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

[Audio Gap] today's virtual on non-deal road show. My name is Karina Tatarinova, Media Relations coordinator as well as virtual moderator throughout Renmark. And on behalf of our team here at Renmark, we'd like to thank all of you for joining us and especially those of you joining us for the first time from Europe for the presentation of Royal Gold trading on the NASDAQ under ticker symbol RGLD. We are joined today by Alistair Baker, Vice President of Investor Relations and Business Development. The presentation will last approximately 20 minutes. And that will be followed by a formal Q&A that we encourage you to participate in by clicking on the chat box at the top right corner of the screen. And now with that, Alistair, I'll turn the floor over to you.

Well, thanks, Karina, and thanks, Renmark, for the opportunity to present today. We haven't been marketing in Europe for quite a while given COVID travel restrictions. I'm very happy to spend some time with you today. I will be making forward-looking statements during this presentation. So please make yourselves aware of the language on this page. And before I start the formal presentation itself, just want to make a few comments on our September quarterly results, which we released last week. We had a record revenue and cash flow in the quarter. Revenue was $174 million, cash flow was $130 million. That was really driven by strong performance across the portfolio, but particularly the royalty segment. We did see contributions -- first contributions from a couple of assets in the portfolio, the Khoemacau development project, which we have been involved in for the last couple of years funding development, produced its first concentrate, and we received our first silver delivery. So very pleased to see that, and that will be a 20-year mine life and very beginning of which we're in today. And then the other asset where we received our first deliveries from was the NX Gold mine in Brazil. We [indiscernible] stream on this asset in June, and we received our first gold deliveries from that asset during the quarter. We also, at Khoemacau, we increased our stream position from 84% of the payable silver to 90%. So again, very pleased to have increased exposure to this high-quality asset. And then during the quarter, we're actually in a stub period. This 6-month period that we're in today is our transition from our June 30 fiscal year to a December 31 fiscal year. And we provided guidance last quarter, and we increased our guidance this last September last week. And we are now looking to produce 180,000 to 190,000 gold equivalent ounces from our previous guidance range of 175,000 to 185,000. And that was really just due to strong performance across the portfolio in the last quarter. So with that, I guess I'll start with the commentary and formal presentation of Royal Gold. And this slide, I'm showing here really does show us at a high level of who we are. And we are a high-margin business that generates consistent cash flows from precious metals revenue. We've been in the business since the 1980s, and we've just celebrated our 40th anniversary on the NASDAQ Exchange. So we've been around for quite a while. And our business model provides us the exposure it provides our investors with the opportunity to invest in precious metals without many of the risks that come with investing in operating mining companies. We have 2 operating segments. We have streams, which provide about 75% or 70% of our revenue, and royalty is about 30% of our revenue. But both are basically the same thing, which both allow us to invest in the top-line production from mining assets. And our streaming business segment is actually based in Europe. It's based in Switzerland and We have a very diverse portfolio about 200 properties in the portfolio, 44 which are producing revenue today. And about 85% of our revenue comes from precious metals and a 75% of our revenue is gold. Our market cap is about $7 billion. We have 28 employees, so it's a very efficient business model. And we're very strong -- we have a very strong balance sheet. We have about $1 billion -- just over $1 billion of liquidity available to us. And that is great firepower for what we see in the marketplace today. So moving to Slide 4. I'll just talk about some of the attributes, the key attributes of Royal Gold. But there are 3 things that I want to really highlight here on this slide. There's a lot of language on this slide, but 3 things that are really important. First is our business model is designed to provide optionality to metals prices and reserve growth. And that's without the ongoing capital commitments that operating mining companies have to face. Our commercial and technical teams are very experienced. And when we look at new investments, we're always looking for those that can provide upside over the longer term. The second thing I want to say is we think about our business in terms of per share metrics. We're always looking to fund our growth using cash on hand, operating cash flow and our revolving credit facility. And we look at those things first before we look at using equity to fund our business. And the whole idea here is to show our shareholders accretive for our share of growth. And then finally, we are very committed to our dividends. We paid a dividend since 2000, and we've increased it every since, and that's unique in the precious metal sector. So turning to Slide 5 here just shows why we think we're a good alternative for investors who are looking for a conservative approach to investing in gold and precious metals. On the left-hand side, you