The ‘Everything’ Crash: U.S. Debt Crisis Leaves Nowhere To Hide | Brett Heath

0:00The long end is the foundation for the price of money. So this affects everything. 30-year mortgages, real estate markets gonna go down the affordability for the whole economy is gonna go up. That is going to filter through all of the cost across everything just given that most of the world's goods are moved by a ship and most of those ships are moved by diesel. You're likely never gonna default. So, I think for at the moment, you can kind of rule that completely out. But ultimately, it comes at a cost. Welcome back to the Labor Day weekend. It's Tuesday, September 8th, and as markets open, everything is down. The stock market is down. The S&P 500 is down 32 basis points. An asset gets down about 30 basis points as well. Gold is down, almost 1%, Bitcoin's down, half a percent. The dollar's down, 1%, interestingly yields. Our flat to down the long end of the curve. Oil is up this morning as a Saudi oil facility is over the weekend where attacked by a rambacked hoothies. And the escalation between the Iranians

1:01and the Americans in the Middle East continues to move up. And we have a situation where the Fed Watch tool, the CME Fed Watch tool, is now predicting a 58% chance of a Fed rate hike by next week. This is up from only 50% of few days ago. Brett Heath, CEO of the Teller, the oil tea is going to go over today's market action. But more broadly, what the trends are currently that investors need to be paying attention to right now. Brett, welcome back to the show. Very good to see you. Yeah, thanks for having me. The biggest market concerns for you right now is not just CEO of a royalty company, but somebody participating in the markets and investors, so to speak. What concerns you the most? Well, we continue to get volatility across the markets, whether it's the commodity markets, the equity markets, now the bond markets, as you noted in your intro, it's the same story a different day, right?

2:04The Iran conflict is not ending. The US is in a really tough spot. They've got really no ability to exit. Iran is not backing down. I did see that the US also tax some of the rainy oil tinker. So what does this mean? What does this mean for investors in the markets in general? It means more supply disruptions. When you look at the lead time on some of these different commodities that are involved, some of the lead times are a bit longer than others. And so I think what your investors should prepare for or major supply disruptions across a bunch of the material commodities that mainly run through the straight-orbs. What does higher oil price have to do with the higher interest rate? Where do you think interest rates are moving out for a separate reason here? Yeah, I think interest rates are moving up for a separate reason. I mean, the high oil price is just going to filter into the balance of inflation across all commodities. Everything needs to be transported.

3:05I mean, most of that is diesel. And what's interesting is that there's a big divergence between diesel and oil at the moment. That is probably set to close, but that is going to filter through all of the cost across everything, just given that most of the world's goods are moved by ship and most of those ships are moved by diesel or run by diesel. And that is something that can't be changed out with a different form of energy. And so I think oil is set to go higher. A lot of the infrastructure that has been damaged is going to take multiple years to repair. And the world is going to continue to have greater demand on less supply and that's going to make the price go up. So if the diesel crack spread that your reference here right now continues to widen, let's say it closes at some point like you said, but for now it's wide. And prices for anything that requires trucking goes out, including our grocery bills,

4:05does that put pressure on the Fed to raise interest rates this quarter? Well, the Fed's in a tough spot right now. And I have an idea of why that I think it's in a tougher spot than it maybe it has previously. And what we've seen, David, we spoke about this on previous interviews. There's been a longer term trend where central banks, which typically have been the material buyer of US debt. Have stepped away. And they have now been diversifying heavily into physical metal. This was a big reason over the last few years why gold has gone or went from 2,500 now sitting in kind of the mid $4,000 range. But that trend is continuing. It has not stopped. So who has been the buyer who has stepped in to buy the debt and the office of financial research,

5:06just published that over $2 trillion are now held by hedge funds. And there's approximately 3 trillion of repo funding behind it. And so what this means is that the most price insensitive buyer has been replaced by the most price sensitive buyer, meaning leverage hedge funds for central banks stepping in or sovereigns owning this debt. And what's happening or what I think is happening is that the US out of all the G7 countries, they're repricing of their debt or they're roll over their debt is almost a third annually. It's the highest among the G7. In fact, I think Canada is only the second highest. But the balance of the G7 averages is around 11%. The US turns over about a third of their debt annually. And so frequency of issuance is frequency of price discovery. And the US came to market 444 times last year.

