Royal Gold, Inc. (RGLD) Earnings Call Transcript & Summary

We are so happy this afternoon to host Alistair Baker, the VP, Investor Relations and Business Development of Royal Gold. Royal Gold is one of the major royalty streaming companies, a very large, formidable company with excellent cash flow and net cash. And I don't want to tell the story because Alistair is going to do it better than me.

All right. Well, thank you very much, John. I certainly appreciate the opportunity to present at your conference. I really wish I was there in person. But I guess, we'll have to wait till next year. Hopefully, you can all see my screen and the investor presentation title slide. So I will, obviously, be making forward-looking statements during this presentation. So please make yourselves aware of the language on this page. And before I start with kind of the formal presentation, what I would like to do is just make a few comments about our fiscal 2021 results, which we released in mid-August. It was a fantastic year for Royal Gold. We had record revenue, cash flow and earnings. Our revenue was $616 million, cash flow of $407 million and earnings of $303 million. Each of those were up strongly over the previous year. And that was due to higher metal prices across the board, but also a very strong portfolio performance. So we're very pleased to see that good, consistent performance from the portfolio. A few other things that happened in 2021 that are worth noting. We will be changing our year-end effective this December 31. So John, I hope that makes your life a lot easier. We were the outlier over the June 30 year-end, and moving to December 31 will make it easier for you to compare us to our peers. We also -- we have completed 3 transactions around the end of the year. They're all gold-focused, right down the fairway for us. I'll go into a bit more detail on those during the presentation. And then finally, we increased our dividend for the 20th consecutive year in November. So 2021 was a really good year for us, and we're in a great position now to look forward. So this slide explains Royal Gold at a high level, and we are a high-margin precious metals business that generates consistent cash flow. We've been in the business since 1980s, and we just celebrated our 40th anniversary on the NASDAQ this June. So long-standing history of performance. Our business model provides exposure to precious metals, without many of the risks that you get when you operate -- when you invest in operating mining companies. We have 2 main segments in our business. We have streams at about 70% of revenue and royalties at about 30%. But both are really the same thing in that they provide the opportunity to invest in the top line production for mining assets. We have a very diverse portfolio of about 200 properties, 44 of which were in production. And about 85% of our revenue comes from precious metals, and 75% is gold. Our market cap of just over $6 billion today and 28 employees means that we're a very efficient business. And we have a strong balance sheet with over $1.2 billion as of the end of June available for new transactions. So we're very -- positioned very well.

How about your net cash?

Net cash at the end of the quarter was $220 million or so, but then we did draw on our revolving credit facility of $100 million just after the end of the quarter.

Okay.

