AGM 2020

Jun 22, 2020

Slides

On the Cisco Gold Royalties 2020 Annual Meeting for Shareholders. And I'm going to start with the formal portion of the meeting today, which is the National Assembly Annual Meeting for Osisko Gold Royalties. And we will start the formal portion of the presentation right now. And I would refer you to the website and the forward looking statements as we get into this. So now I will start the formal presentation. Mr. Sandeep Singh, President, Des Cocol Roll Royalties, qui vienes nous jouins, la Premiere Genevieur Andre Level, Vice President of Zafair Jouradique Secretary, Cooperative and Mr. Frederic Rouell, Chastere de laixante financiere, Vice President, Christopher Kirkman, Joanne Firstman, Murray Jean, Pierre Labe et Charles LePage. Mr. Andre Belvieu is President of the Federal Judiciary Secretary of Cooperative and Jerome's Secretariat, La Assembly. Isabelle Vachon, Madamoiselle Francine Beaucerreux, the last such deputy this year, A. ST Saint Nome, consultatively accepted approach to Cisco, Most of you are familiar with the conduct of these meetings and already know that the vast majority of the shares represented in this meeting are held are voted by proxy and granted to management. Currently, Osisko has 165,000,000 shares issued and outstanding. According to the scrutineers report, proxies are favorable to the propositions of the agenda and have been given to management as follows: between 98,000,000 and 128,000,000 shares representing 82% 99.7% of the number represented in this meeting for the election of Assisco's directors number 2, over 132,000,000 shares representing approximately 99% of the number representatives meeting for the appointment of Pricewaterhouse as independent directors sorry, as independent auditors for the company. Now item number 3, over 160,000,000 shares 16,000,000 shares 116,000,000 shares, sorry, being approximately 97% of the number represented for at this meeting for the approval of the unallocated options and amendments of the stock option plan. Item number 4, over 119,000,000 shares being approximately 99% of the number represented at this meeting for the approval of the amendments of the employee share purchase plan. Item number 5, over 116,000,000 shares being approximately 97% of the number represented at this meeting for the approval and amendments of the restricted share unit plan. Item number 6, over 117,000,000 shares being approximately 98% of the number represented at this meeting for the approval of the continuation of the amended restated shareholders rights plans. Item number 7, over 115,000,000 shares representing approximately 97% of the number represented at this meeting for the adoption of an advisory resolution accepting Cisco's approach to executive compensation. We thank you for your confidence. Please note that we will conduct votes on the matters before this meeting by poll. On a poll, the respective matters, every shareholder is entitled to a vote has one vote per each share held and entitled to be voted on the matters. The poll will be open for all resolutions at the same time. This will allow you to choose to vote on each resolution immediately or wait until the conclusion of the discussion on each resolution prior to casting your vote. Once the poll is closed, we will be announcing the results. While the meeting is virtually is virtual only, we will hold a question period for shareholders following the management presentation. The scrutineers have prepared a preliminary report confirming that the number of shares held by shareholders, which are present or represented by proxy at this meeting, currently represent 80 0.5% of the issued and outstanding common shares of Osisko. Given that the Osisko's quorum is established at 25% of the issued and outstanding common shares, I now declare the meeting properly constituted for the transaction of business. The process We shall now proceed to the first item on the agenda, the presentation of the audited consolidated financial statements containing the independent auditors report thereon to the shareholders of the year ended in December 31, 2019, which has been filed on SEDAR. The Secretary has received a copy for inclusion in the records of this meeting. As such, I will exempt the Secretary from reading these documents. As described in the circular, only registered shareholders and duly appointed proxy holders who receive the control number from our transfer agent may vote and submit questions at the meeting. Please note that you do not need to vote at the meeting if you have already voted by proxy do not wish to change your vote. There will be a question and answer period following the management presentation. You may submit your question comments or comment at that time. To ask a question, click on the question icon at the top of your screen and submit your question. For the good conduct of the meeting, only questions of general interest to all shareholders will be answered. Questions or comments containing inappropriate language that are disruptive to the order economy meeting will not be answered as well as questions that are repetitive. If your question is related to an individual matter, we invite you to contact an Osisko representative after the meeting. We shall now proceed to the second item on the agenda, the served continuously as Directors of Osisko since their appointment and election in such capacity. On on Cezium, Marie John on Sethiam, Pierre Labe on