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

Hello, and good afternoon, 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 New York 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, for which you can participate using the chat box in the top right-hand corner of your screen. With that being said, I will now hand the floor over to Alistair.

Thanks, Noella, and thanks, everybody, for attending today. Obviously, the gold price continues to grind higher, setting new records almost on a weekly basis. So it's a great time to give you an update on Royal Gold. So firstly, I just wanted to flag that I will be making forward-looking statements during this presentation. There are risks and uncertainties that 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 with that out of the way, I will, today, give you the investment thesis for Royal Gold and what we provide to our investors, which in a sentence would be precious metals exposure with consistent financial performance and a focus on per share metrics. In the presentation, I'll go through today is divided into sections. First, I'll talk about our low-risk leverage to the gold price; secondly, our long history of executing a pretty simple business strategy; thirdly, our unique business model; fourth, our organic growth potential from a diversified portfolio; and fifth, I will end on valuation. And obviously, with the gold price being where it is, it's very timely to talk about valuation of companies like ours. So to start with, I will give you an overview on the slide of Royal Gold and -- we are a high-margin business that generates consistent cash flows from precious metals. We've been around since the mid-1980s. We've been on the NASDAQ for that entire time. We have 2 segments to our business. We have streams at about 2/3 of our revenue and royalty is about 1/3 of our revenue. But both are essentially the same things from an investor or a shareholder perspective. They both provide top line exposure to mining production or production for mining assets. We will be releasing our Q1 results in a couple of weeks, but I can talk about our Q4 results, which were released in mid-February. And for that quarter, the fourth quarter of 2024, it was a really fantastic way to end a very good year. And we had record revenue, cash flow and earnings, both for the quarter as well as the year. Our EBITDA margin increased to 84% on an adjusted basis. Our revenue for the year -- or for the quarter was 76% gold and about 60% of revenue came from Canada, the U.S. and Australia. We ended the quarter and the year with 0 debt and about $1.2 billion in liquidity. And really, the results in the fourth quarter as well as the rest of 2024 demonstrate that we have high margins, and we are a business that benefits directly from the strong and rising gold price. So, so far in 2025, it's been even stronger from a gold price perspective. Now I will talk on this slide a bit about how we're positioned in our sector relative to peers. I think this is important as you think about our opportunities for growth. We sit in a very interesting position. We are large enough to compete for the largest transactions in our sector. We have very good access to low-cost capital. We have very strong cash flow coming in from our portfolio. Yet we're also small enough to be able to show growth in a sector that is generally -- from an acquisition perspective, generally smaller opportunities where things that are most common. So a small transaction for Royal Gold, given our size, can actually mean that there's a meaningful change to our business if we can do several of these small transactions. We're not aiming to be the biggest in our sector. As I said, the sector's -- most of the growth in the sector comes from relatively small transactions. So being large is not necessarily an advantage. However, we want to be the best in our sector. We want to be able to deploy our capital to the best projects. We want to be able to show the best returns for our shareholders. And we think this Goldilocks position that we're in is really -- it's a great platform for us to execute our strategy of growing in gold. Now I'll get into the presentation section itself. Now I'll talk about our low-risk leverage to the gold price first. And this slide shows how we are positioned relative to other ways you can invest in gold. And our model provides exposure to precious metals without many of the risks that come with investing in operating companies. We're designed to provide exposure to gold, the price itself, but also the optionality in the projects and the assets where we invest. And we reduce our downside risk by holding a diverse portfolio that does not have direct exposure to operating and capital cost risks. And that's all very important when you think about inflation. There are different ways you can invest in gold. You can be conservative and you can invest in physical gold and you can buy an ounce of gold. But that ounce will always be an ounce. There will never be additional upside to that ounce beyond price appreciation. And that ounce will also not pay you a dividend. In fact, it will cost you to hold that ounce. You could be more aggressive and you can look at mining companies or exploration companies, and you can invest in those. But when you do that, you're also exposing yourself to operating and capital cost increases. There are some who would say, well, our business is conservative and it doesn't have the same leverage to gold, but I think that is a fallacy. I think our financial results, as I talked about in the fourth quarter, and last year, we did very, very well in an environment where the gold price has been rising and has been strong. And you can see that over the longer term on this slide. This shows why we do think we're a very interesting alternative for those who are looking for exposure to gold. On the left-hand side, you can see our beta to the gold price of 1.8. That's very strong. So we definitely have leverage to the gold price. On the right-hand side, you can see our share price performance over the longer term. This goes back to the beginning of the GDX index in 2005, 2006. And since that time, we have outperformed the gold price, the GDX index and the general market as well. So very, very good share price performance over the longer term. Now I'll get into the next section and talk about execution and execution of our business strategy. We do have a very long record of consistent and disciplined performance. And this slide shows our 20-plus year of capital