M&A Announcement

Sep 23, 2019

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. Please note that this call is being recorded today, September 23, 2019, at 8:30 am Eastern Time. Today on the call, we have Mr. Sean Rosen, Chair of the Board of Directors and CEO of Osisko Gold Royalties Mr. Brian Coats, President Ms. Edith Nevesque, Chief Financial Officer and Vice President, Finance and Mr. Chris Wouter, 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 Rosen. Mr. Brian Coats, President Madame Elif Navec, Welcome to the conference call for the acquisition of Barkerville Gold Mine by Osisko Global Royalties. We're going to be using a PowerPoint deck that's on our website this morning that's titled Acquisition of Parkdale Gold Life. And 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 of the press release that we announced before. There are 2 main points that I want everybody to take away today from this call. The first is the creation of Nordic Spirit Discovery Group, which is the platform under which Barker Global operates. This is the evolution of our accelerator model, whereby we've been incubating projects and companies, 5 of them throughout the last 5 years since we started Sysco. The accelerator model is a business model that we pioneered at Sysco Gold Royalty. 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. And our spirit is designed along the model of private equity in that we will hold as 100 percent owned by Osisko at this point in time, but we will be looking for 3rd party money, either through LP structure or 3rd party private equity groups or joint ventures to provide capital at the asset level as we go forward. So this is the natural evolution of our accelerator model. And it's an effort to pure apply 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 all Cisco Gold Royalties, but maintain a direct drive from our Spirit into or by holding equity within our Spirit Group. And at the end of the day, we expect that we will be somewhere between 50% and 30% shareholder for Spirit if everything goes the way planned and depending on how much capital we have to raise. But 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 existing shareholders to access that capital at lower cost within the accelerator model. 2nd piece of business, of course, is the acquisition of Barford Gold. This is a highly accretive transaction for our Sysco Gold Royalty shareholder in terms of the basis, and it fits exactly where we always work. Those of you familiar with our presentations as 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 heavily 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 be going through the permitting and construction process. So 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. So that's as we said, we deployed 75% of our capital in that place, and we feel that Parkville presents an opportunity for us to deploy capital, much higher returns in that space. And North Spirit will also benefit not only from the Barco technical team, but also from the Cisco technical team. OR is uniquely situated to manage this business model and that we have the technical team inside the company that can run more spirit as an independent development group. That's where we see the value for our shareholders as we go ahead and we make Pacifica Royalty the more pure royalty and streaming company and North Spirit becomes a traditional development group. On Page 3 of our presentation, just a basic background here on I'll continue on. I hope everybody can hear me. There's some construction noise outside. Page 3 is a summary of Sysco Gold royalties. We are a peer leading royalty group with over 135 royalties and streams. We have a goal in real estate directly. We have 76% of our NPD by asset base in Canada, 64% of it starting directly in Canada and about CNY 40,000 net of GEOs earned so far this year, gold equivalent ounces. Operating cash flow in the first half of the year was CNY46.1 million, CNY89.5 million for 20 18. We currently pay a dividend of 1.2%. We are uniquely situated to evolve the accelerated model that we pioneered into this model with over CAD800 1,000,000 of financial capability on our balance sheet. And as we get further into why we would want to acquire BGM into North Spirit by using a block from our company, Cisco Gold Royalty. 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 4 is a demonstration of how this compares to our Canadian Malartic story. Both historic production in Canadian camps with over 4,000,000 ounces having been produced in the Caribou Camp historically. Significant existing infrastructure. The Cariboo project has the Q1 mill, maling spawns and facilities actively on a small scale mining permit in place and significant amount of underground infrastructure and on-site infrastructure that we can leverage from. For those that were reviewed to be studied, the existing infrastructure is quite important to the value driver there and that we are not building a new build cyanide facility in tailings pond or waste dump to execute 4,000 tonne of the underground mine. So that's pretty unique opportunity. In terms of the exploration upside, this is the Brownfield camp and we've gone back and remodeled it And Chris Lawler and his team have led the charge to unlock the value of this camp through the remodeling of