Royal Gold Inc 0 Earnings Call

Hello and good morning, everyone. Welcome to today's virtual non-deal roadshow. My name is Noella Alexander-Young, virtual event moderator here at Renmark Financial Communications. On behalf of our team, we would like to thank everyone in Houston and surrounding areas for joining us today for the presentation of Royal Gold trading on the Nasdaq under the ticker symbol RGLD. Presenting today is Alistair Baker, Senior Vice President of Investor Relations and Business Development. The presentation will last approximately 25 minutes and will be followed by a Q&A session for which you can participate in by using the chat box in the top right-hand corner of your screen. With that being said, I will now hand it over to Alistair.

Well, thank you very much, Noella, and thanks as always to Renmark for the opportunity to present today. There has been a lot of news at Royal Gold over the past several quarters. A lot of that has not been recognized yet by the market, and gold is taking a bit of a breather, so I think it is pretty timely to give you an update today. So I will start with the obligatory comments on forward-looking statements. During today's presentation, I will be making forward-looking statements. There are risks and uncertainties that could cause actual results to differ materially from these statements, and all of these risks and uncertainties are discussed in our most recent Form 10-K filing with the SEC. So during the course of this presentation, I will give you the investment thesis for Royal Gold. In a sentence, we are a high-margin business.

We generate consistent cash flows from precious metals, and we are not a mining company. This presentation is divided into sections that talk about the key attributes of Royal Gold and our business model. First, I will talk about our focus on precious metals, with gold being the biggest focus, and I will talk about our high-margin business with a longstanding commitment to dividend growth. Then I will talk about our portfolio, which is the most diversified amongst our peers in terms of assets, operators, and jurisdictions. I will talk about our business model, which has limited operating risks by having steady margins and no direct exposure to inflation pressures. Talk about our size. We think we are the right size for a small sector. We can compete for the largest transactions, but we can also do small transactions that show meaningful growth.

Finally, I will end with a comment about embedded optionality within the portfolio and the fact that we do not have to pay for organic growth that comes from within the portfolio, whether that be through mine expansions or extensions. In summary, 2025 was a very active, and what we like to say, a transformational year for Royal Gold. We completed the Sandstorm and Horizon corporate acquisitions, and they closed in mid-October last year. With those transactions, we added significant growth and diversification to the portfolio. We also added a couple of additional assets to the portfolio during the year. We added Kansanshi and Aurinsa gold streams. At Kansanshi, we acquired a gold stream on a cash flowing asset. It is a world-class copper mine in Zambia. And at Aurinsa, we added a gold stream to an emerging tier 1 development project in Ecuador.

We hope Aurinsa will be one day a world-class producing asset as well. It wasn't just acquisitions that we did in 2025 that are notable. We saw some optionality surface from within the portfolio. We had a mine life extension announcement at Mount Milligan, taking that mine life to 2045 and potentially beyond. At Four Mile, Barrick has been doing some significant work on the Four Mile project in Nevada that shows it is probably one of the best gold discoveries over the past several decades. We have full exposure to that. What have we done since closing those transactions that I talked about? We've had one quarter so far this year of consolidated financial results to reflect all of these activities, and that quarter was the first quarter of this year. We released our results in early May for the first quarter.

We had record revenue, cash flow, and earnings. We had $391 million of adjusted EBITDA for that first quarter. Very strong financial performance. We've repaid $800 million of debt since the middle of October. We've increased our portfolio reserve life by about 25% over the prior year to 18 years. That's not including resource conversion potential. We've also done a number of things within the portfolio. We addressed some of the more complicated features in the Sandstorm portfolio. We've cleaned up some of the things that we thought needed to be addressed. We sold over $200 million worth of non-core equity positions that we inherited through Sandstorm. We raised our dividend at the end of the year for the 25th consecutive year. A lot of activity, and we added scale, diversification, and growth.

We put in some very solid financial results. We have not changed our strategy. It was a very good year for us, and we're starting to see hopefully this is a new base for us to grow from. I'll start by talking about our gold focus. We have been in the business for well over 40 years. It's very gold focused. Our strategy has been gold focused since day one. We started in the mid-1980s. This is the 45th year of us being on the Nasdaq Exchange. Our strategy, as I said, has been consistent over that entire time period. We're very much focused on gold revenue from good assets in good jurisdictions, operated by good counterparties. As you can see on the slide, our revenue has grown consistently over the past several years, and the metal mix has not changed significantly.

