Good afternoon, ladies and gentlemen, and welcome to the conference call held by Osisko Gold Royalties on the transaction announced today. After the presentation, we will conduct a question and answer session. If you'd like to ask a question, please pick up your speaker and please press star followed by the number one on your telephone keypad. Please note this call is being recorded today, October 5th, 2020 at 1:00 P.M. Eastern Time. Today on the call, we have Mr. Sean Roosen, Chair of the Board of Directors and Chief Executive Officer of Osisko Gold Royalties, and Mr. Sandeep Singh, President of Osisko Gold Royalties. I would now like to turn the meeting over to your host for today's call, Mr. Sean Roosen. [Non-English content]
The PowerPoint, "Creating a Premier North American Gold Mining Company." Welcome everybody. We are using a PowerPoint presentation that you can find on our website titled, "Creating a Premier North American Gold Mining Company." We will be making some forward-looking statements. I'd like you to take a moment to look at the cautionary statement regarding our forward-looking statements. We will be making some forward-looking statements here. I'm just going to give a bit of a preamble before I ask Sandeep Singh, the President, and will be appointed CEO of Osisko Gold Royalties, as I take the role of Executive Chairman, to give us a description of the transaction as it stands.
As a lot of shareholders that may be on this call know, we had acquired Barkerville Gold Mines in September of last year when the gold price was about $1,320 per ounce. Subsequent to that, we've seen the gold price rise to over $1,900 an ounce, so over CAD 2,500 an ounce. We felt it was time to take advantage of the moment, and to reintroduce this project to Osisko Development Corp., as well as a new project that people will know less of, called San Antonio, which we believe is a spectacular heap leach opportunity in Sonora, Mexico, about an hour and a half out of Hermosillo.
This company will also take quite a few of the technical staff that we have working on Barkerville and other projects with us into this vehicle, and set the stage for what we believe is a premier new mining company in the mid-tier space, with the Barkerville project being front and center of that evolution, and I'll get more into that as we get into it. The advantage for Osisko Gold Royalties will be the simplification of the royalty business back more towards the pure royalty model that shareholders have expressed an interest in pursuing.
Hopefully we've accomplished a lot in terms of expectations for the marketplace and also setting the stage for something quite spectacular, as the Barkerville project and San Antonio come together to create what I believe will be one of the best royalty opportunities of this cycle, with creating more than 20,000 gold equivalent ounces once we're in production for Osisko Gold Royalties. This company, Osisko Development, will be quite robust. I will be the acting CEO and Chairman. Luc Lessard, Chief Operating Officer. Chris Lodder is the President, and driving the exploration. We'll get more into the rest of the development team. We're also joined, in his new role, Benoit Brunet will be joining us as a CFO of this new entity.
We will be sharing office space with OR and continue to work hand in glove on the OR platform as we evolve what I believe is the most significant step that we've taken in the accelerator model that we engineered and pioneered since 2014. I'll ask Sandeep now to jump in and take us through some of the details of the transaction. Sandeep Singh, over to you.
Yeah. Thanks a lot, Sean, and thanks everyone for joining us on short notice for what we feel is a fairly, or extremely important, and value-locking announcement for the company. Frankly, a big step forward in what we've been conveying to shareholders all year. I'm on slide three, just really quickly, because Sean has covered a lot of the key points. Worth re-emphasizing, there's a fair few pieces to this transaction. Overall, this is a simplification of the Osisko Gold Royalties business model and the culmination of the North Spirit transaction, to be renamed Osisko Development Corp., which will be advancing the highly attractive sets of assets that Sean mentioned towards intermediate producer status. Essentially what we've been saying all year, with the twist that we're doing it publicly instead of privately, and we'll walk through certainly some of the reasons for that.
I think it's fair to say that we've heard the views on some of the complexity that people have been seeing in our name, and hope that this is viewed as a huge step forward towards that separation of church and state that's been asked of us, and frankly, that we've been asking of ourselves since we acquired BGM in the fall. If you flip forward to slide four of the transaction, there's more summary terms here in detail. I won't go through them, but they're there to be reviewed at your pleasure. Again, at a high level, we're conducting the spin-out to an reverse takeover transaction with a company called Barolo Ventures Corp., and spinning out those assets of Osisko Development Corp.
The portfolio will include, as Sean mentioned, the Cariboo Camp as the flagship asset and the newly acquired San Antonio heap leach open pit in Mexico, and Sean will go through that in significant detail later on. That adds, in our minds, quite a bit to the portfolio of assets here with near-term cash flow for relatively little CapEx. A portion of the equity book within Osisko Royalties will also be transferred with a current value of CAD 116 million. That provides a buffer, if you will, a little bit, to the balance sheet of Osisko Development, as well as significant optionality to some pretty interesting gold projects. There are other early-stage exploration assets that make more sense, frankly, in the Osisko Development portfolio than they do in Osisko Royalties, both in James Bay and Mexico.
Those are promising regions that won't get immediate attention necessarily but are available, and really only one drill hole away from something interesting. Sean, as he mentioned, will take on the CEO role. We'll have a full complement of technical people move across, and frankly, the mine building team that we have within Osisko Royalties will be able to be leveraged to their fullest within Osisko Development. Concurrent with the spin-out, Osisko Development is conducting a CAD 100 million bought deal financing, which is live as we speak, to advance the set of assets and for general corporate purposes.
