EMX Royalty Corporation (EMX) Earnings Call Transcript & Summary

[Audio Gap] Mining Stock Daily podcast, and I've been asked to moderate and host this webinar on the back of really exciting news out of the royalty space, merging 2 wonderful companies, Elemental Altus Royalties and also EMX Royalty. And so joining us to walk us through is both CEOs, Fred Bell of Elemental Altus and Dave Cole. And in the background as well, we have -- from Tether, an Executive Chairman of Elemental Altus, Juan Sartori. He will be addressing any questions later in this webinar. A couple of housekeeping items as well. We will be taking some Q&A following the presentation from both Fred and Dave. You can post those questions into the chat and we will address those once the presentation is over. So we will just jump right into it. So first off, congratulations, Dave and Fred. We knew consolidation was continuing to be a big theme in the royalty space. And so this is huge news as we approach a very active day in the gold market as we are reaching new all-time highs in gold price. So I'll leave it to you guys. So take it away.

Trevor, you know and the folks listening know that I'm a huge believer in royalties. And fundamentally, I believe that the value of mineral rights augments over time. And I'd like to remind folks that when I was 10 years old, the price of gold was $35 an ounce, fascinated by the fact that it's now $3,500 an ounce now at my age over the course of more than half a century, and it's rather astonishing that, that is going on a 9% compound annual growth rate over that time frame. But that speaks volumes to the fact that the value of mineral rights augments over time, the best way to be exposed to mineral rights is royalties because royalties have this aspect of immense embedded optionality. Scale is very important in the royalty business. The bigger you are, the more each royalty is worth. We've seen that historically throughout the sector. And when we look across the sector, we see a real gem in Elemental and their team and their portfolio. We believe they two augment each other immensely. And I'm really pleased to be able to put on the Elemental hat did that just for you, Fred. This is a great opportunity. And I'm very much looking forward to working with Fred and all the folks at Elemental.

And look, from the Elemental Altus side, I think we've long thought that if [Audio Gap] and one company, both from an asset quality, from a shareholder value perspective, but also from a cultural fit, that company was EMX and we've got some shared DNA going back really through the company, through some of the assets we own, through some of the deals we've looked at together. So really delighted to be sitting here today with Dave and a big thank you to all the team at EMX and Elemental Altus for getting us to this point and really exciting announcement and delighted to have Tether as well and Juan representing Tether on this call, who I think are going to be a really cornerstone shareholder for both of us going forward.

Thanks, Juan, for supporting us. And I think we need to go to the next slide. Is that right? Yes, and we'll skip on past that one. The -- Fred and I have been getting to know and our team has been getting to know each other since 2021. We did syndicate the purchase of Caserones, which has turned into a great royalty for both companies, a cornerstone royalty for us. And over the course of the last years, we've been getting to know each other, developing a lot of respect. And we've discussed the possibility of merging now for approximately 1.5 years. And we finally came to the realization that the time was right, particularly given the catalyst of the support from Tether.

And I think that when we look at this, this combination creates a portfolio with a number of cornerstone royalties that is really like any others in the junior space. And I think some really key assets that we can talk to as we go through the presentation. But if we're looking at the combination of our Caserones royalties, if we look at Timok, if we look at Karlawinda, if we look at the new Laverton royalty, Leeville, and there are others we can talk to, I think those there are really the bedrock of the combined company. And for someone new to be able to come in and put those together now would be very difficult. So it puts us in a really, really strong position with a shared philosophy going forward and a revenue base and that margin expansion that is going to put the company in such a powerful position to continue to grow and build and take advantage of opportunities jointly that in the past, we had to syndicate with others or with each other in order to get to this point.

More arrows in the quiver. I think that we're behind the slide. There you go. Thank you very much. And yes, I think you can go one more slide forward as we just spoke to those points. Thank you so much. I will say that I fundamentally believe that Fred's job, my job, #1 thing is long-term positive compound annual growth rate to our shareholders. That's why we're here. That's our fiduciary duty. And the mining industry does not have the best track record of strong CAGRs, compound annual growth rate returns to shareholders. A lot of the royalty companies do. And these 2 royalty companies are excellent examples. I'm proud of the fact that EMX over our 22.5 years have a 17% CAGR, and Fred has even beaten that over his 8 years with over 20% CAGR. That's very admirable. And that speaks to the quality of the teams and specifically the business model and the power of royalties.

