Royal Gold, Inc. · NASDAQ:RGLD
Royal Gold — BC Natural Resource Forum (January 2014)
39 slides from Royal Gold's conference presentation, Jan 22, 2014
Slide 1: Financing Mine Development and Construction
BC Natural Resource Forum Financing Mine Development and Construction Tony Jensen President and CEO January 22, 2014
Slide 2: Cautionary Statement
Cautionary Statement 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 factors that could cause actual results to differ m
Slide 3: Agenda
Agenda Overview Sector Financing Investment Criteria Case Studies Royal Gold Overview Royalty/Stream Sector Overview Royalty/Stream Financing Investment Criteria Case Studies January 22, 2014 3
Slide 4: Royal Gold Overview
Royal Gold Overview World Class Royalty Company 3 I ROYALGOLD,INC
Slide 5: Quality Portfolio of Royalty/Stream Assets
Quality Portfolio of Royalty/Stream Assets Overview Sector Financing Investment Criteria Case Studies Established in 1981 Market cap – $3.4B (as of 1/15/14) Operating cash flow (FY2013) – $172.6M Over 200 properties with royalties and/or streaming interests: – 38 producing assets – 20 development st
Slide 6: Portfolio of over 200 Assets
Portfolio of over 200 Assets Overview Sector Financing Investment Criteria Case Studies January 22, 2014 6
Slide 7: Cornerstone Producing Assets
Cornerstone Producing Assets Overview Sector Financing Investment Criteria Case Studies Contribution to Andacollo Royalty: 1 75% of Au production (NSR) FY2014 Q1 revenue Reserves: 2 1.8M oz (Au) 30% Estimated Mine Life: 20+ Years or $17.2M Contribution to Peñasquito Royalty: 2.0% NSR FY2014 Q1 reven
Slide 8: Other Cornerstone Assets
Other Cornerstone Assets Overview Sector Financing Investment Criteria Case Studies Mt. Milligan Stream: 1 52.25% of payable gold Reserves: 2 6.0M oz (Au) Est. Mine Life: 22 Years Commercial Prod: Q1 CY14 Est. Production: 3 262k oz (Au)/yr • Production ramp-up • First concentrate production in Septe
Slide 9: Positioned to Grow
Positioned to Grow Overview Sector Financing Investment Criteria Case Studies Embedded Growth – Positioned to grow volume ~50% from Mt. Milligan alone 350 Growth Compared with Peers 6,7 300 (5-Year est. volume growth CAGR) Pascua Lama Thousands of Gold Equivalent Ounces 18.00% 250 16.00% Mt. Milliga
Slide 10: Strong Financial Position
Strong Financial Position Overview Sector Financing Investment Criteria Case Studies Financially Robust – Mt. Milligan investment complete – Low costs with Adjusted EBITDA 1 margin at ~90% of revenue – Liquidity of ~$1 billion Efficient Use of Resources Financial Strength Maximizes Margins $687M $35
Slide 11: Gold Price Relationship to Economic Conditions
Gold Price Relationship to Economic Conditions Overview Sector Financing Investment Criteria Case Studies $2,000 Gold vs. US Debt Ceiling December 1993 - December 2013 $1,800 y = 0.1153x - 353.3 R² = 0.9219 $1,600 $1,400 Trend would indicate current gold Gold Price (per oz) prices should be over $1,
Slide 12: Mineral Industry Sources of Capital are Limited
Mineral Industry Sources of Capital are Limited Overview Sector Financing Investment Criteria Case Studies Capital Raised, by asset class ($B) 1 January 22, 2014 12
Slide 13: Overview of Royalty/Stream Sector
Overview of Royalty/Stream Sector
Slide 14: Decade of Rapid Growth
Decade of Rapid Growth Overview Sector Financing Investment Criteria Case Studies Metal royalty model established by Franco Nevada (1985) and Royal Gold (1992) Silver Wheaton began metal streaming in 2004 Business model success has attracted new companies Precious and Base Metal Royalty/ Streaming C
Slide 15: Sector Market Capitalization of ~US$16.3B
Sector Market Capitalization of ~US$16.3B Overview Sector Financing Investment Criteria Case Studies Sector market capitalization dominated by three Companies: Silver Wheaton, Franco Nevada and Royal Gold 30,000 Global Royalty Corp Premier Royalty Market Capitalization Gold Royalties Corporation 25,
Slide 16: Royalty/Stream Companies Rank Amongst Top 20 Precious Metal Companies
$US Millions 0 10000 15000 20000 5000 Goldcorp Inc. January 22, 2014 Barrick Gold Corporation Fresnillo PLC Overview Newmont Mining… Polyus Gold International… Silver Wheaton Corp. Yamana Gold, Inc. Franco-Nevada Corporation Randgold Resources Limited Newcrest Mining Limited Sector Kinross Gold Corp
Slide 17: Over US$9B Deployed Over Past 10 Years in Royalty and Stream Finance
Over US$9B Deployed Over Past 10 Years in Royalty and Steam Finance Overview Sector Financing Investment Criteria Case Studies Royal/stream finance is now a well known source of capital with nearly 70 transactions over past decade Streams can be used for project development, mergers and acquisitions
Slide 18: Royalty/Stream Financing
Royalty/Stream Financing World Class Royalty Company 3 I ROYALGOLD,INC
Slide 19: Stream and Royalty Finance Investment Structure
Stream and Royalty Finance Investment Structure Overview Sector Financing Investment Criteria Case Studies Streams and royalties are financing options that involve the investment of money in return for a percentage of revenue or payable metal production Mining Company Royalty Financing Life of Perce
Slide 20: Stream and Royalty Finance Key Features
Stream and Royalty Finance Key Features Overview Sector Financing Investment Criteria Case Studies ROYALTY STREAM Receive a percentage of the production Purchase all, or percentage of the designated from a mine, usually over the LOM, often OWNER HOLDS RIGHT TO: metal at a fixed or variable (% of spo
