Royal Gold, Inc.

Hello everyone and welcome to the Royal Gold 2024 full year and fourth quarter conference call. My name is Nadia and I'll be coordinating the call today. If you would like to ask a question, please press star followed by one on your telephone keypad. I will now hand over to your host, Alistair Baker, Senior Vice President, Investor Relations and Business Development to begin. Alistair, please go ahead.

Thank you, Operator. Good morning and welcome to our discussion of Royal Gold's fourth quarter and year-end 2024 results. This event is being webcast live and a replay of this call will be available on our website. Speaking on the call today are Bill Heisenbuttel, President and CEO, Paul Libner, Senior Vice President and CFO, Martin Ratfield, Senior Vice President of Operations, and Dan Breeze, Senior Vice President, Corporate Development of RGAG. Randy Sheffman, Senior Vice President and General Counsel, is also available for questions. During today's call, we will make forward-looking statements, including statements about our projections and expectations for the future. These statements are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These risks and uncertainties are discussed in yesterday's press release and our filings with the SEC. We will also refer to certain non-GAAP financial measures, including adjusted net income, adjusted net income per share, adjusted EBITDA and cash GNA. Reconciliations of these measures to the most directly comparable GAAP measures are available in yesterday's press release, which can be found on our website. Bill will start with an overview of 2024 performance. Dan will provide some background on the Cactus Royalty acquisition. Martin will give some commentary on the portfolio, and Paul will provide a financial update. After the formal remarks, we'll open the lines for a Q&A session. I'll now turn the call over to Bill.

Good morning, and thank you for joining the call. I'll begin on slide four. 2024 was an excellent year for Royal Gold. We recorded a stronger than anticipated fourth quarter and set records for revenue, operating cash flow, and earnings for both the annual and quarterly period. For the full year, revenue was $719 million, operating cash flow was $530 million, and net income was $332 million. which were 19%, 27%, and 39% higher, respectively, over 2023. On an adjusted basis, our earnings were a record $346 million, or $5.26 per share. Gold remained the largest contributor to revenue for the year at about 76% of total, and almost 60% of our revenue was generated from the U.S., Canada, and Australia. We have a business with very high margins, and our adjusted EBITDA margin was just over 81% for the year and reached almost 84% for the fourth quarter. Our business is not directly exposed to inflationary cost pressures, and we have continued to see strong margins with the rising gold price. During the year, we paid over $105 million back to shareholders in dividends and raised our annual dividend to $1.80 per share for 2025. This is the 24th consecutive annual dividend increase, which is an unmatched record in the precious metals industry. And since we initiated our dividend in 2000, we have returned approximately $1 billion to shareholders. We also completely repaid our revolving credit facility in 2024, and we finished the year with no debt and approximately $1.2 billion of available liquidity. There were a few other notable developments during the year, including New revenue from Mar Rosa, Nancho, and Cote gold mines, each of which poured first gold during 2024. A new agreement with Sentara at Mount Milligan. It provides an incentive for Sentara to continue to invest in the long-term future of Mount Milligan. And the addition of new royalties on the Back River Gold District in Canada and the Cactus Project in Arizona. Both of these meet our criteria for investing in good projects with expansion potential operated by strong management teams and located in safe and mining-friendly jurisdictions. Turning to slide five, we performed very well in 2024 compared to guidance. We issued our annual guidance in April 2024. We provided sales in terms of metal units rather than one GEO number to avoid distortion in the GEO calculation caused by volatile metal prices. And we will continue to use this approach. Compared to the guidance ranges, Gold sales were at the top end of the guidance range. Copper and other metal sales were slightly higher than the guidance ranges. EDNA expense and effective tax rate were within the ranges, and silver sales were slightly lower than the guidance range, primarily due to lower silver deliveries and sales from Pueblo Viejo. Silver recovery at Pueblo Viejo has been disappointing for several quarters, and we flagged this on our last quarterly call. Our gold sales for the year were stronger than we expected when we gave our outlook for the fourth quarter on our last quarterly call. And this improvement was related to higher than expected fourth quarter revenue from the Penasquito and Cortez royalties, and then earlier than expected gold delivery from Antiquario in the fourth quarter. These positive developments once again underscore the difficulty we have in forecasting the production levels of projects we don't operate. I'll turn the call over to Dan to go over the Cactus royalty purchase, but before handing over, I want to point out that while this is a copper royalty, this purchase does not indicate a strategic shift away from our focus on precious metals. We have consistently said we are open to non-precious metal investments in markets we understand, and we view this as an opportunistic purchase that should provide a good return over a long mine life, a metal we understand very well. With that, I'll turn it over to Dan.

