May 12, 2022
Operator
Good morning, ladies and gentlemen. And welcome to the Osisko Gold Royalties Q1 2022 Results Conference Call.
After the presentation, we will conduct a question-and-answer session. [Operator Instruction] Please note that this call is being recorded today, May 12, 2022 at 8:00 AM Eastern time.
Today on the call, we have Mr. Sandeep Singh, President and Chief Executive Officer, and Mr.
Frederic Ruel, Chief Financial Officer and Vice President Finance. I will now like to turn the meeting over to our host for today's call, Mr.
Sandeep Singh. [Indiscernible]
Sandeep Singh
Thanks very much, Operator. And good morning, everybody.
Thanks for being with us. On a busy day, probably and a busy week, to appreciate your time.
We'll go through a short presentation, Fred and I, and then we'll certainly open it up for questions. Just note that I'll be referring to the presentation that's now on the website.
Jumping in on Slide 3, just in terms of highlights for the quarter, we'll obviously pre -release our GEOs at 18.25,000 for the quarter. With that, comes a lot of information given our business model, but happy to fill in the gaps for the rest of this morning.
That excludes GEOs from Renard stream as you've probably gotten used to us doing for the last significant period of time. Happy to report that hopefully, that's the last plan we have to say that with the Renard stream having been reactivated over the course of the quarter, as we had previously guided, so I think that's a very important step for us.
Combination of the mine doing better than [Indiscernible] market having recovered. So that's a very good news for us, not only is the stream been reactivated, but the last half of the working cap facility has also been repaid to us and the other lenders to our account that was CAD 3.94 million.
So happy with the progress there. Revenues from the royalties and streaming segment of just over CAD 50 million operating cash flows as well, just over CAD 40 million.
So we continue to benefit from our business model with the highest cash margins in our history last quarter, obviously based on the gold price having been quite strong. The margin at 94%, again, continues to track exactly towards our guidance.
Adjusted earnings, again, from that segment of CAD 0.15 per share. And over the course of the quarter, we completed [Indiscernible] financing, but you're all well aware of.
Timing those things is always challenging. Obviously, we were busy on the corporate development side on the new acquisition side in Q1 and that's largely what that funding is meant to go towards.
Always a challenge planning those types of things, but certainly happy in the current market with the volatility that we're seeing that the balance sheet has been strengthened as a result. We also paid our dividend of CAD 0.055 on March 31st and we announced this morning the same for July 15th for the quarter ending on June 30th.
In terms of those transactions in Q1, Tintic and CSA is what I was referring to, there will be a couple of slides later on where I can update you on the timing for both those deals. But simply put still tracking towards end of Q2.
[Indiscernible], and we've said second half of for CSA, but it's something hopeful that will be in the third quarter. In terms of things subsequent to Q1, we did as opposed to sitting on the cash waiting to make those payments, we did choose to repay the amounts outstanding on our revolver as opposed to [Indiscernible] paying those interest payment.
The Renard stream has been reactivated as I pointed out, and we published our second ESG report, which we're quite proud of the progress on that side, as well as our inaugural asset handbooks. So trying to catch up on the disclosure side of what is a very -- for an asset base and important thing that we're doing on the ESG side as well.
If you skip the Slide 4, it's a slide view for some version of the slide, you've seen from us very many times. I believe most people on this call and know, the strength of our portfolio when it comes to the asset quality that due geographic focus, the precious metals focus, and the quality of the partners that were involved with.
And it's always worth highlighting, I think overall, when you take a look at market that we're in, the transactions that are being done. I think you look back at this portfolio, you understand the replacement value of it, the embedded growth with that is all kind of taking shape as we speak.
On Slide 5, that thesis I'm referring to continues to strengthen. Overall, I think it's fair to say that Q1 was a little bit lighter.
We expected that. That's baked into our guidance, so we're flying from our perspective and we do expect the strong strengthening in a year of quarter-by-quarter and certainly a very strong second half.
The reason for that in Q1 was obviously, I think fairly well-known if the seasonality at [Indiscernible], which we had talked about. The tie-in of the expansion at manto, so essentially taking your stuff, you're put off the gas a little bit before you step one it again and the ramp-ups at a couple of assets about the rationale behind a steeply incur of GEOs, if you will, over the course of the year.
But I think it's also fair to say that if you looking at the whole sector, if you're watching the reporting of the course of Q1. I think the sector as a whole, had kind of a little bit of a pullback in Q1 for a variety of reasons.
Labor, COVID, absenteeism, supply chain issues. So I think that's pretty fair statement, pretty broadly.
For us the good news is it's just a shift from one quarter the other. We don't get the cost impacts as our operating partners do or the operating sector does.
So me I think that inflation protection and that business model protection that we offer is proving itself out given the volatility that we're seeing out there in some of the reporting. Over to Slide 6, I mentioned earlier we do expect a strong second half of the year or turn to 2022, and then over the long term I would say that our growth assets continue to steadily advance towards these production -- these projections.
