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spk09: Good day and thank you for standing by. Welcome to the Triple Flag Precious Metals Q3 2021 results call. At this time, all participants will listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. If you require any further assistance, please press star zero. I'd now like to hand the conference over to Sean Usmar. Sir, please go ahead.
spk07: Good morning, and thank you for joining us to discuss Triple Flag's third quarter results. I'd like to start by taking a moment to express our gratitude on this day for the sacrifices made by veterans. This is a day that kindles fond memories of several loved ones in my family, and I know does the same for countless families around the world. This is our second quarter as a public company, and I'd like to start by thanking all our investors who recognize the fundamental quality and deep value on offer at Triple Flag. We as a management team are significant owners of this business and are truly aligned with our shareholders in generating value, growing our cash flow and net asset value per share, while showcasing and eliminating the deep valuation arbitrage to our peers as we season in the public market. The third quarter of 2021 was yet another strong quarter for gold equivalent ounces sold and free cash flow growth. Our 20,746 CEOs were up 62% over the same period in 2020, delivering a robust 53% increase in operating cash flow and 43% increase in adjusted EBITDA. Sheldon will share more detail on our financial results shortly. 2021 has been a year of growth for TripleFlag. By the end of the third quarter, our assets produced as many CEOs as in the entirety of 2020, reflecting strong contributions from our cornerstone assets and the ramp-up of new mines. Having built Triple Flag from the ground up since 2016, we're set to leading growth in GEOs over this period. We're proud to demonstrate the organic growth of our existing portfolio by highlighting Step Gold's ATO Phase 2 expansion. This was one of the many exciting catalysts during the quarter. The feasibility study announced in October includes a 10.5-year mine life extension, materially increasing the life of our stream by more than a decade. This is a testament to our rigorous due diligence approach and our ability to source and structure transactions on high-quality mining projects led by great partners around the globe. This is a significant value catalyst for all stakeholders in the ATO project. It's also worth considering the context of this milestone from a NAV for share, accretion context, and a demonstration of the intrinsic appeal of the streaming and royalty business model. Our long-term investment horizon and disciplined approach to deploying capital is core to our identity as managers and owners of this business. We aim to deploy capital and be a financier for mining companies throughout the commodity cycle, providing much needed capital to mining companies to fund their strategic priorities. Our investment in ATO is a perfect example of this. ATO is a great test study of the potential for this form of financing to be enabling to the capital needs of the mining sector by generating good investment returns with optionality that rewards our investors as well as those of our mining partners. Triple Flag has full exposure to the ATO Phase 2 expansion with its gold and silver stream, with no incremental investment from Triple Flag beyond the original capital of $28 million we provided to Step Gold as cornerstone investors, representing navigation for Triple Flag on the order of tens of millions of dollars. Our focus is on growing value for share, not pursuing size for size sake, and we'll maintain that discipline going forward. Moving on, we're extremely proud to have published our inaugural sustainability report during the quarter, demonstrating our integrated approach to ESG and rigorous standards in this area. I encourage investors who care about this key aspect of our activities to look at our commitment and work in this area and welcome any feedback as we continue to evolve and pursue substantive best practices in this area. In October, we announced the implementation of the dividend reinvestment plan and normal course issue of it. We believe that when our share price does not reflect the fundamental quality and value of our portfolio, buyback shares pursuant to the NCIB is a creative and an opportunity to capture this discount and create value for our shareholders, whilst being cognizant of the need to build over time a larger float and greater liquidity in the stock. We declared a quarterly dividend of 4.75 US cents per share, and our annualized dividend yield is set to leading at approximately 2%, allowing us to directly share the benefits of Triple Flag's cash flow with our shareholders. We intend to continue growing this dividend over time without compromising our disciplined growth strategy. Our focus will remain on delivering reliably strong results and returns as we pursue our strategy of disciplined and accretive growth through the acquisition of precious metal streams and royalties. Triple Flag's current valuation provides significant upside for a re-rating to multiples that would be more in line with our peers, particularly in the context of the quality and longevity of our portfolio that aligns favorably with the best in the sector. We have already demonstrated repeatedly over the past five years that we have the scale and capability to compete in an intelligent manner with the best in the sector for the largest and highest quality precious metals opportunities. We believe that a re-rating will be driven by the broader recognition of investors, of our portfolio quality and management team capabilities, along with a continued performance of our business, consistent execution of our strategy, and prudent return of capital to our investors. Our commitment to our investors is to continue to remain disciplined in the execution of our business strategy. From the outset, we've been relentlessly focused on asset quality, Over time, this focus has translated into a portfolio that compares favorably to that of the largest, most valuable peers in the sector on key portfolio quality metrics. Each of our assets both compelling geology and the potential for significant exploration and production upside. Our core assets in particular are associated with large, low-cost ore bodies with good track records of