Triple Flag Precious Metals Announces Record Full Year 2021 Results

2022-02-22 22:16:13

TORONTO / Feb 22, 2022 / Business Wire / Triple Flag Precious Metals Corp. (with its subsidiaries, “Triple Flag” or the “Company”) (TSX:TFPM, TSX:TFPM.U) announced its results for the fourth quarter and full year of 2021 and declared a dividend of US$0.0475 per common share to be paid on March 15, 2022. All amounts are expressed in US dollars.

2021 was a year defined by our transition to the public markets and ongoing delivery by our talented team. Together we’ve built a remarkable business from a standing start in 2016. I am grateful to our team, shareholders, board and partners for making this possible, and excited for what lies ahead with the platform we have built together,” commented Shaun Usmar, Triple Flag founder and CEO. “Despite lower year-over-year gold sales in Q4 due to Covid-related supply disruptions at ATO, our portfolio performed extremely well overall, resulting in metal sales for the year above guidance. We achieved our fifth consecutive GEOs1 sales record, achieving 83,602 ounces. That’s a 33% increase on our prior record in 2020, which equates to a sector-leading CAGR of 26% since we first sold 32,706 ounces in 2017. Our 2021 sales translate into record operating cash flow of $120 million, representing a 42% increase on our prior record in 2020, net earnings of $45.5 million, down 18% due to a one-time gain in 2020 and fair value adjustments, and record adjusted net earnings2 of $57.6 million, up 136% on our prior record in 2020. These record inaugural annual results as a public company showcase our latest step towards building a senior precious metals streaming and royalty business that compares favorably with the best in the sector.

We enter 2022 with a carbon-neutral, high-quality, high-growth, high-margin, long-life, diversified precious metals portfolio. We have no meaningful financial commitments over the next decade, generate strong cash flow and have $41 million of cash with no debt outstanding, providing us with more than $600 million of liquidity to finance new deals. We also pay a dividend with a yield that ranks with the best in the sector, and possess an active deal pipeline with perhaps more strategic possibilities and activity than at any time in our history.

Full Year 2021 Financial Highlights

  • 34% increase in Revenue to $150.4 million, from $112.6 million in 2020.
  • 33% increase in gold equivalent ounces (“GEOs”)1 sold to 83,602, from 63,059 in 2020.
  • 42% increase in Operating Cash Flow to $120.0 million, from $84.4 million in 2020.
  • 18% decrease in Net Earnings to $45.5 million ($0.31/share), from $55.6 million ($0.48/share) in 2020.
  • 136% increase in Adjusted Net Earnings2 to $57.6 million ($0.39/share), from $24.4 million ($0.21/share) in 2020.
  • 28% increase in Adjusted EBITDA3 to $123.5 million, from $96.2 million in 2020.
  • Strong Asset Margin4 of 91% compared to 92% in 2020.
  • Cash Costs per GEO5 of $161, compared to Cash Costs per GEO of $147 in 2020.

Q4 2021 Financial Highlights

Q4 2021 results exceeded the top end of our expectations, highlighting the resilience of the overall portfolio against the backdrop of Q4 2020 being a record quarter. The key material variance between Q4 2021 and Q4 2020 was the Covid-related supply chain disruptions at ATO, which will result in a deferral of gold ounces that were originally expected to be produced in Q4 2021. Other items of variance that impact the financial metrics listed below include the $78.0 million cash payment from Zijin Mining Group Co., Ltd. (“Zijin”) in December 2020 for the exercise of the Buriticá gold stream buyback, and the associated $30.9 million gain on disposition.

  • 12% decrease in Revenue to $37.0 million, from $42.0 million in Q4 2020.
  • 8% decrease in GEOs1 sold to 20,605, from 22,409 in Q4 2020.
  • 6% decrease in Operating Cash Flow to $29.0 million, from $30.7 million in Q4 2020.
  • 75% decrease in Net Earnings to $13.4 million ($0.09/share), from $54.0 million ($0.40/share) in Q4 2020.
  • 21% decrease in Adjusted Net Earnings2 to $13.4 million ($0.09/share), from $17.1 million ($0.13/share) in Q4 2020.
  • 21% decrease in Adjusted EBITDA3 to $28.9 million, from $36.7 million in Q4 2020.
  • Strong Asset Margin4 of 91% compared to 92% in Q4 2020.
  • Cash Costs per GEO5 of $159, compared to Cash Costs per GEO of $154 in Q4 2020.

GEOs Sold by Commodity, Revenue by Commodity, and Financial Highlights Summary Table


























   

Three Months Ended December 31

 

Year Ended December 31

($ thousands except GEOs, Asset Margin, Total
Margin, Cash Costs per GEO, and per share numbers)

 

2021

2020

 

2021

2020

GEOs1

           

Gold

 

10,614

14,370

 

41,143

38,548

Silver

 

8,586

7,606

 

38,229

22,947

Other

 

1,405

433

 

4,230

1,564

Total

 

20,605

22,409

 

83,602

63,059

   

 

 

 

 

 

Revenue

 

 

 

 

 

 

Gold

 

19,054

26,932

 

74,035

69,452

Silver

 

15,414

14,256

 

68,777

40,436

Other

 

2,522

811

 

7,609

2,700

Total

 

36,990

41,999

 

150,421

112,588

   

 

 

 

 

 

Net Earnings

 

13,381

53,955

 