6:09Every auction is a chance for a change buyer base to repricate. And it looks with hedge funds being kind of the marginal material buyer, those rates are going to go up at the long end. It's tough to say exactly what Worsh is going to do at the front end of the curve. It seems like the odds are higher as you stated. Those odds jumped materially after the Jackson Hole speech. But Worsh has also said a lot of things and hasn't kind of followed through. So it's really tough to kind of say what's happening on the short term. But this repricing of debt I think is going to continue to compound at the high end and hedge funds obviously being a very leveraged group of holders I think are going to demand higher prices for that. So what happens to the economy once the long end of the interest rate curve moves up regardless of whether or not the Fed raises rates? Well, David, the long end is the foundation

7:12for the price of money. So this affects everything. 30-year mortgages, real estate markets going to go down the affordability for the whole economy is going to go up cost of capital basically for the, for, you know, not just the US, but I'd say kind of broader Western governments and industries are going to go higher. And I think that's going to have a big difference in regards to how things operate. I know from the streaming royalty sectors, specifically, we're seeing the higher cost of the longer term debt filter in. All of our lending capacity is usually from large revolving credit facilities. That's all priced off this rate, right? It's all priced off either so far and so forth. But generally, it comes off the long end of the curve. And what we're seeing is that as that becomes more expensive, streaming and royalty finance is actually not

8:14is kind of moving from being an alternative form of financing to really kind of a material part of the capital stack. It's not really be alternative anymore. And we've seen that, or we recently saw that with, you know, the Wheaton BHP stream. And, you know, I think that will continue. I think that there's likely going to be more of that or a material part of the financing part of this new build cycle that I think we're heading into in the mining sector is going to be finance via royalty and stream, just giving kind of the cost of capital versus where the long end is moving. Before we continue with the video, let's talk about something that comes up a lot with investing in gold. Now, gold is widely held as a store of value that we know. But the tradeoff is that sitting in a vault, it earns you nothing. That's where today's sponsored monetary metals comes in. They give investors a way to earn a yield on gold paid in physical gold. Through their leasing platform, investors can earn up to 4% annually

9:16with yield paid monthly in ounces rather than dollars. So your holdings grow in gold itself, not in fiat currency terms. The gold stays your asset the whole time and it can be redeemed at any point you want. Thousands of investors are already earning a month of yield in gold through monetary metals. So visit monetary-metals.com-linn today. Scan the QR code here or use the link in the description down below to learn more. Projects go to companies like you, royalty companies when they need financing and if debt is more expensive, that makes sense. But you get your capital from somewhere, right? Did the cost of capital go up for you? Yeah, of course. So for smaller companies like Metallah, we've got a bit of a different business model than kind of the larger majors, right? The larger majors are kicking off billions and billions of dollars of free cash. And so they've got the ability to more aggressively price some of these transactions than Metallah would, right? Metallah uses kind of different ways

10:18to get competitive edges and grow our business than the big guys. But ultimately what I think is going to happen is that you're going to see royalty and streaming companies placed very well in regards to kind of this next build cycle, just given that I think that the cost of capital for most of the major mining companies is going to be very kind of competitive versus what they will expect to get on there from the banks. Okay, I want to come back to Metallah's latest developments in future milestones just a bit. Let's talk about gold. We haven't talked about gold yet. Gold, like I mentioned in the introduction, is also down today. The move from $4,400 happened very quickly throughout August. We're now in September and gold hasn't broken above $4,500 yet. Why this particular ceiling? What's going on? I think gold's just doing what it's doing. I mean, when you look at the drawdown, you had some of the highest buying on record

11:20from central banks. So as gold was moving from $5,500 down to $4,000, I mean, look what happened. The central banks just leaning into buying. Now, there was a little bit of selling. There was some ETF outflows. And most of that was, it called on the margin, retail participation that came out of the ETS. But the bulk, the major buyer that has been buying that took gold from $2,500,500 was really leaning in. So what does that tell you? So that is a floor. That is a floor. I think $4,000 probably is the floor. I mean, it could go test that again. But a potential for it to happen. But gold has broken its downtrend. It is consolidating. It looks really in a strong place today. And I think it's likely going to go higher. I wonder if your company or royalty companies like yourself provide an indicator for market sentiment.

