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

Good morning, everyone. Thanks for joining us for the 27th Annual CIBC Western Institutional Investor Conference. My name is Cosmos Chiu. I'm a research analyst here at CIBC. I'm excited. I'm excited about 2024. I'm excited about what that's going to be for precious metals. Hopefully, our panel today, our panelists are as excited as I am. We have the royalty panel, which is usually a very good kickoff for our Western conference. I've each -- asked each speaker to give us a 5-minute introduction for the company and then thereafter, we'll sit by the fireplace and we'll have a fireside chat. And so first off, we'll have Jason Attew, President and CEO of Osisko Gold Royalties newly minted. It's not his first time at the Western conference, but certainly his first time presenting at a conference as CEO -- President and CEO of Osisko Gold Royalties, and so I'll hand it off to Jason.

Thank you, Cosmos. I appreciate everyone attending [ Ag ]. I will take the first selection to open a conference, which is [indiscernible]. So look, Osisko Gold Royalties this is our [indiscernible] state I have to point this out, given the size to front, that I our lawyer say, I will be making some forward-looking statements. Osisko Gold Royalties, what I want to convey and hopefully, the 1 takeaway that everyone takes away today is we are on a path of revitalization. In fact, obviously, everyone knows it's a new year, new CEO, and we have a new-ish strategy. The fact of the matter is, over the course of the last 5 years, in particular, there's been a lot of confusion with respect to the story, mainly because the old management team went out a number of years ago, as I think people knew and acquired mining assets. I'm here to tell you our newish strategy is we definitely are a pure-play gold-focused royalty streaming company that investors have to own, and we want to substantially grow the business in that fashion. The project generator or accelerator model clearly did not, although it was a very interesting concept. It did not produce the shareholder returns that people expect with respect to a royalty company. It also created a lot of confusion and confusion does have its costs. It also created a bunch of governance issues and related party issues. So as I said, I'm here today. The cleanup has started. I'm here to finish, again, the cleanup as it relates to the related party and governance issues. But underpinning the business, and again, our focus is just to really become a pure-play royalty mine finance royalty and streaming company and economic interest company. The business is tremendous. The assets that underpin the Osisko Gold royalties. As you can see on the slide, we have over 180 assets. The fact of the matter is this is a very young company. I think people will know or recognize if we've been in the business for some time. It was last week 10 years ago that the evil Goldcorp went hostile on a Osisko mining. And this Osisko Gold royalties obviously was a product of that defense. And so what they've obviously done with an asset such as Canadian Malartic, which was the first asset that came out of the hostile transaction, there's over another 180 assets that investors have exposure to. We do have 22 producing assets at this stage. And I will tell you, the approach that we're taking around capital allocation is different. We'll be very, very disciplined. We have a number of metrics specifically on return of invested capital, that we'll be disciplined as we go out and be a mining finance company around the pure-play gold royalty and streaming