Okay, we are going to kick off the Royal Gold session. Royal Gold is a precious metals royalty and stream company with a portfolio of 364 properties across 30 countries at various stages of development. Joining us today from Royal Gold is President and CEO Bill Heissenbuttel. Thanks for joining, Bill. We're gonna do a fireside chat here, and feel free to send questions in the app if you want to, you know, get involved. Bill, you described 2025 as a transformational year for the company, rightfully so. There were several big deals, including the acquisition of Sandstorm and Horizon. How do you feel about the portfolio that you've built so far? Does it have enough growth in it? Are you happy with the duration, the maturity, the stream royalty mix, the geographies? You know, are there any areas you're still looking to optimize?
Sure. First of all, thank you for allowing us to participate in the conference. I agree with Paul's comments that this is probably the premier investor event put on in our industry, so thank you again. Yeah, last year was really busy. We are extremely pleased with where the company sits right now. The Sandstorm Horizon transaction really allowed us to take the strengths of both companies and put them together into one company. By that, I mean, we had a very strong producing portfolio, whether that's Milligan, Pueblo Viejo, Cortez. What Sandstorm brought was actually a very strong development portfolio. I think most of the value of that company was in development assets like Platreef, like MARA, like Hod Maden.
You put those assets together, with our growth assets, you know, Red Chris, Great Bear, and I would say the number of growth assets that we could point to has probably more than doubled. You know, we now have a slide, we're probably talking about 10 different properties on the growth side. It was strength and strength and putting it together and making a, I think, a stronger company. Diversification has been a long-term focus for us. I think if you follow the industry, everybody has a concentration, whether it's Wheaton at Salobo or Luis Franco at Cobre or us at Milligan, and that subjects you to event risk, which we have seen. Trying to, you know, reduce the biggest assets to something smaller has been a core focus.
The way we calculated the consensus NAV for assets is that Milligan is the only asset that's above 10% of our portfolio on a NAV basis, and I think that's really strong. You know, in terms of the rest of the issues that you raised, you know, the number of royalties versus the number of streams, we don't really care what they are. You know, I think when I first started as CEO, people would ask me, "Are you gonna do more streams or royalties?" I would have said, "We're gonna do many more streams," and I think six of the first seven deals were royalties. You just, you never know in this industry what's gonna come forward, and we don't really care.
Political risk, even though we did add a number of countries, we added South Africa, we added Turkey, we added Zambia, last year. Again, the diversification certainly helps that. People say, "Well, you're new in Turkey." Okay, Turkey's 4% of our NAV as it stands right now. I think that's good. We like the countries we're in. I would say when we look at political risk, it's really about understanding how important is this industry to the country? Does the government understand the importance? Does it produce important tax revenue?
I think where mining companies get in trouble sometimes, you go into a country that does not have that culture, does not have that understanding. When things go wrong, you don't have the industry coming behind you to sort of support you with the government. I think that's good. I think the final thing you touched on was duration, and that includes Sandstorm and Horizon, but includes Constancia, which is a couple of decades, and then two events that we really had nothing to do with, and that was the Mount Milligan life of mine extension, taking that mine life from the mid-2030s to 2045. Our biggest asset now has two decades of potential life in front of it.
There was Four Mile at Cortez, and they've laid out a plan of 600,000-750,000 ounces over 25 years. I say we've been associated with Cortez for three and a half decades, and you may see us associated with it for another three and a half decades.
Yeah, maybe let's spend some time on some of the bigger assets that you talked about there. Mount Milligan, you mentioned, you know, continues to work on the life extension to 2045, which is a big positive, but Centerra has also been looking to improve, you know, its understanding of recovery and throughput. How much optimization do you think is possible there this year? Is there anywhere the market might be misunderstanding the potential of the asset?
Yeah, I don't know if it's recovery so much as I think it's grade, and I think they've done a lot of infill drilling to better understand some of the grade issues that they've had. They have had issues with guidance in the last two years, but my understanding is the drilling that they're doing has actually helped to inform some of the life of mine plan. It, you know, it's always when you have challenges that you learn something, and you use that to make things better going forward. I really think when it comes to Milligan, investors sort of take a show-me approach, as opposed to just saying, "Oh, it's 2045." They wanna see the results.
