Triple Flag Precious Metals Corp. (TFPM) Q1 2024 Earnings Report, Transcript and Summary

Hello and thank you for standing by. At this time, I would like to welcome everyone to Triple Flag Precious Metals Q1 2024 Conference Call. [Operator Instructions] I would now like to turn the conference over to Shaun Usmar, Chief Executive Officer. Please go ahead.

Thanks, Jericho. Good morning, everyone and thank you for joining us to discuss Triple Flag’s first quarter of 2024 results. Today, I am pleased to be joined by our CFO, Sheldon Vanderkooy, and for the first time, our Director of Mining, James Lill, who will join us for the Q&A portion of the call. James is a mining engineer and is responsible for portfolio management and supports technical diligence at Triple Flag. As a background, James has over 20 years of experience across mine sites, head offices and consulting, most recently as Head of Canada at Mining Plus. Triple Flag achieved a new quarterly GEO sales record to start the year with sales of roughly 28,000 gold equivalent ounces, resulting in $48 million of EBITDA during the quarter. The strong performance has positioned us well to achieve our 2024 GEO sales guidance of 105,000 to 115,000 ounces. Most notably, in line with our guidance for a stronger 2024 due to higher gold grades from the E31 open pits at Northparkes, our flagship asset delivered a nearly 90% increase in GEO sales quarter-on-quarter. We continue to expect these pits to deliver high grade through at least 2024 and 2025, and look forward to a feasibility study for the E22 underground ore body, which our partner, Evolution, expect to complete by the end of Q2 this year. E22 is expected to represent another source of high-grade gold ore at Northparkes in the medium to long-term. In March of 2024, we surfaced further value from the Mavericks portfolio with a settlement agreement reached with Coeur Mining on the Kensington NSR royalty, which has commenced paying and will be discussed later in the presentation. Finally, I’d be remiss not to mention the current favorable precious metals price environment, which on the back of sustained Central Bank buying, Chinese retail purchases and seemingly never ending geopolitical uncertainty, has remained at near record levels for gold prices and solid silver prices. It’s been a great time to have continued meaningful GEO growth in our portfolio, coincide with a period of strong price support. We expect to deliver our eighth consecutive year of record GEO sales in 2024, and with the first quarter of high grade growth from Northparkes now achieved, we look forward to the prospect of continued high gold and silver prices in our portfolio’s cash flow per share. I’ll now turn it over to Sheldon to discuss our financials for the first quarter of the year.

Thank you, Shaun. As noted, we had a strong first quarter with the portfolio producing just under 28,000 GEOs, which puts Triple Flag right on track to achieve our 2024 guidance. As expected, Northparkes and Cerro Lindo were the two largest contributors to Q1 production, with Northparkes showing year-over-year growth due to the higher gold grades realized. In Q1, we also recorded our first revenues from the Kensington royalty, which we acquired as part of the Mavericks’ portfolio. The strong Q1 production and the record quarterly gold price resulted in record levels of revenue and adjusted EBITDA significantly higher than the prior year period. Operating cash flow per share is the metric that I am most focused on. Our operating cash flow before working capital and taxes increased over 22% as compared to the prior year period. But as a short-term timing matter, our working capital increased by $6.5 million in Q1, resulting in bottom line operating cash flow in the quarter that was unchanged from the prior year. Typically, our adjusted EBITDA and our operating cash flow track quite closely, and I expect that this will continue to be the case for 2024 as a whole as the shorter term working capital changes reverse. For 2024, we are well positioned to drive increases in operating cash flow per share as we are realizing higher production levels from our existing portfolio and the higher gold prices translating into increased cash flows. In Q1, the gold price averaged $2,070 per ounce, a quarterly record. But in Q2, to date, the gold prices averaged over $2,300 an ounce, a significant increase over Q1. We grow – we view a growing dividend as a core part of our capital allocation strategy. In this quarter, our dividend has been maintained at $0.21 on an annualized basis. I’m proud we have increased our dividend every year since our IPO. We will continue to assess the potential for further increases going forward. In addition to our dividend, we also returned over $3.5 million to shareholders via share buybacks in Q1. Last, I’d like to comment on our balance sheet. We exited the quarter with net debt of just $30 million or less than a quarter of cash flow, a clean balance sheet, robust cash flows, and our revolving credit facility of over $500 million gives us the financial capacity to deploy capital to drive further growth for the benefit of shareholders. Going to the next slide. We continue to highlight three key aspects of our investment thesis, namely asset diversification, precious metals focus and a portfolio which is predominantly centered in Australia and the Americas. Our asset diversification is well understood. So continuing on Shaun’s earlier comment about a strong precious metals environment, I would like to highlight Triple Flag’s 98% exposure to precious metals in Q1 2024. This pure-play exposure, ranks among the highest in the sector with a meaningful portion weighted to silver at 34%. I feel fortunate to have this level of exposure given the many favorable tailwinds for both gold and silver in the near to medium term. Finally, our portfolio is predominantly located in mining-friendly jurisdictions, a key criteria as we look to expand our portfolio through acquisition. By geography, the country with the single greatest contribution remains Australia. Notably, during the quarter, another one of our Australian assets was featured as a core part of M&A transaction with Westgold announcing a friendly takeover of Karora to operate the Beta Hunt mine. We are pleased to have the cash flow and exploration potential of Beta Hunt, spotlighted by Westgold. Over to you, Shaun.

