Q1 2023 Gold Royalty Corp Earnings Call
Speaker 1: sections.
Speaker 1: please ensure that you fill in the short questionnaire at the end of the presentation as this helps us and the company communicate more effectively with you for future events.
Speaker 1: before I turn it over to the team, please note the forward-looking statement at the beginning of this presentation. Gentlemen, the stage is yours.
Speaker 2: Thank you, Joanne. Good morning everybody and welcome to John and Andrew as well. He'll be presenting along with me and Andrew will be providing a highlight on the financial results for the quarter and our forward looking projections. John will walk us through our portfolio, a very extensive portfolio. Actually, now 216 Royalties across the portfolio.
Speaker 2: heavily concentrated in the Americas with an even significant concentration in Nevada, Quebec and Ontario, the three best mining jurisdictions in the world and some of the best producing gold assets in the world. And we'll get into that in a bit more detail as we go through the presentation, but I thought I'd spend a minute talking about the rally and the gold price of late.
Speaker 2: As we've said in the past when we talked about the fundamentals for gold, we've always said it's more a monetary instrument than a commodity. And really what drives gold price up and down is relative interest rates. That's why gold as a monetary instrument has always yielded zero treasuries today, whether it's US treasuries or whether we're looking at the European.
Speaker 2: dealing with a quandary in that we're seeing the monetary system, particularly financial services systems, start to collapse underneath because all the accesses that have been introduced into the system since the credit crisis of about 15 years ago, there's been a massive expansion of money supply.
Speaker 2: excess debt and as interest rates go up servicing that has become a significant challenge and we've seen the evidence of that in the financial sector as we've seen banks collapse and that's just really the beginning the tip of the iceberg. That's the catalyst for gold and it has been the catalyst for gold over the last couple of months as we've seen a significant acceleration in the price.
Speaker 2: as the market has started to realize that the central banks really can tighten monetary conditions significantly with undermining the financial system, undermining governments, because as we correctly pointed out the debt levels that we've strapped on as a society since the onset of this inflation cycle and since the great financial crisis.
Speaker 2: is significantly greater than it was back in the 1970s when we last experienced these types of inflation. Debt to GDP globally is at about 350% relative to where it was in the 1970s at 100%. So what that tells you is there's very limited latitude for central banks to meaningfully tighten monetary conditions without
Speaker 2: undermining governments, corporations and individuals, all of whom are carrying unprecedented debt levels.
Speaker 2: So while we're seeing the central banks continue to increase interest rates and for example the Federal Reserve has recently tightened interest rates another 25 basis points, that same Federal Reserve introduced $300 billion of new liquidity into the system to stave off bank collapses and there's more of that to come. So they are shocking and blowing.
Speaker 2: We're starting to see central banks introduce new money supply into the system even as they're increasing nominal interest rates. What that will serve to do is accelerate inflation.
Speaker 2: we're going to see inflation levels unlike we haven't seen since the 1970s and that will drive real interest rates deeper and deeper in the negative territory and the negative correlation, the negative relationship between the gold price and real interest rates is striking and dramatic and that's why we consistent in saying that
Speaker 2: Gold will achieve its new all-time highs of at least $3,000 an ounce and that's on a real basis. Because gold back in the early 1980s in the last big inflation cycle was in excess of $800 an ounce. But if you inflation adjust that to 2023 dollars that suggests us the gold could go to at least $3,000 an ounce.
Speaker 2: That would be the real all-time high. We still have at least 50% upside from the current gold price levels that we're experiencing.
Speaker 2: that will drive new capital into the gold sector and we think significant share price appreciation and we're starting to see the early evidence of that.
Speaker 2: Since the crisis in banking system really which started to manifest itself in early March, we have seen a significant outperformance in both the GDXJ and gold prices relative to the general equity markets. And that's what gold should do in these types of crises is provide insurance.
Speaker 2: against volatility in the general equity market. We've seen the gold price go up dramatically. There's more of that to come and there's more volatility to come in the general equity markets as people's confidence in the economy is undermined and as money supply continues to accelerate, inflation continues to accelerate, people will be looking for gold as a life preserver, as a protector and preserver of their safety.
Speaker 2: the opportunity I see in the valuations before I hand it off to Andrew to talk about our financial results. You can see that the sector is still significantly discounted. We're still in a relative significant underperformance of the gold equities relative to the gold price and the opportunity we see with gold royalty trading at half times NEV with an an beural.
