Gold Royalty(GROY) - 2025 Q2 - Quarterly Report

Condensed Interim Consolidated Financial Statements Condensed Interim Consolidated Statements of Financial Position Gold Royalty Corp.'s financial position as of March 31, 2025, shows slight increases in total assets and liabilities, with a minor decrease in total equity Financial Position Summary | Metric | March 31, 2025 ($ thousands) | December 31, 2024 ($ thousands) | Change ($ thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------ | :------------------- | :------- | | Total Assets | 739,884 | 737,515 | 2,369 | 0.32% | | Total Liabilities | 181,837 | 179,212 | 2,625 | 1.46% | | Total Equity | 558,047 | 558,303 | (256) | -0.05% | | Cash and cash equivalents | 3,214 | 2,267 | 947 | 41.77% | | Accounts receivable | 1,197 | 1,663 | (466) | -28.02% | | Royalties, streaming and other mineral interests | 719,833 | 717,780 | 2,053 | 0.29% | Condensed Interim Consolidated Statements of Loss and Comprehensive Loss Gold Royalty Corp. reported a net loss of $1,248 thousand for Q1 2025, an improvement driven by increased revenue and operating income Statements of Loss and Comprehensive Loss Summary | Metric | For the three months ended March 31, 2025 ($ thousands) | For the three months ended March 31, 2024 ($ thousands) | Change ($ thousands) | % Change | | :----------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | :------------------- | :------- | | Revenue | 3,138 | 2,894 | 244 | 8.43% | | Gross profit | 2,902 | 2,374 | 528 | 22.24% | | Operating income/(loss) for the period | 341 | (544) | 885 | -162.68% | | Net loss after income taxes for the period | (1,248) | (1,405) | 157 | -11.17% | | Net loss per share, basic and diluted | (0.01) | (0.01) | 0.00 | 0.00% | | Weighted average common shares outstanding | 170,325,913 | 145,778,698 | 24,547,215 | 16.84% | - Operating income significantly improved from a loss of $544 thousand in Q1 2024 to an income of $341 thousand in Q1 2025, primarily due to increased revenue and lower general and administrative costs[3] Condensed Interim Consolidated Statements of Changes in Equity Total equity slightly decreased to $558,047 thousand by March 31, 2025, primarily due to net loss, partially offset by issued capital and reserves Changes in Equity Summary | Metric | Balance at December 31, 2024 ($ thousands) | Balance at March 31, 2025 ($ thousands) | Change ($ thousands) | | :-------------------------------- | :--------------------------------------- | :-------------------------------------- | :------------------- | | Issued Capital | 595,811 | 596,392 | 581 | | Reserves | 35,684 | 36,095 | 411 | | Accumulated Deficit | (73,227) | (74,475) | (1,248) | | Total Equity | 558,303 | 558,047 | (256) | - The Company issued 282,165 common shares during the three months ended March 31, 2025, for vesting of restricted share units and interest payments on convertible debentures[4][35] Condensed Interim Consolidated Statements of Cash Flows Operating activities generated $2,487 thousand in cash for Q1 2025, while investing activities resulted in a $2,087 thousand net outflow Cash Flow Summary | Activity | For the three months ended March 31, 2025 ($ thousands) | For the three months ended March 31, 2024 ($ thousands) | Change ($ thousands) | | :-------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | :------------------- | | Cash provided by operating activities | 2,487 | 336 | 2,151 | | Cash provided by/(used in) investing activities | (2,087) | 1,048 | (3,135) | | Cash provided by/(used in) financing activities | 547 | (1,018) | 1,565 | | Net increase in cash | 947 | 366 | 581 | | Cash and cash equivalents, End of period | 3,214 | 1,809 | 1,405 | - The significant increase in cash from operating activities was driven by improved net loss and favorable changes in non-cash working capital items, including accounts receivables and accounts payable[5] - Investing activities shifted from a net inflow in 2024 to a net outflow in 2025, primarily due to a $2,209 thousand investment in royalties, streaming, and other mineral interests[5] Notes to Condensed Interim Consolidated Financial Statements This section provides detailed disclosures and explanations for the condensed interim consolidated financial statements, covering corporate information, accounting policies, and financial instrument details Corporate Information Gold Royalty Corp. is a Canadian-incorporated company focused on acquiring gold-focused royalty and mineral stream interests - Gold Royalty Corp. (GRC) was incorporated in Canada on June 23, 2020, and is primarily engaged in acquiring gold-focused royalty and mineral stream interests[6] - GRC's common shares and common share purchase warrants are listed on the NYSE American under the symbols "GROY" and "GROY-WT", respectively[7] Basis of Preparation and Significant Accounting Policies