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Good afternoon. Thank you all for your interest in joining us. We're so pleased to host Alistair Baker, the Senior Vice President, Investor Relations and Corporate Development of Royal Gold. Royal Gold is exciting, growing. There's nine assets that aren't even contributing revenue, and it looks like in the March quarter, they're going to have $3 million a day to invest or give back to shareholders. Such an exciting company. Please, Alistair.
Thank you very much, John. Certainly appreciate the opportunity to speak to you today. You're right. It's a very exciting time for Royal Gold. We've done a lot in the last year that will be hopefully very interesting for us to talk about during this presentation and also give us lots of things to talk about over the next several months. I'm going to just make what I'm going to do during this presentation is give a brief overview of our company. But obviously, I'll be making forward-looking statements. So please make yourselves familiar with the language on this slide, and as forward-looking statements, the results may differ materially from actual results. All the risk factors are disclosed in our 10-K filings with the SEC.
But what I'm going to do, John, if it's all right, is just take our investor presentation, speak to a handful of slides just to give you an overview of Royal Gold for those in the audience who may not be familiar with us. And then I'll talk a little bit more about the assets and some of the things that are coming. And I think that's really where your focus is for the next hour or so. And obviously, I'm happy to take any questions as we go along. But what I want to do is just slide three here. Just this shows who we are and what we do. We are a high-margin business. We generate consistent cash flows from precious metals. We're the largest, or sorry, I should say the smallest of the large companies in our sector.
What we think that does for us is it gives us access to lots of capital at low cost, but it allows us to be able to show growth by doing smaller transactions, so we can compete for large transactions, yet we can still show growth by doing small transactions, and our sector is generally based on small transactions. We've been around for a long time. We've got a long track record. We've been in the business for over 40 years. We've been Nasdaq-listed for well over 40 years, so we have a long history of being able to add value. We have two main operating segments to our business. We have royalties and we have streams. They both provide the same thing, which is top-line exposure to mining assets without having to worry about operating and capital cost risk. We have a very diverse portfolio.
And I'll get into that in a little bit more detail in a few slides. But we've done some transactions recently that have made us. They've grown the portfolio significantly. We have a depth and breadth to our portfolio that is really unparalleled in our sector. And we are a very efficient company. So it doesn't take very many people to run a company like what we have. And if you look at our revenue market cap per employee, you can see that we're a very efficient business, something that we are head and shoulders above many of the other companies that you see in the market. And that could be tech companies or any other company in any other sector. Now, there are a few things that differentiate us. And I just want to highlight those very quickly before we get into the rest of it.
First is we have a U.S. domicile. That's an important thing when you consider U.S. investors who have a mandate to invest in U.S. companies. We are the only company in our sector that's domiciled in the U.S. That means our shareholder base is a little bit different as well, but that's an important differentiating factor. Another differentiator is that we have a very high gold revenue percentage in our business, and it's the highest of all of our large-cap peers. We're very gold-focused. We do like other precious metals like silver and PGMs. We will occasionally look at other metals like copper and other base metals, but really, our focus when we're looking for new opportunities is gold, and then return of capital has always been a key strategic objective for us.
We've paid a dividend for 25 or 26 years, and we've increased it for 25 years in a row. It's something that differentiates us from the rest of the sector, and then finally, we do think in terms of per-share metrics, so when we think about funding acquisitions, we like to use cash on hand. We like to use our revolving credit facility, which we can pay back out of operating cash flow, and shares are the last and least preferred way for us to think about financing growth. We did do a transaction. We just closed it on October 20th. We acquired Sandstorm Gold Royalties. We used shares to fund that transaction and finance that growth. Very unusual for us. Prior to 2025, this year, we haven't done an equity offering since 2012.
So our share count is the lowest in the GDX index, even after issuing the shares that we used to acquire Sandstorm. So that's us at a high level. Now, there are a couple of things I just want to highlight. This is one of them. We're a long-term business. We invest for the long term. We invest for the long-term growth at assets. And over the long term, our share price performs quite well. There are some who would say that we don't have good leverage to gold. And in the short term, perhaps if the gold price rises very quickly, the right kind of investment may be something that offers you a lot of leverage to gold. So you look at a high financial leverage company, or perhaps you look at a high-cost producer. Those may give you leverage in the short term.
But over the long term, our business has performed very well. You can see that our leverage to the gold.
Alistair, if I could interject.
Yeah.
All of the royalty streaming companies bypass operating cost, capital cost, and reclamation cost. Several years ago for BHP, Rio, and Vale, the reclamation liabilities grew to $17-$20 billion each. And for many mining companies, the reclamation is bigger than debt these days. So when the costs escalate and force up the copper price or the silver price or the gold price, the royalty streaming companies get more profit without any pain. And the streaming contracts that have a fixed cost benefit disproportionately on the way up. And no mining company has a fixed cost. And there's fewer intervening causal factors to screw you up when you're a royalty streaming company operator. So I don't personally believe in buying high-cost companies. And I don't personally believe that the mines are necessarily better than the royalty streaming companies. Excuse me for defending you, Alistair. I'm interjecting.
