Triple Flag Precious Metals Corp. (TFPM) Earnings Call Transcript & Summary

I'm Stuart Macliver from Amvest Capital. Welcome to the Amvest Capital, Inc. Live Webinar with Triple Flag Precious Metals Corp. Triple Flag trades on both the TSX and New York Stock Exchange as TFPM. We hope you'll enjoy today's program. A replay will be available on demand following today's program. Q&A is a very important aspect of webinars, so please make sure you submit your questions here, and we'll try and ask them on your behalf in real time. You can also share this event with others during the program, which is highlighted here. And at the end of the webinar, please share your feedback here. Amvest Capital is a New York-based specialist investment management and corporate finance firm, focused solely on the natural resource sector. This call is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to sell or buy any security and should not be relied upon as a basis for investment decisions. Joining us today from Triple Flag is our CFO, Sheldon Vanderkooy. Following the formal presentation, members of Amvest Capital will ask questions of management. We also look forward to any attendee questions that you send in. And now I will turn it over to Sheldon. Thank you.

Thank you, Stuart. Good afternoon, everyone. My name is Sheldon Vanderkooy. I'm the Chief Financial Officer of Triple Flag Precious Metals. I appreciate you giving me the time to hear a little bit about our story and the value proposition that we bring. I'm going to skip over the cautionary statements, all the normal cautions apply to forward-looking statements. I'm going to start with an overview of Triple Flag. And before I get into the weeds on the slide deck, there's 3 themes that I really want or 3 takeaways I want you to take away from my session today. And one is the strong embedded growth that we have in our profile. So you're going to see a track record of growth that we've accomplished to date, but there's actually more paid for growth in our portfolio that's going to be delivered in the next 5 years, and that's already bought and paid for us. So you're going to see that accrue to the shareholders' benefit in the future based on work that we've done in the past. The second is our strong cash flow forecast focus. We care about cash flow a lot. There's a lot of mining stories and they're based on the hope that something will turn into a deposit, exploration plays, development plays. And people have different business models and that can be successful. We've chosen to focus with a very clear line of sight to cash flow. And as you hear about the streaming and royalty model, you're going to see that it's a very powerful model for generating shareholder returns and cash flow directly to the bottom line that's available for shareholders. The third point I want to leave you with is that this management team, almost unique in our sector, are strong owners of the shares. You can see there on the slide that management and the Board are the founders of the company. I started with the company in 2016, when it was founded. We didn't have any assets at that point. We've built this company from scratch. The management team and the Board as a whole own about 4% of the company. That's over -- it's well over $100 million of value. What that means is when we're looking at managing this business, our focus is, first and foremost, with our shareholder hat on. We're not an embedded management team. We have a long-term view, and we're thinking about what's going to generate value for shareholders in the long run because we are shareholders. We started Triple Flag in 2016. We weren't spun out with an existing portfolio or an existing asset. What we did is we really admired the business model of the streaming and royalty sector that didn't actually own mines, but was able to amass large portfolios with high margins. You can be well diversified and produce cash flow and precisely get exposure to gold and silver over a large number of mines in a very effective manner and it generates good returns over the cycle. And we think with higher -- lower risk exposure and good high exposure to the upside. So we think it's asymmetric exposure. So we set out to build this portfolio. In that time, we've now raised the portfolio where we're the fourth largest streaming and royalty company by GEOs. You can see we're forecasting 105,000 to 115,000 GEOs for 2024. Almost unique in our subsector, we're actually forecasting higher production in '24 than we were -- than we had in '23. We achieved guidance in '23. We've got a strong track record in the market. And then as I alluded to earlier, our 5-year outlook is we see that stepping up to 140,000 ounces. Our cash flow is directly scaled from our production. We get a really good flow-through from production times the gold price equals our cash flow, very low overhead. And so as we scale up from this current level of 105,000 to 115,000 ounces to 140,000 ounces, you're going to see a direct correlation to the cash flows that are available to shareholders. 234 assets. It's a large portfolio. Our cash flow right now comes from just over 30 of those assets, there's always another 200 assets on which we benefit if somebody drills a hole and find some good intercepts, if someone develops a mine, if someone expands an operation, we're going to benefit from all that, but we don't have to contribute any further capital to that. The next box there is the dividend. We actually strongly believe a dividend is an important part of the return to shareholders. We're not just a dividend story. We're also a growth story. But we've paid out a dividend right now at a $0.21 per year level. It's U.S. dollars. When we went public, it was $0.19. We've been public for 2 years now. Every year since we've gone public, we've increased our dividend. That's a really nice track record. We look to continue that in the future. And right now, our dividend consumes a little under 25% of our free cash flow. So it's very sustainable. It's not a risk. And actually, we see the ability to increase that over time. As our portfolio grows, we'll also be able to increase that dividend as well. The last box there is the available liquidity. And that's our liquidity and our capital that we have available to grow. So we have a very low debt burden. We haven't achieved our growth by leveraging the company. At year-end, our net debt was only $40 million. That represents about a quarter's worth of cash