Frederick Bell: Good afternoon and good morning, everyone, and welcome to Elemental's Q3 2026 Earnings presentation. With me today, I have my colleague Stefan Wenger, our CFO, and you have myself, Frederick Bell, CEO, to talk you through the slides. In terms of the overview of the portfolio, just to give you a summary at the beginning, the company has had record year-to-date performance in terms of both revenue and in gold equivalent ounces.
Frederick Bell: We have the strongest growth profile from this out to the 2030s that we've had in the history of the company, getting to a total from existing producing and development assets of over 50,000 gold equivalent ounces from where we are today, and that is already within the portfolio here. The portfolio remains precious metals weighted, so that is approximately two-thirds precious, gold and silver, and one-third other commodities, primarily copper.
Frederick Bell: It is diversified across operator, counterparty, and jurisdiction, and we have continued to add to that and further diversify with the most recent transaction we have announced. We also just recently closed on an upsized credit facility. That is the second time we have upsized our credit facility this year, which means that we were both able to use that for the Orion transaction, but also maintaining financial flexibility and drawing on it going forwards. In terms of capital allocation, we had a normal course issuer bid put in place during the year that we utilized, particularly over the summer when the share price was low, and it gives us that flexibility going forwards to use it again at the same time that we have had our first dividend in Q1, and now paid on a quarterly basis going forwards.
Frederick Bell: In terms of the management team, we have strengthened that as well over the course of the year, both on the finance team, on the legal team, and adding to our technical team as well as we go forwards. Lastly, after the final close of the Orion transaction, we have Tether remaining a cornerstone shareholder, about 27% currently, and very supportive of the company's strategy going forwards. So, a highlight then in Q3 specifically, and it was a very active quarter for us, both in terms of transactions that we announced and completed, as well as the continuing, I think, improvements to liquidity and the capital markets profile of the company that we have done. One particular, I think, feature was the sale of the generation unit.
Frederick Bell: What we're doing here is we are both improving that liquidity for shareholders, and it came with the TSX inclusion for the first time in September. Then I think the combination of closing the Vizsla transaction previously announced, that we finally completed in September, alongside the acquisition of a large portfolio of five producing streams and royalties from Orion, and the sale of our generation unit. That really simplifies, streamlines the company, reduces our G&A going forwards, and combined with the increase in revenue from the producing assets within the Orion portfolio, and that reduction in G&A going into 2027, it will drive improved free cash flow and better margins going forward into 2027.
Frederick Bell: We are really, in that quarter, continuing to build out the portfolio, both producing and key development assets in Ruby Hill with i-80 Gold Corp., at the same time that we are streamlining the business and reducing that G&A going forwards. In terms of year-to-date, what we have done, I think here it is just under $70 million in revenue for the year to date. We have approximately $23 million cash on the balance sheet. We still have ability to draw on our credit facility, alongside that. In terms of gold equivalent ounces, that is just under 15,100 gold equivalent ounces year to date, which is a record for the company, both in terms of revenue and gold equivalent ounces.
Frederick Bell: I think that importantly, we see really strong growth going ahead, from our portfolio as it was, and with the addition of the Orion portfolio, where we will get some partial contribution for this year, and a full year's contribution going into next year, alongside the Santana's asset in New Zealand, that will be in production, expect to have first gold in summer. I will not go through all of these milestones here, but I think we wanted just to highlight how active the company has been over the course of this year, both on transactions, and on the corporate front. I think that Q3 has really been a continuation of that.
Frederick Bell: We announced in post-quarter end, we announced the first close on the Orion portfolio, and we are expecting to further progress Carlin East to sell the generation business, and have an announcement on that in Q4, along with the final close on the last asset in the Orion portfolio in Q1 2027. In terms of our growth outlook moving forwards, I think we just highlighted this earlier, but it is really, by far and away, the strongest growth profile we have ever had in the company.
Frederick Bell: You can see what it was prior to the Orion acquisition, and then in the silver there, the addition of that portfolio, which is a partial year contribution this year, in 2026, and then a full year in 2027 onwards, and really wraps up with the contribution from i-80 Gold Corp.'s Ruby Hill, where we have a very material silver stream there. I think what you will see going into 2027 is you will see alongside that increase in gold equivalent ounces and revenue, you will also see a step-down in terms of our G&A and costs that Stefan can expand on a bit further in this call. That is driven by the sale of our generation unit.
