Earnings Call Transcript - OR Q4 2023

Operator, Operator

Good morning, ladies and gentlemen, and welcome to the Osisko Gold Royalties Q4 End Year 2023 Results Conference Call. After the presentation, we will conduct the question-and-answer session. Please note that this call is being recorded today February 21, 2024 at 10 AM Eastern Time. Today on the call we have Mr. Jason Attew, President and Chief Executive Officer; Mr. Frédéric Ruel, Chief Financial Officer and Vice President of Finance; and Mr. Iain Farmer, Vice President, Corporate Development. I would now like to turn the meeting over to our host for today's call, Mr. Jason Attew.

Jason Attew, CEO

Thank you, operator. Good morning everybody, and thanks for being on today's call. I’m Jason Attew, President and CEO of Osisko Gold Royalties. I have been around to witness the formation almost 10 years ago and subsequently subsequent growth of Osisko Gold Royalties. I’m very humbled to be taking the leadership reins of the leading royalty company in the sector, and look forward to interacting with all our stakeholders in a positive, constructive manner in the near future. Procedurally, I'll run through the presentation and then we will open up the line for questions. For those participating online, you can submit your questions in advance through our webpage. The presentation is available on the website, as well as through the webcast. Please note there are forward-looking statements in this presentation for which actual results may differ. Also, the basis of presentation is in Canadian dollars unless otherwise noted. I'm joined on the call this morning by Frédéric Ruel, the company's Vice President Finance and Chief Financial Officer; and Iain Farmer, Vice President, Corporate Development amongst others as highlighted on the slide. When looking at our overall performance for the full year, it is important to note that the fiscal book a record year in terms of deals earned and was very busy from a transactional point of view 94,300 GEOs earned in 2023, representing a respectable 6% growth over the 89,400 GEOs earned in the full year 2022. This number we reported on January 8th, came just below the company's 95,000 to 105,000 GEO guidance released in early 2023. By this time, the challenges faced across our portfolio have been well-documented but worth a quick recap, a sharp fall in the rough diamond prices resulting in the shutdown of the Renard diamond mine, Canadian wildfires, which primarily affected deliveries from Éléonore, and ongoing ramp-up issues at the Mantos Blancos were there now appears to be some light at the end of the tunnel. Despite these headwinds, 2023 marked record annual revenues of CAD247.3 million and an annual cash margin of 93% with a record 94% being achieved in the company's fourth quarter. Fiscal ended the year with CAD67.7 million in cash and net debt at just CAD130 million after the company used the gross proceeds of CAD132 million from the sale of the Osisko mining shares to pay down our revolving credit facility. Subsequent to this and in 2024 year-to-date, the company has repaid an additional CAD30.2 million on the facility, reducing our overall debt thereby, increasing our financial flexibility to carry out accretive transactions. With respect to our ongoing commitment to return capital to our shareholders, the company declared and paid a quarterly dividend of CAD0.06 per share in Q4, making its 37th consecutive dividend with over CAD268 million returned to shareholders from these distributions. The company has had a stellar year as it relates to its disciplined deployment of capital into new transactions with some meaningful additions to an already strong portfolio. In summary, Osisko Bermuda closed both the CSA silver and copper streams in June 2023 followed by execution on the Gibraltar stream amendments Silver Stream amendments by Osisko and then also the acquisition of gold and copper NSR royalties on cost of Fuego. Finally, in the fourth quarter the company closed the acquisition of the 1% NSR on Namdini for US$35 million. With other smaller transactions rounding up the full list 2023 provided yet another demonstration of our team's ability to uncover and source accretive precious metals transactions. Turning now to the financial performance from 2023. Increases in record annual revenues largely tracked both the commensurate increase of annual deals earned as well as higher year-over-year commodity prices. On a quarterly basis, strong commodity prices resulted in a new quarterly high watermark achieved in the fourth quarter of CAD65.2 million which contributed to a revenue achievement of CAD274.3 million for the full year 2023. One of the disciplines I brought to the team is to think in per share metrics. And it is encouraging to see that from a cash flow per share growth perspective our annual cash flows from continuing operations in 2023 compared to 2022 increased by CAD0.04 per share, despite being impacted by increased interest charges and higher G&A as a result of severance charges associated with the recent management changes. Without these severance charges the increase in cash flow per share would have been CAD0.06. A net loss of CAD0.26 per basic common share for the 2023 year represented a marked decline versus the previous year. However, this delta largely reflects non-cash impairment charges on royalties, streams and investments. The major contributors of this impairment were charges to the carrying value of the Renard stream in loans, fair value accounting treatment of our investment in Osisko development and an impairment of the Trixie stream at Fintech. On the latter, please refer to the Osisko development press release put out this morning related to the impairment review at Trixie. More importantly, 2023 annual adjusted earnings of CAD0.54 cents per basic common share represented an improvement