Royal Gold, Inc. (RGLD) Earnings Call Transcript

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'd like to thank everyone in Los Angeles 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. 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 is in the top right corner of your screen. With that being said, I will now hand the floor over to Alistair.

Well, thanks, Noella, and thanks to Renmark. As always, for the opportunity to present today. We have [indiscernible]. Before I start, I will make the obligatory comments about forward-looking statements. I will be making forward-looking statements today during the course of the presentation. There are risks and uncertainties that could cause actual results to differ materially from these statements. all of these risks and uncertainties are discussed in our most recent Form 10-K filing with the SEC. So with that out of the way, I will talk about what we're going to do today, which is really give you the investment thesis for Royal Gold. We are a high-margin business. We generate consistent cash flows from precious metals, and we're not a mining company. So a very different business model than a typical mining investment. This presentation is divided into sections that really cover the key attributes of Royal Gold and our business model. So the first is our focus on precious metals and gold in particular. I'll talk about our high margin business with a long-term commitment to dividend growth. Our portfolio is a big part of this discussion. I'll talk about how it's the most diversified in terms of assets, operators and jurisdictions when you compare us against peers. Our model itself has limited operating risks with steady margins and no direct exposure to operating costs and inflation pressures. It's more of the right size for a small sector, so that means that we can compete for the largest transactions, yet still show growth from smaller transactions. And finally, I'll talk about some of the growth in the portfolio, the embedded optionality that we like to call it. We don't need to pay for organic growth because of the assets are in our portfolio. anything that comes from mine extensions or expansions is free to us, and that's the optionality that I think shareholders are most interested in. So I'll cover those during the course of the presentation. But I will also make some comments right now, just about 2025. It was a transformational year for Royal Gold. We did a lot in 2025. We acquired Sandstorm and Horizon, which are 2 separate companies in the corporate transaction that closed in late October. And that added significant growth and diversification to our portfolio. We also saw a couple of new additions to the portfolio from asset acquisitions. We acquired gold stream on the Kansanshi mine and Zambia run by First Quantum, that provides immediate cash flow from a world-class copper asset. It's a gold stream. And then the second was Warintza. This is a an emerging Tier 1 copper asset where we have a gold stream and royalty in Ecuador. So meaningful growth we expect to come from that transaction in the future. And it wasn't just acquisitions where we saw some benefits in addition to our portfolio. We saw additional optionality surface from within the portfolio, we saw a mine life extension of Mount Milligan that extended the mine life to the mid-2040s, and potentially beyond, if you listen the operator and the [indiscernible] they're thinking about the mine plan. And then Fourmile. I think it's 1 of the most topical and interesting things in the gold sector these days. It's a fairly early-stage discovery at the core test complex by Barrick. We have full royalty exposure to Fourmile, and it's certainly one of the best assets that is an emerging asset in the gold sector, and we have full exposure to it. So very pleased to see that advancing quickly. And so obviously, a lot of things in the portfolio, but we've done a lot since closing the transactions as well. We closed -- everything closed off basically towards the end of October last year. We've had 2 very solid quarters of financial results that don't have transaction costs and all the other noise associated with our transactions that we had in the first -- second quarter of this year. And the first quarter, we had record revenue, earnings and cash flow in the second quarter, which we released last week. We had record cash flow. So we've had a very strong 6 months -- first 6 months after betting down these transactions in 2025. We've repaid over $900 million of debt since the closing of those transactions in October. We've repurchased and canceled $30 million worth of shares. And we've done a lot to clean up and rationalize and simplify the Sandstorm portfolio. We sold non-core equity positions, raised over $200 million from doing that. We've restructured some of the more complex arrangements within the portfolio. So [ Relief Canyon ], we announced a couple of weeks ago, [ BeraCreek, ] we announced at the beginning of this year. And we also restructured half of the joint venture interest in the Hod Maden project in Turkey. So we've done a lot to clean up some of the things that investors didn't really like about the sensor portfolio. These transactions allowed us to increase our reserve life as well by about 25%. So now we have an 18-year reserve life. That's reserve life. That does not include resource potential beyond that and most of the mines where we have an interest of resources that are additive to reserves. So hopefully, we'll see that 18 years grow as time goes on. And then finally, at the end of last year, as we always do, we raised our dividend. And that was the 25th consecutive raise to the dividend in the company's history. So a very important milestone for us. So we did all of this. We added scale, diversification and growth. We have not changed our strategy. And I'd like you to keep all of this in mind as I get to the end of the presentation and talk about valuation because I think there's a bit of a disconnect there that we need to talk about. So in this first section, I'll talk about our gold focus. And we have been around since the mid- to late 1980s has always been very goal-focused. This is our 45th year on the NASDAQ exchange. So we've been around for a long time. We know this business well. And our strategy has been consistent over that entire time period. We're really focused on gold revenue from good assets in good jurisdictions run by very good operators. And our revenue has grown over time, as you would expect, as we've added to the business, but the metal mix hasn't changed. So hopefully, that shows you [indiscernible]. We what we aim to provide our investors is gold