Franco-Nevada Corp (FNV) 2010 Q3 法說會逐字稿

Good morning. My name is Amanda, and I will be your conference operator today. At this time, I would like to welcome everyone to the Franco-Nevada third quarter 2010 financial results conference call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions)

Thank you. I would now like to turn the conference call over to Jason O'Connell. Mr. O'Connell, you may begin your conference.

Thank you, Operator. Good morning everyone, and welcome to the Franco-Nevada third quarter results conference call.

For this call, our comments will be supported by a PowerPoint presentation that we have posted on the Franco-Nevada website. You'll find it under our home page, under Latest Presentations, on the right-hand side of the website, which is www.franco-nevada.com. If you refer to Page Two of that presentation, as always there's cautionary language regarding the use of our forward-looking statements which we ask you to keep in mind as we make our comments.

Speaking on the call today will be Sandip Rana, our Chief Financial Officer, who will walk through the quarter's financial results, and David Harquail, our CEO, who will provide some additional comments on the quarter and the Company overall. We also have with us our senior management team, and we will introduce them during the Q&A, if needed.

Thank you for participating in today's call. Sandip will now walk you through the Q3 financial results and how our assets performed for the quarter.

Thank you, Jason. As you saw from the press release yesterday, Franco-Nevada had another great quarter, achieving record financial results in a number of key financial metrics. Please note that the Company does use non-GAAP performance measures, which management believes more accurately reflect the financial performance of the Company. Tables have been included in the press release and at the end of this presentation, providing reconciliations of these non-GAAP measures.

Slide Three provides some of the key highlights for third quarter 2010. These include the Company achieving record royalty revenue of $49 million, up 35% over prior year. Record free cash flow for the quarter of $44.6 million or $0.39 per share. Strong margin of 91% in the quarter, the highest in the Company's history. Adjusted net income of $14.8 million for the quarter, compared to $7.3 million in 2009. This equates to $0.13 per share in 2010 versus $0.07 per share in the prior-year quarter, a substantial increase.

The Company continues to have a strong balance sheet with an excess of $800 million in available capital. In addition to these great results, the Company has paid out dividends of $24.9 million as of September 30, 2010 with $35 million to be paid by the end of the year. As mentioned, third quarter was a very strong quarter for the Company.

Slide Four compares third-quarter financial performance versus the prior year. The results under Canadian GAAP are a total revenue of $52.2 million compared to $41.1 million in third quarter of 2009, a 27% increase. Net income being higher by 46% to $18 million for the quarter compared to $12.3 million in Q3 2009. And earnings per share of $0.16 versus $0.11 in 2009, a 45% increase. All strong results which are a result of the increasing royalty revenue of the Company.

However, as mentioned, management does consider certain non-GAAP measures a better reflection of performance. Royalty revenue -- $49 million compared to $36.4 million in third quarter 2009, a record. This increase can be attributed to the overall strong performance from our royalty portfolio, in particular, Goldstrike and Palmarejo, as well as the stronger commodity prices. Gold royalty revenue was $38.2 million compared to $25.5 million in third quarter 2009, a 50% year-over-year increase. In fact, gold royalty revenue was up 32% over Q2 2010.

With respect to free cash flow, $44.6 million or $0.39 per share compared to $32.5 million or $0.29 per share in third quarter 2009. Again, major contributor to the increase was the strong royalty revenue in the quarter, combined with the continued control on cost, all resulting in a margin of 91% for the quarter, a record. Adjusting for unusual items, adjusted net income was $14.8 million for the quarter compared to $7.3 million in third quarter 2009. This represented $0.13 per share compared to $0.07 per share in third quarter 2009.

Moving on to the results for the nine months ended September 30, 2010 on Slide Five, overall total revenue was $157.2 million compared to $119.3 million in 2009, a 32% increase. This increase is due to increase in royalty revenue of $37.5 million. Net income of $53.3 million or $0.47 per share compared to $41.2 million or $0.39 per share in 2009, a 21% year-over-year increase.

