Osisko Gold Royalties on track with Q1 performance By Investing.com

Osisko Gold Royalties Ltd (NYSE:.TO) reported a solid start to 2024 in its Q1 earnings call, with gold equivalent ounces (GEOs) production and financial results aligning with the company’s annual guidance. The company announced a predictable Q1 with 22,259 GEOs, setting the stage to meet its yearly target of 82,000 to 92,000 GEOs.

Revenue for the quarter was CAD60.8 million, and the firm maintained impressive cash margins of 97%. Osisko ended the quarter with CAD70.6 million in cash and a manageable net debt of CAD8 million. The company also shared its optimism about its robust pipeline and upcoming significant transactions.

Key Takeaways

• Osisko Gold Royalties earned 22,259 GEOs in Q1, on track for the 82,000 to 92,000 GEOs full-year guidance.
• Q1 revenue reached CAD60.8 million with a cash margin of 97%.
• The quarter concluded with CAD70.6 million in cash and a net debt of CAD8 million.
• A quarterly dividend of CAD0.06 per share was declared and paid, with an 8% increase to the base dividend approved.
• The company remains optimistic about closing one or two significant transactions this year.
• Record gold production was achieved at the Canadian Malartic mine.
• The acquisition of Argonaut Gold (OTC:) and its Magino gold mine by Alamos is expected to optimize production at Island Gold.
• Osisko aims to maintain a net debt to EBITDA ratio of 2x and plans to deploy CAD300 to CAD400 million this year.
• The company focuses on acquiring producing assets or high-quality development assets and is open to syndicated deals.

Company Outlook

• Osisko expects to add two production assets in the second half of the year, including the Namdini and Tocantinzinho projects and the CSA stream.
• The company is confident in achieving its 2024 GEO delivery guidance.
• New gold equivalent ounces are anticipated from upcoming projects in the second half of the year.

Bearish Highlights

• The Eagle Mine underperformed due to lower grades.
• The Mantos Blancos operation saw flat milling rates.

Bullish Highlights

• Osisko reported record gold production at the Canadian Malartic mine, driven by higher tonnage and gold grades.
• The ramp development at East Gouldie is progressing well, with production expected to commence in February 2024.
• The acquisition of Argonaut Gold and its Magino gold mine by Alamos is set to close in Q3 2024, which will enhance the mine plan at Island Gold.

Misses

• No specific financial misses were highlighted during the call.

Q&A highlights

• Osisko aims to maintain a net debt to EBITDA ratio of 2x.
• The company expressed a preference for maintaining royalties in their portfolio rather than bundling them for sale.
• Osisko is focused on acquiring producing assets or high-quality development assets with competent management teams in good jurisdictions.
• They are open to syndicated deals and will consider equity investments if necessary, but do not wish to manage equity positions.
• If the Winsome transaction is successful, Osisko will receive proceeds in cash or shares of Winsome.

In conclusion, Osisko Gold Royalties provided a comprehensive overview of its Q1 2024 performance, future projects, and financial strategies. The company remains on track to meet its annual production guidance and is poised for growth with upcoming asset additions and strategic acquisitions.

InvestingPro Insights

Osisko Gold Royalties Ltd’s commitment to maintaining a manageable net debt and its focus on acquiring high-quality assets is reflected in the company’s financials and strategic moves. Here are some InvestingPro Insights that provide additional context to the company’s current position and future outlook:

InvestingPro Data indicates that Osisko Gold Royalties has a robust Gross Profit Margin of 93.27% for the last twelve months as of Q1 2023, highlighting the company’s efficiency in generating profit from its revenues. With a Dividend Yield of 1.11% as of the latest data, the company shows a commitment to returning value to shareholders.

Moreover, the Price % of 52 Week High stands at 91.86%, suggesting that the stock is trading near its annual peak, which could indicate market confidence in the company’s performance and prospects.

An InvestingPro Tip to note is that Osisko Gold Royalties has raised its dividend for 3 consecutive years, signifying a stable and growing income stream for investors. This is a positive sign for those looking at the company’s track record of providing shareholder value.

