Royal Gold Inc (RGLD) 2014 Q1 法說會逐字稿

Good afternoon. My name is Tiffany and I will be your conference operator today. At this time, I would like to welcome everyone to the Royal Gold fiscal 2014 first-quarter conference call.

(Operator Instructions)

Thank you. Karli Anderson, Vice President - Investor Relations, you may begin your conference.

Thank you, Tiffany. Good morning, and welcome to our discussion of Royal Gold's first-quarter fiscal 2014 results. This event is being webcast live, and you will be able to access a replay of this call on our website. Participating on the call today are Tony Jensen, President and CEO; Stefan Wenger, CFO and Treasurer; Bill Heissenbuttel, Vice President - Corporate Development; Bill Zisch, Vice President - Operations; Bruce Kirchhoff, Vice President, General Counsel and Corporate Secretary, and Stan Dempsey, Chairman. Tony will open with a review of the quarter, followed by Stefan with a financial review, and then Bill Zisch will discuss the performance of our portfolio. After management completes their opening remarks, we will open the line for a Q&A session.

This discussion falls in the Safe Harbor provision of the Private Securities Litigation Reform Act. A discussion on the Company's current risks and uncertainties is included in the Safe Harbor statement in today's press release, and is presented in greater detail in our filings with the SEC. Now, I will turn the call over to Tony.

Good morning, and thank you for taking time to join us today. We are using a few slides to frame our discussion, and I will begin on slide 4.

Overall, our financial and operational results were very much as expected. When compared to the prior-year period, revenue was impacted by both volume and price. Production was about 10% lower, while gold price was 20% lower. When comparing to the June quarter, production volume increased, but was offset by 6% lower gold prices.

I would like to point out just a couple of operational-related items worth noting. Goldcorp previously signaled that Penasquito production would be lower in the first half of calendar 2013, due to lower grades in the mine sequence, and expected an increase in the second half of the year. Looking at the last three quarters, we have seen favorable volume trends, and we would expect a strong December quarter from Penasquito, as Goldcorp has maintained its guidance there.

Andacollo had particularly strong production for the quarter. The mine has nearly met its full-year operational guidance within the first three calendar quarters. We understand that Andacollo is now transitioning to phase 3 of the pit, where lower grade ores are expected. Therefore, we anticipate our fiscal second quarter contribution from Andacollo will be lower than what we have experienced over the last year and a half. However, this anticipated lower production is expected to be offset by improvements in other areas of the portfolio, including increased production at Penasquito, initial shipments from Mt. Milligan, seasonally stronger sales at Voisey's Bay during the December quarter, and a pick-up in production at Cortez. Stefan Wenger and Bill Zisch will go into much more depth on operational and financial results in just a moment.

On the development front, we made our final payment to Thompson Creek for the purchase of the Mt. Milligan stream, and we completed our acquisition of a royalty on the El Morro project in Chile. Subsequent to our acquisition, Goldcorp reported that the environmental permits at El Morro have been reinstated, and that they are optimizing project economics, looking at alternatives for long-term power supply, and continuing with community involvement at the project. At Pascua-Lama, Barrick announced a temporary suspension of construction, just last week. Activity will now be limited to environmental protection and regulatory compliance. Barrick said its decision to restart construction will depend on improved project economics, such as go-forward cost, the outlook for metal prices, and reduced uncertainty associated with legal and other regulatory requirements.

This decision by Barrick does not impact the carrying costs of our investment. While disappointed that the project has been delayed further, we view the suspension as a temporary setback. We continue to be guided by our original investment thesis, that this is a long-lived world-class gold deposit, located in an attractive region of the world, and it is designed to achieve a robust production profile at an attractive operating cost. Deposits with these characteristics are rare.

Turning to slide 5, you'll see an overview of the key developments at Mt. Milligan. In October, several of our team attended the grand opening. I followed this project since my days at Placer Dome, many years before Royal Gold made its first investment. It is gratifying to see Mt. Milligan evolve into a significant copper gold operation.

Several accomplishments have been registered over the quarter. Mechanical construction and wet commissioning were completed, and the phased start up of the mill began on August 15, followed by production of copper and gold concentrate in September. In late September, Thompson Creek reported that trucking of concentrate to the load-out facility in Mackenzie had begun. This is an impressive sight, and we are encouraged by the ramp of progress made to date. Each project commissioning has it is unique problems, but so far, we are not aware of any particular challenges at Mt. Milligan. No doubt though, some will pop up, there always are.

