Golden Prospect Precious Metals (LSE:GPM) — Investor Presentation

0:01 Good morning, ladies and gentlemen, and welcome to the GOLDEN PROSPECT PRECIOUS METALS LIMITED investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and we'll publish those responses where it's appropriate to do so on the investor meet company platform. Before we begin, we would just like to

0:33 submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the team from GOLDEN PROSPECT PRECIOUS METALS. Keith, good morning, sir. Good morning. Thank you very much for having us. Much appreciated again. And thank you all for joining. I'm here with my colleague, Rob, who hopefully you can see on screen as well. And we just like to run through the GOLDEN PROSPECT PRECIOUS METALS fund, probably quite timely given events around the world that have been driving interest in the sector. Just by way of brief background with Rob and I, we work at CQS. It's largely a credit fund. We won... Run some equity related and mining and resource related companies. Today, we want to talk about the GOLDEN PROSPECT fund that's currently got gross assets of just shy of 70,000,000 sterling.

1:26 Whilst it says we have 70 holdings, actually, some of those are separate listed or, in some cases, unlisted warrants that come along with placings in there. But we're quite focused in our style. We've got some 50% plus in the top 10. It has been slightly higher, but we've been taking some profits more recently. Gearing is fairly minimal. It certainly was higher running into this, and in large part, part of the reason for that reduction in gearing is that performance has been so strong year to date. I think we're up something like 60%. I think the key points from this slide, though, are to note that we are an investment trust focused on precious metals. Yes. Generally, in what we would call the small and mid cap area, which are ignored by other mainstream stars of investors.

2:15 The closed end structure lends itself to that where arguably the liquidity is slightly less, but the value is much more. At the moment, the majority of the portfolio is invested in self funded gold mining operators, which generally have some good growth prospects from development of new projects, and some good news flow that we think will accompany that. That is part of our investment style to look for value, but also look for catalysts that will drive that. As I've said, it's closed end that lends itself to the less liquid rather than the ETF structures, which often go for more liquid type of investments. Rob will come on to later the sort of valuation differentials that we're looking at and that we see as the prime target that have driven the performance more recently. As you'll see, we're still predominantly invested in gold as opposed to silver or PGMs.

3:15 We're increasingly looking at PGMs because we do think at some stage, there will be a supply correction, and that will drive an improvement in the PGM prices. If we move on a slide, I think if we look at the top slide first of all, you'll note that I think over the time frame that we've looked at here, which was pre COVID, you will generally note that the green line, which is the GPM net asset value, typically outperforms the larger cap ETFs in bull markets, which we are currently in for this sector. And, you know, that is by virtue of the fact that after a little while, some of the less liquid names start to really peak people's interests.

4:07 And eventually, ultimately, the market caps move them into larger indices, one of the catalysts that we often look for. What we haven't really seen of late, and again, we'll come back to this in one of the later slides, is some of the operational leverage that we think these type of investments really ought to show but have yet to. In part, that's because cost inflation has been prevalent in pretty much every sector, frankly, but also in the gold mining sector. And I would say as an aside, that has really pushed us into assets that don't require too much capital to develop a single asset in particular because we see that as a slightly more risky outlook versus, say, five, six years ago when we were investing more so in in the likes of the developers.

5:02 The next point, the third one down on the bullets on the right, I think, is to note that whilst there is some cost pressure, it's very much easing now in terms of both inputs such as the oil price, which might actually start to reduce year on year in the next twelve months, and and labor pressures are also easing. Without much greenfield investment, we'd also note that the improving earnings backdrop may well drive more m and a activity. Certainly, we've seen it in the portfolios we'll come on to in the next slide. And, you know, the larger names will need to replace their depleting or reserves. Finally, just note the bottom chart at the moment. It's somewhat disappointing, I guess, that the NAV has widened. But whilst we don't really have specific explanation for that, one thing we do notice that sometimes when the NAV moves up quite smartly, it takes a little while to gain traction in the share price, and it might just be that people are happy to, you know, just sell some shares on some still good absolute return even though the NAV is that much higher than the share price.

6:17 If I flip on again, this just illustrates the main point that we are quite focused. You know, the the top positions there are not quite double digit. They have actually been double digit, the likes of Caliber, but by trying to contain specific stock risks, we have taken some of those position sizes down following some of the recent strength that we've seen in the share prices. But it still represents a pretty healthy 50 plus percent of overall AUM and net asset value. If we look at the split, you'll see that, as I outlined earlier, the majority of this is into producers. These are the ones with the asset values that have already undertaken the investment and where we feel there's lesser risk on, say, executing versus a developer, which is at the smaller side of the overall exposure than has historically been the case, say, six years ago as I'd referenced.

7:17 One of our styles of investment is to look for those companies that can withstand a temporary blip down in the gold price. We still think we're in a very healthy outlook for the metal, given the ongoing uncertainties. But, you know, all of these operators that we have here are lowest cost and have sufficient funds even in the event of a pullback in the gold price to deliver on their growth plans, you know, right from Caliber, which has got two large open pits. Now it's been taken out by Equinox at a slightly higher premium than was initially offered. It's open pit, which generally consumes more oil, and the margin that they will offer, I think, is at risk of of expanding rather than contracting because of the the scale of some of the strip that's going into the big projects that are online very shortly and should deliver news flow.