So that's -- this an important slide for us. We put out, as you all know, our inaugural five-year outlook in February and tried to put a focus for the market, with its pretty deep portfolio.
A lot of moving pieces to it, some that are better known than others. But when you take a look back, when you can look at 10% or double-digit CAGR growth over the next five years, and then you look at some of the assets that are in this arrow that aren't factored into that five-year outlook, but that are undergoing pretty material catalyst as well, maybe the timeline a little bit more will pay off right now.
We certainly expect the visibility of grow. Five years is a long time.
So when you take that all together, it's a incredible amount of organic growth to it. When we can, when we can do things like 10 seconds PSA, we're happy to add external growth to that, but this is the feeling of the company for the rest of this decade.
On top of what's already in there and factored in terms of those assets, those assets continue to strengthen as we see on Slide 7. We've been talking about a million meters drill on our properties for the last four years.
In 2021, that was 1.4 million meters. Despite a period where I think everyone is scrambling to access rigs, our grounds, our partners have always been putting good work in and that work has only intensified last year and we see that continuing on into this year.
And then even more important that the work is paying off. And you see that on the right-hand Slide here, it's a new graphic we've added into our asset handbook over the last couple of months, and we've had increases on attributable ounces so we're pointing out that these are kind of apples to apples.
When we -- royalties are easy -- when we have streams, we deduct the transfer prices so that we can compare them on an NSR [Indiscernible] basis if you will. So growth in reserves, growth in M&I, growth inferred across all categories.
And these are -- we can't some these up. You certainly can't if you want to, but these are ounces that don't have any extraction costs associated with them for us.
So we expect that to continue and that free upside that we're benefiting from across our entire portfolio to only intensify. On to Slides 8 and 9, as I mentioned, those two transactions -- really nothing changed on both; just waiting for both to complete.
Both were slightly more complicated transactions than the average. So hence, longer time period, I think, was the acquisition by Odev of two private companies.
So a lot of paperwork, but our understanding is that's going well, there's a lot moving pieces to those transactions. The acquisitions and NYC listing for EV and the financing closings.
But that's all tracking well, or being completed by the second half -- sorry, in the second quarter. And we look forward to adding those ounces to our portfolio in the second half of the year.
We'll find out here in the near-term where within that range of 20 or 40 million ODB chooses to right size that stream. And on the CFA side, slightly longer because of a destocking process, that middle of acquisition corporate needs to go through.
They're working methodically to that process. But I don't recall if we've had chance to talk to everybody about this transaction.
This was another one, TINtech, we were very pleased with that came through our network. This is another one that we got outside of participating in a process and paying the most of this came through relationships that we had and funding the acquirer that we're quite happy to be associated with.
This hit all of our criteria in terms of production now, geography, upside potential long-life, getting longer throughput of upside potential. So really hit all of our criteria and we'll be very happy when Metals Acquisition Corp and complete that transactions on the silver side, and then there's also still potential that we may top us on the shoulder for somebody for exposure as well.
So that's a bit of a high-level update. I'll pass it on to Fred to give you a little bit more color on quarter itself.
And then we'll between two of us happy to answer any questions you may have.
Frederic Ruel
Thank you, Sandeep. [Foreign] Good morning, everyone.
Thank you for joining us today. As you can see on Page 10 of the presentation, we recorded revenues of CAD 50.7 million this quarter from royalties and streams compared to CAD 49 million in Q1, of 2021.
Cash flows from [Indiscernible] activities were CAD 23.6 million on a consolidated basis. For the royalties and streams segment alone, cash flows from operations reached CAD 40.5 million compared to CAD 27 million in Q1 of last year.
On Page 11, we present a summary of our net earnings and adjusted earnings the consolidate to net earnings to Osisko shareholders was CAD 200,000 compared to net earnings of Teva CAD 7.6 million or CAD 0.06 per share in Q1 2021. The lower consolidated net earnings was mostly due to mining operating expenses incurred by Osisko Development in Q1 2022.
On a consolidated basis, adjusted earnings were 2.2 million or CAD 0.01 per share. Comprised of adjusted earnings of CAD 24.8 million or CAD 0.15 per share for -- from the royalties and streams segment.
And an adjusted loss of CAD 22.7 million from Osisko development or CAD 0.14 per share. On Page 12, we have a summary of our quarterly results with additional details for the royalties and streams segment.
Including [Indiscernible] and deployed 18,251 GEOs in Q1 gross profit of CAD 36.2 million compared to 34.6 million last year. And the protein cash flows of CAD 40.5 million that were generated in Q1 from our royalty and streaming business.
From my record, quarterly cash margin of $47.5 million. If we go on Page 13, we present a breakdown of our cash margin.
The cash margin on our royalties reached $25 million and the cash margin on our streams amounted to $12.6 million for, as I said, a quarterly record of 75. -- 70 -- CAD 47.5 million.