Sean touched on it. I'll just spell it out in a little bit more detail here. Osisko will be retaining a 5% net smelter return on Cariboo, as well as a 15% stream on what will be a fully financed San Antonio project, and other royalties on some of the earlier stage assets.
Worth pointing out that San Antonio was acquired by us with the intent of passing it to an operating entity. As this path took priority over some of the other paths we were looking for North Spirit, it became clear that our preferred partner was within the building. 20,000 ounces is what we expect the portfolio to generate when in production to Osisko Royalties account, with significant further upside in terms of expansion at both sets of assets. Osisko Royalties will be the majority owner of Osisko Development in the first instance. We will own 88% of the company as CAD 100 million are raised. We'll look to reduce that ownership level as the company finances and advances itself. It's worth pointing out that we are doing this because we want retained exposure to the asset base.
There's a lot of value to unlock for every dollar that goes into the ground. That being said, we realize the float of that company is not necessarily where it should be, and we'll look to be opportunistic if and when we can be, as some of the significant catalysts unfold. Flipping forward to slide five. Again, I think we've touched on a lot of these in terms of the rationale for both sets of companies, but I think it's important to go through it in a little bit more detail. From a Osisko Development, well, just generally, let me take a step back. I think it's worth pointing out that really we're trying to set up two distinct companies with distinct mandates. Obviously, there's overlap in the first instance, but as both companies go down their paths, I think they'll settle in quite nicely.
I don't think it's an overstatement to say that on the Osisko Development side, the assets are currently in the company to lead to a North American intermediate of significance. 6 million ounces of quality resources at Cariboo on a brownfield site, a short flight out of Vancouver matters. It is a hugely scarce asset. That was our view when we took it in. That view has only grown in the past year, and we're more convinced than ever that Cariboo is a mining camp and not just one large gold project. In conjunction with this announcement, we've also released some exploration results to catch up in terms of that news flow. Exploration results that we're quite bullish on to start to fill in the gaps between the existing resources and also outline some hugely exciting new discoveries along strike.
In the meantime, as Cariboo is being permitted, Osisko Development can bring on circa 100,000 ounces of combined production from the Bonanza Ledge phase II, which is a satellite of Cariboo, and the high-grade, low CapEx production from San Antonio, initially in oxides and then in high recovery sulfides. Sean mentioned the team. It's essentially the team that built Canadian Malartic from first hole to Canada's largest gold mine in six years, They will turn those talents onto the Barkerville and beyond. I certainly appreciate the confidence that Sean and the board has shown in me to take up the CEO role at Osisko Royalties. From an Osisko Royalties perspective, I think this transaction is fairly straightforward. It streamlines and simplifies the company to continue to focus on growing its royalty and stream base.
We have a pretty exciting period in front of us on the OR side with a high-quality portfolio of assets that we think matter in the sector, many of which are going to some compelling positive catalysts, including expansions, extensions, new discoveries, and restarts. Our development weighting is starting to transition to the producer column on a lot of assets, which couldn't be happening at a better time in the gold cycle. I mentioned the addition of 20,000 ounces to our portfolio. I think it's also worth pointing out that all the people, or pretty much all the people required for both these companies, are already in the building. By putting the right people in the right places, there will be a significant reduction in the G&A on the OR side as we move forward.
I also mentioned the discipline the approach will have to reducing ownership, as and when warranted. I think the re-rate opportunity we feel is significant here, and I'll touch on that in the next couple slides at a high level, as I imagine that that's probably going to be fairly well understood. If you flip ahead to slide six. Worth pointing out, probably not lost on anyone on this call, that the conservatism and negativity brought on post Barkerville transaction has been evident. I don't think it's asset related on either side of the equation. It was structural. What we've been saying is we'll fix the structure. We weren't, frankly, finished structuring the transaction when we announced it. With this transaction, we now are, and frankly feel that some of that negativity has been overdone, and hopefully we're going a long way today towards rectifying that.
Just to finish that point on slide seven, you'll note the wide gap between ourselves and our peer group for what we think on the OR side is a pretty interesting set of assets with high growth in safe jurisdictions and a precious metal focus. We think we'll have to continue to drive this point home, but we think there's a huge re-rate or significant re-rate potential in front of us. It's our job to go get it. I think this is, as I said, not to repeat myself, one big step in that direction. With that, I will pass it back to Sean. I think it's important for everyone to hear more about Osisko Development, what's happened to Barkerville for the past year. Hear for the first time about this asset in Mexico, which we're quite enthusiastic about.
Sean, I'll pass it back to you on slide eight.
Thank you, Sandeep. As we go on to page eight, the basic summary here on the production side is obviously Cariboo is the big story with the PEA study that we put out in September, or sorry, in August of 2019, sort of being the foundation to this and then building on that as we move up. Currently sitting at 2.9 million ounces at 4.7 g in the measured and indicated category, and another two and a half million ounces in the inferred category. We are getting up there. There is ongoing drilling out there, and we've had quite a bit of success. In addition to the Cariboo side of it, we have the Bonanza Ledge, which has 271,000 ounces measured and indicated, another 241,000 ounces in inferred at that site.
