Gold Royalty Corp

AMEX:GROY

Earnings Call Transcript 2024-Q1

[Joanne C. Jobin, executive]

I'm Joan C Jobin, [indiscernible] media host. Welcome to the Gold Royalty Quarterly Townhall Forum. [Operator Instructions]. With us this morning is the Gold Royalty team, led by Chairman and CEO, David Garofalo, who will make the intros to the team and take you through the highlights of the most recent quarterly results. David, the stage is yours.

[David Garofalo, executive]

Well, good morning, everybody, and I'm delighted to be joined today by our CFO, Andrew Gubbels our Director of Corporate Development and Investor Relations. Peter Behncke. We'll take you through our financial results and the results of our Royalty portfolio and an update on our Royalty portfolio over the course of the presentation today. But look, I thought I'd start today talking about the gold price, and it's been an auspicious start to the year with the gold price up about 14%, 15%. And if there's one word to describe the dynamic, it would be China. And we've seen a significant amount of buying both at the central bank level and also at the individual level in China. And really, that's a microcosm of what's happening globally in terms of currency relative to each other. The gold price has done well and every major currency in the world has achieved all-time nominal high, but still well off with the real all-time high for the gold price is back in the early 1980s. When you inflation adjust the peak gold price back in the last big inflation cycle in the late '70s and early '80s to 2024, the gold price is still a good 20%, 30% below the all-time highs. But I would argue that we're in an environment now where the gold price is poised to significantly outperform even those peaks on a real basis given the debt dynamic we're seeing globally with global debt-to-GDP still at an alarming 350% relative to only 100% in the last big inflation cycle in the 1970s, early 1980s. So there's very limited latitude for central banks to really increase interest rates dramatically to deal with what's really double-digit inflation that we're experiencing in the economy, not the 3% or 4% headline numbers that frankly are economic fiction. Those exclude all of the important things that we need like food, fuel and shelter. And as mortgage rates reset across the industrialized world, in particular in North America, we're going to see a dramatic increase in monthly mortgage payments and that is inflation. That eats away at the purchasing power of individuals, and that really will continue to drive capital into gold relative to other major currencies that are actually yielding negative on a real basis. Sovereign debt is eating away at your savings. So if you're buying U.S. treasuries, if you're buying Canadian treasuries, Euro, Japanese, you're not seeing your savings go up even with normal rates at relatively high rates with inflation eating way at the purchasing power of our currency, we're starting to see savings be meeting the way whereas Gold is a tremendous preserver capital in that type of environment. And gold is a barometer, and accurate barometer. It's an agnostic barometer of what's really happening in inflation on a real basis. And that's why Gold has been a one-way trade for over 50 years, whereas the U.S. dollar has seen a decline of 96% in it's purchasing power over that 50-year period since the U.S. government abandoned the gold center. We've seen the gold price go from $35 an ounce on a nominal basis to almost $2,400 an ounce today. Gold is the currency, you can't print. The U.S. dollar and every other major currency has seen prolific printing and the basement of the purchasing power of those fee currencies over a long period of time. But what we're not seeing is a massive response in the gold valuations on the equity side, particularly among the producer universe. The juniors have had very limited access to capital for a long period of time. They're still not seeing that incremental dollar, that marginal dollar of investment allocated from the general equity markets yet. There hasn't been a response. But even among the largest producers in the space, we've seen a muted response to the gold price. And in fact, if you look at the bellwether stocks, whether it's Newmont, whether it's Barrick, their valuations actually, their share prices are below where they were in the 1990s when the gold price was 1/10 of what it is today. And they're dealing with the overhang of cost inflation, which we're able to avoid in the Royalty model. We're completely insulated from that with the top line exposure that we have within our portfolio. But also this is an industry that's experienced decreasing reserves over a long period of time. And as a result, we've seen the cannibalization of companies in the producer universe. Barrick and Newmont, the largest producers in the space have really seen no increase in their production of reserves over the last 25 or 30 years, but they've seen a massive increase in their share count because they've had to absorb other companies to maintain a suboptimal production rate. So that is a microcosm of what's happening among the producers, among the equities in the space. We haven't seen that kind of leverage that investors are looking for in the equities because of the overhang of cost inflation, but also because of the industry continuing to shrink in terms of its reserve base, particularly given the lack of access to capital among the explorers, the juniors that really drive the exploration focus in the industry. And that lack of exploration success has led to a declining pie, shrinking pie in the producer universe. It's been a good