Osisko Gold Royalties Ltd

TSX:OR

Earnings Call Analysis

Osisko's Performance in 2023 Below Guidance

Osisko Gold Royalties achieved 94,300 GEOs in 2023, slightly falling short of its 95,000 to 105,000 GEO guidance. Record annual revenues of $274.3 million were reached, representing an uplift with an impressive 93% cash margin. Despite challenges, cash flow per share rose by $0.04, which could have been $0.06 barring severance charges. The year ended with a net loss of $0.26 per share but posted an adjusted earnings increase to $0.54 per share. Strategically, Osisko is nearly fully weighted towards precious metals with diamonds no longer contributing due to Renard's closure. Osisko remains resilient with $67.7 million in cash and reduced net debt to $130 million. Key assets like Canadian Malartic excelled, and production from East Gouldie may expedite by 2023, a year ahead of schedule.

Stepping under the leadership spotlight

As Osisko Gold Royalties wraps up its 2023 fiscal year, newly minted President and CEO Jason Attew expresses humility in taking the helm. The company, witnessing a decade of growth, navigates through another year with a mix of measured successes and challenges.

Solid production amidst headwinds

Osisko saw a 6% increase in Gold Equivalent Ounces (GEOs) earned, from 89,400 in 2022 to 94,300 in 2023, narrowly missing the early-year guidance of 95,000 to 105,000 GEOs. Factors affecting the performance included the Renard diamond mine's closure, wildfires impacting Eleonore deliveries, and Mantos Blancos's ramp-up issues.

Financial fronts display resilience and strategic moves

The financial narrative unveils record annual revenues reaching $247.3 million, and an impressive cash margin, peaking at 94% in Q4. With strategic debt reduction powered by asset sales and additional repayment, Osisko's net-adjusted debt was $130 million by year-end, positioning the company for robust transactional agility.

A continued commitment to shareholder returns

Osisko's long-standing tradition of rewarding investors persisted with a quarterly dividend payout of $0.06 per share in Q4, marking the 37th consecutive distribution and over $268 million in returns to shareholders to date.

Asset portfolio expansion underpins growth prospects

2023's transactional landscape showcased Osisko's aggressive appetite for accretive deals, like completing silver and copper streams for the CSA mine, amending the Gibraltar stream, and acquiring NSR royalties, including a $35 million 1% NSR on Namdini.

Earnings overhang clouded by impairments

Despite a significant net loss of $0.26 per share, which is attributed to non-cash impairments, the company's adjusted earnings paint a rosier picture at $0.54 per share, signaling a notable improvement over the previous fiscal year.

Strategic shift to precious metals

Osisko is transitioning to a precious-metal-centric portfolio, with gold and silver constituting over 90% of GEOs earned. Factors such as the closure of the Renard diamond mine facilitate this pivot, enhancing the company's precious metals purity in the go-forward strategy.

Flagship assets continue to underpin production

The Canadian Malartic mine remains Osisko's crown jewel, with consistent contributions and an expedited underground project timeline. The Victoria Gold Eagle mine also showed remarkable improvement, with future plans pointing toward stable year-over-year growth.

Addressing operational challenges

Underperformance at Mantos Blancos due to milling rate issues and forest fires impacting Newmont's mine testify to the operational hurdles faced. However, Osisko's near-term expectation is flat performance and mid-2024 hopes for overcoming these adversities.

A glance at the upcoming catalysts

Looking ahead, Osisko anticipates contributions from its CSA copper stream starting mid-2024 and an updated mineral outlook from its partners, serving as potential catalysts for continued development and performance enhancements.

Earnings Call Transcript 2023-Q4

[Operator]

Good morning, ladies and gentlemen, and welcome to the Osisko Gold Royalties Q4 and Year 2023 Results Conference Call. [Operator Instructions] Please note that this call is being recorded today, February 21, 2024, at 10:00 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 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.

[Foreign Language]

[Jason Attew, executive]

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. Having been around to witness the formation almost 10 years ago and 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 web page. 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 Frederic Ruel, the company's Vice President of Finance and Chief Financial Officer; and Iain Farmer, Vice President, Corporate Development, amongst others, as highlighted on this slide. When looking at our overall performance for the full year, it is important to note that Osisko booked a record year in terms of GEOs 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 8 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 are worth a quick recap.

A sharp fall in a rough diamond prices resulting in the shutdown of the Renard diamond mine, Canadian wildfires, which primarily affected deliveries from Eleonore and ongoing ramp-up issues at the Mantos Blancos, where there now appears to be some light at the end of the tunnel. Despite these headwinds, 2023 marked record annual revenues of $247.3 million and an annual cash margin of 93%, with a record 94% being achieved in the company's fourth quarter.

