Triple Flag Precious Metals Corp. Common Shares

ladies and gentlemen thank you for standing by my name is brent and i will be your conference operator today at this time i would like to welcome everyone to the triple flag fourth quarter and fiscal year 2022 results conference call all lines have been placed on mute to prevent any background noise after the speaker's remarks there will be a question and answer session if you would like to ask a question at that time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. It is now my pleasure to turn the call over to the CEO, Mr. Sean Asmar. Sir, please go ahead.

Thanks very much, Brent. Good morning, everyone, and thank you for joining us to discuss Triple Flag's fourth quarter and full year 2022 results. Today, I'm pleased to be joined by my CFO, Sheldon van der Kooij, our Senior Vice President of Corporate Development, James Dendel, our Vice President of Talents and ESG, Katie Board, and our Vice President of Finance, Iban Bari. Turning to the next slide, 2022 was an important year of delivery against our strategic and operational priorities, a triple flag on almost every metric. And we're all well positioned going into 2023 with the enlarged platform afforded to us by the Mavericks transaction. I view 2022 as one of the top three or four most consequential years in our nearly seven year journey in building this business. Our founding and concluding the Cerro Lindo deal to get us on the map in 2016, doing the North Park deal at the start of COVID and preparing the business for a successful IPO during 2020, the successful TSX IPO and transition to public life in 2021, and now a disciplined step change on multiple metrics during our first full year as a public company that included our largest deal with Mavericks, the New York Stock Exchange listing, our inaugural Sustainalytics rating, growing our dividends, and new quarterly and annual records for the business, to name but a few. My team's going to go into more detail in the slides ahead. On slide five, We announced the $606 million Mavericks transaction on November 9th, our largest transaction to date. The deal has grown our portfolio to 229 assets, with nearly 80% of the NAV coming from 29 cash generating assets, offering our investors more than 90% precious metals exposure and favorable geographic concentration, with greater than 80% located in Australia and the Americas. We emerged with a nicely diversified portfolio, an enhanced shareholder register, a projected 27% increase in GEOs for the year ahead to add to our 21% CAGR since 2017, and a portfolio of 200 exploration and development property interests offering our investors additional growth optionality beyond the 140,000 GEO average we've identified over the next five years that requires no additional funding commitment. The immediate inclusion in the GDXJ and tenfold increase in trading liquidity we've witnessed has been an important and welcome facet of the transaction. Integration is essential to value realization in any M&A transaction. I'm pleased to report that the integration is in an advanced stage and progressing well towards a rapid conclusion, having only closed the transaction five weeks ago. We can confirm the delivery of our announced annual synergies of more than $7 million will be achieved. The breakdown is reflected on this slide. I'm also happy to report that we haven't discovered any material surprises relative to our expectations going into the transaction now that we have the keys to the company. Warren Beale has slotted seamlessly into our team as general counsel, offering valuable capability, experience, and continuity to the legacy Mavericks portfolio. We're also pleased to welcome Jeff Burns and Blake Rhodes to our board whose vast industry experience made an immediate contribution to the depth and perspectives on display in our boardroom yesterday. We're also excited to welcome Elizabeth Wedman to the board with her extensive capital markets and sector experience. I'd like to pay tribute to the professionalism of the Mavericks management team during this intensive period of handover and express my gratitude to my team who've done a remarkable job of absorbing this additional workload during year-end demands while executing to a high standard. I'll now turn it over to Sheldon to discuss our financials for Q4 and the financial year we've just gone through. Sheldon.

Thank you, Sean. We had a record fourth quarter, realizing over 25,400 gold equivalent ounces due to a very strong performance at Cerro Lindo in the quarter. For the quarter, our adjusted net earnings of $0.12 US per share was an increase to that of a year ago, and our asset margins remained strong at 91%. Our operating cash flow in the quarter was nearly $37 million, which was another record, due largely to record gold equivalent ounces that were slightly offset by lower average metal prices. For the year as a whole, we realized results that were quite consistent with that in 2021. Our gold-equivalent ounces were steady with the prior year, despite experiencing timing delays, which resulted in our sales and deliveries lagging underlying production at Cerro Lindo, and the headwinds of a lower silver price, which resulted in our silver sales translating into less gold-equivalent sales. Adjusted earnings for the year equaled $0.40 per share, slightly ahead of $0.39 per share realized in 2021. I also want to highlight that during 2022, we paid a total of over $30 million in dividends. Since our IPO, we have paid out over $45 million in dividends, directly sharing underlying cash flow with shareholders. In 2022, we increased our dividend from an annual rate of 19 cents per share to 20 cents per share. Our dividend is well covered. For the year, it represented 25% of cash flow, leaving significant additional cash flow for deployment into new opportunities as they present themselves. I'd like to turn to slide seven to show the progression of the business since our founding in 2016. Triple Flags was formed in May of 2016, and we acquired our first asset, the Cerro Lindo Silver Stream, in December of that year, and we received our first cash flow in January of 2017. Since that time, we have accretively grown the portfolio, realizing over $150 million in revenue in 2022 and poised for further growth in years ahead. After rapid cash flow growth in 2019, 2020, and 2021, due primarily to increasing production, in 2022, we realized results which were largely consistent with the prior year. In 2022, our 84,500 gold equivalent ounces resulted in operating cash flow of just under $120 million US. This was with 2022 silver prices averaging $1,800 per ounce for gold and less than $22 an ounce for silver. Later in the presentation, James will speak to our five-year forecast of 140,000 gold equivalent ounces. As we scale from our current level of production, the cash flow will scale accordingly, assuming consistent gold and silver prices. Of course, if prices increase from current prices, the cash flow will increase even more. So we expect that cash flow will resume a course of growth going forward, again, assuming consistent prices as the embedded growth in the portfolio is realized. We have managed to maintain consistent margins of over 90% Even a few years ago, this didn't get the level of investor attention that it does now, as many operators strive to maintain margins in an inflationary cost environment. The defensive margin characteristics are a real highlight of the streaming and royalty model, and it allows for a very effective translation of revenue into cash flow for shareholders. I'll now turn it over to Triple Flag's Vice President of Finance, Iban Bari.

