Welcome to today's virtual non-deal roadshow. My name is Julia Perron, virtual event moderator here at Renmark Financial Communications. On behalf of our team, we'd like to thank everyone in Dallas and surrounding areas for joining us today for the presentation of Royal Gold Inc., trading on the NASDAQ under ticker symbol RGLD. Presenting today is Kevin Chiew, Manager of Investor Relations and Business Development. The presentation will last approximately 20-25 minutes following a formal question-and-answer session. Please submit your questions via the chat box at the top right corner of your screen. With that, I will hand it over to Kevin.
Thank you, Julia. So before I begin, I'd like to briefly introduce myself. My name is Kevin Chiew. I'm the Manager of Investor Relations and Business Development in Royal Gold, and I'm based out of Toronto, Canada. I joined the company in March of 2020, and previously I was at a Canadian bank in equity research covering mining companies, including Royal Gold, and I was there for over 10 years. With that introduction, I'd like to turn your attention to slide two of our presentation. I will be making forward-looking statements during today's presentation. They're subject to risks and uncertainties that could cause actual results to differ materially from these statements. These risks and uncertainties are all discussed in our most recent 10-K filing with the SEC.
Now, I'd like to begin this presentation by giving you the investment thesis for Royal Gold, which is to provide precious metal exposure with consistent financial performance and a focus on first-year metrics. Over the course of this presentation, I'd like to focus on several key messages, including our low-risk leverage to gold, our long history of successful execution of a simple strategy, our unique business model, including key features such as optionality and efficiency, our broad and deep portfolio, which offers organic growth potential, and our valuation, which is attractive compared to historical levels. At a high level, Royal Gold is a high-margin business that generates consistent cash flow from precious metals. We've been in business since the mid-1980s and have traded on the NASDAQ for over 41 years. In 2022, Royal Gold performed very well, and some of those numbers are presented on this slide.
Our stream segment contributed approximately 69% of revenue, while our royalty segment contributed the remaining 31%. Between streams and royalties, royalties tend to be higher margin, but both provide exposure to top-line production of mining assets. In 2022, our streams and royalties generated volumes of 335,000 GEOs, which in turn translated to $603 million of revenue, $417 million of cash flow, and $3.63 of earnings per share. 2022 was a busy year for Royal Gold, and we've produced many achievements. We can group these achievements into three buckets. Number one, acquisitions. We completed three transactions on two long-lived assets, which goes towards improving the overall portfolio duration. Number two, portfolio events. We saw some good portfolio events, which should translate to good organic growth from within the portfolio itself. Number three, corporate or strategic initiatives. We completed a number of these.
For example, we financed acquisitions without equity dilution, and we continued to increase our dividend, and we were added to the S&P High Yield Dividend Aristocrats Index. This is an interesting graph. Royal Gold is uniquely positioned among its competitors, and this graph illustrates two things. One, Royal Gold is big enough to compete for the largest transactions supported by significant cash flow. And two, we are yet small enough to show meaningful growth through relatively smaller transactions. Keep this in mind as we talk about our portfolio and the opportunities we see in front of us. Moving on to the discussion of our low-risk leverage to gold. Slide eight presents different ways you can invest in gold. Our model is designed to offer exposure to precious metals without many of the risks that come with investing in operating companies.
We provide upside exposure to gold and optionality while reducing downside risk through a diverse portfolio with no direct exposure to operating and capital costs. There are other ways to invest in gold, such as buying physical metal, but an ounce of gold is always an ounce of gold. You'll never get upside from project improvements. You can be more aggressive and invest in mining companies, but those have exposure to operating and cost risks. Slide nine shows our historic performance and why we think Royal Gold is a good alternative for those looking for conservative exposure to gold. On the left-hand side, you can see our leverage to gold price. 1.85 is our beta, so very good leverage to the gold price. On the right-hand side, we show our share price performance over time, going back to the formation of the GDX index in 2006.
As you can see, Royal Gold has outperformed not only the gold price and the GDX index, but also the general indices. Royal Gold has had a long record of consistent and disciplined performance. Over the 20-plus year history, over our 20-plus year history, we've done a good job of allocating capital and growing, and that's really from the perspective of accretive growth for shareholders. Since 2000, we have generated significant revenue and cash flow growth. There are three aspects to this growth. Number one, our business is high margin and scalable. Revenue growth leads to modest increases in G&A expense. Two, revenue growth is not strictly dependent on metal prices. We have also added meaningful volume. And three, we have financed growth internally without a significant rise in share count.
