Q2 2021 Royal Gold Inc Earnings Call
[music].
Good day and welcome to the Royal Gold fiscal 'twenty 'twenty, one second quarter conference call.
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I would now like to turn the conference over to Alistair Baker. Please go ahead.
Operator, good morning, and welcome to our discussion of Royal Gold second quarter 'twenty. It's why do you want results. This event is being webcast live and you will be able to access a replay of this call on our website.
Participating on the call today are bill heightened buddle, President and CEO, Paul Wagner, CFO, and Treasurer, and Mark just though executive Vice President and CEO of Royal Gold Corporation.
Dan Breeze, Vice President corporate development of RG AG and Randy Schatzman General Counsel are also available for questions.
During today's call, we will make forward looking statements, including statements about our projections and expectations for the future. These statements are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These risks and uncertainties are discussed in yesterday's press release on our filings with the SEC.
We will also refer to certain non-GAAP financial measures, including adjusted net income adjusted net income per share net debt and net cash reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are available in yesterday's press release, which can be found on our website sales.
I will give you an overview of the quarter followed by Mark with an operating update Paul will then provide a financial update and bill will wrap up the call with some closing comments. We'll then open the lines for a Q&A session.
Now I will turn the call over to Bill.
Good morning, and thank you for joining the call before beginning I would like to remind you that Royal gold continues to operate remotely and well do our best to offer a coordinated response to any questions.
So please bear in mind that this reporting period is quarterly for us, but annual for most of our operators, we may not be in a position to offer in depth answers to questions on our operating assets.
The extent the information for the December quarter has not yet been released.
I'll begin on slide four.
We continued our strong start to fiscal 2021 with another quarter of record revenue.
Total revenue of $158 million was driven by excellent operating results across the portfolio, particularly from our royalty segment real.
Relative to the prior year quarter, our Cortez revenue in our Australian royalty portfolio revenue were both up over 100%.
Well on palace, Quito, and Marigold revenue increased over 50%.
We had a couple of new contributions this quarter from royalties that while small demonstrate the optionality embedded in our portfolio.
Commercial production was declared at least Canyon in January and we received our first revenue from the 2% MSR during the quarter.
We also received the first payment from our 4% NPI royalty I could not be which is part of Saracen South library to mine in Australia.
We acquired both these royalties over a decade ago as part of multi asset transactions.
Earnings for the quarter were $60 million or <unk> 91 per share and operating cash flow came in slightly below $100 million.
Adjusted earnings were <unk> 92 cents per share after adjusting for a minor mark to market change in the fair value of our equity securities.
We raised our dividend in November for the 20th consecutive year to $1 20 per share per year, which represented a 7% increase over the prior year payout.
This record of increasing annual dividends is unmatched in the precious metal space.
We paid down a further $75 million on our revolving credit facility during the quarter, leaving us with a net cash position of $182 million and over $1 $2 billion on liquidity at the end of the quarter.
We made a further reduction in the balance outstanding on the revolving credit shortly after quarter end.
Which Paul will touch on later.
Yeah.
We continued to fund our investment in Lycoming County project and we've now completed the funding of the 80% based silver stream.
Mark will give you a further update on the project in his remarks.
We also continued our practice of board renewal, adding saviano chubb's to the board following the retirement of Chris Thompson in November. So have you on it brings a wealth of experience to Royal gold from her career in finance auditing and internal controls and I look forward to working with her.
I would like to thank Chris for his many contributions to Royal gold since 2014 and wish him well in his retirement.
Maintaining our board with relevant industry experience and diverse background, it's important to protect and promote long term value for all stakeholders and I believe that Royal Gold has one of the best sports in the precious metal sector.
With that I'll turn the call over to Mark for an update on progress at come accounts.
Thanks, Bill I'll start by making a brief comment on the excellent performance across the portfolio.
Our royalty segment contributed 32% of revenue while typical contribution has been in the range of 28%.
