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 Seattle 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 corner of your screen. With that being said, I will now hand the floor over to Alistair.

Well, thanks, Noella, and thanks to Renmark for the opportunity to present today. Obviously, the gold price environment has been very good over the past several quarters, and it looks like it's going to continue to be good. So very timely for me to give you an update on Royal Gold. And for those who don't know Royal Gold, give you an introduction to the company. So I'll start off with the obligatory forward-looking statements comments. 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. These risks and uncertainties are all discussed in our most recent Form 10-K filings with the SEC. So during this presentation, I'll give you the investment thesis for Royal Gold. And it's really shown on this slide in summary form. We are a high-margin business. We generate consistent cash flows from precious metals and our business model is unique. This presentation covers the various things and key attributes of Royal Gold that -- and our business model that make us unique. And firstly, our gold exposure, our focus is precious metals and nothing else. Our model has very high margin, and we've been able to return capital to shareholders for a long period of time. We have a very diversified portfolio in terms of assets, operators and jurisdiction. So that should be something that helps us with consistency. We have a model that has limited operating risks. Our margins are steady, and we don't see direct exposure to operating and capital cost risks. We're the right size for a small sector. We can do small transactions in a sector that's typically -- it typically see small transactions, but we can also compete for the largest transactions in our sector. And then finally, we have optionality embedded within the portfolio. We have a big portfolio of assets, so any mine expansions or production extensions or other things like that, that create opportunities of those assets, creates optionality for our shareholders that we don't need to pay for because those are already in our portfolio. So those are the key attributes, and I'll go into these in a bit more detail one by one. I'll start off talking about our portfolio and our gold focus. And we have 40-plus years of experience and execution success in gold and our gold focus. The company started in the mid-1980s. We've been listed on the NASDAQ for over 40 years. And our strategy has not changed really since the inception of the company. It has been very consistent. We're very focused on gold-focused revenue on good mining assets in good jurisdictions. And as you can see on this slide, our revenue has grown consistently, and the metal mix really hasn't changed. So it just goes to that focus and consistency. We aim to really -- what our aim is, is to provide gold exposure to investors in a conservatively managed vehicle. And over time, we've managed to demonstrate exactly that. And you can see that on this slide here, looking at our historic share price performance, it does show that we are a good alternative for those who are looking for conservative exposure to a very volatile commodity. On the left-hand side, you can see that we've got good leverage to gold and beta at [ 1.8 ]. But on the right-hand side, you can see our share price performance that over a longer period of time, this goes back to the formation of GDX index in 2006. We've beaten the gold price, we've beaten the GDX index. We've also beaten the S&P 500. So we're very pleased with that. It shows that long-term potential within the company. And it shows that we're a good buy and hold investment for those who are looking to get exposure to pretty volatile sector and volatile commodity. Now we have a high-margin business, and we've been able to show dividend growth over a long period of time. And you can see on this slide, our margin -- our EBITDA margin is about 80%. It is pretty consistent from 1 year to the next. And our business model is very unique in that it is high margin, but it's also very scalable. If you look at our cash G&A, the cash that we have to pay every year to run this business. It was about 4% of our 2024 revenue. So very low costs. And generally, those costs are low, they're fixed as well. So inflation, cost inflation is not something that impacts our margins, and it doesn't impact our ability to deliver. Now to further on that point, when we think about our business as being very efficient as well, and it's scalable. So we have 29 employees who run our business. And last year, we produced over $700 million of revenue. Our market cap today is over $12 billion. So on a per employee basis, we're a very, very efficient business and that we can compare ourselves against any mining company or any company in the general markets, and you can see that efficiency per employee is huge. And we don't need to add people if we add assets to our portfolio. If we add a new transaction, we completed a new transaction, we add new assets. We generally don't need to add anybody to manage those assets. We're a passive holder of interests. And so we don't need to add additional people to our staff to be able to manage when we add new assets. Now given that efficiency and given the high conversion of revenue to cash flow, the return of capital is clearly a -- that's a key strategic objective for us at Royal Gold. And it's something that makes us unique amongst other gold investments. We paid a growing and sustainable dividend since 2000, and we've increased the dividend every year since 2001, despite volatility in the gold price. This year, we -- our dividend is 12.5% higher than it was in 2024, and that's -- it was a 24th annual consecutive annual raise to our dividend, when we raised it at the end of last year. We've now paid out just over $1 billion of dividends to our shareholders, and we're the only company in the GDX index that has paid an increasing dividend every year since the index was formed in 2006. And we're the only precious metals company in the S&P High-yield Dividend Aristocrats Index. So that is something that separates us from all of the companies in the precious metals sector, and it's something we're very proud of. Now our portfolio really is the thing that drives our performance. I'll spend a few minutes just talking about that. We have a global portfolio, and it's weighted towards lower risk, and what we would consider to be more mining-friendly jurisdictions And about -- in 2024, about 60% of our revenue came from Canada, the U.S. and Australia. And our portfolio spans the various stages of projects or binding assets or mining project development, if you will. We have 40 assets that produce revenue today and about 135 assets are in various stages of early stage exploration or evaluation or development. And we would expect any of those assets that are in the earlier stages, if they move through that pipeline to production, and that's when we get our revenue. So there is the potential for organic growth as assets move through that pipeline. And we've got examples in the portfolio. The most recent ones would be King of the Hills in Bellevue Gold. Both of those are in Australia, both have been producing now for probably 6 to 8 quarters. But 10 years ago, those assets were dormant. And more recently, management teams