Triple Flag Precious Metals Corp. (TFPM) Q3 2025 Earnings Report, Transcript and Summary

Good morning, and thank you for standing by. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the Triple Flag Precious Metals Third Quarter 2025 Conference Call. [Operator Instructions] I would now like to turn the conference over to Sheldon Vanderkooy, CEO. Please go ahead.

Thanks, John. Good morning, everyone, and thank you for joining us to discuss Triple Flag's third quarter results. Today, I am joined by our CFO, Eban Bari; and our Chief Operating Officer, James Dendle. 2025 has been an exceptional year so far, and Triple Flag has achieved another record quarter in Q3. We recorded 27,000 GEOs in the quarter, which drove record adjusted EBITDA of $79 million and record operating cash flow per share of USD 0.39. Shareholders are directly benefiting from the higher gold prices through higher cash flow per share. We should continue to benefit in Q4 and beyond as well as current gold prices are well in excess of the average gold price realized in Q3. We expect to achieve 2025 GEOs between the midpoint and the high end of our 2025 guidance range. I am very pleased with the additions we have made to the portfolio year-to-date. Year-to-date, Triple Flag has now deployed over $350 million of capital over 5 investments. In H1, we announced our investments in the Tres Quebradas lithium mine in Argentina, the Arcata silver mine in Peru and an additional interest in the Johnson Camp copper mine in Arizona, all of which have now started production either in line or ahead of our investment case. Early in the third quarter, we completed our acquisition of a 1% NSR royalty on the Arthur project in Nevada operated by AngloGold Ashanti. And most recently, we have acquired a royalty package on Pan American's producing Minera Florida gold mine in Chile for $23 million. James will provide further details on Minera Florida later in the presentation. This is exactly the sort of royalty that drives shareholder value over time in the royalty sector as we have open-ended exposure to top line revenues and resource expansion over time. Together, our investments year-to-date are providing near-term increasing cash flows as well as longer-dated optionality. They are also located in the right jurisdictions. The bulk of the value is in the Western United States and the remainder is in Chile, Peru and Argentina. I will now hand over to Eban to discuss our financials for the third quarter of 2025.

Thank you, Sheldon. As noted by Sheldon, we had an excellent third quarter with just over 27,000 GEOs. This puts Triple Flag on track to achieve between the midpoint and high end of our 2025 GEOs guidance. These strong volumes in Q3 were delivered in the backdrop of strong metal -- precious metals prices, which reached a record quarterly average of nearly $3,500 per ounce for gold and nearly $40 per ounce for silver. Accordingly, we are pleased to highlight that operating cash flow per share, the single most important metric we focus on as a company, has increased by over 25% year-over-year. Lastly, I'd like to comment on our balance sheet. We exited the quarter with essentially 0 net debt despite deploying significant capital during the third quarter for the acquisition of the Arthur Gold royalty and the Minera Florida royalty. Today, we're in a net cash position. Overall, strong balance sheet, record operating cash flow and total liquidity available of nearly $1 billion provides us with the capital to continue deploying dollars into accretive opportunities to drive future growth for our shareholders. It also allows us to continue returning superior returns to shareholders, and we're pleased to declare a quarterly cash dividend of USD 0.0575 per share. Triple Flag remains focused on top-tier precious metals assets with revenue that's nearly 90% sourced from mining-friendly jurisdictions in both Australia and the Americas. Northparkes and Cerro Lindo continue to be 2 largest contributors to revenues in the third quarter with Northparkes achieving another record quarter due to continued processing of higher open pit grades from stockpiled ore. Triple Flag sales mix remains 100% derived from precious metals, including nearly 3/4 from gold. We do not expect this to materially change, and this will continue to provide investors with exposure to the strong gold and silver price environment. I will now turn it over to James to discuss the producing Minera Florida gold mine in Chile.

