Earnings call transcript: Elemental Royalties Q3 2025 revenue surges 70%

Elemental Altus Royalties reported a strong third quarter in 2025, driven by a significant increase in revenue and strategic mergers. The company, which recently merged with EMX Royalty, reported a 70% year-over-year increase in adjusted revenue, reaching $8.2 million. Despite this growth, Elemental’s stock price saw a slight decline of 1.91% to $22, reflecting broader market trends and investor sentiment.

Key Takeaways

• Elemental’s Q3 adjusted revenue grew by 70% year-over-year.
• The company completed a merger with EMX Royalty, forming a $1 billion royalty company.
• Stock price decreased by 1.91% following the earnings report.
• Elemental forecasts a record adjusted revenue of approximately $42 million for the year.

Company Performance

Elemental Altus Royalties demonstrated robust performance in Q3 2025, with a notable increase in both adjusted revenue and EBITDA. The merger with EMX Royalty has positioned the company as a significant player in the royalty space, managing over 200 royalties. This strategic move is expected to generate multi-million dollar synergies and enhance Elemental’s market position.

Financial Highlights

• Adjusted revenue: $8.2 million, up 70% from Q3 2024
• Royalty revenue: $6.9 million
• Adjusted EBITDA: $6.2 million, nearly 70% increase
• Adjusted cash flows from operations: $5 million, nearly 80% increase

Outlook & Guidance

Elemental Altus Royalties is on track to achieve its gold equivalent ounce (GEO) guidance of 11,600-13,200 for the year. The company is also expecting higher copper head grades in the second half of 2025, which could positively impact future revenue. Additionally, Elemental is anticipating new paying royalties from projects like the Chapi mine in Peru and the Western Queen gold royalty.

Executive Commentary

"The combination creates a billion-dollar royalty company of scale where very few royalty companies have ever achieved," stated Dave Baker, CFO. Frederick Bell, CEO, emphasized the strategic benefits of the merger, saying, "We are now in a position where we can do some opportunities that we would not have been able to do previously."

Risks and Challenges

• Market volatility could impact stock performance.
• Integration challenges post-merger with EMX Royalty.
• Dependence on commodity prices, particularly gold and copper.
• Potential delays in new royalty projects.
• Economic uncertainties affecting global mining operations.

Elemental Altus Royalties’ Q3 2025 earnings report highlights the company’s strategic growth and operational efficiency. Despite a slight decline in stock price, the company’s strong financial performance and future outlook position it well for continued success.

Full transcript - Elemental Royalties Corp (ELE) Q3 2025:

Call Operator/Moderator: Good day, ladies and gentlemen, and welcome to the Elemental Altus Royalties Q3 earnings call and webcast. As a reminder, all participants are in a muted or listen-only mode to cut down on any background noise. Later, you will have the opportunity to ask questions, and instructions will be shared at that time. To get us started, I’m pleased to turn the floor over to CEO Mr. Frederick Bell. Please go ahead, sir.

Frederick Bell, CEO, Transitioning to COO and President of Elemental Royalty Corporation, Elemental Altus Royalties: Thank you, everyone, for joining our Q3 call today. This will be the last quarterly call as Elemental Altus Royalties, because for those paying attention to all of our announcements, we shortly after our Q3s announced the closing of the merger with EMX Royalty. I am here on this presentation as the CEO of Elemental Altus, and I’ll be going into the COO and President role of Elemental Royalty Corporation. With me is Dave Baker, who is the CFO of Elemental Altus Royalties to run through our Q3s, and he will be assuming the Chief Investment Officer role for Elemental Royalty Corp moving forwards. With that, if we can go to our highlights for the third quarter, I think the overall message here is that it’s the strongest financial position in the company’s history, really good continuing cash build.

