Sandstorm Gold Royalties (NYSE: NYSE:SAND) reported its second-quarter performance, highlighting lower-than-expected production due to temporary issues at various mines. Despite this, the company remains optimistic about its growth prospects, expecting a significant increase in production over the next five years. This optimism is supported by strategic plans to reduce debt, implement a share buyback program, and focus on cash-flowing acquisitions. The company's Q2 financial results showed strong revenues and cash flows, and they are committed to continuing their debt reduction efforts, with a target of bringing debt down to $350 million by the end of the year.
Key Takeaways
- Sandstorm Gold Royalties experienced a dip in Q2 production but anticipates a rebound in future quarters.
- The company plans to reduce debt to $350 million by year-end and has a share buyback program in place.
- Gold prices impacted Gold Equivalent ounces, but a five-year outlook shows potential for significant production growth.
- Over 80% of Q2's attributable gold equivalent ounces were sold from operations in the Americas, with 17% from Canada.
- Sandstorm aims for acquisitions under $100 million, focusing on assets that are already generating cash flow or will within a year.
- The Aurizona mine's production is expected to improve in the second half of the year, with Valley Royalties anticipated to generate payments starting in 2025.
Company Outlook
- Sandstorm is considering potential acquisitions, likely within the $100 million range, targeting cash-flowing assets.
- The company expects production to double with the growth of existing assets and potential new acquisitions.
Bearish Highlights
- Q2 production was below expectations due to temporary setbacks at certain mines.
- The decrease in head grades and silver sales at Cerro Moro affected production, although partially offset by higher silver prices.
Bullish Highlights
- The increase in the average realized selling price of silver and copper contributed positively to revenues.
- The start of mining activities at the Aurizona Tatajuba pit and a 56% increase in copper pounds sold from Chapada indicate potential growth.
Misses
- The company reported lower production at some assets compared to the same period last year, with specific disruptions at Equinox and Cerro Moro.
Q&A highlights
- The company clarified that royalty payments are typically received semi-annually, with the next payment for the Valley Royalties project potentially occurring in 2026.
- The Evolve transaction has already brought in $15 million in cash, with the remaining $5 million still uncertain.
- Sandstorm emphasized that the potential non-receipt of the remaining Evolve transaction funds would not impact their cash position.
Sandstorm Gold Royalties continues to navigate a challenging market with a clear strategy focused on growth and financial stability. The company's commitment to reducing debt and returning value to shareholders through share buybacks reflects its confidence in the future. As they aim to enhance production and cash flow, Sandstorm positions itself for a stronger performance in the coming quarters.
InvestingPro Insights
As Sandstorm Gold Royalties (NYSE: SAND) remains focused on growth and financial stability, recent data and analysis from InvestingPro could provide investors with additional insights into the company's performance and prospects.
InvestingPro Data shows that Sandstorm Gold Royalties has a market capitalization of $1.64 billion, reflecting its position in the market. The company's P/E ratio stands at 54.65, which is high compared to the industry average, suggesting that investors have high expectations for the company's future earnings. However, when adjusted for the last twelve months as of Q1 2024, the P/E ratio increases to 102.81, indicating an even greater premium placed on the company's earnings potential. Despite a quarterly revenue decline of 2.66% in Q1 2024, the company's gross profit margin remains impressive at 84.37%, underscoring its ability to maintain profitability.
Two InvestingPro Tips that stand out for Sandstorm Gold Royalties are the recent upward revisions of earnings by analysts for the upcoming period and the company's strong free cash flow yield implied by its valuation. These revisions suggest that analysts are becoming more optimistic about the company's financial performance, which could be a positive signal for investors. Moreover, the strong free cash flow yield points to the company's ability to generate cash, which is crucial for funding operations, reducing debt, and potentially returning value to shareholders through buybacks or dividends.
For those seeking further analysis and information, InvestingPro offers additional tips on Sandstorm Gold Royalties, which can be accessed by visiting https://www.investing.com/pro/SAND. These tips include insights on the company's earnings multiples, stock volatility, liquidity position, and profitability forecasts, all of which are pivotal in assessing the company's overall financial health and investment potential.
Full transcript - Sandstorm Gold Ltd N (SAND) Q2 2024:
Operator: Good morning. My name is Joanna and I will be your conference operator today. At this time, I would like to welcome everyone to the Sandstorm Gold Royalties 2024 Second Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. Please be aware that some of the commentary may contain forward-looking statements. There can be no assurance that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. [Operator Instructions] Okay, Mr. Watson, you may begin your conference.