Speaker 2: Essentially, we just have to wait for that growth to come to fruition and the value accretion on a per share basis is immense over the coming years and the re-rate potential of our stock as we achieve that scale organically through the growth of our cash flow from an existing well-diversified portfolio within the best mining jurisdictions in the world, we think is immense and a great opportunity for our shareholders to realize upside.
Speaker 2: With that, I will pass it on to Andrew to talk about our financial results. Thanks Dave. You would have seen yesterday we announced our financial results for the quarter ended December 31st, 2022. With the change in our fiscal year end from September 30th to December 31st, this period will be...
Speaker 3: for that three month period. Now that's a 11% increase from the same period in 2021.
Speaker 3: This is largely due to higher revenue contribution from poor royalties such as Ghanaian Malartic and Borden.
Speaker 3: For fiscal 2023 we do expect total revenue and option proceeds to increase year on year and we put forward guidance of $5.5 to $6.5 million in total revenue and option proceeds for the year.
Speaker 3: We end the calendar year with a strong financial position as well. We have cash and available liquidity of approximately $35 million.
Speaker 3: And we're well positioned to fund our business and continue to grow the company throughout the year with this liquidity position.
Speaker 3: Finally, in fiscal 2023, we also expect recurring cash operating costs to be between $7 million and $8 million for the year.
Speaker 3: Now this would represent a circa 30% decrease in recurring operating costs from the prior calendar year and reflects the evolution of our company after a fast start following the IPO and three large strategic acquisitions in our initial growth phase.
Speaker 3: Now beyond our financial results, I do want to highlight the company's progress with respect to ESG and ESG disclosure. In 2023, we joined the UN Global Compact and will disclose our ESG performance.
Speaker 3: in an inaugural sustainability study in and around our Investor and Analyst Day in May.
Speaker 3: alongside the sustainability report.
Speaker 3: We also expect to publish our first asset handbook. This important document will provide investors with a detailed look into the assets that make up our market leading growth portfolio.
Speaker 3: our first asset handbook. This important document will provide investors with a detailed look into the assets that make up our market leading growth portfolio. Now with that...
Speaker 3: I'll pass it over to John Griffith, our Chief Development Officer, to step through the assets. Thank you very much Andrew and it's a pleasure to have you all join us today and thank you for your time. It's worth recalling that it was only two years ago that we went public with a portfolio of 18 royalties and we now have over 200 royalties that are fully paid for in a portfolio poised to deliver multi-decade growth.
Speaker 3: Our portfolio places us in the top five in terms of the number of royalties behind the likes of Franco Nevada, Sandstorm and Triple Flap.
Speaker 3: Our portfolio is organic in the sense that many of the assets are moving forward in the very capable hands of some of the world's leading well-capitalized and socially responsible Lucy know how to sell path to go and go produce.
Speaker 3: as noted at the bottom of this page. As our key top tier operating partners work to move these assets along the development pipeline, they become increasingly valuable without gold royalty having to raise any additional capital or incur any additional costs.
Speaker 3: Our seven producing royalties are closely shadowed by 14 royalties on development assets.
Speaker 3: many of which will be in production over the next several years, delivering peer-leading revenue growth.
Speaker 3: Behind the pipeline of development royalties, we have another 38 advanced exploration royalties with resources.
Speaker 3: many of which present very large gold resource endowments.
Speaker 3: and the scope to rapidly move into the development phase.
Speaker 3: into the development phase, such as federal.
Speaker 3: And then we have over 150 exploration royalties, many of which are in the most prolific gold producing regions in the Americas.
Speaker 3: These royalties provide significant option value to provide meaningful future value accretion over time.
Speaker 3: Turning to slide nine.
Speaker 3: As mentioned, the producing and development royalties in our portfolio will be the key drivers of our peer-leading growth over the next several years.
Speaker 3: using research analyst consensus estimates.
Speaker 3: Gold Royalty is expected to deliver organic revenue growth on a compound annual growth rate basis.
Speaker 3: 60% over the next several years. And importantly we do not need to raise any capital or incur any additional costs to benefit from this growth.
Speaker 3: Beyond the next several years, we anticipate a continued growth in revenue.
Speaker 3: as assets such as Odyssey, Granite Creek and Kotek come online, supported by the REN project, the northern extension of Gold Strike, as well as Fanalong towards the end of the decade.
