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spk01: 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.
spk04: 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.
spk02: 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.
spk04: Thanks very much, Peter. So just to wrap up, As Peter said, significant intrinsic value in the portfolio. The target price on the stock across the seven analysts that cover us, and that's remarkable sell-side research coverage for a relatively young company, is about $4.25 per share. Our consensus net asset value is about $3.30 per share, so more than $2. Double where our current share price is currently. So significant intrinsic value in a sector that's facing cost pressures. And I'm talking among the producers, significant capital expenditure pressures, significant operating cost pressures, declining reserves and production, which is driven M&A. which I think has demonstrated over time that's a zero-sum game. It doesn't create value in the sector. It just maintains current production and reserve profiles, but doesn't create per share value. We're very much focused on growing through multiple means, as I said, through M&A, through project financing, through third-party royalty acquisition and royalty acquisition. generation organically as well, which delivers value on a per share basis, providing leverage to the gold price while protecting you from inflation, leverage to the expiration success of our underlying operating partners who are investing north of $200 million per year on their portfolio to which we're contributing nothing. So optimum leverage to the gold price, significant intrinsic value, significant value, because frankly, the royalty companies have been tarred with the same brush as the operating companies. that there's been an exodus of capital out of the gold sector that's resulted in significant underperformance of equities to the gold price. But I think it's well overdone in the royalty sector where I think there's significant value in particular in the gold royalty stock. So with that, we'd be happy to take any Q&A, Joanne.
spk01: Excellent. Thank you very much for that update, gentlemen. That was fantastic. Um, we've got a lot of people online and there's lots of questions to be asked. So, uh, let's go to our first one and it's regarding expenses. Um, can you hold expenses in 2024? Um, a big part of the stock price under performance, maybe the small cap nature of the stock and the lack of profitability. What kind of profitability can you drive next year if you meet your revenue targets?
spk03: Thanks, John. I could take that one. So look, with respect to holding cash or operating expenses from this year, we are tracking towards our guidance of recurring cash operating expenses for 2023. We've seen subsequent decreases quarter over quarter. And that's really eliminating redundancies connected with prior corporate transactions. There's been disciplined use of consultants, professional services, et cetera. There may be some additional refining of contracts as we go into 2024. That being said, I'd look to sustain roughly consistent operating costs. I'll have to assess how 2024 is looking and see where the cost profile will fall out. But we've reduced our costs really to be consistent with a number of the companies in the sector, which is an achievement. With respect to profitability going forward in the future, as they've mentioned at the outset, we have reached a point where cash flow, free cash flow neutrality is being reached on a On a monthly basis, in the quarter, we are very close this past quarter. And I suspect in future quarters, certainly through 2024, we will be free cash flow positive, which I think is great for profitability. Now, we don't put out guidance. for revenue beyond this year. We'll assess what we do next year. All I can comment on is what is out in the public domain that the street puts out there for revenue forecasts and based on what I've seen for 2024 and 2025 based on revenue. And if we do keep a consistent operating cost base, we will generate profitability next year. Now, depending on what analyst you pick, depending on what cash goal price they have, assumption they have, it will be a variation on what that profitability is. But certainly we've turned a corner and we'll join the ranks of profitable, free cash flow generating royalty companies in 2024.
spk01: Excellent. That's a that's a great milestone. And going back to the cash costs, are there any further cost reductions expected? Like, is there any way you can squeeze some more margin out of there? We have a lot of questions on that. That's why I'm coming back to it.
spk03: Yeah, look, there's, we've taken a, a fairly conservative approach to our budgeting through 2023, and we'll do it again in 2024. I mean, there are some fundamental costs in our company that are difficult to avoid. For instance, we have certain insurance costs that are associated with directors and management, as well as just general insurance that... is somewhat contingent on the fact that we IPO'd in 2021, and it takes a track record before some of those costs start to decrease. We are having a track record over the last couple of years. Also, the fact that we're only listed in New York has an impact on that. Our regulatory and listing fees being listed only in New York is a relatively fixed cost as well. So when you look at our company compared to other Canadian listed companies or Toronto listed companies, we do have some fundamental costs that are difficult to decrease. and that's really you know the benefit also to scale is that you can spread those costs across a larger base as companies get bigger it's a good rationale for consolidation going forward can we bring more costs out of the system um that's going to be a function of of where we get to on some of those fixed costs like insurance for one thing in 2024 which we don't renew until next year as well as just generally looking at our vendor selection. Is there ways that we can trim down costs a little more materially in different areas? But I suspect we'll have to look at the budget next year and where we can start picking away. But I think we've got to a stage where we're much more similar to where our peers are now.