Ouitiam, Charles Page, a moi meme on lithium, Sean Roussien. Would somebody make the motion? The motion is duly made and seconded as the number of nominees is equal to the number of seats of the Board of Directors. There will be no further nominations as permitted by the corporation's bylaws. I ask as a matter of principle only for a motion that the nominees are elected. Would someone make this motion, please, and second it? Mr. Benoit Brunet, actionaire les estes apresse propositions. The motion has been duly made and seconded. I will now call for a vote on the motion before the meeting. Would all voting delegates please enter your votes in Lumi. We shall now proceed to the 3rd item on the agenda being the appointment of the independent auditor of Acesco. May I now have a motion for the corporation motion for the appointment of the corporation's independent auditor. Desexeneres et autolizee administratee affixe, Madam Mademoiselle, Helen Paquette, Action Adlerless is still a preset proposition. I will now call for the vote on the motion before the meeting. Would voting all voting delegates please enter your votes in Lumi. We shall now proceed to the 4th item of the agenda being the approval of unallocated stock options unallocated options and amendments to the stock option plan as more fully described in the Cisco Circular. May I have a motion for the adoption of such resolution? Would someone second the motion? Kevin Conant, actionaire de la sustaine a pre set proposition. I will now call for the vote of the motion before the meeting. Would all voting delegates please enter their votes in Lumi. We shall now proceed to the 5th item on the agenda being the approval of the amendments of the employee share purchase program. As more fully described in the Cisco's circular, may I now have a motion for the adoption of such resolution? Geraldine proposition and Mr. Nelson Madroa's actionaire de laissezte proposal adaption resolution ordinarvisins, a approval modification of the regime, dachardes action Would someone second that motion? I will now call for the vote on the motion before the meeting. Would all voting delegates please enter your votes in Lumi. We shall now proceed to the 6th item on the agenda, being the approval of the amendments of the restricted share units plan as more fully described in the Cisco's circular. May I now have a motion for the adoption of such resolution? I will now call for the vote on the motion before the meeting. Would all voting delegates please enter their votes on Lumi. We shall now proceed to the 7th item on the agenda being the ordinary resolution to approve the continuation of the amended and restated shareholders rights plan as more fully described in the Cisco shareholder circular, sorry. May I now have a motion for the adoption of the resolution. Would someone second this motion? Madamois, Sophie Bourassa, Actionable Estates, President of the Propositions. I will now call for a vote on the motion before the meeting. Would all voting delegates please enter their votes in Lumi. We shall now proceed to the 8th item in the agenda, being the advisory resolution accepting the approach of the executive composition as more fully described in the Cisco's circular. May I now have a motion for the adoption of such resolution? On Matier de Remuneration, the IMMAM de Haute de laixons, the Alcressee de Creed on a circular. Would someone second the motion? I will now call for a vote on the motion before the meeting. Would all voting delegates please enter their votes in Lumi? We will now ask for the transfer agent to complete and confirm the results. In the meantime, I'd ask the shareholders take a moment to read the forward looking statement on the corporate presentation that we are going to be going through in a few minutes. Dear shareholders, I am pleased to announce all resolutions submitted at this meeting have been duly passed. We thank you for your continued confidence. So we'll now move to the presentation of the 2020 update on the company that's on there that you will find on the website. For an update. Set presentation, et ce tu selicitweb. So I'd ask you, it shows the Page number 10. It shows the forward looking statement and then we'll move to Page 11. So we'll start on Page 11. On record, the Le Fresoix generate policy activity exploited on the dividend through Montreal, the Saint Saint Exens Par Action. If we look at our overall revenue for the year from $127,000,000 up to $140,000,000 and our net profits have gone up to $91,600,000 for the year. 2019 was a pretty busy year as is 2020. I'm on Page 12 now. If you look at what happened in Q4, we did the Santana royalty with Mineralamos in Mexico, the Pine Point royalty of 1.5 French San Francisco Metals in the Northwest Territories. Bralorne 1.2 percent royalty with Talisker in Central British Columbia. We completed the acquisition of Barkerville Gold Mines. We also had significant changes in our management team with Sandeep Singh joining us to take on the presidency January 1. Frederic Ruel has joined us and taken on the role of CFO. Fred has been with us as Controller for many years, so pretty step forward transition. Ian Farmer has been promoted to Corporate Development. He has been with us for 5 years. So congratulations to Fred and Ian for moving up. And Benoit Brunet has most recently joined us after his tenure at the Caisse du Pou to take on the role of business strategy for the company. It brings a lot of interesting