So moving on to our core attributes. And there's a lot on this slide, but there's 3 things I really want to highlight. First is our business model is designed to provide optionality, and that's to metal prices, but also reserve growth. And that's without the ongoing capital commitments that an operating company has. We have a very experienced technical and commercial team. And when we look at new investments, we're always looking for those that can provide upside over the longer term. Secondly, we think of our business in terms of per share metrics. And when we look to fund our business and expand and grow, we're looking to fund it through using internal resources. So that will be cash on hand, it will be operating cash flow, but we also have a revolving credit facility that we will draw on to build our business, and we'll pay that down over time. And the whole idea is to show accretive per share growth to our shareholders. And then the final thing I'd just like to highlight on this slide is that our dividend is very important to us. We're very committed to it. We've paid a dividend since 2000. We've increased it every year since. So that's unique in the precious metals sector. Now Slide 5 here just shows, for a generalist audience, why we think we're a good alternative for investors, who are looking for a conservative exposure to precious metals and gold. On the left-hand side, you can see our beta of 1.77 to gold is -- that's excellent leverage. But we've also had, over the period since the GDX was started in 2006, we've had a very good longer-term share price performance. And that's measured against gold, that's measured against the GDX, but it's also measured against the general market indices. So again, well worth considering us if you want conservative exposure to precious metals. Now I'll make a few comments on gold. Assuming your regular audience, John, is the people I've seen before, I don't think I need to spend much time on this. But gold really is a unique strategic portfolio asset. It provides diversification against all sorts of market risks. So markets, currencies, inflation and so on. It's very liquid. And if you separate gold from the general commodity bucket, it has performed very well relative to other asset classes over time, but it's done that with lower volatility. So it's an interesting thing to think about in today's macro environment. You can make many different investments in precious metals, and this slide here is just meant to show and highlight how we are a bit different from some of the others. We provide -- we try to provide the best of all worlds. So we try to provide exposure to gold and optionality while reducing risk. And we reduce our risk by having a diverse portfolio and also without having direct exposure to operating capital costs. You can invest in gold by buying the physical metal, but 1 ounce will always be an ounce, and you'll never get a dividend from that ounce. You can also invest and get really high leverage to gold by investing in junior mining companies or senior companies, but the problem there is you're exposed to operating and capital costs. So we hopefully don't provide that. So I'll spend a few minutes on the next slides talking about optionality and efficiency in our portfolio in total. This slide here is -- this really is the key to our model, and that's to provide optionality and reserve growth. I've taken 2 examples here on this slide. We've got PV on the left, and we've got Wassa on the right. And both of those are investments we made in 2015, and we have gold streams on both of these. We're in gold and silver on PV. We made those investments in 2015, but today, reserves and resources at both of those assets are higher than at the time that we made the original acquisitions. And that is, despite the fact that these acquisitions have provided us with 6 years of metal deliveries during the period from investment to today, and we've recovered about 62% of our investment at PV and also 100% of our investment at Wassa. But both of those projects have interesting growth projects underway. At PV, there's an expansion underway that will maintain throughput levels at around net levels, but potentially extend the mine life to the mid-2040s. At Wassa, there's been a new resource that's been identified that could extend the mine life by an additional 11 years on top of the 6-year reserve life that's ahead of the asset today. So in both of these cases, Royal Gold does not require to fund capital or invest any further to get exposure to the upside. And this is growth that we just don't have to pay for. So that the exploration and production growth and the upside is key when we look at new opportunities, and it's a key feature of our business model. Now just talking about the efficiency of our business model. We have, as I said at the outset, 28 employees produced over $600 million of revenue last year and our market cap today just over $6 billion. So if you compare that, those metrics on a per employee basis, we compare well to other mining companies as well as other companies generally today. So a very efficient business model. And our low employee count really means that we have a low fixed cash G&A, which really contributes to our efficiencies. Our EBITDA margin last year was 8%, and cash G&A was about 4% of revenue. And our G&A is made up of things that don't move that much. So things like salaries, professional services, office rents. And as a result, we don't expect that inflation should be a significant risk to our margins. And to further drill down on that point, we think our business is relatively well insulated from cost inflation compared to the average gold producer. And you can see on the right-hand side of the slide here, you've got the cost structures for us and for the average gold company. And producers are exposed to a lot of inflation and input costs. So they have labor, energy, other site costs, reagents, things like that, that are commodities that when commodities generally increase, those costs will increase quickly as well. So if oil and gas prices go up, energy costs go up very quickly. So you see margin erosion at the operator sometimes, whereas our G&A costs are mostly steady. As I said, salaries, consulting services, office rents, things like that, that typically don't move in the short term. So our margins are much less exposed to inflation pressures just simply because we don't have the same kind of cost structures. So on Slide 12 here, this is our portfolio, the map of our portfolio. And you can see at the end of June, we had 44 assets that produced revenue, about 145 or so, 146 at various stages of development. And on the globe, you can see that our assets are located towards lower risk and more mining-friendly jurisdictions. On the right-hand side, the names there, the 7 names, are the principal properties, and those are the larger portfolio assets that are expected to contribute the highest amount of our revenue. If you look at our portfolio and the diversification within the portfolio, by geography on the left, you see our largest country exposures are to Canada, the Dominican Republic, Chile and the U.S.A. So all of those are pretty mining-friendly jurisdictions. In the middle, you can see the revenue split. And we have revenue from 44 mines, as I said. And that portfolio breadth compares very well to operating mining companies. And it really does reduce some of the single asset exposure that we may have. And at the beginning of COVID, we saw a few assets that had temporary production curtailments or restrictions or what have you. But our overall revenue for 2020 and 2021 was not impacted. So that's the advantage of the diversification. And then finally on the right-hand side, you can see that our underlying assets are predominantly gold assets. And that's -- it's not so important today with strong base metal assets. But what it means is that, generally, our revenue is not dependent on base metals prices for viability. So that's an important point to note in a different price environment admittedly. So our portfolio here, this is intended to show kind of the depth of our portfolio, and it does span the various stages of mining project development. We have 146 assets that I said, that are not producing, but they're in various stages of whether they be exploration, evaluation or development. We would expect portfolio -- organic portfolio growth to occur for any of those assets or the bottom part of that triangle as they move up the triangle up into production and into revenue. And that's really where we get the growth. So there are examples of things that have been in our portfolio for quite a long time like King of the Hills and Bellevue Gold that are expected to be producing within the next couple of years. So those will produce revenue for us, and that is a source of organic growth from within the portfolio. Now to continue on the theme of organic growth, this slide shows some of the key catalysts that we see in the portfolio from various assets. At the top in the blue, you can see producing assets. And we have potential for mine life extensions and production increases at several -- I've already mentioned Wassa, I already mentioned PV, where significant projects are underway to extend mine lives and also increase production. But at Peñasquito, which has been in our portfolio since 2007 [indiscernible] revenue last year. Newmont has done a fantastic job there. They've improved recoveries. They've improved operating performance. And they're -- they've done exploration around the mine that leads them to believe they can extend the mine life to potentially 2040. So again, better production, more revenue for us and a longer mine life. That's organic growth. And then finally, the last one is a smaller asset in our portfolio LaRonde Zone 5. Agnico has done a lot of work on automated mining techniques here. And so they're looking to incrementally improve production and extend the mine life there. It's a small producer for us, but yes, I don't know, enough of these together and they actually add up to something significant. There are other assets in our portfolio that are...

Can you stay on this slide? Let me just pick one.

Yes.

Côté Gold.

Yes.

It is a controversial project geostatistically. I'm just going to be succinct.

Okay.

