Osisko Gold Royalties Ltd

NYSE:OR

Earnings Call Transcript 2024-Q1

[Operator]

Good morning, ladies and gentlemen, and welcome to the Osisko Gold Royalties Q1 2024 Results Conference Call. [Operator Instructions] Please note that this call is being recorded today, May 9, 2024, at 10 a.m. Eastern Time.Today on the call, we have Mr. Jason Attew, President and Chief Executive Officer; Mr. Frederic Ruel, Chief Financial Officer and Vice President, Finance; Heather Taylor, Vice President, Sustainability and Communications; 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.[Foreign Language]

[Jason Attew, executive]

Good morning, everybody, and thanks for being on today's call. I'm Jason Attew, President and CEO of Osisko Gold Royalties. Procedurally, I along with Heather Taylor will run you through the presentation and then we'll subsequently open up the line for questions. For those participating online via the webcast, you can submit your questions in advance through the webcast platform.Today's presentation will also be available and downloadable online through our corporate website. Please note there are forward-looking statements in this presentation for which actual results may differ. Also, please note, the basis of presentation will be in Canadian dollars, unless otherwise noted.I'm joined on the call this morning by Frederic Ruel, the company's VP, Finance and Chief Financial Officer; and Heather Taylor, Vice President, Sustainability and Communications, amongst the others as indicated on Slide 3.In Slide 4, when looking at Osisko's first 3 months of 2024, we are off to a predictable start as it relates to gold equivalent ounces earned, cash margins, cash flows as well as overall debt reduction. Osisko earned 22,259 GEOs in the first quarter of 2024, which puts us on track to achieve our previously published full year 2024 guidance of between 82,000 and 92,000 gold equivalent ounces.Revenue for the period was strong in Q1 at $60.8 million. Even though gold and silver prices in Q1 were robust with average realized prices of USD 2,073 and USD 23.78, respectively, the precious metals complex already saw a real appreciation after our last sales concluded for the quarter. In other words, today's spot gold price is approximately $250 higher than a realized price over Q1.In addition, the system's cash margins were 97% in the quarter. This is just shy of the company's record quarterly cash margin of 98% booked in the third quarter of 2017. Osisko ended the first quarter with $70.6 million in cash and net debt of just over $8 million after the company continued to pay down its revolving credit facility during the period. So far in Q2, the company has repaid an additional $18.6 million on the facility, further increasing our financial flexibility in order to be able to transact in new accretive opportunities as they present themselves.With respect to our ongoing commitment to return capital to shareholders, the company declared and paid a quarterly dividend of $0.06 per share in Q1, marking its 36th consecutive dividend with over $279 million returned to shareholders to date from these distributions.Subsequent to the quarter, Osisko Board of Directors approved an 8% increase to the base quarterly dividend of $0.065 per common share payable on July 15, 2024 to shareholders of record as of the close of business on June 28, 2024. This is a testament to the tremendous confidence we have for the consistency and the predictability of the cash flows underpinning our business.With respect to our opportunity set, the company's pipeline continues to remain robust. With our corporate development team busier than they've ever been, we remain optimistic that we'll get at least 1 or possibly 2 meaningful transactions across the line this year. Finally, as some of you know, on April 10, Osisko published its fourth edition of its sustainability report, Growing Responsively.And I'd like to bring on Heather Taylor to talk about the key achievements in more detail. Heather?

[Heather Taylor, executive]

