Q2 2025 Gold Royalty Corp Earnings Call
Good day everyone and welcome to the gold. Royalty Corp second quarter, 2025 results conference call.
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After today's presentation, there will be an opportunity to ask questions.
please also note, today's event is being recorded
At this time, I would like to turn the conference call over to David GOP chair and CEO sir. Please go ahead.
Thank you, operator. Good morning, ladies and gentlemen. And thank you for participating in today's call to review our second quarter 2025 results.
Please note for those not currently on the webcast of presentation, accompanying, this conference call is available on the presentation page of our website.
Some of the commentary on today's call will include forward-looking statements and I would direct everyone to review slide 2 of the presentation which includes important, cautionary notes.
Speaking alongside me on today's call will be Andrew gles Chief Financial Officer and Jackie Price. Bilofsky vice president Capital markets.
We are proud to report that this quarter. We had firmly reached our inflection point achieving positive, free, cash flow and another record quarterly Revenue, adjusted IA and operating cash flow.
We also continue to expect steady improvement over the coming quarters through the successful ramp UPS of several of our key assets, including Baris, which achieved commercial production on July 1st kotay, which announced on June 23rd. That it had reached steady state run rate and borbera which started operations on March, 28th and continues to progress towards commercial production later this year.
Growing cash flows and revenues continue to improve our balance sheet, as Andrew will discuss in a moment.
but first, I want to talk about our approach to Capital allocation
Capital allocation continues to be an important strategic priority.
Will be even more important as we Harvest cash through this year.
Looking ahead, we meet in a clear focus on debt reduction while considering Capital returns to shareholders in pursuing strategic growth opportunities when appropriate.
With our convertible debentures and outstanding common. Share warrants. Now, deeply in the money and our growing free cash flow. We could be in an essentially net, debt-free position by the end of 2026.
We continue to monitor the landscape of consolidation across the world, you know, in the space.
With the entry of new strategic Capital into our sector and the recent announcement of 2. Major mergers in the royalty spaces here. Already, we do expect the pace of consolidation in the royalty sector to accelerate.
While we can't predict the sequence or participants in Industry consolidation, we believe the drive to create a mid-tier royalty company with Organic growth in sufficient scale to track Global institutional Equity investors. While also realizing cost synergies will be a big driver of continued merger activity.
Experienced by gold royalty. And some of our peers is partly reflective of this Dynamic. We also expect that the realization of gold world is peer-leading revenue and cash flow growth. This year has been a large driver of our share price performance in 2025
The better news is that this is just the beginning of a minimum 5-year period of pronounced attributable, gold, equivalent production growth across portfolio of growth season streams on large scale, and long life Minds in some of the best jurisdictions in the world.
We spent significant time on our June 12th, Capital markets day discussing your Capital, allocation strategy, and our views on consolidation.
If you are unable to attend the event live, I would encourage you to view the replay, which is archived on our website under investors and corporate presentation.
With that. I'll pass a call over to Andrew Goebbels to discuss a details of our first quarter results and our look on slide 4.
Thank you, David and good morning, everyone.
We're pleased to report.
New records for revenue and adjusted Ava in the quarter and half here.
Adjusted Eva de was 2.4 million in the quarter and nearly 50% increase compared to the previous quarter.
Total revenue land agreement proceeds, and interest was 4.4 million translating into 1,346 gold equivalent ounces in a quarter.
A reported revenue included the recognition of $0.3 million in revenue related to royalties payable for prior periods. After you received a favorable judgment in a previously announced dispute with the operator of the Jericho Canyon Mine regarding our Purton royalty interest.
This judgment will not impact future royalty revenues should Jerk Canyon restart.
As David mentioned, we reported both positive operating cash flow and free cash flow. This quarter, we are very excited about this transition to positive free cash flow.
