I'd like to introduce our next presenter and speaker for another fireside chat Q&A. It's Sheldon Vanderkooy, CEO and Director of Triple Flag Precious Metals. Welcome, Sheldon.
Thank you, Ralph.
All right.
My pleasure.
Great to see you. Yeah. Given this is a part of the streaming model, maybe I'm going to sort of more focus on contract structures. Deal flow is always topical in the streaming space and the royalty space, and so that's kind of where I'm going to take the line of questioning, again, as the last presentation, maybe leave about three to four minutes at the end. I do want to give you the opportunity, Sheldon, to maybe just at a high level, introduce the audience to your company, just a few points on where you are in sort of market capitalization and some of the strategic priorities.
Yeah. Thanks, Ralph. We're a streaming and royalty company. We started the company in 2016. We went public in 2021, so we're relatively young. We're actually the fourth-largest precious metals streaming and royalty company right now. We have a portfolio of about 240 assets. About 35 of those produce the cash flow, Tier 1 assets like Northparkes, Fosterville, Beta Hunt, the Altar Project. Really what we've looked to do is generate shareholder value by deploying our capital into streams and royalties into good assets run by good operators with a real focus on good jurisdictions.
I think we've had a pretty successful track record over the years. I mean, we have $1.8 billion of shareholder capital in the company. The market cap right now is about $7.5 billion. We paid out a few $100 million in dividends as well in the short history of the company. We're kind of like a 4x return on capital invested.
Great. Thank you for that. Sheldon, the team has talked about the strike zone of particular deals in the space being in that sort of $200 million-$500 million range, typical on what we see sort of on some of the players that are smaller than yourselves and some of the players that are bigger. Can you talk a little bit about some of the transactions that we've seen in the sector? Where do you fit into that? Are you seeing more of a blue ocean in terms of opportunities?
Yeah, I like the blue ocean analogy.
Yeah.
I mean, we're always looking to find good places to put our capital, and that's really how we built all the value in the company. We didn't start with an endowment or a portfolio. When we give that guidance, right, like a $200 million, $500 million transaction, that actually really moves the needle for a company like Triple Flag, and it actually represents really the bulk of the deals you see in the sector. There's some that are much, much larger, of course.
Mm-hmm.
Those tend to be the minority. We actually feel we're actually really well- poised. We did $350 million of deployment last year into really great investments that are going to benefit our shareholders for decades. That's meaningful growth for us. Some of the larger peers, of course, the same sort of deployment figure wouldn't have the same sort of impact. We actually see a really nice opportunity for us to grow substantially.
Excellent. Jurisdictional concentration, typical with all mining companies, about 75% of your asset allocation right now is towards what we call Americas and Australia. Just, is there a hard cap on jurisdictional exposure, and how do you think about that when you approach new deals?
Yeah. There's no hard cap. We kind of look at each deal as it comes in, but you really have to pay a lot of attention to jurisdiction risk. Remember, we started our deployment in 2016. I think the focus on jurisdiction risk has only increased over that period, and I feel really well- situated right now. Our single largest asset is Northparkes. Royalty and streaming companies get fantastic diversification. That's actually the only asset we have that's over 20% or even actually over 10% of the NAV. If you want to have your biggest asset somewhere, it's probably in Australia, a long-established operation. Beyond that, again, biggest country concentration is Australia. A real focus on the Americas, and specifically Canada and the United States.
Yeah. Coming back to Northparkes, this E44 agreement I thought was fascinating because what it did is sort of it redid the agreement to include the exploration upside, really unlocking a lot of value in what was sort of a supplemental type of agreement. My question is, are you seeing some of those other types of structures applicable to other deals in your portfolio?
Yeah. Northparkes is a little unique. What's really nice about Northparkes is it's our biggest asset, and it's actually now going to be our biggest growth engine over the next, like, 5-10 years of the company. The E44, that actually came about because our stream is a byproduct stream. It's a copper mine at Northparkes.
Mm-hmm.
We get actually 60% of the gold revenue, and that works because the bulk of the revenue is copper, and so it all works for the operator. What they found is we have 1,000 sq km area of interest. The stream area is 1,000 sq km, so 20 km away from that mine, there's actually a gold deposit. Now, a gold deposit, no one's going to develop a gold deposit if someone's getting 60% of the revenue.