exposure and conservatively manage the vehicle. And this slide here shows why we think we're a good alternative for those investors who want conservative exposure to a very volatile commodity. On the left-hand side, you can see our beta to the gold price of 1.6. We do have very good leverage to gold. On the right-hand side, though, you can see over the long term, how we have performed relative to some of the metrics that we watch some of the measures that we compare ourselves against. Obviously, the gold price is important, repeating the gold price. We've beaten our peers, so the GDX, which has been around since 2006, we're a founding member or we were included in the original list of members of the GDX. We have beaten that index since 2006. And we've also beaten the S&P 500. So this shows why we think we're a very good long-term investment in a volatile commodity. I'll talk a little bit about margins and dividend growth in the next section. We do have very high operating margin in our business. Our business model is unique. It's high margin, but it's also scalable. We had an 82% EBITDA margin in 2025. And our cash G&A was about 4% of revenue, so a very high-margin business. Our costs are low and they're fixed. So cost inflation should not be something that really risks our margins. Our business model is efficient. And when you've got low cost like that, clearly, it's sufficient. But our head count is low for the scale of our business. We have 39 employees today, who work for Royal Gold and our market cap is about $20 billion. So on a per employee basis, we compare well to any company in any sector anywhere. And return of capital is something that is very important strategic objective for us at Royal Gold. And it's something that makes us unique amongst other both investments and our peers. We paid a growing and sustainable dividend since 2000, and we've increased the dividend every year since 2001, and that's despite volatility in the gold price. We've increased the dividend for 20 consecutive years, and we've now paid out over $1 billion in dividends to our shareholders. We're the only company in the GDX that's paid an increasing dividend since that index was formed in 2026. And we're the only precious metals company in the S&P High Yield Dividend Aristocrats Index. So that is a huge differentiator for us. Now another [indiscernible] is our portfolio. It's highly diversified. And our portfolio is global. It's -- we're weighted towards lower risk and what we would consider to be mining-friendly jurisdictions. Our portfolio spans in the various stages of mining project developments. And we have over 360 assets in the portfolio today. About 80 of those are producing revenue and about 30 are in development. And the other over 250 would be earlier stage. And so organic growth comes from us. That embedded optionality that I talked about at the very beginning, that comes from development and exploration stage assets that move through the project pipeline to revenue -- to production, which means revenue to us. And having a diversified portfolio reduces single asset and counterparty risks. As I said at the beginning, our commodity focus is gold, and we have the highest revenue percentage of our large cap peers from gold. But we also have meaningful silver and copper in the portfolio. In terms of geographies, we're geographically diverse, but we do have a North American focus. And our portfolio itself, if you look at the different assets in the portfolio on a net asset value basis, we have the most diversified mining asset portfolio in our sector of royalty streaming companies. And 9 of our top 10 assets are producing revenue today, and there are expansion and extension projects underway 5 of those assets. So a lot of growth embedded in the portfolio. Our operators are best in class. They're large, well-capitalized, they experienced generally, and we've recently added a few to the portfolio, which we're very proud to have as counterparties, First Quantum, Glencore, Rio Tinto. These are world-class operators that are part of our business. And portfolio diversification, it reduces our exposure to single asset operator and jurisdiction risks. And that's very important for generalist investors who don't want to spend the time to understand individual mining assets. We have a diversified portfolio. When something goes wrong at one asset, hopefully, something compensates from somewhere else, you don't need to spend as much time as you would if you were invest in a mining company. We don't need to understand the assets in the same level of detail. Now I want to talk about our model in a bit more detail and talk about the advantages of the royalty model and what we provide to our investors. Our model provides gold exposure with reduced risk. There are other gold investments you can make, and they're shown on this slide here. What we tried to do is provide upside to gold and optionality and a dividend while reducing the downside risk through holding a diversified portfolio that doesn't have direct exposure to operating and capital cost risk. Now the other alternatives you can use to invest in gold range from the conservative. You can buy gold itself. You buy an ounce today. That, though, will never grow into more than an ounce. An ounce will always be an ounce. You'll get price appreciation, but you won't get a dividend either, and it will actually cost you to hold that out. So that's a conservative, side of the spectrum. The more aggressive side, you can own equities in mining companies or exploration companies, and you'll certainly get leverage to the gold price. But you'll also get exposure to operating and capital cost risks and inflation. And inflation can erode margins and actually impact the value of those investments. There's a perception amongst some that our business model doesn't provide the same leverage to gold as other alternatives. But I think our financial results would prove that wrong and prove that not to be the case. So let's talk about margins for a second. Producers and Royal Gold have very different cost structures. And our costs are low and they're fixed. So margins should increase and expand as metal prices rise. Operator costs, though, are subject to inflation. So margins may not expand as quickly. And if we want to go into this in a bit more detail, this slide shows the cost structure of ourselves versus the average operator. The operator or producer, they're exposed to inflation and input costs. So these are the costs that operators need to incur to run the assets they have in their portfolio. So labor is a big part of that, energy, and then other consumables that are required to run mining assets. Many