8:14 I don't really want to labor that too much more. We've got some PGMs. We'd actually rather have more, but, you know, we've got to look at the timing of the catalysts for what we think is going to be the big driver of investment into that sector. And for the moment, rather than demand, we think it's likely to be supply correction and that, you know, we've got factors that are favorable for that. A strong rand means that the margins of PGM producers are being squeezed, and the prices of the metals are actually quite low. So the value is is there. We now just need to assess the timing. If I move on rather than labor too much more, we move into some of the sort of macro backdrop. And I think the one thing that this sector is undoubtedly benefiting from now and probably will for the next couple of years at at the very least, is uncertainty and the blunt way in which...

9:11 Well, previously, Biden, effectively weaponized the US dollar post Russia Ukraine crisis, and latterly, with his rather abrasive, trade tariff approach to, politicking. And, you know, that is seeing people really take a less risky approach to their portfolios, which we still think has got room to run. The main point from this one, though, and as is the first point on the top left, is that central banks, even though they've been net buyers for the last fifteen years as it happens, have stepped up the pace with which they're buying gold to add to reserves. Certainly, China, you know, that's now got some 2,300 tons of gold in reserves, which has more than doubled in a few years, largely driving that performance by overall net buying, but it still only represents something like 6% of their overall reserves. And they are quite clearly keen to diversify away from US dollar assets as are most other central banks.

10:21 I would say that there are also issues that that come about as a result of overleverage, and that's very much true, which will come on to the next slide in terms of the US dollar and interest rates. And one of the interesting points to note is that the US dollar has... Even though it's potentially under threat and interest rates arguably reflect the stagflationary outlook and moving up, Gold has nevertheless moved up despite a rise in the long term interest rates in The US, which is still one of the main points of note. Elsewhere, just note that globally, bar and coin coin investment has also stepped into the breach, and I think that probably reflects something of a safe haven status for the the more wealthy types that are just, you know, not just buying jewelry, but looking for a store of of of wealth against pernicious inflation or stagflation.

11:21 If we move on, we have seen a surprising lack of enthusiasm by financial allocations into physically backed ETFs, and they came back from a peak, you know, just immediately post the Russia Ukraine invasion. This is the blue line, which shows millions of answers on the left hand scale held by all ETFs that are monitored by Bloomberg. And you can see that peaked to over a 100,000,000, a 110,000,000 in mid twenty twenty, and it started to nudge back. Despite that sort of lesser demand from the financial sector allocation. The gold price has moved up. Again, that really harps back to the point regarding both central bank buying and baton coin demand.

12:20 But having had that retracement over the last five years, call it, we are starting to see some stability now and actually a potential move in investment style from simply momentum and growth led stocks. Basically, most financial advisers would have just said buy the S and P, and they've been proved pretty right over the last decade plus. But that may be called into question if we're starting to see vulnerabilities arise as a result of over indebted governments and the liabilities that are certainly accruing out in The US, but in most developed markets, frankly. And with a background of trade war and relatively reduced demand outlook, you know, we're in for probably a stagflationary outlook, which is the best environment for GOLD to continue to perform.

13:19 And I think wrapped into that is just, you know, what do you want to value things in? And increasingly, we are seeing much more commentary around the sustainability of government borrowings. And realistically, that feeds back into what is your currency worth and is fiat at risk. That's a longer term bit of a gold bug type of push, but it's something that's relevant at the moment. And I'll move on one more slide. And this is, I think, something that, you know, we would look to highlight at the moment in the the, you know, The US is nearly 35,000,000,000,000 of overall liabilities at the moment. And with some 25% of its overall bonds resetting at nearly 44...

14:07 Not 44%. This year, we're seeing an increasing burden of interest costs really weighing on the ability of it to keep investing. You know, whilst we agree that I think Trump's aim of reducing that debt burden is is admirable, the manner in which he's gone about it is really not necessarily the best way. And to put tariffs up at the astronomical rates that have been pushed forward under his sort of brinkmanship style. Even if it's just 20%, that's probably too much. And, you know, we're gonna see an increasing requirement for more bonds to be issued just to pay the interest, which is, you know, already about a trillion and a half a year just to pay the interest on these borrowings.

14:56 And we'll see, you know, more fiscal tax giveaways ahead of the midterm elections next year is only going to worsen that situation. And for the time being, I think, you know, the demand from central banks, from bar, is probably going to remain the main driver with potentially some spice added from a reallocation in the financial sector, which is, over the last five years, largely withdrawn money from it. And gold miners, as Rob will outline in one of the latest slides, really represent, despite the gold price

15:28 move, one of the cheapest forms of insurance premiums in a broad portfolio that you could have. And I think if we are going to see a sort of change in style being maintained from simple momentum and, you know, blindly buying the S and P, which is largely being driven by tech, then I think the value sectors with... Which we would include this in, as long with broader mining, frankly, and real assets that are... Aren't overburdened with debt, I think they're gonna be the real beneficiaries. The alternative is austerity, as we outlined at the bottom there. And I think, you know, that raises the risk of recession. And, again, gold is probably one of those go to assets for... As a store of wealth even in that type of situation.

16:13 At the moment, though, I'd say we're heading for q e four, and we haven't really got off the quantitative tightening that was, you know, really required before we head into a current sort of interest rate rising cycle that we're seeing at the minute. And if I'm brutally blunt, I just come back to the point that the current abrasive approach to international trade is undoubtedly harmful for economic growth and is inflationary generally, and that is a stagflationary backdrop that GOLDEN has tick... Typically performed extremely well in.

