Triple Flag Precious Metals Corp (TFPM) 2021 Q3 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Triple Flag Precious Metals Q3 2021 results call. At this time, all participants are on listen-only mode. After the speakers' presentation, there will be a question-and-answer session. (Operator Instructions)

I would now like to hand the conference over to Shaun Usmar. Sir, please go ahead.

Good morning, and thank you for joining us to discuss Triple Flag's third-quarter results. I'd like to start by taking a moment to express our gratitude on this day for the sacrifices made by veterans. This is a day that kindles fond memories of several loved ones in my family, and I know it does the same for countless families around the world.

This is our second quarter as a public company, and I'd like to start by thanking all our investors who recognize the fundamental quality and deep value on offer at Triple Flag. We view the management team as significant owners of this business and are truly aligned with our shareholders in generating value, growing our cash flow and net asset value per share, while showcasing and illuminating the deep valuation arbitrage to our peers as we see them in the public market.

The third quarter of 2021 was yet another strong quarter for gold equivalent ounces sold and free cash flow growth. And 20,746 GEOs were up 62% over the same period in 2020, delivering a robust 53% increase in operating cash flow and 43% increase in adjusted EBITDA. Sheldon will share more detail on our financial results shortly.

2021 has been a year of growth for Triple Flag. By the end of the third quarter, our assets produced as many GEOs as in the entirety of 2020, reflecting strong contributions from our cornerstone assets and the ramp-up of new mines. Having built Triple Flag from the ground up since 2016 with sector-leading growth from GEOs over this period, we are proud to demonstrate the organic growth of our existing portfolio by highlighting Steppe Gold's ATO Phase 2 expansion. This was one of the many exciting catalysts during the quarter.

The feasibility study announced in October includes a 10.5-year mine life extension, materially increasing the life of our stream by more than a decade. This is a testament to our rigorous due diligence approach and our ability to source and structure transactions on high-quality mining projects led by great partners around the globe. This is a significant value catalyst for all stakeholders in the ATO project.

It's also worth considering the context of this milestone from a NAV per share accretion context and a demonstration of the intrinsic appeal of the streaming and royalty business model. Our long-term investment horizon and disciplined approach to deploying capital is core to our identity as managers and owners of this business. We entered to deploy capital and be a financier for mining companies throughout the commodity cycle, providing much needed capital to mining companies to fund their strategic priority.

Our investments in ATO is a perfect example of this. ATO is a great test study of the potential for this form of financing to be enabling for the capital needs of the mining sector, while generating good investment returns, risk optionality that rewards our investors, as well as those of our mining partners.

Triple Flag has full exposure to the ATO Phase 2 expansion with its gold and silver stream with no incremental investment from Triple Flag beyond the original capital of $28 million we provided to Steppe Gold as cornerstone investors. Representing NAV accretion for Triple Flag on the order of tens of millions of dollars, our focus is on growing value per share, up pursuing size for size's sake, and we'll maintain that discipline going forward.

Moving on, we are extremely proud to have published our inaugural sustainability report during the quarter, demonstrating our integrated approach to ESG and rigorous standards in this area. I encourage investors who care about this key aspect of our activities to look at our commitment and work in this area, and welcome any feedback as we continue to evolve and pursue substantive best practices in this area.

In October, we announced the implementation of the dividend reinvestment plan and normal course issuer bid. We believe that when our share price does not reflect the fundamental quality and value of our portfolio, buying back shares pursuant to the NCIB is accretive and an opportunity to capture this discount and create value for our shareholders, while stay cognizant of the need to build over time a larger float and greater liquidity in the stock.

We declared a quarterly dividend of USD0.0475 per share and our annualized dividend yield is sector-leading at approximately 2%, allowing us to directly share the benefits of Triple Flag's cash flow with our shareholders. We intend to continue growing this dividend over time without compromising our disciplined growth strategy. Our focus will remain on delivering reliably strong results and returns as we pursue our strategy of disciplined and accretive growth through the acquisition of precious metal streams and royalties.

Triple Flag's current valuation provides significant upside for a re-rating to multiples that will be more in line with our peers, particularly in the context of the quality and longevity of our portfolio that aligns favorably with the best in the sector. We have already demonstrated repeatedly over the past five years that we have the scale and capability to compete in an intelligent manner with the best in the sector for the largest and highest-quality precious metals opportunities.

We believe that a re-rating will be driven by the broader recognition of investors of our portfolio quality and management team capabilities, along with the continued performance of our business, consistent execution of our strategy, and prudent return of capital to our investors. Our commitment to our investors is to continue to remain disciplined in the execution of our business strategy.

