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

Hello, and good morning, everyone. Welcome to today's virtual non-deal roadshow. My name is Noella Alexander Young, virtual event moderator here at Renmark Financial Communications. On behalf of our team, we'd like to thank everyone in Chicago and surrounding areas for joining us today for the presentation of Royal Gold trading on the NASDAQ under the ticker symbol RGLD. Presenting today is Alistair Baker, Senior Vice President of Investor Relations and Business Development. The presentation will last approximately 25 minutes and will be followed by a Q&A session which you can participate using the chat box in the top right corner of your screen. That being said, I will now hand it over to Alistair.

Well, thanks, Noella, and thanks, everybody, for participating today as the gold price continues to grind higher and set new records almost on a weekly basis. I think it's a great time for me to give you an update on Royal Gold. So during this presentation, I will make forward-looking statements. Risks and uncertainties could cause actual results to differ materially from these statements. All of these risks and uncertainties are discussed in our most recent Form 10-K filing with the SEC. So during this presentation, I'm going to give you the investment thesis for Royal Gold and what we provide to our shareholders, our investors, which really is precious metals exposure with consistent financial performance and a focus on per share metrics. The presentation is sectioned off to give you an explanation of our low-risk leverage to the gold price. Our long history of executing a very simple business strategy. Our unique business model, organic growth from within the portfolio and then finally, our valuation, which I think despite the record gold price, I think we're still trading at pretty attractive levels. So to jump into an overview of Royal Gold first. We are a high-margin business. We generate consistent cash flows from precious metals. We've been in the business for a long time since the mid-1980s. We've been on the NASDAQ Exchange for most of that time. We have 2 segments to our business. We have streams that contribute about 2/3 of our revenue -- pardon me, and royalties contributed about 1/3 of our revenue. Royalties and streams have structural differences, but they're basically the same thing in that they provide exposure to topline production from mining assets. We released our Q4 results just over a month ago, and that was -- it was the end of the 2024 year as well. We had a very, very strong quarter and it finished an excellent year for us. We had in the quarter record revenue, record earnings and record cash flow. Our EBITDA margin increased to 84%. I challenge you to find a business in any sector that has margins like that. Our revenue was 76% from gold, and it came about 60% from Canada, the U.S. and Australia. We ended the year with zero debt and about $1.2 billion of liquidity available to deploy. We had excellent results for the year. And really, the final quarter to demonstrate our continued high margins and our business really is structured to benefit from a strong and rising gold price, which we saw in certainly in the fourth quarter and has continued into this year as well. Now this slide gives you an overview of how we compare to our peers in the streaming and royalty sector. We sit in a very interesting position. We are big enough to be able to compete for the largest transactions in our sector. We have significant access to capital, that's from our cash flow, but also from our revolving credit facility. Yet we're also small enough to be able to show growth. We can add a small transaction to our portfolio, and that will result in something that you can see in our overall results. We're not aiming to be the biggest. We don't think that's necessarily the wisest thing to do, but we want to be the best. We want to be -- we want to approach our business and have the best assets that produce the best returns for our shareholders. And we think our Goldilocks position, if you want to call it that, is a great platform for us to be able to continue to grow and execute our strategy of growth in gold. So I will turn now to leverage and our low-risk leverage to the gold price. And this slide, for those of you who know Royal Gold and understand our business, I'm sure this will be all had to you, but I just -- I want to set the stage here and show how we're positioned relative to other things that -- or other investments you can make in the gold sector. Our model is designed to provide exposure -- shareholder exposure to precious metals without many of the risks that come with operating or exploration company investments. And we provide exposure to gold price itself, but also optionality within mining projects. And we do that while reducing downside risk by holding a diversified portfolio does not have direct exposure to operating and capital cost risks. And that's very important when you think about things like tariffs that could cause inflation or anything that could impact margins. When the gold price rises, you don't want the cost structure of what your investment is to rise as well. Now there are other ways you can invest in gold. There are many different alternatives, you can invest in physical gold and we've seen a lot of people doing that over the last several months have been investing in physical. But if you buy an ounce, it will always be an ounce. It will never pay you a dividend. So you'll never get any upside except for price appreciation. You can be more aggressive and you can buy mining companies or exploration companies, you buy shares of those companies. But with those, you're getting exposure to operating and capital cost risks. So -- and there are some people who think that our business doesn't provide that exposure, that leverage to the gold price that operating or exploration companies may provide. But -- that's not true. You look at our financial results, you can see there's a direct correlation between a strong rising gold price and our share price and the results that we provide to our shareholders. On this slide, you can see our why we think we are a good alternative for those who are considering conservative exposure to gold in the precious metal sector. On the left-hand side, you can see that we've got very good strong leverage to the gold price 1.8 -- that's the 1.8 beta, sorry. On the right-hand