Thank you, Sheldon. Our inflation-resistant business continues to perform well. with a 91 percent margin realized during the fourth quarter. This is consistent with our historic performance and shows the strength of the Royalty Insuring Model as inflation and central bank policy continue to be headwinds for the global economy. Turning on to slide nine, we see the benefits of the high margins being robust cash flow highlighted by our record $37 million in the fourth quarter. Our cash flows will vary with metal prices, but the combination of high margins and low overhead result in consistent and dependable cash generation. We have returned $45 million U.S. in dividends to shareholders since our IPO and look forward to continuing this trend. Turning on to slide 10. It highlights three very important aspects for our portfolio. being asset diversification, precious metals focus, and a portfolio which is predominantly centered in the Americas and Australia. Sarah Lindo was our biggest contributor in the quarter, with approximately 37% of quarterly revenues being attributable to the asset as a result of catch-up and deliveries. In the past quarter, gold and silver accounted for over 90% of our revenues, amongst the highest in the sector. By geography, the country with the greatest contribution in our revenues was Australia. And after Australia, our portfolio was predominantly located in mining-friendly jurisdictions in the Americas. Now passing on to James.

Thanks, Iban. Page 11 tracks our growth from the founding of Triple Flag in 2016 with the acquisition of the Sierra Linda Silver Stream, which remains our largest single GEO contributor. From that period, Triple Flag has grown at a sector-leading rate, driven by strong performance of the underlying operations, such as Saralinda and Fosterville, as well as the disciplined acquisition of streams and royalties to our latest acquisition of Mavericks. Looking forwards, GEO guidance for 2023 stands at 100,000 to 110,000 GEOs, which increases to over 140,000 GEOs on average for the period 2024 to 2028. for our longer-term outlook.

I'll go into further details on the drivers for both figures on the next page.

While 2022 and the fourth quarter represented sales records, our portfolio was impacted by delivery and timing and the gold-silver ratio. The 2023 guidance assumes the continuation of similar lags, particularly regarding Cerro Lindo concentrate settlement and assets that are ramping up, and a persistence of a higher than historical average gold-silver ratio. Certain handicaps were appropriate to account for the recent operational performance being included. Of note, a portion of North Park's GEOs will be deferred from 2023 to 2024, reflecting changes in the mill-feed blending from all sources of differing gold-grade contribution. specifically the deferral of ore from the higher-grade E31 north open pit that is expected to start up towards the end of 2023. This is due to North Park's planning to mine an increased volume of the E26 Lift 1 north cave in order to optimize cave productivity and overall extraction, which runs into a capacity constraint at the plant. which is about 7.8 million tons with the nameplate capacity of 7.6 million tons. Fosterville's 2022 production was lower than forecast, primarily due to the operating restrictions related to low frequency noise and lower gold grades than anticipated in the fourth quarter of 2022. The operating constraints related to low frequency noise have been assumed to continue in 2023, resulting in a deferral of approximately 3,000 GEOs to triple flag for the year. Negligible GEOs are assumed from construction and ramp-up assets, specifically Pumpkin Hollow and Gunnison. Intellectual performance is demonstrated, although both projects appear to be making solid progress. Royal Baffigan Platinum experienced operational disruptions in late Q3 2022 as a result of a tragic underground mobile equipment-related fatality and the ensuing investigation. This will impact 2023 GEOs due to the timing lag between mine production, smelting, refining, and metal sales, resulting in a deferral of those GEOs until future periods. Together, these points represent a deferral of GEOs from one period to another. As previously indicated, no contribution from the Omelon Royalty has been assumed in either the 2023 guidance nor the long-term outlook. Turning to the long-term outlook, GEO sales over the five-year period ending 2028 are expected to average 140,000 GEOs per year, a significant increase over the current levels, primarily due to north parks, where in the short term, increased gold production from E31 north open pit, and in the medium term, the ramp up of E22 deposit, both of which host materially higher gold growth than the current run of mine feed forecast for 2023. At the construction stage assets, the restart and ramp-up of operations at Pumpkin Hollow and production from Gunnison, commencing with the existing Johnson Camp, will add to GEOs. And we expect Agnico to resolve the low-frequency noise restriction issues at Fosterville. And finally, we anticipate the completion of production ramp-up at Arby Platt's steel drift mine, Veritica, and Beta Hunt. The majority of the production expected over the five-year outlook is derived from mines that are currently in production and supported by mineral reserves. Above and beyond the current outlook exists further optionality associated with development stage projects that may be advanced during the period. The long-term outlook requires minimal capital expenditure by the asset operators, and a number of the development projects have been permitted, providing a low-risk outlook. The long-term production outlook requires no further funding from Triple Flag.

