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

Good afternoon, ladies and gentlemen. Welcome to today's virtual non-deal roadshow. My name is Nadine Salonga, Virtual Event Moderator here at Renmark Financial Communications. On behalf of our team, we want 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 around 20 to 25 minutes and will be followed by a Q&A session for which you can participate by using the chat box on the top right-hand corner of your screen. With that being said, I will now hand it over to Alistair.

Thanks, Nadine, and thanks, everybody, for your attention today. We've had lots of good news at Royal Gold over the past several months. It's a great time for gold. It still continues to be a very good time for gold. So it's very timely to give you an update. So I will make the obligatory statements about forward-looking statements. I will be making forward-looking statements during this presentation. There are risks and uncertainties that could cause these statements to differ materially from actual results. All of these risks and uncertainties are contained in our Form 10-K filing with the SEC. So during this presentation, I'll give you the investment thesis for Royal Gold. We are a high-margin business. We generate consistent cash flows from precious metals. It's been a transformative year for Royal Gold. 2025 has been a huge year. Sandstorm and Horizon were 2 public corporate transactions that we completed. We completed those in October, and we announced 2 stream transactions as well. In May, we announced the Warintza transaction in Ecuador on a development project. And in August, we announced the Kansanshi Gold Stream transaction on a producing gold mine or a copper mine in Zambia, operated by First Quantum. We've had a number of positive developments throughout the portfolio during the year as well. We've had some very positive news at Mount Milligan and Fourmile, and I'll get into those in a few more minutes. But we had a lot of scale, diversification and growth to our portfolio. But despite all these additions, our strategy remains very consistent, very much the same Royal Gold that you've known for many years. And so during this presentation, I'll walk you through some of those -- the attributes of Royal Gold, and I'll focus in the presentation on our gold exposure. Precious metals is definitely our focus and gold is really where we want to spend the majority of our time. Our business is very high margin. We have a very long history of returning capital to shareholders and a consistent history of dividend growth. Our portfolio is one of the most diversified amongst peers in our sector. That is in terms of assets, jurisdictions and operators, and that provides consistency. Our model is very limited when it comes to exposure to risks when you think of operating costs or capital costs that may rise. Our margins are steady. And when we think about the size of our business, we're actually a very good size for a relatively small subsector of the mining business. And finally, optionality is a very important part of our business. It is where our shareholders get that extra return. And if we structure our business properly, we don't need to pay for continued growth. We can get embedded growth through growth within the portfolio. So as I move to the first section here, just talking about the portfolio. We do have, as I said, very gold-focused portfolio, and we've been in the business for over 40 years. We've been listed on the NASDAQ since the mid-1980s, late 1980s. So a very long history and we've got a very consistent record of executing on a strategy that has been consistent over time. We're very much focused on gold revenue on good assets in mining-friendly jurisdictions. Our revenue has grown consistently over the time that we've been in business, but the metal mix has not really changed. And I would just point out that some of the transactions we've done more recently are not reflected in these numbers. But the metal mix of the portfolio today is very similar to what it was prior to doing these transactions. And we're really trying to provide to our shareholders gold exposure in a conservatively managed vehicle. And you can see that when you look at our historic performance. And this shows why we think we're a good alternative for those who are looking for consistent exposure, more conservative exposure to precious metals, but precious metals are volatile, so you want that conservative exposure. And that's what we've done over time. You can look at our leverage to the gold price on the left-hand side, 1.7, so it's good strong leverage to the gold price. But over the -- on the right-hand side, you can see our share price performance going back to the beginning of the GDX index in 2006. Since then, we have outperformed the gold price the GDX index and the S&P 500. So that shows why we're a good buy and hold investment in a very volatile commodity. Now we have a high-margin and dividend-growing company as well. And if you look at our margins, this shows 2024, we had a very consistent EBITDA margin of about 80%. And it's a very unique business model. The high margin is also scalable. We don't need to add people to our business as we grow our business. Our cash G&A is -- in 2024, it's about 4% of our revenue. In our last quarter, it was about 3% of our revenue. So that shows you that we do have leverage to metals prices because we're capturing more margin as metals prices rise. Our costs are low and they're fixed. And so cost inflation shouldn't be something that really impacts our margins. In addition to that, our business is very efficient. We don't need many people to run this business and it's very scalable. We have less than 40 employees with the company today, and that headcount remains pretty low when you think about our business in terms of an $18 billion market cap. So on a per employee basis, you can compare our revenue, our enterprise value, our market cap, whatever the metric is, you