Triple Flag Precious Metals Corp (TFPM) 2022 Q1 法說會逐字稿

Good morning. My name is Joseph, and I will be your conference operator today. At this time, I would like to welcome everyone to the Triple Flag Precious Metals quarter one 2022 results call. (Operator Instructions)

CEO, Shaun Usmar, you may begin your conference.

Thank you very much. Hello, everyone, and thank you for joining us to discuss Triple Flag's first-quarter results. Today, I'm joined by our CFO, Sheldon Vanderkooy; our Vice President of Evaluations and IR, James Dendle; our Vice President of Talent and ESG, Katy Board; and our Vice President of Finance, Eban Bari.

I'm pleased to report another solid quarter during which our business benefited from continued support of commodity prices, underlying portfolio quality, and the embedded resilience associated with asset diversification and insulation from operating and capital cost inflation. We're pleased to report that we met our pre-release sales guidance in the first quarter, having achieved 20,113 ounces sold, resulting in a 7% increase in revenue year-over-year to USD37.8 million, adjusted EBITDA of USD30.5 million, and earnings of USD0.10 per share.

The market and pricing backdrop has been volatile during this period. With the competing forces of inflation, central bank action, ongoing COVID-related supply demand impacts, and geopolitical instability with the war in Ukraine, yet our margins have remained steady, our cash balance continues to grow, and our financial results have proven to be resilient.

The business is continuing to deliver robust organic growth. Production across the portfolio in the first quarter was strong and in line with expectations. Over the quarter, the pipeline for new deals has remained very active. Triple Flag acquired a royalty on a highly prospective, high-sulphidation epithermal gold deposit in Chile, called Sofia, for $5 million, a small tuck-in addition to our portfolio done on a bilateral basis.

We also announced earlier in the quarter the acquisition of a royalty on the Beaufor mine in Quebec. Our latest deal announcement subsequent to quarter end is the proposed precious metal stream and gross revenue royalty on the Prieska Copper-Zinc Project in South Africa, another bilateral deal that we have exclusivity on. Prieska is a large scale base metals VMS deposit operated by Orion Minerals, which is listed on the ASX and the JSE, with an extremely large and prospective land package. We are really pleased to achieve this important step towards providing Orion with funding support for a very exciting base metals mine development.

Overall, we continue to demonstrate discipline in our deal-making approach, with a focus on high-quality, accretive transactions and an emphasis on cultivating direct bilateral deal opportunities.

Our dividend yield remains competitive, with our Board declaring a dividend of USD0.0475 for the quarter to be paid in June. In these unprecedented times of both climate and social change, Triple Flag is committed to responsible mining, providing essential metals for renewable energies through our work with responsible mine operators, primarily via a precious metal byproduct stream financing, and supporting the communities in which they work.

During the quarter, we also donated CAD100,000 in support to Ukrainian humanitarian relief to assist the most vulnerable victims of this senseless conflict. The portfolio is delivering organic growth, both in the short term and the medium to long term. Buritica's expansion continues to 4,000 tonnes per day this year, and our ramp-up assets are advancing towards nameplate capacity. Steppe Gold resumed leaching in March, and they are advancing the Phase 2 expansion.

James and I were fortunate to visit Northparkes a few weeks ago, with COVID-related travel restrictions finally easing. The trip underscored the quality of the management team, combined with the incredible surface and underground infrastructure in place at Northparkes and a significant optionality associated with resource conversion, the discovery of new porphyry deposits and potential to expand the capacity of the mine. In a world seeking copper to enable decarbonization and climate change imperatives, Northparkes is ideally placed for a long and prosperous future ahead of it, that we are proud to be a part of via our gold and silver byproduct streams and our community support commitments.

I will now turn it over to Sheldon to discuss our financials for Q1 2022.