One of the unique new grounds they break in the 43-101 science is they don't disclose any geostatistics. They don't disclose coefficient variation because they don't want to engage the topic. Another thing they've done, and I read hundreds of these studies, and I have opined on 25 gold mine valuations in M&A or court cases, court cases in 4 countries. They present their data as 6-meter composites rather than 2-meter composites or 1-meter composites or raw data. Alistair, I call positing the standard deviation of ground meat. Because a 6-meter composite is a moving average of up to 20 data points, 20 assays. So in university, we never did statistics on moving averages. If you hear, what I'm saying?

Okay. Yes.

So let's just say they top cut 1 zone to erase 17% of gold and 1 zone to erase 11% of the gold. So there's a degree of conservatism in that regard. It's a little bit like a math problem in high school or college where the student doesn't disclose the steps. So we are -- we, the readers, or investors are trying to decide if their conclusion is reasonable without seeing the supporting reasoning or data. I'm trying to be sort of generous and diplomatic. Let's say the gold falls 30% short or the top cuts were half as big as they needed to be and it goes through receivership in one way or another, does your relationship survive a bankruptcy?

So we have a royalty, John. So it's different from a stream. It's not a contract. The royalty is an interest in the property. So obviously, there are questions whenever something goes through or whenever you're thinking about what could occur. You have to do your legal analysis. I think we're in a pretty strong position based on the fact that...

So this is a very strong relationship legally because it's in Quebec, it's in Canada, it's not necessarily...

Sounds right.

And the company has many other assets that are very good. And the project has been one of geostatistical controversy for over a decade. A famous geologist wrote a letter to the editor of The Northern Miner in 2009 or '10 declaring it a fraud. And the first 43-101 on it by the first upper with much less data had a coefficient variation of 9, which is 9x variability times the mean is with 1 gram is not where you want to be. So in this particular case, is the attitude that you're going to diversify among a lot of projects? And if once in a while, one falls a little short, you have so many others that produce multiples of the initial gold that it works out as a portfolio in the end?

No. I mean our approach is to look at every asset on its own. And so we don't take a shotgun approach where we hope to have most of our projects worked out. We take an approach where we want all of them to work out. And I can say that with acquiring this royalty, I mean, we did not have access to current nonpublic information because it was a third-party acquisition of the royalty. So we acquired it from a different owner and not the developer project. But we did a lot of due diligence on this asset, including we talk to people who had been involved previously with the project. And so that factored into our thinking. We did an independent estimate, which is robust. But we don't have current information from IAMGOLD. That was not something we had access to. But we did a lot of due diligence, and we were very comfortable with the results that we got. And so your concern is noted, but that is not something that we highlighted as a risk.

I rendered a legal fairness opinion, opining in a merger in 2010 on the initial data. And I'm going on the IAMGOLD field trip next week, just to follow up, 11 years later. Call me afterwards, call me any time, and I'll talk to you in greater detail.

I'd be interested to hear what you discover or what you hear next week in that site visit. So yes, absolutely, we'll call you.

Feel free. I'm not going to charge you anything. We're friends in this [indiscernible].

Good. Okay. Well, are you okay if I get back to...

Can you just walk through these different gold projects -- different 6 projects in the slide, who are the operators?

Yes. So Khoemacau is the first one. The operator is a private equity company, Cupric Canyon Capital. We got involved in this...

Canyon -- Cupric Canyon?

Cupric Canyon Capital.

Cupric.

The operating company is called Khoemacau Copper Mining. And they are a private equity sponsored firm. And we got involved in 2019 to help them build this project. It's a copper-silver project in Botswana. And right now, we have an 84% silver stream. The project is in commissioning right now. We talked about it on our last quarterly conference call. They had just produced first concentrate in June and had just shipped it when we had our last conference call in the first couple weeks of August. The project is in commissioning round. So it's obviously an uncertain time. And what we said we would do is we weren't going to give any more information on the project until our next conference call, which will be in early November. And we'll give more detail then on deliveries and ramp up and funding and so on. So I don't really want to go into much more detail on that one right now, but that's Khoemacau. The next one -- the next 2 actually, King of the Hills and Bellevue are both in Australia. King of the Hills is being developed by Red 5 Mining. It's a previous producer, but they've got a new concept for a 16-year mine life there. Construction is well underway. Last week, I believe they started assembling their SAG mill on site. We have a 1.5% royalty on that one. Bellevue Gold is the next one, another project in Australia. It's a high-grade underground mine that's being pushed forward by Bellevue Gold is the name of the company. They are advancing the project with first production expected later in 2022, 2023 time line. We have a similar royalty on that one. So those are 2 assets that have been in our portfolio for a long time. And in this price environment, the developers are very keen to move these forward. And so we're seeing a lot of work being done to put those into production. So we're quite excited about those. We already talked about Côté, but that is planned to be in production by the end of 2023.

What's your percentage NSR?

On Côté, it's 1.0%. And then moving down after that, we have Manh Choh, which looks like a new name, but it's an old project. It's the Peak Gold project. And John, you'll remember this is the one that we actually had a direct asset interest in. And last September, a year ago, we sold our interest to Kinross. And they're developing Peak as a satellite ore source for the Fort Knox mill. It's up in Alaska, near -- not too far from Fort Knox. So they're working on all the initial studies in metallurgy and so on right now. They're expecting that project to be in production in 2024. And then moving down to the bottom of the slide, Back River, Sabina's project in Northern Canada, that one – we've done a ton of technical work on it. Right now, they're doing work on financing. So we're looking forward to see...

