Good morning, ladies and gentlemen, and welcome to the Osisko Gold Royalties Conference Call, acquisition of Barkerville Gold Mines. 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, September 23rd, 2019, at 8:30 A.M. Eastern Time. Today on the call, we have Mr. Sean Roosen, Chair of the Board of Directors and CEO of Osisko Gold Royalties, Mr. Bryan Coates, President, Ms. Elif Lévesque, Chief Financial Officer and Vice President of Finance, and Mr. Chris Lodder, President and CEO of Barkerville Gold Mines. I would now like to turn the meeting over to our host for today's call, Mr. Sean Roosen.
[Non-English content]
[Non-English content]. Welcome to the conference call for the acquisition of Barkerville Gold Mines by Osisko Gold Royalties. We're going to be using a PowerPoint deck that's on our website this morning that's titled Acquisition of Barkerville Gold Mines. I'd like everybody to review the forward-looking statement pages on this presentation as we will be making several forward-looking statements throughout the presentation and review on the press release that we announced this morning. There are two main points that I want ever ybody to take away today from this call.
The first is the creation of North Spirit Discovery Group, which is the platform under which Barkerville will operate. This is the evolution of our accelerator model, whereby we've been incubating projects and companies, five of them throughout the last five years since we started Osisko. The accelerator model is a business model that we pioneered at Osisko Gold Royalties. We're now taking it to the next step. The basic points on North Spirit will be that we will set the platform in place to operate the companies at a project level as opposed to public company level.
North Spirit is designed along the model of private equity, in that we will hold, it's 100% owned by Osisko at this point in time, but we will be looking for third-party money, either through LP structure or third party, private equity groups or joint ventures, to provide capital at the asset level as we go forward. This is the natural evolution of our accelerator model, and it's an effort to purify the royalty model, and we see North Spirit taking on a significant role in the evolution of these assets while we separate the accelerator model from Osisko Gold Royalties, but maintain a direct drive from North Spirit into OR by holding equity within North Spirit Group.
At the end of the day, we expect that we will be somewhere between a 50% and 30% shareholder of North Spirit, if everything goes according to plan, and depending on how much capital we have to raise. Given the capital markets have not been very supportive of late-stage exploration and development projects, especially single asset companies lately, we see more access to capital at a lower cost for these projects through this model, and this is really the bridge to value for Osisko shareholders to access that capital at a lower cost within the accelerator model. The second piece of business, of course, is the acquisition of Barkerville Gold. This is a highly accretive transaction for Osisko Gold Royalties shareholders in terms of the basis, and it fits exactly where we always work.
Those of you familiar with our presentations at OR, we often go through how we allocate capital, with 25% of it going into early stage exploration stories and 75% of it going into stories that are evolving into permitting, through permitting, through construction, and into production, much like what we did with Victoria Gold. That's really where we see the biggest value gap. Often there's a value gap in that period, and it's not very exciting sometimes for public markets to be going through the permitting and construction process. We see that as a value gap where North Spirit deploys capital, is really in that value gap area of permitting and evolution of the asset.
That, as we said, we deploy 75% of our capital in that place, and we feel that Barkerville presents an opportunity for us to deploy capital at much higher returns in that space. North Spirit will also benefit not only from the Barkerville technical team, but also from the Osisko technical team. OR's unique ly situated to manage this business model, and that we have the technical key inside the company that can run North Spirit as an independent development group. That's where we see the value for our shareholders as we go ahead and we make Osisko Royalties a more pure royalty and streaming company, and North Spirit becomes a traditional development group. On page three of our presentation, just a basic backgrounder on Hold on a second, we have some noise here. I'll continue on. I hope everybody can hear me. There's some construction noise outside.