And look, Dave, a very nice comment there, but I think we can all acknowledge that having a 20-year plus track record in CAGR is really something that takes a lot of work. And we both have examples through our portfolio of assets where we've been able to add real material value, both through the optionality and upside, but also through being able to recognize the potential in assets at an earlier stage. And if you look at our portfolios today, with 80 royalties in total at Elemental Altus and approximately 138 at EMX, that portfolio today, I think less than half of that by NAV is in production. And so there is huge optionality across that portfolio that is yet to come in and where our partners and counterparties are continuing to spend money, drill, explore and build out the base. And so for us to have that foundation of a portfolio cornerstone with the optionality and growth in it and then as we mentioned earlier, that real support from a cornerstone shareholder like Tether, it puts us in a really unique position going forward. And this next slide, Slide 5 here really gives you an idea of the width and breadth of our portfolio. And I think it's common to see a geographical focus for royalty companies. Clearly, you can see here that we are generally spread across the world. And I think the one thing we have in common is we're looking for quality and we're looking for quality assets wherever they are. And we're fortunate that we have some in Tier 1 jurisdictions as well. And there's 1 or 2 in particular, probably that Dave can talk to.

Yes. Great point, Fred. And one of those key assets, it's in a great jurisdiction and has a phenomenal operator, Lundin Mining Corporation is Caserones where our footprint on that royalty, which combined between the 2 companies is now 1.3% NSR over an area of the size of a small state, the footprint there is immense with a whole host of targets that are being tested by Lundin. They've been bragging about that in recent press releases, including the exploration results or discovery results at Angelica, high-grade breccia zones being found from in-pit drilling at Caserones and increasing production up to nameplate capacity at Caserones all to our benefit. Those are why you want to -- those are the reasons why you want to own royalties. And of course, we're very bullish on copper price. But other significant ongoing aspects of actuation of discovery optionality would be at Cactus, where we have combined royalties there now, giving us a nice footprint over that, which will be fast-track copper production in the United States. Very importantly, Diablillos, they just continue to find more silver and gold there. We have a 1% royalty over that in perpetuity, once again, a very large footprint, and it's a great example of discovery optionality coming to fruition within the portfolio. And then my favorite in the portfolio is Timok operated by Zijin. Zijin is drilling 12 drill rigs on the surface. They've been drilling out additional holes into the lower zone. The production from the upper zone continues to augment and the life span of the upper zones has been expanded as per their last annual report. And then the huge MG discovery, which had a maiden resource of 180 million tonnes at over 2% copper equivalent, very nice gold credit there. And I'm very, very pleased to see that. I know that Fred is also proud of some discovery optionality, specifically at Laverton.

Yes. Look, and I think that's a great example of where we're not standing still. Even as we were progressing this merger and this combination, we were still looking at royalty opportunities and one that we announced earlier this week, which will make a new cornerstone asset for the company in the future is Laverton. And that is where we already had a 2% royalty and we doubled that, getting an additional 2% royalty on a bit under 4 million ounces. And so pretty rare to get that opportunity now in a mature jurisdiction and gold field like the Laverton district and with an operator like Genesis Minerals who are extremely well known, very successful. And I think one of the unique aspects there is there has effectively been very little to no exploration on that gold belt for the last -- on these licenses for the last 10, 12 years, and that was partly due to the ownership structure. And so you've had this scenario where the gold price in Aussie dollar terms has almost tripled in that time frame. And you've had this prime real estate in terms of gold exploration, already a multimillion ounce endowment that has seen virtually no exploration. So to be able to source that transaction, to be able to do it efficiently in a bilateral manner and adding to our portfolio, Tier 1 jurisdiction, high-quality operator gold, I think, is really an indication of what we will be able to do going forward.

Moving on to 6, please. Trevor, thank you. And I think it's great that we're in a situation today in this balanced portfolio where the net asset value as determined by the analysts of our currently cash flowing assets represents 45% of that portfolio. And that speaks highly that we have this ongoing cash flow that we can utilize to continue to build the company. But in addition to that, 55% of the net asset value as determined by the analysts are those assets that are yet to come into production, and that speaks to the growth potential. Very pleased to be in a situation where 67% of the income -- current income is precious metals. But as everybody knows, I'm a fan of diversity, and I think that gold is the most precious metal and copper is the most strategic, and we believe these are excellent elements. And that's why I like the name Elemental to be exposed to.

