Q1 2024 Franco-Nevada Corp Earnings Call
Operator: Good morning, and welcome to Franco-Nevada Corporation's first quarter 2024 results conference call and webcast. This call is being recorded on May 2nd, 2024. At this time, all lines are in listen-only mode.
Good morning, and welcome to Franco Nevada Corporation first quarter 2024 results conference call and webcast.
Operator: This call is being recorded on may 2nd half 'twenty 'twenty four.
Operator: At this time all lines are in listen only mode.
Operator: Following the presentation, we will conduct a Q&A session, where you may ask a question through the phone line or webcast. If you're joining by webcast, you may submit a written question for the Q&A session at any time during this call by typing your question in the Q&A section of the webcast platform. If you require immediate assistance during this call, please press star zero at any time for the operator. I would now like to turn the conference over to your host, Candida Hayden, Senior Analyst, Investor Relations. Candida Hayden, Senior Analyst, Investor Relations, Investor Relations Please go ahead.
Operator: Following the presentation, we will conduct a Q&A session, where you may ask a question through the phone line our webcast.
Candida Hayden: Joining by webcast you may submit a written question for the Q&A session at any time during this call by typing. Your question in the Q&A section of the webcast platform.
Candida Hayden: You require immediate assistance during this call. Please press star zero at any time for the operator.
Operator: Now I'd like to turn the conference over to your host Candida Hayden Senior Analyst Investor Relations. Please go ahead.
Candida Hayden: Julie, good morning everyone. Thank you for joining us today to discuss Franco-Nevada's first quarter 2024 results. Accompanying this call is a presentation which is available on our website at franco-nevada.com, where you will also find our full financial results. The presentation is also available to view during the webcast. During our call this morning, Paul Brink, President and CEO of Franco-Nevada, will provide introductory remarks, followed by Sandip Rana, Chief Financial Officer, who will provide a brief review of our results.
Operator: Julie.
Candida Hayden: Good morning, everyone. Thank.
Candida Hayden: This will be followed by a Q&A period. Our full executive team is available to answer any questions. Participants may submit questions by the telephone or via the webcast. We would like to remind participants that some of today's commentary may contain forward-looking information, and we refer you to our detailed cautionary note on slide 2 of this presentation. I will now turn the call over to Paul Brink, President and CEO of Franco-Nevada.
Speaker Change: Thank you for joining us today to discuss Franco Nevada's first quarter 2024 result.
Paul Brink: Accompanying this call is a presentation, which is available on our website at Franco hyphen, Nevada Dot Com, where you will also find our full financial results.
Paul Brink: Presentation is also available to view on the webcast.
Paul Brink: During our call this morning.
Paul Brink: President and CEO of Franco Nevada will provide introductory remark followed by Sandy Brenna, Chief Financial Officer, who will provide a brief review of our results.
Paul Brink: This will be followed by Q&A period.
Paul Brink: Executive team is available to answer any questions.
Paul Brink: Participants may submit questions via the telephone or via the webcast.
Candida Hayden: I'd like to remind participants that some of today's commentary may contain forward looking information.
Paul Brink: For you to our detailed cautionary note on slide two of this presentation.
Candida Hayden: I will now turn over the call to Paul Brink, President and CEO of Franco Nevada.
Paul Brink: Thank you, Candida, and good morning. Yesterday we held our AGM here in Toronto, and we're pleased to have Hugo Dryland join our board. Hugo has for many years led Rothschild's metal and mining advisory business, and amongst other areas, he has extensive experience in project finance and international operations. He fills the seat left empty after Randall Oliphant sadly passed away last night.
Paul Brink: Thank you Candida and good morning.
Paul Brink: Yesterday, we held our AGM here in Toronto, and we're pleased to have Hugo dryland join our board.
Paul Brink: <unk> has for many years led Rothschild metal and mining advisory business.
Paul Brink: And amongst other areas has extensive experience in project finance and international arbitration.
Paul Brink: Hugo filled the seat left empty after Randall Oliphant sadly passed away last year.
Paul Brink: A diversified portfolio performed well, and production for the quarter met our expectations, and the Pacay GeoSails were above and Candelaria GeoSails slightly below. Elevated gold prices boost our revenue and translate it directly into some of our highest-ever markets. Adjusted EBITDA margin was 84.2%, and adjusted net income margin was 56.9%.
Paul Brink: Our diversified portfolio performed well our production for the quarter met our expectations and <unk>.
Paul Brink: Sales were above Cavalerria geo sales slightly below expectations.
Paul Brink: Elevated gold prices pushed our revenue translated directly into some of the highest margins.
Paul Brink: Adjusted EBITDA margin was 84, 2% and adjusted net income margin was 56, 9%.
Paul Brink: Royalties on new mines continue to contribute to our growth. During the quarter, gold fuels poured the first gold at Solaris Norte and half shale at Mayarosa. Equinox and G-Mining are on track for first production at Greenstone and Tocco di Segno, respectively, in the coming months. Alamos' planned acquisition of Argonaut will help realize the full potential of the Maginot and the island deposit, including a potential expansion of the Maginot Mill facility. Alaba reported good progress on the construction of Valentine Gold, and production there is expected to start in the first half of 2025. While Cobrae Panama remains in preservation and safe management, we're hopeful that the issues can be resolved. The Panamanian election takes place this Sunday, May 5th.
Paul Brink: Royalties on new mines continue to contribute to our growth during the quarter Goldfield support the first goal, that's large naughty and hostile that my Rosa.
Paul Brink: Equinox and G mining are on track for first production at greenstone and Taco <unk>, respectively in the coming months.
Paul Brink: Al Moss as planned acquisition of <unk> will help realize the full potential of the <unk> and the island deposits.
Paul Brink: So looking at potential expansion of the <unk> mill facility.
Paul Brink: Although our reported good progress on the construction of Valentine gold.
Paul Brink: Production is expected to start in the first half of 2025.
Paul Brink: While corporate Panama remains in preservation and safe management.
Paul Brink: Hopeful that the issues can be resolved.
Paul Brink: Panamanian election takes place this Sunday may 5th.
Paul Brink: On the business development front, we closed the previously announced acquisition of natural gas royalties in the Haynesville and added a number of smaller entries. Incremental Royalty on Pasqualama, and Royalty on Scotty Resources Property in the Golden Triangle, B.C. An increase in the Condestable gold stream in Peru and a silver royalty on Perpetua's Stibnite gold property in Idaho. Our organic growth typically accelerates on the back of higher gold prices. A highlight for the quarter is the success that Agnico Eagle continues to have expanding the Detroit Lake gold body and also the East Gold Eagle body at Canadian Mallard. To wrap up, we have no debt, $2.3 billion in available capital, and an active deal pipeline. I'll hand the call over to Sandip.
Paul Brink: On the business development front, we closed the previously announced acquisition of natural gas royalties in the Haynesville.
Sandip: <unk> added a number of smaller interests.
Sandip: Incremental royalty on Pascua Lama at.
Sandip: Royalty on Scotty resources property in the Golden Triangle BC.
Sandip: An increase to the Qantas stopped lake gold stream in Peru, and a silver royalty on perpetual.
Sandip: It might go property in Idaho.
Sandip: Our organic growth typically accelerates on the back of high gold prices. The highlight for the quarter is the success that agnico Eagle continues to have expanding the detail detour lake ore body.
Sandip: Also the east Goldie ore body at Canadian <unk>.
Sandip: Wrap up we have no debt $2 3 billion in available capital at an active deal pipeline.
Sandip: I hand, the call over to <unk>.
