Elemental Royalty Corporation (ELE) Q2 2026 Earnings Report, Transcript and Summary

Good day, everyone, and thank you all for joining this Elemental Royalty Corporation Second Quarter 2026 Conference Call. [Operator Instructions] As a reminder, today's session is being recorded. It is my pleasure to turn the floor over to President and COO, Mr. Frederick Bell. Welcome, sir. The floor is yours.

Thank you very much, and thank you, everyone, for joining us. Today, you have myself, Frederick Bell, COO and President; and Stefan Wenger, our CFO, to talk us through the Q2 results for 2026. And if you look at this slide, look, it was -- at a high level, it was the second highest quarter of revenue in the company's history. It was a record in terms of gold equivalent ounces sold in the quarter, continues to show the growth that we have forecast for this year, and we're ahead of the midpoint of guidance as we pass the midyear point. And as of the end of Q2, the company, before new acquisitions, had a cash position of about USD 74 million. And I will talk through a few overview slides and then pass over to Stefan to run through the more detailed Q2 financials, and we'll give a bit of an update on the portfolio projects' growth profile and then lead into Q&A. So as a brief reminder, the portfolio as it sits today is roughly 2/3 gold focused, 1/3 copper, very diversified across both jurisdiction and counterparty operators. We have done a lot of work in the first half of the year in terms of -- on the corporate side, in terms of uplist to the TSX from the TSXV. We completed our NASDAQ listing at the end of last year. We increased our credit facility, upsizing it and reducing the cost of capital on that. We had some new analyst coverage coming on, and we had some -- starting to see the first indexes as well for the company index inclusion that we expect to continue [indiscernible] and onwards. In terms of capital allocation, we put in place the company's maiden dividend in Q1. We also had approval for a normal course issuer bid at the company's AGM of up to 5% of shares outstanding over the next year. And we have now paid 2 quarters of dividends in Q1 and Q2. The management team, we have both taken on the management teams from EMX and Elemental Altus as part of the merger, but we have also added to that over the course of the first year, strengthening both our technical team, financial team and legal team to enable us to maintain cadence of growth and transactions that we have demonstrated over the past year. And we continue to have a very supportive shareholder base. And I think as most people are aware, major shareholder, 32% approximately currently is Tether. One, I think before we get into the detail of Q2, it's worth rewinding and going back to June 2025 and looking at the difference between the company as it was then and as we sit at the end of Q2 2026. And a few really key points to highlight here. If you look at our top 6 cornerstone assets as of the middle of 2025, they had an average value of about $40 million. And with the conclusion and closing of the Vizsla transaction, those top 6 assets for the company going forward have an average value of about $170 million. So a number of new acquisitions and additions [indiscernible] increased our cornerstone assets materially in terms of size and importance to the portfolio. And I think we guided last year that this was going to be one of the key areas of focus for the company is improving the quality of our cornerstone top 10 assets as we go forward. And looking to build this into [ a mid-tier ] royalty company, we're looking to have really high-quality assets underpinning it. In terms of capital allocation, you can see that in the year from June '24 to '25, the company deployed about $28 million in new acquisitions, including, again, the Vizsla transaction in the year to June '26. The company will have deployed about $750 million, including the EMX and Vizsla corporate transactions. So a material step-up in terms of growth, in terms of the number of producing royalties, again, [ further derisking ] it from that perspective. A multiple uplift of 3x in terms of total number of royalties as well, adding a lot in the development and earlier stage side. And then in terms of revenue, which we'll talk to more, but you can see that the guidance for 2025 was about $40 million and up to $85 million this year. So I think on all of those metrics, we are a very different company at the end of Q2 to where we were at the end of Q2 2025. And I think before we get into the detail, really important to have that context of just how much has been going on, both on the portfolio side, strengthening it, but also on the corporate side, on the team side, really building it out. And I think we have spoken to a bit, some of the indexes that we expect the company to get into. And we have the S&P/TSX Global Gold Index inclusion in Q2 with the Russell 2000 inclusion as well. And we're expecting MSCI, Canadian small-cap and GDXJ as well going forward in the short term. In terms of really material strategic developments, the most important one was the agreement to acquire Vizsla Royalty (sic) [ Royalties ], and that is an uncapped life of mine 2% to 3.5% NSR over the Panuco project. We have guided to the market close of that transaction in Q3 2026. And just to reiterate, we have -- Vizsla Royalties have had shareholder approval and they have had court approval. And we are waiting on the Mexican Antitrust Commission, who we are in regular contact with [indiscernible] [ sign off ] that transaction. And we can talk a bit more to that later on. In terms of some of the corporate milestones, and these often going on in the [ background ]. Every time in the company's history we have renewed our credit facility, we have lowered the [ cost of capital for that ] trend in H1, both upsizing it to $150 million plus $50 million accordion, but also reducing our cost of capital, giving us additional flexibility, index inclusions we spoke to. And we have been active at times on the normal course issuer bid, given some of the volatility in markets and trying to take advantage of that when we see anomalies in terms of our valuation. We completed another transaction on the Western Queen royalty where we already had exposure, and we increased that royalty. We improved the terms. We improved [indiscernible] in the course of the H1. There's a number of updates. We'll talk a bit more to on some of our cornerstone assets, Timok, Caserones, Karlawinda, Laverton. And then post quarter end, we had an investment which was both adding to our royalty -- existing royalty at Chapi, which commissioned in H1, but also taking some equity in the company as they look to come public in the coming months. And we paid our second quarterly dividend. We also introduced the option for shareholders to take that in Tether Gold as well as cash. And just to clarify for some shareholders on that point, anyone can still take that in cash. It is just now an additional option to take that in Tether Gold for those who would like to. So with that, I think those are some of the highlights overall. I'll pass over to Stefan to run through Q2 financials in detail. Thank you.

