Good morning, ladies and gentlemen, and welcome to the Osisko Gold Royalties Q1 2020 results conference call. After the presentation, we will conduct a question-and-answer session. If you would like to ask a question, please pick up your receiver and press star, followed by the number one on your telephone keypad. Please note that this call is being recorded. Today, May 13th, 2020, at 10:00 A.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. Mr. Sandeep Singh, President of Osisko Gold Royalties, and Mr. Frédéric Ruel, Chief Financial Officer and Vice President, Finance. [Non-English content]
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[Non-English content] Welcome to the Q1 reporting call for Osisko Gold Royalties, everybody. Thank you for taking your time this morning. Pretty good quarter because we've had obviously some challenge in the second quarter with everybody else with the COVID-19 crisis. I want to start on page three, and I would defer everybody to look and read the forward-looking statement as we will be making some forward-looking statements throughout this presentation.
This presentation is found on our website under Osisko Gold Royalties for first quarter results for 2020. I'll start on page three with the highlights from Q1 of 2020. We had GEOs, gold equivalent ounces, of 18,159 ounces, creating a revenue from royalties and streams of CAD 37.8 million, and cash flow from operating activities of CAD 23.8 million, with a non-cash net loss of CAD 13.3 million, mostly relating to the impairment of CAD 26.3 million, of which CAD 19.3 million was to the Renard diamond stream net of taxes. We had adjusted earnings of CAD 7.5 million or CAD 0.05 per basic share. Also due to the pandemic, we've withdrawn the 2020 production guidance as many of our associate companies and projects that we are invested in have also withdrawn theirs.
We will come back to guidance as our partners continue to update their guidance as we get further into the year and this pandemic crisis becomes more evident as to what the effects are going to be mid to long term on the projects. Our cornerstone asset, the Canadian Malartic Mine, was affected by COVID-19, including a shutdown for care and maintenance on March 25th to April 15th. It is currently by ramping back up, and we look forward to seeing that mine back in full production.
I want to be specific on our cash operating margins net of some offtake agreements. We are operating at 91% gross royalties. There has been some misinformation in the market about what our royalties are, but we have a small offtake agreement left in our portfolio that does skew that a bit, but our real royalty margins are 91%.
Throughout the quarter, we also acquired just under 430,000 common shares through our normal course issuer bid process for an aggregate of CAD 3.9 million. The average price per share we purchased under the NCIB was at CAD 9.15 a share, with the stock currently trading about CAD 13.30. We also declared a dividend of CAD 0.05 per share. This is consistent with our dividend policy that's been in place since 2014. We continue to be one of the biggest dividend payers in the space on a yield basis at well over 1.5% on average. Subsequent to Q1, we had a financing non-brokered that we carry out with Investissement Québec. We would like to thank Investissement Québec for stepping forward.
We did a non-brokered premium to market deal for CAD 85 million to bring in a great cornerstone shareholder that now brings Investissement Québec to about north of 5.5% of the overall company and 6.2% on a fully diluted basis. We're very happy to have Investissement Québec as a cornerstone investor in the company.
In terms of other activity, we did increase our exposure to the Gibraltar mine by investing CAD 8.5 million to reduce the transfer price on a silver per ounce, down by CAD 2.75, so that we no longer have a transfer price there. It's really become more like a royalty. We also declared our dividend, as we said, of CAD 0.05 per share, which is payable on July 15th to shareholders who are on the record as of the close of June 30th, 2020. On page four, COVID-19 impact. I hope everybody's staying safe today.
Obviously, here in Quebec and in Montreal, we've had our challenges. We want to thank all of our frontline and first responders and doctors and nurses who've been working so hard to keep our community safe. As we advance through this crisis, we look to honor those people as this unfolds and evolves into what we hope will be a manageable situation shortly. The transition for us involved shutting down the day-to-day office here in Montreal.
Everybody's been equipped with printers and laptops and communication equipment that they need. We're fully active and we're working seamlessly from home. We will continue to keep non-essential office people at home throughout the crisis. We've limited our exposure as much as we can and doing everything we can to support those people who have to go to work or have to be in the public.