Speaker 3: Turning to slide 10. In addition to having a balanced portfolio operated by many of the world's leading operating companies, our portfolio benefits from being heavily weighted in some of the best mining jurisdictions in the world, as measured by the Fraser Institute.
Speaker 3: taking into account factors such as geological prospectivity.
Speaker 3: access to skilled labor, permitting and rule of law. Over 80% of our net asset value is anchored in the provinces of Quebec and Ontario in Canada and the state of Nevada in the USA.
Speaker 3: And speaking of prospectivity, last year our operating partners drilled over 700,000 meters on our underlying properties.
Speaker 3: This year our operating partners are expected to drill a further 600,000 meters.
Speaker 3: All of this exploration comes with zero cost to gold royalty.
Speaker 3: but with all the upside in potential resource growth. This underscores that our portfolio is not just about quantity of royalties, but also the quality of our assets in which our operating partners are investing so heavily.
Speaker 3: Turning to slide 11. We have grown quickly but we've also built our business on solid foundations.
Speaker 3: A number of our royalties are underpinned by assets that are not only among the largest gold mines in North America, but also mines that will produce gold for many decades.
Speaker 3: This is a differentiating feature of our company. None of our more immediate peers have multiple assets such as Odyssey, Cote and Rennes that will all be producing gold this decade and still be producing gold in 2040 and beyond. It is important to emphasize this point.
Speaker 3: as great mining companies are built on the back of great assets.
Speaker 3: Franco-Nevada's foundational asset was a royalty on Barracks' gold strike mine.
Speaker 3: And we have a royalty on the Northern Extension, an important future contributor to Gold Strike, the REN project.
Speaker 3: The attributes of our portfolio are outstanding.
Speaker 3: We are poised to deliver exceptional growth, not just over the next several decades, but well into the next.
Speaker 3: Sorry, not over the next several years, but well into the next decade.
Speaker 3: our confidence in the portfolio.
Speaker 3: allowed us to initiate a dividend early on in the evolution of our company.
Speaker 3: it will be instrumental in being able to grow total shareholder returns over time.
Speaker 3: Having addressed some of the macro attributes of our portfolio, I'd now like to speak a bit more in detail about some of our exciting assets.
Speaker 3: Turning to slide 12, first talking about the Canadian malarctic property. As a reminder, we hold a 3% NSR royalty on portions of the Canadian malarctic mine and the Odyssey project.
Speaker 3: This royalty currently applies to a portion of the Canadian maloptic open pit areas, the eastern end of the bonnet extension.
Speaker 3: where most of the production has occurred to date, and importantly the northern portion of the Odyssey project.
Speaker 3: The royalty also applies to portions of East Meloptic, Sladden and the Sheehan Zones, and all of the Jeffrey Zone within the Canadian Meloptic Mine property.
Speaker 3: The previously announced acquisition of Yamana by Agnico Eagle in Pan American is expected to close soon, resulting in Agnico Eagle becoming the sole owner and operator of the Canadian Meloctek attacked by American military.
Speaker 3: The Canadian Melodic and Odyssey mines will now form the Canadian Melodic Complex. For 2023, Agnigo Eagle disclosed that production is expected to be sourced from the Canadian Melodic Pits.
Speaker 3: the Barnett pitch, and the Odyssey mine.
Speaker 3: complemented by ore from the low-grade stockpiles. The Canadian malarctic pits is expected to be exhausted late in the first half of 2023.
Speaker 3: Production from the RAM sections of the Odyssey mine is expected to commence in March 2023 with the mine ore to be processed at the Canadian Milotic Mill.
Speaker 3: The Odyssey Mine is forecast to gradually ramp up production in 2023 with production from the shaft commencing in 2027.
Speaker 3: Agnigo Eagle expects to have up to 40,000 tons per day of excess milk capacity at the Canadian malarctic complex starting in 2028 as processing of the open-pit ore and low-grade stockpile begins to wind down and processing transitions.
Speaker 3: to the higher underground Odyssey Mine. Turning to Curtin Gold Project, we hold a 0.75% NSR royalty.
Speaker 3: over the southern portion of the Cote de Gaulle project located in Ontario.
Speaker 3: IAMGOLD has disclosed that COTAC Gold Project was estimated to be approximately 73% complete at the end of 2022.
