Franco-Nevada Corp (FNV) 2016 Q4 法說會逐字稿

Good morning.

My name is Stephanie and I will be your conference operator today.

At this time, I would like to welcome everyone to the Franco-Nevada 2016 results conference call.

All lines have been placed on mute to avoid any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions).

Thank you.

Stefan Axell, you may begin your conference.

Thank you operator.

Good morning everyone.

Thank you for joining us either in person or over the phone to discuss Franco-Nevada's 2016 results and Company outlook.

Today's presentation will be a little bit longer than usual as we will be providing many updates on the Franco-Nevada portfolio.

Accompanying our call today is a presentation which is available on our website at Franco-Nevada.com, where you will also find our full financial results as well as an updated version of our asset handbook.

Before we begin formal remarks, we would like to remind participants that some of today's commentary may contain forward-looking information and refer you to the detailed cautionary note on Slide 2 of the presentation.

Sandip Rana, CFO of Franco-Nevada, will discuss the results, followed by several members of the team providing key updates on the Company.

This will be followed by a Q&A session.

I'll now turn the call over to Sandip Rana, CFO of Franco-Nevada.

Thank you Stefan.

Good morning everyone.

As you will have seen from the press release that we issued last night, the Company continued the momentum that was built during the first nine months of the year, reporting strong Q4 and year-end 2016 financial results.

If you turn to Slide 6, we have a comparison here of, year-over-year, how the guidance and the actual performance was compared to 2015 and to the guidance levels.

A year ago, in March of 2016, we did issue guidance for gold equivalent ounces, or GEOs as we like to call them, of 425,000 to 445,000 and oil and gas revenue of $15 million to $25 million.

On the GEO guidance, it was a significant increase over 2015 and that was going to be due to the benefit of having Antamina for the full year as well as the Antapaccay transaction that we completed a year ago.

Well, based upon the performance that we achieved during the first nine months of the year, we did raise our guidance in November.

The new range for GEOs was 445,000 to 455,000, and oil and gas was increased to $25 million to $30 million.

We're pleased to say that we exceeded both of these guidance levels, achieving GEOs of 464,383 with oil and gas revenue just over $30.1 million.

If you turn to Slide 7, just to show you the GEO growth over the last number of years, you can see that, in 2011, the Company was generating approximately 230,000 gold equivalent ounces.

And if you move forward to 2016, we did over 460,000.

That was a 100% increase over this time frame, and just year-over-year over 2015, a 29% increase in gold equivalent ounces.

Slide 8 highlights through a waterfall chart really where the movement was year-over-year.

So obviously, the largest increase is due to the acquisitions that the Company has made.

We benefited from a full year of Antamina.

That's the stream that we bought on that mine in Q4 of 2015, so we got the full benefit of the full year in 2016.

Obviously, Antapaccay was added, so we benefited from that stream as well in 2016.

And Karma, the deal that was done a few years ago but the mine came into production in the first quarter of last year and so we benefited from those incremental ounces in 2016.

Gold NPIs were also higher year-over-year and that's mainly due to Hemlo, the mine in northern Ontario that is owned and operated by Barrick.

It's a 50% NPI, and we did benefit from rising gold prices and higher production from that mine during the year.

And I believe Barrick now calls it a core asset, so we are looking forward to recognizing some more NPI profits and royalties on that interest going forward.

On the downside, we did have some gold assets that didn't perform as they did in 2015, three in particular -- Goldstrike, which was just due to lower production; Candelaria, which was less production to our account in 2016 but we did highlight that we did expect a slight decrease in Candelaria in 2016; and Palmarejo.

So Palmarejo is the mine with core mining where we have a 400,000 ounce minimum.

That was met in Q3 of 2016, so now we are getting 50% of actual gold produced, and it's under the new Guadalupe stream agreement which came into effect really in Q4 of 2016.

So, obviously, production at these properties results in GEOs.

The other element of success in our business is commodity price, which we really have no control

over.

Slide 9 highlights the partial recovery in commodity prices over the year in Q4.

And you can see, in Q4 2016, across the board, gold, silver, platinum, palladium and oil were higher over Q4 2015 but, for the full year, only gold and silver were up in terms of average price.

So when you combine that with the GEOs received, we did have a significant increase in our precious metals revenue.

As you can see on Slide 10, precious metals revenue was $572 million for the year compared to $406 million a year ago, a significant increase, over 40%.

And when you add in other minerals and oil and gas revenue, our revenue for the full year was $610 million compared to $443 million in 2015, so a substantial increase.

Slide 11 showcases all our key financial metrics.

I'm not going to get into the detail as to what they are, but what I would like to point out is that, in those square shaded boxes, are the records the Company has achieved.

It seems that every year we hit some sort of record.

And as you can see on the chart, gold equivalent ounces, revenue, adjusted EBITDA, adjusted EBITDA per share, and net income were all records on the full year for the Company, so we are very, very proud of that.

Slide 12 is our 2016 revenue sources.

So you can see that we still -- we are precious metals royalty and stream company.

We have this threshold where we like to be 80% precious metals, 20% non-precious metals in terms of where the revenue is generated.

For the full year, we were 94% precious metals.

It gives us the capacity to do non-precious metal transactions.

And as you will have seen from the press release we issued yesterday, we did do another oil and gas transaction in the United States.

Jason will talk to that shortly.

But we still have the capacity to do further non-precious metal transactions.

In terms of where the revenue is actually generated, so this is where the mines are located, and so where the revenue is coming from, 84% from the Americas with 50% coming from Latin America.

And that has increased over time with the addition of the new streams being Antamina, Antapaccay and Candelaria.

Slide 13 is another metric that we do look at internally.

So if you look at 2016 adjusted EBITDA, the first is just to showcase the diversification of our portfolio.

We have 46 mineral assets that generate revenue for the Company.

And of those 46, only three generate more than 10% of our EBITDA, adjusted EBITDA being Antamina, Antapaccay and Candelaria.

No one asset is more than 15% of our adjusted EBITDA.

So, that other 60% that's being generated is being generated by 43 other assets.

So we do -- we look at diversification and we don't want to be dependent on one single asset.

In terms of legal ownership, the chart beside, still on Slide 13, this is not where the mine is located, but this is more of where the legal entity is based that owns the mine.

So on an adjusted EBITDA basis, 38% of our adjusted EBITDA for 2016 was generated through companies located in Canada with 37% being Barbados.

And obviously, Barbados has increased somewhat as we've added the large stream transactions over the last couple of years.

I will touch quickly on Slide 14 on the impairment that we recorded in the quarter.

