Gold Royalty Corp.

Good morning. I'm your host, Joanne Jobin, and I'd like to welcome you to the Gold Royalty Town Hall Forum hosted by VidMedia. Today's Town Hall will be focused on Gold Royalty's recent quarterly announcement and will be hosted by David Garofalo and Peter Behnke, Manager Corporate Dev and Investor Relations, and CFO Andrew Goebbels will join us at the end for Q&A. After the presentation, I will be delighted to moderate submitted questions from our audience. Now a few words on the company. Gold Royalty Corp is a precious metals focused royalty and streaming company offering creative financing solutions to the metals and mining industry. It currently has a diversified portfolio of over 190 royalties located in mining friendly jurisdictions throughout the Americas. The company's business model includes acquiring royalties, streams and similar interests at varying stages of the mine life cycle to build a balanced portfolio offering near, medium and longer term attractive returns for investors. Before we commence, just a reminder that if you have any questions for the company, please place them into the Q&A tab at the top of your chat sections. And please ensure that you fill in the short questionnaire at the end of the presentation. This really helps us and the company communicate more effectively with you in the future. And before I turn it over to the team, please note the forward-looking statement at the beginning of this presentation. Gentlemen, the stage is yours.

Well, good morning and good afternoon, as the case may be to everybody. Thank you for attending our third quarter town hall. I'm delighted to walk through our quarterly results and then hand it over to Peter to walk through the advancement on our prolific and diverse portfolio of royalties. Our operators have been very busy, both on the exploration and development front. So there's lots to talk about today. And what's clear from our Q3 financial results is that we're very much at a tipping point right now. For the first time, We were free cash flow neutral as we drove down our cash operating costs by 50%, crystallizing synergies from the mergers we completed in the first year of our existence. There were three companies that we took over and we went through an extensive post merger integration period. We've driven out a lot of the redundant costs out of the business and that's why you've seen such an appreciable improvement in our operating cost profile. We also saw a 48% increase in our total revenue land agreement proceeds And we're poised to be significantly free cash flow positive in 2024 with the startup of Cote next year, which when fully producing will be Canada's second biggest producing gold mine. And as we saw during the past quarter, they reported IAM Gold, the operator reported over 90% physical completion of the property. They expect to have about 5 million tons or about six months of production of broken ore at the mouth of the mill. So they're in an excellent position. to hopefully execute on a smooth ramp up in significant free cash flow generation or revenue generation and royalty over the course of 2024, which represents a significant step change for us in our total revenue profile and again, drives us into free cash flow positive territory. As we stated in our presentation, our company's operators, Agnico Eagle, IAD Gold, BlackRock Silver, all announced material positive developments on their respective projects over the course of the quarter as well, which Peter will get into in a bit more detail in his presentation. We're very busy on the acquisition side as well. We continue to supplement what's one of the most prolific and diverse portfolios, not just in the junior royalty space, but in the royalty space generally. We're approaching over 240 royalties in the portfolio with the acquisition of 20 royalties in this past quarter, over 20 royalties in fact. And we did it in a very creative way, recognizing the capital is scarce in the sector right now. And so we've had to be creative in terms of where we've acquired it. We acquired a producing copper silver royalty on the Cozumel mine in Mexico, operated by Capstone, a large cap copper producer based in Canada. We also acquired over 20 royalties from SOCRAM, which is the mining investment arm of the Quebec government. And in return, SOCRAM, and by extension, the Quebec government, took a strategic stake in gold royalty, again, expressing a confidence in the intrinsic value of our portfolio, our management team, and our ability to continue to grow value, not only on an absolute basis, but on a per share basis. And that's going to be a very important relationship for us with SOCRM in that they will continue, as is their investment model, to continue to invest in exploration properties in Quebec. And now we have a relationship, a conduit, if you will, for any future royalty opportunities they generate from the properties they're investing in in the normal course of their business. So that's been a very important relationship. It's an exclusive deal. We ended up purchasing all of their royalties from their existing portfolio in return for shares in Gold Royalty Corp. And also, we continue to