Sandip Rana: Thank you, Paul. Good morning, everyone.
Sandip: Thank you Paul good morning, everyone.
Sandip Rana: As mentioned by Paul our portfolio of assets continued to perform well.
Sandip Rana: As mentioned by Paul, our portfolio of assets continues to perform well, and we're in line with expectations for the first quarter of 2024. With respect to performance in the quarter, on slide four, we highlight the gold equivalent ounces sold for the last five quarters. As you are aware, Cobrake Panama has not contributed any GEOs or revenue for 2024, as it is under preservation and safe management. On the slide, we've highlighted Kobre-Panama separately for prior periods.
Sandip Rana: And were in line with expectations for first quarter 2024.
Sandip Rana: With respect to performance in the quarter on slide four we highlight the gold equivalent ounces sold for the last five quarters.
Sandip Rana: As you are aware cobre, Panama has not contributed any geos or revenue for 2024.
Sandip Rana: It is under preservation and safe management.
Sandip Rana: On the slide we've highlighted Cobra separately for prior periods.
Sandip Rana: Total Geos sold were $122,897 for Q1 2024. This compares to $145,331, for the same period in 2020. All of these precious metal geodes were 93,018 compared to 111,238 in the prior year. However, if Colbray Panama is excluded from prior year comparisons, Precious Metals GOs were actually higher year-over-year at $93,018 versus $82,575. This increase was due to strong contributions from Antipakai, Guadalupe, and Tabica, all of which had strong production in the first quarter of 2024.
Sandip Rana: Total Geos sold for 122897 for Q1 2024. This compares to 145331 for the same period in 2023.
Sandip Rana: Of this precious metal Geos were 93080 compared to 111238 in the prior year.
Sandip Rana: However, if cobra Panama is excluded from prior year comparative precious metals geos were actually higher year over year.
Sandip Rana: 93018 versus 82575 Geos.
Sandip Rana: This increase was due to strong contributions from Andrew Mackay, Guadalupe and <unk>, all of which had strong production in first quarter of 2024.
Sandip Rana: This increase was partially offset by lower geosols for Sudbury due to lower production and still water, which was due to the impact of converting weaker platinum plate in revenue to geosols. In addition, we were delivered approximately 3,000 geosols for Conde Stable, which remain in inventory at the end of the quarter. Announcements were not sold during the first quarter and have subsequently been sold post-quarter. Precious metal geodes represented approximately 76% of total geodes for the core.
Sandip Rana: This increase was partially offset by lower Geos sold for Sudbury due to lower production.
Sandip Rana: Stillwater, which was due to the impact of converting weaker platinum palladium revenue to geos.
Sandip Rana: In addition, we were delivered approximately 3000 geos for Qantas thoughtfully, which remaining inventory at the end of the quarter.
Sandip Rana: <unk> were not sold during first quarter and have subsequently been sold post quarter end.
Sandip Rana: Precious metal deals represented approximately 76% of total yield for the quarter.
Sandip Rana: For diversified GOs, our valet royalty contributed an increase in GOs for the quarter compared to the prior year due to a higher than anticipated royalty payment reflecting higher INR sales during the second half of 2020. As you know, each quarter we make an estimate of what the royalty will be, with the actual amount being announced by Valet in late March and September each year.
Sandip Rana: For a diversified yields our valley royalty contributed to an increase in geos for the quarter compared to prior year due to a higher than anticipated royalty payment, reflecting higher iron ore sales during the second half of 2023.
Sandip Rana: As you know each quarter, we make an estimate of what the royalty will be with the actual amounts being announced by valley in late March and September of each year. As a result, you will see adjustments to revenue twice a year.
Sandip Rana: As a result, you will see adjustments to revenue twice a year, in the first and third quarters. Energy GOs were lower at $21,082 for Q1 compared to $25,952 a year ago. The decrease in GOs is a combination of lower revenue due to weaker natural gas prices and also the impact of converting energy revenue to GOs using higher gold prices. Q1 2024 saw continued movement in average commodity prices. As you can see on slide five, gold and silver prices were higher for the quarter when compared to the prior year. However, platinum, and, in particular, palladium prices were significantly lower year over year, which did negatively impact the conversion of PGM revenues. Oil prices were relatively flat, with natural gas being sharply lower.
Sandip Rana: First and third quarter of each year.
Sandip Rana: And our GT yields were lower at 21082 for Q1 compared to 25952, a year ago the decrease.
Sandip Rana: <unk> is a combination of lower revenue due to weaker natural gas prices, but also the impact of converting LNG revenue yields from the higher gold prices.
Sandip Rana: Q1, 2024 saw continued movement in average commodity prices.
Sandip Rana: As you can see on slide five gold and silver prices were higher for the quarter when compared to prior year. However, platinum and in particular play your prices were significantly lower year over year, which did negatively impact conversion at PJM revenue Ceos.
Sandip Rana: Oil prices were relatively flat with natural gas being sharply lower.
Sandip Rana: Flight 6 highlights our total revenue and adjusted EBITDA amounts for the last five quarters. As you can see from the bar charts, revenue and adjusted EBITDA are lower in Q1 2024 compared to prior quarters. The company recorded $256.8 million in revenue in the first quarter and $216.1 million in adjusted EBITDA. A margin of 84.2% was achieved for the quarter.
Sandip Rana: Slide six highlights our total revenue and adjusted EBITDA amounts for the last five quarters.
Sandip Rana: As you can see from the Bar chart revenue and adjusted EBITDA are lower in Q1 2024 compared to prior quarters.
Sandip Rana: Company reported $256 8 million in revenue in first quarter and $216 1 million adjusted EBITDA.
Sandip Rana: Our margin of 84, 2% was achieved per quarter.
Sandip Rana: The low revenue and adjusted EBITDA are due to less GEO sold during the quarter compared to the prior year. The impact on both revenue and adjusted EBITDA of the lower GEOs was partially offset by higher gold and silver prices. In fact, while GEOs sold are lower by 15% year-over-year, total revenue is lower by 70%. As you turn to slide 7, you'll see the key financial results for the company.
Sandip Rana: The lower revenue and adjusted EBITDA are due to last year or so during the quarter compared to prior year.
Sandip Rana: Impact on both revenue and adjusted EBITDA at the lower Geos was partially offset by higher gold and silver prices.
Sandip Rana: Backlog Geos sold are lower by 15% year over year total revenue was lower by 7%.
Sandip Rana: As you turn to slide seven you will see the key financial results for the company.
Sandip Rana: As mentioned, total GOs were $122,897, generating $256.8 million in revenue and $216.1 million in adjusted EBITDA. On the cost side, we did have a decrease in cost of sales compared to the prior year, as we did not incur the ongoing fixed cost for ounces delivered by Cobrade-Hanifan. Also, cost of sales is dependent on which assets deliver stream ounces, as not all fixed payments per stream are. Depletion decreased to 58.2 million versus 61 million a year ago.
Sandip Rana: Total Geos were 122897 generating $256 8 million in revenue at $216 1 million and adjusted EBITDA on the cost side. We did have a decrease in cost of sales as compared to prior year as we can.
Sandip Rana: Not incurred the ongoing fixed cost per ounce is delivered by Colgate.
Sandip Rana: Also cost of sales that dependent on which assets deliver stream ounces as not all fixed payments per screen are equal.
Sandip Rana: <unk> decreased to $58 2 million versus $61 million a year ago.
