Elemental Royalty Corporation

Good day, ladies and gentlemen, and welcome to the Elemental Altus Royalties Corporation Q3 earnings call and webcast. As a reminder, all participants are in a muted or listen-only mode to cut down on any background noise. Later, you will have the opportunity to ask questions, and instructions will be shared at that time. To get us started, I'm pleased to turn the floor over to CEO, Mr. Frederick Bell. Please go ahead, sir.

Thank you, everyone, for joining our Q3 call today. This will be the last Q3. quarterly call as Elemental Altus Royalties, because for those paying attention to all of our announcements, we shortly after our Q3s announced the closing of the merger with EMX Royalty. So I am here on this presentation as the CEO of Elemental Altus, and I'll be going into the COO and President role of Elemental Royalty Corporation. And with me is Dave Baker, who is the CFO of Elemental Altus Royalty to run through our Q3s. And he will be assuming the Chief Investment Officer role for Elemental Royalty Corp moving forwards. So with that, if we can go to our highlights for the third quarter, I think the overall message here is that it's the strongest financial position in the company's history. Really good continuing cash build. We had for Q3 adjusted revenue of $8.2 million, and that is compared to Q3 in 2024 of $4.8 million. We announced the merger with EMX, and the day after our results came out, We announced the closing of it in November, and that creates about a billion US dollar market cap royalty company, a portfolio of over 200 assets and four really cornerstone royalties to build the company out going forwards. We also announced two acquisitions in September. And that was the Dugbe royalty and the Laberton royalty in Australia. And we closed the Dugbe royalty and we expect to close the Laberton royalty shortly this quarter. We have about 100 million US dollars of non-dilutive capital that we have available to deploy from today. And that is both from our credit facility that is existing and also our cash on hand. And then lastly, alongside the closing of the merger with EMX, we also closed the previously announced $100 million financing with Tether that was part of the merger with EMX. So a bit more detail here into the quarter. And as you can see, really strong continuing year-on-year growth in revenue, EBITDA and operating Cash flow, we had Q3 royalty revenue of US 6.9 million and adjusted of 8.2 million, up 70% on the comparable period for 2024. And just to remind everyone, really the key difference there between a royalty revenue and adjusted revenue number is the inclusion of our Casarones royalty in that adjusted number. We had adjusted EBITDA there of 6.2 million US, which again is up nearly 70%. on the Q3 period in 2024. And we have adjusted cash flows from operations of 5 million US dollars up nearly 80% on Q3 2024. In terms of revenue guidance increase and geo guidance, we are on track to meet the midpoint of our gold equivalent ounce geo guidance. And that is between the 11,600 and 13,200 geo range, and that translates to increase record adjusted revenue of approximately 42 million US dollars. And that is basing it on a Q4 number of 4,000 US dollars gold. So again, just to make that really clear for everyone, our gold equivalent ounce number in attributable ounces from our operators and counterparties, we are on the on the basis of using a higher gold price in the Q4 quarter, of which we are approximately halfway through at the moment. Our Q3 gold equivalent ounces came in at 2,362, which is up about 22% on a geo basis from Q3 2024. Our liquidity has improved significantly on the back of the cash flows. And we mentioned here the Kerali Sud royalty, which continued to contribute in Q3 with about a million dollars of revenue. And year to date, the royalty has generated now over $10 million in revenue. And that was, for those who recall, that was a first production from Kerali Sud, first royalty revenue coming in at the beginning of this year. so it puts us in a really strong liquidity position and building on that is about 15 million dollars we have added in milestone payments as well over the course of the year so pro forma balance sheet for the post merger with with emx is about 48 million us dollars i would note that in the last 48 hours emx also announced the acquisition of the fukios royalty so this is this number is pre-that and on top of that we have about 50 million credit facility available for drawdown so at this stage i'll hand over to elemental analysis cfo dave baker and our moving forward cio to run through the rest of this quarterly presentation thanks uh thanks fred uh another couple of minutes on the emx merger because uh