Mm-hmm.
We came to a deal there, and they're going to unlock that. Now Evolution's going to make a lot of money on E44, because that's really nice. We have minimum payments, minimum deliveries contracted for there, so it's really risk-free from our standpoint. I expect to get more than the minimums, of course, because they wouldn't agree to minimums if they thought they were kind of cutting it close to that line.
Agreed. The path to 2030 includes significant growth from-
Yeah,
...90,000 to 105,000 gold equivalent ounces up to that 145,000-ish range, which is, call it 45% growth.
Yeah.
Just wondering, when you look at that growth, can you sort of segment to us study cases versus brownfield versus greenfield, and how do you approach those buckets in terms of the sources of that growth?
Yeah. We feel really confident about that 140,000-150,000 sort of range. What's nice about it is it doesn't really depend on any one project coming in. It's actually a pretty long list. Couple sources and a couple buckets, I think is really what you're asking for. Like, where does that come from? A lot of it actually is embedded growth at a number of the mine plans within the existing operations that are producing. It's not just all development projects coming online. Places like Beta Hunt, Northparkes.
Mm-hmm.
RBPlat, those are going to increase their production. That's just the profile and the mine sequencing. We have a number of assets that are in construction right now that are tracking really well, like the Koné project that Montage is building in Côte d'Ivoire, the Arcata project, which is being done right now in Peru. There's a few others which are going through the milestone steps. If you add up the total production of what all of our operators put in for 2030, you're actually going to get a figure higher than the 150,000. We've already done some haircutting-
I see.
...on that because it's mining and it's a lot easier to come in a little later than it is to come in a little earlier.
Okay. We have some front-end loading of that growth, but also conservatism baked into that assumption.
Yeah, it's not really front-end loading. It's just that a lot of it comes from existing operations and it's going to come sequencing in. We're going to start seeing that in 2026 and 2027, and going on through to 2030.
Great. Let's switch to silver, a hot topic over the first few months of this year. We do have a Cerro Lindo step down in terms of that royalty. Just with that, how do we incorporate silver exposure into the business model?
Yeah. And the Cerro Lindo step down is actually a good news story. It was our very first investment. It was in 2016, and we modeled 17.5 million ounces of silver that we'd receive. And the step down actually is going to take place when we get our 19.5 millionth ounce. So it's like 2 million extra ounces of silver, and I had no idea that the silver price we'd be getting for those ounces where it's going to be in the 70s when we did that deal in 2016, of course. Silver exposure is going to come down.
We do have other silver exposure and, first of all, Cerro Lindo is going to be our second biggest asset, even after the step down. It's quite a wonderful stream. We have silver coming out of Buriticá. A new silver coming online will be from the Arcata stream that we did last year. A little bit further out, so this is going to impact in the 2030+ period. The Camés Project has shown some real momentum, and that's been one of our recent catalysts that, quite frankly, went a lot faster than we expected.
Okay. Yep. We talked about Northparkes as part of the early part of our conversation. Maybe get a little bit more on the technical side, because you've guided to 2026 GEOs being about 5%-10% growth there, coming from a certain part of the bulk mining and the mine sequencing there. Maybe if you could talk a little bit about, from a technical aspect, the sublevel caving, how that plays into the production profile in the short term?
Yeah. One of the nice things about Northparkes is they have multiple ore sources. There's these surface pits, there's the E48 block cave. There was an E26 block cave, which is winding down now. There's the E22 ore body coming up. It's a copper mine, and we get the gold byproduct. Each of these zones has different gold grades. The amount of gold we receive is going to vary as they sequence and as the ore blends, it gets drawn from the different areas. The step down that we're seeing, the dip is in 2026. It's actually completely with the mine plan, and then we're going to start seeing it come up. E48 was something that we were watching really carefully last year because it had to get their development work done, and they're starting to draw on ore from E48.
E48 actually has very nice gold grades in it. I was really watching that development all last year, wanting to see them hit their markers. Because of course, if you're behind on your development, it's going to flow through in the back half of this year. They actually were tracking on exactly the Evolution team. Really impressed with how they execute. Actually have been hitting all their marks.
If we go a little bit further, then we have the E22 block cave, right?