Thank you, John. I appreciate that commentary. I think that's absolutely correct. I mean, we don't have exposure to operating costs and capital costs. So our revenue is really dependent on top-line production. So as long as assets continue producing, we expect to continue receiving revenue. So our margins are growing, or I should say that our margins are very high, 80% or so EBITDA. And those are consistent with time. And actually, we've seen expansion in our margins over the past little while because the cost to operate this business is relatively low. It costs us, prior to the Sandstorm transaction, we were paying something like $25-$30 million a year cash to run our business. As the gold price has risen almost exponentially over the past little while, we have been able to capture additional margin because our cost base is absolutely stable.
So that's a very unique feature of our business. And I think it shows up in our share price. You can see we've been able to beat the gold price, the S&P, and the GDX index over the long term. This graph goes back to 2006 when the index was formed. So with that, I'll just talk for a moment about the dividend. And the dividend is not something that is important to a lot of gold investors, but it's very important to us. And it's very important to a lot of the generalist investors who own it because what it does is it shows discipline around capital allocation. We have grown our dividend for 25 consecutive years. And we've paid out over $1 billion of dividends since we started paying a dividend.
We've grown our dividend regardless of what the share price or, sorry, the gold price has done over time. We've been able to continue growing that dividend. And it's because we've been successful in growing our business. So even if the gold price is low, we're still able to add transactions that add volume to our company and allow us to repay some of that volume growth to our shareholders in the form of dividends. It's something we're very proud of. We're the only precious metals company in the S&P High Yield Dividend Aristocrats Index. So that's absolutely unique about Royal Gold. You can't find anybody else in the precious metal sector that has a record like ours. So with that, I'm going to move on to our portfolio. And I think this is, John, where your biggest interest lies.
And I think, as the slide says, we have a very highly diversified portfolio. We've actually grown it significantly over the past several months with the completion of the Sandstorm and Horizon transactions. On the left-hand side, you can see the property counts for Royal Gold as a standalone company and then Sandstorm Horizon as standalone companies as well. We haven't integrated these two yet because we use different categorizations of properties for each of those counts. We're in the process right now of harmonizing and integrating all of the assets in the portfolios. And so we'll be able to give you a standardized property count in the near term. But what I can tell you is, looking at these numbers, we have over 80 assets that produce revenue. We have over 40 assets that are in development.
And then the remainder of the portfolio, which is well over 200 assets, is at earlier stages, whether that be exploration or it may be evaluation, but earlier stage assets. That's where a lot of the embedded growth is within our company. It's in the development, exploration, and evaluation assets. The producing assets are great because they provide us a cash flow to continue growing our business. But the growth in our business comes from the development portfolio as well as the other assets that may not really have any value today from a net asset value basis, but in the future may start to produce revenue for us. With a rising gold price environment, some of those assets become more and more attractive every day as the gold price goes up.
We expect to see some good optionality from within the portfolio as we continue to see the gold price stay strong. And when you think about our portfolio in terms of diversification, we are one of the most diversified, if not the most diversified, in our sector. And that's a very important factor when you think about what we are and some of the risks that we try to mitigate. We try to appeal to the generalist investor who wants to have gold exposure in a conservatively managed vehicle. And one of the ways that we can mitigate risks is making sure that our portfolio is diversified. It's diversified in terms of operator, in terms of jurisdiction, and then, of course, in terms of asset. The reasoning behind this is if we can present a diversified portfolio to our shareholders, that means our cash flow is more consistent.
It means that they don't have to worry about something happening in the portfolio that may cause a real impact to our share price. And so having that diversified portfolio is really important to us. Another thing that we did when we did the Sandstorm transaction is we actually reduced our asset concentration by diversifying the portfolio. And it reduced our exposure to Mount Milligan as the largest asset in our portfolio. And when things are going well, it doesn't matter if you have a concentrated portfolio. But it's when things don't go well that it really matters. And we've seen issues over the past at Mount Milligan. And really, at any mining asset, these things happen. In the case of Mount Milligan, they've had droughts and they've had floods. So too little and too much water, obviously, the operator can't control that. And that impacts production.
We've also had other things that have occurred, so metallurgical issues or other things. Forest fires was another thing that was completely out of the operator's control that caused production to be impacted. By reducing our concentration to our largest asset, then obviously that improves our ability to withstand any issues at that asset. And that was one of the key strategic reasons for doing the Sandstorm transaction. So with that, I am going to talk a little bit about the assets. And what I'm going to say at the outset of this is, as I said before, we're in the middle of integrating all these assets into our portfolio. We have initial views on these assets. When we did our due diligence for the Sandstorm portfolio, we had initial views, but we're fine-tuning those as we learn more about the assets.
We will be coming out with a better, more consistent, easier-to-understand profile of these assets when we do an investor day in the first quarter of 2026. You'll have to bear with us until we get that work done. We're doing an asset handbook at the same time. That'll give the market enough information to really understand the growth potential of these assets. We'll be doing the investor day to highlight what we're putting into that asset handbook. If I was to step back and say, what is it about Sandstorm and Horizon that was really attractive? I think, John, you'd probably agree that a year ago, one of the concerns that people had with our portfolio was that there was a lot of cash flow, but there wasn't a lot of growth potential.
We had some very nice growth assets, but we didn't have a lot of them. Sandstorm was exactly the opposite. They had lower cash flow, but a lot of growth potential. And so by putting these two companies together and these two portfolios together, we actually end up with a portfolio that's got a lot of cash flow and a lot of growth ahead of it. That cash flow is important because it's kind of the engine that we use to continue growing our portfolio because we're able to go out and buy more to add to this. But the growth is really what a lot of our shareholders are looking for in the longer term, especially with a rising metal price environment. So I'll walk through these assets one by one, just give you an overview of what they are and what they may mean to us.
