OR Royalties Inc.

It's nice to see you. Hey. Welcome to Colorado Springs. Thank you very much., I think you're gonna start with a few prepared remarks. Fantastic. Good morning everyone. So I will be making some forward looking statements for which actual results may differ. So I, I thought I'd start this morning, given the fact that, in, in the capital markets right now we're hearing a lot, especially in the US on CNBC and Bloomberg about the Magnificent Seven and, and so that's obviously an index that has grown significant amount of shareholder returns, but what I'd like to present it and, and illustrate. If you actually took the top 6 royalty and streaming companies, which I'll coin the royalty 6, you actually look at their performance over the last 2 years and you've actually outperformed the mag 7 207%, meaning for every $100 that an investor put in two years ago at the Denver Gold Show or or starting Denver, the Mining Forum of Americas now that they branded themselves., you would have received, you know, over $210 or close to $210 with respect to our company or royalties since I joined that actually outperformed again if you created synthetic index of the royalty 6 of the top six royalty companies, you you've almost got a 300% return. So again, I, I think that's important to context set. We, we obviously are here in a commodity environment that's very constructive and it's interesting because Law Center and I the last time we were on stage was actually at PAC, and we are making the arguments the case for gold over the over the case for copper and the technical session that kicked kicked off POC and maybe I'll just say a few minutes, take a few minutes just to talk about the case for gold. Because I do think there's a confluence of market factors that really set up gold for a very constructive tape over the next number of years and so I wrote down a few stats and I I did present this with Lawson before, but a lot of that is underpinned by both the inflation environment that we're seeing globally, specifically in the US, as well as the US debt, situation. So just a few stats for you. The federal debt burden currently right now in the US is $37.5 trillion. That's against the GDP of approximately $29 trillion. So the debt to GDP ratio is about 130%. Now that 130% is you know the highest level since World War II. That that's approximately $750,000 for US family and. And, and, and, and this, this level has steadily climbed since, since the pandemic where the the federal debt was about $20 trillion against GDP of $21 trillion. So that means the debt has increased by about 90%, whereas GDP has only increased about 38%. The US government, as I think people know, is running a $2 trillion annual deficit. the big beautiful bill will just add to this, in at least in my, my observation. You layer into that the fact that the global central banks are trying to diversify away from the US dollar and given everything that's happening again with US tariffs and the weaponization of, of again the policies in the US that there's a very, very good case for safe haven assets such as gold. There's obviously a lot of geopolitical risk., volatility and, and unrest. You have a situation in China right now for which the real estate and the banking system is, is, is obviously quite tenuous. And, and so a milestone happened last week for people that may not be aware, but gold has overtaken the euro as the second largest reserve asset in the world. And, and so again I think that just sets us up for a very constructive tape go forward and as you can see since Loss and I were on the stage, gold. This year is actually outperformed or year to date 27% versus copper. It was interesting during that presentation because there was actually a live survey done with the audience, and I, I think I remember Lawson probably about 80% were more copper bowls or favorable for copper are performing this year than gold. But as I said, we're we're setting up very nicely for a very constructive gold tape and obviously that underpins all the royalty and streaming businesses. With respect to our royalties, again on our journey for the last two years, I'm just mentioning that we're we're getting more profile and relevance certainly in the Canadian capital markets and the Canadian markets because if you look at where we were in 2023, we were the 120,000 7th largest market cap ranking on the TSX. We've actually now moved, you know, to Canadian dollar $9 billion over $9 billion market cap, which ranks us in the top 100, actually 85th. The same would go for Wheaton and or Franco, which Wheaton would rank in the top 20 with Franco about 26. So, so the, the, the point is, you know, from, from a, from a generalist perspective, from an investor perspective, we're getting to the size and scale where you just can't ignore the royalty and streaming companies and as as Sheldon said earlier. I mean we've got a fantastic business model in the royalty and streaming space. It's, it's the only business that, and I've been in the business for 30 years now, but it's the only business you can actually generate asymmetric returns if you do things right and acquire the right assets at the right time. With respect to the so so how is our royalties going to drive future value the four key differentiators that I'd like to mention. The first is with respect to our portfolio, as you can see in the top left here, 80% of our net asset value actually comes from we consider the tier one jurisdictions that would be Canada, the US, and Australia, and we've actually continued one of the big filters that we do have when we do acquire assets that we as we look at. Again, the geopolitical positioning of, of, of where we're gonna put and generate geos from and that filter for the last few years we continue to add assets in Australia, the US, and Canada, and I think that's important as you think about, you know, the potential ramifications of the environment we are in with the the both the global unrest and volatility as I mentioned. There's some rhetoric right now, especially given where we're at $36,700 gold about nationalization of some assets, a windfall taxes. Clearly if you're in a jurisdiction such as what the majority of our our assets are, you're you're certainly insulated from that just to a large degree. The second positive differentiator for our royalties is the fact we have the highest cash margin out of all our peers, and the reason for that is we're much more royalty centric than some. Yes, we do have some streams, and yes, we'll probably be adding more streams