can compare it across sectors, across very well-known companies. And you'll find that our business is probably one of the most efficient that you could possibly come across. Now when we think about our business, return of capital is always a very important attribute for us, and it's a key strategic objective when we think about our business. It's very unique when you think about us in the context of other precious metals investments. We have paid a growing and sustainable dividend since 2000. We've increased the dividend every single year since 2001. And that's despite ups and downs in the gold price. We just -- in November, just about a month ago, we increased our dividend again for the 25th consecutive annual increase. There's about a 5% increase over 2025 level, but nice, steady dividend growth seems to be the history of Royal Gold, and it's certainly something we want to continue doing into the future. We paid out over $1 billion of dividends to our shareholders since we started paying a dividend, and we're the only company in the GDX that has paid an increasing dividend every year since that index was formed in 2006. And we're the only precious metals company in the S&P High Yield Dividend Aristocrats Index. So that sets us apart from everybody else in the precious metals sector, and it's a very unique attribute that we're very proud of. Now we have a highly diversified portfolio, and this portfolio is weighted towards lower risk and mining-friendly jurisdictions. Our portfolio spans at various stages of mining project development. And on this slide, you'll see that there are 2 property counts. Here we have Royal Gold, and we have Sandstorm and Horizon. Both of us -- both of the Royal Gold and Sandstorm/Horizon, we categorized our properties differently, and we're in the process now of unifying everything, bringing everything into the -- into our standardized categorization process. And so I'll be able to show you an overall property count hopefully shortly. But combined, you can see that we've got over 80 revenue-producing assets. We have over 40 assets in development. And then the remainder, well over 200, are at various stages of exploration or evaluation. And organic growth from within the portfolio comes as new assets move through that pipeline from early-stage exploration through to revenue production. That's organic growth that we don't have to pay for. And the portfolio is very diverse. And that diversification reduces our exposure to single asset counterparty or jurisdictional risks. Our operators are best-in-class and they're large, well-capitalized and experienced. We've more recently in some of the recent transactions that we've done, we've added First Quantum, Rio Tinto and Glencore as counterparties. So they are arguably some of the best buying companies in the business in the world. And on a net asset value basis, if you look at our assets, we have the most diversified portfolio within our sector. Our largest asset remains Mount Milligan, about 12% of our net asset value. But we recently saw an extension to the mine life there about 10 years to 2045. So our largest asset has a multi-decade mine life. The operator is talking about potential additional decades plural of potential mine life if there's the ability to convert some of the existing resources that are known around that project into reserves. So we're very pleased with that development and the diversification overall of our portfolio. So as I said that portfolio diversification really helps us when it comes single asset risk, single counterparty and jurisdictional risk as well. And that's important for generalist investors who may want to have exposure to precious metals, they want to have exposure to mining projects, but they don't really want to have too much exposure to one asset or maybe they don't want to do a deep dive into assets or risks around those assets, but they want comfort that there's a portfolio behind the generation of the numbers that is broad and deep. Now a key feature of our business model is our limited operating risk and limited exposure to operating risks. So you can get -- there are many ways you can get gold exposure by investing. You can invest in physical gold or you can invest in mining companies or exploration companies. But our model provides what we think is kind of the best of both worlds. You get exposure to gold. We also don't take on direct risks with our model. We provide our shareholders with exposure to gold and optionality as well as a dividend, but we reduce our downside risk, we mitigated by holding a diverse portfolio that doesn't have direct exposure to costs. There are other ways you can invest in gold. So if you want to invest in physical gold, you can buy an ounce, but that ounce will always be an ounce. It will never pay you a dividend. You can move down the risk curve and you can take investments in junior companies, exploration companies or operators. But with those, you're also getting exposure to operating and capital cost risks. We fit nicely in the middle. There is a perception that our business doesn't have the same leverage to gold as some of our peers. But I think if you look at our financial results -- and when I say peers, I mean, operating companies. When you look at our financial results, you can see there is absolute leverage. Our revenue goes up with the price of gold as well. So that is something over the long term, I think, is not recognized by a lot of people in the marketplace. Now royalty and streaming companies and our business model, we have this unique feature around margins. We have a very different cost structure to our business than a producing mining company. Our costs are low and they're fixed. So our margins expand as metal prices increase. Operator costs, on the other hand, may increase as commodity prices rise. So their margins may not expand as quickly. And you can see that in this next slide, when you look at cost structures, I've got -- shown here on the