Sibanye Gold owns the Cooke 4 mine in South Africa.

They announced in early Q4 that they were putting the mine on care and maintenance.

We have a 7% stream on this property.

Based upon that care and maintenance decision, we did an impairment analysis for accounting and booked an impairment of $67.4 million in Q4.

We would just like to point out that the mine does restart.

The 7% stream is still in place, so our contract is still valid.

Slide 15 is a slide we highlight every quarter, and it's a way we look at the scalability of our business.

You can see that, in 2016, we had a substantial increase in revenue, as I mentioned earlier, $610.2 million.

And you can see on the chart the fixed cost, the light blue shaded boxes, really hasn't increased significantly over this time frame.

And that includes our corporate G&A and our business development costs.

We basically run this Company on a flat cost structure.

The costs that are increasing are the stream and other costs, so that is the fixed payment per ounce that we pay for the gold and silver ounces that are delivered to us, as well as Nevada proceeds taxes, oil and gas taxes.

So, if that number is increasing, actually look at it as a good thing.

It means for the stream piece, two things.

Number one, we are getting delivered more ounces, so I'm paying more fixed else costs, or the gold price is increasing and I am paying more with respect to the streams where the fixed price is tied to the gold price, so for example 20%.

So, I look at that as a good thing as well as the Nevada proceeds, taxes, and the other costs.

It just means that my revenues from those areas, whether it's being generated in Nevada or from the oil and gas business, is increasing.

And so, before I do turn it over to Paul, another metric that we've started tracking, and you can see it over on Slide 16, is an all-in sustaining cost per ounce number.

So what we've done is we've gone back to 2011 and looked at our cost of sales and G&A, business development, stock comp, basically all of the metrics required to build this calculation under the guidelines of the World Gold Council.

And as you can see, our all-in sustaining cost over this period has roughly hovered around $300 per ounce with it actually being $273 per ounce in 2016.

So, when you look at the average gold price for the year of $12.48, we were technically generating margin of $975 per ounce.

And so, over this time frame, we have increased, and, as mentioned earlier, we've doubled the amount of GEOs to our account, yet our all-in sustaining cost per ounce is decreasing as the costs are getting averaged out over a higher number of GEOs.

So, if and when the gold price does appreciate, we would expect to benefit significantly from that, and would not expect the per-ounce all-in sustaining cost number to change dramatically.

And with that, I will turn it over to Paul, who will touch base on our asset portfolio and corporate development.

Thank you.

Thanks Sandip.

Good morning everybody.

Our business keeps evolving with new avenues of growth.

Initially, it was royalties.

Then we were into streams.

As you know, there are different types of assets we've invested in.

A lot of those were copper mines with a gold byproduct stream.

We've also done gold mines and gold streams in gold mines, and different types of transactions, project financing, assets like Cobre Panama, M&A when we got (technical difficulty) finance Candelaria, recapitalization with Glencore and Teck with Antamina and Antapaccay.

The latest avenue of growth that we've been spending our time on has been commodity diversification.

And as you know, our target over time is to be about 80% precious metals and the other 20% can be oil and gas or other non-gold.

It doesn't mean our preference is to do those other commodities.

Our view is always we will only do them if we think we can get better returns than we could get in the gold space.

But what that diversification does give us is, when the gold market gets too expensive, we are not forced to be chasing gold assets; we've got the ability to look in other areas and achieve value.

The commodity downturn gave us a fantastic opportunity at Franco really to change the profile of our Company.

We've invested in gold streams on four copper assets.

It will be four of the top 20 copper assets in the world.

And in particular, the -0 being able to invest in those copper assets where your average life is 30 to 50 years as opposed to your average gold asset where that life may be 12 to 15 years has allowed us to put a very long-term, stable base of cash flows in Franco-Nevada.

The assets in particular -- themselves have been great performers.

So Candelaria, if you think about it from the time of acquisition, Lundin has increased the production profile over the first five years by more than 20%.

If you look at their 2016 reserve statement now, their reserves, including depletion since the time we've done the acquisition, are now 50% higher than when we had done the additional deal.

And add to that they are looking at further debottlenecking of the mill, and that could add another 15% to 20% to the production profile.

So, it's been a tremendous performer.

But actually our top performer or our top outperformer last year was Antamina.

And for Antamina, remember, when we did that deal, we said the average silver production we would expect was about 3 million ounces a year with a range of 2.8 million to 3.2 million, 3.2 million in the good years.

We knew that last year, 2016, was going to be a good year, but we didn't get 3.2 million.

We got roughly 4.5 million ounces that came out of Antamina.

What happened there is they do have some high-grade silver veining in the orebody, and they mine through some of that, and that caused the outperformance.

They know they're going to touch on some of the same ore again.

This year, 2017, we don't expect to be quite as high but we do expect to be above the 3.2 million ounces again for 2017.

I'll speak a bit about Cobre Panama.

Over the last couple of years, there have been liquidity concerns about First Quantum.

I think all of those have been erased now both with cover price coming back over the last 12 months and now with First Quantum completing the very big bond financing that they did over the last couple of weeks.

Those concerns have moved away.

We started see the change probably mid of last year.

Prior to that, the budgets each quarter had been reduced as they were conserving capital.

The first change we saw really was for the fourth quarter last year.

They increased the budget.

They've increased budgeted spend again for 2017.

They look to spend more than $1 billion this year on the project.

They've gone past the psychological 50% of capital spend on the project.

We think that's the point of no return.

We just had a team down visiting last week at the project.

They came back very impressed.

I've got a couple of slides from their visit there.

You can see here the port site.

The change there is they've now put the conveyor going out.

They are putting in the transfer facilities in the port.

For the power plant, it's well advanced.

They are on schedule and are looking to do an early commissioning of that, so should later this year be commissioning the power plant.

Just an overview of the site, and a reminder of the mine planning that they have on the site, and in particular what you can see here is the big conveyor system going from the mine to the process plant, and that is an element of the CapEx, but is also one of the reasons it will help this to be a low-cost operating mine.

Picture here, overview of the mill site.

You can see in the foreground there are the pylons for the core source stockpile.

You can see the mill building.

Most of the foundations are in place on the mill site.

A lot of the steel work has been done.

To put it in context, the mill building doesn't look that big there.

It's 220 meters long.

A picture of the SAG and the ball mills here.

They're all sitting on their foundations.

Those SAG mills are 40-foot diameter mills.

They're some of the largest in the industry.

To put it all in context -- and also we have a new hire in our Barbados team, Boris de Vries.

