2 0 1 6 A N N U A L R E P O R T
E X P A N D I N G T H E P O R T F O L I O
R
O
Y
A
L
G
O
L
D
,
I
N
C
.
2
0
1
6
A
N
N
U
A
L
R
E
P
O
R
T
Table of
Contents
2
Selected Financial Data
3
Financial Highlights
4
Letter to Shareholders
7
Property Portfolio
Principal Producing Properties
14 Portfolio Map
16 Property Tables
20 Property Table Footnotes
22 The Gold Market
23 Corporate Responsibility
24 Non-GAAP Financial Measures
25 Total Return to Shareholders
26 Glossary
27 Form 10-K
Corporate Information
LAST PAGE OF 10-K
Board of Directors
INSIDE BACK COVER
Management
INSIDE BACK COVER
46594cov.indd 3-4
Royal Gold, Inc. acquires and manages precious metals royalty and stream interests, with a primary focus on gold. The
Royal Gold, Inc. acquires and manages precious metals royalty and stream interests, with a primary focus on gold. The
Company’s portfolio provides investors with a unique opportunity to capture value in the precious metals sector without
Company’s portfolio provides investors with a unique opportunity to capture value in the precious metals sector without
incurring many of the costs and risks associated with mine operations.
incurring many of the costs and risks associated with mine operations.
To acquire a royalty, Royal Gold buys a percentage of the metal produced from a mineral property in exchange for an initial payment. Existing
royalties are acquired outright from either a mineral resource company or a private party; new royalties are generally created by providing capital to
an operator or explorer in exchange for a royalty. Precious metal streams are purchase agreements with mine operators that provide, in exchange
for an upfront deposit payment, the right to purchase all or a portion of one or more metals produced from a mine, at a price determined for the life
of the transaction by the purchase agreement. Except for one joint venture property where we conduct exploration, we do not conduct work on the
properties in which we hold royalty and streaming interests, and we are not responsible for contributing to exploration, operating, environmental
or capital costs on those properties.
Royal Gold owns a large portfolio of producing, development, evaluation and exploration stage royalties and streams located in some of the world’s
most prolific gold regions. Approximately 90% of our reserves and revenue in fiscal 2016 was derived from North America, the Dominican Republic
and Chile.
With this high quality portfolio, Royal Gold maintains upside potential through exploration successes by the operators and generally benefits when
new reserves are discovered and produced. This successful business model generates strong cash flow and high margins with a lower cost structure,
providing shareholders with a premium precious metals investment.
Royal Gold is based in Denver, Colorado, and is traded on the NASDAQ Global Select Market, under the symbol “RGLD.”
Notes:
• Certain information, including the Company’s audited financial statements, required to be included in this Annual Report, is contained in the Form 10-K.
Certain information has been provided to the Company by the operators of those properties or is publicly available information filed by these operators
with applicable securities regulatory bodies, including the Securities and Exchange Commission. The Company has not verified, and is not in a position to
verify, and expressly disclaims any responsibility for the accuracy, completeness or fairness of such third-party information, and refers readers to the public
reports filed by the operators for information regarding those properties.
46594nar.indd 1
9/26/16 12:18 PM
Corporate Profile Selected Financial Data
SELECTED STATEMENTS OF OPERATIONS DATA
(Amounts in thousands, except per share data)
2016
2015
2014
2013
2012
Fiscal Years Ended June 30,
Revenue
Revenue
Operating income
Net (loss) income 11
Net (loss) income
Net (loss) income available to
$ 359,790
$ 359,790
$ 278,019
$ 278,019
$ 237,162 $ 289,224
$ 237,162
$ 263,054
$ 289,224 $ 263,054
$ 4,816
$ 87,235
$ 108,720 $ 171,167
$ 156,634
$ (82,438)
$ (82,438)
$ 52,678
$ 52,678
$ 63,472 $ 73,409
$ 63,472
$ 98,309
$ 73,409 $ 98,309
Royal Gold common stockholders 2
$ (77,149)
$ 51,965
$ 62,641 $ 69,153 $ 92,476
Net (loss) income per share available to
Net (loss) income per share available to
Royal Gold common stockholders:
Royal Gold common stockholders:
Basic
Basic
Diluted
Diluted
$ (1.18)
$ (1.18)
$ 0.80
$ 0.80
$ 0.96 $ 1.09
$ 0.96
$ 1.61
$ 1.09 $ 1.61
$ (1.18)
$ (1.18)
$ 0.80
$ 0.80
$ 0.96 $ 1.09
$ 0.96
$ 1.61
$ 1.09 $ 1.61
Dividends declared per common share 3
$ 0.91
$ 0.87
$ 0.83 $ 0.75 $ 0.56
SELECTED BALANCE SHEET DATA
As of June 30,
(Amounts in thousands)
2016
2015
2014
2013
2012
Stream and royalty interests, net
Stream and royalty interests, net
$ 2,083,608
$ 2,848,087 $ 2,083,608
$ 2,848,087
$ 2,120,268
$ 2,109,067 $ 2,120,268
$ 2,109,067
$ 1,890,988
$ 1,890,988
Total assets
Debt
Debt
Total liabilities
$ 3,066,552 $ 2,917,191
$ 2,882,316 $ 2,895,747 $ 2,365,290
$ 313,869
$ 600,685 $ 313,869
$ 600,685
$ 302,632 $ 292,669
$ 302,632
$ 282,172
$ 292,669 $ 282,172
$ 780,667 $ 501,264
$ 509,759 $ 525,111 $ 501,861
Total Royal Gold stockholders’ equity
Total Royal Gold stockholders’ equity
$ 2,353,122
$ 2,229,016 $ 2,353,122
$ 2,229,016
$ 2,348,887
$ 2,354,725 $ 2,348,887
$ 2,354,725
$ 1,838,459
$ 1,838,459
1. The term “net (loss) income” represents net income attributable to Royal Gold shareholders as shown on the Company’s Consolidated Statement of Operations
and Comprehensive Income in our Annual Report on Form 10-K.
2. Fiscal 2016 earnings were impacted by impairments reported in the March 2016 quarter and discrete tax expenses reported in the September 2015 quarter
resulting in a net loss attributable to stockholders of $77.1 million, or ($1.18) per share, compared to fiscal 2015 net income of $52.7 million, or $0.80 per share.
Absent the adjustments for impairments and the discrete tax expenses, fiscal 2016 adjusted net income would have been $65.0 million, or $1.00 per share.
3. Dividends are paid on a calendar year basis and do not correspond with the fiscal year dividend amounts shown in the Selected Financial Data. The dividend for
calendar year 2016 was $0.92; the dividend paid during fiscal year 2016 was $0.91.
2
46594nar.indd 2
9/26/16 8:28 AM
Financial Highlights
Revenue
For the Fiscal Years Ended June 30, ($Millions)
$400
$300
$200
$100
$0
263.1
289.2
278.0
237.2
359.8
2012
2013
2014
2015
2016
THE kEY ELEMENTS OF OuR
BuSINESS STRATEGY INCLuDE:
Business Model: Royal Gold’s royalty and streaming
business model provides investors with a diversified
portfolio of 38 producing assets without incurring
many of the costs and risks associated with mine
operations.
Gold Focused: 85% of Royal Gold’s revenue in fiscal
2016 was generated from gold.
Adjusted EBITDA 1
For the Fiscal Years Ended June 30, ($Millions)
260.5
237.6
202.1
216.5
Growth: Royal Gold emphasizes
investment
in
long lived assets that we believe will provide our
259.8
shareholders resource to reserve conversion upside.
Capital Deployment: Royal Gold maintains a strong
balance sheet that allows us to opportunistically
invest at favorable times in the price cycle and during
counter-party needs.
Financial Flexibility: Royal Gold’s unique business
model allows us to source our capital efficiently, with
a preference to grow our business from free cash flow.
Return to Shareholders: Royal Gold concentrates
on margin expansion by maintaining a lean cost
structure, measures success on a per share metrics,
and believes paying a sustainable and growing
dividend is important.
$300
$200
$100
$0
2012
2013
2014
2015
2016
Calendar Year Dividends 2
($ Per share)
$1.00
$.80
$.60
$.40
$.20
$.00
0.80
0.84
0.88
0.92
0.60
2012
2013
2014
2015
2016
Footnotes:
Footnotes:
The term “Adjusted EBITDA” is a non-GAAP financial measure.
1. 1. The term “Adjusted EBITDA” is a non-GAAP financial measure.
Adjusted EBITDA is defined by the Company as net income plus
Adjusted EBITDA is defined by the Company as net income plus
depreciation, depletion and amortization, non-cash charges, income
depreciation, depletion and amortization, non-cash charges, income
tax expense, interest and other expense, and any impairment of
tax expense, interest and other expense, and any impairment of
mining assets, less non-controlling interests in operating income
mining assets, less non-controlling interests in operating income
of consolidated subsidiaries, interest and other income, and any
of consolidated subsidiaries, interest and other income, and any
royalty portfolio restructuring gains or losses. A reconciliation of
royalty portfolio restructuring gains or losses. A reconciliation of
Net Income to Adjusted EBITDA is provided on page 24.
Net Income to Adjusted EBITDA is provided on page 24.
Dividends are paid on a calendar year basis. The dividend for
2. 2. Dividends are paid on a calendar year basis. The dividend for
calendar year 2016 was $0.92; the dividend paid during fiscal year
calendar year 2016 was $0.92; the dividend paid during fiscal year
2016 was $0.91.
2016 was $0.91.
46594nar.indd 3
9/24/16 2:52 PM
3 | ROYAL GOLD, INC. | 2016 ANNUAL REPORT
Our strategic positioning provided
many opportunities to Royal Gold;
and in fiscal 2016 we were perfectly
positioned to buy quality assets
at a favorable entry point in the
commodity price cycle when others
were selling.
Letter to Shareholders
DEAR FELLOw SHAREHOLDER,
By many measures, the last several years have been
By many measures, the last several years have been
difficult for the gold industry. The gold price drifted from
difficult for the gold industry. The gold price drifted from
historical highs in 2011 and 2012 to a six year low in
historical highs in 2011 and 2012 to a six year low in
December 2015. Many operating companies implemented
December 2015. Many operating companies implemented
aggressive debt and cost reduction campaigns in search of
aggressive debt and cost reduction campaigns in search of
to
margins and survival. While others responded defensively to
margins and survival. While others responded defensively
a weak metal price environment, we positioned ourselves
a weak metal price environment, we positioned ourselves
to take advantage of it.
to take advantage of it.
Royal Gold went into this difficult period from a position
Royal Gold went into this difficult period from a position
of strength, with a strong balance sheet and a lean cost
of strength, with a strong balance sheet and a lean cost
structure. Our resulting financial performance was strong
structure. Our resulting financial performance was strong
with volume and adjusted EBITDA growing by 41% and 29%,
with volume and adjusted EBITDA growing by 41% and 29%,
respectively, over the last three fiscal years.
respectively, over the last three fiscal years.
Our strategic positioning provided many opportunities
Our strategic positioning provided many opportunities
to Royal Gold; and in fiscal 2016 we were perfectly
to Royal Gold; and in fiscal 2016 we were perfectly
positioned to buy quality assets at a favorable entry point
positioned to buy quality assets at a favorable entry point
in the commodity price cycle when others were selling.
in the commodity price cycle when others were selling.
We closed $1.4 billion of new acquisitions in the first
We closed $1.4 billion of new acquisitions in the first
quarter of fiscal 2016.
quarter of fiscal 2016.
New investments at Andacollo, Pueblo Viejo, Wassa and
New investments at Andacollo, Pueblo Viejo, Wassa and
Prestea are already among our top five revenue producers,
Prestea are already among our top five revenue producers,
and we look forward to Rainy River’s production in the near
and we look forward to Rainy River’s production in the near
future. These acquisitions contributed to a 21% increase
future. These acquisitions contributed to a 21% increase
in attributable precious metal reserves, totaling 6.4 million
in attributable precious metal reserves, totaling 6.4 million
gold equivalent ounces, and are expected to drive industry
gold equivalent ounces, and are expected to drive industry
leading growth in volume of about 25% over the next three
leading growth in volume of about 25% over the next three
fiscal years.
fiscal years.
Specifically, our fiscal 2016 investments included the
Specifically, our fiscal 2016 investments included the
following:
following:
In July 2015, we expanded our economic and geographic
• • In July 2015, we expanded our economic and geographic
interest at the Andacollo mine in Chile, operated by Teck
interest at the Andacollo mine in Chile, operated by Teck
Resources Limited. This increased interest in gold from
Resources Limited. This increased interest in gold from
Andacollo helps offset the declining gold grade profile
Andacollo helps offset the declining gold grade profile
at the mine and is expected to provide revenue to Royal
at the mine and is expected to provide revenue to Royal
Gold for the next several decades.
Gold for the next several decades.
4
46594nar.indd 4
9/24/16 2:52 PM
Also in July 2015, we entered into a gold and silver stream
• • Also in July 2015, we entered into a gold and silver stream
with New Gold, Inc. on its Rainy River project in Ontario,
with New Gold, Inc. on its Rainy River project in Ontario,
Canada. Rainy River is expected to become a strong revenue
Canada. Rainy River is expected to become a strong revenue
contributor when production commences, which is projected
contributor when production commences, which is projected
in calendar 2017.
in calendar 2017.
We closed a gold streaming and loan agreement with Golden
• • We closed a gold streaming and loan agreement with Golden
Star Resources Ltd. related to its assets in Ghana in July, and
Star Resources Ltd. related to its assets in Ghana in July, and
expanded that streaming interest in December 2015. We are
expanded that streaming interest in December 2015. We are
receiving production from the existing Wassa and Prestea
receiving production from the existing Wassa and Prestea
operations while funding for the development of two new
operations while funding for the development of two new
underground operations. We are particularly interested in
underground operations. We are particularly interested in
the exploration opportunities at these assets, and for the
the exploration opportunities at these assets, and for the
potential to expand mine lives.
potential to expand mine lives.
In September 2015, we closed the Pueblo Viejo gold and
• • In September 2015, we closed the Pueblo Viejo gold and
silver streaming transaction with Barrick Gold Corporation,
silver streaming transaction with Barrick Gold Corporation,
adding yet another world class, high quality, long-lived asset
adding yet another world class, high quality, long-lived asset
with substantial resource conversion opportunity to Royal
with substantial resource conversion opportunity to Royal
Gold’s portfolio. Opportunities of this caliber and magnitude
Gold’s portfolio. Opportunities of this caliber and magnitude
are rare. Here too, we expect production for the next several
are rare. Here too, we expect production for the next several
decades.
decades.
However, fiscal 2016 was not without its challenges:
However, fiscal 2016 was not without its challenges:
After completing our investments during the fiscal first
• • After completing our investments during the fiscal first
quarter, we turned our attention for much of the remainder
quarter, we turned our attention for much of the remainder
of the year to liquidity concerns at Thompson Creek Metals
of the year to liquidity concerns at Thompson Creek Metals
Company Inc. and to protecting our investment at Mount
Company Inc. and to protecting our investment at Mount
Milligan. We were a catalyst in generating a free market
Milligan. We were a catalyst in generating a free market
solution to this situation. Our work culminated in an
solution to this situation. Our work culminated in an
agreement with Centerra Gold Inc. in July 2016 to amend our
agreement with Centerra Gold Inc. in July 2016 to amend our
streaming interest, while retaining the economic value of this
streaming interest, while retaining the economic value of this
investment for our shareholders. This facilitated Centerra’s
investment for our shareholders. This facilitated Centerra’s
pending acquisition of Thompson Creek, which is expected
pending acquisition of Thompson Creek, which is expected
to close, with our stream amendment, in the second half of
to close, with our stream amendment, in the second half of
calendar 2016. We believe the amended stream and the
calendar 2016. We believe the amended stream and the
Centerra acquisition will be an excellent outcome for Royal
Centerra acquisition will be an excellent outcome for Royal
Gold, and we anticipate Centerra’s stronger balance sheet
Gold, and we anticipate Centerra’s stronger balance sheet
and gold-focused skill set will further benefit our investment
and gold-focused skill set will further benefit our investment
at Mount Milligan.
at Mount Milligan.
We believe the amended stream and
the Centerra acquisition will be an
excellent outcome for Royal Gold,
and we anticipate Centerra’s stronger
balance sheet and gold-focused skill
set will further benefit our investment
at Mount Milligan.
46594nar.indd 5
9/24/16 2:52 PM
5 | ROYAL GOLD, INC. | 2016 ANNUAL REPORT
At Rubicon Minerals, the Phoenix project experienced
• • At Rubicon Minerals, the Phoenix project experienced
I am very proud of our dedicated employees at Royal Gold
I am very proud of our dedicated employees at Royal Gold
a significant reduction in resources that resulted in a
a significant reduction in resources that resulted in a
and was pleased to introduce nearly half our employees
and was pleased to introduce nearly half our employees
suspension of development and an impairment of our
suspension of development and an impairment of our
to you at our Investor Day seminar this year. They, and
to you at our Investor Day seminar this year. They, and
interest. We continue to seek opportunities to recover
interest. We continue to seek opportunities to recover
our outstanding Board of Directors, are among the most
our outstanding Board of Directors, are among the most
value for this investment.
value for this investment.
talented in the business and are focused diligently on
talented in the business and are focused diligently on
We advanced the Tetlin Gold Project in Alaska during
• • We advanced the Tetlin Gold Project in Alaska during
executing our strategy.
executing our strategy.
the fiscal year with an investment of $5.7 million.
the fiscal year with an investment of $5.7 million.
While the path was not linear from the start to the end
While the path was not linear from the start to the end
Exploration results continue to expand our knowledge base
Exploration results continue to expand our knowledge base
of the fiscal year, we delivered on our corporate objectives
of the fiscal year, we delivered on our corporate objectives
of the project and have justified further work in fiscal
of the project and have justified further work in fiscal
of providing shareholder exposure to growth, quality and
of providing shareholder exposure to growth, quality and
2017 at the same or higher levels. This is another example
2017 at the same or higher levels. This is another example
opportunity. I sincerely thank our shareholders for your
opportunity. I sincerely thank our shareholders for your
of an opportunistic investment, which we structured
of an opportunistic investment, which we structured
support of our efforts.
support of our efforts.
to permit us to exit the project and return to our core
to permit us to exit the project and return to our core
business at the appropriate time.
business at the appropriate time.
Our strategy is focused on long term value:
Our strategy is focused on long term value:
We will continue to invest opportunistically in assets
• • We will continue to invest opportunistically in assets
Tony Jensen
Tony Jensen
that we believe will provide our shareholders resource to
that we believe will provide our shareholders resource to
President and CEO
President and CEO
reserve conversion upside and gold price leverage.
reserve conversion upside and gold price leverage.
We will continue to maintain a lean structure to maximize
• • We will continue to maintain a lean structure to maximize
margins.
margins.
We will continue to emphasize per share metrics to
• • We will continue to emphasize per share metrics to
measure our success.
measure our success.
We will continue to source our capital needs as efficiently
• • We will continue to source our capital needs as efficiently
as possible with a preference to grow our business from
as possible with a preference to grow our business from
free cash flow.
free cash flow.
We will continue to provide a return of capital to our
• • We will continue to provide a return of capital to our
shareholders.
shareholders.
Similarly, we take a long term view of the gold market.
Similarly, we take a long term view of the gold market.
In the second half of fiscal 2016, there was renewed
In the second half of fiscal 2016, there was renewed
market appreciation for the safe haven and strong currency
market appreciation for the safe haven and strong currency
characteristics of gold. Simply stated, we believe gold
characteristics of gold. Simply stated, we believe gold
is largely valued as a currency, and the supply of gold is
is largely valued as a currency, and the supply of gold is
increasing at a much slower rate than fiat currency
increasing at a much slower rate than fiat currency
throughout the world. These long-term market dynamics
throughout the world. These long-term market dynamics
are favorable for gold and remain in place, with a projected
are favorable for gold and remain in place, with a projected
decline in gold mine production and continued soft fiat
decline in gold mine production and continued soft fiat
monetary policies resulting in negative interest rates.
monetary policies resulting in negative interest rates.
6
46594nar.indd 6
9/24/16 2:52 PM
Principal Producing Properties
Principal Producing Properties
Approximately 77% of Royal Gold’s fiscal 2016 revenue derived from our Principal Producing Properties. This includes
Mount Milligan, Andacollo, Pueblo Viejo, Wassa and Prestea, Peñasquito, Holt and Cortez.
Our principal properties are located in some of the world’s most prolific gold-producing regions. Our producing properties
are further distinguished by their long mine lives, strong production profiles, impressive unit economics and resource to
reserve conversion potential. For example, our principal properties have over 15 years of remaining reserve life, on average,
with several properties, such as Pueblo Viejo, Mount Milligan and Andacollo, featuring reserve lives in excess of 20 years.
Pueblo Viejo is also one of just three gold mines in the world today producing approximately 1 million ounces of gold
annually, while Mount Milligan ranks amongst the world’s lowest cost gold-copper mines. The operators of the Peñasquito,
Pueblo Viejo and Wassa and Prestea mines are currently engaged in the analysis and/or implementation of new production
technology, tailings dam expansion, and exploration to potentially convert future resources to reserves.
Notes for pages 8-13:
1. Reserves, estimated production and mine start-up information were provided by the operators and have not been verified by Royal Gold.
2. Metal prices for the reserve figures can be found on page 20, footnote number 3.
7 | ROYAL GOLD, INC. | 2016 ANNUAL REPORT
46594nar.indd 7
9/26/16 10:08 AM
FY2016 Revenue:
$4$499.2M.2M
FY2016 SALeS:
441,600
1,600 ooz gold
z gold
ReSeRveS: 1
1.609M ooz gold
1.609M
z gold
REgiON iV, CHiLE
Royal Gold’s wholly-owned subsidiary, RGLD Gold AG (“RGLD Gold”), owns the
right to purchase 100% of payable gold until 900,000 ounces have been delivered;
and 50% thereafter, subject to a fixed payable percentage of 89%. The purchase
price for gold ounces delivered is 15% of the monthly average gold price for the
month preceding the delivery date.
Andacollo is an open-pit copper mine and milling operation operated by a
subsidiary of Teck Resources Limited (“Teck”). Gold is produced as a by-product
of copper production. The mine is located in Coquimbo Province, Region IV, Chile,
adjacent to the town of Andacollo.
Production Status: Stream deliveries from Andacollo were 41,700 ounces of
gold during our fiscal year 2016. We sold approximately 41,600 ounces of gold
during the year. Teck has indicated that they expect calendar 2016 gold grade and
production to exceed calendar 2015.
1. Reserves as of December 31, 2015.
8
46594nar.indd 8
9/24/16 2:52 PM
Andacollo FY2016 SALES:
$12$1255..4M4M
FY2016 SALES:
108,800 ooz gold
108,800
z gold
RESERvES: 1
55.68.689M 9M ooz gold
z gold
BRiTiSh COLUmBiA, CANADA
RGLD Gold owns the right to purchase 52.25% of the payable gold from the Mount
Milligan project, at a cash purchase price of $435 for each payable ounce of gold
delivered to RGLD Gold, subject to a fixed payable percentage of 97%.
Mount Milligan is an open-pit copper-gold mine operated by a subsidiary of
Thompson Creek Metals Company, Inc. (“Thompson Creek”), located in central
British Columbia, Canada.
On July 5, 2016, Royal Gold signed a commitment letter and binding term sheet
with Centerra Gold Inc. (“Centerra”) related to our streaming interest at the
Mount Milligan mine. Centerra entered into a definitive arrangement agreement
to acquire Thompson Creek and pay its outstanding bonds. Under the terms of the
commitment letter, Royal Gold’s 52.25% gold streaming interest at Mount Milligan
will be amended, conditional and effective on closing of Centerra’s acquisition of
Thompson Creek, to a 35% gold stream and 18.75% copper stream. Royal Gold
will continue to pay $435 per ounce of gold delivered and will pay 15% of the spot
price per metric tonne of copper delivered.
Production Status: Stream deliveries from Mount Milligan were 111,000 ounces
of gold during our fiscal year 2016, an increase of approximately 50% when
compared to our fiscal year 2015. The increase was due to higher mill throughput
and gold grade. We sold approximately 108,800 ounces of gold during the year.