Page three is a summary of Osisko Royalties. We are a pure-leading royalty group with over 135 royalties and streams we own, host, and real estate directly. We have 76% of our NPV by asset base is in Canada, 64% of it started directly in Canada. About 40,000 net GEOs earned so far this year, gold equivalent ounces. Operating cash flow of the first half of the year was CAD 46.1 million, CAD 89.5 million in 2018. We currently pay a dividend of 1.2%. We are uniquely situated to evolve the accelerator model that we pioneered into this model, with over CAD 800 million of financial capability on our balance sheet.
As we get further into why we would want to acquire BGM into North Spirit by using stock from our company, Osisko Gold Royalties, the easy numbers are that we're issuing 9% of our stock to increase our underpinning NAV by 22% as we go through this. Page four is a demonstration of how this compares to our Canadian Malartic story. Both historic production and Canadian camps, with over 4 million ounces having been produced in the Cariboo camps historically. Significant existing infrastructure. The Cariboo project has the QR Mill, tailings ponds, and facilities, and actively on a small scale mining permit in place, and a significant amount of underground infrastructure and on-site infrastructure that we can leverage from. For those that have reviewed the PEA study, the existing infrastructure is quite important.
It's a value driver there, in that we are not building a new mill, cyanide facility, tailings pond, or waste dump to execute a 4,000-ton underground mine. That's a pretty unique opportunity. In terms of the exploration upside, this is the brownfield camp. We've gone back in, remodeled it, and Chris Lodder and his team have led the charge to unlock the value in this camp through the remodeling of the geology. Been extremely successful with over 90% hit rate of drill holes in the last 24 months that have been drilled using the geological model. That's extraordinary success when it comes to geological interpretation, because the camp has world-class potential with more than 2,000 square kilometers of permitted area in a world-class mining district in the Cariboo.
Historically, this mine and this area also hosts several proper mines, the Cariboo Gold Quartz Mine, Island Mountain Mine, all within this area. Historically, this is an area that's very used to mining and logging. It is very friendly towards resource sector operations. It's worth noting that Pretium in B.C. was permitted in under 20 months. It's been a jurisdiction that has been issuing mining permits as well. Of course, our Canadian mint leaf's on the bottom and a reason why we call North Spirit a discovery group of North Spirit is we believe that the Canadian jurisdiction and then we, the north, is the best place for Osisko Gold Royalties to invest its capital. We continue to be Canadian-focused as we go forward. Summary on page five. We're moving this project towards the PEA study goal of building 185,000 ounce a year gold mine.
We're purchasing the remaining 68% of the publicly held shares of Barkerville that we don't own. We own a little over 32% of the company as we come into this, plus we have an overriding 4% royalty, which increases the accretion to us as we acquire this, as that 4% royalty does have significant value to it. The PEA study was completed a few months ago, visions about CAD 310 million to build a 185,000 ounce a year mine with 11-year mine life. In the meantime, there is ongoing mining at Bonanza Ledge. The phase II of Bonanza Ledge should produce around 20,000 ounces a year before permitting is completed on the larger project, which is a 4,000-ton a day underground mine as defined by the PEA study. In the meantime, Chris and his team will continue on with significant amount of exploration.
We believe that this is the beginning of the story. This is a camp-sized play with over 67 km of long trend, a newly discovered parallel zone to that. We think that we're going to be here for a long time, and there should be multiple opportunities for Osisko to advance through project financing as this project advances. One of these things is not like the other. This project is large and is scalable, which is very important to us in that we can continue to deploy capital in a very disciplined manner as we evolve this project without having to swing for the fence on anything particularly big. Again, this is the first asset that we put into North Spirit, which is the replacement for the Osisko accelerator model.
We think it sets the table for a significant amount of accretion. Page six, we give a little bit more about what North Spirit Discovery Group is here for. We're here to do project financing, project engineering, and project management within that group. The technical team at Barkerville, Sean Masse and Maggie, and Chris, and the rest of the team will continue to work to develop the exploration of the on-site there with support from the Osisko Engineering Group in Montreal and also from the Project Finance Group that sits within OR, where we find the right set of partners to go together for the final mine finances as we get closer to that post-permit.
