OR Royalties Inc. Q2 FY2026 earnings call

• Overall Q2 2026 Performance

  • Total revenues hit $97.8 million, and operating cash flow reached $83.2 million, both 62% higher than Q2 2025, on a 5% increase in gold equivalent ounces (GO).
  • 96.8% of revenue converted to cash margin this quarter, the highest rate in the sector. Net earnings rose 94% year-over-year to $0.33 per basic share.
  • 94.7 million in total cash margin, up from $57.8 million (95.8% of revenue) in Q2 2025. Adjusted earnings hit $60.5 million ($0.32 per share), up 78% YoY.

• Recent Completed Acquisitions & Closings

  • Closed the Goldfields royalty portfolio and Spring Valley acquisitions in Q2, for a total transaction value of $335 million, largely funded via the company's revolving credit facility.
  • Closed the Murraybrook precious metals stream transaction in July 2026 post-quarter end, alongside a $4 million equity subscription.
  • An incremental 15 million extension of royalty coverage at Chile's Costa Fuego to include the new La Verde discovery is expected to close in Q3 2026.

• Canadian Malartic Operational Update

  • On July 1, 2026, a rock mass movement occurred on the north wall of the Barnett Open Pit; no injuries were reported, as pre-emptive monitoring and suspension of mining in the area worked as designed.
  • Approximately 370,000 ounces of gold will be inaccessible over the next three years, translating to a 3,500 GO reduction for Oral Royalties in 2026, and up to 7,500 GO reduction in both 2027 and 2028, before any mitigation activities.
  • The adjacent Odyssey underground project at Canadian Malartic set a quarterly production record of 28,800 ounces, and first production from the new shaft remains on track for Q2 2027; Agnico Eagle's target of 1 million annual ounces at Canadian Malartic by the early 2030s remains unchanged.
  • A 6-day mill shutdown in Q2 followed a fatal accident in April 2026 at the operation.

• Other Portfolio Updates

  • Received the first royalty payment from Dalgaranga this quarter; ramp-up at Nandimi is progressing well, with the company's increased 2% royalty already becoming a significant contributor.
  • The portfolio currently has 23 producing assets, with the 24th (Cabral Gold's Coiu-Coiu project in Brazil) expected to begin commissioning in Q4 2026 as scheduled.
  • Deferrals of some silver and copper GO at CSA due to transport logistics, and lower GO delivery from Mantos Blancos (previously flagged due to front-loaded silver grades in 2026) created modest headwinds in Q2, both expected to normalize in the second half.

• Balance Sheet & Capital Allocation

  • Ended Q2 with $75.6 million in cash and $215 million drawn on the revolving credit facility, for a net debt position of $139 million.
  • The board raised the quarterly dividend by 18.2% to 6.5 cents per share; the company has now paid 47 consecutive quarterly dividends, with ~$300 million returned to shareholders via dividends to date.
  • Repurchased 225,000 shares for $8 million in Q2, and an additional 1 million shares for $29.1 million in July 2026 post-quarter end; ~1.6 million shares have been repurchased and canceled year-to-date.
  • The revolving credit facility was recently amended to increase total availability from $650 million to $850 million, and extend maturity from May 2029 to August 2030.
  • Capital allocation priorities remain unchanged: prioritize opportunities that maximize net asset value per share, including dividends, share repurchases, accretive royalty/stream acquisitions, and debt repayment.

Oral Royalties operates two core product segments: Royalties and Streams. In Q2 2026:

• Royalties segment: Generated $62.8 million in revenue, accounting for 64.2% of total Q2 2026 revenue. Royalties carry essentially no operating costs, contributing fully to cash margin.
• Streams segment: Generated $35.0 million in revenue, accounting for 35.8% of total Q2 2026 revenue. Total company revenue for the quarter was $97.8 million.