flow. Our trailing free cash flow is about $40 million a quarter, so we'll see it being debt free this year. Unless we find some good opportunities to invest in, in which case we'll invest in that, and that will accrue additional value to shareholders. The business model is very important. Some of you will be more or less familiar with the business model. When we first got into this business, we were actually emulating ourselves with the Franco-Nevadas, the Wheaton Precious, the Royal Golds, who had a really strong track record over decades. What the business model does is we have contracts with miners, and we get a percentage of the gold or silver that's produced. The ideal asset for us to have an interest in is, is a copper mine or a zinc mine that has a gold or a silver byproduct and we'll put -- we'll pay money upfront to the mine operator. We won't own the mine, so we don't have the burdens of environmental costs, capital cost inflation, operating cost inflation. We don't have that. What we do is we get to buy the gold and silver at a discount for as long as that mine runs. We also hold royalties on properties, where we get a percentage of the revenue it produces. What that does is it gives top line exposure. So as the gold price goes up, as the copper price goes up, as the silver price goes up, we benefit from that directly. But we're not subject to capital cost inflation or operating cost inflation. This has proven to be very important in the last few years. A lot of the disappointments that operators have had have been on the cost inflation side where they don't get the full benefit of the headline revenue increases because our costs are going up. And as their costs go up, that doesn't really impact us. Our costs are basically fixed by contract. We'll hit some slides later on that show that we've been experiencing 90% margins quite consistently since the inception of the business. That generates free cash flow available to shareholders. Diversification is very important. If you're a mining company, you have 2, 3, 4, 5 assets, you feel you're well diversified. You have a lot of operations. We have 234 assets. Our revenue comes from over 30 assets. It's much easier to get diversified with a royalty and streaming company than it is as an operating company. And what that means is you get the benefits of diversification where one underperforms, one overperforms. On balance, we're looking to overperform, of course. But if something does go wrong, you're well insulated from it because it forms a small part of your portfolio. And you'll see that we've developed a very diversified portfolio in a short period of time. The next one is very important is the optionality, and that's our ability to benefit as the mine operators expand their production, explore new areas, bring new mines into production, that provides optionality for shareholders. If a mine expands its operation, we get to benefit from that. We get to benefit from the additional production. What we don't have to do is we don't want to fund the cost of that expansion. We don't have to fund the cost of exploration. So if we have a royalty on a property and that mine operator is spending $10 million a year on exploration, I love it because I get the benefit of that exploration. If they find something, I'm going to participate. But I don't have to spend shareholders' money on furthering that exploration work. And what that does is it gives you a lot of torque, when new discoveries are brought online, our returns can actually be greater than mine operators because they have to pay for the cost of bringing on that new production. Whereas I get to have a free ride. Consistent high margins. I touched on this already. We'll see a slide later. We've realized 90% margins consistently. For a royalty, you get 100% margin. They send us a check every quarter. It's wonderful. For a stream and royalty, our margins are fixed by contract. On average, it works out to about 90% margins. So if someone sells us an ounce of gold that's worth, say, $2,000, it's a little lower than today's price. I would pay maybe 10% for that. I paid $200, I sell that ounce of gold into the market for $2,000 and I'd realize that 90% margin. Very forgiving business model. It means I produce cash flow, positive cash flow throughout the cycle. And then scalable and low overhead. This is actually really, really interesting and really powerful. We have a company with 16 employees. We have a market cap of CAD 3.5 billion, USD 2.5 billion. As you grow the portfolio, you don't need to add a lot of people in this business model. And that's because we're not operating the mines. We have a technical team. We have geologists. We have mining engineers, we have people that are very experienced in the mining business. But we don't have all the costs of running full mines, full operations. We don't have exposure to a lot of the risks that mines have such as environmental issues and things like that. We don't bear that, the operators do. Because the model is so scalable, if I were to double my portfolio size tomorrow, I think I'd have to add maybe 4 or 5 people max. So it's very scalable as you go up. I talked in generalities, but I want to talk now on the hard facts of what we've accomplished over our track record. What you see here is the operating cash flow, the free cash flow, the net earnings and the profit margins that I alluded to earlier. You can see we started this business in 2016. Our first year of cash flow was in 2017. We had $27 million of cash flow that year. In our most recent, year 2023, $154 million of cash flow. So you see we're running at 4, 5x what we had at that point, that the cash flow is built over the years as we've deployed capital in a very profitable manner. And we'll go into some of the case studies that builds up to this record before, but I'm quite proud of this because we managed to consistently grow over time and we're poised for further growth in the future. The other takeaway I want you to have from this slide is the operating cash flow and the free cash flow charts look almost exactly the same. That's not an accident. That's actually a feature of the model. When you run a mining business, a lot of your operating cash flow gets consumed. If it gets consumed with sustaining capital expenditures, it gets consumed with having to do acquisitions to buy more properties to replace their reserves and resources. With the streaming and royalty model, you get direct drive, where your