ideas to the company. And I think that our planning and our refreshment of the management team as we go forward into the next market is complete and we have the right people in the right places to take this company to the next level. Q3 saw us the first gold pour at the Eagle Mine in the Yukon. Congratulations to John McConnell and the Victoria Mine team and the Eagle Mine team for having completed the construction of the Yukon's largest gold mine and getting it into production. We also cleaned up some of our outstanding assets such as the sale of the Predium offtake agreement, the Reynard credit bed, Montes Blancos stream enhancement and a strategic investment with Sable Resources in Q2. We saw $175,000,000 share buyback, which mostly completes the Orion Mine Finance reacquisition of their share block back into treasury. And we also saw the Silverstream closed on Falco Resources, which we think is going to be a significant asset in the future. Congratulations to Falco Resources on their feasibility work that they've completed and their ongoing efforts to make one of the Abertivi's new long life assets as they come forward through the process there. Page 13, a review of the COVID-nineteen impact. Obviously, here in Quebec, it's been a challenge for everybody during the pandemic. We saw the government shut down all of the mines and take a pretty stiff action, but it looks like things are coming right and most of the mines are going back into production or back already back in production with Canadian Malartic leading the charge. So that will have an impact on us in the second quarter. But most of those mines are either back up and running now or on their way to back up and running. As you can see, a few initiatives from our side. We've shut down our access to our office and we will be coming back online in a very orderly manner. We've also obviously taken everybody home to the Internet position and we've tried to be a solid member of our community by committing to donating hand sanitizer, volunteer work. And in the bottom right hand side, we see one of our geologists who has taken on the role of 3 d printing for visors for protection. And we've also donated more than $60,000 in fundraising to the Moisson Royal, which is Montreal's Canada's largest food bank. We continue to support that effort as we go through these troubled times. Page 14, a little bit of our of things that have gone on. We closed an $85,000,000 financing with Investement Quebec to bolster the balance sheet of the Cisco on March 30, very timely, given the conditions of the market at the time. We also did another financing with Taseko, one of our top partners on their Gibraltar mine to increase the return on our Silverstream. So that's a very good move in terms of an asset that we already know and like and are a good partner with our friends at Taseko. Page 15 shows the evolution of the gold price, which has been quite spectacular and we're at a 7 year high today as I talk to you at the US1753 dollars and about CAD23.79 dollars So gold price continues to reflect the current risk that the market perceives as added debt goes into a lot of the currencies and currency driven risk based on COVID-nineteen costs and dilution that's being taken into these currencies continues to bolster the gold price as people look for safe haven assets. In terms of where we see the gold price right now, we're quite happy at the current gold price. However, a lot of predictions are that gold could hit $17.50 to $19.50 between now and the end of the year and stay there. So that continues to bode well for the Osisko shareholders. On to Page 16, just to highlight the quality portfolio, one of the best asset bases in the space. Cash margins currently because most of our portfolio is actually royalties instead of streams running at the highest in the sector at 91%. And on a consensus NPV, Cisco is running significantly low political risk with the dominance being in Canadian assets, giving us the 86 percent by geography as we continue to go forward. And of course, partnered with Agnico, Humana and Newmont, quality operators with long life assets in safe jurisdictions has been the theme of Osisko since the get go. Onto Page 17, the highest dividend in our sector paying 1.5% yield right now and also the biggest opportunity for investment is we trade at 1 of the lowest multiples of NAV, which given us a yield. So we see significant amount of value in the market right now that for shareholders that thought maybe they missed it. Cisco looks like it's set should be set to catch up on these multiples as we go through the rest of the year and on a risk off strategy as we manage the assets in the portfolio. A very high trading liquidity of $18,500,000 per day. The balance sheet is in fantastic shape with over $243,000,000 in cash, including $85,000,000 from Investanc Quebec and over $900,000,000 in total cash financial capability from our debt facility and our equity book. We also have very diversified shareholder base. So all in all, we've achieved a lot of things and now the pursuit of that will be to convert that into a premium share price throughout the other year the rest of the year. The way we do that is on Page 18. We've always had the same policies since 2014 that we would our core business was really the traditional investment in royalties and streams and last money in shovel ready projects like what happened with Eagle where the permits in the project were