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

Good morning, ladies and gentlemen, and welcome to today's Virtual Non-Deal Roadshow. My name is Julia Perron, virtual event moderator here at Renmark Financial Communications. On behalf of our team, we'd like to thank everyone in Seattle and surrounding areas for joining us today for the presentation of Royal Gold, Inc., trading on the NASDAQ under ticker symbol RGLD. Presenting today is Alistair Baker, VP, Investor Relations and Business Development. The presentation will last approximately 25 minutes, following a formal question-and-answer session. Please submit your questions via the chat box at the top right corner of your screen. With that, I will hand it over to Alistair.

Great. Well, thank you very much, Julia. Thanks for the invitation to present today. I always appreciate it. Before I start, I just wanted to draw your attention to this slide. I will be making forward-looking statements during today's presentation that are subject to risks and uncertainties, could cause actual results to differ. These risks and uncertainties are all discussed in our most recent Form 10-K filing with the SEC. So during this presentation, I want to give you the investment thesis for Royal Gold and what we provide to investors, which is precious metals exposure with consistent financial performance and a focus on per share metrics. So during this presentation, I'm going to hopefully give you some messages on our low-risk leverage to goals, our long history of execution of our business plan, the unique nature of our business model, our portfolio, and end off with a couple of comments on valuation, which I think our -- we're trading at pretty attractive levels compared to historical. So as we look at Royal Gold at a high level on this slide, Slide 4, we're a high-margin business that generates consistent cash flows from precious metals. We've been in business since the mid-1980s, and we've been on the NASDAQ for over 41 years. We have a very long track record. In 2022, we performed very well, and this slide has some numbers from that full-year performance. Our stream segment contributed about 69% of our revenue, and the royalty segment contributed about 31%. But streams and royalties are kind of the same from our perspective. They both provide top line exposure to mining assets and mining production. Our operating and financial results were very strong last year. We had volume of 335,000 gold equivalent ounces. So that's our revenue divided by the gold price, and when we look at our revenue, it's $603 million for the year. Operating cash flow was over $400 million, and we had earnings per share of $3.63. So a very strong year for us. And as we look back on 2022, there are quite a few achievements shown on this slide, but what I want to say was -- is a busy year, and I'll go into some of these in a bit more detail but there were kind of 3 areas in those achievements. First is, we completed transactions on new opportunities that should add long mine line to our portfolio. The second is we saw -- it's a very good portfolio of events. And so that means organic growth is coming into the portfolio from that portfolio itself. And then thirdly, we completed a number of strategic initiatives, and I'll go into these in a bit more detail, but things like funding acquisitions without issuing equity, continuing to raise our dividends. We actually got included in the Dividend, High Yield Aristocrats Index, so that kind of thing. It was a very productive year for us in 2022. And all of these things were definitely in line with our long-term strategic thinking and long health strategy. So -- just to give you a bit of a foundation or lay out the positioning of Royal Gold in our sector, this is an interesting graph. We did this for our investor update in late April. And it very clearly shows how we're positioned relative to our peers in our sector. And we're in a very interesting competitive position. We're big enough. We have the cash flow to be able to compete for the largest transactions so we can compete with the big guys but we could also compete very well with the small guys. But with all that, we're small enough to show very good growth. When we look at smaller acquisitions, they actually meaningfully add to our revenue. And so that is something that is unusual in our segment. We can compete with the large transactions. We can do the smaller transactions. But all transactions actually result in some kind of improvement to the company that you can actually see because we're not too big for that to be seen. So I wanted you to keep that in mind as I talk about the portfolio and the opportunities that I'm going to discuss during the rest of the presentation. So I'll move on to the discussion of our low-risk leverage to gold. And there are different ways you can invest in gold, and this slide shows those different kinds of investments and we're positioned. Our model is really designed to provide exposure to precious metals without the risk that come with investing in operating companies. We provide exposure to gold and exposure to optionality on the projects, but we also reduce the downside risk because