Vox Royalty Corp. (VOXR) Earnings Call Transcript & Summary

Good day. Welcome to the iAccess Alpha Virtual Best Ideas Spring Investment Conference of 2025. The next presenting company is Vox Royalty Corporation. [Operator Instructions]. I'd now like to turn the floor over to today's host, Spencer Cole, Chief Investment Officer of Vox Royalty Corporation. The floor is yours.

Fantastic. Thanks so much, and thanks to the iAccess Group for the opportunity to present a little bit about the Vox Royaltys' story. So I'm really excited to share a little bit about Vox, the company's history and why it's such a unique investment story for the markets that we find ourselves in today. Vox as a company was established about 10 years ago, and it was purpose-built by investors for investors for, markets exactly as those markets that we find ourselves in today. Many investors realize that gold prices are at a record level, but a lot of generalist-investors don't really understand the best way to get exposure to the gold price. So I'm really excited to share a little bit about how we as Vox have positioned ourselves over the last 10 years to be a conduit for generalist-capital and generalist-investors that want exposure -- leveraged exposure to metals. I will be making some forward-looking statements in my presentation, so I'd refer investors to the disclaimer on our Corporate Presentation on our website. So Vox was a purpose-built company when it was seeded with only $7.5 million of capital 10 years ago, and the problem statement that we were built to solve was that investors want mining and metals exposure. But historically, mining equities have underperformed equity indices. So this is because of a number of the sort of common esoteric risks embedded within the mining industry. And unfortunately, some of the challenges from a management level inherent to the junior mining industry. Mining is highly capital-intensive. If you're looking to get exposure to explorers or developers, typically, there's a lot of capital to go from a new discovery into a fully constructed and producing mine. And unfortunately, for equity investors, that involves a lot of equity dilution and unfortunately, quite a bit of misaligned management focus in the junior end of the market. Vox was really created by generalist investors in the United States to solve this problem. We are a mining royalty investment vehicle that's inherently scalable. And for those who don't fully understand what a mining royalty contract is, I'll briefly touch on that. A mining royalty contract is essentially a contract that entitles a company like Vox to a percentage of revenue from a mine, once that mine is brought into production. Mining royalties are commonly created when an individual or a family sells their mining rights or their mineral claims and retains typically 1% to 2% of potential revenue if that mine is ever brought into production. So we, as Vox, we find these forgotten royalty contracts all around the world that cover mines that are just about to be built, and we acquire them at discounted prices, and we reap the benefit of that for our investors. We've been built with a key competitive advantages at the core of our business. So we built an engine that's systematic and disciplined and process orientated to find and acquire and sort of compound value within mining royalties. We're extremely capital-light and headcount-light. Our entire company is only 6 senior executives, and we could double or triple the size of our royalty portfolio with the same 6 senior executives. And importantly, the generalist investors, we're a team of mining engineers and geologists on the front lines of the business. And we, as management, own in excess of 10% of the company ourselves. So everything we do is as investors ourselves. So we are fully aligned as owners of the business ourselves. I touched on the gold price in my introduction. I think gold as an asset class or as a metal is often highly overlooked and misunderstood. Most generalist investors are fundamentally underweight commodities and by extension, underweight metals. There's been some recent surveys that look at sort of investor and portfolio manager exposure. And within the U.S., most investment advisers allocate less than 1% of their portfolio to gold. Now contrast that with the fact that if you look at the gold price, it's outperformed the S&P 500 consistently over the last 20 years. So for an asset that holds a position of typically less than 1% in U.S. investors' portfolios, investors would have significantly outperformed the S&P 500, had they held that over the last 20 years. And a lot of the most recent gold price sort of appreciation, given we're finding ourselves at record gold price levels, is being driven by Central Bank buying. So we haven't even really seen a tipping point of retail investors coming into the gold price. I think we're just starting to see the early stages of that. But central banks in the likes of China, Russia, emerging markets have been significantly increasing their physical gold holdings, and that has really sort of driven a lot of the most recent appreciation in the gold price. So very strong fundamentals within the gold price environment that we're in today and investors are structurally [indiscernible] this precious metal. But it then transitions to the next logical question, what is the best way to get a leveraged exposure to gold and to metals? There's three main ways you can get exposure. One is holding the physical metal. So