OR Royalties Inc.

Good morning, ladies and gentlemen, and welcome to the Cisco Gold Royalties Q2 2022 results conference call. After the presentation, we will conduct a question and answer session. And if you would 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, August 10th. 2022 at 10 a.m. Eastern Time. Today on the call, we have Mr. Sandeep Singh, President and Chief Executive Officer, and Mr. Frédéric Ruel, Chief Financial Officer and Vice President, Finance. And I would like to turn the meeting over to your host for today, Mr. Sandeep Singh. Bonjour, Mesdames et Messieurs, et bienvenue à l'appel conférence des résultats du deuxième trimestre de 2022 de redevances orifières au Cisco Limité. Après la présentation, nous procéderons à une séance de questions et réponses. Si vous désirez poser une question, veuillez appuyer sur la touche étoile suivie du numéro 1. Veuillez prendre note que cet appel est enregistré aujourd'hui le 10 août 2022 à 10 h, heure de l'Est. Nous avons sur l'appel aujourd'hui M. Sandeep Singh, président et chef de la direction, et M. Frédéric Ruel, chef de la direction financière et vice-président finance. J'aimerais maintenant céder la parole à votre hôte, M. Sandeep Singh. La parole est à vous.

Thank you so much, Operator, and thanks to everyone listening in. Hopefully you can hear me okay. I'm happy to be with you to update you on the quarter. It was an interesting quarter, certainly from a market perspective, quite volatile. The swings were quite swift. Notwithstanding that, for my two cents or what it's worth, I think the backdrop for gold remains extremely strong, even in the face of what's been a very strong US dollar and rising rates. Regardless, even in that volatility, and maybe as a result of that volatility, we still had a record quarter on a number of fronts. As I update you on that, I will be referring to the presentation that's now on the website. And I'll jump right into it after reminding people that I will be making forward-looking statements, as shown on slide two. We can probably jump right to slide four entitled Q2 2022 Highlights. As I said, I won't read through all the bullets. I'm sure most of you and all of you have read the beliefs and already commented on it, frankly. But for the record, in a number of fronts, first and foremost, which drives our business is the geo deliveries, the ounces that were delivered to us by our partners. gapping up nicely from Q1 to Q2 to 22.2 thousand geos. That makes the first half of the year just roughly 40 and a half thousand geos delivered to us. And I'll talk to you about our guidance on maybe the next slide of 90 to 95, but we do expect a significant uptick in the second half of the year, hopefully sequentially over the next couple of quarters for reasons that I'll go through, but hopefully are relatively obvious when I do. Um, so that builds well, a record in terms of geos, a record in terms of cash margins, uh, and a strong bottom line in the quarter and then a better, stronger second half for very obvious reasons in front of us. Um, I will point out, uh, perhaps maybe just make one obvious point from most people that our financials are still a little messy. Obviously we consolidate, uh, with the Cisco development. Uh, most of you know that, um, And we have tried to provide additional information for that on a segmented basis. We do still realize it's a work in progress, but I will say that we're close and we're closer than we ever have been. But ultimately, assisted development is doing what they should be doing as a developer. They're spending money advancing their assets. And OR is doing what it does, which is racking up cash. despite an inflationary market out there. So putting the two together, you know, slapping the two together, I think can lead to some misleading statements. So hopefully people were giving you the information that you need to differentiate. And if you look at one of those bullets, six or seven from the list, those adjusted earnings for the royalty business, for our fiscal royalties amounted to just almost 26 million Canadian or the money that we accumulated over the quarter and hope to continue to grow as the year and the years progress. We also, worth pointing out on this page, repaid our credit facility in full. That credit facility is now completely undrawn and available for growth as we go forward, hopefully growth into a market that is kind of leaning our way as a financier with some of the other taps in the market closed or significantly reduced. So I think that bodes well for us in terms of the types of opportunities that will come our way. Otherwise, standard quarter, we also announced a binding deal on the Tintic stream that we had already brought to you and commented on in Q1. Those I's and T's are getting dotted across, so that bodes well. And over the course of July, for the handful of days that we weren't in blackouts, with our geo pre-release and then our financials, we bought back 660,000 shares almost, uh, for $8.3 million. And we're quite happy as we were last year to take opportunities where the market is, uh, in our views, uh, you know, just, just, just not reflective of the value of the company still isn't, but when it gets really, really wonky, we're happy to step in there and disproportionately take our cashflow to buy back the best exposure to royalties that we think we can find out there. So that's just, My quick preamble, as we move through to slide five, you'll see the breakdown by assets as we usually provide in terms of where the ounces came from. Our core assets continue to deliver. Again, I think that bodes well for the second half of the year that we had a record in Q2, despite two of our meaningful assets, our second and third biggest asset, not being at full stride. And at the risk of boring people who already understand what that means, I'm referring to Mantos and Eagle at Q2. Eagle, I think most people know that the first half of the year is always a little bit more challenging than the second for the three coldest months of the year for the time being. Victoria doesn't process, doesn't stack ore. I think that those issues and the cold weather months drifted into Q2. I think that's obvious based on their numbers. So they had a first half that was similar to their first half in 2021. And you just look back at how the ounces came in in the second half of the year for them last year. I think it was roughly a 50% increase, H1 to H2 last year. And that was as they're still ramping up. So I do expect we'll see a strong second half from Eagle. That's one of the assets which I expect to continue to do better for us as they