As mentioned, we do look at non-GAAP measures, those being royalty revenue of $136 million compared to $98.5 million in 2009, a 38% increase. The increase is a result of a number of factors, the most significant being nine-months' production from Palmarejo compared to four months in 2009. Gold royalty revenue of $94.5 million compared to $68.2 million in 2009, a 39% increase over 2009 and a 94% increase over 2008. This is in line with our goal of being the leading gold royalty company in the market. This is a combination of higher gold prices year-over-year and contributions from the acquisitions made over the last couple of years.

Free cash flow of $121.8 million or $1.07 per share was generated for the nine months ended September 30, 2010 compared to $85.3 million or $0.81 in 2009. This results in our continued strong margin of 90% year-to-date. Adjusted net income of $34.1 million or $0.30 per share for the nine months ended September 30, compared to $9.2 million or $0.09 per share in the nine months ended September 30, 2009.

It is great to see this growth in revenues and free cash flow. As you can see, the Company continues to perform well on all financial fronts, with continued improvement over prior-year results. Please note that this growth has occurred while our number of shares outstanding has remained relatively flat. This further illustrates the strength of our core assets.

As you can see on Slide Six, the trend over the last couple of years has been upward for royalty revenue and free cash flow, while costs remain flat. At these gold prices, we envision this trend to continue as new projects such as Tasiast and Detour come on-line. David will speak to those in a few minutes.

Slide Seven breaks down the components of royalty revenue. It can be seen that the precious-metals component is increasing. In fact, the trend is upwards with 83% of royalty revenue in Q3 2010 being from precious metals. This continued growth in royalty revenue, and in particular precious metals, is based off our strong foundation of core assets. Please note that the appendices at the back of the presentation do include additional charts illustrating the movement in royalty revenue and net income for Q3 2010 versus prior year.

On Slide Eight, you can see royalty revenue sources continue to be from politically-sound jurisdictions, with 45% from the US, 25% from Canada, 25% from Mexico, and 3% from Australia.

As well, moving on to Slide Nine, the Company continues to have a strong balance sheet with an excess of $800 million in liquidity. This full amount is available to the Company to continue to add to its portfolio. Looking forward, we expect to finish the year strong. Based upon the current commodity prices, we do expect to exceed our previous guidance provided in August.

Now, I'll pass it on to David, who will speak about the Company's growth profile.

Thank you, Sandip. That's a very good review of our quarter, and I'm looking to a very strong finish in 2010, especially with the contribution of Gold Quarry that will come in in the fourth quarter.

I'd just like to add a few words about Franco-Nevada's outlook beyond this year. To do that, I'd like to look at not only the assets that are producing royalty cash flow right now, which you could see on Slide 10, but also what's in the pipeline, which you can see in the other buckets that follow.

On Slide 11 is a visual of some of our most important royalty assets right now. None of our key major royalties are capped, nor are they likely to go into any terminal decline soon. We believe that the average life of our key producing assets is at least 10 years to 20 years.

At Goldstrike, even though gold production has been declining since our IPO, our profits interest has been growing with higher gold prices. We believe at these gold-price levels Goldstrike will continue to be a major royalty contributor for Franco-Nevada for about 10 years. After that, there will be another 10 years of royalties, at least, from the huge stockpiles that have been built over the last 25 years.

At Gold Quarry, Newmont is working on the greater Gold Quarry Layback. We believe it will go ahead. Our bet is that we will see royalties from Gold Quarry for 20 years.

At Palmarejo, it looks relatively short, with an operator projection of less than 13 years. However, this is typical of underground vein deposits. It's a 29,000-acre property with lots of structures and good hits. The Guadalupe discovery is a good example of why we expect this one to last a lot longer than the official plan.

The rest is self-explanatory. Our current major assets are going from strength to strength and are a great base to build on.

So in Slide 11, I want to start showing you what's in the pipeline, and as Sandip mentioned, a highlight for us is Tasiast, and many of you have picked up on it. We'll start to see our first royalties on this project next year. This is the property that was given a de minimis valuation at the time of our IPO three years ago. Now we believe it has the potential for $0.5 billion dollars of cash flow to Franco-Nevada, if not more.

This is how real value is created for shareholders -- exposure to exploration success by the drill bit without taking the risk. Our business models allowed Franco to assemble a large inventory of land exposure on the best geological trends when those interests were cheap. Franco is just reaping the rewards from the availability of risk capital to do the exploration and development of these projects. Tasiast is just the top example of organic value accretion within the Franco portfolio as we're benefiting across the portfolio.