And look, moving on to this slide, I think this is one that both companies have been really proud of, which is an ability to actually demonstrate real revenue growth individually. And when you look at that graph there on the top half is EMX in orange and the bottom half is Elemental Altus in blue. You can see that 2023 were record years, 2024 record years, 2025 combined, it's going to be another record year and going into organic growth for 2026. And some of the fantastic aspects of that are that with this business model, it's the margin expansion that you get. So we've got that exposure to top line revenue, particularly in the gold and then copper side as well. And we've got relatively fixed costs as a business. And as we scale here, we're going to strengthen that situation and our position financially even more. And the concurrent financing we're doing with this with Tether will put the company in a net cash position with a credit facility in the future that we believe will be significantly expanded and generating, as you can see here, in the order of $70 million to $80 million of revenue going forward.

I will say that immediately upon announcement, Fred and I were both asked about synergies within the combined companies. I'm confident that we'll find multiple millions of dollars of cost savings between the 2 companies, but I want to clearly point out that, of course, frugality is a virtue. It's always important for us to concentrate on efficiency. But our greater focus is on creating value for the next $100 million or $1 billion as we move forward with, in my opinion, a very well experienced and intelligent team.

And look, moving on to the next slide, and I'll let Dave lead with this.

So with this scale increase, there's a phenomenon within the royalty business that we're all phenomenal -- excuse me, all familiar with, and that is that the greater number of royalties you have and the more cash flow you have, then the better P/NAV, the better that you trade relative to your net asset value. That's been a phenomenon within the space for a long time. It's one of the key driving aspects to building scale within the business. And we're poised here trading just at by current analyst evaluation, we're trading right at 1x our net asset value pro forma. I believe that net asset value is going to move up and to the right. As the analysts dig in and take a closer look at some of these assets, they continue to perform exceptionally well, particularly on the discovery side, in addition to the expansion of our P/NAV as people realize that we have a strong record and deserve to trade at the types of valuations that our mid-tier peers are trading at.

And I mean, just to reinforce the point, I think that portfolio combined, we will have approximately 200-plus royalties and half of those or so by NAV being preproduction means that there's an awful lot of value to come as those projects are advanced through development, exploration stage and catalysts are hitting. And I think if you look at the combined company, as Dave said, trading at just over 1x PNAV, which is almost the lowest in the junior royalty space despite the fact that we're now moving out of that space. And you can look on that -- on the right-hand side chart there in terms of revenue and see that the gap there between us and the juniors has just increased dramatically. And I think EMX and Elemental Altus were already 2 of the highest -- they are this year, the highest revenue royalty companies there. And so combined even further out there. And I think that for us, the lovely thing is most of that royalty revenue is derisked in the sense that it is coming from existing producing assets. We're not looking at this and saying that 2025, 2026 is dependent on assets going through development at the moment. These are already producing royalties that are already paying us and to that extent, derisked. So the companies has significant scope for value uplift, both on a PNAV basis. But then also you can see as the revenue increases, the margin expansion will put us in an increasingly strong position going forward.

Very well said, Fred. And up and to the right is the direction that we are headed here. I'm very proud of the fact that our up and to the right movements, if you look at both companies, as per the analyst determinations on a per share basis. And that's the key thing is that we're building value on a per share basis and moving away from the crowded junior space into the mid-tier space because of this success. And the combination of the 2 is just pouring gasoline on the fire in my view. The -- we'll have a much improved balance sheet as per Fred's comments and likely, we'll be able to increase our revolver probably in the range of $150 million plus approximately $50 million in cash, putting us in a situation where we have larger arrows and more arrows in our quiver to be able to hunt bigger game with. Both companies in the past have been hampered by that, of course. And this will put us in a situation where we can prudently allocate capital and continue this up into the right pathway.

Yes. That's a great point, and we touched on it briefly earlier, but we both syndicated transactions in the past where they were either too large for the individual company or it made sense from a risk perspective, balancing it in the portfolio. And if you look at where we are, as Dave said, in terms of our access to credit facilities based on the revenues of the combined pro forma company, our existing cash that we would have on a pro forma basis and the revenue that we're generating. Clearly, we have an ability now to look at transactions that we did not do individually or where we have to share some of that upside. So I think that's a really attractive future for the combined company going forward as well.

So prospect generation and royalty generation is key to my ethos. And if it all goes back to this concept that the value of royalties -- the value of mineral rights goes up over time, best way to capture that is through royalties. The most -- the very best value creation that we can do, particularly in the early stages of the company, and both companies have a history of having done this is royalty generation and prospect generation. This puts smart engineers and geologists in the field around the world, doing that generative work and also identifying royalties to purchase. So the royalty generation side of the business has a distinct positive expectation. Purchasing royalties smartly has a distinct positive expectation. But the integration of the 2 actually just accelerates both because it gives you this team of sharp geologists and engineers. We have a saying that astute business decisions are rooted in solid technical understanding. And we have the technical strength in-house to be able to drive both of those aspects of our business forward. And it has panned out very, very well for us thus far, and it's a great marriage between the 2 companies in that regard.