We aim to provide our shareholders gold exposure in a conservatively managed vehicle. If you look at this next slide where we see our historic performance, our share price performance, you can see why we think we're a good alternative for those who are looking for conservative exposure to gold. On the left-hand side, you can see our beta to the gold price of 1.6, so that's strong leverage to the gold price. On the right-hand side, you can see over the long term, our share price performance has been very strong. We've beaten the gold price, we've beaten the GDX index since it was formed in 2006. We've also beaten the S&P 500. We think we are a very good long-term investment to get exposure to a very volatile commodity. In this next section, I'll talk about margins and dividend growth.

We do have a very high operating margin business. Our business model is unique. It's high margin, obviously, as I just said, but it's also very scalable. Our EBITDA margin in 2025 was 82%. Very high, very strong. Our cash G&A was about 4% of revenue. Our costs are low and they're fixed, so cost inflation should not be something that poses a significant risk to our margins. To further the point about efficiency, you can see on this slide how efficient we are as a company. When you think about our headcount, we have 39 employees in the business, and for the scale of our business, that's a pretty small number. Today, our market cap is $16 billion. We're suffering the downdraft in the gold equities as our peers and everybody else in the sector is.

We've had a market cap as high as $25 billion in the past several months. It's a very valuable business on a per employee basis, you can compare us to any company in any sector, we actually compare very well compared to those very well-known companies. Now, return of capital is a strategic objective for us, it's one of the key things that we always talk about every year, it's an attribute that makes us unique amongst other gold investments. We have paid a growing and sustainable dividend since 2000, we've increased the dividend every year since 2001, that's despite volatility in the gold price. We've increased our dividend now for 25 consecutive years, we've paid out well over $1 billion of dividends to our shareholders.

We're the only company in the GDX index that's paid an increasing dividend every year since that index was formed in 2006, we're the only precious metals company in the S&P High Yield Dividend Aristocrats Index. That sets us apart from our peers as well as any other company that's in the precious metals sector. Now, in this next section, I'm going to spend a few minutes just talking about our portfolio. Our portfolio is global, it's weighted towards lower risk and more mining-friendly jurisdictions. The portfolio itself spans various stages of mining project development. We have over 360 assets in the portfolio today. About 80 of those are producing revenue and about 30 are in development. That means that they're within several years of actually producing new revenue. Beyond that, we have over 250 assets that are earlier stage.

Organic growth from within the portfolio comes from those earlier stage development, exploration, and evaluation projects that advance through to production. Now, our portfolio diversification. Having a diversified portfolio reduces single asset and counterparty risk, that's a very important consideration when you think about us and our business model, compare us to our peers. Our commodity focus is gold, it always has been, it always will be. We have the highest gold revenue percentage of our large cap peers, we also have significant copper and silver revenue as well. There is a bit of revenue diversification from other metals. We're geographically diverse, North America is a bit of a focus for us based on where we found transactions, that is definitely the lion's share of the revenue comes from North America.

When you look at the assets specifically, and you look at the diversification within the portfolio, on a net asset value basis on the left-hand side, you can see that we've got the most diversified asset portfolio in our sector. Nine of our top 10 assets by net asset value are producing revenue today, and expansion and extension projects are underway at five of these. That's a pretty interesting mix of big assets within our portfolio. On the right-hand side, you can see our operators, and our operators are best in class. You can look down this list of names, and you'll see many large, well-capitalized, and experienced companies. More recently, with some of the transactions we've done, we've added First Quantum, Rio Tinto, and Glencore to this counterparty list.

This portfolio diversification, it reduces our exposure to single asset operator and jurisdictional risks, and that's an important consideration for generalist investors who they want exposure to our model and assets, but they don't want to spend time reviewing assets in detail. With us, you get a very broad, diversified portfolio. If there is an issue at an asset, it should not impact the value of our company as a whole, because hopefully there's a bit of give and take when it comes to asset performance. Operating risk. This is an important factor when you think about our business model, and there are advantages of investing in the royalty model if you want gold exposure. Our model produces gold exposure with reduced risk, and this slide shows the different ways you can invest in gold, and how we're positioned.

