Floyd with Vox Royalty Corp.
Thanks, and good afternoon, everybody. Great to be here, and thanks to Chris and Scott and the team, as always, for a great conference. It's certainly one of my favorites that we get the opportunity to come to. Very excited to be with you today, but before we get started, please pay attention to the disclaimer. We will be making forward-looking statements. For those that don't know Vox Royalty Corp., we were built to solve a problem, and the problem being that it's very difficult to pick what we believe are the right assets in the metal sector. Mining companies historically have dramatically underperformed. They have a very esoteric suite of risks that, for a generalist investor, are very difficult to analyze and digest and then allocate capital accordingly. Vox Royalty Corp. was built to solve this problem.
We were built to be a medium for exposure, for leveraged exposure to metals, with better risk-adjusted returns. That's what we sought out to build as a business, a company that could fundamentally and systematically find value and deliver better risk-adjusted returns for our shareholders. I believe we have accomplished that, and we will continue to accomplish that for our shareholders. Very nice to be talking with you in what is a very bullish market for gold and precious metals. We are a business that's built to perform regardless of what metal prices are doing. We're fundamentally finding assets at dislocated values and able to compound that capital regardless of what is happening in the precious metals cycle and in terms of prices. Meanwhile, however, a higher metal price is very significant in terms of its effect on the broader portfolio of assets that we already have within the portfolio.
These prices are encouraging miners to spend capital, increase production, increase reserves, and ultimately, all of that compounds significantly in our favor as the royalty company without having to contribute capital to that equation. We have one of the most significant portfolios of gold royalties in Australia, where gold prices have been at all-time highs and chasing all-time highs for much of the last six to seven years. This means that the operations and the operators there have been flush with capital, are reinvesting in their projects, and in fact, actually exploiting the cycle, as we've seen, where more money means more production, means more reserves, and all of that compounding well in our favor. Very quick snapshot of our cap table. I'll take a couple highlights of this to discuss in more detail. One is that we have a very aligned management and board and shareholder group.
We work for the benefit of our shareholders. We work tirelessly in that effort, and we're very aligned in the long-term objectives that our business is trying to create. In a prior life, not having sat in the CEO role of a business, I will tell you that having that alignment with your shareholders is critical. There are a lot of businesses that don't. You can see the discontinuity in how they operate without that alignment. I will tell you, we have that very firmly so. We're very fortunate to work for our shareholders. We have a great group of very supportive institutional investors that we very much appreciate, and that institutional investor list continues to grow. I think that's a function of that we continue to do what we say we're going to do, and we execute and run this business very efficiently for our shareholders.
Right now, we have 14 producing assets. We expect that to grow to north of 20 over the next few years. Our primary objective is finding assets before they go into production, buying those at big dislocations to their fair value, and then compounding that capital successfully. We made a large acquisition, which I'll touch on, that has increased our precious metals exposure dramatically. We are now about 80% gold, and really, that lines up. We bought the world's largest proprietary database of mining royalties back in 2019. Within that database is about 70%- 80% gold royalties. Gold assets have transacted in more volume than just about any other commodity, and what that means is there's more shots on gold for us to find deep value. One of the questions that naturally persists is, what is going to be your weighting to different metals?
What I can tell you is, over time, it should be in the 60%- 80% gold as a function of shots on gold of where we can find deep value. I'll touch on the transaction that we just completed. It was transformational in terms of its effect on our revenue and cash flow. We had a fantastic opportunity to find, again, a portfolio of what, in this case, these assets operated streams. We're able to find a portfolio that was trading anywhere from 2x to, say, 4x- 4.5x cash flow, which is in line with how we buy pre-production royalties. For those investors saying, did you do anything different here? The answer is really no. It's very consistent with our execution model.
Very significant discount to net asset value, a very favorable cash flow multiple, but a tremendous amount of optionality around these assets that are going to see, will have a tremendous impact as well on our operating metrics. We expect significant revenue growth, significant cash flow growth, and now also significant growth in earnings per share. This portfolio included six producing assets with mostly multibillion-dollar operators, some of the best that are listed in both the U.S. and Canada, and fundamentally, operators that are growing their operations and expanding their operations. We expect to see the effect of a much higher gold price alongside increases in production, increases of ounces to our account. I mentioned that it was six producing assets. However, there's another two to four assets that we expect to come online over the next few years to ultimately bring that producing asset count to close to 10.