Is this Northwest territories? Or is it...

None of it.

None of it. Is it silver or gold?

It's gold, primarily gold.

And what's your interest?

We have royalties there, and they're variable. About 2% would be our NSR royalties on that one. I will get back to you on that one because I don't remember the exact number off the top of my head.

And there's not a year yet for that. Is there?

No. No. No. They need to arrange financing first, and then the construction schedule will come.

Sometimes I can't keep them all straight. You have so many wonderful assets and moving parts.

Yes, we do have a deep portfolio. So it's kind of hard. It's hard for me as well sometimes with so many different NSR rates and so on.

Excuse me for interrupting, I just thought that was a very good slide of yours.

Thank you. Happy for the question. Let's keep it dynamic. So the -- what I'll do now, so I'll just talk about 3 of the new additions that we made to the portfolio. We've already talked about one of them, but I'll show the slide anyway, so you can see what it is. But they're all -- these are transactions that we announced just around the end of the year. So they're very current and -- given our portfolio. But what they all are is they're all kind of aligned with our strategy, even producing gold-focused revenue, but it also has -- they provide upside to exploration success, but also production. So hopefully, they are right down the fairway for us. But the first one I'll start with is Red Chris. And this is a -- we acquired a 1% NSR royalty in the Red Chris Mine in Northern BC. It's operated by Newcrest Mining. And we acquired the royalty in August and is effective as of the beginning of 2021. So we -- it's in production today, so we should be receiving royalty revenue from it the next time we make a payment. But Newcrest, for those who don't know Newcrest, they're one of the world's leading gold mining companies. And they got involved in this project in 2019 as an existing operating open pit. The Newcrest concept is to transition the mine from a small open pit to a large bulk tonnage underground operation. And they actually -- last night, they released a feasibility study results for this project. And -- it's -- they've outlined the project. They call it a Stage 1 study. So it doesn't have a lot of the exploration success that they've had recently is not included. But they've outlined a 36-year mine life for this project, with average production of about 148,000 ounces a year of gold, 48,600 tonnes a year of copper. And the block cave, they're expecting to start operations in 2026. And as I said, it does not -- this PFS does not have some of the exploration upside they've identified. The East Ridge target, which is off to the right of the map that I show on this slide, it's a new target they've got. And they've got -- there's another new zone that they identified last night. This higher-grade material is just southwest of the main zone. So we have a royalty that covers 5,100 hectares here, and it covers all the known mineralization prospective exploration areas on the porphyry corridor. And...

Alistair, If I could interject again. Maybe 3 or 4 years, we hosted Imperial Metals at our conference and before Mount Polley. I think they weren't traveling as much after that. And often, the speaker was not Norman Keevil, but Gordon Keevil.

Right.

Gordon, he's the cousin, he calls himself the poor Keevil. But the reputation of Red Chris was that the open pit is economic. It's not waste stripping, but the ore grade improves as you deepen. So this is the classic perfect example of the optionality slide that you described earlier in your presentation where in the later years of the 36-year project, it gets better and better. And the block cave should very well be everything Newcrest wants. And because Newcrest operates block caves in Australia and PNG, it's only natural they went for this. And the tailings disaster at Mount Polley weakened the company and caused them to need a partner, which was Newcrest. And it was a coup for you to buy this because even though you paid a lot from Glencore. I'm just trying to be balanced, not just beat you up on one.

I appreciate that, John. I mean you said it very well. I think when Imperial Metals had this project, it was -- it's a fantastic project. They just did not have the resources to be able to move it forward and make it what it could be. So when Newcrest came in, Newcrest has the balance sheet. They've got the technical skill. They have the other assets that they could draw upon while they're developing a project like this. And we think this is a world-class mine potentially. And so this is the kind of thing that will hopefully give our shareholders exposure to upside for the longer term for multi-decades. And so this is exactly the kind of thing that we're looking for when we look for new acquisitions. So thanks for the comments. I'll move to the next one is NX. And this is a gold stream that we acquired in June. 20% gold stream on a small operating gold mine in Brazil that's operated by Ero Copper. And it's a small underground asset, but it has excellent exploration potential with a very large land package. And Ero is doing an exploration program right now, 60,000 meters of drilling on their package in 2021. And a week after the announcement, I think we got some questions about this one because the mine life looks short and the market didn't understand it. But a week after the transaction was announced, we -- Ero put out the best drill intercepts that they've seen on the project so far. And they had just 10 meters away from the 2020 resource shell, they had a 9-meter intercept of 22 grams a tonne. So really good, solid results. But they also, in the same release, they also talked about 2 other new prospects that they've identified, 2 new mineralized systems. And they are 1.2 and 25 kilometers away from the existing mine workings, but they're within our extreme area of interest. So this is the kind of exploration upside that we're always looking for. But the other thing that we like about this asset is that the mill is currently operating at about 60% of capacity. So there is additional capacity in the mill. And so potential for higher production levels if Ero is able to fill the mill. So production upside and exploration upside and immediate cash flow as well. We've already received stream deliveries from this acquisition.

Could you just spell the name of the company?

ERO, E-R-O, Copper.