start to the year for us. From a share price performance standpoint, we're up nearly 30%. So we have provided leverage to the gold price. You'll remember the gold price has gone up about 14%, 15% this year. We've gone up about 30%. And we still think there's a significant re-rate opportunity when you look at the relative valuations particularly given our growth profile, which I'll touch on a little bit -- in a bit more detail and Andrew and Peter will get into that in a bit more detail over the course of the presentation. But also, if you look at the quality of our portfolio, we have over 240 royalties, but we have royalties on 3 of the 5 biggest producing gold mines in North America. So we have a quality proposition. We have long reserve lives. We have a long profile of revenue growth right through the end of the decade, peer-leading revenue growth, which we think will continue to drive a rerate in our story and provide a strong relative performance relative to our peers, given the quality of our portfolio, the location of our portfolio with the vast majority of our royalties in the best jurisdictions in the world from a mineral potential standpoint, low political risk and low regulatory risk. And I have to say that revenue growth is no longer theoretical. We've been talking about that revenue growth since our inception 3 years ago. That's starting to happen now. We saw more than a doubling in our revenue in the first quarter of this year, driven by the acquisition of Borborema and Cosman late last year and getting the full -- first full year of benefit from those, and those are quality assets and quality jurisdictions, providing meaningful leverage to gold and copper prices, performance improvement in Canadian Malartic, where we have some exposure in royalties in the open pit, and we're starting to see a bit of a catch-up of some underperformance last year in the Barnat pit. But also we're starting to see underground production from Canadian [indiscernible], we have substantially more royalty coverage. than we have in the open pit. So that's going to be a big driver for growth for us going forward.So again, more than doubling our revenue in the first quarter and peer-leading growth right through the end of the decade where we're expecting, on a consensus basis, about 60% compounded annual growth right through the end of the decade, driven by -- principally by those big botch bracket operations that represent 3 of the 5 biggest producing gold mines in North America, but also Borborema Closeman provide us a meaningful source of revenue growth going forward as we just only recently folded those into the portfolio late last year. Q1 was an excellent start to the year with $4.2 million of total revenue when you include land agreement proceeds, royalty revenues, et cetera, essentially achieving about 40% of our full year guidance in the first quarter alone. So it puts us in an excellent position to achieve our revenue guidance -- total revenue guidance of between $10 million and $11.2 million for the full year. And that's really -- that is without the benefit of royalty revenue from the newly commissioned Cote mine, which started production on March 31 of this year and will represent a significant leg of royalty revenue growth in the second half of this year as they expect to achieve commercial production in the third quarter. Together with another 10% decrease in our operating costs, again, Andrew has done an exceptional job since he took over as CFO a little over a year ago and driving costs out of the system, that's our post-merger integration efforts. We absorbed 3 companies in 2021, and we continue to find efficiencies as we start to integrate all of those companies and rationalize all of the holding companies we have within the portfolio and really focus on the core of our business. So we continue to drive down our operating costs and our revenues continue to go up. That's the perfect formula for driving free cash flow for the first time in our history in Q1 of this year, and we continue to expect free cash flow generation going forward. That's a remarkable achievement for a company that's only been in existence for 3 years. So from a concept effectively on the back of a napkin and the cafe that Amir Ninan and I sat down to conceive of this company, we've gone from really a standing start where we had no revenue in our IPO to today, peer-leading revenue growth, free cash flow generation and the prospect of positive earnings going forward. And we have been busy on the strategic side as well. As I said, we acquired 2 cash flowing royalties last year in Borborema and Cosman and instrumental to that acquisition of the Borborema Royalty was a strategic partnership with TaurusTaurus, help fund that acquisition through a convertible debenture along with Queen's Road and other significant strategic shareholder in the company. And Taurus has a dedicated royalty fund, and they've chosen us over every royalty company in the world that they could have done work with to forge a strategic exclusive alliance on co-investing on new royalty opportunities going forward above $30 million in value. So that means we can look at bigger deals because we have a partner besides us that can co-invest in those royalty opportunities. And not only that, we can share in due diligence costs on major royalty opportunities and streaming opportunities as well. So it helps to continue to rationalize our operating cost as well as provide us a source of meaningful capital for investment and new opportunities going forward. So with that, I'd love to hand it over to Andrew to talk through our financial performance in a bit more detail.