Which is primarily due to the contribution of the various and Co gold mines. Strong gold prices, which averaged 3,279 per ounce in the quarter, and relatively flat Q2, G&A costs of 1.8 million
Our operating costs which include GNA and project evaluation expenses.
continue to be in line with an average of our other small cap royalty and streaming peers as we showed at our June 12th, Capital markets day,
Looking forward. We we reiterate our 2025 and 5 year outlook.
We will use excess cash including any proceeds from the exercise of outstanding warrants.
To opportunistically repay, the 27.3 million outstanding on our revolving credit facility.
As our EV dog grows over the coming quarters, we expect to deliver quickly such that Gold Royalty is effectively debt-free by the end of 2026.
I'll now pass the call over to Jackie to review our key operations.
In our asset portfolio.
Cody has achieved a major Milestone achieving name plate. Throughput, I am gold. Reported that on Saturday, June 21st 2025, the Cote processing plan operated at name plate. Capacity of 36,000 tons per day on average over 30 consecutive days.
Namely capacity was reached well ahead of the company's Target of Q4 2025, and our revenue from cot was strong at over million dollars in the quarter. I'm 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 debottlenecking the potential for further optimizations and improvements in the near future.
Or a minerals continue startup activities at Boba. After the mine achieved, first production in late March.
Or has maintained its 2025 guidance of 33 to 40,000 oz of gold produced.
While the asset has not, yet declared commercial production, the operator continues to expect this milestone in the current quarter. As such, we continue to receive pre-production payments of 250,000 oz of gold per quarter which contributed a meaningful, 1.2 million dollars in Revenue in the second quarter at strong gold prices.
Temporary issue of Mind sequencing. The operator continues to highlight the tremendous potential at Odyssey in the longer term, including a potential extension to Chef number 1, an installation of a second shaft.
We also continue to watch is Adriatic Metals, various mine, which achieved commercial production on July 1st 2025 roughly in line with the operator's Target of Q2 2025.
On July 28th, Adriatic Medals reduced its full year 2025 guidance to 40,075 to 58,585 thousand tons, or milled from 625 to 675 thousand tons, previously.
Despite the guidance cut at various gold royalties, we maintain our full-year guidance of 5,700 to 7,000 GEO in 2025. The shortfall at various assets is expected to be partly offset by better-than-expected performance from other portfolio assets. Including the assets mentioned previously, we are also maintaining our 5-year guidance at 23,000 to 28,000 GEO. We continue to note that this longer-term outlook is fully bought and paid for, and it’s comprised mostly of mature and brownfield operations owned by experienced and well-funded operators.
And with that, I'll pass the call back to David for a closing remarks.
Thank you, Jackie. There's indeed lots to get excited about as you look across your portfolio and the various high-quality assets, ramping up and entering production.
1 of the key benefits to our Diversified portfolio is a steady flow of exciting growth catalysts at our underlying assets. Those near medium, and long-term catalysts will contribute to peer leading growth to Jackie highlighted in our 2029 Outlook
Our relative valuation chart shows that gold royalty has made significant progress towards fair value and a price in that asset value basis. Since our first quarter call on May 8th
however we continue to see compelling upside to our share price as our portfolio assets, continue to develop according to our 2029 Outlook
And we emphasize that we will remain patient and disciplined as we consider any Acquisitions. And this week review, our Capital allocation options going forward.
Paying down or revolving credits facility will continue to be 1 of our priority uses of capital.
As our share price has now been comfortably above our warrant exercise price. For some time, we think it's prudent to highlight this to any Ward holders on today's call.
As of June 30th 2025 the company had approximately 20 million outstanding share purchase warrants with each warrant exercisable into a common share at us, 225 per share.
The warrants are listed on the NYC, American under the symbol groy.ws and they expire May 31st 2027.
for more information on exercising, warrants, please see our second quarter, earnings press release,
Thank you everyone for tuning in to the earnings call. And with that, I'd be happy to open up the call the Q&A operator.