allocation and growth, which is really driven by the idea that we want to provide accretive growth to our shareholders. And since 2000, you can see our revenue growth and our operating cash flow growth have been both very significant. There are 3 aspects of this growth, and I think are well worth noting and calling out. The first is our business is high margin and it's very scalable. Our revenue growth has far exceeded any increase in G&A expense. We don't need to add people. We don't need to add anything to our business as we acquire more assets and grow our business. The second is our revenue growth is not dependent solely on metal prices. And obviously, the gold price over the past several years has been a great tailwind to us. But we've been able to add volume to our portfolio by adding assets and further providing leverage to the gold price by adding new assets. And thirdly, we have financed our growth mostly internally without a significant rise in the share count over this 20-plus year period. We are in the -- one of the original members of the GDX index, and we have the lowest share count by far in the GDX index. We have not issued equity since 2012. We really do want to avoid shareholder dilution and it's a strategic imperative for us. If we can fund our business with internal resources, then what that means is that we're able to pass per share growth on to our shareholders. Now on this next slide, I want to talk a little bit about our liquidity position. And liquidity is very important in our business. We have to be patient. We have to maintain a strong balance sheet. We have to maintain liquidity because sometimes transactions come up very quickly and we need to be able to execute or act on those transactions and be opportunistic. And making sure you have liquidity is always is a very key part of that. Our approach to funding our growth is really to use cash on hand, our operating cash flow and our revolving credit facility to fund growth and avoid issuing equity if we can do so. Equity is our least preferred method of financing growth. And certainly, since 2012, as I said, we haven't done an equity offering. On the left-hand side of the slide, you see the waterfall of how we used our cash flow and how we allocated that in 2024. We used our operating cash flow to repay debt, pay our dividends and reinvest in the business. And our total liquidity at the end of the year, as you can see on the right-hand side, it was $1.2 billion, and that's including the working capital that we had at the end of the fourth quarter. We don't have any debt, and we have our full revolving credit facility of $1 billion undrawn and available, which is lots of liquidity for the environment we find ourselves in today. And to further expand on the point about our credit facility, it's $1 billion, as I said, and it provides very cheap and flexible financing to us. We have 8 top-tier banks in the facility, so it's very well structured syndicate. What we do is we'll draw on our credit facility when we see a need for capital, and we'll pay that back by drawing back from cash flow. And if I were to say a good example would be 2022. We were very active in 2022. We acquired a couple of large royalties and ended the year with $575 million of debt. And the royalties we acquired were multi-decade. We had royalties at Cortez, and we had royalties at Great Bear. And we have now, 2 years later, we've repaid all the debt that we used to acquire those royalties, and that's really from that cash flow that our portfolio generates. And while there is an interest cost in the short term to using debt to fund our business, we think that short-term interest expense is a worthy trade-off when you're thinking about adding multi-decade assets to the portfolio without diluting shareholder interest in those assets. Now another key strategic objective for us is to return capital to shareholders. And it's something that makes us unique when you think about precious metals, opportunities and investments. We have paid a growing and sustainable dividend since 2000, and we've increased the dividend every year since 2001, despite volatility in the gold price. Last year -- at the end of last year, we announced an increase to our 2025 dividend of 12.5%, and that was the 24th consecutive annual increase to our dividend. We've now paid out over $1 billion of dividends to our shareholders since we started paying dividends, and we're the only company in the GDX index has paid an increasing dividend every year since the index was formed. And we're the only precious metals company in the S&P High-Yield Dividend Aristocrats Index. So that is a huge differentiator for us, and it's something we'd like to tell generalists all the time. Now something else that is very core to our business is due diligence, and we view this as a core competency of ours. And good due diligence is very important because we want to make sure that we have the right assets to our portfolio and we avoid adding the wrong assets. And while we're always busy looking at opportunities for different reasons, opportunities will come to us, not all opportunities are things that we want to invest in. And so sometimes, we'll just say no and sometimes we'll walk away from things if we see risks that we don't like. And so our due diligence process is very structured. It's a very exhaustive process, and it's really built around identifying upsides, but also identifying risks. We don't feel pressure to do transactions in our business. And if we can't find the right opportunities, we're happy to collect our revenue from the portfolio, build our balance sheet and wait because we found that history has shown us that opportunities often come up with very little warning and then something very good maybe around the corner. So you don't want to -- you want to make sure you're ready to act on those opportunities when they become available. And really, 2023 was a case in point. When you think about that year. We were busy, as I said, in 2022, and 2023, we just didn't see the right opportunity. So what we did that year, as we built that, we paid down our debt, built up our liquidity, and we were patient. And now we're in a very good position. Another attribute of our business is ESG and we've always thought about ESG as being a very core part of our business even before ESG was called ESG. And it's really because we do not operate. We don't have direct operating control of the assets where we invest. And so when we make our investments, what we have to do is make a judgment on the