Sandip Rana: The decrease in depletion was a combination of no depletion being recorded for Colbray-Panama, being partially offset by higher depletion for Antifa-Chi and the new Haines-Oil-Natric asset. Adjusted net income was $146 million compared to $152.2 million in Q1 2023, and adjusted EPS was $0.76 per share for the quarter, lower by 3.8% versus the prior year. Light 8 highlights the continued diversification of the portfolio. From the charts, you can see that 76% of our first quarter 2024 revenue was generated by precious metals, with the revenue being sourced 83% from the Americas.
Sandip Rana: Greece and depletion with the combination of no depletion being recorded for Cobra, Panama being partially offset by higher depletion for extra cost kind of new Haynesville natural gas acquisition.
Sandip Rana: Adjusted net income was $146 million compared to $152 2 million in Q1, 2023, and adjusted EPS was <unk> 76 per share for the quarter lower by three 8% versus prior year.
Sandip Rana: Slide eight highlights the continued diversification of our portfolio.
Sandip Rana: From the chart you can see that 76 of our first quarter of 2024 revenue was generated by precious metals with revenue being sourced 83% from the Americas.
Sandip Rana: Lloyd Gignac illustrates the strength of our business model to generate high margins. For Q1 2024, the cash cost per GEO, which is essentially the cost of sales, divided by whole equivalent analysis sold, was $273 per GEO. This compares to $263 per GEO in Q1 2023, and margin was approximately $1,800 per ounce in the first quarter. The average gold price was higher by $183 per ounce for Q1 2024 compared to Q1 2023. At the same time, Franco-Nevada's margin was higher by $173 per ounce, or 95% of the global price increase during the same period.
Sandip Rana: Slide nine illustrates the strength of our business model to generate high margins for Q1 2020 for the cash cost per Geo, which.
Sandip Rana: Is essentially cost of sales divided by gold equivalent ounces sold was $273 per deal. This compares to $263 per kilo in Q1 2023.
Sandip Rana: Margin with approximately $800 per ounce first quarter.
Sandip Rana: The average gold price was higher by $183 per ounce for Q1 2024 compared to Q1 2023.
Sandip Rana: At the same time Franco Nevada's margin was higher by $173 per ounce or 95% of the global price increase in the same period.
Sandip Rana: In a rising commodity price environment, we expect to benefit fully, and the cost per geo sold should not increase significantly. The other cost component for the company besides the cost of sales is our corporate administration costs. The Royalty Streaming Business Model is a scalable model.
Sandip Rana: A rising commodity price environment, we expect to benefit fully at the cost per kilo sold should not increase significantly.
Sandip Rana: The other cost component for the company besides cost of sale as our corporate administration costs.
Sandip Rana: The royalty streaming business model is a scalable model our corporate admin costs have increased at a much slower rate than our revenue.
Sandip Rana: Our corporate admin costs have increased at a much lower rate than our revenue. Revenue has increased 9-fold from Q1 2008, while corporate admin costs have increased by 2.5 times over the same period. Management believes we can continue to add to our portfolio and grow our business without adding significant overhead to the company. Earlier this year, we estimated $10 to $15 million in estimated costs for the recovery of the Panama arbitration.
Sandip Rana: Revenues increased nine fold from Q1 2008, while corporate admin costs has increased by two five times for the same period.
Sandip Rana: Management believes we can continue to add to our portfolio and grow our business without adding significant overhead to the company.
Sandip Rana: Earlier this year, we had guided to $10 million to $15 million and estimated cost for the cobre Panama arbitration.
Sandip Rana: In the first quarter, we incurred $1.4 million in costs. We expect the costs to be weighted more towards the second half. And lastly, slide 11 summarizes the financial resources available to the company, including our credit facility of $1 billion. Total available capital at March 31, 2024 is $2.3 billion. Now I'll pass it over to Julie, and we're happy to answer any questions.
Sandip Rana: The first quarter, we incurred $1 4 million in costs, we expect the cost be weighted more towards the second half of the year.
Julie: And lastly, slide 11 summarizes the financial resources available to the company when including our credit facility of $1 billion total available capital as at March 31, 2024 to $2 3 billion.
Sandip Rana: And now I'll pass it over to Julie and we're happy to answer any questions.
Operator: Of course, during this Q&A session, if you'd like to ask a question, simply press star, then the number 1 on your telephone keypad. If you'd like to withdraw your question, please press star 2. If you're joining us on the webcast, please submit your question through the Q&A section of the webcast platform. One moment, please, for your first question. Your first question comes from Brian MacArthur on behalf of Raman James. Please go ahead.
Julie: Of course, this Q&A session, if you'd like to ask a question Press Star then the number one on your telephone keypad. If you would like to withdraw your question. Please press star two if you do.
Operator: Joining us on the webcast. Please submit your question to the Q&A section of the webcast platform.
Brian MacArthur: Please for your first question.
Brian MacArthur: Your first question comes from Brian Macarthur from Raymond James. Please go ahead.
Brian MacArthur: Good morning and thank you for taking my question. You've left guidance for GEOs unchanged, but there are a lot of different assumptions, which you sort of talked about commodity prices moving in the first quarter. I mean, now you have much higher gold price assumptions going forward, and much lower gas prices. My question really is, is there anything on a volume basis that's significantly changed that you're seeing in your portfolio since the beginning of the year?
Brian MacArthur: Good morning, and thank you for taking my question.
Brian MacArthur: You've left guidance of Geo's unchanged, but theres a lot of different assumptions, which you sort of talked about commodity prices moving in the.
Brian MacArthur: First quarter, I mean, now youre much higher gold price assumptions going forward much lower gas prices. My question really is is there anything on a volume basis significantly change that youre seeing in your portfolio since the beginning the year and maybe its oil and gas because gas prices are.
Brian MacArthur: And maybe it's oil and gas because gas prices have gone down. And secondly, it looked like Antecapai, versus what you give on a gold GEO basis, had a pretty good first quarter. But is that sustainable, or does it fall off through the year? It kind of goes into the overall volume question.
Brian MacArthur: I have gone down and secondly, it looked like the pie versus what you'd given a gold geos basis had a pretty good first quarter is that sustainable or does it fall off through the year. It kind of goes into the overall volume question.
Sandip Rana: and energy, from a production volume standpoint, are in line with expectations. So right now, from a production standpoint, they're in line. Obviously, commodity prices are moving around, but we are within our guidance range at this point. With respect to Antipakai, I would expect, or we do expect Antipakai to fall off towards, you know, for the rest of the year and still be within that guidance range we had provided as part of our forecast.
Speaker Change: Thanks for the question, Brian on a production basis, as we said the asset both mining and energy from our production volume basis are in line with expectation. So right now from a production standpoint. They are in line, obviously commodity prices are moving around.
Sandip Rana: But we are within our guidance range at this point.
Sandip Rana: With respect to <unk> I would expect or we do expect that to kind of fall off.
Sandip Rana: Towards for the rest of the year and still be within that guidance range. We provided as part of our year end results.
Brian MacArthur: Thank you. My second question just relates to Condostable and the increase from up to 37.5% and 25%. I assume everything else, the points where it kicks in are all still the same. So it'll be kind of the middle 2030s, or if you can guide when that 30, you see that 25 to 37.5% kicking in, please.
Speaker Change: Thank you my second question just relates to <unk> and the.
Brian MacArthur: Increased from $37, 525% I assume everything else.
Brian MacArthur: The points, where it kicks in are all still the same sort of be kind of middle 2030, or if you can guide when that 30, you see that 25% to 37, 5% tick again please.
Ian: Hi Brian, it's Ian speaking. Good morning. Yes, the change really just relates to the final race, so you wouldn't expect the rest to change meaningfully in the near to medium term.
