Triple Flag Precious Metals 6K 2023 Q2 Current report | TFPM Filing

0.0051010000074110002014200014822000

Exhibit 99.2

Condensed Interim Financial Statements of

Triple Flag Precious Metals Corp.

For the three and six months ended June 30, 2023

(Expressed in $US thousands)

Triple Flag Precious Metals Corp.

Condensed Interim Consolidated Balance Sheets


	As at June 30,		As at December 31,
($US thousands) (Unaudited)	2023		2022
ASSETS
Cash and cash equivalents	$	16,438	$	71,098
Amounts receivable and prepaid expenses (Note 5)		14,803		9,603
Loans receivable (Note 6)		2,000		—
Financial assets (Note 7)		15,474		9,906
Income tax receivable		460		—
Current assets		49,175		90,607

Mineral interests (Note 8)		1,795,011		1,228,171
Loans receivable (Note 6)		37,181		11,096
Other assets (Note 9)		4,022		4,547
Deferred income tax		3,783		2,610
Financial assets (Note 7)		33,587		—
Non-current assets		1,873,584		1,246,424

TOTAL ASSETS	$	1,922,759	$	1,337,031

LIABILITIES AND EQUITY
Liabilities
Amounts payable and other liabilities	$	7,261	$	11,320
Lease obligation		376		277
Income tax payable		2,970		989
Current liabilities		10,607		12,586

Long-term debt (Note 10)		65,000		—
Lease obligation		1,906		1,640
Deferred income tax		902		1,485
Other non-current liabilities		3,377		2,841
Non-current liabilities		71,185		5,966

Shareholders’ equity
Share capital (Note 14)		1,758,822		1,250,194
Retained earnings		70,333		63,670
Other		11,812		4,615
		1,840,967		1,318,479

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,922,759	$	1,337,031

The accompanying notes form an integral part of these condensed interim consolidated financial statements.

Triple Flag Precious Metals Corp.

Condensed Interim Consolidated Statements of Income


	For the three months ended June 30				For the six months ended June 30
($US thousands, except per share information) (Unaudited)	2023		2022		2023		2022
Revenue (Note 15)	$	52,591	$	36,490	$	102,860	$	74,245

Cost of sales
Cost of sales excluding depletion		9,904		3,723		21,372		6,755
Depletion		15,740		11,485		31,668		24,664
Gross profit		26,947		21,282		49,820		42,826

General administration costs (Note 11)		5,184		3,382		10,856		7,457
Business development costs (Note 11)		782		1,090		2,355		1,238
Sustainability initiatives		104		243		222		383
Operating income		20,877		16,567		36,387		33,748

Gain (loss) on disposition of mineral interests (Note 8)		(1,000)		—		(1,000)		2,099
Increase (decrease) in fair value of financial assets (Note 7)		(954)		(3,834)		2,699		(4,492)
Finance costs, net		(1,269)		(442)		(2,578)		(979)
Foreign currency translation gain (loss)		6		(100)		52		(153)
Other expenses		(3,217)		(4,376)		(827)		(3,525)

Earnings before income taxes		17,660		12,191		35,560		30,223
Income tax expense		(1,626)		(1,269)		(2,992)		(3,412)
Net earnings	$	16,034	$	10,922	$	32,568	$	26,811

Earnings per share (Note 13)
Basic	$	0.08	$	0.07	$	0.17	$	0.17
Diluted	$	0.08	$	0.07	$	0.17	$	0.17

The accompanying notes form an integral part of these condensed interim consolidated financial statements.

Triple Flag Precious Metals Corp.

Condensed Interim Consolidated Statements of Cash Flows


	For the three months ended June 30				For the six months ended June 30
($US thousands) (Unaudited)	2023		2022		2023		2022
Operating activities
Net earnings	$	16,034	$	10,922	$	32,568	$	26,811
Adjustments for the following items:
Depletion of mineral interests		15,740		11,485		31,668		24,664
Non-cash cost of sales related to prepaid gold interests		4,921		—		10,481		—
Amortization		93		92		184		189
(Gain) Loss on disposition of mineral interests		1,000		—		1,000		(2,099)
(Increase) decrease in fair value of financial assets (Note 7)		954		3,834		(2,699)		4,492
Stock-based compensation expense		941		995		1,788		1,737
Income tax expense		1,626		1,269		2,992		3,412
Finance and other costs		1,923		931		3,839		1,754
Operating cash flow before working capital and taxes		43,232		29,528		81,821		60,960
Income taxes paid		(1,857)		(1,815)		(3,083)		(3,485)
Change in working capital		(500)		2,227		1,006		(1,176)
Operating cash flow		40,875		29,940		79,744		56,299

Investing activities
Acquisition of mineral interests (Note 4 and Note 8)		(17,593)		(5,434)		(163,597)		(14,562)
Proceeds on disposition of mineral interests		1,700		—		1,700		4,500
Proceeds on sale of investments		—		—		—		6,258
Acquisition of loans receivables		(8,833)		—		(17,333)		—
Acquisition of investments		—		—		(741)		(2,357)
Net cash used in investing activities		(24,726)		(5,434)		(179,971)		(6,161)

