OR Royalties - Q2 2024
August 7, 2024
Transcript
Operator (participant)
Good morning, ladies and gentlemen, and welcome to the Osisko Gold Royalties Q2 2024 Results Conference Call. After the presentation, we will conduct a question and answer section. If you would like to ask a question during this time, please press star one on your telephone keypad. Please note that this call is being recorded today, August 7, 2024, at 10:00 AM 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 (CEO)
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 Royalty. 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 three.
When looking at Osisko's second quarter and first six 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 30th to achieve our previously published full year guidance of 82,000 to 92,000 GEOs. Revenues for the period were strong in Q2 at $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 thirty-ninth 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 6.5 cents per common share, payable on October 15, 2024, to shareholders of record as of the close of business on September 20. 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 non-cash 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. 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 a 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 revenues come predominantly from Canada, and we derived over 98% of our revenues 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 GEO 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 24th, 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 8th. 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 tons per day on a sustainable basis are progressing, despite an approximate two-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 additions 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 Tocantinzinho, first payment from G Mining is expected in November, based on a two-month lag associated with the royalty payments as structured in the contract. This current list of twenty assets also counts CSA as only one single operating asset. However, as you all know, we have two instruments associated with the mine: a 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 eight. 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 nine, which provides highlights on the recently announced Cascabel gold stream transaction with SolGold in partnership with Franco-Nevada. As noted in our July 15th 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 flows from this investment, SolGold has guided to production in the 2030s, which falls outside our five-year outlook. However, once in production, the Cascabel stream is expected to contribute approximately 23,000 gold equivalent ounces per year for the first ten years of the initial 28-year mine life. 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 two 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 number two 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 tons of latent mill capacity still expected at 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 twelve. 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 tons 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 CAD 200 million over the next three years to further de-risk 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 tons of copper, or approximately 300 GEOs. Further to this, just last week, Metals Acquisition Limited announced some very impressive drill results, which serve 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 24th, 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 non-cash 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 is that Osisko has various protections with respect to its royalty, including security over the property, a registered interest in land recorded within the Yukon Territory, and an inter-creditor agreement with the 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 two 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 investee companies continue to make great strides in de-risking their assets that will accrue to our shareholders. Highlights of some of these efforts are provided on slides sixteen and seventeen. 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 two pages, I encourage you to reach out to my colleagues here at Osisko for more information. Moving to slide eighteen, 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 to 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 our 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 CAD 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, commodity prices, specifically gold and silver, remain above CAD 2,400 and CAD 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.
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, creative 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, Savina. 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'll make sure to respond offline to those we don't get to cover on this webcast. Thank you for your time. Operator?
Operator (participant)
Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press star, followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Ralph Profiti, with A Capital. Your line is now open.
Speaker 6
Thanks, operator, and thanks for taking my questions. 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 (CEO)
Thank you for the question, Ralph. Look, obviously, in doing a syndicated deal with a partner like Franco-Nevada, a lot of people, including myself, going back to my banking days, have 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.
It really came down to proportional interest, both in the royalty as well as in our interest in working with Franco to give the SolGold team the amount of proceeds that they were looking for, obviously $750 million, which the bulk of it will be provided to them on the construction decision or construction decision by either themselves or if they are not the operator at the time, whoever is operating at the time. Look, obviously it was a negotiation. We've got a relationship clearly with SolGold. We've got a really great relationship with Franco. We're quite comfortable with Ecuador as the jurisdiction. The fact is that, as you know, the way that the deal was structured with Franco is we have a number of off-ramps here.
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 2025. But for whatever reason, that does not happen, and we see Ecuador not being as good as a jurisdiction for mining the development of Cascabel, we have a number of off-ramps, as you're very well aware, and that's how we've staged and structured the transaction. 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 one jurisdictions. So we're actually looking to do more transactions that will actually have a bit more of a balance in Canada, the US, and Australia going forward. But we're very and obviously the partnership that we have with Franco.
Speaker 6
Yeah, I appreciate that clarity. It does make sense. Keeping on the theme of transactions, you mentioned that Casca Bell in the 2030s puts it beyond the five-year guidance. Just wondering, if you look at sort of 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 five-year guidance or is the majority outside of it?