have come in. Given the assets [ that we think ], obviously, the metal price environment has been helpful, and those assets are now producing revenue to us. So that's organic growth. That's the kind of thing that we'd like to see from within the portfolio. And sometimes we have some nice surprises from the portfolio. Our portfolio as well is diversified. And the diversification is really important because it produces single party and counterparty risk. Our operators are generally best-in-class, and so they're large, well-capitalized experience. They're global names when you look at our counterparty list. And with 40 producing mines, we have a very -- there's a big breadth to our portfolio in terms of who contributes what. And our reserves and resources on an attributable basis. So that's the reserves and resources that Royal Gold has exposure to. They're spread across various property stages as well as geographies. So that means that we have organic growth potential in different places, and we hope to see that surface. So this portfolio diversification is very, very important. It reduces our exposure to a single asset or operate single operator or jurisdictions, though the risks embedded in all of those. And we also have limited operating risk, and that's a unique feature of our business model. What our model does, or what we try to give to our shareholders is exposure to golds and optionality at mining projects with a reduced risk profile. And that's essentially what our model provides. And relative to other things, other ways you can invest in gold, you can see it on this slide. We expose -- provide exposure to upside to gold, to the metal itself, but also optionality from within the portfolio and the assets we invest in, and we provided dividend. And we reduced our downside risk through holding a diverse portfolio that does not have direct exposure to capital costs or operating costs. There are different ways you can invest in gold and 1 of the most popular today is the physical metal. People buying bars or coins or what have you. But if you buy an ounce of gold today, it will always be an ounce. You won't get -- that ounce will never grow. You're never going to get a dividend from that ounce either, and it's going to cost you to hold that ounce. You don't need to worry about that with Royal Gold. Now if you want to be more aggressive, you can buy operating equities and operating companies or exploration companies, but with those, you're also going to get exposure to operating and capital cost risks and inflation, which is something that has definitely come back to life again, that is something that can impact margins where you think what operating companies as well. So that's an important consideration. There are some who would say that our business model doesn't allow us to provide the same leverage to gold as some of the other vehicles you can use to invest in gold, but I would disagree. I think if you look at our financial results over the past several quarters, as the gold price has risen, we have done very, very well and our financial results have proven that we've got very good leverage to the gold price. Now a key thing to think about is margins when you're investing in companies like ours. And our margins expand with the gold price. When you consider us against -- compared to a producer, you see very different cost structures, and our cost structures -- structure is low and it's fixed, as I've said a couple of times. So our margin tends to expand when the revenue rises. When oil price rises, revenue line rises, the costs remain fairly flat. If you look at an operator, a lot of the costs that are -- that an operator has are things that move with commodity prices. So margins may not expand as quickly if the gold price is rising, a lot of the times, operator costs will rise as well. And you can see that in more detail on this next slide, where I'm showing our cost structure versus the cost structure of the average operator in our business. Producers or operators, they're exposed to inflation and input costs. So the costs they need to incur to run mining assets. Those costs would be things like labor, energy and consumables. Often, they're very commodity-price related. So when commodity prices and gold prices increase, commodity -- other commodity prices may increase as well. And so you don't get that margin expansion. If you look at our G&A costs, and they're mostly pretty steady to things like salaries, services and office rents, they will rise for year-to-year, but they're not going to be -- they're not going to rise in a short-term manner. So our margins are a lot less exposed to inflation of pressures simply because we're not exposed directly to operating capital costs. Now something else that distinguishes us when you look at our sector and other opportunities within our sector is our size, and we think we have an optimal size. We are -- if you look at us against our largest peers and the peers are further down the market cap levels, we are in a very good position. We're large enough to be able to compete against largest peers, but we're also small enough to be able to show growth by doing business in our sector. Our sector is generally built on small transactions. Most transactions are less than about $300 million in size, and the average transaction size is just over $100 million. So a lot of small transactions. But given our size and given where we are, and where we sit, we're able to compete against the largest peers when a large transaction does occur. And these do occasionally come up. But the smaller transactions is generally where most transactions occur at smaller sizes. And we can do those and show growth because we're not that big, it's easy to show growth when you are our size. So a small transaction can add meaningful value to a company of our size. We're not aiming to be the biggest. Being the biggest is actually a bit of a problem because it's hard to show growth, but we want to be the best. We want to have the highest value in our sector. And we think this -- we like to think of it as a Goldilocks position. It's a great platform to be able to execute our strategy of growth in gold. Now I'll talk a little bit about liquidity because that's really important when you're thinking about large-scale transactions or any transactions for that matter. When we think about funding our business and growing it, we think about using cash on hand first, operating cash flow second and then revolving credit facility. And we don't like to use equity if we can avoid it. So that's -- equity is always furthest down the list of ways to finance our growth. But we have to be very patient in our business. We have to maintain a strong balance sheet. We need to maintain liquidity on hand to be able to move on transactions quickly because often they come up quickly, and we want to be able to take advantage of them. We had, at the end of last -- the first quarter, so on May -- March 31, sorry, we had total liquidity of $1.25 billion approximately. And that was really our revolving credit facility of $1 billion, and we had $250 million of working capital. We don't have any debt on the balance sheet right now, and that's our preference. But we will use our revolving credit facility if we see interesting transactions come up that we don't have enough -- we don't have enough cash on the balance sheet to be able to fund them. We use