Triple Flag Precious Metals (TFPM) - 2024 Q3 - Quarterly Report

Unaudited Condensed Interim Consolidated Financial Statements Condensed Interim Consolidated Balance Sheets As of September 30, 2024, Triple Flag's total assets decreased to $1.77 billion from $1.89 billion at year-end 2023, primarily due to a reduction in mineral interests and loans receivable. Total liabilities also decreased, driven by a reduction in debt, while shareholders' equity declined from $1.81 billion to $1.71 billion, reflecting a net loss for the period Consolidated Balance Sheet Summary (as of Sep 30, 2024 vs. Dec 31, 2023) | Account | Sep 30, 2024 ($ thousands) | Dec 31, 2023 ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total Current Assets | 63,249 | 57,038 | +10.9% | | Total Non-current Assets | 1,709,978 | 1,837,426 | -6.9% | | TOTAL ASSETS | 1,773,227 | 1,894,464 | -6.4% | | Total Current Liabilities | 19,880 | 17,315 | +14.8% | | Total Non-current Liabilities | 43,787 | 66,408 | -34.1% | | TOTAL LIABILITIES | 63,667 | 83,723 | -24.0% | | TOTAL SHAREHOLDERS' EQUITY | 1,709,560 | 1,810,741 | -5.6% | | TOTAL LIABILITIES AND EQUITY | 1,773,227 | 1,894,464 | -6.4% | Condensed Interim Consolidated Statements of Income (Loss) For the third quarter of 2024, the company reported net earnings of $29.6 million, a significant turnaround from a $6.0 million loss in Q3 2023, driven by a 49% increase in revenue. However, for the nine months ended September 30, 2024, the company recorded a substantial net loss of $64.4 million, compared to net earnings of $26.5 million in the prior year period, primarily due to $148.0 million in impairment charges Income Statement Highlights (For the three and nine months ended Sep 30) | Metric ($ thousands, except EPS) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue | 73,669 | 49,425 | 194,778 | 152,285 | | Gross Profit | 36,663 | 25,809 | 108,826 | 75,629 | | Operating Income (Loss) | 30,668 | (7,703) | (59,376) | 28,906 | | Impairment Charges | 0 | 28,081 | 148,034 | 28,081 | | Net Earnings (Loss) | 29,649 | (6,041) | (64,364) | 26,527 | | Diluted EPS | $0.15 | $(0.03) | $(0.32) | $0.13 | Condensed Interim Consolidated Statements of Cash Flows For the nine months ended September 30, 2024, cash flow from operations increased to $150.0 million from $116.5 million in the prior year. Net cash used in investing activities was $82.2 million, primarily for the acquisition of mineral interests. Financing activities resulted in a net cash outflow of $61.6 million, driven by debt repayments of $85.0 million and dividend payments of $32.2 million. The company's cash position increased by $6.2 million to end the period at $23.6 million Cash Flow Summary (For the nine months ended Sep 30) | Activity ($ thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 150,030 | 116,494 | | Net Cash used in Investing Activities | (82,196) | (203,300) | | Net Cash from (used in) Financing Activities | (61,593) | 30,096 | | Increase (Decrease) in Cash | 6,223 | (56,755) | | Cash at End of Period | 23,602 | 14,343 | Condensed Interim Consolidated Statements of Changes in Equity Shareholders' equity decreased from $1.81 billion at the start of 2024 to $1.71 billion at September 30, 2024. The decline was primarily driven by a net loss of $64.4 million and dividend payments of $32.2 million, partially offset by stock-based compensation and proceeds from stock option exercises. The company also repurchased common shares for $5.0 million under its NCIB program Equity Reconciliation (For the nine months ended Sep 30, 2024) | Item ($ thousands) | Amount | | :--- | :--- | | Equity at Jan 1, 2024 | 1,810,741 | | Net Loss | (64,364) | | Dividends | (32,205) | | NCIB Share Purchase | (5,046) | | Stock-based compensation & option exercises | 434 | | Equity at Sep 30, 2024 | 1,709,560 | Notes to the Condensed Interim Consolidated Financial Statements The notes provide detailed explanations of the company's accounting policies, significant developments, and breakdowns of key financial statement items. Major highlights include the acquisition of new gold streams, significant impairment charges on specific