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Good morning, ladies and gentlemen, and welcome to the Osisko Gold Royalties Q4 and Year 2019 Results Conference Call. [Operator Instructions] Please note that this call is being recorded today, February 20, '20 at 10 a.m. Eastern Time. Today on the call, we have Mr. Sean Roosen, Chair of the Board of Directors and Chief Executive Officer of Osisko Gold Royalties; Mr. Sandeep Singh, President of Osisko Gold Royalties; and Ms. Elif Lévesque, Chief Financial Officer and Vice President of Finance. I would like to now turn the meeting over to our host for today's call, Mr. Sean Roosen. [Foreign Language]
[Foreign Language] You know the forward-looking statement. We will be talking about the future, so I'd like everybody to observe that forward-looking statement. And we are following the PowerPoint that is on our website entitled Q4 and Year-End 2019 Results. 2019, big year for Osisko and lots of things going on within the portfolio and at the management level. Q4 started as a pretty good end of the year with over 20,000 GEOs earned in the fourth year -- fourth quarter and for a total of 78,006 GEOs earned into the 2019 period, which essentially met our guidance for 2019. Exceptional revenues of $38.9 million, obviously a lot driven by gold price; with record revenues for the year of CAD 140 million compared to CAD 127 million in 2018. Net cash flows from operating activities of $17.2 million in 14 -- in the fourth quarter, sorry. And cash flows for the year at $91.6 million compared to $82 million for 2018. So all in all, a pretty solid operating year. However, we did incur some noncash write-down within the portfolio related to some of the acquisitions that we did in 2017 from our partner, Orion, and also from the Virginia acquisition in 2015 related to Éléonore for the most part. And we have a net loss based on noncash items of $155 million in the fourth with the net loss of $234 million for the year, reflecting the impairment of the stream and offtake interest that we're taking on through the auditor's report under our accounting process over the year. However, our continued guidance meets the -- what we've set out as we've moved forward. Adjusted earnings right now for the fourth quarter sit at $10.3 million and $41.1 million (sic) [ $41.9 million ] for the entire year compared with $31 million last year. 2019 also saw the evolution of our portfolio, a lot of things going on, both in our accelerator model and also in the asset base that we created. We've created a pretty high-torque and potent growth portfolio over the last 5 years. And those of you who know, when we started out 2015, and we created the new business model for royalty and streaming companies by introducing the accelerator model as some of the activities that we carried out in Q4 were almost all related to the accelerator companies with the purchase of the Santana royalty from Minera Alamos in Mexico, the Pine Point royalty of 1.5% on Osisko Metals, which is one of the most promising zinc projects in the world right now. We also have a 1.2% royalty on the Bralorne deposit in British Columbia being led by Talisker. And we completed the acquisition of Barkerville Gold Mines in November of 2019. We also saw some of the investments from 2018 come to fruition with first gold pour at the Eagle mine owned by Virginia. And we'd like to congratulate Virginia on having executed -- sorry, Victoria Gold. My bad. To -- they're fighting to get that mine under construction and completed ahead of time, and we have a 5% top line royalty there, which I think is probably the most significant royalty that's been done in the last 24 months in the royalty and streaming space. And as they march forward, they were supposed to have 9 months a year of loading onto their pads. They've been able to work through this winter and achieve better than that. So we congratulate that team for the extreme effort that they put forward. And we look forward to seeing their results as they move through their commissioning here ahead for commercial production in, hopefully, sometime in the second or third quarter of this year. Last year, in Q3, we also sold the Pretium offtake agreement, which created confusion on our balance sheet as to how the accounting works. So that should clear up some of those misconceptions about our margins. We do run a 91% gross margin on our royalty and streaming portfolio as we stand today. Other items that we worked through were the Renard credit bid on the acquisition of the mine here in Québec, the Renard mine, with our partners from The Caisse des dépôts, Investissement Québec and Triple Flag. We've also had exceptional results from our friends at Mantos Blancos, run by our friends at Orion. And Stable Resources, we made strategic investments for a 2% royalty on the portfolio of assets that they run between British Columbia, Mexico and Argentina. Q2, we did one of the biggest share repurchase buybacks in the entire mining sector at $175 million, which repurchased about 8% of our outstanding shares, giving us a pretty big buyback. And Orion's ownership in the company now sits between 5.2% to 5.4% of the outstanding equity. In Q1, we also closed the silver financing on the stream to the Falco Horne 5 Project, which is moving ahead quite nicely. It has a long mine life of