Earnings Call: Q4 2021

Aug 12, 2021

Good day, and welcome to the Royal Gold 6 Month Transition Period and December Quarter 2021 Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Alastair Baker, Vice President of Investor Relations and Business Development. Please go ahead. Thank you, operator. Good morning, and welcome Welcome to our discussion of Royal Gold's 6 month transition period and December quarter 2021 results. This event is being webcast live and you will be able Speaking on the call today are Bill Heisenbuttel, President and CEO Paul Livner, CFO and Treasurer and Mark Istow, Executive Vice President and COO of Royal Gold Corporation Dan Breeze, Vice President, Corporate Development of RG AG and Randy Scheffman, General Counsel are also available for questions. During today's call, we will make forward looking statements, including statements about our projections and expectations for the future. These statements are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These risks and uncertainties are discussed in yesterday's press release and our filings with the SEC. We will also refer to certain non GAAP financial measures, including adjusted net income, Adjusted net income per share and adjusted EBITDA margin. Reconciliations of these non GAAP financial measures to the most directly comparable GAAP measures are available in yesterday's press release, which can be found on our website. Bill will give you an overview of the transition period and December quarter, followed by Mark with an operating update. Paul will then provide a financial update and Bill will wrap up the call with some closing comments. We'll then open the lines for a Q and A session. I'll now turn the call over to Bill. Good morning and thank you for joining the call. As of December 31, we closed out a 6 month transition period From this point forward, we will be reporting on a calendar year schedule. I want to thank our team for the hard work to complete another audit just 6 months after the last, while also incorporating our first property disclosures under the SEC's new SK1300 reporting guidelines. Turning to the results for the 6 month period, I'll begin on Slide 4. In summary, we posted very solid results. Despite flat to declining precious metal prices, we still posted a 12% increase in revenue to $343,000,000 which included excellent results from our royalty portfolio. Our volume of 191,300 gold Operating cash flow was very healthy at $249,000,000 up 28% over the same period last year, and earnings were $138,000,000 or $2.10 per share. After adjustments, earnings were $2.11 per share. The larger percentage increase in cash flow than revenue is indicative of the efficiency of our business and our ability to leverage a low cost base that is largely insulated from the effects of inflation. We raised our dividend in November for the 21st year in a row And on January 31, we were added to the S and P High Yield Dividend Aristocrats Index. This index is made up of 114 companies that have consistently increased their dividends every year for at least 20 years. We're the only precious metals company in this index And we're pleased to be included alongside the likes of well known companies like IBM and Nike. We used our operating cash flow to repay debt and at the end of December, we were debt free with approximately $1,200,000,000 of available liquidity. We also added growth to the portfolio during the period with the previously announced acquisitions of the Red Chris Royalty and Annex Gold Mine Stream and increased our Silverstream rate at Comecao. I'll let Mark give a more detailed update on Comecao in his remarks. Finally, I'd like to welcome Martin Raphael to our team in a new role as Vice President of Operations. Martin has extensive experience in operational, Corporate, construction and consulting roles and we got to know him when he held senior project development and technical roles at Golden Star and through his participation in some of our due diligence team efforts after he left Golden Star. Martin's skills and experience will further add to our technical depth and we are very pleased to welcome him to the team. With that, I'll turn the call over to Mark for an update on our portfolio. Thanks, Bill. I'll start on Slide 5 with some comments on our transition period production. We provided our initial guidance for the 6 month transition period in early August and raised guidance in November to reflect a record GEO production We reported for the September quarter strong performance again in the December quarter of 93,000 900 GEOs allowed us to reach 191,300 GEOs for the period, exceeding the top end of our revised guidance range of 180,000 to 190,000 GEOs. As Bill mentioned, Most of this outperformance was due to production volume rather than metal price impacts as GEOs were approximately 191,000 using the same metal prices we used to set our guidance. Turning to Slide 6, I'll provide some commentary on the December quarter. I'll note that we're reporting before many of our operating counterparties, so I don't I won't be able to provide specifics on all of our interests. Overall, revenue was $169,000,000 with volume of 93,900 GEOs. Our royalty segment contributed $57,900,000 in revenue, an increase of 14% over the prior year quarter, representing about 34% of total revenue for the quarter. Notable revenue increases were