And moving on to the combined Board and management teams, and I'll run through the Board of Directors quickly and then Dave can talk to the team on the ground. And we've got -- pleased to have Juan with us here today, who's the Exec Chair and representing Tether as well. And I think they've been a real breath of fresh air for the company since they -- for Elemental Altus since they came in. And in the 2.5 months or so since Tether became a major shareholder in the company, we've done 2 transactions, 2 different counterparties. We have announced this M&A deal with EMX. We have in parallel been progressing a U.S. listing to announce that. And I think that we have really turbocharged our desire to grow, to build the company to get this to real scale, but all the while adding value and making sure we've got a culture that is not just growth for growth's sake, but it's actually making sure we add value as we do it. And so Dave is coming on the board as well there. And clearly, you all -- everyone here, I think, knows Dave very well and his background as a founder and building EMX from 20 years ago. We've got Sunny as well, who's on the Board coming from EMX, real experience across formerly Kinross, Solaris, Highlands Silver. And then we've got Simon and Ravi as well, who are both currently on the Board of Elemental Altus and have been working through with really all the management teams to get us to the point today where we can announce. So I think a strong Board with a good blend of skill sets. And I'll leave to Dave to really talk to the management team going forward.

And with regards to the Board, Fred, really looking forward to working with all these folks. I want to point out that Sunny is a phenomenal person. And she led the special committee on behalf of EMX, worked her tail off and just delighted to have had her contribution at the Board level as Chairman of the Audit Committee. And I'm looking forward to working with her further now going forward on this Board, truly a fantastic person to work with here. So I'm very pleased about that. It's a tough decision to decide who -- which 2 Board members come from EMX because we have a strong Board in general that was really great to work with, but Sunny and I will carry forward. And then I've made it -- done my best in my career to work with people smarter than me, so it rubs off a little bit. And this is certainly the case when I have a chance to work with this management team. I'm humbled by these folks. I look forward to getting to know Juan better, but what I've seen so far is really his enthusiasm is phenomenal. And it's great to work with people that have a very bullish outlook on metal price and looking forward to that. The immense amount of respect for Fred that I've gained over the years and his strong background in capital markets and understanding of banking and whatnot is really going to pay off well and one of the key aspects of the intellectual side of this business. And then Stefan Wenger, who came to EMX after having worked at Royal Gold for 15-plus years and moved that company from a couple of hundred million dollar market cap to a few billion during his tenure there. We're now on a pathway to do that here. And Stefan is sitting right here next to me. It's great to have a CFO right next to you when you're the CEO and really enjoyed my time working with him and glad to have him continuing on in the joint company as CFO. And then Dave Baker, who was originally in the business development side, of Elemental and then filled in the position of CFO. Dave is delighted to be back on the biz dev side. And I think he's an ideal person to run the company going forward as Chief Investment Officer.

And look, from a capital markets perspective, you can see a summary of the company here and pro forma market cap as of close of play yesterday would be about USD 930 million market cap with approximately USD 50 million in cash, $10 million in equity investments, a very strong revenue profile that is going to continue to contribute to the company as we go forward and 0 debt. And we currently have an undrawn credit facility of $50 million, up to $50 million. And I think clearly, with this combined company and profile, there is a much greater ability there to build on that going forward. In terms of the analyst coverage currently, we both share National Bank, and then we have a number of other analysts across. And I think one of the benefits of this transaction is that we're going to have increased liquidity, particularly with the combined entity doing the U.S. listing, which we're working on as well. And I think that increased size, scale, liquidity, U.S. listing and the strength of the portfolio and management team combined, that is going to make it the combined entity much, much more attractive for investors as a vehicle going forward. And I think in terms of coverage as well and increasing the profile and awareness of the business, it's going to put us in a really strong position. And an interesting point that we haven't talked to really to date, but the pro forma company will be in a great position to qualify for is some of the indices that you see in the space and increasingly influential in driving capital flows. And I think neither Elemental or EMX are in those indices today. And when you look at the pro forma company, we would qualify for a number of those. And so I think that's going to be as well an important driver initially of increasing liquidity and then maintaining it, which is a really virtuous circle. And just speaking from the Elemental side, I think one of the challenges we've had historically is we've had an incredibly supportive shareholder base and a number of really material long-term shareholders who have backed us from the early days. And that's great. And the only challenge we've had sometimes is actually that liquidity has not been as strong. And so I think this combination, it's going to have a completely transformational effect on the liquidity for us for the company and for our shareholders. And maybe, Dave, you can talk to the shareholders a bit.

