Elemental Royalty Q1 Earnings Call Highlights
Elemental Royalty (NASDAQ:ELE) reported record quarterly results in its first full quarter following the merger of EMX Royalty Corporation and Elemental Altus Royalty, with management pointing to stronger metal prices, expanded scale and a larger royalty portfolio as key drivers of performance.
Chief Executive Officer David Cole said the company is operating in a favorable environment for mining and royalty companies, citing strong commodity prices and improved capital markets recognition for the mining sector. He said the merger was intended to create scale in the royalty space and strengthen the company’s ability to allocate capital across a larger portfolio.
“I’m very pleased with how that merger has come to fruition and the results that we’re seeing,” Cole said on the call.
Record Revenue and Cash Flow
Chief Financial Officer Stefan Wenger said the company reported revenue of CAD 24.3 million for the quarter, an 83% increase over the prior year for Elemental. He said annualizing that figure puts the company near a CAD 100 million revenue run rate.
The company sold just under 5,000 gold equivalent ounces, or GEOs, during the quarter. Wenger said that level keeps Elemental on track with its full-year guidance and supports a production profile of about 20,000 GEOs annually.
Adjusted EBITDA was nearly CAD 18 million, up 55% from the prior year, while operating cash flow was nearly CAD 15 million. Wenger said EBITDA could strengthen further as some expenses in the quarter were elevated by transaction-related activity, including merger closing costs, exchange uplistings, the inaugural dividend and the upsizing of the credit facility.
General and administrative expenses were CAD 5.5 million for the quarter. Wenger said that was above the annualized run rate he expects, which he put closer to CAD 16 million. Royalty generation expenses were described as on budget and in line with full-year expectations.
Wenger also noted that Caserones was included in the revenue line as a royalty for the first full quarter, rather than being reflected as an investment. He said Caserones, Timok, Bonikro and Carlin were among the cornerstone assets driving results.
Credit Facility Expanded, Dividend Introduced
Cole said the company has increased its revolving credit facility to CAD 200 million, a move he said demonstrates how the merger has improved Elemental’s access to capital and reduced its cost of capital. Wenger said the company has a CAD 150 million undrawn credit facility with a CAD 50 million accordion feature, as well as CAD 70 million on the balance sheet.
Wenger said that even after the cash component of the Vizsla transaction announced the same morning as the call, the company expects to remain in a net cash position and continue pursuing transactions in the royalty space.
Cole also highlighted the company’s inaugural dividend, which gives shareholders the option to receive payment in cash or in XAUT, the Tether Gold stablecoin. He said the payout ratio is modest because management still sees opportunities to invest capital to expand the portfolio.
The company has also uplisted to the main board of the Toronto Stock Exchange from the TSX Venture Exchange. Cole said trading liquidity on Nasdaq and the TSX is now “multiples ahead” of where the two companies were on a combined basis before the merger, which he said could support future index inclusion.
Portfolio Remains Precious-Metals Focused
Cole said Elemental remains gold-focused while also increasing its silver exposure. He said the company intends to remain more than 50% precious-metals focused to support potential inclusion in precious-metals-focused index funds, including the GDXJ. He said the company currently has more than 60% of ongoing revenue from precious metals.
Management said the company has about 300 mineral property assets in more than 20 countries, including about 200 royalties. Cole said more than CAD 100 million in annual exploration drilling is being undertaken across the portfolio by counterparties, which he described as a key source of long-term optionality.
Executive Frederick Bell said record revenues were recorded during the quarter from Karlawinda, Leeville, Bonikro and Timok, while Caserones delivered a near-record quarter. He said strong copper prices are also benefiting the company, with copper the company’s second most material commodity exposure after gold.
At Karlawinda, Bell said an expansion aimed at 150,000 ounces per year from the second half onward remains on track for commissioning in the third quarter. At Timok, he said the record quarter came from the upper zone, while Zijin is advancing development of the lower zone, which he said is expected to be much larger and is also subject to Elemental’s royalty.
Development Assets Add Growth Potential
Bell pointed to several development-stage assets as potential contributors to future growth. At Laverton, he said Genesis is expected to update its five-year plan around the middle of the year or in the third quarter, and Elemental expects some royalty-covered ground to be included in that plan.
At Cactus, Bell noted that Arizona Sonoran is being acquired by Hudbay, with a recent shareholder vote showing 99% approval. He said the move to a larger mining company could be positive for project development. He also cited AbraSilver’s Diablillos project, where a resource update was released during the week and a feasibility study and construction decision are expected this year.
Bell said Fireweed is continuing work on an updated feasibility study for Mactung, expected in 2027, and described the tungsten project as a potential long-term contributor. He also discussed Dugbe, where the operator is updating a feasibility study and has discussed a construction decision in the second half of the year.
Looking ahead, Bell said Elemental sees about 50% organic growth to 2029 from the existing portfolio, before the addition of Panuco and Vizsla. Including those assets, he said the growth profile rises to about 75% from current levels.
Analyst Questions Focus on Bonikro and Korali-Sud
During the question-and-answer session, Raymond James analyst Brian MacArthur asked about Bonikro’s outperformance. Bell said the stronger quarter was partly related to the timing of sales rather than a major change in ore moving in and out of royalty-covered areas. He said Bonikro was ahead of expectations on a quarterly basis but management is maintaining its prior view for the year.
MacArthur also asked about Korali-Sud, which generated no revenue in the quarter. Bell said Elemental expects some residual payments this year related to previously mined royalty revenue and milestone payments. He added that the company is waiting for an updated mine plan following the acquisition of Allied Gold by Zijin.
Cole closed the call by directing investors to a separate call on the Vizsla Silver transaction. He said the company continues to focus on assets with discovery optionality, which management believes is a key driver of long-term royalty valuation.
About Elemental Royalty (NASDAQ:ELE)
Elemental Royalties (NASDAQ: ELE) is a publicly traded company that acquires and manages royalty and streaming interests in the mining sector. The firm focuses on securing long‑lived, low‑cost interests that provide ongoing, contractually defined payments or metal deliveries from producing and near‑term development mineral projects. By targeting royalties and streams rather than operating mines, the company seeks exposure to commodity price upside while avoiding the capital intensity and operating risks of miners.
Elemental Royalties’ activities include sourcing and negotiating royalty and stream transactions, performing technical and commercial due diligence on potential assets, and actively managing a diversified portfolio of interests.
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