Gold Royalty Corp. (GROY) Earnings Call Transcript & Summary

We're very pleased to have David Garofalo, the Chairman and CEO of Gold Royalty Company; and Peter Behncke, the Manager of Corporate Development and Investor Relations, to tell us all about the progress at Gold Royalty Company. David, please.

Well, thanks, John, and it's always a delight to be included in your conference, and thank you so much for the effort you put in following our story. And it is still a relatively new story to the royalty space, having only IPO in March of 2021, initially with a relatively modest portfolio of 18 royalties, none of them are cash flowing, though the foundational assets of our portfolio have over 30 million ounces of gold equivalent resource on them in a dozen development stage projects throughout the Americas that we had written royalties on from our parent company, former parent company, Gold Mining Inc, before we were spun out in an IPO in March of 2021, looking to raise $30 million in our IPO -- we raised $90 million and achieved a post-money valuation of $200 million. And as John pointed out just prior to this presentation, the stock IPO-ed at a much higher price than where we are today. But I would say that the company is measurably better than it was in our IPO because back then, we didn't have cash flowing assets. We have now over 240 royalties in the portfolio, and we're very much in a catalyst-rich year from the standpoint of a lot of the growth in our revenue that we've been promising since our IPO is now being crystallized in a very meaningful fashion. Now Peter, can I advance these slides or should you... Now Peter, can I advance these slides? Or should you.

You just let me know, I can move forward.

Peter has the controls.

Yes.