Nolan Watson: Thank you, Joanna. Good morning everyone, and thank you for calling into our Q2 earnings call. As usual, in a few minutes, I'll hand things over to Erfan, our CFO, to review our quarterly financial earnings and highlights. And before I do that, I would like to give a brief update on our business and specifically hone in on four key points. Those being number one, an explanation of our Q2 production, which was below budget. Two, a status of where our debt is and is expected to be by the end of the year. Three, an update on our share buyback plans. And four, and finally, I'd like to talk about our next steps of growth as a company. So with respect to number one in our Q2 production, I would describe it as an uncharacteristically weak and hopefully unlikely to reoccur quarter. During the second quarter, there were a number of temporary effects that caused the quarter to be below our expectations, including Aurizona having problems with its Piaba pit, Cerro Moro and Chapada moderately underperforming, and Greenstone taking longer to begin delivering first gold to Sandstorm than originally budgeted. But I would like to reassure everyone that each of these items are all temporary, and not only are we expecting these mines to rebound, the Greenstone mine is now up and running and delivering gold to Sandstorm under our stream. We did not receive any material amounts from Greenstone in Q2. However, even here in July and now into August, we're seeing the ounces starting to come from that Gold Stream. So Q3 should be our first quarter with some Greenstone production. And as they continue to commission and ramp up their mine, our gold sales will ramp up correspondingly. One of the other reasons for the dip in Gold Equivalent production in Q2 relates to the recent significant increase in the price of gold relative to silver and copper. Specifically, our annual Gold Equivalent ounce production estimates were based on $1,800 per ounce gold, which was close to the gold price at the time that we set our budgeted numbers. Now that the gold price has increased significantly above $2,400 an ounce, it means that our silver revenue and copper revenue turns into fewer Gold Equivalent ounces at this high gold price. In fact, our Q2 Gold Equivalent ounces are lower by more than 2,000 ounces just from this pricing effect of converting copper and silver into Gold Equivalent ounces. I for one, though, I'm not going to complain about high gold prices. And as gold prices are now around $2,500 almost, we're still expecting even with these high gold prices, our 2024 Gold Equivalent ounces to be between $75,000 to $85,000 ounces per year. With these figures expected to increase eventually to $155,000 ounces per year once both Hod Maden and MARA have been built. There's nearly a 100% increase in gold equivalent production over the next five years. Point number two, at the status of our debt, we continue to use the majority of our cash flow to pay down our debt. And as I sit here this morning, our debt balance is down to USD383 million, and therefore our goal of getting debt down to $350 million by the end of year is well on track. And that leads me to point number three, which is because of high gold prices, we've been able to not only bring our debt down as anticipated, we have also been able to simultaneously buy back some of our own shares. We have a small share buyback plan in place, which is approximately 10,000 shares per trading day, as long as we're not in blackout. For example, today we are in blackout because of the earnings release, so we can't buy shares today. But on Monday, we'll be back in the market buying small amounts of shares. This plan may change from time to time, as we're currently focusing the majority of our cash flow on paying down debt, and we'll continue to do so with the goal of getting our balance sheet ready for our next leg of growth, which brings me to my final point four. We're in a fortunate position to already own growth assets in Greenstone, Platreef, Robertson, and Hod Maden, and we have the right to purchase the MARA stream, which we anticipate doing. These assets should nearly double our production from where we are today. So the future is bright at Sandstorm. If you take a look at this slide, which is our current best estimate of our top seven assets by value, you can see that four of these seven assets were not even in production yet during this Q2 results that we're talking about this morning. Hod Maden, Platreef, Greenstone and MARA will all be very important contributors to Sandstorm's future, and we're looking forward to that very bright future. Another way of looking at it is that in Q2 of this year, only 55% of Sandstorm's NAV was in production. By the end of next year, that number should be up to 72% as Greenstone ramps up and Platreef comes online, and then by 2029, we expect 88% of our NAV to be in production. Our portfolio is maturing quickly. And as a reminder of the cash flow generating capacity of that portfolio, you can see that once those ramp-ups do happen by 2029, we expect our portfolio to be able to generate after-tax cash flows of close to a quarter billion dollars per year. Now, we're continuing to pay down our revolving debt facility, and as we do that, we're opening up room on it for potential future acquisitions that would grow our production even further, and we're starting to once again look at such potential transactions. What I want to emphasize, however, is that we are not contemplating any transactions that would cause us to have to raise equity. We want to decrease our share count, not increase it, and also, we're not contemplating any transactions that would cause us to have to draw down too much on our revolver to the point where we would no longer be comfortable buying back our own shares. Overall, I want to be clear that with our significant free cash flow, we are still predominantly focused on debt reduction with the purpose of recharging our balance sheet so we can eventually begin our next leg of acquisition growth and grow from a position of financial strength while avoiding dilution. We are very fortunate to be in this position to be able to do this while having a nearly 100% increase in production coming from our existing portfolio. It's a good place to be. And with that, I'll hand it over to Erfan.