From the outset, we've been relentlessly focused on asset quality. Over time, this focus has translated into a portfolio that compares favorably to that of the largest, most valuable peers in the sector on key portfolio quality metrics. Each of our assets boasts compelling geology and the potential for significant exploration and production upside. Our core assets, in particular, are associated with large, low-cost orebodies with good track record of reserve replacement and large prospective land packages, which our investors will benefit from through potential future success with the drill bit and possible expansions.

Capable and responsible operators working to high ESG standards are prerequisites for our investments. A high proportion of our assets by net asset value are in production and operated by senior mining companies. Additionally, beyond the producing mines, we have a large portfolio of developments and exploration properties that will provide organic growth in the medium to long term. We have deliberately structured the portfolio with a long average mine life linked to assets with good track records of reserve replacement, social license to operate and practice environmental management, which we believe ultimately leads to longer and more sustainable mines. This, in turn, provides investors with long-term visibility to future cash flows and exposure to multiple commodity price cycles, in addition to the optionality that comes from future life extensions, expansions in discovery through the drill bit.

The vast majority of our producing assets are situated in the lower half of their respective industry cost curves. This is an important characteristic in an inflationary environment with rising materials and labor costs, as we're now beginning to witness across the industry, which have historically put pressure on mining companies' margins. As a streaming and royalty company with low-cost position assets, we are broadly insulated from these headwinds, particularly sectorial margin compression. We remain true to the model in our portfolio construction, avoiding exposure to equity positions and similar financial instruments, and focusing our activities on acquiring predominantly precious metal streams and royalties. We believe that is what our investors are seeking from us, and we will remain disciplined in executing on this model.

I will now ask Sheldon to comment on our Q3 results and to provide some further context.

Thanks, Shaun. We had another strong quarter, recording over 20,700 GEOs, representing a 62% increase in GEOs over the same period in the prior year. Year to date, we have realized nearly 63,000 GEOs, very close to our total GEOS for all of 2020. We have seen strong performance from Cerro Lindo, Northparkes, Fosterville, RBPlat and Buritica, which has helped to offset COVID-related production delays experienced by ATO.

Adjusted net earnings of $13.7 million were increased 171% over the corresponding period in the prior year. Net earnings were affected by a non-cash, mark-to-market decrease in the value of equity investments recorded in the quarter. We realized operating cash flow of over $29 million in the quarter and over $91 million in 2021 to date. We are debt-free and at quarter end had $27 million of cash on hand.

Turning now to slide 8. Slide 8 sets out the growth in operating cash flow and free cash flow, as well as the high asset margins that we have continued to maintain. In 2020, operating cash flow increased by over 100% over 2019 to $84 million. This strong growth has continued with operating cash flows in the last 12 months of $122 million. A strength of the streaming model is that operating cash flow gets translated very efficiently into free cash flow. As a streaming company, we are not exposed to the sustaining capital expenditures that mining companies are exposed to. This leaves more cash available to shareholders.

The streaming business model is also characterized by high margins. Slide 9 sets out our high margins, which are resilient despite gold price fluctuations. Crucially, our margins are well insulated from rising inflation as we are not directly exposed to mine level operating or capital cost inflation. In prior positive price cycles, producers were unable to fully enjoy the benefit of higher gold prices as underlying cost inflation could result in margin compression. Our high margin model is well suited for inflationary environments.

I'll now turn matters back to Shaun.

Thanks, Sheldon. We're working hard to help provide the market with a richer and deeper understanding of the quality of our portfolio and many catalysts. As part of this campaign, we are planning virtual mine tours for the benefit of investors before the end of the year on Northparkes and RBPlat and look forward to educating the market on the quality of our mining partners and their world-class assets.

Slide 10 provides an overview of the many catalysts across our portfolio announced since we reported our second-quarter results, demonstrating the diversification, underlying quality, embedded growth and long-term optionality in our portfolio. The ATO Phase 2 expansion in the recently released feasibility study was a significant milestone and represents material upside for our stream, which I'll expand upon in upcoming slides.

Zijin has achieved commercial production at Buritica and is already expanding the processing plant from 3,000 tonnes per day to 4,000 tonnes per day. The expansion is expected to come online in the New Year. Dargues, RBPlat and Young-Davidson all achieved record production ore mining rates in the quarter. Fosterville continues to outperform, having already achieved the lower end of Kirkland's guidance in the first nine months. Kirkland now forecasts production of 500,000 ounces or higher for the year.