side, you can see our share price performance since 2006. This is one of the GDX Index form, the GDX is the Index that has all of our peers and a lot of other gold equities in it. We performed very well since the Index was formed, and we've outperformed Index. We've outperformed the gold price, but we've also outperformed general market indices. So we have a very good record of producing good shareholder returns over the long time -- over the long term. I'm going to talk in this next section about execution and our history of execution, as I said, we've got a long record of being in this business and a long record of consistent and disciplined performance. And this slide shows our 20-year capital allocation strategy and how we've grown. And really, our strategy is about providing accretive growth to our shareholders. You can see that our revenue and our cash flow have grown significantly since 2000, but there are 3 aspects of this growth that are definitely worth noting. The first is our business is high margin and it's very scalable. Our revenue growth has far exceeded the growth in our G&A expense. So we don't need to add new people when we add new assets to our portfolio. The second is our revenue growth is not dependent only on metal prices. The gold price has been a great tailwind for us for the past several years and certainly over the past few quarters, but we've also been able to add volume to our portfolio to be able to amplify the effect of the rising gold price for our shareholders. And then thirdly, we've been able to finance our growth largely from internal sources without a significant rise in our share count. We're one of the original members of the GDX Index, and we have the lowest share count in that Index, we have not issued equity since 2012. And you won't find many companies in the precious metals sector who can say something like that. We want to avoid shareholder dilution and if we can fund our business using internal resources that provides per share growth to our shareholders. I'm going to talk now about liquidity. And liquidity is very important in our business. We have to be patient for the right opportunities to present themselves. But that means that we have to maintain a strong balance sheet at all times and liquidity to be able to act on opportunities that may come up very quickly. And our approach to funding is to use cash on hand, our revolving credit facility -- sorry, cash on hand first; second, our operating cash flow; and thirdly, our revolving credit facility with equity as the least preferred way for us to finance our growth. And the waterfall on the left-hand side of the slide shows how we've allocated our cash flow or how we allocated our cash flow in 2024. We used our operating cash flow to repay debt, pay our dividends and reinvest in our business. And at the end of the year, at the end of December, we ended with about $1.2 billion liquidity and that includes working capital. We have no debt and our revolving credit facility is 100% undrawn. So that provides us lots of liquidity for the business development environment that we find ourselves in today. And I just want to talk a little bit more about the credit facility because it really is a financing tool for us that we see as being very strategic. It provides cheap and flexible financing. It's a $1 billion revolver. We have 8 banks in the facility. We will draw on the facility periodically when we see attractive transactions, and we'll pay it back using cash flow from the portfolio as it comes in. And 2022 was a big year for us. We made some pretty significant investments. We ended the year with $575 million drawn on the revolving credit facility. But during that year, we acquired long life assets at Cortez and at Great Bear. We've repaid within 2 years, we repaid that draw completely. And that rapid paydown really shows you the cash flow potential of our portfolio. And while some would say, well, there's an interest cost to using debt to finance growth, we think that interest -- that short-term interest expense is a pretty worthy trade-off when you're adding multi-decade assets to the portfolio without diluting shareholders. Now when we talk about strategic objectives, one of the other things that is strategically important to us is to pay a dividend and return capital to shareholders. And it's something that we think makes us very unique amongst other all gold investments. We've paid a growing and sustainable dividend since 2000, and we've increased the dividend every year since 2001, despite volatility in the gold price. We've now increased our 2025 dividend by 12.5% over 2024, and that's the 24th consecutive annual increase in our dividend. Since we started paying a dividend we paid out about $1 billion to shareholders. And we're the only company in the GDX that's paid an increasing dividend every year since Index was formed in 2006 and we're the only precious metals company in the S&P high-yield dividend Aristocrats Index. So our dividend record sets us apart from all of our peers. Something else that we think is very important and does set us apart is our competency when it comes to due diligence. Good due diligence of transactions is important to make sure you add the right transactions, but you also avoid adding the wrong ones. And we're always busy looking at new opportunities, but not all opportunities make it through our process, which we think is pretty exhaustive. We're very disciplined in the way that we will deploy our capital. So if we see risk is something that we don't like and we don't see a mitigation plan that makes sense, we'll walk away from transactions. We're not afraid to do that. We have no pressure to do transactions. If we can't find the right opportunities, then we'll look for new ones, but will, in the meantime, we'll just sit and collect cash flow through the portfolio and rebuild our balance sheet and wait. We've seen that over the past 40 years, we've seen that new opportunities often come up very quickly. And so you want to be positioned well to be able to act quickly when those come up and you need to be patient. Now ESG is something that's always been important to us even before it was called ESG, and the reason is because our business model does not provide us direct operating control of the assets that we invest in. We invest for the long term in any asset that we invest in. So ensuring sustainability of those assets is very important, and