Gold Industry Legends
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David Garofalo: Happy New Year to you, Gerardo! I'm glad to be with you again.

David Garofalo: Well, I think that the inflation rates we've seen — the headline CPIs — have only emphasized the importance of gold as a safeguard of your capital. And inflation at 7% headline, I think, vastly understates what we're actually experiencing.

If you're putting food in your stomach, fuel in your car, or a roof over your head — you're experiencing far in excess of 7% inflation. It's insidious. It's eating away at your capital. You're not earning anything in your bank accounts. If you leave it in your bank accounts, inflation is eating it away to the rate of 7%, 8%, 10% or above. It's taking away your capital. It's robbing you of your capital.

Gold is preserving capital. And not only is it preserving capital but it's showing signs of life here as inflation rears its ugly head. And I'm so very optimistic that gold is going to have a long run here, not unlike what we experienced in the late-1970s when we last had a big inflation cycle.

David Garofalo: Yeah, well, I think it speaks to the quality of the asset base we've assembled in very short order from our IPO in March of last year when we only had 17 royalties — a very modest portfolio — none of them cash flowing at the time.

And then, through the acquisition of three of our peer companies, we've added almost 180-plus royalties into the portfolio, and many of them are cash flowing or near cash flowing. That's given us a solid foundational cash flow that we felt gave us the comfort to put in a sustainable dividend that we think we can grow over time as our cash flow grows.

We think we have the highest compound average growth rate and cash flows in the industry over the next five years, and we believe that'll underpin a potential increase in dividend over time.

Gold Royalty Portfolio Summary

David Garofalo: Well, we think there's still going to be more consolidation in the sector. It's still quite highly fragmented. We've been active in that regard. As I said, we've ended up merging with three of our competing companies in the last year, and that's allowed us to vastly expand and diversify our portfolio and introduce significant cash flow growth in.

We have announced a takeover of Elemental Royalties and encourage investors to look at the takeover documents, which are filed at the SEC on Edgar. But we think that's going to be a recurring theme in the sector, generally. I think there is still lots of scope for consolidation.

Scale is important in our industry in the royalty business; this scale gives us higher multiples, gives us access to capital, which allows us to perpetuate and continue to grow our business on an accretive basis for our shareholders.

David Garofalo: Well, we're still sitting at about US$40 million in cash. No debt on the balance sheet so very conservatively capitalized. And we're generating cash flow, which means that we're going to continue to grow our balance sheet.

We'll continue to deploy capital and add more cash flowing assets over time. We have significant pipeline growth within our existing 191 royalties that we think will give us cash flow growth for the foreseeable future.

David Garofalo: You know, what I would say is the recurring theme among that team is operational expertise. We're not financial players. We didn't come at this as former bankers or former sell-side analysts. We have built and operated mining companies. Over 30 years, I have been involved in the construction of 15 separate mines. I've operated multiple mines.

Ian Telfer is the Chairman of our advisory board. Ian was the founding Chairman of Goldcorp and built multiple companies over his career. He's been a very credible and substantial operator, a member of the mining hall of fame here in Canada. So, it brings a lot of credibility, expertise, and depth of organization or depth of network, which we're leveraging as we grow our business.

John Griffith was the former head of Merrill Lynch's mining franchise in North America. He’s joined us. And his job is chief development officer for Gold Royalty. So, he has a transactional type of role, and he brings a lot of expertise, particularly on the royalties side, when he was advising a number of companies in the royalty space in his banking career. He was actually my advisor on the merger of Goldcorp and Newmont. So we've had a long history, and I have a lot of trust in him.

Also on the board, Alan Hair, who was my successor as CEO at Hudbay, and was my chief operating officer there. And Alan has almost 40 years of experience as a metallurgical engineer. And he's a prolific mine builder, having built the three mines that we built that Hudbay when I was there, including the $2 billion Constancia project in Peru. He was responsible for our success and mine development construction when I was there, and has a long history of having done mine building over his career.

In addition to that, we have Warren Gilman on the board. Warren runs Queen's Road Capital. He manages Li Ka-shing's Natural Resource fund, and is a cornerstone investor in the company. Unusually for him, he joined the board. Normally he doesn't do that for investee companies, but he's had a longstanding relationship with both me and Ian for over 30 years, and he wanted to have some fun. And he really liked the investment model. He's put capital behind it, but he wants to participate in that on a more meaningful basis. And also we're able to leverage his network and get involved in a lot of situations that are not necessarily available in the marketplace.

DAVID GAROFALO Chairman & CEO

Former President & CEO of Goldcorp until its merger with Newmont in 2019; former President & CEO of Hudbay Minerals; former SVP Finance and CFO of Agnico-Eagle

JOHN GRIFFITH Chief Development Officer

Former Head of Bank of America’s Metals & Mining Investment Banking

IAN TELFER Chairman of Advisory Board

Former Chairman of Goldcorp and the World Gold Council; built and led Wheaton River, Wheaton Precious Metals, and Uranium One

AMIR ADNANI Director

Entrepreneur, Founder, President & CEO of Uranium Energy Corp, Chairman of GoldMining Inc and Uranium Royalty Corp.

ALASTAIR STILL Director of Technical Services

Former Director of Corporate Development for Newmont Corporation; previously held senior leadership roles with Goldcorp, Placer Dome, and Kinross

WARREN GILMAN Director

Founder, Chairman & CEO of Queen’s Road Capital Investment, a leading financier to the global resource sector; former Chairman and CEO of CEF Holdings, a global mining investment company

The advantage of having collectively over 250 years of mine operating experience on our board management is access to virtually anybody in the mining business in the world, which means we've become aware of royalty opportunities before the rest of the market is aware of them. And so we’re trying to a large extent to avoid those competitive processes where royalties are overpaid for.

David Garofalo: Gerardo, it's an exciting time for the gold industry. And I still say that the best place to play gold is in the royalty space where you get that top-line-exposure / optimum-leverage of the gold price.

And you're completely insulated from inflation that we're all experiencing in every industry in our everyday life because we're exposed to just revenue. We provide that leverage to the gold price without exposing our shareholders to cost inflation.

David Garofalo: Thanks, Gerardo.