We have a clearly defined set of investment criteria and screen all assets against these prior to making an investment decision. These are:
Our focus is on providing investors exposure to
commodities that will support a sustainable future.
What it means?
- We focus on commodities that are required to complete the energy transition.
- Our current commodity exposure includes copper, nickel, cobalt, steelmaking coal, vanadium and uranium.
2024 performance
- We further diversified our commodity basket through the acquisition of a royalty over the Phalaborwa Rare Earths Project.
- We further divested our shareholding in the Labrador Iron Ore Royalty Company generating C$11m.
Future focus
Nickel, copper and cobalt markets offer attractive long-term entry points.
Our current focus is on adding income-producing royalties or streams with base metals being our preferred commodities.
We would consider smaller investments into commodities we would like to add to the portfolio such as lithium, high purity manganese, zinc, tin and graphite.
We use a rigorous screening and due diligence process to inform our investment decisions.
What it means?
We focus the majority of our investment in projects that:
- are relatively low cost;
- are in established mining jurisdictions;
- have strong management teams;
- achieve clear IRR targets;
- focus on commodities within our basket; and
- meet our sustainability investment criteria.
2024 performance
The Phalaborwa rare earths royalty was added to the portfolio, which is:
- focused on rare earths;
- expected to be in the lower quartile in the industry cost curve;
- in a project with no primary mining reducing operational risk;
- anticipated to hit mid-teens IRRs based on conservative long-term consensus pricing; and
- projected to have strong sustainability credentials.
Future focus
Focus will remain on investing in projects that meet our investment framework.
We seek diversity of commodities, jurisdiction and asset maturity to balance portfolio risk.
What it means?
As we grow the portfolio we will seek to:
- reduce asset concentration;
- increase the commodity exposure;
- strike a balance between income generating and growth acquisitions; and
- deploy majority of capital into lower risk opportunities.
2024 performance
- Entered the year with 53% of value in income producing assets.
- Added a royalty over a development stage rare earths project in Phalaborwa.
- Ended the year with 50% of the value in income-producing assets, 45% in assets in development and 5% in early stage assets.
Future focus
We will seek to continue to diversify the portfolio in terms of commodity, asset maturity and jurisdiction.
Our capital allocation framework focuses on growth,
maintaining a strong balance sheet and distributions
to shareholders.
What it means?
- Acquire high quality royalties to further diversify and grow the portfolio.
- Focus on post-transaction deleveraging.
- Distribute semi-annual cash dividends based on payout ratio of 25%-35% of free cash flow.
- Consider share buybacks in context of market price and estimated NAV.
2024 performance
- Updated capital allocation framework to prioritise growth and balance sheet strength.
- Deployed US$8.5m into royalty acquisitions.
- Made final payment of US$9.2m to South32 related to the acquisition of a royalty portfolio in 2022.
- Completed a US$10m share buyback.
Future focus
Management’s focus is on adding producing, or near-term producing, royalties to the portfolio that will increase short- term revenue. Absent any acquisitions, the Group will look to de-leverage at the same time as maintaining a dividend in line with the capital allocation framework that was updated in 2024.