Yes. Thank you, Fred, and good morning, everyone. And I'm really pleased to be reporting to you today that we just had an outstanding second quarter and first half of the year. And as Fred mentioned, it's a completely different company post-merger with EMX. And we're -- we've had quite a busy first half of the year that I'll talk to in more detail. But the portfolio is performing as we expected it would. We had nearly $24 million in revenue in Q2, a 127% increase over the prior year. GEOs are at the higher end of our guidance range. We had 5,250 GEOs sold in Q2. It's a 65% increase over the prior period. And our adjusted EBITDA of $17.4 million was up nearly 100%. Operating cash flow of $15.5 million is a record and up over prior year. It's only up 8% because we had some payments in the prior year that also came to operating cash flow, but very strong conversion to cash flow. And at the end of the quarter, we had $74 million in cash, and Fred has already talked about our undrawn credit facility as well. I will guide that as we close the Vizsla transaction, there is a cash component to that. So we expect to use about $60 million in cash on the Vizsla transaction. We've also just completed the Chapi acquisition that Fred pointed out. So we will potentially use a small amount of our credit facility just to maintain working capital post those couple of items. But as you can see from the portfolio, we continue to generate cash. And we feel like we're in a very excellent financial position with working capital of $96 million. Moving on to the financials. And I've already pointed out some of the revenue numbers on the left. But just focused on the financials themselves, the questions I get most are, what's your G&A run rate going forward, and how should we expect the cost profile going forward. From a G&A perspective, the first half was incredibly busy, and we've really laid the foundation for growth in the future. But I expect in the second half, our costs will decline. And from a run rate perspective, I would expect our G&A to be somewhere in the low $4 million range on a quarter-over-quarter basis instead of the $5.6 million that you see here. But there's a number of initiatives that we're working on right now to reduce those costs. For example, after we completed the merger with EMX and Elemental, we had over 70 entities within the combined group because of historically how the company has been put together. This year, we're targeting reducing that by over 50%, which will reduce costs and reduce friction within the company. Also during the first half of the year, Fred mentioned some of the corporate initiatives that we worked on: the NASDAQ, the TSX uplift, the dividend, the NCIB, the credit facility, all of the work that we've been doing to sort of build the platform for future growth. And some of those costs are going to come off as we go forward. So that's why I can guide to a lower G&A rate running forward from here. Royalty generation expense is right in line with our budgets. You can annualize that for the year as far as an expectation. And we continue to be focused on growing NAV per share every day. So that's where you'll continue to see the focus of the company. And as I go forward, I've already mentioned as well, we're tracking towards the upper end of our guidance of 21,000 GEOs for the year. And we're over -- we're about 60% of the lower end of our guidance, so tracking very well within that guidance range. And our revenue is also tracking. So we're in very good shape. The portfolio is doing exactly what we expected it to do this year. Just giving a snapshot of where our cash flow goes. You can see that we ended Q1 with $69 million in cash. We generated that $15.5 million of free cash flow. And then from a capital allocation perspective, we had a relatively small investment to expand our Western Queen royalty. That was AUD 10 million or about USD 7 million. And then Fred mentioned, we commenced an NCIB with our share price, we believe, was trading well below our NAV, and we took advantage of that and invested $2 million in share repurchases, in addition to just less than $2 million of our dividend payments that have now happened in Q1 and Q2. So a really balanced allocation of return of capital to shareholders with both the NCIB and the dividend. The full first half cash flow bridge shows a similar story. And really, that free cash flow is being driven from our key royalties from Caserones, Bonikro, Karlawinda, Leeville and Timok. I believe 80% of our revenue comes from those top 5 assets, and we're performing and growing as expected. And Fred is going to give a slide that talks about our growth profile. And all of these things that we're doing during this quarter are focused on building for the future, and you'll see that in the slide that Fred will present. So with that, I'll turn it back to Fred, and then happy to answer questions at the end.