Frederick Bell: Just as a reminder for everyone, in terms of NAV, that business unit probably represented to order of magnitude 1% or less of our NAV, but it was 60% of the personnel in the company. It was a material number of subsidiaries and in excess of 25% of our G&A as well. By doing this transaction, and it happened simultaneously, but by doing it simultaneously, we are expanding our revenue, reducing our costs, and again, should be improving that free cash flow margin, going into 2027 and beyond. With that, I will hand over to Stefan to run through the financial highlights for the quarter. Stefan will hand back to me a bit later on to talk through a few of the asset-specific pieces. I am happy to take a Q&A at the end of this call as well.
Stefan Wenger: Thank you, Fred, and good morning, everyone. Thanks for participating in our quarterly conference call. As Fred mentioned, it was a really active quarter. The team is really performing well, and we are executing on our strategy through the year. A couple of financial highlights you can see on a revenue basis and an adjusted EBITDA basis.
Stefan Wenger: Our results, both for Q3 and year to date, show a substantial increase compared to the prior year. As you know, in the prior year, we had not yet merged with EMX, so this really shows the benefit of the merger, in addition to the strong performance of our assets throughout the year. This is driven by GEOs of about 15,000 year to date, and you can see on the bottom there that our guidance, we are well progressing towards our full year guidance that we updated in Q3 with the announcement of Orion.
Stefan Wenger: We are operating very well on all fronts on the financial perspective. As I dig into the financials a little bit more, you can see our revenue is up by 153%. Our adjusted EBITDA is up by close to 170%. We have cash of $23 million at the end of the year. Thinking about the income statement, the question I get most is, what do we expect G&A to look like for the full year and then going forward?
Stefan Wenger: This year has really been a transitional year. We have experienced higher than expected G&A because of our integration costs between Elemental and EMX. Also, now we have spent a significant amount of time and effort in the past quarter with the divestiture of the generative business that Fred mentioned. As we head into 2027, we are going to see the G&A decrease.
Stefan Wenger: This quarter, we had higher G&A costs specifically because of some severance costs related to the divestment of the generative business, and also legal costs as we worked to complete that in Q4. I would expect the Q4 costs are still going to be in line with this Q3, but as we head into 2027, we are going to start to really see the benefit. We are going to see the benefits in a couple ways.
Stefan Wenger: Number one, the royalty generation expenses that you see there that are about $5 million a year are going to go away. In addition to that, because of the reduction in headcount that Fred mentioned, and also streamlining activities that we have within the company for simplification of our business, on top of the divestiture of the generative business, we are going to see significant savings on G&A.
Stefan Wenger: We quoted in our release when we announced the Orion acquisition that our G&A reduction, or our cost reduction would be $6 million a year. With those additional simplification efforts that we see, we see that we are going to save well beyond $6 million a year, and we will update that as we enter 2027. From a capital structure perspective, it was also a transitional quarter with respect to our capital structure. We not only completed the acquisition of Vizsla, but we also, which we drew $30 million on our line of credit. We also positioned ourselves to go ahead and acquire the Orion portfolio, so we have expanded our credit facility. As of today, we do have $210 million of debt outstanding, and $23 million of cash, plus equity investments of about $36 million.
Stefan Wenger: On a debt-to-EBITDA basis, we are about 2.5x net debt to EBITDA, but we see that deleveraging rather quickly, and over the next year, you will see that nearly halve as we go forward. We see that we have still good availability with the credit facility and the accordion feature of about $90 million. As was mentioned, with increasing cash flow from the Orion deal, which for next year is about $20 million at current prices, plus the reduction of our G&A and the generative business, we are going to be expanding our cash flow significantly that will support that debt reduction. Just a little more detail on the cash flow. For Q3, you can see we started the quarter with $74 million in cash.
Stefan Wenger: We generated $13 million of free cash flow just from our royalties, and then invested $63.5 million for the Vizsla acquisition, another $25 million for the addition and enhancement of our investment in Quilla and the Chapi project. We drew on the line to fund some of those activities, ending the quarter with $23 million in cash. Just for the full year, you can see all of the activities that Fred outlined, and in addition to what I discussed on Vizsla and Chapi, we had other royalty acquisitions during the period, and the draw on the RCF.
Stefan Wenger: You can see also we continue to fund our dividend. The dividend, we anticipate continue to fund that, and increase that into the future. We also bought back some shares when we were in the lower share prices back in June and July. We were active on our NCIB as well. You can see quite active on the capital front. With that, I am going to turn it back to Fred for a portfolio update, and then we will take questions.