can see that our beta to gold at 1.77 is very strong. So we have good leverage to gold. On the right-hand side, you can see our performance compared to gold, the GDX Index and the general market indices as well, going back to 2006 when GDX is formed. And you can see that we performed very well against all of those metrics. So we have good leverage to gold, and we have a record of outperforming the market. So we're very pleased with that. And just looking at the gold generally, the World Gold Council, and I have all the bunch of information from the World world Council and put it on to the slide here. They've done a lot of really good research on gold in the gold market. And I'd encourage you to have a look at their website. It's very user-friendly, and it's very interesting to look at. But gold really is a strategic portfolio asset. And within a portfolio provides all sorts of diversification. So that could be a case market risk, currency risk, depreciation, inflation, all sorts of different factors. And gold is very liquid. And when you separate gold from general commodities, it is actually -- it has provided very competitive returns over time relative to other asset classes and has done that with lower volatility. It's had very good performance recently, and that's been in this period of low interest rates, and the gold price has actually moved quite closely with negative yielding debt. And over the longer term, gold has done well as well. If you look at this price performance compared to money supply increases. So there is a good rationale for having exposure to gold in today's economic environment. And there are different ways you can look at investing in gold. And Slide 7 shows the different ways that people typically invest. And it shows how we're positioned. And the important thing to note here is that we try to provide the exposure in gold and optionality for mining projects without the risk of having direct ownership of those assets. So we've got a diverse portfolio, and we don't have exposure directly to operating costs or capital costs. Now, you can invest in gold itself and by the physical metal, but an ounce will always be an ounce. So it doesn't give you upside. Gold also will not pay you a dividend. You can take a more risky approach and invest in operating mining companies, but those will provide you also with the exposure to risks to operating costs and capital costs and inflation, and that's what we're seeing today. So I'll spend a few minutes on the next few slides just talking about optionality, efficiency and our portfolio. So this slide here shows really the key to our model, which is optionality, and that's optionality to reserve resource and production growth. I've got 2 examples shown on this slide. We've got the PV mine on the left and Wassa, which is on the right. And both of these investments are investments we made in 2015. And you can see what I've tried to show here is what we invested in, in 2015 what we've received to date and what lies ahead for these projects. And in both cases, total reserves and resources today are higher than at the time that we did the acquisitions. And that's in addition to the revenue and production that we received. And in the case of PV, we've received -- we've recovered about 65% of our investment. And in case of Wassa, we've recovered about 100% of our investment. And that is without considering what is ahead of those assets today. And there are growth projects at both assets underway. At PV, Newmont and Barrick, the joint venture partners, are looking to an expansion of the mill capacity will allow them to maintain production at current levels. They're also looking at an expansion to tailings capacity that will bring additional resources into the mine plan and extend the mine life to the mid-2040s. At Wassa, Golden Star has outlined a new resource that could extend the mine life by an additional 11 years, and that's on top of the existing 6 year mine life and it's based on reserves today. So in both of those cases, Royal Gold does not have to fund the capital to invest or invest any further to get exposure to those upside stories. And so, this is a growth that we don't have to pay for, and it's the optionality that our shareholders enjoy. So the -- so exploration and production upside is absolutely key when we look at new business opportunities, and it's an important feature of our model. As I mentioned at the beginning, our model is also very efficient. We have 28 employees. Last year, we produced over $600 million of revenue. We have a market cap of about $7 billion. So on a per employee basis, we compare very well to large mining companies, large gold companies as well as some of the more high-profile names you see in the marketplace today. So it's a very efficient business model. And our low employee count really means that we have low fixed cash G&A, which further contributes to our efficiency. Last year, we had an EBITDA margin of about 80%. And our cash G&A is about 4% of revenue. Our G&A has made up of salaries, professional services, office rent, things of that nature. So cost inflation in consumables is not something that factors into our margins. It's not a risk to our margins. You can see that more clearly on this next slide, Slide 11 here, where I've shown the -- our cost structure and the average gold producers' cost structure side by side. And we're very well insulated from cost inflation. Producers are exposed to inflation and input costs. So labor, energy, other cost sites and many of those increase when you see increase in commodity prices. So when the oil price goes up, energy costs go up. And often what that does is