operating cash flow and your free cash flow are pretty much the same thing. They go down to the bottom line. They're available to shareholders, and they're available to drive the growth of the business. Net earnings and adjusted EBITDA. Very consistent story as well, going consistently upwards. We see that generation of earnings as we recover more cash flow than we originally underwrote. So it's been a very successful story over the 8-year history of the business. The gross profit margin is probably the single most powerful feature of this business model. You can see that consistent 90% margins throughout. It just makes it much more a hearty of a business model. If the gold price were to tick down a bit, we don't get hit that hard. We're going to generate cash at all levels at these margins. As the gold price goes up, we directly drive, we get a 1:1 -- a little better than 1:1 leverage on that, and you'll see that directly falling down to the benefit of the shareholders. We've maintained our discipline throughout the 8 years that Triple Flag has existed. We're shareholders. We're significant shareholders in the company. So we care, and we don't want to have growth for growth's sake. What we care about is earnings on a cash -- on a per share basis, and we care about cash flow on a per share basis. And we've always tried to be disciplined in our growth. The culture really matters. The core team of Triple Flag actually comes out of mining companies. I used to be at First Quantum and Inmet before that. Our founder, Shaun Usmar, CEO, he was the CFO of Barrick. He was at Xstrata throughout their history of growth. So we have deep roots in the mining sector. We try to -- we conduct ourselves with integrity at all times. We try to be good business partners for our financing recipients. We just try to be good actors and have good networks within the industry. Financial discipline, I think I touched on mining backgrounds, I touched on. The last I'll focus on here is sustainability. It really matters. It matters in mining. It matters in the world at large. We care about this stuff. Your social license is key. We do rigorous due diligence when we look at new investment opportunities. If the local community doesn't accept the mine, then that mine is at risk being shut down. And that's just a fact in the mining sector. We've seen this time and time again. What we want to be associated with is really great operators that are a force of good in their local communities. We also try to play our part in supporting our operators with that. We support scholarship programs around RBPlat. We provide funding around the Northparkes local community. We just want people to see that if we're benefiting from the mining in the local community, we want that local community to also see to be benefiting from that. This is a map to showing our assets. Obviously, 234 assets is a lot to wrap your mind around. What we've done is we've really tried to focus on the Tier 1 mining jurisdictions. The portfolio was largely centered in Australia. Canada, United States. We also have significant assets in Latin America. We also have some exposure to South Africa and some other places. But really, we try to center ourselves in those Tier 1, low-risk jurisdictions, where we are in South Africa. It's with a really good project, a really good partner. We knew it well, just a great opportunity. I'd like to talk a bit about Australia. That's our single highest country concentration. Australia is a great place to mine. It's a mining-friendly jurisdiction. They know mining, it's embedded in the DNA of the company -- of the country, I should say. And it's just a very safe place to be. In a world where we have increasing profile of geopolitical stresses, a lot of conflict. I think having a portfolio that's centered in Australia, Canada, United States is a really, really good place to be, and it's really been resonating with investors. Here are some circle graphs explaining our portfolio in different ways. One is the asset diversification that I touched on. You can see, our single highest concentration is Northparkes, at 25%. Northparkes is located in Australia. It's a wonderful cornerstone asset. I'm going to touch on it in more detail later on in the presentation. But if you're going to have a cornerstone asset, the place you want to have it is a place like Australia. After that, nothing exceeds 10%. So these are great assets. They're great cornerstones as well in our portfolio. But we're well diversified. Commodity exposure is important as well. We are -- we see ourselves as a gold and silver investment vehicle. You can see we're at 94% precious metals. We have some other, we have some exposure of some copper, exposure to some nickel, but that's very minor. We'll pick that up if we see that opportunistically, if we see a good opportunity. But really, we always want to be a gold and silver investment vehicle. That's why people invest in us, that's the exposure we want to offer to our investors. And then geography, I think I've already touched on. Here's just a few of the headline assets we have in our portfolio. Northparkes in Australia. Cerro Lindo, our very first asset in Peru, the biggest underground mine in Peru. We have a silver stream there. It's been very successful for us. The Impala Bafokeng mine in South Africa. That's a PGM mine and we streamed the gold off of that. A very successful investment, a wonderful asset. It was recently acquired by Implats. They had a long take over value. I think that really showed that they saw the value in that mine that we saw a few years ago, and that's in good hands with Implats. Fosterville is a very high-profile mine, was with Kirkland Lake. And it's now in the Agnico stable. Wonderful grades at Fosterville, and we actually bought that, just as the swan zone was beginning to show itself. And we got those super high grades for a number of years. That's tailed off more lately, but again, we've had a really good experience with our Fosterville investment. Young-Davidson in Canada, operated by Alamos. Buritica is a mine that we acquired at silver stream on Buritica when it was held by Continental Gold. Since then, it's been taken over by Zijin Mining. It's now in the hands of one of the large international mining companies. And again, a wonderful endowment. Our interest, we're actually going to get silver from a very large land footprint. And we only -- the current reserves are less than 2% of the footprint of that property, and