Elemental Royalty Corporation

Good morning, everyone. And how are you today? I'm Joanne Jobin. I am your VID host with VID Media. And today, we are welcoming Elemental Altus Royalties on their very first quarterly Investor Town Hall Forum. Before we commence, this is just a reminder that if you do have any questions for the company, please place them in the Q&A tab located at the top of this screen. After the presentation, I will be delighted to moderate the questions submitted by our audience. With us this morning, I am delighted to introduce CEO Frederick Bell and CFO David Baker, who will take you through the highlights of the most recent quarterly results. Fred, the stage is yours.

Thank you very much, Joanne, and thank you everyone for joining us today. And this is the first quarterly investor call we've done for a while, so very pleased to put it together and we'll do it going forward to try and give shareholders and potential investors a better guide to the company and really an explanation of some of the results as we go forward. At any point, if there are questions, we'll hopefully just keep them in mind, and then we can come back to them at the end of the presentation and try and address anything that's there. So in terms of the slides here, if we move on to the first slide here and note we're gonna be making forward-looking statements, and there's a disclaimer there, and the two presenters from the company today are myself, Frederick Bell, and David Baker, who is our CFO. and we'll really run through the results today with you. So starting on, if we turn to the next slide, thank you. The second quarter, look, the real highlight here is we had strong royalty revenue of 2.5 million, revenue of 5.2 million US, which is about a 10% increase on Q2 2023. It's the, I believe, the second highest adjusted revenue number quarterly in the company's history. And as we continue to grow from 2023, 2024, going into 2025, we expect to continue to get really solid quarters growing along that period. In terms of adjusted, EBITDA stands at 3.4 million US dollars, which is about up 4% from Q2 2023, respective period, and margins improving towards pre-merger levels. In terms of gold equivalent ounces, that's geos, we have 2,211 ounces, and for the half year to the end of June, that is 4,415 ounces. We expect to meet the lower end of our guidance on a geo basis of 10,000 to 11,700 gold equivalent ounces, and that's driven in the second half of the year by first royalty revenue we're anticipating from Diba in Q3. and partially offset by lower copper prices compared to gold prices at Casarenos. And I think worth mentioning for that, that that is for a gold equivalent ounce term. In terms of revenue, we get the same, it is just lower on the gold equivalent ounce basis when we're looking at copper from Casarenos. In terms of the balance sheet, we've continued to strengthen the balance sheet over the course of the year. This is something we said we would do last year, and we repaid five million in Q1, and we repaid another five million in Q2, taking a total repayment 2024 year-to-date to 10 million US dollars. And at the quarter end, we held approximately 6.5 million in cash, and we retained approximately 20 million of undrawn debt that's available for transactions, which along with free cash flow generation and expected milestone payments, giving us a lot of capacity for future acquisitions. And those milestone payments across 2024 and 2025 We've said we need approximately $19 million to come in over that period. The two assets that are really going to be driving growth for us in 2024 and continuing into 2025 are Bonacro and Diba. Bonacro has already started to demonstrate that. We had $1.8 million in revenue in the first half of this year. which is a material increase on the approximately 300,000 we have in the equivalent period in 2023. And DIVA, Allied Gold, the operator there, have announced that they may commence mining, and we're expecting royalty revenue to start coming in from Q3. In terms of the deal pipeline, look, it remains very, very robust. We've got a lot of opportunities we're looking at both on an individual acquisition basis, but also in terms of portfolios and consolidation discussions across the junior royalty space. So in sum, it's been a good quarter in terms of revenue. We've strengthened the balance sheet over the course of this year to date, and we expect to continue to do that where the opportunity is there. Bonacro has really started to deliver growth as of 2023, and Diba coming on in the second half of this year, and we're continuing to look at acquisitions as we go. So if we then turn to slide five, Two key royalties for us are Carlawinda in Australia and Casarones in Chile. Carlawinda operated by Capricorn Metals and it was a record quarter in terms of revenue at Carlawinda, partly driven by really the gold price there. Capricorn, the operator, are guiding to 110,000 to 120,000 ounces in the next 12 months. And really importantly for us is Capricorn also announced the commencement this month of a study on a major expansion of 2 to 2.5 million tonnes per annum at the mine, and that's an approximate 50% increase in throughput. So they're looking to have that study completed by the end of this calendar year, and we should have further news on that, but that's one of our largest royalties they're looking And I think important to note as well that the management team at Capricorn, this is a management team that in their previous company built three mines in Australia in a five-year period and had throughput increases, expansions at all of those mines over that same period of 30 to 50% at each. So it's a management team that in Australia are exceptionally well-known and have a really strong track record, not just building mines on time or budget, but actually then taking expansion studies through successfully and implementing them. So really pleased to see that news come out and look forward to further updates from Capricorn there. At the same time as