Royal Gold, Inc. · NASDAQ:RGLD
Royal Gold — Investor Day (February 2014)
29 slides from Royal Gold's investor day presentation, Feb 23, 2014
Slide 1: GSA Investor Day
GSA Investor Day Tony Jensen President and CEO February 23, 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: Royal Gold Overview
Royal Gold Overview Embedded Growth – Positioned to grow volume ~50% from Mt. Milligan alone Financially Robust – Mt. Milligan investment complete – Low costs with Adjusted EBITDA 1 margin at ~80-85% of revenue – Liquidity of approx. $1.1 billion Attractive Market Environment – Royalty/streaming a c
Slide 4: Strong Track Record of Growth
Strong Track Record of Growth February 23, 2014 4
Slide 5: Embedded Growth: Thousands of Gold Equivalent Ounces
Embedded Growth Fully Invested 350 300 Pascua Lama Thousands of Gold Equivalent Ounces 250 Mt. Milligan 200 150 Other ~50% estimated increase over 100 FY2013 due to Mt. Milligan alone Voisey's Bay Peñasquito 50 Andacollo 0 FY 2013 (1,2) Mt. Milligan(3,4) and Pascua-Lama(5) contribution at full produ
Slide 6: Royal Gold Growth Compared with Peers
Embedded Growth Royal Gold Growth Compared with Peers 1,2 5-Year Estimated Volume Growth CAGR 18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Silver Wheaton Franco-Nevada Royal Gold Updated as of December 31, 2013 February 23, 2014 6
Slide 7: Development Cornerstone Properties
Embedded Growth Development Cornerstone Properties Stream: 1 52.25% of payable gold Mt. Milligan 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 September 2013 • First shipment in mid
Slide 8: Mt. Milligan Stream Ramping Up
Embedded Growth Mt. Milligan Stream Ramping Up Mt. Milligan Facilities Mt. Milligan Primary Crusher Mt. Milligan Two 24ft Ball Mills Mt. Milligan Flotation Circuit February 23, 2014 8
Slide 9: Phoenix Stream Agreement Details
Embedded Growth Phoenix Stream Agreement Details Investment of $75 million in five installments over next two years – 6.3% of production up to 135,000 oz – 3.15% thereafter Delivery payment of 25% of spot price at time of delivery 1 Rationale: ‒ High grade operation in final stages of construction ‒
Slide 10: Phoenix Stream Agreement Details
Embedded Growth Phoenix Stream Agreement Details Operator: Rubicon Minerals Location: Red Lake, Ontario LOM projected production: 2.19M oz (Au) Production start-up: 12-14 months following completion of financing Estimated mine life: 13 years Est. average annual production: 165,300 oz February 23, 20
Slide 11: Financially Robust
Financially Robust Diverse Portfolio of Assets February 23, 2014 11
Slide 12: Cornerstone Producing Properties
Financially Robust Cornerstone Producing Properties Andacollo Contribution to 1H FY Royalty: 1 75% of Au production (NSR) 2014 revenue Reserves: 2 1.8M oz (Au) 26% or $28.9M Estimated Mine Life: 20+ Years Actual CY13 production: 64,600k oz (Au) Peñasquito Royalty: 2.0% NSR Contribution to 1H Reserve
Slide 13: Cash Margin by Operating Property
Financially Robust Cash Margin by Operating Property 1 80% 70% 60% Cash Margin 50% Weighted Average Cash Margin 48% 40% 30% 20% 10% 0% 97% * Percentage of 9Mo CY2013 Revenue *3% of Royal Gold’s revenue does not have a corresponding cash margin, as the operator does not report it to the level of deta
Slide 14: Efficient Use of Resources Maximizes Margins
Financially Robust Efficient Use of Resources Maximizes Margins $350 $300 $250 Millions $200 $150 $100 $50 Adjusted EBITDA Margin - 86% of Revenue (12/31/13) $- CY2009 CY2010 CY2011 CY2012 CY2013 Revenue Adjusted EBITDA February 23, 2014 14
Slide 15: Strong Balance Sheet and Cash Flow in an Attractive Market
Financial Strength Strong Balance Sheet and Cash Flow in an Attractive Market $704.8M Working Capital $350M Undrawn Credit $370M convertible * ** debt 2019 @2.875% $178.4M February 23, 2014 15
Slide 16: Mineral industry sources of capital are limited
Attractive Market Environment Mineral industry sources of capital are limited Capital Raised by Asset Class ($B) 1 February 23, 2014 16
Slide 17: Multiple Investment Entry Points
Attractive Market Environment Multiple Investment Entry Points Capital Consuming 1 Capital Generating 2 February 23, 2014 17
Slide 18: Multiple Sources for New Business Opportunities
Attractive Market Environment Multiple Sources for New Business Opportunities 100% 14% 20% 16% 15% 90% The largest 80% source of our 70% 31% gold revenue 48% 48% 60% 44% in fiscal 2013 50% was non- 40% precious 30% metals mines 20% 54% 36% 36% 37% 10% 0% 2010A 2011A 2012A 2013A Primary Gold Mines Po
Slide 19: Favorably Positioned
Favorably Positioned RGLD Price to Book Value EBITDA Per Share 4.0x $3.00 3.5x $2.50 3.0x Five-year average: $2.00 2.5x 2.2x * FNV $1.50 2.0x SLW RGLD 1.5x $1.00 Current: 1.0x 1.8x $0.50 0.5x $0.00 2009 2010 2011 2012 CQ1-CQ3 0.0x 2013 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Calendar year reported
Slide 20: Royal Gold Summary
Royal Gold Summary Embedded Growth Mt. Milligan, September 2013 – Positioned to grow via Mt. Milligan Financially Robust – Mt. Milligan investment complete – EBITDA margin ~80-85% of revenue – Liquidity of $1.1 billion Attractive Market Environment – Compelling alternative to challenging equity/debt
Slide 21: Appendix
APPENDIX Ih ; (A ROYALGOLD,INC 1
Slide 22: Royalty vs Stream
Royalty vs Stream Royalty Financing Life of Mine Upfront Payment Stream Financing Life of Mine Upfront Delivery Payment ($/oz) Payment February 23, 2014 22
Slide 23: Differences Between Royalties and Streams
Differences Between Royalties and Streams ROYALTY STREAM Receive a percentage of the Purchase all, or percentage of the production from a mine, usually over designated metal at a fixed or variable OWNER HOLDS RIGHT TO: the LOM, often after deducting offsite (% of spot) price over LOM or specified re
Slide 24: Royalty/Streaming Sector
Royalty/Streaming Sector Metal royalty model established by Royal Gold (1992) and Franco Nevada (1985) Silver Wheaton began metal streaming in 2004 Business model success has attracted new companies Sector market capitalization ~US$22.3B; dominated by three companies: Silver Wheaton, Franco Nevada a
Slide 25: Precious Metal Sector
Precious Metal Sector Three largest royalty/streaming companies are within the top fifteen precious metal companies 25,000 Market Capitalization Precious Metal Companies 20,000 (as of 2-19-14) 15,000 $US Millions 10,000 5,000 0 February 23, 2014 25
Slide 26: 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 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, debt or hedge restructuring or other purposes Stream Fina
Slide 27: 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 3 ROYAL GOLD OVERVIEW announced a temporary suspension of
Slide 28: 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 7 EMBEDDED GROWTH: 3. Updated reserves and mine li
Slide 29: Royal Gold contact details
1660 Wynkoop Street Denver, CO 80202-1132 303.573.1660 info@royalgold.com www.royalgold.com