Q3 2024 Triple Flag Precious Metals Corp Earnings Call
Later, we will conduct a question and answer session to ask a question. Please press star followed by the number one on your telephone keypad. As a reminder, this conference is being recorded at this time I would like to turn the conference over to Sheldon Bender CEO. Please go ahead.
Sheldon Bender: Thank you Jeremy.
Sheldon Bender: Morning, everyone and thank you for joining us to discuss Triple flag 2024 third quarter results today I am joined by our Chief Financial Officer, even Barry and our Chief operating Officer James Dental.
Sheldon Bender: Triple Slide delivered another strong performance in Q3 with record sales of nearly 30000 gold equivalent ounces. This has resulted in another record quarter for Triple flag and places us firmly on track to achieve our 2024 production guidance of 105 to 115000 ounces, we now expect to achieve the top half.
Sheldon Bender: Our guidance range.
The high grade open pit material from North parks continues to be a key part of the 2024 story as North parks continues to be a strong contributor.
Sheldon Bender: I'd like to highlight our growing cash flow per share.
Sheldon Bender: Operating cash flow per share increased over 70% as compared to the prior period.
Sheldon Bender: This was due to record production record gold prices and stable margins insulated from inflationary cost pressures. The streaming model is working as it should for the benefit of our shareholders.
Sheldon Bender: Our portfolio has also achieved several milestones over the past three months. These include the following first Cerro Lindo delivered robust 2024 production year over year.
Sheldon Bender: Second or the mining increased its production guidance for Camino Rojo for the second time this year.
Sheldon Bender: Third highest gold fully permitted and financed the Kona project to production.
Sheldon Bender: And finally west Gould announce exceptional exploration results from drilling at the <unk> zone, a beta hon, demonstrating meaningful expansion potential for that mine.
Sheldon Bender: Triple flag acquired its royalties on Camino Rojo, Kona and beta hunt through the Mavericks transaction in 2023, which continues to pay dividends for <unk> shareholders.
Sheldon Bender: Towards the end of the third quarter Triple side was added to the S&P <unk> composite index, which brings exposure to a broader investor base as well as greater liquidity and trading.
Sheldon Bender: Looking ahead triple flags growth profile remains strong and well positioned to deliver long term value for our shareholders. Our production is expected to be between 135000 to 145000 gold equivalent ounces in 2028.
Sheldon Bender: With that I'll turn it over to Yvonne to discuss our financial results for the third quarter of 2024.
Speaker Change: Thank you Sheldon.
Yvonne: As noted we had the strongest quarter yet.
With the portfolio of producing nearly 30000 geos a new record for the company.
Yvonne: This puts triple flag right on track to achieve our 2020 for our sales guidance.
Sheldon Bender: Sheldon just confirmed.
As a high margin royalty ensuring goodness.
Sheldon Bender: These record volumes have translated to record levels of agenda, adjusted EBITDA and operating cash flow per share.
Sheldon Bender: Lastly, I.
Sheldon Bender: I would like to comment on the balance sheet.
Sheldon Bender: We ended the quarter with a small net debt position of only $11 million.
Sheldon Bender: Following third quarter drawdown on the credit facility of over $60 million for.
Sheldon Bender: For the acquisition of the new streams with Alcoa.
Sheldon Bender: And then additional royalty on the <unk> project.
Sheldon Bender: This clearly demonstrates that robust cash flows generated by that triple flag business.
Sheldon Bender: Our cash flow outlook combined with nearly $690 million.
Sheldon Bender: Our current available liquidity gives us the financial capacity to deploy future capital for future <unk>.
Sheldon Bender: <unk> share growth as well as deliver Pi.
Sheldon Bender: Shareholder returns.
Moving ahead, we continue to highlight.
Sheldon Bender: Three key aspects of our investment thesis, namely asset diversification.
Sheldon Bender: Precious metal focus.
Sheldon Bender: In our portfolio, which derives roughly 80% of its revenues from Australia MD America.
Sheldon Bender: Cerro Lindo in North parks continue to be.
Sheldon Bender: The two largest contributors to Q3 geos with both assets receiving a benefit from higher year over year volume and of course higher gold and silver prices.
Sheldon Bender: Our asset diversification and geographical focus is well understood.
So given the strong precious metals environment I highlight triple flags, continuing 100% portfolio exposure on topline revenue to precious metal in Q3, 2024, with a meaningful portion weighted to silver at approximately 30%.
Sheldon Bender: I feel fortunate to have this level of exposure.
Sheldon Bender: And then the many favorable tailwind for both gold and silver in the near to medium term as a pure play royalty and streaming company.
Sheldon Bender: As highlighted earlier, the realization of strong precious metal prices and an asset portfolio that continues to deliver has resulted in record performance across revenue cash flow adjusted EBITDA and <unk> over the last 12 months.