[Andrew Gubbels, executive]

Thanks, David. As you would have seen in our reported results, it was a very solid quarter. Our record revenue, which you see here on a reported basis was higher in the first quarter, 2024, really due to stronger production from areas of the Canadian Malartic mine covered by our royalty. And importantly, as compared to 2023 in the first quarter, we had included the first full quarter of reproduction payments from Borborema as well as the recently acquired Cosman royalty. So it's a testament to our acquisition strategy, yielding benefits in the top line for the first quarter of this year. When looking at total revenue, land agreement proceeds and interest, which is the figure we like referring to because it's inclusive of all our cash inflow sources. Now that includes the full amount of land agreement proceeds and the interest income from the Borborema Goldline loan. Now that number was $4.2 million, which again is 112% increase from Q1 2023 and was higher, again, as I mentioned, from the contribution from Canadian Malartic, Borborema, Cosman, but also from larger scheduled payments received from certain operators within the company's royalty generation business in Nevada. So again, that part of the business really paying dividends in the first quarter of 2024. Once again, cash operating expenses were lower 10% lower in the first quarter as compared to the first quarter last year. As a company, we continue to deliver on our disciplined cost management efforts and expect to see steady operating costs going forward through the rest of the year. As a result of the higher revenue and the moderated costs in the quarter, further to what David mentioned, Gold Royalty did report its first positive cash flow from operations of $0.3 million. Now that excludes $1.1 million of land agreement proceeds, which is credited against the mineral properties in our reported numbers. If we did use the total revenue, land agreement proceeds and interest instead of reported revenue, our operating cash flows would be closer to $1.4 million. So a very healthy operating performance in the quarter. Now we have frequently stated that 2024 will be a transitional year for the company, whereby we become a cash flow generator, which is very important. And this first quarter really demonstrates our considerable progress over the prior quarters. It really sets us up for a strong fiscal year in 2024. Now what hasn't changed is the company's strong revenue growth trajectory beyond this current calendar year. In fact, this profile you see here, and you've seen this page before, has improved considerably since adding assets such as Borborema and Cosman in the near to medium term, in particular, but also having core assets such as Cote, for first gold at the end of Q1 of this quarter and really coming into fruition through 2025, '6 and '7 within this cash flow profile. We do continue to have the best revenue growth profile in the sector over the next 5 years. That message hasn't changed, and this is per the average broker estimates. Now using broker estimates, the long-term gold price, if you recall, is around $1,900 an ounce. So below current gold prices. So looking forward, if you do expect positive gold prices to continue, we could see even further upside to this growth profile. Also recall that revenues within our our pipeline are really driven by and underpinned by large fully funded projects being developed by the likes of Agnico Eagle and obviously Barrick in Rand and IAMGOLD and Cote Lake, amongst others, near term and also well-capitalized partners such as oral minerals and the Borborema project. So we are very comfortable, confident that this is an achievable and low-risk revenue growth profile that you'll see coming to portion as we move forward year-on-year. Now with that, I think it's a deal natural time to pass over to Peter, who can give you an update on the company's asset pipeline going forward.

[Peter Behncke, executive]

