Good morning, ladies and gentlemen, welcome to the Osisko Gold Royalties Q2 2018 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 please press star followed by the number one on your telephone keypad. Please note that this call is being recorded today, August 3rd, 2018, 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, and Mr. Bryan Coates, President of Osisko Gold Royalties. I would now like to turn the meeting over to our host for today's call, Mr. Sean Roosen.
[Non-English content]. We'll be using our PowerPoint that's listed on our website this morning. I'd like to welcome everybody to the second quarter financial results conference call, and thank you all for attending. The PowerPoint has a forward-looking statement page and disclaimer that I'd like to have everybody to refer to, as we will be looking at making some forward statements in this presentation. As we look forward to the rest of the year of 2018, the second quarter has been a very good quarter for Osisko, with over 20,500 GEOs earned, 89% increase since the second quarter of 2017.
Cash flows provided by operating activities at CAD 19.7 million, compared to CAD 14.1 million last year for the same quarter. Adjusted earnings of CAD 3.7 million, compared to CAD 7 million for last year, giving us CAD 0.02 per share of basic share. A repayment of CAD 51.8 million for our revolving credit facility. We also closed a couple of significant deals. 5% of our royalty on Victoria's Eagle project for CAD 98 million and the purchase of CAD 50 million worth of the equity for the company. We also secured a deal with Falco Resources with a senior secured silver stream facility up to 100% of the future silver produced from the Horne Property located in Rouyn-Noranda, which currently has a mineable reserve of over 6 million ounces gold equivalent. We also declared a quarterly dividend of CAD 0.05 per common share.
This is a continuation with our dividend policy, I believe bringing us to 16 quarters in a row. In terms of where we are for the first half of the year, this brings our deal total to CAD 330 million, of which CAD 99 million has been deployed in the first half of the year. A very busy year for us thus far. As we look at the gold equivalent ounces produced, we're on track for our guidance. I'm onto page four now. We're looking at 20,000 ounces for this quarter, setting the stage for us to achieve 40,542 ounces for the first half of this year, looking good for our guidance, which is between 77,500 and 82,500 for 2018. Production and guidance in GEO is on page five. We expect that the second half of the year should be steady production, with increases through 2019 and 2020.
Quite a bit of ramp up underway in different assets that we're involved in, we're on a pretty good, strong growth curve here. If we look at 2017, we had 58,932 ounces. We're already, for this year, looking at anywhere between 77,500 and 82,500. Pretty fast track growth in the royalties space. Page six includes a breakdown on asset by asset basis. Canadian Malartic still leading the charge with 9,000 ounces for the quarter. Éléonore at 1,660 in the gold side. On the silver side, Mantos at just under 1,600 gold equivalent ounces. Sasa coming in stronger than expected at 1,153. On the diamond side, we have Renard delivered about 2,900 ounces gold equivalent. In other, we had Sasa delivered about 600 ounces.
All in all, we remain highly exposed to gold and silver, with 15% of our GEOs this quarter coming from diamonds and only 3% from other metals. All in all, still very good exposure to silver and gold and silver. Financial performance, I'm going to hand it over to Elif from here to go take you through the financial performance for the quarter.
Thank you, Sean. As Sean mentioned, we had a very strong growth this year with the Orion transaction from last year. If you look at the revenues, our revenues went up by 39% versus the same period last year to reach CAD 32.9 million. If you look at the net cash flows from operating activities, they also went up by 40% to reach CAD 19.7 million for the quarter. This even after our interest payment of CAD 7.9 million, which covers the period from November 2017 to June 2018 on the CAD 300 million convertible debentures we capped actually at the end of June this quarter. I guess this also reflects the increase in our cash operating margin and our lower G&A this quarter compared to last year's same period.
If you look at the adjusted earnings, they stand at CAD 3.7 million this quarter compared to CAD 7.1 million last year. The main difference really between the two periods is the higher finance expenses by CAD 5.3 million, which is mainly for the CAD 300 million convertible debentures and strong credit facilities. If you look at the results on page eight, we had very strong operating results. As Sean mentioned, the yields are 20,560 ounces compared to 10,863 same period last year. This actually reflects a 59% increase also with the cash margin. In terms of the percentage right now, we are at 87%, which is still at a very high level, and this without taking into consideration the 1% of the cash margin we get from additional off-take agreement. If you look at our financial position, cash and cash equivalents stand at CAD 188.6 million.
