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Vox Royalty (VOXR) - 2024 Q2 - Quarterly Report
Vox Royalty Vox Royalty (US:VOXR)2024-08-07 20:15

Unaudited Condensed Interim Consolidated Financial Statements This section presents the company's financial position, performance, and cash flows for the interim period, prepared in accordance with IAS 34 Unaudited Condensed Interim Consolidated Statements of Financial Position As of June 30, 2024, total assets were $52.8 million, a slight increase from $52.7 million at the end of 2023, driven by an increase in royalty interests offset by a decrease in cash and cash equivalents, while total liabilities rose to $8.2 million from $7.8 million, and total equity slightly decreased to $44.6 million from $44.9 million Consolidated Statements of Financial Position (Balance Sheet) | | June 30, 2024 ($) | December 31, 2023 ($) | | :--- | :--- | :--- | | Total current assets | 11,411,718 | 13,282,702 | | Cash and cash equivalents | 7,802,713 | 9,342,880 | | Total non-current assets | 41,368,253 | 39,423,907 | | Royalty interests | 39,413,369 | 37,443,198 | | Total assets | 52,779,971 | 52,706,609 | | Total current liabilities | 3,166,127 | 2,903,950 | | Total non-current liabilities | 5,053,504 | 4,878,989 | | Total liabilities | 8,219,631 | 7,782,939 | | Total equity | 44,560,340 | 44,923,670 | | Total liabilities and equity | 52,779,971 | 52,706,609 | Unaudited Condensed Interim Consolidated Statements of Loss and Comprehensive Loss For the six months ended June 30, 2024, the company reported a net loss of $575k, an improvement from a net loss of $730k in the same period of 2023, with royalty revenue for the first half of 2024 at $5.72 million, slightly down from $5.80 million year-over-year, though Q2 2024 revenue of $2.84 million showed a 28% increase over Q2 2023 Financial Performance Highlights | Metric | Six Months ended June 30, 2024 ($) | Six Months ended June 30, 2023 ($) | Change (YoY) | | :--- | :--- | :--- | :--- | | Royalty Revenue | 5,721,629 | 5,798,239 | -1.3% | | Gross Profit | 4,521,127 | 4,796,345 | -5.7% | | Income from Operations | 818,932 | 425,240 | +92.6% | | Net Loss | (574,975) | (729,682) | +21.2% (Improvement) | | Basic Loss Per Share | (0.01) | (0.02) | +50.0% (Improvement) | Quarterly Financial Performance (Q2) | Metric | Three Months ended June 30, 2024 ($) | Three Months ended June 30, 2023 ($) | Change (YoY) | | :--- | :--- | :--- | :--- | | Royalty Revenue | 2,839,117 | 2,217,384 | +28.0% | | Gross Profit | 2,106,988 | 1,831,488 | +15.0% | | Net Loss | (333,588) | (48,443) | -588.6% (Worsened) | Unaudited Condensed Interim Consolidated Statements of Changes in Equity Total equity decreased from $44.9 million at the beginning of the period to $44.6 million as of June 30, 2024, primarily due to dividends declared ($1.2 million) and the net loss for the period ($0.6 million), partially offset by share-based compensation ($1.4 million) Reconciliation of Equity (Six Months Ended June 30, 2024) | Description | Amount ($) | | :--- | :--- | | Balance, December 31, 2023 | 44,923,670 | | Dividends declared | (1,204,345) | | Shares issued – dividends reinvestment plan | 48,334 | | Share-based compensation | 1,391,659 | | Net loss and comprehensive loss | (574,975) | | Other (share issue costs, RSU settlement) | 593,318 | | Balance, June 30, 2024 | 44,560,340 | Unaudited Condensed Interim Consolidated Statements of Cash Flows For the first six months of 2024, net cash from operating activities was $3.2 million, a significant increase from $1.6 million in the prior-year period, with cash used in investing activities at $3.1 million mainly for a royalty acquisition, and cash used in financing activities at $1.6 million primarily for dividend payments, resulting in a net decrease in cash of $1.5 million, bringing the cash and cash equivalents balance to $7.8 million Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Net cash flows from operating activities | 3,221,584 | 1,569,808 | | Net cash flows used in investing activities | (3,136,909) | (59,713) | | Net cash flows from (used in) financing activities | (1,611,849) | 5,614,705 | | Net decrease (increase) in cash | (1,527,174) | 7,124,800 | | Cash and cash equivalents, end of period | 7,802,713 | 11,278,440 | Notes to the Unaudited Condensed Interim Consolidated Financial Statements This section provides detailed explanations of the accounting policies, judgments, and specific line items presented in the consolidated financial statements for the three and six months ended June 30, 2024, covering the company's operations, basis of preparation, specific asset and liability accounts, equity components, commitments, contingencies, and financial risks Note 1: Nature of operations Vox