attributed to Cortez with higher production Following recovery from a pit wall stability issue that impacted the first half of twenty twenty one into Boise's Bay due to higher base metal prices, We also had a large revenue contribution in the quarter due to a true up of previous period underpayments from Leeville. These increases were partially offset by lower revenue from our South Laverton Kornalby net profits interest royalty, which was mostly due to the timing of revenue recognition. We recognized the NPI revenue In the September quarter of 2021 and in the December quarter of 2020. On the stream side, revenue of $111,000,000 was up about 3% from the prior year quarter. New revenue from Comacao and NX Gold was partially offset by lower sales from the Mount Milligan copper stream. At Pueblo Viejo, silver sales and deliveries were lower due to continued recovery issues with the silver circuit. Recoveries continue to track near minimum recovery levels prescribed in the stream agreement, and we saw further delivery deferral of approximately 41,000 ounces during the December quarter. The balance of deferred silver is now approximately 459 1,000 ounces. We expect silver recoveries will remain highly variable until the expansion project is completed and bottlenecks associated with silver circuit and silver recovery can be fully addressed. This remains a cash flow timing issue from our We don't expect it to have any lasting impact on silver revenue. Turning to Slide 7, I'll give an update on Khoemacau in Botswana. ACM reported continued ramp up of mine production Since our last quarterly call in November, the progress has been slow due to impacts from COVID-nineteen. Botswana was hit hard by the omicron variant in December and Khoemacau was no exception. In December, approximately 25% Of the operator workforce, including about 40% of the highest skilled operators, were unavailable to work due to COVID protocols, which affected about 40% of the mining shifts. When combined with shortages of skilled operators With typical operational issues related to start up starting up a mining operation in a new ore body, progress in the quarter was slower than expected. Fortunately, the worst of the omicron wave appears to have passed. Currently, only 2% of the mining workforce is self isolating In January, production was approximately 40% of the 10,000 tonne per day target. ACM has which is about 1 quarter later than the schedule we gave you on our last call. While we're not providing detailed ramp up forecast for the next quarters, I operational flexibility will increase as more mining areas continue to open up. It is worth highlighting that ground conditions Our as expected orebody widths and grades are in line with the resource model, metallurgical recoveries are in line with expectations. We are also confident that the project has the equipment and manpower resources required to support the planned production ramp up. With respect to KCM's financial position, working capital has been impacted due to the slower ramp up, and we're currently in discussions with KCM on providing the final $26,500,000 available under the Silver Stream. This discussion includes RK Mine Finance as well as KCM shareholders, And we expect that additional support in equity will be provided alongside any further stream contribution. The aim of all parties is to ensure sufficient liquidity is available to allow Khoemacau to reach full production levels. In the event we contribute the full $26,500,000 Roagold stream interest would increase to 100% of payable silver, which at full production is expected to be 1,800,000 to 2,000,000 ounces per year. While COVID-nineteen was an unforeseen challenge when development Started in 2019, KCM's management is handling the situation well and has a well engineered ramp up plan in place. And we're pleased to have increased exposure to this high quality project. KCM provided an update on their website earlier this week at komacowdot And I encourage you to review that information for additional detail on the project progress. I'll now turn to Slide 8 to make some brief comments on a couple of other recent developments. At Mount Milligan, Centerra provided 2022 production guidance of 190,000 to 210,000 ounces of gold and 70,000 to 80,000,000 pounds of copper, which compares well to actual production of 196,000 ounces of gold and 73 £300,000 of copper for 2021. They expect this production to be weighted 60% towards the second half of twenty twenty two. Also in progress is an updated life of mine plan with an expected release in the 2nd quarter. Turning to NEX Gold, Arrow announced year end increases in M and I resources of 32% and 2P reserves of 25% and provided 2022 production guidance of 39,000 to 42,000 ounces, above actual production of 38 We have also started the NX-sixty project to bring the new into the mine plan in 2024 and expect to increase and sustain long term gold production of We like the near term potential of NX Gold when we acquired the stream and we're pleased to see Quickly, Arrow Copper has advanced their plans to realize this potential. I'll now turn the call over to Paul for a review of our financial results. Thanks, Mark. I will now turn to Slide 9 and give an overview of the financial results for the quarter. For this discussion, I will be comparing the quarter ended December 31, 2021 to the prior year