Slide 21: Stream and Royalty Finance Advantages
Stream and Royalty Finance Advantages Overview Sector Financing Investment Criteria Case Studies Return of investment based on No joint venture involvement production Royal Gold provides additional No principal amortization or investor exposure maturity date 4-6 week due diligence Deliveries can mat
Slide 22: Stream and Royalty Finance Comparison Summary
Stream and Royalty Finance Comparison Summary Overview Sector Financing Investment Criteria Case Studies STREAMS PROJECT DEBT CORPORATE DEBT EQUITY JOINT VENTURE ROYALTY Based on reserve tail; Term Max 10-12 years 5-30 years Mine Life Permanent Mine Life Typically secured but Partner claim on Recour
Slide 23: Stream and Royalty Finance Frequently Asked Questions
Stream and Royalty Finance Frequently Asked Questions Overview Sector Financing Investment Criteria Case Studies Do streams or royalties have minimum delivery Most streams and royalties are done without minimum delivery requirements. requirements? Do streams or royalties have to Royalties and stream
Slide 24: Stream and Royalty Finance Frequently Asked Questions
Stream and Royalty Finance Frequently Asked Questions Overview Sector Financing Investment Criteria Case Studies Do streams cause tax Streams can typically be structured so taxes are paid when metal is produced. problems for operators? No, although we prefer more advanced projects, streams can provi
Slide 25: Royal Gold Investment Criteria
Royal Gold Investment Criteria
Slide 26: Investment Criteria
Investment Criteria Overview Sector Financing Investment Criteria Case Studies Deposit Quality People Country/Location ― Legal system ― Title and social stability ― Fair and transparent political and regulatory systems and expectations ― Regulatory environment and stability ― Infrastructure ― Tax an
Slide 27: Case Studies
Case Studies aaa | If, ROYALGOLD,INC
Slide 28: Mt. Milligan Transaction Summary
Mt. Milligan Transaction Summary Overview Sector Financing Investment Criteria Case Studies Three Transactions in exchange for 52.25% of payable gold: ― I. 25% of gold for $311.5M – July 2010 ― II. 15% of gold for $270M – December 2011 ― III. 12.15% of gold for $200M – August 2012 Total investment:
Slide 29: Mt. Milligan Profile – Operations
Mt. Milligan Profile – Operations Overview Sector Financing Investment Criteria Case Studies 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
Slide 30: Mt. Milligan Profile – Operations (cont.)
Mt. Milligan Profile – Operations (cont.) Overview Sector Financing Investment Criteria Case Studies 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
Slide 31: Mt. Milligan Profile – Operations (cont.)
Mt. Milligan Profile – Operations (cont.) Overview Sector Financing Investment Criteria Case Studies Infrastructure ― Low cost hydropower provided by new 92 Km power line ― Adequate water balance for processing ― Road access to regional communities ― Port access by road or rail to Vancouver or Port
Slide 32: Thompson Creek Profile
Thompson Creek Profile Overview Sector Financing Investment Criteria Case Studies Current market cap: ~$500M (1/15/14) Operating facilities: ― Thompson Creek (Idaho) ― Endako (British Columbia) ― Langeloth Met Facility (Pennsylvania) Reserves: 1 ― 6.02M oz. Au ― 515.9M lbs Mo ― 2.1B lbs Cu 2012 reve
Slide 33: Plan of Arrangement Between Terrane Metals and Thompson Creek
Plan of Arrangement Between Terrane Metals and Thompson Creek Overview Sector Financing Investment Criteria Case Studies Terrane owned 100% of Mt. Milligan Goldcorp was a 52% shareholder on a fully diluted basis Thompson Creek announced acquisition of Terrane: ― Total consideration ~C$654M • 0.052 s
Slide 34: Acquisition Rationale
Acquisition Rationale Overview Sector Financing Investment Criteria Case Studies Pure gold transaction Estimated Annual Contribution Long reserve life from Mt. Milligan 350 Attractive host country 300 Pascua Lama Substantial royalty revenue Thousands of Gold Equivalent Ounces 250 Experienced operato
Slide 35: KSM Option
KSM Option Advancement of Feasibility Study Overview Sector Financing Investment Criteria Case Studies Seabridge Gold – British Columbia, Canada June 2011: Initial acquisition from Seabridge Gold – Purchase of 1.0M shares of Seabridge common stock for C$30M – Earned option to buy 1.25% NSR royalty o
Slide 36: KSM Recent Exploration Success
KSM Recent Exploration Success Overview Sector Financing Investment Criteria Case Studies Favorable results from recent drilling at Deep Kerr notes substantial widths grading at least 0.5% copper 1 January 22, 2014 36
Slide 37: Endnotes
Endnotes Many of the matters in these endnotes and the accompanying slides constitute forward looking statements and are subject to numerous risks, which could cause actual results to differ. See complete Cautionary Statement on page 2. PAGE 7 CORNERSTONE PRODUCING ASSETS 5. Approximately 20% of the
Slide 38: Endnotes (cont.)
Endnotes (cont.) Many of the matters in these endnotes and the accompanying slides constitute forward looking statements and are subject to numerous risks, which could cause actual results to differ. See complete Cautionary Statement on page 2. PAGE 10 STRONG FINANCIAL POSITION PAGE 30 MT. MILLIGAN
Slide 39: Royal Gold contact details
1660 Wynkoop Street Denver, CO 80202-1132 303.573.1660 info@royalgold.com www.royalgold.com
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