I'd be happy to take any questions as I go through this, and then when I'm finished with this, I'll just end up with a couple of comments on valuation, and then I'll turn it back to you, John, for a Q&A, so the first asset that we've got on this slide, and these assets are shown in a general sequence as to how we see these things being developed. These are brand new assets. They're not contributing revenue and cash flow to us yet. They're still to come over the next several years, but B2Gold has got the Back River Project in Canada. It's a very attractive project. We have multiple royalties on this asset. They overlap. Our eventual royalty rate grows to 3.3% gross royalty on this asset.
When they get to full production in two or three years, which they're expecting to be 300,000-330,000 oz a year, that will contribute somewhere in the order of 9,000-10,000 gold equivalent oz to our account. So a pretty meaningful amount of growth when you think about this year. Our guidance was in the order of 280,000 gold equivalent oz. And I guess it probably makes sense for me just to explain what a gold equivalent ounce is because it's a metric that only those of us in the royalty and streaming sector use. Gold equivalent ounce, what that is, is we take our revenue from these assets, divide it by the gold price, and you get a number of ounces that would equate to that revenue.
That's an important metric because it allows you to do apples-to-apples comparisons against our peers, but also against operating companies. Back River, as I said, it has just started production. First production was in June of this year. It is ramping up. When that gets to full production, we're expecting it to be somewhere between 9,000 and 10,000 GEOs. Now, the other attractive feature of Back River is that this is a gold district. It's an 80-kilometer-long district in the Arctic in Canada. It's really underexplored. B2 has a $32 million exploration budget for this year. They're working on understanding the regional potential around this asset and what the growth over the long term could be. We're very pleased to have this in the portfolio. There may be some additional upsides to throughput as well.
They're looking at different things to do to increase throughput from 4,000 tons a day to 6,000 tons a day. And that's all news we're expecting to see in the near term. So very pleased to have this in the portfolio, and it is our newest asset. As we move across the slide, we move to Platreef. Platreef is an asset in South Africa. It's being developed by Ivanhoe Mines. It's a PGM Platinum Group Metals asset, but there's an important gold byproduct credit there. We had a team visit the site a few weeks ago now. They came back, and they were extremely impressed with how things were developing. It's the tail end of the development, construction, and moving into operations as we speak.
Our team was extremely impressed with the amount of work they've done to prepare the team for operations as well as the quality of the construction build. We have a stream here. We bought this as part of the Sandstorm transaction. So what we're expecting this to do, this is a staged asset in terms of production levels. There's a phase one, which they'll start with. They're going to expand the plant for a phase two in 2028. Then after that, there's a phase three. But this should be something that contributes on the order of 15,000-20,000 oz a year, gold equivalent ounces to our account. A very attractive asset. It's the highest margin, lowest cost PGM mine in the world. As I said, it's transitioning to production now. We would expect to see revenue from this asset sometime early in 2026.
As we move to Robertson, this is part of the Cortez Complex. For those of you who know Royal Gold, you know that we started our history at Cortez. Cortez is a complex. We've acquired additional royalties over time. We have full coverage of that Complex. It's a Complex operated by Barrick, and Newmont is the joint venture partner, so two of the best gold companies on the planet are operating this asset, and Robertson is a new phase of growth to the Cortez Complex. Robertson is currently in development. Barrick has talked about having this in production in 2027. It's an open pit, relatively low-grade operation, but it's going to be a source of oxide ore to the mill at Cortez, and so it'll be a key part of the Cortez Complex when it gets up and running.
Prior to the Sandstorm transaction, we had. Sorry, John, did you say something? No, I'm good. Thank you. Okay. Prior to the Sandstorm transaction, we had a 0.45% gross royalty at Robertson. But when we acquired Sandstorm, we got an additional 2% NSR royalty from this asset. So when you look at our exposure to Robertson, it's now north of 2%. We're expecting it to produce at a 250,000 ounce level. It should produce around 6,000 gold equivalent oz to our account. So another leg of growth at Cortez. As we move to Hod Maden, the next one on this slide, this is a very unusual structure for us. We acquired this as part of Sandstorm, and it's not something that we would say we like the structure of this investment. We like the asset itself. It's a very high-quality development asset in Turkey.
But the structure isn't what we would like. The structure is currently. We own it as a direct 30% joint venture interest in this asset. We would like to convert that to something that's more consistent with our core business, whether that's a royalty or a stream. And so we're working on that now. I'm not going to make any more comments about the timing or what that will look like. We're certainly working on this as a priority. But it's a very attractive asset. There are two partners in this asset. The first is the operator, SSR Mining. For those of you who know SSR, they've got the Marigold Project or mine in Nevada. They also have other assets around the world. We've had a long history with them. They're a very capable operator, and they're leading the developments of this asset.
The other partner is a local Turkish company called Lidya. They're a 30% owner of the asset, and so between the three of us, we have a roughly even ownership split. Now, as we think about how we want to restructure this, there are two natural buyers, obviously, with the other two partners, but there are also, because this is such a good quality asset, we've had a number of other companies calling us about what we intend to do with our ownership here, so stay tuned on what this is going to look like, but at the moment, with the joint venture interest, and assuming we get our joint venture gold deliveries, it would be something on the order of 30,000 to almost 40,000 oz a year produced from this mine to our account. This is a 13-year life of mine today, but there is additional exploration upside.