left-hand side, you can see our cost structure and the average producer. And producers are exposed to inflation in the input costs that they need to run their assets. So labor costs, energy costs or other bulk consumables, which are often commodities. Those will often increase when the gold price rises because they are commodities as well. If you look at our G&A costs, they're relatively steady. We have things like salaries, service and office rents -- services and office rents, I should say, that they don't move on a short-term basis, they're often multiyear contracts or there are things that are not subject to near-term price increases. So our margins are a lot less exposed to inflation pressures because we're just not exposed to direct operating and capital cost risk. Now I'll talk about our size, which we think is pretty optimal in a small sector. You can see on this slide, we are -- we like to say that we're large enough to compete, but we're small enough to show growth. And our sector is built on small transactions. Most transactions in our sector are sub-$300 million and the average transaction size, if you go back over the past 20-odd years, it's just over $100 million. And we sit in a very interesting position. We're big enough to compete for the largest transactions, and we did the Kansanshi transaction in August, which is $1 billion cash. We have access to low-cost capital. We have access to a lot of cash flow. So we can compete for the largest transactions in our sector, yet we're also small enough on a market cap basis to show growth by doing some of the smaller transactions that are kind of the bread and butter of the sector. And a small transaction can add significant value to us. And you can see small transactions, you can see the increase in revenue or the impact on revenue after we do those transactions. We're not aiming to be the biggest in the sector, being the biggest in the sector creates a growth problem. How do you show growth when you're the biggest. But we want to be the best. We want to be the most highly valued. We want to be the most nimble company in our sector. And we think our Goldilocks position, as we call it, really does provide a great platform for us to execute on our strategy of growing in gold. I'll talk in the next section about embedded growth and optionality. And this slide shows a 20-plus year history of how we've allocated our capital in our business. This does not include the transactions that we've done this year. It will be updated, obviously, as we get into 2026. But it is a good -- it gives you a good overview of how we performed and how we've executed our business plan over the past couple of decades. Since 2000, you can see we've had tremendous revenue and cash flow growth, and we look forward to incorporating the Sandstorm and Horizon assets into this over the next several months. But there are 3 aspects of the growth that I just want to point out here. First is our G&A has not increased at the same rate as our revenue and cash flow growth. And we don't need to add people when we add assets to the company. We -- it's a very scalable business. We manage our cost carefully. And so that is a key feature. We tend to add or provide that revenue and cash flow growth to our shareholders and we don't need to change the way that we approach our business. The second is our revenue is not dependent solely on metal price increases. The gold price increase over the past several years has been great. It's been a fantastic tailwind to us, but we've also been able to add volume to our portfolio. So we've been able to acquire assets, build our portfolio to take advantage of that increase in the gold price. The third thing is we've, by and large, funded most of our growth using internal sources of capital without increasing our share count in a meaningful way. We did increase our share count in October when we completed the Sandstorm transaction. We issued 18.6 million shares. And that was the first time we had issued any equity since 2012. So we're very careful about issuing equity. And even with the issue of these new shares, we still have the lowest share count in the GDX. We want to try and avoid shareholder dilution. And if we can provide per share growth to our shareholders using other sources of capital, so cash, operating cash flow and our revolving credit facility, that's where we turn to first when we think about financing new transactions. I'll give a bit of a case study on this next slide about one of the most important things, features of our business model. That's really exposure to reserve and resource growth optionality without having to make further investments. And this case study is on a mine called Mulatos, operated by Alamos Gold. We had a capped royalty on this mine. So the cap meant that after production of 2 million ounces, the royalty was extinguished. We don't like that kind of structure. We want to have that long-term exposure to the upside of assets and that perpetual exposure. But in this case, it was a very helpful tool because we can actually do a proper dissection of the returns and what we expected and what we actually received at the end of the day, to illustrate this point on optionality. We acquired the Mulatos royalty in 2005. And at the time, there were 3 million ounces in reserves and resources, and the mine had a 7-year land mine life. Well, the mine produced for 14 years before the cap was reached. And when the cap was reached, the reserves and resources were 4.3 million ounces. So there was a significant growth in the mine life over that period of time. And what we expected to be about an 8% return actually ended up being more like 36%. And it was really as a result of that optionality, that exploration success that caused resources to be converted to reserves, which got converted to cash flow. And the extended mine life, it really -- it provides a double benefit to us. First of all, you get more production, so that means more revenue. But at the