Many new projects around the world have suffered problems in the crushing and grinding portions of the circuit, and modifications to those areas can be costly. With regard to Mt. Milligan, we are encouraged by the size and capacity of the crushing and grinding circuit, and note that the pebble crusher is already part of that circuit. Thompson Creek continues to guide for commercial production by year end. On slide 6, you will see a photo of some of the Mt. Milligan team celebrating the first concentrate shipment on-site. Concentrate will continue to accumulate and be stored both on-site and at the Mackenzie load out facilities, until sufficient quantities are available to ship to smelters. Thompson Creek expects to send the first ocean shipment to market in the December quarter, and we continue to anticipate initial delivery of gold by the end of this calendar year.

I'll now turn the call over to Stefan.

Thank you, Tony, and good morning, everyone.

Moving to slide 7, you see the financial highlights for the period. In the first quarter of fiscal 2014, we generated revenue of $57 million, compared with $78 million in the prior-year quarter, which by the way, was our strongest quarter ever, in terms of price and volume. Gold price was down 20% over the same period a year ago, and was the primary driver for the lower revenue. Our net income was $15 million or $0.23 per share, compared with $25 million or $0.42 per share a year ago, principally driven by the lower gold price. This impact was partially offset by higher royalty volume at Andacollo, Dolores, and Wolverine. We paid cash dividends in the first quarter of $13 million, which is a payout ratio of 37% of our operating cash flow of $36 million.

For the first quarter, income tax expense decreased to $4.8 million, for an effective tax rate of 24%, compared with the $16.5 million or 39% in the prior-year period. The decrease in our effective tax rate was primarily a result of the expected contribution from Mt. Milligan production to our fiscal 2014 earnings, as well as a reduction of the accrual for uncertain tax positions during the first quarter. Our cash tax rate for the quarter was 31%. For the full fiscal year, based upon our current forecasts, we continue to expect to report an effective tax rate of between 30% and 34%. This reflects the contribution of Mt. Milligan revenue at a lower tax rate than our US tax rate.

Adjusted EBITDA as a percentage of revenue is expected to move downward, as Mt. Milligan shipments commence to around 80% to 85% of revenue, as our payments of $435 per ounce will be reflected on the income statement as a cash cost. DD&A was a bit higher than our guidance range in the first quarter, due to lower contributions from Cortez, Penasquito, and Robinson. However, we continue to expect DD&A of $425 to $500 per gold equivalent ounce for fiscal 2014, with the rate moving from the high-end in the first half to the lower end of that range in the second half of the year.

Our balance sheet, depicted on slide 8, is strong, with working capital of $687 million, an undrawn credit line of $350 million, and $155 million of operating cash flow over the past 12 months. In the near term, we look forward to our first revenue from Mt. Milligan. As I mentioned on the last quarterly call, Royal Gold will take physical delivery of metal from Mt. Milligan and handle the marketing and sale of that metal to our Swiss subsidiary. As Mt. Milligan transitions into production, the deliveries that Royal Gold will receive will be based on not just that contained gold and concentrate, but also the delivery terms agreed with Thompson Creek. We expect delivered ounces to initially lag Thompson Creek's reported production by two to four months, with that time period transitioning to approximately four months after the first year of production. Unlike our royalty revenue, for which revenue accruals are made as and when our operators receive smelter payments, revenue for the stream transactions will only be recognized upon the sale of the delivered gold ounces into the market.

I will now turn the call over to Bill Zisch.

Thank you, Stefan, and good morning, everyone. I will be talking to slide 9.

On a gold equivalent basis, gold volumes were down 9.5% over the September 2012 quarter, and up 5.2% from the June 2013 quarter. I will focus my comments on variances from the June quarter. I will start with comments on the producing cornerstone properties, followed by our principal properties. Andacollo contributed 30% of our quarterly revenue. Volume increased 12% over the June quarter, due to increased mill throughput, which was partially offset by lower expected grades. The mine has produced about 91% of its calendar year guidance to date.

Teck has mined close to its plan since the inception of the Hypogene project in 2010, when Royal Gold Inc began and its association with Andacollo. Operations are now moving into phase 3. While the initial phases of the pit extracted material that was above the reserve grade for the deposit, the third and subsequent phases are likely to mine ore that is closer to the reserve average of about 0.12 grams per ton. To mitigate some of the impact from lower grades, Teck indicated it expects that further mill improvements will enhance throughput.