Speaker 3: Imgold also disclosed that the aggregates anticipated proceeds from asset sales, combined with the funds to be provided by Sumitomo under the joint venture for the mine, will meet the estimated remaining funding requirements for the completion of construction at K?te.
Speaker 3: IAMGOLD further stated that Cote is expected to commence production in early 2024 when it is expected to become Canada's third largest gold mine by production.
Speaker 3: Turning to the REM project.
Speaker 3: We hold a one and a half percent NSR and a three and a half percent NPI over the REN project part of Barracks Kolin complex in Elko County, Nevada.
Speaker 3: On February this year as part of the company's 2022 results announcement.
Speaker 3: Barrick highlighted an increase in inferred resources at REN to 1.6 million ounces.
Speaker 3: stated that growth is expected to continue in 2023.
Speaker 3: At REN drilling continues to grow in third resources in the JV zone as well as confidence in the continuity of mineralization at the Corona Corridor where MRC22-002, MRC22-002 and REN drilling continues to grow in third resources in the Corona Corridor where MRC22-002, MRC22-002 and REN drilling continues to grow in third resources in the Corona Corridor where MRC22-002
Speaker 3: drilled within the Devonian Rodeo Creek formation returned 16 meters at 17.35 grams per ton of gold.
Speaker 3: within the Devonian Rodeo Creek formation returned 16 meters at 17.35 grams per ton of gold. Turning to the phenyl on gold project.
Speaker 3: We hold a 2% NSR royalty over the vast majority of the Fenelon Gold Project located in Quebec. On January this year, Wallbridge announced an updated mineral resource estimate for the Fenelon Project prepared under NI 43-101. You will also To tryIf you choose to repair the
Speaker 3: The updated mineral resource estimate is expected to form the foundation for Woolbridge's upcoming PEA on phenylon which is expected to be completed in the second quarter of this year.
Speaker 3: Wallbridge also announced its 2023 exploration plan, which includes 15,000 meters of drilling on the Fenlon project.
Speaker 3: which remains open laterally and at depth in multiple directions.
Speaker 3: The drill program will follow up on recent exploration results that continue to expand the NIM Amber gold system.
Speaker 3: In addition, Walbridge will continue de-risking the project with further technical studies, environmental and permitting activities.
Speaker 3: Turning to Granite Creek.
Speaker 3: We hold a 10% NPI over Brenner Creek Mine in Nevada.
Speaker 3: On March this year, IAT provided an update and recap of progress at Granite Creek.
Speaker 3: The 2022 underground drill program was focused on delineating mineralization for mining, as well as upgrading and expanding resources.
Speaker 3: expected to provide the bulk of mineralization to be mined in the following 12 months.
Speaker 3: Multiple underground levels have been developed, especially at the OD zone, and IAT continued to extend the decline to depth with the goal of initiating access to the new South Pacific zone, located immediately below and to the north of the underground mine workings.
Speaker 3: IAT targets to complete underground drilling and bring the newly discovered South Pacific zone into the Granite Creek Mine Plan in 2023.
Speaker 3: And finally, turning to Jared Canyon. We hold a 0.5% NSR over the Jared Canyon mine in Elka County, Nevada. We also hold an incremental third-time royalty interest on the Jared Canyon processing facility. simply by holding aLinux 3 in the middle of the concert hall. Jared Canyon is dry, cracked, and at the same time, the sensing is micro, South Requesting
Speaker 3: 20th of this year, First Majestic announced it's taking action to reduce overall costs by reducing investments.
Speaker 3: temporarily suspending all mining activities and reducing its workforce at Jared Canyon.
Speaker 3: effective immediately. During the suspension, First Majestic intends to process approximately 45,000 tons of a background stockpiles.
Speaker 3: During the suspension, First Majestic intends to process approximately 45,000 tons of above ground stockpiles through the plant.
Speaker 3: Exploration activities are expected to also continue through 2023 with several additional plans for optimization of the assets.
Speaker 3: As a result of the suspension, First Majestic's previous production and cost guidance for Jared Canyon can no longer be relied upon.
Speaker 3: First Majestic revised consolidation and production and cost guidance, including capital investments, are expected to be published in July .
Speaker 3: Gold Royalty notes that Jared Canyon accounts for less than 2%
Speaker 3: its portfolio on a net asset value based on consensus estimates.