Brian MacArthur: Hi, Brian It's Ian speaking good morning.
Ian: The change really just relates to the final.
Ian: So we wouldn't expect the.
Ian: The rest two to change meaningfully.
Ian: And that in the near to medium term.
Brian MacArthur: And is the mid 2030s sort of where you see that now kicking up? I just don't have the data on how that's developed since the original deal. Yeah, I don't.
Ian: And is mid 2030 sort of where you see that now kicking up I just don't have the data on how that's developed the original deal.
Ian: Yeah, I don't have that immediately handy, you know, we are fixed deliveries. I think it was for the first five years. Yeah. Those come off, and it goes to a variable percentage in terms of the exact estimate as to when the second variable percentage kicks in.
Speaker Change: Yes, I do.
Brian MacArthur: Don't have that immediately hendi, we are fixed deliveries I think it was for the first five years.
Ian: Those come off and it goes to a variable percentage.
Ian: In terms of the exact estimate as to when those.
Ian: The second variable percentage kicks in.
Speaker Change: I don't have that offhand.
Speaker Change: Unfortunately, we can chat offline.
Brian MacArthur: Great, thank you. Maybe my final question, just Sandip, on the accounting for the taxes on a global basis, can you just review how you're going to do that given when it, you know, technically gets enacted?
Speaker Change: Great. Thank you and maybe my final question just sandeep on the accounting for the taxes on a global basis can you just review, how you're going to do that given when it typically gets enacted.
Sandip Rana: So, right now, it's not enacted in either Barbados or Canada. So, for the foreseeable future, our effective tax rate will be 15%, roughly. But when it is enacted, assuming it's retroactive, there will be an adjustment in that quarter, which we did highlight. It'll be an adjustment to taxes of about $47 million. And, as guided at the end of the year, we expect our effective tax rate to be about 19% going forward.
Sandip Rana: So right now its not enacted neither Barbados.
Sandip Rana: So for the foreseeable future our effective tax rate will be 15% roughly.
Sandip Rana: But when it is enacted.
Sandip Rana: Assuming it's retroactive there will be an adjustment in that quarter.
Sandip Rana: We did highlight it'll be an adjustment to taxes of about $47 million.
Sandip Rana: And as guided at the end of the year, we expect our effective tax rate to be about 19% going forward.
Brian MacArthur: Thank you very much.
Speaker Change: Thank you very much I appreciate it.
Heiko Felix Ihle: Your next question comes from Heiko Ihle from HC Renwright. Please go ahead.
Brian MacArthur: Your next question comes from Heiko Hill from H C. Wainwright. Please go ahead.
Paul Brink: Hey there, thanks for taking my questions. You've made quite a meaningful number of acquisitions here in the last few months. In your intro to the earnings release, you also state that you still have an active steel pipeline. Unsurprising, but still good to hear. Conceptually, are you seeing pricing improvement from sellers of streams that are more willing to negotiate right now? And if so, are you seeing this phenomenon more in mining or more in energy?
Heiko Felix Ihle: Hey, there thanks for taking my questions.
Speaker Change: Hi, Phil.
Paul Brink: You've made quite a meaningful number of acquisitions here over the last few months and Youre ensured that the earnings release you also state that you still have an active deal pipeline unsurprising, but still good to hear.
Paul Brink: Conceptually are you seeing pricing improvement from sellers of streams that are more willing to negotiate right now and if so you've seen this phenomenon more than mining or more in energy.
Heiko Felix Ihle: Hi, it's Paul. I'd say in this environment, probably the main impact is gold prices moving up. Players that have got precious metal byproducts, it's a very attractive environment for them to raise capital through the sale of a precious metal stream. So I'd say that's the predominant trend right now, and that's making for an active deal pipeline.
Paul Brink: Heiko, it's Paul.
Paul Brink: Say, the E&S environment, probably the main impact is with gold prices moving up.
Heiko Felix Ihle: Players that have got.
Heiko Felix Ihle: Precious metal byproducts.
Heiko Felix Ihle: It's a very attractive environment for them to raise capital through the sale of a precious metal stream.
Heiko Felix Ihle: So I'd say, that's the predominant trend right now and Thats, making for an active deal pipeline.
Heiko Felix Ihle: Okay.
Ian: Fair enough. Building on that last question, I mean, with gold prices where they are, inflation levels where they are, has there been a bit of a shift with sellers looking for fixed fees versus a percentage of spot prices as your cash payment, or is it just the same, and they more or less take whatever they can get?
Heiko Felix Ihle: Building on that last question I mean with gold prices, where they are inflation levels, where they are has there been a bit of a shift with sellers looking for fixed fees versus the percentage of spot pricing as you're as you're a cash payment.
Ian: Or is there or is it just to save and they more or less take whatever they can get.
Heiko Felix Ihle: Hi Heiko, it's Ian. Good morning. I would say, generally, the market has shifted towards the percentage in terms of the fee we pay to the seller. Fixed is far less common these days, and I haven't seen any trend there recently other than to kind of maintain that.
Ian: Hi, Heiko, it's Ian.
Ian: Good morning.
Ian: I'd say generally the market has shifted towards a percentage.
Ian: <unk> of the fee, we pay to the seller.
Ian: Fixed is far less common these days I havent seen any.
Ian: Any trends there are recently other than to kind of maintain that.
Heiko Felix Ihle: Fair enough. That's all folks. Thank you guys for your time.
Speaker Change: Fair enough. That's helpful. Thank you guys for your time.
Cosmos Chiu: Your next question comes from Cosmos Chiu from CIBC. Please go ahead.
Heiko Felix Ihle: Your next question comes from Cosmos <unk> from CIBC. Please go ahead.
Cosmos Chiu: Thanks Paul, Sandeep, and team. Maybe my first question is on Panama. As you know, the election is coming up this weekend on May 5th. Is this something that you're watching closely? Any variables that you might be watching for? And you know, do you see a potential outcome that could impact Franco-Nevada in the near term? Or is it really a longer-term sort of event?
Cosmos Chiu: Thanks, Paul Sandeep and team.
Cosmos Chiu: My first question is on Panama.
Cosmos Chiu: As you know the elections coming up this weekend on May 5th is this something that you're watching closely any variables that you might be watching for.
Cosmos Chiu: Do you see a potential I'll come back could impact Franco Nevada in the near term or is it really a longer term sort of adventure.
Paul Brink: Cosmos, yes, we're working closely in the lead up to the election, and no surprise, you know, given what happened in the country and the populist sentiment against mining and against the mine. I'd say all the candidates have been quite circumspect in terms of commenting on, you know, what their approach might be. We're hopeful that with a new government in place, there can be a new dialogue, and I'm sure that First Quantum will be engaging with whoever that is. There is a way to find a way to...
Cosmos Chiu: Cosmos, yes.
Paul Brink: We're watching it closely.
Paul Brink: In the lead up to the election and no surprise given given what happened in the country and the popular sentiment against mining it against the mine.
Paul Brink: I would say all of the candidates being quite circumspect in terms of commenting on what their approach might be.
Paul Brink: Okay.
Paul Brink: The.
Paul Brink: But so we're hopeful that with a new government in place.
Paul Brink: But they can be in a new dialogue.
Paul Brink: I am sure that first quantum will be engaging with whoever that is.
Paul Brink: Let's see.
Paul Brink: There is a route.
Paul Brink: To find a way to reopen the line.