sustainability of those assets. We want these assets to be in production for decades. And so we have to understand what some of the sustainability risks are around the assets where we invest. And that's a big part of our due diligence. And we'll also -- we'll do things as well to work with operators to ensure that they operate to the highest standards and we like to help fund initiatives around assets where we reinvest to help with community programs and things like that. But it's all around making sure that we are invested in sustainable assets because that's what our shareholders want over the long term. And on this slide, you can see we've got two influential ratings providers in our sector. We've got Sustainalytics and MSCI. So here over the last several years, you can see our ratings have improved. And we sit in a very good position. We're top rank -- top rated by Sustainalytics, we're AA rated by MSCI. I'm going to switch gears and talk about our business model in this next section. And really, the key to our model is optionality, and that's optionality to resource and reserve growth at the assets where we invest without having to fund anything further to get exposure to that investment. I've got 2 assets or examples shown on this slide. We've got PV on the left. We got Wassa on the right. These are mines that we invested in, in 2015. And in both cases, today, total reserves and resources are higher than at the time that we made our original investments. And that's in addition to the cash flow that we've managed to generate from these assets has allowed us to recover almost 95% of our investment in PV and over 170% of our investment at Wassa. And the interesting thing here is that there are growth projects underway at both of these assets still today. In PV, there's mine life extension with a new tailings facility that could see the mine life extended to the mid-2040s. And at Wassa, there's a large underground resource which is being scoped out and the operators looking to get that into production and potentially add a couple of decades to the existing reserve life of that asset. So the thing that is common about both of these is that we do not need to fund anything further to get further exposure to this upside is growth that we don't have to pay for. And so understanding exploration and production upside is very important when we do our due diligence on new investment opportunities because of that aspect of our business, that optionality is the most important thing as a shareholder you want to be able to talk about and understand. Now our business model is unique as well in that it's very efficient. It's a highly efficient business. We have 30 employees in our company. Last year, we had revenue of over $700 million. Today, our market cap is around $12 billion. So on a per employee basis, we compare well against any company in any sector. So it's a very efficient business. And that low employee count means that we have a low fixed cash G&A, which clearly further contributes to our efficiency. In 2024 for the year, our adjusted EBITDA margin was 81%. That grew to 84% in the fourth quarter. For the year, our cash G&A was about 4% of total revenue, but that grew -- or that declined actually to 3% of the total revenue in the fourth quarter. And that was really as a result of the direct impact of a very strongly rising gold price. Our G&A costs are low, and they're mostly fixed. So inflation is not really a risk to our margins. And you can see that on this next slide, how we are relatively well insulated from cost inflation compared to the average gold producer. On the left-hand side, you can see cost structures for us and the average gold producer. And you can see that the producers are exposed to inflation and input costs. So these are the costs that they require to run their operations. So labor, energy, consumables, things like that. They often increase commodity price increases. So sometimes, when you see gold prices or commodity prices increase, you see those costs increase as well. And margins don't expand. And I think that's an important point when you think about this tariff environment that we're in today. Some of the costs for operators may actually increase fairly significantly. That will not help them increase their margins. Whereas us, we don't have direct exposure to those costs. So our margins should actually, with the rising gold price, should expand. Our G&A costs are generally pretty steady, things like salaries, services, office rents, these are things that don't move in a short-term manner. And so that means that our margins are a lot less exposed to the inflation pressures that operators will have simply because we don't have the exposure to the same kinds of costs. Now I'm going to talk a little bit about the portfolio in this section. And we do have a broad portfolio with lots of good organic growth potential inside of it. And this slide shows where we are in the world. It's a global portfolio, but you can see that we're weighted towards more lower risk and mining-friendly jurisdictions. We do call out principal properties in the portfolio on the right-hand side of the slide, we have 4 of them, and they contributed just over 50% of our revenue last year. We have exposure to some of the more established mining camps in the world. You see clustering of our portfolio in certain areas. We have about 50% of our revenue, last year, it came from Nevada, British Columbia and Western Australia. These are all very well established mining camps. And we have significant exposure to these areas with other assets and royalties and so on that may be on exploration of earlier-stage assets in these regions. In a historical mining region, it's important to have a presence because in these areas, that's where you have the geological prospectivity. You generally have pretty supportive regulatory environments and you have access to people and the skills that are required to run mining assets. There's a saying in the mining business that the best place to find a mine is near a mine. So we think we're very well situated with our portfolio to enjoy additional optionality from exploration success as it gets surfaced. Our portfolio is well diversified as well, and that's a very important point. And that provides stability to our cash flows. Our operators are best-in-class. We have some of the largest, most well-capitalized and experienced companies in the world, operating the assets where we have investments. 