Drill results during the quarter demonstrate down-plunge extension of the Swan Zone, Cygnet, and Robbin's Hill, with very high gold grades in the down-plunge extension of Swan Zone. Other core-producing assets are delivering organic growth and positive exploration results. Drilling at Cerro Lindo during the quarter continues to confirm continuity of orebody 9 and 5B. Northparkes announced during the quarter that they have commenced the development application process for the E44 Rocklands deposit, which contains favorable gold grades and is approximately 13 kilometers southwest of the existing operations.

In September, Excelsior provided a comprehensive update on its ongoing ramp-up, the restart of the Johnson Camp oxide open pits, and long-term upside on the property. Nevada Copper announced financing support from its key backers for completion of the underground ramp-up and has been successfully accelerating stope production and increasing development rates. Renard is benefiting from materially higher diamond prices and steady operational progress.

Aurelia's Dargues is also demonstrating tremendous value. Talon continues to intersect record grades and expand the scale of the Tamarack Nickel deposits. The latest discovery indicates a new deposit with shallow, thick, and large scale mineralization.

Newcrest announced plans to drill the GJ Project in British Columbia. And Calibre Mining is ahead of schedule on its Eastern Borosi project. Our royalty in New Found Gold's Queensway project is also benefiting from incredible exploration success and attractive geology. The drill program at Queensway was recently expanded to 400,000 meters and the upside is prospective.

Moving to slide 11. We want to extend our gratitude and congratulations to the entire Steppe Gold team on the excellent Phase 2 expansion results, including the recent feasibility study and the record progress made on this exciting project. This project will bring further significant investment to the region, generating more jobs and providing economic benefits to local stakeholders, while creating strong returns to Steppe Gold and Triple Flag shareholders.

The economics are incredibly robust, with an IRR of 67% and a three-year payback period. These figures are after tax and include the stream providing for a really compelling expansion for Steppe. This is a relatively low-risk expansion, with construction underway and permitting and infrastructure broadly in place. A new 2.5 million tonne per annum crusher is currently being installed, and Steppe reported that it is in discussions for debt financing.

After constructing the ATO oxide phase heap leach project that went into production in 2020, Steppe Gold boasts a proven management team well versed in constructing a mine in the region. This stream showcases Triple Flag's ability to work with miners to provide tailored financial solutions that enable them to build profitable new mines using our vast global mining sector experience, along with deep technical and commercial capabilities to deliver value to all of our stakeholders. We are also working with the Steppe Gold management team to meaningfully contribute to their impressive community programs in education and beyond, adding to our commitments with mining partners in other regions.

On slide 12, you can see the site layout and the background. We've been partners with Steppe Gold since day one. We like the geology, the asset and the management team, and we're the cornerstone financing partners in 2017 to help Steppe acquire the assets and successfully bring ATO into production. In total, we invested $28 million in the stream and we have already received $60 million back in the stream cash flow as of the end of the quarter, despite 2021 being a challenging year in terms of temporary supply chain constraints on sourcing reagents.

The Phase 2 expansion represents significant upside for all stakeholders and materially extends the life of Triple Flag's gold and silver stream. Across the streaming sector, it is objectively one of the most value-accretive catalysts in 2021, adding tens of millions of dollars of NAV to our portfolio with no incremental investment by Triple Flag.

Triple Flag's portfolio has a strong balance of well-established core operating assets and assets in the ramp-up phase providing near-term growth. Both parts of the portfolio are contributing to our results, and I'm pleased to share some notable highlights.

Northparkes was the strong performer for Triple Flag, contributing 4,300 gold-equivalent ounces in the quarter. We are seeing upside materialization on Northparkes large land package as well, with the announcement of the E44 Rocklands application for development. This is a gold rich deposit 13 kilometers from existing operations.

Cerro Lindo continued its very strong performance in 2021 with 7,500 GEOs delivered in the quarter. RBPlat is performing well, contributing 1,800 GEOs. In the third quarter, it had record 4E production at Styldrift as it nears its nameplate capacity of 230,000 tonnes per month. We're also watching with interest the speculation of a possible combination with Implats and Northam.

We are pleased to see Fosterville tracking above 500,000 ounces for the year after an extremely strong Q3 on grade outperformance in the Swan Zone. Fosterville contributed 2,500 GEOs in the quarter. And Young-Davidson contributed 800 GEOs and as mentioned earlier, achieved record mining rates through the quarter. Additionally, we have seen encouraging exploration results as Alamos resumed the first systematic exploration in over a decade at Young-Davidson.

Slide 14 sets out the five assets in our portfolio that are currently ramping up to full capacity. At ATO, COVID continues to disrupt 2021 production due to supply chain issues, impacting the China and Mongolia border. Border and vessel congestion unfortunately led to shortages of critical reagents. But Steppe has been mining, crushing and stacking ore throughout the year, so the supply chain issues are a matter of production delays that are expected to be made up in the future periods, again, essentially a timing impact. We expect leaching to resume at ATO in the spring in our internal planning, allowing significant time for the supply chain disruption to be addressed. We'll keep the market informed as they progress.

