Royal Gold, Inc. · NASDAQ:RGLD
Royal Gold — Merger or Acquisition (July 2010)
27 slides from Royal Gold's merger presentation, Jul 15, 2010
Slide 1: Mt. Milligan Gold Stream Transaction: Acquisition and Project Finance Investment
Mt. Milligan Gold Stream Transaction: Acquisition and Project Finance Investment July 2010
Slide 2: Cautionary Statement Under the Private Securities Litigation Reform Act
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
Slide 3: Transaction Overview
lf A ROYALGOLD,INC The Gold Standard of Royalty Companies Transaction Overview
Slide 4: Transaction Summary
Transaction Summary 25% of payable gold from Mt. Milligan project Total consideration: $311.5M $226.5M to support Thompson Creek offer of Terrane Metals Secured with assets of the project $85.0M to finance construction of the Mt. Milligan project Contingent on sufficiency of financing and staged rec
Slide 5: Plan of Arrangement Between Terrane Metals and Thompson Creek
Plan of Arrangement Between Terrane Metals and Thompson Creek Terrane owns 100% of Mt. Milligan Goldcorp is 52% shareholder on a fully diluted basis Thompson Creek announced acquisition of Terrane: Total consideration ~ C$654M 0.052 shares of Thompson Creek for each share of Terrane C$0.90/share cas
Slide 6: Thompson Creek Profile
Thompson Creek Profile Current market cap: $1.3B Operating facilities: Thompson Creek (Idaho) Endako (British Columbia) Langeloth Met Facility (Pennsylvania) Reserves: 1 556M lbs Mo Annual production: 27M lbs Mo 2009 revenue: $373M Available liquidity: 2 $512M (as of 3/31/10) Significant operating e
Slide 7: Mt. Milligan Project
lf A ROYALGOLD,INC The Gold Standard of Royalty Companies Mt. Milligan Project
Slide 8: Project Profile – Operations
Project Profile – Operations Location: British Columbia, Canada Open pit copper/gold porphyry Estimated production (metal in concentrate): 1 262,000 ounces of gold annually during first six years 195,000 ounces of gold over life of mine Estimated mine life: 22 years Reserves and resources: 2,3 Metri
Slide 9: Project Profile – Operations (cont.)
Project Profile – Operations (cont.) Mine Production Low strip ratio: 1 0.84:1 Conventional truck, electric shovel operation Processing Conventional and proven technology Flowsheet consists of crushing, grinding and flotation to produce copper/gold concentrate 60,000 tonnes per day concentrator plan
Slide 10: Project Profile – Operations (cont.)
Project Profile – Operations (cont.) Infrastructure Low cost hydropower provided by new 92 Km power line Adequate water balance for processing Road access to regional communities; no camp required Port access by road or rail to Vancouver or Port Rupert Robust economics Life of mine net cash costs of
Slide 11: Project Development
Project Development Permits Provincial Environmental Assessment Certificate and Mines Act Permit approved Federal Environmental Assessment approved Construction: 2010 – 2012 Long lead time equipment orders placed AMEC/Fluor selected as EPCM contractor Access road construction commenced Estimated com
Slide 12: Resource Opportunity
Resource Opportunity Gold resources (M&I) are 25% higher than reserves (P&P) Reserves: 6.02M oz ($690/oz Au; $1.60/lb Cu) Resources: 7.5M oz ($800/oz Au; $2.00/lb Cu) (inclusive of reserves) Exploration potential at depth and adjacent to known resources Several exploration targets with similar geoph
Slide 13: Estimated Annual Net Revenue Potential
Estimated Annual Net Revenue Potential ~ $51M over first six years ($1,200 gold price less $400 purchase price; 97% smelter return) ~ $37M over mine life ($1,200 gold price less an average of $425 purchase price; 97% smelter return) 300 Metal Production 250 (metal in concentrate) 200 Gold Oz (thousa
Slide 14: Acquisition Rationale
Acquisition Rationale Pure gold transaction Long reserve life Attractive host country Enterprise Value 1 89% 11% Substantial royalty revenue Experienced operator 2013E Pro Forma Revenue 2 86% 14% Construction-ready project Major Environmental Assessment approvals received Equity Gold Reserves Ounces