Frederick Bell: Thank you, Stefan. Looking here at the global map of our portfolio, I think what stands out is we are really cornerstone now by a number of both international miners, such as Lundin, Zijin, but also some Nevada Gold Mines, some specific companies in Australia, Capricorn and Genesis, two of the preeminent gold miners there, as well as a number of producers and developers such as i-80 Gold Corp. and Mansa. That is a deliberate strategy over the course of the last 12 to 18 months of both diversifying our base, but also improving the quality of the underlying assets and the operators and counterparties who are operating those. In terms of specific updates related to some of the assets in the quarter, the first two that I will talk to are Caserones and Karlawinda.
Frederick Bell: Karlawinda, we had the mine expansion that has been going on over the past year. It was successfully commissioned on budget during the quarter, so towards the end of September, Capricorn announced they had completed that commissioning, and we expect it now to be running at the higher of approximately 150,000-ounce throughput rate, so about a 30% increase in attributable gold equivalent ounces to Elemental going forwards. You can see it has been pretty consistent in terms of the production historically.
Frederick Bell: They also, earlier this year, announced an increase in the resource and the reserves, alongside that higher production rate that it is going through. If you look at an asset like Karlawinda, since we acquired it has, I think, a similar mine life at the time that we acquired it just on the reserves, and not including the resources, which would approximately double it.
Frederick Bell: We have benefited now from both the successful mine build, but also now an expansion of the mine that will deliver an increase in production at no cost to the company going forwards, and we have the optionality to the gold price. It is a very good example of the embedded value that you have in royalties, where we no longer have to contribute to the costs, but the operator, in this case, Capricorn, are very successfully continuing to explore, add new ounces to the resources, convert existing resources into reserves, and simultaneously expand the mine production so that it is now running at approximately 30% higher throughput rate. The second asset, Caserones. Caserones was the prime reason for lower-than-expected revenue in the quarter. You can see there the impact from Q2 to Q3.
Frederick Bell: We had about $3.5 million lower revenue in Q3 than we did in the last quarter. That was due to a combination of storms in Chile. The first one was very well publicized across the space and impacted a number of mines, particularly copper mines in Chile. It was followed up by another storm that I think compounded the issues and delayed production in Q3. I think they have announced since that they are updating their guidance down to the lower number for this year, but expecting production to recover both in Q4 and then getting back to normal. In terms of our royalty revenue, Caserones is a very long-life asset that, in our view, will be producing for many years to come.
Frederick Bell: I think that that production there is really delayed and not lost to us in terms of revenue, but that was the primary cause of the lower revenue in the quarter of that storm in Caserones. In terms of the next 3 assets, at Timok, we had, again, a very good quarter there continuing. As mentioned previously, we did do a site visit to the mine earlier this year and got an update on both current mining, but also their exploration, where they have been exceptionally active, and the development of the Lower Zone, which is the major value driver at Timok, and that is the porphyry that sits beneath the Upper Zone.
Frederick Bell: They are actively developing and expect that we will have some updates from Zijin in the coming months and year on progress at the Lower Zone, in addition to ongoing production from the Upper Zone, which is what we receive now, and then future plans at the MG Zone, which was the major discovery they made approximately 2 years ago within our royalty area as well. Timok remains an asset that will be paying us every year, and we expect it to continue to appreciate in value as they get closer towards first production in the Lower Zone, and then also looking at future plans for the MG Zone.
Frederick Bell: At Bonikro, we had, again, very consistent quarter with Q2 and Q1, and the area where we receive our royalty from, the pushback on Bonikro, that is expected to be a key part of the mine moving forwards, and they are benefiting from some higher-grade areas there as well in the coming months and quarters. Expect that to continue to perform at those levels for us. Then lastly, Leeville, and this is Nevada Gold Mines in the US, and this is part of the Carlin Complex. We did have an update from the mine site team earlier this year as well, to getting a better understanding of the mine plan going forwards, because our royalty covers part of the mine, and so it will sometimes fluctuate quarter to quarter.
Frederick Bell: But again, really positive exploration results they have had in our royalty area in recent times, and this is a mine that has been producing now for decades and will continue to do so, in our opinion. So, another really high-quality, long-life asset operated by a tier 1 miner. In terms of some of our key development assets that we expect to come in, I think just touch on these 4, and 2 of them in particular, the first 2, Panuco and Ruby Hill, that have been added to the portfolio in the last 3 months with the completion of the Vizsla deal and the first close on Orion. So, firstly, looking at Panuco in Mexico, and I think there are 2 real drivers there for the company.