Sheldon Bender: We expect this performance to continue as we deliver on our 2028 growth outlook and are committed.
Sheldon Bender: Remain disciplined on capital allocation as we diligence and the deals are accretive per share growth and deliver sustainable returns for our shareholders.
Over to you James.
Thank you Adi.
James Dental: The open ended optionality embedded in the royalty and streaming assets is crucial to the value proposition of our business are well exemplified by the exploration success.
James Dental: Announced by West dose of <unk>.
James Dental: While we hold those say three 5% <unk> royalty and a one 5% net smelter return royalty.
James Dental: Peter Huntsman underground mine in Australia.
James Dental: Full ore bodies across the seven kilometer footprint hosting approximately one 6 million ounces of measured and indicated resources of $1 1 million ounces.
James Dental: That made all sources the western flanks deposits minus is currently undergoing an expansion to consistently deliver 2 million tonnes per annum of ore, which is expected to be completed in the first half of 2025.
That support production growth until the medium term.
James Dental: <unk> New operates a west coast has recently announced a significant new discovery notice the flexure side.
The <unk> zone is located 300 meters to the west of Western flanks and is interpreted as a parallel structure. This primary ore source.
James Dental: Successful drilling has resulted in wesco, declaring an inaugural exploration targets under the dual code for the <unk> ranging from 23 to 27 million tonnes.
<unk> of $2 one to two five.
James Dental: Hold on containing one six to $2 1 million ounces of gold.
James Dental: Clearly this is a substantial discovery, which could nearly double the current resource base with beta hubs at a very similar grade.
James Dental: Exploration drilling is ongoing and west Cold is also advancing <unk> development from the western flank two to flat you said.
<unk> a potential new mining fronts.
Speaker Change: We look forward to the continued developments that Fletcher said, which is a prime example of the strength the streaming and royalty business model to deliver substantial additional gold at no additional cost to our shareholders of EU Sheldon.
Speaker Change: Thank you James.
Sheldon Bender: With record production record revenue and most importantly record operating cash flow per share. We are very pleased to present these third quarter results to our shareholders. We.
Sheldon Bender: We will continue triple Slags track record of accretive growth, we have available capital of nearly $690 million a broad base of 235 assets, a strong organic growth profile and our corporate development team remains busy and focused on adding additional assets to the portfolio.
Speaker Change: I want to stress our alignment with shareholders. The board and the management team are large shareholders and we are completely focused on shareholder value. We are looking forward to 2025 brings for triple flag and all its shareholders. Jeremy Please open the line for questions.
Speaker Change: Just as a reminder, if you would like to ask a question today. Please press star followed by the number one.
Speaker Change: Yeah.
Speaker Change: We do have our first question.
Speaker Change: We do have our first question, sorry, and I apologize I was not able to pick up your name and the recording but your line is now open.
Speaker Change: Okay.
Speaker Change: Hello does that mean.
Speaker Change: Yes.
Speaker Change: Oh, Okay, well I cannot you can disconnect on scholarship bank.
Speaker Change: Good morning, guys and thank you so much for taking my question.
Speaker Change: Just wanted to come back and NASDAQ colony. The deal pipeline I know I asked it that way quarter, but you know we have a gold price that is quite volatile and moving in both directions and just wanted to to look and ask out what the opportunities look like for you.
Speaker Change: And you know right now like we had last talk last quarter about 100 to 300 million range and we had talked about mostly focused on the funding.
Speaker Change: Funding for new projects that maybe someone can give me some color on what youre seeing today and if anything's changed thank you.
Sheldon Bender: Yeah. Thanks, Tanya this is Sheldon speaking I'll respond to that it remains a strong pipeline in that 100 million to 300 million I think remains in play.
Sheldon Bender: It's Ah Theres also some smaller transactions I think that we're looking at.
Sheldon Bender: We announced the Allied gold transaction on the on the last quarter and that was a just a little bit over $50 million. So I can see there being a transaction that's in that range as well.
Sheldon Bender: The pipeline Steve in terms of development that remains that there is.
Sheldon Bender: A pretty good proportion of the pipeline remains on the development side, there's also operating cash flow.
Possibilities out there as well.
Sheldon Bender: Primarily in the Golden and silver space I don't know if that helps or not.
Sheldon Bender: It does that Sheldon and thanks for that and maybe our RV simple royalties and streams are in.
Speaker Change: Do we still have the complexity of having to look at maybe also providing debt or equity exposure as well.
Speaker Change: Although it's still you know how we should be thinking about some of these transactions.
Speaker Change: Yeah, you should be thinking about traditional royalties and streams Tanya we really don't want to go down the the debt and equity route and its just not our business model and I don't think it's what our shareholders are looking to us to provide our our counterparties.