it means that margins are effective. So our G&A costs are pretty steady. We have, as I said, salaries, consulting services, office rents, things of that nature that don't typically increase in rapid fashion in the short-term. So our margins are much less exposed to inflation pressures. And it's simply because we're not directly as opposed to operating and capital costs. And that's a key factor of when you're thinking about investing in precious metals today. Inflation numbers this morning were a surprise to the upside. And that's not something that will impact our margins. So Slide 12 here shows the portfolio and what drives our financial performance. And you can see on the map here, our portfolio is really weighted towards lower risk in mining-friendly jurisdictions. And on the right-hand side, you see our principal properties are called out specifically. Those are the larger portfolio assets that really the bulk of our revenue. But our portfolio is very well diversified. And what that does is it provides us consistent, stable cash flows. And if you look at our portfolio and diversification on a geographic perspective, it's really our largest country exposures to Canada, Dominican Republic, Chile and the U.S.A. So all of those have long mining histories and are relatively friendly mine jurisdictions. Our revenue, as I said, comes from 44 mines. And that portfolio breadth really does compare well to any mining company, any of the big mining companies. And this really that revenue diversification that reduces our exposure to single asset underperformance. And we saw that at the beginning of COVID, we saw some assets temporary curtailments or shutdowns for periods of time as the operators got used to the COVID environment. But our overall revenues as a company, were not significantly affected. And then the third way that we're diversified is our underlying assets are mostly precious metals focused assets. And about 20% of our assets are based metals as the primary producers. And that really means that we're not subject to base metal fundamentals for the viability of our revenue. So again, a very diversified portfolio and revenue sources. And if we look at the portfolio in terms of what it's made up of, it's -- it really does span the stages of mining project development. And we have 146 assets in the portfolio that we're not producing. And those are at various stages of they could be either exploration, evaluation or development. And it's is organic growth within the portfolio that occurs when any assets move up the triangle and they move to that, the ultimate position there of being a producing asset. That's when they start producing revenue for us. But there are assets that move up through that triangle and it takes time, but it does occur and King of the Hills and Bellevue Gold are 2 very good examples of organic growth in the portfolio. We expect to see revenue from these assets within the next year, 1.5 years. And that is after they have been in our portfolio for well over a decade. So there is organic growth in the portfolio that we expect to see as time goes on. And just to continue on that theme of organic growth in the portfolio, this slide here, Slide #15, shows some of the key catalysts that we see today from various assets in the portfolio. At the top in the blue, you can see several assets that are already producing. And we see potential for mine life extensions and production increases from those assets. I've already mentioned Wassa and PV where there are projects underway at both to extend mine lives. But at Penasquito, which is Newmont's biggest asset, this has been in our portfolio since 2007. It produced about 8% of our revenue in 2021. And Newmont, when they acquired this asset from Goldcorp a couple of years ago, has done a tremendous job of improving recoveries and operating performance generally. So it's been producing more to our account. But they've also been doing a lot more in terms of exploration around the mine site itself, and they've identified the potential to increase the mine life to 2040. So again, that's growth in mine life that we don't have to pay for. Another example here is LaRonde Zone 5. It's a smaller asset in our portfolio. But Agnico has been doing a lot of work on automated mining techniques and improving production and maintaining higher production rates through 2029. So while that is not a huge contributor to us, if you add small things like that together, they can actually amount to significant growth in revenue for us. I've already mentioned Khoemacau, but that's another example of an asset that is in our portfolio, and it's just started to produce. And so there will be growth coming to us from that as that asset continues to ramp up. This asset we've been invested in since 2019. We were one of the founding -- or one of the companies that came in to provide construction financing for development of the project. And we now own and manage 90% silver stream on this project. The project is in commissioning today. They produced their first concentrate right at the end of June, shifted in July and we already received our first silver deliveries. And the asset will continue to ramp up until about the third quarter of next year when it's expected to be at full production levels. I've already mentioned King of the Hills and Bellevue. Those are 2 assets where we expect to see royalty revenue in the next little while. But also Cote and Manh Choh are other examples of projects that are looking to first production in 2023 and 2024. And then further out, we see the potential for additional revenue from Back River. And this is a project in Northern Canada, where