Thanks, Jason, and thank you to everyone who's taken the time to join us today. Subsequent to the quarter, we published the fourth edition of our sustainability report, Growing Responsibly, as Jason mentioned. It's guided by the highest standards set by GRI, SASB and IFRS climate-related disclosures. This publication marks another year of substantial progress made with respect to our governance, environmental and social initiatives. I invite you to explore our achievements in greater detail in the report, which is posted on our website.Starting with governance. This past year has seen Osisko make significant strides. We've enhanced the leadership of our Board by appointing an independent chair, reinforcing our commitment to robust oversight and accountability. We've also maintained our commitment to diversity with women continuing to make up over 30% of our Board members. The integration of my now not so new role as Vice President of Sustainability and Communications ensures that we have a dedicated individual focusing on our ESG initiatives and continuing to drive these forward.On the environmental side, supporting Osisk's mandate to align capital allocation with ESG principles, we formalized our investment due diligence process by developing an ESG screening and monitoring tool. The tool is aligned with industry-leading practices and allows us to assess the ESG performance of potential assets and mining partners across multiple topics, prior to investing and subsequent monitoring post-capital deployment.In our commitment to address climate-related challenges, we conducted scenario analysis to gauge the exposure of key assets to climate-related risks and opportunities. This analysis helps inform the development of an inaugural climate change strategy for the 2024 to 2027 time frame. We also enhanced our transparency in reporting Scope 3 emissions and have entirely offset the company's 2023 office-based emissions with the purchase of high-quality carbon credits.Lastly, on the social front, we have deepened our commitment to our employees and the communities we impact. We implemented comprehensive training, focused on diversity, equity and inclusion, health and safety and human rights. Additionally, our teams have actively participated in volunteering events that support and uplift our local communities. We deployed over $325,000 towards community donations aligned with our newly formalized community investment guidelines.Our efforts have been recognized externally with Osisko receiving a AA rating from MSCI and high rankings from Sustainalytics, including top-rated regional and industry badges. These achievements we should be immensely proud of. These accomplishments reflect our strong performance relative to precious metal peers and underscore our dedication to leading ESG practices.As we look to the future, our commitment remains firm. We will continue to integrate ESG principles across the organization and into our corporate strategy, ensuring that our actions benefit not only our shareholders, but also the broader communities and environments in which we conduct business.With that, I'll pass it back to Jason.

[Jason Attew, executive]