Thanks, Bill. Turning to slide six, in late December, we acquired a 2.5% NSR royalty over the Cactus project from a private seller for $55 million. Cactus is a brownfield copper project in Arizona, approximately 70 kilometers southeast of Phoenix. Arizona Sonoran Copper, the current operator, has a right to repurchase 0.5% of this royalty until July of this year. The project was operated from 1974 through 1984 by Arsarco, and Arizona-Sonoran acquired the project assets and interest in 2020 from the Asarco Trust. The project is attractive on its own merits, and we have the confidence in the Arizona-Sonoran management team, some of whom we've worked with in the past. We are not alone in our positive view of the project, as Arizona-Sonoran has attracted the attention of Rio Tinto and HUD-Bay, two base metal mining companies that together own just over 17% of the shares outstanding. Turning to slide seven, the royalty covers about 50% to 60% of the Park Sailor deposit and 100% of the Cactus East and West deposits. We estimate that the first royalty payment to us will occur in about year five of operation and generate 4,000 to 6,000 GEOs per year in the first 15 years at current prices. The mineral resource estimate is current and there are approximately 7.3 billion pounds of copper contained in the measured and indicated resource. and an additional 3.8 billion pounds in the inferred resource. The results of the August 2024 PEA show a straightforward project producing 5.3 billion pounds over a 31-year mine life. Most of the mining will be done by open pit and copper cathodes will be produced with a conventional heat bleach and SXEW process. Arizona Sonoran is working to update the resource and complete a pre-feasibility study this year followed by a feasibility study and construction decision in 2026. First production is expected in the 2028 to 2029 timeframe. Permitting should be straightforward given that most of the project is on private land. Several of the key permits require only amendments given its brownfield status, and the project is subject to only state of Arizona permits. I'll now turn the call over to Martin to discuss portfolio highlights from the quarter.