So he's leading things from the technical side.

Boris was visiting on site.

Usually, we have all our people here to present today.

He's not here, so I have to give him some profile.

So we are going to do a bit of Where's Waldo.

You've got to try and spot Boris on the screen.

There he is, to put it all in context.

A couple more pictures, they started on the electrical work for the mills.

You can see also they concentrate thickness in the foundations for the flotation.

Lastly, on the pre-strip, they have been at it, started on it last year.

They are now reporting that they are more than 50% complete on the pre-strip.

So, Cobre Panama is scheduled for phased commissioning in 2018 with a ramp up of production on 2019, and everything we see, they are headed towards those targets.

The contribution from those four assets, you can see what it's been quarterly for the last number of quarters.

Once Cobre Panama kicks in at full production, those four assets -- Candelaria, Antamina, Antapaccay and Cobre -- will contribute half of all of our GEOs.

But that really understates their contribution to the Company because of the long duration of the life of those assets.

So prior to those assets, the average reserve life of our other gold assets was around 12 years.

With those assets, our reserve life is now greater than 18 years.

If you take all resources, our resource mine life is now greater than 35 years.

When we do acquisitions, it gets a lot of airtime, but really the most profitable growth in our business is organic growth.

And really when capital starts to come back in the sector and people start spending money on our properties, the real differentiator of Franco-Nevada is the depth of our existing portfolio.

And to illustrate that impact, we took a look at the assets that we acquired at the time of our IPO to say what's happened to the reserves of those assets over time.

When we acquired the assets, the total gold reserves were 33 million ounces.

Since then, we've had 28 million ounces produced from those assets.

And today, the reserve ounces there are 62 million ounces.

So, in total, 90 million ounces from what was originally 33 million ounces.

So, we are almost at a triple in the gold ounces and reserves at those assets.

That 20 million ounces that was produced in the meantime, the revenue to us was $850 million.

And that figure caught my eye, and this is a bit of transgression, so we said hang on, if that's what we've got from the gold assets, what have we got from the other assets?

What does it all total up to at the moment?

So we have just taken a look at it for the platinum, mostly Stillwater and the other assets, about roughly $165 million, $180 million from our oil and gas assets.

So if you total all that up, the revenue that we have now received from our IPO assets is north of $1.2 billion, which was the price of our IPO.

So it's a fantastic milestone to be achieving in the Company.

In terms of organic growth, here's a listing of our portfolio news.

There's a lot on that slide.

The pace of activity of our existing portfolio has picked up.

I don't mean for a second that you should read it now.

Really just to point to it, this is a slide we try to keep updated as a place that you can go to and see what's moving in the portfolio and keep updated on it.

I'll just speak to a couple of them, the news that we are looking forward to that will have a meaningful impact, and the first of those is Tasiast with Kinross.

Kinross is now speaking again, in the third quarter this year, they look to put out the feasibility on the Phase II expansion.

If that goes ahead, they will be producing 780,000 ounces a year out of Tasiast.

Currently, they are producing 175,000 ounces, so that will be more than a quadruple in the rate of royalty payments that we get out of Tasiast.

Second is Subika with Newmont.

I know that they have been speaking about it for a while.

They assure us now they will be making a decision probably mid of this year on the expansion and also the underground at Subika.

So if you recall, Ahafo is the mine.

Subika property is the southern portion of that property.

They produced last year about 350,000 ounces at Ahafo in general, so we get a share of that.

But in terms of the go-forward, the Subika underground, which is much of the reserve and a great proportion of the resources going forward, all falls on the southern part of the ground.

That could add up to 200,000 ounces a year of production.

They are also contemplating a mill expansion.

The mill expansion would add up to 150,000 ounces of additional production coming out of that property.

So, with that decision, we could see a far faster run rate coming out of Subika.

The third one to chat about is Hemlo with Barrick.

It's been a very pleasant surprise for us, both in terms we got a very healthy NPI.

Doing my rough numbers and working back, the margins we are getting are about $250 an ounce on our NPI payment out of Hemlo.

But the exciting news is new exploration that they've done.

Barrick has -- I mean if we are out there on the new zones that they've found, one is the Interlake zone, one they are calling the Deep Sea zone.

Both of those zones fall mostly on the royalty property that we have.

So they've just put out their new reserves.

There was a 900,000 ounce increment at Hemlo.

It takes the reserves up to 1.6 million ounces.

Much of that will fall on our royalty ground.

And then what's been one of our longest held assets and also a bit of a sleeper over the last couple of years but has a lot of potential, Stillwater.

Stillwater has been producing roughly 550,000 ounces of PGMs a year.

They are undergoing an expansion, really putting in a new access, the Blitz project, to the east of the existing Stillwater mine.

It's currently being built, looking to ramp up production in 2018.

The projections for it are 270,000 to 330,000 ounces, so that's more than a 50% increase in the rate of output at Stillwater, which should be very meaningful.

To put that orebody in perspective, the current reserve ounces at Stillwater are 21 million ounces.

It's been that way for a while.

They haven't declared resources in the past because they've been under the US system.

They just speak about mineralized material.

But they just have put out their first resource report.

They have declared an inferred resource.

The inferred resource obviously in addition to the reserve there is another 44 million ounces.

So this is an asset that really can make a big difference to the long-term growth of Franco.

A bit of a comment on our business.

Streaming has a very bright future and it's not just because it works for us.

It's also because it works well for the operators that we are financing.

Last year, the slide I had up here was of the best performing gold equities for the proceeding year, and right at the top of that list had been Lake Shore Gold, Kirkland Lake Gold and Klondex, all companies that we had financed through royalty financings.

This year, the slide I got really focused on stream deals that we've done, and what it shows is, for each of the six last years that we've done, three of them were in the gold sector, three were with base metal companies, how those companies have performed relative to their peers since the time we did the deal until today.

So we are comparing them against, for the gold companies, the gold index for the base metal guys against the base metal index.

And what you can see is, across the board, very substantial outperformance that ranges at the low end there from 50% to their peers to 200% of the likes of Glencore and Teck and Klondex.

Now, I don't for a moment pretend that all of equity performance is related to doing a stream.

There are a lot of factors that impact equity performance.

But what I can say is we are betting six out of six as an indication that stream financing is not a bad way to finance.

Lastly, we've got $1.4 billion of capital available to us.

We are seeing good opportunities.

The big recapitalizations that we had seen a couple of years ago we are no longer seeing, but what we are seeing is the green shoots of new mine development, so we are active both in looking at new gold mines to develop, also some new base metal mines.