there's geographic potential all over there. So we're actually quite excited about that. I won't go through every one of these pictures. But again, we're quite proud of our portfolio, and it shows the diversification and the strength of the operators that we're associated with. This I think is one of the single most important slides in the presentation. You can see in 2017, we did 33,000 gold equivalent ounces. That was our very first year of operation. All of that was from the Cerro Lindo mine. And you can see that, that grew over the years. In 2023, we did 105,000 ounces. That's actually the fourth highest total in the royalty and streaming sector. We were within our guidance. We're quite proud of that. We've been quite successful in growing our profile over the years. In 2024, we've given guidance that we're going to achieve between 105,000 and 115,000 gold equivalent ounces. But most exciting for me is the next bar, which is the 5-year average is going to be over 140,000 ounces per year. We have many assets in our portfolio, have a ramping profile. And we're going to go into some of the detail of that to come. But that's not acquisitions that we have to make in the future. That doesn't count on us making new investments. That's -- those are assets within the portfolio that are already bought and paid for. Shareholders don't have to contribute any additional funds, are going to deliver that growth. As they deliver that growth, we're going to see direct benefits to the bottom line cash flows of the business, which I'm quite excited about. Here's some detail of how we deliver that growth. The single largest component of the growth is we're going to see increasing gold output at Northparkes, which is our cornerstone asset. Northparkes is a copper mine in Australia. It's now operated by Evolution Mining. They just recently acquired it. And we stream the gold off that mine. The gold grades can vary significantly within the different mining areas there. And they're now getting into some higher gold grade zones. They're really interested in the copper. They're just going there because that's the sequence of the mining plan, but we're really going to benefit. We're going to benefit for a number of years there. And that's going to drive a real increase in our deliveries at Northparkes from that, which we've experienced in recent years. We also have expansions at ATO. They're going to the Phase 2 expansion. They're moving out of the oxides, they're moving into the fresh rock. That's being built as we speak. We're going to benefit for over a 10-year mine life there at ATO. Beta Hunt, again, increasing its capacity. What I want you to take away from this is, this isn't dependent on someone discovering a new ore zone or a new ore body with the drill bit. This isn't speculative. This is built into the mine plans of our operators, and it's being delivered in the very near future. We also have a number of development assets in the pipeline there. Hope Bay, which is owned by Agnico Eagle. It's in Canada's far north. Agnico has been putting out some very positive reports. It looks like this mine is getting bigger. It might go on for longer. We're not sure exactly when they're going to bring that back into production, but we're quite optimistic that it's going to turn into a very nice mine. We have a royalty on Hope Bay. Eskay Creek is in British Columbia, is being developed right now by Skeena. Again, we don't know the exact timing, but this is going to be quite a nice mine. It's in British Columbia, and I think it's been getting increased attention. I won't go through everyone on the list, but you can just see there's a good pipeline here. And the main question, I think, is timing. These are good ore bodies and good locations in good hands, and they're going to be brought into production in the future. And when they do, Triple Flag is going to benefit. On the more long-dated side, you can see the exploration projects as well. Some very exciting drill intercepts out of the Queensway project that New Found Gold has in Newfoundland. Fenn-Gib give as well. We see exciting stuff out of those companies. But those are more longer dated. They're still doing their drilling and scoping out what they have. But when those come to pass, we're going to benefit. Here's another look at the growth pipeline. Again, we try to do is give investors here a window into what we're thinking is going to come into the 2025 to 2030 period in what's going to be a little bit more long dated. This is very important here in this slide. And this is -- it goes to our track record of growth and our ability to generate even more growth in the future through acquisitions. We started the company in 2016 without an existing portfolio. Everything we developed this management team has bought and paid for. We've actually managed to grow our production significantly while expending a modest amount of capital deployment. You can see here, we put on the right-hand side, the capital deployment of our sales versus our peers, and then you map that against the growth that we delivered. We have a very nice sized portfolio in that, if we find a $200 million or $300 million opportunity in the gold space, that actually moves the needle nicely for us. We're not so big that we're X growth. We're still in this growth mode, and I think that really presents a lot more runway to shareholders. It's important that growth be profitable growth, and that should be a -- it is a motherhood statement. But I think a lot of the time, management teams lose sight of this. They grow because they want to grow. And then sometimes, growth can be value destructive. And I think the fact that we're significant shareholders in the company really guards against that sort of thinking at Triple Flag. We've always had a very strong shareholder returns focus. What we've done here is, and I think this as our report card, what we've done is we've compared our initial investment to how much cash will be received out of the investment, and what do the analysts think that our remaining investment in that property is worth. And so the lower bar on each of these operations, it's not our opinion. This is the opinion of the 10 analysts that cover us. So it's actually -- it's third party. And you can see we have a very good track record. Northparkes is a more recent investment. You can see we put $550 million in. And then if you take into account the cash flow we have already received and with the analysts net