Penasquito contributed 12% of our quarterly revenue. Production volume increased 44% over the June quarter, as its sulfide plant achieved average throughput of approximately 110,000 tons per day during the quarter, with water availability as expected. Goldcorp narrowed its full year guidance to 370,000 to 390,000 ounces of gold, as they continue to expect higher-grade ore to be processed during the last quarter of the year. They also reported that progress on the Northern Well Field project continues on schedule, and they expect construction activities to commence in the fourth calendar quarter of 2013.

Voisey's Bay contributed 13% of our quarterly revenue, with a significant copper volume increase due to seasonal shipping schedules, which favor the September and December quarters, and an increase in production during the period. Production of copper during the September quarter usually represents about 40% to 50% of the annual copper production during the year. This quarter's production actually reached about 53% of the calendar 2012 production levels.

At Cortez, production decreased as Barrick continued to prioritize Cortez Hill, which is not subject to our royalty interest. During the last couple years, when Barrick has been mining the open pit portion of the Cortez Hill deposits, our primary source of revenue has been from shipments of stockpiled pipeline Roaster ore to Goldstrike. During the September quarter, this material was displaced by autoclave feeds from Cortez Hill. We await the finalization of calendar 2014 mine plans, but surface equipment has returned to the pipeline pit, and we would expect our Cortez revenues to begin picking up.

At Holt, production increased 19% over the June quarter, due to higher grade ore sources, and correspondingly improved mill recoveries. At Las Cruces, you may recall that June quarterly production was reduced about 20% by a fire. Steady operations during the September quarter resulted in production that exceeded the June quarter by an additional 28%, as First Quantum tested the plant at higher ore throughput rates. At Mulatos, production decreased 25% from an abnormally high June quarter, a slight increase in throughput during the rainy season and a higher recovery ratio were not enough to offset reduction in the grade of material stacked. The Escondida mills continued to operate at designed throughput of 500 tons per day, but lower grade ore was mined as the mine plan shifted to accelerate access to the Escondida Deep portal.

At Robinson a record high June quarter that exceeded normal quarterly production by about 30% of copper production, and more than 100% of gold production, was the primary reason that September quarterly production decreased 62%. Additionally, during the September quarter, mining moved to the lower grade Liberty pit. Production during the remainder of calendar 2013 is likely to meet or exceed 2012 levels, as year-to-date copper production is at 75% of 2012 levels, and gold has already exceeded 2012 levels. At Wolverine, Yukon Zinc announced an increase in their production target from 60% to 70% of design output, effective October 10. As a result, they plan to commence a three-week operating period for the mill, followed by a one-week shut down for maintenance. Yukon Zinc estimates they will average 1,200 tons per day over the four-week period.

With that, I'll turn the discussion back to Tony.

Thanks, Bill and Stefan. Before I close, let me briefly address our business development activities. We continue to view this as an attractive market for our financial products, and are quite busy looking at new business opportunities. We are encouraged with the deal flow, but remain selective for investments that we have confidence can perform successfully in this price environment, and lower, if necessary.

In closing then, we are off to a solid start for our new fiscal year. The Company is positioned from a point of strength, when many in our industry are facing challenges. Simply said in four points, our balance sheet is robust, with nearly $1 billion in liquidity. We have strong and largely uncommitted cash flow. We have a very attractive growth profile embedded in the Company, that is just starting to surface at Mt. Milligan, and we are in a market environment that there is a demand for our investment dollar.

Operator, with that, we will now open the line for questions.

(Operator Instructions)

Your first question comes from the line of Michael Peterson with MLV. Your line is open.

A couple of questions. Tony, I'd like to follow-up on your prepared comments for Pascua-Lama. Given that you view this as a world-class resource, and given that I think it's fair to say that the operator is well motivated to raise capital, have you, or would you consider an incremental investment in that project?

Thanks for the question, Michael. Obviously, we aren't going to be able to comment in any kind of detail with any business development opportunity.

But as in any investment that we look at, we will look at the risk profile or concentration of wealth in one particular asset, and all the other aspects that go into making a sound business judgment. So I'm not able to comment anything specific with regard to that asset, but we will continue to evaluate as opportunities come to us.