We're both here today in this situation where we can actuate this thanks to our shareholders. And it's not fortuitous that many of the shareholders that each company have are the same, a lot of crossover there. And that's because these are shareholders that recognize the power of the royalty business model and want to back folks like us that are executing that model around the world. Just delighted to bring that together. I want to point out specifically that Darin Milmeister at Extract Capital has been a very supportive of EMX and Elemental and this transaction. Paul Stevens, who is an afficionado of the royalty business and was an early investor in Franco and has told me many times that we tripled his money in Franco, sold, bought back, tripled it again. I did that a few times. And I'm just delighted to have Paul here as a strong supporter of EMX over the years. And I know that Paul is a big fan of this transaction, and we thank you very much. Adrian Day, Euro Pacific also has been a supporter of both of us for many years. We're very appreciative of that. And I think it's a real feather in the cap of EMX that we have the investment from Franco-Nevada. We were the only royalty company that Franco had ever bought stock in, and they were our lender. And that loan will be paid off part and parcel to this transaction. I would like to point that out. But we have a great deal of respect for Franco and look forward to them continuing on as a shareholder in the merged company. Sprott -- and specifically Rick Rule and the Sprott Global side have been massive supporters of us over the years and are supportive of this transaction. Well, with that, should we move on to answer some questions, Fred, what do you think?

Yes. I think, Trevor, if we could hand over to you, that would be great, and you can take away with a couple of...

All right. Thanks, gentlemen. Again, for anybody with questions, I know a lot have been rolling in, put your questions into the chat, and then we will relay them here over the next few minutes. And then also, as I mentioned before, we do have Juan Sartori on this call as well. He will be addressing any specific questions his way later in this presentation. But I would like to start things off here. And this is probably tackle a couple of the themes of questions that have come in. Dave, the prospect generator model, you did address this a little bit in the presentation, but that's been a real pillar of EMX throughout its business. How do you balance not only prospect generation model in this new combined company, but also a lot of the G&A that comes along with it. And Fred, maybe you addressed that as the new COO. How will that be balanced? Will it be brought into the mold and kind of address that.

So we're big believers in this and specifically big believers in the synergy and the value that creates in the merged business model. And I anticipate that the royalty generation side of our business will remain approximately the same size, which means that as a percent of the overall business, it will be cut in half, if that makes any sense. And -- but we still get the benefits of that with respect to superior due diligence and royalty opportunity smoothing around the world across the entire business. Does that answer your question, Trevor?

Yes. And Fred, maybe you talk about that's a different aspect with Elemental and your business model that you'll be working on.

Yes. And look, I think there's some similarities here. And obviously, Elemental and Altus was a merger of 2 companies. And on the Altus Board was EMX's Chairman, Michael Winn. And I think some people know that, but not everyone. And I think 2 of the directors on the Elemental Board had both previously been directors of prospect generator companies. So very good understanding of the business model. And if you look at our portfolio today, actually, our most recent producing royalty was generated through that model where the project was advanced successfully sold to Allied Gold, who took it from resource through to definition delineation, drilling, permitting and production in about 18 months. And that is now paying producing royalty on part of a 10-million-ounce endowment at Sadiola mine. So clearly, we've got some examples in our portfolio where we've benefited from that. And I think one of the interesting synergies that we're looking forward to is we've always found historically that some of the best deals we have done have been ones where we've been able to identify the opportunity ourselves, really evaluate it and then transact on it in an efficient bilateral manner. And I think that a lot of the skill sets and sort of on-the-ground experience that EMX have, I think that's going to be a real synergy working alongside on that royalty acquisition front. And already talking today between the teams, there are examples of opportunities where I think we can work together really well and do a better job than we would have been able to individually.

Just knowing the EMX team, some of the best technical people on the ground I've ever met and worked with a really exciting time. So -- and on the back of that, there's a question regarding just kind of the scale of the prospect generation. Will the G&A be maintained at an absolute level or a percentage of revenue? I think this is a good question.

So I've always believed that it should be maintained at a prudent absolute level, not as a percentage of the overall business. So therefore, as growth of the revenues increase, it's a smaller percentage of the overall business, if that's specifically what you're asking. We found that the best royalty generation teams work when they're a little bit underfunded. So they're really focused on frugality and covering the ground efficiently.