Yeah.
That's what gives you that real production. When does it reach that full capacity where you think of it more a steady state?
I can't get ahead of Evolution Mining here, but what they approved was the capital to start the block cave development of E22. E22 actually has very good gold grades relative to the rest of the deposit. That's going to drive some real growth. Block caves have about a four-year period, or this one does. We're going to start seeing production from that block cave in 2030. This is why it's really poised as a very good growth asset from us. We're going to see an increase from 2026 levels as E48 comes in. 2030 beyond, we're going to start seeing the E22 effect coming in. It'll be a block cave, and it'll take them a little while to get up to full ramp rate there. I don't want to get ahead of Evolution Mining.
Mm-hmm.
What's really exciting there is we're also looking at increasing the capacity of Northparkes. Right now it's 7.6 million tons per annum. They're doing a coarse particle flotation and some other debottlenecking sort of activities that'll take them to 8 million tons. They've actually approved that now. They're doing a study that they said is going to look at 10+ million tons. If you look at the earnings call transcript of Evolution, they were talking about that being up to 15 million tons per annum, roughly a double from what they have today. Of course, as a streamer, that's exactly what you want to have. That really affects the gold byproduct we get from the copper operation. There's that E44 on top of that, which we're going to get as they develop the E44. That's just the same flowsheet.
They're going to put that material into the mill. It'll just make the gold content of the concentrate that much higher, and it's going to be over and above. We did not have anything from E44 in our investment case when we bought this stream. We didn't have it in our mine plan or our model even a year ago. We had these discussions with Evolution to unlock that.
We heard from Agnico yesterday talking about the pending commissioning of Hope Bay.
Yeah.
Sometime later this year, perhaps in the next month or so, how are you looking on the timeline of that asset into production, and what could it mean in terms of the NSR exposure on GEO contribution to Triple Flag?
That's another asset that's not currently producing cash flow for us, but that just gotten better and better over the last couple of years. Agnico was kind enough to host me on-site last month up at Hope Bay. I got to spend some time with the team. It was fantastic. I can't get ahead of Agnico, but what they've guided for publicly is 400,000-425,000 ounces a year for 10+ years. We have a 1% NSR, so you do the math there, it's 4,000, maybe a little bit more than 4,000 a year. Every geologist that goes to Hope Bay comes back raving about it. It's very prospective. There's a lot more there. I think the date they have circled in the calendar they put out publicly is May 19. I'm kind of looking forward to that May 19 announcement.
Yeah.
I see the first decade as really the starter, and then they're going to expand that out as they go along. There's a lot more material.
Okay. Sheldon, let's keep on the line of questioning concerning around upcoming growth, and let's talk about Eskay Creek, and permitting there, and how you're feeling about what is the guidance now for a Q2 of 2027 start date and how that plays into the growth profile.
Yes. We have 0.5% royalty on Eskay Creek, and again, just a team that's really hit all its milestones. I got to give credit to the province of British Columbia, too. The story used to be that permitting would be indefinite or take a lot longer, and they've actually moved through that permitting process, I think, much faster than anyone saw before. Again, I'm going to defer to the company as to what they believe the timelines are for that coming in. I've been impressed with how that team's executing, and that's one of the fairly long list of assets that we have coming into production in the next couple of years.
Yeah. How closely are you monitoring Koné construction, Montage Gold? Big CapEx number with first gold pour planned there. Could we see some delays there, or has management been executing according to your plan and sort of to a satisfactory level?
Again, it's a consistent story, right? The Montage team has done an incredible job. It's been reflected in the market. I think it's very well-recognized overall. I think initially they were talking about next year and then early this year, or maybe it was late last year, they started saying actually they might get some production early this year, actually moving up timelines, which is not what you normally hear. Anyway, I've no reason to doubt what they're going to do.
Yeah, Sheldon, I'd like to maybe pivot a little bit towards capital allocation, shareholder returns. We've had four consecutive annual dividend increases. Where do dividends play into the portfolio allocation as it pertains to capital?
Yes. We've been really clear in our messaging on dividend policy since we've gone public and capital allocation policy overall. We went public with a dividend, it was $0.19 a share per year. We've increased it every year. We've increased it by a penny. We see continuing that, I would say, indefinitely into the future. When we went public, it was consuming a little over 20% of our cash flows and with our production profile going up and the gold price movement, that's going to be under 10% very shortly.
