Q1 2024 Triple Flag Precious Metals Corp Earnings Call
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Speaker Change: I would now like to turn the conference over to Sean Smith, Chief Executive Officer. Please go ahead.
Sean Smith: Thanks Gerrick.
Sean Smith: Good morning, everyone and thank you for joining us to discuss Triple flags first quarter of 2020 full results.
Sean Smith: Today I'm pleased to be joined by our CFO Sheldon vendor Koi.
Sean Smith: And for the first time, our director of mining James <unk>, who will join us for the Q&A portion of the call James as a mining engineer and is responsible for portfolio management and supports technical diligence that triple flag as a background tens is over 20 years of experience across mine sites head offices in consulting.
Sean Smith: Recently has hit a candidate mining plus.
Triple flag achieved a new quarterly sales record to start the year with sales of roughly 28000 gold equivalent ounces, resulting in $48 million of EBITDA during the quarter.
Sean Smith: The strong performance has positioned us well to achieve our 2000 2040 year sales guidance of 105 to 115000 ounces.
Sean Smith: Most notably in line with our guidance for a stronger 2024 due to higher gold grades from the <unk> 31 open pits at North Park.
Sean Smith: Our flagship asset delivered a nearly 90% increase in <unk> sales quarter on quarter.
Sean Smith: We continue to expect these pits to deliver high grade through at least 2024, and 2025 and look forward to a feasibility study for the <unk> 'twenty two underground ore body, which our partner evolution expects to complete by the end of Q2 of this year.
Sean Smith: <unk> two is expected to represent another source of high grade gold ore at North Pax in the medium to long term.
Sean Smith: In March of 2024, we surface further value from the Mavericks portfolio with the settlement agreement reached with Coeur mining on the Kensington NSO royalty, which has commenced paying that will be discussed later in the presentation.
Sean Smith: Finally, I'd be remiss not to mention the current favorable precious metals price environment, which on the back of sustained central bank buying Chinese retail purchases and seemingly never ending geopolitical uncertainty has remained at near record levels for gold prices and solid silver prices.
Sean Smith: It's been a great time to have continued meaningful <unk> growth in our portfolio coincide with a period of strong price support.
We expect to deliver our eighth consecutive year of record sales in 2024 and with the first quarter of high grade growth from North Parks now achieved we look forward to the prospect of continued higher gold and silver prices on our portfolio cash flow per share.
Sean Smith: I'll now turn it over to Sheldon to discuss our financials for the first quarter of the year.
Sheldon Koi: Thank you Sean.
Sheldon Koi: As noted we had a strong first quarter with the portfolio producing just under 28000, Geos, which puts triple flag right on track to achieve our 2020 for guidance.
Sheldon Koi: As expected North parks in Cerro Lindo, the two largest contributors to Q1 production with North park, showing year over year growth due to the higher gold grades realized.
Sheldon Koi: In Q1, we also recorded our first revenues from the Kensington royalty, which we acquired as part of the Mavericks portfolio.
Sheldon Koi: The strong Q1 production and a record quarterly gold price resulted in record levels of revenue and adjusted EBITDA significantly higher than the prior year period.
Sheldon Koi: Operating cash flow per share is the metric that I am most focused on.
Sheldon Koi: Our operating cash flow before working capital and taxes increased over 22% as compared to the prior year period.
Sheldon Koi: But at the short term timing matter, our working capital increased by $6 5 million in Q1, resulting in bottom line operating cash flow in the quarter that was unchanged from the prior year.
Typically our adjusted EBITDA and our operating cash flow tracks quite closely and I expect that this will continue to be the case for 2024 as a whole as the shorter term working capital changes reverse.
Sheldon Koi: For 2024, we are well positioned to drive increases in operating cash flow per share as we are realizing higher production levels from our existing portfolio and the higher gold prices translating into increased cash flows.
Sheldon Koi: In Q1, the gold price averaged $2070 per ounce a quarterly record.
Sheldon Koi: But in Q2 to date, the gold prices averaged over $2300 an ounce a significant increase over Q1.
Sheldon Koi: We grow we view a growing dividend as a core part of our capital allocation strategy and this quarter. Our dividend has been maintained at 21 on an annualized basis I'm proud that we have increased our dividend every year since our IPO, we will continue to assess the potential for further increases going forward.
Sheldon Koi: In addition to our dividend, we also returned over $3 $5 million to shareholders via share buybacks in Q1.
Sheldon Koi: Last I'd like to comment on our balance sheet, we exited the quarter with net debt of just $30 million or less than one quarter of cash flow a clean balance sheet robust cash flows and our revolving credit facility of over $500 million gives us the financial capacity to deploy capital to drive further growth for the benefit of shareholders.
Sheldon Koi: Going to the next slide.
Sheldon Koi: We continue to highlight three key aspects of our investment thesis, namely asset diversification precious metals focus in our portfolio, which is predominantly centered in Australia and the Americas.
Speaker Change: Our asset diversification is well understood. So continuing on sean's earlier comment about a strong precious metals environment I would like to highlight triple flag, 98% exposure to precious metals in Q1 2020 for.
Speaker Change: This pure play exposure ranks among the highest in the sector with a meaningful portion weighted the silver at 34%.
Speaker Change: I feel fortunate to have this level of exposure given the many favorable tailwind for both gold and silver in the near to medium term.
Speaker Change: Finally, our portfolio is predominantly located in mining friendly jurisdictions are key criteria as we look to expand our portfolio through acquisition.
