Royal Gold, Inc. · NASDAQ:RGLD
Royal Gold — American Exploration and Mining Association Industry Outlook Luncheon 2017
29 slides from Royal Gold's conference presentation, Dec 7, 2017
Slide 1: Industry Outlook Luncheon
Industry Outlook Luncheon American Exploration and Mining Association Tony Jensen President and Chief Executive Officer December 7, 2017 NASDAQ: RGLD
Slide 2: Cautionary Statement
Cautionary Statement NASDAQ: RGLD 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 result
Slide 3: Presentation Preface - Headwinds
Presentation Preface - Headwinds NASDAQ: RGLD Gold is Under Pressure Stronger dollar • Fed rate hike in December expected, and further strengthening anticipated • US tax reform expectations Global markets rising in unison, US markets hitting all time highs US GDP at 3.3% annualized, highest in three
Slide 4: Presentation Preface - Headwinds
Presentation Preface - Headwinds NASDAQ: RGLD Gold is Under Pressure Focus on building long term value, rather than worrying Stronger dollar about short term issues • Fed rate hike in December expected, and strengthening anticipated • US tax reform expectations Global markets rising in unison, US ma
Slide 5: Buy and Hold – Creating Long Term Value
Buy and Hold – Creating Long Term Value NASDAQ: RGLD The industry must discover, permit, build and operate for long term value Agenda: Gold is Precious Gold is Valuable • Becoming increasing scarce • A surprisingly competitive investment • Longer lead times to development • Critical store of investm
Slide 6: Gold is Precious
Gold is Precious NASDAQ: RGLD Gold is a store of value because it is scarce Approximately 187,200 tonnes, equal to ~6 billion ounces mined to date1,2 Current market value of all gold mined to date is $7.8 trillion3 • 2/ of that gold has been mined since 1950 3 • Each year 2,500-3,000 tonnes of gold
Slide 7: Gold is Precious: Exploration has become less efficient
Gold is Precious NASDAQ: RGLD Gold is a store of value because it is scarce Exploration has become increasingly less efficient Source: BMO Capital Markets, SNL Metals and Mining | 7
Slide 8: Gold is Precious: Reserve grade degradation
Gold is Precious NASDAQ: RGLD Gold is a store of value because it is scarce Exploration investment hasn’t demonstrated pro rata increase in reserves Reserve grade degradation over time; not only maturing assets • South Africa dominant in 1970s • Heap leaching in the 1980s • Economies of scale in the
Slide 9: Longer lead times to development and production
Gold is Precious NASDAQ: RGLD Longer lead times to development and production Adds to value by restricting supply Initial exploration to production = 16 years (Source: S&P Global Market Intelligence) Source: Schodde, 2014 | 9
Slide 10: Buy and Hold – Creating Long Term Value
Buy and Hold – Creating Long Term Value NASDAQ: RGLD The industry must discover, permit, build and operate for long term value Agenda: Gold is Precious Gold is Valuable • Becoming increasing scarce • A surprisingly competitive investment • Longer lead times to development • Critical store of investm
Slide 11: Gold is Valuable: A competitive investment
Gold is Valuable NASDAQ: RGLD A competitive investment for all portfolios Strong historical performance in all currencies • 9.25% compounded annual average return since 2000 Relatively stable, when viewed on an annual average basis Source: Bloomberg, Sprott | 11
Slide 12: Gold is Valuable: Performance and liquidity
Gold is Valuable NASDAQ: RGLD A competitive investment for all portfolios Strong historical performance against other investment classes Tremendous global liquidity Gold's long-term performance compared to other financial assets* Gold trades more than many other major financial assets Avg. annual re
Slide 13: A critical store of value
Gold is Valuable NASDAQ: RGLD A critical store of value All fiat currencies lose value against real assets over time Most recent US Gold Standard, Bretton Woods 1944 – Nixon 1971 Currencies have depreciated over time relative to gold Gold index value 120 100 80 60 40 20 0 1900 1910 1920 1930 1940 19
Slide 14: Deflation: Making Sure It Doesn't Happen Here
Gold is Valuable NASDAQ: RGLD A critical store of value Deflation: Making Sure ‘It Doesn’t Happen Here’ • Ben Bernanke, Federal Reserve Board, November 21, 2002 “Like gold, US dollars have value only to the extent that they are strictly limited in supply. But the US government has a technology calle
Slide 15: Dollar devaluation: GDP and money supply
Gold is Valuable NASDAQ: RGLD A critical store of value More dollars in circulation without underlying GDP growth leads to dollar devaluation • Inflation is the oversupply of a currency Indexed US GDP and Money Supply 4.5 CY 1993 - October 2017 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2004 2015 1993 1994