For readers interested in a deeper dive into Osisko Gold Royalties’ financial health and potential investment opportunities, InvestingPro offers additional tips and metrics. There are 5 more InvestingPro Tips available for Osisko that can be accessed by visiting https://www.investing.com/pro/OR. Investors can also take advantage of an exclusive offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes comprehensive analytics and real-time data to inform investment decisions.

Full transcript – Osisko Gold Royalties Ltd (OR) Q1 2024:

Operator: Good morning, ladies and gentlemen, and welcome to the Osisko Gold Royalties Q1 2024 Results Conference Call. After the presentation, we will conduct the question-and-answer session. [Operator Instructions] Please note that this call is being recorded today May 9, 2024 at 10:00 AM Eastern Time. Today on the call we have Mr. Jason Attew, President and Chief Executive Officer; Mr. Frederic Ruel, Chief Financial Officer & Vice President of Finance; Heather Taylor, Vice President Sustainability & Communications; and Mr. Iain Farmer, Vice President, Corporate Development. I would now like to turn the meeting over to our host for today’s call, Mr. Jason Attew. [Foreign Language]

Jason Attew: Good morning everybody, and thanks for being on today’s call. I’m Jason Attew, President and CEO of Osisko Gold Royalties. Procedurally, I along with Heather Taylor will run you through the presentation and then will subsequently open up the line for questions. For those participating online via the webcast, you can submit your questions in advance through the webcast platform. Today’s presentation will also be available and downloadable online through our corporate website. Please note, there are forward-looking statements in this presentation in which actual results may differ. Also please note, the basis of the presentation will be in Canadian dollars unless otherwise noted. I’m joined on the call this morning by Frederic Ruel, the company’s VP of Finance and Chief Financial Officer and Heather Taylor, Vice President, Sustainability Communications, amongst the others as indicated on Slide 3. On Slide 4, when looking at Osisko’s first three months of 2024, we are off to a predictable start as it relates to gold equivalent ounces earned, cash margin, cash flow as well as overall debt reduction. Osisko earned 22,259 GEOs in the first quarter of 2024, which puts us on track to achieve our previously published full year 2024 guidance of between 82,000 to 92,000 gold equivalent ounces. Revenues for the period were strong in Q1 at CAD60.8 million. Even though gold and silver prices in Q1 were robust with average realized prices of US$2,073 and US$2,378 respectively, the precious metals complex only saw a real appreciation after our last sales concluded for the quarter. In other words, today’s price is approximately CAD250 higher than our realized price over Q1. In addition, Osisko’s cash margins were 97% in the quarter. This is just shy of the company’s record quarterly cash margin of 98% booked in the third quarter of 2017. Osisko ended the first quarter with CAD70.6 million in cash and net debt of just over CAD8 million after the company continued to pay down its revolving credit facility during the period. So far in Q2, the company has repaid an additional CAD18.6 million on the facility, further increasing our financial flexibility in order to be able to transact a new accretive opportunity as they present themselves. With respect to our ongoing commitment to return capital to shareholders, the company declared and paid its quarterly dividend of CAD0.06 per share in Q1, marking its 36th consecutive dividend with over CAD279 million returned to shareholders to date from these distributions. Subsequent to the quarter, Osisko’s Board of Directors approved an 8% increase to the base quarterly dividend of CAD0.65 per common share payable on July 15, 2024 to shareholders of record as of close of business on June 28, 2024. This is a testament to the tremendous confidence we have in the consistency and the predictability of the cash flows underpinning our business. With respect to our opportunity set, the company’s pipeline continues to remain robust with our corporate development team busier than they have ever been. We remain optimistic that we’ll get at least one or possibly two meaningful transactions across the line this year. Finally, as some of you know, on April 10th, Osisko published its 4th edition of its sustainability report, growing responsively. And I’d like to bring on Heather Taylor to talk about this key achievement in more detail. Heather?

Heather Taylor: Thanks, Jason, and thank you to everyone who’s taken the time to join us today. Subsequent to the quarter, we published the fourth edition of our sustainability report growing responsibly as Jason mentioned. It’s guided by the highest standards set by CRI, IASB and IFRS climate related disclosures. This publication marks another year of substantial progress made with respect to our governance, environmental and social initiatives. I invite you to explore our…