Royal Gold, Inc. · NASDAQ:RGLD
Royal Gold — Investor Presentation (March 2023)
50 slides from Royal Gold's investor presentation, March 2023
Slide 1: Investor Presentation March 2023
Investor Presentation March 2023
Slide 2: Cautionary Statements
Cautionary Statements Forward-Looking Statements: This presentation includes “forward-looking statements” within the meaning of U.S. federal securities laws. Forward-looking statements are any statements other than statements of historical fact. Forward-looking statements are not guarantees of futur
Slide 3: Precious Metals Exposure with Consistent Financial Performance
Precious Metals Exposure with Consistent Financial Performance Royal Gold provides a differentiated model with disciplined capital management and a focus on shareholder returns DIVERSIFIED LOW RISK HISTORY OF UNIQUE PORTFOLIO ATTRACTIVE LEVERAGE CONSISTENT BUSINESS W. GROWTH VALUATION TO GOLD EXECUT
Slide 4: Company Overview
Company Overview Opportunity to capture value in the precious metals sector without incurring many of the costs and risks associated with mining operations Dual Business Segments… …Across A Diverse, Gold-Focused Portfolio… …With Standout Performance Royalty Interests: 182 12 $603M 335,100 An interes
Slide 5: Precious Metals Exposure with Consistent Financial Performance
Precious Metals Exposure with Consistent Financial Performance Royal Gold provides a differentiated model with disciplined capital management and a focus on shareholder returns DIVERSIFIED LOW RISK HISTORY OF UNIQUE PORTFOLIO ATTRACTIVE LEVERAGE CONSISTENT BUSINESS W. GROWTH VALUATION TO GOLD EXECUT
Slide 6: Exposure to Gold and Optionality with Reduced Risks
Exposure to Gold and Optionality with Reduced Risks Exploration No Direct No Direct Exposure Portfolio Sustainable Upside / Exposure to Exposure to to Gold Diversification Dividend Optionality Operating Costs Capital Costs ETFs, Bars and Coins Senior Operating Companies Junior Operating Companies De
Slide 7: Gold Leverage with Market-Leading Return
Gold Leverage with Market-Leading Return A stable, sustainable investment… …with a heritage of market outperformance (5/22/06 – 3/3/23) Indexed since the formation of the GDX 5.0 1.85 Beta vs. Gold Price RGLD Will provide higher 4.5 GDX 4.14 leverage to gold… β Gold 4.0 Spot Gold SP500 3.5 DJIA 3.20
Slide 8: Precious Metals Exposure with Consistent Financial Performance
Precious Metals Exposure with Consistent Financial Performance Royal Gold provides a differentiated model with disciplined capital management and a focus on shareholder returns DIVERSIFIED LOW RISK HISTORY OF UNIQUE PORTFOLIO ATTRACTIVE LEVERAGE CONSISTENT BUSINESS W. GROWTH VALUATION TO GOLD EXECUT
Slide 9: Accretive Growth Financed Without Significant Equity Dilution
Accretive Growth Financed Without Significant Equity Dilution Since calendar year 2000: $5.5B Revenue 64x Cumulative Revenue Operating Cash Flow 99x $3.5B Cumulative Operating Cash Flow Cash G&A Expenses 16x $324M Cum. Cash G&A1 Expenses Avg. Gold Price 6x Up to $1,800 /ounce Shares Outstanding 4x O
Slide 10: Financing and Capital Allocation Strategy Drives Shareholder Returns
Financing and Capital Allocation Strategy Drives Shareholder Returns Financing strategy – prioritizes non-dilutive forms of capital in the order of: • Existing cash balances • Cash flow from operations • Debt (revolving credit facility) • Equity, when accretive 2022 Sources / Uses Liquidity1 $US M $
Slide 11: Growing and Sustainable Dividend Despite Gold Price Volatility
Growing and Sustainable Dividend Despite Gold Price Volatility Royal Gold is the only precious metal company in the S&P High Yield Dividend Aristocrats Index US$/share US$/oz $1.60 $2,800 Dividend Payout Ratio Gold Price 16% $1.40 $2,400 $1.20 Dividend CAGR $2,000 (2000-2023) $1.00 $1,600 $0.80 $815
Slide 12: Robust Due Diligence Drives Disciplined Approach to Acquisitions
Robust Due Diligence Drives Disciplined Approach to Acquisitions Due diligence process includes: • Technical • Legal • Financial/Credit analysis − Geology, reserve/resource − Title, permitting, mining law • Management references definition • ESG − Mining − Environmental impact − Metallurgy − Social