That group would look something like what we did, we believe, at Victoria, where we teamed up with our friends from Orion Mine Finance and Caterpillar Financial to issue a CAD 550 million mine finance project. That is the goal of North Spirit. There will be questions about whether we're trying to be a mining company or whether we're trying to be a royalty company. The answer is North Spirit is there for two to three years for sure, while we get through the permitting process. At which point in time, a value fork is created in terms of where the asset is. A fully permitted 185,000-ounce-a-year mine in Canada has a significant amount of value. It's a shovel-ready project, as does one that's an 185,000-ounce-a-year mine that's in production.
We'll have two to three years to make that decision, but we are not going mining on a large scale within North Spirit tomorrow morning. This is about working in the trough and that value gap period within the Lassonde curve as we move forward and setting the table to be in the best advantageous position to write the project financing at the appropriate time. We think that scalable projects are few and far between. This is a camp-sized play. For those of you who know us well, we consider ourselves to be brownfield specialists in terms of going into old mining camps, trying to find new deposits and bring those deposits to value in the same way we did at Canadian Malartic Mine, where we went in and we bought the project for $80,000.
We invested CAD 1 billion and it resulted in a mine, I think, for a little over CAD 4.1 billion, including the spin-out of Osisko Gold Royalties. We've been there. We've made money for shareholders doing this before, and we're doing nothing new here except what we've done in the past. We've set the table for some optionality about what happens to the project in two or three years as the permit comes into issue. This is a late-stage project in that it already has a significant amount of infrastructure and a resource. The overall resource is at 4.3 million ounces. The PEA studies have taken into consideration only 2.3 million of those ounces. A significant upside of what's already been drilled. Barkerville's a relatively short, shallow project, so lower CapEx because of that.
Again, I can't say this enough times, this is a great Canadian asset, which is what we like to do. We're particularly well-suited and purpose-built to take this project through the value process. Page seven is the transactional summary, where to acquire the Barkerville currently, because it's not currently owned by Osisko. Total value of that would be CAD 338 million, of which we already own 32%. The shareholders of Barkerville will own pro forma 9% of Osisko Gold Royalties, which has revenue, cash flow, and pays a dividend. Shareholders will receive a significant amount of access to liquidity. Their stake in OR will be worth a significant amount of money, and the drive from the value of Barkerville will be reflected in that share price, they will participate in the upside of Barkerville as we move this project on and forward through the value process.
Consideration right now is 0.0357 shares of Osisko per share of Barkerville, with an implied price of CAD 0.58 per Barkerville share, representing a 44% premium on the 20-day VWAP for both companies. Some deal protection has been put in place, the customary non-solicitation covenants and formal fiduciary. There's a CAD 9.8 million termination fee to Osisko if the transaction is not completed. Holders of 17.9% shareholders, including the board and management, have agreed to support this transaction and enter into a lock-up agreement. Another consideration is Barkerville shareholders' vote is 66 and 2/3 of the majority of the minority of the votes cast by shareholders. Customary regulatory approvals and closing conditions to apply.
Osisko is to provide a CAD 7 million bridge loan expandable to CAD 13 million by mutual consent throughout the process to maintain momentum on the project in terms of the underground development at [CGP] and the continued exploration on-site. Timing of this, the meeting materials will be mailed in October to shareholders. We'll have a meeting in November, and the closing is expected shortly thereafter. The benefits for the BGM shareholders are outlined on page eight. Chris, would you like to walk through that? Chris Lodder, CEO of Barkerville, will do this one.
