Gold Royalty Corp

AMEX:GROY

Earnings Call Transcript

[Joanne Jobin, executive]

Good morning. I'm Joanne Jobin, your VID Media host. Welcome to the Gold Royalty Quarterly Investor Town Hall Forum. [Operator Instructions]

With us this morning is the Gold Royalty team, led by Chairman and CEO, David Garofalo, who will make the intros to the team and take you through the highlights of the most recent quarterly results.

David, the stage is yours.

[David Garofalo, executive]

Well, good morning, everybody, and thanks for the introduction, Joanne, and I'm joined today by our Chief Financial Officer, Andrew Gubbels who will take us through our second quarter financial results. And then Peter Behncke, our Director of Investor Relations and Corporate Development, will provide you a portfolio update.

But before we get into that, I thought as has been my custom to discuss the fundamentals of the gold market, which remains very, very robust. And this is not a recent phenomenon. The significant performance of the gold price has been occurring for 50 years, really since the U.S. government and central banks globally decoupled from the gold standard in the early 1970s. It really has been a one-way trade. The temptation to continue to print money is just too great for governments, particularly in this environment where debt levels are at historical highs, 350% global debt to GDP relative to 100% the last big inflation cycle. And those fundamentals are really driving the governments and central banks, in particular, the lower interest rates, and that's driving capital into gold, which is the one monetary instrument that can't be printed. And while it yields 0%, the reality is treasuries and other sovereign debt is yielding negative on a real basis. So there really is no opportunity cost to owning gold. And this long-term phenomenon of gold appreciating against all fiat currencies will continue unabated into the foreseeable future, particularly is an environment where the only way for these governments to deal with their exorbitant debt levels is to inflate it away.

So we are in for a prolonged inflationary cycle, and gold will perform extremely well in that environment. What has not performed well, unfortunately to this point is gold equities. We haven't seen a significant allocation of capital out of the general equity markets into the gold equities, and that's evidenced by the blue line you see here, which is the GDXJ, which still remains 75% below its all-time highs back about 10 years ago when the gold price was at $1,000 per ounce lower. And that's not a phenomenon that's unique to the junior stocks. If you look at the bellwether stocks in our industry, for example, Barrick and Newmont, their price levels today are actually about half of what they were in the mid-1990s when gold was only $250 an ounce.

So we have not seen a significant rotation of capital into the gold equities, but we think that's inevitable. That will happen. And if you look at crises in the past and how the gold commodity and the gold equities have performed in each of those financial crises, eventually, there is a significant rotation of capital into the gold equities. Take, for example, the tech crash back in 2000. Initially, it was a baby in the bathwater type of market, even the gold equities were sold off dramatically, the gold commodity was initially. But as the government started to ease monetary policy, lower interest rates, expand money supply, we started to see gold perform dramatically. And the gold equities, in particular, provided leverage to the gold price. And so we saw, for example, in the great tech crisis or the tech crash in 2000 that the gold equities outperformed the S&P 500 by over 200%.

And if you look at the great financial crisis in 2008, again, there was a baby in the bathwater type of market initially, where both the commodity and the gold equities were sold off with the general equity market. But eventually, again, as the governments and the central banks in particular start to ease money and lower interest rates, we saw an allocation of capital not only to the commodity, but also to the gold equities which significantly outperformed the S&P 500. We saw a similar phenomenon in the pandemic eventually -- initially, as you saw early on in the endemic there was a massive sell-off of equities, we started to see capital allocated to the commodity and to the gold equities, again, a significant outperformance of gold equities to the general equity market.

This general equity market has been very narrowly focused on the big 7 technology companies. We're starting to see the market chip away at those valuations. We'll start to see a rotation of capital, not only the commodity, but of the gold equities. And the gold equities are actually -- should be performing because they're performing as businesses. They're starting to demonstrate clear leverage to the gold price. Year-to-date, even though the gold price is up 20%, the gold equities, both the large cap, the small cap indices, underperforming the commodity. That makes no sense, given the massive leverage and profitability that these companies are providing to an increased gold price.

And we've seen that in our own results as we've started to see some of our growth projects come into production, we've seen a significant increase in our revenues this quarter. In fact, we saw a quadrupling in our revenue versus last year driven by the gold price, but also by the fact that we've seen a number of projects come into production and starting to deliver positive free cash flow for the first time in our history.