spk01: Okay. So let's move on to the portfolio before we go back to more financing questions. Do you see Cote entering production next year and will it impact your bottom line?
spk02: Yeah, absolutely. With a 92 percent complete construction as of September 30th, targeting five million tons of stockpile ready to go in early 2024. We expect initial production in Q1 and a smooth ramp up through next year. Impact on the bottom line is close to 500,000 ounces of annual production next year. reporting in and translating close to 2,000 GEOs for Gold Royalty Corp next year alone, a meaningful increase in our overall attributable production revenue and a direct impact on the bottom line cash flow.
spk01: Great. Thanks, Peter. And can you comment on the news regarding Fenelon and Tonopah West projects and what other catalysts should we be looking forward to, such as Granite Creek, Odyssey, Cotea? all of these completions, which I know you went through in the presentation, but maybe you can.
spk02: Yeah, no, I think I spoke to Granite Creek, Odyssey, and Cote at some length, but phenylon and Tonopah West are great examples of some of the advanced exploration assets within our portfolio. Tonopah West had over 100% increase in its underlying mineral resource. really attractive high-grade silver deposit down in Nevada. Similarly, Fenelon, an asset that's now published its initial economics and they continue to look for ways to grow and expand its production profile. These are catalysts across our portfolio that we really don't get much value attributed to as its potential cashflow that's eight, 10 plus years away, albeit does create meaningful value. across the portfolio and are just a couple of examples of the 20 some odd advanced exploration assets and 170 plus early stage exploration assets, all of which are having some kind of work or many of which are having some kind of work across the portfolio.
spk01: Okay. As you can imagine, there's lots of questions on the SOCAM deal. So how did it come about and You know, was there a bidding process? Can you get a little more granular with that deal for us?
spk04: Yeah, no, I'm happy to. Look, time and again, since our IPO in 2021, we've been able to demonstrate that leveraging the relationships that our board and management have with collectively 400 years of industry experience has led to significant growth. Virtually every deal that we've done since our origination has been on an exclusive basis. And so it was leveraging a relationship that a couple of our management and board members had with the executive at SOQEM. You'll remember I was in northwestern Quebec for many, many years with Agnico Eagle, so I have relationships within the Quebec institutions as well. And that was meaningful in terms of getting this exclusively negotiated with SOQEM. But I think more meaningfully, it opens us up for future deals with SOQEM. Now that we've established this relationship, we have a formal commercial arrangement as they continue to invest in the normal course in exploration of Quebec, which is fundamental to their mandate, they're going to generate more royalties and they're going to look for a way to monetize those royalties with any vehicle, a public vehicle like old royalties. So hopefully, I can't guarantee it'll be exclusive going forward, but hopefully now that we've established this structure, it's something that we can leverage time and again through that strong fundamental relationship with SOCOM.
spk01: Okay. And I guess the question that I keep getting asked here is like, why wouldn't they just keep the million dollars and take the proceeds from the royalties? Why did they, you know, why did they parcel off or spin out their royalties?
spk04: SOKRAM's mandate is not to hold on to these assets forever. Their mandate is to incentivize exploration in the ground in Quebec, make those investments to catalyze growth and reserves and resources across a broad spectrum of metals, not just precious metals. and ultimately exit those positions over time and recycle that capital into new exploration opportunities. So holding on to those royalties forever doesn't really fit their mandate. They're looking to put new capital back to work in the ground, and this will provide them some capital they can use over time to reinvest back into exploration in Quebec, which is, again, fundamental to their mandate.
spk01: Okay, and the last question on Sakim is, you know, clearly it's hard to model at this early stage, but, you know, do you have any metrics of how this deal actually looks or shakes out in the end for gold royalties?
spk04: Now, there's a couple of ways to look at it. You know, Peter talked about the 18 million dollars of buy downs within the contracts of the royalty consciousness, which we would get 50 percent. So in a very aggressive scenario, assuming all those got bought down, we would get nine times our money back in just cash. So that's excluding any option value fundamental to those royalties. The other way of looking at it is we got 20 royalties for the equivalent of U.S. six hundred thousand dollars. So that's about $30,000 of royalty. It's comparable to what our royalty generator model costs, you know, in terms of staking claims, the salaries of our people down in Reno. So very comparable to generating royalties organically in terms of the entry costs. So very, very cost-effective way to add additional royalty optionality into the portfolio.
spk01: Okay. And let's talk about focused on precious metals and North America. And I'm going to combine this with another question. From someone regarding, you know, platinum pricing and gold is nearing the cheapest valuations ever. Are we entering the platinum streams and royalty contracts?