We have 1 million ounces sitting at San Antonio, bringing the overall resource here to north of 7 million ounces within the company. Obviously, we want to get the producer status of this company as soon as possible. The goal is to start production in January, February with the Bonanza Ledge BC Vein development that we've been working on. We've got just under 2 km of development in there. We are shooting about 7 m a day right now. We hope to have the final scoping release from the permitting side to start processing our QR mill that we own sometime in January or February. We are hoping that that sort of deliver 25,000-35,000 ounces a year in the interim. The bigger production on Cariboo will come as we go through the permitting process at Cariboo.
We've gone through the public hearing process, which was concluded in August. Quite well run and a tip of the hat to our team there with Mike MacFarlane, Chris Lodder, and Chris Pharness having driven that process as we went forward. We're in good stead with our friends from First Nations on this project, and we hope to have some news for you on IBAs in the near term. All those things are moving well, and I think that we use the time wisely. We feel that the larger permit has now been expanded from the PE level of 4,000 tons a day to 4,750 tons a day. In addition to that, we've purchased a comminution circuit that was purchased by Hudbay in 2013 but never installed. All the equipment is brand new at quite an advantageous rate with our partners from JDF Mining based in Kelowna.
That equipment will be delivered to Quesnel or Prince George here in the new year. We have achieved that, which simplifies, I think, the detailed engineering for this project as we move forward. I'm also going to present to you the San Antonio project, which very few people know anything about. This was previously an oxide copper producer. It went bankrupt in 2018, and we've acquired it from that bankruptcy process, and we've rethought it as a gold project, which we're quite excited about. The other two land packages that we have here are mostly exploration ground. Won't get into that too much today, but we look at those as partnering opportunities as we go forward in this.
Also, we will be keeping about CAD 116 million of equity in this company as we go forward, not the least of which will be the 19%+ that we own in Alamos, as well as the just under 19% ownership in Falco Resources, both significant companies that we're proud to be associated with under the OR mandate, and I think they'll do well under the ODV mandate as well. On page nine, you can see what I was talking about. We have 62,000 ounces coming out of Bonanza Ledge in the first two years as we go through that permitting process. We have a small mine permit there that allows us to mine about 250,000 tons a year to generate those 62,000 ounces. They'll be processed in our existing Cariboo mill, which we last operated in 2018 when we produced 22,000 ounces from that.
The San Antonio project has about 40,000 ounces sitting on an existing pad that has about 1.3 million tons stacked on it. Previously, it was permitted for copper extraction. We're in the process of converting that to gold extraction. We're hoping to have that back under irrigation sometime in the first half of next year. On track to undertake the open pit mining and ore stacking in the full-on mine plan for that project as we go forward. I just covered off Cariboo for the most part, the expansion to 4,750 tons a day from the original 4,000 tons in the PEA study sets the stage for us to be at 200,000 ounces a year plus. We'll also keep hopefully BC Vein and San Antonio contributing to that.
If all goes well within the three to four-year period, we should be looking hopefully at a consolidated production somewhere between 250,000 and 350,000 ounces. Page 10. I covered it a little bit in the preamble, but I have taken the role of CEO and executive chairman in both. I'll be Executive Chairman of Osisko Royalties as well as Executive Chairman and CEO for Odev. Luc Lessard is acting as chief operating officer. You'll remember Luc, he was the CEO of Osisko One, currently acting CEO Falco as well, and supported by François Vézina , VP Technical Services, and the entire technical group that covers most disciplines from water management, tailings, mining, milling, and environmental, social, and governance. Chris Lodder and Maggie Layman will continue to drive the exploration.
Chris also carries a responsibility both on community relations and First Nations relations and all stakeholders as well as our political efforts in BC in terms of being part of the community and making sure that we contribute in a very positive way as we go forward. As you can see, Benoit Brunet, who joined us from the Caisse de dépôt, will be taking on the role of CFO. From a corporate governance standpoint, OR will still be a very significant shareholder of this through our fiduciary responsibility through the board of OR. I will be joining the board, obviously, as chairman. Charlie Page will take on the role of Lead Director, John Burzynski, founder of Osisko One and currently CEO of Osisko Mining, OSK, and Joanne Ferstman will come across and put in place proper Osisko-style audit committee and everything that we need to have happen at ODV.
It will be a reporting consolidated subsidiary of Osisko Gold Royalties. We are New York Stock Exchange listed, we follow US GAAP rules. That's an important piece of business as we get further on to the story. As we evolve and raise money and go forward, we expect to see this company take more and more of its independence as we get closer to the production at Barkerville. The next slide is a bit of a summary of our ESG credentials. For those of you who know us, we started the Canadian Malartic project in 2005. We had quite a challenging project here in that we had to move 250 houses, and we had six institutional buildings that we either had to buy or replace.
We ended up spending CAD 180 million to create a new suburb, move over 150 houses, create an industrial park for the town, also build a new suburb that ended up housing more than 300 houses. We built a brand-new school for 425 children, a daycare for 111, 60 long-term care facility rooms at the hospital, an amphitheater for 850 people that is probably the nicest public amphitheater in the Abitibi at this point in time and well-used by the cultural community in that area. As well, we committed to a Fonds des arts, which is a fund that's managed by local communities to support their community in the way that they see fit. That project, I think, has been the poster child for a lot of what sustainable development is.