They wanna see Centerra, you know, address some of the short-term issues. The one thing I don't think people really appreciate is that if you look at the life of mine extension, the tailings storage facility they're building will accommodate much more material than a 2045 mine plan. I know Paul has been talking about a longer mine plan than that, so, you know, I think there's a lot more potential at Milligan than people really appreciate.
Interesting. Another asset I was curious about, Pueblo Viejo. Metallurgy has been a bit challenging there. Do you have any sense how far away the operator is from figuring out the, I mean, the gold side of things and ultimately driving up the silver?
You know, to be frank, PV has been disappointing recently. I know they have Barrick has tried very hard to address a number of the issues on the recovery side. I think our understanding of the issue right now is the weathered nature of the stockpile is causing some of these issues, and from what we've heard, that stockpile is gonna continue to be processed over the short term. I still think, you know, we go there every year. We've actually brought metallurgists to site to talk to them. I think there's a potential solution. I just don't think it's in the short term.
Okay. You touched on Kansanshi in Zambia. That was at the addition of another cornerstone asset for Royal Gold. Actually, First Quantum said yesterday, biggest ever investment by a U.S. corporate in Zambia. We actually got to go see the asset late last year and met with the president. You know, I think seems like a great jurisdiction where they wanna grow, you know, copper. What do you see to the upside of Kansanshi in the long term?
We start with a 20-year mine plan, which is a great start. Our area of interest covers the entire mining license. I think it's somewhere on the order of 250 square kilometers. Our geologists have looked at it and sort of said: Well, we think there's potential here, potential there. I think the other upside is, I will refer to it as laterite gold, but they've been working on that concept, that idea. People will say, "Well, but your stream is geared towards copper production, so if, you know, that gold production actually started, you won't see anything." I would say, "You know, at the time, we would have had no idea what we were buying.
They would have had no idea what they were selling, but we have a relationship, we have a contract, and to the extent that opportunity comes up in the future, we are very well positioned," and I see that as a potential upside.
Interesting. Another big area of discussion in the gold sector has been Cortez in Nevada. The JV has been advancing Gold Rush and Barrick's adding ounces on Four Mile. Has the magnitude of Four Mile been surprising to Royal Gold? Do you have a view on how Royal Gold's cash flow profile plays out in that district?
Yeah, I. The only thing I think that has surprised me personally at Four Mile is the speed with which it has developed. When, you know, when we did the royalty acquisitions in 2022, people criticized us. They said, "You know, you paid a lot of money for what you see," and our geologists, again, I go back to, we've been associated with the property for three decades, to criticize the transaction in 2022 would be to say, "Cortez is done. There are no new ounces." Our geologists looked at the upside and said, "That's, that's not the case." We expected a Four Mile, didn't expect it in three years.
I thought that would develop over time. You know, in my opening remarks about, you know, the potential there, you know, Four Mile, when I say 25-30 years, they're gonna study it for the rest of the decade, so it's probably 25-30 years from 2030. It just, there's a long runway there, ahead for us.
Interesting. Yeah, we did a site visit there, and one of the exploration guys said they were trying to shorten the gap between major discoveries from every decade to every three years.
There we go.
M aybe it's right on pace. Elsewhere in the portfolio, which of your assets have important expansion studies or ramp-ups occurring this year that the market should be aware of?
Well, I think the first thing to appreciate is the fact that Kansanshi only contributed a quarter's worth of revenue. The Sandstorm assets only contributed 70 days to our portfolio. Now we've got a full year of all of those assets. That is one primary source of growth for 2026. I think the other one is Goose is ramping up. The Goose royalty that we have starts at 0.7%, and over a couple of years, goes up to 3.3%. That'll take a little more time, but you will see that progress. I think the other one I might just mention is Platreef, which, as you know, just started production in the fourth quarter of last year. This is one of the Sandstorm growth assets, and we would expect to start receiving deliveries, in, sometime during this year.
I'd like to touch upon Hod Maden. One of your assets where you've got a 30% equity stake. Can you talk about the timeline to deliver that project, and how can you go about customizing your exposure, you know, maybe maintaining more conventional stream or royalty exposure to the asset?