12:22My logic is this, if investors retail or institutional belief, let's say copper is a next big play, then presumably we're going to get capital rotate into copper producers. Now, these copper producers, once they get a lot of capital, they're under pressure, where at least encouraged by investors to expand. Then they go to royalty companies for financing. Does that sequence events follow bull markets, you think? Well, if you look at the gold sector, just in general, one of my friends and one of your guest Tavi Costa posted a data point on the mining margins versus the S&P sector. Like if you look at the margins right now, the mining sector is running at like 31% versus the average, I think it was around 17% for the balance of the other sectors in the market. So what that tells you is that the mining sector

13:23is in the healthiest place it's ever been. I think it's not even remotely being priced into the market. You've got GX trailing PE at 20X, which is about a decade low and manage money net longs right now. Or I think as of recently is just been around 43%. So you've got the highest margins in the market and you've got the cheapest multiples in a decade and it doesn't seem that anyone's positioned for it. It looks to me that the market generally, in regards to the equities, have kind of rode off another move and it's not currently being priced in. One data point that I like to watch are the ratios. And one of the ratios that I recently saw break out of a 15 year consolidation was the gold to XAU. XAU is basically the one of the longest standing gold mining

14:27indexes. So includes the big royalty and streaming companies. And that has been in a resistance basically going back to 2009. We just saw that break out, meaning that the mining equities are basically positioned to materially outperform the metal, which was completely different on the first run. You had gold significantly outperform the equities for a number of years, the mining equities for a number of years when it went from 2,500 to 1,500. And again, during that whole move, it was stuck in this consolidation. That has now broken out. And I think that the mining equities are very, very well positioned here to make a big move, specifically if gold holds and continues to march higher. Well, okay, have you noticed an improvement in the gold sector sentiment from the last month from July onwards prior to July around May to July, sentiment has been weak as gold has been falling

15:29from 4845, 4000 throughout this year. 4000, like you mentioned, is still really, really good. It's just investors have a short-term memory, apparently. And forgot that 4000 versus a year ago is still an amazing price. But anyway, I know that there were key metrics I was looking at like bullish sentiment for the miner index was at an all-time low or multi-year low just a few months ago, which is crazy for me. I wonder if that's improved based on your observation in the ground town. Yeah, it has. And it was crazy to see that it got too such a low. It's still obviously a very, very high gold price in general, very, very healthy margin environment for the mining companies. What we saw is once gold really held its ground around 4000 and then broke its trend, you saw a big move, big, big move, one of the biggest moves on record into the mining sector equities from in August.

16:32So you saw a very significant move higher. A lot of the mining equities went and almost got to a point where they were retesting the old highs. If you look at even at the indexes, like they made a move up towards the old highs of where they were sitting at 5500, they didn't quite break them. But I think on the next move higher, likely that they will and they probably will break out to new highs well for gold does. What is driving gold right now? Well, I think it's the same thing that's been driving it for the last few years, right? This is a very significant long-term trend. You've got the diversification of almost all sovereigns, not all, but most of the sovereigns out there that are trying to reduce their exposure to US Treasuries. So they want to remove that duration risk off their sovereign balance sheet and they're replacing it with gold.

17:33And that's kind of continuing today. And so I don't expect that to stop. There's still another $9 trillion of US Treasuries sitting on foreign central banks balance sheet. So there's still a lot that has to be moved. No, not all of it will be moved, obviously, but there's still a material part of what they hold, specifically the emerging market countries that I think really need to reduce that like China. Last year, central banks collectively around the world held more in gold in nominal terms than US Treasuries for the first time in history. Now, a lot of that has to do with the fact that the gold that they've already held, pretty much doubled in price over the last year and a half. But regardless, the nominal value of gold holdings and foreign reserves has exceeded the nominal value of Treasuries. So if there was an aha moment where something clicked in central banks mines

18:34that made them think, okay, we have to continue holding gold and we have to continue diversifying away from the dollar, what do you think that moment is? What do you think triggered this particular kind of move from the last couple of years? Well, it started when the US started to weaponize the dollar. That was probably the start of it. I mean, that's when you really saw gold start to move when the US was having sanctions across Russia, seizing other private countries' assets and the rest of the world was kind of looking around and saying, okay, well, we could be next. What are we holding here? And I think that was the start of the move. That happened a number of years back and then that has just continued to compound. Everything that started that move back then is only increased today. And so you look at what's happening geopolitically today. You're looking at kind of obviously the fiscal situation.

