Elemental Royalty Corporation

Hello and welcome to the Elemental Royalty Corporation quarterly earnings announcement. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star 1 on your telephone keypad. For those of you viewing online, you can make questions at any time using the component on the webcast console. I would now like to turn the conference over to David Cole, CEO. You may begin.

Yeah, thank you very much, and thanks to everybody for joining. I'm particularly pleased to be here today representing this great company. What a wonderful time to be in the mining business with these strong metal prices, but I've had a chance to reflect on that when I woke up this morning. I was thinking about when I started my career, the mining industry was not very popular, and we're in a situation today where there's been a paradigm shift, and I'm sure we've all seen this. of people recognizing the strong contribution that we make to society across the globe. And that is recognized in commodity prices, but it's also been recognized in the capital markets, where many companies are starting to get the recognition that they deserve for their production. And more and more people are focused on understanding We're in a particularly good situation to take advantage of that. Those of you that heard us speak before, you know that we understand that royalties are phenomenal financial instruments. The value of mineral rights augments over time, and the best way to be exposed to that is through royalties, and specifically the optionality that the royalty instrument affords to us as the owner of that. And one way that we've done that and to create further portfolio effect as scale is rewarded within the royalty space, is to affect the merger between EMS Royalty Corporation and Elemental Altus Royalty. And I'm very pleased with how that merger has come to fruition and the results that we're seeing, which are producing the numbers that we have seen today in the quarterly report. And near and dear to my heart is the team, and it's my pleasure to introduce Frederick Bell and Stephan Wenger, a great example of the integration of the two teams. coming forward with an immense amount of experience base to put us in a position where we can make the right decisions to allocate your capital moving forward. So if we look at some of the highlights, we are gold-focused. We will remain gold-focused, but I'm very pleased that we, as per announcement today, we are augmenting our silver exposure. I believe that silver is a strong commodity in the current world from an industrial demand perspective, but also from an investment perspective. And to ensure that we remain precious metals focused so that we have the strong potential to be GDXJ index included in other various index funds that are focused on precious metals, on an ongoing revenue basis. We have 300 mineral property assets in the world in 20-some countries, and 200 of those are royalties. And this is a portfolio that has an immense amount of over $100 million a year in exploratory drilling ongoing, creating that discovery optionality. which is the real reason why you want to own royalties and royalty portfolios long term. We have crossed an important boundary from my perspective in the last quarter where we have reached the point where we feel very comfortable paying the dividend. And our inaugural dividend gives our shareholders the option to take that dividend with an in-kind instrument, with the XAUT tether gold stable coin. We're the first company to do this. I wouldn't be surprised if this ends up becoming popular within the business. And it's a nice option for our shareholders to have to be able to take the dividend in cash or in XAUT, which is fully convertible into physical metal on demand. I'll point out that our dividend payout ratio is modest. and that is because we're confident that we can continue to allocate capital within the space, document our portfolio, and do exactly what you want us to do. We've also increased our revolving credit facility to $200 million, and this is a good example of how the gaining of scale through the merger is increased our capital availability and decreased our cost of capital, enabling us to further our business transactions, and today's a great example with the deal that we have announced today. We've also uplisted now onto the TSX big board from the TSX Venture Exchange, and I'll point out that the augmentation of our liquidity, trading liquidity, on NASDAQ, which is done fantastically well. In addition to now on the big board on the TSX, our trading liquidity is multiples ahead of where the two companies were combined pre-merger. And we're very pleased to see that. Once again, that is very likely adding to the probability of us being included in a number of index funds in the near future, which is a salient point. There's a whole host of smaller deal flows that are ongoing within the company, and I'm pleased that even though we're in a competitive environment, we don't bemoan that competition. We're confident that we have the alpha to be able to outperform our competitors, and that's exemplified by the deals that we continue to do, both base hit, small individual deals that we're doing, in addition to M&As such as the one that was announced today. And I will point out that there will be a call specifically for this transaction with FISLA after this call later, in an hour after this call, in fact. And so we will focus on that. This call is to highlight the quarterly results. And with those quarterly results, I want to introduce the very capable Stephan Wenger, who will walk us through the record-breaking numbers that we have today.

It's a little bit funny that these fantastic financial results are going to get overshadowed by a really fantastic deal we announced this morning, but as a CFO, I'll take that any day. And I'm excited to share with you. Q1 of 2026 that we reported last night is really the first quarter of our combined results as the new combined elemental following the EMX merger. And I'm really pleased to report that the results are tracking even better than we anticipated when we did the deal. Today we're reporting record quarterly revenue, record EBITDA and cash flow, and we're well on track to meet our 2026 guidance. And on this slide, you can see that our revenue of $24.3 million is an 83% increase over the prior year for elemental. And if you annualize that number, you know, we're pushing up towards that $100 million run rate for revenue, which is advanced beyond our guidance on a revenue basis. From a GEO perspective, just about 5,000 GEOs sold during the quarter, which is right slightly just under our guidance for the full year. We're on track to meet that and demonstrating what we're going to be. at that 20,000 GEO a year level solidly. And from a cash flow perspective, nearly $18 million in adjusted EBITDA. I'll discuss our cost side on the next slide, but that EBITDA I see strengthening even more because this quarter we had quite a higher cost number than our anticipated annual run rate, just as you can imagine from all of the closing deal costs. the uplist on the TSX and NASDAQ, our inaugural dividend, upsizing the credit facility. We had quite a busy quarter, and that doesn't even speak to the fact that we are spending and quite active with respect to new loyalty acquisitions, which we also expensed during the quarter for most of those costs. So really excited about the $18 million in just EBITDA, 55% increase over the prior year. Operating cash flow of nearly $15 million, a substantial increase. And then, as Dave mentioned, we upsized our credit facility during the quarter as well. We have a $150 million undrawn credit facility with a $50 million accordion feature, so $200 million potential available, and add that to $70 million on the balance sheet. even after the cash component of the B-School transaction we announced this morning, will be net cash positive and fully ready to continue to transact in our space. And as we look a little deeper into the financials, just to follow up on my comment on a couple of the items, revenue continues to be strong. Our G&A expenses at $5.5 million are above our annualized run rate that I would expect. I would expect us to be closer to a $16 million annualized run rate on the G&A. Royalty generation expenses are right on budget and on track for a full year expectation there. We continue to generate strong cash flow. There were a couple non-cash items in the net income, including a mark-to-market on some warrants that are outstanding, and taxes and others. But we continue to generate strong results on a cash flow basis. You also see the first full quarter of full Casarones reflected in our revenue line item as a royalty instead of as an investment. So, on a comparative basis, we continue to show sort of that revenue plus attributable share of Casarones, but all of Casarones is baked into our revenue line for this quarter. And we're quite pleased to have Casarones along with T-Mark, Bonacro, and Carl Winda really driving these results from our cornerstone assets. Casarones with copper at $6.20 a pound right now, we're not going to argue with that either. And just moving forward to the cash flow bridge, we really had tremendous cash flow during the period and driven by collection of royalties primarily from our December quarter. Some transaction costs related to the credit facility and some deal costs that came out of it. We also had quite a positive impact from stock option exercises for some options that were expiring during the quarter. But a very clean, very targeted growth in our cash flow that we're quite pleased with. I'm not going to spend a lot more time. It was a fantastic quarter, really driven by our assets, and I'd like to ask Craig Bell to go ahead and give you an update on the portfolio. And again, I invite you all to join us for the conference call on the transaction in about 45 minutes' time.