assets. As I said, we have the highest quality portfolio. We -- the concentration of Canadian Malartic, again, is the anchor asset within the portfolio. If people weren't aware, Canadian Malartic is the largest and most profitable asset mining asset in Canada. It's the seventh largest mining operations -- gold mining operation in the globe, and we have a 5% NSR associated with it. In addition to the high-quality portfolio that you see here, obviously, we have assets across the globe. But what I would say in addition is we have a peer-leading growth profile. And so we are expecting to get a 30% growth over the next 5 years. And the subset of that 30% growth is actually, as you can see, some of the highlighted yellow box one there are actually in the producing asset stage. So this is not -- they are not all 50% of here are not coming from development assets, 50% are, but 50% are coming from either mine expansions or extensions of the very, very well-known assets you see here and some of the other cornerstone assets we have in the portfolio include companies that are presenting here the CIBC Western Institutional Conference. Mantos Blancos, which Capstone operates, the Eagle mine, which Victoria operates, and we recently signed a deal on the Metals acquisition Limited, which owns the copper asset in Western Australia cut CSA for which we get -- this year, we'll get 100% of the silver credit, and we will also at the second half of next year get -- there's a copper stream that will also contribute to our portfolio. So very, very high-quality portfolio. In terms of the mining jurisdictions, and I do think this will be topical. This is heavily weighted to our resources. There will be a lot of resource conversations just around jurisdictions given some of the events that have happened in the past. But what we've conveyed here and recognize this might be somewhat simplistic given Canada, U.S. and Australia makes up 80% of our NAV and it's a simplistic view arguably of jurisdictions. However, what we can say is Canada, U.S. and Australia are a very, very known mine into the safest of safe jurisdictions. And we have the peer-leading best exposure as the 80% of our NAV is associated with those jurisdictions. Lastly, I just want to talk about, again, it comes down to the related party aspects and what we did at the end of last year to really firm up our balance sheet. We did sell the Osisko Mining block for CAD 132 million. Why we did that was for 2 reasons, as I said, Osisko Gold Royalty has one focus, one focus only is to [ pride ] Mine finance to the best assets in the best jurisdictions for the for the best management teams, and we've got a really great opportunity set in the pipeline to do that. And in order to do that, we obviously needed to provide some capacity within our revolver facility. So we sold down the whole 100% of the OSK block, the Osisko Mining Block for CAD 132 million, proceeds went to pay down our debt. So our total debt right now is CAD 192 million, you can see on the slide. From a net debt perspective, we're under CAD 130 million. So we have approximately CAD 550 million of capacity to go out and do very smart, disciplined deals with, again, operators that we think are best in class in the best jurisdictions and really grow the business. So overall, I hope the 1 takeaway from you folks is the fact that we're simplifying the business. We're really just focused on royalty streams, economic interest with the best partners and again, cleaning up everything that's happened in the past to produce superior returns. Thank you for your time, and I appreciate your interest.