40% -- or sorry, 40 assets approximately are -- that's the number of assets that contribute revenue to us today. So that portfolio and breadth is great. We have our underlying assets are a mix of precious metals and then base and precious metals. And over 50% of our revenue comes from Canada and the U.S.A. So those are very mining-friendly, stable jurisdictions. And this portfolio diversification is important when you think about risk. It really does reduce our exposure to single asset operator and jurisdictional risk. And our portfolio also, it spans the various stages of mining project development. We have 135 assets that produce revenue -- or sorry, that do not produce revenue to us today, but are at different stages of development. So they could be exploration assets, evaluation assets or development assets. And there's the expansion or the potential for organic growth to surface from within the portfolio as assets move through the development pipeline, through production. And we've seen a couple of very good examples in the past 2 or 3 years. We've got Bellevue Gold and King of the Hills in Australia. Both of these assets are producing revenue today. They both have great futures ahead of themselves, but they've been in our portfolio for well over 10 years. And for many of those years, they were dormant. So that's growth that we don't have to pay for that came up and bubbled up to the surface from within the portfolio. And that's organic growth that we're always looking to find and we're very happy to see. And to continue on the theme of organic growth. We have a number of catalysts ahead of ourselves. I'm not going to go through this list, but really, the point here is to show that we have potential for mine expansions, extensions to reserve lives and new production from within the portfolio. And we don't have to pay to get exposure to any of this. This is all free optionality to our shareholders. Now we don't just rely on organic growth to give us growth. We're always looking to add to the portfolio. And this slide summarizes some of what we've done over the past several years. We've deployed about $1.2 billion on several transactions that all provide gold exposure to assets in safe jurisdictions. And there's one here that I'm missing. At the end of the last quarter, we announced the acquisition of a small copper royalty on an emerging copper project in Arizona. This isn't something that we typically go out looking for, but it came across our desk and we like the returns, we like the project, we like the people and certainly the jurisdiction. And we thought this is a very good thing to add to the portfolio. So a relatively small transaction for us, not a strategic shift or anything like that, but it's another nice little thing to tuck in the portfolio. But the point I'd make on this slide here is that we have funded all of these transactions using cash on hand and our revolving credit facility. We haven't diluted our exposure or our shareholders' exposure to any of these by issuing equity. And you can see that some of these are fantastic assets to have in the portfolio. And just to give a bit more detail on some of these, I'll go through this very quickly because there's a lot happening in all of these. But at Cortez in Nevada, great exploration potential there, new projects coming into production. We now have royalty coverage over the entire complex. Red Chris in Northern British Columbia. Newmont is the operator here. They're moving this asset from a relatively small open pit operation to a large bulk tonnage underground with decades of mine life. Xavantina in Brazil, fantastic exploration success here has really proven out over the past couple of years since we've been invested. We actually increased our investments just a couple of weeks ago at this asset. We're very pleased with the exploration potential here and we think this mine is getting produced for quite a long time. Cote Gold in Ontario, this is in the final stages of ramping up. It's an emerging world-class operation and we've got a nice royalty position there. Great Bear in Ontario. It's an earlier stage project, but Kinross is moving this project forward. Kinross is a very well-established, very experienced developer. This is an asset that we expect to be producing for a couple of decades once it starts production towards the end of this decade. And then finally, Back River in Northern Canada. This is an asset that's in the final stages of construction. We should see some royalty revenue from this asset towards the middle of this year. So very good assets, lots of growth potential, and they're all very consistent with our strategy, which is really to provide exposure to our shareholders to production and exploration upside, safe jurisdictions in metals that we understand. So I am going to end this slide just talking about valuation. I think it's worthy of note at this point given where the gold price is, our business is performing very well. I mean clearly, gold price, where it is today, generates lots of cash flow for us. We've been very disciplined with our allocation of capital and how we -- and what we do with that cash flow and we've got good organic growth from within the portfolio. Our share price is very close to all-time highs, and that's really been driven by this very recent run-up in the gold price. But I think if you look at us on a valuation perspective, you still see that we're trading towards the lower end of the peer group on price to cash flow basis. And I think that's simply because the value of the long life assets and the optionality with the portfolio has still not been recognized by the market. And it feels like the gold price, even though it's done very, very well, I still don't think that the longer higher -- the higher longer-term gold price has been factored by the market into our share price. So I think there is still a bit of a valuation disconnect there. So that's basically everything that I wanted to cover on the formal part of the presentation. I think as I said, we think we're positioned very, very well in this environment. We have a very strong record. The business is performing well. We've got high-quality assets in great jurisdictions. We got lots of organic growth potential from within the portfolio. We trade at an attractive valuation. We've got a strong balance sheet, lots of liquidity on hand to continue to grow in this environment. And we think, obviously, with the gold price where it is, we're positioned extremely well. So Noella, with that, I will finish the formal part of the presentation. I'll turn it back to you for Q&A.