over 2022. During the fourth quarter, the company had 23 producing assets including ongoing contributions from Osisko’s newest cornerstone asset the Silver Stream on the CSA mine located in New South Wales. Recall deliveries from the associated copper stream for CSA are not set to kick in for Osisko until June 15th of this year. Our GEOs earned come predominantly from Canada and we derived over 90% of our GEOs from precious metals, gold at 67% and silver at 25% with the remainder coming from diamonds and other mills. With the recent shutdown of Renard diamonds, they will no longer be a contributor to Osisko’s deals earning. Gold going forward will put the company in a position to be effectively 100% precious metals until some of the company's base metal exposure begins to expand with the aforementioned CSA copper stream being the first major contributor later this year. Some comments on specific mine performances before speaking about a couple of our assets in greater detail. Like a reliable workhorse, the Canadian market had yet another impressive year and remains the company's most significant contributor to GEOs earned. In terms of the underground project progress at Odyssey during the period, Agnico Eagle's planned mining rate of 3,500 tonnes per day was reached in October 2023 and sustained through the fourth quarter. In addition, underground development was ahead of plan in the fourth quarter. Finally, the main ramp towards East Gouldie is ahead of schedule with Agnico Eagle expecting to reach the first level of the top of the East Gouldie deposit at a depth of 750 meters this quarter. Consequently, we're excited to hear that our partner is now evaluating the potential to accelerate initial production from East Gouldie to 2026, a year earlier than previously expected. Performance from the Victoria Eagle mine in 2023 was an obvious improvement over 2022, despite a two-week wildfire evacuations during the third quarter. Victoria managed to achieve total production within its guidance range. With the mine becoming more predictable going forward, and based on the new flying plan released earlier last year, Osisko looks forward to modest year-over-year growth as the company works towards achieving a near-term target of 200,000 gold ounces per year. The strong performance from Malartic, Eagle and others helped offset the lower than budgeted silver stream deliveries from Capstone's Mantos Blancos operation. Milling rates continue to lag Phase 1 expansion design levels. Worth noting is deliveries from the mine are on a two-month lag, meaning that Osisko's 2023 results represent operations from the mine from November 2022 to the end of October 2023. Osisko will continue to monitor Mantos as performance going into 2024. And for now, is expecting relatively flat year-over-year performance from the asset for 2024. Capstone is pointing to a mid-2024 for resolution of the plant issues following the delivery and installation of new pumping infrastructure related to fine tailings and water management, and after which it is expected that Mantos Blancos will consistently deliver nameplate Phase 1 throughput rates of 20,000 tonnes per day. Newmont's Éléonore was impacted as operations were temporarily suspended for approximately six weeks during the third quarter due to the proximity of forest fires, which impacted the mine's 2023 production and Osisko's annual GEOs deliveries were also impacted. Newmont will be providing updated public disclosure on the assets as part of its annual outlook tomorrow morning. Rounding things out with our newest material contributor, Metals Acquisition Limited, they had a solid quarter with gold and silver production basically flat versus the previous three-month period. In 2024, Osisko will benefit from a full year of silver deliveries from CSA under the silver stream and just over six months of deliveries under the copper stream from June 15 onward. The next major catalyst from our partner will come in the form of an updated mineral resource estimate on CSA, the first under Metal Acquisition Corp.'s ownership. The company's CDIs began trading yesterday on the ASX. As highlighted in our MD&A, the number of currently producing assets in our portfolio has decreased to 19 from the previously mentioned 23. The most high profile of these assets no longer contributing GEOs earned is Renard. While the three other names that have come off though are significantly less material. These were Kwale, Matilda and Tintic, which collectively only contribute 415 GEOs. A more positive note, however, I'll draw your attention to the top half of the list where five of our top 10 contributors continue along their path of improvement in the form of ongoing expansions, mine life extensions or throughput and production ramp-ups. By the end of 2024, we can also expect both Namdini and Tocantinzinho gold projects to be added to this list. Along with Osisko's high precious metal exposure, especially diamonds no longer serving as a major GEO contributor, our company continues to distinguish itself from pure leading jurisdictional exposure as it relates to both production and NAV to what Osisko defines as Tier 1 mining jurisdictions, which include Canada, the United States and Australia. Recent global events have only served to underpin our belief that maintaining a high exposure to both Tier 1 and very well-established mining jurisdictions where mining has been a key industry or part of the overall culture is extremely important. As stated in our press release last night, after joining the team and subsequently going through a full portfolio review, in addition to factoring events that have transpired over the past years since this company last published its 2023 guidance and previous five-year outlook, the company has updated these numbers to reflect what we believe to be achievable ranges. With respect to our 2024 