Gold Royalty Corp. Investor Day | May 16, 2023

foreign [Music] I'm your host Joanne joban with vid media I would like to welcome you to our very first Live Gold royalty investor day coming to you I'll say it again live from downtown Toronto people are just starting to arrive so a reminder that we will be starting at 9 00 a.m sharp so please settle in with the coffee and start submitting those questions into the Q a tab please as per usual we will be taking questions from the audience throughout the presentation when the Q a sessions are opened questions from the floor will be answered first and then David or someone from the team will ask if we have any from our virtual audience as per usual we will do our very best to get everyone's questions answered we have a Full Slate today with David leading the charge with opening remarks and the entire team will have their turn at the mic today now I would like to turn the stage over to David Garofalo who will commence with our live investor day David over to you we are now live thanks good morning everybody I'm delighted that we have a almost a full room here live and we have quite a few people I think north of 150 online and welcome to all of you looking forward uh to answering your questions over the course of the day uh or this morning I should say as we go through our presentation uh this is our inaugural investor day one of what we think will be many down the road as we grow the business out um and uh I'm delighted that we're able to welcome all of our key Executives here today to present on the business and provide a holistic overview of our strategy or Vision but more importantly introduce you to our people we have a very capable and professional team and this investor day is meant to coincide with the publication of her inaugural asset handbook or ESG report both of which are available online uh if you're here live you can pick up a hard copy of the asset handbook as well and again we've been quite systematic about growing the business from 18 royalties initially when we ipo'd just over two years ago to well over 200 royalties today and still continuing to grow much of it organically and a very low cost fashion I'll talk about that in a bit more detail over the course of the presentation but we've built a sustainable business that's starting to contribute significant cash flow from our royalty revenues from our extensive and diversified royalty portfolio in the Americas and one that's poised to go dramatically over the course of the rest of the decade and within a year contribute free cash flow for the first time and that's remarkable in any line of business to go from startup to free cash flow in three years is is a remarkable achievement and we're very pleased to be able to talk about that and talk about how we're going to deliver on that Revenue growth over the course of the next year or so but first let me talk a little bit about the team I'm very happy about the assets we've curated over the course of the last couple years but I'm even more delighted with this strength of the team that we've been able to assemble very accomplished team with significant mining experience Andrew gobbels joined us as CFO at the beginning of this year and Andrew many of you would have known from heiress mining before where he ran the corporate Development Group but before that an extensive and international career in the investment banking side principally with UBS almost 20 years in the business John Griffith has been a long time partner of Mine He's our chief development officer ran Merrill Lynch's mining group before I was able to entice them to join us at Gold royalty Corp over 30 years of investment banking experience with significant experience in the streaming and royalty part of the business as well he's done a number of transactions in that regard and has been a trusted partner of mine over the years in running gold Corp HUD Bay eggnico eagle and providing banking services accessing Capital markets and helping advise on transactions so he brings a wealth of experience in the industry and in capital markets Sam ma who's our VP of project evaluation Sam's here as well today he'll talk about our evaluation criteria due diligence process we're quite systematic and it's a testament to Sam's expertise as a mining engineer he was a working mining engineer for a long time and uh joined us from SSR recently but before that spent 10 years with wheat and precious metals during its initial 10 years and doing exactly the type of work he's doing with us which is to evaluate streaming and royalty opportunities so he brings a wealth of operating experience but also a wealth of streaming and royalty experience in particular doing due diligence so we're very delighted to have him in the team Peter banking many of you will know as our manager of Investigations and corporate development John was employee number two Peter was employee number three and he's been instrumental in our acquisition evaluations and also starting to develop a more professional investor relations program as we start to diversify our shareholder Basin and hopefully get some institutional traction we've gotten certainly a lot more institutional meetings of late as we've seen our Revenue start to grow and crystallize Catherine is another example of our shared services model we share Alistair with a number of other companies we share Catherine with three other companies as our head of ESG and we're very proud that she's not only published or inaugural ESG report at Gold royalty but she's in the process of doing that with uh three other companies within our ecosystem and so it's one of the reasons we've been able to keep a very low GNA is that we share a lot of resources among the number of companies within that ecosystem within my partner's uh companies Amir at Nanny and so we can share people like Catherine with significant subject matter expertise like Alistair like our general counsel as well that helps keep GNA costs low we share an office space again rents very low we actually don't pay anything in rent right now we just share meeting space with with amir's companies so that's allowed us to keep our back office costs low our rent low so that we can maintain a low g a cost as we grow our Revenue that really Falls right to the bottom line and contributes to free cash flow starting next year and Ryan Hass joined us from Equinox gold he's our manager of operations what he does day in day out is make sure that we collect the checks on our royalties audits those royalty statements and gets regular information flow from our operating Partners not only in terms of what we're old on royalties but when we get expiration news that flows up through Ryan so that we can communicate that to our shareholders and and communicate the upside that we're seeing in the expiration efforts of our operating Partners but what Ryan also does ensure that we get also ESG data the feeder ESG report among other things so he does the day-to-day relationship with our operating Partners which has become a critical uh part of our business as we've grown out our operating portfolio of royalties quite significantly since our founding over two years ago so I'll uh hopefully mercifully provide some brief introduction remarks talk about our strategy Vision a little bit about the gold market as well before I pass it on to a very capable team to talk about uh all the aspects of her business in a bit more detail and entertain your questions not only for me but for anybody else that you see within this Podium that you might have questions of and the various aspects of our business so uh what I've always like to do is really talk about the gold market and and I think you've heard many of you heard me talk about our thesis on the gold price and and I think we've been quite consistent um in in terms of our our views of the gold price and the fact that we're headed for a prolonged bull market and we're gratified to actually start to see uh that thesis start to take some traction right now and we've started to see gold uh consistently above two thousand dollars an ounce and we've been saying this when gold was as low as 17 1800 an ounce that we are very much in an entrenched inflationary cycle I don't believe the Federal Reserve don't believe the central banks globally that are talking about tightening cycle indeed were in fact in a declining real interest rate environment and we think that'll be Amplified as you start to see nominal rates pivot later this year early next but the reality is inflation's far and above what the headline inflation numbers might indicate uh nobody in this room I think and nobody online believes that our inflation rates are only four five or six percent if you're putting food in your stomach fuel in your tank or a roof over your head it's deeply in the double digit territory so these real interest rate numbers that you see in blue at the bottom of this chart are the headline numbers but if you actually factor in real inflation and ignore the fiction that the CPI box basket communicates we're seeing real interest rates continue to decline deeper and deeper into negative territory and the negative correlation since the US dollar banned the golden gold standard early 1970s between the gold price a real interest rates is striking over that 50-year period the gold price does exceedingly well in a declining real Interstate environment that's precisely where we are this inflation cycle is far worse than we saw in the 1970s it Bears many of the Hallmarks that we saw in the 1970s you know back in the early 1970s we had the US dollar decoupled from the gold standard and we saw a massive amount of monetary expansion to fund economic activity to fund a war in Vietnam we saw a very similar on Mooring of Fiat currencies in the great financial crisis in 2008 where we saw a global coordinated efforts to debase uh paper currency expand money supply it's gone up exponentially and central banks are being disingenuous by raising nominal rates but then flooding the market with additional liquidity when there are bank failures as we saw a couple of months ago so there is a bit of sucking and blowing on going on by central banks make no mistake about it monetary expansion is continuing in dramatic fashion and interest rates will reflect that nominally we think by as early as next year as the Federal Reserve has to Pivot to deal with the massive amount of debt that we've strapped on this as a society Global debt to GDP you've heard me say it's 350 today versus 100 in the in in the 1970s there's very limited latitude for the central banks to dramatically tighten and raise real interest rates without bankrupting governments corporations and individuals there's just too much debt in the system the only conceivable way to deal with the debt is to inflate it away central banks want inflation inflation's here to stay and gold will do exceedingly well in that environment as declining real interest rates start to take hold and really uh you know again you've heard me say if you buy into that thesis uh the best place to be is in the royalty business and it's no mistake that a number of us in our Board of management who have been operators and mind developers over much of our career and I've been doing that for over 30 years of my career I've switched to a royalty company we all firmly believe in the bull scenario for gold but we also understand that operating companies are not immune from cost inflation that we've seen in the sector um and in many of you also know that on-site costs typically are 60 labor and energy and that's where the inflation pressure has been most acute and that's why we've seen a significant resetting of cost expectations across the operating sector in the mining business and again I think that's going to continue for a long period of time and that will undermine The Leverage proposition that you're looking for in Gold equities when you're buying an operator and the other Dynamic and the operating side of the business is the sector is shrinking the value in the ground of their businesses are shrinking because reserves are declining dramatically and they have declined dramatically over the course of the last decade down 40 percent because the industry simply has not been reinvesting back in expiration and that's why you're seeing Pac-Man underway in the operating side of the business that's why you're seeing a massive amount of consolidation because if you're not finding it in the ground you're going to have to buy it and just to share a bit of an analogy until recently uh John and I were responsible for the biggest gold merger in history uh gold Corp and Newmont obviously that's been eclipse the Newmont new Crest deal but I remember sitting across a date table from Gary Goldberg the CEO of the time at Newmont saying collectively we have seven and a half million ounces of production a year as gold Corp and Newmont together but we don't want to be at seven and a half we can't sustain that we're going to call some of the non-core asses and we're going to be able to sustain 6 million ounces a year for 20 years that was the thesis four years later Newmont has not been able to sustain that they've had to do new crafts to get back up to that six million ounce range and the reality is because the industry has not been reinvesting back in expiration to replace depleting reserves and importantly the Juniors have not had access to the capital markets and any consistent fashion and they're the ones that do the heavy lifting and Grassroots exploration and if they're not doing Grassroots expiration or not accessing Capital to do that the industry will necessarily shrink and necessarily cannibalize itself and that's what's happening in the operating side of the business and that's why I think that's a shrinking pie and will continue to shrink and the royalty business as capital inevitably gets allocated back to expiration of development out of existential necessity will be an important part uh an important provider of capital to the explorers and emerging developers to replace this shrinking pie of reserves in the industry but again providing you Top Line exposure while protecting you from inflation so it is a better way to invest in gold it gets you that precious metal exposure gets you the expiration exposure as well but without having to pay for it and gets you diversification that no operating company can hope to deliver to you and we have over 220 royalties and with the people you have here and this is pretty much the whole team sitting at this front desk here we could run a business 10 times the size we can scale this without having to scale up our G A and in fact our G A costs have come down 30 percent year over year and I'll give Andrew an opportunity to talk about that in a bit more detail so we can can and have Diversified dramatically uh and that's I think a key and attractive feature of being in the royalty business over and above that Top Line exposure while protecting you from cost inflation and again the reason we've been able to grow this business so quickly so dramatically is the depth and breadth of our management board which collectively have over 400 years of Industry experience so this gives you an overview of how quickly you've grown the royalty business but we've been very disciplined geographically about where we've been very disciplined about the geological models we invest in we do extensive due diligence which we'll get into in a bit more detail but I think uh this growth is quite dramatic and I think unparalleled in the royalty space since we came into existence a little over two years ago um again another important part I talked about our management team is we have a very very strong board as well uh Warren Gilman has been in the business as long as I have over 35 years uh investing in the business he's been a banker he's a mining engineer and now he's a portfolio manager running queensword Capital Hong Kong a Cornerstone investor in her IPO an important Steward of our Capital Alan hair worked with me at uh HUD Bay he was my successor CEO he's my CEO a prolific Mind Builder in his own right 35 years as a mineral process engineer he built the constancia mine in Peru he built the triple seven mine in Manitoba at the Lawler mine in Manitoba the Reed mine in Manitoba so it brings a wealth of technical expertise to the board Glenn Mullen joined us he's the co-founder of Golden Valley in Abu Tibby or founder I should say of those companies and like Jerry brings a wealth of expertise in prospecting and staking and generating royalties organically and through his companies and arrangement we have with with him we're able to continue to degenerate royalties organically within Quebec and on Ontario so he's been an important contributor to our growth since he joined the company about a year and a half ago and then the last person I'll mention last couple of people Amir Nanny my partner our co-founder goal royalty also controls 15 of the company through his vehicle gold mining which I'm involved in as well and Ian Telfer many of you obviously will know was my chairman at uh at Gold Corp and was the founder of Wheaton precious metals and pioneered the whole streaming model with Wheaton about 15 years ago and so it brings a wealth of streaming and royalty experience to the table