our revolving credit facility. We'll pay that back using cash flow. And 2022 is a very good example of how we did this. So we invested around $900 million in 2022. We bought royalties on 2 very attractive long-term assets, which we think will be great additions to the portfolio. And we ended the year with $575 million of debt. But here we are 2 years later, we've paid back all of that debt. And that rapid paydown really shows you how quickly our portfolio can generate cash flow to refinance our business. And we find -- we think that we have lots of liquidity from the business development environment that we find ourselves in today. Now I'll move on and talk a little bit about the embedded growth and optionality within our portfolio. And this is one of my favorite slides in this deck. And it's really -- this is a 20-plus year history of our capital allocation growth. And it's really -- the point here is we've been able to provide accretive growth to our shareholders over a long period. And if you look at -- if you go back to 2000, you look at our growth and revenue and operating cash flow, you can see, it's been very, very significant. But there are 3 things that I think are worth pointing out on this slide. The first is to my previous point about this business being scalable. Our G&A has not increased as nearly as much as the growth in revenue and operating cash flow. We don't need to add people when we add assets. So it's a scalable business. Second is our revenue is not dependent only on metal prices to get us there. We -- the gold price obviously has risen the past several years, and it's been a great tailwind for us, but we've also been able to add volume to our portfolio and see organic growth come through the portfolio as well. And then the third thing is we've been able to finance our growth using mostly internal sources without a significant increase in the share count. We're one of the founding companies in the GDX Index, and we have the lowest share count in that index. We haven't issued equity since 2012. If we want to -- we really want to avoid shareholder dilution if we can. And if we can fund our business using internal resources, then that provides a per share growth to our shareholders. Now talking about optionality. I just want to spend a moment or 2 on this slide, which is -- this is a case study. And this is -- optionality really is the key to our business model, and its exposure to reserve and resource growth without having to make further investment. That's what I'm talking about when I say optionality. This is a very good case study because it shows a capped royalty. Now we typically don't like to have cap royalties. And when I say capped royalty, mean a royalty that fell away after a certain number of ounces had been produced from this property. But this is a very good example because it allows us to dissect the returns. What -- the dollars we put in, the dollars we received, how long that it took to recover those. What this -- the mine look like before and after the investment. We don't need to make projections about the future. And this is a mine that is still operating today. t's called Mulatos in Mexico. It's operated by Alamos Gold, and we bought this royalty in 2005. And at the time, when we bought this royalty, it was before production started, there were 3 million ounces in reserves and resources at this mine, and the mine had a 7-year mine life. Well, we were -- we received royalty revenue for 14 years during that period. And when the cap was reached in 2018, there were 4.3 million ounces in reserves and resources. So that initial what we thought was going to be an 8% return actually grew to being about a 36% return. And it was as a result of that. Addition of resources, they got converted to reserves, which got produced and extended the mine life. And an extended mine life really has a double benefit. I mean, obviously, you get more production. So that's more revenue. So that's the first benefit. But the second is an extended mine life, just -- it means that you're exposed to the gold price for that much longer. You're exposed to a volatile commodity and there will be times when the commodity is very, very strong and others when it's not as strong, but it really adds to that return. And so a 36% return is not too shabby on an investment where we thought we were going to 8%. The great thing, though, is that we didn't have to pay to get any additional exposure to this asset after that initial royalty acquisition. It's -- so the upside that came to us and came to our shareholders, it was already included in the price that we paid. We didn't need to contribute any further to get there. So that's the -- when I say that we look for exploration and production upside, that's why is because we can offer that optionality to our shareholders. We do the job properly on day 1, identify the best assets with growth potential. And hopefully, that means that our shareholders will get to enjoy that growth potential in the future. Now we have several assets in the portfolio that are producing. And we have several development assets as well in the portfolio. And many of these have catalysts today that we see as being potentially able to provide us further organic growth, mine expansions or extensions or exploration success or new production from within the portfolio is all that free optionality. And we have a number of assets, as I've already said that we think will provide some of that. And we don't need to pay for that growth. So that's a very unique part of our business and something that explains the valuation of our company. And just on that point, and this will be the last slide before I turn it over to Q&A, we are trading at historically pretty attractive multiple. You can see our price to NAV, price to cash flow on this slide. Going back 10 years in both cases, our trading multiples are fairly high. There's no doubt when you compare us to other companies in different sectors. But is really explained by the fact that we have consistent cash flows. There's that embedded optionality that I've talked about, and we have a low operating risk as well. And so we generally command a premium multiple. And our business has performed extremely well. We've had very strong cash flow over the past several years. We've been very disciplined in the way that we allocate our capital. We've got good organic growth that's come through the portfolio, and our share price is at near all-time highs. And that's obviously been driven a lot by the gold price. But we still see our price to cash flow multiple at the bottom end of the peer group. And it feels to me like the market is still not recognized the value of our long-life assets and some of the optionality and leverage to the -- what we think is going to be a sustained higher gold price into the future. So with that, I've come to the end of the formal part of the presentation. I do believe we're in a very good position today. Our record is very strong. Our business has been performing very well. We've got high-quality assets and a well-diversified portfolio. We've got lots of organic growth. We think we're bringing a pretty attractive valuation, but we have a strong balance sheet on liquidity to be able to continue growing. So we think we're in a very good spot today. So with that, Noella, I've come to the end of the presentation, I'll be happy to turn it back to you for Q&A.

