Earnings Call: Q4 2019

Feb 20, 2020

Good morning, ladies and gentlemen, and welcome to the Osisko Gold Royalties Q4 and Year 2019 Results Conference Call. After the presentation, we will conduct a question and answer session. Please note that this call is being recorded today, February 2020, at 10 am Eastern Time. Today on the call, we have Mr. Sean Roosin, Chair of the Board of Directors and Chief Executive Officer of Osisko Gold Royalties Mr. Sandeep Singh, President of Osisko Gold Royalties and Ms. Elie Flevec, Chief Financial Officer and Vice President of Finance. I would like to now turn the meeting over to our host for today's call, Mr. Sean Rousin. Show. Another forward looking statement, we will be talking about the future. So I'd like everybody to observe that forward looking statement. And we are following the PowerPoint, which is on our website titled Q4 and Year End 2019 Results. 2019, big year for Osisko and lots of things going on within the portfolio and at the management level. Q4 started at the very good end of the year with over 20,000 GEOs earned in the 4th year Q4. And for a total of 17,006 GEOs earned into the 2019 period, which essentially met our guidance for 2019. Exceptional revenues of CAD38 point 9 million, obviously, a lot driven by gold price, with record revenues for the year of CAD140 1,000,000 compared to CAD127 1,000,000 in 2018. Net cash flows from operating activities at CAD17.2 million in the Q4, sorry, and cash flows for the year at CAD91.6 million compared to CAD82 million for 20 18. So all in all, a pretty solid operating year. However, we did incur some non cash write downs within the portfolio related to some of the acquisitions that we did in 2017 from our partner for Orion and also from the Virginia acquisition in 2015 related to Eleonore for the most part. And we've have a net loss based on non cash items of CAD155 1,000,000 in the 4th with the net loss of $230,000,000 to $4,000,000 for the year, reflecting the impairment of the stream and offtake interest that were taken on through the auditors' reports under our accounting process. Over the year. However, our continued guidance meets what we've set out as we move forward. Adjusted earnings right now for the 4th quarter is at $10,300,000 $41,100,000 for the entire year compared with $31,000,000 last year. 2019 also saw the evolution of our portfolio, a lot of things going on, both in our accelerator model and also in the asset base that we've created. We've created a pretty high torque growth portfolio over the last 5 years. As you know, we started out 2015. We created the new business model for royalty of streaming companies by introducing the accelerator model and some of the activities that we carry out in Q4 were almost all related to the accelerator companies with the purchase of the Santana royalty from Mineral Alamos in Mexico, the Pine Point royalty of 1.5% on the Cisco Metals, which is one of the most promising zinc projects in the world right now. We also have a 1 point 2% royalty on the Bralorne deposit in British Columbia being led by Callister. And we completed the acquisition of Barkerville Gold Mines in November of 2019. We also saw some of the investments from 2018 come to fruition with First Gold Port and the Eagle Mine owned by Virginia. And I would like to congratulate Virginia on having executed sorry, Victoria Gold, my bad. They're fighting to get that mine under construction and completed ahead of time. And we have a 5% top line royalty there, which I think is probably the most significant royalty that's been done in the last 24 months in the royalty and streaming space. And as they march forward, they were supposed to have 9 months a year of loading onto their pad. They've been able to work through this winter and achieved better than that. So we congratulate that team for the extreme effort that they put forward. And we look forward to seeing their results as they move through their commissioning year and head for commercial production, hopefully, sometime in the second or third quarter of this year. Last year in Q3, we also sold the premium offtake agreement, which created some confusion on our balance sheet as to how the accounting works. So that should clear up some of the misconceptions about our margins. We do have a 91 percent gross margin on our royalty and premium portfolio as we stand today. Other items that we worked through with the Renard credit bid on the acquisition, of the mine here in Quebec, the Renard mine with our partners from the Caisse Depot and West Ham, Quebec and Triple Flag. We also had exceptional results from our friends at Mendoza Blancos, run by our friends at Orion and Sable Resources with their strategic investments for 2% royalty on the portfolio of assets that they run between British Columbia, Mexico and Argentina. Q2, we did one of the biggest share purchase buybacks in the entire mining sector at $175,000,000 We repurchased about 8% of our outstanding