Osisko Gold Royalties Ltd

TSX:OR

Earnings Call Analysis

Osisko Gold Royalties Q2 Revenue Boosted by High Precious Metal Prices

In Q2 2024, Osisko Gold Royalties reported strong earnings with revenues hitting CAD 64.8 million, primarily driven by rising precious metal prices. The company earned 20,068 gold equivalent ounces, maintaining 97% cash margins. Although Victoria Gold's Eagle Mine underperformed and halted production, leading to a CAD 67.8 million noncash impairment, Osisko's updated 2024 guidance now stands at 77,000 to 83,000 GEOs. Debt was reduced to just over CAD 40 million, with additional repayments in Q3. The quarterly dividend was maintained at CAD 0.065 per share.

Strong Revenue Growth Amidst Commodity Price Increases

Osisko Gold Royalties demonstrated solid financial performance in the second quarter of 2024, generating revenues of CAD 64.8 million. This significant growth was largely attributed to rising precious metal prices. The company earned 20,068 gold equivalent ounces (GEOs) during the quarter, positioning it to meet its annual guidance of 82,000 to 92,000 GEOs, even amidst challenges presented by certain underperforming assets.

Cash Flow and Margins Remain Healthy

The company's cash margins were impressive at 97%, underscoring the robust profitability of its operations. Cash flow per share saw a year-over-year increase, rising to CAD 0.28 from CAD 0.26. Adjusted earnings improved to CAD 0.18 per basic common share, compared to CAD 0.15 the previous year, further highlighting Osisko's financial resilience during this period.

Challenges from Impairment Charges

Despite the positive trends, Osisko reported a net loss of CAD 0.11 per share due to a non-cash impairment charge of CAD 67.8 million related to the Eagle NSR royalty. This decision stemmed from a reassessment of the asset's recoverable value following operational challenges faced by Victoria Gold's Eagle Mine, which has been suspended since June 24, 2024. The impairment reflects a cautious approach to uncertain future production prospects.

Strong Balance Sheet and Reduced Debt

Osisko concluded the quarter with CAD 65.7 million in cash and reduced its net debt to just over CAD 40 million, following ongoing efforts to pay down its revolving credit facility. An additional payment of CAD 13.8 million was made in Q3, enhancing the company's financial flexibility for future transactions. Plans to potentially achieve a net cash position by year-end were also shared, contingent on commodity prices remaining favorable.

Consistent Return of Capital to Shareholders

In line with its strategy to return capital to shareholders, Osisko declared a quarterly dividend of CAD 0.065 per share in Q2, marking its 39th consecutive dividend payment. The Board is set to maintain the same dividend for Q3, reaffirming the company's commitment to shareholder returns, which have totaled CAD 290 million over time.

Opportunities in New Transactions and Projects

Looking ahead, Osisko's corporate development team is engaged in numerous potential transactions, with the company optimistic about closing at least one meaningful deal by year-end. This includes exploration for new high-quality royalty and stream opportunities that will support future GEO deliveries and cash flows. The recently announced Cascabel gold stream transaction signifies a strategic investment in a project expected to contribute approximately 23,000 GEOs annually once in production, anticipated in the 2030s.

Future Guidance Adjustments and Expected Production Changes

With the suspension of operations at the Eagle Mine influencing production forecasts, Osisko has adjusted its 2024 GEO guidance range to 77,000 to 83,000 GEOs, down from the previous estimate. This reflects an anticipated reduction in contributions from troubled assets, particularly Eagle. However, continued support from other operations positions the company wellmoving forward.

Exploration and Development Potential

Osisko remains focused on enhancing its exploration and development pipeline, which includes promising projects like the Odyssey Underground and Upper Beaver, both of which have potential to significantly increase future GEO contributions. The ongoing discussions with partner companies highlight a commitment to maximizing both production and shareholder value into the future.

Earnings Call Transcript 2024-Q2

[Operator]

Good morning, ladies and gentlemen, and welcome to the Osisko Gold Royalties Q2 2024 Results Conference Call. [Operator Instructions] Please note that this call is being recorded today, August 7, 2024, at 10 a.m. Eastern Time.