On the partner side, we have several mines. There was a Quebec-wide shutdown for mining, which has subsequently been lifted in part and hopefully in full soon. We'll see most of the Quebec mines go back to work. We'll have better guidance as those regulations evolve and people are able to go back to some of the remote fly-in/fly-out sites safely. One thing to note that for us in the mining industry, we didn't miss any business. It's a deferral of revenue. The resources are still in the ground. On the social front, we've done a fundraising with our employees where Osisko has matched up to CAD 50,000 for Moisson Montréal, one of Canada's largest food banks. We continue to rally for support for that great organization as we go forward.
A few of our employees, Guy Desharnais, as shown here in the photo, joined the revolution of 3D printing and is printing protective visors with a couple of printers on the go 24/7. Also, we're contributing to some other efforts on an ongoing basis as the crisis evolves. Page five is a summary of what we just covered. The CAD 85 million private placement really goes to bolster the balance sheet in a time of crisis. This CAD 85 million brings our cash balances up to about CAD 230 million on hand, that allows us some flexibility in these times.
Also on page five, you can see a bit of a summary on the Taseko offtake agreement. This is a great mine with a 17-year mine life located in British Columbia, not that far away from the Barkerville project, it continues to be a great mine.
It's operated for a long time. It is a primary copper producer, open pit of 85,000 ton per day mine that we think has a lot of potential. Taseko as a group has an awful lot of good projects, and we're very admirative of that management team's ability to operate that mine in the cost cycle that they have, and they continue to have robust operations even at these lower copper prices. On page six, I wanted to go through our assets, dominantly a gold exposure. We have the most amount of gold revenues of all the royalty and streaming companies in the space. We've shown you here the Q1 GEOs by asset base. Obviously, Canadian Malartic is still our biggest cornerstone shareholder, followed up by Éléonore, Seabee, and most recently, Eagle and Island .
We'll talk a little bit more about Eagle as we go on. Eagle is the Victoria Gold's Yukon mine, the latest gold mine to go into production, and they're enjoying significant success, having worked through the winter at 64.5 degrees latitude and delivered the project into production, and they're pursuing commercial production as we speak and had very good results yesterday, and congratulate the Victoria team on being able to continue operations throughout not only the cold winter but also through the COVID crisis. It's a very exceptional management team that's been able to bring that project to fruition in these difficult conditions.
We showed you our silver production, with Mantos being our most important silver asset, previously an Anglo American copper mine and operated by Orion now. Exceptional asset with long life. We continue to see a lot of these assets continue to grow.
We had a little bit of diamond exposure with about 2,000 GEOs coming from Renard. The diamond sector has been a little more challenging as we get into the piece. This too shall change. As we saw in 2008 and 2009, diamond prices did rally after a bit of a financial crisis at that time. Hopefully we'll see that happen in the diamond space as well.
I'd like to introduce you to Fréd Ruel, who is going to take us through pages seven through 11. Fréd has taken over the role as CFO as of January 1st. I'd like to congratulate Fréd on having had his first quarter, somewhat trial by fire. Fréd and his team have been able to give their reporting through and continue on even with the COVID-19 crisis, the challenges obviously in the accounting department being somewhat significant. Fréd, over to you, for page seven.
Thank you, Sean. Good morning, everyone. Strong quarter for Osisko in terms of revenues, cash margin, and operating cash flow. Despite the disruptions in activities for some of our main operators, the strong gold price more than offset the reduced deliveries at the end of March.
Revenues from royalties and streams reached CAD 37.8 million in Q1, up CAD 4.3 million compared to last year, an increase of 13%. Cash flows from operating activities were slightly lower by 1 million in Q1 of this year, but excluding the impact of the changes in non-cash working capital items, operating cash flows were CAD 27.9 million, compared to CAD 22.6 million in Q1 of last year, an increase of 23%. On page eight of the presentation, we show a breakdown of our cash margin for Q1. Cash margin on our royalties increased by CAD 2.3 million - CAD 25.6 million.
Cash margin on our streams also increased by CAD 2.3 million - CAD 8.8 million, resulting in a cash margin on our royalties and streams of 91% in Q1 of this year, compared to 89% in Q1 2019.