And I would add just to that, Trevor, look, this transaction is clearly going to generate some synergies at the basic level in terms of the listing, the corporate entity and a lot of the costs -- ancillary costs that go along with that. So we know there's going to be multimillion ounce synergies on that corporate front to begin with. And I think beyond that, we're going to work together really hard over the coming weeks to sort of put the team in the best position and take advantage of the opportunities. And one of the key, I think, almost philosophies from Tether has been looking forward and looking at that growth mindset and scaling up the business. And we really want to have as many opportunities as possible to grow that business. And the generation side and the acquisition side go really well together in helping us do that as efficiently, as quickly and ultimately and as accretively as possible.

Well said, Fred.

A couple of questions that came in regarding kind of management of the equity. Elemental has had a normal course issuer bid in place. EMX has been actively buying back shares in the last number of quarters here. Given this deal, is it -- can we assume that both kind of get put on pause for this to continue to move forward and close? And where does that lead those 2 kind of action items once the new company is in place?

We've not yet had a Board decision on this, but I believe that it's most prudent for us to pause the normal course issuer bids for the time being whilst we integrate the 2 companies and ascertain our go-forward cost of capital, which I believe has decreased substantially.

And then look, on the Elemental side, we haven't used our normal course issuer bid yet. So we put it in place. We never actually used it. And I think we've been in and out of sort of periods where we're not able to use it. So we haven't used it yet. We're not planning to in the short term, but we have it available if and when needed.

In the news release, and this is another question that came in a couple of times, in the news release, you did mention having a new U.S. listing in due course. EMX already has a U.S. listing on the NYSE. Can you kind of walk us through this decision on creating a new listing in NYSE in due time? Why not just move everything over to the EMX listing? How are we balancing that? How should we...

Go ahead, Fred, you can explain that.

Yes. Well, I think, look, just as a result of the structure of the combination, we're not going to be able to keep the listing that EMX already have. And so we're applying for one in parallel that will be up and running by the time the combination closes, and we can go into seamlessly. And so I think it's -- that's more of a structuring point of view from a point of view of this combination. And clearly, putting it together, there were a whole number of factors that we took into account from a tax perspective, from a shareholders' perspective, and it worked out that, that was the optimal way to structure this. But it shouldn't have any meaningful impact in terms of we will have a U.S. listing prior to this transaction closing. And so the combined company has one, but that's the reason.

Okay. In head office, Fred being based in London, Dave being based here in Denver area, where will the head office be?

We're a North American company and we have our headquarters in Vancouver and Denver. We intend on keeping that, and that will be the main headquarters, but I believe it's quite prudent for us to have a footprint in Europe as well. I'm delighted to have Fred in London.

Yes. Look, ironically, Trevor, actually, nearly all the European royalties, if not all, come from the EMX side, even though they're [indiscernible] in principle. But I think when we did the merger with Altus, and for those who know Elemental, we were a British Columbia Incorporated company and Altus were actually listed in London. And one of the things, the conscious decisions we made at that point was for the BC company to continue. And I think that was really driven by the fact that the center of gravity for the royalty business here, it's in North America. And if you look across the space, it's the most knowledgeable investors the biggest companies and players in the space, they are all really in North America. And so for us, it's actually been on that sense, it's helped the transaction that both companies are BC incorporated companies, and we're able to continue that going forward.

Dave, can you comment on the position of your shareholder, Franco-Nevada going forward with this deal and support?

So they had to approve the transaction, part and parcel to the covenants of the loan agreement, and they've given us that approval.

Okay. Very good. There's a couple of questions coming in here. Let's see. Here's a good one. Dividends, thoughts on dividends. Maybe jump in the horse here. We're putting the cart before the horse. Thoughts on dividends going forward now that you are all likelihood looking to be a $1 billion royalty company.

Go. Ahead, Fred, you can take that one.

Look, from the elemental perspective, and it's probably not a much known fact, but actually as a private company from day 1, we paid a dividend, and it was in the constitution of the company. And when we went public, actually, a lot of the larger institutional shareholders who back to us said, look, the most important thing for the company at this stage is to scale up and lower your cost of capital. And if you look at us since we went public then in 2020, I think we've done that. And this transaction puts us in an even stronger position. And I think the privileged position where we can actually, as a combined entity, we have so many options on the table to add shareholder value. We can use a normal course issuer bid opportunistically if we think the value of the shares does not reflect the value of the portfolio. We can put a dividend in place because we actually have the revenue, the balance sheet, the cash flow and that margin to support a sensible dividend while still redeploying capital into acquisitions, into new transactions and investments. So no decision at this point, but I think that the combined pro forma entity is in an incredibly strong position to be able to look at all of these and have all of these levers on the table. And I'm very conscious that, that is -- as you scale up as a royalty company, it's a sign of a more mature business that you can afford to pay a sensible dividend and still maintain those growth rates.