Financing activities
Proceeds from long-term debt (Note 10)		5,000		—		115,000		—
Repayments of long-term debt (Note 10)		(20,000)		—		(50,000)		—
Proceeds from exercise of stock options and warrants (Note 14)		16,398		—		17,203		—
Normal course issuer bid purchase of common shares (Note 14)		(10,505)		(106)		(13,075)		(331)
Dividends paid (Note 14)		(10,100)		(7,411)		(20,142)		(14,822)
Repayments and interest on lease obligation		(139)		(83)		(223)		(166)
Payments of interest on long-term debt		(2,096)		(486)		(3,217)		(982)
Net cash from (used in) financing activities		(21,442)		(8,086)		45,546		(16,301)
Effect of exchange rate changes on cash and cash equivalents		19		(121)		21		(78)
(Decrease) Increase in cash and cash equivalents during the period		(5,274)		16,299		(54,660)		33,759
Cash and cash equivalents at beginning of the period		21,712		58,132		71,098		40,672
Cash and cash equivalents at end of the period	$	16,438	$	74,431	$	16,438	$	74,431

The accompanying notes form an integral part of these condensed interim consolidated financial statements.

Triple Flag Precious Metals Corp.

Condensed Interim Consolidated Statements of Changes in Equity


	Common	Share		Retained		Other Equity
($US thousands, except share information) (Unaudited)	Shares	Capital		Earnings		and Reserves		Total
At January 1, 2022	156,036,737	$	1,253,013	$	40,298	$	1,311	$	1,294,622

Normal course issuer bid purchase of common shares	(26,808)		(215)		(116)		—		(331)
Stock-based compensation	—		—		—		1,737		1,737
Net earnings	—		—		26,811		—		26,811
Dividends	—		—		(14,822)		—		(14,822)
Balance at June 30, 2022	156,009,929	$	1,252,798	$	52,171	$	3,048	$	1,308,017

At January 1, 2023	155,685,593	$	1,250,194	$	63,670	$	4,615	$	1,318,479

Shares issued to Maverix shareholders	45,097,390		491,111		—		—		491,111
Issuance of shares from exercise of stock options	256,799		493		—		—		493
Normal course issuer bid purchase of common shares	(911,646)		(7,312)		(5,763)		—		(13,075)
Stock-based compensation granted to Maverix employees	—		—		—		6,709		6,709
Stock-based compensation	—		—		—		1,788		1,788
Net earnings	—		—		32,568		—		32,568
Dividends	—		—		(20,142)		—		(20,142)
Warrants issued to Maverix shareholders	—		—		—		7,938		7,938
Issuance of shares from exercise of warrants	1,800,000		24,336		—		(7,938)		16,398
Automatic Share Purchase Plan	—		—		—		(1,300)		(1,300)
Balance at June 30, 2023	201,928,136	$	1,758,822	$	70,333	$	11,812	$	1,840,967

The accompanying notes form an integral part of these condensed interim consolidated financial statements.

Triple Flag Precious Metals Corp.

Notes to the Condensed Interim Consolidated Financial Statements (unaudited)

For the three and six months ended June 30, 2023 and 2022

(Expressed in thousands of United States dollars, unless otherwise indicated, except share and per share information)

1. Nature of operations

Triple Flag Precious Metals Corp. (“TF Precious Metals”) was incorporated on October 10, 2019 under the Canada Business Corporations Act. TF Precious Metals is domiciled in Canada and the address of its registered office is 161 Bay Street, Suite 4535, Toronto, Ontario, M5J 2S1, Canada.

The condensed interim consolidated financial statements of TF Precious Metals for the three and six months ended June 30, 2023 and 2022 comprise TF Precious Metals and its wholly owned subsidiaries (together, the “Company” or “Triple Flag”).

The Company is a gold-focused streaming and royalty company. Its revenues are largely generated from a diversified portfolio of properties in Australia, Canada, Colombia, Mexico, Mongolia, Peru, South Africa and the United States.

2. Basis of presentation

These condensed interim consolidated financial statements of TF Precious Metals and its subsidiaries have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), applicable to the preparation of interim financial statements, including International Accounting Standard (“IAS”) 34, Interim Financial Reporting.

These condensed interim consolidated financial statements should be read in conjunction with TF Precious Metals’ most recently issued audited financial statements for the years ended December 31, 2022 and 2021 (“2022 Annual Financial Statements”), which include information necessary or useful to understanding the Company’s business and financial statement presentation. In particular, the Company’s significant accounting policies were presented in Note 3 to the 2022 Annual Financial Statements and have been consistently applied in the preparation of these condensed interim consolidated financial statements. Certain comparative figures have been reclassified to conform to current year presentation. There were no new accounting standards effective January 1, 2023 that had a material impact to the Company’s financial statements as at June 30, 2023. These condensed interim consolidated financial statements were authorized for issuance by the Board of Directors of TF Precious Metals on August 8, 2023.

3. Critical accounting estimates and judgments

The judgments, estimates, assumptions and risks discussed here reflect updates from the 2022 Annual Financial Statements. For judgments, estimates, assumptions and risks related to other areas not discussed in these condensed interim consolidated financial statements, please refer to Note 4 of the 2022 Annual Financial Statements.

Accounting for the acquisition of Maverix Metals Inc.