Perfect. Well, thanks, Andrew. So building on what Andrew was saying in terms of our peer-leading revenue growth, we can really see that a lot of that is driven by the cornerstone assets that David mentioned earlier. Odyssey, the underground extension of the Canadian Malartic mine going to be Canada's largest underground gold mine is still our cornerstone asset. And while providing moderate revenue over the next several years, we'll really be kicking in towards 2027, 2028 when that complex shifts to a fully underground operation, and I'll dive into some of the recent Q1 updates from Agnico Eagle on that asset later. From a big picture perspective, you can see on this slide, the main aspects of our portfolio are unchanged. We have one of the strongest jurisdictional profiles of any royalty and streaming company, over 80% of the business in Quebec, Ontario and Nevada. Partnering with the premier operators in the sector, Newmont, Barrick, Agnico Eagle driving forward our cornerstone assets and exceptional optionality across the portfolio. In the past 3 years, we're approaching nearly 2 million meters of drilling. And with that comes significant optionality and all at no cost to Gold Royalty as a royalty and streaming company. In 2024, we're still compiling filing figures. And despite a much more difficult equity market for juniors and developers, we're still seeing hundreds of thousands of meters being drilled across the portfolio in this year again. If you look at the green assets highlighted on our pipeline slide, you see Cote Gold, Orbera, Cozamin, these are all acquisitions we've made over the past couple of years. And are representing a very meaningful portion of our revenue in 2024. The near-term revenue is really being supplemented by those acquisitions we completed through 2022 and 2023. And finally, from a portfolio perspective, I'd reiterate that we are over 90% gold exposure across the portfolio. We did pick up some copper exposure last year with the Cozamin Royalty, but we do provide that concentrated focus on precious metals to our investors, which does differentiate us from some royalty and streaming peers. Now diving into some of the updates across the portfolio in Q1, as I mentioned, the Odyssey mine continuing to perform and beat expectations to the upside. Ramp development has progressed ahead of schedule by Agnico Eagle. And given some changes in the plans on shaft development, they're now expecting to be able to utilize the shaft 6 months ahead of schedule. The longer-term outlook for the Odyssey mine is relatively unchanged. 2027, 2028 is really when this asset comes online and makes that meaningful step change in gold royalties revenue profile. But it's very reassuring to see Agnico continuing to advance this on time, on schedule. They have been a bit more aggressive in some of their marketing on the potential upside at the Odyssey underground mine. Recently, you've seen the likes of our Persico royalties highlight the potential for a second or even a third shaft to be sunk at the Odyssey mine. This would greatly increase the capacity for production. Right now, only less than 1/3 of the processing plants or the mill capacity is being utilized in the current mine plan. So the ability to fill that mill and increase annual production well beyond the 500,000 ounces per year currently envisioned is something that gets us quite excited through our 3% NSR over the property. At Cote, as David mentioned, first gold pour, March 31 was a great Easter Sunday news release, and they're well on track to achieve commercial production in Q3. They came out with their Q1 results recently and reiterated that guidance for later this year. Their annual production guidance is 220,000 to 290,000 ounces per year or in 2024. So we expect our 0.75% NSR to benefit from that in the second half of the year.At the Ren project, while this is a relatively small deposit in the grand scheme of Barrick's very large portfolio, they have been continuing to advance Ren at the Carlin complex, recent news results, while less definitive have continued to increase our confidence that they are on track for a prefeasibility study in early 2026, with production expected very shortly thereafter with Ren being incorporated into the overall Carlin complex mine plan. As it currently sits, the Ren deposit has an inferred mineral resource of approximately 1.6 million ounces at just shy of 7 grams per tonne grade. And Barrick has indicated that there is significant exploration upside to grow that resource quite meaningfully over the next couple of years before they start production at the deposit. Our most recent acquisition, the Borborema investment, our 2% NSR, which has preproduction payments and our gold-linked royalty convertible loan with Ora Minerals has just completed its first quarter of providing revenue to us. 250 gold equivalent ounces through the preproduction payments in Q1 and 110 ounces through coupons on the gold-linked loan. We'll be expecting approximately $3 million in revenue through these preproduction payments and coupon payments in 2024 before the assets even entered production.On that note of entering production or reiterated that they are on track for production at Borborema early 2025 with construction 25% complete as of March 31, 2024 or has a track record of completing mines on time and on budget with the recent completion of the Vales mine also in Brazil. So they are a proven operator. They know this jurisdiction, and that's one of the main reasons we partnered with them late last year in making that investment and funding Borborema. At Cozamin, we had a positive start to the year. Higher grades were achieved by Capstone, but this is an asset that's been steadily achieving exploration success and strong production results since 2006. And Q1 2024 was no different. This acquisition made through the second half of last year is one that we're excited to see them continue to deliver on that production profile and see what exploration upside is there to expand the reserve life beyond 2030. And finally, Granite Creek, the royalty we picked up from Nevada Gold Mines at the end of 2022. I80 Gold recently completed their bought deal financing, really addressing some balance sheet risk that was associated with the company and then outline their plan for the Granite Creek mine for the remainder of 2024, which includes expansion drilling, continued underground development, test mining and the publication of feasibility study, which incorporates the high-grade South Pacific zone later this year. We do have a production threshold associated with our 10% net profit interest at Granite Creek. As of Q1, we were approaching 10,000 ounces credited against the 120,000 ounces total. But I would note that given the significant grade and mining rates achieving closer to 1,000 tonnes per day in the not-too-distant future, we would achieve that production threshold quite quickly at Granite Creek. So this could be a major revenue contributor in what I would call the midterm in a few years. Beyond that, with 240 assets, there's various other catalysts across the portfolio. Our royalty generator model had great success with the likes of the Dole property being sold and the TonopaWest auction payment being received in Q1, and we're continuing to generate those royalties. And as I mentioned previously, another nearly 400,000 meters of drilling expected in 2024 in addition to those almost 2 million meters of drilling over the last 3 years. So a lot of catalysts that may not be represented immediately, but will translate into positive developments across the portfolio over the coming quarters and years. So with that, I'd hand it back to Dave to summarize and before we open things up to Q&A.