ready to go and we were able to put the last money in and then see a fairly short timeline from money in to return to the royalty. The higher octane portion of our portfolio investment strategy is in the early stage accelerator model where we incubate projects, companies and people together. The most successful, of course, has been Osisko Mining led by John Brzezinski that started in 2016 with an $8,000,000,000 market cap, significantly has raised $500,000,000 in capital, now trading at 1,200,000,000 dollars and continues to be one of the more spectacular discoveries of this cycle with over 5,000,000 ounces over 8 grams located in just west of La Belle sur Quivion in Quebec. In terms of things that we do, we've been able to get these projects early. So we've had royalties instead of streams and we've been able to have significantly better returns than most of the peer group in terms of people that have bought royalties on the open market in a competitive process being at the incubation level, we're able to achieve significantly better deals than that. We also have done the acquisition of Barkerville, which resulted in the Caribou District being acquired, which is an essentially a 2,000 square kilometer district that Osisko shareholders currently owned directly. We're looking to take some risk off that project as we go through now the care of the permitting process and the drill out phase and put that project into development as it gets closer to production. It is spectacular outcome outlining 83 kilometers of mineralized trend currently at 5,000,000 ounces of resource on about 6 kilometers of that trend and only drilled down to a depth of 3 50 meters. Mineralization has been consistently hit by drilling underneath that down to a depth of 900 meters, demonstrating significant upside for that deposit as we go into it. We're pretty excited about that one as it's relatively low CapEx and the charge is being led by North Spirit, our private equity group that is developing financing and project finance for that project. On to Page 19, the flagship assets in our company, obviously, Malartic is our flagship asset and we know it well. We found it, we drilled it, we built it, We put it into production and we sold it in 2014 to Agnico and Yamana. And it's genetically turned out to be one of the most significant and spectacular deposits in the world, currently ranked as the 10th largest gold mine in the world and continues to add with significant discoveries on the underground as it moves forward to the underground side of this. On Page 20, you can see the underground resource has been developing. We had touched on this in 2014 when we drilled the extensions of Odyssey, but since then the partnership and we congratulate them, has done a spectacular job of identifying the underground mineralization. That's over 10,000,000 ounces measured and indicated and inferred categories in the underground and sitting next to Canada's most lowest cost mill, 55,000 tonne a day mill operating on tariff L power here in Quebec at less than $0.04 a kilowatt hour. We maintain a 5% royalty over the bulk of the ground with a small portion of North Odyssey being at 3%. So this is an asset that has already been spectacular and it just got a whole lot better and we expect that hopefully that value will be reflected in the stock this year as people understand how important this is within the Osisko Group portfolio. Page 21, Canada's newest gold mine Eagle, we were the catalyst investor. We put up $98,000,000 to buy the royalty and subsequently another $70,000,000 of equity. The mine is now built. It continues to ramp up and it's looking forward to declare commercial production sometime over the next couple of quarters. Built in record time heap leach, so it's very simple line, 30,000 Sanadayo open pit heap leach in the Yukon, the oxide deposit and congratulations to Victoria and Mr. McConnell for an exceptional mine build. Eleonore, one of our premium assets, our royalty continues to increase there as more gold production comes out of it now operated by Newmont. Newmont's come in and with fresh eyes and is looking to push this mine to the next levels and it's one of the more impressive mines out there and we continue to see exploration upside around it, but really a beachhead into an entire new mining camp. Matos Blancos progressing well. We see good deliveries there. We were able to modify our stream. So excellent asset in a great jurisdiction. Windfall Lake, one of the stars of our portfolio. Congratulations to John and his team. Having recently closed an equity investment of $177,000,000 projects is essentially has all the equity financing it needs to go into production now. So it's a 5,000,000 ounce and growing resource sitting in Northern Quebec, fully financed and heading into the permitting cycle, one of the more exceptional outcomes of this gold cycle. Hermosa, great project. It continues to deliver. We've had an exceptional good investment with this project having made more than $34,000,000 net on the equity position when it was taken out by South 32. And we still own the royalty audit and they're putting it into production as we speak. The other asset that we talked about was Falco's Horned Vai project, 6,000,000 ounces in reserves alone, GEOs and feasibility is completed permitting underway. This will be one of the better underground mines ever built and it sits on a VMS deposit like LaRonde. We've got another kilometer of underground