Sure. I knew it was a bit of a stretch to get specific detail, and I understand that. More broadly, can you give us a sense -- again, I think your summary, few would disagree with the fact that you're very well-positioned at a time where, from a negotiating perspective, things are arguably in your favor.

That said, we are going on nearly a year where you've been that position, can you give us any visibility on how you think about deploying that capital or if things are selective enough on your side that it may very well be you'll wait to see how things unfold? Can we expect anything in 2014 to persecute that advantage?

Have to start the comments the same way I did the last question. I can't comment on specifics, and I can't comment on timing either, that's largely out of our control.

But let me just go back to what I was alluding to in my prepared comments. We do see very good deal flow. This is a time where -- it's certainly been better than most of years that I've been with Royal Gold.

So there's lots of momentum coming our way. I would be disappointed, let me say it that way, if we weren't able to execute on some nice quality opportunities here within the next 12 months.

Okay. I appreciate that and I understand why you can't go into greater detail. Thank you for the question, and congratulations on a good operational quarter, gentlemen.

Next question comes from the line of Cosmos Chiu with CIBC. Your line is open.

I got a few questions here, Tony and team. Maybe first off, maybe for Stefan here, I noticed how your G&A went up by quite a significant percentage quarter-over-quarter, is that just due to fiscal year-end expenses or is it more related to corporate or business development type expenses?

Hi, Cosmos, it is Stefan. Thanks for the question. I think our G&A went up about 5% quarter over quarter. I would classify that as just typical activity.

As Tony mentioned we continue to have business development activity, and when we do that, we do spend some dollars here. In addition to just regular corporate activity, particularly in this quarter with respect to putting out our proxy, putting out our annual report, and those kind of items, I generally put into that G&A. I can't really say anything, nothing else specific that jumps out at me as abnormal in the quarter.

Hopefully my associate heard that answer, because he give me a different percentage to ask this question for.

Okay.

(laughter) Thanks, Kevin.

And then maybe this is my question, it is got a bit more meat to it. Tony, I'm sure you've seen that the S&P decided to reclass the streaming deals as debt. The two other rating agencies have decided that they disagree with that. But in terms of streaming deals reclassified as debt, does that impact your business?

First of all, the vast majority of people that we have been doing business with don't have rated credit, so I still think there's plenty of deal flow. But we are disappointed with that decision by S&P. We disagree with it. We would certainly like to understand more clearly what components of that classify it one way or the other.

And I also would just say that all streaming agreements haven't been written the same, and there could very well be good mechanisms to be able to put together a set of terms that are consistent with S&P's definition of non-debt. So we're going to continue to work on those issues. I don't think it necessarily cuts off the opportunity for the larger companies that have rated debt, but it is not helpful, Cosmos.

Okay. Then maybe turning to future commitments. Now that you've made your last payment on Thompson Creek, the other commitment that you have remaining would be with the agreement with Chieftain. Is there any time limit on that agreement? Can you remind me, or is there some timeline in terms of completion or anything like that?

Cosmos, let me introduce Bill Heissenbuttel to speak to that question.

The only timing element in that particular transaction is an ability for us. You remember, we made a $10 million investment at the end of 2011, and there was a three-year window in which they had to satisfy the CPs for the rest of the money.

To the extent they weren't able to do that, which would be a little over a year from now, we would have the opportunity to seek the $10 million back. But other than that there's no date by which they have to reach completion of the project, et cetera. That's the only timing in the agreement.

But you are still pretty confident with what's going on at Chieftain, right, Bill?

Still like the project.

Great. Maybe one last question on Pascua. Based on my calculation, and I've seen in your disclosure, Tony and Stefan, that the carrying value for the asset right now is about $400 million.

Based on my calculation, I would think that $400 million would imply a gold price that might be higher than where spot prices are today, and given there's now added uncertainty in terms of timing coming from Barrick, I would have thought that could impact your carrying value, but as you can put in your press release today, Tony and Stefan, you don't expect that to have an impact. So maybe if you can walk you through your thought process here. I think that might help me out.

Sure, Stefan, you want to go?

Sure, Cosmos, I'm happy to talk to that. We are a US reporting Company, and under US GAAP there's a couple of levels of analysis with respect to any impairment that we follow, and we update our impairment analysis each and every quarter. With respect to Pascua-Lama, the first step is based on an undiscounted cash flow analysis.