Management determined that the Company’s acquisition of Maverix Metals Inc. (“Maverix”) (Note 4), which owned a portfolio of stream, royalty and other interests, did not meet the definition of a business combination under IFRS 3 – Business Combinations. The acquisition included amounts receivable, mineral interests, financial assets, loans receivable and liabilities. Streams and royalties are standard contractual entitlements and Triple Flag can continue to utilize its existing processes to manage royalty receipts. Accordingly, the acquisition was accounted for as the purchase of individual assets and liabilities in accordance with relevant IFRS standards (IAS 16 – Property, Plant and Equipment, IFRS 9 – Financial Instruments, IAS 37 – Provisions, Contingent Liabilities and Contingent Assets). The identifiable assets and liabilities acquired were measured at their relative fair values at the date of acquisition. The determination of the relative fair values required management to make assumptions and estimates on the future production profiles, metal prices, discount rates, and exchange rates.

Impairment

As at June 30, 2023, the Company did not identify any indicators of impairment or reversal of impairment for any of its mineral interests and as a result, no impairment test was performed for the three and six months ended June 30, 2023.

Triple Flag Precious Metals Corp.

Notes to the Condensed Interim Consolidated Financial Statements (unaudited)

For the three and six months ended June 30, 2023 and 2022

(Expressed in thousands of United States dollars, unless otherwise indicated, except share and per share information)

4. Key developments

a.Acquisition of Agbaou Royalty

On June 23, 2023, the Company entered into an agreement with Auramet Capital Partners, L.P. (“Auramet”) for the acquisition of the 2.5% net smelter return (“NSR”) royalty it held on the Agbaou mine in Côte d’Ivoire, operated by Allied Gold Corp (“Agbaou Royalty”). The NSR royalty provides Triple Flag with an entitlement to 2.5% of net smelter returns from future production at the Agbaou mine. Triple Flag acquired the Agbaou Royalty for a total consideration of $15,463 of which $13,500 was paid in cash and remaining paid through in-kind contribution of an asset held by the Company. The Agbaou Royalty was recorded as mineral interest.

b.Acquisition of Maverix Metals Inc.


	January 19, 2023
Cash and cash equivalents	$	4,080
Amounts receivable		5,869
Inventory		1,261
Financial Assets		47,494
Mineral Interest		587,817
Loan receivable		10,231
Amounts payable and other liabilities		(11,133)
Lease obligation		(460)
Income tax payable		(351)
Total assets acquired, net of liabilities assumed	$	644,808


Number of Triple Flag shares issued to Maverix shareholders		45,097,390
Value of Triple Flag shares issued to Maverix shareholders		491,111
Cash consideration paid to Maverix shareholders		86,666
Cash paid to retire Maverix credit facility		46,608
Maverix share options exchanged for Triple Flag replacement share options¹		6,709
Maverix warrants exercisable for 1,800,000 Triple Flag shares		7,938
Transaction costs		5,776
Purchase consideration	$	644,808

¹Valued using Black Scholes.

On January 19, 2023, the Company acquired all of the issued and outstanding common shares of Maverix pursuant to the terms of an arrangement agreement dated November 9, 2022 (the “Agreement”). Pursuant to the Agreement, Maverix shareholders had the option to receive either 0.36 of a TF Precious Metals common share or $3.92 in cash per Maverix common share, in each case subject to pro-ration such that the aggregate cash consideration would not exceed 15% of the total consideration and the aggregate share consideration does not exceed 85% of the total consideration. In addition, (i) holders of options to acquire Maverix Shares received fully vested replacement options to acquire Triple Flag Shares; and (ii) the restricted share units (“RSUs”) of Maverix outstanding immediately prior to the effective time of the transaction, whether vested or unvested, were assigned and transferred by the holder to Maverix in exchange for a cash payment and each RSU was immediately cancelled. The outstanding Maverix warrants (the “Maverix Warrants”) (5,000,000 Maverix share warrants outstanding with an exercise price of $3.28 per Maverix Share outstanding as of the closing date) were automatically adjusted in accordance with their terms, such that if and when exercised, Maverix warrant holders would receive a total of 1,800,000 Triple Flag shares at an exercise price of $9.11 per Triple Flag Share. The Maverix Warrants were exercised on April 12, 2023. In connection with the closing, Triple Flag paid $86,666, issued 45,097,390 common shares to all former Maverix shareholders and incurred $5,776 of transaction costs. The transaction was recorded during the first quarter of 2023. Following the completion of the acquisition, Maverix Metals Inc. became a wholly-owned subsidiary of Triple Flag.

Triple Flag Precious Metals Corp.

Notes to the Condensed Interim Consolidated Financial Statements (unaudited)

For the three and six months ended June 30, 2023 and 2022

(Expressed in thousands of United States dollars, unless otherwise indicated, except share and per share information)

The transaction was accounted for as an asset acquisition on January 19, 2023, with mineral interests of $587,817. The other net assets acquired in the transaction included cash and cash equivalents, amounts receivable, prepaid gold interests and loans receivable of approximately $68,935, amounts payable and other liabilities, lease liabilities and income tax payable of $11,944. The other liabilities included change of control under the terms of Maverix’s employment agreements.

5. Amounts receivable and prepaid expenses


As at	June 30, 2023		December 31, 2022
Royalties receivable	$	12,706	$	7,510
Other receivables		656		551
Prepaid expenses		477		1,306
Sales tax recoverable		964		236
Total amounts receivable and prepaid expenses	$	14,803	$	9,603

Royalties receivable represent amounts that are generally collected within 45 days of quarter-end. Prepaid expenses largely represent various insurance programs that are in place.