• 2026 full-year gold equivalent ounce guidance is maintained at 80,000 to 90,000 GO, despite the 3,500 GO reduction from the Canadian Malartic incident. First half 2026 deliveries hit 43,497 GO, up 12% over first half 2025, putting the company on track to meet the full-year range.
• The long-term 2030 outlook of 120,000 to 135,000 GO is fully maintained and unaffected by the Canadian Malartic incident, as the Barnett pit was always scheduled to be mined out by 2028-2029. This 2030 outlook does not include production from the recently closed Spring Valley and Murray Brook acquisitions, leaving built-in contingency for upside.
• The company expects the second half of 2026 to be modestly lower in GO output than the first half. Q3 2026 will be modestly lower due to safety work at Barnett, while Q4 2026 will be modestly stronger than Q3 as mining resumes and ramp-ups at other projects add output.
• Long-term five-year guidance is updated once per year in February; the next updated five-year outlook (to 2031) will be published in February 2027, and will include all recent acquisitions and positive portfolio developments not currently reflected in the 2030 outlook.

• The rock mass movement at the Canadian Malartic Barnett Open Pit creates near-term production reductions, with 3,500 lost GO in 2026 and up to 7,500 lost GO annually in 2027 and 2028, though the long-term value of the Canadian Malartic royalty is unchanged.
• Concentration risk: Canadian Malartic represents approximately 25% to 30% of the company's net asset value, making it the single largest asset in the portfolio, though management remains comfortable with this exposure.
• Production deferrals at CSA due to transport logistics and lower-than-expected output at Mantos Blancos created near-term headwinds in H1 2026.
• First royalty/stream payments from the Almosar project are not expected until 2028 (and potentially late 2027 only if commodity prices remain very strong), as United Gold must first repay a $150 million government loan before deliveries to Oral Royalties begin.
• The full size and economic potential of the La Verde discovery at Costa Fuego is not yet public, as a full resource estimate has not been completed, creating uncertainty around the value of the extended royalty position.

Q: Given the recent incident at Canadian Malartic, the company's largest royalty asset, should investors be concerned about concentration risk in the portfolio? / A: Management noted the asset makes up 25-30% of net asset value, not a controlling majority stake. They expressed full confidence in Agnico Eagle's operational and technical expertise, highlighted that the incident resulted in no injuries due to pre-emptive safety systems, and reaffirmed that Canadian Malartic is the crown jewel of the portfolio that will grow in value as Agnico advances to 1 million annual ounces. Management stated they have no concerns about concentration risk.

Q: The 2030 guidance does not include recent acquisitions like Spring Valley and Murray Brook. When will the outlook be updated to reflect these assets? / A: The company updates its five-year long-term outlook once per year in February. The 2030 guidance already includes fully paid-for growth with no contingent capital, and recent accretive acquisitions plus positive organic developments across the portfolio will all be added when the 2031 outlook is released in February 2027.

Q: After the Canadian Malartic incident, has the company changed its acquisition criteria or focus? / A: Management confirmed that acquisition priorities remain unchanged: 90% of corporate development focus remains on producing assets, followed by development-stage assets that will add production within the five-year outlook. All deals continue to be evaluated on whether they are accretive to net asset value per share, with no changes to this framework after the incident. Management also noted they are currently seeing larger transaction opportunities up to the billion-dollar range, primarily for precious metals assets in tier 1 jurisdictions (Canada, U.S., Australia), which aligns with their existing focus.

Q: Can you provide an update on construction progress and remaining risks at the Amelsar project? / A: Technical leadership confirmed that United Gold's team is tracking on time and budget, with first gold production expected in mid-September 2026 and full ramp-up by the first half of 2027. Management noted that the operator has successfully addressed historic social and geopolitical challenges, and that the company will accrue ounces from production until the $150 million government loan is repaid, with regular royalty payments to Oral Royalties expected to begin in 2028. Accrued ounces will be delivered over a five-year period after loan repayment, making Amelsar a significant contributor starting in the late 2020s.