Earnings Call: H2 2020

Apr 14, 2021

Good day, and welcome to the Anglo Pacific Results Webcast and Conference Call. At this time, I would like to turn the conference over to Julian Traeger, CEO. Please go ahead. Thank you, Kian. Good morning to you all, and thank you for taking the time to dial into our webinar this morning. So I'm Julian Tregga, the CEO of Anglo Pacific, and I have Kevin Flynn, our CFO and Mark LaFlesche, our CIO, on the call with me. I will initially cover the results highlights. Kevin will then discuss the financial results and the portfolio performance in 2020. And then reflecting the change in complexion of our business, Mark will cover our strategic focus on 21st Century Materials, the Voisey's Bay acquisition and Cobalt particularly. Finally, I'll wrap up, and then we'll take the usual Q and A questions. So Just to give you some background, this results announcement is unusual for Anglo Pacific in that it relates to a very different company to that which exists today. Post our transformational cobalt deal and our sell down of a significant part of our stake in Labrador Iron Ore, the business looks and feels very old. And so the results are somewhat historic and have already been signaled to the market at the time of our trading update. Nevertheless, 2020 was a difficult year for the world in general, and we were no exception. So turning to Slide 3 with the financial highlights. Whilst our mines, on the whole, continued producing, there were some stoppages and also price weaknesses. This coincided with reduced production from Castrol during the year on the previous record level seen in 2019. And 2020 volumes were 11% lower at 5,800,000 tonnes, a level which is likely to be the new normal in the near term. There were also a number of one off items, which impacted Our results, planned CapEx investment at IOC and the charge at Moraca's mention due to monies owed to Glencore upon the termination of their offtake agreement, but these should not be repeated in 2021. Turning to the results themselves. We saw a decline in our royalty rates related revenues from close to £56,000,000 in 2019 to £34,000,000 last year. And likewise, the total portfolio contribution reduced from close to £60,000,000 to £37,000,000 Adjusted earnings per share reduced from 20.4p to 12.35p. But net debt at the end of the year It was not very different from 2019. It actually reduced from close to €29,000,000 to €24,000,000 largely benefiting from the £15,000,000 of LIOK disposals we made in December at a profit of £2,000,000 in preparation for the financing of the Boise's Berg stream acquisition. Importantly, Kestrel represented 17% of the group's royalty assets on the balance sheet, down from 26% at the end of 2020. And this was reduced further to 12% after the acquisition of the Voisys Bay Cobalt Stream, which we announced in March of this year. We did make a number of new investments during the year. Namely, we committed to a $20,000,000 investment in the in Kola Performance Minerals project, which is in the calcium carbonate space, diversifying our The profile of our royalty income is something which is more stable in Industrial Minerals. We invested $2,000,000 further into Brazilian nickel alongside the U. S. Government as part of a wider financing package and continue to be Very enthusiastic about the prospects for this project. We also spent £5,000,000 buying back our shares at an average price of £1.90 partially financed through £4,000,000 of non core disposals, mainly consisting of the Bakken Energia, which went up a lot last year. And we reinvested close to £6,000,000 in Labrador Iron Ore in Q1. That yielded 14% through the year. And then we disposed of a significant piece of our Labrador holding in December, which generated a good profit of £2,000,000 So that's the highlights of the results for last year. But I'll now hand over to Kevin to cover the financial results and the portfolio in more detail. Kevin? Thank you, Julien. Good Turning to the financial highlights slide, if we can. Although the headline numbers for the year did show decreases on the record levels that we earned in 2019. As Julian mentioned, it's important to put this in the context of the widespread disruption to the coal markets as a result of COVID-nineteen during the year. In addition, there were a number of 1 offs in the period and I'll discuss these in more detail on the next page, but importantly, we don't expect them to reoccur. Secondly, I suppose 2019 did benefit from a windfall at Kestrel in terms of record levels of production. These now seem to be a one off. So to compare 2020 to 2019 is not exactly to compare apples with apples. I'll discuss this again on the next page. But taking all this into account, total portfolio contribution for the year was still £37,000,000 or approximately US50 million dollars which produced our adjusted earnings per share of 12.35p. Still very resilient outcome for the year and really a testament to the quality of our assets, which from an operational perspective were largely uninterrupted by COVID. I'll touch on the KPIs in detail as we go through the individual slides. So if we could turn to the next slide, which is our income summary. And what I'll do here is