16:49 With that and without rambling on too much more, if you don't mind, I'll hand over to Rob who can take over the presentation for the next slide, and we can come back to q and a after that. Yeah. I might... I mean, I might add a little bit on this slide because I I do think it's gonna be hugely important as we look forward. I mean, Keith Keith and I have been talking around kind of in... Increasing debt levels globally, and it's not just a US story, you know, for for well over a decade. But what's really changed in the near term is that rate expectations have materially shifted, and that really changes

17:19 changes the burden. So, you know, it's kind of fine adding to your to your overall debt level when you're in a very low rate environment. But what's really shifted in the last twelve months is longer term rate expectations. And that's really what makes it kind of here and now. But this kind of ties in and I think Keith framed very well, know, all kind of positive outlook for gold. You know, we've kind of got to these repeated all time highs given strong central bank demand, almost entirely down to strong central bank demand as shown by those ETF holding where financial players haven't really shown up in the physical ETF yet. We're seeing similar for managed futures through CTAs, etcetera. So really, it kind of seems largely bypassed. And, you know, our view central bank demand will remain elevated just because of all that uncertainty as Keith talked about.

18:07 But I'm I'm gonna focus here more on the bottom upside. So I'm gonna touch on on valuation. So Keith touched on it earlier around the operational leverage you typically expect to see from mining companies. So, you know, to put

18:22 in simple math, if gold was 2,000 and we see gold go to 3,000, if you have a $1,000 reduction cost, that would mean your margin would go from 1,000 to 2,000, assuming cost remained flat. What... So, yeah, when we've seen this, as this chart shows here, we have gold pricing green and we've used the OKR NYSE Gold Bugs Index to show here. It's almost had a one to one correlation with the gold price rather than showing that operating leverage. We've added in GOLDEN PROSPECT there just to show you the last twelve months, and it does show that that incremental leverage that this fund does offer over over the peers, give them where we focus and and how we allocate. So I think this is important. Keith touched on it around costs. You know, there's a number of inputs and, you know, we think this is one of the things that had led more general... More generalists to be cautious around the sector. Because after we saw gold rally post COVID, gold stocks rallied, but then gave back much of those gains as their margins then compressed as their cost cost inflation fed through and ultimately compressed margins to something comparable to pre that gold run post COVID. So I think that's led to a degree of caution from the market more broadly.

19:41 But as a snapshot to where we are today, we're seeing inputs falling, you know, oil price, steel price going lower. Keith touched on it with labor. We're definitely seeing labor easing materially as other mining sectors are struggling. So that's making labor more

19:57 available. We'll touch on FX as well a bit later on. You know, FX from many of the producing regions has also been weaker. So, you know, CAD dollar, Aussie dollar, Mexican peso for major producing regions. So that's that's helping as well. So our belief is that a stronger gold price environment will feed through to higher margins for the producers, and we're certainly seeing that in more recent reporting. And as we believe that the miners themselves should be should be providing more operating leverage to the gold move than they're currently reflecting. So if I move on to the next slide, you can see that what this means. And we've got a couple of charts here. The top one is showing the price to NPV at a 10% discount, assuming a gold price...

20:46 A gold spot price. So the yellow line is showing gold spot. And then this breaks out... Sorry for the the small font.

20:54 But you can see there that breaks out by sectors for the large caps, mid caps, small caps, and some of the developers. How ultimately their their pNAVS under these assumptions have just been trending lower through this period and have moved quite sharply lower in the more recent price rise... More recent gold price rise. So, you know, historically, they're at some of the most attractive multiple levels that we've we've seen in in history and going back, called stocks used to trade at a notable premium to NPV given their insurance properties.

21:25 So we believe these are some of most attractive levels that we've seen in history. If we look to the bottom chart, that's showing PE multiples for subsector And we've used BMO's dataset here just because it's it's the easiest to represent. It isn't all encompassing. It doesn't include every company, but it includes those that they cover. But I think it's still quite reflective. And the main point here is that you can see that the earnings multiples have also collapsed. So we've seen, you know, we've seen many of the

21:56 of the gold miners trading at, you know, mid mid single digit. So it's a five to seven times PE on a one year forward. So it's kind of telling us two things. Either the market just doesn't believe doesn't believe the gold price or it doesn't believe that the mining companies themselves are going to be able to maintain those margins. And for those reasons that we gave, we believe costs are very much containable. We believe the the management teams themselves broadly

22:22 are disciplined. So we don't anticipate to see poor m and a or badly timed hedging as we've seen previously because there's a lot of pressure from shareholders such as ourselves and other other resource funds and others focused on it to not make those same mistakes that have been made being made prior.

22:42 So why are they so... Yeah. Why are they so attractively priced given the moves we've seen? So we think this is a really interesting chart. So the GDXJ or VanEck Junior Gold Miners Index or ETF is is one of the largest ETFs out there, and it's very similar for the larger cap ETF, the VanEck Gold Miners ETF.

23:05 What you can see there is the the share price is ticking up and the index moving higher. You can see that moving in in high correlation with gold price. So we've only got two axes here, but it's it's a very close correlation if if I was able to use the three three y axes. But what you can see in the green line is shares outstanding for the CTF have been completely collapsing since... Well, since around sort of q one of of twenty four, which is interesting because gold prices rallied really strongly, yet the ETFs have been selling equities. So what that is telling us, much like we saw with the physical ETFs, which have been steadily selling for four or five years post that COVID period despite the more recent kind of blip slightly higher. They have been steadily selling physical gold and generalists have also been selling selling the mining equities as well.