and has been an invaluable contributor to Our Success since we've launched a little a little over two years ago um you've you've heard me say this before the re-rate potential in the small cap universe is immense particularly when you look at where the category killers are trading the big caps Wheaton Royal gold Franco Nevada at uh two to three times in that asset value you can start to see Triple flag and a Cisco have been creeping up gradually trying to capture that multiple as well and they're doing that through scaling and that's what we've been endeavoring to do since we launched is scale does matter it does become institutionally relevant if it becomes institutionally relevant the stock will get bought your multiple go up drive down your cost to Capital and create a virtuous cycle in your business uh cost of capital absolutely critical in our business because we're a capital provider and so trying to get our multiple up through this rebating through the scaling of our business we can certainly do that organically with what we already own and given the cash flow growth profile which we'll get into in a bit more detail in a few more minutes but we can also do that through M A I do expect that this smaller cap universe will continue to consolidate and capture a mid-tier uh vacuum that currently exists in the space there's a large cap and then there's a small cap not a lot in between if we can capture that mid-tier and then I think we can capture multiple that could conceivably be superior to what the seniors provide because what we can provide if we capture that mid-tier is the prospect for growth it's very difficult as high a quality as Franco wheat and row are of royalty companies they can't capture any growth given their scale it's very very difficult for them to grow significantly and so that's the opportunity I see in the sector uh looking at it uh from from a 30 000 foot perspective is there a scope for consolidation in fact since we launched uh three uh two years ago we we uh absorbed three of those companies uh Elite Golden Valley and Abby Tibby royalties but five other companies have been absorbed by our competitors as well including Mavericks and Nomad among others and so the consolidation cycle is is happening in the royalty space and we believe will continue to happen until somebody captures maybe one or two companies captures that mid-tier crown and captures that growth multiple that clearly is absent in the sector right now so with that I'd like to pass it Andrew to Andrew gobbels or CFO to walk you through our financial results for the first quarter and talk about our financial position as well thank you for your attention this morning all right thanks uh David thanks everyone for for coming um uh let me start off by by saying um gold royalty Corps is really emerging from a transitional period um whereby the foundation of the company was really built from a successful IPO through to a series of transformational acquisitions it's been very important for building that solid foundation from which we can now grow we now have a consistent cash flow base some quality assets and a very robust pipeline of projects development projects that are being built by some of the gold Industries largest best capitalized operators as well as a long tail of exciting exploration properties moving forward we're going to see increased cash flow from our royalty portfolio as these high quality projects are constructed and commissioned at the same time we are expecting our recurring cash operating costs to decrease and moderate proced the integration of these prior Acquisitions that I mentioned and that the establishment of a real core Management Group and efficient operating structure now let me start by giving you a snapshot of our quarterly results for the first quarter 2023 which we announced on Thursday of last week investors should be aware that we did change our fiscal year end from September to December last year so this is officially our q1 so in the in the first quarter we saw revenue from an option proceeds increased by 12 percent quarter on quarter now this is the second highest quarterly Revenue figure that we've had since our Inception q1 we also saw cash operating cost decrease as Dave mentioned and decreased by about 30 percent quarter on quarter and recurring cash operating costs decreased by 26 so it shows that we're moving in the right direction when it comes to managing our offering costs in q1 we closed an asset swap transaction with valdor mining VZ um and also generated some additional royalties in Nevada which uh Jerry we'll we'll talk about a little bit later in the presentation in total we added 12 new royalty assets to our portfolio we also increased the size of our revolving credit facility um in the quarter by 10 million dollars to the total of 35 million including the the accordion feature and that does provide us with additional liquidity to support our our growth in the future and finally we paid our fifth consecutive consecutive dividend that currently yields over 1.7 percent at current share prices and we also established a dividend reinvestment plan now that will allow investors to take shares instead of cash if they choose and allow the company to reinvest some of the cash um uh back into grossian initiatives for the company so all that Plumbing's in place now for investors in the future now in terms of outlook for fiscal 2023 we do expect to see increased Revenue um despite the temporary suspension of operations at Jared Canyon we have provided guidance of 5.5 to 6.5 million dollars of Revenue and option proceeds for the fiscal year 2023. this is really driven by revenue from royalties at Canadian malarctic at the Borden mine at Isabella Pearl and option income from a large growth portfolio now what's not on this chart but in 2024 and Beyond we do expect Revenue to increase materially we haven't put out guidance for future years um but all the brokers in the room have put some estimates for our Revenue we will see a step change in in that Revenue come 2024 and going forward on the um on the cost side of the equation um for fiscal 2023 we are targeting decreased recurring operating costs 2021 and 2022 as I mentioned before were really transitional periods as we set up the company included higher costs related to insurance insurance new companies especially New York listed companies are on the high side we had elevated marketing costs and Consulting costs associated with some of the m a to build that Foundation of our business in 2023 however we are working to and have done quite a bit of work centralizing some of the administrative activities within our subsidiaries bringing it into into head office it's a initiative I've done quite a bit of work on today we've refocused some of our marketing professional fees and we're finally starting to benefit from decreased corporate Insurance costs as the company matures so we do expect to see recurring operating costs moderate at that seven to eight million dollar level and continue around that level on a recurring basis going forward and as a result of this growing Revenue of which again we'll see a step change post 2023 in particular and decrease in costs operating margins from recurring activities are expected to increase and improve in future years now next I just want to talk about some of the sources of capital we have available to us um having access to Capital is critical to our strategy as Dave mentioned we are the thesis for consolidation is strong and we are looking to grow this company gold royalty does enjoy a healthy balance sheet um and we have put financing programs in place to be able to access Capital when and if it's required we have approximately 10 million dollars of cash and marketable securities on the balance sheet at the moment earlier this year again I mentioned before lenders are supportive of enlarging our credit Facility by 10 million dollars to 35 million in total which gives us a good convenient access to to that credit facility on a revolving basis we also have approximately 50 million dollars a capital available under our ATM facility which was put in place mid last year and finally GRC filed the 250 million dollar shelf perspectives in mid-2022 that will allow us to facilitate the access of additional Equity Capital if required in the future so when it comes to M A and Acquisitions we'll evaluate all sources of of capital to fund future Acquisitions the choice of which will really be dependent on the size of that acquisition and on the cash flow profile of those assets that we do acquire now finally I want to let um Talk a bit about the trading liquidity of um of gold royalty we've really built a strong Market presence I think this is an important characteristic that differentiates us from some of our peers as well um we have soil trading liquidity we built up our last two years we currently trade on average over a million dollars worth it's U.S one million dollars worth of shares on the New York Stock Exchange every day and it takes um the amount of time it takes to turn uh one turn of our floats is about as frequent as some of our larger peers so in terms of getting in getting out of gold royalty shares it is a an easier proposition than some of the smaller um appears in in the sector we also have strong research coverage with additional Brokers preparing to launch um coverage throughout the year I know menu the institutions are room today so I'd like to thank um if you're your support um to date and and we look forward to your continued support going forward and now with that I'd like to pass it on to Catherine to speak to our sustainability in ESG thank you Andrew good morning everyone my name is Catherine arblaster I'm the VP of sustainability and ESG for gold royalty so I'm going to talk a little bit about our approach to sustainability our management of ESG related risks and also to talk a little bit about how we've embedded sustainability as a core value in our organization fundamentally We Believe mining can be an important mechanism to achieve sustainable development and we believe that mining can enable positive contributions to the local community as a royalty company we recognize that we don't directly manage many of the ESG related risks that sit at the underlying assets of our portfolio therefore it's important to us that we're ensuring the quality of our operators and we're partnering with leading minors that are are focused on sustainable mining practices and that also throughout our process that all of our operators are aligning to our ESG core values as well as meet our rigorous ESU due diligence process so I'm going to start with a little bit of an interactive session to keep everyone awake this morning and to get everyone talking now as I know we have our q a happening in a few minutes so if you see up on the screen there's Two Earths on the left hand side you'll see the gray Earth with the blue bubble does anyone who's that brave enough to raise their hand this morning want to share with you what they think the blue bubble represents I know none of you are shy I want to say there's no wrong answers but there are wrong answers but there's always good guesses I can look up here at the front table and see if anyone has an answer Sam it's got to be water it's got to be water that's right so the blue bubble represents all of the water on the Earth's surface to scale compared to the Earth on the right hand side you'll see the Blue Earth and the pink bubble does anyone have an idea of what that is I believe it's air that's correct the reason I wanted to show this picture is it represents the urgency around things like the climate crisis and the sustainability and the use of our natural resources so generally speaking many of us mining companies included treat Water and Air as infinite but it's very clear that they're actually finite so this is a call to action for organizations like gold royalty that we need to be very mindful of the way that natural resources are being used so that we can ensure that they're going to continue on into the future and that our organizations and our portfolio can continue to rely on things like water and the climate a few other data points that always I think really drive home the point around the urgency of the climate crisis and sustainability are that I'm sure many of you are familiar with the global goal to keep global warming between 1.5 and 2 degrees Celsius well the un's released Recent research that shows that we're actually very likely to surpass the 1.5 degree warming goal and we're actually likely to hit 1.5 degree warming probably in the mid-2030s there's also a date that I know as a sustainability practitioner I track which is what we call Earth overshoot Day and that's the day of the year that we've used all of the Earth's natural resources that could on their own regenerate throughout that year last year in 2022 that was July 28th so many research has shown that we would actually need three Earths to be able to live at the current Pace that we're living in our current use of Natural Resources so I bring that up not to be all doom and gloom in the morning but really to demonstrate that sustainability is a really important value for us as an organization and we ultimately um are committed to ensuring that our operators that we partner with are ensuring that they're using sustainable mining practices that are mindful of things like ghg emissions being released into the atmosphere and their water usage so at Gold royalty we're committed to addressing many of these challenges through appropriately and proactively managing risks related to water biodiversity and climate change to demonstrate that commitment we've joined the UN Global compact which is a voluntary initiative based on CEO commitments to implement Universal sustainability principles and commit to accelerating progress to the sdgs we've identified seven sdgs that we feel we can contribute to both internally within our organizations and then also through our Partnerships with leading top-tier operators and we think about sustainability as a two-pronged approach so there's sustainability within our organization and that's um us being a steward for our people for our local communities and for our environment and as Dave mentioned we have a very lean team most of the team is here in this room so as you can imagine our footprint is pretty small our scope one and two emissions from our corporate office very minimal so we recognize in the second prong of our sustainability approach is thinking about the impact of our portfolio so we recognize the scope three emissions from our mining operations are much more significant than our scope one and two emissions so we think about this as our approach to ESG due diligence to ensuring that we're working with responsible and leading minors and then are also thinking about how do we support them to reduce things like their emissions their water usage Etc so we're proud to say that in FY 22 so last year we were able to contribute over twenty thousand dollars to diverse Community causes including the Arts mental health and culture in the Vancouver area we also prioritize diversity and inclusion on our board 29 of our board members are female and we have a goal of reaching over 30 by 2025 also within our executive management team 30 of our leaders are female and 50 identify as ethnically diverse we also Focus this year on really laying the foundation of our sustainability program so we focused on updating our sustainability policy which really sets the guard rails around our commitment to sustainability and how we plan to work with our operators and we've approved things like our anti-corruption policy and Insider Trader policy a big focus of that sustainability policy is the reflection on our ESG due diligence and the rigor that we we ensure within that process and so last year over well 100 of our agreements were reviewed with our enhanced ESG due diligence process which I'll speak to in a few minutes and we did screen out 11 of deals because of ESG related risks for example jurisdictional risk as Dave talked about the quality and location of our assets jurisdictional risk is one thing that we watch very closely along with ultimately looking very closely at things like water practices and usage I see a question here but I know we're going to go to q a in just a few minutes so why don't we I will come to you first so ESG governance is very important um and this is really what enables us to remain accountable throughout the organization and I think this visual helps demonstrate how we've embedded sustainability as a core value throughout the organization um so our board has oversight over our sustainability approach for every deal that we bring to the board we spend time reviewing the ESU related risk that we identified for for that organization or for that asset specifically and then our ESG committee goes a lot deeper so they work with me and with Dave on our ESG strategy as well as progress against that strategy on an on a quarterly basis and then we've also embedded sustainability throughout every aspect of the organization so our strategic planning process we discuss our ESG objectives and how we plan to achieve those naturally in our corporate development process which really focuses on our ESG due