Okay. Perfect. So this very much is an inflection year for us. Up to this point, we've been -- I would characterize this as a start-up where we were assembling assets, again, a very diverse portfolio of assets at over 240 royalties. But we now have 7 that are cash flowing. We have another 14 in various stages of construction and development. And this year, that's translating to 160% growth in revenue, and that means our first year of positive free cash flow. And we're seeing 60% compounded annual growth in our revenue right through the end of the decade. And given that we have a very stable cost structure, in fact, that G&A cost profile has come down significantly as a result of our post-merger integration efforts over the course of 2021 when we absorb 3 companies, we realize significant G&A synergies. We're seeing our cost structure having come down and our revenue going up quite dramatically over the course of the next several years. So that incremental growth in revenue falls right to the bottom line. It means quite exponential free cash flow generation and growth over the course of the decade coming from some of the largest scale mines in North America upon which we have royalties. Very attractive valuation at this point. And this is based on a consensus estimate of P to NAVs. And you'll see a little later on the presentation, we're trading at less than half the price and net asset value of many of our competitors. But I would argue that we offer quality not only in terms of the long tenure of our assets, the scale of them, but also the low geopolitical risk with a heavy concentration of our portfolio in the Americas with particular focus on Nevada, Quebec and Ontario, which are primly rated 1 of the top 5 jurisdictions or 3 of the top 5 jurisdictions in the world for mineral potential, low political risk and low regulatory risk. And even though we have 240 royalties, and we certainly have a heavy preponderance of royalties in earlier stage, either a resource stage or pre-resource stage, which gives us a lot of optionality I would argue that we have some of the larger scale assets in the universe. We have royalties of 3 of the 5 biggest producing gold mines in North America, and that provides a foundational element, a cornerstone, if you will, for our business for decades to come given the long reserve lives, with significant scale and an inherently low cost structure because of the economies of scale in those large-scale mines. And the reason we've been able to scale up the business so quickly, again, off a very modest portfolio of 18 non-cash flowing royalties is because we've been as careful about curating people as we have assets. And collectively, my Board of Management has over 400 years of industry experience. I've come from an operation and mine building background having run Gold Corp before, Hudbay before that, was the CFO at Agnico Eagle for a dozen years and then started my career at Inmet Mining. But there are a lot of people around the boardroom, people who have similar experience levels to me. That includes the former Head of Merrill Lynch's Mining Group as our Chief Development Officer, the former Head of UBS' Mining Group as our Chief Financial Officer, and within our Board, we have Warren Gilman, who runs Queen's Road Capital over 35 years of industry experience, a mining engineer by training. Alan Hair, a Mineral Process Engineer with over 35 years of experience and a prolific mine builder in his own right, having built the Constancia mine in Peru, Lalor in Manitoba and the 777 mine, which is now exhausted, but 777 mine in Northern Manitoba. So he brings a wealth of experience as a mine builder and operator and a former C-level executive, having been my successor at Hudbay. So it's really curating good people that gives us the opportunity to leverage their relationships within the industry to bring opportunities to the table for us as a result of those relationships and allowing us to build our portfolio by buying assets on an exclusive basis. We're certainly not in a position to compete with Franco-Nevada and Wheaton Precious Metals. Our cost structure or capital cost or cost of capital, excuse me, is significantly higher. The reason we've been able to build the portfolio so quickly and so dramatically is by leveraging those relationships, we have been able to acquire deals on an exclusive basis. So we're not in competitive processes where inevitably we would fail where there's always somebody that has a lower cost of capital willing to pay $1 more for any acquisitions we might be able to do. But as you can see, and we'll talk about this when we talk about the various platforms for growth, -- it's very important for us to have those multiple platforms of growth in order to be able to grow when one window close, open up another where we can acquire royalties on a much more cost-effective, high rate of return basis. Peter, we can go to the next slide. This just gives you in an encapsulated form, an overview of how we built the business in 3.5 short years since our IPO. Again, starting with 18 Royalties, none of them cash flowing, raising $90 million, recognizing, as John correctly pointed out prior to this presentation that we got a very healthy valuation in our IPO, recognizing that we had a healthy valuation, particularly on a relative basis to our competitors, we started rolling up our peer companies. And we bought 3 of them over the course of 2021, Ely Gold Royalties, Golden Valley and Abitibi Royalties. And that added another 150 royalties to the portfolio. And most meaningfully out of those acquisitions, we were able to acquire a royalty on Canadian Malartic, which is around the #2, #3 