45,527

55,565

Net Earnings per Share

 

0.09

0.40

 

0.31

0.48

Adjusted Net Earnings2

 

13,409

17,060

 

57,563

24,406

Adjusted Net Earnings per Share2

 

0.09

0.13

 

0.39

0.21

Operating Cash Flow

 

28,997

30,721

 

120,015

84,377

Adjusted EBITDA3

 

28,880

36,735

 

123,485

96,157

Asset Margin4

 

91%

92%

 

91%

92%

Total Margin4

 

78%

87%

 

82%

85%

Cash Costs per GEO5

 

159

154

 

161

147

Corporate Updates

  • Acquisition of Three NSR Royalties Proximal to Salares Norte on properties operated by Gold Fields: In December 2021, Triple Flag announced the acquisition for $4.9 million of three pre-existing 2% net smelter returns (“NSR”) royalties on each of the Aster 2, Aster 3, and Helada properties from a private third party proximal to Gold Fields Limited’s (“Gold Fields”) Salares Norte project in Chile. These royalties each cover prospective exploration ground that Gold Fields has been exploring. Each royalty has a buy-down provision to reduce the royalty rate from 2% to 1%, with the buy-down price payable to Triple Flag if exercised being $4.0 million for each of Aster 3 and Helada and $2.0 million for Aster 2.
  • Beaufor Royalty Acquisition: Subsequent to quarter-end, Triple Flag entered into a binding agreement to acquire an existing 2% NSR royalty (with a milestone-based step-down to 1%) on the Beaufor Mine for C$6.75 million. In connection with this transaction, the Company entered into a binding agreement with Monarch Mining Corporation (“Monarch”) to provide Monarch with additional funding of C$4.5 million in consideration for increasing the royalty rate to 2.75% and eliminating the step-down. The two transactions were closed on February 14, 2022.
  • Talon Royalty Buy-down and Disposition of Equity Interest: Subsequent to quarter-end, Talon Metals Corp. (“Talon Metals”), through its U.S. subsidiary Talon Nickel (USA) LLC (“Talon Nickel” and collectively with Talon Metals, “Talon”) exercised its right to reduce the NSR royalty rate under the Tamarack royalty agreement from 3.5% to 1.85% of Talon’s interest in the Tamarack Nickel Project (“Tamarack”) in exchange for a payment of $4.5 million. This is consistent with the assumptions underpinning our five- and ten-year GEOs outlook we published in Q3 of 2021. Triple Flag acquired its royalty on Tamarack for $5 million in March 2019. The transaction will be recorded during the first quarter of 2022.
    On December 3, 2021, we acquired 5 million common shares of Talon Metals for C$413,000 through the exercise of our 5 million common share purchase warrants. Subsequent to quarter-end, we sold the 5 million Talon Metals shares for C$3.7 million. The disposition will be recorded during the first quarter of 2022 and is driven by our strategic focus on limiting equity exposures across our business.
    Triple Flag retains significant exposure to Tamarack through the remaining 1.85% NSR royalty and has more than recouped its investment into Talon with the proceeds from the sale of the Talon common shares and the proceeds from the buy-down payment.
  • Gunnison Stream Amendment: In December 2021, Triple Flag and Excelsior Mining Corp. (with its subsidiaries, “Excelsior”) agreed to an amendment to the Stream Agreement between the Company and Excelsior, thereby helping facilitate certain transactions. Pursuant to the amendment, the Company and Excelsior agreed to remove Excelsior’s buy-down option and concurrently agreed to re-price Triple Flag’s 3.5 million common share purchase warrants to C$0.54 per common share. This amendment was reflected in our results for the year ended December 31, 2021, and did not have a material impact on our financial statements.
  • Virtual Tours: Late in 2021, Triple Flag, in partnership with its partners, hosted virtual tours of Royal Bafokeng Platinum Limited’s (“RBPlat”) PGM operations and China Molybdenum Co., Ltd’s (“CMOC”) CMOC-Northparkes Mines (“Northparkes”). The virtual tours can be found under the “Video Content” page under the Investors section of our website at www.tripleflagpm.com.
  • Dividend: Triple Flag’s Board of Directors declared a quarterly dividend of US$0.0475 per common share that will be paid on March 15, 2022 to the shareholders of record at the close of business on March 4, 2022. The annualized dividend of US$0.19 per share represents a yield of 1.4% based on the closing share price on February 18, 2022.
  • Team: Subsequent to the quarter-end, we are pleased to announce that John Cash has joined Triple Flag as a Senior Advisor, Mining Engineering. John brings 35 years of experience in the mining industry, the majority of which was spent with Barrick Gold Corp. John joined Barrick’s Goldstrike Mine as a mining engineer in 1988 and rose to progressively more senior positions, most recently as Vice President of Life of Mine Planning and Growth. John brings a wealth of global mining experience that spans mine planning, construction, technical studies, business improvement, due diligence at the mine site and corporate levels. John is replacing Allan Polk, who retired from Triple Flag as Vice President, Mining Engineering in December 2021. We are grateful to Allan for his contributions to our business and wish him well for the future.

