Ecora Royalties PLC (ECOR) Earnings Call Transcript & Summary

Welcome to the Anglo Pacific 2021 AGM Results presentation and Q&A. [Operator Instructions] I'll now hand over to Patrick to begin. Patrick, over to you.

Thank you very much. Good morning, ladies and gentlemen. For those who don't know me, my name is Patrick Meier, and I've been a member of the Board of Anglo Pacific since April 2015 and was appointed as Chairman in May 2017. On behalf of the Board, I would like to thank you all for your continued support and commitment, and welcome you to this webcast. I really had hoped that we would be meeting in person, but I guess the pandemic has prevented that for us this year. But I certainly hope that next year we'll be back to normal as we always enjoy the physical meeting that we have and meeting many of you shareholders in person. So I guess what we will do is run through the business that has already taken place and then move on to the presentation. But because shareholders were unable to actually attend the AGM in person, the formal business has been undertaken with the requisite quorum and concluded with the -- and I'm pleased to inform you that all 19 resolutions were duly passed. Proxy voting results on the various resolutions will shortly be uploaded to our website and available via the National Storage Mechanism. And these voting results should now be appearing on your screen, Slide 5. I will shortly invite members of the Board to introduce themselves. But first, I would like to turn to Vanessa Dennett. We're saying a sad farewell to Vanessa as she has stepped down from the Board as a Non-Executive Director, following the conclusion of this year's AGM. We're immensely grateful to Vanessa for the enormous contribution she's made to the group over the last few years. She's been an energetic Chair of the Remuneration Committee, which has overseen a full review of our compensation structure and the design of the new long-term incentive plan, which was passed unanimously at the AGM. Vanessa has also played a vital role on the Board, and her background in M&A was particularly valuable in our recent landmark transaction of the Voisey's Bay cobalt stream acquisition for $205 million. I'd like to invite Vanessa, if I could, just to say a few words. Vanessa, over to you.

Thank you, Patrick, for those kind words. As I've left the Board, I will keep this brief. My main focus over the past year was developing a revised remuneration policy and new -- a new long-term incentive plan, as Patrick's outlined. I believe that both the policy and the plan achieve the objectives we set at the outset of the process. And it's very pleasing to see the support received for them at the AGM today. I'd like to thank our shareholders for that support and also for the engagement and feedback received during the consultation process. I've had a very interesting time on the Anglo Pacific Board and especially enjoyed being part of the acquisition of the Voisey's Bay stream, which I really believe positions the company well for the future. I wish the company and everyone at Anglo Pacific, the very best going forward. Back to you, Patrick.

Thanks, Vanessa. So I'd like to move on, if I could, next to Graeme Dacomb.

Good morning, all. I joined the Board as a Non-Executive Director in November 2019. I'm Chair of the Audit Committee and will be taking over as the Remuneration Committee Chairman after this AGM, which marks the retirement from the Board of Vanessa Dennett, as you just heard. My background is in accounting and auditing, primarily with Ernst & Young in the U.K., where for the last 12 years, I was focused on serving clients in the extractive industry sector. My other Board position is Ferrexpo plc, a London-listed, but Ukrainian-based iron ore miner, where I'm also the Audit Committee Chair. Anglo Pacific occupies an important position in the mining industry, offering alternative sources of finance for mining companies struggling to obtain traditional financing. And I'm very pleased to be able to contribute to that strategy. Thank you, and back to you, Patrick.

Thanks, Graeme. Now I'd like to ask Jim Rutherford to step forward.

Patrick, thank you. My name is Jim Rutherford, and I joined the Board in November 2019, pretty much the same time as Graeme. I was appointed Senior Independent Director in January 2020, and I'm also Chairman of the Sustainability Committee. My background is in investment management and investment banking, notably with Capital Group, a U.S.-based investment management firm, where I was responsible for investments globally in the metals and mining industry. My other Board positions include Centamin plc, the gold producer, where I'm the Chairman. And I'm due to join Board of U.K.-listed steel producer, EVRAZ plc in mid-June. As of 2 weeks ago, I stepped down from the Board at GT Gold, a Canadian exploration company following the completion of its takeover by the world's #1 gold producer, Newmont. And with that, I will pass back to Patrick. Thank you.

