Q4 2024 Triple Flag Precious Metals Corp Earnings Call
Thank you for standing by my name is Karen and I will be your conference operator today.
Speaker Change: At this time I would like to welcome everyone to the Triple flawed precious now close Q4, 'twenty 'twenty four results conference call. All lines have been placed on mute to prevent any background noise. After today's presentation, there will be an opportunity to ask questions to ask you.
Speaker Change: You May press Star followed by the number one on your telephone keypad.
Speaker Change: Do we draw your question Press Star followed by the number one again.
Speaker Change: I will now turn the call over to Sheldon vendor Coy CEO. Please go ahead.
Speaker Change: Thank you Karen.
Speaker Change: Good morning, everyone and thank you for joining us to discuss triple flags fourth quarter and full year 2024 results.
Speaker Change: Today, I'm joined by our CFO, <unk>, Bari, and our Chief operating Officer James bundle.
Speaker Change: Triple flag had a fantastic year in 2020 for the business delivered another strong performance during the fourth quarter, resulting in record performance for the full year of 2024.
Speaker Change: This includes record G E OS of 113000 ounces. That's a result that is in the upper half of the guidance range. We issued at the beginning of the year and represents our eighth consecutive year of G E O growth.
Speaker Change: Hello record G E OS are great what really matters for shareholders as our annual operating cash flow of $214 million, demonstrating our ability to directly realize higher cash flows due to the rising metal price environment.
Speaker Change: We are on track to deliver another great year in 2025 with Geo guidance range of 105 to 115000 ounces.
Speaker Change: Notably the high grade E 31 open pit deposits deposits at North parks with where a core contributor to our performance in 2024 will continue to be processed or any upcoming year.
Speaker Change: Looking further ahead the next stage of high grade gold ore from North Park is also advancing into production.
Speaker Change: As to the first sub level at <unk> 48 is substantially complete and commissioning is expected in the third quarter of 2025.
Speaker Change: In the fourth quarter. We were also pleased to announce a 28 million dollar acquisition of the <unk> royalty reinvesting the cash flows we generated into further streams and royalties, which will benefit our shareholders for decades to come.
Speaker Change: This gives our shareholders exposure to near term cash flow from a large well capitalized mining project operated by US in this AGM with a long life and significant exploration potential.
Speaker Change: Our portfolio provides top tier precious metals exposure, we are proud of what our operators have achieved in 2024.
Speaker Change: These achievements include Geo's at Cerro Lindo, increasing 24% year over year due to higher grades and enhanced plant efficiency and.
Speaker Change: In addition, Camino Rojo achieved record production of 137000 ounces, representing a 19% beat our initial guidance.
Speaker Change: And on the development side, the new team at montage gold delivered a fully permitted and financed project that kony and less than a year with construction now well underway.
Speaker Change: Overall triple flag is well positioned to deliver long term value for our shareholders from a diversified mix of producing and development assets and we are poised for further growth with an organic growth profile of 135000 to 145000 Geos in 2029.
Speaker Change: Okay.
Speaker Change: As I noted earlier record Ceos are great, but what really matters is cash flow for shareholders on a per share basis.
Speaker Change: The single most important metric I focus on is cash flow per share, which we have increased through the course of 2024 wells consistently and rapidly as we have benefited from record production and a rising golden silver price environment.
Speaker Change: This is the way it's supposed to work and this is exactly what we have done.
Speaker Change: There is still more to come the average gold price in 2024 was less than $2400, an ounce, which is $500 an ounce lower than spot prices at spot prices our year over year cash flows will continue to increase.
Speaker Change: I will now turn it over to Elaine to discuss our financials for Q4 and the full year 2024.
Elaine: Thank you Sheldon.
Elaine: As you can see 2024 was a record across all financial metrics.
Elaine: Strong volumes in precious metals prices as well as continued strong margins.
Elaine: These margins drive the high conversion of topline revenue into cash flow available to shareholders.
Elaine: A key benefit of the royalty and streaming model.
Elaine: Strong cash flow generation will continue to support all of our capital allocation decisions, including shareholder returns and external growth opportunities.
Elaine: On shareholder returns, we paid out over $43 million in dividends to shareholders in 2024, which reflects a 5% increase.
Elaine: In the middle of the year, our third consecutive increase since our IPO.
Elaine: In addition to our progressively growing dividend we all.