When we talk about time to deliver, we're not trying to deliver Hod Maden as a joint venture partner. Really, our priority here, Hod Maden came with the Horizon Copper acquisition. You could have said, "Well, you could have just bought Sandstorm and left Horizon alone," but there were so many intercompany issues, and instruments, that we just thought, "Let's get both companies, get rid of all the and but we're gonna have to deal with the joint venture. It's not something that is part of our strategic focus. Buying Hod Maden is not an indication that we're going off into joint ventures, as an acceptable, form of investment.
The priority for this year really is to try to sell that 30% interest and convert it into something that looks a bit more normal for what we do, whether that's a royalty or a stream. You have to get the valuation right, you have to get the structure right. I think SSR has been kind of focused on the technical study that was done towards the end of last year, and then the press release that came out, and now having a dialogue with the partners about an investment decision. There's not much to report, in terms of progress there, but again, it is a priority there to try to convert what has cost overrun risk to something that doesn't have cost overrun risk.
Is there anything else in the portfolio after the acquisition of Sandstorm that you would look at as non-core or that should be rationalized? What are the catalysts to realize value on those assets?
You know, we've done a pretty good job so far. You know, the Versament block that we sold towards the end of last year, people would look at it and say, "Well, there's a big mark-to-market loss there." You know, you're talking about a 25% equity position in a company with no liquidity, and the shares actually had trading restrictions for a period of time, so we had to get Versament involved to be able to do it. You're just gonna sell that at a discount. There's no way around it. Really pleased to generate almost $150 million and pay down debt with it. There are a number of other smaller equity positions in the portfolio that we've been chipping away at.
No one's really gonna notice, but again, it keeps people focused on, you know, royalties and streams as opposed to, what do I do with this equity position? The other big equity position is Antofagasta. It's a little bit like Versament, you know, it's 20+ %. I think with Antofagasta, you know, they got to get the licenses into OT LLC to get the development of Lift ONE going, and if they can do that, I, there may be a valuation enhancement that goes on. I think we might be a little more patient with that one and see what happens. Other than that, it's really the Hod Maden joint venture is the only other thing that I would say just really doesn't fit. We're not looking to sell, you know, the royalties and streams in the Sandstorm Horizon portfolio that we inherited.
Okay, let's move the conversation over to the deal environment. I thought it was interesting in your Q4 conference call, there was a comment, maybe the $100 million-$300 million category deal has evolved into a $200 million-$500 million deal size bracket. Is that just a function of metal price and, you know, the amount of ounces that you're looking to acquire in a given transaction? What's driving the, you know, the size upgrade?
We haven't set a minimum investment hurdle that we have to get to. We're not targeting specific volumes of GEOs. It's just the reality that in this gold price environment, every GEO you buy is more expensive than it was three years ago or two years ago. You know, the market really hasn't changed. Yes, we have seen a number of billion-dollar transactions. I don't know that that is now the norm. I think it's still going to be the sub $500 million. It's just those transactions are more expensive these days.
What types of deal motivation are you seeing in the market right now, M&A, debt, project development, or exploration?
There's always project development. There's always something, you know, gold at these prices, you're gonna have projects move forward into development. You just have to be a little bit picky about the assets that you invest in, because we all know projects that didn't work in $2,500 or $3,000, and now they work. Okay, is that really the investment that you want to make? We got to have a little bit of discipline on that front. I think one of the greatest things, and it's really come up just in the last few days, is M&A. You know, if you go back, Milligan was actually originally an M&A transaction, primarily. Most of the money was to buy terrain, and there was a small piece for construction of Mount Milligan.
We went through this period where, you know, Newmont bought Goldcorp. T hey're gonna divest non-core assets, they're gonna be streaming opportunities. Randgold- Barrick, exact same thing. Nothing ever happened. I kind of lost faith that, you know, these things would actually lead to opportunities. Now, we weren't the ones to do the transactions, but, you know, a Casa Berardi, a Porcupine, a Hemlo, it just establishes the industry as a source of financing in M&A, like I've never really seen it. And I think that's really positive, and I think you just talked to Paul about the fact that doing a big deal in Australia, fantastic. We always said we need one to get everybody else in Australia to at least listen to us.
All we want is to be able to walk in the door and just pitch what we do because we think it makes sense. The large Antamina transaction, if BHP's willing to do it, okay, you know, Rio Tinto, what are you thinking of Antofagasta, Southern Copper? Every time a bigger company uses the streaming product, it potentially opens the door at least to a conversation where we can say, "This is why we think our product makes sense." I feel as good about the doors being opened in this industry as I've ever been, and I... You know, I've been here for 20 years, we were the lender of last resort... Right? You didn't get to see anything of the debt. The equity markets were open. Now we are part of the conversation when it comes to raising capital.