Thank you, Jim. Now I'd like to ask Bob Stan to step forward. And I'd like to thank Bob, in particular, for getting up very early, given that it's some ungodly hour in the morning where you are, Bob.

Thanks, Patrick. I joined Anglo Pacific Board in February 2014. It's been a privilege and an honor to participate in this, my eighth AGM for Anglo Pacific. I'm currently a member of the Audit, Remuneration and Nomination committees of the company, and I serve as a designated Non-Executive Director for the workforce engagement. And this latter capacity, I engage on a candid basis with our staff to receive comments from them related to the company and any concerns they may have. I have almost 40 years of mining and resource development experience, covering a wide variety of operations and commodities. I have -- I currently serve on the Boards of Quantex Energy Limited, CanWhite Sands Corporation, and I'm Chairman of Spruce Bluff Resources Limited. During my working life, I've been fortunate to have had senior roles with several mining companies, including Fording Coal and Westar Mining, Smoky River Coal and Teck Corporation. In 2000, I was a member of an entrepreneurial group of investors that established Grande Cache Coal Corporation, and I served as President and CEO and Director until this company was sold to an Asian consortium in 2012. Anglo Pacific has a valuable role to play in providing nontraditional financing for resource companies seeking funding for a broad range of commodities. As such, it fills an important role in today's challenging environment for resource projects. Thank you, and back to you, Patrick.

Thanks, Bob. I'll shortly hand over to Julian Treger, the Chief Executive Officer; Marc Lafleche, the Chief Investment Officer as well, to provide an overview and update on the company. They will then hand over to Kevin Flynn, the Chief Financial Officer, who will run through the financials. You should see on your screens the bio for Julian. Julian joined the Board in October 2013, which most of you will be well aware of. And during the time with the company, he successfully led acquisitions of nearly $450 million, determinately reducing the company's reliance on one asset and pivoting us away from our coal heritage and towards 21st century commodities needed for a sustainable future. And this really has been our focus as a Board and for the management team. And Julian will be very happy to talk about that. So Julian, over to you.

