Royal Gold, Inc. · NASDAQ:RGLD
Royal Gold — Shareholder Meeting (November 2009)
57 slides from Royal Gold's shareholder meeting presentation, Nov 18, 2009
Slide 1: Annual Shareholder Meeting
Annual Shareholder Meeting November 18, 2009
Slide 2: Cautionary Statement
Cautionary Statement Under the Private Securities Litigation Reform Act 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 f
Slide 3: Key Attributes
Key Attributes Gold focused portfolio Effective business model Strong assets Proven performance and financial strength Royalty Asset Distribution Revenue by Metal Type (number of properties) (fiscal 2009) 13% Producing 3% Development Evaluation Exploration 84% 0 10 20 30 40 50 60 Gold/Silver Polymet
Slide 4: Favorable Environment for Gold
Favorable Environment for Gold
Slide 5: Declining World Gold Mine Production
Declining World Gold Mine Production Supply from Mine Production vs. Price of Gold 2,500 1,000 900 2,000 800 700 1,500 600 $ Per Ounce Tonnes 500 1,000 400 300 500 200 100 0 0 Production Gold Price Source: CPM Group
Slide 6: Fewer Major Gold Discoveries
Fewer Major Gold Discoveries 12 10 8 Number of Discoveries 6 4 2 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: Metals Economics Group and Kinross Gold Corporation’s presentation, Denver Gold Forum, September 2009 Note: Major discovery is defined as 3.0 million ounces or greater
Slide 7: Declining Reserve Grade
Declining Reserve Grade Cumulative Reserves for Top Producers and Annual Average Gold Price 1,000 $1,000 900 $900 Reserves (million ounces) 800 Reserves $800 700 $700 600 $600 500 $500 400 $400 300 $300 200 $200 100 $100 0 $0
Slide 8: Declining Reserve Grade
Declining Reserve Grade Cumulative Reserves for Top Producers and Annual Average Gold Price 1,000 $1,000 900 $900 Reserves (million ounces) 800 Reserves $800 700 $700 600 $600 Gold 500 $500 400 $400 300 Gold Price $300 200 $200 100 $100 0 $0
Slide 9: Declining Reserve Grade
Declining Reserve Grade Cumulative Reserves for Top Producers and Annual Average Gold Price 1,000 $1,000 900 $900 Reserves (million ounces) 800 Reserves $800 700 $700 600 $600 Gold 500 $500 400 $400 300 Gold Price $300 200 $200 100 $100 0 $0 Cumulative Reserves for Top Producers and Weighted Average
Slide 10: Declining Reserve Grade
Declining Reserve Grade Cumulative Reserves for Top Producers and Annual Average Gold Price 1,000 $1,000 900 $900 Reserves (million ounces) 800 Reserves $800 700 $700 600 $600 Gold 500 $500 400 $400 300 Gold Price $300 200 $200 100 $100 0 $0 Cumulative Reserves for Top Producers and Weighted Average
Slide 11: Increasing Cash Production Costs
Increasing Cash Production Costs Cash Production Costs for Nevada Producers 950 850 750 650 $ Per Ounce 550 450 350 250 150 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Total Cash Costs Gold Prices Source: Per John Dobra; Economic Overview of the Nevada Mining Industry 2008 - 200
Slide 12: Growing Demand For Gold
Growing Demand For Gold Supply from Net Central Bank Sales 500 500 400 400 300 300 Tonnes 200 200 100 100 0 0 -100 -100 H1’02 H1’03 H1’04 H1’05 H1’06 H1’07 H1’08 H1’09 CBGA Sales Non-CBGA Sales/Purchases Source: Gold Demand Trends; World Gold Council; Chart 5; August 2009 (GFMS, IMF, WGC)
Slide 13: Growing Demand For Gold
Growing Demand For Gold Supply from Net Central Bank Sales Gold Tonnage in ETFs 500 500 400 400 300 300 Tonnes 200 200 100 100 0 0 -100 -100 H1’02 H1’03 H1’04 H1’05 H1’06 H1’07 H1’08 H1’09 CBGA Sales Non-CBGA Sales/Purchases Source: Gold Demand Trends; World Gold Council; Chart 5; Source: Dr. Martin
Slide 14: Favorable Macroeconomics
Favorable Macroeconomics United States Surplus/(Deficit) Reagan Bush Sr. Clinton Bush Jr. Obama Source: BMO Capital Markets; Fig. 35; September 4, 2009
Slide 15: Favorable Macroeconomics
Favorable Macroeconomics United States Surplus/(Deficit) Reagan Bush Sr. Clinton Bush Jr. Obama Foreign Exchange Reserves Source: BMO Capital Markets; Fig. 35; September 4, 2009 Source: Dr. Martin Murenbeeld with Dundee Wealth Economics 1 Source: Gold Outlook (WHERE SHOULD FOOTNOTE BE DENOTED?)
