Royal Gold, Inc. · NASDAQ:RGLD
Royal Gold — Scotiabank Mining Conference 2020
35 slides from Royal Gold's conference presentation, November 2020
Slide 1: Investor Presentation November 2020
Investor Presentation November 2020
Slide 2: Cautionary Statement
Cautionary Statement Cautionary “Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995: This presentation includes “forward-looking statements” within the meaning of U.S. federal securities laws. Forward-looking statements are any statements other than statements of histo
Slide 3: Company Overview
Company Overview Opportunity to capture value in the precious metals sector without incurring many of the costs and risks associated with mining operations Dual Business Segments… …Across A Diverse, Gold-Focused Portfolio… …With Standout Performance Royalty Interests: 188 12 $499M 320,000 An interes
Slide 4: Royal Gold: Core Attributes
Royal Gold: Core Attributes Differentiated model with disciplined capital management and a focus on shareholder returns UNIQUE Business model provides optionality to gold price and production and reserve growth MODEL Efficient model with high operating margin and revenue generation per employee
Slide 5: Royal Gold: Leverage to Gold with Market-Leading Return
Royal Gold: Leverage to Gold with Market-Leading Return A stable, sustainable investment… …with a heritage of market outperformance (5/22/06 – 10/30/20) Indexed since the formation of the GDX 5.0 1.77 Beta vs. Gold Price 4.5 GDX Providing higher leverage RGLD to gold… 4.11 β Gold 4.0 Spot Gold SP500
Slide 6: Gold: As an Investment
Gold: As an Investment Gold is a strategic asset… 20 Year CAGR Real estate As of December 31, 2019 Gold EM bonds • A market that has outperformed many key asset classes Private equity EM stocks over a number of periods US stocks Hedge funds • A market that has outperformed the generic commodity US b
Slide 7: Gold: As an Investment
Gold: As an Investment Negative debt US$tn Gold price US$ …offering unique performance advantages 20 1,600 Gold Price vs. 1,500 Negative 15 • Well positioned in a period of low interest rates and Yielding Debt 1,400 political, economic and social uncertainty Monthly figures from 9/1/15 to 12/31/19 1
Slide 8: Royal Gold Offers Unique Exposure to Gold
Royal Gold Offers Unique Exposure to Gold Exploration No Direct No Direct Exposure Portfolio Sustainable Upside / Exposure to Exposure to to Gold Diversification Dividend Optionality Operating Costs Capital Costs ETFs, Bars and Coins Senior Operating Companies Junior Operating Companies Development
Slide 9: Optionality
Optionality Royal Gold seeks to provide exposure to resource growth and metal price optionality. Resource growth and mine life extensions can significantly enhance returns over time. Case Study Reserves & Resources* Mine Life Contained Gold M oz Years Mulatos – Alamos Gold 2P Reserves • Royal Gold a
Slide 10: Highly Efficient Business Model
Highly Efficient Business Model The efficiency of Royal Gold’s business model exceeds that of the largest mining and technology companies ENTERPRISE VALUE1/EMPLOYEE2 TOTAL REVENUE/EMPLOYEE2 (US$ 000s as of Apr. 30, 2020) $515 $474 (US$ 000s 12 Mo. Ending Dec. 31, 2019) $1,877 $938 $637 $2,414 $3,029
Slide 11: Highly Efficient Business Model
Highly Efficient Business Model High margin business model drives profitability… …for peer-leading margins and metrics CASH FLOW METRICS1 US$ 499M Revenue Adjusted EBITDA Margin2 78% US$ 388M Adjusted EBITDA US$ 341M Operating Cash Flow Operating Cash Flow/Revenue 68% Cash G&A3 Expenses/Revenue 4% U
Slide 12: Diverse Portfolio in Established Mining Jurisdictions
