Royal Gold, Inc. · NASDAQ:RGLD
Royal Gold — Scotiabank Senior Precious Metals Day 2016 (London)
32 slides from Royal Gold's conference presentation, June 2016
Slide 1: European Meetings
QUALITY GROWTH OPPORTUNITY European Meetings June 2016 ROYALGOLD,INC
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: Royal Gold Vision & Strategy
Royal Gold Vision & Strategy Gold Focused Reinvest Free Invest at the Pay a Be the Most Cash Flow in Troughs and Growing and Valuable, Not Long Lived be Patient at Sustainable Necessarily Properties the Top Dividend the Largest We create long term value by providing leverage and optionality to gold
Slide 4: Portfolio of Assets: Portfolio by Metal
Portfolio of Assets Portfolio by Metal 85% of Revenue from Gold in the First 9 Months of Fiscal 2016 Gold Silver Other 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 9 mths 2016 June 2016 4
Slide 5: Portfolio of Assets: Distribution of Geography
Portfolio of Assets Distribution of Geography 80% of Revenue from Canada, Chile, US & Mexico in First 9 Months of Fiscal 2016 US Canada Chile Dominican Republic Mexico Africa Australia Other 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 6: Portfolio of Assets: Cornerstone Properties
Portfolio of Assets Cornerstone Properties Cornerstone Properties generate cash flow that lead to more diversification $350,000,000 FY15: Mount Milligan $300,000,000 FY12: was 22% of net Andacollo was revenue 24% of revenue $250,000,000 Gross Revenue $USD Pueblo Viejo FY10: Golden Star $200,000,000
Slide 7: Portfolio of Assets: Current Value Drivers
Portfolio of Assets Current Value Drivers 80% of our portfolio asset value is in mines with reserve life >15 years,1 including: Pueblo Viejo, 20 years Mount Milligan, 21 years Andacollo, 20 years June 2016 7
Slide 8: Portfolio of Assets: Life of Mines
Portfolio of Assets Life of Mines 80% of our portfolio asset value is in mines with reserve life >15 years,1 including: Years in production since we've owned it Years of remaining mine life 25 20 15 Years 10 5 0 Mt. Andacollo Voisey's Pueblo Cortez Canadian Rainy River Peñasquito Leeville Robinson G
Slide 9: Capital Allocation: Opportunistic Capital Deployment
Capital Allocation Opportunistic Capital Deployment We raised money near the post-financial crisis high in the gold price, then deployed capital near the trough $1,900 RGLD Equity Raise at $1773 gold $1,800 Mt. Milligan II $1,700 Spot Gold Price in US Dollars $1,600 $1,500 Andacollo Stream $1,400 Pu
Slide 10: Growth: New Stream Transactions
Growth New Stream Transactions Estimated Annual Operator Property Strategic Rationale Net GEOs Current Status (first five years)1 Producing; one of only three mines in the world to produce >1m oz per year; first Now receiving regular Barrick Pueblo Viejo 50,500 quartile costs; high quality resources
Slide 11: Quality: Pueblo Viejo Contributions Growing
Quality Pueblo Viejo Contributions Growing Pueblo Viejo – Barrick Gold (60% interest), Dominican Republic Expected to deliver ~50,000 GEOs of production per year to Royal Gold1 Gold deliveries began in December 2015; silver deliveries began in January 2016 Latest Update (Barrick’s share)2: o C
Slide 12: Quality: Rainy River In Construction
Quality Rainy River In Construction Rainy River – New Gold, Canada December 2015 February 2016 Latest Update1: o Overall construction progress is currently 35% complete o Plant site earthworks over 90% complete o Assembly of initial mine fleet complete o Installation of mechanical, piping, electri
Slide 13: Quality: Longer life and larger interest at Andacollo
Quality Longer life and larger interest at Andacollo Andacollo – Teck, Andacollo Project: o Long operating history o Well respected partner in Teck, Canada’s largest diversified resource company o Proven and probable reserves of 1.6 Moz gold and a 22 year mine life Stream: o 100% gold stream to
Slide 14: Quality: Wassa and Prestea Transition to Underground
Quality Wassa and Prestea Transition to Underground Wassa and Prestea – Golden Star Resources, Ghana Latest Update1: o March quarter Wassa and Prestea open pit production of 53,000 ounces at cash costs estimated below $750 per ounce1, in line with full year guidance of 180,000-205,000 ounces of go
Slide 15: Quality: Cortez Crossroads On Schedule
Quality Cortez Crossroads On Schedule Cortez Crossroads – Nevada, USA Crossroads is an area of approximately 3 million ounces1 of reserves subject to Royal Gold’s 5.6% royalty interest Waste stripping in the Crossroads pit began in 20152 Dewatering wells were completed in 2015 Production exp
Slide 16: Capital Allocation: Returning Capital to Shareholders
