David Garofalo, CEO, GOLD ROYALTY CORP
Can you give an update on Gold Royalty Corp’s activities over the past year?
Gold Royalty Corp continues to expand quickly and now has over 220 royalties in our portfolio, with a heavy concentration in Québec, Ontario, and Nevada. In 2021 we absorbed three of our peer companies – Abitibi Royalties, Golden Valley Mine & Royalties, and Ely Gold Royalties – and we have also been successful in acquiring third-party royalties as we did on IAMGOLD’s Côté Gold project and Barrick and Newmont’s Granite Creek project. The latter acquisition made Nevada Gold Mines (Barrick and Newmont’s joint venture in Nevada) our second-biggest shareholder at 7% ownership. We also continue to generate royalties organically and have a small team in Val d'Or, Québec, and another in Reno, Nevada, who stake exploration claims around existing mines and deposits and then farm the properties out and take royalties in return.
Can you discuss Gold Royalty Corp’s involvement at the Canadian Malartic Complex?
Gold Royalty Corp has significant royalty coverage at Agnico Eagle’s Canadian Malartic complex, initially on the open pit to a limited basis, but now also on the underground expansion of the Odyssey mine where we have 3% NSR royalty coverage on a significant portion of the resource. As Agnico Eagle continues to ramp up production from underground, our royalty will ramp up accordingly. It is encouraging that Agnico Eagle has consolidated ownership which will realize significant cost synergies as a result of its takeover of Yamana Gold’s former stake.
How will Gold Royalty Corp fare in 2023 and beyond?
The industry has to reinvest back into exploration and mine development out of existential necessity as reserves have declined dramatically and we are well positioned to provide the capital to do that. Most importantly, we already have over 220 royalties in our portfolio that are fully bought and paid for and, by an analyst consensus estimate, we are poised to deliver over 60% compounded annual growth in revenue through the end of this decade. With little overhead, we are an excellent position to consider dividend increases over that period from the current 2% yield in our stock.
David Cole, President and CEO, EMX ROYALTY CORP
Can you elaborate on EMX Royalty’s portfolio, particularly in Québec?
EMX Royalty is a substantial global mineral rights holder, and we touch over 4 million acres / 1.6 million hectares of mineral rights across 14 countries including the US, Europe, Asia, Australia, North America, and South America, as well as one asset in Africa. In Eastern Canada, our portfolio is predominantly early-stage assets, and we believe that Québec is a great place to invest. The support for mining from the government and communities in the province is unsurpassed. Québec is also strongly incentivizing strategic mineral exploration.
How is the Royalty Generation business model useful in the context of inflation?
The benefit of royalties is that once we sell an asset, the ever-increasing costs that it takes to advance it, whether it be exploration costs, development costs, or capex costs, is on the counterparty’s shoulders and not on that of the royalty holder. This creates the concept of optionality, which is important for the royalty company and its shareholders
Royalties are phenomenal financial instruments due to their embedded optionality.
What are the key factors EMX Royalty considers before investing?
First and foremost is geological prospectiveness. Secondly, we will look at the probability of selling the asset, as it is not that hard to acquire mineral properties, but the trick is to get those sold and turned into a profitable royalty.
What will be the key drivers for the mining industry in 2023 and beyond?
The energy transition agenda is driving significant demand for battery metals, but the real fundamental increase in demand is the fact that people in the poverty class are moving up to the lower class, and people that are lower class are moving up to the middle class. Every time there is a step change in class, there is a huge increase in consumption.