Cosmos Chiu: Of course, thank you. And going to your financial statements here, I noticed that your finance income, $16 million, has increased quite a bit year over year and quarter over quarter as well. I just want to make sure, is that just due to the G mining term loan? And if that's the case, what else? What else is there?
Speaker Change: Of course, thank you.
Paul Brink: And.
Cosmos Chiu: Going to your financial statements you I noticed that your finance income $16 million has increased quite a bit year over year and quarter over quarter as well I just wanted to make sure is that just due to the G mining term loan and if thats the case what else what else is in there.
Sandip Rana: So Cosmos, the interest income is in two places on the financials this quarter. Up in revenue, you'll see interest income that relates to actual interest on the G-Mining loan as well as the STINA kind of verbal note that we did at the end of last year. So any loans we've made up, that interest income is up in revenue now. And it was about $1.2 million for the quarter. The finance income you're referring to, the $16 million, that is the interest we're earning on our cash balance. Transcribed by https://otter.ai
Cosmos Chiu: So cosmos the interest income in two places on the financials this quarter.
Cosmos Chiu: Okay, okay. And is there a reason why you separate those two or just really account for them?
Sandip Rana: You will see interest income not relates to actual interest on the G mining loan as well as the scanner.
Cosmos Chiu: I will note that we did at the end of last year.
Cosmos Chiu: And any loans, we've made up that interest income is helping revenue now.
Speaker Change: It was about $1 2 million for the quarter.
Cosmos Chiu: Finance income you're referring to the $60 million that is the interest were earning on our cash balance.
Speaker Change: Okay, Okay and is there a reason why you separate those two just really accounting.
Sandip Rana: It's all accounting and technical-related. The loan interest, because it's related to mining assets, is up in revenue, and we intend to do more debt-like structures going forward. So we've included that up top.
Speaker Change: It's all accounting technical related.
Sandip Rana: The loan interest because it's related to mining.
Sandip Rana: Mining assets and revenue and we intend to do more debt like structures going forward.
Sandip Rana: We've included that up Tom.
Cosmos Chiu: Okay, sounds good. And then maybe one last question on the accounting side as well. I know Brian asked it earlier in terms of the global minimum taxes, but it sounds like now Barbados has its own legislation, and Canada also has its own sort of legislation that's going through. Is there a situation where, in terms of timing, when the legislation of two countries is being enacted, is there a chance that things can get really complicated later on if they're enacted at different times, different quarters? Or is that something that we don't really need to worry about?
Speaker Change: Okay sounds good and then maybe one last question again on the accounting side as well.
Cosmos Chiu: I don't know Brian asked it earlier in terms of the global minimum taxes.
Cosmos Chiu: Sounds like now Barbados Huntsville legislation.
Cosmos Chiu: Canada also has jill sort of legislation thats going through is there a situation where in terms of timing when legislation that two countries are being enacted.
Cosmos Chiu: Chance that things can get really complicated later on if they're enacted.
Cosmos Chiu: At different times different quarters or is that something that we don't really need to worry about.
Sandip Rana: So, our understanding right now is that neither one has enacted the laws. Barbados' effective tax rate will be 15% going forward once the law is enacted. But our understanding is it's contingent on Canada implementing the GMT. So they should both come into play at the same time, but obviously, we'll have to wait and see. Okay, great.
Cosmos Chiu: So our understanding right now neither one has enacted laws.
Sandip Rana: Our beta was effective tax rate will be 15% going forward. Once the law is enacted but our understanding it's contingent on Canada implementing the GMT.
Sandip Rana: Yes.
Sandip Rana: Should both come into play at the same time, but obviously, we'll have to wait and see.
Sandip Rana: Okay great.
Cosmos Chiu: Great. Thanks. Thanks, Sandeepa and Paul.
Speaker Change: Thanks, Sandeep and Paul does all the questions.
Tanya M. Jakusconek: Your next question comes from Tanya Jakusconek from Scotiabank. Please go ahead.
Cosmos Chiu: Your next question comes from Tanya <unk> from Scotiabank. Please go ahead.
Tanya M. Jakusconek: Good morning, everybody. Some of my questions have been answered, but I've got to come back to just Hamlow, Sandip. How should we be thinking of this royalty? Because this one's always quite variable. What guidance can you give us for the year?
Tanya M. Jakusconek: Good morning, everybody and some of my questions have been.
Tanya M. Jakusconek: Answered that.
Tanya M. Jakusconek: But I've got to come back to just the hemlo Sandy.
Tanya M. Jakusconek: How should we be thinking of that.
Tanya M. Jakusconek: Royalty because thats when bill is quite variable what guidance can you give us for the year.
Sandip Rana: Tanya, you know, it was lower than I expected in Q1 considering where commodity prices were and I think for Barrick's release yesterday they had higher costs. So you know, going forward, I think we stick with what we had guided or as part of our year-end guidance. It's probably going to be at this stage, similar to last year, but we'll have to see how the year-end plans work.
Tanya M. Jakusconek: Okay.
Sandip Rana: It was lower than I expected in Q1, considering where commodity prices were and I think per barrick's release yesterday, they had higher costs.
Sandip Rana: So going forward I think we stick with what we had guided or as part of our year end guidance.
Sandip Rana: We are going to be at this stage similar to last year.
Sandip Rana: And we'll have to see how the year unfolds.
Tanya M. Jakusconek: Okay, and then for my mine waste solution, we're getting to the cap, so that would imply the rest of the year being a bit lower, would that seem fair?
Tanya: Okay, and then for Mike mine waste solution that we're getting to the cap so that would imply the rest of the year a bit lower with that theme.
Sandip Rana: Yeah, so we do anticipate reaching the cap in Q4 this year, depending upon how the next two quarters play out. It could be early in the year.
Tanya M. Jakusconek: Sure.
Tanya: Yes, so we do anticipate the reach the cap.
Sandip Rana: In Q4 this year, depending upon how the next two quarters play out it could be early in Q4.
Tanya M. Jakusconek: Okay. No, that's what we have as well. And then as we look at the year, You know, with everything said and done, and I appreciate a lot of variability, but should we be thinking that, you know, a slightly better second half with some of the new minds coming in, and can you just remind me for Q2 and Q3 when the new contributions are coming in? So, you know, first, a stronger second half, should we be thinking like 52, 53% of GEOs? And then the new minds, if you can remind me who's coming in Q2, Q3.
Sandip Rana: Okay.
Sandip Rana: That's what we have as well and then as we look at the year.
Tanya M. Jakusconek: With everything said and done I appreciate a lot of variability, but should we be thinking that a slightly better second half with some of the new mines coming in and can you just remind me.
Tanya M. Jakusconek: For Q2 and Q3 when the when the new contributions are coming in.
Tanya M. Jakusconek: No.
Tanya M. Jakusconek: Bruce stronger second half should we be thinking like 50, 253% of Geos and then the new mines. If you can remind me what who's coming in Q2 Q3.
Sandip Rana: Sure, yes, so we do expect a stronger second half, and that's just because, as you said, the new mines will be online. In Q2, you know, Greenstone is pouring, sorry, yes, Equinox is pouring the first gold for Greenstone. And second quarter, Solaris Norte tokens in Neo4j mining are Q3. I don't have the specific split as to whether it's, you know, 52, 48, or what have you, but definitely a stronger second half.
Speaker Change: Sure, Yes, so we do expect a stronger second half and not just because as you said the new mines will be online.
Sandip Rana: Q2, greenstone is pouring I'm sorry, yes.
Sandip Rana: Equinox is pouring first gold for greenstone.
Sandip Rana: Second quarter, Soliris, North Te <unk> mining as Q3.