Erfan Kazemi: Thanks, Nolan. Looking at the financial results for the three-month period ended June 30th, gold equivalent production totaled just over 17,400 attributable ounces. Nolan mentioned there were a few factors that resulted in slightly softer production numbers when compared to the previous quarters. Some of these I'll discuss in a little minute, but the company remains on track to achieve attributable production between 75,000 and 85,000 gold equivalent ounces in 2024. Stronger gold prices boosted revenues during the second quarter with a company recognized over $41 million. Elevated commodity prices have been a welcome tailwind against the mining industry in the first half of this year. While during the second quarter, the Sandstorm realized average gold prices of $2,313 per ounce from the company's gold stream and achieved a new record for cash operating margins of over $2,040 per trivial ounce. As Nolan discussed, shareholders have a lot to look forward to over the next few years as the company's portfolio continues to mature. Over the near term, we anticipate stronger production as the Greenstone mine continues to ramp up following its first Gold Pour in May. The Greenstone gold stream was purchased as part of the company's acquisition of Nomad Royalties in 2022 and is one of the most material development assets from that acquisition to come online. Once fully ramped up, Greenstone expected to contribute between 8,000 and 10,000 gold ounces annually to Sandstorm. Quarterly revenue was comprised of $25.8 million in sales from streaming contracts and $15.5 million in royalty revenue. With strong operating margins, the company has $32.6 million in cash flow from operating activities, excluding changes in non-cash working capital. These exceptional cash flows continue to support our effort in deleveraging the company's balance sheet. Debt repayment has been our primary focus over the last 24 months following various asset acquisitions in 2022. During the second quarter, the company made net debt repayments of $27 million on its revolving credit facility. And as Nolan mentioned, we have $383 million debt outstanding as of now and an undrawn and available balance of $242 million. Net income for the quarter was $10.5 million compared to $2.7 million for the comparable period in 2023. The increase was partially driven by a fair value revaluation gain of approximately $7 million as a result of the settlement of the company's debenture due from Versamet Royalties, which was formerly known as Sandbox Royalties. The debenture was settled by way of conversion to common shares of Versamet, resulting in the gain. In June, Versamet announced a transaction with B2Gold (NYSE:BTG), which subsequently valued Versamet at nearly $300 million. The settlement of Sandstorm's debenture highlights the next step in daylighting value for Sandstorm shareholders, which was the underlying investment thesis back in 2022. As previously disclosed, Sandstorm renewed its normal course issuer bid in May and was actively buying back shares throughout the second quarter. For the three months end of June 30th, the company bought back and cancelled nearly 460,000 common shares for a total consideration of $2.5 million. Subsequent to quarter end, the company has purchased approximately 90,000 additional shares while not in blackout. We expect this level of buyback activity to continue for the remainder of the year, as Nolan mentioned, and we're pleased to once again be able to return capital to shareholders via share buyback in addition to our quarterly cash dividend. Gold Equivalent ounces for Q2 reflected lower production at some of the underlying assets in the portfolio when compared to the second quarter in 2023. Attributable production at Cerro Moro reflected decrease in head grades and the corresponding decrease in silver sales. This was partially offset by an increase in the average realized selling price of silver, which is approximately $28 compared to $25 per ounce in the second quarter of 2023. The realized selling price of silver is reflective of the silver market in early April, as Sandstorm typically receives its material silver deliveries, including deliveries from Cerro Moro, early in the quarter. In April, Equinox reported displacement of material in the Piaba pit at the Aurizona mine, resulting in restricted access to the pit. As a result, Equinox paused mining at Piaba to establish a remediation plan. Milling and gold production continued from ore stockpile through April, while mining activity commenced at the Aurizona Tatajuba pit, which is also within Sandstorm's royalty claim. Equinox anticipated ramp up of mining activities at Tatajuba to produce ore for plant feed in June going forward. Partially offsetting the decrease in sales and royalty revenue was the 56% increase in the number of copper pounds sold from the Chapada copper mine. The average realized selling price of copper also increased to $4.22 per pound compared to $4 per pound in the same period in 2023. Finally, taking a quicker look or a quick look at a breakdown of our Attributable Gold Equivalent ounce sold during the second quarter, over 80% of our ounces sold came from operations in the Americas, 17% of which came from operations in Canada. We expected this to increase over the coming months and years as Greenstone ramps up to commercial production. Sandstorm continues to be a precious metal focused company with nearly 70% of attributable production coming from precious metal and only increasing more with time. While our material copper assets, Chapada, Antamina, and Caserones continue to provide excellent exposure to our preferred base metal. With that, I'll pass it over to Dave for a few updates. Dave?