Slide 13: Sound ESG Practices are Fundamental to Success
Sound ESG Practices are Fundamental to Success Materially better market perception with improved disclosure 60 51.9 50 SEVERE RISK 40 RATING HIGH 30 23.4 22.8 MEDIUM 19.1 20 9.1 10 LOW 0 2018 2019 2020 2021 2022 Source: Sustainalytics AAA 7 ESG AA 6 AA AA RATING 5A A A A 4 BBB 3 BB 2B 1 CCC LAST UPD
Slide 14: Precious Metals Exposure with Consistent Financial Performance
Precious Metals Exposure with Consistent Financial Performance Royal Gold provides a differentiated model with disciplined capital management and a focus on shareholder returns DIVERSIFIED LOW RISK HISTORY OF UNIQUE PORTFOLIO ATTRACTIVE LEVERAGE CONSISTENT BUSINESS W. GROWTH VALUATION TO GOLD EXECUT
Slide 15: Exposure to Resource Growth and Metal Price Optionality
Exposure to Resource Growth and Metal Price Optionality Mine expansions and resource growth can significantly enhance returns with no cost to Royal Gold PUEBLO VIEJO WASSA Millions of Gold Ounces5 76% Millions of Gold Ounces of Initial Investment Recovered6 0.3 124% of Initial Investment Recovered5
Slide 16: Business Model is Highly Efficient and Scalable
Business Model is Highly Efficient and Scalable ENTERPRISE VALUE1/EMPLOYEE2 TOTAL REVENUE3/EMPLOYEE2 (US$ 000s as of December. 31, 2022) $970 $611 (US$ 000s 12 Mo. ended September. 30, 2022) $1,995 $1,228 $855 $1,810 $2,350 $542 $2,777 $841 $235,924 $20,991 $12,946 $2,785 $7,815 $1,803 $15,054 $2,56
Slide 17: Efficiency Drives High Margins
Efficiency Drives High Margins CASH FLOW METRICS1 US$ 603M Revenue Adjusted EBITDA2/Revenue 79% US$ 474M Adjusted EBITDA US$ 417M Operating Cash Flow Operating Cash Flow/Revenue 69% Cash G&A3 Expenses/Revenue 4% US$ 26M Cash G&A3 1 – Calendar 2022. 2 – Adjusted EBITDA is a non-GAAP financial measure
Slide 18: Cost Structure and Business Model Reduce Inflation Exposure
Cost Structure and Business Model Reduce Inflation Exposure Operator costs tend to increase with commodity prices while Royal Gold’s costs remain stable Comparison of Cost Structures: Royal Gold Cash G&A Expense3: US$/oz 900 Metal Price Royalty Dependent 800 TCRC & Shipment 7% 700 6% Salaries Other
Slide 19: Precious Metals Exposure with Consistent Financial Performance
Precious Metals Exposure with Consistent Financial Performance Royal Gold provides a differentiated model with disciplined capital management and a focus on shareholder returns DIVERSIFIED LOW RISK HISTORY OF UNIQUE PORTFOLIO ATTRACTIVE LEVERAGE CONSISTENT BUSINESS W. GROWTH VALUATION TO GOLD EXECUT
Slide 20: Diverse Portfolio in Established Mining Jurisdictions
Diverse Portfolio in Established Mining Jurisdictions PRINCIPAL PROPERTIES 3 1 ANDACOLLO Region IV, Chile 2 CORTEZ Nevada, USA 2 4 5 3 MOUNT MILLIGAN British Columbia, Canada 4 PEŇASQUITO Zacatecas, Mexico 6 5 PUEBLO VIEJO Sanchez Ramirez, Dominican Republic 1 40 PRODUCING 6 KHOEMACAU 182 Botswana 1
Slide 21: Diversification Provides Predictable and Sustainable Cash Flow
Diversification Provides Predictable and Sustainable Cash Flow Geographically and operationally diverse portfolio, underpinned by primary precious metals mines Calendar 2022 Revenue Contribution by Geography by Mine by Mine Type* Others Other Mexico Mount Copper Canada Milligan Africa Wassa Rainy Ri
Slide 22: Potential for Organic Growth from Portfolio Pipeline
Potential for Organic Growth from Portfolio Pipeline Properties at various stages of development provide optionality and organic revenue growth potential EXPLORATION EVALUATION DEVELOPMENT PRODUCTION 71 52 19 40 • Earliest stage of • Published resource • Published reserve • Producing development • N
Slide 23: Revenue Growth Expected from Producing and Development Assets
Revenue Growth Expected from Producing and Development Assets In production Expansions and extensions add to portfolio revenue and duration Defined startup date Longer-dated production KHOEMACAU – ramp-up to target production rate achieved in December 2022; expansion FS expected in 2023 PUEBLO VIEJO
Slide 24: Recent Transactions Enhance Royal Gold Portfolio