Thanks, Dan. Turning to slide eight, I'll give some comments on fourth quarter revenue. Overall revenue was a record $203 million with a volume of 76,100 GEOs. On our third quarter call, we forecasted a slightly softer fourth quarter, but strong metal prices and a stronger contribution from our royalty segment helped overall revenue exceed our expectations. Royalty revenue was up strongly by about 43% from the prior year quarter to $78 million. and the royalty segment contributed about 38% of total revenue, which is higher than we've seen over the past several quarters. We have 35 royalty assets that generate revenue, and although they are generally smaller contributors than our stream assets, strong performance from several of these can have a positive impact on our overall revenue. In addition to a very strong quarter from Penesquito, Strong contributions from Manchot, Bellevue, and Robinson, more than offset lower revenue from the Cortez Legacy Zone. Revenue from our stream segment was $125 million, up by about 27% from last year, with increased contributions from Mount Milligan, Rainy River, Pueblo Viejo, and Wausau. I'll turn to slide nine and give some comments on notable developments within the portfolio. Firstly, I'll note that as part of an annual materiality review of individual stream and royalty interests, we have redefined our principal properties to be Andacoyo, Cortez, Mount Milligan, and Pueblo Viejo. These four properties contributed approximately 55% of our total revenue in 2024. This review considers primarily the relative contribution of estimated future revenue and to a lesser extent, historical revenue to our portfolio from each property. While Penesquito and Comacau are relatively smaller, these and other assets remain important contributors, and we will continue providing disclosure on non-principal properties as appropriate. Moving on to specific property updates, Barrick held an investor day in late November and gave some details on plans at Cortez. In the near term, Barrick is expecting overall gold production from Cortez to increase. with mining of ore in the Crossroads pit increasing following stripping, as well as the continued ramp up at the Gold Rush underground mine, which is expected to produce 400,000 ounces of gold per year at full production levels. For 2025, ARIC is forecasting production from the Cortez complex of between 680 and 765,000 ounces, with Crossroads and Gold Rush driving production to over 1 million ounces in 2027. Rene Valladares- Relating to the longer term potential at Cortez Barrick reported several developments, including the receipt of the record of decision for the Robertson project in the fourth quarter. Rene Valladares- The significant increase in gold resources at the four mile project after incorporating results from recent drilling and further exploration progress at the Hanson target at Cortez Hills underground and the swift target to the west of the pipeline deposit. According to Barrick, a PEA for the four-mile project, which covers approximately one-third of the known ore body as defined by drilling to date, indicates the potential for gold production levels exceeding 500,000 ounces per year. Barrick plans to advance these projects with feasibility work ongoing for the Roberts and Open Pit project, a pre-feasibility study plan to begin in 2025 at the four-mile project, and continuing exploration at the Hansen and Swift targets. As a reminder, our approximate exposure to these areas is 9.4% gross royalty on Crossroads, a 1.6% gross royalty on Gold Rush, Four Mile, Hanson, and Swift, and a 0.45% gross royalty on Robertson. Eric also provided some updates on Pueblo Viejo in the same session and outlined several projects that are intended to achieve planned throughputs and recoveries. ERIC expects plant throughput to increase steadily from 2024 and reach the expanded 14 million ton per year capacity in 2028. Note that a 35-day shutdown is expected in the first quarter of 2025 to complete a second optimization. With respect to recoveries, ERIC expects gold recovery to increase from approximately 80% at the end of 2024 to 90% by the end of 2026. and a project to improve silver recovery is targeted for completion by the fourth quarter of 2025. Barrick is guiding that its share of gold production for 2025 will range between 370 and 410,000 ounces, which is expected to increase further in 2026 as throughput and recovery projects are completed. Barrick also reported that it is currently advancing work on the new El Naranjo tailings storage facility with a late 2029 target for commissioning. The facility is expected to provide storage capacity for eight additional years beyond the current life of mine, which is expected to be 2046. Turning to slide ten, Anikoyo Tech reported in January that risk mitigation plans to increase water availability were implemented in 2024, enabling no throughput rates consistent with the mine plan through the second half of 2024. Tech also provided copper production guidance that reflects ongoing drought conditions that remain a production risk and expects copper production to increase by about 26% from approximately 39,700 tons in 2024 to a range of 45 to 55,000 tons per year from 2025 through 2027. Gold and copper grades have been relatively well correlated and gold production has historically tended to track copper production. At Comacow in January, MMG provided copper production guidance of 43,000 to 53,000 tons in 2025, up from 39,000 tons in 2024. MMG reported that it is working to access higher grade areas to achieve a higher production run rate of 60,000 tons per year of copper in concentrate by 2027. Rupert Clayton, MMG does not provide silver guidance, but there is a relatively strong correlation between silver and copper grades and production at ComiCal. Rupert Clayton, Additionally, MMG reported that a feasibility study for the expansion to 130,000 tons per year started in December 2024 and construction of the expansion is expected to begin in 2026. Rupert Clayton, First concentrate production is expected in 2028 subject to refining the timeline and the feasibility study. Greg Rutledge, recall that Royal gold silver stream interest cover expanded production from the zone five mine and the mango northeast deposit. Greg Rutledge, i'll wrap up with a few brief comments on other portfolio assets, particularly related to 2025 production and catalysts. Greg Rutledge, Peter gold has recently reported that the goose project back river is on track for this goal to be poured by the end of the second quarter. Recall that our royalty ramps up gradually over about three years to the full 3.3% GSR level. We're looking forward to a full year of contribution from Mara Rosa, Cote Gold, and Manchot after each Ford First Gold in 2024. 2025 production guidance is 94 to 104,000 ounces at Mara Rosa and 200,000 ounces at Manchot. And at Cote, we expect to receive royalty revenue on approximately two thirds of the 360 to 400,000 ounces produced. The cash price paid at Savancina will increase from 20 to 40% of spot price when they reach the 49,000 ounce delivery threshold, which we expect will occur sometime in the second quarter. Since we acquired our stream interest, Savancina Production has outperformed our initial expectations And we have received delivery of 45,000 ounces as of the end of December. Note that the change in the cash price will not impact GEOs. And finally, we're looking forward to seeing results of Mount Milligan PEA towards mid-year. If Sentera shows a mine life extension beyond 2035, it should be a significant positive development for Royal Gold. I'll now turn over to Paul for a review of our financial results.