of these actually increase when commodity prices increase. You look at our costs, though, there G&A is pretty steady. We have salaries services and office rents, things that aren't subject to short-term increases. And anything that impacts costs impacts margins. So we would expect to see on the producing side, we would expect to see some inflation in costs over the next little while as all of the higher energy prices as a result of the Iran war, those will filter through into the mining sector, and you'll start to see operating cost increases, whereas we're not directly exposed to that. So it's not something that impacts our margins. I'll talk about our positioning in our sector. And we are what we like to think of being in a Goldilocks position. We're large enough to compete in the big caps to put things in our portfolio, but we're also small enough to do small transactions that show growth. And our sector is actually built on relatively small transactions. Most transactions, if you go back over the history, they're smaller than $300 million, and the average transaction size is just over $100 million. And we sit in a pretty interesting position, we are big enough in terms of cash flow and access to capital and liquidity that we can compete for the largest transactions. And we showed that last year. We did a $1 billion stream transaction at Kansanshi with First Quantum. One of the largest transactions that's been done in our sector. So we were able to do that. Yes, we also are not so big that we can still show some growth by doing small transactions and small transactions can add meaningful value to us. And/or [indiscernible] would be the other alternate -- the other example from last year, a $200 million transaction last year, relatively small, but we think it will grow to show pretty meaningful results when that asset starts operating. We're not aiming to be the biggest in our sector, but we do want to be the best. And that Goldilocks position provides us a great platform to execute our strategy of growing in gold without having to look at other commodities for growth. there's enough growth in the gold sector for us to continue growing from where we are. I'm going to talk a little bit about embedded growth and optionality. And before I do that, before I get into a little bit more detailed explanation there, I have to talk about our capital allocation priorities and framework and growth in our sector really depends on successfully allocating capital. Our strategy has remained pretty simple and pretty consistent over the decades that we've been in business. The first thing is we want to reinvest in our business using non-dilutive financing. The second is we want to maintain a strong balance sheet and access to liquidity, because opportunities come up quickly. We want to be able to act. And then thirdly, we always keep shareholders in mind. We want to return capital to shareholders the dividend is our preferred method of doing that. All of that said, we have to be flexible when it comes to allocating capital. And we have a framework in place that allows us that flexibility because market conditions change. But the framework, generally speaking, is -- we think about it this way. We want to target double-digit returns on new investments. and show per share growth in the metrics that our shareholders care about. We want to repay debt quickly. We want to make sure that we have liquidity that's free on our balance sheet. We have a revolving capacity -- revolving credit capacity available to us for new transactions. And then thirdly, we want to continue growing that dividend. 25 years of consecutive dividend growth. That's an important thing that we want to continue as a strategic objective to continue growing that dividend into the future. We added a couple of new tools to our toolkit in the last quarter to help us with these capital allocation priorities. And the first was, we added some more capacity to our revolving credit facility, $600 million uncommitted accordion. That helps us with liquidity or transactions that may come up. And the second is, a share buyback. First time we've done this in many, many, many years. And this was put in place to address what we think is -- sometimes we see valuation disconnects. So as we think about the universe of places to buy capital, we wanted to make sure we're positioned to be able to buy back shares if we see a dislocation in the share price. Now how have we done? So this slide shows a 25-year history of our capital allocation, I would say, it's been pretty successful. Since 2000, we've grown our revenue and cash flow pretty significantly, but there are 3 aspects of this growth that are worth highlighting, and they're all shown on this slide here. The first is, our G&A has not increased anywhere near revenue and operating cash flow. We don't need to add people when we add assets to the portfolio. The business is very scalable. And that goes to that efficiency comment that I made earlier. The second is our revenue growth is not dependent on metal prices. The gold price has grown, and it has risen over the past 20 years. It's been a great tailwind to us for us. But we've been able to add volume to our portfolio, and we've seen organic growth come from within the portfolio. So we're able to take advantage of that higher gold price as well by adding volume to the portfolio. And then the third thing is we've mostly financed our growth internally without a significant rise in our share count. We did issue shares last year to complete the Sandstorm transaction, almost 19 million shares, but that was the first time we had issued equity since 2012. And even with those shares and our higher share count, we still have the lowest share count on the GDX. We want to avoid shareholder dilution and provide per share growth to our shareholders. So keeping a close eye on our share count is obviously a very important part of doing that. I'm going to talk about assets and transactions and returns. So when we allocate capital and we think about allocating capital to new business, what we're aiming for is trying to get double-digit returns over the long term, but we have to be patient. Exploration and production upside is very important when we look at new assets and new transactions. And it sometimes takes time for the market to see and then to understand the upside that we see when we make investments. We do very extensive due diligence on new opportunities. We take a bottoms-up technical approach to asset reviews. We have a very strong technical team at Royal Gold, and we look at exploration potential. We look at expansion potential. We look at a lot of things in a very detailed way when