Royal Gold, Inc. · NASDAQ:RGLD
Royal Gold — Merrill Lynch Global Metals & Mining Conference 2007
31 slides from Royal Gold's conference presentation, May 2007
Slide 1: The Leading Precious Metals Royalty Company
The Leading Precious Metals Royalty Company Merrill Lynch Global Metals & Mining Conference May 2007
Slide 2: Cautionary Statement Under the Private Securities Litigation Reform Act of 1995
Cautionary Statement Under the Private Securities Litigation Reform Act of 1995 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
Slide 3: Why Royal Gold?
Why Royal Gold? Unique and attractive business model Exposure to world class assets and premier operators Significant growth potential Strong financial performance
Slide 4: Unique and Attractive Business Model
Unique and Attractive Business Model
Slide 5: Operating Company vs. Royal Gold
Operating Company vs. Royal Gold Share of profit Exploration or production Low operating Development costs vs. High Operations Margins Environmental/ Exploration Closure Upside Operating Company Royal Gold
Slide 6: Lower Risk Investment
Lower Risk Investment Insulated from increased operating costs No capital cost contributions required No environmental or closure costs incurred Five-year change in operating cost drivers 200 Labor (Metals & Mining Services PPI) Energy (Crude Oil) 180 Construction (Iron & Steel PPI) +81% +70% 160 14
Slide 7: High Margins
High Margins Operating cash flow margins* Net profit margins* July 2006 to December 2006 July 2006 to December 2006 75% 75% 60% 60% 60% 48% 45% 45% 38% 30% 30% 19% 15% 15% 0% 0% Royal Gold North American majors** Royal Gold North American majors** * Operating cash flow margin = operating cash flow d
Slide 8: No Cost Organic Growth
No Cost Organic Growth Cortez - Pipeline Mining Complex Goldstrike Mine – SJ Claims M oz 11 10.2 M oz 8.0 8.0 8 6 6 4 3.1 2.3 2 0.3 1 0 Reserves New discoveries Reserves Reserves New discoveries Reserves 12/31/1995 & additions 12/31/2006 -2 12/31/2002 & additions 12/31/2006 -4 -4 -3.1 Depletion -9 -
Slide 9: Premium Gold Vehicle
Premium Gold Vehicle Exploration Royalty Company Junior Operators Intermediate Operators Return ETF Major Operators Index Funds Physical Gold Risk Note: This chart represents the views of Royal Gold
Slide 10: Exposure to World Class Assets and Premier Operators
Exposure to World Class Assets and Premier Operators
Slide 11: Unrivaled Geographic and Asset Diversification
Unrivaled Geographic and Asset Diversification TROY LEEVILLE MINING MONTANA COMPLEX Revett NEVADA Newmont SJ CLAIMS (GOLDSTRIKE MINE) NEVADA MULATOS Barrick MEXICO Alamos PIPELINE MINING COMPLEX TAPARKO NEVADA BURKINA FASO Barrick PEÑASQUITO High River MEXICO GOLD HILL Goldcorp NEVADA Kinross BALD M
Slide 12: Producing Royalties
Producing Royalties Pipeline Mining Complex (Nevada) Operated by Barrick Reserves*: 2.3M oz Au Production (CY07e): 491,000 oz Au 9-month FY07 Revenue: $15.1M (FY06: $16.8M) Robinson (Nevada) Operated by Quadra Reserves*: 1.0M oz Au; 1.9B lbs Cu Production (CY07e): 68,000 oz Au; 136.3M lbs Cu 9-month
Slide 13: Producing Royalties ~ Continued
Producing Royalties ~ Continued Troy (Montana) Operated by Revett Reserves*: 13.8M oz Ag; 131.2M lbs Cu Production (CY07e): 2.0M oz Ag; 16.0M lbs Cu 9-month FY07 Revenue: $1.8M (FY06: $1.7M) Bald Mountain (Nevada) Operated by Barrick Reserves*: 2.0M oz Au Production (CY07e): 91,000 oz Au 9-month FY0
Slide 14: Growing Asset Base and Revenue
Growing Asset Base and Revenue 2004 2005 2006 2007E* Pipeline Mining Complex SJ Claims Leeville Troy Mine Bald Mountain Martha Robinson Taparko Mulatos * Assuming no additional royalties added to portfolio; based on first nine months of FY2007 (July 2006 thru March 2007) results annualized Note: Siz
Slide 15: Significant Growth Potential
Significant Growth Potential
Slide 16: Pipeline for Growth
Pipeline for Growth Significant embedded growth potential Completed 6 acquisitions since December 2005 Acquisition of Battle Mountain Gold Exploration pending* Both Peñasquito and Pascua-Lama are long-lived, world-class ore deposits EXPLORATION FEASIBILITY PERMITTING CONSTRUCTION OPERATIONS Taparko
Slide 17: Peñasquito ~ Long-lived, World Class Deposit