gold has performed extremely well, up circa 600% in the last 20 years. A different way to get exposure is the mining equities themselves, the actual mining companies that produce the metal. Unfortunately, as I mentioned earlier, the miners have underperformed the metal and equity indices. So because of all the challenges of actually owning, operating and developing mines, a lot of the actual mining companies have underperformed, whereas if you contrast that with the royalty companies who typically are getting a percentage of revenue, so royalty companies that get price appreciation as the gold price increases, so too does the royalty revenue. But also as new mines are brought online, a lot of that incremental volume ultimately gets paid to the royalty companies. So this is a key factor of why royalty companies have outperformed every comparable metal-based benchmark over the past 20 years. And that is the synthesis of why Vox exists as an investment company. So what makes us different as a company as a NASDAQ and TSX-listed mining royalty investment company? Our focus and our obsession really is generating the highest return on invested capital through an inherently lean and scalable business model. So how do we do that? We focus on what we call Legacy Royalties. So we're doing extensive digging to find royalty contracts that are typically overlooked, that were created often between 20 to 40 years ago and that cover mines that are just about to be built. So I'll give you an example. 2 years ago, we approached a family of ranches in Nevada. Historically, the grandfather had his ranch -- had been prospective for gold. It sold the gold rights to a mining company and retained a 1% revenue contract if a discovery was ever made and if a mine was built. We approached his grandchildren 2 years ago and managed to agree a deal to buy that royalty contract from the grandchildren prior to the mine coming into production. So that's a very common sort of transaction structure for us. And what we're able to generate from deals like that is compounding per share returns. And more specifically, over the last 3 years, we've compounded 92% CAGR on cash flow per share growth over those 3 years. And that really is success to us, compounding per share returns at inherently low risk. We offer very low geopolitical risk. 90% of our royalty portfolio is specifically weighted towards Australia, U.S. and Canada, and then we focus on very simple mining ore bodies, typically shallow open-pit gold mines that are expandable and have potential to go from 10 years of mine life up to 20 years plus is what we target. And this is all underpinned by our in-house technical due diligence by our team of mining engineers and geologists. So a little bit about our capital structure. Very tight capital structure, about 51 million shares out. So we're at USD 150 million market cap. No debt, net cash of $9 million on the balance sheet and growing. We have an undrawn credit facility of USD 25 million with BMO, Bank of Montreal. And when you look at our key shareholder base, it's the who's who of some of the world's largest mining investors such as BlackRock, U.S. Global out of San Antonio and then some very large European gold and mining funds. And then importantly, as I touched on before, management and the Board combined is over 20% of the company. So this company is being led by owners of the business. And then on the right-hand side of this slide, a little bit about our royalty portfolio. We have 70 royalties, 7-0, that are also 70% weighted towards precious metals. Most of that is gold. The other 30% is across base metals and battery-facing metals such as copper, nickel, some zinc and then also some iron ore as well. I touched on our extremely low geopolitical risk. I'll go deeper into why Australia, shortly. And then of our 70 royalties, 8 of them are currently producing today, and that's expected to grow north of 20% in the coming 3 to 4 years based on the 5 brokers that cover our stock. So a little bit about our portfolio weighting. On the left-hand side, I touched on how heavily weighted towards Australia we are. We view Australia as the best jurisdiction on the planet to explore, develop and operate and ultimately expand gold mine. The rule of law is first rate, there's abundant capital and skilled mining labor and the permitting jurisdiction is accelerated relative to any other country. So when we look at Western Australia, we've got multiple examples in our portfolio where a royalty has gone from discovery into first production within 5 or 6 years, and contrast that to some of the other parts of the world where it takes up to 15 years to get a mine permitted and ultimately brought into production. So because we're buying royalties typically before they come into production, we want the most pro-mining jurisdiction where these projects can be accelerated into production and ultimately into royalty cash flow as quickly as possible. And on the right-hand side of this chart, this is really an anomaly for a company of our size to have approximately 2/3 of our operating partners that actually operate our royalty properties to be $2.5 billion-plus companies. This is really an anomaly. And this speaks to the volume of capital that's available for our royalty properties to bring them into production and to expand them once they're in production to the benefit of our investors. I touched on the gold price earlier. I think one nuance I just share here and another reason why we're really attracted to