Okay. Like Erotika in Greek, Eros?

Yes. I'll defer to you on that, but I think you're correct, yes. So then the final asset -- and John, you asked the questions about this, just for the audience to make sure they understand exactly what you were referring to. This is the 1% net sales return royalty on IAMGOLD's Côté project in Ontario, which we acquired in June. This is being developed as an open pit mine. IAMGOLD is talking about 500,000 ounces a year average production for the first 5 years. Mine life of 18-plus years. Project is about 27% complete. It's in construction right now. The project is fully funded, and first production is expected by the end of 2023. Our royalty, you can see on the map, is the blue outline. We don't have the entire resource and it's not covered by the royalty, but about 70% of the current reserve is covered by the royalty that we acquired. And we also have royalty blocks to the north and the northeast of the deposit. So this royalty...

This could be said, Alistair, to illustrate another one of your themes in the theme of every royalty streaming company that you're not exposed to higher capital costs or higher operating costs. There's some issues that the capital costs have crept up or whether the operating costs are conservative or not. And we're entering what appears to be an inflationary era. But you're not exposed to that. But if the gold grade falls shorter than the 17% and 11% top cuts, that's your exposure. If it turns out the 17% and 11% top cuts were too harsh, that's your upside. I'm just griping because they chose not to put as much data in the technical study as I would have wished to explain their reasoning.

Right.

And I like to look at standard deviation as God made the rock, not as a composite. Some companies have 50 domains where every stope or every bench is a different domain, and that's another trick meant to hide the variability. Some companies do the geostatistics on after the top cut and not before the top cut. So sometimes the raw standard deviation or CV, coefficient of variation, is 3x bigger and by doing it post top cut they hide the variability. So it's a new theme in mathematics, Alistair, to hide the variability or do not disclose it at all. So there might be an upside. There might be a downside. But their technical study was succinct and just bypassed some of that data.

Right. Well, I'll give you a call next week after your site visit, and hopefully, you'll have some good news to report.

I'm going to be out all next week in Canada. So you can give me a call the week after next. And you can call me later this week to tell you why I'm so sensitive.

Okay. Will do. Okay. So that's Côté. So those are the 3 new acquisitions in our portfolio. We're very pleased to have them. We think they'll all perform very well for us over the next -- the period that they're in our portfolio. So I'm very happy to have that growth. So I will -- I'll mention ESG now. I haven't talked about it yet. But our business model does not allow us to have direct operating control, but ESG is a big part of our business. We invest in assets for the long term. So ensuring they are sustainable is really important. And we look at ESG factors when we do our due diligence with new assets. That is a big, big part of what we do. We're always looking at how [ APEC ] companies or counterparties manage their relationships with host communities, with the environment and with other things as well. Because if they have issues with those projects, it impacts our investment. We also -- we will -- aside from the due diligence, we'll also build language into our transactions so that we are able to require the operators to operate to the highest standards. And where it makes sense, we also look for ways for us to contribute to their programs around sites. So none of this is really new for ESG in the way we do it. But what we have done is we talked about it more, and we've improved our transparency. And we've actually seen some very good results with respect to Sustainalytics and MSCI, for example, as I've shown on this page, their ratings over the past several years for us have improved quite a lot. And as large as it is, we're just being more transparent about the way that we approach ESG. So we stand toe-to-toe with anybody in the industry, and we're very proud of our ratings from these organizations. And just looking at the ESG areas specifically, I mean, we -- on the east side, we have sponsored groups looking at innovation, improving best practices in the mining business. We're a member of leading global mining [indiscernible] principles for responsible development. But then on the social side, we look at our communities where we live and work, and we've got a very strong social commitments, with the latest charities where we have offices. So it's Denver, Toronto, Vancouver and Lucerne in Switzerland. And on governance, John, you know the company well, and you know that we've got a very strong board, a very long record and commitment to corporate governance best practices. So ESG is very important for us. I'll switch gears for a moment and just talk about the market for our financing product. And so you can look at where does stream financing -- where is it used? And since 2004, most of stream investments, most of what we provide to the mining industry has been invested, more directed towards balance sheet restructuring and project development and some M&A. But you can see on the right-hand side that the time line shows that those investments are really pretty lumpy. And it really depends on the status or the environment that we're operating in. So in periods of distress, when metals prices are low, people need our money for balance sheet restructuring. In times like today, where metals prices are high, people are looking at us for -- to out-fund project development. So what it means is that we generally see a pretty good runway of opportunities ahead of us, regardless of the point in the cycle. And you can see that in the next slide here, just looking at our activity on the same time line. And ours is lumpy, there's no doubt about that. We're always busy looking at opportunities, but not all of them make it through our due diligence process. We do have a very extensive process, and we're pretty disciplined in how we deploy capital. So if we see risks, they can be [indiscernible] mental, emotional, legal. If we see risks that we don't think might be mitigated appropriately, we're happy to walk away from transactions. We don't feel the pressure to do transactions because we're happy to harvest cash, build up our balance sheet and wait. Because we know that the right opportunities will come along. It's just a question of being patient and being careful. So part of being patient, if you look at our liquidity on Slide 23, we have to maintain liquidity on our balance sheet to be able to act quickly and finance opportunities as they arrive -- as they arise. So at the end of June, as I said, we had $1.2 billion available to us between our cash balance and undrawn revolver capacity in that. In today's market, that is lots of liquidity. So we feel good about how we're positioned. As I mentioned, we did draw $100 million from -- on our revolving credit facility at the end of the quarter. And what we expect to do is pay that down using cash flow as that cash flow becomes available. So much the same way that we became debt-free quarters ago, we'll do the same thing again is our expectation as these balances and cash flow allows. Maintaining a strong balance sheet is very important. So we've prioritized our cash towards debt repaying, dividends and then new business opportunities as well. You can see on this slide our 20-year history of capital allocation and growth. And it's really about providing accretive growth to shareholders. Since 2000, revenue has grown by 60x, operating cash flow by about 100x, but our G&A has stayed relatively low. And there are 3 things that I want to highlight on this slide here, which is a lot of information in a very simple looking graph. But firstly, revenue growth exceeds the increase in G&A by a large margin. And that's really because we have a high margin and scalable business. Every new asset we add does not require a new workforce. So we can add bulk without adding employees. Another thing is our revenue growth is not dependent on metal prices. We added volume during this period. And so we did transactions that actually grew the company. And then the final point is we financed our growth internally, and we did it without increasing our share count by large amounts. We're one of the founding members of the GDX index, and we have the lowest count -- share count of all members of the GDX, which is something we're proud of because it really shows that we're focused on avoiding shareholder dilution. Now the final slide here is our dividend. I'll just end on this one. And return of capital is very important to us. That's a key strategic objective for us to continue to return capital to shareholders, and we think it makes us unique in the precious metal sector. We've paid a growing and sustainable dividend since 2000, and we've increased the dividend every year since we started making that first payment. And that's despite volatility, ups and downs in the gold price. In November of last year, we increased the dividend for the 20th consecutive year. And we've paid out $660 million of dividends to the shareholders since we started paying dividends. We're the only company in the GDX that has paid an increasing dividend since the GDX was formed in 2006. So again, something else that sets us apart from our peers. So with that, John, I've come to the end of my presentation. I'll be happy to turn it over to you and see if you've got any more questions.