We are still buying royalties that come available.

And then lastly, on the oil and gas side, as you would have seen, we have been active.

And in particular, we think our commodity diversification opens up an avenue that we have where we have a capability different from our competitors that allow us to continue growing our business even if things get expensive in the mineral space.

So, with that, I'm going to hand it over to Phil Wilson.

Phil is our technical lead, and he is going to speak more about our reserves and resources.

Thanks, Paul, and good morning everyone.

So, before we go on to talk about reserves and resources, I want to use this opportunity to introduce our 2017 asset handbook.

This is a book we've been producing for five or six years now, is intended to give investors and analysts a better understanding of our business and the asset portfolio.

It's a great read, and we certainly encourage you to take it away and read it.

The contents include descriptions on and updates on all of our producing and advanced assets.

We've got details on mineral reserves and resources, oil and gas reserves and resources.

This year, we have a new section on environmental, social and governance and there's a bunch of other corporate information there.

You can get a hard copy here in the office, or you will be able to download it from our website.

Moving on to Slide number 36, the slide shows the growth in reserves and resources referenced to 2007 when we IPO'ed.

As you can see, the reserves have continued steady growth, and as might be expected, the resources have been a little bit more volatile.

However, we do expect that, as metal prices increase, and exploration picks up, we see the upward trend on the resources resume.

Now, I do need to emphasize that this chart is based on 100% of the operators' disclosure for properties where we have an interest and is not Franco's attributable share.

So why do we show it?

Firstly, it's based entirely on public data, so it's very easy to verify.

And secondly, it involves the fewest assumptions, estimates, and adjustments by management, and yet it still gives a good indication of growth in the portfolio, the disadvantage being that it's very difficult to tell Franco's attributable share from a chart like this.

If we move on to Slide number 37, we're just looking in a little bit more detail on year-on-year changes in the reserves.

So, during 2016, we saw approximately 7.8 million ounces increase in the portfolio across the board.

But again, this is on a 100% basis.

It's a great result when you consider that we didn't make any material acquisition during this time.

You may recall that Antamina was already announced before our investor day last year, and included in the 2015 ounce count.

The prices used for calculating reserves haven't really changed from 2015 to 2016, and over 5 million ounces have been produced from the same properties during the year.

Geographically, we're seeing the biggest change in Canada, the biggest growth in Canada, of almost 6 million ounces.

And Hemlo on the Hardrock project have been the main drivers behind this with Hardrock contributing 4.6 million ounces out of those 5.7 million.

If we move to Slide number 38, we've just got a brief overview of the Hardrock project.

We have a 3% NSR on most of the property, which we acquired from Barrick in 2013.

We bought a package of royalties.

It's a great jurisdiction, excellent geological potential.

In fact, there's over 4 million ounces that have been produced from the property historically.

It's currently being advanced by Greenstone gold, which is a joint venture between two experienced operators, Centerra and Premier, which released a feasibility study in late 2016.

And the study contemplated an open pit mine producing -- processing 27,000 tons a day, and yielding just under 300,000 ounces per year on a 14.5 year mine life.

So we are really looking forward to seeing this one developing in the years, future years.

If we move to Slide number 39, this is royalty equivalent units.

It's a miracle that this is a concept that we introduced a couple of years ago to overcome some of the limitations of a simple ounce count and try and provide better representation of value for a royalty or streaming company.

So to calculate reuse, what we do is we make our best estimate of the ounces that are covered by royalties and streams, and then we adjust the various terms and the relative economics and the commodity to that of a gold NSR equivalent.

There's more detail on this in the asset handbook, which results in a pretty good indication of equivalent attributable ounces that we can expect to receive in time, the downside being that you need a thorough working knowledge of the assets to be able to do this, and you need to rely on management's judgment in these estimations.

And it reflects life of mine potential, not annual production profile.

So Slide number 40 really is a concluding slide.

So, we saw earlier we've got steady growth in the underlying reserves and resources on the assets where we have an interest, as well as projects that are still being advanced.

This has translated to continued growth in our attributable share expressed as reuse, as can be seen in the slide there.

At the end of 2016, if our share of the reserves and the resources in asset portfolio were considered as gold equivalent NSR, we estimate that approaching 12 million ounces will be due to Franco in time and at no additional cost of production.

So, next, we have Jason coming to talk about oil and gas.

Thanks Phil.

So we don't spend a lot of time speaking about oil and gas, so I want to start off on Slide 42 just with a quick overview of the portfolio.

We've got a map on the left showing the location of our Canadian assets, as well as a map on the bottom right which shows the location of our US assets.

Oil assets are shown here in green and gas in red.

We have in total 1.8 million acres, or gross acres, of royalty exposure in both Canada and the US.

We have 61 producing assets and 19 nonproducing or exploration assets.

And in total, we have an interest in approximately 8,000 wells, mostly in Western Canada but also in the US.

The key assets here in Canada, we have the Weyburn and Midale units in Saskatchewan, and the Edson GORR, which is located in Alberta.

And then in the US, we have the STACK royalties in Oklahoma, and recently we've acquired a set of assets or royalties in the Midland Basin in Texas.

This year, the portfolio produced $30 million of revenue, of which, in Q4, about 6.7% of the -- or I guess 6.7% of the total corporate revenue was oil and gas.

So with the fall in the oil and gas price here in the last couple of years, combined with the addition of gold assets, we now have room to add oil and gas to the portfolio, and we've done that with a couple of transactions over the last couple of quarters here.

Slide 43, this just shows the table of the different royalty types or ownership structures that we have within the portfolio.

For new deals, we are targeting mostly the GORR, or gross override royalties, and mineral title.

Those are the non-cost bearing structures and so those are the most attractive to us.

GORR royalties are getting traction lately as a form of financing in the oil industry, so people are manufacturing these royalties to help DV for companies and fund projects.

Mineral title is really the most attractive form of royalty ownership in that it represents a perpetual interest in land.

Within mineral title, there really two sort of categories.

There's both leased and unleased land.

And so what happens is, if we have mineral title, we will lease out that land to an operator in exchange for what's called a lessor royalty.

Even if that operator goes bankrupt or they default on their lease, that land will come back to us and we can lease it out again.

So, when we spoke about our business development outlook at this time last year, there was a big focus on mineral title in Western Canada.

A bunch of large transactions have been done involving assets that were coming out of the major companies, CNRL and Synovus, and also some of the intermediate size companies, in Husky and Penn West.

Mineral title in Canada is mostly held by the Crown, so the large transactions that happened in 2015 were sort of legacy assets or legacy lands that had come out of Hudsons Bay Company and the railroads.

