• Total Revenue, Land Agreement Proceeds, and Interest (Q3 2024): $2.6 million, a 90% increase compared to Q3 2023.
• Year-to-Date Total Revenue, Land Agreement Proceeds, and Interest (2024): $9 million, over 130% increase compared to the same period in 2023.
• Cash Operating Expenses (Q3 2024): Below $2 million.
• Year-to-Date Cash Operating Expenses (2024): $5.9 million.
• Cash Provided by Operating Activities (Year-to-Date 2024): $1.3 million.
• Net Income (Q3 2024): Positive, after recognizing a $5.9 million non-cash deferred tax asset.
• Full Year Revenue Guidance (2024): $13 million to $14 million.
• Expected Q4 2024 Revenue: $4 million to $5 million.

• Warning! GuruFocus has detected 5 Warning Signs with GROY.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Gold Royalty Corp (GROY) achieved record revenues for the nine months ending September 30, 2024, with a 90% increase in total revenue compared to the third quarter of 2023.
• The company is on track to deliver its first year of positive cash flow from operations, with $1.3 million of cash provided by operating activities year-to-date.
• Gold Royalty Corp (GROY) reported positive net income in the quarter after recognizing a $5.9 million non-cash deferred tax asset.
• The company expects strong fourth-quarter revenue growth driven by the ramp-up of the KTE gold mine in Ontario and the Vri mine in Bosnia.
• Gold Royalty Corp (GROY) has a robust pipeline of royalties and streams, featuring high-quality assets in favorable mining jurisdictions with established operating partners.

Negative Points

• There is a lag in recognizing revenue from the Vri mine due to the nature of the streaming agreement, with initial revenue expected in the fourth quarter despite production occurring in the third quarter.
• Severe storms and flooding in Bosnia affected transportation infrastructure, requiring concentrate to be trucked by road until railway repairs are completed.
• The company's current valuation is considered frustrating, with management expressing confidence that growing free cash flow will eventually lead to a re-rating of the share price.
• Gold Royalty Corp (GROY) has limited appeal for early-stage exploration opportunities due to the ability to generate royalties through its generative program.
• The company plans to prioritize paying down its revolving credit facility with growing cash flows, which may delay potential returns of capital to shareholders.

Q & A Highlights

Q: What is the impact of the higher gold price on Gold Royalty Corp's portfolio, and are operators investing more than expected? A: David Garofalo, CEO, explained that the higher gold price significantly enhances cash flow, with the company's leverage to the gold price growing as production volumes increase. Jackie Przybylowski, VP of Capital Markets, added that some assets, like the Odyssey mine, could benefit from accelerated development due to higher gold prices, potentially bringing development-stage assets into production sooner.

Q: What is the current state of the M&A pipeline and corporate development given the higher asset prices? A: David Garofalo noted that while the junior market has not seen the expected equity market participation, Gold Royalty Corp remains disciplined in acquisitions. The company focuses on opportunities that align with its strategy and is cautious about early-stage exploration assets, preferring to generate royalties through its own programs.

Q: Are there any updates on the Jarrett Canyon project? A: Andrew Gubbels, CFO, stated that while the Jarrett Canyon investment has been written down, higher gold prices could potentially revive interest in the asset. However, there is currently no timeline for future developments at Jarrett Canyon.

Q: Can you provide insights into the exploration portfolio and potential new discoveries? A: Peter Benke highlighted the Whistler project in Alaska and the Tonopah West project in Nevada as promising exploration assets. Both projects have shown significant resource growth and potential for future development, with Gold Royalty holding substantial royalties on these properties.

Q: How does the concentrate sales lag at the Vris mine affect revenue recognition? A: Andrew Gubbels explained that revenue from the Vris mine is recognized upon reaching a threshold of 25 tons of contained copper in concentrate. There is typically a three-month lag between production and payment, with expectations of around $1.2 million in revenue from Vris in Q4, contingent on copper prices and ramp-up success.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.