OR Royalties Inc.

Good morning, ladies and gentlemen, and welcome to Orthoscope Gold Royalty's Q3 2020 Results Conference Calls. After the presentation, we will conduct a question and answer session. If you'd like to ask a question, please pick up your receiver and press star, followed by the number one on your telephone keypad. Please know that this call is being recorded today, November 10, 2020, at 3 a.m. Eastern Time. Today on the call, we have Mr. Sean Roussin, Chair NCO of Asisco Gold Royalties, Mr. Sandeep Singh, President, and Mr. Frédéric Ruel, Chief Financial Officer and Vice President, Finance. I will now like to turn the meeting over to your host for today's call, Mr. Sean Roussin. Bonjour, mesdames et messieurs, et bienvenue à l'appel conférent. C'est le résultat du troisième trimestre de l'année 2020 de redevances orifères au Cisco LT. Après la présentation, nous procéderons à une seule to a question and answer session. If you have a question, please unhook the phone and click on the number 1 on the screen. Please note that this call was registered today, November 10, 2020, at 10 a.m. U.S. time. We have on the call today Mr. Sean Wilson, Chairman of the Board of Directors and Chief of the Orifair Revenue Directorate of Cisco. Mr. Sandy Singh, President, and Mr. Frédéric Ruel, Head of the Financial and Investment Directorate. I would now like to give the floor to your host, Mr. Sean Roussin.

Thank you, Dr. Roussin, and welcome everyone to the third quarter of the third quarter of Cisco Global Values, or Cisco OCR. This morning, we're going to have a presentation with Fred Ruel, our CFO, Welcome to our third quarter conference call. We will be following the format this morning with Fred Ruel presenting our financial results as reported. And then Sandeep Singh, our president and to be CEO will be coming on and giving us the rest of the corporate presentation for today. We will be referring to some forward-looking events, and we have a presentation on our website titled Q3 2020 Results that you can follow this morning. I will give a small preamble this morning and then pass it over. As you know, we are in the evolution of the Asisco story with the purification of the royalty model for Asisco Gold Royalties through the spin-out of the Barkerville and San Antonio assets into the new entity of ODEV. That vehicle will probably start trading in early December. And some more work left to do on that as we get into it. And that should simplify the business of Cisco Gold Royalties on a forward basis. Quite excited about the evolution there and the aspects of what's happened with the ODEV assets, both at Barkerville and San Antonio, as we move forward. And I think it goes well to... explaining why we believe Cisco Gold Royalties has the best business model in the space with the sidecar accelerator business, providing unequal opportunities to Cisco Gold Royalties as we evolve in the space and continue to execute our business plan to build the best business around the royalty model in the sector. On that note, I will hand it over to Fred Ruel to give you the financial highlights. And then Sandeep will take over after that. Fred, over to you.

Merci, Sean. Good morning, everyone. Thank you for joining us today. A strong third quarter for Cisco with production rebounding very well from Q2 and the COVID impact. We earned 16,739 GEOs in Q3, generated record revenues of $41.2 million, record operating cash flows of $36.1 million. and an operating margin on our royalties and streams of over 96%. Net earnings were $12.5 million, or $0.08 per share, while our adjusted earnings were $17.5 million, or $0.11 per share. We also acquired during the quarter the remaining 15% ownership on the Canadian Precious Metal Royalty Portfolio, which includes royalties on the Island Gold and Lamac Mines. We also announced a strategic partnership with Regulus for $12.5 million U.S. And of course, as you all know, we announced in October the spin-off transaction and the creation of a Cisco development. On page four of the presentation, we show our production by assets and by products. Again, the Canadian Malafik mine delivered strong results, and Victoria continued to increase the deliveries. In Q3, 70% of our production came from gold and 27% from silver. As presented under page 5 of the presentation, we recorded record revenues from royalties and streams of $41.2 million compared to $33.9 million in Q3 2019. Cash flows from operating activities reached a record $36.1 million compared to $28.3 million last year. If we go to page 6, we have a breakdown of our cash margin for Q3 and year-to-date. The cash margin on our royalties increased in Q3 to reach $30.1 million compared to $23.4 million last year. For the first nine months of the year, the cash margin on royalties reached $76.5 million, an increase of $5.9 million compared to Q3 2019, despite the COVID impact on our deliveries during the second quarter. The cash margin on our streams was $9.6 million in Q3, compared to 7.4 million in 2019, and 25 million for the first nine months of the year, 4.5 million higher in 2019. This resulted in a cash margin on our royalties and streams of over 96% in 2003, in fact, 96.4%, compared to 91% in 2003 of last year. Our total cash margin reached 40.5 million, 8.7 million higher than last year. Year-to-date, our total cash margin was $104 million, an increase of close to $10 million. On page 7, we have a summary of our earnings and adjusted earnings. Net income was $12.5 million into $0.038 per share, compared to a net loss of $45.9 million last year, or $0.32 per share. The loss in 2019 was due to impermanent charges. Adjusted earnings for Q3 reached $17.5 million, or $0.11 per share, similar to last year. On page 8 of the presentation, we have a summary of our results for Q3 and year-to-date. Geos from gold production were lowered this year, partly due to the sale of the Bruce Jackoff take in Q3 2019 and the remaining impact of COVID. But this was more than offset by strong silver deliveries. The decrease in our total revenues from $109 million to $56 million was also due to the sale of the Bruce Jack offtake last year, partially offset by a higher realized price on gold. Our average gold price per ounce sold amounted to a record $2,545 Canadian in Q3 of this year, compared to $1,952 in Q3 of last year. Our gross profit for Q3 increased to $30.8 million from $20.9 million in 2019. On page 9, we have a summary of our strong financial position. Our cash balance at the end of Q3 was $161 million. Our debt amounted to $422 million unchanged from Q2, including the $100 million accordion available under our credit facility. The facility has over $400 million available at the end of September, allowing us to quickly deploy capital as needed. Finally, on page 10, you may find our updated guidance that was released in early August. We expect GEOs of between $33,000 to $35,000 in the second half of this year, with a cash margin on royalties and streams of approximately 95%. We anticipate a continued upward trend in general deliveries in the fourth quarter, and we believe that we are in an excellent position to meet our forecast for the second half of 2020. I'll pass the talk to Sandeep for the rest of the presentation. Sandeep, to you.

