Gold Royalty(GROY) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported record revenues of $0.6 million for Q2 2022 and $1.2 million for the first half of the year, with expectations to reach approximately $5 million in revenue for 2022 [27][28] - The company has strong liquidity of $25 million, positioning it well for further growth [29] - The company introduced a dividend yielding approximately 1.3% and plans to increase it as revenue grows [28][22] Business Line Data and Key Metrics Changes - The royalty portfolio has expanded from 14 royalties at IPO to 195 royalties across the Americas, with six producing royalties and 21 in development [21][32] - The company anticipates a compounded average revenue growth of 60% over the next five years, aiming for over $20 million in revenue by 2025 [31] Market Data and Key Metrics Changes - The company operates primarily in top-ranked jurisdictions such as Québec and Nevada, which account for nearly 75% of its net asset value [33] - The company is positioned to benefit from a rising gold price environment, with a focus on precious metals [33] Company Strategy and Development Direction - The company aims to achieve scale quickly to compete effectively in the royalty space, targeting growth through M&A and organic growth strategies [19][66] - The management emphasizes the importance of maintaining a diversified portfolio while focusing on high-quality assets in stable jurisdictions [33][39] Management's Comments on Operating Environment and Future Outlook - Management believes the current inflationary cycle will lead to a significant increase in gold prices, potentially reaching $3,000 per ounce [13][14] - The company is optimistic about its growth trajectory, citing strong fundamentals despite recent market sell-offs [44] Other Important Information - The company has been aggressive in M&A, acquiring several companies to enhance its royalty portfolio [21] - Management has demonstrated discipline in its approach to acquisitions, walking away from a hostile bid for Elemental due to a lack of access to data and the need to protect shareholder value [20][48] Q&A Session Summary Question: Do you still see opportunities for further M&A at this point? - Management sees opportunities for further M&A, particularly among smaller royalty companies that may lack liquidity and capital access [46] Question: Why did the Elemental bid fail and why did you not increase the bid? - The bid failed due to a closely held shareholder base and management's decision to maintain discipline and not overbid without access to meaningful data [48][49] Question: What are the key reasons why the stock trades at such a deep discount to NAV? - Management believes the story needs to be told more effectively, highlighting the diversified portfolio and growth potential in a rising gold price environment [51] Question: When does management expect to start receiving payments from the 3% royalty on Canadian Malartic? - Moderate cash flows are expected from Canadian Malartic in the next couple of years, with maximum revenue anticipated around 2026-2027 [52] Question: What type of royalty company are you striving to be? - The company aims to remain focused on precious metals, with potential for diversification while maintaining a strong majority in gold [53] Question: Can you provide a more representative run rate for G&A costs? - Management indicated that recent G&A costs included non-recurring expenses related to M&A activity, and ongoing costs are expected to remain low due to a small headcount [55][56] Question: How is the prospect generation outside of the business going? - The company is actively pursuing organic growth through new contracts and partnerships with major gold producers, aiming to generate royalties at low costs [63] Question: Are you avoiding Newfoundland intentionally? - Management clarified that there is no intentional avoidance of Newfoundland, and opportunities are continuously evaluated [70] Question: What negative monetization are you placing on Elemental? - Management stated that they do not have meaningful interests in Elemental, and thus do not place any negative monetization on it [72]