a throughput expansion they also announced a 15% increase to the reserves to just over 1.4 million ounces of gold and that supports current mine life of approximately 13 years. The second real cornerstone asset in the portfolio is Caterines with Lundin Mining in Chile, and this accrued adjusted royalty revenue of $1.4 million US dollars based on reported production on copper and molybdenum by Lundin. And at the same time, I think Lundin actually increased their guidance here for the 2024 year to 124,000 to 135,000 tons of copper, and you can see it was pretty So, it has continued the pattern since Lundeen acquired majority ownership in this mine. I think we've seen, from a royalty holder's perspective, we've seen really good, consistent production, and we've actually seen really positive trends, both in terms of the direction they're taking the mine, in terms of the outlook on cost improvements, and also exploration drilling. which is the next bullet point here, and which they have started for the first time since the mine was constructed approximately 10 years ago. So one of the things with a mine with a long mine life is you don't always prioritize exploration when you build it. And I think it's great to see that with Lundeen coming in as operators, they've started exploration there and a very good outlook in terms of some of the targets they're looking at, which I should emphasize are all, as a rule to go, they're done at no cost to us. So if we turn on to the next slide, there's a number of opportunities to see growth in the portfolio, most notably, and we mentioned Diva first here, and this had first production in June, and we're expecting maiden gold sales in Q3 2024. subject to receipt of authorization for processing at Saviola, which is the mine they currently operate immediately adjacent to the Diba deposit. So we're seeing a lot of work that Allied have completed since that transaction was announced at the end of last year, and they've built a whole road to site. They declared maiden reserves, and then they announced that in Q2 they started first mining there. So very encouraging to see how fast Allied have been progressing it. And they also announced an $8 million exploration program really focused on . Again, very encouraging for us to see resource growth that's already happened, the mine being put into production, and the future exploration potential that we're going to see from the drilling they're doing now. The second asset here, Bonner Crow, it's also operated by Allied Gold and, as mentioned, provided significant royalty revenue. You can see on that chart there from Q3 last year that it's materially increased and been averaging approximately $1 million a quarter for the last three quarters. And Allied have also guided that they're expecting to access higher grade ore in 2025 and 2026, which should drive production from the royalty area. And the last royalty we're talking about here is an asset that is not in production, but a really material PEA announced by Arizona and Sonoran on the Cactus Copper project. And that's moving it to a larger open-pit operation from the previously envisaged underground project. The full technical report should be put out soon by the operator, Arizona and Sonoran, The first indications for us are that we expect royalty to cover significantly higher tons, which ultimately will drive in the future more revenue for us as a royalty holder. And we should also impact – sorry, we should also note that this is prior to the Newton studies that are expected to come out later in the year that Arizona and Sonoran are doing in conjunction with Rio Tinto. Moving on to slide seven here. Recently, other than other updates from the portfolio, we've recently completed the acquisition of two royalties. Really, the driver for this was the royalty on the Mactan tungsten project, which is recognized as one of the largest, highest-grade tungsten deposits in the world. It's help-rated by Fireweed Metals. company that we know and follow for a number of years and I think very pleased to have that asset into the portfolio and following that we also had a few updates with existing royalties in the portfolio and you can see there that We mentioned the royalty we have in Rwanda, which is currently being explored under a JV by Rio Tinto. I think they have just announced yesterday that they're expecting to start drilling on the project later this year, which will be maiden drilling and exploration there. In Egypt, we continue to hold a royalty and equity interest through IntuMetals on one of the largest land packages in Egypt. There was a major dual program completed on the project with encouraging results and we're looking forward to the second dual program which is planned for Q3 this year. We're well positioned to benefit through any discovery success there with uncapped royalty interest, continuing equity exposure and milestone payments on success. And then lastly, we received an additional payment from the mainstream that we have. And so that takes the total consideration we're expecting from the asset to about 12.4 million US compared to the just over 11 million carrying value at the date of disposal. So there's been a few updates in the portfolio. And I think we're anticipating a few new additions to the portfolio moving forward as well. In terms of the portfolio makeup, I will just very quickly run through this and then I think I'll hand over to Dave to go through the rest. But look, what we have put in place is I think a really well diversified portfolio in terms of our assets. It's also our commodity mix. We're remaining precious metals focused, but with a significant exposure to copper. And in terms of jurisdictions, we're really anchored by Australia and Chile as our two biggest jurisdictions. So I think it's a portfolio that has a very good blend in terms of diversified revenue, also a clear focus on gold and copper as the two primary commodities. So with that, I will hand over to Dave to take you through the next couple of slides.