quarter. Revenue was $169,000,000 for the quarter, a 6% increase over the prior year period. We had Strong production of 93,900 gold equivalent ounces or GEOs, which was an 11% increase over the prior year period. Most of the revenue increase was driven by strong operating performance, as Mark mentioned in his remarks. Also contributing to our Revenue was the 2nd quarter of deliveries from Khoemacau and NX Gold, which together contributed about $8,000,000 during the quarter. With respect to metal prices compared to the prior year quarter, the average price of gold and silver were down about 4%, while the average price of copper was up 35%. Gold continued to be dominant, making up about 73% of our total revenue, followed by silver at 12% and copper at about 10%. Cost of sales, which excludes DD and A And specific to our streaming segment was steady at $25,100,000 compared to $24,900,000 in the prior period. Our DDA expense was $49,100,000 up slightly from $47,900,000 in the prior year quarter. Our DD and A expense on a dollars per GEO basis was $5.23 per GEO for the quarter compared to $5.67 per GEO in the prior year. The decrease in our DD and A per GEO was a result of stronger performances within our royalty portfolio. Earnings were $68,200,000 or $1.04 per share, a 14% increase from the prior year quarter. After adjusting for a $1,500,000 expense related to the fair value change in equity securities, our adjusted earnings were $1.05 per share. We reported another very strong quarter of operating cash flow at $119,000,000 which was a 19% increase over the prior year and was primarily due to higher proceeds received from both our royalty and stream interest. Turning to Slide 10, I'd like to make a few comments on our performance relative to the transition period guidance. As Mark covered in his remarks, our transition period GEO sales came in slightly above the revised guidance range due to stronger volumes within the portfolio. Our transition period DD and A of $5.21 Per GEO came in slightly below the bottom end of our earlier guidance range of $5.25 to $5.75 per GEO. The lower DD and A per GEO when compared to our earlier provided guidance range was largely due to the better than expected contributions from our royalty portfolio. As most of our royalties have been in the portfolio for many years, they then have lower overall carrying values and lower depletion rates. Our reported effective tax rate for the transition period was 17.8%. Absent the effect of discrete tax items during the period, Our effective tax rate was 18.9%, which was in line with the earlier guidance range of 18% to 22%. With our move to calendar year end reporting, we expect to begin providing 1 year total GEO sales guidance. As several of our counterparties have yet to release their own production guidance For calendar 2022, we are not able to provide our 2022 GEO sales guidance today. We do expect to provide this guidance early in the second quarter or once all the information is made available. However, looking forward to the March quarter for our Stream segment and absent any potential operational impacts from COVID, We are expecting a slower start to the year sales with the Q1 range of 50000 to 55000 GEOs. I will now turn to Slide 11 and provide a summary of our financial position at the end of the quarter. Our liquidity position continued to strengthen as we ended the quarter with $144,000,000 of cash, Working capital of $155,000,000 $1,200,000,000 of available liquidity. In line with our strategy of using operating cash flow to manage our debt level, We repaid the remaining $50,000,000 revolver balance in early December and ended the year debt free and with a full $1,000,000,000 revolver undrawn and available. We view the revolving credit facility as a key financing tool to provide accretive growth to our shareholders. Our business continues to generate strong operating cash flows, and we are comfortable using debt in a measured way and repaying that debt as cash flow allows. With respect to our outstanding commitment under the Khoemacau Stream agreement, as Mark mentioned, we currently have $26,500,000 available to KCM. KCM has advised that it intends to draw the remaining $26,500,000 stream advance payment later in February, which would then increase our Silverstream interest from 90% to 100%. As part of the NEX Goldstream, we also have potential payments of up to $10,000,000 through 2024, depending on Aerokov for meeting certain exploration and resource targets. We expect that funding for either of these will be made from our available cash resources. That concludes my comments on our financial performance for the quarter, and I will now turn the call back to Bill for closing comments. Thanks, Paul. We ended calendar 2021 in a very strong position and we're looking forward to building on that strength as we start 2022. Our diversified precious metals focused portfolio continues to perform well and our strong balance sheet and cash flow position us well to act on new opportunities. We also anticipate positive news in 2022 from several assets in the portfolio. Come and Call is expected to continue to ramp up throughout the year and a pre feasibility study on the project's expansion is expected in the second half of the year. Our first royalty payment from Red Chris is due by the end of the Q1. New Gold is looking to release the optimized