producer in Canada in terms of gold production and is transitioning to a $1.6 billion expansion into an underground mine where we have significantly more royalty coverage with a 3% NSR on half of the overall resource. A resource that I should add and hasten had is still growing significantly through Agnico Eagle, my old shops exploration efforts as they gain access to drill that deposit from underground from the underground infrastructure they're putting in place for production. Through the acquisition of a third-party royalty on Cote, this was one of the original prospectors that actually staked out the property. He died a few years ago and as a state was looking to sell the royalty, we're able to pick up a $16.5 million acquisition on a 0.75% NSR royalty on the highest grade portion of the open pit at Cote. And so at current gold prices, we'd be seeing a payback on that investment of sub-3 years. And it will be in that high-grade zone for the next 5 or 6 years. So we're going to get all of our return in the first half a dozen years of production at Cote. And then over the course of the last year, again, through a third-party royalty acquisition from Endeavour Silver, we got a royalty on the producing copper silver mine, Cozamin, that's operated by Capstone in Mexico. And that has 6 years of reserves and with resources about a dozen years of mine life ahead of it. And this is a deposit since its inception in 2006 has always had about 6 years of reserves ahead of it. And the operators have been able to demonstrate geological continuity just through ongoing brownfield exploration efforts. So we have a high degree of confidence this will represent a long-life deposit that's already paying us cash flow from day 1. It was immediately cash flow per share accretive. Also last year, we did a project financing for Borborema along with Dundee Corp, again, leveraging relationships I had with Jonathan Goodman, the CEO of Dundee Corp, who had a joint venture interest in the project, was organizing a debt project financing and left my team in charge of trying to find a royalty financing to put in place to supplement the project debt financing they did with Santander. We acquired this royalty, wrote this royalty, originated it for $31 million through a structured financing that pays us during the construction phase and preproduction royalty payments. But also part of our financing is a Gold-Linked convertible note that pays interest to us during the construction phase as well, which we can then convert into an additional NSR and we're confident that the project has achieved design capacity over the course of the next year or so expected to be in production in the first quarter of 2025. And then another unique avenue for growth has been through SOQUEM. This is the Quebec arm -- or excuse me, the exploration arm of the Quebec government that underwrites exploration efforts for the juniors in the province. And over the course of many decades, it assembled a royalty portfolio, a number in the dozens. We found a core of royalties of 21 in total within that portfolio that we thought had economic interest with solid operators. for $600,000, we picked up 21 royalties, and that was $600,000 in stock. And as a result of that, not only did we get SOQUEM as a strategic shareholder, the Quebec government, but we also now have an exclusive conduit to pick up additional royalties in the Quebec region from SOQUEM as a result of the relationship we established with the Quebec government. So having that critical mass within the province of Quebec has paid dividends for us in terms of being able to cost effectively continue to perpetuate our substantial royalty portfolio in the Abitibi region in particular. And then finally, the Vares Stream is a first time we've done a copper stream on a project in a producing mine, in fact, in Bosnia, which was built by Adriatic Metals, now in production, expected to achieve nameplate capacity in the fourth quarter and will be contributing revenue immediately to us over the course of the next couple of quarters. as it achieves its design capacity. And we have 100% of the copper stream on this project with fixed payability factors. That's very important. So grades tend to fluctuate within concentrates, but it doesn't matter, we get 24% payability on the copper concentrate regardless of whether those payability factors fall below that level or not. So that is a fixed payability factor with complete upside on the copper price on a substantial long-life 2-decade deposit with significant exploration expansion potential in a fledgling democracy or a fledgling, I should say, EU membership state, which has applied for EU membership in short order. And so we're in a country that's derisking geopolitically very rapidly as a result of their desire to become part of the European Union. So that's really how we've grown to 240-plus royalties over the course of the last several years. And it's really a testament to the fact that we've built up this multi-platform approach to grow. When we had the currency to do so over the course of 2021, we used it aggressively to roll up our competitors. So we've done M&A, and that was an important source of providing over 150 of royalties through that approach on the M&A side when we have the currency to do so. When the Federal Reserve pivoted and started tightening interest rates in early 2022, we saw a significant derating of the gold industry and exodus of capital, if you will. But in particular, stocks that had significant growth saw a disproportionate derating, recognizing that we started to lose that multiple advantage in 2022. We stopped doing M&A, and we started growing through other