Our total cash margin reached CAD 35.3 million in Q1, including CAD 800,000 generated from our offtake agreement, an increase of CAD 4.7 million or 15% compared to last year. On page nine of the presentation, we present a summary of our earnings and adjusted earnings. We had a net loss of CAD 13.3 million in Q1 or CAD 0.09 per share, compared to a net loss of CAD 26.5 million in Q1 2019 or CAD 0.17 per share. Excluding impairment charges, net earnings would have been CAD 6 million in Q1 of this year compared to CAD 2.1 million last year. Adjusted earnings were CAD 7.5 million, CAD 0.05 per share, compared to CAD 5.8 million or CAD 0.04 per share in 2019.
On page 10 of the presentation, we have a summary of our results for Q1. GEOs from gold production were lower this year, partly due to the sale of the Brucejack offtake in Q3 2019 and the impact of COVID, but this was offset by a higher realized price on gold.
Our average gold price per ounce sold amounted to CAD 2,125, compared to CAD 1,731 in Q1 2019. The decrease in our total revenues from CAD 100 million - CAD 53 million was also due to the sale of the Brucejack offtake last year. Gross profit increased to CAD 21.6 million from CAD 18.2 million last year. On page 11, you will find a summary of our financial position. Our cash balance was CAD 158 million at the end of Q1 and CAD 243 million considering the CAD 85 million equity financing completed with Investissement Québec on April 1st.
Our debt amounted to CAD 423.5 million, which includes a drawdown of $50 million in March on our revolving credit facility as a cautionary measure. Including the CAD 100 million accordion available, our available credit on the facility was over CAD 400 million at the end of March. Our net debt position, including the Q1 financing, amounted to CAD 180 million. In addition, our equity investment portfolio was currently valued at over CAD 250 million. Back to you, Sean.
Thanks very much for that, Fréd. I think it's just worth highlighting that our net debt position is quite manageable at CAD 180 million. Our equity portfolio has been performing quite well, obviously, in these increased gold prices. All in all, things are going pretty well and a lot of liquidity and a lot of firepower on the balance sheet to work with in this interesting market times, as they say. On page 12, just a recap of our portfolio. Over 135 royalties and streams in precious metal offtakes acquired since we started this company in 2014 with one producing royalty and four non-producing royalties. We've gone pretty quick in terms of getting access to quality assets throughout the space, in a very competitive space. We've created the accelerator model, which is somewhat unique to us.
We're currently operating at the highest cash margins of anybody, in the royalty and streaming space at 91%, with an exceptionally low geopolitical risk with over 68% of our assets being in Canada, 86% here in North America by geography. I think it's a credit to our partners, Agnico Eagle, Yamana, and Newmont, who are top quality operators on the asset base that we are most exposed to. We'd like to do a shout-out to Agnico, Yamana, and Newmont in this time of crisis. We really appreciate the efforts that all those management teams have made to keep these assets in good stead throughout this challenge.
On to page 13. In terms of dividend yield, we're at the top of the quality of the investment cycle. If we're looking at this dividend yield of 1.5%, being more than all the other royalty and streaming companies in the space.
Therein lies the opportunity as we see it in the second line on a P/NAV trading multiples. We're trading at about one times NAV based on consensus. Therein lies the opportunity for investors today, is to look at that, and we feel that as we get further into the year and the asset base continues to strengthen, and also we should see some simple catalysts in the portfolio, such as the Canadian Malartic Underground resource that's evolving and also the quick evolution we're seeing on Barkerville, as that asset continues to strengthen and really show its quality in the portfolio.
We also have one of the highest liquidity ratios in the business, trading at CAD 18.5 million per day, which I think goes to the fact that this is an asset that the company is well followed, and hopefully that sets the stage for us to increase value as we meet these criteria that we've outlined in our catalysts for this year.
The strong balance sheet with over CAD 900 million in total financial capability and a positive net debt balance sheet sitting at well north of CAD 60 million. In terms of our shareholder base, we have a very diversified shareholder base with Caisse de dépôt sitting at around 12% and Investissement Québec sitting at 5.6% and some other very strong portfolio hands such as Sprott Investment Fund and some of the bigger, VanEck and Fidelity working to round out our top 10 shareholder list.
Our business model on page 14, obviously this is somewhat unique to us, and I think in this increased gold price, it obviously sets the stage for us to be pretty loud and proud about what was accomplished with our business model. We are a hybrid in that we invest about 75% traditionally in our core royalty and streaming business, which obviously we've seen that happen with the largest acquisition of recent times in that business was the royalty on the Victoria asset Eagle. We paid CAD 98 million for a 5% royalty, which is now Canada's most recent entrant into production.
