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

Good afternoon, everyone. My name is Cosmos Chiu, and I'm your Royalties Analyst here at CIBC. It is my pleasure to be with you today for the CIBC Western Institutional Investor Conference being brought to you virtually. This afternoon, we have a very interesting panel of royalty companies. including Osisko Gold Royalties, Sandstorm Gold, Royal Gold and Triple Flag Precious Metals. We'll have some time at the end of the presentation for Q&A, and we would like to encourage you to submit questions throughout the presentation. [Operator Instructions]. So without further ado, I'll turn it over to Sandeep Singh, President and CEO of Osisko Gold Royalties, who will kick it off for us. Sandeep?

Thanks a lot, Cosmos. Thank you to CIBC for having us, and thanks for taking the time to get an update. Hopefully, you can hear me okay. And if you could, moderator, just throw up the slide deck if it's not already being shown. I will be making some forward-looking statements through the presentation. So please be mindful of that, and you can jump to the next slide, please. I'm seeing it quite small. Hopefully, that's not the case for everyone. I think it's an exciting time to be telling you or updating you on the Osisko Gold Royalties story. It's a portfolio of a company that's matured significantly. It's a business has been simplified, I think, significantly, an asset portfolio that's working definitely well, and we're at an inflection point from a growth perspective, which I think is quite interesting. In terms of 2021, we produced 80,000 GEOs gold equivalent ounces over the course of the year at a 97% cash margin, did that in some 17 different producing assets within a basket of 160 and growing. Important to note, I think, that, that excludes just over 9,000 GEOs from the Renard diamond stream which we left out of our number there, our guidance, and we're hopeful that we'll be able to turn that stream back on effectively this year. So a strong, diverse set of production, long-life assets that are only getting longer, to be honest. There's nothing core in our business that's coming off in the near term. And to that stable and frankly, growing cash flow from existing mines, we'll be adding new assets, new ounces for the rest of this decade in a pretty significant way. We've got a strong, diversified shareholder base. We have a fair bit of -- significant liquidity on both the TSX and the NYSE under the ticker symbol OR. And we've prioritized, as you can see with the dividend yield, capital returns to that shareholder base since our existence -- since our IPO 7 years ago. Meaningful yield, which we increased last year despite some volatility in the gold market. The week we increased the dividend, gold was down something like $100 that week, and then we followed that up by going out and buying 1.3% of our company. So prioritizing those returns to investors, and we'll continue to do that with the company that's currently trading below NAV. It's the cheapest, highest quality royalty exposure we can see. So we'll continue to be active on that front. Next slide, please. I can't quite see these slides, so I'm going on memory. But from an ESG perspective, it is something we take to heart. It's an important facet of our company. When you look at the portfolio that's been built, I think you could argue that it was built with ESG in mind. And in a lot of ways, it was. It just wasn't called ESG at the time. When you look at our asset quality, our assets, I should say, our partner quality, the geographies that we're in, we tick a lot of boxes from an ESG perspective. But importantly, it's not just a box-ticking exercise for us. If you're familiar with the Osisko story, stewardship is in our DNA. Environmental and social license, we've lived it, we've earned it. So we know what to look for when we're doing our diligence on our operating partners. And that's the core aspect of us. We've caught up and we've improved on the disclosure side, which we'll continue to do. But it's always been something that's been a core tenet of our company, and that's not changing anytime soon. Next slide, please. From a risk perspective, we think we offer quite low risk from a geological perspective. We are an America-centric company. Our growth is largely America-centric, North American-centric. So this is an important facet of any mining story. I think it's even more so in the world we're living in right now post COVID or during COVID depending on where we are with a lot of countries kind of leaning left and looking for ways to fund their budgets. Our -- you're never immune to geopolitical risk in mining, but we're as insulated as you can be to it by virtue of the royalty model itself, the fact that we're not really associated with any marginal assets that teeter on the brink of profitability if a jurisdiction imposes a new tax or a new regime and also by virtue of where our assets are and where our partners are. And I think, as I said, always important and increasingly so. Next slide, please. Speaking of partners, you can pick out their logos there. We think we're partnered with some of the best names in the sector. More importantly, we're partnered with them on low-cost mines that matter to them that they're spending a significant amount of capital on. And as you're doing that, we're getting the free upside and the disproportionate upside to those ounces and discoveries as they're made. A huge amount of work has been done on our portfolio. We show there 4 years on average, of about 1 million meters, 3 million feet drilled on our properties. We expect that number to grow in 2021 when we can aggregate it, and we expect that to continue. And importantly, that's leading to some pretty significant upside in terms of mine life extensions, expansions, new discoveries, as I mentioned and to the growth overall. So it's something that we're benefiting from across the entirety of our portfolio in a way that we never have to this date. So I think that's an important facet for us. I'm sure you'll hear something similar from everyone on this panel. Next slide, please. And I certainly can't read this one. But I think from a catalyst perspective, I could use up everyone's -- the aggregate time allotted to talk about things that I think are exciting that are happening to our business. As I mentioned earlier, the core assets are significant. They're long life. They're getting longer. They're getting bigger whether you talk about Malartic. Obviously, we had a lot of positive catalysts last year, but the important thing to remember is they're continuing into this year and beyond, the drilling that's going into Malartic on the underground, the increases and ounces that we expect to happen in bunches of millions and then the potential for additional underground infrastructure that could take the production higher, that matters. With respect to Mantos, that's been a good new story for us for a long time. We're seeing the operator there tie in the ramp-up this quarter. So we'll go from getting about 9,000 to 10,000 GEOs a year to 15,000 to 16,000 on a full year basis. This year will be something in between that, but a significant uplift. And then I've always said that it was a bit of a crown jewel in the copper, intermediate space from an M&A perspective, and we were happy to see that merger announced between Mantos and Capstone. And if there was anything lacking on that asset, it was transparency. So looking forward to the added visibility on that asset in a public company, and they haven't even finished that first expansion from 4 million to roughly 7 million tonnes, and they're already talking about the next 1 million to 10 million tonnes for pretty low CapEx. So I don't know how I'm doing on time, but I will continue on maybe jumping to some of the development assets just really quickly. We think there's good news flow there as well. The Windfall project is continuing to grow in leaps and bounds, rare combination of size and grade, both are getting better, whether it's the feasibility and permitting at Cariboo, whether it's the synergies that come out of the Kirkland Lake camp for Agnico and our Upper Beaver and other assets that we have royalties on there or the Hermosa study that just dropped this week by South32, which was quite important, and there's an FID decision coming in about a year's time. Those are all important catalysts, chunky assets. So I expect that news flow and that momentum to carry into this year. So that's just a flavor of it. Maybe we'll get into it again in the rest of the Q&A. But hopefully, that gives you a good bit of color on us that, as I said, at a point in time, that's pretty exciting for the company. So thanks for that opportunity, Cosmos. And I'll cede the floor.