reserve replacement and large prospective land packages, which our investors will benefit from through potential future success with the drill bit and possible expansions. Capable and responsible operators working to high ESG standards are prerequisites for our investments. A high proportion of our assets by net asset value are in production and operated by senior mining companies. Additionally, beyond the producing mines, we have a large portfolio of developments and exploration properties that will provide organic growth in the medium to long term. We have deliberately structured a portfolio with a long average mine life linked to assets with good track records of reserve replacement, social license to operate, and proactive environmental management, which we believe ultimately leads to longer and more sustainable mines. This, in turn, provides investors with long-term visibility to future cash flows and exposure to multiple commodity price cycles, in addition to the optionality that comes from future life expansions and discoveries through the drill bit. The vast majority of our producing assets are situated in the lower half of their respective industry cost curves. This is an important characteristic in an inflationary environment with rising materials and labor costs, like we're now beginning to witness across the industry, which have historically put pressure on mining companies' margins. As a streaming and royalty company with low-cost position assets, we are broadly insulated from these headwinds, particularly sectoral margin compression. We've remained true to the model in our portfolio construction, avoiding exposure to equity positions and similar financial instruments, and focusing our activities on acquiring predominantly precious middle streams of royalties. We believe that is what our investors are seeking from us, and we will remain disciplined in executing on this model. I will now ask Sheldon to comment on our Q3 results and to provide some further context.
spk04: Thanks, Sean. We had another strong quarter, recording over 20,700 GEOs, representing a 62% increase in GEOs over the same period in the prior year. Year-to-date, we have realized nearly 63,000 GEOs, very close to our total GEOs for all of 2020. We have seen strong performance from Cerro Lindo, North Parks, Fosterville, RV Platte, and Bredica, which has helped to offset COVID-related production delays experienced by ATO. Adjusted net earnings of $13.7 million were increased 171% over the corresponding period in the prior year. Net earnings were affected by a non-cash mark-to-market decrease in the value of equity investments recorded in the quarter. We realized operating cash flow of over $29 million in the quarter and over $91 million in 2021 to date. We are debt-free and at quarter end had $27 million of cash on hand. Turning now to slide eight. Slide 8 sets out the growth in operating cash flow and free cash flow, as well as the high asset margins that we have continued to maintain. In 2020, operating cash flow increased by over 100% over 2019 to $84 million. This strong growth has continued with operating cash flows in the last 12 months of $122 million. A strength of the streaming model is that operating cash flow gets translated very efficiently into free cash flow. As a streaming company, we are not exposed to the sustaining capital expenditures that mining companies are exposed to. This leaves more cash available to shareholders. The streaming business model is also characterized by high margins. Slide 9 sets out our high margins, which are resilient despite gold price fluctuations. Crucially, our margins are well inflated from rising inflation as we are not directly exposed to mine level operating or capital cost inflation. In prior positive price cycles, producers were unable to fully enjoy the benefit of higher gold prices as underlying cost inflation could result in margin compression. Our high margin model is well suited for inflationary environments. I'll now turn matters back to Sean. Thanks, Sheldon.
spk07: We're working hard to help provide the market with a richer and deeper understanding of the quality of our portfolio and many catalysts. As part of this campaign, we're planning virtual mine tours for the benefit of investors before the end of the year on North Park and RB Plant and look forward to educating the market on the quality of our mining partners and their world-class assets. Slide 10 provides an overview of the many catalysts across our portfolio announced since we reported our second quarter results. demonstrating the diversification, underlying quality, embedded growth, and long-term optionality in our portfolio. The ATO Phase II expansion in the recently released feasibility study was a significant milestone and represents material upside for our stream, which I'll expand upon in an upcoming slide. So GEM has achieved commercial production at Beritica and is already expanding the processing plant from 3,000 tons per day to 4,000 tons per day. The expansion is expected to come online in the new year. Dargs, Obby Platt, and Young-Davidson all achieved record production or mining rates in the quarter. Fosterville continues to outperform, having already achieved the lower end of Kirkland's guidance in the first nine months. Kirkland now forecasts production of 500,000 ounces or higher for the year. Drill results during the quarter demonstrate downplunge extension of the Swan Zone, Sigmund and Robbins Hill, with very high gold grades in the downplunge extension of Swan Zone. Other core producing assets are delivering organic growth and positive exploration results. Drilling at Cerro Lindo during the quarter continues to confirm continuity of all body 9 and 5B. North Park announced during the courses that they have commenced the development application process for the E44 roughness deposit, which contains favorable gold grades and is approximately 13 kilometers southwest of existing operations. In September, Excelsior provided a comprehensive update on its ongoing ramp-up, the restart of the Johnson Camp outside open pits, and long-term upside on the property itself. Nevada Copper announced financing support from its key backers for completion of the underground ramp-up and has been successfully accelerating scope production and increasing development rates. Renard is benefiting from materially higher diamond prices and steady operational progress. Our earlier stage