we're not directly exposed to capital and operating costs, and we have a large portfolio of producing assets. There are other ways you can hold gold investments. You can provide physical metal but 1 ounce will always be an ounce, and you'll never get upside from project improvements. You could be more aggressive and you can buy operating mining companies. But with those, you will also get exposure to operating the capital cost risk. This next slide, Slide 9, shows our historical performance and why we think we're a good alternative for those who are looking for conservative exposure to gold. On the left-hand side, you can see our leverage to the gold price, it's 1.9 is our beta. So very good leverage to the gold price. But on the right-hand side, you can see our share price performance over time. And this graph goes back to the beginning of the GDX Index. And you can see that our share price has actually performed very well. It's outperformed the gold price, it's outperformed the GDX Index, but it's also outperformed general market indices, which I think is an unrecognized feature of our business and, obviously, very important to note as well. Now we have a long history of execution and certainly a consistent and disciplined performance in our history. And over our 20-year history, as you can see on this graph, we've done a very good job of allocating capital and growing. And we've really thought about this from the perspective of providing accretive growth to our shareholders. So since 2000, as you can see from this graph, revenue and cash flow growth have been significant. But there are 3 things that I want to highlight about this growth. And the first is -- our business is high margin and it's scalable. So our revenue growth has far exceeded the growth in G&A expense, and that's an important thing to note. The second is that revenue growth is not solely dependent on gold price [ appreciation ]. We've added volume during that 20-year period by trying to find and acquire and add the right assets. And then thirdly, we financed our growth internally and that's been without a significant increase in our share count. We're one of the original members of the GDX Index, and we have the lowest share count in the Index. And we wanted to avoid shareholder dilution. And if we could fund our business using internal resources to provide per share growth to our shareholders, then we're very pleased, we're successful in executing on that key strategic objective. Now Slide 12 here shows a snapshot of our liquidity. We have to be patient in our business, and that means that we have to maintain a strong balance sheet and we have to maintain liquidity to be able -- to act quickly if we see opportunities come up. Our approach to funding has always been to try and use internal resources. So we use cash on hand, first. We use our operating cash flow and our revolving credit facility. And then equity is the last and least preferred alternative for us. Our revolving credit facility provides cheap and very flexible financing to us. And currently, we have $500 million drawn on that facility. We drew in July and December last year to fund a couple of the acquisitions that I'll talk about in a minute. And right now, we have about 0.8x trailing 12 months EBITDA is -- would be our leverage ratio. And we aim to repay the $500 million by around the middle of next year, but that's at current metal prices and assuming no further business development opportunities, and we don't try any further on the revolver. But our total liquidity at the end of March, our last reported financials, was about $634 million. So that's including our working capital as well. And that's a good level of liquidity for the market opportunities that we see for ourselves today. Return on capital is a very important objective for Royal Gold, and it's something that we think about that's top of mind all the time, and it's -- it does make us unique amongst other precious metals or gold investments. We've paid a growing and sustainable dividend since 2000, and we increased the dividend every single year despite volatility in the gold price. So that's a 22-year history. We've paid out over $840 million of dividends to shareholders, and we're the only company in the GDX that has paid an increasing dividend since the Index was formed in 2005, 2006. And we're the only precious metals company that's included in the S&P High Yield Dividend Aristocrats Index. So that is a differentiator from Royal Gold. Now another differentiator, we think, is our core competency when it comes to due diligence. And good due diligence is very important to ensure that we add the right assets to our portfolio. And while we're always looking -- busy looking at new opportunities, not all opportunities make it through our due diligence filter and screens. We have a very extensive process. If we're looking at assets, we're very disciplined in the way that we deploy our capital. If we see risks that we don't like, whether they're technical or social or environmental or what have you, we're happy to walk away from transactions. We don't feel the pressure to do transactions, and we're happy to wait and be patient and be patient