Q4 2021 Portfolio Updates

Australia:

  • Northparkes (54% gold stream and 80% silver stream): Sales from Northparkes in Q4 2021 and FY2021 were 3,772 GEOs and 14,886 GEOs, respectively, based on sales of 2,922 ounces of gold and 68,212 ounces of silver in Q4 2021, and sales of 12,059 ounces of gold and 210,503 ounces of silver in FY2021. In Q4 2021, Northparkes produced 7,694 tonnes of copper and 6,232 ounces of gold. Capital and expansion projects continue to progress well, with the Expansion Project (Phase 1) achieving design rates and the E26 Lift 1 North Block Cave expecting to commence production in Q1 2022, some five months ahead of schedule.
  • Fosterville (2.0% NSR gold royalty): Royalties from Fosterville in Q4 2021 and FY2021 equated to 3,253 GEOs and 10,327 GEOs, respectively. Fosterville produced 108,156 ounces of gold in Q4 2021 and 509,601 ounces of gold in the full year 2021, above November 2021 guidance of 500,000 ounces. Production exceeded target levels for the quarter mainly due to higher-than-expected average grade. Increased Covid-19 cases in Australia resulting from the spread of the Omicron variant have resulted in reduced workforce levels and some disruptions to operations, but Kirkland Lake Gold Ltd. (“Kirkland”) noted with its Q4 and full year 2021 production results that the mine is well positioned to achieve 2022 production in line with prior guidance of 325,000 to 400,000 ounces that was issued on December 10, 2020. On February 8, 2022, the merger between Kirkland and Agnico Eagle Mines Limited was completed, and consolidated 2022 guidance for the combined company is expected to be released in the second half of February.
  • Dargues (5.5% gross revenue (“GR”) gold royalty): Royalties from Dargues in Q4 2021 and FY2021 equated to 358 GEOs and 1,735 GEOs, respectively. Dargues produced 10,844 ounces of gold in the quarter ended December 31, 2021, in line with the prior quarter’s production of 10,827 ounces. Ore processed was 92.0 kt versus 91.3 kt in the prior quarter, and gold recovery and concentrate grade improved as a result of flotation circuit optimization and higher gold to sulphur ratio in the mill feed. Aurelia Metals Limited (“Aurelia”) left its FY2022 (ending June 30, 2022) production outlook for Dargues of 45,000 to 50,000 ounces of gold unchanged, with stronger production expected in the second half of FY2022. As part of the Phase 2 drilling program, underground diamond drilling to infill the lower mining area resumed in October and surface drilling commenced in the quarter to infill certain areas of the resource along with numerous high priority exploration targets in the immediate mine vicinity. Aurelia is targeting a Mineral Resource and Ore Reserve update in the second half of calendar 2022, with environmental assessments and regulatory approvals associated with a potential expansion completed by approximately mid-2024.
  • Henty (3.0% GR gold royalty): Royalties from Henty in Q4 2021 and FY2021 equated to 190 GEOs and 1,046 GEOs, respectively. Henty produced 6,311 ounces of gold and sold 6,621 ounces of gold in the quarter ended December 31, 2021. Since Catalyst Metals Ltd. (“Catalyst”) acquired Henty on January 20, 2021, Henty has produced 24,706 ounces of gold, in line with its guidance of 25,000 ounces for calendar year 2021.
    During Catalyst’s ownership, mill recoveries have improved, new exploration targets have been identified and they have delivered three consecutive quarters of production growth. Catalyst is focused on converting the mineral resource to mineral reserves and increasing production from the current rate of approximately 30,000 ounces of gold per year to 50,000 ounces, as new ore sources are added, which will require minimal capex investment and is expected to reduce all in sustaining costs by 20 to 25%. For 2022, Catalyst is initiating a project to supplement its 2022 mine plan with additional high-grade ore from narrow vein orebodies not in the current mine plan. The medium-term objectives of the supplemental high-grade ore plan is to restore production to 40,000 ounces per annum while maintaining or extending mine life. On the exploration front, Catalyst has three drill rigs in operation for underground diamond drilling with a fourth arriving in February, and one rig for surface exploration. Henty’s recent exploration results have identified potential to increase mineral resources due to high-grade intercepts outside the current mineral resource, and to delineate new mineral resources in new areas.

Latin America:

  • Cerro Lindo (65% silver stream): Sales from Cerro Lindo in Q4 2021 and FY2021 were 6,361 GEOs and 30,651 GEOs, respectively, based on 489,271 ounces of silver sold in Q4 2021 and 2,223,472 ounces sold in FY2021. Cerro Lindo produced 940,000 ounces of silver during Q4 2021, a decrease from 1,024,000 ounces of silver in Q4 2020, but produced 3,814,000 ounces of silver for FY2021, up from 2,939,000 ounces in FY2020 and above guidance. On December 14, Nexa Resources S.A. (“Nexa”) reported that Cerro Lindo operations had been temporarily suspended due to a group of protestors illegally blocking road access to the mine as part of protest activities that began on December 8. After two days of stoppage, protests were resolved on December 16 and the plant was ramped up to full production on December 18.
    Nexa provided updated 3-year guidance with its FY2021 financial results on February 15, 2022, which showed a reduction in assumed throughput to 6.0 – 6.5 million tonnes per annum, down from 7.0 million tonnes per annum in 3-year guidance provided at the beginning of 2021. This, in combination with lower zinc head grade, has resulted in reduced zinc and, to a lesser extent, copper production guidance for 2022, with higher zinc and lower copper in 2023. However, of most importance to Triple Flag, silver production guidance for 2022 and 2023 has improved significantly, to 4.0 million ounces for 2022 from 3.5 million ounces previously, and to 3.5 million ounces for 2023 from 2.9 million ounces previously. In 2024, silver production is expected to increase back to 4.0 million ounces. The 2022 exploration plan for Cerro Lindo includes 39,000 meters of drilling, including detailed drilling at Pucasalla and extension drilling on other targets such as the northwest extension of OB5B and Festejo, located southeast of the Cerro Lindo mine and OB9. Nexa also plans to run a 36-kilometer ground geophysics survey along these targets to confirm continuity of mineralization. Pucasalla is outside of Triple Flag’s stream area but is covered by a right of first refusal. Nexa has continued to discover extensions of the Cerro Lindo deposit within the stream area, towards the east and southeast of the mine.
  • Buriticá (100% silver stream): Sales from Buriticá in Q4 2021 and FY2021 were 1,203 GEOs and 4,403 GEOs, respectively, based on 93,741 ounces of silver sold in Q4 2021 and 318,939 ounces in FY2021. Buriticá achieved average throughput slightly above design capacity at 3,100 tonnes per day at an average grade of 7.4 grams per tonne gold in Q4 2021. Zijin is currently commissioning the expansion project to increase throughput to 4,000 tonnes per day during 2022, which will also allow the mine to produce copper and zinc concentrates from Buriticá, that will further boost the already high margins from this low-cost mine.
  • Eastern Borosi (2.0% NSR gold and silver royalty): Calibre Mining Corp. (“Calibre”) noted with its 2021 production results that in 2021 it advanced technical drilling, land purchases, and social and environmental work at the initial resource zones within Eastern Borosi. It significantly advanced three of six known resource zones in 2021. In February, Calibre announced it has submitted permit applications to advance Eastern Borosi, which is expected to provide high-grade mill feed to the Libertad mill during the second half of 2023 and support Calibre’s ‘hub and spoke’ strategy. Concurrent target delineation and exploration drill programs have been ongoing and have restarted with two rigs testing extensions to existing resources and newly identified targets including the San Cristobal and Cadillac West deposits.

North America:

  • Young-Davidson (1.5% NSR gold royalty): Royalties from Young-Davidson in Q4 2021 and FY2021 equated to 672 GEOs and 2,817 GEOs, respectively. Young-Davidson produced 51,900 ounces of gold in Q4 2021, up from 48,000 ounces in Q4 2020. Following the completion of the lower mine expansion in July 2020, underground mining rates increased to average a record 7,889 tonnes per day in 2021, including a record 8,128 tonnes per day in the second half of 2021. Mining and processing rates are expected to average design rates of 8,000 tonnes per day going forward. Additionally, Alamos Gold Inc. (“Alamos”) announced three-year guidance for Young-Davidson and expects the mine to produce 185,000 – 200,000 ounces each year, making Young-Davidson Alamos’ top producing mine. Grades mined and processed are expected to range between 2.15 and 2.35 grams per tonne of gold in 2022 and remain at similar levels through 2024. Grades mined are expected to increase thereafter, as Young-Davidson West becomes more of a significant contributor to production.
    Alamos has budgeted $5.0 million for exploration in 2022; the focus of the underground exploration drilling program will be to expand mineral resources in six target areas that have been identified within proximity to existing underground infrastructure. In addition, 3,500 meters of surface drilling is planned to test near-surface targets across the 5,600 hectare Young-Davidson Property.
  • Pumpkin Hollow (97.5% gold and silver stream): Sales from Pumpkin Hollow in Q4 2021 and FY2021 were 136 GEOs and 635 GEOs, respectively, based on sales of 107 ounces of gold and 2,063 ounces of silver in Q4 2021, and sales of 501 ounces of gold and 9,655 ounces of silver in FY2021. During Q4 2021 Nevada Copper Corp. (“Nevada Copper”) announced a series of updates on the progression of operating and ramp-up activities at the mine. Lateral development rates continue to rise, being 100% higher in December 2021 than in August 2021, due in part to contractor productivity increasing by 31% between October and November resulting in substantial improvement in operating efficiency as well as cost reductions. Installation of additional surface ventilation fans remains on schedule, with commissioning planned to be completed in Q1 2022, with ventilation no longer expected to be a constraint to production rates thereafter. Nevada Copper plans to undertake various exploration and drilling activities across the Pumpkin Hollow open pit and Tedeboy projects during 2022. Triple Flag holds a 0.7% NSR royalty and a 2.0% NSR royalty on the Pumpkin Hollow open pit and Tedeboy projects, respectively.
  • Gunnison (16.5% copper stream): Sales from Gunnison in Q4 2021 and FY2021 were 133 GEOs and 392 GEOs, respectively, based on 54,035 pounds of copper sold in Q4 2021 and 163,188 pounds in FY2021. During Q4 2021, Excelsior Mining Corp. (“Excelsior”) announced that two diamond drills have been mobilized to the Johnson Camp Mine (“JCM”), for infill drilling of the Burro and Copper Chief open pits. Excelsior continues to advance the JCM restart which, once operational, will provide cash flow while the raffinate neutralization plant is being designed and built for Gunnison. Any cathode production from the JCM is covered under Triple Flag’s stream.
  • Eagle River (0.5% NSR gold royalty): Royalties from Eagle River in Q4 2021 and FY2021 equated to 115 GEOs and 450 GEOs, respectively. Eagle River produced 24,630 ounces of gold in Q4 2021 and 101,403 ounces of gold in FY2021, at the top end of 2021 production guidance of 92,000 to 105,000 ounces of gold. For 2022, Eagle River production guidance is 95,000 to 105,000 ounces of gold. During the quarter, Wesdome Gold Mines Ltd (“Wesdome“) announced the discovery of the North Contact Zone and the discovery of zones of additional mineralization parallel to the Falcon 7 Zone at Eagle River. The North Contact Zone is a new discovery located along the northern contact of the mine diorite and has been intersected by several underground holes that were drilled north of the 300 East zone to test for parallel structures. The Falcon 7 Zone was discovered in 2019 during surface drilling of the volcanic rocks located approximately 200 meters west of the mine diorite. Drilling has been ongoing since the discovery to determine the extent of the zone and to increase confidence of the gold grade distribution. Recent drilling from the new development intersected several parallel zones to that of the Falcon 7 zone. Wesdome is planning aggressive underground and surface exploration programs in 2022.
  • Tamarack (1.85%a NSR nickel and copper royalty on Talon’s interest): In January 2022, Talon announced an agreement with Tesla Inc. (“Tesla”) for the supply and purchase of nickel concentrate to be produced from Tamarack in Aitkin County, Minnesota. The execution of the agreement follows an extensive period of detailed due diligence performed by Tesla and lengthy negotiations between Talon and Tesla. Tesla has committed to purchase 75,000 tonnes (165 million pounds) of nickel in concentrate and has a preferential right under the agreement to negotiate the purchase of additional nickel concentrate over and above the initial 75,000 tonne commitment. Talon will use commercially reasonable efforts to achieve commercial production on or before January 1, 2026 at Tamarack. Talon and Tesla will work together to optimize nickel concentrate grades and metal recoveries. Furthermore, the parties have also agreed to share in any additional economics derived from by-products extracted from the nickel concentrate, such as iron and cobalt. The purchase price to be paid by Tesla for the nickel in concentrate will be linked to the London Metals Exchange (LME) official cash settlement price for nickel. In February 2022, Talon announced that the US Department of Energy has awarded $2.2 million in R&D funding to explore carbon storage potential at Tamarack. Rio Tinto, Talon’s joint venture partner, will lead the efforts to explore new approaches in carbon mineralization technology as a way to safely and permanently store carbon in solid rock form, and will contribute $4 million in funding for the 3-year project in addition to the $2.2 million from the US Department of Energy. During the course of 2021 Talon reported numerous results of drilling intercepts beyond the current mineral resource at Tamarack, demonstrating the presence of shallow, high-grade nickel copper mineralization.
  • Queensway (0.2% to 0.5% NSR gold royalty): During Q4 2021, New Found Gold Corp. (“New Found Gold”) continued to release high-grade results from their 400,000 meter drilling program and on January 13, 2022 announced the discovery of Keats Footwall Zone, intercepting 56.69 grams per tonne gold over 2.45 meters. These results were followed by the announcement of an intercept of 28.20 grams per tonne gold over 4.50 meters in the same zone, 145 meters below the Keats Main Zone.