the geology. And extremely successful with over 90% hit rate of drilled holes in the last 24 months that have been drilled using the geological model. So that's extraordinary success when it comes to geological interpretation. As I can't have world class potential with more than 2,000 square kilometers permit area and a world class mining district in the Caribou. Historically, this mine and this area also hosts several copper mines, the Chico's mine, Imperial's mines, all within this area. Historically, this scenario is very used to mining and logging and is very friendly towards resource sector operations. It's worth noting that Pretium in BC was permitted in under 20 months. So it's been a jurisdiction that has been issuing mine permits as well. And of course, our Canadian Middle East on the bottom and the reason why we call our Spirit Discovery Group North Spirit is we believe that the Canadian jurisdiction and then We The North is the best place for Cisco Royalties to invest its capital. We continue to be Canadian focused as we go forward. Summary on Page 5. We're moving this project towards the B setting goal of building 185,000 pounds a year gold mine. We're purchasing the remaining 68 percent 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 PE study was completed a few months ago. Envisions about CAD310 1,000,000 to build CAD185 1,000 ton a year mine sorry, half year mine with a level year mine life. In the meantime, there is ongoing mining and financial ledge. And the Phase 2 of financial ledge should produce around 20,000 ounces a year before permitting is completed on the larger project, which is a 4,000 tonne a day underground mine as defined by the PEH 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 campsite play with over 67 kilometers long trend. And I think we discovered parallel zones to that. And we think that we're going to be here for a long time and there should be multiple opportunities for Osisko to invest through project financing as this project advances. So this is not one of these things is not like the other. This project is large and is scalable, which is very important to us and that we can continue to deploy capital in a very disciplined manner as we evolve this project without having to swing to the fence on anything particularly big. And again, this is the first asset that we put into North Spirit, which is the replacement for the Sysco Accelerator model that we think it sets the table for a significant amount of accretion. In the Page 6, we give a little bit more about what North Spirit Discovery Group is here for. We're here to project financing, project engineering and project management within that group. The technical team at Barkerville, Sean Massey and Maggie and Chris and the rest of the team will continue to work to develop the exploration of the on-site there with the 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 partner to go together for the final line finance as we get closer to that post permit. So that group, it would look something like what we did, we believe, at Victoria, where we teamed up with our friends from Orion Mine Finance and Caterpillar Finance to issue a CAD 550,000,000 Mine Finance project. So 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 that our spirit is there for 2 to 3 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. Fully permanent 185,000 ounce a year mine in Canada has significant amount of value if it's a shovel ready project as does 1 that 185,000 ounce a year mine is in production. So we'll have 2 to 3 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 Lausanne curve as we move forward and setting the table to be in an advantageous position to write the project financing at the appropriate time. We think that scalable projects are few and far between. This is a campsite play. And 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 the same way we did in Canadian blarden, where we went in and we bought the project for CAD8888. We invested CAD1 1,000,000,000 and we sold it at a Manheim Deco for a little over CAD4.1 billion including the spin out of the Cisco Gold Royalty. So 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. So we've set the table for some optionality about what happens to the project for 2 or 3 years if this department has an issue. This is a late stage project and then it already has a significant amount of infrastructure and resource. The resource overall resource is at 4 point 3,000,000 ounces. The PE study took into consideration only 2,300,000 of those ounces. So significant upside in what's already been drilled. And Barkerville is a relatively short shallow project, so lower CapEx because of that. And again, I can't say this enough times. This is a great Canadian asset, which is what we like to do, and we're particularly well suited and purpose built to take this project through the value process. Page 7 is the transactional summary. We require the market to occur early because the shares not currently owned by Cisco. Total value of that would be AUD338,000,000 of which we already own 32%. And the shareholders of Market Global will perform at 9% of the fiscal global revenues, which has revenue cash and pays a dividend. So shareholders will receive significant amount of access to liquidity. However, their stake in more will be