Slide 15: Transformational Growth
Transformational Growth Pascua-Lama Interest: Mt. Milligan 1 Acquired additional 1.0% NSR Total current royalty interest of 5.23% at > $800 Au 1,850 Pascua-Lama Rationale: World class project 1,650 Long life Attractive host country IRC 1,450 Experienced operator Investment ($ millions) 1,250 Mt. Mil
Slide 16: Asset Diversification and Balance
Asset Diversification and Balance Revenue diversification achieved New long life mines replace maturing assets and provide growth In 2013, 67% of revenues expected from mines with lives greater than 15 years 2013E CY Revenue 1,3 2013E CY Revenue 1,2,3 2009 CY Revenue (including Mt. Milligan) (exclud
Slide 17: Strong Gold Focus
Strong Gold Focus Commissioning of near-term projects will grow precious metal exposure Precious metals dominant, long-term growth profile Chile Mexico Canada Australia Africa Andacollo Peñasquito Canadian Malartic Gwalia Deeps Inata Pascua-Lama Dolores Wolverine South Laverton Holt Mt. Milligan Roy
Slide 18: Reserve Growth - December 2008 to Present
Reserve Growth - December 2008 to Present Precious metal reserves subject to royalties increased 33% to 105.3M ounces 1 Precious metals equity reserves increased 203% to 4.87M ounces 1 Reserves Subject to Royalties Royalty Equity Reserves (calendar years ended December 31) (calendar years ended Dece
Slide 19: Principal Properties – Tier 1
Principal Properties – Tier 1 Taparko Cortez Robinson Mulatos Leeville Siguiri Goldstrike Peñasquito Andacollo Pascua-Lama Voisey’s Bay Mt. Milligan Royalty: 2.0% NSR Royalty: 2 75% of gold Royalty: 4,5 0.78% to Royalty: 2.7% NSR Royalty: 12 25% of payable Reserves: 1 17.8M oz (Au) production 5.23%
Slide 20: Growth Pipeline
Growth Pipeline 1 Exploration Evaluation Development Construction Ramp-Up to Full Production 2013E Growth Pipeline 5,6 Peñasquito Sulfide Processing Line 1 (2010) Dolores (2010) 200 South Laverton (2010) Las Cruces (2010) Production – Royalty Gold Equivalent Ounces Inata (2010) Andacollo (2010) Peña
Slide 21: Market Structure
Market Structure Shares Outstanding Financial Common: 1 55.2M Cash: $300M (7/12/10) (includes ~ 1.6M exchangeable shares) Total debt: $248.5M (7/12/10) Fully diluted: 55.5M CY2010 dividend: $0.36 per share Dividend yield: 2 0.80% 3,000 Market Capitalization 2,500 $1.3B Shareholder 1600% Royal Gold v
Slide 22: Footnotes
lf A ROYALGOLD,INC The Gold Standard of Royalty Companies Footnotes
Slide 23: Footnotes
Footnotes PAGE 6: THOMPSON CREEK PROFILE 1 Per Thompson Creek’s 2009 Annual Report on Form 10-K. Reserves are as of December 31, 2009. 2 Per Thompson Creek’s June 17, 2010 Fact Sheet, $523.6 million in cash and investments less $11.4 million of debt outstanding. PAGE 8: PROJECT PROFILE – OPERATIONS
Slide 24: Footnotes (cont.)
Footnotes (cont.) PAGE 16: ASSET DIVERSIFICATION AND BALANCE 1 2013 estimates assume development properties are brought into production and reach full-scale production on schedule and also assume certain metal prices and currency exchange rates. See page 26 for additional information regarding 2013
Slide 25: Footnotes (cont.)
Footnotes (cont.) PAGE 19: PRINCIPAL PROPERTIES - TIER 1 (CONT.) 6 Reserves as of December 31, 2008. 7 Royalty applies to all gold production from an area of interest in Chile. Only that portion of reserves pertaining to our royalty interest in Chile is reflected here. 8 Barrick’s May 7, 2009 press
Slide 26: Footnotes (cont.)
Footnotes (cont.) 2013E PRO FORMA FOOTNOTE: All 2013 pro forma calculations include certain properties that are currently in development stage, and we have assumed for purposes of the 2013 pro forma calculations that such development stage properties are brought into production and achieve full-scal
Slide 27: 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 27