Also, across this portfolio, we're expecting some production increases. Very good buy for us at tremendous value and, again, consistent with how we've operated as a business for a very long time. I talked about our method of buying assets. We're typically looking for assets before they go into production. We're buying those at good value from groups that need liquidity, and we are there to serve and fulfill that liquidity need. From 2019 to 2024, we've spent about $50 million buying legacy mining royalties. We've been paid back already $38 million on that $50 million. As we get into next year, we expect to be fully paid back. Meanwhile, the average mine life, that's only with pre this large acquisition that we made, that was with eight assets in production across another 42 that we still expect to have production potential.
Just a few assets are already delivering us payback. They have longer mine lives to go, and then we have a suite of development assets that we also expect to come online and produce. Ultimately, the net asset value of what we bought, based on analysts' and average of analysts' reports, is somewhere in the range of $200 million- $250 million, of which we've spent $50 million to buy. You're seeing the returns roll in. It's well north of a 25% return on invested capital and increasing. This is a snapshot of where we've been, a little bit of a snapshot of where we're going. Again, the assets that we just bought in this large gold portfolio acquisition are expected to bring in somewhere between $15 million- $20 million a year of pure cash flow to our business. We bought that for $60 million.
Run the math, it's around anywhere from 3x- 4x forward cash flow. Average industry multiples in our sector, acquisitions tend to be around 10x forward cash flow. Meanwhile, industry multiples in terms of where they're trading in the public markets is around 20x. A public royalty company would buy cash flow at 10x and hope to trade at 20x. We bought cash flow somewhere between 3x- 4x, and right now, we're trading probably close to a little under 10x cash flow. We do pay a dividend. We get asked about what our dividend policy is. Before we inaugurated, I said when we do have a dividend, it'll be something that we believe is meaningful, sustainable, and capable of growing.
We've grown our dividend on average north of 6%, and certainly, the cash flow from this acquisition gives us room to increase that dividend further if that's the decision that the board and our shareholders ultimately make. Right now, royalty revenues are growing. That's pre-acquisition that we made. The acquisition's going to further increase and enhance the cash flow metrics of our business. The chart on the right is not sure how much value it should hold, but this is where analysts have historically set price targets for Vox. You can see it's been a consistent up-and-to-the-right trend, as we've consistently found very deep value in the acquisitions that we've bought, the royalties that we've brought into the business, bought those at fantastic value, and been able to compound that value very successfully.
Here, we can spend a little bit of time on the significant organic growth potential within our portfolio. As I explained where we're at from a cash flow perspective on the other side of this large acquisition we made about a month ago, what I don't think is being taken into account in our business are some of the organic growth opportunities that's baked into our portfolio. I don't think the market's appreciating that. Ultimately, let you be the judge, but we have some very meaningful assets that have, in many respects, been very de-risked. Redhill, that's the acquisition we made a few years ago. Things continue to progress on that asset. It could ultimately be worth well more than 26,000 gold-equivalent ounces to Vox's account. That's a very conservative metric. Within the restart, if you want to take a very simple approach, you would multiply 26,000 x $4,000 gold.
We think this is a very conservative number. You're looking at $100 million of gold-related revenue directly from Redhill when that comes online. We have a host of assets that we expect to restart and expand. In that bucket, we believe there's over 100,000 royalty gold-equivalent ounces, which, at today's gold price, would be about $400 million in undiscounted value. Assets that are in the greenfields category, but significantly de-risking: South Railroad, that's advancing in Nevada; Bowden’s is the largest developing silver mine in Australia; Ashburton is a very large gold mine in Western Australia; and Libby, that's the former Montnor mine, this is on the FAST41 set of projects that have been identified for fast-tracking permitting and ultimately development in the U.S. in Montana. That's another 40,000 GEOs or $160 million in terms of undiscounted revenue opportunity from those assets.
None of that, I think, is captured within the current valuation of the business. We have tremendous opportunity to take advantage of those assets just naturally as they progress through the pipeline, but also in our acquisition pipeline, it's deep. We get continued questions on, can you continue to find value in legacy royalties and with your database? Every few months, we answer the call, we found something else with fantastic value. It's a very systematic, disciplined approach to finding and acquiring value for our shareholders. This is just a very quick slide before I get into some Q&A. This shows the progression of our assets. It's a very busy slide.