that's something we can do when we do our initial due diligence. We will build language into transactions to try and ensure that operators will operate to the highest standards, and we'll always look for opportunities to help our operators if there are ESG issues around assets, perhaps we help fund community or social or other things to help strengthen relationships and ensure sustainability. It's very important to us. And we do have -- on this slide, we have 2 influential ratings providers shown. We've got Sustainalytics, who ranks us top rank, and we have MSCI, who ranks us at AA. Now I will talk a little bit about our business model because this is something that really sets us apart when you think about different ways to invest in precious metals. And our business model is unique and the key to our model really is optionality. And that's providing optionality to our shareholders to reserve and resource growth without having to make further investments to get exposure to those. I've got 2 examples shown on this slide. Both of these investments we made in 2015. We've got PV on the left, Wassa on the right. And in both cases, today, total reserves and resources are higher than at the time of our original investment. And that's in addition to the production and the revenue that has allowed us to recover over 95% of our initial investment of PV and 170% of our initial investment at Wassa. There are growth opportunities at both of these assets today. PV there's a plant expansion is in the final stages, and there's tailings facility expansion that could extend the mine life to 2046. At Wassa, there's a 4-year reserve plan, but there's additional resource that could extend the mine life by up to 20 years beyond that. So in both of these cases, Royal Gold is not required to fund any further investment to get exposure. And this is growth that we don't have to pay for. When we look at new transactions, exploration and production growth is always very important to us because that's optionality, potential for things to improve is the most important feature of our business model and provides that additional return to our shareholders. Another feature of our business model is efficiency, and we have 30 employees in the company. Last year, we produced over $700 million of revenue. Today, we're about a $10.5 billion market cap company. So on a per employee basis, we compare well to any company in any sector. And our low employee count really means that we've got a low fixed cash G&A, which further contributes to our efficiency. We had -- in 2024, we had an 81% EBITDA margin. Our cash G&A was about 4% of our revenue. In Q4 2024, our EBITDA margin grew at 84%, and our cash G&A was 3% of revenue. So that was a direct result of exposure to the strong gold price rise during the latter half or last portion of last year. Our G&A is generally low and as I said, made up of fixed cost, mostly fixed cost. So inflation is not something that we have to worry about in our margins. And to illustrate that point further, you can see on this slide, this is our cost structure on the left compared to the average gold producer, the stacked bars. And you can see that producers are exposed to inflation and input costs. And these are the costs that users need to incur to run mine. So they need to pay for labor. They need to pay for energy and consumables and other things that are often -- those prices are related to commodity prices. So when you see -- the gold price rise, often input costs for mining operations rise as well, and you don't see margin expansion. For us, our G&A costs are mostly steady. There are things like salaries, services, office rents. They don't move in a short-term manner. So generally, our margins are not exposed to inflation in the short term, and they generally stay -- we pass on the margin or we enjoy the margin benefit when the gold price rises. Now we have a broad and deep portfolio. So I'll talk about that for a few minutes. And this map shows our portfolio globally. You see that we're were mainly weighted towards lower risk and more mining from friendly jurisdictions around the world. We do have 4 principal properties in our portfolio, and those properties combined contributed just over 55% of our revenue last quarter. And if you look at where we are situated on a different scale map, we have many royalty stream investments or interests in established mining camps in the world. So about 50% of our revenue came from -- in 2024, it came from Nevada, British Columbia and West Australia. And we have significant exposure to earlier-stage projects in all of these regions. In places where there is an established mining history and historical mining has occurred, you generally find excellent prospectivity. That's why the mines are there in the first place. But you also find supportive regulatory environments and you can find the people and the skills that you need to be able to run these operations. There's a saying in the mining sector that the best place to find a mine is near mine. And so we think we're very well situated to be able to capture additional optionality from exploration success and growth within those mining areas. Our portfolio is also very well diversified and that provides stability. Our operators are generally speaking, best-in-class. They're large, well-capitalized and experienced. We have 42 mines that are contributing revenue today. That portfolio breadth is very good compared to any mining company. And our underlying assets come from -- they're about 60% gold dominance and 40% would be a mix of gold, copper or base metals. And over 50% of our revenue comes from Canada and the U.S.A. The remainder of our interests are in generally pretty mine-friendly jurisdictions. So this portfolio diversification really does reduce our exposure to single asset operator and jurisdictional risk. Now the way our portfolio is structured is it covers the various stages of mining project development. We have 130 assets, give or take, that are not producing today in various stages of exploration, evaluation and development and we would expect there to be potential for organic growth as any of these assets move through this pipeline from left to right into production. And we've got examples, recent examples like Bellevue and King of the Hills and both of these are in Australia that have been in the portfolio for a long time. And they just started producing revenue to us in the last several