guidance of 82,000 to 92,000 GEOs, it goes without saying that there is a significant void in terms of GEOs that has been left by the shutdown of production improvements and new mine startups, plus the CSA copper stream coming online for us on June 15th are expected to partially offset this reduction. However, cornerstone asset, Canadian Malartic is guided to be flat to maybe modestly down year over year in large part, because of Ignyta's decision to defer the reintroduction of progression lower grade ore to increase mill throughput, which is now not expected to happen until 2025. In 2024, Mill throughput is expected to be sourced primarily from the Barnat pit, as well as the Odyssey underground and to a lesser extent, with total throughput estimated to be 52,000 tonnes per day in 2024 versus a nameplate capacity of 60,000 tonnes per day. Further to this, at mental Glencore's, when combining our two months stream delivery lag with recent progress and timelines provided by our partner Capstone, we are basically expecting flat year-over-year GEO deliveries compared to 2023, with a material positive step change expected from 2025 onwards. As noted in our press release, we are also expecting a 97% cash margin in 2024. This, I believe is the highest amongst our peer group. And finally, it should be worth noting that due to recent and previously disclosed close write-downs associated with Renard, Osisko is not expecting to be cash taxable in Canada for 2024. Looking further out with respect to our year outlook and as it relates to our growth trajectory, we believe 120,000 to 135,000 GEOs is a very realistic range for us over that time period. What this means is that Osisko's peer-leading growth profile very much remains intact. However, this growth will not occur in a straight line. Notable assets that are no longer included in our five-year outlook that had previously been factored include Back Forty, San Antonio and Pine Point. For reference, we also haven't been including either Amulsar or Horne 5 in any of our published numbers for quite some time. In summary, on slide 9, the company is now looking at its near-term guidance and longer-term outlook through a more conservative lens. After barely missing the low end of its guidance range for the past two years, Osisko has now set targets that the company is confident they can deliver on, helping us further reestablish credibility by meeting expectations set in order to complement our asset base, which we believe remains second to none. Underpinning this updated growth profile are a long list of near-term catalysts that we provided on slides 10 and 11. We've already touched on some of these earlier in the presentation, so I'm not going to go through this list line-by-line. However, there are a few names and opportunities that will benefit our shareholders that I'd like to highlight. As everyone may have seen last week, our partner South32 announced the final investment approval of the Taylor deposit at Hermosa, along with project economics as part of its final feasibility study. Based on the timelines provided, the project remains on track for first production in the first half of calendar year 2027. Congratulations to South32 for achieving these important milestones. And as a reminder, Osisko had a 1% NSR at Taylor. Our partners at Osisko Mining and Gold Fields together with the Windfall Mining Group are expected to achieve some important milestones themselves at Windfall over the next 10 to 12 months, not the least of which being the finalization of an impact benefit agreement with local First Nations. Moving to slide 11. I would also like to highlight that on Friday last week, our partner SolgGold announced a successful completion of an updated pre-feasibility study and Cascabel, effectively outlining a lower capex, longer-life, lower-risk development options. SolgGold now expects to commence the technical work to further advance and derisk cash development. If you'd like to discuss further in any more detail any of the remaining items highlighted in these two pages, I encourage you to reach out to any of my colleagues here at Osisko and we'll be happy to assist. Finally, we'll end the formal part of the presentation on slide 12, which outlines the current state of the Osisko's balance sheet. At year end, we had total debt of just over CAD190 million and net debt of only CAD130 million. As we stated previously, the covenant performance is exceptionally strong with cash margins expected in 2024 of 97%. This is important, as noted previously on this call and noted in the subsequent event in our MD&A, we've now also repaid an additional CAD30.2 million against our revolving credit facility, further strengthening our financial position. This is important, as Osisko doesn't expect to sit on its hands in 2024 and our much improved balance sheet provides the company with the financial capacity and flexibility to continue its strategic strategy of disciplined allocation in the pursuit of high-quality, accretive precious metals, streams and royalties that will bolster the Company's current and near-term deal deliveries and cash flow that should accrue to our shareholders benefit. And if for whatever reason, and clearly that isn't the company's base case, for the company was unsuccessful in cementing new transactions in 2024, then we'll end the year in a net cash position based on current projections, which is not the worst outcome. And with that, I'd like to thank everyone for listening today. We know it's a very, very busy day for earnings with respect to our peers and other mining companies. But we will open the line up for questions as well as questions posted on the webcast. And if we don't get to all the questions on the line, we will make sure to respond offline to those that we don't cover on this webcast. Thank you very much and operator over to you for questions.

