John Griffith: Dave, I might add that the other thing about a rising gold price environment, because we own royalties that incremental revenue just drops to the bottom line. There are no costs that come with it. So it’s incredible leverage. And that’s one of the beauties of the royalty business model.
Joanne Jobin : Thank you. John. Can you comment on Marin Katusa and why he advised his subscribers to sell?
David Garofalo : Yes, Marin last year really turned bearish on gold because the Federal Reserve was starting what was at that point and still is an unprecedented increase in interest rates. And he used the phrase don’t fight the Fed. And so he actually advised his investors, his subscribers, to liquidate their gold positions. It wasn’t just a Gold Royalty phenomenon. Obviously, he was very heavily weighted to Gold Royalty as one of his preferred stories. But he decided to make a wholesale rotation out of gold. Interestingly, in the last couple of weeks, he’s pivoted back into the gold sector and is actually advising his investors to look at gold and the potential for an unprecedented bull run in gold. So I think, like many of us, he’s starting to see the potential for a significant pivot by central banks, from tightening monetary conditions to easing them dramatically because of the prospect of a financial contagion.
Joanne Jobin : Thank you. I know we’ve talked a little bit about pressure on the stock, but is there an actual catalyst that will help to improve the share price in the coming year?
David Garofalo : Well, from a macro standpoint, I would see the gold price would be a significant catalyst for not just our equity, but mining equities generally, but in particular royalty companies in the face of increasing inflation, that’s the best place you want to be parked to get optimum leverage to the gold price, optimum leverage to exploration while protecting yourself. As John correctly pointed out from inflation, every dollar increase in our revenue goes right to the bottom line because our costs are static and in fact, have been declining by 30% from the previous year as we’ve integrated all of this growth that we’ve executed on since our IPO just two years ago. We’re still a relatively young company, and we continue to optimize our business and optimize our cost structure. And so I think we’re very well positioned for a rising gold price environment.
Joanne Jobin : Thank you. I know you thoroughly discussed the First Majestic closing of Jarrett Canyon, but is there something else that you could sort of explain to your listeners? Because we’re getting a lot of questions on that.
David Garofalo : Yes, look, I think there’s a couple of things that we should point out. By consensus estimate, Jarrett Canyon represents less than 2% of our underlying value of our business. And that’s the power of diversification that you can realize in a royalty company that you can’t hope to realize even in the most senior operators in the gold industry, even the biggest, have no more than a dozen to 15 mines within their portfolio. So there’s a limit to the diversification you can undertake when you’re a producer, it’s impractical to run more than 12 or 15 mines, even if you’re a very big producer like Newmont or Barrick or Agnico Eagle, for that matter. And so with 216 royalties, we could run a business ten times the size with the same human footprint.
We have eight full time equivalent employees. There’s no limit to the diversification we can achieve within our portfolio. That’s another unique aspect and feature and attraction of this model. And while Jarrett Canyon is not in production currently, and they’re still assessing First Majestic when they’re going to restart operations there, we’ve completely removed that from our guidance. And that represents upside now. And the beautiful thing about royalties is they don’t waste, they don’t decay, they don’t require capital. We can just be patiently waiting for those operations to restart for First Majestic to continue its exploration program and benefit from the upside from their exploration efforts without actually having to contribute. So that provides a lot of optionality for our shareholders.
Joanne Jobin : Thank you, David. And is the company looking to continue to grow through portfolio acquisitions, or are you going to rely on organic growth for the next little while?
David Garofalo : John?