23:58 You know, we we can debate around what the reasons for that. It can just be sizing and allocation, potentially leading to some sales. It could be more hedge fund type money that is just taking profits and crystallizing some of those gains. But it kind of feels slightly counter logical. But our belief is actually that's a very bullish backdrop when you have gold at all time highs. The miners have been strong, but this is despite general selling by the broader market. And we believe this

24:27 supports a potential catch up on reallocation from financial players, both into physical gold through physical ETFs and also back into the mining equities, which could then close that gap to more normalized multiples and earnings multiples going forward. Currency I touched on earlier. I mean, there's two sides to it. There is the producer impact. So in a weaker producing currency helps on margins as I discussed. It also helps for the likes of us that are realizing this value in our domestic currency. But when you have that general weakening, that actually boost the gains over and above that stated in dollar terms. Even with the sort of more recent weakness in dollar is a very much a clear trend there over the the prior ten years.

25:17 On on m and a, we we certainly believe m and a is gonna be a theme going forward. We've certainly seen it for a number of our names. We wouldn't say it's a key strategy of ours. We we just generally try and focus on quality assets, quality management teams, but as a result... Oh oh, at at good valuations, which as a result has meant that many of our names have seen m and a interest and m and a activity and also being taken out or or seen mergers. But here we have a chart here showing annual gold mine production for the sector overall provided by the World Gold Council. Whilst last year was an all time high, only marginally relative to where we've been for the prior ten years. So the point here is that despite a very strong gold price, we've seen very little ability from the sector overall to increase production. So that is telling us that production is quite flat.

26:09 The larger larger producers or... And and mid tier producers in the pressure vessel sector have generally been under investing on their own exploration and and development. Thus, if they want to grow or simply just replace their existing reserves and mines as they get towards the end of their lives, they're gonna need to see more m and a. And we started to see that, but we anticipate that we'll see more of that going forward. The one... The countries that... Well, the people that have been most active have been the Chinese so far. And we believe we're fairly early stages of more Western companies kind of stepping in and and being active in in that sector either through, you know, 9.9% type holdings in some earlier stage names or complete takeouts and merger m and a because they see the benefit from mergers and acquisitions and getting to larger market caps and ultimately higher multiples.

27:01 That is something that we've certainly certainly supported.

27:06 Silver, we could do a whole whole presentation on silver but just put quickly, difference from silver versus gold is that it's over 50% industrial demand now. So this leaves us with an element of caution because we do see potential risk in a general more economic slowdown that silver demand could weigh from the industrial side. But then the other side of it is more led by precious metal demand, which given its affordability relative to gold, we expect to see a pickup. Medium term, we're very constructive because silver is the only metal more conductive than copper, so it ties into nuclear growth sectors like EVs, wind turbines, arguably AI and data centers because, you know, for high end electronics, it's gonna it's gonna clearly offer more benefit and justify the higher price point.

28:03 Supply remains constrained given much of it's producers of byproduct from base metal mines which have been seeing weaker prices and thus reducing their production overall. So we're seeing less of it coming through as a byproduct. So there is quite... There's a very constructive sort of midterm outlook, an element of caution near term. So the reason we don't have a larger weight than than this given there's a more more bullish view is unlike the gold miners which are incredibly cheap, silver miners trade at a bit of a premium, often to be in regions such as Mexico, which has had in recent history a bit more uncertainty around the political backdrop. So really, we kind of take a bit more of a bottom up view there with the likes of, say, America Silver, which is sort of one of our larger holdings there. And we we see that as being being quite attractive.

28:56 So, yeah, as an outlook, we're constructive on the gold price. We see many reasons for it to head higher. Ultimately, we've got here almost entirely led by central bank demand, which is only likely to strengthen from here given US uncertainty around trade wars as they look to diversify away from US treasuries. We see strong bar on coin, which is being led more by EM where that's being led by people looking to divest or protect against currency weakness. Just recently, we've heard strong demand at the likes of Iran. We've seen strong Chinese retail has been a very strong aspect given concerns there about potential devaluation of renminbi. So, we expect that to remain strong. I think the real key towards the next catalyst going forward is going to be rate of participation by financial markets. And we anticipate to see some of that through either ETF holdings.

29:53 And we certainly expect to see a catch up from equity valuations as we see inflow. As looking forward, there's greater concern around US debt levels and the largest risk free asset in the world, US treasuries. Just at the margin, we expect to see a larger allocation towards precious metals to offer some protection against

30:14 that. So ultimately, we think it's a very constructive outlook going forward. Valuations are attractive. Sector's generally overlooked by generalists and we're very constructive on the outlook going forward. Just one technical aspect. Would just note on that the fund does include an embedded rights option on a one to five basis. That's 48p for the 12/01/2025. That is open to all shareholders that their own own shares. I think it's around three weeks or four weeks before at the... Yeah. At the record date effectively, then have the option to participate in that. So whilst optically, clearly that would be dilutive given that the NAV is materially above that and share price also higher, one thing I would note is that it's not dilutive to any shareholders that take up those rights.

31:09 It is something that we debated internally. It was a decision by the board ultimately and was voted through by shareholders. But we've but it was generally felt that that is better to grow the fund and ultimately create efficiencies of that for underlying shareholders and benefits that that creates, noting that if they participate in that, that doesn't have any dilutive effects on anyone's individual holding.

31:37 And I will leave that there and pass on to Q and A because I can see there's quite a few questions. Please leave some time for that. Absolutely. Rob Keefe, I may just jump back in there. Thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that have been submitted already, just like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can all be accessed via your investor dash board. Guys, as you can see there and quite rightly, Rob, there's a number of questions that that have come in this morning. So thank you to all of those on the call for taking the time to submit their questions. But, guys, at this point, really, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so. And if I look to pick you up at the end, that'll be great. Thank you.