So we are poised to provide significant performance. And I think the general equity markets will start -- gold equity markets start to provide significant performance -- outperformance not only to the S&P 500, but leverage to the gold price. We think that eventually, that rotation will lead to outsized returns relative to the commodity price given the leverage and profitability that these companies enjoy.

What we've been able to do in 3.5 years, I think, is remarkable and steadily building out our business, starting with 18 non-cash flowing royalties in our IPO and steadily adding to the portfolio in terms of projects at the production stage, but also development stage projects. We now have 7 cash flowing royalties, 14 royalties in various stages of construction. But over 240 royalties overall to provide significant growth of pipeline across the life cycle of a mine, but also provide our shareholders a significant optionality in a market that we think eventually will pay for that optionality as we start to see a rotation of capital out of the general equity markets into the gold equities. We're poised to significantly outperform not only because of that optionality, but because of our outsized growth in revenue, free cash flow in the coming quarters and years as a result of our robust pipeline of projects where we've seen a 14-fold increase in the number of royalties in our portfolio since our IPO and a fivefold increase in our net asset value on a gross basis since our IPO.

And I understand the net asset value can be an esoteric metric, hard to understand, but what we think everybody can understand is the growth in our revenue. As I said, in Q2, we saw a fourfold increase in our revenue relative to where we were a year ago and the second consecutive quarter of positive operating cash flow and we're poised with a very strong second half with a number of our major projects coming into full production to deliver, again, significant growth in what is now a positive operating cash flow profile in our portfolio. And what we think that ultimately will lead to as a significant rerate opportunity for our shareholders.

On a consensus basis, we're trading at about 0.5x net asset value. Again, it's not our own measure, it's looking at the 6 analysts that cover us relative to our peers, we're significantly undervalued. And I think that's been because at this point or up to this point, the market has been paying for growth. They see risk [ inhereting ] growth, but many of our projects now are coming into production or achieving full-scale production, and that revenue growth is happening today. Our free cash flow growth is happening today.

It was a far off prospect when we started this company several years ago talking about our growth, but again, that growth is being crystallized in the current quarters, in the coming quarters and delivering positive free cash flow for our shareholders and we think positive earnings as well as we go forward. So we're in an excellent position that could deliver a rerate opportunity in our share price. But also if you look at our shareholder register, we've been able to attract some of the most sophisticated investors in the sector. They understand the intrinsic value of our business, understands the value on a per share basis at in terms of net asset value and the coming growth in cash flow and earnings per share as a result of the robust pipeline of projects in the production and development stage and the significant optionality we have in our portfolio.

And with that, I'd like to pass it on to Andrew to talk about our financial results.

[Andrew Gubbels, executive]

Thanks, Dave. As Dave referenced, Q2 was another strong quarter for the company. Gold Royalty, as you've seen in our results, is truly transitioned to become a royalty company that consistently generates cash from operations. In Q2, we delivered $1.2 million worth of cash flow, including land agreement proceeds, credit against multiple mineral properties, which is our second consecutive quarter, a positive operating cash flow. It's a great achievement for a company that IPO-ed 3 years ago with 18 non-cash flow and royalties, as Dave already mentioned.

Q2 total revenue of $2.2 million, that's 947 GEOs for our calculation was approximately 300% higher than the comparable period in 2023 -- 2023. This further highlights how far we've come in such a short period of time. Higher revenue in the period was largely due to the additional royalty receipts from our accretive acquisitions and supplemented by initial cash flows from development projects in our pipeline starting into production. The second quarter also saw continued cost discipline with our cash operating costs down approximately 9% compared to the same period in 2023.

Notably, in the period, Gold Royalty completed the acquisition of a copper stream on the Vares Project in Bosnia from Orion Mine Finance for $50 million. This bilateral transaction secured a high-return long-life asset to further strengthen our foundation of producing assets. Aside from Vares, the existing portfolio has continued to perform well and Peter will talk more about this in the subsequent pages.

We've earned our first royalty revenue at IAMGOLD's Cote project and benefited from a full quarter of cash flow from the Borborema and Cozamin royalties that we acquired last year. That complements strong revenue generation from Canadian Malartic and Borden.

