The company is focused on underwriting bespoke royalties and streams with the intent of optimising its counterparties’ risk-adjusted cost of capital while allowing Star Royalties to achieve above-threshold returns. Management, as capital allocators, constantly reviews new opportunities to sustainably and responsibly grow Star Royalties’ portfolio with a strict emphasis on:
- Value and quality over quantity
- Risk management with focus on top-tier jurisdictions
- After-tax internal rate of return metrics
- Relative return on invested capital
- Free cash flow per share accretion
- Net asset value per share accretion
Star Royalties targets an 80% capital allocation to precious metals with up to 20% available for predominantly green investments.
Additionally, Star Royalties’ longer-term portfolio allocation will target a 70% weighting in cash flowing royalties and streams, 20% weighting towards near-term development opportunities (with development-to-cash-flow timeline horizons of less than two years), and 10% to geologically prospective, advanced exploration targets (non-cash flowing). This targeted 70/20/10 approach is intended to improve cash flow visibility and restrict capital allocation towards higher-risk, long-term exploration-stage investments. The company believes that abiding by these portfolio constructs will result in a robust, cash flowing, debt averse (credit facility when appropriate), precious metals-focused portfolio that will provide attractive risk-adjusted returns to its shareholders.