Today on the call, we have Mr. Jason Attew, President and Chief Executive Officer; and Mr. Frederic Ruel, Chief Financial Officer and Vice President of Finance. I would now like to turn the meeting over to our host for today's call, Mr. Jason Attew.

[Foreign Language]

[Jason Attew, executive]

Thank you, Joelle. Good morning, everybody, and thanks for being on today's call on this beautiful summer's day. I'm Jason Attew, President and CEO of Osisko Gold Royalties.

Procedurally, I'll run 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 that 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 Fred Ruel, the company's VP - Finance and Chief Financial Officer, amongst the others as indicated on Slide 3.

When looking at Osisko's second quarter and first 6 months of 2024, we've had a solid first half as it relates to gold equivalent ounces earned, cash margin, cash flows, as well as overall debt reduction. Osisko earned 20,068 gold equivalent ounces in the second quarter of 2024, which had put us in a good position on June 30 to achieve our previously published full year guidance of 82,000 to 92,000 GEOs. Revenues for the period were strong in Q2 at CAD 64.8 million, buttressed mainly by improving precious metal prices throughout the period. In addition, Osisko's cash margins remained high at 97% during the quarter.

Osisko ended the first quarter with CAD 65.7 million in cash, and net debt has now been reduced to just over CAD 40 million after the company continued to pay down its revolving credit facility during the period. So far in Q3, the company has repaid an additional CAD 13.8 million on the facility, further increasing our financial flexibility in order to be able to transact on new accretive opportunities as they present themselves. With respect to our ongoing commitment to return capital to shareholders, the company declared and paid its quarterly dividend of CAD 0.065 per share in Q2, marking its 39th consecutive dividend with over CAD 290 million returned to shareholders to date from these distributions. Subsequent to the quarter, Osisko's Board of Directors approved a Q3 dividend of CAD 0.065 per common share, payable on October 15, 2024, to shareholders of record as of the close of business on September 20th.

With respect to our opportunity set, the company's pipeline continues to remain robust, with our corporate development team busier than they have ever been. We remain optimistic that we will get at least one meaningful deal across the line this year, over and above our recently announced Cascabel gold stream.

Moving on to the company's financial performance for Q2. Quarterly revenues effectively tracked higher year over year due to strong commodity prices when comparing to Q2 of 2023, which is also partially offset by fewer GEOs versus the same period last year. The net loss of CAD 0.11 per basic common share for the period was due entirely to our decision to take a full noncash impairment charge of CAD 67.8 million, or CAD 49.9 million net of income taxes on the Eagle NSR royalty, based on our own internal assessment of the current facts and circumstances. And of course, as more information continues to surface, especially as it relates to timelines associated with the potential restart of the operation and resumption of precious metal deliveries to Osisko under its royalty agreement, a reassessment of the recoverable amount of the Eagle royalty will be performed at that time, which may lead to reversal of part or all of the impairment loss that has been recognized.

Most importantly, Q2 2024 saw a year-over-year improvement in both cash flow per share at CAD 0.28 versus CAD 0.26 last year, as well as a quarterly adjusted earnings of CAD 0.18 per basic common share versus CAD 0.15 in the comparative quarter of 2023. During the second quarter of 2024, the company had 20 producing assets, including the Eagle Mine, which was producing up until the suspension of operations on June 24, 2024. Our GEOs earned come predominantly from Canada, and we derived over 98% of our GEOs from precious metals, gold at just under 71% and silver at 28%, with the remainder coming from other metals. Some comments on some specific mine performances during the quarter before speaking about a couple of our more material assets in greater detail.

Canadian Malartic had yet another extremely impressive first half of 2024, with Agnico booking strong quarterly production from the mine in the second quarter. The asset remains Osisko's most significant contributor to GEOs earned by a solid margin. Performance for Victoria Gold's Eagle Mine during the second quarter of 2024 fell significantly short of our budgeted expectations, to the tune of about 33%. In other words, even prior to the heap leach facility failure on June 24, Eagle was already underperforming through the first half of the year. It is our understanding that Victoria Gold will be reporting its Q2 2024 on August 8. So in the absence of additional information, it is our assumption that the mine will not provide us any GEO deliveries in 2024.

