Vox Royalty's Proven Royalty Company Positioned for Cash Flow Growth

• Vox Royalty reported strong 2023 results, with revenue up 45% and cash flow from operations up 157% year-over-year
• The company has a portfolio of ~70 royalties globally, with 5 of 6 producing assets in Australia
• Vox focuses on acquiring royalties 1-3 years from production from quality projects at good valuations
• Vox secured a $25M credit facility in January 2024, providing capital to scale the business and act on opportunities
• 2024 guidance is $11-13M revenue, with potential upside from 2-4 new producing assets coming online in 2025-2026

Strong 2023 Results & Outlook

Vox Royalty Corp (TSX:VOXR) is a returns-focused mining royalty company aiming to provide investors exposure to a portfolio of global royalty assets. With around 70 royalties, including six currently producing assets, Vox has established a foundation of cash-flowing assets while maintaining a pipeline of near-term development projects.

In a recent interview, Chairman and CEO Kyle Floyd discussed the company's 2023 results, growth strategy, competitive advantages and outlook.

Interview with Chairman & CEO, Kyle Floyd

2023 Financial Results

Vox reported robust financial results for 2023, with revenue increasing by nearly 45% and cash flow from operations surging 157% compared to 2022. The company also raised its dividend by over 9% year-over-year.

Per-share metrics are a core focus for Vox.

"When we look at how we grow our business, we're focused on per-share metrics and cash flow per share," Floyd noted. "We continue to make progress in that respect and as a result, we've been able to increase our dividend for the second consecutive year, which resulted in about a 9.1% increase in the dividend yield."

Vox says it now sports one of the highest dividend yields in the precious metals royalty sector. This demonstrates the cash flow-generating power of its portfolio.

Australia-Heavy Portfolio

One of Vox's biggest competitive advantages and areas of focus is Australia. The company believes it is the best mining market for royalties globally. Vox has the second-largest portfolio of hard rock mining royalties in Australia after industry leader Franco-Nevada.

Five of Vox's six producing royalties are located in Australia. The portfolio is also heavily weighted toward investment-grade counterparties, with nearly 80% of the royalties on projects operated by billion-dollar or larger companies. Key operators include giants like Zijin Mining Group and Mineral Resources Limited.

"We have a very undervalued portfolio right now in terms of where the market is on Vox," Floyd stated, "but nevertheless, a great suite of assets – a portfolio that we believe we're going to be able to continue to grow, similar to how we've grown it over the last 5 or 6 years."

Growth and Capital Allocation Strategy

Vox aims to grow its royalty portfolio by targeting assets within 1-3 years of production, operated by quality teams, where Vox can acquire the royalty at an attractive valuation. The company maintains a proprietary database of royalties that allows it to quickly evaluate potential opportunities.

Access to capital has been one constraint on Vox's growth historically. However, in early 2024 the company secured up to $25 million revolving credit facility with the Bank of Montreal. This facility remains undrawn, but provides Vox with enhanced financial flexibility to act on opportunities.

"Alongside a balance sheet of about $12 million of working capital, we also have $25 million of undrawn firepower," Floyd explained. "We've continued to be disciplined...that will be allocated to the right opportunities."

This added capital enhances Vox's ability to scale its business in line with its historical growth trajectory. It expands the pipeline of executable deals focused on royalties nearing or already in production.

2024 Outlook

For 2024, Vox is guiding for revenue of $11-13 million, in line with 2023. Floyd described this as "a bit of a consolidating year for us," but noted a potential upside to guidance. Looking further out, the addition of 2-4 new producing assets could drive growth in 2025 and 2026.

While the broader market environment remains challenging, Vox's value-focused strategy allows it to uncover opportunities in any commodity cycle. "We're value players, we've always been value-focused," Floyd emphasized. "We're generating the highest return on invested capital in the [royalty] sector."

This value orientation has led to a portfolio concentrated in gold royalties. However, this is more an outcome of where Vox sees the best risk-adjusted return potential rather than a concerted effort to gain gold exposure. The company remains agnostic to which commodities and will deploy capital where it sees the best value.

Vox Royalty offers investors exposure to a growing portfolio of cash-flowing royalties and near-term development assets. The company's value-driven approach, Australian focus and operator quality are key differentiators. With a fortified balance sheet and enhanced access to capital, Vox is well-positioned to continue scaling its business by acquiring royalties at attractive valuations from advanced projects.

While 2024 is expected to be a consolidation year, the medium-term growth outlook remains encouraging with several royalties expected to start producing in 2025 and 2026. For investors seeking yield and long-term value in the royalty space, Vox presents a compelling opportunity.

The Investment Thesis for Vox Royalty

• Unique, returns-focused royalty company with a proven history of value creation
• Portfolio of ~70 royalties globally, with 6 current producers generating strong cash flow
• Near-term growth potential from development assets nearing production
• Undrawn $25M credit facility provides enhanced capacity to act on new opportunities
• High dividend yield of 2.4% and growing, supported by significant operating cash flow
• Value-driven approach allows Vox to find opportunities in any commodity price environment
• Australia focus a competitive advantage - strong mining jurisdiction with many quality assets
• Partnerships with high-quality, well-capitalized operators reduce asset-level risk

Vox Royalty delivered strong results in 2023, with revenue and cash flow growing significantly. The company is well-positioned for future growth, underpinned by its producing assets, strong pipeline of development projects, value-focused acquisition strategy and newly secured credit facility. While 2024 is expected to be a consolidating year, Vox offers investors a compelling combination of dividend yield and long-term growth potential.

The current macro environment presents both challenges and opportunities for royalty companies like Vox. Volatile metal prices, rising costs and economic uncertainty have pressured the mining sector, constraining access to capital for operators and developers. This financing gap provides an opening for royalty companies to step in and acquire royalties at attractive valuations from high-quality projects.

Vox's CEO Kyle Floyd addressed this dynamic in the interview, noting "It's a little bit of a squirrel with ADHD, that's how I would describe the public markets...It's easy to get pulled in different directions and lose your long-term focus." However, by maintaining a disciplined, value-driven approach, Vox has been able to uncover opportunities and deliver sector-leading returns on invested capital.

The royalty and streaming model has proven resilient in challenging market conditions. By providing upfront capital in exchange for long-term royalties, companies like Vox can build diversified portfolios that generate returns across commodity cycles. With a portfolio spanning precious metals, base metals and bulk materials, Vox has exposure to multiple macro themes.