asset value is, it comes over $665 million. A nice step up. If you look at Cerro Lindo, our first investment, we've actually gotten all the money we put in there back already. And we still have $181 million of value remaining. You can see that's a nice multiple on invested capital. That's a mine that has had a great track record of replacing its reserves and resources over time. It wouldn't surprise me if we look at this mine in 4 or 5 years and we see a similar sort of NAV at that point because they're going to keep drilling and discovering more. That's been the cadence in the mining sector. When you have underground mines, there's a tendency to find expansions to the reserve base as you go along because you get access to new drilling platforms underground. If I look at Buritica as well, a 2019 investment, we've put $100 million in. We've already gotten $109 million back, and we have over $129 million of NAV. So a really nice track record there. Impala Bafokeng, that's the -- used to be RBPlats, it's in South Africa, significant returns there on a 2020 investment. ATO is the Mongolia investment we made back in 2017. We've already more than gotten our money back, and we have lots of mine life there as we get to benefit from the Phase 2 expansion without putting additional capital in. I also spoke earlier to the Fosterville investment that we made. We've gotten all of our capital back from that. We have some remaining mine life there as well. It wouldn't surprise me if we actually do better than that $53 million. There's no way I'd sell this royalty for that $53 million. They're continuing to explore the property, but they're kind of searching for their next high-grade zone. I'm going to turn now to Northparkes, which is really our cornerstone asset and one that I'm quite, quite excited about. It's located in Australia, which is a great place to be. Originally, this was a Rio Tinto asset. When we came into the story, we did a transaction office at CMOC. And CMOC just last year sold to Evolution. Evolution has a great track record of running mines in Australia. I think they're really going to be great operators. But the main thing here is that they've had a great record of reserve replacements. When we did our transaction, we noticed that they had the same number of gold ounces in reserve, when we did [ this deal ] 25 years after their earlier reserves. So over time, they just tended to replace. They have a massive endowment there. It's a very large land package. It's under drilled. There's the capacity to do a lot more. And as I alluded to earlier, this is higher gold zone, higher gold grade zones that are going to increase the gold production nicely. It's a bit of a geology here, but the copper is -- it's a porphyry, but it also has these finger-like structures. And a lot of these are -- that they've been mining were actually exposed. But our geologists thought there was great potential for some of these zones to actually link up underground and create additional zones of value. Also, there's always a chance that there's hidden deposits that didn't help crop at surface. And we've seen some of that come to bear. They've already identified some ore zone since we first came into the story that are -- that look quite promising that actually weren't apparent when we did our initial investment. This is the gold grade story. This is really, really, really important. In 2023, they averaged 0.016 grams per tonne milled. And you can see, as you go to the E31 North, you're going to see like 0.93 there. E31 which is the picture shown, they're mining that as we speak. We're benefiting from that in 2024. The gold grades there are around 3x what that average gold grade was in last year. So as we get the gold grades from E31 and E22, we're going to see a step-up in the gold deliveries that we receive. Very nice story. It doesn't depend on exploration success. It doesn't depend on expanding them expanding their operations. It's really just a matter of their mine sequencing, and this is what they're going to now. Evolution as a new owner of Northparkes. And we thought it was really important that we highlight for investors just what a great track record Evolution has had with other mines, specifically the Cowal mine. The Cowal mine is located fairly approximately to Northparkes. Evolution acquired the Cowal mine in 2015 from Barrick. And since they acquired it, when they acquired it, it looked like it was a tired mine. There was a reason why Barrick was getting rid of it. People thought it was on its last legs. And actually, Evolution's management team managed to look at that asset in a different way and quite frankly, breathe some new life into it, and they realize significant value out of Cowal. We think that is a really good analog for Northparkes going forward, not that -- Northparkes was a healthy mine. It was doing well. We were happy with how it was. But a new management team based in Australia, we think, is the right owners of this mine going forward. I'm also going to touch a little on our sustainability story. Sustainability is important. The mining sector depends on it. If we don't have the support of local communities, a mine can't operate successfully. We're a finance provider. We don't actually operate the mines, we're one step removed. We actually think it's really important that as a Triple Flag, personally, that we're good corporate citizens. We also want to be seen to be in accordance with all the latest thinking, and we want to be doing -- seem to be doing the right thing and to do the right thing. You can see we've gotten -- sorry, Sustainalytics has ranked us very highly. We also got an inaugural rating from MSCI, top levels there. We've looked to share our success with the local communities. We've funded scholarship programs in South Africa. We fund community initiatives in South America and in Australia. We have a strong representation of different -- of diverse backgrounds on our team. So just some of the indicators that we're trying to be good citizens. What I'll leave you with is we're very focused on cash flow. Our portfolio has embedded growth within it that's going to be delivered to shareholders in the near future. We have a great track record that we're quite proud of. But there's actually more growth ahead of us to come. And we're firmly focused on shareholders' interest. We are shareholders first, and we're really focused on shareholder value. With that, I'll turn it over to you again, Stuart.

