Osisko Gold Royalties(OR) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - OR Royalties earned 20,326 gold-equivalent ounces (GEOs) in Q3 2025, a 3% improvement over Q2 2025, tracking towards the midpoint of the full-year guidance of 80,000-88,000 GEOs [4][6] - Quarterly revenues reached $71.6 million, a 71% increase year-over-year, marking a quarterly record for the company [10] - Net earnings were $0.44 per basic common share, significantly improved year-over-year, partly due to a non-cash gain of $54 million from the revaluation of Osisko Development equity investment [11][12] - Cash margins for the period were just under 97%, in line with the budget for the year [7] Business Line Data and Key Metrics Changes - Approximately 95% of GEOs earned came from precious metals, with the balance from copper exposure through Harmony Gold's CSA Copper Mine [12] - Significant year-over-year improvements in cash flow per share at $0.34 compared to $0.19 in Q3 last year [12] - Mantos Blancos operation saw improved silver grades contributing to third-quarter stream deliveries, with production at or above nameplate capacity [13][14] Market Data and Key Metrics Changes - The average realized gold price for the first nine months of 2025 was $3,188 per ounce, over $900 higher than the same period last year [7] - Silver represented over 30% of revenues in Q3 2025, up from just over 26% in H1 2025 [16] Company Strategy and Development Direction - The company emphasizes capital allocation discipline, focusing on high-quality accretive streams and royalties while maintaining a debt-free position [9][39] - OR Royalties plans to adhere to a disciplined approach in pursuing transactions that meet internal hurdle rates, with a focus on maintaining strong cash flows [39] - The company is committed to returning capital to shareholders, having declared its 44th consecutive dividend [10] Management's Comments on Operating Environment and Future Outlook - Management expects Q4 2025 to be the strongest quarter of the year in terms of GEOs earned, driven by improved silver grades at Mantos Blancos [5] - The company is tracking approximately 2,000-2,100 GEOs lower than its original budget due to higher-than-budgeted commodity price ratios [6] - Future growth is anticipated from the Namdini mine in Ghana and continued improvements at Mantos Blancos [52] Other Important Information - OR Royalties ended Q3 2025 with $57 million in cash and is debt-free for the first time in over 10 years [8][38] - The company received $49 million in cash from the sale of shares in CSA Copper following Harmony Gold's acquisition [28][30] Q&A Session Summary Question: Near-term outlook for the Canadian Malartic asset - Management expects no surprises, with continued overperformance in grades due to conservative resource reserve models [41] Question: Involvement in negotiations for the Eagle Gold Mine - Management confirmed they are stakeholders and pleased with the quality of interest from established operators, but cannot comment on specific negotiations [43] Question: Outlook for transaction opportunities - Management emphasized the need for discipline in capital allocation, with a focus on high-conviction transactions that meet internal return criteria [44][45] Question: Internal rate of return metrics for transactions - Management indicated that the internal rate of return varies but is generally above 5%, with a focus on conservative gold pricing [46][49] Question: Current opportunities in the market - Management noted a variety of opportunities, including streams and royalty packages, with a focus on transactions in the $50 million-$500 million range [50][51]