means. And as I mentioned, we picked up royalties through third-party royalty acquisitions from prospectors and the like that we're looking to monetize their staking efforts. We picked up royalties through project financings as we did the Borborema financing with Aura Minerals last year. And then through the acquisition of Ely and Golden Valley, we picked up the capability to generate royalties organically. We have one gentleman in Reno, Nevada, Jerry Baughman, one of the co-founders of Ely and Glenn Mullen in Quebec, who runs a couple of small exploration companies. We have rights on any of the royalties they generate organically. And so through their sweat equity, they've generated collectively over 60 royalties since we acquired their companies and effectively at 0 cost for us and not only at 0 cost, but they option payments on their staking efforts. So as they farm out the properties, not only do they get a royalty back in return from the operator, but we also get option payments. And last year alone, we generated over $3 million of option revenues on those farmed out properties, which has helped to mitigate almost 50% of our G&A costs corporately. So not only has it become a source of cheap optionality for our shareholders, but it also helped to defray our corporate cost, which is about $7 million per annum, including all of our listing fees and people. And you're looking at about 1/4 of the company, I should add here on the phone between myself and Peter. We had 8 full-time equivalent employees, and I'm quite confident we could run a business 10x the size in terms of the number of royalties in our portfolio without having to add any additional heads to our headcount. So it's very much an [ emily ] scalable business, which means that revenue growth that I talked about earlier on really falls right to the bottom line. Peter, we can go to the next slide, please. This just gives you a sense of the revenue growth. And what we see in bar chart here is our gold equivalent attributable production to us. And last year was our first year -- first full year of revenue from a number of our assets, and we produced about 5,000 tonnes of gold -- 5,000 ounces, excuse me, of gold equivalent ounces of production -- sorry, 2,500, excuse me. And now we're close to 5,900 ounces of gold equivalent this year. And what you see in the lines is what that translates to in dollars of revenue based on your gold price assumptions. So we've flexed it between $1,800 to up to $2,800 an ounce. So exiting the decade with between -- at current gold prices, $60 million to $80 million of revenue against a G&A forecast of about $7 million. So quite dramatic growth in revenues. If we very crudely took the multiple that, for example, Franco-Nevada is trading on their revenue profile, it's about 20x and apply that to our revenue profile at the end of the decade, that would intimate that we should be at close to $1.5 billion market cap versus the $230 million that we're currently experiencing in terms of our aggregate market cap. So quite a dramatic re-weighting that we expect over the course of the next several years as that revenue growth has crystallized. And by the way, these are not our own projections. These are consensus estimates from the 6 analysts that cover us across the sell-side universe. And so it's based on the guidance provided by the underlying operating companies, which typically gets haircuted by the sell-side analysts that then publish their estimates of revenue growth within our portfolio. So quite dramatic growth driven by some -- again, some of the largest cap companies in the world. We have royalties on the assets of Agnico Eagle, Barrick, Newmont, among others, and some of the largest producing gold mines in North America, namely Canadian Malartic, Cote and Goldstrike. We have the underground extension, a royalty both on an NSR and NPI basis that are the biggest drivers of growth. But what we've been able to do over the last year in adding cash flowing royalties on Borborema, Vares and Cozamin is allowed to vastly diversify our portfolio of cash flowing royalties in some of the longer life assets in the mid-tier space to supplement the growth that we have from some of the largest cap companies in our sector. Peter? This gives you an overview. And again, on a consensus basis for the 6 sell-side analysts that cover us, and I'll get into who those sell-side analysts a little later in the presentation are. But on a consensus estimate, we're trading at about 0.5x net asset value. You can see the category killers in our industry, Wheaton, Franco and Royal Gold are typically trading at 2 to 3x, a little bit deflated of late, particularly with the problems that Franco-Nevada has had in Panama that saw a bit of a derating in their stock, but typically, they've been trading at upwards of 3x price to net asset value. And there's quite a divide between the large caps and everybody else. And I would characterize everybody else as being relatively small caps, sub-$5 billion market cap. And you can see quite a disparity between the large cap players and the smaller cap players in our sector. And that in itself affords an opportunity for this industry to create a mid-tier champion where currently none exists. There isn't anybody in that Goldilocks zone, a $5 billion to $10 billion market cap that's big enough to be institutionally relevant, but still small enough to grow. I would argue as high-quality company as Franco, Wheaton are, and they are tremendous companies with great management teams and tremendous assets. I would argue that they're growth. At that size, it's very difficult for them to move the needle with any individual royalty