Thanks, Martin. I'll now turn to slide 11 and give an overview of the financial results for the quarter. For this discussion, I'll be comparing the quarter ended December 31st, 2024 to the prior year quarter. Revenue for the quarter was up 33% to a record $203 million. Metal prices were a primary driver of the revenue increase, with gold and silver both up 35% and copper up 13% over the prior year. Gold remains our dominant revenue source, making up 77% of our total revenue for the quarter. followed by silver at 10% and copper at 9%. Royal Gold has the highest gold revenue percentage when compared to our major peers in the royalty and streaming sector. Turning to slide 12, I'll provide a bit more detail on specific financial line items for the quarter. G&A expense was $8.9 million, down slightly from the prior year and mostly due to lower corporate costs. Excluding non-cash stock compensation expense, our cash G&A expense has remained stable or decreased which combined with the increase in our revenue, the result was margin expansion over the past year. Our cash G&A has decreased from approximately 5% of revenue in the prior period to nearly 3% this quarter. Our D&A expense decreased to $34 million from $40 million in the prior year. On a unit basis, this expense was $444 per GEO for the quarter, compared to $518 per GEO in the prior year. The lower overall depletion expense and DDNA per GEO this quarter was due to lower depletion rates in our stream segment and a higher concentration of revenue from the royalty segment. In particular, increased production at Penesquito, which carries a lower depletion rate. It is worth noting that some of our royalties have low depletion rates. So in a quarter like this, where there was an increase in the concentration of royalty revenue, depletion expense can be lower and our margins may increase. Interest expense decreased significantly to $1.4 million from $6 million in the prior year. The decrease was primarily due to lower average amounts outstanding on the revolving credit facility. Tax expense for the quarter was $26 million, resulting in an effective tax rate of 19.5%. This compares the tax expense of $13 million and effective tax rate of 17.5% in the prior year. The higher tax expense in the current period was due to higher pre-tax income, driven primarily by our record revenue. Net income for the quarter was up 71% over the prior year to a record $107 million, or $1.63 per share. The increase in net income was primarily due to higher revenue and lower interest expense. Our operating cash flow this quarter was a record $141 million, up 40% over the prior year. The increase in operating cash flow was primarily due to higher stream and royalty cash receipts. We expect to provide full-year 2025 guidance for metal sales Depletion expense and our effective tax rate in mid to late March. However, to help you prepare your estimates, we expect our stream segment sales to range between 40,000 and 45,000 GEOs during the first quarter of 2025. As with our prior practice, this is the only quarter during the year when we will give quarterly guidance and this quarterly guidance should not be viewed as indicative of the full year guidance. I'll now turn to slide 13 and provide a summary of our financial position as of December 31st, 2024. We remained debt-free at the end of the quarter, and our total liquidity was approximately $1.2 billion, which includes the fully undrawn and available $1 billion revolving credit facility and approximately $190 million of working capital. That concludes my comments on our financial performance for the quarter, and I'll now turn the call back to Bill for closing comments.

Thanks, Paul. 2024 was a very strong year for Royal Gold. Our business is designed to deliver leverage to gold And our 2024 results demonstrate the direct relationship between a strong and rising gold price and Royal Gold's financial performance. We saw contributions from a number of new producing assets. We acquired two quality royalties, produced our first asset handbook, increased our dividend, and hopefully set the stage for an increase in the mine life of our largest revenue source. Looking forward to 2025, we think the uncertain global geopolitical and macroeconomic outlets will continue to bias risk in the gold price to the upside. While we expect to give formal guidance in mid to late March, we believe the guidance ranges will be similar to what we provided in 2024. Our key assets are positioned to provide medium-term growth, and we will watch with interest several catalysts, ramp-up progress at Gold Rush and continued studies at Four Mile, both at the Cortez Complex. The planned ramp-up of throughput at Pueblo Viejo feasibility study work on a ComiCal expansion, a life of mine extension study at Mount Milligan, and first production at Back River. On the business development front, we will continue to look for the best opportunities to provide further growth, continuing our strategy of adding exposure to high quality assets with upside, experienced management, and good jurisdictions. And with a strong balance sheet and robust cash flow, we are positioned to compete for those opportunities with our disciplined approach to project evaluation. Operator, that concludes our prepared remarks. I'll now open the line for questions.

Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If you would like to remove your question, please press star followed by 2. When preparing to ask your question, please ensure your phone is unmuted locally. Our first question goes to Cosmos Chu of CIBC. Cosmos, please go ahead.

Thanks Bill, Dan, Martin, Paul and Alistair. Maybe my first question is on Cortez. Bill, I know you don't give out longer term guidance. However, you know the Cortez royalty is is certainly very complex. There's different parts to her legacy royalties versus for the newer ones here. So I guess my question is, as you mentioned, Cortez is looking at 720,000 ounces-ish this year, can grow to a million ounces by 2027 based on Crossroads, Gold Rush, and Martin. Thanks for giving us the 9.4%, 2.2%. My question is, how can we use that information potentially to help us refine our model in terms of what growth could come through at Cortez? Is it as simple as, taking the 9.4 and a 2.2, averaging out to 5.8% GSR and say the growth, the additional ounces would be subject to that kind of GSR or how can you help us out?

