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

Ladies and gentlemen, thank you for standing by. My name is Angela, and I will be your conference operator today. At this time, I would like to welcome everyone to the Triple Flag Precious Metals Second Quarter 2026 Conference Call. I'd like to remind everyone that this call is being recorded. [Operator Instructions] I would now like to turn the call over to Mr. Sheldon Vanderkooy, Chief Executive Officer and Director. Please go ahead.

Thank you, Angela. Thank you for joining us to discuss Triple Flag's Second Quarter 2026 results. With me on the call this morning are Eban Bari, our Chief Financial Officer; and James Dendle, our Chief Operating Officer. This quarter marks a milestone for our company. Triple Flag is entering a second decade, and we are doing so with the strongest organic growth profile in our history and a clear track record of compounding shareholder value. . H1 was the strongest 6 months in the history of our company. Q2 was another strong quarter. We sold nearly 29,000 GEOs. We generated $117 million of adjusted EBITDA and we delivered operating cash flow per share of $0.54, up from $0.38 in Q2 of last year. This represents 42% growth in cash flow per share with our high-margin top line exposure to gold and silver prices translating directly into per share cash flow. June was a milestone month for Triple Flag. In the span of two weeks, we announced three important developments. First, we reached a settlement agreement with Step Gold that fully resolves all our outstanding disputes. We received all obligations and arrears on signing, and we have secured guaranteed fixed gold deliveries over the next 10 years along with long-term exposure to production from the ATO mine. We initially invested $28 million in debt and have already received over $60 million of returns to date in addition to the over 34,000 ounces of gold to be delivered over the next 10 years. Second, we announced and closed the acquisition of a $440 million gold stream on the Ravenswood Gold Mine in Queenland Australia. This is a cornerstone addition to our portfolio that delivers immediate cash flow from a large-scale, long-life, low-cost operation with first deliveries received in July of this year. And third, on the strength of these 2 developments, we increased our 2026 GEO guidance to 110,000 ounces and raised our 2030 outlook to 150,000 to 160,000 GEOs. Q2 was also a fantastic quarter for demonstrating the organic growth driven by mine development and mine life extension. In May, Agnico Eagle announced a positive construction decision at Hope Bay, a milestone that we have pointed to for several quarters and one that firmly anchors our growth beyond 2030 outlook. At North Parks, the E-48 sublevel cave is ramping up and its growth plans continue to advance, including a mill expansion study to 10 million tons per annum. And at Arthur, these ability work and drilling are underway on a world-class greenfield deposit following the pre-feas released earlier this year. Finally, an important part of our capital allocation strategy remains returns to shareholders. We are pleased to announce our fifth consecutive annual increase of our dividend since we listed in 2021 and which now equates to an annualized dividend of $0.24 per share. Additionally, we repurchased $20 million of shares in the open market during the quarter, taking advantage of the opportunity presented by the market. I will now turn it over to Iban to discuss our financial results for Q2 of 2026.

Thank you, Sheldon. As Sheldon highlighted, we had a very strong quarter but portfolio producing 2,700 GEOs, resulting in a first half of nearly 59,000 GEO. This cuts Triple Flag on track to achieve our increased 2026 guide. Across the chart, adjusted EPS were up 63%, adjusted EBITDA was up 54%. Most importantly, cash flow per share was up 42% year-over-year. Operating cash flow per share is the metric most directly compounds to shareholders over time. And our strong margins ensure that higher metal prices flow directly to reach to our shareholders. . This strong cash flow generation continues to support all our capital allocation priorities. We view a progressively growing dividend as a core part of our capital allocation strategy. and 1 that's sustainable across all metal prices. Our dividend has now been increased to $0.24 on an annualized basis, up 4% from prior dividend. I'm proud that we've increased our dividend every year since our IPO. On buybacks, we have said that our shares are being undervalued and we acted on Davis quarter repurchasing $20 million worth of shares in the park. The NCIB remains an active part of our shareholder return strategy, and we will continue to be opportunistic. Lastly, I would like to comment on our balance sheet. Despite deploying $440 million on Raven acquisition, $20 million on share buybacks in our normal first dividend, -- we exited the quarter with over $1.1 billion of available liquidity. We funded reasons with cash on hand and drawing from our revolving credit facility, and given cash-generating power of our business with over $100 million worth of operating cash flow this quarter alone, we expect to repay this facility rapidly during 2027 based on current metal brand. Overall, a strong balance sheet, robust operating cash flow and total liquidity over $1.1 billion gives us the capital to continue deploying dollars into creative opportunities to drive future growth for the benefit of our shareholders. With that, I will turn it over to James to to raises pit, home and our Roth pipeline.