and when we're patient, we can rebuild our balance sheet and we can be well funded for the next opportunity that comes across. We found in our history that opportunities always come up out of left field. And there are those that you can identify and say that those are likely opportunities, but then you're often surprised. And so having a good strong balance sheet allows us to be able to act on those opportunities. So taking a bit of a turn here to ESG. Our business model does not allow us to have direct operating control as a key feature of our model, but ESG has been a very important part of our business since inception. We invest for the long term. We don't sell our assets. When we buy a royalty or a stream, we tend to own those until the mine life is depleted. And -- so making sure that we get involved in the right opportunities, the upside is very important. We have to make sure that the opportunities that we're investing in are sustainable and the risks are understood. And so that's a very important part of our due diligence. We also -- we try and incorporate ESG risks into our transactions, and new transactions will build language into our documentation that insures that operations are managed to the highest standards. And we're always looking for opportunities to help our counterparties as well. If they have initiatives around mine sites that we could be helpful with, from a financing perspective, we're always very keen to participate if we can find the right opportunities. We have worked very hard over the past several years to improve the transparency of our processes around ESG. And I think we've seen material improvements in our perception and the recognition of those practices. And you can see that on our time lines on this slide. We're top rated by Sustainalytics today, and we're AA rated by MSCI. And so those are 2 of the most important ratings providers in our sector. I'm going to spend a bit of time just talking about our business model and the unique nature of the model. And really, the key to our model is optionality, and that's optionality to reserve and resource growth. And getting that optionality without having to pay for it when it becomes clear that it's something that will occur. So there are 2 examples I've got on this slide here. We've got PV, Pueblo Viejo, and Wassa. And we made investments, stream investments, in both of these assets in 2015. And in both cases, total reserves and resources today are higher than at the time of the original acquisitions. And that's in addition to the collection over the past 7, 8 years that has allowed us to recover more than 80% of our additional investment in PV and over 100% of our investment at Wassa. The interesting thing here is that there are growth projects underway at both assets today. At PV, there's a plant expansion in the final stages that's designed to increase or maintain gold production at high levels. And there's a new tailings facility that has been permitted -- or this -- sorry, is in the permitting process that's been added to the mine plan that will allow them to continue operations to the mid-2040s. At Wassa, there's a large resource that could add approximately another 11 years on top of the existing reserve life. And in both of these cases, Royal Gold does not have to fund anything further to get exposure to these upsides. And that -- and the growth that we don't have to pay for is the optionality. And so it's that exploration and production upside that's very important when we look at new opportunities, and it's probably the most important part, or at least a factor, in our business model. Now another part of our business model that's unique is the efficiency. Now we have 31 employees in the company. And last year, we produced over $600 million of revenue, and our market cap today is just over $8 billion. So on a per employee basis, we compare very well to any company really in any sector. And our low employee accounts means that we have a very low fixed cash G&A, which further contributes to our efficiency. Last year, we had an EBITDA margin of about 79%. And our cash G&A is about 4% of revenue. And our G&A is made up of -- it's low, clearly, and it's made up of mostly fixed cost. So inflation is not a big risk to our margins. And you can see that more clearly on this slide. On the left-hand side, I've got the cost structure for Royal Gold compared to the average gold producer. And you can see that producers are exposed to inflation in input costs, the costs required to run the mine. So that could be labor, it could be energy, it could be other consumables. And they're often things that move when you have commodity price increases. So if the gold price increases, often the cost of those consumables increases as well. Whereas our G&A costs are pretty steady. So the things like salaries and office rents and service provider fees, things that typically don't move that much on a short-term basis. So our margins are much less exposed to inflation pressures than those of operating companies. And it's simply because we're not directly exposed to operating and capital costs. Now I'm going to take a few minutes here to talk about our portfolio. And as