Yeah, Cosmos, we struggle with the exact same thing. And I think, well, I mean, the issue is, and I understand Barrett talks about it as one project. It is not one project to us. When you've got a 9.4 and 1.6% royalty, The GEOs that result from that are completely dependent on where the ounces come from. Now, I think when we get to the point next month where we're giving you the guidance for this year, I think we'll be able to give you the math to make it work. But unless Oak Barrick gives us permission to talk longer term about where ounces are coming from, it's something we always have to work with with our operators because we don't want to front run them. We don't want to put information out that they're not comfortable putting out there. Now, I will say a million ounces in 2027 to me sounds exciting because if it is crossroads, that is a bigger piece of, has a bigger royalty rate associated with it. But longer term, I just can't help you right now. I mean, we will continue to work with Barrick to To try to improve that right now, the best we're going to be able to do is on an annual basis.

Okay. So I guess we'll find out a bit more maybe come mid or late March when we get the 2025 guidance. We might not see the full picture, but you'll help us out. Yeah. Yeah, I think we'll be able to do that. Okay. And then maybe quickly, Pablo Viejo, As we know, there's a 30-day shutdown impact in Q1 2025 for the thickener optimization. Is that going to impact your Q1 or Q2? And then my second part of my question is, I seem to see that gold recovery is going to take a bit longer to optimize versus silver recovery, which should be by the end of 2025, versus optimization of gold recovery by the end of 2026. Can you maybe comment on that as well in terms of how they're able to optimize the silver recovery first?

Okay, I'll take the first part of your question, and then I may turn it over to Martin to do the second part. So the way our deliveries work, they work on a quarterly basis. We get deliveries the 15th of March, June, September, December based on the three-month period of the last month. So the March delivery will be December, January, February. It all depends when this 30 day period lasts. Let's just assume for a second, it's all January, February. So the deliveries we get in March will be down. That, whatever it gets delivered in March gets sold in June. And so that's how you should, there's always sort of a three to five months lag between what they're producing and what we're selling. If the 30-day period sort of goes half February and half March, you're going to see sort of lower deliveries in March and sales, but then it will impact the June delivery and therefore the September sales. So it all depends where this 30-day period ends up. But at least you understand how deliveries go and that we sell what we get in one quarter, we sell it in the following quarter.

Of course.

Martin, is there anything you can add on silver recovery?

Yeah, I think, hi, Cosmos. I think Barrick have got a lot of projects running at the moment to improve both the gold and the silver recovery side. If you look at their presentation a couple of days or yesterday, They've got the sag mill deslime cyclones being put in. That's going to improve the output of the sag mills and send the fine straight to the thickeners and into the autoclaves. They've got grinding thickener modifications ongoing. As you mentioned, removing and replacing the center well to improve the autoclave feed and density. Then in terms of the silver recovery, the important one there is the cooling tower upgrade, because what that does is it allows the CIL temperature to be reduced, but it allows prior to that the lime boil temperature to be higher. And that is really the important thing for silver recovery, breaking down the jarricite, releasing the silver in the lime boil. So that cooling tower upgrade is kind of the thing that is going to improve silver recovery. And then they've got further projects on the carbon regeneration kiln upgrades that improve both gold and silver recovery. So to answer your question, it's not completely clear to us why the gold recovery is over a longer period of time, but it is clear to us that improving the silver recovery in the third, fourth quarter this year

is really related to that cooling tower upgrade that allows the lime boil to work more efficiently and allows more silver to be recovered great thanks martin i guess in the end that's what matters to you in terms of being able to really understand why the silver recovery goes up because that's the most important part to royal gold i would imagine um maybe one last question on cactus uh bill as you mentioned this is a a copper uh royalty um and uh but bill as you mentioned this is not an indication of you changing your strategy in terms for the company so maybe could you maybe comment on i saw that in the last quarter your revenue mix was 76 percent gold 12 silver nine percent copper are you happy with that mix i'm happy with the mix uh you know the thing i i think i've i've said

that when our business development team is out there marketing, looking for opportunities, we're focused on precious metals. If someone happens to call us up and say, hey, I've got this copper royalty. Do you want to have a look? Sure, we'll look at it. So we don't really target percentage of revenue. I'd say, do I want gold revenue to be higher? Yeah. I mean, that's what we do. But it certainly doesn't mean we sort of throw to the curb good opportunities that happen to be in markets that we understand. It's really just what we focus on, where we put our efforts, but we're always willing to react to other things. Of course.