Thank you, Iban. Starting with Ravensworth where we hold a 5.5% Gold Street. The mines log is Queensland's largest gold mine and a top 10 Australian gold mine by ore reserves. There are several attributes, particularly like transactions. First, this is a producing proven operation. Ravenswood has been in continuous position since 1997 and has produced 4 million ounces of gold in discovery. Our stream generates cash media that first iris having commenced in Q3. Second, the asset offers a track the scale of the mine life and costs. The expansion completed in 2023 was growth in annual production to more than 200,000 ounces with the operation ramping towards that level by 328 while sitting in the lower half of the global cost curve. Third, the mineral endowment is extensive and the expiration is compelling. Since 2020, roughly 800,000 ounces of reserve additions outpaced 600,000 ounces of depletion with multiple in-pit and near mine targets adjacent to the Barclays West and sales field non pits. Turning to Hope Bay. We hold a 1% NSR royalty on this Agnico Eagle project in Netherlands. In late May, Agnico Eagle allows positive construction decision. The commenting study contemplates 6,000 tonnes per day underground operation, producing 400,000 to 435,000 asset of the year over an initial 11-year life mine. Post production is expected in 2030. What makes hope particularly exciting is what the initial plan is at. The 11-year mine life incorporates only about half of the declared mineral resource, 55% of the measures are indicated and 48% will be first. Beyond that, Agnico has over 90 regional targets across a signing perspective, 80-kilometer greenstone belt with 700,000 meters drilling planned over the next 5 years. This includes drilling up the Boston deposit, which is not included in the PEA and is located 50 kilometers set of deposits. Bubba has the potential to develop into a multi-decade district scale mining camp and Agnico's decades of proven arctic operating experience. and established logistics routes based on the ideal operates to realize its potential. Finally, I want to discuss some of the assets that will drive further growth in our 2030 outlook. This should provide a clear view to our shareholders. Support will become core paying assets trila. Arthur comment Hobart world-class, long-life assets located in established mining jurisdictions. At Alta, a prefeasibility study was released in February, forming the basis of permanent to commit to 2027. The current 9-year life of mine is the beginning of a much longer life. Anglo Gold is described the study at top of the iceberg, noting that Arthur is a marquee asset that will anchor Anglo Gold's portfolio in the 20s. At Cannes, Triple Flag holds 100% of the stream. The 2026 PEA supports a large-scale copper gold silver operation, reaching production by 2031. -- leveraging existing brownfield infrastructure ancients from previous mining operations. The PEA mine plan represents only 47% of the resource tonnes, providing upside for further rates to be included in an upcoming PFS in mid-2020. As I mentioned, we expect to invade commenced production in 2030 with the ramp up thereafter. And finally, normal parts is Triple Flour's largest asset. Numerous growth projects have recently been approved by Evolution, which will unlock value from world-class copper and gold and diamond that include the E22 Block Cave, the E44 gold open pit with minimum delivery guarantees and most importantly, a potential well expansion of at least 10 million tonnes per annum, the latitude of which are currently being studied over next year. We believe that the mill expansion is the Ofolato mark value from not only the 625 million tonnes of total current resources, but other perspective underexplored targets that could materially add to the production profile with increased scale and processing optionality. Taken together, these 4 assets are diversified across long-life district scale systems in Nevada, British Columbia, Nunavut and Australia. And they are all operated by Hagan parties, representing the foundation for further organic growth beyond 2030. I'll now pass it back to Sheldon.