Thank you very much, Patrick. Rosy, perhaps we can turn straight to Slide 12. And as is customary, I'll provide a short overview of the company, the results, highlights and where we are in a broad sense and then hand over to Marc, who will cover the investment strategy in more detail, and in particular, why are we so excited about the cobalt market. So turning to the highlights of last year's results. I mean those were previously published in our trading update. And so this is not news. And they are somewhat academic as they do not reflect the acquisition of the transformational Voisey's Bay cobalt deal, which we completed in March 2021. Nevertheless, it is worth discussing what happened to your company last year. Fortunately, we had very little disruption from COVID-19 across the portfolio. But there were effects on the coal market resulting in lower prices and there was lower production at a number of our mines, particularly at Kestrel, which reduced from the previous record level seen in 2019 and volumes there were 11% lower, a level which we think is likely to be the new normal in the near term. The results were also impacted by planned CapEx investments at IOC, which translated into a lower special dividend from them. And there were also a number of one-off events, which are unlikely to be repeated this year. The result of all of that was a roughly 40% decline in most of our metrics for 2020 royalty-related revenues, our portfolio contribution and also adjusted earnings per share. Net debt at the end of the year wasn't higher though. In fact, it was lower from GBP 29 million. We dropped to GBP 24 million, but that benefited from the GBP 15 million realization of part of our Labrador Iron Ore position, which we made in December, generating a profit of GBP 2 million, but very much in preparation for the financing of the Voisey's Bay stream acquisition. And as you -- if you follow the company closely would know, we subsequently sold a much larger position of Labrador Iron Ore in the first quarter of this year to fund that. In 2020, cash flow showed a significant decline as a proportion of royalty assets dropping from 26% to 17%, and that has further reduced to 12% on a pro forma basis with the acquisition of the Voisey's Bay cobalt stream, and we would expect by the end of this year, it will be below 10%. So a significant progress in reducing our coal exposure. Although these results are dominated to some degree in retrospect by the Voisey's Bay deal we did earlier this year, we didn't do nothing in terms of new investments in 2020. We made a commitment to finance $20 million with Incoa which diversifies the way in which our revenues are generated because it's a more stable industrial mineral. We invested further $2 million into Brazilian Nickel alongside the U.S. government as part of a wider financing package at a price before the nickel market ran. And we did a GBP 5 million share buyback program at GBP 1.09 per share, partly financed through selling the mainly Berkeley Energia stake, which has gone up a lot. And we also have invested more in Labrador Iron Ore at the beginning of last year and generated a significant profit on that holding before we disposed of it. So that really is a summary of how we operated in 2020. But moving forward to Slide 13, Rosy. As a result of the Voisey's Bay acquisition, the company really does have a new look and feel. We are now 60% in battery-related materials. We've grown significantly in terms of more acquisitions. We've realized a large proportion of our Labrador Iron Ore stake with a 60% total return. And we are moving more and more into the green space as the slide demonstrates. So if you turn to the next slide, 14, you can see how, from a pie chart perspective, focusing on our asset base, the business has really changed immeasurably. From 2013, when I joined, we were dominated by Kestrel, 76% in coking coal. As I said, this should now be below 10%. We were -- we had no battery metals. Now we're 60% in battery metals; 45% in cobalt, and we provide more exposure to cobalt as a percentage of our business, we think that anywhere else in the public markets at the moment. So for people who share our enthusiasm for cobalt, our stock should be a go-to material. And we've done that all without compromising on our very disciplined jurisdictional footprint. We've gone actually up from 93% in the OECD to 95%, but the Australian pieces dropped from 90% to 25%, and we've gone from only 4% in Canada to be close to 60% in Canada. So a very much changing business, moving significantly into battery metals, but still staying in safe jurisdictions. The next slide -- please, Rosy -- looks at how we've grown the portfolio contribution, reducing our exposure to Kestrel. And obviously, that will be significantly changed with the Voisey's Bay acquisition. We did have a reduction, obviously, last year. But this year, we're hopeful that as the world economy recovers and commodity prices recover, we will see the recovery as well. And we have, over the past couple of years, developed a very good track record in capital allocation, trying to identify commodities to invest in before they go up, so investing in vanadium in 2014, thermal coal in 2015, uranium in 2017, iron ore before its latest run, copper again before this latest run and nickel as well. Despite that track record, if you turn to my last slide on 16 -- Rosy, please -- and the strong growth we've had in dividends per share, which continue to be well covered by our earnings, we haven't seen a significant rerating for the stock. As you can see, our multiple of EBITDA continues to be quite low, although it has recovered recently with the renewed interest in the mining sector. And our P/NAV not hasn't really moved much for the last couple of years. So we are hopeful that as we move into this new area, we will get the attention of more investors and that rerating will occur. That's a broad overview. I'll now hand over to Marc Lafleche to talk about the investment focus of cobalt. So Marc joined the company in May 2014 and was appointed Chief Investment Officer in December 2020. Marc was instrumental in the successful completion of the Voisey's Bay deal. And together with the investment team, reviews hundreds of opportunities every year, carefully and diligently selecting projects that meet our strict investment criteria. Together, we work hard to continue to further diversify and strengthen the portfolio, and Marc will talk more about that. Over to you, Marc.