Speaker Change: By geography, the country with the single greatest contribution remains Australia.
Speaker Change: Notably during the quarter.
Speaker Change: Another one of our Australian assets was featured as a core part of an M&A transaction with West Gould announcing a friendly takeover of Carrara, who operate the beta on our mind. We are pleased to have the cash flow and exploration potential data Hon spotlighted by Westfield with you Sean.
Sean Smith: Thanks Sheldon.
Speaker Change: A core part of the 2024 story for Triple flag is our anchor asset at North <unk>.
To give the market better context for the impact of this expected great improvement versus historical results. This slide highlights mill head grades at North Park over the past three four years of our stream ownership from 2021% to 2023, which is range from one three grams, a ton to 107 grams a ton therefore.
And therefore, the Q1 2020 full processed grade of <unk> two eight grams, a tonne is undoubtedly a significant step up from the past and evolution mining has done a great job in delivering what was promised.
On the next slide an asset that has been a clear winner for triple flag from prior year's Mavericks transaction as the Kensington MSR.
Kensington is operated by <unk> mining, which commenced production in 2010 with over 1 million ounces produced to date and is expected to have a minimum five year reserve life by the end of 2020 for the.
Speaker Change: The mine is located in Alaska, a jurisdiction that is no stranger to mining.
Speaker Change: For the settlement agreement executed this MSR commence paying in Q1 with further share consideration from <unk> and settlements of royalties and a risk.
Speaker Change: As part of the settlement agreement, we received roughly 737000 shares.
Speaker Change: Which we divested earlier in the second quarter of 2024 in the open market.
Speaker Change: We expect to receive a further fixed value of $3 $75 million worth of shares of <unk> in the first quarter of 2025, which will be the final share consideration received under the agreement.
We look forward to working with Coors operating partners for the years to come on Kensington.
Speaker Change: So the and we have had a strong start to 2024 with a new record quarter of Geos in earnings that puts us nicely on track to achieving our guidance of 105 to 115000 Ceos for the year.
Speaker Change: This represents our eighth consecutive projected year of record growth for our business and.
And both on the 34% cumulative annual growth rate in operating cash flow. This team has delivered over the past seven years.
Speaker Change: We highlighted at the end of the last year, a period of substantial growth from our cornerstone asset in Australia Fox for the next couple of years or so to be able to demonstrate a nearly 90% increase in geos for the first quarter from this asset while delivering another robust performance in Cerro Lindo as a top five asset in our portfolio is something we're very pleased with.
We manage a large portfolio of 234 assets.
Speaker Change: Assets as anchors to our portfolio and guidance are clearly delivering for our investors and we've seen the power of a large large portfolio being demonstrated with a kensington royalty starting to contribute to doses plus quarter.
Speaker Change: Two underperforming assets, we've highlighted in our release today have been well communicated in the past have been factored into our 2020 for guidance and we've provided additional disclosure to make it clear that we're commercially well placed if they continue to underperform to maximize value for our investors.
Speaker Change: So finally with our amplifier power of roughly 670 million U S dollars and available liquidity as well as the cornerstone base 32, producing assets were nicely diversified and well positioned to benefit from the current metal price environment. As we continue our relentless pursuit of growth and value per share for our owners.
Speaker Change: With the board and management team being large shareholders ourselves completely.
Speaker Change: <unk> aligned and ensuring the best outcomes and are excited about the significant opportunity ahead for our portfolio to deliver further value. So.
Speaker Change: With that Jericho.
Happy to open the floor to questions.
Speaker Change: Well. Thanks for your question. So if you ask a questions. Please press star.
Speaker Change: And the number one or two that will keep that we've got a pause for just a moment to compile the Q&A roster.
Speaker Change: Okay.
Speaker Change: First question comes from the line of Cosmos.
Speaker Change: Please go ahead.
Speaker Change: Hi, Thanks, Sean Sheldon 19, maybe.
Speaker Change: Maybe my first question is on North parks, where anchor assets.
Speaker Change: As you mentioned, there's going to be anthem as it relates to study.
Speaker Change: To be released by the end of Q2.
Speaker Change: In 'twenty two underground ore body could you maybe share with us what.
Speaker Change: Yours or our expectations could be.
Speaker Change: And what might be the next steps for the operator and potential timeline as well.
Speaker Change: Yes, hi, it's good to hear from you.
Speaker Change: <unk>.
Speaker Change: Im going to.
Speaker Change: To further his question until evolution release.
Speaker Change: This study in the middle of the year and the reason is we've got a great new partnership.
Not really appropriate for me to front run it I think all I can say in terms of expectations and I think we covered this on the last call we had a while ago.
Speaker Change: As you know you've got a group here with Iridium <unk> track record in that jurisdiction with Kal and my expectation is they've been very successful in taking their time.
Speaker Change: Investing in exploration prudently, there's over a thousand square kilometer package ore body is open at depth and they've been very good at.
Speaker Change: I think studying a suit and I think we touched on previously that.
Speaker Change: Even though there is an existing study that would have inherited an E 'twenty two.
Speaker Change: Get another.
Speaker Change: In a block cave.
Speaker Change: We're looking at a sub level cave as an alternative I have no knowledge at this stage, which I can share, but I think that would give them, perhaps earlier access and would benefit us. If indeed, they went that route. So we're looking forward to seeing that release and I think if you look at the public disclosures as you would expect with checking Laurie.
Speaker Change: The real focus is on just integrating the business well.
Speaker Change: Which I believe they have done very successfully.