we're doing due diligence on new opportunities. And analysts on the sell side, the ones who published the research reports that investors often read, they don't have the benefit about that work. So Street estimates on day 1 announcement of the transaction, they may appear pretty low, and it may take a number of years for the upsides that we see in the due diligence to become evident to the marketplace. And this slide illustrates how point. We've selected a number of transactions on this slide here. You can see the initial estimates on day 1 that one of the sell-side analyst produced. And then you can see what the estimates are today based on the information that's come to light. So as time has passed, expected returns have grown with production expansions and mine life extensions. And those are all driven by reserve and resource growth without having to make further investments from Royal Gold. So that's the optionality that I was referring to. And this next slide shows the same concept but in a slightly different way. As time passes, we recover our investments. And the investment is shown in the dark blue. What we aim to do is see that investment recover over time and any value that's added by the operators to those assets increases the future value of what we own. So that, again, is another way to look at returns. So on day 1, we'll invest a certain amount of capital, but we want to receive multiples of that over time. And sometimes it does take time for that optionality to show up in those assets. And the way this works is the multiplier effect, which is, we're trying to show here on this cartoon slide. Any extension to mine life in an asset where we have an interest. It provides a double benefit to us. Obviously, as production is extended, that means more revenue to us. But as production is extended, that's a mine life extension. That means that we're exposed for a longer period of time to the gold price. And there's a lot of volatility in the gold price that can really add a lot of value to the investments that we make. Operators are always looking to extend asset lives and capture that incremental revenue. They paid for the capital to build a mine. They want to try and maximize their returns. And the way they do that is by trying to find opportunities to extend mine life. And you can see that in 2025, we had over 2 million meters of drilling that was done by operators across the portfolio. We benefit from that drilling because we don't need to fund it. We don't to fund any capital or invest any further to get exposure to the upside that those operators are able to surface. This growth that we don't have to pay for. And that's the optionality, which we think is the most important feature of our business model. And you can see that on this next slide. So some of the development assets that we have in the portfolio. These are all bought and paid for. And this slide shows some of the key catalysts that we see today at new assets that provide -- we think will provide organic potential to us in the future. We've got a very significant organic growth pipeline, and we have a decade of catalysts every year. We see at least something happening within the portfolio that should provide some value to our shareholders. Back River reached commercial production late last year. Platreef started milling more in the fourth quarter last year. We just got our first gold stream delivery at the beginning of August from Platreef. Robertson, we're expecting to see production in 2027. Hod Maden, Great Bear, Warintza. We're expecting to see those in production towards the end of this decade. And then beyond the turn of the decade, MARA and Fourmile are 2 very important large assets for their operators [indiscernible], respectively. We don't need to fund any of the growth that we're showing on the slide here. The Mount Milligan and these are new assets. They're not assets that are in the portfolio producing revenue. So if I want to include those, I included the Mount Milligan mine life extension. I already include the expansion of production at [indiscernible]. So when you take all this and you boil it down, we have one of the best organic growth pipelines in the sector. And that's reflected in that -- in the 5-year guideline or the 5-year outlook that we gave with our guidance in March of this year. So with all of that said, I'm going to turn to valuation as kind of the final point here. And Royal Gold is performing very well. We've got very strong cash flow, good organic growth within the portfolio. We're executing on our priorities. But if you look at a snapshot today of our valuation metrics, it doesn't reflect that. We're showing valuation multiples on an NAV basis. We're trading at a pretty significant discount to our large cap peers. And on a cash flow multiple basis, we're trading at the lowest end of our large cap as well as small cap peers. So we struggle with that. And I think if you look at the -- historically, you could see how this has manifested itself over time. This isn't just a snapshot today. It's over the long term, we're trading at pretty low levels, and there's a disconnect. And I think it's because the market hasn't absorbed the scale and the growth potential of the portfolio, a lot of the activity we did in 2025 has not been recognized yet. And the market is probably more focused on the integration risk, the 2025 acquisitions without recognizing some of what we've actually reported. And I'll be clear, we've only had 2 quarters of financial results. So it's not a big data set for the market to focus on. I understand that. But the first 2 quarters should show, we've got -- we had almost $800 million of adjusted EBITDA in the first 2 quarters of this year. We paid over $900 million of debt since the middle of October last year. And we're seeing pretty important advances from within the portfolio, some of the projects that we have that I've already gone through and just talking about the organic growth. So our focus is really to make sure the market understands how well we're executing. So we address this valuation disconnect with information with the hard metrics that the market needs to see. So Noella, I'll turn it back to you in a moment. I'll just sum up here. We believe we've done a lot to strengthen our position for a rising oil price environment. We've added scale, diversification and growth to the portfolio. We've got a very strong balance sheet. We've got significant cash flow. And we think our patient approach and our commitment to the long-term strategy that has worked should be rewarded by the market. And so with that, I think I'll turn it back to you, Noella, and happy to start the Q&A session.