Thank you, Julian. So starting on Slide 19, please. A key primary strategic focus has been, as Julian mentioned, to transition this business towards commodities that support a more sustainable world and away from its heritage to call. Our focus on 21st century commodities has 2 key elements: first, those commodities required to achieve the electrification of energy consumption, and those are listed on the right-hand side of the page. And for example, these are commodities linked to renewable energy production, battery energy storage, electric vehicles and, of course, electric grids and energy transmissions. And the second pillar of our 21st century thematic are those commodities which provide environmental benefits within their specific commodity subsets. And by that, we mean, for example, mining operations, which produce high-purity products with low levels of deleterious elements relative to other producers of the same commodity, operations with relatively low carbon footprints per unit of production as well as mining operations that contribute more generally to reduce Scope 3 carbon emissions by virtue of the fact that those commodities themselves have low carbon emissions per unit produced within broader supply chains. On Slide 20, please. The transformational $205 million Voisey's Bay cobalt stream acquisition is entirely consistent with that thematic. And furthermore, addresses two of what we see as historically two of Anglo Pacific's biggest strategic challenges: first, to replace customer royalty income; and second, to decisively shift Anglo Pacific's portfolio away from coal and into those 21st century commodities. In terms of the Voisey's Bay Mine, put simply, this operation really ticks all the boxes. It's a Tier 1 mine, with a Tier 1 operator, in a Tier 1 country. It's an established nickel, copper and coal line production track record dating back 15 years, and it's a low-cost operation with strong through-the-cycle cash flow generation. The mine has a long mine life with a reserve-based mine life, extending to 2034 with further length of line upside potential. And the stream provides Anglo Pacific with exposure to a very scarce source of Canadian-origin cobalt. On Slide 21, please. We have completed a tremendous amount of due diligence in relation to the cobalt commodity outlook. And in a nutshell, the long-term fundamentals of the cobalt market appear to be extremely favorable. Currently, there are 2 broad cobalt end markets. First, approximately 50% of cobalt demand today comes from well-established industrial buyers. Industrial markets provide a fairly inelastic source of cobalt demand, given it is difficult to substitute cobalt without sacrificing end product quality, performance. Second, approximately 50% of cobalt demand is linked to lithium-ion batteries. And looking into the future, the accelerating trend towards the adoption of electric vehicles is expected to drive significant cobalt demand growth. Auto manufacturers have made very bold promises about transitioning to a fully electrified, emission-free future. And one thing is absolutely clear, to do so, they will require a lot of batteries. On Slide 22, we've outlined cobalt supply outlook, and these dynamics appear equally favorable. Cobalt supply is primarily limited to challenging jurisdictions with approximately 70% of the world's cobalt produced in the Democratic Republic of Congo. And furthermore, cobalt supply is quite inelastic, simply because cobalt is typically produced as a byproduct of nickel and copper mines. And globally, today, there's only one commercial pure-play cobalt operation. The combined effect of these supply-demand factors are expected to result in future supply deficits such that APG is very well positioned to benefit from what we perceive to be significant cobalt price upside potential. If you can please turn to Slide 23. Diversifying Anglo Pacific's commodity royalty portfolio in terms of both sources of royalty income and the underlying commodity mix has been a key and continues to be -- has been a key strategic focus in the past and continues to be a key strategic focus in the future. But as we have grown our portfolio, we have looked to acquire royalties over mining operations underpinned by very strong sustainability profiles. A number of key highlights are included in this slide, but just to pick a very -- a small sample. On the right-hand side of the slide, you can see a chart outlining carbon emissions per unit of nickel produced amongst all global nickel mines. And it's very clear that Voisey's Bay Mine is amongst the lowest emitters of carbon per unit of nickel produced relative to all global nickel lines, which within the context of the Anglo Pacific portfolio significantly alters APG's carbon footprint. Amongst other operators, Mantos Blanco is seeking to source 50% of its power from renewable sources, and all its water usage is sourced by a seawater desalination, thereby indicating the requirement for freshwater. Ultimately, we believe that partnering with counterparties that produce commodities in a sustainable way is just as important as acquiring exposure to commodities that are required as raw materials for products that will, therefore, deliver the transition to a more sustainable future. So with that, back to you, Julian.