I'll now pass it back to Shelton.

Thank you, James. In addition to the GEO guidance, we have provided additional guidance as to our expected depletion, G&A expense, and Australian cash tax rate. Based on our guidance of 100,000 to 115,000 gold equivalent ounces, we forecast our 2023 depletion to range between $65 million to $71 million. At the midpoint of the range, we are forecasting depletion of $632 per ounce. In 2022, we realized depletion of $592 per ounce, which we expect to increase as we account for the ounces from the Mavericks portfolio with their stepped-up cost basis. We are forecasting cash G&A for the year to be $16 million to $17 million, an increase from the $11.3 million realized in 2022. The increase is due to the increased scale from the addition of the Mavericks portfolio, as well as a full year of being listed on the New York Stock Exchange. As Sean has already spoken to, we are delivering on the Mavericks transaction synergies represented by payroll savings and duplicative third-party costs such as insurance, audit, legal, rent, and listing fees. These savings will be realized over the course of 2023. Non-cash G&A is forecast to be $5 million per year. This primarily consists of stock options, RSUs, DSUs. Triple Flag currently incurs cash taxes in Australia on our Australian royalties. Consistent with the prior year, we expect cash taxes to be 25% on the Australian royalties. In addition to the royalties on Fosterville, Dargs, Stahl, and Henty, we can now add the Beta Hunt royalty to our Australian portfolio. I'll now turn it over to Katie Board, Triple Flag's Vice President, Talent, and ESG.

Thanks, Sheldon. Sustainability remains a core value of Triple Flag. In the fourth quarter, we received external validation of our foundational focus on excellence in ESG as a capital provider to the mining sector, receiving our inaugural Sustainalytics score that ranked us fourth of 114 companies across the global precious metals industry. Further, we were awarded two supplemental top badges for both region and industry. We were also accredited as a great place to work in Canada, highlighting the outstanding employee experience and workplace culture, which we view as a competitive advantage for our talent-obsessed organization at Triple Flag. where top-tier performance is constantly demanded from a small, high-quality team of executives focused on growing value per share. We support decarbonization and the transition to a low-carbon economy. We are committed to maintaining carbon-neutral operation. Since inception in 2016, we have been carbon neutral, broadly defining our carbon footprint as consisting of not only the greenhouse gas emissions associated with our direct business activities, but also including our share of the emissions associated with production of our attributable metals production by our counterparties to the point of saleable metals. We achieved carbon neutrality and even received a third-party carbon neutral certification in 2022 by offsetting our annual carbon footprint through the purchase of accredited and verified third-party carbon offsetting projects. We continue to target investing 2% of our net income into community and sector development through scholarships and other developmental programming. Early in 2022, we announced DE&I targets of at least 30% women on the board and 30% diversity in senior management by 2025 and are happy to announce that we have now surpassed our women on the board target and will continue to work on closing the diversity gap by 2025.

Thanks, Katie. I want to end on the critical topic of talent. We embarked on a journey seven years ago to build the next senior precious metal streaming and royalty company. I believe our track record is revealing the quality of this team and the ability to execute against our strategic objectives. The focus at Triple Flag is to grow value per share for our stakeholders through investing in precious metal streams and royalties in a manner that adds value to the mining sector both financially through offering patient, competitive, structured finance through the commodity cycle and by enhancing the sector's privilege to operate through our approach to executing on our ESG strategy as capital providers. It's simply pragmatic. We've outlined in this brief presentation the many achievements in a consequential year and compelling growth outlook that has set us up with an enhanced platform to continue our value growth journey and to build on the momentum we have generated. Our fortunes are directly related to the quality of our talents and how well we work together. Our recent accreditation is one of Canada's great places to work. It's an independent window into the cohesion and energy in our ranks. I believe that the quality of this team and our cultural model is core to enabling us to execute to a high standard against our strategic objectives by making effective use of our global networks for deal flow generation and specialist due diligence needs, applying sound business judgment to deals, allocating capital astutely, and managing our portfolio effectively. This team culture and approach has enabled us to establish, catch up, and then surpass our intermediate peers in pursuit of our ambition to build the next senior precious metal streaming and royalty business. Imagine the possibilities with our enhanced platform and this team in the years to come. We appreciate the support and trust of our stakeholders, and we look forward to providing further updates soon. Thank you. And with that, I'm happy to answer any questions.

At this time, I would like to remind everyone, in order to ask a question, press star followed by the number one on your telephone keypad. Your first question is from the line of Cosmos 2 with CIBC. Your line is open.

Hi. Thanks, Sean and team, and congrats on a very successful 2022. Maybe my first question is on your 2023 guidance, 100,000 to 115,000 ounces. How have you incorporated the Mavericks asset into your guidance? More specifically, have you taken a fresh look at any of those assets or even built in some sort of conservatism?