We had for Q3 adjusted revenue of $8.2 million, and that is compared to Q3 in 2024 of $4.8 million. We announced the merger with EMX, and the day after our results came out, we announced the closing of it in November, and that creates about a $1 billion market cap royalty company, a portfolio of over 200 assets, and four really cornerstone royalties to build the company out going forwards. We also announced two acquisitions in September, and that was the Dukabay Royalty and the Laverton Royalty in Australia. We closed the Dukabay Royalty, and we expect to close the Laverton Royalty shortly this quarter. We have about $100 million of non-dilutive capital that we have available to deploy from today, and that is both from our credit facility that is existing and also our cash on hand.

Lastly, alongside the closing of the merger with EMX, we also closed the previously announced $100 million financing with Tether that was part of the merger with EMX. A bit more detail here into the quarter, and as you can see, really strong continuing year-on-year growth in revenue, EBITDA, and operating cash flow. We had Q3 royalty revenue of $6.9 million and adjusted of $8.2 million, up 70% on the comparable period for 2024. Just to remind everyone, really, that the key difference there between the royalty revenue and adjusted revenue number is the inclusion of our Caserones royalty in that adjusted number. We had adjusted EBITDA there of $6.2 million, which again is up nearly 70% on the Q3 period in 2024. We had adjusted cash flows from operations of $5 million, up nearly 80% on Q3 2024.

In terms of revenue guidance increase and GEO guidance, we are on track to meet the midpoint of our gold equivalent ounce GEO guidance, and that is between the 11,600 and 13,200 GEO range, and that translates to increased record adjusted revenue of approximately $42 million, and that is basing it on a Q4 number of $4,000 gold. Again, just to make that really clear for everyone, our gold equivalent ounce number in attributable ounces from our operators and counterparties, we are on the midpoint of guidance range for that, but we are increasing the revenue guidance on the basis of using a higher gold price in the Q4 quarter, of which we are approximately halfway through at the moment. Our Q3 gold equivalent ounces came in at 2,362, which is up about 22% on a GEO basis from Q3 2024.

Our liquidity has improved significantly on the back of the cash flows, and we mentioned here the Coralli Sud Royalty, which continued to contribute in Q3 with about $1 million of revenue, and year to date, the royalty has generated now over $10 million in revenue. That was, for those who recall, that was first production from Coralli Sud, first royalty revenue coming in at the beginning of this year. It puts us in a really strong liquidity position, and building on that is about $15 million we have added in milestone payments as well over the course of the year. Pro forma balance sheet for the post-merger with EMX is about $48 million US dollars.

I would note that in the last 48 hours, EMX also announced the acquisition of the Phokios Royalty, and so this number is pre that, and on top of that, we have about $50 million credit facility available for drawdown. At this stage, I’ll hand over to Elemental Altus’ CFO, Dave Baker, and our moving forward CIO to run through the rest of this quarterly presentation.

Dave Baker, CFO, Transitioning to Chief Investment Officer, Elemental Altus Royalties: Thanks, Fred. Just a couple of minutes on the EMX merger, because it really is a genuinely transformative transaction for both companies. The combination creates a billion-dollar royalty company of scale where very few royalty companies have ever achieved. Together, we’re managing more than 200 royalties with a larger base of cash flowing and near cash flowing assets. What also makes this merger really compelling is the strategic fit between the two portfolios and the two businesses. Elemental Altus bringing strong precious metals exposure, a track record of disciplined acquisitions, EMX bringing exceptionally broad project knowledge and technical business, globally diversified, and real cornerstone royalties such as Timok and Leverel.

If you look at those combined portfolios of cornerstone assets, adding Caserones, Karlawinda, and Laverton, we have a revenue and growth foundation that’s high quality, but also very much back to gold and copper, which are two very important metals for us. The companies have generated consistent value over a long period of time, and I’m confident that together we deliver even more growth through that scale, flexibility, ability to now compete for larger and higher impact transactions alongside our new large investor, Tether. The merger really does represent a clear step change for Elemental and really positions us firmly in the intermediate royalty space with enhanced access to growth and to capital. Turning to the transactions that we’ve announced in the quarter, starting with Laverton, Laverton’s an exceptionally high quality royalty opportunity.