Rest of World:

  • RBPlat (70% gold stream): Sales from RBPlat in Q4 2021 and FY2021 were 1,903 GEOs and 8,096 GEOs, respectively, based on 1,919 ounces of gold sold in Q4 2021 and 8,093 ounces in FY2021.
    On November 29, Royal Bafokeng Platinum Limited (“RBPlat”) announced that it received notification from Impala Platinum Limited (“Implats”) of Implats’ intention to acquire the issued ordinary shares of RBPlat, other than treasury shares, and shares it already owned. On December 9, Implats announced that it increased its shareholding in RBPlat to 35.31% and on January 17, 2022, issued an offer to acquire all outstanding shares, which RBPlat recommended to shareholders on February 11, 2022. Commenting on the offer, Implats’ CEO, Nico Muller, emphasized the “low-cost, shallow, mechanized assets, enhancing the positioning of the Implats Group with a quality portfolio of high-value operations that are sustainable and competitive through the cycle”. Triple Flag’s gold stream will not be affected by the change in ownership of the RBPlat assets.
  • ATO (25% gold stream and 50% silver stream): Sales from ATO in Q4 2021 and FY2021 were 977 GEOs and 3,380 GEOs, respectively, based on sales of 843 ounces of gold and 10,372 ounces of silver in Q4 2021, and sales of 3,199 ounces of gold and 11,247 ounces of silver in FY2021. As we outlined in our October 29 press release, Triple Flag was pleased to report that Steppe Gold Ltd. (“Steppe”) announced on October 26 the positive results of the Feasibility Study on the ATO gold mine in Mongolia, focused primarily on the 10.5-year expansion from the fresh rock ore (“Phase 2 Expansion”) following depletion of the producing oxide phase in 2 years (the “Feasibility Study”). The Phase 2 Expansion materially extends the life of Triple Flag’s gold and silver stream by more than a decade, for no incremental investment by Triple Flag. Triple Flag was the cornerstone financing partner in 2017 to support Steppe in its acquisition and development of ATO, investing $28 million in the ATO stream and having received $17.3 million in stream cash flow from ATO as of December 31, 2021.