over 17 years and located in Rouyn-Noranda, Québec, one of the biggest underground development projects left in North America. With 6.1 million ounces of gold equivalent resources and 9.1 million ounces of overall resources, it remains a strategic asset that's undervalued within the Osisko family of accelerator companies and things that we see as bringing value in the future. Over to Page 5, the production of GEOs. As you can see, we've had pretty good growth in our portfolio since 2014 when we IPO-ed this company. Ending this year at 78,000 GEOs equivalent with a 90% cash operating margin, quite a spectacular margin because most of our assets are actually royalties and, obviously, anchored by the big cornerstone asset of Canadian Malartic, which continues to deliver value with the new resource having been published by Yamana and Agnico of quite a big significance that we'll talk about later. And we've seen our market cap go from $500 million at the IPO to $2.1 billion, which I think is exceptional given that we've -- we bought back well in excess of $300 million of our own stock over the last 5 years. The revenue breakdown, I'm going to pass it over to Elif Lévesque, our CFO. And I want to congratulate Elif on celebrating her 10th year with us, but she will be leaving us to pursue her own interests as we go forward. And I'd like to take this occasion to thank Elif on behalf of Osisko management and shareholders for her contribution in creating not only Osisko, one, but also what is now Osisko Gold Royalties, which we believe is a distinct business in the royalty and streaming space, and she has been key to the development of our financial plan and strategy throughout the last 5 years. Elif?
Thank you so much, Sean. It's an amazing privilege and a lot of fun working with you in past years. So going back to the presentation on Slide 6, as you mentioned, we had a very strong quarter in terms of revenues and cash margins. On Slide 6, we see the breakdown of the revenues by type of interest. On our royalty and stream interests, we finished the year with a 90% cash margin. In 2019, we sold the Brucejack Mine offtake to Pretium for a gain of $7.6 million and effectively reduced our low-margin offtake instruments to just one as of today. On the next, Slide 7, revenues from royalties and streams increased by 10% to $140.1 million compared to the last year, mainly due to the increase in streams; as well as the addition of ounces from Eagle gold mine, which started at the end of last year; and high metal prices. We also recognized record operating cash flow at $91.6 million compared to $82.2 million, mainly reflecting the increased cash margins and elimination of capital share-based payments. The slide on impairment. So we had to do some valuations and assessments during the year coming from the information that we received from the operators. In December, Lydian, the owner of the Amulsar project, announced that it had applied to CCAA, and this was considered an impairment this year. We evaluate assets to its recoverable value of USD 22.3 million, resulting in impairment charge of USD 51.3 million on the Amulsar streaming offtake for the fourth quarter of 2019. But Osisko's stream interest is secured, and we're working closely with Lydian to be a part of the restructuring solution and protect our interests going forward. Also, in February 2020, recently, Newmont, the operator of the Éléonore mine, announced updated mineral resource -- and resources, decreasing the total amount by approximately 50%, which resulted in the impairment of $27.2 million and $20 million net of income taxes, bringing the recoverable value of the Éléonore royalty to $101.3 million. We also incurred an impairment on Coulon project -- zinc project, which we had acquired with the Virginia mine acquisition in 2015, basically on the fact that we no longer plan on putting further exploration and valuation expenditures into that project. So we brought down recoverable value to $10 million. And including these impairments, total impairments for the quarter stand at $148.6 million and $260.8 million for the year.Next slide, our financial performance reflecting all of these noncash impairments and adjustments. Losses, excluding the impairments, stood at $26.2 million compared to earnings of $18.1 million last year. Variance is really related to the loss on -- due to disposal of Barkerville shares that we already held at the acquisition for $24 million, which is another noncash item. We have completed the acquisition of Barkerville during the quarter, and the transaction has been recorded as an acquisition of assets. You will find details on the transaction and the purchase price validation in the notes to our financial statement. And if you look at it on an adjusted earnings basis, you will see the nice increase compared to last year, 33% up year-over-year basis, mainly related to higher gross profit that we've seen during the year. So Slide 10, basically just kind of a summary of the different production from different metals that we have received. You will see that the realized gold price this year compared to 2018 was at CAD 1,945 per ounce compared to CAD 1,817, which had a very positive impact on the results. And currently, as we speak, gold is actually trading at over CAD 2,100 per ounce. So with that, Sean, back to you.
