Royal Gold, Inc. · NASDAQ:RGLD
Royal Gold — 42nd Nasdaq Investor Conference (June 2020)
34 slides from Royal Gold's conference presentation, Jun 15, 2020
Slide 1: 42nd Nasdaq Investor Conference
42nd Nasdaq Investor Conference June 2020 THE GOLD STANDARD IN NASDAQ: RGLD PRECIOUS METAL INVESTING 1
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: An interest in real property th
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 – 5/22/20) Indexed since the formation of the GDX 5.0 Beta vs. Gold Price 4.73 1.60 Providing higher leverage to gold… 4.5 4.0 RGLD β Gold GDX 3.5 Spot Gold 3.
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$tn …offering unique performance advantages 20 Gold price US$ 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 10 1,300 9/1/15 to 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. Reserves & Resources* Mine Life Case Study Contained Gold M oz Years 2P Reserves Mulatos – Alamos Gold M&I Resources*
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 $3,029
Slide 11: Highly Efficient Business Model
Highly Efficient Business Model High margin business model drives profitability… …for peer-leading margins and metrics CASH FLOW METRICS1 US$ 379M Revenue 78% Adjusted EBITDA Margin US$ 296M Adjusted EBITDA US$ 249M Operating Cash flow 66% Operating Cash Flow/Revenue 4% Cash G&A Expenses/Revenue US$
Slide 12: Diverse Portfolio in Established Mining Jurisdictions
Diverse Portfolio in Established Mining Jurisdictions PRINCIPAL PROPERTIES 1 ANDACOLLO Region IV, Chile 2 CORTEZ 3 Nevada, USA 7 3 3 MOUNT MILLIGAN British Columbia, Canada 2 2 4 PEŇASQUITO 4 5 Zacatecas, Mexico 4 5 6 5 PUEBLO VIEJO Sanchez Ramirez, Dominican Republic 6 6 WASSA 1 Western Region, Gha
Slide 13: High Quality Portfolio in Favorable Cost Position
High Quality Portfolio in Favorable Cost Position Approximately 60% of revenue from assets in 1 st 90% from below 4th quartile and 2nd quartile of cash cost curve 100% 4th Q 9% $36 75% Cash Cost Percentile1 Rainy River Carmen de Andacollo 3rd Q Penasquito 31% $129 50% Mount Milligan Wassa 2nd Q 35%
Slide 14: Portfolio Updates
Portfolio Updates MOUNT MILLIGAN PUEBLO VIEJO CORTEZ KHOEMACAU CANADA DOMINICAN REPUBLIC USA BOTSWANA • Technical report released 3/2020 • Plant expansion engineering • 2020 LOM Plan • Construction 43% complete (to design and costing completed in Mar. 31, 2020) • LOM Payable Au Production: • Forecas
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 PROJECT DEVELOPMENT $18.6B 52% USE OF $3 Total Stream Investments by all companies US$ M BALANCE SHEET PROCEEDS 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 plan prioritizes forms of capital in the following priority: balance sheet, dividends and investment 2 • Existing cash balances • Cash flow
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 $3.8B Cumulative Revenue Revenue $2.3B Operating Cash Flow Cumulative Operating Cash Flow Cash G&A Expenses $255M Cum. Cash G&A Expenses Avg. Gold Price Sha
Slide 21: Royal Gold Offers a Consistent, Increasing and Sustainable Dividend
Royal Gold Offers a Consistent, Increasing and Sustainable Dividend Since 2000, Royal Gold shareholders have received a dividend regardless of the gold price CONSISTENT - INCREASING - SUSTAINABLE US$ $1.20 $2,000 18% $1.00 Dividend Payout Ratio Gold Price $1,800 Dividend CAGR $1,600 (2001-2019) $1,4
Slide 22: Appendix
Appendix Appendix THE GOLD STANDARD IN PRECIOUS METAL INVESTING 22
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: Independent Board of Directors
Independent Board of Directors Highly capable, independent board, with deep experience across the gold sector Director Qualifications William Kevin William M. C. KevinJamie Christopher Jamie C. ChristopherRonald Ronald J.SybilSybil E. and Experience HayesHayes McArthur Sokalsky McArthur SokalskyThom
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 Element When Performance Measures Measuring Period How Payout Determined financial, operational
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 Identified Investor Styles • Top shareholders show little movement, resulting in some Yield limitations on shares
Slide 28: Quality Portfolio of Asset Investments
Quality Portfolio of Asset Investments MOUNT MILLIGAN $93M PEÑASQUITO $19M Au Stream: 35% Revenue* 2.4 2028 62% Royalty: 2% NSR Revenue* 8.1 2028 245% 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 retur
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 $136M Ag Cash Price: 20% of Spot years Royal Gold $265M 80% stream Overrun Facility $ 25M Ag reserves mine life estimated Funded to Equity $ 75M m ounces $265M start up April 2020
Slide 30: Historical Trading Multiples
Historical Trading Multiples Streaming Companies have historically traded at relatively high P/NAV and P/CF multiples Peer Range Royal Gold Peer Range Royal Gold 3.5x 60.0x 3.0x 50.0x 2.5x 2.31x 40.0x 2.0x P / NAV P / CF 30.0x 1.5x 20.0x 20.5x 1.0x 10.0x 0.5x -- -- Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
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 Nine Months Ended Twelve Months Ended March 31, March 31, March 31, (amounts in thousands) 2020 2019 2020 2019 2020 2019 Net income and comprehensive income $ 38,292 $ 28,594 $ 1
Slide 33: Non-GAAP Measures
Non-GAAP Measures Reconciliation of non-GAAP financial measures to U.S. GAAP measures (cont.) Net debt and net debt to adjusted EBITDA: March 31, (amounts in thousands) 2020 Debt $ 100,154 Debt issuance costs 4,846 Cash and equivalents (93,715) Net debt $ 11,285 Twelve months ended March 31, 2020 ad
Slide 34: Appendix
Appendix Tel. 303.573.1660 investorrelations@royalgold.com www.royalgold.com THE GOLD STANDARD IN PRECIOUS METAL INVESTING 34
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