We provide exposure to gold, upside exposure to gold, and optionality, and a dividend, and we reduce the downside risk by having that diversified portfolio that I just talked about, and also without having direct exposure to operating and capital costs. There are other ways you can invest in gold. You can be conservative and you can invest in physical gold, but you will never get more than the ounce that you buy From physical gold. You won't get upside except for price appreciation, and you certainly won't get a dividend. In fact, it'll cost you to keep that gold somewhere safe. If you want to be more aggressive, you can buy equities in mining companies or exploration companies, and they'll certainly give you exposure to asset optionality.

With those investments, you're also getting exposure to operating and cost risks and inflation, and that could impact margins and the value of the equity that you acquire. There is a perception in the marketplace amongst some that our business model doesn't provide leverage to gold. I think if you look over the long term, our financial results would prove that point to be untrue. Royalty and streamer margins are important to notice because they do expand with gold price. Producers and Royal Gold, we have very different cost structures, and our costs are low and they're fixed, so our margins should expand as metal prices increase, which is what you as an investor want to see.

Operators, on the other hand, their costs are often subject to inflation, so margins may not expand as quickly as gold prices run up or in fact, they may actually compress depending on how strong inflation pressures may be. You can see on this next slide the differences in cost structure between ourselves and the average producer. Producers are exposed to inflation in the input costs that they use to run their operations, so labor costs, energy costs, other consumables that they need. Many of those things actually do increase when you see commodity prices increase as well. The gold price may increase, but you may also see metal or steel consumable costs increase as well. That means that margins for operators may not expand. Our G&A costs, on the other hand, though, they're pretty steady year-on-year.

They're salaries, services, office rents, things that don't move on a short-term basis as a result of inflation pressures. You need to remember that anything that impacts costs impacts margins. We haven't seen yet on the operating side the impact of the Iran war on operating costs. I think you'll likely start seeing that in the next quarter, probably the next several weeks as companies start talking about their second quarter results. As energy prices increases, diesel costs increase, operator costs will increase. The first quarter of this year, you didn't see that because the war hadn't been going on long enough for that really to show up. I think you're going to start seeing that over the next quarter or two in operator costs. You should see our margins stay fairly consistent. Now I'll talk about our size and our positioning in our sector.

We are, as I said at the beginning, we like to think of ourselves as being in a Goldilocks position. We're large enough to compete, but we're also small enough to show growth. Our sector is built on relatively small transactions. Most transactions are smaller than about $300 million. The average transaction size, if you go back over history, is about $110 million. We sit in a pretty interesting position. We're big enough to compete with the largest transactions against our largest peers. We have significant cash flow. We have access to capital as well, and we did a $1 billion stream transaction last year on Kansanshi, so that should show you that we've got the ability to compete for those large transactions. Yet we're also small enough to show growth. A small transaction can add meaningful value to us.

Last year, the Aurelia transaction was a $200 million transaction. We expect that to show meaningful growth to us when that operation begins production. We're not aiming to be the biggest. We prefer to be the best, is how we think about it. That Goldilocks position that we sit in, it provides us a really good platform, we think, to execute our strategy of continuing to grow in gold. Now, as I advertised at the beginning, I'm going to end with a comment on embedded growth and optionality. When you think about this, the first thing I should talk about is our capital allocation priority. Our successful growth really depends on being able to allocate capital successfully. Our strategy remains simple and consistent, and it has been this way for decades.

First thing we think about is reinvesting in the business using non-dilutive financing, we provide shareholders growth. The second is to maintain a strong balance sheet and access to liquidity, that's to make sure that we're always positioned for those new transactions that may come up quickly. Thirdly, we want to continue returning capital to shareholders. We think this shows discipline to our shareholders. We think about them as a key allocation of our dollars as they come in. In the next slide here, we talk a little bit about our framework, we have to be flexible. A framework provides guideposts, but we have to be flexible because market conditions change all the time. Our framework is designed to provide, hopefully target double-digit returns on assets, any new investments that we make, and show per share growth.