Thanks, Sheldon. The core part of the 2024 story for Triple Flag is our anchor asset at Northparkes. To give the market a better context of the impact of this expected grade improvement versus historical results, the slide highlights more head grades at Northparkes over the past 3 full years of our stream ownership from 2021 to 2023, which has ranged from 0.13 grams a tonne to 0.17 grams a tonne. Therefore, the Q1 2024 process grade of 0.28 grams a tonne is undoubtedly a significant step-up from the past, and Evolution Mining has done a great job in delivering what was promised. . On the next slide, an asset that has been a clear winner for Triple Flag from prior year’s Maverick’s transaction is the Kensington NSR. Kensington is operated by Coeur Mining, which commenced production in 2010, with over 1 million ounces produced to date and is expected to have a minimum 5-year reserve life by the end of 2024. The mine is located in Alaska, a jurisdiction that is no stranger to mining. With the settlement agreement now executed, this NSR commenced paying in Q1 with further share consideration from Coeur and settlements of royalties and arrears. As part of the settlement agreement, we received roughly 737,000 shares of Coeur, which we divested earlier in the second quarter of 2024 in the open market. We expect to receive a further fixed value of $3.75 million worth of shares of Coeur in the first quarter of 2025, which will be the final share consideration received under the agreement. We look forward to working with Coeur’s operating partners for the years to come on Kensington. So to end, we have had a strong start to 2024 with a new record quarter of GEOs and earnings that puts us nicely on track to achieving our guidance of 105,000 to 115,000 GEOs for the year. This represents our eighth consecutive projected year of record growth for our business and build on a 34% cumulative annual growth rate in operating cash flow this team has delivered over the past 7 years. We highlighted at the end of the last year, a period of substantial growth from our cornerstone asset in Australia, Northparkes, for the next couple of years. So to be able to demonstrate a nearly 90% increase in GEOs for the first quarter from this asset, while delivering another robust performance with Solindo as a top 5 asset in our portfolio is something we are very pleased with. We manage a large portfolio of 234 assets. The core assets is anchored to our portfolio and guidance are clearly delivering for our investors. And we’ve seen the power of a large portfolio being demonstrated with the Kensington royalty starting to contribute GEOs this past quarter. The two underperforming assets we’ve highlighted in our release today have been well communicated in the past, have been factored into our 2024 guidance, and we provided additional disclosure to make it clear that we’re commercially well placed if they continue to underperform to maximize value for our investors. So finally, with our ample firepower of roughly $670 million in available liquidity as well as the Cornerstone base of 32 producing assets, we’re nicely diversified and well positioned to benefit from the current metal price environment as we continue our relentless pursuit of growth and value per share for our owners. With the Board and management team being live shareholders ourselves, we completely aligned in showing the best outcomes and are excited about the significant opportunity ahead for our portfolio to deliver further value. So with that, Jericho, please happy to open the floor to questions.

[Operator Instructions] First question comes from the line of Cosmos Chiu with CIBC. Please go ahead.

Hi, thanks, Shaun, Sheldon and team. Maybe my first question is on Northparkes, your anchor asset. As you mentioned, there’s going to be a feasibility study to be released by the end of Q2 on the E22 underground ore body. Could you maybe share with us what yours or our expectations could be? And what might be the next steps for the operator and potential time line as well, Shaun?