Thank you very much, Elif. Obviously, with the noncash losses in the statement, it's a little bit of a confusing year-end and quarter, really, given the way that the accounting has worked here. But we would guide you to the first principals, which is we've made about $2.6 million a week for the last 52 weeks in a row and with a gross margin of 90%. So that's probably my summary of what we should take away from today's presentation. As we look at Page 11, you can see, obviously, our cornerstone asset, Canadian Malartic, continues to deliver with over 33,000 ounces from the year; and an overall contribution of 78,000 ounces with 68% coming from gold, 17% coming from silver, 13% from diamonds and 2% from other small metal groups. And we continue to be one of the more dominantly precious metals based assets in the product and the space. Currently, by market cap, we are the fourth-largest precious metal royalty and streaming company in the world, with a dominant focus on Canadian brownfields, with 65% of our assets -- producing assets located in Canada. And as geopolitical issues continue to exacerbate and create pressure on the rest of the world in terms of investability, we think that Osisko Gold Royalties and our focus on ESG in the past and in our current life sets the table for the Osisko Gold Royalties to be one of the most investable companies in the precious metal space. If you look at our cornerstone asset, this is on Page 12, over 670,000 ounces -- or 670,000 ounces produced in 2019, making it, I believe the 10th or 11th largest gold mine in the world and by far the largest gold pressure -- producer here in Canada, with one of the best margins. And we wanted to take this moment to congratulate our partners, Yamana and Agnico, manage for their exploration success at depth as we get further into it, with 33 million -- 33 ounces -- 33,000 ounces delivered to us in Q4. If we look to Page 13, we have a little bit of a long section showing the way that the development has come off on Malartic as the partnership there has evolved, and we continue to see Malartic as being one of the most fantastic things that we've ever been involved with, with 8 million ounces of historic production before we got there and over 13 million ounces booked when we were drilling there, 8.4 million of it was in the new open pit. And now we see a conglomerated resource here that continues to grow with East Goldie, East Malartic and Odyssey having made major contributions to the ounces, measured and indicated at 694,000 ounces, 5.1 million ounces of inferred. And then East Gouldie is at another 2.7 million ounces. Any of these would have been exceptional discoveries on their own, but the fact that they're sitting next to the lowest-cost operating mill in Canada, 55,000 tons a day; the same Malartic mill that operates on tariff L electricity from Hydro-Québec makes this an exceptional discovery and evolution. And our friends at Agnico have a significant amount of expertise in low-grade underground development with their success at East Gouldie and their continued work at LaRonde. So we think that the generational asset that continues to deliver value to the Osisko Gold Royalties shareholders far into the future well over and above what we've seen in the past and a significant amount of mine life that has not really been included in our valuation in the marketplace with a lot of the analysis that's been published. So we look forward to seeing that come in this year as one of the big catalysts to drive further future share prices here in the near- and midterm as we see that project starting to evolve. Page 14. Again, a little shout-out to our friends at Victoria Gold for their contribution, having evolved the Eagle mine in the Yukon, now the largest gold mine in the Yukon and operating quite well and having gone through a fairly cold winter this year and having then execute the construction last year during the winter, very proud to be partnered with the Victoria team and celebrate their success. And we actually have a model of their first gold bar sitting in our office today. So that is quite an accomplishment to put Canada's most recent gold mine into production. And one of the toughest environments around, they're located at 64.5 degrees latitude, which is just off the Arctic Circle. And they're on-road and on time and on budget. In terms of things that we've done with our shareholder base. I think that the evolution of Osisko Gold Royalties if we look at it as an IPO from 2014, it's been quite an exceptional outcome. If you look at Page 15, you'll see that we've -- between dividends and share repurchases, we've returned $336 million to shareholders in quite a short time, both through dividends and share backs -- share buybacks. So we continue to be what we think is one of the leaders of returning capital to shareholders in this space, and we remain focused on the