Elaine: <unk> returned nearly $9 million to shareholders via share buybacks in 2024 and expect to remain active on Rins CIP opportunistically.
Elaine: On external growth, we reinvested the cash flow generated in 2024 into streams and royalties, including outbound inbound cost streams as well as that test came out that is royalty.
Elaine: These assets either generate cash flow today or in the near term offer significant exploration potential and are operated by strong management teams and represent accretive additions to our portfolio.
Speaker Change: Moving forward to 2025 guidance as Sheldon noted, we expect Geos have between 105000 115000 ounces for the year.
Speaker Change: Which we expect to be essentially 100% derived from precious metals, namely gold and silver.
Speaker Change: This is driven by our expectation of higher gold grade open pit material at <unk> 31, and.
Speaker Change: E 31, and deposits continuing to contribute to deliveries from north parks as well as solid performance from Cerro Lindo.
Speaker Change: Depletion is expected to be between 70, and 80 million same as in the prior year, while G&A will be relatively consistent between 24 and $25 million.
Speaker Change: Finally, our Australian cash tax rate for our Australian royalties will be approximately 25% to assist consistent with that 24% that was realized in 2024.
Speaker Change: <unk> has delivered a consistent track record of Geos growth since inception, achieving a compounded annual growth rate of approximately 20% since 2017.
Speaker Change: Beyond the guidance set for 2025.
Speaker Change: Further growth to 135 to 145000 Geos in 2029.
Speaker Change: Midpoint to midpoint. This represents earnings growth of over 25% from 2025, driven by our operating partners pursuing their own organic growth through both brownfield development and advanced projects, such as Q&A SK Creek in fiscal <unk>.
Speaker Change: We also continue to have substantial firepower for deals that would be additive to this growth profile with more than $700 million available to deploy for new transactions that are accretive.
Speaker Change: Fit with our strategy and deliver value through the cycle.
Speaker Change: Not pass it onto James to discuss that that's coming out of this acquisition.
Speaker Change: Thank you Eva.
Speaker Change: We were pleased to announce the acquisition of <unk>, 5% gross overriding royalty on <unk>.
Speaker Change: The $28 million this past December.
Speaker Change: Which is expected to close in the first quarter.
Speaker Change: This asset at Nielsen revenue from our high grade lithium Brian that says.
Speaker Change: With multi decade reserve lives.
Speaker Change: An attractive cost profile as Brian operations tend to be the lowest cost quartile of the cost of goods.
Speaker Change: Expansion Optionality and significant resource upside.
Speaker Change: Notably our royalty is full coverage all the mineral properties that comprise the projects.
Speaker Change: As steady state for the flag expects to receive royalty revenue from phase one Crestwood brought us.
Speaker Change: Wait to approximately <unk>.
Speaker Change: Representing production capacity of 20000 tonnes.
Speaker Change: Battery grade lithium carbonate.
Speaker Change: The vision is aiming to be a global lithium producer having entered the lithium market in 2021 and acquiring it's 100% interest interest about us in early $2022 $770 billion.
Speaker Change: As highlighted by risks into $6 $7 billion acquisition of Arcadia.
Speaker Change: Asset is located in the <unk> low cost loans that lithium brine production.
Speaker Change: In terms of expansion Optionality Zain is contemplating a potential expansion of nameplate production.
Speaker Change: From a range of 40 to.
Speaker Change: The 60000 tons of lithium carbonate.
Speaker Change: Referred to as phase two.
Speaker Change: If advanced this would meaningfully increase at steady state.
Speaker Change: As I mentioned earlier.
Speaker Change: Overall, the acquisition of <unk> royalty represents counter cyclical opportunity to deploy capital is a crucial slot.
Speaker Change: Getting exposure to a large well capitalized mining project, the long life and significant upside potential.
Sheldon Coy: All my Pal Sheldon.
Speaker Change: The formal part of the presentation.
James: Thank you James.
Speaker Change: We have a strong and positive outlook in front of us in 2025.
Speaker Change: We have a growing cash flow per share profile that will allow us to increase our dividend buy back shares opportunistically and reinvest in the deals to drive compounding cash flow growth.
Speaker Change: We have a diversified portfolio that provides us with top tier precious metals exposure.
Speaker Change: We have forecast organic production growth of over 25% by the end of this decade.