I mean, one last question on Cactus. As you mentioned, I think the majority of the royalties at Cactus East and Cactus West with a bit at Parks and Sawyer. I don't know the asset as well, so I'm just trying to figure out how this kind of comes around or comes together. But what can we expect, you know, when the pre-feasibility study is due to be released later on in 2025? I'm sure we're going to see some Parks and Sawyer, but is Cactus East and West going to be in there as well? Because, again, I'm just trying to, you know, refine my model here. If I was to take the entire um reserve resort or the resource here this would be worth a lot more than the 55 million dollars that you paid for so number one i'm just trying to figure out the different components to it what's going to be included in the pre-fees uh that's coming up and how can we how can we value it yeah cosmos what i might do is ask dan or martin dan i don't know if there's anything just sort of commercially from a valuation perspective

You might be able to add, or Martin, if you have anything specific to the study that's coming out that would help.

Yeah, thanks, Bill. Hi, Cosmos. Good to hear from you. You know, I think I might just pass it over to Martin. And Martin, maybe what we could do is just share a little bit of color about how the ops team there came up with a schedule in terms of those deposits and how we're thinking about it. Cosmos, I think we defer you over to the operator ultimately in terms of how they're looking at the assets and give you some commentary. Martin, any color on the scheduling?

Yeah, certainly. Yeah, so Cosmos, we believe that the Park Salia deposit is going to be the first area into production, and we believe we've probably got about 50 to 60 percent of that aoi coverage possibly even a little bit higher um and so however the first the first production to come out of there is our our aoi is likely to be delayed by a couple of years as they as they move from the south to the north with the mining Um, so we've got a good portion of the park salary area, and we've got complete coverage over the cactus East and the cactus, um, underground area. So sorry, the cactus West and the cactus underground portions, those we do believe are going to come in a bit later. However, because they're working on the PFS at the moment, there's, there's a lot of scope to change things as they run their optimization processes. So. We're waiting with a great deal of interest like you in terms of seeing what that PSS comes out with. Yeah, I think that's probably enough said at the moment on that.

No, that's perfect. Thanks, Dan and Martin. And we'll keep our eyes out for the pre-Ps as well. But those are the questions I have. Thanks again for answering all my questions.

Thanks, Cosmos.

Thank you. The next question goes to Brian Carr of Raymond James. Brian, please go ahead.

Hi, good morning. My question really causes last question, but just to be clear, when you say the first payments that you think you're going to get on Cactus are in year five, that is purely on the assumption of where the mining's come from there's not a checkerboard royalty there's not this is all one royalty and the buyback of 0.5 is all the same royalty there's there's not like multiple royalties i don't see here that part of the equation this is just purely your assumptions about what the uh future mining plan will be when you say you won't get you any royalties until year five is that correct

Yeah, Brian, thanks for the question. Yeah, Martin, chime in here if I go astray here. Technically, there are two royalties. They're the exact same thing. We only describe it as one just to keep it simple. But there's no checkerboard. It's just the coverage. It's just the timing of when we think the material is going to be processed. It's not really on again, off again. an on-again, off-again approach in terms of our ALI.

Great. That's what I want to make sure. So if I looked at your production profile, if it were the same that you have on, you know, year page seven now, basically you just start, as it turns out, you know, you'd start to get the big year of production is when you'd start to kick the royalty. And the way you see things now, I realize it can all change with no feasibility. Is that the right way to look at this?

That's the way we're looking at it now. Now, as Martin said, as they go through these studies, that could change. And maybe they do mine it in a different sequence. But right now, where you're going, I think it's the correct way to think about it.

Great, thanks. It's just the same thing as cause. I'm just trying to get the math to work on this thing. The second thing, just can you remind me, I see the deferred silver is up to 1.7 million ounces at PV now. So I mean, that's almost a buck a share or whatever. Effectively, what actually happens, like if they finally get the recoveries worked, can you just remind me how you start to recover those deferred ounces?

Yeah, I'll try to see if I can keep this as simple as possible. And, you know, Dan can always cut me off if I go astray. The key recovery rate is 52.5%. So When silver recovery was 70%, we'd get our 75% of silver, not a big deal. As the silver recovery went down, basically the 75% would go all the way up. So at 52.5%, we're getting 100% of the silver. They've been below that, and that's when you start getting into the deferral of the ounces. I think when they start getting above 52.5%, that's when I think you're going to see the deferred ounces sort of unwind in the other direction and come back to us. The only thing I'd caution you a little bit is when you're looking at the value of what we might get, number one, if they deliver deferred silver, we have to pay the 30% of spot price so that you're immediately taking 70% of the value. And then we have deferred some cash price payments based on the fact that we have not been getting the ounces, those also have to be paid. And I don't have the exact number right now, but if you look at the gross value of the silver right now, you know, the net to us might be, I don't know, 35, 40% of the value when all is said and done. So I guess what I'm going to do is don't look at that gross number and say, wow, you guys are missing a lot, because there are payments that would have to be made once those ounces are received by us.