Recent Transactions Enhance Royal Gold Portfolio Strategic objective: Further strengthen and diversify the portfolio by adding high quality precious metals assets • ~$1.2B of gold-focused Near Term Long Mine Lives investments without Revenue Contribution NX Gold raising equity since June Red Chris 2
Slide 25: Cortez Royalty Acquisitions: Further World-Class Exposure in Nevada
Cortez Royalty Acquisitions: Further World-Class Exposure in Nevada Recent Rio Tinto and Idaho Royalty acquisitions add life of mine exposure to a large, established and prospective complex operated by Nevada Gold Mines LLC Simplified Royalty Detailed Royal Gold Royalty Coverage and Rates Rates Rio
Slide 26: Great Bear Royalty: Adds Long-Term Duration, Scale, Optionality
Great Bear Royalty: Adds Long-Term Duration, Scale, Optionality Life of mine exposure to an emerging world-class project in Ontario operated by Kinross Gold 2.0%1 net smelter return royalty: • Life of mine without stepdowns or caps (except for Kinross option1) • Covers entirety of 9,140 ha Great Bea
Slide 27: Other Recent Additions Expected to Provide Further Growth
Other Recent Additions Expected to Provide Further Growth KHOEMACAU RED CHRIS XAVANTINA CÔTÉ BOTSWANA CANADA BRAZIL CANADA • 100% payable silver stream • 1% NSR royalty on a producing • 25% gold stream on a producing • 1% NSR royalty on the Chester 3 • First concentrate produced on copper/gold/silve
Slide 28: Precious Metals Exposure with Consistent Financial Performance
Precious Metals Exposure with Consistent Financial Performance Royal Gold provides a differentiated model with disciplined capital management and a focus on shareholder returns DIVERSIFIED LOW RISK HISTORY OF UNIQUE PORTFOLIO ATTRACTIVE LEVERAGE CONSISTENT BUSINESS W. GROWTH VALUATION TO GOLD EXECUT
Slide 29: Trading at Historically Attractive Multiples
0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x Peer Range 1.88x P / NAV RGLD ROYAL GOLD, INC. | INVESTOR PRESENTATION | MARCH 2023 1.88x 10x 20x 30x 40x 50x 60x 0x Jan-12 Feb-12 Jan-12 Mar-12 May-12 Jun-12 May-12 Jul-12 Sep-12 Oct-12 Sep-12 Dec-12 Jan-13 Trading at Historically Attractive Multiples Mar-13
Slide 30: Precious Metals Exposure with Consistent Financial Performance
Precious Metals Exposure with Consistent Financial Performance Royal Gold provides a differentiated model with disciplined capital management and a focus on shareholder returns DIVERSIFIED LOW RISK HISTORY OF UNIQUE PORTFOLIO ATTRACTIVE LEVERAGE CONSISTENT BUSINESS W. GROWTH VALUATION TO GOLD EXECUT
Slide 31: Appendix
I> RoyALGOLD,INC
Slide 32: Gold is a Unique Strategic Asset
Gold is a Unique Strategic Asset Gold is uncorrelated, and is a diversifier that provides a hedge against systemic risk, currency depreciation and inflation Correlation of Gold vs. US Stock Returns Value of Currencies and Broad Commodities Relative to Gold Annual Gold Return and Inflation Weekly ret
Slide 33: Stream/Royalty Investment Process
Stream/Royalty Investment Process Royal Gold’s role in the mining value chain can be tailored to fit the needs of the operating partner EXPLORATION DEVELOPMENT PRODUCTION Royal Gold Payment • Investment is typically • Investment typically • Investment typically in the form of a in the form of a in t
Slide 34: Stream/Royalty Detail
Stream/Royalty Detail From a cash flow perspective, streams and royalties are comparable in that the revenue from a stream less the ongoing cash price paid roughly equals a royalty-like interest in production ROYALTIES • Typically structured as gross smelter return (GSR), net smelter return (NSR), n
Slide 35: Stream and Royalty Financing is Significant
Stream and Royalty Financing is Significant Stream and royalty financing has become a mainstream source of capital to the global mining industry $22.3B Streaming is a flexible product that is relevant throughout the commodity cycle Total Stream Investments by all companies 5% Primarily Balance Prima
Slide 36: ESG Overview: Sustainability Is Our Business Model
ESG Overview: Sustainability Is Our Business Model Royal Gold is committed to sustainability at the corporate and local levels, and seeks counterparties with leading approaches to ESG practices Environmental Social Governance Committed to analyzing and mitigating the Committed to supporting social c