Great. Thanks, Sandeep. That was a great summary here. Next, we have Jason Hynes, VP, Business Development and Strategy at Royal Gold. Jason?

Thanks for having us, Cosmos. So most people are aware, we're a gold-focused royalty and streaming company. Our interests are concentrated in pretty mining-friendly jurisdictions, and our principal assets are operated by the likes of Teck, Barrick, Nomad. Oh I'm actually looking at the Sandstorm presentation there, maybe.

Is there something that we don't know that you should tell us? I'm just kidding. Go for it, Jason.

You guys know us pretty well. Feel free to give this answer at the break.

You can go ahead, Nolan, I'll jump back in later. So I don't know if Nolan, you want to take over here and I can go when mine comes up or....

Yours is up there now.

Perfect. There we go. So maybe we'll just skip forward a couple of slides there to Slide 3, should do it. Yes. So fiscal '21, which ended June this last year was a record year. We did $407 million in operating cash flow on $616 million in revenue. And just a housekeeping reminder we're actually currently transitioning to a December year-end to better align with our peers. Next slide, please. I think people are familiar with the key features of our business model. Everybody here has got it. Exposure to the upside while bypassing some of the risks faced by the operators. Our investment decisions, they continue to be driven by fundamental technical analysis, and it's led by an experienced team. We think in terms of per share metrics, we prefer to use cash and our revolver to fund growth rather than equity. And with that, we have ample liquidity and cash flow to fund both growth and our dividend, which we've increased every year since 2001. Next slide, please. I'll spend the last few minutes on some organic catalysts before providing a quick update on our most recent acquisitions. Starting with Wassa in Ghana, which should soon be owned by Chifeng Jilong following their acquisition of Golden Star. We're looking forward to having a large balance sheet focused on developing that resource, that underground resource, which is more than 7 million ounces. Before the acquisition, Golden Star had put out a PEA with 11 years of production at close to 300,000 ounces a year, and that was incremental to the reserve plan of 6 years at 200,000 ounces a year. At Pueblo Viejo in the DR, Barrick is working on plans for the plant and tailings expansion to hopefully secure production levels above 800,000 ounces into the 2040s. And I'm also just going to take a minute to highlight a few smaller examples of the embedded gold optionality in our portfolio. Everybody loves Western Australia. We own a couple of royalties on some rapidly growing gold projects there. 1.5% on Red 5's King of the Hills project, which is one of the 10 largest gold reserves in Australia and is in the late stages of the construction; and 2% on Bellevue Gold's namesake project, which is expected to become one of the highest-grade, lowest-cost gold mines in Australia. They fully funded the construction. I believe it's expected to start later this year. And just a shout out to Sabina, the team is hard to work on financing the construction of the Back River gold project in Nunavut, where we have a 2% royalty. These are all stand-alone basis. They're all small examples, but there are just minor parts of portfolio and acquisitions we made over 10 years ago, and they're on our books at very low values. And each of them have the long reserve life exploration potential, expansion potential. And together, if you look at them together, they actually have the potential for combined production of over 600,000 ounces a year out of the gates. Moving to the next slide. Just to give a very brief update on our newest assets. Khoemacau, which we acquired in 2019, have been funding since. The construction is fairly complete. The ramp-up is ongoing. I mean this team built what is essentially 3 underground mines during a pandemic that hit -- that continues to hit Southern Africa hard, and they have our full support as they continue to focus on that ramp-up. And eventually, they'll turn their attention towards expansion. At Red Chris, the October PFS is really just the first step in Newcrest's plan to turn the mine into a Tier 1 asset with a low carbon footprint. They're reporting lots of exploration success. They've discovered a new resource at East Ridge, lots a high-grade mineralization at the main zone, and none of that is included in this initial PFS. So we continue to watch -- look forward to watching the progress there. And moving down, it's only been 6 months since we closed the NX Gold transaction with Ero Copper. M&I resources are already up by 1/3 with near mine regional exploration is ongoing. Off the back of that exploration success, Ero announced an initiative to target a 50% increase in production over today's levels by 2024, making use of the processing plant's spare capacity. And that one really our exploration team's thesis that it's a large underexplored greenstone belt. It's starting to prove itself out earlier than we had anticipated. And the Red Chris and NX acquisitions, they're examples of our philosophy of trying to identify upside through technical analysis and then really putting our commercial team to work to make sure those assets end up in our portfolio. And at Cote, construction -- this is Canada's next major gold mine. Construction continues, supposed to be in production by the second half of '23 and it was 43% complete at year-end. Just one more slide for me there. I'll just close briefly on ESG. We've always placed a lot of importance on the topic well before it became fashionable. It's the right thing to do, and it's also good for business. We've been improving on communicating our approach to stakeholders and that communication will continue to improve this year. So that's all I wanted to say, Cosmos. So I'll hand it back.

Thank you, Jason. And sorry for stealing your thunder earlier, but now it is really Nolan's turn. Of course, Nolan Watson, President, CEO and Founder of Sandstorm Gold. Nolan?

