What Elemental Royalty (ELE) Said on Its Q3 Earnings Call

Key Points

• Record performance: Elemental reported nearly $70 million in revenue and about 15,100 gold equivalent ounces for the first nine months of 2026. Third-quarter revenue came in below expectations after storms disrupted production at Chile’s Caserones mine.
• Acquisitions and cost savings: The Vizsla deal closed, and Elemental began closing its Orion portfolio acquisition, which management expects to add about $20 million in cash flow next year. Divesting the royalty-generation business is expected to produce annual savings exceeding $6 million.
• Debt reduction outlook: After drawing additional debt to fund Orion, the company had about $210 million outstanding. Management expects net debt to adjusted EBITDA to fall from roughly 2.5 times to just above one times by the end of 2027, with debt repaid over two to two-and-a-half years.

Elemental Royalty NASDAQ: ELE reported record year-to-date revenue and gold equivalent ounces through the third quarter of 2026, while executives outlined plans to reduce costs and pay down debt following a series of acquisitions.

Revenue was just under $70 million for the first nine months of the year, and gold equivalent ounces, or GEOs, totaled just under 15,100, CEO Frederick Bell said. Both were records for the company. CFO Stefan Wenger said the results reflected strong asset performance and the benefit of the company’s merger with EMX, which had not occurred in the comparable prior-year period.

Bell said revenue in the third quarter was lower than expected, principally because storms in Chile disrupted production at the Caserones copper mine. Revenue from the asset was approximately $3.5 million lower than in the second quarter. He said the mine’s operator had lowered its annual guidance but expected production to recover in the fourth quarter.

Acquisitions and cost reductions

Elemental completed its previously announced Vizsla transaction in September and closed the first stage of its acquisition of a portfolio from Orion after the quarter ended. Bell said the Orion assets would contribute for part of 2026 and for a full year in 2027, with the final asset expected to close in the first quarter of 2027.

The Orion portfolio includes a silver stream on i-80’s Ruby Hill project, a stream on Mansa Resources’ Kouroussa mine, an interest in Silverco’s La Negra mine, a stream on Endura’s Snowy River gold mine and a royalty on Dakota Gold ground, Bell said. He said Snowy River was expected to produce its first gold in December.

Bell projected that Elemental’s existing producing and development assets could grow to more than 50,000 GEOs in the early 2030s. He cautioned that revenue per share could decline in the short term as the company invests in growth, though management expects the additions to support future free cash flow per share.

Alongside the acquisitions, Elemental is divesting its royalty generation business. Bell said the unit represented approximately 1% or less of net asset value but accounted for 60% of personnel and more than 25% of general and administrative expenses.

Wenger said integration costs following the EMX merger, severance and legal work related to the divestiture contributed to higher expenses this year. He expects fourth-quarter costs to remain in line with the third quarter before declining in 2027. Annual royalty generation expenses of about $5 million will disappear, he said, and total savings should exceed the $6 million a year previously cited by the company.

Debt and cash flow outlook

Elemental ended the third quarter with approximately $23 million in cash, Wenger said. It generated $13 million of free cash flow from royalties during the quarter and invested $63.5 million in the Vizsla acquisition and another $25 million in its investment in Quilla and the Chapi project.

Wenger said the company had $210 million of debt outstanding at the time of the call, including an additional $180 million drawn in October to close the Orion portfolio. It also held approximately $36 million in equity investments and had about $90 million of availability through its credit facility and accordion feature.

At current prices, the Orion portfolio is expected to add approximately $20 million in cash flow next year, Wenger said. Combined with lower costs, management expects net debt to adjusted EBITDA to fall from about 2.5 times to just above one times by the end of 2027, with a total debt payoff period of two to two-and-a-half years.

Wenger declined to provide a multiyear operating cash flow projection on the call, but said Elemental would issue 2027 guidance, including information on costs and the classification of streams. He noted that streams carry an ongoing cost component.

The company began paying a quarterly dividend in 2026 and also repurchased shares under its normal course issuer bid. Wenger said management expects to continue funding the dividend and increase it in the future.

Updates across the portfolio

At Karlawinda in Australia, Bell said Capricorn completed commissioning of a mine expansion on budget near the end of September. He expects the higher production rate to increase attributable GEOs to Elemental by approximately 30%.

At Pánuco in Mexico, Bell identified permitting and security as the principal near-term issues. He said the project was fully funded for construction, but its permit remained outstanding and the company was awaiting plans for a fuller return to the site.

Bell also highlighted drilling at Ruby Hill, where he said i-80 was conducting a 130,000-meter program and had moved the project ahead of two others in its development plans. Elemental expects an updated resource in the first quarter, he said.

Looking ahead, Bell said Elemental would continue evaluating acquisitions but could not predict whether 2027 would match this year’s deal activity. He said management was focused on transactions that add value per share, while maintaining flexibility to pursue either royalties or streams.

About Elemental Royalty (NASDAQ:ELE)

Elemental Royalty Corporation is a precious-metals royalty company. It provides financing to mining companies in exchange for rights to a portion of future mineral production or revenue, allowing it to participate in mine output without directly operating the mines. The company's portfolio includes royalties and other interests in producing mines and projects under development. Its assets span multiple regions, including Australia, Africa, and the Americas. The business traces its roots to the 2022 merger of Elemental Royalties and Altus Strategies.

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