In some of the earlier stage businesses that we've been involved with, obviously OSK is the most successful of the Osisko family accelerator companies to date, and we congratulate Osisko team and John on the fine job that they've done to really take Windfall to another level at a speed that's been breathtaking to watch over 1.2 million meters get drilled there, over 3.5 million feet drilled on that asset as we go through.
We also will talk about Cariboo a little bit later. North Spirit Discovery Group is our subsidiary that's looking to finance the evolution of the Cariboo assets as we go forward. That asset has gone up significantly in value since we purchased it last year when the gold price was mid CAD 1,400. Obviously with gold at CAD 1,700 now, the significant amount of value increase in that asset.
Over to page 15. We've seen solid growth in our GEOs since the beginning of the company in 2014, and we see that to continue for a long time to come. Our paid-for royalty growth portfolio allows us to get to 140,000 ounces per year, and that is things that are 100% financed and paid for already by the Osisko Gold shareholders. That would exclude things like the Horne 5 Silver stream where we still have some cash investment. That's just purely what's already been paid for as we go forward and we see these assets evolve.
I think it bodes well for us in the future. These are competitive marketplaces, but we've been able to create an organic pipeline that we believe is somewhat unique in the space in terms of not only being on significantly gold assets for the most part, as opposed to by-product from copper mines.
This is a portfolio that's dominantly Canadian as well. As we've seen with Canadian Malartic, which we can switch over to on page 16. The Canadian Malartic, when we sold the company in 2014, the amount of Agnico purchased it, and it's been one of the all-star assets in both those companies' portfolios. We've also seen the underground resource here essentially double what was there before, with over 10 million ounces having been identified in measured and indicated and inferred categories in this asset. We had drilled some of the stuff on the Odyssey zone during the 2014 spring, but they've taken it to a whole new level, and we congratulate the Agnico and Yamana team on the exploration success that they've generated here.
Obviously, there has been some discussion around this asset in terms of the significance of this, but it's not really priced into our stock right now. Obviously, at $1,700 + gold price, all these ounces are exceptional, and they're located near Canada's most efficient and lowest cost gold mill, the Canadian Malartic Mill, and we look forward to seeing this value unlocked as our partners, Agnico and Yamana, go further to develop that underground aspect. Page 17. Again, a quick photo of Victoria's new Eagle Mine located in the Yukon. It's the largest gold mine ever built in the Yukon, ramping up to an annual production of 220,000 ounces per year. As I said in the preamble, they were able to operate that mine throughout the winter.
It was an exceptionally cold winter this year, seeing temperatures of below - 58, they've been able to keep this mine running and is now starting to hit its stride. We really congratulate an extraordinary effort to keep that project on its go and wish them luck with the commissioning as they move forward here. Congratulations on the results this week for seeing significant amount of gold production from April. Éléonore was acquired when Newmont did the acquisition of Goldcorp. We welcome Newmont to our portfolio. Very happy to be partnered with Newmont. We have a long history with Newmont and really consider them to be an exceptional company with exceptional people. As we go forward, we look to see Newmont bring that mine back up and to push it aggressively as we move forward. We'd mentioned Mantos earlier.
There's 100% silver stream in the Antofagasta, Chile belt, another long-life mine and a great jurisdiction moving forward. On page 18, a couple of things have gone on at Windfall recently that were interesting from a science standpoint with the team there having drilled Canada's deepest diamond drill hole ever, just under 3,500 m.
Congratulations to Major Drilling and to the team at OSK for that. More exceptionally has been the 5 million ounces resource that was published within the drilling that's been done there and an additional 250,000 m of drilling planned for 2020 continues to be one of the most impressive drill outs in the current exploration and development world. I don't think there's any other site in the world right now that's operating with 20 core rigs. Congratulations to that team for having really moved things forward. We did increase our royalty there recently.
We now have a 2% - 3% royalty depending on which part of the deposit. Hermosa has continued to move forward. Exceptional polymetallic high-grade zinc deposit at 10.4% zinc grade, equivalent zinc grade, multi-decade life, really another exceptional discovery. South32 is moving that pre-feasibility is on track for the second half of 2020. We retain a 1% royalty on that project. Horne 5 under Falco Resources led by our very own Luc Lessard, currently at 6 million ounces of GEOs in reserve. Another 3 million ounces of reserves. This remains one of the largest underground bulk tonnage deposits that's in the development pipeline here in Canada and in North America.