Perfect. Thank you, Cosmos. So we've got the presentation up there. I just have a handful of slides that I'm going to walk people through today, not really trying to convince people of Sandstorm as opposed to other royalty companies because every single one the royalty companies on this panel is one that they respect with their portfolio that's diversified, a good management team and whatnot. But I just thought I'd walk people through a few salient points that are worth keeping in mind with respect to Sandstorm and some of the stuff we're going to do this year. I'll be talking about some cautionary forward-looking statements, so everyone can be aware of the future hasn't happened yet, and I may be wrong, which my wife will tell you happens a lot. If you go to the next slide on cash flow -- or sorry, on the number of assets in the portfolio. So from a high-level perspective, Sandstorm, we have 230 streams, royalties globally diversified all around the world. It's one of the larger portfolios in the world, the royalties -- in terms of number of royalties. And you could see there -- the time line by when we've acquired them and what our number was over time. So one of the questions I always get is, hey, what about competition in the industry. And we've been around for 11 years now, and you can see every year, year after year for 11 years, we've been able to grow the portfolio in an intelligent way as have our competitors been able to do the same things. If you look at the next slide, we sort of turn that into what it looks like on an after-tax cash flow basis. If you can put the slide -- the cash flow one. So we just had record revenue last year, record cash flow last year in 2021. We've actually had records every year, year after year for many years in a row, and we're forecasting record cash flow this year in 2022, getting close to the portfolio generating about USD 100 million of after-tax cash flow and that continuing to grow. We have virtually almost no debt in the company at all and a large undrawn revolving line of credit we can use for acquisitions to continue to increase this profile. I would say one salient point about Sandstorm is -- one the questions we get is, okay, well, how long are the cash flows? What's the average life of the mine? If you're an investor, you would have looked at Sandstorm, say, 7 years ago, I think the average reserve life of mine was pretty short. It's probably around 7 to 8 years. If you look at Sandstorm's portfolio today, the actual average expected mine life is probably closer to 16 years now. And we're 5 years running where every year for 5 years, the amount of gold ounces produced on the properties attributable to Sandstorm, they found more new gold ounces attributable to Sandstorm. So we've got long mine lives now on low-cost assets with lots of exploration upside. And I think that's why we've been trying to build our portfolio that way, and it's proving out. You can see some of the growth there ticks up over the next few years. A main part of that growth is an asset we have called Hod Maden. It's in Turkey. And if you can flip the slide here, I'll talk briefly about it and why we're sort of excited about it and briefly about what our plans are for this asset, too. And this is really important to understand where Sandstorm is going in 2022. You can see why we're excited about this asset, what we own is a 30% interest in the mine. So one of the knocks on Sandstorm has been historically we're the only streaming and royalty company of any material size in the world where their largest investment is not technically a stream or a royalty. And that's this Hod Maden interest. And I'll talk about what our plans are to do with that in a second. But if you can see briefly here, this is a chart on the Y-axis is the top-quality copper projects in the world. The y-axis is the grade of copper. And so you can see those top quality copper projects in the world. And the x-axis is the top gold projects in the world and the gold grades. And if you map the assets that have both copper and gold, Hod Maden would be higher than most other copper mines, if it was only a copper mine and would also have higher grade of gold if it was only a gold mine and it happens to have both in the same order. It's not copper equivalent or gold equivalent. This is just grades and gold grades. It's just an incredibly high-grade mine. It's not a narrow mine. It's -- sometimes when you get these grades, they are 3-meter mining [ widths ], these are 40-meter mining [ widths ]. I mean this is a serious big mine right at surface with enormous grades that's going to be producing gold on an all-in sustaining basis probably closer to $400 an ounce or something thereabout. And so we're excited that, that's a big part of Sandstorm's growth. The asset just got its full EIA permit just before Christmas. So we're happy to see that come through. But one of the key things, and this is important to understanding Sandstorm going forward is in 2022, one of the big initiatives we have is we want to turn Sandstorm back into a pure-play streaming and royalty company. And it's taken us too long to do it. And unfortunately, COVID and permits took longer than we hope they would at Hod Maden, but they're finally at hand now. And so what we're going to likely do is take our Hod Maden 30% interest, sell it to another small entity, have them pay for it by giving us a large stream. So it will be a pure stream that Sandstorm takes back. And we might take back some shares in a bit of an IOU for that entity, and then we'll help that entity also go hunt for base metal acquisitions that have gold byproducts and Sandstorm will strain the gold by products off. So we're hoping to launch that probably around Q2 this year, that initiative. And by the end of the year, what we want is Sandstorm to be just a pure streaming and royalty company with Hod Maden being a flagship asset, but being a stream and a royalty. Now if you flip to the next slide. So from a -- if you look at a 10,000-view of Sandstorm's portfolio, one of the things we've tried to do is build a portfolio that -- where the assets are really low-cost operations. I'm a big believer that one of the unfortunate things about our industry is as CEOs, we can't control the price of our product. We can't market to people and convince our T shirts are better than other people's T shirts and control prices, we're just price takers. And so if you can't control price, one of the best things you can do is make sure that you're associated with assets that have very low cost of operations. So at the bottom of the cycles, all of your assets survive and still thrive. And so you can see here that over 70% of Sandstorm's protected cash flow is coming from assets that are in the lowest cost quartile of mines in the world in their respective categories. So it's a very low-risk, stable as well as long-life portfolio. If you go to the next slide, real briefly. So we're a big believer that our company is undervalued, you'll hear almost all CEOs say that. It's -- we're kind of paid to say it, but Sandstorm has put its money where its mouth is year after year. That bar chart shows how many shares we bought back of Sandstorm in the market by year. And so you can see every single year for 4 years, we've been buying back millions of shares. We bought back over 10% of our company already. And we have so much cash flow that we think we can grow our company by buying new assets and buy back some shares. And then if you go to the next slide, you'll see we're the only company on this panel that is not yet to dividend -- has not yet been a dividend-paying company, and we just announced our first quarterly dividend, and our intention is to pay a quarterly dividend every quarter for forever and have that dividend go up year after year as has the dividend of all the other companies on this panel. I think everyone here has done a good job of showing that our business models when the businesses are run well, can increase dividends year after year after year. And so Sandstorm later this month is going to be paying our first ever dividend, and we hope that, that dividend continues to increase over the years, and we'll continue to grow our business and grow that dividend, and keep executing the model. And that's about it. That's what we're doing now, and that's what the plan for 2022 is.

Thanks, Nolan. And then, of course, last but not least, we have Shaun Usmar President, CEO and Founder of Triple Flag Precious Metals. Sean?