shares, giving us a pretty big buyback and Orion's ownership of the company now sits between 5.2% to 5.4% of the outstanding equity. In Q1, we also closed the silver financing on the stream to the South O Horn 5 project, which is moving ahead quite nicely, has a long mine life of over 17 year and located in Rwanda, Duranda, Quebec, one of the biggest underground development projects left in North America with 6,100,000,000 ounces of gold equivalent resources and 9,100,000 ounces of overall resources remain a strategic asset that's undervalued within the Ancisco family of accelerator companies and things that we see as bringing value in the future. Over to Page 5, production of GEOs. As you can see, we've had pretty good growth in our portfolio since 2014 when we IPO ed this company, ending this year at 78,000 GEOs, equivalent with a 90% cash operating margin, quite a spectacular margin because most of our assets are actually royalties and obviously anchored by the big cornerstone asset of cable arnid, which continues to deliver value with the new resource having been published by Humana and Aimigo quite a big significance that we'll talk about later. And we see our market capital from CAD500 1,000,000 in the IPO to $2,100,000,000 which I think is exceptional given that we've bought back well and accepted $300,000,000 of our own stock over the last 5 years. The revenue breakdown, I'm going to pass it over to Elizabeth Eckhart, our CFO, and I want to congratulate Jolie on celebrating her 10th year with us, but she will be leaving us to pursue her own interests as we go forward. And I'd like to take this occasion to thank Liv on behalf of the Cisco management and shareholders for her contribution and creating not only Cisco ONE, but also what is now Cisco Gold Rockies, which we believe is a distinct business in the royalty and streaming space, and she has been key to the development of our financial plan and strategy throughout the last 5 years. Thank you so much, Sean. It's an amazing privilege and a lot of fun working with you in the past years. So going back to the presentation on Slide 6, as we mentioned, we had a very strong quarter in terms of revenue and cash margins. On slide 6, we see the breakdown of the revenues by type of interest. On our royalty and stream interest, we finished the year with a 90% cash margin. In 2019, we sold the Brucejack Mine offtake to Pretium for a gain of $7,600,000 and effectively reduced our low margin offtake instruments to just 1 as of today. On the next slide 7, revenues from royalties and streams increased by 10% to $140,100,000 compared to the last year, mainly due to the increase in streams as well as the addition of ounces from Eagle Gold Mine, which started at the end of last year and high metal prices. We also recognized record operating cash flow of CAD91,600,000 compared to CAD82,200,000 mainly reflecting the increased cash margins and elimination of capital share based payments. The slide on impairments. So we have to do some valuations and assessments during the year coming from the information that we received from the operators. In December, Lydian, the owner of the Amalfour project announced that it is applied to CCAA and this was considered an immediate indicator. The Italian assets to its recoverable value of US22.3 million dollars resulting impairment charge of US51.3 million dollars on Yamal Sur stream and off stage for the Q4 of 2019. But at Cisco's stream interest is secured and we're working closely with Lydian to be a part of the restructuring solution and protect our interests going forward. Also in February 2020, recently, updated mineral resources and resources decreasing the tangible amount by approximately 50%, which resulted in impairment of $27,200,000 $20,000,000 net of income taxes, bringing the recoverable value of the Alena royalty to $101,300,000 We've also incurred an impairment on Clalal project, a project which we had acquired with the Virginia mines acquisition 2015, basically on the fact that we no longer plan on putting further exploration and valuation expenditures into that project. So we brought down recoverable value to $10,000,000 Including these impairments, total impairments for the quarter stand at $148,600,000 $260,800,000 for the year. Next slide on financial performance, reflecting all of these non cash impairments and adjustments. Losses excluding the impairments to the $26,200,000 compared to earnings of $18,100,000 last year. Variance is really related to the loss on deemed disposal of Barkerville shares that we already held at the acquisition for $24,000,000 which is another non cash item. We have completed the acquisition of Barcelo during the quarter and the transaction has been recorded as an acquisition of assets. You will find details on the transaction and the purchase price allocation in the notes to our financial statements. And if you look at an adjusted earnings basis, you will see the nice increase