Good morning, ladies and gentlemen, and welcome to the Osisko Development Q4 and year 2021 results conference call. After the presentation, we will conduct a question-and-answer session. If you'd like to ask a question, please press star followed by the number one on your telephone keypad. Please note that this call is being recorded today, February 25th, 2022 at 9:00 A.M. Eastern time. Today on the call we have Mr. Sean Roosen, Chair of the Board of Directors and Chief Executive Officer, Mr. Alex Dann, Chief Financial Officer and Vice President Finance, Mr. Chris Lodder, President, Mr. Luc Lessard, Chief Operating Officer. I would now like to turn the meeting over to your host for today's call, Mr. Sean Roosen.
[Non-English content ]. Welcome to the fourth quarter results call for Osisko Development Corporation, everybody, and thank you for taking your time out today during a busy session. We'll be looking at the fourth quarter results for the Osisko Development Corporation and some of the things that are going on on the balance sheet. First, I wanted to take a chance to discuss the results for 2021 from a catalyst standpoint, and we'll get into it after I read the forward-looking statements. I'd like to remind participants all amounts discussed on this call being denominated in Canadian dollars.
Please also note that statements made during this call will include forward-looking information, and future-oriented financial information regarding ODV, its business and disclosure, and regarding possible events, conditions or results that are based on information currently available to management, which indicate management's expectation of future growth, results of operations, business performance, and business prospects and opportunities. Such statements are made as of the date hereof, and the company assumes no obligation to update or revise them to reflect events, disclosures or circumstances except as required by applicable securities laws. Such statements involve significant risks and uncertainties and are no guarantees of future performance or results as a number of these risks and uncertainties could cause results to differ materially from those results that are discussed today. Given the risks and uncertainties, one should not place undue reliance on these statements and information.
Please refer to the risk factors of forward-looking information of the future-oriented financial information sections of our public filings, including without limitation, our recent 2021 annual financial statements, MD&A, and earnings press release for additional information, which was filed on SEDAR. Yesterday, we released our 2021 annual and fourth quarter results. Before we get into the financial results, I did want to take a chance to give you an update on the company, and a quick overview on the acquisition of the Trixie project in Utah. The Trixie mine project in Utah, the Tintic property, is about 14,000+ acres, and it consists of 23 previous producers.
What's most exciting was a new high-grade discovery that happened in 2020, developed by the operators of the project. This is a new type of mineralization that hasn't been seen. This project's been in production for over 100 years, most recently by Kennecott. This mineralization has been super high grade and led to Trixie mine being the highest in production mine last year at 59 g a ton at grade mine. Though albeit very small scale, we consider this to be significant opportunity for the ODV shareholders as we get further into it. In terms of our growth plans on that project, we'll come back to you after the deal closing and give you further update and insight on that project as it evolves.
In terms of our growth plans, we continue to add ounces, along 43-101 compliant resource development update, drilling campaign is ongoing at the Cariboo Gold Project, as well as what we're doing in Mexico. The assets that we have on the go right now are all evolving through the development curve and into the production side, going through construction here in the next 24 months-36 months for the most part. The Cariboo Project in particular, permitting is underway for a 4,750 tons per day operation.
That permitting cycle is in good shape, and we expect the EA acceptability in the second half of 2022, with a feasibility study due out in the first half of 2022 this year, so by June. That project has also experienced a significant amount of drilling last year, with 158,000 meters of drilling completed in 2022 to infill and set the table for the phase one mine plan of that project, which we expect to announce with the feasibility study as well. Currently, production is ongoing at the BL2 project, which is part of the Cariboo, the larger project. We expect to see north of 20,000 oz. Plus, we're operating the QR mill.
and 2021 were challenging years due to the COVID impact on operations there. We're happy to see and thank the team for all the hard work to get us to where we are and pouring gold there in a significant way as we speak today. The San Antonio heap leach project in Mexico, there's a 1 million-ton stockpile that we're currently putting on the leach pad. We're hoping that that rate of load onto the pad be between 4,000 tons and 6,000 tons by the end of this quarter. We should see first gold processing here in Q1 or early Q2 next quarter on that project as we process that stockpile, set the stage for the larger project.
We believe we should receive a permit for that sometime in the second half of the year, and we'll decide how we wanna scale that project as we're looking at some leach kinetics coming in now. Suffice it to say, the drill results that we put out on San Antonio have met our expectations and then some as of recent, and we continue to see good growth on that asset as we go on with it. Quite an exciting year, and I would say that you know in the gold business high-grade assets in shallow and good jurisdictions are like waterfront on the Riviera.