I'll use this as an opportunity to update you on the portfolio as well. More detailed slides on the portfolio are in the appendices. So starting with Kestrel, revenue is around half the level of the previous year And this was due to production levels not matching the record levels achieved in 2019. Volumes are down around 11% to 5,700,000 tonnes. And we now expect following the Adara announcement recently that this is the level to be maintained for the near term with around 90% of this to be within our private royalty lands in 2021 before transitioning Kind of further out from our lands thereafter. Pricing in 2020 was impacted by COVID-nineteen and the Indian port closures in particular, which had adverse consequences for the seaborne market. But the average realized price at Kestrel was down around 34% in the year impacting revenue. Turning to Maracas' mention and this one potentially is one which has the most updates. Sales volumes in the year were slightly lower during the year as there was a one off kind of working capital adjustment as they brought the sales function in house following the termination of at Lencor offtake arrangement, which meant there was a lag between posting sales and receiving cash. The latter is what our royalty is paid on. This termination of the offtake arrangement also resulted in a $1,300,000 charge. Again, this is nonrecurring. And actually, the termination of the offtake is a positive for Anglo Pacific because it should improve the margins going forward as we're no longer subject to offtake discounts. In terms of outlook, Largo is targeting a 25% increase in sales volumes in 2021. And With vanadium prices already ahead thus far this year, we're kind of we are cautiously optimistic about our prospects for this royalty in the year ahead. There is further potential upside, should they increase the portion of high purity vanadium pentoxide, which they're producing for the battery market. And Lardor also targeting modest increases in plant capacity to 1100 tonnes per month in Q1 2021 And they hope to commission V203 plant in late 2021 as well. Further out their plans for an alumina extraction plant in 2023. And by way of a further update, Largo also announced that they commenced selling Some iron ore byproduct as well, albeit at these stages relatively modest levels, volume levels, But overall in the round, plenty of upside potentially to come from this royalty. Mantos contributed a full year of revenue in 2020 based on 41,000 tonnes of payable copper. Guidance for 2021, I think, is around 50 4,500 tonnes with a long term target post the debottlenecking completion of around 52,000 tonnes. Although there is actually the potential for a Phase 2 debottlenecking project, which could bring this higher. 2021, we would expect will benefit from pricing upside. The current price, I think, is already up around 15% on the closing 2020 prices. Looking at Narrabri, volumes were broadly flat in 2020, but similar to Kestrel, the results were impacted by softer coal markets in 2020. Whitehaven continued to mine through the localized fault area. This impacted volumes at the end of 2020. And this along with some weather related events in earlier this quarter led Whitehaven to reduce their FY 2021 guidance, which I think ends in June to between 5,400,000 to 6,000,000 tonnes. So that's down around 15% on their previous guidance. In terms of pricing, thermal coal prices have held up pretty well actually thus far in 2021, prices up around 6% in the year to date. Looking at LIORC, another very strong year. Dividends were impacted by the planned investments at the underlying mine. So the total dividend for the year of $3.05 we're down on the $4 received in 2019. As part of the financing package for the Voisey's Bay transaction, we reduced our position in LIORC by 77% and broker consensus dividend I think for 2021 are currently at $4.10 As Julian noted, the disposal of our position and 2 part finance, Voisey's Bay represented a very successful investment for Anglo Pacific and along with the dividends earned represented a return of around 60%. EBBC had another very solid year with the increase in gold price compensating for lower volumes, which were as a result of lower grade oxide going through the plant. The portion of copper produced actually during 2020 was almost 50% higher than 2019. But most importantly for us, Sorvana completed an updated mineral resource and reserve estimate at the end of the year, suggesting a mine life of approximately 5 years with a further potential inferred resource of about 450,000 ounces. So that 5 years could indeed be longer. They're targeting in the meantime 52,500 ounces of gold in their financial year 2021. Aspeze McLean Lake, as Julian mentioned, was the one casualty we had of COVID-nineteen with operations being placed on care and maintenance between March September, given the impact that an outbreak would have on what is a very remote population. This was placed back on current maintenance in December, but we were very pleased to see earlier this week that they're now targeting recommencements in April. And this is not a royalty with price volatility. The investment generates around about CAD 0.5 million a month for Anglo Pacific. So