Thanks, Heather. We'll now pivot to the company's financial performance for Q1. Quarterly revenues effectively tracked higher year-over-year commodity prices when comparing to Q1 2023, which was also partially offset by less gold equivalent ounces versus the same period last year. The decrease in Q1 2024 is due to the stoppage of operations at the Renard diamond mine at the end of 2023.Net earnings of $0.08 per basic common share for the period represented a modest decline versus the first quarter of 2023. However, this delta largely reflects a noncash share of loss in associates or specifically a fiscal development, and to a lesser extent, a modest noncash foreign exchange loss during the period. Most importantly, though, Q1 2024 saw a year-over-year improvement in both cash flow per share as well as quarterly adjusted earnings of $0.16 per basic common share.During the first quarter of 2024, the company had 19 producing assets. Our deals earned come predominantly from Canada, and we derive over 95% of the gold equivalent ounces from precious metals; gold, just under 71% and silver at 25%, with the remainder coming from other metals.As I noted previously, the recent shutdown of Renard, diamonds will no longer be contributed to Osisko's GEOs earned going forward, putting the company in position to effectively be 100% precious metals until some of the company's base metal exposure begin to expand with the first material contribution coming from the CSA Copper Stream with the effective date of that copper stream since June 15 of this year.Some comments on specific mine performances during the quarter before speaking out -- speaking about a couple of more material assets in greater detail. The Canadian Malartic had yet another impressive start to the year with Agnico booking record quarterly production from the mine. The asset remains Osisko's most important contributor to our GEOs earned by a solid, solid margin.Performance from Victoria Gold Eagle during the first quarter of 2024 fell somewhat short of our budgeted expectations. Victoria, as noted, however, the gold production in Q1 2024 was lower year-over-year due to lower grades related to mine sequencing of the Eagle orebody, the timing of placing stacked tonnes under leach and lower planned stacking rates in Q4 2023. Despite the slower start, the company still expects to achieve 2024 gold production guidance of 165,000 to 185,000 ounces, with summer and fall season typically being the mine's strongest operating periods.Performance from Capstone's Mantos Blancos operation, where milling rates continue to lag Phase 1 expansion design level was effectively flat versus the prior period in Q4 2023. Osisko will continue to monitor Mantos' performance through 2024. We remain optimistic that Capstone continues to point to a mid-2024 resolution of the plant issues following the deliveries in June 2024, installation of new pumping infrastructure related to the fine tailings and water management.If things go well from there, Capstone is able to consistently achieve its nameplate throughput capacity of 20,000 tonnes per day, and Osisko will reap the benefits of this achievement in its 2025 year, with Mantos Blancos representing the biggest driver of the fiscal step change in gold equivalent ounce growth in 2025 versus 2024.As I mentioned earlier, the number of currently producing assets in our portfolio stands at 19. We anticipate this number to increase by 2 production assets in the second half as we expect both Namdini and Tocantinzinho projects to be pouring gold before the end of the year, in addition to the start of CSA Copper Stream.Moving to the next slide. While we have spoken to this slide at a numerous number of times, I think it remains as relevant today as ever as our company continues to distinguish itself from the rest of its relevant peers in the subsectors and it relates to jurisdictional exposure. Osisko is the leader when it comes to both net asset value and gold equivalent ounces earned from what Osisko defines as Tier 1 mining jurisdictions, which includes Canada, United States and Australia. Of note that if we were to add Chile to that list of countries, we would be [ about ] over 95%.In terms of Canadian Malartic, the mine realized record quarterly gold production driven by higher tonnage in gold grades, thanks to contributions from the Odyssey underground. More specifically, ramp development continued to exceed target, reaching the first production level of East Gouldie in February 2024 and at a depth of 765 meters at the end of March.Shaft sinking improved during the quarter with an average sinking rate of 2.4 meters per day. The temporary loading pocket previously planned at level 102 will now be built at level 64, which is expected to provide hoisting capacity by mid-2025, 6 months earlier than previously planned and will provide added development and production flexibility. We were obviously also delighted to hear our operating partner continues to make reference to plan around a potential second shaft in the Odyssey underground, a story to stay tuned to.Moving to the next slide on CSA. Just a few weeks ago, our operating partners at Metals Acquisition Corp. announced an updated mineral reserve and resource statement based on drilling completed at CSA only up to the end of August 2023. Highlights included the 67% increase in mine life to 11 years, in other words to the end of 2034, based on mineral reserves only compared to a 6-year reserve mine life outlined previously.The updated mineral reserve only extends 95 meters vertically below the current decline position. And Metals Acquisition Corp. has continued to drill beyond August 2023 cutoff date. So we clearly expect that there is more to come from this team in relative near term. Recall that CSA copper mine has been producing for almost 60 years with very limited exploration away from the known deposits and there is clear potential to further optimize Metal Acquisition Corp. by April 2024 life-of-mine production plan. Exploration in the top 850 meters of deposit is just starting, and initial results highlight strong potential to open additional mining fronts.Moving to the next slide, Island Magino. In late March 2024, Alamos announced a friendly acquisition of Argonaut Gold and its Magino gold mine and mill, located immediately adjacent to Island Gold. This transaction is expected to close in Q3 2024. The previously planned Phase 3 mill expansion construction work at Island will no longer be required following the announced acquisition of the 10,000 tonne per day Magino mill, which is located approximately 2 kilometers from the Island Gold shaft.The larger mill and tailings infrastructure at Magino will now accommodate the rapidly growing mineral drills and local resource base at Island Gold. The expanded and accelerated mine plan is also anticipated to transition a greater proportion of production towards Osisko's 2% and 3% NSR royalty boundaries earlier in the mine plan, as opposed to the mineral inventory covered by Osisko's 1.38% NSR royalty. In addition, a small fraction of the eastern limit of the Magino pit is covered by a 3% NSR royalty, with production expected later this decade.The underground exploration potential previously highlighted by Argonaut Gold on this claim is located less than 300 meters from the existing Island Gold underground infrastructure.Moving to our guidance and growth. After the first quarter, and as previously noted, the company remains on solid footing with respect to being able to achieve its previously published 2024 GEO delivery guidance, especially the 3 material contributors expected to deliver new gold equivalent ounces to Osisko in the second half of 2024, being the CSA Copper Stream, Tocantinzinho and Namdini.While this year's guidance number was always going to represent a modest step down versus last year's, it is worth reminding everyone that Renard -- with Renard no longer in the picture, cash margins have increased. And given the write-downs that have already taken place in the assets, tax pools have been created, so Osisko is not expecting to be cash taxable in Canada for 2024.Unsurprisingly, at this point in time, the company's 5-year outlook for 2028 published in mid-February remains unchanged as we remain very confident that both the expansion and our development assets will fuel a 30-plus percent purely in growth with no continued capital or any capital calls required.Moving to our catalyst slide. Underpinning this updated growth profile is a long list of near-term catalysts that we provided on Slide 14 and 15. We've already discussed many of these already on previous slides on this presentation, so no need for me to add anything further to this today. That said, I would still suggest you take the time to go through this impressive list yourself. And if you have any questions or would like to discuss further any of the remaining line items highlighted on these 2 pages, I encourage you to reach out to my colleagues here at Osisko for more information.Turning to the balance sheet. Well, finally, we'll end the formal part of the presentation on Slide 16, which outlines the current state of the Osisko's balance sheet. At quarter end, we had a total debt of just over $150 million and net debt of only approximately $80 million. As we stated previously, the covenant performance was exceptionally strong, with a 97% cash margin experienced in the first quarter of 2024 expected to continue throughout the year.As noted previously on this call and noted as a subsequent event in our MD&A, we've now also repaid an additional $18.6 million against our revolver credit facility, further strengthening our financial position, which, by the way, [indiscernible] extended the facility for another 4 years.In addition, in commodity prices, specifically gold and silver sit above USD 2,300 and USD 27, respectively -- sorry, USD 25, respectively. We forecast to end up in a net cash position at the beginning of the fourth quarter of 2024. No significant deals are closed by that time.This is important as Osisko doesn't expect to sit in its hands in 2024. And our much improved balance sheet provides the company with financial capacity and flexibility to continue its strategy of disciplined allocation in the pursuit of high-quality, accretive precious metal streams and royalties that will bolster the company's current near-term GEO deliveries and cash flow that should accrue to our shareholders' benefit.And with that that, I'd like to thank everyone for listening today. We'll now open up the line for questions as well as questions posted on the webcast. 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. Operator?