6. Loans receivable


As at	June 30, 2023		December 31, 2022
Bridge Financing - Stornoway Diamonds¹	$	11,557	$	11,096
Convertible Debenture – Excelsior Mining²		1,524		—
Loan Receivable – Nevada Copper³		8,373		—
Loan Receivable – Elevation Gold⁴		17,727		—
Total Loans receivable	$	39,181	$	11,096
Current portion		2,000		—
Loans Receivable - Long-term	$	37,181	$	11,096

Represents a receivable under a bridge financing facility provided by certain secured lenders, including the Company, in June 2019 to Stornoway and certain of its subsidiaries. The loan bears interest at 8.25% per annum, which is calculated and compounded monthly and is capitalized until repayment. The increase in the loan balance during the six months ended June 30, 2023 represents interest accrued on the loan.

On February 9, 2023, Triple Flag invested $1,500 in Excelsior Mining Corp (“Excelsior”) in the form of a Convertible Debenture (“Debenture”). The Debenture matures on February 9, 2026 and carries interest at 10%. Interest is payable in cash or in Excelsior Shares, at the election of Triple Flag. The Debenture also has a conversion feature whereby Triple Flag has the option to convert it into Excelsior shares prior to maturity.

In connection with the Nevada Copper restart financing package for operations at the Pumpkin Hollow mine, its senior credit facility was amended on October 28, 2022, to provide for a new tranche of up to $25,000. The Company made a $2,500 payment on each of February 22, 2023 and March 13, 2023, respectively. Pursuant to the binding financing package agreement dated May 9, 2023, entered with Triple Flag, Pala Investments Limited and Mercuria Energy Holdings (Singapore) Pte. Ltd, Triple Flag funded an additional $3,333 to Nevada Copper during the second quarter of 2023. The loan carries interest at SOFR plus an adjustment spread and a fixed margin, at the time funds were advanced. The loan matures on July 31, 2029 and can be repaid prior to maturity with no penalty.

In conjunction with the acquisition of Maverix, Triple Flag acquired a loan receivable from Elevation Gold (“Elevation”) and subsequently provided an additional $2,000 loan during the first quarter of 2023. On May 15, 2023, Triple Flag entered into an amended and restated loan agreement with Elevation and subsequently provided an additional $5,500 loan during the second quarter of 2023. Under the terms of the amended and restated agreement, interest accrues at an interest rate of 10% per annum, payable quarterly. A $1,500 principal payment is due on or before December 15, 2023, with subsequent principal payments of $250 due quarterly until December 15, 2024. The balance of principal payable is due on or before February 28, 2025.

Triple Flag Precious Metals Corp.

Notes to the Condensed Interim Consolidated Financial Statements (unaudited)

For the three and six months ended June 30, 2023 and 2022

(Expressed in thousands of United States dollars, unless otherwise indicated, except share and per share information)

7. Financial assets


As at	June 30, 2023		December 31, 2022
Investments¹	$	8,085	$	5,372
Prepaid gold interests – Steppe Gold²		—		4,534
Prepaid gold interests – Auramet Capital Partners³		40,976		—
Total financial assets	$	49,061	$	9,906
Financial assets – current		15,474		9,906
Financial assets – long-term	$	33,587	$	—

Investments comprise equity interests and warrants in publicly traded and private companies and have been recorded at fair value. The fair value of the public equity investments is classified as level 1 of the fair value hierarchy because the main valuation inputs used are quoted prices in active markets, the fair value of the warrants is classified as level 2 because one or more of the significant inputs are based on observable market data, and the fair value of the private equity investments is classified as level 3 of the fair value hierarchy because the relevant observable inputs are not available. Refer to Note 12 for additional details. During the first quarter of 2023, the Company subscribed to 15,384,615 shares of Monarch Corporation for C$1,000 through a private placement.

On September 26, 2022, the Company entered into an agreement with Steppe Gold to acquire a prepaid gold interest. The Company made a cash payment of $4,800 to acquire the prepaid gold interest in exchange for delivery of 3,000 ounces of gold that were delivered by Steppe Gold in 8 monthly deliveries. The final delivery was made in May 2023. The Steppe Gold Prepaid Gold Interest was accounted for as a financial asset at fair value through profit or loss and fair value was calculated based on the London Bullion Market Association PM fix on the last trading day of the quarter.

On January 19, 2023, as part of the Maverix acquisition, the Company acquired a prepaid gold interest with Auramet Capital Partners, L.P., a subsidiary of Auramet International LLC. The contract requires Auramet to deliver 1,250 ounces of gold to Triple Flag per quarter. Triple Flag is required to make ongoing cash payments equal to 16% of the spot gold price for each gold ounce delivered. On and after ten years and 50,000 ounces of gold have been delivered (since inception), Auramet shall have the option to terminate the stream for a cash payment of $5,000 less certain cash flows related to the gold deliveries. The Auramet Prepaid Gold Interest is accounted for as a financial asset at fair value through profit or loss. The remaining contractual ounces to be delivered as of June 30, 2023 is 40,000 ounces of gold.