The addition of Tintic gives Osisko Development shareholders that footprint a lot on high grade with a large project at Cariboo in the background and a low-cost CapEx project in Mexico. I think we have a very good mix of assets in the company for future growth. We set our stage to be a mid-tier producer as we've said that we would within the five-year window that we'd allotted as we came out with this company in 2020/2021. I will now pass the mic over to Alex Dann, our CFO, to give you an overview of 2021 Q4 financials. Alex, over to you.
Thank you, Sean, and [Non-English content]. Good morning, everyone. Gross revenue was approximately CAD 3 million for the fourth quarter from the sale of 1,236 oz of gold at an average realized gold price of $1,766 per oz. For the 12 months ending December 31st, the company sold 3,175 oz, generating CAD 7.7 million in revenues and realizing a $1,802 per oz gold price. In the fourth quarter, the company incurred a net loss of approximately CAD 56.4 million or $0.42 per share. The main driver for the loss is the recording of non-cash impairments totaling CAD 47.8 million, which is comprised of two amounts.
An amount of CAD 42 million related to the exploration and evaluation assets held in northern Quebec and the south of Mexico. With the company's resources focused on its current active projects and the addition of the Tintic project in the company's portfolio, management deemed prudent to impair these properties. The second non-cash amount of CAD 5.8 million is related to the reevaluation of the stockpile at Sapuchi due to an increase in the estimated processing costs. For 2021, the company incurred a net loss of approximately CAD 133.3 million or CAD 1.01 per share. The loss for the year is mainly due to the non-cash impairments of assets recorded in Q4 and prior quarters, totaling approximately CAD 122 million. G&A for the quarter was in line with the previous quarter.
General and administrative expenses for the full 2021 year totaled CAD 21.7 million, and the increase compared to last year is due to the ramp-up of activities and workforce at all the projects and the head office. Other income net of other expenses in the fourth quarter was a gain of CAD 3.8 million compared to CAD 3.5 million in the same quarter last year. For 2021, a recorded gain of CAD 13.5 million compared to CAD 9.8 million in the prior year. The increases in income is mainly due to the recognition of a premium on the flow-through and charity flow-through share issuances that were completed in the first quarter of 2021. Our cash and cash equivalents balance at the end of the year was approximately CAD 33.4 million.
The main drivers affecting cash in the quarter were as follows. Cash flows used in operating activities for the full year was approximately CAD 41.4 million compared to CAD 6 million in the prior year. The increase is due to the ramp-up of the G&A to meet operational requirements and also a negative change in the amount of cash working capital. Cash flows used in the investing activities totaled approximately CAD 157 million for the year compared to CAD 62 million in the prior year.
The increase is mostly reflected in the ramp-up of the mining interests and property, plant, and equipment at the Cariboo Gold Project, Bonanza Ledge II, and San Antonio projects, offset by the proceeds from the disposal of certain investments. Finally, cash flows provided by financing activities for the full year were approximately CAD 34.7 million, which was due to the flow-through financing that was completed in March 2021 that generated CAD 33.6 million of gross proceeds. I will now turn the call back to Sean for closing remarks.
Thank you very much, Alex. Obviously, a lot's going on in terms of the evolution of the company when we had transitioned this company from OR balance sheet to ODV. We had taken some of these exploration projects with us, which, with the pending development of the company and the listing on the NYSE, we wanted to make sure that all issues regarding the balance sheet were dealt with in this quarter. We've looked at the ability to do that.
We've also initiated two financings, non-brokered for CAD 110 million and CAD 90 million bought deal that was scheduled to close. It should leave proceeds of CAD 230 million plus the existing cash balance and equity book in the company, setting available liquidity somewhere north of CAD 300 million as we close those financings. Current workforce is sitting at around 500 people, including contractors as we push these projects along the way. As everybody knows, in this sector, the COVID-19 and supply chain impact have to be dealt with. That's been part of our reality throughout 2020 and 2021.
We feel like we've turned the corner, taking advantage of those moments as best we can. We're in line to have three fully permanent mines in production by the end of this year. They'll be at a small scale and then scaling up to larger production as these projects continue to take their natural evolutionary course, setting the table for to be one of the more exciting assets in the gold space with a Canadian large scale project at Cariboo, an evolving asset in Utah, which could be polymetallic. We talked about the high-grade gold deposits at Trixie. There's also a silver-lead-zinc mine called Burgin there, and a significant exploration target on a copper porphyry that we believe is important as well on that property.
