Anglo Pacific Group (LSE: APF, TSX: APY) – Royalty & Streaming Finance Explained (Transcript)

Julian Treger, CEO of Royalty & Streaming company Anglo Pacific Group (LSE: APF, TSX: APY) sat down with us to help us understand the differences between Royalty and Streaming finance. These are not mining companies but rather finance companies. It is however a good way for investors to get de-risked exposure to the mining sector and pick up a dividend too.

Interview highlights:

  • Who Anglo Pacific is as a Company?
  • The Company’s Strategy, Growth Plan and Investment Focus
  • How they Structure Contracts, De-Risk Investments and Maximise Results
  • Where do they sit in the Financing Mix?
  • Shareholder Dividends
  • Differences between ETF’s, Royalties and Streaming

Click here to watch the video.

Matthew Gordon: So why don’t you tell us a little bit about the company. Give us a minute summary, then we can get into some questions.

Julian Treger: Well, Anglo Pacific Group is the only listed Royalty company on the London Stock Exchange (LSE). So we’re pretty unique in the London market. And unlike many of our peers in North America, who focus on Gold and Silver, we focus on other metals. But it’s a really interesting business which allows investors to get de-risked exposure to a risky sector. And that’s it’s great appeal.

Matthew Gordon: Well, let’s start with the terminology. Royalty. Streaming. What of those things actually mean?

Julian Treger: Well, there are different ways of financing the mining sector, which is very capital intensive. A Royalty, which is what the majority of our company consists of. But we are getting more and more into Streaming. A Royalty consists of basically giving money to a mine in exchange for a share, normally a percentage of their revenues. So that’s a combination of their production and the price that they get for those commodities. A Stream is more like a contract around a specific amount of the commodity at a fixed price. So they do have different characteristics, they have different tax effects, but generally they are forms of finance for this sector.

Matthew Gordon: This sectors has find it quite hard the last 2-3yrs. Some of the commodity prices are quite depressed. What type of companies do you best serve? Because if you look at the entire food chain, in terms of financing, you can go and issue some shares, get a little bit of money that way. Private placements. You’ve got debt way over here. And you got a bunch of structured finance in the middle. Where do you position yourselves when you are talking to companies?

Julian Treger: Ultimately, we are interested in helping people who need money. And actually there are two forms of that. So half of what we do is roughly providing money directly to the miners. The other half actually is buying second-hand Royalties. So sometimes we are providing liquidity to people who already have a Royalty, but they want to cash out and they don’t know how to do so. When we talk about the miners who we are most useful to, it’s generally not the biggest companies, because they have access to capital and it’s not very expensive for them. So it tends to be more mid or smaller companies which need money in order to expand or to get into operation. who are our target audience.

Matthew Gordon: But these are these guys who are in production, the cash flowing and they’re looking for some growth capital. And you’re providing some kind of structure, every company is gonna be different because the needs are different.

Julian Treger: Yes. Every Royalty, every Stream is unique. A lot of what we’ve done historically has been producing. But obviously, producers are less needy of finance than people who want to get into production. And so recently we have broadened our scope to look at earlier stage projects, which might need money in order to get into production. And what’s happening at the moment in the mining sector, which is very good for us, because we have quite a lot of cash. We don’t have any debt and therefore, we’re in a good position, is that there’s very little money available to the mining sector. It’s really dried up in the past year or two because people have been more interested in marijuana stocks or bitcoins, etc.. And so it’s a really good backdrop for us to deploy the capital, which we have on our balance sheet to use.

Matthew Gordon: But you’re about risk mitigation in all of this. You’ve got a structured deal that’s going to work for you, that’s going to limit your exposure by structuring it appropriately. But if you come down exploration end of the mining market. It’s inherently much more risky. How do you identify risk? What are the things that you think, it needs to have this sort of profile before I’ll go in to exploration or development?