Operator, Operator

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Your first question is from Cosmos Chiu with CIBC. Please go ahead.

Cosmos Chiu, Analyst

Hi, thanks, Jason and team. Maybe my first question is on your equity holdings here. As you mentioned, you divested Osisko mining shares. Could you comment on your other equity positions? And to the extent that you can share with us, your intentions of those equity positions.

Jason Attew, CEO

Thank you. Good morning, Cosmos. Thank you for the question. Yes, we do obviously have some other equity holdings in the portfolio. The majority for which being the Osisko Development, we do hold a 40% interest in a specific development as well as with metals acquisitions limited. And so those are the majority. The rest of the positions we have make up a very small amount anyway. And so with respect to – I'll just talk about our philosophy around our equity holdings. As I've stated, we had the conversation before customers. We're not in the business to be portfolio managers. And so we obviously make investments in equity that really pivots as a part of a transaction that involves obviously a royalty, stream or an economic interest. And so what you witnessed or saw when we divested the Osisko mining block is first of all, we had a really good use of proceeds to pay down our debt. But secondly, we're not providing a lot of value to our partners by essentially being a passive equity holder. So our philosophy is again, we're not long-term holders of these equity positions. We will provide equity to our partners if it is around a catalyzing event, such as an acquisition or other milestone that advances and arguably preserves our interest as it relates to a royalty stream or economic interests within the company. So you can see, we have a slide obviously on what our other equity interests are. So people can refer to that. But as I said, we are not in the business of being portfolio managers. We will look at the appropriate time to monetize these equity interests, but obviously working with our partners to ensure that we're doing it in a responsible way.

Cosmos Chiu, Analyst

Perfect. Thanks, Jason. And my other question is just trying to understand your thought process here, as you talk about your five-year projections in terms of growth and specifically, you pointed out that compared to the last sort of target under the old management, that Back Forty, San Antonio and Pine Point are no longer included in your numbers. I'm just trying to figure out, you know, how you went through that process. What's the commonality between some of these three, for example, projects that made you decide to take it out of your numbers and to the extent that you can comment on it, what have you included? I already know, what have you what remains in that number?

Jason Attew, CEO

Thank you, Cosmos. So with respect to our process, it’s not different, I don't think to any other oil companies when they put out their guidance. We get together as a group. We've got technical evaluations and technical folks that obviously, apply the disclosure of our partner companies. We very much rely on again the disclosure that we see from corporate, as I remind everybody we're not the operators here, our partners are very much closer than we are. But mining is a tough business as you and I both know. And so when we get together to look at again what our guidance should be, we take the appropriate contingencies that we see. And so collectively, what you'll see as I talked about the assets that we pulled out of the five-year guidance for the most part, a slippage in timelines, of which we don't expect to come in within that five-year window. But we do it essentially, probability weight some of the assets on a five-year timeline. And therefore, we have a lot of assets in that portfolio at Cosmo. So happy to walk you through our thoughts off-line, with respect to what would aggregate into that five-year contribution from a GEO perspective. But then again, we do take the appropriate contingencies as we see them as a partner and obviously, a royalty or a stream holder with respect to these assets.

Cosmos Chiu, Analyst

Great. Thanks, Jason. That perfectly answers my question. So, thanks again.

Jason Attew, CEO

Thanks, Cosmos.