acquisition, where within a smaller cap universe through consolidation, we think there's an opportunity to create that $5 billion to $10 billion market cap company that can provide the liquidity that many large-cap institutions are looking for on the buy side, but still provide a platform to significantly grow. And I think if we can create that vehicle through consolidation and when I say we, I'm talking collectively among the smaller cap universe in pictured here, if we can come to a many of the minds and create that consolidated vehicle that achieve that mid-tier status, we think we can capture market share, if you will, from the buy side from the larger cap players in the space and have the potential even to achieve a multiple superior to those because we can offer both liquidity and growth, which I think they're going to be challenged to provide in spite of the quality of the portfolio they currently own. So that's the opportunity we see. Absent that, if all we do sit on our hands and crystallize the growth I showed you in the previous slides, we see a re-rating to at least the median mean of our smaller cap peers, which are typically trading at 1.2x NAV, which would indicate that we should see a doubling our shares, all things being equal, as we achieve that growth with some of the highest quality assets in the highest quality jurisdictions in the world. Peter? This just gives you an overview of how pure play this is from a precious metal standpoint. Yes, we've introduced some diversification on the copper side with both the Vares copper stream and the Cozamin Royalty, but we're still very much focused on precious metals when you look at the percentage, not only of our book value, but I would say our net asset value is still very much in that horizon as well in the 90% range, give or take, which means we do have some scope for diversification, but we'll still always remain a very much precious metal-oriented company. And from a geographical standpoint, even though we've introduced some diversification in Brazil through Borborema and Vares and Bosnia, we still have over 80% of our royalty portfolio by number and by net asset value focused in Nevada, Quebec and Ontario, again, rated among the top 5 jurisdictions globally by the Fraser Institute for Mineral Potential, low political risk and low regulatory risk. Peter? This next slide just gives you an overview of some of the levers for growth that we expect to deliver 160% growth in revenue this year alone. As we see Odyssey is gradually ramping up from a ramp as they complete the permanent shaft. And as we'll get into this a little later on, and I'll hand it off to Peter to talk about Odyssey in particular a little later on, there's significant exploration potential within Odyssey as they open up the underground horizons for production, they also open it up as has been Agnico's habit, as I know well from my many years there, as they open up those horizons for production, they also open them up for exploration. And they're very aggressive about getting underground drill platforms in place as they open up those lower production horizons. And virtually all of the drilling up to this point at Odyssey has been from surface where they've delineated a massive resource upon which we have a 3% NSR and the majority of that resource. but they are going to be opening up drill horizons and expanding that resource, converting a lot of that resource into reserve. They've only incorporated about half of the underground resource into the mine plan. As they tighten up the drill spacing, that will open up conversion of that resource to reserve and open up our economic footprint on this deposit as they convert a lot of those zones into reserve within our coverage area for our 3% royalty that we have on this property. The Vares, as I said, started up production earlier this year, expect to achieve nameplate capacity in the fourth quarter. We have 100% of the copper stream. And this has not only an 18-year mine life, but significant expansion potential, both from an exploration and production standpoint, which we'll get into a little later on in the presentation. Cote achieved production this year as well, IAMGOLD's new flagship mine in Northern Ontario, and it's expected to achieve nameplate capacity in the fourth quarter, already achieved commercial production a month ahead of schedule in August of this year. And as I said, we have coverage on the highest grade portion of the open pit Zone 5 with a 0.75% NSR, and we're looking at a very quick payback on the small initial investment that we made. And Borborema, expected to be in production in the first quarter of next year, already half constructed. Our has been a prolific builder of mines over the last several years. and a result of the structure that we have in place, we're getting preproduction royalty payments and interest on the convertible Gold-Link loan that we put in place to help finance the construction of this project. So all these are contributing meaningful revenue growth, overall, about 160% growth in our revenue this year and our first year of positive free cash flow, and we expect positive broke earnings in the second half of this year for the first time as well. So we very much transitioned from a start-up to a sustainable and significantly growing business from a free cash flow perspective. Peter? So with that, I'm going to hand it off to Peter maybe to talk in a little bit more detail about our pipeline. From, again, free cash flow or cash flowing assets at the right end of the spectrum to pre-resource stage assets right on the left side of the spectrum that you see here that represents the life cycle of a mine. So Peter?