With a full feasibility study and a reserve status here, there's a lot of work that's been done to complete the agreements with our partners there, and we look forward to getting that permitting underway in a significant way this year and early next year, hopefully, to have completed that cycle. It really is an exceptional asset, and it's a VMS deposit that goes down with another kilometer of undrilled potential at depth, and we see that as one of the big assets here in Quebec that will be generational. If we were to fast-forward 10 years from now, we would see probably Windfall and Falco's Horne 5 and Canadian Malartic Underground as the biggest assets here in Quebec. We are staying close to home. Quebec is our premium jurisdiction, and B.C. is our other go-to jurisdiction.
On page 19, I wanted to do a brief touchdown on the Cariboo project. As you can see here in the image, the underground workings from the B.C. vein, and you can see some of the clear cuts in the background. Work is ongoing on this project. We have in less than four kilometers of the known trend outlined 4.4 million ounces of underground resources in our PEA study that was published in September of last year. This company is currently 100% owned by Osisko Gold Royalties, and obviously, time has been our friend on the gold price, with the gold price having gone up significantly since we bought this project back in September.
We're evolving towards the permitting timeline on that with a couple of different things on the go, but we've set the stage to look at a + 4,000 ton a day operation, which would set the table for over 185,000 ounce a year in phase 1 development of this project. Make no mistake about it, this is a mining camp, not just a project, with over 83 km of mineralized trend identified in this project on north of a 2,000 sq km land package. This is one of the big projects that is out there, and we think that this is a generational asset. What we're hoping to see is a scaled investment.
One of the advantages of this project is it has existing infrastructure with a QR mill in place. We think that it can relatively simple ramp up to go to 4,000 times a day using ore sorter and flotation technology, coupled with the existing infrastructure. We have a pretty straightforward mine with relatively low CapEx from the beginning. We will be there with our royalty currently at 4%-5%. It's high times for permitting in Barkerville as we move forward towards the conclusion of that project description. The team is fully functional and pushing hard to get that done. We did spend about CAD 5 million worth of our budgets on exploration drilling there, which have yielded some significant forward motion on infill drilling for the deposit. That project continues to strengthen nicely as we move into the year.
We've concluded the transaction, and we did spend some money on transaction closure, and we've also invested about CAD 10 million between the transaction closure and pre-production environmental contact water management systems that'll set the stage for use during the production period as well. Page 20, high exposure to gold prices with us being at 81% gold exposure and mostly driven from pure gold mines, which is somewhat unique in the space. We're quite happy to be there, obviously during this gold price. On page 21, really a cycle through of our business plan. The optionality the accelerator model has brought to us, we've been able to incubate one or more accelerator companies with the Osisko Group on a per year basis since 2014.
Really the goal is to take highly talented exploration and development and mine building teams that put Canadian Malartic together and created CAD 4.3 billion of value in that company, of which shareholders made a profit of over CAD 3 billion. To take that team and to deploy them into other assets that can duplicate the success that we saw at Canadian Malartic, but hopefully to do it a bit more in parallel rather than one asset at a time. We listed for you here Osisko Mining, which we own a 16% equity ownership, and we generated a royalty there, a slight scale royalty of 2% - 3%. Osisko Metals, run by Bob Wares, and he currently runs the Pine Point project. We have a 1.5% royalty there. 18% equity ownership at Falco with the Horne 5 project that we talked about.
A new accelerator company that we've invested in, headed up by Terry Harbort, one of our exceptional exploration structural geologists and his team, Talisker Resources, currently working on the Bralorne project in central B.C. Minera Alamos, which has been moving well with the heap leach at Santana in Mexico. We see these early-stage opportunities really evolving and creating our own organic world in terms of doing deals earlier on, and then being there to help those projects with project financing as we get further into the value creation process of those projects as they move into production. Page 22, a brief summary of things. Just over 18,000 ounces GEOs earned in the quarter. Cash margins at 91%, the highest in the sector. Over CAD 23.8 million in terms of cash flow.