32:26 Great. Shall I deal with the first one? Because I think I touched on it earlier. And the question was the discount to NAV has trended upwards over the last year with the result that 25 plus has now become the norm despite the stated intentions of GPM. What do you think are the reasons for this, and what do you intend to do differently to try and address this?

32:50 Very pertinent point. I think I alluded to the reason that may have contributed to it because it's very difficult to actually give a a specific one, and that it's just that the NAV has moved up so smartly that the share price often, we see a lag, and it's certainly been one of those that has experienced a lag this year among the investment trust world. I think we're probably one of the leaders in The UK at the moment in terms of overall performance. What do we intend to do differently to try and close it?

33:22 Generally, we look on the demand side rather than the supply side, know, such as buybacks and things because we are still quite a small fund, hence, putting in place a few years ago the embedded rights, which I'm sure will be one of the later questions. And, you know, we have to accept that that is, you know, just the main focus of a a relatively small fund that we want to get marketing on formats and platforms such as this to raise awareness of portfolio. And frankly, it's an opportunity to get in at the moment. You know, we're trading at this sort of discount despite having an in the money one for five embedded right alongside it. So you could argue that it's certainly over 25%.

34:11 But, you know, we do quote the fully diluted number as it happens, and that's really all we can say at the moment. We are trying our level best to continue to, open other doors with regards media coverage, platform presentations, webinars such as this, and that's the difference. We're just trying to increase the scope that we can we can access that. And, we think there are... It helps that the gold price is up here, and they're generally more eyes on the sector at the moment.

34:42 The next question, I'll leave... I might just... Sorry. If I if I can just add to that as well. I I think it's kind of a broader apathy to to the sector from generalists as well. So, you know, we touched on it earlier with the with the the large ETF shareholdings. They've seen fairly steady selling. So, it doesn't feel like there's been big inflows from generalists yet despite clearly improving fundamentals and earnings of the underlying corporates. Anecdotally, with the other precious metal resource funds globally. I don't think you've seen big inflows. So, you know, it isn't purely a something specific to this fund. I think it's something that's been a bit across the broader sector as well.

35:26 The next question related to the embedded right that I just referred to earlier, it said, will you consider canceling the subs this year if the NAV per share is significantly above the 48p strike later this year? It could have a significant dilutive effect for relatively little gain. I mean, I understand the question, and it was certainly a debate that we, along with the board, argued over quite undiscussed in a lot of depth because it is going to be a dilutive process. But when it was instated in the assets under management and the size of the fund was smaller, it was viewed as the lesser evil to try and grow assets to make it, you know, relevant.

36:13 And that is just a fact of life that we had to swallow the down in order to potentially grow assets. And just note though that if you are a shareholder, you aren't if you take up your rights that are in the money. You remain with an equivalent proportion of shareholding in the company. So you're not diluted out of this. And I think I've just looked through a few of the other questions, and I'd like to answer one now because it's relevant. If you buy shares today ahead of the December 1 excise or or notification point. I think, actually, the date is just slightly prior to that that you have to give notice to take up your rights. You are eligible for this one to five. I think this is the third of five, so you'll have two more afterwards.

37:01 And as I say, you know, at the moment, that 48p is in the money.

37:12 I'll dive in on the next one. Yeah. So the next one is what was the sub share money spent on last year? I don't believe this was ever mentioned. Yeah. So... Yeah. Ultimately, we we are keeping to the same strategy. So mostly, it went into existing holdings and existing names, maybe added to to a couple, but broadly, it's very much on the same strategy. So it's not a case of that that embedded rights option money comes in, and then we just go and buy something new. Ultimately, our strategy remains the same whether the fund is this size or whether it's slightly larger post post some funds coming in. So there's no shift in our underlying positioning.

38:01 There's a question here saying, what are labor inputs like and what is the pipeline for new entrants to the mining workforce being like? How how is that been evolving? So that is very much as a region by region aspect. So one to focus on is kind of West Australia. So labor has had been very tight there post the COVID period and that had in part been down to things like strong lithium markets, iron ore being elevated, and so strong investment into kind of mining more broadly. What we've seen since then is the lithium market collapsed. We've seen iron ore the big iron ore mines BHP and Rio laying off staff to try and cut costs given the looming oversupply coming through as Simandou comes through against weak Chinese iron ore demand. So that's... Oh, and BHP had a big big nickel project as well that they they also closed. So that that that reduced materially the numb... Number of staff they were using.

39:01 So that's really freed up market... Freed up the market there for labor and led to kind of cost deflation on on labor and also higher quality and less turnover, which improves efficiency. If you look to the likes of Africa, generally, there hasn't been the same same constraints, so that hasn't had the same tightness. Canada is... It it is a bit more variable, but there hasn't been a kind of big surge or or collapse there, so it's been a bit more stable. But, ultimately, labor labor overall, we're seeing greater automation in process in how how projects are being run. So greater efficiencies, but the big surge that we had in in wages is ultimately easing from here, and we're seeing that kind of ease back, and that's that's helping support margins. Because for some of these projects, labor costs alone can be, you know, 40, 45 of overall costs. So it's certainly material, but at least we're on the sort of bright set... Bright side of trends in the current environment.

39:59 The next question is, do you think the Pan American deal for MagSilver is the start of more deal making in the sector? Is the response to the industry to higher spot prices likely to be more CapEx or acquisition oriented in your view. So we I mean, we touched on that earlier. Pan American I mean, MaxSilver was obviously one of our holdings. They came in and purchased that as a meaningful premium. We would have hoped for a better outcome ultimately because we do think that's a pretty incredible kind of tier one asset, although that they they had in a JV with Fresnillo. But, you know, ultimately, that's that's the way it's allowed as a single single asset producer. Ultimately, you're kind of exposed to that because you trade at a lower multiple and thus for acquirers.