At Capstone's Mantos Blancos operation, Q2 production was lower year over year due to lower grades and recoveries. Plant upgrades to reach 20,000 tonne per day on a sustainable basis are progressing, despite an approximate 2-month delay relative to Capstone's prior plan due to longer equipment lead times. Osisko expects to see the benefit of the increased throughput in its silver deliveries starting in the beginning of 2025.

As I mentioned earlier, the number of currently producing assets in our portfolio stands at 20. Changes to the list include the removal of Eagle, partially offset by the addition of G Mining Ventures' Tocantinzinho mine in Brazil, which announced its first gold pour in early July, as well as Agnico Eagle's Akasaba West satellite operation at its Goldex mine. On the latter, Osisko received its first payment from Agnico in July, whereas on Tocantinzino, first payment from G Mining is expected in November, based on a 2-month lag associated with the royalty payments as structured in the contract. This current list of 20 assets also counts CSA as only one single operating asset. However, as you all know, we have 2 instruments associated with the mine, 100% silver stream, in addition to our now economically effective copper stream, with the copper stream having provided its first deliveries to Osisko in early July of this year.

Moving on to Slide 8. Our company continues to distinguish itself from the rest of its relevant peers as it relates to jurisdictional exposure. Osisko is the leader when it comes to both NAV and GEOs earned from what Osisko defines as Tier 1 mining jurisdictions, which include Canada, the United States, and Australia. Of note is that if we were to add Chile to that list of countries, we'd be at over 95%.

This brings me to Slide 9, which provides highlights on the recently announced Cascabel gold stream transaction with SolGold, in partnership with Franco-Nevada. As noted in our July 15 press release, Osisko believes that Cascabel is a world-class copper-gold project that has the potential to become a multi-generational mine. This new stream investment, which complements Osisko's existing royalty on Cascabel, further enhances Osisko's peer-leading growth profile at a very attractive rate of return. In terms of when we expect to receive GEOs from this investment, SolGold has guided to production in the 2030s, which falls outside our 5-year outlook. However, once in production, the Cascabel stream is expected to contribute approximately 23,000 gold equivalent ounces per year for the first 10 years of the initial 28-year life of mine. It should be additionally pointed out that this mine life is based on only 18% of the measured and indicated mineral resource of the Alpala deposit. We are very encouraged to see that SolGold recently signed an Exploitation Contract with the Government of Ecuador. This served as another indicator that the current administration is pro-mining and Cascabel remains a top priority project within the country.

As noted previously, on a GEOs earned basis, it was yet another stellar first half of the year for our most important asset, as impressive progress continues to be made on the Odyssey Underground project. While I won't spend too much time on the following 2 slides, I wanted to flag some language on Slide 11. As evidenced by a second quarter report and subsequent conference call, Agnico Eagle continues to talk more and more comfortably about the potential for a future Shaft #2 for the Odyssey Underground Mine. Factoring in some basic assumptions and based on publicly released information from Agnico, Osisko estimates that a potential second shaft could add approximately 15,000 gold equivalent ounces to Osisko Gold Royalties annually over and above what is expected from the most recently published mine plan, all from the early 2030s onwards and at no additional cost to Osisko or its shareholders. With 40,000 tonnes of [ latent ] mill capacity still expected in the Canadian Malartic complex from 2028 onwards, Agnico has now officially made reference to a Fill the Mill strategy, with additional information on this likely to follow in the coming years.

Next slide please, Slide 12. And as if the Malartic story for Osisko wasn't exciting enough, just last week Agnico Eagle provided a comprehensive update on its Upper Beaver project in Ontario. Our operating partner announced a positive internal valuation for a standalone mine and mill scenario at the project. Agnico Eagle believes that Upper Beaver has the potential to produce an annual average of approximately 210,000 gold ounces and 3,600 tonnes of copper, with initial production possible as early as 2030. What does this mean for Osisko? Again, based on the information provided, we estimate that Upper Beaver could result in an average of approximately 4,500 gold equivalent ounces earned, based on our 2% NSR royalty on the project. We were also delighted to hear that Agnico has now committed over $200 million over the next 3 years to further derisk the project and collect the necessary bulk samples prior to final project approval.