19:36It's all kind of coming to head at the same time as we noted before. The marginal buyer is now a leopard hedge fund in the treasury market. That's the marginal buyer right now. And is it demands higher rates and as the US has to cycle a third of their debt every single year? It's going to get impact first. A lot of people are always like, oh, well, I've heard 100 times the US is going to be the last one to fall or it's the cleanest dirty shirt, but it's not really the case because the impact of the rates to the US first Japan, which has a much higher debt level, which I think is less relevant, is that Japan, higher rates, they're only cycling around, I think it's around 10% or maybe even less of their debt annually. So the higher rates are going to have a much lower impact in regards to what that interest rate cost is.

20:37You look at the US, they're already over a trillion dollars. If they cycle higher and rates go higher, that can be an exponential amount of capital that goes into that. And ultimately, that's just, I think, going to compound on itself as the fiscal situation gets worse. Let me show you something else. This is from Reuters. I looked up earlier, why central banks buy gold? This is an article simply called why central banks buy gold. One of the golds, one of gold's primary rules for central banks is to diversify the reserves. At times of need, banks may be forced to print more money. Since interest rates, the traditional lever of monetary control have been stuck near zero for over a decade. This increase in money supply may be necessary to stay without economic turmoil, but at the cost of devaluing the currency gold by contrast, is a finite physical commodity whose supply can't easily be added. Now, isn't that interesting?

21:38Because we've lived in such a long regime of near zero rates, central banks have had very little other tools to increase in money supply besides literally printing more money. Perhaps the fact that central banks have been stockpiling gold as an indicator for what they're about to do, which is print more money. Yeah, and look, if you've got the power to create money, you're likely never going to default. I think for at the moment, you can rule that completely out. But ultimately, it comes at a cost. It comes at a cost. As you're forced to print more money, you are going to devalue the currency. The rest of the world is obviously watching this very closely. You're seeing it, you're seeing it how they're acting with their balance sheet. They don't want to hold this again. I think this is a very, very long-term trend in motion. It's going to continue.

22:40Gold is the largest safest currency of the world that can't be debased. That's where these sovereigns want to sit. I want to show you this, this is gold to oil. I just want to get your reaction to this. Gold to oil ratio is now sitting at an all-time high. Near an all-time high, the last time it's been this high was right at the beginning of the year when he ran, got bombed. Prior to that, it was during COVID. It seems that every single time throughout history, or almost every single time, the gold to oil ratio spikes, they have a recession almost immediately afterward, or it happened during a recession. But we're not getting a recession now. It's a bit curious. What do you think that is? Well, I mean, if you look at the economy in general, and you look at the problem is here,

23:40is that the government statistics have been changed so many times over the years, that actually quantifies a recession, what quantifies inflation has changed. And they're continuing to change this. You're hearing this recently with the new Fed Chair. So it's really difficult to put any faith in regards to what that was in the past, first what it is today. But yeah, it looks like to me that the economy in general, cost of capital moving higher, you know, it felt like there has been a recession on the horizon for some time. You know, some of that has been met with additional liquidity that's been put into the market, and kind of have slowed that process down, but it does feel that generally, like the world's kind of moving into more of a contraction type environment. Copper has been breaking you all time highs.

24:40Gold is still not above all time highs, and neither is silver. Due to the recent price action, have you noticed a shift in your portfolio for metallic royalty that is in terms of which metals or underlying, or has been the most, I guess, in demand for when it comes to seeking royalty agreements in the last year? No, I mean, we look, we we always focus on the higher quality asset first. So we're looking for the kind of highest quality asset and highest quality operator and jurisdiction. Then we kind of then look at see what's available in regards to kind of copper gold silver. You know, we're happy to take exposure to all of them, but look, the copper, the copper royalties we bought were back in, you know, five, six, seven years ago. And this this was when people thought we were crazy by a copper, right? This is when when there was there was, you know, AI wasn't even something that people were thinking of.