Finally, in Q2, Gold Royalty published its second annual sustainability report, which highlights our ESG performance and ongoing commitments. I'm proud to report that we had one of the lowest carbon intensive portfolios in the royalty and streaming sector in 2023. With $6.4 million of total revenue in the first 6 months of 2024, that's inclusive of land agreement proceeds and interest. We've already exceeded our full year 2023 total revenue of $5.2 million and we're approximately halfway to achieving our 2024 guidance of $13 million to $14 million of total revenue.

To help achieve our full year objective, we do expect the second half of 2024 to benefit from further revenue from the Cote mine as it ramps up and also initial revenue from the Vares mine through the copper stream, which will meaningfully ramp up in Q3 and Q4 2024. Further, as those who follow the company are aware, with a reduced and stabilized G&A and of course, no exposure to operating capital cost inflation as a royalty company, the approximate 160% expected revenue growth from 2023 to 2024 should have a positive impact on the company's bottom line and cash generation through the rest of the year.

Now finally, as Dave mentioned, as a management group, we were focused on building a portfolio of quality, growth-oriented assets to really future-proof the company. And then second, what we've done in the last 12 to 18 months is really creating a self-sufficient cash flow generating business, and that's for that transition point I mentioned earlier. And we've largely achieved that as a result of the accretive acquisitions we've made to date.

The execution of this strategy has attracted some of leading investors and finance providers in the resource sector from private capital providers such as QRC, Taurus and Orion to reputable public equity investors and also strategic mine and project operators. We rarely have any issue with vendors taking back shares of Gold Royalty in these acquisitions, they do see the long-term prospects of our shares. In fact, these investors, amongst others, continue to be supportive of Gold Royalty's strategic vision and really do see the fundamental value upside in the company's shares as we build scale and relevance in the royalty and streaming company sector. We're well on our way to moving up that valuation curve.

So with that, I'll pass the presentation over to Peter, who will step through an update on our portfolio.

[Peter Behncke, executive]

Thanks, Andrew. So building on Andrew's comments speaking to the growth in our revenue profile this year and that driven by some of our recent acquisitions. I wanted to zoom out and provide a reminder a snapshot of our portfolio pipeline as it stands today. You can see the 7 cash flowing assets that are driving our 2024 total revenue and land agreement proceeds have really been supplemented by our recent acquisitions, the assets highlighted in green and the yellow box, Vares, Cote Gold, Borborema, Cozamin, all individual asset acquisitions acquired over the last several years.

Before diving into the specific portfolio updates, details of which are more comprehensively outlined in our MD&A, reminder of the portfolio metrics that really do differentiate Gold Royalty. We are still over 80% North American focused with the majority of our portfolio in Quebec, Ontario and Nevada and the quality of operators that are driving forward our assets are second to none. Newmont, Barrick, Agnico Eagle, specifically, really driving forward those key development stage assets fueling our future growth, extremely well capitalized, which is increasingly important in today's precious metals environment for developers and producers.

So the first asset to highlight and provide an update on is our flagship asset over the Odyssey mine, the underground future of the Canadian Malartic complex, going to be Canada's largest underground gold mine. As a reminder, our royalty is a 3% NSR royalty over the northern portion of the Odyssey mine, specifically covering the Odyssey North deposit, portions of East Malartic, part of Odyssey South and excitingly, the majority of the internal zones, which could supplement the Canadian Malartic mine plan in the relatively near term. Based on the 2023 updated mine plan, we see a mine life out towards 2042. But importantly, that incorporates approximately only half of the known resource into that mine plan.

Agnico had a strong second quarter and Canadian Malartic success was really a part of that. Some key highlights at the Odyssey mine, which truly benefit Gold Royalty, are that development and mining rates through Odyssey South are continuing to exceed Agnico's expectations due to exploration success across the project, they are increasing their exploration spend with approximately 84,500 meters of incremental drilling expected around the Odyssey mine and the regional exploration package, specifically to the East, where we hold a 1.5% NSR the Midway project, part of the Canadian Malartic complexes regional exploration program.

All this is really with the aim to fill the mill and Agnico's been more explicit recently on the potential for a second shaft to increase mining rates out of the East Gouldie deposit, which also indirectly benefits us seeing Odyssey North and East Malartic mineralization potentially coming online sooner in the mine plan. And then again, just to reiterate, current mine plan only incorporates 57% of existing resources, significant potential to increase that resource conversion factor. And given the exploration success, we view the potential to continue to grow resources is quite strong.