Thompson Creek estimates that Mount Milligan gold production will be at the lower
end of their calendar 2016 production guidance of 240,000 to 270,000 ounces.
1. Reserves as of December 31, 2015.
46594nar.indd 9
9/26/16 8:28 AM
9 9 | | ROROYYAL GOLD
AL GOLD, INC.
, INC. | 2
| 2016 ANNU
AL REPORTT
016 ANNUAL REPOR
Mount Milligan FY2016 REvEnuE:
$$222.8M2.8M
FY2016 PRoduction: 1
558484,,000 000 ooz gold
z gold
21.21.4M 4M ooz silv
z silverer
.2M lblbs les leadad
134134.2M
333333..00MM lblbs zinc
s zinc
RESERvES: 2
1010..180M180M o oz gold
z gold
55881.1.9960M
60M ooz silv
33..7701B 01B lblbs les leadad
8.886B lblbs zinc
8.886B
s zinc
z silverer
ZACATECAS, mExiCO
Royal Gold owns a 2.0% NSR royalty on all metals produced from the Peñasquito
mine. The open-pit mine, composed of two main deposits, Peñasco and Chile
Colorado, hosts one of the world’s largest gold, silver and zinc reserves, while also
containing large lead reserves. Peñasquito is operated by a subsidiary of Goldcorp
Inc. (“Goldcorp”) and is situated in the western half of the Concepción Del Oro
district in the northeast corner of Zacatecas State, Mexico.
Production Status: Gold, silver, lead and zinc production attributable to our
royalty interest at Peñasquito decreased approximately 21%, 13%, 15% and
2%, respectively, during our fiscal year 2016, when compared to our fiscal year
2015. The decrease in production is attributable to lower throughput, grades
and recovery.
Over the next three calendar years, Goldcorp expects mining activities in the pit
to be focused on lower grade ore in the upper parts of the Peñasco pit while
stripping is emphasized to ensure an economically optimal pit shell design to
maximize the net asset value of the operation. By calendar 2019, Goldcorp expects
Peñasquito’s gold production to benefit from mining higher grades at the bottom
of the Peñasco pit and significantly enhanced metallurgical recoveries with the
planned completion of the Pyrite Leach Project (“PLP”) approved in July 2016.
The PLP is expected to increase overall gold and silver recovery by treating the
zinc tailings before discharge to the tailings storage facility.
1. Reported production for FY2016 relates to the amount of metal sales subject to our royalty interests
as reported to us by Goldcorp.
2. Reserves as of December 31, 2015.
10
46594nar.indd 10
9/26/16 8:28 AM
Peñasquito FY2016 REvEnuE:
$$3399.7.7MM
FY2016 SALES:
331,21,20000 o oz gold
z gold
2208,08,900900 o oz silv
z silverer
8.9960M
60M ooz gold
z gold
RESERvES: 1 8.
5454..14145M 5M ooz silv
z silverer
Pueblo Viejo
SANChEZ RAmiREZ, DOmiNiCAN REPUBLiC
RGLD Gold owns the right to purchase 7.5% of Barrick’s 60% interest in payable
gold produced from the Pueblo Viejo mine until 990,000 ounces have been
delivered; and 3.75% thereafter. The purchase price for gold ounces delivered
is 30% of the spot price until 550,000 ounces have been delivered, and 60%
thereafter. RGLD Gold also owns the right to purchase 75% of Barrick’s 60%
interest in the payable silver produced from the Pueblo Viejo mine until 50 million
ounces of payable silver have been delivered; and 37.5% thereafter. The purchase
price for silver ounces delivered is 30% of the spot price until 23.1 million ounces
have been delivered, and 60% thereafter. Silver deliveries are based on a fixed
70% recovery rate.
Pueblo Viejo is an open-pit gold mine owned by a joint venture in which Barrick
holds a 60% interest and is responsible for operations. Goldcorp holds the
remaining 40% interest. The mine is located in the central part of the Dominican
Republic on the Caribbean island of Hispaniola.
Production Status: Stream deliveries from Pueblo Viejo were 42,200 ounces of
gold and 532,600 ounces of silver during our fiscal year 2016.
Our silver stream was effective January 1, 2016, thus stream deliveries only reflect
half of a fiscal year. We sold approximately 31,200 ounces of gold and 208,900
ounces of silver during the year.
In calendar 2016, Barrick expects improved throughput and plant availability as
compared to calendar 2015 primarily due to overcoming the issues related to
the oxygen plant motor failures which negatively impacted 2015 throughput.
In addition, Barrick is focused on improving efficiency and throughput by a
combination of ore blending optimization, increasing autoclave availability, and
optimization of maintenance strategies. A prefeasibility study is expected to be
commissioned in the second half of calendar 2016 to evaluate a possible increase
in tailings storage capacity, giving the potential to move a significant portion of the
mine’s 7.7 million ounces of gold and 44.7 million ounces of silver in measured and
indicated resources to reserves.
1. Reserves as of December 31, 2015.
46594nar.indd 11
9/26/16 8:28 AM
11 | | ROROYYAL GOLD
11
AL GOLD, INC.
, INC. | 2
| 2016 ANNU
AL REPORTT
016 ANNUAL REPOR
FY2016 REvEnuE:
$$2323..33MM
FY2016 SALES:
2200,,100100 o oz gold
z gold
RESERvES:1
2.2.143M143M o oz gold
z gold
Wassa and Prestea WESTERN REgiON, ghANA
RGLD Gold owns the right to purchase 9.25% of payable gold produced from the
Wassa and Prestea projects, until the earlier of (i) December 31, 2017 or (ii) the
date at which the Wassa and Prestea underground projects achieve commercial
production; and 10.5% thereafter. The purchase price for gold ounces delivered is
20% of the spot price until 240,000 ounces have been delivered, and thereafter
the stream percentage decreases to 5.5% of payable gold produced from the
Wassa and Prestea projects at a purchase price equal to 30% of the spot price.
The Wassa and Prestea projects are operated by Golden Star Resources Ltd.
(“Golden Star”). The Wassa open-pit mine and oxide ore mill are located in
the Wassa East District, in the Western Region of Ghana. The Prestea open-pit
operation produces oxide ore from the Ashanti Gold District in the central eastern
section of the Western Region of Ghana.
Production Status: Stream deliveries from Wassa and Prestea were 21,500
ounces of gold during our fiscal year 2016. We sold approximately 20,100 onces
during the year. Golden Star’s total production in calendar 2016 is expected to be
between 180,000 and 205,000 ounces of gold.
We are currently receiving production from the existing Wassa and Prestea
operations while contributing funds for the development of two new underground
operations. On July 12, 2016, Golden Star announced pre-commercial production
commenced at Wassa underground gold mine. The Prestea underground project
is currently in development with a planned average annual gold production of
90,000 ounces at a cash operating cost of $468 per ounce.
1. Reserves as of December 31, 2015.
12
46594nar.indd 12
9/26/16 8:28 AM
Additional Principal Producing Properties
Cortez (Pipeline mining Complex)
NEVADA, UNiTED STATES
As of June 30, 2016, Royal Gold held the following royalties at the Cortez open-pit
and underground mine, operated by Barrick: sliding-scale 0.40% to 5.0% GSR1
and GSR2; 0.7125% GSR3; 1.014% NVR1; and 0.618% NVR1C.
As of September 19, 2016, we acquired a royalty that increased our interest in NVR1
from 1.014% to 4.76%; and our interest in NVR1C increased from 0.618% to 4.37%.
Production Status: Production attributable to our royalty interest at Cortez
decreased approximately 68% compared to the prior fiscal year. The decrease
was primarily due to Barrick’s production focus on Cortez Hills, where we do not
have a royalty interest, and reduced production from the Pipeline, South Pipeline
and Gap pits, where our royalty applies, compared to the prior fiscal year. Barrick
expects calendar 2016 gold production at Cortez, in the area subject to our royalty
interests, to be lower compared to calendar 2015 production. Waste stripping at
Crossroads, which is subject to our royalty interest, is expected to restart later in
calendar 2016.
holt
ONTARiO, CANADA
Royal Gold holds a sliding-scale NSR royalty, derived by multiplying 0.00013 by the
quarterly average gold price, on gold produced from the Holt mine now operated
by Kirkland Lake Gold Inc. (“Kirkland Lake”), through their acquisition of St Andrew
Goldfields Ltd. on January 26, 2016.4
Production Status: Production attributable to our royalty interest at Holt
decreased approximately 5% when compared to the prior fiscal year.
1. Reported production relates to the amount of metal sales that are subject to our royalty interests for the
fiscal year ended June 30, 2016, as reported to us by the operators of the mines.
2. Reserves as of December 31, 2015.
3. Cumulative reserves subject to our royalties at Cortez.
4. Newmont Canada Corporation is responsible for payment of our royalty at Holt.
5. Reserves as of December 31, 2014.
FY2016 REvEnuE:
$6.1M$6.1M
FY2016 PRoduction: 1
74,000 oz gold
74,000
oz gold
RESERvES: 2, 3
7.871M7.871M oz gold
oz gold
FY2016 REvEnuE:
$10.3M
$10.3M
FY2016 PRoduction: 1
58,300 oz gold
58,300
oz gold
RESERvES: 5
0.439M oz gold
0.439M
oz gold
13 | | ROYAL GOLD, INC.
13
| 2016 ANNUAL REPORT
ROYAL GOLD, INC. | 2016 ANNUAL REPORT
46594nar.indd 13
9/26/16 8:28 AM
193 Properties
38 PRODUCING
24 DEVELOPMENT
50 EVALUATION
81 ExPLORATION
4
9
3
5
2
6
8
1
14
46594nar.indd 14
9/24/16 2:52 PM
Portfolio Map PRINCIPAL PROPERTIES
Andacollo – Region iV, Chile
Cortez – Nevada, USA
Holt – Ontario, Canada
Mount Milligan – British Columbia, Canada
Peñasquito – Zacatecas, mexico
Pueblo Viejo – Sanchez Ramirez, Dominican Republic
Wassa and Prestea – Western Region, ghana
Pascua-Lama - Region iii, Chile
Rainy River- Ontario, Canada
8
9
4
4
9
9
3
3
5
5
2
2
6
6
7
7
8
1
8
1
46594nar.indd 15
9/24/16 2:52 PM
15 | ROYAL GOLD, INC. | 2016 ANNUAL REPORT
Producing Properties
ProPerty
Location
oPerator
royaLty/MetaL StreaM 1
(gold unless otherwise stated)
reServeS 2,3,4,5
(contained oz or lbs) M 6 MetaL
revenue
FY2016 ($M)
Gwalia Deeps
Australia, W. Australia
St Barbara
1.5% NSR
Meekatharra -
YaloGinDa
Australia, W. Australia
Metals x
0.45% NSR
south laverton
Australia, W. Australia
Saracen
1.5% NSR; $6.00/oz 7
southern Cross
Australia, W. Australia
China Hanking Holdings
1.5% NSR
Don Mario
Bolivia, Chiquitos
Orvana
3.0% NSR (gold, silver and copper)
1.900
0.028
0.516
0.229
0.018
0.472
11.319
taparko
inata
Burkina Faso,
Namantenga
Nord Gold
2.0% GSR; 0.75% GSR (milling royalty) 8
0.502
Burkina Faso, Soum
Avocet
2.5% NSR
Mount MilliGan
Canada, British Columbia
Thompson Creek
52.25% of payable gold 10
voiseY’s BaY
Canada, Labrador
Vale
2.7% NSR (copper, nickel and cobalt)
raMBler north
Canada, Newfoundland
Rambler Metals and Mining
1.0% NSR (gold, silver, copper and zinc)
holt
williaMs
Canada, Ontario
Kirkland Lake Gold
0.00013 x Au price (NSR)
Canada, Ontario
Barrick
0.97% NSR
CanaDian MalartiC
Canada, Quebec
Yamana / Agnico-Eagle
1.0% to 1.5% NSR 11
0.326
5.689
834.075
1779.968
103.331
N.A.
0.439
0.483
3.035
allan
Canada, Saskatchewan
Potash Corporation of
Saskatchewan
$0.36 to $1.44 and $0.25 per ton (potash) 12
N.A.
anDaCollo
Chile, Region IV
Teck
100% of payable gold 13
el toqui
Chile Region xI
Nyrstar
0% to 3.0% NSR (gold, silver, lead and zinc) 14
wassa anD prestea
Ghana, Western Region
Golden Star
9.25% of payable gold 15
Dolores
Mulatos
Mexico, Chihuahua
Pan American Silver
3.25% NSR (gold)
2.0% NSR (silver)
Mexico, Sonora
Alamos
1.0% to 5.0% NSR 16
peñasquito
Mexico, Zacatecas
Goldcorp
2.0% NSR (gold, silver, lead and zinc)
el liMon
Nicaragua, El Limon
B2Gold
3.0% NSR
pueBlo viejo
Dominican Republic,
Sanchez Ramirez
Barrick / Goldcorp
7.5% of payable gold 19
75% of payable silver 20
las CruCes
Spain, Andalucia
First Quantum Minerals
1.5% NSR (copper) 21
johnson CaMp
United States, Arizona
Excelsior Mining
2.5% NSR (copper)
troY
United States, Montana
Hecla Mining
3.0% GSR (silver and copper)
BalD Mountain
United States, Nevada
Kinross
1.75% to 2.5% NSR 23
Cortez (pipeline
MininG CoMplex)
United States, Nevada
Barrick
GSR1: 0.40% to 5.0% GSR 24
GSR2: 0.40% to 5.0% GSR 24
GSR3: 0.71% GSR
NVR1: 1.014% NVR
NVR1C: 0.618% NVR26
1.609
0.194
1.185
22.509
493.712
2.143
1.57
53.100
1.543
10.180
581.960
3701.260
8885.920
0.173
8.960
54.145
804.026
656.000
17.080
119.750
0.423
0.591
3.116
0.744
0.457
2.963
GolD hill
United States, Nevada
Kinross
1.0% to 2.0% NSR 27, 28
0.6% to 0.95 NSR (M-ACE) (gold and silver) 29
0.124
1.823
GolDstrike
United States, Nevada
Barrick
leeville
MariGolD
United States, Nevada
Newmont
United States, Nevada
Silver Standard
0.9% NSR
1.8% NSR
2.0% NSR
pinson
United States, Nevada
Waterton Precious Metals
3.0% NSR – Cordilleran 30
2.94% NSR – Rayrock 31
roBinson
United States, Nevada
KGHM
3.0% NSR (gold and copper)
ruBY hill
United States, Nevada
Waterton Precious Metals
3.0% NSR
twin Creeks
United States, Nevada
Newmont
2.0% GV
United States,
South Dakota
Coeur Mining
0.0% to 2.0% NSR 32
United States, Utah
Bowie Resources
1.41% GV (coal)
wharF
skYline
16
3.756
1.005
1.867
0.483
0.827
1375.67
0.024
0.075
0.763
N.A.
Au
Au
Au
Au
Au
Ag
Cu
Au
Au
Au
Cu
Ni
Co
Au
Au
Au
Au
Au
Ag
Pb
Zn
Au
Au
Ag
Au 17
Au 18
Ag 18
Pb 18
Zn 18
Au
Au
Ag
Cu
Cu
Ag
Cu
Au
Au
Au
Au 25
Au 25
Au 25
Au
Ag
Au
Au
Au
Au
Au
Cu
Au
Au
Au
4.6
0.4
2.7
2.1
0.6
1.9
- 9
125.4
11.0
0.2
10.3
1.7
6.3
1.1
49.2
0.1
23.3
4.4
8.1
22.8
1.6
39.7
5.4
- 22
0.1
0.9
6.1
1.3
5.2
2.2
4.6
0.7
8.1
0.2
1.6
2.4
1.9
*One oil and gas royalty is not included
46594nar.indd 16
9/24/16 2:52 PM
Development Properties
ProPerty
Location
oPerator
royaLty/MetaL StreaM 1
(gold unless otherwise stated)
reServeS 2,3,4,5
(contained oz or lbs) M6
MetaL
Don niColas
Argentina, Santa Cruz
Compañía Inversora en Minas
2.0% NSR (gold, silver)
BalCooMa
Australia, Queensland
Consolidated Tin
1.5% NSR
CeltiC/wonDer
north
Australia, W. Australia
Bligh Resources
1.5% NSR
kunDip
Australia, W. Australia
ACH Minerals
1.0% to 1.5% NSR 7
Meekatharra -
nannine
Meekatharra -
paDDY’s Flat
Meekatharra -
reeDYs
reD DaM
Mara rosa
BelCourt
sChaFt Creek
Australia, W. Australia
Metals x
1.5% NSR
Australia, W. Australia
Metals x
1.5% NSR;
AU$10 per ounce produced 8
Australia, W. Australia
Metals x
Australia, W. Australia
Phoenix Gold
Brazil, Goiás
Amarillo Gold
1.5% to 2.5% NSR 9
1.0% NSR 9
1.5% NSR
2.5% GSR
1.0% NSR
Canada,
British Columbia
Canada,
British Columbia
Walter Energy
0.103% GV (coal)
Copper Fox / Teck Resources
3.5% NPI (gold, silver,
copper and molybdenum)
kutCho Creek
Canada, British
Columbia
Capstone Mining
2.0% NSR (gold, silver,
copper and zinc)
pine Cove
Canada, Newfoundland
Anaconda Mining
7.5% NPI 10
BaCk river
Canada, Nunavut
Sabina Gold & Silver
George Lake: 2.35% NSR 11
Goose Lake: 1.95% NSR 12
phoenix GolD
Canada, Ontario
Rubicon Minerals
6.3% of payable gold 13
rainY river
Canada, Ontario
New Gold
6.5% of payable gold 14
60% of payable silver 14
CaBer
Canada, Quebec
Nyrstar
1.0% NSR (copper and zinc)
el Morro
Chile, Region III
Goldcorp
1.4% NSR (gold, copper) 15
pasCua-laMa
Chile, Region III
Barrick
0.78% to 5.45% NSR (gold) 16, 17
1.09% NSR (copper) 18
iloviCa
la inDia
Macedonia, Bosilovo
Euromax Resources
25% payable gold 19
Nicaragua, Leon
Condor Gold
3.0% NSR
svetloYe
Russia, Khabarovsk Krai
Polymetal International
1.0% NSR (gold and silver)
soleDaD Mountain
United States,
California
Golden Queen / Gauss LLC
3.0% NSR (gold and silver) 20
hasBrouCk Mountain
United States, Nevada
West Kirkland Mining /
Clover Nevada
1.5% NSR
0.196
0.401
0.001
0.380
32.466
7.879
29.274
0.097
0.307
0
0.483
0.092
0.111
0.946
N.A.
5.775
51.895
5630.715
373.340
0.124
11.618
462.678
734.300
0.175
0
2.503
N.A.
3.772
9.410
11.355
116.036
2.674
1959.099
14.680
548.177
2.45
0.675
1.185
0.664
0.765
0.984
16.516
0.588
10.569
Au
Ag
Au
Ag
Cu
Pb
Zn
Au
Au
Au
Au
Au
Au
Au
coal
Au
Ag
Cu
Mo
Au
Ag
Cu
Zn
Au
Au
Au
Au
Au
Ag
Cu
Zn
Au
Cu
Au
Cu
Au
Au
Ag
Au
Ag
Au
Ag
Au
Ag
46594nar.indd 17
9/24/16 2:52 PM
17 | ROYAL GOLD, INC. | 2016 ANNUAL REPORT
Evaluation Properties1
ProPerty
argentina
Chispas
Martha
auStraLia
aveBurY
ownerShiP
royaLty rate
ProPerty
Location
royaLty rate
Compañía Inversora en Minas
2.0% NSR
Hunt Mining
2.0% NSR
GolD river
hiGh lake
Tahoe Resources
MMG Limited
1.5% NSR
1.5% NSR
horizon Coal
Anglo American
0.50% GV (coal)
canada (continued)
MMG Limited
Bell Creek
Metallica Minerals
2.0% NSR
AUD$1 to
AUD$2/tonne
Bellevue
Burnakura
Golden Spur Resources
2.0% NSR
Monument Mining
1.5% to 2.5% NSR 2
Cheritons FinD
Hanking Gold Mining
eDna MaY
Evolution Mining
kinG oF the hills
Saracen Mineral
1.5% NSR
0.5% GSR
1.5% NSR
Meekatharra - saBBath
Avitus Capital
AUD$1.00/tonne 3
Mt. Fisher
Mt. GooDe
(CosMos)
Rox Resources
AUD$5.00/oz 4
Western Areas
1.5% NSR (nickel)
north well Chilkoot
Saracen Mineral
2.5% to 4.0% NSR 5
paDDinGton
Zijin Mining Group
1.75% NSR
phillips FinD
Barra Resources
AUD$10.00/oz 6
quinns austin
CNN Investments
teMora
Sandfire Resources
van uDen GolD Deposit
MH Gold / St Barbara
weMBleY DuraCk
Metals x
westMorelanD
Laramide Resources
YunDaMinDera
Nex Metals
1.5% NSR
12.5% NPI
1.5% NSR
1.0% NSR
1.0% NSR
1.5% NSR
hushaMu
ulu
wilanour
(CoChenour)
wolverine
ghana
NorthIsle Copper and Gold
10.0% NPI
Mandalay Resources
5.0% NSR 8
Goldcorp
Yukon Zinc
5% NPI
0.0% to 9.445% NSR 9
kuBi villaGe
Asante Gold
3.0% NPI
guateMaLa
taMBor
Mexico
nieves
ruSSia
Kappes, Cassiday & Associates
4.0% NSR
Blackberry Ventures
2.0% NSR
FeDorova
Barrick / Pana PGM
united StateS
alMaDen
GolDrush
Terraco Gold
Barrick
islanD Mountain
Victoria Gold
la jara
Laramide Resources
lonG valleY
Vista Gold
0.75% or 1.0% NSR
0.5% NSR
1.25% or 1.5% NSR 10
1.0% to 2.0% NSR 11
1.0% NVR
2.0% NSR
$0.25/lb 12
(uranium)
1.0% NSR
3.0% NSR
Burkina FaSo
seGa
canada
Perseus Mining
3.0% NSR
MCDonalD
(keep Cool)
niBlaCk
Newmont
Heatherdale Resources
1.0% to 3.0% NSR 13
Barraute (swanson)
Agnico-Eagle
1.0% or 2.0% NSR 7
BerG
Thompson Creek
1.0% NSR
Bousquet-
CaDillaC-joannes
Agnico-Eagle
2.0% NSR
Bronson slope
Seabridge Gold
1.0% NSR
FollansBee
Goldcorp / Premier Gold
2.0% NSR
relieF CanYon
Pershing Gold
roCk Creek
Hecla Mining
san juan silver
(BullDoG)
Hecla Mining
2.0% NSR
1.0% NSR
3.0% NSR 14
1.0% NSR 14
tetlin
wilDCat
Contango ORE
2.0% and 3.0% NSR 15
Clover Nevada
1.0% NSR 16
1.0% to 2.0% NSR 17
18
46594nar.indd 18
9/24/16 2:52 PM
Exploration Properties
ProPerty
argentina
ownerShiP
royaLty rate
ProPerty
ownerShiP
royaLty rate
canada (continued)
MiChelle
Compañía Inversora en Minas
2.0% NSR
lazY eDwarD BaY
Denison Mines
Mina CanCha
Yamana Gold
2.50% NSR
MCkenzie reD lake
Goldcorp
2.5% NSR 9
1.0% NSR
auStraLia
aBBotts
BunDarra
Doray Minerals
Terrain Minerals
1.5% NSR
1.5% NSR
Mike lake
Pitchblack Resources
2.0% NSR
MonuMent
New Nadina Explorations /
Archon Minerals
1.0% GV
ButterCup Bore
Panoramic Resources
2.0% GPR
niGhthawk lake
aFriDi lake
Shear Diamonds
1.5% NSR
ashMore
aviat one
HudBay Minerals
1.5% NSR
Stornoway Diamond
1.0% GV
apex
BsC
ChesterFielD
Galaxy Resources
CopperheaD
St Barbara
1.5% NSR
1.5% NSR
Croesus
Zijin Mining Group
AUD$1.25/tonne 1
Forrestania
Western Areas
1.5% NSR 2
jaGuar niCkel
Independence Group
1.5% NSR
kalGoorlie east
Malanti Pty Ltd
lake BallarD
Eastern Goldfields
lounGe lizarD
Western Areas
Maori lass
St Barbara
MelBa Flats
MMG Limited
Merlin orBit
Merlin Diamonds
Mt. GooDe Bellevue
Golden Spur Resources
Mt newMan-viCtorY
Australia, St Barbara
reD hill west
Cullen Resources
southern Cross niCkel Western Areas
1.125% NSR
0.60% NSR
1.5% NSR 2
1.5% NSR
2.0% NSR
1.0% GV
2.0% NSR 3
1.5% NSR 3
1.5% NSR
2.5% NSR
1.5% NSR 4
stakewell
Diversified Asset Holdings
1.5% NSR
west wYalonG
Argent Minerals / HQ Mining
2.5% NSR
canada
Barrow lake anD
north kellet river
Carswell lake
ChurChill
ChurChill west
DarBY (haYes river)
Hunter Exploration
1.0% GV
Repsol Oil & Gas /
Capstone Mining
Shear Diamonds /
Stornoway Diamond
Shear Diamonds /
Stornoway Diamond
Teck Resources /
Hunter Exploration
5.0% NSR
1.0% GV
1.0% GV
1.0% GV
DuvernY
Threegold Resources
2.0% NSR 5
Franquet
Gauthier
GoDFreY ii
GolD DoMe
Nuinsco Resources /
Ocean Partner Holdings
2.0% NSR 6
3.0% NSR 6
Yamana /Agnico Eagle
3.0% NSR
Moneta Porcupine Mines
2.0% NSR
Golden Predator
2.0% NSR
GolDen Bear
Goldcorp
hiCkeY’s ponD
Krinor Resources
hooD river
Shear Diamonds
jewel
Stornoway Diamond
joe Mann
Jessie Resources
2.0% NSR
1.0% NSR
1.0% GV
1.0% GV
0.0% to 2.0% NSR 7
2.0% NSR 7
juBilee
kizMet
Stornoway Diamond
1.0% GV
Kiska Metals Corporation
1.0% NSR 8
Imperial Metals / Rainy
Mountain Royalty / White Metal
Resources
2.5% NSR 10
qiMMiq
Commander Resources
1.0% to 3.0% NSR 11
2.0% NSR 11
1.0% GV 11
railroaD
Eastmain Resources
3.0% NSR 12
raMBler south
Krinor Resources
Sable Resources
Independence Gold
5.0% NSR 13
1.0% NSR
0.5% NSR
shasta
tak
voiseY’s BaY DiaMonDs
Vale
YellowkniFe lithiuM
Erex International
3.0% GV
2.0% NPI
doMinican rePuBLic
Minera hispanola
Energold Drilling
0.40% NSR 14
honduraS
vueltas De rio
Lundin
2.0% NSR
Mexico
san jeroniMo
Goldcorp
2.0% NSR
tuniSia
trozza
united StateS
China Minmetals
2.5% NSR
aMBrosia lake
Uranium Resources
2.0% NVR
Teck / Pennaroya Utah
3.0% NSR 15
McEwen Mining
BuCkhorn south
Barrick
Cooks Creek/Ferris
Creek
Barrick
DoBY GeorGe
Western Exploration
2.0% NSR 17
horse Mountain
Barrick
0.25% NVR
hot pot
iCBM
keYstone
Nevada Exploration
1.25% NSR
Timberline Resources
0.75% NSR
Energy Fuels
Mule CanYon
Newmont
oro BlanCo
Pan American Silver
pinson – other
Barrick
reese river
MV Portfolios
rYe
Barrick
2.5% NSR
15.0% NPI 16
14.0% NPI 16
1.5% NVR
2.0% NSR
5.0% NSR
3.0% NSR
0.489% to
5.979% NSR 18
2.0% NSR
0.5% NSR
san raFael
Rio Grande Resources
2.0% NVR
silver ClouD
Rimrock Gold
siMon Creek
Barrick
trenton CanYon
Newmont
1.2% NSR
1.0% NSR
3.0% GSR 19
10.0% NPI 19
unCle saM
winDFall
Coventry Resources
2.0% NSR
Timberline Resources
3.2% NSR
wooD GulCh
Western Exploration
wooDruFF Creek
McEwen Mining
5.0% NSR
1.0% NSR
19 | ROYAL GOLD, INC. | 2016 ANNUAL REPORT
46594nar.indd 19
9/24/16 2:52 PM
Footnotes
Producing ProPerties
1. Royalty and Metal Stream definitions are included in the glossary on page 24 of
this annual report.