ability for us to generate opportunities that allow us to give significant return back to shareholders. We have created a business model that has higher torque than a lot of the manila envelope sort of royalty and streaming companies that are out there. We believe this is a superior model. And as we go forward, obviously, today is a big day in terms of our accelerator model with our friends at Osisko Mining having put out their resource update, and I would like to congratulate John Burzynski and the Osisko Mining team at this point for having published their updated resource at Windfall Lake, one of the biggest exploration projects in the world right now, with over 23 drills turning this morning and almost $500 million invested and 1 million meters of drilling; and for our American friends, that's over 3 million feet of drilling that's been executed on this project in the last 4 years. John took on the task of -- this company had an $8 billion market cap in 2016 with Bob Wares and a few of the other founders of the Osisko Group, and they have now brought this project to world-class standards with an inferred resource sitting at 3.94 million ounces averaging 8.4 grams and another 1.2 million ounces of indicated at 9.1 grams, making it one the most significant discoveries in recent times here in Québec, located just inside the footprint of the Plan Nord in Québec. And there's also been an announcement by the Québec government yesterday that there will be a power line for over $100 million investment going into that project. So it's been a pretty big win for team Osisko Mining this week. And we congratulate John and all of the Osisko Mining people that have led that charge. It's been a very intense project. But it goes to character on the Osisko Group and the Osisko platform. We are a little bit feistier than some of our competitors in this space, but we're also delivering a significantly higher return with us having upgraded our royalty on that project by the existing contractual rights that we earned at the conception of the company because we were there to incubate it. So we've been delivering significantly better returns than most of the other royalty and streaming deals that have been done in the space through the accelerator model. And these things are just coming into their fruition right now. So I think you should look forward to Osisko Gold royalties to accelerate our model, leading the charge in terms of innovation in the royalty and streaming space. We were there first, and we carved this space out for our shareholders. And I think you're going to see the delivery of those goods as we go forward and onto the future. In terms of our balance sheet, $480 million available on our credit line, $108 million of cash. Net debt sits at $349 million. Our investments and equity portfolio sits is a $277 million with 157 million shares out and paying a quarterly dividend of $0.05 a share or $0.20 per year. In terms of our royalty interest, obviously, we have royalty streams and some offtakes. So the one thing that does skew our results a bit is we have 100% margin on all of our royalties with zero-cost gold, 68% on our streams. Our offtakes, however, is a smaller margin, and they too kind of bias the way that the P&L sheet looks at times. So it's worth taking into consideration. It is a small part of our business. But those markets are small because it's basically a look-back system, where we have a time period to look back on those royalties and realize sale price. But it's essentially zero-risk money because we always look back and pick the share -- the price that's the most favorable to us. So onto Page 18. Over 135 royalties and streams, up from 7 -- 5 when we IPO-ed the company in 2014. Canadian brownfield exposure, where over 25,000 square kilometers of brownfield camps are covered by our royalty footprint, making us one of the biggest royalty footprints in the world in terms of number of kilometers that we cover. NPV sits at 76% in North America, and our assets sit at 64% Canadian. We did record cash flow this year of $91 million, $277 million in cash on the balance sheet, $108 million of cash. That leaves our balance sheet with $850 million of firepower, and that leaves us in a stage where we can compete with the -- both the larger private equity groups and the larger royalty companies in terms of an opportunity that we do see in the royalty and streaming space. And we can easily reach to do a USD 500 million deal.2019 saw a fairly big change in how the succession planning at Osisko has worked out with Sandeep Singh having joined us. Sandeep has taken over as President of Osisko. Sandeep is 40 years old and has been an investment banker close to us since -- essentially, at the beginning of 2007, 2008 when he was at BMO, subsequently at Dundee and then as a founder of Maxit Capital, one of the most successful boutique advisory firms in