Dargues, Buritica, Gunnison and Pumpkin Hollow all continued progress of their development. Each are currently contributing cash flows and are expected to gradually increase their production contributions going forward.

As announced in the prior quarter, production over the next five years is expected to average 105,000 GEOs per year, a significant increase over current production levels primarily due to continued production growth from Buritica, Pumpkin Hollow, Gunnison, Dargues, and ATO. Over the next 10 years, we expect average production of 105,000 GEOs per year. This is 98% precious metals weighted and only requires USD45 million in future investment, which will easily be financed through internal cash generation.

Beyond this outlook, numerous catalysts exist in the portfolio along with considerable optionality related to potential life of mine extensions, expansions, and exploration from our 15 producing mines and 60 exploration and development assets. This outlook naturally doesn't factor in any additional transactions we are likely to do, given our successful track record over the past five years.

The team and I have embedded principles in sustainability and ESG into Triple Flag and its core values from day one, and we are pleased to share our approaches in more detail in our sustainability report, which we published in September. We support the progress being made by leaders at the UN Climate Change Conference in Glasgow. The role of the mining sector in addressing the climate change challenge is one of the most important [that someone would] have. As a provider of capital to the sector, we feel we have a duty and ability to help influence outcomes and that we must also take our share of responsibility to the impact associated with production of attributable metals that generate our revenues. We have done this by estimating and offsetting the greenhouse gases associated with the production of our attributable share of metals by our counterparties.

Each project we've invested in for carbon offset credits, such as renewable wind power in Mongolia and the production of efficient cookstoves in Ghana, makes a measurable difference protecting the environment, as well as providing secondary benefits that align with the UN Global Compact Ten Principles and the Sustainable Development Goals, including quality education, gender equality and responsible consumption and production.

On September 30, to commemorate the new National Day for Truth and Reconciliation in Canada, which honors the lost children and survivors of residential schools, their families and communities, Triple Flag partnered with Stornoway to announce a new scholarship program for students at the local pre-high school near the Renard Mine in Northern Quebec, whereby five scholarships will be awarded at the end of the school year to students. We also provided 75 backpacks full of school supplies to be distributed at the elementary school. Supporting local communities was incredibly important to us. We will continue to partner with our counterparties where we can to support communities where they operate.

Our balance sheet is robust. We have no debt. Our business generates substantial cash flow, and we currently have available liquidity of over USD600 million. Deals of this scale could represent material growth to a company of our size. As you are aware, we made the decision to take Triple Flag public on the TSX in May of this year. Part of the consideration in coming to market was our firm belief that the company had reached the critical scale necessary to allow us to compete for and originate streams and royalties of meaningful scale as a public company and broaden our ownership base. We have a strong institutional shareholder base led by Elliott and a blue chip set of leading global firms and a growing retail shareholder base. As significant shareholders ourselves, we are fully aligned with our fellow owners.

We have positioned Triple Flag as an emerging senior streaming and royalty company. We believe we have all the key elements to drive Triple Flag's growth in trading multiples. We have a high-quality portfolio that objectively stacks up with those of the larger, most valuable peers in the sector on all the important metrics. The numerous catalysts we highlighted today demonstrate the organic growth and exciting future ahead as we continue our track record of growing this company further in a manner that creates value for all our stakeholders.

In the near term, an increase in gold equivalent ounces, the sector-leading dividend yield, accretive share buybacks, and used flows from portfolio assets are all catalysts we see on the horizon. We look forward to highlighting our core assets virtually in the near term.

Thank you again to all who have attended this call. And I will now ask the operator to please begin the Q&A session.

(Operator Instructions) Fahad Tariq, Credit Suisse.

Hi, good morning. Thanks for taking my questions. Maybe first, there's still a number of mines that are ramping up to full capacity. You've touched on a few of them in your presentation and in the MD&A. Can you talk a little bit about expectations for next year in terms of when we could expect more normal run rate production levels? Thanks.

Fahad, hi. Thanks for the question. Look, firstly, Fahad, we'll be providing 2022 guidance early next year along with the rest of the sector. So I'm not really going to provide anything specific right now. I think generally what I would say is I would encourage people to look at what we've done over the last four years -- the last five years. So our CAGR was 24% in GEO growth. This year will be another 30%, and that's with essentially negligible contributions from assets like Nevada Copper, Excelsior, and others that are ramping.