Thank you, Eban. Minera Florida is located approximately 75 kilometers southwest of Santiago in Chile and is owned and operated by Pan American Silver. It's an underground mine that produces gold and silver ore with the zinc concentrate byproduct. During the third quarter, we were pleased to acquire a package of 3 net smelter return royalties on Minera Florida, ranging from 0.8% to 1.5% for a total cash consideration of $23 million from a third party. Minera Florida has a long history of consistent performance, continuous operation and reserve replacement and has produced over 2.5 million ounces of gold and 14 million ounces of silver since commissioning in 1986. The mine has always operated with a relatively short reserve life. Over the last 20 years, the mine has had approximately 0.5 million ounces of gold in reserves at any one time, which equates to about 4 to 5 years of visible reserve life. Historic annual production at Minera Florida has ranged between 75,000 and 100,000 ounces of gold per annum. Driven by mill expansion potential to increase the nameplate capacity, Triple Flag expects GEOs for Minera Florida to increase to approximately 1,000 ounces by 2028. The exploration potential of this mine is significant. And given Minera Florida's impressive track record of reserve replacement since 1986, we see this asset continuing to perform for decades to come. I'll pass it back to Sheldon for closing remarks.

Thank you, James. In closing, Triple Flag is performing very well and is positioned to continue this performance going forward. Our shareholders are benefiting from our strong current production and the increase in gold prices, which are translating into record cash flows per share. I am very pleased at our success in reinvesting those cash flows in further streams and royalties, which will benefit our shareholders for decades to come. There are a number of near-term catalysts across our portfolio. First, Johnson Camp mine, Tres Quebradas and Arcata have all recently started production and will continue to ramp up into 2026. Second, on the project front, economic studies for Arthur and Hope Bay are on track for completion in the first half of 2026, and we look forward to ongoing exploration updates on the Fletcher zone from Beta Hunt. And finally, the Koné project continues to make good progress, targeting production in 2027. That concludes our presentation. Operator, please open the floor to questions.

[Operator Instructions] Our first question comes from the line of Fahad Tariq with Jefferies.

Just on the deal pipeline, maybe talk a little bit more about how the Minera Florida transaction was sourced. Was this -- I mean, it was a third-party royalty from a family. Just curious if there was any sort of process? Or was this a relationship that was like preexisting? Any more color there would be helpful.

Yes, I can take this. Yes, it was, I think, a fairly concentrated process. We developed a bit of a report with family over the course of negotiating the deal. And that was good because we actually were able to undertake a site visit. And very often, as you know, with these third-party royalty sales, you can't do that, whereas we actually have a team down in Chile earlier on in the year, spending a couple of days at site. So we had access to Pan American Silver in this instance and the whole mine sales team.

Okay. Great. Yes, that's helpful. And then maybe just switching gears to the ATO stream. It looks like there was an international arbitration that was started in early October. Can you maybe just give us an update on how the discussions are going with Step Gold? And what's Triple Flag's expectation for a potential resolution?

Fahad, it's Sheldon. I'll take this one. We tried to be really transparent in the press release and give everyone like direction on the legal proceedings we've started. I'm a little limited in what I can say, but I can provide some background and direction to you in the market. First of all, I'm going to start by saying we're just extremely confident in our legal position. We're owed about USD 10 million. STEP's market cap is a little over CAD 500 million. They have production, they have cash flow. They clearly have the ability to pay. We are in dialogue with Steppe's controlling shareholder. There is no doubt in my mind that they are building Phase 2. And the last thing I'd note is we're going to land in the top half of our guidance range even if we don't receive a single ounce from Steppe Gold here to the end of the year. I really can't go any further into how this is going to get resolved, but we are in discussions, and we are very confident in our legal position.

Okay. And then just -- sorry, just maybe a follow-up, if you can answer this part. You're in discussions with the largest shareholders. Are you in discussions directly with Steppe Gold?

I would take the largest shareholder as being in discussions with Steppe Gold.

Your next question comes from the line of Sam Overwater with Scotiabank.

I just had a question on the transaction opportunities. I think the last time we spoke, you guys were evaluating opportunities between $100 million and $300 million. I just wanted a little bit more color on that. Like what geographies and jurisdictions are these opportunities in? What are the structures of these deals, debt equity stream, et cetera? Is there any royalty opportunities -- and then on top of that, too, like what are the -- a lot of the purposes on the transactions in terms of asset sales, construction funding, et cetera?

Yes. Thanks, Sam. I appreciate that. Yes, the opportunity set, I think, still is squarely in the $100 million to $300 million. Obviously, we've done deals that are smaller than that. We'll look at those. There are larger ones as well. It's probably instructive to look at what we've done already year-to-date. We've done $350 million of deals year-to-date. It's a pretty good mix of smaller royalties than we had the larger Arthur transaction, which is actually a corporate transaction, which is just another way to find good assets at reasonable prices for our portfolio. The opportunity set, it's a real mix. I mean, it's streams, it's royalties. I would say it's concentrated in jurisdictions that investors will be very happy with, I would say, like the Americas traditional mining jurisdictions. And the use of proceeds or what's driving it, it really runs the gamut. I think you kind of summed it up pretty well. It's -- people need money for various things, and that creates the opportunity for companies like ours to step in with financing.