go. And then Mantos is the other we received. Deliveries that are kind of akin to their typical deliveries for us. You'll probably know that they're going through a very meaningful expansion from 4.3 million tons per annum to 7.2, 7.3 million tons per annum. It's a big lift. and we're still expecting to see the benefits of that. I think we've already started to see the benefit of that post-quarter, but if you follow Capsule and Copper, they've made good progress, maybe a quarter behind, but in Q3, they intend on or they expect to stabilize in terms of the throughput and optimize and stabilize at the new throughput levels and the recovery levels as well. So that's another story that's only going to strengthen at the year that's on. Moving on to slide six, and we've got a number of updates here on our portfolio. I'll touch on things as I go. I do want to make sure we leave sufficient time for questions, and I realize there's a lot of companies reporting today. So I want to make use of your time. If we glance over something that deserves more attention, we can certainly come back to it in the Q&A. First and foremost, on slide six, With Malartic, that story is phenomenal for us. It's our flagship royalty. It's, I think, the gold sector's flagship royalty, and it continues to strengthen. The underground is advancing at pace on schedule. That means there'll be a trickle of underground ore into the mill in early 2023. That will increase, obviously, as the years progress to ultimately overtake the open pit component of it. The story there is one of infill and extension drilling this year as they do the methodical work towards the end of the build. And that infill and extension drill work is going extremely well. Circa 20 rigs on the property. The good news, I think, will frankly intensify as they get more access from underground in the second half of the year. The exploration budgets are plus $30 million U.S. for 150,000, 160,000 meters of infill drilling, but also a significant amount of extension work. And not only, as we've talked about in the past, is the ore body seeming to grow down the extension of East Goldie, but you look at this result that's highlighted here in large font, 1.8 grams over 63 meters in a western extension of East Goldie, which previously does not have resources. So I think we couldn't be happier with what's going on at the underground, at the Arctic, the work that Nico and Yimena are doing there. And in the fullness of time, I think this asset is only going to continue to grow, extend at the very least in terms of mine life. We already know that we have a mine life out to 2039 based on half of the resources. more will get infilled into a mine plan, more will get added. It's just a question of where that takes us, but it's obviously a very good place. On slide seven, I think I've already kind of made the points I want to make with respect to MANTOS. At least, as I said, the focus is on optimization and sustaining throughput. They've guided to kind of getting there in terms of Q3, and we're already starting to see the benefits of that On our side, with respect to Eagle, I mentioned why we are excited about the second half of the year. Beyond that, and obviously they have to kind of get to, you know, they need to continue the methodical progress that they've been making and ultimately get to the first target. But beyond that, the work on Project 250 continues. That's their aim of getting to 250,000 ounces, in their words, in 2023. And they're also working on their project 2040, which is to the extent to extend the mine life out to 2040 with good results, both at depth and along strike in some of the satellite projects there. So that's all positive. Eleanor continues to kind of tick along. Study state Q2 was a little bit lower due to lower grades milled and throughputs. It is a remote site, and I think we've seen in the first half of the year implications of that from a COVID and quarantining and the like perspective. But overall, it continues to tick along and do reasonably well. Hopefully, they'll start to get past some of those issues as well. On slide eight. Excuse me. On Flight 8, with respect to Island, LAMAX, CB, those are three phenomenal Canadian stories for us, run by three excellent companies. They're all core assets to them. Individually, Alamos, Eldorado, and SSR are not ordered on the page. The Phase 3 or 3-plus expansion study that Alamos provided several weeks ago was fantastic for us. It moved the expansion from to 2,400 tons per day with a long mine life. They're still adding ounces. They're still doing significant drill work. As you notice, 58,000 meters planned for this year. And not only are the ounces growing, but our piece of the ounces are also growing. Right now we're getting an NSR that is, I think it's 1.38% exactly. And we expect that to be a blended rate of 2.25% over that new life of mining. So that's a great story unfolding, but so are LAMAC and CB. Good levels of production, a lot of work that's going into the assets. LAMAC contemplating a significant expansion. CB producing extremely well in the first half of the year and continuing to guide towards mine life extensions at the very least. at that operation. So good news for us on those fronts. If you look at slide nine, we've got on the page two long life base metal mines where we get the silver at Gibraltar and Sassa, you know, doing reasonably well. And we expect a strong second half from Gibraltar as they get access to some higher grade ore and the Sassa mine continues to do exceptionally well. And then, as you all know, or most of you probably know, Q2 was the first quarter where we added Bernard back, the Bernard screen back into the fold. We had taken the conservative approach of not including it in our geos and and alike. Whilst we weren't rightly so well, we weren't benefiting from the cash flow. The mine has been benefiting from higher cashflow. Diamond prices, on average, $124 a carat in Q2. You might remember that prior to COVID, it was lucky to get up to $70. So there's been a real step change in the diamond market, and their cost structure has also kind of come down, or at least been managed, even in an inflationary environment. So they're making money, they're paying the stream, they're paying the debt. All that's good news for us at Renard. It's very nice to get that asset back on track. On flight 10 and 11, if you will, we've talked about the producing assets on 10. The nice thing about our uptake in ounces from 2021 to 2022, forgive me, is a lot of those ounces, again, are coming from existing operations just being expanded or ramped up. So you argue lower