Yes. Thanks, David. And just to reiterate on that last slide, this really is the key inflection point of the portfolio. And not to dance around the slides too much, but one of the critiques of the company and why we've seen ourselves at this 0.5% suppressed multiple relative to peers is we haven't delivered that cash flow yet to date. It's been a development heavy story. And as you've seen across the sector, whether it's royalty companies, explorers, developers, growth is out of favor in contrast relative to cash flow. But 2024 is really that inflection point, as David mentioned, going from 2,500 GEOs, $5 million in revenue, not even covering fully our G&A costs in 2023, now breaking into free cash flow and having that line of sight to $20 million plus in revenue in 2025 and upwards of $70 million with that major step change in 2028, really being driven by those key development stage assets, which David already spoke to, Vares, Cote, Odyssey, the largest gold mines in Canada, really driving forward our growth. Coming back to our pipeline, looking at the cash flowing assets, 7 in the producing category. Vares and Cote having achieved production this year, ramping up in Q4 to full nameplate capacity. We will benefit from a full year of production from both those assets in 2025. And importantly, both with 20-year-plus reserve lives with significant expansion and exploration potential to produce beyond that. Borborema and Cozamin, 2 other recent acquisitions, Borborema providing us initial cash flow through a structured financing package, but really ramping up through 2025 as that asset achieves initial production. I'd highlight as well at Borborema only approximately 1/4 of the underlying ounces are incorporated in that initial 12-year mine life. We see significant potential beyond that. Then the other producing assets within our portfolio, Canadian Malartic, Borden and then a smaller asset Isabella Pearl, supplementing our revenue this year. Beyond these cash flowing assets, and I won't go through all 22430-some-odd advanced exploration assets, John. But the one we really do like to highlight is our royalty over the REN project. REN is the underground extension of the Goldstrike mine, the northern underground component there. Barrick delineated an initial resource of approximately 1.6 million ounces and inferred at just shy of 7 grams per tonne. So very attractive high grade to supplement the feed at the complex at Goldstrike. They're completing advanced engineering studies and dewatering currently, and we've had a team on site there. So we have strong conviction that we'll see this incorporated into the overall Carlin Complex 10-year mine plan in the very near term. Qualitative metrics, just to reiterate David's point, geographically, you see a lot of Canadian and U.S. flags on our pipeline, over 80% of the portfolio by number of assets and value in very safe jurisdictions, specifically Quebec, Ontario and Nevada. And importantly, a lot of these advanced exploration and exploration projects are brownfields claims associated near existing mine sites where we're seeing exploration investments by the likes of Newmont, Barrick and Agnico Eagle. And that really helps validate the potential there, the amount of exploration investment that's being put into our portfolio by well-established operators with the expertise. And in fact, to quantify that, we've seen over 500,000 meters of drilling across the portfolio per year over the last 4 years, upwards of 2 million meters drilled. That's the equivalent of over $200 million being put into the portfolio each year by our operating partners. That doesn't immediately result in near-term cash flow or near-term production increases in our portfolio, but it's a metric that will help drive increased resource growth and increase that growth out towards the 2030s and beyond in our portfolio. And to reiterate the benefits of the royalty model, all this investment, all this R&D comes at no cost to us as a royalty holder. That investment in exploration and expansion is being conducted by our operators, but we don't have to put up a dollar. Now to briefly go over some of the nuts and bolts before getting into specific assets or John opening it up to any of your questions. I'd highlight our shareholder base. And this is not just a testament to the strong management team and the expertise that we bring at Gold Royalty, but also an indication of the inflection point. We've seen an uptick in our institutional ownership over the past year, and that is representative of the change in the fundamentals of the company. We're a much stronger free cash flow business with a strong outlook over the coming quarters. We have strong strategic backing with the likes of Gold Mining Inc., our former parent company. Also, Barrick is our second largest shareholder through the Nevada Gold Mines joint venture. Other groups like Orion Mine Finance, Taurus Royalty Fund, Queen's Road Capital, resource sector specialists, financiers in the space are strong strategic backers and see the re-rate potential here in the near term. Board and management also own approximately 5% beyond the Gold Mining stake. Looking at the balance sheet and analyst coverage, 6 analysts, BMO, Haywood, H.C. Wainwright, National Bank, Raymond James and Scotiabank. So well-renowned analysts on the street. And I'd also highlight a recent appointment of the company is Jackie Przybylowski, a well-respected analyst from BMO, used to cover the gold and copper majors for them. She's joined as VP Capital Markets to help increase the awareness of the Gold Royalty story with larger institutions. So that's been a very exciting appointment for us at Gold Royalty. Looking at the balance sheet, about 169 million shares outstanding, about 199 million fully diluted share count, market cap as it sits today around $225 million. We have $4 million in cash in the bank, about $10 million available within our credit facility. We do have a convertible private placement that we completed in late 2023 with Queen’s Road Capital and Taurus, which I mentioned previously. So relatively clean balance sheet.

