Randy Smallwood: And yes, the other aspect is operating costs and margins. We do focus on first and second quartile assets. And so, a lot of times when we see opportunities like this, these assets, one of the reasons they are for sale is because they’re not very high margin assets. Their costs have climbed up. And so, it is something that we’re not willing to stretch as far for in terms of doing that, but there’s definitely going to be some activity on that front. Richard, I think the third question was related to IRR and what kind of an IRR we look at. One of the huge benefits of this business model is the fact that we have commodity price pure commodity price exposure. Our costs are defined in the contracts. And so, a lot of it comes down to what happens to commodity prices over that period.
I think you suggested about four or five year period. We deliver the bulk of that right back to our shareholders in terms of cash flows and profits. And so, it’s a real key difference in the streaming model versus the traditional mining model where higher prices quite often mean lower grades get processed and costs go up because of that. We don’t suffer from that. Our costs actually are defined by our contracts and are and we still deliver very, very strong margins all the way back up when we see those higher prices. And so, I don’t know Gary, you got something to add. We’ve got a pretty good track record on the IRR side.
Gary Brown: Yes, we do. Richard, like we distill the required returns associated with the opportunities that we’re looking at based upon the risks inherent in that opportunity relative to the risks inherent in our existing portfolio. And so, we look at how well-defined the resource is, what the counterparty credit risk looks like, what the political risk looks like, whether we’re dealing with the first quartile asset or a second quartile and we’re really only focused on assets that operate in the lowest half of the respective cost curves. And then, we look at whether we’re taking development stage risk or whether it’s a currently operating asset and then we look at the ESG track record or what we expect to be the commitment of the counterparty to ESG, high-level of ESG practices.
And we come up with an appropriate discount rate associated with that. We also do what we call a postmortem every year, where we look at every deal that we’ve ever done and we compare how it performed to how we expected it to perform. And, when you look at that, we put just over $10 billion into streams. We’ve already recovered all of that money. We have an average mine life of rough, Proven and Probable Reserve life of roughly 25 years, when you include resources which our assets have shown a high propensity to deliver on that mine life more than doubles. So, when you look at the returns that we’ve generated on the over $10 billion we estimate that at being just over 17%. So, and that’s over a 20-year history. We’re celebrating our 20th anniversary.
So, I think we feel we’ve been pretty good stewards of capital.
Richard Hatch: That’s incredibly helpful, Gary, and team. Thanks. And, I just for reference, normally, when you would do a deal, if we would see when tomorrow, the IRR that the market probably would calculate would be high-single-digits, low-double-digits IRR. So really, there’s a good what, 50% upside on return potentially through whether it’s commodity price upside or life of mine upside, is that a good way to think about it?
Randy Smallwood: Yes. I mean, it comes down every project is unique, right, because each project has varying risks. If you’re going into small countries, there where you’re the only asset running, you assign a higher risk to it and you take that risk when you’re going into it. And so, you make sure you structure it to protect yourself, so you don’t have those kind of problems. If the exploration risk, the metallurgical risk, all of those factors come in, the ESG risk, all of those factors come in to what kind of return that we need to satisfy us investing into the project. And as Gary highlighted there, we’ve got a pretty good track record of making sure that we deliver on those returns.
Richard Hatch: Cool. Very helpful. I’ll get it out of the way. Thanks for your time.
Randy Smallwood: Thanks, Richard.
Operator: [Operator Instructions] Your next question comes from Tanya Jakusconek from Scotiabank. Please go ahead.
Tanya Jakusconek: Good morning, everyone. Thank you for taking my questions, and thank you, operator, for getting my name right. That’s awesome. Yes. I just called Annie and Natasha on two other calls, so this is a good one. I, have actually four questions if I could. So I’m just going to go through them, one-by-one. So the first one, maybe just on the global minimum tax. Just from your interpretation because my understanding is that, if implemented or when implemented and the Canadian government implements it, it would be retroactive back to January 1, 2024. So, I just want to understand your view. Are you seeing it as retroactive going back, or are you seeing it just being implemented when the Canadian government implements it?
Randy Smallwood: We expect it to be retroactive, Tanya.
Tanya Jakusconek: Okay. So, we should think of it that maybe you don’t pay it in Q1. But if it’s implemented in Q2, then you would have it, obviously, take through the income statement and going forward in Q2 onwards retroactive back to Jan 1. Would that be a fair way of thinking about it?
Randy Smallwood: Yes. Like I don’t think there’s much of a chance of the GMT being enacted by the time that we release our Q1 results. So, we’ll be very transparent as to what that accrued liability would be expected to be by disclosing it in our MD&A. But we likely will take two quarters of GMT reflect two quarters of it in our second quarter results. So, just keep that in mind.