We were the first to pay 100% of our closure bonds in place, and we also developed a new system called continuous closure, where we didn't leave the mine reclamation to the end, that the reclamation is ongoing throughout the mining process. We're pretty proud of our heritage on that, and we look forward to bringing that to bear as we develop ODV and we take on Cariboo, San Antonio, and hopefully continued success on the exploration as we develop this mining camp. The next slide is really what I'm on about. On page 12, as you can see, this is a very large area in terms of what we're doing.
The town of Wells is historic in that it was the largest town north of San Francisco, Barkerville, and Wells back in the 1860s and 1970s when the boom came to be, and it was the reason that British Columbia was incorporated in Canada at the time and not left as an open territory for Hudson Bay Mining. A significant amount of historic resource, over 4.5 million ounces of historic production from this camp, most recently been shut down in about 1985 not necessarily due to lack of ore, but due to some outside forces on the corporations that were operating there. The prior management to us was able to consolidate this entire area, and it's the first time that the entire land package has ever been consolidated, and that brings us over 2,000 sq km of mineral rights or 2 million hectares.
One of the largest land packages in the world in terms of mineral rights. Currently sitting at a total, including BC Vein, of 3.2 million ounces at 4.6 g for measured and indicated, and inferred resource of 2.7 million ounces. As you can see, over the 6 million ounces of total resource base and still getting new discoveries all the time. The underground mine that we demonstrate here, you can see it on the map. It's just in the town of Wells . We mined there in 2018 and produced 23,000 ounces from the other side of this thing. We've driven a ramp into the BC Vein, and we're going to start production there. The QR Mill was a mill that was built by Kinross back in the day. It's a very good mill for metal mineral, F LSmidth equipment. It's set up as a carbon-in-pulp.
We're doing some work to allow it to do carbon-in-leach as well. This is a historic mill site, fully permitted for cyanide and for tailing. We'll be looking to use this mill as part of the bigger project as we go forward as well. The major advancements that we had in 2019 and 2020 while the company was, for lack of a better term, private. We had new discoveries at the Proserpine and Lowhee Williams KL that add ounces to the global resource. We also purchased the milling equipment that I mentioned earlier. There's a 7,500 ton a day mill that we'll be adapting down to 4,750 to start with.
That leaves us lots of room for further success, assuming that exploration can come on, and we wouldn't have to do too much to upgrade this mill if the time comes and we are successful in the exploration. We are also in the process of developing a ramp that hopefully will get us a bulk sample in 2021 from the underground. As I said, we have a two-year mine plan right now for the Bonanza Ledge. More importantly, in the big picture, feasibility is on track for next summer. We'll be targeting most of that measured and indicated that we showed you converted to both mineable reserve, and hopefully a little bit more. For the feasibility study, obviously, we're going to that 4,750 tons a day, and we're integrating some other aspects of this project.
Most importantly, two portal access, which is why we're able to go to the extra tonnage, because we're essentially going to be having two different ramp access mines on each side of the valley, connected by a ramp underneath the valley as well. The vision for the camp, again, is that we think that the exploration continues for many years to come. If we get it right, we're hoping to see sort of 5- 10 ramp access mines up and down these two trends that you can see on the next slide 14. Very early days in terms of the step out. Most of the work has been focused on that green box that you see that's on the existing trend, that's where the 6 million ounces of resource that we've identified is at present.
We have all these other deposits that are developing on trend, and we also have the new parallel trend, which we've discovered here in the last few years. Really hats off to the technical team that did all the work. Our structural geologist guru, Terence Harbort , currently the CEO of Talisker. Chris Lodder and Ruben Padilla led the charge along with Maggie Layman to really kind of crack the genetic code of this project, which had never been done before. That's what led us to our success. Their exploration targeting went from one in 10 successful holes when we got there to eight to nine out of 10. It's been a highly successful exercise. Again, a tip of the hat to Terence and Ruben and Chris and Maggie for having figured all this stuff out, because it really did change the way the game is working.
Now we're solidly of the belief system that we have an entire mining camp to develop here, which sets the stage for years and years of success. Hopefully, this is a bit like going Timmins, Red Lake, or Kirkland Lake or maybe Sudbury back in the day, if you were back in the 1920s and 1930s. We don't see these kind of big camps end up in a single-asset company or a smaller company very often. The last time we did it was at Canadian Malartic. John did it again at OSK with Windfall Lake. We have our other sister company, Falco and Barkerville. Our group has been extremely fortunate in terms of developing these ramp-bound gold camps in Canada. We're just thrilled to be able to bring this project back to the market in the current market conditions.
As you can see on the bottom of this slide, we've only explored down to a depth of about 350 m. Significant amount of potential underground. We have 40 holes underneath the Cow Mountain Valley and Shaft Zone that demonstrate that the mineralization does not stop there. We didn't want to spend the money to drill it from surface. We have significant upside at depth as well as along strike on this. Some of the work that's gone on is we've executed 500 km or 500,000 m of core drilling since we got involved in the project. Over 20,000 soil, sediment, and rock samples and a significant amount of airborne surveying and 1- 2,000 mapping has really sort of set the stage for what we believe is going to be a pretty exciting the exploration story as this develops.