same time, if you're able to extend mine life, it means that you have a longer period of exposure to the gold price, and you get volatility in the gold price, which can add a lot of value over that extended period of time. In this case, we didn't have to -- and we look for this in all of the things we invest in, and we don't need to fund additional capital or invest any further to get exposure to that upside. So it's growth that we don't have to pay for and really evaluating exploration and potential upside is a very important part of our due diligence when we're looking at new business opportunities because the optionality is really where we get that extra return for our shareholders. And to illustrate that point, we have a number of assets within the portfolio today where we think there is going to be good growth potential. This slide shows a sequence of assets that we expect to start producing over the next several years. In fact, over the next decade or so, we see a number of catalysts. These are brand-new assets to our portfolio. And it's a pretty significant growth pipeline. One of the reasons we did the Sandstorm transaction was because they were very -- they had a lot of assets that are developments stage. And by taking their development stage portfolio, adding it to ours, we have a very nice growth profile and portfolio over the next several years. As we move through this conceptual time line and sequence, you can see Back River is the first one. Now Back River is actually producing now. It started producing at the beginning of -- it was actually June 30 this year. It was our first pour of gold. They reached commercial production. We're seeing new royalty revenue from that asset. Platreef is the next one. That is a brand-new asset as well. It's -- they started processing ore through the mill. We haven't seen revenue yet. We expect to see that revenue very early on in 2026. After that, in 2027, we see the Robertson mine, which is part of the Cortez Complex in Nevada. Barrick is talking about that starting production in 2027. And then we've got Hod Maden and Great Bear later this decade. And moving into the next decade, we've got the Mara project in Argentina, Cactus project in Arizona, Oyu Tolgoi in Mongolia, Warintza in Ecuador. And probably last but not least, one of the most exciting gold deposits there is in the marketplace is Fourmile. We have a full royalty exposure to Fourmile, and Barrick has been fast-tracking this project. They came out in September with some incredible exploration results. And they're talking -- they're describing this asset as probably the best find of the century. So we've got some very nice growth assets in the portfolio that will hopefully start producing over the next several years. And it is really one of the best growth profiles or portfolios in the business. And this does not include some of the other stuff that we've got in the portfolio as well. I mentioned the Mount Milligan mine life extension. That adds a lot of value to our portfolio. It will extend the mine life there. And then we've also got an expansion expected at Khoemacau. We're expecting to see a feasibility study by the end of this year, another very good quality asset with tremendous growth potential and long life ahead of it. So there's a lot of other stuff happening within the portfolio in the producing assets that's not captured on this slide. Now I'll turn to the last slide and just talk about valuation for a moment. You can see on this slide our historic price to cash flow and price to net asset value multiples going back over 10 years. You can see that we're actually trading at the lowest end of our peer group and which we don't think is justified. Our portfolio is performing very well. We've got very strong cash flow. We've got very good organic growth potential. But we are trading at the low end, and I think there's a bit of a -- we're going through a period of adjustment in the market size right now. We just completed $5 billion of transactions in 2025. So the dust is settling on those. We issued new shares to do the Sandstorm transaction. And likewise, a lot of those shares may not have ended up in sticky hands, but we think those are in sticky hands now and hopefully, we're starting to see some stability in the share price as those shares find a new home. Second thing is, we've got a higher debt balance than we've ever had in the history of the company. On a leverage basis, compared to our EBITDA, we don't think this is a problem at all. It's very manageable, but it does tend to make the market think, well, this is more debt than we've seen before. The market wants to see us make some progress on debt repayment. We've made that a very clear focus for the next little while. So hopefully, that will be something that is just temporary as well. And then the third thing, I think it really goes back to that previous slide I just talked through. There's a lot coming in our portfolio. And I don't think the market has had a chance yet to really digest it. We're going to be doing an Investor Day at the end of March in 2026. We expect by that time to have a very nice easy-to-understand picture snapshot of our business, so the market has some good confidence as to what the long-term growth looks like. But we are in that stage of just making sure we educate the market on the scale and growth of the business and what we've done within our portfolio over the past several months. So with that, I've kind of come to the end of the prepared remarks. I think we've done a good job of strengthening Royal Gold for this rising gold price environment. We've added a lot of scale, diversification and growth to the portfolio. We have a very strong balance sheet. We have significant cash flow. And history shows we've got a very patient approach. We've got a commitment to a long-term strategy. And we think over time, this will all be rewarded by the market. So Nadine, with that, I'll hand it back to you to start the Q&A session.

