Earnings Call Transcript - GROY Q2 2024

Joanne Jobin, Host

Good morning. I'm Joanne Jobin, your VID Media host. Welcome to the Gold Royalty Quarterly Investor Town Hall Forum. Before we commence, just a reminder that if you have any questions for the company, please place them into the Q&A tab located at the top of this screen. After the presentation, I will be delighted to moderate submitted questions from our audience. With us this morning is the Gold Royalty team, led by Chairman and CEO, David Garofalo, who will make the intros to the team and take you through the highlights of the most recent quarterly results. David, the stage is yours.

David Garofalo, CEO

Well, good morning, everybody, and thanks for the introduction, Joanne. I'm joined today by our Chief Financial Officer, Andrew Gubbels, who will take us through our second quarter financial results. Then Peter Behncke, our Director of Investor Relations and Corporate Development, will provide you with a portfolio update. But before we get into that, I thought it's been my custom to discuss the fundamentals of the gold market, which are very, very robust. And this is not a recent phenomenon. The significant performance of the gold price has been occurring for 50 years, really since the US government and central banks globally decoupled from the gold standard in the early 1970s. It has really been a one-way trade. The temptation to continue to print money is just too great for governments, particularly in this environment where debt levels are at historical highs—350% global debt to GDP relative to 100% elastic inflation cycle. And those fundamentals are really driving the government and several banks, in particular, lower interest rates, which is driving capital into gold, the one monetary instrument that can't be printed. And while it yields zero percent, the reality is treasuries and other sovereign debt yield negative on a real basis. There really is no opportunity cost to owning gold. This long-term phenomenon of gold appreciating against all fiat currencies will continue unabated into the foreseeable future, particularly in an environment where the only way for these governments to deal with their exorbitant debt levels is to inflate it away. We are in for a prolonged inflationary cycle, and gold will perform extremely well in that environment. What has not performed well, unfortunately, to this point, is gold equities. We haven't seen a significant allocation of capital out of the general equity markets into the gold equities, evidenced by the blue line you see here, which is the GDXJ, still remaining 75% below its all-time highs about 10 years ago when the gold price was $1,000 per ounce lower. That's not a phenomenon unique to junior stocks. If you look at the bellwether stocks in our industry, such as Barrick and Newmont, their price levels today are actually about half of what they were in the mid-1990s when gold was only $250 an ounce. We have not seen a significant rotation of capital into gold equities, but we think that's inevitable. It will happen. If you look at crises in the past and how the gold commodity and gold equities performed in each of those financial crises, there is eventually a significant rotation of capital into gold equities. Take, for example, the tech crash back in 2000. Initially, it was a baby in the bathwater type of market, where even the gold equities were sold off dramatically. The gold commodity was initially sold off too, but as the government started to ease monetary policy, lower interest rates, and expand money supply, we started to see gold perform dramatically. The gold equities, in particular, provided leverage to the gold price. In the great tech crisis, the gold equities outperformed the S&P 500 by over 200%. In the great financial crisis of 2008, again, there was a baby in the bathwater type of market initially, where both the commodity and gold equities were sold off with the general equity market. But eventually, as governments and central banks, in particular, started to lower interest rates, we saw an allocation of capital not only to the commodity, but also to gold equities that significantly outperformed the S&P 500. The same phenomenon occurred during the pandemic. Initially, there was a massive sell-off of equities, but we started to see capital allocated to both the commodity and gold equities, with a significant outperformance of gold equities against the general equity market. This general market has been very narrowly focused on the big seven technology companies. We're starting to see the market chip away at those valuations. We're starting to see a rotation of capital into the commodity and gold equities. Gold equities should be performing because they are performing as businesses. They are starting to demonstrate clear leverage to the gold price. Year-to-date, even though the gold price is up 20%, gold equities, both large cap and small cap indices, are underperforming the commodity. That makes no sense given the massive leverage and profitability these companies provide in response to an increased gold price. We've seen that in our results as well, as we've started to see some of our growth projects come into production. We've seen a significant increase in our revenues this quarter. In fact, we saw a quadrupling in our revenue versus last year, driven not only by the gold price, but also by the fact that a number of projects have come into production and are starting to deliver positive free cash flow for the first time in our history. We are poised to provide significant performance. I think as the general equity market starts to engage, the gold equity markets will provide significant outperformance relative to the S&P 500 and leverage the gold price. Eventually, that rotation will yield outsized returns relative to the commodity price, given the profitability leverage these companies enjoy. What we've been able to achieve in 3.5 years is remarkable—steadily building our business from 18 non-cash flowing royalties at our IPO and steadily adding to our portfolio in terms of projects at both production and development stages. We now have seven cash flowing royalties and 14 royalties in various stages of construction, but over 240 royalties overall that provide significant growth in the pipeline across the life cycle of a mine, while also providing our shareholders significant optionality in a market that we believe will eventually reward that optionality as we begin to see a shift in capital out of the general equity markets into gold equities. We are poised to significantly outperform, not only because of that optionality, but our outsized growth in revenue and free cash flow in the coming quarters and years as a result of our robust pipeline of projects. We've seen a 14-fold increase in the number of royalties in our portfolio since our IPO and a five-fold increase in our net asset value on a gross basis since our IPO. I understand the net asset value can be an esoteric metric, difficult to understand, but what we believe everyone can understand is growth in our revenue. As I said, in Q2, we saw a four-fold increase in our revenue relative to where we were a year ago, and this marks the second consecutive quarter of positive operating cash flow. We are poised for a very strong second half with a number of our major projects coming into full production that will again deliver significant growth, now reflected in a positive operating cash flow profile in our portfolio. What we believe that will ultimately lead to is significant re-rate opportunities for our shareholders. On a consensus basis, we are trading at about 0.5 times net asset value. That's not our own measure; it reflects the six analysts who cover us relative to our peers. We are significantly undervalued, I believe, because the market has been paying for growth, perceiving risk inherent in growth. Many of our projects are coming into production or achieving full-scale production, and revenue growth is happening today. Our free cash flow growth is currently in progress. It was a far-off prospect when we started this company several years ago discussing growth, but now that growth is crystallizing in this quarter and will continue to deliver positive free cash flow and, we believe, positive earnings as we move forward. We are in an excellent position to deliver a re-rate opportunity in our share price. Furthermore, looking at our shareholder register, we've been able to attract sophisticated investors in the sector who understand the intrinsic value of our business, recognize the per-share value we present in terms of net asset value, and the coming growth in cash flow and earnings per share as a result of our robust pipeline of production and development-stage projects and the significant optionality within our portfolio. With that, I would like to pass it on to Andrew to talk about our financial results this quarter.