Slide 37: Experienced Independent Directors
Experienced Independent Directors Highly capable, independent board, with deep experience across the gold sector William Hayes Fabiana Chubbs Kevin McArthur Independent Director and Independent Director; Independent Director; Chairman of the Board; Former Former Chief Financial Former Executive Chai
Slide 38: Experienced Management Team
Experienced Management Team Management team comprised of professionals with extensive mining sector experience William Heissenbuttel Mark E. Isto Paul Libner Randy Shefman Daniel K. Breeze President and Chief Executive Executive Vice President and Chief Financial Officer and Vice President and Gener
Slide 39: Management Compensation Structure
Management Compensation Structure Short-term and long-term incentive program seeks to align compensation with the factors that drive and measure total shareholder return Compensation breakdown:1 • Short Term Incentives focused on financial, operational, strategic, and individual performance • Long T
Slide 40: Shareholder Base Reflects Company's Unique Position
Shareholder Base Reflects Company’s Unique Position Shareholder base is institutional with some unique characteristics • 44% of identifiable investors (38% of total) are Index investors • High-quality shareholder register, with large and long-term Identified Investor Styles institutional investors c
Slide 41: Quality Portfolio of Asset Investments
Quality Portfolio of Asset Investments Operator Mine Metal Royal Gold Interest Ongoing Payment Expected Mine CY 2022 CY 2023 1 Current Until* Thereafter Initial Until* Thereafter Life to Year Operator Production Actual Production 3 Operator Production 2 4 Guidance Guidance Principal Streams Gold 35.
Slide 42: Optionality
Optionality Royal Gold seeks to provide exposure to resource growth and metal price optionality. Resource growth and mine life extensions can significantly enhance returns over time. Case Study Reserves & Resources* Mine Life Contained Gold M oz Years Mulatos – Alamos Gold 2P Reserves • Royal Gold a
Slide 43: World Gold Council – 247 Initiative
World Gold Council – 247 Initiative ROYAL GOLD, INC. | INVESTOR PRESENTATION | MARCH 2023 43
Slide 44: Non-GAAP Measures
Non-GAAP Measures Non-GAAP Financial Measures and Certain Other Measures Overview of non-GAAP financial measures: Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by U.S. generally accepted accounting principles (“GAAP”).
Slide 45: Non-GAAP Measures
Non-GAAP Measures Non-GAAP Financial Measures and Certain Other Measures Overview of non-GAAP financial measures: 4. Free cash flow is a non-GAAP financial measure that is calculated by the Company as net cash provided by operating activities for a period minus acquisition of stream and royalty inte
Slide 46: Non-GAAP Measures
Non-GAAP Measures Reconciliation of non-GAAP financial measures to U.S. GAAP measures Adjusted EBITDA, Adjusted EBITDA margin, net cash and net cash to TTM adjusted EBITDA: Three Months Ended December 31, September 30, June 30, March 31, (amounts in thousands) 2022 2022 2022 2022 Net income and comp
Slide 47: Non-GAAP Measures
Non-GAAP Measures Reconciliation of non-GAAP financial measures to U.S. GAAP measures (cont.) Cash G&A: Three Months Ended The Year Ended December 31, December 31, (amounts in thousands) 2022 2021 2022 2021 General and administrative expense $ 8,815 $ 8,034 $ 34,612 $ 29,306 Non-cash employee stock
Slide 48: Non-GAAP Measures
Non-GAAP Measures Reconciliation of non-GAAP financial measures to U.S. GAAP measures (cont.) Free cash flow: Three Months Ended The Year Ended December 31, December 31, (amounts in thousands) 2022 2021 2022 2021 Net cash provided by operating activities $ 101,026 $ 118,898 $ 417,345 $ 461,869 Acqui
Slide 49: Other Disclaimers
Other Disclaimers DISCLAIMER STATEMENT FOR USE OF MSCI ESG RATING THE USE BY ROYAL GOLD OF ANY MSCI ESG RESEARCH LLC OR ITS AFFILIATES (“MSCI”) DATA, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT, RECOMMENDATION, OR PROMOTION
Slide 50: Contact
Tel. 303.573.1660 investorrelations@royalgold.com www.royalgold.com