Thank you. Thank you, Stefan. And look, this is an overview of our portfolio, just as a reminder for everyone. And I think the -- one of the takeaways from this is not just how diversified we are in terms of our revenue base, but also a number of advanced projects that we have in the portfolio, a few of which we will talk to specifically later in this presentation. And then the very, very deep pool of embedded optionality with those approximately 200 earlier-stage royalties, where we often do not have a value attributed to them, but where a lot of those operators and our counterparties are investing, in some cases, tens of millions of dollars a year in terms of exploration and advancing those projects. So we know from experience, there is a huge amount of embedded optionality in those earlier-stage royalties that we do not get value for currently, but is part of the benefit of having this portfolio very diversified. So the two additions to it in that we'll talk to a bit just recently. And we've touched on Panuco. And again, this is one of the highest-quality primary silver development assets that is known in the market. It is going to be a very material contributor for us once it is in production going forward, and we are really excited -- remain really excited by the exploration potential. And there is 1/3 of the known veins that have been explored to date. And the more work they do, the more they find. And we expect the resource across the project to continue to grow. And if you look at those first 5 years of the mine plan, we see potential for that to continue over the 9.4 years of the life and then later extension. So we think that the feasibility study they put out was at a point in time, based on the resources. We expect that to improve over time. We expect to see more resources coming into it. And that 2% to 3.5% uncapped royalty on the project makes it a very material contributor for us going forward. In terms of key catalysts there, Vizsla waiting for their permit for the mine. And we have seen over the last quarter, two, I think, other permits granted in Mexico. So there is progress being made by other companies in the sort of pipeline of projects getting approvals. And there's also a plan for Vizsla to have enhanced security at the asset going forward. So we look to get approval from the Mexican Antitrust Commission, we have guided this quarter. We have had questions back and forwards with them. And coming over the summer as well, I think there was a bit of a delay getting some answers back from them, but we would anticipate getting that approval in the coming weeks, subject to not getting any further follow-up questions from them. So we have answered everything to date that we need, and we have shareholder approval for that and the court approval as well. So expect that to -- the final Mexican antitrust to happen in the coming weeks. And we'll be able to close the Vizsla transaction, which, as Stefan mentioned, is -- it was 3/4 equity consideration and approximately 1/4 cash that will be paid on closing. The next asset that we added to here -- and this was an existing royalty we had in the portfolio. And the initial investment was made at the beginning of 2025. We added an additional royalty on it. We also took equity in the company, which we don't do as often. This is a very well-known management team in Peru, a really top-tier track record. It is in a belt here where you can see a lot of the majors deposits are Freeport's, Cerro Verde to the Northwest, and you've got Anglo American and Southern Copper projects. And more recently, Chinalco just came in, in the past month or 2 as well. So it's a huge amount of exploration potential. They have done the hardest part in terms of commissioning the mine in the first half of this year, getting production at an initial 10,000 tonnes per annum and working on the plans for expansion to 30,000 tonnes per annum as well going forward. So an asset where we see cash flow from immediately. We've increased our coverage. We've also increased our total royalty exposure. And we think it's a top-rate management team with a very, very storied track record in Peru of actually operating successfully and executing. So we added to that in the quarter. And then maybe a bit of an update on some of our producing assets and some of our cornerstone ones. And there are a few updates out from Karlawinda. And you can see it generated about USD 3 million of revenue in Q2 and approximately that amount when you look at H1, similar, about $3 million. Two important updates from Karlawinda. The first is that the expansion of the mine is on track for completion in Q3, so this quarter. And as a reminder, they are taking that annual production, increasing it from about 115,000 ounces, 120,000 ounces to approximately 150,000 ounces per annum. And that expansion is expected to complete and commission this quarter. And then they will be at a run rate of about 150,000 ounces per annum and fully funded internally by Capricorn. They also, very importantly, post quarter end, they announced an increase both in their reserves and resources. So about a 30% increase in reserves versus last year and about a 48% increase in total resources as well. And just as a note, I