Cosmo, firstly, thank you. I appreciate the congrats and Yeah, look, I think as you'd appreciate in guidance setting, I think we've tried to embrace the same philosophy as we thought we did a year ago, namely, you know, putting in a sufficiently high probability of successfully achieving that. I think when we look back and said, what are the factors that, you know, represented variance and might we have done things differently? You'll see as we've set guidance for the year ahead, a lot of those things were really timing related and price related. rather than operational. So, for example, to just stress the point, relative to our internal views of things like our biggest GEO contributor, Cerro Lindo, the actual operational performance exceeded what we'd assumed, but the timing differences on settlement, as we'd sort of conveyed, had impacted us. So when you look at the overall picture as we tried to apply judgment through various forecasting teams, you know, which we have to then consolidate, You've essentially got a situation where we've continued that, we've applied that, you know, the gold-silver ratio that we mentioned. And as we think about Mavericks, you know, we've seen some analysts include, despite our guidance, Omelon. We wanted to restress that we're not assuming any of that in the outlook. We understand that we have an entitlement that, you know, will perhaps be of value in years ahead, but we're not factoring that in. And over above that, I think you can think of it as in line with where we'd expected and really quite flat relative to the prior years, what we're assuming in the immediate year. The only other experiences that James has sort of touched on are really in reaction at being at the end of this process to just some recent market updates. And specifically, if you think about Kirk Agnico's latest views from Fosterville, To remind you, we've really fully recouped the investment on that or the money we put into that. They've done incredibly well, exceeding the first two years by about 50% relative to our expectations. Each year, they've actually outperformed. In this last year, at the back end, they were slightly shy and they guided materially lower on the back of these noise restrictions, which I think limit their operations from the hours of midnight through 6 a.m. These are not insurmountable things, and it's really a timing issue. factor as we sort of communicated. So I'll see you, James. I don't know if there's anything else you'd wish to add perhaps or show.

I think that's a good summary.

Yeah. So, Cosmo, hopefully that gives you a flavor, but as you'd appreciate, you know, we're obviously trying to, as always, you know, be as, I'd say, sensible about providing, you know, something that we have a decent confidence of being able to achieve.

Of course. Yeah, that sounds great. And your guidance, you know, also appreciate the fact that you've put in now negligible contribution coming from Gunnison and also Pumpkin Hollow. You know, James kind of touched on it in the prepared remarks, but could you still give us an update in terms of how that's going? And, you know, likely won't be able to answer my next question, but any kind of timeline in terms of, you know, when that could start potentially contributing?

Yeah, so I think on that similar philosophy that I just shared with you, so how we try to think in a guidance setting, you know, I'd say the first point is when you look back at the sector, the mining sector as a whole, and then you look at just the latest updates that are coming out in terms of cost inflation and deferrals, that's affecting the sector, I think, as a whole. And I'd actually say to you that if you even go back to, I think McKinsey did some studies years ago, The back set or the backdrop of execution in noninflationary environments for the mining sector is like one in five projects being on time and on budget. We've always handicapped our investment cases. But in the case of those two assets, until they demonstrate the execution that is in the public domain, we're going to continue to be sort of, I'd say, not reflect that until such time as we see the run rate. The latest updates that we received on both assets are actually very encouraging. You know, we're big supporters of Randy Buffington and the team, which I think we demonstrated last year at Nevada Copper. We've been in touch with the team and some of the partners in the last week, and I think we're very encouraged with the progress that they're making. But there's a difference between what we're seeing in terms of those indicators and, you know, liking the team and then actually getting through as they're projecting in Q3 with essentially, you know, bringing the underground on and feeding them all. So those are the milestones we're looking forward to, and I'd hope to be able to obviously, you know, positively point to that later this year. And on Excelsior, you would have seen later, I think earlier this morning, there's actually issued a press release, I think on a PEA, which looks really good. They've announced the Norton Rio Tinto relationship, which we're very encouraged by. They've received their permits for the leach pad. And I think we're hoping that they'll get their, frankly, quite delayed permits for the well injection stimulation that they've been looking for for some time. And I hope they'll get that fairly soon. Again, I think that team has always displayed quite a pragmatic approach to doing things. They've maintained reasonable liquidity levels to execute their plans. We're encouraged, but we'll continue to monitor and build that in as we see the progress. And then I'd say just the last point perhaps is I don't know if any strategic or candidly an investor has a bearish view on copper. Both these assets are copper in a friendly jurisdiction. They have substantial optionality. And I think at a time when you're still seeing sticky inflation on execution of new projects, having largely sunk, certainly in the case of Nevada Copper, the capital, it's a question of execution now. on the ramp up. I think their place has been quite well.

Yeah, I agree. Clearly copper has done quite well year to date. Maybe more specifically on Excelsior, I read in your MD&A that, is it Newton or Norton, the copper leaching, heat leaching technology, the new technology. Maybe I've been around for too long, but new technology always somewhat concerns me. But maybe could you describe a bit more in terms of what's going on here with the new technology? And it sounds like it's only needed potentially for the Johnson camp. Is that true or is it for the Gunnison as well? Do you need this new technology for production to happen?