compared to last year, 33% up year over year basis, mainly related to higher gross profit that we've seen during the year. So slide 10 basically just kind of a summary of the different production from different metals that we have received. You will see that the realized gold price this year compared to 2018 was at C19.45 dollars per ounce compared to 2018, 2017, which had a very positive capital result. And currently, as we speak, gold is actually trading at over $2,100 per ounce in Canadian. So with that, Sean, back to you. Thank you very much, Alist. Obviously, with the non cash losses in the statement, it's a little bit of a confusion here ending the quarter, given the way that the accounting is working here, but we've got first principles, which is we've made about $2,600,000 a week for the last 52 weeks in a row with the gross margin of 90 percent. So that's probably a line summary of what we should take away from previous presentation. As we look at Page 11, you can see obviously our cornerstone asset, Canadian Malartin, continues to deliver with over 33,000 ounces from the year and an overall contribution of 78,000 ounces with 68% coming from gold, 17% coming from silver, 13% from diamonds and 2% from other small metal groups. And we continue to be one of the more dominantly precious metals based assets in the partly in the space. Currently by market cap, we are the 4th largest precious metal company in the world with a dominant focus on Canadian brownfields with 65% of our asset producing assets location in Canada and as geopolitical issues continue to exasperate and create pressure on the rest of the world in terms of investability. We think that Osisko Gold Royalties and our focus on ESG in the past and in our current life sets the table for Osisko Gold Royal used to be one of the most investable companies in the precious metal space. If you look at our cornerstone asset listed on Page 12, over 670,000 ounces produced in 2019, midyear, I believe, 10th or 11th. Large coal mine in the world and by far the largest coal pressure producer here in Canada with one of the best margins. And we wanted to take this moment to congratulate our partners, Eman and Agnico for their exploration success at depth as we get further into it with 33,000 ounces delivered to us in Q4. If we look to Page 13, we have a little bit of a long section showing the way that the development has come off on Malartic as the partnership there has evolved. And we continue to see Malartic as being one of the most fantastic things that we've ever been involved with, with 8,000,000 ounces of historic production before we've got there and over 13,000,000 ounces booked when we were drilling there, 8.4 of it was in the open pit. And now we see a conglomerated resource here. It continues to grow with East Goldie, East Malartic and Odyssey having made major contributions to the ounces, indicated at 694,000 ounces, 5,100,000 ounces are inferred and then East Goldie is at another 2,700,000 ounces. Any of these would have been exceptional discoveries on their own with the fact that they're sitting next, which is the lowest cost operating mill in Canada, 55,000 tonne a day, same large mill that operates on tariff electricity from Hydro Quebec makes this an exceptional discovery and evolution. And our friends at Agnico have a significant amount of expertise in low grade underground development with their success at Goldie and their continued work at LaRonde. So we think that this is a generational asset that continues to deliver value to the Osisko Gold Royalty shareholders far into the future, well over and above of what we've seen in the past and add significant amount of mine life that has not really been included in our evaluation in the marketplace with a lot of the analysis that's been published. We look forward to seeing that come in this year as one of the big catalysts to drive future share prices here in the near to mid term as we see that project starting to evolve. Page 14, again, a little shout out to our friends at Victoria Gold for their contribution, of having evolved the Eagle Mine in the Yukon, now the largest gold mine in the Yukon and operating quite well and having gone through a fairly cold winter this year and having been executing the study last year during the winter, we're proud to be partnered with the Victorian team and celebrate their success. And we actually have a model of their first gold bar sitting in our office today. So that is quite an accomplishment to put Canada's most recent gold mine into production. In one of the toughest environments around, they're located 64.5 degrees latitude, which is just off the area circle. And they're on road and on time and on budget. In terms of things that we've done with our shareholder base, I think that the evolution of Osisko Gold Ross deals, if we look at it as an IPO of 2014, we acquired an exceptional outcome. If you look at Page 15, you'll see that we've between