Triple Flag Precious Metals Corp (TFPM) 2024 Q4 法說會逐字稿

Thank you for standing by. My name is Karen, and I will be your conference operator today. At this time, I would like to welcome everyone to the triple Flag Precious Maples Q4 2024 results conference call. (Operator Instructions).

I will now turn the call over to Sheldon Vanderkooy, CEO. Please go ahead.

Thank you, Karen.

Good morning, everyone, and thank you for joining us to discuss Triple Flag's 4th quarter in full year 2024 results. Today I'm joined by our CFO, Eban Bari and our Chief Operating Officer, James Dendle.

Triple flag had a fantastic year in 2024. The business delivered another strong performance during the fourth quarter, resulting in record performance for the full year of 2024.

This includes record GEOs of 113,000 Ounces. That's a result that is in the upper half of the guidance ranges we issued at the beginning of the year and represents our eighth consecutive year of GEO growth. And while record GEOs are great, what really matters for shareholders is our annual operating cash flow of $214 million. Demonstrating our ability to directly realize higher cash flows due to the rising metal price environment.

We are on track to deliver another great year in 2025 with GEO guidance range of 105,000 to115,000 Ounces.

Notably, the high grade E31 open deposits at North Parks, which were a core contributor to our performance in 2024, will continue to be processed during the upcoming year.

Looking further ahead, the next stage of high grade gold ore from North Parks is also advancing to production. Access to the first sublevel at E48 is substantially complete, and commissioning is expected in the third quarter of 2025.

In the fourth quarter, we were also pleased to announce the $28 million acquisition of the Trey Quebradas Royalty, reinvesting the cash flows we generated into further streams and royalties which will benefit our shareholders for decades to come.

This gives our shareholders exposure to near-term cash flow from a large, well-capitalized mining project operated by Zain with a long life and significant exploration potential.

Our portfolio provides top tier precious metals exposure, and we are proud of what our operators have achieved in 2024.

These achievements include GEOs at Cerro Lindo increasing 24% year over year due to higher grades and enhanced plant efficiency.

In addition, Camino Rojo achieved record production of 137,000 ounces, representing a 19% beat on initial guidance.

And on the development side, the new team at Montage Gold delivered a fully permitted and financed project at Kona in less than a year, with construction now well underway.

Overall, Triple Flag is well positioned to deliver long term value for our shareholders from a diversified mix of producing and development assets, and we are poised for further growth with an organic growth profile of 135,000 to 145,000 GEOs in 2029.

As I noted earlier, record GEOs are great, but what really matters is cash flow for shareholders on a per share basis.

The single most important metric I focus on is cash flow per share, which we have increased through the course of 2024, both consistently and rapidly as we have benefited from record production and a rising gold and silver price environment. This is the way it's supposed to work. This is exactly what we have done.

There is still more to come. The average gold price in 2024 was less than $2400 an ounce, which is $500 an ounce lower than spot prices. At spot prices, our year over year cash flows will continue to increase.

I will now turn it over to Eban to discuss her financials for Q4 and the full year 2024.

Thank you, Sheldon.

As you can see, 2024 was a record across all financial metrics due to strong volumes and precious metals prices, as well as continuing strong margins.

These margins drive the high conversion of top line revenue into cash flow available to shareholders, a key benefit of the royalty and Cerro model.

Strong cash flow generation will continue to support all of our capital allocation decisions, including shareholder returns and external growth opportunities.

On shareholder returns, we paid out over $43 million in dividends to shareholders in 2024, which reflects a 5% increase in the middle of the year, a third consecutive increase since our IPO.

In addition to our progressively growing dividend, we also returned nearly $9 million to shareholders via share buybacks in 2024 and expect to remain active on our NCIB opportunistically.

On external growth, we reinvested the cash flow generated in 2024 into streams and royalties, including the Agbaou and Bonikro streams as well as the Tres Quebradas royalty.

These assets either generate cash flow today or in the near term, offer significant exploration potential, and are operated by strong management teams and represent creative additions to our portfolio.

Moving forward to 2025 guidance, as Sheldon noted, we expect GEOs of between 105,000 and 115,000 ounces for the year, which we expect to be essentially 100% derived from precious metals, namely gold and silver.

This is driven by our expectation of higher gold grade open pit material at E31 and E31 and deposits continuing to contribute to deliveries from North Parks, as well as solid performance from Cerro Lindo.