Operator, Operator

Your next question comes from Tanya Jakusconek with Scotiabank. Please go ahead.

Tanya Jakusconek, Analyst

Great. Good morning, everyone. Thank you so much for taking my questions. Jason, being new CEO at the helm, I would like to get a bit deeper thoughts on your strategy or transactions. So first question I have, now that you've improved the balance sheet, what size of the deal would you be comfortable attacking at this point? So, that's my first question.

Jason Attew, CEO

Thank you, Tanya, and good morning. I appreciate everyone joining us today. From a strategic standpoint, 2023 was a strong year for Osisko regarding transactions, with five completed that are all quite beneficial for our shareholders moving forward. As we look ahead, we need to consider the timing and frequency of our transactions. There was a substantial deal, specifically the CSA transaction, which amounted to over US$190 million, including the private placement. This is significant for us. Strategically, we aim to remain focused on precious metals and support strong management teams that we believe are making significant progress in Tier 1 jurisdictions. We mentioned earlier that we used proceeds from the Osisko mining sale to pay down our debt facility, which now has over CAD550 million available, including the accordion, for pursuing accretive transactions. It largely depends on the engagement and response from our partners. Transactions in the range of US$200 million are feasible for us, but we will also continue to pursue transactions similar to those in 2023 around US$35 million, such as MAC, which gives us a strong deal profile. In terms of corporate development, I believe our ideal deal size over the next couple of years will be between US$50 million and US$250 million.

Tanya Jakusconek, Analyst

Thank you for that, Jason. Regarding the jurisdiction, you mentioned Tier 1, specifically highlighting Australia, Canada, and the U.S. as key operating areas. Would you consider expanding beyond those regions? For instance, are you looking to increase your presence in Africa, given your recent activities in Ghana? How do you view this in relation to diversifying your portfolio?

Jason Attew, CEO

It's a great question. Thank you for asking. We have the capability to take on more jurisdictional and geopolitical risk, as I mentioned in the presentation. However, we prefer to remain in what we consider Tier 1 jurisdictions. We understand that if we stick strictly to those areas, our deal flow might be more restricted. Therefore, we need to consider opportunities outside these jurisdictions. To answer your question, yes, it would be unwise not to explore opportunities in regions like Africa. There are numerous opportunities there, and we have our own risk assessments for those areas. Ultimately, our role as management, along with Ian, Michael, Fred, and others, is to act as risk managers for our shareholders' capital. If we enter a jurisdiction that doesn’t fit our Tier 1 criteria, we need to ensure there’s a corresponding return to manage that risk effectively. Additionally, as you know, the contractual aspects of the royalty or streaming interest are crucial. We must ensure there's survivability in any transaction. Many factors influence our decision-making as we consider putting bids and term sheets in front of companies outside the Tier 1 jurisdictions, but it's important to note that we must achieve a wider spread than we typically would in a Tier 1 investment, such as in Canada.

Tanya Jakusconek, Analyst

Would you find in Africa that fits your risk profile just say it would be smaller in size and say CAD200 million deal?

Jason Attew, CEO

Yes, I believe we wouldn't fully commit our resources or use their entire facility for a transaction, such as CAD500 million, in an African jurisdiction that might not align with our shareholders' interests. You're correct that we need to consider the size of both the trends and the transactions we pursue outside of the regions we classify as Tier 1.

Tanya Jakusconek, Analyst

Okay. And then just my final question in terms of the capital allocation, Jason, maybe you can go through for us your priority for capital allocation and with respect to debt versus dividend versus share buyback?

Jason Attew, CEO

Thank you, Tanya. So, again, it follows our typical capital allocation decision tree. So, obviously, we've had a forecast now and analysts to speak to 2024, that's going to generate some significant operating cash flow. Dividend is very important to us and we will continue to obviously pay our dividend. A lot of that is obviously dependent on the commodity prices underpinning our business. So, as I said from a capital allocation perspective, we still do have debt out of our facility. If for whatever reason we can't find accretive deals to do it, our first priority would be to pay down our debt and just really, really have an increase in our financial flexibility to go out and do transactions if it's not in 2024, 2025, and beyond. And so beyond that and we're really just looking at how rich and how much cash we are having on our balance sheet. And so if we do get to a point where our balance sheet is very, very healthy and we've got a lot of cash on the balance sheet, we would look to do things like special dividends for sure. In terms of buying back shares, that's really dependent on more so our trading price and the capital markets aspect if we do know our fundamental value of the business is. And so we've got cash on our balance sheet. We do see that we think there's a disconnect with respect to what we think fundamental value is and what the market is quoting us.