add royalties through our royalty generator model, adding two in the current quarter with significant, well-capitalized operators. Again, we generate those royalties effectively for free through the sweat equity of our team, particularly in Reno, Nevada. And in fact, we not only get those for free, we quite often get paid for them because not only do we get royalties in return for those properties, we quite often get option payments. And option payments have been a significant component of our revenue through the first couple of years of our existence. So it's a strategy that not only pays for itself, but actually pays profits for us while we're generating royalties on those properties that we stake through our exploration efforts. So we've been able to demonstrate, we continue to grow through all the four major legs. There's only four ways to grow in the royalty business. You can do it through M&A, which we've done quite capably when we had a much stronger currency over the course of 2021. We've done it through third-party royalty acquisitions. That's how we acquired Cote, which represents a significant leg of growth for us going forward. We've done project financings as well, and we do organic royalty generation. So we do all four things we think quite capably, which is unique, a unique value proposition for the small-cap royalty universe among our competitors. What clearly was not a highlight in the quarter, and I'm the first to admit it, is share price performance. And it has to be very, very frustrating for investors in the gold universe to see this type of gold chart and not getting the kind of performance and leverage of the gold price they should expect in a rising gold price environment. Now, gold has been range bound over the last couple of years between 1900 to 2000 dollars an ounce. But it's held in like a champ in the face of a massive exodus of capital out of virtually every other jurisdiction in the world into the US dollar. So that exodus of capital, that flow of capital into the US dollar has also gone into gold because gold has held its value against the US dollar in spite of that flight to safety to the US dollar and US treasuries in particular. And in fact, gold is at all time highs and every other major currency in the world. So that's a recognition of the intrinsic value of gold. What we haven't seen is the kind of performance you would expect in the share prices in a rising gold price environment. And we've seen a significant underperformance, particularly in the last year relative to the gold price in the GDXJ index. And that's a smaller cap universe where we've seen a 20% underperformance relative to the gold price. But we've also seen that in the large cap universe. Many of the bellwether stocks in the industry, whether you're looking at Ignico, Newmont, Barrick, are at half the value that they were a year or two ago. And that's a reflection, I think, in the producer universe of declining reserves and also increasing operating costs and capital costs. And that's eaten into their margins, even as the gold price has maintained value at about $2,000 an ounce. So, That doesn't really make sense in the royalty universe. The royalty companies should be doing significantly better because they provide that optimum leverage. That investment model provides you that leverage while protecting you from inflation. But what I think what will continue to do is drive consolidation among the producers. And we've seen a significant amount of consolidation among the producers over the course of the last couple of years, going back to 2018. Given the shrinking pie of reserves, shrinking production profiles, you're going to start to see and continue to see the larger cap players in the producer universe continue to consolidate. I think inevitably you're going to see that kind of consolidation in the royalty universe as well, because we're a cost of capital driven business. And what clearly has been demonstrated in the market is scale matters. The biggest companies in the royalty sector get the best multiples, but the biggest companies are also challenged to growth. And we think the absence of a mid-tier company represents a significant opportunity for many of the smaller cap royalty companies in the space, including gold royalty, to fill that void where we can create something that's big enough to be institutionally relevant and attract capital, but small enough to grow. because the multiples that the seniors in the royalty space are enjoying currently imply that they have significant growth ahead of them, but they clearly do not. They have high quality portfolios, but are significantly challenged to grow given their absolute scale. And that's the opportunity the smaller cap universe can start to create in the royalty spaces. They continue to consolidate and create critical mass over the course of the next little while. So I'd say watch that space over the next little while. So with that, I'd like to pass it on to Peter to walk through our portfolio, our growth plans in a bit more detail, and then we'll have some Q&A that Andrew Goebbels, our CFO, and Peter and I can answer at the end of the presentation. Thank you for your attention.