Diverse Portfolio in Established Mining Jurisdictions PRINCIPAL PROPERTIES 1 ANDACOLLO 3 Region IV, Chile 3 2 2 CORTEZ Nevada, USA 4 5 3 MOUNT MILLIGAN 4 British Columbia, Canada 5 6 6 4 PEŇASQUITO 7 Zacatecas, Mexico 1 5 PUEBLO VIEJO 1 Sanchez Ramirez, Dominican Republic 40 PRODUCING 6 WASSA 188 17
Slide 13: Diverse portfolio safeguards stable, predictable and sustainable cash flow
Diverse portfolio safeguards stable, predictable and sustainable cash flow Royal Gold’s revenue is sourced from a geographically and operationally diverse portfolio, underpinned by primary precious metals mines • Globally-diverse portfolio minimizes • Principal property revenues • Revenue contributi
Slide 14: Portfolio Updates
Portfolio Updates KHOEMACAU PUEBLO VIEJO PEAK GOLD JV WASSA/PRESTEA BOTSWANA DOMINICAN REPUBLIC USA GHANA • Construction 70% complete (to • Plant expansion EIA submitted, • Project interests sold to Kinross, • Stream with Golden Star September 30, 2020) orders placed for long lead items a proven dev
Slide 15: ESG: Our Role in Ensuring a Sustainable Future
ESG: Our Role in Ensuring a Sustainable Future Royal Gold is committed to analyzing and mitigating the environment around us, the social impacts of our local offices, and the operations in which we are involved • We proudly endorse the Responsible Gold Mining Principles of the World Gold Council and
Slide 16: ESG: Our Role in Ensuring a Sustainable Future
ESG: Our Role in Ensuring a Sustainable Future Royal Gold seeks to assess the impact of its investments during the process of assessing all project specific risks • Initial due diligence • Internal risk assessment and board review In 2018, the Peñasquito mine, then owned by Goldcorp, constructed and
Slide 17: Stream and Royalty Financing is Significant
Stream and Royalty Financing is Significant Stream and royalty financing has become a mainstream source of capital to the global mining industry $5 40% $4 $18.6B PROJECT DEVELOPMENT 52% USE OF $3 Total Stream Investments by all companies BALANCE SHEET PROCEEDS US$ M RESTRUCTURING/ All Industry VALUE
Slide 18: Robust Due Diligence Drives Disciplined Approach to Acquisitions
Robust Due Diligence Drives Disciplined Approach to Acquisitions Royal Gold’s due diligence process includes: • Management references • ESG • Technical Due Diligence • Infrastructure • Environmental Impact • Geology, reserve/resource • Marketing (concentrates) • Financial/Credit Analysis • Social li
Slide 19: Strong Liquidity Position and Financing Strategy Drive Shareholder Returns
Strong Liquidity Position and Financing Strategy Drive Shareholder Returns We anticipate financing acquisitions with non-dilutive Disciplined capital allocation prioritizes forms of capital in the following priority: balance sheet, dividends and investment2 • Existing cash balances • Cash flow from
Slide 20: Liquidity and Financing Strategy
Liquidity and Financing Strategy For almost 20 years, Royal Gold’s growth has been financed accretively and without significant equity dilution $3.9B Cumulative Revenue Revenue Operating Cash Flow $2.4B Cumulative Operating Cash Flow Cash G&A Expenses $264M Avg. Gold Price Cum. Cash G&A1 Expenses Sh
Slide 21: Royal Gold Offers a Consistent, Increasing and Sustainable Dividend
Royal Gold Offers a Consistent, Increasing and Sustainable Dividend Since 2000, Royal Gold shareholders have received a dividend regardless of the gold price CONSISTENT - INCREASING - SUSTAINABLE US$/share US$/oz $1.40 $2,200 17% $1.20 Dividend Payout Ratio Gold Price $2,000 $1,800 Dividend CAGR (FY
Slide 22: Appendix
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Slide 23: Stream/Royalty Investment Process
Stream/Royalty Investment Process Royal Gold’s role in the mining value chain can be tailored to fit the needs of the operating partner EXPLORATION DEVELOPMENT PRODUCTION Royal Gold Payment • Investment is typically • Investment typically • Investment typically in the form of a in the form of a in t