Frederick Bell: They are fully funded to build the mine, and the two key, I think, drivers for them are both plan on the security front and also on the permitting side. On the permitting side in Mexico, we have seen approximately 5 permits granted to mining companies in Mexico since, I think, Q2 this year. There is a couple that remain outstanding in Mexico, and Vizsla is one of those in that list. I think after a hiatus of 12 to 18 months with very little happening on the permitting front, there has been a steady stream of permits since Q2 this year for different mining companies in Mexico getting those approved. I think very positive on that permitting front in Mexico in general, and specifically to Panuco, expect them to be on that list of projects awaiting that permit.
Frederick Bell: On the security front, I think waiting for the company to announce their plans on that side as well, and getting back on site in a fulsome way and progressing the project. Those are the two key catalysts at Panuco. In terms of Ruby Hill, actually, the day after we announced the acquisition of this stream, there was a very good update out by the company, which was the first results from their drill program, and they are doing 130,000-meter drill program at Ruby Hill.
Frederick Bell: It is a really material exploration program, partly funded by Franco-Nevada. They announced some very good results, significant number above the existing resource grade, both up to, I think it was 3 kilometers to the east and 1 kilometer to the north. So, material step-out drilling and results that a significant proportion were above the existing resource grade.
Frederick Bell: They are going to continue drilling that over the course of Q4 and going into Q1, and I think we expect an updated resource from them there in Q1. I think very positive from the results that we have seen to date, and they continue to aggressively drill that out. They also announced later in the quarter, they also announced that they are moving Ruby Hill forward in terms of their planning for projects in development. Ruby Hill, just as a reminder, is the cornerstone asset for i-80 Gold Corp., and they have announced that they are bringing it forward in the development timeframe ahead of two of their other projects. I think that was something we had anticipated, but it was good to see that announced formally by them, and again, expect them to have further updates on that.
Frederick Bell: In summary, expanding the existing resource that we have coverage on there, at the same time as looking to bring the project forward as a cornerstone asset. So, two really material positive impacts at that asset in the 6 or 7 weeks since we have acquired the stream. In terms of Laverton, we had a royalty, existing royalty on part of the ground here, and we picked up a larger royalty covering more of the ground, another 2% in September of 2025.
Frederick Bell: The operator, Genesis, have been very active on the M&A front, consolidating ground in the Laverton district as well as surrounding, and this is one of the two primary hubs for Genesis in Laverton. So, they have an existing mill there, and they are going to come up with an updated mine plan that will look to optimize production from different ore sources.
Frederick Bell: And we expect that some of the ground our royalty covers will be fed into that mine plan. Just to give you an idea, one of the key deposits there, Beasley Creek, that they call the first cab off the rank, is double the grade of what they currently mine. We have 4% royalty on it. It is permitted, licensed about 20 kilometers on the roads from the mill, and we expect that will be one of the first deposits that goes into their updated mine plan when they put it out. So that would be very material for us, and there are a number of deposits that we cover, our royalty covers there, that we expect to come into their mine plan as they progress.
Frederick Bell: Genesis have also said that they are looking to expand the mill that they have already operating there to enable them to process more, given the M&A and given the consolidation they have done and the increased portfolio resources that they have. So I think we should have some really material updates on that asset in Australia, and Genesis have called it, some of that ground, the best exploration ground that they have in West Australia, which is for a very well-known Australian gold producer and a management team who have historically been pretty conservative in what they have said. I think that is a very positive indicator of what they see the potential there as.
Frederick Bell: For us, as a royalty holder, look, you would not be able to buy that royalty from an existing operator or producer in that region now. Just to remind people, they are neighbors with Gold Fields and AngloGold Ashanti in that Laverton belt. So I think the transaction we did, which was a third-party existing royalty that had been around for over a decade in September of last year, I think that will be a really cornerstone asset for us moving forward, and we should get better clarity on the production, on the timeline with their first mine plan updated coming out shortly.
Frederick Bell: Lastly, on Dugbe, and this is an asset that is less well-publicized. Mansa Resources are a private operator in West Africa, but Dugbe is a 2% to 2.5% uncapped NSR for us. It currently covers just under 4 million ounces, so similar in terms of overall current size to Laverton. That project, Dugbe, is going through an updated feasibility study, and it was due out before the end of the year.
Frederick Bell: Alongside that, it has been in the press that Mansa have been looking at financing options to start work on the project in the very near term. So they are private, but I expect we will get some news on that front in the coming months in terms of updated feasibility studies for the project, and then also on the financing side. That will be in production. On the last feasibility study, it was approximately 200,000 ounces a year asset. So that, in terms of a royalty, makes it really material for us. Just for context, when we look at Karlawinda, where we have a 2% royalty, that is with the expansion now going up to approximately 150,000 ounces.