Thanks, Jason. Next up, we have Nolan Watson, President and CEO of Sandstorm Gold. Welcome back, Nolan. I think it's been a few years since you've come to the Western conference. I don't know if you heard, but we had David last year from Sandstorm. We scared away a number of the generalist investors. So hopefully I don't think they've come back. Hopefully, Nolan I'm sure you won't.

Sounds good. All right. I just have a few slides to talk to here. Sandstorm's business model is pretty simple. It's a lot of stuff that Jason just said about Osisko, Sandstorm is a similar sized company, about a similar amount of production that came this year. You can see from this chart, our production guidance going forward. I think one of the things that we've done that's unique to Sandstorm is we've gone out and we've bought a lot of our growth or all of our growth for the next several years, bought and paid for. We did a number of transactions that totaled about $1.3 billion a couple of years ago. And those acquisitions worth of things were mines going into construction or in construction. And so you'll see our production profile growing year-over-year as these mines that we've acquired streams and royalties on the mines that we've acquired get into production. And you can see those gray bars there is we've got an option to acquire gold stream on Glencore's Mara projects. They've recently spent $0.5 billion buying out the minority interest there, and they've then informed us that they're going to go full bore ahead with that project, and that would be about another $30 million year free cash flow for us if we exercise that option. So in terms of cash flow at $1,800 gold once these mines come online, we see ourselves up over USD 200 million per year in free cash flow from the portfolio of things, again, that we own and have the right to. I think 1 of the themes for Sandstorm is that because we have already pre-bought and locked down all of this growth, we don't plan on actually being very active in making new acquisitions over the next couple of years. We took on a bunch of debt to make these acquisitions. And we've been paying that off aggressively over the last year and a bit, and we'll continue to pay that aggressively over the next couple of years. Our share price has suffered a little bit, in interest rate environment where interest rates are once in a generation rate hiking cycle and you've taken on a bunch of debt investors, I think, shied away from the stock a little bit, and it's caused us to trade at low multiples. And I think you're really going to see that part of our story reverse. Our debt is coming down super fast. Hopefully, interest rates will be coming down. And you'll see this cash flow kicking in massively. $2,200 gold used to be a big stretch I don't think it's a big stretch anymore. It's basically 2% inflation for the next 4 years. It gets us to $2,200 gold and we'd be USD 0.25 billion of free cash flow per year, again, based solely on the things that we've already bought -- locked down as those mines get built. So if you juxtapose that $0.25 billion of cash flow per year against our market cap, we basically we look at these debt numbers and that cash flow relative to that debt and then to our market cap. So when we did all those acquisitions, we took on about $640 million worth of debt and IOUs at the time. We've been aggressively paying that down since. Today, as I stand here, we've got that paid down to $427 million. So massive amounts of debt reduction since we've made those acquisitions. Our goal is to have our debt below $350 million by the end of this year. And assuming that we achieve that objective, then our debt will be approximately equal to the loans that we have made to other mining companies and the equity that we've invested in other mining companies, we have USD 240 million of loans to other mining companies, and $80 million of equity investments in other mining companies. So our debt will approximately equal our investments in other mining companies. And my job over the next several years will be to harvest those loans and equity and use that to pay off the debt. So that the free cash flow, that $0.25 billion we talked about, our free cash flow generated by the portfolio of streams and royalties will be truly free cash flow. And that's the place we're hoping to get to by the end of the year. And if you juxtapose $250 million a year of free cash flow against the market cap as of this morning is $1.39 billion. If things don't change, then eventually Sandstorm will be trading at 5.5x cash flow, which is pretty rare for a stable, diversified streaming and royalty company with high-quality assets around the world. So I think we've done the right things. We're doing the hard work, and it's a pretty value-driven story at the moment. And that's basically it.