The financial statements are prepared under IFRS (IAS 34) in USD, with consistent accounting policies from the prior annual period - The condensed interim consolidated financial statements are prepared in accordance with IFRS Accounting Standards (IAS 34) and are presented in United States dollars[8][10] - The accounting policies are consistent with those applied in the annual consolidated financial statements for the year ended December 31, 2024, and interim results are not necessarily indicative of full-year results[8][11] Wholly-owned Subsidiaries as at March 31, 2025 | Name of subsidiary | Country of Incorporation | Functional Currency | % Equity Interest | | :----------------------- | :----------------------- | :------------------ | :---------------- | | Ely Gold Royalties Inc. | Canada | U.S. dollar | 100% | | Nevada Select Royalty, Inc. | USA | U.S. dollar | 100% | | Ren Royalties LLC | USA | U.S. dollar | 100% | | VEK Associates | USA | U.S. dollar | 100% | | Gold Royalty Holdings Ltd. | Canada | U.S. dollar | 100% | | Groyco Mex. S.A. de C.V. | Mexico | U.S. dollar | 100% | IFRS Pronouncements New IFRS 9/7 amendments and IFRS 18 pronouncements are being assessed for their potential impact on the Company's financial statements - The IASB issued Amendments to IFRS 9 and IFRS 7 in May 2024, effective for annual periods beginning on or after January 1, 2026, which update classification and measurement requirements for financial instruments[12][14] - IFRS 18, issued in April 2024, replaces IAS 1 and introduces a specified structure for the income statement, effective for reporting periods beginning on or after January 1, 2027[15] - Management is currently assessing the effect of both IFRS 9/7 amendments and IFRS 18 on the Company's financial statements[14][15] Royalties, Streaming and Other Mineral Interests Total royalties, streaming, and other mineral interests increased to $719,833 thousand by March 31, 2025, driven by new acquisitions Royalties, Streaming and Other Mineral Interests ($ thousands) | Category | Balance at Dec 31, 2024 | Additions (Q1 2025) | Depletion Adjustment/(Depletion) (Q1 2025) | Land Agreement Proceeds (Q1 2025) | Balance at Mar 31, 2025 | | :-------------------------------- | :---------------------- | :------------------ | :----------------------------------------- | :---------------------------------- | :---------------------- | | Streams on Production Stage Assets | 50,570 | — | (158) | — | 50,412 | | Royalties on Production Stage Assets | 321,572 | — | 67 | — | 321,639 | | Royalties on Exploration and Resource Stage Assets | 202,851 | 2,246 | — | — | 205,114 | | Total | 717,780 | 2,257 | (91) | (113) | 719,833 | - On March 7, 2025, the Company acquired a 1.2% NSR royalty on the Garrison Project for $1,948 thousand (C$2.8 million), with transaction costs of $298 thousand[17] - The Company incurred $145 thousand in copper streaming expenses related to the Vareš copper stream during Q1 2025, which were nil in the prior year[19] Long-term Investment The Company holds a $1,390 thousand long-term investment in Prospector Royalty Corp., representing a 12.5% equity interest - As of March 31, 2025, the Company holds a $1,390 thousand (C$2 million) long-term investment, representing a 12.5% equity interest in Prospector Royalty Corp. (PRC), a private company providing access to a digitized royalty database[21] Gold-linked Loan A $10,000 thousand gold-linked project financing loan to Borborema Inc. generated a $290 thousand fair value gain in Q1 2025 - The Company provided a $10,000 thousand project financing loan to Borborema Inc. on December 19, 2023, bearing interest at 110 ounces of gold per quarter, payable in cash or physical gold[22] - The loan is classified as a financial asset measured at fair value through profit or loss, with a fair value gain of $290 thousand recorded for the three months ended March 31, 2025[23][24] Gold-linked Loan Movement ($ thousands) | Metric | Balance at Dec 31, 2024 | Interest income credited against Gold-linked loan (Q1 2025) | Change in fair value during the period (Q1 2025) | Balance at Mar 31, 2025 | | :-------------------------------- | :---------------------- | :---------------------------------------------------------- | :----------------------------------------------- | :---------------------- | | Gold-linked loan | 10,739 | (326) | 290 | 10,703 | Bank Loan The Company upsized its secured revolving credit line to $30,000 thousand and extended its maturity to March 31, 2028, with reduced interest rates - On February 24, 2025, the Company amended and restated its credit agreement, upsizing the secured revolving credit line to $30,000 thousand (with an accordion feature up to $75,000 thousand) and extending the maturity to March 31, 2028[27] - The amended facility bears a reduced interest rate of SOFR plus a margin