Thanks, Wajred, and good morning, everyone. It's Sandeep Singh here. Look, hopefully what you've taken away from Fred's presentation and our Q3 results is that this was an excellent quarter. You know, records in terms of cash flow, despite the fact that, you know, our operators' assets were largely still revving up over the course of the quarter post-COVID. The asset base is performing extremely well overall. As Fred mentioned, you know, production bounced back well with still further upside expected in Q4. You know, to touch on that a little bit, we've talked about timing, you know, deliveries in the last quarter in our press release. For instance, CB, we didn't get any ounces delivered to us in Q3. They're certainly producing in Q3. So that was kind of the hangover of COVID where we didn't get that impact in Q2. We got it in Q3. Island as well. The mine is doing extremely well, as everyone I'm sure knows. But our ounces were down in Q2. That's kind of behind us as well. And looking forward to kind of getting over the hump on those types of issues. Malarctic, obviously, our flagship asset, a good quarter by every respect, but also included some processing of low-grade stockpiles as they look for increased flexibility until the Barnett higher grid zone starts contributing. It did a little bit in Q3. We certainly hope that that will continue. And then Victoria is the large asset for us ramping up this year. It's still ramping up and deliveries are growing to us all the time. I'll touch on that in a little while. I'm still looking at slide 10, by the way, if you're following along in the deck. And as Fred mentioned, meeting our guidance equates to about 16,000 to 18,000 ounces, just a touch above for the low to the high in terms of Q4. And we certainly think given the dynamics we just mentioned, I just mentioned that we don't see any risk of that. Obviously, the assets will do what they do, but we feel pretty comfortable heading into the last quarter of the year. In terms of growth during the quarter, Uh, we spent, uh, about 67 million Canadian on, uh, royalty and stream growth in the quarter between the acquisition of the case portfolio, the 12 and a half million and the San Antonio stream fund, you know, basically, uh, facilitating that transaction, which delivered us to San Antonio stream. Um, you know, so that between those two transactions, there's immediate growth on assets that we already own in that, in that case portfolio that we like and not have big upside. And then, uh, the additional stream we think has the potential for significant contribution in the New York term as well. Look at slide 11. The next two slides, I will touch on the important transaction that we announced post the end of the quarter and want to make sure everyone understands the impact on us. I'm sure everyone does understand the transaction structure by now. We've had a chance to talk to most of you about it. As Sean mentioned, it remains on track, or the trading of ODEV remains on track for early December. We're just going through the last of the listing process now, and that bodes well. Again, I won't go through the transaction particulars. I'm sure they're all well understood. In terms of the financing, I will say that it was a good result in what's been a choppy market, generally speaking, leading into the U.S. election. Good demand, a good set of shoulders that Sean and team will take forward in the Cisco development. and significant interest in that company, even though the structure was a little bit complex for some groups to be able to participate in. So we think there's a good launch in store for us on the ODEV side and some meaningful catalysts in the next six months that the team will be able to unlock value with. In terms of the, maybe I'll touch on it because it preempts hopefully the question a little bit. The only real question we get left from an OR perspective is on the retained ownership. Obviously, 88% in the hands of one entity is not a sustainable level. We structured it in such a way that we wanted, and we want that retained upside. As the ODEP team moves the assets forward, we will be diluted. We expect the team to move the assets forward quickly to meet those catalysts. And then as well, as I've mentioned before, we'll look for opportunities to reduce as well. But the prize there is a significant amount of value. So we're going to look to do that in a smarter way as possible. On slide 12, I think it's worth reemphasizing one more time. I think it's a win for both sets of assets. Frankly, I think we've set up the Cisco development well as a strong portfolio, well-funded assets. honest way to becoming an intermediate company solely with assets based in North America when in production and a good mix of near-term production potential as well as the flagship assets. Obviously, the team, we have the utmost confidence in terms of unlocking that value. On the OR side, I think there's quite a lot, frankly. I mean, it's a lift. We got our shoulders a lift from what's been invested into the asset base there, which is significant We've crystallized the value of those development assets. They're now off of our balance sheet. They'll have a see-through value. They have one based on the financing. They'll have one every day thereafter, which we think will be beneficial to our shareholders. We reduced or, you know, we'll be eliminating the spend in terms of the asset exposure. In Q3, that was roughly $69 on care. So in keeping with previous quarters, when you flow that through, that's almost about $0.10 a share. to the bottom line. We've also produced or will be producing our GNA as part of the transaction as essentially the full team required to run both companies was in place and we're just segmenting them between the two. And not, you know, last but not least, we secured and fashioned at least, you know, 20,000 ounces of geos for Cisco, you know, subject to unlocking value on those assets. But that's a, hugely significant chunk of growth that we got paid to take in the end. So a rough ride perhaps to get there, but ultimately happy with the end result. And we certainly feel like we've set the company up for a significant re-rate. The assets, the royalty portfolio that is in our fiscal royalties today deserves a better valuation. and has a pretty substantial growth profile that we don't think we're getting proper value for. So that's our job going forward is make sure we can unlock that for the benefit of our shareholders. I think we've done a lot of the heavy lifting and we'll continue down that path. If you look at slide 13, it's the growth profile. I touched on a little bit before, you know, essentially the ability to more than double production organically with things that we've already bought and paid for. Some of those contributing this year, some of those contributing next. and a good pipeline of assets that are coming on behind. So we feel pretty comfortable in terms of where we sit currently. And this provides us the ability to be disciplined in what certainly can feel like a bit of a heavy transaction market out there. We'll look to pick our spots when we see value. If we don't, we'll sit on the sidelines, given the dynamic I just mentioned. I'll spend a little bit of time on slides 14 and 15 talking about the Malarkey Underground, given that it's a huge catalyst for us, we hope, and we certainly expect over the course of the next coming months, not just for us, but obviously our joint venture partners, Ignico and Humana, who are doing a tremendous job with the asset. The OpenFit continues to deliver like clockwork, so I'll focus you on The underground, I'm sure all of you who follow those companies are aware of the underground work that was announced in Q2 in terms of wrapping down the portal work that's underway now, almost complete, and the two years' worth of wrapping into East Goldie, Odyssey, and East Malartic. In Q3, a lot of the discussion was around drilling update at East Goldie, which should translate into a new resource early in the year, followed by a PEA, which I'm sure the market hotly look forward to. The drill results were nothing short of fantastic, frankly, with widths and grades increasing. If you look at the bottom right here, you'll also notice And the continuity has never really been an issue, but it continues to be reinforced. And I think it goes a long way towards adding confidence to the operators to push that asset forward, including a potential shaft decision off the back of the PA in New Year. And if you look at the bottom right, as I was trying to say, East Goldie and East Malartic dipping towards each other with certainly the potential of those two converging at depth as well, open at depth to help benefit that. A lot of good news from a malarctic perspective, a malarctic underground perspective, and we look forward