We haven't -- and you've seen our sort of 10-year guidance. There's only two large companies, the two biggest who've been able and capable of providing that sort of guidance. And you've just seen the ATO expansion plus cornerstone significant funding that's been announced at the same time for $65 million to fast track that.

So I guess what I'm trying to allude to here is that the cash flow multiples that are implied in our business now are the lowest in the entire sector before any of that is factored in, including our growth track record and including the likely growth that we will see in the year ahead. I mean, ATO alone with the disruption this year with the reagents, if they hit their original guidance, that would have been another 9,000 GEOs to 10,000 GEOs, for example, just to put that in context.

So anyway, I hope that gives you a bit of an indication. I think when you start looking at the details of things like Buritica and the expansion ahead, those guys are just doing incredibly well. You've heard the updates that we try to provide a lot more disclosure and information. And we'd welcome any additional feedback from yourself and your colleagues as to how we can continue to enhance our disclosure.

And then in a few weeks from now, I think the first two catalysts to rank, Northparkes and RBPlat, I think will give you a really good window into just the quality and the optionality and some good cornerstone assets. So maybe not the full detail at which you require. A lot of that will come early next year, but hopefully, directionally that gives you a very good idea.

Okay. And then just maybe switching gears from the organic growth to potentially inorganic growth. Some of your competitors in the past few weeks have talked about potentially looking at other metals beyond precious metals and having the latitude to even look at things like battery metals. Maybe I'm just curious, your thoughts philosophically on given deal pipelines and what things are looking like. Is that part of the consideration maybe expanding to different metals that you would consider? Thanks.

Look, I'm not sure -- I think we might be unique in that -- I suspect we're the only management team, as a senior team that is actually working in the base metals sectors as executives and operators. We've got the skill set. We've got battery metals already in our portfolio with copper and nickel, for example. And we do see a lot of opportunity there. So we've always been very clear that those are fair game and they're things that we have skill sets in. If we're diligencing a copper asset like Northparkes for gold and silver, it's not a commercial or technical constraint that allows us to do a base metal stream on that. The only issue is the extent to which perhaps you go overweight for us at a longer-term target. So we've been clear that our core focus is precious metals. We've seen ample opportunity there. But we will be opportunistic if we see a decent battery metal or base metal opportunities.

What we won't do, just to reiterate, it is -- it feels odd for us to talk about being carbon neutral, given our skill sets and orientation. We're not investing in coal, we're not investing in oil and gas. Those are skill sets that we just don't have, and it's at odds with our focus. So yes, but we're just -- we're not going to declare Triple Flag battery metals at this point. We're a precious metals company that is in pursuit of good assets, good returns. And we have an opportunity in the short term maybe to go slightly overweight, but ultimately, we'll focus on our longer-term targets.

Okay. Great. Thanks so much. That's it from me.

Thank you.

Greg Barnes, TD Securities.

Thank you. Shaun, with the guidance that you don't expect reaching at (inaudible) from [probably spring] of 2022, is that your view or what is that goal from?

It's us, Greg, and good morning. Good to hear your voice. Yeah, we -- look, I think what we're trying to demonstrate is just a level of pragmatism and prudence there. We don't have any special insight. We know that the team is pursuing multiple sources outside of these traditional channels to address that. And I think you've seen also in our disclosures -- I mean, even with the work that we've continued doing, they've got a -- I think it's 40,000 ounces crushed and stacked. So the minute they've got reagents, the time to be able to unlock those ounces should be pretty quick. But one is the kinetics and the seasonality in winter that we're just factoring in. But yeah, it's us. It's nothing to do with Steppe management's view at this stage. We hope we're conservative in that prospective range.

So to be clear, they're not going to (multiple speakers) today.

No, but just to your point, I mean, if you consider, ATO started last year in the spring and ramped and hit commercial production and you think about the ounce delivery last year just versus this year alone, I think it gives you a sense when you've already got that level of ounces stacked and mined and crushed and stacked on there. The minute they do that, the ability to be able to have a flesh of ounces coming through there is obviously significant.

[Nonetheless,] they're getting expansions of 4,000 tonnes a day. What's the impact on your GEO delivery fee beyond [taking price]? And now it sounds like that's going to start very early in 2022 for the (inaudible).

Yeah. Well, firstly, my first comment on Buritica as a whole is it's actually been quite remarkable to watch the Zijin team navigate through COVID through a ramp-up where even key experts with things like tramways, they'd be sitting in Austria. These guys have just done incredible work to sort of take it on the chin and work with all of their communities and really ramp up.

So you'll start seeing -- the ounce contribution is really, really meaningful. And just to remind you, that deal we did a couple of years ago, we've -- from the $100 million, we've got less than $10 million outstanding now from that, and it's just starting to ramp. So we are in love with what those guys have been able to achieve. And to see them already going from the 3,000 tonnes to 4,000 tonnes has been pretty gratifying.