Capital Allocation Returning Capital to Shareholders 15 straight years of dividend increases Dividend increased in calendar 2016 to $0.92 per share 29% payout ratio of operating cash flow in FY20151 21% compound annual growth rate (CAGR) since 2001 Equates to 1.6% annual yield (May 31, 2016) $1.00 1
Slide 17: Capital Allocation: Disciplined Use of Equity
Capital Allocation Disciplined Use of Equity We have demonstrated positive stewardship of shareholder capital Our share count is a fraction of our peers, and nearly unchanged since Oct 2012 Millions of Common Shares Outstanding Operating Cash Flow Per Share1,2 SLW FNV RGLD SLW FNV RGLD 500 $3.50 450
Slide 18: Investment Returns and Thesis
Long Term Value Creation Investment Returns and Thesis $1,000 25 Estimated Years of Remaining Reserves $800 20 $600 15 Millions $400 10 $200 5 $- 0 * Initial investment Cumulative net revenue through March 30, 2016 Estimated remaining mine life * Includes proceeds from sale of the Andacollo Royalty;
Slide 19: Gold Reserve Optionality and Growth
Long Term Value Creation Gold Reserve Optionality and Growth Organic growth represents reserve optionality ~20% growth in attributable gold reserves after acquisition Equity Reserve Growth Acquired Reserves $Au (EOY) 10 $2,000 9 $1,800 8 $1,600 Attributable Gold Ounces (millions) 7 $1,400 6 $1,200 G
Slide 20: Gold Reserve Waterfall
Long Term Value Creation Gold Reserve Waterfall Organic growth represents reserve optionality Organic growth largely offsets consumption 7.00 6.00 Attributable Gold Ounces (millions) 5.00 4.00 3.00 2.00 1.00 0.00 2005 Reserves Acquisitions Depletion Growth 2015 Reserves June 2016 20
Slide 21: Return on Investment Expectations
Long Term Value Creation Return on Investment Expectations Consolidated investments have paid back ~60% of investment to date Indicative simple return of ~3X investment $8,000 $6,000 $4,000 In Millions of $USD $7.3B $2,000 $0 Last 12 months $3.5B -$2,000 $2.0B -$4,000 Total capital invested to date
Slide 22: Historical Performance
Long Term Value Creation Historical Performance RGLD total return outperformed S&P 500 Total Return & Gold Price since 2000 RGLD Total Return Gold Price in US Dollars % Change S&P 500 Total Return Level % Change 3500 3000 2500 Percentage Total Return 2000 1500 1000 500 0 -500 Source: YCharts June 20
Slide 23: Mount Milligan Investment
Long Term Value Creation Mount Milligan Investment Lien Rankings1 Equipment Financing ($59M) Royal Gold – Au in concentrate Senior Secured Bonds ($314M currently) Royal Gold – Stream Unsecured Bonds ($517M) $1,200 $1,200 $1,000 Street Principal $1,000 In Millions of $USD Consensus Secured NAV of Not
Slide 24: Mount Milligan Attributes
Long Term Value Creation Mount Milligan Attributes Mount Milligan – Thompson Creek, Canada Peñasquito First quartile of worldwide production costs 21 year mine life Located in British Columbia, Canada Appeals to gold or copper production Royal Gold’s interest is secured June 2016 24
Slide 25: Royal Gold's Competitive Advantages
Royal Gold’s Competitive Advantages Creativity in deal structure Disciplined capital allocation Operating expertise Governance and oversight Incentives that foster discipline and align with shareholders June 2016 25
Slide 26: Five Year Volume Pro-forma
Five Year Volume Pro-forma Continued near-term growth expected, driven by Pueblo Viejo and Rainy River1 320,000 300,000 280,000 Net GEOs1 260,000 240,000 220,000 200,000 FY2016 FY2017 FY 2018 FY 2019 FY 2020 June 2016 26
Slide 27: Compelling Valuation
Compelling Valuation Royal Gold trading at a substantial discount to historical cash flow per share1 RGLD Price to CFO Per Share (TTM) FNV Price to CFO Per Share (TTM) SLW Price to CFO Per Share (TTM) RGLD average P/CF (LTM) FNV average P/CF (LTM) SLW average P/CF (LTM) 60.0x 50.0x 40.0x 30.0x Value
Slide 28: Compelling Investment
Compelling Investment NASDAQ:RGLD Simple and efficient business model Straight forward strategy Portfolio of high quality, long lived assets Growth embedded in current portfolio Attractive returns, leveraged to price and reserve optionality Disciplined capital allocation and processes Experienced an
Slide 29: Endnotes
QUALITY GROWTH OPPORTUNITY Endnotes ROYALGOLD,INC
Slide 30: 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 PORTFOLIO OF ASSETS – CURRENT VALUE DRIVERS 1. Based on
Slide 31: 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 17 CAPITAL ALLOCATION – DISCIPLINED USE OF EQUITY 1. Royal
Slide 32: Royal Gold contact details
1660 Wynkoop Street, #1000 Denver, CO 80202-1132 303.573.1660 info@royalgold.com www.royalgold.com
Royal Gold — Scotiabank Senior Precious Metals Day 2016 (London) on 6ix