Sabina, the operator, has been working on project development and they're currently looking at financing solutions to be able to put the project into production. So the current metal price environment is robust. It's very supportive of new development, and operators are motivated to get projects into production to take advantage of the higher prices that we're seeing today. And many of those projects are in our portfolio. So we're very pleased with that. I'll talk in the next couple of slides about 3 additions that remain to our portfolio right at the end of the fiscal year. So that was June to August time frame. And all of these are really aligned with our strategy of providing gold-focused revenue with significant potential for production and exploration upside. The first year on Slide 16 is the 1% net smelter return royalty we acquired at the Red Chris mine in Northern British Columbia. And this is operated by Newcrest mining. We acquired this royalty in early August. And Newcrest for those of you who don't know it, is a leading mining company, Australian-based, and they're going to involve in this project 2019. And their whole idea was to transition this small open pit producer to a large bulk tonnage underground operation within the next 5 to 6 years. They have done a tremendous amount of exploration, and they defined a world-class deposit and resources today are about 1.2 billion tonnes, containing 15 million ounces of gold and 4.3 million tonnes of copper. Our royalty covers 5,100 hectares and includes all of the known mineralization from prospective exploration areas on the porphyry corridor. So an asset like this in our portfolio will give our shareholders. We expect excellent exposure to long-term resource upside a multi-decade mine life. And we're currently receiving royalty revenue from this asset, while Newcrest is doing the work to transition it into its next phase of life. So this is a great acquisition as far as we're concerned. The next one is the NX Gold mine in Brazil, and we acquired a 25% gold stream on this asset right at the end of June. It is operated by Ero Copper. And it's a small producing mine, but it has excellent exploration potential around the mine site into the larger land package. And Ero is doing a lot of work on the larger land package and exploration around the mine site. They've got a 60,000-meter drill program for 2021. And since the announcement, Ero's made a few releases about exploration success at the mine, near the mine and on the larger land package. And all of that is included in our area of interest. Now the other thing that we liked about this asset, aside from the exploration potential, is also the mill is currently underutilized. So it's operating about 60% capacity. And there's a potential for higher gold production, if Ero is able to develop more ore and feed it into the mill. So this is an example of immediate cash flow from a transaction, but with excellent long-term exploration upside. And we've already started to receive gold deliveries, as I mentioned at the outset. Finally, I mentioned the 1% net smelter return royalty on IAMGOLD's Cote Gold project in Northern Ontario. We acquired this royalty in June, and Cote is going to be an open pit mine. And IAMGOLD is estimating gold production of about 500,000 ounces a year for the first 5 years of production and a mine life of about 18 years. And the project as of mid-October is about 36% complete, is fully funded and IAMGOLD is targeting first production at the end of 2023. Our royalty is, as you can see in the map here, shown it's on the Chester 3 claims, which cover about 70% of the current 7.3 million ounce reserve. And it also covers areas to the east and to the northeast of the main deposit. So this is a royalty that will give us good exposure to a large and long life project in a Tier 1 jurisdiction. Now, I'll switch gears on Slide 19 and talk about ESG. And although our business model does not allow us to have direct operating control of assets, ESG is a core part of our business. We invest for the long-term so making sure that our investments are sustainable is really important. And it's something that we look at very carefully in our due diligence on new transactions. And we're always looking at in the due diligence of those transactions, how counterparties manage their relationships and their impacts on host communities. So social and environmental considerations are very important. We also build language into our transaction to ensure that operations are managed to the highest possible standards. And where it makes sense, we look for ways to help fund initiatives that operators are making into ESG areas. None of this really is new, but what we've done recently is we've worked hard to improve our transparency around our processes. And we're quite pleased to see that there's been recognition in the marketplace of the improved transparency. And as the -- we've seen material improvements in the perception and recognition of our practices. And in September, we just got an upgrade from MSCI, and we're now ranked AA, which is their leader category for the money metals companies. So MSCI and Sustainalytics are both very influential ratings providers. And you can see that over time, their ratings have improved as we've improved our transparency and make sure the market understands how we're thinking about ESG. Now, I'll mention on the Slide 20, specifics on what we've done in each of the E, S and the G area. So on the E side environmental, we've sponsored groups working on innovation and improving best practices in the mining industry. We're also a member of global mining industry groups, and we