25:42This is going to pre-chat chachy VT one launch. So, you know, the time to buy these royalties were, were, were quite some time. Now we hold these royalties and now they're moving into production. So two of our largest copper royalties are royalty on first quantum stack attack and our royalty on hubbays copper world are both set to come online kind of in around 2030. Now these are going to be material copper assets. But and as those come on, I think the timing is working out great when you when you look at the data center power demand, you know, is expected to double by 2030. It's expected to equal like almost all of the electricity. That that Japan consumes on an annual basis according to the idea so very, very significant. So, demand for for that and I think that's all going to play into copper right copper is really.

26:45I think the part that nobody's pricing within the AI story like AI is really a power problem before it's a chip problem in the power runs on copper right everyone is watching the I trade through chips chips and and the binding trade is really copper and it's the one no one is pricing at the moment. Well, sorry, what do you mean by no one's pricing it in at the moment hasn't the price already been moving up. The copper price has been moving up, but when you look at kind of the the the equities being priced for that price, it's it's not there right like the copper price is continuing to move up and look some of that is is arbitrage from the tariffs and that that is going to unwind. The reality is is you can build a data center in 18 months to build a major copper mine it takes 18 years. So price price is not going to change that it just you can have a much higher copper price it's not going to bring on the copper supply the way that that like oil.

27:49It would other commodities what it's just the lead time for the supply to come on the market is is a much much much longer story and so that is I think what no one is really pricing it. I think of the financial principle here if I were to master it I'm buying the raw commodity and not the equity. Obviously I think there's a squeeze happening right now or the near future for the raw commodity maybe inventory is going to complete I am not betting on the minor right now. According to what you're saying probably because I don't think like you said it's going to take a very long time for the miners to start making money and produce more or I don't think that the miners will even be able to start extracting copper to the same demand needed in the future I don't know which outcome it is but yeah what do you think going on. Well I mean it's it's it's incredibly difficult to build a mine in general a copper mine is is at the extreme side of how difficult is to build a mine and what I would say is that you know there are maybe a dozen companies on the planet that even have the resources and skill sets to build these mines in each one of those companies.

29:11I would argue that it takes probably five years for those companies to build one of these mines and they're not building to at the same time so it just kind of shows you. You know what what what the markets in for in that and again like I don't think that the I don't think that the markets pricing the same you know the amount of capex that copper makes up as part of these data centers is like less than 1% right they're not going to switch to aluminum or or or some. Other metal like it's it's a small fraction of the overall capex and it's the most efficient metal to move the power. You know wood McKenzie is has has estimated that I think three to four times the amount of copper is going to go into the grid like basically up to gritty in the grid around these data centers so that's it's another significant multiple that I think the market's really not pricing in and again like the supply is is. Really it's it's it doesn't matter really what the copper price goes to it could go to eight nine ten dollars a pound is there going to be a significant amount of more copper that comes to the market over that price yeah for sure but it'll be five years from now or even potentially 10 years from now and ultimately what happens in the meantime we'll have to wait and see.

30:31Let me just pull up let's close off the metallic here your stock is up 32% year to date gold down sorry gold is not down gold is up actually year to day 1.5% it was down I guess now it's up since the last couple weeks given that you've beaten gold have you pursued a strategy of diversifying away from gold even further this year. No again like we we just printed the best quarter in the company's history we had record revenue we'd our first real kind of net income you know while gold was down 21% from a tie and that's why you own the royalties you know verse the money companies you know our portfolio was built in the years where you know capital was scarce and in these assets were scarce and now all of these assets are now starting to come online and you know regardless of kind of what the gold. The price does day to day you're getting like a really strong growth business and that's going to support the value ultimately and you know we want to own high quality so we want to own high quality assets the high quality operators and high quality jurisdictions that's what our portfolio is full of and and we'll continue to do that.

31:44So when you say you had the best quarter by what metric. Yeah by revenue adjusted EBITDA net income so kind of across most or all of the financial metrics RQ 2 was was a record. I'm guessing because for for the revenue side like you said producers especially gold producers have just been printing free cash flow like never before before is that is that the reason. Well the reason is is that the really the growth in the portfolio so we've had we've had a number of different assets to start producing or ramp up production and so that's really been the major driver of it obviously the higher gold price in general has helped although golds come down. Consolidated but the growth in the underlying portfolio will will continue to kind of outpace whatever gold do in the near term or probably even the long term. Can you just walk us through for the generalist investor watching who may not be exposed to roadies right now the business model that your company in particular follows how is revenue generated when you're not a minor.