Jason Attew (CEO)
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 five-year outlook. That said, there are some very quality assets, 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, I've talked to my board with and what the corporate development team is doing, really the focus is doing transactions within that five-year outlook.
But we're not going to ignore, again, a high-quality opportunity that sits outside the five-year outlook, because that obviously sets the company up for the future to go forward. But we're very, very busy and so, you know, 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 five-year outlook.
Speaker 6
Great. Thank you, Jason.
Jason Attew (CEO)
Great. Thank you. Thanks, Ralph.
Operator (participant)
Your next question comes from Josh Wolfson with RBC Capital Markets. Your line is now open.
Speaker 7
Yeah, thanks very much. First question I have is on the Eagle impairment to zero. 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 (CEO)
Yeah, 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 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 sort of 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, it's a big resource up there, very important for the Yukon territory in terms of employment and other things that, depending on the situation, there is a strong possibility that the mine is up and running and restart. 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, the 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 equivalent 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 (CFO)
No. Thank you, Josh, for the question. It's purely an accounting. It's purely related to accounting and applying accounting rules and regulations here, based on information that we have as of today. So that's 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.
Speaker 7
Got it. Thank you. And then extending this sort of 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, you know, what the impact is of the loss of Eagle to the five-year guide?
Jason Attew (CEO)
Yeah, 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 24th. Victoria is doing everything they can to essentially contain what's happened, ensure that from an environment perspective there's no long-term damage. So I think it's certainly in the early innings of what's going to happen here. As stated before, we just don't have the visibility on a restart plan. According to Victoria, and I encourage you to listen to their call this week, they're a number of weeks away from being able to provide a concrete plan that could or could not get regulatory approval, and then the social license that I talked about. There's lots of work to be done in the remediation front.
I just think it's too early at this point to suggest that would come out of our five-year outlook. We do think that obviously they've got significant gold that they've proved up through the various communications, mineral reserves and resources. There is also, you know, the story reasonably well, they have identified secondary heap leach facility. That's what's going to come in line later in the line 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, clarity of direction at this point as to the timing. Really, we can only get that from Victoria Gold, taking their direction.
Speaker 7
Got it. 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 Caribou included in the existing five-year guidance, or was that something that was incorporated after that period?
Jason Attew (CEO)
Great question. It was not included in our five-year outlook.
Speaker 7
Got it. Thank you.
Operator (participant)
Your next question comes from John Tumazos with Broker. Your line is now open.
Speaker 5
Thank you. 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 on board, Osisko had a lot of efforts trying to fix Renard Diamonds and Amulsar in Armenia, and the different things in ODV. Would you contribute good money after bad? When something blows up, would you fire the guy that originated the deal? Just what's your attitude toward trying to fix things or when to move on?
Jason Attew (CEO)
Look, John, obviously, I think you're probably, you know, talking through some of the issues now, obviously heightened with the Victoria Gold facility failure. Obviously, you know, 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, I mean, 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 going 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 cost. There's no contingent cost associated with it.
You know, 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 a 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 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.
There's an additional level of governance with respect to, again, our investments into assets at Osisko Gold Royalties.
Speaker 5
Jason, if I could follow up.
Jason Attew (CEO)
Yep.
Speaker 5
There's a hedge fund or two friend of mine that, 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 (CEO)
The way I'd answer that, John, is the committee is really set up for oversight, 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, we are, 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, I 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 is 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. 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. 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 per share?
Again, these are quantitative metrics that our comp committee will determine when they're compensating the executive team.
Speaker 5
I'll let other people have a chance. Good luck, Jason.
Jason Attew (CEO)
Thanks, John.
Operator (participant)
Your next question comes from Tanya Jakusconek with Scotiabank. Your line is now open.
Tanya Jakusconek (Managing Director and Senior Equity Analyst)
Great. Thank you so much for taking my questions. Good morning, everybody. 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 to 135 thousand GEOs, that about 9,000 would have been Eagle 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 (CEO)
It's a great question, Tanya, and thanks for participating this morning. Yes, CAD 9,000 was approximately what we were budgeting. Again, you can get it from Victoria Gold's production guidance for 2024 per year. If you actually forecast that forward, it would be somewhere around that number. All that said, though, as I mentioned, we give our five-year outlook and our five-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 four and a half years out, whether it'll be contributions from the Eagle Mine in particular. We haven't changed our five-year outlook.
