Good morning, ladies and gentlemen, and welcome to Osisko Gold Royalties Q2 2022 Results Conference Call. [Operator Instructions] Please note that this call is being recorded today, August 10, 2022, at 10:00 a.m. Eastern Time. Today on the call, we have Mr. Sandeep Singh, President and Chief Executive Officer; and Mr. Frédéric Ruel, Chief Financial Officer and Vice President, Finance. I now would like to turn the meeting over to your host for today, Mr. Sandeep Singh. [Foreign Language]

Thank you so much, operator, and thanks to everyone listening in. Hopefully, you can hear me okay. Happy to be with you to update you on the quarter. It was an interesting quarter certainly from a market perspective, quite volatile, the swings were quite swift, notwithstanding that for $0.02 it's worth, I think the backdrop for gold that remained extremely strong even in the face of what's been a very strong U.S. dollar and rising rates. Regardless, even in that volatility and maybe as a result of that volatility, we still had a record quarter on a number of fronts. As I update you on that, I will be referring to the presentation that's now on the website, and I'll jump right into it after reminding people that I will be making forward-looking statements as shown on Slide 2. We can probably jump right to Slide 4 entitled Q2 2022 highlights. As I said, I won't read through all the bullets. I'm sure most of you, all of you have read the release and already commented on that, frankly. But a record in a number of fronts, first and foremost, which drives our business is the geo deliveries, the ounces that were delivered to us by our partners, gapping up nicely from Q1 to Q2 to 22,200 GEOs. That makes the first half of the year just roughly 40,500 GEOs delivered to us. And I'll talk about our guidance on maybe the next slide of 90% to 95%, but we do expect a significant uptick in the second half of the year, at least sequentially over the next couple of quarters. for reasons that I'll go through, but hopefully are relatively obvious when I do. So that bodes well, a record in terms of GEOs, a record in terms of…

Thanks, Fred. Just over to the operator, please.

[Operator Instructions] And your first question will be from Ralph Profiti at Eight Capital. Please go ahead.

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

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

Got you. Understood. Maybe as a follow-up, Sandeep, there's been quite an active transaction market. Just recently, some competitors of yours have announced sort of deals that, I guess, could be perceived as sort of more on the full valuation side with respect to resources implied and sort of conversion rates. And I'm just wondering, is that something that you're seeing in your particular deal pipeline sort of a more competitive streaming pipeline with respect to valuations themselves? And are you still confident that we can get these IRRs in the high single digits and low double digits, given perhaps more competitive tension in the space?

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

I appreciate those answers. Thanks Sandy.

Next question will be from Trevor Turnbull at Scotia Bank. Please go ahead.

Just want to ask a little bit about tax bills going forward. You had a pretty sizable tax bill this quarter. And just wondered how we should think about that going into the subsequent periods?

Sure. I could do my best tax from first nation. But Fred, why don't you start and then I can pick up maybe. Frédéric Ruel: Sure. So most of the taxes for 2022 are deferred taxes. So they're not cash taxes. We pay some cash taxes in foreign jurisdictions, for example, in the U.S. or in Mexico. We're expecting to start paying cash taxes by the end of 2023 and more significantly in 2024. But the impact for this quarter was mostly related to deferred taxes, which may be as a result, usually of different noncash or nontaxable or nondeductible transactions that we may have, which are mostly accounting-driven.

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

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

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

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

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

Okay. I appreciate all that. Thank you, Sandy.

Next question will be from John Tumazos at John Tumazos Independent Research LLC. Please go ahead.

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

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

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

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

Thank you.

Thank you. Next question will be from Carey MacRury at Canaccord Genuity. Please go ahead.

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

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

Yes. That's great. Maybe also a bit too soon, but obviously, diamond prices have improved a lot. Have you had any discussions with your partners on what the strategic future plan is there?

Well we have, we've always. And I think the genesis of that, first and foremost, was the - just the reinitiation of the stream at a required - our partners on the lending side to come up with a plan that works for everybody. I think it does. So that was a rework that led to the reinitiation of the stream. And those conversations continue, obviously, and that with step 1, you've got to walk before you run. But those conversations continue to carry in terms of what is the long-term future of that mine, where does it reside, what kind of capital infusions kind of benefit from, from external sources. So that was really the point that safeguarding that asset, getting it turned back on is very positive. Ultimately, if we can find a better home for it, all the partners are very much aligned in doing that.

Good. Thanks Sandeep.

Thank you. [Operator Instructions] And your next question is from Adrian Day at Adrian Day Asset Management. Please go ahead.

Yes, Good morning, Sandeep. I had two quick questions, if I may. On your investments, a tad under $400 million, I guess, ODV is about well, a little less than $250 million. So how much do you have in other various Osisko spin-offs? And where is the bulk of the rest of that?

Sure. And you're right, that's about right. We own - post consolidation, we own 33.3, I guess it is, million shares of Osisko development. So that's the lion's share. We also own 50 million shares of Osisko Mining, if that's pretty much exact. So that would be the other big component. I think it's 14% of the Osisko Mining shares outstanding. And then there's a small position in Osisko Metals, a small position in some of the earlier stage accelerator companies like Sable and Talisker. But that really rounds out the rest of it pretty quickly.

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

Yes, that's it. That's a tougher one. Look, I would say the fact that we are going from 80,000 ounces last year to a projection that sees us growing by double-digit CAGR growth all the way to 130,000 to 140,000 ounces in '26. Those are big leaps. Even getting to the low end of our guidance this year is a 12.5%, 13% increase. Those are big leaps for a company our size. And then when you look back, I'm looking at Page 10 now, and you look at the things that aren't included in there, obviously, or external growth, anything we buy is not included in there. But when you look at that arrow and you see things sticking out at you like casino, like Hammond Reef, which Agnico has put reserves on for the first time and is working on studies Hermosa, Spring Valley, Upper Beaver, those are big contributors. Casino itself can be as big as Malartic once built. We're talking about multiple assets in that list that could contribute 5,000 to 6,000 to 7,000 ounces a year. So in terms of when they come along, that's the crystal ball kind of question, I would say a lot of them are important, important to their operators, they're being advanced and what years they pile up on, I think old reserve judgment. But I certainly think there's a lot of those assets that are going to matter in this decade and matter in very significant ways. So I'd say we're in good stead. What year we have the best growth or what period we have the best growth? I don't know exactly, but I believe when you're looking at this page, we have the ability to sustain, which is more important than one kind of big blip. To me, at least in any given year, but the ability to sustain this level of production - or growth for a company our size for such an extended period of time, I don't know of anybody else that can replicate it, especially without any investment.

All right. Okay. Thank you so much.

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

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

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