We also want to repay debt quickly, we also want to continue growing that dividend that I talked about. More recently, in the first quarter of this year, with those results, we announced that we had added two new tools to our toolbox when it comes to capital allocation. The first was a $600 million accordion facility on our revolving credit facility. This is uncommitted, but it does provide the potential for more liquidity if we see more large transactions pop up. The second was the authorization by the board of a $500 million share buyback. It's not based on a formula, it's not based on specific levels, but it's a discretionary tool to use when we see the potential for large valuation disconnects between our equity and what we think it's worth.

Two additional tools that we added while we had the opportunity to do so, and those are now in place. I'll talk about our history of capital allocation, how we've financed our growth accretively without significant equity dilution. This slide shows what we've done over the past 25 years. You can see since 2000, we've had significant revenue and cash flow growth, but there are aspects of this growth that are really important to note. The first is G&A growth has not increased nearly as much as our revenue and cash flow. That shows you that we don't need to add people when we add assets. Our business is very scalable, it's an efficient, scalable business. Second is our revenue growth isn't dependent only on metal prices. Certainly, the gold price has been rising fairly consistently since the beginning of 2000.

It's been fairly consistent year-on-year growth. It's been a great tailwind for us, but we've also been able to add volume to our portfolio, and we've seen organic growth come from within the portfolio as well that allows us to take advantage of that higher gold price. The third thing I would say is we've been able to finance our growth mostly from internal sources without a significant rise in our share count. Now, last year with the Sandstorm transaction, we did issue almost 19 million new shares, but that was the first time we had issued equity since 2012. Even with those new shares added to our share count, we still have the lowest share count in the GDX index.

We want to avoid shareholder dilution, and we want to provide per-share growth to our shareholders, and hopefully this chart gives a good indication of how we've managed to do that over the past 25 years. Now I'll talk for a moment about returns when it comes to transactions, and we aim for double-digit returns because, as I said, capital allocation, we always want to reinvest in our business because that's the best source of value. That's the best way to grow value. We aim to get double-digit returns in any investment that we make, but we have to be patient to see those returns materialize. Exploration and production upside is very important when we look at new investment opportunities, and it does take time for exploration potential and production upside to become clear in those assets when we make those investments.

We do a lot of due diligence on new transaction opportunities, and we do take a very bottoms-up technical approach to asset reviews. Analysts on the sell side, they often don't have the same access to that information that we do. Street estimates of returns on announcement, they're often low, and it may take years in some cases for upsides to become clearer to The Street. This slide really does illustrate that point. As time has passed, expected returns have increased with production expansions and mine life extensions, and that's driven largely by resource and reserve growth. We don't have to pay for that. That's how that return increases over time. If assets see additional resources or production or what have you, those assets become more valuable. We don't have to pay for that.

That's where that additional return comes from and is added to our shareholders. The next slide shows the same concept in a slightly different way. As time passes, we recover our investment from cash flow. Any value that's added by the operators to the assets where we have those investments, that also increases the value of our future cash flow and our interests. That is recognized by The Street in that NAV from this point forward estimate. Hopefully, what you'll see over time is that the cash flow contributed by Royal Gold in those assets is dwarfed by the value of what we recover, plus what is ahead of us from those assets.

The way this works, and it is pretty simple really, it's this multiplier effect that any extension to mine life in an asset where we have an investment provides a double benefit to us. First of all, obviously, any extension to mine life or production means that there's just more production, more revenue to us. That's a positive. The second is anytime you got mine life is extending, then you get additional exposure to the gold price, and the gold price is volatile. There's a lot of value in having exposure to that additional gold price volatility. Operators, they're always looking for ways to extend the asset lives within their portfolios because they're trying to capture incremental revenue and increase their returns as well on the invested capital when they built those mines in the first place.

In 2025, you can see we had 2 million meters of drilling was completed by our counterparties at the assets in our portfolio. That shows you those operators are trying to invest further to extend the mine lives of those assets, and we benefit from that extension simply because we have those interests, and we don't have to pay any further to get exposure. It's that optionality, really, which is the key feature of our business model. To provide some specifics around this, we think, as you can see on this slide, we've got a number of key catalysts today at assets that should provide some significant organic growth potential over time. We have a significant pipeline of organic growth from new assets, and we see catalysts from within the portfolio extending into the next decade.

