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How to make the gold sector more relevant - Triple Flag Precious Metals' Shaun Usmar

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(Kitco News) - Mine developers are struggling to raise equity but that is an opportunity for royalty and streaming companies, says Shaun Usmar, CEO of Triple Flag Precious Metals.

Usmar spoke to Kitco mid-September at the Gold Forum Americas 2023 held in Colorado Springs, CO.

He said in 2020 there was a lot of capital deployed, but not many cash-generating assets, "a lot of development-stage stuff and low returns than we'd seen in a while." This year represents a return to that dynamic.

"There's almost a secular trend: there's less...risk capital available for the sector," said Usmar adding that streaming and royalty companies are a "...great way to contribute capital to the sector."

"On the one hand it's an opportunity. I think on the other hand you've got to really look at the risk carefully, because you don't want to overburden the asset and we spend a lot of time on that, but we're seeing a resurgence of those sorts of deals now."

Usmar said royalty companies are a great way to contribute capital to the sector during a secular trend of less capital availability.

"Particularly if you compete at the big end which we prioritize with the big three [royalty & streaming companies], we've got the balance sheet to do that, I think there's rational competition there," he said.

"People are focused on generating returns, so I think there's more deal flow opportunity than there is capital in the sector."

The whole sector needs to be re-thought, noted Usmar, adding that the "...gold sector is so fragmented that consolidation just to make this sector relevant should occur."

"It's just an interesting moment in time for the sector. There is so much opportunity on the horizon."

Kitco Mining's coverage of the Gold Forum Americas 2023 was sponsored by Metalla Royalty & Streaming Ltd.

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By

Andrew Topf

For Kitco News

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