Thank you very much, Alistair, for the presentation. We'll now begin the Q&A. Your first question is gold represented approximately 76% of revenue with silver at 12% and corporate 8%. Has the portfolio become more diversified than investors may realize. And how do you expect that mix to evolve over the next 3 to 5 years?

I think the portfolio mix has stayed pretty consistent over time. Gold has always been the biggest driver of our revenue and were between [ 70% and 80% ] on a quarterly basis we meet our contribution from gold. And that's been consistent over time. We're certainly not trying to change our commodity focus. We have a few silver streams which we -- quite like silver. We're always looking at silver. We think of that as a precious metal copper. We're not actively looking to grow in copper [indiscernible]. We're not out there looking to do anything in base metals. But occasionally, we see interesting base metals opportunities coming across our desks. And we will look at them. If there's a good return to be had in a copper asset, we understand that business very well. So we'll look at that. But we're not out there actively seeking to change our commodity mix. And I don't think this is going to change significantly in the future either. I mean if you look at what's in the portfolio, some of the assets that I just talked about where there -- we're expecting new production to come in. Of all of those assets, gold is the #1 focus. There's one on that slide that shows is the Cactus project. We have a small copper royalty on that. In Arizona, it won't be a significant change to our metals mix when that starts producing. But we're very focused on precious metals, and we don't intend to change that in any material way.