think, look, it's using approximately, in U.S. dollar terms, an $1,800 gold price, I think, on that resource reserve update. So we continue to see material mine life potential, both through exploration and also converting the resources, which are approximately equal to the reserves as they stand today going forward. At Caserones in Chile, Lundin continue the exploration that they have been doing over the past 18 months. And in total, that will be about 100 kilometers of drilling at the project. And I think for us, there's a number of other growth initiatives underway, improving the cathode plant utilization. And we expect to see some updates on that exploration they've been doing over the past 18 months going forward. So that's been -- I think the best way to characterize Caserones has been continued incremental improvement since Lundin took majority ownership quarter-on-quarter, year-on-year. And that's tracking well, notwithstanding some interruptions in Q3 for weather that they have announced. But that's, as you can see, an asset that both Elemental and EMX owned and a material contributor now and going forward. In terms of some of the other assets, we had site visits and updates both at Timok and Leeville in the first half of the year as well. So we were able to meet with the management teams, get updates on the mine plans and how they're progressing. And I think positive on both senses in terms of what they're actually achieving on the ground and current production, as well as the longer-term outlook. And Timok is an asset that we have spoken to quite a lot in terms of the expansion there. And they continue to develop the Lower Zone. So as a reminder, they are currently mining the Upper Zone. They have a major expansion into the Lower Zone underway. And they will be mining that both through shafts and declines, and that will be mined in parallel with the Upper Zone. They also made a very important discovery a year ago that in Zijin's terms by itself classifies as a supermajor discovery, which is the MG Zone, Malka Golaja to the Southeast and within our royalty area. And they've put out an initial resource on that, and we expect that also to be another area -- production area for them in the future going forward. So very, very good to get our site visit there complete and see the progress they're making. And it's been a pretty consistent contributor for us in recent quarters. At Bonikro, this is a 4.5% NSR. So this has been a material contributor for us recently. And this is a capped royalty, so it will continue for the -- until approximately 2029, producing for us. Allied were going to be acquired by Zijin, and that changed post quarter end into an investment by Zijin in Allied. And Allied continued to operate -- I think at Bonikro, they've actually extended the mine life there. So they continue to work on it, and it continues to be a very important contributor for them and also for us through that 4.5% royalty coverage that we have. And then lastly, Leeville. And this is partial coverage. So again, quite important for us to get the site visit here, talk to the management team and understand how our royalty area, which is very similar to Royal Gold's Leeville royalty, how that royalty area fits into their mine plans going forward. And I think one comment on Leeville has been the consistent exploration success Nevada Gold Mines have had there over many years. And I think we saw that through the management update that we had. And I think for us, there's a multi-decade mine life coming through on that Leeville royalty, and that is before exploration that they continue to do that. So Leeville is -- it's a really high-quality asset for us with that management team there. In terms of the development projects that we talk to most often, and this is a highlight. I think the -- what you might take away from this is that these operators are investing approximately $800 million plus in these projects to expand them, to bring them into production, to develop them. And so that is -- these are serious counterparties. Genesis Minerals in Australia, one of the highest-regarded management teams. AbraSilver, which has been a huge success recently in Diablillos project. Mansa Resources, existing private mid-tier operator, and they operate two mines and looking to fast track Dugbe project into construction at end of this year, beginning of next. Fireweed with the Lundin there, who have done a lot of work progressing the project, and feasibility study expected on that next year. Viscaria, where they have started construction and looking to target that production coming in next year. And then Cactus, which was successfully acquired by Hudbay and feeds into their pipeline. So I think the important thing about our growth profile when we talk to it is that it is partly coming from existing producers, Genesis as an example, Mansa as an example, Hudbay as an example. But it's also coming from management teams with a track record with an ability to raise a finance, develop the project. And I think our growth profile is materially derisked versus a lot of peers. In terms of our track record, we've updated this slide now for Q2. And so as a reminder, it shows on the first line, what we originally acquired