Franco-Nevada - Q1 2024
May 2, 2024
Transcript
Operator (participant)
Good morning, and welcome to Franco-Nevada Corporation's first quarter 2024 results conference call and webcast. This call is being recorded on May 2, 2024. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a Q&A session, where you may ask a question through the phone line or webcast. If you're joining by webcast, you may submit a written question for the Q&A session at any time during this call by typing your question in the Q&A section of the webcast platform. If you require immediate assistance during this call, please press star zero at any time for the operator. I will now like to turn the conference over to your host, Candida Hayden, Senior Analyst, Investor Relations. Please go ahead.
Candida Hayden (Senior Analyst Investor Relations)
Thank you, Julie. Good morning, everyone. Thank you for joining us today to discuss Franco-Nevada's first quarter 2024 results. Accompanying this call is a presentation which is available on our website at franco-nevada.com, where you will also find our full financial results. The presentation is also available to view on the webcast. During our call this morning, Paul Brink, President and CEO of Franco-Nevada, will provide introductory remarks, followed by Sandip Rana, Chief Financial Officer, who will provide a brief review of our results. This will be followed by a Q&A period. Our full executive team is available to answer any questions. Participants may submit questions by the telephone or via the webcast. We would like to remind participants that some of today's commentary may contain forward-looking information, and we refer you to our detailed cautionary note on slide two of this presentation.
I will now turn over the call to Paul Brink, President and CEO of Franco-Nevada.
Paul Brink (President and CEO)
Thank you, Candida, and good morning. Yesterday, we held our AGM here in Toronto, and we're pleased to have Hugo Dryland join our board. Hugo has for many years led Rothschild & Co's Metals & Mining Advisory business, and among other areas, has extensive experience in project finance and international arbitration. Hugo fills the seat left empty after Randall Oliphant sadly passed away last year. Our diversified portfolio performed well, and production for the quarter met our expectations. Antapaccay GEO sales were above, and Candelaria GEO sales slightly below our expectations. Elevated gold prices boosted our revenue and translated directly into some of our highest ever margins. Adjusted EBITDA margin was 84.2%, and adjusted net income margin was 56.9%. Royalties on new mines continue to contribute to our growth. During the quarter, Gold Fields poured the first gold at Salares Norte and Hochschild at Mara Rosa.
Equinox and G Mining are on track for first production at Greenstone and Tocantinzinho, respectively, in the coming months. Alamos' planned acquisition of Argonaut will help realize the full potential of the Magino and the Island deposits, including a potential expansion of the Magino mill facility. Marathon reported good progress on the construction of Valentine Gold, and production there is expected to start in the first half of 2025. While Cobre Panama remains i. preservation and safe management, we're hopeful that the issues can be resolved. Panamanian election takes place this Sunday, May 5. On the business development front, we closed the previously announced acquisition of natural gas royalties in the Haynesville and added a number of smaller interests.
An incremental royalty on Pascua-Lama, a royalty on Skeena Resources property in the Golden Triangle, BC, an increase to the Condestable gold stream in Peru, and a silver royalty on Perpetua, Perpetua's Stibnite Gold property in Idaho. Our organic growth typically accelerates on the back of high gold prices. A highlight for the quarter is the success that Agnico Eagle continues to have, expanding the Detour Lake gold body and also the East Gouldie body at Canadian Malartic. Wrap up, we have no debt, $2.3 billion in available capital and an active deal pipeline. I'll hand the call over to Sandip.
Sandip Rana (CFO)
Thank you, Paul. Good morning, everyone. As mentioned by Paul, our portfolio of assets continued to perform well, and we're in line with expectations for first quarter 2024. With respect to performance in the quarter, on slide four, we highlight the gold equivalent ounces sold for the last five quarters. As you are aware, Cobre Panama has not contributed any GEOs or revenue for 2024, as it is under preservation and safe management. On the slide, we've highlighted Cobre Panama separately for prior periods. Total GEO sold for 122,897 for Q1 2024. This compares to 145,331 for the same period in 2023. Of this, precious metal GEOs were 93,018, compared to 111,238 the prior year.