The change in fair value of financial assets for the three months ended June 30, 2023 was $954 loss (2022: $3,834 loss), and for the six months ended June 30, 2023 was $2,699 gain (2022: $4,492 loss).

Triple Flag Precious Metals Corp.

Notes to the Condensed Interim Consolidated Financial Statements (unaudited)

For the three and six months ended June 30, 2023 and 2022

(Expressed in thousands of United States dollars, unless otherwise indicated, except share and per share information)

8. Mineral interests


	Mineral
June 30, 2023	Streams		Royalties		Total ⁽¹⁾
Cost
As at January 1, 2023	$	1,281,254	$	285,857	$	1,567,111
Additions ⁽²⁾		76,700		524,808		601,508
Disposals ⁽³⁾		—		(3,000)		(3,000)
As at June 30, 2023	$	1,357,954	$	807,665	$	2,165,619

Accumulated depletion and impairments
As at January 1, 2023	$	(284,095)	$	(54,845)	$	(338,940)
Depletion		(22,061)		(9,607)		(31,668)
As at June 30, 2023	$	(306,156)	$	(64,452)	$	(370,608)
Carrying value	$	1,051,798	$	743,213	$	1,795,011


	Mineral
December 31, 2022	Streams		Royalties		Total⁽¹⁾
Cost
As at January 1, 2022	$	1,277,091	$	234,476	$	1,511,567
Additions⁽⁴⁾		4,163		53,782		57,945
Disposals⁽⁵⁾		—		(2,401)		(2,401)
As at December 31, 2022	$	1,281,254	$	285,857	$	1,567,111

Accumulated depletion and impairments
As at January 1, 2022	$	(244,506)	$	(41,828)	$	(286,334)
Depletion		(39,589)		(9,417)		(49,006)
Impairment charges⁽⁶⁾		—		(3,600)		(3,600)
As at December 31, 2022	$	(284,095)	$	(54,845)	$	(338,940)
Carrying value	$	997,159	$	231,012	$	1,228,171

1.	Includes 1,186,455 (2022: $1,036,220) of depletable mineral interest and $608,556 (2022: $191,951) of non-depletable mineral interest.

2.	Reflects acquisition of Maverix, including transaction costs that have been capitalized during the first quarter of 2023. In addition, Triple Flag acquired the Agbaou royalty in the second quarter of 2023 for $15,463 and funded an additional $3,667 for the Clean Air Metals royalty.

3.	Reflects the Eastern Borosi royalty buy-down in the second quarter of 2023 which resulted in a loss of $1,000.

4.	Reflects NCU Royalty and Stream amendment, acquisition of Clean Air Metals royalty, Beaufor royalty, and Sofia royalty. Transaction costs incurred to date have been capitalized.

5.	Reflects Talon royalty buy-down in 2022 which resulted in a gain of $2,099.

6.	Reflects impairment charge taken for the Beaufor royalty in 2022.

Significant cash flowing mineral interests acquired as part of the Maverix acquisition includes (see Note 4):

La Colorada

La Colorada mine is a long life underground polymetallic mine located in Mexico. Under the stream agreement with Pan American Silver, operator of La Colorada mine, the Company receives 100% of the gold produced from the mine with an ongoing payment of $650 per ounce of gold. The stream is uncapped and has no buyback provisions. On acquisition, the fair value ascribed to the stream interest was $22,500, which was determined using a discounted cash flow model. Key assumptions used in the analysis were a 5% discount rate, long term consensus prices and an estimated mine life of 18 years.

Triple Flag Precious Metals Corp.

Notes to the Condensed Interim Consolidated Financial Statements (unaudited)

For the three and six months ended June 30, 2023 and 2022

(Expressed in thousands of United States dollars, unless otherwise indicated, except share and per share information)

El Mochito

El Mochito is a mine located in north-western Honduras. Under the stream arrangement with Kirungu, the operator of El Mochito mine, the Company receives 25% of the silver produced from the mine with an ongoing payment of 25% of spot silver price. The stream is uncapped and has no buyback provisions. On acquisition, the fair value ascribed to the stream interest was $24,300, which was determined using a discounted cash flow model. Key assumptions used in the analysis were a 5% discount rate, long term consensus prices and an estimated mine life of 9 years.

Beta Hunt

Beta Hunt mine is located in the prolific Kambalda mining district, located 600km from Perth, Western Australia. As part of the royalty agreement with Karora Resources, operator of Beta Hunt, the Company holds a 3.25% GRR and 1.5% NSR Royalty on gold and 1.5% NSR royalty on nickel. The royalty is uncapped and has no buyback provisions. On acquisition, the fair value ascribed to the royalty interest was $46,400, which was determined using a discounted cash flow model. Key assumptions used in the analysis were a 5% discount rate, long term consensus prices and an estimated mine life of 8 years.

Camino Rojo

Camino Rojo oxide gold mine is a gold and silver open-pit heap leach mine located in Mexico. As part of the royalty agreement with Orla Mining, operator of Camino Rojo, the Company holds a 2.0% NSR Royalty. The royalty is uncapped and has no buyback provisions. On acquisition, the fair value ascribed to the royalty interest was $27,400, which was determined using a discounted cash flow model. Key assumptions used in the analysis were 5% discount rate, long term consensus prices and an estimated mine life of 10 years.