Thank you very much, Alistair, for the presentation. We'll now begin the Q&A. Your first question is, have you seen any recent shifts in the types of assets or jurisdictions where operators are actively seeking royalty or stream financing?

No, I think the -- generally speaking, things are consistent with what we've seen over the past several years. I think what's happened recently with the gold price doing what it's done is it's put a little bit of a more urgency into the operators. Some of the operators who are developing assets trying to take advantage of the higher gold price or to try to move things forward quickly or more quickly. So it's been a very good thing for us. We see more development projects come to us. We're seeing good opportunities for us to invest in this environment. I think jurisdictionally, we're seeing the same kinds of things that we're seeing in the past several years. We see a little bit more activity in Africa. That's for sure. Our peers have been quite active there. We're a little less open to all of Africa. We're open to certain parts, and we'll look at those very selectively. But I think, generally speaking, we're seeing the same kinds of opportunities that we have done. What we're not seeing a lot of these days is balance sheet restructuring. And the simple reason is because most producing companies today have cash flow that's pretty strong at these prices. So most balance sheets are in pretty good shape, but what we are seeing more of is development opportunities.

Your next question is, do any of your partner development properties go into production this year or next year?

So the nearest term is going to be Back River, and that's in the final stages of construction. As I said, we expect to see some new revenue from that in the -- probably around the third quarter of this year. They're targeting midyear to start production. So that's an exciting one for us. It's been in our portfolio for a long time. We've added to that over the past year. We've added to that royalty position, and we're very pleased. One of the other catalysts in the portfolio may not mean any increase in near-term production. But one of the things that we're looking for -- we're looking forward to a great deal of interest is at Mount Milligan. Centerra is going to be publishing a study on extending the mine life, and they're looking to publish that study in the third quarter of this year. It's a prefeasibility study that could see, as they've described it, a couple of decades added to the mine life at Mount Milligan. So if that is something that happens, it could be a big catalyst for Royal Gold and we're very much looking forward to seeing the results of that study.

The next question is, do you feel valuations may be too high in the precious metal space to initiate deals?

I think one of the problems that we've had over the past several months is that the gold price has run fairly quickly, and it's increased significantly. So when we're looking to negotiate a transaction with a counterparty, I mean obviously, the buyer and the seller, they may have different expectations as to what they're looking for. The sellers are going to look for something closer to spot pricing, because it's very high. And we'll be a little bit more conservative because we have been in this business for a long time and we're looking to get longer-term returns. So we may not be comfortable with using the spot price to value transactions. That delta has widened as time is -- the last several months have gone on just because the gold price has done so well. But at the end of the day, most people are pretty rational, and I think most of the sellers will realize -- realizing the spot price today is probably unreasonable. There's probably some froth in the spot price. If things settle down on the trade war front or geopolitical risks start to subside, you may see the gold price settle a little bit. And so I think that most people are pretty rational, but it does take a little bit more discussion because that gap is wide to begin with.