taking all of this into account, contribution for the year, £37,000,000 or $50,000,000 which again we consider to be very resilient in light of the challenges of COVID and all the one off items I've mentioned. If we can turn to the next page, which is a summary of our income segments. I won't go into a huge amount of detail here because I've already touched on the main points. Just to note that our costs were lower in 2020 than on a headline basis, but that includes share based payments. Stripping out share based payments, Our cash costs were broadly in line with 2019 at around £6,200,000 The minor impairment charges predominantly relate pushing out the start date for the Pilbara royalty and the Kestrel deficits reflect the depletion during the year and lower pricing inputs into the valuation model at the end of 2020. So overall, whilst we posted a loss of GBP 18,600,000 in the year, Excluding all of the non cash items, our adjusted earnings were £22,200,000 which produced adjusted earnings per share of 12.35p. Looking on to the next page, the balance sheet. I suppose this is Now a very outdated snapshot of our business at the end of December given the Voisey's Day transaction post year end. So I won't touch on Too many things in here. Our cash borrowings are covered on the next slide. But it is probably worth touching on a few of the updates from our development assets, which actually have little or minimal balance sheet carrying value. First of all, we were very pleased to see the investment by Fortescue into the Canariaco project in 20 20, which provides fresh impetus to the project, which is a significant underdeveloped copper project in Peru over which we hold royalty whose value is only $1,000,000 on the balance sheet. Secondly, Humminbird entered into an earning arrangement during 2020 for Dunbee, which will see a third party investment project and undertake feasibility studies. And this was really the first significant progress of the project in a number of years, which when coupled with the current high gold price could pave the way to monetization of this asset. We were also pleased to see that the authorities in Brazil have given the go ahead for the sale of the Amapa stockpile, which Anglo Pacific is entitled to a royalty over. Cadence Minerals continue to push for a creditor solution, Which would allow them to make a meaningful investment into the project with a view to bringing this back online. We retain our royalty in the meantime. And finally, we were very pleased to participate in the $2,000,000 into a wider financing package by Brazilian nickel during the year. It was really interesting to see the U. S. Government participate in this equity raising, which is the first kind of tangible site of Western governments looking to secure supply of key strategic minerals. Our investments and the wider financing should push forward the feasibility studies And APG has an option to invest a further $70,000,000 in additional royalties, which could be very meaningful investment for Anglo Pacific. Turning on to the next page, which is our liquidity and cash flow. Again, the snapshot very out of date following the Voisey's Bay acquisition recently. Free cash flow generated in the period was £47,800,000 We invested $8,700,000 during the year, which is namely the LIORC reinvestments, which generated 14% for us in 2020, along with the Maracas deferred consideration and the Brazilian nickel investment. Overall distributions to shareholders were 21,700,000 cash basis, which resulted in around 11.25p per share. This included the cash dividends paid of 9.25 along with a further approximate 2p by way of our share buyback program. The buyback program itself was largely financed through the disposal of part of our stake in Barclays Energia after its share price doubled during the year. And APG share price in comparison at that time was trading close 52 week low. So this represented actually a very good recycling of capital. And the capital recycling theme continued at the end of 2020 with the disposal of $15,200,000 of LIORC as we commenced financing plan for the Boyd's Bay transaction. Along with the remaining position, which we sold in Q1 2021, We generated about 60% return on this investment since we commenced acquiring it only in Q3 2018. So this retiring of iron ore with commodity trading at decade level highs into cobalt, which has fallen by 50% since its peak a few years ago, hopefully represents a very good recycling opportunity as well. Following the Voisey's Bay acquisition, our borrowings drawn currently stand at $123,500,000 And along with our treasury shares and remaining LIORC stake, the group probably has anywhere between $50,000,000 to $60,000,000 of financing flexibility available to it immediately as we move forward with our growth ambitions for the remainder of the year. Turning to the next slide, which deals with capital allocation. Following the Voisey's Bay transaction, The Board is kind of undertaking a review with a view to implementing a more formal capital allocation Policy in due course. But 4 of the key points which are likely to be included in this policy are outlined on this slide. The first of which is balance sheet strength. As we've now