40:49 With multiple assets that trade at a premium multiple relative, they can acquire these assets at a premium to where they're trading in the market and still on an accretive basis versus their multiple. And in this case, Pan American got a very high quality asset at an attractive price. So more broadly, how do we view M and A going forward? Well, the big miners have very solid balance sheets. They are... Have record earnings. They have building cash piles, and they have shareholders now asking them where their next leg of growth is gonna come from after a decade of underinvesting in organic growth. So as a result, we do definitely expect to see more m and a coming through, noting that these larger companies just down to the nature of where we've gone in this kind of ETF world where liquidity leads to higher multiples.

41:38 That means they can buy single asset or dual asset companies lower valuations even if those assets are higher quality. So with cash ultimately building, we are seeing a return to some dividends, but they certainly haven't got to a level that's material enough to eat into the growing cash piles. So we do very much expect we do very much expect to give an

42:00 attractive valuations for the sector overall, especially for kind of single asset or dual asset companies that there'll be a lot more m and a coming through. That said, we don't look to that as a kind of key catalyst because up until very recently, much of the m and a hasn't been coming at a material premium. So, you know, it's gonna be sold as a kind of merger of equals or, you know, coming at a small premium to try and justify consolidation to to get that higher multiple. But more recently, we have started to see premium starting to come in to incentivize m and a, but kind of getting to more around that 30% level. That isn't a key focus of our strategy. We focus on quality assets, quality teams, good jurisdictions, and high profitability. But inherently, that does ultimately point to them being m and a targets.

42:48 And I'll take a breather and give give Keith a chance. Sorry. I'll just put my mic on. One question here is, can you give your price target you see on gold by this year end and then for 2026? We do get asked this. I think the previous occasion that I personally was asked was by The Wall Street Journal around the turn of the year, probably in January. And we don't tend to give specific price forecast. That's not per se the way that Rob and I would look to invest on this. Instead, you know, back then, it was like, will 3,000, you know, be difficult to get through? And in some senses, you know, the round numbers are just psychological levels.

43:34 The fact is that we would rather look at the direction of of travel and the pressures that force that movement. And at the moment, most of the pressures are saying at a lot of levels, have some insurance in your portfolio and beware of investment style that I referred to earlier. You know, the blind momo and the investment in in in indices is perhaps something that is starting to be questioned as is the the value of US treasuries and, you know, the interest rates that they are marked at.

44:17 So I I would just say at the moment that in the main, we still see there to be upward pressure to the gold price that will attract people in. More so, we feel relevant, the equities that have not yet shown the operational leverage and which at the spot gold price are at, you know, decade lows in terms of valuations. That's the mark of the insurance premium that ultimately your portfolio will pay. Next question by the same person is when you trim a position, where do you look for reinvestment of those profits? I... In an alternate market cap company, commodity, etcetera. I'd say that part of, Robin, my processes, and and we see eye to eye on this, that sometimes, you know, stocks don't always move in lockstep.

45:08 And we do get opportunities, particularly in this sort of small and mid cap sector where there are sort of inefficiencies to the points in time when we see some performance. And we'll get instances where, say, Caliber is up, you know, 10, 15, or 20% ahead of what we would consider a comparable. And as a result of that, we'll take some money out of it and perhaps invest in something else. So it might be, for example, we've taken some money out of Caliber and we look at something slightly different. It could be another producer or it could be, say, an explorer like collective mining. And the reason that we might do that is that, you know, some drill results indicate that this could be at least a 10,000,000 ounce deposit, if not 20, potentially.

45:56 And that's the type of, you know, slightly

46:01 even better value opportunity that we look at in a in a... At a fundamentally positive market as we see it. And so it's generally that we'll rebalance the portfolio if we see some instances where stocks have moved up rather more than than others than anything in particular. Yes. We'll look at other commodities. At the moment, I'd say we wouldn't look at, say, industrial metals. As I say, in

46:25 a stagflation environment, gold and precious are the places to be. And and and and really, I hope that gives you some kind of outline of where we're looking. I might share a comment to that. I mean, it's very much actively managed this this portfolio and and we're quite kind of fluid with how we view that. You know, Keith touched on it earlier. There are points that we've been heavily weighted towards developers with no no production because they were incredibly cheap. At the moment, we see real benefit from the producers with development assets because that provides the catalyst to upside. But, you know, you'll go through phases where, yeah, you're like Canadian stocks may outperform versus the Australian stocks and that allows us to rotate between. So it's kind of a very fluid fluid view depending how we reallocate, but it's always kind of looking at top down, bottom up, where are the catalysts because there are many names with with value opportunities.

47:21 But one thing we really look for is names that are catalyst rich. And if you look through that top 10, we've all... The majority of them have some pretty heavy catalyst coming through on on kind of production startups from development assets and it's things like that that we look for that we believe can offer that alpha and and outperformance relative to the underlying sector. I'm sorry, Keith. Jump to him. No. Don't don't worry. And one... I think we're we're running out of time quite quickly now, so we'll probably just keep it to to one, maybe two more questions. There's another useful point just from a technical perspective, which is is the embedded rights for the 12/01/2025 based on a holding date in '25 or in 2024.