I am going to really defer this question for Evolution release, their study in the middle of the year. And the reason is we’ve got a great new partnership. It’s not really appropriate for me to front run it. I think all I can say in terms of expectations, I think we covered this on the last call we had a while ago, is you’ve got a group here with a really impeccable track record in that jurisdiction with Cowal. And my expectation is they’ve been very successful in taking their time investing in exploration prudently. There’s over 1,000 square kilometer package here, ore bodies open at depth. And they’ve been very good that I think studying astutely. And I think we touched on previously that there’s an existing study that would have – on E22 with yet another block cave. They were looking at a sublevel cave as an alternative. I have no knowledge at this stage, which I can’t share. But I think that would give them perhaps earlier access and would benefit us if indeed they went that route. So we’re looking forward to seeing that release. I think if you look at their public disclosures, as you’d expect with Jack and Lori, their real focus is on just integrating the business well, which I believe they’ve done very successfully, getting these studies done and then just settling into delivering. For us, what I look for is always risk on a transition as someone who’s been a lot of mining companies over the years, and it’s stabilization through integration. You can see from these results that they haven’t missed a beat. I think they’ve done very well. James, I don’t know if there’s anything you wish to add, but...

No, I think you captured that well, Shaun.

Thanks. Is there anything else?

Yes, for sure. If I – maybe switching gears a little bit, Shaun, as you mentioned, it’s good to see strength in the gold and silver prices year-to-date. My question is, how does that kind of impact the opportunity set in terms of acquisitions, new stream and royalty acquisition? As Sheldon mentioned, you have a strong balance sheet, $640 million undrawn on your line of credit. Is that kind of like – is that sufficient? What type of size is that – does that speak to the size of these opportunities that you might be looking at?

Yes, because it’s an important and sort of evergreen question. I know some investors look at a high gold price environment, and they kind of get confused by it because they say that must mean that there’s a firehose of capital available to gold miners and clearly, there is not a lot of business, therefore, for streaming and royalty companies to do it. And that’s really not the reality. I think if you consider that nearly 70% of our ounces come from polymetallics that’s not by accident. I think those sorts of transactions are very symbiotic, as we’ve discussed before. We are seeing a lot of activity of that nature. We had our Board meeting yesterday, and I think we’ve highlighted there that I think it’s fair to say it’s probably the busiest deal pipeline we’ve seen in our 8-year existence. And a number of those, we’ve got some smaller transactions that are nice tuck-ins at decent rates of return, where we’re exclusive on. And that doesn’t mean we’ll conclude them, but I think we’ve got a good line of sight on those. And then there are larger ones out there, which really are substantial insights, many, many hundreds of millions. You can hear from Sheldon’s comments that we have ample firepower. But I think part of our consideration is not only the fit for the portfolio shareholders, but very much, what does the portfolio mix look like. So I think the bulk of what we’re looking at, we can easily cover with our existing financing. There are some where we would perhaps look to syndicate just purely from a portfolio mix if indeed, it went that route. But my feeling at this stage is that just given this macro environment, we’re seeing really good deal flow activity. And I don’t believe it’s an anomaly. I suspect in this environment, with rates seemingly being the way they are for some time to come, I think it’s a sticky good outlook for deal flow for us. Sheldon, is there anything you wish to add to that?

No, I think that covers it quite well, Shaun.

And then, Shaun, maybe one last question, going through your income statement, I saw that there was an expected credit loss of $6.851 million as a charge. You kind of touched on it. There are some operators that have had some financial issues. I’m just trying to look for more details on it? And what are they related to?

Cosmos, I’m not someone to comment, but I want to preface this a little by saying I think an organization that is only looking at your things is not – we’ve got to balance risk and reward. And the whole focus here for us is staying true to the model, which I think we’ve demonstrated over the years, and managing a portfolio. The numbers you’re mentioning, in particular, are 1 of our 140 assets we acquired during the Maverick’s transaction that we knew was problematic at the time. We’re very happy with that transaction. We’ve announced Kensington. I think we delivered our synergies, and it’s gone quite well. But this is one of the examples we’ve been working with the management team to try and support them while really focusing on value. You’ll see, I think with our track record as well, we’ve not [indiscernible] providing a lot of additional equity and other kind of financing. We really have stayed true to our model. But occasionally, as part of the – of the portfolio management we do have impacts like that. And we’re very clear, and you would have seen in the last period with – I think we took a charge at the end of the Renard experience. And that one, we just, for example, done a write-back, we tend to try to on the side of conservatism. But Sheldon, do you want to pick it up?