Perfect. Thanks, Fred. Just in terms of the financial overview, GEOs for the quarter came in at 2,211. ounces translating to $5.2 million of adjusted revenue. That's up 10% year-on-year. Revenue to H1 was $9.9 million, and that's up 16% year-on-year. I think we're a little bit unlucky just in terms of the timing of production versus sales at some of our key royalties, but we'd expect that to pick up in Q3. This translated into a modest increase in EBITDA for the quarter, but clearly a material increase in EBITDA compared with H1 2023. The reason for that modest increase in Q2 is we've tidied up some of the non-cash accruals in the period, and then we're going to release those over the remainder of 2022 and 2025. And then also we've had some changes within the management team and some one-off costs associated with the disposal of the exploration business. So we'd expect to get those margins to improve over time. And we'll talk to that later. Operating cash flow, likewise, affected by one-off costs around departure costs of senior management and also the timing of audit, accounting and tax invoices that we go through. I'd expect that to normalise significantly through H2O. I would note that as a result of the growth in the business and optimizations post-merger and disposal of the exploration business, that net loss for the quarter is over 90% lower than this time last year, and I look forward to that improving in the future. I think an underestimated asset to the company is the expected $19.2 million of milestone payments that we are expecting to come through 2024 and early 2025, and that will significantly bolster our financial position. In H1 2024, we've already received $0.3 million in cash and $2.3 million in Firefly equity that we have realized. We've also received significant cash as part of the sale of Canyon Resources shares and our first discovery bonus this year from SKO. Looking forward to H2, we would expect to receive a million dollars on reaching first commercial production at Diba, that Ally has recently announced that first production has taken place, so we expect that to occur in H2 2024, and we're expecting a deferred $400,000 from the sale of the Egyptian licenses. But in H1 2025, we see material further payments, including nearly $10 million in cash and fly-fying equity, the final payment of the Ming stream, There is a small residual amount there that we could possibly be entitled to, so that number could get a little bit larger. We also see $10 million of production from contingent payments from DEBA upon reaching 100,000 ounces of production, and nearly $10 million for the buy-down, that partial buy-down of the Cactus Royalty. All in all, $19.2 million of one-off payments to the middle of next year. In terms of trends for the business, GEOs are relatively flat, but that's built into the relative performance of copper versus gold. So that means similar or even higher copper-based revenue from Casarona results in fewer GEOs as the gold price rises. Obviously, that benefits the other 70% of our royalties. We are, in terms of guidance, as Fred said earlier, with $9.9 million for the half year. We're expecting revenue towards the top end of our adjusted revenue guidance of $20 to $22. $23.3 million, and that's driven by first royalty revenue from DIVA and continued strong gold prices. In terms of margins, as I said, they're definitely on the right track following the merger and the monetisation of the exploration business over the last 12 months, and I think we'd look to get that back towards pre-merger levels of between 70% and 80%. I think as well, I just would like to draw attention to our attractive valuation versus peers for pure play gold and royalty copper and golden copper investment. And also draw attention. Since 2021, we've put a few of the names that have been acquired by mid-tier royalty names on the right-hand side. And I think the next time we'll have to put this slide together, we'll put Trident from the left-hand box into the right-hand box as they've just been acquired by Daterra. I guess whilst that reduced competition helps us for deal flows, it also shows that larger royalty companies are willing to pay real premiums for high-quality royalty companies. And with that, I'm going to pass it back to Fred for Q&A.

