From $300M Debt to Cash Stream Growth: OR Royalties' Financial Turnaround Precious Metals Play

• OR Royalties has transformed from a debt-burdened company with $300 million in debt 19 months ago to a net cash position today, generating approximately $160 million in operating cash flow in 2024 with expectations of 40% growth to $220-230 million in 2025.
• The company maintains a focused geographic strategy with 80% of assets and cash flow concentrated in low-risk jurisdictions including Canada, the US, and Australia, differentiating it from peers with higher geopolitical exposure.
• OR Royalties operates with exceptional efficiency, employing only 25 full-time staff while managing a portfolio of 195 assets, of which 22 are currently producing, providing significant optionality for future cash flow generation.
• The company's investment strategy targets transactions between $50-500 million USD with assets expected to generate returns within five years, using conservative consensus gold pricing of $2,400 per ounce for deal evaluation rather than spot prices.
• Recent strategic developments include a 24.4% equity stake and 5% net smelter return royalty in Cariboo Gold's British Columbia project, expected to commence production in 2027, along with regulatory improvements in the US streamlining permitting processes for assets like Spring Valley in Nevada.

The precious metals sector presents a unique investment opportunity in 2025, with gold prices maintaining elevated levels and structural tailwinds supporting long-term demand. OR Royalties, a royalty and streaming company with a ~US$5 billion market capitalization, exemplifies the investment potential within this space. Under the leadership of President and CEO Jason Attew, the company has undergone a remarkable transformation from a debt-laden operation to a financially robust enterprise positioned to capitalize on favourable market conditions.

The royalty and streaming business model offers investors leveraged exposure to precious metals production without the operational risks associated with mining companies. OR Royalties' recent performance and strategic positioning provide compelling insights into why precious metals investments deserve consideration in today's market environment.

Financial and Operational Excellence

OR Royalties has demonstrated exceptional financial discipline and operational efficiency over the past 19 months. The company has eliminated $300 million in debt while achieving a net cash position, a remarkable turnaround that underscores management's commitment to financial health. This deleveraging strategy has been executed without sacrificing growth opportunities, as evidenced by the company's $300 million in committed capital transactions during 2024, representing approximately 10% of the $3 billion total royalty and streaming market transaction in that year.

President and CEO Jason Attew explained, highlighting the company's strong cash generation capabilities and positive outlook for the coming year,

"We generated from a cash flow of operations perspective about $160 million. This year again as long as the commodities stay where they're at, we're looking at 40% above that."

The company's operational model reflects best-in-class efficiency, maintaining only 25 full-time employees while managing 195 assets across its portfolio.

Strategic Geographic Focus

OR Royalties has distinguished itself from peers through its concentrated geographic strategy, with 80% of assets and cash flow positioned in tier-one jurisdictions including Canada, the United States, and Australia. This geographic concentration significantly reduces geopolitical risk compared to competitors with greater exposure to emerging markets or politically unstable regions.

The company's risk management approach extends beyond geographic diversification to include technical expertise and conservative forecasting methodologies. OR Royalties employs experienced professionals, including former mine managers from iconic producing gold mines such as Tasiast and Fruta del Norte, to evaluate asset quality and price risk appropriately. The company applies probabilistic modelling to production forecasts and incorporates factors such as climate change impacts into guidance calculations, reflecting a sophisticated understanding of modern mining challenges.

Interview with President & CEO Jason Attew

Portfolio Composition and Growth Optionality

OR Royalties' portfolio demonstrates strong precious metals exposure, including 67% in gold and approximately 25% in silver. This composition aligns well with current market dynamics, where precious metals have outperformed base metals and continue to attract investor interest amid macroeconomic uncertainty.

The company's 195-asset portfolio includes only 22 currently producing assets, providing substantial optionality for future cash flow growth as commodity prices incentivise development of previously sub-economic projects. This optionality represents significant embedded value that may not be fully reflected in current valuations, particularly as improved permitting processes and higher commodity prices accelerate project timelines.

Capital Allocation and Strategy

OR Royalties employs a disciplined investment approach, targeting transactions between $50-500 million USD with assets expected to generate returns within five years of investment. The company uses conservative consensus gold pricing of approximately $2,400 per ounce for deal evaluation rather than spot prices, providing downside protection and ensuring sustainable returns even if commodity prices moderate.