Well, thank you, Alistair, for the presentation. And as you mentioned, let's now start the Q&A. Your first question from the chat asked, how many of Royal Gold's top 10 revenue-generating assets are past peak production? And what replaces that production organically?

So that's -- I think mining assets are depleting assets. We're in a business where resources are, they don't grow necessarily unless you go find them. But I think if you look at our largest assets, we're pretty comfortable with the way they are evolving, and we'll talk to this more on this Investor Day that I referenced in the comments. We don't see any real declines in the production levels of these assets. And in fact, some of these assets have tremendous growth potential. So if you look at something like the Cortez Complex, within that complex, you've got the Goldrush mine ramping up. You've got Robertson starting in 2027. You've got the Fourmile exploration project. So even though assets are mature and they may be producing revenue, it doesn't mean that they're necessarily declining because as operators work on these assets more, they have more experience with the geology, they can actually squeeze more out of these assets. And we think the largest assets in our portfolio, they have very decent growth ahead of them, if not no decline. So it's -- we feel very good about the portfolio and some of the expansion potential within the portfolio on the revenue-producing side.

That offers a strong overview. Thank you, Alistair. Your next question from the chat asked, from a dollar perspective, what is the low end of your transaction size?

We will do small transactions if we find good, attractive projects. And the smallest transaction, I think we've done -- announced publicly anyway recently, it was about $8 million. A few years ago, we bought a royalty on something in the Golden Triangle in British Columbia. It was a very attractive exploration stage asset, and it was a -- the dollars may be small, but it's that kind of thing that adds -- potentially can add a lot of value in the long term. So we're not afraid to do small transactions. We like them. That's often where you get the best value as well because there's a bit of an information disconnect perhaps. And we can see things that allow us to make investments that we think will turn into something meaningful over the longer term, but you have to be patient to do that.

Appreciate the clarification. Up next, the viewers also asking, Royal Gold often trades at a premium to peers. What specific metrics justify this premium?

Well, I wish we could say we were trading at a premium to our peers right now. Unfortunately, that's not the case. I think the -- and as I mentioned in the presentation, I think this is kind of a temporary thing as the market gets more comfortable with some of the things that we've done recently. But we have traded to peers in the past. I think the biggest thing that really influences how we trade and who trades at a premium is perception of growth in our sector. I mean, once you check the box on scale, which us and our largest peers have done, and portfolio diversification is obviously important as well. The other thing is really growth. And so the highest growth profiles tend to trade at the highest premium. So what we're trying to do is make sure the market understands the growth potential within this business and within our portfolio. And hopefully, we get there again soon when it comes to trading at a premium.

Well, best of luck on that and thanks for breaking that down. Your next question asks, with the current bull cycle for precious metals, are there any material headwinds for the sector outside of the higher cost of deals?

I don't think so. I mean, we feel very comfortable with our portfolio today. And if deals get too expensive because people are underwriting a very high gold price when they do those deals, we're quite happy not to do deals. We're quite happy to -- we've got other potential uses for our cash. As I said, we've got debt. We're happy to pay that down. And we're happy to see some of the other growth within the portfolio that we've already paid for. We're happy to see that come to fruition as well. And in the near term, if metals prices stay strong, we'll just collect the cash flow from the portfolio and build our balance sheet, and we'll wait. It may be that there is a change in the metal price environment or maybe there will be new opportunities that come up as a result of higher metal prices and we'll be that much better positioned if we are able to be patient and disciplined in the way that we deploy capital. So we don't feel that there is a real headwind ahead of us right now. We're actually feeling pretty good about where we are, and we see some good opportunity within the portfolio as a result of the higher metal prices.

Excellent. I appreciate you outlining that. Up next, a viewer also is asking, your presentation states 50 evaluation positions. Can you explain what is actually being evaluated?

