Royal Gold, Inc. · NASDAQ:RGLD
Royal Gold — Denver Gold Group Luncheon (March 2013)
30 slides from Royal Gold's conference presentation, Mar 20, 2013
Slide 1: Denver Gold Group Luncheon: The New Gold Rush: Mineral Streaming
Denver Gold Group Luncheon The New Gold Rush: Mineral Streaming March 2013 Page 1
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
Slide 3: Agenda
Agenda Royal Gold Overview Royalty and Streaming Sector Overview Royalty/Stream Financing Case Studies Page 3
Slide 4: Royal Gold Overview
Royal Gold Overview Page 4
Slide 5: Company Overview
Company Overview US$4.5B public royalty and streaming company, listed on NASDAQ (RGLD) and the Toronto Stock Exchange (RGL) Focused on gold, which contributed 68% of revenues for the last twelve months ended December 31, 2012 Attractive business model Exploration Lower risk Junior Operators No cost
Slide 6: Company Overview: Revenue and Operational Diversification
Company Overview US$4.5B public royalty and streaming company, Revenue by Operator (TTM December 31, 2012) listed on NASDAQ (RGLD) and the Toronto Stock Exchange (RGL) 22% 26% Focused on gold, which contributed 68% of 3% revenues for the last twelve months ended 5% 13% December 31, 2012 6% 7% 12% 6%
Slide 7: Company Overview: Cash Cost Margin and Historical Margins
Company Overview US$4.5B public royalty and streaming company, Royal Gold Cash Cost Margin listed on NASDAQ (RGLD) and the Toronto 1,800 Stock Exchange (RGL) 1,600 1,400 Focused on gold, which contributed 68% of 1,200 US$/Ounce revenues for the last twelve months ended 1,000 December 31, 2012 800 60
Slide 8: Company Performance
Company Performance History of increasing financial performance Significant assets in construction Mt. Milligan commissioning in calendar 2013 Pascua-Lama commissioning in calendar 2014 Historical Financial Results (US$M) ¹ Long-term Impact of Mt. Milligan and Pascua-Lama Net Gold Equivalent Ounces
Slide 9: Royalty and Streaming Sector Overview
Royalty and Streaming Sector Overview Page 9
Slide 10: Royalty/Streaming Sector
Royalty/Streaming Sector Metal royalty model established by Royal Gold (1986) and Franco Nevada (1983) Metal streaming established by Silver Wheaton in 2004 Business model success has attracted new companies Page 10
Slide 11: Royalty/Streaming Sector
Royalty/Streaming Sector Metal royalty model established by Royal Gold (1986) and Franco Nevada (1983) Metal streaming established by Silver Wheaton in 2004 Business model success has attracted new companies Sector market capitalization ~ US$23B, dominated by three companies: Silver Wheaton, Franco
Slide 12: Precious Metal Sector
Precious Metal Sector Three largest royalty/streaming companies are within the top twenty precious metal companies Page 12
Slide 13: Royalty/Stream Financing
Royalty/Stream Financing Page 13
Slide 14: Royalty/Streaming Overview
Royalty/Streaming Overview Credibility Established Mining Company Represents a well known form of project finance Production Percent of Cash Common component of a multiple source financing strategy Royal Gold Advantages relative to traditional financing options such as project debt, equity and joint
Slide 15: Royalty/Streaming Overview
Royalty/Streaming Overview Credibility Established Mining Company Represents a well known form of project finance Production Percent of Cash Common component of a multiple source financing strategy Royal Gold Advantages relative to traditional financing options such as project debt, equity and joint
Slide 16: Royalty and Streaming Financings
Royalty and Streaming Financings Wide-ranging interest throughout the industry in royalty/streaming finance Since 2004, US$8.5B deployed for corporate and project financing in 47 transactions Page 16
Slide 17: Royalty/Streaming Advantages: Repayment
Royalty/Streaming Advantages Repayment Repayment Management time No fixed amortization schedule. Investor takes risk of investment return Documentation and structure Payments are calculated based on metal production. The investor accepts risk of Shareholder returns shortfalls or delays Calculated ba
Slide 18: Royalty/Streaming Advantages: Management Time
Royalty/Streaming Advantages Repayment Management Time Management time Due diligence and documentation can be completed within 4-6 weeks Documentation and structure Reporting requirements tailored to match management reports; no special financial Shareholder returns covenant reporting requirements T
Slide 19: Royalty/Streaming Advantages: Documentation and Structure
Royalty/Streaming Advantages Repayment Documentation and Structure Management time No hedging requirements Completion guarantee and completion tests Documentation and structure are seldom necessary No debt service or operating expense Shareholder returns reserve accounts No financial covenants or as
Slide 20: Royalty/Streaming Advantages: Shareholder Returns
Royalty/Streaming Advantages Repayment Shareholder Returns Management time Transaction costs are not passed on to operator, reducing financing costs Documentation and structure No commitment fees, upfront fees or interest during construction, also reducing Shareholder returns financing costs Payment
Slide 21: Viewpoints on Streaming
Viewpoints on Streaming Royalty/Streaming Concerns and Responses Royalty/streams encumber project upside Royalties/streams have life of mine interests but the percentages can be reduced after production of an amount of metal Streams cause tax problems for the operators If structured correctly, the t
Slide 22: Case Studies
Case Studies Page 22
Slide 23: Troy
Troy Rehabilitation of a Mine Montana, United States Revett Minerals 2004 production payment between Royal Gold and Revett Minerals Investment of $7.25M for a 7.0% production payment covering all metals produced Production payment capped at $10.5M, or 90% of reserves, at the time of investment Perpe
Slide 24: Taparko
Taparko Mine Development Namantenga, Burkina Faso High River Gold In fiscal 2006, Royal Gold invested $35M to fund construction of the Taparko project In exchange for funding, Royal Gold acquired: Two concurrent production payments Fixed 15.0% payment 4.3% payment (at gold prices between $385 and $4
Slide 25: Andacollo
Andacollo Mine Expansion Region IV, Chile Teck 2010 production payment between Teck and Royal Gold Royal Gold acquired right to receive 75% of gold until 910K ozs are produced; 50% thereafter, by: Paying US$218M and issuing 1.2M shares common stock No further payments No royalty on copper production
Slide 26: Mt. Milligan
Mt. Milligan Financing M&A and Mine Development British Columbia, Canada Thompson Creek Transaction summary: 25% of gold for $311.5M in July 2010 15% of gold for $270M in December 2011 12.25% of gold for $200M in August 2012 = 52.25% of gold for $781.5M Delivery payment of $435/oz or prevailing mark
Slide 27: KSM
KSM Advancement of Feasibility Study British Columbia, Canada Seabridge Gold 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 on gold and silver for C$100M December 2012 – Second acquisition from Se
Slide 28: Footnotes
Footnotes Page 28
Slide 29: Footnotes
Footnotes PAGE 7. COMPANY OVERVIEW PAGE 25: ANDACOLLO 1. FY2009 results were impacted by two one-time gains 1. Reserves as of December 31, 2011. related to the Barrick royalty portfolio acquisition and the Benson royalty buy-back by Golden Star. The PAGE 26: MT. MILLIGAN effect of these gains was $3
Slide 30: Royal Gold contact details
1660 Wynkoop Street Denver, CO 80202-1132 303.573.1660 info@royalgold.com www.royalgold.com Page 30