Julian Treger: That’s a good question. First of all, what we see as providing investors with is a de-risk way of getting exposure to the mining sector. And that really sits at the forefront of everything that we do. When you invest in Anglo Pacific, which is an investment company, not a mining company. You get a exposure to the sector which is really not linked to CapEx or OpEx. It’s really only linked to production. And therefore a lot of the day to day problems that bedevil the mining sector, we avoid. Only very extreme events affect us. But day to day, a higher cost or much higher CapEx, flows over us. That is an important distinction because the mining sector is so risky and volatile. And to give people a de-risked way of getting exposure to that is actually very valuable. And in Canada, our peers trade at double to triple what the mining companies do here. Unfortunately, because people don’t really understand the virtue of the Royalty model that isn’t the case. But then when we look at how we de-risk the business, we only invest in what we believe to be safe jurisdictions. So we are in Brazil. We’re in Australia. We’re in Canada. We’re in Spain. We don’t go to places where we think there’s going to be issues. Then we look for very good operators, very good counter parties. People who are as responsible, who are good in terms of ESG (Environmental, Social Governance). We look for commodities, which we think are going to be more valuable than the market expects. We look for mines which are very long-life. Which are going to be low-cost. So everything we do is constantly de-risking the exposure for the company. And so if we were to do a risky development Royalty, which is what you were talking about initially, we generally would put very small amounts of money to work initially. And then we would commit, at our option generally, to put more money to work as the project gets de-risked over time. So we do look at de-risking everything. At the same time, we are also growing fast and we need to, show expansion.

Matthew Gordon: We just talked about a lot there. There’s some real, real meaty topics there. Jurisdictional risk. Canada, Australia, very low risk. I’d put Brazil slightly below them. And Spain, depending which year it is, below that. You need to evaluate jurisdictional risk on its own. With regards to the company and the stage it’s at, the management team’s ability to deliver. That’s an entirely different subject. Have they done it before? Have they done it in this jurisdiction? With this commodity, at this stage of development?

Julian Treger: Of course there’s a whole geological de-risking piece that we need to have people looking at the underlying business.

Matthew Gordon: Absolutely. Mining is mining. And what I’m asking is, if people are thinking or considering Royalty & Streaming or ETFs. They need to have faith in your ability to make those assessments. How do you do that? Do you buy in consultancy when you’re doing your diligence? You have a small portfolio…

Julian Treger: Well, we are growing it and we have about 14 major Royalties. But it’s not 100. But it’s not 100. And because unlike our peers in Canada who do really only Gold and Silver and that’s very specialized, we are doing many commodities all over the world. You’re quite right, we do tend to outsource a lot of the due diligence to the best and the brightest. And we have a small team here that initially processes the deal flow. So last year we had 300 transactions that came through the door and we did two. So most of them get dismissed initially on jurisdictional bases. Or they’re not at the right stage. It’s not that complicated. But we do tend to outsource. But ultimately, I think investors are backing, the track record of the team. I’ve joined five ago. In our first year, we had £3M of income. This year, we should have £60M-£70M of income. So we have had a period when during which, the sector for mining has been quite challenged, where we have made decisions and investments which have borne fruit and we haven’t fortunately stumbled. And I think ultimately that’s what investors need to believe in.

Matthew Gordon: But you said that with growth there. You’ve got to continue that trajectory. That’s the beast you’ve got to feed.

Julian Treger: It is difficult to find Royalties which tick all our criteria. On the other hand, the Gold and Silver space is about 15% of the mining sector by value. And there are approximately $35Bn of listed Royalty companies which focus on that. The other 85%, which consists of Steel and Iron Ore and Coal and Copper, etc., isn’t really serviced in terms of Royalty. So there’s an enormous universe for us. We don’t see very much competition.

Matthew Gordon: But likewise, the size of that entire universe is not necessarily investable, if you apply your investment criteria to it. It might come down to 20% of that.

Julian Treger: That still a big number.

Matthew Gordon: We are in violent agreement about that. But what you now need to be able to do is work out how you find them. There’s a bit of competition out there.

Julian Treger: Not much though.

Matthew Gordon: Not so much over here. Are you saying internationally that you don’t really tend to come up against other Royalty providers or finance providers? Because it’s not just about Royalties, is it? There’s lots of structured finance out there.

Julian Treger: Well, we are finding very little competition globally from non-precious Royalty companies and the precious ones can’t really get into non-precious because it dilutes their golden sheen. And there are obviously people who are providing debt finance, not so much from the banks, but alternative debt finance vehicles. But ultimately, they’re not that large and the Royalty is more equity-like than debt-like. Our Royalties don’t have to be repaid. So I think we fit more into preferred equity / mezzanine bucket, where actually there’s a lot of demand at the moment.

Matthew Gordon: There is a lot of demand, but I think there are quite a few companies out that that would purport to offer structured finance solutions to companies. I remember my days in banking. The CEO comes along and needs some money. And they’re in a… not necessarily a perilous state, but they’re in a state where perhaps the big banks don’t want to provide pure debt, because the moving parts aren’t quite aligned, and they don’t want to dilute obviously. Money is money. What you call it. How you structure it. What ultimately will it costs you. That’s what they’re going to focus on. You’re a big company here in the UK.