risk growth, never no risk growth. So we are seeing some delays and if they amount to a quarter here and there or a couple months here and there in the grand scheme of things, that matters a lot less for us. But that's the best growth you can hope for. And then beyond that, when you look at the next bar, when you look at the arrow in terms of optionality past that, and when you look at slide 11, a lot of good assets being moved in many of these cases into the late stages of feasibility study work. That's true of Caribou. That's true of Windfall. It's true also of Back40, and they are in well-funded businesses who are, again, moving them forward in a difficult market for developers, certainly, but moving them forward in a straight line as you can get in the mining sector. These are names I think most of you know well. We can certainly talk about them in the Q&A for us. Upper Beaver and AK, I would point out, those are interesting assets that we're looking forward to getting some news from Mignico in terms of how they fit into the new Crispin Lake camp that they own. But I think that all bodes well with AK specifically. They're already drifting into it. They're drilling to expand it. And then Upper Beaver is the next one we're looking to hear some positive news from. That's kind of a story in terms of organic growth, if you will, when you flip the slide to the next slide, or at least the near-term growth story, when you flip to the next two pages, what we've done on slides 12 and 13 is just highlight a snapshot of, it's not the full list, we could keep adding pages of further optionality that people tend to forget when they think about us. But there are a lot of good assets on these pages. As I mentioned, there are others we could have added run by some pretty good operators undergoing some pretty important catalysts. I'll touch on a couple, but not all. When you think about something like Akasaba West, MECO recently, by recently I just mean a week or two ago, approved the development of that. It's essentially an ore body that gets sent to the Goldex mill, and that will start producing in 2024, a full-year basis. That's an additional 750 or so ounces per year to us. that I don't think most people had accounted for. So that's worth getting out of bed for, I would argue. Altar, again, we have a 1% royalty there in an asset in San Juan, Argentina that Aldebaran runs, Copper X4. Happy to see South32 step in for about 10% of the company for a $10 million investment. They've raised money subsequently. They put out some really exciting holes. They already had a pretty decent starter pack, but the last hole I saw was 700 meters of 0.5% copper equivalent, so nice to see activity there. Clearly, at Casino, which is a big asset for us, the work they've been doing, the investment by Rio Tinto, their involvement in some of the technical work has all been a good shot in the arm, and we look forward to seeing the conclusion of how their studies and their advancement pan out. I said I wasn't going to talk about all of them, and I mean it. I'll talk about a few more. But we are excited about the names on the stage. FCI is another really interesting one that maybe you haven't heard us talk about. It's in the James Bay region of Quebec. It's being advanced by a company called Patriot Battery Metals. We have a significant NSR there. And they're well-funded to drill 20,000 meters today. They continue to drill long runs of plus 1% lithium oxide. So that's a story that's definitely gotten legs in the last, I'd say, six to nine months. And we look forward to seeing it continue to develop. Hermosa, obviously, you know about that story. South 32, positive pre-feed last year, working towards, or I guess it was Q1, working towards a feasibility by middle of next year. That's a big ticket, a big contribution for us once they finally make the go-ahead decisions. and others on slide 13. I said a couple of times, so I won't talk about them, but if you look at the page, there's some pretty exciting catalysts there. And we expect that to continue to intensify, partly because of slide 14, we are seeing an immense amount of drilling and activity done by our partners on our ground. You've heard that from me before in 2021, 1.4 million meters just over that. I'd argue the rate is higher now, but if you're Factor $350 a meter, that's half a billion dollars almost of work done on our properties that we're not paying for, our shoulders are not paying for. And on the right-hand side, what you see that lead to is not only a replacement of the ounces that came out of the ground last year, 80,000 ounces for us, replaced by 114,000 ounces in reserves. But if you factor all the categories, our ounces that are getting out of the ground are being replaced by orders of magnitude. So that's We talked a little bit more in the previous pages about organic growth. This is really a depiction of, in my mind, of the sustainability of the business, the longevity of the business, and further upside or blue sky, however you want to describe it. We've talked about the recent transactions that we've announced, mainly in Q1 on slide 15. As I mentioned, we're really excited to have Kintec, uh, closed, uh, it says they're expected in Q3, but it's imminent any day now, as I said, just dotting eyes, crossing keys, but, uh, closed in the same manner. We announced it, uh, the deal between a Cisco development and the private sellers closed in late May. I think it was the last day of May. Um, so it was kind of a quiet period from a Cisco development in terms of talking about that asset for most of the first half of the year. But now that it's in the fold, we look for some positive news flow there and, uh, And the ramp has already started to make progress down to get to a larger throughput operation. In terms of CSA as well, we continue to advance those discussions with the SPAC, Metals Acquisition Corp, who are looking to consummate that transaction with Glencore. Obviously, a lot has changed in the copper market since that deal was announced. It's a little funny that we've swung from a world that couldn't get enough copper and And now apparently that was a false alarm. The world doesn't need any. I think the truth is in between. And what we see there is a very motivated buyer and seller and hopefully a pathway to getting a transaction done that we're still quite keen to participate in under the right circumstances. That's the update that I want to provide. I will pass it on now to Fred to just walk you through a few more of the particulars from the quarter and then happy to come back and field questions afterwards. So, Fred, over to you.