Frederick Bell: So just to give perspective, this is a 2% to 2.5% NSR on approximately 200,000 ounces once in production, that we acquired for $16.5 million upfront in September of last year, with another $3.5 million of milestone payments. So I think very much looking forward to the update on that front as well, where there is not as much in the public domain, but when there is a public statement on the feasibility study and development plans, we will look to share that with shareholders and investors in the market when we can. So look, that brings us back here to a slide on the year-to-date that we have had, and that is in terms of revenue and GEOs, a record, notwithstanding one of our biggest royalties at Caserones, having production impacted in Q3 by storm events.
Frederick Bell: And we have been very active across the board on the capital market side, on portfolio, in terms of adding and strengthening to the team, and also streamlining the business down to the pure play royalty and streaming model, which should have a very positive impact on the cost basis for the company moving forwards. So with that, I think, Stefan, we are good to move on to the Q&A and take any questions from investors.
Stefan Wenger: Operator, are there any questions from the second line?
Operator: Of course. We will now begin the question and answer session. If you would like to ask a question, simply press star followed by the number 1 on your telephone keypad. And our first question comes from the line of Larry Liu with CIBC. Larry, please go ahead.
Larry Liu: Hi, Fred. Hi, Stefan. Thanks for taking my question. I will start off with a more general kind of strategy question. If you look at the history of Elemental, the company has been more royalty-focused, but now that after the Orion package, you do have streams added to the portfolio, should we see more streams in the future, or how should we look at stream versus royalty going forward from here?
Frederick Bell: Well, I am happy to take that in the first instance, Larry. From our side, we are agnostic whether it is a stream or a royalty. I think that just historically, having started with smaller acquisitions, we saw a lot more royalty opportunities than we did streams. As the company has evolved, we are now able to do larger transactions. It is more common that we are coming across streams, and that is both where we are writing them with the operator, as we have done in the past, but also where we are buying preexisting streams, such as the ones in the Orion portfolio.
Frederick Bell: I think we have always been opportunistic in trying to find the best opportunity for the company, whether that is a royalty or a stream, and we just have a bigger opportunity set now than we were able to have in the past.
Larry Liu: Gotcha. Sounds good. Yeah, Fred, that makes a lot of sense. I think it just adds a little line to the financial statement, makes Stefan add it there. That feeds well into my next question. I am going to ask about cash flow projection. You talk about your growth outlook, and we do know that with streams, there is ongoing cost component to it. Is it too greedy to ask for an operating cash flow projection for the next few years as well from that perspective?
Stefan Wenger: Hey, Larry, it's Stefan. Yeah, happy to look at that with you. I do not have a cash flow projection that I am willing to put online right now, but as we go into 2027, we will be providing guidance for 2027, particularly on the cost side and on how we classify the streams, so that will be pretty clear.
Larry Liu: Yeah. Amazing. Sounds good.
Stefan Wenger: You are right.
Larry Liu: I got Oh, sorry.
Stefan Wenger: I was just going to say, I appreciate you pointing out the fact that streams will have a cost component, but we will be able to demonstrate that clearly in the P&L.
Larry Liu: Gotcha. Sounds good. Sorry to keep cutting you off there, Fred and Stefan. My connection is probably not too well, so I have you cutting in and out as well. So, forgive me. But on that note, I will have just one more question. For the quarter, or subsequent to the quarter, I noticed that the debt balance is about $210 million. That is why I asked about the cash flow projection for the next few years. Would you mind giving us a little hint or a little sense on how the debt repayment schedule will look like from your perspective and how that would help deleverage the balance sheet from now?
Stefan Wenger: Yeah. So you are correct. So in October, we drew another $180 million on the line of credit to close the Orion portfolio. As we go forward, just for example, with the Orion portfolio, we are adding an additional $20 million of cash flow from GEOs with the Orion portfolio just next year. In addition to that, we are going to cut our G&A by about a third. So just on those couple of things, we are driving an additional sort of $30 million of cash flow into the business with that. As we look at deleveraging the net $185 million of net debt that we have, we see that going from 2.5 times to just above 1 time by the end of next year. Then a total payoff period of 2 to 2.5 years.
Larry Liu: Gotcha. Perfect. Sounds good. That is really good to hear. Congrats, Fred, Stefan, and Elemental on a record year. Thank you.
Stefan Wenger: Thanks, Larry.
Frederick Bell: Thank you.
Operator: Your next question comes from the line of Heiko Ihle with H.C. Wainwright & Co. Heiko, please go ahead.