However, if Cobre Panama is excluded from prior year comparatives, precious metals GEOs were actually higher year-over-year at 93,018 versus 82,575 GEOs. This increase was due to strong contributions from Antapaccay, Guadalupe, and Subika, all of which had strong production in first quarter of 2024. This increase was partially offset by lower GEOs sold for Sudbury due to lower production and Stillwater, which was due to the impact of converting weaker platinum palladium revenue to GEOs. In addition, we were delivered approximately 3,000 GEOs for Condestable, which remain in inventory at the end of the quarter. These ounces were not sold during first quarter and have subsequently been sold post-quarter end. Precious metal GEOs represented approximately 76% of total GEOs for the quarter.
For diversified GEOs, our Vale royalty contributed an increase in GEOs for the quarter compared to prior year, due to a higher than anticipated royalty payment, reflecting higher iron ore sales during the second half of 2023. As you know, each quarter we make an estimate of what the royalty will be, with the actual amount being announced by Vale in late March and September of each year. As a result, you will see adjustments to revenue twice a year, in the first and third quarter of each year. Energy GEOs were lower at 21,082 for Q1, compared to 25,952 a year ago. The decrease in GEOs is a combination of lower revenue due to weaker natural gas prices, but also the impact of converting energy revenue to GEOs using higher gold prices.
Q1 2024 saw continued movement in average commodity prices. As you see on slide five, gold and silver prices were higher for the quarter when compared to prior year. However, platinum, and in particular, palladium prices were significantly lower year-over-year, which did negatively impact the conversion of PGM revenue to GEOs. Oil prices were relatively flat, with natural gas being sharply lower. Slide six highlights our total revenue and adjusted EBITDA amounts for the last five quarters. As you can see from the bar charts, revenue and adjusted EBITDA are lower in Q1 2024 compared to prior quarters. The company recorded $256.8 million in revenue in first quarter, and $216.1 million adjusted EBITDA. A margin of 84.2% was achieved for the quarter.
The lower revenue and adjusted EBITDA are due to less GEOs sold during the quarter compared to prior year. The impact on both revenue and adjusted EBITDA of the lower GEOs was partially offset by higher gold and silver prices. In fact, while GEOs sold are lower by 15% year-over-year, total revenue is lower by 7%. As you turn to slide seven, you'll see the key financial results for the company. As mentioned, total GEOs were 122,897, generating $256.8 million in revenue and $216.1 million in adjusted EBITDA. On the cost side, we did have a decrease in cost of sales compared to prior year, as we did not incur the ongoing fixed cost for ounces delivered by Cobre Panama.
Also, cost of sales is dependent on which assets deliver stream ounces, as not all fixed payments per stream are equal. Depletion decreased to $58.2 million versus $61 million a year ago. The decrease in depletion was a combination of no depletion being recorded for Cobre Panama, being partially offset by higher depletion for Antapaccay and the new Haynesville natural gas acquisition. Adjusted net income was $146 million, compared to $152.2 million in Q1 2023, and adjusted EPS was $0.76 per share for the quarter, lower by 3.8% versus prior year. Slide eight highlights the continued diversification of the portfolio. From the charts, you can see that 76% of our first quarter 2024 revenue was generated by precious metals, with revenue being sourced 83% from the Americas.
Slide nine illustrates the strength of our business model to generate high margins. For Q1 2024, the cash cost per GEO, which is essentially cost of sales divided by gold equivalent ounces sold, was $273 per GEO. This compares to $263 per GEO in Q1 2023. Margin was approximately $1,800 per ounce in first quarter. The average gold price was higher by $183 per ounce for Q1 2024, compared to Q1 2023. At the same time, Franco-Nevada's margin was higher by $173 per ounce, or 95% of the gold price increase in the same period. In a rising commodity price environment, we expect to benefit fully, as the cost per GEO sold should not increase significantly.
The other cost component for the company, besides cost of sales, is our corporate administration costs. The royalty streaming business model is a scalable model. Our corporate admin costs have increased at a much lower rate than our revenue. Revenue has increased ninefold from Q1 2008, while corporate admin costs has increased by 2.5 times over the same period. Management believes we can continue to add to our portfolio and grow our business without adding significant overhead to the company. Earlier this year, we had guided to $10 million-$15 million in estimated costs for the Cobre Panama arbitration. For first quarter, we incurred $1.4 million in costs. We expect costs to be weighted more towards the second half of the year. And lastly, slide 11 summarizes the financial resources available to the company.
When including our credit facility of $1 billion, total available capital as at March 31, 2024, is $2.3 billion. Now I'll pass it over to Julie, and we're happy to answer any questions.