Thanks, Nolan. Next, we have Sheldon Vanderkooy, the CFO of Triple Flag Precious Metals. It's your first time here, I think, presenting Sheldon, and Shaun is not here today. So feel free to let us know anything that Shaun wouldn't tell us. But with that, Sheldon?

Thank you very much, Cos. Good morning, everyone. I'm Sheldon Vanderkooy, CFO of Triple Flag Precious Metals. I too will be making forward-looking statements and the customary cautions apply. As I introduce Triple Flag to you, there's 2 main points that I want to leave you with, and the first is a significant embedded growth that's within our portfolio right now, and that's over the next 5 years. And the second is our strict focus on financial returns and in particular, on cash flow. We created Triple Flag in 2016. We didn't have an existing portfolio. Every asset in the portfolio has been acquired by the current management team through a series of acquisitions. Our goal was to create a premier streaming and royalty company. I'm really pleased with the progress we've made. Today, we have over 230 assets in the portfolio. We have a market cap of USD 2.6 billion. We just released our 2023 production figures. It was 105,000 gold equivalent ounces. That's actually the fourth highest total in our sector. On the screen, you see the track record of growth that we've achieved. Our first year of production was 2017. We had 33,000 global equivalent ounces in that year. We just achieved 105,000 ounces in the last year as 3x growth, over 3x growth in just 6 years. So that's a track record that we're quite proud of. But what I really want to focus you on is the bar that says 5-year average. And we are actually looking at 140,000 ounces a year on average over the upcoming 5 years. And most of that growth is from existing producing assets. It has to do with increasing gold grades on Northparkes. It's not dependent on permitting. It's not dependent on financing. It's not dependent on a junior company being taken out by a senior company and building something. So that's a significant uptick in growth that we're looking at over the next 5 years. from our current existing levels of production. This model is fantastic because that production translates very effectively into cash flow. If you look at the 2 charts on the left, they map very closely to the production chart. And if you go to the far right, you see part of the reason for that is the strong margins, and that's inherent in this business model. We have over 90% asset margins. This model is fantastic for translating the top line revenue growth into bottom line free cash flow. We benefit from top line growth of our partners, but we're not susceptible to the operating cost inflation, the capital cost inflation, the sustaining capital expenditures, the exploration expenditures, all the things that take cash flow away from the operating companies our model allows us to fully benefit from that. Ultimately, this model is quite simple. Our free cash flows are primarily going to depend on our production volume and the gold price. The gold price today, today is down a little bit this morning, but overall, it's still over $2,000 an ounce. If I compare that to the average price of last year, it's higher. So if prices stay exactly the same, if we don't benefit from the interest rate cuts, which people largely think are going to come to happen this year, they stay the same. We're going to see year-over-year increases in cash flow just from the price impact on this year's production. And then when you overlay that on increasing production growth, you're going to get this gearing effect benefit both from the gold price effect and the production effect translating in the cash flow available to shareholders. I won't dwell too long on this slide. There's an increasing focus on asset diversification and on jurisdiction risk. We're well diversified by asset diversification. Our single largest exposure is Northparkes. I'll touch on Northparkes later. The key fact there, I think, is it's located in Australia. The next circle chart there is our commodity exposure. We are very much a precious metals investment vehicle, 95% of our revenues are gold and silver. With respect to geography, our single largest country exposure is Australia, and over 60% of our NAV is Australia, Canada and the United States, very good jurisdictions to be in. This is a bit of a report card. It's on an asset-by-asset view, some investments that we've made in the past and seeing how we've done with the benefit of the passage of time. What we've done is we've taken our initial investment and looked at the cash flows we have received to date and also compared to the existing NAV that analysts are putting on it. These aren't our own internal figures. These are consensus analyst figures. This is what the market looks at. And as you can see, we generated cash flows and value significantly in excess of our invested capital in many of these cases. The 1 I'd actually like to draw your attention to is the bottom left, the ATO investment because there is the potential with this model to have higher returns. ATO, we put in $28 million in a series of stage payments starting in 2017. We've harvested nearly $40 million at the end of Q3. It's higher than that now, to date, we have significant value ahead of us. They're undertaking a Phase II expansion. We're going to benefit from that expansion without putting our own capital to work there. So again, I think indicative of the strength of the model, how you benefit at the back end as you get into the parts of the spreadsheet that you actually didn't pay for at the front end. I want to touch on Northparkes. It's our cornerstone asset. It's located in Australia. It's been operating for decades. The mine team thinks that this could be the 100-year mine. It has lots of mine life ahead of it. It's a copper mine. It's 80% operated by Evolution. They just stepped in last year. The remaining 20% is Sumitomo. They draw from numerous different ore sources and these sources have differing gold grades. And what's exciting for us is this is primarily a copper mine. So they're going after the copper and then the gold and then we benefit from the gold there. They're going to be accessing zones of this mine, which have higher gold grades than we've experienced in the past. And so what that's going to do is that's going to drive an increase in our deliveries. The picture there is of the E31 open-pit. They started mining that late last year. They're mining that right now, and we're going to benefit from those higher gold grades in 2024 and beyond. The gold grade at E31 is about 4x higher than what they have been traditionally been mining. Now they draw from multiple ore sources. So this is just going to blend in the average, but it's going to raise up the average. This is 1 of the sources of our growth in the next 5 years. I just -- what I want to leave you with is we're very proud of the portfolio we've built. We have embedded growth in the portfolio, and we are strictly focused on financial returns and cash flow.

Thank you, Sheldon. Next, we have Bill Heissenbuttel, President and CEO of Royal Gold. I think you're the longest serving participant on this panel. So Nolan missed last year, so we started the clock again. So any wisdom that...