these royalties for. And in the dark gold, the -- what we have received from them to date, and then the current NAV. And we update this, try and do it on a quarterly basis. We've summarized on the right, some of our previous investments, smaller ones. But you can see there as well, really good returns and some of those assets still in production today, Mount Pleasant, Mercedes, Korali-Sud, and so continuing to improve those returns over time. But I think if you look at Karlawinda as an example, the second one on the left here. Look, when we bought that royalty, we had a view that the management team were top-tier in Australia, very long track record of successful execution. We had a view that their previous company, they built 3 mines in 5 years, and they also expanded all 3 of those mines in that 5-year period. And we had a view they were going to do the same at Karlawinda based on the resource and the deposit and how they built it. And we're seeing that now coming through. And we also had a view that the mine life would continue to grow over time, which we have seen. And so when you combine those factors, you get an awful lot of optionality through the royalty model and through the benefit of an operator like Capricorn being able to invest internally, hundreds of millions of dollars into a mine expansion and into continued exploration for the benefit of us as a royalty holder. The next slide here is our growth outlook. And as Stefan mentioned, we have been working on this assiduously, not just from additions to the portfolio. And we have made a number of royalty acquisitions over the last year that have added to this. And Vizsla, you can see there in the gray, that will come in into that growth profile. But we have done this alongside our adding to the team, building out the really, strength of our management team and the corporate side. And if you look here, our guidance for this year is about 17,000 to 21,000 gold equivalent ounces. And if you jump forward to 2028, we're forecasting that to be about 25,000 GEOs. And if you go to 2029, 2030, 30,000 GEOs, 35,000 GEOs. So as Stefan alluded to, we will be in a -- continue to be in a very strong financial position even post-close of Vizsla, and we will have the strongest organic growth profile the company has ever had by orders of magnitude. And that is not including existing assets like Karlawinda that will continue to add to their mine life. It's not including the approximate 100,000 meters of drilling at Caserones has happened over the last 18 months continues that we expect to add to the mine life there. And it's not including exploration across most of our other major assets. So look, I think it puts us in a very, very strong position, not just to continue delivering the financial returns that we are at the moment, but also to get that material uplift in terms of revenue growth and margins going forward. In terms of the next slide here -- and I'll just touch on this quickly and we'll go through into Q&A in a minute. But we wanted to give a highlight because it has been such a busy period of the catalysts that we have achieved and those that are still outstanding on the portfolio and corporate side. And you can see on the left, a number of the projects hitting material catalysts and a number that are still to come in the second half of this year and being guided to by operators there. And on the corporate front, a number of the initiatives underway to improve the company's position to strengthen our liquidity, which has seen a very material 50x increase from June of 2025 through to where we are today, and put ourselves in a position to continue to grow the company, improve liquidity for shareholders and improve visibility of the company going forward. The next slide here, we -- I'll just touch on quickly, but approximately USD 1.2 billion market cap. And as Stefan mentioned, about $74 million cash as of Q2 end before the $25 million Chapi investment and before the approximately $60 million cash that we will be paying to Vizsla Royalties on completion. We had some additional analyst coverage. Pleased to say, CIBC initiated on the company as well. So we have continued to get better research coverage, and I think raising our profile in the space. And part of that is that TSX uplist, the NASDAQ listing, the index inclusion. And we have a number of shareholders listed there on the right-hand side. And I think a number of those shareholders who have been shareholders in the company for a number of years, very supportive. And Stephens Investment Management, Euro Pacific, [ Extract Capital ], a few groups there that have been shareholders in the company for many years, very supportive. And we now have Tether as well since June of last year, who have been a major shareholder in the company, very supportive. Juan is on the Board as Exec Chair and continue to be supporting the company in growth initiatives going forward. And with that, I will come to the last slide here, circling back on where we are at the midyear point. And that is about $48 million in H1 revenue, 10,000 GEOs, as Stefan mentioned, and really on track to deliver a very good performance in line or above guidance for 2026. And with that, happy to run over to questions.