Osisko ended the year with $67.7 million in cash and net debt adjusted $130 million after the company used the gross proceeds of the $132 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 $30.2 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 its quarterly dividend of $0.06 per share in Q4, making its 37th consecutive dividend with over $268 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 its 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 on Costa Fuego. Finally, in the fourth quarter, the company closed the acquisition of the 1% NSR on Namdini for USD 35 million. With other smaller transactions rounding out 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 GEOs earned as well as higher year-over-year commodity prices. On a quarterly basis, strong commodity prices resulted in the new quarterly high water market achieved in the fourth quarter of $65.2 million, which contributed to a revenue achievement of $274.3 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 $0.04 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 $0.06. A net loss of $0.26 per basic common share for the 2023 year represented a marked decline versus the previous year.

However, this delta largely reflects noncash 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 Tintic. On the latter, please refer to the Osisko development press release put out this morning related to their impairment review at Trixie.

More importantly, 2023 annual adjusted earnings of $0.54 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 15 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 metals. With the recent shutdown of Renard, diamonds will no longer be a contributor to Osisko's GEOs earned going forward, putting 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 such 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 Malartic 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 Gold Eagle mine in 2023 was an obvious improvement over 2022 despite a 2-week wildfire evacuation during the third quarter. Victoria managed to achieve total production within its provided 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 2-month lag, meaning that Osisko's 2023 results represent operations from the mine from November '22 to the end of October '23. Osisko will continue to monitor Mantos 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 [indiscernible] undermine was impacted as operations were temporarily suspended for approximately 6 weeks during the third quarter due to the proximity of forest fires, which impacted the mine's 2023 production, and Osisko's annual GEO 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 3-month period. In 2024, Osisko will benefit from a full year of silver deliveries from CSA under the silver stream and just over 6 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 very successful Australian IPO -- after a very successful Australian IPO, the company's CDIs began trading yesterday on the ASX.

As was highlighted last night in our MD&A, the number of currently producing assets in our portfolio come down to 19 from the previous aforementioned 23. The most high profile of these assets no longer contributing GEOs earned is Renard. While the 3 other names that have come off, were of 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 5 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 5-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 at Renard.

Production improvements and new mine start-ups plus the CSA copper stream coming online for us on June 15 are expected to partially offset this reduction. However, our cornerstone asset, Canadian Malartic, is guided to be flat and be modestly down year-over-year, in large part because of Agnico's decision to defer the reintroduction of pre-crushing 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 Barnett pit as well as the Odyssey underground to a lesser extent, with total throughput estimated to be 52,000 tonnes per day in 2024 versus the nameplate capacity of 60,000 tonnes per day. Further to this, at Mantos Blancos, when combining our 2-month stream delivery lag with recent progress time lines provided by a 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 write-downs associated with Renard, Osisko is not expecting to be cash taxable in Canada for 2024.

Looking further out with respect to our 5-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 5-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 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 this guidance range for the past 2 years, Osisko has now set targets that the company is confident it 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 is 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 partners 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 time lines 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 has a 1% NSR at Taylor. Our partners at Osisko Mining and Gold Fields, together 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, SolGold, announced a successful completion of an updated pre-feasibility study at Cascabel, effectively outlining a lower CapEx longer life, lower risk development option. SolGold now expects to commence the technical work to further advance and derisk Cascabel. If you'd like to discuss further in any more detail, any of the remaining items highlighted in these 2 pages, I encourage you to reach out to any of my colleagues here at Osisko, and we'd be happy to assist.

Finally, we'll end the formal part of the presentation on Slide 12, which outlines the current state of Osisko's balance sheet. At year-end, we had total debt of just over $190 million and net debt of only $130 million. As we stated previously, the covenant performance is exceptionally strong with cash margins expected in 2024 of 97%. This is important and -- sorry, as noted previously on this call and noted on a subsequent event in our MD&A, we've now also repaid an additional $30.2 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 strategy of disciplined allocation in the pursuit of high-quality accretive precious metal streams and royalties that will bolster the company's current and near-term GEO 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, but the company were 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'll make sure to respond offline to those that we don't cover on this webcast. Thank you very much. Operator, over to you for questions.

[Operator]

[Operator Instructions] Your first question is from Cosmos Chiu with CIBC.