A bit more detail on the development updates, the rates that are targeting, again, ahead of Agnico's targets right now. And then the exploration success that they've delivered is really focused on these 5 key objectives: first two focused on East Gouldie conversion drilling and expansion. But conversion drilling at Odyssey South and further investigation of the internal zones are what's truly going to benefit Gold Royalty. Again, if you use the shaft at Canadian Malartic, at Odyssey mine currently, that lies just within our royalty coverage area. So we do have a smaller portion of Odyssey South, but everything on the right side of that middle picture, the red internal zones, the vast majority of which is reporting into our royalty coverage area. And this indicates the potential for further production between 2024 and 2029 from these zones. So we're quite excited as Agnico is more explicit on what the production profile from the internal zones could be.

Moving on to our most recent acquisition, the Vares project currently in its ramp-up phase. There has been some recent developments, I'd like to clarify on the asset. It's a reminder, we have 100% copper stream with ongoing payments of 30% of the spot price. And looking at the resource at the bottom of the page here, we can see there is 18.3 million tonnes of indicated resources and 2.8 million tonnes of inferred resources under JORC standards at Vares. And currently, only 13.8 million tonnes of those are incorporated in the mine plan. So similar to Canadian Malartic, strong potential to see increased resource conversion and extending that mine life beyond the current 18-year plan.

Q2 2024 highlights at Vares, ramp-up of production to nameplate capacities remains on track for the fourth quarter of 2024. In the second quarter, they achieved their initial concentrate sales and underground development has improved significantly, up 31% quarter-over-quarter. They continue to look to expand the [ Rupice shade ] deposit beyond that current mineral resource estimate I mentioned on the previous slide.

One of the exciting areas of upside that Adriatic outlined is that they are currently completing studies evaluating a 1.3 million tonne per annum production scenario, up from 0.8 million tonnes, 800,000 tonnes per annum. So that would be a significant increase in overall throughput, which would very much enhance the economics of the project and our investment.

Now since the end of the quarter, there was a ruling by the Bosnian court on the removal of trees from the planned expanded tailings facility at Vares. And having been in discussion with Adriatic management and looking at their public disclosures, they are outlining that there is no impact on the anticipated production due to the ruling. They're already evaluating alternatives for tailings storage facilities. And it's not the first instance of these types of discussions. So there is less cause for concern than one would expect on a court ruling, but we're quite confident that there will be no impact on production from the Vares -- for the Vares project due to this reason. And in fact, since this announcement, we've seen significant investments by senior management and the Board across Adriatic. So they're quite confident in the outlook as they continue to track for that full nameplate capacity in the fourth quarter of the year.

Moving to our other key asset that's currently ramping up the IAMGOLD project where we hold a 0.75% NSR royalty over the southern portion of the mine. IAMGOLD's been developing this asset and we're really on the cusp of it, achieving full nameplate capacity at a similar time line to Vares.

Recent Q2 updates, IAMGOLD just achieved commercial production in August of this year, so a major milestone, achieving 60% of nameplate capacity for the required period there and continuing to ramp up in the fourth quarter. Their production guidance remains intact. They're targeting the lower end of 220,000 to 290,000 ounces of gold for the year. And our royalty coverage is applicable to a meaningful portion of that Phase 1 of the mine plan, which I'll provide some details on in the upcoming slides.

Finally, as a reminder, Cote Gold is another multi-decade mine life, 18 years on the current resource alone. So similar to Odyssey and Vares, very long mine life, which provides robust economics for us as a royalty or stream holder.

So as I mentioned, benefits of the first phase of the mine plan here at Cote, you can see Zone 5 and 7 on the left map here showing the patchwork of royalties, and that's covering a meaningful portion of the measured and indicated ounces. The important part is that the southern portion of the mine is Phase 1 for IAMGOLD's mine plan. So we're expecting increased coverage in the first 6 years in Phase 1 and then seeing our coverage gradually trail off as they mine the more northern deeper portions of the mine, which are somewhat lower grade.