We’re acquiring an additional 2% gross revenue royalty over Genesis Minerals’ consolidated Laverton project that they acquired from Focus Minerals. This is one of the largest undeveloped gold systems in Australia. It’s Australia’s third largest undeveloped gold project. Over 300 sq km, more than 2.1 million ounces of M&I resources, 99% of those resources within existing mining leases. It really does reduce that permitting and development risk. Genesis, AUD 4 billion operator, has been very clear about the strategic rationale behind acquiring the Laverton assets, provides high quality mill feed for their processing hub that’s just 30 km away. From our perspective, and the reason why we did the transaction is it creates that potential for fast track development path, gold focused in Western Australia, and Genesis have already come out saying that they’re fast tracking opportunities and drilling at Beasley Creek.

With Laverton, with a new well-funded operator and a real district scale plan, we think we believe that Laverton’s potentially be one of the most meaningful group competitors to the portfolio over time. These are exactly the kind of deals we want to do. Dukabay is another significant and strategic acquisition, one of the largest undeveloped gold deposits in West Africa. We’ve acquired a 2-2.5% NSR over 3.3 million measured and indicated ounces, reserves of 2.8 million ounces. It’s got meaningful scale. Previous study work has suggested a 14-year mine life with over 170,000 ounces of gold produced per year. I would note that that was done at a $1,700 gold price, so well below today’s gold price environment.

On those numbers, we believe this royalty could be generating for us more than $10 million annually as CSA production in royalty revenue, and again, would make Dukabay one of the most significant contributors to our portfolio. Lots of catalysts from the Pasafino team. We’re expecting an updated feasibility study, and then they’re looking towards a financing and construction decision in 2026. In terms of the quarter, looking at some of our producing assets, which really do underpin our financial performance, Capricorn had another strong quarter with more than 32,000 ounces of gold produced. Asset continues to perform consistently, efficiently, and as previously announced, they’ve had that regulatory approval in hand for the major expansion to take production to 150,000 ounces of gold a year. We’ve got some impeded growth into our 2% NSR. Caserones, again, continues to be a pillar of stable revenue for the company.

We’re expecting higher copper head grades in the second half of 2025 and expected for the Londonians to hit their full year production guidance. There was a bit of a weather-related delay in Q3 sales, but we’ll expect to get those back in Q4. Bonakro continues to perform well, nearly 20,000 attributable ounces in Q3. Allied have been clear that they’re expecting processing high-grade material in the second half of this year and across 2026 and 2027, and that gives us good visibility on higher revenues at these high gold prices. Coralli Sud continues to perform and continues to pay. I think what’s exciting there is that they are still able to co-process or at the main Satiola mill. We’re looking forward to updates from there on the future production at Coralli Sud.

Wanyanga, we are still, we’re waiting royalty payments due to the external audit by the government of Burkina Faso, and we will update you when we have more information at Wanyanga. In terms of the financial highlights, strong operating performance had another quarter of significant financial growth year on year. Compared to the same quarter in 2024, just revenue increased to 70% year on year, just EBITDA up 67%. That just translates straight through with that margin expansion to nearly 80% increase in operating cash flow. These are attributable to both increased ounces being delivered in the profile and increasing metal prices. In terms of the bridge for cash flow, generated $5.2 million in free cash flow for the year.

We did start to have some costs associated with the EMX merger affecting free cash flow, but still strong numbers reflected by strong revenue in the quarter and some asset partly offset by transaction-related G&A and merger costs. Another couple of one-offs in the quarter as well with acquiring the Dukabay Royalty, which you can see on the next slide. We made an initial payment on the Laverton GEO to lock that in, so we’ll close that in this quarter. Received, as expected, the $1.9 million through the royalty buyback, the partial royalty buyback at Arizona Sonoran, and through in-the-money share option exercises, we received $2.2 million. I think importantly as well, we’ve fully repaid our loan in Q1, which lowers our cost structure and allows us to be positive on interest income rather than interest cost.