diligence and then as well our risk management focus our risk management process we identify a lot of the ESG risks throughout that process and those get elevated to the board as well so ESG due diligence is is really a central focus of a lot of how we ensure the quality of our our portfolio um and I know I've mentioned it before and so we've listed out some of the key areas that we look at as a part of our ESG ESG due diligence process and I'll just speak to a few of these um and and really kind of the focus of them so for example water management is something that I mentioned as you know an area that there's some urgency associated with so we look at the operators uh management processes associated with water usage but we also look at where the water source is that the mining company will be using and if other communities local to the mindset are also relying on it to ensure that there's a plan in place to ensure that that resource is going to be responsibly managed we of course look at tailings and waste management we look at the biodiversity and in particular the Mind closure plan to ensure that there's going to be some um some focus on regenerating any damage that's been made to the biodiversity near the mine site and then of course we look at climate change in the emissions management so as all of you know there's some urgency around climate change and there are going to be targets coming in for many companies at 2030 2040 and 2050 to reduce their emissions and so if you think about the life of mine many of those will go into and surpass 2030 so we do look to see if operators are planning for that are building in those Associated costs to decarbonize as well from a social perspective health and safety is essential we want to ensure that the companies have an appropriate management system in place and that they have a strong record around health and safety we look at things like have they earned they social license to operate or how are they working and engaging with the community and in particular if there's indigenous communities how are they engaging with those indigenous communities and do they have the right to work there human rights is essential and we ensure that there's been no human rights abuses then we also look at Labor Management and then from a governance perspective we look at how the company operates internally from an ethical standpoint and we also look at from a board perspective our does the board have oversight over any ESG related risk that they've identified and then finally we've spoken to political and jurisdictional risk that's a key one so we always look at you know the the regulatory environment in the political environment in the countries that these operators are working in and then finally I mentioned that you know we screened out 11 of our deals um because of ESG related risks um we also look to partner with um our operators to see how we can help them further Advance our sustainability goals um so there's many different ways that we've done that you know in in some ways for example we've offered pools of capital to help them further their sustainability objectives that would come alongside the royalty agreement um so very much we kind of use that two-prong approach where if the risk feels too high we'll screen out that that opportunity but ultimately we do look to help Advance our operator sustainability goals and then finally I'll just I know Dave mentioned but I'll make a plug for the sustainability report we're very excited to have been able to publish it this year it's on our website I would definitely encourage you um if you're short on time please read the CEO letter from Dave because I think it highlights a lot of the achievements that we're most proud of then I'll invite Dave back up for the Q a I think you do you have a question yeah I think there's one right here the 11 percent that you mentioned uh for the uh royalty and you said um 11 were screened due to ESG concerns right okay so what does that mean can you elaborate on that yeah absolutely so and Sam's going to speak to our due diligence process later on in the session but ultimately as we go through our due diligence process we'll look at things like jurisdictional risks so are we comfortable with the the political and Regulatory environment um that that asset operates in or are we comfortable with their health and safety record or their social license to operate and so if we have identified a risk where we felt like the operator is not managing that risk appropriately and and we'll engage with the operator and have conversations with how they plan to manage these things um but if we're not comfortable with that then we'll ultimately turn down that opportunity because we feel like it will either you know lead to delays or significantly affect the capability of that asset to move forward so jurisdictional risk is is a big one because we we really prioritize you know mining friendly jurisdictions which I think goes back to the quality of our portfolio um so I don't have a breakdown of it specifically how many were jurisdictional risks versus others but that was a major one that we screened out for any other questions of Catherine on the ESG side where we have her up here I significantly understated her role when I talked about the ESG report almost exclusively introducing her she is very much embedded in her due diligence process um she reports to the board and to other Senior Management uh on her assessment of the SG risk of every opportunity we look at so she's integral to that so it's a significant part of a role and I want to emphasize that reputational risk is extremely important uh issue to manage it does drive cost of capital particularly in this environment where ESG is top of mind for many institutional investors uh and capital providers so we have to be absolutely crystal clearing and crisp on that issue and so I'm delighted that we have somebody of Catherine's expertise and background in the organization um yep right okay thanks can you please break down the revenue between option income and royalty income because because uh Andrea I think mentioned that there was some option income are we covered are we writing options or puts or like we no no option income refers to option uh option payments we get from operators who we option our properties out to so we get a royalty back in return quite often we have work commitments so they're required to work the property so many dollars per year and then they also pay us an option on the property they actually pay us fees for taking the property from us okay so so that's not it's not derivative income I don't it's actually on the ground Grassroots income from the properties we never actually spend any invest any money in expiration ourselves we Farm the properties out before it gets to that point so they take the expiration risk we get paid royalties and option proceeds in return for the property so what was the breakdown between royalty income and option income Peter Peter do you wanna yeah do you want do you want to get to that chart now Peter do you want to just deal with it verbally right yeah go ahead I've got one other question after that yeah sure you can stay up Dave um yeah the breakdown is about three million three million in uh 2023 and we've consistently generated between two and three million dollars in option proceeds uh the past two years and going back before that uh through Jerry's model at Elite Gold royalties before we acquired them as well so it's a it's a sustainable consistent source of cash flow for us is is that option proceed income okay now a good chunk of the g a decline was because the dno insurance came down correct it is that was that decline based upon you're insuring a smaller market cap because the stock did so poorly or is that declined because it was you know a decline in the in the actual policy yeah no it was a decline in the policy it it really um the insurance Market um are dino insurance as a new company without a track record um tends to have higher premiums so it's really establishing a track record regardless of our market cap the um year on year as long as we don't have any claims our um insurance is dropped yeah so it doesn't have anything to do with market cap thank you uh how much is drawn on the credit facility uh there's approximately 10 million drawn so it's um the credit facility is is a 20 million dollar revolver 10 of which is drawn we also have access to a 15 million dollar accordion feature which has some other constraints um but 10 of the 20 revolvers drawn and along the same line how much is left on the Shelf uh so the the Shelf was a 250 million dollar shelf um the shares that we issued as part of consideration to um Nevada gold mines for transaction last year I think it was around 2022-27 27 million dollars worth um was uh credited against the shelf so we've got the remaining available yeah thank you uh and second question for Me Maybe for David you talked about um the lack of Juniors the availability of financing for the junior producers or explorers um have you seen that improve with the higher spot prices no not at all it's been very selective access to uh the equity Capital markets it's really been a nuclear winter for juniors other than a brief window in 2019 when we saw the gold price start to regain some momentum uh and it was right after the actually the merger activity early 2019 we saw about a six-month period where Juniors were accessing Capital again then the door firmly shut again so again over the last decade it's been very very selective access and that's why you've seen this 40 decline in reserves the industry simply isn't reinvesting in expiration in a meaningful way so uh oh were there any more questions uh oh in the room please yeah go ahead would you mind identifying yourself yeah George Foster my question is I'm looking at the uh the asset handbook and I know most of the properties are in the Americas you have one in Turkey now is there any plans to expand in other areas like Africa or Scandinavia Etc yeah certainly is interesting about 80 percent of our royalties by number and by market value or net asset value are in Nevada Quebec and Ontario so it's very concentrated in three of the best arguably three of the best jurisdictions in the world we certainly have room to take on a bit more political risk but what will drive our decision making and John will get this into a bit more detail later on is quality of the geological model quality of the operator and our comfort with the jurisdiction because at the end of the day we don't own any mines we own paper we own contracts and if there is any legal framework that recognizes the sanctity of those royalty contracts then we won't go there because we want to ensure that we have security against the asset in some form to ensure the royalty contact survives if there's a change in operator or a bankruptcy of an operator and that's the appeal of being in the Nevada Quebec in Ontario is that legal framework is extremely well established and well respected Renee Renee from uh can you just talk a little bit about the longevity of the option proceeds how long you think that they're going to continue on for and then also maybe just give us a little bit of color in terms of when you expect to grind down that portion on the balance sheet and once option proceeds are going to move from going directly to the cash flow statement to the Top Line so with regards to the longevity of the option proceeds most of our option Agreements are on three to five year term but with that said Jerry's continuing that work continuing to generate two to three royalties per quarter so while we only have visibility for say the next four years we're confident in the sustainability of that model at a similar level a forward-looking basis as our royalty Revenue increases that'll be a smaller percentage of our overall cash flow proceeds but it is a consistent and reliable source of cash flow with regards to our accounting policy of top line revenue versus uh just hitting the cash flow statement it really is dependent on the book value of the property that we're vending out uh currently it's hitting the balance sheet and the cash flow statement until the full book value of that vended out asset is depleted and then any gain beyond that is setting the income statement so it is on a case-by-case basis and I can't really provide more clarity on uh it really does depend on what deals Jerry's generating each quarter I think to your question Randy that's why it's important we provide a normalized revenue number with that option income that goes against carrying value extracted out so you're aware you have Clarity and transparency about how much option income we're generating regardless of the accounting treatment the county treatment is a bit nonsensical but it is what it is are we okay then oh okay um excellent then um Joanne we're okay to move on to the next section why don't we pause there and let uh let the next section come up and then we can take some more questions before a break so if you're budgeting for a coffee break let's assume it happens in about a half an hour I guess Peter and then we'll take a 10 to 15 break from from there before we go to the next section after that excellent thank you very much perfect so uh hi everyone and and thanks for the questions uh good to have a dynamic conversation uh my name is Peter benke as Dave introduced to the beginning I'm our manager of corporate development and IR I've been at the company since 2020 when we were writing our original 18 royalties and uh it's it's been exciting to see us grow to a portfolio of over 20 220 assets I'm gonna provide an overview of our portfolio run through some of the metrics that are outlined in the asset handbook that you have there uh and then we'll take a short break before coming back and having Ryan and Aleister uh do a deep dive on some of the key Assets in our portfolio and get into the Weeds on those so zooming out and taking a look uh at the key metrics that really Define our portfolio we've already spoken at length with regards to the jurisdictional exposure concentrated in the best mining jurisdictions in the world the recent Fraser Institute report outlined Nevada as the best mining jurisdiction in the world and that is where we have the most royalties in our portfolio close to 90 currently uh in a close second uh over 70 royalties in Quebec and another 30 some odd in Ontario and I think that speaks to the quality of our portfolio not just quality of jurisdiction but quality of asset with Cornerstone royalties on three of the largest mines in North America as well as quality of operator these assets are being developed or are operated by the largest and most well capitalized companies in the mining sector the likes of Barrack Newmont igniko eagle the growth has been very rapid 18 to over 220 in just over two years but that focus on acquiring a foundational portfolio of assets has really been top of Mind throughout an important aspect of our portfolio is our commodity mix we are a gold royalty focused company as the name begets uh roughly 95 of the portfolio by net asset value is in Precious Metals gold and silver and we do have some copper exposure uh in some gold copper porphries through Alaska and South America I think important to note as we continue to grow the portfolio we we do have the ability to take on some commodity mix whether that's additional copper zinc nickel but but core to our businesses is precious metals and we'll maintain be the focus so we've I mentioned them our three Cornerstone royalties royalties on the largest gold mines in North America the largest of which is our three percent NSR over the Canadian malarctic complex specifically The Odyssey underground project uh our three percent NSR covers a significant portion of mineralization of the East Mall Arctic deposit the Odyssey North deposit and then portions of the Nori Zone and the internal zones which are getting continued exploration Investments by agnico subsequent to its recent consolidation of the asset through the acquisition of yamana this asset is ramping up over the next several years but really shifts to a full underground operation where we'll see the full benefit of our royalty there in the Years 2027 and 2028 when the open pitch is done producing at Canadian malarctic our second Cornerstone asset is our royalty over the Cote gold project we have a 0.75 NSR over the southern portion of the Cote pit this is the most immediate Catalyst within our portfolio and is the key driver of that inflection point that Andrew spoke to earlier with regards to shifting to positive free cash flow and really driving our Revenue growth in 2024. uh I am Goldstone a good job divesting on core assets restructuring the ownership there and are well on track to deliver first gold poor early next year our third Cornerstone asset is our royalty over the Gold Strike mine specifically the ren project the northern extension of the Carlin complex we have a 1.5 percent NSR and a three and a half percent NPI over this deposit this is a very high grade component of the Carlin complex roughly seven grams per ton material uh close to 2 million ounces and continuing to be explored by Barrack at the Carlin complex interestingly enough we have three foundational assets that