The project is of such high quality that really the focus so far has been developing the asset and not in exploration, but there is an exploration program that's underway regionally to understand some more of the targets and potentially increase that life of mine. SSR will be putting out a feasibility study, an updated feasibility study in the next several weeks, and that will provide some updated project parameters for this, including the CapEx, which is going to be an important data point for us. We're expecting this asset to start producing sometime towards the end of this decade. So it's not a very near-term asset for us, but it is something longer-term that will provide some significant value. Now, the next asset is Gualcamayo. This is located in Argentina. It's currently owned by a private Argentine company.
It's been an asset that's operated for a number of years under different owners, but currently, with the owner, this Argentine private entity, what they're focused on is what they call the Deep Carbonates project. And there's a deep ore body at depth that they're looking to access and mine and process. And what they're talking about is 120,000 oz a year of production from this Deep Carbonates project. We have royalty exposure to this asset. It's a 17-year life of mine. Our royalty is variable. It depends. It's a sliding scale royalty, but we estimate somewhere in the order of 3,000 GEOs to our account when this asset starts producing. And we're expecting a feasibility study shortly, sometime in 2025. So that'll provide some updated project parameters as well for this asset. So a relatively small asset, but obviously an important one when we're talking about growth.
The next asset here is Great Bear. For those of you who know Kinross, you'll know that this is Kinross' flagship development project. It's located in the Red Lake District of Ontario, a very mining-friendly, very mining-sophisticated area. A lot of mining has been done there over the past century. Great Bear is a unique asset in that it's a little bit different from the typical high-grade underground Red Lake style ore body, and it's more of a disseminated, still relatively high-grade, but open-pittable asset. What Kinross is doing here right now is they're in the permitting stages, but they're also developing what they call an advanced exploration decline. They've drilled from surface, and they found the mineralization continues beyond 1.5 km from surface, but it's very expensive to drill from surface.
So what they're doing is they're advancing an exploration decline into the ore body that will give them access to drill locations that will allow them to prove out the depth and the full continuity of this ore body. So we're quite excited about that. Unfortunately, the project's in the permitting stages right now. They're advancing this development. There's not a lot of news, but it's front and center as far as Kinross is concerned. They're expecting first production in 2029. Production levels will be around just over 500,000 oz a year. And they're talking about that level being sustained for at least eight years. And they think this is going to be a multi-decade ore body when it starts producing. Our GEOs, we have a royalty here. It's 2%. At a 2% level, the GEOs to us will be around 10,000 GEOs per year.
So a very attractive asset in the hands of a very experienced developer in a very stable jurisdiction in a mining community. So I don't think you can ask for better than that. We'll obviously be watching Kinross very carefully as they go through the permitting milestones towards that 2029 construction start. Now, the next asset on this slide is probably one of the most important. And this is the Mara Project in Argentina. When I say important, I mean in terms of the growth potential to Royal Gold. This is owned 100% by Glencore. It's a brownfield project. If you remember the Alumbrera mine, it stopped producing maybe 10 years or so ago. It's been unified with the Agua Rica deposit. And what Glencore is planning to do, and they put out a very interesting detail last week in their investor day talking about this project.
But what they're doing is they're going to mine at the Agua Rica deposit, use a conveyor that's about 35 km to the old Alumbrera infrastructure. And they're going to use the existing Alumbrera mill, which has got water, it's got power, it's got a concentrate pipeline, and they're going to use the existing Alumbrera tailings facility, as well as the mined-out Alumbrera pit for tailings storage. So this is a brownfield project that's got a relatively quick development timeline. There is permitting that needs to be done. There's also construction of the conveyor. But we're expecting this asset, per Glencore's disclosure, to start producing in 2031. This is something we have currently, we have a royalty, but we have an option through the Sandstorm transaction to convert that royalty to a stream by investing $225 million.
That's invested during the construction period of the project in proportion to the spending by Glencore on the project, and that'll give us a 20% gold stream on this asset. We expect that'll contribute to our account something like 22,000 oz a year once the asset gets up to steady-state production, so we're very much looking forward to seeing this asset move forward. It was a nice surprise to us to see it move so quickly after completing the Sandstorm transaction. The next asset here, as we go continue along this curve for the sequence, is Cactus. This is a copper royalty we own as a copper asset in Arizona. It's a brownfields copper development project. It's right next to the city of Casa Grande in Arizona, so it's got great infrastructure. It's got the interstate next to it. It's got power. It's got water. It's got a workforce.
It's got all of the attributes you look for in a project, and this came to us as a one-off kind of acquisition opportunity. As I said, our focus is on gold, but occasionally, when something really attractive comes across our desks, we look at it, and copper is something we like. We're not out there looking for copper exposure, but we liked this one because it came to us. It was a private seller who said, "We know you can do transactions. We know that you can execute on transactions. Is this of interest?" and we looked at the project. We knew the management team from prior business dealings. Obviously, the jurisdiction is very good. With the recent changes in the U.S. with respect to national copper development and internal to the U.S. borders, there's a big push on getting copper projects advanced.