Speaker Change: Getting these studies done and then to settling into delivering for us when I look forward as always risk on the transition.
Speaker Change: Someone who has been a lot of mining companies over the years and as stabilization tree integration.
Speaker Change: You can see from these results they haven't they haven't missed a beat I think they've done very well.
Speaker Change: James I know, if there's anything you wish to add.
Speaker Change: I think you can capture that so thanks.
Sean: Great. Thanks, Sean because anything Thats great.
Speaker Change: Yeah for sure maybe switching gears a little bit.
Speaker Change: Sean as you mentioned, it's good to see strength in the gold and silver prices year to date.
Speaker Change: My question is how does that kind of impact the opportunity set in terms of.
Speaker Change: Acquisitions, new stream of royalty acquisition.
Speaker Change: Sheldon mentioned, we have a strong balance sheet $640 million drawn on our line of credit is that kind of like is that sufficient.
Speaker Change: What type of size is that.
Speaker Change: Does that speak to the size of these opportunities that you might be looking at.
Speaker Change: Yes, because it's.
Speaker Change: As an important sort of evergreen question.
Speaker Change: Some investors look at a high gold price environments, and they kind of get confused by it because let's say that must mean that there is a fire hose of capital available to gold miners.
Speaker Change: Clearly there is not a lot of business, therefore for streaming and royalty companies to do and.
Speaker Change: And that's.
That's really not the reality I think if you consider that nearly 70% of our ounces come from poly metallics.
Speaker Change: That's not by accident.
Speaker Change: Those sorts of transactions are very symbiotic as we've discussed before.
Speaker Change: We are seeing a lot of activity of that nature.
We had a board meeting yesterday and I think we've highlighted there that I think it's fair to say, it's probably the busiest deal pipeline than we've seen in our eight year existence.
Speaker Change: And a number of those we've got some smaller transactions that are nice tuck ins at decent rates of return that we're we're exclusive on and that doesn't mean, we'll conclude them, but I think we've got a good line of sight on those.
Speaker Change: And then there are larger ones out there, which really are substantial in size.
Speaker Change: Many many hundreds of millions.
Speaker Change: You can get from Shelton's comments that we have amplified Paul but I think part of our consideration is not only the fit for the portfolio.
Speaker Change: As shareholders, but very much what is the portfolio mix look like so I think the bulk of what we're looking at we can easily cover with our existing financing. There is somewhere we would perhaps look to syndicate just purely from a portfolio mix. If indeed it went that route.
Speaker Change: My feeling at this stage is that.
Speaker Change: Just given this macro environment, we're seeing really good deal flow activity and I don't believe it's an anomaly I suspect in this environment with rates seemingly being the way they are.
Speaker Change: For some time to come I think it's a particularly good outlook for deal flow for us Shouldnt theres anything you'd wish to add to that Mike.
Speaker Change: Quite welcome.
Speaker Change: And then maybe one last question.
Going through your income statement I saw that there was an expected credit loss of $6.851 million as a charge.
Speaker Change: Touched on it there is some operators.
Speaker Change: So it has had some financial issues I'm just trying to look for more details on it and what are they related to.
Yes.
Speaker Change: Children to comment, but I wanted to preface this a little by saying.
Speaker Change: I think an organization that is when you're looking at things.
Speaker Change: We got to balance risk and reward and the whole focus here for us is staying true to the model, which I think we've demonstrated over the years and managing our portfolio.
Speaker Change: The numbers, you mentioned and in particular <unk>.
Speaker Change: One of 140 assets, we acquired during the Mavericks transaction that we knew was problematic at the time, we're very happy with that transaction, we've announced Kensington I think we've delivered our synergies and that's going quite well, but.
Speaker Change: This is one of the examples we've been working with the management teams to try and support them, while really focusing on value you'll see I think with our track record is while we've not dalliance with that Dara is providing a lot of additional equity and other kind of financing. We really have stayed true to our model, but occasionally as part of our model.
Of the portfolio management.
Speaker Change: Do have impacts like that and were very clear I mean, you would have seen in the last period with I think we took a charge at the end of.
Speaker Change: The <unk>.
Speaker Change: Experience in it that one we just.
Speaker Change: For example, don't write back we tend to try to err on the side of conservatism, but Sean do you want to yes.
Speaker Change: Yes, sure Thanks, Sean and thanks, Thanks, guys.
Speaker Change: That relates to as Sean alluded to two expected credit loss that we recorded four reflecting our investment in the mass and the mass mine and it's run by elevation elevation gold.
Basically elevation has been quite public that they are experiencing cash flow difficulties and that they're actually looking at different alternatives.
Speaker Change: At the end of the day this is a.
Speaker Change: Producing gold mine in the United States are fantastic.
Speaker Change: Gold price environment.
Speaker Change: But they've been a little tight on cash flow as they as they ramp up the new new pad.
Just wanted to be conservative we wanted to take this that this allowance we will see how they are either process plays out I can't really speak too much for that but we continue to monitor it quite closely.
Speaker Change: <unk>.
Speaker Change: I will add that we're in for a secured position on everything there. So we just wanted to be conservative and take the six expected credit loss and.
Speaker Change: And see how this is a matter of plays out.
Speaker Change: And because I think the last thing just for materiality.
Speaker Change: In context with some of the some of the audience on the call.
We're talking about one of our 234 assets that is.
Speaker Change: I believe consensus NAV is in the teens.
Speaker Change: Given us 3 billion.
Speaker Change: Argues.
Speaker Change: Billion dollar market cap right now.