Thank you for clarifying that, Alistair. Your next question. Will the development of Fourmile accelerate following yesterday's Newmont and Barrick agreement?

We hope so. I think it was very promising to see the dispute between Newmont and Barrick has now been settled, and they're working together to advance this project. I think as the Barrick CEO mentioned yesterday on the conference call, they probably won't see production [indiscernible]. So I think the fact that they're now working together and maybe thinking about deploying capital in a different way, maybe installing additional processing capacity close to Fourmile that will be helpful for the project. Obviously, we benefit as a result of that. So we're very pleased to see that announcement. I think it was a question on the market's mind as to how quickly Fourmile was going to advance given the dispute between Newmont and Barrick. Now that's been resolved. We think there's a pretty clear runway. And if you think about the two companies who know Nevada the best, that's Barrick and Newmont, if they're working together to advance projects in Nevada, that's probably the best situation you could possibly have.

Thank you for that response. Next, [indiscernible] was asking, Royal Gold made another significant debt repayment during Q2. What is the target debt level you would ultimately like to reach?

So what we have said is we expect to be debt-free by the end of -- or in the fourth quarter of this year. And so we don't target necessarily a certain level of debt, we like to maintain as low level of debt as possible. And if it's 0, then that's fine. We have a revolving credit facility that we use as a source of capital, it's non-dilutive. And we are happy to use that as a way to raise money quickly to acquire new assets. And what we'll do is we'll pay that down over time. We have got a lot of [indiscernible] is a very strategic financing tool. We borrow and then we pay down we borrow, pay down. And so if we can keep the balance as low as possible, what that means is the capacity available to us is higher. And that's what we want. We want to be able to make sure we've always got liquidity to be able to do new transactions. And we see we look down the pipeline, and we often see things that are coming. But sometimes we're surprised. Sometimes things come up faster than we expect. And so you don't want to ever be in a situation where you've got too much debt and you can't raise capacity, you can't raise enough liquidity to be able to execute on transactions. Because transactions, they trade once, if you have an opportunity to buy a royalty on Fourmile, for example, that trades once. As soon as that's in the hands of a peer, it's never going to be shaking loose. So you want to make sure that you've always got the ability to act quickly and decisively on transactions. And part of that is making sure we have liquidity available. So our debt -- our focus on debt is really to repay the revolving credit facility to maintain that liquidity.

Thank you for your comments on that. Next, [indiscernible] was asking, which assets are the main drivers of the other metals outperformance relative to guidance?

