Royal Gold, Inc. · NASDAQ:RGLD
Royal Gold — John Tumazos Very Independent Research Metals and Mining Conference 2014
28 slides from Royal Gold's conference presentation, March 2014
Slide 1: March 2014 Presentation
March 2014 Presentation World Class Royalty Company 3 I> ROYALGOLD,INC
Slide 2: Cautionary Statement
Cautionary Statement This presentation contains certain forward‐looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward‐looking statements involve known and unknown risks, uncertainties, and other factors that could cause actual results to differ m
Slide 3: Royal Gold Overview
Royal Gold Overview Embedded Growth – Positioned to grow volume ~50% from Mt. Milligan alone Financially Robust – Mt. Milligan investment complete – Low costs with Adjusted EBITDA 1 margin at ~80‐85% of revenue – Liquidity of approx. $1.1 billion Attractive Market Environment – Royalty/streaming a c
Slide 4: Strong Track Record of Growth
Strong Track Record of Growth March 2014 4
Slide 5: Embedded Growth
Embedded Growth Fully Invested 350 300 Pascua Lama Thousands of Gold Equivalent Ounces 250 Mt. Milligan 200 150 Other ~50% estimated increase over 100 FY2013 due to Mt. Milligan alone Voisey's Bay Peñasquito 50 Andacollo 0 FY 2013 (1,2) Mt. Milligan(3,4) and Pascua‐Lama(5) contribution at full produ
Slide 6: Embedded Growth: Development Cornerstone Properties
Embedded Growth Development Cornerstone Properties Mt. Milligan Stream: 1 52.25% of payable gold Reserves: 2 6.0M oz (Au) Est. Mine Life: 22 Years Commercial Prod: Q1 CY14 Est. Production: 3 262k oz (Au)/yr • Production ramp‐up • Commercial production achieved in February 2014 Photo: July 2013 • CY1
Slide 7: Mt. Milligan Ramping Up
Embedded Growth Mt. Milligan Ramping Up Mt. Milligan Facilities Mt. Milligan Primary Crusher Mt. Milligan Two 24ft Ball Mills Mt. Milligan Flotation Circuit March 2014 7
Slide 8: Phoenix Stream Agreement Details
Embedded Growth Phoenix Stream Agreement Details Investment of $75 million in five installments over next two years – 6.3% of production up to 135,000 oz – 3.15% thereafter Delivery payment of 25% of spot price at time of delivery 1 Rationale: ‒ High grade operation in final stages of construction ‒
Slide 9: Phoenix Stream Agreement Details
Embedded Growth Phoenix Stream Agreement Details Operator: Rubicon Minerals Location: Red Lake, Ontario LOM projected production: 2.19M oz (Au) Production start‐up: 12‐14 months following completion of financing Estimated mine life: 13 years Est. average annual production: 165,300 oz March 2014 9
Slide 10: Financially Robust: Diverse Portfolio of Assets
Financially Robust Diverse Portfolio of Assets March 2014 10
Slide 11: Cornerstone Producing Properties
Financially Robust Cornerstone Producing Properties Andacollo Contribution to 1H Royalty: 1 75% of Au production (NSR) FY2014 revenue Reserves: 2 1.8M oz (Au) 26% or $28.9M Estimated Mine Life: 20+ Years Actual CY13 production: 64,600 oz (Au) Peñasquito Royalty: 2.0% NSR Contribution to 1H Reserves:
Slide 12: Cash Margin by Operating Property
Financially Robust Cash Margin by Operating Property Calendar Year 2013 80% 70% 60% 50% Weighted Average Cash Margin 49% 40% 30% 20% 10% 0% March 2014 12
Slide 13: Efficient Use of Resources Maximizes Margins
Financially Robust Efficient Use of Resources Maximizes Margins $350 $300 $250 Millions $200 $150 $100 $50 Adjusted EBITDA Margin ‐ 86% of Revenue (12/31/13) $‐ CY2009 CY2010 CY2011 CY2012 CY2013 Revenue Adjusted EBITDA March 2014 13
Slide 14: Financial Strength
Financial Strength Strong Balance Sheet and Cash Flow in an Attractive Market $704.8M Working Capital $350M Undrawn Credit $370M convertible * ** debt 2019 @2.875% $178.4M March 2014 14
Slide 15: Mineral industry sources of capital are limited