[David Garofalo, executive]

Thanks, Peter. And thank you for your attention today. Look, I think the important message here, particularly in this rising gold price environment, with cost being a significant pressure point for the producers, your best position in a royalty company that provides you optimum leverage of the gold price, leverage the experts of our underlying operators who invest about $200 million a year on the underlying assets underneath our royalties, which we get the benefit of. And also, we could give you an ETF-like exposure to the juniors. We have so many early stage royalties, many of which we've generated ourselves effectively for free. We're providing exposure to multiple juniors in the exploration space. And as they start to get attention in the marketplace, you're going to get the benefit of that exposure without having to worry about dilution that comes from juniors raising money because our royalties are at the asset level, and they're undiluted by anything they would do to raise equity to finance their exploration activities. And again, a quality portfolio with Tier 1 royalties in North America that provide us peer-leading revenue growth right through the end of the decade. And this experienced management team, I think, has delivered time and again, leveraging relationships to bring in new opportunities in the portfolio, access capital creatively from some of the biggest strategic investors in the industry, not only in the royalty space but in the mining industry generally. And that's evidenced by the strategic relationship we forced with Barrick, which is our second biggest shareholder with Queens World Capital and Taurus, which provide us and continue to provide us a source of capital to finance our growth going forward. So with that, Joanna, I'd be delighted to take questions. And Peter and Andrew and I are here to answer any questions that our investors and shareholders might have.

[Joanne C. Jobin, executive]

Wonderful. Thank you, David, and thank you, gentlemen, for a great update. As per usual, we have another full house today with over 111 interested stakeholders in the room. So thank you, everyone, for tuning in this morning. Of course, we really appreciate it.

[Joanne C. Jobin, executive]

Now before we take the questions, please do place your questions in the Q&A tab located at the top of the screen. And our first question today is, what is the likelihood of Walbridge becoming a significant asset for grow?

[Andrew Gubbels, executive]

Yes. So I think Fenelon has always been an asset that really excited us, our 2% NSR royalty covers all areas of mineralization in the current mine plan. I think the challenge for Walbridge right now is something that plagues most early advanced exploration companies is access to capital and advancing the project. But that really doesn't take away the technical merits of Fenelon, 212,000 ounces for over 12 years mine plan. Our 2% NSR will provide us significant revenue once that asset is advanced. It's in a great jurisdiction with some good strategic shareholders already of that company, but not one that we're relying on in terms of our near-term production. That's an asset that really fuels that growth sometime in the next decade based on our estimates.

[Joanne C. Jobin, executive]

The next question is from Heiko Ihle at H.C. Wainright. And this question is for you, David. Can you provide some color of what you're seeing in the M&A environment given current interest rate and some of your peers seemingly cutting back a bit with acquisitions. Are sellers getting a bit more desperate? And how are you taking advantage of that?

[David Garofalo, executive]

I really think, look, it depends on where you look in the sector among the larger cap producers. They had to significantly increase their M&A activity in order to replace declining reserves, declining production. And we've seen that in multiple mega mergers among the largest cap producers in the space over the last several decades. But as I said earlier on over the last several years, but as I said earlier on, over the last several decades, their production profiles have not gone up. Their share counts have gone up because they necessarily had to go out and acquire companies to maintain production profiles and frankly, weren't sustainable, particularly given the decline in reserves we've seen over the last 12 years with the lack of access to capital for the juniors who do all of the exploration work that the industry vitally needs to replace depleting reserves. So you're seeing a lot more M&A activity, and I think necessarily and existentially required to happen among the producers in order to maintain their production and reserve profiles. The juniors have a different dynamic. They're quite desperate for capital. They have not had consistent access to capital markets for a dozen years, which has led to that decline in reserves. They're the ones that do all of the heavy lifting on the exploration side, the discoveries, if you will, and they're becoming more desperate, but that presents opportunities for us to look for royalties on some of the highest quality deposits in the world because of the lack of access to capital for those smaller explorers and early-stage developers.

[Joanne C. Jobin, executive]

The next question, as you progress with each quarter representing bigger revenue for the company, how do you expect to minimize the expenses since inflation rises, it affects the operating expenses?

[Andrew Gubbels, executive]

I can take that one. So look, I -- as we grow the business, one thing that's nice about royalty companies is that you don't need to have an excessively large team. And I think our team at Gold Royalty is a full team. It's a well-built out team. It's able to fully function in executing our strategy, reviewing opportunities as well as operating the company. I'm of the view that we can grow our business materially without further investment in adding personnel. I don't think that's the same for all the peers in the sector, especially smaller groups may need to retool and add. We're not a big team we control our cost, but we do have good control over how we execute our strategy with the folks that we have on board, which is good. In terms of inflation, how we move forward, again, as not being an operator, we are subject to inflation, yes, but maybe not the same regard as operating mine companies, which is great. There is variable cost components that can be controlled. I mean a portion of our business is spent on marketing, insurance, et cetera. There are areas that are necessarily required. But our areas that if we absolutely needed to scale back, we could look to scale back. But all in all, I'm fairly comfortable with the investment we've made and the ability to control costs in a rising environment. And rest assured, I think if there is a situation where our business is growing materially, you're going to see outsized margin growth and outsized generation of cash flows well in excess of our operating costs, which I expect to be fairly steady with the team we have.