Julian Treger: Well, we’re not that big.

Matthew Gordon: I think people would be very happy if they had what you have. You were saying that you are not seeing that level of competition. So when CEO’s come to you they know what they want?

Julian Treger: Relatively the amount of capital available to the mining sector has reduced over the past couple of years. Whereas there’s a built up demand for new mines to come on board, because unless we invest in new mines all the time, the existing mines deplete. So there is at the moment an excess of demand for funding over supply, which is why we are tilting our business towards growth at this stage. We think there’s this window of opportunity. We should have, if we don’t deploy any capital, £50M roughly on our balance sheet towards the end of this year or early next year. We’ve got about a £100M of unused borrowing lines. And so we think the moment is ripe for us to make hay while the sun isn’t shining for the sector.

Matthew Gordon: There are a few chinks in various commodities. Battery metals has risen and slightly fallen, things like Cobalt and Lithium falling away. You have to have a much longer-term outlook. Your contracts are much longer-term. So you can’t have a short-term outlook.

Julian Treger: No.

Matthew Gordon: And if you think of Cobalt 27 and their bet on Cobalt, didn’t quite work out. Nickel 28, and hopefully will work out. But again, many people would bet against that. How do you identify the commodities? Or do you identify the commodity thesis and say, right, ‘I believe this is going to work’. Or do you say, ‘actually the fundamentals of this company, because it’s lowest quartile in terms of it AISC’, or whatever criteria you allocate, that’s good enough for me. I don’t need to worry about what the outlook is. As long as I get the best companies in class.

Julian Treger: No, I don’t think that’s true. I think we have to do both. But because of the power of commodity pricing cycle, even if you choose the best company and you’ve chosen a bad commodity, and that commodity holds in value, you’re still going to be harmed by it. Obviously we get a lot of deal flow coming through the door. So we just look at it and their is an opportunistic element to it. But ultimately we are trying to make bets on commodities where we think that the market is underpricing the opportunity set. So when there was this bubble for Lithium and Cobalt, our view was that there’s a lot of that material in the world. There’s so much noise in the sector which is driven by short-term trading. We’ve got to sift through that and look 5yrs, 10yrs, 15yrs, what are the prospects for those commodities? And I think you’ll see with both Cobalt and Lithium there’s much more supply than people expected. And the fundamental pricing is going to be much more normal. But there are other commodities, particularly commodities that are out of favor.

Matthew Gordon: Talk to us about that. I’ve looked at your portfolio. You do seem to have picked things that some people have shied away from.

Julian Treger: Yes. I think that that does happen in the sector. I think when people shy away from them and outlooks very poor. Then there’s no new mines that come on. And then ultimately the supply is much lower than the demand and the price recovers. And then people start to get money, and build mines and so on. I think you make money in the mining sector by being a contrarian, not a trend follower. Because if you follow the trends, you’re going to be investing at the top and sell at the bottom. So you’ve got to keep thinking. And so the areas I think we need more exposure to now are the Base Metals. Are some of the Battery Materials, which we are keen on, like, for instance, Vanadium which we’ve already got exposure to. So we are trying to be thoughtful, because ultimately also we’re investing a lot of our money. Myself and the current board and the previous board have 8-9% of the business. So every time we invest a pound, we are investing £0.08-£0.09 of our money. And so we think of it in that way and we’re very careful and prudent.

Matthew Gordon: You’ve got Coal and Coking Coal. So most people look at that and go well that’s dirty energy. Are you under any pressure from your shareholders to shy away from some of those things? I appreciate trends is one thing, but this green economy is another.

Julian Treger: I would argue actually that the Coal that we own is greener Coal to the extent that that’s possible. It’s higher quality Coal. It’s less polluting. And the Coal that we own in general is used to make Steel and there is no replacement for that Coal. So if you want to have a world which doesn’t have steel then that’s fine. But particularly not only with the Coal, but the other commodities we’ve invested in. One of the areas of emphasis has been on purer, cleaner, less polluting commodities. So we’re positioning Anglo Pacific as a finance vehicle which finances a cleaner world. Now it may not be a clean world, but it’s a cleaner world. And I think that that’s an important distinction. And so when we look at new opportunities, one of the criteria we look at as well is how pure is this commodity? How free of contaminants is it? Because our thesis overall is that we’re in this long-term cycle where you’re going to get higher and higher premium for cleaner and purer products. And if you have dirty rubbish products, they’re going to be increasingly discounted and difficult to sell.