spk04: Yeah, look, we're going to stay focused on LME traded metals, ones that are quite liquid. If you look at our board of management, including myself, I've spent equal amounts of time in my career in base and precious. I've built copper, zinc, silver and gold mines over the course of my career. Nickel, those metals are ones that we understand where we think we add value. Some of the more exotic, less liquid metals are something that you really wouldn't see us in. If it's in context of a polymetallic deposit that has those core minerals in them, that's certainly something that we would look at. But, you know, we're going to be precious metal focused with some diversification into some of those LME metals.
spk02: David, I would just expand on that, looking at the platinum and palladium commodities. We do see the argument there as including them within the precious metals bucket. But with that said, the quantity of opportunities we see in that space relative to the much larger gold, silver, copper commodity space is much smaller. We've looked at over 300 opportunities since we went public and only executed on a handful of those. I'd note of those 300 plus opportunities, the vast majority were gold, silver, and then some copper opportunities as well. We'll look at high quality opportunities across the commodity spectrum, but consistently we're seeing what we've been able to close on.
spk01: Okay. Let's go back to your portfolio. How much of your revenue is expected to be generated or come from Odyssey next year? And what does the ramp look like over the next several years in terms of expected revenue?
spk02: Yeah, so from Canadian Malartic in 2023, Our attributable production was primarily expected to come from Barnett pit. Now that has been, we have seen less attributable production from the Barnett pit just due to the sequencing at Canadian Malartic. We expect most of that to be caught up in 2024 and targeting closer to 30,000 ounces of total production reporting into our 3% NSR from the pit. We are awaiting on any specific guidance across the Odyssey South and internal zones. As I noted, they are still delineating that internal zones resource and are focused on incorporating it into the mine plan as soon as next year. But it's really a key metric and something we can't speak to certainly about today. Where we see the most clarity is towards the end of the decade with assets such as Odyssey North and East Malartic on a combined basis reporting closer to 200,000 ounces of total production reporting into our 3% NSR by the end of the decade. And that really starts to ramp up through 27 and 28. Okay. And how many assets do you...
spk01: do you think we'll be producing by 2024, 25?
spk02: Yeah, so by the end of next year, we currently have our four producing assets. We're excited to see Cote enter production and the potential for the Odyssey Underground to also supplement that. So we're looking at six royalties producing by the end of 2024. And then by the end of 2025, we have a handful of smaller royalties in Nevada that could supplement that number of producing royalties upwards of eight by the end of 2025.
spk01: OK, and we have a couple of questions here that I'm going to try to put into into one. And it has to do really with royalty companies. And maybe, David, you can answer this. You know, what are your thoughts? Do you think there's going to be more mergers among royalty companies next year? And, you know, why are they I know you touched on this a little bit, but why are they performing so badly in the markets or underperforming at this point?
spk04: Yeah, there actually has been quite a bit of M&A activity since our IPO. So we IPO in March of 2021. There was no consolidation occurring. We instigated the consolidation by merging with three of our peer companies, Ely, Golden Valley and Abitibi over the course of 2021. And then we saw a lot of other M&A activity. In fact, six other royalty companies have disappeared. And you know some of them, Mavericks and Nomad, Altus Strategies, et cetera. There's a number of them that have disappeared over the course of the last couple of years. So there has been meaningful consolidation. with the objective of trying to achieve scale quickly, drive down the cost of capital. That hasn't been borne out, honestly. We've seen some consolidation, but what we haven't seen is the re-rate you would have expected from that consolidation because there's been a massive exodus of capital out of gold equities generally, not just in the royalty streaming universe. Again, what's driving that exodus of capital has been cost inflation. Among the producers, growing operating capital costs, and that has shrunk margins in a stable gold price environment. Gold has been range bound between $1,800 and $2,000 an ounce over the last couple of years. So the gold price hasn't grown meaningfully, but the costs have. And I think that's resulted, along with shrinking reserves and production profiles and a significant cycle of M&A activity among the producers, has seen capital just kind of disappear from the space. the royalty and streaming companies have been tarred with the same brush in spite of the fact that we do provide cost insulation. So it's been a baby with the bathwater type of a reaction in the gold sector. And that's obviously disappointing to gold investors who are looking for leverage to what's an increasing gold price globally. Again, gold has hit all-time highs in every other major currency and has held its own against the U.S. dollar, but we haven't seen the royalty and streaming companies perform. But they will, inevitably, because... they do provide that optimum leverage to the gold price and expiration while protecting from inflation. And I think as we start to see generalist money come back into the space, inevitably it will, as we see a rotation out of other general equity markets into natural resources and precious metals in particular, you're going to see those first dollars go into the royalty and streaming companies because they provide a much less risky proposition, risky exposure, and better leverage to the gold price than the producers and developers do.