dividends and share purchases, we've returned CAD336 1,000,000 to shareholders in quite a short time, both through dividends and share buybacks. So we continue to be what we think is one of the leaders of returning capital to shareholders in this space and remain focused on the ability for us to generate opportunities that allow us to give significant return back to shareholders. We have created a business model that has higher torque than a lot of the vanilla envelope sort of royalty and streaming companies that are out there. We believe this is a superior model. And as we go forward, Obviously, today is a big day in terms of our accelerator model with our friends at Osisko Mining having put out their resource update. And we'd like to congratulate John Ryzenski and the Osisko Mining team at this point for having published their updated resource at Winfall Lane, one of the biggest exploration projects in the world right now with over 23 drills turning this morning and almost CAD500 1,000,000 invested in 1,000,000 meters of drilling for our American Express. That's over 3,000,000 feet of drilling that's been executed on this project in the last 4 years. John took on the task of this company at an $8,000,000 market cap in 2016 with Bob Weres and a few of the other founders of the Osisko Group and they now form out a process project world class standard with an inferred resource sitting at 3,940,000 ounces, average 8.4 grams and another 1,200,000 ounces I've indicated at 9.1 grams, making it one of the most significant discoveries in recent times here in Quebec, located just inside the footprint of the plant in Quebec. And it's also been announced by the Quebec government yesterday that there will be a power line for over $100,000,000 investment going into that project. So it's been a pretty big win for Chino Sisko Mining this week. And with directly John and all of the Sisko Mining people that have led that charge. It's been a very intense project. But it goes to character on the Cisco Group and the Cisco platform. We are a little bit tight here with some of our competitors in the space, but we're also delivering significantly higher returns with us having upgraded our royalty on that project by existing contractual rights that we earned at the conception of the company because we were there to incubate. So we've been delivering significantly better returns than most of the other well stream streaming deals that have been done in the space through the accelerator model. And these things are just coming into their fruition right now. So I think you should look forward to the global royalties accelerator model leading the charge in terms of innovation in the royalty and streaming space. We were there first and we carved this space out for our shareholders. And I think you're going to see the delivery of those goods as we go forward and on to the future. In terms of our balance sheet, dollars 4.80 million available on our credit line, dollars 108,000,000 of cash, net debt since the 3.49 million dollars Our investments in equity portfolios sits at 277,000,000 with 157,000,000 share and paying a quarterly dividend of $0.05 a share or $0.20 per year. In terms of our royalty interest, obviously, we have royalty streams and some offtakes. So the one thing that does fuel our results a bit is we have 100% margin on all of our royalties with 0 cost of gold, 60% on our streams. Our off takes, however, are smaller margin and they too kind of bias the way that the P and L sheet looks at times. So it's worth taking into consideration. It is a small part of our business, but those margins are small because basically a look back system where we have a time period to look back on those royalties realized sale price. But it's essentially the 0 risk money because we always look back and picked up the share price, the price that's the most favorable to us. On to Page 18, over 135 royalty streams, up from 7 out of 5 when we IPO the company in 2014. Canadian brownfield exposure, we're over 25,000 square kilometers of brownfield camps are covered by our royalty footprint, making us one of the biggest royalty footprints in the world in terms of number of cloggers that we cover. NPV sits at 76% in North America and our assets to 64% Canadian. We did record record cash flow this year at 91,000,000 dollars with $177,000,000 of cash on the balance sheet, dollars 108,000,000 of cash. We've got our balance sheet with $850,000,000 of firepower. And that leaves us at a stage where we can compete with the both the larger private equity groups and the larger royalty companies in terms of opportunities that we do see in the royalty and streaming space. And we can easily reach to do a $500,000,000 deal. 2019, fairly big change in how the succession planning at Osisko has worked out. With Sandeep Singh having joined us, Sandeep has taken over as President of Osisko. Sandeep is 40 years old, has been an investment banker close to us since 2000 