Derick Ma

Derick Ma asked if there's a lack of incentive for the operator to prioritize silver at Pueblo Viejo due to the stream structure and what Royal Gold can do to accelerate silver production. He also questioned why Royal Gold doesn't provide preliminary royalty revenue expectations and sought clarification on Q1 GEO sales guidance.

Answer

Bill Heissenbuttel, President and CEO, clarified that the silver stream structure, including a 30% cash price and Newmont's 40% interest, means Royal Gold and Barrick each have about a 30% economic interest, and he doesn't perceive a lack of incentive. Paul Libner, SVP and CFO, explained that preliminary royalty revenue expectations are difficult due to information rights, with data often received 15-45 days post-quarter. He suggested using the historical 70% stream / 30% royalty split as a guide. Paul Libner confirmed that Q1 guidance refers to total GEO sales.

Derick Ma questioned whether there's a lack of incentive for the operator at Pueblo Viejo to prioritize silver due to the stream's structure and deferred ounces, and what Royal Gold can do to accelerate silver production. He also asked why Royal Gold doesn't provide preliminary royalty revenue expectations, unlike some peers, and sought clarification on Q1 guidance referring to metal sales versus revenue.

Answer

Bill Heissenbuttel, President and CEO, explained that due to the stream's structure (75% silver, 30% cash price, 60% project coverage), the economics are split, with Newmont having a 40% interest and Royal Gold/Barrick around 30%, suggesting no lack of incentive, especially given the DR government's interest. Paul Libner, SVP and CFO, clarified that information rights for many royalties only provide data 15-45 days after month/quarter-end, making preliminary estimates difficult, suggesting the historical 70% stream / 30% royalty split as a guide. Paul Libner confirmed that the Q1 guidance refers to metal sales (GEOs), not revenue.

Derick Ma asked an accounting question regarding the Sandstorm assets, specifically whether there would be a "bump" in their cost base, leading to higher depreciation compared to when they were standalone Sandstorm assets.

Answer

Paul Libner (SVP and CFO, Royal Gold) stated that the accounting for the purchase price allocation, which would impact depreciation, is still being finalized and more information would be provided in the next update call.

Derick Ma of TD Cowen asked about the Khoemacau expansion, specifically requesting details on the correlation between copper and silver grades in the new deposits and how that might impact Royal Gold's stream.

Answer

SVP of Operations Martin Raffield responded that the correlation between copper and silver grades in the Khoemacau expansion area is expected to be similar to the correlation observed in the currently operating Zone 5 mine.

Derick Ma of TD Cowen questioned Royal Gold's capital allocation strategy, asking if there is sufficient deal flow to deploy its significant cash flow and liquidity, and at what point the company might consider itself overcapitalized. He also asked for clarification on the Cactus royalty's area of interest.

Answer

President and CEO William Heissenbuttel responded that while current deal flow is typically in the $100M-$300M range, the market can change quickly, and the company prefers to maintain flexibility to act on larger opportunities. He stated that deploying capital into new, value-accretive assets is the primary goal, and discussions about being overcapitalized would only occur if quality opportunities became scarce. SVP of Operations Martin Raffield confirmed the Cactus royalty area of interest includes the Northwest extension.

Derick Ma asked about the disposal of the El Machido stream, inquiring how the situation arose, how it resulted in a 'win-win' for both parties, and how Triple Flag evaluates such situations against retaining optionality within its portfolio.

Answer

Sheldon Vanderkooy, CEO, explained that El Machido, a small mine in Honduras acquired through the Mavericks portfolio, was undercapitalized and struggled to service the stream. He described the resolution as a 'win-win-win' where Triple Flag facilitated outside capital for the operator, allowing them to move forward without the stream, while securing good value for Triple Flag. He noted that while generally not looking to sell streams, such decisions are made on an asset-by-asset basis.

Derick Ma from TD Cowen asked about the El Machido stream disposal, seeking insight into how the situation arose and how Triple Flag evaluates such disposals against retaining optionality within its portfolio. He followed up by asking how these types of situations are generally assessed across the company's portfolio.