Thank you, Sandy. Good morning, everyone. Thank you for joining us today. Let's start with page 17 of the presentation. We recorded revenues of $51.5 million this quarter from royalties and streams compared to $50.7 million in Q1 and $49.9 million in Q2 of 2021. Cash flows from operating activities were negative on a consolidated basis as a result of the consolidation of the activities of Cisco development. But for the royalties and streams segment alone, Cash flows from operations amounted to $35 million compared to $37.3 million in Q2 of last year. The slight decrease was mostly the result of timing and the payments from the operators. These payments were received actually in early July. On page 18, we present a summary of our net earnings and just earnings. Consolidated net earnings to a Cisco shareholders was $17.2 million or $0.09 per share compared to a net loss of $14.8 million or $0.09 per share in Q2 of 2021. In 2021, impermanent charges from a Cisco development had generated dollars at the time. On a consolidated basis, the adjusted loss was $4.7 million or $0.03 per share which is comprised of adjusted earnings of $25.7 million or $0.14 per share from the royalties and streams segment and an adjusted loss of $30 million from a Cisco development or $0.16 per share. On page 19, we have a summary of our quarterly results with additional details for the royalties and streams segment, including 22,000 GOs in Q2 of this year compared to 20,000 in Q2 of last year. A gross profit of $35.9 million in 2022 compared to $35.7 million in 2021. And operating cash flows of $35 million were generated in Q2 by the royalty and streaming business, mostly as a result of the record quarterly cash margin of $47.8 million. If we move to page 20, we present a breakdown of our cash margin. So the cash margin from our royalties reached $34.4 million, and the cash margin from our streams amounted to $13.4 million for a quarterly record of $47.8 million, or 93%. On slide 21, we present the progression of the dividends paid to our shareholders since the creation of Cisco Gold Royalties in 2014. The dividend yield is approximately 1.7% as of this morning, and over $204 million have been returned to our shareholders at the end of Q2, in addition to $95 million that was used to repurchase a total of 7.4 million shares under our NCIB program. And finally, on page 22, you'll find a summary of our financial position. The consolidated cash balance was $449 million at the end of Q2, which include $213 million for Cisco Royalties and $136 million for Cisco Development. Cisco Royalties held investments having a value of $195 million at the end of June, in addition to our investment in Cisco Development, which is valued at approximately $200 million. Our long-term debt stood at $300 million at the end of June, following the repayment in full of the credit facility in April. We currently have 650 million available under our credit facility, including the accordion of 100 million. We have also acquired during the quarter a total of 247,000 shares under our NCIB program for 4.9 million, and we've acquired 659,000 shares in July for 8.3 million. So we have continued to benefit from strong commodity prices in Q2, which allowed us to generate strong cash margins and operating cash flows from our royalty and stream interests. And we are very optimistic for the second half of the year. I will now turn the call back to Sandy for questions.