So when we talk about evaluation projects, it's really the stage of growth that those assets are in. So we've got producing assets, have reserves, they produce revenue. Development assets are generally permitted. They've got reserves and they're economic and they're in the final stages or they're certainly in construction. When we talk about evaluation assets, they're often -- they've got resources, but they haven't been approved up yet by the operators. Additional work is going on to get to that next stage. And so when you think about the life cycle of projects, you go from very early stage exploration and you do that initially, you find out that you've got something and that evaluation is what those projects move into next. And that's where you have resources identified and companies do work to be able to prove those resources up to the economic, and then they move into the development and then finally, revenue production. So having a big number of assets at that stage of production is very important because it goes to the embedded growth and optionality within the portfolio.

Thank you, Alistair. The following question asked, are your G&A expenses rightsized? Or is there room to reduce those expenses?

Well, our G&A expenses are pretty low, and we're very focused on making sure they stay low. We don't like to grow headcount quickly. We don't like to -- our salaries and things like that are generally pretty stable. And so we're very, very cognizant of the cost line on our income statement. I would say that in terms of right size, you don't get many companies that have G&A would be 3% of revenue. I think that's a very good metric, and it's hard to see how we would be able to cut much from our G&A. It costs us prior to the Sandstorm transaction, which will increase our headcount a little bit because we just got a much larger portfolio, and we needed to bring some people on to help us manage that. Prior to that, we were spending $25 million to $30 million cash per year to run this business, which is pretty small when you think about the scale of our business. We're an $18 billion company and it costs you $30 million to run. So it's hard to see that we would be able to really make any meaningful reductions to our G&A based on where we are today.

Thanks, Alistair, for that information. Up next a question from the chat asked, will Nolan Watson be involved with Royal Gold, now that the acquisition of Sandstorm has been completed?

Nolan has not continued with the company. We do not have any members of the Sandstorm Board that did not join us. None of the senior management did either. We have a few colleagues from within the Sandstorm and Horizon organizations that have joined us, but they're not -- they weren't on the Board, and they weren't the very senior leadership. Our understanding is that Nolan wanted to continue as a shareholder of Royal Gold, and that was one of the reasons why we did an all-share transaction. But I haven't had any contact with him since we closed the transaction. So I don't know if that's current.

Appreciate the clarity. Next, Cortez has meaningful optionality through Goldrush, Fourmile and Robertson. How conservative should we be when modeling further upside?

Well, when modeling the upside there, you really need to take the Barrick disclosure as the basis. And Barrick is a very large and experienced company. They've been operating in Nevada since the beginning of Barrick, and lots of experience there. I think what they put into the market is probably the best way you should be thinking about what is happening at those assets. I think the one thing to think about at Cortez is that it's not just one mine, it's a complex. And so there are a lot of levers that Barrick can pull. When they talk about overall production levels from Cortez, they're talking about production from several different parts of the Cortez Complex. And so they may decide that they will ramp up production in a certain part and take resources away from another part for whatever reason that they're trying to optimize their business for themselves. So that's the one thing that's a little bit hard to understand around Cortez is just how Barrick's mine plan changes from period to period. But their disclosure is quite good. They give nice top line production growth or production statistics for Cortez into the future. And they've also given enough detail on some of the other assets that are growing and adding value to the complex. So you can do some estimating, although it's not a full data set necessarily but that's where I would start, if you're going to be looking at modeling that asset.

Thank you, Alistair. Your next question asked, roughly what percentage of total revenue in 2026 is expected to come from your top 5 producing assets?

Well, we haven't given guidance yet. So it's -- I can't answer that question without giving guidance for 2026. We did inherit -- we've added a few new assets to the portfolio recently. We've got Kansanshi, it's a major contributor to us. It's about #2 when we think about asset in terms of NAV. We also have a couple of other assets from Sandstorm as well. So it has changed the face of our portfolio a little bit. And for that reason, it's hard for me to even give just a general answer because we have -- we're going through that exercise right now to make sure that we -- when we give our guidance, we built it up properly from the foundation asset by asset. And I'll be able to answer that question in a couple of months.

Thank you for the information. Your next question is asking, how does management differentiate itself against Franco-Nevada and Wheaton in competitive auctions?