Heiko Ihle: Hey, Fred and team. Thank you guys for taking my questions. Hope all is well. The world's a changed place. Geopolitical risks have obviously gone up quite a bit. Has your view on where one should be doing business changed over the past few months? I know your US exposure is not like it is the majority of your business, but given the results of the US election, are you changing your views of which area of the US you are willing to do deals in?
Frederick Bell: So maybe I could kick off with that and then pass on to Stefan for any finishing comments. I think, look, Heiko, I appreciate the question, first of all. I think we are always trying to balance, as a philosophy, the geological upside and potential with the jurisdiction risk. We definitely do, as a rule, distinguish between provinces, regions within countries. You reference the US there, but there is a number of other countries as well where we have assets and we have been active in the past.
Frederick Bell: I think we make a very material distinction between exposure in different parts of those countries. But look, overall, where the portfolio is now. We have Australia as one of our biggest jurisdictions. We have more exposure than we have had historically in the US and Canada, with the last transaction. We remain material exposure in Chile through Caserones.
Frederick Bell: But I think that is a very good example here of that diversification. There was, as mentioned, a major storm event in Q3 that impacted a material number of the larger mines in Chile. I think historically, that would have been more impactful for us. The benefit of our portfolio today is that we are at approximately 20 producing royalties at any one time, and with that being very well diversified geographically as well as from operator, it gives us a lot of insulation from delays, impacts, and whether that is weather-related or whether that is government-related.
Frederick Bell: So I think that for us, that diversification is very important in terms of jurisdiction as well as all the other factors. I think that we are pretty comfortable, I think, where the portfolio is today. We are going to see some evolution of that as our development assets come on. But I think overall, pretty happy.
Heiko Ihle: Fair enough. Changing gears just a little bit, the company obviously has changed, as I just mentioned, the other comment. I guess you said the same thing throughout the call. Is there a change to your thoughts on minimum cash to keep on hand given all these changes and the spin-off?
Stefan Wenger: Maybe I'll
Frederick Bell: Yeah.
Stefan Wenger: I can comment on that.
Frederick Bell: Yeah, go ahead.
Stefan Wenger: Heiko, it's a good observation. The one benefit of the divestiture of the generative business is that from an Elemental perspective, not only are we going to reduce ongoing costs and headcount and some of those things that cause our G&A to be high, but in addition to that, it's also going to free up working capital. We do have working capital tied up in that business for some of the projects that we're partnered with.
Stefan Wenger: Not all those are timing things, but it does require us to keep a bit more cash on hand. Going forward, I think that's going to give us more flexibility to run a little leaner on the cash side. We also hold a number of investments also that over time, we expect are going to provide liquidity to the company over time. I think from our perspective, yes, we will lighten up a bit on cash on hand, but we will keep enough to be able to continue to run the business in a smart way.
Heiko Ihle: Fair enough. Cool. I will get back in queue. Thanks for taking my questions.
Stefan Wenger: Thanks, Heiko.
Frederick Bell: Thanks, Heiko.
Operator: Your next question comes from the line of John Tumazos with John Tumazos Very Independent Research. John, please go ahead.
John Tumazos: Thank you for taking my question. I have a couple clarification questions. On Ruby Hill, there is at least three mineral zones. There is a 5.5 million ounce heap leach they call Mineral Point.
Frederick Bell: Yeah.
John Tumazos: There is underground sulfide refractory Archimedes, and then there is an oxide underground zone too. Do you cover all of those in your royalty?
Frederick Bell: Our royalty is, and our stream, I should correctly say, is two things. Firstly, it is a silver stream, so it does not cover the gold. So it is a 50% silver stream for the next 1.3 approximately million ounces of silver, and then it is a 10% ongoing life of mine uncapped silver stream. That covers Ruby Hill, which on a gold and silver equivalent basis is approximately 8 million ounces currently, and it also covers Archimedes, which you referred to, albeit the level of silver in that is lower.
Frederick Bell: I think Ruby Hill is unusual in the value weighting towards silver. So that is where, from our perspective, in terms of the value on that stream, I think, 98% of the value is on Ruby Hill for that silver stream. But we do have coverage across most of their current license.
John Tumazos: In my model, I have Mineral Point as 4 million ounces of silver output after it is permitted. That is the heap leach, the big heap leach is the big silver bit. Separately, could you explain what are the five assets that come with the Orion transaction?
Frederick Bell: Hi John. I do not know if we just lost you there.
John Tumazos: No, I am here. I asked what are the five assets that came with the Orion transaction?