Thank you, James. Our business model generates shareholder value through reinvesting our robust cash flows into accretive additions to the portfolio. In the past 18 months, the start of 2025, we have deployed over $900 million in a high-quality streams and royalties, Tradabatis, Arcata Nazuca, Arthur, Minera Florida, the Johnson Camping Medison Royalties, the North Park E44 stream and now Ravenswood. . These are all high-quality assets operated by high-quality operating teams. The bulk of this capital has been deployed in Australia and the United States, we have deployed on attractive returns for our shareholders. Triple Flag shareholders will benefit from these portfolio additions for decades to come. I'd like to close by stepping back and looking at what Triple Flag has created over its first decade, a portfolio of 242 streams and royalties, 36 of them producing with peer-leading exposure to Australia. We remain firmly focused on generating shareholder value. We have increased our GEO production every year since our 2016 founding. We have increased our dividend every year since our 2021 IPO. We are active buyers of our own shares, and management and the Board remain founders and substantial owners of the company. Looking forward, the picture is even stronger. We had a strong first half with robust growth in operating cash flow per share and we delivered $550 million of transactions that will benefit our shareholders for decades to come. Our increased guidance calls for 100,000 to 110,000 GEOs this year, growing to 150,000 to 160,000 GEOs in 2030 from a derisked pipeline that James just walked you through. And finally, we have over $1.1 billion of available liquidity to continue pursuing accretive opportunities over the remainder of the year and beyond. That concludes our prepared remarks. Operator, please open the floor to questions.

Your first question comes from the line of Cosmos Chiu with CIBC.

Sheldon, Iban and James, and congrats on a strong first half. Maybe my first question is on North parks. James, you kind of touched on it, but the E44 development study is expected by the end of June 2027, still some time away, but is there any kind of progress or any kind of update at least on that study that you can provide to us?

Yes. Cosmos, I obviously can't get too far ahead of the studies, but I think it's important to highlight there this a number of things happening in North Park. Evolution has recently approved course part on flotation project and debottlenecking of the pricing plan that opened up capacity. And then the two big milestones or developments in conjunction with that the development of the E22 blockade, which is the next kind of frontier of mining at North parts in conjunction with the extension of the mill. And the base expansion of the mill is 10 million tonnes, but it could be higher than that. That's precisely what evolution study at the moment. So that looks ongoing, and it's been a allocated towards those studies. So we look forward to see the results of that next year. And then E44 is relatively straightforward from a study point of view. It's a reasonably well-defined pit that really requires ore mining and then treatment in conjunction with the other ore feeds. The study under that is quite straightforward. So I think the focal point for us will be seeing how big of an expansion is on the mill next year.

Maybe sticking with Australia, Ravenswood, good to see. The first monthly delivery was received in July 2026. So can I take it that I guess Q3 is going to be a normal sort of quarter? Or is there still some kind of ramp-up factors that we should be aware of? And as you mentioned during the acquisition presentation, a normal quarter will be 2,300 to 3,330 GEOs per quarter. So again, is it Q3 going to be a normal quarter? Or is there any factors that we should still consider?

Yes. Look, it will be ramp up because there are capital projects going on to open up the calls floats. And then that scales up towards the 200,000 plus run rate up 2028. During that period, it will be relatively normal, but there's a ramping profile of that asset.

Okay. Maybe switching gears a little bit. Serra Lindo, it's been a great asset for Triple Flag. But now there's been a step down that happened in April Zero Linda is one of your larger silver streams. I guess my question is, with that sort of coming down and and a bit of a decrease in silver at least contribution wise, are you still happy, Sheldon, with your gold, silver, copper and other mix as it stands today? .

Yes. Thanks, Cosmos. Bottom line is we are happy. Like we're a precious miles company, and we're always looking for high-quality gold, high-quality silver exposure, and we think we have that in space. We long anticipated the seralin step down. And as you pointed out, hitting the step down is a sign of success. And remains a very substantial asset for Triple flag going forward. It's still going to be one of our largest contributors. There are no further step ones after this. Carrolindois even looking at putting new capital into that project. So that's pretty benefit from that. . And in terms of silver exposure longer term, I mean, we have Cerro Lindo, we have Radio. We actually get quite a bit of silver out of North Park, fantastic. We have things like Arcata and Aziza, which are silver we've highlighted Kimes as well to a silver exposure as well. So there's still a lot of silver in the portfolio.