assets are also demonstrating tremendous value. Talon continues to intersect record grades and expand the scale of the Tamarack nickel deposit, The latest discovery indicates a new deposit with shallow, thick, and large-scale mineralization. Nucleus announced plans to drill the DJ project in British Columbia, and Calibre Mining is ahead of schedule on its Eastern Barassi project. Our royalty and newfound gold's Queensway project is also benefiting from incredible exploration success and attractive geology. The drill program at Queensway was recently expanded to 400,000 meters and the upside is perspective. Moving to slide 11, we want to extend our gratitude and congratulations to the entire Step Gold team on the excellent Phase 2 expansion results, including the recent feasibility study and the rapid progress made on this exciting project. This project will bring further significant investment to the region, generating more jobs and providing economic benefits to local stakeholders while creating strong returns for Step Gold and Triple Flag shareholders. The economics are incredibly robust, with an IRR of 67% and a three-year payback period. These figures are after tax and include the stream, providing for a really compelling expansion for STEP. This is a relatively low-risk expansion, with construction underway and permitting and infrastructure broadly in place. A new 2.5 million-time per annum crusher is currently being installed, and STEP reported that it is in discussions for debt financing. After constructing the ATO Oxide Phase Heat Beach project that went into production in 2020, Steph Gold boasts a proven management team well-versed in constructing a mine in the region. This stream showcases Triple Flag's ability to work with miners to provide tailored financial solutions that enable them to build profitable new mines using our vast global mining sector experience, along with deep technical and commercial capabilities to deliver value to all our stakeholders. We are also working with the Step Gold management team to meaningfully contribute to their impressive community programs in education and beyond, adding to our commitments with mining partners in other regions. On slide 12, you can see the site layout in the background. We've been partners with Step Gold since day one. We like the geology, the asset, and the management team. and with the Cornerstone financing partners in 2017 to help Steph acquire the assets and successfully bring ATO into production. In total, we invested $28 million in the stream, and we have already received $60 million back in stream cash flow as of the end of the quarter, despite 2021 being a challenging year in terms of temporary supply chain constraints on sourcing reagents. The Phase 2 expansion represents significant upside for all stakeholders and materially extends the life of TripleFlag's gold and silver stream. Across the streaming sector, it is objectively one of the most value-accretive catalysts in 2021, adding tens of millions of dollars of NAV to our portfolio for no incremental investment by TripleFlag. TripleFlag's portfolio has a strong balance of well-established core operating assets and assets in the ramp-up phase providing near-term growth, Both parts of the portfolio are contributing to our results, and I'm pleased to share some notable highlights. Northparks was a strong performer for Triple Flag, contributing 4,300 gold equivalent ounces in the quarter. We're seeing upside materialization on Northparks' large land package as well, with the announcement of the E44 Rosslands application for development. This is a gold-rich deposit 13 kilometers from existing operations. Cerro Linda continued its very strong performance in 2021, with 7,500 GEOs delivered in the quarter. RB FATS is performing well, contributing 1,800 GEOs. In the third quarter, it had record 4E production at Steldroof, as it nears its nameplate capacity of 230,000 tonnes per month. We're also watching with interest the speculation of a possible combination with Implats on Northern, We're pleased to see Fosterville tracking above 500,000 ounces for the year, after an extremely strong Q3, on great outperformance in the Swan Zone. Fosterville contributed 2,500 geos in the quarter. And Young-Davidson contributed 800 geos and, as mentioned earlier, achieved record mining rates through the quarter. Additionally, we've seen encouraging exploration results as Elemis resumed the first systematic exploration in over a decade at Young-Davidson. Slide 14 sets out the five assets in our portfolio that are currently ramping up to full capacity. At ATO, COVID continues to disrupt 2021 production due to supply chain issues, impacting the China and Mongolia border. Border and vessel congestion unfortunately led to shortages of critical reagents, but staff have been mining, crushing, and stacking ore throughout the year. So the supply chain issues are a matter of production delays that are expected to be made up in the future periods, again, essentially a timing impact. We expect the etching to resume at ATO in the spring in our internal planning, allowing significant time for the supply chain disruption to be addressed. We'll keep the market informed as they progress. DARS, Veritica, Gunnison, and Pumpkin Hollow all continue to progress their development. Each are currently contributing cash flows and are expected to gradually increase their production contributions going forward. As announced in the prior quarter, production over the next five years is expected to average 105,000 geos per year, a significant increase over current production levels primarily due to continued production growth from veritica, pumpkin hollow, gunnison, dogs, and ATO. Over the next 10 years, we expect average production of 105,000 geos per year. This is 90% precious metals weighted and only requires $45 million in future investment. which will easily be financed through internal cash generation. Beyond this outlook, numerous catalysts exist in the portfolio, along with considerable optionality related to potential life of mine extensions, expansions, and exploration from our 15 producing mines and 60 exploration and development assets. This outlook naturally doesn't factor in any additional transactions we are likely to do, given our successful track record over the past five years. The team and I have embedded principles in sustainability and ESG into Triple Flag and its core values