Gold Royalty's Mid-Tier Bet: 500% GEO Growth Ahead on the Existing Portfolio

## The strategy: own the tier the seniors left behind

Gold Royalty Corp (GROY) is positioning itself as a "mid-tier champion" in the precious-metals royalty space — a tier CEO David Garofalo argues has been "largely abandoned" even as the largest players, Franco-Nevada, Wheaton Precious Metals, and Royal Gold, have grown too large to move the needle on incremental deals.

In an interview on The Deep Dive, Garofalo framed the strategic gap with a specific data point: Wheaton's recent $4-billion-plus streaming deal at Antamina was four times the largest streaming deal before it, yet moved less than 5% of the company's market cap. His pitch is that a liquid, mid-cap royalty company can still post the percentage growth the seniors structurally cannot.

## The numbers behind the pitch

According to Garofalo, Gold Royalty is generating record revenues, profits, and free cash flow this year, with last year marking its first year of positive free cash flow. The balance sheet carries no debt, $50 million in cash, and $150 million in undrawn credit lines. Even without acquiring another royalty, Garofalo says the existing portfolio implies over 60% growth in gold equivalent ounces this year and over 500% growth over the next five years.

That embedded growth stacks from three buckets, in Garofalo's telling. First, the producing royalties: 14 are currently in production, with another 7-8 expected to come online over the next five years. Second, expansions within producing assets. Third, royalties on three of the five biggest producing gold mines in North America — Canadian Malartic (specifically the Odyssey underground), Côté Lake, and the underground extension of Gold Strike, which Garofalo says is "coming into production at the end of this year in a few short months" as a high-grade extension of an open pit mined since the 1980s.

He pegs this year's free cash flow (after tax, growth-capex-adjusted) at roughly $30-40 million and projects 3-4x growth over the next several years at current gold prices.

## Why royalties dodge the producer cost squeeze

Garofalo used the interview to argue that royalty and streaming companies sit structurally better than producers in the current cycle. Producers, he said, face two simultaneous headwinds: rising input costs (fuel, and labor settlements lagging commodity prices) and a shrinking reserve base — industry reserves are down roughly 40% from the 2012 peak after a "nuclear winter" for exploration juniors. Mergers among producers are, in his view, "a zero-sum game" because they shuffle ounces rather than create them.

Royalties sidestep both, he argued, because they're paid on the top line — there's no cost inflation to absorb — and they capture the upside of operator exploration budgets "entirely for free." Gold Royalty's operators spend over $200 million a year on exploration underneath the company's royalties, per Garofalo.

The one structural wrinkle is how new royalties are sourced. Gold Royalty runs a "royalty generator" model — staking exploration claims in Nevada, Quebec, and Ontario around existing mines, then farming out the properties in exchange for retained royalties. About a third of the company's 250+ royalties were generated this way at zero cost to shareholders, which is why Gold Royalty avoids paying for early-stage royalties and concentrates acquisition spending on late-stage development or already-producing assets.

On the technology side, Garofalo highlighted a partnership with Prospector Royalty Corp, in which Gold Royalty is a significant shareholder. Prospector uses AI to scrape technical reports for fragmented royalty ownership — heirs of original prospectors who may not even know they hold a title — and recently helped Gold Royalty assemble a royalty on Stiller Gold's Garrison project in Northern Ontario by tracking down ten separate family members.

## Tether, liquidity, and the crypto-gold convergence

Perhaps the most market-moving datapoint in the interview: Tether, the stablecoin issuer, has accumulated over 14% of Gold Royalty's stock through open-market purchases, according to Garofalo. Tether is described as a passive investor, not a strategic one, and Garofalo tied the buying spree to the company's deep liquidity — 3-4 million shares trade daily on NYSE American, worth roughly $15-20 million a day.

Garofalo framed the move as part of a broader convergence between crypto and gold: Tether is one of the largest physical-gold buyers in the world right now, and is now placing capital into royalty and streaming companies because it sees "optimum sensitivity to the gold price" in the model. The same pattern, he said, has played out at peer royalty and streaming names including Versamet, Metalla, and Elemental.

## The macro tailwind

The interview's broader framing was Garofalo's longstanding debasement thesis. He argued that with U.S. federal debt above $40 trillion and global central banks competing to debase their currencies, gold's 50-year march from $35/oz to a recent high near $5,600/oz will continue. He cited central banks buying a record 289 tons in Q2 even as Western ETFs sold 45 tons in the same quarter, and pointed to a historical correlation of roughly 0.98 between gold and M2 money supply. By that relationship, he said, gold should be trading around $9,000/oz today — implying roughly a double from current levels within a year.

Whether or not that price target materializes, the underlying flow of capital from crypto balance sheets and central banks into royalty and streaming names is a concrete, ongoing signal for investors weighing the space. The bear case — rising input costs across the commodity complex, a labor-cost lag that has historically followed metal prices higher, and a 20-year lead time from discovery to first production — applies primarily to producers, not to the royalty model Garofalo is selling.

For investors mapping exposure to gold without taking direct miner risk, Gold Royalty's pitch is structurally clean: top-line royalties, no debt, growing cash flow, and a backstop of large operator-exploration spend flowing through for free. The thesis only works if gold holds or climbs from here, but the company has clearly aligned itself with the macro view that it will.