Royal Gold, Inc. · NASDAQ:RGLD
Royal Gold — Investor Presentation (July 2022)
43 slides from Royal Gold's investor presentation, July 2022
Slide 1: Investor Presentation July 2022
Investor Presentation July 2022
Slide 2: Cautionary Statements
Cautionary Statements Forward-Looking Statements: 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 historical fact. Forward- looking statements are not guarantees of futu
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: 185 12 $654M 360,900 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 – 6/30/22) Indexed since the formation of the GDX 5.0 1.84 Beta vs. Gold Price GDX Will provide higher 4.5 RGLD leverage to gold… β Gold 4.0 Spot Gold 3.67 SP5
Slide 6: Gold is a Unique Strategic Asset
Gold is a Unique Strategic Asset Gold is uncorrelated, and is a diversifier that provides a hedge against systemic risk, currency depreciation and inflation Correlation: Gold vs. US Stock Returns Value of Gold, Commodities and Currencies Average Annual Return: Gold vs. Commodities Weekly returns in
Slide 7: 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 8: Optionality to Reserve and Resource Growth
Optionality to Reserve and Resource Growth 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. PUEBLO VIEJO WASSA Millions of Gold Ounces5 70% Millions of Gold Ounces of Initial Inv
Slide 9: 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/EMPLOYEE2,3 (US$ 000s as of Mar. 31, 2022) $993 $670 (US$ 000s 12 Mo. Ending Mar. 31, 2022) $1,960 $1,296 $630 $1,509 $2
Slide 10: Highly Efficient Business Model
Highly Efficient Business Model High margin business model drives profitability… …for peer-leading margins and metrics CASH FLOW METRICS1 US$ 654M Revenue Adjusted EBITDA Margin2 80% US$ 523M Adjusted EBITDA US$ 462M Operating Cash Flow Operating Cash Flow/Revenue 71% Cash G&A3 Expenses/Revenue 4% U
Slide 11: Business Model Offers Protection Against Cost Inflation
Business Model Offers Protection Against Cost Inflation Royal Gold has limited exposure to operator escalation • Changes in operating and capital costs are absorbed by the mine operator Cost Structure Less Exposed to Variable Inputs • In commodity boom cycles, operator costs tend to US$/oz increase
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 41 PRODUCING 6 WASSA 185 19
Slide 13: Diverse Portfolio Will Safeguard Stable, Predictable and Sustainable Cash Flow
Diverse Portfolio Will Safeguard 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 will • Principal property revenues • Revenue contributio
Slide 14: Portfolio Spans the Stages of Project Development
Portfolio Spans the Stages of Project Development Properties at various stages of development provide optionality and organic revenue growth potential • Organic growth occurs when projects advance through the pipeline to revenue production EXPLORATION EVALUATION DEVELOPMENT PRODUCTION 72 53 19 41 •
Slide 15: Expected Catalysts in the Portfolio
Expected Catalysts in the Portfolio In production Organic growth opportunities expected to add to portfolio revenue and duration Defined startup date Longer-dated production KHOEMACAU – ramp up to full production targeted by Q4/2022 PUEBLO VIEJO – plant and tailings expansions to maintain production
Slide 16: Newest Assets Will Provide Attractive Growth Potential
Newest Assets Will Provide Attractive Growth Potential KHOEMACAU RED CHRIS NX GOLD CÔTÉ BOTSWANA CANADA BRAZIL CANADA • 100% payable silver stream • 1% NSR royalty on a producing • 25% gold stream on a producing • 1% NSR royalty on the Chester 3 • First concentrate produced on copper/gold/silver min
Slide 17: Great Bear Royalties Acquisition Meets Royal Gold's Investment Criteria
Great Bear Royalties Acquisition Meets Royal Gold’s Investment Criteria The Great Bear Royalty is a unique opportunity to add an emerging world-class project to the Royal Gold portfolio • Kinross is a reputable and top tier operator with deep technical resources and a strong financial position Peo
Slide 18: Great Bear Royalty adds Long-Term Duration, Scale, Optionality
Great Bear Royalty adds Long-Term Duration, Scale, Optionality NSR royalty provides straightforward life of mine exposure to the entire Great Bear Project 2.0%1 Net Smelter Return royalty: • Life of mine without stepdowns or caps (except for Kinross option1) • Covers entirety of 9,140 ha Great Bear
Slide 19: Great Bear Royalties Transaction Overview
Great Bear Royalties Transaction Overview Proposed • International Royalty Corporation (“IRC”), a wholly-owned subsidiary of Royal Gold, Inc., to acquire Transaction 100% of Great Bear Royalties Corp. (“GBR”) common shares • The sole material GBR asset is a 2.0% NSR Royalty (the “Royalty”) on the Gr
Slide 20: Sound ESG Practices are Fundamental to Success
Sound ESG Practices are Fundamental to Success Recent improved disclosure of Royal Gold’s approach to sustainability has materially improved market perception and recognition of leading ESG practices 60 51.9 50 SEVERE RISK 40 RATING HIGH 30 23.4 22.8 MEDIUM 19.1 20 9.1 10 LOW 0 2018 2019 2020 2021 2