Some of the new discoveries, if we move on to page 15, that you can see in the yellow zones, the more rose-colored zones represent the existing resource that's in the permitting acquisition. In the permitting process that we've outlined for the 4,750 ton a day underground mine development. We've had success at Lowhee, the KL Zone, Williams, and most recently Proserpine. Proserpine has come in quite nicely. You can see some of the grades that have been coming out here. It's 26 g over 3 m , 15 g over 7.5 m , 95 g-m . One of the things to take away from this is that when we've reported the resources here, we've reported them as vein corridor, which really equate to longhole stoping grades because we've designated everything at least 2.2 m wide.
If you were to look at just the quartz veins that contain the pyrite and the gold, the average grade is closer to 10.28. The shaft zone, for example, is just under 12 g once you separate it out, which is a reason why we're going to be introducing ore sorter technology in this project. For about 50% of the lower grade component, we will be using an ore sorter that separates on X-ray fluorescence, based on the fact that most of the ore is contained in the quartz veins and associated with the sulfides. It works extremely well because the XRF picks up sulfides, and we'll get into more detail on that as we get further into this phase. I've covered a lot of detail here. I won't get into it too much more because we do want to talk about San Antonio quite a bit.
This project is somewhat new to the marketplace. It's located about an hour and a half outside of Hermosillo in Sonora State. What we have here is about 11,400 hectares land package. Mineralization is identified on about 5x7 km . The body was mostly drilled with the intent of looking for oxide for a copper mine. We're retooling it as a gold project, and we've identified 1 million ounces of inferred here at 1.18 g, of which we think that somewhere between 200,000-300,000 ounces is in oxide, where we've seen recoveries north of 80%. This is a pretty important piece. We're also seeing significantly better than usual recovery in the sulfide component and transition material here of 55%-65% on 28-day follow-up. This is pretty exciting stuff.
The CapEx here is relatively low at about $35 million to get us hopefully a 50,000-70,000 ounce a year producer with eyes on some infill drilling and some optimization of hopefully pushing the deposit as close to 100,000 ounces a year as we can get it. A significant amount of exploration upside that our team is quite happy to get underway and going on. There is quite a bit of infrastructure in place here as well. As we flip to the next slide on page 18, you can see this was a well-built and well-laid-out copper mine. Unfortunately, the previous owner, the principal was driving this passed away and the company ended up in bankruptcy. It is a very well-organized site, and it's a brownfield site that we feel we can go fairly quickly in terms of recommissioning.
I want to get onto the deal summary because we've been on the call for a little while. Page 19, really a summary on the bottom right-hand corner. The pre-money value of the deal was CAD 750 million. About $580 million-$880 million . New equity of CAD 100 million. Post-money value here of CAD 850. We think that that's very much in the current metrics at the low end of competitive projects we did. The retained ownership at Osisko stand at 88%. From a just a little royalty standpoint, we are very much in a position to keep this equity component on the books and we make CAD 150 million a year in royalty revenue in a normal year, with about a 91% gross margin. Currently, Osisko's firepower on their balance sheet is about CAD 510 million.
We're quite happy to stand in as shareholders as we go through this value process from the OR side. I won't get too much into the key metrics, but you can have a look at those and if anybody has any questions, but I think the point to take away is we're still looking at producing around a $790, $800 all in sustaining cost with a significant life of mine. That'll be enhanced as we get through the feasibility for next summer. If you look at the PEA study, percentage of the resource model is not very high at this point in time, and you get to about $1 billion of value at $1,600 gold on the NPV basis, which I think puts us in pretty good stead for the valuations that we propose here.
Not to forget that we have CAD 116 million of equities on the book. If you were to take the equities off the cash and the project here, we'll be trading around CAD 750. Some of the more important metrics to look at on page 22. The combination of Cariboo plus the resource at Cariboo and San Antonio put you just slightly below Sabina. In terms of metrics and Osisko Development, CapEx in our PEA study is CAD 306 million. Because we are increasing size, there'll be an incremental increase in the CapEx as well, and we'll get that out to you as soon as we have the feasibility being more advanced. The life of mine, looking at Cariboo at 185,000 ounces in the PEA study, and we'll be looking to do better than that.
In addition to that 185 that we had in the PEA, we would have 60,000 from San Antonio, another 31 from Bonanza Ledge, which sets the stage for a pretty solid run rate for the mid-tier gold production. We've shown you the enterprise value net of the cash and the equity book here at CAD 650. Puts us in pretty good company. You can see there's quite a few companies that are valued significantly higher than us. In terms of enterprise value for us, we come out about CAD 70 an ounce at this point in time. I think we have some room to move, and that's going to be where we end up being the most positioned to work on that as we take more risk off and we get closer to the final permits and we get some production going.
We should be able to re-rate fairly quickly with all those catalysts on their way. The next page, on page 24, really goes into an enterprise value. We think this thing has the legs to get to CAD 1 billion once we see production come out of it. That's the goal right now, is to crack that CAD 1 billion mark as we get closer to production. A significant amount of meaningful cash flow and catalysts over the next eight, 12-1 8 months as San Antonio and BC Vein get going. Chris Lodder and Maggie continue to execute on the drill program and frame up some of these discoveries that we're following up now and hopefully get some ounces converted on that front as well. In terms of the team, I think you know us from the past.