Yes, sure. Thanks, Shaun, and thanks, Cos. Cos, that relates, as Shaun alluded to, to an expected credit loss that we recorded for reflecting our investment in the Moss mine, and it’s run by Elevation Gold. Basically, Elevation has been quite public that they’ve experienced some cash flow difficulties and that they’re actually looking at different alternatives. At the end of the day, this is a – it’s a producing gold mine in the United States, a fantastic gold price environment, but they’ve been a little tight on cash flow as they ramp up new pad. We just want to be conservative. We wanted to take this allowance. We’ll see how their process plays out. I can’t really speak too much for that, but we continue to monitor it quite closely. And I will add, but we’re in first secured position on everything there. So we just want to be conservative and take the expected credit loss and see how this matter plays out.

Cos, I think the last thing just for materialities and context with some of the audience on the call, we’re talking about 1 of our 234 assets that is – the NAV – I believe consensus NAV is in the teens. So given a $3 billion odd – $1 billion market cap right now that these useful context.

And to confirm, Shaun and Sheldon, so I guess the stream and also the royalty and the promissory notes, they’re all secured on the assets of Moss – or Elevation Gold just – so you do have a right to recover your investment, but you are just trying to be conservative?

Yes. That’s right, Cos. We’re first secured on that. The stream – the stream is, again, it’s a silver stream one, a gold-silver project in the United States. But when we look at the total burden on the property, we think that the credit loss is just the prudent way to go. And that’s – so we’ve taken that and we try to be quite upfront about that.

Yes. And I understand your point, Sheldon, about materiality. So, for sure. Those are my questions. And thanks.

Thanks, Cos. Great questions.

Our next question comes from the line of Greg Barnes with TD Securities. Please go ahead.

Yes. Thank you. Shaun, can you talk a little bit about what the grade profile does look like in Northparkes for the rest of 2024, and you said high grade in ‘25 to ‘26. Just give us some idea of what we should be looking at there.

Thanks. Good morning, Greg. I’m going to ask James just to comment within what’s disclosed extension, I guess.

Yes. Yes. Thank you very much. Yes, as discussed, the E31 South and North, they continue to ramp up. We should see that continue into Q2 and level off for us, 3 and 4. And then the fix itself will start to continue into 2025 and then start to ramp down going into the fourth quarter of 2025. And then after that, then it’s E22, which is where that study to be released and then that will be the next higher grade zone once that’s constructed.

And Greg, you may recall, we’ve shared some of the grades E22, from memory, with something like 0.39 grams a ton. So that really was the – you could sort of think of that when that becomes the mainstay of the mine plan as really being at the sort of levels we expect to see this year continuing for many years beyond. I think – this year, for some may have been a – for what – said. I think hopefully, there’s quarters, a helpful indicator of what we’ve been talking about for gold generation from the asset.

Okay. Just James, you broke up a little bit, I couldn’t really hear what’s happening in Q2 and Q3, I think that was this year?

Sorry, for Q2, we’re expecting GEOs to increase again as well as into Q3 and then leveling off and then growing into 2025 before ramping down kind of later in that year, the bits and the higher grade material.

Do you get that, Greg?

So higher GEOs in Q2 and Q3 then flat lining of that level in Q4, I think for 2024. And then 2025...

Sort of continually on. Yes, I think the only thing on that is, as you’d appreciate it, we get like, I don’t know, was it 13 deliveries, roughly, they’re fairly lumpy during the year. So there are shoulder phenomenon that we do get with this. We try to factor that into our guidance. So you need to see through that as you think about the year versus the quarter.

Got it. Thank you.

Yes. Thanks, Greg. Is there anything else?

No. That’s it for me.

Okay, thank you.

Our next question comes from the line with Scotiabank. Please go ahead.

Sorry, is that me?

Tanya, I think it was. Yes. Good morning.

Okay. Alright. Good morning. I just didn’t know who that was. Thank you, first, for taking my questions and congrats on a good quarter. I’m just going to follow up on Greg’s question. Is Northparkes the only asset within your portfolio that is looking to have this stronger performance and everything else is relatively equal? I’m just trying to see if there is any other assets that I should think about as a stronger second half?

No. Tanya, I think that’s a good way to look at it. I think it’s something we’ve made no bones about is we don’t just take aggregation of the public guidance of the operating assets in our portfolio and sort of put those out there. Our guidance is sort of handicapped accordingly. And I think we telegraph quite well in advance last year that we were expecting this sort of growth to come from E31 or from Northparkes this year. So it’s a meaningful catalyst from a very well-established multi-decade long mine, which I think, should be well celebrated and recognized. And then the growth is not coming from Hail Mary stuff we’re waiting to come in later. And just to beat the dead horse on this, but I think that is the beauty of the portfolio effect on this again, is little things like Kensington. We have over 200 of these things that it’s some different time horizons that are not captured in our guidance. We do expect some subsidiaries to also represent good growth for our investors. But I think the way you and Greg are thinking about it is exactly right.

