Stand on the Shoulder of Mining Legends

Gold Royalty Corp.

NYSE: GROY


The Royalties Business has MAJOR Advantages…

It’s a unique business model that’s become a favorite of billionaires around the globe and has been copied by some of the world’s leading companies.

In simple terms, a royalty company provides money today to another business. In return, they’re promised a % of revenue later.

You may have heard the term used on the TV show Shark Tank before, as those savvy investors understand the true long-term value of this business model.

Royalty agreements exist in a number of industries: from mining to oil and gas, and even in music.

Take the music business for example.

If you record a song and publish it, each time it’s played you get paid…again and again.

Even the song “Happy Birthday” had a royalty agreement attached to. Each time it was played in a movie Warner Music would get paid.

The Smooth Criminal Royalty Story:
Michael Jackson’s BIG Payday

The original “King of Pop”, Michael Jackson made most of his money not from his music but by owning the royalty rights of other artists.

Michael Jackson once outbid his friend at the time, Paul McCartney on a sale of the royalty rights to the Beatles’ catalogue and a few other artists.

It wasn’t cheap, as it cost Jackson just under $50 million in the mid 80’s…but it paid dividends (literally) for decades to come.

The Jackson estate eventually sold his last half of the collection for $750 million…

Warren Buffett loves the business model and once compared royalty businesses to owning a toll booth. “Once you’ve got it, you’re getting paid every time someone passes through”.

In fact, for years, some of the largest and smartest billionaires have quietly cornered this lucrative low-risk high cash flow business model.

Royalty businesses are the billionaires’ treasure boxes as it keeps printing them money…

Hedge-fund billionaire William Ackman made his move recently into the music royalty industry stating:

“I can’t think of an asset I’m more confident in being consumed over time.”

The recent inflationary concerns…

Combined with unprecedented government money printing…

Have shined the light on another industry that many billionaires are convinced will act like lucrative toll bridges going forward…

GAME ON: The Golden Opportunity

Two Canadians were the first to put the royalty business model into practice in the gold industry.

Pierre Lassonde and Seymour Schulich started the first gold royalty company in the world, the original Franco Nevada back in the 80’s.

It was a massive success.

The stock rose from CAD$0.21 per share with a Market Cap of $2M to eventually being bought out by Newmont at over CAD$33 per share for CAD$2.5 billion.

  • That’s an over 15,000% return!

A modest $1,000 investment would have been worth over $150,000 (and that’s not even including the dividends).

Here’s how the gold royalty business model works:

It’s based on the simple framework of “exchange cash today, for a share of tomorrow’s production”.

The industry uses a term called Net Smelter Return (NSR) which is the net revenue that the owner of a mining property receives from the sale of the metal, less transportation and refining costs.

Fast forward 20 years and the next big step forward in the industry was by Ian Telfer. He tweaked the royalty business model from a “% of Revenue” to a “stream” or a “% of what’s produced”.

Telfer started the first precious metal streaming company called Silver Wheaton (now known as Wheaton Precious Metals).

Franco Nevada and Wheaton Precious Metals are now the two largest royalty and streaming companies in the world.

They’ve made their investors filthy rich. Since then, however, the royalty business model has been relatively quiet…

Until recently when Gold Royalty Corp. (NYSE: GROY) came on the scene.

Since completing a massively oversubscribed $90 million IPO in March 2021, Gold Royalty Corp. (NYSE: GROY) has been on a mission to aggressively acquire precious metals royalties.

It’s common in the royalty business for a company to target individual mines and negotiate a royalty.

But Gold Royalty Corp. (NYSE: GROY) has changed the game once more.

Rather than targeting individual mines, the company has gone out and acquired 3 separate royalty companies alongside a strategic stake in a fourth business.

This rollup strategy has culminated in a massive asset base of exploration, development and currently producing precious metals royalties.

Gold Royalty Corp. is now one of the largest gold royalty companies in the world and shows no signs of stopping.

Here’s a quick and easy an acronym to use as we dig a bit deeper, as we’re always on the lookout for the best:

  • People,
  • Resources,
  • Operations,
  • Future,
  • Investors/Investments, and
  • Triggers.

As in the end, every investor’s goal is to P.R.O.F.I.T.


Gold Royalty Corp.

NYSE: GROY


(P) - People

CEO: David Garofalo

David is a 30-year veteran in the industry. He has operated and ran some of the largest mining companies in the world. Most recently he was the CEO of Goldcorp from 2015 until Goldcorp was merged with Newmont in 2019 and created the largest gold company in the world.

Before that David was President & CEO of Hudbay Minerals, and he also served as CFO of Agnico Eagle, one of the world’s largest gold companies.

David knows everyone in the game and it is extremely rare to get someone this distinguished running a company where you can buy stock at the same price as the insiders.

David has taken on the CEO role because he believes he can grow the company– otherwise he wouldn’t be wasting his time.

COO: John Griffith

The former head of BoA’s Metals & Mining Investment Banking arm. In fact, he was the lead banker on the merger with Goldcorp and Newmont when David was the Goldcorp CEO.

