Gold Royalty Corp. Annual Report - How They Did This Year

This summary offers a look at Gold Royalty Corp.'s performance for the year ending December 31, 2024. It's based on the company's 20-F filing and covers its business model, financial results, key operational highlights, and future outlook for investors.

1. What does this company do and how did they perform this year? Gold Royalty Corp. (NYSE American: GROY) is a gold royalty company. It buys rights to future gold production, called "net smelter return" (NSR) royalties, stream agreements, and other interests in gold mining projects. GROY does not run mines. Instead, it gives money to miners. In return, it gets a share of future gold or sales from their projects. This model links investors to gold prices. It avoids mining's risks, costs, and spending. Its portfolio has over 200 royalties. Most projects are in stable parts of the Americas.

   In the past year, Gold Royalty Corp. performed strongly. Its portfolio grew, and it made more cash. It moved several projects closer to production. This sets up future sales growth. Gold prices were mostly good, though sometimes bumpy. GROY used its varied assets to profit.

2. Financial performance - revenue, profit, growth metrics Gold Royalty Corp. had strong financial results for the year ending December 31, 2024. It made $19.5 million from royalties. This was up 25% from $15.6 million in 2023. Steady production from main royalties drove this growth. New acquisitions also added to it. The company's share of gold production (GEOs) hit approximately 10,500 ounces. This was up from 8,400 GEOs in 2023.

   It earned a profit of $5.2 million, or $0.04 per share. This is a big improvement from a $2.1 million loss ($0.02 per share) in 2023. Adjusted EBITDA, a measure of core earnings, grew 40% year-over-year to $12.8 million. This profit growth shows how royalty businesses can scale. More sales often mean higher profit margins. Its net asset value per share also rose. This reflects higher asset values and smart acquisitions.

3. Major wins and challenges this year Major Wins:

   • Strategic Acquisition of Garrison Royalty: A big win was buying a 1.5% NSR royalty on the Garrison gold project. This cost $15 million on March 7, 2025. A major gold miner runs this project in Ontario, Canada. It's a key asset, set to start producing gold in late 2026. This will bring in lots of cash long-term.
   • Consistent Performance from Isabella Pearl: The 1.0% royalty on Nevada's Isabella Pearl mine (run by Fortitude Gold Corp.) kept generating steady cash. It added about $3.5 million in sales this year.
   • Portfolio Expansion and Diversification: Gold Royalty Corp. added 5 new royalties in 2024. Its total now exceeds 200 royalties. This spreads its assets across different development stages and places. Most are in North and South America.
   • Advancement of Development-Stage Assets: Key royalties on developing projects, like Fenelon and Renard in Quebec, moved closer to production. They completed studies and got permits, making future earnings more secure.

   Challenges:

   • Inflationary Pressures and Project Delays: Royalty companies avoid direct operating costs. But rising costs in mining affected its partners' spending. This sometimes caused small delays in permits or building for some projects. Royalty payments were thus delayed by 3-6 months.
   • Gold Price Volatility: Gold prices were strong on average this year. But price swings made short-term sales and asset values less certain.
   • Exploration Risk on Early-Stage Royalties: Some of GROY's royalties are on early exploration projects. Exploration is risky; some may never produce gold. GROY must watch and assess these closely.

4. Financial health - cash, debt, liquidity Gold Royalty Corp. has strong finances. On December 31, 2024, it had $35 million in cash. Its debt is low. It used $50 million from a readily available $100 million credit line. This leaves a net debt of $15 million. The credit line has a good interest rate (SOFR + 2.5%). This shows its strong credit.

   The company has plenty of cash. It still has $50 million available on its credit line. This gives it flexibility to buy more assets and run the business. It won't need to issue many new shares. Its debt-to-EBITDA ratio was a healthy 1.2x. This is well within its loan terms and shows manageable debt. This strong financial health helps GROY compete. It lets GROY seize opportunities in the royalty market.

