Gold Royalty (NYSE:GROY) Portfolio of Royalties on Top Tier Mines

foreign [Music] Network I'm joined with Peter benke the head of ir over at Gold royalty Corp and we're here in the precious metal Summit AT in Colorado uh Peter good to see you good to see you too Peter for those less familiar just quick overview of gov royalty yeah so gold royalty is a relatively new royalty and streaming company we were born out of a company called gold mining Inc a development Stage Company and we wrote royalties on that company's assets put them in a gold royalty Corp completed our IPO March of last year Wow since then we've been really busy done corporate m a royalty financings picked up third-party royalties and now have over 200 royalties primarily in the Americas strategy going forward is to continue to creatively build our portfolio build our cash flow profile and give Superior returns to our shareholders awesome and could you just remind us of sort of what the current capital structure is in the company yeah so we have 134 million shares outstanding uh 10 million warrants publicly traded that were issued as part of our IPO and and some employee stock options as well so relatively clean capital structure we have a 25 million dollar credit facility with that we just renewed this week and share price is roughly 270 right now with the recent pullback in the markets for a fully diluted market cap of roughly 400 million dollars we're traded on the New York Stock Exchange America okay I mean your 400 million market cap already like say your 200 royalties 10 in production how have you done it in such a short period of time what's the strategy behind this yeah well I think in the royalty and streaming space more so than anywhere else in the mining industry scale really matters you look at the biggest players in our sector Franco Wheaton Royal gold they all trade it two to three times that asset value the rest of us really the small caps within the sector we're all at one times or below one times after the recent sell-off and our view is that by creating critical scale by building that critical mass to have and be a meaningful investment for investors we can achieve that premium multiple and and have that re-rate in our price internet asset value okay um he's talking about an asset value there is that do you think that's the first way to value a royalty company and what sort of multiple you should do you think inferior ideal well should that be based on yeah so effectively the net asset value is just the present value of the future cash flows from our portfolio royalty companies it's a relatively simple business model it's just a bunch of agreements getting cash flow but our view is to get that premium multiple to be above one times it's on the upside that you have in those assets it's from having very high quality assets with exploration upside that goes beyond what you're modeling in your cash flow model and that's why you see the majors getting those premium multiples they're the highest quality assets with the most upside and that's what we're striving to build at Gold royalty as well let's talk about your assets because like I said you're 10 in production at the moment maybe you can run through what sort of cash flow that's provided in the company at the moment and yeah just run us through that side of the portfolio yeah so right now as you mentioned 10 cash flowing assets focused in Quebec Ontario Nevada our core assets are really in development stage currently three Cornerstone Assets in our portfolio are on the three largest gold mines in North America Canadian malarctic Canada's largest gold mine we hold a three percent NSR over that asset it's set to go into production in 2023 The Odyssey underground project would be a good step change our Revenue profile the Cote gold project we hold a 0.75 percent NSR over that project and it's set to go into production in 2024 and then we're in the midter midterm we hold a royalty over the Gold Strike mine specifically the ren project which is the underground Northern extension Barracks key asset there this is really going to give us Revenue growth in the next three to five years analyst consensus give us a 60 compound annual growth rate out until 2025 but beyond that it's where we get really really excited to to see higher Revenue we have 6 million in Revenue this here looking closer to 20 million by 2025 with that Revenue growth I mentioned but beyond 2027 2028 Odyssey is fully ramped up Cote is fully ramped up Wren centered production we're looking at Beyond 50 million dollars in Revenue obviously that's that's still a little while away if you're an investor look in this right now what's the current strategy in terms of adding additional value because obviously you've got a m a strategy and I wouldn't mind hearing just a little bit about that if you don't mind yeah and I think what we've done in the past 18 months like I said 180 royalties acquired in a year and a half we'll look at everything in anything and if it makes sense on on a creative basis then then we'll pursue it whether that be corporate M A looking at other royalty companies uh as I mentioned putting that scale together creates value in this space we've done royalty financings we recently did a royalty financing for Monarch mining helping the restart of the Beaufort mine in Baldor and we've picked up third-party royalties like our Cote royalty in Ontario we do have a fourth leg to our growth strategy in acquiring illegal