9. Other assets


As at	June 30, 2023		December 31, 2022
Deferred charges – Credit Facility¹	$	2,104	$	2,445
Right-of-use asset²		1,687		1,811
Leasehold improvements, furniture and fixtures		231		291
Total other assets	$	4,022	$	4,547

1	Represents costs associated with the issuance and amendment of the Credit Facility. These costs are being amortized as a component of interest over the life of the Credit Facility.

2	Represents the asset recognized under IFRS 16. It relates to a lease entered into by the Company and is being amortized over the remaining life of the lease.

10. Long-term debt


As at
Long-term debt – January 1, 2023	$	—
Revolving Credit Facility drawdown		115,000
Repayments		(50,000)
Long term debt - June 30, 2023	$	65,000

Revolving Credit Facility

On September 22, 2022, the Company extended the maturity of the $500,000 Credit Facility by four years, with a new maturity date of August 30, 2026 (the “Credit Facility”), and increased the uncommitted accordion from $100,000 to $200,000, for a total availability of up to $700,000.

Triple Flag Precious Metals Corp.

Notes to the Condensed Interim Consolidated Financial Statements (unaudited)

For the three and six months ended June 30, 2023 and 2022

(Expressed in thousands of United States dollars, unless otherwise indicated, except share and per share information)

The Credit Facility is to be used for general corporate purposes and investments in the mineral industry, including the acquisition of mineral interests and other assets. The Credit Facility is secured by the Company’s assets, present and future (including mineral interests and other assets).

Advances under the Credit Facility can be drawn as follows:

●

Base rate loans with interest payable monthly at the greater of: (a) the aggregate of (i) the Federal Funds Effective Rate and (ii) 1/2 of 1.0% per annum and (b) the Base Rate Canada, plus between 0.75% and 1.75% per annum (December 31, 2022: 0.75% and 1.75% per annum) depending on the Company’s leverage ratio; or

●	Term benchmark loans for periods of 1, 2, 3 or 6 months with interest payable at a rate of SOFR, plus between 1.75% and 2.75% per annum (December 31, 2022: SOFR, plus 1.75% and 2.75% per annum), depending on the Company’s leverage ratio.

Finance costs, net relating to the Credit Facility for the three months ended June 30, 2023 were $1,269 (2022: $442) and for the six months ended June 30, 2023 were $2,578 (2022: $979), including amortization of debt issuance costs and standby fees. The Credit Facility includes covenants that require the Company to maintain certain financial ratios, including leverage ratios, as well as certain non-financial requirements. As at June 30, 2023, all such ratios and requirements were met.

11. Operating expenses by nature¹


	For the three months ended June 30				For the six months ended June 30
	2023		2022		2023		2022
Employee costs ^2,3	$	4,059	$	2,721	$	7,223	$	5,430
Office, insurance and other expenses		1,295		883		2,459		1,778
Professional services ³		519		776		3,345		1,298
Amortization		93		92		184		189
Total operating expenses	$	5,966	$	4,472	$	13,211	$	8,695

1	Includes general administration costs and business development costs.

2	Includes share-based compensation expense of $1,276 for the three months ended June 30, 2023 (2022: $1,230) and $2,902 for the six months ended June 30, 2023 (2022: $2,566).

3	Certain costs have been presented within business development costs due to their nature.

12. Financial instruments

The Company’s financial instruments include cash and cash equivalents, amounts receivable (excluding sales taxes and prepaid expenses), financial assets (including investments and prepaid gold interests), loans receivable, amounts payable and other liabilities, lease obligations and long-term debt. The cash and cash equivalents balance as at June 30, 2023 consists of cash on deposit with major Canadian and U.S. banks in interest bearing accounts totaling $16,438.

The Company applies all of the requirements of IFRS 9 to its financial instruments. The approach in IFRS 9 is based on how an entity manages its financial instruments and the contractual cash flow characteristics of the financial asset. IFRS 9 introduced a single expected credit loss impairment model, which is based on changes in debt or credit quality since initial recognition.

IFRS 9 applies an expected credit loss model to evaluate financial assets for impairment. The Company’s financial assets which are subject to credit risk include cash and cash equivalents, amounts receivable (excluding sales taxes and prepaid expenses) and loans receivable. The amounts receivable (excluding sales taxes and prepaid expenses) are carried at amortized cost and had a carrying value of $13,362 as at June 30, 2023 (December 31, 2022: $8,061). Considering the current turnover and credit risk associated with the amounts receivable (excluding sales taxes and prepaid expenses) and loans receivable, the application of the expected credit loss model did not have a significant impact on the Company’s financial assets, because the Company determined that the expected credit losses on its financial assets were nominal.

Triple Flag Precious Metals Corp.

Notes to the Condensed Interim Consolidated Financial Statements (unaudited)

For the three and six months ended June 30, 2023 and 2022

(Expressed in thousands of United States dollars, unless otherwise indicated, except share and per share information)

To provide an indication of the reliability of the inputs used in determining fair value, the Company classifies its financial instruments into the three levels prescribed under the accounting standards. The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. Refer to Note 7 for additional details on investments that are measured at fair value.