I just want to show you a few more. On Slide Number 13 is the number-two example, and that's Detour. We have a 2%, same as the Tasiast, on this project. As well, we cover the rest of -- most of the belt, including the Trade Winds resource property immediately to the West, which doesn't get a lot of profile. We are confident that the collective reserve will over time approach 20 million ounces, and this operation will now be built.

Detour Gold has now raised $500 million in equity and last week received its provincial permits to allow it to begin construction. We hope to see production here beginning in late 2013. Between Tasiast and Detour, Franco could realize in the area of $1 billion over time.

But now look at Slide 14 and what else is in the pipeline. All these projects were assembled long ago, but now they're benefiting from the availability of risk capital to realize their potential. Whenever others spend dollars to drill on our land, where Franco-Nevada has a royalty, Franco gets lucky.

Many of these on the list are relatively small projects compared to a Tasiast or Detour, but collectively, even with a risk-adjusted discount, they have the potential to generate over $1 billion in royalty cash flow to Franco-Nevada. That is more than Tasiast and Detour combined. I don't believe this is fully appreciated.

Slide 15 is a visual, how these gold revenues stack up. Franco-Nevada has been one of the quieter companies in terms of press releases but has been doing one of the best jobs of actually delivering per share growth. In our first year 2008, gold revenues were just $71 million. 2009, it grew to over $100 million. 2010, we are now projecting gold revenues to be in the area of $150 million for 2010, 50% growth, much higher than the gold price.

Beyond that, we have shown how the other gold projects that I've just spoken about strap-on additional growth. This is growth that will not cost Franco-Nevada one dollar in capital. This is true value accretion.

One thing that we have removed from the chart is the Prosperity project. Conseco has work to do to achieve its environmental permits. But it was the one project that we would have required a major cash outlay. We had made a $350 million commitment. We still are sitting on that cash, so the only cost to Franco is an opportunity cost. There will be others, and if Conseco can make things work, we fully support them.

Doing streaming teams by ideals by this management team and the financing mines into production, is a good source of value addition that we could contribute to shareholders. But in the resource business, we don't forget that financial engineering is second to discovery by the drill bit in terms of creating real shareholder wealth. We believe that's probably the most important driver for this Company, going forward.

Slide 16 is just a summary of just how much discovery by drill bit has been occurring on just a small fraction of Franco-Nevada's royalty properties. The cease planned is from good geological assessments made over a decade ago, are just beginning to sprout throughout the Franco portfolio. The team here couldn't be more optimistic about our long-term outlook.

Finally, on Slide 17 is a chart and giving you the long-term perspective of how Franco-Nevada has been performing. What I'm struck about is that the share price of our Company is still in the same range as it was 1.5 years ago. This is despite what we believe is major significant improvements, both in our existing producing assets and the prospects in our pipeline. To me, that spells just one thing -- opportunity. The market has been focused on M&A; our business model is something between an ETF and an operator. We're lower risk than an operation, but we can deliver growth earnings and yield that an ETF cannot. We like to think of Franco-Nevada as a gold ETF on steroids, and that there's going to be a good market for such a vehicle.

With that, I'm with most of the Management team here in the Toronto boardroom. We'd be very happy to take your questions.

[Operator Instructions]

Your first question comes from the line of Anita Soni from Credit Suisse. Your line is now open.

Good morning, Dave, Sandip. My question is with regards to the oil and gas royalties. They seem to be a little light this quarter. Can you just elaborate on that?

Anita, I'm going to let you talk to Geoff Waterman, who manages those assets.

Anita, It's a function of, really, the gas prices. Gas prices have not -- have been flat, and we're seeing declines also. Just a natural declines that occur on our oil and gas assets, as well are kicking in.

Well, gas price, I think, was down by about 7% or 8% this quarter, but it seems like the reduction in revenue is more along the lines of about 25% to 30%. So, what kinds of declines are you seeing in the actual natural gas --

Sorry. This is Sandip. Anita, are you comparing to previous quarter?

Yes, I did mark-to-market and looked at what the gas prices were in the quarter, and it should have come out to somewhere around the range of $10 million and came in at about $7 million, $7.5 million.