It really is a genuinely transformative transaction for both companies. The combination creates a billion dollar royalty company, a scale where very few royalty companies have ever achieved. Together, we're managing more than 200 royalties with a larger base of cash flowing and media cash flowing assets. What also makes this merger really compelling is the strategic fit between the two portfolios and the two businesses. Metalthus bringing strong precious metals exposure, a track record of discipline acquisitions, EMX bringing an exceptionally broad business, globally diversified, and real cornerstone royalties such as TMUK and Leadville. If you look at those combined portfolios of cornerstone assets, adding Casarones, Carlawinda and Laverton, we have a revenue and growth foundation that's high quality but also very much backed which are two very important metals for us. Companies have generated consistent value over a long period of time and I'm confident that together we deliver even more growth through that scale, flexibility to now compete for larger and higher impact transactions alongside our new large investor Tether. The merger really does represent a clear step change for Elemental and really positioned just firmly in the intermediate royalty space with enhanced access to growth and to capital. So turning to the transactions that we've announced in the quarter, starting with Laverton. Laverton's exceptionally high quality royalty opportunity. We're acquiring an additional 2% gross revenue royalty of the Genesis Metals consolidated leveraging project that they acquired from Focus. This is one of the largest undeveloped gold systems in Australia. It's Australia's third largest undeveloped gold project. Over 300 square kilometres, more than 2.1 million ounces of M&I resources, 99% of those resources within existing mining leases. So it really does reduce that permitting and development risk. Genesis, $4 billion Australian operator, being very clear about the strategic rationale behind acquiring the Laberton assets, provides high-quality mill feed for their processing hub that's just 30 kilometres away. So from our perspective, and the reason why we did the transaction, is it creates that potential for fast development path, goal-focused in WA, and Genesis has already come out saying that they're fast-tracking opportunities and drilling at Beavisley Creek. Sorry, at Laverton, with a new well-funded operator and a real district-scale plan, we believe Laverton's potential to be one of the most meaningful group competitors to the portfolio over time. These are exactly the kind of deals we want to do. Dugbeck is another significant and strategic acquisition, one of the largest undeveloped gold deposits in West Africa. We required a 2% to 2.5% NSR, over 3.3 million measured and indicated ounces, reserves of 2.8 million ounces. It's got meaningful scale. Previous study work has suggested a 14-year mine life with over 170,000 ounces of gold produced per year. I would note that that was done at a $1,700 gold price, so well below today's gold price environment. On those numbers, we believe this royalty could be generating for us more than $10 million annually as they say production in royalty revenue. And again, it would make Duke Bay one of the most significant contributors to our portfolio. Lots of catalysts from the Pacifino team. We're expecting an updated feasibility study, and then they're looking towards a financing and construction decision in 2026. So in terms of the quarter, looking at some of our producing assets, which really do underpin our financial performance. Capricorn had another strong quarter with more than 32,000 ounces of gold produced. Asset continues to perform consistently, efficiently, and as previously announced, they've had that rate yield through approval in hand for the major expansion to take production to 150,000 ounces of gold a year. So we've got some impeded growth into our 2% NSR. Casarones, again, continues to be a pillar of stable revenue for the company. We're expecting higher copper head grades in the second half of 2025 and expected for the Lundins to hit their four-year production guidance. There was a bit of a weather-related delay in Q3 sales, but we'll expect to get those back in Q4. Bonapro continues to perform well, nearly 20,000 attributable allowances in Q3. Allied have been clear that they're expecting processing high-grade material in the second half of this year, and across 2026 and 2027, and that gives us good visibility on higher revenues at these high gold prices. Kerali Sur continues to perform and continues to pay. And I think what's exciting there is that they are still able to co-process or at the main satiola. And also we're looking forward to updates from there on the future production at Kerali Sur. Wanyon, we are still awaiting royalty payments due to the external audit by the government of Burkina Faso, and we will update you when we have more information at Wanyon. So in terms of the financial highlights, strong operating performance, had another quarter of significant financial growth year-on-year, so compared to the same quarter in 2024, adjusted revenue increased to 70% year-on-year, adjusted EBITDA up 67%, and that just translates straight through with that margin expansion to nearly 80% increase in operating cash flow. These are attributable to both increased balances being delivered in the profile and increasing metal prices. In terms of the bridge for cash flow, generated $5.2 million in free cash flow for the year. We did start to have some costs associated with the AMX merger affecting free cash flow, but still strong numbers reflected by strong revenue in the quarter and some ESF partly offset by transaction-related G&A merger costs. Another couple of one-offs in the quarter as well with acquiring the Goodbay Royalty, which you can see on the next slide. We made an initial payment on the Leviton GRR to lock that in, so we'll close that in this quarter. Received, as expected, the $1.9 million through the royalty buyback, the partial royalty buyback at Arizona Sonoran Sparks Elliott, and through the money share auction exercises, received $2.2 million. I think importantly as well, we've fully repaid our loan in Q1, which lowers our cost structure and