The people at Wheaton Precious Metals give a 10-year forecast for their gold equivalent output, and they cite 33 years of reserves and another 28 years of measured, indicated and inferred resources at their projects. I know that's a little strenuous since maybe some of those projections are less firm in the 10th year than the projections are in the first year. Is there any rule of thumb like that we might -- I'm sorry to put you on the spot. That's a pretty high-level question.

No, that's all right, John. It's a good question because we -- with our change in our year-end to December 31, we are going to start providing full year guidance. We've never done that before. We've always given guidance one quarter out. And so going to a 1-year guidance for us is something we want to try and see how it works, see how we can do that, how we manage it and how we perform at meeting that guidance. And then obviously, the next step will be, can we extend that 1 year to something beyond 1 year. We haven't had that conversation yet, but we're comfortable going out 1 year. I think 10 years is tough. We don't control this...

Alistair, I have no criticism of companies that provide no guidance because you never provide wrong guidance.

Yes.

Now some companies can't guide the 90-day quarter. There are steel companies that change their guidance. U.S. Steel, Steel Dynamics and Nucor give the guidance in the first week of the third month of the quarter rather than doing it when they report earnings for the next quarter. So I'm just reacting to Wheaton Precious Metals, but I'm not saying that if -- companies that provide no guidance never lie to anybody. They never make a mistake, too. So if my son -- my single son doesn't ask a girl out, he is never going to get rejected and he is never going to have a divorce to make a mistake either. So different approaches to life.

Sure enough, sure enough. But I think we...

Excuse me, Charles, if this gets back to you.

I won't tell him. But the -- I think the guidance is -- in a business where we don't control our assets, it's hard for us to give guidance that is meaningful. We could give you a range maybe, but is that going to be meaningful to you, I don't know. I mean the issue we have is that there are certain things that happen in 3 years, 5 years that you just can't contemplate today. So it's hard for us to see how we could give you guidance for an extended period of time. Now for a year, I think we had fairly good comfort that we could give you good quality guidance because we do see what our operators -- most of our operators who we have stream agreements with, they give us their budget numbers for the year. Now we're not going to release that, but we can consolidate numbers and give you a guidance number for a year that has reasonable -- we're comfortable with. To go beyond that, though, and it's harder. So that's why we approach guidance the way that we do. Will it change in the future? I can't comment on that right now. But I know that a number of people are asking for longer-term guidance. It's not a question of whether or not we're confident in our business. It's absolutely not that, it's just whether or not we give you a number that's useful to you.

Certainly. And once again, I'm not sure what is the right policy. If the companies never give guidance, they never give wrong guidance. And sometimes the investors get really upset if the guidance is wrong.

Right.