It's a logical path forward.

Okay. Dave, you had talked a little earlier about the long support of Adrian Day. He's on this call, and he's put in a couple of questions, and so I'll share one of those with you. His question was about timing. You mentioned you two had been in discussions about these synergies for a year, if not a little bit more. Why is now the appropriate time for this combination? Why not a year ago?

The EMX was aware that there was an immense discovery being made at Timok. And we want to make sure that, that discovery was actuated and understood by our shareholders before we proceeded with a major corporate transaction. In the meantime -- and that's been quite beneficial for us. In the meantime, Fred has done his own great transactions and had their own success as well. And I will point out that we're particularly excited about bringing in Tether and the financial backing and capital availability that Tether has. And that was the tipping point to what already was a conclusion that was forthcoming.

Okay. Actually, so you mentioned Tether. I'm wondering if -- one, if you might be able to jump on. There's a couple of questions that came in, probably best for you to address it. Thanks so much for joining us and giving us some of your time. Maybe first, quick comments from you, the backing of this deal, and welcome to the Gold Royalty space.

No, it's a pleasure to be here. Thank you for allowing me to address it. First of all, I would say congratulations to everybody because it was some weeks of a lot of work, a lot of due diligence, a lot of structuring lawyers and organization. But I think we are all very, very happy and excited to announce this transaction today. I think the market is seeing the benefits that we saw when we started discussing it for quite some time. And I think what I would highlight is the power of the combination because you have 2 very good companies with very good management with good assets, but the combination of the 2 is not an addition. It's a multiplication of value of experience of capacity. They are very complementarity. And if you look at philosophically always there's a bit of a dispute between the generation model and the acquisition model. And I think here, we were able to put together the best-in-class of royalty acquisitions with the best-in-class of royalty generations. And they are both very complementary and can create a lot of value together. I think when I see it today that we are doing the dream team of royalty of the next years and this is the basis for a company that is going, I think, to surprise by the value of what it can do. From our point of view, also at Tether to have been a catalyst for this to happen as a supportive shareholder where the whole pipeline and opportunities that this management team see, we're able now to fund to lower the cost of capital in order to reach those levels of bigger company, bigger valuation and that virtuous cycle that we see happening when gold royalty companies start growing in size, become more profitable and become more organized. But we also see it in the experience of David and the youth of Fred, the capacity of the team to work together there. The fact that it's now a global company with presence in London, in Denver, royalties all over the world. From almost all point of view, we see really a multiplication of the power of this combination and very, very strong and clear catalyst in the very short term. I would say, even between now and the end of the year, we're going to have so many exciting and positive catalysts, whether it's the U.S. listing, more liquidity, more coverage, more capacity to go with this additional financing for opportunities that we are seeing that makes us very, very excited and proud to announce this deal today and be part of it and to see the support we got from all the shareholders that we crossed the wall a few days ago and are getting in touch today. I think we are all very aligned on what we want to accomplish and that the future is very, very bright and announced this on a day where gold is reaching an all-time high and going into uncharted territories as probably just the beginning of a very powerful trend would not position us better to announce this deal in this moment with this team. So we will be supporting and really strongly, strongly working hard at continuing with this kind of transactions that we are announcing today in the short-term future of the company.

Thanks, Juan. There was a question that actually came in or a couple of them I'd like to address with you. One of them is Tether's in your roles with this new merged company on the back of now it's kind of a multipronged business strategy with the prospect generation. What kind of support or how do you see that role from you and Tether coming in to support the other aspects of this new business?

We have -- we believe that here, we haven't invested only in gold or only in royalties, we've invested in people. And we see the value of the experience here as one of the most important intangibles of this company that we want to support and is going to create the value. So really, what we have said is you guys are the best in this industry. We want to allocate more capital to this industry, and this is the trusted vehicle and the trusted team to do it. So really, we will be able to support and back their views of the market that as we see by the track record is also very disciplined. So they deploy in smart deals, in good deals. They know how to find it. And I don't think it's a matter of allocating generation versus acquisitions. It's really a matter of allocating profitably and creating value across all of the different possibilities that this team has now of executing.