Okay, because in Q2 2010 we did have some audit adjustments. So, that would be -- we booked some additional revenue related to audit findings. So, Q2 was probably abnormally high.

Okay. Thank you.

Your next question comes from the line of David Haughton from BMO Capital Markets. Your line is now open.

Yes, good morning. And thank you. Seeing that Falcondo is back on stream, what's your expectation for the kind of pay out ratio, out of Falcondo? Would it be the historic kind of levels? Which is nearly all cash-flow going out as dividends, of which you get your 4%?

David, thank you for the question. Yes, Xstrata just, I guess, about six weeks ago said they were restarting and they expect to be about 50% of production by March of next year. And, you know, annually they used to do about 60 million to 70 million pounds of nickel contained in ferronickel per year. But it was always a swing producer, and this is one of the things that has always been feast or famine.

The nature of the contract they had with the Dominican Republic is that they will pay out surplus cash accumulation 100% in dividends. Because otherwise, they're forced to convert into pesos, which is something that the old Falconbridge would never do. And I expect Xstrata will do the same. In terms of, is it a nice annualized cash-flow? No, it's not, because they do spend capital. Also, it tends to be function of the nickel and oil price market, historically. Now it's going to be driven by O&G gas prices, going forward.

But what we're -- what I'd expect to see is something that's going to be a little more stable that we had in the past. An example was our 4% in 2007, when it was held by Newmont, paid out over $20 million in dividends that year. That was because they were able to capitalize on nickel prices, that were over $20 million. My guess is that at these types of nickel prices, and I haven't quite seen what the total unit cost will be with this new O&G structure. But I was told by Xstrata that they're hoping to get costs down to around a $4 per annum type annual cost. I don't know if that's going to be achievable, or how quickly.

But I think you really, just do the spread of $4, a 50% tax rate in the Dominican Republic, and that would be effective margin coming out of the DR. One of the things, though, is they do have to recover any capital moneys they spent on doing the conversion from oil to natural gas. I haven't seen the total spending yet. When we get the year end numbers, we'll probably be able to give a bit better guidance, by March of next year.

But my assumption is we won't see any dividends, at the earliest, until late 2011 or 2012. And so, we'll need a bit of time to recover or build up the working capital inventories in that company.

All right. Well, that's very helpful. Saw that you've picked up a few smaller royalties. And a number of them, around Bald Mountain, you have now got quite a patchwork of royalties around Bald Mountain. How should we be thinking about those, collectively?

We put a map in the AIF, and we just are updating the map we have right now on our website. So, it's a bit of varying royalties, you know, can be spreading from 1% to 5%, depending on where you are on the properties.

The core of the operations right now at Bald Mountain are the top pit, and our disadvantage before is we only had, really, the eastern side of the top pit. Now we cover the entire pit. So, what we'll see is a more -- a better averaging out of, in terms of our revenues on a quarterly basis, from that pit. Also, we're seeing some good exploration potential going to the west.

And also, what we're excited is -- we bought for the long term, what we call the White Pine to the north. Where Barrick has resources but doesn't have any immediate mining plants. So, we believe we're able to buy this as a great long-term option on, in terms of future exploration. What we like is Barrick has been spending serious capital on this property. There's a new truck fleet. They've indicated they're expected to be doubling production at the property. We now are less concerned about where they're mining on the property, because we feel really we have pretty-- most of it, virtually all of it, covered in terms of where the resources are.

So, what I'll do is I'll guide you to the new map on our website. We'll have that up in about a week.

All right. And as far as the thinking on Prosperity, should we just have that on ice for now until a revised plan can be put forward?

You know, Dave, I think that's the best conservative approach. I've talked to Russell Hallbauer twice this week, and we have a lot of respect for Taseko and the Hunter Dickinson Group. We believe they're -- they're mine builders and they're doers, and they still want to see how they can make this thing happen. They want to have a discussion with the federal government to say, instead of going through one of the processes where you get into it, you're not allowed to talk to anybody in terms of any ministerial parties that can make decisions, but all the outside NGOs are allowed to have free access to those parties. And that if you make any amendment to reflect any suggestion or criticism of the project through the process, you're thrown back to ground zero. And so their hope is, they've already gone successfully through the provincial process.