Speaker 3: And with that, I conclude my remarks and hand back to Dave.
Speaker 2: Thanks very much, John , and thank you all for your attention today. I think what is indisputable is that we are headed into what I think is an unprecedented bull run for gold. The ingredients are there in terms of an accelerating inflationary environment, a likely pivot.
Speaker 2: by the Federal Reserve and central banks globally to easing monetary condition. They're faced with the conflicting challenges of high inflation, but also a financial contagion. And they're going to have to do increasing liquidity to stave off financial ruin within the financial services sector, not unlike what we had in the great financial crisis just 15 years ago. So we're likely to enter into a period where gold will exceed all-time highs of $3,000 an ounce on a real basis.
Speaker 2: In that type of environment, we do expect gold equities to respond. What's also striking is that gold equities have not responded, even though gold on a nominal basis is achieving all-time highs again, we've still seen gold equities discounted severely from where they were the last time gold was above $2,000 an ounce, at least 30%.
Speaker 2: below their all-time high. In the producer universe, I think that's a factor, factored by or influenced by the fact that producers are not immune from inflation that we're experiencing in the general economy, and that's certainly weighing on their valuations. That's why we believe that royalty space is the best place to live.
Speaker 2: to get optimum leverage to gold price and optimum leverage to expiration while protecting you yourself from inflation in the underlying gold producer universe. No company is better positioned for rising gold prices than gold royalty from a couple of respects.
Speaker 2: increase in production from our underlying Royalty portfolio and we have peer leading growth in revenue. Admittedly, we're in a space in the equity markets where growth is being severely discounted as nominal rates go up and that's certainly led to underperformance. But we think that as monetary conditions ease-
Speaker 2: As the gold price goes up, we're uniquely positioned to provide the best world from the best jurisdictions in the world, Nevada, Quebec and Ontario, where we have a heavy concentration in our portfolio. And as I said, we have optimum leverage to expiration. Last year, our operating partners invested over $200 million or 700,000 meters of diamond drilling on their underlying properties, growing the reserves and resources.
Speaker 2: and exposing our shareholders to that expiration upside. And we expect a similar expiration focus from our operating partners over the course of 2023, which will lead to further expiration upside within our portfolio. So I think we're excellently positioned to not only grow our cash flow, but also to expand our portfolio
Speaker 2: but also grow our dividend over time and also well positioned with strong liquidity on the balance sheet to participate in new opportunities as they come our way over the course of the next year or so. With that, we'd be delighted to take questions from our shareholders. Thank you so much for your attention today. Thank you gentlemen for a fantastic update and thank you for your time today. By the way, thank you for your time today.
Speaker 1: We had almost 120 participants on this call. So well done. I can see by the comments and the questions that many of your shareholders appreciate the opportunity to be able to interact directly with you. So with that, we'll start taking questions.
Speaker 1: 120 participants on this call. So well done, I can see by the comments and the questions that many of your shareholders appreciate the opportunity to be able to interact directly with you. So with that we'll start taking questions.
Speaker 1: into the portal. Can you please outline the specific areas where cash operating expenses can be reduced to achieve the 2023 guidance level and also can you break out between the Royalty Revenue and the option proceeds to get to the 2023 guidance?
Speaker 3: Sure, I can take that. So the recurring cash operating expense reductions
Speaker 3: through 2023 is likely to happen in a few areas. First off, I think everyone will be aware and understand that we as a company made three large acquisitions post IPO.
Speaker 3: a major subsidiary in Nevada and Valdor, Quebec at the time. One of the things that we are in the process of doing and will do through 2023 is consolidate and reorganize those subsidiaries.
Speaker 3: such that there should be elimination in excess overheads in those areas, reduction in consulting costs, et cetera. That's one thing. We do expect also as the company was established, a moderate.
Speaker 3: moderation in the office and in IT setup costs through 2023 as the company stabilizes that so it happens once. Also, refocusing the
Speaker 3: marketing in IR costs through 2023 should be helpful to get to meet that guidance for cost. So those are the key areas that we'll focus on for cost reductions to meet that seven to eight million dollar recurring cash operating expense guidance. Now on the question about royalty and option proceeds.
Speaker 3: for 2023, approximately 40% of that will be from our royalties with the majority coming from the Canadian Malartic line and approximately 60% will be options AMRs, etc.