On that last point, we are an original member of the GDX, and yet we have the lowest share count in the index. We want to avoid shareholder dilution and fund our business with internal resources to provide per-share growth to shareholders. Slide 12 provides a snapshot of our liquidity. We need to be patient in our business, and that means maintaining a strong balance sheet and having liquidity on hand to easily finance opportunities as they arise. Our approach to funding growth, in order of preference, is to use cash on hand, then our operating cash flow, and then our revolving credit facility. Equity is our least preferred source of capital. Now, this slide does not reflect our recent June announcement where we committed to acquire royalties on Serrote in Santa Rita in Brazil.
That transaction is still contingent on the closing of a transaction between ACG and Appian and other closing conditions. We have a press release with further details on our website, and I invite you to review that at your convenience. Assuming this transaction is completed, Royal Gold will pay $250 million at closing and expects to fund this from available cash resources and draw approximately $200 million on its revolving credit facility. In early June, Royal Gold also repaid $100 million of the outstanding balance on the revolving credit facility, resulting in an outstanding balance of $400 million on that date before the Serrote in Santa Rita royalty acquisition. All that said, the underlying message is the same. Our revolving credit provides cheap and flexible financing, and we are quite comfortable using it to fund acquisitions.
Pro forma the Serrote in Santa Rita royalty acquisition, we expect to have sufficient available capacity in our undrawn revolver for market opportunities we see for ourselves today. Return of capital is a key strategic objective for Royal Gold, and one of the attributes that makes us unique among other gold investments. We've paid a growing and sustainable dividend since 2000, and we've increased the dividend every year despite volatility in the gold price. Since inception through April 2023, we've paid out approximately $840 million in dividends. We are the only company in the GDX that has paid an increasing dividend since the index was formed in 2006. We are also the only precious metal company in the S&P High Yield Dividend Aristocrats Index. Another core competency for Royal Gold is due diligence. Good due diligence is essential to ensuring that we add the right assets.
While we are always busy looking at opportunities, not all opportunities make it through to completion. We have an extensive due diligence process, and we are disciplined in how we deploy capital. If we see technical, environmental, legal, or other risks that can't be addressed, we will walk away. There is no pressure to do transactions, and if we can't find the right opportunities, we'll collect revenue, build our balance sheet, and wait for the right opportunities. Turning to slide 15, our business model does not provide direct operating control, but ESG has always been a core part of our business. We invest for the long term, so ensuring the sustainability of our investments is a key part of our due diligence for new transactions.
We also build language into our transactions to ensure that operations are managed to the highest standards, and where it makes sense, we offer to help fund initiatives that can have a positive impact. Over the last several years, we've worked to improve our transparency around these processes, and we are pleased to see material improvements in the perception and recognition of our practices. As reflected by two influential ratings providers in MSCI and Sustainalytics, we are considered industry-top rated by Sustainalytics, and we have a double-A rating by MSCI. Now I'd like to spend a little bit of time discussing our unique business model. The key to our model is optionality, with that optionality being reserve and resource growth, and getting that optionality without further investment. We have two examples on this slide: Pueblo Viejo, or PV, and Wassa.
Both investments were made in 2015, and in both cases, total reserves and resources today are higher now than at the time of acquisition. This is in addition to production that has allowed us to recover over 79% of our investment at PV and 128% of our investment at Wassa. What's interesting here is that there are growth projects underway at both assets. At PV, they are currently completing an expansion to maintain gold production levels and extend the mine life to the mid-2040s, and at Wassa, new resources have been outlined that could extend the mine life by another 11 years beyond the existing reserve life. In both cases, Royal Gold is not required to fund capital or invest further to get exposure to this upside, so this is growth we don't have to pay for.
Exploration and production upside is key when we look at new investment opportunities, and that optionality is the most important feature of our business model. Another feature of our business model is efficiency and scalability. We have 31 employees and produce over $600 million of revenue, with a market cap of just under $8 billion, although that number might be different today. On a per-employee basis, we compare well to other large companies, both inside and outside of the gold sector. Our low employee count also means a low fixed cash G&A, which further contributes to the efficiency of our business. Our EBITDA margin in 2022 was 79%, while our cash G&A was 4% of revenue. Our G&A is low and consists mostly of fixed costs, so cost inflation should not be a significant risk to our margins. That last point can be seen more clearly on this slide.