to that getting further advanced by our partners. If you look at slide 15, just a little bit more on the exploration update, 12 rifts turning at East Goldie generated 38,000 meters of drilling in Q3. That takes us to about 77,000, 78,000 meters, I think, for the first nine months. and a similar kind of Q3, Q4 level of drilling, so intense drilling. And certainly we expect that to lead to a significant increase in resources by the time they update that in the new year. As I mentioned, you'll notice a snapshot of some of these results here. You know, nothing short of exceptional, frankly. Fantastic continuity, average width, if I remember correctly, north of 10, I think it's 11 meters. averaging greater than three grams per ton in the East Goldie portion. So this is going to be one of the core facets, one of the core catalysts for us. We've always felt this year that this was shaping up to be the best development project maybe in the sector or certainly one of. It's continued to trend that way. And our view is the more the operators do their work, the more they're comfortable talking about it. early in the year, the better it will be for all of our sets of shareholders. So we look forward to that ongoing work. If you move to slide 16, just some of the other producing assets to touch on a little bit. And then if I missed something, we can certainly pick it up in the Q&A. Eagle, I touched on earlier, ramping up, continues to ramp up well. I guess the wrap-up continues. If you follow Victoria, you would have heard of some bottlenecks on the processing, largely crushing side, that are being addressed through a variety of optimization work. Importantly, I think the grade and the recovery, if you listen to the operator, are reconciling quite well. So it's just really a methodical march. up in terms of tons being stacked. And so we're quite confident that the team is doing the right thing there. We keep a close eye on it and look forward to that production growing. It's growing to us all the time. And then from an exploration perspective, you know, everyone's been focused on the production there as they should be, but we're starting to see some really good stuff come out of Victoria on the exploration side, including most recently on the Raven targets. a drill hole of about 65 meters and just shy of three grams, which was a large step out hole. So again, you know, speaking to character and the potential of a large, a very large prospective land package. Mantos, again, a strong contributor in Q3 for us, performed quite well, even with all the challenges of COVID in South America, Chile especially. So we commend them for that. And in terms of the expansion of, I think we say here mid-2021. There could be some small delays, again, COVID-related, but that pushed that into the second half of the year. But still, overall, we're quite pleased with the updates we're seeing in terms of their expansion work and how little impact COVID has actually had on them. Eleanor, again, it was a COVID-impacted quarter, slower rev up there. as I guess they're being a little bit more cautious and lower tons mine, but we expect them to continue to make progress on their being Newmont's full potential program. So hopefully this is one that they can continue to improve and add ounces to us. On slide 17, I touched on the assets being contributed through ODEV to us. So I'll go through this relatively quickly. At Caribou, look at the... significant, scarce, meaningful, whatever adjective you want to use, resource at Caribou. There's an aggressive drill program underway, and we expect that to continue under the ODEV banner. Lots of exploration success over the course of the year that the team will be following up on to turn discoveries into resources and a meaningful reserve update as well that will feed into feasibility study in mid-2021 and an ongoing path towards permitting Recently, you know, IBA signed with the key First Nation, the Lukaku Dene Nation, so significant advancement from that perspective as well. And from what we can see, permitting is obviously a lot of hoops to jump through, but the team is doing a great job doing just that. And on the San Antonio side, really great starter pack with a million ounces of high-grade 1.2-gram heap leach material, large land package, really untouched and kind of forgotten. Work to do there in terms of permitting, infill drilling, expansion drilling, studies, etc. But a great address and a great starter pack, as I mentioned, in Sonora with significant upside overall and a lot of good near-term opportunities that Sean and team will be attacking. Slide 18 just highlights, maybe slide 18 and 19 highlights some of our other assets. I won't go through them all in detail. Windfall, Hermosa, Horn 5, significant contributors to growth. At Cisco Mining, sizable, high-grade, 5 million ounce resource. Continue to, you know, the press release had a pretty funny title, you know, more of the same, but that more of the same is some of the most exceptional drill results in the sector at present. So we look forward to that continuing to add meaningful ounces as they work towards their own feasibility study in 2021. And Salco and Horn 5, a very important announcement, their transaction with Glencore, where they provided a convertible to venture structure to not take, which they always had the right to. And frankly, got some skin in the game. And as they continue to work towards the last uh, technical diligence they're doing. And, and the team at Falco have done a phenomenal job, uh, getting the relationship with Glencore to the point where it is. So we look forward to them finishing that exercise, um, over the next, uh, short while. And then again, just to touch on horn five as well, which is a stream that we fund based on success, but, um, can be a meaningful contributor depending on your, your gold and silver prices circa 20,000 ounces of geos right there. Um, And so the recent announcement is a positive one towards that. Our stream, as I said, is funded on success. But if you just look at the Monarch transaction recently, congrats to those folks, for I think circa $150 million in the neighborhood, we certainly think that's a very positive read-through on value for 6 million ounces of reserves and 10 million ounces of overall gold equivalent resources. On slide 19, again, other examples of how the portfolio is doing well, I touched on on Island, obviously a ton of success there for the Alamos folks in terms of, uh, of that mine, um, in terms of production and cashflow, but also on the exploration side, uh, and some of that drilling, especially over to the East now drifting over to our higher grade royalty portion. So we look forward to their continued work towards expansion and, and obviously, uh, uh, continued exploration success. Uh, CV, I touched on earlier, uh, deliveries have restarted for us in October. So that's, uh, That's behind us, and we look forward to their catching up to a high-grade mine and asset for us in Canada. Gibraltar and the Tseko folks, I think the upshot of that is they did quite well through COVID, managed it exceptionally well despite such a large workforce. They kept costs down, brought costs down, frankly, and now the copper price is in a much more supportive place. So I think that's a good news story. We obviously improved our stream significantly. earlier in the year to assist and, frankly, opportunistically for us. And on SASA, again, a really important contributor on the silver side. Obviously, unfortunately, there was a tailings issue, a tailings leak during the quarter. Those remediation plans seem to have gone well and have been well accepted. They're still finishing that exercise, and hopefully that gets sorted out soon. In the meantime, production is back at full capacity. So, Hopefully that issue gets resolved and is behind them. And then I guess ending on slide 20, I will just re-emphasize again that we think it's frankly an excellent quarter coming out of COVID and sets us up for a strong finish to the year. And at current gold prices, even with the last day factored in, we're still making money hand over fist and hence the records that we saw from the cash revenue, more importantly cash flow perspective. but of course a Q3, so hopefully we can keep that trend going. There certainly are a lot of strong catalysts across the asset base over the next three, six, 12 months. Pick your timeframe. And what we think is fairly sector-leading organic growth that we should start to chip away at. In the process, we think we've simplified the story this quarter. And as we get out and tell that story, we certainly expect to undo the meaningful trading discount that we still think our assets deserve a better lot in life on. So with that, I will conclude and open up for any questions you may have of myself, Brad, and Sean.