Ladies and gentlemen, at this time, we will be in the question and answer session. If you would like to ask a question, you may press star and then 1 using a touchtone telephone telephone to withdraw your questions. You may press star and 2. If you are using a speaker-phone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality once again, that is star. And then 1 to queue in to the question queue, on the audio side, we'll pause momentarily to assemble the roster.
Jamie, while we're assembling the roster, I do have a question that's come in by email.
Could gold royalty specifically State how the free cash flow from Q2 2025 was handled.
Well, I'll pass it on to Andrew to answer.
A quarter, we're slightly above that threshold that I'm looking to keep. Um, and we will start, um, looking at repayments to the revolver moving forward. In the coming quarters.
And once again, if you would like to ask a question, please press star and then 1.
We do have a question on the audio side, and this comes from Eric windmill from Scotia Bank. Please go ahead with your question.
Oh, hi. Good morning, David team. Thanks for taking my question. Uh, just wondering if you can elaborate all on Jericho Canyon, the revenues you received, and how we should think about Jared for the balance of this year. And next year, are you expecting an additional revenues to come in there? Be helpful. Thank you. I'll hand that off to Jackie.
Oh yeah, sure. Thanks. Thanks for the question. Uh, so the, um, the revenues that we received were, uh, were in, um, in relation to, uh, a settlement that that had been reached, um, uh, earlier uh, earlier this year. Um, just at the end of the quarter, uh, so our royalty on Jared Canyon, uh, includes uh, 2 components. It's a 0.5% NSR. Uh, and as Andrew mentioned, there's a sliding per ton rate as well. Uh, and that's that's the aspect that was disputed. Um, did the settlement that we've recorded in in the quarter, uh, represents the, the, the final, um, amount for that settlement, that we were expecting? We had
Previously a crude, uh, uh, a small amount as well. But this, um, uh, this 0.3 million is the is the final amount that we were expecting. So we're not expecting any further revenues from Jared Canyon this year, uh, and nothing else related to that settlement. Um, if if your Canyon were to restart and, uh, and the company, um, first Majestic has has indicated that they are looking at restarting, then then, of course we would receive the, um, the royalty revenues, uh, both from the, uh, 0.5% and sorry, and the sliding per 10 rate, um, going forward, but we're not expecting. Anything else until until the mine were to restart.
Okay great. Uh, super helpful. Appreciate it. Uh, maybe just 1 more if you don't mind. But uh, if you comment on the merger landscape, I know you uh, touch on in the Preamble of the outset. But just curious, you know, obviously exciting time in the royalty space and, you know, gold royalty, stock has appreciated, uh, pretty substantially this year. You know, how's that affect your plan? And would you be more likely to be a consolidator or, or, uh, look to be acquired? I mean, you've got a good organic growth life. Uh, anything that's touch on there. Be helpful. Thank you.
Yeah, thanks very much, Eric. I look, I, I do think that consolidation can only Accelerate from here. Um, obviously the fundamentals of the gold price are are very helpful in that regard, but also there's been new entrance in the space. Um, you know, namely we've seen a very large stable coin fund and tether taking a very significant investment in 1 of our peers and, uh, with a stated objective of, uh, consolidating the sector and putting more Capital to work then, perhaps creating more stable coin products backed by royalties and streams. That can only enhance the amount of capital available for the smaller cap Universe of royalty players. So I'm optimistic that we'll lead the more consolidation and lead to significant synergies. There's probably 50 to 75 million dollars of excess GNA among the smaller cap players in the space. So there's a lot of value to be created through consolidation and scale and I think the creation of a mid-tier uh player has always been a driving corporate vision for gold royalty.
You know 1 that's sufficiently large and liquid to attract General Equity investors, but still small enough to grow in contrast to some of the larger cap players in our space who are excellent companies but don't have the growth profile that a a mid to your competitor. Can can create and we think that can create a significant rear rate opportunity. Uh we've always seen ourselves as a a player in the space. We want to be eventually be a consolidator but we're we don't feel we're in a position right now or have the currency to be a significant consolidator what we want to do.