endorsed the principles that they have set for responsible development. On the S side, we're very active in supporting community organizations where we live and work. We have offices in Denver, Toronto, Vancouver and Lucerne. And we have made donations to various charities in those areas for medical supplies, food security, homelessness, eldercare and things of specific importance to those communities. And on governance, those of you who have followed Royal Gold for a long time, know that we've got a long-standing record of commitment to corporate governance best practices. We have a strong Independent Board, and that Board has relevant industry experience. Now, I'll talk for a minute or 2 about the market for our product. And since 2004 when streaming started, the majority of stream investments were really allocated towards balance sheet restructuring and project development and some smaller amount to financing M&A activity. And as you can see on the time line, stream financing has been a bit lumpy over that period. And while the use of stream financing tends to really be dictated by the state of the mining history, mining is a capital-intensive business. So there's always a need for capital, and that does provide us with a constant opportunity flow. And you can see on this next slide, this is our activity on the same time line. And while we're always looking and we're always busy looking at new opportunities, not all opportunities make it through completion for various reasons. And one of those reasons may be our due diligence process, which is very expensive, as you can see at the top of the slide. We're very disciplined in the way that we deploy capital. If we see risks that we don't like, they could be technical, they could be environmental, legal or social or some other risk, if it's something that we don't think can be mitigated properly or can be addressed, then we'll walk away from transactions. We don't feel the pressure to do transactions. And if we can't find the right opportunities, we'll collect revenue from our portfolio, build our balance sheet and we'll wait for those right opportunities to come up. And that's a nice segue into liquidity because really being part -- being patient means that we have to maintain liquidity to be able to access -- to be able to finance opportunities as they arise, and sometimes opportunities come up very quickly. At the end of September, we had about $1.1 billion of liquidity available on our totally available from our cash balance and undrawn revolver capacity. And that does position us well for the sizes of deals that we're seeing in the marketplace today. We had about $100 million -- we did have $100 million of debt at the end of September and that was all on our revolving credit facility, but we repaid $50 million of that debt after the quarter end, and we now have about $950 million of financing available on that credit facility. We plan to repay this remaining $50 million as cash flow allows. And our only remaining commitments to existing assets are a potential further investment in the Khoemacau project of $26.5 million and then up to $10 million at the NX Gold mine. So we're relatively uncommitted. We are very focused on maintaining our balance sheet. And on the right-hand side, you can see how we prioritized our cash in 2021. So that cash was used for debt repayments and dividends and then investments in our business as well. So very disciplined in the way that we allocate our capital. And you can show -- you can see that on Slide 25 -- 24 here, sorry, this is our 20-year history of capital allocation and growth. And it's -- really, as I said earlier, it's about providing accretive growth to shareholders. So since 2000, our revenue and cash flow growth has been significant both of those and both have far outpaced the growth in our G&A. And there are 3 things that I just want to highlight on the slide. First is revenue growth has exceeded G&A growth, which is obviously a result of our -- is because we have this high margin, very scalable business. The second is our revenue growth is not dependent on metal prices. We added volume during this period. So we were able to do transactions that provided that additional growth. So we weren't just relying on the gold price to go up. And then thirdly, we've largely financed our growth internally, and that's without issuing new shares. And our share count has not changed significantly over the past 20 years. We're one of the founding members of the GDX, and we have the lowest share count in the GDX Index. And we really want to avoid shareholder [ dilution ] and funding our growth through internal resources will provide per share growth to our shareholders, and that's a core objective for us. Now I'll end the formal part of the presentation on our dividend. And this is also a key strategic objective for us, and that's return of capital. And it's one of the things that we think makes us very unique in the precious metal sector. We've paid a growing and sustainable dividend since 2000, and we've increased the dividend every year, despite volatility in the gold price. Last year, when we raised our dividend in November, it was a 20th consecutive annual increase. We paid out about $680 million in dividends to shareholders over that time, and we're the only company in the GDX that has paid an increasing dividend since the index was formed in 2006. So our dividend is very important to us, very much a key strategic objective, and we intend to continue paying growing sustainable dividend. So with that, Karina, I've come to the end of my formal comments. I'd be happy to turn it back to you and to the audience for Q&A.