Most of those big, chunky blocks have now changed hands and have been consolidated.

And so that's sort of -- there isn't a lot of other sort of big mineral opportunities.

And what we saw just after this time last year was a shift towards GORR transactions.

These are really, as I said, manufactured royalties that are used as a form of financing, particularly in the oil sands business.

So, we find these assets, or these GORRs attractive, particularly because they expose us long-life potential assets in the oil sands.

The issue is there's a lot of competition right now in these types of deals, and we find that prices are quite steep.

The US oil and gas market on Slide 45 is really a completely different story.

The US is a much larger and much more active market than we see in Canada.

And unlike in Canada, most of the land in the US is owned privately, not by the government, so you have large ranches and independent landholdings, which, for a long period of time, have been aggregated or consolidated by private equity funds, private companies.

That's not something that Franco-Nevada is particularly interested in.

We don't have the resources to be able to go out and sort of affect the ground game like that.

But we do feel that our business model, being a very long-term strategy, is perfectly positioned to acquire these packages from short-term private equity funds or from private companies that are looking to pull forward some of the value of their long-term undeveloped lands.

So, not only is there more opportunity in the US right now, but the opportunities that are down there are very good quality, particularly in the Permian STACK where we have been focusing.

The economics are excellent.

There's a lot of activity.

Breakeven costs for operators here are sub-$40 a barrel, and that's important as a royalty holder because you want to be in areas that are going to see their share of capital, where wells are going to get drilled.

And also in a low price environment, you want to be in areas that are going to keep producing when the oil price drops.

In terms of long-term option value, there are opportunities in the US to participate in stacked plays.

So for example, if you buy an acre of land with five productive horizons at depth, that's really the equivalent of buying sort of five acres of land with only a single productive horizon, so you get sort of more bang for your buck.

There are minimal transportation issues.

So in Canada, there are logistics issues, transportation bottlenecks, that cause very large discounts in the realized prices for operators.

In the US, that's not so much of an issue, and in fact, in the STACK royalty area, for example, those royalties are located right next to Cushing, Oklahoma, where their WTI is price, so there's virtually no discount there.

And in terms of jurisdiction, the US is an excellent place to do business, both from a regulatory perspective, from a social acceptance perspective, particularly in Oklahoma and Texas.

There are no carbon taxes, there's no risk of border adjustment taxes that we might have in Canada.

And with the new administration, there is the potential to lower corporate income tax rates, which would obviously be a huge upside on our recent investments.

So, for all those reasons, we think there's excellent opportunity in the US, and it's an area where we've been spending a lot of time focusing.

So, in terms of our recent entry into the US, the STACK is an area that we focused on a little bit before Christmas, so we've kind of gone through a bunch of the details here.

But I just wanted to kind of reacquaint you with the asset and speak a little bit about it just so we can position the STACK and our new Midland Basin assets together and sort of speak about a US strategy.

So, the STACK stands for Sooner Trend, Anadarko Basin, Canadian and Kingfisher Counties, and you can see that on the map here.

It's an acronym that shows Kingfisher County in the upper right, Canadian on the bottom right and then Blaine, which is sort of a newer area of focus, is on the upper left.

So people sometimes refer to it as the STACK B play now.

We closed $100 million acquisition just before Christmas last year.

The key operators on these lands are Newfield and Devon.

They are focused primarily on the Meramec formation under our royalties, which is a relatively new formation.

They've got excellent economics and it's really turning out to be something special.

The acreage that we have consists of 1,200 acres net to our royalty, or when pooled, the royalties provide exposure to about 75,000 acres of land at a royalty rate of 1.6%.

And I'll speak a little bit about the concept of pooling in a couple of slides.

In terms of strategy, we think of the STACK as a rightful approach in the sense that we are investing in a very targeted area here where we have a consolidated land base, and you've got one or two operators that you can look to under public disclosure, and you can look to their development plans and see how the play will develop under your royalty lands.

The Midland Basin is a new acquisition that we are just announcing.

So, we spent $110 million here.

The acquisition has an effective date of January 1, 2017, and we expect it to close in late May of this year.

The Midland Basin is really the eastern portion of the broader Permian Basin.

It's an extremely active area right now.

It is effectively the second-largest oil reservoir in the world after the Ghawar field in Saudi Arabia.

It's a mature basin in the sense that there's been a lot of vertical drilling here over many, many decades.

But with the advent of horizontal drilling and fracking, this has really revolutionized the area and it's now the most popular place or most active place for drilling in the US and it's a huge producer for the US.

The acreage, you can see shown on the map here by the yellow blocks, is operated by a variety of operators, but it's anchored by Pioneer, who is one of the largest and most reputable companies in the US.

The acreage consists of 910 acres net to our royalty, and after pooling, it provides exposure to about 675,000 acres at a low royalty rate of about 0.135%.

So the strategy here is much different.

And rather than sort of the targeted rifle approach that we saw on the STACK, we think of this more as a shotgun approach in that you're buying a very diversified package of land which really spreads across the entire core of the Midland Basin.

And so rather than relying on one or two operators to look for production in the future, you are really looking at the development of the entire basin as a whole.

And just out of interest, I showed a picture at the bottom here on the right.

You will hear people speak about the Permian sort of entering a manufacturing process.

This is an aerial photograph just showing all the well pads where people are drilling wells, and this type of sort of drilling goes on for miles, so it really is quite an amazing place.

On the last couple of slides, I've talked about acreage in a couple of different ways, and here we're trying to explain why we do that.

Pooling is basically the concept of joining your lands together with neighboring lands, and it allows for a more efficient sort of development of the underlying reservoir.

With the advent of horizontal drilling, particularly in the plays we are focused on in the US, operators now are exploring these reservoirs usually on a 1-mile or 2-mile section.

And so what that means, and you can kind of see the illustration on the top right here, operators will drill down and then they will drill laterally or horizontally for up to 2 miles.

So obviously, if you have a small parcel of land, you need to join that with your neighbor to be able to drill those kind of lengths.

On the bottom right, there is a map, and this is actually part of our STACK acreage.

And here we're just showing our acreage that we actually own in red, so that's referred to as a tract or a lease.

In this case, it's a quarter section.

That gets pooled with, in this case, other lands in a two-section unit, and that unit is shown in blue.

And that's for the purpose of drilling this well in black, which would be a 2-mile horizontal well.

And lastly on the table on the bottom left, we are just running through an example of how that acreage gets pooled along with the STACK and the Midland.