Conference Call Details

Triple Flag has scheduled an investor conference call at 10:00 a.m. ET (7:00 a.m. PT) on Wednesday, February 23, 2022, to discuss the results reported in today’s earnings announcement. The conference call will be broadcast live via a webcast and can be accessed by visiting the Events and Presentations page on the Company’s website at: www.tripleflagpm.com. An archived version of the webcast will be available on the website for one month following the webcast.







Date and Time:

 

February 23rd, 2022 at 10:00 a.m. ET (7:00 a.m. PT)

Live Webcast:

 

https://event.on24.com/wcc/r/3575993/63D3700EFEF747D0629DB9EC6547E60D

Dial-In Details:

 

 

 

Toll-Free (U.S. & Canada): +1 (833) 968-2076

International: +1 (236) 714-2960

Conference ID: 6428245

Replay (Until March 2nd):

 

 

Toll-Free (U.S. & Canada): +1 (800) 585-8367

International: +1 (416) 621-4642

Conference ID: 6428245

Mr. James Dendle, Vice President, Evaluations & Investor Relations, is a “qualified person” as such term is defined under National Instrument 43-101 and has reviewed and approved the technical information disclosed in this news release.

About Triple Flag

Triple Flag is a gold-focused streaming and royalty company, providing investors exposure to a long-life, diversified and high-quality portfolio of streams and royalties, that generates robust free cash flows. Our business is underpinned by a rigorous focus on asset-quality, optionality, sustainability and risk management. We offer bespoke financing solutions to the metals and mining industry. Our mission is to be a sought-after, long-term funding partner to mining companies throughout the commodity cycle. Since our inception in 2016, we have delivered sector-leading growth through the construction of a diversified portfolio of streams and royalties that provides exposure primarily to gold and silver in the Americas and Australia. We have 79 assets, including 9 streams and 70 royalties. These investments are tied to mining assets at various stages of the mine life cycle, including 15 producing mines and 64 development and exploration stage projects. On May 26, 2021 Triple Flag closed its IPO, which was the largest TSX-listed mining IPO since 2012 by size and market capitalization, and the largest precious metals IPO globally by market capitalization since 2008. Triple Flag’s shares are listed on the TSX under TFPM.U (USD listing) and TFPM (CAD listing).

Forward-Looking Information

This news release contains “forward-looking information” within the meaning of applicable Canadian securities laws. Forward-looking information may be identified by the use of forward-looking terminology such as “plans”, “targets”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “outlook”, “forecasts”, “projection”, “prospects”, “strategy”, “intends”, “anticipates”, “believes”, or variations of such words and phrases or terminology which states that certain actions, events or results “may”, “could”, “would”, “might”, “will”, “will be taken”, “occur” or “be achieved”. Our assessments of, and expectations for, future periods (including, but not limited to, our 2022 guidance and long-term production outlook for GEOs, our dividend policy and our acquisition strategy), are considered forward-looking information. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding possible future events or circumstances.

The forward-looking information included in this news release is based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable in the circumstances. The forward-looking information contained in this news release is also based upon the ongoing operation of the properties in which we hold a stream or royalty interest by the owners or operators of such properties in a manner consistent with past practice; the accuracy of public statements and disclosures made by the owners or operators of such underlying properties; and the accuracy of publicly disclosed expectations for the development of underlying properties that are not yet in production. These assumptions include, but are not limited to, the following: assumptions in respect of current and future market conditions and the execution of our business strategies, that operations, or ramp-up where applicable, at properties in which we hold a royalty, stream or other interest, continue without further interruption through the period, and the absence of any other factors that could cause actions, events or results to differ from those anticipated, estimated, intended or implied. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. Forward-looking information is also subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but are not limited to, those set forth under the caption “Risk Factors” in our May 19, 2021 prospectus and in our annual information as filed from time to time on SEDAR at www.sedar.com. For clarity, mineral resources that are not mineral reserves do not have demonstrated economic viability and inferred resources are considered too geologically speculative for the application of economic considerations.

Although we have attempted to identify important risk factors that could cause actual results or future events to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to us or that we presently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this news release represents our expectations as of the date of this news release and is subject to change after such date. We disclaim any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required by applicable securities laws. All of the forward-looking information contained in this news release is expressly qualified by the foregoing cautionary statements.

Technical and Third-Party Information

Triple Flag does not own, develop or mine the underlying properties on which it holds stream or royalty interests. As a royalty or stream holder, Triple Flag has limited, if any, access to properties included in its asset portfolio. As a result, Triple Flag is dependent on the owners or operators of the properties and their qualified persons to provide information to Triple Flag or on publicly available information to prepare disclosure pertaining to properties and operations on the properties on which Triple Flag holds stream, royalty or other similar interests. Triple Flag generally has limited or no ability to independently verify such information. Although Triple Flag does not believe that such information is inaccurate or incomplete in any material respect, there can be no assurance that such third-party information is complete or accurate.

Endnotes

Endnote 1: Gold Equivalent Ounces (“GEOs”)

GEOs are a non-IFRS measure and are based on stream and royalty interests and are calculated on a quarterly basis by dividing all revenue from such interests for the quarter by the average gold price during such quarter. The gold price is determined based on the London Bullion Market Association (“LBMA”) PM fix. For periods longer than one quarter, GEOs are summed for each quarter in the period. Management uses this measure internally to evaluate our underlying operating performance across our stream and royalty portfolio for the reporting periods presented and to assist with the planning and forecasting of future operating results. GEOs are intended to provide additional information only and does not have any standardized definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measures are not necessarily indicative of gross profit or operating cash flow as determined under IFRS. Other companies may calculate these measures differently. The following table reconciles GEOs to revenue, the most directly comparable IFRS measure.