Thank you very much for the presentation, Alistair. And yes, now let's begin the Q&A. Your first question, how much emphasis Royal Gold will be putting on the new business in 2022?

It's always a key focus for us as new business. Growth is definitely what we want to continue doing. We've had a good track record of growing over the past, as I shown, in 20 years. We want to continue that growth as well. So we're always looking for new opportunities. And right now, I think, we're seeing the best opportunities in project development. As I said, the metals prices are high, companies are motivated to get projects into production, and that's where we're seeing most of the opportunities. I'd say that most of the opportunities we're seeing though are on the smaller end of the spectrum. The 3 opportunities that I -- the 3 transactions that I highlighted are -- they were -- they ranged from $75 million to $165 million. So they're not -- historically, they don't compare as being big transactions. But for us, the size of the company that we are, we're quite happy to do transactions of those -- of that size because that does provide meaningful growth to our shareholders. So in summary, we're very focused on growth. And if we can continue adding to our portfolio, as we have done, we'll be quite pleased to do that in 2022.

And since we are located in Europe and presenting for Europe today, a viewer is asking, are you seeing any deals [ crossing ] the table that are located in Europe at all?

We don't tend to see that many projects in Europe, and I think it's just -- it's a function of where the mining industry in precious metals, specifically are mined around the world. We see most of the opportunities in North America and South America, but we're certainly not opposed to looking in Europe. We have 1 investment in Europe, and that's the Las Cruces mine in Spain. There's a royalty on that operation that's owned by and operated by First Quantum. Unfortunately, it's come to the end of its life. If we could add more assets in Spain or elsewhere in Europe, we would be very pleased to do that.

And for the next question, we're still on this topic. So comment of saying the company has a lot of liquidity. Is there a quota for deals that Royal Gold does within a year? And if so, are you close to achieving the acquisition targets?

We do have a lot of liquidity. But as I mentioned in our remarks, we need to have that liquidity on hand to be able to act when opportunities come up. And sometimes those opportunities come up very quickly. And you always want to have the ability to be able to fund a transaction without a financing condition. So that's why we have that liquidity on hand. We don't have a quota for transactions. We're more focused on the quality of transactions. So if we see things in the marketplace that don't meet our criteria for investment, we don't feel pressure to invest in those just to meet a quota at a certain number of transactions. As I said, we're quite happy to, we don't feel the pressure to deploy capital. So we're happy to continue building our balance sheet because we know that our business is very cyclical. And although, we may not see large transactions today, that may change in 3 months or 6 months. We always want to make sure that we've got the liquidity available. So if we don't see things that make sense for us, we'll wait and we'll build our liquidity further. But we don't feel pressure. The Board doesn't say you need to do a certain number of transactions per year. There's no kind of pressure that has a bit of a slippery slope. You may end up -- if you start getting told you have to do a certain number of transactions a year, then your criteria change and you may relax some of your criteria for investment. And that's not the way we think about our business.

And moving on to next question, a viewer is asking how are things coming on with the Prestea project? Is there any update from the new partner?

I don't really have a lot to say about Prestea. It's now owned by a private company. So there's not a lot of information available publicly. FGR acquired that asset from Golden Star, and they've been doing work on trying to bring it back to its previous levels of production. We are still receiving gold deliveries from the asset, but it's -- I would say, it's currently in a state of transition. So, I don't really have much to report on that asset. It's really a small part of our portfolio. It's definitely not something we get many questions on just it's a very minor contributor to revenue.

And now on a different topic. The question is, do you need a minimum life to invest -- excuse me, a minimum mine life to invest?

We certainly -- we want the longest mine like if possible. So that's not a very good answer to that question. We don't have a minimum per se, but we're not interested in just investing today to receive our money back in the next 2 years. We want to have it's very long-term exposure to assets. So we will invest in short mine lives if we think, there is the potential to grow those mine lives over time. And we've done that. Wassa was a good example of that. When we invested in 2015, the mine life is about 7 years. But we knew that there was potential to significantly extend that mine life. And that's what we see today. We've been invested for 6 years, and there's currently potentially 17 years ahead of it today. So is -- we want exposure to those assets that can grow over time. We tend to discard the assets that have very finite mine lives. So if we can -- if we look at an opportunity and it really doesn't have much in the way of potential for increased metal production or mine life extensions, we're not going to invest. It's just not something we want to do. We think we'll be better off waiting for an opportunity to come that will give us more exposure to the long-term. So it's a subjective answer to that question, but we're always looking for long-term assets.

