Royal Gold, Inc. · NASDAQ:RGLD
Royal Gold — Denver Gold Forum 2010
32 slides from Royal Gold's conference presentation, September 2010
Slide 1: World Class Royalty Portfolio
World Class Royalty Portfolio Denver Gold Forum 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 2010 – Exceptional Year of Growth World Class Portfolio Attractive Shareholder Value “This year of expansion was exceptional and transformational as we increased the assets of the company by slightly over $1 billion.” Tony Jensen President and CEO 3
Slide 4: 2010 – Exceptional Year of Growth
2010 – Exceptional Year of Growth 4
Slide 5: 2010 Transformational Transactions
2010 Transformational Transactions Acquisition Investments Chronology 1,400 $1.3B January 2010: Acquired gold royalty on the Andacollo mine in Chile from 1,200 Teck Resources February 2010: Acquired International Royalty Corporation (IRC), obtaining 1,000 cornerstone Pascua-Lama and Voisey’s Bay roy
Slide 6: 2010 Asset Growth
2010 Asset Growth Royalty Properties 1 40 62% Increase 35 30 77% 77% Increase 25 20 15 10 5 0 Development Producing Producing properties (does not include three oil and gas properties) Pre-2010 2010 Development properties 6 See footnote on page 25
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 equity reserves increased 198% to 4.8M ounces 1 Gold equivalent equity reserves increased 200% to 6.7M ounces Reserves Subject to Royalties Royalty Equity Reserves
Slide 8: 2010 Financial Growth
2010 Financial Growth FY 2010 revenue: $137M (85% increase) FY 2010 free cash flow: $100M (62% increase) Non-recurring items impacted net income in FY 2009 and FY 2010 Per Share Financial Results Historical Financial Results 3.50 140 3.00 120 2.50 100 ($ in millions) ($ per share) 2.00 80 1.50 60 1.
Slide 9: World Class Portfolio
ROYALGOLD, INC World Class Royalty Portfolio World Class Portfolio
Slide 10: World Class Portfolio – World Class Operations & Properties
World Class Portfolio – World Class Operations & Properties 74% Equity Gold Equivalent Ounces in Reserve 70% Equity Gold Equivalent Ounces in Reserve Pascua-Lama Leeville Peñasquito Siguiri Gold Hill Andacollo Voisey’s Bay Mt. Goode Mt. Milligan Goldstrike Twin Creeks Marigold Cortez Wharf Bald Moun
Slide 11: World Class Portfolio – Low Cost Operators
World Class Portfolio – Low Cost Operators Operators of Royal Gold’s royalty properties Cash cost of gold production - $452/oz 1 Industry average cash costs: $532/oz 2 Distribution of Cash Costs 1000 900 800 700 Cash Costs Per Oz ($) 600 $532/oz = Industry Average 500 400 300 200 100 0 Production Se
Slide 12: World Class Portfolio – Large and Gold Focused
World Class Portfolio – Large and Gold Focused 57 producing and development assets 2010 FY Revenue 131 evaluation and exploration assets Strong precious metal exposure 16% 84% Total Precious Metals Royalty Asset Distribution 25% (number of properties) 1 Producing 2013E CY Revenue 2,3,4 (including Mt
Slide 13: World Class Portfolio – Favorable Geopolitical Distribution
World Class Portfolio – Favorable Geopolitical Distribution Currently 68% of production from United States, Mexico, Canada, Chile and Australia 97% of reserves from United States, Mexico, Canada and Chile Royalty Ounces Current Production 1 Gold Equivalent Reserves 2,3 (including Mt. Milligan) Unite
Slide 14: World Class Portfolio – Asset Diversification and Balance
World Class Portfolio – 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 2010 FY Revenue 2013E CY Revenue 1,2,3 (including Mt. Milligan) Cort
Slide 15: World Class Portfolio – Principal Properties, Tier 1
World Class Portfolio – Principal Properties, Tier 1 Taparko Cortez Robinson Mulatos Leeville Siguiri Goldstrike Peñasquito Andacollo Pascua-Lama Voisey’s Bay Mt. Milligan Royalty: 2.0% NSR Royalty: 2 75% of gold Royalty: 4,5 0.78% to Royalty: 2.7% NSR Royalty: 12 25% of payable Reserves: 1 17.8M oz