48:04 I would say that there is a record date or a subscription date, which is probably something like, I don't know off the top of my head. I'll have to go and have a look. But in the particulars, it will be probably two weeks before the December 1 where you will have the right to elect in taking up your rights or not. And just as a further outline, if you elect not to and you get annoyed by your platform for whatever reason, just note that those unelected shares... We hope everyone does in time elect for that. But those unelected shares will be rounded up and block sold and and proceeds are generally then directed back to you from the sale of those those shares that have not been elected when they're in the money. So the fund does still grow, and you do still at least get your your nominal amount of intrinsic value back from that less a few costs.

49:05 If I can jump in on a question here. There's one saying Southern Collective DDG account for a rate and a half percent of NAV. Yes. We're all explorers, not developers or producers. Actually, think that's quite an important question just to kind of phrase here because it's our our determination here. So just to be clear on that, TDG, we would have classified as Explorer because it's much earlier stages stages, collectibles, explorer. The Southern Cross would fall into developer and that's because... In how we've classified it here. So I just wanna be clear on this. And that's because they raised funding to put in a large exploration adder or ramp into explore from underground. They are far more developed down that down that timeline, and it's very clear it will be a mine. So we have transitioned it out of the sort of explorer explorer side. And...

49:59 Yes. So I just wanna be clear on that because not all of the developers mean that they're actually in construction through kind of building a new mill or new mine. So we kind of classify that for the stuff we do as as kind of later stage. But the the producers clearly would be entirely cash flowing cash flowing companies and that there is just that sort of nuance with developers which I I wanted to make clear. And follow on to that from the same person, so it'd be enormously helpful to understand about holdings beyond the top 10 especially... Yeah. Especially read that point around around the view of the explorer waiting. So, yeah. I mean, it's still fairly it's still fairly concentrated below into the sort of top top 20 and you'd have a lot of names around this at one and a half, one or sort of one to two, two and a half percent type position for the next for the next 10.

50:53 And then down at the tail, in that overall shareholding number would actually include quite a lot of things like warrant. So one of the things with mining, sort of mid cap mid cap... Small and mid cap mining companies in in Canada specifically, when they raise equity and we do participate in quite a lot of primary equity issuance by these companies,

51:17 by some of these some of these miners is often you get a warrant or half warrant with each share that you buy. So in that tail, that would also include a number of warrants which offers extra talk to the upside in a stronger market. Typically, you receive... Typically, we have received those in placements that have been done in weaker times in weaker markets where the warrants have been given to incentivize raising capital when it's been more difficult for them to raise capital. In a more stronger gold price environment, we're not seeing many of those kind of coming through on equity issuances. So these are warrants that might have a sort of one, two, two, sort of four year type type duration. They're valued in the portfolio using kind of Black Shoals using the Black Shoals model and not a huge proportion of the portfolio currently around 1% or so sitting in the tail, but but that would add to a number of a number of those physicians.

52:15 Consciously, have quite a few questions here. We're trying to keep it close to an hour, but we we can potentially go a bit over. I'm just gonna have a a quick look through of those that are remaining. There's one there's one other question which was do we hedge our sterling exposure to non sterling investments? And the answer to that is generally not. No. We... In this instance, in this fund, we have never hedged. Only one other fund have we have we actually enacted hedging, not relevant to this, and it was just to protect some dividend income that we're receiving. So, you know, that's just something that we we run with ultimately and absorb in terms of of performance. If we looked indeed at that this year to date, you know, we we... We've seen sort of some fairly volatile moves in the in the US dollar and and sterling rates.

53:12 You know, we... As I said, we just absorbed that in our NAV. Over time, it tends to play out. There've been a few questions asked about PGMs, and I don't really want to labor it. What do we need to see in order to invest in that? I think it's just clearer evidence that corporates are more willing to curtail supply and start to mothball some of their operations. For whatever reason, generally, it's been political and to

53:43 maintain labor forces in South Africa. Those operations have remained, and so supply has not really come out of the market. Another factor that actually we quite liked about about this sector, and Rob kind of alluded to it with regards to silver, is that a byproduct of PGM is chrome. You know, we're we're looking in our current sort of top down view for where bad news can be good. And chrome goes into stainless steel, the steel market's probably under pressure. And if the demand for and price of chrome goes down, that byproduct credit, which has been surprisingly resilient, will knock another support for the basket price received by these PGM miners and may lead to some of that supply curtailment, but we've just not had any indications that there's a willingness to do that just yet. So it's still on the radar on our watch list, and, you know, we just will have to monitor that. We can't give any clear timing indications on it just yet.

54:52 What else do we have? Yeah. I mean, I might I might add a bit of... On PGM just because there's a couple of questions on that. But... Yeah. Look. I mean, it's difficult because it's a market that's been in deficit for for a number of years, which actually similarly silver has the last four years as well. But, yeah, I mean, the real question mark there is, know, whilst it's in deficit into the cost curve, we haven't seen that kind of supply rationalization that we would have anticipated and they have been bailed out by a stronger chrome price. Rand being stronger is is is kind of weighing on their costs. But ultimately, actually, South Africa kind of feels like it's getting a bit better as a place to operate for for miners with issues around power through Eskom and Transnet through their through their rail network. So maybe, you know, maybe they all kind of hang on a bit longer and, you know, against kind of kind of weakening ICE

55:45 kind of car sales globally, particularly with the sort of growth in EVs in China, it's... You know, there isn't a hugely kind of bullish outlook because obviously, the real transition there for incremental demand is going to be more EM driven because the Western markets are a bit more of a recycling market where because PGMs feed into auto cat, so a catalytic converter for cars. So the Western market is a bit more of a recycling market. And really it's about growth in driven by EM given higher environmental air quality controls. So yeah, there's kind of question mark. There's moving parts to it and it's hard to have complete conviction. For the moment, we're happy to have a low weight until we have a bit more clarity and certainty. We And certainly have a lot more conviction around the gold miners, the outlook for gold near term, given strong central bank demand and the very attractive valuations that we're seeing and potential inflows into that.