Depletion is expected to be between $70Million and $80 million, same as in the prior year, while GNA will be relatively consistent between $24 Million and $25 million.

Finally, our Australian cash tax rate for Australian royalties will be approximately 25%, consistent with the 24% that was realized in 2024.

Triple Flag has delivered a consistent track record of GEO's growth since inception, achieving a compound annual growth rate of approximately 20% since 2017.

Beyond the guidance we set for 2025, we see further growth to 135000 to145,000 GEOs in 2029.

Mid to midpoint, this represents ounce growth of over 25% from 2025, driven by our operating partners pursuing their own organic growth through both brownfield development and advanced projects such as Kone, Eskay Creek and Gunnison.

We also continue to have substantial firepower for deals that will be additive to this growth profile with more than $700 million available to deploy for new transactions that are creative.

Fit with our strategy and deliver value throughout the cycle. I'll not pass it on to James to discuss that Quebradas acquisition.

Thank you, Eban. We were pleased to announce the acquisition of a 0.5% gross overriding royalty on the Tres Quebradas $28 million this past December, which is expected to close in the 1st quarter.

This asset adds near to revenue from a high grade lithium brine asset with multi-decade reserve life, an attractive cost profile as bright operations tend to be in the lowest cost quartile of the lithium cost curve.

Expansion optionality and significant resource upside. Notably, our royalty has full coverage of all the mineral properties that comprise the project.

At steady state, triple flag expects to receive royalty revenue from phase one [revadas] to equate to approximately 1,000 Geos per year, representing production capacity of 20,000 tons per year of battery grade lithium carbonates.

Zijin is aiming to be a global lithium producer, having entered the lithium market in 2021 and acquiring its 100% interest Tres Quebradas in early 2022 for $770 billion.

As highlighted by Rio Tinto's $6.7 billion acquisition of Argonaut. This asset is located in the right area for low cost long term lithium brin production.

In terms of expansion optionality, the gene is contemplating a potential expansion of nameplate production. From a range of 40,000 to 60,000 tons of lithium carbonate per year referred to as phase two.

If advanced, this would meaningfully increase the steady state 100 year profile I mentioned earlier.

Overall, the acquisition of Tres Quebradas royalty represents a countercyclical op opportunity to deploy capital into a crucial commodity and gain exposure to a large, well-capitalized mining project, a long life, and significant upside potential.

I may pass back to Sheldon for the conclusion of the former part of the presentation.

Thank you, James.

We have a strong and positive outlook in front of us in 2025.

We have a growing cash flow per share profile that will allow us to increase our dividend, buy back shares opportunistically, and reinvest in the deals to drive compounding cash flow growth.

We have a diversified portfolio that provides us with top tier precious metals exposure.

We have forecast organic production growth of over 25% by the end of this decade.

We have we have a debt-free balance sheet with over $700 million of debt capacity available to finance further deals. We have full alignment with shareholders as we are significant shareholders ourselves, and ultimately our strategy that has made us successful provided us with a strong track record, is not going to change as we look ahead.

Here's what we're going to do. We're going to we are going to focus on reinvesting cash flows to deliver compounding growth per share. We're going to focus on acquiring good assets in good regions with good operating partners, and we're going to stay focused on generating cash returns for shareholders. Karen, please open the floor to questions.

(operator Instructions). Lawson Winder, Bank of America Securities.

Thank you, operator, and hello, gentlemen. Good morning.

Thank you for the update. I wanted to, well, ask about a few things. So first off, on the Bonikro and Agbaou stream, there was a proportion of revenue in 2024 that was a true up. And so just trying to think about what was like a run rate number in 2024 for those two assets X the true up and are there any additional true up still coming in 2025 for those?

James, thanks for the question. Yes, the true ups are, relatively small contribution, and obviously we don't provide assets specific guidance.

So, I think you can think about it from the point of view of Allied guidance, and there'll be a sort of assuming they're short of the minimums, which, their guidance would indicate that they are marginally. There'll be sort of a lagging throughout every year.

So when you sort of smooth that out over the period of the minimum deliveries, it will kind of blend through to being not similar to the production rate that mine is achieving and a remark those true ups are settled.

By the end of January, the following calendar year, so it basically happens in in 10 there's a bit of timing with deliveries from the prior, from the prior year in any case.

Okay, yeah, thanks for the reminder. I wanted to ask you about a privately held asset that you guys have.