Now on Slide 13, and touching briefly on CSA, first delivery under the CSA copper stream to Osisko was made in the first week of July for a total of 74 tonnes of copper, or approximately 300 GEOs. Further to this, just last week, Metals Acquisition Limited announced some very impressive drill results, which served to underpin Osisko's original thesis that significant exploration potential exists across their land package.

Moving on to Slide 14. As you all know, and as I stated earlier, on June 24, Victoria Gold announced that the heap leach facility at its Eagle Gold Mine in the Yukon Territory had experienced a failure. Production remains suspended, and as stated previously, absent new information, Osisko's assumption is the mine will not resume production in 2024. Osisko has now taken the appropriately conservative step to recognize a full noncash impairment loss of CAD 67.8 million, or CAD 49.9 million net of income taxes, based on our management team's assessment of the current facts and circumstances. If there is any key takeaway from this slide, it's that Osisko has various protections with respect to its royalty, including security over the property, registered interest in land recorded with the Yukon Territory and an intercreditor agreement with a senior lending syndicate. At this time, these various layers of protection provide Osisko with confidence that our rights will continue upon a restart of the Eagle Mine. As a secured creditor, we will continue to monitor the situation closely and provide further updates to the market as warranted.

Prior to the heap leach facility failure at Victoria Gold's Eagle Mine, Osisko was tracking well with regard to its previously published 2024 GEO delivery guidance range of 82,000 to 92,000 gold equivalent ounces. However, under our assumption that production at Eagle will remain suspended through to the end of 2024, the company has decided to adjust its 2024 GEO delivery guidance to 77,000 to 83,000 gold equivalent ounces. I have already provided additional context on this call as it relates to Eagle's underperformance versus our budget expectations for the first half of the year, and this should also help further explain why we made this adjustment. Additionally, with [ surge ] capacity equipment at Capstone's Mantos Blancos having been installed 2 months later than originally scheduled, we took a further step in making some cautionary adjustments to our budget as it relates to the second half deliveries we are expecting from Capstone Copper.

Our investing companies continue to make great strides in derisking their assets that will accrue to our shareholders. Highlights of some of these efforts are provided on Slides 16 and 17. We've already discussed many of these already on previous slides of this presentation, so no need for me to add anything here today. That said, I would still suggest you take the time to go through the impressive list yourself, and if you have any questions or would like to further discuss 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.

Moving to Slide 18, which outlines the current state of Osisko's balance sheet. At quarter end, we had total debt of just under CAD 110 million, net debt of only CAD 43 million, which compares the net debt of just under CAD 250 million in the comparative quarter of 2023. Our focus on being responsible capital allocators is using our cash flow from operating activities and redeploying it in the form of paying down a revolving debt facility, which year to date is over CAD 101 million, CAD 87.8 million in Q1 and Q2 and CAD 13.8 million subsequent to quarter end. Also, subsequent to quarter end, we made a $10 million payment to SolGold as a first installment under the gold stream agreement to further advance the Cascabel project in Ecuador. In addition, as mentioned in last quarter's conference call, if commodity prices, specifically gold and silver, remain above the $2,400 and $27, respectively, we forecast to end up in a net cash position by the end of the year. That, of course, is absent of any material acquisitions of royalties or streams we make during that period. This is important as, even though we've already made an announcement on a key transaction regarding Cascabel, Osisko's corporate development team remains busier than ever, with the hope of getting more deals across the line before year end. And our much improved balance sheet provides the company with the financial capacity and flexibility to continue its strategy of disciplined allocation in the pursuit of high-quality [ stream ] of precious metal streams and royalties that will bolster the company's current and near-term gold equivalent ounce deliveries and cash flows that should accrue to our shareholders' benefit.

Finally, I would like to take the opportunity to welcome our newest Board member, Ms. Wendy Louie, who we believe will be a tremendous contributor to our company going forward. Wendy brings a wealth of experience in resources and commercial and accounting matters, from her impressive career credentials from Duke Energy, Ernst & Young, Hecla, Goldcorp, and most recently, Sabina.

And with that, I'd like to thank everyone for listening today. We will 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 we don't get to cover on this webcast. Thank you for your time. Operator?

[Operator]

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

[Ralph Profiti, analyst]

Jason, the syndication at Cascabel at 30%, was there a desire to do more? How much of that discretion was driven by the desire for things like dry powder or balancing country exposure? Just wondering how you tackled some of those thresholds and criteria.