Okay. Thank you. And then Sheldon, can you remind just the book value of Moss and Pumpkin Hollow, the two ones that are with also strong operators.

Yes. So Tanya, Moss, the stream has a book value of just under – it’s around $18 million, $19 million. Pumpkin Hollow, the stream has a book value of $85 million.

Okay. And then how should I think of just the cash flow that you’re generating? How should I think about your balance between paying off your debt, your share buyback and potentially growing your dividend? Maybe that’s over to you, Shaun, for that one.

Thanks. I’ll give Sheldon that mic. He marinades in it pretty much every day.

Alright. Sheldon, over to you.

Yes. So Tanya, I maybe start with like the first, I think, and best use of our cash flow is accretive transactions for shareholders. And as you know, we’re always looking at things and hoping to deploy. And right now, we’re well positioned for that. The dividend, we’ve increased that every year since we’ve been public. I would expect that to continue probably at a similar pace, but we’ll wait for further in the year for any sort of update on that. As you get cash flow and you have net debt, it’s really simple, you just pay down your net debt, but we’re quite comfortable drawing on our revolver to make acquisitions and to add value to shareholders that way. We don’t like share dilution. So we look to use the revolver strategically and then pay down over time. NCIB, we’ve been quite active over time, and we’ve continued to use that to view that like opportunistically. Again, it’s returning capital to shareholder, and our feedback from shareholders have been positive on that front.

Okay. And then maybe, Shaun, to you just on Cosmos’ question on the M&A environment, transaction environment. So did I understand correctly that the larger transactions, the $500 million plus that are spoken about out there and there’s like a couple – I heard 3, 4, maybe even 5, in that sort of range, are you looking at those in terms of your ability to do them only syndicated? Or would you also look at doing those on your own?

No. So it’s a great question. I think firstly, I was looking at some of the transcripts of Franco’s calls. They’ve telegraphed it, and I think he may have covered the question at the time. And I think what we’re seeing is very, very similar to, I think, what was articulated there. So there’s no short – there’s always development stuff. You’ve got to be very discerning how much of that exposure you want. But I think for the first time perhaps since our existence, we are seeing these sort of $0.5 billion plus or thereabouts type transactions reemerging that I think we last saw in 2014, 2015. I think the one thing that’s different, which we’ve sort of highlighted with our Board, if you take yourself back to that time, and you remember, we did one of these at Barrick when I was the CFO, rates were close to zero. And commodity prices, at least gold prices were at nearly cyclical lows for quite some time. We are not in that same space. So we’re spending a lot of time thinking through the risk-reward and portfolio fit. I’d say with a couple that we are active on, we are comfortable that the check size is one that we would easily finance, and these are cash-generating assets. So it actually adds to our funding capacity, and we wouldn’t be over levered. The other one is one where it’s not clear whether or not it’s just a thing on cost of capital and fit or indeed, they would want to go for size. I believe we are more than covered. And if not, we may be a syndicate member. What we won’t do is pursue growth for growth’s sake. None of these I must do for us at all. I mean, you can see our growth that we have in the existing portfolio. This is purely a question of does it fit with our strategy? And will it add value over time?

Okay. So from that, should I be thinking that sort of these larger ones would be ones that likely could be syndicated and you would participate in that, but the majority of what you’re looking at would be sub $500 million. Would that be a fair way of thinking about it?

Yes. I think that’s a reasonable way of looking at it. It’s hard on – we were talking in generalities. The specifics are so different in each of these cases, each with the sort of real benefits and complexities as you’d expect. So it’s really hard for me to comment any further. But I think we are – at the size we’re at and with what we have, and I think what we’ve demonstrated, remember, we did Northparkes at $550 million a few years ago. At that time, that was the largest just pure pressure streaming deal in the space. I think still to this day. We’re starting to see these larger things come out. So if the Northparkes emerge tomorrow, we I think we’ll easily cover that off. But yes, so hopefully, that gives you a flavor, Tanya.

Alright. I gathered plus $500 million you could do on your own as well.

Right. Yes, yes, that’s right.

Yes. Okay. No, I think that’s it from side...