They have known each other for many years, and both choose this company as they believe they can make a significant impact to the upside for shareholders.

He is also incredibly well connected in the industry, has an enormous amount of intellectual capital and brings stellar deal making savvy to the table.

Amir Adnani, Director:

Amir is likely a familiar name to you if you’ve been following the junior resource industry for a while. If not, you should be following him.

He has been pegged as one of the future leaders in mining by Fortune magazine, Mining Journal and Casey Research to name a few.

Most notably, Amir is also the founder of Uranium Royalty Corp. (URC) that has gone on to become one of the hottest companies during this recent uranium bull market.

He has an excellent reputation in the industry and has been invited to speak at numerous global conferences.

Ian Telfer, Advisor to the Board

You may have recognized this name earlier from his Silver Wheaton (now known as Wheaton Precious Metals) fame.

Ian was also the Chairman and founder of Goldcorp when David was the CEO and wrote a multi-million-dollar cheque in the GROY IPO at $5 per share as well.

The Dream Team of Mining

These are some of the biggest names in the industry who’ve led some of the biggest companies and now they’re all coming together to take Gold Royalty to the next level.

(R) Resources

Below is a breakdown of their royalties by stage and by location:

The Gold Royalty Corp. (GROY.NYSE) team have disrupted the whole gold royalty sector and have the management teams of the other companies on their heels.

One of the massive competitive advantages that GROY holds over other mid-tier royalty businesses is where their royalty projects are located.

Location, Location, Location

Nearly all of their royalties are located in the most politically stable and mining friendly jurisdictions such as Quebec (Canada) and Nevada (USA).

There is no risk of government or rebel army seizure of the assets like in some parts of Africa or parts of South America.

With unsafe jurisdictions when the metal prices rise so does the risk of governments to nationalize mines or increase royalty %’s. These can change or ruin the whole economics of their project.

That just doesn’t happen in North America.

In fact, Quebec and Nevada, where Gold Royalty Corp. (NYSE: GROY) holds most of its assets, are ranked as some of the best jurisdictions in the world for mining. When it comes to location, this is absolutely as good as it gets.

Gold Royalty Corp. has the lowest exposure to political risk of any of the royalty and streaming companies.

(O) Operations

Major Asset #1: Ren

Mining heavyweight Marin Katusa believes that this has the potential to be a huge score.

  • Gold Royalty Corp. (NYSE: GROY) owns a 1.5% NSR and a 3.5% Net Profit Interest on Ren.

Ren is operated by Nevada Gold Mines, which is a joint venture between the 2 largest gold companies in the world: Barrick Gold and Newmont.

Ren is situated at the northern edge of the Goldstrike district in Nevada, which is one of the most valuable gold districts on the planet.

The region has produced over 60 million ounces of gold and the Ren claims are located smack between the South Arturo and Meikle mines (both of which are operating today and are managed by Nevada Gold Mines).

The historical resource estimate called for over 200,000 ounces per year of potential production. And had indicated incredible high grade gold averaging over 10 grams per tonne.

  • If this grade is consistent, it will be over 10 times the average grade of global operating gold mines

However, the deposit was shelved at the time because gold was trading at $350 per ounce when the resource was completed.

With Gold currently around $1,800 per ounce, the economics make more sense. Barrick and Newmont are sure to look very closely at putting this mine into production.

The back of the envelope math on a 1.5% Net Smelter Return (NSR) using current gold prices and production of 200,000 ounces per year generates in excess of $5 million per annum in cash flow.

Major Asset #2: Odyssey

This project represents the underground portion of Canada’s largest producing gold mine.

  • The Malartic Mine is operated by Yamana Gold & Agnico-Eagle, and today it produces over 550,000 ounces of gold annually from a very large open pit.

The Odyssey portion represents all the ore below the open pit mine. Yamana and Agnico Eagle are investing a total of $1.7 billion into underground development at Malartic.

Currently there’s more than 7 million ounces of gold in the underground portion of the deposit, and it’s estimated that the underground mine will run from 2024 until at least 2040.

Upon completion of the merger with Abitibi Royalties, Gold Royalty Corp. (NYSE: GROY) will own a 3% Net Smelter Royalty (NSR) on over 5 million ounces of the underground. And they will share a 15% Net Profit Interest on over 1 million additional ounces.

This has the potential to be a world class royalty asset.

Based on the current mine plan economics, Odyssey could produce between 600,000 and 700,000 ounces of gold annually between 2024 and 2040.

Using the current gold price of $1,800 per ounce, this royalty alone could generate over $25 million per year in cash flow to Gold Royalty Corp.

That is in addition to the potential $8 million in cash flow from the Net Profit Interest.

This is another cornerstone asset for the company and is like owning the Beatles music catalogue mentioned earlier.

Major Asset #3: The Other 189 Gold Royalties

The royalty on the Fenelon asset, for example, will have had $71.5 million spent on the project this year and over 550,000 feet of drilling. 

A resource update will be out by year end and this is just one of the 189 royalties not mentioned yet.