Good morning, everybody. The benefits show Barkerville at a 44% premium to our 20-day VWAP. Everybody will have continued exposure to the project and will be part of the shareholders with Osisko Gold Royalties and the new North Spirit Discovery Group. Acceleration happens as well. We care about the project and continue with that. Part of speeding up is having access to capital through this transaction. The circuit of funding is there, but it's on balance sheet, and it's already a capital gain to Osisko Gold Royalties. We have the direct exposure to the increasing gold price environment we think we're all going into as Osisko's close in and equity value will be shown as that. This is for shares outstanding for your trading facility for those people who are moving in and out of the shares here.
Page nine is the benefits to an Osisko shareholder. I've touched on many of these points on the way through to get this far. I think a summary here is that this is a significant asset that will drive value and will represent 22% of the NAV underpinning the shareholder value of Osisko Gold Royalties after closing. It also sets the table for us to have significantly higher returns than typical streams and royalties have been delivering that have been bought from third parties on the marketplace lately. It also goes to our strengths and our unique toolbox to create value by working in what we call the trough, which is the period post exploration through permitting and construction into mine development. There are several value points at which point we can do that.
If you look back at the Victoria transaction, we did monetize the equity position and maintain the royalty here earlier this spring with our equity trade book with our friends at Orion Mine Finance and we maintained our royalty. We did a similar deal when we bought Arizona Mining. The equity was taken out by our friends at South32. We had a CAD 5 million equity investment. We netted CAD 34 million over and above our capital in, and we still own a 1% royalty. We are doing a deal that's fairly traditional for Osisko Royalties. The only difference this time is that we've acquired a public company to execute the transaction, OR Royalties to acquire this public company from the BGM shareholder. Next step for Cariboo, the timeline to expand to production is outlined on page 10. We've given you a bit of a history here.
We have significant involvement with this project since early 2016. We came into the project to try and understand it, and there have been several milestones within the evolution of our relationship with Barkerville. The most important thing has been the technical work that we have finally understood the project in around 2017. We became comfortable with the geological model. We set about checking the veracity of that model, and we drilled, I think, subsequently, Chris, 400,000 meters?
360,000 for the end of 2018.
We've put a significant amount of drilling in to confirm the model. We presented the resource update and the PEA study to the public markets. I think that we also executed several financings throughout that period. The ongoing continued demand for capital, I think has been the overhang on the share price. Today we're here to solve that problem in terms of being able to put this into the North Spirit Discovery Group with the financial backing of OR. If you look at the chart here, you see that we see a permit being issued sometime in 2021 with construction after that. At that period when the permit is issued will be a value point, and that will be where we issue the project financing.
We find a partner or we sell the asset on, depending on how the value of the market looks at that point in time. We do have a couple of years of work to get through here to unlock that value point. Chris, page 11. I'll let Chris take you through the Cariboo Gold Project overview and move forward here.
As most of you know from this occasion, we're in the South Central British Columbia, so we're not out in the middle of nowhere. This is an accessible area that's far enough away from any population centers in terms of a tourism area, anybody who's an industrial area, mining and forestry dominate the industry there. We can get things done. We've got all the services required for a mine there. The area that we control mineral-wise, it's the whole district. We have really no neighbors there. Something we all like within the group to allow us to do efficient long-term exploration. The big thing that we have here really is the overall resource potential and the ability to grow that, and that's directly with the ability to schedule process steps as we go forward.
It's a low CapEx project that initially produced around 185,000 ounces a year, not including the North Spirit project. The significant history here of mining has been initially two classic industries that underground gold mining of veins and replacement, which is now ongoing with ourselves. The mill that we have on the site is 1,000 tons a day. Presently permitted at 1,000 tons a day. That's been effectively put aside. We're looking at everything, we've got a U-cut that's underway. 1,200 tons a day, considering that we're not going to be using the crushing circuit since on the development, there is no crushing and concentrate taking place on site. All our stakeholders in the area are very supportive of our First Nations in the regional district.
We know well and for now, this has really been a good investment for the people in the area that the jobs that are created there are the quality jobs people want presently in British Columbia.