And they're hoping they can get some understanding with the federal process that says, can we do something that's less stacked against the proponent of the project,. And that way we can maybe iterate with you in terms of what's needed to build the project. And, so, tell us exactly what the objections are or what you need, in order to approve the project, and then maybe we can adapt the project to meet your needs. But one of these things -- processes where you're always putting up a process. And then two years down the road, they reject it out of hand without being specific of why it couldn't negotiate that at the very start, is something that they're trying to change the dynamics on. And we fully support that.

We think a mine, that area -- I was up there and the pine beetle is devastating the forest in the area. It's been -- can't even do forestry now in the area because of the poor quality of the trees. This would be a good project. We think it would be good for the community. We're supportive of the mining industry. And so, we're going to continue to support Taseko. But there's no projection that we can guide analysts to, in terms of, how to value this in the future. It's just one, I think, of a myriad of projects that we're going to continue to work on. And to the extent that we can be successful with operators, and we'll be successful too, and we can give you some specifics on it.

You've got quite a sizable war chest available to you, $846 million. How you finding this current environment for doing either royalty or streaming deals? Is it target-rich or target-poor at the moment?

Well right now, as you saw, we just announced three smaller royalty deals in the quarter. So actually, it's quite rich now in terms of smaller existing royalties. Because you have a lot of people that are just stimulated right now, just want to capture what they think is the peak gold price or it's finally reached what they need in terms of requirement. Or they have some estate and tax planning to do before, you know, taxes change in the US.

So, that's actually been a boon for us in terms of doing, or stimulating transactions on the smaller deals. It's hard to get the market excited about it because, really, we're planting seeds for what we think can be longer term royalties for us in the future; as you're seeing us benefiting on some of the things we bought, you know, a long time ago. We're planting those long term seeds now.

In terms of the streaming deals and, you know, the mine financing deals, definitely more complicated. I think what's happened is, we were well advanced in the number of discussions this year. That reality is, is either the companies got taken over. So, you can guess some of them. Or that they've been able to do major equity financings, which have a lot fewer strings attached to them than a streaming deal. So, I don't blame the companies for going that particular route to finance their projects going forward.

And then in terms of pricing the projects, we have to price these projects on assumption, of what is the gold price going to be over the next 10 to 20 years. I'm saying it's going to take some of these projects a couple years to go forward. So, again, we are getting a little cautious. Do we really want to value projects at $1,400 gold for the next 20 years? There's more risk associated with those projects. So, I'd say right now, it's more challenged on the streaming mine financial deals. But what we're getting now, is a lot of approaches saying -- people are seeing our war chest, saying, "Well, jeez, help us on our M&A. And we'll do a royalty on our existing operations, or the operations we're about to acquire, in return for you giving us some cash component to our acquisition bid to make it more compelling."

So, that seems to be the growth area of our business right now. We've been involved in a number of these where we put out term sheets, and, you know, but there's a combination of factors to whether these go forward or not. There's no question, we're in the M&A frenzy period of all mining bull markets that I've seen. It's very exciting to see some of these things come through. And I think we have a good possibility of being a participant in some of them in the future.

In terms of, do we have to do any of these things? I think that was the crux of my presentation. Most of these things we're going to pay full value for and we're going to try to do it at a good, long-term average gold price. But the best value we get is these absolute discoveries on properties that we already own. We're getting a whole bunch of these. So, we don't have to be super aggressive and, yet, we can still deliver great growth for this Company going forward.

Now I appreciate that most of that commentary was in relation to gold revenues or streams. What about in oil and gas? It's a softer market than what we've got in precious metals. Are there opportunities there, that you'd consider?

Well, Geoff Waterman has been -- Geoff, why don't you make a comment on that area.

On the oil and gas side. You know, the oil market is, of course, prices are strong there; gas is weak. But in the oil and gas industry, on the royalty side of things. You don't see the royalty packages on the market, as you were back in mid '90s, when the energy trust reform. And the other thing is, in the oil and gas business. There's already a lot of encumbrances that the operators are dealing with, crown royalties, free world mineral royalties. So, there's not as much room to create a royalty, on a lot of the properties that are out there.