CAD 169 million of investments as at March 31st, 2020, and CAD 158 million of cash as of March 31st ongoing. Obviously, current cash balances enhance the upside since that. To simplify the story, this is a very good exposure to gold, pays a dividend while you're invested in gold with a significant amount of upside. With over 1 million meters having been drilled on the royalty lands that the Osisko Gold Royalties shareholders are already exposed to last year and the year before without having to invest any further money.
Our royalty lands are more important exploration-wise than most other things worldwide because of the flow-through share system here in Canada, which encourages exploration or R&D, if you will, which is usually the lifeblood of all value creation in every sector is research and development, and we consider exploration to be that R&D factor that differentiates us from other gold investments in the space. In terms of where we are right now, obviously, our hybrid business model has been a little less valued in the marketplace in the past, but we think that we're well geared for this market and certainly with the evolution of the accelerator assets within the project, we're seeing more and more value being ascribed to those through the analyst community.
We think that as we get further into this year, a lot of that value starts to unlock, and hopefully, we can turn the corner on the valuation process and see a higher share price for our supportive shareholders. On that note, I'd like to thank everybody for participating in the call and open it up to Q&A if I could.
As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster.[Non-English content] Your first question comes from the line of Kerry Smith of Haywood Securities. Please go ahead, your line is open.
Thanks, operator. Sean, a couple of things on Cariboo. Could you give me sort of your current thought process on the timing of the permitting process? Also bringing in a partner, what your expectation on timing is to have concluded that sort of that investment?
Yeah, George. Obviously, we've been in an uptick marketplace here, Barkerville has gotten an awful lot of attention as of late from various partners. We are working very hard with those partners to optimize the investment that the Osisko shareholders have made into this project. In terms of timeline on the permitting, we see we would have a construction release hopefully in 2022, probably later on. We have been moving well within the new framework that B.C. has outlined, we're quite happy with the way the process is going. Our First Nations partners have been very supportive as well. Most recently, prior to the COVID-19 crisis, we had the mine minister and major projects coordinator come and visit the site.
Obviously, we think that given the economic outcome of a lot of different industries right now, gold mining in the Cariboo, which is a brownfield site, is going to be a priority investment. We have the ability to create significant amount of jobs, both during the construction period with probably 700 - 800 jobs during construction, and then a full-time workforce of somewhere between 400 and 600, as we continue to ramp up and build out that project. From the partnership, we see some very high-quality partners that are interested in this project because of its scalability and because it is a camp-sized project.
Sean, is your target to then try and have a partner for that project by the end of this year, let's say? Is that a 2021 event?
I think we'll get a partner. We're in process right now, Kerry, obviously COVID-19 has created challenges for a lot of different people, so I'm hesitant to put timelines on things. I don't see why we wouldn't get a deal done in the current market conditions that we're in. B.C. has deemed mining as a necessary service, it has not been shut down, the ministry there continues to work, as do we. The team there has really moved things forward as we got going there. We don't really see anything that would inhibit us from getting this deal done, hopefully over the course of the summer, or certainly by the end of the year.
Okay, just on the permitting side, when would you file the documents with the regulators in, if you want to have the permitting done in 2022?
The process has already begun, Kerry, and we have submitted project descriptions last year. We're optimizing those on what's called IRTs, information request transfers. We are in the process now, and hopefully, we'll be going back and forth a bit more. We're in constant motion on the permit as we speak today. That process is engaged.
Okay. Okay, good. Thanks, Sean.
Thank you, Kerry.
Again, to ask a question, please press star one on your telephone. Your next question comes from the line of George Topping of Industrial Alliance. Please go ahead, your line is open.
Great, thank you. Everyone. Sean, on the CAD 10 million to be spent this year at Cariboo Gold, how much will be [infilling] expansion and how much is going to remediation?
Well, the budget right now is CAD 5 million for drilling. We'll be doing some tidy up infill as we've finished up with that geological model. Anywhere we've identified that we need the higher density of infill drilling, we'll go back and tidy that up.
We have made an investment into the contact water treatment facilities that are really for sort of pre-capitalizing the infrastructure that we need to go mining. In terms of remediation work, it's mostly being done in function of the B.C. vein development, but it won't be that much. The CAD 10 million is really to go to drilling as we go forward. We'll be a little bit opportunistic, George, as we see opportunity to do things that are going to de-risk the project and move us forward, and we can get the permits to do them. We may go and do that.