Andrew Gubbels, CFO

Thanks, Dave. As Dave referenced, Q2 was another strong quarter for the company. Gold Royalty has truly transitioned to become a royalty company that consistently generates cash from operations. In Q2, we delivered $1.2 million in cash flow, including land agreement proceeds credited against multiple mineral properties, marking the second consecutive quarter of positive operating cash flow. This is a significant achievement for a company that IPO’d three years ago with 18 non-cash flowing royalties, as previously mentioned. Q2 total revenue reached $2.2 million, approximately 300% higher than the comparable period in 2023. This clearly highlights how far we've come in such a short time. The higher revenue during the period was largely driven by additional royalty receipts from our accretive acquisitions and supplemented by initial cash flows from development projects that have entered production. The second quarter also saw continued cost discipline with our cash operating costs reduced by approximately 9% compared to the same period in 2023. Notably, in this period, Gold Royalty completed the acquisition of a copper stream on the Vares Project in Bosnia from Orion Mine Finance for $50 million. This bilateral transaction secured a high-return, long-life asset to further strengthen our foundation of producing assets. Aside from Vares, our existing portfolio has continued to perform well, and Peter will discuss more about this in subsequent slides. We've earned our first royalty revenue at IAMGOLD's Côté project and benefitted from a full quarter of cash flow from the Borborema and Cozamin royalties that we acquired last year, complementing strong revenue generation from Canadian Malartic and Borden. Finally, in Q2, Gold Royalty published its second annual sustainability report, highlighting our ESG performance and ongoing commitments. I'm proud to report that we had one of the lowest carbon-intensive portfolios in the royalty and streaming sector in 2023. With $6.4 million of total revenue in the first six months of 2024, inclusive of land agreement proceeds and interest, we've already exceeded our full-year 2023 total revenue of $5.2 million. We're also approximately halfway to achieving our 2024 guidance of $13 million to $14 million of total revenue. To help achieve our full-year targets, we expect the second half of 2024 will benefit from further revenue from the Cote Mine as it ramps up, along with initial revenue from the Vares mine through the Copper Stream, which will significantly ramp up in Q3 and Q4 2024. Additionally, for those following the company, with significantly reduced and stabilized G&A, along with no exposure to operating capital cost inflation as a royalty company, the expected 160% revenue growth from 2023 to 2024 should positively impact the company's bottom line and cash generation moving forward. As we mentioned, our management group has focused on building a portfolio of quality, growth-oriented assets to future-proof the company. In the past 12 to 18 months, we have successfully created a self-sufficient, cash flow-generating business, marking a pivotal transition point. We've achieved this success largely due to our accretive acquisitions to date. The execution of this strategy has attracted leading investors and finance providers in the resource sector, ranging from private capital providers such as QRC, Taurus, and Orion to reputable public equity investors and strategic mine and project operators. We have encountered no issues with vendors taking back shares of Gold Royalty in these acquisitions; they recognize the long-term prospects of our shares. In fact, these investors, among others, are supportive of Gold Royalty’s strategic vision and acknowledge the fundamental value upside in the company's shares as we build scale and relevance in the royalty and streaming sector. We are well on our way to advancing up the valuation curve. With that, I'll hand over the presentation to Peter, who will provide an update on our portfolio.