worth significant amount of money and the drive from the value of Barkerville will be reflected in that share price. So they will participate in the upside of Barkerville as we move this project on and forward through the value process. Consideration rate now is 0.035 7 shares of Asisto per share of Barkerville with an implied price of 0 point 58 dollars per Barkerville share representing a 44% premium on the 20 day debas of both companies. So chilled production has been put in place, the customary non solicitation covenants and formal fiduciary out of CNY9.8 million termination fee to Assisco and the transaction is not completed. Percent shareholders, including the Board of Management, have agreed to support this transaction entering a lockup agreement. On other considerations, Parkdale shareholders won't be a 66 and twothree of the majority of the minority of the votes cast by shareholders. Customer regulatory approvals exposing conditions to apply And if Cisco has provided $7,000,000 bridge to an expendable $13,000,000 by mutual consent throughout the process to maintain momentum on the project in terms of the underground development at BCP and the continued exploration on-site. The timing of this, the meeting materials will be mailed in October shareholders at the meeting in November, and it was expected shortly thereafter. The benefits for the BGM shareholders are outlined on Page 8. Chris, would you like to walk through that? So I have Chris Lohner, CEO of Mark Croyle with morning, everybody. Leverage there at the discovery group. Acceleration happens, we'll be here for a while. We continue with that and probably being up with happy access So Page 9 is the benefit to a fiscal shareholder. I've touched on many of these points on the way through to get to this far. But I think the 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 the Cisco 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 3rd parties on the marketplace lately. And 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 full of exploration through permitting and construction into mine development. There's several value points of which point we can do that. And 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 maintain our royalty. We did a similar deal when we bought Arizona Mining. We were taken out the equity was taken out by our friends in South32. We have $5,000,000 equity investment. We've added $34,000,000 over and above our capital in and we still own a 1% royalty. So we are doing a deal that's fairly traditional Fortescisco royalty. The only difference this time is that we've acquired a public company to execute the transaction or our operating plan to acquire this public company from the BGM shareholder. Next step for Caribou in the time line, the expansion production has been outlined on Page 10. We've given you a bit of 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 Parkdale. But 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. We drilled, I think, subsequently, Chris, 400,000 meters. At 360,000 for the end of 2018. So we've started significant amount of drilling in to confirm the model. We presented the resource update and the PE study to the public markets. And I think that we also executed several financings throughout that period. And the ongoing continued demand for capital, I think, has been the overhang on the share price. And today, we're here to solve that problem in terms of being able to put this into the Nordiskirt Discovery Group with 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. So 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, but 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 Caribou Gold Project overview and the area that we control mineralized is the whole district. We have really no majors there, something we all like in the group So it allows us to do efficient long term exploration. And the big thing that we have is really the overall The capacity here in mining has been initially been flattered and very good underground mining of veins and for Kaita, which is now on budget ourselves. The mill that we have on the site is about 1,000 cents a day, presently targeted as investment for people in the area that is the jobs are included there, the coaching jobs being lost presently in 4/32. Thanks, Chris. Page 12 is a summary of the fees, Freddie. I'll just hit the highlights on it. NCV of CAD402 million and CAD 13 $25 gold. At current spot prices of $1500, the NCV would go to $700,000,000 and we would be we would have a 20% return there. Given our own acquisition costs of this project and what we've already spent on, it will be around BRL380 1,000,000. It's significant bump to us at BRL1600. Golding goes to BRL800 1,000,000 and C1700 dollars gold, the FPG goes up to C930 1,000,000,000. So significant gearing to a higher gold price while being a low cost operator. Other aspects of this to consider is that the log holding on 30 meter benches are levels and at 4.5 grams, we're using an ore sorter to upgrade that material. So the simple takeaways between the ore sorter and flash concentration that we're doing on-site. We will be trucking 20 gram material to an existing mill that's fully permitted with sailing swan and cyanide license displaces in places. All in sustaining costs are just under US800 dollars an ounce at US796 