Sandip Rana: I don't have the specific split as to whether it's 50 248 or what have you.
Sandip Rana: But.
Sandip Rana: Definitely a stronger second half.
Tanya M. Jakusconek: Okay, so that's helpful. I just want to make sure because, production, I mean, you get paid exactly when they start producing. There's no deferral. It's not from my understanding, even if they're non-commercial.
Sandip Rana: Okay.
Speaker Change: Helpful. I, just want to make sure because production I mean, you get paid exactly when they start producing.
Tanya M. Jakusconek: Note that far off.
Tanya M. Jakusconek: From my understanding.
Tanya M. Jakusconek: Non commercial.
Sandip Rana: Yeah, so on royalties, we accrue revenue if ounces have been produced or entitled to it. So we will accrue revenue even if we haven't been paid, but we will.
Tanya M. Jakusconek: Yes, so on the royalties we accrue the revenue of the ounces have been produced were entitled to it. So we will accrue even if we haven't been paid but we will accrue.
Tanya M. Jakusconek: Okay, perfect. And then just on the environment, Paul, you mentioned that what you're seeing right now is mainly streams on non-gold assets for precious metals, so base metal producers. Can you just, you know, come back and verify that we're looking at that sort of like 100 to 300 million range? Is that still the range that you're thinking about for these streams?
Sandip Rana: Okay Perfect and then just on the environment I think Paul you mentioned that Tom what Youre seeing right now is mainly <unk>.
Tanya M. Jakusconek: Dreams on non gold assets.
Tanya M. Jakusconek: This model so base metal producers.
Tanya M. Jakusconek: Can you just come back and verify that we're looking at that sort of like $100 million to $300 million range is that still the range.
Tanya M. Jakusconek: You're thinking about for the screen.
Tanya M. Jakusconek: I'm going to hand that over to Ian, Tanya. Sorry, Ian.
Tanya M. Jakusconek: I'm going to hand that over to again Tanya.
Ian: Sorry, Ian. Sorry. Yeah. Morning, Tanya.
Ian: Im sorry, Im sorry, yes.
Ian: Good morning, Tanya. Good question. As Paul noted, it's an active pipeline. It's been evolving over the course of the year so far. I'd say, generally, the size has scaled up a bit. You know, beyond 300, you're seeing more potential for larger transactions as well.
Ian: Thanks, Ed.
Ian: Good question.
Ian: As Paul noted to the active pipeline its been evolving over the course of the year. So far I would say generally the size has scaled up a bit.
Ian: Beyond 300 were seeing more.
Ian: Cancel for larger transactions as well.
Ian: We are quite encouraged by that.
Ian: Sure.
Tanya M. Jakusconek: And when you say larger transaction, are we talking about over 500 million or still under five?
Speaker Change: And when you say larger transaction that we are talking in over 500 million or so under five.
Ian: There are transactions at the 500 and above level that are possible, so that's perhaps a bit of a change versus the last time we spoke. There still are smaller transactions, and as Paul said, by-product transactions are more common than they were. That said, with capital still constrained to the gold space, with gold producers, I think there's still decent latitude to transact.
Tanya M. Jakusconek: There are transactions at the 500 and above levels that are possible.
Ian: No.
Ian: Perhaps a bit of a change.
Ian: The last time, we spoke for steel are smaller transactions and as Paul said.
Ian: Byproduct transactions are more common than they were.
Ian: With the capital so constrained in the gold space.
Ian: With gold producers I think there's there's still decent latitude to transact.
Tanya M. Jakusconek: I would assume, Ian, with the higher gold price, for gold producers that would want to put some sort of royalty or stream on their gold assets, with this higher gold price, their overall view of their valuation has gone up. Would that be a fair statement to say? Uh, yes.
Ian: I would assume even with the higher gold price.
Tanya M. Jakusconek: Oil producers that would want to put some sort of royalty or stream on our gold assets.
Tanya M. Jakusconek: This higher gold price their overall view on their valuation has gone up with that be a fair statement to say.
Ian: Yes, I think so. By-products, precious metals producers probably also have a similarly elevated view. I'll have to take a balanced view on the gold price, but certainly constructive on that as well.
Ian: Yes, I think so.
Ian: Byproduct precious metals producers, probably also have a similar elevated view of losses.
Ian: A balanced view on gold price.
Ian: Certainly constructive on that as well.
Tanya M. Jakusconek: Okay. And then Ian, maybe just on the, I know in your investor day, I think it was Paul that mentioned that you, you know, are looking at lithium. Central Transaction and other non-gold transactions. Can you just comment on where you stand on that? Whether, you know, we're still, you know, those are in the pipeline and whether we can see those in 2024 or is the focus still gold ahead of these non-golds?
Ian: Okay, and then maybe just on the I know in your Investor Day, I think what Paul that mentioned that you are.
Tanya M. Jakusconek: Looking at lithium.
Ian: Potential transaction and other non gold transactions can you just comment on where you are on that.
Tanya M. Jakusconek: Sure.
Tanya M. Jakusconek: Bill.
Ian: So was there in the pipeline and whether we can see those in 2024 or is the focus still gold ahead of these non bullock.
Jason: Hi Tanya, it's Jason speaking. I would say that the focus is still on gold. I think that's where we spend the majority of our time. That said, there are a lot of opportunities in, you know, many different commodities right now. Lithium is one that is interesting to us, just given where we are in the price cycle. There's obviously been a significant pullback in the lithium price, which has created a bit of a challenge for developers looking to finance new mines.
Speaker Change: Hi, Jason.
Ian: I would say that the focus <unk> I think that's where we spend the majority of our time.
Jason: That said there are a lot of opportunities in many different commodities right. Now lithium is one that is interesting to us just given where we are in the price cycle Theres, obviously been a significant pullback in the lithium price, which has created a bit of a challenge for developers looking to finance new mines and so there is.
Jason: And so there is, as a consequence, potentially a role there for us to play a part. And so it's something that we're spending time on. And, you know, we may be active this year. It just depends on the opportunities that are in front of us.
Jason: As a consequence potentially a role there for us to play a part.
Jason: And so that's something that we're spending time on.
Jason: We may be active this year depends on the opportunities that are in front of us.
Tanya M. Jakusconek: And what size would those opportunities be in JCPenney?
Tanya: And what size of those opportunities be and Jason.
Jason: It's a range. I think probably the sweet spot for us would be $50 to maybe up to $300-$400 million if we did something very sizable.
Tanya M. Jakusconek: It's a range I think.
Jason: Probably the sweet spot for us would be 52.
Jason: Maybe up to $3 $400 million, if we did something very sizable.
Tanya M. Jakusconek: And my last question, if I could, just on uranium. We've seen, you know, volatility in that space as well. Anything in terms of looking at uranium for you guys?
Speaker Change: Okay and my last question, if I could just on uranium we've seen.
Speaker Change: I'll, let kelly the in App as well.
Tanya M. Jakusconek: In terms of looking at uranium for you guys.
Jason: We do look at uranium from time to time. There aren't as many assets available for us to participate in. There's a couple that we keep our eye on, but it's not something that we're spending a lot of time on, despite the change in commodity price.
Tanya M. Jakusconek: We do look at uranium from time to time, there arent as many assets available for us to participate in theirs.
Jason: Paul that we keep our eye on but it's not something that we're spending a lot of time on risk.
Jason: Despite the change in commodity price.
Tanya M. Jakusconek: Okay, I'll leave it for someone else to ask questions, and I really appreciate you answering my questions. Thank you.