that hasn't been drilled. So quite a bit of upside in that one. Page 23 Caribou, so you get 4,400,000 ounces of underground resource and growing and significant amount of discoveries on the trend and just a spectacular upside play. We've looked at a PA study there of 185,000 ounces a year. But really the vision here is that we think there's multiple mines on this trend, the central processing facility, this will be one of the more important gold camps in the world by the time all the drilling is done. So we look forward to being the leader of the orchestra as we get forward on that and hopefully we'll find the right partners on that one over the summer. But we bought that project in September of last year when gold was about $2.50 an ounce less. So just the arbitrage on the gold price since the time that we bought it to now is a significant benefit to the Osisko Gold Royalty shareholders. Page 23, we've given you the names of some of the accelerator companies here that you can look through. It's really an incubation process that allows us to intervene and have technical and financial guidance on these assets in the early days and allows us as a Cisco Gold royalty shareholders to take advantage of a unique business model that I believe is far superior in the royalty and streaming space than anything else that's out there, because we're not in a competition process for who can spend the most to buy the least in a bank run audit process. So I think it's unique to us and we've really had significant returns. And if you look at the companies that we've been able to incubate, our Cisco Mining, dollars 1,200,000,000 of Cisco Metals, dollars about 70,000,000 Falco, dollars about $80,000,000 Talisko Resources, dollars about $80,000,000 Mineralis, dollars 200,000,000 Collectively, we've incubated over $2,000,000,000 worth of companies through the accelerator process as we went through this and we set the stage for what we believe are the only true exploration assets out there in a dominant way that's kept up and has also taken advantage of the use of flow through share financing here in Canada to keep the drills turning. And if we look back over the last 3 years, over 50% of the drills turning in Canada were turning on the Cisco Gold Royalties shareholders properties that the shareholders were not paying for the drilling, but there was over 1,200,000 meters of drilling executed on the lands that the royalty that the company holds benefit from. So I think the shareholders are getting a great service here Unlike in some of the other business models, we benefit from the flow through share basis like nobody else. And it's a bit of a very spectacular set of returns associated with those accelerator companies when we look at them in detail. In summary, on Page 25, our financial position, cash on hand at $158,000,000 plus undrawn credit facility at $243,000,000 investments of $255,000,000 and basic shares outstanding at $65,000,000 So over $407,000,000 of Firepower available to us plus our equity book sitting at 2 $55,000,000 a little more than that today. So just under $700,000,000 of liquidity available to the company at this point in time. So we continue to have a strong balance sheet and the ability to compete with the ability to execute large transactions of US500 $1,000,000 or better without too much problem in terms of deal structure. Page 26 goes to our ESG program. We've been ESG for a long time and we've been a primary leader, I think, here in Quebec and all along in terms of as an operating company back in the day. We're one of the group's first groups to have fully financed closing bonds. We've also participated a lot in our social programs in terms of educating and helping people and setting in motion assets around, for example, the Canadian Malartic, where we built a school for 425 children, 60 long term care facility rooms and an amphitheater use and we've created the 1st the Fondes sur de Malartic, a long term sustainable fund that finances social and cultural events that even after the mine would close that all these assets continue to go forward. So we think that as we go forward, we want to be a leader on ESG and we continue to set the stage to make sure that we are in front on all of these issues. In Page 27, we've gone through our environmental, social and governments listings here. I'd be happy to talk to anybody who wants to give me a call about what we're doing in detail. But we are very cognizant of it and we have the history to show you that we not only talk the walk, but we walk the talk. In terms of where we sit on Page 28 and then we're going to go to Q and A after that, A bit of a summary, high quality asset base, a lot of upside as we have a high growth portfolio and still a big opportunity for investors the fact that the market is a little bit lower valued on our stock than it should be. And I think that if investors do a little bit of work, they'll find out that there's a quite a bit of value gap to be closed here. So I encourage everybody to have a look at that. At this point in time, I will open it up for Q and A. Sorry, Ian, I don't see any questions here. So if there are no further questions, I'll thank everybody for their participation today. And I hope everybody stays safe and hopefully we can all get through this pandemic together and take advantage. All right. Thank you very much and all the best for all the investors with their work and thank you very much for your support.