Thank you, Alistair, for the presentation. We'll now begin the Q&A. Your first question is, what attracted Royal Gold to warrant specifically? Was it the project scale jurisdiction, commodity mix or management team?

Whenever we look at a new transaction, we have to look at a number of factors. We call them the 3Ps. There's people license projects and what really attracted us to warrant, and this is -- for those who don't know the asset, this is -- we just announced a transaction in -- on an early stage project in Ecuador. The scale of that asset is huge. And so that was the thing that we really, really liked. This is something that has potential to produce for decades and kind of be the engine of a -- cash flow engine for the company for an extremely long time. So the scale was definitely something interesting. So the project check the box. The people also check the box. It's a credible management team as a junior. It's a small company. There's no doubt. But it's a credible management team. So we certainly -- we like that. And then the place is Ecuador, which is an emerging jurisdiction in the mining sector and is becoming a place where many of our peers have invested, and we've seen a lot of development capital being allocated towards Ecuador. It is an emerging jurisdiction. So it is -- you can say it's higher risk, simply because it doesn't have the history of mining the same way that Chile or Peru may have, but it is a good place to do business. And we did a lot of due diligence where we actually visited the site twice. We think the community relationships that Solaris has been able to build, have been -- they're positive. There seems to be a willingness and interest in development in that part of Ecuador. So we were very pleased with that as well. So if you think about all those things together, it was just -- it was an attractive thing for us to consider, and we're quite pleased to have it in the portfolio.