Matthew Gordon: So you’re pushing that agenda. You are under no pressure from shareholders or anywhere else. How does the shareholder breakdown actually in terms of institutional versus retail price and which parts of the world does that come from?

Julian Treger: I think although we do have a listing in Canada, a large proportion of our shareholders are based in the UK. We’ve got 3-5 institutional shareholders who are between 8-10% roughly. And then there’s a long-tail of retail shareholders who are attracted by the de-risked way of getting exposure to the mining sector. But also by the very high and consistently increasing dividend that we pay. And for them it’s not something to worry about. It allows them to get reasonably dependable income in an environment where Bonds are yielding nothing and interest rates are in another cycle of decline.

Matthew Gordon: You are dividend paying and you have been for some time. If you’ve given a lot back to the shareholders. You have de-risked or removed the need to think too long and hard about mining and the constituent parts of mining investment. You’re doing that for people, because you have the team here to do that. You along with ETFs, put yourself in a very different area from conventional equities investing. That’s working for you and the Streaming & Royalty sector for sure. ETF versus Royalty who is better?

Julian Treger: Well, I don’t know much about the ETF market. I put my money in the business that I know. I don’t know if the ETFs provide the income. ETFs is generally just provide commodity exposure, which is different to what we’re providing. In our instance you get growth in production, as well as exposure to the price. And then you also get a significant Stream of income that’s paid out as well. And our dividends are generally 2-3 times covered. So it’s not something you need to worry about.

Matthew Gordon: So let’s talk about that de-risk component, especially with the producing companies.

Julian Treger: Ideally, we look to find a mine which has a 10yrs, 15yrs, 20yrs life. And we pay when we buy it for their Reserves. But generally, they have much larger areas and much more Resources. And we try and get those for free, so we don’t pay for that. So there’s optionality as well built into our portfolio, which you wouldn’t find in an ETF.

Matthew Gordon: But there’s a lot more bells and whistles too. It’s important for investors to understand some of the moving parts, and I think it’s important for people to understand the options or the tools available to you, which de-risk it. In the example I’m looking at, this company has borrowed money over a 7yr period, a significant amount, $60M-$70M. They can draw that down in tranches. They can choose to draw it down day one, or not, at their option. But it’s at LIBOR +5.5% – 6.7%. So there’s an uplift there. You’ve got 100% interest on the capitalised cost going through to March 2021. There’s basically an interest free holiday. The company can pay by 65% before the date of maturity of the paper. There’s a 2% fee payable on each tranches that’s drawn down. They’ve got fixed $10 per ounce production and payment for the first 500,000oz and the list goes on and on.

Julian Treger: That’s true.

Matthew Gordon: So you guys can structure this in a way which suits the company obviously or they won’t sign, but it means that the risk exposure to you guys is hugely limited at each stage. It’s not just one number day and that’s what it’s going to be. This changes over the term of the contract. Is that the secret sauce?

Julian Treger: Each Royalty is a bespoke contract. And there are many, many aspects and terms to it and there’s legal terms as well as financial terms, and change of control, and options, truncating … And we can work very hard to make sure that it’s the right deal for us. But it also has to be the right deal with the counterparty.

Matthew Gordon: But it needs to be the right deal for them, just.

Julian Treger: Yes.

Matthew Gordon: Enough to get them to sign.

Julian Treger: They need sign, but it needs to be clearly better than alternatives.

Matthew Gordon: Sure. Or they don’t sign. That’s what I’m trying get at. In terms of identifying them and how much competition there is. I come from the in the world of doing convertible bonds. And when we structured those things, the documents were so thick and you had to beat the competition, but you don’t have to beat them by too much.

Julian Treger: No, that’s obviously correct. And one of the things that we try and do is to get 8% to 12% returns for producing and low-risk products. But 15% to 25% for more risky, longer-term products. We try and price things accordingly. And obviously recently what’s really interesting is that the cost of capital has gone up for the sector. And so we can get 100 or 200 more basis points.

Matthew Gordon: All good for your shareholders. That’s the point I’m trying to make here. So for the company, you make it good enough. Some of the conditions can fall away during the term of the contracts as you’ve got more and more of your capital back, and you’re heading towards a number which you’re comfortable with. But for your shareholders, you’re looking after their interests because that’s your number one focus.

Julian Treger: Of course.