Speaker Change: Useful context.
Speaker Change: And to confirm Sean and show them, So I guess.
Speaker Change: The stream and also the royalty and the promissory notes there are secured on the assets of more solar elevation goal will just so you'll have a right to recover.
Speaker Change: But you are just trying to be conservative.
Speaker Change: Yes, yes.
Speaker Change: That's right cause where first secured on that.
Speaker Change: The stream.
Speaker Change: Extreme again, it's a silver stream on a gold silver project in <unk>.
Speaker Change: And in the United States.
Speaker Change: But when we look at the total burden on the property, we think that the credit loss is just a prudent way to go.
Speaker Change: And Thats.
Speaker Change: So we've taken that and we tried to be quite upfront about that.
Speaker Change:
Speaker Change: And your point, Josh on the bubble.
Speaker Change: Sure those are all my questions and thanks once again.
Speaker Change: Thanks, Kosta, Thank you great questions.
Speaker Change: Okay.
Speaker Change: Our next question comes from the line of Greg Barnes with TD Securities. Please go ahead.
Speaker Change: Yes. Thank you Shawn can you talk a little bit about what the grade profile does look like for the rest of 2024, and you said high grade in 'twenty five 'twenty six just give us some idea of what we should be looking at there.
Speaker Change: Good morning, Craig I'm going to ask.
Speaker Change: James just to comment with him.
Speaker Change: What's disclosed the extent gifts.
Speaker Change: Thank you very much.
Speaker Change: Yes.
Speaker Change: 31, <unk>, they're continuing to ramp up we should see that continue.
Speaker Change: Can you into Q2 level.
Speaker Change: Yes.
Speaker Change: And then we will start to.
Continue into 2025.
Speaker Change: Our two right.
Speaker Change: Ramped out going into the fourth quarter of 2025.
And then after that then this E <unk> two which.
Speaker Change: We released.
Speaker Change: And that'll be the next higher grade zone.
Speaker Change: Once that is constructed.
Speaker Change: And Greg you May recall, we've shed some of the grades at <unk> 22 from memory with somebody like <unk>.
Three nine grams a tonne.
Speaker Change: So that really was the <unk>.
Speaker Change: You could sort of think of that when that becomes the mainstay of the mine plan.
Speaker Change: It's really being at the sort of levels, we expect to see this year.
Speaker Change: <unk> for many years beyond I think.
Speaker Change: The CF as some may have been have shown meaningful North Park I think hopefully this quarters I hope.
Speaker Change: Full indicator of what we've been talking about for coal generation from the asset.
Speaker Change: Okay.
James: James It broke up a little bit I couldn't really hear what what's happening in Q2 and Q3.
James: I think that was this year also.
James: For Q2 were expecting <unk> to increase again.
As well as into Q3, and then leveling off.
James: And then going into.
James: 25.
James: We're ramping down later in that year.
James: The pits in the higher grade material.
Speaker Change: Did you get that Greg.
Speaker Change: So higher Geos in Q2, and Q3, then flatlining of that level in Q4.
Speaker Change: I think for 2024, and then 2025.
Speaker Change: Although the continuing on it.
Speaker Change: Yes, I think the only thing on that is as you would appreciate it we get like I don't know what was it 13 deliveries roughly they are fairly lumpy during the year. So.
Speaker Change: Our shoulder.
Speaker Change: That phenomenon that we do get with this.
Speaker Change: To factor that into our guidance. So you need to see through that as you think about the year versus the quarter.
Speaker Change: Gotcha. Thank you.
Speaker Change: Yes, thanks, Kurt anything else.
Nope, that's it for me.
Speaker Change: Okay. Thank you.
Speaker Change: Our next question comes from the line with Japan.
Speaker Change: Go ahead.
Speaker Change: Hello does that mean.
Speaker Change: Yes, I think it was yes. Good morning, Okay, alright, good morning.
Speaker Change: Now who that was.
Thank you for taking my question and congrats on a great quarter.
Speaker Change: I was just going to follow up on Greg's question, if not the only.
Speaker Change: Asset within your portfolio.
Speaker Change: Looking to have this stronger performance and everything else.
Speaker Change: Relatively equal I'm, just trying to see if there is any other assets.
Speaker Change: Think about a stronger second half.
Speaker Change: Tony I think that's a good way to look at it.
Speaker Change: I think it's something we've made no bones about us.
Speaker Change: Yes.
Speaker Change: Darn just take the aggregation of the public guidance of the operating assets in our portfolio and sort of put those out there.
Speaker Change: In our guidance is sort of handicapped accordingly, and I think we've telegraphed.
Speaker Change: And then funds last year that we were expecting this sort of growth to come from.
Speaker Change: He said he wanted from North Park. This year, so it's a meaningful catalysts from.
Speaker Change: A very well established multi decade long mine, which I think should be.
Speaker Change: <unk> celebrated and recognized and then the growth is not coming from <unk>.
Speaker Change: <unk> stuff, we're waiting to come in later and just to.
Speaker Change: Beat the dead horse on this but.
Speaker Change: I think that is the beauty of the portfolio effect on this again is little things like Kensington.
Speaker Change: The 200 of these things that it's some different time horizons that are not captured in our guidance. We do expect some subsidies also represent good growth for our investors, but I think the way you and Greg.
Speaker Change: We're thinking about it is exactly right.
Speaker Change: Okay. Thank you and then that Sheldon can you remind me.
Speaker Change: Book value of Marston.
Speaker Change: Hello.
Speaker Change: Two tier ones that are in outlet.
