Gold Royalty Corp. (AMEX:GROY) Q4 2022 Earnings Call Transcript

John Griffith: Well, one of the beauties of our portfolio, as I mentioned, is we’ve got some of the largest and most prolific gold producers in the world, spending considerable amounts of money drilling and further advancing all of the underlying assets in our portfolio. So without us having to do anything, there’s a natural migration of the assets within our pipeline towards production. So in addition to those that are coming online, which we’ve already discussed, we’ve got this further impetus for growth. But that’s all organic and it’s all paid for. We’re certainly very active. In fact, I’d say we’ve probably never been quite as active and looking at different opportunities. You might say, well, why haven’t we transacted?

And I’d say largely because of our discipline in trying to find the right opportunity. That’s going to be a good fit with our portfolio, that’s going to be additive to our strategic imperatives, that’s going to add value to our net asset value per share. And so we’re looking at opportunities that I would say would be across the spectrum, consolidation opportunities, writing new royalties, providing fresh capital to operating companies, looking at portfolio assets, looking at single assets. And I’d say also that our organic royalty generation, both in Nevada and Quebec, have both been very prolific for us in generating new organic royalties. I think the one thing I would say though, I’d probably tone down the amount of consolidation that’s going on.

We’ve already seen a considerable number of companies that have either consolidated already or certainly changed in form. So I think the opportunity for corporate consolidation is simply a narrower window. But we’re busy in all aspects of the corporate development spectrum.

Joanne Jobin : So to answer one of the questions that has been asked, so you are open to looking at any M&A possibilities in the near future, given the consolidation we’ve seen in the space recently?

John Griffith: Absolutely. I mean as I said, the one thing we do have to make sure is it’s a good strategic fit. We have to be disciplined. And again, we look at a significant number of opportunities. I know David said this before. We operate almost in a perpetual state of due diligence, and I’d love to be able to say definitively and handicap the possibility of those opportunities turning into live transactions, but there are so many factors that are at play that make it impossible to really give any confidence around that. Suffice to say that we’ve never been as busy in the corporate development group here at Gold Royalty.

Joanne Jobin : Thank you, John. We’ve had a lot of questions about this by the way, what is the percentage of Eric Sprott’s current GROY holding?

David Garofalo : It’s really hard for us to discern any individual share ownerships unless they’re doing public filings. So hard to say. But we know that we’ve inherited some really high caliber shareholders over the course of our existence since our IPO in consolidating Ely, Golden Valley and Abitibi Royalties. And that included not just Eric Sprott, but Rob McEwen, Jimmy Lee. These have been good strategic shareholders. And I should add, we also have Nevada Gold mines, which is the joint venture between Newmont and Barrick as a significant shareholder as a result of the acquisition of the Granite Creek Royalty last year, they’re, I think, sitting at around 6% based on public filings.

Andrew Gubbels: I think I’ll also add that Eric Sprott was a big believer in Ely and Ely assets, and they still remain within Gold Royalty Corp. So investors still get exposure to those assets through our shares, certainly.

Joanne Jobin : Thank you. Andrew, there were a lot of questions regarding perceived, I’m going to say perceived dilution of the stock. Can you comment, please?

David Garofalo : I’m not sure what you are referring to. We haven’t had any major share issuances other than for share based compensation, restricted share units to our Board of Management forms actually majority of our compensation is sharing based compensation. But the last big significant share issue, as a result of the M&A, we’ve done. And we haven’t issued any stock for cash of any significance, really, since our IPO when we raised $90 million.

Joanne Jobin : Thank you, David. On average, how much time will the development projects take to generate income? One to two years, two to three?

John Griffith: I I’ll take that one. I think maybe if we could turn back to, I’m going to turn back to our growth slide here. So basically, as I mentioned in my prepared remarks, we’re looking at 60% growth from 2023 to 2025 based on analyst consensus estimates. So that hopefully gives the person asking that question an indication that our revenue is going to grow significantly over the next couple of years. And beyond that, it takes an entire next step leap as Odyssey underground and production from the Shaft comes online. Obviously, we’ve got the royalty on the southern portion of Cote. When that comes online in 2024, our royalty basically sits right over the near surface mineralization, so we expect significant revenue from Cote, certainly in its early years of production.

I think Granite Creek is another asset that’s going to be a massive contributor to our relatively near term revenue appreciation. And I think beyond that, as I mentioned, we have 14 assets that are in that development pipeline pushing towards production. And for that reason we haven’t obviously provided guidance specifically out to 2027. But you’ll see here that we anticipate our revenue will be depending on whatever commodity prices you want to assume, at least at the $50 million to $60 million level, again, without us spending a single $0.01, without us issuing a single share.