The Osisko platform has brought quite a few successes to the table. Obviously, OSK with John and the Windfall team, took Osisko Mining Inc. from a CAD 8 million market cap in 2016 to currently sitting at CAD 1.4 billion with one of the best exploration outcomes of this cycle at Windfall Lake. We tip a hat to those guys, really done a great job of moving that project forward. In terms of Falco and Luc Lessard and the Victoria Gold for having moved the Eagle Gold Mine in the Yukon forward, where we own a 5% royalty. We think that we've been involved in a lot of the big successes on the Canadian mining scene. We're looking to continue that success with this team, and I'm very proud of everybody that works on the Osisko platform.
All the efforts that have been made by everybody to get us where we are today. Certainly not least is our friend Bob Wares at Osisko Metals, and some of the success that he's had with the Pine Point zinc project up north. We are a group that has invested a lot in exploration development, and we've been able to access capital through flow-through for drilling in a way that none of the other groups have been able to do. All that drilling has added up to royalties for Osisko Gold Royalties shareholders and set the table for what we believe is the next leg of the accelerator model. I'm going to stop there, and if there's any questions for us, it'd be a great time to chime in.
We feel we've got a pretty good ride so far in terms of setting up this deal, in terms of being able to deliver to you a product that we believe fits the time and the space in the current equity markets. On that note, if you have any questions, we'll bring it in for questions.
If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, please press the pound key. We'll pause for just a moment while we compile the Q&A roster. [Non-English content]. Your first question comes from Ralph Profiti from Eight Capital. Your line is open. Please go ahead.
Good afternoon, everyone. Thank you for taking my two questions. First of all, congratulations on the transaction. Sean, if I could start firstly, the decision to optimally go with 4,750 tons per day, is that really driven by the new mineral resources exploration, and how much trade-off studies are going to be done at increasing that through potential? How much scalability are we talking about here in the medium term? Was that really behind the timing of that deal that you really felt like you had the project parameters or right size that now was the right time to do this transaction? That's my first question.
Sure. I'll try and bring it home for you. The 4,750 tons a day is a step up from where we're at 4,000 tons a day. This is an underground mine, it's not like an open pit where you can just fire up at 50,000 or, in the case of Malartic, 260,000 tons a day of mining and feed a mill 55,000 tons a day. We need that underground development to accelerate. This is the largest underground mine that we can permit under the current conditions. We did purchase our milling equipment in a scalable way, it will take us a couple of years after we start construction to get to that 4,750 as we have to build that underground development into it.
We'll see where we get to from there, but we're looking to come out with a feasibility with hopefully a little over 3 million ounces of mineable reserve. Which does support that 4,750, and then also allows us some upside to look at things after we get up and running to see what we might do to continue on with that. In terms of the timing question, I think that we took a lot of risk off the table over the last sort of 12, 13 months. We went through the public hearing permitting cycle, and we got into the final cycle, which we felt was a pretty good value driver. The support from the Atikamekw Nehirowisiw Nation has been great, and we felt that we had their support on going forward with this.
That coupled with the fact that we had committed last year through their [North Spirit plan], that we would be using another vehicle than OR to develop this project. We were also able to conclude the acquisition of San Antonio in September, which set the stage for us, I think, to really drive the catalyst moment and look, hey, we've got two great assets that have near-term production capability in a gold market that looks like it needs to see another good project and a good company come to bear. We felt that this was the right time to bring this to market based on the parameters of what we're seeing in valuations in competing projects and where we've gotten to with this one.
Yeah. Got it. Thanks for that clarity. Hey, Sandeep, maybe I have a question for you, Sandeep, if I may. Just on your strategic initiatives post this transaction and when you think about valuation and you think about the development waiting coming down, where is your attention being put towards now as you think about the next few years at Osisko Gold Royalties?
Yeah. Well, thanks, Ralph. Obviously, we'll continue on the path that we've been on. I think we had a lot going on, a lot going right in the company, I should say, and this is a bit of an overhang for the wrong reasons. I mean, obviously the asset value, we believed in from the beginning, needed to, as I said earlier, finish the structuring, and so this is a key deliverable for this year. We think we've got the balance right, and hopefully, the market agrees with that. I think our larger shareholders seem to, as there's a lot of support for that financing that we're coming out with today. Overall, the state of the company. Look, we have a significant amount of catalysts internally. We've said all along that we want to get value for our current asset base. This is one step towards that.
You mentioned the natural progression of a larger development weighting, transitioning into the producer column. I think that's significant and important, and it's happening kind of with or without us, with a lot of those development assets maturing, things that were early maybe a couple of years ago, but now are maturing at arguably the best time in the gold cycle in a long time or maybe ever. That's positive. The developments at Malartic Underground, we don't think are fully appreciated in our stock or our partner stocks for that matter. As they continue to advance and put more meat on the bone, we think that's helpful. Look, we have a lot to unlock and unpack from an internal perspective and things that we think we need to get paid for. Externally, we'll continue on the path. I mean, we'll continue to look for value.
I'll be honest, there hasn't been a lot of value in our mines to find recently. We'll pick our spots, and we'll try to be a little bit different. We don't want to be exactly the same as everybody else, Ralph. We think that hybrid model, in its purest sense, is the absolute right model. Obviously, we deviated from it by buying the asset 100%, and it was a means to an end, but heard that message loud and clear and underlined it. The situation in the accelerator group where we're trying to put 10s and 20s to work and turn them into 100s and 200s has been wildly successful.