Matthew Gordon: So the question then is, this is structured finance in all but name. Have you looked at other sectors? You’re in mining right now because you know mining, but given money is money, and companies from different sectors want money. Have you ever considered in terms of this growth story of yours have you considered other sectors?

Julian Treger: We have in the past looked at Oil & Gas and we sponsored a Royalty company, which turned out to be quite a good investment, but it didn’t grow in the way that we expected. And we are looking now at Green Energy Royalties. But I think we do want to stick to what we know. I don’t think we’re going to go into the recording sector and doing Royalties there or pharmaceutical drugs. Those are all big things. But you do have to know what you’re doing. And I think we have developed a lot of domain expertise which we can build on.

Matthew Gordon: So your growth is going to be focused on natural resources. Stick to the knitting. Do what you know.

Julian Treger: Because it’s a big sector and there’s a lot to do.

Matthew Gordon: You’ve got a lot of spare cash at the moment. Do you think you’re gonna be able to deploy that in the next twelve months?

Julian Treger: Yes.

Matthew Gordon: And if you are, are you going to go out and get some more?

Julian Treger: Well, it depends how quickly we deploy it relative to how much we are generating. We are retaining $10M, $15M, $20M a quarter now. Even after we pay out this very well covered dividend. It’s a matter of how quickly we spend versus how quickly it comes in. And as we get a bigger and bigger portfolio, our borrowing lines will grow from around $100M now, now they could get larger.

Matthew Gordon: So your borrowing will get cheaper…

Julian Treger: Borrowing is reasonable at the moment. It’s not a very high rate. Because the banks actually, more than the stock market, recognize how de-risked our stock portfolio is, and the risk that they are not taking. And given our significant equity value, there is no debt at the moment. And our track record. They are quite comfortable with relatively low rates compared to LIBOR.

Matthew Gordon: But you and your shareholders want the money deployed. It’s making money out there. Sitting in the bank, not as much.

Julian Treger: Yes, that’s true. And so we have been investing in increasing our team. Last year we did two transactions. We haven’t done one so far this year. But I’m confident we should do two, three, four in the second half of the year.

Matthew Gordon: And what commodities are you looking at? Given that part of your thesis is looking at the long-term focus for commodities?

Julian Treger: We’d like to get more exposure to basic commodities like copper, Nickel, Zinc. We’re looking at some of the Fertilizers which are out of favor, like Potash or Phosphate. And then we are looking at some of the more reasonably priced Battery Materials because we think there’s room for more of that within our portfolio.

Matthew Gordon: With regards to long-term contracts. Can you get out of those? Can these sell those on the secondary market? I’m thinking of things like Uranium and Vanadium. Vanadium has had a bit of a spiky ride.

Julian Treger: It’s come up and down. But our Vanadium Royalties actually got enormous potential in terms of increasing its production. For us, it’s not just price. We’re not a trader. Our Vanadium Royalty should have 25%-30% volume growth this year. But then it could expand very significantly.

Matthew Gordon: How does it do that? And do you ensure that you’re first in the queue?

Julian Treger: We have the Royalty over all this land. There are some trickier situations where they expand outside the Royalty area. But I think in the Vanadium case, we are confident that they will expand in the area that we have the Royalty over. The flipside of the fact that there’s no competition means there isn’t a secondary market. So that does mean that when we make the investment, you can check in, but you can’t check out.

Matthew Gordon: So you better get it right.

Julian Treger: So we work very hard to make sure that it’s correct. And our working assumption is that we own these Royalties or the Streams for the life of the mine. So the entry point is very important and the conviction that we have that the commodity outlook is better than the market expects.

Matthew Gordon: So let’s look at some the numbers. You came in said five and half years ago with a thought in mind, which was?

Julian Treger: Well, to grow the business substantially over the subsequent term.

Matthew Gordon: And you’ve done that?

Julian Treger: We’ve done some of it, but there are still more to do. So tell us what tell us what you walked into, what you did? What I walked into was a situation where the Royalty income was falling off a cliff. The company was running out of cash. And the dividend was unsustainably high. And we had a portfolio of non-core equity holdings, which hadn’t really worked out, which were showing significant losses. And so we had to jettison the equity portfolio in large part to continue to pay the dividend, but then cut the dividend. And then gradually recover by re-investing capital and raising a bit of money. So when I joined the company, we had 100 million shares. Today we have 180 million shares an issue. So over that period, we’ve issued 80% more equity. But it was a combination of those things, plus making new investments. The company companies built upon this historically very valuable Royalty in the Coking Coal space. And one of the things we’re doing is trying to diversify the portfolio from that. So when I joined the company, we were almost a single asset business. And by 2016, Kestrel Royalty had grown a lot. By 2018, we had already bought other assets which were of the same size as Kestrel in 2016. So we are achieving that diversification as well as growth.