There was a triggering event based on that analysis, meaning that the discounted future cash flow would be less than your carrying value, then you would move to a second fair-value step. And while we realize that at current gold prices and with the uncertainty on the project, there certainly are items that we need to evaluate with respect to carrying value, and we are following that closely, under our GAAP methodology, there is no indication of impairment. The reserves continues to be there at the project, including a substantial resource as well, so we are right in line with that.

Great. Thank you, that's all I have. Thanks.

Your next question comes from the line of Shane Nagle with National Bank Financial. Your line is open.

Thanks, Operator. Cosmos asked most of my questions, but maybe Bill or Tony, just maybe a quick comment on the Mt. Milligan concentrate. I've seen some reports, obviously, that the gold grades in the con are a bit lower than what they were targeting initially. Obviously that happens with these projects ramp up, but maybe just a quick observation on how the gold recoveries are trending there?

Yes, thanks very much for the question, Shane. It is just too early to even draw any conclusions with regard to that. We remain very confident in the gold recovery rate, that the test work has indicated.

So I think we just have to wait for a little bit. Let them get that circuit optimized. We know that they will focus on getting the float right first, and then start feeding in the concentration, and how to get the gold recovery up just a bit more. But no real concerns are pointing our way at this particular time.

That's great. Maybe, Stefan, staying on Mt. Milligan, the payables from the concentrate, the two to four months expected to trend to four months, is there anything particular in the agreement that you can share, to model, to make it easier for us to model the cash flow? This initial shipment you get paid sooner, and then over the course of time, you just get paid once you take physical delivery? Is there anything in the agreement written to that effect?

Sure, Shane. For the first 12 shipments, we get paid provisionally. We get paid a certain percentage of it provisional, and that percentage of the provisional declines over the first year, and ultimately, we get our deliveries based on final settlements that Thompson Creek achieves.

We very specifically did that to manage our cash flow during the initial startup. With the comment to cash flow, our cash flow occurs once they make gold deliveries to us, and that should happen within a period of days after they make their first shipment. We will get a delivery of gold from Thompson Creek, and then we would look to sell that gold into the market, which would create the cash flow for our Company and our shareholders.

Okay, even the provisional payments are made in gold, not in dollars?

Yes, that's correct. All the Thompson Creek payments, if you will, come to us in gold.

Okay. Then maybe just one final question, just asking maybe the Pascua-Lama question another way. I know there's -- I think approximately 9% NSRs out there, outstanding, some in smaller private hands.

Has any of those holders come to expressing their frustration with the development timeline that Barrick has put forward or maybe looking to monetize those? Obviously they weren't looking to monetize of these assets previously when Pascua was tracking on schedule, but maybe now there's more willing sellers in the marketplace? Any comments on that, Tony?

Shane, let me just confirm that the total NSR in that property is 9.8%, and those were the original owners of the claims and over time, they morph that into an NSR. And we've gone around through many, many acquisitions and bought up to the extent to 5.23%, that royalty, so we owned greater than the majority of it, now. But beyond that, in our relationship with those folks, we just don't think it would be appropriate to get into too much more detail at this time.

Okay. That's great. I didn't think that there would be much of a comment there, but I had to try. Thanks.

Index question comes from the line of an impressed with Cowen. Your line is open.

I had maybe a quick query about Cortez Pipeline and Crossroads, and how you see the transition away from Pipeline, and how Crossroads is going to come into production. Is it going to be a relatively seamless transition from Pipeline, and then how long do you think that asset will last?

Adam, Tony here. We are very pleased to see that we now have it shift of mining equipment back from Cortez to the West in the Pipeline complex, and just for everybody else on the call, we don't have a royalty on the Cortez Hills deposit, so over the last, Bill I would say, maybe four years or so, we've been three or four years, we have been low, quite low on our Cortez royalty, compared to prior years. With that shift, the equipment comes back on the suite of deposits that we have royalty interest on.

So we are pleased to see that transition is happening. I would expect, having been the mine manager there for four years, I would expect that they would focus on the pipeline pits, the gap and lay backs to those pits, first, before they would come into the Crossroads deposit. As you remember, Crossroads is about 600 feet deep on stripping. It is a bit lower grade than what you had experienced in the Pipeline.