Thanks, Brad. Or just over to the operator, please.

Thank you. Ladies and gentlemen, if you would like to ask a question, please slowly press star followed by 1 on your touchtone phone. You will hear a three-tone prompt acknowledging your request. And if you would like to withdraw from the question queue, please press star followed by 2. And if you're using a speakerphone, we do ask that you please lift the handset before pressing any keys. Please go ahead and press star 1 now if you have a question. And your first question will be from Ralph Profiti at 8 Capital. Please go ahead.

Good morning. Thanks for taking my questions, Sandeep. I have two of them, if I may. Firstly, I'd like to get your thoughts on the drivers behind the $20 million investment at Tintic. There was an option to go higher, and just wondering, was that a function of economics, or was there a strategic rationale to hitting the lower bound of that original range?

Sure. Hi, Ralph. I can answer that question first, and then we'll allow you a second, but no more. Look, the driver was pretty simple. We had provided basically a range of 20 to 40 million U.S., available to a Cisco development when they announced the deal. Obviously, when they announced the deal, they didn't know how much equity they'd be able to go raise off the back of it. They were very successful in doing that, which was a good outcome for them and for us in terms of having off the back of that, using that catalyst, that high-grade catalyst to go raise funding and being able to raise funding off for all the assets. So, Excuse me. And I forget how much they raised exactly, but circa $230 million or so Canadian is the number in my head. So just led them to need a little bit less. We would have been happy for them to take more. We really like that asset. We're really excited about it, but very happy also with the $20 million investment. So it was their choice. And given the financing success they had, they need the less from us. I would have wished that, you know, we would have got the whole 40, but we'll, we'll, we'll certainly settle for the 20.

Gotcha. Uh, understood. Um, maybe as a followup, Sandy, you know, there's been a, you know, quite an active transactionary market, uh, you know, just recently, you know, some competitors, uh, you know, of yours have announced sort of deals that I guess can be perceived as sort of a more on the full valuation side, uh, with respect to, you know, resources implied and, and sort of, you know, conversion rates, um, And I'm just wondering, is that something that you're seeing in your particular deal pipeline, sort of a more competitive streaming pipeline with respect to valuations themselves? And are you still confident that we can get these IRRs and the high single digits and low double digits given perhaps more competitive tension in the space?

Yeah, look, I mean, Ralph, it's a fair assessment, I think. I think people are doing what they think they... I'm not in a position to say whether that is or isn't, but it is competitive. It has been, honestly, the entire time I've been in my seat, I would say we have seen some deals that have been lofty, but ultimately they made sense to both sides for us. you know, I've been clear that we don't need to stretch for growth. We have, you know, double digit cake of growth for the next five years. And I hope beyond that, based on the assets we already own, that we can be disciplined. And frankly, we need to, because we don't have the same multiple. So for us to stretch and pay those types of prices would be diluted to what we already have. And we're only interested in adding growth if it's accretive, if it's additive, if it's overall beneficial, you know, quantitatively and qualitatively. So, You know, the idea of diluting our exposure to our assets for shareholders at 0.9 or 0.8 or wherever we trade times that today based on a street consensus basis is not something I'm interested in doing. So it's a competitive market. It stayed hot. The truth is, despite some of the things you've seen right now, I mean, I think the pipeline is getting better. I alluded to it earlier, you know, in a market like this where equity is not available to everybody, we're certainly happy to be cashed up. And we're seeing conversations that had stalled, you know, six, nine months ago, getting re-engaged, some of those bilateral to us. So I think that's a good sign. And I think, frankly, the longer there's pain in the system, the more inflation there is, as the CapEx numbers get bigger, I think the more need there'll be for our capital and others in our sector. So I think the good news for us, you're right, I think, overall. I think it's hard to argue with your assessment. But the good news for us is we have a lot of organic growth. We can pick our spots. We always have said we willed. And even in, you know, I would say Q3 is better than Q1 was from a company, or should be at least in terms of a deal flow perspective based on how the equity markets have completely closed. But even in Q1, we were able to do some pretty smart things and good returns off the beaten path. And our focus will continue to be on getting value for our existing portfolio, as well as adding to it smartly when we can.