This is just to help bridge financial statements to our underlying performance. We do still pick up Caserones below the line there as a share of profit from associate. That is represented there at number two. We are looking at ways to change that now that we have a significantly larger portion of Caserones with the EMX transaction. We may be able to present that differently at year end. Performance in the quarter, I would say as expected. We were very clear that we are expecting production revenue to be weighted to the first half of 2025 through the cash shop at Coralli Sud.

As Fred said earlier, we are on track to meet the midpoint of GEO guidance for the year and for the second time this year have upgraded our revenue guidance, which is $42 million at the midpoint, reflecting higher metals prices. EBITDA margins remain high, and that is back to where they should be in the 75%-80% range, affected somewhat in the quarter by starting to accrue merger-related costs as a one-off. Likewise, very happy with the $5 million of operating cash flow, including Caserones dividends in the group. Clearly, Q2 is going to be an outlier for a very long time, reflecting that one-off payment by Coralli Sud catching up from 2024. We are seeing cash flow in line with rising metals prices and keeping a fixed sustained cost base.

We have received, as expected, the material one-off payments in the year, led with the start of the year by the distribution from Ming Settlement. As discussed earlier, we have had some milestone payments from Coralli Sud and the partial buyback of the Cactus Royalty to make nearly $15 million of buybacks and milestone payments in the quarter. Pro forma, market cap of the company, $1 billion. As Fred said, $48 million in the bank estimated pro forma, less the $6 million of the EMX paying for the Phokios acquisition. We have made a small investment in gold directly through Tether this quarter. We have got $1 million of actual exposure to gold. We will keep that as a small proportion of our cash availability. Post-merger, Tether come out as 32% shareholders of the company with over 50% of the register as institutional.

would say as well that our Nasdaq listing remains well progressed. Now that the U.S. government and the SEC have reopened, we’ll be looking to get on the main board of the Nasdaq as soon as possible. With that, I might pass over back to Fred to sum up ahead of any questions.

Frederick Bell, CEO, Transitioning to COO and President of Elemental Royalty Corporation, Elemental Altus Royalties: Thank you, Dave. I think the really key story here is closing the merger this week with EMX. It has been something that we have been working on and discussing for a long time in the background. I think really delighted to be able to get that announced and now closed alongside in total three acquisitions between EMX and Elemental Altus over the last two months. In parallel with the financing from Tether, the share consolidation, and what we hope will shortly be the Nasdaq listing once the SEC gets to reviewing our file and finalizing that. We will then have a company with a really high quality portfolio cornerstoned by four key assets. We have growth from three of those assets going forward. That is Timok moving into the lower zone. It is the mine expansion already under construction at Karlawinda.

It is the Laverton project going into Genesis’ mine plan at the Mount Morgan Mill there. I think all three of those are really material upgrades in terms of revenue from some of our cornerstone assets. It puts us in a position where the company has a really strong unlevered balance sheet to deploy into new acquisitions going forwards. We have the benefit of both the EMX and the Elemental Altus teams combined in terms of looking at business development opportunities. I expect us to continue to be very active on that front. With that, we’ll hand over to questions. Thank you all for listening.

Call Operator/Moderator: A reminder to our phone audience today, if you would like to ask a live question over your telephone line, simply press the star and one on your telephone keypad. Pressing your line, star and one, I will open your lines one at a time and invite your questions. Gentlemen, presently, we have no signals from our phone audience.

Unidentified Speaker: Okay. It looks like we’ve got a question, I guess, through the chat. I guess the first question I can cover. The question is, will we get any of the EMX Q3 financials? No, I guess EMX is now delisted, so it will not be putting out its Q3s. What we will do is provide at year end a summary of the EMX financials for Q3 and the full year, so we will not lose those numbers forever. Then Elemental and the combined company will pick up EMX’s share of profits and cash flows from the date of the merger close. That is yesterday, the 13th of November. Second question, Fred, might pass to you. Will collective G&A expenses be lower in the combined company?