There are 3 transactions that caught my eye in the royalty streaming space. Actually each were NSRs in the last several months. EMX Royalty bought a package from SSR Mining, which is net cash and didn't need to sell a package. And the terms were $33 million cash, $33 million EMX stock and $34 million deferred payment. And EMX believed at the time the package was going to deliver $18 million of cash next year. So they thought they paid 5 to 6x cash flow. Second, in 2 separate transactions, second and third, EMX and Nomad Royalty bought NSRs on -- from different discovery geologists on the Caserones copper deposit in Chile that's been in production about 10 years, has a 17-year life plus resources. That's operated by Pan Pacific Mining (sic) [ Copper ], a Japanese smelter consortium. And they believe that, that's at 5 to 6x next year's cash flow in recent copper prices. So I used to use as a rule of thumb that a gold royalty was worth 10x cash flow. It all depends on the life and the upside and optionality and all these wonderful things you discussed. But maybe gold stocks and base metal stocks are terrible these days. The market has all these uncertainties. Stock valuations are well. The businesses are good. The earnings are good. Is the situation that the terms for NSRs or streams are getting better for the buyer and worse for the seller because the stock prices are bad? Or are these perhaps unique one-off transactions? Or are there things that you're under confidentiality agreement or unfamiliar and just can't talk? If that's the case, I respect that, certainly.

Well, I won't talk to these specific transactions and the prices paid, but I will talk generally to the market. I think we're seeing -- there are new entrants in our business. Nomad is clearly one of those. They've been around for 2 years, and they've built their business. And so that just means one other company is out there looking for the same thing that others are as well.

But they're not bidding up the deals. They're actually getting better deals than we expect.

Yes. Yes. So I think the -- what they're doing is just they're adding more competition to the environment. And does that impact pricing? Yes, absolutely, it does. I think what we -- where we compete generally is at the larger end of transactions. And so we haven't seen a great big change there in terms of the number of folks who are looking for the larger things. And that's where we're focused. We want to be moving the needle. So we're going to focus on the larger transactions. But at the small end of the scale, there are quite a few new entrants. And I think they are -- it has become a bit of a sellers' market. So that is definitely something that we've seen. And it means our deal flow activity has not been all that robust over the past couple of years. And you've seen this that we're not all that active relative to some companies. And a big part of it is pricing. And we're not going to pay up for assets if we don't believe they have what we need, which is the upside. So if they don't have the production upside, they don't have the exploration upside, but somebody wants us to pay a full price for those assets, it's harder for us. And so we often will not bid that aggressively. And as to my point that I made earlier in the presentation, if we don't win transactions, that's okay. We're not under any pressure. The Board doesn't apply pressure to the management team to say, get one transaction done a quarter or on some time line. It's not that kind of an approach. We would rather make sure that we win the transactions that we want. And if somebody wants to overbid, then it's unfortunate, but that's just the way it goes. We're not going to chase things just to get transactions done.

Once again, there might be 20 royalty streaming companies competing in the space instead of 3, but some of them are getting deals at half the normal rate. So maybe all these people just have new unique relationships and are the early bird that gets to the worm? And the behavior is the opposite of what you expect that the deals are getting done cheaper instead of more expensive?

Well, I mean, we see a lot of the transactions that occur. And very rarely do we see something happen at a pricing that is shockingly low to us. That would be our reason.

You don't consider 5 or 6x cash flow shockingly low?

It is relatively low, yes.

I'm going off base here, but tell me to shut up if you want me to, Alistair. I like the iron ore business. I don't think that Rio Tinto and Vale can mine and deliver million tonnes a day and waste strip 1 million tonnes a day and dispose of tailings. I just think that's hard. It's easier in an Excel spreadsheet than in practice. And I have an interest in an iron ore company and friendship with some iron ore companies. And I'm trying to organize a 1% NSR on the company's project. I own 6% of the company. And I might send -- you got your company a brief on an iron ore project that maybe you won't want to look at because it's not gold. But I was going to -- I was wanting to propose a project in Canada at a 9% NSR and a project in Africa at 12.5% discount rate -- I'm sorry, discount rate. And instead, I'm going to go out with 18% and 20% because these projects were so low priced, the 3 that I cited. And that's why it's in my consciousness.

Right.

And maybe somebody is going to get a great deal. And maybe I'm just some crazy guy with wild ideas, who knows. But I'm just telling you why that's a prime reason why that mattered to me. And there's a lot of industries where it's harder to produce every day, gold, iron ore. 60% of the world's aluminum is from coal-fired power. It's not ESG-compliant, not climate change-compliant. There's more aluminum because of the bev can replacing plastic bottles. There's more aluminum because the EVs are aluminum because the batteries weigh out a ton or more. And in my business career, the internal combustion engine averages 8 to 10 pounds per car, per vehicle more aluminum every year. Plus we have population and GDP growth that add to autos, construction, bev cans, et cetera. So if there was a 1% aluminum NSR offered to you, do you think your team would study it?

Well, we're always interested in opportunities. And so we will -- it's certainly not our core focus to be looking at aluminum NSRs or iron ore or anything else like that. But if they are high-quality projects and they offer a decent return, yes, we will look at those. Strategically, are we going to go focus on those things? No. But if you bring them to us...

The smelters, they buy the bauxite or they buy the alumina. So if this power contract is renewable for a smelter, it's essentially a perpetual life project or it takes a long time for them to wear out, 50 years. You realign the pots every so often, Alistair. So if the electric current efficiency is good and the power contract is renewable, sun, wind, hydro, and so it's a good gig. It's better than a gold deposit.

Right. Well, we like cash flow. So -- I mean if it's something that provides us...