you can see on this slide here, this map, we have a portfolio that's weighted towards lower risk and more mining-friendly jurisdictions. And our principal properties are the large portfolio assets that are called out on the right-hand side of this slide, and those produce about 70% of our revenue. Our portfolio is well diversified, and so that provides stability to our cash flows. Our largest country exposures are to Canada, the U.S.A., Dominican Republic and Chile. So all of those are pretty mining-friendly jurisdictions. And we have revenue that comes from 40 operating assets today. And so that portfolio breadth, it compares very well to any mining company in the business. And that revenue diversification reduces our exposure to single asset underperformance. And then finally, the underlying assets we're invested in are a mix of base and gold assets as well. So we're not necessarily tied to the success of one metal necessarily. Our portfolio itself, if you look at how it's broken up into the different components of our portfolio, it spans the various stages of mining project development. We have 142 assets that are increasing -- various stages of development. So we've got exploration, evaluation and development. And we would expect there to be the potential for organic growth for any assets that we move from the left of this slide to the right. Then on the right is where we get our cash flow and revenue. And King of the Hills is a very good example of organic growth from a project that's been moving through the pipeline for the last couple of years. This is a royalty that we own on an asset in Australia. It's been in the portfolio for over a decade. And new management came in, and they designed a new concept for the mine and an expansion that it just started producing from that. And so that's new revenue to us. We didn't have to pay for it. It was embedded in the portfolio. And so it's organic growth that will be beneficial to our shareholders. And to continue on this theme of organic growth. On this slide, you can see some of the key catalysts that we see in the portfolio today from various assets. The arrows at the top in blue are the producing assets, and those are already contributing revenue to us. But there are several opportunities for mine life extensions and production increases at various of those assets today. The next tier down in the gold color would be new revenue that we see from development assets within the portfolio. And so a handful of those would be Goldrush at -- within the Cortez complex. There's a Record of Decision expected later this year. We're expecting Bellevue Gold to provide its first royalty revenue to us mid this year. And then early next year, we should see revenue from Côté, Manh Choh and Mara Rosa. And then a little bit further down the track, we got Back River, and we have Great Bear towards the end of this decade. But the important thing to note here is that all of this growth is free optionality. It's all been paid for, and so we do not need to pay for any more exposure to this growth. Now we -- obviously, the portfolio itself does provide some growth, but we're also very active in looking at adding new assets to the portfolio, and this slide summarizes what we've done over the past couple of years. We've deployed over $1.2 billion of capital on 6 large transactions. They provide us both exposure on assets that have good upside potential in safe jurisdictions. We funded all of these using cash on hand and using our revolving credit facility. So we haven't diluted our shareholders by issuing any equity to complete these acquisitions. I'm going to spend a couple of minutes on a couple of these, Cortez and Great Bear. The first would be Cortez. And this is the largest transaction that we've done recently, and it was on the Cortez complex in Nevada. And we've had a long-standing history of ownership of royalties at Cortez. And on the left-hand side of this screen, you can see the map that covered our original investments, and this would have been at the beginning of last year. And then in August and in December, we acquired a couple of new royalties. In August, we acquired the Rio Tinto royalty. And in late December, we acquired what we call the Idaho royalty. And these royalties, what they do is they basically increase our exposure to the Cortez property from regional exposure now that we have a much larger coverage. And in some cases, these royalties overlap. So we have very high royalty rates over certain areas of this project. And when we think in terms of our strategy for investments, we think in terms of 3 Ps, we call them people, placement, project. And Cortez is a great example of how this checks the boxes. The people would be -- Barrick and Newmont are the operators. The place is Nevada. And the project, it's what are the most prolific gold mining areas in New Orleans. So very much in line with our strategy. It was our investment at Cortez. And we do have exposure to the entire complex. And you can see the rates at which we have that exposure, on this slide. If you look at the table, and so it's a little bit involved to look at. But the most important thing to note here is the middle