Thank you, Marc. I would now like to hand over to Kevin Flynn to discuss the finances in more detail. Kevin joined the company as Chief Financial Officer in January 2012, and was appointed Executive Director in January 2020. During this time, Kevin has successfully originated and negotiated all of the group's borrowing facilities, recently bringing in three of the biggest Canadian banks, namely Scotia, CIB and RBC and has played a leading role in raising equity for the company. Kevin, over to you.

Thanks, Julian, and good morning, everyone. Echo Patrick's comments, hope that we can be doing this in person again next year. It seems like it's been a long time. Rosy, if we could turn to Slide #26, please? This is our KPIs, and this chart really does demonstrate the resilience of the royalty model. And I guess, what history will judge to have been one of the most challenging years for businesses on record. Despite the significant disruption to the coal markets, which Julian alluded to earlier and other one-off events within the portfolio, we still emerged with income of approximately $50 million, strong dividend cover, and we ended the year with a balance sheet well positioned to support the financing of Voisey's Bay acquisition. Looking at the earnings profile over the last few years, it's worth bearing in mind that 2020 is not really a direct comparison with the proceeding 2 years because 2018 benefited from very high coking coal prices and 2019 benefited from record production levels of Kestrel where the operator, in fact, increased production by 40% in that year. With production at Kestrel now likely to be back to around about the 2018 level and the near-term coking coal prices still relatively subdued, we don't expect the portfolio to reach that highs of 2019 in the current year. If we can turn to the next slide -- please, Rosy -- which summarizes our income. And I'll use this slide to give a brief update on some of the portfolio news flow. Total portfolio contribution was GBP 37 million, which is approximately $50 million, which was a 38% decrease. And most of this was attributable to Kestrel, where we saw a 10% decrease in volumes and also a 34% reduction in prices achieved. Going forward, I think the operator has announced its plans to produce around about 5.7 million tonnes in 2021, and this compared to just over 6 million in 2020. And we think that's going to be their run rate for the next couple of years given the coal price environment. Looking at Maracas, this was one of the royalties impacted by one of those one-off adjustments in 2020, and that was namely the GBP 1.3 million charge associated with the termination of offtake arrangement. And although this hit revenue in 2020, it should actually result in higher margins going forward as they're no longer subject to that offtake discount. And that will come through to [indiscernible]. In addition, they now, with the in-housing of their sales function, have the ability to kind of alter the composition of what they're producing. And we think that they're targeting a higher-purity vanadium product targeted towards the battery end users. And we would expect this product to achieve higher margins also. So we do see some upside to this royalty coming through in 2021. Narrabri was once again impacted by the fault area that they've experienced over the last number of years. We'd expect to see increased volumes coming through in 2021 and beyond as they really get into the expansion whereby they will mine straight from the Northern deposit to the Southern deposit, and that in turn should result in fewer long changeovers. Revenue in 2020 was similarly to Kestrel impacted by the widespread disruption to coal markets caused by COVID-19. Looking at Mantos, this really reflected a full year of contribution in 2020, only at 4 months of revenue in 2019. And we'd expect to see increased volumes in 2021 as they achieve the debottlenecking project for which our royalty was used to finance. Clearly, copper prices are also at much higher levels thus far in 2021 than they were at last year. So there's a reasonable prospect of growth to come in the year ahead. Our revenue from Four Mile continues to be impacted by the ongoing dispute in relation to the permitted deductions. This matter is now in the legal process in Australia. So I can't comment too much further on this at the moment other than that we are actively pursuing our rights in relation to this. Income from LIORC for the year was impacted by planned CapEx at the underlying operation, which reduced the component of income