underground mine plan study for Rainy River in the Q1, while Centerra plans to issue an updated technical report and life of mine plan for Mount Milligan in the Q2. Existing royalty interest in Australia may see 1st gold production at King of the Hills and the initiation of construction at Bellevue in the middle of the year. We may see higher production at NX Gold, with further exploration undertaken and work expected to continue on the longer term NX-sixty project. And finally, the Pueblo Viejo process plant expansion is expected to be complete by the end of the year. On the ESG front, our short term incentive compensation plan was modified in the transition period to include certain ESG factors, and we anticipate releasing our first ESG report in the first half of this year. We will be hosting a virtual investor update on April 20 this year. And we hope that you'll join us as we go into detail on these as well as other topics of interest. I'd like to finish by coming back to something I mentioned in my opening remarks, namely inflation and how our business model insulates us from direct exposure to the pressures faced by operating companies, many of which have reported recent cost inflation of 5% to 7%. We have not seen inflation erode our margins and our 80% adjusted EBITDA margin in the December quarter of 2021 was unchanged compared to the December quarter of 2020. With our disciplined history of maintaining low and stable G and A costs, I expect that we'll continue to maintain our high leverage to gold prices, while maintaining consistent and high margins. Operator, that concludes our prepared remarks. I'll now open the line for questions. We will now begin the question and answer session. Our first question will come from Tyler Langton with JPMorgan. Please go ahead. Yes. Good morning, Bill, Paul, Mark. Thanks for taking my question. Just to start, Paul, could you reiterate, I know you gave some guidance for Q1, was that for stream volumes, the $50,000 to $55,000 I just wanted to make sure I got that correctly. That's correct, Tyler. It was the stream segment quarter sales, dollars 50,000 to 55,000 And do you have any can you provide any color just in terms of the kind of sequential decline, what assets are driving it? And is that anything to do with just the The deferrals at Pueblo Viejo or just any kind of color there? Yes. I may turn it over to Mark, but there's a little bit of timing. As we've said, sometimes we have changes in delivery schedules and timing as such. But I may turn it over to Mark To give a little bit more color on some other notable items. Yes, sure. Paul, you're exactly right is Really the big item, I think, is timing related to shipments around Mount Milligan And having ships come in early, they vary from between 102 100 days. So it can be difficult to determine exactly When we should schedule them. So we received or we had sales in the December quarter that would Could have fallen into the March quarter. So that's really the biggest item. Okay. That's helpful. And then I I guess, Bill, in terms of and I guess geopolitical risk, and I guess we're seeing sort of some headlines proposals, such as the ones in Chile, like around nationalization. I guess, are you are any of these sort of like headlines causing sort of you any pause when you sort of look at new investments? Or do you think sort of are you seeing So that impact developers kind of even sort of looking at new projects? Sure. It does Influence our decision making to some extent. I mean, you have to take into account the current conditions within Country, I've always been amazed at how the mining industry seems to be able to operate through very difficult situations. And a lot of our investments, We typically look decades out. So I try not to let Short term trends or moves take us completely out of a market unless those trends are significant. But it's a bit of a balancing act, but the short answer to your question is, yes, we absolutely consider those factors when we're looking at new countries. Great. Thanks so much. Our next question will come from Cosmos Chiu with CIBC. Please go ahead. Hi, thanks Bill and team for the conference call today. Maybe my first question is on Comacao. KCM, Clearly, I think they need a bit more liquidity or more money, given the COVID-nineteen impact, Dave. They're exercising the $26,500,000 with you. They're asking for lender support and additional equity from shareholders. I'm Not sure how much you can share with us, but how tight is their financial situation? And how concerned are you or how concerned In terms of their financial situation? Cosmos, thanks for the question. I think one of the things I'd like to do is give Mark perhaps an opportunity to talk about Sort of a review we have done in association with this request for funds, because hopefully it'll give you a little confidence and how we see the plan. Mark, is that okay with you? Yes, sure. Yes, so Cosmos, With every stream draw, we do a level of diligence On how things are going, I think for this one, I would say we did substantially more perhaps than we would usually do. And I'll share with you a bit Of what we do and what we did. I mean, we took a look at the definition drilling to make sure that definition drilling that they were Carrying out now confirm the ore body grade and widths, and it is. We took a deep dive on their schedule with