But James, I don't know if you've got any comments. Did you want to make a comment and [talk] about --?

Yeah. I mean, Greg, and we'll be -- James here. We'll be positive for 2022. The one element is the expansion from 3,000 to 4,000, but also the stabilization of the monthly throughputs that are becoming more consistent, that will also provide some GEO growth in 2022.

And Allan, anything else?

Yeah. It's really a straight 25% increase in production from the plan this year to the plan next year. So yeah.

Okay, (inaudible).

Yeah. And obviously, they've been ramping through this year. So as they start achieving their run rates and then hit that benefit, it's just increased throughput, which would be good. But we'll incorporate all of this in our guidance early in the New Year.

And what run rates are they achieving right now?

About 3,000 tonnes per day. They have been achieving 3,000 tonnes per day.

Okay, thank you.

Thanks, Greg.

Brian MacArthur, Raymond James.

Good morning, and sorry to go back to this because my question was like Greg's in ATO. So I just want to try and understand a couple of things here. This 40,000 ounces on the pad, they talk about 60,000 ounces maybe next year, but you're saying we maybe won't get there because we're going to be more conservative. But I assume those ounces come out quickly out of the pad. So can we get, from your perspective, coming out more than 60,000 ounces next year? And I guess my second part of the question is what's the delay in your contract between when they actually produce it and you actually book it? I'm just trying to get a feel for the sales there next year since there's a lot of moving parts.

Yeah. Brian, look -- great to hear your voice. Look, there is a misconception I want to correct here. I'm not suggesting that if those guys -- the Steppe team is saying 60,000 ounces next year that we're saying they're going to do 40,000 ounces. What I'm saying is even though they've had reagent disruption, they've continued to mine and really build working capital, so rather than just conserve cash. So that's working capital, to your point, before they start mining again next year. So they should be very well placed to not just benefit from quick ounce delivery from mining activity this year and that working capital build-up, but the work they're going to do next year. Plus they've got a crusher, that 2.5 million tonne crusher that they're in the process of finalizing construction, that is what, three or four times the sort of capacity of the existing one.

So I think they're very well placed once they get the reagents to be able to achieve some very good ounce run rates next year. The time delay -- we get pretty much continuous deliveries from there. It's not like on something like Cerro Lindo, where you can think of something like performance lag between -- once they actually produce and then we ultimately get the ounces. We get good line of sight, but there is that working capital time lag. We don't really have that in this business.

Sheldon, I think it's mostly -- we get sometimes -- every couple of weeks, we'll get deliveries from Steppe.

Yeah. They do kind of periodic pores, and then they deliver that to the Mongolian Central Bank and they get paid. And then we get our delivery upon that payment. So that's actually a very short lag in the system from our perspective on that one.

Yeah.

Great, that's very helpful. And then as far as the cap at ATO, you would think it kicks in when, 2024?

Yeah, we're currently projecting about 2024. I mean, obviously they've had a pretty good run rate. They have a bit of additional oxide, they've got this additional crushing capacity. So we're working off their latest public guidance in that. And as you know, I mean, we -- our business case is really predicated on quick payback, high return on the oxide. So this latest news is -- it's all additional -- tens of millions of additional NAV to us beyond that. So yeah. And that's before they hopefully have some additional success with further exploration. This is just this current study that drives that -- these reserves.

Okay, great. Thank you very much.

Thanks. Thanks, Brian.

Mike Jalonen, Bank of America.

Hi, Shaun. I guess that's my Finnish pronunciation of my last name.

Hey, Mike. Absolutely.

Yeah. Just I try -- and switching gears away from ATO and Mongolia and just wondering, you -- Shaun, you mentioned one of your goals is to increase your share liquidity. You're trading, I assume, or you're buying back stock. So unless you're buying back Elliott stock, I'm not too sure how you're going to increase your liquidity. So I was just wondering what steps you're taking to increase your liquidity.

Yeah. So, Mike, firstly, I mean, this is a contradiction we've grappled with a lot, as you'd appreciate. I'd say the status quo, our liquidity has clearly been the one consistent thing when we look at our large institutional shareholder base. That has been a clear driver of the underperformance that we've had, and it does seem to be this sort of concern that there is this contradiction. But you can look at your own numbers and everyone else's. As you look at the nine transactions that have been done, over $50 million this year, and ask yourself the question of what those economics look like in terms of NAV accretion, I encourage you to look at the same thing with no money down on ATO in terms of that NAV and what that means and behaving countercyclically.