[Jason Attew, executive]

Yes, thanks for the question, Ralph. Look, obviously, doing a syndicated deal with a partner like Franco-Nevada, a lot of people, including myself, going back to my banking days, has talked about having syndicated deals and why they make the most amount of sense. So, look, the 30% level, we can tell you, was a negotiated level. We do think the Cascabel project is a world-class asset. In fact, it is also, as you know, Franco-Nevada has a royalty, as we do, a higher royalty than we do. And so, it really came down to proportional interest both in the royalty as well as in our interest working with Franco to give the SolGold team the amount of proceeds that they were looking for, obviously CAD 750 million, which the bulk of it will be provided to them on the construction decision by either themselves or if they are not the operator at the time, whoever is operating at the time.

So, look, obviously, it was a negotiation. We've got a relationship clearly with SolGold. We've got a relationship with Franco. We're quite comfortable with Ecuador as a jurisdiction. The fact is, as you know, the way that the deal was structured with Franco is we have a number of off-ramps here. So if the country, which we do believe is very pro-mining with President Noboa right now, and we do think he likely will be quite successful in the elections in 2025, but for whatever reason that does not happen, and we see Ecuador not being as good as a jurisdiction for mining and development of Cascabel. We have a number of off-ramps, as you're very well aware.

That's how we've staged and structured the transactions. So right now, we're obviously quite comfortable with the direction, very pro-mining in the particular province. We think SolGold is doing a very good job in terms of ensuring they have a social license and doing all the right things from a community level. But, as I said, we still very much value our, as I keep saying, our Tier 1 jurisdictions. So we're actually looking to do more transactions that will actually have a bit more of a balance in Canada, the U.S., and Australia go forward. But we're very pleased with the transaction that we were able to do with SolGold and, obviously, the partnership that we have with Franco.

[Ralph Profiti, analyst]

Yes, I appreciate that clarity. It does make sense. Keeping on the theme of transactions, you mentioned that Cascabel, in the 2030s, puts it beyond the 5-year guidance. Just wondering if you look at this deal pipeline that you had talked about before year end and perhaps beyond, are you at liberty to talk about how much of those opportunities are within the 5-year guidance or is the majority outside of it?

[Jason Attew, executive]

That's a great question, Ralph. Look, obviously, there are a lot of opportunities and every one of our peers, as you probably heard, are very, very busy from both corporate development and the technical services that they basically employ to go look at these opportunities. I would say that, again, our preference in terms of our strategy is obviously have transactions that fit within our 5-year outlook.

That said, there are some very quality development assets in particular that there's a long gestation to actually get into production and ramp up that would sit outside of it. But strategically, [ what I've talked to my ] Board with and what the corporate development team is doing, really the focus is doing transactions within that 5-year outlook. But we're not going to ignore, again, a high-quality opportunity that sits outside the 5-year outlook because that obviously sets the company up for the future to go forward. But we're very, very busy. As so, as I mentioned on the call, we're hoping we can get one of these opportunities done before year-end that would fit within the 5-year outlook.

[Operator]

Your next question comes from Josh Wolfson with RBC Capital Markets.

[Joshua Wolfson, analyst]

First question I have is on the Eagle impairment to 0. I'm wondering, is there any read-through here on the potential recoverability of any value to the company? And is there any risk that the royalty would not survive a solvency-related event for the operator?

[Jason Attew, executive]

Yes. Look, obviously, and I'll let Fred comment in a second. Obviously, we took the decision specifically because we just don't have the visibility right now as to when a restart is going to happen. There's obviously a lot of work that Victoria Gold's team is doing specifically around containment, specifically around the water quality with respect to the cyanide sampling that they're doing, and specifically with respect to the remediation.

Any restart, obviously, will require a permit from the Yukon government. Plus, as you can appreciate, there's an element with respect to the First Nations groups that they will have to get an approval and get a social license there. We thought it was prudent at this point to write down the CAD 67 million that I mentioned -- and change that I mentioned, just because we don't have that visibility as of yet. We do think, obviously, the big resource up there is very important for Yukon Territory in terms of employment and other things that, depending on the situation, that there is a strong possibility that the mine is up and running in a reset. We just don't have visibility as of yet.