Great. And then maybe one last question likely for Iban, but going through your income statement, I noticed that taxes were fairly low, slightly over $1 million. G&A was also very fairly low, $3.8 million, whereas first half totaled closer to $10 million, so a decrease from Q1. So I guess even what's a sustainable rate here? Is this representative of what we can expect for the remainder of the year.

Well, thanks for the question. Our G&A largely was impacted by mark-to-market on our share price has a pretty significant impact on the DSUs, RSUs, and so forth. Our run rate is essentially based on what we had guided to the market, which is about 30, 32, so on a quarterly basis, we expect assuming often equal, we expect 20 million to SG&A for the quarter. With respect to tax being lower, it's a combination of of tax benefits due to the share price decreases, but you've got a benefit as well as mark-to-market on some of our prepaid. So these are recoveries essentially, but cash taxes remain pretty consistent.

Yes. It's kind of funny. You be talking about the benefits because the share price decreased. So -- for you, I hope that you pay more taxes because that means the share price is going up. But again, those are all the questions I have. And congrats again on a very strong first half. .

Your next question comes from the line of Josh Wolfson with RBC Capital Markets.

Just sort of two quick ones. First question is on Prisca. It sounds like the operator there is moving forward towards construction commencement -- how should we think about the stream option, I guess, also when could we expect that to be exercised, if it's exercised? And what would be the time lines for funding?

Josh, I can answer that. It's worth just remembering that when we entered into the Street transaction, the development plan was the deeper part of the ore body, there's enough and the deeper zone is the lion's share of the economics from the over 95% of value. So the stream is predicated on getting the deeper zones production, the company has subsequently reorientated the development of the assets doing in a more of a staged manner, which actually is a very appropriate way of developing an asset for development come. So all to say, we still have the the right but not obligation to fund stream. The asset looks great, Glencore has come in with a very concise financing to get from on the ground. But our focus is still on the deep. So when the company moves towards an investment decision on the Deeps, which we expect to be next year, we'll look to our evaluation and presumably invest stream at that time. But all the sites we have at the moment are great. The economics of our stream are very robust. And I think having a supportive capital provider alongside of Glencore is it good also the project and the price ample capital projects up and running and fully developed deep sales

Okay. And then Teresa brought us. I know it's a pretty small contributor today. The release talks about Phase 2. Is there any goalposts that can be provided in terms of what production could look like when it's expanded.

Yes. There's been Uber's expansion options, Josh. The Phase 2 essentially goes, but there's an opportunity to triple it from current levels. It is not fully determined as to how large production rate goes. There are options to think beyond the ring of current levels. Our investment case is predicated on the mine running at the current nameplate of about 20,000 tonnes. So anything beyond that is a great upside for us.

The next question comes from the line of Fahad Tariq with Jefferies. .

I wanted to come back to Ravenswood. In the second half of the year, can you just remind us if that's factored into the 2026 guidance? And I think I may have missed this, but is it fair to assume the low end of the quarterly deliveries at 2,300 ounces per quarter in the third and fourth quarter of this year.

It's Sheldon. I'll answer that. So we've updated our guidance to say we're looking at the top half of our updated guidance. The top half of that $100 million to $110 million, and that does include the Raymond Wood stream as well. .

Okay. Got it. And then -- and maybe just swing gears, 1 for Eban. On the balance sheet, I noticed the cash balance obviously came down just because of the transaction and the buybacks. But can you just remind us like minimum cash balance that the company typically targets going forward? .

Yes, thanks. We generally, we're a business that we don't really need a whole lot of it to maintain the business, we generally try and to limit how much cash went on the balance sheet, just given the facility that's drawn. So for us, about $10 million, $15 million is probably about a number. .