represent over the 50 percent of the value of our business and these three assets alone uh and these are the foundations that built the largest royalty and streaming companies in the sector Franco Nevada the largest royalty and streaming company was built upon a single royalty over the Gold Strike mine and we also have a piece of gold strike through our royalty over Ren now Beyond these three Cornerstone royalties this is a slide I'm sure many of you have seen before is our pipeline of development producing Advanced exploration and earlier exploration stage assets representing the over 200 royalties we have within our portfolio I'd uh get ahead of the question we do have Jarrett Canyon outlined here in our producing Assets Now Jared Canyon is an asset that's first Majestic the operator has had difficulties with they continue to process or there for the first two quarters of this year better Shifting the asset to care and maintenance and we'll do the same in terms of our buckets and asset classification uh in early next quarter Beyond Canadian malactic Cote uh and ren were very excited by several of the other smaller royalties within our portfolio that supplement the growth as I mentioned that's roughly half the value of our business but with another 219 royalties in the portfolio there's a lot of exciting catalysts across the board that are fueling growth over the next coming years on this slide I'd also like to highlight The Operators I mentioned the likes of Newmont Barrick igniko Eagle that not only gives us confidence in the development pipeline they're well capitalized can deliver on that growth they have great track records but it also speaks to what Catherine said earlier with regards to our commitment to State sustainability these are leaders in that regard and really align with our views on best practices and the assets we want to align with so providing a bit more granularity with regards to our Revenue profile over the next few years wanted to lay out a chart of the key producing assets and where we're seeing growth in those some of the key development stage assets that we're seeing come online or potentially re-enter production over the next few years and then also highlight some of the key development stage or Advanced exploration stage assets that we see as opportunities for future growth but aren't necessarily fueling our near-term cash flow profile the first two I want to highlight I've spoken at length about the Odyssey mine as it shifts and ramps up over the next few years to a fully underground operation in 2027 and 2028. Ryan will speak to that in more detail but it really is the single most important driver of growth in our business the other key producing mine is our royalty over the board and mine we have a half percent NSR over a portion of this deposit and we expect to see increased attributable production from that mine as they mine more of the deposit at depth underneath our coverage area I mentioned that Cote is the most immediate Catalyst in our Revenue profile with that asset entering production early next year this will be a significant increase in our Revenue profile expected to increase overall total revenue and option proceeds by over 50 percent uh next year Beyond these three Canadian assets the next five on this list here really highlight some of the exciting royalties we have in Nevada a smaller royalty within our portfolio but another incremental portion of growth is our royalty over the gold rock project this is a satellite deposit to caliber's pan mine in Nevada uh we have a half percent NSR over the entire project they're look expecting to release a feasibility study and make a construction decision in 2024 and by consensus views on on caliber we could see revenue from this asset starting in 2025 as an incremental portion of growth would be about a 50 000 ounce a year producer Jarrett Canyon as I mentioned unfortunate circumstances with their temporary suspension of operations but they continue exploration work and are evaluating how they can reoptimize the mine plan to potentially restart operations there we've stripped it out of our Revenue guidance and our forward-looking Revenue profile and now this asset really represents a potential area of upside for us should they restart it over the next two to three years uh while it was a million dollars of lost Revenue in 2023 I'd note that this is a relatively small portion of our overall net asset value an asset that makes up roughly one percent of overall nav similar to Gold Rock another smaller royalty within our portfolio is our royalty over the railroad opinion project recently acquired by Orla we have a patchwork of royalty coverage here representing roughly a third of the overall project and over the key deposits that will be mined but again recently brought in by a strong operator an Orla and well Advanced to supplement our Revenue profile towards uh 2026 over the next few years Ren I spoke to as a key Cornerstone asset Barrick has highlighted this as being incorporated into the Mind plan in the short term we had a team on site there a few weeks ago and I'll let Ryan and Sam speak to their experience there later on but we're really really excited about this asset high grade near one of the largest mines in North America with great infrastructure and a great operating team there driving forward the deposit finally uh the last Nevada asset to highlight here is our royalty over the Granite Creek mine this is our most recent acquisition we picked it up last fall uh I-80 gold has continued to advance the deposit outlined a high-grade zone at OG and and expects to release an initial result resource for the South Pacific Zone and release updated mining studies in 2023. they're doing small scale mining currently at Granite Creek but they're ramping that up over the coming years and we see this as an exciting component of growth uh given given the high grade nature of Granite Creek towards mid mid this decade 2026 by our estimates Beyond these assets that are really fueling the revenue profile that I'll show on the next slide there's a couple Advanced exploration stage assets that that we're really excited about specifically phenylon and Whistler phenolon located on the detour like mind Trend in Quebec is a multi-million ounce relatively high grade deposit over three grams per ton and been extensively explored by Walbridge mining in the province given its jurisdiction a long Trend with the largest gold mine in Canada and the appointment of the recent of the chairman at Walbridge we could see this asset being traded into a larger vehicle and is while we're not counting on it for our near-term cash flow it's an asset that could provide that that upside towards the end of this decade or in the early 2030s similarly another significant deposit is our royalty over the Whistler project in Alaska multi-million ounce gold copper pore free that recently completed an IPO through the U.S gold mining Inc vehicle and that team's now fully funded to deliver a pea over the next couple years so that provides a bit more granularity on on what is driving our Revenue profile which I'll highlight on this slide as we mentioned building upon what Andrew highlighted is six and a half million dollars in total revenue and option proceeds in 2023 we see that large step change in 2024 to being well above our G A costs in 2024. this is primarily driven by Cote but also increased coverage at the Odyssey project increased coverage at Borden and consistent option proceeds year over year beyond that as I mentioned on the previous slide with all those assets coming online and increased coverage at our key development assets we'll see that Revenue grow at roughly a 60 compound annual growth rate year over year out towards 2026. in 2027 we start to see that Revenue take a step change as Odyssey becomes a fully underground operation and and could see potential upside beyond what uh we're forecasting given that significant excess capacity they have at the Carlin complex as the operation shifts from open pit to Underground given our flat cost structure this Revenue profile is has a linear relationship to our cash flow profile you'll see cash flow increase year over year as this Revenue profile materializes and that'll give us the latitude and the ability to reevaluate our dividend policy and potentially increase that dividend year over year beyond that and before we take a break Andrew and Aleister will be taking a deep dive into those assets that I mentioned earlier giving an overview of some of the recent catalysts and some of the upcoming uh catalysts across those assets but I'd also implore you to take a look at our asset handbook recently published a few weeks ago available here for you and it's a great source of information to dive in to the portfolio and get into the weeds but uh with that yeah sure yeah sounds good um so with that yeah pass it over to Ryan thanks Peter uh I'm Ryan Hass the operations manager at Gold royalty responsible for managing the portfolio as well as maintaining and growing our relationships with our operating partners as Peter mentioned the foundation of our company is really built upon three Cornerstone assets came allarctic specifically The Odyssey underground project the kote gold project coming into production early next year and the northern extension of the Gold Strike mine the ren project which we're looking to see into production in 2025 2026 and being fully wrapped up starting with our most significant asset in the portfolio The Odyssey underground project is included in the Canadian malarctic complex the Canadian Arctic complex is located within the prolific Abba Tibby gold belt is one of the largest gold mines in Canada is owned and operated by igniko eagle after their acquisition of the remaining 50 percent of the mine from Humana in q1 a royalty covers the northern portion of the Odyssey project with significant coverage over the East Mall Arctic deposits The Odyssey North deposit and the recently explored Nori Zone which is getting a lot of coverage given its proximity to Historic high-grade e-school lead deposit will the three percent NSR over a large portion of the underground extension of the monarchical malarctic Mine The Odyssey Underground the Mind plan for Odyssey outlines a mine life to approximately 2039 at a production rate of five to six hundred thousand ounces a year once fully ramped up they just started producing this past March from the underground and will ramp up towards that five to six hundred thousand ounces per year in 2027 as the asset shifts from an open pit to an underground operation with production from The Odyssey shaft looking at our coverage here you can see we have a patchwork of royalties all over the Canadian allergic complex you see in the top center of the map our main three percent NSR over the Odyssey underground including the shaft which will drive most of our future attributable production to the South we have exploration upside at malartik South and the Midway project to the South and Southeast but our key royalty is the three percent NSR you see that's over the Odyssey shaft and covers those deposits that I mentioned earlier the two percent NSR at Goldie and Charlie and the 15 NPI at radium that you see in the top left to the West are more exploration upside and are not key drivers to our valuation of the three percent NSR with regards to next steps and where we see this asset going the 500 000 ounces per year in the initial mine plan has the potential to increase the ramping up production this past March at Odyssey South by ramp access out towards 2027 where they plan to shift to a fully underground operation but with that shift from open pit to underground we see significant upside given the excess Mill capacity at Canadian malarctic as an open pit operation came to malarctic is a 60 000 ton per day operation but as an underground operation igniko is envisioning a 19 000 ton per day of throughput leaving 41 000 tons per day of excess Mill capacity one of the key areas of study for ignico given its recent acquisition of humana's Canadian assets is how to optimize the excess capacity at the Canadian allergic complex given our significant resource coverage we can see increased resource conversion beyond what is currently in the mine plan so here are some of the upcoming catalysts and developments to note that will transition the operation from open pit to underground we can expect updates to the mineral resource estimates and the mine plan the current Pea only incorporates about half the underlying resources in the mine plan so given half and half aren't included it really illustrates the potential upside in our royalty while not a significant Revenue contributor to Gold royalty Now by 2027 Canadian malarctic is expected to be the highest revenue and cash flow contributor for gold royalty with modest production from the open pit and the underground ramping up to production moving on to our second Cornerstone asset the Cote gold project Cote is a multi-decade generational asset operated by imgold and is located in Ontario on the west side of the abbottibi gold belt that is rapidly advancing to becoming one of Canada's largest gold mines this is an asset that is less than 12 months away from first gold poor which is expected in the early half of 2024. I am gold is fully funded to deliver that production timeline we have a 0.75 NSR over the southern portion of the Cote pit which is the highest grade early part of the mine life that we have significant coverage the current mine plan at Cote envisions 495 000 ounces per year for the first six years of the mine life given the high grade near surface mineralization with 365 000 ounces per year expected to be produced then after until 2041. I should note given the extensive mine life there's a great opportunity to expand and grow resources at Cote important to note I mentioned earlier the high grade near surface mineralization and as you can see this is where we have most of our royalty coverage we have coverage over zones five and seven and the southern third portion of the Cote pit which represents actual high grade and measure high grade measured and indicated resources at Cote as you can see on the image on the left as such we expect expect to see high attributable production from our royalty in the early years of the mine life which results in a quicker payback on our initial investment and seeing this Trail off towards the later years in the mine I am I'm Gold released their q1 results last week indicating they have completed 80 of production construction up from 73 at Q4 displaying their continued development progress at site I am gold has also provided some updates and challenges they've faced in the construction year one of which has been increased capex and Opex due to unforeseen factors such as inflation but for us as royalty holders this further illustrates the advantages of the royalty model in which we're insulated from cost overruns and by having our exposure to the top line revenue once the mine is in production imgold has done a great job divesting longer dated assets restructuring funding with Sumitomo and continue to stay on track to deliver first production in early 2024. as mentioned previously this will be the biggest step change in a revenue profile in 2024. again a little more clarity on first gold poor this timeline proposed by I am gold which is an experienced operator have well Advanced on the project and they have the advantage of having a strong team in place with sufficient funding we're excited to see this asset producing within the next 12 months we believe certainly Cote is an exciting deposit and is rapidly developing to becoming one of Canada's largest gold mines our third Cornerstone asset the ren project is the northern underground extension of the Gold Strike mine that is currently in development for which we see coming online in the near term the project is operated by Barrick and located along the Carlin Trend which is historically produced over 70 million ounces of gold we hold a one and a half percent NSR and a three and a half percent MPI over the project which encompasses most of rent current resources at 1.6 million ounces warranting roughly seven grams per ton material although Barrick has not come out with definitive guidance on when this asset is expected to enter production they have indicated that is being incorporated into the mine plan at the Carlin complex in the short term our team including myself and Sam were at site just a few weeks ago and had a chance to see the underground operations and had productive discussions with management the management team there in order they're well on track with various mining studies across the deposits and therefore that should we are bullish on this asset being incorporated into the overall Carlin complex in the future I should note in Barracks September analyst day they outlined exploration upside of two to three and a half million ounces of resource further showcasing our royalty upside from this and given the attractive grade and proximity to existing infrastructure it makes sense for this deposit to be mined sooner rather than later speaking to that proximity you can see some of the existing processing facilities from the Carlin complex just south of Ren as you see in the image in