increased our leverage Following the Voisey's Bay transaction, balance sheet discipline and strength is key to us. And we will look to target a meaningful deleveraging as we go through the remainder of the year. Funding for further acquisitions obviously is key for Anglo Pacific. We are in growth mode. We intend to capitalize on the momentum of the Voisey's Bay transaction and the scale that it provides us and the diversification it provides us to continue growing our portfolio along the thematic of 21st century minerals. Thirdly, quarterly dividends. This is a pillar of our capital allocation policy and remains unchanged in the year. We will continue to pay £1.75 per quarter. And finally, other shareholder returns. So depending on our performance during the year, along with the growth opportunities we've either acquired or we're progressing will then depend on the level of the final dividend for 2021 as a whole. But this policy remains unchanged. We retain The flexibility in the Q4 of each year to determine our final dividend. I'll now pass over to Mark, who will to discuss the repositioning of Anglo Pacific post the Voisey's Bay transaction. Thank you, Kevin. Starting on Slide 12, our primary strategic focus has been to transition this business towards commodities and support more sustainable world. And our focus on 21st century commodities has 2 key elements. First, Those commodities required to achieve the electrification of energy consumption. For example, this includes commodities linked to renewable energy production, Battery energy storage, EVs and of course electric grids. And second, we see green commodities is providing environmental It's within the specific commodity subsets. So for example, mining operations which produce high purity products with low levels of deleterious elements relative to other producers of the same commodity, operations with relatively lower carbon footprints per unit of production, as well as mining operations that contribute to reduce carbon Scope 3 emissions within broader supply chains. And moving to Slide 13, the transformational of Boise's Bay Cobalt Stream acquisition is entirely consistent with AppTomatic and of course addresses 2 of our biggest strategic challenges. 1st, the cash flow royalty runoff And second, to decisively shift Anglo Pacific's portfolio away from its heritage of coal and into 21st century commodities. Moving on to Page 14, We're absolutely delighted to add the Boise Bay Stream acquisition to our portfolio. Put simply, the operation very much ticks all the boxes. That's Tier 1 mine, the Tier 1 operator and a Tier 1 country. And by way of update, the underground expansion It's now approximately 60% complete. Total capital spend to date is approximately $900,000,000 of a total of $1,700,000,000 And the start of on the ground mining operations remains on track to occur in 2021 and ramp up thereafter. Turning to Slide 15 for a cobalt market update. Cobalt prices now stabilized at approximately $20 to 22.50 Steeper pound over the past few weeks from Q1 highs and from there still remain ahead of our assumptions for the full year, which we made at the time of and Share Forecast. High manganese content batteries have captured headlines in the past weeks. However, there certainly remain a number of technological challenges to overcome. This technology It's certainly not expected to be commercialized in any meaningful volume until 2025 at the very earliest. Lithium phosphate, Lithium iron phosphate battery technology is responsible for a good chunk of non cobalt bearing cathode market share. However, relatively low energy density continues to be a key drawback. Accordingly, Cobalt bearing nickel cathodes remain and continue to be expected to capture the bulk of the market share of the next decade, which you can see on Slide 15 by market share in 2020 to 2,030 by cobalt bearing and non cobalt bearing cathodes at approximately 75% to 79% and potentially beyond. So from here, We continue to believe that the outlook for cobalt appears to be very attractive. Back to you, Julian. Thank you very much for that, Mark. Turning to Slide 16. So including the recently announced Polyvive Bay transaction, Now by far our largest exposure, we now have 17 principal royalties with a continued focus on very good OECD prioritized jurisdictions. Amongst some of those smaller royalties, there continues to be significant upside in the development part of our portfolio, but also with the existing operating royalties, There is growth to come. However, Boise State does make a major difference to our split at Anglo Pacific. And as a result, if we now look at the various pie charts and how our exposure has changed since 2013. You can see The dramatic increase in battery metals from nothing to 60% dominating our portfolio, whereas coking coal has dropped from 76% to 12% and should decline below 10% during the course of this year, with cobalt, as I said, dominating our commodity exposure, supported by other base metals like nickel, copper and vanadium. Geographically, during that period of 7 years, however. We've continued our real emphasis on OECD jurisdictions that has gone up slightly from 93% to 95%. But within that, we've really Reduced Australian