We are relatively insulated from cost inflation compared to the average gold producer. Producers are exposed to inflation in input costs, such as labor, energy, and consumables, many of which increase when commodity prices increase. Our G&A costs are mostly steady: salaries, services, office rent, not typically subject to short-term increases. Our margins are much less exposed to inflation pressures because we are not directly exposed to operating capital costs. In this next section of our presentation, I'd like to talk a bit about Royal Gold's portfolio. Slide 22 shows you where we are in the world. As you can see, the portfolio is weighted towards lower-risk, mining-friendly jurisdictions. Also note, our principal properties are the larger portfolio assets that provide the bulk of our revenue. Our portfolio is well diversified, which provides stability. Our largest country exposures are Canada, USA, Dominican Republic, and Chile, all pretty mining-friendly jurisdictions.
Our revenue comes from 40 different mines, and this portfolio breadth compares well to mining companies, and revenue diversification reduces our exposure to single asset underperformance. Looking at mine type, the underlying assets are approximately 80% precious metal, with 20% from base metal mines. Our portfolio spans the different stages of mine project development. We have 141 assets, which are not currently producing, and in various stages of exploration, evaluation, and development. We would expect potential for organic growth from any assets that advance through the development pipeline through to production. King of the Hills is an example of organic growth from a project moving through the pipeline. This royalty has been in the portfolio for over a decade. Over the past few years, new management came in and introduced new concepts for the mine.
It recently began producing, and we received our first royalty revenue from King of the Hills in Q1 of this year. Continuing on the theme of organic growth, slide 25 shows key catalysts we see today from various assets. The blue arrows show potential for mine life extensions and production increases at several assets that are already producing. The gold arrows show potential new revenue from development assets in the portfolio. For example, Goldr ush at Cortez, there is a record of decision expected later this year. At Bellevue, we expect to receive first royalty revenue later this year, and looking ahead to next year, we expect to begin receiving royalty revenues from Côté, Manh Choh, and Mara Rosa. The dark blue arrows show some longer dated assets, including Back River and Great Bear. The key to this slide is that the growth shown is free optionality.
All are fully funded, and we do not need to pay for this growth. While our portfolio offers good organic growth, we have also been active, adding to the portfolio over the past couple of years, and this slide summarizes what we've done. Since June 30, 2021, we've deployed approximately $1.2 billion of capital on six large transactions to provide gold exposure on assets with upside potential in safe jurisdictions. It is important to note we have funded these transactions using cash on hand and our revolving credit facility without diluting shareholders by issuing equity. I'll spend a few minutes talking about two of our newer acquisitions, in Cortez and Great Bear, and give you a sense of how they fit our strategy of strengthening and diversifying the portfolio. The two Cortez royalty transactions were the largest we've done recently.
We have had a long-standing history of royalty ownership at Cortez. The map on the far left shows a royalty position prior to the acquisitions. Last year, in early August, we acquired the Rio Tinto royalty, and in late December, we acquired the Idaho royalty. You can see our current royalty coverage on the map on the far right. These two royalties essentially increased our exposure to the Cortez property. We now have exposure to the entire Cortez complex. These transactions fit our strategy and investment criteria, which we simplified to the three P's: people, place, and project. Cortez checks all of the boxes. A world-class gold complex in a mining-friendly jurisdiction operated by NGM JV, owned by two of the biggest gold producers in Barrick and Newmont. This table on slide 28 is an effort to summarize our royalty rates at Cortez.
The middle column of the table shows simplified royalty rates across the Cortez Complex, and we try to do this by deposit or area. We have a 9.4% gross royalty on Pipeline and Crossroads mines. We have a 1.6% royalty on Cortez Hills mine and the Goldru sh and Fourm ile Development Projects, and we have a 0.45% royalty on the Robertson Project. Barrick expects Cortez to produce one million ounces in 2023, rising to approximately 1.3 million ounces in 2027. With these production levels and royalty rates, we expect Cortez to become a top three revenue contributor for us. Also, with the production growth and reserve replacement history at Cortez, we think this is one of the most prospective gold mining areas anywhere, and we expect these royalties to contribute for many years to come. Another recent transaction was the acquisition of Great Bear Royalties Corporation.
The sole asset of any materiality held by the company was a 2% net smelter return royalty on the Great Bear Project. Like Cortez, the Great Bear transaction met our investment criteria, which again goes back to the Three P's. Great Bear is operated by Kinross, a well-capitalized and experienced senior producer. Great Bear is located in Ontario, Canada, a mining-friendly and low-risk jurisdiction, and the Great Bear Project is one of the most interesting gold projects to be discovered globally in the past few years. When in production, Kinross expects to produce 500,000 ounces of gold per year for a couple of decades. Our royalty covers the entire 91 square kilometers land package and is life of mine without step-downs or caps. As part of our transaction, we provided Kinross the option to acquire 25% of the royalty at our cost.