Well, good morning, everybody. I really like to thank CIBC for the opportunity to participate in today's panel discussion. I will be making forward-looking statements. which are subject to risks and uncertainties. Actual results may differ materially, and these risks are discussed in our 10-K filings with the SEC. If you could just take away a few words or a phrase from this high-level description of our company, I think it would be consistency, efficiency and uniquely positioned. We are consistent in terms of our leadership and our team. We are the oldest continuously traded public royalty company in the sector. And since we adopted a gold strategy in the mid-80s, we've only had 3 CEOs, including me. Our team averages 10 years in tenure, and that allows our personnel to develop a wealth of corporate history, knowledge and experience. And I also think it speaks very highly of the work environment we have in our culture. We are consistent with respect to our strategy. We're focused on streaming and royalty investments. We generate 70% to 75% of our revenue in -- from gold and almost 90% from precious metals. Since 2021, we closed over $1 billion in transactions on properties that are primary or byproduct gold producers with good operators in good jurisdictions. While we can consider investments in other metals, we do not lose sight of what we offer investors, and that is a lower risk exposure to gold. We are consistent with our financing strategy. We financed investments from existing cash, cash from operations and our revolving credit. Once we borrow money for an acquisition, we look to pay back quarterly in order to position ourselves for the next transaction. Now that does not guarantee that we will never issue equity in the future if good investments present themselves. There's a reason we only have 66 million shares outstanding, which is the lowest in the GDX. We haven't done a public equity issue since 2012. In the period from 2000 to 2022, our operating cash flow increased 99x while our shares outstanding increased 4x and the gold price increased 6x. We benefit from a consistent share register. In the last year, our top 10 shareholders did not change in the average, holding period of our institutional investors is over 15 years. We're also consistent in our approach to our dividends. In November of last year, we increased our dividend to $1.60 per share for 2024. That was the 23rd consecutive annual increase in the dividend. And we're a member of the S&P High-Yield Dividend Aristocrats Index, which is -- reflects that accomplishment. And we're the only precious metal company in that index. In terms of efficiency, we only have 30 people, within the team, but we're able to manage new business identification, new business acquisition, portfolio monitoring, risk identification still produce EBITDA margins of about 80%. And for the 9 months ended September 30 of last year, we earned $453 million in revenue and had cash G&A of $23 million. And that's a real insulating factor when it comes to things like inflation. And as a U.S. company, with Newmont is the only other major U.S.-based source of gold exposure, we are uniquely positioned to potentially attract generalist money when their attention turns to gold. We're members of over 200 equity indices in the U.S. And also as a U.S. company, we do not expect to see our results to be negatively impacted by a global minimum tax. And in fact, we may actually see that level of the playing field with our key competitors that may face a higher tax burden. So in closing, there were a few portfolio events that impacted our results in 2023, primarily the strike at Penasquito and the slower-than-anticipated ramp-up at Pueblo Viejo. But I invite you to watch a few key events this year, the return of full production at Penasquito, steady-state production to Pueblo Viejo, a PEA at Great Bear, the commissioning of the Goldrush project at Cortez Complex, construction progress at Back River, a potential new owner at [ Comical ] with a possible focus on expansion the opportunity to fully repay our revolving credit and first production from Manh Choh, Cote and Mara Rosa, 3 assets that are on their own aren't all that material, but in the aggregate, represent good organic growth from our portfolio. Thanks for your time, and look forward to the panel discussion.

Bill. I don't think I'll give you any time to rest. But let's start off with you again, Bill. Out of a scale of 1 to 10, 10 being best, how was last year's acquisition environment? And what are you expecting for 2024?

I think my view on 2023 is a little bit jaded because we had such a good 2022. So you want 1 to 10, I kind of had, well, it's probably a 3 or a 4. And that's just really sort of our perspective on it as a whole. We had 1 transaction that we did announce publicly. We weren't able to close it due to other closing conditions that were not satisfied. And I would say that the transactions that we saw, maybe we had some technical concerns, maybe we had some jurisdictional concerns. So maybe that's just a reflection of how we look at the market and not the market as a whole.

And what do you think about 2024?

I mean the funny thing about this business is you never know what's going to come up. If you had told me at the beginning of 2022, we're going to do 2 Cortez transactions and buy Great Bear, Great Bear Royalties we stood -- that wasn't on the on the radar. I still think interest rates are high, which is good. I think the equity markets are relatively close. So that's good. So I am pretty bullish about the potential in the market.

Nolan, do you agree? Was it a 3 out of 10 for you last year? Or was it a higher number, a lower number? What are you thinking about 2024?