Speaker Change: We haven't we have a debt free balance sheet with over $700 million of debt capacity available to finance further deals.
Speaker Change: We have full alignment with shareholders as we are significant shareholders ourselves and ultimately our strategy that has made us successful provided us with a strong track record is not going to change as we look ahead.
Speaker Change: Here's what we're going to do we're going to and we're going to focus on reinvesting cash flows to deliver compounding growth per share we're going to focus on acquiring good assets in good regions with good operating partners.
Speaker Change: Are going to stay focused on generating cash returns for shareholders. Karen Please open the floor to questions.
Speaker Change: At this time I would like to remind everyone in order to ask a question press star followed by the number one on your telephone keypad.
Speaker Change: We will pause for just a moment to compile the Q&A roster.
Speaker Change: Your first question comes from Lawson Winder from Bank of America Securities. Your line is open.
Speaker Change: Hi.
Speaker Change: Thank you operator, and Hello, gentlemen, good morning, Thank you for the update.
Speaker Change: Two.
Speaker Change: I ask you about a few things so first off.
Speaker Change: On the <unk> and I both stream there was a proportion of revenue in 2004 that was a true up.
Speaker Change: And so just trying to think about what was like a run rate number in 2024 for those two assets X. The the true up and are there any additional true ups still coming in 2025.
Speaker Change: James Thanks for the question, Yes that is the true ups are relatively small.
Speaker Change: Contribution and obviously, we don't provide asset specific guidance. So I think you can think about it from the point of view of alloys.
Speaker Change: Guidance.
Speaker Change: I'm <unk>.
Speaker Change: Yes.
Speaker Change: Assuming that shortens, the minimums, which that guidance would indicate that they are.
Speaker Change: Largely that would be sort of a lagging true up every year. So when you sort of smooth that out.
Speaker Change: Compared to the minimum.
Speaker Change: What kind of.
Speaker Change: Bled through its being similar to that.
Speaker Change: Right.
Speaker Change: And as a reminder.
Speaker Change: Those true ups. This is settled.
Speaker Change: By the end of January the following calendar year. So you basically happens in Q1, obviously, there's a bit of timing of deliveries.
Speaker Change: Right.
Speaker Change: From the prior year any code.
Speaker Change: Okay. Thanks for that reminder.
Speaker Change: Also.
Wanted to ask about.
Speaker Change: Privately held asset that you guys have just trying to get some clarity on whether or not we should be thinking about including it in our long term projections, particularly thinking about your long term guidance out to 2020 on that.
Speaker Change: <unk> you Havent received deliveries from that asset for <unk>.
Speaker Change: Couple of quarters, maybe three or two and a half.
Is that asset expected to restart at some point.
Speaker Change: Yeah, Hi loss and I'll take that yeah, that's a smaller asset that we acquired as part of the <unk> portfolio is a privately held zinc mine has been in operation for decades, and they got hit with a few higher costs in the zinc price ticked down last year, and but they've actually restarted deliveries.
Speaker Change: We have really good dialogue with the operator is not a large asset in our portfolio and it's not something that we need or count on to hit either our 2025 guidance or our 2028 or 2029 number. So I'd say, it's kind of like upside from front from here, but but you know just the mine's operating it's a really good team there and we're.
Speaker Change: Working closely with the operator, so I don't see that as a as an issue.
Speaker Change: And last one to be clear we have a receive deliveries are about in Q3 and Q4 FY 'twenty four.
Speaker Change: Oh, great. Thank you for converting.
Speaker Change: And then.
Speaker Change: Just getting back to one of your bigger assets just thinking about verdict. So there was the disruption from the artisanal miners at that asset do you have.
Speaker Change: Any sort of.
Speaker Change: Update or insight as to what's happening on the ground today like does that is that an issue. That's now resolved and that we can kind of forget about that going forward or are there still some potential risks that we should think about with that asset in terms of.
Forecasting.
Speaker Change: Revenues for the coming years.
Sheldon Coy: Yeah, Hey loss and as Sheldon here I'll answer this one as well.
Sheldon Coy: I think those Asian team has done a really good job on the ground dealing with a difficult situation, they're in and this is actually.
Sheldon Coy: What's very important is not artisanal miners were dealing with these are these are illegal miners as far as more criminal syndicates in gangs and.
Sheldon Coy: And that's a situation that the Asian team is managing.