Got it. Appreciate those answers. Thanks, Andy.

My pleasure, Ralph.

Thank you. Next question will be from Trevor Turnbull at Scotiabank. Please go ahead.

Hi, Cindy. I just want to ask a little bit about taxes going forward. You had a pretty sizable tax bill this quarter and just wondered how we should think about that going into the subsequent periods.

Sure, I could do my best tax impersonation, but Fred, why don't you start, and then I can pick up, maybe.

Sure, so most of the taxes for 2022 are deferred taxes, so they're not cash taxes. We pay some cash taxes in foreign jurisdictions, for example, in the U.S. or in Mexico. We're expecting to start paying cash taxes by the end of 2023 and more significantly in 2024. But the impact for this quarter was mostly related to deferred taxes, which may be as a result usually of different non-cash or non-taxable or non-deductible transactions that we may have, which are mostly accounting driven.

Yeah. And even that assessment, sorry, I would say, look, that's right. Some of that will depend on commodity prices. Commodity prices are softening again. So perhaps our our cash taxes will get pushed out again. And as we add to the portfolio, we continue to create new tax attributes, which will hopefully continue to shelter us. So that's just the only caveat I would add to that, Trevor. It sounded like you had a follow-on.

Yeah, and maybe I can talk a bit more about it offline. And I apologize, I've been kind of juggling a couple of different calls. I don't know if you mentioned it, but with respect to consolidation with ODEV, is that something that now that you've got a reduced holding, you see being able to stop doing, or is that something we're going to probably live with for a bit longer?

Well, I think it's certainly something we're focused on getting out of. I don't think it helps either company to have that kind of noise in accounting. and it does, I think, lead to some flawed conclusions. Both companies are doing exactly what they should be doing. You slap them together, I don't think it's the right interpretation, but it is an issue we're working towards. With the drop in ownership recently, it just happened at the end of May, from 75, low 70s, to 44%. We're very close, Trevor, I would say, and we're having those discussions with our auditors as we speak. So our hope is very soon we will be able to unconsolidate. I think that will provide a lot clearer of a picture, um, for, uh, for investors and analysts and anybody that follows us. Um, so yes, the answer is we're, we're close and I think we, we've got ways to, to get there. So hopefully, uh, we'll ask you guys to bear with us a little bit longer, but hopefully it's not, not very much longer.

Okay. Um, And then my final question is just with respect to San Antonio. I saw that you had a lot of updates with a lot of different projects, but San Antonio, I'm still having a hard time getting my head around exactly when we should think about production starting down there.

Yeah, look, apologies for that if we didn't have a proper update. There's a lot of assets to talk about on a usual basis, but The update there is there should start to be or there has been a trickle of ounces starting to come out of the stockpile, which is the starter project, if you will. It's just reprocessing of an existing stockpile, obviously, that was sitting at surface. So that's under leach now. So a little bit of delays, but those ounces are coming out now and will hopefully continue to grow over the course of the second half of the year. But again, that's not the prize. The prize there is the new heap leach stockpile. project at Cipucci. And the gating item there, I would say the first gating item is permitting. So they've been working on that, that day being with Cisco Development. And our understanding is that things are going well. It's still Mexico. It's still permitting. So until they have it, they don't have it. But our hope is that we'll come together also in the second half of this year. And then it's a question of hitting the go button on the larger off-site project. So short answer, a trickle coming out of the stockpile and then subject to permitting and getting the construction done, hopefully more meaningful production from the sapuchi oxide coming thereafter in the nearish to medium term.

Okay. I appreciate all that. Thank you, Sandy. No problem, Trevor. Thank you.

Thank you. Next question will be from John Tomasos at John Tomasos Independent Research LLC. Please go ahead.

Thank you, Sandeep. Sandeep, I'm kind of patient, and maybe I invest with a 10- or 20-year time horizon and don't have too many pressures, keep my costs low, try to be laid back. But some of the institutional money managers have a shorter time horizon, and if they don't perform, their clients fire them. We're getting up to almost two years since the OTC restructuring, and the benefits are not as obvious as they should be. I'm thinking back in history. Weyerheiser sold their white paper to Domtar and took back stock, and they sold their home builder to TriPoint Homes and took back stock, and they issued Domtar and TriPoint stock to to Warheiser shareholders to retire Warheiser shares. That's, for example, a mechanic where you could issue analogously ODC shares to retire OR shares to help force the market to recognize value. But for these institutional managers, you know, that get fired and sometimes they have to fold their firm when they have withdrawals, Could you do something to help make the market recognize the great underlying values a little faster? Sell an asset, buy back even more stock. You know how some people's clients are not as easygoing as you and me, Sandeep.