Quite a bit to do this year and, very exciting times and, I think that, we have a lot of catalysts, for the ODV shareholder this year. Operator, I'll open up for questions now. Thank you. Thanks everybody for listening, and we will be presenting at the BMO conference in Florida, this week on Wednesday morning at 9:45 A.M. If not, if you happen to be here in Florida, for the conference, we're also available, to book. Just fire us a note and we'll find the time slot. On that, operator, please, we'll take our first questions.
Thank you. At this time, I would like to remind everyone in order to ask a question, press star, then the number one on the telephone keypad. We'll pause for just a moment to compile the attendee roster. Again, if you'd like to ask a question, press star one. Your first question comes from John Tumazos from John Tumazos Very Independent Research. Please go ahead.
Good morning, Sean. Thank you. Could you just refresh us with the feasibility study and permitting schedule? When you think the first gold from the full Cariboo mine will be produced and what the annual production rate will be in the first several years?
Thank you, John. The Cariboo project is online for the EA acceptability to be completed in the fourth quarter of this year, as scheduled for third, but it was assuming that some COVID lag on the permitting. The development will start in earnest near the end of the year or in early 2023 with the underground portal at Cow Mountain and will be in construction throughout 2023 and 2024. All that assumes that project financing and the green lighting and the permitting is in place for the early works. We would be looking to the staggered production increase. We would increase-
We would start to feed the QR mill and the ore sorter at lower tonnages as we develop that mine. We'd be looking to, by the end of 2024, be sitting around that 4,750 tons a day development. The construction of the flotation concentrator at the Wells site would be complete by then on the current schedule. That would set the stage for production of north of 180,000 oz a year, and we would be targeting somewhere between 200,000 oz a year and 250,000 oz a year from where we sit today. However, the feasibility study is not complete, so we will put that feasibility out here by the end of second quarter.
I just wanna make sure I'm understanding clearly, Sean, so I'm gonna try to take baby steps. There's gonna be some non-commercial production possibly in 2023 and 2024 from development muck?
That's correct. The ongoing-
Production that's not indicative of a commercial mine.
We will be drifting into the Cow Mountain and doing a bulk sample this year from the Lowhee side. That will set the stage for the first Cow Mountain style of mineralization to be processed with the ore sorter. We would continue to try and develop that once we've got the EA to continue to operate the QR mill at reduced tonnages while we get that larger concentrator up and running. That will come out in the feasibility study, but we would hope that through the bulk sample and as that permit evolves, that we can keep smaller scale production, say 1,000 tons a day-2,000 tons a day, ongoing while we complete the construction of the larger float tank.
For 2025, should we be expecting 180,000 oz or 250,000 oz? I wasn't sure what you said.
Well, with the feasibility the PEA study that says had us at 185,000 oz a year, coming out and then, we haven't published the feasibility study yet. So we'll put that number out, as I say, here, but the public information that is out right now is that PEA study from 2020.
There's a chance that the grade or the tons or the recovery could be better in the feas than in the PEA?
Yes. As the goal was to increase the tonnage and also to simplify the mine plan, and to bring our mining costs down, by utilizing the ore sorter. The optimization right now, a lot of the information will be gathered this year from the bulk sample that got fully permitted in Q4 of last year. We'll be able to give you better guidance on what kind of grade we're able to mine and what the optimum sweet spot of what grade we mine versus what grade we treat with the ore sorter and what grade goes with QR in the interim, and then what grade we are producing from the flotation concentrator that will be built in 2023.
Thank you. In terms of the northern Québec exploration properties written down, would these be things that dated from when André was operating Virginia Mines like Coulon and other things in northern Québec?
That's correct, John. We inherited those that investment during the acquisition of Virginia back in 2015. They were passed through Osisko Royalties as part of the portfolio that we put into Osisko Development last year. As we haven't been active on those lands and on the Coulon project, we deemed it prudent to take the write-down right now as we're transitioning the company and setting the stage for an NYSE listing.
In terms of the Guerrero District large lands, those have not been written down. Those are just waiting for a better time to evaluate more fully, I guess.
Yeah. We've looked at various joint ventures there, and as you know, that region is evolving with quite a bit of activity. In that gold belt, we still believe that the Guerrero belt is probably the most significant gold belt that remains with remaining upside within Mexico. So we're looking for the right partner on that asset, but we think that we have to bear down and focus on the assets in hand right now, and we'll try and find the right partner for that asset base.
The gold in the ground never goes anywhere, so you can be patient. In terms of the Tintic District, I might have recollections of different companies active in the neighborhood. Could you just repeat the name of the company you bought out?
It's Chief Consolidated Mining Company and IG Tintic that are the current owners that we're in the final stages of acquisition with.