Thank you, Shaun. GEOs in Q1 were broadly in line with the same quarter in the prior year, increasing by 2% to 20,113. Gold stream volumes increased by 29%, driven primarily by increased deliveries from Northparkes, and gold royalties were consistent with the prior year. Silver stream volumes decreased year-over-year, but consistent with our expectations. Q1 results as a whole were consistent with our 2022 guidance of 90,000 to 95,000 GEOs, which assumed a gold/silver ratio of 77. The markets have experienced significant volatility lately. And in Q1 as a whole, we realized the gold/silver ratio of 78 times.

To illustrate the impact of the gold/silver ratio on GEOs, GEOs for the quarter would have been approximately 1,000 ounces higher if the gold/silver ratio had remained consistent with the same period last year. Nonetheless, we had a good start to the year, with strong performances at Northparkes, Fosterville, Buritica, and RBPlat in particular. I will now turn to the next slide.

We've seen increasing financial market volatility as the markets grapple with inflation and rising interest rates. We are seeing input cost pressures across the economy, which can squeeze margins. The streaming and royalty model is a fantastic lower-risk model ideally suited to today's environment. We have top line revenue exposure benefiting from top line revenue inflation, but with no direct exposure to operating cost or capital cost inflation and thereby preserving our margins.

I will now ask Eban Bari, Triple Flag's Vice President of Finance, to provide further details on the quarter's results.

Thank you, Sheldon. The portfolio delivered strong financial results during Q1. Revenue was up 7% over Q1 2021 to $37.8 million. Net earnings were up 83% year-over-year and adjusted net earnings were up 12% in the same period. Adjusted EBITDA was 1% higher, to $30.5 million. We generated $26 million worth of operating cash flow, 9% decrease year-over-year, and the decrease was largely due to differences in working capital changes as a result of timing of bonus payments. We also maintained strong, consistent asset margins at 92%.

I will turn over to the next slide. Our pure play precious metals portfolio is well diversified, with 93% of the revenue from precious metals, with over a third of our revenue from Australia, and 87% of our revenue from the Americas and Australia, considered stable mining jurisdiction.

I will turn over to the next slide. We finished the quarter with $58 million worth of cash on the balance sheet, no debt, and available credit facility of $600 million, including the accordion. All of this provides us ample liquidity for accretive new deals as well as our dividend program.

I will now turn over to James Dendle, Vice President of Evaluations and IR.

Thanks, Eban. This page sets out our GEO growth from inception as well as our 5- and 10-year annual GEO outlook. You may recall that we issued our inaugural 5- and 10-year outlook in Q3 of 2021, indicating 105,000 GEOs for both the 5- and 10-year timeframes, highlighting the embedded growth within our portfolio in the long portfolio duration. We're pleased to be able to extend this outlook by a year, and increase the outlook in the 5-year timeframe from 105,000 GEOs to 110,000 GEOs. The majority of the production is expected over a 5- and 10-year outlook. It's derived from mines that are currently in production and supported by mineral reserve estimates. The long-term production outlook requires minimal capital expenditures by the asset operators, and a number of the development projects have been permitted, providing a low-risk outlook.

The long-term production outlook requires no further funding from Triple Flag, with the exception of a $45 million staged payment with respect to Kemess upon a construction decision. We're continually looking to increase and extend this outlook through disciplined acquisitions that fit our technical, commercial, ESG, and returns criteria. In this area, I'll provide a brief overview of the Prieska opportunity that Shaun mentioned earlier.

Subsequent to quarter-end, we entered into a non-binding term sheet for a precious metal stream and royalty on the Prieska Project. As Shaun mentioned, Prieska is a copper-zinc project operated by ASX and JSE, listed Orion Minerals, and located in the Northern Cape at South Africa. It's a brownfield project that was operated by Anglovaal from 1971 to 1991, has significant underground infrastructure, a very solid resource base, and significant exploration potential across the stream area of over 4,000 square kilometers. A feasibility study released in 2020 contemplates a 12-year life of mine, with significant opportunity to extend this, and all major permits are in place. Once in production, we expect an average annual stream GEOs of around 12,000 per year.