And for us, I wouldn't -- the idea here is really just be supportive. These numbers are not material to our overall liquidity. We haven't commenced buying, to be clear. We've been in a blackout period. But ultimately, there needs to be a better reflection of just some of our intrinsic value. And that can happen on some very low volumes with -- currently in our stock. Therefore, I think it could create an environment where Elliott who frankly has not sold the share on the IPO and hasn't -- they couldn't sell even if they wanted to, and they don't want to, from our understanding. I think the potential to do non-dilutive secondaries in the future would be contingent upon a slightly better reflection of fundamental value in the share price.

So that's how we view it. There is an opportunity for us obviously, depending in certain -- where we are at at that time. We've got a lot of firepower with cash to transact with. We've made that clear in the presentation. But if there is an opportunity to add good assets and NAV and potentially dilute Elliott and do some additional equity there, that will be something that we won't do formulaically, but we'll consider very carefully depending on the dilution that it may entail at that time. We're big shareholders, so this is a thing we don't take lightly.

So I hope that gives you a sense. But it's not like this is simple linear dance that we can sort of sketch out for you. I think in the short term, it's just helping people educate, particularly smaller investors who are very value-focused, who like the large dividend that we pay and just see this massive disconnect between the fundamental value in this business and the re-rate potential and the ability to participate. It's like a no-brainer.

Okay. I guess another way to dilute Elliott is a merger with another streaming and royalty company, which one of your peers has bought three of them already and just can try it ongoing, [everybody with the battery, I guess]. So I'm just wondering what your view there is.

Yeah. So look, firstly, there is the concept and then there is the -- obviously the detail and the math, right? And you've got to make both those work. So conceptually, we're not entrenched management, plain and simple. I think we've got probably more equity ownership than pretty much any management team out there. So that means our picking up the paycheck every couple of weeks is not what keeps us engaged and excited about life. So whether we are on either end of a -- or a merger recourse or whatever that combination look like, we are intrinsically open to those opportunities.

The group you have mentioned, I think they're doing a public service in terms of consolidation on the small end. I think it's quite hard for us to find fundamental value on some of those. And so we'll look at every and all possibilities. And we're always available to those, but the math also has to work, right, at the end of the day.

So I think some of the things that -- I would be interested in your perspective at some other point. But if you look at some of the things, particularly on the smaller end, and then you think about if they were in our portfolio, would we get -- once institutions and analysts actually focus on those fundamentally because this is not a retail story -- would we get the value attribution and the recognition? Would it be seen as smart and accretive and actually make a material impact on our business? Those are the questions, I think, we sort of grapple with.

Okay. And just one last question. Thanks a lot, by the way. On slide 5, the P/NAV chart -- well, all three of them or two of them, Triple Flag is the least expensive. So maybe Triple Flag is in the crosshairs of somebody who wants to buy another company consolidating Triple Flag because of your evaluation.

Yeah. Like I say, Mike, look, we're not entrenched. If there was a sensible offer that was a proper reflection of value, we'd be amenable to it. But at the same time, we're not a charitable organization and Elliott isn't either. These guys are -- they've been super supportive over five and a half years. They like gold, they clearly like this team. And by the way, nobody can go and do a hostile and sneak one by them. So, yeah, bonafide approaches that made sense that were a proper reflection of value, every day the week. But cheeky offers, like I mean, let's not waste each other's time, right?

Okay. Well, thanks for that.

Okay, Mike. Good chatting to you.

Tanya Jakusconek, Scotiabank.

Hey. Good morning, everyone. Thank you for taking my questions. First of all, congratulations on getting that free option on the fresh rock work, so that's good news. Just wanted to come back on the M&A, and Mike did talk a little bit about merging -- mergers with other companies and so forth. So I'll leave it at that and move on to maybe the opportunities that you are seeing in the market. I know on your Q2 call, you mentioned a few hundreds of millions in sizes. Is that still the range that you're seeing opportunities in?

Yeah. Tanya, I think it is. It's interesting. I know we -- this format lends itself to the sort of quarterly fixation. But I mean, as the ATO shows, seeds that you plant years out very often can really create these outside opportunities. You know this and you know the model really well. And so our line of sight, I'd say beyond just this quarter, I think there's some really interesting things in that size range at the moment, development stage stuff, some non-core things, some base and precious. We've got a bilateral thing that's kind of around $100 million and it's been on a super slow burn that may or may not get there, which would really be more like early next year if it all comes together.

But this team is about as active as it's been at any time. I think it's just maintaining that focus on value as we go forward. So yeah, I'd say the sort of comments that we've made previously and all the stuff that I've read so far with the peer set is very representative.

Okay. So I guess just from what I've taken on, is the size of the project financing looks like non-core asset sales was one that you mentioned too?