Yep. Thank you, Dave. And Joanne, if there's any questions.

Yeah. Thank you very much. Yes, thank you very much, gentlemen, for a great update. We certainly have a full international house with us this morning. So thank you to the audience for taking the time to participate on this call. Now, before we take questions, just a reminder to please place the questions that you do have into the Q&A tab located at the top of your screen. And the first question for today is, Given the low stock price, sorry to have such a difficult question for the first one, we're going to start. Given the low stock price, when can we expect management to purchase some shares? Great question.

Yeah, look, a very good question. I think, unfortunately, we often are deemed inside for various reasons, and sometimes that is as it is currently due to the accounts. So there is a two week period before the accounts are out where we're not allowed to trade and often before that it is due to potential transactions we're working on. So we've actually been in a pretty prolonged period restricting our ability to buy shares. I think all else being equal in theory we should be in the clear from 24 hours from today so I think effectively from tomorrow But obviously, that is often subject, I think, where we sit today. Look, I would, on a personal level, I think we're extremely well, we're extremely undervalued. And I think that without the restrictions of insider period and trading regulations, I think definitely it would be an attractive time to acquire shares, both for individuals and on a personal level.

Thank you. Have you considered paying a dividend?

So the short answer is yes, and I think we actually said earlier this year that we were looking, we were continuing to look, and they had a number of different options that they incorporated, paying down the debt, which we've paid down $10 million so far this year, and also initiating a dividend and also potentially a normal course issuer bid, so putting in place the ability to buy back shares in the market. So we have been evaluating internally all of those, and I think our anticipation is, as our expectation is, that as we continue to generate free cash flow and we have more money ability to deploy, if we're not putting that into acquisitions, we will be putting it into paying down the debt or initiating a dividend or doing a buyback. So all three of those have been on the cards and we've started in a material way on the debt side, which also decreases our cost of debt going forwards, improves our margin and improves our ability to then look at options like dividends and buying back shares in the future. So short answer again is is all of those under consideration. And we've been active on the first one, paying down the debt so far this year.

Thank you. Now, the next one's a two-part question. So can you walk us through some of the opportunities that you're seeing without spilling any state secrets, of course? And are you interested in continuing to branch out into critical metals or base metals, as you have recently with tungsten?

So I might answer the second part of that question first on the commodity mix and then pass over to Dave to talk to some of the opportunities that we're seeing and looking at. I think in terms of the commodity, we're approximately still, I call it 75% gold, precious metals, and 25% copper, order of magnitude. So we really are focused on maintaining a balance similar to that. Sometimes where we have opportunities, elsewhere, particularly value opportunities such as what we saw with the tungsten asset earlier this year. We will take advantage of those. And I would remind some of our shareholders and investors who maybe aren't familiar that one of the early royalties we acquired was a mineral sands royalty that commodity-wise wasn't necessarily what we're looking for, but it delivered a 40% IRR on an asset that went into production that was really good quality. So I think for us, focuses on gold and copper as the primary commodities, but where we see exceptional value and where we see a real opportunity to generate returns, we're a big enough company now that we can do transactions like the Tungsten acquisition very recently that won't change significantly the weighting of the portfolio, but we think will deliver really good returns going forward. Maybe that will pass over to Dave to talk about some of the deals that we've been looking at and looking at currently.