Speaker 1: Thank you, Andrew.
Speaker 1: Next question, and we've had a lot of questions about this regarding the performance of the stock. Can you discuss why there is pressure on the stock or as I like to say, what is the market missing?
Speaker 2: Look, I think as I alluded to a little earlier on when I provided a summary of our presentation, growth has been severely discounted in this market, in a market where interest rates are rising. We're seeing our growth significantly discounted. Growth stories are definitely not in bold. Immediate cash flows getting a premium and admittedly our cash flow in the short term is not as significant as it is over the next three to five years.
Speaker 2: largely absent up to this point and we've seen that in the underperformance and mining equities generally. I think you're going to see a premium place on the kind of growth that we can offer. Growth that's fully funded I should add. As I said we have 216 royalties but they're all bought and paid for. We don't have to put another dime into our growth nor do we have to put a dime into the significant exploration programs that our operating partners are undertaking.
Speaker 2: All that growth really comes for free because all of our royalties are bought and paid for. We just have to wait for that growth to crystallize. And the value creation on a per share basis is immense because our share count is static and our growth is immense. And that's the opportunity we see as we start to see capital reallocated back into the gold sector.
Speaker 2: Just to give you a sense of the upside potential within the gold sector generally, if you look at global asset allocation, it's only a small fraction of 1% of capital globally is allocated to the gold sector and physical gold. It would only require a small reallocation of capital, really a rounding error.
Speaker 2: to significantly enhance not only the price for gold, but also significantly enhance valuations in the gold sector. And as that capital gets reallocated into the gold sector, it's our firm view that investors, general investors in particular, are not going to be looking to invest in shrinking business.
Speaker 2: businesses will be looking to invest in ones that are growing, not only on an absolute basis, but on a per share basis. And again, because our growth is all fully paid for, that means the per share accretion, the per share growth in our value and our earnings and our cash flow is dramatic over the next coming years. We were talking about the
Speaker 2: investors coming into the space will be looking for growth again, which has not been the case up to this point.
Speaker 2: Thank you. Staying on the gold market, what is the impact for GROY when gold goes up by $100, for example? Yes, certainly. Look, every $100 move in the gold price has millions of dollars of impact in our revenue, increasingly so.
Speaker 2: as a more significant portion of revenue comes from production rather than options. If you look at our growth beyond the next couple of years, all that growth is coming from royalty revenue, not option proceeds. In fact, our assumptions in our revenue projections and the consensus estimates that you've seen in our chart up to this point is that option proceeds fall off at effectively zero over the next two to three years.
Speaker 2: all of our growth comes from royalty revenue. That means that every $100 move has an immense impact on our revenue growth over the coming number of years. We're using 1650 gold long term for our consensus for estimates at the consensus gold price.
Speaker 2: So even at current gold prices, there's upside in those revenue projections that we showed you a little earlier in the presentation. I might add that the other thing about a rising gold price environment, because we own royalties, we have to be able to get the same value.
Speaker 3: that incremental revenue just drops to the bottom line. There are no costs that come with it. So you know it's incredible leverage and that's one of the beauties of the royalty business model.
Speaker 1: Thank you John . Can you comment on Marin Katusa and why he advised his subscribers to sell?
Speaker 2: Yeah, Marin last year really turned bearish on gold because the Federal Reserve was starting what was at that point and still is an unprecedented increase in interest rates and he used the phrase, don't fight the Fed. And so he actually advised his investors.
Speaker 2: subscribers to liquidate their gold positions. It wasn't just a gold royalty phenomenon. Obviously he was very heavily weighted to gold royalty as one of his preferred stories, but he decided to make a wholesale rotation out of gold. Interestingly, in the last couple of weeks, he's pivoted back into the gold sector and is actually advising his investors to look at gold. Hol fitok procedure
Speaker 2: the potential for an unprecedented bull run in gold. So I think like many of us, he's starting to see the potential for a significant pivot by central banks from tightening monetary conditions to easing them dramatically because of the prospect of a financial contagion.
Speaker 1: Thank you. I know we've talked a little bit about pressure on the stock, but is there an actual catalyst?
Speaker 2: that will help to improve the share price in the coming year? Well, from a macro standpoint, I would say the gold price would be a significant catalyst for not just our equity but mining equities generally, but in particular royalty companies in the face of increasing inflation. That's the best place you want to be parked to get optimum leverage for the gold price, optimum leverage to exploration while protecting yourself. As John correctly...