Answer

Sheldon Vanderkooi, CEO, explained that El Machido, a small, undercapitalized mine in Honduras acquired as part of the Mavericks portfolio, struggled to service its stream. Triple Flag worked with the private operator to bring in outside capital, structuring a 'win-win-win' sale of the stream that provided good value for Triple Flag and allowed the operator to move forward. He noted that while generally not looking to sell streams, such decisions are made on an asset-by-asset basis.

Derick Ma of TD Securities inquired about the Prieska project, asking if Triple Flag's internal assessment has changed following the updated feasibility study and what conditions are required to exercise its option.

Answer

James Dendle, Chief Operating Officer, responded that the company's position has not changed. He confirmed Triple Flag is reviewing the new feasibility study and reiterated the two key conditions for moving forward: the study must be completed to their satisfaction, and the operating company must be fully funded through to free cash flow. An update is expected later in the year or early in the next.

Derick Ma questioned if the Major Tom discovery at Northparkes could displace higher-grade gold tonnage from the stream and asked for details on the $35 million precious metal stream for a brownfield restart in Peru mentioned in the company's MD&A.

Answer

CEO Sheldon Vanderkooy stated that the Major Tom discovery at Northparkes is viewed as entirely positive upside for Triple Flag with no risk of displacing advantageous tonnage. Regarding the Peru stream, he confirmed it was a bilateral deal for a brownfield restart that fits their core strategy and expects to disclose more details upon its closing.

Derick Ma asked for clarification on two topics: whether the Major Tom discovery at Northparkes could negatively displace higher-grade tonnage under Triple Flag's stream, and for details on the $35 million precious metal stream for a brownfield restart in Peru mentioned in the company's MD&A.

Answer

CEO Sheldon Vanderkooy confirmed that the Major Tom discovery at Northparkes is viewed as entirely positive upside with no risk of displacing advantageous tonnage for Triple Flag. Regarding the Peru stream, he stated it was a bilateral deal for a brownfield restart that fits squarely within the company's strategy, and that more details would be shared upon the transaction's closing.

Derick Ma asked about the leverage of royalties and streams on primary gold mines versus byproduct gold streams at current gold prices and how this influences portfolio decisions. He also sought Franco-Nevada's view on Argentina as a mining jurisdiction and investment destination, and the projected GEOs for Taca Taca and San Jorge in the 2029 outlook.

Answer

Paul Brink, President and CEO, Franco-Nevada Corporation, confirmed that primary gold deposits offer significant leverage at high gold prices, as operators can lower cut-off grades and move more material into mine plans, leading to substantial organic growth. He noted similar benefits for copper assets. Brink expressed encouragement regarding Argentina's RIGI program, which addresses currency convertibility and international arbitration, making it an attractive destination for investment, though Franco-Nevada already owns interests in Taca Taca and San Jorge. Sandip Rana, CFO, Franco-Nevada Corporation, stated that Taca Taca and San Jorge are conservatively estimated to contribute about 5,000 combined GEOs to the 2029 outlook, as they still need to be built.

Derick Ma asked about the leverage of primary gold mine royalties/streams versus byproduct gold streams at current gold prices and how this influences portfolio decisions. He also sought Franco-Nevada's view on Argentina as a mining jurisdiction post-midterm elections and the projected GEOs from Taca Taca and San Jorge in the 2029 outlook.

Answer

Paul Brink, President and CEO, confirmed greater leverage in primary gold deposits at high gold prices due to lower cut-off grades and increased reserves, noting similar benefits for copper assets. He expressed encouragement for Argentina's RIGI program, which addresses currency convertibility and international arbitration, making it an attractive destination for future investment, though Franco-Nevada already owns interests in Taca Taca and San Jorge. Sandip Rana, Chief Financial Officer, stated that Taca Taca and San Jorge combined are conservatively estimated to contribute about 5,000 GEOs to the 2029 outlook.