Yeah. Thanks, Fred. Yeah, so just reading what Fred said, I think gold is very important to us. It's important to be gold-focused. We also have very, very strong beliefs in copper and the long-term fundamentals there. But we will go outside those parameters very much on a returns basis. We look at everything. So whether that's individual royalties, whether that's a package of royalties as part of a larger or smaller portfolio, whether that's corporate deals as well. And again, just really trying to target the best quality assets for the best quality operators in the best quality jurisdictions. So, yeah, we've got very, very... broad remit, but I think still the focus is definitely on gold, as near-term production as possible, with obviously looking at copper and maybe other metals very much to combine them on a deeply discounted basis.

And what is Focus doing on this project as their disclosure is not the best?

Yeah, so look, maybe a quick background on Laviton. For those who aren't familiar, it's a significant land package that we have in Western Australia. And it is just to the north of a major goldfields mine and to the east of another gold mine operated by Genesis Minerals. So it's a historical mine. mining town, it has been mined historically. We bought royalties there covering a number of deposits, the principal ones being Beazley Creek and Lancefield, and two slightly different deposits. Beazley Creek is high-grade oxide near surface within tracking distance of two mils, and Lancefield was a top 10 underground gold mine in West Australia in the 1990s. 10,000 ounces per vertical meter, so a really significant mine, and it hasn't had any exploration since 1999. So that royalty is not producing at present. In our view, the primary reason it's probably not producing is because the operator, ASX Focus Minerals, is majority owned by Chinese, Parastatal and Shandong, and they have recently built and started mining the other gold project they have in Western Australia are at Coolgardie. And so, Laverton hasn't been a focus. I think for us, we see that as one of the assets that in due course is going to be really material and really valuable, and I think in the hands particularly of the right operator, Lancefield has the potential to be a very material mine going into the future. It certainly was in the past. So for us, you're right, limited disclosure from the operator being majority Chinese owned, and we don't get as much visibility as we like. That said, some of the team were just in Perth and Kalgoorlie recently at a conference, and we were able to get some updates there from operators in the region on the outlook and how they see it. And I think our view is that at current gold prices, that asset is increasingly attractive and in demand from some of the mid-tier Australian gold miners.

Thank you. And current gold prices indeed. Next question. Are there additional opportunities to increase your ownership in SLM California?

And maybe I can pass this question over to Dave as well, just to run through that.

Yeah, absolutely. Great question. We hold our shares in SLM California both directly and then also with a joint venture with our friends at EMX. EMX also have done a deal on some of those shares with Franklin Nevada. So it's clearly a royalty that's in great demand and obviously now under great new ownership with the London Mining, taking themselves to 70%. There is a small amount of SLM California available still. But yeah, we haven't been able to get there on a valuation that we're comfortable with. It's certainly something that we are always reviewing.

Thank you, David. Next question. Would 100% of the expected 2025 and 2026 production at Bonacro be on your royalty lands?

Yeah, I can jump in. Yeah, absolutely. Yes, so the real change in Bonacro is that Allied have moved from mining the satellite pits mostly at Hire outside of the area Our royalty is an area, a gigantic area around Pushback 5, which is in the main pit. And then before you saw that material uplift in Q4 2023, we'd only really been getting material in small development or from there as they were pushing back the open pit. Now they are nearly entirely into the main pit. Yeah, so we're expecting to see most of Bonaparte's production coming from the royalty area. And I think encouragingly, the commentary that we've seen from allies is as they push back, they're getting, they're uncovering increasingly higher grade material. So this is going to be a material contributed to our earnings for the next couple of years.

Excellent. Next question regarding prospect generation. And is it part of the strategy going forward or is that something that is now in the past?