With respect to the question in an insolvency situation, I think, as I mentioned on the call, fact that, again, we've got security with the asset, the fact that we're registered in the Yukon, as well as we've got strong intercreditor support within those agreements, we think there's obviously a very strong case when this is up and going. If it goes through insolvency, that, again, our rights will be affected. Our rights and the royalty and the gold equivalence ounce deliveries, if it does take some time here, that, again, we certainly have all the protections necessary. Maybe I'll ask Fred if he wants to comment further.

[Frédéric Ruel, executive]

Thank you, Josh, for the question. It's purely related to accounting and applying accounting rules and regulations here based on information that we have as of today. And depending on how things go in the future months and quarters, we'll reassess on a quarterly basis if a reversal of impairment might be possible based on new information that might be provided by the company.

[Joshua Wolfson, analyst]

And then extending this uncertainty to what the future impact could be, I understand the company updated 2024 guidance. There was no comment on what the long-term guidance implications are. Is there any sensitivity you can provide us with what the impact is of the loss of Eagle to the 5-year guide?

[Jason Attew, executive]

Yes, look, it's a great question. We've also received a question via webcast, similarly. I think, obviously, Josh, it's early days. Obviously, the facility failed on June 24. Victoria's doing everything they can to essentially, again, contain what's happened, ensure that from an environment perspective there's no long-term damage. So I think it's clearly in the early innings of what's going to happen here. As stated before, we just don't have the visibility of a restart plan.

According to Victoria, and I encourage you to listen to their call this week, they are a number of weeks away from being able to provide a concrete plan that could or could not get regulatory approval and a social license that I talked about. There's lots of work to be done in the remediation [Technical Difficulty] front. I just think it's too early at this point to suggest that would come out of our 5-year outlook.

We do think that, obviously, they've got significant goals that they've proved up through the various [ communications as to ] mineral reserves and resources. There is also the story [ reasonably well ], they have identified a secondary heap leach facility that was going to come in line later in the mine life. So there's a lot of positive attributes that could suggest that this mine will be restarted. We just have no concept or visibility or clarity of direction at this point as to the timing. Really, we can only get that from Victoria Gold's [ taking the ] direction.

[Joshua Wolfson, analyst]

And sorry, one final question on the long-term guide. I can't recall if this was included or not, but for ODV and their financial status, was Cariboo included in the existing 5-year guidance, or was that something that was incorporated after that period?

[Jason Attew, executive]

Great question. It was not included in our 5-year outlook.

[Operator]

Your next question comes from John Tumazos with [Technical Difficulty].

[John Tumazos, analyst]

Sometimes the big royalty streaming companies say the first dollar is the last. Jason, could you give us your views of the pros and cons of that? Before you came onboard, Osisko had a lot of efforts trying to fix Renard Diamonds and Amulsar in Armenia and the different things in ODV. And would you contribute good money after bad? When something blows up, would you fire the guy that originated the deal? And just what's your attitude toward trying to fix things or when to move on?

[Jason Attew, executive]

Look, John, obviously, I think you're probably talking through some of the issues now obviously heightened with the Victoria Gold facility failure. Obviously, the team works very, very hard to identify opportunities that we think will accrue to shareholders. We didn't anticipate this happening. And there's obviously been some other assets that haven't proven up to expectations.

With respect to going forward, we've got a very, very strong technical team. We've upgraded our technical team since I joined. And so we are going to be making investments go forward. We're going to be making investments based on, again, the information that we have that we think is going to be accretive to shareholders go forward.

In terms of looking at some of the historical legacy assets, yes, we did a full portfolio review. Yes, we've come to views as to which ones we should fund and which ones we should not fund go forward. I think I've conveyed that the opportunity set on new opportunities far outweighs the opportunities that we see currently in terms of investing in the current portfolio that require additional capital. A lot of our portfolio, the 185 assets, as you know, require no additional costs. There's no contingent costs associated with it. Our preference for all the companies out there, if we've made an investment through a royalty or a stream, is they should be going out and sourcing other financing and not relying on an incremental royalty or stream that could burden the asset to the point where, again, their set of equity holders, if they're public, is disadvantaged.