we received by the way of special dividend. But despite this, the strong iron ore price allowed for a very high plan of dividend for 2020. And the outlook for 2021 continues to look favorable, given very strong iron ore prices. Although, I guess we should caveat that we have sold around 77% of our position in LIORC to part finance the Voisey's Bay stream. So that level of income will reduce in 2021. And finally, EVBC -- sorry, McClean Lake, I should say, was impacted by the closure of the operation for around about 6 months as a result of precautionary measures to protect the local population against the outbreak of COVID-19. It's a very isolated area. But we're pleased to see that this came back into production in April of this year. And that means that all of our sources of revenue are now back in operation. And EVBC continues to perform very well for Anglo Pacific. Although volumes were down in 2020, the gold price remains strong, as investors turn their attention to safe assets given COVID uncertainty and gold is obviously always a beneficiary of flight to safety. But more encouraging for us really is that the operator announced an updated reserve and resource position at the end of 2020, which suggests a further 5 years of mine life at least to come. And to put this in context, this is a royalty, which began production in 2011. We probably had about 3.5% payback in terms of cash on that with another 5 years to come. So a very good example how royalty investments really do provide upside potential. So just to conclude on this page, although 2020 was a challenging year, we do see potential for growth coming from our portfolio in 2021. Now if we can turn to the next slide -- please, Rosy -- which is our financing flexibility. We currently have around $70 million of financing flexibility to finance additional acquisitions. This takes the form of 3 sources. We've got around $26.5 million undrawn on our current borrowing facility. We retained just over 1 million shares in LIORC. And based on share prices and exchange rates today, that's worth around $36.5 million. We did a share buyback last year, and the value of those shares is currently around about USD 9 million. So that all comes together to give us around $72 million of financing flexibility. And this should be sufficient for financing 1 or 2 bolt-on acquisitions, given the average deal size over the last number of years. If we can move to my last slide -- please, Rosy -- capital allocation. So following the Voisey's Bay acquisition and the way in which we financed it, we thought it would be sensible to outline how the Board are currently thinking about capital allocation targets and priorities for the year ahead. This is yet to be formally finalized by our Board, but we thought we put down on paper some of the pillars of what the policy is likely to look like. First of all, following the Voisey's Bay acquisition, for which we drew down $123.5 million, our priority is to keep our balance sheet strong for future growth. And whilst there remains -- whilst we remain with comfortable levels of debt capacity in business, we're now over 2x levered, and we need to ensure that our balance sheet continues to support appropriate levels of leverage going forward. Following the Voisey's Bay acquisition, we are firmly -- we remain firmly in growth mode. We want to build on the momentum of that transaction and consolidate our position as the largest listed battery metals royalty company. And although we've largely infilled for the Kestrel revenue stream at the Voisey's Bay acquisition, there's more to be done, and we're firmly, as I say, in growth mode. Thirdly, our approach to dividends has remained unchanged. We will continue to pay a 1.75p quarterly dividend, providing shareholders with a base dividend level of 7p for 2021. And then depending on the performance of the company during the year and the growth opportunities that we've either executed or we're actively pursuing, we can then determine what to do with any residual capital leftover. The table below on this page shows our dividend calendar for the year. The payment of the final dividend is a little later than 2020 as we need to file our Q2 covenant statement in advance of paying that dividend. But I guess we'd like to point out that any investor who buys into the stock today will still benefit from that final dividend. And so for -- so on a cash basis, shareholders can expect to receive 9p of dividends by the end of February next year. That completes my slides. Julian, back to you to wrap up on the outlook.