Yeah, look, it's a good question again and it's a context for everyone. Elemental Altus, we merged at the end of 2022 and we had what was then quite a significant effectively prospect generation in the business. And some of the transactions we've done over the last 18 months, partnering our ground in Egypt with Inti Metals, who we referenced earlier during the presentation, selling the Diva project, which was referred to a number of times to Allied Gold, who operated the adjacent mine and bringing that into production. selling the Ethiopian portfolio to ANS and putting the Moroccan assets into Ethereum. The purpose on a lot of those transactions was really to realize the value in the underlying assets and in some cases to take them to the next stage of production and in other cases to put them in the hands of well-financed partners who could commit more capital and expenditure to them than we could. So look, that was the real rationale in terms of those transactions. And one of the benefits they alluded to earlier in this presentation was also the parallel reduction in corporate costs and GNA that we increasingly have as a result of partnering those assets and projects. So from our perspective, the real focus has been on royalties. and continuing to add to the portfolio there. We have kept an eye on opportunities, probably partly to work with prospect generators as well and identifying teams who have that core skill set or a specific knowledge in a region or location where they can have a competitive advantage in Dry Valley. So we've spoken to some groups in terms of helping them start that and us taking a royalty on it and working with counterparties to partner on opportunities there. But in the short term, the immediate focus is on the royalty side.

Thank you. We've been getting a lot of questions about the share price, so I'm just going to ask a general question. Can you please comment on your share price performance compared to your peers?

Yes, I think our share price has come off. It's in terms of the junior gold royalty companies. I think we've come off broadly in line with those. Certainly in terms of, if you look at our underlying performance from a financial perspective, this is the second highest quarter of revenue the companies had. And in actual, in terms of operational performance, it wasn't the strongest quarter that we've had. So I think that's really encouraging because from an operator perspective, maintaining guidance, we're actually expecting to see better quarters than the one we've just had into an increasingly high gold price environment at the same time as, again, we've guided to before, we're going to have lower costs on the G&A front. So from a revenue perspective, from a financial position perspective, we're the strongest we've been. I think in many years, which is paying down $10 million of debt in the first half of this year and making an acquisition recently that was fully financed from cash on hand, not needing to go to the market. So from that perspective, I think the share price today is not at all reflective of the underlying fundamentals of the business. And look, I think we recognize that there is limited liquidity in the market. And in an environment where there's limited liquidity, often you see that share price weakness, it doesn't take a lot to impact it down, but I don't think that's driven If you look at it on a revenue per share basis, I think we're almost at the highest on a revenue per share basis that the company's been in certainly for a number of years. But in addition to that, we have more exposure through our pipeline and through our wider portfolio than we've ever had by a very significant margin in terms of the broader portfolio. on a per share basis on an overall company perspective financial benefit. We're ticking a lot of boxes in terms of strength. I know it's frustrating. when the share price doesn't match up to that. And to the earlier question from somebody around management and insider buying, again, I think where and when we are able to, more especially than ever at the current price, I think we'd love to take advantage of it. And we've just got to find a window where we are able to do that. And look, in terms of the broader portfolio, and then where we are with the share price. I think that's also why one of the topics under discussion internally is putting in place a normal core fiscal bid, potentially with the opportunity to buy back shares when it does, in our opinion, reach a valuation that is sufficiently attractive for us to go out there and we're actually delivering really good returns by buying back shares. So I hope that addresses the question.

Excellent. And, you know, you mentioned this unprecedented revenue growth in the first half of the year. Do you expect to see that continue?

Yeah, maybe, Dave. Dave can probably talk to that quite well.

Yeah, absolutely. So, I mean, aside from a fantastic gold price performance through the year. So I think at the start of the year, we were talking $2,000 gold. And it looks like it's powered past 2550 gold, which is definitely helping all of us. We've had a couple of new royalties come online. The key one there being Bonacrua. And that's now had three full quarters in the royalty area. So we'd expect that you're paying us over around a million dollars a quarter. Yeah, the real uplift that we'd expect in the second half of the year is also an allied mine, and that's Diba, which is a satellite deposit to Satiola. And again, we're still waiting for exact guidance from allied there, but they're talking to material contributions to Satiola's revenue there. So yeah, we'd expect significant growth in the second half of the year. And we talked to our guides and they waited to the second half of the year. So looking forward to that to continue. both in terms of ounces and in terms of dollars.