So there is a small handful. Peñasquito, we have a royalty there, that's all metals. So Peñasquito is obviously an important [indiscernible] Canada is another one where it's got nickel and copper. And we have a couple of other interests on the biggest being Antamina, we have a royalty there. It's a net profits royalty, and we have exposure to zinc as well. So those would be the main drivers for some of the strength that we've seen in other metals.

[indiscernible] question is, do you consider doing buybacks to use treasury shares to acquire other companies that could be more inclined if the offer include shares? And have you considered deposing of royalties with less expected LOM or quality and using the revenue for buybacks, so you increase NAV per share in better quality assets.

Okay. That's -- there's a lot in that question. I'm going to try and answer it. But if I don't get it quite right, please get back to Renmark, we'd be happy to speak to you if I don't get it quite right. But when we think about the assets in the portfolio, we tend -- we don't like to sell assets. And the reason is because there's always the potential for additional growth in those assets and realize [indiscernible] it's worth more to us to keep these assets. It doesn't cost us anything to have assets in the portfolio. And there are examples in the portfolio of assets that have had no book value. And we think they're dormant, we think there's nothing happening. And then suddenly, there's a change. And there are a couple of Australian examples. We've got royalties in Australia on Bellevue Gold and King of the Hills. And these were 10 years ago. These were dormant assets. They had no potential 10 years ago of moving into production. In both cases, management teams have come in, looked at the assets, thought about them differently and put them back into production. And now they're actually pretty significant revenue contributors to us. So if we had sold those assets, we wouldn't have received anywhere near the value of those assets. So it's worth more to us to keep them in the portfolio. And that's because that embedded optionality is worth a lot. And we wouldn't want to see us sell an asset for $10 and find out that a year later, somebody is able to put it back into production, and it's worth a multiple of $10. That wouldn't be a good allocation of capital. So we don't think about it that way. We're not like a mining company that has maybe operating costs are increasing and margins are declining at an asset. And you say, I'd rather focus on higher returning projects. So I'm going to sell that [indiscernible] the way we think about it. This is about owning a portfolio where each of the assets has some additional optionality. To go back to the question on -- so can you read the first part of the question, please, again?

Yes. So the first part is you consider doing buybacks to use treasury shares to acquire other companies that could be more inclined if the [indiscernible].

I think I understand the question. We will use shares occasionally. It's not very often, but we have done that in the past to acquire things. And the most recent example would be Sandstorm. So we did use our shares to acquire Sandstorm. It was just a transaction that was too large and actually the seller company wanted shares. They wanted to be able to participate in the larger vehicles. So we have done that in the past. It's not something we typically look to do because, as I said, we want to maintain our share count. So the buyback is a completely separate calculus, and that's around -- thinking about the buybacks around valuation and other ways that we can deploy capital. We want to make sure that we're doing it in the most accretive way. So Hopefully, I've answered that question. But as I said, if I didn't, if I misunderstood it, please go back to Renmark. We can have a conversation offline.

Thank you for breaking that down, Alistair. How should investors think about the updated project schedule and the potential for changes to capital requirements?

So this is [indiscernible] a question. This is an asset very unique for us. We have a direct joint venture interest in an asset in Turkey that's being developed by a Turkish company called [ Lydia ]. And there's been a big change with the ownership here. [indiscernible] just taken over as operator of the asset. We own 15% and [indiscernible] owns 85%. As [ Lydia ], they've now stepped into the operator role, and that's been in the last couple of months. quite successfully. We're quite pleased with the way that they're handling the project and moving it forward. What they did say though was that they are reviewing the prior plans in terms of the execution plan and the schedule. At this point, they're executing the project based on the old plans, but they're doing anything that a new operator would do. And let's just look at everything to make sure that they agree. And they haven't said anything yet that would indicate there's going to change. So they're executing to the original plan. And of course, we'll update the market if there's any change.

Thank for that response. Next question, [indiscernible].