Yeah, I can pick that up, Carlos. Hi, James. The Newton technology, which is a Rio Tinto venture, is specifically for leaching sulfide mineralization and would likely have some applicability to the transitional mineralization. The upper part of the Johnson camp is an oxide ore body, and the Gunnison deposit, as it relates to the in situ leaching, is an oxide ore body. So for the oxides, conventional solutions that one uses in copper heap leaches are applicable. So there's no requirement for the sulfide leach technology to work in order to deliver the oxide as contemplated, neither Gunnison or the Johnson camp. So it's very simply an opportunity above and beyond what we ever envisaged for the project, quite frankly. Sulfide leaching has been around for a while, but when we first looked at this project, it was not a feature. So that's of benefit. It's also worth pointing out that Johnson Camp mine was mined quite successfully in the past, and that the prior operators largely got into trouble when they started trying to use conventional oxide heat bleach on sulfide material, which of course was never going to work. So the oxide operation as planned for Johnson Camp has a good history and a lot of potential. So the company's focus remains on getting the Institute leaching up and running, but the Johnson Camp oxide transition in sulfide is some upside.

Our investment case never contemplated the delays to the extent we've experienced them, but I never contemplated metal from the Johnson Camp, so that's over and above what we underwrote.

Understood. Thanks again. Those are all the questions I have. Thanks again for answering all my questions.

Thanks so much. Aparu, do you have any other questions?

Your next question is from Fahad Tariq with Credit Suisse. Your line is open.

Hi, good morning. Thanks for taking my question. Just looking at the 2023 guidance again, is it fair to say that had it not been for the Mavericks transaction, just given all the operational issues at the underlying mines, that at the legacy triple flag mines, it would have been flat or even lower production year over year?

Yeah, I think the way we sort of characterize it is quite flat on the assumption that we're not building in any of those, you know, ramping asset volumes, more conservative, you know, relative to historical pricing scenarios and things of that nature. So as you'd appreciate with a team that, you know, set out as a sort of first year issuer, to provide guidance that we thought was very high probability, and they're missing that last year as a disappointment. That has been a very strong focus for us, and we built that in. So hopefully that gives you a sense of it, but our ambition is to get into a cadence of under-promising and over-delivering, ideally.

Okay, and then just my only other question, just in terms of deal flow, given where copper prices are today, quite elevated, You know, it's interesting how quickly the dynamic has changed versus just a few months ago. You know, any color on deal flow and size, commodity type, geography would be very helpful. Thanks.

Yeah, it's a great question. You know, Fahad, I'd say the first general point for, you know, we turned seven at the end of April. I'd actually characterize the current deal environment as positive. amongst, if not the busiest that we've encountered in that time. The question of translation into ultimate deals is always the thing that we wouldn't look to forecast. But I think hopefully, having gone through the last two years talking about discipline and then hopefully demonstrating some of that, that's what you should expect from us. But we are seeing multiple transactions for the first time in a couple of years, really, that are meaningfully cash generating and well-advanced, precious metals focused, some acquisition financing related opportunities, some sort of value realization situations. I'd say generally in favorable jurisdictions. And I'm very bullish when I think just beyond the immediate horizon, particularly as we've conveyed previously, polymetallics, the need that this world has for you know, battery minerals, critical minerals, and I think our form of funding to be a useful part of the overall funding cocktail for new supply. And I think it's something that I think is under-recognized and I think should actually accrue to the sector as a whole. I'm really quite encouraged by that. So the deal pipeline is good. I think the thing that really matters is the final analysis of what people do and what they pay.

Okay, great. That's it for me. Thank you. Thanks.

Your next question is from the line of Greg Barnes with TD Securities. Your line is open.

Yes, thank you. James, can you be a little more specific around GEO expectations for North Parks and RB Platte this year? Are we looking flat year over year? It sounds like you're giving your answer to Fahad's question, but just a little more detail would be helpful.

Yeah, sure, Greg. So, Essentially, with North Parks, the E26 cave has a gold grade of about 0.1 grams a ton compared to more like 0.7, 0.8 for the E31 open pit. So what North Parks has encountered is a scenario where they need to basically extract more of the cave, the E26 cave, during 2023. in order to make sure the draw points are operating in accordance to plan and ensure that the cave delivers on the overall extraction ratio. So in doing so, they've increased mine tonnages from that cave from around 3.5, 3.7 million tons a year up to 4.4. And that's accordingly displaced the E31 open pit feed until 2024, how it stands today. The constraint then, which is pretty unusual as you'll appreciate for underground mines, actually becomes the mill. The nameplate capacity is 7.6 million tons per annum. They're forecasting running slightly ahead of that for the year at 7.8 in order to process that material against the backdrop of about 8 million tons of ore being mined during the year. So a lot of ore feed, but relatively lower gold contributions. And obviously the differential between the two ore sources is quite big from a gold growth point of view. So for the year, North Park is more or less flat. And then what we're seeing at the moment is towards the end of the year, contributions from E31, which meaningfully increased gold. You look at monthly gold production. But as they occur more in November, December, some of that actually will come into 2024 with the timing delays between production of concentrates and settlement of the stream. So some of that benefit goes into next year, but it's more or less flat. I'll be flat when you reflect the fact, yes, the production for the third quarter last year was down. That actually equated to about a negative 25% hoisted tons of steel drift for Q3 2022 compared to the same period in 21. So that impacts, as I mentioned, this year. But there is a slight sort of offsetting factor into far as steel drift is ramping up. So Arby Platte is more or less flat, Evers is slightly down year on year, but it's really on the margin when you put all that together. Production for the balance of the year looks quite strong, but there's a roughly five-month time delay between production at the mine and settlement of the stream, so they're obviously not later into this year and into next.