So I'll answer that question a long-winded way, but we do think that there's a really good opportunity set on a case-by-case basis. We have, additionally, from a governance perspective, set up, as I think we've talked about, an investment committee, which is some commercial and technical folks on our Board that we have to, obviously, pass that gate before we are allowed to deploy any further capital. So there's an additional level of governance with respect to, again, our investments into assets at Osisko Gold Royalties.

[John Tumazos, analyst]

Jason, if I could follow up. There's a hedge fund or 2, friend of mine, whenever someone in the team originates an idea, they give them a quarter of the performance fee from that idea, and the idea is tagged to a specific person. Do you think having a bunch of committees dilutes responsibility, and is it better? What are the pros and cons of committee responsibility versus originator responsibility on your team?

[Jason Attew, executive]

So the way I'd answer that, John, is look, committee is really set up from an oversight perspective. Plus, as you can appreciate, we've got technical folks that can really pull apart or take a look at through a lens that maybe some of our technical folks haven't looked at, but really to assure us, because again, as I like to say, we're effectively pricing risk for our shareholders or risk managers on behalf of our shareholders.

With respect to compensation, as it relates to origination of opportunities, we can say we don't have that philosophy here at Osisko. As I've talked through with yourself and many others, we have tweaked our compensation for the senior executives, which is really in the long-term, our long-term incentive pay, very much driven by per share metrics, specifically cash flow per share, growth in cash flow per share, and growth in net asset value per share. So, as we move forward, and we continue to make investments, we are hoping we're making investments that increase our cash flow per share, increase our NAV per share, because as you know there's a very strong correlation if we can do this to shareholder performance.

So to answer the question, there is no specific origination fees that are payable for our team. We are very much a team, and we're very much driven and top of mind for anything that we do from an investment perspective, is will this increase our cash flow per share as well as our net asset value share. And again, these are quantitative metrics that our comp committee will determine when they're compensating the executive team.

[Operator]

Your next question comes from Tanya Jakusconek with Scotiabank.

[Tanya Jakusconek, analyst]

Just wanted to circle back on that 2028 guidance and not to beat this to death, but would it be fair to have assumed that within that 120,000 to 135,000 GEOs at about 9,000 would have been that equal gold, and we'd more likely be towards the lower end of the range than the upper, just so that we can benchmark ourselves?

[Jason Attew, executive]

So it's a great question, Tanya, and thanks for participating this morning. So yes, 9,000 was approximately what we were budgeting. Again, you can get it from Victoria Gold's obviously production guidance for 2024 per year. And so if you actually forecast that forward, it would be somewhere around that number. All that said, though, as I mentioned, we give our 5-year outlook and our 5-year guidance in February. I think it's far too early at this stage. The information is still coming in, specifically with that asset, to know whether or not, almost 4.5 years out, whether there'd be contributions from the Eagle Mine in particular. And so we haven't changed our 5-year outlook. We just don't have the information to make that adjustment. And if we do get that information, obviously, we'll let the market know, but very likely in February when we put our annual guidance for 2025 as well as our updated 5-year outlook.

[Tanya Jakusconek, analyst]

Maybe just moving off then onto just to finish off on the transaction front. I know the last conference call you had talked about 1 or 2 meaningful transactions. And now, Jason, you mentioned that there's one more meaningful for 2024. You hope to get done by year-end. Are we still talking that $50 million to $300 million range? And are we still talking a syndicated transaction, or are you still looking at just a stream deal?

[Jason Attew, executive]

Great question, Tanya. Look, I think we have, just on the syndication front, we have a very good blueprint now of what we can do at Osisko Gold Royalties, working with partners like Franco and some of the other senior royalty and stream players. So yes, I'm still a big believer in syndicated deals. Yes, we are looking at large, chunky acquisitions in the magnitude that you've mentioned. We are also looking at, obviously, some smaller ones that we do think will be accretive to our shareholders go forward. Nothing is guaranteed, obviously. The team is working very hard to close some of the business issues that we may have on, again, a very important, meaningful transaction that will really set the company up go forward. But yes, we are looking at transactions anywhere from $50 million all the way up to $300 million, and some of them syndicated and some not.