Slide 24: Stream/Royalty Detail
Stream/Royalty Detail From a cash flow perspective, streams and royalties are comparable in that the revenue from a stream less the ongoing cash price paid roughly equals a royalty-like interest in production ROYALTIES • Typically structured as gross smelter return (GSR), net smelter return (NSR), n
Slide 25: Experienced Independent Directors
Experienced Independent Directors Highly capable, independent board, with deep experience across the gold sector William Hayes Fabiana Chubbs Kevin McArthur Independent Director and Independent Director; Independent Director; Chairman of the Board; Former Former Chief Financial Former Executive Chai
Slide 26: Management Compensation Structure
Management Compensation Structure Short-term and long-term incentive program seeks to align compensation with the factors that drive and measure total shareholder return • Short Term Incentives focused on financial, operational, strategic, and individual performance • Long Term Incentives involve ne
Slide 27: Shareholder Base Reflects Company's Unique Position
Shareholder Base Reflects Company’s Unique Position Shareholder base is institutional with some unique characteristics • 35% of identifiable investors (29% of total) are Index investors • High-quality shareholder register, with large and long-term Identified Investor Styles institutional investors c
Slide 28: Quality Portfolio of Asset Investments
Quality Portfolio of Asset Investments MOUNT MILLIGAN $131M PEÑASQUITO $25M Au Stream: 35% Revenue* 2.4 2028 65% Royalty: 2% NSR Revenue* 8.1 2032 262% Au Cash Price: $435/oz Au reserves mine % of investment Au reserves mine % of investment Cu Stream: 18.75% m ounces life returned m ounces life retu
Slide 29: Strong Runway of Growth Opportunities
Strong Runway of Growth Opportunities KHOEMACAU Investment Sources 21 2021 Red Kite $275M Ag Stream: 80-100% $212M 50.9 $179M Ag Cash Price: 20% of Spot years Royal Gold $265M 80% stream Overrun Facility $ 25M Ag reserves mine life estimated Funded to Equity $ 75M $265M m ounces start up Sept 2020 T
Slide 30: Historical Trading Multiples
Historical Trading Multiples Streaming Companies have historically traded at relatively high P/NAV and P/CF multiples P / NAV P / CF 2.02x 17.6x ** Peers include Franco-Nevada, Wheaton Precious Metals, Osisko Gold Royalties, Sandstorm; peer range excludes Royal Gold. Source: BMO Capital Markets ROYA
Slide 31: Non-GAAP Measures
Non-GAAP Measures Non-GAAP Financial Measures and Certain Other Measures Overview of non-GAAP financial measures: Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by U.S. generally accepted accounting principles (“GAAP”).
Slide 32: Non-GAAP Measures
Non-GAAP Measures Reconciliation of non-GAAP financial measures to U.S. GAAP measures Adjusted EBITDA: Three Months Ended September 30, (amounts in thousands) 2020 2019 Net income and comprehensive income $ 106,674 $ 68,872 Depreciation, depletion and amortization 46,300 38,714 Non-cash employee sto
Slide 33: Non-GAAP Measures
Non-GAAP Measures Reconciliation of non-GAAP financial measures to U.S. GAAP measures (cont.) Adjusted net income and adjusted net income per share: Three Months Ended September 30, (amounts in thousands, except per share data) 2020 2019 Net income and comprehensive income attributable to Royal Gold
Slide 34: Non-GAAP Measures
Non-GAAP Measures Reconciliation of non-GAAP financial measures to U.S. GAAP measures (cont.) Free cash flow: Three Months Ended September 30, (amounts in thousands) 2020 2019 Net cash provided by operating activities $ 94,152 $ 71,239 Acquisition of stream and royalty interests (11,304) (4,362) Fre
Slide 35: Contact
Tel. 303.573.1660 investorrelations@royalgold.com www.royalgold.com