Osisko Gold Royalties Ltd. has just unveiled its Q1 2024 results, and while the headline numbers are respectable, a closer look at the transcript reveals a compelling undercurrent: Osisko might be on the cusp of a significant copper-driven growth spurt, one that seems to have flown under the radar of most analysts.

Osisko has long been known for its dominant precious metals portfolio, a fact the company proudly highlights in its presentations. Yet, amidst the predictably strong gold equivalent ounce performance and record-breaking cash margins, whispers of a "base metal exposure" beginning to "expand" emerge from the transcript. The catalyst? The CSA copper stream, set to kick off on June 15th, 2024.

While Osisko mentions the CSA copper stream, it doesn't dwell on its potential impact. The company acknowledges the mine's impressive history - producing for nearly six decades with minimal exploration beyond known deposits. This very fact, however, points to a crucial opportunity: significant upside potential from exploration efforts.

The recently announced updated mineral reserve and resource statement for CSA, based on drilling data up to August 2023, bolsters this argument. It reveals a staggering 67% increase in mine life, extending to 2034 based on reserves alone. Notably, this estimate only considers drilling 95 meters below the current decline position, and exploration activities have continued beyond the August 2023 cutoff.

Osisko anticipates further positive news from Metals Acquisition Corp, the operator of the CSA mine, in the near term. This implies that the current reserve-based mine life of 11 years might be just the tip of the iceberg. Could the actual mine life be significantly longer? Could copper production, and consequently Osisko's royalty revenue, exceed expectations by a considerable margin?

The transcript also reveals Metals Acquisition Corp's strategic focus on exploring the "top 850 meters of the deposit", an area with "strong potential to open additional mining projects". If these exploration efforts prove successful, CSA's copper production could see a dramatic increase, translating into a substantial boost for Osisko's copper-derived royalty income.

"Here's where the hypothesis gets interesting: Osisko hasn't factored any potential upside from expanded copper production at CSA into its published five-year outlook for 2028. This outlook already projects impressive 30% plus organic GEO growth, driven by expansions and development assets. Adding potential upside from a copper boom at CSA could propel Osisko's growth trajectory even further, potentially exceeding current market expectations."

Projected GEO Growth

The following chart compares the projected GEO growth with and without potential upside from expanded copper production at CSA.

Consider this: In 2023, Osisko derived 67% of its GEOs from gold and 25% from silver. Even a modest increase in copper production from CSA, say 10%, could add a few thousand GEOs to Osisko's annual deliveries, representing a notable percentage increase in its non-precious metal contribution.

Now, imagine a scenario where Metals Acquisition Corp's exploration efforts unlock substantial new copper resources at CSA, leading to a doubling of copper production over the next five years. This scenario, while ambitious, is not implausible given the mine's historical under-exploration and the promising initial drilling results. Such an outcome could transform Osisko's commodity mix, significantly boosting its copper-derived GEOs and potentially surpassing its gold contribution in the long run.

Osisko's Commodity Mix (2023)

While the market seems to be fixated on Osisko's precious metal dominance, the CSA copper stream quietly hums with the potential to redefine the company's growth story. June 15th, the effective date of the copper stream, could mark not just the beginning of copper deliveries, but the start of a hidden copper boom for Osisko, one that could propel the company far beyond its current growth projections.

This potential copper-driven growth spurt is the whisper that seems to have escaped the attention of most analysts. Osisko's focus on this opportunity, coupled with the positive developments at CSA, suggests that the company might be sitting on a copper goldmine, ready to explode onto the market's radar and propel Osisko's growth into uncharted territory.

"Fun Fact: The CSA copper mine has been in operation for nearly six decades, highlighting the longevity and potential of this asset. Its history of minimal exploration suggests a hidden treasure trove of copper resources waiting to be unlocked."