Peñasquito ~ Long-lived, World Class Deposit Operator: Goldcorp Royalty: 2.0% NSR (on all metals) Reserves: 10.0M oz Au; 575M oz Ag; 8.0B lbs Zn; 3.7B lbs Pb Production*: Est. commencement 2008 Mine life*: 17 years Purchase price: $100M Key characteristics: Low cash costs; exploration upside (Artist
Slide 18: Additional Development Stage Royalties
Additional Development Stage Royalties Taparko (Burkina Faso) Operated by High River Gold Reserves*: 0.8M oz Au Production (Est.): 100,000 – 140,000 oz Au; Royalty payments expected in 1Q FY08 Mine life: 7 years Royalty: 15% GSR and 4.3% GSR or a sliding-scale (both sunset at certain production or r
Slide 19: Strong Growth in Reserves
Strong Growth in Reserves* Gold Silver** M oz M oz Copper** B lbs 595 50 600 2.3 2,500 2.0 2,000 42 500 1,500 40 1,000 400 500 102 30 0 2004 2005 2006* 300 21 20 19 Zinc B lbs 200 10,000 8.0 8,000 10 6,000 100 4,000 16 19 2,000 0 0 0 0 0 2004 2005 2006* 2004 2005 2006* 2004 2005 2006* * Reserves sub
Slide 20: Proposed Acquisition of Battle Mountain Gold Exploration
Proposed Acquisition of Battle Mountain Gold Exploration Acquisition Highlights JOE MANN CANADA Friendly merger WILLIAMS Campbell CANADA Consideration – 1.57M shares Barrick/Teck DOLORES Subject to due diligence MEXICO Minefinders DON MARIO BOLIVIA EL LIMON Orvana NICARAGUA Glencairn Overview of sit
Slide 21: Royalty Portfolio with Battle Mountain Properties
Royalty Portfolio with Battle Mountain Properties TROY JOE MANN LEEVILLE MINING MONTANA CANADA COMPLEX Revett Campbell NEVADA WILLIAMS Newmont CANADA SJ CLAIMS Barrick/Teck (GOLDSTRIKE MINE) NEVADA MULATOS Barrick DOLORES MEXICO MEXICO Alamos PIPELINE MINING Minefinders COMPLEX TAPARKO NEVADA BURKIN
Slide 22: Strong Financial Performance
Strong Financial Performance
Slide 23: Significantly Outperforming Gold and the Major Gold Producers
Significantly Outperforming Gold and the Major Gold Producers 800 Royal Gold stock price Gold price +582% 600 400 +145% 200 0 2002 2003 2004 2005 2006 2007 800 Royal Gold Newmont Barrick Goldcorp +582% HSBC Global Gold Index 600 400 +242% +209% +145% 200 +41% 0 2002 2003 2004 2005 2006 2007 Source:
Slide 24: Strong Track Record of Growth
Strong Track Record of Growth $50 Net Income Free Cash Flow Royalty Revenue $40 34.0 $30 ($ in millions) 26.6 $20 14.0 $10 $0 2002 2003 2004 2005 2006 2007E* Source: Company data; fiscal years ended June 30 * 9-month FY07 results annualized to June 30, 2007; figures represent the 9-month FY07 number
Slide 25: Creating Value for Shareholders
Creating Value for Shareholders Pursue acquisitions that are both Dividend Yield*: Dividend Payout Ratio**: 0.86% 27% strategic and accretive $0.30 $0.26 Efficient business model with low $0.25 $0.20 $0.22 overhead $0.20 $0.15 $0.15 $0.10 Protect margins and grow cash $0.10 flow $0.05 $0.00 2003 200
Slide 26: Why Royal Gold?
Why Royal Gold? Unique and attractive business model Exposure to world class assets and premier operators Significant growth potential Strong financial performance
Slide 27: Appendix: Summary of Royalties
Appendix: Summary of Royalties
Slide 28: Royalty Types
Royalty Types Gross smelter return (GSR) Net smelter return (NSR) Net value return (NVR) Net profit interest (NPI) 28
Slide 29: Portfolio of Producing and Developing Properties
Portfolio of Producing and Developing Properties 9-month FY06 FY07 Revenue Revenue1 Mine Location Operator Royalty (Gold unless otherwise stated) ($M) ($M) 0.40-5.0% GSR1 (sliding-scale); 0.72-9.0% Pipeline Mining Complex Lander County, NV Barrick GSR2 (sliding-scale); 0.71% GSR3; 0.39% NVR1 16.8 15
Slide 30: Exploration Royalty Portfolio
Exploration Royalty Portfolio Property1 Location Royalty Royalty Operator Santa Cruz Province Argentina 2.00% NSR Hidefield Sega Burkina Faso 3.00% NSR Orezone2 Long Valley California 1.00% NSR Vista Gold Kettukuusikko Finland 2.00% NSR Taranis Resources Rock Creek3 Montana 1.00% NSR Revett Minerals
Slide 31: I> ROYALGOLD,ING Member of World ©
I> ROYALGOLD,ING Member of World © Gold Council gold ROYAL GOLD, INC 1660 Wynkoop Street Suite 1000 Denver, Colorado 80202-1132 PHONE (303) 573-1660 FAX (303) 595-9385 101088) OhStanig eet e
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