quarters after being dormant for quite a while and then suddenly been refreshed as new management teams came in and took a different approach to these assets. Now to continue on the theme of organic growth. This slide shows some of the key catalysts that we see ahead of us today, and I'm not going to go through all of these, but there are mine expansions, extensions and new productions coming from within the portfolio that we expect today. And any of the incremental improvements that you see on this slide, they're free to our shareholders. We do not need to pay to get exposure to these. So that's the free optionality that I mentioned before and definitely a key feature of our business. But another key feature of our business is that we're not just relying on organic growth to be -- to provide upside to our shareholders. We're also looking at new opportunities to add to the portfolio all the time. And this is one of the major focuses our daily activity. And this slide shows what we've done since June 2021. We've deployed about $1.2 billion of capital on 7 transactions and 6 assets that all provide gold exposure on assets with upside potential in safe jurisdictions. There's one transaction that's not shown here, and we just did the most recent transaction that we've completed and that was the Cactus royalty that we acquired in December. It's a copper royalty on a project in Arizona. This should not be seen as a strategic shift or anything like that. It was a very opportunistic transaction for us. We think it's a very attractive project, and it came to us, and it was not part of a competitive process. We're very happy to acquire this royalty, very happy to have it within the portfolio. But I think the point to drive home here is that we funded these transactions with cash on hand and using our revolving credit facility, and we haven't diluted our shareholders by issuing equity to fund any of these transactions. If I were to go into a little bit more detail, I'm not going to spend too much on this because there's a lot of detail on this slide. But just I'd like to make a few points here just on each of these recent transactions at Cortez in Nevada, we had the opportunity in 2022 to grow our royalty position here. We've been involved in Cortez since the beginning of the company. It's a world-class gold mining complex operated by Newmont and Barrick, 2 of the leaders in our sector. Since we made this transaction, we've seen new production from Goldrush. We've seen excellent kind of world-class exploration success of Fourmile. The Robertson project is coming into production and there are other exploration targets that Barrick is focused on here. So we're very pleased to have this in the portfolio. The Red Chris mine in Northern British Columbia and Newmont is the operator here, there's a plan underway to convert the operation from a relatively small open pit to a large bulk tonnage underground operation that should go on for decades. The Xavantina mine in Brazil, small high-grade underground gold mine -- it's had tremendous exploration success here. Ero Copper is the operator, they've added pretty significant to resources recently, and they increased production by about 50% since we made our initial investments. The Cote mine in Ontario is in the final stages of ramp-up brand-new operation, very pleased to be involved there. The Great Bear Project in Ontario is Kinross flagship development project, 6.6 million ounces in resources, 500,000 ounces a year is what Kinross is projecting -- there's tremendous exploration potential here at depth. So we're hoping to see this resource number grow over time. It's a very attractive emerging opportunity. And then the Back River project in Nunavut is in the final stages of construction. We're expecting to see new revenue from this asset towards the middle of this year. And we have a -- when the asset gets up to full run rate, we have 3.3% gross smelter return royalty approximately on this asset, 15-year mine life, it's a safe jurisdiction. So some very good developments at these assets since we made these original transactions and announced these transactions. There's a common theme here with all of these, and they're consistent with our strategy, which is to provide exploration and production expansion and potential exposure to assets in safe jurisdictions and metals that we understand. So we're very pleased with these transactions and what they've done for us since we made them. I'm going to talk finally about valuation, as I promised at the outset, you can see here historical valuation metrics for price to NAV, price to cash flow, 2 of the things that most people look at when they evaluate our business. You can see that we are performing -- or you can see from our financial results performing very, very well. We've had strong cash flow. We've been very disciplined with our capital allocation. We've got good organic growth from within the portfolio. But I think that the share price and valuation is still not quite reflected what we think is probably a consistent long-term outlook for the gold price, especially when it comes to cash flow, you can see we're trading at the bottom end of our peer group. And I think that the valuation or the value of the long-life assets the optionality for within the portfolio is not recognized by the market. And it feels generally, as I look at the gold sector, that the market is still not reflecting higher long-term gold price valuations which I think is likely going to change as we're north of $3,000 per ounce now and most assessments of long-term prices are rising as people get more comfortable with the current price. So with that, I've come to the end of the formal part of the presentation. Hopefully, that I've given you a good sense of why we think we're in a good position today. Our record is very strong, business is performing very, very well. We've got high-quality assets in a very well-diversified portfolio, and that portfolio has good organic growth with it -- within it. We have -- we're trading at an attractive valuation today. We have a very strong balance sheet. We've got lots of liquidity to deploy for new transactions. So we're very confident. We feel very strongly about our potential over the next little while. And we're pretty happy with enjoying the record gold prices and nice to see it finally start to come through in our stock price as well. So Noella, with that, I'll turn it back to you for Q&A.