Peter Behncke, Director of Investor Relations and Corporate Development

Thanks, Andrew. Building on Andrew's comments about the revenue growth profile this year driven by some of our recent acquisitions, I wanted to zoom out and provide a snapshot of our portfolio pipeline as it stands today. You can see the seven cash flowing assets driving our 2024 total revenue, with land agreement proceeds supplemented by our recent acquisitions, notably the assets highlighted in green and the yellow box: Vares, Cote Gold, Borborema, Cozamin—individual asset acquisitions throughout the last several years. Before diving into specific portfolio updates, which are comprehensively outlined in our MD&A, I want to remind everyone of the portfolio metrics that truly differentiate Gold Royalty. We maintain over 80% North American focus, with the majority of our portfolio in Quebec, Ontario, and Nevada. The quality of operators driving our assets is second to none—Newmont, Barrick, and Agnico Eagle are driving forward those key development stage assets fueling our future growth. They are extremely well-capitalized, which has become increasingly important in today's precious metals environment for developers and producers. The first asset I want to highlight and provide an update on is our flagship asset at the Odyssey mine, an underground feature of the Canadian Malartic complex, which is set to be Canada's largest underground gold mine. Our royalty is a 3% NSR royalty over the northern portion of the Odyssey mine, specifically covering the Odyssey North deposit, portions of East Malartic, and excitingly, the majority of the internal zones that could enhance the Canadian Malartic mine plan in the near term. Based on the 2023 updated mine plan, we see a mine life extending to 2042, but importantly, that incorporates approximately only half of the known resource into the mine plan. Agnico had a strong second quarter, and Canadian Malartic's success was a part of that. Some key highlights at the Odyssey mine indicate that development and mining rates through Odyssey South are continuing to exceed Agnico's expectations due to exploration success across the project, with an increased exploration spend of approximately 84,500 meters of incremental drilling expected around the Odyssey mine and the regional exploration package, specifically to the East, where we hold a 1.5% NSR over the Midway project, part of the Canadian Malartic complex's regional exploration program. This is all aimed at filling the mill, and Agnico has been more explicit recently about the potential for a second shaft to increase mining rates from the East Gouldie deposit, which will indirectly benefit us by bringing Odyssey North and East Malartic mineralization online sooner in the mine plan. To reiterate, the current mine plan only incorporates 57% of existing resources, highlighting significant potential to increase that resource conversion factor. A bit more detail on the development updates indicates that rates are currently ahead of Agnico's targets, and the exploration success they've achieved is focused on five key objectives. First, focusing on East Gouldie conversion drilling and expansion, secondly, conversion drilling at Odyssey South, and further investigation of internal zones will greatly benefit both our royalty. If you were to use the shaft at Canadian Malartic, the Odyssey mine currently lies just within our royalty coverage area. Moving on to our most recent acquisition, the Vares project is currently in its ramp-up phase, and there have been notable developments that I want to clarify regarding this asset. As a reminder, we have a 100% copper stream with ongoing payments of 30% of the spot price. Looking at the resource at the bottom of the page, we see 18.3 million tonnes of indicated resources and 2.8 million tonnes of inferred resources under JORC standards at Vares. Currently, only 13.8 million tonnes of those are incorporated into the mine plan. Similar to Canadian Malartic, there is strong potential for increased resource conversion and extending the mine life beyond the current 18-year plan. Q2 2024 highlights at Vares show that the ramp-up of production to nameplate capacity remains on track for Q4 2024. In the second quarter, they achieved their initial concentrate sales, and underground development has significantly improved, showing an increase of 31% quarter-over-quarter. They continue to aim to expand the future deposit beyond what is currently