This is one of those projects. We thought that this was kind of a no-brainer opportunity. It's a 2% royalty. The production start date is sometime in 2029. It's a 22-year mine life as it stands today. We expect the $5 copper price and the $4,000 gold price, this would contribute somewhere in the order of five-ish thousand gold equivalent ounces to our account when it gets up and running. The next steps for this are a feasibility study in the second half of 2026. Arizona Sonoran, the operator, has talked about a final investment decision sometime, and it could be as early as the end of 2026. Staying with copper assets, the next asset is Oyu Tolgoi. Anybody who understands or knows the copper business globally understands that this is one of the biggest, best copper deposits in the world.
It's operated by Rio Tinto. We have exposure to streams here on what is called the Hugo North Extension. It's part of the Oyu Tolgoi joint venture between Entrée Resources and Rio Tinto. The mine plan for the Oyu Tolgoi deposit has mining occurring as the deposit moves into the joint venture grounds. Unfortunately, right now, there's a little bit of an administrative issue with transferring the licenses from the current owners to the Oyu Tolgoi joint venture, which includes the government of Mongolia. This is a project that will produce for at least what we think is around 30 years, and it's going to contribute at full run rate around 11,000 gold equivalent oz to our account. Now, there are a number of things that need to occur, including that license transfer. There's still a lot of work going on around that.
It's hard for us to put a date on the production for the joint venture area that we have exposure to. But we're expecting sometime in the mid-2030s to see some revenue from this asset. We're very pleased to have this exposure. When you think about operator counterparty quality, there are very few companies in the world who are as good as Rio Tinto. And this is clearly one of the best copper deposits in the world. We also own a 24% equity interest in Entrée Resources. So not only do we have the stream exposure here, we have an equity exposure, which we haven't really talked about our plans for that. But strategically, it's an important card to play at the right time. I will talk about Warintza next. We did an acquisition of a royalty and a stream at Warintza earlier this year in May.
And it's a great project, but I think it got overshadowed by the news on Sandstorm, Horizon and then Kansanshi, those transactions that we did in the summertime. But we're very pleased to have an interest in the Warintza project. It's in Ecuador. It's a very large open-pit, low-strip ratio asset. The developer is Solaris Resources. They're a junior. They're advancing it. They don't expect to be building it. This is probably going to be one of those copper projects that cost multiple billions of dollars to build. But Warintza is moving forward. Solaris came to us for funding to allow them to get through permitting and to an investment decision. They expect that they'll likely be selling out of this project, and they'll likely attract a major to develop this project. And we have a very complicated structure here. We have a stream, and we have a royalty.
The royalty will continue regardless of what happens. The stream may be bought back, and we offered the buyback for a couple of reasons. First of all, from their perspective, to attract a major into the company, perhaps the stream isn't what the major needs. The major may not need financing, so we didn't want to chill their attempts to sell to a developer, so that was an option we gave to them. We also, on the flip side, we wanted the option to get our money back if somebody comes in who we're not comfortable doing business with, so there may be, it could be a Chinese SOE or something of that nature that comes in to develop this project, and perhaps that's somebody who we don't want to have as a counterparty.
And so by giving us ourselves the option to get our money back for the stream, that allows us to have some flexibility around controlling who our counterparty is here. In either scenario, whether it's bought back by Solaris or by us ourselves, the royalty stays in place. And this is a very attractive long-life asset. There's a pre-feasibility study that was just released to the market a few weeks ago at the beginning of November. It's got a mine life of 22 years, and there's a potential to extend this by 25-30 years. So an extremely attractive large-scale copper development asset. It's got gold, molly as well. So the metal mix is good from our perspective. And it's just one of those long-term assets that should provide growth to us over the long term.
They've talked about 300,000 oz or, sorry, 300,000 tons per year of copper equivalent production from this asset. And so at the royalty rate of 0.3%, which has potential to double, that would be about $10 million of revenue to us or about 5,000 GEOs per year. And then the last thing I'll mention on this is perhaps one of the most exciting. That's Four Mile at the Cortez Complex. Back in 2022, we did a couple of acquisitions of royalties at the Cortez Complex in Nevada. And we bought additional royalties from Rio Tinto and some private sellers. These royalties give us full exposure to the Cortez Complex. If you remember back to when we announced those transactions, we did get some criticism for the prices paid for those transactions.
But what we said was there is additional upside in these assets that is not yet recognized by the market. We felt comfortable saying that because we've been involved at Cortez for over 40 years. Our previous CEO was a general manager of the Cortez mine. One of our senior technical people worked at Cortez during its development. So we had a lot of institutional knowledge about Cortez. And when Barrick came out in September and started talking about the Four Mile project, what it did was a bit of a proof of concept to the market as to what we acquired. Barrick has talked about Four Mile being one of the most exciting and best discoveries of the century. And I think that's probably a fair statement. They're talking about extremely high-grade underground material here.
They're producing their back-of-the-envelope estimates of production would be somewhere between 600,000-750,000 oz a year over at least a 25-year mine life. We had a 1.6% gross royalty on the Four Mile Complex, and it's a second-to-none asset, and we're very pleased to have that. Now, the royalties that we acquired at Cortez aren't just on Four Mile. They cover all of the other assets as well, so while Four Mile is getting developed and Barrick is expected to have it in production sometime in the early 2030s, we're getting paid on those royalties from other parts of the Cortez Complex, so we're getting paid to wait, and a lot of the potential within the Cortez Complex outside of Four Mile is pretty notable in its own right. As I said, Robertson is improving or, sorry, Robertson is moving to production.