Turning over, this page provides an overview of the stream and the asset. The royalty in the stream are subject to Orion Minerals raising AUD20 million and completing an updated feasibility study. We expect definitive documents to be finalized in the third quarter of this year, and we will provide more information on this asset later in the year. This is a deal that we've been working on for some time, and it was originated on a bilateral basis through our networks.

Turning to our key assets. The portfolio is performing well and consistent with our 2022 guidance. At Northparkes, the E26 Lift 1 North Cave is ramping up to plan, and record plant throughputs were achieved in March. RBPlat had a solid quarter, with tonnes hoisted up 11%, and Styldrift is expected to reach nameplate capacity in 2022. Fosterville outperformed during the quarter due to higher-than-expected grades. Based on a likely sequence of mining of ultra-high grade stopes, Fosterville anticipates having lower gold production in the next two quarters, with the fourth quarter being the strongest of the year.

Steppe Gold recommenced leaching at ATO during the quarter, and we received deliveries under the stream subsequently after the quarter end. Reagent shipments continued uninterrupted in April and the process of restocking reagent storage facilities is ongoing. Buritica made excellent performance -- progress on the commissioning of the 4,000 tonnes a day expansion, running close to nameplate in February and March, which is ahead of our expectation.

I'll turn it over to Katy.

Thank you, James. As always, we strive to invest in responsible mines and projects that protect worker health, safety, and the environment, where benefits accrue to local communities and a broad range of stakeholders. As Shaun mentioned, in light of the attack on Ukraine, Triple Flag donated CAD100,000 to the Canadian Red Cross, in support of the Ukrainian humanitarian relief effort to assist those most in need during this horrific crisis. The Triple Flag team also participated in packing supplies in response to the relief effort. Triple Flag stands with the people of Ukraine.

At Northparkes, four local students from doorstep communities have been selected to receive AUD5,000 one-time bursaries to support post-secondary degrees. Each of these recipients has expressed a desire to return to rural, remote areas of Australia upon completion of their degrees. While in Australia, our team participated in the unveiling of four grandstands and met some of the impressive recipients of Triple Flag's scholarship program, and could recognize the direct benefits of our activities on the Parks and Forbes communities.

At RBPlat, Triple Flag is committed to financially supporting seven new students in pursuing mining-related, post-secondary engineering degrees. This is in addition to the eight students Triple Flag continues to support from 2021. Contributing to community and sector development through our global scholarship programs is a priority for our organization and we'll continue to seek out ways to complement our mining partners' activities in these areas and enhance their privilege to operate with their host communities.

On March 8, International Women's Day, Triple Flag again sponsored a table and invited women from within our network to attend to the Women for Women's College Hospital lunch, a fundraising event, which raised over CAD550,000, dedicated to breaking down barriers to health care for all women. We have since seen some of our direct peers adopting various initiatives we have undertaken and take that as a sign that we're on the right path. It is our goal to continue to be leaders in this space, and we continually seek out opportunities for further advancement.

Since inception, we have remained a carbon neutral company and go a step further by offsetting the attributable share of emissions from our mine investments, which we believe is still unique in our industry. We look forward to sharing more of our ESG initiatives in our 2021 sustainability report, which will be published next month.

Thank you, Katy. As the metrics on this slide demonstrates, our key metrics stack up very favorably to the best in the sector. We have 80 assets over the last 12 months. Our EBITDA was USD124 million and provides investors with a compelling dividend yield and organic growth. Thus solidly positioned as an emerging senior streaming and royalty company.

In summary, we delivered solid financials in Q1 against a volatile market backdrop, highlighting the quality of our portfolio. Over the quarter, the pipeline for new deals remained very active. We acquired two new royalties and entered into exclusive non-binding terms in May for a precious metal stream and royalty on the Prieska Project in South Africa. We continue to successfully demonstrate our ability to secure exclusive bilateral deal opportunities that offer favorable risk reward attributes for our investors.