[Joanne C. Jobin, executive]

Seems like the Street is not rewarding your revenue growth story. When would you expect to reinstate a dividend now that free cash flow generation is achieved?

[David Garofalo, executive]

Yes. Look, we'll be delighted to have that conversation with our Board as we get into a sustainable period of free cash flow going forward about returning capital to shareholders in various forms. That's something I think that's intrinsic or really fundamental to any royalty story is to have a return of capital policy, and that's something that we continue to explore as we start to achieve this growth. We're crystallizing that revenue growth for the first time in crystallizing free cash flow generation. So again, that puts us in an excellent position to continue to have that dialogue with our Board, and we'll be reporting back to shareholders in due course.

[Joanne C. Jobin, executive]

Excellent. Where has the company been saving costs? And what makes up the $2.3 million in cash operating expenses?

[Andrew Gubbels, executive]

Yes. Look, over the past few quarters, I've gone through some of the areas where cost savings have occurred. And really what David had mentioned at the outset as well, the company did transition from more phase of consolidating other entities and reducing redundancies throughout as the consolidation played out. So we continue to do that through the last year. So when you look at the comparability between Q1 of this year and last year, you're still seeing some of those costs from the prior phase of our growth, really, the consolidation phase, so to speak, with Eli and Golden Valley Abitibi start to decrease as we move forward. So that is an area where cost savings have occurred. I've spent quite a bit of time looking at trying to enhance certain service agreements and contracts to the extent that we can find savings with respect to our service providers, working with our insurance providers to really maximize premiums on insurance in other areas in general. So that's where some of the savings have come. In terms of the breakdown of the operating expenses, the corporate administration line really includes the G&A that relates to marketing, office and IT, regulatory, mineral interest expenses. On the quarter, we were maybe marginally higher than the previous quarter or the comparable quarter. Employee costs are more or less flat. This is, however, more than offset by lower professional fees in the quarter, and that's sort of audit, legal tax adviser, et cetera. So really looking to balance and ensure that we keep with our view on where we want to be on costs going forward. All in all, operating costs -- cash operating costs were down 10% compared to the previous quarter, and I'm confident that we'll be in line with our internal budgeting and expectations for the year.

[Joanne C. Jobin, executive]

Gentlemen can you discuss the recent share price performance?

[Peter Behncke, executive]

Yes. Thanks, Joanne. So I think as Dave started with the presentation, the disconnect between equities and the gold price has been a trend we've seen across the sector and gold royalty is not immune to that. But with that said, given the strong fundamentals of gold royalty in Q1 and the conscious efforts we've made to market that to retail and institutional shareholders alike. We have seen a bit more credit relative to peers through the beginning of the year. But I think as this gold price continues to hold in close to $2,400 an ounce earnings continue to exceed expectations. It will be something that we hope is corrected through the remainder of 2024.

[Joanne C. Jobin, executive]

Next question. Why do you think we haven't seen more M&A within the royalty space since the number of employees would not have to increase to manage a much larger portfolio that would benefit shareholders in that space.

[David Garofalo, executive]

Yes. No, it's an excellent question, Joanne. And I think that I think M&A among the smaller cap players. And when I say smaller cap, I'd say everybody below the big guys and Franco, Wheaton and Royal I think there's inevitably going to be significant consolidation in the space because it drives up multiples. It drives down cost of capital. Scale does matter in our industry. And I think we're going to see a restart of M&A in the space. It's hard for me to predict the sequencing, but I think it's become an economic comparator for these smaller players to start to look at consolidation because there's probably by our estimation, $50 million to $60 million of excess G&A in the industry that can be driven out because we can run a business 10x the size with the same employees that we have. We don't need to have anybody else. So if we ended up rolling up as we did in 2021, rolling up companies, then we're likely to realize almost 100% synergies in the G&A we inherited, which is, in fact, the track record we've been able to achieve and the 3 roll-ups we did over the course of 2021. So there is an economically compelling argument, both from a cost synergy standpoint, but also in terms of achieving scale and driving up multiples and driving down cost of capital, which is absolutely fundamental to the business and growing our business.

[Joanne C. Jobin, executive]

And what are the primary drivers of revenue in the -- for the remainder of 2024 for the company?