Wonderful. Okay. Thanks so much, Kevin. So I'll just talk shortly about outlook and then hand over to Patrick to chair the Q&A session. With regards to outlook, we are confident about the remainder of the year. The outlook for most commodities looks favorable. We've seen significant increases in iron ore, copper, nickel, thermal coal and now recently, we've seen some recovery in coking coal as well, as increased government investment is likely globally as a fiscal response to COVID-19. So we definitely expect a rebound during 2021. The Voisey's Bay transaction is expected to significantly alter our revenue profile, starting from Q2. Q1 was an interim quarter when we've sold our Labrador stake, but we haven't yet started to achieve income from Voisey's Bay. The group intends to continue to pay an interim dividend of 1.75p per quarter, very much in line with what Kevin outlined. And in addition to the healthy organic portfolio contribution, we expect this year, we have the capacity and flexibility to continue to add to our high-quality royalty and streaming portfolio. We've made a big step with Voisey's Bay, but we need to cement that with further probably smaller steps in the coming months. So we are hard at work on your behalf, but look forward to the rest of the year with confidence. And I'll now hand over to Patrick to chair the M&A -- the Q&A session, rather.

Thanks, Julian. Thanks, Kevin. Thanks, Marc. So yes, we'd like to entertain some questions and be happy to take some and provide some answers and further detail. So over to you for questions, Rosy?

Thank you, Patrick. We've had a few questions submitted already. Firstly, the first question is, it seems that royalty producing companies such as Anglo Pacific are not really appreciated by U.K. investors for their free cash flow and dividend security and yield. Have you considered moving the quote to the Canadian market where royalty income stocks trade on a much higher multiple?

Okay. Julian, do you want to address that one?

Sure, Patrick. I think we already do have a quote on the Canadian market. And with the Voisey's Bay transaction, we have 60% exposure to Canada in terms of our asset base. And as we've mentioned, our bankers are not entirely Canadian. So our Canadian presence is growing. We certainly plan to spend more time in Canada, particularly physically when we can, meeting new investors, but we were encouraged that a number of Canadian institutions came into the recent placing for Voisey's Bay. And it's very much a work in progress, which we will continue to focus on.

Yes. The next question is there have been a number of brokers notes recently recommending these shares, both for capital gain and income, yet doesn't appear to have had an impact on the investment community and the shares languish are well below the suggested target prices. This is even after a successful share buyback program, why do you feel we are so poorly regarded by the market?

Okay. Julian, back to you. You talk to the market.

Sure, Patrick. We have seen some pickup recently in the share price, along with the market. But I think the market did have to digest quite a considerable number of new shares around the Voisey's Bay placing. We also saw in the first couple of months of this year because of the spat between China and Australia that coking coal prices have slipped back. Fortunately, they have now recovered somewhat. And I also think our mix of being very heavy with green metals, but still having some coal exposure is supporting us back, and that is an area where we will look at ways of reducing, particularly our thermal coal exposure. So hopefully, all of those steps will help to get the stock to the appropriate levels in the market.

Thank you, Julian.

Our next question is at the current price, this company is considerably undervalued. It could be very easily fit into other companies and similar businesses. All these companies have a much more realistic valuation. Have we ever received a serious approach from other companies?

Maybe I'll address that one. I think certainly, we note the difference in rating that is enjoyed by Canadian royalty companies compared with our own company and that is something which is frustrating, albeit there are differences, different market, different commodity mix and so on. And some of the issues that Julian mentioned are relevant there. In answer to the specific question, have we had serious approaches? Clearly, we had serious approaches, you would have heard about them in terms of any concrete or very meaningful approaches. We are constantly reviewing our own ability to defend any such approach such that we would optimize price where it ever to happen. But I think I can say at the moment, there is no -- there is nothing on the horizon that we can see. Next question?

Thank you, Patrick. We have no further questions. So unless any come through in the next few seconds, I will hand back to you to close the meeting.

Okay. So well, thank you, everybody, for taking the time to participate. As we said at the beginning, we do hope that we'll be able to meet in person next year. I think that's what shareholders want and what we like, so we look forward to that. But in the meantime, thank you for your continued support. We appreciate that a lot of you have been with us for a long time, and we hope for a long time to come. And we also hope that we can continue to do a good job. We think we're doing a reasonable job managing the company, and it would be nice to see some gains over time as well as far as the market is concerned. So with that, thank you again, and I'd like to close the meeting. Thank you.