David Awram: Great. Thanks, Erfan. Good morning, everyone. Today, I'll speak to Troilus' new feasibility study. Endeavour's expanded drill program at Houndé and also an interesting chart regarding the big increase in attributable reserves and resources, Sandstorm has realized in the last couple of years. But first, a quick discussion on drilling at Hugo North Extension. So Entrée Resources recently released drilling results from both surface and underground locations at Hugo North Extension on Oyu Tolgoi joint venture ground. Although the drilling took place in 2022 and 2023, Entrée received results only a few weeks ago, but they're definitely worth the wait. Highlights from surface drilling include one hole with 398 meters, about 2% copper equivalent and another with 400 meters of about 1.4% copper equivalent. Highlights from underground drilling include 2 holes that graded about 3.7% copper equivalent, one being 124 meters and a separate one being 114 meters. There was also a number of very wide intercepts underground with 2 notably wide ones, one over 574 meters, creating almost 1.9% copper equivalent. And one almost 365 meters of 2.5% copper equivalent. Of course, each of these had higher grade intervals within, but when you look at all the holes and where they sit relative to the current reserve and resource, it paints a great picture of how special this deposit is and how Rio Tinto (NYSE:RIO), the operator, is finally looking to expand the ore body. A primary direction is to north the long trend, which is, of course, the ground on which our streams apply. In addition to the eye watering drill results, Entrée also offered an update on the underground development Shafts 3 and 4 have reached their final steps. These shafts are key for support of Panels 1 and 2 of the block cave [ph] and will allow for a greater level of development. Entrée is also guiding that development work on the JV ground, begins in Q4 2024, which is exciting to see the very first underground work beginning in the area covered by the stream. After a long wait, Sandstorm has started to see the light at the end of the tunnel, and I expect to see more regular updates on work and ultimately production from that Oyu Tolgoi joint venture ground. So, moving on to the recently announced feasibility study on the Troilus deposit in Northern Quebec, which we own a 1% NSR on. The study revealed 6.7 million ounces of gold equivalent to be mined over 22 years from this past producer. Troilus is looking to produce and sell a concentrate that has an average annual production of 303,000 gold equivalent ounces over those 22 years, with a peak of production of over 536,000 gold equivalent ounces. The overall NPV-5, using April 2024 average prices for gold, copper and silver, is over USD1.5 billion. So, the economics are great for this project. Troilus is shaping up to be another big Canadian gold project and we can't wait to see it move forward. Next steps on the project is finalization of the environmental and social impact assessment and continued exploration of the property. Moving on to Houndé, I certainly want to speak to the success of Exploration that Endeavour Mining is having on the project. Now, our royalty does not cover all the areas that they've been exploring, but so far, it seems that there has been an important focus on the ground that our royalty does cover. Endeavour had originally budgeted $7 million for exploration at Houndé in 2024. However, with the success at Vindaloo, they have increased that to $10 million for the year. It seems that the Vindaloo deeps target is looking very promising for potential underground operation, but they also stress exploration success and resource delineation at Coho Main, Coho East and Vindaloo North, which are all encompassed by our royalty. Houndé continues to impress on the exploration side and it feels like almost every target they have is open in one way or another. I certainly expect to see the resources continue to grow on this generational asset. For my last item, I wanted to take a look at a bigger picture of our acquisitions for the last couple of years. On slide 16, we're trying to illustrate how Sandstorm has transformed its diverse portfolio through its acquisitions of BaseCore and Nomad. The first important point is that post the acquisitions of these companies, we now have an average mine life of 25 years for our top 10 assets in the portfolio. And as the years pass, those mine lives are increasing with exploration success rather than just depleting. Second, with the reserves and resources that these two major transactions and the success of subsequent exploration at the underlying assets, we've seen attributable reserve royalty gold equivalent ounces almost double. And resources both measured and indicated and inferred categories have almost doubled as well. We like to use this indicator as a way of demonstrating how important and effective those acquisitions were to accretive growth of Sandstorm. So with that, I'll hand over the call to Joanna, the operator, for a Q&A session. Please feel free to ask questions about any of our royalties and streams. Thank you.