[Operator]

[Operator Instructions] Your first question comes from Ralph Profiti with Eight Capital.

[Ralph Profiti, analyst]

I have 2 of them, please. Firstly, the degree to which you can, without giving away too much, you mentioned 1 to 2 transactions hopefully be able to close this year. Can we get sort of a broad range of the sizes of that you're looking at? And maybe more importantly, whether or not these are sort of competitive processes? Or are you leveraging existing or new relationships where we would consider these opportunities more exclusive?

[Jason Attew, executive]

Thank you, Ralph. Very good question. And obviously, we'd love to give you more information on the opportunity set that we have, but obviously there's a lot of confidentiality associated with this. With respect to the opportunity set and the size of the ticket or the size of the transaction, again, it varies obviously to the transactions that we're looking at. Whether it's royalties or streams as well, it certainly varies in terms of the transactions. There's not a lot of detail that I can give you. However, what I would say is, again, the team is very much focused and have the team very focused on a smaller number of high conviction bets that, again, we're hopeful that we can get 1 or 2 transactions announced by the end of the year.And transaction size, you can think of anywhere between USD 50 million up to USD 300 million. That's what we're essentially looking at. In terms of the competition, it is still a very, very competitive process for competitors and environment as I think you can appreciate. We've got a lot of peers as well as the private equity groups that participate in those processes. We do have some very strong relationships though. And so we are also moving forward with a number of bilateral type transactions that are outside of any sort of process. But any more detail that we can provide you, Ralph, obviously, we'd be breaching confidentiality.We look -- we're very excited to, hopefully, again, be able to announce 1 or 2 of these by year-end and then you can analyze it in terms of what the overall returns are because we'll be incredibly disciplined to ensure that either accretive deals and the accretion will accrue to our shareholders.

[Ralph Profiti, analyst]

Yes, certainly. I appreciate that, but very helpful comments. And then secondly, I wanted to break down the incremental benefit at Island Gold with Magino. And just can we quantify sort of bringing forward not only the actual production by not having to bring in that mill, but also the encroachment on the more advantageous 2% to 3% NSR. And if you're running at sort of 5,000 ounces gold equivalent, I'm just wondering if you can quantify, say, over the guidance period, whether or not we're going to see any incremental GEOs from that?