Cortez Hills Underground, they've had some tremendous exploration results there. The Crossroads, Pipeline pits, those are continuing to produce. They've done some pre-stripping there that should get them into some ore in the 2026-2027 time period. So a lot of things happening at Cortez. It still remains kind of the engine of the company when it comes to some of our baseline production. So that's a lot of talking, John. Those are the new assets in the portfolio. I haven't even gone into the expansion of the Mount Milligan mine life, the expansion that we're expecting to see from the Khoemacau project, some of the near-term high-grade additional production from the Xavantina mine in Brazil. So there's a lot happening within our portfolio, and it's something that we really need to get into the marketplace in a coherent way.
And we're working towards that with our asset handbook and with our investor day in March of this year, or this coming year, I should say. So with that, I'm just going to talk for a moment about valuation because I know this is important to you. We look at our multiples over time compared to our competitors and our peers. And there's a lot that's happened in our company, and I think the market is still working to understand it. We've issued a whole bunch of new shares for Sandstorm. We have higher levels of debt than we've ever had in the past. We have an outlook that is maybe not clearly understood by the market. And I think that's reflected in our trading multiples. We're not happy with these multiples. We're doing our best to try and make sure the market understands what is coming.
And so incrementally, if we can do some things that will help the market see progress on the Sandstorm transaction, see some additional production from the new Kansanshi asset, see some debt reduction, see our dividend increase that we just announced a couple of weeks ago, these are all incremental positives that we think will, over the relatively short time, start to see an improvement in our trading multiples relative to peers. So, John, that's everything that I just wanted to cover off kind of in prepared remarks. I'm happy to turn it back to you for Q&A, if that makes sense.
Thank you very much for the presentation. Most of my questions will be focused on the slide 23, the 11 big new projects. And everyone is welcome to submit questions through the question box. We appreciate everyone's participation and their insights.
This slide 23 is a big part of this. Just to repeat, the expanding assets are Mount Milligan, Khoemacau, and what was the third? Xavantina. I want to interject that four of these 11 projects are from Sandstorm. Seven of them are Royal Gold legacy projects. So Royal Gold did have some growth going on, right?
Yes. Correct.
I don't want to sell you short. You're modest. If Four Mile is 750,000 ounces of output, given the different formula for the different participations you have in Cortez, how many ounces, how many of 750,000 oz would accrue to Royal Gold?
So the royalties are 1.6%. It's a 1.6% gross royalty. So every single ounce will get 1.6% of that. So it's a pretty simple math of 750 times 1.6 or 11,000 oz. You're better at math than I am.
How do we approach the business problem of my estimate pro- forma Sandstorm and current gold prices $3 million a day cash flow to invest, my estimate, not yours, at current gold prices March 27 $1 billion to have debts extinguished with no new investments made and without selling 0.3% of Hod Maden and their major asset sale or buyback? For example, whether it's a buyback option kind of thing. $3 million a day is hard. One challenge, if we just look at the Spring Valley acquisition that Wheaton did a few weeks ago or a couple of months ago, they paid $2,000 an ounce plus 20% of the future gold price for a project that doesn't come into production for four years, where maybe the other 30% is largely the NPV discount.
So they paid the spot price, expecting either a higher gold price or the property to be more ounces. So it's very competitive finding good deals. I'm sure that's why you bought Sandstorm, because it was cheaper than outbidding Wheaton or FNV in the next deal. Should we just expect the dividend to become much larger with all this cash flow?
Well, we certainly need to repay the debt. So I don't want to get ahead of ourselves and talk about return of capitals to shareholders until we've actually repaid that debt. We're also very focused on growing our business. And if we can find the right opportunities at the right price, that's really the best way for us to add value to our account.
If we can grow our business by investing in things at just over one times NAV and getting a re-rating in the stock price, then that is the best way for us to grow value. The dividend is very important to us, but we don't find that we trade on yield. Most of our shareholders don't want necessarily a high-yielding investment. What they want is really the messaging around the dividend because it shows that we're disciplined and we're conservative in our allocation of capital by thinking about shareholders first. I think if you ask most shareholders, they'd say, "We'd prefer that you reinvest in the business rather than grow your dividends in a huge way." They don't want us to become a yield vehicle. They want us to continue showing growth in our market, and we think that there's opportunity to do that.
We have to be careful at this gold price environment because the gold price has run up very quickly, and we don't want to be seen as buying assets at the top of the market, but at the same time, we don't know if this is the top. The gold price has risen substantially, but it doesn't look like there's any factor that's going to cause the gold price to drop, so maybe this is not a new top, but it's certainly in the mix of things as we think about our capital allocation. The debt is going to be a big priority over the next little while because we want to rebuild that financial capacity to be able to do new transactions. If we can do new transactions, that adds value to our account.
And the dividend is a way for us to show our shareholders that we're going to be disciplined and we think about them first when it comes to allocating that capital.
Everyone's welcome to submit questions at the moment. There are some. It's a little hard for me to read the question box. So just give me a moment. We have a shareholder dating back to 1978 and predecessor acquisitions that's very happy. On Slide 13, the consensus asset NPV chart, Kansanshi is a different color. Does that have some significance as a royalty or something?
No. We wanted to call this out separately because when we announced the Sandstorm and Horizon transactions, we put this very same chart into our materials. And we just wanted to highlight which was a Royal Gold legacy asset and which was coming from Sandstorm Horizon.