Royalty Corp. is a mining royalty company listed on the TSX and Nasdaq under the ticker 'VOXR', focusing on accretive acquisitions with approximately 85% of its royalty assets located in Australia, Canada, and the United States, prioritizing royalties on assets that are either already in production or are near-term producers - The company's business model is a mining royalty company focused on accretive acquisitions12 - Geographic focus is on Australia, Canada, and the United States, which account for about 85% of its royalty assets12 - The company's strategic priority is acquiring royalties on producing or near-term producing assets12 Note 2: Basis of preparation The unaudited condensed interim consolidated financial statements are prepared in accordance with International Accounting Standards (IAS) 34, applying the same accounting policies as the 2023 annual statements and presented in United States dollars, with new accounting standards adopted on January 1, 2024, having no material impact on the company's financial statements - The financial statements are prepared in accordance with IAS 34, Interim Financial Reporting, and do not include all disclosures required for annual statements13 - The presentation currency is United States dollars ($), which is also the functional currency for the company and its subsidiaries15 - New accounting standards adopted effective January 1, 2024, did not have a material impact on the company's reporting18 Note 4: Accounts receivable As of June 30, 2024, total accounts receivable amounted to $3.31 million, a decrease from $3.51 million at year-end 2023, with the balance composed almost entirely of royalties receivable ($3.21 million), which are typically collected within 45 days of the quarter-end Accounts Receivable Breakdown | | June 30, 2024 ($) | December 31, 2023 ($) | | :--- | :--- | :--- | | Royalties receivable | 3,212,899 | 3,414,128 | | Sales tax recoverable | 97,968 | 93,443 | | Total | 3,310,867 | 3,507,571 | - Royalties receivable are generally collected within 45 days of the end of a quarter28 Note 5: Royalty interests The carrying amount of royalty interests increased to $39.4 million as of June 30, 2024, from $37.4 million at the end of 2023, primarily driven by the acquisition of the Castle Hill royalty portfolio in Australia for $3.1 million, with depletion expense for the first six months of 2024 at $1.2 million - On May 14, 2024, the Company acquired the Castle Hill royalty portfolio for cash consideration of $3,119,81430 Royalty Interests Summary | Description | Amount ($) | | :--- | :--- | | Opening Balance (Dec 31, 2023) | 37,443,198 | | Additions (incl. Castle Hill) | 3,170,673 | | Depletion (H1 2024) | (1,200,502) | | Carrying Amount (June 30, 2024) | 39,413,369 | - In June 2023, the company recorded a $500,000 impairment charge on the Alce royalty after the operator did not renew the mining concessions33 Note 6: Credit facility On January 16, 2024, the company established a $15 million secured revolving credit facility with the Bank of Montreal (BMO), which includes a $10 million accordion feature and matures on December 31, 2025, with no amounts drawn as of June 30, 2024, and the company in compliance with all covenants, incurring total transaction costs of $459,944 - The company entered into a $15,000,000 secured revolving credit facility with BMO on January 16, 202434 - The facility includes an accordion feature for an additional $10,000,000 of availability34 - As of June 30, 2024, there were no amounts outstanding under the Facility, and the company was in compliance with all covenants3435 Note 9: Share capital As of June 30, 2024, the company had 50.24 million common shares outstanding, with two quarterly dividends of $0.012 per share declared during the first half of 2024, totaling $1.20 million, and a portion of the April dividend settled through the issuance of 24,491 shares under the dividend reinvestment program - As of June 30, 2024, there were 50,240,245 common shares issued and outstanding44 Dividends Declared in H1 2024 | Declaration Date | Dividend per Share ($) | Record Date | Payment Date | Total Payable ($) | | :--- | :--- | :--- | :--- | :--- | | March 7, 2024 | 0.012 | March 29, 2024 | April 12, 2024 | 601,462 | | May 8, 2024 | 0.012 | June 28, 2024 | July 12, 2024 | 602,883 | | Total | 0.024 | | | 1,204,345 | - The April 12, 2024 dividend payment included $48,334 paid in 24,491 shares through the dividend reinvestment program46 Note 10: Equity reserves During the first six months of 2024, all 3.6 million outstanding warrants expired, while the company granted 240,000 new stock options and 968,448 Restricted Share Units (RSUs), resulting in 1.35 million options and 1.69 million RSUs outstanding as of June 30, 2024 - All 