But, David, in terms of, you know, we have looked at a few things. Our focus, though, is -- until today has been on the gold side. We really wanted to push that gold component higher so we could do something more material on the oil and gas side. I expect they'll be things we can look at in the future. But there's nothing imminent that we're going to sort of guide the street that we're going to do. We've made the commitment that we're gold focused. We're going to try to do as much as we can on the gold side.

Last area of questioning. You had mentioned looking to your Company for growth and yield. You've moved now to monthly [dividends]. Have you any feeling about whether you'd like to lift your yield?

I think we've guided people that one of our dividend strategies is to continually increase our dividend, year by year. We effectively increased it with our annual meeting this year when we moved to the monthly, and it effectively raised our rate. So, what we expect is that you should wait for our next announcement, which will be timed probably for our annual meeting next May. But I feel quite comfortable we have the financial resources, irrespective of whatever might happen in the commodity markets, to continue to raise our dividends for a long, long time.

All right. Thank you, David.

Your next question comes from the line of Terence Ortslan from TSO & Associates. Your line is now open.

Thanks. David, the credit line seems to be a bit meager with respect to your overall capability of cash-flow and the balance sheet and all. Is that by choice, or is it by caution on the other side?

The credit line that we have, Terry -- thank you for that -- is, reflects a bit of our history. When we came public, we needed a credit line, actually, to pay for the assets that we're acquiring from Newmont. And so, we put in the original credit line with the current syndicate of banks that we have, to take care of that acquisition. And happily, where our greenshoe came into effect. And also, we were able to do some financing in 2008 that gave us some cash cushion. And then we saw enough opportunities in front of us. And also, the credit line that we had in place was such, I guess, competitive terms as we went into the financial crisis. That was something that we just felt it was a very good thing to have, because we saw enough opportunities for us to spend going forward.

What we did is, we did renew the credit line earlier this year. What we do see is the credit line is actually a little more expensive than some of the other terms that could be achieved in the marketplace. So, we're taking a look in terms of what is the best, I guess, credit support going in front of us. We've had a lot of people coming in, telling us what our financing options are. And what we're really looking at is, okay, what we -- some of these major ones that were doing it; we want a structure, I guess the financing, to sort of fit the major transactions that we're doing.

So we're kind of in a holding pattern until we sort out what is the big -- next major step that we take, and then we can fit the credit line to fit it. But one of the things is, why we don't expand it more from the stage we have, is that it does cost us a standby fee. It's a higher rate than most of the other commercial rates out there. And so, that's something we want to fix, before we increase it any further.

Okay. Just coming back to the streaming question and your answer. I mean, that's required some more different capital structure than, you know, the use of royalties. In terms of geographic areas, I mean, there's been a change of emphasis of discoveries and as well as explorations dollars. It looks like Columbia, let's say, versus (inaudible) areas. Are you trying to shift your emphasis on new areas, whereby new accounts and new discoveries are being made? And are you seeing the traffic coming through you?

Last first. Are we seeing the traffic come through? Absolutely. We're getting -- the nice thing about being in Toronto and right above the Toronto Stock Exchange is the whole world comes through our doors continually.

In terms of areas that we'll go through, you know, we are -- we've done the deal in Ghana. We're going to be getting big royalties in Mauritania soon. We're comfortable to go, as long as we can have a good contractual tenure with the operator. And we just talked about earlier, Falcondo, which is in the Dominican Republic. All these deals, we have a recourse to Xstrata Nickel in Toronto or we have our royalties in Indonesia or Ghana. We have contracts which are based with a US company or Australian or a UK or North American based company.

To us, the most important is to having a contract where we don't rely on courts, that maybe less predictable in terms of outcomes. So we'll -- we're willing to go wherever the mining industry is going, as long as we can do a contract with a court that we can depend on. Because the only way we get paid is if our royalty can survive its tenure for 10 or 20 years. So, we can really see our value over the long term.

Was there another component to your question, Terry, that I forgot?

No, that's perfect. Just one last quick question. I'll get this question off the lot, and maybe you have the number better than I do. Management holdings, directors, then you've got the couple of [major blocks] by institutions, what do you think your float really is?