Sheldon Coy: The mine is producing right now last year was a was a record and if you look at what <unk> is projecting for the future there theyre continuing to invest money and expanding that that asset we feel really good about the asset but this situation is probably not going to be one that's going to resolve quickly is probably going to be something that this asset lives with for a while.
Sheldon Coy: Aegean has done a very good job of operating through the through the issues with the illegal miners.
Speaker Change: Okay Fantastic and then I could ask just one more on the project pipeline or is it sort of the deal pipeline.
Speaker Change: What sort of transaction sizes are you seeing is it more focused on precious metals are you seeing opportunities in non precious metals like the.
Speaker Change: But like the lithium opportunity you guys took advantage of last quarter.
Speaker Change: Yeah, no real change from prior quarters, we would've said I mean, I think our sweet spot is still the 100 million to 300 million dollar range. It's a really robust pipeline right now there's a lot of good opportunities that we're looking at lithium I love that lithium deal. We just did a part of it is <unk> as an operator of large well capitalized.
Speaker Change: Mine coming on in Argentina, and I think that the timing and the price cycle as is.
Speaker Change: It looks good for lithium it's also a very small size and it doesn't change our focus from a precious metals focused our portfolio.
Speaker Change: I think the next deal will have have announced will be a golden silver deal in the Americas, So that'll be kind of squarely in the in our strike zone.
Speaker Change: We are seeing some smaller deals as well out there. So it's probably a pretty healthy pipeline of under $100 million to kind of the $100 million to $300 million and actually a few larger ones that are probably lower probability, but we will see what we can do.
Speaker Change: In terms of precious versus non precious the waiting is definitely towards the precious there are some non precious opportunities out there. We've always been open that we'd be open to looking at some non precious exposure right now we have 100% of our revenues from precious metals. So I think there's definitely some room in there for the portfolio, but I never want to take the.
Speaker Change: So away from being seen as really a precious metals vehicle like that when people look at Triple flag, it's right in our name and we're not changing that.
Speaker Change: Fantastic. Thank you very much guys.
Speaker Change: Thanks Lawson.
Speaker Change: Again, you do have a question press star followed by the number one on your telephone keypad.
Speaker Change: The next question comes from the participant from Scotiabank. Your line is open.
Speaker Change: Okay Bethany. Thank you good morning, everyone.
Speaker Change: Good morning, Brian.
Speaker Change: Good morning, I just wanted to follow up on <unk> question on the M&A pipeline.
Speaker Change: You mentioned that.
Speaker Change: The size of the sweet spot, where are you seeing $100 million to $300 million.
Speaker Change: Are we looking at producing assets.
Speaker Change: Assets and that sort of range or is this still like development coming in in five years' time.
Speaker Change: Wondering what youre seeing is it going to be adding immediately to the pipeline are beyond 2030.
Speaker Change: So the things we're looking at in that pipeline that I referenced there's actually a mix of development assets and producing assets.
Speaker Change: It's really a matter of what fish, we get into the boats.
Speaker Change: Okay.
Speaker Change: And you mentioned, a couple of bigger ones greater than 300 million.
Speaker Change: Im hearing one big one down in South America as well just wondering if youre open to syndication on that one or how big the NASDAQ could you do a 700 million dollar.
Speaker Change: Transaction, just wondering how big you would go.
Speaker Change: And where do you syndicate.
Speaker Change: So.
Speaker Change: Openness is syndication, yes, but it would probably come down to a concentration of I'm talking completely in the abstract here and not with respect to any particular asset, but certainly opened a syndication if there would be some kind of concentration in our portfolio that we wouldn't want to have over concentrated whether that be a commodity or or or.
Speaker Change: <unk> or development or something something like that.
Speaker Change: So we are opening concept of syndication, but we're not necessarily wanting to go there upper end of the range I don't know if I want to give you an upper end of the range, but we could finance quite quite a bit right now and we've always had a view that we would be competing for even the largest deals in the sector and that's been the case since even before we were public and that has not changed.
Speaker Change: <unk>.
Speaker Change: Okay, and what about corporate transactions I mean I.
Speaker Change: I'd say that from just speaking to generalists.
Speaker Change: Talk about Wheaton, and Frank Cowen and getting down to the smaller ones. It gets a little bit too high for some of these general.
Speaker Change: And that how do you think about corporate transactions.