the world in the mining space. And he joins us to take up the hunt for the evolution as we evolve Osisko into the most investable royalty and streaming company in the world with a dominantly Canadian portfolio. We're looking to Sandeep to help us lead that fight. Frédéric Ruel has moved up. He's worked for 5 years with Elif, who has done a great job in putting us in a solid financial position. With the listing on the New York Stock Exchange in 2016, Elif was one of the first CFOs in Québec to lead a mining company, a resource company, on the NYSE with us. Fred picks up where she left off and gives us a great foundation with the team that she and Fred have put in place here in Montréal. We also have Iain Farmer, who has stepped up to VP of Corporate Dev, who has been working with us and doing a lot of the hard work along the way. Iain has been with us for 5 years as well. So very happy to see him evolve into his space. A new addition to our team will be Benoit Brunet, who joins us. He has a CA from -- and was an auditor at PwC and subsequently went on to work at The Caisse de dépôts. And he is joining us as a new VP to take on the challenges with Sandeep and Iain and Fred as we move forward with the new model. And he has quite the experience both in private equity and with ESG, so we're looking for Benoit to help lead us through that project. And I'd like to congratulate Kevin Connan, who is sitting to my right, on his new appointment as Director of Communications. As we move forward, the team is refreshed and ready to go. And just before I go to the Q&A, I'm going to pass it over to Sandeep for just a couple of words. A lot of you in the industry already know him, so I don't think we've kind of surprised you too much.
Sure. Thanks, Sean. I won't say too much other than I'm very pleased to be part of the team. I'm also very pleased that a number of the right pieces were already in the company and ready to take over from those that came before. And with the new additions, you mentioned Benoit, and the promotions internally, I feel like we are set to take things to the next step in our next phases of growth. Thankfully as well, feel like there's a lot of value to unlock with our existing portfolio, and that's going to be the key focus. Obviously, we'll continue to look for growth, but there's a lot of interesting things to do in-house already. So excited about what comes next.
All right. And on that note, we'll turn it over for questions. If anybody has anything -- sorry, my oversight. Before we pass over to questions, I'd like to mention that Murray John, a long-standing member of the resource and mining community, previously of Dundee Wealth Management and both a geological and mining engineer of some record, with a lot of portfolio management experience under the Dundee, has joined us as a member of the Board. So congratulations and welcome to Murray John for joining the Board to fill out some of our space that has been created by some departures over the last couple years by people who have either retired or moved on. So with that note, we'll go to our first question.
[Operator Instructions] Your first question comes from the line of Lawson Winder.
Just a question on the Canadian Malartic royalty. One of the 2 partners in that partnership had commented on a call that they were in discussions with you guys on the economics of the underground with respect to the royalty. I'm just curious what -- I mean to the extent that you can, how flexible you might be on those and what your current thoughts might be on those discussions.
Well, I believe the discussions and the negotiations between the 3 parties of this asset should remain just that: discussions and negotiations. However, I will comment that at the current gold price, this project is a slam dunk. And the anxiety I believe that's been expressed has been around the $1,000 to $1,100 gold price, and we've seen some publication on that level. Obviously, life is a negotiation. And our -- some of our friends have chosen to negotiate through the shareholder base and through the advisory base. That's their choice. It's not the way we would do business. But we'll take that as we get it. We're really more interested in the information to come. We feel the deposit has been under drilled so far, and we'd like to see a larger commitment from the partnership to executing a more significant drill program there, picking up the pace.By context, we've drilled 1 million meters in 5 years at Windfall, and we've drilled 350,000 meters at Barkerville. And we would like to see our partnership at Canadian Malartic pick up the pace and intensify the drilling. For us to make a financial decision on our most significant asset, our shareholders need to know what that project represents. So we would go with the Osisko model, which is called SUDS, which stands for shut up and drill (sic) [ shut up and drill, stupid ].