the left which is a planned view of The Carling complex we have coverage over significant mineralization at rent the JB Zone the corona Zone and the 24 Zone highlighted in red all of which have had continued exploration success extending to the northwest of the banshee and Miko underground operations one of the recent updates that Ren involving key catalysts and and developments Barrick is continuing to outline their exploration program in 2023 and continuing to complete mind studies we're seeing quarter over quarter Barrett continued to highlight this as the future of the Carlin complex and we're bullish on seeing this asset enter production in the next few years with a production profile of about 150 to 200 000 ounces per year based on our estimates given our full coverage and one and a half percent NSR this could be another six and a half million plus in revenue for us per year based on spot quantity prices beyond our three Cornerstone assets I want to highlight a couple producing assets to give more clarity that the team is very excited about first is the producing board in mind operated by Newmont in Ontario within the broader porcupine complex I should note Borden does not have much stand-alone disclosure as par as it is part of the larger porcupine complex as reported by Newmont with that Borden is roughly a 100 000 ounce per year operation is an interesting asset it is the full as it is the first fully electric mine in Ontario which aligns with our esgnis initiatives as Catherine previously discussed the current mine plan envisions board and producing until 2027 with potential extension onwards with exploration of the complex we hold a half percent NSR over the underground workings of the lake on the east side of the property as I'll highlight on the next slide current mining is primarily on land and will work its way to the southeast under the lake where royalty covers Borden has been producing since 2019 and our attributable coverage as you can see in the mine working gives us exposure to those mine Life Extensions as they continue to explore at depth extend a long strike to the southeast and could see an extension increase in our tribal production past the current production rate this is a royalty that came to us through Ely and one of the many development stage assets and smaller NSR royalties that are fueling our Revenue growth as mentioned I wanted to highlight our significant royalty coverage over the lake area that you can see on the bottom right on the image on the left for which the underground workings are expected to increase between now and 2027 with potential mine life extension further showcasing our upside to the current NSR the final the final producing asset I wanted to highlight is the Jarrett Canyon mine operated by first Majestic unfortunately first Majestic is run into difficulties in mining profitably but they continue to explore the asset to unlock value and double down on their investment made in 2021 from acquisition from Sprott we hold a half percent NSR and a per ton royalty over the asset which is not a huge portion of our overall net asset value less than two percent but it is an asset that we would like to see producing again in the near term first Majestic is outlined the suspension is temporary in nature and continue to explore the asset delineate new deposits and looking for ways to mine in a profitable manner they haven't come out with definitive guidance on when they can expect a restart but conservatively the gold royalty team could see restart come in 2025 2026 after they've had a chance to optimize infrastructure and explore various deposits across the property we have stripped out Jared Canyon from our guidance moving forward although they did produce 16 000 ounces in q1 the restart of Jarrett Canyon now represents an upside to Gold royalty given our we are now not counting uh on this asset in our forecasts during the suspension first Majestic will be processing approximately 45 000 tons of stockpile through the plant with exploration plans to explore for new Regional discoveries and expand current reserves and resources analyze the optimization of bulk Mining and cost-effective Mining methods and convert inferred and indicated resources into measured Reserve resources first Majestic is planning to drill about 28 000 meters in 2023 focusing on large volume resource growth further providing additional upside to our royalty overall the gold royalty team is confident in first Majestic to leverage their underground experience from their Mexican operations to accomplish their goals of unlocking value at Jarrett Canyon and now I'll pass it on to Alistair we can take a break I think we'll take a break thank you um we'll entertain some questions and and answers right now while uh we prepare for a short break and give people an opportunity to refill their coffee cups but Peter did you have some online questions and we can go back to questions of the room we can give them an opportunity to ask questions before uh oh this one's a little louder um yeah Dave there's one question and given we just ran through the asset update so I'll hit it and I think it'll help some of the people in the room as well and it's primarily over our coverage over a couple of those Cornerstone assets specifically Odyssey and Cote um and I'm happy to take this one so Odyssey uh with regards to the the production figures that they're forecasting over the next few years up to full ramp up uh what what uh Ryan quoted where the full production figures we're expecting to have roughly 30 to 40 percent attributable coverage over Odyssey really over the next few years and then as the asset is fully ramped up in 2027 and Beyond uh that's that's based on the underlying resources that we have at the project we have approximately five million ounces of Total Resource of the total deposit there with the potential for that figure to grow given the significant expiration being conducted by Nico at the deposit so so that gives you some some fence posts with regards to how much production we'll be receiving from Odyssey similarly with uh Cote over the entire life of mine we're expecting roughly a quarter to a third 25 to 30 percent of the attributable production coming from our royalty at Cote uh albeit that portion is front loaded given where our royalty is focused the mineralization is focused at surface the higher grade portion where our royalty is located and then our attributable production is expected to fall off towards the end of the mine life as the deposit dips to the north and off of our royalty coverage land so this provides a bit more clarity on those two assets and with Ren we have full coverage over the entire deposit beyond that I'd open up to anyone in the room for for Q a Brad connicker thank you um just curious as to why we would introduce a drip with the stock trading at less than 50 percent of nav and can you tell me uh how many of the officers and directors management actually elected to reinvest versus taking cash um but as far as I know all of the directors and officers which collectively own about four percent of the stock participated in the direct um but um beyond that it was very very nominally taken up um but again the the reason we introduced the drip is give Cheryl as a full optionality if they choose to reinvest their dividends they have an opportunity to do that question about the one of the initial slides in terms of the comparison of the navs of the different royalty companies from my generalist understanding it's it's a bit of an art um could you speak to your practices compared to other similar size companies I noticed some of the analysts have different calculations for any of these perhaps than than yours can you give any color surrounding that slide yeah I'll let Peter get into that in a bit more detail but what I would say is those were based on consensus numbers they're not internal numbers uh so they are based on the analyst coverage universe but Peter please uh yeah well the gentlemen are in the room here as well but uh it is we do have in just the two years with our existence we have fairly widespread coverage which which I believe gives our consensus estimates a bit more robustness than some of the other smaller cut appears but ultimately we rely on consensus estimates to make it comparable uh to the universe ultimately it's it's their estimates but but in my view it it's consistent across the board for comparable purposes and really is driven by the present value of the cash flows within our business and having that clear line of sight on those development stage assets um and while there's a range having that five hopefully soon to be six or seven consensus estimates uh gives gives us that reliability but there is I would say some disparity on discount rates depending on the analysts some analysts attribute more to our expiration potential than others uh some use different multiples um so there it's not entirely consistent Across the Universe and and um I'm not really in a position to speak about their methodologies I think they're actually quite uh robustly disclosed within their research reports uh but it's not you know they don't you always do it the same way across the board those like the same way yeah so the question is how do we come up with the nav for the uh for the other smaller cap companies and you'll note that on that peer group slide it is a select group of the smaller cap companies where we do have estimates that we can rely upon some of the sub 100 million dollar royalty companies sub 100 million dollar market cap companies might have no research coverage and those instances you're not seeing them on the chart so it's really the data that we can rely upon where we have independent discretionary research to point to as opposed to their own disclosed figures or paid for research yep uh Haiku at the back I think thank you hey with Jared Canyon obviously shutting down and their punch line still is you know we're working on the contractor this might shut you know might ramp back up in the somewhat near future just want to see what you are doing with your internal evaluation of the site and how exactly you've adjusted and what factors you based on given that there are very conflicting messages out in the marketplace with what's actually happening there I'm going to let Peter handle that he does a lot of the modeling there so please yeah haiko uh good question uh really with regards to us as a royalty company we view this as a deferral uh we've taken what we've modeled for the asset given the underlying resource there and conservatively push this out to 2026. we think in the lines of temporary suspension a three-year delay is is a conservative estimate to see this asset come back into our Revenue profile with that said first Majestic has outlined that they'll provide updated guidance this summer I believe it's July so we're really waiting on them to provide more clarity on their plans and their updated guidance for the asset as well we have we have deferred it and our and our Revenue guidance has completely stripped out Jared Canyon so we are not expecting revenue from that asset for the next three years if it comes in sooner than that that is upside for us I'll just add you you'll see in our quarterly disclosure as well we did do an impairment test and we management with our Auditor's side we did not impair the asset um given that we delayed it we deferred the um uh the cash flow in our models it was not an indicator to to impair that asset for the quarter so it is a small portion of our nav um we are still monitoring the situation the first Majestic says a temporary shutdown and we'll monitor it quarter over quarter but it didn't have as material of an impact on our internal numbers um to make decision to do any impairment at this stage thank you um and quick question for me uh uh maybe for Peter as part of your overall nav how much does Odyssey code and run represent yeah so overall our view and relatively in line with consensus too is Canadian Arctic is about a third of the overall net asset value of the company and then Cote and ren represent about 10 each as well so all three together are approximately 50 or just over the overall net asset value of the business uh thank you and you touch on your Revenue Outlook but how should we think about your cost Outlook should that be maybe based on for 2023 or you expect maybe a slight increase in that year over year yeah Andrew can build on on anything I say but that's seven to eight million dollar in recurring cash operating costs is expected to be exactly that recurring going forward we don't expect an increase there and if anything Andrew continues to look for opportunities to save further G A costs um and finally for me how do you view the dividend as part of your world Capital allocation strategy Parton how do you view your dividend as part of your overall Capital allocation strategy yeah yeah well look uh obviously with our free cash flow we're tipping into for positive free cash flow next year and it's growing substantially from there we're in a position to actually look at increased dividends over time it's at a very nominal level right now it's about five and a half million dollars per year and next year it'll be at least partially paid out of free cash flow and after that more than fully covered out of free cash flow and we have very no low debt nominal debt on the balance sheet less than 10 million dollars so we're in a great financial position not only to sustain that dividend but increase it over time as free cash flow growth and we'll look at a formula that maybe something more formulaic as we get into more sustainable free cash flow going forward right now it's a nominal dividend I think it helps diversify our shareholder base and you know with that kind of cash flow profile why wouldn't we pay a dividend we have a lot of confidence in our operators they're well capitalized senior operators all of our growth are coming from significant assets with long lives and so this is a dividend that we feel comfortable we'll be able to grow over time yeah just a quick one for me uh just with new Crest and Newmont definitive Pan-American in your man and completed the and D Market's going to heat up do you guys have an edge as it gets you to the table or how are you thinking about getting the table for these producing assets yeah and you know what I'm gonna I'm gonna defer that question because John is going to talk about our pipeline things that we're looking at right now and I would say that we are almost exclusively concentrated on cash flowing assets in terms of what we want to add to the portfolio obviously we're generally continue to generate royalties organically long-dated royalties through Jerry and Glenn's efforts in Nevada and Quebec respectively but in terms of Acquisitions major Acquisitions that they're exclusively focused on cash flowing assets that could bat be massively accretive on a cash flow per share basis without undermining internet asset value accretion and the reason we've been able to do that and being able to grow so quickly um is because of the access that our Collective Board of management affords us to these opportunities on a bilateral basis I can say I can say quite transparently we've competed in a number of competitive processes and we failed in every one of them because in our view they were mispriced when they traded at least Mis price relative to our cost of capital and we're happy to walk away from those and lose those types of competitive processes because we'll be price disciplined so uh oh yeah Carrie one more question and I'm going to give you guys a break so thank you okay okay so I had a couple of questions firstly that graph that you put up with the revenues by year can you share which assets are actually included by by year let me pop it up here so like over and above the assets that are already producing Peter obviously we know the ones that are producing yeah so beyond the producing Assets in 2024 the the Big Driver there is Cote uh that that is the incremental growth uh in 2024 and then beyond the revenue growth from Cote is is increased coverage across assets like board and odyssey and option proceeds are expected to be relatively consistent year over year by 2025 we could expect to see some incremental revenue from Ren by the end of the year uh as well as gold rock for caliber and again continued resource coverage or mineralization coverage at Odyssey and Borden in 2026 we see the benefits of Ren coming in for the full year fully ramped up at Cote and assets like railroad gold rock uh and while not in this forecast the potential restart of Jared Canyon as well uh coming in that year okay and are there any indexes that you think you could get into in the near term that would help with liquidity and an investor interest in the company with regards to index we are already in the gdxj uh something we have considered uh is is the Dual listing which would put us in the TSX composite as well albeit that's not that significant of an inflow in passive funds uh beyond that as a foreign private issuer in the states we are evaluating what U.S indices we could potentially be included in but it's not something I could speak to definitively carry so okay and there was a slide you had about meters drilled on your