So you can see our net royalty acres at the top and the gross acreage and royalty rate at the bottom.

So, effectively, what you're looking at here is just, with pooling, our royalties get expanded over a much larger geographic area, but the royalty rate gets reduced.

So why the STACK and the Midland Basin?

In looking at investment opportunities, there's obviously some good ones and some bad ones.

There's a lot to focus on.

We think one of the key items to look at is the activity or the drilling activity in a particular area.

In this case, the chart on the top shows the top 20 counties by drilling activity in the US.

And that's tracked by Baker Hughes, which is a drilling company in the US.

They track about 150 counties.

And so what you're seeing here really is our royalty acreage is shown -- or I guess counties where our royalty acreage applies are shown in dark blue.

And effectively, we've got royalties on eight of the top 150 counties in the US by activity.

The chart on the bottom is a little bit different in that it's showing the number of rigs in both the STACK and the Midland Basin over time.

And so what this is showing is just that these two basins or two plays are gaining momentum as time goes by.

They are becoming a bigger share of the US market.

And really what we're looking at here is, the importance of this, is that, in these shale plays, you really want to be where the rig counts are growing because that's what ultimately drives your production growth.

Another factor we look to is multizone potential.

And so, with these horizontal benches, you really do have sort of long-term upside exposure.

The diagram on the left here shows the Midland Basin.

The key areas of focus there are the Wolfcamp and Spraberry formations.

Each of those has different landing zones within it, and so we have exposure to more than six potential landing zones.

Likewise in the STACK on the right, operators right now are focused on the Meramec formation, which, again, has got several different landing zones within it, but they both have that STACK potential.

So Slide 51 really follows on that.

Here we are showing the Midland Basin along with the STACK relative to some of the other key plays in the US.

And again, why this is important is, when we are acquiring these royalty assets, we can really base our valuation or underpin our valuation on just a couple of these formations or zones.

The rest we consider upside, so we are effectively getting it for free; we are not paying for it.

And so the long-term cash generation potential here is really excellent.

We are investing in these plays not for sort of a double in our initial investment.

We are really looking to five or seven times our initial investment.

So, we've sort of spoken about the importance of being in the right play.

Slide 52 focuses on the fact that it's important to be in the right part of the right play.

You want to be in the core areas where operators are going to develop first rather than on the margins.

So on the left, there's a map of our STACK acreage; the acreage is shown in yellow here.

The black line represents what Devon considers to be the core of the Meramec formation.

That's a bit of a stale schematic.

The red line is actually a more I guess updated core.

And that's just being influenced by new wells that have been drilled that have shown excellent results.

So, you can see there's a good correlation between our royalty acreage and what's considered to be the core of that play.

Likewise, on the right, this is our Midland Basin royalties, again shown by the yellow squares.

In this case, this is really a heat map, so it's looking at permitting activity since 2015.

And so what you see here is that our lands sit on the most permitted lands within the Midland or where operators are really focusing.

So, again, we cover almost the entire core of the Midland Basin here.

In terms of estimating revenue, on Slide 53, it's too difficult to go through how these production profiles have built up on a well-by-well basis.

So, what we've tried to do here is provide you some revenue, or I guess how we look at providing revenue guidance.

Both of these need to be looked at independently.

They are quite different.

They both will generate approximately $5 million this year starting out.

Going forward, though, the STACK will vary quite significantly depending on timing of when operators are on our lands.

So, if you look at the map on the left, you can see our royalty acreage is shown by the colored blocks here, along with wells existing -- our existing wells by the dark red lines.

And you'll see that, on our acreage right now, there aren't a lot of existing wells and that's because, right now, operators have really drilled that acreage in order to hold their lease so that the leases don't expire.

If you look to just the south of our lands, though, you will see three or four drill rigs that are set up that are drilling those sections on a much closer spacing.

And that's more indicative of full field development.

So, as that full field development comes on to royalty ground, you're going to see a big bump in revenue.

The issue is it's difficult to predict timing.

The Midland Basin, though, is quite a different approach.

Here you are really looking at, because of the diversified nature of the royalties, you're looking at the production growth of the Basin as a whole rather than a particular area or particular operator.

To provide some context, over the last four years, the Midland has grown at about 15% annually.

So if you extrapolate that forward, within a five-year period, we should be seeing revenues of roughly $10 million.

As another point of context, Pioneer, who is the biggest operator under our royalty lens, they are speaking publicly about an increase in revenue of four-fold from where they are today.

So, again, if you extrapolate that going forward, you're looking at revenue of about $20 million within the next 10 years.

So, this is the last slide for oil and gas, Slide 54.

So we are just providing some guidance here for 2017 as well as five and 10 years out.

The chart here shows revenues divided up by country, and so you'll see our Canadian assets shown in dark blue, along with the US assets shown in light blue.

You can see here, over time, that some of the legacy Canadian assets will start to decline a little bit, and that will be more than offset by growth from our US assets.

The portfolio will become more US-weighted as we go forward.

In terms of 2017 guidance, we have provided a range here as well as a range going forward.

That range is fairly broad, again, because it's difficult to predict timing of when royalties -- when operators will be on royalty ground.

But for 2017, we are estimating $35 million to $45 million at a WTI price of around $50.

And five years out, we are estimating $55 million to $65 million, and 10 years out, $50 million to $75 million, all at that $50 WTI.

So, just to finish off, we are really excited to be growing the oil and gas portfolio.

We're looking forward to seeing how these royalties perform in the next couple of years.

We do think there's a lot of opportunity right now out there, particularly in the US but also in Canada.

And as Sandip alluded to earlier, we do have the space within the Company right now with the gold/non-gold balance where it is to add more assets.

So, with that, I'll turn it over to David.

Thank you Jason.

And I promised a shout out to Cary McGruary.

He took the picture here at Antamina three weeks ago.

This is from Gringo Hill looking east across the pit.

So it's the best quality picture we have of Antamina.

I apologize for all you mining types.

We just took you through an extensive oil and gas discussion, but it is kind of sort of our new area of activity, and we expect to be doing more of these, and so we thought it was important to get you somewhat educated and give you the range of what we think are the possibilities.

We think this is actually an exciting new area for us to expand the royalty business, and as I said, we expect to do more of these.

So, in terms of my role here is to wrap up before lunch and to give you an outlook for the Company.

And I have great pleasure in doing that once again this year.

But to do that, I think it's worth reviewing first Franco-Nevada's performance over the nine full years now that we've reported results since our IPO.

And you can see that we've had this ongoing growth in GEOs and revenue and market capitalization.