The most recent asset to start producing was Back River. That started producing late last year. It reached commercial production in October. This year should be the first full year of contributions from Back River. Then Platreef started milling ore in the fourth quarter of last year. Robertson should start production in 2027. This is at Cortez Complex. Beyond that, leading towards the last part of the decade, we should see new production from Palomarin, Great Bear, and Marimaca. After the turn of the decade, we should start seeing new production from MARA and Four Mile in the 2030s. This is a pretty enviable pipeline, but it doesn't include growth at some of the assets that are producing revenue today. I mentioned at the beginning, Mount Milligan, there was mine life extension there. That mine now goes to 2045 and potentially beyond.

That's a lot of value to Royal Gold. Another example is Khoemacau. There's an expansion underway at Khoemacau, and that should see about a 30% increase in silver deliveries to us starting in around 2028. This is one of the best organic growth pipelines, we think, in the industry, and that's reflected in our five-year outlook that we provided in March. I'll end with the standard comment on valuation. I think what's unique for us right now is where we are. If you think about what I've just described, and if you look at what we've done recently, we are performing exceptionally well. We've got very strong cash flow from the portfolio. We've got excellent organic growth. We're executing on all of our priorities. However, the share price is not reflecting any of that or the strong gold price environment that we're in today.

If you look at us relative to our peers, and you look at price and net asset value, price to cash flow, you can see that we're actually lagging quite significantly. Now we're working and doing our best to close this gap. The backdrop is not that positive for gold equities today, but we think we need to get our story out there, and we're doing our very best to do that and to talk to as many people as possible to make sure they understand what we have done and how we see the business. The messaging is simple. It's around our long-term production profile and the growth within that. We've done an investor day at the end of March that was very much focused on that.

We put out an asset handbook that includes all the assets that are in the portfolio. It should be very transparent where our revenue is coming from. We're doing our best to make sure the market understands the scale and the growth potential of our portfolio. Hopefully that will mean that we see some kind of a recognition in the marketplace and some kind of an improvement in the trading multiples. I think with that, Noella, I've come to the end. I'll just wrap up by saying we've done what we think have been some very significant things to strengthen our position and to position ourselves for a continued strong gold price environment. We've added the scale, diversification, and growth to the portfolio. We have a strong balance sheet today, and we have significant cash flow. We think we've got a long-term strategy that works.

It's certainly worked since the beginning of the company. We expect it to continue to work from this point forward. With that, I'll turn it back to you, Noella, for the Q&A session.

Thank you, Alistair, for that presentation. We'll now begin with the Q&A. Your first question is, as several senior gold producers are either acquiring or getting exposure to copper projects, do you feel the trend will continue, and is that something that could change the approach for royalty companies?

I think it probably will continue that operators are looking for more copper. I think one of the characteristics of copper assets is they generally have longer mine lives than gold assets. A lot of gold companies, they're looking to extend the duration of their portfolios, and if they can find copper assets that have a gold component, then it allows them to sneak a bunch of higher duration assets into their portfolio while still calling them, or at least having some gold exposure and revenue. I don't think that's a new phenomenon. I think that's something that a lot of the gold companies have tried to do for a long time. Does it continue? Yeah, I think it probably does.

There's a lot of potential in the world when you see copper and gold together, and a lot of the gold companies are competing against the copper companies for those assets. I think for us, it creates an opportunity because everybody's looking for the same kinds of things. It's long duration assets. Copper's certainly a focus. If we can help anybody acquire assets and stream non-core metals from those, whether it's silver or gold, then it creates an opportunity for us. I think if you look at some of the things we've done in the past, Khoemacau is a good example. That's a copper asset that had a 7% silver revenue component to it. We streamed 100% of the silver, and we actually helped the developer with the financing to actually build that mine.

For them, they were able to keep exposure to the copper, which is what they wanted, and we were able to get the silver and use our lower cost of capital to create a bit of a valuation arbitrage that helped them develop that asset and improve their returns. Anytime you see anybody looking for large copper assets, if there's any kind of a precious metals component, that's the kind of opportunity that we see as being very attractive, and we're certainly very interested in getting involved in those. I think it's a good thing for our business that that's the focus of the industry.

Thank you for clarifying that. Your next question is, which acquired assets have surpassed to the upside since closing?