Yes, Cosmos. Thank you for the opportunity. I like what you guys did with the gold price today, a good way to kick off the mining conference. So thanks for that. And we're going to be the same as everyone else covering a couple of forward-looking statements. So you've got the disclaimers on Slides 2 and 3. If we can go to Slide 4, one of the themes I'm sure you raised, Cosmos, is always this question of new entrants and competition in the space. Although we listed last year on the Toronto Stock Exchange, this will be our sixth year since we founded this business. And really, it was informed as someone has been a career in mining with a serendipitous pool of capital from Elliott to see if we could actually provide meaningful funding to the mining space and really trying to expand this form the financing and the legitimacy of this form of financing to the mining space. And that's really what we set out to do. Our plan originally was over 5 years to see if we could invest really primarily in gold and silver streams and royalties and build a meaningful portfolio, deploy about $1 billion and stay very true to the streaming and royalty model. So that's what we set out to do. And the view was, at that point, we would then naturally transition to expand the ownership base. What made that possible. And our competitive focus was always to be able to focus on either producing or near-producing assets, not very long-dated optionality as a sort of primary focus. Our skill sets and I was CFO at Barrick part of this, and then in companies like Xstrata and Barrick and then diversifieds. So we really understood the arbitrage that was available and how to structure this. And we felt that the competitive vectors with people on this panel and the majors, were actually less than perhaps people had appreciated that there was an ability to expand the pie and at the same time, provide a cycle good, if you will, to the mining space, which we felt is underserved. So fast forward, we deployed about $1.7 billion in fact, just prior to listing in May of last year. We've got just under 80 assets, 15 are producing. I'll give you a flavor of those in a minute. But you'll see it's really very much go-focused and has very similar characteristics. I think to what you've heard from everyone on this panel, by design. You'll also see that we've got some beautiful anchor assets like Northparkes. We unfortunately can't take investors on planes and take them to mine tours. So as a new issuer, we recognize we have work to do to showcase some of these assets. And you'll see we did a Virtual Mine Tour of Northparkes in Australia, a beautiful copper mine with gold and silver byproducts that we stream. It's actually the largest precious stream that we've seen come to market since our inception at least. And they've -- these guys are talking about that asset going on for 100 years. It's the first fully automated underground mine in the world, and they're doing an incredible job with their communities in a very stable community setting in Australia. We did a similar thing with RBPlat, the virtual mine tour. And again, multi-decade mine lives with this beautifully capitalized mine that took a decade to develop in Styldrift that is now ramping to final nameplate. And we're very fortunate to have great partners there. You would have seen that the work that they're doing with Amplats has been focusing on them recently as well as [ Northern ]. And for us, we invest as part of our ESG commitments to our partners alongside with [ scholarship ] programs. And I think if you get a chance to see those videos, you'll appreciate just the impact that mining can have on the front lines, not just Sustainalytics and other ratings, the things that tangibly positively impact society. It is on full display there with hospitals, schools, housing and health and education. It's quite an impressive track record that team has there. So into what has been mentioned here. I think if you're in the businesses we're in and you've come from businesses that we have, ESG is table stakes, and you just have to be good at this. For us, it's who we partner with and the diligence that goes into it, similar to that is on this panel. It's the investment alongside to enhance the privilege to operate. And then on the climate piece, we've done a lot of work on not just direct Scope 1 and 2 emissions, but also Scope 3 to maintain, to understand our carbon footprint and then invest in carbon neutrality, which we've done, and we'll maintain. We're significant shareholders. We own over 5% of the business that really drives how we think about it. And that was owned through -- or earned through generating returns in excess of our cost to carry. Private equity isn't a charitable organization, and we work hard to achieve that, and we're very proud of that. If you go to the next slide, these are just some of the headlines. This is a little out of date, we published other night. Our GEO, the numbers in revenue for last year or first, obviously, as a public company. You'll see it's our fifth consecutive record ounce production 33% over and above the prior record from last year, and we were fortunate to exceed guidance with just over 83,000 ounces. You'll see on this now, we've got net cash on the balance sheet, no debt, ample firepower to deploy. And you'll see that growth rate has been an important feature for us. Like we've never been incentivized to growth for the sake of it because that would be a great way to destroy shareholder value and not earn equity. You'll see our CAGR now is actually at 26% since 2017. And we've got some fairly demanding multiples and a significant dividend that we pay. Jurisdictionally, having always really been in the money space through my career on the next slide. So I guess I need to flag that. Our hunting grounds are primarily the Americas and Australia. Our largest concentration is Australia with assets like Fosterville and Northparkes and others. And when we do go elsewhere, we really make sure that the specifics of that asset, the mining team, we mentioned RBPlat. We also did the ATO investment 5 years ago now. It was a small high teen -- well, small investments, sub-$30 million for us. We hope a junior miner IPO get into production in the midst of COVID and generate a good return for our investors. And they recently have announced their fresh rock study, the feasibility study that adds 10 years of life, more than 10 years to that mine, which are -- we'll benefit from without another dollar of investment. It's nearly $100 million of NAV for our investors. And importantly, it just demonstrates, I think, some of the talk that this model can offer over time and the high returns, but also the importance of the capability and skill set needed to not just do technical diligence, but to structure these and to be able to actually work very well with your local partners. On the next slide, the distinctiveness of the portfolio, construction has really mattered. We've looked at an awful lot of opportunities for the -- just under 80 assets that we have. You'll see that strategic positioning has been very important, how we thought about the space. You'll see that with -- our asset concentration is mostly in producing assets, even though we've had that significant CAGR, the growth rate to date, you'll see that, that's projected to continue with what we've invested in to date. That risk profile and the embedded optionality and growth was key. And so we've really tried to target the premium valuation peers in the space when we thought about portfolio construction, and we've seen that play out in the track record. So you'll see that. I think as Nolan mentioned previously, bottom half of the cost curve is a good place to be, and it's an important feature for us. We are focused as much on not overburdening assets because those are just bad deals for the miners as well as ourselves as we are on the returns. Mine life, we see is quite distinctive. 65% of our portfolio is linked to byproduct production, typically copper-, lead-, zinc-based metal mines, things I've spent a lot of my career in, and platinum mines. So you'll see that extend through very long mine lives. We've got more than 2 decades of mine life duration before any mine life extension and replacement. And we are seeing that. Like Cerro Lindo, for example, our first deal for $250 million. They have the same silver reserves ahead of them now as when we did the deal over 5 years ago. And we've pulled out over $150 million of silver through that investment so far. Beautiful cadence reserve replacement. Same with Northparkes, same with Fosterville and others. On the next slide, I think the multiples speak for themselves. There's significant opportunity for us. And as a new issuer, we're focusing on closing that gap. And indeed, you see the dividend yield that is available to our investors. On the next slide, the cash flow and the performance of those margins are just part of the beauty of this model. And I think any investor, particularly a journalist, I don't know how the hell they survive. If they go to a conference like this, you sit in the audience, particularly as you start looking beyond this pedigree of participants, the words all sound the same. And most guys don't care what mine you've got. They want to know that you've got a decent ability to generate decent returns, good margins, demonstrate growth and that you've got a good risk profile. So I think track record, capital allocation, your ability to do that over time should and does matter. And so over time, I think how the teams avail themselves matters because otherwise, everything is all class, everything is low cost, et cetera. And I think over time, it's very important, particularly as you start listening to some of the investment theses of some of the smaller participants and some of the speculation in there that really doesn't matter. And then on the next slide, this is a combination really of both the historical actuals. You can see that ounce growth because we generated a lot of growth in cash flow. We're paying over $120 million a year run rate currently. But you'll see that there is really essentially fully funded embedded growth. The minute we got out of the shackles of 1-year forward guidance on an IPO process, we put out our 5- and 10-year guidance, and you'll see that demonstrates sort of that ongoing growth within the existing footprint of the portfolio. I think the only small $40 million investment we have is in that 2020s -- well, in the 6- to 10-year time horizon, and that's less than a quarter worth of cash to finance that. So well-funded and solid. And then when you think about the nonproducing assets over and above that, really 90% of those are in Canada and the United States. So very well situated and not included essentially in that profile. You'll see that 60% of that is gold, 30% silver. And we don't do well in gas and coal. But with our base metal backgrounds, copper, nickel, we've got a fair bit of that exposure, including Tamarack, who just announced a deal with Tesla for an offtake, which we're very happy about, and those guys have done a great job on that asset. On the next slide, we've really focused quite discerningly on the portfolio construction the question when we started was how you compete? But remember, the idea was that we saw an opportunity to expand this form of funding. So we said about doing that. And you'll see that of the 17 deals. We've looked at 500 things for those few deals. 13 of those have really come via working opposite miners and really trying to put ideas in front of guys informed through the sort of decisions that we were making when we were on in those executive teams and companies. So it's really trying to increase the applicability of this. And we find and we continue to see good opportunity going forward. Let me go on the slide -- the next slide, and that is just this is my senior team, highly experienced, diverse and just super capable. I'm privileged to have them and the people not displayed on this slide. Really, our networks. This model is built very much similar to how we ran M&A in Xstrata. It's enabled us to execute seamlessly on Northparkes in the midst of the COVID. And our Board, which is not reflected here, just their experience and their networks have really been a great asset for us during this time. So thanks for the attention. Hopefully, that's succinct enough and I'll hand it back.