Yes. Sorry, maybe just a nuance on that. If this was – that’s sort of check size and you were funding something, which had a ramp associated and cash flow many years out, it’s a very different prospect to an operating asset with maybe some substantial immediate cash flow. That’s it.

That would be producing...

There’s a bunch of that – yes – it’s a pretty interesting environment.

Yes. And I would assume that the smaller ones would be further out non-producing development sites.

No, no. Actually, no, it’s not the case. I hope to give you some news in the months ahead. But no, we’re seeing – this environment is not super supportive of single-asset producers, private businesses and others. I think that even though we’ve perhaps seen a bit of a reduction in some of the inflation and module compression that the sector has experienced, I think there’s a lot of guys out there who are looking at their equity and saying, like what happened? Gold had to run and we’ve been left behind. So I think we are seeing some really decent – of return, good optionality, smaller opportunities that are just great tuck-ins. And yes, we’re active on some of those, too.

Okay. Look forward to seeing more. Thank you.

Yes. Thanks, Tanya.

The next question comes from the line of Lawson Winder with BofA Securities. Please go ahead.

Thank you, operator and good morning, Shaun and team. Thanks for the taking the question and for the presentation today. I’d like to ask about Pumpkin Hollow and two points on that. I mean, one, obviously, I mean I think they require some more financing and wanted to understand whether or not Triple Flag would consider applying additional capital to that situation. And I think in the context of you guys still believing in the asset longer-term, correct me if I’m wrong. And then longer-term, I mean, when should we kind of think about putting some production from that asset into our model, particularly, vis-à-vis, your long-term guidance?

Yes. Listen, it’s – yes, as you know, this has been an asset that has been in our growth outlook for some time. It’s one of our five larger projects that we were funding into production. That said, it’s been quite notable and it sort of struggles with inflation and liquidity from time to time. So, to your point, we last supported this in a couple of years ago, really with the royalty and some funding that was secured in line with our model. I don’t see a scenario here where we look to continue to add to the burden, if you will, of the asset and to continue to fund this through. We will focus on, if we do any capital to be small in this scenario where they don’t secure the funding they need. And really, it’s just really to optimize value from our perspective. I think there is nearly $1 billion of some capital on a copper asset in a permitted situation with a fully developed underground mine and have already open pit. I think it’s an intrinsically valuable situation. So, I can’t tell you sitting here today whether the party or parties that they are engaged with, which would provide that remaining capital and continue to grow the asset will come to fruition. I guess what we really wanted to communicate with, update you on that, and just make it clear that we – what our situation – our ranking would be depending which fork in the road was to go down. But you shouldn’t expect us to be like a big equity check to get this into production or something. Sheldon, I don’t know if there is anything you would add?

Yes. Thanks Shaun. Thanks Lawson. Yes. Like so Nevada Copper, like they have disclosed that they are in discussions with another party and that they need more capital. So, I think everyone knows that. We certainly do believe in the asset, copper United States, all the Sun Capital, all those reasons. But that said, we are not operators, we have no desire to be operators. So, we are not going to be the source of the funding to bring this into production. And we just – we probably – we have invested our piece. And as Shaun said, we don’t want to add to the burden there. So, hopefully, that gives you the direction that they need.

Yes. And also, I think the last thing and I look forward to hearing more at your conference next week, but I think it’s probably the best copper backdrop, I can remember in some time. So, you would think if they could solve the liquidity situations and you got levered asset in this backdrop in the United States, that should be good, right?

Yes. Makes sense to me, and I appreciate the clarity. It’s very helpful. Could I also just ask on your thinking around corporate M&A, obviously your last experience, I mean at least in my view, I think was very successful. Are you still looking at that as an avenue for growth going forward? And do you see opportunity in the current environment?