Thanks, Chris. Page 12 is a summary of the PEA study. I'll just hit the highlights high. NPV of CAD 402 million at CAD 1,325 gold. At current spot prices of CAD 1,500, the NPV would go to CAD 700 million. We would have a 20% return there, given that our all-in acquisition cost of this project and what we've already spent on it will be around CAD 380 million. It's a significant bump to us. At CAD 1,600 gold, it goes to CAD 800 million. At CAD 1,700 gold, the NPV goes up to CAD 930 million. Significant gearing to the higher gold price, while being a low-cost operator. Other aspects of this to consider is that we're long-hole on 30-meter benches, or levels, and we're at four and a half grams, and we're using an ore sorter to upgrade that material.
The simple takeaway is between the ore sorter and the flash concentration that we're doing on-site, we will be trucking 20-gram material to an existing mill that's fully permitted, with tailings ponds and cyanide licenses in places. All-in sustaining costs are just under $800 U.S. an ounce at $796. Even with the CapEx, the CapEx is the low on this. We put the CapEx number here to demonstrate that CAD 912 in all-in sustaining cost plus OpEx and CapEx. It's a remarkably low-cost mine on a brownfield mine site, with only CAD 310 million in terms of required capital. That'll generate about CAD 1.54 billion of revenue, and an IRR of 34.6% pre-tax, and 28% post-tax. 28.1% on the after-tax IRR.
This project makes sense on a lot of cases, for what we're trying to do, and when we compare the metrics of other opportunities in the royalty and streaming business, we feel that this is significantly superior to most of the deals that we've seen out there. In the meantime, the fact that we know well and that we've been executing the technical work on this project with our technical group and Chris' BGM team for the last year or so, it's not unknown to us, and we're very comfortable with the work that's been done here. We feel that there's significant upside, even in the resource, once we get underground. There are several mineralized zones that were excluded from the resource modeling program, that we can only really claim once we get back underground.
This project has elevation, so we're only using ramps to get in, and we're only dealing with the first 360 meters. The deposit has mineralization well below 1,000 meters, which we haven't drilled off yet to carry the cost associated with that. The ability that we've had to execute success in the shallow we're drilling. Page 15, just a summary of where we are. We have 104 royalties in the North American continent. The significant producing royalties are Éléonore, operated by Newmont. Renard, operated now by the Stornoway Mining Group. Our cornerstone asset is Canadian Malartic, generates about 35,000 ounces of zero-cost gold to us a year. Most recently, Yamana and Agnico have announced significant upside there, with about 4.4 million ounces of inferred being added to that project as it continues to deliver at depth.
The Mantos Blancos project we have in Chile, and the Eagle Gold Mine, which has just poured gold last week on September 17th. We're very happy and want to thank the Victoria Gold Corp. team and congratulate them on a job well done. They executed the construction of that mine in the Arctic and came out a month ahead of schedule. Our pouring gold at this point in time, that'll be the next add of production to the Osisko Gold Royalties family of royalties. We also have a couple other assets in different places. On page 16, you can see more of the detail, and I won't go into them on an individual basis, but we are expecting 85,000 to 95,000 gold equivalent ounces for 2019 and maintain an 89% margin, which is one of the highest margins in any business that I've ever heard of.
We continue to have a strong view of our asset base and that more exploration has been done on our land packages in Canada in the last 24 months that we could ask for. We're still a significant shareholder of the Eagle project owned by Osisko Mining, where John Burzynski and his team are executing another 200,000 meters of drilling, a significant high-grade zone there. We continue to be supportive of our current and Falco R esources with 6.1 million ounces of gold equivalent reserves in a feasibility study there that's also in the permitting process. Also, we continue to support other exploration and development stories such as the Osisko Metals project, which is operated with Pine Point Project in the Northwest Territories, and to some extent, some of our projects such as Nighthawk Gold Corp. that we've been long-term equity in as supporters of in the Northwest Territories.