We saw especially strong contribution from independent skewed a royalty.
Many of the smaller royalties also performed well, which demonstrates the significant upside and optionality in our smaller and older portfolio assets.
Moving on to slide five I'll give you an update on the KOL Macau project in Botswana currently under development like Cool Macau copper H C M.
Construction activity progressed, well during the quarter. Despite challenges caused by COVID-19, and the continued state of emergency in Botswana.
Construction completion reached 85% at the end of the quarter up from 70% at the end of the September quarter.
Underground development in the three mines reached 8300 meters and as of last week, there's a surface ore stockpile of over 100000 tons up from 70000 times at the end of December.
Or is being produced from development drives an overall ore grades and wix. So far are consistent with expectations net.
Happy and sampling on the Orange zones. These drives continues to provide high confidence in the quality and dimensions.
Zone five ore body it confirms results from previous surface grade control drilling.
Ground conditions are in line with the geotechnical model and no significant changes have been required to planned ground control measures confirmation of the resource and geotechnical models are both positive result at this stage of development.
With respect to startup Casey and expects to begin plant commissioning activities late in the second quarter of calendar 'twenty 'twenty, one and they continue to target shipment of first concentrate late in the third quarter.
Production is expected to ramp up capacity.
Capacity in the fourth quarter of 'twenty, 'twenty, one and reach sustained production level in the first quarter of calendar 2022.
All of this assumes no escalation in COVID-19 challenges.
We made our six advanced payments kind of accretion of $32 $6 million on January six and have now advanced a total of $212 million towards the project, which completes our investment for the 80% base silver stream.
Logistical and scheduling delays attributed to COVID-19 since last March have caused a modest increase to the project capital budget.
K C M expects some further costs working capital and operating costs, resulting from the extended construction schedule.
If you recall, when we announced the transaction, we committed to providing additional funding of up to $78 million.
We provided Casey M with options to draw up to $53 million by increasing the silver screen to 100% of payable silver standard draw up to $25 million from our subordinated debt facility.
Auctions were intended to provide K C M with confidence that the project would be fully funded regardless of reasonable potential cost increases.
Casey I'm expects up to $50 million of further funding will be required to reach commercial production.
We are currently in discussions with kcl to finalize sources of debt additional funding.
It's too early to say what role at those obligations may be and we expect to have more clarity in early April has two KC EMS funding plans.
Regardless of the timing Casey M anticipates, it will reach commercial production without requiring further funding beyond $50 million.
Next I'm going to show you a few slides regarding progress.
<unk> site.
Turning to slide six you can see a couple of photos from the box cuts at zone five.
So on the left show substantial completion of the GSL places.
On the box cut slopes require erosion control.
The photo on the right shows concrete work underway at a box cut some part of the mine water management system, all of which was completed during the December quarter.
Turning to slide seven.
On the left you can see a segment of the 35 kilometer haul road and access road looking from zone five towards the settle mill site.
Final surfacing is being applied in a 15 kilometer section of the haul road is complete and open to traffic.
At the right you can see construction progress on the new concentrate bagging facility.
And finally on slide eight.
On the left you can see the permanent potable water treatment plant at zone, five which is currently being commissioned.
And on the right side, you see the settled substation, which is substantially complete with commissioning of electrical infrastructure and the connection to the national grid expected later this month.
In summary, the KOL Macau team is doing an excellent job.
Advancing the project in spite of COVID-19 challenges the orebody dimensions and grades are consistent with expectations and surface construction advances at 85% completion.
I'll now turn the call over to Paul to discuss our financial results.
Thanks, Mark I will now turn your attention to slide nine and give an overview of the financial results for the quarter.
Well this discussion I'll be comparing the second quarter of fiscal 'twenty 'twenty, one to the prior year quarter.
We experienced another consecutive quarter of record revenue as we recognized a 28% increase on our revenue $258 million on volume of 84500 gold equivalent ounces or geos.