Slide 16: Effective Business Model
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Slide 17: Effective Business Model
Effective Business Model Simple Gold Investment Vehicles No management demands No operating exposure Exploration No capex challenges Junior Operators Efficient Royalty Company Passive investor Intermediate Operators No continuing investment Major Operators Return High margins/low overhead Index Fund
Slide 18: Effective Business Model
Effective Business Model Simple Royal Gold vs. Major Gold Mining Companies Calendar year ended December 31, 2008 1,2,3 No management demands 90% No operating exposure 78% No capex challenges 75% Efficient 60% Passive investor 45% No continuing investment 34% 29% 30% High margins/low overhead 17% 15%
Slide 19: Effective Business Model
Effective Business Model Simple Royal Gold’s Asset and Revenue Growth vs. Cost No management demands 140 No operating exposure No capex challenges 120 Efficient 100 Passive investor 80 No continuing investment 60 High margins/low overhead 40 Option value 20 Unhedged Reserve additions at no cost 0 20
Slide 20: Effective Business Model
Effective Business Model Simple Gold Reserve Growth at Peñasquito 20 No management demands 17.4 No operating exposure 15 No capex challenges 10.0 Efficient 10 (Gold M oz) 7.4 Passive investor 5 No continuing investment High margins/low overhead 0 -0.02 Option value Reserves Depletion New Discoveries
Slide 21: Strong Assets
V7 if A ROYALGOLD,ING The Gold Standard of Royalty Companies Strong Assets
Slide 22: Asset Growth
Asset Growth (November 2009) 1 Pipeline, including Crossroads deposit
Slide 23: Asset Growth
Asset Growth (November 2009) 1 Pipeline, including Crossroads deposit 2 Royal Gold acquired this property in the Battle Mountain transaction. The parties claiming interests in the mining concessions subject to this royalty have disputed any royalty obligation 3 Closing of Andacollo transaction pendi
Slide 24: Asset Growth
Asset Growth (November 2009) 1 Pipeline, including Crossroads deposit 2 Royal Gold acquired this property in the Battle Mountain transaction. The parties claiming interests in the mining concessions subject to this royalty have disputed any royalty obligation 3 Closing of Andacollo transaction pendi
Slide 25: Asset Growth
Asset Growth (November 2009) 1 Pipeline, including Crossroads deposit 2 Royal Gold acquired this property in the Battle Mountain transaction. The parties claiming interests in the mining concessions subject to this royalty have disputed any royalty obligation 3 Closing of Andacollo transaction pendi
Slide 26: Principal Producing Properties
Principal Producing Properties Cortez (Pipeline Mining Complex – Nevada) Operator: Barrick Royalty: GSR1 and GSR2: 0.4% to 5.0% GSR3: 0.71% NVR1: 0.39% CY 2009 Production (Est.): 346,000 oz (Au) FY 2009 Revenue: $16.3M Reserves: 1 4.3M oz (Au) Taparko (Burkina Faso) Operator: High River Royalty: TB-
Slide 27: Principal Producing Properties
Principal Producing Properties Leeville (Nevada) Operator: Newmont Royalty: 1.8% NSR CY 2009 Production (Est.): 426,000 oz (Au) FY 2009 Revenue: $6.7M Reserves: 1 2.5M oz (Au) Mulatos (Mexico) Operator: Alamos Gold Royalty: 1.0% to 5.0% NSR CY 2009 Production (Est.): 2 160,000 oz (Au) FY 2009 Revenu
Slide 28: Key Growth Properties
The Gold Standard of Royalty Compantes
Slide 29: Peñasquito (Goldcorp – Mexico)