included in the mineral resource estimate I mentioned earlier. One exciting area of upside that Adriatic outlined is that they are completing studies to evaluate a 1.3 million tonnes per annum production scenario, an increase from the current 0.8 million tonnes per annum. This would be a significant boost to overall throughput, greatly enhancing the project's economics and our investment. Since the end of the quarter, there has been a ruling from the Bosnian court regarding the removal of trees from the planned expanded tailings facility at Vares. After discussions with Adriatic management and reviewing public disclosures, it is clear that this ruling has no bearing on the anticipated production. They are currently assessing alternatives for tailings storage facilities. There is less cause for concern than one might expect from a court ruling, and we are confident that there will be no impact on the Vares project’s production due to this decision. Since that announcement, we have observed significant investments by senior management and the Board across Adriatic, indicating their confidence in the outlook as they continue to work towards achieving full nameplate capacity in the fourth quarter of this year. Moving on to another key asset that is ramping up, the IAMGOLD project where we hold a 0.75% NSR royalty over the southern portion of the mine. IAMGOLD has been developing this asset, and we are on the cusp of achieving full nameplate capacity similar to what we anticipate for Vares. Recent Q2 updates show IAMGOLD achieved commercial production in August of this year—a major milestone, achieving 60% of nameplate capacity for the required period and continuing to ramp up throughout Q4. Their production guidance remains intact, targeting the lower end of 220,000 to 290,000 ounces of gold for the year. Our royalty coverage is applicable to a meaningful portion of Phase 1 of the mine plan, which I will detail in the upcoming slides. Côté Gold is another multi-decade mine life with 18 years based on the current resource alone, akin to Odyssey and offering robust economics for us as a royalty or stream holder. Benefits from Phase 1 of the mine plan at Côté are illustrated here, showing zones 5 and 7 where the past work of royalties covers a significant portion of the measured and indicated ounces. The southern portion of the mine constitutes Phase 1 for IAMGOLD's mine plan. We are expecting increased coverage in the first six years of Phase 1, with coverage gradually trailing off as they mine the more northern and deeper portions of the mine that are somewhat lower grade. This image here illustrates the Pit Phase 1 showing that it primarily focuses on the southern edge of the Cote pit, with Phase 2 expanding after year 6 and starting to observe stripping on the northern edge of the Cote Pit. This indicates why we are excited to see Cote ramp up in the near term. Another cornerstone asset is our royalty over the REN Project, part of the Carlin Complex— the largest gold mining complex in the USA. We have a 1.5% NSR and a 3.5% NPI over the entirety of the REN deposit, currently sitting at approximately 1.7 million ounces around 7 grams per ton. Within Barrick's overall portfolio, REN may appear relatively small, but it plays a vital role as high-grade supplemental feed to the Carlin Complex. Q2 updates indicate that REN remains on track, with Barrick reiterating that they are completing advanced detailed engineering studies for the PFS expected to be released towards 2026, with near-term production anticipated shortly thereafter. Finally, I’d like to highlight our royalty over the Borborema Project, where Aura Minerals is making progress. The most recent update for Q2 shows that construction is now 40% complete, with production still on track for Q1 2025. Importantly, similar to Canadian Malartic and Vares—where we see relatively low resource conversion—the current indicated resources of 2.1 million ounces and inferred resources of 400,000 ounces significantly exceed the current mine plan of 748,000 ounces. This discrepancy is mainly due to the potential increase of mineable mineral reserves after a road is relocated near the project. Approval for that road relocation is expected later this year, with licensing projected for 2025, based on the Q2 results. So, those are some major catalysts across our recent acquisitions and key assets within our portfolio. I'll pass it back to David at this point before we enter the Q&A session.