The increase on our revenue when compared to the prior year quarter was due to higher average metal prices and a strong contribution from our royalty segment, including the two new royalty contributions that bill mentioned earlier in his remarks with.
With respect to metal prices, the average price of gold silver and copper increased 27%, 41% and 22%, respectively when compared to the prior year quarter.
Contributions from gold continue to be dominant within our portfolio as the revenue mix for the quarter was 72% from gold.
11% from copper and 10% from silver.
G&A expense for the quarter was $6 8 million, which was stable and comparable to the $6 seven line, we recognized during the prior year quarter.
Our G&A expense, which also includes noncash compensation expense was again in line with a typical quarter for Royal Gold and is what we anticipate going forward absent any large unusual items.
Our DD&A expense for the quarter was $47 9 million or $567 per day E. L F.
Up from $480 per day on the prior year quarter.
The increase on our total DD&A expense from the quarter was primarily due to higher gold sales and a higher depletion rate from Mount Milligan, partially offset by lower gold sales and a coil.
However, we came in below the low end of our previously provided guidance range of between 590 and $640 per G. E O primarily due to the stronger performance in our royalty segment.
Any of our royalties and clean the tube royalties that provide a new contributions this quarter.
<unk> been in the portfolio for several years and have lower remaining carrying values.
The result of strong production contributions and lower carrying values within the royalty segment contributed to the overall lower DD&A expense per G E on during the quarter.
Looking forward, we are forecasting our DD&A for fiscal 'twenty 'twenty one to remain within the previously provided guidance range of between 590 $640 per G. E O exploration costs, which were specific to our peak gold joint venture from reduced to zero during the quarter due to the sale of the joint venture during the September 'twenty.
'twenty quarter.
We do not expect to incur additional exploration costs in the future.
Earnings were $59 $9 million or <unk> 91 per share up 45% compared to the prior year quarter we.
We had limited adjustments to our earnings this quarter with only a one cent per share loss due to the fair value decrease in our equity holdings.
Thereby increases or decreases in our equity holdings and the related adjustments to our earnings will continue as long as the company holds these securities.
After moving this one item our adjusted EPS was <unk> 92 per share for the quarter.
We had another very strong on court of operating cash flow as our cash from operations was up 28% to nearly $100 million.
This increase was driven by a higher stream and royalty revenue less the cost of sales specific to our stream revenue.
At the end of December we held approximately 29500 G E OS in inventory, which was slightly higher than the guidance range provided last quarter.
The increase was primarily due to deliveries that were received earlier than forecasted.
Looking forward to the March quarter, and absent any potential operational impact due to COVID-19.
We expect stream segment sales to be on the range of 48000 to 53000 G E O N.
On the inventories for the quarter on to be in the range of 26000 to 31000 G E O S.
We also continue to expect our fiscal 'twenty 'twenty, one effective tax rate to range between 19, and 23% absent any unusual or discrete items.
I will now turn to slide 10, and provide a summary of our financial position.
Our liquidity position continues to strengthen as we ended the quarter with cash of 382 million working capital of $393 million and a net cash position of $182 million.
During the quarter, we repaid $75 million on our revolving credit facility and in early January we repaid an additional $50 million.
Upon the $50 million repayment in early January we now have 150 million outstanding and $850 million available under our revolving credit facility combined with our available cash resources. This provides us with about $1.2 billion of total liquidity.
We believe we have sufficient liquidity to cover G&A costs.
Of the remaining commitments, Oklahoma, Kal and our expected dividend payments for the foreseeable future. However.
However, we also remain cautious with respect to the operating environment and the potential COVID-19 impacts.
We remain committed to reducing our debt and absent the requirement to fund any new business opportunities, we expect to manage our debt levels. Accordingly, once the operating environment returns to normal.
With respect to call on Macao, we made a $3 million to $5 million advance payment in October and a $32 6 million dollar advance payment in early January completing our total contribution of $212 million for the 80% based silver stream.