of 3.00%, a 100 basis points reduction[27] Bank Loan Movement ($ thousands) | Metric | Balance at Dec 31, 2024 | Additional draw-down (Q1 2025) | Less: transaction costs and fees (Q1 2025) | Modification adjustment (Q1 2025) | Interest expense (Q1 2025) | Interest paid (Q1 2025) | Balance at Mar 31, 2025 | | :---------------- | :---------------------- | :----------------------------- | :----------------------------------------- | :-------------------------------- | :------------------------- | :---------------------- | :---------------------- | | Bank loan | 24,920 | 2,000 | (165) | (693) | 626 | (565) | 26,123 | Convertible Debentures The Company issued $40,000 thousand unsecured convertible debentures with a 10% annual interest rate, payable partly in GRC Shares - The Company completed a private placement of $40,000 thousand unsecured convertible debentures in December 2023, bearing 10% interest per annum over a 5-year term, with interest payable 70% in cash and 30% in GRC Shares[28] - The debentures are classified as compound financial instruments, with a liability component measured at amortized cost and a Conversion Option accounted for separately as equity[29][31] Convertible Debentures Movement ($ thousands) | Metric | Balance at Dec 31, 2024 | Finance costs (Q1 2025) | Interest paid (Q1 2025) | Balance at Mar 31, 2025 | | :---------------------- | :---------------------- | :---------------------- | :---------------------- | :---------------------- | | Debentures balance | 24,898 | 1,575 | (1,000) | 25,473 | Embedded Derivative The Redemption Option embedded in convertible debentures is valued at fair value, with a $(100) thousand change recognized in Q1 2025 - The Redemption Option embedded in the convertible debentures is valued at fair value, with a change in fair value of $(100) thousand recognized for the three months ended March 31, 2025[30][34] Embedded Derivative Movement ($ thousands) | Metric | Balance at Dec 31, 2024 | Change in fair value during the period (Q1 2025) | Balance at Mar 31, 2025 | | :---------------------- | :---------------------- | :----------------------------------------------- | :---------------------- | | Embedded derivative | 1,309 | (100) | 1,209 | - The fair value of the embedded derivative is estimated using the White Hull one factor model, incorporating inputs such as share price, credit spread, expected interest rate volatility, and mean reversion constant[34] Equity Equity movements in Q1 2025 included the issuance of 282,165 common shares and recognition of share-based compensation expenses - During Q1 2025, the Company issued 282,165 common shares for vesting of Restricted Share Units (RSUs) and convertible debenture interest payments[35] - Share-based compensation expense for RSUs was $456 thousand in Q1 2025 (vs. $503 thousand in Q1 2024), and for share options was $236 thousand (vs. $92 thousand in Q1 2024)[36][41] Movements in Reserves ($ thousands) | Category | Balance at Dec 31, 2024 | Vesting of RSUs (Q1 2025) | Share-based compensation - share options (Q1 2025) | Share-based compensation - RSUs (Q1 2025) | Balance at Mar 31, 2025 | | :---------------- | :---------------------- | :------------------------ | :------------------------------------------------- | :---------------------------------------- | :---------------------- | | Warrants | 9,295 | — | — | — | 9,295 | | Share Based Awards | 14,657 | (281) | 236 | 456 | 15,068 | | Convertible Debentures | 11,732 | — | — | — | 11,732 | | Total | 35,684 | (281) | 236 | 456 | 36,095 | Revenue Total revenue increased by 8.43% to $3,138 thousand in Q1 2025, driven by new contributions from Vareš and Borborema Revenue by Source ($ thousands) | Source | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 | Change ($ thousands) | % Change | | :---------------- | :---------------------------------------- | :---------------------------------------- | :------------------- | :------- | | Borden | 184 | 179 | 5 | 2.79% | | Canadian Malartic | 102 | 632 | (530) | -83.86% | | Côté Gold | 309 | — | 309 | N/A | | Cozamin | 301 | 252 | 49 | 19.44% | | Vareš | 484 | — | 484 | N/A | | Borborema | 741 | 281 | 460 | 163.70% | | Others | 804 | 1,282 | (478) | -37.29% | | Total Revenue | 3,138 | 2,894 | 244 | 8.43% | - Significant revenue increases were observed from Vareš (new in 2025) and Borborema, while Canadian Malartic revenue decreased substantially[43] General and Administrative Costs and Project Evaluation Costs General and administrative costs decreased by 19.46% to $1,821 thousand in Q1 2025, primarily due to lower corporate administrative costs General and Administrative Costs ($ thousands) | Category | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 | Change ($ thousands) | % Change | | :------------------------ | :---------------------------------------- | :---------------------------------------- | :------------------- | :------- | | Corporate administrative costs | 681 | 1,158 | (477) | -41.19% | | Employee costs | 780 | 733 | 47 | 6.41% | | Professional fees | 341 | 350 | (9) | -2.57% | | Depreciation | 19 | 20 | (1) | -5.00% | | Total G&A Costs | 1,821 | 2,261 | (440) | -19.46% | - General and administrative costs decreased by $440 thousand (19.46%) in Q1 2025 compared to Q1 2024, primarily due to lower corporate administrative costs[44] - The Company reclassified share-based compensation from general and administrative costs to a separate line item in Q1 2024 for improved presentation, with no impact on net loss[45][46] Finance Costs Total finance costs increased by 23.60% to $2,205 thousand in Q1 2025, mainly due to higher interest expense on the bank loan Finance Costs ($ thousands) | Category | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 | Change ($ thousands) | % Change | | :------------------------------ | :---------------------------------------- | :---------------------------------------- | :------------------- | :------- | | Interest expense on bank loan | 626 | 336 | 290 | 86.31% | | Interest expense on convertible debentures | 1,056 | 1,047 | 9 | 0.86% | | Accretion of convertible debentures | 519 | 395 | 124 | 31.39% | | Interest expense on lease liabilities | 4 | 6 | (2) | -33.33% | | Total Finance Costs | 2,205 | 1,784 | 421 | 23.60% | - Total finance costs increased by $421 thousand (23.60%) in Q1 2025, mainly driven by a significant increase in interest expense on the bank loan[47] Financial Instruments The Company's financial instruments include various assets and liabilities, with Level 3 instruments relying on unobservable market data for fair value Fair Value Hierarchy of Financial Instruments as at March 31, 2025 ($ thousands) | Category | Level 1 | Level 2 | Level 3 | Total | | :-------------------------- | :------ | :------ | :------ | :------ | | Short-term investments | 140 | — | — | 140 | | Gold-linked loan | — | — | 10,703 | 10,703 | | Long-term investments | — | — | 1,390 | 1,390 | | Embedded derivative | — | — | (1,209) | (1,209) | | Total | 140 | — | 10,884 | 11,024 | - The Company's financial instruments include cash, investments, gold-linked loan, receivables, payables, lease obligations, bank loan, convertible debentures, and embedded derivatives[48] - Level 3 financial instruments, including the gold-linked loan, long-term investment, and embedded derivative, rely on significant unobservable market data inputs for fair value determination[49][52][53][54] Related Party Transactions Related party transactions include significant convertible debenture holdings by QRC and compensation to key management personnel - QRC, an entity with a director also serving as a director of the Company, subscribed for $30,000 thousand of the convertible debentures in December 2023[65] - During Q1 2025, the Company incurred $1,181 thousand in finance costs related to debentures held by QRC[65] Transactions with Key Management Personnel ($ thousands) | Category | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 | Change ($ thousands) | % Change | | :---------------------- | :---------------------------------------- | :---------------------------------------- | :------------------- | :------- | | Management salaries | 298 | 317 | (19) | -5.99% | | Directors' fees | 48 | 58 | (10) | -17.24% | | Share-based compensation | 507 | 429 | 78 | 18.18% | | Total | 853 | 804 | 49 | 6.09% | Operating Segments The Company operates as a single segment focused on royalty and streaming interests, with revenue and non-current assets diversified geographically - The Company operates as a single segment, focusing on investment in royalty and mineral streaming interests[68] Revenue by Geographical Region ($ thousands) | Region | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 | Change ($ thousands) | % Change | | :-------------------- | :---------------------------------------- | :---------------------------------------- | :------------------- | :------- | | Bosnia and Herzegovina | 484 | — | 484 | N/A | | Canada | 809 | 811 | (2) | -0.25% | | USA | 803 | 1,282 | (479) | -37.36% | | Brazil | 741 | 549 | 192 | 34.97% | | Mexico | 301 | 252 | 49 | 19.44% | | Total Revenue | 3,138 | 2,894 | 244 | 8.43% | Non-current Assets by Geographical Region ($ thousands) | Region | As at March 31, 2025 | As at December 31, 2024 | Change ($ thousands) | % Change | | :-------------------- | :------------------- | :---------------------- | :------------------- | :------- | | Bosnia and Herzegovina | 50,411 | 50,572 | (161) | -0.32% | | Canada | 447,354 | 444,975 | 2,379 | 0.54% | | USA | 197,638 | 197,751 | (113) | -0.06% | | Brazil | 31,954 | 31,990 | (36) | -0.11% | | Mexico | 6,255 | 6,356 | (101) | -1.59% | | Total | 733,612 | 731,644 | 1,968 | 0.27% |