In terms of a management, now. I think it's 5% to 6%. Yes. 5% to 6% and holding. Pierre Lausanne, of course is the largest individual holder. And I get asked the question all the time, his major equity holding is Franco-Nevada. He has his office in our offices, and he's very much involved with us in terms of day-to-day dealings on this Company. I'm a major shareholder. I own 1% of the Company myself. And, in terms, of the rest of the management team, are all shareholders or auction holders in the Company. So, we've actually tried to design our compensation plan. So, that they are very motivated on per share value accretion in the Company. And you'll see that written in the philosophy of both our annual report and our management information circular. In terms of the split of our Company, we're still mostly generalist institutional funds. Our larger shareholder is the Fidelity Funds out of the US. They're about 13.8% of our Company right now. They've been with us since the IPO, and they've been growing. We've also been getting strong generalist interest out of the United States. So, other big funds are T. Rowe Price, and I'm just trying to think of some of the other larger funds. And in Canada we have, you know, the generalist funds. We don't have much in terms of specialized gold funds, because I think they don't -- their perception is we don't give them enough torque. And I think, we're generally fairly light on the retail side, compared to other companies. We have been discussing in-house whether to consider a US listing. And It's something we've not made a decision on but we're at least doing the preparatory work. Because we have such large holdings now with the generalist funds. In the US, we know that's something that appeals to them. But we want to get through the first transition first, before we consider a US listing.

Okay, fair enough. Thanks for your time, guys.

Thank you.

[Operator Instructions]

Your next question comes from the line of Greg Barnes from TD Newcrest. Your line is now open.

Thank you. David, I was intrigued by your comments about helping out with M&A, as possible extreme of business. How does that work?

It's pretty simple. As most companies, you know, have -- in this market a good powerful paper. But they're also trying to acquire a company that has a lot of paper, as well. And what they're trying to do, is saying -- looking at the what the competition is saying, "Jeez, we have a cash component in our bid," and makes it that much more difficult for a competing company, that also has strong paper to compete in that transaction. And so, what's been happening is, companies have been coming in saying, "We have particular producing properties right now, or we're acquiring producing properties. We're willing to write a royalty on those sets of assets if you would make a commitment to our bid to supply X hundreds of millions of dollars to this acquisition bid." So, we've had a number of these yet. We've gone down the path with some of them, haven't gone quite through to fruition, or they've gone and decided to do other targets instead. But it's something that I see enough of, right now, that I see it as another growth area for the Company. So, I'm going to leave it to the investment bankers to create the real combinations here. But I think a lot of them have gotten the idea already. And we're seen as a good source of, I guess, potential acquisition financing. What we don't want to do, though, is be asked to do acquisitions on properties or companies that we already have royalties. We've never done anything hostile with any of our royalty operators. We consider ourselves to be partners with them. So, in those circumstances, we would only want to do a friendly transaction.

So, would this be focused on particular assets, rather than the companies?

That's right. Yes. So what we're looking at is the acquiring company would be targeting to buy assets, and we're looking to bright royalties on properties themselves, that we can secure on the properties themselves. So we say, if you're willing to write a royalty on either existing assets or properties or the ones you're acquiring, then we'll provide you with the capital to go ahead with your transaction.

Those have to be pretty meaningful royalties to make -- to putting a hundred or a couple hundred million dollars into these transactions. They have to be big royalties to justify that, don't they?

But the nice thing about it is, when you're writing a royalty, you can structure it almost any way, as a percentage of gross revenues on an entire property. So, you'll look for the properties that have margins on them and -- or you can do it as a sliding scale. And that these properties are vulnerable to lower prices, you can structure the royalty, so that the operator is not taking a larger financial risk going forward. You can structure it so that it can be more like a stream, that gives you margin above what their other bank debt that they might be raising. So, it doesn't impinge on the bankability of the various acquisitions they're trying to finance. So, you have a lot of flexibility in terms of creating a royalty that can be meaningful to us and also not impinge on the financeability of their acquisition by the acquirer. So essentially, it's -- the field's wide open in structuring these types of transactions.

Okay. Interesting. Thanks, David.

And at this time, you have no further questions. I'll turn the call back over to you.

Thanks, everybody for joining, and please join us again for our next call. Which will be, I guess, in May for our annual results.

This concludes today's conference call. You may now disconnect.