As Mark mentioned in his remarks at Kay seems election, we expect to provide further financing to the project in the form of additional silver stream <unk> subordinated debt.
The remaining amount form and timing of this funding will be decided in the next several weeks and we expect that any final contribution will be made from our available cash resources.
That concludes my comments on our financial performance for the quarter and I will now turn the call back to Bill for closing comments. Thanks.
Thanks, Paul our financial and operating performance in the second fiscal quarter continued our strong start to fiscal 2021.
Solid performance from our operating portfolio has allowed us to take full advantage of the robust metal price environment.
Over the 12 months ended in December we've invested $114 million of cominco.
Moved from a net debt position of $54 million to a net cash position of $182 million and paid dividends of $73 $5 million.
We see an active business development market today, but we remain mindful of long term returns when we bid for opportunities.
The financial performance of our portfolio allows us to be patient with new investment opportunities and we will remain disciplined as we continue to evaluate our new business pipeline.
Our strong balance sheet and access to liquidity positions us well to execute on new transactions in a timely manner.
Operator that concludes our prepared remarks I'll now open the line for questions.
Thank you we will now begin the question and answer session.
I'll ask a question you May press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing lucky.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
My first question comes from Cosmos Chu with CIBC. Please go ahead.
Thank you.
Thanks, Bill Mark, Paul and Alister and great to see that you've increased your dividend once again.
I guess my first question is on Cominco here.
Just to confirm I guess, you know the additional $50 million that's needed.
On to get the mine to commercial production. That's is that you know in essence, our costs increased due to COVID-19.
Yeah.
Yes Cosmos. This is bill can you hear me okay.
Bill, Yes, yeah, okay great.
Yes, essentially.
The debt the impact of COVID-19 on it it's yeah. It stood on a number of things I mean, you have your quarantine cost you.
You have to have some extra staffing.
Our debt that's necessary to sort of fill in.
When you have people in quarantine. So it is all related to two to the pandemic.
And Bill I guess, you know based on your understanding you know after a day additional funding of $50 million, how much cushion do they have because as Mark said earlier on the prepared remarks, you know never say never there might be potentially more COVID-19 could be more COVID-19.
<unk> two it like.
I'm, just trying to get some confidence around that number to try to figure out how much cushion day have built in at the operator level.
Yeah.
That number is probably not something we can disclose I will say that day, what they've come forward with us that's the maximum that they think they'll have to spend to get to commercial production. So.
Mark is there anything else any other color you might add to that.
We just might be limited in what we can say of course.
Right.
The only thing ill add.
Bill as you know we make are.
On the advanced funding and we're only a portion of the funding that comes in so they started the year with it.
Substantial.
Funding available to them, so they're they're well funded.
Certainly for the construction they have left to complete.
Given the fact that we're only a portion of it.
Mhm.
And then you know in terms of the actual construction itself to the extent that you can what's the critical path item here for them to get to sort of ramp up. The you know by Q2 calendar Q2 commissioning by Q2, and then sort of you know getting the concentrate shipment by Q3 is there is there one or two critical.
Pass items out there they're looking at at this point in time and concentrating on.
Mark I'll leave that to you yeah, I'm thinking cash.
Sure.
The critical path.
The last several quarters has been running through the mill refurbishment work and.
This has really been an area where there they have seen some COVID-19 impacts due to just contractor productivity.
So just the E E.
Hum, we say it runs through price.
You know the mechanical and electrical work getting at are completed would be the would be the critical path, which wouldn't be a typical for our project at this point in time.
The mining and development is not a critical path, it's going quite well.
Mhm, Okay, great and then maybe switching gears a little bit Bill as you mentioned this is your fiscal Q2, but a lot of the operators you know full year 'twenty 'twenty and looking at your operator, you know performances I see that for example, Cortez actually did very well in terms of what they have project.