My recollection is that maybe five to 10 years ago, Tom Patton's company, Quaterra, was working in that district and had a JV with Freeport.
Yeah. It's been a very active area and it remains a very active area.
Are you buying their background too or was is that?
No, the only acquisition that we're focused on right now is the Chief and Tintic, IG Tintic ground, which is about 14,200 acres, plus some JV ground around it. We are limited to that footprint at this point in time. We feel that's more than adequate amount of opportunity for us at this time.
You've identified both high grade gold and porphyry copper targets, at least two different. It's like you're big game hunting for tigers and lions at the same time.
Yeah. I think, you know, this has got we've got a carbonate replacement zone that's in the Burgin Mine. You know, previously this property was mostly known for silver-lead-zinc production. Most recently it was in production and shipping flux to the Kennecott smelter at Bingham Canyon, which is only 40 mi north. Chris is on the line. We can have a geological talk afterwards, John. The age group and the mineralization at Tintic and this region is pretty much bang on with the same mineralization at Bingham Canyon, which is, you know, North America's premium copper porphyry system. We're quite excited by that, and we're doing a lot of science on the ground.
We'll be targeting that deeper porphyry system as we get further into the year. Chris and the entire geological team are pretty excited to get the targeting completed and have a go at that. We're also. There's a PEA study from 2011 on the Burgin Mine, which outlined about a $250 million NPV project in a PEA study there. We'll be looking to update that on the silver-lead-zinc side. Historically, the production in the 75-85 zone was a quartz-rich 7 g-10 g gold deposits that were being shipped directly to the smelter for flux. There's several targets there.
The newest one, and the one that I think has garnered, and rightfully so, a significant amount of excitement, is this new style of mineralization that we've seen with the telluride gold system in it, that's behind the traditional zone and had never been mined historically. That's the new discovery that starts everything in motion. The rest of it we will continue to work on.
Thank you. I'll let somebody else get a chance. Thank you, Sean.
Thanks, John.
Again, if you'd like to ask a question, press star one on your telephone keypad. Your next question comes from Phil Ker from PI Financial. Please go ahead.
Hey, Sean, thanks for hosting the call today and congrats on all the recent success. Just a first question here on Cariboo. Could you just clarify what's happening right now underground in terms of the bulk sample? And could you outline what sort of budget we're looking at for this year?
What's going on underground on the BL2 is the continued mining. We're expecting about 20,000+ oz this year out of BL2. That mining is ongoing, and we're pouring gold on a weekly basis. I've seen some good results at the QR mill as of late with recoveries in the 80%+ range, even in those graphite-rich zones at BL2. That's you know, hats off to our operators there that have gone through a tough winter in B.C. and been able to achieve significant operating progress on that front. The portal for the bulk sample has been set. The roadheader is in there. We'll be looking to green light that underground development sometime at the end of March.
We've got about seven to eight months of drifting ramp to get to the target zone for the bulk sample. The ore sorter is on site, so we would look to commission the ore sorter and do the optimization work on the 10,000 tons of bulk sample that is currently permitted and look to see what else we can do while we're in there, based on permitting and the evolution of the permit on Cow Mountain. If you look at the pictures on the deck right now, you can see the roadheader's parked in the portal. We're just waiting for the weather to lighten up, and then we'll have a go with that. Budget for that is about CAD 17 million.
Okay. Development is suspended as of right now. With another seven to eight months of progress to get to the bulk sample or targeted bulk sample zone, we're really not looking to begin processing that material until, you know, kind of later in Q3 or early Q4 then?
Correct.
All right. What about underground drilling? Will you be setting up underground drill stations along the way, or is that sort of kind of on a, you know, ad hoc basis, you know, depending on progress underneath?
We have about CAD 3.9 million of flow-through left right now. We're just doing an optimization on the resource, and we'll probably do some surface drilling on Lowhee to infill that zone in the near term. That'll help us with our plans as we get further into the bulk sample, as we will wanna drill some of those areas from underground as we're on our way down there.
Perfect. Okay. Then in terms of San Antonio, I think the news said or referred to some permits you were waiting for. Is that for actual mine permits of new zones there? Can we anticipate just the mining for 2022 to be fully from the million ton stockpile?
Right now, we're fully permitted for that 1 million-ton stockpile. We have about 16,000 oz contained that we're looking to recover there in the short term. The permitting aspect for the actual Sapuchi larger project is underway. We have our own equipment, a 15,000-ton-a-day plant that we bought and shipped to Mexico. We'll be looking to, over the course of the summer, decide how big we want to set up for on Sapuchi. Once we have that permit, we'll decide to green light it. We're taking advantage of the time window to re-engineer that plant and to make sure that we take some of the exploration results that we've received and get those things moving as they evolve.