Okay. There was another question that came in regarding Tether. Do they hold antidilution rights? And do -- does Tether intend to continue that exercise?

We -- I don't think we have anti-dilution rights. So -- but we are a happy shareholder and probably we are happy to continue investing more into the company if it requires financing and be very supportive. If the company has good ideas, we are happy to provide more capital at it, like most of the other shareholders that called us today. And definitely, the idea is to try to retain the high, high-quality shareholder list that this company already had. We are a big and very committed shareholder, but I think there's a lot of equally impressive and equally supportive shareholders in this company that we are very, very proud to partner with from now into the future.

Yes. You've done an excellent job of really merging physical assets with the digital assets, leaps and bounds in the last 6 months or so. What can you tell us from the sentiment you hear from the new generation of digital assets and the people focusing in that -- in this realm? Are they starting to look towards the likes of Tether and the physical asset market and the gold asset that maybe we're starting to see a shift or a rotation within the generational models of those 2. Can you address that?

I have no doubt that the new generation has realized that the financial system or the traditional one has to change and probably is stronger and better for people if it relies on nongovernment-related assets that have a real value and have limited supply, like, for example, our gold or Bitcoin in the digital way. But I don't think they separate by digital or real. They separate into non-intervened assets that have limited supply and real value. And all of the financial system will start relying more on those assets and less in the traditional ones. So what -- the impact we see in gold today is because central banks are suddenly again realizing it's a better asset to hold than most of the fiat or treasuries or financial assets because retail people are suddenly able to own gold in innovative ways like can be Tether Gold, one of our products where they can suddenly own it on a wallet, use it to pay for anything without having to have physical one or paying the huge fees that the financial industries can put. The financial industry transform gold into a negative carry asset when actually it's not. So we think that some of those digital innovations can probably give gold a stronger shine, make it more accessible for more people. Why not be more and more of the international reserve currency that it once was, thanks to the technological innovations. That's the direction that we think is going and why we like the exposure to gold. And then obviously, exposure to gold with an additional value that is the royalty model that David explained very well why it's superior is what makes this company so attractive to invest in.

A lot of focus on gold. Can you address merging of Caserones brings in a lot of copper as well. EMX has a number of base metal assets within that portfolio, silver as well. You talked a lot about gold. Can you maybe address not only silver, obviously, that's important as well in the precious metals complex, but also the base metals coming into this portfolio?

Look, the focus is gold and precious metals. But David gave me a geological explanation. The gold rarely comes alone. So you go to look for the gold, usually, you're going to get copper, silver or other things. So it's part of the pursuit of what we like the most, makes it a better business, but taking the rest of it. And I think there's a fine line there. Precious metals companies trade at a better valuation. We want to make sure that there are some diversification, but at the same time, the focus on precious metals is important for investors' exposure to be clearly defined for valuation of the company. So we may have some other royalties, but I think the focus will continue to be on precious metals and a big, big percentage of it in gold and associated ones.

Thank you, Juan. That's -- I think we're wrapping things up. Dave, Fred, Juan, if you have any closing comments, please share with me before we depart.

Well, look, I think maybe just a huge thank you to, first of all, all the people attending today, particularly the shareholders on both sides. And we're fortunate to have both EMX and Elemental who have had some really supportive long-term shareholders, mutual shareholders who have backed us through the markets. And I think for a long time, a number of investors in the royalty space have been looking the opportunity to create a new leader from the junior space and see that consolidation happening. And I think really pleased to be able to do it with EMX today and a huge thank you to the teams on both sides, the Boards everyone who's been advisers working to get us to this point today and looking forward to the next couple of months, which is going to be incredibly busy with a lot going on and working with Dave and the team at EMX to [Audio Gap].

Everything Fred just said, thank you very much. I'll specifically point out that we will be presenting jointly at the Precious Metals Summit in Beaver Creek next week. We have 2 time slots, one originally for EMX and one for Elemental. Our intent is to jointly present the big picture of the combined company in the first presentation and go into greater detail about some of the individual assets, answering many of the questions that I see here today about what -- which mines are coming in production next to be the catalyst for cash flow and whatnot. That will be an opportunity for us to address that. And both of those will be broadcast -- and then likewise, moving on to the Denver Gold Show the week after that, there'll be a further presentation and a chance for folks to ask us questions. As I said, those presentations will be broadcast. So there's a chance to learn more from us via those venues. Thanks very much to everyone.

Thank you. All right, everybody. That concludes the presentation of the webinar. Thank you so much for your time. Have a wonderful day and a wonderful weekend.

Thanks all.

Thank you.