Speaker Change: So strong operator.
Speaker Change: Yes, so Tanya MOSFET stream has a book value of just under <unk>.
Speaker Change: <unk> <unk> hundred $19 million.
Speaker Change: Pumping hollow the stream has a book value of <unk>.
Speaker Change: $85 million.
Speaker Change: Okay.
And then how should I think.
Speaker Change: Yes.
Speaker Change: Cash flow that you're generating how should I think about your balance between paying off your debt share buyback and potentially growing your dividend may be that over to you Shaun for that one.
Thanks, Steve.
Speaker Change: Ill give sheldon that Mike Kings. These marrow Nathan it pretty much every day alright.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Tanya.
Speaker Change: Yeah.
Speaker Change: Let me start with the first I think and best use of our cash flow is accretive transactions for shareholders.
Speaker Change: As you know we're always looking at things.
Speaker Change: And hoping to deploy and right now we're well positioned for that.
Speaker Change: The dividend we've increased that every year since we've been public.
Speaker Change: I would expect that to continue.
Speaker Change: Probably at a similar pace, but we'll wait for further in the year for any sort of update on that.
Speaker Change: As you get cash flow when you have net debt its really simply you just pay down your net debt, but were quite comparable drawing on our revolver to make acquisitions and to add value to shareholders that way.
Speaker Change: We don't like share dilution. So we would look to use the revolver are strategically and then pay down over over over time.
Speaker Change: And CIB, we have been quite active over time, and we'd continue to use that to view that like Opportunistically again, returning capital to shareholder and our feedback from shareholders that have been positive on that front.
Sean Smith: Okay, and then maybe Sean for you.
Speaker Change: Good question Amit.
Speaker Change: M&A environment transaction environment.
Did I understand correctly that the larger transaction being 500 million Clos that are.
Speaker Change: Spoken about Aaron is like a cop out.
Speaker Change: Three four.
Speaker Change: And maybe even tie.
Speaker Change: Alright. Thanks.
Speaker Change: Are you looking at those in terms of your ability to do the ammonia vindicated or would you also look at getting that was on your own.
Speaker Change: No.
Speaker Change: It's a great question I think firstly.
Speaker Change: I was looking at some of the transcripts of Franco's calls they've telegraphed it and I think you've covered the question of the time and I think.
Speaker Change: What we're seeing is very very similar to I think what was articulated there so.
There is no shortage, there's always development stuff.
Speaker Change: <unk> got to be very discerning how much of that exposure you want but I think for the first timing, perhaps since our existence.
Speaker Change: We are seeing these sort of half a billion plus or thereabouts type transactions re emerging that I think we last saw in 2014 2015, I think the one thing Thats difference, which we've sort of highlighted with our board. If you take yourself back to that time and you remember we did one of these at Barrick when I was CFO.
Speaker Change: Rates were close to zero.
Speaker Change: <unk>.
Speaker Change: Commodity prices are at these gold prices were at merely cyclical lows for quite some time, we are not in that same space with.
Speaker Change: We're spending a lot of time thinking through the risk reward and portfolio fit.
Speaker Change: Say with.
Speaker Change: A couple that we are active on <unk>.
Comfortable that the check size is one that we would easily finance.
Speaker Change: And these are cash generating asset so it actually adds to our funding capacity and we wouldn't be over levered.
Speaker Change: The other one is one where it's not clear whether or not it's just a thing on cost of capital and fits where indeed, they would want to go for size.
Speaker Change: I believe we have more than covered and if not we may be a syndicate member what we won't do is.
Speaker Change: Pursue growth for growth's sake, none of these are must do's for us at all I mean, you can see our growth that we have in the existing portfolio. This is purely a question of does it fit with our strategy and will it add value over time.
Speaker Change: Okay. So from that should I be thinking that sort of thing.
Speaker Change: The larger one that would be one that.
Speaker Change: Likely could be syndicated.
Speaker Change: Participate in that that the majority of what Youre looking at would be sub 500 million.
Speaker Change: Our way of thinking about that.
Speaker Change: Yes, I think thats, a reasonable way of looking at it.
Speaker Change: Its hard on.
Speaker Change: We're talking in generalities the specifics are so different in each of these cases.
Speaker Change: Each with a sort of real benefits and complexities as you'd expect so it's really hard for me to comment any further but I think we are at the size, we are at and with what we have and I think what we've demonstrated and remember we did north park.
$550 million a few years ago.
At the time that was the largest just pure precious streaming deal in this space I think both of us to this day.
Speaker Change: We're starting to see these larger things come out.
Speaker Change: It's a north parks emerge tomorrow.
Speaker Change: I think we would easy cover that off.
Speaker Change: But yes, so hopefully that gives you a flavor tenure.
Speaker Change: Alright, Alright, I gather some 500, you could do on your own as well.
Speaker Change: Alright, Yeah, Thats right, yes, yes, okay, no I think that's it for me.
Speaker Change: Right.
Speaker Change: Yes, so maybe just a nuance of it.
Speaker Change: As this was.
Speaker Change: Check size and Youre funding, something which had a ramp associated cash flow many years out.
Speaker Change: So very different prospect to an operating asset with maybe some substantial immediate cash flow.
Speaker Change: What type of story.
Speaker Change: Thanks Robby.
Speaker Change: As a bunch of that together.
Speaker Change: Yes.
Speaker Change: Pretty interesting environment, yes.
Speaker Change: Yeah, and I would assume that the smaller ones would be further out.