dollars And even with the CapEx, the CapEx is still low and then we put the CapEx number here to demonstrate that CAD 9.12 in all in sustaining cost plus OpEx and CapEx. So it's a remarkably low cost mine on a brownfield mine site with only C310 1,000,000 in terms of required capital. And we generated about C1.54 billion of cash flow of revenue and then it's IRR 34.6 percent pretax and 28% post tax. So this project makes sense on a lot of sorry, 28.1% on an after tax IRR. This project makes sense in a lot of cases. But what we're trying to do when we compare the metrics of other opportunities, clearly, it's trading that we feel that this is significantly superior to most of the deals that we've seen out there. In the meantime, it's an asset we know well and that we've been executing the technical work on this project with our technical group and Chris' BGMT for the last 3 years. So it's not an 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 under there are several mineralized zones excluded from the resource modeling program that we can only really plan once we get back under. This project is kind of elevation, so we're only using ramps to get in. We're only dealing with the first 3 60 meters. The deposit has mineralization well below 1,000 meters, which we haven't drilled on yet to carry the trough close to that and the ability that we've been able to put that we've had to execute success in the shallower drilling. Page 15, just a summary of where we are. We have 104 royalties in the North American continent. Significant producing royalties are Eleonore, operated by Newmont, Renard, operated now by the Renard Mining Group. Our cornerstone asset is Kishibar, generates about 35,000 ounces of 0 cost gold to us a year. Most recently, Iman had a negative 11 ounce, significant upside there with about 4,400,000 ounces of inferred being added to that project as it continues to deliver at depth. The Banco's project we have in Chile and the Eagle project, which is just Fort Gold last week on September 17. We're very happy and want to thank the Victoria team and congratulate them on a job well done. They executed the construction of that mine in the Army and came out a month ahead of schedule and are reporting goals at this 2 point in time. That will be the next add of production to the Osisko family of royalties. We also have a couple of other assets in different places. On Page 16, you can see more of the details. 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. As we've asked for, we're still significant shareholder of the Eagle project ruled by Cisco Mining, where John Krasinski and his team are executing another 200,000 meters of drilling, significant high grade zone there. And we continue to be supportive of our presence in Buffalo Resources with 6,100,000 ounces of coal equivalent reserves in a feasibility study there, the consummate permitting process. And also, we continue to support other exploration and development stories such as the Osisko Metals project, which is operating with pipeline project, the Northwest Territories and to some extent, some of our projects such as Knighthawk Resources that we've been long term equity in this quarter, up in Northwest Territories. Page 17 goes through the impact on the Osisko NPD by geography and that we see pro form a post transaction. We see that the Canadian presence goes from 76% to 81%. We see on our construction level projects that headed for production, we go from 55% to 44%. And NPV by type will be at 42% with 27% being direct ownership. And now very small amount of offtake agreements with 27% of it streams. So we continue to see good metrics on our royalty and streaming portfolio, and this project meets all the tests for that. The summary is on Page 18, but I don't want to take up too much more time on this. I think that everybody's had a chance hear what we have today. So I'd like to get some questions. And now if I could, please. Thank you. Your first question comes from the line of Shane Nagel from National Bank Financial. Please go ahead. You're well proceeding. Thanks, operator. Sean, just wanted to know if you could go into a bit more detail on the North Spirit, just how you see this kind of obviously it's in its infancy, but how conceptually you see this playing out over the next say 3, 4 years? I mean is the intention to always kind of keep a permitting derisking story? Or you've obviously got a high quality team of mine developers in house. Just wondering how kind of far you're willing to kind of take not just the Barkerville project, but how many other kind of projects or entities you feel that unit will have the capacity for? Well, I think for today, I mean, obviously, the business is at Barkerville. Depending on how we make up with this transaction, we'll set the stage for the next evolution. But we did sort of look at the way the market is working here, where access to capital or these single asset development stories are coming from. We have 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 the platform to move to diversify participants on the asset level. And we see private equity and people are interested in private equity having significant amount of access to capital and want to have a way for our shareholders to share in that value building process. And we felt that we were