How much cash does Topaz really make, and what is a share of it worth?

The words on this page

Real cash (true cash)

What was left in the bank each year after every bill, every tax payment and every well drilled. Not profit, and not "cash flow" as companies usually quote it, which leaves the drilling out. The strictest number there is.

Required return

The yearly return you insist on for taking the risk. A dollar promised in ten years is worth less than a dollar today; this rate says how much less. 9% is a common professional figure for a large Canadian producer; the reserve engineers use 10%.

Well life (reserve life)

How long the wells keep producing. After the life you choose, nothing is counted.

What a share is worth

Every future year's cash, shrunk back to today's dollars at your required return, added up, less the debt, divided by the number of shares. Pay less than this and you earn more than your required return; pay more and you earn less.

Where the default growth comes from

Topaz guides to 4 to 7 per cent annual royalty production growth on its lands, and 2025 royalty volumes grew 17 per cent, so the growth dial starts at 5 per cent.

The arithmetic, step by step

1. Count the real cash each past year: cash generated by operations as reported, plus interest paid put back, minus rent on leases, minus every dollar spent on wells and plants. Buying and selling assets is shown separately.
2. Project it. The starting cash you choose (an average of the history, or the latest year) grows at your growth dial for ten years, then at the long-run rate for as long as the wells keep producing. Nothing is counted after the well life ends.
3. Bring it back to today. Each year's cash is shrunk by your required return, counted at mid-year because cash arrives through the year rather than on 31 December.
4. Turn it into a share value. Add up the shrunk cash; take off net debt of C$544M; divide by 154.9M shares.
5. Work it backwards. "The growth today's price assumes" is the ten-year growth rate at which this start is worth exactly the share price.

Where the numbers come from

• Topaz only began operating on 14 November 2019, so the history is six full years rather than the ten the model prefers; the seven week 2019 stub period is excluded. The five year average is the natural starting point.
• A royalty company has no reserve life of its own: how long the cash lasts depends on other companies drilling Topaz's lands and using its plants, so the model simply assumes a 25 year life.
• Royalty companies spend almost nothing on capital. Topaz's growth spending is acquisitions of royalty and infrastructure interests, shown in the acquisitions line, and it was funded partly with new shares (a $381.6 million raise in 2021 and about $207 million in 2024), so the share count has grown from 90 million to 155 million.
• Interest is the interest expense Topaz recorded on its bank debt, as cash interest paid is not separately disclosed: the audited supplemental cash flow note covers only working capital changes. Lease payments are not separately disclosed in financing activities and are treated as zero; office rent paid to Tourmaline (about $0.2 million a year) sits in operating costs.
• Net debt is bank debt less cash from the audited balance sheets: Topaz carried no bank debt and $220.2 million of cash at the end of 2020, and no cash at the end of 2021 or 2022. Topaz's own net debt measure also nets off working capital and was $497.4 million at 30 June 2026 versus the $544.2 million used here.
• The 2024 comparatives are as re-presented in the audited 2025 statements, which adjusted the originally reported 2024 figures.
• Topaz has never bought back shares; dividends are the whole return story, and cash dividends have risen every year from $73.1 million in 2020 to $207.7 million in 2025.
• Analyst targets: average C$36.25 across 13 analysts (stockanalysis.com analyst consensus, 30 August 2026).

For the technically minded

The method is the one used to evaluate capital projects, from Ted Lawrence, The Business Guide to Economic Evaluations: Projects, Leases, Tariffs and Acquisitions (2017). "Real cash" is the book's project cash flow (chapter 3) with depreciation, debt servicing and debt-like leases restructured out (chapters 4, 5 and 19); short operating leases stay in as a cost of producing, a chapter 19 judgment. The value per share follows the share-purchase evaluation of chapter 20: present value of the company's cash flows at the cost of capital (chapter 10), mid-year discounting (chapter 12), plus non-required assets, less net debt and the decommissioning liability. "What you gain or lose" is the bid-curve NPV of chapter 20; "when you get your money back" is the discounted payout of chapter 13; the bars follow the project profile of chapter 6. The reverse solve on growth is a plain reverse DCF.

Discount-rate anchors: 9% is a common cost-of-equity figure for a large Canadian producer and 10% is the reserve-report convention (PV10). The long-run rate defaults to 0% here: a depleting resource should not be assumed to grow forever, so anything above zero is a judgment you make with the dial.