[Jason Attew, executive]

Well, I'll start -- thank you, Ralph. I'll start and ask Guy to provide some expertise around the technical nature of the assets. I would say, the first comment is the transaction has not closed as of yet. And obviously, the best source of information when it does close is with respect to the Alamos team. Obviously, the proximity of the 2 assets has been something that's been contemplated for some time.Where we're obviously excited is, obviously, you have an operator that's moving into -- taking over an asset and specifically, it's all about mill optimization. As I think you know, [indiscernible] has got a deep set of experience in terms of both operational acumen, but very deep balance sheet as well. So I think, again, we're quite excited about the transaction. We do think that it's going to be beneficial for our royalties, both at the Island Gold as well as Magino over time. But I'll ask Guy to comment if he has anything further.

[Guy Desharnais, executive]

Yes. For the -- if you look at the most recent disclosure by Alamos, you'll see just naturally where the mine -- the center of gravity of the mining is going towards the edges of where they've been recently. And that, in general, you can see that as going towards the 2% and 3%. The Magino acquisition or potential acquisition doesn't really change any part of that plan. The thing that it does do is derisk some of the construction that is -- that was required, the mill expansion, tailings facilities. And so that's -- if the acquisition goes through, then those items are derisked.And then the other portion is below that pit and you'd have to go back a couple of years to see some of the Argonaut disclosure on underground drilling that were really quite spectacular intersections. And those were not necessarily orphaned, but a lot less accessible, except for now in the hands of Alamos, it's a lot easier for them to drift over and further test those and see if they're economic and makes sense to bring into the life of mine plan earlier. But that's -- yes, it's hard to quantify what that could look like.

[Operator]

Your next question comes from Kerry Smith with Haywood Securities.

[Kerry Smith, analyst]

Jason, I have just 2 questions. Firstly, what is your sort of targeted debt level that you'd like to run with for the company? You keep paying it down pretty aggressively, and you're generating $45 million to $50 million a quarter of cash flow. So the debt's pretty modest in that context. I'm just wondering if you have a target number there.

[Jason Attew, executive]

And your second question, Kerry?

[Kerry Smith, analyst]

Okay. And my second question is, how is the agreement structured on the Alamos royalty in terms of how you actually figure out what your payable ounces will be from the Island tonnage? Because the recoveries from Magino will be considerably lower than the recoveries they'll get from the Island or just by virtue of the grade. I'm just wondering how you monitor that.

[Jason Attew, executive]

Thank you, Kerry. With respect to the leverage levels, you're absolutely on point. It's been a real focus for Fred and the whole Osisko executive team to continue to pay down our facility. You heard what I had to say to Ralph, with respect to the opportunity set, we do think that there's possibilities for which we can be deploying this year USD 300 million, USD 400 million. And so the way we think through things, we think through things in terms of net debt to EBITDA level. I would suggest that we can do producing assets, and it really again depends on the type of transaction that is done, because if you're doing a transaction that gives you immediate cash flow, it's obviously better.But the general rule of thumb, Kerry, we don't want to be for any long period of time beyond a net debt to EBITDA ratio of 2x. We could go through it. And obviously, we've got lots of covenants -- there's lots of room within the covenants of our facilities to do that. But generally speaking rule of thumb, as a management team, we think it's certainly at these commodity prices, 2x net debt to EBITDA would effectively, then we'd be back into -- as we have been over the course of the last 12, 18 months, just repaying that facility down through cash flow or repaying it back through sort of another method. I'll turn the question with respect to Island and tonnage to Guy, because he can answer a lot better than I can.