Speaker Change: Producing development site.
No no actually no there is not the case.
Speaker Change: I hope to give you some news.
Speaker Change: In the months ahead, but.
Speaker Change: Now we're seeing.
Speaker Change: This environment is not super supportive of single lessor produces private businesses and others I think.
Speaker Change: Even though we are perhaps in a bit of a reduction in some of the inflation and margin compression that the sector has experienced I think theres a lot of guys out there who's looking at their equity and saying like what happened.
Speaker Change: Goals that are running we've been left behind so I think we are seeing some really decent greater return good optionality.
Speaker Change: Mahler opportunities that are just tuck ins.
Speaker Change: We're active on some of those too.
Speaker Change: Okay.
Speaker Change: So all I can say mark thank you.
Speaker Change: Thanks, Kevin.
Speaker Change: Next question comes from the line of Boston Linda.
<unk> Securities.
Speaker Change: Right.
Speaker Change: Thank you operator, and good morning, Sean and team. Thanks for taking the question for the presentation today.
Speaker Change: I'd like to ask about pumpkin hauling.
Speaker Change: Two points on that I mean, one obviously.
Speaker Change: I mean, I think they require some more fans financing and wanted to understand whether or not.
Speaker Change: Flag would consider.
Speaker Change: Applying additional capital to that situation.
And I think in the context of you guys still believing in the asset longer term correct me if I'm wrong, and then and then longer term I mean, when should we kind of think about.
Speaker Change: Putting some production from that asset into our our model, particularly vis vis your long term guidance.
Speaker Change: Yes Wilson.
Speaker Change: Yeah. As you know this has been an asset that has been in our growth.
Speaker Change: Outlook for some time, that's one of our larger.
Speaker Change: Projects that we were funding into production thats its been.
Speaker Change: Notable in its sort of struggles with inflation in la.
Speaker Change: On liquidity from time to time.
So to your point, we lost supported us in.
Speaker Change: And a couple of years ago.
Speaker Change: With the royalty and some funding that was secured in line with our model I don't see a scenario where.
Speaker Change: We look to continue to add to the burden. If you will of the asset and to continue to fund. This through we will focus on if we do any capital would be small.
Speaker Change: In this scenario where that unsecured funding they need and really it's just really to optimize value from our perspective I think there is nearly $1 billion on capital on a copper asset in a permitted situation with a fully developed underground mining shovel.
Speaker Change: Shove already open pit I think it is an intrinsic evaluable situation.
Speaker Change: So I can't tell you sitting here today, whether the party or parties that they're engaged with which would.
Speaker Change: Provide debt remaining capital and continue to grow the asset will come to fruition I guess, what we really wanted to communicate was update you on that and just make it clear that.
Speaker Change: We.
Speaker Change: Our situation, our ranking would be dependent which fork in the road to go down, but you shouldnt expect us to be.
Speaker Change: Like a big equity check to get this into production or something so I don't know if there's anything you'd add.
Speaker Change: Yeah. Thanks, Sean Thanks, Barton, yes, so Nevada copper like they've disclosed that there.
Speaker Change: They are in discussions with another party and that they need they need more capital. So I think everyone everyone knows that.
We certainly do believe in the assay copper in United States, All the sum capital all of those all of those reasons, but that said we are.
Speaker Change: We're not operators, we have no desire to the operators. So we're not going to be the source of the funding to bring this production and <unk>.
Speaker Change: We just.
Speaker Change: We probably we've invested our piece and as Sean said, we don't want to add to the burden. There. So hopefully that gives you the direction.
Speaker Change: Yes, listen I think the last thing that we look forward to hearing more conference next week, but.
Speaker Change: I think it's probably the best copper backdrop I can remember in some time. So you would think if they could solve the liquidity.
Speaker Change: Situations and you delivered acid in the spectrum in the United States.
Speaker Change: That should be good right.
Yes, it makes sense to me and I appreciate the clarity it's very helpful.
Speaker Change: Could I also just ask on your thinking around corporate M&A. Obviously your last experience I mean at least in my view I think was very successful.
Speaker Change: Are you still looking at that as an avenue for growth going forward and do you see opportunity in the current environment.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: I think to your point.
Speaker Change: Okay.
Speaker Change: Since the large part of my career in companies like extra that really grew substantially through M&A or return the BHP billiton merger.
Speaker Change: For example in the.
Speaker Change: Paris.
Speaker Change: People not falling in love with the assets, because I think everybody likes to know more about their businesses and others. They always think that the tour in a smarter and better looking than everyone else's, but if you just focus on value and I think at any given time you have a very good line of sight and you should be focusing as we all do on the organic pipeline and the ability to track.
Speaker Change: But if you go back to your point to metrics, we've just come through in environments of a couple of years, where we would normally do.
$200 million, a year and we saw billions get deployed and must be development stage assets with very low returns.
Speaker Change: This is an M&A transaction.
Speaker Change: That was accretive made sense for both sets of shareholders struck at a low premium that really delivered synergies and they value.
Speaker Change: Don't know why that isn't an obvious thing more for the sector.
So directly to your question, Yes, we're always looking at the universe of the possible is.
Speaker Change: So many poised to play with.
Speaker Change: Just to reiterate the obvious.
Speaker Change: I am very happy as a shareholder whether that means we are in.
Speaker Change: Acquirer, we're an acquiree, but.
Speaker Change: Usually the social barriers of the largest to consolidation in the sector I do think that the invest.