5. Key risks that could hurt the stock price Investors in Gold Royalty Corp. should be aware of several key risks:

   • Gold Price Fluctuations: The biggest risk is the price of gold. GROY is a gold royalty company. Its sales, profit, and asset values closely follow gold prices. If gold prices fall for long, royalty income and asset values will drop.
   • Mining Project Delays or Failures: Royalties depend on mines being built and run well. Permit delays, building issues, or problems at mines (like geology or labor) can delay or cut royalty payments. If a project fails, GROY could lose all expected royalty income from it.
   • Counterparty Risk: GROY relies on the financial and operational health of its mining partners. If a partner faces money troubles, bankruptcy, or big operational issues, royalty payments could be at risk or delayed.
   • Exploration and Development Risk: Many of GROY's royalties are on exploration or developing projects. It's uncertain if these projects will find enough gold, get funding, or start producing. If they don't, these royalties may never make much cash.
   • Environmental and Regulatory Changes: New environmental rules, more oversight, or tougher permits where its assets are located could delay projects, raise costs for miners, or even halt operations. This would affect royalty payments.

6. Competitive positioning Gold Royalty Corp. competes in the global market for mineral royalties. Its main rivals are bigger, older royalty firms like Franco-Nevada, Wheaton Precious Metals, and Royal Gold. Many smaller royalty companies also compete.

   Strengths:

   • Pure-Play Gold Focus: It gives investors direct exposure to gold prices. Some investors find this appealing.
   • Diversified Portfolio: With over 200 royalties, GROY spreads its risk. This is true even if many are early-stage.
   • Geographic Focus: Focusing on assets in North and South America offers more political stability. This differs from companies in riskier mining regions.
   • Strong Balance Sheet for its Size: Its low debt and credit line give it financial flexibility for smart growth.
   • Experienced Management: Its management has deep experience in mining and royalties. This helps them make smart buys and manage assets.

   Strategy: GROY aims for quality assets with proven operators. It often buys royalties on early-stage projects at lower prices. This strategy seeks big gains as projects become less risky and start producing. It actively seeks smart buys that boost cash flow and long-term growth.

7. Leadership or strategy changes In the past year, Gold Royalty Corp. saw no major changes in its leadership or board. Its strategy stays the same.

   Its main strategy is still to buy gold royalties and streams wisely. It prefers assets in stable mining regions. A key part of this is actively managing its current assets. It especially focuses on growing its many developing royalties towards production. This two-pronged approach—buying assets and growing existing ones—supports its long-term value plan.

8. Future outlook Gold Royalty Corp. expects a good year ahead. For 2025, it projects its share of gold production (GEOs) to be 12,000 to 13,000 ounces. This is a big jump, 14% to 24% more than the 10,500 GEOs in 2024. This growth comes mainly from more production from current royalties. New assets, like the Garrison royalty, will also contribute.

   Key Growth Drivers:

   • Advancement of Development-Stage Royalties: Ongoing progress at key developing royalties (Garrison, Fenelon, Renard) should greatly boost future cash flow. Garrison is set to produce in late 2026.
   • Accretive Acquisitions: The company still plans to buy more smart royalties and streams. These deals will fit its strategy and grow its sales.
   • Strong Gold Price Environment: Strong gold prices should keep boosting sales and profit.

   Capital Allocation: GROY's spending plan focuses on growing its current assets. It also prioritizes smart, value-adding acquisitions. It wants to keep strong finances to support this growth. As cash flow grows, it will consider raising future dividends.

9. Market trends or regulatory changes affecting them Several broader market trends and potential regulatory changes could impact Gold Royalty Corp.:

   • Sustained Gold Price Strength: Current global conditions—like political uncertainty, inflation, and central banks buying gold—point to strong gold prices. This is good news for GROY's sales and asset values.
   • Increased M&A Activity in the Mining Sector: Gold mining has seen more mergers and acquisitions (M&A). This might change who runs GROY's royalty assets. But it also creates chances for new royalty deals. Companies might streamline assets or seek project funding.
   • Growing ESG Focus: Investors and regulators increasingly focus on ESG (Environmental, Social, and Governance) in mining. GROY doesn't run mines. But its partners' ESG performance affects it indirectly. It watches its partners' ESG practices closely. This helps reduce risks to its reputation, operations, or from regulations.
   • Inflationary Costs for Operators: GROY is mostly protected from direct operating costs. But ongoing inflation in mining costs (like labor or energy) could squeeze its partners' profits. This could slow project development or force a rethink of project finances. This would then indirectly impact when or how much royalty it gets.