2. Reserves have been reported by the operators of record as of December 31, 2015,
with the exception of the following properties: Don Mario – September 30, 2015;
Gwalia Deeps, South Laverton – June 30, 2015; Hasbrouck Mountain – June 3,
2015; Wharf – June 1, 2015; Svetloye – January 1, 2015; Bald Mountain, El Morro,
El Toqui, Gold Hill, Holt, Inata, La India, Meekatharra (Nannine, Paddy’s Flat,
Reedys and Yaloginda), Pinson, Rainy River, Ruby Hill and Soledad Mountain
– December 31, 2014; Back River – October 21, 2014; Kundip - June 30, 2014;
Celtic/Wonder North – November 21, 2013; Schaft Creek – December 31, 2012;
Don Nicolas, Johnson Camp and Pascua-Lama – December 31, 2011; Mara Rosa
– October 28, 2011; Balcooma – June 30, 2011; Kutcho Creek – February 15, 2011;
Pine Cove – June 30, 2010; and Caber – July 18, 2007.
3. Gold reserves were calculated by the operators at the following per ounce prices:
A$1,500 – South Laverton; A$1,474 – Southern Cross $1,450 – Kundip; A$1,400
– Celtic/Wonder North and Meekatharra (Nannine, Paddy’s Flat, Reedys and
Yaloginda); $1,366 – Schaft Creek; $1,350 – El Toqui; A$1,310 – Red Dam; $1,300
– El Morro, Pinson and Svetloye; $1,275 – Wharf; $1,250 – Back River, Holt, Inata,
La India, Mount Milligan, Mulatos and Soledad Mountain; A$1,250 – Gwalia Deeps;
$1,225 - Hasbrouck Mountain; $1,200 – Andacollo, El Limon, Gold Hill, Leeville,
Pascua-Lama, Robinson, Taparko and Twin Creeks; $1,180 – Dolores; $1,150 –
Canadian Malartic; $1,100 – Bald Mountain, Don Mario, Don Nicolas, Mara Rosa,
Marigold, Peñasquito, Ruby Hill, Wassa, Bogoso and Prestea and Williams; $1,000
– Cortez, Goldstrike and Pueblo Viejo; and $983 – Pine Cove. No gold price was
reported for Balcooma, Caber or Kutcho Creek
Silver reserves were calculated by the operators at the following prices per
ounce: $25.96 – Schaft Creek; $25.00 – Don Nicolas; $23.00 – El Toqui; $22.50
– Svetloye; $20.00 – Gold Hill; $17.50 – Hasbrouck Mountain; $17.00 – Dolores and
Soledad; $16.50 – Don Mario and Peñasquito; and $15.00 – Pueblo Viejo. No silver
price was reported for Balcooma or Kutcho Creek.
Copper reserves were calculated by the operators at the following prices per
pound: $3.52 – Schaft Creek; $3.21 – Robinson $3.00 – El Morro; $2.98 – Voisey’s
Bay; $2.75 – Don Mario; $2.70 – Las Cruces; $2.50 – Johnson Camp; and $2.00
– Pascua-Lama. No copper reserve price was reported for Balcooma, Caber or
Kutcho Creek.
Lead reserve price was calculated by the operators at the following prices per
pound: $1.04 – El Toqui; and $0.90 – Peñasquito. No lead reserve price was
reported for Balcooma.
Zinc reserve price was calculated by the operators at the following prices
per pound: $1.13 – El Toqui; and $0.95 – Peñasquito. No zinc reserve price was
reported for Balcooma, Caber or Kutcho Creek.
Nickel reserve price was calculated by the operator at the following price per
pound: $6.61 – Voisey’s Bay.
Cobalt reserve price was calculated by the operator at the following price per
pound: $12.81 – Voisey’s Bay.
Molybdenum reserve price was calculated by the operator at the following price
per pound: $15.30 – Schaft Creek..
4. Set forth below are the definitions of proven and probable reserves used by the
U.S. Securities and Exchange Commission.
“Reserve” is that part of a mineral deposit which could be economically and
legally extracted or produced at the time of the reserve determination.
“Proven (Measured) Reserves” are reserves for which (a) quantity is computed
from dimensions revealed in outcrops, trenches, workings or drill holes, and the
grade is computed from the results of detailed sampling, and (b) the sites for
inspection, sampling and measurement are spaced so closely and the geologic
character is so well defined that the size, shape, depth and mineral content of the
reserves are well established.
“Probable (Indicated) Reserves” are reserves for which the quantity and grade
are computed from information similar to that used for proven (measured)
reserves, but the sites for inspection, sampling and measurement are farther
apart or are otherwise less adequately spaced. The degree of assurance of
probable (indicated) reserves, although lower than that for proven (measured)
reserves, is high enough to assume geological continuity between points of
observation.
5. Royal Gold has disclosed a number of reserve estimates that are provided by
operators that are foreign issuers and are not based on the U.S. Securities
and Exchange Commission’s definitions for proven and probable reserves. For
Canadian issuers, definitions of “mineral reserve,” “proven mineral reserve,”
and “probable mineral reserve” conform to the Canadian Institute of Mining,
Metallurgy and Petroleum definitions of these terms as of the effective date of
estimation as required by National Instrument 43-101 of the Canadian Securities
Administrators. For Australian issuers, definitions of “mineral reserve,” “proven
mineral reserve,” and “probable mineral reserve” conform with the Australasian
Code for Reporting of Mineral Resources and Ore Reserves prepared by the Joint
Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy,
Australian Institute of Geoscientists and Minerals Council of Australia, as
amended (“JORC Code”). Royal Gold does not reconcile the reserve estimates
provided by the operators with definitions of reserves used by the U.S. Securities
and Exchange Commission.
6. “Contained ounces” or “contained pounds” do not take into account recovery
losses in mining and processing the ore.
7. The $6/ounce royalty applies to Monty’s Dam and Elliot Lode properties only and
it becomes payable once 265,745 ounces of gold have been produced. This royalty
is payable on gold only.
8. The 2.0% GSR applies to gold production from defined portions of the Taparko-
Bouroum project area. The 0.75% GSR milling royalty applies to ore that is mined
outside of the defined area of the Taparko-Bouroum project that is processed
through the Taparko facility up to a maximum of 1.1 million tons per year.
9. No revenue received during the fiscal year ended June 30, 2016.
10. Thompson Creek will deliver 52.25% of gold produced, at a purchase price equal
to the lesser of $435 per ounce delivered or the prevailing spot price.
11. NSR sliding-scale schedule (price of gold per ounce – royalty rate): $0.00 to $350
– 1.0%; above $350 – 1.5%.
12. The royalty applies to 40% of production. The royalty rate is $1.44 per ton for
the first 600,000 tons on which the royalty is paid, reducing to $0.72 per ton on
600,000 to 800,000 tons and to $0.36 per ton above 800,000 tons, at a price
above $23.00 per ton. A sliding-scale is applicable when the price of potash
drops below $23.00 per ton. Given the current North American market price for
potash, the complete sliding-scale schedule is not presented here. In addition,
there is a $0.25 per ton royalty payable on certain production up to 600,000
tons.
13. Teck will deliver gold in amounts equal to 100% of payable gold until 900,000
ounces have been delivered, and 50% of payable gold thereafter, subject to
a fixed payable percentage of 89%, at a purchase price equal to 15% of the
monthly average gold price for the month preceding the delivery date for each
ounce delivered.
14. All metals are paid based on zinc prices. NSR sliding-scale schedule (price of
zinc per pound – royalty rate): Below $0.50 – 0.0%; $0.50 to below $0.55 – 1.0%;
$0.55 to below $0.60 – 2.0%; $0.60 or higher – 3.0%.
15. Golden Star will deliver 9.25% of gold produced, until the earlier of (a) December
31, 2017 or (b) the date at which the Wassa and Prestea underground projects
achieve commercial production, at which point Golden Star will deliver 10.5% (or
10.9% if Royal Gold’s total investment increases from $145 million to $150 million)
of gold produced until 240,000 ounces have been delivered (or 250,000 ounces
if the total investment increases from $145 million to $150 million), at a purchase
price equal to 20% of the spot price per ounce delivered. Thereafter Golden Star
will deliver 5.5% of gold produced, at a purchase price equal to 30% of the spot
price per ounce delivered.
16. The Company’s royalty is subject to a 2.0 million ounce cap on gold production.
There have been approximately 1.55 million ounces of cumulative production as of
June 30, 2016. NSR sliding-scale schedule (price of gold per ounce – royalty rate):
$0.00 to $299.99 – 1.0%; $300 to $324.99 – 1.50%; $325 to $349.99 – 2.0%;
$350 to $374.99 – 3.0%; $375 to $399.99 – 4.0%; $400 or higher – 5.0%.
17. Reserve shown is “capped” assuming 70% recovery.
18. Operator reports reserves by material type. The sulfide material will be processed
by milling. The oxide material will be processed by heap leaching.
19. Barrick will deliver gold in amounts equal to 7.50% of Barrick’s 60% interest in
gold produced until 990,000 ounces have been delivered, and 3.75% of Barrick’s
60% interest in gold produced thereafter, at a purchase price equal to 30% of
the spot price per ounce delivered until 550,000 ounces have been delivered, and
60% of the spot price per ounce delivered thereafter.
20. Barrick will deliver silver in amounts equal to 75% of Barrick’s 60% interest in
silver produced, subject to a minimum silver recovery of 70%, until 50 million
ounces have been delivered, and 37.50% of Barrick’s 60% interest in silver
produced thereafter, at a purchase price equal to 30% of the spot price per ounce
delivered until 23.10 million ounces of silver have been delivered, and 60% of the
spot price per ounce delivered thereafter.
21. Royalty is payable only when LME cash settlement price for Grade A copper is
equivalent or greater than $0.80 per pound of copper.
22. The Company has not recognized revenue from this property since the acquisition
of International Royalty Corporation in February 2010.
23. NSR sliding-scale schedule (price of gold per ounce – royalty rate): Below $375 –
1.75%; >$375 to $400 – 2.0%; >$400 to $425 – 2.25%; >$425 – 2.5%. All price
points are stated in 1986 dollars and are subject to adjustment in accordance
with a blended index comprised of labor, diesel fuel, industrial commodities and
mining machinery.
24. GSR sliding-scale schedule (price of gold per ounce – royalty rate): Below $210 –
0.40%; $210 to $229.99 – 0.50%; $230 to $249.99 – 0.75%; $250 to $269.99
– 1.30%; $270 to $309.99 – 2.25%; $310 to $329.99 – 2.60%; $330 to $349.99
– 3.00%; $350 to $369.99 – 3.40%; $370 to $389.99 – $3.75%; $390 to $409.99
– 4.0%; $410 to $429.99 – 4.25%; $430 to $449.99 – 4.50%; $450 to $469.99 –
4.75%; $470 and higher – 5.00%.
25. NVR1, NVR1C and GSR3 reserves and additional mineralized material are subsets
of the reserves covered by GSR1 and GSR2.
26. NVR1C is the Crossroads portion of NVR1.
27. The royalty is capped at $10 million. As of June 30, 2016, royalty payments of
approximately $4.2 million have been received.
28. The 1.0% to 2.0% sliding-scale NSR royalty will pay 2.0% when the price of gold
is above $350 per ounce and 1.0% when the price of gold falls to $350 per ounce
or below. The 0.6% to 0.9% NSR sliding-scale schedule (price of gold per ounce –
royalty rate): Below $300 – 0.6%; $300 to $350 – 0.7%; > $350 to $400 – 0.8%;
> $400 – 0.9%. The silver royalty rate is based on the price of gold.
20
46594nar.indd 20
9/24/16 2:52 PM
29. The 0.6% to 0.9% sliding-scale NSR applies to the M-ACE claims.
8. Royalty applies to production above 675,000 ounces.
30. Royalty only applies to Section 29 which currently holds about 95% of the
9. Gold royalty rate is based on the price of silver per ounce. NSR sliding-scale
reserves reported for the property. An additional Cordilleran royalty applies to a
portion of Section 28.
schedule (price of silver per ounce – royalty rate): Below $5.00 – 0.0%; $5.00 to
$7.50 – 3.778%; >$7.50 – 9.445%.
31. Royalty only applies to Section 29 which currently holds about 95% of the
10. The 0.75% NSR royalty applies to gold and silver and the 1.0% NSR royalty
reserves reported for the property. Additional Rayrock royalties apply to Sections
28, 32 and 33; these royalty rates vary depending on pre-existing royalties. The
Rayrock royalties take effect once 200,000 ounces of gold have been produced
from open pit mines on the property. As of June 30, 2016, approximately 103,000
ounces have been produced.
32. NSR sliding-scale schedule (price of gold per ounce – royalty rate): $0.00 to under
$350 – 0.0%; $350 to under $400 – 0.5%; $400 to under $500 – 1.0%; $500 or
higher – 2.0%.
Development pRopeRtIeS
*For footnotes 1-6, see corresponding footnotes under Producing Footnotes.
applies to platinum group elements, copper and nickel. The 0.5% NSR royalty
applies to gold, silver, platinum group elements, copper and nickel. The 1.25%
NSR royalty applies to gold and silver and the 1.5% NSR royalty applies to
platinum group elements, copper and nickel. These royalties become payable
on commercial production once capital repayment has been made at the
project.
11. A $325,000 payment is due upon production of the first 100,000 ounces. Once
production reaches 200,000 ounces, the royalty begins paying at the following
rate schedule (price of gold per ounce – royalty rate): $0.00 to $425 – 1.0%; $425
and above – 2.0%.
12. Royalty is payable on per pound of uranium produced above eight million
7. The royalty rate is 1.0% until 250,000 ounces of gold has been produced, 1.5%
pounds.
thereafter.
8. The A$10 per ounce royalty applies on production above 50,000 ounces. Royalty
payable on gold only.
9. The 1.5% to 2.5% NSR sliding-scale royalty pays at a rate of 1.5% for the first
75,000 ounces produced in any 12 month period and at a rate of 2.5% on
production above 75,000 ounces during that 12 month period. The 1.0% NSR
royalty applies to the Rand area only.
10. Operation is currently in production; estimated pay-back of capital, a requisite to
royalty payments, to occur by 2020.
11. George Lake royalty applies to production above 800,000 ounces.
12. Goose Lake royalty applies to production above 400,000 ounces.
13. This is a metal stream whereby Royal Gold is entitled to 6.3% payable gold until
135,000 ounces of payable gold has been delivered; 3.15% thereafter, whereby
the purchase price for gold ounces delivered is 25% of the London PM gold fixing
price as quoted in United States dollars per ounce by the LBMA on the Date of
Delivery.
13. Royalty rate is 1.0% for each ton of ore having a value of less than $115 per ton;
2.0% for each ton of ore having a value between $115 and $135 per ton; and 3.0%
for each ton of ore having a value greater than $135 per ton.
14. Royalty rate is 3.0% on Homestake and Emerald unpatented claims; 1.0% on
Emerald patented claims.
15. Royalty rate depends on claim group.
16. The 1.0% royalty rate applies to the SS lode claims only.
17. An additional 1.0% NSR applies to gold production between 500,000 ounces
and 1.0 million ounces. The royalty increases to a 2.0% NSR on production in
excess of 1.0 million ounces. This royalty applies to various claims on the mining
property.
exploRatIon pRopeRtIeS
1. Royalty paid on dollars per tonne of ore above 50,000 tonnes up to 500,000
tonnes.
2. Royalty payable on gold only.
14. This is a metal stream whereby Royal Gold is entitled to 6.5% of the gold
3. Royalty rate is 2.0% for gold and 1.5% for all other metals.
produced until 230,000 ounces have been delivered, 3.25% thereafter; and
60% of the silver produced until 3.1 million ounces have been delivered, 30%
thereafter. The purchase price for gold or silver ounces delivered is 25% of the
spot price per ounce of gold or silver.
15. The royalty covers approximately 30% of the La Fortuna deposit. Reserves
attributable to Royal Gold’s royalty represent 3/7 of Goldcorp’s reporting of 70%
of the total reserve.
16. Royalty applies to all gold production from an area of interest in Chile. Only that
portion of the reserves pertaining to our royalty interest in Chile is reflected here.
Approximately 20% of the royalty is limited to the first 14.0 million ounces of
gold produced from the project. Also, 24% of the royalty can be extended beyond
14.0 million ounces produced for $4.4 million. In addition, a one-time payment
totaling $8.4 million will be made if gold prices exceed $600 per ounce for any
six-month period within the first 36 months of commercial production.
17. NSR sliding-scale schedule (price of gold per ounce - royalty rate): less than or
equal to $325 – 0.78%; $400 – 1.57%; $500 – $2.72%; $600 – 3.56%; $700 –
4.39%; greater than or equal to $800 – 5.23%. Royalty is interpolated between
lower and upper endpoints.
18. Royalty applies to all copper production from an area of interest in Chile. Only
that portion of the reserves pertaining to our royalty interest in Chile is reflected
here. This royalty will take effect after January 1, 2017.
19. This is a metal stream whereby Royal Gold is entitled to 25% payable gold until
525,000 ounces of payable gold has been delivered; 12.5% thereafter, whereby
the purchase price for gold is 25% of the London PM gold fixing price as quoted
in United States dollars per ounce by the LBMA on the Date of Delivery.
4. Royalty payable on all minerals, except nickel or any by-products in whatever
form or state.
5. Royalty rate is equal to 15% of the proceeds of production until $1,760,000 has
been paid. A 2.0% NSR royalty applies to production thereafter.
6. The 2.0% NSR royalty applies to production from an area of the property referred
to as the “GeoNova Properties,” and the 3.0% NSR royalty applies to production
from an area of the property referred to as the “Homestake Properties.”
7. Sliding-scale royalty applies to gold only. NSR sliding-scale schedule (price per
gold ounce - royalty rate): Below $325 - 0.0%; $325 - 1.5%; $375 - 2.0%. Once
$500,000 has been received in gold royalty payments, the rate will reduce to
1.0% and will only be in effect at a gold price of $350 per ounce or higher. The
2.0% NSR royalty applies to silver and copper.
8. Operator has the option to purchase the entire 1.0% NSR for $1 million prior to
the development of a mine on the property.
9. Operator has the option to purchase 1.25% of the 2.5% NSR for $1 million at any
time prior to a production decision or within 30 days thereafter.
10. Operator may purchase 1.5% of the 2.5% NSR at any time for CDN$1.5 million.
11. The 1.0 to 3.0% NSR sliding-scale royalty only applies to gold production. The
2.0% NSR royalty applies to commercial production of all minerals excluding
diamonds and industrial minerals. The 1.0% GV royalty applies to commercial
production of all diamonds and industrial minerals.
12. Owner has the option to purchase one-third of the 3.0% NSR for $1 million at any
time.
20. Royalty is capped at $300,000 plus simple interest.
13. Operator has the right to purchase 2.5% of the 5.0% NSR at any time for $1
evaluatIon pRopeRtIeS
1. Royal Gold considers and categorizes an exploration stage property to be an
“evaluation stage” property if mineralized material has been identified on the
property but reserves have yet to be identified. The U.S. Securities and Exchange
Commission does not recognize the term “mineralized material.” Investors are
cautioned not to assume that any part or all of the mineralized material identified
on these properties will ever be converted into reserves.
2. The 1.5% to 2.5% NSR sliding-scale royalty pays at a rate of 1.5% for the first
75,000 ounces produced in any 12 month period and at a rate of 2.5% on
production above 75,000 ounces during that 12 month period.