respect to development and stoping And found the logic all works out with their mine design and the productivities that they've assumed in the schedule, All are makes sense and supportable. We see that on the milling side that they're achieving or exceeding Recoveries. The operating costs are in line with what they've actually Achieved and we could see how they're projected out into 2022. And putting all of these things together, I mean, we get a we look at the cash flow and the liquidity that are being projected by Khoemacau and I feel very confident that they've got a well engineered plan and Happy to try to fill in any gaps for you. Yes, great. I guess it really is based on the fact that COVID-nineteen had an impact on the start up. Could you maybe talk about What's the situation like in Botswana in terms of vaccination? And yes, we don't want hopefully not another variant is going to come around, but You never know. So how vulnerable is the country and the workforce to Something like that happening once again because it again, it sounds like it had an impact this time around and it is Getting to the point where the financial situation could be a bit tighter than they would have liked. Yes, sure. It's Good question. I mean, December was significantly impacted as we made comments about the production was probably impacted by 40% to 50% with the skilled miners, many of the skilled miners in quarantine. But I think just actually yesterday, I was speaking to the CEO at Koma Cowen. He mentioned that The vaccination rate amongst their employees and contractors is over 90%. So they have a very high site vaccination rate. I don't know if I can't speak Particularly about the country, but the site is well vaccinated and they have very rigorous testing And management protocols around COVID issues. So a lot of confidence that they're doing everything they can Around that. Great. Thanks, Mark. Maybe switching gears a little bit, 2 quick modeling questions here. I noticed that South Laverton, one of your not small, but one of the smaller than Comica, one of the smaller ones in Australia, I noticed that the cost this time around for this quarter was $1,800,000 Last year was $5,400,000 I think this in part drove the beat earlier today. I guess my question is, How should we look at this? And what's more of a representative run rate? And how should we model going forward? Yes. Thanks for the question, Cosmos. And I think you're referring to our NPI, which In and of itself means volatility, but Paul, would you want to just give a little background there? I'm not sure we can give you much in terms of forecast, but Maybe Paul can help. Yes. Good morning, Cosmos. Thanks for the question. Hi, Paul. As you've heard us say in the past, one of the strengths of our portfolio is the optionality and depth within the portfolio. We acquired this royalty back in 2010, I believe, when we acquired International Royalty Corporation. So it certainly has been nice to See in 2020 some contributions from this NPI as well as 2021. But to provide you a bit more color on the royalty, The MPI is calculated and paid annually in Australian dollars. It's actually due to us within 60 days of Northern Star's fiscal year end, which is June 30. So but as is common with many MPI contracts, we don't have much visibility into the calculation And can only recognize revenue during the period in which we received the royalty calculation, on so more or less on a cash basis versus an accrual basis. But as Mark mentioned in his comments, our 2020 MPI was received and recognized as revenue in December 2020, which is you made up the large part of that $5,400,000 that you mentioned for the prior year. While our 2021 NPI Was received and recognized during our September 2021 quarter, which is really why you're seeing the decrease in the December quarter. What I would like to add that the recent acquisition of Saracen by Northern Star, the purchase accounting rules would require Northern Star to record its interest at South Lamberton net fair value. So this accounting exercise may increase Northern Star's carrying value at South Lamberton, which could then increase their calculated depletion on the property, thus possibly reducing the net profits that would be attributable to our NPI calculation. So again, we don't have much visibility into this calculation, but this kind of accounting exercise, it could impact the royalty amounts That are owed to Royal Gold in the future. Okay. Great. Does that help? Yes, it does. And we'll again try our best To forecast what you might get from it. The other question I have in terms of modeling is income taxes. I see that for the transitional period, it was 17.8%. You have forecasted 18% to 22%. It's always good, I guess, when it comes to taxes to be slightly under. But my question is, Paul, What drove the lower than expected tax rate? And again, what should we model on a go forward basis? Alistair, to what you Kamal, as we've said, typically, we provide Our annual tax guidance during our Q1, I would anticipate that we'll be able to provide that guidance At our next quarterly conference call. Really, the we did have a couple of discrete tax items during the quarter. And it's there weren't too much, but it did drive down our effective tax rate by A point or 2. It was a small discrete item during the period. And it really was a result of a favorable