Operator: [Operator Instructions] First question comes from Heiko Ihle at H.C Wainwright. Please go ahead.
Heiko Ihle: Hey there. Thank you all for taking my questions on a very interesting and a soft market. Your stated goal is to get the debt down to $350 million by the end of the year. I mean, goals effectively at an all-time high, especially if you look at some non-USD currencies. You mentioned your share buyback plan at $550, that seems quite appealing. But with the debt and given current gold prices and the commensurate cash flow, is there any stretch goal that you think is achievable given the cash flow that you're getting with the current commodity prices? Do you think we could get this to call it 330, 335 by the end of the year?
Erfan Kazemi: Yes, I'm not going to throw out dartboards with changing commodity prices and stuff like that. But the goal of getting it to below 350 by the end of the year. Originally, the goal is to get it to 350 and then start buying back our own shares because the gold price has gone up so much in our cash flow has been higher than was anticipated. We're buying back shares even before we get there, and we're still going to get it to below 350 by the end of the year. And if we continue to get the strong commodity prices hopefully, we get it below there and continue to buy back shares and just recharge that balance sheet. It's -- there's a lot of cash flow coming in and it's kind of a fun job having to allocate it between a bunch of intelligent ways.
Heiko Ihle: That's fair. I know you stated you don't intend to monetize assets in the press release, but nonetheless, have there been some conversations at least, even just early stage, with mine operators that want to buy back streams on their own assets, even though they may not have the contractual right to do it, just given that the current gold prices have changed their internal calculations a bit?
Nolan Watson: No, not at all. It's something that we don't really engage in. If a mining company ever asks to buy back a stream of royalty, we say no very quickly. And I think all the other stream of royalty companies do as well. And people know that they'd stop asking.
Heiko Ihle: Okay, fair enough. That's what I assumed you would say. Thanks so much. I'll get back in queue.
Operator: Thank you. Next question comes from Delvin [ph] Lee at Scotiabank. Please go ahead.
Unidentified Analyst: Hey, good morning. I know that you're [Indiscernible] days. Thank you for taking my question. Following on this debt reduction, so you're targeting $350 million by year, and do you have any longer term targets beyond 2024?
Nolan Watson: Yes, the way we look at it is once we're below $350, we're just going to continue to pay off that debt as quickly as possible, because it's a revolving line of credit, and we can redraw on it at any time to make acquisitions. So our goal is to get that number as low as possible before we start swinging big for our next series of transactions, because we want to grow methodically. We want to do it from a position of strength. We never want to be viewed as over levered again. So we're really focusing on just getting that number as low as possible while we continue to look for deal.
Unidentified Analyst: Right. Excellent. Thank you. In terms of the M&A strategy, firstly, is your deal size still mostly within the range of $100 [ph] to $300 [ph]?
Erfan Kazemi: Yes. In terms of things that we think we could do now without over levering ourselves, it would certainly be things that are $100 million or less. As we continue to pay down our debt, that number grows.
Unidentified Analyst: All right. I think the Corp [ph] debt chain is spending like half the time on cash flowing assets, and the other half on long-term, earlier stage optionality assets. Do you hold true?
Nolan Watson: Yes. Right now, we've given our corporate development team the guidance that if we're going to do a material transaction, it needs to be something that's either cash flowing now or is being built and will be cash flowing within a year or so. We're not looking at deploying material amounts of capital for things that are long-dated optionality. What we are looking for simultaneously, though, are really small dollar, small royalty transactions, trying to find them at the point of discovery where we can build in rights of first refusal to do the stream financing if and when they eventually go to build the mine. So those contracts are small dollars, but they do take a lot of time to find. Those opportunities are hard to find. We're looking at both ends of the spectrum in that way.