[Guy Desharnais, executive]

Yes. So the distribution of ounces and the relative coverage, we can have a separate conversation, if you want to reach out. But there are clues in the most recent technical report in terms of the royalty percentage with time in some of the graphs that they provide. And with respect to the recovery of the Island Gold or that would go into the Magino mill. If you listen to the conference calls that were given by Alamos following the announcement of the transaction, this was raised on those calls. The process -- the specific process we use at Magino and the Island Gold mill are the same.The expectation is that the recovery will be equal. And I expect that Alamos would be highly sensitive to any gold loss, especially the -- if you look at the differential and grades there, it's -- they'll be very sensitive and they'll always have -- well, for the beginning period anyway, they'll have the opportunity to run that test scenarios and run some of the mill throughput through the existing mill there. I'm not -- we're not concerned about that scenario.

[Operator]

Your next question comes from John Tumazos from John Tumazos Very Independent Research.

[John Tumazos, analyst]

Congratulations on all the progress on so many fronts. I was sort of brainstorming. I was thinking it would be an interesting package to put up for sale. If you were to bundle all of the Osisko legacy royalties together as a package, Cariboo, Tintic, Horne 5, Falco, Windfall and the 39.6% of ODV and sell it as a block, as an asset package, it's a nice North American package, a lot of good Canadian gold. And the proceeds would probably all book straight to equity because they're assets that you didn't pay much for, that probably aren't on your books for very much.It would probably all be tax free because you have some accumulated losses. And it would improve the perceptions in the market, and we wouldn't have any more equity losses from ODV. What do you think of that, Jason? Would that be a nice way to pay down some debt or fund the stock buyback?

[Jason Attew, executive]

John, I appreciate the comments and the color. And look, obviously, a very interesting concept. What I would say, however, is with all the assets that you mentioned, there's obviously some -- we really do believe that there's -- the royalties and it's so tough in this competitive market to actually acquire royalties, but these are some very, very good royalties that we think from a shareholder perspective, which I know you are one, it's much better for us to remain in our portfolio.As I think you're aware, very, very rare for royalty companies, streaming companies to be selling off assets like this. And specifically funneling all the ones that you mentioned, I would argue in this marketplace that we wouldn't get the same values if we're just patient and wait until these assets do come on and start generating some very good gold equivalent ounces in the fullness of time. But I appreciate the comment.We are -- again, we are very supportive of, obviously, all the companies that are associated with these companies moving the development forward because we do think in the fullness of time that our [indiscernible] gold royalty shareholders will accrue the benefit or more so than if we were to essentially monetize it as you suggest today.

[Operator]

[Operator Instructions] Your next question comes from Tanya Jakusconek.

[Tanya Jakusconek, analyst]

I just wanted to come back to Ralph's question on the transactions that are out there and the 1 to 2 that you've talked about that could potentially be done this year, Jason. I just -- I'm trying to understand whether it's similar to other deals in the market, which are either to fund the mine builds to help buy out some of these Newcrest sold assets and/or other by Newmont. So first of all -- or is it balance sheet repair? Like I'm trying to understand what sort of deal semantics they are.

[Jason Attew, executive]

Yes. Thanks for your question, Tanya. And again, kind of the same overriding comment with Ralph. Obviously, all the conversations that we're in are quite confidential, we'd love to open up and show you the opportunity set because I think you'd be quite impressed with it.With respect to the type of transaction, though, and you probably -- you're aware that Q1 was a very quiet period for any sort of transactions by basically the whole subsector or the whole sector of royalties and streams there were really nothing material as you know. And so in terms of the type of transactions that we're looking at, you're absolutely on point is transactions for which senior companies, they're selling assets and mid-tier they're effectively looking at that as a financing possibility or vehicle to essentially get the funds to bring that into their portfolio that hopefully will improve the portfolio.There are very few, I would say, opportunities with respect to balance sheet repair at this point. Typically, again, if the assets are supporting what they're doing currently, unless they have a large portfolio with one asset that is materially better than the others, and then we obviously need the structure to ensure that our interest is protected, we're assisting with one of the lesser assets. So we're not really looking and working on anything with respect to balance sheet repair. It's more on companies either requiring good assets that, for the most part, are production and/or some very high-quality development assets that will come into production and within our 5-year outlook with very, very competent teams, management teams in very good jurisdictions. I think that's all I can say for now, Tanya.