[Operator Instructions] And we do have a signal from the audience coming from Mr. Larry Liu at CIBC Capital Markets.

I have just two really quick questions. The first one is on the GEO calculation. Can you remind us if the GEO reported is calculated at spot prices or your guidance prices? And if it's calculated at spot prices, how does that compare to your guidance prices? And does that give us a positive now that you have that 1/3 copper and copper prices really ran?

Yes, I'm happy to take that, Larry. We -- the GEOs that we report are based on actual average prices for the quarter compared to our revenue, so revenue divided by the average price gets us our GEOs. Our guidance was made at $4,500 gold. And I'm looking up the copper right now, was at $550 copper. So we're -- sort of today's spot just below where our guidance price range was for gold and well above it for copper. Copper has been the outperformer so far.

Perfect. Sounds good. So I guess, Stefan, what you're trying to tell me is if you use realized prices today, that will give you more GEO count because copper prices are higher?

Yes. We're benefiting from the higher copper prices. Gold, of course, has been a little bit below our guidance range.

Perfect. Sounds good. And I guess I'll touch on my second question, taking a step back here. Fred, you've talked about how Elemental is a very different company just from a few months ago or even a year ago where you did the EMX merger and now on track to closing the Vizsla transaction. So I just want to ask about what does growing in size, does that change the way you look at transaction, whether it's deal sizes? Or now you've gotten your feet wet and put a little bit of into equity investment recently, does that change the way you look at your transaction style?

Thanks, Larry. I think it's very consistent with what we've done in the past, and we have taken small equity positions alongside royalties in the past where we see value and where we see the opportunity. And in terms of the transaction size, I think you've seen the whole spectrum of deals that we have looked at. And so we have done $7 million transactions adding to existing royalties such as Western Queen alongside much larger corporate transactions on the other side of the scale with Vizsla Silver. So I think we're continuing to look across the range. We do see really strong pipeline in terms of opportunities that we are working on and we have progressed. And I think importantly, the company is in a position to be able to execute on those. And just a reminder for everyone on the call, I think in the royalty space, if you look across it from really, the top down, people are looking both for growth and the ability to continue to deploy capital accretively. And then also the second consideration is, are you -- do you have the financing and funding and ability to do that. And if you look at both Elemental, EMX historically, we have actually, between us, syndicated about $200 million of deal flow over the history of the company. And that is as we grew from smaller companies not wanting to overweight the portfolio, but also to individual assets, but also a function of availability of capital. And so we have syndicated with Franco-Nevada twice. We have syndicated with two different private equity groups in the space as well. And that is an area that we don't necessarily have to do going forward, where we are giving away some of the deal flow that we have generated and opportunities that we have found ourselves. So I think we'll continue to do -- to be very active looking across the spectrum of assets. Where we're probably going to be very consistent as well is on the commodity front. And I mentioned earlier, we were roughly 2/3 precious metals and 1/3 copper. And I think we continue to have a focus on those commodities, but with an ability to be opportunistic where we see deep value elsewhere in the space.

Excited to hear good cash chasing good assets out there. Congrats on a strong quarter.

We'll take our next question from the line of Heiko Ihle at H.C. Wainwright.

Just actually following up on the last question a little bit. Obviously, Vizsla and Panuco was a pretty interesting deal. Can you walk us through your view on geopolitical risk factors as they pertain to assets and your willingness to take risks? And if those willing -- if that willingness to take risk has changed at all since the merger, since you're obviously a bigger company and can arguably take on more risks at the right discount rate?