Tanya Jakusconek, Analyst

Okay. And my last question is just, what's the minimum cash balance you keep on the balance sheet to run your business?

Frédéric Ruel, CFO

Well, thank you. In terms of cash balance, we will execute the CAD16 million approximately in the cash balance and use the remaining balance to pay down the debt or do acquisitions.

Tanya Jakusconek, Analyst

Helpful. Thank you so much. I'll leave it to someone else.

Frédéric Ruel, CFO

You’re welcome.

Operator, Operator

Your next question comes from John Tumazos with John Tumazos Very Independent Research. Please go ahead.

John Tumazos, Analyst

Congratulations Jason, great to have you on board.

Jason Attew, CEO

Thank you, John.

John Tumazos, Analyst

If I can ask a very detailed question, concerning Trixie, is your charge related to the cash put in for the future stream and excludes your equity in the impairment process that's delaying their earnings report through the end of March?

Jason Attew, CEO

Yes. Good question, John. I'm going to pass it over to Frédéric, our CFO as well to answer.

Frédéric Ruel, CFO

Yes. These impairments need to be evaluated as they are primarily related to investments. IFRS requires us to consider investments instead of just potential impairments, which we believe applies in this situation. Consequently, the value of the investments was adjusted to their fair value at the end of the year. Regarding the stream, it is always determined by our internal financial models. In this instance, we recorded a CAD23 million impairment related to the stream.

Jason Attew, CEO

CAD23.5 million to be exact, John.

John Tumazos, Analyst

So this closure counts the equity income offset for whatever OGC calculates?

Frédéric Ruel, CFO

It's not going to be directly related to the impairment that they might book in their books.

Jason Attew, CEO

And you likely saw John that Osisko development put out a press release as well putting a range of the impairment at Trixie between CAD80 and CAD120 million booked on their books.

John Tumazos, Analyst

Of course. I guess a big quick question, Jason, how big picture would you like to change the structure orientation of the Osisko Gold Royalties? There's the 20 wonderful near-term catalysts you've posted. It seems as though the stock market has a hard time understanding or digesting everything. There's so much progress. And the market is confused, because most of the years you reported a loss, because of non-cash charges. We narrowed Royal Gold Osisko, Triple Flag usually report profit every quarter. For example, would it be a good reorientation to dividend your Osisko development 40% to your shareholders directly, so that we get a positive value for it? We're having a penalty because they take a write-off last quarters.

Jason Attew, CEO

John, I do appreciate the comments. And firstly, I would like to stress the fact that our earnings and what you see with respect to these unmet needs, these are all non-cash charges. So that's why we direct our investors to our adjusted earnings number. And I do take your comments that confusion does have costs here associated and we have made a number of changes both on the governance side and as well with respect to our strategy going forward. We will never be buying mining assets going forward. I can promise you that. We are going to be a pure-play royalty company that's effectively invest in royalties streams, economic interests in good jurisdictions with good management. With respect to the question on the 40% interest in Osisko Development, as if we could do a dividend, the challenge as we see it with that because that will actually create a capital gain for our shareholders or a cost for our shareholders to do that. And so we don't think, although, it's something we are certainly considering and we'll talk to our shareholders about that, but we don't think by doing distribution or dividend of the interest in Osisko Development would be well received given they'll all receive a tax bill associated with a distribution. But we're open to having conversation with yourself, John and others on options as it relates to again ensuring that we create value on that investment.

John Tumazos, Analyst

Thank you.

Operator, Operator

Your next question comes from Adrian Day with Adrian Day Management. Please go ahead.

Adrian Day, Analyst

Yes. Good morning, and thank you. I had two questions if I may. First one, can you just talk a little bit about? Obviously, you mentioned that you're pretty pure precious metals now, but you also mentioned you've got a lot of base metals coming on. What is your general thinking, general strategy on diversifying into other commodities? How broadly would you diversify?