 

 

2021

($ thousands, except average gold price and GEOs information)

 

Q4

 

Q3

 

Q2

 

Q1

 

Year ended
December 31

Revenue

 

36,990

 

37,126

 

40,939

 

35,366

 

 

Average gold price per ounce

 

1,795

 

1,790

 

1,816

 

1,794

 

 

GEOs

 

20,605

 

20,746

 

22,537

 

19,714

 

83,602








 

 

2020

($ thousands, except average gold price and GEOs information)

 

Q4

 

Q3

 

Q2

 

Q1

 

Year ended
December 31

Revenue

 

41,999

 

24,470

 

27,575

 

18,544

 

 

Average gold price per ounce

 

1,874

 

1,909

 

1,711

 

1,583

 

 

GEOs

 

22,409

 

12,821

 

16,115

 

11,714

 

63,059

Endnote 2: Adjusted Net Earnings (Loss) and Adjusted Net Earnings (Loss) per Share

Adjusted net earnings (loss) is a non-IFRS financial measure, which excludes the following from net earnings (loss):

  • impairment charges
  • gain/loss on sale or disposition of assets/mineral interests
  • foreign currency translation gains/losses
  • increase/decrease in fair value of investments
  • non-recurring charges; and
  • impact of income taxes on these items

Management uses this measure internally to evaluate our underlying operating performance for the reporting periods presented and to assist with the planning and forecasting of future operating results. Management believes that adjusted net earnings (loss) is a useful measure of our performance because impairment charges, gain/loss on sale or disposition of assets/mineral interests, foreign currency translation gains/losses, increase/decrease in fair value of investments and non-recurring charges (such as IPO readiness costs) do not reflect the underlying operating performance of our core business and are not necessarily indicative of future operating results. The tax effect is also excluded to reconcile the amounts on a post-tax basis, consistent with net earnings. Management’s internal budgets and forecasts and public guidance do not reflect the types of items we adjust for. Consequently, the presentation of adjusted net earnings (loss) enables users to better understand the underlying operating performance of our core business through the eyes of management. Management periodically evaluates the components of adjusted net earnings based on an internal assessment of performance measures that are useful for evaluating the operating performance of our business and a review of the non-IFRS measures used by industry analysts and other streaming and royalty companies. Adjusted net earnings (loss) is intended to provide additional information only and does not have any standardized definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The measures are not necessarily indicative of gross profit or operating cash flow as determined under IFRS. Other companies may calculate these measures differently. The following table reconciles adjusted net earnings to net earnings, the most directly comparable IFRS measure.

Reconciliation of Net Earnings to Adjusted Net Earnings


















 

($ thousands, except share and

 

Three months ended
December 31

 

Year ended
December 31

per share information)

 

2021

 

2020

 

2021

 

2020

Net earnings

 

$13,381

 

$53,955

 

$45,527

 

$55,565

Impairment charges

 

 

 

 

7,864

Gain on disposal of mineral interests

 

 

(30,926)

 

 

(30,926)

Loss on derivatives

 

 

 

297

 

Foreign currency translation losses

 

1

 

11

 

25

 

16

(Increase) decrease in fair value of investments

 

(60)

 

(6,306)

 

10,786

 

(6,447)

IPO readiness costs1

 

 

 

670

 

Income tax effect

 

87

 

326

 

258

 

(1,666)

Adjusted net earnings

 

$13,409

 

$17,060

 

$57,563

 

$24,406

Weighted average shares outstanding

 

156,158,978

 

135,903,392

 

148,025,464

 

115,456,471

Net earnings per share

 

$ 0.09

 

$ 0.40

 

$ 0.31

 

$ 0.48

Adjusted net earnings per share

 

$ 0.09

 

$ 0.13

 

$ 0.39

 

$ 0.21

1 Reflects charges related to a potential U.S. listing that was not pursued.

Endnote 3: Adjusted EBITDA

Adjusted EBITDA is a non-IFRS financial measure, which excludes the following from net earnings:

  • income tax expense
  • finance costs, net
  • depletion and amortization
  • impairment charges
  • gain/loss on sale or disposition of assets/mineral interests
  • foreign currency translation gains/losses
  • increase/decrease in fair value of investments; and
  • non-recurring charges

Management believes that adjusted EBITDA is a valuable indicator of our ability to generate liquidity by producing operating cash flow to fund working capital needs, service debt obligations, and fund acquisitions. Management uses adjusted EBITDA for this purpose. Adjusted EBITDA is also frequently used by investors and analysts for valuation purposes whereby adjusted EBITDA is multiplied by a factor or ‘‘multiple’’ that is based on an observed or inferred relationship between adjusted EBITDA and market values to determine the approximate total enterprise value of a company.

In addition to excluding income tax expense, finance costs, net and depletion and amortization, adjusted EBITDA also removes the effect of impairment charges, gain/loss on sale or disposition of assets/mineral interests, foreign currency translation gains/losses, increase/decrease in fair value of investments and non-recurring charges. We believe these items provide a greater level of consistency with the adjusting items included in our adjusted net earnings reconciliation, with the exception that these amounts are adjusted to remove any impact of income tax expense as they do not affect adjusted EBITDA. We believe this additional information will assist analysts, investors and our shareholders to better understand our ability to generate liquidity from operating cash flow, by excluding these amounts from the calculation as they are not indicative of the performance of our core business and not necessarily reflective of the underlying operating results for the periods presented.