column of the table, in the dark shading. If you look at the deposits for the Cortez complex, because of the overlapping royalties here, we have a 9.4% equivalent gross royalty on the pipeline across [ those ] mines and 1.6% gross royalty over Cortez Hills and the Goldrush and Fourmile projects. Another 0.45% royalty on the Robertson project. Now Barrick is expecting Cortez to produce about 1 million ounces in 2023, and that rises to just over 1.3 million ounces in 2027. So with those production levels and the royalty rates that I just described, we expect Cortez to become one of the top 3 royalty contributors within our portfolio. Now another transaction we did last year was the royalty on the Great Bear project that's owned by Kinross. We actually acquired a company and their sole asset, any materiality was the royalty on this project. So with this, we acquired a 2% net smelter return on this project. And like Cortez, this very much meets our 3 Ps. The people, that's Kinross, well-capitalized senior gold producer. The place is Northern Ontario in Canada, which is a very mining-friendly jurisdiction. And then thirdly, the project is -- this is one of the most interesting emerging discoveries over the past several years, and Kinross is targeting around 500,000 ounces of gold to be produced from this project for a couple of decades, starting later this decade. The royalty itself covers about 91 square kilometers and its life of mine. So a very attractive royalty here. And Kinross has done a lot of work over the past 1.5 years since they've owned the project and they announced the initial -- a maiden reserve -- or sorry, maiden resource for this project in February this year, about 5 million ounces. And they're continuing to do further work on exploration and they're expecting to do further deep drilling to add to this resource over the next little while. So -- we are very keen to see them progress. We believe this will be an asset that provides long-term growth, scale and optionality to Royal Gold. And so we're very pleased to have this in the portfolio. Slide 31 here summarizes 4 other additions to the portfolio that have potential for near-term growth. And I won't spend much time on these because there is quite a bit of detail on these pages, but I'll summarize that as saying, Khoemacau is a silver -- we have a silver stream on a copper-silver asset in Botswana, and this year, we expect to be the first full year of production from that asset after they've been ramping up -- probably 2019 they've done construction. So it's very pleased to see the first full year of production, hopefully, in 2023. At Red Chris in Northern British Columbia, Newcrest, who is being -- in the process of being acquired by Newmont, is advancing studies to transition this project from an open pit to an underground -- the large underground vault tonnage operation. And we're very pleased to see exploration success that Newcrest has enjoyed here. So we think this will be a key asset for Newmont when the final transaction is completed. At Xavantina, Brazil, Ero is working very hard to fill it in and sustain gold production levels of 60,000 ounces a year. We have a 25% gold stream on this asset. So that's pretty important to us. And then finally, the gold -- Côté Gold project in Ontario, IAMGOLD is working hard to get this completed and into production early in 2024. If there was a common theme that I would describe with all of these assets, it's -- they're all precious metals and they all provide further exposure to production and exploration upside, which is pretty prospective at all of them. And on this page -- in particular, 3 of these 4 assets are producing revenue to us today. So we're very pleased with that. Now I'm going to end on valuation here. And I think historically, if you look back at -- as to how we've traded, we are trading at pretty attractive multiples. We performed very well in 2022, and we outperformed all of our large cap peers. I think that really did reflect the strong company performance that we turned in. But it feels like the multiples are lagging somewhat. And if you look at the cash flow multiple, for example, we're trading at the bottom half of our peer group. And I personally don't think that the market is recognizing the quality of the cash flow that we're sourcing from the assets within our portfolio. I think the market has started to give us credit, slowly, for some of the recent transactions we've done, but the value of the long life assets and the optionality has not yet been recognized fully. So I need to continue working on that and make sure that people understand our story and what we've been adding. So with that, I think I've come to the end of the prepared comments. I think the -- yes, hopefully, I've given you the message that our record is strong, our businesses are performing well. We've added some very high-quality assets to the portfolio, but we also see organic growth within the portfolio. And then finally, our valuation is pretty attractive. And I think I'll close by saying we think we're in a very good position to continue executing at this point in 2023. And with that, Julia, I'll turn it over to you for Q&A.