Okay, great. That's very helpful. Thank you.

Your next question is from the line of Brian MacArthur with Raymond James. Your line is open.

Good morning. My question is similar to Greg's, but can we just go through Cheryl Lindo and how you see it? I mean, we talked about last year, you know, production was up, there's delays in sales. This year, you know, we're going to go down a bit, but I guess there's a lag for sales. And then we get up to the four to four and a half and 24, 25. Should I assume really the impact of that with a six month delay is really not till 25. And can you just remind me exactly how you price this with the big delay, whether you price it on production and then true up going forward, or whether you just bring it in as sales when it's finally sold and concentrate. Thanks.

Yeah, Brian, I'll start and I'll ask James to expand on your question. So I think firstly, you know, if you go back to some of the materials in our deck, you remember Sura was our first transaction. You know, we're well on track to full recoupment to that initial investment. And part of the beauty of their track record has been like really low cost reserve replacements. And I think just over a year ago, we essentially seen the silver that we'd underwritten largely replaced on a reserve basis and they continue to do that quite well. The biggest factor which is a little different on this transaction to what we see in others, and it was driven through their accounting concerns when we actually did the transaction, was very much around for them to get deferred revenue treatment. They had a strong view that the final settlement had to be based not on provisional pricing but on actually final receipts when they settle. And what we've experienced, and I don't think we would have assumed anything different last year, we saw the movement of that QP timing that we mentioned out from, I don't know, about a month or so out to four. We have capped it at four months. So that is a commercial protection we put in the contract. We've seen that move out. And as I said, the actual underlying operating performance that they've done on silver is because you may have seen Nexa put out guidance for the next three years that, you know, good results, but there are three years, I think, on some of the base metal assumptions that come down. I know some of the analysts out here actually follow more of the base metals and don't necessarily have a view as a byproduct of silver. But what we're seeing is silver is actually maintained and being quite robust. So I think with that as context, James, I don't know if there's things you wish to expand on, or posture.

Yeah, I suppose, you know, Sarah, produced in terms of metal and concentrate at the mine, 4.1 million ounces in 2022. Next, it put out a guidance range of 3.5 to 3.8 for 2023, and that goes up 3.7 to 4.2 in 2024, then stepping up further to 4.5 in 2025, which is actually ahead of some of the other figures that have been out there in the technical report. So, you know, we see that flowing through with the lag. So, you know, for this year, you know, there is some opportunity that's reflected in the guidance range of, you know, recovering and getting paid on a great proportion of those answers within the year. But as you mentioned, it does depend on the timing of the settlement.

Okay, great, thanks. And just following up on one of their comments, Sean, you talked about battery metals out there and general views on diversifying into lithium graphite, like real battery metals, as opposed to, say, copper. Would you go that far in a portfolio?

Yeah, look, it's a great question. I think the first point I'd make is I think some of I think there is empirical evidence that some of our larger peers, as they pursue chunkier deals, are sort of perhaps doing a bit more of their portfolio mix in non-precious. We get that question a lot. And I feel that we've been successful by being very focused with the deployment of our capital on generating precious metal investment opportunities. And I see no reason for us to deviate from that. And I truly believe Contrary to some of the questions we got, say, at the Denver Gold Forum, where you've seen guys almost like Orion try and play through the capital structure with their available firepower. So, hey, let's write a big equity check and maybe do some debt, and we'll then maybe do a stream. We've been far more successful, and I think the best and highest use of our capital is actually to deploy that in a very focused way alongside other capital providers who specialize in those parts of the capital stack. And we engage in deals like that now and have consistently been because I think it is the best use of our capital for our shareholders. But specific to your question, we have looked at times, we have space in the portfolio. You'll see we are now 93 or so percent gold and silver. And so we have got obviously copper, nickel, little diamonds. I don't think there's anyone who has a jaundiced view of the copper outlook, at least that I'm aware of. And there's probably more appetite than there is opportunity. And we're active on some of those right now. We've looked at tons of lithium over the years. We've just never found a case that we've found conviction on. We've been engaged in quite large cobalt situations, but we, I suppose, got cold feet when we looked at the implied cobalt price that was being underwritten as opposed to the sort of technical issues that are there. So it's a long-winded answer saying to you, we've actually, I think, not quite maybe uniquely, but this team's got extensive experience in, you know, what's now called critical battery metals from our careers. We've got great networks there. We are comfortable to have some exposure in there. We have the expertise, but we are going to remain focused on prioritizing precious metals.

Great. Thanks very much, Sean. Very clear.

Thank you.

Your next question is from the line of Tanya Jakuskinek with Scotiabank. Your line is open.

Great. Good morning, everyone, and thank you so much for taking my questions. I guess we should just end with Beritica, James. We've talked about North Park's RB Platts in terms of year-over-year. I guess Brian mentioned Sierra Lindo. Beritica, what are we looking there, just so that we touch on the big ones that are harder to get information on?