Thank you. At this time, if you'd like to ask a question, press star, follow button number one on your telephone keypad. To withdraw your question, press the pound key. And your first question comes from Ralph Profoti with H Capital. Please go ahead.

Hi there, and good morning, everyone. Thanks for taking my questions. Sandeep, two of them, if I may. Firstly, you talked about the transaction market. You described it as being a heavy transaction market. Just wondering kind of what you meant by that. Are you seeing a significant pickup in activity or a more competitive environment or both? And in that context... Under the new structure, how would you allocate priorities to how you would actually fund new transactions?

Sure. Happy to touch on that, Ralph, and good morning. Look, I think in terms of your first question, in terms of the growth market, I think I said heady, or I meant to say heady, not heavy. But look, it's clear there is a fair bit more competition out there. You know, I don't think we've been shy. The going rate for things at times we've chosen to not pay. We've tried to grit for a variety of reasons. We have significant organic growth, as I mentioned earlier, and we've tried to fashion new growth in different ways. And the Cisco development transaction is one example of that. But, you know, there's more people out there looking for royalties. So you'll find that at times. But there's also more royalties and streaming opportunities coming around all the time, I think. You know, that ebbs and flows. It's a capital intensive market. I think through royalty and streaming, we provide collectively a competitive cost of capital. So there's still a lot to do and things popping up kind of here and there all the time. I would describe our pipeline as good. You know, we still see things that we can do that add, you know, moderate type transactions that add meaningful growth to our size of portfolio that we, you know, we think are still good value. And those are the types of things we're focused on. So hopefully that answers your first question. And then again, flowing into your second in terms of allocating priorities. Again, I think for us, it's given what I just described, it's having discipline and uh and showing discipline in terms of what we reach for if we see good value out there we can reach for it we can do almost any transaction we want to in the sector but but uh at times that's been a big um so we'll look we'll look to pick our spots uh the fact is job one is to get paid for our current set of assets um and uh and then obviously have the organic growth kick in if we can supplement that with smart transactions We will, we've got, as we know, you and I, with many of you have talked about the fact we've got a large development portfolio that's transitioning already. And we'll get the benefit of those ounces really as they do transition from development to producer status. So, you know, the focus is on we have to look at things on a case-by-case basis. You can't be too stuck in your ways, but the focus to me is on near-term, either cash flowing or near-term opportunities. That said, when we see an attractive asset like we structured with Regulus in Peru, which is big and getting bigger all the time, we'll reach for those as well. Hopefully that gives you a bit of color. If I can just

distill that those are a lot of words but if i can distill them into two it would be uh discipline and balance fair enough yeah um i appreciate that if i can follow up on renard um can you give us sort of your views on on the ramp up and milestones that you're seeing it's not included in the guidance how much upside could we see from i say a materiality perspective