Thanks, Shaun, and thanks for thanking the conference for the higher gold and silver price today. Actually wasn't in the conference. It was actually all me, so patting myself on the back here for the higher gold and silver prices. But joking aside, maybe I'll start off with Nolan. I can already hear your wife giggling in the background, Nolan. But let me ask you, as you rub the crystal ball here and look into the future here. And this is -- it will be interesting because I asked the same question of the producers earlier today. What's your outlook on gold, silver? And how do you run a company in today's environment, Nolan?

Yes. I think my -- I mean, all skilled CEOs are going to say their outlook is positive irrespective of what they actually think. I think I've got a long track record of saying what I actually think. You can go back on Sandstorm's calls. When I think gold price is going down, I say it. I'm more bullish than the average person is right now on the gold price. I'm way more bullish on gold equities generally right now than the average person. I think that the market has been selling off gold equities and throwing out the baby with the bathwater in anticipation of gold prices trading off. Gold prices normally trade off in this stage of an economic cycle, but they didn't. Things are -- things truly are different this time with the amount of quantitative easing that's been happening in money printing and inflation. And we're in it, we're just in a different environment. And the gold traditionally is actually despite what you would expect in economic books, it tends to actually trade up when you get into a rate hike cycle because people start getting nervous on what's the -- what's on the back end of that rate hike cycle. And so I think gold prices are going to do really well. I think there's going to be a huge catch-up trade in the precious metal equities. But what I would say that's also different this time is inflation is different this time. And people are seeing that on the ground. And mining companies, I think, especially ones that have their assets in developing countries are going to see costs going up 10% year-over-year-over-year. So really I'm a CEO of a gold royalty company, so you'd expect me to say this, but I really do believe the gold that gold equities are prime to rerate and the ones that will have the most leverage because of their lack of exposure to inflation are gold royalty companies. So feeling good.

Sandeep, I think you're also a CEO of a gold royalty company here. Are you as bullish in light of higher interest rates, and it's not a matter of if, it is when? And you and I always have fun talking about all kinds of stuff. Any comments on, say, crypto? Or you might just tell me that no, crypto doesn't matter. How might that fit into the picture as well?