The next question is, how have your cash flow multiples changed with the recent run-up in the share price?

I don't think they've changed a great deal. I mean, last time I would have spoken to you, they're probably in the 15 to 16x range, now in their -- in the 19. But I think the important thing to note is that we're at the relative low end of our peers. So that's something I just don't think makes sense. I think there may be a little bit of a misunderstanding of the quality of our portfolio in the marketplace. We're doing our best to make sure that the market understands the size of our portfolio, the breadth of it and some of the smaller assets that actually do contribute pretty significantly to the portfolio. And to that point, we actually, yesterday, we announced our -- or released our 2024 asset handbook. There's a lot of detail in there on some of the assets that we have in the portfolio. And we're trying to surface that detail to make sure that the market and sell side analysts, specifically, model those assets and give us full credit for what those assets are going to do. And we think that will help us bridge some of that valuation gap. It will take a little bit of time likely, but hopefully, that valuation gap will close, and we'll start to see ourselves trading at levels that are more comparable to our large cap peers.

Your next question is has competition in the gold and silver space reached an inflection point of moving to second-tier locations or bidding on smaller companies instead of a single royalties?

No, I don't think so. I mean we still see lots of single asset opportunities for us that are quite interesting. I think -- and we're always looking at our peers and is there an opportunity to consolidate the sector. That's something we do look at. We find it's easier, in most cases, to buy assets one by one. And so we add to the portfolio. It's slower growth. It's not that bolt-on, not immediate change in the company's size, but we're happy with that as well because we get to pick those assets very carefully and we get to bid what we think those assets are worth. When you buy another company or a portfolio of assets, you're often -- you've got to pay for everything and sometimes there are things in those that we don't like. But it's not to say that we're -- we don't look at consolidation opportunities, we do. And so at the right value, if we see good value in our portfolio, we'll definitely consider it.

Next, how does the company weigh near-term cash flow contribution versus long-life optimality when evaluating new opportunities?

That's a very good question. It's subjective. It really does depend on the asset. I mean we want to be -- when we make an investment, we wanted to start returning cash to our shareholders as soon as possible. So we always like to be closer to cash flow, but we don't want to lose sight of the fact that long-term optionality can generate a lot of value for our shareholders. So we generally want assets that are close to production or in production, but also has that long-life optionality and that ability to extend. So it really is a judgment call, and we will look at assets from many different perspectives to try and make sure that we are getting what we hope in terms of near-term contribution but also the long-term potential for those assets to grow.

Thank you, Alistair. Next, a viewer asked, how do you structure inflation or commodity price protection into your agreements, if at all?

We don't. We don't hedge. We don't do anything like that on the top line. So it's -- that is not something we do. I think our shareholders want us for that leverage to metals prices. So they would push back if we started to hedge. We don't have capital needs. We're not like a developer or an operator company that may say that next year, I need $500 million to do an expansion, and so I'm going to make sure that I'm guarding that liquidity. We don't need to do that because all of our capital spending is discretionary. So we can choose to invest or we can choose not to. We don't have to. So on the top line, we don't do any hedging. On the bottom line or our G&A and our expenses, as I said in the presentation, they're really de minimis relative to the size of our company. Last year, $719 million of revenue, and our cash G&A was $30 million, give or take. So that's -- we protect ourselves on the cost side by being very vigilant on costs, and we don't like to see growth in our G&A expense. So that's how we protect on that side of things.

Next, the question is, any comments on central banks buying gold?