The carrying value of amounts receivable (excluding sales taxes and prepayments), cash and cash equivalents, financial assets (including investments and prepaid gold interests), loans receivable, amounts payable and other liabilities, lease obligations and long-term debt approximate their fair value. Financial assets and financial liabilities as at June 30, 2023 and December 31, 2022 were as follows:


			Financial		Financial
			Assets		Liabilities
			at amortized		at amortized
As at June 30, 2023	FVTPL		cost		cost
Cash and cash equivalents	$	—	$	16,438	$	—
Amounts receivable¹		—		13,362		—
Financial assets		49,061		—		—
Loans receivable		—		39,181		—
Amounts payable and other liabilities and lease obligation		—		—		9,388
Long-term debt		—		—		65,000
Total	$	49,061	$	68,981	$	74,388


			Financial		Financial
			Assets		Liabilities
			at amortized		at amortized
As at December 31, 2022	FVTPL		cost		cost
Cash and cash equivalents	$	—	$	71,098	$	—
Amounts receivable¹		—		8,061		—
Financial assets		9,906		—		—
Loans receivable		—		11,096		—
Amounts payable and other liabilities and lease obligation		—		—		13,237
Total	$	9,906	$	90,255	$	13,237

¹	Excluding sales taxes and prepaid expenses

13. Earnings per share - basic and diluted


	For the three months ended June 30
	2023				2022
	Basic		Diluted		Basic		Diluted
Net earnings	$	16,034	$	16,034	$	10,922	$	10,922
Weighted average shares outstanding		202,041,353		202,383,167		156,013,993		156,044,014
Earnings per share	$	0.08	$	0.08	$	0.07	$	0.07

	For the six months ended June 30
	2023				2022
	Basic		Diluted		Basic		Diluted
Net earnings	$	32,568	$	32,568	$	26,811	$	26,811
Weighted average shares outstanding		196,938,120		197,133,344		156,020,615		156,034,617
Earnings per share	$	0.17	$	0.17	$	0.17	$	0.17

Triple Flag Precious Metals Corp.

Notes to the Condensed Interim Consolidated Financial Statements (unaudited)

For the three and six months ended June 30, 2023 and 2022

(Expressed in thousands of United States dollars, unless otherwise indicated, except share and per share information)

14. Share capital

The Company is authorized to issue an unlimited number of common and preferred shares. As at June 30, 2023, the share capital comprises 201,928,136 common shares with no par value.


	Number of
	common
	shares	Share Capital
Balance at December 31, 2021	156,036,737	$	1,253,013
Normal course issuer bid purchase of common shares	(351,144)		(2,819)
Balance at December 31, 2022	155,685,593	$	1,250,194
Issuance of shares pursuant to the Maverix acquisition	45,097,390		491,111
Exercise of stock options	256,799		493
Issuance of shares upon exercise of warrants¹	1,800,000		24,336
Normal course issuer bid purchase of common shares and ASPP	(911,646)		(7,312)
Balance at June 30, 2023	201,928,136	$	1,758,822

¹	On April 12, 2023, the holder of 1,800,000 Triple Flag share warrants, exercised the warrants and acquired 1,800,000 Triple Flag shares at an exercise price of $9.11 per share.

Normal Course Issuer Bid and Automatic Share Purchase Plan

In November 2022, Triple Flag received approval from the TSX to renew its normal course issuer bid (“NCIB”). Under the NCIB, the Company may acquire up to 2,000,000 of its common shares from time to time in accordance with the NCIB procedures of the TSX. Repurchases under the NCIB are authorized until November 14, 2023. Daily purchases on the TSX will be limited to 9,186 common shares, representing 25% of the average daily trading volume of the common shares on the TSX for the period from May 1, 2022 to October 31, 2022 (being 36,744 common shares), except where purchases are made in accordance with the “block purchase exemption” of the TSX rules. All common shares that are repurchased by the Company under the NCIB will be cancelled. For the three and six months ended June 30, 2023, the Company purchased 720,440 and 911,646, respectively of its common shares under the NCIB for $10,505 and $13,075, respectively. Under our current NCIB, Triple Flag may purchase a remaining 919,332 common shares out of the authorized total of 2,000,000.

On June 30, 2023, in connection with the NCIB, the Company entered into an Automatic Share Purchase Plan (“ASPP”) with the designated broker responsible for the NCIB. The ASPP is intended to allow for the purchase of its common shares under the NCIB at times when the Company would ordinarily not be permitted to purchase its common shares due to regulatory restrictions and customary self-imposed blackout periods. On June 30, 2023, the Company instructed the designated broker to make purchases under the ASPP during the period between July 1, 2023 to August 10, 2023. The Company has recorded a liability of $1,300 reflecting the obligation to purchase shares under ASPP as at June 30, 2023.

Dividends

For the three and six months ended June 30, 2023, the Company declared and paid dividends in United States dollars totaling $10,100 (2022: $7,411) and $20,142 (2022: $14,822), respectively. For the three and six months ended June 30, 2023, no shares were issued from treasury for participation in the Dividend Reinvestment Plan (“DRIP”).

Triple Flag Precious Metals Corp.