Australia and Western Australia is when you convert the record high gold price, say, USD 3,000 an ounce into local currency into Australian dollars, we're approaching AUD 5,000 an ounce. So it means our Australian gold mining operators are extremely well capitalized to reinvest more dollars in the ground into our royalty properties. So this record high Aussie dollar gold price is really accelerating development across our Australian royalty properties. This next slide is a busy slide. This is looking -- basically looking backwards 2 years and looking forward to 2 years. And what we've seen is just these record gold prices are really accelerating projects beyond even our management expectations. So in the past 2 years, we've had approximately 5 new assets come into production and expanded. And then on a forward-looking basis, we have approximately 3 to 5 assets in the next 12 to 24 months that we expect to come into production. So without any additional royalty acquisitions, we have a huge amount of organic growth within our portfolio, which translates into broker expectations around near-term revenue continuing to grow organically. This slide is just a little snapshot of some of our returns. As I mentioned from the outset, we are a returns-focused company. So our north star continues to be compounding per share returns. On the left-hand side of the slide, you see the multiple on invested capital we've been able to generate across a number of our investments. We're generating 2x to up to 14x our money across select royalty investments. At some stage next year, we expect to be fully paid back on all of our royalty investments. And that's with a 10- to 20-year mine life across a number of our key royalties, still remaining. So to be paid back at some stage next year is really remarkable and speaks to, I guess, our management's ability to select really attractive royalty assets at compelling value. This slide just speaks to, I guess, operator quality and the low technical risk of the assets we're focused on. On the left-hand side, you see these are some of our key operating partners and $4 billion, $12 billion, $20 billion, up to $60 billion market cap organizations, extremely well capitalized to develop our royalty properties. The royalties are located in Australia and more specifically Western Australia, a Tier 1 mining jurisdiction. And then from a technical mining risk perspective, these are all open-pit mines or projects that offer very low technical mining risk. So this means for every dollar of royalty revenue, we've got very low technical and geopolitical risk attached to each dollar of revenue. So on a risk-adjusted basis, we offer some of the lowest risk-adjusted royalty revenue in our entire industry. A little bit about where we've come from and where we're going, from a revenue perspective. So in the last 3 to 4 years, we've tripled revenue. But when you look at how brokers are forecasting our revenue growth from here, brokers are still expecting very substantial royalty revenue growth in the coming 3 to 4 years as new properties come into production and as new properties start to pay. So this is without any additional acquisitions. The growth in the last 3 years has been transformational. But really, what's still to come, I think, is equally exciting with a number of key royalties expected to come online in the next 2 years, that have potential to meaningfully grow revenue. So a brief snapshot for a few different lenses. We do pay a dividend. We actually pay the highest dividend yield within the mining royalty industry. But candidly, investors aren't typically buying us as a dividend story. Investors are buying us typically as a growth at reasonable price or sort of compounding value-based story. So that's -- I think the dividend is supportive of some of our historical investor appetites and interests, but that still gives us ample capital to reinvest in new royalty acquisitions. And the right-hand side of this slide, despite all the momentum and record gold price environment that we find ourselves in, we still continue to trade at a discount to the average broker consensus price target. Next slide just touches on some of the most recent catalysts that we're seeing within Western Australia. We've had 3 separate royalties in the last 6 months come into production. So this speaks to the record gold price in Australia, but then how that's translating to these royalty properties being rapidly accelerated ahead of expectations. In one case, the middle project, Castle Hill, that project was brought into production 9 months ahead of schedule, which is a real anomaly within the mining industry. So this is all to the benefit of our investors as this royalty revenue is accelerated and brought forward to our investors' benefit. And then in terms of catalysts we have coming up over the coming 6 months to 2 years plus. We have a number of key royalties that are coming -- expected to come into production, both in the short, medium and longer term, which the brokers expect will be very meaningful for our revenue growth. And a lot of that growth really is driven by Gold projects in Western Australia and then also some Copper and Silver in Australia as well. And then from a U.S. and Canadian perspective, we have some key growth assets, gold and then a very large platinum group metal asset in South Africa that's in the development stage as well. So with that, I'll wrap up and open up for questions. Thanks for your time and excited to go through a few questions together.