David Garofalo, CEO

Well, thanks, Peter, and thanks to everyone for your kind attention. We're going to stick around to take some Q&A. Peter made a great point regarding Borborema; I view it as a microcosm of the broader portfolio where the operators continue to optimize and explore the assets. In the case of Borborema, the permit to move the highway will unlock significant resources to expand production and extend the mine life. This optionality comes at no cost because all of our 240 royalties are entirely purchased and paid for. This exploration is not only occurring in Borborema; looking at the larger portfolio, over $200 million per annum is spent on exploration on that underlying portfolio, with zero contributions from us to the exploration budget. We benefit from that upside, and that portfolio currently has over 120 million ounces of gold equivalent exposure—substantial optionality within the portfolio that you receive for free as a shareholder. I think that’s an important element of the story, in addition to the significant growth we're realizing right now in terms of revenue, operating cash flow, and free cash flow for share growth in the upcoming quarters and years. With that, Joanne, I'm happy to start taking questions, and Peter and Andrew will join me to help address them.

Joanne Jobin, Host

Thank you very much, and thank you, gentlemen, for another excellent update. We certainly have a full global audience today, as usual. So, thank you to everyone for taking the time to join us this morning or afternoon, depending on your location. Our first question today is about the 20% cost reduction in G&A compared to 2023.

Andrew Gubbels, CFO

Yes, I could take that one. The company continues to closely manage its operating costs. This has been an ongoing process. Last year, the effort primarily focused on eliminating redundancies and streamlining the company following the acquisitions made in 2021. Since then, we've been concentrating on renewing vendor contracts to ensure more efficient and effective pricing, simplifying the operational structure wherever possible, and targeting the most value-add in terms of general office, IT, insurance costs, etc. As such, the decrease in costs is attributed to our focus on simplification and streamlining. Additionally, in Q2, a significant portion of our time was spent executing the Vares transaction, and some transaction-related costs and salaries were capitalized, as noted in the financial statements, which contributed to a moderate decrease in operating costs this period as well, alongside our ongoing cost management efforts.

Joanne Jobin, Host

Thank you, Andrew. Next question. A well-known mining newsletter writer, Logo Tigre, said he does not recommend GROY because of excessive issuance of shares. Can you address how, even with issuing more shares, the long-term value is still a net benefit to shareholders? And by the way, David, I guess Joe was very impressed with your interview while jogging yesterday. The percentage of shareholders that can talk Turkey on a run is likely in the 1% category. So, Bravo on that.