Thank you very much, Alistair, for the presentation. I'll now begin the Q&A. Your first question is, how does your 2025 sales guidance compared to 2024 results?

So we are -- we released our guidance a couple of weeks ago, and we were pretty clear when we did our Q4 conference call that we're expecting relatively consistent unit sales from gold, silver, copper and other metals. So 2025, we're not expecting to see a big jump in production from our portfolio, we're expecting to see pretty consistent levels. The one disappointment for us is silver. We are experiencing continued low recoveries at the PV on both PV silver stream. But Barrick has a plan in place to rectify that. And we're hoping that, that becomes a thing of the past fairly quickly, but we may not see that resolve until the end of this year. But otherwise, we're expecting pretty consistent production from across the portfolio. Obviously, the one thing that has changed is the metal price environment. So even if the production remains relatively consistent with a higher metal price environment, or expected revenue would increase proportionately.

Thank you for your insight on that. Next question is how do you evaluate and weight the investments in the various investments you make? And how do you decide to make mix changes?

So we -- when we're looking at any investment, it has to stand on its own merits. We don't think about a portfolio approach where we can afford to put a little bit more risk in certain areas because we've got a safe portfolio in other areas. So we think about each investment separately. We think about our strategy of investing in gold assets or precious metals assets have good upside and optionality and potential for long mine lives. Those are the things that drive our thinking. And the way that we do our -- the way that we evaluate any opportunity is very fundamentally driven approach where we look at the asset and understand is the asset something that is sustainable? Is it something that has got long-term potential? Is it something that's well operated are the people operating it do they know what they're doing is it located in a good jurisdiction. So it's a very fundamental view of assets and then we'll come to a commercial decision or negotiate commercial terms that we think make sense for us as well, but it's always driven by the fundamentals of the asset. So it's a very broad answer to the question. I'm not sure I answered the question exactly as it was asked, but I think that I'd be happy to go into more detail and reask the question if I didn't quite hit it.

Thank you for that response, Alastair. Your next question is, your market cap is 1/3 of Wheaton, yet your operating cash flow is more than half of that of Wheaton. Any reason for this?

Well, I think -- it goes to the fact that I think we're just undervalued. I think the market has not looked at our portfolio and evaluated it from the perspective of some of the upsides that are in the portfolio. We think we have a portfolio that stands against any of our peers. It's very well diversified. In fact, it's a lot more diversified than some of our peers, including Wheaton. It's a lot more gold focused than our large cap peers. It's got a lot of optionality within it. And I just think the market misses a few of the assets within the portfolio and especially some of the smaller assets. If you look at the way that we have performed relative to consensus estimates over the last several quarters, we generally beat consensus estimates because I think a lot of analysts and a lot of the investment community does not look at some of the smaller assets in our portfolio in detail. And so they miss some of the developments. And while they may be small, you add a few of these together and they can have a reasonably big impact on a company like Royal Gold. So I think that's the first thing is I think the market is misunderstanding or not understanding well enough our portfolio. I think another thing is just -- and this is something we're always trying to work towards, and we're trying to get our market cap higher, but there is a premium paid for the largest company in any sector look across any sector in the marketplace, and you'll find that the largest companies generally traded at premium to the smaller companies. So I think that is part of the disconnect as well. We're obviously working hard to try and find the right assets to build the company and build our valuation and build our market cap because that -- if we were able to close that gap somewhat, I think you'll see some of the discrepancy and value start to disappear as well.

Thank you for your insight on that. Next, if you're asked, what metal do you see as having the most need for streaming and/or royalty deals?