The next question for you is, is your investment in Warintza, the first for Royal Gold in Ecuador?

Yes, it is. Yes.

Next, if you were asked, can you give more details on the change of control clause for the Soliris deal? I thought a royalty stays with the holder even if it's taken over by another company.

So I guess I'll step back and explain a little bit as why we did what we did. So it's a little bit more complicated transaction than perhaps that you're used to seeing. And it's simply because the asset is early stage in the hands of a company that is relatively small, and it's obviously a jurisdiction that we're not that familiar with. So what we decided to do was try and create flexibility for both ourselves as well as Solaris. Solaris will move this project to a certain point and likely this is going to be a multibillion dollar capital project. Likely they'll have to bring in a partner or they may want to sell entirely to a major mining company because we don't know who that partner may be in the future. We wanted to create some flexibility for ourselves because we just don't want to be in a situation where we've made investments in an asset and then somebody comes in that perhaps we're not comfortable doing business with that party. We wanted to create the opportunity for us to exit and receive our money back. And the project will continue. And we also wanted to create the opportunity for Soliris to attract somebody to come and acquire. And if it's going to be a major mining company, they probably don't need our financing, they probably have a strong balance sheet already. So they don't need us to be there. And so we thought it would be helpful to them to have that ability to eliminate the stream component of our financing and attract somebody else in to develop the project if they wanted to. Now the important thing here is that we have a royalty interest that will survive regardless. And so if the stream gets terminated, whether it's our option or whether it's on the other side, it really -- the royalty will continue. And so we still have an interest in the project. Now we'll get our money back. We'll get our initial investment back. We'll have that sustained royalty interest. And when you think about a deposit as large as this, that's going to proceed as long as it potentially will produce, that royalty can have tremendous value. So it would be nice if everything stayed with a stream intact to the royalty intact. But in the scenario where the stream gets bought back, then we still have that ongoing royalty interest. So we still have an interest in the project, regardless of what happens.

The next question for you is also about the Solaris acquisition. The question is 20% to 25% spot price seems to be an average for streaming company deals, is 60% spot one of the higher payments?

It's a negotiated number, really is what it is. We've got 60% in some of our -- in the Pueblo Viejo stream in the Dominican Republic, we have a 60% -- potentially going up to a 60% payment to spot price in the future. It's something that's negotiated. And what we always try to do is when we put a stream on an asset, we want to make sure that the burden is not to high to disincentivize continued investment by the operator in that asset. And so if you have a -- you can either -- you can step the stream rate down, or you can step up the cash price really ends up being the same thing. But what we do when we step up the cash price or step down the stream rate is you create this longer tail of a lower exposure to the asset. And then that probably -- it should help to incentivize the operator to continue investing in the asset. As mines get deeper, grades generally get lower. It just means that their economics get thinner as time goes on. So it's a way for us to share some of that with the operator and 60% was negotiated. It could have been 50% or 40%. It really depends on how negotiation goes, and in this case, we end up at 60%.