essentially at the beginning, 2007, 2008 when he was at BMO, subsequently at Dundee and then as the founder of Max Capital, one of the most successful boutique advisory firms in the world And the mining space, he joins us to take up the hunt for the evolution as we evolve Francisco into the most investable revenue streaming company in the world with a dominating Canadian portfolio. We're looking to Sandeep to help us lead that fight. Frederic Ruel has moved up. He's worked for 5 years with Delisle, who's done a great job and putting us in a solid financial position. With the listing on the New York Stock Exchange in 2016, Elif was one of the first CFOs in Quebec to Toledo Mining Company, our resource company on the NYSE with us. Fred picks up where she left off and gives us great foundation with the team that she and Fred have put in place here in Montreal. We also have Ian Farmer, who stepped up the VP of Corporate now, who's been working with us and doing a lot of the hard work along the way. Ian has been with us for 5 years as well. So we're very happy to see him evolve to get to his space. A new addition to our team will be Benoit Brudet, who joins us. He has a CA from and was an honor there at PWC and subsequently went on to work at the KFC pole. He is joining us as a new VP to take on the challenges with Sandy and Ian and Fred as we move forward with the new model. And he has quite a bit of experience both with private equity and with ESG. So we're looking for Benoit to help lead us through that project and I'd like to congratulate Kevin Konan, who's sitting to my right on his new appointment as Director of Communications as we move forward. The team is refreshed and ready to go. And just before I go to Q and A, I'm going to pass it over to Sandeep for just a couple of words. A lot of you in the industry already know, I don't think we can surprise you too much. Sure. Thanks, Sean. I won't say too much other than I'm very pleased to be part of the team, also very pleased a number of the right pieces were already in the company and ready to take over from those that came before. And with the new additions, you mentioned Benoit and promotions internally, feel like we are set to take things to the next step in our next phases of growth. Thankfully as well, feel like there's a lot of value to unlock with our existing portfolio and that's going to be the key focus. Obviously, we'll continue to look for growth, but there's a lot of interesting things to do in house already. So excited about what comes next. All right. And on that note, we'll turn it over for questions. If anybody has anything else, but sorry, I provided my oversight. Before we pass over to questions, I'd like to mention that Murray John, a long standing member of the Resource and Mining Committee, previously of Dundee Wealth Management, as both a geological and mining engineer of some record with a lot of portfolio management experience under the Dundee. Had has joined us as a member of the Board. So congratulations and welcome to Murray John for joining the Board to fill out some of our space that has been created by some departures over the last couple of years by people who have either retired or moved on. So with that note, we'll go to our first question. Your first question comes from the line of Lawson Winder. Your line is now open. Hello, Sean and team. Thank you for taking my call. Just a question on the Canadian Martek royalty. 1 of the 2 partners in that partnership had commented on a call that they are in discussions with you guys on the economics of the underground. With respect to the royalty. I'm just curious what I mean to the extent that you can, how flexible you might be on those and what your current thoughts might be on those discussions? Thank you. Well, I believe the other discussions and the negotiations between the 3 parties of this asset should remain just that discussion of the negotiations. However, I will comment that at the current gold price, this project is just left out. And the anxiety, I believe, is being expressed has been around $1,000 to $1100 gold price. And we've seen some publication on that level. Obviously, life is a negotiation. Some of our friends have chosen to negotiate through the shareholder base and through the advisory base. That's their choice. So it's not the way we would do business. But we'll take that as we get it. We're really more interested in the information to come. We feel the deposit has been under drilled so far. We'd like to see a larger commitment from the partnership to executing a more significant drill program there, picking up the base. By context, we've drilled 1,000,000 meters in 5 years at Windfall and we've drilled 350,000 meters at Barkerville. And we would like to see our partnership at Canadian Malartic pick up the pace and intensify the drilling for us to make a financial decision on our most significant asset. Our shareholders need to know what that project