3. Royalty applies on production above 10,000 ounces.
4. Royalty is capped at 500,000 ounces.
5. Royalty rate is 4.0% for grades at 1.5 g/t or less and 2.5% at grades above 1.5
g/t.
6. Royalty applies to production above 40,000 ounces and is capped at $1 million.
7. Royalty rate is 1.0% on Exploration claims and 2.0% on Gold claims. The 2.0%
royalty on Gold claims has a 50% buy back for $1 million.
million.
14. Royalty on three property packages is capped at an aggregate of $2 million.
15. Royalty is capped at $1 million.
16. The 15.0% NPI and the 14.0% NPI apply to different claims on the property.
17. The 2.0% NSR becomes payable once 400,000 ounces have been produced.
18. Royalty rate varies depending on pre-existing royalties (max of 6.0%).
19. The 3.0% GSR applies to production from the properties from which greater than
60% of the revenues are projected to be derived from gold and silver. The 10%
NPI applies to production from the properties from which less than 60% of the
revenues are projected to be derived from gold and silver.
46594nar.indd 21
9/26/16 2:07 PM
21 | ROYAL GOLD, INC. | 2016 ANNUAL REPORT
The Gold Market1
GOLD PRICe AND DemAND OveRvIew
tonnes. Other notable accumulations occurred in China
Demand for gold was steady when comparing 2015 to
Jordan (22 tonnes). Faced with economic pressures, El
the prior year. Gold traded at an average price of $1,160
Salvador (-5 tonnes) and Colombia (-7 tonnes) shed a
per ounce for the year and demand was in line with the
portion of their gold reserves.
(104 tonnes) and Kazakhstan (30 tonnes) followed by
long term average. In 2016, the gold market experienced
a resurgence in investment demand. As markets opened
for trading at the beginning of 2016, gold was priced at
$1,060 per ounce; by June 30, 2016, it increased 25% to
$1,320 per ounce, distinguishing itself as one of the best
performing asset classes of the year thus far.
Calendar Year 2015
The gold market encountered many hurdles in 2015 and
recorded a slight decline in gold demand to 4,212 metric
tons (“tonnes”).
The demand for gold used in the technology sector
fell 5% in 2015. Substitutions and more cost-effective
alternatives were familiar themes, along with weaker
sales in key sectors.
Mine production saw its slowest annual growth rate
since 2008, and recycling activity continued to shrink
to multi-year lows in the fourth quarter. The widespread
decline was largely due to reduced output from
many established mines. Annual production totaled
92.9 million ounces in 2015, compared with 91.5
million ounces of gold produced in 2014. A decline in
The demand for jewelry declined 3% to 2,415 tonnes
production and lower gold output was seen at some
from 2,481 tonnes in 2014. Turkish, Russian and Middle
of the world’s largest gold mines. Many producers
Eastern markets were
impacted by financial and
turned their focus to cost reduction and efficiency
socio-political factors during the course of the year.
rather than capital spending on project development.
In 2015, rural incomes and government regulations in
The impact of cost-cutting measures, combined with
India took a toll on the jewelry sector. India rallied in the
reductions in ore grades, was expected to affect
second half of the year to yield 5% annual growth, its
production throughout 2016.
highest level since 2010.
Although a challenging year, bar and coin demand held
Six months to June 30, 2016
up with consumers seeking gold’s wealth protection
In
the first six months of 2016,
investment
properties and risk diversification. In particular, weakness
accounted for the largest component of the gold
of the Chinese currency was cited as a main driver of
demand. US and European investors fueled much of
demand for gold bars and coins; currency deflation
the upsurge in gold bars, coins and especially exchange
remains a concern and limits imposed on the purchase
traded funds (ETFs). ETF inflows counterbalanced the
of foreign currency highlight gold’s role as a wealth
unfavorable conditions of the weak jewelry market
preservation tool in China.
amongst rising prices.
Central banks continued to strengthen reserves and fuel
Gold-backed ETF assets under management increased
the sector demand for gold. Central bank net purchases
69% in the first half of 2016 to reach US$93 billion,
increased 1% over the prior year. Reserve management
their highest level since Q3 2013. Demand during
and diversification remained a top priority due to
the six months to of 2016 reached historic levels
economic and political uncertainties. Russia tipped the
worth US$41.6 billion. Heightened levels of doubt
scales with purchases during the year in excess of 200
across Western markets triggered the release of
1. This information is derived from the World Gold Council and represents the data and opinions of those sources. Royal Gold has not verified this data and
presents this information as a representative overview of views on the gold business from gold industry sources. No assurance can be given that this
data or these opinions will prove accurate. Investors are urged to reach their own conclusions regarding the gold market.
22
46594nar.indd 22
9/26/16 10:08 AM
considerable investment demand in bars, coins and
Organizational Involvement
ETFs. Specifically, global uncertainty remains high
and influenced by unparalleled loosening of global
monetary policy and the relaxed pace of US interest
rate hikes.
Royal Gold is an active participant in organizations involved
in promoting the mining industry and the use of gold. The
Company is a member of the World Gold Council, and is
represented by its President and Chief Executive Officer
Jewelry demand
lurked well below
its five-year
on the board of the National Mining Association; by its
average, declining 17% from 1,110 tonnes in the first
Chief Financial Officer and Treasurer on the boards of
half of 2015 to 925 tonnes in the first half of 2016. The
the Northwest Mining Association and the Nevada Mining
sharp rise in the gold price has taken its toll on the
Association; and by its Vice President Investor Relations
jewelry sector. According to the World Gold Council’s
who serves as Chairman of the Board of Directors of the
Gold Demand Trends — Second Quarter 2016, while
Denver Gold Group.
there have been improvements in a few markets (most
notably, the US and Iran), jewelry has suffered across
For more information on gold, you can visit the following
the globe. India and China had the most influential
web sites:
impact on demand largely due to geopolitical and
economic challenges.
Denver Gold Group – www.denvergold.org
Minerals Information Institute – www.mii.org
National Mining Association - www.nma.org
Nevada Mining Association - www.nevadamining.org
Northwest Mining Association - www.nwma.org
World Gold Council - www.gold.org
CORPORATE RESPONSiBiLiTY
Royal Gold is committed to preserving and protecting the environment, promoting the health and
safety of its employees, respecting local cultures and values, and being an exemplary international
corporate citizen. We strive to balance various stakeholder interests in our endeavors to
conduct our activities in a responsible manner, and we expect and encourage the operators
of properties where we hold royalty and stream interests to do the same. As demonstrated
by our associate membership in the World Gold Council, which is an associate member of
the International Council on Mining and Metals (“ICMM”), Royal Gold supports the ten ICMM
principles that seek continual improvement in sustainable development performance.
46594nar.indd 23
9/26/16 8:28 AM
23 | ROYAL GOLD, INC. | 2016 ANNUAL REPORT
Non-gAAP Financial measures
The Company computes and discloses Adjusted EBiTDA.
The Company computes and discloses Adjusted EBiTDA.
AAP financial measure.
Adjusted EBiTDA is a non-gAAP financial measure.
Adjusted EBiTDA is a non-g
Adjusted EBITDA is defined by the Company as net income
Adjusted EBITDA is defined by the Company as net income
shareholder dividends and to service the Company’s debt
shareholder dividends and to service the Company’s debt
plus depreciation, depletion and amortization, non-cash
plus depreciation, depletion and amortization, non-cash
obligations. This information differs from measures of
obligations. This information differs from measures of
charges, income tax expense, interest and other expense,
charges, income tax expense, interest and other expense,
performance determined in accordance with U.S. generally
performance determined in accordance with U.S. generally
and any impairment of mining assets, less non-controlling
and any impairment of mining assets, less non-controlling
accepted accounting principles (“GAAP”) and should not
accepted accounting principles (“GAAP”) and should not
interests
interests
in operating
in operating
loss (income) of consolidated
loss (income) of consolidated
be considered in isolation or as a substitute for measures
be considered in isolation or as a substitute for measures
subsidiaries, interest and other income, and any royalty
subsidiaries, interest and other income, and any royalty
of performance determined in accordance with U.S. GAAP.
of performance determined in accordance with U.S. GAAP.
or stream portfolio restructuring gains or losses. Other
or stream portfolio restructuring gains or losses. Other
Adjusted EBITDA, as defined, is most directly comparable
Adjusted EBITDA, as defined, is most directly comparable
companies may define and calculate this measure
companies may define and calculate this measure
to net income in the Company’s Statements of Operations.
to net income in the Company’s Statements of Operations.
differently. Management believes that Adjusted EBITDA
differently. Management believes that Adjusted EBITDA
Below is the reconciliation of net income to adjusted EBITDA:
Below is the reconciliation of net income to adjusted EBITDA:
is a useful measure of the performance of our royalty
is a useful measure of the performance of our royalty
and stream portfolio. Adjusted EBITDA identifies the cash
and stream portfolio. Adjusted EBITDA identifies the cash
generated in a given period that will be available to fund
generated in a given period that will be available to fund
the Company’s future operations, growth opportunities,
the Company’s future operations, growth opportunities,
ADJuSTED EBITDA RECONCILIATION
Years Ending June 30
(Unaudited in thousands)
Net (loss) income
2016
2015
2014
2013
2012
$ (82,438)
$ 52,678 $ 63,472 $ 73,409
$ 98,309
Depreciation, depletion and amortization
141,108
93,486
91,342
85,020
75,001
Non-cash employee stock compensation
10,039
5,141
2,580
5,701
6,507
Impairment of stream and royalty interests
98,588
31,335
Restructuring on royalty interests in
mineral properties
Interest and other, net
Income tax expense
Non-controlling interests in operating loss (income)
-
-
-
-
-
1,328
3,869
-
-
26,574
24,992
25,793
34,000
60,680
9,566
19,455
63,759
54,710
of consolidated subsidiaries
5,289
(666)
(572)
(1,420)
(2,108)
Adjusted EBITDA
$ 259,840 $ 216,532 $ 202,070 $ 260,469
$ 237,616
24
46594nar.indd 24
9/24/16 2:52 PM
Total Return To Shareholders
(Includes reinvestment of dividends)
COMPARISON OF CUMULATIvE FIvE YEAR
TOTAL RETURN
Years Ending June 30
$200
$150
$100
$50
$0
PHLX GOLD/SILvER SECTOR CONSTITUENTS
Agnico Eagle Mines Ltd
Gold Resource Corp
Primero Mining Corp
Anglogold Ltd
Goldcorp Inc.
Randgold Resources Ltd
Barrick Gold Corp
Harmony Gold Mining Co Ltd
Royal Gold, Inc
Coeur Mining Inc
Hecla Mining Co
Sandstorm Gold Ltd
Compania De Minas
Buenaventura SA
Eldorado Gold Corp
First Majestic Silver Corp
Freeport-McMoRan Inc
Gold Fields Ltd
IAMGold Corp
Seabridge Gold Inc
Kinross Gold Corp
Sibanye Gold Ltd
McEwen Mining Inc
Silver Standard Resources Inc
New Gold Inc
Silver Wheaton Corp
Newmont Mining Corp
Stillwater Mining Co
NovaGold Resources Inc
Yamana Gold Inc
2011
2012
2013
2014
2015
2016
Pan American Silver Corp
Royal Gold, Inc.
S&P 500 Index
PHLX Gold/Silver Sector
Source: S&P Capital IQ
ANNUAL RETURN PERCENTAGE TO SHAREHOLDERS
Years Ending June 30
Company Name / Index
Royal Gold, Inc.
S&P 500 Index
PHLX Gold/Silver Sector
2012
2013
34.68 (45.79)
20.60
(20.25) (39.11)
5.45
2014
2015
83.79 (17.71)
24.61
7.42
17.37 (37.87)
2016
19.30
3.99
46.11
INDEXED RETURNS TO SHAREHOLDERS
Years Ending June 30
Company Name / Index
Royal Gold, Inc.
S&P 500 Index
PHLX Gold/Silver Sector
2011
100.00
100.00
100.00
2012
134.68
105.45
79.75
2013
73.01
127.17
48.56
2014
134.18
158.46
57.00
2015
110.41
170.22
35.41
2016
131.72
177.02
51.74
FORWARD LOOKING STATEMENTS
With the exception of historical matters, the matters discussed in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
With the exception of historical matters, the matters discussed in this report are 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 materially from the projections and estimates
Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from the projections and estimates
contained herein and include, but are not limited to: expected industry leading growth in volume; providing our stockholders a premium prescious metals investment; our competitiveness
contained herein and include, but are not limited to: expected industry leading growth in volume; providing our stockholders a premium prescious metals investment; our competitiveness
for royalty and streaming acquisitions; benefits relating to the proposed amendment to the Mount Milligan stream and related proposed acquisition by Centerra; Rainy River’s near-term
for royalty and streaming acquisitions; benefits relating to the proposed amendment to the Mount Milligan stream and related proposed acquisition by Centerra; Rainy River’s near-term
production; benefits of the Pyrite Leach Project at Penasquito; re-starting waste stripping at the Crossroads project; recovering value at the Pheonix project; exploration opportunities at
production; benefits of the Pyrite Leach Project at Penasquito; re-starting waste stripping at the Crossroads project; recovering value at the Pheonix project; exploration opportunities at
Wassa and Prestea, including estimates relating to a future Prestea underground project; continuing to provide a return of capital to shareholders, source capital efficiently and grow the
Wassa and Prestea, including estimates relating to a future Prestea underground project; continuing to provide a return of capital to shareholders, source capital efficiently and grow the
business from free cash flow; and calendar 2016 and other production, mine life and reserves estimates from the operators of our stream and royalty interests. Factors that could cause
business from free cash flow; and calendar 2016 and other production, mine life and reserves estimates from the operators of our stream and royalty interests. Factors that could cause
actual results to differ materially from these forward-looking statements include, among others: the risks inherent in the operation of mining properties; a decreased price environment for
actual results to differ materially from these forward-looking statements include, among others: the risks inherent in the operation of mining properties; a decreased price environment for
gold and other metals on which our stream and royalty interests are paid; performance of and production at properties, and variation of actual performance from the production estimates
gold and other metals on which our stream and royalty interests are paid; performance of and production at properties, and variation of actual performance from the production estimates
and forecasts made by the operators of those properties; the successful closing of Centerra’s acquisition of Thompson Creek; decisions and activities of the Company’s management
and forecasts made by the operators of those properties; the successful closing of Centerra’s acquisition of Thompson Creek; decisions and activities of the Company’s management
affecting margins, use of capital and strategy; unexpected operating costs, decisions and activities of the operators of the Company’s royalty and stream properties; changes in operators’
affecting margins, use of capital and strategy; unexpected operating costs, decisions and activities of the operators of the Company’s royalty and stream properties; changes in operators’
mining and processing techniques or royalty calculation methodologies; resolution of regulatory and legal proceedings; unanticipated grade, geological, metallurgical, environmental,
mining and processing techniques or royalty calculation methodologies; resolution of regulatory and legal proceedings; unanticipated grade, geological, metallurgical, environmental,
processing or other problems at the properties; revisions or inaccuracies in technical reports, reserve, resources and production estimates; changes in project parameters as plans of
processing or other problems at the properties; revisions or inaccuracies in technical reports, reserve, resources and production estimates; changes in project parameters as plans of
the operators are refined; the results of current or planned exploration activities; errors or disputes in calculating royalty payments or stream deliveries, or payments or deliveries not
the operators are refined; the results of current or planned exploration activities; errors or disputes in calculating royalty payments or stream deliveries, or payments or deliveries not
made in accordance with royalty or stream agreements; the liquidity and future financial needs of the Company; economic and market conditions; the impact of future acquisitions and
made in accordance with royalty or stream agreements; the liquidity and future financial needs of the Company; economic and market conditions; the impact of future acquisitions and
royalty and stream financing transactions; the impact of issuances of additional common stock; and risks associated with conducting business in foreign countries, including application
royalty and stream financing transactions; the impact of issuances of additional common stock; and risks associated with conducting business in foreign countries, including application
of foreign laws to contract and other disputes, environmental laws, enforcement and uncertain political and economic environments. These risks and other factors are discussed in more
of foreign laws to contract and other disputes, environmental laws, enforcement and uncertain political and economic environments. These risks and other factors are discussed in more
detail in the Company’s public filings with the Securities and Exchange Commission. Statements made herein are as of the date hereof and should not be relied upon as of any subsequent
detail in the Company’s public filings with the Securities and Exchange Commission. Statements made herein are as of the date hereof and should not be relied upon as of any subsequent
date. The Company’s past performance is not necessarily indicative of its future performance. The Company disclaims any obligation to update any forward-looking statements.
date. The Company’s past performance is not necessarily indicative of its future performance. The Company disclaims any obligation to update any forward-looking statements.
Third-party information: The Company does not own, develop or mine the properties on which it holds stream or royalty interests. Certain information provided in this report
Third-party information: The Company does not own, develop or mine the properties on which it holds stream or royalty interests. Certain information provided in this report
has been provided to the Company by the operators of those properties or is publicly available information filed by these operators with applicable securities regulatory
has been provided to the Company by the operators of those properties or is publicly available information filed by these operators with applicable securities regulatory
bodies, including the Securities and Exchange Commission. The Company has not verified, and is not in a position to verify, and expressly disclaims any responsibility for the
bodies, including the Securities and Exchange Commission. The Company has not verified, and is not in a position to verify, and expressly disclaims any responsibility for the
accuracy, completeness or fairness of such third-party information and refers readers to the public reports filed by the operators for information regarding those properties.
accuracy, completeness or fairness of such third-party information and refers readers to the public reports filed by the operators for information regarding those properties.
25 25 | | ROYAL GOLD, INC.
| 2016 ANNUAL REPORT
ROYAL GOLD, INC. | 2016 ANNUAL REPORT
46594nar.indd 25
9/26/16 2:07 PM
glossary
Concentrate: A mineral-rich, intermediate, product obtained
from processing ore, by gravity or flotation operations.
Concentrates typically require additional processing to
obtain refined metal.
Fixed-Rate Royalty: A royalty rate that stays constant.
Grade: The metal content of ore. With precious metals,
grade is expressed as troy ounces per ton of ore or as grams
per tonne of ore. A troy ounce is one-twelfth of a troy pound
or 14.583 troy ounces per avoirdupois pound.
Gross Proceeds Royalty (GPR): A royalty in which
payments are made on contained ounces rather than
recovered ounces.
Gross Smelter Return (GSR) Royalty: A defined percentage
of the gross revenue from a resource extraction operation,
less, if applicable, certain contract-defined costs paid by or
charged to the operator.
Gross value (Gv) Royalty: A defined percentage of the
gross value, revenue or proceeds from a resource extraction
operation, without deductions of any kind.
Metal Stream: A purchase agreement that provides, in
exchange for an upfront advance payment, the right to
purchase all or a portion of one or more metals produced
from a mine, at a price determined for the life of the
transaction by the purchase agreement.
Milling Royalty: A royalty on ore throughput at a mill.
Mineralized Material: That part of a mineral system that
has potential economic significance but is not included in
the proven and probable ore reserve estimates until further
drilling and metallurgical work is completed, and until other
economic and technical feasibility factors based upon such
work have been resolved.
Net Profits Interest (NPI) Royalty: A defined percentage
of the gross revenue from a resource extraction operation,
after recovery of certain contract-defined pre-production
costs, and after a deduction of certain contract-defined
mining, milling, processing, transportation, administrative,
marketing and other costs.
Net Smelter Return (NSR) Royalty: A defined percentage
of the gross revenue from a resource extraction operation,
less a proportionate share of incidental transportation,
insurance, refining and smelting costs.
Net value Royalty (NvR): A defined percentage of the
gross revenue from a resource extraction operation, less
certain contract-defined costs.
Probable Reserve: Ore reserves for which quantity and
grade are computed from information similar to that used
for proven reserves, but the sites for inspection, sampling
and measurement are farther apart or are otherwise less
adequately spaced. The degree of assurance, although lower
than that for proven reserves, is high enough to assume
geological continuity between points of observation.
Proven Reserve: Ore reserves for which: (a) the quantity is
computed from dimensions revealed in outcrops, trenches,
workings or drill holes, and grade is computed from the
results of detailed sampling; and (b) the sites for inspection,
sampling and measurement are spaced so closely and the
geologic character is so well defined that size, shape, depth
and mineral content of reserves are well established.
Reserve: That part of a mineral deposit which could be
economically and legally extracted or produced at the time
of the reserve determination. Reserves are categorized as
proven or probable reserves (see separate definitions).
Resource: A mineralized deposit which has been delineated
by drilling and/or underground sampling to establish
continuity and support an estimate of tonnage with an
average grade of the selected metals under Canadian
securities regulations. “Mineralized resources” are not
reserves and are categorized, in order of increasing
geological confidence, into “inferred resources,” “indicated
resources” and “measured resources.” None of these
terms are recognized by the U.S. Securities and Exchange
Commission and are not permitted to be used in documents
filed with the SEC. Readers are cautioned that mineral
resources cannot be classified as reserves unless and until it
is demonstrated that they may be legally and economically
produced and, as a result, resources may never be converted
into reserves.
Royalty: The right to receive a percentage or other
denomination of mineral production from a mining
operation.
Sliding-Scale Royalty: A royalty rate that fluctuates based
on contract-specified variables such as metal price or
production volume.
Ton: A unit of weight equal to 2,000 pounds or 907.2
kilograms.
Tonne: A unit of weight equal to 2,204.6 pounds or 1,000
kilograms.
26
46594nar.indd 26
9/24/16 2:52 PM
FORM 10-K F O R M 1 0 - K
27 | ROYAL GOLD, INC. | 2016 ANNUAL REPORT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
(cid:2) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 2016
or
(cid:3) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From
to
Commission File Number 001-13357
Royal Gold, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
1660 Wynkoop Street, Suite 1000
Denver, Colorado
(Address of Principal Executive Offices)
84-0835164
(I.R.S. Employer
Identification No.)
80202
(Zip Code)
(303) 573-1660
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Name of Each Exchange on Which Registered
Common stock, $0.01 par value
NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes (cid:2) No (cid:3)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Exchange Act. Yes (cid:3) No (cid:2)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (cid:2) No (cid:3)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes (cid:2) No (cid:3)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. (cid:2)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See definition of ‘‘accelerated filer’’, ‘‘large accelerated filer’’ and ‘‘smaller reporting company’’ in
Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer (cid:2) Accelerated filer (cid:3)
Non-accelerated filer (cid:3)
(Do not check if a
smaller reporting company)
Smaller reporting company (cid:3)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes (cid:3) No (cid:2)
Aggregate market value of the voting common stock held by non-affiliates of the registrant, based upon the closing sale
price of Royal Gold common stock on December 31, 2015, as reported on the NASDAQ Global Select Market was
$2,361,359,998. There were 65,269,476 shares of the Company’s common stock, par value $0.01 per share, outstanding as of
July 28, 2016.
Portions of the Proxy Statement for the 2015 Annual Meeting of Stockholders scheduled to be held on November 16,
2016, and to be filed within 120 days after June 30, 2016, are incorporated by reference into Part III, Items 10, 11, 12, 13 and
14 of this Annual Report on Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE
INDEX
PART I.
ITEM 1.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 2.
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 3.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 4.
Mine Safety Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II.
ITEM 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 6.
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . .
ITEM 8.
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9.
Changes In and Disagreements with Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III.
ITEM 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . .
ITEM 11.
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 13.
Certain Relationships and Related Transactions, and Director Independence . . . . .
ITEM 14.
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV.
ITEM 15.
Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PAGE
1
9
25
25
37
37
37
38
38
55
56
93
93
95
95
95
95
95
95
96
97
99
ii
This document (including information incorporated herein by reference) contains ‘‘forward-looking
statements’’ within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, which involve a degree of risk and uncertainty due to various factors
affecting Royal Gold, Inc. and its subsidiaries. For a discussion of some of these factors, see the discussion
in Item 1A, Risk Factors, of this report. In addition, please see our note about forward-looking statements
included in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of
Operations (‘‘MD&A’’), of this report.
Royal Gold does not own, develop, or mine the properties on which it holds stream or royalty interests.