Peñasquito (Goldcorp – Mexico) Royalty: 2.0% NSR (all metals) Reserve Profile Reserves: 1,2 17.4M oz (Au) 1.0B oz (Ag) 50 CY’09 production (est.): 70,000 oz (Au) 40 2.3M oz (Ag) Gold Equivalent Ounces 4 30 Estimated production start-up: (millions) 1st sulfide circuit - 2009 20 2nd sulfide circuit -
Slide 30: Peñasquito (Goldcorp – Mexico)
Peñasquito (Goldcorp – Mexico) Royalty: 2.0% NSR (all metals) Project Schedule Reserves: 1,2 17.4M oz (Au) 1.0B oz (Ag) CY’09 production (est.): 70,000 oz (Au) 2.3M oz (Ag) Estimated production start-up: 1st sulfide circuit - 2009 2nd sulfide circuit - 2010 High pressure grinding roll circuit - 2010
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Slide 33: Dolores (Minefinders – Mexico)
Dolores (Minefinders – Mexico) Royalty: 3.25% NSR (Au) 2.0% NSR (Ag) Reserves: 1 2.4M oz (Au) 126.6M oz (Ag) CY’09 production (est.): 2 80,000 oz (Au) 1.4M oz (Ag) Mine life: 15 years Annual royalty revenue potential: ~ $5.0M 3 1 Reserves as of March 25, 2008 (reserve numbers have not been updated t
Slide 34: Dolores (Minefinders – Mexico)
Dolores (Minefinders – Mexico) Royalty: 3.25% NSR (Au) Production Profile 2.0% NSR (Ag) 250 Reserves: 1 2.4M oz (Au) 126.6M oz (Ag) Gold Equivalent Ounces 3 200 CY’09 production (est.): 2 (thousands) 85,000 oz (Au) 150 1.8M oz (Ag) Mine life: 15 years 100 Annual royalty revenue potential: ~ $5.0M 3
Slide 35: A ROYALGOLD,ING The Gold Standard of Royalty Compantes
7, f, f. A ROYALGOLD,ING The Gold Standard of Royalty Compantes
Slide 36: A ROYALGOLD,ING The Gold Standard of Royalty Compantes
7, f, f. A ROYALGOLD,ING The Gold Standard of Royalty Compantes
Slide 37: Andacollo (Teck – Chile)
Andacollo (Teck – Chile) Royalty: 75% of gold until 910,000 payable ounces; 50% thereafter Ownership: 90% CDA (subsidiary of Teck Resources Limited) 10% Empresa Nacional de Minería (Chilean, state-owned mining company) Total consideration: $218M cash 1.2M shares Closing by January 29, 2010
Slide 38: Andacollo Hypogene Project
Andacollo Hypogene Project Sulfide plant production: Construction complete: 4Q’09 Commercial production: first half 2010 55,000 tonnes/day mill capacity Proven and probable reserves: 1 1.6M oz Au (394M tonnes at 0.13 gpt) Estimated annual production: 2 53,000 oz gold 76,000 tonnes copper 3 Estimated
Slide 39: TE Ron. COE NC
TE Ron. COE NC
Slide 40: Coarse Ore Conveyor
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Slide 41: Pascua-Lama (Barrick – Chile)
Pascua-Lama (Barrick – Chile) Royalty: 0.16% to 1.08% NSR > $800/oz gold = 1.08% royalty rate Reserves: 1,2 14.6M oz (Au) Estimated production: 3 Start-up – 2013 750,000 to 800,000 ounces of gold (average during first five years) 600,000 to 700,000 ounces of gold (average during life of mine) $200 t
Slide 42: Canadian Malartic (Osisko – Canada)
Canadian Malartic (Osisko – Canada) Royalty: 1 2.0% to 3.0% NSR Reserves: 2 4.7M oz (Au) Estimated production start-up: 2011 Mine life: 10 years Annual royalty revenue potential: ~ $6.0M 3 700 Production Profile 3 600 Gold Ounces (thousands) 500 400 300 200 100 2011 2012 2013 2014 2015 2016 2017 201
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Slide 45: Holt (St Andrew Goldfields – Canada)
Holt (St Andrew Goldfields – Canada) Royalty: 1 0.00013 X gold price (NSR) $1,000/oz gold = 13% royalty rate Party responsible for royalty in dispute Reserves: 2 0.5M oz (Au) Estimated production start-up: 2010 Mine life: 7 years 120 Annual royalty revenue potential: Production Profile 3 100 ~ $8.0M