uniquely suited to take our accelerator model and to move it towards that North Spirit model. In the 1st 2 years, what we see is the main value driver is getting permits on these projects and writing the project financing, which is really what royalty streaming companies traditionally do as they participate in project finance or gold mine construction and mine expansion. There are rare cases like we saw in 2016 where we see significant debt conversion in the industry to royalties. But normally, this is our normal business as a royalty company. So 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 the corporate level. So 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 and we go through that trough. So if you look at our normal marketing deck, we always show that it's on curve and we said 75% of our capital allocation is in the trough, which is that period from end of exploration through the PEA study, feasibility study, permitting the mine construction. So we have the ability, as I said, there are 2 value points for North America at the end of the day. 1 is when the permit has been accomplished and the second is after the mine has been commissioned. So we'll see what the market looks like once we achieve the permitting, and we'll make a decision there. In terms of another possible project for the North Spirit, I know a lot of the El Naida Senegal today, but we'll see what the reaction is and what the 3rd party participant level of capital available to us is once we've done this, and we'll make the call at that point. Just on that note then, when you look at the value that you can unlock with this private equity vehicle, does that mean you'll or in your view, are you going to see kind of an end in a traditional accelerator model where you just kind of take an equity stake, obviously, remaining supportive to Falco and the like that's in there already. But going forward, would the I guess the preference be to commit capital into this private vehicle to unlock value? Or will we still see some of that kind of traditional accelerator model equity positions being taken by Sysco Royalties? Yes. I think that we always been out 5 years ago. We pioneered this model, the accelerator. I think that we will already be participants, but we're going to set the stage to access capital at the lowest cost possible versus projects. The reality is for capital markets haven't had a lot of appreciation for single asset exploration development stories as of late. So we'll see when the asset bank for capital is in our spirit for further yields. But we continue to incubate roughly 1 company per year within the group. So we'll continue to do that, and we'll take the excess 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. Very closely. Hi, Sean. I just had two questions. I guess, I'm just looking back in Nurtureville on, they Nurtureville on there thinking of finding a joint venture partner to build the mine. They decided to go alone and eventually got out of it with some frustration. I guess my question is, in 2 to 3 years, you can't find a partner or sell the asset because there's a lot of assets for sale right now and nobody is buying them. Do you operate the mine at that point? Or what do you do? And I have a second question after that one. Well, Mike, as my grandmother said to me was, no matter what, my friends always wanted. And in this case, I don't think that a premium asset in Canada will go without an acquisition. We choose our projects carefully, Expanding from wine, camps in Canada have always had a bid, especially if they're not going to operate. So we have the ability to operate if we have to, and that's the right answer for our shareholders to get value. But we think that the partnership along the way will be all along the way to get to that decision. So we'll see where we get to. In terms of gold price, obviously, that's the backdrop to all of this. But it's 2 to 3 years of work before we have to make that decision. Like we see long term on the gold price, we've assumed $13,000,000 in all of our assumptions. But obviously, a $1500 is a very, very colors asset. And I'm pretty sure that once we get the permit, and we have a full understanding of the project and we have some more success in the exploration bid. And we take some more risk off the project, but we'll have some friends. Okay. Well, thanks for that. And then just second question. I know you're on 32%. That's a stopping block for anybody who want to make a break this up. But I also noticed the average analyst price objective for all buys is $0.95 So will that encourage another buyer to come up and pay more? Or I'm just 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, very worst scenario, Mike, is that somebody does come over the top and resets the share price for bar capital and the volume gets daylighted. We're market participants. We could be buyers or sellers if we see value. If there is somebody who 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 since the essentially since the incubation of the asset in its current format. We have a view on value, and we're there to execute. Everybody else has to do whenever it is needed. 