exposure from 90% to 25%, and Canada has become our dominant market, rising from 4% to 59%. So a company very much in transition With more to come, but very different and pivoting to take advantage of the opportunities represented by 21st Century Materials. So turning to Slide 17 to wrap up with the highlights and outlook. We think that we are now demonstrating our ability to continue to grow and diversify of the portfolio in a meaningful fashion. With the Voisey's Bay, we are on the road to become the leading growth royalty and streaming company focused on commodities that support a more sustainable world, which is the aim of the business in our sort of strap line. We have taken advantage of the very strong iron ore price levels and the higher Labrador iron ore share price to monetize around 75% of our holding and that has generated significant capital gains below the line and realized total return of our investment of close to 60%. That strong focus and progression has resulted in Much improved carbon footprint, particularly given Boise's Bay is literally of the chart in a good way in terms of its low carbon footprint. And as a result of that progress, we recommended the final dividend for 2020 of 3.75p, taking the total dividend for the year to 9p per share. From an outlook perspective, the outlook for most commodities look favorable for the near term with increased government investment globally and in a coordinated fashion as a response to COVID-nineteen, Helping the demand piece and as Kevin mentioned in his review, many of our commodities are up this year on last year. The voices paid transaction will not contribute significantly to Q1, but should really We'll be a major addition to our income in Q2, Q3 and Q4. And as Kevin said, the group intends to continue to pay an interim dividend of 1.75p per quarter for the foreseeable future, with healthy organic portfolio contribution growth expected this year Without the repetition of the negative one off events of last year, we are quite optimistic about the outlook and we have the flexibility to add high quality royalty and streaming transactions to our portfolio. So whilst we've made the transformational step. There are other steps to be made in the path that we are taking to a greener and more sustainable portfolio. And with that, I'll turn over to Kian to chair the question and answer session. Thank you. Thank If you are using a speakerphone, please make sure your mute function is disabled to allow your signal to reach our equipment. We can now take our first question from Richard Hatch of Berenberg. Yes. Good morning, Julian and team and thanks very much for the call. I just wonder whether I could ask a bit on the dividend and capital allocation. You talk around balance sheet strength being an important part of the capital allocation policy. Would you be able to So some sort of stair around where you see a strong balance sheet sitting in. As I look at the kind of dividend, it would appear that you'd love to do some more deals and would look to See some more deals done this year. So should we therefore be thinking that sort of that 7p base is a sustainable level and then maybe Top it up depending on what commodity price movements and how so the capital has been allocated over the course of the year. And then just lastly on the dividend again. Does it make sense to transition the policy to payout ratio, say, 30% to 50% of free cash flow, which enables the tie from a base dividend level and in fact And that enables you to put a policy in place, which moves around with the commodity price. Thanks. I mean, I think our policy is to have a base dividend, as we said, of 7p and then to review that depending upon the upturn for the year. But I'll hand over to Kevin to talk about the views on balance sheet strength. Kevin? Sure. Thanks, Julian. I think, Richard, I think in terms of balance sheet strength, the Financing package we put together for the Boise Bay transaction has seen our leverage increase to higher levels than what we've seen in the past. So I think what we just need to make sure is that we've got sufficient headroom under our borrowing facilities, which we currently obviously envisage that we do have. And that the speed of deleveraging takes place towards appropriate levels. I think what we've tried to do is outline probably for the first time the way we think about capital allocation. And I think importantly for the dividend, that really doesn't represent a change in policy. We've always adopted a quarterly level. And then any additional amount at the Q4 depends on performance for the year and how we see growth opportunities progressing. In terms of payout ratio, I suppose that is something which is becoming more the norm in the mining industry. But look, I think At this stage to do something radical, feels probably a bit premature given the fact that we've just transacted on Boise's Bay. And we really want to see how that asset performs as we go through the year. But I think what we're trying to do here is just To kind of give you some thinking as to how we're kind of thinking about this internally post Poisease Bay. And then perhaps can I just follow-up? Last one is just on transactions. There was a transaction