Operator (participant)
Of course. During this Q&A session, if you'd like to ask a question, simply press star, then the number one on your telephone keypad. If you'd like to withdraw your question, please press star two. If you're joining us on the webcast, please submit your question through the Q&A section of the webcast platform. One moment please for your first question.
Your first question comes from Brian MacArthur from Raymond James. Please go ahead.
Heiko Ihle (Managing Director of Equity Research)
Good morning, and thank you for taking my question. You've left guidance of GEOs unchanged, but there's a lot of different assumptions, which you sort of talked about, commodity prices moving in the first quarter. I mean, now your much higher gold price assumptions going forward, much lower gas prices. My question really is, is there anything on a volume basis that significantly changed that you're seeing in your portfolio since the beginning of the year? And maybe it's oil and gas, because gas prices have gone down. And secondly, it looked like Antapaccay versus what you give on a gold GEO basis, had a pretty good first quarter. Is that sustainable or does it fall off through the year? It kind of goes into the overall volume question.
Sandip Rana (CFO)
Thanks for the question, Brian. On a production basis, as we said, the assets, both mining and energy, from a production volume basis, are in line with expectations. So, right now, from a production standpoint, they're in line. Obviously, commodity prices are moving around, but we are within our guidance range at this point. With respect to Antapaccay, I would expect, or we do expect Antapaccay to fall off, towards, you know, for the rest of the year and still, be within that guidance range we had provided, as part of our year-end results.
Heiko Ihle (Managing Director of Equity Research)
Thank you. My second question just relates to Condestable and the increase from up to 37.5 from 25%. I assume everything else, the points where it kicks in are all still the same, so it'll be kind of middle 20s, 30s, or if you can guide when that 30. You see that 25% to 37.5% kicking in, please.
Ewan Gray (CFO)
Hi, Brian, it's Ewan speaking. Good morning. Yes, the change really just relates to the final race, so we wouldn't expect the rest to change meaningfully in the near to medium term.
Heiko Ihle (Managing Director of Equity Research)
Is mid-2030 sort of where you see that now kicking up? I just don't have the date on how that's developed since the original deal.
Sandip Rana (CFO)
Yeah, I don't have that immediately handy. You know, we are fixed deliveries. I think it was for the first five years.
Heiko Ihle (Managing Director of Equity Research)
Yeah.
Sandip Rana (CFO)
Those come off, and it goes to a variable percentage, in terms of the exact, you know, estimate as to when those, the second variable percentage kicks in. You know, I don't have that offhand, unfortunately. We can chat offline.
Heiko Ihle (Managing Director of Equity Research)
Great, thank you. Maybe my final question, just Sandip, on the accounting for the taxes on a global basis, can you just review how you're gonna do that, given when it, you know, technically gets enacted?
Sandip Rana (CFO)
So, right now, it's not enacted, neither Barbados nor Canada.
Heiko Ihle (Managing Director of Equity Research)
Yeah.
Sandip Rana (CFO)
For the foreseeable future, our effective tax rate will be 15%, roughly. When it is enacted, assuming it's retroactive, there will be an adjustment in that quarter, which we did highlight. It'll be an adjustment to taxes of about $47 million. As guided at the end of the year, we expect our effective tax rate to be about 19% going forward.
Heiko Ihle (Managing Director of Equity Research)
Thank you very much. I appreciate it.
Operator (participant)
Your next question comes from Heiko Ihle, from H.C. Wainwright. Please go ahead.
Heiko Ihle (Managing Director of Equity Research)
Hey there. Thanks for taking my questions.
Sandip Rana (CFO)
Hi, Heiko.
Heiko Ihle (Managing Director of Equity Research)
You've made quite a meaningful number of acquisitions here in the last few months. In your intro to the earnings release, you also state that you still have an active deal pipeline. Unsurprising, but still good to hear. Conceptually, are you seeing pricing improvements from sellers of streams that are more willing to negotiate right now? And if so, are you seeing this phenomenon more in mining or more in energy?
Paul Brink (President and CEO)
Heiko, it's Paul. I'd say the, in this environment, probably the main impact is with, with gold prices moving up, players that have got precious metal byproducts, it's a very attractive environment for them to raise capital through the sale of a precious metal stream.
Heiko Ihle (Managing Director of Equity Research)
Mm-hmm.
Paul Brink (President and CEO)
So I'd say that's the predominant trend right now, and that's making for an active deal pipeline.