rather than interest costs.

And then this is just to help bridge our financial statements to... show our underlying performance, we do still pick up Casaronas below the line there as a share and profit from associates. So that's represented there at number two. We are looking at ways to change that now that we have a significantly larger portion of Casaronas with the EMX transaction. So we may be able to present that differently at year end. Performance is in the quarter, as expected. We were very clear that we were expecting production revenue to be weighted to the first half of 2020, sorry, the first half of 2025 through the catch-up at Coralie Slip. And as Fred said earlier, we are on track to meet the midpoint of GEO guidance for the year, and for the second time this year, I've upgraded our revenue guidance, which is $42 million at the midpoint, to reflecting higher metals prices. Equities on margins remain high, and back to where they should be in the 75% to 80% affected somewhat in the quarter by starting to accrue merger-related costs as a one-off. And likewise, I'm very happy with the $5 million of operating cash flow, including Castrone's dividends in the group. Clearly, Q2 is going to be an outlier for a very long time, reflecting that one-off payment by Corrales Heath catching up from 2024. But we are seeing cash flow in line with rising metals prices and keeping a fixed, sustained cost base. We have received, as expected, the material one-off payments in the year, led with the start of the year by the distribution from Ming Settlement. But then, as discussed earlier, we've had some milestone payments from Crowley's Hood and partial buyback at the Cactus Royalty to make nearly $15 million of buybacks and milestone payments in the quarter. So ProForma, market cap of the company, $1 billion, as Fred said, $48 million in the bank, estimated ProForma, less the $6 million of BMX paying for the Cookeos acquisition. We have made a small investment in gold directly through Tether this quarter. So we've got a million dollars of actual exposure to gold. We keep that as a small proportion of our cash availability. And then post-merger, Tether come out as 32% shareholders of the company with over 50% of the register as institutional. I would say as well that our NASDAQ listing remains well-progressed. Now that the US government and the SEC have reopened, we'll be looking to get on the main board of the NASDAQ as soon as possible. And with that, I might pass over back to Fred to sum up ahead of any questions.

Thank you, Dave. And look, I think the really key story here is closing the merger this week with EMX. And it's been something that we have been working on and discussing for a long time in the background. And I think really delighted to be able to get that announced and now closed alongside in total three acquisitions between EMX and Elemental Answers over the last two months and in parallel with the financing from Tether, the share consolidation, And what we hope will shortly be the NASDAQ listing once the SEC gets to reviewing our file and finalizing that. So we will then have a company with a really high quality portfolio cornerstoned by four key assets. We have growth from three of those assets going forward. So that is Timok moving into the lower zone. It is the mine expansion already under construction at Karlawinda. And it is the Leyverton project going into the Genesis's mine plan at the Batmobile mill there. So I think all three of those are really material upgrades in terms of revenue from some of our cornerstone assets. And it puts us in a position where the company has a really strong un-leave-it balance sheet to deploy into new acquisitions going forwards. And we have the benefit of both the EMX and the elemental artist teams combined in terms of looking at business development opportunities. So I expect us to continue to be very active on that front. With that, we'll hand over to questions. And thank you all for listening.