And now, could you please tell us, do you prefer investing in development projects or producing mines?

Well, again, it's subjective. It really depends on the quality of the opportunity. Our preference is to be as close to cash flow as possible. So, if we can invest in producing mines that have good upside, that's ideal. But we don't find that all the time. I mean sometimes we do things like what we did with Khoemacau when we get involved in the beginning of development. And we will fund the projects through development on the expectation that they will be great long-life producers for us. So our -- it tends to be a lot more work from a due diligence perspective when you're investing in a project because you've got to invest, you got to look very carefully at the plans, you've got to make sure there's adequate financing in place from other sources, you have to make sure the team is the right team to be able to execute on the development, and development is challenging. So it takes a lot more due diligence to invest in development projects. We always do want to be close to cash flow because that's really the thing that makes us near-term money is additional cash flow. So that's where we prefer to be. But we're not uncomfortable with development project risk. And we found many good opportunities to invest in development projects in our history, and we see some very good ones ahead of us today as well.

Now moving on, should investors see in sales records going forward quarter-over-quarter of gold equivalent ounces?

We don't really have any guidance beyond December 31 period. So it's hard for me to answer that. I think what we do see in the portfolio or what we have seen in the portfolio is a very strong performance, and that's across many of the assets in the portfolio. As I said, producers and developers are trying to take advantage of today's metal prices. So production increases and things like that are fairly commonplace across the industry, and we've seen a few good examples of that in our portfolio, and that has really allowed us to show higher gold equivalent ounce production. A big part of revenue as well, though, is metal price. And so strong metal prices like what we've seen recently are very good for our performance. So if you couple strong operating performance and strong metals prices, I think that bodes well for our revenue in the future. But I think it's hard for us to predict whether those will be new records or not. I mean, we certainly have seen increases in our revenue over the past several quarters. Fiscal 2021 was record revenue. Our last quarter, which ended -- which we reported on last week, again, was last -- was a revenue record. So we've seen very good improvements in our revenue over time. But I would hesitate to point you in the direction to say if that's going to continue, it will depend on volume growth, it will depend on metal prices.

And now I'll take the next question before we move on to finance questions. A viewer was asking you how does your valuation compared to SMB and WPM?

Well, it depends on which metric you're talking about. I think the -- on a price to net asset value basis, we're fairly consistent with precious metals. Franco certainly has a premium. When you look at cash flow, price to cash flow, next year's cash flow, I think we trade at a discount to those 2. So it really depends on the analysts you're looking at. But I think on a consensus basis, we trade in line with on net asset value and probably at a discount on cash flow. So you can read into that what you will. Obviously, we'd like to be at the top end of the valuation multiples, but it really means the market has to improve the share price is a price to net asset value, price to cash flow is the share price will respond against that.

And now, we will move on to the finance questions. Next question is regards to the credit facility. A viewer is were saying, I'm curious to know what the interest rate is on the credit facility?

It's quite low. We -- I think it would be about 1.3%. It would be the most recent number. So it's a fairly cheap way for us to finance our business, certainly a lot cheaper than issuing shares, which are, obviously, there's a cost to that. So our credit facility, we've always considered it as a very key strategic piece of financing for us. And it's something that we can draw, and we can repay without penalty. So it's -- when it's drawn, interest rate is very low, and we can repay it as soon as we have cash flow to repay it. So it's very important to us to have that credit facility and have access to it. So it's a cheap form of capital that's allowed us to grow our business and again, do it on an accretive per share basis.

Now, the next question is about Khoemacau. Could it be expected about Khoemacau will need any further cash from Royal Gold at this point, given the COVID setbacks they have experienced there?