Matthew Gordon: And what are the numbers looking like? Because, again, some of the charts look like it’s heading the right way.

Julian Treger: Well it is heading the right way.

Matthew Gordon: Where’s it going though?

Julian Treger: I think our aim would be to try and get to a $100M run rate for our Royalties, hopefully next year or the year after.

Matthew Gordon: Where are you today?

Julian Treger: We’re probably around, with the sterling where it is, at around sort of $75M-$80M. So I think we could still grow another third. And then to internationalize our register, because I think the more people who are owners of Royalties at much higher valuations in Canada are aware of Anglo Pacific and can switch to Anglo Pacific, the higher our rating would be. And as our stock gets larger, as our earnings get larger, I think we’ll be in a situation of a virtuous cycle.

Matthew Gordon: If I look back over the time that Anglo has existed, there have been highs of £3.50 back in the day. But since you’ve come in, since you changed the structure, you’ve seen a real movement in the share price, positive movement in the share price. You’ve got to be pleased with that.

Julian Treger: I’m pleased with it but our rating is still derisory. We’re trading something like at an x8 PE ratio, at x6 times cash flow multiple, at a 5% dividend yield. All those things, I think in Canada, our peers trade at 2-3 times that. So although we have had some progress. And obviously those numbers depend in part upon what the commodity prices do for the rest of the year. They are certainly not in any way or form any profit forecast implied in that. There is tremendous scope for the price to be at a different level as the market becomes more educated about the virtues of the Royalty model.

Matthew Gordon: Let’s help people understand that bit. North Americans are 2-3 times what you are. What’s that down to? Are they better at promoting. Are the markets more educated? What do you actually think it boils down to?

Julian Treger: Actually, I think it’s a combination of factors. Most of those players are focused on Gold and Silver. And Gold bugs may be prepared to pay for them because they get a de-risked exposure to a de-risked sector. And so that’s worth a premium. And almost all the Canadian companies are valued off a 5% discount rate. Whereas in London, because we’re unique, the brokers tend to value us off an 8% discount rate. And one of the things I’m trying to work on is how we can get our discount rate down, particularly given the fact that ultimately a lot of the North American Royalty companies have Royalties in much more risky places than we do. And we would think that being in safe jurisdictions, because a lot of the discount rate should be driven by the sovereign ratings in those markets. And so that’s that’s another difference. And then there is in Canada and in North America a much more dedicated investor base for Royalties, whereas I think in the UK, what we find is people saying, ‘well we don’t want to invest in mining, but we’ll have an exposure to Anglo Pacific because it’s a de-risk way of getting exposure to mining’. But they are ultimately coming from a mining background or thinking of us in the mining respect rather than think of us as a finance business.

Matthew Gordon: I think that’s true. They seem to be a lot of moving parts there, which you need to adjust to trying to turn the volume up or down on. Plus, it’s a very small pool here in the UK. So which commodities you go after moving forward is important.. You’re covered by how many brokers here?

Julian Treger: Four or five.

Matthew Gordon: You know who the brokers are and you know who is not covering you. That’s an education process. The market as a whole, it’s smaller, it’s less knowledgeable. But you’re starting a process to help educate.

Julian Treger: Absolutely. And we’re going to be spending much more time in North America over the next 12 months. We have been. And we have had some traction. People can see the obvious appeal and the discount.

Matthew Gordon: And the differentiators that you have compared to other Royalty companies over there.

Julian Treger: Yes. Because a lot of the Royalty companies there as well will do deals at 3%-5% which we wouldn’t do. And I think that fundamentally mis-prices the risk of the mining sector, where things go wrong all the time. So we think that our base returns should be closer to 10% because we think that’s more appropriate. And hopefully investors will recognize the virtue of that.

Matthew Gordon: We shall see. Julian, thank you very much for your time today. I’ve really enjoyed that. Learning about your company.

Julian Treger: Thank you for the time and attention.

Matthew Gordon: I’d like to stay in touch with you and certainly see how things develop over the next six months and into next year. I know our viewers and subscribers will have questions and we will come back to you with those.

Julian Treger: Excellent. Look forward to that. Thank you for your time.

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