Speaker Change: The scale requirements. These days for it to be relevant are higher like notably higher than when we started our company in 2016. So I think thats affected it should be a feature in every boardroom and every management team and I think when we look at.
Speaker Change: The sort of menu of possibilities very small things we tend to struggle with like Mavericks. If you recall had a lot of assets, but more than half of NAV that we acquired came from 14 assets over there was over 100 as you recall, which we're generating cash what are the really small stuff. There's a lot of NAV, which is quite long dated.
And we often struggle to see a path to value there, even though on a P&L basis, they might seen while discounted and then with whether its intermediates with seniors.
Speaker Change: If if they are sensible things to do we're always open to them, but yes, there's various steps.
Speaker Change: Any more than you wanted to hear but hopefully that gives you a sense, where we're always open for business, if there's business to be done.
Okay.
Speaker Change: Theres never too little let's put it that way. Thank you very much.
Speaker Change: Alright.
Speaker Change: Thanks listen to you next week.
Speaker Change: Alright.
Our next question comes from the line of Brian Macarthur with Raymond James.
Speaker Change: Go ahead.
Speaker Change: Good morning, and thank you for taking my questions.
Speaker Change: We've heard a number of people talk about these big deals potentially out there are 500 million plus refer back to the last cycle where.
Speaker Change: All for debt restructuring can I, just when people talk numbers of 500 cannot can I assume they're true streaming deals, meaning they're not like say 300 of streaming and youre, putting 300 of equity in or something is because as you've mentioned.
Speaker Change: These deals are getting more high bred more complicated in the sector.
Speaker Change: Just trying to figure out to make sure that these are what I would call true screaming lower risk deals as opposed to complicate it.
Speaker Change: Financing transactions.
Speaker Change: Yeah, Brian good to hear from you. It's a really good question, it's funny, let's say year or so ago.
Speaker Change: Started getting questions from investors conferences and elsewhere about.
Speaker Change: Is triple flag going to start doing more hybrid deals because we've seen some larger guys. Good <unk>.
Speaker Change: We've seen the private guys like Orion do that very successfully.
Speaker Change: Believe concentrates risk in it violates the model. So it was very clear that we're not going to engage in doing that and we haven't.
Speaker Change: Don't expect anything along those lines from us.
Speaker Change: And directly to your question no. These are these streaming deals.
Speaker Change: Isn't.
Speaker Change: Hey Boy, if we got a deal for you has half a billion dollars, but as you say 300 that is a stream and you're going to love and a $200 million equity check.
Speaker Change: So.
Speaker Change: The streaming dose.
Speaker Change: And I think.
Speaker Change: In many cases.
Speaker Change: It is stuff that just represents at a moment in time, perhaps a.
Speaker Change: A better alternative on cost of funding.
Either balance sheet repair improving liquidity or things of that nature is just how to think about it.
Speaker Change: Thank you that's very clear also what I wanted to hear.
Speaker Change: Second question.
Speaker Change: Different vein a little bit can you just go through the rationale that Ato and staff do you mean again, we do another prepaid which is another type of financing again is that just the ramping up is that the seasonal working capital Youre doing this four or.
Speaker Change: I assume this is nothing like elevation or anything else to be clear for everybody, but if you could just give a little bit of rationale for that.
Speaker Change: I'll ask them to expand on this but I think the important thing is from time to time, we have assisted with this at the capital markets for these guys perusal and we've done this once or twice with step where we made a good return on our money. It was very helpful financing for them.
Speaker Change #100: Yes, and Thats a partnership with your coal goes back I think it was our second transaction. So these guys.
Speaker Change #100: IPO, we've helped them deliver successfully they've got this transaction now they need some bridge funding we are happy to assist its a decent return.
Speaker Change #100: And it's a team that I think is demonstrating some ambition and growth in a very strong Mongolian champion.
Speaker Change #101: But what would you add to that.
Speaker Change #102: Thanks, Sean Thanks, Brian Yeah, so step.
Speaker Change #102: Pretty impressive story, if you see what they've accomplished over the years. They are relatively small company and they were <unk>.
Speaker Change #102: To find financing assignment amount of financing for phase III, we benefit from that which is fantastic.
Speaker Change #102: Bit of a it was a heavy lift for them Q1s often.
Speaker Change #102: A harder quarter for them just due to the Mongolian winter and this particular winter in Mongolia was particularly particularly hard.
Speaker Change #102: Basically.
Speaker Change #102: Asked us for some for some funding to help them out there we.
Speaker Change #102: We are happy to give that because we can see the value there.
And actually since that transaction since we did that prepay with that with step.
Speaker Change #102: The Bureau transaction got got announced and that's actually a real game changer for them.
Speaker Change #102: To really give them some really good robust cash flows.
Speaker Change #102: That marry up quite well with the development project they have with the phase II expansion.
Speaker Change #102: The rates of return that we're obviously attractive for us how we quite frankly got a little lucky on the gold price timing.
And Thats just the way the way it worked out.
Speaker Change #102: Sorry, that's the second question, but this was kind of independent of the Peru transaction right. Yeah. It was just a seasonal thing you are helping them get through our <unk>.
Speaker Change #103: I don't think of it as funding that transaction or anything.
Speaker Change #104: No its not finding that Trina is independent.
Speaker Change #105: Yeah, Okay, and then my third question under the category of hidden assets or I don't know if its hidden or not but you. Obviously highlighted some good value in Kensington, which had been worked on for a year is there any possibility of getting any value at all Milan is anything happening there anymore or is that just totally very difficult.
Speaker Change #104: Okay.
