Royal Gold, Inc. · NASDAQ:RGLD
Royal Gold — Bank of America Merrill Lynch 16th Annual Canada Mining Conference (September 2010)
32 slides from Royal Gold's conference presentation, September 2010
Slide 1: Bank of America Merrill Lynch 16th Annual Canada Mining Conference
Bank of America Merrill Lynch 16th Annual Canada Mining Conference September 2010
Slide 2: Cautionary Statement Under the Private Securities Litigation Reform Act
Cautionary Statement Under the Private Securities Litigation Reform Act 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
Slide 3: Agenda
Agenda Strong Financial Results Period of Portfolio Transformation Setting the Stage for Future Growth 3
Slide 4: Financial Results
Financial Results FY 2010 revenue: $137M (85% increase) FY 2010 free cash flow: $100M (62% increase) Non-recurring items impacted net income in Fiscal 2008 to 2010 June 2010 equity offering raised $276M; strengthens balance sheet Per Share Financial Results Historical Financial Results 3.50 140 3.25
Slide 5: Key Drivers: Taparko and Cortez
Key Drivers Taparko 24.92% 1 120 35 $32M in revenue (fiscal 2010) 100 30 Annual Gold Production $50M in cumulative revenue (as of 6/30/10) Royalty Revenue Ounces (thousands) 80 25 ($ millions) 60 20 Leverage in TB-GSR2 royalty increased 23.57% 1 24.19% 1 total royalty to almost 25% 40 15 20 10 0 5 2
Slide 6: Transformational Growth
Transformational Growth Andacollo 75% of gold production over planned 20-year mine life Cost: $272M IRC Five-Year Transaction History Diversified royalty portfolio with Mt. Milligan 1 gold growth Cost: $350M cash plus 7.0M Pascua-Lama shares 1,850 Pascua-Lama 1,650 IRC Leveraging the IRC acquisition
Slide 7: Reserve Growth - December 2008 to Present
Reserve Growth - December 2008 to Present Precious metal reserves subject to royalties increased 33% to 105.3M ounces 1 Precious metals royalty ounces in reserves increased 203% to 4.87M ounces 1 Organic growth demonstrated as properties in the portfolio on 12/31/08 added more reserves than were min
Slide 8: Principal Properties – Tier 1
Principal Properties – Tier 1 Taparko Cortez Robinson Mulatos Leeville Siguiri Goldstrike Peñasquito Andacollo Pascua-Lama Voisey’s Bay Royalty: 2.0% NSR Royalty: 2 75% of gold Royalty: 4,5 0.78% to Royalty: 2.7% NSR Reserves: 1 17.8M oz (Au) production 5.23% NSR Reserves:1 1.5B lbs (Ni) 1.1B oz (Ag
Slide 9: Peñasquito (Goldcorp – Mexico)
Peñasquito (Goldcorp – Mexico) Royalty: 2.0% NSR (all metals) 40 Precious Metals Reserve Profile 35 Reserves: 1 17.8M oz (Au) Gold Equivalent Ounces 2 30 1.1B oz (Ag) 25 (millions) 15.9B lbs (Zn) 20 7.2B lbs (Pb) 15 10 FY’10 production (actual): 5 - 117,963 oz (Au) 2006 2007 2008 2009 Gold Reserves
Slide 10: Andacollo (Teck – Chile)
Andacollo (Teck – Chile) Royalty: 75% of gold until 910,000 payable ounces; 50% thereafter (NSR) Reserves: 1.6M oz Au 1 Production: Commissioning substantially complete Estimated design capacity: Second half 2010 55,000 tonnes/day mill capacity Estimated annual production: 2 55,000 oz (Au) (in conce
Slide 11: Pascua-Lama (Barrick – Chile)
Pascua-Lama (Barrick – Chile) Sliding-Scale Schedule Royalty: 1,2 See chart Gold Price/ Oz NSR Royalty Rate Reserves: 3,4 14.6M oz (Au) <$325 0.78% $400 1.57% Estimated production: 5 $500 2.72% Start-up – 2013 $600 3.56% $700 4.39% 750,000 to 800,000 ounces >$800 5.23% of gold (average during first
Slide 12: Voisey's Bay (Vale – Canada)
Voisey’s Bay (Vale – Canada) Royalty: 2.7% NSR Reserves: 1 1,493M lbs (Ni) 873M lbs (Cu) 74M lbs (Co) Production capacity: 6,000 tonnes per day CY’09 production: 40,000 tonnes (Ni) (restricted by strike) 24,000 tonnes (Cu) Mine life: 20+ years 2 Actual royalty revenue (TTM): 3 $17.2M “Voisey’s Bay c
Slide 13: Principal Properties – Tier 2
Principal Properties – Tier 2 Cortez (Barrick) Wolverine (Yukon Zinc) Wolverine Location: U.S. Location: Canada Cortez Royalty: 5 0.0% to 9.445% NSR Royalty: 1 GSR1 and GSR2: 0.4% to 5.0%; 6 Reserves: 0.2M oz (Au) GSR3: 0.71%; NVR1: 0.39% Reserves: 2 5.2M oz (Au) 42.8M oz (Ag) Leeville (Newmont) Hol
Slide 14: Mt. Milligan Transaction and Project Overview
Mt. Milligan Transaction and Project Overview 14 14
Slide 15: Transaction Summary
Transaction Summary 25% of payable gold from Mt. Milligan project Total consideration: $311.5M $226.5M to support Thompson Creek offer of Terrane Metals Secured with assets of the project $85.0M to finance construction of the Mt. Milligan project Contingent on sufficiency of financing and staged rec
Slide 16: Project Profile – Operations
Project Profile – Operations 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 mine Estimated mine life: 22 years Reserves and resources: 2 ($690/o
Slide 17: Resource Opportunity