Yeah, look, I mean, Renard is still important to us. Uh, we, we took it out of the guidance out of the, you know, overabundance of caution while it was on longer care and maintenance, uh, uh, through COVID and then obviously the luxury good market, uh, you know, not, not wasn't our expectation would be the first thing to come out of COVID. Um, but that being said, I think we've been, um, positively surprised. So the mind is back. We're up and running. Um, We chipped in, at least on paper right now, not fully, to provide a working capital facility with our partners who are quite strong there with us, just to make sure that there wouldn't be any fits and starts. There was a significant inventory of diamonds on the books already that they could dip into as needed. They've started to make some of those sales. And the prices have been good, kind of back to pre-COVID type levels, sooner than we expected. So I think that's an important asset. It can add a big chunk to our gold equivalent ounces. We're still in the kind of workout phase now. It's going ahead of schedule versus my own expectations at the start of the year. And it's kind of on the cusp of needing an extra little push from a diamond price perspective, whereby we can get back to the point where we're making money on our screen. Now, you know, thematically, that's the wrong word, but, but market-wise, um, Argyle, uh, you know, Rio Santos Argyle is finally kind of, uh, you know, run out of, of ore and it's on the, the shutdown phase, long phase, but I think, uh, in terms of, you know, in their last deliveries, uh, that is 10%, I think roughly as a global market, uh, importantly for us in the same, uh, overlaps significantly, I guess I'd say in the, in the smaller fraction, uh, that Renard lives and breathes in. So, you know, we certainly hope that there's a, uh, a moderate improvement that gets us back to our stream. It's a significant stream for us. Ultimately, the logic on that transaction was it is a chunky stream for us. It's a billion dollars of good infrastructure. It's a mine that runs well, just needs a little bit of help on the diamond side, the price side, and so far, so good. So I don't know if that answers your specific question, but we're certainly happy with the progress there and look forward to a positive outcome eventually, hopefully sooner than later.

Yep, no, answers it perfectly. Thank you, Sandeep. Thanks for the input. No problem, Raf.

And your next question comes from the line of Puneet Singh with Industrial Alliance. Please go ahead.

Great, thanks. You upped your exposure to Island Lake in the quarter. Can you take us through the varying royalty rates on the mine, which areas are higher, which areas are lower, and how that works in terms of the expansion they're planning at the mine?

Yeah, hi, Puneet. Thanks for your question. So a little bit from mine, just overall, that we think is running exceptionally well. Again, kudos to the Alamos team in terms of what they've done there. Obviously, some of the blueprint was already there, but they've done a fantastic job with it since. And the grades and widths that they continue to hit at depth are improving that situation. So it's an asset that we had 85% of that portfolio, if you will, that we bought from tech. Case had the last 15%. adding exposure to a mine that we already knew well and liked would dig upside was a bit of a no-brainer. Currently, the royalty rate, if I'm not mistaken, is 1.38 to shy of 1.4%, and that will continue to be the case for some time. Importantly, as they drill to the east, they are drifting towards what is, I think, between 2% and 3% royalty space for us. So I don't have the exact answer for you in terms of when that transitions, but certainly, if you'd like, I can follow up with you with a better answer post the call.

Okay, great. That's good. And then I guess my second question, just on Mantos, I see you put out a forecast of when the debottling project would be complete, I guess. are you still forecasting it to go up to a million ounces of silver per annum after it's complete? And how fast do you think the operator can get to that level?

Yeah, look, I mean, I think we're pleased with the progress today. I'd say we're happy that the, you know, what looks like minimal limited impact from the COVID, essentially, both at the actual operation and on the expansion side. So that all bodes well. I think, you know, so that's from a timing perspective. Will that continue to be the case? I'm not sure, but so far so good. How that affects the ramp up, we'll certainly want to see as well. So I think we're being, we'll stay, you know, mute for the time being, but certainly we do, nothing's changed, I guess, in our view of ultimately where it ends up. A question of how long it gets to take to get there, but really, you know, we might be talking months. as opposed to anything else. But ultimately, our view there has not changed, and we look forward to that as a contribution. Okay. Fair enough. Thanks.

And your next question. Thank you. I'm sorry. And your next question comes from the line of Mike Jelonen with Bank of America. Please go ahead.

Good morning, Sean, Cindy, Fred. Just a question on page 13 where you show a production going around 64 and a half thousand ounces to the midpoint this year to 140,000 by some date that's not shown. Just wondering what would be that date and what are the key assets that basically drive about a 75,000 ounce increase, more than 100%. Thanks.

Hi, Mike. Good morning. Yeah, look, that is intentional. We haven't given a date for that. Again, mainly because it's not in our control. I will say this. you know, we're not talking about kind of often the distance, you know, we might not be talking about the next two or three years either, but these are kind of in the next several years, we certainly see the ability for the asset base to grow to that order of magnitude. In terms of the assets, look, we were supposed to be, you know, supposed to be, I think the range was 82 to 88,000 ounces for this year, 85 being the midpoint pre-COVID range. um you know with uh some some renard so look we certainly have the ability we're on track for growth this year with eagle kicking in beyond that um we've got things like the expansions we just talked about a mantos we've got windfall uh hermosa akila being a big chunk there as well falco is not in that number given that we haven't paid for it yet and then we've tacked on a cisco development uh kind of the placeholder for about 20 000 ounces a year so those are Those are some of the assets in the next several years. Each of those, you might have a view on their respective timing. But importantly, all are generally all moving forward well with some minor exceptions. But most of those assets getting good traction and advancing well in what is a pretty conducive equity market out there. So hopefully that continues to be the case for those folks through the development and construction trough.

Well, our analyst that covers South 32 has Hermosa maybe 2026 at the earliest. And what about Windfall? I read their press releases. I don't see any production or construction decision yet. Maybe what Cisco sees, what's your view of what they could be in production? Because it's obviously a great discovery.

