Gold Royalty Targets Sixfold Production Growth as Gold Prices Lift Royalty Outlook

Key Points

• Gold Royalty targets roughly sixfold growth in gold-equivalent production over the next four years, rising from about 7,000–8,000 ounces this year to nearly 30,000 by decade’s end. The company projects potential revenue of at least $150 million by then, compared with $7 million–$8 million in annual cash general and administrative costs.
• The royalty company expects its cash-flowing royalties to increase from 10 to 20 by the end of the decade, with about 70% of projected growth coming from already-constructed assets ramping up. Gold Royalty is debt-free, has been free-cash-flow positive for two years, and cites roughly $200 million in available capital for potential investments.
• Gold Royalty said its portfolio is more than 90% tied to gold by net asset value, while copper is expected to contribute about 30% of near-term revenue. More than 80% of its assets are concentrated in Nevada, Quebec and Ontario, and the company benefits from exploration spending by mine operators without funding those programs itself.

Gold Royalty NYSEAMERICAN: GROY outlined its view that the royalty business model is positioned to benefit from higher gold prices and mining-sector inflation, while highlighting a portfolio it expects to deliver substantial growth in gold-equivalent production through the end of the decade.

During a company presentation, David of Gold Royalty said rising nominal interest rates have been accompanied by accelerating inflation, leaving real interest rates “effectively flat or declining.” He said continued currency debasement and money-supply growth should remain supportive of gold prices.

David argued that mining producers face pressure from reserve replacement needs, share issuance and rising operating costs, particularly labor and energy expenses. In contrast, he said royalty companies can offer direct exposure to commodity prices and exploration success without assuming mine-level capital or operating costs.

Portfolio growth and balance-sheet position

Gold Royalty said it has more than 260 royalties, with 10 currently generating cash flow. The company expects that number to increase to 20 by the end of the decade. David said the portfolio is fully paid for, with no capital calls, installment payments or step-down provisions.

The company expects gold-equivalent production to rise about sixfold, or roughly 500%, over the next four years. David said Gold Royalty expects more than 60% growth in gold-equivalent ounces this year and reported that revenue doubled during the first half compared with the prior-year period.

According to the presentation, approximately 70% of the projected growth is expected to come from assets that have already been constructed and are ramping up. Another 20% is expected to come from satellite deposits at existing mines, where infrastructure is already in place.

David said the company is targeting nearly 30,000 gold-equivalent ounces of production by the end of the decade, compared with approximately 7,000 to 8,000 gold-equivalent ounces this year. He said that, under the company’s gold-price assumptions, this could translate into at least $150 million in revenue by the end of the decade, against cash general and administrative costs of roughly $7 million to $8 million.

Gold Royalty said it has been free-cash-flow positive for the past two years and is debt-free. David cited a $150 million available credit facility and approximately $50 million in pro forma cash, including proceeds related to in-the-money warrants maturing in coming months. He said the company has about $200 million of capital available for potential royalty investments without returning to equity markets for acquisitions.

Gold focus, copper revenue and jurisdiction exposure

More than 90% of the portfolio’s net asset value is tied to gold, according to Gold Royalty. However, David said roughly 30% of near-term revenue is expected to come from copper, reflecting the Vares acquisition as well as the Pedra Branca and Cozamin royalties.

The company identified several assets expected to support future growth, including Odyssey, the underground extension of Canadian Malartic; Ren, the underground extension of Goldstrike; and Côté. David said Gold Royalty holds royalties on three of the five largest-producing gold mines in North America, including Canadian Malartic/Odyssey, Ren and Côté.

Gold Royalty also emphasized the geographic concentration of its portfolio. David said more than 80% of the portfolio by number and value is located in Nevada, Quebec and Ontario, which he described as low political- and regulatory-risk mining jurisdictions.

Acquisition strategy and organically generated royalties

David said Gold Royalty expanded from 18 royalties and no revenue shortly after its formation more than five years ago to its current portfolio through peer-company rollups and individual royalty purchases. The company used acquisitions in 2021 to add approximately 150 royalties, he said, before shifting toward cash-flowing and near-cash-flowing royalty investments and project financing.

The company also uses a royalty-generator model, under which it stakes claims near existing mines and deposits, then farms out properties to neighboring operators in exchange for royalties. David said about one-third of the portfolio was generated organically at no cost to shareholders.

Gold Royalty said operators across its royalty properties are spending about $200 million annually on exploration and conducting an estimated 500,000 to 600,000 meters of diamond drilling each year. The company said it does not contribute to those exploration budgets but can benefit if exploration expands underlying operations.

In response to a question about assets investors may be undervaluing, David pointed to Tonopah West, owned by Blackrock Silver. He said Gold Royalty staked the property in 2021 at no cost, sold it to Blackrock Silver in 2024 for about $1.5 million in cash and retained a 3% net smelter return royalty. He said the project could potentially enter production by the end of the decade.

David also said institutional ownership has increased since Gold Royalty’s initial public offering and noted that Tether has become a meaningful shareholder. He said the company is covered by about seven sell-side analysts, with an average target price above $5 per share.

About Gold Royalty (NYSEAMERICAN:GROY)

Gold Royalty Corp. (NYSE American: GROY) is a precious-metals royalty and streaming company. Rather than operating mines directly, the company provides financing to mining and exploration companies in exchange for contractual interests in future production, such as royalties, streams and other mineral-rights payments.

Its portfolio is focused primarily on gold properties in the Americas, with exposure to mining districts in the United States, Canada and Mexico. Gold Royalty's interests may cover producing, development-stage and exploration properties, allowing the company to participate in potential mineral production without bearing the direct operating and capital costs associated with owning and running mines.

Gold Royalty was established as part of the growth of the modern precious-metals royalty sector and became publicly listed in 2021.

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