Slide 21: ESG Overview: Sustainability Is Our Business Model
ESG Overview: Sustainability Is Our Business Model Royal Gold is committed to sustainability at the corporate and local levels, and seeks counterparties with leading approaches to ESG practices Environmental Social Governance Committed to analyzing and mitigating the Committed to supporting social c
Slide 22: 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 $21.8B Streaming is a flexible product that is relevant throughout the commodity cycle Total Stream Investments by all companies 5% Primarily Balance Prima
Slide 23: 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 − Environmental Impact − Geology, reserve/resource • Financial/Credit Analysis − Social license definition − Infrastructure − Communit
Slide 24: 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 investment • Existing cash balances • Cash flow from o
Slide 25: Liquidity and Financing Strategy
Liquidity and Financing Strategy For over 20 years, Royal Gold’s growth has been financed accretively and without significant equity dilution $4.9B Cumulative Revenue Revenue Operating Cash Flow $3.0B Cumulative Operating Cash Flow Cash G&A Expenses $298M Avg. Gold Price Cum. Cash G&A1 Expenses Shar
Slide 26: Royal Gold Offers a Consistent, Increasing and Sustainable Dividend
Royal Gold Offers a Consistent, Increasing and Sustainable Dividend Since 2000, Royal Gold shareholders have received a dividend regardless of the gold price, and Royal Gold is the only precious metal company in the S&P High Yield Dividend Aristocrats Index CONSISTENT - INCREASING - SUSTAINABLE US$/
Slide 27: Appendix
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Slide 28: 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 29: 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 30: 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 31: 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 to
Slide 32: Shareholder Base Reflects Company's Unique Position
Shareholder Base Reflects Company’s Unique Position Shareholder base is institutional with some unique characteristics • 42% of identifiable investors (34% of total) are Index investors • High-quality shareholder register, with large and long-term Identified Investor Styles institutional investors c
Slide 33: Quality Portfolio of Asset Investments
Quality Portfolio of Asset Investments MOUNT MILLIGAN $173M PEÑASQUITO $53M Au Stream: 35% Revenue* 2.1 2028 93% Royalty: 2% NSR Revenue* 6.3 2032 352% 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 re
Slide 34: Strong Runway of Growth Opportunities
Strong Runway of Growth Opportunities KHOEMACAU Investment Sources +20 2021 Red Kite $275M Ag Stream: 100% $265M 50.6 $265M Ag Cash Price: 20% of Spot years Royal Gold $265M 100% stream Overrun Facility $ 25M Ag reserves mine life start up Funded to Equity $ 75M 20% m ounces March 2022 Total $ 640M
Slide 35: 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 36: Historical Trading Multiples
Historical Trading Multiples Royal Gold is currently trading at historically attractive P/CF multiple** P / NAV P / CF 1.63x 15.0x 3.5x 60x 3.0x 50x 2.5x 40x 2.0x 1.63x 30x 1.5x 20x 1.0x 15.0x 0.5x 10x 0.0x 0x Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Sep-12 Jan-19 Jan-20 May-12 Sep-13 Jan-21
Slide 37: 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 38: Non-GAAP Measures
Non-GAAP Measures Non-GAAP Financial Measures and Certain Other Measures Overview of non-GAAP financial measures: 4. Free cash flow is a non-GAAP financial measure that is calculated by the Company as net cash provided by operating activities for a period minus acquisition of stream and royalty inte
Slide 39: Non-GAAP Measures
Non-GAAP Measures Reconciliation of non-GAAP financial measures to U.S. GAAP measures Adjusted EBITDA and Net cash to TTM adjusted EBITDA: Three Months Ended March 31, December 31, September 30, June 30, (amounts in thousands) 2022 2021 2021 2021 Net income and comprehensive income $ 65,962 $ 68,362
Slide 40: Non-GAAP Measures
Non-GAAP Measures Reconciliation of non-GAAP financial measures to U.S. GAAP measures (cont.) Cash G&A: Three Months Ended March 31, December 31, September 30, June 30, (amounts in thousands) 2022 2021 2021 2021 General and administrative expense $ 8,931 $ 8,034 $ 7,129 $ 7,212 Non-cash employee sto
Slide 41: Non-GAAP Measures
Non-GAAP Measures Reconciliation of non-GAAP financial measures to U.S. GAAP measures (cont.) Free cash flow: Three Months Ended March 31, (amounts in thousands) 2022 2021 Net cash provided by operating activities $ 101,133 $ 92,233 Acquisition of stream and royalty interests (37,800) (33,656) Free
Slide 42: Other Disclaimers
Other Disclaimers DISCLAIMER STATEMENT FOR USE OF MSCI ESG RATING THE USE BY ROYAL GOLD OF ANY MSCI ESG RESEARCH LLC OR ITS AFFILIATES (“MSCI”) DATA, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT, RECOMMENDATION, OR PROMOTION
Slide 43: Tel. 303.573.1660 investorrelations@royalgold.com www.royalgold.com
Tel. 303.573.1660 investorrelations@royalgold.com www.royalgold.com