Speaker Change: Yeah, I mean, I guess, we're a little bit unique in that we've had the kind of the more recent successful corporate transaction.
Speaker Change: I think 2024 has been a fantastic year for some of the assets, we picked up through the Mavericks transaction, including icon, a SK Creek and others.
Speaker Change: So we are open to it but you just really have to find you have to find the value there and you have to find a partner that's willing to transact at a price where you both agree you're seeing good value. So we found that on Maverick some were open to it and other cases, but.
Speaker Change: Corporate M&A.
Speaker Change: It's not easy necessarily we're open to it but you just kind of need to find something where the all the gateway.
Speaker Change: Okay.
Speaker Change: And then maybe.
Speaker Change: Finally, just on your $700 million.
Speaker Change: Available in Australia, you pay down your debt. So congrats on that zero debt, how do we think about the dividend I think that comes up with you.
Speaker Change: I think with Q2 or thereabouts.
Speaker Change: About the dividend.
Speaker Change: Yes, I think we've been quite public that I see us with a progressive dividend policy, we've increased our dividend every year since we've been public.
Speaker Change: I would look to be seen to increase side of course subject to board discretion, but no no no changes anticipated on that so I would say you should probably expect us to continue our policy of our practice of increasing the dividend annually.
Speaker Change: And as I think about your investment in the business and I think about.
Speaker Change: Dividend payout.
Speaker Change: Do you think about what's the minimum cash balance you would keep on your balance sheet to operate your business I know, it's only going to be very low I just wanted to try and see how much leverage I have R V.
Speaker Change: Plus increased dividend.
Speaker Change: Oh, yes, I mean, the actual amount of cash you need to run. This business is very very low we tend to keep like $10 million on bi.
Speaker Change: We could run this business with.
With $5 million of cash in the system. It's just these are just a very efficient business models.
Speaker Change: And the cash flow tends to come in pretty consistently through throughout the year. So.
Speaker Change: If you are modeling I would use somewhere in the $5 million to $10 million range, there and just trying to CES Sheldon what you could do from a dividend perspective.
Speaker Change: And the actions in <unk>.
Speaker Change: So keep that minimum balance at 10 and up.
Speaker Change: Okay, No I really appreciate those insights I'll pass it on to someone else. Thank you so much for taking my question.
Thanks, Tony.
Speaker Change: Your last question comes from Derek <unk> from TD Cowen Your line is open.
Speaker Change: Thank you very much at North Park early days for <unk>, but as major trauma situation, where exploration success for evolution.
Speaker Change: I would actually displace what is why it is higher grade gold tonnage.
Speaker Change: And that would be subject history.
Speaker Change: Derek I don't see any risk of major Tom displacing any anything that our.
Speaker Change: Our disadvantage actually nature times, a really positive development for Triple flag, that's why that's a new discovery on the property right in the middle of the.
Speaker Change: The mine site. So no I don't see any downside exposure to major Tom I see it is all upside for triple flag.
Speaker Change: Okay, and then on the $35 million precious metal stream you mentioned in your MD&A to support about Bronco restart in Peru with bilateral situations and are there other opportunities like this put a restart.
Speaker Change: Given the elevated precious metal prices.
Speaker Change: Yes that is a bilateral situation.
Speaker Change: I'm, hoping that that will close very shortly and we can talk a little more freely about that but so it's right now it's on a on a no names basis, but as you pointed out we disclose it in our MD&A.
Speaker Change: It is bilateral it's exactly what we're supposed to be doing from a corporate development opportunity to us perspective, as we're out there talking to people using our networks. It's a really nice opportunity I am really looking forward to talking to the market more fully on it a really good team. It's a nice property as brownfields to restart and it's a precious metals and in Latin America. So you know.
Speaker Change: Right right in the middle of the of our Venn diagram.
Speaker Change: Okay, great. Thanks.
Speaker Change: That concludes the Q&A session.
Speaker Change: I'll turn the call over to Sheldon Vander Kooi CEO for closing remarks.
Speaker Change: Yes, I just want to thank everyone for participating thank our shareholders, where we are.
Speaker Change: We're excited about what we've accomplished in 2024 and we're even more excited about 2025, I don't think we've ever been as well positioned as we have been right now the cash flows are very robust theres a great deal pipeline.
Speaker Change: Very much looking forward to the upcoming year, thanks, everyone for participating.
Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining and you may now disconnect.
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