56:37 So it's one that we kind of remain actively monitoring, but at the moment, I'm happy to say a bit more on the sidelines. Okay. And there's a question here. So with high spot prices, has there been any moves to increase exposure to lower quality producers with higher production costs but proportional margin expansion may benefit more than the higher quality peers.

57:00 So that kind of feeds through into the quest... The point I was making around operating leverage. You know, if you're actually a higher cost producer, the operating leverage should lead to outsized returns relative because you've got more operating leverage because you're starting from a lower margin point relative to the gold price. To be honest, we haven't taken that view. We continue to focus more on low cost producers. We actually think we can get more of that. We can get just the same talk by focusing on low cost producers with development assets. At the moment, we like development assets and the risk... The the risk around construction. The development assets trade discount to NAV typically because of concerns on execution, potential cost overruns, CapEx concerns, and and potential time slippage of execution.

57:52 We think that risk is currently priced too aggressively in the market because the... Because overall CapEx costs, we're not seeing big inflation issues, labor issues are easing, FX as we discussed earlier, has a big impact on build costs, which are generally weakening. So actually, we think the outlook for development project is very attractive relative to where they are currently priced, but we do like having the safety net of also having a producing asset that are generally making very strong margins in this current environment,

58:22 which then provides you full protection if time does slip by a quarter or so. And thus, we think that, you know, provides an attractive risk reward and we prefer that over going, you know, a very talky, yeah, a very talky high cost producer because any kind of operational slippage there can really be far more catastrophic and we'd like to have that safety net ultimately of of that existing production.

58:52 There's a question on m and a, which I think we kinda covered off on the prior one. Just on on how we weigh how we weight positions, do we do we aim to have generally equal weighting going forward? No. We're kind of very fluid on that. There are some names that are higher risk, and we're happy to have a smaller position in, but it's kind of better risk reward. But at the same time, you wouldn't have a large conviction position. We think the fund overall relative to the broader sector offers plenty of talk. And that, you know, that's clearly represented by the by the overall performance relative to the underlying sector where you've seen very clear outperformance versus the sector and versus our peers over the last twelve months and over sort of five years.

59:47 One final one just to get everyone thinking about the gold market was, do you think The US will revalue their gold reserves? And if so, what will be the impact? And personally, I suspect most people... Well, maybe not. But, you know, I think the Fed values it at something like $40 an ounce, a very historic price. But, you know, it's known that if you were to go to spot prices, that would be a nice nice windfall. I'm trying to think what that would be at the moment. I'd have to calculate it, but it's probably something like 0.5 to $1,000,000,000,000 one off windfall. The problem is that that's not even all of the interest bill on an annual basis. So what do they do with that? And if it's just going to go on tax giveaways or some such, then, you know, it's arguably inflationary.

1:00:34 And and the one thing that unfortunately needs to be taken away at the moment is probably a bit of consumer demand. And if you're gonna buy votes, that's a bit of a tricky one. So it may, but, technically, it can have feedback that isn't necessarily always as positive as you might think. And that said, you know, I I just suspect that the quantum that we're talking about is still one that is is not is not something that is sustainable because it is literally a one off correction in price, and then you've used that bullet. But, you know, we're getting to a point where maybe there there is only a single bullet left, so I wouldn't necessarily rule it out. But but it's really just one of of history on it, to be frank.

1:01:25 Keith, Rob, sorry. Oh, yeah. Apologies. I know. Yeah. Yeah. No. I I mean, I was just gonna add... Look. I I I don't think we have a... There's some of the gold bugs out there claim you kind get this kind of full revaluation. I think we're kind of dubious around that. I think the one thing we can say with certainty is around the

1:01:42 quality of... I'll give you the quality of the largest risk free asset in the world. US Treasuries is now in question and central banks globally are gonna be more incentivized to to diversify into gold going forward. And we think financial players equally will look to do so given given the question marks around that. It doesn't mean the dollar has to revalue, but I think there is a real risk about kind of broader devaluation of fiat currencies more generally. And gold in many ways as well as being a commodity should be viewed as a currency. And it's one that we think is going to perform relatively well versus devaluation of other global currencies. Guys, if I may just jump back in there. Thank you very much indeed for being so generous of your time and addressing all of those questions that came in for investors this morning. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review.

1:02:36 But Rob, perhaps before now, really looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great. Yes. Well, firstly, thank you very much for time. Yes, look, in general, we have a very constructive outlook on where precious metals are heading. There are many positive drivers behind that. The equities themselves, the mining equities are very attractively valued here and we do expect to see a catch up just even to get back to historic norms.

1:03:11 Yeah, I think there's a question mark of given the strong performance we've seen some shareholders may or some people looking at this may question whether they've missed it. I think the key point is that valuations are attractive and pressured vessels look like they can definitely head higher given the macro backdrop that we had. So we'd very strongly argue that they haven't. Thank you. That's great. Rob Keith, thank you once again for updating investors this morning. Could I please ask investors not to close this session? She'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of GOLDEN PROSPECT PRECIOUS METALS LIMITED, we would like to thank you for attending today's presentation.

1:03:59 That now concludes today's session. So good afternoon to you all.