What's crypto? I've never heard of it. No, I think I echo a lot of what Nolan said. I think it's fair to say that, that crypto in the tail end of 2020 really did come in and steal a lot of thunder away from gold and did for maybe much of 2021. I don't see that same dynamic playing out now. I think that commentary about it being an alternative safe haven. I think that's gone away. I think that was a little hollow at the best of times what it was, was an interesting way to make a lot of money quickly and kind of a new asset class. And I think there's room for crypto in some way, shape or form when it all plays out. But I don't think it's your safe haven investment necessarily. And if you look at what's been happening to the prices of it all the way up and all the way down, I think that's -- and the correlation or the lack thereof to the rest of the economy. I think that points to that. I think the -- I think, as Nolan mentioned, you're going to have to be pragmatic about the whole thing. You can't just kind of be counting an upward rising gold price the whole time, but I am quite bullish on it. And I think the only thing maybe as a group, we all got wrong in 2021 was the strength of the U.S. dollar. I mean we had economies bouncing back quickly. We had all that stimulus. Some of it was relative strength more than absolute strength. But that really kind of did that plus that crypto noise really did kind of put a damper on gold. Now that we sit here in 2022, rates are going up. It's clear, whether it's 3 hikes, 4 hikes. But the point they had to, they were 0. And I just don't think that they can go up that high at the end of the day. I think the Fed has a really tricky job. They don't have a lot of tools at their disposal to deal with inflation, which will run hotter than their expectations for longer. And I think they want it to run hotter. I don't think they want to craft wage inflation. We've seen wages be stagnant for too long. They need to go up. I think inflation is needed to deflate the amount of debt that's in the world. I mean ultimately, we're sitting on $300 trillion of debt globally. Something -- like last time I checked 12% of global GDP goes to service that debt. Rates just can't go up high enough before there are cracks in the global economy, and I think the Fed realizes that. So as we see here today, I think we are in a pretty unique situation where inflation is hot. Gold should be running hotter. Obviously, it's got the headwinds from an interest rate perspective. But I think despite that, and then as you're seeing some of those cracks today, we're coming out of a phase where there's been so much apathy for gold. All of last year you couldn't find a gold buyer anywhere and there was so much money to be made in everything else. I think when you take -- the S&P still at high levels, near all-time highs, you take that stimulus coming out and then reversing, spending in the U.S. from a government perspective is kind of backlogged. All that taken together, I think it's going to be a good period for gold. We, as royalty companies kind of benefit in both worlds. I think we've seen a better market for -- I'm sure we'll talk about this on the call, we've seen a better market for deal flow in 2021 than we did in 2020 with a sideways to downwards gold market. And if that continues, we'll all take advantage, I'm sure. And then when it turns around, which I think it will, we'll all be beneficiary of it.

Great. And then maybe turning to Shaun. And Shaun, as you mentioned, you're in a very unique position. You've spent a lot of time in the base metals industry and also in the precious metals industry. We saw relative strength in metals last year and maybe into this year as well versus precious metals. Now how does that change? Or how does that change in terms of the acquisition opportunities for new royalties and streams? And then I have another follow-up question later. And then I guess my follow-up question, Shaun, is that -- are you as bullish on the precious metal prices? And do you want them to go up really high in terms of precious metals? Because in the past, what we've heard is when gold and silver prices go up really high, the producers don't need streaming of royalty companies anymore as part of the financing syndicate. Do you want it to be that hot, Shaun?

Yes. Look, I think those are great related questions. I cannot overstate or understate, I guess, I'm not quite sure which one, but just how much of an opportunity I see, if it's not in this immediate 1-year time horizon, certainly in the 3 to essentially 10-year time horizon with the electrification, decarbonization and battery metal theme. And I actually think you're starting to see little signs of that. I bought my first Tesla 9 years ago when the stock was $32 presplit. Sorry I didn't buy the stock, I bought at the car. But as a consumer product, and this is from a petrol-head, I think consumers are only just starting to understand what that can mean for them. And I think OEMs are going to be doing more in order to be able to appreciate that. But I think no one other than perhaps Tesla has really understood what that means for the supply chain needed to deliver into that. When someone like Ford announces doubling of the lighting of the pickup truck and their stock does what it does, I think others are paying attention. It's not just the new participants in there. And what I think that means is the need and the lead times associated with the battery metals that will feed that transition is totally underappreciated on an aggregate basis. So I think that creates for everyone on this call and beyond significant opportunity to help finance those. And I think the -- and it's not an either/or situation. We do a number of deals where we are alongside their providers with working on inter-creditor arrangements, working with equity investors. We can be patient. And I think people don't always appreciate the complementarity of this form of financing, just from a debt as well as an equity holder perspective when it's well structured. And also the diligence and the know-how and the support that teams like these can bring to this form of investment. So polymetallics, I mentioned 65% of our portfolio resides and is derived from that. It doesn't mean you're not competing for primary. There's a natural cost of capital arbitrage. And I think it will present significant forward-looking opportunities globally for this form of financing and others. So I'm very bullish on that. As for higher prices, gold streams don't have to come from gold mines. And the arbitrage is even more compelling when the gold price is high. So we invest through the cycle. We're not growing for the sake of it. And so I think the specificity, the nature of it changes. So when we first started in '16, the narrative on Main Street was all those good deleveraging deals the big guys did have gone. That's partially true. We did some deleveraging investments, and we continue to. But balance sheets are looking much better, but building mines, helping with acquisition financing and noncore disposals are all there, and we'll continue to invest through the cycle. So I look forward to those higher gold prices.

Good to hear it, Shaun. And then, Jason, maybe you can touch on your sort of outlook on gold and silver as well and understanding that Royal Gold is a lot more -- the majority of it is gold. And I think given your position, you're uniquely positioned to maybe answer this question as well. In terms of the gold and silver price and some of the volatility that we've seen, last year at this conference, we were at $1,900 an ounce gold. What kind of IRR hurdle rate is acceptable to you when you're running your process? And has that sort of hurdle rate changed over time, Jason?

Yes. In terms of the first part of the question, I mean I'm not complaining about gold at $1,800 and silver at $23 or $24, whatever it's at today. I think those are -- we're happy with those prices. And -- but definitely, we see conditions that are favorable for sustained improvements in those pricing. And I think we're seeing sort of some green shoots on those -- on that today, maybe some of the other panelists made some really good points on that already. In terms of the -- and my job really is to put our investors in the best assets at the lowest possible price I can kind of regardless of commodity cycles. In different commodity cycles, different opportunities and different volumes of opportunities come up. In terms of IRR hurdle rates, what's acceptable to us when we're running our process, we have to first compete against debt and equity. So you got to first look at what the cost of capital, what the alternative cost of capital is for the operators and the people that are selling us their streams. And still single-digit IRRs are competitive with that. But the reality is those are just what people see out of the chutes, but over the long term, we expect to hit double-digit IRRs from -- on investments we make, and that's not just from metal price appreciation. That's from all the other benefits of our model, including expansion potential, resource conversion and exploration.