We did the Kansanshi transaction about a month after we announced the Sandstorm and Horizon transaction. So that's why we're putting that in as a little bit of a separate, it's a new asset to us. And we're just calling it out because it was a transaction that occurred prior to closing of Sandstorm Horizon. So we just wanted to make sure that the market understood that it's a new asset and it's something that is relatively recently added to our portfolio. So there's no significance there. This is a gold stream on a copper asset. It's run by First Quantum in Zambia. Zambia is a new jurisdiction for us, but it's a very high-quality asset. First Quantum is a top-notch operator. They've been in Zambia for 20-odd years. They were the ones who developed this asset. So they put it into production.
They've operated it without any interruptions since about 2001. There's a small gold component here. And what we did was we acquired a gold stream for $1 billion on that to get exposure to that gold component. So it's a core asset to us. It's one of the largest, longest-lived assets in our portfolio. And we're just calling it out because it's a relatively new addition.
Is the conversion of Hod Maden based on releasing capital to Royal Gold?
Sorry, is it based on what capital?
There's the revenue royalty on Hod Maden. There's a stream on Hod Maden. And my guess, maybe you get four cents of a billion when you sell 30% of Hod Maden when it's more updated feasibility study, further built, ready to start up. Why don't you explain each of those three tentacles of Hod Maden?
Okay. So Hod Maden is quite a complicated structure.
And as I said, Jeremiah prepared remarks. It's not the ideal structure for us. We don't like to have direct equity interests in assets. One of the things that the market didn't like about Sandstorm and Horizon was the complication of those entities. Horizon was a spinout from Sandstorm. And so what they were trying to do was move assets around the Sandstorm portfolio that didn't get full value within Sandstorm. And they spun out this company called Horizon. Sandstorm owned 65% or so of this company. And what they did was they put these intercompany agreements in place, including a stream from Horizon to Sandstorm. And by acquiring both of the companies at the same time, what we're doing is we're collapsing that. So we're getting rid of all this intercompany complication, and we're simplifying the ownership structure of these assets.
Right now, there are two pieces that we own of Hod Maden. There is a royalty, the 2% NSR royalty from the asset up to Royal Gold. But there's also this 30% joint venture equity interest. That joint venture equity interest, as I said, is not something that we want to own directly. We would like to convert that into something that's either additional royalty or perhaps a stream between the asset and Royal Gold. Or perhaps if somebody else comes in and they want to acquire our interest, we'll take a stream back on one of their assets as consideration. So that's our thinking with respect to the structure of this asset. It was complicated,
so there's no existing gold stream. I misspoke.
Is the what stream?
Is there an existing gold stream that you own on Hod Maden? Not anymore.
Because by collapsing Horizon and Sandstorm together, that stream was eliminated. So we own directly. Royal Gold directly owns the ownership in the Hod Maden joint venture.
So the 2% revenue royalty on both copper and gold, how many ounces equivalent would that be?
So the asset is.
It varies by year because the grades vary a little bit.
Yeah. Their production levels will be 140,000 ounces a year is what the previous study had estimated for production at Hod Maden. So 2% of that. So 3,000 GEOs or so.
There's a question why you chose to sell VersaMet first so fast. Maybe buyers came to you ready to write a check. But please explain.
Yeah. So VersaMet, I mean, like the Horizon structure, there were a number of non-core assets or complications within the Sandstorm portfolio.
One of the things that they did was they created this new royalty company called VersaMet, and they owned 24% of it. Owning equity interests is not our core business. We don't like to have equity in debt investments. They kind of strand capital. We have to mark to market those with our financial results. They cause earnings volatility. We have to manage them. It distracts us from our core business, and so we very quickly identified a number of non-core assets within the Sandstorm portfolio. The VersaMet shares were one of those. We were approached by the buyers of that block of shares, and so we decided that we wanted to sell. It's a very illiquid company. They don't trade a lot of shares on a daily basis. The position was very large.
It was easier for us to deal with this in one transaction than it would have been to try and sell those into the market. It would have been very complicated to do that, and it would have taken forever, and we would have killed the price of VersaMet. We didn't want to do that, so we had an opportunity to sell the block. We did sell it at a discount to the market price, but because it's a relatively illiquid company to begin with, the market price didn't reflect the full value of those shares, so by selling them, we cleaned it up. We said that we were going to apply the proceeds of the sale to debt repayment, so hopefully, we can check two boxes with that transaction, first of all, simplifying the portfolio, and secondly, reducing debt.
In terms of just elaborating on what you said, Alistair, it's not intuitively obvious that a royalty company should own another royalty company competing with itself. So the raison d'être for VersaMet was not obvious to me. Maybe there was a capital constraint moment in Sandstorm's evolution where a partnership was easier than there was a check that was too big for them to write, and they took a partner.
I mean, we certainly were not in the business of owning equity positions in other peers or competitors. So it was just a bit of a position that we identified very quickly as being non-core. And for us to be able to deal with it quickly, we think chalking up a run on the board very quickly as well.
So hopefully, it allows shareholders to think about, "We're simplifying this business. We're executing on the plan that we put into the marketplace. And we're pleased to see the results."
Which jurisdiction gives you the most heartburn?