Peter, What is the conversion price as we convert?

The converts have $1.90 conversion price.

And that's a 5-year piece of paper for John unsecured, no financial covenants, callable by us after 3 years. So the anniversary, they were issued in November of last year. So the anniversary -- the 3-year anniversary would be November of 2026 upon which we can call them, but they mature in November of '28.

Thank you.

Yes, I think we are on the last slide. So just to wrap it up, and Peter did a really excellent job of running through the portfolio in a bit more granularity. But this is our inflection year. This is the year that we -- the rubber hits the road from the standpoint of generating free cash flow, positive earnings against a very stable and scalable business in terms of our cost structure. We not only stabilized our cost structure of $7 million, but through our post-merger integration efforts last year alone in 2023, we actually drove 35% out of our pro forma G&A costs from the combination of the 3 companies we rolled up. There's probably $50 million to $70 million of stranded G&A costs within the small-cap universe in the royalty sector that can be essentially eliminated through consolidation. So it's not only a matter of achieving critical mass in order to hasten the re-rate. But also, I think there's some significant economics to be realized through putting these companies together because at the end of the day, we're just managing contracts. We don't need to keep inflated headcounts here as other companies are absorbed into the system. We're certainly not in a position to do large-scale M&A right now. We have to kind of sit on our hands, hopefully, as we start to achieve that re-rate. And we've been disciplined in that regard. We haven't done any M&A in over 3 years because we simply haven't had the currency to do that. So we found other means to grow other platforms, if you will, through project financing, third-party royalty acquisition and royalty generation, which is, again, generating royalties through our sweat equity, just using the contacts that we have and our expertise on the ground in Quebec, Nevada and Ontario in particular. But this is an attractive entry point as we start to achieve that inflection. And you saw that in terms of the consensus NAV trading at less than half of what our direct peers are trading at and about 1/4 of what the seniors are trading at in this sector. And I would put our quality portfolio, our cornerstone assets up against the cornerstone assets of even the seniors in the space when you consider they have royalties on 3 of the 5 biggest producing gold mines in North America. That's a pretty attractive portfolio of assets for what is still a relatively small cap company. And I would argue that, that's how Franco-Nevada started with a royalty on Goldstrike back in 1980s, and they built off that foundation to create what's now one of the biggest players in the space. And we have that kind of potential, we believe, not only with the quality of the assets, but the long tenure and experience of our management team that's allowed us to grow that portfolio so quickly and dramatically to deliver what is industry-leading growth from Tier 1 assets in Tier 1 jurisdictions. John, over to you.

Thank you. Just to try and to clarify, Vares of Adriatic is in Bosnia, and that's the copper project?

Correct. So we have 100% copper stream on the project. It's a primary silver, zinc polymetallic deposit, so about 30% silver, 30% zinc. And actually, copper is only 2% of the mine revenue, hence, why our stream isn't overencumbering the economics of the project.

And Borborema in Brazil is gold?

Borborema is a pure gold project, relatively simple, low CapEx open pit. They're looking at about 85,000 ounces a year of annual production over the initial years of the mine life there at Borborema.

If we were to...

I think it's worth putting a slide up Sorry, John. I was just going to say you might want to learn a bit more about the Borborema asset because it is a very attractive opportunity for us. So we value this acquisition based on the 750,000 ounces included in the life of mine. So as Peter said, a little over 80,000 ounces a year. But there's an additional 2 million ounce resource that's underneath the federal highway that's not incorporated in the mine plan currently, even though it's been drilled to reserve level, can't be called a reserve until they can demonstrate they can include in the mine plan and get it permitted. And the highway movement is within an area that's very -- with a very low population, about 40,000 people in aggregate along that area. So in terms of moving the highway, we don't think it's going to be a very socially difficult thing to do. In fact, the process to get the permit to do that is currently underway. And when Aura does that, moves the highway, that liberates that 2 million ounces into the mine plan. Now when we valued this, we valued it based on the 0.75 million ounce reserve, not on the additional 2 million ounce of resource trapped underneath the highway. Once they incorporate that in, that not only extends the mine life dramatically, but they'd be looking at about a 75% increase in the production rate here to accommodate the additional ounces. None of that we paid for. So that exploration -- or I should say, that conversion upside as a result of the highway movement and also the expansion that they are contemplating when they do that has not been incorporated into our valuation. That would effectively double our rate of return on this investment.

And David, I'd build on that highlighting the expertise of Aura Minerals as a team, a lesser known, I'd say, producer in North America, given a Miami-based team, Brazilian nationals, but they just came off the successful construction of the Almas mine also in Brazil on time and on budget, which is, as you know, John, increasingly rare these days. And that construction team has now shifted to Borborema to deliver on that similar success. So we're very confident in the track record here of the Aura team to not only deliver that production on time in early 2025, but to see that expansion potential moving the highway and also potentially increasing the annual throughput here at Borborema.

One of your slides you guided to USD 20 million to USD 30 million of revenue next year at a range of $1,800 to $2,800 gold. If I'm reading it right. The 4 mines, Malartic, IAMGOLD, Borborema and the Bosnian mine, what percent of next year's revenue are they?

The key assets that will be driving revenue next year will be Vares, Borborema, Cote and Canadian Malartic. They'll be driving over 80% all together, the smaller components of revenue will be -- Borborema and Cozamin or pardon me, Borden and Cozamin. Each of those produce approximately $1 million a year. But it would be those 4 assets really driving forward. Do you have the breakdown? Is that what you were looking for?