This is after our debt payments that we've done this quarter over CAD 15 million, the payments that we've done on our Victoria transaction, and the convertible debentures of CAD 7 million that we closed for Falco. The debt stands at CAD 419.2 million, and this is on a net basis after accretion and unamortized transaction costs. Our investment stood at CAD 336 million, and this reflects the fair market value as of June 30, 2018. For us, I guess it was very important to show in terms of the credit facilities you see on page 10, our capacity. We showed the CAD 450 million that we have on revolving, and of that about CAD 100 million right now is drawn, but it still leaves us with an available CAD 350 million. I think we're going to continue reducing our debt facility as we generate cash flow from our operations.
If you look at our long-term debt on a gross basis, we've gone from almost CAD 500 million to about CAD 450 million this quarter after our payments, I think our goal is to continue reducing our debt position. Going on to page 11. During the quarter, we distributed another CAD 7.8 million in dividends, bringing the total to date since inception to about CAD 71 million. We declared another CAD 0.05 per share in dividends yesterday. With that, back to Sean.
Sure. Thanks, Elif. In terms of the transactions, the big transaction in the first half of the year has been the Eagle transaction from Victoria Gold for a 5% royalty, which will generate somewhere between 8,000-11,000 ounces per year of 100% margin gold for us. In fact, the project is under construction. We visited site here in July. It's going well. It is a heap leach operation and it's located with road access about 45 km north of Mayo in the Yukon. A very good jurisdiction. I think that we have a pretty good feel that things are moving fast there. Equipment's being delivered. We think that this project is on track to deliver gold in 2019, somewhere in the second half of the year as we go forward.
This is one that is pretty much in the here and now, moving well with very experienced management and EPCM contractors fully deployed on site. Horne 5 Silver Stream on page 13. We obviously know this project quite well. It's located Rouyn-Noranda in Quebec. 6 million ounces of mineable reserve at 2.37 grams. Looking to build a 15,000 ton-plus underground operation here. Feasibility was completed last year and currently in the IA and permitting process with our partners at Glencore. Good-looking numbers in terms of what we're seeing in terms of upside potential there as well. Strategic items have moved forward in the project. The site has been secured the school that we had to relocate will be handed over and exchanged sometime probably by the end of September as we move forward with that project, as you can see.
We think that that's going to be a long-term asset with quite a long mine life as well, located right here in Quebec. A very quality asset and a good exposure for us. The deal that we struck there is incremental deployment. We're not deploying 100% of the capital on day one. We're doing it on a milestone basis, which I think gives us a significant advantage as we move through these projects. Page 14, cash flow asset, strong North American focus. I won't go through them all here, but as we move through the year, a lot of these assets are in ramp up. Renard, Éléonore, Brucejack and Ambler are all ramp-up assets right now, and we're seeing good progress on a lot of them. We also have the Gibraltar Stream at Osisko over in British Columbia.
We also have a few other assets that are smaller pieces that have been moving well. Island Gold has been a strong performer, better than expected, with Alamos as the operator. We see that moving quite well. Cerro Moro and Mantos. Those are our top performers in South America at this point in time. We continue to see all of the assets come along. We have long life assets that are relatively young in their life cycle. This is a foundation for success for some time to come. Page 15, the near and medium term cash flow assets. Again, we won't go into all of them, but we have a 1% royalty on Hermosa, which just got purchased by South32. In the first process of selling to South32, that significantly advances that project.
Barkerville Gold Mines published a total resource of 3.7 million ounces, with 1.6 million ounces of it being measured and indicated in the second quarter. That's moving forward. Victoria, we've already covered. Falco, we've already covered. We also have a 2% royalty on the Upper Beaver project, which was consolidated when Agnico purchased the other 50% of it from our friends at [EMF]. Windfall Lake has been a strong performer with quite a strong discovery and ongoing discovery as we look forward to that one. Underground test mining is underway there, and we just talked about 1.6 km of ramp down to a vertical depth of just under 200 m already, moving forward on that one as well. Some of the other ones, obviously, we know pretty well. Odyssey North and South is at the Canadian Malartic mine site.