from day one. And we are pleased to share our approaches in more detail in our sustainability report, which we published in September. We support the progress being made by leaders at the UN Climate Change Conference in Glasgow. The role of the mining sector in addressing the climate change challenge is one of the most important of the time. As a provider of capital to the sector, we feel we have a duty and ability to help influence outcomes and that we must also take our share of responsibility for the impact associated with production of attributable metals that generate our revenues. We've done this by estimating and offsetting the greenhouse gases associated with the production of attributable share of metals by our counterparties. Each project we've invested in for carbon offset credits, such as renewable wind power in Inner Mongolia and the production of efficient cookstoves in Ghana, makes a measurable difference protecting the environment as well as providing secondary benefits that align with the UN Global Compact 10 principles and the Sustainable Development Goals, including quality education, gender equality, and responsible consumption and production. On September 30th, to commemorate the new National Day for Truth and Reconciliation in Canada, which honours the lost children and survivors of residential schools, their families and communities, Triple Flag partnered with Stornoway to announce a new scholarship program for students at the local Cree High School near the Renard Mine in northern Quebec, whereby five scholarships will be awarded at the end of the school year to students. We also provided 75 backpacks full of school supplies to be distributed at the elementary school, Supporting local communities is incredibly important to us. We will continue to partner with our counterparties where we can to support communities where they operate. Our balance sheet is robust. We have no debt, our business generates substantial cash flow, and we currently have available liquidity of over 600 million US dollars. Deals of this scale could represent material growth to a company of our size. As you're aware, we made the decision to take Triple Flag public on the TSX in May of this year. Part of the consideration in coming to market was our firm belief that the company had reached the critical scale necessary to allow us to compete for and originate streams and royalties at meaningful scale as a public company and broaden our ownership base. We have a strong institutional shareholder base led by Elliot and a blue-chip set of leading global funds and a growing retail shareholder base. and significant shareholders ourselves who are fully aligned with our fellow owners. We have positioned Triple Flag as an emerging senior streaming and royalty company. We believe we have all the key elements to drive Triple Flag's growth and trading multiples. We have a high-quality portfolio that objectively stacks up with those of the larger, most valuable peers in the sector and all the important metrics. The numerous catalysts we highlighted today demonstrate the organic growth and exciting future ahead as we continue our track record of growing this company further in a manner that creates value for all our stakeholders. In the near term, an increase in gold equivalent ounces, a sector-leading dividend yield, accretive share buybacks, and news flows from portfolio assets are all catalysts we see on the horizon. We look forward to highlighting our core assets virtually in the near term. Thank you again to all who have attended this call. And I'll now ask the operator to please begin the Q&A session.
spk09: Thank you, presenters. At this time, if you would like to ask a question, please press star 1 on your telephone keypad. Again, to ask a question, simply press star 1 on your telephone keypad. And your first question comes from the line of Fahad Tariq from Credit Suisse. Your line is now open.
spk06: Hi, good morning. Thanks for taking my question. Maybe first, there's still a number of mines that are ramping up to full capacity. You touched on a few of them in your presentation and in the MD&A. Can you talk a little bit about expectations for next year in terms of when we could expect more normal run rate production levels? Thanks.
spk07: Look, thanks for the question. Look, firstly, Fahad, we'll be providing 2022 guidance early next year along with the rest of the sector. So, you know, I'm not really going to provide anything, you know, specific right now. I think generally what I would say is I would encourage people to look at what we've done over the last four years, the last five years. So Arcaga was 24% in GEO growth. This year will be another 30%, and that's with essentially negligible contributions from assets like Nevada Copper, Excelsior, and others that are sort of ramping. We haven't – and you've seen our sort of tenure guidance. There's only two large companies, the two biggest, who have been able and capable of providing that sort of guidance. And you've just seen the ATO expansion plus, you know, cornerstone significant funding that's been announced at the same time for $65 million to fast-track that. So I guess what I'm trying to allude to here is that the cash flow multiples that are implied in our business now are the lowest in the implied sector before any of that is factored in, including our growth track record and including the likely growth that we will see in the year ahead. I mean, ATO alone with the disruption this year with the reagents, if they hit their original guidance, there would have been another 9,000 to 10,000 CEOs, for example, just to sort of put that in context. Anyway, I hope that gives you a bit of an indication. I think when you start looking at the details of things like Veritica and the expansion ahead, those guys are just doing incredibly well. You've heard the updates that we try to provide a lot more disclosure and information. We'd welcome any additional feedback from yourself and your colleagues as to how we can continue to enhance our disclosure. And then in a few weeks from now, I think the first two cabs off the rank, North Park and Albee Platte, I think will give you a really good window into just the quality and the optionality and sort of some good cornerstone assets. So maybe not the full detail of what you require. A lot of that will come early next year. But, you know, hopefully directionally that gives you a very good idea.