The next question is, was Royal Gold a bidder in the process for the royalty announced on Cote Gold that was acquired by FNV?

I can't really say too much about that one. When there's a competitive process being run, you should assume that we are part of that. And we're familiar with that asset. And we're very -- we're expecting to see a transaction on that asset. So that's really all I can say at this point.

This next question is also on the Cote royalty. The question is who gets paid first, Royal Gold or Franco-Nevada.

Well, I can speak to our royalty. It's registered on title. So it's a property interest so it's the most senior claim you can have. My understanding is that the Franco-Royalty is also registered on title. And so they would be paid at the same time, [ now they're both ] senior claims. I think the -- it's bit of a hypothetical question because you need metal prices to fall to a level where the mine is not making any money for this to really be a concern because paying 1 royalty over another, it just generally, is not a consideration that's made. I mean if the royalties are at the same level, you would pay both in a normal circumstance, I don't think we are seeing a scenario where 1 royalty gets paid and another does not if they're equal. So it's a bit of a hypothetic question. I don't think it's an issue. I think if -- perhaps if we had a different kind of investments, and they had a royalty or vice versa, then that would be something I could ask with more clarity, but both of the royalties, as far as I understand, are relatively the same in terms of where they are, and where they sit on the projects.

The next question is, Gold Royalty and Metallica have royalties on Cote as well. Do they cover the same ground as the Royal Gold royalty?

Not as far as I'm aware. I think both of those royalty positions are -- they're further to the north and east. Our royalty covers about 70% of the main Cote gold deposit. And my understanding of the royalty positions owned by those companies is that they cover more to the north and the east, and they cover -- in 1 case, there's complete coverage of the Gosselin portion of the deposit, which is a separate pit. And I think 1 of the other companies has a small participation in the Cote Gold deposit itself, but our royalty is it sits on top of the Cote deposit.

The Next question is, with over $1.1 billion in liquidity and no remaining debt, what are the company's priorities for deploying this capital? Are there plans for significant acquisitions or share repurchase program in the near term?

Well, we find the best way for us to generate value is to reinvest in our business. So that is always #1 focus for us. But that said, the dividend is something that's very near and dear to our hearts. And strategically, as I said in the presentation, it's a strategic focus for us to continue paying that dividend. We want to grow it. And when we think about growing it, we don't just think about growing it next year, we think about growing it down the track. I mean how many years do we look into our portfolio to say, can we grow it now. We will be able to continue raising it next year and the year after and the year after and so on. So the dividend is very important to us, and that will always be something that we'll allocate capital towards. If we had debt on the balance sheet, for sure, we'd be very focused on paying that down, but we don't have that today. So that's not a focus today. So it's really -- it's deploying in our core business. And we do see opportunities ahead of us today to be able to deploy our cash flow into new opportunities. So that is really where we're focused at the moment.

Next, you're asked, do you base your deals on reserves? Or do you factor in exploration upside?

Well, we look holistically at assets and really -- we'll try and price things based on reserves, so that we're able to operate at a competitive cost of capital for a counterparty who's looking to do something. We'll base the pricing on reserves generally. And then what we try to do is keep the exposure to the resources for our shareholders as additional return. So it takes a lot of work to try and understand where the potential is beyond the end of somebody's mine plan. And so that is -- a lot of our due diligence focus is trying to make sure that we understand upside to projects, and that's geological upsides or other things that may help like increased throughput rates for mining projects and things like that. So we're very focused on the upside. We generally have to pay something that's based on reserves, that's competitive with the cost of debt or the cost of equity. And if you're not competitive with those, then often you find that companies will move to equity or debt or the cheapest form of capital. So we have to be consistent with the pricing of other forms of capital based on reserves, but we do try and keep as much of that upside for our shareholders.

The next question is, will you be included in any more indices or ETFs with your market cap of over $10 billion?