This image here illustrates that Pit Phase 1, now the orientation has been shifted, so the southern portion would be the top right corner of the 3D model here. And you can see that Pit Phase 1 is almost entirely focused on the southern edge of the Cote pit with Pit Phase 2, expanding after year 6 then starting to see stripping on the northern edge of the Cote pit. So just an illustration of why we're so excited to see Cote ramp up here in the very near term.

Our other cornerstone asset, our royalty over the Ren Project, part of the Carlin Complex, the largest gold mining complex in the U.S.A. We have a 1.5% NSR and a 3.5% NPI over the entirety of the Ren deposit currently just shy of 1.7 million ounces around 7 grams per tonne. Within Barrick's overall portfolio, a relatively small project, but an important part of supplemental feed of high-grade supplemental feed to the Carlin Complex.

Q2 updates, Ren remains on track. They're driving it forward. They reiterated that they're completing advanced detailed engineering studies for that PFS that they announced be coming out towards 2026 and near-term production expected relatively shortly thereafter. Project capital expenditures at Carlin did increase primarily due to the Ren project investments with continuation of dewatering and detailed engineering at the asset.

And then finally, highlighting our royalty over the Borborema project. Aura Minerals continue to advance this. The most recent update at Q2 is that it is now 40% complete construction with production still on track for Q1 2025. And then importantly, similar to what we saw at Canadian Malartic, similar to what we see at Vares with relatively low resource conversion, the current 2 million -- 2.1 million ounces of indicated resources and 400,000 ounces of inferred resources are much larger than the 748,000 ounces currently in the mine plan. And that's primarily due to the potential increase of minable mineral reserves after a road is moved near the project. And approval for that road relocation is expected later this year with licensing in 2025 based on Aura's Q2 results. So that would be a major catalyst to see those mineral reserves increase significantly and the overall mine plan increase significantly as well at Borborema.

So with that, there are other updates across the 200-plus assets we have in the portfolio. Those are some major catalysts across our recent acquisitions and key assets. And I'll pass it back to David at this point before we enter our Q&A session.

[David Garofalo, executive]

Well, thanks, Peter, and thanks, everybody, for your kind attention. We're going to stay on to take some Q&A. But I think Peter's point on Borborema, to me is a microcosm of what's happening in the broader portfolio in that, the operators continue to optimize and explore the assets. In the case of Borborema, the permit to move the highway will unlock significant resource to not only expand production but extend the mine life, and that optionality comes for free because all of our 240 royalties are completely bought and paid for. And not only is that work happening at Borborema, when you look at the broader portfolio, over $200 million per annum is spent on [ exploration ] on that underlying portfolio, which we contribute nothing to that exploration budget.

We get the benefit of that upside, and that portfolio now has over 120 million ounces of gold equivalent exposure, that's significant optionality within the portfolio that you get for free as a shareholder. And I think that's an important element of the story in addition to the significant growth that we're realizing, crystallizing right now in terms of revenue, operating cash flow and free cash flow per share growth over the coming quarters and years.

With that, Joanne, I'd be delighted to take questions and Peter and Andrew will join me to help field those.

[Joanne Jobin, executive]

Thank you, gentlemen, for another stellar update. We certainly have a global full house audience today as per usual. So thank you to the audience for taking the time to listen in this morning or this afternoon, wherever you're located. [Operator Instructions]

And our first question for today is, can you expand on the 20% cost reduction in G&A compared to 2023?

[Andrew Gubbels, executive]

Yes. I could take that one. So the company continues to closely manage its operating costs. This has been an ongoing process. Last year, really the effort was eliminating redundancies and streamlining the company following the acquisitions made in 2021, really since then, we've been focused on renewing vendor contracts with a view of trying to have more efficient and effective pricing, simplifying the operating structure to the extent possible and really targeting the most value add with respect to just general office, IT, insurance costs, et cetera. So really, the decrease in costs are as a result of the continued focus on simplification and streamlining.

Also in the period, Q2, we spent a big portion of the time as a group, executing on the Vares transaction, there was a portion of transaction-related costs and salaries that were capitalized as a result. It's recorded in the notes, the financial statements as well, which contributed to a moderate decrease in the operating costs in the period in addition to the continued focus on streamlining those operating costs.