David Garofalo, CEO

Well, thanks very much for your question. In each and every case where we have issued shares, and I should clarify that we only issued shares in the IPO and most recently as part of the bought-deal financing to acquire the stream on the Vares silver mine in Bosnia, we had a clear use of proceeds. Each time, it has added significant accretion to not just our net asset value per share, but more importantly, our recent acquisitions over the last year have appreciably added to our cash flow per share growth. The biggest criticism we faced a year ago was related to the gap to growth; the market did not want to pay for growth because it was perceived as long-dated. Thus, we focused on cash-flow-producing royalty opportunities that would contribute immediate accretion on a cash flow per share basis while also enhancing net asset value per share. I assure you that we are not issuing equity recklessly. We are not doing it simply to add cash to our balance sheet; we are putting that capital to work on long-life deposits that hold significant exploration upside and offer substantial cash flow per share accretion in the short term while also supplementing net asset value per share growth. This has been the case with every acquisition we've made over the last year aimed at boosting cash flow and net asset value per share.

Joanne Jobin, Host

Okay. And next question regarding the new land agreements coming online, which is in line with the share question and revenue improving—will there be further dilution in the future?

David Garofalo, CEO

Again, we have not diluted our shareholders. When we issue equity, it's within the context of having a defined use of proceeds that demonstrates how we are creating value for our shareholders, whether through net asset value or most recently significant cash flow per share accretion. If we see any opportunity where we could show a clear use of proceeds that would lead to significant accretion, we would consult with our shareholders about seeking additional capital. In the absence of that, we will not issue equity.

Joanne Jobin, Host

Excellent. When can we expect the share price to improve?

David Garofalo, CEO

That's a good question. I wish I could pinpoint a specific date when that happens. But I believe that given the cash flow per share growth and earnings per share growth we are currently experiencing and expecting to see in the upcoming months and years, and considering these assets have long lives and are well-capitalized, I believe we are strong and ready to grow cash flow and earnings per share. I think the market will start attributing value and performance to our share price as a result. We are indeed in an excellent position to deliver notable re-rate potential as all this growth we have discussed since our IPO comes to fruition over the next year or two.

Joanne Jobin, Host

Excellent. We do have quite a few questions regarding Vares. I'm going to attempt to group them together. The first one is: What is the lag time between production payments on the Vares Copper Stream for production reported in the quarter with the stream revenue associated with this production hitting in the following quarter?

David Garofalo, CEO

I can respond to that. Regarding the Copper Stream contract, it necessitates a certain amount of copper to be produced in concentrate. There is indeed a temporal lag between the concentrate produced and the accrued copper that qualifies for our first stream payment. We anticipate receiving our first stream payment for the Vares project in the third quarter of this year.

Joanne Jobin, Host

Thank you. And I know you touched upon this in your presentation, but can you reiterate the potential impact, if any, the recent court ruling on the Vares Royalty will have on the operating mine?

Peter Behncke, Director of Investor Relations and Corporate Development

Yes, certainly. To reiterate the commentary from Adriatic and from our discussions, the recent court ruling has no impact on production. They have advanced alternative tailings facility operations or potential plans that could substitute for the expanded tailings facility that currently has some trees slated for removal, but they also continue to have ongoing discussions to secure the expanded tailings facility as originally planned. Furthermore, it’s worth noting that there was a recent management shift at Adriatic. The key principles involved are in-country experts positioned to bring this asset into full-scale production, which gives us confidence in our forecast.

David Garofalo, CEO

I would also encourage shareholders to review Adriatic’s public disclosures regarding this matter; they have consistently indicated that they possess alternative disposal sites for tailings within their own land. They will not need to depend on government land for tailings disposal. We were on site during our due diligence process and plan to visit again in September with other key shareholders. I should also mention that Adriatic's largest shareholder recently doubled their ownership in the company to around 11% following the announcement regarding the tailings and corporate matters, suggesting their confidence in our investment.

Joanne Jobin, Host

Thank you, David. Can the company publish a five-year projection of GEOs ramp-up?