Our focus remains on disciplined deal execution and value creation, exercising patience while pursuing sensible and accretive deals. With nearly $700 million in available liquidity, we have ample means to transact on the larger, higher-quality transactions in our deal pipeline. As inflation and supply chain disruption impact mining sector margins, our faithful application of the royalty and streaming business model to our investments, coupled with the diversified and resilient nature of our high-quality portfolio, largely insulates our investors from the direct effects of these corrosive forces. Our dividend remains robust and provides a competitive yield.

Our business is producing strong cash flows, which are positioned to increase as the fully funded embedded growth is delivered across a number of assets. Having celebrated the sixth year anniversary of our founding in late April, and approaching the one-year anniversary of Triple Flag's IPO, I'm pleased with the solid performance we have delivered so far and look forward to continuing to deliver strong financial results as well as disciplined growth and value for our investors. We sincerely appreciate the support and trust of our stakeholders, and we look forward to providing further updates soon.

Thank you. Operator, with that, if we can turn to Q&A, we're happy to answer any questions.

(Operator Instructions) Tanya Jakusconek.

Great. Good morning, everybody. So sorry, I was just caught up on another call, so I did miss you talking about the deal you announced last night. Can I just -- and I just quickly looked at the slide on the presentation. Can I just ask -- maybe you can go through what was the attractiveness of this asset for you and Orion, and maybe highlight what you see as the risks in the deal, and what you see is the timeline of getting the deal done, and the key catalysts you need to see in a mine plan for it go ahead.

Tanya, firstly, good morning and thanks. I appreciate it. I know there's some congested timelines with these presentations. So I'll start and I'll ask James to comment and perhaps -- and Sheldon. Look, the first thing is, you -- I think you should recognize probably by now that we've obviously been, I think, the first in this industry to successfully do a precious metal stream in the region with RBPlat. The first filter there in that region is always the ESG credentials, how they've sorted out the Black Economic Empowerments, the host community relations. And those are things that, I think before any technical merits even can contemplate it, that we put that to the test. We started this over a year ago. We've put a lot of ideas in front of miners all over the world.

And I'll give you the context because I think it points to two things. One, I think this form of funding -- we've said it before, but I think we're seeing it in real time -- is becoming increasingly accepted as a sensible alternative for miners, particularly with base metal miners and polymetallics like this, where there is a natural arbitrage.

So this term sheet originally I think was somewhat dismissed, and it was a great example where our mining partner at RBPlat -- it's a small community, and they strongly advocated actually, unbeknownst to us, for doing business with us, and also talked about how we have supported their local communities during COVID. And that was the difference for them to come back to us and say, actually we're really interested in exploring this while we consider other alternatives. We've engaged for nearly a year and the main reason is the same thing, whether it's in this region or any other part of the world.

If you look at the history of mining project delivery, whether it's majors -- pick your name -- it turns out the data over the last 10 years, people seem to think big mining companies have better project execution, but the data doesn't support that. In fact, the percentage in the absolute dollar numbers are higher typically when you actually look at the outcomes, and the time deliveries in particular tend to be longer.

So the reason for our very patient approach here has really been focusing on providing them with feedback, not on the equivalent of the 43-101 studies and what looks good on a spreadsheet or a technical study, but on the execution plans. And you'll see the way that we structured this so far is very much with a high degree of optionality in our favor, strong security. But I'll ask James to comment in a minute. The core thing in this area: there is great mineralization, renewed interest in the region, a massive land package, a lot of fund capital, the know-how, and the ability in the region to be able to execute.

And I think I'll turn it over to James from there.

Yeah. Tanya, I think Shaun covered some of the main points there. I mean, look, it's a past-producing mine. It's got a very extensive production history. So the ore is a known quantity from a processing point of view, but also from a mining and rock mechanics and geology point of view. So it's a very well understood ore body. As Shaun mentioned, the stream area is large. Our stream actually, as contemplated, is over 4,000 square kilometers. And it's a very big VMS system.