That's one of the benefits of buying Vox, is that there's so much activity happening every month, every quarter, every year where the operators of these mines, and it's a very clear distinction I should make, the operators are spending billions of dollars to move these assets forward, bring them into production, expand production, expand reserves, of which Vox contributes no capital towards. We just take a % of revenue, typically between 1% and 5% of the revenue from these mines, and all of the capital that the operators invest goes to our benefit and ultimately our shareholders' benefit as these mines produce dramatically increased revenue numbers to Vox.
One of the things that we focus on is, and where the acquisition that we recently made is very consistent with how we operate, is we're traditionally looking for the assets of the mines that are run by the multibillion-dollar mining companies. These companies have a tremendous amount of capital within their balance sheets. They're able to deploy it very successfully. They have some of the best operating teams, and we're able to leverage that for our shareholders. We're able to cherry-pick both the best assets at the best valuations and then allow those assets to compound within the portfolio. Earlier on, for those new to the story, I wanted to touch on our database. In 2019, we bought the world's largest proprietary database of mining royalties.
This gives us a significant edge in finding these assets where others don't know that they exist, and in many cases, have forgotten about it. There have been more instances than I can count where we're actually informing people and parties that they own these assets, and they've owned them for, in some cases, 20, 40, 50, 60 years, and these estates have forgotten about them, or the companies have forgotten about them, and we knock on their door, and we actually inform them that they have a valuable asset that we'd like to buy. This is one of the tools that we use day in, day out that allows us to find these kinds of dislocations in value systematically and consistently to our benefit. One of our largest assets and most important assets is Redhill. This is an asset that we found through that process.
We identified that there had been very significant drilling and successful drilling on what had been a previously producing mine. We bought this asset and a portfolio around it for $5 million. This is an asset that, at today's gold prices, could do anywhere from $15 million- $25 million annualized in revenue for likely a 10+ year life of mine. We are also, earlier this year, bought a royalty over a fantastic producing copper mine in South Australia. It's both heavy copper and heavy gold. I will tell you a lot of what's in our portfolio right now in terms of new acquisitions we're hoping to make are copper gold, which is, in many respects, kind of a dream suite of metals to have in one deposit. This is cash flowing, the production's growing, and this is an operation that we're really excited about.
We believe that they're going to have the capacity to both expand mill utilization and mine life as they continue to move underground with this deposit. To conclude the presentation and open up to Q&A, we have a business that has just completed a very transformative acquisition, acquired at fantastic value. You'll see the significant benefits and accretion to our operating metrics, which will come out in the following quarters. Coinciding with that, the rest of the organic portfolio is performing extremely well in this gold environment, as expected. What will also come alongside this organic growth that we now possess is our pipeline is full. We continue to answer the bell. Our process, our systems, our people improve, and we continue to be able to find very well-priced royalties that we can continue to compound value around. I appreciate everybody's time.
Right now, I will go ahead and open up to Q&A if there's any questions.
If you're $50 million invested in royalties, you've got $38 million back. What's the total you expect to get over time from this?
What I can tell you is, on a discounted basis, I believe that the average net asset value that analysts, we haven't come out with that number, Mike, so analysts have us sitting around, I think, a $400 million- $500 million net asset value. That's obviously discounted to get to an NPV.
How long does that take?
The average mine life that we have within the portfolio is about 15 years.
Yes, Eric.
You mentioned that you buy a lot of these assets pre-production. With gold running up so much, have you seen timelines accelerate by the mining companies bringing in production sooner than maybe you were expecting?
We have. I would say every year, we get a couple surprises where, because of higher prices, and really consistently, our portfolio is very heavy Australia, and Australia has had a very buoyant gold price environment for five, six years now. What we're seeing is that they're getting into production, and then they're expanding capacity, all of that happening at a faster clip than what we would have built into our models in terms of pricing these assets. Yeah, and the other kind of tag-along effect to this environment is something to know about our business. We're not financing mining companies. A lot of our industry grows on giving capital to mining companies in return for a new stream or a new royalty. We're finding, for the most part, legacy assets, whether it's legacy streams or legacy royalties. We're not directly, we're not giving capital to the mining company.
The benefit of that is that these very high gold prices, if you are giving capital to the mining company in exchange for these new streams of revenue, the mining companies have all the information asymmetry on their side, and they're also pricing in $4,000 gold. We're able to find assets before they go into production where it's less of a conversation about what gold price is doing and more about certainty of actually coming into production and ultimately producing cash flow. Our business is very intentional and has a true systematic advantage in that, even in a rising gold price environment, we're able to find really quality acquisitions before they go into production at great prices. Meanwhile, a lot of the industry is going to be deploying capital at very low rates of return to continue to get exposure.