Notes to the Condensed Interim Consolidated Financial Statements (unaudited)

For the three and six months ended June 30, 2023 and 2022

(Expressed in thousands of United States dollars, unless otherwise indicated, except share and per share information)

15. Revenue

Revenue is comprised of the following:


	For the three months ended June 30				For the six months ended June 30
	2023		2022		2023		2022
Revenue from contracts with customers Streaming and related interests
Silver	$	15,696	$	12,564	$	36,540	$	28,554
Gold		20,992		13,679		39,286		24,663
Other¹		2,191		2,514		4,326		5,091
Royalty Interests		13,712		7,733		22,708		15,937
Total revenues	$	52,591	$	36,490	$	102,860	$	74,245

Stream and royalty interest revenues were mainly earned from the following mineral interests:


	For the three months ended June 30				For the six months ended June 30
	2023		2022		2023		2022
Revenue from contracts with customers Streaming and related interests
Cerro Lindo	$	8,012	$	10,049	$	21,987	$	22,402
Altan Tsagaan Ovoo		5,617		4,846		11,727		5,616
Northparkes		9,006		6,340		14,195		13,210
Moss		2,952		—		5,946		—
RBPlat		3,163		3,377		6,037		7,609
Buriticá		2,825		1,125		5,617		3,635
Auramet		2,390		—		4,850		—
Renard		1,989		2,287		4,124		4,630
Other²		2,925		733		5,669		1,206
	$	38,879	$	28,757	$	80,152	$	58,308
Royalty Interests
Fosterville	$	3,354	$	4,517	$	5,036	$	8,587
Beta Hunt		2,853		—		4,687		—
Young-Davidson		1,383		1,411		2,569		2,936
Other³		6,122		1,805		10,416		4,414
	$	13,712	$	7,733	$	22,708	$	15,937
Revenue from contracts with customers	$	52,591	$	36,490	$	102,860	$	74,245

¹Consists of diamonds and copper

²Includes revenue from El Mochito, Gunnison, La Colorada and Pumpkin Hollow.

³	Includes revenue from Dargues, Eagle River, Hemlo, Henty and Stawell and other royalties, including royalties acquired pursuant to the Maverix acquisition.

16. Segment disclosure

The Company’s business is organized into one single operating segment, consisting of acquiring and managing precious metal and other high-quality streams and royalties. The Company’s chief operating decision-maker, the CEO, makes capital allocation decisions, reviews operating results and assesses performance.

Geographic revenues from the sale of metals and diamonds received or acquired from streams and related interests and royalties are determined by the location of the mining operations giving rise to the stream and related interests or royalties.

For the three and six months ended June 30, 2023 and 2022, stream and royalty revenues were mainly earned from the following jurisdictions:

Triple Flag Precious Metals Corp.

Notes to the Condensed Interim Consolidated Financial Statements (unaudited)

For the three and six months ended June 30, 2023 and 2022

(Expressed in thousands of United States dollars, unless otherwise indicated, except share and per share information)

Revenue by Geography


	For the three months ended June 30				For the six months ended June 30
	2023		2022		2023		2022
Australia¹	$	16,821	$	12,338	$	26,902	$	25,630
United States²		6,462		733		12,423		1,206
Peru³		8,165		10,049		22,290		22,402
Canada⁴		4,118		4,022		7,840		8,147
Mongolia⁵		5,617		4,846		11,727		5,616
South Africa⁵		3,163		3,377		6,037		7,609
Mexico⁶		2,975		—		5,903		—
Colombia⁵		2,825		1,125		5,617		3,635
Others⁷		2,445		—		4,121		—
Total revenue	$	52,591	$	36,490	$	102,860	$	74,245

Includes revenue from streams for the three months ended June 30, 2023 of $9,005 (2022: $6,340) and six months ended June 30, 2023 of $14,195 (2022: $13,210), revenue from royalties for the three months ended June 30, 2023 of $7,816 (2022: $5,998) and six months ended June 30, 2023 of $12,707 (2022: 12,420).

2	Includes revenue from streams for the three months ended June 30, 2023 of $5,546 (2022: $733) and six months ended June 30, 2023 of $10,998 (2022: $1,206), revenue from royalties for the three months ended June 30, 2023 of $916 (2022: nil) and six months ended June 30, 2023 of $1,425 (2022: nil).

3	Includes revenue from streams for the three months ended June 30, 2023 of $8,012 (2022: $10,049) and six months ended June 30, 2023 of $21,988 (2022: $22,402), revenue from royalties for the three months ended June 30, 2023 of $153 (2022: nil) and six months ended June 30, 2023 of $302 (2022: nil).

Includes revenue from streams for the three months ended June 30, 2023 of $1,989 (2022: $2,287) and six months ended June 30, 2023 of $4,124 (2022: $4,630), revenue from royalties for the three months ended June 30, 2023 of $2,129 (2022: $1,735) and six months ended June 30, 2023 of $3,716 (2022: $3,517).

5	All revenue from streams.

6	Includes revenue from streams for the three months ended June 30, 2023 of $1,389 (2022: nil) and six months ended June 30, 2023 of $2,655 (2022: nil), revenue from royalties for the three months ended June 30, 2023 of $1,586 (2022: nil) and six months ended June 30, 2023 of $3,248 (2022: nil).

7	Includes revenue from streams for the three months ended June 30, 2023 of $1,333 (2022: nil) and six months ended June 30, 2023 of $2,811 (2022: nil), revenue from royalties for the three months ended June 30, 2023 of $1,112 (2022: nil) and six months ended June 30, 2023 of $1,310 (2022: nil).

Triple Flag Precious Metals (TFPM) 6-K2023 Q2 Current report (foreign)