assets, changes in debt and equity structures, and detailed revenue analysis by asset and geography Note 1: Nature of operations Triple Flag is a Canadian-domiciled precious-metals-focused streaming and royalty company. Its revenue is generated from a diversified portfolio of properties across ten countries, including Australia, Canada, and the United States - The company's core business is acquiring and managing streaming and royalty interests in the precious metals sector[7] - Operations are geographically diversified across Australia, Canada, Chile, Colombia, Cote d'Ivoire, Mexico, Mongolia, Peru, South Africa and the United States[7] Note 3: Critical accounting estimates and judgments and newly enacted tax rules The company identified impairment indicators for its interests in the Moss mine (Elevation Gold) and the Pumpkin Hollow project (Nevada Copper) as of June 30, 2024, leading to impairment charges. Additionally, newly enacted Canadian EIFEL tax rules, effective October 1, 2023, did not have a material impact on the company's financial results for the period - As of June 30, 2024, impairment indicators were identified for interests in the Moss mine and Pumpkin Hollow project, resulting in impairment charges[12] - Newly enacted Excessive Interest and Financing Expenses Limitation (EIFEL) rules had no material impact on the deductibility of interest and financing expenses for the period[13] Note 4: Key developments During 2024, Triple Flag executed several key transactions. In August, it acquired 3% gold streams on the Agbaou and Bonikro mines for $53.0 million. In July, it acquired an additional 1.0% NSR royalty on the Tamarack project for $8.0 million. In March, it settled litigation with Coeur Mining regarding the Kensington royalty, receiving $6.75 million in Coeur shares and amending the royalty terms - Acquired 3% gold streams on the Agbaou and Bonikro mines from Allied Gold Corp. for a total cash consideration of $53.0 million on August 14, 2024[14] - Acquired an additional 1.0% NSR royalty on the Tamarack project for $8.0 million on July 5, 2024[17] - Settled litigation with Coeur Mining over the Kensington gold mine royalty, receiving $6.75 million in Coeur shares and amending the royalty rate effective January 1, 2024[18][19][20] Note 6: Loans receivable Net loans receivable decreased dramatically to $1.7 million as of September 30, 2024, from $28.0 million at year-end 2023. This reduction was due to the full impairment and write-off of loans to Nevada Copper and Elevation Gold, as there was no reasonable expectation of recovery Loans Receivable Breakdown ($ thousands) | Loan | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Convertible debenture – Excelsior | 1,746 | 1,638 | | Loan receivable – Elevation | — | 17,731 | | Promissory notes – Elevation | — | 6,490 | | Loan receivable – Nevada Copper | — | 11,840 | | Net loans receivable | 1,746 | 27,976 | - The company concluded there is no reasonable expectation of recovery for the Nevada Copper and Elevation loan receivables, resulting in impairment charges[24] Note 8: Mineral interests The carrying value of mineral interests decreased to $1.67 billion from $1.77 billion at the start of the year. The decrease reflects depletion of $57.3 million and significant impairment charges of $107.0 million, which more than offset additions of $57.6 million from the acquisitions of the Agbaou and Bonikro streams and the additional Tamarack royalty Mineral Interests Roll-Forward (YTD Sep 30, 2024, $ thousands) | Item | Amount | | :--- | :--- | | Carrying Value at Jan 1, 2024 | 1,773,053 | | Additions | 57,591 | | Depletion | (57,304) | | Impairment Charges | (107,046) | | Disposals | (366) | | Carrying Value at Sep 30, 2024 | 1,665,928 | - Additions include the Agbaou stream ($19.8M), Bonikro stream ($26.3M), and Additional Tamarack Royalty ($8.0M)[30] - Impairment charges were primarily for the Nevada Copper stream ($83.9M) and the Elevation stream ($18.7M)[30] Note 9: Impairment charges and expected credit losses For the nine months ended September 30, 2024, the company recorded total impairment charges and expected credit losses