And then just maybe one more for me. How do you guys think about the dividend going forward? It would certainly seem, at current gold prices, you would have the capacity to increase that. But what are your thoughts?
We always look at the dividend. And obviously, we're mostly fairly big shareholders ourselves, so it's close to our hearts. However, where we sit today, there's a lot of opportunity on our screen, and we've been focusing also on share buybacks. So I think right now, at the current share price level, we'd probably focus more on share buybacks than dividend increases as the stock is extremely undervalued in the current marketplace.
Your next question comes from the line of Don Blyth from Paradigm Capital.
I missed the first few minutes of the call, so excuse me if any of these have already been addressed. But on Barkerville, do you have any estimate of how much you'll be spending in 2020 to continue advancing Cariboo?
Yes, Don, so where we stand right now, obviously, there's been significant success in drill results. There is some pending updates both on a resource level and on some exploration discoveries that have been made both on the major trend and on the parallel trend. So that will be an update coming out under the title of our Spirit as we evolve that right now. And we're looking at a couple of different decision points, both based on that resource update in terms of further budget commitments as to how we move forward. However, we are intent and very proud of our Barkerville acquisition, and we believe that we're going to drive a lot of value on that project as we set the table for the North Spirit financing, hopefully in the first half of this year. So stay tuned. There will be some updates coming. But in terms of budget commitments right now, we know we have some work to do. And some of that's going to be delivered -- some of that budget decision will be driven by permitting requirements and line of sight. As you know, there's been some changes to the Canadian permitting process that are quite favorable to Barkerville in that, from a federal level, we only need to work on a provincial permit right now as they've increased the test for federal level from 600 tons a day to 5,000 tons a day. And we had put up PEA study on Barkerville at 4,000 tons a day. So we're looking to take advantage of some of the things that have occurred in our favor at Barkerville, had to take into account the exploration success and expertise that we've gained and the knowledge of that -- not only that portion of the project but also the deep geological knowledge that we gained in the last 18 months of that project. So as we get forward, we will come forth with a more precise budget.
Okay. And with regards to taxes, can you give a sense of the tax pools and how long you think you can defer being into a cash taxable, payable position?
Well, I'll hand this question over to Elif. She's the knower of all things tax.
Yes. So sure. So in terms of our taxable, actually, we're sitting in a very good position. Given that we've done quite a few investments in terms of the royalties that actually -- and with the base that we started off in 2014, we've built some pretty interesting taxables. So we're not actually foreseeing to pay any cash taxes for the next quite -- 4 to 5 years, actually. We're going to be paying withholding taxes from some of the international royalties there, but it's going to be limited to that. Our tax-affected tax pools are, as I said, at a pretty good level right now.
Okay. And assuming you continue to invest in similar rates, you expect that to sort of just keep moving forward.
Exactly.
And maybe I would just add a couple of comments on the tax pool for those who may not be that familiar with the Canadian charity flow-through and flow-through tax regime. As long as we invest in Canadian projects, especially here in Québec, B.C. and Ontario using flow-through shares or charity flow-through share investments into places like Canadian -- or into projects like Osisko Mining and also into Barkerville, those investments, as long as they're of an equity nature, can be used to detract from our royalty revenues. So it's a rather unique advantage that we have with our accelerator model that, by investing in those equities, we can actually increase our tax [ for the whole ] pool. And it provides roughly a 22% advantage for us when we invest in those equities. It is unique to the Canadian companies, and you have to have brownfield and big drill programs to do that. But our friend, Mr. Burzynski, and our friends at Pine Point, the Horne 5 Project, Barkerville and Victoria have done extremely well at taking advantage of that business and providing significant value to the Osisko shareholders. And especially if you look at Windfall Lake, there's been over $400 million of flow-through and parity flow-through raised to advance that project, and nobody else in the world could have ever executed that drill program without that tax program. And Osisko shareholders have been a major benefactor from that.