3,600,000 outstanding warrants, with an exercise price of C$4.50, expired during the first six months of 202448 - In H1 2024, the company granted 240,000 stock options and cancelled 240,560, leaving 1,346,838 options outstanding51 - In H1 2024, the company granted 968,448 RSUs and settled 230,652, bringing the total outstanding to 1,689,81454 Note 12: General and administration General and administration expenses for the six months ended June 30, 2024, totaled $2.23 million, a 22% decrease from $2.86 million in the same period of 2023, primarily driven by lower salaries and benefits and professional fees General and Administration Expenses (Six Months Ended June 30) | Expense Category | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Corporate administration | 561,516 | 663,957 | | Professional fees | 206,568 | 417,010 | | Salaries and benefits | 1,302,893 | 1,476,513 | | Director fees | 66,458 | 60,357 | | Amortization | 91,770 | 91,770 | | TSX listing costs | - | 147,327 | | Total | 2,229,205 | 2,856,934 | Note 14: Related party transactions Compensation for key management personnel and directors for the first six months of 2024 amounted to $2.33 million, an increase from $1.96 million in H1 2023, primarily due to a significant increase in share-based compensation, which grew to $1.26 million from $0.70 million year-over-year Key Management Personnel Compensation (Six Months Ended June 30) | Compensation Type | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Short-term employee benefits | 1,068,879 | 1,260,961 | | Share-based compensation | 1,264,181 | 703,433 | | Total | 2,333,060 | 1,964,394 | Note 15: Commitments and contingencies The company is involved in litigation against Titan Minerals Limited, seeking replacement royalties or damages potentially valued at up to $1.0 million, and has fixed commitments of $117,937 for leases and consulting agreements over the next year, additionally facing up to $9.44 million in contingent milestone payments related to various royalty acquisitions, payable upon achievement of specific production or revenue thresholds - The company has filed a statement of claim against Titan Minerals Limited to enforce its rights for replacement royalties or damages, potentially reversing a $1,000,000 impairment charge from 20236566 - The company has future commitments of $117,937 for leases and consulting agreements67 - The company has contingent milestone payments totaling $9,441,311, which are dependent on certain royalty revenue or production thresholds being met6869 Note 17: Segment information The company operates as a single reportable segment focused on the acquisition of royalty interests, with Australia being the most significant region, generating $5.70 million (99.6%) of the company's revenue in the first half of 2024 and holding $32.36 million (78%) of its non-current assets - The company operates in one reportable segment: the acquisition of royalty interests71 Revenue by Geography (Six Months Ended June 30, 2024) | Geography | Revenue ($) | % of Total | | :--- | :--- | :--- | | Australia | 5,701,312 | 99.6% | | USA | 15,505 | 0.3% | | Brazil | 4,812 | 0.1% | | Total | 5,721,629 | 100.0% | Non-Current Assets by Geography (June 30, 2024) | Geography | Assets ($) | % of Total | | :--- | :--- | :--- | | Australia | 32,359,730 | 78.2% | | Canada | 3,109,115 | 7.5% | | USA | 2,248,545 | 5.4% | | South Africa | 1,914,844 | 4.6% | | Other | 1,735,619 | 4.2% | | Total | 41,368,253 | 100.0% | Note 19: Financial instruments The company is exposed to various financial risks, including credit, liquidity, currency, interest rate, and commodity price risk, managing liquidity with $7.8 million in cash and an undrawn credit facility, and is sensitive to foreign exchange fluctuations, with a 10% change in CAD/AUD rates estimated to impact net loss by $519,000, importantly, the company does not hedge its commodity price exposure, providing shareholders with full exposure to metal price movements - The company manages liquidity risk with cash and cash equivalents of $7.8 million and working capital of $8.2 million as of June 30, 202477 - The company is exposed to currency risk; a 10% change in the CAD and AUD relative to the USD would impact net loss by approximately $519,00078 - The company's future revenue is not hedged, providing shareholders with full exposure to changes in the market prices of underlying commodities82 Note 20: Subsequent events Following the end of the reporting period, on August 7, 2024, the Board of Directors declared a quarterly dividend of $0.012 per common share - On August 7, 2024, the Board of Directors declared a quarterly dividend of $0.012 per common share, payable on October 11, 2024, to shareholders of record on September 27, 202487