Well, we've entered a few new jurisdictions with a Sandstorm portfolio. We've always been very North and South America focused. And we like Australia as well. We like these mining-friendly jurisdictions. Of the places that we've now entered, I think Turkey is a new one for us. We don't have a lot of experience in Turkey. And so Western mining companies seem to be able to operate in Turkey quite well. But that is a new jurisdiction. So we're learning about that. Another one is South Africa. We've been hesitant in the past to go into South Africa because it does have legacy issues.
We've got lots of experience within the company, people who've worked in South Africa. But as a company, we've always been somewhat hesitant to invest in South Africa. Those are two places we keep our eye on. But I think when you think about mining-friendly places and places with histories of mining, both of those have long histories of mining. So it doesn't look like they're places that we need to be too concerned with. But we do watch them carefully because they are new to us.
How material is the joint venture dollar amount?
Sorry. I'm assuming that's at Hod Maden. So the Hod Maden.
I got to stick out there, yes. Y
eah. So the Hod Maden as a percentage of our NAV is relatively low. It's somewhere between 3%-4% of the overall portfolio. We do have to fund our share of the 30% of capital.
So it's like any mining project. That 30% will get put in as the project gets developed. And if we're successful in dealing with the ownership structure in the near term, we won't have exposure to that because they really haven't started the big spend on the project yet. But the operators have said the prior capital number in the marketplace is just over $300 million. SSR has talked about capital cost inflation of 10%-15% a year. So since that number was put into the market, that was in 2021. So it's probably somewhere on the order of $200 million would be our exposure based on what we know today. But we're waiting for that new feasibility study to come in the next several weeks that will give a clear picture of the capital required.
We don't think it's material to our business because it is a relatively small investment for us compared to the cash flow that we expect to generate. And as I said, if we're able to deal with this, we won't be exposed to the capital at all. But even if we are unable to deal with the asset structure, funding that capital spend as the project is developed is not something we're concerned about. It'll be a small portion of the capital or cash flow that we generate.
The business judgment, in part, is whether you should put the $200 million or whatever the CapEx is into the project in the hope that when the project is churning revenue, you get a much fuller valuation than you do before the construction starts. So that's a judgment. Sometimes there's capital cost overruns. Rarely are there underruns.
And you're not operators, and you're not used to being exposed to capital cost overruns. Part of the theme of Royal Gold is you're not exposed, and you do have $1.2 billion of debt. So do you think it's more amenable to sell it early and not put the money in? Or I guess it all depends on what the offers you get are.
Exactly. I mean, we're in the process of trying to figure out what the different alternatives are, and we're weighing those alternatives, and I think the feasibility study, when it's published, will provide a lot of clarity to the market, and that will be helpful as we think about the alternatives. We do have to make a business judgment here. You're absolutely right. Do we fund it for a period of time and try and sell it at a higher price?
Or do we want to try and deal with it sooner and eliminate the risk of having to fund any capital? So you're right, John. There's a lot of judgment that will go into this. And we'll obviously evaluate things as the situation evolves.
How many investments do you think your small competent team has the bandwidth to evaluate per month? And for example, with something like Hod Maden that's a little complicated, there could be a benefit simply of freeing management time. How many deals a month do you think is in the sweet spot of Royal Gold to analyze in terms of investments?
Well, typically, we look at, in an average year, it's around 100 transactions. So I'd say it's probably in the 8-10 a month.
Two a week. Two a week.
Yeah. I mean, the cadence is irregular.
A lot of things we look at very quickly, and we discard because we just know that it's not the right opportunity for us, so we'll generate some opportunities ourselves. We'll get a lot of calls. We look at things. Not a lot of things make it through the due diligence process, and we approach things in a phased way, so we'll do a very high level first. If it doesn't meet the criteria for further time, we discard it immediately, and so we really try and focus on those high-value assets or opportunities, so we've never really had a constraint. We've done a lot of transactions simultaneously in the past. If you think about the summer, we did the Warrants transaction in May, and then we did the corporate transactions, both Sandstorm and Horizon.
And we did the Consanguinee transaction one month after announcing the Sandstorm-Horizon transaction. So we don't feel like we have constraints. We have an internal team that is dedicated to looking at things. And when we need to bolster that team, we have a list of consultants who come on board and help us on a project-specific basis. So that's how we manage ourselves. We'll grow our team and shrink it. When we're finished looking at something, those consultants move on to do other work for other clients. But we do have the ability to look at more than one thing at once, as evidenced by this year.
Final question from the audience. Does Royal Gold have an interest in financing more tailings recovery projects?
It's a very interesting potential source of business for us.
Whenever somebody comes to us with something like a tailings reprocessing project, absolutely, we'll have a look at it. We haven't done anything really yet on that kind of opportunity. But we have looked at several. They just haven't met the criteria that we're looking for. But certainly, we'd be interested in having a look at it. We see potentially mining tailings is the same as mining a deposit. So we understand the technology that's required to do it. We're not afraid of looking at that kind of thing. So if the right opportunity came to us, yeah, absolutely, we would have a look at it.
Alistair, next year, when we're organizing for next year soon. I f you want to have one and a half time slots, we only want to learn. And there's a lot of ground to cover. So that invitation is open.
We have Discovery Silver 245, and I need to start opening the window. Thank you, everyone, for your attention and participation. And congratulations, Alistair.
Thank you very much, John. Really appreciate the opportunity. So please reach out with any questions if I didn't address them to your satisfaction. And look forward to one and a half time slots next year. So thanks.
Thank you. Take care.
You too. Take care. Bye-bye.