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. 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, February 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 Ms. Elif Lévesque, 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 Roosen.
[Foreign language]
[Foreign language]
Also, in this presentation, there is now the forward-looking statement. We will be talking about the future, so I'd like everybody to observe that forward-looking statement. 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 as a very good end of the year with over 20,000 GEOs earned in the fourth quarter for a total of 78,006 GEOs earned into the 2019 period, which essentially met our guidance for 2019.
Exceptional revenues of CAD 38.9 million, obviously a lot driven by gold price, with record revenues for the year of CAD 140 million, compared to CAD 127 million in 2018. Net cash flows from operating activities at CAD 17.2 million in the fourth quarter, and cash flows for the year at CAD 91.6 million compared to CAD 82 million for 2018. 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, Orion, and also from the Virginia acquisition in 2015 related to Éléonore for the most part.
We have a net loss based on non-cash items of CAD 155 million in the fourth with the net loss of CAD 234 million for the year, reflecting the impairment of the stream and offtake interest that were taken on through the auditor's report 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 fourth quarter sit at CAD 10.3 million and CAD 41.1 million for the entire year, compared with CAD 31 million 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 potent growth portfolio over the last five years.
As those of you who know, we started out in 2015, we created the new business model for royalty and streaming companies by introducing the accelerator model. Some of the activities that we carried out in Q4 were almost all related to the accelerator companies with the purchase of the Santana royalty from Minera Alamos in Mexico, the Pine Point royalty of 1.5% by the Osisko Metals, which is one of the most promising zinc projects in the world right now. We also have a 1.2% royalty on the Graylord deposit in British Columbia being led by Talisker. 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 poured at the Eagle Gold Mine owned by Victoria Gold.
We'd like to congratulate Virginia on having executed their fight to get that mine under construction and completed ahead of time. 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. As they march forward, they were supposed to have nine months this year of loading onto their pad. They've been able to work through this winter and achieve better than that. 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 Pretium off-take agreement, which created some confusion on our balance sheet as to how the accounting works. That should clear up some of those misconceptions about our margins. We do run a 91% gross margin on our royalty and streaming portfolio as we stand today. Other items that we worked through were the Renard credit bid on the acquisition of the mine here in Québec, the Renard Mine, with our partners from the Caisse de dépôt and Investissement Québec, and Triple Flag. We also had exceptional results from our friends at Mantos Blancos, run by our friends at Orion. Sable Resources, we made a strategic investment for a 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 CAD 175 million, which purchased about 8% of our outstanding shares, giving us a pretty big buyback. Orion's ownership in the company now sits between 5.2%-5.4% of the outstanding equity. In Q1, we also closed the silver financing on the stream to the Southold Part V project, which is moving ahead quite nicely. It has a long mine life of over 17 years and located in Rouyn-Noranda, Quebec, one of the biggest underground development projects left in North America with 6.1 million ounces of gold equivalent resources and 9.1 million ounces of overall resources. It remains a strategic asset that's undervalued within the Osisko family of accelerator companies and things that we see as bringing value in the future. Over to Page five, production of GEOs.
As you can see, we've had pretty good growth in our portfolio since 2014 when we IPO'd 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 Canadian Malartic, which continues to deliver value with the new resource having been published by Yamana and Agnico of quite a big significance that we'll talk about later. We've seen our market cap go from CAD 500 million at the IPO to CAD 2.1 billion, which I think is exceptional given that we've bought back well in excess of CAD 300 million of our own stock over the last five years.
The revenue breakdown, I'm going to pass it over to Elif Lévesque, our CFO. I want to congratulate Elif on celebrating her 10th year with us, but she will be leaving us to pursue her own interests as we go forward. I'd like to take this occasion to thank Elif on behalf of the Osisko management and shareholders for her contribution in creating not only Osisko One, but also what is now Osisko Gold Royalties, which we believe is a distinct business in the royalty and streaming space. Elif.
Thank you so much, Sean. It's been an amazing privilege and a lot of fun working with you the past years. Going back to the presentation on Slide six, as you mentioned, we had a very strong quarter in terms of revenues and cash margins. On Slide six, we see the breakdown of the revenues by type of interest. On our royalty and stream interests, we finished the year with a 90% cash margin. In 2019, we sold the Brucejack Mine off-take to Pretium for a gain of CAD 7.6 million, and effectively reduced our low margin off-take instruments to just one as of today.