Just Try to get some clarity on whether or not we should be thinking about including it in our long-term projections, particularly thinking about your long-term guidance after 2029, and that's El Machito, you haven't received deliveries from that asset for a couple of quarters, maybe 3 or 2.5. Is that asset expected to restart at some point?

Yes, hi, Lawson, we'll take that. Yes, that's a smaller asset that we acquired as part of the Mavericks portfolio. It's a privately held zinc mine. It's been in operation for decades, and they got hit with a few, higher costs, and the zinc price ticked down last year. And but they've actually restarted deliveries.

They're, we have really good dialogue with the operator. It's not a large asset in our portfolio and it's not something that we need or count on to hit either our, 2025 guidance or our 2028 or 2029 number. So I would say it's kind of like upside from here. But the mine's operating, it's a really good team there and you know we're working closely with the operator, so I don't see that as an issue.

And Lawson, to be clear, we have received deliveries on that in Q3 and Q4 2024.

Oh, great.

Thank you for confirming that. And then, Just getting back to one of your bigger assets, just thinking about Buritica, so there was the disruption from the Artisanal miners at that asset. Do you have any sort of update or insight as to what's happening on the ground today? Like, is that an issue that's now resolved and that we can kind of forget about that going forward, or there's still some potential risks that we should think about with that asset in terms of forecasting, revenues for the coming years.

Yes, hey Lawson, it's Sheldon here. I'll answer this one as well. I think the AI team has done a really good job on the ground dealing with the difficult situation there, and this is actually, this is very important.

It's not artisanal minors we're dealing with. These are illegal minors. It's more criminal syndicates and gangs and that's a situation that the Zein team is managing.

The mine is producing right now. Last year was a was a record, and if you look at what Ze Jin is projecting for the future, they're continuing to invest money and expanding that asset. We feel really good about the asset, but this situation is probably not going to be one that's going to resolve quickly. It's probably going to be something that this asset lives with for a while, but Zhe Jin has done a very good job of operating through the through the issues with the illegal miners.

Okay, fantastic. If I could ask just one more on the project pipeline or the deal pipeline. What what sort of transaction sizes are you seeing? Is it more focused on precious metals? Are you seeing opportunities in non-precious metals like the like the lithium op opportunity you guys took advantage of last quarter?

Yes, no real change from prior quarters, we would have said. I mean, I think our sweet spot is still the $100 million to $300 million dollar range. It's a really robust pipeline right now. There's a lot of good opportunities that we're looking at. The lithium, I love that lithium deal we just.

A part of it is like Saijin is an operator, a large, well capitalized mine coming on in Argentina, and I think that the timing and the price cycle is looks good for lithium. It's also a very small size and it doesn't change our focus from a precious metals focused portfolio.

I think the next deal we'll have a have announced will be a gold and silver deal in the Americas, so that'll be kind of squarely in the in the strike zone. We are seeing some smaller deals as well out there, so it's probably a pretty healthy pipeline of under 100 million to kind of 100million to 300 million and actually a few, larger ones that are probably lower probability, but we'll see what we can do.

In terms of precious versus non-precious, the weighting is definitely towards the precious. There are some non-precious opportunities out there. We've always been open that we'd be open to looking at some non-precious exposure.

Right now we have 100% of our revenues from precious metals, so I think there's definitely some room in there for the portfolio, but I never want to take the portfolio away from being seen as really a precious metals vehicle like that, when people look at Triple Flag, it's right in our name, and we're not changing that.

Fantastic. Thank you very much, guys.

Thanks, Lawson.

Tanya Jakusconek, Scotiabank.

Oh good, that's me.

Thank you. Good morning everyone. Just wanted morning I just wanted to follow up on Lawson's questions on the M&A pipeline. You mentioned, the size, the sweet spot of the well, you're seeing $100Million to $300 million. Are we looking at producing, assets in that sort of range, or is this still like development coming in in like 5 years' time?

Just wondering your mix of what you're seeing, is it going to be adding immediately to the pipeline or beyond 2030?

So the things we're looking at in the, in that pipeline that I'm reference, there's actually a mix of development assets and producing assets. It's really a matter of what fish we get into the boat.

Okay, and you mentioned a couple of bigger ones greater than $300 million. I'm hearing one big one down in South America as well. Just wondering if you're open to syndication on that one or how big of an asset could you do a $700 million transaction? Just wondering how big you would go and would you syndicate?