Resource Opportunity Gold resources (M&I) are 25% higher than reserves (P&P) Exploration potential at depth and adjacent to known resources Several exploration targets with similar geophysical and geochemical signatures Source: Terrane’s April 2010 presentation Source: Terrane’s April 2010 presentat
Slide 18: Estimated Annual Net Revenue Potential
Estimated Annual Net Revenue Potential ~ $51M over first six years 1 ($1,200 gold price less $400 purchase price; 97% smelter return) ~ $37M over mine life 1 ($1,200 gold price less an average of $425 purchase price; 97% smelter return) 300 Metal Production 250 (metal in concentrate) 200 Gold Oz (th
Slide 19: Growth Pipeline
Growth Pipeline 1 2013E Growth Pipeline 5,6 Exploration Evaluation Development Construction Ramp Up to 250 Full Production Dolores (2010) South Laverton (2010) Production – Royalty Gold Equivalent Ounces Inata (2010) 200 Andacollo (2010) Las Cruces (2010) Peñasquito Sulfide Line 2 (2010) Wolverine (
Slide 20: Asset Diversification and Balance
Asset Diversification and Balance Revenue diversification achieved New long life mines replace maturing assets and provide growth In 2013, 67% of revenues expected from mines with lives greater than 15 years 2013E CY Revenue 1,2 2013E CY Revenue 1,2,3 2010 FY Revenue (including Mt. Milligan) (exclud
Slide 21: Favorable Geopolitical Distribution
Favorable Geopolitical Distribution Currently 68% of production from United States, Mexico, Canada, Chile and Australia 98% of reserves from United States, Mexico, Canada, Chile and Australia Royalty Ounces in Reserves Current Production 1 Reserves 2 United States Mexico Canada Chile Australia Afric
Slide 22: Strong Gold Focus
Strong Gold Focus Commissioning of near-term projects will grow precious metal exposure Precious metals dominant, long-term growth profile Chile Mexico Canada Australia Africa Andacollo Peñasquito Canadian Malartic Gwalia Deeps Inata Pascua-Lama Dolores Wolverine South Laverton Holt Mt. Milligan 201
Slide 23: The Gold Market
The Gold Market Money Supply Low real interest rates Sovereign debt concerns The future of the world’s reserve currency Mine supply Growth in demand Gold Investor Demand Source: IMF country data, WGC 1 International Monetary Fund, World Economic Outlook, October 2009. Gold Mine Supply Source: GFMS 2
Slide 24: Market Structure
Market Structure Shares Outstanding Financial Common: 1 55.2M Cash: $325M (6/30/10) (includes ~ 1.6M exchangeable shares) Total debt: $249M (6/30/10) Fully diluted: 1 55.5M CY2010 dividend: $0.36 per share Dividend yield: 2 0.73% Royal Gold vs. Gold Price Appreciation Market Capitalization 2000% 3.0
Slide 25: Footnotes
lf A ROYALGOLD,INC The Gold Standard of Royalty Companies Footnotes
Slide 26: Footnotes
Footnotes PAGE 4: FINANCIAL RESULTS 1 In fiscal 2008, total net income was $24.0M. Basic income per share was reduced by the payment of preferred dividends and a non-cash preferred share conversion adjustment of $4.8M, or $0.15 per basic share. 2 Net income for fiscal 2009 includes one-time gains of
Slide 27: Footnotes (cont.)
Footnotes (cont.) PAGE 8: PRINCIPAL PROPERTIES – TIER 1 (cont.) 5 Upon the completion of the transaction announced on July 6, 2010, which is scheduled to occur on or before October 29, 2010, approximately 20% of the royalty is limited to the first 14.0M ounces of gold produced from the project. Also
Slide 28: Footnotes (cont.)
Footnotes (cont.) PAGE 12: VOISEY’S BAY (VALE – CANADA) 1 Reserves as stated in Vale’s 20F for 2008. 2 Based on 2008 Vale Inco EIS. 3 Based on TTM revenue as of June 30, 2010. PAGE 13: PRINCIPAL PROPERTIES – TIER 2 1 NSR sliding-scale schedule (price of gold per ounce – royalty rate): Below $210 – 0
Slide 29: Footnotes (cont.)
Footnotes (cont.) PAGE 16: PROJECT PROFILE – OPERATIONS 1 Per Terrane Metal’s Feasibility Update Study – Technical Presentation dated December 15, 2009. 2 Reserves as of October 23, 2009 from Terrane’s Technical Report – Feasibility Study. PAGE 18: ESTIMATED ANNUAL NET REVENUE POTENTIAL 1 Per produc
Slide 30: Footnotes (cont.)
Footnotes (cont.) PAGE 21: FAVORABLE GEOPOLITICAL DISTRIBUTION 1 Equity gold equivalent ounces, based on TTM as of June 30, 2010 production, were calculated using a gold price of $1,089.45 per ounce. 2 Reserves as detailed in Royal Gold’s June 2010 reserve release. Equity gold equivalent ounces were
Slide 31: Footnotes (cont.)
Footnotes (cont.) 2013E PRO FORMA FOOTNOTE: All 2013 pro forma calculations include certain properties that are currently in development stage, and we have assumed for purposes of the 2013 pro forma calculations that such development stage properties are brought into production and achieve full-scal
Slide 32: Royal Gold, Inc. contact details
ROYAL GOLD, INC. 1660 Wynkoop Street Denver, CO 80202-1132 PHONE 303.573.1660 FAX 303.595.9385 EMAIL info@royalgold.com WEB www.royalgold.com 32