Heiko Ihle (Managing Director of Equity Research)
Fair enough. Building on that last question, I mean, with gold prices where they are, inflation levels where they are, has there been a bit of a shift with sellers looking for fixed fees versus a percentage of spot pricing as your cash payment? Or is there? Is it just the same and they more or less take whatever they can get?
Ewan Gray (CFO)
Hi, Heiko, it's Ewan. Good morning.
Heiko Ihle (Managing Director of Equity Research)
Morning.
Ewan Gray (CFO)
I would say generally, the market has shifted towards the percentage, in terms of the fee we pay to the seller. Fixed is far less common these days, and I haven't seen any trend there recently other than to kind of maintain that.
Heiko Ihle (Managing Director of Equity Research)
Fair enough. That's helpful. Thank you guys for your time.
Operator (participant)
Your next question comes from Cosmos Chiu from CIBC. Please go ahead.
Cosmos Chiu (Analyst)
Thanks, Paul, Sandip and team. Maybe my first question is on Panama. As you know, the election's coming up this weekend on May 5th. Is this something that you're watching closely? Any variables that you might be watching for? And, you know, do you see a potential outcome that could impact Franco-Nevada in the near term, or is it really a longer-term sort of event too?
Paul Brink (President and CEO)
Cosmos, yes, we're watching it closely. In the lead up to the election, and no surprise, you know, given what happened in the country and the populist sentiment against mining and against the mine. I'd say all the candidates have been quite circumspect in terms of commenting on, you know, what their approach might be. But so we're hopeful that with a new government in place, that there can be a new dialogue, and I'm sure that First Quantum will be engaging with whoever that is, to see if there is a route to find a way to reopen the mine.
Cosmos Chiu (Analyst)
Of course. Thank you. And, going to your financial statements here, I noticed that your finance income, $16 million, has increased quite a bit year-over-year and, and quarter-over-quarter as well. I just wanna make sure, is that just due to the G Mining term loan? And if that's the case, what else, what else is in there?
Paul Brink (President and CEO)
So, Cosmos, the interest income is in two places on the financials this quarter.
Cosmos Chiu (Analyst)
Yes.
Sandip Rana (CFO)
Up in revenue, you'll see interest income that relates to actual interest on the G Mining loan, as well as the Skeena convertible note that we did at the end of last year.
Cosmos Chiu (Analyst)
Mm-hmm.
Sandip Rana (CFO)
So any loans we've made up, that interest income is up in revenue now. And it was about $1.2 million for the quarter. The finance income you're referring to, the $16 million, that is the interest we're earning on our cash balance.
Cosmos Chiu (Analyst)
Oh, okay. Okay. And is there a reason why you separate those two, or just, just really accounting?
Sandip Rana (CFO)
It's all accounting, technical related. The loan interest, 'cause it's related to mining assets-
Cosmos Chiu (Analyst)
Mm-hmm.
Sandip Rana (CFO)
It's up in revenue, and we intend to do more, you know, debt-like structures going forward.
Cosmos Chiu (Analyst)
Mm-hmm.
Sandip Rana (CFO)
So we've included that up top.
Cosmos Chiu (Analyst)
Okay, sounds good. And then maybe one last question again on the accounting side as well. I know Brian asked it earlier in terms of the global minimum taxes, but it sounds like now Barbados has their own legislation, and Canada also has their own sort of legislation that's going through. Is there a situation where, in terms of timing, when, you know, legislation in the two countries are being enacted, is there a chance that things can get really complicated later on if they're enacted at different times, different quarters? Or is that something that we don't really need to worry about?
Sandip Rana (CFO)
Our understanding right now, neither one has enacted the laws. Barbados' effective tax rate will be 15% going forward, once the law is enacted.
Cosmos Chiu (Analyst)
Mm.
Sandip Rana (CFO)
But our understanding is, it's contingent on Canada implementing the GMT.
Cosmos Chiu (Analyst)
Oh, okay.
Sandip Rana (CFO)
They should, they should both come into play at the same time, but obviously we'll have to wait and see.
Cosmos Chiu (Analyst)
Okay, great. Thanks, Sandip and Paul. Those are all the questions I have.
Operator (participant)
Your next question comes from Tanya Jakusconek from Scotiabank. Please go ahead.