Speaker Change: Okay I appreciate that I'll leave it for someone else to ask questions and really appreciate you answering my questions. Thank you.
Tanya M. Jakusconek: Yes.
John Charles Tumazos: Your next question comes from John Tumazos from John Tumazos's Very Independent Research. Please go ahead.
Tanya M. Jakusconek: Your next question comes from John Tumazos from John Tumazos, very independent research. Please go ahead.
John Charles Tumazos: Thank you very much. You know, it's always hard to figure out How to Value Things. Presumably, Franco, as you approach new transactions, values them at the spot gold price, or today $2,300-ish. And then you put a...
John Charles Tumazos: Thank you very much.
John Charles Tumazos: Well, it's always hard to figure out.
John Charles Tumazos: Yeah.
John Charles Tumazos: How does value things.
John Charles Tumazos: Presumably Frank as you approach new transactions.
John Charles Tumazos: Values them at the spot gold price for 'twenty 300 ish.
Speaker Change: And then you put up.
John Charles Tumazos: Capitalization rate based on the mine life and quality, and maybe that would have been eight or ten times revenue for a simple royalty, adjusting for how much money is streaming in. The gold stocks are actually a little bit lower, even though gold is higher. And now there's a minimum tax rate, which clips your return a little bit. Do you think it's fair to assume that, given the valuation of gold stocks and tax status, not only at Franco but your peers as well? You'd be capitalizing revenue at a lower rate going forward, then you might have a couple years. Also, interest rates are higher. That's another reason.
Speaker Change: <unk> rate based on the mine life and quality.
John Charles Tumazos: And maybe that would have been eight or 10 times revenue for simple royalty.
John Charles Tumazos: Adjusting for how much in the money the stream is.
John Charles Tumazos: The gold stocks are actually a little bit lower even though gold is higher.
John Charles Tumazos: And now there is.
John Charles Tumazos: Minimum tax rate, which clips your return a little bit.
John Charles Tumazos: So is it fair to assume that.
John Charles Tumazos: Given the valuation of gold stocks.
John Charles Tumazos: That is not only a franco but your peers as well.
John Charles Tumazos: The.
John Charles Tumazos: You'd be capitalizing revenue.
John Charles Tumazos: Lower rate going forward.
John Charles Tumazos: Oh.
John Charles Tumazos: And you might have a couple of years ago.
John Charles Tumazos: Also interest rates are higher that's another factor excuse me.
Paul Brink: John, it's Paul. There's a lot of ink in there. On one thing, anytime we're looking at a property, it's less commodity prices; it's more figuring out, you know, what are we comfortable with there? Happy to pry, happy to pay a fulsome price. For what we're comfortable with, we'll get produced and then want to participate in the upside, and it's really, you know, getting the calls right and being able to participate in the upside that, you know, generally has the greatest impact on our terms.
Paul Brink: John It's Paul.
John Charles Tumazos: A lot of things in there.
Paul Brink: Sure.
Paul Brink: One thing anytime we're looking at our properties.
Paul Brink: So commodity prices, it's more figuring out what are we comfortable is there.
Paul Brink: Happy to pry happy to pay a fulsome price.
Paul Brink: For what we're comfortable we'll get produced and then want to participate in the upside and it's really getting the calls right and being able to participate in the upside.
Paul Brink: Generally has the greatest impact on our returns.
Paul Brink: So the vast majority of our work, though, is figuring out what we're comfortable with getting produced. You know, particularly when you're looking at development projects, it's sometimes W is less than what you can see in reserves, sometimes it's far more.
Paul Brink: So the vast majority of our work, though is figuring out what are we comfortable will get produced.
Paul Brink: Particularly when you're looking at development projects.
Paul Brink: <unk> is less than what you can see in reserve, sometimes it's far more.
Paul Brink: That's by far the biggest determinant in terms of commodity prices. We're trying to price deals in the context of the market. You know, the trick is you don't want to get caught when prices run up sharply and paying peak prices, and on the other hand you know when the market turns down that's really where you want to get your deals done you don't want to get caught up uh... using bear market prices because you're on the valley everything so it's, In a sense, it's trying to take a longer-term view of prices regardless of where the market has moved in the time.
Paul Brink: That's by far the biggest determinant in terms of commodity prices were.
Paul Brink: We're trying to price deals in the context of the market.
Paul Brink: The trick is you don't want to get caught when prices run up sharply and paying peak prices.
Paul Brink: And on the other hand, when the market turns down Thats really where you want to get these deals done.
Paul Brink: You don't want to get caught up.
Paul Brink: Using bear market prices, because you undervalue everything so.
Paul Brink: In a sense.
Paul Brink: Trying to take a longer term view of prices, regardless of where the market has moved to in the time.
Paul Brink: Um, on, you know, on your last comment in terms of rates, and how do we think about rates? We think of them as a bit of a competitive advantage, and the competitive advantage is that we don't have much debt. So with so many parties, their cost of capital is moving up and down with their cost of debt. But we don't really have that. So we think it's an advantage. We can make deals in the market.
Speaker Change: And you're right.
Paul Brink: Last comment in terms of rates and how do we think about rates.
Paul Brink: The.
Paul Brink: Think of it as a bit of a competitive advantage and the competitive advantages. We don't have much debt. So with so many parties of their cost of capital is moving up and down with their cost of debt. We don't really have that so we think it's an advantage. We can do deals in the market and we can extend capital to people at a more consistent rate.
Paul Brink: We can extend capital to people at a more consistent rate than other players over time. And, you know, particularly when other folks are forced to use a higher cost of capital, we don't have to, and I think that's a bit of a competitive advantage.
Paul Brink: And other players over time.
Paul Brink: And.
Paul Brink: So, particularly when other folks are forced to use a higher cost of capital. We don't have to and I think that's a bit of a competitive advantage.
Speaker Change: Thank you.
Tanya M. Jakusconek: Your next question comes from Tanya Jakusconek from Scotiabank. Please go ahead.
Paul Brink: Your next question comes from Tanya <unk> from Scotiabank. Please go ahead.
Tanya M. Jakusconek: Good morning again. Sorry, I forgot to ask you about COBRE Panama. I know Cosmos asked about it, the election happening on May 5th, but can you just review it for us? When do the parties actually get into office? Are we talking like, you know, July-ish or thereabouts? And, you know, once they get into office, are we expecting more clarity? So maybe just a bit of a timeframe for us on getting some news out on COBRE Panama.
Tanya M. Jakusconek: Okay. Good morning, again, sorry, I forgot to ask about Cobra Pan line No Cosmos asked about it.
Tanya M. Jakusconek: <unk> happening on May 5th, but can you just review for US when did the parties actually then get into office.
Tanya M. Jakusconek: Talking like July ish or thereabouts.
Tanya M. Jakusconek: Once they get into office, we expect more clarity so maybe just a bit of a timeframe for us on getting some news out on cobre Panama.
Paul Brink: Tanya, you're exactly right. Elections are coming up now, but the actual official change of government will only happen in July, so that's the first time that they're in a position of power. It doesn't mean that you can't have dialogue with them before that, but to your point, you know, I don't expect any news or any direction on Cobrae until later.
Tanya M. Jakusconek: Tony Youre exactly right elections coming up now.
Paul Brink: But the actual official change of government will only happen in July.
Paul Brink: The first time that they could.
Paul Brink: They are in a position of power.
Paul Brink: <unk>.
Paul Brink: The.
Paul Brink: It doesn't mean that you saw and have dialogue with them for that.
Paul Brink: But to your point.