Yeah, maybe I'll jump in on that one. Go ahead, John. You know, I think right now we're pounding away on the intro drilling to finish the reserve status there. We should be done the drilling sometime in the spring. And, you know, the question is how big is it? But, you know, we're obviously in good shape. The company is fully funded with almost $300 million available to it. So it easily takes care of the equity component required to build it. And lots of tailwind support from both First Nations and the government of Quebec in the We're in the Plan Nord area. You know, so it's moving forward extremely quickly. And the last time I checked, there was more than 26, 27 rigs, maybe a little bit more than that, turning on it right now. So we are in a go-fast program with windfall. And I'm not going to predict the exact date of the production, but we're driving hard to set the stage for the final permits now. And then we'll be in permitting for 12 to 24 months. Okay.

Okay. Thanks, Sean, for that. And well, good luck to have these discoveries in Canada.

Yeah, it's good to see, you know, I think half the drill rigs turning right now in Quebec right now are at Windfall Lake, right? So pretty active place. It looks more like a deployment zone than it does a mining project right now. A significant amount of infrastructure on the go. And, you know, we've been a leader on the COVID-19 program with the first site that installed an on-site drill. lab that delivers results in three to six hours um but we're setting up for the big play there and uh you know john's done an exceptional job keeping that one well financed and and uh you know pedal to the metal and uh matthew stepped in as president there definitely has the leadership capabilities to get us where we have to go on that one okay yeah and mike just i'm sorry sorry mike yeah just to finish up i mean look you

You raise a good point. I mean, ultimately, in terms of timing, you know, we'll see how quickly those things move together, move forward. But certainly we're not fussed when the operators, obviously two pretty different operators in terms of the assets you mentioned there, but have the wind at their backs. They're finding more with South 32. They're talking about, you know, taking longer to create their pre-feasibility study, but thinking of it as a larger project. So all those things are positive. Obviously, we'd love them to be in production today. but we'll settle for the fact that they're getting bigger and better all the time and continually moving in the right direction towards production.

Okay. Well, I look forward to the windfall line opening event. Yeah, I don't know.

Did you see the picture of the core that John put up on there?

No.

On Instagram?

I'm blocking it. Yeah.

No, they continue to shoot the lights out from an exploration perspective. And, again, I think, like you, we're looking forward to them putting it all together for us.

I've only been doing this for 36 years, but I haven't seen a better piece of core than that.

Sean, you'll have a first-year production just in the core. That's right.

Well, that is kind of the underwhelming strategy here is to run the core shack for at least 24 months. Okay.

Now, maybe, Sandeep, just going back to OD, you mentioned bringing down your interest over time. Where would OR be? What kind of percentage would you hold, say, in three years from now on OD? Would you be below 50%, do you think?

Oh, look, I mean, I think certainly, I mean, when we talked about, and Sean in particular talked about OD, North Spirit, which, you know, this is really just North Spirit renamed OD, And public, you know, ultimately the idea was not to be, you know, a 50% shoulder. The idea was to set up the assets well, benefit from the royalties and streams, and then send it on its way. There's, you know, two, potentially two significant developments, you know, mine builds there that will require capital. Um, anyone who knows Sean knows that he's, he's going to be active to unlock those catalysts quickly. So just, you know, uh, you know, I think when we talked about it, North spirit was meant to kind of come down to 20, 20 some odd percent. I don't know when that will happen. Three years is a long time in my mind, uh, Mike. So, uh, a lot can happen between now and then, but ultimately, you know, we've, we've structured it well now. So we finished the structuring part of the transaction, which we said we weren't done a year ago. And eventually we do need to start taking money off the table there, but, uh, we'll let the company take its first steps here as a public company. Three years feels like an awfully long time away. And I think a lot will happen between now and then. Okay.

Maybe, Mike, I'll add to it. 99% of the companies that you guys cover, most of them have too much liquidity and too high a float, not a big enough shareholder ownership base in any one shareholder. We're the 1% that are actually in full control of our floats. and we have a proper shareholder base to work with coming out of the chute, and we don't have any particular hangover from previous adventures in this stock. This thing is pristine, and it's the first time in my career that I've seen as many institutional shareholders calling me to worry about the size of the float as opposed to worry about the size of the float because it's too big. So I think we're in a quality situation, and I'm quite happy to be the 1% in this market.

Okay, well, John, good luck with OD, and Sandeep, good luck with OIR, and that's all my questions. Thank you.

Thanks a lot, Mike.

And your next question comes from the line of Josh Walson with RBC. Please go ahead.

Thank you. Just wrapping up those thoughts on windfall, is there any sort of guidance you can provide for some of the more near-term catalysts ahead of production, like the feasibility study?

Yeah, I think where we stand on that, Josh, is we're going to let John Brzezinski answer those questions. You know, we're a 14% shareholder in the company, and we'll rely on John to come up with his guidance on those issues.

Good. Okay. And from a go-forward perspective in terms of structuring transactions, you know, historically, the accelerator model had utilized equity in terms of its transactions. Now that's been spun out to ODEV. When you look at these types of accelerator model transactions going forward, has there been any thought given to how you would structure these and whether or not equity would still be a meaningful component to that?