Yes. Look, I think to your point, it’s – I have spent the large part of my career in companies like Xstrata that really grew substantially through M&A. I worked on the merger and for example. And the power of people not falling in love with their assets because I think everybody likes to – they know more about their businesses than others. They always think that they are mature and smarter and better looking than everyone else’s. But if you just focus on value, I think at any given time, you have a very good line of sight and you should be focusing as we all do on the organic pipeline, and the ability to transact. But if you go back to your point to Maverick’s, we just come through an environment of a couple of years where we normally do a few hundred million dollars a year. And we saw billions get deployed in mostly development stage assets with very low returns versus an M&A transaction that was accretive, made sense to pass it to shareholders, struck at a low premium that really delivered synergies and their value. I don’t know why that isn’t an obvious thing more for the sector. So, directly to your question, yes, we are always looking at the universe of the possible. There is only so many toys to play with. And just to reiterate the obvious, that I am very happy as a shareholder whether that means we are an acquirer or an acquire. But I think usually, the social barriers are the largest to consolidation in the sector. I do think that the investor – the scale requirements these days for it to be relevant are higher, like notably higher than when we started our company in ‘16. So, I think that’s a factor that should be a feature in every boardroom and every management team. And I think when we look at the sort of menu of possibilities, very small things we tend to struggle with. Like Maverick’s, if you recall, had a lot of assets, but more than half the NAV that we acquired came from 14 assets and there was over 100, as you recall, which we are generating cash. A lot of the really small stuff, there is a lot of NAV, which is quite long dated, and we often struggle to see our path to value there. Even though on a P&F basis, they might seem well discounted. And then, yes, whether it’s intermediates or seniors, if there are sensible things to do, we are always open to them. But yes, there is barriers there. So, probably more than you wanted to hear, but hopefully, that gives you a sense. We are always open for business if there is business to be that.

There is never too little. Let’s put it that way. Thank you.

Don’t worry. Thanks Lawson. See you next week.

Our next question comes from the line of Brian MacArthur with Raymond James. Please go ahead.

Good morning and thank you for taking my questions. We have heard a number of people talk about these big deals potentially at their $500 million plus and refer back to the last cycle where it’s all for debt restructuring. Can I just – when people talk numbers of $500 million, can I assume those are true streaming deals, meaning they are not like, say, $300 million of streaming and you are putting $300 million equity inter-something because as you have mentioned, these deals are getting more hybrid, more complicated in the sector. I am just trying to figure out to make sure that these are what I would call true streaming lower-risk deals as opposed to complicated financing transactions.

Yes. Brian, good to hear from you, it’s a really good question. It’s funny, a fair a year or so ago, I started getting questions from investors at conferences and elsewhere about is Triple Flag going to start doing more hybrid deals because we have seen some larger guys do it, and we have seen the private guys like Orion do that very successfully? I believe it concentrates risk and it violates the model. So, I was very clear that we are not going to engage in doing that, and we haven’t. So, don’t expect anything along those lines from us. And directly to your question, no, these are streaming deals. It isn’t, hey, boy, we got a deal for you. Here is $0.5 billion. But as you said, $300 million of that is a stream and you are going to love in a $200 million equity check. So, no, they are streaming deals. And I think that in many cases, it is stuff that just represents at a moment in time, perhaps a better alternative on cost of funding, either balance sheet repair, improving liquidity or things of that nature is just how to think about it.

Thank you. That’s very clear, also what I wanted to hear. Second question, just a different vein a little bit. Can you just go through the rationale at ATO and Steppe, I mean again, we do another prepaid, which is another type of financing. Again, is that just – they are ramping up? Is it the seasonal working capital you are doing this for, or I assume this is nothing like Elevation or anything else to be clear for everybody, but if you could just give a little bit of rationale for that.

Yes. I will ask Sheldon to expand on this. But I think the important thing is, from time-to-time, we have assisted where the capital markets for these guys are brutal. And we have done this once or twice with Steppe where we made a good return on our money. It was very helpful financing for them, yes. And that’s a partnership as you recall, goes back, I think it was our second transaction. So, these guys, we have helped them IPO. We have helped them deliver successfully. They have got this transaction now. They need some bridge funding. We are happy to assist. It’s a decent return. And it’s a team that I think is demonstrating some ambition and growth and a very strong Mongolian champion. But Sheldon, what would you add to that?

Yes. Thanks Shaun. Thanks Brian. Yes. So Steppe, it’s actually a pretty impressive story if you see what they have accomplished over the years. They are a relatively small company and they were managed to find financing, amount of financing for Phase 2. We benefit from that, which is on plastic. It’s a bit of a – it was a heavy lift for them. Q1 is often a harder quarter for them just due to the Mongolian winter. And this particular winter in Mongolia was particularly hard, and they basically asked us for some funding to help them out there. We are happy to give that because we could see the value there. And actually, since we did that prepay with Steppe, the Boroo transaction got announced, and that’s actually a real game changer for them. It’s going to really give them some really good robust cash flows that marry up quite well with the development project they have with the Phase 2 expansion. The rates of return were obviously attractive for us, so we quite frankly, got a little lucky on the gold price timing, and that’s just the way it worked out.

And sorry, that was going to be the second question, but this was kind of independent of the Boroo transaction, right? It was just a seasonal thing you were helping them get through or I mean in a sense, I don’t think of it as funding that transaction or anything?