properties in 2021 and 2022 can you Hazard a guess as to what that number might be in 2023 it was 700 000 meters I think and yeah so as as you'll imagine expiration has pulled back a bit in 2023 we're still forecasting approximately 600 000 meters of drilling on the portfolio based on quoted 2023 expiration Plans by The Operators a big portion of that is first Majestic continuing to evaluate opportunities The Odyssey project and then some some smaller programs at assets such as phenolon another 30 000 meters there and uh Whistler starting their inaugural control program later this year as well okay thank you the jurisdictions which we operate this this is another image to help illustrate that we're focused very much in North and South America that suits us uh very well good strong uh geopolitically stable jurisdictions on the right hand side of this image you can see the actual royalties per uh per state or by province by country you can see we have very strong concentration of course in Nevada Quebec Ontario uh that's uh that's great for our company also great for me my background started as a geologist uh in Kirkland lake and Timmins and was a chief geologist for for Kinross and Placerville man for gold Corp in those regions so know the Abbott TV very well and some great jurisdictions there there's there's nowhere else we'd like to be than some of these jurisdictions and as Dave mentioned too we have the capacity to take on additional risk and look globally by having such a stable foundation in the Americas um we did talk about the 700 000 meters of drilling that uh was completed last year on our properties the beauty of that is that we don't fund that it's funded by our operators and our developers and our company stands to benefit entirely by any upside exploration success or or new new deposits that are found or added to the pipeline and the current estimates are about 600 000 meters for 2023 of course that's a figure uh in progress as the companies come out with plans summer season is about to start in the northern hemisphere as well within those five key projects that I'll give a little more background on three of them happen to be in in Nevada so that shows the jurisdiction that we have a lot of focus on and the first one to come up is the Granite Creek uh project and this is operated by I-80 gold is it the Northern end of uh of Nevada it's near the intersection of the Battle Mountain Trend and the getchell trends it's a it's a sizable deposit in its own rate already it's already produced over a million ounces from historical production but I-80 is really focused on the future of what this operation could become as an underground operation and as an underground operation has a couple of key strengths primarily I would like to focus on the grade component here the underground resource is north of 10 grams per ton which is a high grade deposit it will recover some uh dedicated processing there is some refractory ore here it's typical Carlin Style mineralization there is also some oxide ore that's being processed in the earlier stages from some of the near surface mineralization but a significant Carlin style deposit here I would also point out this is the one of the few royalties that we have which is an NPI interest which is a net profits interest it's about 10 percent uh covering the deposit right now it is a sizable resource there's over a half a million ounces in the underground and also a sizable resource of uh you know close to 1.3 million ounces is an open pit Resource as well um what we can see and what we have seen from the operator here they have been very aggressive with a drill program a very successful drill program completed in 2022 there's some 30 000 meters that were drilled on the deposit that's adding to the discoveries primarily on the OG Zone which is the the nearest surface mineralization Underground and they are updating a feasibility study on OG which should be out sometime in this quarter by I-80 and then also some of the deeper holes have been targeting this uh the South Pacific Zone which is basically an extension of the underground the grades continue mineralization continues and the ramping will continue there are a number of underground levels already developed there has been some initial mineralization shipped to plants for processing but the significant portion of this comes in the future once they announce this final plans coming out of that feasibility study and a future Pea on this Earth Pacific Zone as well so we're really staying tuned and we're excited the advancements I-80 is making here at Granite Creek shifting back to the north uh back to my uh I I guess where my roots were in the in the abbottibi is the the fenlon gold project and uh one of the key things that really excites us about this project is the exploration potential uh the operator here Walbridge has been very aggressive with their drilling programs they've drilled some 450 000 meters since 2017 and this year they're planning on in this an additional 15 000 meters so still staying aggressive on the expiration uh many of you may recall that the First Resource that came out on this deposit I believe was in 2021 it was a started out Life as a fairly low-grade open pit resource which kind of surprised the market a bit uh Walbridge since pivoted and had a focused on the Underground now I think this is a very significant underground resource it's about 4 million ounces combined categories and with a grade north of uh three grams per ton so with a good sized bulk scale operation they have been envisioning something in the scale of six thousand to eight thousand tons per day which as a comparison would be very similar to what uh the young Davidson mine is producing by Alamos which is about eight thousand tons per day at a grade actually just under three grams per ton so similar scale and a little better grade is what they've been talking about here um but really it's it's the growth potential it is also part of this and the image on the right hand side at the top we can see it is a long The Detour Trend it's a major structural Corridor which hosts Canada's largest deposit detour like mine which has a total endowment of some 40 million ounces of that one deposit alone this structure continues across the border into Quebec through the Finland property here so it's a great expiration potential in this property and we're very excited that they are planning to release a pea on the project uh sometime this quarter is their their guidance so with that we should be able to model this into our production profile but those sort of grades that sort of tonnage it's looking at about a 200 000 ounce per year plus or minus would would fall in line with that scale of production those grades From The Underground shifting back to Nevada on a key property which is uh is which is now held by uh Orla mining which is the railroad pinion property uh it's also one that I'm quite familiar with uh first visited this project actually in 2015 when it was just being discovered by gold standard Ventures and at that time I was working for gold Corp and we liked the project so much we invested 16 million dollars into it to further Advance gold standard uh the good news for us as the royalty holder on this property now we have a 0.44 NSR over a large portion of it including the primary uh driver of the value there a dark star um a large uh large portion of this has been Advanced and will advance further by Orla and the significance there is that Orla is now plus or minus a two billion dollar market cap company they've established credibility by building and operating the Camino Rojo mine in Mexico so they've got a very strong operating and development team that can see them move forward on this project there is sizable uh reserves or sorry excuse me resources on the project which Orla will be advancing into further studies throughout the year um what I would illustrate here is that uh the coverage on the deposit is not continuous like many properties in Nevada this is what they uh they refer to as the checkerboard pattern of claim ownership and our royalty covers the areas highlighted in yellow and uh but what you can see from that it does cover most of the main resources uh particularly at opinion and Dark Star as well as some of the more prospective areas such as the jasperoid wash Target to the South the royalty covers those those properties so um what uh what Orla have said is that they have their records of decision which is their permits of construction to really continuing to fine-tune their studies they are looking to make a construction decision within the next two years this is information from orla's website showing their development timeline um because of its location this is in close proximity to new monster immigrant and Rain former operations so it's in a developed and established part of the state with good infrastructure there's roughly uh you know one A two-year permitting process such that by the end of 2024 permitting is complete and they're beginning construction that's that's the timeline from Orla which is great having an established operator and developer now running this project one of the projects that Peter had touched on earlier is is the gold rock project this is run by Calibre and I like to highlight Calibre have been very successful uh in a much more challenging jurisdiction in Nicaragua and they've brought Minds into operation there and they follow a very simple development operating strategy which is a spoken Hub system so I have one central processing facility with surrounding exploration properties with the infrastructure in place Advance your property surrounding that infrastructure and you can very quickly and easily with efficient use of capital bring those into production that's exactly the same model caliber is exploiting here and and gold rock you can see it's just to the east of their main pan mine and processing facilities at pan and uh to show caliberi's commitment to the project they have announced 35 000 meters of drilling in 2023 to try and expand upon the existing 400 000 ounce resource they have which is a very uh amenable to leaching a facility it's just over 50 000 ounces per year has been their plan but what they have also been announcing is significant drill hole intercepts with very good grades good widths so there's a very good likelihood this resource could expand and that's in fact what they plan to incorporate that additional drilling into these ability study which will be announced in 2024 along with a decision to construction and because of its location and with the infrastructure nearby this can ramp up very quickly into an operating site for us a final project just to give a highlight on is is the Whistler project and this is a project I'm very familiar with as the as the CEO of of gold mining Inc the former parent company of gold royalty we've just launched a new company called U.S gold mining Inc we've launched that on the NASDAQ within the last month specifically to advance and move forward the Whistler deposit which is almost 9.5 million gold equivalent ounces it's in a great location it's only 100 miles from Anchorage uh it's about 70 Revenue by gold significant copper on it with some tremendous uh upside and with an experienced team has been brought in to lead that work including uh the CEO of that company is Tim Smith who many of you may recall made a major Discovery with kamenak gold which was acquired by gold Corp uh acquired their assets in the Yukon the coffee project for over 500 million dollars so an experienced team leading that work now that project hasn't been drilled in over 10 years so it's good to see that activity is resuming this summer the camp is being refurbished and there's a Planned drill program of some 10 10 000 meters will be the first phase of that project uh drill work starting this summer and in fact there's a focus on the high grade core of the deposit if you look at an elevated cutoff within the existing resources at Whistler and there's some 6 million gold equivalent ounces at about one gram per ton core in that deposit so high grade core with a number of deposits to be tested in a good jurisdiction and that work will lead to the announcement of a pea study in in 2024 and I guess this is a good point to mention too that in addition to the the royalty that gold royalty has there they also have Buy-Back rights to acquire an additional 0.75 royalty for for five million dollars from uh from with Cisco so it's a it's a it's a great deposit and it's a an exciting time to see it actually starting its uh next phase of expiration so that was a little bit of a snapshot onto a couple more of our development projects that are next ones in the pipeline and I think there are questions now are wait for okay I'll pass to our chief development officer John Griffith uh thank you Alistair and uh thank you everyone for attending today uh it's a pleasure to be here my name is John Griffith I'm the chief development officer which means I'm primarily responsible for our m a strategy and our quote unquote non-organic growth uh today I will share with you why growth is important to a company like ours um I will also share with you some of uh the perspectives that we have on how we think about valuation um and then also talk to you about what we believe to be a differentiating multi-pronged strategy to to Growing the company uh you'll also hear from Jerry Bowman who is uh vice president of Nevada select royalty and he's going to talk about our organic royalty generation model and then Sam ma who's a VP of evaluations and Sam will talk uh talk to you about our comprehensive due diligence review process uh it's been it's been established Beyond doubt that our sector is welcoming of consolidation the benefits of consolidation Beyond human talent and asset quality a best measured in terms of capital markets and operating scale which Drive increased trading liquidity higher valuations and a lower cost of capital creating a virtual cycle in which capital can be more efficiently deployed on an accretive basis to drive further growth and it is this Dynamic which we believe is driving the current wave of consolidation since our IPO in March of 21 there have been at least seven change of control consolidation transactions in the sector the wave of consolidation began with gold royalty's acquisition of illegal royalties in 2021 followed shortly thereafter by Acquisitions of Golden Valley mines as well as Abba Tibby royalties which we closed in September of 21. then in 2022 Sandstorm acquired Nomad royalties Elemental royalties merged with Altius Royal gold acquired Great Bear royalties and triple flag precious metals acquired Mavericks metals despite the recent wave of consolidation there are by our estimates more than 30 private and public royalty and streaming companies by striving to create scale and becoming investable by meaningful institutions the rear rate potential is very significant if we achieve a multiple closer to that of the seniors between two and three times net asset value what will drive this rewrite at present we believe the market is favoring current cash flow over growth but it won't take long for this Dynamic to shift as the quality portfolio of our assets begins to ramp up to production with peer leading growth over the next several years and this growth is underpinned by assets that are not only among the largest gold mines in North America but also mines that will be producing gold for many decades this is a clear differentiating feature of our company none of our more immediate peers have multiple assets such as Odyssey Cote and ren that will all be producing gold this decade and still be producing gold in 2040 and Beyond why do we focus on net asset value or nav represents the present value of the life of mine cash flow and the key assumption applied in building a DCF model being the Mind production schedule mine production schedules are driven by technical reports when available when a production schedule is not available and internal estimate is made on a case-by-case basis to assess an appropriate mineral resource conversion factor production rate and likely timeline to the start of production adjustments are made to reflect the perceived technical risks which may be influenced by among other factors the geology mining method and mentality Metallurgy of the or body macroeconomic assumptions such as commodity price exchange rates and discount rates are then applied and the result being a calculated scientific reflection of the value of the asset once aggregated across all the Assets in the portfolio We Believe nav to be the most appropriate reflection of the underlying value of the portfolio what are the issues with using single year sales or cash flow multiples to Value royalty companies we would argue that these multiples fail to reflect the underlying asset quality the portfolio duration the specific portfolio risks such as jurisdiction and in short the cash flow Revenue multiples while useful simply provide a static snapshot at a moment in time and don't tell the full story I think what helps set our growth strategy apart from many of our peers are the four fundamental pillars of growth some of our peers focus on one or two and in some limited instances three of these four pillars of growth We