Also, we'll be somewhat subject to our financial partners' view of the project as well as we get further into it.
Right. For 2021, do you have a thought on how much you might spend there? Admitting it might change if you have another partner involved with their own thoughts.
Yeah, I think where we are on that, George, is that there's probably three answers. If we go it alone, we would probably be fairly conservative. The mid-tier is assuming that we're driving hard to do everything we can to facilitate that construction release ASAP. The third one is assuming that we want to get aggressive not only on that, but we also want to increase the drill out, that partnership that we would initiate a significant drill program in 2021. I'll come back to you a little bit later on in the year as we fill out those goals. We can assume that it's probably going to be a minimum of CAD 20 million-CAD 30 million, and then upwards from there, depending on how aggressive we get on the exploration and underground development side.
Got it. Just lastly, just switching over to diamonds. Obviously, with India being shut down, now it's coming back a little bit. Have you had any industry updates on where diamond markets, how they might recover from any of the commodity specialists?
Yes, we have. There's a couple different viewpoints. If you look back to the last financial crisis, obviously it didn't have the same ramifications of shutting down the diamond polishing centers in India as COVID-19 has. There is pent-up demand, and we're seeing that retailers in China who have opened back up have seen significant demand. First indications are, is that the month of April, was somewhere between 60%-80% of what the 2019 April numbers were. That demand did come back fairly strong. You've seen now shutdown, and/or shut-in of different mines in the space. There is a supply-demand scenario building. However, there will be a bit of an inventory clear-through as diamonds go back out into space.
We are optimistic that the diamond prices will respond like they did in 2008 and 2009, where with that pent-up demand coming back into space.
Right. Do you think Renard, would your budgets be maybe Q4 this year or thereabout for a restart?
It's going to be a bit speculative on my part, George, but obviously I certainly would hope that we can do that. The mine is on a dry shutdown right now as we monitor the situation. We'll review that fairly regularly with our partners as we get further into the piece. The mine is well groomed and well-built, and it was just starting to hit its stride when the diamond prices started to pull back. We are ready and waiting to put that mine back to work as soon as the time is right.
Right you are. Great. Thank you.
Thank you very much, George.
Your next question comes from the line of John Tumazos of Tumazos Independent. Please go ahead. Your line is open.
Hello, Sean. Congratulations on the progress on so many fronts.
Well, I appreciate that, John, and I hope you're keeping well and safe. I know you live in a place that's had its challenges as we have had here.
Yeah, I just keep looking at my computer and work in the garden, and I discovered the wholesale fish markets, the fishermen can't sell to restaurants, and there's great fishing around here. It isn't all in the Canadian North. There's a little bit good here. Could you update us, please, concerning how your investment criteria have changed as the markets have changed? First, have you raised your gold price basis in doing analyses, the CAD 400 or so that the spot price has gone up? Some of the majors have kept their criteria the same as a year or two ago. Second, have you raised your discount rate assumption because a couple of projects had charged this year or last year or the year before? Third, how much do you raise your discount rate outside of Canada?
Fourth, how do you prioritize between these dozens or so wonderful projects that all appear promising, where some of them don't have 1 million meters of drilling like Windfall and are at earlier stages?
Okay. I'll try and tackle the tasks laid out before me here, John. In terms of our gold price right now, we're probably somewhere around $1,400 U.S., which I think is bank consensus. We'll obviously run sensitivities based on the asset and what we think the ability of that asset is to perform at lower gold prices. I'm a big believer in the ratios between cutoffs and mining grade. That's probably a higher criteria for me on an individual basis. We do look at internal rate of returns. On discounts or rates, we tend to focus a lot on the geopolitical risk and the life of the mine. In terms of where we are in the world, obviously COVID-19 has changed the geopolitical dynamics in a lot of environments, in a lot of countries.
If you can't fly there or go there, it makes it much harder to monitor things. I do like my maple syrup and poutine. we've been sticking to Canada with Quebec and B.C. being our dominant jurisdictions that we've been deploying capital in. obviously where we've had the most success with the drill bit and in terms of the earlier stage accelerator companies, because of the flow-through share and charity flow-through share program here in Canada, and the low cost of drilling here, it's very much in our favor to continue to push on these brownfield stories that we've been able to focus on in Canada. The most recent one being the Bralorne asset. In terms of discount rates, we work with a 5% discount rate on premium assets.