Certain information provided in this Annual Report on Form 10-K, including, without limitation, all
reserves, historical production and production estimates, descriptions of properties and developments at
properties included herein, has been provided to us by the operators of those properties or is publicly
available information filed by these operators with applicable securities regulatory bodies, including the
Securities and Exchange Commission. Royal Gold has not verified, and is not in a position to verify, and
expressly disclaims any responsibility for the accuracy, completeness or fairness of, such third-party
information and refers the reader to the public reports filed by the operators for information regarding those
properties.
ITEM 1. BUSINESS
Overview
PART I
Royal Gold, Inc. (‘‘Royal Gold’’, the ‘‘Company’’, ‘‘we’’, ‘‘us’’, or ‘‘our’’), together with its
subsidiaries, is engaged in the business of acquiring and managing precious metal streams, royalties,
and similar interests. We seek to acquire existing stream and royalty interests or to finance projects that
are in production or in the development stage in exchange for stream or royalty interests.
We manage our business under two segments:
Acquisition and Management of Stream Interests—A metal stream is a purchase agreement that
provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or
more metals produced from a mine, at a price determined for the term of the agreement. As of
June 30, 2016, we owned stream interests on four producing properties and three development stage
properties. As discussed further below, we invested approximately $1.3 billion in stream interests in our
fiscal year 2016, including stream interests relating to Pueblo Viejo, Carmen de Andacollo
(‘‘Andacollo’’), Wassa and Prestea, and Rainy River. Our stream interests accounted for approximately
66% and 34% of our total revenue for the fiscal years ended June 30, 2016 and 2015, respectively. We
expect stream interests to continue growing as a proportion of our total revenue.
Acquisition and Management of Royalty Interests—Royalties are non-operating interests in mining
projects that provide the right to revenue or metals produced from the project after deducting specified
costs, if any. As of June 30, 2016, we owned royalty interests on 34 producing properties,
21 development stage properties and 131 exploration stage properties, of which we consider 50 to be
evaluation stage projects. We use ‘‘evaluation stage’’ to describe exploration stage properties that
contain mineralized material and on which operators are engaged in the search for reserves. Royalties
accounted for approximately 34% and 66% of our total revenue for the fiscal years ended June 30,
2016 and 2015, respectively.
We do not conduct mining operations on the properties in which we hold stream and royalty
interests, and except for our interest in the Peak Gold, LLC joint venture (‘‘Peak Gold’’), we are not
required to contribute to capital costs, exploration costs, environmental costs or other operating costs
on those properties.
1
In the ordinary course of business, we engage in a continual review of opportunities to acquire
existing stream and royalty interests, to establish new streams on operating mines, to create new stream
and royalty interests through the financing of mine development or exploration, or to acquire
companies that hold stream and royalty interests. We currently, and generally at any time, have
acquisition opportunities in various stages of active review, including, for example, our engagement of
consultants and advisors to analyze particular opportunities, analysis of technical, financial and other
confidential information, submission of indications of interest and term sheets, participation in
preliminary discussions and negotiations and involvement as a bidder in competitive processes.
As discussed in further detail throughout this report, some significant developments to our
business during fiscal year 2016 were as follows:
(1) Our revenue increased 29% to $359.8 million, compared to $278.0 million during fiscal year
2015;
(2) We acquired a gold and silver stream on the Pueblo Viejo mine located in the Dominican
Republic;
(3) We acquired a gold stream on the Andacollo copper-gold mine located in Chile and
terminated the previously held royalty at Andacollo;
(4) We acquired a gold stream on the Wassa and Prestea mines located in Ghana;
(5) We acquired a gold and silver stream on the Rainy River Project located in Canada; and
(6) We increased our calendar year dividend to $0.92 per basic share, which is paid in quarterly
installments throughout calendar year 2016. This represents a 5% increase compared with the
dividend paid during calendar year 2015.
Certain Definitions
Dollar or ‘‘$’’: Unless we have indicated otherwise, or the context otherwise requires, references
in this Annual Report on Form 10-K to ‘‘$’’ or ‘‘dollar’’ are to the currency of the United States. We
refer to Canadian dollars as C$.
Gross Smelter Return (GSR) Royalty: A defined percentage of the gross revenue from a resource
extraction operation, less, if applicable, certain contract-defined costs paid by or charged to the
operator.
Metal Stream: A purchase agreement that provides, in exchange for an upfront advance payment,
the right to purchase all or a portion of one or more metals produced from a mine, at a price
determined for the life of the transaction by the purchase agreement.
Mineralized Material: That part of a mineral system that have potential economic significance, but
is not included in the proven and probably reserve estimates until further drilling and metallurgical
work is completed, and until other economic and technical feasibility factors based on such work have
been resolved.
Net Smelter Return (NSR) Royalty: A defined percentage of the gross revenue from a resource
extraction operation, less a proportionate share of incidental transportation, insurance, refining and
smelting costs.
Net Value Royalty (NVR): A defined percentage of the gross revenue from a resource extraction
operation, less certain contract-defined costs.
Net Revenue: Net revenue is calculated as Royal Gold’s Revenue minus Cost of sales.
2
Probable Reserves: Ore reserves for which quantity and grade are computed from information
similar to that used for proven reserves, but the sites for inspection, sampling and measurement are
farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than
that for proven reserves, is high enough to assume geological continuity between points of observation.
Proven Reserves: Ore reserves for which (a) the quantity is computed from dimensions revealed in
outcrops, trenches, workings or drill holes, and grade is computed from the results of detailed
sampling, and (b) the sites for inspection, sampling and measurement are spaced so closely and the
geologic character is so well defined that the size, shape, depth and mineral content of reserves are
well established.
Payable Metal: Ounces or pounds of metal in concentrate after deduction of a percentage of
metal in concentrate by a third-party smelter pursuant to smelting contracts.
Reserve: That part of a mineral deposit which could be economically and legally extracted or
produced at the time of the reserve determination.
Royalty: The right to receive a percentage or other denomination of mineral production from a
mining operation.
Ton: A unit of weight equal to 2,000 pounds or 907.2 kilograms.
Tonne: A unit of weight equal to 2,204.6 pounds or 1,000 kilograms.
Recent Business Developments
Mount Milligan Commitment Letter
On July 5, 2016, we entered into a binding commitment letter with Centerra Gold Inc.
(‘‘Centerra’’) setting forth the key terms and conditions of a future amendment to our Mount Milligan
streaming agreement in connection with the proposed acquisition by Centerra of Thompson Creek
Metals Company Inc. (‘‘Thompson Creek’’) by Plan of Arrangement under the Arrangement
Agreement executed between Centerra and Thompson Creek, as announced on July 5, 2016 (the
‘‘Centerra Acquisition’’). Thompson Creek is the parent company of Terrane Metals Corp. (‘‘Terrane’’),
which owns and operates the Mount Milligan copper-gold mine. Our obligation to amend the Mount
Milligan streaming agreement is subject to the consummation of the Centerra Acquisition and other
customary conditions set forth in the commitment letter.
Under the commitment letter, we also agreed to an exclusivity arrangement with Centerra that
prohibits us from negotiating and entering into any agreement with any person (other than Centerra)
relating to Thompson Creek’s obligations under the streaming agreement until the earliest of (i) the
closing or abandonment of the Centerra Acquisition, (ii) the date, if any, on which shareholders of
Thompson Creek decline to approve the Centerra Acquisition, or (iii) November 30, 2016.
Pursuant to the terms of the commitment letter, we and Centerra have agreed to amend the
streaming agreement, effective on the closing of the Centerra Acquisition, as follows:
• the existing 52.25% gold streaming interest will be amended to 35.00%;
• we will obtain an 18.75% copper streaming interest at Mount Milligan at a price equal to 15%
of the spot price for each metric tonne of copper delivered;
• the existing restriction of $400 million on senior secured debt covered by the Mount Milligan
assets will be extended until we receive the full return of our $781.5 million deposit (the
‘‘Payment Deposit’’);
3
• until we have received the full return of the Payment Deposit and an additional 35,000 metric
tonnes of copper, Terrane will maintain a leverage ratio of total consolidated indebtedness to its
earnings before interest, taxes, depreciation and amortization of no greater than 3:1 (including
intercompany debt that ranks parri passu with or in priority to our streaming agreement);
• Terrane will not make distributions of cash or property to any of its affiliates if Terrane or
Thompson Creek is in default under the streaming agreement; and
• we will enter into an intercreditor agreement with lenders providing $325 million in senior
secured debt financing to Centerra in connection with the Centerra Acquisition, pursuant to
which we will (i) retain our first priority security interest in 35.00% of the payable gold
produced from Mount Milligan and all proceeds thereof, (ii) obtain a first priority security
interest in 18.75% of the payable copper produced from Mount Milligan and all proceeds
thereof, and (iii) otherwise agree to subordinate our security interests on all other assets of
Terrane on terms and conditions substantially similar to those contained in our existing
intercreditor agreement with the security agent for the benefit of the holders of Thompson
Creek’s 9.75% Senior Secured First Priority Notes due 2017.
In connection with the closing of the Centerra Acquisition, Centerra will redeem all of Thompson
Creek’s secured and unsecured notes at their call price plus accrued and unpaid interest, which
Centerra expects to finance through the combination of the $325 million senior secured debt referred
to above and approximately C$185.7 million in net proceeds from a recent equity offering. The
Centerra Acquisition will require the approval of the holders of two-thirds of Thompson Creek’s
outstanding common stock and will be subject to court and applicable regulatory approvals, in addition
to other customary closing conditions. The Centerra Acquisition is expected to close in the fall of
calendar 2016.
Fiscal 2016 Business Developments
Please refer to Item 7, MD&A, for discussion on recent liquidity and capital resource
developments.
Acquisition of Gold and Silver Stream at Pueblo Viejo
On September 29, 2015, RGLD Gold AG (‘‘RGLD Gold’’), a wholly-owned subsidiary of the
Company, closed a Precious Metals Purchase and Sale Agreement with Barrick Gold Corporation
(‘‘Barrick’’) and its wholly-owned subsidiary, BGC Holdings Ltd. (‘‘BGC’’) for a percentage of the gold
and silver production attributable to Barrick’s 60% interest in the Pueblo Viejo mine located in the
Dominican Republic. Pursuant to the Precious Metals Purchase and Sale Agreement, RGLD Gold
made a single advance payment of $610 million to BGC as part of the closing. The transaction was
effective as of July 1, 2015 for the gold stream and January 1, 2016 for the silver stream.
BGC will deliver gold to RGLD Gold in amounts equal to 7.50% of Barrick’s interest in the gold
produced at the Pueblo Viejo mine until 990,000 ounces of gold have been delivered, and 3.75% of
Barrick’s interest in gold produced thereafter. RGLD Gold will pay BGC 30% of the spot price per
ounce of gold delivered until 550,000 ounces of gold have been delivered, and 60% of the spot price
per ounce delivered thereafter. RGLD Gold received its first delivery of gold from Pueblo Viejo on
December 15, 2015.
BGC will deliver silver to RGLD Gold in amounts equal to 75% of Barrick’s interest in the silver
produced at the Pueblo Viejo mine, subject to a minimum silver recovery of 70%, until 50.0 million
ounces of silver have been delivered, and 37.50% of Barrick’s interest in silver produced thereafter.
RGLD Gold will pay BGC 30% of the spot price per ounce of silver delivered until 23.10 million
ounces of silver have been delivered, and 60% of the spot price per ounce of silver delivered
4
thereafter. RGLD Gold received its first delivery of 209,800 ounces of silver from Pueblo Viejo on
March 15, 2016 for the period January through February 2016.
The Pueblo Viejo mine is an open-pit mining operation located approximately 60 miles northwest
of Santo Domingo, in the Dominican Republic, and is owned by a joint venture in which Barrick holds
a 60% interest and is responsible for operations, and in which Goldcorp Inc. (‘‘Goldcorp’’) holds a 40%
interest. The mine began production in 2013. Barrick reported calendar 2016 production forecast, on a
60% basis, of 600,000-650,000 ounces of gold. Barrick also reported proven and probable gold reserves
attributable to Barrick of 9.0 million contained ounces at 2.97 grams per tonne, and attributable proven
and probable silver reserves of 54.1 million contained ounces grading 17.9 grams per tonne, in each
case as of December 31, 2015.
Acquisition and Amendment of Gold Stream on Wassa and Prestea
On July 28, 2015, RGLD Gold closed a $130 million gold stream transaction with a wholly-owned
subsidiary of Golden Star Resources Ltd. (together ‘‘Golden Star’’). On December 30, 2015, the parties
executed an amendment providing for an additional $15 million investment (for a total investment of
$145 million) by RGLD Gold.
Funds will be used for ongoing development of Golden Star’s Wassa and Prestea mines in Ghana.
As of June 30, 2016, RGLD Gold has advanced $95 million. On July 1, 2016, RGLD Gold made an
advance payment of $20 million and expects to advance the balance in two quarterly payments as
follows: (i) $20 million on October 1, 2016, and (ii) $10 million on January 1, 2017; however this
schedule may be modified based on the actual spending on the Wassa and Prestea underground
projects and these funds are subject to satisfaction of certain conditions.
In return, Golden Star will deliver to RGLD Gold 9.25% of gold produced from the Wassa and
Prestea mines, until the earlier of (i) December 31, 2017 or (ii) the date at which the Wassa and
Prestea underground projects achieve commercial production. At that point, the stream percentage will
increase to 10.5% of gold produced from the Wassa and Prestea mines until an aggregate 240,000
ounces have been delivered. Once the applicable delivery threshold is met, the stream percentage will
decrease to 5.5% for the remaining term of the transaction.
RGLD Gold will pay Golden Star a cash price equal to 20% of the spot price for each ounce of
gold delivered at the time of delivery until the applicable delivery threshold is met, and 30% of the
spot price for each ounce of gold delivered thereafter.
The Wassa mine is located approximately 90 miles west of Accra and has operated continuously
since 2005. Golden Star forecasts calendar 2016 production of 100,000 to 110,000 ounces of gold from
the single Wassa open pit and 20,000 to 25,000 ounces of gold from pre-commercial production from
the developing Wassa underground. Open pit proven and probable reserves are 878,000 ounces
at 1.59 grams per tonne, as of December 31, 2015. RGLD Gold’s investment will fund development of
the Wassa underground deposit, which has 796,000 ounces of probable gold reserves at 4.59 grams per
tonne. Once the underground deposit is in production, Golden Star expects average annual gold
production of approximately 160,000 ounces of gold over the life of mine from the combined open pit
and underground at Wassa.
Prestea is located approximately 125 miles west of Accra and has produced over 9 million ounces
of gold from both open pit and underground sources over the last 100 years. Prestea underground
probable gold reserves are 469,000 ounces at 14.02 grams per tonne as of December 31, 2015. Golden
Star forecasts calendar 2016 production of 60,000 to 70,000 ounces of gold from the open pit
operations. Underground development at Prestea is already well advanced. Golden Star expects to
spend $36 million of capital investment on Prestea, which includes hoist and shaft upgrades, electrical
infrastructure, ventilation and a process plant upgrade. Once in full production, Golden Star expects
5
annual production of approximately 90,000 ounces from Prestea, with estimated life of mine production
of 450,000 ounces. Golden Star forecasts underground gold production from the Wassa and Prestea
mines by mid-calendar 2016 and mid-calendar 2017, respectively.
Also on July 28, 2015 and separate from the stream transaction by RGLD Gold, the Company
funded a $20 million, 4-year term loan to a wholly-owned subsidiary of Golden Star and received
warrants to purchase 5 million shares of Golden Star common stock. Interest under the term loan is
due quarterly at a rate equal to 62.5% of the average daily gold price for the relevant quarter divided
by 10,000, but not to exceed 11.5%. The warrants have a term of four years and an exercise price of
$0.27.
Acquisition of Gold and Silver Stream at Rainy River
On July 20, 2015, RGLD Gold entered into a $175 million Purchase and Sale Agreement with
New Gold, Inc. (‘‘New Gold’’), for a percentage of the gold and silver production from the Rainy River
Project located in Ontario, Canada (‘‘Rainy River’’). Pursuant to the Purchase and Sale Agreement,
RGLD Gold made an advance payment to New Gold, consisting of $100 million on July 20, 2015, and
will make an additional advance payment of $75 million once capital spending at Rainy River is 60%
complete (currently expected during the second half of calendar 2016). Under the Purchase and Sale
Agreement, New Gold will deliver to RGLD Gold 6.50% of the gold produced at Rainy River until
230,000 gold ounces have been delivered, and 3.25% thereafter. New Gold also will deliver to RGLD
Gold 60% of the silver produced at Rainy River until 3.10 million silver ounces have been delivered,
and 30% thereafter. RGLD Gold will pay New Gold 25% of the spot price per ounce of gold and
silver at the time of delivery.
The Rainy River Project is located approximately 40 miles northwest of Fort Frances in western
Ontario, Canada. Over its first nine years of full production, the 21,000 tonne per day, combined open
pit-underground operation is scheduled to produce an average of 325,000 ounces of gold per year.
Construction was initiated in calendar 2015 and at the end of June 2016, overall construction was over
40% complete. Rainy River has an estimated fourteen year mine life based on current reserves and is
projected by New Gold to start-up in mid-calendar 2017.
Acquisition of Gold Stream at Carmen de Andacollo
On July 9, 2015, RGLD Gold entered into a Long Term Offtake Agreement (the ‘‘Andacollo
Stream Agreement’’) with Compa˜n´ıa Minera Teck Carmen de Andacollo (‘‘CMCA’’), a 90% owned
subsidiary of Teck Resources Limited (‘‘Teck’’). Pursuant to the Andacollo Stream Agreement, CMCA
will sell and deliver to RGLD Gold 100% of payable gold from the Andacollo copper-gold mine until
900,000 ounces have been delivered, and 50% thereafter, subject to a fixed payable percentage of 89%.
RGLD Gold made a $525 million advance payment in cash to CMCA upon entry into the Andacollo
Stream Agreement, and RGLD Gold will also pay CMCA 15% of the monthly average gold price for
the month preceding the delivery date for all gold purchased under the Andacollo Stream Agreement.
The transaction encompasses certain of CMCA’s presently owned mining concessions on the
Andacollo mine, as well as any other mining concessions presently owned or acquired by CMCA or any
of its affiliates within a 1.5 kilometer area of interest, and certain other mining concessions that CMCA
or its affiliates may acquire. The Andacollo Stream Agreement was effective as of July 1, 2015, and
applies to all final settlements of gold received on or after that date.
Termination of Royalty Interest at Carmen de Andacollo
On July 9, 2015, Royal Gold Chile Limitada (‘‘RG Chile’’), a wholly owned subsidiary of the
Company, entered into a Royalty Termination Agreement with CMCA. The Royalty Termination
Agreement terminated an amended Royalty Agreement originally dated January 12, 2010, which
6
provided RG Chile with a royalty equivalent to 75% of the gold produced from the sulfide portion of
the Andacollo mine until 910,000 payable ounces have been produced, and 50% of the gold produced
thereafter. CMCA paid total consideration of $345 million to RG Chile in connection with the Royalty
Termination Agreement. The royalty termination transaction was taxable in Chile and the United
States.
Our Operational Information
Reportable Segments, Geographical and Financial Information
The Company manages its business under two reportable segments, consisting of the acquisition
and management of stream interests and the acquisition and management of royalty interests. Royal
Gold’s long-lived assets (stream and royalty interests, net) are geographically distributed as shown in
the following table:
As of June 30, 2016
As of June 30, 2015
Canada . . . . . . . . . . . . . .
Chile . . . . . . . . . . . . . . . .
Dominican Republic . . . . .
Mexico . . . . . . . . . . . . . .
United States . . . . . . . . . .
Africa . . . . . . . . . . . . . . .
Australia . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . .
Stream
interest
Royalty
interest
$ 809,692
369,896
588,502
$228,566
453,629
—
— 118,899
— 102,385
697
42,547
32,649
88,596
—
12,029
Total stream
and royalty
interests, net
$1,038,258
823,525
588,502
118,899
102,385
89,293
42,547
44,678
Stream
interest
Royalty
interest
$823,091
—
—
—
—
—
—
8,183
$ 251,688
653,019
—
131,742
110,286
12,760
50,119
42,720
Total stream
and royalty
interests, net
$1,074,779
653,019
—
131,742
110,286
12,760
50,119
50,903
Total . . . . . . . . . . . . . . . . . .
$1,868,715
$979,372
$2,848,087
$831,274
$1,252,334
$2,083,608
The Company’s revenue, costs of sales and net revenue by reportable segment for our fiscal years
ended June 30, 2016, 2015 and 2014 is geographically distributed as shown in the following table:
Fiscal Year Ended June 30, 2016
Fiscal Year Ended June 30, 2015
Revenue
Cost of sales
Net revenue
Revenue
Cost of sales
Net revenue
Streams:
Canada . . . . . . . . . . . . . . .
Chile . . . . . . . . . . . . . . . . .
Dominican Republic . . . . . .
Africa . . . . . . . . . . . . . . . .
$125,755
49,243
39,684
23,346
$47,417
7,280
11,625
4,657
$ 78,338
41,963
28,059
18,689
$ 94,104
—
—
—
$33,450
—
—
—
$ 60,654
—
—
—
Total streams . . . . . . . . . . . . .
Royalties:
$238,028
$70,979
$167,049
$ 94,104
$33,450
$ 60,654
Mexico . . . . . . . . . . . . . . . .
United States . . . . . . . . . . .
Canada . . . . . . . . . . . . . . .
Chile . . . . . . . . . . . . . . . . .
Australia . . . . . . . . . . . . . .
Africa . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
Other
$ 35,267
35,483
30,676
84
10,462
1,868
7,922
$ —
—
—
—
—
—
—
$ 35,267
35,483
30,676
84
10,462
1,868
7,922
$ 43,008
42,675
37,496
39,508
8,494
3,075
9,659
$ —
—
—
—
—
—
—
$ 43,008
42,675
37,496
39,508
8,494
3,075
9,659
Total royalties . . . . . . . . . . . .
$121,762
$ —
$121,762
$183,915
$ —
$183,915
Total royalties and streams . .
$359,790
$70,979
$288,811
$278,019
$33,450
$244,569
7
Fiscal Year Ended June 30, 2015
Fiscal Year Ended June 30, 2014
Revenue
Cost of sales
Net revenue
Revenue
Cost of sales
Net revenue
Streams:
Canada . . . . . . . . . . . . . . .
$ 94,104
$33,450
$ 60,654
$ 27,209
$9,158
$ 18,051
Royalties:
Mexico . . . . . . . . . . . . . . . .
United States . . . . . . . . . . .
Chile . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . .
Australia . . . . . . . . . . . . . .
Africa . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
Other
$ 43,008
42,675
39,508
37,496
8,494
3,075
9,659
$ —
—
—
—
—
—
—
$ 43,008
42,675
39,508
37,496
8,494
3,075
9,659
$ 43,093
34,671
50,733
54,277
8,353
7,943
10,883
Total royalties . . . . . . . . . . . .
$183,915
$ —
$183,915
$209,953
Total royalties and streams . .
$278,019
$33,450
$244,569
$237,162
$ —
—
—
—
—
—
—
$ —
$9,158
$ 43,093
34,671
50,733
54,277
8,353
7,943
10,883
$209,953
$228,004
Please see ‘‘Operations in foreign jurisdictions are subject to many risks, which could decrease our
revenues,’’ under Part I, Item 1A, Risk Factors, of this report for a description of the risks attendant to
foreign operations.
Our financial results are primarily tied to the price of gold and, to a lesser extent, the price of
silver and copper, together with the amounts of production from our producing stage stream and
royalty interests. During the fiscal year ended June 30, 2016, Royal Gold derived approximately 91% of
its revenue from precious metals (including 88% from gold and 3% from silver), 4% from copper and
5% from other minerals. The price of gold, silver, copper and other metals has fluctuated widely in
recent years, having declined from highs experienced in the first half of our fiscal year 2013, with the
price of gold and silver having rebounded during the second half of our fiscal 2016. The marketability
and the price of metals are influenced by numerous factors beyond our control.
Competition
The mining industry in general and streaming and royalty segments in particular are competitive.