So openness to syndication, yes, but it would probably come down to a concentration. I'm talking completely in the abstract here and not with respect to any particular asset, but certainly open to syndication if there would be some kind of concentration in our portfolio that we wouldn't want to have over concentrated, whether that be a commodity or a or a jurisdiction or development or something like that.

So, we are open in concept of syndication, but we're not necessarily wanting to go there. Upper end of the range. I don't know if I want to give you an upper end of the range, but we could finance quite a bit right now, and I would, we've always had a view that we would be competing for even the largest deals in the sector, and that's been the case since even before we were public, and that has not changed.

Okay. And what about corporate transactions? I mean, I say that from just, speaking to generalists, everyone wants to talk about Wheaton and Franco and then getting down to the smaller ones, it gets a little bit hard for some of these generalists to invest. How do you think about corporate transactions?

Yes, I mean, I guess we're a little bit unique in that we've had the kind of the more recent successful corporate transaction, I think 2024 has been a fantastic year for some of the assets we picked up through the Mavericks transaction, including like Kone, Eskay Creek, and others.

So we are open to it, but you just really have to find a, you have to find the value there, and you have to find a partner that's willing to transact at a price where you both agree you're seeing good value. So we found that on Mavericks. We're open to it in other cases, but you know it's a corporate M&A is not easy necessarily. We're open to it, but you just kind of need to find something where all the gates line up.

Okay. And then maybe finally just on your $700 million available and also your pay down your debt, so can grab on that with zero debt. How do we think about the dividend? I think that comes up for a review, like with Q2 or thereabouts. How are we thinking about the dividend?

Yes, I think we, I've been quite public that I see us with a progressive dividend policy. We've increased our dividend every year since we've been public.

We, I would look to be seen to increase that. Of course that's subject to the board discretion, but no changes anticipated on that. So I would say you should probably expect us to continue our policy of our practice of increasing the dividend annually.

And as I think about, your investment in the business and I think about your dividend payout, how should I be thinking about what's the minimum cash balance you would keep on your balance sheet to operate your business? I know it's going to be very low. I just want to try and see how much leverage I have for deals plus, increased dividend.

yes, I mean the actual amount of cash you need to run this business is very low. We tend to keep like, $10 million on, but we could run this business with $5 million of cash in the system. It's just these are just very efficient business models and the cash flow tends to come in pretty consistently throughout the year. So if you're modelling, I would use somewhere in the $5Million to $10 million dollar range there.

Yes, just trying to see, Sheldon, what you could do from a dividend perspective plus transactions and kind of still, keep that minimum balance of 10 and up. Okay, no, I really appreciate those insights. I'll pass it on to someone else. Thank you so much for taking my questions.

Thanks, Tanya.

Derick Ma, TD Cowen.

Thank you very much. At North Park, early days perhaps, but is major common situation where exploration success for evolution might actually displace what is otherwise higher grade gold tonnage, and that would perfect your stream.

Derek, I don't see any risk of Major Tom displacing anything that, to our disadvantage. Actually, Major Tom's a really positive development for a Triple Flag. That's a new discovery on the property right in the middle of the of the of the mine site. So no, I don't see any downside exposure to Major Tom. I see it as all outside for Triple Flag.

Okay. .

And then on the $35 million precious metal stream you mentioned in your MDNA, to support a Brownfield restart in Peru, was this a bilateral situation and are there other opportunities like this supporting restarts, given the elevated pressure metal prices?

Yes, that is a bilateral situation, and I'm hoping that that will close very shortly and we can talk a little more freely about that. But so it's right now it's on a on a no names basis, but as you pointed out, we disclosed it in our MDNA. It is bilateral.

It's exactly what we're supposed to be doing from a corporate development. Opportunity perspective is we're out there talking to people using our networks. It's a really nice opportunity. I'm really looking forward to talking to the market more fully on it. A really good team. It's a nice property. It's brownfields. It's a restart, and it's precious metals in Latin America. So kind of right in the middle of our Venn diagram.

Okay, great. Thanks.

That concludes the Q&A session. I will turn the call over to Sheldon Vanderkooy, CEO for Closing Room.

Yes, I just want to thank everyone for participating. Thank our shareholders. We're very excited about what we've accomplished in 2024, and we're even more excited about 2025. I don't think we've ever been as well positioned as we have been right now. The cash flows are very robust. There's a great deal pipeline, very much looking forward to the upcoming year. Thanks everyone for participating.

Ladies and gentlemen, that concludes today's call. Think of joining and you may now disconnect.