Gold Royalty Corp. — FY2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023; the filing also presents fourth-quarter results for the three months ended December 31, 2023. Amounts are in U.S. dollars unless stated otherwise. The company reports under IFRS.
Business context
Gold Royalty is a precious-metals royalty company with 240 royalties across projects at different stages, including five on producing projects. It generally does not operate mines or fund their operating and capital costs. Its revenue depends on production by third-party operators. The Canadian Malartic Property in Québec is identified as its sole material property for SEC mineral-property disclosure purposes.
Financial performance and position
| Metric | FY2023 | Prior comparable period |
|---|---|---|
| Revenue | $3.048 million | $3.993 million (calendar 2022) |
| Gross profit | $2.105 million | $2.308 million |
| Net loss | $26.756 million; $0.18 per share | $12.709 million; $0.09 per share |
| Adjusted net loss (non-IFRS) | $3.965 million; $0.03 per share | $11.254 million; $0.08 per share |
| Cash operating expenses (non-IFRS) | $8.004 million | $12.580 million |
| Cash used in operating activities | $6.876 million | $15.769 million |
Revenue declined about 24%, primarily due to lower Canadian Malartic royalty receipts following a change in Barnat Pit sequencing and the absence of a $0.9 million prior-period Borden royalty recovery recorded in 2022. Lower overhead and professional costs reduced cash operating expenses by 36%; adjusted net loss improved. Reported net loss increased, principally because royalty impairments rose to $22.379 million from $3.821 million.
Fourth-quarter revenue was $1.016 million versus $0.582 million a year earlier. Net loss was $19.360 million, including the period’s $22.379 million impairment charge; adjusted net earnings were $0.935 million, or $0.01 per share, versus an adjusted net loss of $2.824 million, or $0.02 per share.
Cash and cash equivalents were $1.443 million and short-term investments $0.342 million at year-end, versus $5.847 million and $3.840 million, respectively, at December 31, 2022. Working capital fell to $1.695 million from $7.559 million. Total assets were $690.994 million; shareholders’ equity was $520.950 million. Total non-current liabilities were $166.193 million, including $131.214 million of deferred tax liabilities. Financial debt included $10.031 million carrying value of bank debt and $22.763 million carrying value of convertible debentures; $40 million principal was issued under the debentures. Investing activities used $33.488 million, while financing activities provided $35.960 million. Year-end cash was $1.443 million.
Material changes and transactions
- Acquired a 1.0% NSR royalty on producing Cozamin for $7.5 million cash and a 2.0% NSR royalty on the Borborema project for $21 million. The company also advanced $10 million to Borborema through a gold-linked loan.
- Issued $40 million of unsecured convertible debentures, bearing 10% annual interest over five years: 70% payable in cash and 30% in shares. Holders may convert at $1.90 per share; the company has a limited redemption right from the third anniversary, with a related $1.75 conversion price.
- Acquired 21 Québec royalties from SOQUEM for C$1 million in shares.
- Expanded the secured revolving credit facility to $25 million, with a further $10 million accordion subject to conditions. The maturity was extended in March 2024 to March 31, 2027.
- Suspended quarterly dividends in July 2023 to prioritize acquisitions and growth in cash flow and net asset value per share. Dividends paid in FY2023 totaled $2.599 million.
- Issued 496,438 shares under the ATM program for about $1.3 million net proceeds; the program expired in September 2023 and had not been renewed as of the filing.
Outlook, commentary and risks
Management forecast 5,000–5,600 GEOs and $10.0–$11.2 million of total revenue, land agreement proceeds and interest in 2024, assuming gold at $2,000 per ounce. The forecast implies roughly 100% midpoint GEO growth versus 2023. Recurring cash operating expenses were expected to remain broadly in line with 2023, with positive operating cash flow anticipated as Côté and Odyssey ramp up and Cozamin and Borborema contribute for a full year. These projections depend on operator disclosures and development schedules, not solely on company-controlled activity.
Major uncertainties include the passive nature of the royalty business, reliance on third-party operators and data, commodity-price exposure, and revenue concentration in a small number of producing assets. Jerritt Canyon mining remained suspended at year-end; the company recorded an $8.3 million impairment on that royalty. Monarch-related royalties were impaired by approximately $10.0 million after insolvency proceedings and asset dispositions; the filing reports that affected royalties no longer apply to certain projects, while the Croinor royalty remains. The filing reports total FY2023 royalty impairments of $22.4 million.
Other risks include projects failing to reach production, permitting and environmental issues, Indigenous-community opposition, jurisdictional and title risks, operator insolvency, and the need for future financing. Management stated that available credit, cash, investments and expected revenue were sufficient for planned activities and obligations over the following 12 months. The company also expects it may be a PFIC for U.S. tax purposes; it had not made a formal determination for 2023.
PwC issued an unqualified opinion on the IFRS financial statements. Management concluded disclosure controls and internal control over financial reporting were effective at December 31, 2023; there was no auditor attestation on internal controls, consistent with the company’s stated exemptions.
Investor facts to verify
- Confirm the 2024 GEO and revenue outlook against subsequent operator updates, especially Côté, Odyssey, Borborema and Cozamin ramp-up timing.
- Reconcile the filing’s GEO figures: the highlights and GEO calculation show 2,703 for FY2023, while one selected annual-information table appears to show 3,204 for that year.
- Review the assumptions supporting the $22.4 million impairment, the recoverability of remaining royalty carrying values, and the status of Jerritt Canyon and Monarch assets.
- Assess liquidity and refinancing needs, including cash levels, credit-facility covenants and maturity, the 10% debenture coupon, conversion dilution and share-settled interest.
- Check royalty coverage limitations, buyback provisions and operator-reported project schedules; many interests cover only portions of underlying properties, and Gold Royalty generally cannot independently verify operator data.