Well, I think if you go back long enough, you can see some of the assets that we've invested in that have done extremely well. As I said during the presentation, some of the more recent things that we've added to the portfolio take time for upsides to become more evident to the market. One example that I would point to is Wassa, and that's an asset that we invested in 2015. At the time, we expected that asset to be finishing production in around 2022. It's still producing today. Our dollars in, dollars out is about two times at this point, and there is still a significant mine life ahead of it. That is an example of a very good returning asset.

It did take time for that potential to be seen and to be recognized by the market. That is an example of something that is really done very well for us. We have other assets in the portfolio that we invested in decades ago that have done many multiples of the original acquisition price. Robinson in Nevada is a great example. It is a copper gold asset. It has been operating for a long time. We have been invested there for 25 years, and I think it is probably closing in on a 10 times return on our original investment. You have to see things over the long term to be able to make that statement.

Some of the more recent acquisitions we have made, we think they are very good acquisitions, but you won't see that kind of return evident until some of the upsides that we identified during our due diligence, until those are clear to the marketplace. We have got a number of those in the portfolio.

Thank you for elaborating on that. Your next question, "Long-term growth projections. What are the long-term targets for net profit margins?

Well, we don't target margins per se, because we are influenced by the gold price. Any fluctuations in the gold price will certainly impact potentially margins. Hopefully not significantly, as I tried to make a point during our presentation because our G&A costs are so low. What we do target is making sure that we have got assets in the portfolio that will continue to grow. When we gave our five-year guidance in March, that was based on gold equivalent ounce production. That is top line. At the time, we were expecting at about a 17% increase from the midpoint of our current year guidance to the midpoint of that five-year outlook. It is about a 17% growth. Margins should stay consistent over that time period. As I said, our G&A costs are relatively low, so they shouldn't be impacted too much by inflation.

Hopefully what you'll see is that 17% growth will be a proxy for what you're looking for in terms of earnings as well.

I appreciate you clarifying that. Next viewer is asking, "How much of the expected value from recent transactions depends on reverse conversion or mine life extensions?

The value, when we price a transaction, what we're often doing is we're trying to make sure that we get a return on reserves as defined, and anything beyond that is an upside. We will have our own internal estimates of what those upsides could be and how that could impact returns, but we don't disclose what those estimates are. As I said during the presentation, we target double-digit returns in everything we invest in. A street analyst may say, "Well, we think it's a 2% or a 3% or 4% return today," but that'll be based on what the street can see.

When we do the analysis ourselves after doing due diligence, we may think that the base return is somewhere closer to double digits, and then hopefully over time, as conversions or expansions or extensions occur, that will go significantly north of that initial investment level, that initial return level. That's what we're targeting, and that's how we think about it. It does take time, as I said, for that to become evident to The Street.

Thank you for that response, Alistair. Next viewer is asking, "With the accordion feature potentially increasing the revolving facility to $2 billion, what is the maximum leverage Royal Gold would accept for a compelling acquisition?

What we said during the investor day that we did in March, as we talked about capital allocation, is we will, in extreme circumstances, look at going to, say, three times net debt to EBITDA as the peak level of leverage. We would want to get down from three to two times within a reasonably quick period of time. We're not afraid of using leverage to grow our business, but we will be conservative when it comes to using leverage. We never want to be in a position where we're helping somebody, an operator, help them strengthen their balance sheet, yet we weaken our balance sheet by doing a new transaction. We're careful about leverage. We're very conservative. That hopefully gives you a sense of how we think about it.

We certainly wouldn't want to operate on a regular basis of three times net debt to EBITDA, we think that would be a peak that we could see or get to, and if we could see ourselves getting down to two times within a relatively quick period of time after that. Now, you look at our portfolio, and one of the advantages of the portfolio is it's broad, it is diversified, there's a lot of cash flow coming in from the portfolio. That does give us that additional confidence that we're not subject to single asset interruption risk. If something didn't perform as planned, we've got the rest of the portfolio to continue providing the cash flow. That makes us more comfortable when it comes to using financial leverage for new transactions.

Appreciate you clarifying. Next, "Are there any royalties or streams that management believes the market is assigning little or no value to today, but could become meaningful contributors over the next decade?