Yeah, sure, Tanya. As you know, the nameplate capacity at Bredeker is 4,000 tons a day. In the last quarter of 2022, the mill was running at about 3,600 a day, which is more like 3,750 in October and November, so pretty close to nameplate. We're expecting, at least as a base case, we've assumed similar performance in 2023, so that You know, we think that's a reasonable assumption because obviously, you know, the mill is one thing, but what the mine can deliver is another. So that's kind of our baseline for the year. Grades and recoveries are, you know, in line with expectations, in line with the reserve grade. So, yeah, that's generally what we're expecting in Britica. You know, there were media reports related to some of the illegal mining challenges the company's having, which, you know, have been... publicized recently. From our interactions, you know, obviously there's a desire from the operators to have the government increase its focus on helping combat those challenges.

Antonio, I think just to add to the context, which you're probably well aware of, you remember we did that deal a few years ago now. We've already fully recovered that initial investment. And you may recall You know, I think the case that we'd underwritten at the time when it was still continental was, you know, 3,000 ton a day. So, you know, James mentioned the 4,000 nameplate. That was, you know, above and beyond certainly what we'd expected in time. And, you know, I think the team there has done quite a remarkable job of execution through COVID, including not only bringing it online, but obviously expanding, you know, the capacity above what any of us had anticipated. I think to your point, you know, we recognize, I think, a number of these cases and opportunities to just sort of find ways to increase the visibility and disclosure for, you know, everyone's benefit.

And maybe we can just get a bit of guidance. Last year you provided guidance that, you know, we would be back and waited versus, you know, the first half. Is there any guidance you can give us quarterly and or semi-annual?

Yeah.

It will depend a bit on timing of some of the streams. Specifically, Cerro Lindo has come off a strong 2022 from a mine production perspective and deliveries flowing into 2023 will be stronger initially. Whereas North Park has an increasing output from a gold perspective as the year goes on. We'll see exactly how the deliveries break up, but nothing overly specific at this stage.

Antonio, there's slight hesitation because there's been a big discussion amongst ourselves. When you don't control the finance teams that provide the information, it's an interesting task forecasting through them. If we think back to last year, when your largest geo-contributor has experienced those delays that we telegraphed, when you're seeing call it quarter on quarter, 100% variance from three to four, effectively, you know, through those. In the continuum of the year and then beyond, you know, we've seen consistent performance, but, you know, the question of the absolute timing within the wonderful precision of a quarter is quite hard. I think the general direction of travel, when you look beyond to the 140,000 plus ounces that we've projected and what we're seeing on this is, you know, as you'd appreciate, we've actually got, compared to, say, the intermediate pairs and smaller guys, a lot of our NAV, the lion's share of our NAV is captured in operating assets. We do, you know, you've heard our posture on the non-producing assets or the ramping assets, and we'll continue to sort of maintain that over time, which I think is a little different to some of what we are seeing in the market. And I think the general direction of travel is still, you know, if you think about overall trend as opposed to quarter on quarter, and even the year is obviously going to be increasing over time here. So, sorry, it's a super long answer and Not emphatic, but as I said, when you're going for 4,500 GOs at zero, one quarter, and over 9,000 the next, you do get these periodic variances.

Okay. Can I ask on the M&A? I think you mentioned that you're seeing multiple transactions available in the precious metal focus on financing opportunities. Can you talk about the size of these opportunities that you're seeing? You said relatively safe jurisdictions. Maybe just size-wise, are there any more royalties available out there? A lot of the deals done out there are royalties and quite large in size. Just wondering what your overall appetite is and what you think you can do size-wise.

Yeah, look, I'd actually, to answer that, I'll answer it in a few ways. I think the first is it's a wonderful opportunity to reflect on, you know, the risk of an echo chamber and a management team when you take over a business. And we spoke to Warren. We've asked others saying, look, just any reactions or reflections on your early experience versus what you'd seen previously? And, you know, one of his observations is just the unsolicited flow of stuff that we seem to get relative to perhaps what he was used to. There's not a week goes by that we don't tend to find more royalties and stream opportunities that emerge that was not visible for us. We say no to most of these things for a host of reasons, but there is an unusually steady stream of these. I think strategically, just to frame the answer for you, compared, I think, at different cycles of your growth trajectory, you demand different things. Post-Mavericks with sort of 200 exploration development assets offering a lot of optionality, that's not a super big priority for me, candidly. I think we are going to really be focusing our available firepower. You see we've merged $80 million or so of debt. We'll pay that down quickly. And we've got over $600 million of available firepower. I really want to focus that preferentially, unless there's an offer we just can't refuse in the longer term on not producing, on things that are cash generating or new cash generating. Strategically, we've always prioritized that from the get-go, like Sir Alindo birthed us. But I think now more than ever, that I'd see as a priority for us. Directly to your question, I think we're seeing things in the multiple hundreds of millions of dollars that we're active on. We've done several site visits already this year. And it's been an unusually busy time for us. So, you know, I think the question really for me is we see the market, you know, waxing and waning is ultimately, you know, what's our capacity to translate some of those potentially into deals that we're willing to underwrite where we're successful. I can say that we've got as characteristically, you know, we focus on some of those things are bilateral, some are competitive. I hope that gives you a sense.

Okay, so mainly streams, Sean, versus royalties?