Your next question comes from the line of Kerry Smith from Haywood Securities.
Sean, I had a couple of questions. What is the rough timing now to complete the feasibility for Barkerville? And the second question was what are you seeing on the diamond price trends? It seems like diamond pricing is improving. But I'm just wondering what you're seeing at Renard, generally, if you're seeing any favorable trends there.
Yes, we've been seeing an increase. So I'll start with the diamonds first. We've seen an increase of between 5% to 7%. The sale on sale, there's a couple of contributing factors to that. Obviously, the supply and demand story developing with the [ confirmature ] of the Victor in Ontario and Argyle, and some of the diamond market has been changing as the Millennials come more into the space. However, there has been some discussion about whether the coronavirus would affect the diamond prices as we move forward. But we do think that there's a supply and demand story that's pretty solid in the diamond space, and that was -- when we went forward with our partnerships with Triple Flag and Caisse des dépôts and Investissement Québec on the credit bid for Renard, that was one of the things we did take into consideration as a lot of people are quite bullish about diamonds, including some of the bigger groups like BHP and Rio Tinto having made significant exploration commitment to the diamond space as we move forward. And just a general comment, in this pursuit, this world, there's a lot of wealth around. And the pursuit of purchasing genuine articles and luxury articles continues to grow as we've seen across the board with all the LVMH products, with Tesla and especially in the gem space and also the appreciation of gold and platinum and palladium. There's a lot of pursuit for valuable so-called precious metals, precious stones as we go forward, and I think that, that growth increases as the rarity goes up. And Canadian diamonds from an ESG standpoint are pretty popular as we speak today. About your other question, in terms of Barkerville feasibility, we'll announce that once we finish up with the current drill program. That'll be driven by the resource updates and also some of the aspects that we're quite excited about in terms of the permitting opportunities that we have there. But we feel that in terms of where we wanted to be with North Spirit, we closed the acquisition in November. We wanted to take the time to do a lot of this work. We've been pleasantly surprised by a lot of things that have gone on with that project, especially from the drilling side. Some of the things that we've identified within the mining process in terms of being able to use roadheaders, ore sorters and some of the new technology that we believe is going to drive Barkerville to be one of the more valuable projects. As you saw, the PEA in the study calls for CAD 310 million or about $225 million of CapEx as well as 185,000 ounce-a-year mine for 5 years. It uses about half of the existing reserve. So on a CapEx intensity level, Barkerville still remains probably the most interesting project in the world right now in terms of being able to put almost 200,000 ounces of production on the table for USD 225 million. So that's the basis from where we start, and then everything else from here on in is on optimization. And we have quite a few drill plans on the go with a $12 million exploration budget [indiscernible] and exploration drilling on the Gulf for that project. So some of those ounces will be driven by those results.
Okay. And the resource, I think, would be when then, when should we expect that?
Well, resource updates are a fickle thing these days. So I would guide you to somewhere in early Q2 or late Q3. All right. If there are no further questions, I'll thank everybody for participating today. It's exciting times here at Osisko Gold Royalties with obviously big things happening in Osisko Mining, further success at the Barkerville program, advancements on the Horne 5 Project and our friends at Victoria Gold heading into commercial production and the gold price sitting at a 7-year high of USD 1,615. I would remind everybody that it's at CAD 2,137 this morning, which is an all-time high in Canadian dollars, and it's at an all-time high in Australian dollars. So it's a great time to have a Canadian-based portfolio, especially brownfield assets where other people are spending their money to drill on our royalty lands as we speak. And we thank everybody for their participation and look forward to the 2020 evolution as we think this is our time. We did create a very high-growth portfolio over the last 5 years, and now it's starting to mature and should expect to drive and deliver results to shareholders as we evolve through the next phase of this company. Thank you very much.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.