[Cosmos Chiu, analyst]

Maybe my first question is on your equity holdings here. As you mentioned, you've divested all your 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, executive]

Thank you for the question. And so, 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 Osisko development as well as with Metals Acquisitions Limited. And so those are the majority. The rest of the positions we have make up less than 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, Cosmos, we're not in the business to be portfolio managers and so we obviously make investments in equity that really pivots or 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 and/or other milestone that advances and arguably preserves our interest as it relates to a royalty stream or economic interest 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]

And my other question is just trying to understand your thought process here, as you talk about your 5-year projections in terms of growth, specifically, you pointed out that compared to the last sort of target under the old management Back Forty, San Antonio, Pine Point are no longer included in your -- the number. I'm just trying to figure out how you went through that process, what's the commonality between some of these 3, 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 or what have you -- what remains in that number?

[Jason Attew, executive]

So with respect to our process, it's not different, I don't think, to any other royalty companies when they put out their guidance. We get together as a group. We've got technical evaluations and technical folks that, obviously, applying on the disclosure of our partner companies. We very much rely on, again, the disclosure that we see. 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 5-year guidance for the most part, the slippage in time lines, which we don't expect to come in within that 5-year window. But we do essentially probability weight of the assets on the 5-year time line. And therefore, we have a lot of assets in that portfolio, Cosmos. So happy to walk you through our thoughts offline with respect to what would aggregate into that 5-year contribution from a GEO perspective. But 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.

[Operator]

Your next question comes from Tanya Jakusconek with Scotiabank.

[Tanya Jakusconek, analyst]

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

[Jason Attew, executive]

Look, from a strategic perspective, 2023 was a very good year for Osisko in terms of transactions. Five transactions were done, and they're all very accretive and will benefit shareholders going forward. I would see us going forward to have that frequency and cadence around transactions, but there was obviously a big, big chunky one. And I'm thinking of the CSA transaction, which aggregated over USD 190 million by the timing included the private placement into it. And so that's obviously very meaningful for us -- to us. So you can think -- again, we will, as an organization -- strategically, we obviously want to stay precious metal focused. We will support very good management teams, which we believe [indiscernible] is a very good management team in jurisdictions that we consider Tier 1. And the reason why we did, as we've talked about, Tan, what we did pay down our debt facility with the Osisko Mining sale is now we have over $550 million within our facility at the time you include the accordion as well to go out and do accretive transactions.

So look, obviously, it depends on the flow and the receptivity of our partners here. But you can think transactions, USD 200 million plus is not out of reach for the Osisko group. But we will also continue to do transactions like in 2023 with USD 35 million [indiscernible], which gets us some very good GEO profile. So if you were to basically bracket, I think from the corporate development engine and the corporate development perspective, and Iain is here, and he can comment on as well, USD 50 million to USD 250 million, I think, would be our sweet spot for the next couple of years.

[Tanya Jakusconek, analyst]

Okay. And then just on the jurisdiction. You mentioned Tier 1. So you flagged Australia, Canada, U.S. as great areas to operate. Would you be willing to move out of those jurisdictions and, for example, do more in Africa as well that you did something in Ghana, but how do you see that in terms of the diversification of your portfolio?

[Jason Attew, executive]

Excellent question, Tan. I think -- so we do have the ability to take on more jurisdictional risk, geopolitical risk, as I talked about in the presentation. However, again, we'd obviously prefer to stay in what we call our Tier 1 jurisdictions. We recognize if we did that, our deal flow would probably be more limited. So you do have to look outside of those jurisdictions. The way I'd answer that question is yes, we'd be irresponsible not to assess opportunities, for example, and there's a lot of different places in Africa. We have our own risk ratings associated with it. But at the end of the day, what we do as management sitting in the room here with me and Iain and Michael and Fred and others is we're effectively just risk managers on behalf of our shareholders' capital. And so for us to go into a jurisdiction that is not what we consider Tier 1, we need a commensurate return to essentially deal with that risk.

The other aspect to, as you're very well aware, it really also depends on the contractual nature of the royalty or the streaming interest. We absolutely need survivability and any sort of transaction, that's a must for us. So there's a lot of factors that, obviously, go into our calculus as we think about putting bids and term sheets in front of companies that are not necessarily in the Tier 1 that we talk about. But to be clear, we have to make a spread more so than a spread in some of these other jurisdictions, more so than the spread that we make in an investment in Canada for example.

[Tanya Jakusconek, analyst]

[indiscernible] in Africa this year risk profile, just they would be smaller in size than, let's say, a $200 million deal?

[Jason Attew, executive]

Sorry, Tanya, I think we missed the first part of your question.

[Tanya Jakusconek, analyst]

I said that would you be looking then for the risk being size-wise in Africa, you would see those 2 smaller portions of transactions?

