Q1 2025 Gold Royalty Corp Earnings Call

Welcome to the gold royalty Corp, first quarter 'twenty 25 results conference call all participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

After today's presentation there'll be an opportunity to ask questions. Please note. This event is being recorded.

Speaker Change: I would now like to turn the conference over to David Garofalo, Chairman and CEO. Please go ahead.

David Garofalo: Thank you operator, good morning, ladies and gentlemen, and thank you for participating in today's call to review, our first quarter 2025 results.

David Garofalo: Please note that for those not currently in the webcast. Our presentation accompanying this conference call is available on the presentation page of our website.

David Garofalo: Some of the commentary on today's call will include forward looking statements and I would direct everyone to review slide two of the presentation, which includes important cautionary notes.

Speaker Change: Speaking alongside me today will be Andrew Gobbles, Chief Financial Officer, and Jackie <unk>, Vice President capital markets.

Speaker Change: We're very excited about 2025 and believe the company is uniquely positioned for a transformative year.

Speaker Change: We are proud to report that this quarter, we have achieved another record operating cash flow and we expect to see a steady improvement over the coming quarters to the successful ramp ups of the copay virus and Barbara Rimer mines.

Speaker Change: We look forward to continued momentum as production increase increases towards full nameplate run rates at these operations.

Speaker Change: We've also benefited from a positive gold price environment spot gold prices have reached record highs recently exceeding $3300 per ounce and the fundamentals for gold continues to be supportive of strong gold prices in the near and medium term.

Speaker Change: At gold royalty strong gold prices boost both our top and bottom line and what is an already exciting inflection year.

Speaker Change: As production and revenues grow as our scalable business model keeps G&A and other costs flat. We expect to report positive free cash flows later this year for the first time.

Speaker Change: Capital allocation continues to be important strategic priority and we will be even more important as we harvest cash with a year.

Speaker Change: Looking ahead, we maintain a clear focus on debt reduction, while considering capital returns to shareholders and pursuing strategic growth opportunities when appropriate.

Speaker Change: With that I'll pass the call over to Andrew Gobble us to discuss the details of our first quarter results and our outlook on slide number four.

Speaker Change: Yeah.

Speaker Change: Thank you David and good morning, everyone.

Speaker Change: We had strong financial performance during the quarter with total revenue land agreement proceeds and interest of $3 $6 million translating to 1249 gold equivalent ounces for the quarter.

Speaker Change: Additionally, this quarter, we set a record for positive operating cash flows of $2.5 million, representing an increase of over 180% compared to the previous quarter.

Speaker Change: As well as an adjusted EBITDA of $1.7 million, representing an increase of over 30% compared to the previous quarter.

Speaker Change: This is primarily due to the continued ramp up of the virus in Cotai gold mines.

Speaker Change: And improved gold price environment, and lower G&A costs of $1.8 million during the quarter.

Speaker Change: Okay.

Speaker Change: Looking ahead, our 2025 and five year outlooks are unchanged from the guidance that we provided with our Q4 results in March.

Speaker Change: Production in the first quarter equates to approximately 20% of the midpoint of our full year guidance range of 5700 to 7000 Geos in 2025.

Speaker Change: We remain comfortable with our guidance as we expect to see Geo growth during the year as the projects in our portfolio continue to ramp up and de risk.

Speaker Change: Looking ahead.

Speaker Change: On 2025.

Speaker Change: On slide five we're also excited to reiterate our inaugural five year outlook.

Speaker Change: We forecast 23000 to 28000 gold equivalent ounces by 2029, representing an over 360% increase from our 2024, geos and showcasing our significant growth potential.

Speaker Change: This longer term outlook.

Speaker Change: And so arrive from the assets already held in our portfolio and is based on the public forecast expected development timelines and other disclosures by the operators of the properties underlying our interests.

Speaker Change: We assume a gold price of $2212 per ounce and a copper price of $4.24 per pound in developing our five year outlook.

Speaker Change: Lastly, I'd like to emphasize.

Speaker Change: That as this outlook materializes, we expect our operating cost structure to remain relatively stable.

Speaker Change: This will result in higher future operating margins and increase our cash reserves.

Speaker Change: This transpires, we will continue to review our capital allocation alternatives, which includes paying down our revolving credit facility to reduce our interest costs and boost free cash flows.