Frederick Bell: What they are?
Stefan Wenger: Yeah, just the
John Tumazos: Yeah, just the line.
Stefan Wenger: Do you want to cover that first?
Frederick Bell: Yeah. So, sure. The first one is Ruby Hill silver stream, which we touched on. The second one in terms of materiality is Mansa Resources' Kouroussa Mine, which is immediately adjacent to the north of PDI's Bankan in the Siguiri Basin. That is a recent combination of Robex and Predictive, and that is about 14 million ounces. Kouroussa is the second asset in there, and that is a 5% stream that has a time-limited buyback on 50% of it. It also has a step-down in the early 2030s. But that stream is a very interesting structure because it is on the mill, not just tied to a specific license. As Mansa expand their land holding in that region.
Frederick Bell: long as it is mined through their existing mill, which we anticipate it would be, we get the optionality from exploration success, but also future exploration success on licenses that they will add to and expand in the license package. That is the second one. The third one is Silverco Mining Ltd.'s La Negra mine in Mexico, and that is currently in production. It is a very good management team that are at the asset there, and they announced an updated PEA on the asset in September, actually, at the same time that we acquired it, that would have approximately double the production that we modeled when we bought that royalty. That is the third asset, Silverco Mining Ltd.'s La Negra. The fourth asset is a stream on Endura's mine in New Zealand, and that is run by Jake Klein.
Frederick Bell: It is a private company, and that is due to have first gold in December, and that is from the Snowy River gold mine. That is the fourth asset. The fifth one is royalty on Dakota Gold's ground. The one thing I would say about Dakota Gold ground, and we have a map in the presentation, so we estimate current mine plan covered by that royalty, and then we have a very large land package around it that I think has a lot of exploration potential, but will also have some permitting requirements on it as well. So those are the five assets that we acquired from Orion.
John Tumazos: Thank you very much.
Stefan Wenger: Thanks, John.
Operator: There is no further question at this time. I will now turn the call back over to Fred for closing remarks. Fred?
Stefan Wenger: Fred, there is a couple.
Frederick Bell: Well, thank you. Yeah. No, perfect. Thank you, Stefan, and I was just looking at that. We have also had one or two pre-submitted questions coming in, so I will try and cover those off alongside Stefan now. And there is one question which is, "Following the closing of these, there are the first close of Orion, Elemental has significantly expanded its royalty portfolio. As a long-term investor, I am interested in how management evaluates the balance between portfolio growth and per-share value creation, and what financial metrics and capital allocation priorities will be most important in driving sustainable free cash flow per share over the next two to three years." So, a very good question. Thank you for that. I will address it in maybe two different ways.
Frederick Bell: I think, as a first comment, we are absolutely focused on per-share value creation, and that has been the case for as long as I have been involved with Elemental, from private company all the way through. And actually, one of the reasons we, I think the merger between Elemental Altus and EMX was relatively easy to put together, was because the management teams and also some of the key shareholders on both sides were very much focused on that long-term per-share value creation.
Frederick Bell: I think what we have done as we have grown the company is using some of that revenue that we generate through the portfolio, both to help fund new acquisitions, but also to enable us to either buy back shares when they are cheap, when we think the value is under, when we think they are undervalued, or to use that revenue to give ourselves a credit facility and a cost of capital that enables us to also flexibly draw on that going forwards.
Frederick Bell: In terms of the portfolio growth that we have done, I think in the short term, the combination of EMX and Elemental Altus and materially stepping up our revenue, really diversifying the portfolio and reducing those risks across the board, and the latest addition with the Orion portfolio, another three assets within that that are producing today, I think all of that is adding to the revenue, and it is going to drive the free cash flow on a share basis. Now, what I would say is that when you invest in as much growth as we have over the past year, you could see in our projections getting to over 50,000 GEOs in the early 2030s, that will mean that in the short term, on a per-share basis, our revenue may in fact come down.
Frederick Bell: But when you look at it in terms of what we have added into the portfolio over those coming years, that is really going to drive that growth in free cash flow per share, alongside the NAV. I think that the transaction we did, so separating out the generation business and remaining a key shareholder in it, and having exposure to it, but having it in a separate entity, I think that is also very much with a view to reducing the costs for the business and enabling us to have better free cash flow and better margins for the company going forwards. So I hope that answers some of that. Stefan, please, if there was anything you want to add, jump in.