Thanks, David. So speaking to the growth that we've had across the portfolio with the pro forma closing of our recently announced Sochem acquisition, it brings our portfolio to over 240 royalties. That's a 13 and a half fold increase in less than three years since our IPO in March of 2021, the fastest rate of growth of any royalty and streaming company in the sector. But so you don't think it's just been a focus on quantity and gold royalty. We really have been focused on a key metric, and that's growing the underlying net asset value per share. As David noted, when we had a stronger currency in 2021, we were very aggressive on the growth front. And to that end, we did issue stock in the context of several acquisitions. And that has been the only context that we have issued any material quantity of shares is in growing the portfolio. To that end, we've grown our overall gross net asset value by five times in less than three years, while only increasing our underlying share count by three and a half times over the same period. This translates into a 40% increase in the underlying net asset value per share of the business, a significant increase and a significant creation of value for gold royalty shareholders, albeit it has not been translated across the share price. When we look at the consensus average figures, that's where that 0.4 times price to net asset value metric comes from. I'd also highlight the average price target of our seven analysts is 225% above where our current share price is. So we've created significant value in this business, albeit it's not being translated into market performance. But in time, that cash flow will start to crystallize and we'll start to see a re-rating in the stock as cash flow starts to come in. So to that end, the overall revenue profile of the company is materially unchanged for the quarter. We saw several positive advancements on our key assets, but the big picture is really the same. Leading revenue growth within the sector, key assets well on track to enter production over the near and midterm. As David mentioned, expected to have 5 million tons of stockpile at Cote to see a smooth ramp up in 2024, which will be a meaningful step change in our revenue profile next year. 2025 and 2026, we start to see some upside potential at the Odyssey project, especially with the internal zones and the potential incorporation there. And then assets like Granite Creek, Wren, Fenelon supplementing our revenue profile towards the end of the decade. One thing that we found very encouraging this quarter was the continued efforts on our cost savings, 50 percent year over year decrease in cash operating costs in Q3 2023. And that really translates well to this revenue profile chart. Every dollar that you see in revenue growth is driving towards the bottom line as we maintain that disciplined approach to our expenses. So getting into the portfolio and a bit more granularity, as I mentioned, largely the main assets, the core assets that are driving the value of our business are on track and unchanged. We did supplement our cash flowing end of the portfolio with the addition of Cozum in this quarter, but Cote, Odyssey, Ren are the true value drivers of the business over the next several years. The Soquem portfolio primarily fits into the green exploration bucket, albeit with very strong operating partners and in one of the best mining jurisdictions in the world. A bit more detail on that recent acquisition. The Soquin portfolio is just north of 20 royalties, all located in Quebec, with quality operating partners such as IAM Gold, Ignico Eagle, Asisco Mining, Probe, and several others. Interestingly, with this portfolio, there was 18.2 million Canadian in associated milestone payments and buyback proceeds. So relative to our very attractive bargain purchase price of Canadian 1 million in gold royalty stock, we have the potential to benefit with multiples of that in terms of proceeds from these buybacks and milestone payments before we even consider the exploration and the optionality associated with the remaining royalty after those buybacks have been exercised. It's primarily a gold-focused portfolio, and a few of these assets do have underlying resources, but for the most part, they are earlier expiration stage. But I'll reiterate, with great operating partners, well-funded operating partners to explore these assets, and in prolific mining jurisdictions, a long trend with significant assets such as the Detour Lake Mine, or near Val d'Or, near the lakes of Canadian Malartic, Lamac, and that prolific district as well. As part of the consideration, SOQM is entitled for 50% of any potential buybacks or milestone payments. That still leaves Gold Royalty with net Canadian $9.1 million in potential proceeds, again, relative to a $1 million purchase price. A very attractive tuck-in and creative way to continue to grow our portfolio. Now moving on to the organic growth associated with the portfolio, I wanted to dive into some of the key assets and some of the advancements we saw in Q3. At Odyssey, Agnico Eagle has continued to aggressively explore the Odyssey South deposit, specifically infill drilling at the internal zones, which a majority of those are towards the north of Odyssey South, between the Odyssey North and Odyssey South deposit, which lies underneath our royalty coverage area. So we're very bullish on Agnico Eagle. delineating a larger resource of the internal zones and they've continually emphasized that the internal zones represent upside to increase production from the underground during the transition period. The transition period being 2024 to 2028 when the Canadian malarctic complex shifts from open pit to underground. It's currently operating as both an open pit and underground operation. The key high-grade deposit at the Canadian malarctid