Great. And then just on top of that as well, corporate transactions. How are you guys assessing corporate transactions relative to sort of other opportunities in the current landscape? Is there anything you're currently considering?

Yes. I mean I don't view a big distinction between corporate transactions and other transactions. I mean we acquired that Arthur royalty. It was via an acquisition of Origin and then a spinout. The Maverix acquisition was a way to acquire a great portfolio at a reasonable price. So we're always looking for ways to add good assets to our portfolio at returns that are attractive and accretive to shareholder value.

Great. And then lastly, does Triple Flag currently have like an equity portfolio to sell? Are you considering any sales in an equity portfolio or anything like that?

No.

Your next question comes from the line of Brian MacArthur from Raymond James.

I just wondered if you can comment a little bit on Prieska and what's going on there. I mean there's a statement Orion looks like they've signed a term sheet with Glencore. But what actually needs to happen there for you to move that forward post -- other than the South African regulatory approvals?

Brian, it's James. I'll pick that up. So as you'll recall, Prieska was always contemplated as a single integrated project comprising 2 zones, what they refer to as the Uppers, which is the upper remnant areas of the historical mine and the Deeps, which is the sort of untouched sulfide ore body. The Deeps is of great interest to us because it hosts the precious metals. It also has the exploration upside and it's the part of the ore body we're most focused on. The company through looking to stage their capital expenditures has disaggregated the project to the Uppers, which they'll develop first and the Deeps that they'll develop progressively thereafter. There is a dewatering component to that. And as you noted, they've received, I think, a very supportive nonbinding letter of intent from Glencore, which they're working through at the moment. So that is all very positive. Given our primary economic interest is in the Deeps, we will be evaluating the right but not obligation to fund the stream into the Deeps when they actually are at the stage to make a final investment decision on that project. So we expect the company to make an investment decision on the upper this year and an investment decision on the Deeps next year. So as a reminder, we have no obligation to fund the stream, but we like the asset. So it's a funding decision for Triple Flag in 2026.

But just to be clear, so can you -- I mean, do they develop the upper, if you think of it that way with the money they have and you just get the option to wait and then just come in on the lower? Or do you have to execute once they make a decision to do the upper, if I want to look at it that way. That's what I'm trying to figure out is when you're I get it, you've got -- you have the option to do it or not do it, but I don't know if there's a drop dead part of the contract that makes you decide or whether you can wait and see how the second part goes if you see what I'm saying?

Yes, we can wait until the second part is ready to go. The nice thing is that the company will be progressing with the dewatering of the Deeps while mining the Uppers, so that they continue to derisk and develop the project whilst we get the opportunity to wait to make the investment decision on the Deeps. So there's no drop debt in that sense. We just have the opportunity to wait a little longer. You'll recall we have a small royalty on the project as a whole. So when the upper start producing, obviously, the royalty will pay because that applies to both zones.

Your next question comes from the line of Derick Ma with TD Cowen.

On the El Mochito stream disposal, you got a fair amount of consideration to perhaps a win-win situation for both parties. But could you discuss how the situation arose and how you evaluate these types of situations versus retaining optionality in the portfolio?

Yes. Sure, Derick. It's Sheldon. I'll speak to that. El Mochito, it's a fairly small mine. It's based in Honduras. We acquired as part of the Maverix portfolio. It was undercapitalized and they were having difficulty servicing the stream as part of their operations. Eventually, what we did, and we're close to the operator. They're a private company, and we were looking for ways to get additional capital that was not our capital into that project so they could be in a position to start paying out on the stream. Basically, I think this is a win-win-win situation where we found the outside capital, they're bringing that in, and then we're structuring ourselves to come out on these terms. It's good value for us, and I think it allows them to move forward without the stream in place.

Okay. And how do you kind of evaluate these type of situations versus retaining optionality when you look across your portfolio when other opportunities come up like this?

I mean every situation is different. I think -- I put it this way, I'm very happy with the structure of this -- and the way this is being resolved. It's getting us good value out. It allows them to go on. Generally, we're not looking at selling streams, but this is essentially a structured sale of a stream, but it's really based on an asset-by-asset basis.