Great, thanks, Bill. That's what I was trying to figure out. So that's very, very helpful. Thank you very much for my question. Thanks, Brian.

Thank you. And as a reminder, if you would like to ask a question, please press star, fill it by one on your telephone keypad. And the next question goes to Teo Oyodeji of Scotiabank. Teo, please go ahead.

Good afternoon, everyone, and thanks for taking my question. So I'd just like to ask about your deal pipeline. Are you still seeing opportunities mostly in the 100 to 300 million range? And then this year, can we still expect more deals on non-gold? I know that you talked about it being opportunistic in nature, but are you still expecting anything? And then maybe just comment on your structure. would you still structure deals using like combinations of equity, debt, or has this changed? And then we were sort of hearing about a deal in the market, like a $1 billion deal. Do you want to comment on this? Like if you were to pick on this deal, can you do it by yourself or would you sort of like do a syndicated deal approach if you were to get involved?

uh yeah let me uh let me try to tackle a couple of them that i might get dan in here so um you know we don't comment on particular transactions so there's a billion dollar deal in the market we wouldn't comment specifically on it uh i think generally speaking uh we're totally open to syndication um the only thing about syndication is you have to find a partner that thinks Similarly to you in terms of structure, return, um, security guarantees. There's a lot that you have to agree with your partner, but you know, we could handle a billion dollars. I'm not worried about doing that by ourselves. Um, but again, if someone comes along and says, we want to work together, happy to do it. That that's great. Um, you know, the equity debt stream side of things, you've seen us do debt at Coma Cal. You've seen us do debt at golden star. Both those loans were repaid. We'd rather not do it, but if a stream transaction is say 60 to 70% of a total financing, somewhere around there, and doing some debt and doing some equity would get us the transaction, we are open to it. Again, not a preference, but if it gets us the right stream transaction, we have to consider it. And then, you know, more copper, no, again, this isn't a change in strategy. If something comes up in the latter part of this year, middle part of this year, that's copper and we like it, we might do it. But it's certainly, again, this isn't a switch to, okay, how many copper deals can we do? How many zinc deals or nickel deal, whatever. That's not the approach. And nobody can ever forecast what transactions are coming up in this market. So don't take one deal as an indication of what's to come. Dan, do you want to just talk about the market in general?

Sure, Bill. Yeah, maybe just to answer the last question there, which is the range, $103 million. I think that still holds. And we always talk about that, it seems, every quarter. But you look at the last two deals that we've announced, including Cactus here today, they were sub $100 million deals. So we do look at things that are smaller. We do see things that come across our radar that are interesting and will obviously transact We are aware of a couple of larger opportunities in the market. And in general, I would say the things that we see in the pipeline right now are more precious weighted gold in particular around project development. So I think that kind of summarizes it from what we see right now. Does that answer your question?

Yeah, thank you very much. And maybe just to follow up to that, Do corporate opportunities make sense to you? Why or why not if they don't?

Are you talking about M&A amongst royalty and streaming companies? Yes. Yes, okay. We always look at it. There are obviously times when that could very well make sense. I think the thing that we have found historically is you have certain companies that trade at higher multiples. You have certain companies that trade at lower multiples. And where the transactions probably make sense are between those. If the lower multiple company wants to trade at a higher multiple and then get a takeover premium on that higher multiple, it makes less and less sense. We don't need, you know, we haven't done, you know, a true corporate transaction in about 15 years. And at that time, we were getting bigger. We wanted the assets. We don't feel the need to get bigger. We don't need to add assets in one go. So if it makes sense, we're open to it. But you just don't see a lot. And I think that's the reason of the valuation differences. And finding two parties who find the right time and the right price, that's really tough to find. Totally open to it, but you just don't see a lot.

Okay, thank you for that. And one other question, like yesterday we saw a new mine plant at Rainier River from New Gold. Maybe just provide some comments on this from Royal Gold's perspective.

Yeah, I'm going to turn it over to Martin, but I may caution you, it's also news to us, probably, so he may not have had a chance to digest everything we just saw, but I don't know, Martin, if you have any color you can add.