On the next Slide seven, revenues from royalties and streams increased by 10% to CAD 140.1 million 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 at CAD 91.6 million compared to CAD 82.2 million, mainly reflecting the increased cash margins and elimination of capital share-based payments. The slide on the impairments that we had 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 Amulsar project, announced that it had applied to CCAA, and this was considered an impairment indicator. We devalued the asset to its recoverable value of $22.3 million U.S., resulting impairment charge of $51.3 million U.S.
on the Amulsar stream and off-take for the fourth quarter of 2019. Osisko's stream interest is secured, and we're working closely with Lydian to be a part of their restructuring solution and protect our interests going forward. Also, in February 2020, recently, Newmont, the operator of the Éléonore mine, announced updated mineral reserves and resources decreasing the total amount by approximately 50%, which resulted in impairment of CAD 27.2 million and CAD 20 million net of income taxes, bringing the recoverable value of the Éléonore royalty to CAD 101.3 million. We've also incurred an impairment on Coulon project, big project, which we had acquired with the Virginia Mines acquisition in 2015, basically on the fact that we no longer plan on putting further exploration evaluation expenditures into that project. We brought down recoverable value to CAD 10 million.
Including these impairments, total impairments for the quarter stand at CAD 148.6 and CAD 260.8 for the year. Next slide on financial performance, reflecting all of these non-cash impairments and adjustments. Losses excluding the impairments to CAD 26.2 million, compared to earnings of CAD 18.1 million last year. Variance is really related to the loss on deemed disposal of Barkerville Gold Mines shares that we already held at the acquisition for CAD 24 million, which is another non-cash item. We have completed the acquisition of Barkerville Gold Mines 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. If you look at on 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.
Slide 10, basically just 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 CAD 1,945 per ounce compared to CAD 1,817, which had a very positive half on results. Currently as we speak, gold is actually trading at over CAD 2,100 per ounce. With that, Sean, back to you.
Thank you very much, Elif. With the non-cash losses in the statement, it's a little bit of a confusing year-end and quarter given the way that the accounting has worked here. When we get back to the first principles, which is we've made about CAD 2.6 million a week for the last 52 weeks in a row. With a gross margin of 90%, that's probably my summary of what we should take away from today's presentation. If we look at Page 11, you can see obviously our cornerstone asset, Canadian Malartic, 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. We continue to be one of the more dominantly precious metals-based assets in the space.
Currently, by market cap, we are the fourth largest precious metal and gold mining company in the world. With a dominant focus on Canadian brownfields, with 65% of our producing assets located in Canada. As geopolitical issues continue to exacerbate 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 Royalties to be one of the most investable companies in the precious metal space. If you look at our cornerstone asset, this is on Page 12. Over 670,000 ounces produced in 2019, making it, I believe, the 10th or 11th largest gold mine in the world, and by far the largest gold producer here in Canada with one of the best margins.
We wanted to take this moment to congratulate our partners, Agnico, for their exploration success at Deep as we get further into it, with 33,000 ounces delivered to us in Q4. If we look at Page 13, we have a bit of a long section showing the way that the development has come off on Malartic as the partnership there has evolved. We continue to see Malartic as being one of the most fantastic things that we've ever been involved with. With 8 million ounces of historic production before we even got there, and over 13 million ounces booked when we were drilling there, 8.4 of it was in the open pit. Now we see a conglomerated resource here that continues to grow with East Gouldie, East Malartic, and Odyssey having made major contributions to the ounces: measured indicated at 694,000 ounces, 5.1 million ounces inferred.
East Gouldie has added another 2.7 million ounces. Any of these would have been exceptional discoveries on their own, but the fact that they're sitting next to the lowest cost operating mill in Canada, a 55,000 ton a day, same large mill that operates on tariff electricity from Hydro-Québec, makes this an exceptional discovery and evolution. Our friends at Agnico have a significant amount of expertise in low-grade underground development with their success at Goldex and their continued work at LaRonde. We think that this is a generational asset that continues to deliver value to the Osisko Gold Royalties shareholders far into the future, well over and above of what we've seen in the past. Adds a significant amount of mine life that has not really been included in our valuation 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 share prices here in the near midterms, 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 Gold 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 construction last year during the winter. Very proud to be partnered with the Victoria team and celebrate their success, and we actually have a model of their first gold bar sitting in our office today. 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 at 64.5 degrees latitude, which is just off the Arctic 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 Royalties, as we look at it as an IPO from 2014, has been quite an exceptional outcome. If you look at Page 15, you'll see that between dividends and share purchases, we've returned CAD 336 million to shareholders in quite a short time, both through dividends and share buybacks. We continue to be what we think is one of the leaders of returning capital to shareholders in this space. We remain focused on the ability for us generating 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 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. We'd like to congratulate John Burzynski and the Osisko Mining team at this point for having published their updated resource at Windfall Lake, one of the biggest exploration projects in the world right now, with over 23 drills turning this morning and almost CAD 500 million invested and 1 million meters of drilling. For our American friends, that's over 3 million feet of drilling has been executed on this project in the last four years.