Sandip has done a great job in terms of the drivers behind that growth.

And you can see 2016 was a particularly good year for growth in this Company.

I'm also pleased the Company continues to perform very efficiently.

When you look at the bottom left chart, what we've done now is we've put G&A as a percentage of our market capitalization, because we know a lot of the fund managers here measure their performance in terms of their costs relative to the value of the portfolio.

So we said let's do the same way.

And right now, we are running the Company for about 20 basis points on the value of our portfolio.

And I'd like to point out that GLD, or the largest gold ETF in the world, charges you 40 basis points, so we like to think we are twice as efficient as the gold ETF.

So, I'm taking great pleasure out of this chart.

And of course, we pay dividends.

We've been able to grow our dividends for each of the years that we've been in business since our IPO, and I'll talk to you more about our plans for 2017 shortly.

On Slide 57, it summarizes our outlook for 2017.

You've seen the numbers in our press release, so I don't have to belabor those.

You note that the growth in 2017 is we are looking at a 4% increase in GEOs, but that's on top of the 29% growth that we just experienced in 2016.

So I think it's a great accomplishment, we can continue to grow despite such a big jump in 2016.

And then on the oil and gas front, I think you've already had enough detail from Jason in terms of how we derive those forecasts and projections going forward.

And then depletion numbers in Cobre Panama numbers, I think those are self-explanatory.

In terms of our five-year outlook, you see that on Slide 58 and the key assumptions behind them.

And there's no big surprises.

Cobre Panama, Subika, Tasiast, oil and gas are all playing a big part in our continuing growth.

I believe that Paul's presentation has given you comfort that Cobre Panama is now substantially derisked.

Apart from Cobre Panama, all of this growth is bought and paid for.

The Company can continue to grow even if Franco-Nevada management did nothing for the next five years, and even if our operators didn't find a single ounce or pound of reserve on our properties for the next five years.

I regard both those outlook assumptions as impossibilities.

I'm absolutely confident that we will be adding more assets and more reserves will be found to build on these growth projections that we are giving you here today.

Slide 58 shows you the dividends paid annually since our IPO.

What I like to do is actually show the gross amount of dividends we are paying each year.

Franco-Nevada, in 2016, was the largest dividend payor in the entire gold industry in the world.

I believe this is a testament to both our portfolio and business model.

We have now paid over $700 million in dividends since our IPO.

But I get the question all the time from fund managers, why is their yield only 1.4%.

And the answer is that's because our stock price keeps going up, for our IPO investors are now realizing yields closer to 6% to 7% on their cost base, and I consider that a great yield for a gold investment.

Our board met yesterday and reviewed our projected growth and cash flows.

The board expressed its comfort that, when we have our May board meeting associated with our annual general meeting, we are highly likely to declare another incremental increase to the dividend starting with a second-quarter payment in June.

Finally, on Slide 59, just our usual summary slide.

There are a lot of gold companies that can provide torque to the gold price.

We feel that, for generalist investors, gold should be a risk-off investment and a form of insurance against financial risk in the markets.

Our ambition is to make Franco-Nevada the go-to stock for generalist fund investors, and we manage the risks investing in gold by, one, running our business model as a royalty streaming model; two, by making sure it's as diversified as possible; three, by staying disciplined in our capital allocations; and four, by avoiding financial leverage.

This strategy has delivered yield and alpha to our investors with a favorable risk-reward return.

An investor owning Franco-Nevada since the IPO over the last nine years has realized a 19% compounded annual growth rate total return in their holding.

It is even higher for Canadian investors.

Your key take-away after listening to the management team today is that this management team is still pumped.

We are still excited about the opportunities in front of us.

We believe we can continue this track record.

So, with that, we will be happy to take any questions.

And what I'd like to do is maybe start with any questions in this room before we open up the line to investors that are listening.

So please.

If you could just state your name and firm you're with, and we'll take your question.

It's Cosmos here from CIBC.

Maybe first off, looking at -- I noticed last night in the press release that you put in a $100 million line of credit through your Franco-Nevada Barbados subsidiary.

Is that an indication that you are going to look towards doing more streams and transactions through Barbados?

And I guess, Sandip, you've already indicated that about 37% of your revenue or your streams at this point in time are coming from Barbados.

Thanks, Cosmos, for the question.

Yes, we did put in place a $100 million facility.

It's for one year.

A bit of background, the board for Barbados didn't want to just be dependent on the Canadian parent to fund, that they want some independence to fund transactions themselves.

Historically, our streams have been through Barbados, so as more streams come into play and we are successful on transactions, if it's an international stream, the likelihood is we would be doing it through Barbados.

So, I would expect that facility at some point will be drawn, but, again, it's all dependent upon what opportunities come in front of us.

Maybe switching gears a little bit, and I guess, Paul, you talked quite a bit about Cobre Panama.

You've paid about $500 million as of the end of 2016.

I believe you're forecasting another $200 million in 2017, the remainder of that making up the entire $1 billion?

Is the remainder going to be paid in 2018 or is it going to be 2018 and 2019?

We are expecting as to guidance is $200 million to $220 million for 2017, something similar for 2018 with the balance in 2019.

So you won't see a lump sum, catch-up all in 2018.

We do expect some funding in 2019.

And how does that work?

Because I think production starts sort of in 2018, so you don't fully pay the $1 billion before production starts?

It's based on their percentage spend, so as they spend, we put in one of every $4.00 that First Quantum puts in.

Okay.

So there is the -- Sandip is right, we do keep funding that 1-in-4 ratio.

But when they do -- when they get to first production, they are able to call the rest of the amount.

So I don't think there will be much of a catch-up, but there could be a small catch-up that comes, and we are not certain on the exact timing on it.

Okay.

Maybe one last question for Jason.

In terms of -- thanks for the teach-in on oil and gas.

I am just wondering.

When you look at these oil and gas royalties, who are you buying these royalties from, and who's your major competitors in terms of bidding for these royalties?

It depends on the type of royalty that we are sort of seeking.

There's different categories, so in Canada right now, as I mentioned, the main source of royalties are these manufactured GORRs, and so that's companies putting royalties in place as a financing tool.

For those royalties, we would look to buy directly from the operator.

The US royalties that we are looking at are primarily these mineral title royalties, and they are -- we are buying those from groups that have assembled packages of royalties over many, many years.

And so those are generally private companies.

Oftentimes, those private companies are backed by private equity groups.

So, the types of bidders for those are private equity groups themselves; they are other companies.

They are not typically royalty companies, mostly because the types of assets that we are buying are sort of growth assets which fit with our strategy as a long-term investor.