I think right now, we're seeing a need in all metals. It depends for different reasons. I think the copper price is strong, but it's not -- hasn't done as well as gold. So base metal companies are still looking for financing because they don't necessarily have the cash flow that the gold companies do. But on the gold side and then the silver side, those companies have got lots of cash flow, but they've also got big projects. In some cases, they want to advance. So they're trying to take advantage of the current metal price environment to be able to push things forward. So we see opportunities everywhere. And if there's an opportunity for us to get involved in a base metals project or a gold project didn't and get a gold exposure to either of those, we're really indifferent. But that's the beauty of our business as well is that we're always -- we're a provider of financing. So at different points in the cycle, there are different needs for financing driven by different things. So when metals prices are depressed, people are looking to refinance balance sheets. When metals prices are really strong, people are looking to grow their portfolios and they're looking to invest and they need capital for both of those things. So we tend to find that we are active at all points in the cycle. And so that's very good for our business.

Thank you for that response. Next is, how much does cash flow increase for every $100 increase in gold price.

I would have to look at that number to get you the exact number. It's in our financial somewhere, we do have a revenue sensitivity table in our 10-K. I just apologize for not having that number the tip of my fingers, but I'll turn back to you if you like.

Thank you, Alistair. Next question is, can you explain the reason behind the 6-month lag from Mount Milligan deliveries? What is the average for other partners?

So it's a function of what they produce at the mine site. So when you say a 6-month lag, production at the mine is generally when we get our revenue from sale of metal, it's generally 6 months after production from the mine. So that's because Mount Milligan produces a bulk tonnage concentrate. And so at the mine, they'll mine ore, they'll process it -- and then we've got to ship that concentrate that they produce at the mine. They need to ship that to a load out facility by rail, then it goes on a ship to a smelter refinery. And then when there's metal actually produced, then we receive a delivery of that metal and then we sell that metal afterwards. And so there's a process in that chain that takes about 6 months for us to get revenue from Mount Milligan. It's the same situation at Andacollo, they produce a concentrate as well. And then at some of the other assets within the portfolio, we may have delays as well, but they're not nearly as significant. It's just a function of the product that the mines produce and the way that our contracts are structured. So we do have an explanation of this in our asset handbook on our website. I encourage you to have a look at that. And that's basically the reason. But I think that, what it does is it complicates things a little bit when people look at the production guidance given by an operator for a certain asset and expect that to show up immediately in our financial results. In some cases, you need to do a little bit of offsetting of production guidance and results to Royal Gold. But over the long term, it shouldn't make any difference. It's just over that 1 or 2 quarter period that you may see a discrepancy.

Thank you, Alastair. The next question is, given the uncertainty within the financial markets and the substantial rise in gold prices, have you seen your institutional holders increasing their position in the stock?

We tend to have a very sticky shareholder register at the top end, and so we will see allocation changes from each of our large institutional shareholders from quarter-to-quarter. We haven't seen -- we only see our shareholders once a quarter. So you have to look at -- with the benefit of time, you can look back and you can see what people have done. I think where we have seen the most change is an engagement from generalist investors. And we've seen a lot of this over the past several quarters where we go out and we try and do marketing to people who have never heard of the Royal Gold story. Their interest in precious metals as an asset class, but they don't know Royal Gold. We're getting a lot more engagement with shareholders who are typically not invested in precious metals or any mining. And it's because of the rising gold price and people's view on the macroeconomic forecast. And so -- that is something we have seen. Obviously, our share price has risen over the last little while, which I think is an indicator of more buying. But we haven't seen big shifts in our large institutional shareholdings yet. I think what needs to happen is there needs to be a little bit more time where you see consistent inflows to a lot of these shareholders. They could only invest the money that they've got available. So if they don't have individuals, people like you and me, putting money into our savings accounts or investment accounts towards precious metals type funds, then those funds don't have money to deploy and increase their positions in our sector. But I think that is something that is shifting.

9 Thank you for your insight on that, Alistair. The next question is, what are your strategic weights for short term, 2 years and long term, 5-plus years for gold, precious metals and base metals?