settlement Agreement that we received with the foreign taxing authority on a long standing tax dispute. The terms of that settlement agreement are confidential, so I'm not really able to comment on the specifics. But I can share that, that Uncertain tax position that created the benefit thus lowering our tax rate for the period was part of the IRC transaction back in 2010. So It's something that we don't anticipate seeing going forward. Great. And then you mentioned guidance that jogged my memory a little bit. Maybe one last Kind of wrap up question for Bill. Clearly, we're looking forward to your 2022 guidance. Have you given any thought in terms of what you Would you be giving out longer term guidance as well? Some of your peers in the industry have given out 10 year guidance, 5 year guidance, longer term guidance. Is that something that Royal Gold is also considering, Bill? Cosmos, I'd say not for 2022. I'll just and maybe I know I'm a bit alone in this view, But we don't control these properties. We have some good visibility and we've got a lot of assets where we don't have visibility because we don't have contractual rights. So for me to give guidance on properties that we're just not that close to is very difficult. And we started this with the 6 month guidance last year and we had to change the range 3 months later. I think if you own the properties, you might not end up doing that. So let's See, when we give the annual guidance, let's see how we do with respect to that guidance. And if we feel good about it, maybe we'll consider something longer term. I would say 3 years, Something longer term, I would say 3 years, maybe you start talking 5 or 10 years on properties, again, we don't own. I don't know what that's worth to you, to be honest with you. Got you. Thanks once again, Bill and team, and those are the questions I have. Thanks, Cosmos. Our next question will come from Josh Wolfson with RBC Capital Markets, please go ahead. Thanks very much. Back to Khul Macau, The release mentioned some discussion with the lenders. Given Royal Gold I was also part of the group with its overrun facility. I think there was $25,000,000 Is there any potential revision to the terms that That were outlined there or is Royal considering other means of investment here beyond the stream and existing debt in place? What we're anticipating right now is what we have in the press release. The Come Call has available to it $26,500,000 under the overrun That's really all we're looking at. Okay. And there was no revision to the existing terms that were set for that debt. So I think it was repayment in something like 7 years? Correct. Okay. Great. That's all my questions. Thank you. Thank you. Our next question will come from Tanya Jack Usskonen with Scotiabank, please go ahead. Great. Good morning, everyone, and thank you so much for taking my questions. Just have 2. I just wanted to circle back if I could on Pueblo Viejo. I'm just trying to get a better understanding on this silver recovery. I think you mentioned that as we go through the plant expansion at Pueblo Viejo, it's going to be quite variable. So Should we be thinking that since the plant expansion isn't going to be done until the end of this year that through 2022, We may not be getting many of these deferred ounces returning back to us or minimal contribution from Pueblo Viejo. Tanya, I might turn that over to Mark. But I'm not sure there's going to be much we can add to what we've commented on. But Mark, is there anything you'd want to say? Yes, there really isn't much to add. I would say, we've seen a lot of variability over the last 18 months as you've seen. And I don't see that variability really changing. It's been very hard to really predict what that recovery is going to be for the full quarter. So my thinking is that the variability continues and Our expectation is these bottlenecks will get worked out with the expansion as we're being informed. And then we would see a more steady silver recovery situation. Maybe you can't give us then these sales, but maybe you can talk a little bit about And from reading the monthly reports and talking with folks at Sight is there's really been a push on tons through the plant. And what happens when and it's focused on gold production as you would expect. And what happens is that push on tons overwhelms or comes up against bottlenecks associated with the Silver Circuit and the Silver Circuit for various reasons will end up getting bypassed In the process and the silver is not recovered. I think the one thing I'd leave you with Is that the site is very incentivized to recover silver. I mean, the reserve grade is over 14 grams and At 9,000,000 tons a year of processing, they have 4,000,000 ounces of silver going through the circuit. So having a 40% JV partner And having a nice credit on cash cost, on byproduct cash cost. So we're comforted that they're incentivized at site to be very proactive on managing the silver recovery. And we think it will be variable until the expansion is completed and expect it to settle down after that. What comfort do you have that they just don't continue to jam the mill with the gold? Well, I think, I mean, my sense is that they would continue they will continue to push tons this year, But that but the bottlenecks associated with that in the Silver Circuit will get addressed in the expansion. And