Triple Flag Precious Metals (TFPM) - High Margin, Long Life Gold Focus

Triple Flag Precious Metals is a high-margin and long-life gold-focused streaming and royalty company. The company is focused on significant future growth and value creation through its advantage of being miners first and foremost, with its management team having technical experience and relationships throughout the mining sector. 

Matthew Gordon spoke to Shaun Usmar, Founder and CEO of Triple Flag Precious Metals (TSX: TFPM) to discuss the company’s recent listing and its approach to business. 

Company Overview

Triple Flag Precious Metals aims to grow its portfolio and value through the ongoing investment in primarily precious metals streams and royalties with a focus on cash-generating operations and construction-ready, fully permitted projects.  Triple Flag Precious Metals has 78 assets globally predominantly in Australia, North America, and South America. The assets are 15 producing assets and 63 development and exploration assets.

The company boasts a USD$ 2.0Bn market cap with USD$ 627 million liquidity available.

Triple Flag Precious Metals has a lean and low-burn rate business model that limits general and administrative (G&A) expenses, with it focused on its remuneration structure from the company’s inception. The company rewarded its team with equity, believing that with management having a 5% share in the business, the team has a common goal of moving the company forward. The company believes that its approach cultivates a nimble and analysis-driven culture.

The management team of Triple Flag Precious Metals has experience in some of the world’s largest mining companies. The team understands that execution in a mining environment does not always go as planned and focuses rather on long-term agreements than short term gains. The company believes that through its patient approach to debt and equity it will continue to develop high-margin and long-life agreements. 

Company management

Triple Flag Precious Metals’ team is willing to roll up their sleeves and work in different areas of the business, if need be, to reach the ambitious goals that this 6 year old company has set for itself. Leading this team is Shaun Usmar.

Shaun Usmar serves as Founder, Chief Executive Officer (CEO) and Director of Triple Flag  Precious Metals. Usmar has more than 25 years of experience in mining internationally and has served in an operational, financial and executive leadership capacity in some of the largest mining companies in the world. Usmar holds both a Bachelor's degree in Metallurgy and Materials Engineering as well as a Masters in Business Administration from the Kellogg School of Management at Northwestern University. Usmar was part of Xstrata Mining throughout 2002 up until 2013 as a senior executive member of the management team that grew the company into one of the world’s largest diversified miners. Usmar also served as Senior Executive Vice President and Chief Financial Officer at Barrick Gold Corporation, from 2014 to 2016. Usmar is accredited with assisting Barrick Gold through a restructuring initiative to lessen its USD$ 13 billion debt at the time.

Sheldon Vanderkooy is Chief Financial Officer and a founding member of the Triple Flag management team. Vanderkooy has over 20 years of experience in the mining sector and has been in positions as Senior Director of legal affairs at Inmet Mining Corp. and corporate partner at Blake, Cassels & Graydon LLP in Toronto, Canada. Vanderkooy holds a law degree from the University of Western Ontario and a Bachelor's degree in Commerce from Queen’s University.

The management team also includes James Dendle serving as the Vice-President of evaluations and investor relations, Eban Bari as  Vice-President of finance and Katy Board, Vice-President of talent and ESG. The MD of Fiance is Leshan Daniel, Andrew McLarty serves as director of corporate development and investor relations, and Steve Bristo as the director of corporate development and research. Caleb Crockwell acts as legal counsel, with Michelle Chan as manager of finance and Connor Pugliese as corporate development, and investor relations associate.

The company also boasts a robust shareholder base including institutional ownerships by Elliott Investment Management L.P., Manulife Asset Management, Fidelity Investments,  Schroders, GAM Investments, Mackenzie Investments, TD Asset Management and US Global Investors.

Company values and assets

Triple Flag Precious Metals focuses on long-term portfolio precious metals, with its portfolio currently consisting of 90% gold assets. The strategy of the company excludes investments in fossil fuels, as it is a strong supporter of decarbonization and the global attempt to move to a low carbon economy.

Triple Flag Precious Metals sees Environmental, Social and Governance (ESG) as a core part of its business and believes it to be critical to the long-term success of the company. The company refuses to do business with partners who do not have a commitment to ESG and do not demonstrate strong ESG management and structures. The company performs stringent due diligence regarding the ESG of potential partners. The ESG factors commonly considered include environmentally sustainable index (ESI) analysis findings, workforce and community health investigation findings, community safety and security, indigenous peoples, cultural heritage, and biodiversity and conservation.

Triple Flag Precious Metals has a diversified portfolio of streams and royalties which provide exposure to long-life producing mining assets predominantly in Australia and North and South America. The long-life mining assets include operations such as the Northparkes copper-gold mine in Australia indirectly owned by China Molybdenum Company Limited (CMOC), the Cerro Lindo polymetallic mine in Peru owned by Nexa Peru1, the Fosterville gold mine in Australia owned by Agnico Eagle (previously Kirkland Lake Gold), the Buriticá gold mine in Colombia owned by Zijin Mining and the RBPlat PGM Operations in South Africa owned by Royal Bafokeng Platinum.

2021 asset developments and finances.

The long-life assets of the company have allowed the company to experience a strong 2021 financial year. The financial year saw the company increase its revenue by 52% from USD$ 24.5 million in Q3 2020 to USD$ 37.1 million in Q3 2021. The company’s operating cash flow increased by 53% to USD$ 29.5 million, whilst the net earnings of the company decreased by 42% to USD$ 5.1 million ($0.03/share), from USD$ 8.9 million ($0.07/share) in Q3 2020. The adjusted net earnings of Triple Flag Precious Metals increased by 171% to $13.7 million ($0.09/share) with the company portfolio experiencing an increase of 62% in gold equivalent ounces (GEOs) sold from 12,821 in Q3 2020 to 20,746.

Some of the highlights of the company’s 2021 portfolio performance include the Buritica project of Continental Gold expanding throughput from 3,000 to 4,000 tons per day and the Fosterville Mine of Kirkland Lake Gold producing 510 koz of gold in 2021 with it planning to launch an exploration campaign of USD$ 85 to USD$ 95 million. Record production at the RBPlat PGM operation, Young-Davison Mine and Dargues Gold Mine also added to the success of the past year.

Triple Flag Precious Metals has recently declared a dividend of USD$ 0.19 per common share, the company intends to grow the dividend over time as it focuses on executing its strategy of disciplined and accretive growth through the acquisition of additional precious metals streams and royalties.  

The company aims at delivering strong financial results, with it currently being debt-free and funded to continue its growth. The company has a credit facility of USD$ 500 million with an additional uncommitted accordion of up to $100 million, for a total availability of up to USD$ 600 million.

The company is focused on increasing the value of its shareholders and believes that it is perfectly positioned for large movements regarding its share price, the company credits this to its size and the size of its transactions. The company’s cash balance was $26.7 million at the end of Q3 in 2021, combined with its USD$ 600 million undrawn credit facility and robust cash generation, provides Triple Flag Precious Metals with sufficient liquidity to reach its business requirements for the foreseeable future, including acquisitions, working capital requirements and dividend payments.

‍To find out more, go to the Triple Flag Precious Metals Website