[Jason Attew, executive]

Yes. Look, again, we wouldn't -- we certainly wouldn't bet the farm and use their whole facility to do, for example, a $500 million transaction in a jurisdiction in Africa. That's, I don't think, what our shareholders would want us to do. So you're absolutely right. It's got to be balanced in terms of the size of the transaction that we'd be looking at outside of the jurisdictions that we consider Tier 1.

[Tanya Jakusconek, analyst]

Okay. And then just my final question turns to capital allocation. Jason, maybe you can go through for us your priorities for capital allocation with respect to debt versus dividend versus share buyback?

[Jason Attew, executive]

So again, it follows our typical capital allocation decision tree. So obviously, we've got a forecast now and I'll 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 on our facility. If for whatever reason we can't find accretive deals to do our first priority when we pay that 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 '24, into '25 and beyond. And so beyond that, then 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 capital markets aspect. We do know what our fundamental value of the business is. And so if 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. Yes, we also use it as a tool to go back and buy back shares that, again, should accrue over the medium to long term to our shareholders. So again, think of the decision tree and it's quite straightforward and simple. We obviously want to grow the business. We want to grow it responsibly. We're focusing more on per share metrics, as I talked about in my presentation, we will be disciplined with our shareholders' capital.

[Tanya Jakusconek, analyst]

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

[Jason Attew, executive]

That's a great question. I'll actually pass it off to Fred, our CFO can answer the question much better than I can.

[Frédéric Ruel, executive]

Well, thank you. In terms of cash balance, we would like to keep at $15 million approximately in the cash balance and use the remaining balance to pay down the debt or do acquisitions.

[Operator]

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

[John Tumazos, analyst]

Congratulations, Jason. Great to have you on board. 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 to the end of March?

[Jason Attew, executive]

Good question, John. I'm going to pass that over to Fred, our CFO as well to answer.

[Frédéric Ruel, executive]

Yes. These impairments, they must be looked at -- there's first, the investment. So IFRS requires that we look at investments and if there's a potential impairment or indicators of impairment, which we believe was the case this time. So the value of the investment was reduced to the fair value at the end of the year. And then for the stream, it's always based on financial models -- internal financial models. And in this case, we've booked $23 million Canadian impairment on the stream itself.

[Jason Attew, executive]

$23.5 million to be exact, John.

[John Tumazos, analyst]

So this doesn't count the equity income effect for whatever ODC calculates?

[Frédéric Ruel, executive]

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

[Jason Attew, executive]

And you likely saw, John, that Osisko development put our press release as well, putting a range of the impairment at Trixie between $80 million and $120 million 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 or orientation in the Osisko Gold Royalties? There's the 20 wonderful near-term catalyst you 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 report a loss because of noncash charges we, Royal Gold or Osisko or Triple Flag usually reported 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 rather than having a penalty because they take a write-off in most quarters.

[Jason Attew, executive]

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 the -- these are all noncash charges. So that's why we direct our investors to our adjusted earnings number. I do take your comment 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 a mining asset go forward. I can promise you that. We are going to be a pure-play royalty company that effectively invests in royalties, streams, economic interest in good jurisdictions with the management.

With respect to the question on the -- on our 40% interest in Osisko development if we did do a dividend, the challenge as we see it with that is 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 a distribution or a dividend of the Osisko development would be well received, given they'll all receive a tax bill associated with a distribution, but open to have conversation with yourself, John and others on options as it relates to, again, ensuring that we create value on that investment.

[Operator]

Your next question comes from Adrian Day with Adrian Day Management.

[Adrian Day, analyst]

I had 2 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? And how broadly would you diversify?

[Joshua Wolfson, analyst]

Myself and my team and our Board do actually have lots of conversations around diversification -- the first statement that I'll 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 on precious. I really think it does depend on the opportunity set that we're looking at.

Clearly, if we can invest in 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, 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 volume. So whatever is going to create value for our shareholders, we endeavor to look at. So we would look at base metals. We would look like copper. We have a very positive constructive view on the copper environment go forward around the energy transition and the decarbonization themes that you're very, 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, there is no -- we don't think that makes sense for our portfolio right now given the opportunity set 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, 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, executive]

We do not, Adrian, but it's something certainly 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 of 80%. We wouldn't go out 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. And then my second question if I may, an answer to Cosmo Chiu's very first question, I got the sense that there's no particular urgency or is not a high priority to sell down more of your equity. Is that correct?