We compete with other streaming and royalty companies, mine operators, and financial buyers in
efforts to acquire existing royalty interests, and with the lenders, investors, and streaming and royalty
companies providing financing to operators of mineral properties in our efforts to create new royalty
interests. Our competitors in the lending and mining business may be larger than we are and may have
greater resources and access to capital than we have. Key competitive factors in the stream and royalty
acquisition and financing business include the ability to identify and evaluate potential opportunities,
transaction structure and consideration, and access to capital.
Regulation
Operators of the mines that are subject to our stream and royalty interests must comply with
numerous environmental, mine safety, land use, waste disposal, remediation and public health laws and
regulations promulgated by federal, state, provincial and local governments in the United States,
Canada, Chile, Mexico, Dominican Republic and other countries where we hold interests. Although we
are not responsible as a stream and royalty interest owner for ensuring compliance with these laws and
regulations, failure by the operators of the mines on which we have stream and royalty interests to
comply with applicable laws, regulations and permits can result in injunctive action, damages and civil
and criminal penalties on the operators.
8
Corporate Information
We were incorporated under the laws of the State of Delaware on January 5, 1981. Our executive
offices are located at 1660 Wynkoop Street, Suite 1000, Denver, Colorado 80202. Our telephone
number is (303) 573-1660.
Available Information
Royal Gold maintains an internet website at www.royalgold.com. Royal Gold makes available, free
of charge, through the Investor Relations section of its website, its Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports
filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably
practicable after such material is electronically filed with, or furnished to, the Securities and Exchange
Commission (‘‘SEC’’). Our SEC filings are available from the SEC’s internet website at www.sec.gov
which contains reports, proxy and information statements and other information regarding issuers that
file electronically. These reports, proxy statements and other information may also be inspected and
copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room.
The charters of Royal Gold’s key committees of the Board of Directors and Royal Gold’s Code of
Business Conduct and Ethics are also available on the Company’s website. Any of the foregoing
information is available in print to any stockholder who requests it by contacting our Investor Relations
Department at (303) 573-1660. The information on the Company’s website is not, and shall not be
deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC.
Company Personnel
We currently have 21 employees, 18 of whom are located in Denver, Colorado, one who is located
in Zug, Switzerland, and two who are located in Toronto, Canada. Our employees are not subject to a
labor contract or a collective bargaining agreement. We consider our employee relations to be good.
We also retain independent contractors to provide consulting services, relating primarily to
geologic and geophysical interpretations and also relating to such metallurgical, engineering,
environmental, and other technical matters as may be deemed useful in the operation of our business.
ITEM 1A. RISK FACTORS
You should carefully consider the risks described below before making an investment decision. Our
business, financial condition, results of operations, and cash flows could be materially adversely affected by
any of these risks. The market or trading price of our securities could decline due to any of these risks. In
addition, please see our note about forward-looking statements included in Part II, Item 7, MD&A of this
Annual Report on Form 10-K. Please note that additional risks not presently known to us or that we
currently deem immaterial may also impair our business and operations.
Risks Related to Our Business
Volatility in gold, silver, copper, nickel and other metal prices may have an adverse impact on the value of our
stream and royalty interests and may reduce our revenues. Certain contracts governing our royalty stream
interests have features that may amplify the negative effects of a drop in metals prices.
The profitability of our stream and royalty interests is directly related to the market price of gold,
silver, copper, nickel and other metals. Our revenue is particularly sensitive to changes in the price of
gold, as we derive a majority of our revenue from gold stream and royalty interests. Market prices may
fluctuate widely and are affected by numerous factors beyond the control of Royal Gold or any mining
company, including metal supply, industrial and jewelry fabrication, investment demand, central banking
9
economic policy, expectations with respect to the rate of inflation, the relative strength of the dollar
and other currencies, interest rates, gold purchases, sales and loans by central banks, forward sales by
metal producers, global or regional political, economic or banking conditions, and a number of other
factors.
Volatility in gold, silver, copper and nickel prices is demonstrated by the annual high and low
prices for those metals over the past decade:
Gold
($/ounce)
Silver
($/ounce)
Copper
($/pound)
Nickel
($/pound)
Calendar Year
High
Low
High
Low
High
Low
High
Low
2006 - 2007 . . . . . . . . . . . . . . . . . . . .
2008 - 2009 . . . . . . . . . . . . . . . . . . . .
2010 - 2011 . . . . . . . . . . . . . . . . . . . .
2012 - 2013 . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . .
2016 to-date . . . . . . . . . . . . . . . . . . .
$ 841
$1,213
$1,895
$1,792
$1,385
$1,296
$1,366
$ 525 $15.82
$20.92
$ 713
$48.70
$1,058
$37.23
$1,192
$22.05
$1,142
$18.23
$1,049
$20.47
$1,077
$ 8.83
$ 8.88
$26.16
$18.61
$15.28
$13.71
$13.58
$4.29
$4.08
$4.60
$3.93
$3.37
$2.92
$2.31
$2.01
$1.26
$2.76
$3.01
$2.86
$2.05
$1.96
$23.41
$15.10
$13.17
$ 9.90
$ 9.62
$ 7.01
$ 3.50
$6.30
$4.00
$7.68
$5.97
$6.06
$3.70
$4.84
Declines in market prices for gold, silver, copper, nickel and certain other metals such as those
experienced during our fiscal year 2015 and first half of fiscal 2016, decreased our revenues. Declines in
market prices could cause an operator to reduce, suspend or terminate production from an operating
project or construction work at a development project, which may result in a temporary or permanent
reduction or cessation of revenue from those projects, and we might not be able to recover the initial
investment in our stream and royalty interests. Certain streaming agreements provide us the right to
purchase metals at a specified percentage of the spot price. Our margin between the price at which we
can purchase metals pursuant to streaming agreements and the price at which we sell metals in the
market will vary as metal prices vary; in the event of metal price declines, we would generate lower
cash flow or earnings, or possibly losses. Our Mount Milligan streams provide us the right to purchase
gold at fixed prices of $435 per ounce. Further, our sliding-scale royalties, such as Cortez, Holt,
Mulatos and other properties, amplify the effect of declines in market prices for gold, silver, copper,
nickel and certain other metals, because when metal prices fall below certain thresholds in a sliding-
scale royalty, a lower royalty rate will apply. A price decline may result in a material and adverse effect
on our profitability, results of operations and financial condition.
Price fluctuations between the time that decisions about development and construction of a mine
are made and the commencement of production can have a material adverse effect on the economics
of a mine and can eliminate or have a material adverse impact on the value of stream and royalty
interests on the property.
Where gold and silver are produced as by-product metals at the properties where we hold stream
and royalty interests, such as at Mount Milligan and Andacollo, an operator’s production decisions and
the economic cut-off applied to its reporting of gold and silver reserves and resources may be
influenced by changes in the commodity prices of the principal metals produced at the mines.
Moreover, certain agreements governing our royalty interests, such as those relating to our royalty
interests in the Robinson, Pe˜nasquito and Voisey’s Bay properties, are based on the operator’s
concentrate sales to smelters, which include price adjustments between the operator and the smelter
based on metals prices at a later date, typically three to five months after shipment to the smelter. In
such cases, our payments from the operator include a component of these later price adjustments,
which can result in decreased revenue in later periods if metals prices have fallen.
10
We own passive interests in mining properties, and it is difficult or impossible for us to ensure properties are
developed or operated in our best interest.
All of our current revenue is derived from stream and royalty interests on properties operated by
third parties. The holder of a stream or royalty interest typically has no authority regarding the
development or operation of a mineral property. Therefore, we typically are not in control of decisions
regarding development or operation of any of the properties on which we hold a stream or royalty
interest, and we have limited legal rights to influence those decisions.
Our strategy of acquiring and holding stream and royalty interests on properties operated by third
parties puts us generally at risk to the decisions of others regarding all operating matters, including
permitting, feasibility analysis, mine design and operation, processing, plant and equipment matters and
temporary or permanent suspension of operations, among others. As a result, our revenue is dependent
upon the activities of third parties, which creates the risk that at any time those third parties may:
(i) have business interests that are inconsistent with ours, (ii) take action contrary to our interests,
policies or objectives, or (iii) be unable or unwilling to fulfill their obligations under their agreements
with us. At any time, any of the operators of our mining properties may decide to suspend or
discontinue operations. Except in limited circumstances, we will not be entitled to material
compensation if operations are shut down, suspended or discontinued on a temporary or permanent
basis. Although we attempt to secure contractual rights when we create new stream or royalty interests,
such as audit or access rights, that will permit us to protect our interests to a degree, there can be no
assurance that such rights will always be available or sufficient, or that our efforts will be successful in
achieving timely or favorable results or in affecting the operation of the properties in which we have a
stream or royalty interest in ways that would be beneficial to our stockholders.
Our revenues are subject to operational and other risks faced by operators of our mining properties.
Although we are not required to pay capital costs (except for our interest in the Peak Gold, LLC
joint venture and for other transactions where we finance mine development or actively fund or
participate ourselves in exploration or development projects or in certain other limited circumstances)
or operating costs on projects on which we hold stream or royalty interests, our financial results are
indirectly subject to hazards and risks normally associated with developing and operating mining
properties where we hold stream and royalty interests. Some of these risks include:
• insufficient ore reserves;
• increases in production or capital costs incurred by operators or third parties that may impact
the amount of reserves available to be mined, cause an operator to delay or curtail mining
development and operations, or render mining of ore uneconomical and cause an operator to
close operations;
• declines in the price of gold, silver, copper, nickel and other metals;
• mine operating and ore processing facility problems;
• economic downturns and operators’ insufficient financing;
• default by an operator on its obligations to us or its creditors;
• insolvency, bankruptcy or other financial difficulty of the operator;
• significant permitting, environmental and other regulatory requirements and restrictions and any
changes in those regulations or their enforcement;
• challenges by non-mining interests to existing permits and mining rights, and to applications for
permits and mining rights;
11
• opposition by local communities, indigenous populations and non-governmental organizations;
• community or civil unrest;
• labor ; shortage of miners, geologists and mining experts, changes in labor laws, increased labor
costs, and labor disputes, strikes or work stoppages at mines
• unavailability of mining, drilling and related equipment;
• unanticipated geological conditions or metallurgical characteristics;
• unanticipated ground or water conditions;
• pit wall or tailings dam failures or any underground stability issues;
• fires, explosions and other industrial accidents;
• environmental hazards and natural catastrophes such as floods, earthquakes or inclement or
hazardous weather conditions;
• injury to persons, property or the environment;
• the ability of operators to maintain or increase production or to replace reserves as properties
are mined;
• potential increased operating costs arising from climate change initiatives and their impact on
energy costs in the U.S. and foreign jurisdictions; and
• uncertain domestic and foreign political and economic environments.
The occurrence of any of the above mentioned risks or hazards, among others, could result in an
interruption, suspension or termination of operations or development work at any of the properties in
which we hold a stream or royalty interest and have a material adverse effect on our business, results
of operations, cash flows and financial condition.
Many of our stream and royalty interests are important to us and any adverse development related to these
properties could adversely affect our revenues and financial condition.
Our investments in the Mount Milligan, Andacollo, Pueblo Viejo, Wassa and Presta and
Pe˜nasquito properties generated approximately $260.5 million in revenue in fiscal year 2016, or nearly
72% of our revenue for the period. We expect these properties and others to be important to us in
fiscal year 2017 and beyond. Any adverse development affecting the operation of or production from
any of these properties could have a material adverse effect on our results of operations, cash flows
and financial condition. Any adverse decision made by the operators, such as changes to mine plans,
production schedules, metallurgical processes or royalty calculation methodologies, may materially and
adversely impact the timing and amount of revenue that we receive.
If Centerra’s acquisition of Thompson Creek or the anticipated amendment to our Mount Milligan streaming
agreement is not consummated, Thompson Creek may be unable to find another buyer and may experience
liquidity issues or seek bankruptcy protection, and we may not be able to realize the benefits of our stream
interest on the Mount Milligan mine.
There are a number of uncertainties relating to Centerra’s proposed acquisition of Thompson
Creek, including, among other things, those relating to Thompson Creek obtaining stockholder
approval and the acquisition receiving court and applicable regulatory approvals. If Centerra’s proposed
acquisition of Thompson Creek is not consummated for any reason, there can be no assurance that
Thompson Creek will be able to secure another buyer for itself or Mount Milligan, or that another
buyer will seek to amend our Mount Milligan streaming agreement on terms we find acceptable. Any
12
failure of Centerra’s proposed acquisition of Thompson Creek to close could result in Thompson Creek
experiencing liquidity issues that impact operations at Mount Milligan or could result in Thompson
Creek seeking bankruptcy protection, which could limit our ability to realize the future benefits from
our stream interest on the Mount Milligan mine and could materially and adversely affect our business.
Further, while we believe our proposed amendment to our stream interest at Mount Milligan will be
value neutral on a discounted cash flow basis to our existing stream interest, we cannot guaranty that
this will prove to be the case.
Problems concerning the existence, validity, enforceability, terms or geographic extent of our stream and
royalty interests could adversely affect our business and revenues, and our interests may similarly be
materially and adversely impacted by change of control, bankruptcy or the insolvency of operators.
Defects in or disputes relating to the stream and royalty interests we hold or acquire may prevent
us from realizing the anticipated benefits from our stream and royalty interests, and could have a
material adverse effect on our business, results of operations, cash flows and financial condition.
Material changes could also occur that may adversely affect management’s estimate of the carrying
value of our stream and royalty interests and could result in impairment charges. While we seek to
confirm the existence, validity, enforceability, terms and geographic extent of the stream and royalty
interests we acquire, there can be no assurance that disputes or other problems concerning these and
other matters or other problems will not arise. Confirming these matters is complex and is subject to
the application of the laws of each jurisdiction to the particular circumstances of each parcel of mining
property and to the documents reflecting the stream or royalty interest. Similarly, stream and royalty
interests in many jurisdictions are contractual in nature, rather than interests in land, and therefore
may be subject to change of control, bankruptcy or insolvency of operators, and our stream or royalty
interests could be materially restricted or set aside through judicial or administrative proceedings. We
often do not have the protection of security interests that could help us recover all or part of our
investment in a stream or royalty interest.
We have limited access to data and disclosure regarding the operation of the properties on which we have
stream and royalty interests, which may limit our ability to assess the performance of a stream or royalty
interest.
Although certain agreements governing our stream and royalty interests require the operators to
provide us with production, operating and other information, we do not have the contractual right to
receive such information for all of our stream and royalty interests. As a result, we may have limited
access to data about the operations and the properties themselves, which could affect our ability to
assess the performance of a stream or royalty interest. This could result in delays in, or reductions of,
our cash flow from the amounts that we anticipate based on the stage of development of or production
from the properties which could have an adverse impact on our results of operations, and financial
condition.
Acquired stream and royalty interests, particularly on development stage properties, are subject to the risk that
they may not produce anticipated revenues.
The stream and royalty interests we acquire may not produce anticipated revenues. The success of
our acquisitions of stream and royalty interests is based on our ability to make accurate assumptions
regarding the valuation, timing and amount of revenues to be derived from our stream and royalty
interests and, for development projects, the geological, metallurgical and other technical aspects of the
project as well as the costs, timing and conduct of development. If an operator does not bring a
property into production and operate in accordance with feasibility studies, technical or reserve reports
or other plans due to lack of capital, inexperience, unexpected problems, delays, or otherwise, then the
acquired stream or royalty interest may not yield sufficient revenues to be profitable for us.
13
Furthermore, operators of development stage properties must obtain and maintain all necessary
environmental permits and access to water, power and other raw materials, as well as financing,
necessary to begin or sustain production, and there can be no assurance that operators will be able to
do so.
The failure of any of our principal properties to produce anticipated revenues on schedule or at all
would have a material adverse effect on our asset carrying values and potentially our business, results
of operations, financial condition or the other benefits we expect to realize from the acquisition of
stream and royalty interests. For example, we experienced a write-down for the Phoenix Gold mining
project in the third quarter of fiscal 2016 after examining updated technical reports prepared by
Rubicon, the operator of the mining project.
Further, as mines on which we have stream and royalty interests mature, we can expect overall
declines in production over the years from those operations unless operators are able to replace
reserves that are mined through mine expansion or successful new exploration. There can be no
assurance that the operators of properties where we hold stream and royalty interests will be able to
maintain or increase production or replace reserves as they are mined.
Operators may interpret our stream and royalty interests in a manner adverse to us or otherwise may not
abide by their contractual obligations, and we could be forced to take legal action to enforce our contractual
rights.
Our stream and royalty interests generally are subject to uncertainties and complexities arising
from the application of contract and property laws in the jurisdictions where the mining projects are
located. Operators and other parties to the agreements governing our stream and royalty interests may
interpret our interests in a manner adverse to us or otherwise may not abide by their contractual
obligations, and we could be forced to take legal action to enforce our contractual rights. We may or
may not be successful in enforcing our contractual rights, and our revenues relating to any challenged
stream or royalty interests may be delayed, curtailed or eliminated during the pendency of any such
dispute or in the event our position is not upheld, which could have a material adverse effect on our
business, results of operations, cash flows and financial condition. Disputes could arise challenging,
among other things, methods for calculating the stream or royalty interest, including whether certain
operator costs may properly be deducted from gross proceeds when calculating royalties determined on
a net basis; various rights of the operator or third parties in or to the stream or royalty interest or the
underlying property; the obligations of a current or former operator to make payments on stream and
royalty interests; and various defects or ambiguities in the agreement governing a stream and royalty
interest.
For example, in December 2014, the Labrador Nickel Royalty Limited Partnership (‘‘LNRLP’’), of
which the Company is the indirect majority owner, amended its October 2009 statement of claim
against Vale and certain subsidiaries of Vale. LNRLP alleges that Vale has been calculating LNRLP’s
3% NSR royalty on nickel, copper and cobalt produced from the Voisey’s Bay mine incorrectly since
production began in late 2005 and that Vale has breached its contractual duties of good faith and
honest performance. One of the claims asserted by LNRLP relates to Vale’s calculation of the royalty
since Vale began processing nickel concentrates from Voisey’s Bay at its new Long Harbour
hydrometallurgical plant. Vale currently deducts full Long Harbour operating costs, depreciation and
cost of capital from actual proceeds when calculating the net smelter return royalty, which has the
effect of reducing or eliminating royalty payments to LNRLP. Royal Gold strongly disagrees with Vale’s
position that full operating costs, depreciation and cost of capital are permissible net smelter return
deductions pursuant to the royalty agreement and is aggressively pursuing its legal remedies. For fiscal
2015, the Voisey’s Bay royalty comprised 6% of our revenue. We did not receive any revenue from Vale
for the fourth quarter of fiscal 2016. The Voisey’s Bay royalty comprised 3% of our total revenue for
fiscal 2016.
14
Potential litigation affecting the properties that we have stream and royalty interests in could have an adverse
effect on us.
Potential litigation may arise between the operators of properties on which we have stream and
royalty interests and third parties. For example, Barrick’s Pascua-Lama mining project has been the
subject of litigation by local farmers and indigenous communities alleging that the project’s water
management system is not in compliance with environmental permits and that the project has damaged
glaciers located in the Pascua-Lama project area. As a holder of stream and royalty interests, we
generally will not have any influence on litigation such as this and generally will not have access to
non-public information concerning such litigation. Any such litigation that results in the reduction,
cessation or termination of a project or production from a property, whether temporary or permanent,
could have a material adverse effect on our business, results of operations, cash flows and financial
condition.
We may enter into acquisitions or other material transactions at any time.
In the ordinary course of business, we engage in a continual review of opportunities to acquire
existing stream and royalty interests, to establish new streams on operating mines, to create new stream
and royalty interests through financing mine development or exploration, or to acquire companies that
hold stream and royalty interests. We currently, and generally at any time, have acquisition
opportunities in various stages of active review, including, for example, our engagement of consultants
and advisors to analyze particular opportunities, analysis of technical, financial and other confidential
information, submission of indications of interest and term sheets, participation in preliminary
discussions and negotiations and involvement as a bidder in competitive processes. We also consider
obtaining debt commitments for acquisition financing. In the event that we choose to raise debt capital
to finance any acquisition, our leverage may be increased. We also could issue common stock or incur
additional indebtedness to fund our acquisitions. Issuances of common stock could dilute existing
stockholders and may reduce some or all of our per share financial measures.
Any such acquisition could be material to us. In pursuit of such opportunities, we may fail to select
appropriate acquisition candidates or negotiate acceptable arrangements, including arrangements to
finance acquisitions. In addition, any such acquisition or other transaction may have other transaction
specific risks associated with it, including risks related to the completion of the transaction, the project,
its operators, or the jurisdictions in which the project is located and other risks discussed in this Annual
Report on Form 10-K. There can be no assurance that any acquisitions completed will ultimately
benefit the Company.
In addition, we may consider opportunities to restructure our stream or royalty interests where we
believe such restructuring would provide a long-term benefit to the Company, though such restructuring
may reduce near-term revenues or result in the incurrence of transaction related costs. We could enter
into one or more acquisition or restructuring transactions at any time.
We may be unable to successfully acquire additional stream or royalty interests at appropriate valuations.
Our future success largely depends upon our ability to acquire stream and royalty interests at
appropriate valuations, including through royalty, stream and corporate acquisitions and other financing
transactions. Most of our revenues are derived from stream and royalty interests that we acquire or
finance. There can be no assurance that we will be able to identify and complete the acquisition of
such stream and royalty interests or businesses that own desirable interests, at reasonable prices or on
favorable terms, or, if necessary, that we will have or be able to obtain sufficient financing on
reasonable terms to complete such acquisitions. Continued economic volatility or a credit crisis, or
severe declines in market prices for gold, silver, copper, nickel and certain other metals, could adversely
affect our ability to obtain debt or equity financing for acquisitions. In addition, changes to tax rules,
accounting policies, or the treatment of stream interests by ratings agencies could make royalties,
streams or other investments by the Company less attractive to counterparties. Such changes could
adversely affect our ability to acquire new stream or royalty interests.
15
We face substantial competition, and we may not be able to compete successfully in acquiring new stream and
royalty interests.
We have competitors that are engaged in the acquisition of stream and royalty interests and
companies holding such interests, including competitors with greater financial resources, and we may
not be able to compete successfully against these companies in new acquisitions. If we are unable to
successfully acquire additional stream or royalty interests, the reserves subject to our stream and royalty
interests may decline as the producing properties on which we have such stream and royalty interests
are mined or payment or production caps on certain of our royalty interests are met. We also may
experience negative reactions from the financial markets or operators of properties on which we seek
stream and royalty interests if we are unable to successfully complete acquisitions of such interests or
complete them at satisfactory rates of return. Each of these factors could have a material adverse effect
on our business, results of operations, cash flows and financial condition.
We depend on our operators for the calculation of payments of our stream and royalty interests. We may not
be able to detect errors and later payment calculations may call for retroactive adjustments.
The payments of our stream and royalty interests are calculated by the operators of the properties
on which we have stream and royalty interests based on their reported production. Each operator’s
calculation of our payments is subject to and dependent upon the adequacy and accuracy of its
production and accounting functions, and, given the complex nature of mining and ownership of mining
interests, errors may occur from time to time in the allocation of production and the various other
calculations made by an operator. Any of these errors may render calculations of such payments
inaccurate. Certain agreements governing our stream and royalty interests require the operators to
provide us with production and operating information that may, depending on the completeness and
accuracy of such information, enable us to detect errors in deliveries under metal streams and in the
calculation of payments of royalties. We do not, however, have the contractual right to receive
production information for all of our stream and royalty interests. As a result, our ability to detect
payment errors through our stream and royalty monitoring program and its associated internal controls
and procedures is limited, and the possibility exists that we will need to make retroactive revenue
adjustments. Some contracts governing our stream and royalty interests provide us the right to audit
the operational calculations and production data for the associated royalty payments and metal stream
deliveries; however, such audits may occur many months following our recognition of the revenue and
we may be required to adjust our revenue in later periods, which could require us to restate our
financial statements.
Development and operation of mines is very capital intensive and any inability of the operators of properties
where we hold stream and royalty interests to meet liquidity needs, obtain financing or operate profitably could
have material adverse effects on the value of and revenue from our stream and royalty interests.