Frederick Bell, CEO, Transitioning to COO and President of Elemental Royalty Corporation, Elemental Altus Royalties: Yes, thank you for that question. I think the answer is we’re expecting multi-million dollar synergies. The teams are currently working through that at the moment, and we will have a budget for the 2026 year that will be agreed. I think it will enable us to quantify some of the numbers across the team, the combined company at the moment. Yes, there will be synergies. The exact number we will put out alongside our budget for next year. I think that’s putting these two companies together. Clearly, we get some immediate synergies in it. I think one of the added benefits is actually being able to cover more ground. Two material, I think going forwards, will be two material acquisitions that we announced just before the merger when we’ve closed one. I think really good to see EMX team also announcing an acquisition this week.

We’re going to continue to be very active going forwards now with the combined team. We have integrated the business development teams, and we’ve had people over in both US offices and London offices really working together to get on top of that going forwards.

Unidentified Speaker: Yep, completely agree. Another question we have, Fred, is are we expecting any new paying royalties in the next few quarters or just an estimate? Maybe I could start. Is that we’re expecting, I guess, on the EMX side, the Chapi mine in Peru is expected to restart production near term. We also have a producing royalty at Gedig Tepe that’s currently paying on the offsites. They’ve got a sulfide circuit under construction at Gedig Tepe and also a circuit to reprocess the tails. There have been new sources of revenue there. We also have a small royalty, a gold royalty in Australia called Western Queen. They’re looking at some contractor mining there as well. Yeah, near term, there’s definitely some new royalties that are expected to start paying us.

Fred, and this leads in the question from Adrian, is Adrian Day, do we see better opportunities to acquire royalty companies or individual royalty companies? Can we take part in more processes now we’re larger and better access to capital?

Frederick Bell, CEO, Transitioning to COO and President of Elemental Royalty Corporation, Elemental Altus Royalties: Thank you for that, Adrian. Look, I think the key part here is where we see the best value. We have been really active in the last two months in royalty opportunities, individual opportunities, and we continue to progress those as well as some private portfolios. I think as ever, we look across the board at opportunities and see where we can have most value to the company. As we sit here today, I think on consensus now of numbers, Elemental Royalty Corp as a combined entity is actually trading at a better valuation, a lower valuation than any of our peers in the space. Actually, the best value company we would acquire today would be ourselves. For the short term, we’re very much focused on royalty opportunities where we see them. Yes, we are looking through processes as well.

We are familiar with how competitive those can be at times in the royalty space. Also, we are now in a position where we can do some opportunities that we would not have been able to do previously and where the combined team has some better insights into some of those assets and companies than either of us would have had individually. I think continuing to look at deals, both ones we generated ourselves, like Dukabay, like Laverton, and ones that we see coming through processes where we can see compelling value and they add to the company.

Unidentified Speaker: A question from Simon is asking about Tether communicating the intent around the AlphaStream option. Hey, Simon. Yeah, Tether have exercised their option to acquire the shares from AlphaStream. That was completed pre-merger. That was completed in October. The 32% pro forma that Tether own of the company, that’s inclusive of that option to acquire shares from AlphaStream. That deal has been completed. That might be it in terms of questions.

Call Operator/Moderator: Gentlemen, we have no questions from our phone audience today.

Frederick Bell, CEO, Transitioning to COO and President of Elemental Royalty Corporation, Elemental Altus Royalties: No, I think, operator, thank you very much. I think with that, we’re good to close off our Q3 2025 call. And note that that is the last quarterly call that we will do with Elemental Altus Royalties. And going forwards, it will be as Elemental Royalty Corp. So hopefully look forward to speaking to you all and hearing from you all again in the new year.

Call Operator/Moderator: Certainly. And thank you. Ladies and gentlemen, thank you all for joining us today. You may now disconnect your lines, and we hope that you enjoy the rest of your day.

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