Interesting. Did you make a comment earlier that you didn't think we'd see that many above billion-dollar deals?
It's just rare. I mean, if you go back, I mean, you had Cobre was $1 billion. The Vale Sudbury Salobo transaction was $2 billion. You didn't see any other ones, and all of a sudden, last year you've got Coté, $1 billion, Kansanshi, $1 billion. You can throw Sandstorm at $3.5 billion in there, and now we have Antamina. Because they're more expensive, but I just think there's more opportunity.
Then the other theme in the space is consolidation, and you've been a consolidator. You know, how do you feel about the current state of competition and, you know, are you still think that we're gonna see more of that in the market?
Yeah, I've joked we've done our part. I would say right now we're really focused on integrating, and as simple as this business appears, when you inherit 200+ properties and you have to do diligence, not so much before the acquisition, but when I say diligence, I mean, understand each and every asset. You know, hire law firms and just say, "Does the royalty still exist? Is it registered? Should it be registered?" It takes a lot of time. I can't see us being involved in the short term. You know, I think if OR and Triple Flag, if there were to be consolidation there, I think it would help competition a little bit. We see them in most every bidding process that we're involved in.
I think the smaller guys right now, we don't really see them that much, so, you know, if a Metalla happen to get together, I don't think it would change the competitive landscape. You know, for competition, all you need is two or three, and as long as we've got four or five, the impact on competition is gonna be, I think, marginal.
Another theme that I've asked about in some other sessions is around North America getting more serious about mining, supporting the sector, streamlining permitting. You've got a big footprint in Canada and the U.S. Are you seeing any benefit of those efforts in your asset portfolio?
Hopeful, because, you know, some of the, some of the assets that have benefited, have benefited very recently. You have a federal designation in Canada, you have a federal designation associated with Red Chris. You have provincial designations of Milligan and Great Bear. Anything that is designed to advance permitting quicker is just good for our portfolio. That's where most of the impact is, and, you know, within the U.S., we bought a royalty on the Cactus project in Arizona, copper being a critical mineral. You know, I'm hopeful that they will also see sort of a fast track to permitting.
I mean, maybe in the closing moments here, just interested if there's assets in the portfolio that you think have the best long-term organic growth potential that you think might be underappreciated in the market. Be interested to hear your take on them.
Well, Cortez, we've talked about. I think that will always probably have the best organic growth potential. I think second, I'd probably put Xavantina, and I don't know if you recall Xavantina. We made the investment in 2021, and the mine plan at the time ended in 2026. Our geologist said, "I don't really care if it's a five-year mine plan, the potential here is substantial." You know, we get to 2026, at the end of, w ell, the end of last year, Ero filed a technical report with a mine plan that starts in 2026 and now goes to 2032, and that's the kind of upside, that's the secret sauce. If we see that kind of upside, we're doing our job properly.
Then we made another investment early last year, and you may say the economics didn't change all that much, but what we did is we increased the area of interest. Again, our geologists remain really, really excited about that one. I think Wassa, you know, when Chifeng bought Golden Star, I think Wassa kind of disappeared from public view a little bit. You go back to 2015 when we made that investment, the mine plan went out to 2022, still operating. Chifeng did an independent Competent Person's Report a couple of years ago showing the potential to 2049. Again, when we got into the investment, that was the kind of upside we were hoping to see. I think the last one, I'll put Milligan on that list.
You're building a tailings storage facility for much more than 20 years. There's a lot of material there, and you may see that one, show a lot of organic growth.
We're gonna go see Xavantina with Ero in the fall. They had this pile of gold concentrates that they've been selling. Is that something you knew about in the deal, and was it easy to put a value on that?
We didn't know about it when we did the deal, but that was our idea. We had a guy on site who said, "Look at all this material. Have you ever thought about marketing that?" You know, when we say we're a partner, you know, we're not just a financing partner. We like to think of ourselves as an operating partner, and the idea was a member of our team being on site and calling it to their attention.
That's great. Well, I think we covered a lot of bases there. Really appreciate the Q&A. Thanks, Bill.
Thank you.