represents. So we would go with the Sysco model, which is called FUEX, which stands for shop and drill. And then just maybe one more for me. How do you guys think about the dividend going forward? It would certainly see in the current gold prices, you would have the capacity to increase that. What are your thoughts? We always look at the dividend and obviously we're mostly fairly big shareholders ourselves, so it's close to our hearts. However, where we sit today, there's a lot of opportunity on our screen and we've been focusing off on share buybacks. So I think right now, at the current share price level, we probably focus more on share buybacks than the dividend increases as stock is extremely undervalued in the current marketplace. Great. Thank you. Your next question comes from the line of Don Blight from Paradigm Capital. Your line is now open. Thanks. Thanks guys. I missed the first few minutes of the call, so excuse me if any of these have already been addressed. But on Barkerville, do you have any estimate of how much you'll be spending in 2020 to continue advancing Caribou? Yes, Don. So where we stand right now, obviously, there's been significant success drill results. There is some pending updates both on the resource level and on some exploration discoveries that have been made both on the major trend and on the parallel trend. So that will be an update coming out under the title of North Spirit as we evolve that right now. And we're looking at a couple of different decision points, both based on the resource update in terms of further budget commitments as to how we move forward. However, we are intent and very proud of our Barkerville acquisition, and we believe that we're going to drive a lot of value on that project as we set the table for the North Spirit financing hopefully in the first half of this year. So stay tuned. There will be some updates coming. But in terms of budget commitments right now, we know we have some work to do. And some of that's going to be delivered some of that budget decision will be driven by permitting requirements and line of sight. As you know, there's some changes to the Canadian permitting process that are quite favorable to Barkerville and that from a federal level, we only need to work on a provincial permit right now as they've increased the test for federal level from 600 tons a day to 5000 tonnes a day. We had put a P and A at Barkerville at 4,000 tonnes a day. So we're looking at taking damage to some of the things that have occurred in our favor at Barkerville and to take into account the exploration success and expertise that we've gained and the knowledge of that of not only that portion of the project, but also the deep geological knowledge that's been gained in the last 18 months at that project. So as we get forward, we will come forward with a more precise budget. Okay. And with regards to taxes, can you give a sense of the tax pools and how long you think you can defer being into a cash taxable payable position? Well, I'll hand this question over to Aleve. She's the knower of all things tax. Yes. So in terms of our tax pool, actually, we're sitting in a very good position given that we've done quite a few investments in terms of the royalties that and with the base that we started off in 2014, we've built some pretty interesting tax pools. So we're not actually foreseeing to pay any cash taxes for the next quite 4 to 5 years actually. We're going to be paying withholding taxes from some of the international royalties there, but it's going to be limited to that. Our tax affected tax pools are at a pretty good level right now. Okay. And assuming you continue to invest in smaller rates, you expect that to sort of just keep moving forward? Exactly. Maybe I would just add a couple of comments on the tax pool for those who may not be that familiar with the Canadian charity flow through and flow through tax regime. As long as we invest in Canadian projects, especially here in Quebec, BC and Ontario, using flow through shares or charity flow through share investments into places like Canadian or into projects like Cisco Mining and also into Barkerville. Those investments as long as they're of an equity nature can be used to deduct from our royalty revenue. So it's a rather unique advantage that we have with our accelerator model that by investing in those equities, we can actually increase our tax equivalent pools They provide roughly a 22% advantage for us when we invest in those equities. It is unique to the Canadian companies. We have brownfield and big drill programs to do that. But our friend, Mr. Bzezinski, our friends at Pine Point, the Hornfly project, Barkerville and Victoria have done extremely well at taking advantage of that business and providing significant value to the Osisko shareholders. And especially if you look at Windfall Lake, there's been over $400,000,000 of flow through and carrying flow through raised to advance that project