John took on the task of this company at a CAD 8 million market cap in 2016 with Robert Wares and a few of the other founders of the Osisko Group, and they now form a process project to world-class standards with an inferred resource sitting at 3.94 million ounces averaging 8.4 g, and another 1.2 million ounces of indicated at 9.1 g, making it one of the most significant discoveries in recent times here in Québec. Located just inside the footprint of the Plan Nord in Québec. There's also been an announcement by the Québec government yesterday that there will be a power line for over CAD 100 million investment going into that project. It's been a pretty big win for Osisko Mining this week, and I would congratulate John and all of the Osisko Mining people that have led that charge. It's been a very intense project.
It goes to character on the Osisko Group and the Osisko platform. We are a little bit spikier than some of our competitors in the space, but we're also delivering significantly higher returns without having upgraded our royalty on that project by the existing contractual rights that we earned at the conception of the company because we were there and incubated. We've been delivering significantly better returns than most of the other royalty and streaming deals that have been done in the space through the accelerator model, and these things are just coming into their fruition right now. I think you should look forward to Osisko 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 out to the future. In terms of our balance sheet, CAD 480 million available in our credit line, CAD 108 million in cash. Net debt sits at CAD 349 million. Our investments in equity portfolios sits at CAD 277 million, with 157 million shares out, paying a quarterly dividend of CAD 0.05 a share or CAD 0.20 per year. In terms of our royalty interests, obviously, we have royalty streams and some offtakes. The one thing that does skew our results a bit is we have 100% margin on all of our royalties with zero cost gold, 68% on our streams.
Our offtakes, however, are smaller margin, and they do bias the way that the P&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 it's basically a look-back system, where we have a time period to look back on those royalties and realize sale price. It's essentially zero-risk money because we always look back and pick the share price that's the most favorable to us. On to Page 18, over 135 royalties and streams up from five when we IPO'd the company in 2014. Canadian brownfield exposure where over 25,000 sq km 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 kilometer that we cover.
NPV sits at 76% in North America, and our assets sit at 64%. We did record cash flow this year at CAD 91 million. CAD 277 million of cash on the balance sheet, CAD 108 million of cash. It leaves our balance sheet with CAD 850 million of firepower, and that leaves us in a stage where we can compete with 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. We can easily reach to do a $500 million U.S. dollar deal. 2019, a 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.
He's actually at the beginning of 2007, 2008, when he was at BMO, subsequently at Dundee, and then as a founder of Maxit Capital, one of the most successful boutique advisory firms in the world in the mining space. He joins us to take up the hunt for the evolution as we evolve Osisko into the most investable royalty and streaming company in the world with a dominated Canadian portfolio. We're looking to Sandeep to help us lead that fight. Frédéric Ruel, who's moved up. He's worked for five years with Elif, who's done a great job in 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 Québec to lead a mining company, a resource company, 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 Iain Farmer, who has stepped up to VP of corporate dev, who's been working with us and doing a lot of the hard work along the way. Iain's been with us for five years as well, we're very happy to see him evolve into his space. A new addition to our team will be Benoit Brunet, who joins us. He is a CA from an auditor at PwC, subsequently went on to work at the Caisse de dépôt . He is joining us as our new VP to take on the challenges with Sandeep and Iain and Fred as we move forward with the new model. He has plenty of experience, both with private equity and with ESG.
We're looking for Benoit to help lead us through that project. I'd like to congratulate Kevin Conan, 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. Just before I go to Q&A, I'm going to pass it over to Sandeep for a couple of words. A lot of you in the industry already know him, so I don't think he has to 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 that a number of the right pieces were already in the company and ready to take over from those that came before. With the new additions, you mentioned Benoit, and some 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. Excited about what comes next.
All right. On that note, we'll turn it over for questions if anybody has anything else. Sorry, my oversight. Before we pass over to questions, I would like to mention that Murray John, long-standing member of the resource and mining community, previously of Dundee Wealth Management, is both a geological and mining engineer of some record with a lot of portfolio management experience under the Dundee hat, has joined us as a member of the board. 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've either retired or moved on. With that note, we'll go to our first question.
As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound or hash key. Please stand by while we compile the Q&A roster. 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 Malartic royalty. One of the two 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, 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 discussions and the negotiations between the three parties of this asset should remain just that, discussions and negotiations. However, I will comment that at the current gold price, this project is a slam dunk, and the anxiety I believe is being expressed has been around the $1,000-$1,100 gold price. 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 some through the advisory base. That's their choice to do so. It's not the way we would do business. 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, and we'd like to see a larger commitment from the partnership executing a more significant drill program there, picking up the pace.
By context, we've drilled 1 million meters in five years at Windfall, and we've drilled 350,000 meters at Barkerville. We would like to see our partnership at Canadian 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. We would go with the Osisko model, which is called SUAD, which stands for Shut Up And Drill.