go forward, but right now our margins close to 97%. So that means as as we see more appreciation in the gold and silver and precious metal markets we're actually generating more, more, more cash flow, more net income to our shareholders, than our other peers and, and, and again I think people will know and I'll talk about this in a second, but the, the company is not an old company. The company is just over 10 years and, and the reason why again we, we have the Canadian malartic royalty. It was essentially subject to a takeover defense, a hostile takeover defense from Goldcorp for which this nice 5% NSR was spun out of the Canadian malartic complex. The third positive differentiator is organic growth and and so for 2025 our guidance is 800 to 88,000 gold equivalent ounces. If you take the midpoint of that and you move to 2029, it's a 40% growth over that period, and I think it's very important to acknowledge that that 40% growth is with no contingent capital associated. And the majority of that growth actually comes from assets that are already in production, so there's really no development risk associated with with that growth. It's with big large established operators that are really just expanding, expanding, expanding their asset base to provide more ounces for themselves and more gold equivalent ounces for ourselves. There's, there's also a bunch of near term optionality and we, we go through a process in February to provide a 5 year outlook, but there's been a number of assets that over the last of the course of the few months we've had some very positive developments. We, we put a press release out, just last week, so I encourage you to look at that because none of that is included in our 40% GO growth that you see on this slide here. And lastly, before I sit down with Lawson and we do a bit of Q&A, we do have the Malartic royalty, and that's well acknowledged and recognized in the royalty sphere by our peers as the most valuable royalty out there. It's obviously a an asset that's operated by Ignico Eagle who we believe are the best gold operators on the planet. They have a vision of moving the Canadian malartic complex to a 1 million ounce per year asset over the course of the next 5 to 10 years and the majority of that will be reflected by our 5% NSR. So as you can appreciate, as they get to a million ounces our 30,000 geo base will have the potential to get up to 50,000 ounces again with no capital associated. It's a very, very, successful mine. It's the 2nd biggest gold mine in Canada, certainly very profitable mine, so very, very good margins there and we couldn't be more pleased with, with, with the operator, and it really has been and continue will continue to will be the cornerstone asset for for our company and our growth go forward. So with that I'm gonna sit down and Lawson's gonna take me through some questions. Jason, I think you did a fantastic job of setting the stage for a long term sustainable rally and growth. And you also, reminded me of something from the gold versus copper debate. I think one of the teams arguing against us suggested that you'd be better off buying spam than buying gold in the type of world we were describing where gold could work. So I did some research myself and the price of spam has not changed since early March., so, so with the, sustainable gold rally or the case you've made for a sustainable gold rally is context, I think it's really interesting, a lot of the optionality that you pointed to in the portfolio., also some of the, upside you have from your existing assets like, Canadian Malartic is, is quite an amazing asset, but there's a lot going on in the portfolio. So maybe walk us through the, the next 5 years. What some of the upside is it's not plot, not not included in that 40% growth, and then what are some of the details of that 40% growth? Yeah, no, excellent question. And, and so maybe just again the context that what when I came in two years ago. When we were actually setting our our our long term outlook, I really wanted to get rid of some of the ropier assets, some of the assets that we didn't have direct visibility into generating cash flows and GOs for for our shareholders, and so a lot of those were, were, were pulled out because they either didn't have financing in place or the permitting situation was, was uncertain again, given the environment that we're seeing, we're we're actually obviously seeing the the financing environments become much more constructive so. There, there, there's one of those, levers that are eased for again the operating companies, but more importantly, from, from a permitting perspective there's a lot more assets that are getting permitted and so maybe I'll just mention two that are completely excluded from that 2029 outlook. We will go through a process in February so in February we'll give our new 5 year outlook, but the first one, which we got a 5% NSR, so a big chunky NSR, is the Caribou, asset that the caribouin. In British Columbia, for which Cisco Development has, has now raised, they, they, they, they, they, they've raised all the capital necessary to to essentially start construction. It is shove shovel ready. They did get their permits earlier this year. They did put an updated, feasibility study out and, and so that will be a very nice generator for for GOs for us, again in, in the near term, and, and, and as well as very much the, the, the longer term., the, the other ones in our, in our portfolio, I, I'll mention the one in Nevada, and you're gonna hear the theme that most of our assets Canada, US, or Australia, in, in Nevada it's called Spring Valley, is an asset now that's, got a record of decisions, so fully permitted. It's also got $825 825 million dollars., assigned to it from the US Exim Bank. So again, largely the financing risk is, is, has been largely de-risked and, and, and so again in Nevada assets, coming into production shove shovel ready again that's really just gonna accrue to our shareholders for for no contingent capital so as assets like that and, and in this environment where we're actually seeing more streamline permitting processes. And the access to capital that will really help we've we've only got in, in, in our company right now we've got 22 producing assets out of close to 200 so there's a huge, huge bucket of near term and long term optionality out there that's again when, when we encourage people come February when we actually put our guidance out you'll know that we've gone through a very robust process. Process and only the assets that we believe have