[Joanne Jobin, executive]

Next question. Okay, here we go. Well, well-known mining newsletter writer, Lobo Tiggre, said he does not recommend GROY because of excessive issuance of shares. Can you address how even with issuing more shares, the long-term value is still a net benefit to shareholders? Oh, and by the way, David, I guess, [ Joe ] was very impressed with your interview while jogging yesterday. The percentage of shareholders that can talk Turkey on a run is likely in the 1% category. So bravo on that.

[David Garofalo, executive]

In each and every case, when we have issued shares, and I should add that we've only issued share in the IPO and most recently, in the bought deal financing that we did in order to acquire the stream, the copper stream on the Barrick [indiscernible] silver mine and Bosnia. We had a use of proceeds. And in each every case, it adds significant accretion to not only our net asset value per share, but more importantly, our most recent acquisitions over the last year have added appreciably to our cash flow per share growth.

The biggest criticism we faced a year ago was that the gap to growth was long. The market wasn't willing to pay for growth. Our growth was too long-dated, so we went about looking at cash flowing royalty opportunities we thought would add immediate accretion on a cash flow per share basis, but also add net asset value per share accretion. So I would assure you that we're not issuing equity willy-nilly. We're not doing it for the sake of issuing equity and putting cash on the balance sheet, we're putting that capital to work with long-life deposits with significant exploration upside that offer significant cash flow per share accretion in the short term while adding to the net asset value per share. And that's been true in each and every one of the cases of acquisitions we made over the last year in order to, again, supplement the cash flow in the short term, but again, introducing assets that have significantly long lives and significant exploration upside.

[Joanne Jobin, executive]

Okay. And next question is, with the new land agreements coming online, and this is again in line with the share question, and revenue improving, is there further dilution coming on the horizon?

[David Garofalo, executive]

Again, we have not diluted our shareholders. When we've issued equity, it's been in the context of having a use of proceeds where we've actually accreted value for our shareholders, net asset value and most recently in the most recent [ acquisition ] significant cash flow per share accretion. So if we had a use of proceeds where we could demonstrate that there was significant [ accretion ] of course, we'd go back to our shareholders and ask for more capital for an opportunity that adds value. In the absence of that, we don't issue equity.

[Joanne Jobin, executive]

Excellent. And when can we expect the share price to improve?

[David Garofalo, executive]

It's a good question. I'd love to see -- I'd love to be able to pinpoint a date when that happens. And I would say that given the cash flow per share growth, earnings per share growth that we're experiencing -- expecting experience over the coming months and years. And again, these are from assets that have long lives, well-capitalized operators that are on the cusp of significant production growth. We're in an excellent position to grow cash flow and earnings per share. I think the market will start to attribute accretion, to attribute share price performance in that type of environment. I think we're in an excellent position. We're on the cusp of delivering a significant rate as a result of all of this growth we've been promising since our IPO coming to fruition all at the same time over the course of the next year or 2.

[Joanne Jobin, executive]

Excellent. And we have -- we do have quite a few questions on Vares, so I'm going to try to gather those all together. So the first one is what is the lag time between production payments on the Vares copper stream? For production reported in the quarter, would the stream revenue associated with this production be in the following quarter?

[Andrew Gubbels, executive]

I could take that one. With respect to the copper stream contract, it does require a certain amount of copper to be produced in concentrate. There is a lag between the concentrate that is produced and the amount of copper that's built up to be able to pay us our first stream payment. Our expectation is that we will receive our first stream payment for the Vares project in the third quarter of this year.

[Joanne Jobin, executive]

And I know you answered this in your presentation, but perhaps you can talk about it again. Describe what, if any impact, the recent court ruling on the Vares royalty will have on the operating line?

[David Garofalo, executive]

Yes, you go ahead, Peter.

[Peter Behncke, executive]

Yes. Really, just to reiterate the commentary from Adriatic and our discussions is there's no impact on production from the recent court ruling. They have well advanced alternative tailings facility operations or potential plans that could substitute the expanded tailings facility that is currently has some trees that they need to chop down on it, but also, they are continuing ongoing discussions to get that expanded tailings facility in place as originally planned as well.

I think one other highlight at Adriatic is they did have recent management shifts as well and the key principles involved are in-country experts as well that are connected to bring this asset into full freight production. So we're quite confident in them to deliver on the production profile as outlined.