This was compensation for a unique arrangement with Kinross. Acquiring a royalty from a third party, you typically don't have access to the operator. But in this case, we had an agreement with Kinross to review non-public technical information. Ultimately, this allowed us to independently validate their assumptions and understand how they think about the project, which de-risked the transaction significantly for us. Kinross has been working hard to progress the project. In early February, they announced a maiden resource of 5 million ounces. They are continuing to do further exploration work, including deep drilling, which is expected to add further resources over the next little while. Kinross is targeting first production in 2029. Overall, Great Bear provides Royal Gold long-term growth, scale, and optionality. Slide 31 summarizes four other new additions with potential for near-term revenue growth.
At Khoemacau in Botswana, the project achieved ramp-up to full production in December of 2022. At Red Chris in northern BC, Newcrest, which has agreed to be acquired by Newmont, is advancing studies to transition the mine from open pit to a large bulk tonnage underground operation in 2026. At Xavantina in Brazil, Ero Copper is continuing exploration work to fill the mill and sustain gold production of 60,000 ounces per year. And at Côté Gold in Ontario, construction is about 80% complete, and commercial production is targeted in early 2024. The common theme across these four assets: all are precious metals. All provide further exposure to production and exploration upside. And three of the four are providing revenue to us today. Next, a few words on valuation. So Royal Gold performed well in 2022 and outperformed all our large-cap peers. That said, our multiples seem to be lagging.
Our cash flow multiple is trading towards the bottom half of our peer group. We do not believe our multiple properly reflects the quality of our cash flows sourced from a diversified set of high-quality assets. Also, the market seems to be giving credit slowly for recent transactions. In our opinion, the value of long-life assets and optionality is not fully recognized or reflected in our multiples. So in summary, I hope I've demonstrated that our record is strong and that our business is performing well. We've added high-quality assets to the portfolio, and we see organic growth from smaller assets. Our valuation is attractive, and we have liquidity to continue to grow the business. We believe Royal Gold is well positioned today. With that, I've come to the end of my formal presentation, and I'd be happy to take any questions.
Thank you so much, Kevin, for the presentation. As mentioned, we will now be moving on to the Q&A portion of the presentation. Your first question for today, a viewer is asking, "Can you comment on some of the emerging international mining jurisdictions that you find the most attractive?"
Yeah, so what I'd say is that we're open to exploring opportunities in any place, in most places around the world. And it's part of our due diligence process that we look at all these different places very thoroughly, much like we did when we did our transaction with Khoemacau in Botswana. We hadn't been there before, but we did our homework. And as long as we're comfortable with the country as being respecting property rights and those sorts of things, we're open to various places in the world. There are places in the world that we will not go into, such as Russia and maybe the DRC. These places, we wouldn't do business in.
Thank you for your insight. Your next question, "What's the average life of your producing royalties?"
That's a good question. I don't have that answer off the top of my head. I'd have to look at the portfolio figure that I want to.
No worries. Thank you, Kevin. Your next question, a viewer is asking, "Can we expect the rise in silver sales at Khoemacau we saw to remain consistent?"
So Khoemacau is now in full production. But what I would say is that the silver-grade profile is lower in the first few years of production. So in that sense, I would expect higher production in future years.
Excellent. Thank you, Kevin, for your response. Your next question, a viewer is asking, "Which development projects in the portfolio will start production over the next year?"
So Bellevue will begin later this year. Then looking ahead to 2024, we have Côté, Manh Choh, and Mara Rosa.
Thank you, Kevin. Or is there more to your answer? I apologize if I cut you off.
No, no.
Okay, perfect. Thank you, Kevin. Your next question, a viewer commented, "Royal Gold had a pretty big announcement last month in connection with ACG. Can you speak to the accretive value of that transaction and what that represents to your overall portfolio?"
Yeah, so the Serrote-Santa Rita transaction, we really like the upside of the two assets. They're both actively producing. There's a good-sized resource at Serrote to support potential mine life extension. The potential underground at Santa Rita has a potential for a 27-year-long mine life. We are happy to be part of a group of financing partners that includes some pretty big names such as Stellantis, Glencore, also PowerCo, which is a subsidiary of Volkswagen.
I think this is also an interesting way for us to get involved with new economy metals without deviating from our focus on precious metals. So we're quite excited about this transaction.
Excellent. Thank you, Kevin. Moving on, your next question, "From which royalty is most of the resource and reserve growth coming from?"
Well, I wouldn't say that it's any single property that we have as an asset that we own. We're seeing growth kind of across a number of assets in the portfolio. For example, Red Chris is an interesting one where the East Ridge has potential to basically double the resource of that asset. So I wouldn't say that it's isolated to just a few assets. It's really across the portfolio.