that you flagged When you did the Voorhees deal in base metals, can you just give us an update on where we are with that one and sort of What you see the pipeline looking like? Well, I think we continue to progress that transaction. And we are working on a number of other deals. I think we have, in the past couple of weeks focused on bedding down the Boise's Bay transaction, making sure that the first shipments Moved smoothly, given that they were our first significant streaming experiences. I'm glad to say that, that all happened well. So we will We're looking at other investment opportunities now with more focus, And you continue to be interested in affecting 1 or 2 further transactions during the course of the year. Thanks, Tim. We can now take our next question from Tim Hoef of Peel Hunt. Yes. Thank you very much. I Hachis has already asked the questions I had on dividends. So thanks for answering all that. But the two additional questions I had were just not assets really. One, the remaining stake that you have in LIORC, you have highlighted as approximately $30,000,000 in terms of value at current market values. But I was wondering whether you are viewing that purely as you pointed out potentially liquidity for Another deal or whether you would look to keep that in the portfolio and potentially manage that asset Up or down in the future? And then the second one was just a quick question on Incoa since you brought it up. I was just wondering if you could give us any more color around When you really expected, I know you've highlighted that it could be Q4 2021, but it sounds more like 2022. Thanks, Tim. Well, the on Encoa, I'll pass over to Mark to answer that question. But as far as Labrador is concerned, we hold our position. We may need it for liquidity, But we may also wish to add to it should the price decline and we think it represents good value again. So it keeps us involved and interested. And in the meantime, it provides a very good yield to us And it continues to be a very interesting clean where to get exposure to iron ore through pellets in large part. But Mark, would you like to comment on Encoa? Sure. Good morning, Tim. The Encoa construction is going well, on track and On budget, which is great. It's definitely been more challenging in the context of the COVID pandemic. Accordingly, we think that it's possible that that funding obligation could slip into Q1 of next year. That being said, it could be Q4. We'll just have to wait and see how things go. Okay. That's great. And just to confirm, Julien, it sounds I mean, it's good news from my perspective. It sounds like LIORC is still very much A solid part of your portfolio with lots of flexibility one way or another. Yes. I mean, in a way, I think we continue to be interested. We continue to monitor it. If the price spikes, we might take more profit, but on the other hand, if it fell, we might well add to our position. Yes. Okay. That's really helpful. Thank you, both of you. Pleasure. We can now take our next question from Tyler Brodaw of RBC. Great. Thanks very much, Julien, Kevin, Mark. I appreciate the call. A couple of questions from my side, just an extension Tim's question really just, if you could remind us in terms of PIE when that decision around that $70,000,000 investment is likely to come. And then just on that considering that's around the sort of capacity that you currently have on the balance sheet, Are you looking to recycle any other parts of the capital in the business, I guess specifically coal and what you're thinking around that here at this point? And then the second question just on the Kestrel production profile. We've seen the Adaro announcement, but also you've got You've got BHP and Anglo and other companies who have pulled back their production. Just wondering how much from your conversations with them is this to do with price? And if there was to be a recovery in net coal prices, do you see that transition that from your lands change in any material way? Thanks very much. Sure. Well, with regards to Brazil Nickel, I think they are focused on the feasibility studies and then the construction of the pilot plant. So we don't see any immediate triggers in terms of the decision on that $70,000,000 We are encouraging them to accelerate their growth plans given the favorable outlook for nickel and for bare nickel in particular. But it will take a couple of years now. Projections continue to be that they will come into production in the middle of the decade. And so probably 2023 would be the time when we might have to start to make decisions on that further commitment. With regards to our coal exposure, as you would appreciate, As we make new investments in the portfolio, diversifies further, that will reduce our coal exposure. And in addition, The depletion of Kestrel and Narrabri also reduces our alcohol exposure. So there is a natural decline in our coal share. We've seen that playing out in the course of 2020 and then this year with Oasis Bay. We've made a commitment not to make any further thermal coal investments, but we are open to disposing of The thermal coal exposure in particular subject to value because that Asset is of high quality. It continues to do well. Obviously, thermal