Adjusted EBITDA is intended to provide additional information to investors and analysts and does not have any standardized definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. Adjusted EBITDA is not necessarily indicative of operating profit or operating cash flow as determined under IFRS. Other companies may calculate adjusted EBITDA differently. The following table reconciles adjusted EBITDA to net earnings, the most directly comparable IFRS measure.

Reconciliation of Net Earnings to Adjusted EBITDA

















 

 

Three months ended
December 31

 

Year ended
December 31

($ thousands)

 

2021

 

2020

 

2021

 

2020

Net earnings

 

$13,381

 

$53,955

 

$45,527

 

$55,565

Finance costs, net

 

602

 

2,737

 

5,673

 

9,860

Income tax expense

 

1,800

 

1,332

 

6,436

 

6,595

Depletion and amortization

 

13,156

 

15,932

 

54,071

 

53,630

Impairment charges

 

 

 

 

7,864

Gain on disposal of mineral interests

 

 

(30,926)

 

 

(30,926)

Loss on derivatives

 

 

 

297

 

Foreign currency translation loss

 

1

 

11

 

25

 

16

(Increase) decrease in fair value of investments

 

(60)

 

(6,306)

 

10,786

 

(6,447)

IPO readiness costs1

 

 

 

670

 

Adjusted EBITDA

 

$28,880

 

$36,735

 

$123,485

 

$96,157

1 Reflects charges related to a U.S. listing that was not pursued.

Endnote 4: Gross Profit Margin, Asset Margin, and Total Margin

Gross profit margin is an IFRS financial measure which we define as gross profit divided by revenue. Asset margin is a non-IFRS financial measure which we define by taking gross profit and adding back depletion and dividing by revenue. Total margin is a non-IFRS financial measure which we define as adjusted EBITDA divided by revenue. We use gross profit margin to assess profitability of our metal sales and use asset margin and total margin in order to evaluate our performance in increasing revenue and containing costs and providing a useful comparison to our peers. Both asset margin and total margin are intended to provide additional information only and do not have any standardized definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The following table reconciles asset margin and total margin to gross profit margin, the most directly comparable IFRS measure:























($ thousands except Gross profit

 

Three months ended
December 31

 

Year ended
December 31

margin, Asset margin, and Total margin)

 

2021

 

2020

 

2021

 

2020

Revenue

 

$36,990

 

$41,999

 

$150,421

 

$112,588

Cost of sales

 

16,339

 

19,276

 

67,168

 

62,490

Gross profit

 

20,651

 

22,723

 

83,253

 

50,098

Gross profit margin

 

56%

 

54%

 

55%

 

44%

Gross profit

 

$20,651

 

$22,723

 

$83,253

 

$50,098

Add: Depletion

 

13,056

 

15,832

 

53,672

 

53,231

 

 

33,707

 

38,555

 

136,925

 

103,329

Revenue

 

36,990

 

41,999

 

150,421

 

112,588

Asset margin

 

91%

 

92%

 

91%

 

92%

 

 

 

 

 

 

 

 

 

Gross profit

 

$20,651

 

$22,723

 

$83,253

 

$50,098

Add: Depletion and amortization

 

13,156

 

15,932

 

54,071

 

53,630

Less: Sustainability initiatives

 

421

 

20

 

855

 

58

Less: Business development costs

 

328

 

54

 

771

 

119

Less: General administration costs

 

4,178

 

1,846

 

12,213

 

7,394

Adjusted EBITDA

 

28,880

 

36,735

 

123,485

 

96,157

Revenue

 

36,990

 

41,999

 

150,421

 

112,588

Total margin

 

78%

 

87%

 

82%

 

85%

Endnote 5: Cash Costs and Cash Costs per GEO

Cash costs and cash costs per GEO are non-IFRS measures with no standardized meaning under IFRS and may not be comparable to similar measures presented by other issuers. Cash costs is calculated by starting with total cost of sales, then deducting depletion. Cash costs is then divided by GEOs sold, to arrive at cash costs per GEO. Cash costs and cash costs per GEO are only intended to provide additional information to investors and analysts and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

Management uses cash costs and cash costs per GEO to evaluate our ability to generate positive cash flow from our portfolio of assets. Management and certain investors also use this information to evaluate the Company’s performance relative to peers who present this measure on a similar basis. The following table reconciles cash costs and cash costs per GEO to cost of sales, the most directly comparable IFRS measure:










($ thousands, except GEOs

 

Three months ended
December 31

 

Year ended

December 31

and cash costs per GEO)

 

2021

 

2020

 

2021

 

2020

Cost of sales

 

$16,339

 

$19,276

 

$67,168

 

$62,490

Less: Depletion

 

13,056

 

15,832

 

53,672

 

53,231

Cash costs

 

3,283

 

3,444

 

13,496

 

9,259

GEOs

 

20,605

 

22,409

 

83,602

 

63,059

Cash costs per GEO

  159  

154

 

161

 

147





__________________
a Triple Flag’s royalty relates to Talon Metals Corp.’s interest in the Tamarack project which is premised to reach 60% after full earn-in by Talon. Talon’s interest is currently at 51%.


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