If operators of properties where we hold stream and royalty interests do not have the financial
strength or sufficient credit or other financing capability to cover the costs of developing or operating a
mine, the operator may curtail, delay or cease development or operations at a mine site. For example,
in 2015, Yukon Zinc shut down its Wolverine mine, on which we own a sliding-scale NSR royalty on all
gold and silver produced, and later filed for and completed bankruptcy proceedings in the Supreme
Court of British Columbia. Operators’ ability to raise and service sufficient capital may be affected by,
among other things, macroeconomic conditions, future commodity prices of metals to be mined, or
further economic volatility in the U.S. and global financial markets as has been experienced in recent
years. If certain of the operators of the properties on which we have stream and royalty interests suffer
these material adverse effects, then our interests, including the value of and revenue from them, and
the ability of operators to obtain debt or equity financing for the exploration, development and
operation of their properties may be materially adversely affected.
16
Certain of the agreements governing our stream and royalty interests contain terms that reduce or cap the
revenues generated from the interests.
Revenue from some of our stream and royalty interests will stop or decrease after threshold
production, delivery or payment milestones are achieved. For example, our gold stream at Pueblo Viejo
decreases from 7.5% of Barrick’s interest in gold produced at Pueblo Viejo to 3.75% after 990,000 ounces
of gold have been delivered. Similarly, our silver stream at Pueblo Viejo decreases from 75% of Barrick’s
interest in silver produced at Pueblo Viejo to 37.50% after 50.00 million ounces of silver have been
delivered. Our streams at Wassa and Prestea, Andacollo and many other properties are subject to similar
limitations contained in our stream and royalty agreements, and therefore current production and revenue
results from our interests may not be indicative of future results.
Estimates of reserves and mineralization by the operators of mines in which we have stream and royalty
interests are subject to significant revision.
There are numerous uncertainties inherent in estimating proven and probable reserves and
mineralization, including many factors beyond our control and the control of the operators of
properties in which we have stream and royalty interests. Reserve estimates for our stream and royalty
interests are prepared by the operators of the mining properties. We do not participate in the
preparation or verification of such reports and have not independently assessed or verified the accuracy
of such information.
The estimation of reserves and of other mineralized material is a subjective process, and the
accuracy of any such estimates is a function of the quality of available data and of engineering and
geological interpretation and judgment. Results of drilling, metallurgical testing and production, and the
evaluation of mine plans subsequent to the date of any estimate, may cause a revision of such
estimates. The volume and grade of reserves recovered and rates of production may be less than
anticipated. Assumptions about gold and other precious metal prices are subject to great uncertainty,
and such prices have fluctuated widely in the past. Declines in the market price of gold, silver, copper,
nickel or other metals also may render reserves or mineralized material containing relatively lower ore
grades uneconomical to exploit. Changes in operating costs and other factors including short-term
operating factors, the processing of new or different ore grades, geotechnical characteristics and
metallurgical recovery, may materially and adversely affect reserves.
Mineral resources as reported by some operators do not constitute mineral reserves and do not
have demonstrated economic viability. Due to the uncertainty of mineral resources, there can be no
assurance that such resources will be upgraded to proven and probable mineral reserves as a result of
continued exploration. It should not be assumed that any part or all of mineral resources on properties
where we hold stream and royalty interests constitute or will be converted into mineral reserves.
Estimates of production by the operators of mines in which we have stream and royalty interests are subject to
change, and actual production may vary materially from such estimates.
Production estimates are prepared by the operators of mining properties. There are numerous
uncertainties inherent in estimating anticipated production attributable to our stream and royalty
interests, including many factors beyond our control and the control of the operators of the properties
in which we have stream and royalty interests. We do not participate in the preparation or verification
of production estimates and have not independently assessed or verified the accuracy of such
information. The estimation of anticipated production is a subjective process and the accuracy of any
such estimates is a function of the quality of available data, reliability of production history, variability
in grade encountered, mechanical or other problems encountered, engineering and geological
interpretation and operator judgment. Rates of production may be less than expected. Results of
drilling, metallurgical testing and production, changes in commodity prices, and the evaluation of mine
17
plans subsequent to the date of any estimate may cause actual production to vary materially from such
estimates.
If title to or concessions, licenses or leases from governments on mine properties are not properly maintained
by the operators, or are successfully challenged by third parties, our stream and royalty interests could be
found to be invalid.
Our business includes the risk that operators of mining projects and holders of mining claims,
tenements, concessions, mining licenses or other interests in land and mining rights may lose their
exploration or mining rights, or have their rights to mining properties contested by private parties or
the government. Internationally, mining tenures are subject to loss for many reasons, including
expiration, failure of the holder to meet specific legal qualifications, failure to pay maintenance fees or
meet expenditure requirements, reduction in geographic extent upon passage of time or upon
conversion from an exploration tenure to a mining tenure, failure of title and similar risks. If title to
unpatented mining claims or other mining tenures subject to our stream and royalty interests have not
been properly established or not properly maintained, or are successfully contested, our stream and
royalty interests could be adversely affected.
Operations in foreign countries or other sovereign jurisdictions are subject to many risks, which could
decrease our revenues.
We derived approximately 90% of our revenues from foreign sources during fiscal year 2016,
compared to approximately 85% in fiscal year 2015 and 2014. Our principal producing stream and
royalty interests on properties outside of the United States are located in Canada, Chile, Mexico, the
Dominican Republic and Ghana. We currently have stream and royalty interests in mines and projects
in other countries, including Argentina, Australia, Bolivia, Brazil, Burkina Faso, Finland, Guatemala,
Honduras, Macedonia, Nicaragua, Peru, Russia, Spain and Tunisia. Various indigenous peoples may be
recognized as sovereign jurisdictions and may enforce their own laws and regulations within the United
States, Canada and other countries. In addition, future acquisitions may expose us to new jurisdictions.
Our foreign activities are subject to the risks normally associated with conducting business in foreign
countries. These risks include, depending on the country, such things as:
• expropriation or nationalization of mining property in foreign countries;
• seizure of mineral production;
• exchange and currency controls and fluctuations;
• limitations on foreign exchange and repatriation of earnings;
• increased foreign taxation or imposition of new or increased mining royalty interests;
• restrictions on mineral production and price controls;
• import and export regulations, including restrictions on the export of gold, silver, copper, nickel
or other metals;
• changes in legislation, including changes related to taxation, royalty interests, imports, exports,
duties, currency, foreign ownership, foreign trade and foreign investment;
• high rates of inflation;
• labor practices and disputes;
• enforcement of unfamiliar or uncertain foreign real estate, mineral tenure, contract, water use,
mine safety and environmental laws and policies;
18
• challenges to mining, processing and related permits and licenses, or to applications for permits
and licenses, by or on behalf of regulatory authorities, indigenous populations, non-governmental
organizations or other third parties;
• renegotiation, nullification or forced modification of existing contracts, licenses, permits,
approvals, concessions or the like;
• war, crime, terrorism, sabotage, civil unrest and uncertain political and economic environments;
• corruption;
• exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S.
Foreign Corrupt Practices Act and similar laws and regulations in other jurisdictions to which
we, but not necessarily our competitors, may be subject;
• suspension of the enforcement of creditors’ rights and stockholders’ rights; and
• loss of access to government controlled infrastructure, such as roads, bridges, rails, ports, power
sources and water supply.
In addition, many of our operators are organized outside of the United States. Our stream and
royalty interests may be subject to the application of foreign laws to our operators, and their
stockholders, including laws relating to foreign ownership structures, corporate transactions, creditors’
rights, bankruptcy and liquidation. Foreign operations also could be adversely impacted by laws and
policies of the United States affecting foreign trade, investment and taxation.
These risks may limit or disrupt operating mines or projects on which we hold stream and royalty
interests, restrict the movement of funds, or result in the deprivation of contract rights or the taking of
property by nationalization or expropriation without fair compensation, and could have a material
adverse effect on our business, results of operations, cash flows and financial condition.
Opposition from indigenous people may delay or suspend development or operations at the properties where we
hold stream and royalty interests, which could decrease our revenues.
Various international and national, state and provincial laws, regulations and other materials relate
to the rights of indigenous peoples. Some of the properties where we hold stream and royalty interests
are located in areas presently or previously inhabited or used by indigenous peoples. Many of these
laws impose obligations on government to respect the rights of indigenous people. Some mandate that
government consult with indigenous people regarding government actions which may affect indigenous
people, including actions to approve or grant mining rights or permits. One or more groups of
indigenous people may oppose continued operation, further development, or new development of the
properties where we hold stream and royalty interests. Such opposition may be directed through legal
or administrative proceedings or protests, roadblocks or other forms of public expression, and claims
and protests of indigenous peoples may disrupt or delay activities of the operators of the properties.
For example, the Pascua-Lama and El Morro projects have been challenged by Chilean indigenous
groups and other third parties. During the fourth calendar quarter of 2013, Barrick suspended
construction activities at the Pascua-Lama project, except for those activities required for environmental
and regulatory compliance, as discussed further in Part I, Item 2, Properties under the heading
‘‘Pascua-Lama Project (Region III, Chile)’’ in this Annual Report on Form 10-K. Similarly, construction
activities at the El Morro project were suspended during the same period.
Changes in mining taxes and royalties payable to governments could decrease our revenues.
Changes in mining and tax laws in any of the United States, Canada, Chile, Dominican Republic,
Mexico or any other country in which we have stream and royalty interests in mines or projects could
affect mine development and expansion, significantly increase regulatory obligations and compliance
19
costs with respect to mine development and mine operations, increase the cost of holding mining
tenures or impose additional taxes on mining operations, all of which could adversely affect our
revenue from such properties. A number of properties where we hold royalty interests are located on
U.S. public lands that are subject to federal mining and other public land laws. In recent years, the
United States Congress has considered a number of proposed major revisions to the General Mining
Law of 1872, and other laws, which govern the creation, maintenance and possession of mining claims
and related activities on public lands in the United States. Congress also has recently considered bills,
which if enacted, would impose a royalty payable to the government on hardrock production, increase
land holding fees, impose federal reclamation fees and financial assurances, impose additional
environmental operating standards and afford greater public involvement and regulatory discretion in
the mine permitting process. Such legislation, if enacted, or similar legislation in other countries, could
adversely affect the development of new mines and the expansion of existing mines, as well as increase
the cost of all mining operations, and could materially and adversely affect mine operators and our
revenue.
Changes in United States tax legislation or our plans regarding our foreign earnings could adversely impact
our business.
We are subject to income taxes in the United States and various foreign jurisdictions. Currently,
the majority of our revenue is generated from stream and royalty interests located outside the United
States. Present U.S. income taxes and foreign withholding taxes have not been provided for on
undistributed earnings for one of our non-U.S. subsidiaries, because such earnings are intended to be
indefinitely reinvested in the operations of that subsidiary. The current Executive branch of the U.S.
government has proposed various international tax measures, some of which, if enacted into law, would
substantially reduce our ability to defer United States taxes on such indefinitely reinvested non-United
States earnings, eliminate certain tax deductions until foreign earnings are repatriated to the United
States and/or otherwise cause the total tax cost of U.S. multinational corporations to increase. If these
or similar proposals are enacted in current or future years, they could have a negative impact on our
financial position and results of operations.
In addition, the possibility exists that amounts determined to be indefinitely reinvested outside of
the United States may ultimately be repatriated. Any repatriation of foreign earnings may require the
accrual and payment of U.S. federal and certain state taxes, which could negatively impact our results
of operations and/or the amount of available funds. While we currently have no intention to repatriate
cash from our foreign subsidiaries, should the need arise domestically, there is no guarantee that we
could do so without adverse consequences.
The mining industry is subject to environmental risks in the U.S. and in the foreign jurisdictions where our
interests are located.
Mining is subject to potential risks and liabilities associated with pollution of the environment and
the disposal of waste products occurring as a result of mineral exploration and production. Laws and
regulations in the United States and abroad intended to ensure the protection of the environment are
constantly changing and evolving in a manner expected to result in stricter standards and enforcement,
larger fines and liability, and potentially increased capital expenditures and operating costs.
Furthermore, mining may be subject to significant environmental and other permitting requirements
regarding the use of raw materials needed for operations, particularly water and power. Compliance
with such laws and regulations can require significant expenditures and a breach may result in the
imposition of fines and penalties, which may be material. If an operator is forced to incur significant
costs to comply with environmental regulations or becomes subject to environmental restrictions that
limit its ability to continue or expand operations, or if an operator were to lose its right to use or
access water or other raw materials necessary to operate a mine, our revenues could be reduced,
20
delayed or eliminated. These risks are most salient with regard to our development stage properties
where permitting may not be complete and/or where new legislation and regulation can lead to delays,
interruptions and significant unexpected cost burdens for mine operators. For example, Argentina
passed a federal glacier protection law in 2010 that, if strictly applied, could restrict mining activities in
areas on or near the nation’s glaciers. We have royalties on the Chilean side of the Pascua-Lama
project, which straddles the border between Chile and Argentina, and the glacier law, if and when it
becomes effective, could affect some aspects of the design, development and operation of the
Pascua-Lama project. In July 2012, the National Supreme Court of Justice of Argentina overturned
preliminary injunctions suspending the application of the glacier law in the San Juan Province, where a
portion of the Pascua-Lama project is located, but the Supreme Court must still rule on the
constitutionality of the glacier law. Further, to the extent that we become subject to environmental
liabilities for any time period during which we operated properties, the satisfaction of any liabilities
would reduce funds otherwise available to us and could have a material adverse effect on our business,
results of operations, cash flows and financial condition.
We are dependent upon information technology systems, which are subject to cyber threats, disruption, damage
and failure.
Information systems and other technologies, including those related to our financial and
operational management, are an integral part of our business activities. Network and information
systems-related events, such as computer hackings, cyber-attacks, computer viruses, worms or other
destructive or disruptive software, process breakdowns, denial of service attacks, malicious social
engineering or other malicious activities, or any combination of the foregoing, or power outages,
natural disasters, terrorist attacks or other similar events, could result in damage to our property,
equipment and data. These events also could result in significant expenditures to repair or replace the
damaged property or information systems or to protect them from similar events in the future. Further,
any security breaches, such as misappropriation, misuse, leakage, falsification or accidental release or
loss of information maintained in our information technology systems, including personnel and other
data, could damage our reputation and require us to expend significant capital and other resources to
remedy any such security breach. There can be no assurance that these events and security breaches
will not occur in the future or not have an adverse effect on our business.
We depend on the services of our President and Chief Executive Officer and other key employees.
We believe that our success depends on the continued service of our key executive management
personnel. Tony Jensen has served as our President and Chief Executive Officer since July 2006.
Mr. Jensen’s extensive commercial experience, mine operations background and industry contacts give
us an important competitive advantage. The loss of the services of Mr. Jensen, other key members of
management or other key employees could jeopardize our ability to maintain our competitive position
in the industry. From time to time, we may also need to identify and retain additional skilled
management and specialized technical personnel to efficiently operate our business. The number of
persons skilled in the acquisition, exploration and development of stream and royalty interests is limited
and there is competition for such persons. Recruiting and retaining qualified personnel is critical to our
success and there can be no assurance of such success. If we are not successful in attracting and
retaining qualified personnel, our ability to execute our business model and growth strategy could be
affected, which could have a material adverse effect on our business, results of operations, cash flows
and financial condition. We currently do not have key person life insurance for any of our officers or
directors.
21
Our disclosure controls and internal control over our financial reporting are subject to inherent limitations.
Management has concluded that as of June 30, 2016, our disclosure controls and procedures and
our internal control over financial reporting were effective. Such controls and procedures, however,
may not be adequate to prevent or identify existing or future internal control weaknesses due to
inherent limitations therein, which may be beyond our control, including, but not limited to, our
dependence on operators for the calculation of royalty payments and deliveries of metal streams that
translate to our revenues as discussed above in ‘‘We depend on our operators for the calculation of
payments of our stream and royalty interests. We may not be able to detect errors and later payment
calculations may call for retroactive adjustments’’. Given our dependence on third party calculations,
there is a risk that material misstatements in results of operations and financial condition may not be
prevented or detected on a timely basis by our internal controls over financial reporting and may
require us to restate our financial statements.
We have incurred indebtedness in connection with our business and may in the future incur additional
indebtedness that could limit cash flow available for our operations, limit our ability to borrow additional
funds and, if we were unable to repay our debt when due, would have a material adverse effect on our
business, results of operations, cash flows and financial condition.
As of June 30, 2016, we had $370 million aggregate principal amount of our 2.875% convertible
senior notes due 2019 (the ‘‘2019 Notes’’) outstanding, which we incurred in June 2012. In addition, we
may incur additional indebtedness in connection with financing acquisitions, strategic transactions or for
other purposes. Since June 30, 2015, we entered into several transactions that resulted in drawing down
our revolving credit facility and reducing our availability under the facility. As of June 30, 2016 there
was $275 million outstanding on the revolving credit facility, resulting in $375 million of available
revolver capacity. We are also subject to the risks normally associated with debt obligations, including
the risk that our cash flows may be insufficient to meet required principal and interest payments and
the risk that we will be unable to refinance our indebtedness when it becomes due, or that the terms of
such refinancing will not be as favorable as the terms of our indebtedness. We may seek additional debt
or equity financing if we deem it available.
Our indebtedness could have a material adverse effect on our business, results of operations, cash
flows and financial condition. For example, it could:
• increase our vulnerability to general adverse economic and industry conditions;
• require us to dedicate a substantial portion of our cash flow from operations to service our
indebtedness, thereby reducing the availability of our cash flow to fund acquisitions of stream
and royalty interests, working capital, pay dividends and other general corporate purposes;
• limit our flexibility in planning for, or reacting to, changes in our business and the industry in
which we operate;
• restrict us from exploiting business opportunities;
• place us at a competitive disadvantage compared to our competitors that have less indebtedness;
• dilute our existing stockholders if we elect to issue common stock instead of paying cash in the
event the holders convert the 2019 Notes, or any other convertible securities issued in the
future;
• require the consent of our existing lenders to borrow additional funds, as was required in
connection with the issuance of the 2019 Notes; and
22
• limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions,
debt service requirements, execution of our business strategy or other general corporate
purposes.
In addition, the agreement governing our revolving credit facility contains, and the agreements that
may govern any future indebtedness that we may incur may contain, financial and other restrictive
covenants that will limit our ability to engage in activities that may be in our long-term best interests.
Among other restrictions, the agreement governing our revolving credit facility contains covenants
limiting our ability to make certain investments, consummate certain mergers, incur certain debt or
liens and dispose of assets.
If we are unable to maintain cash reserves or generate sufficient cash flow or otherwise obtain
funds necessary to make required payments, or if we fail to comply with the various covenants and
requirements of the 2019 Notes, our revolving credit facility or any indebtedness which we may incur in
the future, an event of default could occur that, if not cured or waived, could result in the acceleration
of all of our debt. Any default under the 2019 Notes, our revolving credit facility or any indebtedness
which we may incur in the future could have a material adverse effect on our business, results of
operations, cash flows and financial condition.
The results of the United Kingdom’s referendum on withdrawal from the European Union may have a
negative effect on global economic conditions, financial markets and our business.
In June 2016, a majority of voters in the United Kingdom elected to withdraw from the European
Union in a national referendum. The referendum was advisory, and the terms of any withdrawal are
subject to a negotiation period that could last at least two years after the government of the United
Kingdom formally initiates a withdrawal process. Nevertheless, the referendum has created significant
uncertainty about the future relationship between the United Kingdom and the European Union,
including with respect to the laws and regulations that will apply as the United Kingdom determines
which European Union laws to replace or replicate in the event of a withdrawal. The referendum has
also given rise to calls for the governments of other European Union member states to consider
withdrawal. These developments, or the perception that any of them could occur, have had and may
continue to have a material adverse effect on global economic conditions and the stability of global
financial markets, and may significantly reduce global market liquidity and restrict the ability of key
market participants to operate in certain financial markets. Any of these factors could depress
economic activity and restrict our access to capital, which could have a material adverse effect on our
business, financial condition and results of operations and reduce the price of our securities.
Risks Related to our Common Stock
Our stock price may continue to be volatile and could decline.
The market price of our common stock has fluctuated and may decline in the future. The high and
low sale prices of our common stock on the Nasdaq Global Select Market were $76.85 and $40.45 for
the fiscal year ended June 30, 2014, $82.84 and $55.55 for the fiscal year ending June 30, 2015, and
$72.04 and $24.68 for the fiscal year ending June 30, 2016. The fluctuation of the market price of our
common stock has been affected by many factors that are beyond our control, including:
• market prices of gold, silver, copper, nickel and other metals;
• Central Bank interest rates;
• expectations regarding inflation;
• ability of operators to service their financial obligations, advance development projects, produce
precious metals and develop new reserves;
23
• currency values;
• credit market conditions;
• general stock market conditions; and
• global and regional political and economic conditions.
Additional issuances of equity securities by us could dilute our existing stockholders, reduce some or all of our
per share financial measures, reduce the trading price of our common stock or impede our ability to raise
future capital. Substantial sales of shares may negatively impact the market price of our common stock.
We may issue additional equity in the future in connection with acquisitions, strategic transactions
or for other purposes. To the extent we issue additional equity securities, our existing stockholders
could be diluted and some or all of our per share financial measures could be reduced. In addition, the
shares of common stock that we issue in connection with an acquisition may not be subject to resale
restrictions. The market price of our common stock could decline if our stockholders sell substantial
amounts of our common stock, including shares issued upon the conversion of the outstanding 2019
Notes or are perceived by the market as intending to sell these shares other than in an orderly manner.
Conversion of the 2019 Notes may dilute the ownership interest of existing stockholders.
At our election, we may settle the 2019 Notes tendered for conversion entirely or partly in shares
of our common stock. An aggregate of approximately 3.5 million shares of our common stock are
issuable upon conversion of the outstanding 2019 Notes at the initial conversion rate of 9.4955 shares
of common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of
approximately $105.31 per share of common stock). In addition, the number of shares of common stock
issuable upon conversion of the 2019 Notes, and therefore the dilution of existing common
stockholders, could increase under certain circumstances described in the indenture under which the
2019 Notes are governed. We may issue all of these shares without any action or approval by our
stockholders. As a result, the conversion of some or all of the 2019 Notes may dilute the ownership
interests of existing stockholders. Any sales in the public market of the common stock issuable upon
such conversion could adversely affect prevailing market prices of our common stock.
We may change our practice of paying dividends.
We have paid a cash dividend on our common stock for each fiscal year beginning in fiscal year
2000. Our board of directors has discretion in determining whether to declare a dividend based on a
number of factors, including prevailing gold prices, economic market conditions, future earnings, cash
flows, financial condition, and funding requirements for future opportunities or operations. In addition,
there may be corporate law limitations or future contractual restrictions on our ability to pay dividends.
If our board of directors declines or is unable to declare dividends in the future or reduces the current
dividend level, our stock price could fall, and the success of an investment in our common stock would
depend largely upon any future stock price appreciation. We have increased our dividends in prior
years. There can be no assurance, however, that we will continue to do so or that we will pay any
dividends at all.
Certain provisions of Delaware law, our organizational documents, our rights plan and the indenture
governing the 2019 Notes could impede, delay or prevent an otherwise beneficial takeover or takeover attempt
of us.