No one has done an aluminum NSR. But maybe the OEM companies are going to make so much money, they're not going to need it anymore. And you might not want to do the ones that are in China, 57% or 58% of world output is in China. So you'd be looking at the other 42% or 43%. But some of them are going to have to convert from coal-based to renewable energy, and that might be done by a third-party power supply, or in some cases, the companies who own their own power might want to -- some of the companies have their own electricity plants and some don't. Some have their own raw materials and some don't. Some have their rolling mills and fabricating lines and others don't. I'm just being crazy and creative, Alistair, because we're good friends. I hope I don't get you in trouble with the head guy.

I hope not. I hope not.

Let me just check for the -- many listeners -- you were so good to do a press release. So yes, there are some questions. What do you think the investment in Great Bear Resources and New Found Gold in this stage? In other words, will you buy $1 billion cap before they have a resource? I'm paraphrasing the question.

So I'm assuming this would be a stream or royalty, not a direct acquisition of the asset. But yes, we tend to focus more on things that are closer to cash flow. That's where we would really like to be. But we will look at earlier stage projects. Khoemacau is a good example. It was fully permitted. There was -- all the management team have been put in place and all those kinds of things were there. But it's still -- we were funding development, and so we will fund development. We don't want to get too [ early stage ] because it's harder to define what it is you're going to get eventually. But we will look at earlier stage things, too. So there's no hard and fast rule around anything, but we tend to look at things more seriously if they are closer to cash flow.

Continuing with the question box. It's a little bit hard for me to manipulate. Can you -- can it have its own crypto to be flexible for attracting new customers and players? I think this questioner wants Royal Gold to invent your own crypto?

Okay.

Thank you for the audience. God bless you. Some people have a bigger imagination than me.

I have to say that's the first time I've ever had that question.

If I'm interpreting the question correctly, I think I am.

Yes. I mean crypto is a very interesting thing. We have had the question about would we invest in crypto somehow ourselves? I think to be totally honest with you, I think we don't understand it enough to be able to look at crypto as a currency or as something like gold. We understand gold very well. We understand silver. The crypto is a lot more complicated. And it's just -- we haven't got there yet. I'll never say that we'll never do that. So maybe 10, 15, 20 years at least something that we're focused on. But I don't think right now, based on the skill set that we have in the company, it is something that we'd be interested in looking at in any great detail.

So once -- decades ago, a seasoned Canadian investor heard a pitch from Robert Friedland. And he wasn't sure about the project because that guy is so eloquent. I'm sure someone else is going to believe it and the stock is going to go up. So the guy bought it and made some money. And we could take the greater fool theory and say Royal Gold creates a crypto. And a bunch of people, that we don't understand, believed in it. And it's worth $15 billion in 2 months, and you dividend it to shareholders and your shareholders make more money than they make on Royal Gold. I'm just saying -- and the questioner could be insightful. Maybe cryptos are fraud, but maybe your investors can double their money or triple their money on the greater fool theory before it blows up.

It's a very interesting question. It's something...

I'm just being wild and crazy and having fun, Alistair.

Well, I haven't -- to be totally honest with you, I've never thought about it before that way, but it's an interesting thing to think about for sure.

But I don't think the question is a bad question, and it's possible that you do a crypto spin-off and it's worth more than $6.2 billion if you have your own crypto. Maybe having gold in the name of a crypto would make it worth more than Bitcoin. I'm just being goofy.

Something else for us to talk about when I give you a call on Côté. I'll follow up.

So the Caserones is not 5x cash flow. And the other, you mentioned, is short lived. Someone is offering -- there's a comment to me. I'm glad to be corrected. I love it if somebody tells me I'm stupid or uses and obscenity or whatever. I've been employed. I've been married. I've been a parent. I'm used to being humiliated. In the investment business, we're wrong up to 50% of the time, and we're okay.

That's interesting.

I appreciate the comment in the question box. I hope I'm wrong because I have investments, and I hope the companies do better than I'm projecting. I think Caserones is a good copper mine. All the royalties in the package that EMX bought, I haven't studied. If the person who made that comment in the question box, his name starts with G-R-A-N-I. If you could join the EMX call tomorrow and ask questions, if you're more familiar than me, you would help me a great deal. I appreciate everyone that participates in these programs. Thank you very much. And we're not ending the call, I'm just thanking the person in the comment box. Thank you very much, Alistair, for your time. I don't have any more questions. And we had a lively discussion, a little more lively than I expected.

Well, thank you, John. And we certainly appreciate the opportunity to be part of your conference. You've got -- you've done a great job over the past several sessions on what's coming of settling a bunch of very diverse companies. So it's a very interesting format.

We've hosted 103 companies since '08, bought out for $90 billion combined. And all I do is I just want to make sure they have at least a $3 billion in situ resource or they're not a fraud, that they're not [indiscernible]. That's the only screen I use is that they have a deposit. If it's out of the money, I'm okay. Because the metal prices go up and down. And now I don't have -- the companies call me more than we can accommodate. And the bad companies don't call me because I ask tough questions. So it's like a virtuous circle.

Well, we certainly appreciate being invited, and I appreciate your...

I respect and admire your company so much. Thank you.

Thank you, John.

Thank you.

Thanks, everyone.

Bye.

Take care. Bye-bye.