Thank you so much, Alistair, for the presentation. As mentioned, we will now start the Q&A portion of the presentation. Your first question today, a viewer is asking, do you have any partners with production that are being affected by the forest fires in Canada?

Not as far as I'm aware, right now. We do have a couple of mines in Northern Ontario, but as far as I'm aware, they have not been impacted by any of the fires. So let's keep our fingers crossed.

Sure. Thank you, Alistair. Your next question is, how many meters of drilling will be completed this year across the entire portfolio?

That's a very good question. Unfortunately, I don't have the number. I don't know what the number would be. If you think about some of the drill programs that are underway, they're pretty significant. So like Great Bar, Kinross is drilling into thousands of meters -- tens of thousands of meters this year. Mount Milligan, they're doing a lot of drilling there to -- underneath it as well as the peripheral to the pit. At Cortez, there's a lot of work going on at Fourmile, for example. So those are 3 of the assets where there is a lot of exploration going on, but I don't have one number for you to give you.

Thank you, Alistair. Your next question is, are there any new countries or regions that Royal Gold is currently prospecting?

Well, we have to keep our eyes open for -- it's a company led by projects. So we keep our eyes open for interesting projects. And we are not afraid to go into new jurisdictions. We did that with Botswana a few years ago. We've never been there before, before we invested in Khoemacau. We did a lot of work to get comfort with Botswana. And I think we're very comfortable when we made our investments. And we've been very comfortable since and very good in place for us to invest. But that said, there are certain places we won't go. There are -- it could be that they are very attractive projects in countries where we just don't feel comfortable. So when I said we think about our -- the 3 Ps, people place and project, if we don't have a checkmark in all those boxes, we're not interested. So if place is a risk, then unfortunately, we won't go to those places for good projects. And Venezuela is an example. Venezuela is a very tough place for us to do business. And I don't think we'd be very keen on going into Venezuela. But we do keep our ears and eyes open for projects in interesting places. Where we're not afraid to do the work if it's somewhere that we know well.

Thank you for your insight, Alistair. Your next question, a viewer is asking, are you seeing opportunities in West Africa as it's a large gold producing region?

Yes, we do see some interesting opportunities. But I think if you go back to the previous answer, we're also seeing heightened risk in some of those places. So -- there are certain countries in West Africa where we just don't feel comfortable investing, despite the fact that there may be some interesting projects. We are in Ghana in West Africa, and we're pretty comfortable with Ghana. And if there was more in Ghana that met our other criteria, I think we'd be quite interested in having a look at those opportunities. But it's really on a case-by-case basis. And it just goes down to the place and the risk.

Thank you for your answer. Your next question is, how much of the Cortez mine is underground and at what depth?

Well, Cortez is a mix of open pit and underground. So in terms of tons extracted, I don't know what the numbers would be. Certainly, the open pits would be much, much higher tonnages, but you're thinking about gold production, again, I don't have that number off the top of my head either. But the crossroads in pipeline, which is where we have our legacy royalties, and that's our 9.5% gross royalty rate, those are open pits. Cortez Hills where we have a lower royalty of [ 1.6% ], that's underground. Goldrush will be underground. Fourmile will be underground. I think we see probably more prospectivity underground as Barrick is going deeper and following higher grades and understanding the ore bodies at a depth. And I can't say off the top of my head what the maximum depth would be for those underground workings. Sorry, I just don't have that number.

Thank you, Alistair. Your next question, a viewer is asking, is there an ideal yield that management targets for the dividend?

We don't target yield. We don't target any kind of externality. I think the way that we look at our dividend business, we think about it -- using 2 words, that's growing and sustainable. So what we -- every November is when we have the discussion with the Board about the dividend. And we always -- when we look to raise our dividend, we look down the path a few years because we want to make sure that if we raise it this year, and we think about this next year, will we be in a position to raise it again. And if so, what about the year beyond that and so on. So -- we want to make sure our dividend is sustainable. We don't want to pull it back. But we also want to make sure that we can grow it. So it's really an analysis that we look at our portfolio. We look at what we expect the kind of prices to do. And what we're comfortable paying out this payout ratio, and we don't target yield. We don't target anything that we don't have any control on.