[Jason Attew, executive]

That's correct, Adrian. We've got, as I said, the 2 major ones in the portfolio are Osisko Development and Metals Acquisition Limited. And both of those companies and Metals Acquisitions Limited, for example, they just did a big raise in Australia as you're certainly aware of. And with respect to Osisko 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's not -- it would be counterproductive for us to suggest that we monetize it.

You can think of -- the Osisko Mining situation is a good analog. We're not providing really any value to our partner companies after the Gold Fields joint venture, we essentially just became a passive shareholder, that's when we'd be looking to monetize or divest their interest. And we obviously dealt directly with the Osisko mining when we did do that and thought it was the right thing to do at the time.

[Operator]

Your next question comes from Ralph Profiti with Eight Capital.

[Ralph Profiti, analyst]

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 have seen on the playing field since you started and sort of going around fostering these relationships?

[Jason Attew, executive]

So yes, certainly the answer is that I would say. And again, for people on the line that don't know my history, 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 deeper relationships across the sector. And so what I would say is there are certainly opportunities for us. And so the first phase of me becoming and coming on as a CEO is I thought it was very critically important that meet all our owners and shareholders and except for a last little while Grant and myself have been on the road meeting with all our owners, getting feedback, talking about the strategy going forward.

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 head frame or their processing facilities that they'll accelerate their studies for where you have a very entrepreneurial management teams out there that are looking to acquire assets from the big seniors.

So yes, there's a whole origination piece. This group has been doing it for the last 10 years very, very well. And again, as evidenced by 5 transactions in 2023, record allocation in terms of capital deployment. I think the deployment was very, very smart, and they're going to benefit all our owners go 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 the trends cost of capital for all 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 5 to 20 years.

[Operator]

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

[Brian MacArthur, analyst]

Adrian, I'll ask my main question. But maybe just follow up on the non-precious metal transactions. And you mentioned lithium was something you weren't interested in, but you've got a pretty interesting lithium royalty. Does it ever make sense to sell a royalty going forward? I mean, the whole philosophy here is you tend to get higher multiples for precious metal versus base metals. Just with those 2 comments, have you not focusing on lithium, what's your view on Corvette?

[Jason Attew, executive]

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 NSR and any other metals that are found in that region as well. What I 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 potentially look at it, but I don't think it's something we would consider, first of all, our core competency or something that we would consider doing outside of one-off exceptions.

With respect to potentially trading lithium or any of the assets that we have that are not very specific, either base or precious. Of course, we would consider that. What we'll certainly do. And as I said in my presentation, kind of 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 and there's other assets may be precious focus in other portfolios that we could come to a deal with and swapping. Yes, that would absolutely make sense for us. It's -- I would say it's a lot easier to suggest around thematically than conceptually than around the real execution around these transactions because there's a lot of things obviously involved. We've got tax. We've got considerations around investments, investors. So -- but a broad answer to your question, Ralph, we absolutely will consider looking at our portfolio, and it doesn't make sense in another party's portfolio. And then the second question is, can we actually realize good value for it, either by trading it or monetizing?

[Operator]

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

[Jason Attew, executive]

Thank you, operator. So the first question we have is expand on the rationale behind the recent balance sheet actions and comment on your capital allocation going forward. I believe that we've answered that question through our 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've retired and paid down another $30 million on our revolver facility. We will continue to do that unless and until we see transactions that we want to do that will essentially move our -- again, it's a revolving credit facility. So we always want to have some capacity and flexibility around that.

So -- but so if we don't do transactions, yes, we will continue to retire or pay down our facility. Kerry, thank you for that question. Question from [indiscernible]. Congrats on the nomination and to the whole team. What has been the total ounces produced at Eleonore since start of production? And around 2 million ounces is what I'm getting from the team. It is 2.2 gold ballpark. And is there an expectation to reach the 3.5% NSR royalty eventually. I'll turn that question to Ian because the 3.5% also, I believe, commodity length or commodity price based. But to answer the question, yes, about 2 million ounces has been produced at Eleonore, and I'll ask him to comment on the 3.5% NSR.

[Unknown Executive]

Yes. About 2 million ounces has been produced. We're at the top end of the variable royalty rate range for that royalty. In terms of getting the next bump up on the total production rate, it's probably a little bit too far in the future to say that, that's going to happen at this time.

[Jason Attew, executive]

It's all the questions, operator we have from the webcast. So thank you very much, everybody, for attending the Q4 and the year-end Osisko Gold Royalties results presentation. As I said, 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 weekend. We're always available. Our team and myself is always available if you'd like to have a conversation on any of our business and our strategy go forward. So thank you very much for attending 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.