Well, it's been a very good tailwind to the gold price over the past several quarters, and we expect it to continue. I think if you look at what's happening in the market more generally, central banks have been continuing to buy as the prices run up. So they don't tend to be as price-sensitive as perhaps other buyers. I think it's a long-term shift in portfolios of central banks that's moving away from U.S. dollar assets. So U.S. treasuries and things like that. I think you're seeing more of a conversion into other assets and gold is a beneficiary of that. So I think this is a -- probably a trend that we're going to see for several years. If you look at Central Bank Holdings, the Chinese Central Bank has about 5.5% of their reserves are in gold today. I think if they were to increase to a 10% level, for example, it would take them quite a long time to get there. I don't know what their targets are, but I think what you've seen from them over the past several quarters is very consistent buying, and we expect that to continue as time continues. So centralized buying, I think, caught a lot of people by surprise. The central banks, probably a couple of years ago, were generally not big buyers or consistent buyers, but they have come in over the past couple of years, and they've been like a consistent source of demand for gold, and that they've been a very good -- that provided a lot of support to the gold price.

The next question is, what common misconceptions do you think the investment community has about Royal Gold or the royalty/streaming business model?

I think the one thing that I find is still a misconception. I've been doing this for a few years with Royal Gold. It's been frustrating because we do our best to highlight it. But it's the quality of the portfolio. I think, compared to our largest peers, there's a perception in the marketplace that our portfolio is not as good. I think for the reasons that I explained in the presentation, we're well diversified. We're in good geopolitical areas. We've got more gold exposure than our large cap peers from our -- in our revenue. Those are all things that I think the market is very slowly coming to appreciate. And one of the things that has been a bit frustrating for me is that the market hasn't looked at some of the smaller assets in our portfolio and really model those out to try and understand what the contributions are to Royal Gold those assets. We don't -- we have 65 million shares outstanding. So all you need is a few hundred thousand dollars in a quarter to make a $0.01 difference on earnings. And if you look at the way that the Street has estimated, we have beaten earnings over most of the last several quarters. And it's because those small assets are not necessarily -- they're not very well modeled by a lot of the Street. And so I think that is something that people are getting -- they're starting to do more granular work on our portfolio because we're putting more information into the marketplace about some of the smaller assets, and I hope that starts to correct that misperception about our portfolio. We have a lot of assets in the portfolio that produce revenue. Some of them are smaller than others. That's fine. But those small ones, if you add those together, we have a couple of good quarters from a couple of smaller assets. It's a meaningful difference to Royal Gold. So that is -- that is the thing that I'm pushing the most, and I think and I hope the Street is starting to recognize that.

The next question is, how does your average mine life compared to peers?

So we don't give the same kind of disclosure on mine lives as our peers. In the asset handbook that I mentioned yesterday, we have a table that shows mine lives by asset, but it's for reserves only. We don't make assumptions about resource conversion and what resources could do to mine lives. So our disclosure is different in that respect. Our peers will talk about reserve lives plus resource lines. And our view is that if operators aren't comfortable converting resources to reserves and adding those to mine lives that they're disclosing, it is probably not appropriate for us to be putting resource -- lives associated with resource conversion. In our business, we don't have access to the same information that the operators do. If the operators are not choosing to add mine life to resource conversion, then we probably shouldn't because it's -- we just don't have the same access to information that they do. So that's -- it's a difference in the approach in the way that we talk about our portfolio, but it doesn't mean that we believe reserve lives are -- our asset lives are going to end at the end of reserves. It just means that today, as a snapshot, we don't want -- don't feel comfortable putting lives associated with those reserves or resource conversion. So I think that's a big difference between us and our peers. And if you look at our asset lives, we have multiple assets that have multi-decade lives. We're very comfortable with the duration of our portfolio, but we don't give one number for the duration of the portfolio.

The next question is, will you utilize increased cash flow from the jump in precious metals prices to buy back shares or pay a special dividend?

So this is a conversation that comes up quite frequently at the Board level is what would happen if we can't find new opportunities to reinvest. But what we're finding is year-on-year, there are new things to look at, new opportunities to invest in. And we find that the best way for us to grow value on the company is to reinvest cash flow in the business. If we're able to take our cash flow by assets at 1x NAV, have those rerate within the portfolio to a multiple of NAV, that's the kind of thing that adds value to our shareholders over the longer term, and that's where we prefer to reinvest our capital. Now if we ended up in a position where we thought there is no growth in the gold sector anymore, we don't want to be -- we just don't see any opportunities. Then obviously, that conversation changes, but that's not where we are today. We think that there's lots of growth ahead of us to reinvest in the core business. And clearly, we do pay an increasing dividend every year. That is something that's core to us. We don't trade on yields. I don't think people own us for dividend yield, but what people like to see is growth in dividends because it shows that you're thinking about shareholders as a core constituent when you're making investment decisions. So growing our dividends is something we're very committed to. Paying special dividends, yes, it's something we would consider if we ended up with more cash on the balance sheet that we think we can deploy effectively. So never say never, but right now, the focus is to reinvest in the business, continue to pay our dividend as we have.