Thank you for that perspective. Just maybe one more from me. How do you guys think about the dividend going forward? It would certainly seem the current gold prices, you would have the capacity to increase that, but what are your thoughts? Thanks.
We always look at the dividend, 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 a lot on share buybacks. I think right now, at the current share price level, we probably focus more on share buybacks than dividend increases, as the stock is extremely undervalued in the current marketplace.
Great. Thank you.
Your next question comes from the line of Don Blyth 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. On Barkerville, do you have any estimate of how much you'll be spending in 2020 to continue advancing Cariboo?
Yeah, Don, where we stand right now, obviously there's been significant success on 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. 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. 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. Stay tuned. There will be some updates coming.
In terms of budget commitments right now, we know we have some work to do, and some of that budget decision will be driven by permitting requirements and line of sight. You know, there's been some changes to the Canadian permitting process that are quite favorable to Barkerville, in that, from a federal level, we only need to work on a provincial permit right now. They've increased the test for federal level from 600x a day to 5,000 x a day. We had put a pit at Barkerville at 4,000 x a day.
We're looking at taking advantage of 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 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. As we move forward, we will come forth with a more precise budget.
Okay. 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?
Sure. I'll hand this question over to Elif. She's the knower of all things tax.
Sure. In terms of our taxable, actually, we're sitting in a very good position, given that we've done quite a few investments in terms of the royalties that actually, 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, close to 45 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. Assuming you continue to invest in similar rates-
Yes
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 Québec, B.C., and Ontario, using flow-through shares or charity flow-through share investments into places like Canadian Malartic or into projects like Osisko Mining, and also into Barkerville. Those investments, as long as they are of an equity nature, can be used to deduct from our royalty revenue. It is a rather unique advantage that we have with our accelerator model, that by investing in those equities, we can actually increase our tax available pools. It provides roughly a 22% advantage for us when we invest in those equities. It is unique to the Canadian companies. We have brownfield program and big drill programs to do that.
Our friend, Mr. Burzynski, and our friends at Pine Point, the Horne 5 project, Barkerville, and Victoria have done extremely well at taking advantage of that business and providing significant value to the Osisko shareholders. Especially if you look at Windfall Lake, there's been over CAD 400 million of flow through and charity flow-through raised to advance that project, and nobody else in the world could have ever executed that drill program without that tax program. The shareholders have been a major benefactor from 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. Sean, I had a couple of questions. What is the rough timing now to complete the feasibility for Barkerville? 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.
Yeah, we have seen an increase. I'll start with the diamonds first. We've seen an increase of between 5% and 7% sale on sale. There's a couple of contributing factors to that. Obviously, supply and demand story developing with the closure of the Victor in Ontario and Argyle. 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. 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 Caisse de dépôt and Investissement Québec on the credit bid for Renard.
That was one of the things we did take into consideration, as a lot of people are quite bullish about diamonds, including some of the bigger groups like BHP and Rio Tinto having made significant exploration commitments to the diamond space as we move forward. Just a general comment that in this pursuit, this world, there's a lot of wealth around. 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 appreciation of 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. Canadian diamonds from an ESG standpoint are pretty popular as we speak.
Your other question in terms of Barkerville feasibility. We'll announce that once we finish up with the current drill program. That'll be driven by the resource update and also some of the aspects that we're quite excited about in terms of the permitting opportunities that we have there. We feel that in terms of where we wanted to be with North Spirit, we closed the acquisition in 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 roadheaders, ore sorters, 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, the previous study called for CAD 310 million, or $225 million of CapEx to build 185,000 ounces a year mine for five years. It uses about half of the existing resource. 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 $225 million U.S. That's the basis from where we start, everything else from here on in is optimization. We have quite a few drill plans on the go with a CAD 12 million exploration budget going into it and exploration drilling on the go for that project. Some of those answers will be driven by those results.
Okay. The resource update would be when then? When should we expect that?
Well, the resource updates are a fickle thing these days, so I would guide you to somewhere in early Q2 or late Q3.
Okay. That's helpful. Thank you.
All right. If there's no further questions, I will thank everybody for participating today. It is exciting times here at Osisko Gold Royalties with obviously big things happening at Osisko Mining, further success at the Barkerville program, advancements on the Horne 5 project, and our friends at Victoria Gold heading into commercial production. The gold price is sitting at a seven-year high of $1,615 US. I would remind everybody that it is at CAD 2,137 this morning, which is an all-time high in the Canadian dollar system, an all-time high in Australian dollars. It is a great time to have a Canadian-based portfolio, especially brownfield assets where other people are spending their money to drill on our royalty land as we speak. We thank everybody for their participation and look forward to the 2020 evolution as we think this is our time.
We did create a very high-growth portfolio over the last five years. 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.