Thank you, Alistair. Your next question, a viewer is asking which partner delivers the highest revenues to Royal Gold?

That would be Centerra right now. And from one asset, I should say. Barrick would be our largest because we have -- I think gold source stream interest at PV for our vehicle we have Cortez, which will be another very, very large producer for us. So if you think about all of the different assets, I think Barrick is the largest counterparty that we have.

Excellent. Thank you, Alistair. Your next question, what is your time line for paying down the debt?

So what we said -- and we know -- as I mentioned, we have $500 million outstanding as of the end of March. And what we have said to the market is that we expect to pay that down through cash flow as cash flows were received, and absent any new business development opportunities and assuming current metal prices continue, expect by sometime in mid-2024 to have that paid down.

Excellent. Thank you, Alistair. Moving on. Your next question, a viewer is asking, do you think gold-focused royalty and streamers will outperform gold ETFs?

Well, I think the one thing that we have that gold ETFs -- and if you're thinking physical ETFs, the one thing that we have is exposure to property upsides. Gold ETFs will only move with the gold price, and we will move with the gold price, and hopefully, as properties within our portfolios show upside. So generally speaking, I think -- assuming status quo, everything -- it would make sense for us to outperform the physical ETFs in a normal market environment.

Great. Thank you, Alistair. Your next question, a viewer commented, the share price has seen some pullback over the last couple of weeks. Would you share your thoughts as to why?

I think -- as I look at -- as I watch the share price performance, we're not alone. I think if you look at our peers, we've all suffered from the same kind of pullback. And I think what it is -- it's more related to just general market concerns. I think the market seems to be very volatile. And -- yes, the debt ceiling discussion that's going on in the U.S., I think that has caused some uncertainty in the markets that has affected us. I think the gold price itself has been affected by some of the macro things were happening. I think yesterday, the Bank of Canada raised interest rates, so that was a surprise. And I think that's roughly through to the U.S. markets and people are wondering what the Fed is going to do, if they're going to do something similar. And that's causing pressure on gold. And that affects our price as well, our share price as well. So I think it's a combination of a number of factors. It's not as far as I'm aware of, anything that's specific to Royal Gold. It's just something that's happening with the gold sector. And you see this kind of volatility in the short term. So it's not surprising. Obviously, we don't like to see it happen when it -- when the share price comes down, but it's fairly natural. And this is kind of a natural market movement for us I think.

Thank you for your insight, Alistair. Your next question, a viewer is asking, have you looked at any of the new players in the space as a possible acquisition target?

Well, we always look at our competitors. We have models of our competitors, and we try and maintain valuations on them, and we watch to see what's happening and who's doing what. And if valuations get a little out of whack, those sort of things maybe become interesting. But we don't really feel the need to consolidate the sector. We have a large portfolio. We have good organic growth within the portfolio. And so buying another portfolio to add flowers, it doesn't necessarily do anything. We actually find that we get better results if we're able to acquire assets one at a time and add -- really pick and choose what we want to have in the portfolio and add those assets. If you buy somebody else's company, you're buying a portfolio of assets and you've got a pay for it all. There may only be a handful of things that you really want. And the rest of them -- the rest of the things within that portfolio, you're happy to pass on. But unfortunately, you got to pay for all of it. So it may not be the best way for us to add value. Now of course, when company valuations get out of whack and if one of our smaller peers, somebody ahd a valuation issue, it could very much be an interesting opportunity for us to think on. But it's not the way we think about growing our business necessarily by consolidation of the sector. We'd rather grow our business by identifying the best assets to be involved in and go after those.

Thank you for your answer. Your next question is, have input costs come down for your producing partners?