No, no, no. That's good enough. I'm looking at your development, Slide 11, where 8 of 11 projects are in the U.S. where maybe it's 7 of 10, and 2 are in Canada and 1 in La Mina. Is that Colombia?

Yes.

Because of the recent soccer match, I'm recognizing the Colombian flag from the Americas games. So you have an unusual focus on U.S. and Canada on Slide 11, on the far left, the exploration column is all U.S. and Canada and the advanced exploration column is all the U.S. and Canada. So it's just almost a small subset of your future, it's not the U.S. and Canada.

That's exactly right. A small subset in South America, some of our maiden assets in Brazil and Colombia, but the vast majority of development advanced exploration and exploration is in U.S., Canada, specifically -- Quebec, Ontario and Nevada.

Everyone on the call is invited by the way, to ask question from the question box.

Yes. That's great, John. Lovely to hear more questions from your audience. But I should highlight, and I'll let Peter get into this in a bit more detail, but there's been some very timely news out of Whistler Gold Mining project in Alaska, where they've doubled the overall resource. and quite a surge in the public company that owns the Whistler project, and we have a significant royalty on that. Maybe, Peter, you can hit some highlights from that press release.

Yes, Dave. And I think it's important to highlight that the vast majority of the value of the business is within those 20-some-odd cash flowing and development stage assets. We really don't get credit for the optionality inherent in the advanced exploration and exploration buckets of this slide. I'd argue today, we don't even get credit for the future cash flows of the cash flowing assets, but that's besides the point. To highlight some of those key catalysts across the yellow advanced exploration bucket, Whistler is one we're tremendously excited about. They put out an updated resource to the U.S. gold mining team on Monday morning that the indicated resource has nearly tripled at Whistler. This is circa 11 million ounce deposit, about 100 miles north of Anchorage, all on state land claims, so not running into some of the issues we've seen with other Alaskan-based projects. And importantly, this isn't stuck at the top of the mountain. This is very attractive topography. The initial years of the high-grade core at the Whistler pit could see this with upwards of 1 gram per tonne gold equivalent with a strip ratio of 0, just given the favorable shape of the mineralization at the top of the hill. So a very attractive ore body, and that team is continuing to advance it towards initial economic studies in the coming years. The other major highlight and support here at Whistler is the tremendous state and local community support. There's state funding right now to build an access road directly to site which would be used to conduct further development, exploration and ultimately, potential shipping to port as this assets advance. And we hold a 1.75% NSR over this project. The other advanced exploration asset, lesser known that I'd argue, again, we're not getting credit for is our royalty over the Tonopah West project. Tonopah West is an asset that was originally staked and claimed by Jerry Bowman through our royalty generation model, and we just completed the option agreement with Blackrock Silver. They made their final $1 million payment to us earlier this year, and now we hold a full 3% NSR over Tonopah.

So this is not Jim Hess company Viva Metals.

This is Blackroock Silver in Tonopah. And they just outlined an initial preliminary economic assessment at Tonopah West seen over 100 million ounces of silver equivalent production over that relatively short 9-year mine life, I believe. So another exciting asset and a big royalty for us, a 3% NSR over a project like that could be a meaningful cash flow driver out early next decade. So that's an example of with 200-plus assets, there's a lot of optionality in the portfolio, 2 million meters plus drilling over the last 4 years. You start to see these developments, Whistler increasing its resource and advancing towards economics, Tonopah West, significant drilling and initial economics being wrapped around those projects. And we start to see those value catalysts within the advanced exploration bucket that in a portfolio this large and the challenge that comes with value in a royalty company, we don't get credit for, but in the fullness of time will help supplement our cash flow profile beyond that revenue forecast chart I shared earlier, John.

So there's no questions in the question box. And I'm admiring your portfolio. Could you review your REN NSR and NPI since that's a highlighted property?

Yes, absolutely. So the REN NPI and NSR fully cover the project, fully cover all of the ore bodies associated with REN. This was acquired through the Ely Gold acquisition, which we completed in mid-2021. As I mentioned, we've had a team on site there. Barrick has been quite generous with our access and the management team at Nevada Gold Mines are seem quite bullish on this.

What is the revenue percentage?

What is the revenue percentage?

Yes, you said you have a revenue royalty. What's the percentage?