Strategic weights -- I'm not sure I understand the question, but I'll attempt to answer it. And if I don't answer the question, then please get back to Renmark and I'll try again offline. But we don't really have a strategic shift or weighting of revenue that we target, except to say we are very precious metals focused. Our revenue is about 75% gold, 10% or 15% silver and 10% or 15% copper depending on metals price movements. We want to keep it relatively similar. I mean there's nothing wrong with the way that we are -- we see that revenue mix. I mean we want to be gold-focused Royal Gold is -- obviously, the gold is in our name. So that's a major focus for us. But other precious metals like silver and some of the platinum group metals. We're always happy to add those. We see those as precious as well. When it comes to base metals, we're not actively looking for base metals opportunities, but will look at opportunities if they're attractive and they come to us. An example is the Cactus royalty that we acquired in December. They came to us, a very good project, good management team, good jurisdiction. So we thought it was kind of a no-brainer, let's -- and good return as well. So it was a no-brainer for us to look at that one. But we don't have any strategic shifts in mind when it comes to our revenue mix.

Thank you, Alastair. Next, I was wondering, would it be possible to sell the other metals in the portfolio to be royalty company?

Yes, it would be possible. We have been approached in the past about that. We've given a consideration ourselves as well. I think the one thing, though, that we always struggle with is will you get the same value if you sell it as you receive in your share price today. And it doesn't look to me the way that most people do the valuations of Royal Gold that we have a discount for owning base metals in our portfolio. So base metals, we get some very good cash flows from those. We're very happy to have the -- there is some diversification effect in revenue. If you got base metals, so it's not a bad thing to have base metals in the portfolio. If somebody came in, they offered us more than what the value is in our stock price for those assets, obviously, would have a conversation but we haven't received offers that make sense in that respect. Most people want to pay -- they want to pay a discount to the net asset value of those assets, which is far below our trading value. So it hasn't been something that makes sense. But it's obviously a card we can play if there was the right opportunity and right transaction available, but it's not something that we're pursuing.

Thank you, Alastair. Next question is which are the most valuable assets in Royal Gold's portfolio currently?

I think the most valuable ones would be -- in terms of revenue would be our principal properties. So Mount Milligan, Cortez, PV and Acoyo, they're the largest assets within the portfolio. What we would like to do is see those get smaller in the portfolio, and it's not because we want to reduce our dependence. It's just we'd like to see our portfolio grow and we dilute down those large assets within the portfolio. Ideally, we'd like to have assets that contribute no more than about 15% maximum to our portfolio. But that takes a long time to diversify. But those will be the assets that have the highest value on a gross basis within the portfolio and all very good assets run by very, very good companies. So we're very pleased with those assets being large within our portfolio.

Thank you for your insight on that. The next question is, are there any concerns about potential changes in tax regimes that could impact profitability at key assets?

We haven't seen anything that would give us immediate pause. As a U.S. company, we're -- the rules for us are fairly clear, very clear. We don't see any real issues. I think perhaps where you do see issues with tax and some of the smaller countries that perhaps are revenue started where governments are trying to do things to raise money and they'll look at resource companies as a source for money, and they'll raise taxes on assets. Most of the jurisdictions where we have revenue exposure are pretty stable, mining-friendly jurisdictions and governments in those jurisdictions understand the importance of the mining sector to each of those economies. And so we haven't seen a lot of movement on tax. I think over time, you generally see an uptick of tax rates. That's just natural. That's everywhere in the world, unfortunately, but it's just -- that's something we've seen, but we haven't seen large-scale increases in any of the jurisdictions where we operate that could actually threaten the viability of the assets where we have interest.

Thank you, Alastair, for your response. Next question. You were sitting at zero debt on December 31. Will you take on any debt in the near term?

The only reason we would take on any debt is if we see an acquisition or a transaction that's too large for us to fund without from our existing resources. So if we don't have enough cash on the balance sheet, we would have to take on some debt. And we would do that by drawing on our revolving credit facility. And as I said during the presentation, we would always look to repay that revolving credit facility balance as soon as we can out of cash flow. So that's the only reason. I think the -- we do get the question occasionally, would we put long-term debt into the business because our portfolio is very diversified. It's got stability of cash flow. It's actually pretty well suited to putting long-term debt into our capital structure. But our view is that we'd rather not do that if we don't have the use of proceeds, first of all, it doesn't make sense to do that. And then secondly, we prefer to use our revolving credit facility because it is cheap and it's flexible. So we get very good rates from the revolving credit facility, and it's also flexible we can pay it back as soon as we've got liquidity available. So that tends to be the way that we think about leverage.

Thank you, Alastair. Next to you were asked, Gold is at an all-time high right now, but how has the company historically performed during gold market downturns?