[David Garofalo, executive]

Yes. So through Q1, we did have significant onetime land agreement proceeds. As I mentioned, ConCall West and Dauntless making up a large chunk of that. In the remainder of the year, Cote coming online in the second half of 2024 and then continued revenue growth from Borborema, Cozamin and Canadian Malartic really driving the remainder of our revenue this year. And I'd note that the average gold price through Q1 was around $2,070 an ounce. So we should see an uptick with our royalty-related revenue due to that stronger gold price.

[Joanne C. Jobin, executive]

Excellent. So let's talk about the Taurus Corp cooperation agreement and how that benefits the company.

[David Garofalo, executive]

It's a great question. First off, I want to give a shout out to Andrew Gubbels who helped, I think, instigate this relationship. And again, we've leveraged relationships time and again to introduce opportunities into the pipeline before our competitors even aware of them and to work with the principals at Taurus back in as a banker at UBS. They were colleagues at UBS, and Andrew obviously came to work for us and they went to establish the Taurus fund in particular, the royalty fund that we're looking to co-invest with. But what it gives us is access to a $200 million fund that's largely unallocated. This is a relatively new royalty fund established by Taurus. Taurus is a collection of funds managed out of Australia. So the royalty fund is a relatively new offering that they've raised significant dollars from and they expect to leverage that and increase the amount that they bring into that fund going forward. So what we've done is struck an agreement where we show them royalty opportunities and streaming opportunities above $30 million in size, and they have to show us their opportunities that they source above $30 million and up, and that allows us to co-invest on larger royalties with us, again, a ready access to their capital fund. And Taurus has demonstrated they're also willing to invest at the corporate level. When we did the Borborema transaction, along with Cleans World Capital, they have financed that acquisition through a convertible financing with gold royalty. So not only are they co-investing with us at the asset level, but they obviously showed a very strong willingness to invest at the corporate level to finance very accretive acquisitions like Borborema.

[Andrew Gubbels, executive]

I think I'll just add, David, one of the -- from a cost perspective, what it also gives us is a complementary coverage looking at identifying new opportunities in other parts of the world. We've got a very well-connected team already here in North America, but adding some of the colleagues in -- within the Taurus team, having them on the payroll does introduce new opportunities that we may not have as frequent access to in Australia and the rest of Asia Pacific, given just where they sit from a geographic perspective. So it's nice to have a broader coverage without actually adding people to the team.

[Joanne C. Jobin, executive]

Good. Okay. Next question is someone is asking about the company's acquisition plans and potential CapEx for 2024.

[David Garofalo, executive]

Yes. So building on the acquisition plan, you would have seen the deals we completed through 2023. Cosman Borborema, definitely a focus on near-term cash flow, but being disciplined in finding the right high-quality assets. Given the scarcity of capital for a lot of developers and explorers, we do have a very robust deal pipeline, but the key focus is on quality for us. We have a great tail of exploration development stage assets. It's about finding the right opportunities that would be complementary to the portfolio. With regards to capital costs, do want to clarify, we're a royalty and streaming company. Every asset is completely bought and paid for. We do not have exposure to capital costs with these assets once we make an investment, we have that top line exposure for free and exploration upside beyond that.

[Joanne C. Jobin, executive]

Excellent. And your top 3 strategies or more to pursue and execute for grow in the next 3 years, how are you going to do that to stand out among your peers and provide share appreciation.

[David Garofalo, executive]

I think what's really unique about our model, and this is across the entire royalty in over, including the larger cap players in the space is we actually have 4 distinct platforms for growth, and we've executed on all of them and continue to execute on all of them. Obviously, in 2021, when we had much stronger currency, we didn't hesitate to roll up some of our competitors. So M&A was a meaningful source of royalty creation and royalty acquisition for us over the course of 2021.When the currency abandoned us, we grew through other means. We do royalty generation as you correctly pointed out, Joanne, and that's effectively to the sweat equity of our small teams in Reno and also through an investment we have in Baldor Mining in andoranda. That gives us an opportunity of Baldor-abec, I should say, which gives us an opportunity to generate royalties in Ontario and Quebec through that vehicle. So royalty generations provide us not only a meaningful source of royalty creation through our sweat equity, but also provide us meaningful option payments on those properties. So it's actually become a profit center for us in addition to generating those royalties for free. We've done project financings. We've demonstrated we can do those very accretively as we did with Borborema, again, leveraging our relationship that we had with Dundee Corp. and I've known Jonathan Goodman for over 30 years. And when Jonathan called me about the Burberry acquisition opportunity, we got an exclusive on that. We're able to get that royalty very accretively for our shareholders because, again, leveraging a relationship as we did with Taurus and Andrew's relationships with the XBS colleagues that he had there. And then we've done third-party worldly acquisitions. And again, that's been a very meaningful source of growth for us as well. That's how we got the Copa royalty, which came from the state of a disease prospector. And again, it was a relationship we have with their state lawyer and that was an exclusive opportunity. So being able to grow through those multiple means, M&A, third-party royalty -- royalty generation model, a third-party royalty acquisition and project financings put us in a good position to have a steady source of growth across multiple platforms. And again, that's unique to our story. There's nobody else that does all 4 of those and does them well as we do.