And really, this is the focus of that system, and there's been one major discovery in the area is we think it has tremendous opportunity to discover additional parts of that very large system, as you know [that seldom often]. So I think that's very compelling. The infrastructure is good. There are two shafts in place. And it's a pretty simple, impressive flow sheet. So to us, it looks like a very compelling opportunity for all those reasons.

And, Tanya, at a high level, you've seen the numbers once in production. And I think the rough timeline is somewhere like 2.5 to 3 years, and we'll see how the studies come through. But it's like 12,000 GEOs a year, obviously pretty big margins. I think on our internal rough numbers, it's probably 6%, 7% of our NAV. And you can think of it on consensus, not spot numbers, in the low to mid-teens for both those instruments. And you know what the metrics have looked like in this space on single asset development projects of late, that hasn't been a very [PN] deployment in capital for us. So we like the optionality, we like the assets, and the optionality is in our favor.

And I should just -- the other part of your question, Tanya, is on the studies. The company expects to produce an updated feasibility study later in the year. We'll be looking for a very detailed buildup of execution, really exactly how the project's going to be implemented from feasibility to construction, so that will be one of the focal points for our analysis when that comes out. And obviously, with the way capital costs have moved recently, we'll be paying close scrutiny to the movement in costs and operating costs for that matter. So those are some of the focal points we'll be working through later in the year.

Okay. But I'm interested in the mine plan. So James like so -- because one of the things that you have is you can walk away if you don't like the mine plan. So I'm trying to understand like what are the key aspects that you need to see in the mine plan. So you need to have a good comfort on execution. It appears you need to have the comfort that the capital and operating costs are reasonable, and the time schedule is reasonable. Is there anything else I'm missing that you're going to need to see that meet your criteria to go ahead on this deal on the mine plan?

I think the key thing, Tanya, is, firstly, we don't anticipate major changes from what was contemplated in the 2020 feasibility study. What we will be looking at very closely is the things like the development rate productivities as the mine ramps up into production. So it's really confirming the development rates and the achievability of those rates in the first couple of years as they look to build skills and capacity of the operation. So it wouldn't be -- it's not so much that we're looking for, is this what it looks like going forward versus the 2020 study. It's really confirming the achievability and the granular execution part of what's already been put in the public domain.

And Tanya, so that's a common theme on every asset we're looking at in the pipeline, pretty much everywhere. Development rates we see very often in this sector are generous in the assumptions, and our primary focus as a risk mitigant is making sure these things have sufficient liquidity to get through even if there is risk on time line ultimately. These streams can be very lucrative as long as obviously they deliver the mine. So those are the focal points on for us and that's the reason we've been very patient on this.

Okay. And then just also just -- so we've got the study coming midyear. You're going to be looking at these aspects to see whether it fits your criteria on the mine plan. What about the risk of financing? The operator has to obviously finance this. What's the timeline for that? And then ultimately, what's the risk in that, and then ultimately closing this deal?

Yeah. So the first point on the royalty has really been making sure -- and you'll see that's conditional in raising another $20 million that's in that path -- we want to make sure that they've got sufficient funds to do this study, start dewatering, and really progress this at a very sensible rate now. So we've taken that staged approach. I mean we're senior secured. We structurally will be very well positioned on that. And I think, for us, we're actually quite happy to be patient if their timeline moves along. We want to make sure that, at a point where we'll make a decision, it is the right time.

We know they've got -- I'll come down to the details on the syndicate and others, but we've been pretty too -- they've been doing a lot of work for quite some time on other alternatives, and it's going to be up to their team to finalize that. We've got a lot of experience working with different capital providers, as you know. And from what we see, I think -- we know they've got a good project and they've had other alternatives.

So Sheldon, I don't know if there's something you want to add to that.

Right. I think that covers it very well, Shaun.

Okay. So am I looking at potential closing this year on this deal, or do we have a timing, anything?