spk01: And David, do you actually have a plan in place if someone were to approach you either on a hostile bid or a proposed merger? I guess the question is, where do you see yourselves in three to five years from now?
spk04: Well, look, I think consolidation among the other half a dozen to 10 other royalty streaming companies is inevitable because there is a significant void in the sector. There isn't a meaningful mid-tier royalty streaming company to compete for capital and opportunities with the big guys. And as I said earlier on, the big guys are getting multiples that imply that they have significant growth ahead of them. And they don't. They can't. There's no conceivable way for them to grow, given how big they are. They are quality plays are very liquid. And so it's a good place for many specialist funds in the precious metal sector to kind of park their capital while they wait for the generals to come out and play as well. But invariably, when we start to see the generalists come back into the space, the specialists will be looking for the growth vehicles that provide better leverage. And I think if we create that mid-tier company amongst the rest of us, I think we're going to be something that's going to be coveted in the space because we can provide that growth. while providing trading liquidity and institutional relevance. That's what's absent in the space right now. I think invariably you're going to see these remaining smaller cap players start to consolidate. What I can't predict for you, Joanne, or for any of our shareholders on the phone is the sequencing of that, who takes over whom. It's too difficult to predict at this stage. But it's been quite quiet over the last year or so because virtually everybody in the royalty and streaming space in the smaller cap universe have been plumbing 52-week lows. It's tough to have those kind of conversations when everybody is discounted severely to their net asset values.
spk01: Excellent. And just a few more questions. We are at the top of the hour. At what cash rate does it make sense to spin off the contracts that are not to be producing for years? I guess like what value do you hold?
spk04: Look, I've heard that argument before, but the reality is we're not getting paid for that option value in a small cap company like ourselves, $200 million market cap, arguably larger end of the spectrum in terms of smaller caps. why would it get a better valuation in even a smaller vehicle with no cash flow? In fact, it'd get less valuation. There's no economic rationale for spinning it out into a separate vehicle that doesn't cash flow. And I think, in fact, what small value we get for those long-dated options would get effectively zero in that kind of vehicle. And it would just create additional G&A costs because public companies, as we see, have a fixed net associated with them. You can't avoid listing fees and insurance and whatnot. Why duplicate that? We've been going the other direction and realizing synergies through consolidation. So deconsolidating just introduces those costs back into the system.
spk03: I think I'll also add that investors sometimes forget that there are core assets within the portfolios of companies like Royal Gold and Franklin, Nevada, that were at one point in time exploration assets with no production. So holding on to some of these more long dated options, if they don't have a whole lot of value to spin off now, could have a lot of value in the future.
spk04: It's an excellent point, Andrew, because guess what? They're bought and paid for. They don't eat. They don't decay. They just sit there and wait. And eventually there's going to be value realization, not on all of them clearly, but that's the beauty of our model is there's no limit to the diversification we can achieve. We can have 2,000 royalties with the same G&A footprint that we have right now, and they don't waste. They don't occupy our time. They just wait. They provide infinite optionality to their shareholders at effectively zero cost.
spk01: Okay, so the final question of the day is, do we I love it when shareholders say we do we have a certain valuation, or multiple that we monitor to determine if and when it would make financial sense to introduce buyback of our own shares. And Multiple, multiple barreled question here. And what about other publicly traded RT stream companies? If the price hits those levels, do we have a plan on buying back at those levels?
spk04: Yeah, what's clear to me is that when we start to get into sustainable free cash flow next year, we're going to have to reintroduce the concept of returning capital to shareholders in whatever form. And that's something that I'm looking forward to having a discussion with my board on next year once we do reach that tipping point that we've advertised, you know, with With Cote coming on, with the continual ramp up of Odyssey, with Wren coming on in several years as well, we have a nice profile, almost hockey stick profile in our revenue growth over the course of the next little while, while our cost structure is now been quite well stabilized under Andrew's stewardship over the last year since he took over as CFO. So I'm very happy about the position we're in where we can sit down with our board next year and say, how's What's the most effective way to start to share some of that return, free cash flow return with our shareholders? Is it dividends? Is it buybacks? Are there other forms of returning capital to shareholders that helps our share price go up?
spk01: Excellent. So I was going to ask you if you'd like to say a few more words to your shareholders before we sign off. But, you know, what you just answered is quite valuable. And I think shareholders appreciate that. your stance on everything. Great management team, great presentation as usual. We are now at the top of the hour. So we will end our town hall forum. Thanks everyone for tuning in. It's been a pleasure to host you and we will see you on the next vid town hall forum. Thank you very much, everyone.
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