and nobody else in the world could have ever executed that drill program without that tax program and those push in orders have been a major benefactor for that. Excellent. Thanks very much. Your next question comes from the line of Kerry Smith from Haywood Securities. Your line is now open. Thanks, operator. Shah, I had a couple of questions. What is the rough timing now to complete the feasibility for Abarcadrill? And the second question was, what are you seeing on the diamond price trends? It seems like diamond pricing is improving, but I'm just wondering what you're seeing at Renard generally, if you're seeing any favorable trends there. Yes. We've seen an increase. I'll start with the diamonds first. We've seen an increase of between 5% and 7 percent sale on sales. There's a couple of contributing factors to that, obviously, supply demand story developing with the furniture of the Victor and Ontario and Argyle. And some of the diamond market has been changing as the millennials come more into the space. However, there has been some discussion about whether the coronavirus would affect the diamond prices as we move forward. But we do think that there's a supply and demand story that's pretty solid in the diamond space. And that was when we went forward with our partnerships with Triple Flag and the Gestapo and Investanc came back on the credit mix for Renard. That was one of the things we could take into consideration as a lot of people are quite bullish about diamonds, including some of the bigger groups like BHP and Rio Tinto have a big significant exploration commitment to the diamond space as we move forward. And just a general comment, in this pursuit of this world, there's a lot of wealth around. And the pursuit of purchasing genuine articles and luxury articles continues to grow as we've seen across the board with all the LVMH products with Tesla and especially in the gem space and also the appreciative gold and platinum and palladium. There's a lot of pursuit for valuable so called precious metals, precious stones as we go forward. I think that growth increases as the rarity goes up. And Canadian diamonds from an ESG standpoint are pretty popular as we speak to. Your other question in terms of Barkerville feasibility, we'll announce that once we finish up with the current drill program. That will be driven by the resource update and also some of the aspects that we're quite excited about in terms of the permitting opportunities November. We wanted to take the time to do a lot of this work. We've been pleasantly surprised by a lot of things that have gone on with that project, especially from the drilling side. Some of the things that we've identified within the mining process in terms of being able to use road headers, force orders and some of the new technology that we believe is going to drive Barkerville to be one of the more valuable projects. As you saw in the previous study calls for C310 million dollars about C225 million dollars of CapEx, about C185,000 ounces of your mine for 5 years. It uses about half of the existing resource. So on a CapEx intensity level, Barkerville still remains probably the most interesting project in the world right now in terms of being able to put almost 200,000 ounces of production on the table for US225 million dollars So that's the basis from where we start and then everything else from here on here is optimization. And we have quite a few drill plans on the go with a $12,000,000 exploration budget going on in exploration drilling on the go for that project. So some of those answers will be driven by those results. Okay. And the resource update would be when and when should we expect that? Well, the resource updates are a favorable thing these days. So I would guide you to somewhere in early Q or late Q3. Okay. Okay. That's helpful. Thank you. All right. And no further questions. I'll thank everybody for participating today. It's exciting times here at Sysco Gold Royalties with obviously big things happening at Cisco Mining, further success at the Barkerville program, advancements on the Horn 5 project and our friends at Victoria Gold heading into commercial production. And the gold price sitting at a 7 year high at US1615 dollars But I would remind everybody that it's at C21.37 dollars this morning, which is an all time high in Canadian dollars, it's at an all time high. Australian dollars, it's a great time to have a Canadian based portfolio, especially brownfield assets, where other people are spending their money to drill in our royalty lands as we speak. And we thank everybody for their participation. I look forward to the 2020 evolution as we think this is our time. We did create a very high growth portfolio over the last 5 years and now it's starting to mature and should start to drive and deliver results to shareholders as we evolve through the next phase of this company. Thank you very much. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.