Great. Thanks, Jason. Maybe a bigger picture here. I'll turn it to Shaun first. Shaun, you kind of mentioned the generalist investor, the importance of a generalist investor as we saw at the end of 2021, royalty companies and streaming companies, the share prices outperformed. And there's a lot of good reasons behind it. I'm the converted. I'm sure you guys are the converted as well. But do you believe that can actually continue the outperformance into 2022? What does the industry and also more specifically, the royalty companies and streaming companies, what do we need to do to continue to attract the generalist interest, the dollars and the eyeballs? And Shaun maybe from your perspective, I think you're in a unique position as well, what have you learned or what are some of the key takeaways that you can share with us that you gathered from your IPO process? Shaun?

Yes. Look, I'll try and hit on all those points. Look, I think the first thing that I sort of grapple with when we look at this space is, firstly, yes, I mean, going back to Nolan's earlier comments, you'd be surprised to hear, I believe that the history of this model, which is part of the reason that we've embraced it so keenly is it has a propensity not just to outperform in certain stages, but really does outperform on a fairly sustained basis when well executed. And I believe that will hold and play out. And I think that thematic around inflation -- bear in mind it was 6 months ago, maybe when everyone was saying it was transient and it just didn't feel transient. So I think being in these seats, it's a pretty good time to be in them. And I feel that the potential for our performance is alive and well and can see itself play out not just in the next year but beyond. I think when you think about the broader sector as a whole and this ties in a bit to your IPO question and appealing to the generalist investor, there's a reason the mining theme, I think, has been in the penalty box for so long. And a lot of that was run really dismal capital allocation and the life cycle and all the fallout that happened from that period. In some ways, we're seeing far greater discipline with management teams and mining companies. I think that has led to underinvestment in exploration and in future growth. And I think we have the potential to be beneficiaries of that and I'll be in the beneficiaries of some of that for funding that next generation of mines, not just immediately but beyond. So I think that's a good construct. But I think the broader challenge we face for generalist is they don't want to be burdened by the next scandal or the next problem in the space. We have to be -- go beyond ratings. We have to stay true to the reality on the ESG side. We have to do a better job of showcasing the societal good we provide as capital providers to the space and indeed as miners because there is so much and it's usually the bad stuff that makes the headlines, but there's so much good that gets done. And I really feel we've got to do a better job. We've to sort of attract talent and the next generation of talent because it's a while since the super cycle. And I remember a lot of the guys that came into the sector at that time, a lot have left, and we really need to do a better job at stimulating that. But then I'd say the final point on that would be, it's just relevance. A marquee investor the other day from the United States, who was talking to us about this and just said, look the problem I see for both the precious space, the streaming and royalty space is, let's say, someone's got a sizable position in technology stock like Apple, a nearly $3 trillion company, and they decide they want to change their portfolio and they want to move into precious metals. When Newmont's like $45 billion, like seriously, like what's the ability to actually allocate meaningful capital at the moment into the space? So I think that makes the case for those of us on the panel and more broadly, the ability to actually create meaningful scale, not for the sake of it, but really the ability to have a broader appeal to generalist investors and to generate meaningful scale to be relevant because right now, the actual scale of the sector as a whole, I think, is a bit anemic. So I think there's an opportunity there for us. But I'd say that's it. And then on the IPO front, I think the key thing is it's a bit shocking to me actually that we were the largest IPO in the TSX and on the mining side for nearly a decade. And I think the one thing I've seen on that is, on the one hand, COVID presented an opportunity. And by that, I mean, it's so much nicer shilling it by Zoom than happening on aircraft. And I suspect you might see that continue once things normalize. And also, we are 3x oversubscribed. So I think those equity windows are fleeting. I think if we had gone a little bit later, indeed, that window may not have been there. But I think if you've executed well and you've got a good story, there is a demand out there. And I think the TSX remains a very good place for new issuers. But it's surprising to me that little ol' us was sort of the largest that they're being nearly 10 years. I think it speaks volumes for more and need for more and their timing to this thing about relevance and scale for this sector.

Great. And then maybe turning to you, Nolan, same question in terms of generalist investor. And maybe in a bit more detail, as you mentioned, you're going to become a pure royalty company once again, streaming company once again later on this year. Was that appealing to a generalist investor? Was that part of the motivation of the restructuring that you're planning to do at Hod Maden?

It's certainly, I think. One of the things about our business that investors love is diversification as well as the lower risk nature for the streaming and royalty company. Generalist investors who aren't mining experts who have tried to invest directly in mining companies before, they've often lost money because they didn't know what they didn't know about the nature of mining and the inherited risk therein and streaming royalty companies are just sort of a natural investment for the generalist investor. When we first bought Hod Maden, our intention was to turn it into a stream or royalty within 12 to 18 months. And due to a combination of factors that just took us way longer than we had hoped to, but we're doing it this year. And so it took us longer than we wanted, but we're getting ourselves back to the pure play streaming and royalty model, and we'll stay that way forever. And I do think that this is a business model that generalist investors need to be in if they want gold exposure, period.

Great. And Sandeep, think you guessed that I was going to come to you next. Gold CEOs are paid, number one, to say gold prices are going higher. The other component of it is to talk about that your shares are undervalued. And I got to say, Osisko Gold Royalties are trading at a discount, in part due to the fact that you have ODEV, much like Nolan and Hod Maden. Again, in the whole scheme of things in terms of attracting generalist investors, can you give us an update in terms of ODEV which still makes up a key component of your NAV and how we should look at it? And then on top of that, Sandeep, accelerator model, incubator model, is that still important to OR? And is that still a competitive advantage?