That would be our expectation. I think that's of course subject to the markets at this moment as much as we do. But yeah, they're obviously doing the work in order to work with that timeframe.

Yeah. And Tanya, they've been out there with Q3 for definitive documentation. So we're really pleased we have these agreed terms. The lawyers are now engaged under [affinitive definitive] documentation. And while these term sheets are non-binding, we do have exclusivity, and we don't foresee any difficulties in executing definitive agreements.

Okay. And Sheldon, that I have you on, I just wanted to ask coming back to this global minimum tax, which we ask on every call. And again, we have [splits] in the Canadian budget right now. So I just wanted to have your latest views on how you expect the proposal to impact you at all if successfully implemented. And do you think you are exempt from it because of your revenue threshold?

Yeah. So there is no change since our year-end call, Tanya, that I've seen coming out. I think the budget actually had already come out at that point. The exemption -- I mean, we did note that the revenue threshold, we do -- we would fall below that and be comfortable below that. So I think that would be obviously very nice. And that seems to be within the series of rules were they're not actually targeting entities of our size, so that would make things very easy. And again, even if we are subject to it, when the detailed rule comes out, the impact on the NAV is pretty muted. I think we're talking about 4% range.

Okay. Great. Thank you a lot. I'll leave it to someone else to ask questions.

Thanks, Tanya.

Shane Nagle.

Thanks, operator. So just on the -- basically just carrying on from maybe some of Tanya's questions, which I think you've covered most of it. But it seems to be a pretty high return, I guess, owing to the bilateral discussions that you guys were engaged in in this stage of the project. I mean, is this what we're expecting to see I think going forward? Obviously, a lot of inflationary pressures, new project developments, and there's not a lot of Tier 1 operators looking to monetize streams. Is this kind of the trade-off you guys are noticing going forward, with higher returns, with maybe taking out a bit more counterparty risk, if you can call it that?

Yeah. I guess, that's one we're characterizing it. I think if you look at the deals that we've done in the Canadian space just in the last six months, those I would characterize as maybe Tier 2, 3 single-asset, development-stage assets on extremely skinny returns. You've seen the execution track record in the North American market. So I don't think people should conflate a jurisdictional piece with, call it, execution risk. That's the reason we're very deliberate on this.

And I think we've shown in our pipeline, particularly actually outside of North America, we've been successful in securing streams which have been enabling to, particularly, polymetallics. We've worked in those sectors, where it's enabled those guys to bring projects online, IPO, and do a host of things and generate decent returns. So we will continue to look at everything on its merits.

I would say most of the stuff in our pipeline at the moment is in fact more North American or American -- or Americas-centric, for what that's worth, and some return potentials are higher and some are lower. I don't know if there's anything else you guys would add. But I wouldn't -- we don't have the luxury of being able to very nicely forecast both the cadence and the [reliability] of what that deal flow would look like. We just see -- we are seeing a lot of activity, and some of them are quite large at the moment.

And then just in terms of the jurisdiction where this would be -- I guess, where this reside from a tax perspective. Has there been a change in strategy overall because of the global minimum tax rate discussion? Or will this be housing Canada? Or sitting in your [foreign] subsidiary, like every other stream?

Yeah. Hi, Shane. It's Sheldon. I'll take this one. Yeah, this will be -- it's an international royalty, so it would be in our Bermuda entity. We're quite comfortable with the structure, and we think it works quite well. Of course, we do have an eye to a potential global minimum tax when we're entering into these.

Okay, perfect. And then just last one, real quickly on the production, I guess in the near-term guidance. Obviously, the ATOs has got the reagents sorted out. You said the Northparkes and Buritica expansions were tracking ahead of schedule. Just get a sense -- I mean, roughly what level of conservatism you've baked in the near-term guidance with respect to the operator guidance? I mean, certainly, a couple of these assets are actually tracking fairly well compared to your estimates, I would guess, with some challenges. But if you can get a sense of what level of conservatism you have on some of those assets that are ramping up in the near term.