Thank you, Sheldon, and we will now move on to the Q&A portion of the program. So I guess sticking with the Australian theme, it looks like a lot of the royalties and streams on the assets down there were kind of created by non-Aussie companies. I know typically, Australian miners are slower to get their head around the royalty and streams in general, as a financing option, but Henty was owned by Placer Dome, which Barrick acquired. Northparkes was North and Rio, then the Chinese. You mentioned Beta Hunt owned by Karora potentially being owned by Ramelius. But now with Northparkes being with Evolution and maybe Beta Hung going into an Aussie company, how are you seeing other Australian precious metal companies looking to Triple Flag as a potential financing source?

Yes. It's actually a really good question and a really good observation. If I take a step back, when we started Triple Flag in 2016, I think streaming royalty was still considered a little bit more niche or alternative financing. I mean that was the term was often attached to it. And part of people who say, well, people go to streaming royalty providers only when they didn't have access to equity, they didn't have access to debt. And I think that's really changed now. Part of that is because the equity markets have been slow for a lot of developers for quite some time. But I don't think there's any mining company in the world anymore that would look to finance a new development without considering streaming in the mix. And there's some really good empirical data that a stream actually can form a really good part of the capital structure, along with the right amount of equity and along with the right amount of debt, but not the over-indebted and also not overly diluted shareholders at the equity side. And when you looked in Australia, I think Australia was, in some ways, streaming came last to Australia. But the best advertising when you're in business is to do business. And when we did the Northparkes transaction, that was great because that actually got some attention on Australia and people started -- we actually got some inbounds off of that where people are saying, okay, I see you're doing an Australian deal. We can take a look at this. We've been pretty active in Australia. The other thing is we finance the Henty and Dargues mine in Australia with a group called PYBAR. We worked with their advisers and then tried to put something in which was attractive to the operator there. And we actually had a really good working relationship with the operator and...