Excellent. And let's talk about paying down debt, as you alluded to before. Do you intend to keep paying down the debt at the same rate that you have been for accelerating it?

Yes, I'm very, very, very pleased that we were able to repay $10 million in the first half of the year, five in each quarter. I think we certainly look to the facility, which is an extremely low cost from National Bank and CIBC, so it's like a plus 3% currently at the moment. So it's one of the advantages that we have with our revenue-backed asset portfolios that we are able to access these low-cost, non-diluted sources of finance from mainstream commercial Canadian banks. But yeah, I think definitely the view is to use it as a true revolving facility. And so additional cash will be paid down into the revolver and then we take it out as we need it for transactions.

Excellent. And there's been a few comments on your G&A costs and future expectations. Can you comment on that, please?

Yeah, absolutely. So we've had a couple of one-off costs and that's really mostly around departure costs of senior management and the disposal of the exploration business and the monetisation of the exploration business. I think now we're really through the majority of that. And so I think what we'll see going forward is a much lower G&A than we've historically recorded so far. Now it's just the team is now very stable. I've got it in place to grow the business. So I think year on year, we'll see it lower. And then I'd expect it to be lower again through 2020. Excellent.

Next question. Are there any lithium minerals documented?

Look, as far as it's not something we're focused on. I think, look, we really, the key tungsten asset we bought there in Mactan, we really bought that for the tungsten deposit that historically has been explored and also been through six, seven years of permitting. So that was the prime driver, and we haven't focused on any other quantities there.

Okay. The next question has to do, again, with royalty generation, which you have answered, but the bulk of the question is some of your peers have royalties on significant discoveries like silicon. Do any of your assets have significant exploration potential?

Look, the short answer to that is absolutely. I think the Probably two that we mentioned that are at a very early stage but really high discovery potential are the two we have on the HCK project in Rwanda. And that is a project that Rio Tinto recently did country entry, and Rio Tinto is the second largest miner in the world, recently did country entry into Rwanda to JV this project specifically. And you saw the chairman of Rio Tinto going to Rwanda, meeting the president, So, you know, that is an unusual step for one of the majors to take in regards to into a brand new unexplored project. But it is a highly prospective lithium pangolins type, never explored in Rwanda. So that really helps discovery potential and I think our understanding is they're going to be drilling later this year, which for us is pretty material in terms of seeing what the upside and discovery potential is on that royalty. And then the second one, and we did reference it as well, is Egypt. And at the time, we did the deal with Intu Metals on our Egyptian portfolio. We held approximately 2,000 square pundits of ground in Egypt. So I think we were the third or fourth biggest license holder in Egypt after sentiment. It's a major operator there and some for majors. So that is a very material landholding in a region that is exceedingly underexplored historically. And what we have as a partner in Two Metals is we have a group that is private. They are funded. They completed their first drill program, I believe, before they had a full website up and running. So the emphasis and the money is really being spent in the ground with a really strong technical team, and they don't need to go out marketing, and they don't need to list a company. So they can just focus on the exploration work. And again, our understanding is that the second drill program they've got is upcoming, and I think that we will be able to put out some results following that second drill program, which will be coming up in Q3. So we haven't shared anything to date, but I think once they have that second drill program completed, I think we'll be in a position where we can put out some news regarding the work they've done there. And that is ground that's never been explored before. And it's really the... All the license areas that they're focusing on at the moment. That's two examples from the portfolio where I think we've got really, really good discovery potential. If you look across us today, we've got approximately 10 producing royalties out of a portfolio of, call it 70 to 80 in total. So that's clearly a very large number across the rest of the portfolio that we don't often talk to. But a lot of exploration going on there from our partners and counterparties. And the great thing with the royalty model is that we are not paying for that optionality. So the more optionality we can layer into our portfolio, the more projects we can have where there are good, well-regarded, well-financed, actually competent management teams progressing those projects at no cost to us, the more lottery tickets we have in our portfolio. And if we keep doing that and we keep bringing those assets at really low cost into the portfolio, I think sooner or later we're going to benefit from increasing discovery success, as you say, and point out that some of our peers have had on some of the projects they held.