Stefan Wenger: No, I think for us, just to add a little bit of color, I think we are in a unique situation that you do not often see in the fact that we are substantially increasing revenue over the next five years with the portfolio growth outlook that Fred mentioned, rising to 50,000 GEOs. That is a 160% increase in revenue. But at the same time, we are reducing costs materially.
Stefan Wenger: So, we are driving cash flow growth in two ways, and that is one of our key strategies to improve our cash flow per share. We are also using the banks, our good partners, to use that credit facility so that we are not issuing equity to grow. It does not mean we will not issue equity at the right price in the future and for the right deals, but I think that you are seeing us materially improve our metrics in a number of ways.
Frederick Bell: And then maybe there is a second question here, which is, with Tether being such a large shareholder, what risks do you see if they have different objectives or they are interested in online of management in the future, both regards to investment and corporate strategy? Look, I think that is a question that you see often in companies where you have material shareholders. I think what we can say as a management team, and I think consistent with what was said in the past, is that I think in terms of the transactions, the merger with EMX is a great example. These were transactions that the management teams had been working on, in some cases, for a long time prior to Tether's involvement.
Frederick Bell: I think that since Tether came in as a major shareholder, they have been extremely supportive of the company's sort of targets and opportunities that we have identified and continuing to progress that. I think that now had Tether as a shareholder since June of 2025, and so I think we have increasingly, over the last 18 months, worked together and progressed, and I think there is very good alignment in terms of they would like to increase their exposure to the gold space, particularly royalties.
Frederick Bell: I think they are comfortable with the gold, silver, copper exposure that the company already has, and I think that they will continue to be a very supportive shareholder for the company going forwards in terms of growth. Maybe there is one last question here as well that we have got in. A couple others. There is one here which is, "Do you expect 2027 to be as active in terms of acquisitions as 2026?" Look, that is a good question with the CFO on the line here. I think that we are constantly looking at opportunities in parallel, and as anyone who has been in the royalty space will know, there are a lot of transactions that we do advance, and they fall away because they do not pass due diligence, because we have different value expectations.
Frederick Bell: I think historically, we have said somewhere in the region of 95% to 98% of the opportunities we look at, we turn down or we do not go through to completion on. So, there are an awfully large number of opportunities where we do not progress, and sometimes that does not mean we might never do it. It might just mean we have a difference in value expectations in the short term, and it is an asset that we actually like, and we would keep open-minded in the future if aligned. So, I think it is very hard to predict where we will be in terms of deal flow.
Frederick Bell: What I can say is that the team we have internally today, and the management team that we have built up, the accumulated experience, the intellectual property within the company from many years of working in the royalty space and many more years of working across the mining space, is that we are very well-positioned to continue to grow the company where we think, tagging onto the earlier question, where we think we can do that accretively, and where we can do it in a way that we think we are adding value on a per-share basis.
Frederick Bell: That is always the most fundamental metric, and I think that Tether are very aligned in that. When they first invested in the company 18 months ago, there were questions both to the company and to Tether saying, "Why not do this privately? Why not invest in royalties directly as Tether? Do it in a private vehicle, and you can have 100% of it." I think their answer at the time, which I do not want to speak too much for them, but I think remains very true, which is that they like the discipline of being a public company, and they like being a shareholder in a public company where you are judged on every transaction you do, and where you have to demonstrate that you are continually adding value through those transactions.
Frederick Bell: I think that for an investor like Tether, who has historically been in the mining business, it gives them comfort as we grow the company and do that. I think we are very aligned with them in terms of wanting to grow the company, but do it in an accretive manner. I think that we will continue to look at opportunities throughout 2027 to add to the portfolio where we can in a sensible way, and taking into account the growth that we already have in the portfolio and the acquisitions which we have just recently closed, and we are still in the process of closing.
Frederick Bell: Hopefully that answers that question there. I think that is the last of the pre-submitted questions. But if we miss anything or anyone thought of a question during the call, please feel free to email or reach out to us on the phone, and very much always available and happy to answer any questions that investors may have. With that, we will bring it to wrap it up, bring it to an end. Thank you very much for joining Elemental's Q3 2026 call. For those of you who are shareholders, for your support of the company going forwards, and perhaps for those of you listening in as investors, very happy to give you a rundown on the company and a more in-depth dive on some of the assets and plans moving forwards when we have time.
Frederick Bell: Lastly, just for our team, thank you very much to everyone for the work in getting through this quarter, particularly busy across the board in terms of transactions and also internal processes and systems that we were upgrading mid-quarter. So thank you, everyone, for all the work, and look forward to updating you in our next quarter results.
Stefan Wenger: Thank you.
Operator: This concludes today's call. You may now disconnect.