Speaker Change #106: It's a great question I mean, we've got.
Speaker Change #106: Our contractual entitlement, but as you know we've written that done we did that on the announcement of the transaction we made Medicare that we are not.
Speaker Change #106: Guiding investors to expect anything, but we do have a contractual entitlement that perhaps in the future as could have some value.
One two.
Speaker Change #106: Raise any expectations to that effect I think it's just one of those bags.
Speaker Change #106: Bags or things that perhaps in the future could unlock some value for shareholders.
Speaker Change #107: Yes fair enough. Thanks.
Speaker Change #107: Yes.
Speaker Change #108: When we when we bought Mavericks, we ascribed zero value to all of the lines. So there was no. There was no write down associated with that we just we just described zero value to it and we did that transaction. After the Ukrainian War has started so we kind of have some good visibility there and like Sean said I mean, we have a contractual entitlement is a great ore body.
The mine, but obviously the Russia factor means we're putting zero value on it right now and I wouldn't encourage anyone who put any value on it right now.
Speaker Change #108: History is long in times may change, but I wouldn't put anything like that.
Speaker Change #109: Great. Thanks for answering all my questions.
Brian: Thanks, Brian.
Speaker Change #111: Our next question comes from the line of John Tumazos.
Speaker Change #112: Go ahead.
Speaker Change #113: Good morning.
Speaker Change #113: Some of the offsets here.
Speaker Change #113: Smaller companies will apologize mall by mall.
Speaker Change #114: All right.
Speaker Change #114: What percentage complete.
Speaker Change #114: Pumpkin Hall.
Speaker Change #114: Or how much money do they need.
Speaker Change #114: To complete the project.
Speaker Change #114: Hey, John.
Speaker Change #114: I'll ask Sean to comment on that one for us.
Sean Smith: Yes, John it's pretty difficult for us to give that figure because thats, obviously, Nevada koppers about Valleywag I don't I don't think they put that number out in the public domain and we just we just don't have the freedom to maneuver to give that figure.
Okay.
Sean Smith: Concerning some of your.
Sean Smith: Non producing properties.
We're making progress.
Speaker Change #115: How many years or one year range of years do you think might be first revenue.
Speaker Change #115: We had hoped south railroad tamarac or a trend yet.
Speaker Change #116: Yes, John another.
Speaker Change #116: I think it was in our prior corporate updates that we had at the conferences we've tried to provide.
Speaker Change #116: Some sense of.
Five and a 10 year window for those sort of small smaller royalties that we touch on.
Speaker Change #116: You would see that the 140000.
Speaker Change #116: Bearing in mind last year was what 105 regarding 100 515. This year and then that $1 40 average in the five year.
Speaker Change #116: Really is focused on mostly the producing assets with very limited contribution from any of these smaller things. So you've got that bucket of nearly 200 I think.
Speaker Change #116: To your point, we've got some opportunity I think in the periods ahead to look a little bit more at the advance and be able to draw some attention from an investor point of view at those subsets I think things like.
Speaker Change #116: At Kensington is an example, where none of these are <unk>.
Speaker Change #116: <unk> in their own rights, but as a collective these are things that I think can actually add over time to some meaningful geos.
Speaker Change #116: Our performance and then to your point I hope it's been interesting.
Speaker Change #116: As an investor.
Conference in Zurich recently, I'm always talking about the significant progress, we're making there I know, they're talking about perhaps three or 400000 ounces a year.
And they are getting some good exploration results. There. So our hope is certainly before the end of this decade, they're the right operator in that location the Canadian investing significant money and time that we've got a pretty meaningful royalty on there. So I think in that sort of timeframe, we would hope to see.
Speaker Change #116: Good contribution starting to come from that.
Speaker Change #117: Anything you'd add to them.
Speaker Change #117: Doesn't really welcome and John I think to your point its a good match for us to also.
Speaker Change #117: Our focus beyond because we've always tried to focus on growth risk and Optionality and I think as we've done a bit to highlight some of that Optionality I know theres a lot of guys dine out from that but I think we need to do more to probably showcase more of that opportunity for investors.
Concerning.
Speaker Change #118: Ooh home.
Speaker Change #117: And.
Speaker Change #117: And she in Africa.
Those operators.
Speaker Change #117: Target date option.
Speaker Change #117: Are they in your longer term five year forecast.
Speaker Change #117: Okay.
Speaker Change #119: Yes, they do and we have included you wouldn't think of them as being massive contributors, but we've gone on their public guidance as we've.
As we thought about and again I would draw your attention to it's on our website.
Speaker Change #119: We've got a short summary of a couple of those royalties and that's both in the five year and in the sort of 10 year timeframe.
Speaker Change #120: Thank you.
Speaker Change #121: Thanks, John.
Speaker Change #121: Yeah, no very good question at this time.
Speaker Change #122: I will turn the call back over to Mr. Sean.
Speaker Change #122: Okay.
Sean Smith: Yes, sure. Thank you and thanks, everyone knows.
Sean Smith: Great collection of questions.
Sean Smith: Look I'll just end by saying, thank you to our partners and our team.
Sean Smith: It's great to start off with the record quarter.
Sean Smith: I think our busiest deal pipeline.
And a pretty handy.
Sean Smith: The price spectrum for this company.
Sean Smith: So we just turned eight.
Sean Smith: It's been an exciting idea is a good start to 2024 and I'm really excited to see what license.
Sean Smith: License store for us for the remainder of this year so with that.
Sean Smith: All the best for the rest of your day.