No worries, John. Appreciate the question. It's fair. And sadly, I think most people would have a shorter time horizon than the one you described. which is fair too. And frankly, so do we in terms of seeing the value uplift that we're expecting and we certainly intend on getting to. So I'd say it's, The spin-out, I think, has been the right move for everybody, including for the assets. They've gotten a lot more spending than they would have with the Cisco royalties. That spending is out of the Cisco royalties. We've cleaned up the company. The consolidation is kind of one more step that we're working towards, the reduction in the ownership, all that's kind of in progress. I describe it as being half done, but frankly, John, I think we did the hard half and we have the easier half to do. The last two years, I guess it's been 18 months since that spin out, have been essentially a downdraft in the market. We've outperformed. It's obviously not satisfying to outperform your peers in a down market, but we have. The reason the multiples, the NAV multiple in particular, has not bridged the gap, frankly, though, is the underlying assets have gotten stronger, as strong, frankly, in the interim. And that's by virtue of things like the malarctic underground and and other things, the Mantis expansion, et cetera, et cetera. So all that bodes well. The fact that we still trade where we do, where we were most of the way through the cleanup that we had to do, and we still have all that value to unlock, I think that's good news. And frankly, when I look and talk to our institutional shareholders, the same people you mentioned, they see that same value, and thankfully they are – They're somewhere in between in terms of patient levels that you described and happy to see us continue to do the blocking and tackling that it takes to get there. The point is the asset value is or the portfolio is just too valuable. for it to continue to trade the way it does. We're going to continue to do all the right things that we can. We're hoping more right things than wrong things until we unlock that value. But when you see, you know, back to the point, I guess it was Ralph was making earlier, when you see the prices that are being paid for certain assets, some of them very good assets, some of them exceptional assets. But when you see the prices that are being paid and you look back at our portfolio, the replacement value of what we have is tremendous. and we'll just keep doing the right things to improve the company little by little. It doesn't require any overhauls. We just have to do everything a little bit better, and I think there's a much better outcome for us and our shoulders. So I appreciate the patience. I understand the point.

So, Sandy, since I've had my own office, I've had 19 funds that used to pay me $700,000 U.S. collectively. shut their doors, not just fire me, but close down and liquidate. So it's the customer of my customer that isn't laid back. And anything you can do to make the market recognize value faster is doing God's good work.

Yeah, no, I totally understand, John. It is a tough market out there for everybody, not just us. I think we're coming into our own. And I would say this, I mean, back to... Kind of points we touched on. I do think, maybe the first point I made, I do think the backdrop for gold is exceptional. I think when money comes back to the gold sector, which it's gone completely the other way right now, but when it does, which I think it will, I think most people on this call think it will, I think the royalty sector will disproportionately benefit for all the reasons it always does, especially in this inflationary environment. And when people do look for that exposure, I think they're going to see value in us. That is significant. So that's what we're focused on. And we don't need it. We don't need a better gold price. We don't need a better market to continue to have a strong company, you know, issuing records upon records. But it certainly wouldn't hurt. But understood the point, John, and we'll keep working. Trust me, we're working hard and we're as impatient as they are.

Thank you.

No problem.

Thank you. Next question will be from Kerry McCreary at Canaccord Genuity. Please go ahead.

Good morning, Sandy. Maybe with Renard back in the mix here, could you give us what should we be expecting from a mine life perspective? I think the last mine plan I saw goes out to 2029, 2030, but that's pretty dated at this point.

Yeah, no, it's a good question. And that is a bit dated. You know, I think what you should expect from Renard, it's a bit early to say, but you should certainly expect kind of the carrots and the geos, obviously commodity prices depending on to continue to be akin to what they are now. So I think that's kind of the steady state that they're at. What we see there is a shorter mine life, good ounces that bridge us to some of our growth projects in the middle of the decade. There are also exploration opportunities, or not exploration opportunities, development opportunities to see them invest in the next leg of the underground industry. and push out mine life to the types of dates that you've mentioned. So I think that's still a possibility. We'll have to wait and see right now. It's just good to see the ounces back on, the carrots back on. And the more time they spend on it, the more cash they accumulate, which they are accumulating, then some of those development scenarios make more and more sense. But I wouldn't really just reinitiated it in Q2. So we'll let it run for a little bit and see what the future looks like. We'll certainly come back to you and describe that when we understand it.