that's the guidance we've received from the site folks. Okay. So maybe you could just share with me what are the bottlenecks, so I can do a bit more research on that. I hate to go off the top of my head on what's the most important to the least important because I'm afraid I will not get it correct. But effectively what is happening is the circuit on a whole gets bypassed For a number of reasons based on managing the heat into the circuit or managing lime into the circuit, Both of which are key inputs to the lime boil circuit. You need heat and you need lime. And there are circumstances where 1 or both of those Inputs get restricted. All right. Maybe we'll take it offline. Okay. Thank you. I just wanted to come back to my second question, which maybe Bill can talk or team can talk on. Just wanted to come back to the deal environment. Just want to review your strategy because some strategies have changed over the last little while. Just want to review your focus, whether it continues to be in the precious metal space in gold or has anything changed there With what metals you're looking at? Yes, Tien, happy to answer Nothing has changed. I think you've probably heard me say more times than you'd like to hear me say that If I was given 5 projects and 3 are gold and 1 silver and one is non precious, we'll probably look at the gold ones first and then silver and we take them in That order, but I think I've been clear that if we find something that is non precious that we consider to be Yes, a quality project, quality operator, good jurisdiction. We absolutely will entertain it. We believe within our precious metal revenue mix that we have room for something that is non precious. So nothing's changed. Okay. And then just on the non precious side, are we still talking about base metals or battery metals or There's no energy and or other coal and or anything else in there? Just want to clarify that. Yes, not energy. I mean, it has to be a market that we Understand and I think I'd have to say and by market I understand, I think there are some battery metals I might not feel Totally comfortable being in. But I also think that the risk profile of the operation, I would want it, think to be a mining operation where Mark's skills could apply on the mining side or the metallurgical So if we can understand the market, we can understand the operation, I think that's it. Okay. And then can we just circle back to Just the opportunities in the precious metals space. Last quarter, we talked about the $100,000,000 to 300,000,000 Range for funding project development and balance sheet repair, is that still what you're seeing? Tanya, I'd like to get give Dan Breeze a shot at answering some of these questions. Absolutely. Dan, are you available? Sure, Bill. Hi, Tanya. I hope you're well. And good question. I think the size range that we talked about It's pretty consistent in terms of what we're seeing now, the $100,000,000 to $300,000,000 range. I think what's perhaps newer is And if you look at the equity issuance last year for precious metals, it was down year over year. And so I think what's happening, Tanya, Some of the pressure on the smaller companies, developer companies, it's hard to raise equity. And so we're seeing opportunities for royalty financings that probably in a better market would attract equity, which is interesting. So I think these are Sub $50,000,000 opportunities. And we're looking at these through the eyes of land packages, for example, where there could be Meaningful upside over the longer term. There's smaller but interesting. So I think that's the newer part in terms of the opportunities that we're seeing more recently. So development, so royalties on development assets or packages on that is how I understood it? Yes, we are seeing some 3rd party royalties, but primarily on for development capital. So you can imagine a company that would potentially look at the equity markets for say $10,000,000 to $30,000,000 If that's unavailable, then they're open to a royalty type structure for financing. Okay. And so that's a newer focus, as I mentioned. Okay. And then still I'm assuming that there are some stream opportunities in that $100,000,000 to $300,000,000 range? There are. We like the pipeline. And looking back last year, as you know, it was you have to go back to 2015 to see The kind of volume that transacted last year, we're seeing a good level of opportunities. We like what we see right now. I'd say it's still very much weighted towards development capital in terms of use of proceeds. A little bit on balance sheet strengthening, but not as much as we saw last year. And then It's as well just looking at asset purchases as well to help fund that purchase is another opportunity set that we see in the market right now as well. Okay. I appreciate that. Just wanted to check as from moment to moment some strategies have changed. So really appreciate the insights. Thank you. Thanks, Tanya. Thanks, Tanya, for the question. This concludes our question and answer session. I would like to turn the conference back over to Bill Heisenbuttel for any closing remarks. Well, I just want to thank you for taking the time to join us today. We really appreciate your interest in Royal Gold, and we look forward to updating you on our progress during the next quarterly call. Take care. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.