spk06: Okay. And then just maybe switching gears from the organic growth to potentially inorganic growth. Some of your competitors in the past few weeks have talked about potentially looking at other metals beyond precious metals and having the latitude to even look at things like battery metals. Maybe just curious your thoughts philosophically on, given the deal pipeline and what things are looking like, is that part of the consideration, maybe expanding the kind of different metals you would consider? Thanks.
spk07: Look, I'm not sure. I think we might be unique in that I suspect we're the only management team as a senior team who's actually worked in the base metals sector as executives and operators. We've got the skill set. We've got battery metals already in our portfolio with copper and nickel, for example. And we do see a lot of opportunity there. So we've always been very clear that Those are fair game. And those things that we have skill sets in, if we're diligencing a copper asset like North Parks for gold and silver, it's not a sort of commercial or technical constraint that allows us to sort of do a base metal. stream on there. The only issue is the extent to which perhaps you go overweight for our sort of longer-term targets. So we've been clear that our core focus is precious metals. We've seen ample opportunity there, but we will be opportunistic if we see, you know, decent battery metal or base metal opportunities. What we won't do, just to reiterate it, is, you know, it feels odd for us to talk about being carbon neutral, given our skill sets and orientation, we're not investing in coal. We're not investing in oil and gas. Those are skill sets that we just don't have, and it's at odds with our focus. So yes, but we're not going to sort of declare triple flag battery metals at this point. We're a precious metals company that is in pursuit of good assets, good returns, and we have an opportunity in the short term maybe to go slightly overweight, but ultimately we'll focus on our longer-term targets. Okay, great. Thanks so much. That's it for me. Thank you.
spk09: Thank you. Your next question comes from Greg Barnes from TD Securities. Your line is now open.
spk05: Thank you. Sean, your guidance that you don't expect reaching our CTO until the spring of 2022, is that your view, or what is that goal?
spk07: It's ours, Greg, and good morning. Good to hear your voice. Yeah, we, look, I think what we're trying to demonstrate is just, you know, a level of pragmatism and, you know, prudence there. We don't have any special insights. We know that the team is pursuing multiple sources outside of their sort of traditional channels to address that. And I think you've seen also in our disclosures, I mean, even with the work they've continued doing, they've got, I think it's 40,000 ounces, you know, crushed and stacked. So the minute they've got reagents, you know, the time to be able to unlock those ounces should be pretty quick. But one, there's the kinetics and the seasonality in winter that we're just sort of factoring in. But yeah, it's nothing to do with step management's view at this stage. We hope we're conservative in that perspective, right? No, but just to your point, I mean, if you consider ATO started last year in the spring and ramped and hit commercial production, and you think about the ounce of delivery last year just versus this year alone, I think it gives you a sense when you've already got that level of ounces stacked and mind and, you know, crush and stacked on there, the minute they do that, the ability to be able to have a flush of ounces coming through there is obviously significant.
spk05: Among the ridicule expansions of $4,000 on this day, what's the impact on your QVO deliveries to the United States? It sounds like it's going to start very early in 2022, so there should be an immediate response.
spk07: Yeah. Well, firstly, my first comment on the RIDIC as a whole is it's actually been quite remarkable to watch the Zijin team navigate through COVID through a ramp-up where, you know, even key expats with things like tramways sitting in Austria are These guys have just done incredible work to sort of take it on the chin, work well with their communities and really ramp up. So you'll start seeing that the ounce contribution is really, really meaningful. And just to remind you, that deal we did a couple of years ago, you know, from the $100 million, we've got less than $10 million outstanding now from that. And it's just starting to ramp. So, you know, we're sort of in love with what those guys have been able to achieve. And to see them already, you know, going from their 3,000 to 4,000 tonnes has been pretty gratifying. But, James, I don't know if you've got any comments that you'd want to make on that.
spk08: Yeah, I mean, Greg, it will be positive for 2022. You know, the one element is the expansion from 3,000 to 4,000. but also there's the stabilization of the monthly throughputs that are, you know, becoming more consistent that will also provide for, you know, some GDO growth in 2022.