coal prices have held up very well this year. So we'll need to weigh up any potential transaction against the income which we might forego. As time passes and the portfolio gets bigger and more diversified, That income becomes less significant. So it's very much a work in progress. I don't know if Kevin or Mark, if you'd like to add to that. Well, that covers it, Julien, from my side, unless there's a follow-up. Okay. No, that's the final that and I guess just the question around Adaro and just how price sensitive is the change in guidance from your perspective? Kevin, did you want to address that one? Yes, sure. Yes, look, the Change in guidance is fine, Tyler. Pricing is a bit weaker at the moment, so selling less at these levels is probably a good thing for Anglo Pacific. Ultimately, the total volumes within our private royalty land doesn't change. So it probably smoothens out The timeframe over which the royalty kind of moves more meaningfully outside of prior royalty lines. So we're kind of neutral. We recognize last This year was exceptional in terms of volumes and unfortunately those levels won't be produced again in the short term, but we're fine with that. That's great. Thanks very much. We'll now take our next question from Raya Kotecha from Bank of America Securities. Hi. Thank you for the call today and also for elaborating on your new strategy focus, which is interesting. I have a follow-up on the coal exposure and sort of how you see that in your portfolio. And I mentioned that you might be keen to dispose it or you're Open to this version thermal coal. And I'm just wondering, so how does that sort of square Kestrel versus mirabri? Because mirabri doesn't really contribute as much Casual to the overall revenues and it is also majority thermal coal. So could we expect that to be considered for disposal first? And then just a bit more about Do you have any timelines going forward or anything of that sort? Well, Narrabri is Much more thermal coal exposed than cholesterol, so narrow by 80% thermal coal and it has a much longer life. So I think that is the asset which has now more value than Kestrel. Kestrel itself, as I've mentioned, It's rapidly depleting and its effective life is quite short now. Whilst it will produce through the rest of the decade, within the next year or 2, It will halve and then it will decline further. And part of the reason for the acquisition of the Voisysberg Stream was to counter that decline and actually grow the income during this period ahead. So I think if we were to make a disposal, as you say, Narabry would probably be our priority. Qeshaw itself will deal with itself in the way that it's going to decline. And as we know, it's already only 12% of our net asset value. And During the course of this year, it will drop below 10%. Okay, perfect. Thanks for that. And my second Sorry, yes. I have another question on your financing plans for new acquisitions. So from memory, most of the Labrador proceeds have been allocated to the Voisys Bay financing and so what are your options going forward? Would you consider an equity raise maybe? I'll hand over to Kevin for that, but we have significant firepower for the transactions we're looking at the moment, Kevin. Yes, sure, Julien. Yes, look, I think we've drawn 100 and €3,500,000 under our facility, which is €150,000,000 facility. And obviously, we expect to generate free cash flow as we go through the course of the year. We hold, depending on price, anywhere between $7,000,000 to $8,000,000 in treasury shares, which we can sell into the market we need to. The Labrador stake, which is probably $30,000,000 plus as well kind of gives us Flexibility at the moment of anywhere between $50,000,000 to $60,000,000 I think if we do a larger transaction, we're going to have to be a little bit more Inventive as to how we finance it, but I think we demonstrated with the Boise Bay transaction how we can do that. If targeted acquisitions are of a similar quality and of a similar kind of status to production as Boise Bay is, then We can have sensible discussions with our lending group about upsizing our facility. So there are still options available to us. Equity is always one, but look, it's not certain that that's going to be the lever that's pulled first, if you like. Okay. Thank you. So it appears there are no further questions at this time. Mr. Traeger, I'd like to turn the conference back to you for any additional or closing remarks. No, I think we've covered most of the issues. We, As I said, look to this year with confidence. We think that commodity prices will help us. The one off events won't occur. And we've just done a very large transaction, which will start to contribute in Q2. So we continue to look to execute on other deals. We have the balance sheet capacity to do so. And so we're just hard at work growing the business and making sure that we can create value for our shareholders. As usual, if anybody has any questions for us, Feel free to reach out directly. But thank you for your interest and time this morning. And We will be announcing our Q1 trading update in the next couple of weeks. Thank you. This concludes today's call. Thank you for your participation. You may now disconnect.