Debt for 'twenty and 'twenty versus actual.
You know the one of them I think DSS oh or the other the first revenue was 101 700 ounces versus 67000 ounces. So that's G. S. R. One.
For example, I guess, what I'm trying to ask here is that Oh could you maybe recap what happened in 2020, and then you know what should we expect to the extent possible that I can share with us what we should be expecting from 'twenty 'twenty, one and maybe even putting crossroads as well I think two quarters ago, Mark on Bill you talked about crossroads and that's going on.
Have any positive impact on 'twenty and 'twenty, one I'm just trying to figure out you know if the outperformance in 2020 is sustainable looking ahead.
Yeah Cosmos I'll actually start with the latter part of the question and then maybe I'll ask Mark if he has anything to say about looking back to.
2020.
You know it it's usually a sort of in the first three or four months of the calendar year, where we get a new forecast.
From Cortez, So we will be in a much better position on the next quarterly call. We think to be able to give you a better look in terms of what this year looks like I know last year. We also went out a couple of years.
I can't promise you will be able to do that that's helped our discussions between us and Barrick, but we just we have to defer but what is 'twenty 'twenty one look until the next quarter.
Mark anything you want to add on on last years.
Production.
Well just a bit.
Alexander 'twenty 'twenty.
Actually they did exceed their plan, but by a small margin. So we're very happy it tended to be.
Our weighted more in Q1 calendar Q1, and Q2 then.
And I can't wait to put the overall.
They do a good job of providing an instrument.
Mhm Okay.
Maybe my last question again switching gears, a little bit here on taxes.
The new administration.
And then U S bite on Harris, you know hearing some chatter about potential changes to corporate taxes corporate.
Corporate tax rates.
Not shall we be aware of any potential impacts to our royal gold.
In terms of you know when it might happen or if it happens is it going to impact Royal gold at Al could you give us a bit more color on that.
Sure. It's early days and I think the debt the soft answer if you will is it's too early to tell the Baidu Baidu does have a tax plan.
That would show increased corporate tax rate.
I am personally skeptical that he's ever going to get to it.
On a only because he's got a pandemic he's got a vaccination program he's got an economy.
That he's got a deal with first.
And then he is also turning his attention to immigration and health care and a 50 50 Senate split does not give the Democrats carte Blanche to pass whatever they want and there are some vulnerable senators they've got to be up for reelection in 2022. So it probably is going to get anything done it's going to be really in the next 12 months I just.
Yeah again I personally is my personal view I don't I don't.
Spend time awake at night worrying about the tax rate's going up.
Okay.
Great. Those are all the questions I have thanks, a lot. Thanks Cosmos.
Our next question comes from Josh Wolfson with RBC capital markets. Please go ahead.
Thanks, I just had a quick question for the co Macau funding outlook.
As it stands for that for that 50 or up to $50 million number.
Are the three different financing options that the team has outlined the only available options or is there some sort of restriction in place this debt.
It would require cupric to to to utilize a strictly those.
Options or could they go elsewhere for capital.
There there are other sources that would probably require our approval.
So I.
Wanted to say just because something may not be permitted under the agreement. It doesn't mean, they can't come to us with other options and we'll consider it.
I think within the agreement they have the options that we have laid out in.
And relative to the size of the the funding gap right now those amounts would be sufficient.
But look where we're open to other sources and I think it's a great project. So I'm not too worried about them finding sources of capital if they need it.
Okay. Yeah, I guess the question is more so do you expect to contribute more towards the project.
Which would you say two options at least they were available for Royal gold would seem to be accretive options.
As opposed to just accumulating cash at the current time.
Yeah, I mean, I guess I look at it and say if you've got a 50 million hold on we've got $78 million I'm committed to you and there's there's yet another basket.
Yeah, it's again, that's more than sufficient but if they were to come back to us and take notwithstanding.
Whats available we want to go in this direction, we would certainly.