[Operator Instructions] Our next question comes from the line of Cosmos Chiu with CIBC.

Maybe my first question is on Minera Florida. James, you mentioned that you were on site. My understanding is that this past quarter or this past year, there's been some issues in terms of negative grade reconciliation, unplanned mine sequencing into lower-grade ore zones. I think you mentioned that as much as well in your guidance. You said, I think Minera Florida long term was capable of doing 75,000 to 100,000 ounces. This past year, 78,000 to 90,000. So the top end is lower. So I guess my question is, James, how much of that have you factored in into your valuation? And is it just really a one-off and it's really going to bounce back? Or how do you look at it?

Yes, Carl, good question. The valuation and the production assumptions over a short period of time, of course, you consider what's actually happening on the short term as a guide for the long term. But the interesting thing is, as you know, about Minera Florida is there's a very long history of operations here. So we actually had access to the full history of production records that gave us great confidence in the forecast. And at the end of the day, quarterly variance in a gold mine is not a new thing. So for sure, there's quarterly variance on-month scale that exists, and I'm sure it will occur in the future. But in the long term, we think the mine will operate in accordance to how it's operated historically, which is in the range we stated.

Maybe switching gears a little bit, bigger picture. Sheldon, as you mentioned, you reiterated in your release as well, 2029 guidance outlook. Outlook is you're still looking for 135,000 to 145,000 ounces GEOs. That's a very good increase from what level you're at today. Could you maybe summarize for us what goes into that thinking? What needs to come on for you to hit that growth into 2029?

Yes, sure. Carlos, I can take that. We've got a few assets ramping up. There's some new assets, too. Sheldon mentioned the Arcata silver mine, that has literally shipped concentrate for the first time this week. That will be ramping up into 2026. There are other assets, obviously adding Minera Florida is a small addition, 3Q, Johnson Camp all ramping up. Montage is building Koné, which will be additive to that outlook. But there's also -- we expect production increases from some of the operating mines. We expect after a lower year next year from Northparkes that to start building back up again. We expect increased volumes from [indiscernible], although incremental. Same with Beta Hunt, Westgold has been very public with an expansion to Beta Hunt 2 million tonnes per annum, which is on track. So all of those additions build up to the outlook number. So there isn't one specific asset that drives that increase. It's actually nicely diversified across a large suite of well-positioned assets.

Great. And then maybe one last question, the 2025 GEOs. The gold/silver ratio you've used is 85:1 in terms of the calculation of GEOs converting silver into gold. I just want to confirm, silver has actually outperformed a little bit compared to gold into 2025. That benefits Triple Flag. Am I correct in the sense that I think there's a good percentage of your revenue actually coming from silver. That's number one. Number two, it also benefits your GEO calculation, if I'm not mistaken, if you can confirm that as well. And then third, when do you consider, I guess, changing that ratio? Or I guess, it's not too late in 2025, it's not needed in 2025, but how do you consider that into 2026?

Carl, it's Sheldon. I'll take that. 85: 1, that's pretty close to what it is right now. Obviously, it's volatile. It moves around. It's been various places during the year. I think year-to-date, and you're right, obviously, as the silver price is stronger relative to gold price, that helps GEOs and the opposite when the opposite occurs. The year as a whole, we've actually had a bit of a headwind on the average silver price because of just the timing of when the silver price ran. And I think that's come across in ourselves and all our peers. We always make an allowance for that. We're pretty conservative when trying to set our guidance. And so we just accommodated that within our production. Right now, it's coming in line. And in terms of assessing it, I mean, we just -- every time we put out a new guidance or anything like that, we look at what the current gold/silver ratio is and make sure we're not too far out of line and that is properly conservative. Obviously, when we do our 2026 guidance, we'll look at what the conditions are at that time and react accordingly.

Yes. Sounds like a good plan. And I guess the important part, Sleldon, as you mentioned, is that you're now aiming for the top end of guidance for 2024.

That's right. silver prices all the way through.

Congrats on the solid Q3.

At this time, we have no further questions. I will now turn the call over to Sheldon Vanderkooy for closing remarks.

Yes. Thanks, everyone. Q3 was another good quarter, and we're actually having just a great year in 2025. Really appreciate the support from all of our investors. Thank you all. Bye.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect your lines. We thank you for your participation. Have a pleasant day.