Thanks, Josh. I think taking a step back and then i'll answer your question specifically um look that accelerator model in its true form has been hugely beneficial and we wouldn't be talking about things like like the five million ounces at windfall uh and our our royalty on it uh had it not been for for that we wouldn't be talking about the hermosa one percent nsr that we have and we can debate when it comes on, but certainly appreciate having a 1% NSR on a South 32 scale project. So I think, you know, that accelerator model is its true form of seeding companies, taking royalties early without competition. And for when you look backwards, you know, with the benefit of hindsight, the cents on the dollar is good business. You know, the gating item is, you know, not our willingness to spend you know, $10 million to try to find a 10 bagger. It's really are those opportunities out there. Historically, we've done one a year, essentially seeded one of those companies a year. And again, that's easier done in a down market than it is in a more positive equity market where there's more capital available for those types of stories. So we'll continue to be on the lookout. We think it's a great kicker to our model, but it is not the model. It's the kicker. And so if it needs a little bit of equity to get the royalty, we'll look at those on a case-by-case basis as they've been pretty good to us. So that accelerator model, we have no issues with. We think it's added a lot of value. Clearly, bringing in an asset in-house fully, even though we said that that wasn't the end result, that didn't pan out as expected. And so we're not looking to repeat those exercises. But spending 10 to try to turn it into 100 and get a royalty that's worth 100, At the same time, if we see them, we'll look to act. But overall, I guess that's how I would answer that question.

Okay. And you mentioned expected cost reduction with the spin-out of ODEV on the G&A side. The assumption is that ODEV is going to be fully consolidated just given the ownership structure. I guess, what would you expect the G&E numbers to be on an annual basis going forward, and will we be able to actually see that if it's all consolidated?

Yeah, look, we will be consolidating financials as a result of the ownership in ODEV. So that's kind of one, you know, still relatively muddy piece of the equation, and we'll sort itself out in time. That being said, the actual savings are real. So in terms of the spend that's no longer there on the asset, that's real. In terms of G&A having, as I said, most of the team available to staff both these companies, obviously some additional public costs of running a company, but relatively minimal in our mind. So on the OR side, that G&A, the technical team that's moving over is real. I'd say You know, we want to let the company have its first few steps as a public company before we start guiding people. But we will get back to giving you a bit more color on that. And frankly, it'll shape up on its own. And we will certainly do our best, even during the portion that we're consolidating, Josh, to, within the rules that we have to live by, do a good job of segmenting as best we can what are pure OR costs and what are consolidated OR costs. Okay. And then last question.

Okay.

Sorry, go ahead. No, go ahead. I was going to say, yeah, sorry, last question on Malartic. And yourself and perhaps Sean might have some insight on this. You know, with the ramp up of Barnett, you know, if I recall the old, and this is obviously a long time ago, old Cisco mine plan for the asset, there were some obviously very high grades available that would have been a meaningful contributor to OR today. The mind plane, I think, has shifted to some degree with the blending of Barnett over time. But is there any perspective on what you have in terms of the progression of that grade profile? I know you guys aren't the operators today, but any thoughts on what that grade will transition to become?

I'll let Sean jump in as the guy who built the thing. If you like, Sean, other than to say that I think the end of your comment is right, so maybe Sean can add some context from when we were looking at it, he was looking at it. But we're not the operators. Ultimately, there is a really nice kicker to the grade, how they phase that in. will be up to them um but uh the good news is it's it's it's in you know they've gotten some production out of it in in q3 i think it's 27 000 ounces of pre-production um so they have access to it now and it does provide a lot of flexibility going forward so uh good news uh when it gets phased in and how it gets phased in i guess we'll we'll depend a little bit so we'll be at the mercy of uh of the operators, but I certainly expect them to do it in a way that ultimately maximizes the value of the asset. Sean, did you have any other kind of historical context on Barnett you want to provide?

Well, typically we had bottled it at around two grams, so there's a significant upside there, and there is a few high-grade pods within it that will probably be blended, but the exact mine sequencing is going to be the key here, and I would expect that they'll try and make up some grades to pick up for the Quebec shutdown of the mines that we experienced earlier in the year. So I think they have the toolbox in front of them to go after that higher grade component in the near term. So we'll see what happens, but we don't have a day-to-day mine plan to work from.

All right. That's all my questions. Thank you. Thanks, Josh.

And your next question comes from the line of John Tumassos with John Tumassos Ferry Independent Research. Please go ahead.

Thank you for taking my questions. Concerning the Malartic Underground, clearly the shaft into East Goldie is under planning, and that's the higher grade area. But there's also East and West Odyssey and East Malartic. Do you envision one underground mine by shaft into the highest grade zone, or is there potential for the exploration ramp into the other zones to be a second mine with two sources of underground feed for the mill?

Just in general, John, I mean, if you can have two separate working entities rather than bottlenecking, you always take advantage of that, and In terms of Agnico, they're very familiar with rail veyers and very efficient at underground mining with their experience at Goldex and La Ronne. I expect they'll take full advantage of both entry points and they'll probably try and set it up so that they can work at multiple development phases at the same time. The bottleneck with shafts is, of course, is that um even though you might do the substations when you go down on a level base it's very hard to run the government uh from a shaft that's an active development um you know so they're going to want to take advantage of that there is some old infrastructure in the underground there that hasn't been incorporated into the mine plan yet i imagine there'll be a few a few tests to see if any of that old underground development work uh that's in there um has any value to it or not but um for your primary college rants and chaps who want to be in Fresh Rock. So we'll see, but I think there'll be a couple of tricks to turn on the way down.

Yeah, and then, John, just to finish the thought, I mean, look, I don't personally, as the layman of the group, I don't think they're envisaging two years of underground development work through that ramp to just be for the purpose of exploration drilling and a bulk sample. I'm sure they're expecting that if they have success, that will be longer-term infrastructure. But I think the good news is we don't have that long to find out how they're thinking about this collective and the synergies between East Goldie and the rest of the project.

Second, The Regulus transaction is a little complex, and I want to make sure my reading comprehension is up to snuff. Is it correct that you paid U.S. $12.5 million for three different things, $5.5 million warrants at Canadian or U.S. 225 first, a three-quarters to one-and-a-half percent revenue royalty on 75% of the indicated and 50% of the inferred on the MENA Volare zone plus the opportunity to participate in more future royalties?

John, I'm not sure I could have said that any better myself, so yes.