That is moving well and that's a stage for continued mine life at Canadian Malartic. Page 16, 104 assets in North America, nine in South America. A total of 136 assets spread out around the rest of the world, with most of our assets being North American made. As a summary, 137 royalties in total, five cornerstone assets, 19 of them in production, paying a dividend right now of in excess of 1.6%, dominantly precious metal focused in North America, looking forward to hitting our guidance for the year between CAD 77,500 and CAD 82,500. Our equity book stands at CAD 336 million. Our cash on hand is CAD 188.6 million. Our available credit at CAD 450 million, bringing our available capital for deployment over CAD 900 million in assets available for us to work with as we continue to build out this business.
We are very happy with the results thus far. This is year four for us. We just celebrated our fourth anniversary as a company in June of 2018. Pretty strong progress and we continue to see lots of opportunity for us. Having done over CAD 330 million already this year, it's already been a big year. We'll see where we go from here. On that note, I'd like to thank everybody for the call and open it up to questions.
At this time, I would like to remind everyone that in order to ask a question, please press the star followed by the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Dan Rollins with RBC Capital Markets. Go ahead. Your line is open.
Yep. Thanks very much. Sean, A couple questions from me, but just on the first one, can you confirm if in the 2018 guidance, on gold equivalent sales/production, how much is in there for Amulsar this year?
I don't believe we included anything in this year.
Okay, perfect. Then just more bigger picture, now that you've had sort of the Orion package in the fold for a few quarters, I know it's still pretty early given the long life nature of some of those assets, but which assets have sort of been performing better than expected and which ones have you been a little bit more disappointed in?
I don't think that there's too many surprises for us in the mining industry. We've been around a while. We knew we were purchasing a fairly young portfolio of ramp-up assets, nothing's really surprised us. Some things have disappointed us, we celebrate what goes well, we hope for the best for the rest. Sasa has been a good one. Seabee's been good. Stornoway's been performing relatively strongly for us. There's some issues to sort out at Stornoway, but it's one of our top performers in terms of gold equivalent ounces for us right now. I think that the evolution at Pretium, as you know, we always had that as a legacy. The company does want to buy that stream back, we've included that as just cash back. We haven't put that in our long-term forecast at this point in time.
They've been relatively strong last quarter, we continue to see good progress on the mine development there. Mantos has been quite strong, we continue to see good progress on that asset. It's not one that a lot of people know much about. It was previously an Anglo asset, but the Orion team has gone in there and really had very good success at evolving that asset. We're quite happy with both of those. We do too, with 2018 and 2019 were ramp-up years. We continue to have a patient hand and support where we can. Our goal is always to support these projects. We're experienced miners, we know that in the mining industry, there's always something to fix. That's our job, we're eyes wide open.
Okay, perfect. Then on the opportunity set, what are you seeing out there? Obviously, we've seen share prices pull back here for the precious metal space. Gold's come off, hovering just over CAD 1,200 now. Are you seeing more opportunities coming through the pipeline? If so, what's the competition for those opportunities look like? That's it for me. Thanks.
I think Victoria is a pretty good indicator of the stuff that we're seeing out there. I mean, fully permitted project in the Yukon, where we're able to team up with Caterpillar Finance, Orion, and put together a package to get that project fully financed. That's last money in, kind of best case scenario, where we like the jurisdiction, and a lot of the engineering and permitting issues are taken in hand. That's been a really good one for us. In an uptick market, that might have been a harder deal, the reality is there's not that many allocations of capital coming out of the equity space right now. We're pretty busy, and we're seeing quite good competition, mostly from private equity on the project finance side. On the exploration side and development side, there's less competition.
There's less people wanting to get involved in exploration assets. We're picking our partners extremely carefully on exploration, we are still doing some chip shots on assets that we have a strong belief system in on the exploration side. We're seeing quite a bit there. Those are smaller bets, they're not really things that they're going to have a short-term effect on, they do set the stage for the future. We're working short-term, medium-term, and long-term. It's a very good time to be a royalty and streaming company. We're still predominantly trying to focus on the Canadian and North American assets. We work pretty hard at that piece of business. That's kind of where we're hanging our hat right now.