spk02: Anything else? Yeah, it's really a straight 25% increase in production from, you know, the plan this year to the plan next year. So, yeah. Stay in line.
spk07: And obviously they've been ramping through this year. So, you know, as they start achieving their run rates and then, you know, hit that benefit, it's just increased throughput, which will be good. We'll incorporate all this in our guidance early in the new year.
spk05: What run rates are they achieving right now?
spk02: About 3,000 tons per day. They have been achieving 3,000 tons per day. Okay. Thank you.
spk07: Thanks, Greg.
spk09: Thank you. And your next question comes from the line of Ryan McArthur from Raymond James. Your line is now open.
spk03: Good morning. Sorry to go back to this because my question was like Greg's and ATO. So I just want to try and understand a couple of things here. There's 40,000 ounces on the pad. They talk about 60,000 ounces maybe next year. But you're sort of saying we maybe won't get there because we're going to be more conservative. But I assume those ounces come out quickly out of the pad. So can we get, from your perspective, coming out more than 60 next year? And I guess my second part of the question is, what's the delay in your contract between when they actually produce it and you actually book it? I'm just trying to get a feel for the sales there next year since there's a lot of moving parts.
spk07: Yeah, Brian, great to hear your voice. Look, there's a misconception I want to correct here. I'm not suggesting that if those guys, the STEP team is saying $50,000 next year, that we're saying they're going to do $40,000. What I'm saying is even though they've had reagent disruption, they've continued to mine and really build working capital. So rather than just sort of conserve cash. So that's working capital to your point. Before they start mining again next year, you know, so they should be very well placed to not just benefit from quick ounce delivery from mining activity this year and that working capital buildup, but the work they're going to do next year. Plus, they've got a crusher that, you know, that two and a half million ton crusher that um they're in the process of um you know late finalizing construction that is what three or four times the the sort of capacity of the existing one so um i think they're very well placed once they get the reagents to be able to achieve some very good ounce run rates next year uh the time delay we get pretty much uh you know continuous uh deliveries from there it's not like on Something like Cerro Lindo where you can think of something like a four-month lag between once they actually produce and then we ultimately get the answers. We get good line of sight, but there is that working capital time lag. We don't really have that in this business. Sheldon, I think it's minuscule. We get sometimes every couple of weeks we'll get deliveries from state.
spk04: Yeah, they do kind of periodic pours, and then they deliver that to the Mongolian central bank. and um and they get paid and then we get our delivery upon upon that payment so that's actually a very short uh lag in the system from our perspective on that on that one yeah great that's very helpful and then as far as um the cap at ato you you would think it kicks in when 2024 yeah we're currently projecting about 2024 um i mean obviously they've had um
spk07: you know, a pretty good run rate of a bit of additional oxide. They've got this additional crushing capacity. So we're working off the latest sort of public guidance in that. And as you know, I mean, our business case was really predicated on quick payback, high return on the oxide. So this latest news is it's all additional sort of, you know, tens of millions of additional MAV to us beyond that. So... And that's before they hopefully have some additional success with further exploration. This is just this current study that drives these reserves.
spk03: Okay, great. Thank you very much. Thanks, Brian.
spk09: Thank you. Your next question comes from the line of Mike Hollinan from Bank of America. Your line is now open.
spk01: Hi, Sean. I guess that's my Finnish pronunciation of my last name. Hey, Mike. Absolutely. Actually, I'm switching gears away from ATO in Mongolia. And just wondering, Sean, you mentioned one of your goals is to increase your share liquidity, your trading, I assume, and you're buying back stock. So unless you're buying back Elliott stock, I'm not too sure how you're going to increase your liquidity. So I was wondering what steps you're taking. to increase your liquidity?
spk07: Yeah. So, Mike, firstly, I mean, this is a contradiction we've grappled with a lot, as you'd appreciate. I'd say the status quo, our liquidity is clearly being the sort of one consistent thing when we look at our large institutional shareholder base that has been sort of a clear sort of driver of the underperformance that we've had. And it does seem to be this sort of concern that there is this contradiction between But you can look at your own numbers and everyone else's. You look at the nine transactions that have been done over $50 million this year and ask yourself the question of what does economics look like in terms of NAV accretion. I encourage you to look at the same thing with no money down on ATO in terms of that NAV and what that means and behaving counter-cyclically. And for us, the idea here is really just be supportive. These numbers are not material to our overall liquidity. We haven't commenced buying, to be clear. We've been in a blackout period. But ultimately, there needs to be a better reflection of just some of our intrinsic value. And that can happen on some very low volumes with currency in our stock. Before, I think it could create an environment where Elliott, who, frankly, has not sold a share on the IPO and couldn't sell even if they wanted to, and they don't want to from our understanding. I think the potential to do non-dilutive secondaries in the future would be contingent upon a slightly better reflection of fundamental value in the share price. So that's how we view it. There is an opportunity for us, obviously, depending in certain where we are at at that time. We've got a lot of FIPR with cash to transact with. We've made that clear in the presentation. But, you know, if there's an opportunity to add, you know, good assets and potentially, you know, Dalit Elliott and do some additional equity there, that'll be something that We won't do formulaic heat, but we'll consider very carefully, depending on the dilution that it may entail at that time. We're big shareholders, so this is a thing we don't take lightly. So I hope that gives you a sense. But it's not like this simple linear dance that we can sort of sketch out for you. I think in the short term, it's just helping people educate, particularly smaller investors who are very value-focused, who like to be – you know, the large dividend that we pay and just see this massive disconnect between the fundamental value in this business and the re-rate potential and the ability to participate. It's like a no-brainer.