Unidentified Analyst: Sorry, Alvin. Thank you. My last question is about the share buyback. Is it fair to assume you continue to buy back pretty much $2 million, $2.5 million, so a quarter to the rest of 2024 and 2025 on the buyback? Would that be a fair assumption?
Nolan Watson: Yes. Our plan right now is we're sticking with sort of 10,000 shares a day. If we see big swings in our share price, for example, today is a big down day, even though gold is really strong and the fundamentals are strong, we reserve the right to change that and make decisions on the fly that we think are intelligent capital allocation decisions. But right now, the plan is to use the bulk of the capital to pay down debt and a small portion of it for buying back shares.
Unidentified Analyst: All right. Appreciate the comments. Thank you so much. Those are all my questions. Thank you.
Nolan Watson: Thank you.
Operator: Thank you, ladies and gentlemen. [Operator Instructions] The question comes from Derick Ma at TD Cowen. Please go ahead.
Derick Ma: Thank you. In terms of Arizona, what is the company's expectation for geos in the second half of the year?
Nolan Watson: We have some internal numbers that we're not going to give specific guidance on that mine, but my understanding is that in Arizona they have opened up and have started mining and they are turning back on the mill. So, we are expecting production to get back, maybe not quite up to normal, but closer to normal for the back half of the year.
Derick Ma: So, closer to Q1 levels?
Nolan Watson: Potentially, but not necessarily. We'll see how it goes. We just don't have the date.
Derick Ma: Okay. Fair. Then, in terms of the Valley Royalties, the southeastern system, when in 2025 should we expect Sandstorm to start receiving royalty payments on that?
Nolan Watson: I'll have to double check.
David Awram: The timing happens on those payments on a rotating basis. So, it should be, I think, in keeping with almost where it's been for the last several years.
Nolan Watson: We get paid semi-annually. So, when that kicks in, it'll get caught up in whatever is the next semi-annual payment.
Derick Ma: Right. So, if it's second half, that could happen in 2026.
Nolan Watson: Yes.
Derick Ma: Got it. Okay. Then, finally, on the Evolve royalty sales, the remaining portion of the cash proceeds that you expect to receive, what is the correspondence that you're having with Green Technologies? Do they have a right to buy back the royalty, or is it something else?
Nolan Watson: It's something else, which I'm not going to get into the details of, but that's the last remaining $5 million piece of that transaction. We're trying to close it, and there's a chance that it may not, and I'm not going to get in.
Derick Ma: Yes. Okay. All right. Thank you very much.
Operator: Thank you. And the next question comes from Brian McArthur at Raymond James. Please go ahead.
Brian MacArthur: Good morning, and thank you for taking my question. One of mine is around Evolve too. Where is it on the balance sheet, given this uncertainty? Is it in short-term investments, or is it in something else at the moment?
Nolan Watson: It's in cash.
Brian MacArthur: So, even the $5 million is in cash? So, if you don't get it, the cash goes back out? No.
Nolan Watson: So, the original transaction was $20 million, all cash, in two payments. The first one is $15 million of cash. The second is $5 million of cash. They paid $15 million. We've closed that part, and it's the second part that may or may not close. If it doesn't close, there will be no share. So, there's no Evolve sitting in our investments anywhere.
Brian MacArthur: Okay. Thank you. And just my second one goes back to Versamet, because you mentioned it was a $300 million valuation right now. But I'm just trying to match it again to the financials, because you're carrying value is $65 million, and I think you own 28%, which implies it's worth more than $85 million. Has there been something that's happened since quarter end that's changed that? Because I thought the other convertible was done in the quarter. I'm just trying to reconcile where the $300 million comes from.
Nolan Watson: Yes, that's referencing enterprise value, and the amounts that you see in investment associates are carried at cost. So, they don't get into a revaluation of your initial investments and accounting kind of unique components from market to market.
Brian MacArthur: Okay. Great. Thank you very much. That’s very helpful.
Operator: Thank you. We have no further questions. You may proceed.
Nolan Watson: All right. Well, thank you, everyone, for calling in. And as usual, if you have any questions, feel free to phone us here at the office and have a good day.
Operator: Ladies and gentlemen, this concludes your conference for today. We thank you for participating, and we ask that you please disconnect your lines.
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