Paul Brink: Don't expect.
Paul Brink: Any news any direction on Cobra until later in the summer.
Tanya M. Jakusconek: Okay, well that's very helpful because you know we may be all waiting Saturday, Sunday night, and then you know Monday morning thinking something might be said, but realistically, it's probably not.
Speaker Change: Okay. No. That's very helpful. Because we may be I'll be waiting Saturday and Sunday night and then.
Tanya M. Jakusconek: Monday morning, thinking something might be said, but probably realistically.
Tanya M. Jakusconek: Probably not until the end of the summer.
Paul Brink: We hope for it to happen sooner, but you've got to be realistic.
Tanya M. Jakusconek: Okay.
Speaker Change: But you got to be realistic yeah I appreciate that yes. Thank you so much and good luck.
Tanya M. Jakusconek: Yeah, I appreciate that. Yeah, thank you so much and good luck.
Speaker Change: Thank you.
Candida Hayden: There are no further questions on the phone line. I will now turn the Q&A session over to Candida Hayden, who will take questions from the webcast.
Speaker Change: There are no further question on the phone line I will now the Q&A session over to Ken Duda Hayden, we will take questions from the webcast.
Candida Hayden: Thank you, Julie. Our first question comes from Dipankar Nayak. Do you plan to do any share buybacks in 2024?
Candida Hayden: Thank you Julie our first question comes from Japan, Curt <unk> do you plan to do any share buybacks in 2024.
Unknown Executive: Thanks for the question. We do have a large cash balance on our balance sheet, but our number one priority is to add assets to the portfolio. You know, it comes down to what's the best use of a dollar and for us to continue to add assets. So no, we don't intend to do a share buy.
Candida Hayden: Thanks for the question.
Unknown Executive: We do have a large cash balance on our balance sheet.
Unknown Executive: But our number one priority is to add assets to the portfolio.
Unknown Executive: Comes down to what's the best use of a dollar and for us to continue to add assets.
Unknown Executive: So now we don't intend to do a share buyback.
Unknown Executive: Your second question also comes from Dipankar Nayak. Do you have any option of storing physical gold, assuming the price would go up in the medium term?
Unknown Executive: Your second question also comes from <unk> do you have any option of storing physical opco, assuming price would go up in the medium term.
Unknown Executive: Sure.
Unknown Executive: We do have the option. It comes down to streams versus royalties. Streams, we do get physical credits of precious metals to Franco-Nevada, but for accounting to book revenue, we have to sell that metal, so that's what we do on a quarterly basis. There are some royalties that we actually do receive in kind, and so at any given time, we have roughly 20,000 to 25,000 ounces of gold on our account held in various refineries around the world, but there's no plan to increase that level at this stage.
Unknown Executive: And we do have the option.
Unknown Executive: It comes down to streams versus royalties.
Unknown Executive: Dreams, we do get physical credits precious metals.
Unknown Executive: Franco Nevada.
Unknown Executive: For accounting to book revenue, we have to sell that metals. So thats, what we do on a quarterly basis.
Unknown Executive: There are some royalties that we actually do receive in kind and so on.
Unknown Executive: Any given time, we have roughly 20% to 25000 ounces of gold to our account health and various refineries around the world.
Unknown Executive: But.
Unknown Executive: There is no plan to increase that level at this stage.
Lloyd Hyunsoo Hong: The next question comes from Diego Hermitera from Noster Capital Management. What are the next steps to consider in the Cobre-Patamal arbitration, and can the election have any impact on the process of arbitration?
Speaker Change: Next question comes from Diego Terminal Tara roster capital management, what are the next steps to consider in the Cobra Panama arbitration.
Diego Hermitera: And can be election have any impact on the process of arbitration.
Lloyd Hyunsoo Hong: Thanks for the question, Diego. It's Lloyd Hong.
Lloyd Hyunsoo Hong: Thanks for the question Diego, It's Lloyd Hog.
Lloyd Hyunsoo Hong: In terms of the next steps, as we previously disclosed, we filed a Notice of Intent to initiate arbitration. The next step following that would be to actually file a request for arbitration, which would formally kick that off. In terms of the election process, as Paul mentioned, I mean, we hope the people will be able to engage in a constructive dialogue with the new government once it's elected, which could lead to the potential restart of the mine. Obviously, that would impact whether the arbitration proceeding or not.
Lloyd Hyunsoo Hong: Are the next steps as we previously disclosed we have filed a notice of intent to initiate arbitration.
Lloyd Hyunsoo Hong: And the next step following that would be to actually file a request for arbitration will formally kick that off.
Lloyd Hyunsoo Hong: In terms of the election process as Paul has mentioned I mean, we are we hope for.
Lloyd Hyunsoo Hong: The first one will be able to engage in constructive dialogue with the new government would want to selected.
Lloyd Hyunsoo Hong: Lead to the potential restart of the mine.
Lloyd Hyunsoo Hong: And that would impact whether the arbitration procedure.
Speaker Change: Thank you.
Unknown Executive: The next question comes from Bernie Pichie at Palisade Capital. BHB's interest in acquiring Anglo makes me wonder if Franco-Nevada has opportunities in the current mining industry M&A environment, although knowing this has not been your traditional area of opportunity.
Speaker Change: Your next question comes from Berny Picchi Palisade capital.
Unknown Executive: <unk> interest in acquiring.
Unknown Executive: Anglo makes me Wonder if Franco Nevada has opportunities in the current mining industry M&A environment.
Unknown Executive: Knowing this is no it does.
Unknown Executive: <unk> not been your traditional area of opportunity.
Unknown Executive: Thanks for the question. I would say, you know, that when I saw that potential acquisition, my first thought was that it's a huge positive for the copper price. If BHP is acquiring assets rather than building assets, it doesn't add to the world's copper supply, so I'm not surprised to see that the copper price is running up on the back of it. You know, could there be assets that come out of that that would create some deal activity for us, you know, possibly?
Bernie Picchi: Thanks for the question.
Unknown Executive: I would say.
Unknown Executive: When I saw that potential acquisition. My first thought is thats a huge positive for copper price.
Unknown Executive: BHP is acquiring assets.
Unknown Executive: Robin building assets it.
Unknown Executive: It doesn't add to the world's copper supply so.
Unknown Executive: Not surprised to see that the copper prices is running up on the back of it.
Unknown Executive: Could there be assets that come out of that.
Unknown Executive: B create some deal activity for us possibly.
Unknown Executive: More actionable, though, is a transaction that's already happened, and that's Newmont acquiring Newcrest. They've announced that there are asset sales that they are doing. I think there should be some options. The Bulletproof Executive, 2013
Unknown Executive: More actionable, though in us.
Unknown Executive: Transaction, that's already happened and Thats newmont acquiring new quest.
Unknown Executive: They have announced that they are asset sales that they are doing so.
Unknown Executive: I think there should be some opportunities that come out of that M&A process.
Candida Hayden: Thank you. There are no further questions from the webcast. This concludes our first quarter results conference call and webcast. We expect to release our second quarter 2024 results after market close on August 13th, with a conference call held the following morning. Thank you for your interest in Franco-Nevada. Goodbye.
Speaker Change: Thank you there are no further questions from the webcast. This concludes our first quarter results conference call and webcast. We expect to release, our second quarter 2024 results. After market close on August 13th with a conference call held the following morning. Thank you for your interest in Franco Nevada Goodbye.
Candida Hayden: Okay.
Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.
Speaker Change: Ladies and gentlemen. This concludes today's conference call you may now disconnect. Thank you.
Operator: [music].