[Tanya Jakusconek, analyst]

And that just comes to my next question with respect to if this is the case, then we're looking for this size deal coming towards the end of the year. Can I assume, we're getting this debt down quite quickly? Can I assume, then, return to shareholders' capital allocation, we had thought perhaps looking at maybe share buybacks? Would that be out of your range in terms of being able to also take that on in addition to a larger deal?

[Jason Attew, executive]

So, look, I think we've got ourselves to a position, as I mentioned in the call, where we have tremendous financial flexibility and capability now that we've got our net debt down to approximately CAD 40 million. We'll be in a net cash position very, very soon here. And so, we obviously go through the capital allocation decision tree that you're quite familiar with. We do, as you're aware, have regulatory approval on a normal course issuer bid for buyback. We view that as a tool, though, Tanya. Obviously, our preference is to redeploy our capital into meaningful accretive transactions.

However, again, if we can't get things complete, or if we get things complete that are cash flowing, that does give us the comfort that we should be essentially lowering our share count, really also is predicated on our share price at the time. Not surprisingly, you're going to hear that management and myself think we're undervalued. And I know your research suggests in terms of our peers as well.

So it is a tool that we certainly are contemplating using. And we're really trying to be opportunistic around, again, if we do see some pressure with respect to our stock price in the following months and moving into the year end, understanding that we have some capital we may deploy right into projects and deals that I talked to earlier.

[Tanya Jakusconek, analyst]

Okay. So would you have a preference then if you had excess capital then for dividend, or would you prefer, I know it's share dependent, but allocation to share buyback?

[Jason Attew, executive]

So I think that's the discussion that we continue to have both management and Board. I think they both have very good uses. As you know, we increased our dividends by 8% this year. We want to, again, seeing the predictability, consistency of business. A lot of it is underpinned by the commodity price in particular. We do think the dividends are a meaningful way to return the capital to shareholders. But in the same sense, as I said, we want to be opportunistic for [indiscernible] company see our share price not being reflective of the fundamental value, we will certainly be looking to use the buyback process.

[Tanya Jakusconek, analyst]

Okay. And then just my final question is just on benchmarking myself. When I looked at Cascabel and I took into account the SolGold's study, so based on their study, and I think we've looked at it in a CAD 1,900 gold price environment or there about, an internal rate of 6% to 7%. Is that a fair return in terms of what you would have seen?

[Jason Attew, executive]

Look, I think there's a lot of moving pieces here. Based on the prefeasibility study that SolGold put out, we would say that the return for our shareholders at that price is high single digits. And obviously, anything beyond those commodity prices is more incremental. There are a number of components to the deal, as you're aware, around the [ condition precedence ] in terms of funding. There's obviously, as you're aware, buyback rates for the operator in the first 3 years, a buyback rate lesser amount on 33% is within 5 years that give us a guaranteed rate of return. So there's a few nuances, Tanya, that depending on what happens in Ecuador with Cascabel and who is actually building and operating the mine at the time will impact the return.

[Operator]

[Operator Instructions] Your next question comes from Brian MacArthur with Raymond James.

[Brian MacArthur, analyst]

Jason, I just want to go back to the security on Eagle, and I appreciate there's a lot of moving parts, and you don't have all the information. But when you say you have an intercreditor agreement and security over the property, is that pari-passu with the senior lending syndicate? I'm just trying to figure out, this may come down to relative negotiating power, to the extent you can or are willing to comment on that.

[Jason Attew, executive]

Yes, look, Brian, thank you for that question. Unfortunately, the intercreditor is not a public document at this point. So, all I can say is we feel very, very confident in our protections through that agreement. And as I said earlier, we have security over the property. We have a registered interest in land recording with the Yukon Territory. If the company does go through a CCAA process, we're quite confident that our rights will continue in any restart of the Eagle Mine. And so we are a secured creditor, but the specifics, unfortunately, because it's a confidential document, I can't give you all the details around the intercreditor, but we've got the appropriate protections.

[Operator]

There are no further questions at this time. I will now turn the call over to management for closing remarks.

[Jason Attew, executive]

Thank you very much for joining us this morning. With respect to some of the questions that have come in the webcast, we will answer them offline. So thank you for your participation in that regard. And I hope everyone has a very good week. Thank you for your time this morning.

[Operator]

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