Jason Attew, CEO

Really good question, Adrian. Myself and my team and our board do actually have lots of conversations around diversification. The first statement that I make is, we absolutely want to stay precious focused for the near, medium and long term. That said, as you just pointed out, our concentration around precious is one of the highest in the group. So we do have the ability to take other commodities and we have taken other commodities. I mean, mostly as we talked about copper coming from Hermosa and the copper stream at CSA will adjust to some degree, again, our concentration of precious. I really think it does depend on the opportunity set that we're looking at. Clearly, if we can invest in a large either expansion or a new development of a polymetallic asset, for instance, that gives us both precious and copper. I'll just use copper as an example. And we certainly would entertain that. But the fact is, now that, again, our team is very much focused on per share metrics, we will be very much focused on value over volumes. So whatever is going to create value for our shareholders, we'd endeavor to look at. So we would look at base metals. We would look at copper. We have a very positive constructive view on the copper environment going forward around the energy transition and decarbonization themes that you're very well aware of. Would we go into more esoteric commodities that don't necessarily, you can't necessarily quote them on a metals exchange? I'm thinking commodities like lithium or others, no, we don't think that makes sense for our portfolio right now, given the opportunity that we're accepting that we're seeing. But certainly on the base metal side, we do have exposure within 180 assets that we do have in the portfolio. But we also do think that there's opportunities to essentially get some of those royalties and streams with some of the base metal assets as well and specifically around expansions or new developments that we see being very important to the energy transition sector.

Adrian Day, Analyst

Okay. But you don't have a particular sort of hard line in the sand where you wouldn't go over x?

Jason Attew, CEO

We do not, Adrian, but it's certainly something we evaluate as our portfolio shifts over time, but we do not have a specific target saying if we're going to drop below, let's pick the number 80%, we wouldn't go and do the investment. We always look at value first and then look at the other factors such as you're suggesting around commodity mix.

Adrian Day, Analyst

Okay. Super. And then my second question, if I may, in answer to Cosmos Chiu's very first question, I got the sense that there's no particular urgency or it's not a high priority to sell down more of your equity. Is that correct?

Jason Attew, CEO

That's correct, Adrian. We've got, as I said, the two major ones in the portfolio are Cisco Development and Metals Acquisition Limited, and both of those companies, Metals Acquisition Limited, for example, they just did a big raise in Australia, as you're certainly aware of. And with respect to Cisco Development, they've got a bunch of catalysts, not the least of which a construction permit this year, not the least of which they're going to need to raise capital for their larger builds. So it doesn't make sense. And arguably, it'd be counterproductive for us to suggest that we monetize it. You can think of the Cisco mining situation as a good analog. When we're not providing really any value to our partner companies, after the Goldfields joint venture, we essentially just became a passive shareholder. That's when we'd be looking to monetize or divest our interest, and we obviously dealt directly with the Cisco mining when we did do that and thought it was the right thing to do at the time.

Adrian Day, Analyst

Okay. Great. Thank you. Thank you. That helps.

Jason Attew, CEO

Thanks, Adrian.

Operator, Operator

Your next question comes from Ralph Profiti with Eight Capital. Please go ahead.

Ralph Profiti, Analyst

Thanks, operator. Jason, most of my questions have been answered. How much time are you spending sort of planning on origination, and is there a market appetite for origination for new deals, and has there really been anything kind of new and unique that you've seen on the playing field since you started and sort of going around fostering these relationships?

Jason Attew, CEO

Morning, Ralph. Thank you for your question. So, yes, is certainly the answer that I would say. And again, for people on the line that don't know my history or background, I spent 16 years in investment banking, so I do have some deep relationships. The team has some deep relationships, and our board has certainly some deep relationships across the sector. And so what I would say is there are certainly opportunities for us. And so the first phase of me coming on as a CEO is I thought it was very critically important that we meet all our owners and shareholders. And so for the last little while, Grant and myself have been on the road meeting with all our owners, getting feedback, talking about the strategy before. The second phase, obviously, is around our deal flow and our deal origination, which, again, our team continues to do, and I will pick that up as well. I would say that just from what we're seeing thematically is really around what I talked about before, Ralph, around there are a lot of management teams and or companies that are looking to grow their business. And growing their business around the energy transition theme that I talked about is something that we think will continue to be a theme for some time. So looking at companies that, obviously, want more copper, or have a project that's just a few kilometers away from their headframe or the processing facilities that they'll accelerate their studies for. We have our very entrepreneurial management teams out there that are looking to acquire assets from the seniors. So yes, there's whole origination piece. This group has been doing it for the last 10 years very, very well, and again as evidenced by the five transactions in 2023, record allocation in terms of capital deployment. I think the deployment was very, very smart and going to benefit all our owners going forward. So it certainly will continue, it's not something that the company hasn't done in the past, but we obviously do need to stay current as to trends, cost of capital for all of these parties and their aspirations around growing their portfolios to become, as I said, leaders in this energy transition piece that we're going to see unfold over the next five to 20 years.