Well, like any company that's got leverage to gold prices as the gold price drops, we will -- we would expect to see our share price drop as well. I think, though, we are cushioned from gold price volatility on the downside simply because we do have a very unique business structure. As I mentioned during the presentation, our G&A costs are very, very low. So if gold prices did collapse, then I think you would see we'd still be able to make payroll, we'd still be able to pay for our office rents, things like that. They're relatively small expenses within the context of our company. So we don't think that there would be any main impact -- major impact to Royal Gold. I mean obviously, what it would do if you saw a lower gold price, you probably see our stock price reflect that and that's just natural in a commodity business. But at the same time, lower gold price environments, if you see a gold price drop fairly quickly, it often creates very, very good opportunities for us to add things to the portfolio. And we saw that in 2014 -- '13, '14 and '15, the gold price dropped very, very quickly. And the mining sector was not prepared for it. So you saw a lot of companies that had stressed balance sheets that needed to be able to raise capital to be able to repair those balance sheets. They couldn't go to the equity markets because the equities were depressed. And so they came to the streaming sector. And we were a big part of some of those solutions where we had the liquidity on hand to be able to help companies repair their balance sheets. And during that period of time, we've got some of the best assets in our portfolio. So there is -- although we wouldn't want to see a decrease in the gold price because it would impact the stock price -- the silver lining is that it often creates a very good opportunity as far as from a business development perspective.

Thank you Alistair for your response. The next question is, any concerns over tariffs in your business?

We don't think so. We've looked at this for our business, I mean we don't trade anything. We sell physical metal and we generate cash from sales of metal. Metals generally deposited in locations or it doesn't have to cross borders. The way that our agreements are structured. So we don't think that tariffs will affect us directly, where tariffs may affect our business is in the operating cost of some of the assets where we have interest. So for example, in Mexico, there's not a lot of mining consumables that's actually that are made in Mexico. So Mexico has to import grinding media, for example, from Canada or the U.S., and there are reciprocal tariffs that would drive up the cost of grinding media, it would drive up the cost of the operating assets. So that would be the impact of tariffs. It probably wouldn't affect us unless the impact is so high that operating costs make it unattractive for operators to continue operating those assets, but we don't think that would be the case.

Thank you for that response. We're now coming up to your last 2 questions. The first one is, with more clarity coming from the U.S. over permitting support for mining projects, do you see a potential reduction for U.S. Tier 1 assets, meeting assistance from royalty companies?

I don't think so. I think the relaxing permitting or speeding uo permitting, I should say, where we're making permitting easier. I think it's very, very helpful. It we'll move projects forward faster. But I don't think you've seen a lot more investments in our sector from the capital markets. So if you get projects that are moving forward faster, you've got -- obviously, the companies behind those projects will want to get them into production faster, but they still need capital. So it may actually create an opportunity for us because there's just a bigger need for capital in our sector and the equity markets. They haven't been there over the last several years to be able to finance new production. So we think that improving permitting time lines will be helpful to our business on balance. It will bring metal forward faster. But it may also create more opportunities for us to finance development projects.

Thank you, Alastair, for that response. And your last question is, a viewer says, great to see the stock reaching new highs. How has the percentage gain over the past years compared to peers?

We've actually done pretty well. I think we often compared to our -- most all of our peers are in Canada. So different capital market. The way that they will move sometimes it will be different from the way that we move because we're a member of U.S. indices, U.S. markets don't do very well. You may see us follow on a day when our Canadian peers are going up, and that's simply because of our index inclusion and passive ownership. On balance, though, over the longer term, we've done pretty -- performed pretty well compared to our peers, although on a short-term basis, on the short-term basis, you may see that we either outperform or underperform depending on what's happening in the markets more generally. But we generally keep in line with our peers. And so we're pretty pleased to see that.

Thank you very much, Alistair, for your responses today, and thank you to everyone who submitted questions. If you do not get a chance to your question, you can reach out to the appropriate account manager here at Renmark. That concludes our presentation for today. Before we go, I will turn back the floor to you, Alastair, for final remarks.

Thanks again for attending and listening today. With the gold price being where it is. I'm glad you're thinking about Royal Gold. And obviously, if you've got more detailed questions or if there's anything that you'd like to go into, I didn't answer quite the way that your question was intended. Please go back to Renmark. They'll get back to me and we'll be able to sort this out between us offline. So thanks very much. We look forward to talking to you again.

Thank you very much, Alastair. Once again, this was Royal Gold treating on the NASDAQ under the ticker symbol RGLD. Thank you to everyone in Chicago and surrounding areas for joining us today. The playback for this virtual non-deal roadshow will be available on our website 24 to 48 hours after this presentation under the VNDR Library tab. Please stay tuned for other presentations in your area and see you next time.