It’s not funding that…

It’s independent.

Yes. Okay. And maybe my third question under the category of hidden assets or I don’t know if it’s hidden or not, but you obviously highlighted some good value in Kensington, which had been worked on for a year. Is there any possibility of getting any value out of Omolon is anything happening there anymore, or is that just totally very difficult?

Look, it’s a great question. I mean we have got a contractual entitlement. But as you know, we have written that down. We did that on the announcement of the transaction. We made it clear that we are not guiding investors to expect anything. But we do have a contractual entitlement that perhaps in the future is could have some value. I just wouldn’t want to raise any expectations to that effect. I think it’s just one of those bags of things that perhaps in the future, could unlock some value for shareholders.

Fair enough. Thanks.

Yes. Just when we bought Maverick’s, we ascribed zero value to Omolon. So, there was no write-down associated with that. We just described zero value to it and we did that transaction after the Ukraine war started. So, we kind of had some good visibility there. And like Shaun said, I mean we have a contractual entitlement. It’s a great ore body we like to mine. But obviously, the Russia factor means we are putting zero value on it right now. And I wouldn’t encourage anyone to put any value on it right now. History is long and times may change, but I wouldn’t put anything on it now.

Great. Thanks for answering all my questions.

Thanks Brian.

Our next question comes from the line of John Tumazos. Please go ahead.

Good morning. Some of you asked to smaller companies, so I apologize. I might not be current. What percentage complete is Pumpkin Hollow, or how much money do they need to complete the project?

Hey John. I will ask Sheldon to comment on that one for us. Sheldon, what would you like to say?

Yes. John, it’s pretty difficult for us to give that figure because that’s obviously ind Nevada Copper’s about [indiscernible], I don’t think they put that number out in the public domain, and we just don’t have the freedom and maneuver to give that figure.

Concerning some of your non-producing properties that are making progress, how many years out or what year – range of years do you think might be first revenue in Hope Bay, South Railroad, Tamarack or…?

Yes. John, I know I think it was in our prior corporate updates that we had at the conferences. We have tried to provide some sense of a – if I have been a 10-year window for those sort of smaller royalties that we touch on, you would see that the 140 GEO, bearing in mind last year was what 105. We are guiding 105 to 150 in this year and then that 140 average on the 5-year, really is focused on mostly the producing assets with very limited contribution from any of these smaller things. So, you have got that bucket of nearly 200. I think to your point, we have got some opportunity, I think in the periods ahead to look a little bit more at the advance and be able to draw some attention from an investor point of view at those subsets. I think things like Kensington is an example where none of these are massive in their own rights. But as a collective, these are things that I think can actually add over time to some meaningful GEOs and outperformance. And then to your point of Hope Bay, it’s been interesting. I was on as an investor conference in Zurich recently, Ammar was talking about the significant progress they are making there. I know they are talking about perhaps 300,000, 400,000 ounces a year, and they are getting some good exploration results there. So, our hope is certainly before the end of this decade. They are the right operator in that location. They are clearly investing significant money and time. And we have got a pretty meaningful royalty on there. So, I think in that sort of timeframe, we would hope to see good contribution starting to come from that. Sheldon, anything you would add to that?

No, I think that covers really well, Shaun.

Yes. And John, I think to your point, it’s a good match for us to also focus beyond, because we have always tried to focus on growth, risk and optionality. And I think as we have done a bit to highlight some of that optionality. I know there was a lot of guys gone out on that. But I think we need to do more to probably showcase more of that opportunity for investors.

Concerning our Agbaou, own a NC in Africa, do those operators have a target date for production? And are they in your longer term 5-year forecast?

Yes, they do. And we have included – you wouldn’t think of them as being massive GEO contributors, but we have gone on their public guidance as we thought about. And again, I will draw your attention to – it’s on our website. We have got a short summary of a couple of those royalties, and that – both in the 5-year and then the sort of 10-year timeframe.

Thank you.

Thanks John.

There are no further questions at this time. I will turn the call back over to Mr. Shaun.

Yes. Jericho, thank you and thanks everyone. There was a great collection of questions. Look, I will just end by saying thank you to our partners and our team. It’s great to start off with a record quarter, a very – I think our busiest deal pipeline and a pretty handy commodity price backdrop for this company. So, we just turned 8 years. It’s been an exciting 8 years, a good start to 2024. And I am really excited to see what – light in store for us for the remainder of this year. So, with that, all the best for the rest of your day.