Peter Behncke, Director of Investor Relations and Corporate Development

Yes, indeed. Our guidance for 2024 is set between 6,500 to 7,000 GEOs. With input from the six analysts that cover us and considering the key ramp-ups of development stage assets like Odyssey and Cote, consensus figures indicate that we might approach north of 30,000 GEOs by the end of the decade.

Joanne Jobin, Host

Excellent. When do you expect positive free cash flow?

Andrew Gubbels, CFO

As of now, we are generating positive operating cash flow. It is predicated on the results for the second half of this year, but we are nearing the threshold of generating positive free cash flow. Based on data trends throughout 2024 and into 2025, I anticipate positive free cash flow will become a reality for the company.

Joanne Jobin, Host

Excellent. Andrew. What are some of the major catalysts that the company is looking forward to?

David Garofalo, CEO

We touched on this earlier; Peter mentioned significant production ramp-ups at Cote, which achieved commercial production ahead of schedule, and continued underground development at Canadian Malartic and the Odyssey project, where we enjoy significantly more royalty coverage. This is a multi-year proposition where we will see cash flow growth not only in the current year but also well into the future, particularly as we transition from exclusive open-pit mining to underground, where we have more extensive royalty coverage. We will reap the benefits of Vares with our initial royalty revenue expected in the second half of the year, and Borborema is expected to reach commercial production in the first half of next year. We’re already generating preliminary royalty payments and interest payments on our convertible gold loan this year as we await this production ramp-up. Thus, looking across our portfolio, we see multiple assets with well-capitalized operators that will continue to deliver sustained growth for years.

Joanne Jobin, Host

Excellent. When do you expect to model first GEOs from the Odyssey underground?

Peter Behncke, Director of Investor Relations and Corporate Development

Yes, thank you for the question. We expect to model first GEOs in line with Agnico Eagle's production profile, forecasting that Odyssey North and East Malartic will come online around 2027-2028, according to the recent updates. We view the Odyssey internal zones as potential upside, with Odyssey South likely coming online immediately. Our current revenue from Canadian Malartic and the Odyssey mine is primarily derived from the Barnat pit, which is expected to remain operational until approximately 2028.

Joanne Jobin, Host

Excellent. Let's discuss guidance. Are you still tracking to perform within the ranges provided earlier in the year?

David Garofalo, CEO

Yes, we are on track. As Andrew noted, we are performing well based on our first-half revenue and are positioned to see our key assets ramp-up in the second half to meet guidance.

Joanne Jobin, Host

Okay. One more question regarding share performance. I know you've addressed this already, David, but we're receiving many inquiries on it. Why isn't the share price performing despite the improving cash flow?

Andrew Gubbels, CFO

I believe it’s simply a matter of market sentiment—the current environment rewards growth reflected in past achievements rather than future potential. This is not that sort of market. The GDXJ is 75% below its peak, with small-cap players not receiving speculative inflows from the capital markets. However, as we begin to generate positive cash flow and strong earnings growth, we will see the market rewarding those metrics, with the expectation of price-to-cash flow and price-to-earnings ratios becoming more favorable as opposed to asset value alone. I anticipate we will witness this trend in the second half of the year as we observe significant growth from some of North America's largest gold mines.

Joanne Jobin, Host

Thank you, gentlemen. As we approach the end of the hour, we will conclude our Q&A session. If you have any further questions, please forward them directly to Peter at [email protected]. David, before we wrap up today, would you care to share a few words?

David Garofalo, CEO

Thank you again for your attention this quarter and your questions. We’re always available for questions offline via email or through our 1-800 number, should you wish to reach out. We can make ourselves available.

Joanne Jobin, Host

Thank you, David and team. Please remember that this Town Hall will be available on the Gold Royalty website and across all our social media platforms within the next 24 hours. Before we sign off, please fill out the short questionnaire at the end of the presentation. This really helps us and the company communicate more effectively with you in the future. Thank you for joining us, and we will see you at the next Town Hall forum. Goodbye for now.