Look at it.
No that's great. That's a those are all my questions. Thank you. Thank you.
Our next question comes from Jackie principally on ski with.
Yeah My capital. Please go ahead.
Thank you very much and I think I just wanted to follow up on one on five causes questions about the guidance for 'twenty 'twenty, one alright, I guess for sorry for the next quarter Q3, 'twenty 'twenty, one and it looks like the guidance. The 48 to 53000 ounces as sort of below where you came out for.
From the current quarter and I was just wondering if you could give us a little more color on that or if you can give us some color as to.
How about gold equivalent ounces breaks down between gold silver and copper if that's possible.
Yeah, So what I'll say.
One thing that's important to recognize about our revenue is at two O two of the assets.
In Milligan and a coil can be really lumpy.
And when we just sort of say timing of shipments, it's sort of a general comment.
But we have heard this question and I wanted to turn this over to Mark to try to give you a little more a little more flavor.
Thanks.
Yeah. Thanks, Phil.
Yeah, I think the simplest way to think about a day is so when you when you look at Mount Milligan and every shipment.
Concentrate did they make we think about it is competing a 4000 to 5000 G E O S. A.
Combined gold and copper to us so.
With E C.
I mean come in early or later.
Later, then we expect that that will shift 45000 G. E. OS So that's and the same thing happens with Andrew Cuomo, although the amount of gold.
Gold in a in a ship concentrate shipment ranges from 10000 to 25 on what's the split or Geos to us. So what you find is you know between those those two.
Being able to you know.
Friction.
Six months ago, when they produce concentrate.
It goes into an inventory concentrate inventory depending on how they want to the owner wants to understand it turned to the ship.
And eventually makes it too much.
The smelter.
That has a has a window and so simplistically, you're thinking you know tour flow.
G. He was on mill again in 2000 to 2500 G. E O is on anti koyo.
Swing and you can youre looking table two.
In our press release, which I think gives you a very good view on variability.
And you know how the N number swing around so I don't know if I can.
But any any more color.
To that but happy to try.
Okay. That's helpful. Thanks Martin.
I guess Oh, yeah.
That's a that's a helpful answer if I if I can just ask a second question I hear you.
Total available liquidity it keeps going up it's $1 2 billion at the moment can you can you give us a little bit of.
An update into your thoughts on Opex.
Opportunities not a D C D C gross investment opportunities on the horizon for yourselves and see maybe you could talk a bit about that $1.2 billion on how much would you be comfortable putting out in a single transaction sort of at the maximum level would be helpful color of small things.
Sure maybe I'll just address the liquidity.
I think we have Dan Breeze on on my turnover turn this over to him on the on the business development.
Side of things I think we've always consistently said, we'd be comfortable putting a $1 billion into a transaction.
And and I think that's that still stands.
It wouldn't be our preference.
We don't we don't want to create a concentration issue and I think anything of that size would probably we would probably want to be in production. So.
So that $1 billion doesn't apply to every single type of transaction that.
Debt that we see.
Dan are you on do you want to work.
<unk> walked through the environment.
Yeah, Thanks, Bill Hi, Jackie I hope, you're well can you hear me okay.
I can't think of it makes sense, okay relative to it yeah. Thanks, and so I think the first thing to say is that we're not under pressure to complete transactions. As you know we've got a strong portfolio and of course <unk> is going to be coming on line here over the next number of quarters. So we're excited about that.
But I think it's very similar to what we've talked about on the last few calls we're seeing a pretty healthy market.
I think about $100 million to $500 million range is how I would describe it.
And we've adapted to the realities of not being able to travel very easily so.
We're getting a lot of our work done remotely and processes are continuing we've seen.
Like we've seen in the market some transactions happen as well so we feel pretty good about deploying that capital at some point and as Bill pointed out we've got ample liquidity to do so.
That's really helpful. Thanks, Dan that's it from me.
Great.