royalties and Abbott City royalties in 2021 we didn't just acquire those assets we brought in the human capital as well a gentleman named Jerry in Nevada a gentleman named Glenn in uh Glenn Mullen in Abbott City they Prospect State claims and then bend this out to explorers or developers and we retain a royalty on the back end we effectively generate those royalties for free so continue to grow the portfolio uh it's multiple means okay and what's the main focus at the moment is it through consolidation obviously we've seen a lot of consolidation in the world's space at the moment is that is that one of the key strategies would you say because we did see the elemental there's more of a hostile type of takeover wasn't it that you were trying to push through didn't go through but um is that the sort of arrangement that you're going to sort of look to do moving forward or yeah no I think there's still lots of room for consolidation in the space and we'll continue to evaluate different opportunities out there and the elemental situation just differing views of value at the end of the day and wish them all the best no hard feelings there at all yeah um but even they went out and merged with Altius after that and and I think they they see the sense and consolidation is good for our space we've seen the sandstorm a nomad deal we saw Royal gold take a Great Bear but there's still a lot of royalty and streaming companies and we need to it's a scale of guys the smaller end of the sector okay um just looking I guess in a over the next 12 month period what's what's an ideal outcome for this company obviously we're in a scenario at the moment where the gold price has fallen a little bit but I don't know what your consensus is on on that but 12 months from now where does this company want to be yeah I think the organic growth in our portfolio is coming online but but as you mentioned that's beyond that 12-month period so we're going to continue to evaluate opportunities that's our job we're in a constant state of due diligence looking at opportunities to grow the portfolio and if we can pick up new assets uh near-term cash flowing or key development stage Assets in the next 12 months I think that'd be a success of course with regards to the market frankly as you mentioned the gold price it's it's out of our control and we can only focus on what we control as as a company and that's to be disciplined with how we deploy our capital and make sure any acquisition we do make is a creative for our shareholders do you think I'm looking at this at the moment there's quite a few royalty companies in this space now especially over the last couple of years I mean obviously your new intern in a way but you've grown very successfully how hard is it now to to Really compete say buying from a mining company a royalty especially a good tier one gold royalty asset is there's so many players in this space now no it's it's a great point and it's an incredibly competitive market well with some of the purchase prices we've seen on on recent acquisitions uh I would say that our management and board really do set us apart as a company a really punch above their weight in terms of a small cap royalty company David Garofalo our chairman CEO he's the former CEO of gold Court prior to the largest merger in the gold industry ever and with that collective experience on our Board of management comes a lot of connectivity yeah almost all of our Acquisitions are based on relationships come in and we transact on a bilateral basis in in most instances and through that bilateral relationship is how we can price these Acquisitions at you know a creative metrics for for our sharpeners do you see where we are in the Market at the moment do you see this as a good buying opportunity for the company and and how much say for example you are looking at opportunities at the moment what you were talking about lines of credit what what sort of how big are the deals that you can do at the moment how much credit can you can you draw on how much sort of cash flow can you draw on yeah I think relative to a lot of players we have good access to Capital again through that connectivity we've got our credit facility we do have an ATM in place to access markets but as I mentioned with where our currency is trading now would want to see a very well-priced opportunity to to utilize that that liquidity but when the phone the gold price where things are at right now I think that really does speak to the opportunity for the royalty and streaming companies I spoke to a bank earlier today and Equity markets are shut for a lot of explorers and juniors and if they need Capital the royalty and streaming companies are a good non-dilutive way they don't want to issue shares at 52-week lows awesome Peter thanks for giving us an update no really appreciate it thank you

Channel: Mining Network

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Keywords: Gold Royalty Corp, Gold Royalty, gold royalty, Gold investing, Gold royalties, silver royalties, precious metal royalties, silver investing, royalty stocks, investing into royalty companies, best royalty companies, NYSE:GROY, Precious metals, precious metal investments, royalty investments, mining investing, investing in royalty companies, royalty companies, Peter Gadsdon, Mining Network, GROY, Peter Behncke, Crux, Mining news, mining journal, crux investor, proactive

Id: 5w_Cj5jmngo

Length: 9min 38sec (578 seconds)

Published: Fri Oct 07 2022