Speaker 1: I think we're very well positioned for a rising gold price environment. Thank you. I know you've thoroughly discussed the first majestic closing of Jarrett Canyon, but is there something else that you could sort of...
Speaker 2: explain to your listeners because we're getting a lot of questions on that. Look, I think there's a couple of things that we should point out. By consensus estimate, Jared Canyon represents less than 2% of our underlying value of our business and that's the power of diversification that you can realize in a royalty company that you can't hope to realize even in the most senior operators.
Speaker 2: in the gold industry. Even the biggest have no more than a dozen to 15 mines within their portfolio. So there's a limit to the diversification you can undertake when you're a producer. It's impractical to run more than 12 or 15 mines even if you're a very big producer like Newmont or Barrick or Agnico Eagle for that matter. And so with 216 royalties we could run a business 10 times the size with the same human footprint. We have eight full-time equivalent employees.
Speaker 2: There's no limit to the diversification we can achieve in our portfolio. That's another unique aspect and feature and attraction of this model. And while Jara Canyon is not in production currently and they're still assessing First Majestic when they're going to restart operations there, we've completely removed
Speaker 2: for First Majestic continuous exploration program and benefit from the upside from their exploration efforts without actually having to contribute. So that provides a lot of optionality to prefer shareholders. Thank you, David. Is the company looking to continue to grow through portfolio acquisitions or are you going to rely on organic growth?
Speaker 3: for the next little while. John ? Well, one of the beauties of our portfolio, as I mentioned, is we've got some of the largest...
Speaker 3: and most prolific gold producers in the world, spending considerable amounts of money, drilling and further advancing all of the underlying assets in our portfolio. So without us having to do anything there's a natural migration of the assets within our pipeline towards production. So in addition to those that are coming online.
Speaker 3: which we've already discussed, we've got this further impetus for growth. But that's all organic and it's all paid for. We're certainly very active. In fact I'd say we've probably never been quite as active in looking at different opportunities. You might say well why haven't we transacted and I'd say
Speaker 3: largely because of our discipline in trying to find the right opportunity that's going to be a good fit with our portfolio that's going to be additive to our strategic imperatives that's going to add value to our to our net asset value per share and so we're looking at opportunities that I would say
Speaker 3: would be across the spectrum, consolidation opportunities, writing new royalties, providing fresh capital to operating companies, looking at portfolio assets, looking at single assets. And I'd say also that our organic royalty generation, both in Nevada and Quebec have...
Speaker 3: both been very, very prolific for us in generating new organic oil teas.
Speaker 3: I think the one thing I would say though, I'd probably tone down the amount of consolidation that's going on. We've already seen a considerable number of companies that have either.
Speaker 3: consolidated already or certainly changed in form. So I think the opportunity for corporate consolidation is simply a narrow window, but we're busy in all aspects of the corporate development spectrum.
Speaker 1: So, to answer one of the questions that has been asked, so you are open to looking at any M&A possibilities in the near future, given the consolidation we've seen in the space recently.
Speaker 3: Absolutely. I mean it as I said the one thing we do have to make sure is it's a good strategic fit. We have to be disciplined and you know again we've we look at a significant number of opportunities. I know Davis said this before we operate almost in a perpetual state of due diligence.
Speaker 3: And I'd love to be able to say definitively and handicap the possibility of those opportunities turning into live transactions. But there are so many factors that are at play that make it impossible to really give any confidence around that. If I have to say,
Speaker 1: that we've never been as busy in the corporate development group here at Gold Royalty. Thank you John . What is the percent, we've had a lot of questions about this by the way, what is the percentage of Eric Sprott's current GROI holding? It's really hard for us to discern any individual share ownerships.
Speaker 2: unless they're doing public filings. So hard to say, but we know that we've inherited some really high caliber shareholders over the course of our existence since our IPO in consolidating E. Lee, Golden Valley and Abitibi and that included not just Eric Sprott, but Rob McEwen, and Jimmy Lee. These have been good strategic shareholders.
Speaker 2: We also have Nevada Gold Mines, which is the joint venture between Newmont and Barrick as a significant shareholder as a result of the acquisition of the Granite Creek Royalty last year. They're sitting at around 6% based on public filings. I think I'll also add that.