We should have some more drill results coming out over the next week or two with color on what we're seeing there. You know, we put 27,000 m of drilling in there, mostly the gold-bearing oxide zones, but we've had a few discoveries on potential other oxide zones on the property as well. We'll continue to follow that up.
Would you be using the same leach pad? Would you need an expanded leach pad once mining Sapuchi? You know, what sort of capital outlays would we anticipate upon receipt of that permit later this year?
Yeah. We would be looking to optimize the leach pad that we've already constructed, and there's some of it you can see on pictures of it on the website. We'll take advantage of everything we have now. The Sapuchi mine was always envisioned to have its own separate leach pad. The engineering, civil engineering work for that is underway as we speak, in terms of engineering design and optimization. It would be a separate leach pad build. Depending on how many tons a day that we decide to commission that, it'll be somewhere between $10 million-$25 million CapEx, the way we envision it at present. Then the question will be, you know, how much is owner operator versus contractor?
All right. When would you be able to make a decision on that? Like, is it dependent on receipt of that permit, or could you get started on that construction, you know, sort of mid-year?
I think we need to see the permit first, and then.
You gotta make the decision.
Best allocation of capital at the time. Focus right now in the interim will be the closing of the Tintic acquisition development of the ramp at Tintic with our partners there to continue the evolution of the permitting process in Cariboo and then be in a strike position to take advantage of that permit in Mexico as soon as it does come out.
Perfect. Understood. Appreciate the time, Sean. Thank you.
All right. Thanks, Phil.
Your next question comes from Ralph Profiti from Eight Capital. Please go ahead.
Good morning, everyone, and thanks for taking my questions. Sean, two of them. Firstly, at Cariboo, can you bring us up to date on the EA process? This is, you know, relatively new for the B.C. government. I'm just wondering in the public consultation, what's the feedback been, and has there been any surprises?
The public consultation had over 2,000 responses, which is relatively light for B.C. It's been very good. We have closed up the public consultation period for phase one. There will be another period over the course of the summer. We are nearing completion of response to all of those. Nothing very surprising. The normal concerns about footprint and light, noise, water, and then effect on community, job creation, and that sort of thing. That's you know, so we've taken a lot of effort to do a lot of engagement.
We've been enjoying good support from our partners at Lhtako Dené who've stepped up and have been part of the process and well involved in making sure that the project meets their expectations and criteria. We continue to make steady progress on that. As you say, we are the first ones through the new B.C. EA process. We've enjoyed pretty good support from B.C. government in terms of them allocating resources to their regulators to help get this project moving along. We don't see any delays at this point. Even with COVID-19, we've been able to hold the line in terms of the progress there.
That's in large part due to our team on the ground, led by Chris Lodder and François Vézina and the team, in terms of responding to that. You know, we continue to make progress each and every day on that front. I think we're in pretty good shape.
Great. Yeah, sounds good. At Tintic, Sean, should we expect exploration catalysts, you know, as part of the story in 2022 as you drill out those 15,000 m into the year-end NI 43-101, or is this more of like a bulk analysis approach?
Well, we definitely, you know, see the merit and the success that the team on the ground has had with this, you know, sort of jackleg and scope or underground development, and being able to follow the mineralization. It's so much better than the drill hole to be able to walk through the ore body and see this high-grade mineralization and understand it. We'll continue on. That will be the bulk of the exploration from the underground development. We will be, you know, setting up to drill some larger diameter core because of the way that, you know, we're fairly near surface here, and there's a lot of oxidation in the rock. We'll be wanting to do large diameter, HQ core with possibly a mud program, to get that proper recovery.
There'll be optimization. Right now it's too tight to have too much down there. We need to continue to develop the underground space. Once we have access from the ramp, we will be bringing to bear a larger, more intense drill program from underground. It's relatively shallow presently with about 600 ft, the 625-ft level and down to 900 ft. We need to drill, but we would like to prefer to drill from the underground and from within the mineralization.
Yeah. Understood. Sounds good. Thanks, Sean.
There are no further questions at this time. I will turn the call back over to the presenters for closing remarks.
Thank you, everybody. I think we've set the stage for an exciting evolution for ODV this year and certainly look forward to getting a few of you on the site visits as the year evolves. I wanna thank everybody and especially the shareholders for the support throughout 2021. We are working hard for the shareholders this year to make sure that we get these development assets across the line. I think it's you know the market's just right for these development style assets to come to fruition. Thank you, everybody, and wish you luck with your investments and your work.
This concludes today's conference call. You may now disconnect.