Believe having multiple Avenues to growth meaningfully enhances our ability to acquire great assets and it's important to emphasize the great mining companies are built on the back of great assets you've heard it said today and I'll repeated that Franco Nevada's foundational asset was a royalty on Barracks Gold Strike mine and we have a royalty on the Northern extension an important future contributor of Gold Strike the ren project among other foundational assets continuing with the theme of consolidation corporate M A has been has been a big driver of growth for gold royalty helping establish solid foundations upon which we will continue to build our business in addition to acquiring great assets corporate M A drives increased scale lower cost of capital and provides GNA synergies the next pillar I'd like to highlight is acquiring third-party royalties these are royalties acquired from existing royalty holders such as mining companies land owners or Prospectors for these royalty holders a sale to Gold royalty offers the ability to monetize and daylight value for assets that would otherwise be non-core and illiquid depending on the preference of the seller we're able to offer cash stock or a mix of both as consideration providing the sellers who opt for stock with continued exposure to a to the divested royalty but within a larger more Diversified portfolio of assets an example would be Nevada Gold Mine sale of the portfolio of royalties in which NGM opted to take shares making them our second largest shareholder the third pillar of growth that I'd like to highlight is providing primary Capital to an operator to Def to fund either the development or expansion of a project or mine royalty and streaming as a source of capital to fund mind development was once considered to be a boutique form of financing but over the past couple of decades has become mainstream source of capital the equity and debt markets fluctuate over time depending upon what the state of the markets is and the desire for exposure to development Risk by investors within the mining industry our sub sector provides a very competitive and steady source of capital for operating companies given royalty and streaming companies typically trade at higher multiples to reflect the benefits of the business model namely no exposure to operating and capital costs yet continued upside to exploration and expansion successes coupled with the diversification offered through having multiple assets were able to provide a steady source of capital on an accretive basis to fund development in the industry financing transactions typically require cash consideration given the primary objective of the counterparties and we can tailor and structure the terms to meet the needs of our counterparty while mitigating risks to Gold royalty the fourth and final pillar of growth that I'd like to highlight is organic royalty generation this is the lowest cost way to generate royalties providing near infinite potential returns over time Jerry Bowman will be speaking about the aspects of our growth strategy in Greater detail and certainly will be speaking about how it works so I'll leave that to Jerry to provide an overview of what we do to generate royalties organically I will highlight however that we focus on Nevada Quebec and Ontario with the work that Jerry and also Glenn Mullen do in those key territories while our arrangements with Prospect to royalty Corp or PRC provides exposure to other regions through prc's vast royalty database and with that I will now hand over to jury hey thanks John for the introduction and hello to everyone today my name is Jerry boffman and I run gold royalty's generative business out of our Reno Nevada office I've been working as a geologist for more than 35 years with a significant portion of that prospecting and staking claims throughout Nevada as a result I've helped assemble dozens of generated royalties and I've been able to acquire a vast amount of geological data and information along the way in fact our data collection would rival almost any company working in Nevada Majors like Newmont and Ken Ken Ross to name a few have done data swaps with me to acquire data they didn't have I'm excited to walk you through what what it is I do and how the royalty generation business model is a unique Advantage for gold royalty in the simplest terms royalty generation involves three steps first identifying prospective land second staking that land and then ultimately vending that land package to an Explorer developer or operator in exchange for a royalty and option payments a simple model yet difficult to replicate identifying prospective land is driven by my knowledge and Analysis of geological potential of a prospect it has taken a long time to have the experience and knowledge to actually make this work in some instances prospective land can be neighboring an existing mine or development project and these scenarios the state claims would then represent a portion of the overall projects once once the state claims are vended to an operator an example would be our two percent NSR Rodeo Creek project north of ran at Nevada gold mines south of turtle mine just north of Gold Strike along the Carlin trend in other instances we've considered Consolidated fragmented claims that haven't seen recent expiration of the fragmented lands positions once Consolidated we will hold a royalty over the whole project an example is our royalty over Tonopah West project Advanced by BlackRock silver with regards to the actual execution of staking the claims it is a simple very low-cost exercise and simply requires the recording of mining claims with the County Recorders and state BLM offices the cost to maintain the claims is minimal and once vended the operators always take on the cost to maintain the claims and then the last step of the process is to finally partner to Vin the pro the prize however we will also receive option payments over a term of three to five years and in some instances get a work commitment from the count counterparties as of today we've generated 63 royalties in America using this model and consistently generate a few royalties each quarter Beyond this our team in Felder Quebec runs a similar model and generates additional royalties for gold royalty a key point of validation of the prospectivity of the claims we are staking is the quality of the operators that we are doing deals with recently we've entered option agreements to generate royalties with companies such as Barrick I-80 newcrest El Dorado Centerra and yamana some of the biggest names in the sector are now exploring properties we originally staked another great element to the business model is that is consistently contributes supplemental cash flow from option proceeds in 2022 we received 2.2 million in option proceeds finally I really want to highlight that is a very low cost model some of our peers that highlight they are royalty generators actually drill their projects and spend Millions each quarter in Exploration expense in contrast we vend our projects to operators before we ever spend a cent exploring the project in q1 we spent less than twenty thousand dollars on claim maintenance costs we are creating royalties practically for free through our Sweat Equity and vending those projects out to operators an important aspect of the royalty generation model is that it's somewhat of a second order effect the connections and acquisition opportunities we get access to by having boots on the ground similar to what David noted with regard to the connectivity of the board having a strong generative business gives us access to third parties that hold royalties that our peers never see the acquisition of our royalties over the assets like Iran were acquired through those cherished relationships I've built in Nevada over the past few decades I'm happy to discuss in more detail during the Q a block but before then I'll pass over to Sam ma to discuss our due diligence approach for more additional acquisition opportunities Sam over to you well thank you Jerry for your presentation and your insights on the royalty generator model um good morning everybody in the room as well as the people online my name is Sam Ma and I am the vice president of evaluations I am pleased to be able to share with you uh some slides on our due diligence process and how we use it to evaluate royalties and streams please allow me to introduce a little bit about my background as Dave mentioned I am a mining engineer and I would say that I have I've had a tremendous exciting career I've been building up my experience in a very traditional approach so I've begun in operations and learning how to operate mines get dirty have a look at the rocks at the face and connect that to plans eventually I got promoted and went into Consulting and there my eyes got opened I got a chance to see the world and and explore other medals in particular copper and then I find myself now in head office roles which I really enjoy doing because we're really building a company here specifically in my last 15 years I've been doing a lot of due diligence so this topic is really close to my heart and so I'm going to walk you through a little bit of what I do I still for some reason enjoy digging into the details I love pouring into an asset trying to figure out what makes it tick and eventually I find out if it's good bad or otherwise and so that's really something that requires me to draw on my experience as well as my educational background and it's it's the same for our team and so that's the reason why I can honestly say that the gold royalty team here is very strong because we have depth and we had a wide breadth of experience and so I think that's what makes us really a good team so we're going to go on a journey we're going to go through a couple of slides okay we're going to go through the process and we'll see how our team collaborates together so what you see here are four key areas uh very very key part of due diligence um let's begin in the left corner top right top left which is the technical that forms Foundation of our view on value that's where I get the asking tough questions um Is it feasible you know is the mind uh going to be found on a solid resource does it have integrity um one big question that I do answer is you know does a mining rate is this sustainable let me actually do it often we'll come across projects with really challenging Metallurgy and so those are the type of questions that I like to pour over um as well as your opportunities and so in doing the review you're going to find that there's going to be omissions or additions inputs and assumptions are they reasonable and if we agree moving over to the top right Square we're going to come into a topic of finance and economics and I believe go royalty as a group does this part quite well and the reason why I say this is because we're really marrying the technical uh experience that we have with a financial outcome and so over the years I've spent time developing a proprietary model and that just helps us understand what we're looking at um and what it produces is is a health check and that's something that's really key um you all agree with me that it makes no sense if we're going to buy something and put a burden on it whether it be a roll to your stream and and make it unsustainable and so nobody wins if uh the Mind actually shuts down so that's really important to me so we'll talk about that a little bit more later moving down to the lower left we're gonna hit the legal review and that's also an important step and I think we've talked about it here before that a lot of what we're buying here are royalties and agree and streams they're just agreements and so we really have to be careful in how we paper them and so there's going to be two situations we're gonna be either creating new ones from scratch or we're gonna be reviewing a portfolio of old ones and so a lot of the things that I like to look at when I look at the terms of these agreements for me it's important to know about um access to the site will I have permission or do I have a right to visit the site reporting requirements or obligations you know what are they going to provide us are they going to give us the necessary information that we can actually calculate the royalty to see if it makes sense and so we also at this stage we look at the counterparty um what kind of track record do they have are they in compliance with the laws and regulations of the land and are there any specific jurisdictional differences that we have to be aware of so this is really important you know is the royalty even registered properly and is you know permitting in good order so those are the things that we talked about we look at when we look at the legal moving on to the last topic of ESG I think Catherine's done a great job in Sharing how we've really elevated our game where we're looking at ESG in a different light and I think we do a better job now because of the wealth of experience that she brings the table of expertise and so when you look at all four categories that's what we do for due diligence and that's how we pull together what we think is an appropriate valuation and if we do our job right that's what we end up with so here we have a room of seasoned you know veterans and Professionals in mining and I would say that this is nothing new um let's call it best practice at best right and so I think what we do different again I speaks to the team how we we conduct business and I think we do it well because we have depth all righty she's stuck oh there you go there you go I did it all right so now as we close out due diligence we have to kind of show that it's intertwined with our bidding process and so this is just really an illustration of how if it were to work perfectly this is what it would look like so the far left we're going to be talking about screening and it's really important step um it's high level the space probably on desktop public information and really we're looking here to ask ourselves you know does this asset or opportunity fit our company so we're going to look at commodity we're going to look at a timeline cash flow is really important to us right and so we're going to be looking at how soon that can come into play does it have a long mind life is it generational asset does it have expiration potential so these are things that if we can't even pass this step we don't want to waste our time and it's so important because what I do is the second part the preliminary review is slow and so it's arduous and it takes time to build what we call the technical evaluation model and that's the proprietary model that I mentioned earlier and so important to us because we really want to know the health of what we're buying and so I'm going to give you an example of of how I use that model one of the coolest things is you built a you know vary in a parameter whether it's a technical parameter like dilution or grade or metallurgical recovery and you marry it with um a financial parameter like operating cost or capital or discount rate and so if you can look at a wide range of things on a table you're going to see that at some point the MPV might not make sense it might even be irr whatever the indicator it will show that at some point it won't meet our threshold and so it's really important to me that if we place a royalty or a stream on an asset that has to withstand that so that's really important but it does take time unfortunately moving on if we do pass muster we go to a non-binding bid and here we have a chance to be creative a chance to really write the offer so that either suits our partner or more or less protects ourselves as well and so we can put in contingencies you know payments that are due at a milestone if they achieve certain things yeah it makes sense to give them some money and so that's really important and in certain situations we want to have ability to include ESG linked payments excuse me um and those are probably more associated with um new royalties and new streams so once we submit a non-binding offer and we advance to the next phase we quickly go into confirmatory due diligence and here is kind of a super um compressed timeline you really want to look at the things that you identified earlier whether they're Amber Flags whether they're wrists like we have to mitigate and so at this point all the stuff that we've been doing has in-house so now we might actually bring into play external Consultants give us a hand understand the things that we may not understand so that's uh an important part of confirmatory if a site visit is offered I will definitely take it it's something that I value immensely any opportunity to be at the site is really an opportunity to meet the people the management to The Operators and get their sense of the property and I've I can tell you so many savings that I've conducted I've learned so much and I think it's really important to get the lay of the land and really understand what the bottlenecks might be because you get to ask questions twice maybe three times and if they don't give you the same answer three times you know something's a mess so then at that at this point we're papering um a binding offer and so we submit and so we're at the last stage a lot of work has gone at this point and um I can tell