We we're a member of about 200 indices in the U.S. right now. And I think the next big 1 for us to get included it would be the S&P 500. Now the S&P 500, the minimum market cap inclusion level is $20.5 billion today. So we're a long way from that. So I think it's unlikely that we'll get there unless there's a massive change in the gold price perhaps. But that would be the next one that I would look at being included in. But occasionally, we get added to new indices. I think we saw some pretty good index buying when we got included in the S&P High Yield Dividend Aristocrats Index. There a lot of other dividend and dividend follower funds that invested in us because we were slightly included in that index. So it does occur. But I think they're more marginal around the edges kind of indices. The next big one would be the S&P 500, as I said, I think we're a little ways away from that right now.

Next, you're asked, what are the major derisking milestones you'll be monitoring over the next 12 to 24 months?

Major derisking milestones. Well, I think the way I'd answer is talk about kind of the positive catalysts that we see in the portfolio. The next 1 that will be pretty significant for us is Mount Milligan. This is the largest asset in our portfolio since our gold is the operator. They're doing a prefeasibility study right now to look at extending the mine life of that asset. And what they said is they expected it could be a couple of decades of additional life added to the asset. So that pre-feasibility study is scheduled for release sometime in the third quarter, and we're very keen to see the results of that. that could be something that adds a lot of value to Royal Gold. So that's number one. We see new production potentially coming from the Back River project when that starts producing mid-year this year. It's in the final stages of production. We have a royalty there that starts off at a relatively low level, but it will grow to about a 3.3% gross royalty rate within the next 2 or 3 years. So we're very excited to see that one coming, that will be brand new royalty revenue to us. And then beyond that, it's more kind of incremental things at certain assets within the portfolio. I never want to discount Cortez, that's a complex where we have big royalty exposure there. And there are a number of moving parts within Cortez that often have very good news. The most recent value-add there has been in a big way has been Fourmile. Barrick has been talking a lot about the potential of Fourmile, and they're working on that. They're advancing a pre-feasibility study this year on Fourmile, and that will be something -- as that gets scoped out the market starts to understand that better. That will be a catalyst for us. The timing is a little less certain on that 1 because it is an exploration project. And so we'll have to wait until Barrick gets enough information to be able to put in the market. But we would expect within the next 12 to 24 months, we'll see some results there. And there are other things happening at Cortez as well that could be pretty interesting developments over the next 1 to 2 years. Aside from that, the expansion of PV throughput there is ramping up. Barrick is working on a number of different things to improve the throughput and recovery to get that up to the full run rate within the next couple of years. So hopefully, you see some good news and progress out of that. And then other assets within the portfolio that may have had a weaker 2024 results, we're expecting stronger 2025. An example would be Andacollo in Chile, in 2024, they had some issues with water, and they couldn't run at full production levels this year, those water issues have been resolved. So I would say that, that would be a short list of some of the things that we see, but there are always lots of little things that are coming up with the portfolio as well that when you add them together, they can actually make a material difference.

The next question for you is, is there an internal estimate on when the ramp-up at Cortez might materially impact cash flow?

Well, we have -- we go to Cortez once a year, and so we have good inside views as to what's happening at Cortez. I think the -- what I'd point you to is Barrick's own estimates for Cortez. They've got a big peak coming as they expect in 2027, and that's as a result of ore that's going to be mined at the Crossroads deposit. And for those of you who are familiar with our royalty positions at Cortez, we have a number of overlapping royalties at Cortez, but the largest royalty exposure is to the Crossroads deposit, where we have a number of royalties that overlap there. And if they're able to produce what they're expecting from Cortez and specifically Crossroads in the '26, '27 period, that should be something that is quite positive for us.

The next question is, how does your leverage to the gold price compared to other royalty and streaming companies?

Well, I think if you look at us compared to our largest peers, we have the highest [ gold ] as a percentage of our revenue. We don't have oil and gas. We don't have cobalt. We don't have a number of the other things that they do. So I think our leverage to the gold price is higher than theirs, simply based on where our revenue comes from.

Next is, do you see an inflection point in the future where you will have to expand your team for further portfolio growth? Could this be a future bottleneck?