Page 17 goes through the impact on the Osisko NPV by geography, that we see pro forma post-transaction. We see that the Canadian presence goes from 76% to 81%. We see on our construction level projects and then into production, we go from 55% to 44%. NPV by type, we'll be at 42%, with 27% being direct ownership, and a very small amount of offtake agreements with 27% of it's in streams. We continue to see good metrics on our royalty and streaming portfolio. This project meets all the tests for that. The summary is on page 18, I don't want to take up too much more time on this. I think that everybody's had a chance to hear what we have to say, I'd like to get some questions. Now if I could please.
Thank you. 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. [Non-English content] We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Shane Nagle from National Bank Financial. Please go ahead. [Non-English content]
Thanks, operator. Sean, just wondering if you could go into a bit more detail on the North Spirit, just how you see this. Obviously, it's in its infancy, but how conceptually you see this playing out over the next, say, three, four years. Is the intention to always keep a permitting, de-risking story? You've obviously got a high-quality team of mine developers in-house. Just wondering how far you're willing to take not just the Barkerville project, but how many other projects or entities you feel that unit will have the capacity for?
Well, I think, for today, obviously the business is handled at Barkerville. Depending on how we make out with this transaction, we'll set the stage for the next evolution. We need to look at the way the market is working here, where access to capital for these single asset development stories is coming from. We have a significant amount of experience through the Victoria transaction and some of the other deals we're involved in at present as to how the capital is moving, and we felt that we needed a platform to move to diversify participants on the asset level. We see private equity, as people are interested in private equity, having a significant amount of access to capital, we want to have a way for our Osisko Royalty shareholders to share in that value building process.
We felt that we were uniquely suited to take our accelerator model, and to move it towards that North Spirit model. In the first two years, what we see as the main value driver is getting permits on these projects and writing the project financing, which is really what royalty streaming companies traditionally do, is they participate in project finance for both mine construction and mine expansion. There are rare cases like we saw in 2016, where we see significant debt conversion into streams and royalties. Normally this is our normal business as a royalty company. We felt that we had several groups that were interested in coming to work with us, but they wanted to always participate at the asset level, as opposed to at the corporate level.
We think we set the stage for a vehicle that bridges that gap between total private equity and allows the Osisko Royalty shareholders to get some value from the work that's being done in the accelerator model as we unlock these things when we go through that trough. If you look at our normal marketing deck, we always show the Lassonde curve, and we say that 75% of our capital allocation is in the trough, which is that period from end of exploration through the PEA study, feasibility study, permitting, mine construction. We have the ability, as I said, there are two value points for North Spirit at the end of the day. One is when this permit's been accomplished, and the second is after the mine has been commissioned.
We'll see what the market looks like once we achieve the permitting, and we'll make a decision there. In terms of other possible projects for the North Spirit, I don't want to deal in hypotheticals today. We'll see what the reaction is and what the third-party participant level of capital available to us is once we've done this, and we'll make the call at that point.
Sean, just on that note, when you look at the value that you could unlock with this private equity vehicle, does that mean, in your view, are you going to see an end to the traditional accelerator model where you just take an equity stake? Obviously remaining supportive to Falco and the like that's in there already. Going forward, would the preference be to commit capital into this private vehicle to unlock value? Will we still see some of that traditional accelerator model equity positions being taken by Osisko Royalties?
Yeah, I think that we always set out, five years ago, we pioneered this model of the accelerator. I think that we will be participants, but we're going to set the stage to access capital at the lowest cost possible for this project. The reality is, the capital markets haven't had a lot of appreciation for single asset exploration development stories of late. We'll see what the appetite for capital is in North Spirit for further deals. We continue to incubate roughly one company per year within the group. We'll continue to do that, and we'll take the access to capital that's most appropriate for the situation.
That's great. Thanks, Sean.