Tanya Jakusconek (Managing Director of Equity Research)
Good morning, everybody. Some of my questions have been answered. But I've got to come back to just Hemlo. Sandip, how should we be thinking of this royalty? Because this one's always quite variable. What guidance can you give us for the year?
Sandip Rana (CFO)
Tanya, you know, it was lower than I expected in Q1, considering where commodity prices were, and I think for Barrick's release yesterday, they had higher costs. So, you know, going forward, I think, you know, we stick with what we had guided or to, as part of our year-end guidance. It's probably gonna be, at this stage, similar to last year, but we'll have to see how the year unfolds.
Tanya Jakusconek (Managing Director of Equity Research)
Okay. And then for my Mine Waste Solutions that we're getting to the cap, so that would imply the rest of the year a bit lower. Would that seem fair?
Sandip Rana (CFO)
Yeah. So we do anticipate to reach the cap in Q4 this year. Depending upon how the next two quarters play out, it could be early in Q4.
Tanya Jakusconek (Managing Director of Equity Research)
Okay. No, that's, that's what we have as well. And then as we look at the, the year, you know, with everything said and done, and I appreciate a lot of variability, but should we be thinking that, you know, a slightly better second half with, some of the new mines coming in? And can you just remind me, for Q2 and Q3, when the, when the new contributions are coming in? So, you know, first, stronger second half, should we be thinking like 52, 53% of GEOs? And then the new mines, if you can remind me what, who's coming in Q2, Q3.
Sandip Rana (CFO)
Sure. Yes. So we do expect a stronger second half, and that's just because, as you said, the new mines will be online. In Q2, you know, Greenstone is pouring—sorry, yes, Equinox is pouring first gold for, for Greenstone. And second quarter, Salares Norte, Tocantinzinho with G Mining is, is Q3. I don't have the, the specific split as to whether it's, you know, 52, 48 or what have you, but, definitely a, a stronger second half.
Tanya Jakusconek (Managing Director of Equity Research)
Okay. No, that's helpful. I just wanna make sure, because, you know, production, I mean, you get paid exactly when they start producing. There's no deferral, it, if from my understanding, even if they're non-commercial ounces.
Sandip Rana (CFO)
Yeah. So on the royalties, we accrue the revenue. If ounces have been produced, we're entitled to it, so we will accrue even if we haven't been paid, but we will accrue.
Tanya Jakusconek (Managing Director of Equity Research)
Okay, perfect. And then just on the environment, I think, Paul, you mentioned that what you're seeing right now is mainly streams on non-gold assets for precious metals, so base metal producers. Can you just, you know, come back and verify that we're looking at that sort of like $100 million-$300 million range? Is that still the range that you're thinking about for these streams?
Sandip Rana (CFO)
I'm gonna hand that over to Ewan, Tanya.
Tanya Jakusconek (Managing Director of Equity Research)
Sorry, Ewan. Sorry, yeah.
Ewan Gray (CFO)
Morning, Tanya. Good, good question. As Paul noted, it's an active pipeline. It's been evolving over the course of the year so far. I'd say, generally, the size has scaled up a bit, Tanya. You know, beyond $300, we're seeing more potential for larger transactions as well. So we're quite encouraged by that.
Tanya Jakusconek (Managing Director of Equity Research)
When you say larger transaction, are we talking in over $500 million or still under $5?
Ewan Gray (CFO)
There are transactions at the $500 and above level that are possible. So, you know, that's perhaps a bit of a change versus the last time we spoke. There still are smaller transactions, and as Paul said, you know, by-product transactions are more common than they were. That said, with capital still constrained to the gold space, with gold producers, I think there's still decent latitude to transact.
Tanya Jakusconek (Managing Director of Equity Research)
I would assume, Ewan, with the higher gold price, for gold producers that would wanna put some sort of royalty on or stream on their gold assets, with this higher gold price, their overall view on their valuation has gone up. Would that be a fair statement to say?
Ewan Gray (CFO)
Yes, I think so. You know, by-product precious metals producers probably also have a similar elevated view. You know, we'll have to take a balanced view on gold price, but you know, certainly constructive on that as well.
Tanya Jakusconek (Managing Director of Equity Research)
Okay. And then, Ewan, maybe just on the I know in your Investor Day, I think it was Paul that mentioned that you, you know, are looking at lithium potential transaction and other non-gold transactions. Can you just comment on where you are on that? Whether, you know, we're still, you know, those are, you know, in the pipeline, and whether we can see those in 2024, or is the focus still gold ahead of these non-gold?