I think for us, it's irrelevant. So we -- similar to what Bill said, in 2022 was a big year for Sandstorm. We acquired over $1 billion worth of new assets, 5 of our top 10 assets came in through those acquisitions. And we are dilution sensitive, so we borrowed money to do it. And we just, in 2023, used all of our cash flow to pay down debt instead of buying new things. In 2024, we plan on doing the same thing in 2025, we plan doing the same thing. We're going to grow by 50%, potentially as high as 60%. If I do nothing but sit on my hands being in a situation where you could conceivably buy back your entire company with 5.5 years of free cash flow when you've got mines that are going to be producing for decades. It doesn't really make sense to make acquisitions. It makes sense to buy back shares. So probably at the end of this year, we'll be looking at buying back shares, not buying the streams and royalties.

Sheldon?

So we actually closed -- we actually closed the Maverix transaction in January of last year as we kind of had our big acquisition early on. I'd say it would be a 7 or 8 overall. It was actually a fantastic acquisition for us. I think we were a little disappointed we didn't have more activity during the balance of the year because memories are short, and we're impatient. But it's been -- we had some tuck-ins and all that. So I think it was a really good year with respect to Maverix and then probably a little bit slower after that.

And Jason, understanding that it was someone else who ran the company last year. How would you rank it? And how would you do it this year?

Yes. No, great question, Cosmos. So I do have 70 days context here, but clearly have done a look back in terms of what transactions were done. And so the transactions that were closed that really again sets the company up for growth, the CSA transaction, people might know or followed McMullen is a very well-known mining entrepreneur, Stillwater, Detour Gold, and his vision is to create a mid-tier copper company in Australia, where there's a dearth of those opportunities. And so we were as a financing partner in the Cobar mine total consideration for us was USD 190 million, which essentially got him that mine and if people don't know what Cobar is, it is the highest grade underground copper mine in Australia. So a very solid asset with a very solid management team, great jurisdiction. As I said in my -- this is what we're going to be doing looking forward. I think the genius part of that transaction as well as we're truly a partner with Mick going forward is if people aren't aware, we have a 7-year ROFR associated with anything that he does to do to grow the company. And we all know he's not going to sit still. He will build out a mid-tier copper company, and we're going to be financing partner as it goes through it. And that's also why it was important, as you think about late 2023, and where we did sell off the 100% of the OSK, the Osisko Mining Block that brought our revolver down, as I talked about, to our total debt down to CAD 190 million approximately, and it gives us a lot of financial flexibility to go out and do transactions that I believe and maybe it doesn't happen in 2024. But certainly in the flow around the whole energy transition push, and it's perfectly set up for our companies here because as you can appreciate, we can provide very good financing for byproducts such as silver and gold around big polymetallic -- a big chunky polymetallic acids that in our generational assets. So very much looking more forward than backwards, but Osisko was obviously active in that transaction or another transaction called Namdini, exactly the strategy that I talked about around we're 100% focused. Now on mine financing through royalties and streams. I promise you we will not go by a mining asset because that clearly, again, it was an interesting concept, but it just didn't provide the shareholder return and just simplifying the business and being a mining finance partner for groups like CSA, Capstone and others is what we're going to do.

Great. And maybe next question since Nolan, you didn't really answer my last question, we'll start off with you. Let's spice things up a little bit here. What's the 1 asset in the industry that isn't yours that you wish you had given the -- you were given the opportunity to acquire?

Oh gosh.

And irrelevant is not an answer.

That means I have to say nice things about someone else on the stage.

You're a nice guy.

That's a really tough one. I'm going to have to come back to you on that.

Okay. Anyone else want to give it a crack?

I'll take it. I mean the transaction that started this business, and I'm going back to 1986, Goldstrike, for sure. I mean who would have guessed I don't know if people understand the context there, but it was a small [indiscernible] asset in Nevada before even Barrick owned Goldstrike. It was a company called Western Mining than the American Berrick got it. But obviously, Pierre and Franco gone in on a royalty there a 50 million-ounce endowment now and that created Franco for sure. And so yes, that's something we would have loved to have in our portfolio. It's obviously something that really created, I think an industry and interest around kind of novel ways around mine finance. So for sure, that's 1 that stands out to me as if we get to those transactions, we would do it every day, 3x on Sunday.