Your next question comes from the line of Mike Jalonen from Bank of America. Please go ahead. [Non-English content]
Hi, Sean. I just had two questions, I guess. I am just thinking back in history when Franco and Euro-Nevada had Ken Snyder, and they picked up the project pretty well at the same stage as Barkerville now, nurtured it along. They were thinking of finding a joint venture partner to build the mine. They decided to go it alone and eventually got out of it with some frustration. I guess my question is, in two to three years, if you can't find a partner or sell the asset, because there's a lot of assets for sale right now and nobody's buying them, do you operate the mine at that point? What do you do? I got a second question after that one.
Well, Mike, as my grandmother said to me once, "No matter what I've got, my friends always want it." In this case, I don't think that a premium asset in Canada will go without an acquisition. We choose our projects carefully. Expandable mine life in Canada have always had a bid, especially, if they're up and operating. We have the ability to operate if we have to, if that's the right answer for our shareholders to get value. We think that the partnership along the way will resolve, along the way, get to that decision. We'll see where we get to. In terms of gold price, obviously, that backgrounds all of this. It's two to three years of work, before we have to make that decision, Mike. We're thinking long term on the gold price. We've assumed CAD 1,325 in all of our assumptions.
Obviously, at CAD 1,500 it's a very colored asset, and I'm pretty sure that once we get the permit, and we have a full understanding of the project, and we give some more success to the exploration bit, and we take some more risk off the project, we'll have some friends.
Okay. Well, thanks for that. Just a second question. I know you own 32%. That's a stopping block for anybody who want to make a break this up. I also noticed the average analyst price objective, they're all buys, is CAD 0.95. Will that encourage another buyer to come up and pay more, or it seems a bit of a You're basically doing a take under versus the market? I'm just wondering what your view there is.
Well, I guess the very worst scenario, Mike, is that if somebody does come over the top and resets the share price for Barkerville, and the value gets daylighted. We're market participants. We could be buyers or sellers, if we see value. If there is somebody that wants to do that, they'll have to drive value. We've taken a long-term view on the asset. We've been a participant essentially since the inception of the asset, in its current format. We have a view on value and, we're there to execute. Everybody else is going to have to do whatever it is they do.
Okay. Well, thank you, and good luck.
All right, Mike. Well, we shall prevail.
Your next question comes from the line of Andrew Kaip from BMO. Please go ahead. Your call's today.
Hi, Sean. I've got two questions as well. The first one is, it sounds to me like your strategy from a long-term perspective is to bring unloved development projects into your fold, nurture them, advance them, get them through key stage gating on the risk profile. Can you talk to us about what you think is going to take place with this new strategy? Is the intention to be there to assemble project financing? It sounds like it is. Does that desire then extend to own interest in the project as it's going into construction? Where do you think the monetization opportunity is for Osisko Gold Royalties shareholders? The second, just a little clarity on how you calculated the premium, would be useful as well.
Sure. Maybe I'll start with the first one, the second one first. We calculated the premium based on a 20-day VWAP on the share price of the BGM and of OR. We can send you that calculation if you like, but it's a pretty standard Bloomberg VWAP calculation.
I get that, but the justification for a 44%, it could have been a 60%. I'm just looking for some insight on how you came to that number.
Well, I think, we have to be respectful of the marketplace in terms of what's there. We feel the Barkerville shareholders have been along with us for a while now. If we look at fundamental NAV, there's still risk to be taken off the table, and there's still risk of dilution at the Barkerville level with further capital required. There's a weighted average there, and we feel that, in this market, a 40% premium compared to Barkerville 0% premium, is a significant bump in value here. Barkerville stock has traded in the CAD 0.35-CAD 0.45 range for a significant amount of time, and there's a pending cash call required on the project, at this point in time.
We're stepping in there not only to pay the premium but also to pick up the capital requirements over the next two or three years while we get this project to the next value point. I don't know if that answers your question or not, but we feel that right now, 40% premium in OR stock, which is highly liquid, has the ability to re-rate and essentially giving BGM shareholders just under 10% of OR, allows them to have drive from the project on a go-forward basis that they wouldn't have if we sold it to a larger company and got diluted into the asset base. Where we see it fundamental NAV and a reasonable premium considering the other option of a market-driven financing.