This is just another example where, even today, based on the transaction value today, we're getting paid to take 20,000 ounces of GEOs, which when in production, the going rate for that out there right now is $500,000. I think that works. We need to kind of keep it a little bit simpler for everybody and for ourselves, that's a little bit of what we'll have on the go as we move forward.
Yeah. Got it. Thanks very much, and congratulations again.
No problem. Thank you, Ralph.
Your next question comes from John Tumazos from Independent Research. Please go ahead.
Thank you. Good evening. I'm looking at the new resources of Cariboo and Bonanza Ledge combined. It looks like the indicated dipped from 5.6 million ounces to 4.6 grams per tonne. The inferred from 5.0 million ounces to 3.9 g per tonne . Should we interpret that as a combination of mining dilution or the 2.2 m width, the new zones added, and a drop in the cutoff grade with higher gold prices?
Yeah, the bulk of the driver here, John, is that we did have some lower grade material that we drilled off. With the lower cutoff, we incorporated that. We saw the measured and indicated go from 2 million ounces at the PEA level up to about 2.9 million. That million ounces that we've been able to include with the higher gold price that we felt was worth it.
We also made some strides on the ore sorter technology that we think changes the economics on the low-grade cutoff. The advances there are that there's an XRF both and an optical sorter over and above the XRF that allows you to make some economic decisions about the amount of sulfide that's held in the rock. It's not whether it has sulfide or no sulfide. Based on the cyanide work and some of the other stuff that's underway, we were comfortable lower that lower grade cutoff component down, and then it fully bounces in. The cost is about CAD 1.50-CAD 2 a ton to use the ore sorter.
What we did with the evolution of how we're thinking about the mine plan is we only went after those low-grade hills around the existing higher grade components that would run between 5 g and 6 g, that we had in the original PEA study. Because we've already paid for the development to go in there, we felt that because there was no more development costs, we should take those lower grade components and upgrade them through the ore sorter. The way it ends up working now, John, is we've committed to that comminution circuit that we own. On the back of that, we'll be putting a flotation circuit in Wells at the site, and about 50% of all the material from the higher grade components that'll be running that 5 g- 6 g, just directly from mine stoping .
All the fines that are generated during the crushing process will represent about 50% of the ore mined. That goes directly to the flotation, produces a 28 g-32 g concentrate. The other 50% that we're mining from the underground will go to the ore sorter. 3 g material is going up to 6 g material in the ore sorter for CAD 1.50 a ton-CAD 2 a ton, and 4 g material is going from 4 g-8 g, with the ore sorter. It's a pretty economic outcome, and we don't need a lot of technology. These are relatively inexpensive units. We'll need three of them. They're about $1.7 million each. Not a huge amount of capital.
What will happen at that point in time is, from our underground mining, about one-quarter of all the underground mining will be rejected by the ore sorter, and we'll process three-quarters of the production at the flotation circuit. We'll produce about 800 tons of concentrate at the Wells site, and we'll take that to the QR mill that we already own, we'll take that 28 g- 32 g concentrate, and we'll produce ore at the QR mill, and there'll be about 800 tons of tailings that will go to a dry stack. That also reduces our need for a tailings pond in phase I, at the Wells site and allows us to use the flotation circuit tailings as p aste backfill, and then the ore sorter reject will be co-disposed in a waste dump for development ore and the ore sorter rejects.
A bit of a long-winded explanation, John, but it's an effect of the economic changes that we feel, that we have enough passport to include in the decision.
If I could ask one more. If 8/9 of the company goes with OR worth CAD 750 million or CAD 800 million or say $550 or $600, is it fair to apportion that as $400 million to Barkerville or Cariboo plus Bonanza Ledge, almost $100 million to the securities, and almost $100 million to San Antonio, Guerrero, James Bay, Quebec, Coulon, other bits and pieces?
Yeah, I would think that's not a bad split, John.
Should we conclude from this that you couldn't get a company to pay you CAD 600 million cash for Cariboo, Alamos Gold, Kirk, Agnico, whomever, and Australia and the Chinese, whoever? Should we conclude that you want to keep it and think it's going to be worth more?
It's definitely the latter, John. As you know, we've taken a viewpoint that this was a mining camp, not just a mining project. As we saw at Malartic, we sold Malartic for CAD 4.3 billion in total consideration Canadian, or CAD 3.9 at the time of the transaction back in 2014. Subsequent to that, there was 8.3 million ounces reserved. Subsequent to that, there's been more. Now there's the underground 10 million ounces. There is a lot of value to be had in Barkerville, and we've only really explored a postage stamp of the 2,000 sq km, and we've already got the 6 million ounces. We haven't even gone below 350 m. It's very early days to go for value. We most assuredly could sell this project at the drop of a hat.
There's really not too much else like it in the space right now, where you have this much upside and this many discoveries, and a consolidated land package that includes 4.5 m illion ounces of historic production and 150 km of underground development that we have access, documented access to the data from all that work. This is a highly valuable asset, John, and we will pursue it with prejudice to bring it to value for [Miller Project], as well as the OM shareholders.