Speaker Change: And then maybe from a geopolitical standpoint.
Speaker Change: You know your recent ones have been Oh.
Speaker Change: In Africa, So I'm just kind of wondering if you have <unk>.
Speaker Change: Focus to come back to to more stable jurisdiction, there or how are you thinking about your portfolio there in terms of geopolitical risk.
Speaker Change: Future transactions.
Yes for sure.
We don't actually start with the or targeting a certain jurisdiction is more like you are looking for good assets are a good way to deploy capital.
Speaker Change: And then sorry to that determination involves of course, the determination of the risk of the jurisdiction that you're investing in.
Speaker Change: We're quite happy with that that alloy transaction and quite comparable with the jurisdiction that said, it's not like we're targeting Africa per se for our new our new deployment possibilities.
Speaker Change: You know I'm digging through the pipeline it is pretty varied where it is probably the biggest focus there is Latin America.
Speaker Change: And and.
Speaker Change: And again, it's always an assessment of what the risks are as a whole, but I'll come back to though is when I look at the portfolio as a whole we really are centered in Australia, Australia is our single biggest concentration and primarily like mining friendly jurisdictions in the Americas as well and so I don't see that changing.
Speaker Change: Okay and would you say a lot of your ear and maybe I misunderstood that but youre seeing a lot of opportunities in that Latin America at this point or did I misunderstand that.
Speaker Change: If I had to say a single jurisdiction that most of our pipeline is in is in Latin America, but there are opportunities that are outside of Latin America as well.
Speaker Change: Okay, Alright, I don't want to take up all the time, but thank you so much for helping me on that understanding of thank you.
Speaker Change: Thanks Dino.
Speaker Change: And as a reminder, if you would like to ask a question. Please press star followed by the number one.
Speaker Change: Our next question comes from Derek <unk> from TD Cowen. Please go ahead.
Speaker Change: Thank you for taking my question in terms of the evolution of deal mechanics, and emerging themes are there certain things like counterparties that are looking for.
Speaker Change: When youre looking in the deal market right now in terms of potential stream opportunities.
Speaker Change: Yes, Hi, Hi, Derek.
Speaker Change: <unk>.
Speaker Change: No I don't think Theres anything Thats really a sea change of difference from from before I mean, you know.
Speaker Change: We're always trying to keep our exposure.
Speaker Change: To the whole project to extend the life of mine Counterparties are of course cognizant of doing a deal that works for them and their shareholders as well, but I wouldn't say that there's any real sea change or difference from when we started in 2016 through today.
Speaker Change: In some ways the streaming and royalty model has just gotten more accepted over the years I think everyone that goes and looks to finance a project, probably or certainly they're considering a stream and I think actually quite pleased with how many times a stream as part of that financing package.
Speaker Change: Okay.
Speaker Change: In terms of alternative financing, we've seen a number of gold prepay arrangement being complete in the last 12 months or so.
Speaker Change: How did gold prepaid complete compete with strengthened does that essentially erode the opportunity for streaming company.
Speaker Change: I don't think so I think it's actually part of a total capital picture that companies are looking at and.
Speaker Change: If someone has a prepay and it sits alongside a stream that would be provided by ourselves that that could actually be for our benefit as well.
And in terms of you know, there's some really fundamental differences between a prepay and a stream right.
Speaker Change: But part of that is.
Speaker Change: We actually finance over the entire life of mine and I think that can be really attracted to counterparties.
Speaker Change: We are often we also share the production restaurants, which Ain't all prepay just doesn't do and I think there's some real advantages to the stream financing for operators.
Speaker Change: But again I think that a lot of them are looking to put together a total max and kind of as alluded to on the prior question. There can be equity provided by other sources there can be that provider from other sources and if there is some prepay provided from other sources I think back that also work.
Yes.
Speaker Change: He said that an equity or not really what you guys look at it part of the core part of the business our prepaid something that you would look at more going forward. We've gone there in the past I mean, it's not that we would rule it out but again, what I, what I really want to offer our shareholders is life of mine exposure, a prepay isn't life of mine exposure.
Speaker Change: So so that's work that's never going to be the focus of our business or quite frankly, the focus on any one financing.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Alright, I'll give just a few more seconds to see if anybody else cusack.
It does look like that is all the questions. We have today, so I'll turn it back over to Sheldon, Dan or Corey and the team for closing remarks.
Speaker Change: Yes, Thank you Jeremy and thanks, everyone I don't have any more closing remarks, but it's been a great quarter looking forward to what the end of the year brings and then 2025 I hope everyone has a great day. Thank you.
Speaker Change: Thank you that does conclude today's presentation and have a pleasant day.
Speaker Change: Okay.