Royal Gold, Inc. · NASDAQ:RGLD
Royal Gold — Raymond James Texas Gold Investor Forum 2014
29 slides from Royal Gold's conference presentation, October 2014
Slide 1: Raymond James Texas Gold Investor Forum
Raymond James Texas Gold Investor Forum Stefan Wenger Chief Financial Officer October 2014 SOLID PORTFOLIO. SOLID FUTURE.
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
Slide 3: What Makes Royal Gold Unique
What Makes Royal Gold Unique Growth Near-term growth driven by Mt. Milligan Long mine lives amongst largest investments Quality Focused investment criteria World class portfolio Opportunity $1B uncommitted capital to invest >$100M deals are material Value Strong per share metrics Low relative valuat
Slide 4: Growth: Near-term growth driven by Mt. Milligan
Growth Near-term growth driven by Mt. Milligan What Mt. Milligan will deliver on What Mt. Milligan will contribute to a quarterly basis 1 our total GEO’s 2 Qtrly Run Rate at Design 250,000 Capacity Sept 2014 Quarter - Actual 200,000 Mt. Milligan June 2014 Quarter - Actual 150,000 Mar 2014 Quarter -
Slide 5: Growth: Mt. Milligan ramp up well underway
Growth Mt. Milligan ramp up well underway Throughput increasing Recovery approaching design Source: Thompson Creek Metals, August 19, 2014 Source: Thompson Creek Metals, August 19, 2014 Source: Thompson Creek Metals, August 19, 2014 Record daily mill throughput of 63,970 July gold recovery of 69% ap
Slide 6: Rubicon Minerals' Phoenix Gold Project on schedule
Growth Rubicon Minerals’ Phoenix Gold Project on schedule On schedule for startup mid-2015 1 – Mill construction on schedule – Shaft sinking complete – 24% of underground development completed Estimated mine life: 13 years 2 Estimated average annual production: 165,300 oz 3 Investment Attributes: Ph
Slide 7: Long mine lives amongst largest investments
Growth Long mine lives amongst largest investments 1000 25 Estimated Years of Remaining Mine Life 900 800 20 700 600 15 $ Millions 500 400 10 300 200 5 100 0 0 Initial investment Cumulative net revenue through June 30, 2014 Estimated remaining mine life October 2014 7
Slide 8: Focused investment criteria yields a world class portfolio
Quality Focused investment criteria yields a world class portfolio 56% of our FY2014 revenues from Counterparty investment-grade rated companies 1 Place Over 92% of our reserves from S&P “A” or higher rated countries 1 89% of FY2014 Production Weighted average cash cost ~$576/GEO, Andacollo, Peñasqu
Slide 9: Cash Margin by Operating Property, First Half 2014
Quality Cash Margin by Operating Property, First Half 2014 100% 90% 80% 70% The operators of our royalties and streams recognized an average 57%, or $576 per gold equivalent ounce, gross margin in the first half of 2014 on properties 60% subject to our interest 57% average 50% 40% 30% 20% 10% 0% Oct
Slide 10: World class, long lived portfolio
Quality World class, long lived portfolio Mt. Milligan Royalty: 52.25% of payable gold 1 Contribution to FY2014 Q4 revenue Reserves: 2 6.0M oz (Au) 27% or $18.6M Estimated Mine Life: 20+ Years 5 Andacollo Royalty: 3 75% of Au production (NSR) Contribution to FY2014 Q4 revenue Reserves: 2 1.8M oz (Au
Slide 11: $1 billion uncommitted capital to invest
Opportunity $1 billion uncommitted at a time when royalty/stream financing is needed Capital to invest… …as debt/equity markets remain challenging 1 $450M Liquidity at 6/30/2014 $714M Working Capital Undrawn Credit $370M Debt and Commitments convertible debt due 2019 * LTM Operating Cash Flow $147M
Slide 12: Average number of royalty/streaming companies per year
Opportunity Average of 12 companies per year involved in royalty/streaming over last decade 16 Callinan Royalties Osisko Royalties Coeur Gold Capital 14 XDM Royalty Global Royalty 12 Average 2004-2014 Premier Royalty Gold Royalties Lumina Royalty 10 Sandstorm Metals & Energy Sandstorm Gold Royalty 8