We would increase that discount rate depending on the commodity, and also on jurisdiction, up to as much as 12% in some cases. In terms of allocating capital. Obviously, we're trying to prioritize whatever we think is going to have the most effect on short-term cash flow. In terms of increasing GEOs for our balance sheet, that is the dominant allocation of capital. We do take a long-term view on exceptional assets like Windfall and Horne 5 and Barkerville, where we feel that there's a bigger prize to fight for. Normally, the criteria would be nearest to production and nearest to GEOs. I don't know if I got all your questions, John, but I took a good run at it.
No, we like the emphasis on long life and near production in safe places like Canada with all the double dips on exploration incentives. Thank you.
Thank you, John.
Your next question comes from the line of Carey MacRury of Canaccord Genuity. Please go ahead, your line is open.
Good morning, Sean.
Morning, Carey .
Maybe another question on Barkerville. Is there a scenario, once you get to a construction decision, where you fund construction within Osisko Gold Royalties, or do you think it's more likely at that time to either sell the asset or put it in another vehicle?
We'll have to cross that bridge when we get there, I guess, Carey , but I just want to make sure everybody's clear. Osisko Gold Royalties is a royalties streaming company. Our main business is project finance. We've got 25% of it allocated to the incubation accelerator strategy. But once a project gets to shovel-ready, fully permitted, it falls back into our main strategy. If we see the numbers are right and we can continue to invest there and meet our criteria of being a dominantly royalty and streaming company, we're obviously going to take advantage of the projects we know the best, and things that we've been actively involved in the evolution of would fit in that criteria. We will be opportunistic for the Osisko Gold Royalties shareholders.
We want to make perfectly clear to everybody that the royalties and streaming business is here to stay. If we do go into any other mode, that's why we created North Spirit, was to have a platform that other capital could come and invest alongside of us in that space and to choose the proper partners to unlock the most amount of value in the most expedient manner.
With that, we think that that is a proper strategy in this market, and we see a lot of willing capital is coming into the space right now, and we're in a fortunate position where we control a lot of extremely high-quality assets, especially things that could be five million ounces or more that have the ability to go 300,000-500,000 ounces a year of production in the long run and have the Canadian moniker on them.
That's been our bread and butter. We think that we've really well-positioned ourselves to take advantage of that. With the Eagle Victoria's mine coming online and then the three other big Canadian projects that are sort of within our program, we have the most exposure to big Canadian assets of any group out there at this point in time. I think that we're well suited to take advantage of that for our shareholders.
Okay, great. Maybe on the longer-term guidance of the 140,000 ounces, if you can just remind us what the big component of that growth is relative to where we are today?
We would see, obviously, the Canadian Malartic Underground, Back Forty in Michigan. We also see Mantos expansions working out for us. We see Barkerville and Windfall following a development track. What we did not include in those 140,000 ounces , for example, is Falco with the silver stream because we haven't finished paying for it yet. We've only included the assets where 100% payment by the Osisko Gold Royalties shareholders on the asset has been made. We have quite a bit of organic growth in those assets.
Maybe one last one on Mantos. Can you comment on how the expansion's going there and when you expect to see an uptick in your ounces from Mantos?
As you know, it's a private company. It's very much on track right now. I think that the way that we see that asset is Orion is a very good operator with deep pockets, and we see them pushing hard to get that next expansion under control. The management team there is very focused and driving hard, and we think that by 2021, they should achieve their goal. It's really been an exceptional effort, and that asset is really showing its true colors and true quality.
Okay. Thank you very much.
Thanks very much, Carey.
There are no further questions at this time. I turn the call back over to the presenters.
Thank you very much. I'd just like to thank Sandeep Singh and Fréd, who both stepped up to the plate here in Q1 for a great effort, as well as the rest of the members of the team who've joined us, Mike Spencer on our international side, Iain Farmer, who's taken on the role of vice president of corporate development, and Benoit Brunet, who's joined us in the Montreal office on strategic planning. The team is fully functional, and I'm very happy with the way that the team has been able to come together, especially in this COVID-19 crisis, and achieve so much in such a short time. Thanks, everybody, and stay safe.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.