Yeah, it is pretty new to us. You know, we We understand to a certain extent how the mines are operating in our portfolio, but we don't have very intricate knowledge of them. So if a company changes a plan, if they come out as Rainy River did with a fairly low Q1 and Q2 from a production perspective, we don't have a lot of color to add to what they've said. Yeah, it's new to us, and we're busy digesting it at the moment. Okay, thank you for that.

My last question, your updates on resources, when can we expect that? And your guidance that's coming out in mid to late March is coming out with an investor date.

Yeah, I'm sorry, I didn't get the first part of the question. Did you say reserves and resources? Yes.

Your reserves and resources, when are they coming up?

Yeah, so, you know, it's sort of an iterative process for us a little bit because we have some companies that report as of 12-31. We have Australian companies report as of June 30. We're going to keep our, we have a section under our portfolio that has reserves and resources that will get updated as we go. We're going to have a new asset handbook that will be more of a point in time reserve and resource number. So between the website and the asset handbook, we don't come out with one big announcement. It's more as we get information from the operators, we update the information. I think the second part of your question was an investor day.

Yes. I'm asking if the guidance in late March is coming with an investor day.

No, we don't expect to have an investor day around that. I'm sure Alistair will release it and we'll see what questions we get. If it makes sense to pull groups together, I guess we can do that, but we don't have any plans to do it right now.

Okay, thank you. Those are all my questions. Thank you. Thank you.

Thank you. The next question goes to Derek Ma of TD Cohen. Derek, please go ahead.

Thank you. My question is on capital allocation. Royal Gold is debt-free now, generated $141 million operating cash with Q4. We have $1.2 billion available liquidity. Is there sufficient supply and potential deals in the market to deploy all the capital that you're generating?

If I could forecast the deals we're going to see, I could answer the question. You know, based on the fact that we see transactions, again, in the $100 to $300 million range, you can say, you know, unless you see two or three of these things, you probably have more capital than you need. The problem is you just don't know what's going to happen and just, you know, everybody in the industry goes back to 2015. Uh, when we deployed, you know, a billion plus, uh, in a four or five month period. Um, so we have to be a little bit careful. We do think the best place to invest, to, to use the capital we have is to buy new assets because we put it in at, you know, an AV and hopefully we trade at a premium to that, that, that is increasing value. If we get to the point where we're just not seeing transactions and not meeting the criteria that we have, and we think we have more capital than we need, yeah, then we're going to have a discussion with our board. Do we do anything? Don't we do anything? I've never really seen that happen. The transactions tend to come frequently enough that we're able to take the capital we're generating and redeploy it into assets.

This is maybe a difficult follow-up, but at what point do you think you are overcapitalized then, given your cash flows?

I haven't given enough thought to that and haven't had the discussion with the team or the board to give you a figure where we think, oh, we don't need anything more than that.

Okay. That's fair. One more question on taxes. The area of interest I don't think it includes their target at main spring, but does it include the northwest extension? Hard to tell from that.

Martin, do you have a thought on that?

Yes, it does include up to the northwest. To the northwest extension, OK.

Sorry to the. Exploration optionality. northwest the cactus and northwest extension i believe so that's one of their um exploration targets yes it includes that area okay great thank you very much that's all i have thank you thank you we are almost out of time so the last question goes to josh wolfson of rbc josh please go ahead

James Forrest, Norcal PTAC, he or she, Thanks I apologize in advance for the nitpicky nature of this question, but I just the comments earlier on guidance and some of the discussion on on flat, you know year over year ranges. James Forrest, Norcal PTAC, he or she, Are you thinking about that more in terms of what the geo ranges would be or would that be on the individual metals and I asked just because you know, there have been some significant ratio changes on a year of your basis, thank you.

Yeah, Josh. We plan to give this year's guidance the way we did last year, which is buy metal and then revenue for the smaller metals. I think if we find a point where gold in particular has found a new range, we might go back to GEOs. I don't know yet, but you know, if we had just gone GEOs in 2024, we would have been way off and been explaining like two or three GEO numbers. So for the time being, we're going to stick with the way we did it last year.

Okay. So which would imply when you're saying sort of stable numbers, that would be, you know, by individual metal.

Correct.

Great. Thank you. Thanks, Josh.

Thank you. I want to hand back to Bill Heidenbuttel for any closing comments.

I just wanted to thank you for taking the time to join us today. Thank you for the questions. We certainly appreciate your interest and we look forward to updating you on our progress during our next quarterly call. Take care.

Thank you. This now concludes today's call. Thank you all for joining. You may now disconnect your lines.