So there are a number of things we can do. I think our reputation is important. We've been around for a long time. I think we've got a reputation of dealing fairly with counterparties. And when things don't go well, we will work with our counterparties. We won't work against them. So I think our reputation is something that is important because any new counterparty who wants to deal with us, wants to understand or get a feeling for how we would act in the case that things don't go according to plan. So I think that's an important differentiator. I think we have a very good reputation. I think another thing that we are proud of is our ability to kind of take a blank sheet of paper approach to new transactions. We don't have a cookie-cutter approach. We don't have a checklist and say, you need to have the following items before we look at the transaction. We need to structure it according to the following criteria. We'll take a bit of a more of a listing approach at the beginning when a counterparty comes to us and say they need something. They may have unique constraints. And so we will try and develop something that fits what our counterparty needs because at the end of the day, that's the best way to create a win-win. So that's being flexible and being creative on structure is something that we're -- we think has helped us in the past, and we think that does differentiate us when it comes to new transactions.

Thanks, Alistair. Great point on how reputation matters. So a viewer from the chat is asking a little while ago, Bitcoin was seen as an alternative to gold as a store of value. How do you feel about or account for this?

Well, I think -- I mean, Bitcoin is an asset class. I think when Bitcoin started, a lot of people talked about it as being the replacement for gold. I think the one thing that gold has going forward that Bitcoin doesn't is a long history. I mean gold has been used as a store of value and a medium of exchange for thousands of years in human history. And Bitcoin hasn't. I think if you look at Bitcoin, it's extremely volatile. It's -- gold is not volatile the same way that Bitcoin is. Bitcoin -- gold is a store of value. You can invest in -- there's a liquid market. You know there's always a market there to buy it because it is just part of the financial system. Bitcoin is in its earlier days. It's a volatile asset class, and I don't think it has proven itself yet over the longer term. Now a lot of investors are invested in Bitcoin, but they're -- if you strip it down, I think they're invested for different reasons than those investors who would be invested in gold. So Bitcoin and gold are very different. I don't think we've seen a lot of cannibalization of gold demand as a result of Bitcoin. I think that they're able to coexist as different assets, because they serve unique and different purposes.

Thanks for sharing your thoughts on that. Another viewer is asking what internal rate of return thresholds are required today versus 5 years ago for new deals?

So when we look at new transactions, we're always looking to get returns that are in the double digits. And sometimes when we do transactions on day 1, the estimates that the sell-side research analysts may make for a transaction, it will show kind of mid-single digits, so not very exciting returns. But if we do our job properly and we are able to identify upside potential at assets, then what that does is it creates the opportunity for returns to increase over time. So we're aiming for something that's significantly north of what analysts estimate on day 1. And sometimes, it takes a long time for that to occur. It takes -- in the case of Cortez, for example, we bought royalties in 2022. And the results we saw from Fourmile this past September have increased significantly the value of those royalties. But it took 3 to 4 years for that to become known and something that the market recognizes. I think when we do our initial transaction pricing, we have to be competitive with other sources of capital. And the counterparty can go generally, they can go to the equity markets or they can go to the debt markets. So we have to have a cost of capital that's competitive. Otherwise, we won't win transactions. But where we try and focus is on the assets that have growth potential because those are the assets that over time will allow that single-digit return to increase to something that's in the double digits. And I think if you look at our portfolio and some of the longer-dated assets that are in there, you'll see that we've been able to do that over time, but it does take time for that growth and that potential to become visible to the marketplace.

Thanks for shedding light on that. Your next question asks, what is the current mine life and expected production from Mount Milligan?

The current mine life is now to the 2045. In September, Centerra added another 10 years. So it went from 2035 to 2045. So another 20 years from today. Production levels are relatively consistent in the expanded mine plan. There -- I remember off the top of my head, they're about 150,000 ounces of gold per year and 60 million pounds of copper or thereabouts, which is pretty consistent with what the mine is producing today. One of the things that they've talked about doing is increasing throughput by about somewhere in the order of 5% to 10%. If they're able to do that, then that may also have a production impact. But the mine life extension is really the thing that adds the most value to Royal Gold rather than increased production levels as a result of that increased throughput that is potentially coming.

Excellent. Thank you, Alistair. Your next question asked, to what extent does ESG performance of the operator factor into your royalty selection criteria?

It's very important, and it's always been a factor for us. When we consider any new opportunities, one of the main areas of focus is on ESG because, we invest for the long term. We make a decision today. We make an investment today, and we want that investment to pay us over the life of the asset. And anything that can cause the life of the asset to be shortened or interrupted is something that really impacts our revenue. And so we will do a lot of work on ESG factors when we do our initial due diligence. So we'll look at things from water availability, community relationships, other environmental practices. We look at those things because if something goes wrong with one of those, it can be something that actually impacts the ability for an operation to continue. We also look very carefully at our counterparties' reputations. We pride ourselves on having very good quality counterparties, and the counterparties that have ESG issues are generally the ones that aren't managed the best. So we try to stay away from situations that will cause anything in the asset to be jeopardized. So anything in terms of production or mine life or anything like that and that includes things like the way operators and counterparties, they manage their businesses. So it's a very important factor for us, and we rank it very highly when it comes to any due diligence activity.