Another incredible royalty is the “Titiribi” gold and copper deposit located in Colombia. It’s a very large gold deposit that hosts an NI 43-101 compliant resource estimate of over 7.8 million ounces of measured and indicated gold with another 3 million inferred ounces.

  • Gold Royalty owns a 2% NSR on this project.

There’s no mine plan or economics yet on this asset but given its large size, it could produce 300,000 ounces of gold annually for 15 years.

With current gold prices and at 300,000 ounces per year, this NSR could potentially generate $10 million per year in cash flow.

(F) Future

Size Matters - especially in the royalty world, the overall scale of your royalties leads to lower your cost of capital.

Lower cost of capital means greater revenues and cash flow.

The chart below compares junior & mid-tier royalty companies based on market capitalization and number of royalties.

Gold Royalty Corp. (NYSE: GROY) stands out from the pack:

Royalty companies are not going to give you the explosive volatility up and down like Bitcoin or tech start-ups might.

But like the tortoise & the hare, royalty companies are the slow yet steady march upwards– stable cash generation fueling continual growth.

It will take time for Gold Royalty Corp. (GROY.NYSE)’s valuation to fully reflect what the company is capable of delivering to its shareholders. In that lies the opportunity…

(I) Investors / Investments

Since completing a massively oversubscribed $90 million IPO in March 2021, Gold Royalty Corp. (NYSE: GROY) has been on a mission to aggressively acquire precious metals royalties.

Gold Royalty already has an enormous number of royalties that far surpasses any in its peer group.

This paves the way for future cash flow without having to spend any more money.

Other companies without similarly large royalty packages will be forced to do equity raises and dilute current shareholders in order to keep growing.

But one of the greatest benefits that Gold Royalty Corp. has is some of the largest and smartest deal makers as its backers and supporters.

Among those, you’ll find:

Rob McEwen – Founder of Goldcorp, one of the world’s largest gold companies, and currently the Chairman of McEwen Mining.

Eric Sprott – Billionaire resource financier and founder of Sprott Inc. who owns almost 10% of the company at an average price around $5 per share.

Jimmy Lee – Another billionaire who is backing this management team as one of the largest shareholders.

Ian Telfer – Started the first precious metal streaming (now Wheaton Precious Metals), former Chairman of Goldcorp, and Uranium One.

Warren Gilman – Co-founder of CIBC’s Global Mining Group. Previously the CEO of CEF Holdings which managed multi-billionaire Li Ka-Shing’s natural resource portfolio and is currently an advisor to some of the world’s largest mining companies.

Rick Rule- Eric Sprott’s protégé and successor in taking over Sprott Asset Management (one of the world’s largest asset managers in the commodity and resource sector).

These giants don’t just back any horse and they know that patient capital wins.

Investors like this didn’t create their fortunes overnight.

They built up their wealth over years – decades – of slow and steady progress.

They invest in the best of the best. They’re gold mine builders that know what it takes, and how, to build a mine.

They believe in the management team and the potential upside of the company. That’s why Rob McEwen, Eric Sprott, and Jimmy Lee have all signed three year lock ups and won’t be permitted to sell any of their stock before then.

This is exactly the type of commitment you want to see from the company’s largest backers.

They’re in this for the long haul because they and see the potential opportunity for this investment to grow even more wealth.

(T) Triggers

Large institutional investors and other asset management firms (hedge funds and banks) often target mining royalty companies for their funds, due to the stability and growth trajectory.

This creates a self-fulfilling prophecy, wherein as the company gets bigger more ETFs and passive management funds buy the stock, which again propels it higher.

Gold Royalty Corp. expects on being included in the Gold Mining ETF, which is one of the largest and most liquid commodities ETFs.

  • If and when this happens, it could bring in millions of shares in buying.

Another thing to note and that has gone unnoticed in any analyst report to date is their cost of capital. One of Canada’s largest banks have given Gold Royalty Corp. (NYSE: GROY) a revolving, unsecured line of credit. The rate is lower than royalty companies 3-5 times its size. 

Why would this happen?

Because the largest bank in Canada is also the largest bank for mining, and they believe in the management of Gold Royalty Corp. enough to give them a preferred rate.

But right now, even with such an incredible management team and investor group backing it, the company is still flying under the radar.

Another potential catalyst is that there’s very little analyst coverage of the company…yet.

After all, you can’t have someone like the ex-CEO of Goldcorp (at the time one of the world’s largest gold producers) running a company and not expect to have analysts beginning to run their spreadsheets.

Since the company went public only back in March it has kept a very low profile.

Once the big institutions and funds begin to follow the story this added exposure could really make Gold Royalty Corp. stock start to see some traction.

Looking at the chart back over the last few weeks, some of the big funds might already have this company on their radar.

And based on their rapid M&A spree over the last few months, they could potentially have a lot more in store going forward.

“We've got a lot of firepower to continue to add to this portfolio.”

David Garofalo – CEO Gold Royalty Corp.

Interview with Gold Royalty Corp (GROY.NYSE) 
Chairman David Garofalo

The details on the Abitibi transaction and what a “Double Bump" could mean for investors.

Regards,

Venture Society

Get Free Investing Guide & Updates From Gold Royalty Corp.

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