Yeah, it's always difficult to talk to a level of conservatism without maybe losing the conservatism. But we've gotten out with the 90% to 95%. We're confident in that figure. We feel we've gotten off to a really good start to the year. I think I just might leave it to that. I don't know.

Okay. I think the only thing, Shane, which we've expressed before, is we have a general cluster on ramping assets where I would say we don't tend to take management's views at face value and include those in our agglomerated consensus numbers. I think you've seen us do that consistently, and that's just sensible, given every participant's track record candidly in the sector with a major diversified large gold producer, small, single-asset producer. So [if only one] in five, when you look at the data, tends to be on time and on budget. Although [four and five] is a good bet to make -- have some degree of conservatism in there.

The only thing I'd say as a general observation with the followers of the sector right now, it's amazing to me that people following this sector will ascribe the same risk review on assets that are very often unfunded, don't even have a path to production; in some cases, unpermitted. And I'll apply the same multiple to business, which is either ready in production and ramping or is fully funded and has a pathway to cash flow, on the basis of, let's say, a fictional 43-101.

So it's a bit of a soapbox thing, but I'm seeing that across the sector, and it makes no sense. We have some applying the same multiple to us, as groups with a million dollars of cash flow and almost all their NAV tied up in assets that have no permitting or indeed a path to production. So there is a severe disconnect, I believe, in how people are looking at risk and returns at the moment in the sector.

That's all from me, guys. Thanks.

Thank you.

Greg Barnes.

Thank you, operator. Shaun, I want to go back to Prieska again and just -- I haven't had a chance to review the 2020 bankable feasibility study. So what kind of CapEx are they looking at to get this thing up and running? Do they need to build a mill? And your funding is [USD187] million. How much total funding to they require?

Thanks, Greg. And while James has to -- he's got some of the material in front of us now. And while he is doing that, just preface it. You'll know that, for us, ordinarily, we would only announce on binding terms. Now we've got exclusivity and we've got this to a point. And this has really been triggered more by the counterparty with investors and things on there as part of their overall funding approach.

But yeah, do you want to comment, James?

Yeah. Sure, Greg. So there is -- there are shafts in place and the shaft bottom infrastructure is in place. The mine needs to be dewatered in order to access that infrastructure. But the engineering evaluations of that infrastructure is positive. They've done the camera surveys and that sort of things. So there is already quite a lot done in terms of earthworks and physical inground infrastructure. A lot of the plant's property was taken away when the mine was closed down and rehabilitated. So there is male workshops, officers, and all that sort of [tenant] infrastructure that the company will have to build. The 2020 feasibility study estimated project startup capital at AUS373 million, which at the time was about ZAR4.1 billion.

And the exchange rate of the rand, the exchange rate is about the same as it was in 2020, with sustaining capital of about AUS137 million. So that's obviously a slightly stale number and we'll see where the update shakes out, but that was the 2020 figure. And I think you're right. It has made some progress in locking in some of those components in any case, but we'll look -- again, we will be looking closely at the update later in the year.

And Greg, part of getting to this point is also site -- site visits have been conducted, so it's not just the desktop, for example, at this stage.

So you're likely two to three years away from production, I would imagine.

Yeah. I mean, again, in the feasibility study, the company estimated 32 months from basically early works through production. One of the objectives they're studying in the update is the opportunity to bring cash flow full production earlier from the extraction of some open pit mining areas. So again, we'll see that. But that's the ballpark that we're operating on at the moment. Obviously, they have to get their funding sources out in order to start that process. The royalty payment that we've done will help with some of those early works.

Okay, that's helpful. Thank you.

Thanks, Greg.

There are no further questions at this time. CEO, Shaun Usmar, I turn the call back over to you.

Yeah, operator, thank you. And thanks very much for the questions. Thank you for your time. I know it's a busy time of year for all of you. We're pleased to get another quarter away with strong results, and we look forward to more to come. So thanks, everyone. Enjoy the rest of your day.

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