Jason O'Connell (SVP)
Hi, Tanya, it's Jason speaking. I would say that the focus still is on gold. I think that's where we spend the majority of our time. That said, there are a lot of opportunities in, you know, many different commodities right now. Lithium is, is one that is interesting to us, just given where we are in the price cycle. There's obviously been a significant pullback in the lithium price, which has created a bit of a challenge for developers looking to finance new mines. And so there is, as a consequence, potentially a role there for us to, to play a part. And so it's something that we're spending time on. And, you know, we may be active this year, just depends on the opportunities that are in front of us.
Tanya Jakusconek (Managing Director of Equity Research)
What size would those opportunities be in, Jason?
Jason O'Connell (SVP)
It's a range. I think, you know, probably the sweet spot for us would be, you know, 50 to maybe up to $300-$400 million if we did something very sizable.
Tanya Jakusconek (Managing Director of Equity Research)
Okay. My last question, if I could, just on uranium. You know, we've seen, you know, volatility in that space as well. Anything in terms of looking at uranium for you guys?
Jason O'Connell (SVP)
We do look at uranium from time to time. There aren't as many assets available for us to participate in. There's a couple that we keep our eye on, but it's not something that we're spending a lot of time on recently, despite the change in commodity price.
Tanya Jakusconek (Managing Director of Equity Research)
Okay, appreciate that. I'll leave it for someone else to ask questions and really appreciate you answering my questions. Thank you.
Jason O'Connell (SVP)
Yeah.
Operator (participant)
Your next question comes from John Tumazos, from John Tumazos's Very Independent Research. Please go ahead.
John Tumazos (Principal and Senior Analyst)
Thank you very much. You know, it's always hard to figure out how to value things. Presumably, Franco, as you approach new transactions, values them at the spot gold price, or today, $2,300-ish. And then you put a capitalization rate based on the mine life and quality. And maybe that would've been 8 or 10 times revenue for a simple royalty, or adjusting for how much in the money a stream is. But gold stocks are actually a little bit lower, even though gold is higher. And now there's the minimum tax rate, which clips your return a little bit.
So is it fair to assume that given the valuation of gold stocks and the tax status, not only of Franco, but your peers as well, that you'd be capitalizing revenue at a lower rate going forward than you might have a couple years ago? Also, interest rates are higher. That's another factor. Excuse me.
Paul Brink (President and CEO)
John, it's Paul. There's a lot of things in there. The number one thing, anytime we're looking at a property is, it's less so commodity prices, it's more figuring out, you know, what are we comfortable is there. Happy to pay a full price for what we're comfortable will get produced, and then want to participate in the upside. And it's really, you know, getting the calls right and being able to participate in the upside that, you know, generally has the greatest impact on our returns. So the vast majority of our work, though, is figuring out what are we comfortable will get produced.
You know, particularly when you're looking at development projects, it's, you know, sometimes our view is less than what you can see in reserves, sometimes it's far more. That's by far the biggest determinant. In terms of commodity prices, we're trying to price deals in the context of the market. You know, the trick is you don't wanna get caught when prices run up sharply in paying peak prices. And on the other hand, you know, when the market turns down, that's really where you wanna get your deals done. You don't wanna get caught up using bear market prices because you undervalue everything. So it's, in a sense, it's trying to take a longer-term view of prices, regardless of where the market has moved to in the time.
On, you know, on your your last comment in terms of rates and how do we think about rates? We think of it as a bit of a competitive advantage, and the competitive advantage is we don't have much debt. So where with so many parties, their cost of capital is moving up and down with their cost of debt, we don't really have that. So we think it's an advantage. We do deals in the market. We can extend capital to people at a more consistent rate than other players over time. And, you know, so particularly when other folks, you know, are forced to use a higher cost of capital, we don't have to, and I think that's a bit of a competitive advantage.
John Tumazos (Principal and Senior Analyst)
Thank you.
Operator (participant)
Your next question comes from Tanya Jakusconek from Scotiabank. Please go ahead.
Tanya Jakusconek (Managing Director of Equity Research)
Good morning again. Sorry, I forgot to ask about Cobre Panama. I know Cosmos asked about it, with the election happening on May fifth, but can you just review for us, when do the parties actually then get into office? Are we talking like, you know, July-ish or thereabout? And, you know, once they get into office, are we expecting more clarity? So maybe just a bit of timeframe for us on getting some news out on Cobre Panama.