Thank you, Heiko, for that question. Yes, I'm happy to answer it. And I think one of the -- I suppose one of the aspects, I would say, is that in terms of the risks, we're able to take those risks because of the growth of the company. That transaction for either an Elemental or an EMX would have been a materially greater risk than it is for the combined company with the portfolio that we have, the diversified portfolio and the asset base. And so I think in terms of our ability to take greater risk, I would almost rephrase it and say that those risks are mitigated to an extent, and we are less of a risk for the combined company to be able to do than before. And that touches on the point around syndicating risk as well. And so I think Vizsla, it is an awful lot easier for us. And I think it's also an awful lot more attractive for the Vizsla Royalty (sic) [ Royalties ] shareholders to do a deal with a combined Elemental royalty as it is today versus what it would have been a year ago. And in terms of our overall Mexico exposure, as an example, we have less exposure than a [ Wheaton ] as a percentage of the portfolio. I think we're relatively similar with Royal Gold and Franco and a number of the other royalty companies. So I think that it's in line with some of the larger royalty companies in Mexico, which, as you know, is -- it remains -- if you want, silver exposure, it remains one of the top destinations in the world for that geologically. And I think overall, in the portfolio, what we always try and do is we try and balance geopolitical risk with the geological potential. And so we're constantly assessing it with those factors in mind. And I think that there are some emerging jurisdictions and there are some areas in developing countries where we see outsized geological potential. And then it is a question of how that geopolitical risk fits into our portfolio and alongside the rest of our assets. And in this case, I think we thought Vizsla was exceptional in terms of its geological potential, and it's proven that over the last couple of years. And I think it's got a huge amount of exploration still to come ahead of it. And the other side is that it is a transaction that when we talk to the number of deals that we have done in the last year, I think we mentioned the $750 million number across the EMX portfolio, across Laverton, across Dugbe, across Western Queen, across Chapi are some of the transactions. I think what you will see from us, Heiko, is an ability to maintain a higher cadence of deal flow. And that is partly a function of the combinations of the team. It's partly a function that we've also strengthened our team in key areas. And then we are a larger, better financed company that has a greater ability to maintain that growth cadence and that transaction cadence more so than in the past.

That's actually a very good layover to my second question here. I mean, you got the normal course issuer bid, so you're repurchasing some shares. And you're actively doing it, you don't just have it in place. You have a balance sheet that's much healthier than anything I've ever really seen. And obviously, I come from the EMX side of the business. But I've never really seen quite this much firepower at the ready. Would you be willing to issue meaningful amounts of shares for a large-scale acquisition? And sort of what's your maximum that -- size-wise, that you're looking at right now?

Stefan, do you want to touch on that?

Yes, I'd love to. Heiko, good to talk with you, and thanks for the question. We've structured the company to be very strong on the balance sheet. You saw in the first half, we increased that credit facility. And getting to your question, our first thought when we acquire a new royalty or a stream is to be as accretive to net asset value per share as possible. So there's a reason we have a credit facility. We look to use the credit facility and use our banking partners to help us lever into a deal at an appropriate level of leverage. Now as Fred pointed out, we've built a team for growth. We've got the team, we've got the balance sheet. We've got a supportive investor. So there will come a time when we'll need to issue equity for the right deals. And again, we'll look at those deals on the right. We'll look at the financing together with the deal from terms of what do we look like on a NAV per share and an accretive growth per share model as we do that. So I won't rule out equity in the future if we have the right deals, but we do look to have a strengthened balance sheet that utilizes our existing cash flow from our banking partners first.

Very helpful. And I'll get back in queue.

Any other questions?

We have no further signals from our phones.

We have a number of questions that have come in through the text line, so maybe I can just highlight a couple of those before we break. And one comes in from Brian MacArthur. Can you comment on your targeted precious metals content in the longer term? And I would -- maybe I'll take that, Fred. I would just comment that right now, we're about 2/3 precious metals. You can see from the Vizsla acquisition that we're adding to precious metals. We're also looking at other transactions through our corporate development team that are focused on precious but may have other base metal components. So I suggest that we look to continue to increase that precious component. That said, we're really pleased with the copper in our portfolio that's generating a tremendous amount of cash flow for us. So I think it's a well-balanced portfolio. There's -- I'll take one -- there's a whole host of questions in the text line about our cost structure. So maybe I'll take that. And then, Fred, there were just a couple more on [ V Roy ] that I think perhaps you already commented on, but if there's anything else you want to comment there. Back to the cost structure, I think I highlighted in my comments that the first half of the year was extremely busy. And our cost structure is made up of a couple of things. We have our fixed costs that are our compensation and the cost of running the portfolio, both from a corporate perspective and through an entity structure that's quite complex. So we're doing -- on the fixed side, that's where those costs from. There's also variable costs each quarter. And when I highlight that our first half was extremely busy, it's because we had a number of corporate initiatives, both integration activities, but also corporate activities and strengthening the platform for future growth. Some of those variable costs are going to reduce in the next few quarters meaningfully. Longer term, we're also working on those fixed costs. And when I highlighted the potential to reduce our corporate structure, we're always looking to make our team as efficient as possible. So we hope to reduce those as well. And as I look at the cost as a whole, we've been at about $5.5 million of G&A per quarter for these first 2 quarters. I would expect that to be closer to the low $4 million range to $4.5 million range. So on an annualized basis, $16 million to $18 million a year. But obviously, we're always going to look to improve on that. I'd say it a different way. Right now, our adjusted EBITDA is about 74% of revenue. And as we go into 2027, I would expect to improve that to greater than 80% of our revenue. And obviously, our goal is to grow the top line meaningfully and then incrementally lower that cost structure so we're increasing cash flow from both sides. Fred, any other comments on that or with respect to Panuco that you wanted to add before we close up?