Excellent. Would you consider alternative financing structures such as convertible debt that provide optionality for both the company and the investors?

Again, maybe a good one for Dave to answer that.

Yeah, I think we're certainly well supported with the financing that we've used to date. So whether that was in the early days of the company, two facilities with spot results lending, which was incredibly flexible and got us to a point to acquire some incredible assets, reducing dilution to our shareholders at the time, then graduating to senior bank debt with, as I said, with National Bank and CIBC. Now, they've been incredibly supportive at, I think, a very, very low cost of capital. I would say they've said so for plus 3%. So that would certainly be much lower than cost of capital to the company than other sort of more mezzanine products. I think we've also been strong at using our equity at the right point in time as well. So, for example, the cactus royalty that we acquired from RCF over Arizona, Sonoran Cactus Project in Arizona, And, you know, the RCF were very keen to participate as shareholders of the company and have been very supportive since. So I think, thankfully, because of the quality of the portfolio and that we're, you know, well beyond $20 million of revenue now and should be generating material cash flows going forward, we don't have to have a look at alternative options. You know, it can just be the lowest possible cost of capital and least dilution to existing shareholders to grow.

Excellent. And the last question of the day, as we are at the top of the hour, what do you feel is missing or lacking in the current portfolio? In other words, what are you looking for in your next transaction or transactions?

Look, we've all got a lot of strong views on the opportunities and ideas out there. We have, I think, what we regard internally as two cornerstone assets at this stage that are in production in Casarones and Kalawinda. So I think we're always looking to add another. And alongside that, I think we've We've started really in the last 18 months to bring in some high quality development, advanced exploration projects into that pipeline as well. And there's a few of those we've spoken to over the course of today. But I think for us, being able to continue to add revenue into the portfolio at the same time as bringing in development assets and strengthening the pipeline, and always keeping an eye out for something that we've probably cast as a really cornerstone, long-term, cornerstone asset for the company. So I think those criteria are some of the key things we look for, and Dave, if you would add anything from that, or do you think it covers it?

No, I think it's exactly right, Fred. I think, as I just said, we don't need to go out and chase revenue. We don't need to go out and overpay for revenue. We've got an excellent base of assets. As Fred said, it's very heavily weighted to two excellent assets in tier one jurisdictions operated by absolutely world-class mining companies. I think what we are looking to do is leverage that base. I think we've probably been looking to build out that pipeline a little bit more where But then obviously looking to get surprised on the upside, for example, with Cactus and the recent PEA, which we think has materially improved the economics of the project. So I think that's really what we're looking forward to most is how we can use the base that we have to grow the company and go after, you know, the next cornerstone asset.

Thank you. Thank you, gentlemen. As we are at the top of the hour, we will now end the Q&A session. If you have any other questions, please forward them directly to management. Fred, would you like to say a few words to your viewers before we sign off today?

Well, thank you very much, first of all, for everyone for taking the time to attend. I think we will continue doing quarterly calls going forward and hopefully set a regular consistent cadence of that and as part of a initiative to I think coming into September and as people are coming back to the office after some holidays I think really try and get the story out there and market the story, you know, help the stock because what we've got is an underlying funding month and every quarter that goes by and it puts us in a really good position to be able to make good choices between new acquisitions, paying down debt, dividends, buying back shares, all of the above. So I think thank you all for your time and patience and look forward to staying in touch and please do feel free to email us if you have any questions. We always say that at the end of all the meetings and we're really sincere in saying that we'd like to hear from shareholders and

any feedback you can give us always welcome so please feel free to reach out if you if you do have anything you'd like to say thanks again thank you very much gentlemen and just a reminder that this town hall will be available on the company's website for replay and across all of our socials within the next 24 hours before we sign off please ensure that you fill in the short questionnaire at the end of the presentation this helps us and the company communicate more effectively with you in the future. Thank you for joining us.