Speaker 3: Eric Sprott was a big believer in the E-Lee assets and they still remain within Gold Royalty Corp so investors still get exposure to those assets through our shares, certainly.
Speaker 2: Thank you, Andrew. There were a lot of questions regarding perceived dilution of the stock. Can you comment please? I'm not sure what to refer into. We haven't had any major share issuances other than for share based compensation restricted share units to our board of management. The majority of our compensation is share based compensation.
Speaker 2: But the last big significant share issuance was as a result of the M&A we've done. We haven't issued any stock for cash of any significance since our IPO when we raised $90 million.
Speaker 2: big significant share issuance was as a result of the M&A we've done and we haven't issued any stock for cash of any significance really since our IPO when we raised 90 million dollars. Thank you David.
Speaker 1: On average, how much time will the development projects take to generate income? One to two years, two to three?
Speaker 3: I'll take them and I think maybe if we could turn back to, I'm going to turn back to our growth slide here. So basically, as I mentioned in my prepared remarks,
Speaker 3: we're looking at 60% growth from 2023 to 2025 based on analyst consensus estimates. So that hopefully gives the person asking that question an indication that our revenue is going to grow.
Speaker 3: and production from the shaft comes online. Obviously, we've got the Royalty on the southern portion of Kote when that comes online in 2024. Our Royalty basically sits right over the near surface mineralization. So we expect a significant.
Speaker 3: significant revenue from Cote certainly in its early years of production. And you know I think Granite Creek is another asset that's going to be a massive contributor to our relatively near-term revenue appreciation.
Speaker 3: And I think beyond that, as I mentioned, we have 14 assets that are in that development pipeline pushing towards production.
Speaker 3: And for that reason, we haven't obviously provided guidance specifically out to 2027, but you'll see here that we anticipate our revenue will be, depending on whatever commodity prices you want to assume, at least at the $50 to $60 million limit.
Speaker 3: over 216 royalties. Over the course of the life cycle, if a lot of those are developed or even a handful of those, we're going to see that trajectory increase year over year. It is really a mix of depending on the assets. We do have some coming in a year, two years, three years.
Speaker 4: John , do you want to?
Speaker 4: John , do you want to tackle that one?
Speaker 3: Yeah, I think we have a modest amount of silver exposure. I don't think it's gonna be the key driver of our bottom line revenue growth. It's nice to have that exposure. We also have some exposure to copper, which...
Speaker 3: think has a very similar investment thesis. So quite frankly I think it's copper really that will be the
Speaker 3: commodity that really links up with the greening and the decarbonization of the global economy more than silver within our portfolio. Thank you. How many assets will be producing by 2024?
Speaker 2: I don't know if you have that one, Andrew. I think it's going to be 24. Cote comes on next year. That's probably the most significant addition and that's going to be quite significant step change in cash flow. But that would be probably the most in 2024, that would be the most significant addition to our cash flow.
Speaker 2: you look at detour as number one or number two. We have a Royalty on Kote, which will be number two or three. We have a Royalty on the underground extension of Gold Strike, which is the biggest producing gold mine in the US. So John's point earlier on, Franco Nevada being built on one of those assets of that quality, we have three of them in our portfolio, which is unprecedented.
Speaker 2: for a company of our size and certainly in the envy of any of our immediate peers in the smaller CAP universe.
Speaker 3: Yeah, no, I think we throughout the year will go from about 7 to maybe 12 in total, 11 or 12.
Speaker 3: It should come some later on in 2024, but Dave's right. Cote is really one of the major contributors in 2024.
Speaker 1: Okay, gentlemen, and we are at the top of the hour here. So I'm just going to ask one more question and that is, are any of your royalties subject to buybacks?
Speaker 3: We have a limited number of royalties that are subject to partial buybacks. There are none that have full buyback options. We're quite well an resourceballs companies, where we lie about our stimulus,
Speaker 3: pleased to have the majority of our royalties being NSR royalties and again very little in the form of buy downs and none that have total buy downs.
Speaker 3: of our royalties being NSR royalties and again very little in the form of buy downs and none that have total buy downs. Okay...
Speaker 1: Thank you. Thank you David, Andrew and John and thank you to everyone who joined us today. If you have further questions for the company, you may email them at info at goldroyalty.com. Thanks everyone for tuning in. It's been a pleasure to host you. We will see you soon on the next vid Town Hall Forum.