Thanks, Stefan. I think the questions on Panuco were around timing of closing and gave some guidance on where we are with that. And as I -- just to reiterate, we have been back and forth, answering any questions from the Mexican Antitrust Commission. And we expect to get that approval in the coming weeks. There is no formal time line for that at this stage. But based on our interactions and responses today, we would expect to get that in the coming weeks. And of course, we'll update the market as soon as we do. So that's on the Vizsla side. I think there were -- maybe there was another question as well just around the dividend. And I think I would -- around the ability to take that in Tether Gold versus cash. And just to make sure everyone is aware, every shareholder has the ability to take that in cash as per normal. We have just added a secondary ability to elect to take that Tether Gold. And so it doesn't mean anyone has to. It just is an additional option for people who would like that going forward. And I think that was -- that's the majority of the questions that we've had in, Stefan, if there's anything else?

There was one other on our expectation of consolidation in the industry. And this is one we get quite a lot, so it would be great if you could comment on that.

Yes. So look, I suppose from the company's perspective, we have been active in the industry, both as a target of consolidation and also an active participant. And for those looking back a couple of years, Elemental has combined in the past with Altus Strategies and EMX. And there was some crossover between the companies in terms of shareholders, in terms of some of the management team and Board, even. So I think we all saw the benefits of consolidation in the past and I think the merger with EMX and the ability to leverage the skills of the combined team and the benefits of the portfolio diversification, increased scale. And in EMX's case, we even own some of the same assets alongside each other. So we definitely saw the value there. I think going forward, we have said that we try and look at it on an asset basis. And so when we see an individual royalty acquisition opportunity or we see a portfolio of royalties, and that can be in a private company, it can be in a public company, we do bottom-up work to look at the value of those assets and see which presents more value for us as a company. And so you've seen a number of transactions to date on individual acquisitions where we saw value, and you also saw the corporate transaction with Vizsla that we thought was a really strong addition into our portfolio, into our growth pipeline. So we continue to look at that. We continue to see value on the whole in getting that scale and critical mass. And some of the additions to our team that we made in H1, and that was on the technical team, that was on the finance team, that was on the legal team and people with specific experience in the royalty industry and space as well, I think part of those additions we made to the team were setting us up, as Stefan alluded to, to future growth. And so we're maintaining that outlook and open mind in terms of opportunities. We're very busy at the moment. There has been a lot of deal flow that has been coming to the company. And just because we are waiting for that Vizsla Royalty (sic) [ Royalties ] transaction to close, it certainly does not mean we're not continuing to work on opportunities in the background continuously, and we will do that going forward as well.

Fred, there was one last question that I just wanted to comment on. The question says, with 200-plus royalties, how do you monitor and prioritize material developments across the portfolio? And I guess I would just say we have -- as Fred just mentioned, we have an excellent team whose primary goal is to monitor every development within our portfolio, both from a technical and financial perspective. So I think just a shout out to our team, who've developed a really good platform to grow. And of course, that growth is fueled by our platform that includes our 200 royalties. So the team plays a major role there. And with that, Fred, I guess I'd turn it back over to you for any final comments, and we can wrap it up.

Well, thank you, everyone, for joining our Q2 2026 call. And thank you for those of you, existing shareholders who continue to support the company, and any investors listening. We are always -- and we try and reiterate this every quarter, but we're always very open to take calls and meetings one-on-one with investors if they have follow-up questions. So please feel free to send them through and Tara on our IR side or to either of us, and we'll come back to you. But with that, thank you very much. Thank you to the team for another great quarter, Stefan and the finance team for all the work putting this together, and look forward to updating you at the end of Q3.

Ladies and gentlemen, this does conclude the Elemental Royalty Q2 2026 Conference Call. We thank you all for your participation.