Speaker Change: With that said I will now pass the call to Jacky to discuss some recent portfolio updates in more detail.

Jacky: Thanks, Andrew turning to slide six I'll spend a few minutes discussing the ramp up of the various co take old and Bulgarian of lines.

Jacky: There is no put in Q1, 25 was 40000 tons or 38% below budget due to several factors, including poor weather in January now resolved delay.

Jacky: Delay in the start of the V. S. I could tailings operation now resolved and tailings filtration cycle time issues, which are expected to be fully resolved by Q3.

Jacky: Patriotic metals has already highlighted significant progress in April with key metrics hitting monthly records, including tons milled metal produced on a silver equivalent basis and meters of mine development.

Jacky: The operator maintains its expectation to reach commercial production at various in Q2 of 2025.

Speaker Change: <unk> reported record throughput in March and achieved a monthly average throughput at 90% of nameplate capacity.

Speaker Change: Operator, iron gold expects further improvement with the installation of a second cone crusher later this year, which is expected to improve the reliability of the combination circuit and debottleneck the dry side of the plant.

Speaker Change: The potential for further optimizations and improvements in the near future.

Speaker Change: Company maintains its 2025 production guidance of 360 to 400000 ounces of gold on its 100% basis and continues to target achieving nameplate capacity of 36000 tons per day by year end.

Speaker Change: Or a minerals continue startup activities at ball Braemar. After the mine achieved first production in late March.

Speaker Change: <unk> continues to expect to achieve commercial production in the third quarter and has maintained its 2025 guidance of 33 to 40000 ounces of gold produced.

Speaker Change: Our attractive geographic exposure Premier operating partners and high quality assets made for one of the highest quality portfolios in the sector.

Speaker Change: Bolt royalties diversified portfolio provides significant optionality to the extensive exploration work conducted by our operating partners, we're seeing exciting progress towards project completion expansion and development across the full spectrum months early to mature assets in our portfolio and we look forward to reviewing some of these opportunities in more detail at our upcoming <unk>.

June 12th capital markets day.

David Garofalo: I'll pass it over to David for closing remarks.

David Garofalo: Thanks, Jackie there is indeed lost they get excited about as you look across our portfolio and the various high quality assets ramping up and entering production.

David Garofalo: Despite our high quality portfolio and the encouraging developments from our operating partners. We continue to trade at a discount relative to many peers on a price and net asset value basis.

David Garofalo: During this period, we have placed an emphasis on being disciplined as we continue to grow our portfolio. We have a strong degree of conviction with the quality of the portfolio would get built and we will continue to be patient as our peer leading cash flow growth materializes.

David Garofalo: As we expect cash flow to increase in future quarters. We are confident this will be the catalyst for re rating back in line with peers in the meantime, we will be patient paying down our revolving credit facility will be our priority use of capital.

David Garofalo: In closing gold royalty is in a unique spot currently we're not only excited for the near term as we've mentioned, but over 2027 2028 and 2029, we see a catalyst rich portfolio with significant potential.

David Garofalo: Unexpected increase to production volumes greater than 360% over the span of five years is truly remarkable and speaks to the great quality of the assets and the people at gold royalty <unk>.

David Garofalo: Finally, I would like to remind everybody of our upcoming capital markets day on June 12th in Toronto in person and virtual registration details are outlined on the events page of our website.

David Garofalo: Thanks for tuning in to the earnings call and with that I'd be happy to open up the call the Q&A over to you operator.

David Garofalo: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

David Garofalo: If you are using a speakerphone please pick up your handset before pressing the keys.

David Garofalo: To withdraw your question. Please press Star then two.

David Garofalo: At this time, we will pause momentarily to assemble our roster.

Heiko: Our first question comes from Heiko.

David Garofalo: With H C. Wainwright. Please go ahead.

David Garofalo: Hello, David Jackie and team. Thanks for taking my questions Hope you guys are doing well good morning.

David Garofalo: So I think your full year guidance remains quite achievable going through our model and given the ramp up of the various assets in the portfolio.

David Garofalo: That said I mean, we'll be halfway through Q2 next week.

David Garofalo: You're seeing where should we model ounces for the second quarter and building on all of that can you give maybe a little bit more granularity of how the second half of the year, our stock's up quarter by quarter.

Jackie: Jackie over to you.

Jackie: I think Tycho thanks, Dave Yeah. So production for Q1 represented about 20% of the midpoint of our full year guidance range, which is a seven.