So this is not a complete transaction and but an expression of good faith, whereas they restructure things, you're going to participate in more, and you gave them a little bit of extra cash toward that.

No, look, the way I think of it is, frankly, just in terms of the initial, it is a partnership. There are a patchwork of existing royalties there that they've shown an ability to go back and buy back. Some of them are contractual. Some of them, they've just shown the ability to negotiate those. In our minds, what we paid for the initial royalty on antiquary, which is significant, and on the bulk of the current resources you highlighted, a resource that's only getting bigger as they drill. It's already quite large, getting bigger. That in and of itself justifies the transaction to the extent that we are able to clear it.

Are the warrants a U.S. or Canadian 225?

They'd be Canadian 225. And so anything else that we do as part of that, if they are in fact able to buy back anything else, we have the right to participate in that. You know, that would be a bonus. We'd look at each one of those on a case-by-case basis, decide if we want to play. But having that optionality is good for us. As I said, our view is that transaction already in terms of that initial, you know, meaty royalty is if that's all we end up with, we're quite happy.

with the renard restart uh how much uh revenue or geos is that worth in the fourth quarter or does you even get any in the fourth quarter does it come in the first quarter look so the key difference we we have in our guidance this year when we we came back out with guidance john is we included bernard uh it was on care maintenance first and foremost and

you know, whilst we're benefiting by, you know, anything they produce, they'll use to repay us on our working cap facility. You know, we're not, we're redeploying our stream back into the mine for the time being as we kind of work our way through the the workout plan. So that's why we're not adding bounces to our guidance because we weren't benefiting from them purely as a stream. We were redistributing them back into the asset. So we're not expecting any contribution from that over the course of Q4.

So you've waived your revenue to reinvest in CapEx for the mine and you've waived your loan repayment. Or you haven't waived your loan repayment?

No, we've not waived our loan repayment. Any dollar we put into the asset, we're expecting back.

Even the funding of the cap asset?

Reasonably well. What we've just done is we've been redistributing our stream proceeds back into the mine for the time being. So the outcome there is we want to get back to... a pure stream that we're benefiting from, you know, without having to put that money back until or unless we do, we're not tacking it on to our guidance or incorporating it.

With regard to CLODE, do you get a full quarter of the CLODE output? Excuse me, the Saskatoon line, CB, excuse me.

CB, yeah, yeah, no, I got what you meant.

In the fourth quarter or the first quarter?

Sorry, when do we expect... With the time lags, when do you get the revenue? Yeah, so look, again, Q2 we got, we had, I think, probably a record quarter. Even though they didn't produce Q3, we got zero, even though they were. And as far as I remember, delivery started back early in October. So I would certainly hope and expect that Q4 for us is kind of back to normal at TV.

Thank you for your patience with my questions.

No, I appreciate them, John. Thank you.

And your next question comes from the line of Greg Barnes with TD Securities. Please go ahead.

Thank you. Josh and Mike still have my questions, so I'll take care of it. Thanks. Okay. No problem, Greg. Thanks for your time.

And your next question comes from the line of Brian McCarter with Brennan James. Please go ahead.

Good morning. You talked a bit about Falco. So I just want to make sure I understand the Falco situation now. There is a $10 million loan, I think, coming due at the end of December. I just want to check first that that's still staying in royalties because I know the shares are going to ODB. And secondly, I mean, I see Glencore is putting in $10 million for advancement. But is that $10 million to give your $10 million back? Or how is this actually playing out?

No, good questions, Brian, and good morning. So first and foremost, no, the loan thing with the Cisco World Peace, only the share position has been moved over to ODEV. So our friend DeFalco still owes us money. We expect it back. And you're right, the money from Glencore is meant to advance the asset, finish the last of the technical work that's required, hopefully at the end of that, and end with a buffer, but hopefully at the end of that, to give them all the comfort to enter into a long-term agreement to move that asset forward to the benefit of everyone. And we do have that debt coming due. We'll look to refinance that with Falco, however it makes sense. Again, our objective there is not the debt necessarily. Obviously, if they can repay it, great. That'll be up to them. But we'd be supportive because what we're looking to, you know, we have our eye on the prize, and the prize there is 20,000 ounces of VOs in Quebec. So that's what we're looking to support. And in our minds, that loan was a small price to pay and continues to be a small price to pay to facilitate that. So it's still money they owe us, and we'll, you know, I'm sure they'll look to sort that out when the time comes.

Great, thanks. And just very quickly, an ODV, I mean, you mentioned there's a thinkable trade in December. I mean, to the vote November 20th, but that sort of looks like it's set up. What else has to mechanically happen to get us to December?

Yeah, look, it's not much. I mean, really the only thing is the listing process with the TSX Venture. The vote, as you mentioned, of the Shell company, Barolo, is on November 20th, 80 some odd percent. I forget the number now. um, of the votes have already kind of been delivered. Um, so that's, uh, that's just kind of a procedural, uh, step. Um, and, um, and then it's just, as I said, the completion of the listing process with the TSX. So, you know, as you can imagine, it's a fair bit of documentation, fair bit of paperwork, um, and that's getting bounced around, uh, between lawyers, uh, you know, on a daily basis. So hopefully that will conclude, they can go to their committee and, and, uh, I wouldn't suggest the last few days of November. We're kind of hoping it's the first few days of December, but that's kind of the timeframe we're guiding towards. Great. Thank you very much. So really just procedural. No problem, Brian. Thank you.

And there are no further questions at this time. I will turn the call back over to the presenters for closing remarks.

Great. Well, look, thank you, everyone, for tuning in on behalf of Sean, Fred, myself, and the team. I think we had a Pretty strong quarter, and we look forward to more of the same in Q4 with our assets continuing to deliver quite well. So thanks for your time, and have a great rest of your day.

Thank you.