Well, the operator has said that they don't expect to draw any further from Royal Gold. They -- the most recent product they completed was as a result of they need some additional working capital for the next several months. And so they wanted to maintain a buffer of working capital buffer and it's just prudent capital management from their perspective. So we did see them draw an additional $16 million from us in October, early October. So we don't expect to make any further contributions to the project as it continues to ramp up. But I can't say for certain whether that will be the case. It will really depend on ramp-up progress, and it will depend on the copper price, it will depend on the needs of our counterparty. We do have -- when we did the original transaction, we've built in additional funding requirements to be available to the operator should they need it. So if they do draw additional stream financing from us, from our perspective, that's not a bad thing. It's just more exposure to this project, and we do like the project quite a lot.

And commented things, very nice revenue generation on your copper stream and [indiscernible]. Do you have any plans to further -- sorry, for further exposure to the metal as the demand for electric vehicles is only going to grow demand for copper?

We are -- so when we look at new opportunities, we're always focused on precious metals and gold really being where we want to be. But we will look at other metals as well if the opportunities are good. So high-quality opportunities will always get looked at. But if we have high-quality gold opportunities until we got first, we'll look at those first. So we're not actively seeking to diversify our revenue mix. We do have -- we have copper for Mount Milligan. As you've suggested, we have royalty exposure to copper in Arizona at Robinson. We also have copper revenue exposure at Red Chris. So we do have -- last quarter, we produced about -- it's about 14% of our revenue came from copper. So we're not actively looking to grow that strategically looking to grow that, but we're quite comfortable with copper. And if the right opportunities come up, we'll certainly look at them and we're not afraid to add to it.

And our next question is about silver. Here a viewer was asking, do you see yourself acquiring more royalties in the silver space if there is a bounce back on the silver price?

Again, silver is a precious metal. And while gold is the focus, I think silver is very much a target for us. If we see good opportunities in silver, we will continue to act on those opportunities. So yes, we'll be keen to grow more sort of good.

And we're coming up on last two questions here now. Do you anticipate the revenue split between streams and royalties to change significantly in the next few years?

I think the generally streams of royalties have been about 65% to 70% streams and then 30% to 35% royalties over the past several quarters. I think it will likely continue to remain that way. We do have Red Chris, there's a royalty that will be a fairly significant producer for us. So that will increase the royalty a little bit. But at the same time, we've got Khoemacau as a stream coming on, that will increase the streaming component. So I think you should expect that balance to be roughly maintained.

And now the next question is analyst price targets put you at about $132.42 for the 12-month period and even as high as $144. How much does management pay attention to that?

Well, we certainly watch to see what analysts are saying about us and price targets as well. I mean, I can't comment on individual price targets that is really the purview of the analyst to create those targets. I think this is an interesting question when you compare -- when you think about the question, it's just asked about where we trade relative to Franco and Wheaton. I think that a lot of analysts will apply higher multiples to us because they think that we're trading at a discount relative to our peers and where we should be on a historical basis. So you may see some of the higher target prices in the future are reflective of analysts thinking that, that discount will evaporate. So we certainly do look at analyst target prices, we can't control those. We can't control our stock price either, but what we can control is the performance of our business. So as we execute on our business and make sure we're doing all the right things, we're allocating capital properly, then we would expect analysts to pay attention and the share price to reflect that success as well.

And now your last question for today's Q&A. That is, can we expect -- what can we expect from your dividend in the next 12 months?

Well, the dividend is something that we typically historically have always made changes to in November. We have our annual shareholders meeting coming up next week. There are Board meetings around the shareholders' meeting, and that would be typically based on history, that's why discussions occur around the dividend. It's a Board decision to increase the dividend. So it would be correct for me to speculate on what will happen, but it's generally an annual discussion in November.

Thanks, Alistair. And with that, this concludes the Q&A of presentation. And also thank you to our viewers who submitted questions. If you got any more questions for Alistair or his team, please feel free to reach out to your manager of Renmark. And now before we go, Alistair, I'll turn the floor over to you for your final remarks.

Well, thanks, Karina, and thanks, everybody, for attending. I certainly appreciate the questions. So there's some good questions in there. I appreciate the opportunity to give you an overview of Royal Gold. I look forward to doing it again in person, hopefully, sometime soon. And if you do have any more questions that come up, please contact Renmark. They know where to get a hold of me. And we happy to try and answer that.