Sheldon, do you have a...

I have an answer now.

Oh you got an answer now. Okay, cool. Thank you, Nolan.

Take me a moment. I apologize.

I sent you these questions before.

So I would say, of assets that we were interested in when we were looking at making acquisitions that we had the opportunity to buy that we are in the process of the closest 1 that we came to and ended up not being the winning bidder was Cerro Lindo, we were up against Triple Flag. And we were like, boy, they just paid a little bit too much, and we passed on it and I regret that decision.

Do you agree, Sheldon?

We got Cerro Lindo, it was our first asset and got us kicked off. So thank you. [indiscernible] he did some of the questions before, and I kind of came back to Royal's assets in Nevada, right, Royal Gold, and we're somewhere, I guess, we're the new kids on the Block, and we can start in 2016, and those were largely in your portfolio already. I know there's a bit of an add-on more recently, but yes, those are wonderful assets. Malartic is also a wonderful asset, and Nolan's got a fantastic portfolio as well.

And then Bill?

I'm not shy about extending compliments. We always talk about good people, good project, good place. And I think of Salobo and I think of Malartic as ones that are very attractive -- never really had -- we had an opportunity on Salobo, not Malartic, but great assets.

Thank you, Bill. Maybe something else here. As we've all followed in 2023, there were some fairly highly publicized issues in the mining space that had an issue or had repercussions for the royalty and streaming companies, including the shutdown of Cobre Panama. So Sheldon maybe we'll start off with you. I think you're the only lawyer on this panel here. Does that change the way you structure deals? And also, does that change the way you look at due diligence concentration risk, geopolitical risk, Sheldon?

6 Yes. When big events happen, I think you had to take notice and maybe adjust it or at least course correct or give some contemplation. What Panama has done is it's very destructive, right? It's destructive for the mining sector, the value of those companies have gone through. I think it's also bad for Panama as a jurisdiction. So anyway, I don't quite understand why they're taking that course, but they are I think it's primarily -- the structuring things you can do, and I think we all kind of understand that. I think this just primarily comes down a jurisdiction. I think there's been increasing focus since then on concentration risk and jurisdictions risk, where you're located. And I think people are having a different view there. It wouldn't surprise me if at the end of the day, when we look back, first Franco-Nevada comes out okay on this. because it seems almost insanity for something else to happen. So I think I might be okay at the end of the day. But again, this has been a very bumpy road and obviously has gotten everyone's attention.

And Bill, any comments?

Yes. I mean in certain jurisdictions, we will build things into our agreements. The primarily deal with expropriation. It basically says if you get expropriate and you receive proceeds, if we haven't gotten their money back, we get the money back first, and then we share the economics, you cannot protect against every political risk out there, but that's 1 way we do try to do it. I think the other thing that really strikes home is when you're looking at these jurisdictions, is mining part of the culture is there an industry. And I think the 1 thing about Panama when they do this and they say, well, you're ruining your mining industry and say, what mining industry. So it's just kind of a unique -- it's a unique risk and a unique situation. And the other thing I'll just say is we make investments over decades. We'll do the political risk due diligence but we have no idea where governments may go, where countries may go. That's just a risk that we have to accept when we make these investments.

Nolan?

Yes. When I look back and how I got into the mining industry, I got -- I was 22 years old, I got sent off to the jungles of Myanmar to audit a mine that was a joint venture between the military and a Vancouver-based company and I got thrown right into political risk pretty quick. And my second place I went to was Mongolia, right, as Robert Friedland was finding really in [indiscernible]. And then shortly thereafter, founded a personal charity in war-torn Sierra-Leone and very quickly started to realize how risky the place the world is. and how any country at any given point in time, can go crazy to levels you can't imagine. And so the philosophy that I've always carried at Sandstorm is you can change the politicians and it can get worse or better, but you can't change the rocks. So focus yourself on really high-quality assets and diversify politically. So at Sandstorm, we don't have any 1 country more than 14% of our NAV, and we're going to keep it that way.