Great. Thank you, Kevin. Your next question, a viewer is asking, "What is the long-term growth profile for royalty financing solutions?"
Sorry, could you repeat that question?
Of course. The question was, "What is the long-term growth profile for royalty financing solutions?"
If I understand the question, I think we continue to see a good number of opportunities out there to provide financing for streams and royalties. We have the ability to do these transactions, and there is a demand for our products throughout the business cycle, and so our team is busy all the time looking at opportunities, looking for the right opportunities as they become available.
Thank you, Kevin. Your next question: a viewer is asking, "How is your cost of sales affected with the fluctuating gold price, especially when negotiating a new deal?"
As I understand it, I guess the question is for new transactions, how the costs or the per-ounce ongoing costs, how that's determined and how that's impacted by metal prices. And so really, I'd say that that would be determined on a case-by-case basis, factoring a number of things, including the economics of a project. We don't want to burn in the project such that it affects the health of an underlying asset that we have an interest on. So it really depends. Yeah, it really depends. I'm not sure if I answered that question adequately.
I think you did, Kevin. Thank you for your response. Your next question, "Can investors expect to see an increase to the dividend?"
So we've had a long track record of providing a sustainable and growing dividend. When considering our dividend, we take a multi-year approach. So we're not just looking at one year. We're looking further down the road. And we typically review our dividend each year around November. So I can't promise that there'll be any increase in dividend, but that's the thought process behind it.
Thank you, Kevin. Your next question, a viewer is asking, "In H2 2023, is the company looking at more precious or base metal royalty streaming opportunities?"
Yeah, so I think to remain consistent with what we said before, our focus is precious metals. And so when looking at a set of opportunities, we would probably put most of the effort on precious metal. Not to say that we wouldn't look at good base metal opportunities, but the focus would be precious metals.
Excellent. Thank you, Kevin. Your next question, "How has the stock performed in the last few years versus the gold ETF?"
Now, what I would say is that over the long term, if I go back to the presentation and the slide that we had in there, since the inception of the GDX index, Royal Gold has outperformed the GDX index. So the index consisting of gold producers. I guess the question was, over the last couple of years, I'd have to pull up the chart, but I believe we have still outperformed the GDX.
Excellent. Thank you for your response. We're coming up to your last three questions here. A viewer commented, "I would like to hear your thoughts on consolidation among the major gold producers. And do you feel the mid-tier producers to continue the trend?" "
Yeah, so I guess what I would say to that question is we continue to believe that the best value creation for us remains through the acquisition of individual streams and royalties. That being said, never say never. We are well aware of the status of peers in the sector. But our primary focus is on individual streams and royalties.
Excellent. Thank you, Kevin. Your next question, a viewer is asking, "Can you speak to the strengths and any specializations of your management team?"
Yeah, I mean, our bench strength of our management team is quite deep. I would say our comfort around debt is quite strong. And also, our technical expertise is also a strength of our company. We have a group of individuals that have quite good resumes, quite long resumes. And so when you join the company, you're not here to hone your craft. You're here to bring your expertise into the company.
Excellent. Thank you for your answer, Kevin. Your last question for today, a viewer is asking, "How do analysts value the exploration projects?"
That's a good question. I think you would, how would analysts look at the exploration projects? I mean, you would really depend on exploration results. You build it based on that. Maybe look at the characteristics of a deposit. Look at the overall prospectivity of the grounds. I think that's how analysts would look at it. For us, we have a geologist that would look at this and look at exploration projects and look at drill results, build out a resource model, and do those sorts of things to evaluate the value of an exploration property.
Excellent. Thank you, Kevin, for your response. This concludes the Q&A portion of the presentation. Thank you to everyone who submitted your questions. If you did not get a chance to submit your questions, feel free to send them over to your account manager here at Renmark. This concludes our presentation for today, but before we go, I will turn it back over to Kevin for final remarks.
Okay, I'd like to thank everyone for joining us today for this presentation. Hopefully, I've answered everyone's questions. If you have further questions, please feel free to reach out to Renmark, and they'll get in touch with me, and I can get back to you on those questions, and I look forward to speaking with you all again soon. We report our Q2 results on August 2nd, and so stay tuned for that.
Thank you, Kevin, for the presentation. Once again, this was Royal Gold Inc. Trading on the NASDAQ under ticker symbol RGLD. Thank you to everyone in Dallas and surrounding areas for joining us today. Stay tuned for other presentations in your area. Thank you, and see you next time.