Slide 16: Money supply increasing to fuel deficit and debt
Gold is Valuable NASDAQ: RGLD A critical store of value More dollars in circulation without underlying GDP growth leads to dollar devaluation • Inflation is the oversupply of a currency Money supply increasing to fuel deficit and debt Indexed US GDP, Gold Price, Debt O/S, & Money Supply 5.0 CY 1993
Slide 17: Gold price and US debt ceiling
Gold is Valuable NASDAQ: RGLD A critical store of value Current deadline to raise US debt ceiling is December 8, 2017 Historical Gold Price and US Debt Ceiling $2,000 December 1993 - October 2017 $22,000 $20,000 $18,000 $1,500 $16,000 $14,000 $1,000 $12,000 Source: Charles Schwab $10,000 $8,000 $500
Slide 18: World fiat monetary supply increasing rapidly
Gold is Valuable NASDAQ: RGLD A critical store of value World fiat monetary supply increasing rapidly Gold supply is essentially flat and becoming more constrained OECD M1 and Cumulative Gold Supply, Index 1=1970 Index (1=1970) Index (1=1970) 125 125 Cummulative Gold Supply OECD M1 100 100 75 75 50
Slide 19: World fiat monetary supply and gold value
Gold is Valuable NASDAQ: RGLD A critical store of value World fiat monetary supply increasing rapidly Gold supply is essentially flat and becoming more constrained According to Ben Bernanke, this is… • “equivalent to raising the prices in dollars of goods” OECD M1 and Annual Average Gold Value of Cu
Slide 20: Successful Precious Metal Companies are at a Premium
Buy and Hold – Creating Long Term Value NASDAQ: RGLD The industry must discover, permit, build and operate for long term value Agenda: Gold is Precious Gold is Valuable • Becoming increasing scarce • A surprisingly competitive investment • Longer lead times to development • Critical store of investm
Slide 21: Current market value of all gold equities
Buy and Hold – Creating Long Term Value NASDAQ: RGLD Current market value of all gold equities is just $230B1 vs AAPL($804B), GOOGL($621B), MSFT($563B), FB($484B), AMZN($471B) Value in $USD 1 All market data from S&P Capital iQ. Based on average market capitalization, in $USD, for the period 7-1-201
Slide 22: Cash Flow - Operating cash flow up 56%
Cash Flow - Creating Long Term Value NASDAQ: RGLD Operating cash flow up 56% over prior year Pueblo Viejo was a major revenue driver Cash from Operations (OCF) Versus Gold Price FY13-17 Incremental $M Revenue by Property FY16 to FY17 FY17 Wassa Cortez Other $266m $2,000 Revenue Prestea $0.4 $0.4 Peñ
Slide 23: Diverse Portfolio - Creating Long Term Value
Efficiency Diverse Portfolio - Creating Long Term Value NASDAQ: RGLD 195 property interests, of which 40 are producing1,2 and 21 are in development 87% revenue from precious metals3 89% of revenue from Canada, Chile, US, Mexico and Dominican Republic3 . 1 Producing properties not highlighted include
Slide 24: Strong Margins - Gross Margin
Gross Margin 20% 40% 60% 80% 100% 0% NYSE:FLR NYSE:ADM NasdaqGS:ESRX NYSE:LLL NYSE:SLB NasdaqGS:EXPD NasdaqGS:PCAR NYSE:FTI NYSE:TXT NYSE:CNC NYSE:LYB NYSE:UPS NYSE:GD NYSE:DLPH NYSE:ADS NYSE:HRL NYSE:ALL NasdaqGS:PDCO NYSE:CSRA NYSE:PH NYSE:CMI NYSE:DTE NYSE:DVA NasdaqGS:HSIC NYSE:HPE NYSE:DAL NYSE
Slide 25: Lean Structure - Revenue per employee
Lean Structure - Creating Long Term Value NASDAQ: RGLD Our revenue per employee is higher than 497 of the S&P 500 Revenue per employee NYSE:VTR NasdaqGS:GILD NasdaqGS:CBOE NYSE:DHI NYSE:NBL NYSE:NRG NYSE:PXD NYSE:CF NasdaqGS:VRSN $3m $11M $19M $25M (REIT) NYSE:HPQ NasdaqGS:SNI NYSE:TRV (REIT) NYSE:A
Slide 26: Discipline - Millions of Shares Outstanding
Millions of Shares Outstanding at June 30, 2017 Discipline 200 400 600 800 1,000 1,200 1,400 1,800 0 1,600 Royal Gold, Inc. *Torex Gold Resources Inc Endeavour Mining Corporation Randgold Resources Limited Osisko Gold Royalties Ltd. *SSR Mining Inc. Fortuna Silver Mines Inc. *Pan American Silver Cor
Slide 27: Shareholder Return - Annual Dividends Per Share
Discipline Shareholder Return - Creating Long Term Value NASDAQ: RGLD 19% CAGR in dividends per share since 2001, and currently equates to $1.00 per share, a 1.2% annual yield, and an average 22% OCF yield1 Dividend Per Share Operating Cash Flow Yield Average Gold Price (source: Kitco) $1.00 $1,800
Slide 28: Premium Performance - Total Shareholder Return
Performance Premium Performance - Creating Long Term Value NASDAQ: RGLD Our focus is total shareholder return (TSR) 20-Year Total Shareholder Return RGLD 1,400 % +1261% Percentage Change in Total Return Price 1,200 % 1,000 % 800 % 600 % Gold Price 400 % +313% 200 % S&P 500 +287% 0% -200 % Gold Price
Slide 29: Royal Gold contact details
1660 Wynkoop Street, #1000 Denver, CO 80202 303.573.1660 info@royalgold.com www.royalgold.com NASDAQ: RGLD
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