Slide 16: Mt. Milligan Transaction
Mt. Milligan Transaction 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 stage
Slide 17: Mt. Milligan Project Profile
Mt. Milligan Project Profile 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: 2,3 ($690
Slide 18: World Class Portfolio – Principal Properties, Tier 2
World Class Portfolio – Principal Properties, Tier 2 Cortez (Barrick - U.S.) Wolverine (Yukon Zinc - Canada) Wolverine Royalty: 1 GSR1 and GSR2: 0.4% to Royalty: 5 0.0% to 9.445% NSR Cortez 5.0%; GSR3: 0.71%; NVR1: 0.39% Reserves: 6 0.2M oz (Au) Reserves: 2 5.2M oz (Au) 42.8M oz (Ag) Leeville (Newmo
Slide 19: World Class Portfolio – Growth Pipeline
World Class Portfolio – Growth Pipeline Production 1,2 250 Equity Gold Equivalent Ounces (thousands) 200 150 22 Year Mine Life 100 25 Year Mine Life 17 Year Mine Life 50 17 Year Mine Life 19 Year Mine Life 0 CY 2010E CY 2011E CY 2012E CY 2013E FY2010A Peñasquito Andacollo Voisey’s Bay Pascua-Lama Mt
Slide 20: Attractive Shareholder Value
Attractive Shareholder Value 20
Slide 21: Attractive Shareholder Value – Efficient Business Model
Attractive Shareholder Value – Efficient Business Model Growing margins Cost control Revenue increases EBITDA Margin Economies of Scale 100 200 80 160 EBITDA/ Revenue (%) 60 120 40 80 20 40 0 0 2006 2007 2008 2009 2010 1 2006 2007 2008 2009 2010 Revenue ($ million) Number of Properties Number of Emp
Slide 22: Attractive Shareholder Value – Royal Gold Leverage
Attractive Shareholder Value – Royal Gold Leverage Superior returns (2001 – 2010) Efficient and timely use of capital Gold price growth: 4.6X Shares outstanding growth, 3.0X (2001 – 2010) Royal Gold growth: 15.6X, share price 22.8X, revenue 37.1X, EBITDA Royal Gold vs. Market Capitalization 2000% Go
Slide 23: Attractive Shareholder Value – Financial Return
Attractive Shareholder Value – Financial Return Market Information (as of 9/17/10) NASDAQ: RGLD; TSX: RGL Market cap: $2.8B Average daily volume (TTM): 723,000 2001 – 2010 Compounded Annual Growth Rate (CAGR) Shares Outstanding 40 Common: 55.2M 1 30 Insider ownership: 5% CAGR ( %) 20 Financial Cash:
Slide 24: Footnotes
ROYALGOLD, INC World Class Royalty Portfolio Footnotes 24
Slide 25: Footnotes
Footnotes PAGE 6: 2010 ASSET GROWTH 1 On certain properties, Royal Gold owns multiple royalties. PAGE 7: RESERVE GROWTH – DECEMBER 2008 TO PRESENT 1 Reserve increases from December 31, 2008 to December 31, 2009, including pro forma Mt. Milligan reserves. 2 Royalty equity reserves were calculated at
Slide 26: Footnotes (cont.)
Footnotes (cont.) PAGE 12: WORLD CLASS PORTFOLIO – LARGE AND GOLD FOCUSED 1 Not shown are three oil and gas royalties: Pederson, Wheeler and Lagerquist. 2 2013 estimates assume development properties are brought into production and reach full-scale production on schedule and also assume certain meta
Slide 27: Footnotes (cont.)
Footnotes (cont.) PAGE 15: WORLD CLASS PORTFOLIO – 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 will terminate after production of 14.0M ounces of g
Slide 28: Footnotes (cont.)
Footnotes (cont.) PAGE 18: WORLD CLASS PORTFOLIO – PRINCIPAL PROPERTIES, TIER 2 (cont.) 2 Reserves as of December 31, 2009. 3 Royalty is subject to a buy-down right for $1.0 to $1.5 million depending on the price of gold and is exercisable at any time for one-half of the royalty. 4 Reserves as of De
Slide 29: Footnotes (cont.)
Footnotes (cont.) PAGE 18: WORLD CLASS PORTFOLIO – PRINCIPAL PROPERTIES, TIER 2 (cont.) (footnote 10 continued from prior page) whichever comes first. As of June 30, 2010, Royal Gold has recognized approximately $30.6 million in royalty revenue under TB-GSR1 that is attributable to cumulative produc
Slide 30: Footnotes (cont.)
Footnotes (cont.) 2013E PRO FORMA FOOTNOTE: All 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-scale pro
Slide 31: Slide 31
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