Haven't had any groundswell from shareholders asking for it to increase over and above. Actually, the feedback from shareholders has been overwhelmingly positive on that approach. It's really being opportunistic on the NCIB. Always feel the shares are undervalued, and I think that's been shown by the performance over time, but also trying to balance that with keeping capital available to make new investments and add value that way. So it's really a balance between those two.
Yeah. Just coming back to the NCIB strategy, do you weigh internal rate of returns between the stock and opportunities as whether the trigger point on the two? How do you sort of approach that from a match, because share buybacks on streaming and royalty companies, not conventional, right, because we tend to think of their valuation arbitrage in the market? How do you approach that then? How do you balance those risks?
Yeah.
Opportunities?
The one thing I think, like the NAV that you see in the public market just really understates the value of streaming royalty companies. Any CEO of a precious metal streaming royalty company that said, "Oh, as long as I trade over 1x NAV, I'm fairly valued." I mean, you lack ambition, right? No one's going to say that. Internal rate of return, not necessarily. I think the shares tend to be undervalued because the value tends to be revealed over time. Like E44 wasn't in anyone's model a year ago, and that's the nature of streaming royalty companies.
I've been at operating companies too, and there's a lot of things that come up. There's more negative surprises than positive surprises, I would say. Whereas in a streaming royalty company, there's a lot more positive surprises than negative surprises. People extend the mine life. They find more deposits. They put more capital to work on your properties. I think buying back shares is almost always a good thing to do. On the other hand, when you're buying these streams and royalties, these have proven to be very lucrative investments over time.
Great.
Right? If the next Northparkes comes, I want to jump on that because that created literally billions of dollars of value for a shareholder.
Yeah. I'd like to turn it to the audience. We have time for one question. In the front here, sir.
Yeah, I'll speak loudly. You've mentioned that the company's undervalued, can you tell us why you think it's undervalued compared to the many other royalty and streaming companies?
Yeah.
Who say pretty much exactly what you said about what you do?
Yeah, a very fair question, and you're right, it's not unusual for a CEO to say that a company is undervalued. A couple of things. First, when you look at how the valuations on things like P/NAV and stuff like that, a company like ours does skew a lot lower. The bigger ones trade at, call it 2.5x, 2.25x. The public numbers we have is 1.5x. There's kind of a value differential there. Second is I think streaming royalty companies tend to be undervalued, not just my company, and it's because a lot of the value gets revealed over time. Part of that is you have a royalty in your portfolio, someone raises money, and this environment's fantastic for surfacing value. There's a whole bunch of out-of-the-money options.
Options that were out of the money two, three years ago that are now coming into the money. When we bought that Koné royalty, we put a very modest value on it, and now it's actually very valuable. That Hope Bay asset, too, there's going to be more of those. The idea that that's just going to stop now, I actually don't believe at all.
Can I ask a supplementary? When you bought the Silicon Merlin Royalty, which you now call Arthur, I believe, you paid $420 million for it, which seemed at the time to be a very high price. Is that how you've achieved growth? You've paid a high price, recognizing that long-term value is going to be there irrespective of almost the premium that you pay.
Yeah. You might be a little confused on the public company valuation origin. What it actually cost us to buy that royalty was $250 million. You're right, there are people that said it was a pretty high price. Franco-Nevada paid $275 million for essentially the same royalty shortly thereafter. There's at least one other person out there that felt the same. I felt I didn't need them to vindicate me, but I felt there was someone else that saw the same value. When you see the news flow that's come out on that since, I think that that property is a clear winner for us. This is going to be the cornerstone mine for AngloGold Ashanti going forward. We don't just base our investment decisions based on what's in the analyst report. We sent people to site.
We looked at where the drill rigs were going. We talked to people at the company, and we had a pretty good idea that there was a lot more there than was in the public domain. It actually was in the public domain, but it wasn't widely known at the time we did that deal. I actually feel my technical team deserves gold stars all around for that one. They've been completely vindicated on the work they did before we bought that.
Please join me in thanking Sheldon and the Triple Flag team for their presentation.