We don't have to do that, and it allows us to be disciplined and patient in a way that a lot of the industry isn't afforded that luxury.
Do you have any jurisdictional limitations, either sort of at an official level or unofficially, that you've got the ability to kind of avoid?
In terms of jurisdictions, look, we love Australia. We believe it's the best jurisdiction to own royalties. That being said, we will go into some, let's call it lesser quality jurisdictions from a risk perspective, but we're always measuring risk, and we're always measuring reward. In Nigeria, we bought a royalty for $600,000 and ultimately paid us almost $4 million. In Madagascar, again, not necessarily a Tier 1 mining jurisdiction, we bought a royalty for $300,000. We sold it for $3 million. We will pick our spots in less than Tier 1 jurisdictions, but I think if you're sitting on this side of the team, what I would tell you is we're never going to overweight our portfolio to the super risky jurisdictions. We'll take what we think are really good risk-adjusted opportunities for the return that we're expecting to realize.
We will price in that risk, and I think we've been very successful in some of the jurisdictions that are less than Tier 1.
Can you tell me, what are the milestones or what has to happen for your property to get into production? Do you know what the operating needs have been?
Yeah, so on Redhill, I'll see if I can find this in the appendix. On Redhill, the big catalyst there right now is that this is part of the Super Pit Complex. For anyone that knows, it's one of the largest gold mining complexes in the world. They're expanding that mill from 13 million tons- 24 million tons, ultimately 27 million tons of capacity. Redhill, they've directly pointed to this feeding that mill. That mill is halfway complete. It's been about a $1.5 billion investment. Our expectation, or at least our understanding, is that mill gets completed at some point mid-next year. The quality of this asset, there's no doubt that it's going to be mined. It's a question of when. Our expectation is at some point after this mill expansion is complete that we're going to see development activities go into high gear around this asset.
This asset doesn't need a lot to actually go into production. It was a previous producing open pit. Northern Star, who's 10th largest Aussie gold producer, has all the infrastructure there. They have all the people there. They have the mill there. Ultimately, once this asset is able to come online, which, again, is really predicated by the mill being complete, that timeline can come together very, very quickly.
Is the mill complete mid-next year?
Correct.
What % of your portfolio is public or private?
About 90% is public operators, and most of those is with multibillion-dollar mining companies. That is something that we actively target. The small-cap miners are very subjected to the changing winds of whatever cycle we might be in, where the large-cap and mid-cap miners can consistently move their projects forward, develop their assets. If you have too much exposure to small caps, you leave yourself exposed to the changing industry trends and cycles. Yes?
Piggybacking off that question, I know you've previously mentioned that you guys really are targeting the acquisition of existing royalties that are already in producing mines or at least near production. Given the relationships that you've sort of derived with those operators, is there any possibility in the future of changing that business model to actually work with some of those larger Tier 1 operators who are community-established royalties?
Yeah, so the question is whether we would change our business model to be more of a financing source for mining companies that are larger. Look, being very candid with you, there's plenty of companies filling that role right now. The largest is Wheaton Precious Metals. I think they're about a $30 billion market cap. Franco-Nevada, also in that range. Royal Gold, also very much fulfilling that need for mining companies. What I would say is they're paying a lot for optionality, where that's not our business. We look for tremendous margin of safety, and then we get optionality for free as well around that is the way that we price our asset acquisition. It would be a very dramatic shift in our business and one that, at this point, we don't anticipate.
Certainly, if you're a $10 billion business, you're going to have to rethink what you're doing a little bit, but we're able to find assets that move the needle at our size for where we're at that meet our return thresholds and our risk thresholds. We'll continue to build around that business model. It doesn't mean that those are bad business models. They're just different than ours, and I don't see us going in and trying to outcompete them at a lower cost of capital. Yes?
Do you guys operate any of the projects here in Redhill, or do you guys just have third-party?
Thank you for that question. We don't operate any of the mines. That's one of the great parts of our business is, look, miners have a very difficult job. We appreciate the hard work that they put in every single day. It's very difficult running mines. We have a lot of operating partners that do it very successfully, but we have nothing to do with their operations. We just collect the check either every month or every quarter on a % of revenue. Terrific. I think that's about the end of our time, but I'll be around for the rest of the day, and thank you all for attending. I appreciate it.