Sure. Happy to. And if I say gold is going up more, do I get paid more? But I'd say on the accelerator model, maybe starting with the second question first. Look, that was frankly, it's been an unmitigated success, which most people lose sight of. I mean when you think about the early-stage bets we made in terms of essentially when the accelerator model worked at its best, it's sprinkling a little bit of cash to get early stage royalties, some -- a little bit of equity dollars to go with it to make it go down and launching new stories, sending them out into the world to kind of progress value. When you look back at that 7 years later, we're up on the equity position. We've created a pipeline of assets from a growth perspective that we bought for cents on the dollar when you look back at it, real assets that matter in the sector. So we generated a pipeline, and we made money overall. And that kind of from a standing start 7 years ago when we had 1 producing asset and 5 assets total to get to where we are, was an important aspect of the business. because everyone talks about competition now, but the incumbents back then when we were a much smaller company weren't exactly easy to deal with either. So having that component of the model to just kind of self-generate opportunities was very valuable. I'd say where we sit here today, it's a smaller part of our business. When we talk about the accelerator model, we've done kind of 1 a year, and we're talking about turning 5s and 10s into the 50s and 100s. And when you do that, that's a win. What didn't work, and you're alluding to, and is kind of bringing in one of those assets in the fall of 2019, even with the best of intentions to kind of protect it for a period of time and put it back out, which is exactly what we did within the span of a year, that obviously didn't go over. But we have spun it back out. We've gone from having CapEx and OpEx risk, perceived risk. Even though we said we weren't going to build it within OR, that's gone. And now the next stage is to kind of dilute and reduce our exposure. 2021, to be honest, wasn't the year to do that. There weren't buyers of any development gold equities. But when you look at what's happening in the sector now, when people are turning back from a kind of pure free cash flow mantra in 2020 to 2021 talking about free cash flow, I'm talking about the miners now, but with growth and having to backfill some of those pipelines, I think we've got some pretty interesting assets in the mix to benefit from that. So it's good when you're trying to turn 5s and 10s into 50s and 100s and you generally succeeded at that. I think that's a win at the margin of our business, but it's not to the business. So we are kind of well and truly back in our lane. And that discount, I don't think can remain. We have been one of the better performing royalty companies last year and over the last couple of years. And we've just done it in a flat market, which is not as satisfying and happily, our underlying NAV, the denominator has just grown faster. So whilst we've been performing well, which maybe doesn't feel like it in a down market, on a relative basis we have. But the denominator, i.e., the underlying assets have just gotten that much better. So hopefully, this is a year where we can legitimately close that gap and with more time passed from that transaction, more cleanup of that and more simplification, I guess, I think we can get there.

Great. We only have 5 minutes left. So maybe I'll turn to Jason here. Jason, Royal Gold has the largest portfolio here on the panel. Certainly a lot going on. But what is one asset in the portfolio that you believe is the most underappreciated here? Jason?

Yes. Cosmos, I have to say it's probably Khoemacau. Khoemacau, it's in a private company, I think it's what that Sandeep referred to, getting some more value out of Mantos now that it's in Capstone and they'd be able to talk about it. So it's in a private company. And the ramp-up, it's ramping up, and so there's still ramp-up risks, so shareholders are still watching it carefully. So I think that's one for sure. It's silver. We bought it when silver was at $14 an ounce. Silver is now at $24 an ounce. We're looking forward to that kind of come into fruition and ready to support them -- continue to support them as they move through this ramp-up.

And then I have to ask you a question on ESG or else I might get in trouble here. We've got 3 minutes left. But maybe I'll turn to Sean. ESG was front-and-center in your IPO process. Maybe can you quickly talk about some of the key risks, short term, long term?

Yes. Look, I think what was gratifying is we actually had some really good accounts coming specifically for the ESG characteristics of this model, but also our execution of that. I think in the immediate term, the one thing from a global perspective, seeing communities dealing with what they're dealing with, with COVID, I think the potential for enhanced inequality and the pressures that could put on the mining sector and also RIN-seeking governments at that point is a thing that I think is a risk for all of us over the next 1 to 2 years. Now the streaming and royalty business has structural advantages over a miner. Obviously, we often don't pick up, we typically don't pick up those tax risks, those are passed on. But I do think is a thematic, that's something we look at. And then on that sort of 5-, 10-year-plus horizon, I think it's just more of that broader point around being just good custodians of extracting these resources and being capital providers to the space to really help make sure that we can do this very well. So things like climate change, things like water, I think, are going to be increasingly, if we're in conflict, or the operations we're associated with are in conflict with society and those things is an issue. So I think we have a catalytic role that we can play, actually just sharing best practices in our respective universes, sharing practices and technologies. I think there's a real role that all of us can play for the sector in the years ahead.

Great. And then maybe a quick question for Nolan here. Nolan, you were the one who pointed out that a lot of these assets that you have, you've added more ounces than depletion. And in part, I would say, for sure, it's due to due diligence. Has due diligence become easier now with, I guess, COVID-19 was a bit of an issue. Now it's an issue again. How has due diligence changed? Or has it improved? And then on top of that, how does ESG fit into your due diligence process?

Yes. So due diligence, it had changed during the heart of COVID. Obviously, it was more challenging. But flights are moving again, you can get people to go where they need to go, it's just more of a pain in the butt if their flight will get stuck and if they test positive for Omicron, but they're willing to do it. And so due diligence is fine, and it's going forward normally. And then with respect to ESG, it has changed a little bit in the sense that we formalized things, but ESG has been in the heart of what we do, right? Most people don't know this, but I started out with a humanitarian charity that I still run today before I ever started Sandstorm. It's in the fiber and being of what we do, but we now have people who are in charge of ESG departments, and they're involved in the due diligence processes, and it's a more formalized part of our business now.

Great. And then maybe we'll get Sandeep to end this here. What is one surprise that you think could happen in 2022 for the mining industry, Sandeep? And will that impact the royalty group? You can talk about ESG, again, if you want. But maybe it's not a surprise.

10 seconds? For 10, 9, 8, 7 seconds? Look, I think maybe I'll say, I think inflation, as we've talked about earlier, is going to run hotter. I think 2020 was the year of the miner, with gold prices ripping, as commodity prices ripping as hard as they did. I think you're starting to -- costs always catch up, they lag, but they catch up. And you're seeing now OpEx and CapEx inflating significantly. I still think those businesses are much better businesses and will remain better businesses than they were before. But it's easy to see that inflation -- wage inflation, mobility of miners, that's going to be an issue. And then on the gold side, I'd say, look, everyone is kind of pricing in the Fed getting this right. I can't remember the last time they got almost anything right. So I think the risk of the Fed pushing too fast too soon and then hurting the economy. I think could add another positive bit of momentum for gold at some point this year. So we'll watch for that. But either way, someone said it earlier, I think it was Jason, $1,840 is a great gold price and we can make a lot of money. We all are making tons of money in this market.

Thanks, everyone. That's all the time we have. Thanks again for joining us today at the conference.

Thanks a lot, Cosmos.

Thank you.

Thanks, everyone.