Slide 46: New Asset Contribution
fp Ip A ROYALGOLD,ING The Gold Standard of Royalty Companies New Asset Contribution
Slide 47: Estimated Revenue Contribution – New Assets
Estimated Revenue Contribution – New Assets 1 100 90 80 70 60 ($ millions) 50 40 30 20 10 0 Dolores Andacollo Holt Peñasquito Canadian Pascua-Lama Estimated Total 2009 2010 2 2010 2 2011 2 Malartic 2013 2 New Revenue 2011 2 1 Refer to prior property slides for applicable footnotes 2 As estimated by
Slide 48: Estimated Revenue Contribution – New Assets
Estimated Revenue Contribution – New Assets 1 100 90 80 70 60 ($ millions) 50 40 30 20 10 0 Dolores Andacollo Holt Peñasquito Canadian Pascua-Lama Estimated Total Fiscal 2009 2009 2010 2 2010 2 2011 2 Malartic 2013 2 New Revenue Actual Royalty 2011 2 Revenue 1 Refer to prior property slides for appl
Slide 49: Proven Performance and Financial Strength
Proven Performance and Financial Strength
Slide 50: Execution on Growth Strategy
Execution on Growth Strategy Increased reserves Diversification of revenue Strong financial growth Enhanced shareholder return Solid balance sheet
Slide 51: Reserve Growth
Reserve Growth 1 Gold reserves increased 30% to 64.2M ounces 2 Precious metals account for 82% of gold equivalent reserves 3 Organic growth has offset consumption over the last five years Gold Reserves Subject to Royalty Interests 120 100 Gold Equivalent Ounces 3 80 (millions) 60 40 20 2004 2005 200
Slide 52: Reserve Growth
Reserve Growth 1 Gold reserves increased 30% to 64.2M ounces 2 Precious metals account for 82% of gold equivalent reserves 3 Organic growth has offset consumption over the last five years Gold Reserves Subject to Royalty Interests Gold Reserves Subject to Royalties (calendar years) 120 60 100 Gold E
Slide 53: Revenue Diversification
Revenue Diversification 80 70 60 millions) 50 ($ mi 40 30 20 10 2005 2006 2007 2008 2009 (fiscal years ended June 30) Cortez - Pipeline Troy Peñasquito Dolores Twin Creeks Los Chancas Goldstrike - SJ Claims Robinson Joe Mann Benso El Toqui Leeville Mulatos El Limon El Chanate Mt. Goode Bald Mountain
Slide 54: Strong Financial Growth
Strong Financial Growth Gross Financial Results Per Share Financial Results $90 2.25 $80 2.00 $70 1.75 $60 1.50 llions) ($ millions ($ per share) $50 1.25 $40 1.00 $30 0.75 $20 0.50 $10 0.25 $0 0.00 2005 2006 2007 2008 1 2009 2 2005 2006 2007 2008 1 2009 2,3 (fiscal years ended June 30) (fiscal year
Slide 55: Enhanced Shareholder Return
Enhanced Shareholder Return Royal Gold vs. Gold Price and Index Five-Year Total Shareholder Return 1 (indexed June 30, 2004 = 100) (November 2004 – November 2009) 400 250% 350 200% 200% 300 250 150% 200 100% 87% 150 100 50% 50 0% 2004 2005 2006 2007 2008 2009 Average North Royal Gold American Majors
Slide 56: Financial Strength
Financial Strength Market Information (as of 11/16/09) NASDAQ: RGLD; TSX: RGL Dividend Growth Market cap: $2.1B 0.36 Average daily volume (TTM): 894,000 0.32 Shares Outstanding 0.28 0.26 Common: 40.7M 0.22 Insider ownership: 8% Financial Cash: $307M 1 Total debt: $0 2005 2006 2007 2008 2009 2010 Ava
Slide 57: Royal Gold, Inc. contact details
ROYAL GOLD, INC. 1660 Wynkoop Street Denver, CO 80202-1132 PHONE 303.573.1660 FAX 303.595.9385 EMAIL info@royalgold.com WEB www.royalgold.com 57