Yeah, I think it's super unusual. I mean, look, you obviously saw Royal do some large royalties, but those are sort of legacy things that were penned a long time ago and then obviously became very valuable over a period. But if you think of a large part of our sort of focus for capital deployment is enabling mining financing projects for strategics and preferentially trying to do so. You know, that does lend itself more naturally to stream financing. We obviously, you know, we're happy to do royalties. We will pick them up from time to time, but those tend to be, you know, smaller checks, I'd say, you know, ordinarily. So, no, more of that and a lot of polymetallic stuff that we're continuing to witness.

Okay. Thank you so much.

Thank you. Again, if you would like to ask a question, press star followed by number one on your telephone keypad. Your next question is from Lawson Winder with BOA Securities. Your line is open.

Hello. Good morning, gentlemen. Thank you for the update today. I think we've covered off a lot here, but I wanted to ask about one other of your sort of core or I guess founding assets. But one that I don't think you're getting a lot of value for, which is Gunnison. And I wanted to get your thoughts on, first of all, whether or not you think about Gunnison contributing to your long-term GEO outlook and how you think the street should think about that asset and when that might start to contribute.

Yeah, Lawson, look, it's great to chat to you. I must say I'm really struggling with Gunnison because there's things that I believe I know that I can't communicate at this time. I think, you know, the direction of travel on the in-situ leach, I think we've communicated and you've seen the recent updates and you've seen the positive news that we talked about with Johnson Camp. You know, things that were over and above are underwritten case. And I think the sort of key shorter-term milestone that we look to for that team is the well stimulation, because that's the only thing they really struggle with. The SXEW circuit does exactly as you'd expect. They've been successful with the well fields, but it's been the CO2 challenge with the ISL. There are things that they're working on, which I think just there are multiple options that they've been pursuing in order to unlock the value of a very well-located a large copper ore body in a world that needs copper. I think that's the best way to put it. And if I think just more strategically for the mining sector right now, increasingly you're seeing precious metals and gold companies pursue copper opportunities. Clearly, base metal producers are doing so as well. We're seeing evidence of groups out of the Middle East and elsewhere looking to invest money into critical minerals. I think the demand is objectively significant. And, you know, to be able to secure a sensible supply in a good jurisdiction is key. So, you know, we're patient, we're supportive, and I think there's a very valuable, and I agree with your overall comment, I think it's an underappreciated opportunity. But I also understand that until there's momentum, you know, we will continue to, you know, adopt the sort of posture that we have as we think through guidance.

I would confirm that it is within the average of the five-year period. We think there's enough options to get production from Gunnison within that period that we have confidence sufficient to include it. Obviously, it's a relatively modest contributor.

Okay. That's very helpful. Maybe just one more question on the guidance, 100 to 115 GEOs. I mean, just reading through the release and hearing your comments today, I mean, it sounds like this might be characterized as conservative guidance. Would that be fair? I mean, would you say you have a very high degree of confidence in achieving this 100 to 115 GEO for 2023?

Yeah, you know, I'm just sitting in our boardroom and I've just erased a normal distribution curve that I shared with my board yesterday where, you know, we've sort of highlighted the point around call it, you know, a typical cash flow model, maybe a P50 versus like a P85, P90. Obviously, when you're doing this, you're looking for something where you've got a much higher degree of certainty of achievement. I think the frustration for us last year is we did that and in our judgment, we believed that we had actually done it at the time. And I have to say, like, With some hindsight, we did not forecast historic floods in New South Wales or ongoing zero COVID impacts of cyanide for Mongolia or the situation we've telegraphed for the first time in six years on an investment in Sri Lanka, despite very good operating performance. So I don't think our posture and our analysis has changed. And I'm always hesitant to characterize something as as conservative, but I do think it's an interesting thing if you zoom out from a one-year to multiple-year view and you look at a lot of the businesses out there which have, say, less cash flow and a lot of NAV, I think the sector as a whole hasn't necessarily outperformed to the plus side when you think about timing of NAV. The NAV tends to be quite stable, but the GEO part is the part that we've always handicapped. I just think we're trying to make sure that we can get on the right side of meeting or exceeding the market. So that's, hopefully it's not a political answer to you, but it should hopefully give you a sense of how we're trying to think about it and do it.

It wasn't a fair question. Thanks very much, Sean. No, no, it was a fair one.

Thank you, Lewis.

There are no further questions at this time. I will now turn the call back over to the CEO, Mr. Sean Kussmeyer, for closing remarks.

Yeah, everyone, thank you. And look, thanks all very much for making the time today. You know, thank you for the thoughtful questions. You know, I hope you appreciate, you know, as you look through the release and this call, candidly, the sort of excitement of this stage of our journey. You know, we're going into the FEMA conference on Sunday. Our dance card is, like, ridiculously full. We're really encouraged by that. And it's a wonderful time, I think, for us. And I think, indeed, people in this sector to be deploying really intelligent capital to enable really what the world needs from the sector, from the resources sector as a whole. And I see that as really an underappreciated opportunity for ongoing value creation for our investors and I think investors as a whole. So, you know, I'll leave it there. I'll just thank you once again. And we're happy to address any follow-ups that anyone may have from our disclosures. So thanks so much.

Ladies and gentlemen, thank you for participating. This concludes today's conference call. You may now disconnect.