We don't think so. We -- as I said, if we're able to add assets one by one, it generally doesn't mean that we need to add people. So if it's a relatively consistent growth in the size of our portfolio, then we don't expect it will mean that we need to add people. I think -- at some point, you may need to add 1 or 2 people here and there just to be able to manage the additional burden of the larger portfolio. But it's not something we see as a constraint. We do have a small team, but we also manage our team using external resources sometimes when we find that we're -- maybe we're looking at an asset, we're doing due diligence on something. We need to get some additional help. We have a role of the extra consultants we use all the time, and they will often be able to help us ensure notice to be able to look at something. So we will bolster our team depending on what we're looking at, depending on what's happening. We'll add people but on a temporary basis. to help us deal with things. But in terms of growing the company and on a headcount basis, it's not something we see at this time.

The next question is, aside from gold, is the company prioritizing any copper metal projects when sourcing new royalty or streaming opportunities?

Well, our focus really is precious metals and gold in particular, we will look at copper, we will look at other exchange-traded metals because we understand those. We find that some of the best opportunities are things like Lorenza, where it's a large copper porphyry, but it's got a gold component to it. And so that's the kind of thing that we really like to see if there's a way for us to screen the precious metals on a base metal asset there's an arbitrage there between our cost of capital on a -- an owner of a base metals asset may have themselves. So there's -- that part means that we can very efficiently provide financing. That's the kind of thing that we really like to do, but we don't want to stray and get involved in base metals. It's not something we're looking to do. Now that said, if good and interesting base metals projects come across our desks, and we will look at those. And we had 1 a few months ago, we acquired a royalty on the Cactus project in Arizona. This is a copper project. It's got no precious metals, but it came to us. It wasn't a competitive process. We liked it. We the team, we like the jurisdiction. We like the metal. So it was a good return. So we thought we would act and we acted opportunistically on that 1 and add it to the portfolio. And that we're very pleased to have in the portfolio as well.

We're coming up on your last 2 questions. The first 1 is, what performance metrics do you need to see in order to increase your dividend?

So the way that we think about our dividend is it's a rigorous analysis, but it's also somewhat subjective. We will look at our portfolio. We look at what we think the portfolio is going to do over the next several years. And as I said earlier, if we raise the dividend of 1 year, we want to be able to make sure that we raise it from that level in the following year and the following year and so on. So we do look into the portfolio a number of years. We obviously have to make some adjustments or some estimates on metal prices because that's what drives our revenue. So we'll be relatively conservative. We'll not assume that metal prices are going to continue rising indefinitely, but we'll do some analysis on metal prices. But it's really -- it's cash flow. I mean we want to make sure that we've got enough cash flow to be able to pay the dividend, service the dividend, but also have enough left over to be able to reinvest in the business and continue growing.

And your last question is do you anticipate increasing further exposure to Latin America or Africa?

We are not opposed to either jurisdiction, and we have to go where the opportunities are. I think generally speaking, we're more comfortable with Latin America because we've done -- we've got investments in Chile, Argentina, we now Ecuador, we've looked a lot in Peru. We're very familiar with Latin America. Africa is different. Africa, there are a lot of countries in Africa, and they're not all the same. We will look at certain countries in Africa. We have no hesitation. But there are other places in Africa where we're just not as comfortable, and we just don't have as much experience in Africa. That's not -- it's not to say that we won't go there. We invested in an asset in Botswana. And we had never done any business in Botswana prior to 2019. We did this investment in 2019 on the Khoemacau project. and it's been very, very good for us. We're very happy, but we did a lot of work to get comfort with Botswana. And we just don't have the same familiarity with all the countries in Africa that we do in, say, Latin America. So I think it really is a case-by-case basis.

Thank you very much, Alistair, for your insight today, and thank you to everyone who has submitted questions. If you did 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 the floor to Alistair for final remarks.

Well, thank you, everybody. I really enjoyed the Q&A session. So if there are questions that didn't get asked or if I didn't answer and hit the mark on the question [ that was being asked ]. Please let Renmark know. I'd be happy to get in touch with you 1 by 1 to explain in any further detail. So thanks very much and look forward to talking to you again soon.

Thank you, Alistair. And once again, this was Royal Gold trading on the NASDAQ under the ticker symbol RGLD. Thank you to everyone in Seattle and surrounding areas for joining us today. The feedback 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.