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. Hi, Sean. Hey, look, I've got 2 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 dating on the risk profile? And then 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? Or where do you think the monetization opportunity is for Osisko Royalty shareholders? And then 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 calculated the premium base by 28 BOF on the share price of the BGM and of the BOE. So we can send you that calculation if you like, but it's a pretty standard Bloomberg VWAP calculation. I guess, 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, and we feel that Barco Bros shareholders have been along with us for a while now. And if we look at fundamentals now, this is a there's still risk to be taken off the table and there's still risk of dilution at the part of our level with further capital required. So there's a weighted average there. And we feel in this market, a 40% premium compared to Marpristo, 0% premiums, which is a significant bump in value here. The stock, Embarcadrill stock has traded in the $0.35 to $0.45 range for a significant amount of time. There's a pending cash call required on the project at this point in time. So we're stepping in there not only to pay the premium but also to pick up the capital requirements over the next 2 or 3 years while we get this project to the next value point. So I don't know if that answers your question or not, but we feel that right now, 40% premium NOR stock, which is highly liquid, has the ability to rerate 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 it's not as you hit the asset base. So where we see it, we'll have a reasonable premium considering the option the other option of a market driven financing to carry on the business of the project. 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 Sysco Gold Royalties? Or is this a vehicle that you intend to spin out into a separate company at some point? It is said to be a spin out. And I think it's been a business that Cisco Gold Royalties will maintain an equity position. As I said at the beginning, we kind of envision being a 36% shareholder over the next couple of years as we evolve the accelerator model, and we see what the level of market participation is on asset driven financings as we go through this process. But as we all know, it's very hard for single asset companies to maintain financing without significant dilutions throughout this period. And 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 And I would refer you to the Arizona Mining transaction as a model, the Victoria model, where we chose the project with shovel ready, but nobody stepped up to the project financing and ourselves and our partners at Orion put up the bulk of the money with Caterpillar doing a traditional financing of their mining fleet for CAD60 1,000,000 but the bulk of the partnership with Osisko Gold Broadleaf and Orion. And in that case, we did harvest our equity to redeploy it with our friends at Orion earlier this year. So we have had a disciplined approach to managing the equity exposure within these transactions, And we leased that 10,000 ounces to our royalty portfolio of 0 cost gold last year, which I believe was probably the best royalty deal. From an accretion standpoint, no buyback and just pure play royalty. I don't think that anybody else has done a £10,000 senior deal in the last 12 months within the routing space whereas we have. So 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 traditional oilfield 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. Go ahead. Hi. Good morning, Sean. I just want to be clear too. Is the intent going forward to keep the 4% NSR in Ocisco royalty? I realize it doesn't matter now, but when you spin it out, is the intent to keep it or is that going you might sell that down as part of the financing with private equity as you go forward? I think there might increase, and we'll see what the project financing looks like once we get there. But we are a royalty and streaming company, and selling royalties forward is not really our business. We're here. But so our intention, to be clear and concise, is to increase our royalty and streaming portfolio by being a participant through Northern Spirit to acquire assets that are in the troughs, be the leader in the price better, not the price taker on the project financing and to do that to the benefit of PISSCO Global Group shareholders at superior returns from what we're seeing in the traditional royalty and streaming market today. So just to be clear, we are a royalty and streaming company with prejudice. I just want to make sure. And the second part then, I guess, so you do have the option for the other 1% NSR for $13,000,000 I assume you probably exercised that. And does that have to be exercised? There's no trigger now to do that now. It still fits on the same terms as before? Well, assuming the conclusion of this transaction will be in a situation to write whatever royalty and trade deals are appropriate to get the project financing done. I mean, that's the goal of this model is to work in the trough to generate that organic opportunity where we're the price center of 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 with Columbia 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 a premium royalty and streaming company that enters our business. Thank you very much. Thank you. This concludes today's conference call. You may now disconnect.