Okay, [thank you] .
Your next question comes from the line of Greg Barnes from TD Securities. Please go ahead.
Thank you. Sean, I just want to be clear on North Spirit. Is this going to be a permanent feature of Osisko Gold Royalties, or is this a vehicle that you intend to spin out into a separate company at some point?
It is set to be a spin-out and an independent business, Osisko Gold Royalties will maintain an equity position in it. As I said at the beginning, we kind of envision being a 30%-50% shareholder over the next couple of years as we evolve the accelerator model and as we see what the level of market participation is on asset-driven financings as we go through this process. As we all know, it's very hard for a single asset company to maintain financing without significant dilutions throughout this period. We feel that that's where the value gap is, and that's where we feel we can earn better returns on royalties and streams by participating in that area.
I would refer you to the [Orion] Mines transaction as a model, the Victoria model, where the project was shovel-ready, but nobody stepped up to the project financing. Ourselves and our partners at Orion put up the bulk of the money with Caterpillar doing a traditional financing of their mining fleet for CAD 60 million. The bulk of the partnership was Osisko Gold Royalties and Orion. In that case, we did harvest our equity and redeploy it with our friends at Orion earlier this year. We have had a disciplined approach to managing the equity exposure within these transactions. We've added that 10,000 ounces to our royalty portfolio at zero cost gold last year, which I believe was probably the best royalty deal from an accretion standpoint, no buyback, and just a pure play royalty.
I don't think that anybody else has done a 10,000-ounce a year deal in the last 12 months within the royalty space, whereas we have. We continue to push hard by optimizing our model and generating significant opportunity by working harder and managing a little more complex business plan than the traditional royalty and streaming companies, but to a much bigger end.
Okay. Thank you.
Your next question comes from the line of Brian MacArthur from Raymond James. Please go ahead. Your line is open.
Good morning, Sean. I just want to be clear, too. Is the intent going forward to keep the 4% NSR in Osisko Royalty? I realize it doesn't matter now, but when you spin it out, is the intent to keep it, or is that going to be part, you might sell that down as part of the financing with private equity as you go forward?
I think that it might increase, and we'll see what the project financing looks like once we get there. We are a royalty and streaming company, and selling royalties forward is not really our business. Our intention, to be very concise, is to increase our royalty and streaming portfolio by being a participant through North Spirit to acquire assets that are in the trough, be the leader and the price setter, not the price taker, on the project financing, and to do that for the benefit of the Osisko Gold Royalties shareholder at superior returns from what we're seeing in the traditional royalty and streaming market today.
Great. Thanks.
Just to be clear, we are a royalty and streaming company with prejudice.
Sure. I just wanted to make sure. The second part then, I guess, you do have the option for the other 1% NSR for CAD 13 million. I assume you probably exercise that then. Does that have to be exercised? There's no trigger now to do that now. It still sits on the same terms as before?
Assuming the conclusion of this transaction, we'll be in a situation to write whatever royalty and streaming deal is appropriate to get the project financing done. That's the goal of this model, is to work in the trough to generate that organic opportunity where we're the price setter, not the price maker.
Great. Thanks very much. Very clear.
Thank you.
There are no further questions at this time. I turn the call back over to the presenters for closing remarks.
All right. Thank you everybody for the call. We are available. We will probably be in Toronto tomorrow and perhaps in New York on Wednesday, and available for calls at any point in time. Any clarifications required, we are more than glad to answer them, but I do want one parting message for everybody to be clear about. We are here to make shareholders money through running an accelerator company and operating at premium royalty and streaming companies. That is our business. Thank you very much.
Thank you. This concludes today's conference call. You may now disconnect.