32:52But you participate in royalties so where does the revenue come from. Yeah so we own these these these assets called royalties and also streams but what they basically are these non-delutive non-controlling you know non operating interests. And mining assets that give us kind of a claim to a certain percentage of whatever metals in the ground. A lot of times and if not most of the time in perpetuity so we own a diverse portfolio of these these assets called royalties and you know currently in the tall has upwards of a hundred of these different assets and so. As all these different minds are advancing these projects they're spending billions and billions and billions of dollars advancing them you know they set no cost to us it's completely free carried and then once these assets go into production. They deliver us cash flow right off the top so 1% of whatever copper 1% of whatever gold or silver is produced from these assets we get that check mailed to us or wired to us these days. Usually quarterly and that's how we grow our business and so you know metallur's focus was always focus on the development side because that's where we saw the best value and all that development over time now is now moving into production that's why you're seeing the results in the financial statements.

34:08In the lifespan of metallur like in their company history what is the average time between investing and developer or buying a developer's assets to having that developer transition into a producing mine and then you getting royalties from the cash flow from the producing my what is that lead time. It's a long time sometimes I mean it could be 5 up towards 10 years I mean the difference that the approach to the metallic was was really we're willing to wait we're willing to kind of let's take take a few years. You know prior to kind of where the rest of the market is focusing on and we're going to buy the higher quality assets at a better price now the cost to us was the time right so it's always been the time where if you go out and buy a bunch of assets that are producing today you get to show all those revenues. So a lot of a lot of our peers will show kind of higher headline revenue today but when you look at kind of what our company will look like verse what theirs will in 2030 you know our revenues going to continue to climb without us buying anything where a lot of these other businesses may have trouble replacing some of that cash flow.

35:15You sell like a venture capitalist in the mining space is that a nap comparison. I mean it's it's it's a little bit of a different approach right so venture capitalist on the almost like kind of private equity but you know it's still obviously a public list of company. You know trading on the NYSE so it was just a different strategy and there's other great strategies out there I think I think the majority of all the Royalty companies are great businesses so I think. I think you know from the from big to small the Royalty model is great and I think I think most of the businesses that are are in the Royalty sector are very very well run. A business is in general. I mean investors in metallur or any other role to your streaming company rely on the company on you and your management to pick the right projects right so. If you continuously let's say if you or somebody else in the sector continuously pick projects that never make it to production then this business model fails so what is it about you and your management team that's able to pick projects better than the average investor.

36:15Well with it's just it's just managing risk is is the way to do it I mean there's there's there's certain types of assets certain type of operators that that typically struggle bringing assets and production you know a single asset junior producers going to have a much more difficult time. Having access to the resources the capital the people to to successfully take a mind from exploration through development through production right when you when you're dealing with the you know the deco Eagles or the barracks or the text or you know the elements goals or or other major operators around the world you know these companies are. Very well versed in bringing minds into production and they've got balance sheets to support where if there's an issue then. Then they can they can have that you know issue sorted and and maybe there's a delay but they'll continue on. You know bringing that asset production so that's again that's where we focused what do you ever run to a situation where you've bought a royalty and the developer for whatever reason you're no longer confident in that management team.

37:24Or something has changed and you just don't think they're going to go into development and you want to sell the asset does that ever happen. Look that there's always things that change in in the portfolio we have a hundred different royalties so there's always things that change assets change hands and so forth but generally like you want to build out that diversified portfolio that that continues to kind of march forward and I think that's what we have. Okay generally how like racial of developers that actually make it to production is it like give us a ballpark here. Yeah I mean it's it's one one out of a thousand exploration discoveries make it production so you need to be really good at at finding and understanding that that these or bodies are going to be economic and then you also need to have a good idea that that the operator behind it has the ability to advance it. And then thirdly it needs to be in the right jurisdiction right we're seeing that more and more of these days and that's why you know it's always focused on the Americas and Australia.