So I think that's going to be in the latter of the mine life. All things considered, we would expect it to be probably after the Pipeline pit. So we can't really comment with confidence as far as the sequence of events that might happen there. We've been interrupted before on production from the Crossroads, with the likes of Cortez Hills, so it just would be a bit of a stretch for me to anticipate that today.

No expectation for total life of mine remaining there?

Gosh, how much do we have for reserves? Don't we have -- can anybody help me out with that? If not, we will get back to Adam on the amount of reserves there. A substantial amount of reserves still subject to our royalty interest.

So -- this is going to be years at Pipeline, Cortez, -- or sorry, Crossroads area. Karli is just passing the number and I'm looking at GSR2, probably the GSR3, and we installed multi million ounces there, about 4 million ounces that contained gold subject to our royalty interest. So it is still very, very healthy production profile for us in the future.

But there could be some gaps developing in there, where between Pipeline gap, and before Crossroads gets going?

Look, here's the situation with regard to the area, It's a prospective area and Barrick has got another new and exciting deposit called Gold Rush. We don't know how they are going to process that.

Would they bring that several kilometers, and I guess that would probably be closer to15 kilometers, back around to the Pipeline mill? Or, would that displace some of the lower grade ores at Pipeline or Crossroads? I don't know. But those are the kinds of complexities I just cannot give you a lot of clarity, on until Barrick comes out with their feasibility work on Gold Rush.

Okay. Very good, Tony. Thank you.

Your next question comes from the line of [Bhatir Sharapova] with HSBC. Your line is open.

Tony, congratulations on a great quarter. I have two questions, one is a follow-up to Adam's question. I believe Barrick's guidance that you disclosed back in May, from all four royalties from Cortez, were about, I would say 180,000 ounces and with nine months behind us at this point, it's highly improbable. Do know what triggered that mine tranche -- such a drastic change in mine planning for this year, and do you have an updated guidance for 2013 from the property?

This is Bill Zisch. Their guidance was in the 50,000 to 60,000 ounce forward calendar 2013. And the shift that they had most recently was a lot of the material that we expected to be produced was carbonaceous material, that they would have stockpiled from previous pipeline mining, and that they would have sent that up to Goldstrike.

Some of that material did not get shipped, it's still stockpiled. We still anticipate that it will be mined. At the same time, they did not return the equipment from the Cortez Hill deposit as quickly as they had originally estimated, so a lot of is just sequencing, and from Barrick's standpoint, they are optimizing operations around Cortez, Goldstrike flows [stir] an autoclave feed and pipeline.

So we are likely, as they settle down the mine plans to see some timing and sequencing changes, and that's what it is, it is just timing right now.

I believe you are talking about the NVR 1 royalty, but there is also GSR 1, 2, 3, that combined, I think, were guided to 128,000 ounces, additional to 53,000?

It's about 64,000 each, correct?

And that's, obviously, seems highly improbable this year, right?

I think they could still, if they accelerate their production in the fourth quarter, they could still get to that calendar number. You're right, they'd have to have a very strong quarter.

All right. The other question was actually the follow-up on the Pascua-Lama here. Given that it is been delayed, potential to 2018 or beyond, and with the El Morro project also up in the air, is there more urgency on your part to look at the near production potential royalties, or assets already in production to complement the cash flows that are going to be coming out of Thompson Creek in the near to midterm?

Tony here, we have a very strong growth profile built into the Company, so we do have the luxury of looking a little bit further out. But having said that, we, by far, are much more excited about near-term or existing flowing cash flow assets than we are something that takes three or four years to build. So we always have a preference for that.

Okay. Thank you.

There are no further questions in queue at this time. I turn the conference back over to our presenters.

Let may just come back to Adam's question a moment here, and we have our Chairman, Stanley Dempsey, in the room as well, and he gave me a high sign when Adam asked that question, could there be some other ores that are displaced in front of our Pipeline or Crossroads type production.

Stan negotiated a clause in there that actually has a bit of a penalty that Barrick would have to pay on an annual basis, and they have paid that for some period of time. In the event they do put ores in in front of us, but just wanted to provide a little bit more color on that. It is not a huge penalty, I think it is $400,000 or $500,000 a year. But nonetheless, there was that forethought for that particular asset.

With that, we thank you very much for joining us, and we certainly appreciate your support and your interest in Royal Gold, and we look forward to updating you on our progress at the next call. Thank you very much.

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