spk01: Okay. I guess another way to dilute Elliott is a merger with another streaming royalty company, which one of your peers has bought three of them already and just keeps right on going. Everybody bought already. So I'm just wondering what your view there is.
spk07: Yeah, so look, firstly, there's the concept and then there's obviously the detail and the match, right? And you've got to make both those work. So conceptually, we're not entrenched management, plain and simple. I think we've got probably more equity ownership than pretty much any management team out there. So that means our sort of picking up the paycheck every couple of weeks is not what keeps us engaged and excited about life. So whether we're on either end of a or a merger of equals or whatever that sort of combination looks like, we're intrinsically open to those opportunities. The group you've mentioned, I think, are doing a public service in terms of consolidation on the small end. I think it's quite hard for us to find fundamental value on some of those. And so we'll look at every and all possibilities. And we're always available to those. But the math also has to work, right, at the end of the day. So I think some of the things that, and I'd be interested in your perspective at some other point, but if you look at some of the things, particularly on the smaller end, and then you think about if they were in our portfolio, would we get, once institutions and analysts actually focus on those fundamentally, because this is not a retail story. Would we get the value attribution and the recognition? Would it be seen as smart and accretive and actually make a material impact on our business? Those are the questions I think we sort of grapple with.
spk01: Okay. I guess one last question. Thanks for that, by the way. On slide five, the PNAP charts, well, all three of them, or two of them, Triple flag is the least expensive, so maybe triple flag is in the crosshairs of somebody who wanted to buy another company consolidating triple flag because of your valuation.
spk07: Like I said, Mike, look, we're not entrenched. If there was a sensible offer that was a proper reflection of value, we'd be amenable to it. But at the same time, we're not a charitable organization, and Elliott isn't either. You know, these guys, they've been super supportive over five and a half years. They like gold. They clearly like this team. And, by the way, nobody can kind of go and do a hostile and sneak one by them. So, yeah, bona fide approaches that made sense. They were a proper reflection of value every day of the week. But cheeky offers, like, I mean, let's not waste each other's time, right?
spk01: Okay. Well, thanks so much.
spk07: Okay, Mike. Good chatting to you.
spk09: Thank you. Your next question comes from the line of Tanya Jacobs-Connick from Scotiabank. Your line is now open.
spk00: Good morning, everyone. Thank you for taking my questions. First of all, congratulations on getting that free option on the Fresh Rock Wars. So that's good news. I just wanted to come back on the M&A, and Mike did talk a little bit about, you know, merging, you know, mergers with other companies and and so forth. So I'll leave it at that and move on to maybe the opportunities that you are seeing in the market. I know on your Q2 call, you mentioned a few hundreds of millions in size. Is that still the range that you're seeing opportunities in?
spk07: Yeah, Tonya, I think it is. It's interesting. I know this sort of format lends itself to this sort of quarterly fixation. But I mean, as the ATO shows, Seeds that you plant years out very often can really create these outside opportunities. You know this, and you know the model really well. Our line of sight, I'd say, beyond just this quarter, I think there's some really interesting things in that size range at the moment. Development space stuff, some non-core things, some base, some precious stuff. We've got a bilateral thing that's around $100 million that's been on a super slow burn that may or may not get there, which would really be more like early next year if it all comes together. This team is about as active as it's been at any time. I think it's just maintaining that focus on value as we go forward. Yeah, I'd say the sort of comments that we've made previously and all the stuff that I've read so far with the peer set is very representative.
spk00: Okay, so I guess, you know, just from what I've taken on is besides the project financing, looks like non-core asset sales was one that you mentioned too?
spk07: Yes. Yeah. I mean, we see those from, like, minuscule in size to, you know, larger. So I think we always tend to see those from time to time coming to the market. So, yeah, we see those from both private and public situations.
spk00: And then you said also base metals, so gold precious metals and non-precious metal base metals.