Paul Brink (President and CEO)
Tanya, you're exactly right. Election coming up now, but the actual official change of government will only happen in July. So that's the first time that they could, they're in a position of power. It doesn't mean that you can't have dialogue with them before that, but to your point, you know, I don't expect, you know, any news, any direction on Cobre until later in the summer.
Tanya Jakusconek (Managing Director of Equity Research)
Okay. Well, that's very helpful because, you know, we maybe all be waiting Saturday, Sunday night, and then, you know, Monday morning, thinking something might be said, but probably realistically, it's probably not until the end of the summer.
Paul Brink (President and CEO)
We hope sooner.
Tanya Jakusconek (Managing Director of Equity Research)
Okay, thank-
Paul Brink (President and CEO)
We hope for sooner, but you gotta be realistic.
Tanya Jakusconek (Managing Director of Equity Research)
Yeah, I appreciate that. Yeah, thank you so much, and good luck.
Paul Brink (President and CEO)
Thank you.
Operator (participant)
There are no further questions on the phone line. I will now turn the Q&A session over to Candida Hayden, who will take questions from the webcast.
Candida Hayden (Senior Analyst Investor Relations)
Thank you, Julie. Our first question comes from Dipankar Nayak.
Dipankar Nayak (Equity Research Analyst)
Do you plan to do any share buybacks in 2024?
Sandip Rana (CFO)
Thanks for the question. We do have a large cash balance on our balance sheet, but our number one priority is to add assets to the portfolio. You know, it comes down to what's the best use of a dollar, and for us, to continue to add assets. So no, there—we don't intend to do a share buyback.
Candida Hayden (Senior Analyst Investor Relations)
Your second question also comes from Dipankar Nayak.
Dipankar Nayak (Equity Research Analyst)
Do you have any option of storing physical gold, assuming price would go up in the medium term?
Sandip Rana (CFO)
We do have the option. It comes down to, you know, streams versus royalties. Streams, we do get physical credits of precious metals to Franco-Nevada, but for accounting to book revenue, we have to sell that metal, so that's what we do on a quarterly basis. There are some royalties that we actually do receive in kind, and so on any given time, we have roughly 20-25,000 ounces of gold to our account, held in various refineries around the world. But there's no plan to increase that level at this stage.
Candida Hayden (Senior Analyst Investor Relations)
Next question comes from Diego Termitera, from Nostra Capital Management.
Diego Termitera (Analyst)
What are the next steps to consider in the Cobre Panama arbitration? And could the election have any impact on the process of arbitration?
Lloyd Hong (Chief Legal Officer and Corporate Secretary)
Thanks for the question, Diego. It's Lloyd Hong. In terms of the next steps, as we previously disclosed, we have filed a notice of intent to initiate arbitration. The next step following that would be to actually file a request for arbitration, which would formally kick that off. In terms of the election process, as Paul had mentioned, I mean, we hope that First Quantum will be able to engage in a constructive dialogue with the new government once it's elected, which could lead to the potential restart of the mine. And obviously, that would impact whether the arbitration proceeds or not.
Diego Termitera (Analyst)
Thank you. The next question comes from Bernie Picchi at Palisade Capital.
Heiko Ihle (Managing Director of Equity Research)
BHP's interest in acquiring Anglo makes me wonder if Franco-Nevada has opportunities in the current mining industry M&A environment, knowing this has not been your traditional area of opportunity.
Lloyd Hong (Chief Legal Officer and Corporate Secretary)
Thanks for the question. I would say, you know, when, when I saw that potential acquisition, my, my first thought is that's a huge positive for the copper price. You know, if, if BHP is acquiring assets rather than building assets, it doesn't add to the world's copper supply. So I not surprised to see that the copper price is running up on the back of it. You know, could there be assets that come out of that that would create some deal activity for us? You know, possibly. More actionable, though, is the transaction that's already happened, and that's Newmont acquiring Newcrest.
They've announced that there are asset sales that they are doing, so I think there should be some opportunities that come out of that M&A process.
Candida Hayden (Senior Analyst Investor Relations)
Thank you. There are no further questions from the webcast. This concludes our first quarter results conference call and webcast. We expect to release our second quarter 2024 results after market close on August 13th, with a conference call held the following morning. Thank you for your interest in Franco-Nevada. Goodbye.
Operator (participant)
Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.