Yes. Yeah. I mean, we see those from miniscule in size to larger. So I think we always tend to see those from time to time coming to the market. So yeah, we see those from both private and public situations.

And then you said also base metal, so gold, precious metals and non-precious metal base metals.

Yeah. And I mean, there is bulk. Occasionally, we don't tend to -- depending obviously what that bulk is. You won't see us do coal or things like that, but we see those as well. There are some of those we've seen right now too.

And then just wanted to focus on the royalty side -- on royalties and royalty portfolios. Are there any of those available?

Yeah. There's a tiny one that we're waiting to -- we put some work in a while ago. Hopefully, that -- there's a [robust] situation there that hopefully will resolve itself one way or the other. But yeah, we always see a few of those. And I think on the horizon beyond probably this quarter, there's something that could come to market that I think would be really interesting as well for whoever was to transact on that. So yeah, there's a lot of work at times -- you've been quoting me for things for three years or four years, and sometimes, they end up bilaterally, sometimes they end up in a process. But I think there's a lot in the pipeline.

Okay. And maybe just one technical question just on Northparkes and the E44 potential development of that satellite. Can you just give us an idea of what your stream delivery profile looks like with that?

James, do you want to --?

Yeah. So, Tanya, it's James. So Northparkes has noted the intention to develop and apply for permitting. It has not been integrated into the life of mine plan yet, in addition to our life of mine plan we used as part of the transaction. But we expect at some stage when that is integrated, it will be supplemental feed to the existing deposits.

E44 is a relatively small deposit. There's about 250,000 ounces of gold in resource. But I think what's particularly interesting about it is its 13,000 that Shaun noted from the main mining license area where all of the bulk of the resource and reserve is. And it does highlight the potential to find other four or three targets across a very large land package that we have exposure to. So it's a nice supplement now that we should benefit from and is probably a harbinger of additional discoveries in the future.

And also, is that it's -- this was something that was just not on our radar screen. Because Northparkes has such a large endowment and such a large resource and that tends to translate into decades, I candidly was surprised to see this come to the fore. So yeah, I think to James's point, when you've got over 1,000 square kilometers of land over and above that 26-square-kilometer land package that the reserves and resources and tailings, et cetera, manifested on, it just gives you a sense of the endowments. And we'll cover more of that in some weeks with the virtual mine tour.

Yeah, we were just wondering why the operator was moving forward in that area, given the very low copper grade.

Yeah. I mean, they still benefit from some of the gold exposure and it provides a good blend for the mill. There's also -- a tailings expansion is part of that project as well, which is important for the operation.

Okay. And then just maybe with Sheldon. Just want to come back to the global minimum tax that's been getting a lot of attention, and it is moving -- looks like it is moving forward. So just wanted to get your thoughts on what do you see the impact for -- first of all, your view on it and the impact to Triple Flag.

Yeah. Thanks, Tanya. Yeah. So we've been following that story very closely as obviously everyone has. And there has been a bit more guidance that's been put out, which has been very, very helpful. First of all, on its face, it won't affect the royalties, so it just affects the stream. We do use a subsidiary in Bermuda similar to Franco and Wheaton's structure.

What I can say is when we've done our modeling, one of the things we benefit from is the relative use of our portfolio and the fact that we have the -- our streams are not amortized to a large extent. And we've actually gotten some good guidance from the -- on the international tax front there that they'd follow the accounting income.

So when we look at it and say, even if they managed to implement this in 2023 and making some reasonable conservative assumptions, we see a NAV impact of about 5% on our internal model. So that actually makes us feel pretty good. That's not too substantive. If it's delayed to 2025 because 2023 seems pretty close to us for these implementations, 2025 would lower that impact to about 4%. So again, that just kind of give us a sense of the scale for us. And these figures are before taking in account any ability to utilize Canadian tax shield that we might have. Because we just don't have a lot of detail on how it will be implemented. And of course, as the additional detail comes out, we'd love to see how we could optimize things. But I hope that gives you an idea of how we're assessing the global minimum tax.

And less NAV then would be added on by just the ATO news, for example.

Okay, great. Thank you so much.

Thanks, Tanya.

Thanks, Tanya.

(Operator Instructions) And there are no further questions at this time. Presenters, please continue.

[Look up here] to that. I think people know where we are. If there is any follow-up, we're available always. And we really appreciate everyone's time. We appreciate the thoughtful questions. And yeah, thanks so much for the opportunity to talk to you today. So thanks so much. Have a good rest of your day.

Thank you, presenters. Ladies and gentlemen, that concludes our call for today. You may now disconnect. Thank you for your participation.