you since I've joined we've reviewed hundreds of opportunities and we've only consummated six transactions and so to me it's a reminder of how difficult this work is and how important um and how special it is when we actually close a deal and so when we talked about our portfolio of over 200 royalties it's something to be proud of and it's a testament of our process that we really applied rigor we really tried to you know pick the best stuff and so I'm really proud of what we've accomplished as a team and there's probably three takeaways right you know there's going to be the quality of the asset we're going to be looking at the you know strong growth Pipeline and I think it's really important too to look at the operator you know we have been associated with some really good operators so that's really one I wanted you guys to take away from today's talk is that our process does tie it all together and it's it's a worthwhile investment in our company and so I'm going to conclude before I have have too much more to say but I'm going to pass it over to Dave um all yours great yeah thanks Sam that actually concludes uh the formal part of the presentation and if there's one message that you take away from here I hope it's that uh we're exiting the phase of startup and to what is a systematic and sustainable business on the cusp of significant free cash flow growth and also I think the professionalism of our team and this is the first time I think our shareholders have had full information uh you know we've been a startup for the last couple of years but now you have an asset handbook you have an ESG report uh you have the benefit of sitting down and listening to my team holistically go through our business how we think what our vision is what our strategy and how we execute um and what I can assure you is we're going to be consistent in that regard consistency in our transparency of sharing information with you but also in terms of how we look at assets and look at opportunities how we acquire them how we execute and how we continue to grow this business and I'm very very proud of the fact that we brought our business to a sustainable level both in terms of uh going through the post merger integration with three companies in very short order and driving costs out of the system we continue to do that and and having Andrew come on board early this year has really accelerated that process but you can see with the strong operating Network operating Partnerships that we have we are in the cusp of executing on that growth that we promised and it's fully paid for that's the beauty of it we're in Harvest mode right now while we continue to look at new opportunities the supplement was also already a very high quality portfolio so with that I think we've bought you some time but I still want to have an opportunity for you to ask some more questions and answers or questions and we'll try to provide the answers you don't have to give us the answers but the questions for you and answers from us please um both online yep in the back haiko yeah so the question was yeah our question was on the due diligence process what percentage of the things that we look at make it through to what phase heiko you're thinking oh right through the execution yeah um Sam uh John do you want to grab a mic and try to answer that so the online Network in here yeah yeah great question I think as Sam mentioned we've looked at over 200 opportunities since uh formation and we've concluded six transactions now some of those transactions we've looked at might be quite small um you know less than a million dollars some have been very large and potentially transformational um and the reasons why things don't happen um you know I think uh Catherine mentioned 11 of the opportunities didn't pass master on the ESG side and I remember one particular transaction that we turned down uh because of environmental concerns uh relating to tailings and it was only several months later that we saw one of our competitors actually acquire the same asset um and we wouldn't change it we wouldn't go back um you know I think that discipline is important for the longevity of the company um I think uh another you know another very fundamental reason why that ratio is so small is because of our discipline or on value uh you know we we're not going to we're not going to um do something that doesn't make sense in terms of creating long-term value for our for our stakeholders I think the focus today is very much on cash flow generation and assets that will be significantly accretive to our cash flow profile uh you know I think we've got plenty of what I'd refer to as option value in the portfolio um as as you saw in the um in the slide that Peter discussed there's over 150 assets that we would describe as being exploration those are um you know we use we use a a somewhat flippant term uh lottery tickets um they're lottery tickets that really don't cost us anything um but uh to give an example Royal Goldwater portfolio of exploration properties from Barrack a couple of decades ago one of those assets today is one of Royal Gold's primary cash flow Generation Um generators that is the power of the exploration assets um and the last thing I'd say on on this this process is that slide that Peter mentioned where you saw the 150 exploration properties the 30 plus Advanced exploration and then the development assets Etc think of that as being highly organic those assets are not stuck in in any one category forever and that list of well-capitalized um you know operating companies that are managing those assets they're not looking for those assets to stand still they're moving those assets through that pipeline as well so growth is organic in our business and um you know my responsibility again is that non-organic growth which which as we mentioned and I think Sam articulated very well you know we're very thorough and we're very disciplined and that's why that ratio is quite low that ratio you know I I've done a lot of due diligence uh in my time when I was a banker on um on on some of our peers that ratio is no different uh in many of our peers in terms of the number of assets that they'll they'll they'll look at as well any other questions Carrie Carrie Smith yeah I had a couple questions for Sam just on on the process so what sort of gold price or metal price assumptions do you use what sort of discount rate do you only model that reserves that the company reports and do you generate your own geological model when you look at these assets or do you rely on the model that the company's provided or has posted publicly uh thank you for the question Carrie that's a multi-pronged one so I'm going to try to answer all the components um I don't think we have a crystal ball and so for metal price it'd be fair to say that we probably point to a consensus of some sort and so we'd use something like that to to do our valuations um discount rate you know we would probably begin at five but because of other issues or risks that we identify we might escalate that and I can't say for sure what number that would land at but certainly a starting point could be five um as far as the mineral resource estimate we vet that wholeheartedly and so that's really important to us because that's the foundation of what we're buying and we will have that looked at all the input assumptions does it really make sense is the uh resource integral where it has integrity I hope that answers your question I lost some with the construction going on what was the last part about the modeling and do your model just reserves or how do you do that oh sorry yeah we we do look at the resource and fulsomely and so we uh check the model uh right through from from top to bottom okay and and do you build your own model in are you kind of use the model that you've um we'll we'll uh send that out to external if we're going to do that okay you will and and so when you're going through that due diligence process is it mostly your own in-house team or do you rely on consultants for certain aspects of the process we're predominantly in-house but we will pull in uh Consultants as needed okay okay thanks and then I just had a question for Jerry on on the Nevada team do you only focus on Nevada do you have a focus on the western you asked do you care about the Slate belt in Carolina like what is your sort of focus in terms of where you will operate uh we actually have assets throughout the Western U.S one of the slides you couldn't notice so well but we have projects and royalties in California Utah uh Idaho New Mexico Arizona so we do work the whole Western U.S in fact we're just about to ink a deal on a on a royalty in Montana so uh so we we focused on Nevada because that's where the people want to be that's where most of the activity is but obviously we work the whole Western U.S okay okay and then I guess the valdo office looks at Canada and is that kind of their responsibility uh yes okay okay thank you all right uh if you have other questions from the group just raise your hand there is one online I want to uh bring up and I can address uh Jacques from lbs asks can you remind us the status of the marigold royalty at this time uh for everyone's benefit this is one of our classified producing royalties is it generating royalty Revenue currently and could you tell us what it generated in q1 so our coverage at Marigold wasn't currently producing in q1 this is something that we're forecast to see going to production in the coming years but we are currently receiving lease Revenue so modest income from Marigold and we do have a royalty over this producing asset so something that will come in the future albeit a smaller portion and a smaller percentage NSR so not a material asset overall for us moving on to some of the other online questions um David I think maybe just to for you to address and it's a somewhat common question but maybe just some commentary on the recent share price performance and what may have caused the downturn in in our stock yeah and I think John actually quite eloquently expressed uh I guess the weight on our stock really this is a market where we've seen an unprecedented increase in nominal interest rates over the last year and that means discounted cash flows particularly long data cash flows get weighted down as a result of that it's not a market that's paying for growth it's putting a premium on cash flow we're recognizing that in our corporate development activities as well by focusing on uh opportunities that are providing more immediate cash flow more media casual per share not just cash flow for the sake of cash flow but ones that actually add value to the portfolio so that's certainly our thesis but the other thing I would add is you know John argued for nav as the best way to measure the value of a company I absolutely agree to that but there's even a flaw on that because we have some assets that have multi-decies these are reserves ahead of them as many analysts in this room know once you discount cash flows Beyond 10 years they're effectively zero so we're not even getting the value of that longevity within some of these Cornerstone assets which is a bit frustrating so even nav as good as it is as a measure of value the underlying business is still an imperfect measure and so you really have to look at a variety of things and clearly the Market's playing a premium for companies that have uh higher cash flow per share multiples right now or cash flow per share uh metrics right now excuse me yeah um a few other uh online questions I'll just address uh in in tandem here uh a few along the lines of would you acquire Assets in certain jurisdictions I think as David noted uh we go where the technical merits of an asset are strong uh rather than focusing on specific jurisdictions so we've evaluated opportunities throughout South America Australia Africa and it's really if if we like the asset and are comfortable with the operator and the jurisdiction that it's located in uh another question do we plan to acquire any Minds no we're a royalty company we focus on acquiring royalties and streams there's a few questions related to coverage of the Odyssey project I mentioned it earlier but we have about that 30 to 40 percent overall coverage and approximately 5 million ounces of underlying resource at our project which could grow in the future and then one last question and maybe I'll put Andrew on the spot is are there any tax incentives or are we getting any tax benefits with our royalties currently and how do we model that do you want to come up here Andrew um okay that's pretty quick um we uh we currently don't have specific tax incentives or benefits with their royalties other than the fact that we do have some accumulated tax losses so how we structure some of the future growth and Acquisitions um depending on where it sits within the the corporate structure we are able to to leverage and benefit some of those losses so not inherently at the moment but we could potentially have benefits in the future thanks Andrew so that's really it for the online q a unless there's any questions left in the room yes this one thanks just one quick question uh regarding the share price and its current level has management been taking advantage of that to purchase shares well I've added about 10 to my position this year um so yes I we've seen Insider buying gold mining has been a buyer as well um and they've increased their level and they're an Insider obviously with a significant shareholding of over 15 percent um so yes there has been Insider buying uh the majority of our compensation comes in the form of restricted share units and those accrue over time or vest over time and I don't sell those Wednesday best I I take them I buy them at the at the exercise price and add to my position as I did this year and I will continue to do so going forward so Renee from maybe I'll just ask a question with respect to your corporate development activity you indicated that you're primarily focused on cash flow generating opportunities so can you give us a a flavor in terms of size potential of opportunities that you're looking at and then B is this on the corporate level or are these primarily either individual transactions or portfolios that are coming to Market great great Christian uh Renee I think um the answer to that question is um it's it it it's a wide range of of of types of transactions um it's certainly wide range in terms of size I would say um you know we we have seen as I mentioned in my uh dialogue a significant wave of consolidation I think that's probably going to slow down a little given where um share prices are um I think asset transactions would probably be where I say um the majority of our focus is and when I say asset transactions I'm talking about primary Capital so providing new capital to um to to operating companies who are looking to either develop or expand operations uh in some instances um we're also looking at uh cash flowing third-party royalties um so you know that that would be kind of my assessment of the type of transactions size ranges from very small you know million million and a half all the way up to things that we would say would be transformational um you know if if we could uh conclude those transactions at the right type of valuation uh with the right type of funding structure any other questions in the room or online I think Joanne you'll you'll take us out uh yeah there's just one more question online which I think would be really uh interesting for everyone and that is are you looking at other royalties besides just gold and silver I know you do have some copper uh in the portfolio but maybe you can talk a little bit more about that yeah I'll I'll start and then John can interject and we have a large copper Gulp or free uh and Whistler in our portfolio so I'm a huge Bull on copper spent half of my career in the copper business and built a couple copper mines over that point and I love the Dynamics of it but it would generally be in a poly metallic setting so a goal-bearing DMS um and I built my career in a couple of those as well lauranda Lawler the namely uh poly metallic uh copper gold pore free those types of settings make a lot of sense so where there's an entry through the precious metals but allows us to diversify a little bit into some of the lme traded Metals in particular copper uh where we remain bullish but I'd say that we'd never see our precious metal content really fall much below 70 to 80 percent but again it's it's in those types of settings polymetallic settings and those have two advantages one is they tend to be longer life but also because of the byproduct credits they tend to be naturally low-cost truck crews as well and so it's good to be in those types of high quality assets if we can find them but they are like hens teeth to be honest with you so thank you very much David and thank you to everyone who joined us here today thank you to our online audience you were absolutely fantastic thanks to the vid team they did a great job on getting all our tech details down we'll see you on the next investor day or the next town hall meeting thank you very much [Music]

Channel: VID TV

Views: 941

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Id: 6ZRE8qzam7c

Length: 154min 10sec (9250 seconds)

Published: Fri May 19 2023