We always think there's a lot of stuff in the portfolio that is relatively small that maybe on its own you would think, "Oh, maybe that's not worth considering." You start adding a number of these smaller things together, and they're actually pretty significant when you think about it that way. We have a lot of assets like that in the portfolio. As I said during the presentation, we have over 250 assets that are not in development, but they're in earlier stages of a review by the operators. Some of the development assets we have in the portfolio as well, they're relatively small, and they may not be understood by The Street. I think those are sources of real upside that may be not getting the recognition that they should be.

We've got examples of assets in the portfolio that were very early stage, very low value, that have come through that development cycle and actually are significant contributors of revenue today. Two of those are Australian examples within the last three or four years. We've seen revenue from Bellevue Gold. It's one of the highest grade underground mines in Australia. King of the Hills is another example. It's owned by Vault Minerals. Those were dormant projects in our portfolio. There was zero value assigned to those by The Street. I think today, if you were to look at analyst estimates, they would all have some reasonable value assigned to Bellevue and King of the Hills, because those assets are now producing revenue to us.

With a portfolio the size of what we've got, there are more of those opportunities or there's more of that potential within that portfolio, just given the size of it.

Thank you for that response, Alistair. Your next question is, are there significant expansions in the works at your assets?

There are a number. I mentioned Khoemacau. MMG is doing a big expansion at Khoemacau, and we're expecting about a 30% increase in our silver deliveries from Khoemacau. I mentioned Mount Milligan. Although the production levels aren't expected to change in a material way, the mine life has been extended by 10 years, and the operator's talking about potentially extending it beyond that. That's another example of a significant expansion within the portfolio. I think if you were to think about Cortez and Four Mile, it's not necessarily an expansion of an existing mine, but it's an expansion of the complex itself. The Four Mile project is fairly early stage, greenfield exploration that is part of a producing complex.

It's right next to producing mines, which should mean that permitting is faster, it should mean that access to labor and expertise and things like that is faster because they're in a pretty mature mining area. That is something that has tremendous value, we think, and will have value to our portfolio when it starts producing. There's a lot within our portfolio that has that expansion potential and valuation potential as well.

Thank you for that response, Alistair. Next viewer is wondering, if gold stayed flat, where would cash flow growth still come from?

Gold stayed flat. Well, it's going to be from the expansion in new mines, any new mines that come into production. Those will be the ones that provide that additional growth in cash flow, absent the gold price changing. As I said during the presentations, that one slide that shows you the different catalysts that we see from new mines. The five-year production outlook that we gave, as I said, it's about a 17% increase from midpoint this year to the midpoint of that five-year outlook. That should, everything else equal, that should result in cash flow growth of a similar quantum to that 17%.

Appreciate you clarifying that. Do you plan to buy back shares at these levels?

When we announced the share buyback with our Q1 results, we said it would be a discretionary program. We're not going to make it formulaic. We're not going to link it to specific metrics. It would be discretionary. The thinking or the analysis that goes into that would be looking at the business development pipeline we see ahead of ourselves. Are there opportunities? Is there debt on the balance sheet that needs to be repaid? Then, of course, the dividends, how are we planning on dealing with the dividends? Do we want to continue growing it? There are other competing sources or uses for capital. As part of that, obviously, we'll look at valuation and where we trade relative to our peers.

There's a discretionary approach to thinking about how we may use the share buyback authorization that was granted by the board, and we won't give any indication on share buybacks until we've actually done something. The plan is to, in any quarter, if we were to use the share buyback, we would report on that at the end of that quarter, we would report what we've done. I won't comment on current valuation levels and the share buyback, except to say that it's a discretionary program that is obviously subject to a number of different criteria.

Thank you for that response, Alistair. This next question is kind of a two in one. The first part of the question is, your portfolio has become increasingly diversified with copper exposure. Where do you ultimately see the optimal mix between gold, silver, and base metals? Are you seeking more copper exposure?

The optimal mix, we don't really target a mix. We're happy with the portfolio as it is. I mean, we're about 90% precious metals. Gold is somewhere 75%-80% on a fairly consistent basis. We're very comfortable with where we are. We're not targeting changing that mix. That said, if something very attractive came in the door tomorrow that wasn't precious metals, yeah, we would have to look at it, and I would have to make sense within the context of the portfolio. Occasionally, we do see copper assets come in that are attractive, and if they are good returning opportunities, and they're good projects and good jurisdictions run by good people, we'll certainly have a look at those.