[David Garofalo, executive]

Yes. I would just urge shareholders, by all means, look at Adriatic's own public disclosure on this and they've been quite adamant that they do have alternative tailings disposition sites within their own land. They don't need to rely on government land whatsoever in order to dispose of tailings. We were on site during our due diligence process. We will be on site again in September with other key shareholders who will be visiting the site. And I should add that Adriatic's largest shareholder actually doubled their ownership in the company to about 11% subsequent to the announcement on the Bosnian court ruling. So they've done their own diligence on this and they took the opportunity with the slight sell-off in the stock to weight up their position.

[Joanne Jobin, executive]

Can the company publish a 5-year projection of GEOs ramp-up?

[Peter Behncke, executive]

Yes. So our guidance in 2024 is for that 6,500 to 7,000 GEOs. But across the 6 analysts that cover us and given those key ramp-up -- ramp up of development stage assets like Odyssey, like Cote, consensus figures see us approaching north of 30,000 GEOs towards the end of the decade, so on that 5-year time line inquired on.

[Joanne Jobin, executive]

And when do you expect positive free cash flow?

[Andrew Gubbels, executive]

So at the moment, we are generating positive operating cash flow. It's contingent on the back half of this year, but we are starting -- we're getting close to being at the cusp of generating positive free cash flow. We'll see how the rest of the year shapes up, but it's really through 2024, 2025, I expect positive free cash flow to be a reality for the company.

[Joanne Jobin, executive]

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

[David Garofalo, executive]

Well, we touched on -- Peter touched on that in his presentation with significant ramp-ups in production at Cote, which achieved commercial production a month that had a schedule, continued underground development at Canadian Malartic and the Odyssey project in particular, where we have significantly more royalty coverage and that's a multiyear proposition where we're getting cash flow growth, not only in the current year, but going forward, particularly as a transition from open pit mining to exclusively underground where we have much more royalty coverage.

We're getting the benefit of Vares. We're going to get our first royalty revenue in the second half or streaming revenue, I should say, in the second half of the year. Borborema is expected to achieve commercial production in the first half of next year, we're actually generating pre-production royalty payments and interest payments on our convertible gold loan this year while we're waiting for that production ramp up. So looking across the portfolio at multiple assets with very strong capitalized operators, it will continue to deliver growth for years to come.

[Joanne Jobin, executive]

And when do you expect to model first GEOs from Odyssey underground?

[Peter Behncke, executive]

Yes. First, GEOs, we model in line with the Agnico Eagle production profile. So that's seen Odyssey North and East Malartic coming online towards 2027, 2028 based on the recent updates. And then we do view those Odyssey internal zones as potential upside and Odyssey South here coming online immediately. Our current revenue from Canadian Malartic and the Odyssey mine is from the Barnat Pit currently. So the remaining open pit [ mine life ] towards 2028, but it is in line with Agnico Eagle's current mine plan.

[Joanne Jobin, executive]

Let's talk about the guidance range. Are you still tracking to perform within that range provided earlier in the year?

[Peter Behncke, executive]

Yes. We are on track, as Andrew noted, well on track based on our first half revenue and seeing those key assets ramp up in the second half to meet guidance.

[Joanne Jobin, executive]

Okay. And one more question regarding share performance. And I know you've answered this already, David, but we are getting a lot of questions on it. So why isn't the share price performing despite the improving cash flow?

[David Garofalo, executive]

Yes. Look, I think it's just a matter -- this is a market where you get paid for growth that's in the rearview mirror as opposed to anticipating. It's not that kind of market. As I said, the GDXJ is 75% below its peak. The smaller cap players in the universe have not seen any love from the capital markets. But inevitably, as we start to achieve positive free cash flow, positive earnings growth, the market will pay for that. We'll [ start to trade ] more on price to cash flow and price earning multiples [Technical Difficulty] I think we will start to achieve that really start to get delivered during the second half of the year with significant growth from some of the largest gold mines in North America.

[Joanne Jobin, executive]

Thank you, gentlemen. And as we are now at the top of the hour, we will end our Q&A session. If you have any other questions, please forward them directly to Peter at [e-mail]. And David, before we close the forum today, would you like to say a few words before we sign off?

[David Garofalo, executive]

Well, look, thank you again for your kind attention this quarter and your questions and we're always available to answer any Q&A offline as well through our emails or directly through our 1800 number, if you'd like to reach out, by all means we can make yourself available.

[Joanne Jobin, executive]

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