Okay.
Our next question comes from Mike So on and what the Bank of America. Please go ahead.
So on Bell.
Oh, hopefully you're doing well and.
It's calling you from my our basement.
I'd like to hear a lot longer.
Hey, just a question on strong performance on the royalty side I thought quite tough.
I assume a whole raft river wasn't part of that since tomorrow were shut down.
Just wondering if theres been any discussions with Kirkland Lake what's your royalty.
Maybe reopen kept that binary open or not even what Kirk Lakers fainted.
On a very lucrative royalty, but these prices. So just wondering why or why not defense.
Yeah, and I'm going to answer you from my basement. So.
Yeah look we we we spent months talking to both Kirkland Lake and Newmont trying to.
Solve something that wasn't really our issue.
You know as you know our royalty does not burdened the property.
And it's paid by by Newmont, we were surprised by the by the statement.
The option agreement if you will that was that was announced in.
You know I guess and all I can I can really say idea is that we are in contact with council. We are reviewing our options.
With respect to that to that agreement and that's Mike That's all I can really offer yet.
Okay, well, thanks, and good luck.
Thanks.
Yeah.
Our next question comes from Tanya <unk> with Scotiabank. Please go ahead.
Hey, good morning, everyone can you hear me yeah.
Yeah, we can hear you tenant okay. Great. Thank you I've got three questions I just wanted to circle back on your fiscal Q2 of their revenue.
We don't have the details on that day, you know we have panofsky it on core task, but just on the other royalties can you kind of give us a breakdown of what are the bigger ones in there because that was a lot better than we were anticipating and we'd just like to have a bit of clarity on that day.
Or items in that other revenue.
Oh, Hi, Paul can I ask you to maybe give yeah.
A few names there I mean, I think we say on the in the quote that none of them represent 5%, but maybe we could just tick off some of those bigger ones.
Yeah, Hi, Tony how are you.
Thank you.
You know a kind of a couple of items that I'll just point out too that bill mentioned in his remarks, as well, but probably the bigger one was the 4% NPI that we have on the on Crinone B. It's a chronology MPI, which is they cover certain tenements on south Cirrus and South laboratory property in Western Australia.
That royalty generated $3 $7 million to us this quarter or approximately 2000 G. E. O. So that was really the the big item for the quarter, but also say too is the rest of our Australia our royalties.
We had a nice contribution from from a lot of our Australia and royalty portfolio.
Let you know I mean, including a chronology of 3.7 million. We had total contributions in Australia from $40 million for the quarter and that compares to $34 million in Q1. So those are probably the two big or the bigger ones that I would price pointed out to you is that if that helps.
Okay.
Just thinking of providing us a bit more on information on that other category going forward.
Yeah, I think we've always tried to.
Keep the disclosure to what we phrase has our principal properties.
But I'm happy to take that request on and talked to the team about it and see if it makes sense to give you a bit more detail on the future.
That would be helpful. Thank you.
And maybe just moving on to.
The Q3 stream outlook and I know Jackie asked us on just for us to understand them.
You know the outlook suggests again that that that that day.
But youll ever see on it.
Gonna be similar to the level of stream deliveries on key accounts, but you know given that the production outlook for both Mount Milligan Amanda coil as we're ramping up through the second half of this year appears better.
You know is it just the timing of deliveries that are you know, causing net swing because we would have expected the second half to be stronger.
Yeah, Yeah, I mean don't forget that the one thing about Milligan and acquire if there is this six month delay so you know.
When we when we look at our December quarter, and I'll, just sort of focus on really getting a little bit.
You'll remember that in the second calendar quarter.
They cut back production due to COVID-19 will that start showing up.
Well after Oh, you know people tend to forget about it and then and then it sort of can show up in our results I think.
The thing one mark pointed to table two in the press release and you look at the variability of each of the individual assets in any of those two bigger asset suddenly match up.
Well you might have lower numbers you can see these swings, but I, yeah I I.