And a reminder to our phone audience today, if you would like to ask a live question over your telephone line, simply press the star and one on your telephone keypad, pressing your line star and one. I will open your lines one at a time and invite your questions. And gentlemen, presently, we have no signals from our phone audience.

Okay, so it looks like we've got a question, I guess, through the chat. I guess the first question I can cover. So the question, will we get any of the EMX Q3 financials? So no, I guess EMX is now delisted, so we'll not be putting out its Q3s. What we will do is we will provide at year end a summary of the EMX financials for Q3 and the full year, so we won't lose those numbers forever. And then Elemental and the combined company will pick up EMX's share of profits and cash flows from the date of the major close, so that's yesterday, the 13th of November. Second question, Fred, might pass to you. Will collective G&A expenses be lower in the combined company?

Yes, thank you for that question. I think the answer is yes. We're expecting multi-million dollar synergies. The teams are currently working through that at the moment, and we will have a budget for the 2026 year that will be agreed, and I think will enable us to quantify some of the numbers across the team at the combined company at the moment. So, yes, there will be synergies. The exact number we will put out alongside our budget for next year, and I think that's putting these two companies together you know clearly we get some immediate synergies in it but i think one of the added benefits is actually being able to cover more ground and two material i think going forwards will be two material acquisitions that we announced just before the merger and we've closed one and i think really good to see umx team also announcing an acquisition this week so we're going to continue to be very active going forwards Now with a combined team, and we have integrated the business development teams, and we've had people over in both US offices and London offices, really working together to get on top of that going forwards.

Yeah, completely agree. Another question we had further is, are we expecting any new paying royalties? in the next few quarters, or any, just an estimate. Maybe I could start, is that we're expecting, I guess, on the EMX side, the Chappie mine in Peru is expected to restart production near term. We also have a producing royalty at Gedic Tepe that's currently playing on the off-site. They've got a sulphide circuit under construction at Gedic Tepe and also a sulphide circuit to reprocess the tails. So there's going to be new sources of revenue there. We also have a small royalty, a gold royalty in Australia called Western Queen, and they're looking at some contractor mining there as well. So yeah, near term, there is definitely some new royalties that are expected to start paying us. And then Fred, and this leads in, the question from Adrian is, Adrian, Dave, do we see better opportunities for royalty companies or individual royalty companies? Can we take part in more processes now we're larger and better access to capital?

Thank you for that, Adrian. I think the key part here is where we see the best value. And we have been really active in the last two months in royalty opportunities, individual opportunities, and we continue to progress those as well as some private portfolios. And I think as ever, we look across the board at opportunities and see where we can add most value to the company. But as we sit here today, I think on consensus now of numbers, Elemental Royalty Corp as a combined entity is actually trading at a better valuation and a lower valuation than any of our peers in the space. So actually, the best value company we would acquire today would be ourselves. So for the short term, we're very much focused on royalty opportunities where we see them. And yes, we are looking through processes as well. and we're familiar with how competitive those can be at times in the royalty space, but also we're now in a position where we can do some opportunities that we wouldn't have been able to do previously, and where the combined team has some better insights into some of those assets and companies than either of us would have had individually. So I think continuing to look at deals, both ones we generated ourselves, like Debay, like Labourton, and ones that we see coming through processes where we can see compelling value and they add to the company.

And then a question from Simon is asking about Tether communicating the intent around the AlphaStream option. Yes, so Tether have exercised their option to acquire the shares from AlphaStream. That was completed pre-merger. That was completed in October. So the 32% pro forma that Tether own of the company, that's inclusive of that option to acquire shares from AlphaStream. So that deal has been

That might be it in terms of questions.

Gentlemen, we have no questions from our phone audience today.

No, I think, operator, thank you very much. I think with that, we're good to close off our Q3 2025 call. And note that that is the last quarterly call that we will do with Elementum Altus Royalties. And going forwards, it will be as Elemental Royalty Call. So hopefully look forward to speaking to you all and hearing from you all again in the new year.

Certainly, and thank you. Ladies and gentlemen, thank you all for joining us today. You may now disconnect your lines, and we hope...