38:27So I know you're not a VC but let's going back to that approach a VC's portfolio may have only a few winners but that's enough they have a few few home runs one of them becomes a unicorn they make back all their other losses is that kind of the same model here let's say you have a hundred different royalties let's say most of them never go into production but you've got. A minority that do those are the home line that that generates really high returns for you is that basically how it works. I wouldn't say that I would say that when we buy a royalty we expect that royalty to or expect that that project to go into production now the risk that we have is time and what we have found is that if you buy a really great or body even if it is even if it has issues at the moment it's likely that someone will take that asset from the market. So we make that asset from that company that is better served to bring it into production like the great economic or bodies always find their way and so we're happy to to to risk time as as our material risk on when those assets come online but have a really good idea that look this is that this is a great or body it's going to find its way in a production at some point in time and and so you know I think that obviously green field exploration and so forth is is a little bit of a different.

39:46So I think that's a little bit of a different kind of development and the more material assets like I think almost all of them you know we we buy we we have a lease and idea that there's potential for it to go into production and probably even a high high potential. So the extra stock is up 32% year to date it's up 82% in the last 12 months it hasn't always outperformed gold since I started following your stock but this has been a stellar year for you so given the excellent performance in the last quarter the excellent performance in the last year what's next. Yeah we're going to look to continue to grow our business obviously we've got a great great. Development pipeline that's already bought and paid for so we're going to remain disciplined we've done that over the this part where the markets become really dropped frothy you know we're the most active royalty company from a transaction perspective for eight years straight and we've done like one transaction in the last three years and you know things have been priced at much higher levels and I think again kind of going back to what we spoke about earlier like I think we're going to be able to do that.

40:52Royalty companies are are very well positioned right now to be a kind of material part of the capital stack on a lot of these new build and so I think Mattala is sitting along with the rest of the royalty sector in a really great strong position to grow our business over time. That's interesting because you said earlier if debt costs continue to go up that presents an opportunity for royalty companies but debt cost are going up at a time when gold is still above $4,400 dollars covers at all time highs and so presumably these projects like you just said have high valuations coming in when they approach a royalty company so what do you do do you take the deal right now or do you wait. Well look we're going to do what we've done all along right we're going to we're going to compare these opportunities first what the other ones we've had in the past we want to make sure that when we do an acquisition it's it's a creative on a per share basis and that's that's kind of the focus and you know we've got a great growth portfolio so there's no real driving factor for Mattala just to get bigger for the sake of getting bigger I think that are we're going to get bigger regardless of of of of kind of the way that we're going to do that.

41:57So we're going to do what we do just give in kind of we've already got so much bought and paid for growth and we're going to compare kind of what that is versus the new opportunities out there but I think there will be more new and more larger opportunities available for the Royal team streaming sector and royalty I think companies are going to be very well placed in general for the next few years as we move into this next cycle with gold. So we're going to be in a way that's a good way to get a greater opportunity to get a creative deals right now with prices so high. Yeah it's it's significantly harder so going back we've done one transaction in the last three years. Yeah it doesn't mean that's not going to change that's a point in time equation and eventually I think there will be great opportunity I think that great opportunity is is is on the horizon for larger transactions I think that and I think Mattala you know well position strong balance sheet. Cash low growth coming in you know and so forth I think we're going to be well position to take advantage of it when that time comes so just to summarize if I if I may right now you're in a great position from what you just said balance is looking strong you're just collecting the cash flow that you invested in years ago and this cash that you stacked up in your balance you're waiting for an opportunity.

43:12Yeah exactly we're looking we're actively actively looking but you know again we're going to remain disciplined and you kind of see it in the activity level we we you know we look they're probably a hundred hundred different things in 2025 and and so we're not doing a lot of transactions right now just because as you know did the market is very frothy at the moment prices are very high but you know I think there will be opportunities for for us to grow our business and you don't need a lot of transactions for these larger ones you just need. One or two real good ones a year and I think you're you're well on your way to becoming a material mid-chair royalty I think that's kind of the approach everybody has to have with their own money just with Mattala's money you know be vigilant when prices are high. Scare for opportunities and be disciplined but unfortunately we like to buy when things are high and sell when things are low and some people like to do myself included in the past anyway Brett great conversation thank you so much for your time tell us where we can find you. Yeah so you can come to our website but the best tool on our website is the ass a handbook if you want to know more about these assets that we have you can download our ass a handbook it'll go through all of them in detail and it'll give you a great idea of kind of what's what's going on.

44:25What's in the future in store for Mattala. All right thanks so much Brett good to see you again and we'll speak soon take care. Thanks David thanks. Thank you for watching please you like and subscribe follow Brett and Mattala links down below.