Great. Thanks. Enjoy the long weekend.
Again, if you would like to ask a question, please press star, then the number 1 on your telephone keypad. Your next question, Comes from the line of Mike Jalonen with Bank of America. Go ahead, your line is open.
The win with Falco and the stream there, what would be the next incubator company you might get a stream on? Would that be Windfall? Just curious.
Mike, I don't like making forward statements, but I won't go that far. No deal's ever done till it's done. Obviously, providing capital to these projects that are moving forward, that have a near-term opportunity to attain production is goal one. We're seeing quite a few things out there that are starting to move. Permits are coming together. We're going to stay focused, as I say, trying to be dominantly Canadian, and dominantly in brownfield camps where we can, where we understand the game. I won't give you any specifics today.
Okay. Thank you.
Your next question comes from the line of Michael Cuggino with Macquarie. Go ahead. Your line is open.
Your line is open.
Thanks. If I'm not mistaken, it looks like the share buyback activity dropped off a little bit in the second quarter. Could you talk a little bit, I guess, about your thoughts on that, and maybe more broadly, how you look at the valuation versus your peers, versus the sector, and any commentary you might have around that?
Yeah. This quarter, we elected to really focus on the debt pay down through a big repay to debt. That was our priority for this quarter. We'll examine on a quarter-by-quarter basis. It is an ever-changing equity market, as we all know. We're trying to size up what's going on in the equity space, as are a lot of people. At the end of the day, we run a pretty good business based on cash flow and assets, and we'll deal with equity at the appropriate time. We're not committed to any particular strategy given the volatility of the market. If we see an opportunity where we feel that repurchase of shares is the appropriate step, we will act. If you know our history, we always have an NCIB in place with most of the companies we're involved in for special events.
Right now, I think we're sizing things up, and we'll see how we go. For us, we've been able to deploy capital into good projects, and we were able to pay back our CAD 51 million on our revolver. I think that was a pretty good act for the quarter.
Okay, great. Thanks, Sean. Appreciate it.
Your next question, Comes from the line of John Tumazos with John Tumazos Independent Research. Go ahead, your line is open.
Your line is open.
Congratulations and good morning. Thank you. If the gold price stays lousy or falls another CAD 100 and lots of good opportunities drop in your lap because the other small companies, gold companies, can't raise money, what are your plans to take advantage of those good opportunities, Sean?
As we said in the call, we have more than CAD 900 million of pre-board in our company right now. For Royalty and Streaming Companies, providing capital is our business. We try to do it at the bottom of the market. We're very active right now in terms of identifying opportunities. It's extremely busy times for us, and this is when Royalty and Streaming Companies do their work. We'll be there to provide capital and to provide support for companies that want to keep moving forward. As we know, these projects are longer term. The day-to-day gold price gets taken into effect, but at the end of the day, typically speaking, from discovery to permit and construction tends to be about six or seven years now. We take a slightly longer term view of the project cycle.
We try to deploy at the right time so that we earn a return for our shareholders. We had a very good time in 2015, which was our first big year for Osisko Gold Royalties. We did the Virginia deal. We continued to move forward. 2016, the second half, we saw markets strengthen. We didn't get too many deals done. We were able to build from the success of 2015 and the first half of 2016. We were able to incubate with Osisko Mining, Barkerville Gold, Falco Resources. We continue to stay on our accelerator strategy, John, and to be there not only to provide capital, but also to provide technical and financial support to the company, to get into the asset, because we don't really want to just own royalties and streams on things that don't get built.
We need these things to go into production. That's our focus, is we want to make sure that we're there for the whole cycle.
Thank you, Sean.
John, I just realized they didn't mention that you were very independent on that Gallup announcement, so I'll just clear that up for everybody.
Thank you, Sean.
There are no further questions at this time.
All right. Thank you, everybody, and have a good weekend. Thanks for taking time on a Friday to call in. Really appreciate that. Give us a call if any other questions come up. We're not on vacation.
Ladies and gentlemen, this concludes today's conference call. You may now disconnect.