On Page 14, we showed the progression of the dividends paid to our shareholders since the creation of Osisko Gold Royalties. At the end of Q1 over CAD 194 million have been returned to our shareholders by dividends, in addition to CAD 86 million that was used to repurchase a total of CAD 6.7 million shares under our NCIB program.
And finally, on Page 15, you will find a summary of our financial position, our consolidated cash balance was CAD 449 million at the end of Q1, including CAD 293 million for Osisko Gold Royalties and CAD 57 million for Osisko Development. Osisko Gold Royalties held investments, adding a value of CAD 250 million at the end of March, in addition to our investment in Osisko Development, which was valued at over CAD 400 million.
Our debt was stable at CAD 407 million at the end of Q1. In April, we have repaid the outstanding balance under our credit facility.
As of today, we have CAD 650 million available under our credit facility, including the accordion of [Indiscernible]. We have also acquired in Q1 250,000 shares under our NCIB program for CAD 4.9 million.
So we have continued to benefit from strong commodity prices in Q1 which allowed us to generate once again, strong cash margins and operating cash flows from our royalty and streaming interest. I will now turn the call back to Sandy for questions.
Operator, feel free to open the lines, please.
Operator
Thank you. [Operator Instruction] Your first question comes from Trevor Turnbull from Scotiabank.
Please go ahead.
Trevor Turnbull
Hi, Sandeep. I guess my first question was about the CSA transaction.
You mentioned the potential timing of closing of that deal later this year. I just wondered if you had a sense of when you might know if Metals Acquisition Corp would make a decision as to whether or not they would take advantage of that additional copper stream.
Sandeep Singh
Yeah. Good morning, Trevor.
Look, I think that will come into focus in the nearer term. Obviously for these factors, there's hoops you need to jump through.
But the intent of that was always -- and that copper stream needs to be mutually agreeable to us and to them. The silver part was binding; the copper was not.
But we expect -- where are we? Middle of May.
We expect, I would say, over the next several weeks or months their funding package to come into focus. They have to then obviously describe that in their disclosure documents to go through the De-SPACing process.
So I would say over that time period, we and they should know if that's something they want to avail themselves of and if it's something we want to pursue. So roughly, I think that's a fair timeline.
Trevor Turnbull
Okay, thank you. And then the other question I had is strategic and related to Sandstorm and Nomads merger.
Consolidation clearly makes sense for Sandstorm and its strategy. And we've seen other smaller royalty companies feel consolidation also makes sense for them.
Given your organic growth and the opportunities in your pipeline, it seems that it doesn't make sense to really think much about consolidation for Osisko right now. But is there a scenario down the road where you think that might be part of your tool kit going forward?
Sandeep Singh
Yeah. Look, there's still a lot there and tripled books, they're all trying to answer it.
I'd say, look, I don't disagree with your conclusion let's put it that way. I'd say our prime focus and you've heard me say this over and over again is to unlock the value of our current portfolio.
It's incredibly valuable and it's not trading where we really wanted to when we were close. So that's job one.
We've said -- we've all said frankly up there were a lot of companies created over 2020 - 2021 are part of 2021 in the royalties sector. We didn't think there was enough, especially on the smaller early-stage side for those companies to necessarily thrive.
So I think some consolidation is warranted and we've been happy to watch it with interest given that we're in the sector, but nothing more. So I think that's normal, and it's healthy.
And then the royalty sector in particular, there's no such thing as a massing too many royalties and streams. It's not like an operating company eventually becomes too big that you can certainly pile up royalty checks.
So I think all that makes sense. We'll stay focused on our business overall when we just think about growth.
If I can zoom out a little bit Trevor, we'll grow when it makes sense for us. And again, you've heard me for few months say that we didn't find -- we'd like to look steel transactions out there.
So we took a hiatus that we focused on our own assets. And then over the course of Q1 with Synctech and TSA, we found transactions that we got off the beaten path, if you will, and we've got good deals on and we acted on them.
So that's how we'll continue to conduct ourselves. And I think that organic growth that we have that's -- that you highlighted, that's pretty special.
On top of trying to do things like Syntech and TSA when we see them makes for a pretty important and pretty special pipeline.
Trevor Turnbull
Great. Thank you very much, that's all.
Operator
[Operator Instructions] There are no further questions at this time. I will turn the call back over to the presenters for closing remarks.
Sandeep Singh
Okay. Thank you, Operator and thanks for taking the time.
Thanks for taking it easier on us than usual because my voice is not in best shave today. But look, we're always available if there are follow-up questions, I do realize it's a busy week, there's a lot you folks are catching up on.
So if you need anything else from us, we're always available. But otherwise, I sum it up by saying pretty standard quarter for us and looking forward to the ounces starting to pile up.
Very happy to have sold one of our problem children assets in Renard. We work on the other diligently, so I think there's a lot of good things happening in the portfolio.
And we certainly look forward to closing those deals as well that we've announced, hopefully by the time we next speak. So all of that and have a great rest of the week.
Thank you, Operator.
Operator
This concludes today's conference call. You may now disconnect.