[Tanya Jakusconek, analyst]

Okay. That's fair enough. And maybe, Jason, would you be interested in, let's say, some of the bigger sized deals that may be syndicated? Would that be of interest to you if you were syndicated in that $60 million to $300 million range that you talked about?

[Jason Attew, executive]

Look, it's always of interest to us being the fourth or fifth largest company in terms of public companies, royalty companies out there. If -- again, we have deep relationships with all our peers. So it's always of interest to do something. As you can appreciate, though, there hasn't that -- been that many transactions of that sort of nature that's been done in the past or for the reasons that, again, if you have a high-quality asset, obviously, you want to do a transaction that accrues to your shareholders as opposed to sharing the economics with others. That said, we do have conversations. We do like the concept. We're open to that concept, and we'll see where it goes.

[Tanya Jakusconek, analyst]

Okay. And then my last question on these transactions. Are we looking at sort of your transaction being very simple in structure, i.e., a royalty or a stream? Or should we be thinking that they would be more complicated with equity investments and/or debt components?

[Jason Attew, executive]

Yes, it's a great question, Tanya. I would say every opportunity we look at is quite [indiscernible]. There's obviously a set of needs for the partner or the investing companies that we're looking to assist either through a mine builder or through an acquisition. And so we really do focus on the strength of the company, the cash flow of that company and try to be quite bespoke with respect to how we can assist whether it's royalty, stream, equity.We do shy away from the net piece, though. That's not really what we consider a part of our business. It's nothing that we've contemplated to date. And I would say right now, with the opportunities that we have in front of us, it's nothing that we're going to complicate in the very near term.

[Operator]

Your next question comes from Brian MacArthur with Raymond James.

[Brian MacArthur, analyst]

Just following up on Tanya's question though. I mean people talk about these $300 million and $400 million deals. Can we assume, though, the majority of that price will be streaming or royalties? I mean if half of it becomes equity all the time, aren't we getting back into the situation we had before where the royalty companies owned portfolio, but you're probably not going to get the same credit for it?

[Jason Attew, executive]

So thanks, Brian, for the comment. I can only comment on, again, the strategy and how we're going to execute our business. I can't speak for obviously our peers and our competitors. What I can tell you is for the general point in terms of how we look at things. We do not want to be portfolio managers of equity positions go forward. We will, as I've said in the past, in certain circumstances for which the financing is quite bespoke and it's the last capital in with respect to equity check, similar to what we did with the CSA transaction that was required for them to acquire the asset from Glencore.But we don't habitually want to, again, be portfolio managers that effectively have an equity book. So it's essentially -- again, as we think about from an [ assistive ] royalty perspective, the priorities in terms of funding, certainly, royalty streams economic interest would be first and foremost. But if some equity is required and it's got to be rightsized that really sits with a catalyzing event either being an acquisition or something that really gets a fully financed development assets, we will consider that and we have in the past and we have -- will very likely to do that in the future.

[Brian MacArthur, analyst]

Great. That's very helpful. Second question is just -- I know you mentioned Renard and it's been taken out. But Winsome potentially as a call option to buy this thing and maybe in the future, it comes back. Do you have any other -- I mean at times, you've lent money into them. And do you have anything else that comes back? I mean if this deal were to close and went forward, would the only thing you have be the 9.6% diamond stream? Or is there other claims you might have on some of that money that they put into acquiring Renard if that transaction goes through?

[Jason Attew, executive]

Thanks, Brian. Excellent question. I'm going to turn it over to Iain. Iain, he's on the Board of [Renard ]. He's been living this experience for the last 24 months. So he's probably the best person to comments. Go ahead, Mr. Renard.

[Iain Farmer, executive]

Yes, great question. Thanks. Look, in all likelihood, if that when some transaction materializes, the stream will be vested as part of that transaction and the only proceeds will be the Winsome consideration being the cash or the share of Winsome.

[Operator]

There are no further questions at this time. I will now turn the call over to Jason.

[Jason Attew, executive]

Thank you very much, operator. Again, this concludes our call. Thank you for your attention today and listening to our Q1 results. Have a good week, everybody.

[Operator]

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