So a question here from Chris. What's the expected revenue impact of new royalty assets coming online in 2025? So good question. Thanks, Chris. We've guided towards USD 12 million to USD 14 million of top line revenue this year, which is approximately 20-odd percent top line revenue growth this year, and then I think brokers have a more meaningful revenue growth expectation for '26 and '27 as some additional assets come into production. But yes, the short answer to your question is we're expecting about 20% to 25% revenue growth year-on-year from a number of those new assets coming online. Another question here about what competitive advantage does Vox have over other royalty companies? So I think this is a key factor. And over the last 10 years, one of the key competitive advantages that we've built has been the world's largest proprietary royalty database. So we've built a database in-house that has over 9,000 royalties within it. So what that allows us to do is for any mine or discovery that's being rapidly progressed towards a production decision, we can go into our database and we can identify forgotten royalty contracts, as I said earlier, are typically created 20 to 40 years ago, and we can go and acquire those royalties at really attractive prices prior to the mine coming into production. So I guess when you look at other royalty companies, there's been quite a bit of growth within the royalty sector through highly competitive auctions for royalty portfolios. So naturally, when there is competition, where there's multiple royalty companies at the negotiation table, the pricing and returns on those deals start to get compressed. So Vox as a company in our DNA, we focus on investing in our database and our networks and our ability to source this uncompetitive deal flow, and that's how we've been able to generate the highest return on invested capital within the industry. So we're typically generating, say, based on this year's -- the midpoint of this year's revenue growth, we're generating around 25% to 30% annualized return on the circa $50 million of capital deployed. So that's, I guess, the competitive advantage that we've built over the last 10 years in the database and our sourcing networks and then how that translates into some of the highest returns in the royalty industry. So thanks for that question. Another question here. How are record commodity prices impacting your acquisition strategy? This is from Thomas. Good question, Thomas. So I think we always try and be somewhat, I guess, contrarian in finding value. So if everyone is trying to buy gold royalties or if everyone is trying to buy copper royalties, we start to get a little bit nervous. So I guess record commodity prices for some royalty holders are influencing them either not to sell or to ask for inflated prices. The fundamental benefit we have as an organization is we're not constrained by opportunities. We have ample opportunities in our database and in our networks so that if a royalty seller has unrealistic value expectations, we'll happily move on to the next opportunity. So I'd say part of the answer to your question, record commodity prices like gold, it means some royalties are just not transact-able at rational value. However, the majority of sellers we deal with are selling royalties because they have a near-term liquidity need. They have another use for those proceeds. So for us, we stay focused on what has worked for us over the last 10 years, and that's finding attractive royalties on mines that are just about to be built. Sometimes they will be in record high commodity price segments. So we may acquire additional gold royalties. But selectively, when we see commodity prices start to contract, let's say, copper, for example, has contracted somewhat in the last 6 months, we actually do start to see some more rational value expectations amongst royalty sellers. So our acquisition strategy is dynamic. We're focused on value and acquiring quality royalties on quality ore bodies. So yes, we do have a regard to what commodity prices are doing. But if anything, I'd say we see more benefit from these record high gold prices in terms of our existing portfolio of royalties compared to necessarily shifting our acquisition strategy. So I think all of it's a net benefit to our account. It just means that some sellers are not going to be willing to transact in this market. That's a great question. I'm conscious of time, so I might just wrap up with one final sort of thought. Look, you're catching Vox at a really interesting time in the company's 10-year history, both in terms of the metal price environment we find ourselves in today and then also in terms of the rapid development within our royalty portfolio. There's an unprecedented amount of drilling, development and expansion work across our royalty properties, and all of that is to the benefit of our investors. So we're really excited with what is in front of us as a company, and we strongly welcome any additional investors that want to join the company for this next chapter of value delivery. With that, I will take a breath, and thanks, everyone, for their questions. Thanks, everyone, for their time. If there's any follow-up Q&A or if investors want to have specific calls with management, feel free to reach out through our website, we welcome the opportunity to have a more sort of one-on-one conversation with investors. So thanks so much for your time.

Thank you, everyone. That concludes Vox Royalty Corporation's presentation. You may now disconnect. Thank you for your participation.