Next a viewer asked, with gold briefly reaching $3,500 how many new options have come into the point of being accretive for royalty?

Well, we're always seeing new projects come to us as the gold price rises. It's amazing, in this business God has been creating more assets. Those assets were created a long time ago and geologic formations are what they are. With the rise in the gold price, though, some of the deposits that have been around for a long time, have been known for a long time, those suddenly become economic. So with the rise of the gold price, it actually -- it creates opportunities for us because more of those assets are coming to the market looking for financing. So the rising gold price is great for us. I mean we're obviously seeing more revenue from our portfolio -- our existing portfolio because gold price is higher. We're also seeing resource conversion within the portfolio because those resources are suddenly economic. We're also seeing new opportunities coming to us because companies are looking to finance what may have been uneconomic at $1,500 gold is suddenly very economic at these prices. So it creates -- there's a lot of benefit to us with the rising gold price.

We're coming up to your last 2 questions. The first one is, how has your institutional ownership changed over the past 2 years?

So our institutional ownership generally is pretty stable. If you look at our register, the top 20 shareholders would be 50%, 60% of our total register. They don't change a lot. We've got a lot of very large funds. We've got a lot of passive holdings, which by virtue of being on the NASDAQ, a lot -- we're in about 200 different indices. We are -- we have a number of very large active investors as well on the portfolio. And generally, they're pretty sticky. We find that there may be a little bit of rebalancing from one quarter to the next. But generally, these are holders who have been with us for a long time and they tend not to trade their positions. The average tenure of our holdings for our register as a whole is about 16 years. So very long, sticky, supportive shareholder base, and we very much like to see that. Where we do see some change is kind of the smaller end of the portfolio. We may see people come in and out. We may see hedge funds come in a big way in a quarter, depending on what's happening and they may exit the following quarter. But that money tends to be -- tends to come back to us if it does leave. But when we think about our long-term shareholders, institutionally, they haven't changed for quite a long time.

And the last question is, where are the generalists? Are they active or still tire kicking?

That is a great question, and it's something we all ask ourselves every day as we're looking to talk about and promote our company to new potential investors. I think generalists, we have spent a lot of time marketing to generalists, and that's who we think we appeal to the most. If you're a generalist and you don't want to take single asset exposure or if you don't want to take management team exposure risks, then the royalty model and what we offer is great. I mean you can buy us and you can sleep at night knowing that you're getting exposure to the metal and you're likely mitigating a lot of your risks just because our business model is what it is. So we spent a lot of time over the past several years, marketing to generalists. We find that we get a lot of interest from generalists because our business model is very appealing. What we haven't seen is a lot of new generalists coming into the sector. Now it does take some time. And I think what's -- if I were to read what's happened over the past number of years is we've been doing a lot of education calls with people who are large institutions that may be thinking about what to do if certain things occur. Now we're seeing a lot of those certain things are occurring. So you're seeing weakness in the U.S. dollar. You're seeing a lot of macroeconomic things are happening today, which are good reasons to be exposed to gold. So I'm looking forward to seeing over the next couple of quarters, whether some of that generalist money has come into our sector because we certainly spent a lot of time talking to them over the past several years, and I think in the last several months may have been the catalyst that would see some of the generalists come in and deploy some of their capital in the precious metals sector. So it's a very good question, and it's something that I ask banks, their trading desks, their analysts and so on. I'm asking those people all the time, are you seeing generalist money coming into the sector yet. And I think we're seeing green shoots.

Excellent. 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 submit your question, you can reach out to the appropriate account manager here at Renmark. That concludes our presentation for today. But before we go, I will turn back the floor to you, Alistair, for final remarks.

Well, thanks, Noella, and thanks, everybody, for your attention. Certainly enjoyed the Q&A session. Some good questions in there. If I didn't answer anything fully, then please get back to Renmark and I'd be happy to touch base with you individually or via Renmark as well. So thanks very much. I look forward to talking to you again soon, and enjoy the high gold price.

Thank you, Alistair. And once again, this was Royal Gold trading on the NASDAQ under the ticker symbol RGLD. Thank you to everyone in New York 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.