spk07: Yeah, and, I mean, there's bulk occasionally. We don't tend to, you know, depending on obviously what that bulk is, you won't see us do coal or things like that. But, you know, we see those as well. There are some of those we're seeing right now too.
spk00: And then just wanted to focus on the royalty side, on royalties and royalty portfolios. Are there any of those available?
spk07: Yeah, there's a tiny one that we're sort of waiting to – We put some work in a while ago. Hopefully there's a ROFA situation there that hopefully will resolve itself one way or the other. But yeah, we always see a few of those. And I think on the horizon beyond probably this quarter, there's something that could come to market that I think would be really interesting as well for whoever was to transact on that. So yeah, there's a lot of work at At times, you know, we've been courting these things for three or four years, and sometimes they end up bilaterally, sometimes they end up in a process, but I think there's a lot in the pipeline.
spk00: Okay. And maybe just one technical question, just on North Park and the E44 potential development of that satellite. Can you just give us an idea of what your stream delivery profile looks like with that?
spk07: James, do you want to?
spk08: Yeah, so, Tanya, it's James. So North Park has noted the intention to develop and apply for permitting. It has not been integrated into the life of mine plan yet. And in addition to our life of mine plan, we used as part of the transaction. But we expect that at some stage when that is integrated, it will be supplemental feed to the existing deposits. E44 is a relatively small deposit. There's about 250,000 ounces of gold in resource. But I think what's particularly interesting about it is it's 13K, as Sean noted, from the main mining license area where all of the bulk of the resource and reserve is. And it does sort of highlight the potential to find other port-free targets across a very large land package that we have exposure to. So, you know, it's a nice supplement now that we should benefit from and, you know, it's probably a harbinger of additional discoveries in the future.
spk07: And also that it's, you know, this was something that was just not on our radar screen because North Park says, you know, it's such a large endowment and such a large resource and, you know, that tends to translate into decades. I candidly was kind of surprised to see has come to the fore. So, yeah, I think to James' point, when you've got over 1,000 square kilometers of land over and above that sort of 26-square-kilometer land package that the reserves and resources and tailings, et cetera, manifested on, it just gives you a sense of the endowment. And we'll cover more of that in some weeks with the virtual mine tour.
spk00: Yeah, we were just wondering why the operator was moving forward in that area, given the very low copper grades.
spk08: Yeah, I mean, they still benefit from some of the gold exposure, and it provides, you know, good blend for the mill. And, you know, there's also a tailings expansion as part of that project as well, which is, you know, important for the operation.
spk00: Okay. And then just maybe with Sheldon, just want to come back to the global minimum tax. It's been getting a lot of attention, and it is moving, looks like it is moving forward. So just wanted to get your thoughts. So, you know, what do you see the impact for, you know, first of all, your view on it and the impact to Triple Flag?
spk04: Yeah, thanks, Tanya. Yeah, so, you know, we've been following that story very closely as, you know, obviously everyone has. And, you know, there's been a bit more guidance been put out, which has been very, very helpful. First of all, on its face, it won't affect the royalties. It just affects the streams. We do use, you know, a subsidiary in Bermuda, similar to Franco and Wheaton's structure. You know, what I can say is when we've done our modelling, One of the things we benefit from is the relative use of our portfolio and the fact that our streams are not amortized to a large extent. And we've actually gotten some good guidance on the international tax front there that they follow the accounting income. So when we look at it and say even if they manage to implement this in 2023 and making some reasonable conservative assumptions, we see a NAV impact of about 5% on our internal model. So that actually makes us feel pretty good. That's not too substantive. If it's delayed to 2025, because 2023 seems pretty close to us for these sort of implementations, 2025 would lower that impact to about 4%. So again, that just kind of gives a sense of the scale for us. And these figures are before taking into account any ability to utilize Canadian tax shield that we might have because we just don't have a lot of detail on how it would be implemented. And, of course, as the additional detail comes out, we'd love to see how we could optimize things. But I hope that gives you an idea of kind of how we're assessing the global minimum tax. And less than that then would be sort of added on by just the ATO news, for example.
spk00: Okay, great. Thank you so much.
spk04: Thanks, Tonya. Thanks, Tonya.
spk09: Thank you. Again, to ask a question, please press star 1 on your telephone keypad. To ask a question, simply press star 1 on your telephone keypad. And there are no further questions at this time. Presenters, please continue.
spk07: Look, operator, I think people know where we are. If there's any follow-up, we're available always. And we really appreciate everyone's time. We appreciate the thoughtful questions. And, yeah, thanks so much for the opportunity to talk to you today. So thanks so much. Have a good rest of your day.
spk09: Thank you, presenters. Ladies and gentlemen, that concludes our call for today. You may now disconnect. Thank you for your participation.
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