Derick Ma from TD Cowen asked about Wheaton's philosophy on royalty burden for its partners, both at an asset and corporate level, and inquired about the circumstances under which the company would consider amending existing stream agreements.

Answer

SVP of Corporate Development Haytham Hodaly and President & CEO Randy Smallwood explained that Wheaton aims to keep its economic interest below 20-25% to ensure partner assets remain profitable, focusing on first and second quartile assets. They highlighted that contracts are thoughtfully structured to align with mine life, often with stream percentages decreasing as grades fall. Amendments are typically partner-initiated, often to support expansions, and Wheaton ensures it receives commensurate value in return for any changes, reflecting their active portfolio management strategy.

Derick Ma of TD Cowen inquired about Triple Flag's current position on its Prieska project option, asking if the company's internal assessment has changed following the release of an updated feasibility study.

Answer

Chief Operating Officer James Dendle responded that the company's perspective has not changed. He confirmed Triple Flag is actively reviewing the new feasibility study and will approach it as a fresh investment decision. The two primary conditions for exercising the option remain: the study must meet their standards for executability, and the project must be fully funded through to free cash flow. An update is expected later in the year or early in the next.

Derick Ma asked for clarification on capital allocation priorities after reaching the $300 million debt target, the types of deal opportunities Sandstorm is considering, and the potential timing for capital calls on the MARA project option.

Answer

Executive Nolan Watson stated that share buybacks are the number one priority once the debt target is met, as long as the stock trades below NAV. He clarified that the company is not looking at material acquisitions in 2025. Regarding the MARA project, Watson explained that payments would be made gradually over the multi-year construction period, funded by operating cash flow, with the first potential payments not expected until 2027.

Derick Ma asked for clarification on capital allocation priorities once the $300 million debt threshold is reached, specifically the balance between share buybacks, debt reduction, and acquisitions. He also inquired about the potential size and type of M&A deals Sandstorm might consider, and the timing implications for the MARA project option if Glencore proceeds with its RIGI application.

Answer

Executive Nolan Watson emphasized that share buybacks are the absolute top priority once the debt target is met, continuing until the share price reflects NAV, after which debt reduction would resume. He stated that no material M&A is being considered for 2025. For the MARA project, Watson clarified that Sandstorm's option is triggered by a formal construction decision, and payments would be made gradually over the construction period, funded by operating cash flow, rather than as a large upfront sum.

Asked for production expectations for the Aurizona mine in H2, the timing of initial royalty payments from the Vale Southeastern System, and the status of the remaining $5 million payment from the Evolve royalty sale.

Answer

The company expects Aurizona production to get closer to normal in the second half of the year but won't provide specific guidance. For the Vale royalty, payments are semi-annual, and the timing will follow that schedule once it kicks in. Regarding the Evolve sale, the company is trying to close the final $5 million piece but noted there's a chance it may not close, declining to provide further details.

Derick Ma asked for production expectations from the Aurizona mine for the second half of the year, the timing for receiving royalty payments from the Vale Southeastern System, and details on the remaining proceeds from the Evolve royalty sale.

Answer

Executive Nolan Watson stated that Aurizona production is expected to get closer to normal in H2 but declined to give specific guidance. Regarding the Vale royalty, Executive David Awram and Nolan Watson clarified that payments are semi-annual and will be caught up when they begin, potentially in 2026. On the Evolve sale, Nolan Watson confirmed the final $5 million payment may not close and did not provide further details.

Derick Ma from TD Cowen questioned the production expectations for the Aurizona mine in the second half of the year, the timing for receiving payments on the Vale Southeastern System royalty, and the status of the remaining proceeds from the Evolve royalty sale.

Answer

Executive Nolan Watson responded that while specific guidance isn't provided, Aurizona production is expected to move closer to normal levels in H2 2024. Regarding the Vale royalty, Executive David Awram and Nolan Watson clarified payments are semi-annual and will be caught up on the next payment cycle. On the Evolve sale, Nolan Watson confirmed the final $5 million portion may not close and declined to provide further details.