We're not proactively trying to diversify our revenue mix, we will consider things that we understand, and we'll look at those within the context of other things that we're looking at. If we are looking at a number of opportunities, we're always going to give priority to the precious metals opportunities, we're not going to turn away attractive base metals opportunities. We'll have a look at those if it makes sense.

Thank you for expanding on that, Alistair. We're coming up on your last two questions here. The first question is, how frequently do you revise internal production assumptions when operators delay permitting or construction?

We do that on a regular basis. We're always monitoring our portfolio, and we're always looking at changes to operator guidance or operator plans, and we'll make those adjustments pretty consistently. What we typically give guidance on is once a year. We'll give our guidance for the current year that we're in, as well as now we'll give five-year outlooks. Any changes would be reflected in those numbers as we give those once a year. If there's something notable that happens at an asset that is worth disclosing, obviously we would mention that during our regular quarterly disclosures. Generally speaking, when we look at asset changes from operators and tweaks to the way that they may be looking at mine plans, that would get reflected in our guidance that's given once a year.

Thank you for that response, Alistair. Lastly, a viewer's asking, can you please explain why it is a better business case investing my money into Royal Gold and not into competitors like Franco-Nevada and Wheaton Precious Metals?

Well, we think we have a number of unique attributes that separate us from our peers. I think the diversification within the portfolio is obviously a big one. If you look at our peers, they've had issues with larger assets that may be significant chunks of their value. We've mitigated risk by diversifying our portfolio. I think that's an important distinguishing difference. I think another is we're not really relying on one or two projects to help us with growth. We see a number of assets within the portfolio that are going to add growth, we think, over the next several years, our growth isn't dependent on the success of one or two things. I think that goes to portfolio diversification. I think that's one point.

I think the fact that we have such a high gold revenue percentage, that sets us apart from our peers as well. Some of our peers have other metals or oil and gas or other things in their portfolios that investors may not want exposure to through a gold royalty vehicle. That's an important factor as well. I think that the way we think about our dividend is a bit unique in the sector, the record that we've got of paying a dividend and increasing it every year over the past 25 years, I think that's unmatched. Hopefully that is a distinguishing factor as well. Our share count is lower than our peers. I think that goes to the way that we've funded our business.

We have typically, as I said during the presentation, relied on internal uses or internal sources of funds to grow our business without diluting shareholders. That's another distinguishing factor. The final thing I would say is an interesting point, is that we're a U.S.-domiciled company in a sector that is underrepresented in the U.S. market. There's a scarcity factor for U.S. investors who have U.S. mandates only. There aren't very many opportunities for them to invest in precious metals companies. On the large cap side, there's Newmont, there's us. If you want gold exposure, Newmont is a mining company, very different business model. You've got us as that more conservative exposure. That's very attractive to U.S. investors.

I think right now in the U.S. marketplace, we're not seeing a lot of love for gold. I think that's just based on a lot of different things that are happening. When the U.S. marketplace does turn its interest to gold, we tend to benefit very well as a result of that. That's something our peers don't benefit from because they're Canadian. They're not U.S.-domiciled companies. Excellent.

Thank you very much, Alistair, for all of your insight today, and thank you to everyone who submitted questions. If you did not get a chance to submit your question, you can reach out to the appropriate account manager here at Renmark. That concludes our presentation for today. Before we go, I will turn back the floor to Alistair for final remarks.

Thanks very much. I really do appreciate everybody's time and attention today and the questions. Of course, if there's anything that I didn't address as intended through the question, please contact Renmark. They'd be happy to put us in touch directly. Happy to have a conversation with you to clarify anything that I may have missed if there was a question that I didn't understand. Thanks very much. Enjoy the rest of your summer. I look forward to connecting as soon as we can. Take care. Thank you, Alistair.

Once again, this was Royal Gold trading on the Nasdaq under the ticker symbol RGLD. Thank you to everyone in Houston and surrounding areas for joining us today. The playback for this Virtual Non-Deal Roadshow will be available on our website 24 to 48 hours after this presentation under the VNDR Library tab. Please stay tuned for other presentations in your area.