Slide 13: Industry market cap is highly concentrated
Opportunity Most of the industry’s market cap is highly concentrated 1 Callinan Royalties 30,000 XDM Royalty Premier Royalty 25,000 Tanzanian Royalty Exploration Corp Global Royalty Corp Gold Royalties Corporation 20,000 Lumina Royalty US$ Millions Sandstorm Metals and Energy 15,000 Sandstorm Gold G
Slide 14: Leading in per-share metrics, lagging on valuation
Value Leading in several per-share metrics, lagging on valuation RGLD Variance to FNV What Mt. Milligan will contribute Valuation Per Share Metrics to our total GEO’s 2 Price Fwd/EBITDA Consensus 250,000 Price/Book Value 200,000 Mt. Milligan EBITDA Per Share 150,000 Reserves Per Share 1 100,000 Othe
Slide 15: What Makes Royal Gold Unique
What Makes Royal Gold Unique Growth Near-term growth driven by Mt. Milligan Long mine lives amongst largest investments Quality Focused investment criteria World class portfolio $1B uncommitted capital to invest Opportunity >$100M deals are material Value Strong per share metrics Low relative valuat
Slide 16: Endnotes
Endnotes SOLID PORTFOLIO. SOLID FUTURE.
Slide 17: 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 4 GROWTH 1. Full run rate Mt. Milligan gold deliveries con
Slide 18: 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 10 QUALITY 1. This is a metal stream whereby the p
Slide 19: Appendix A: Royalty and Stream Financing
Appendix A: Royalty and Appendix A: Property Portfolio Stream Financing SOLID PORTFOLIO. SOLID FUTURE.
Slide 20: What We Do – Royalty and Stream Financing
What We Do – Royalty and Stream Financing We invest $ in a mining project in exchange for a Mining Company right a to percentage of metal production Appropriate for any stage of the project life cycle Production Percent of Cash Transactions can be structured to be tax efficient Transactions are ofte
Slide 21: Royal Gold: The Quality Royalty/Streaming Name to Own
Royal Gold: The Quality Royalty/ Streaming Name to Own • Longevity – in business since 1981 • Near-Term Growth – ~60% volume growth Exploration expected Junior Operators No cost inflation concerns Quality assets/reputable partners Intermediate Operators ~85% of Revenue => EBITDA Index Funds Major Op
Slide 22: Gold Price vs US Debt Ceiling
Gold Price vs US Debt Ceiling Historical Gold Price and US Debt Ceiling Historical Relationship $2,000 July 1994 - September 2014 $18,000 Suggests ~$1500 equilibrium $2,000 $16,000 $1,800 $1,500 $14,000 $1,600 y = 0.1082x - 302.89 R² = 0.9109 $1,400 $12,000 $1,200 Gold Price $1,000 $10,000 $1,000 $8
Slide 23: Alignment with Counterparties
Alignment with Counterparties Hypothetical example estimate for illustrative purposes only: Equity Stream 200koz/year gold project expansion, 2 year development, 12 yr mine life Current market cap $300,000,000 $300,000,000 Shares outstanding 200,000,000 200,000,000 Share price $1.50 $1.50 Financing
Slide 24: Alignment with Counterparties
Alignment with Counterparties Return of investment based on No joint venture involvement production Royal Gold provides additional No principal amortization or investor exposure maturity date 4-6 week due diligence Deliveries can match key smelter terms Repayment Management Simplified reporting Time
Slide 25: Multiple Investment Entry Points
Alignment with Counterparties Multiple Investment Entry Points 1 Capital Consuming Capital Generating October 2014 25
Slide 26: Financial Strength
Financial Strength 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 October 2014 26
Slide 27: Appendix B: Property Portfolio
Appendix AppendixB: A: Property Portfolio SOLID PORTFOLIO. SOLID FUTURE.
Slide 28: Property Portfolio
Property Portfolio October 2014 28
Slide 29: SOLID PORTFOLIO. SOLID FUTURE.
1660 Wynkoop Street Denver, CO 80202-1132 303.573.1660 info@royalgold.com www.royalgold.com SOLID PORTFOLIO. SOLID FUTURE.
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