Absolutely agree. Thanks, Alistair. We're actually coming up to your last 3 questions for today. So first of that would be, based on your current mine plan, when is Back River projected to reach the output threshold for the full 3.3% GSR?

I would expect that to be sometime in 2028. Our royalty revenue does -- or royalty rate does increase over time as production thresholds are hit, and we would expect it around 2028 to get to that highest level. There's another -- so we go from today, it's a relatively nominal rate of 0.3% to 0.7%. Next change is up to 2.2%, and we expect that to be reached in 2027 and then 3.3% sometime later in 2028.

Excellent. Thank you, Alistair. Your next question is, 25 consecutive years of raising the annual dividend is an impressive feat. But how long do you realistically think this can continue for especially with the amount of debt that needs to be paid off?

Well, the dividend, we do a full review of our dividend every year and November is the timing, and that's when we typically make the announcement. But when we think about the dividends and we think about what we can do in a particular year, we're not just looking at 1 year ahead, we're looking at several years ahead. We look at our portfolio. We look at other -- the cash flow generation potential of the portfolio. We look at other uses of capital. And so there's a lot of analysis that goes into it. We want to make sure that if we raise our dividend today, we'll be in a position next year to raise it again. So it's a multiyear look forward. We always announce only 1 year of increase, but it is part of our planning to look multiyears into the future. And so the debt we don't see as being a large issue for us to repay quickly. We've talked about having the debt repaid by mid-2027. We think about the quantum of debt. That's a lot, but we also have what we think is very robust cash flow coming in from the portfolio at these metal prices. So we expect and we certainly -- our strategy is to continue raising the dividend every year, but it's a subjective analysis. We don't have a formula. We'll look at past history -- the past history of raising the dividend, and it will be something we look at, but it's not necessarily going to inform what the next year's raise is going to do. So the dividend is very important to us, and we certainly want to continue growing it over the long term.

Thanks for that thorough explanation. And your last question for today is, the royalty sector has become increasingly crowded. How has competition impacted Royal Gold's ability to secure Tier 1 assets on favorable terms?

Well, there's been competition in our sector since the beginning of the sector. We were formed about the same time as Franco-Nevada in the late 1980s, and we've been competing with them ever since. We've seen some new entrants over the past several years. But a lot of the new entrants in our business are at the very small end of the market cap spectrum and we don't see them competing against us for larger transactions. When we look at larger transactions, we generally only have a handful of people competing against us and they're the same people that have been in the market and competing against us for the past 15 years. So it's -- we do see growth in the smaller end of the spectrum, but they're not really able to compete with us for a lot of the stuff that we look at. So I wouldn't say the competition level has changed, but I wouldn't want to leave you with the impression that there's no competition because it is competitive in our sector. And as I said to answer an earlier question, one of the things we try and do is make sure that we have good relationships with counterparties, we're able to differentiate ourselves by being creative and use different ways to position ourselves better for transactions rather than just by looking at scale or price.

Fantastic. Thank you, Alistair. So that wraps up your Q&A session for today. And of course, thank you to everyone who submitted their questions. If you did not get a chance to submit your question, you can reach out to the appropriate account manager here at Renmark. So that concludes our presentation for today. But before we go, I will turn it back to Alistair for final remarks.

Well, thanks, everybody. I really appreciate you dialing in on December 16. The holidays are just around the corner. So I'm glad to see that gold is still top of mind. Glad to see that some good questions were on the dock for me as well. So if I don't speak to you again, if there's anything that I didn't answer properly, please go back to Renmark and they'll be happy to connect us offline. But if not, happy holidays, and I look forward to connecting again in the new year.

Happy holidays, Alistair. Well, thank you for presenting today and taking the time to answer our viewers' questions. And thank you to everyone in New York and surrounding areas for joining us today. Once again, this was Royal Gold trading on the NASDAQ under the ticker symbol, RGLD. 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. Stay tuned for other presentations in your area and see you next time.