Jackie: Seven to 7000 Geos.

Jackie: That was on plan, we were expecting Q1 would be the lightest mm, we're seeing varies quotation bulb Brahma continuing to ramp up towards commercial production.

Jackie: Our full run rate through the year and Q1 as I'm sure. You know is always impacted by some poor winter weather, Oh and certain assets earlier in the earlier in the year I said, we are expecting steady improvement through the year I'm I'd say you know, we don't we don't give guidance quarter by quarter, but we will see a bigger step change.

Jackie: For Q2 versus Q1.

Jackie: And as as we get those those assets ramping up to commercial production, we've already seen announcements by Adriatic for example that bearish is running well in April and we've heard from I'm gold that cochise running well and so we are expecting a more significant step up in Q2, and then and then probably more incremental improvements in the second half of the.

Jackie: So cadence wise in say Q2 should be a reasonably good catch up quarter for us.

Jackie: I think that's a that's a very fair answer and I appreciate the insights.

Jackie: On your longer term outlook, which is obviously quite strong where do you think the most variability could stem from and then building on that.

Jackie: Where do you think we could see the most upside to what's currently you know in our models based on drilling results that you're seeing and just chitchat that you have with the operators.

Jackie: So we recently, we recently did some pull some of the analysts that cover US I think I think we are seeing more analysts now including <unk>.

Jackie: Various expansion for example in estimates and and the startup at rent, which is part of Nevada gold mines, and barrick's targeting as a full production. There in 2027. So we are seeing those being added to consensus estimates, which is great. I mean, that's consistent with our with the operator's guidance.

Jackie: I think where we're still seeing variability is a Canadian mill, Arctic and Odyssey Agnico Eagle talked a bit on its conference call about exploration work, there and some new some.

Jackie: The new zones that Theyre working on east Goldie is not.

Jackie: It is currently delineated not in our coverage area, but it is trending towards our coverage area deaths and the new eclipse selling similarly, not in our coverage area, but trending towards our coverage area at that so I think there's still a bit more uncertainty around.

Jackie: Around you know year by year, our coverage at Odyssey, and I think the other opportunity where we're still seeing potential upside is at ball Braemar <unk> reported its results earlier this week and talked about the highway relocation and no extension and it does not look like we're getting credit for that and analyst consensus estimates right now either so.

Jackie: I think those are the two kind of upside or or variability that we're still seeing in the estimates longer term.

Jackie: Awesome. Thank you so much I'll get back in queue.

Jackie: But well see in Toronto next month.

Speaker Change: Until it's safe, we're looking forward to hosting you for capital market stay thanks Heiko.

Speaker Change: Again, if he has a question. Please press star then one.

Speaker Change: And again, we did have a a question come through by email if I can read that out if that's okay.

Speaker Change: Yes.

Speaker Change: So the question was how.

Speaker Change: How is the market for new transactions.

Speaker Change: And in light of recent high gold prices.

Speaker Change: Well, we can ask Peter to stick handle that Peter Thank you.

Speaker Change: Peter <unk>, our director of corporate development is also on the call to answer questions. Thank you.

Speaker Change: Thanks, Dave Thanks, Jackie I'll jump in there.

Speaker Change: In the current environment, we're seeing more opportunities for new royalties on streams on earlier stage assets preproduction assets.

Speaker Change: As these operators really aren't benefiting from the current strong commodity price environment equity markets are not showing love to those earlier stage smaller cap mine developers.

Speaker Change: This contrasts really with our priority now that emphasis on discipline as David Andrew and Jacqui emphasized during the call. Our focus is on the <unk>.

Speaker Change: Disciplined in our capital allocation strategy and looking for opportunistic ways to grow the portfolio, our focus would be on acquiring cash flowing or near cash flowing royalties and streams. However that market is increasingly competitive and we need to be disciplined with our own cost of capital relative to those competitive processes. So won't.

Speaker Change: Maintain that discipline focus on accretive deals keeping dry powder paying down our revolving credit facility.

Speaker Change: And then looking for opportunistic opportunities as they arise.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to management for any closing remarks.

Speaker Change: Well. Thank you very much everybody for attending looking forward to fielding your questions or a capital markets day on June 12.

Speaker Change: But don't hesitate to reach out to any one of US if you have any other questions. Thank you very much.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.