We just don't have the information to make that adjustment. When we do get that information, obviously we'll let the market know, but very likely in February, when we put out our annual guidance for 2025, as well as our updated five-year outlook.
Tanya Jakusconek (Managing Director and Senior Equity Analyst)
Okay, fair enough. Maybe just moving off then on to just to finish off on the transaction front. I know the last conference call, you had talked about one or two 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 CAD 50 to CAD 300 million range? And are we still talking a syndicated transaction, or are you still looking at just a stream deal?
Jason Attew (CEO)
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 as Osisko Gold Royalties, working with partners like Franco and some of the other senior royalty and stream players. So yes, we... 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 going forward. You know, nothing is guaranteed, obviously.
The team is working very hard to close some of the business issues that we may have on a very important, meaningful transaction that will really set the company up going forward. But yes, we are looking at transactions anywhere from CAD 50 million all the way up to CAD 300 million, and some of them syndicated, and some not.
Tanya Jakusconek (Managing Director and Senior Equity Analyst)
Okay, that's helpful. And that just comes to my next question with respect to, I mean, if this is the case, and we're looking for this sort of size deal coming towards the end of the year, can I assume, like, you know, we're getting this debt down quite quickly. Can I assume then return to shareholders capital allocation? You know, we had thought perhaps, you know, looking at maybe, you know, share buyback. 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 (CEO)
Look, I think we've got ourselves to a position, as I mentioned on 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 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 the regulatory approval on a normal course issuer bid for buyback. We view that as a tool, though, Tanya. Obviously, you know, 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, myself, think we're undervalued. I know your research suggests in terms of our peers as well. So it is a tool that we certainly are contemplating using. But it really will be... 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 through earlier.
Tanya Jakusconek (Managing Director and Senior Equity 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 (CEO)
I think that's a discussion that we continue to have, both management and board. I think they both have very good uses. As you know, we increased our dividend by 8% this year. We want to, again, seeing the predictability and 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 capital to shareholders. But in the same sense, as I said, we want to be opportunistic. Where we, the company, see our share price not being reflective of our fundamental value, we will certainly be looking to use the buyback process.
Tanya Jakusconek (Managing Director and Senior Equity Analyst)
My final question is just on benchmarking myself. When I looked at Cascabel and I took into account the SolGold study, so based on their study, and I think we looked at it in a CAD 1,900 gold price environment or thereabout, an internal rate of 6% to 7%, is that a fair return in terms of what you would have seen?
Jason Attew (CEO)
Look, I think there's a lot of moving pieces here. Based on the pre-feasibility 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 precedents in terms of funding. There's obviously, as you're aware, buyback rights for the operator in the first three years, a buyback right, lesser amount on 33%. It's within five years, that give us a guaranteed rate of return. So there's a few nuances, Tanya, that depending upon what happens in Ecuador with Caspelle and who is actually building and operating the mine at the time, will impact the return.
Tanya Jakusconek (Managing Director and Senior Equity Analyst)
Okay, well, we could take that offline. Thank you so much for taking my question.
Operator (participant)
Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Brian MacArthur with Raymond James. Your line is now open.
Brian MacArthur (Raymond James)
Good morning, and thank you for taking my question. 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, you know, if this may come down to relative negotiating power, to the extent you can or are willing to comment on that.
Jason Attew (CEO)
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 confident in our protections through that agreement. As I said earlier, we have security over the property. We have a registered interest in land recorded with the Yukon Territory. If the company does go through a CCAA process, we're quite confident that our rights will continue in any sort of restart of the Eagle mine. 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.
Brian MacArthur (Raymond James)
Fair enough. Thanks very much.
Jason Attew (CEO)
Sure.
Brian MacArthur (Raymond James)
That still helps with the caller. Thank you.
Operator (participant)
There are no further questions at this time. I will now turn the call over to management for closing remarks.
Jason Attew (CEO)
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 (participant)
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.