Yeah, I'll just reemphasize that, John, one more time. Certainly the latter, not the former. What we said all year is we weren't interested in selling out 100% of the asset or even majority stake in the asset to the operating groups. That wasn't our focus. We looked for minority financial partners to fund the sum of money that takes us to the next set of catalysts. The message was always, we're going to own less and less of something that's more valuable, as we think every dollar put into this asset returns a multiple of it. Then as we pushed along, and the markets changed, our view was this was the better mousetrap to accomplish that and to assure people that OR would not be building this within OR.
That fear and pessimism kind of kept coming up no matter what we were saying consistently between Sean and I. We think this transaction today puts that to rest as well. It certainly is the latter, not the former. I might also add, the resource statement today is really just a point in time, as we're coming out with a transaction, we need to have 43-101 disclosure. Some of you would've heard Sean talk about it on our last quarterly financials, that there are meaningful asset milestones that are coming up at the end of this year and beginning of next, and some of the ones for the end of this year pushed into early next because of COVID.
Those will be situations where we manage to infill drilling or finish infill drilling to get the reserves up to where Sean mentioned earlier, as well as start to add these new discoveries onto the resource categories in more meaningful ways. Right now, we're excited by them. They're as good as the early drilling into any of the portions of the deposit, but they haven't been drilled sufficiently to add to the book yet.
Thank you very much.
Thank you, John.
Thanks, John. Give us a call if there's anything else that comes to mind.
Sure.
Your next question comes from George Topping from Industrial Alliance. Please go ahead.
Great. Thanks. Sean or Sandeep, is there a minimum level of ownership that you see for Osisko Royalties in Osisko Development?
Look, I think it's going to be [crosstalk].
Go ahead, Sandeep.
I'll start, Sean. I think it's going to be fluid. There's no minimum per se. We're not just handing out shares for no reason. As I said, we see significant value in these shares, and the work that's going to be done, and a pretty deep set of catalysts over the 6-12 and beyond months. I think we'll let the market finance the project and move it forward. We'll get diluted that way. Obviously, as I think I said earlier, or I hope I said earlier, the float is going to have to be matured. We don't plan on owning 80% of this, we'll naturally come down as Sean pushes these assets forward aggressively. Then opportunistically, if we can look to promote a healthier flow for the company, we will. It'll be off-the-back catalysts and higher value for OR shareholders.
We've taken the ride this far, taken the slings and arrows, we certainly want to benefit from the win. We'll find the right balance, but obviously it'll come down. How quickly it'll come down will be a virtue of how quickly it advances, but no preconceived notions today, George.
Right. You could go to zero eventually if that's a possibility.
Yeah. Look, absolutely. Sean and I always said, and Sean first, and I echoed it since I joined, is there's a price for everything, including this. Our view is, to get to the right price for the land package that Sean's going to be driving here, we need to continue, now he needs to continue to unlock that value to really show what the camp looks like. Yeah, ultimately, everything's always for sale.
All right. For you, Sean, the Osisko Development, the equity portfolio, is your intention to be adding to that as you go forward and let this be the main vehicle that would hold the equity stakes?
Certainly in the short term, George, our focus is going to be on achieving mining production status. Capital on hand will go primarily to making sure that we get our permits on the bigger projects, that we get BGM into production, we get San Antonio up and firing as well. In the meantime, we're waiting to see what happens with some of the development assets that are in the portfolio. There's a lot of good things happening at both Mineral Medicine and Shaft Zone and some of the other projects. We're not in a rush there. I don't think we'll be adding anything significant in the near term unless it's strategic to what we already are working on.
Got it. Good. Okay, that'll do for me. Thank you.
Thanks so much, George.
Your last question comes from Brian MacArthur from Raymond James. Please go ahead.
Good evening. Mine's sort of a bit of a follow-up on that. Looking at the portfolio, there is CAD 27 million of other transferred. I guess I'm just curious how you decided what was going to be transferred in the portfolio from OR to Osisko Development. Did we just clean everything up so you only have mining development, and I assume metal still left in OR, and you put sort of all the gold in Osisko Development? How did you decide what the right amount or size was to transfer between the companies, given this is partly a simplification exercise?
Yeah. I think that's right. It is a simplification exercise, Sandeep, so you go ahead.
Sorry, Sean. Look, I think that's right, Brian. There's a balance. Some of those other positions are, in and of themselves, quite small. They were used to establish earlier-stage royalties that we already have now within OR, so felt they made more sense within Osisko Development. What we kept was, as you said, the OR brand or Osisko-branded companies like Osisko Mining, Osisko Metals. Some of the earlier names, like Falco.
Osisko Development.
Yeah. Well, that one was cheap.
Yeah.
Some of the earlier name stories that are just kind of setting out in life. I think it was a matter of finding that balance. There are names we certainly care about within this portfolio as well. That was the general idea. Specifically with things like Osisko Mining, that is a big position for us, kind of technically "on our balance sheet." The Osisko Royalty shareholders have helped to nurture that along to the success that it is today. We did those tough years. We felt we deserved, or OR shareholders deserved the win, either in terms of getting to production status or being one of the better names out there in the market. Hopefully that answers your question a little bit, Brian, but a bit of a balancing act, if you will.
Sure. That makes sense. Thanks very much.
No problem.
We have no further questions.
Okay. Thank you very much, everybody, for giving us your time tonight. Please feel free to reach out to us. [Non-English content] Thanks, everybody. Bye now.
Thank you. Bye.
This concludes today's conference call. You may now disconnect. [Non-English content ]