Don't see the range that we've given being completely outside of what we've done before it is very much timing driven.
But yes, if you see production increases at a mine.
Hopefully youll see that in our results that you won't see that day and our results for six months.
Okay. So it's the timing on that.
And then maybe my last question just on the M&A and you mentioned you know you're a billion dollar transaction that would be something that you would do obviously asset being in production on the $100 million to $500 million the range that you're seeing now on those more on the development stage.
On a type of acquisitions or are they producing and are you still focused on on gold or have you shifted the selva maybe on.
It's a bit more on that thank you.
Yeah and.
Dan I May turn this back over to you that the one thing I will say is that we're always going to be gold focused and now you've probably heard me say it before.
Before if you if you give me five transactions to look at and three of them are gold and two of them are self I'm going to look at the gold ones first.
Alvarez in the box, but we're very much focused on on.
On gold, we don't sort of take strategic shifts and say, okay. Now we're going to do some silver.
We tend not to be able to sort of pick the market that way.
You can take the deals as they as they come in.
Dan is there anything you want to add.
Sure, Yeah, Hi, Tony Hope, you're well thanks for the question.
Just add that when you think about the buckets of where the use of proceeds are generally directed towards <unk>.
Project development, M&A and strengthening the balance sheets and I think right now what we're seeing mostly is on the project development side and some of the the equity raises that are happening in the market. There are small and are moving forward the projects, which is good for us as well, we're seeing more of those kinds of projects move forward, where we can be part of the capital structure on.
The development side, so, it's probably skewed more towards project development I would say.
Okay on that.
Makes sense, okay. Thank you so much for that.
Thank you Youre welcome.
Our next question comes from Greg Barnes with TD Securities. Please go ahead.
Yes. Thank you Bill I, just wanted to double check with the $50 million funding GAAP of KC M is the entirety of the funding GAAP, but it's not just what you could they could come on by your.
Funding options.
That is that funded debt.
Okay.
Secondarily your comments at the end of your prepared statements about being disciplined and focusing on returns and.
Being patient if I'm reading between the lines.
Obviously, the loyalty space, it's got a lot more competitive and you're not seeing the returns on the latest deals that have been done.
Particularly attractive for you.
Oh, Yeah, I think the industry as a whole I think you've seen a compression in returns, but I think.
Yeah, when I look at it is if you've got the initial return.
Based on.
Our reserve that you see at the time.
Time and again.
That's not the return we're ultimately looking for where you were looking for debt to assets that have upside where I can say to you a number of years later, so you might calculate it on a really low return at the beginning but this is this is what we saw.
On coming in in the future. It is more competitive and I would say, it's more it's not just the <unk>.
The space has more people and it's at the equity markets are open a little bit more interest rates are low so the debt markets and we haven't seen sort of all of that come together on a long time so.
The point really is where we.
We can be patient and we're not going to chase.
Yeah deals because we have to fill something some pipeline in the future.
We're gonna be able to find the transactions that we thought we wanted to but to your point.
I would say that the competition in the sector is is greater because of these other sources of capital are now more available.
Mhm.
And when you review some recent deals are you do you think.
The other participants on pricing and too much for the upside beyond the basic reserve or is.
Is that not the case yet.
Oh I'll be honest weighted went up on one of our competitors announced a transaction where we were.
We dissect it but.
But everybody has a different technical team everybody has a different view of upside.
They may have some familiarity with the asset.
So it would be it would be really hard for me to start saying, Okay Company X.
You know thinks that this this way.
John's going to instead of having a five year life is kind of a 20 year life. They can't really do that right.
Right.
Okay fair enough. Thank you. Thank.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to Paul Hudson Battle for any closing remarks.
Well. Thank you very much for taking the time to join US today I very much enjoyed the questions. We appreciate your interest in Royal Gold and we look forward to updating you on our progress during our next quarterly call take care.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.