Triple Flag Precious Metals Corp. Common Shares

Thank you for standing by. My name is Bailey and I will be your conference operator today. At this time, I would like to welcome everybody to the TripleSlide Q1 2023 results 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 during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star and the number one. And I would now like to turn the call over to CEO, Sean Usmar. You may begin.

Thanks, Bailey. And good morning, everyone. And thank you for joining us to discuss Triple Flag's first quarter 2023 results. Today, I'm joined by my CFO, Sheldon Vanderkooy, my Senior Vice President of Corporate Development, James Dendle, and I'll also be joined by our Vice President of Talent in the SGKD Board and our Vice President of Finance, Eban Bari, in the Q&A section. So into slide four, the first quarter of 2023 was the first since completing the acquisition of Mavericks Metals, which contributed to another record quarter for Triple Flag. This includes sales of 26,599 gold equivalent ounces, resulting in revenue of $50.3 million, and operating cash flow of $38.9 million, which are new quarterly records. We've also seen a more than tenfold increase in trading liquidity with the addition of many new quality investors to our register, as well as inclusion to the GDXJ, S&P and TSX Global Gold and Selective Global Silver Miners Indices. Our portfolio continues to perform well and the assets that we acquired from Mavericks have shown great progress and continue to reinforce our investment thesis. Operational performance at Camino Rojo and exploration success at Beta Hunts are two highlights. I'm also grateful for my team and the former Mavericks management team who work well together to deliver the integration of the two businesses to a high standard and enabling us to achieve the anticipated run rate of 7 million US dollars in annual synergies. Finally, I'm very pleased to report that as we celebrate our seventh anniversary as a company and second anniversary of our initial public offering, our share price is up 31% in US dollars and 45% in Canadian dollars, with a lot of room to continue to close the gap with our senior peer valuations as we continue to focus on delivering value to our shareholders. I'll now turn it over to Sheldon to discuss our financials for Q1 2023. Thank you, Sean.

Turning to slide 5, we had a record first quarter, realizing over 26,500 gold equivalent ounces, reflecting the addition of the Mavericks assets to the portfolio. Operating cash flow in the quarter was also a record at nearly $39 million. Adjusted net earnings in the quarter was $0.07 per share. Adjusted earnings was impacted by the step-up in value of the Mavericks assets on acquisition, as well as additional costs in Q1 due to the Mavericks acquisition in the quarter. We remain on track to realize identified synergies of at least $7 million annually from the transaction. I also want to highlight that we recorded non-cash cost of sales of $5.6 million relating to gold sales from prepaid gold contracts. This equates to $0.03 per share. This is purely accounting. This is a non-cash expense moving to the income statement. Our cash flow in the quarter was $0.20 per share, a 15% increase over the corresponding period Our asset margins on the quarter were 88%, slightly lower than the 90% levels we have traditionally experienced. This figure was impacted by acquisition accounting, as metal inventory on Mavericks' balance sheet on the acquisition date was recorded at fair value and unsold during the quarter. Going forward, we forecast asset margins to return to the 90% levels. We also declared our 5 cent per share dividend. Upon payment of that dividend, we will have paid over $65 million in dividends to shareholders since our 2021 IPO. I'd also like to comment on our strong balance sheet. Our total cash outlay on the Mavericks acquisition was $146 million, consisting of cash consideration paid to Mavericks shareholders, cash paid to retire the Mavericks credit facility, and transaction costs incurred. At quarter end, we owe $80 million on our evolving credit facility, Subject to new investments we may make, at current metals prices we forecast that internal cash generation will allow us to be debt free by year end. I'll now turn to slide six. Slide six highlights three very important aspects of our portfolio, meaning asset diversification, precious metals focus, and a portfolio which is predominantly centered in the Americas and Australia. Our revenue diversification meaningfully increased with the addition of the Mavericks portfolio. Faralinda was our biggest contributor in the quarter with approximately 28% of quarterly revenues and no other asset accounted for more than 15% of revenues. In the past quarter, gold and silver accounted for 95% of our revenues, amongst the highest precious metals percentages in the sector. And by geography, the country with the greatest contribution to our revenues was Australia, and after Australia, our portfolio was predominantly located in mining-friendly jurisdictions in the Americas. I'll now turn to slide seven. Triple Flag went public in May of 2021, so we are approaching our two-year anniversary as a public company. Looking back, I'm proud of the progress the team has made in these two years, and I am excited with the future possibilities. First, I'd like to look back on our share price performance since IPO. I think it is fair comment that many IPOs disappoint on share price performance. Our IPO investors have been well rewarded for their trust in us, Our share prices increased over 30% from IPO, well in excess of our peer group and the JDX performance. In addition, we have declared dividends of over $65 million since our IPO. We have increased the scale of the portfolio meaningfully. We are guiding for 100,000 to 115,000 gold equivalent ounces in 2023, as compared to 63,000 in 2020. We see this increasing to over $140,000 in the next five years. Our portfolio now totals 229 assets, increased from 75 at our IPO. We now have 29 paying assets as compared to 15 at IPO. Our ESG practices have been recognized by Sustainalytics as we are ranked fourth out of 114 companies. We expect this to continue in the future. In 2022, we increase our dividend and our cash flow continues to grow. In 2022, we also listed our shares on the New York Stock Exchange, increasing access to U.S. investors, and in 2023, our shares were added to three indices. TripleSight has made much progress since our IPO, and we are well positioned to continue our track record of creating shareholder value. I'll now ask James to speak to some of our proposal highlights.