The royalty companies that do exist in the US really are chasing yield, so they find it hard to buy these growth opportunities.

And so that's why we are focused down there.

We feel we are well-positioned to compete and we are competing against people with short-term horizons or people that are chasing yield.

And so we feel we have a bit of a niche.

Maybe along the same lines that I commented about yield and your strategy in oil and gas, I think right now you're in the mid-90s% for gold and silver, and you talk about, long-term, wanting to be at 80%.

With the last two transactions you've done, they've had I guess $210 million committed but negligible impact to your revenues.

So, I guess, knowing that you're ultimately looking for 80/20, what's the right capital to invest in the oil and gas space or non-gold space to sort of right-size that balance?

It's a good question.

That's from Josh Wolfson of Eight Capital, so I'll have to get used to the new name.

And in terms of if you look at the projections, actually it's very little revenue impact right now, but it has a huge impact five to 10 years out.

And so one of the things is we are, constantly, we are management portfolio dynamically.

So if you remember, this Company was almost 50% oil and gas at our IPO.

We said we are going to be majority precious metals, and we were able to do that within about four years of this Company.

But even five, four years ago, we were still a little over 20%.

And so we said we can only do gold deals.

We've now overshot on the gold side, but that's a Hollywood problem on our side.

Now we have some cushion but we are realizing we probably could spend $1 billion plus right now and still stay within the 80/20 rule, but it could blow out on us in the next four or five years.

So, we are constantly asking Paul Brink here, how many more precious metal deals are you going to be able to deliver?

So, we are kind of looking at that pipeline saying really we have a five-year window to keep rebalancing that portfolio, and the nice thing about it is we do expect to be financing future gold mines and creating new gold royalties and streams.

So, we can always say, okay, let's measure it against our other investment opportunities; that tells us how much more we can invest in these other assets that could grow quite dynamically for us.

So, it's going to be a bit of an art, no question.

But that $0.5 billion, $2 billion would not be out of the sort of spectrum --

In our own minds, we are thinking about $1 billion is about our limit in terms of making sure we don't go offside on the 80/20 rule.

Any other questions in this room before -- Greg please.

Greg Barnes.

That raises the obvious question, Paul.

What does the pipeline look like on the gold/precious metal front and how do you stay within that 80/20 rule?

It's good.

We are active.

As I'd mentioned before, it's across the board, different types of opportunities.

Some of that is by existing royalties that are out there in some portfolios that are available.

And then the second is new gold financing.

And so we think we will participate as the sector picks up here, both with gold, new gold mines, being built and once we also get into the construction cycle on base metals.

And we are starting to see that with some midsize projects coming up.

We think there's a big role for streaming going forward in the project financing space, not as lenders but as participants.

And a good part of that is just we've seen a lot of capital that's moved out of the bank sector.

And part of that has been restrictions that have come on then because of BASEL and other constraints.

But we see a lot of appetite from CFOs that are looking to build new mines, or streaming to be a component of that, and I think that will be a good avenue for long-term growth.

And just to show you how dynamic things are too, is don't forget Cobre Panama is coming in in a couple of years.

That opens up more space in terms of balancing our commodity portfolio, and also commodity prices change.

So, whenever that oil price collapses, of course we can go buy more oil and gas assets.

So, actually, you don't need a smart CEO in this Company.

It's whenever commodity is most depressed, our portfolio is telling us those are the ones we should be buying and reweighting on our portfolio.

So, it's not a complicated business.

Any other questions in this room?

Perhaps, operator, we could open it up for questions for anyone that's on the line.

(Operator Instructions).

Adrian Day, Adrian Day Asset Management.

Good afternoon.

David, with regard to this issue of sort of gold and other assets, the perception, certainly, that I have is that you change the emphasis a little bit from a minimum of 80% gold to a sort of 80% gold/20% other.

And I'm wondering if, first of all, if my perception is correct.

But secondly, if you change the emphasis because you see better returns elsewhere, because you want more diversification, or because, frankly, you're just not seeing good streams, good royalties, available on good assets in the gold space.

I appreciate the question, and you are right.

Our intention is to be minimum 80% precious metals.

And so our intent is always to proactively manage the portfolio.

We don't mind right now being 94% precious metals.

We consider that as a good thing.

But it gives us the flexibility, when we need to, to go do those other commodities, but we intend to stay minimum 80%.

And the fact -- right now we have the most flexibility we've ever had.

One reason why we are doing these deals right now I think we started off the oil and gas presentation saying, right now, it's been competitive in Canada.

We've had pension fund competition, private equity competition in the Western Canadian oil space, but we've also been having -- I guess our main competition is not so much our peer companies in this business but it's been the brokerage community and the bought deals.

And generally what we find is that we can't get really acceptable rate of returns when the markets are open for companies to do bought deals, and also if the debt markets are wide open as well to the majors.

And what's happened is of course we've seen, with the super majors, the Glencores, the Tecks, etc., the debt markets have opened up completely.

And then for the mid tier gold companies where last year, midyear, we were putting out all kinds of term sheets, just about every term sheet the team worked on last year, those companies end up doing a bought deal instead.

And so what we need to do is our business is we tend -- we have to be counter-cyclical.

I think, right now, we are seeing it's actually too expensive to chase deals with the gold companies at this stage.

There's a few select opportunities, but we actually see a whole suite of probably higher return opportunities available that are actionable right now.

We are just following that opportunity.

As you can see, at the beginning of Paul's presentation, it tends to be -- everything we do tends to have these 18-month windows where we can actually sort of exploit them, apply a lot of capital and -- but eventually that window closes as other people get into the game or the commodity prices change.

And I think we have an 18-month window here to do this particular investment.

I expect the next window will be financing that next generation of gold mines that are going to need that extra leg of capital to get those mines constructed, and I expect that will be our next phase.

But what we want to do is -- I think what we're trying to demonstrate is we've got a very flexible and entrepreneurial team here.

We are just moving to where we see the best returns and opportunities for our business.

Okay, I appreciate that.

There are no further questions at this time.

Thank you operator.

I'll just open it up to this room again, if there's any other further questions.

And if not, it's lunchtime.

For our visitors here, we have some sandwiches available.

And we will be having our annual meeting in May.

We will be announcing our first-quarter results on the same day that we have our annual meeting, plus an update on our dividend declaration.

Thank you very much for coming here.

Thank you for bearing through the whole oil and gas lecture here.

So, come, please join us.

Thank you.

This concludes today's conference call.

You may now disconnect.