Hopefully that's a little bit more color. Yeah, that's great. Maybe also a bit too soon, but, you know, all this diamond prices have improved a lot. Have you had any discussions with your partners on, you know, what the strategic future plan looks like?

Well, we have. We've always. And I think the genesis of that, first and foremost, was just the reinitiation of the stream. I mean, it required our partners on the lending side to come up with a plan that works for everybody. I think it does. So that was a rework that led to the reinitiation of the stream. And those conversations continue, obviously, and that's step one. You've got to walk before you run. But those conversations continue, Kerry, in terms of You know, what is the long-term future of that mine? Where does it reside? You know, what kind of capital infusions could it benefit from from external sources? So that was really the point is safeguarding that asset, getting it turned back on is very positive. Ultimately, if we can find a better home for it, all the partners are very much aligned in doing that.

Great.

Thanks, Andy. No problem.

Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please slowly press star followed by one on your touch-tone phone. And your next question is from Adrian Day at Adrian Day Asset Management. Please go ahead.

Yes, good morning, Sandeep. I had two quick questions, if I may. On your investments, a tad under $400 million, I guess ODV is about well, a little less than 250. So how, how much do you have in other various Cisco spinoffs and where's the bulk of the rest of that?

Sure. Morning, morning, Adrian. And you're right. That's about right. We own post consolidation. We own 33, 33.3, I guess it is million shares of a Cisco development. So that's the lion's share. We also own 50 million shares of a Cisco mining company. I think that's pretty much exact. So that would be the other big component. I think it's 14% of the Cisco mining shares outstanding. And then there's a small position in Cisco Metals, a small position in some of the earlier stage accelerator companies like Fable and Talisker, but that really rounds out the rest of it pretty quickly.

Oh, okay, okay. And if you look ahead, you know, maybe to the end of the decade or, you know, the next five or six years or whatever, Is there, based on existing plans, is there a particular period when you're expecting largest, you know, year-to-year growth?

Yeah, that's a tougher one. Look, I would say the fact that we are going from 80,000 ounces last year to a projection that sees us growing by, you know, double digits CAGR growth all the way to 130,000 to 140,000 ounces in 26. Those are big leaps. Even getting to the low end of our guidance this year is a 12.5%, 13% increase. Those are big leaps for a company our size. And then when you look back, I'm looking at page 10 now, and you look at the things that aren't included in there, obviously, or external growth, anything we buy is not included in there. But when you look at that arrow and you see things sticking out at you like casino, like Hammond reef, which, which, uh, like Nico has put reserves on for the first time and is working on studies, Hermosa, uh, spring Valley, upper Beaver. Those are, those are big contributors. Uh, you know, casino itself can be as big as Malarctic, uh, once built, uh, we're talking about multiple assets in that list that could contribute five to six to 7,000 ounces a year. Um, so in terms of when they, they come along, that's the, uh, That's the crystal ball kind of question. I would say a lot of them are important to their operators. They're being advanced. And what years they pile up on, I think, all reserve judgment. But I certainly think there's a lot of those assets that are going to matter in this decade and matter in very significant ways. So I'd say we're in good stead. What year we have the best growth or what period we have the best growth, I don't know exactly, but I believe When you're looking at this page, we have the ability to sustain, which is more important than one kind of big blip, to me at least in any given year, but the ability to sustain this level of production, or sorry, growth for a company or size for such an extended period of time, I don't know of anybody else that can replicate it, especially without any investment. Right. Okay, thank you so much. My pleasure, Adrian.

And at this time, Mr. Singh, we have no further questions. Please proceed with closing remarks.

Okay, thank you, operator, and thank you, everybody. I think I won't really say anything else about the company because I think we've covered a lot of ground. This might not be my place, but I can't help myself. I will quickly say something about Ned Goodman, who unfortunately passed away, as most of you probably know, on the weekend, a giant in the mining business and in Canadian business. and very integral and to the Cisco story, you know, his backing of Sean in a Cisco one and a full Arctic and, you know, help build that company. I don't think that story plays out the exact same way without Ned and his support. And he played a very important part of my, my career with the move to, to his shop, having altered the trajectory of my career. So yeah, Sad and our condolences as a group to the Goodman family. It is quite sad to lose people like Ned and Lucas in such a short period of time. But anyway, that's my two cents on a sad event. I'm sure it touched a lot of people on this call as well. So thanks for your time and for bearing with me and all the best.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Enjoy the rest of your day.