They're a mining service business, aren't they?

Yes, they are. They want to try their hand also at developing a mine. And since they've kind of gone back to their origins there, so they've sold out of those 2 positions. But what we got is that formed really good referrals and word of mouth. So we got told both -- we got inbounds from people who said, oh, we were talking to the operator and they thought you were good guys to deal with and like where you did business. We also got that from their professional advisers or financial advisers. And again, that just goes to show, as you start to get active in an area, you start to make inroads in the community, you get good word of mouth. And we're actually, I'm -- because I want to be seen as a good partner to mining companies. We're not -- we're trying to do fair business. We're not trying to take advantage of everyone. I think we have -- we've gotten -- a lot of our deal flow has come through referrals from people we've done deals with in the past.

That's great. And then are seeing many sensible growth opportunities out there and a part of your portfolio?

Yes. There's a lot. And one of the things I've learned in this business is the opportunity set will change from time to time. It's never been quiet since we started this. When we started the business in 2016, people said, well, the big refinancing is the Antaminas, the Antapaccays. That's coming on, and you guys are going to have to go look in Kazakhstan or something like that, which might be a fine country, I've never been there. But the opportunity set has all been passed. And we said, well, we thought we'd find some opportunity and that was nice to able to sit from this vantage point and say, look, we've actually managed to create a really great portfolio at a time that people thought there might not be as much. I got to say, the pipeline right now is more robust than I've ever seen it. That's multiple factors to that. But I mean, it's a healthy metals price environment for some metals. But it's not a healthy nice price environment for others, and that creates opportunities as people maybe aren't generating the cash flow they thought they're going to generate. The equity markets are still a little tight for some people, and so they don't want to overlay dilute their interest, and that leaves them open to considering our financing. There's a really good pipeline right now. But scoping out and looking for the longer term in the future, I'm really excited about the opportunity set over the next 3 to 5 years, in particular, because the electrification story is real. And in order for that story to play out, you need -- the world needs a lot more copper. And the existing mines aren't going to produce that copper. There needs to be more mines produced over time. And we're not a copper company, but where we fit very naturally into that story is to provide funding for a gold stream for people producing some of that new copper capacity that's needed. And I think there's going to be a good opportunity set for our sector because it's a very specialized form of financing. And I think we get to -- we'll have good opportunities to deploy on terms that are attractive to shareholders.

Yes. And this could segue into a question someone submitted. What share of your portfolio is on base metal mines, which you have a precious metal royalty and stream?

Yes. It's around 70% is byproduct. And I don't have the number for base. Some of it is like the -- we have like a stream on RBPlats, which is a PGM mine, where we have a gold stream. But like if you look at Northparkes, that's a copper mine with gold byproduct. Cerro Lindo is a zinc copper with a silver byproduct. And that's a very typical story for our portfolio.

Yes. And then given the strong consistent predictable cash flows, why are the major established royalty firms not use much more leverage but seem to be happy with 0 net debt?

Yes, it's actually a really interesting question, some of the [ financement ]. I think this business model has the predictability of the cash flows is that you could put more leverage on this business model. I think historically, investors have been attracted to very low levels of leverage on the streaming and royalty company side. And that's what we've really tried to stay true to. One of the benefits of that is it preserves your capacity to take advantage of opportunities as they come up. Were you to lever yourself up, you could take yourself out of the game. And the opportunities sometimes come up without predictability. So if something comes available, you want to be able to grab it because we're permanent capital and our shareholders will benefit for a very long time. Like if we didn't have the capacity to take on Northparkes when we did, like that opportunity wouldn't have been available a month later or a year later. I think of like Warren Buffett always says cash is an infinite dated call option on a good deal, right? And so you just get your time to wait. So personally, I like the low leverage model. That said, we do have a debt facility. And we take ourselves up for a couple of hundred million dollars of debt if we had the right opportunity there without diluting shareholders and just use cash flow to pay that down. There are some of our peers now that have put a little bit more debt on their balance sheet, which is a perfectly fair choice. One of them has been quite public saying that they're kind of not going to be actively deploying, they're going to be reducing their debt levels for a while, which again, a fair choice for someone like me, but we're not in that category right now. We're very, very low debt. Absent deploying in very near future, we should be debt-free very shortly.

And then how is the Northparkes transaction financed at your end?

Yes. So we did Northparkes when we were a private company. So we actually had some equity. We raised some equity from our shareholders at that time, and we also borrowed on our revolving credit facility. When we're a private company, we actually had a higher level of debt because, again, this business model comfortably supports a higher level of debt, and that made the right financial sense. When we went public, we actually was 100% treasury offering. Shareholders didn't cash out in any way, shape or form on our IPO, and we use that to largely pay down our debt on IPOs. We emerged on IPO largely debt free.

Got it. And you might not have this stat on hand, but someone asked, what is the return on capital employed of the business?