of $148.0 million. This was driven by the full write-down of assets related to Nevada Copper ($104.1 million) and Elevation Gold ($40.1 million) after the operators filed for Chapter 11 bankruptcy and CCAA creditor protection, respectively Impairment Charges (For the nine months ended Sep 30, 2024, $ thousands) | Asset | Impairment Charge | | :--- | :--- | | Nevada Copper (Mineral Interest) | 83,920 | | Nevada Copper (Loan Receivable) | 20,197 | | Elevation Gold (Mineral Interest) | 18,688 | | Elevation Gold (Loan Receivable) | 21,380 | | Other | 4,438 | | Total | 148,034 | - The Nevada Copper impairment followed its Chapter 11 bankruptcy filing on June 10, 2024, leading to the conclusion of no reasonable expectation of recovery for the stream and loan[38][40] - The Elevation Gold impairment followed its filing for CCAA creditor protection and cessation of mining, leading to a full write-down of the stream and loans[47][49] Note 10: Debt The company significantly reduced its outstanding debt under its Revolving Credit Facility during the first nine months of 2024. The balance decreased from $57.0 million at year-end 2023 to $35.0 million as of September 30, 2024, after making net repayments of $22.0 million. The company remained in compliance with all financial covenants Debt Reconciliation (YTD Sep 30, 2024, $ thousands) | Item | Amount | | :--- | :--- | | Debt at Jan 1, 2024 | 57,000 | | Drawdowns | 63,000 | | Repayments | (85,000) | | Debt at Sep 30, 2024 | 35,000 | - The company was in compliance with all financial ratios and requirements under its Credit Facility as of September 30, 2024[53] Note 13: Shareholders' equity The company continued its capital return program, paying dividends totaling $32.2 million in the first nine months of 2024. Under its Normal Course Issuer Bid (NCIB), the company repurchased 375,800 common shares for $5.0 million. The NCIB allows for the purchase of up to 10.1 million shares until November 2024 - Paid dividends of $32.2 million for the nine months ended Sep 30, 2024, compared to $30.7 million in the prior year period[61] - Repurchased 375,800 common shares for $5.0 million under the NCIB program during the first nine months of 2024[59] - The company renewed its NCIB in November 2023, authorizing the repurchase of up to 10,078,488 common shares until November 14, 2024[58] Note 15: Revenue Total revenue for the nine months ended September 30, 2024, increased by 28% to $194.8 million from $152.3 million in the prior year. The growth was driven by higher revenue from both stream interests (up 25% to $147.4 million) and royalty interests (up 32% to $46.0 million). Key contributors to revenue were the Cerro Lindo, Northparkes, and Impala Bafokeng streams, along with newly acquired streams at Bonikro and Agbaou Revenue by Type (For the nine months ended Sep 30, $ thousands) | Revenue Type | 2024 | 2023 | | :--- | :--- | :--- | | Gold Stream | 78,213 | 56,529 | | Silver Stream | 68,915 | 54,975 | | Royalty Interests | 45,997 | 34,744 | | Other | 1,653 | 6,037 | | Total Revenues | 194,778 | 152,285 | - The top three revenue-generating assets for the nine-month period were the Cerro Lindo ($51.0M), Northparkes ($45.2M), and Impala Bafokeng ($9.9M) streams[73] Note 16: Segment disclosure The company operates as a single operating segment focused on acquiring and managing streams and royalties. Geographically, Australia was the largest source of revenue for the first nine months of 2024, contributing $67.8 million (35% of total), followed by Peru with $51.5 million (26% of total) Revenue by Geography (For the nine months ended Sep 30, $ thousands) | Jurisdiction | 2024 | 2023 | | :--- | :--- | :--- | | Australia | 67,780 | 41,268 | | Peru | 51,544 | 32,852 | | United States | 20,718 | 18,676 | | Cote d'Ivoire | 10,364 | 1,699 | | Colombia | 9,955 | 8,646 | | South Africa | 9,881 | 9,185 | | Mongolia | 9,716 | 15,857 | | Mexico | 7,798 | 8,034 | | Canada | 6,936 | 11,631 | | Other | 86 | 4,437 | | Total | 194,778 | 152,285 | - The company's business is organized into a single operating segment: acquiring and managing precious metals streams and royalties[74]