complex is still East Goldie, which does lie to the south of Gold Royalty's royalty coverage area. However, I note that their exploration is focused along strike to the east and west to extend that East Goldie mineralization. To the west, they've seen significant drill hole results near the Nori Zone, which is actually underneath the gold royalty coverage area. So we're quite excited to see that East Goldie style mineralization starting to appear under the gold royalty coverage area. To the east, albeit it is quite a bit further, they're drilling towards our Midway royalty, and they have been drilling across the Midway property as well. And this is a massive, massive mineral system, and we're very excited to see the potential for that East Goldie style mineralization trend to the east towards our 1.5% NSR at Midway. At Cote, David mentioned construction as of September 30th was approximately 92% complete. targeting 5 million tons stockpiled by the end of the year and on track for initial production in early 2024. Our 0.75% NSR, as a reminder to everyone, covers the southern edge of the Côté Pit. Importantly, the southern portion of the Côté Pit is where the high-grade mineralization is occurring near surface. This means that we expect to have increased attributable coverage at Cote over the early years of the mine life, where IAMGOLD is focused on that high grade portion of mineralization. And we do expect to see our coverage taper off towards the end of the mine life. However, This increased coverage in the early years increases our expected revenue and cash flows from Cote starting immediately next year. Based on estimates of the technical production, technical report production schedule at Cote, consensus commodity prices and our estimate of coverage there, we could expect between $3 and $4 million in revenue from Cote immediately next year, which will directly translate to bottom line cash flow growth. The Wren project is continuing to be highlighted by Barrick as the future of the Carlin complex. They had an updated press release in September of this year outlining all of the growth opportunities across Barrick's vast portfolio. And Wren was highlighted as a potential opportunity to supplement the 10-year mine plan at Carlin. They outlined a potential doubling in the current resource of 1.6 million ounces, bringing it over 3 million ounces in total potentially next year. And they're targeting an advanced mine study, a pre-feasibility study over the next two years. Fenelon, in June of this year, we saw a uptrend. inaugural PEA on the project with a 12.3 year mine life and annual production of 212,000 ounces. Our 2% NSR covers all mineralization that's incorporated in that mine plan. The company's continued their drilling and exploration efforts across the project and recently appointed Brian Penny as their interim CEO. We're encouraged by the continued advancement of the project. They're not immune to the difficulties that most small cap advanced exploration companies have faced, but that really does not discredit the technical merits of Fenelon and the jurisdiction that it's located in, just 70 kilometers to the east of the detour like mine. The last two projects here, Cozumel, our most recent acquisition, we had our initial revenue recognized from the Cozumel mine in the quarter, included in our total revenue and option proceeds adjusted figure. And they're looking to continue their exploration efforts specifically at the footwall zone, which is directly underneath our royalty coverage area. So we're quite encouraged by the continued strong performance at Cozumel, which is currently planned out till 2030 based on reserves alone, but also for the potential for this asset to grow. And they're expected to publish an updated resource estimate in early 2024. Finally, the Granite Creek Mine Project I-80 provided a operational update on the asset earlier this fall on October 11th. The focus here has been ramping up the underground production from the Granite Creek Mine underground It achieved 592 tons per day of mineralized material production, but they're targeting closer to 1,000 tons per day in 2024. A key area of upside and continued exploration success is the South Pacific Zone, which is currently pre-resourced, and we're excited to see the South Pacific Zone have a resource delineated on it and be included as the mine's main horizon in 2024 for development and potential future production. Beyond those six core assets, we now have or expect to have over 240 royalties across the portfolio. And there's various other advancements and exciting catalysts. But those were some of the key material pieces of progress that we saw in the gold royalty portfolio in Q3. As a reminder, we had 700,000 meters of drilling in 2022 and expect to see over 600,000 meters of drilling across the portfolio in 2023, all at no cost to Gold Royalty Corp. We don't see the immediate benefit of a lot of that drilling. It translates into growing resources, de-risking of these assets. But it's that type of investment that will continue to grow our portfolio throughout the remainder of the decade. Finally, a comment on our commitment to sustainability. I think as represented in our most recent acquisitions, we place a strong emphasis on our ESG-related due diligence and our sustainability-focused due diligence. Cozumel, an established operation with Good Social License and Capstone, a reputable operator that has a track record of the same commitments to sustainability that Gold Royalty has. And the SOCHEM portfolio really does fit our core strategy, aligning with partners or vendors that have those same views as us. And SOCHEM is a perfect example of that. So with that, I'd pass it back to Dave to wrap things up. We've had a great quarter and we can open things up for Q&A as well to address your questions.