a clear line to geo production for us around permits, financing visibility will will include, but there's a lot of positive things going on in in our our portfolio right now and so that would be incremental to, the 40% geo growth. You've also got things like Upper Beaver people probably know Upper Beaver from from Agnico Eagle. They're sinking a shaft. Right now, in fact, we've got in our portfolio there's 4 shafts being sunk, that, that again really will will drive value for us go for Upper Beaver obviously the one at Canadian Malartic. You have one in Hermosa and one in Island Gold, which is going through an expansion as well. So, again we couldn't be more pleased with how our portfolio is setting up to drive, really great organic growth for shareholders go forward. Fantastic, so. Pivoting then to the potential for new assets in the portfolio, what is OR's current appetite to add to that portfolio? And then when you look at the pipeline of opportunities, are you seeing something similar to what Triple Flag is seeing? Are you seeing other opportunities and then in terms of the ones that you think are transactional for OR, where are you seeing them in terms of development stage and metal and time to close? So our appetite's very high., Sheldon was absolutely on point. You know, we're, we're all in these processes. There's the 5 companies that are in these processes that are, they're looking at assets, to, to include and get part of the, the growth engine for, for each of them., what we do, and so the first question is because we've got this long tail of optionality in 185 assets that could come on at some point we're not really looking at the Explorer Co or or the really early developer and we're looking for something cash flow or near cash flow, i.e., within our 5 year outlook, that'd be the first thing, first filter that we're looking at. The second filter again, we really want to stay., from a geopolitical differentiator perspective, we really want to stay in the jurisdictions that I mentioned. That doesn't mean we're not looking at opportunities outside of that, but the, the, the checks have to be right sized. we have an asset in Ghana, for example, that's ramping up called Nandini. it was a $35 million US investment a couple of years ago. We, we'll do those type of deals. The, the, the, the environment right now though is incredibly, incredibly competitive. there, there are no barriers to entry for, for this, this business. We're essentially a contract company as you can appreciate. And there's groups out there. I'll just mention Gin's now getting into the royalty and streaming space. there's other vehicles that that that are out there that again see that the power and the returns in this business model, and I would expect that there's gonna be some new entrances and, and obviously a new entrant may come with a cornerstone asset., but what we need to do at our royalties to stay incredibly disciplined. we will not do, we will not do, 0% IRR deals in Africa, for example, we, we do have to make a return for, for our shareholders and, and, and so and and those 0 0% return deals that we've seen in the in the past, those are at spot commodity prices. You, you've heard that I'm obviously a big bull on gold price and constructive, but. We've got such a good organic portfolio that we don't know. We're not prognosticators of the gold price, silver price 10 to 15 years out, and we're making investments and assets that have that longevity. We do, really, really have to be disciplined with, with our capital. We can't be chasing deals. that means is again it's no accident that you've seen that, You know, we haven't deployed a significant amount of capital this year. We've done some smaller deals, but we also, find ourselves as, as I like to say, we get Ricky Bobby a lot. Anyone that's seen Tale of nights, they'll know that Ricky Bobby was famous saying if you're not first, you're last. And, so we end up in second place a lot of times, but, but that's OK because we just have to, we have to, to, to maintain our our discipline here., Jason, we just have a, a, a moment left here, and I think it would be really important to ask about capital return. It's been a theme of the conference. I expect it will continue to be, how do you think about, the right level of capital return and then that split between dividend and buyback. So first and foremost saying, we, we want to, we're, we're, we're, we're, we're risk managers on behalf of our, our, our, our shareholders. So we, the best, best capital allocation is, is actually deploying a new assets, but we have to do them that actually gets a spread, to our internal hurdle rate firstly as we think about the dividends since I came in, we've increased our dividend by 8%., last year and by 22% this year, we, we will be looking again at increasing our dividend we typically make those decisions with the board May of next year, so we'll be, we'll be looking at returning more capital, especially if we see a constructive commodity environment go forward. The buybacks, again it's something that we have regulatory approval for to buy 5% of our shares back. It's becoming more interesting now in that the focus when I came in was just paying our debt completely down. And, and really happy to report that we have zero gross debt now we're just accumulating cash flow on, on, on our balance sheet. We're gonna get another $50 million US, from the Harmony, metals acquisition transaction and Mac copper trans transaction that should close in a matter of weeks here because we did as part of that investment we did put some equity in. And so nice return $50 million so we're accumulating cash and, and so our overall liquidity with our revolving facilities we've got a billion dollars to to deploy, but again we obviously look from from a buyback perspective we have an internal view of the fundamental value and the the the priority to this state was just paying our debt down., but certainly buyback is, is a tool that we definitely will, will use go forward because if we can give our shareholders more concentration on a per share basis to things like Canadian malartic to things like island Gold things just like CSA Copper, all the assets that you know are in our portfolio, we certainly would like to provide more concentration to your shareholders on a per share basis. OK, thank you very much for being here, Jason. Thank you folks for being here to listen in. We've gone well over time, so I think we have to cut it there. That was an amazing presentation. Thank you. All right, Lawson. Thanks.