I don't know if they have come down. I think what has happened is inflation has slowed and we've seen inflation pressure has started to ease. But we have seen costs come down. I guess the one area where costs may have come down will be energy. With lower oil price, that does factor in to costs fairly quickly. Generally, I think -- in most mining assets, about 30% of the costs are related to energy. So that can have a big impact on cost is when the oil price comes down. But most other things tend to be fairly sticky. So things like labor costs, they don't tend to come down. When a union renegotiated contracts, it will be at a higher level. And very rarely do you see contract levels come down or labor costs come down over time. I don't think you're necessarily seeing a big change in -- you don't see reduction in costs. But what has occurred is kind of consistent with the rest of the economy, is that inflation seems to be slowing. So the costs are -- they're not increasing as quickly as they were.

Thank you, Alistair. We're coming up to your last several questions here. A viewer is asking which of your development properties can we expect to see come into production next?

The very next one should be Bellevue Gold. That's -- it's a royalty, at one point, 22% NSR royalty on an asset in Australia. They're targeting sometime early in the second half of this year. So over the next several weeks, we would hope to see first gold from that project. It's a very interesting project. This has been in our portfolio for well over 10 years. We have zero book value assigned to this royalty. A new management team came into the company a few years ago, and they started doing exploration. They found a lot more prospectivity than I think the last one ever had thought about. And so they've been working very hard to get that into production. And they expect to go into production shortly. So that will be the next one. So that's the next one to reach that we hope.

Excellent. Your next question, a viewer is asking, where do you expect deliveries to be in the next few years?

Well, we don't give long-term guidance. We've given our 2023 guidance. We won't go on -- anywhere past that in terms of guidance to the marketplace. So it's simply because we don't have visibility into all of the assets in our portfolio. A lot of the stream assets we have good information rights to, but some of the royalties we just do not. And we know it's -- control these assets. So it's very hard for us to look into the future and be able to give you a very rigorously calculated number in terms of the guidance. We have our own views on what assets will do, but we don't disclose that to the market, unfortunately.

It's understandable. Thank you, Alistair. Your last question for today, a viewer commented, there have been a lot of companies that have entered the royalty and streaming space over the past couple of years. And I am sure they all aspire to be like Royal Gold. What are Royal Gold's aspirations?

Our aspirations, well, we -- I think in terms of our strategy, it's fairly simple. We want to be involved in precious metals assets that have good exploration and production upside. We want to continue adding to the portfolio in such a way that it doesn't dilute shareholder exposure to those assets. So simply put, that's what it is and -- that's our strategy. And so it's all about growth with a very conservative financial approach. So capital allocation, we are disciplined around the way we allocate capital. So if you ask me what the future state of Royal Gold looks like in 5 or 10 years, I would say, they we're aiming for the company to be bigger, continue growing, but exactly in the same form that you see today. So precious metals will be the focus. We'll have a strong balance sheet. We'll continue paying a dividend. So those will be the things that I would say that aspirationally, we want to do, is to be Royal Gold today, but larger in the future if that helps.

Excellent. Thank you, Alistair. This concludes the Q&A portion of the presentation. Thank you to everyone who submitted your questions. If you did not get a chance to submit your questions, you can send them over to your account manager here at Renmark. This concludes our presentation for today. But before we go, I will turn it back over to Alistair for final remarks.

Well, thanks very much, everyone. I really appreciate you taking the time today, and thank you for the questions. And as Julia said, if you do have any more questions, if I didn't answer your question that you asked and give you an answer what you were hoping for, please just let Renmark know. I'd be happy to talk to you one-on-one after the fact if that would be helpful. So thanks very much. Enjoy your day, and look forward to talking to you again.

Thank you, Alistair, for the presentation. Once again, this was Royal Gold Inc., trading on the NASDAQ under ticker symbol RGLD. Thank you to everyone in Seattle and surrounding areas for joining us today. Stay tuned for other presentations in your area. Thank you, and see you next time.