Is Harvest, a very strong rate of return, uh, from the significant Investments we've made in our portfolio. So I would say over the short term, we're very much focused on making sure that our business is running. Well, it's deleveraging and, uh, hopefully in time returning cash flow to shareholders in various forms. But uh, hopefully in time we'll be a consolidator as opposed to being acquired
Okay, great. Thank you very much. I really appreciate the caller. I'll hop back in the queue. Cheers.
Once again, if you would like to ask a question, please press star and then 1.
We do have an additional question from John Baer from Ascend Wealth Advisors. Please go ahead with your question.
Thank you for taking the question here sort of as a follow-up to that last question when you're looking at acquiring a royalty, um, how far out do you typically look, um, at the project?
Coming online. In other words, you're looking at a 2 to 3 year time frame, 5 years and how does that play into your strategy? Well, we have Peter benke who's our director of corporate development, investor relations also on the call taking Corrections. So I'll hand that off to Peter to answer
Thanks David. And thanks for the question, John. Um the the answer is really it depends I I'd say for m&a individual asset Acquisitions through financing or third-party. We are looking at that line of sight to cash flow. So
Assets where there's a clear path, a capitalized operator that's going to develop that asset. So, to your examples within that 5-year window.
Longer term assets. So early, expiration stage, royalties, we actually generate those ourselves through our royalty generator model uh primarily in Nevada so we can get longer data assets, effectively for free. So our Focus for uh, non-organic growth is really in that near-term cash flowing royalty.
Okay, and then uh jurisdiction.
Primarily in in, in Canada and the US, uh, are you looking elsewhere? Are there other jurisdictions that are considered? Um, let's say relatively stable that you
Are investigating or see opportunities in.
Ya know, it's, it's a good question, uh, with our strong base, over 85% of our business in Quebec, Ontario, and Nevada. We have that scope to to look abroad. And we have, we have looked abroad, but to your point staying in safe jurisdictions, is is definitely a priority. Um, so we go where there's high quality assets. We've got good Trust In The Operators and there's that rule of law in place that we can enforce our royalty or streaming contracts. But we've, as we've made in the last couple years Investments, through Brazil, uh, we would love to have interests in Australia, although those opportunities are sometimes less frequent, uh, and then parts parts of Africa that would be be selectively. But we have a very strong base to begin with and we continue to look for opportunities in in Canada and the USA as well.
Last question, appreciate it. Uh, is at what point would you consider?
Reinstating. Uh, dividend.
Yeah, yeah, yeah. I was going to grab that 1. Um, thanks. Uh, so, you know, at this stage, we're very much focused on deleveraging, and as I said earlier, on, in the call, we expect to be net debt free, uh, by the end of next. Year, we expect our debentures will convert given how deep in the money they are. Um, we also expect to largely pay our revolver, and I think at that point, we're in a position to start to talk about uh, returning Capital to shareholders, because then we'll be in a very steady and long-term free cash flow generating phase of our existence.
Yeah, that's good. Getting de-levered is a very important thing in my opinion. Thank you very much for taking my questions. Good luck. Thank you.
And ladies and gentlemen, at this time and showing no additional questions. I'd like to turn the floor back over to management for any closing remarks.
Well, thanks everybody for your attention today, of course, we're always delighted to hear from you. Um, if you'd like to call in at our 1-800 number, we're happy to return calls or email us, uh, either Jackie P at gold royalty.com or Dave, David D, or off, excuse me at gold royalty.com as well. Uh, Peter, um, and and Andrew will be happy to take your questions.
As well, if like the email list or call us uh, hope to hear from you. Over the course of the quarter.
and ladies and gentlemen, with that, we'll conclude today's conference call and presentation, we thank
You, you may now disconnect your lines.