Attractive Market Environment Mineral industry sources of capital are limited Capital Raised by Asset Class ($B) 1 400 350 300 Proceeds ($B) 250 200 150 100 50 0 2007 2008 2009 2010 2011 2012 2013 Loans Bonds Convertibles Follow ons IPOs March 2014 15
Slide 16: Multiple Investment Entry Points
Attractive Market Environment Multiple Investment Entry Points Capital Consuming 1 Capital Generating 2 March 2014 16
Slide 17: Multiple Sources for New Business Opportunities
Attractive Market Environment Multiple Sources for New Business Opportunities 100% 14% 20% 16% 15% 90% The largest 80% source of our 70% 31% gold revenue 48% 48% 60% 44% in fiscal 2013 50% was non‐ 40% precious 30% metals mines 20% 54% 36% 36% 37% 10% 0% 2010A 2011A 2012A 2013A Primary Gold Mines Po
Slide 18: Favorably Positioned
Favorably Positioned RGLD Price to Book Value EBITDA Per Share 4.0x $3.00 3.5x $2.50 3.0x Five‐year $2.00 average: 2.5x 2.2x * FNV $1.50 2.0x SLW RGLD 1.5x $1.00 Current: 1.0x 1.9x $0.50 0.5x $0.00 2009 2010 2011 2012 CQ1‐CQ3 0.0x 2013 Mar‐09 Mar‐10 Mar‐11 Mar‐12 Mar‐13 Mar‐14 Calendar year reported
Slide 19: Royal Gold Summary
Royal Gold Summary Embedded Growth Mt. Milligan, September 2013 – Positioned to grow via Mt. Milligan Financially Robust – Mt. Milligan investment complete – EBITDA margin ~80‐85% of revenue – Liquidity of $1.1 billion Attractive Market Environment – Compelling alternative to challenging equity/debt
Slide 20: Appendix
APPENDIX I> 21 (A ROYALGOLD,INC
Slide 21: Royalty vs Stream
Royalty vs Stream Royalty Financing Life of Mine Upfront Payment Stream Financing Life of Mine Upfront Delivery Payment ($/oz) Payment March 2014 21
Slide 22: Differences Between Royalty and Stream Financing
Differences Between Royalty and Stream Financing ROYALTY STREAM Receive a percentage of the Purchase all, or percentage of the production from a mine, usually over designated metal at a fixed or variable OWNER HOLDS RIGHT TO: the LOM, often after deducting offsite (% of spot) price over LOM or speci
Slide 23: Royalty/Streaming Sector
Royalty/Streaming Sector Metal royalty model established by Royal Gold (1992) and Franco Nevada (1985) Silver Wheaton began metal streaming in 2004 Business model success has attracted new companies Sector market capitalization ~US$22.3B; dominated by three companies: Silver Wheaton, Franco Nevada a
Slide 24: Precious Metal Sector
Precious Metal Sector Three largest royalty/streaming companies are within the top fifteen precious metal companies 25,000 Market Capitalization Precious Metal Companies 20,000 (as of 2‐19‐14) 15,000 $US Millions 10,000 5,000 0 March 2014 24
Slide 25: Over US$9B Deployed Over Past 10 Years in Royalty and Stream Finance
Over US$9B Deployed Over Past 10 Years in Royalty and Steam Finance Royal/stream finance is now a well known source of capital with nearly 70 transactions over past decade Streams can be used for project development, mergers and acquisitions, debt or hedge restructuring or other purposes Stream Fina
Slide 26: Endnotes
Endnotes Many of the matters in these endnotes and the accompanying slides constitute forward looking statements and are subject to numerous risks, which could cause actual results to differ. See complete Cautionary Statement on page 2. PAGE 3 ROYAL GOLD OVERVIEW construction activities at Pascua‐La
Slide 27: Endnotes (cont.)
Endnotes (cont.) Many of the matters in these endnotes and the accompanying slides constitute forward looking statements and are subject to numerous risks, which could cause actual results to differ. See complete Cautionary Statement on page 2. PAGE 11 FINANCIALLY ROBUST: PAGE 16 ATTRACTIVE MARKET E
Slide 28: 1660 Wynkoop Street Denver, CO
1660 Wynkoop Street Denver, CO 80202‐1132 303.573.1660 info@royalgold.com www.royalgold.com
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