Attew noted, emphasizing the company's conservative approach to deal evaluation and commitment to generating risk-adjusted returns for shareholders:

"We price everything off consensus and consensus long-term gold because that is our primary product right now."

The company's recent transaction activity includes the acquisition of a silver stream on the South Railroad project in Nevada for $13 million, expected to commence production in 2027 - a near-term production assets in a favourable jurisdiction at a reasonable valuation.

Regulatory Environment

The regulatory environment for mining projects, particularly in the United States, appears to be improving under current political leadership. OR Royalties stands to benefit from streamlined permitting processes that could accelerate project development timelines and bring previously delayed assets into production sooner than anticipated.

The company's Spring Valley asset in Nevada exemplifies this trend, with environmental approval expected within six weeks and a record of decision anticipated by August 11th. Once operational, Spring Valley is projected to produce approximately 300,000 ounces annually, generating 6,000-7,000 gold equivalent ounces for OR Royalties through its royalty position.

The Investment Thesis for OR Royalties

The company's focus on precious metals positions it well to benefit from continued strength in gold and silver markets, while its exposure to copper and base metal projects through byproduct streams provides additional upside potential as those commodity cycles develop.

• Strong Financial Position: Net cash balance sheet with $220-230 million projected annual operating cash flow provides financial flexibility and capacity for accretive acquisitions
• Geographic Risk Mitigation: 80% of assets concentrated in tier-one jurisdictions (Canada, US, Australia) reduces geopolitical risk compared to emerging market-focused peers
• Operational Efficiency: Lean 25-person team managing 195 assets demonstrates exceptional operational leverage and scalability
• Portfolio Optionality: Only 22 of 195 assets currently producing, providing significant embedded growth potential as commodity prices incentivize development
• Disciplined Investment Strategy: Conservative deal evaluation using consensus pricing rather than spot prices ensures sustainable risk-adjusted returns
• Management Expertise: Experienced team with 30+ years of mining industry experience and proven track record of value creation
• Precious Metals Exposure: 94% precious metals focus aligns with current market dynamics and macroeconomic tailwinds
• Regulatory Tailwinds: Improving permitting environment, particularly in the US, could accelerate asset development timelines
• Strategic Partnerships: Significant positions in development-stage companies like Cariboo Gold provide leveraged exposure to project advancement
• Market Position: Mid-tier scale provides optimal balance of growth potential and operational flexibility in competitive transaction environment

Macro Thematic Analysis

The precious metals sector is experiencing a renaissance driven by multiple converging factors that support long-term investment appeal. Central bank monetary policies, geopolitical tensions, and inflation concerns have reinforced gold's role as a store of value and portfolio hedge. Simultaneously, industrial demand for silver continues to grow through renewable energy applications and technological advancement.

The current market environment presents unique opportunities for well-positioned companies like OR Royalties to capitalize on both elevated commodity prices and improved access to development capital. Higher gold prices have transformed the economics of previously marginal projects, extending mine lives and accelerating development timelines. This dynamic particularly benefits royalty companies, which participate in the upside without bearing operational risks.

Regulatory improvements, especially in North American jurisdictions, are reducing development timelines and providing greater certainty for project advancement. The combination of favoutrrable commodity prices and streamlined permitting creates optimal conditions for bringing new production online, directly benefiting royalty holders through increased cash flows.

"Running a royalty company in this market is just fabulous, if you've got producers in the portfolio," Attew observed.

The sector's appeal extends beyond cyclical factors to include structural trends supporting long-term demand, including central bank diversification away from dollar reserves and growing recognition of precious metals' portfolio benefits during periods of financial market volatility.

Key Takeaways and Market Implications

OR Royalties represents a compelling investment opportunity within the precious metals sector, combining financial strength, operational excellence, and strategic positioning to capitalize on favorable market conditions. The company's transformation from a debt-burdened operation to a financially robust enterprise demonstrates management's capability and commitment to shareholder value creation.

The broader precious metals market continues to benefit from macroeconomic uncertainty, monetary policy dynamics, and structural demand drivers that support elevated commodity prices. OR Royalties' conservative approach to deal evaluation and focus on tier-one jurisdictions positions the company to generate sustainable returns while minimizing downside risk.

Investors seeking exposure to precious metals through a professionally managed, diversified portfolio of high-quality assets should consider OR Royalties as a vehicle that provides leveraged upside to commodity price appreciation while maintaining operational and financial discipline. The company's substantial portfolio optionality and improving regulatory environment create additional catalysts for future value creation.