[Joanne C. Jobin, executive]

A few more questions. We're getting to the top of the hour. All businesses have risk. What do you, as a management team see as the major risk factors facing the company in the next 2 to 3 years? And what are you doing to address and mitigate them? In other words, what gives you of that night, David.

[David Garofalo, executive]

Yes. Look, if you're running a royalty company appropriately, the only risk should be the gold price. When you're buying a gold equity, you want unmitigated leverage to the gold price. And so that's a risk that we think our investors are willing to accept and we're certainly willing to accept. And then really, it comes down to execution. And I think our track record is second to none in that regard. Remember, we only IPOed in March of 2021. So just a little over 3 years ago. And we started with 18 noncash flowing development stage royalties. And today, we have over 240 royalties, 6 producing cash flow, another 14 in various stages of development and compounded annual growth in our revenue on a consensus basis of 60% through the end of this decade with 100% revenue growth coming this year and free cash flow generation. So in terms of execution, I think we've done pretty well. And I think that's a testament to the over 400 years of industry experience we have in our small board and management team. That's incredible collective experience within a very small discrete team, and we've leveraged that to reckless abandon in order to grow the business so substantially in such a short period of time in a financially accretive fashion as well.

[Joanne C. Jobin, executive]

Excellent. So let's talk about the commodity. Obviously, your gold royalty but does the company actively look for deals within the copper and silver space, particularly after the acquisition of Cozamin?

[David Garofalo, executive]

Yes. Look, the way we look at things is we like precious metal deposits that are polymetallic. We look at those quite often. In fact, we've looked over 300 opportunities since our IPO. We've only executed in about 8 or 9. So we're quite selective about what we acquire. We have to make sure it really ticks all the boxes for us in terms of return, quality of the asset, the metal. But polymetallic deposits make a lot of sense. If there's a precious metal deposit has significant amounts of copper, zinc, silver, nickel, those present 2 distinct advantages. Typically, polymetallic deposits tend to have longer lives. And also, they tend to have naturally lower cost structures because of the byproduct credits embedded in them. As is the case with Cozamin, which happens to be also high-grade copper, but also has significant silver byproducts, which helps keep the cost structure down and makes that a competitive operation. And so that means that it's going to be around for a long period of time. So polymetallic deposits certainly makes a lot of sense for us. We're always going to be a precious metal-focused company. Gold Royalty is a name that's appropriate for our focus.

[Joanne C. Jobin, executive]

Excellent. And last question of the day. Can you discuss at a high level, looking at that 200 level, what is the breakdown of your revenue this quarter?

[David Garofalo, executive]

Yes. So this is outlined within the discussion of operations and our MD&A within the key producing royalty assets, we had $632,000 of revenue from Canadian Malartic, about $0.25 million from Cozamin, $179,000 from Borden and then quite a bit within what we classify as the others bucket. So we -- just to provide some granularity on that. We received $1 million in land agreement proceeds on TonaPaul-West, another $725,000 from the Dontese property. So over $1.7 million from those 2 royalty generation efforts. And then initial revenues from our Borborema investment. So another $0.75 million approximately there, which all those together makes up the majority of our revenue in Q1.And as mentioned, looking for the remainder of the year, continued growth from those producing royalties and the Borborema investment as well as Cote coming online in the back half of 2024.

[Joanne C. Jobin, executive]

Thank you, Peter. And thank you, everyone, for tuning in. As we are at the top of our hour, we will end the Q&A session now. If you have any other questions, please forward them directly to Peter [e-mail]. And David, before we sign off, would you like to say a few words to all of your stakeholders here today?

[David Garofalo, executive]

Well, I was going to say what Joanne said. If you do have questions, you have a means of contacting us reaching out to us, but we'd be delighted to hear from you. You don't have to wait to the town hall to ask questions or reach out to us and get updates. So glad that you could join us today.

[Joanne C. Jobin, executive]

Thank you, David. And just a reminder that this town hall will be available on the Gold Royalties website and on all of our socials within the next 24 hours. Before we sign off, please ensure that you fill in the short questionnaire at the end of this presentation. This helps us and the company communicate more effectively with you in the future. So thank you for joining us today, and we will see you on the next town hall forum. Goodbye for now.