Yes. That's -- so we always get asked about our discount rates and our hurdle rates. I'm not going to tell people what sort of discount rate we use for new investments. What I will tell people is it will vary depending on our assessment of the risk of the investment. When you look at the portfolio, like we -- there's things that we underwrote at like 20-plus percent returns. And there's things that we wrote that everyone that invests in the royalty streaming space is familiar with [ NAV 5 ] and there's things that we will invest at NAV 5 because we think that that's a real fair assessment of this top-tier asset. In terms -- one of the numbers we do look at is the return on the capital we've invested the cash returns. And you can see like we're tracking around 10% of the owner's equity in terms of free cash flow. And that varies a little bit, and we did a large transaction last year, but that's a number which I'm quite proud of because cash is king, and it's actually quite an attractive rate of return.

Yes. And then same person was asking, what is your view on royalties versus streams?

Yes. I'm fairly agnostic on royalties versus streams. What I like about both is I give top line exposure with -- if you're looking at a new investment and you're coming in alongside other financing to finance a new development, it usually tends to be a stream. Whereas royalties tend to be something that was created when the property was maybe not worth very much and might have grown to be quite valuable. But quite frankly, if it's the right mine and a good -- right mine, right operator in a good jurisdiction, I'm pretty agnostic whether it's royalty or stream.

Got it. And then another question was does the royalty check you get depend on the cost of production from the operator?

In the vast majority of times, it does not and it shouldn't. There's something called the net profits interest, which is the second best flavor of royalty, and that's where you kind of have a bottom line exposure. But what the vast, vast majority of our portfolio is what we call NSR royalties and that's net smelter returns. And so that's top line exposure. Their costs can go up as long as they're producing, we get our percentage. And that's the beauty of the business.

Great. And then when you do a transaction like Maverix, is there much integration at your end, something like that, like in the typical mining M&A transaction?

Yes. So there's a lot less integration when you're doing M&A in the royalty and streaming space than there is when you're doing operating mines. And that's just for the reasons that's, I think, quite intuitive for everyone where you're not merging operations. There is some work that has to be done. It's important to make sure you connect with your -- with the operators in your portfolio. We actually spend a lot of time just making sure we understand what's going on in our portfolio, talking to our operators, keeping good lines of communication. One thing is that's a great business development tool. These are people in the industry. There's some work behind the scenes, but really, it's quite -- you put the 2 organizations together. There's a little bit of a back office accounting work and IT work but it's all something that, from a shareholder's perspective, should be a pretty ordinary course. We've integrated Maverix now. It was a little over a year ago we completed that acquisition as part of the portfolio. We're quite glad we got that under our belt. It's a really nice acquisition for us.

All right. And then you mentioned your 25% dividend payout ratio on free cash flow. How does that 25% compare to your peers in the sector?

That's a great question. I don't know. I didn't benchmark that against others. I'd be speculating.

Sure. No worries. I know the history of Triple Flag with Elliott. And obviously, there was a big announcement with Elliott forming Hyperion. Do you have much interaction with those people at Hyperion?

Yes. No. So we have had a bit of interaction with them. I had lunch with their team a couple of months ago. But really, they're a separate company from us. Elliott is obviously a common owner. But they're doing their business. It's not a streaming and royalty business that they're operating. They're looking to operate mines. And we're kind of running our business. So I think we're friendly acquaintances with a common shareholder.

Right. Someone just asked a question. Which geographies do you typically exclude from doing any deals in?

Yes, yes. There's -- so there are certainly some jurisdictions we wouldn't go into. I mean, I think some of those are the jurisdictions other people would also have, right? Like I don't think I'd be looking at -- I'm a little low to start naming countries. But like, look, sanctioned places. I'm not going to do a deal in Syria. I'm not going to do a deal in Iran. I'm not going to do a deal in North Korea. There's also other mining jurisdictions where you might say, okay, that's not a firm jurisdiction, but then it sounds more of a risk management exercise and a return expectation exercise. You say, okay, how small is it? What are my return expectations? And this is an important one, how quickly do I think I'm going to get my return? Because if you're underwriting like something that you think you have to wait like 10, 15 years to get your money back, well, in some jurisdictions, you want to kind of be pretty confident you've got your money back within like a much shorter time frame, including maybe before the next election. I'm not talking about the United States here.

Yes. Well, again, I think we might move to a close. So again, thanks to Triple Flag Precious Metals Corp. And then once again, please fill the attendee feedback, so please make sure you send it in here, just highlighted on your screen. And then the on-demand replay will be available in about 1.5 hours via the same link that you used to join today's webinar. We hope you'll join us again for future webinars. You can find a full calendar of upcoming webinars as well as a library of replays at amvestcapital.com/webinars. Thank you, and goodbye.

Thank you very much. Bye.