Ralph Profiti, Analyst

Appreciate the answer. Thanks, Jason.

Operator, Operator

Your next question comes from Brian MacArthur with Raymond James. Please go ahead.

Brian MacArthur, Analyst

Good morning. I'll ask my main question, but I want to follow up on the non-precious metal transactions. You mentioned that lithium is not something you are interested in, but you have an interesting lithium royalty. Does it make sense to sell a royalty in the future? Our philosophy here is that you generally receive higher multiples for precious metals compared to base metals. Considering your lack of focus on lithium, what are your thoughts on Corvette?

Frédéric Ruel, CFO

Well, thank you Brian. I appreciate the question. Good morning. Corvette is a very good asset in our portfolio. And so we are very, very fortunate to be a benefactor of holding the 2% of the NSR there. We also have NSRs and any other metals that are found in that region as well. Whether it was conveying to Adrian is I think we have to be very focused as a corporate development team and origination team on what we're good at what we know. And so we know and we want and are focused on precious metals opportunities. As I talked about before, we really need to stay in that focus. So looking at new lithium projects or new projects in that commodity it would depend if it's a really good management team that we've got a history for, of course we'd potentially look at it, but I don't think it's something we consider first of all our core competency or something that we would consider doing outside of one-off exceptions. With respect to potentially trading in a lithium or any of the assets that we have there are not very specific either base or precious, of course, we would consider that what we will certainly do and as I said in my presentations done a portfolio review, if we can actually create value for shareholders, and for example the other commodities that we have in our portfolio, if we see something in other assets, maybe precious focused in other portfolios that we did come to a deal with SIM swapping, yes, that would absolutely make sense for us. It's I would say, it's a lot easier to suggest around dramatically than them and conceptually then around the real execution around these transactions, because there was a lot of things obviously involved. You've got tax. You've got new considerations around investments.

Brian MacArthur, Analyst

Great. Thanks very much for your clarification.

Jason Attew, CEO

Thanks, Ralph. Sorry Brian.

Operator, Operator

I will now turn the conference back over to Jason for questions on the webcast.

Jason Attew, CEO

Thank you, Operator. So that's the first question we have is expand on the rationale behind the recent balance sheet actions and comments on your capital allocation going forward? I believe that we've answered that question through the Q&A period. So thank you. Next question from Kerry Smith at Haywood. Jason, do you plan to retire any more debt in 2024? Again, I think we've also addressed that. We, as you saw in Q1 or sorry Q1 to-date year-to-date we have retired and paid down another CAD30 million on our revolver facility. We will continue to do that, unless and until we see transactions that we want to do that and essentially move off against the revolving credit facility. So we always want to have some capacity and flexibility around that. So if we don't do transactions, yes, we will continue to retire and/or pay down our facility, Kerry, thank you for that question. And question from Eric. Congrats on the nomination and to the whole team, what has been the total ounces produced at Éléonore since starting production and around two million ounces of what I'm getting from the team, is 2.2 on gold all-ballpark and is there an expectation to reach 3.5% NSR royalty eventually? I'll turn that question to Iain since the 3.5% also I believe and commodity length or commodity price-based. But to answer the question, yes about two million ounces has been produced at Éléonore.

Iain Farmer, Vice President, Corporate Development

Yes. The two million ounces in production were at the top end of the variable royalty rate range for that royalty. And in terms of getting the next bump up on the total production rate is probably a little bit too far in the future to say that that's going to happen at this time.

Jason Attew, CEO

Thank you for your question, Eric. That's all the questions, operator we have from the webcast. So, thank you very much everybody for attending kind of the meeting for the year-end Osisko Gold Royalties results presentation. As I said, it's a very, very busy day, especially for the analysts that cover. So very much appreciate your attention and the thoughtful questions this morning. And so have a very good week. And we're always available. Our team and myself are all available if you'd like to have a conversation on any of our business and our strategy going forward. So thank you very much for attending this morning.

Operator, Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line.