Certain provisions of Delaware law, our organizational documents, our rights plans and the
indenture governing the 2019 Notes could make it more difficult or more expensive for a third party to
acquire us, even if a change of control would be beneficial to our stockholders. Delaware law prohibits,
24
subject to certain exceptions, a Delaware corporation from engaging in any business combination with
any ‘‘interested stockholder,’’ which is generally defined as a stockholder who becomes a beneficial
owner of 15% or more of a Delaware corporation’s voting stock, for a period of three years following
the date that the stockholder became an interested stockholder. Additionally, our certificate of
incorporation and bylaws contain provisions that could similarly delay, defer or discourage a change in
control of us or management. These provisions could also discourage a proxy contest and make it more
difficult for stockholders to elect directors and take other corporate actions. Such provisions provide for
the following, among other things: (i) the ability of our board of directors to issue shares of common
stock and preferred stock without stockholder approval, (ii) the ability of our board of directors to
establish the rights and preferences of authorized and unissued preferred stock, (iii) a board of
directors divided into three classes of directors serving staggered three year terms, (iv) permitting only
the chairman of the board of directors, chief executive officer, president or board of directors to call a
stockholders’ meeting and (v) requiring advance notice of stockholder proposals and related
information. Furthermore, we have a stockholder rights plan that may have the effect of discouraging
unsolicited takeover proposals. The rights issued under the stockholder rights plan could cause
significant dilution to a person or group that attempts to acquire us on terms not approved in advance
by our board of directors. In addition, if an acquisition event constitutes a fundamental change, holders
of the 2019 Notes will have the right to require us to purchase their 2019 Notes in cash. If an
acquisition event constitutes a make-whole fundamental change, we may be required to increase the
conversion rate for holders who convert their 2019 Notes in connection with such make-whole
fundamental change. These provisions could increase the cost of acquiring us or otherwise discourage a
third party from acquiring us or removing incumbent management, which may cause the market price
of our common stock to decline.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
We do not own or operate the properties in which we have stream or royalty interests, except for
our interest in Peak Gold, and therefore much of the information disclosed in this Form 10-K
regarding these properties is provided to us by the operators. For example, the operators of the various
properties provide us information regarding metals production, estimates of mineral reserves and
additional mineralized material and production estimates. A list of our producing and development
stage streams and royalties, as well their respective reserves, are summarized below in Table 1 within
this Item 2. More information is available to the public regarding certain properties in which we have
royalties, including reports filed with the SEC or with the Canadian securities regulatory agencies
available at www.sec.gov or www.sedar.com, respectively.
The Company manages its business under two reportable segments, consisting of the acquisition
and management of stream interests and the acquisition and management of royalty interests. The
description of our principal streams and royalties set forth below includes the location, operator, stream
or royalty rate, access and any material current developments at the property. For any reported
production amounts discussed below, the Company considers reported production to relate to the
amount of metal sales subject to our stream and royalty interests. Please refer to Item 7, MD&A, for
discussion on production estimates, historical production and revenue for our principal properties. The
map below illustrates the location of our principal producing and development stage properties.
Principal Producing Properties
The Company considers both historical and future potential revenues in determining which stream
and royalty interests in our portfolio are principal to our business. Estimated future potential revenues
25
from both producing and development properties are based on a number of factors, including reserves
subject to our stream and royalty interests, production estimates, feasibility studies, metal price
assumptions, mine life, legal status and other factors and assumptions, any of which could change and
could cause the Company to conclude that one or more of such stream and royalty interests are no
longer principal to our business. Currently, the Company considers the properties discussed below
(listed alphabetically by stream and royalty interest) to be principal to our business.
9AUG201610591010
Stream Interests
Andacollo (Region IV, Chile)
As discussed in further detail in Item 1, Business, Fiscal 2016 Business Developments, RGLD
Gold owns the right to purchase 100% of the gold produced from the Andacollo copper-gold mine
until 900,000 ounces of payable gold have been delivered, 50% thereafter. The cash purchase price
equals 15% of the monthly average gold price for the month preceding the delivery date for all gold
purchased.
Andacollo is an open-pit mine and milling operation located in central Chile, Region IV in the
Coquimbo Province and is operated by CMCA. The Andacollo mine is located in the foothills of the
Andes Mountains approximately 1.5 miles southwest of the town of Andacollo. The regional capital of
La Serena and the coastal city of Coquimbo are approximately 34 miles northwest of the Andacollo
mine by road, and Santiago is approximately 215 miles south by air. Access to the mine is provided by
Route 43 (R-43) south from La Serena to El Pe˜non. From El Pe˜non, D-51 is followed east and
eventually curves to the south to Andacollo. Both R-43 and D-51 are paved roads.
Stream deliveries from Andacollo were 41,700 ounces of gold during the fiscal year ended June 30,
2016. Production attributable to our royalty interest at Andacollo during the fiscal year ended June 30,
2015, was 41,500 ounces of gold. Teck has indicated that they expect calendar 2016 gold grade and
production to exceed calendar 2015.
26
Mount Milligan (British Columbia, Canada)
As of June 30, 2016, RGLD Gold owns the right to purchase 52.25% of the payable gold produced
from the Mount Milligan copper-gold project in British Columbia, Canada, which is operated by
Terrane, a subsidiary of Thompson Creek. The cash purchase price is equal to the lesser of $435 per
ounce, with no inflation adjustment, or the prevailing market price. Please refer to Item 1, Business,
Recent Business Developments, for a description of a proposed amendment to our stream interest at
Mount Milligan in connection with the sale of Thompson Creek to Centerra.
The Mount Milligan project is an open-pit mine and is located within the Omenica Mining
Division in North Central British Columbia, approximately 96 miles northwest of Prince George,
53 miles north of Fort St. James, and 59 miles west of Mackenzie. The Mount Milligan project is
accessible by commercial air carrier to Prince George, British Columbia, then by vehicle from the east
via Mackenzie on the Finlay Philip Forest Service Road and the North Philip Forest Service Road, and
from the west via Fort St. James on the North Road and Rainbow Forest Service Road. Road travel to
the Mount Milligan property site is 482 miles from Prince Rupert and 158 miles from Prince George.
Stream deliveries from Mount Milligan were 111,000 ounces of gold during the fiscal year ended
June 30, 2016, an increase of approximately 50% when compared to the fiscal year ended June 30,
2015. The increase was due to higher mill throughput and gold grade.
Thompson Creek estimates that Mount Milligan gold production will be at the lower end of their
calendar 2016 production guidance of 240,000 to 270,000 ounces.
Pueblo Viejo (Sanchez Ramirez, Dominican Republic)
On September 29, 2015, RGLD Gold acquired the right to purchase 7.5% of Barrick’s interest in
the gold produced from the Pueblo Viejo mine until 990,000 ounces of gold have been delivered, and
3.75% thereafter. The cash purchase price of the gold is 30% of the spot price of gold delivered until
550,000 ounces of gold have been delivered, and 60% of the spot price of gold per ounce delivered
thereafter. RGLD Gold also owns the right to purchase 75% of Barrick’s interest in the silver
produced from the Pueblo Viejo mine, subject to a minimum silver recovery of 70%, until 50 million
ounces of silver have been delivered, and 37.5% thereafter. The cash purchase price of the silver is
30% of the spot price of silver delivered until 23.1 million ounces of silver have been delivered, and
60% of the spot price per ounce of silver delivered thereafter.
The Pueblo Viejo mine is located in the province of Sanchez Ramirez, Dominican Republic,
approximately 60 miles northwest of Santo Domingo, and is owned by a joint venture in which Barrick
holds a 60% interest and is responsible for operations, and in which Goldcorp holds a 40% interest.
Pueblo Viejo is accessed from Santo Domingo by traveling northwest on Autopista Duarte,
Highway #1, approximately 48 miles to Piedra Blanca and proceeding east for approximately 14 miles
on Highway #17 to the gatehouse for Pueblo Viejo. Both Highway #1 and Highway #17 are paved.
Stream deliveries from Pueblo Viejo were 42,200 ounces of gold and 532,600 ounces of silver
during the fiscal year ended June 30, 2016. In November 2015, Barrick announced that two of three
electric motors at the Pueblo Viejo oxygen plant experienced unexpected failures and that a
comprehensive plan to mitigate the impact of the motor failure was implemented in December 2015,
which involved installing a number of portable compressors. Barrick was able to restore capacity to
100% by mid-January 2016 with portable compressor motors. The first repaired motor was reinstalled
and commissioned in late January 2016 and the second motor was repaired and reinstalled early
February 2016.
In calendar 2016, Barrick expects improved throughput and plant availability as compared to
calendar 2015 primarily due to overcoming the issues related to the oxygen plant motor failures which
negatively impacted 2015 throughput. In addition, Barrick is focused on improving efficiency and
27
throughput through ore blending optimization, increasing autoclave availability, and optimization of
maintenance strategies. A prefeasibility study is expected to be commissioned in the second half of
calendar 2016 to evaluate a possible increase in tailings storage capacity, giving the potential to move a
significant portion of the mine’s 7.7 million ounces of gold and 44.7 million ounces of silver in
measured and indicated resources to reserves.
Barrick delivers gold and silver to RGLD Gold on a quarterly basis (mid-March, June, September
and December) based on Barrick’s 60% indirect share of any provisional and final offtake settlements
in the prior three calendar month period, subject to certain specific terms of the agreement (including
a fixed silver recovery assumption of 70%). RGLD Gold usually sells gold and silver ounces over the
three month period following physical receipt. All of these factors may result in a difference of
produced ounces reported by Barrick and those reported as sold by Royal Gold for each quarter.
Wassa and Prestea (Western Region, Ghana)
As discussed in further detail in Item 1, Business, Fiscal 2016 Business Developments, on July 28,
2015, RGLD Gold acquired the right to purchase 9.25% of the gold produced from the Wassa and
Prestea projects, operated by Golden Star, until the earlier of (i) December 31, 2017 or (ii) the date at
which the Wassa and Prestea underground projects achieve commercial production. At that point, the
stream percentage will increase to 10.5% of gold produced from the Wassa and Prestea mines until an
aggregate 240,000 ounces have been delivered. Once the applicable delivery threshold is met, the
stream percentage will decrease to 5.5% for the remaining term of the transaction.
The Wassa open pit mine and oxide ore mill are located near the village of Akyempim in the
Wassa East District, in the Western Region of Ghana, approximately 50 miles north of Cape Coast and
93 miles west of the capital Accra. The main access to the site is from the east, via the Cape Coast to
Twifo-Praso road, then over the combined road-rail bridge on the Pra River. There is also an access
road from Takoradi in the south via Mpohor. An airport at Takoradi is capable of handling jet aircraft
and is serviced by several commercial flights each day. Future Wassa production will come from both
open pit and underground operations.
Prestea is currently an open pit operation producing oxide ore located in the Ashanti gold district
in the central eastern section of the Western Region of Ghana, approximately 6 miles south of the town
of Bogoso. Access to the property is by commercial air carrier to Accra and then by vehicle on a paved
and gravel road.
Stream deliveries from Wassa and Prestea were 21,500 ounces of gold during the fiscal year ended
June 30, 2016. Golden Star’s total production in calendar 2016 is expected to be between
180,000 - 205,000 ounces of gold.
On July 12, 2016, Golden Star announced pre-commercial production commenced at Wassa
underground gold mine, as scheduled. Wassa underground is expected to achieve commercial
production in early calendar 2017, at which time it is expected to deliver 2,000 to 2,500 tonnes of ore
per day. The Prestea underground project is currently in development with a planned average annual
gold production of 90,000 ounces at a cash operating cost of $468 per ounce. Golden Star expects first
production from the Prestea underground project in mid-calendar 2017.
Royalty Interests
Cortez (Nevada, USA)
Cortez is a series of large open-pits and underground mines, utilizing mill and heap leach
processing, and is operated by Barrick. The operation is located approximately 60 air miles southwest
of Elko, Nevada, in Lander County. The site is reached by driving west from Elko on Interstate 80
approximately 46 miles, and proceeding south on State Highway 306 approximately 23 miles. Our
28
royalty interest at Cortez applies to the Pipeline, South Pipeline, part of the Gap pit and the
Crossroads deposit, which are operated by subsidiaries of Barrick.
The royalty interests we hold at Cortez include:
(a) Reserve Claims (‘‘GSR1’’). This is a sliding-scale GSR royalty for all products from an area
originally known as the ‘‘Reserve Claims,’’ which includes the majority of the Pipeline and
South Pipeline deposits. The GSR royalty rate on the Reserve Claims is tied to the gold price
as shown in the table below and does not include indexing for inflation or deflation.
(b) GAS Claims (‘‘GSR2’’). This is a sliding-scale GSR royalty for all products from an area
outside of the Reserve Claims, originally known as the ‘‘GAS Claims,’’ which encompasses
approximately 50% of the Gap deposit and all of the Crossroads deposit. The GSR royalty
rate on the GAS Claims, as shown in the table below, is tied to the gold price, without
indexing for inflation or deflation.
(c) Reserve and GAS Claims Fixed Royalty (‘‘GSR3’’). The GSR3 royalty is a fixed rate GSR
royalty of 0.7125% and covers the same cumulative area as is covered by our two sliding-scale
GSR royalties, GSR1 and GSR2, except mining claims that comprise the undeveloped
Crossroads deposit.
(d) Net Value Royalty (‘‘NVR1’’). This is a fixed 1.25% NVR on production from the GAS
Claims located on a portion of Cortez that excludes the Pipeline open pit. The Company owns
81.098% of the 1.25% NVR (or 1.014%) while limited partners in Crescent Valley
Partners, L.P., which is consolidated in our financial statements, own the remaining portion of
the 1.25% NVR. A 0.618% portion of our NVR1 royalty covers the mining claims that
comprise the Crossroads deposit.
We also own three other royalties in the Cortez area where there is currently no production and
no reserves attributed to these royalty interests.
The following shows the current sliding-scale GSR1 and GSR2 royalty rates under our royalty
agreement with Cortez:
London P.M. Quarterly Average
Price of Gold Per Ounce ($U.S.)
GSR1 and GSR2
Royalty Percentage
Below $210 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$210.00 - $229.99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$230.00 - $249.99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$250.00 - $269.99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$270.00 - $309.99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$310.00 - $329.99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$330.00 - $349.99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$350.00 - $369.99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$370.00 - $389.99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$390.00 - $409.99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$410.00 - $429.99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$430.00 - $449.99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$450.00 - $469.99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$470.00 and above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.40%
0.50%
0.75%
1.30%
2.25%
2.60%
3.00%
3.40%
3.75%
4.00%
4.25%
4.50%
4.75%
5.00%
Production attributable to our royalty interest at Cortez decreased approximately 68% during our
fiscal year ended June 30, 2016, when compared to the fiscal year ended June 30, 2015. The decrease
was primarily due to Barrick’s production focus on Cortez Hills, where we do not have a royalty
interest, and reduced production from the Pipeline, South Pipeline and Gap pits, where our royalty
applies, compared to the prior fiscal year. Barrick expects calendar 2016 gold production at Cortez,
29
subject to our royalty interests to be down compared to calendar 2015 production. Waste stripping at
Crossroads, which is subject to our royalty interest, is expected to restart later in calendar 2016.
Pe˜nasquito (Zacatecas, Mexico)
We own a production payment equivalent to a 2.0% NSR royalty on all metal production from the
Pe˜nasquito open-pit mine, located in the State of Zacatecas, Mexico, and operated by a subsidiary of
Goldcorp Inc. (‘‘Goldcorp’’). The Pe˜nasquito project is located approximately 17 miles west of the town
of Concepci´on del Oro, Zacatecas, Mexico. The project, composed of two main deposits called Pe˜nasco
and Chile Colorado, hosts large gold, silver, zinc and lead reserves. The deposits contain both oxide
and sulfide material, resulting in heap leach and mill processing. There are two access routes to the
site. The first is via a turnoff from Highway 54 onto the State La Pardita road, then onto the Mazapil
to Cedros State road. The second access is via the Salaverna by-pass road from Highway 54
approximately 16 miles south of Concepci´on del Oro. There is a private airport on site and commercial
airports in the cities of Saltillo, Zacatecas and Monterrey.
Gold, silver, lead and zinc production attributable to our royalty interest at Pe˜nasquito decreased
approximately 21%, 13%, 15% and 2%, respectively, during the fiscal year ended June 30, 2016, when
compared to the fiscal year ended June 30, 2015. The decrease in production is attributable to lower
throughput, grades and recovery. Additionally, production decreased as a result of a 10-day shutdown
during the June 2016 quarter for planned mill maintenance. By July 2016, the mill returned to normal
operations. Over the next three calendar years, Goldcorp expects mining activities in the pit to be
focused on lower grade ore in the upper parts of the Pe˜nasco pit while stripping is emphasized to
ensure an economically optimal pit shell design to maximize the net asset value of the operation. By
calendar 2019, Goldcorp expects Pe˜nasquito’s gold production to benefit from mining higher grades at
the bottom of the Pe˜nasco pit and significantly enhanced metallurgical recoveries with the planned
completion of the approval of the Pyrite Leach Project (‘‘PLP’’) in July 2016. The PLP is expected to
increase overall gold and silver recovery by treating the zinc tailings before discharge to the tailings
storage facility. Construction activities continued on the Northern Well Field (‘‘NWF’’) project with
15% of the total water production commissioned by June 30, 2016. The NWF remains on schedule for
completion by the end of the September 2016 quarter.
Principal Development Stage Properties
The following is a description of our principal development stage properties. Reserves for our
development stage properties are summarized below in Table 1 as part of this Item 2, Properties.
Pascua-Lama Project (Region III, Chile)
We own a 0.78% to 5.45% sliding-scale NSR royalty on the Pascua-Lama project, which straddles
the border between Argentina and Chile, and is being developed by Barrick. The Company owns an
additional royalty equivalent to 1.09% of proceeds from copper produced from the Chilean portion of
the project, net of allowable deductions, sold on or after January 1, 2017. The Pascua-Lama project is
located within 7 miles of Barrick’s operating Veladero mine. Access to the project is from the city of
Vallenar, Region III, Chile, via secondary roads C-485 to Alto del Carmen, Chile, and C-489 from Alto
del Carmen to El Corral, Chile.
Our royalty interests are applicable to all gold and copper production from the portion of the
Pascua-Lama project lying on the Chilean side of the border. In addition, our interest at Pascua-Lama
contains certain contingent rights and obligations. Specifically, (i) if gold prices exceed $600 per ounce
for any six month period during the first 36 months of commercial production from the project, the
Company would make a one-time payment of $8.4 million; (ii) approximately 20% of the royalty is
limited to 14.0 million ounces of gold produced from the project, while 24% of the royalty can be
30
extended beyond 14.0 million ounces of gold produced for a one-time payment of $4.4 million; and
(iii) we also increased our interest in two one-time payments from $0.5 million to $1.5 million, which
are payable by Barrick upon the achievement of certain production thresholds at Pascua-Lama.
The sliding-scale NSR royalty is based upon the gold price as shown in the following table:
London Bullion Market Association P.M.
Monthly Average Price of Gold per Ounce (US$)
less than $325 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$400 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$600 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$700 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$800 or greater . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note: Royalty rate is interpolated between the upper and lower endpoints.
NSR
Royalty
Percentage
0.78%
1.57%
2.72%
3.56%
4.39%
5.45%
Pascua-Lama is one of the world’s largest gold and silver deposits with nearly 18 million ounces of
proven and probable gold reserves, 676 million ounces of silver contained within the gold reserves, and
an expected mine life of 25 years. Barrick expects Pascua-Lama to produce an average of 800,000 to
850,000 ounces of gold and 35 million ounces of silver annually during its first full five years of
operation.
During the fourth quarter of calendar 2013, Barrick announced the temporary suspension of
construction at Pascua-Lama, except for activities required for environmental and regulatory
compliance. A decision to restart development will depend on improved economics and reduced
uncertainty related to legal and regulatory requirements. Accordingly, the timing of any such decision
to restart, permitting timelines, construction schedule and timing of first production are uncertain.
Rainy River (Ontario, Canada)
As discussed in further detail in Item 1, Business, Fiscal 2016 Business Developments, RGLD
Gold owns the right to purchase 6.50% of the gold produced from the Rainy River project until
230,000 gold ounces have been delivered, and 3.25% thereafter; and 60% of the silver produced from
the Rainy River project until 3.1 million silver ounces have been delivered, and 30% thereafter. The
cash purchase price for the gold and silver ounces is 25% of the spot price per ounce of gold or silver
at the time of delivery.
The Rainy River project is centered within the Richardson Township in northwestern Ontario,
Canada, and is operated by New Gold. The project is approximately 40 miles northwest of Fort Frances
and approximately 100 miles south of Kenora and approximately 260 miles west of Thunder Bay. The
project site is easily accessible by a network of secondary all-weather roads that branch off the
well-maintained Trans-Canada Highways 11 and 71.
Construction was initiated in calendar 2015. In July 2016, New Gold reported that overall
construction was approximately 40%. During the June 2016 quarter, installation of the mechanical,
piping, electrical and instrumentation equipment commenced in the grinding building and the primary
crusher, and the first ball mill shell was installed. During the course of the construction of the water
management facility earlier in calendar 2016, New Gold identified areas where the strength of the
foundation is less than was estimated for the original designs. As a result, during the June 2016
quarter, New Gold submitted revised construction designs for regulatory review. New Gold anticipates
receipt of the requisite permit amendments to begin remediation work on the water management
facility within the September 2016 quarter. New Gold also is finalizing its review of the tailings
management facility design, parts of which are similarly impacted by the foundation conditions, and
plans to submit its proposed redesigns for regulatory review by mid-August 2016. With construction of
the processing facilities and other components of the project on schedule, and the process of amending
the water and tailings management facilities advancing as planned, New Gold continues to target first
production at Rainy River in mid-2017.
31
Reserve Information
Table 1 below summarizes proven and probable reserves for gold, silver, copper, nickel, zinc, lead,
cobalt and molybdenum that are subject to our stream and royalty interests as of December 31, 2015,
as reported to us by the operators of the mines. Properties are currently in production unless noted as
development (‘‘DEV’’) within the table. The exploration royalties we own do not contain proven and
probable reserves as of December 31, 2015. Please refer to pages 35-36 for the footnotes to Table 1.
Proven and Probable Gold Reserves
As of December 31, 2015(1)
Gold(2)
PROVEN +
PROBABLE
RESERVES(3)(4)(5)
PROPERTY
ROYALTY
OPERATOR
LOCATION
Average
Gold
Grade
(opt)
Gold
Contained
Ozs(6)
(M)
.
.
Bald Mountain .
.
Cortez (Pipeline) GSR1
Cortez (Pipeline) GSR2
Cortez (Pipeline) GSR3
Cortez (Pipeline) NVR1
Cortez (Pipeline)
.
.
NVR1C .
Gold Hill(9)
.
.
.
.
.
.
.
.
.
.
.
.
.
Goldstrike (SJ Claims) .
.
Hasbrouck (DEV)
.
Leeville .
.
.
Marigold (DEV)
.
.
Pinson .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Robinson .
Ruby Hill
.
.
Soledad Mountain
.
.
.
.
(DEV)
.
.
Twin Creeks .
Wharf .
.
.
.
Back River - Goose
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Lake (DEV)
.
.
Canadian Malartic
Holt .
.
.
.
.
Kutcho Creek (DEV) .
.
Mount Milligan .
.
.
Rainy River (DEV) .
.
Pine Cove (DEV) .
.
.
Schaft Creek (DEV)
.
.
.
Williams .
.
.
.
Dolores .
.
Mulatos .
.
.
Pe˜nasquito(21)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Andacollo .
.
.
El Morro .
El Toqui .
.
.
.
Pascua-Lama (DEV)(25) .
.
Don Mario .
.
.
Don Nicolas (DEV)
.
.
.
Pueblo Viejo .
.
.
.
El Limon .
.
.
.
La India (DEV)
.
.
.
Mara Rosa (DEV)
Balcooma (DEV) .
.
.
Celtic/Wonder North
.
.
.
.
.
.
.
Gwalia Deeps .
Kundip (DEV)
.
Meekatharra (Nannine)
.
.
(DEV)
(DEV)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
1.75% - 2.5% NSR(7)
0.40 - 5.0% GSR(8)
0.40 - 5.0% GSR(8)
0.71% GSR
1.01% NVR
0.62% NVR
1.0 - 2.0% NSR(10)
0.6 - 0.9% NSR(11)
0.9% NSR
1.5% NSR
1.8% NSR
2.0% NSR
3.0% NSR(12)
2.94% NSR(13)
3.0% NSR
3.0% NSR
3.0% NSR(14)
2.0% GPR
0.0 - 2.0% NSR(15)
Kinross
Barrick
Barrick
Barrick
Barrick
Barrick
Kinross
Barrick
West Kirkland/Clover Nevada
Newmont
Silver Standard
Waterton Precious Metals Fund
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
KGHM
Waterton Precious Metals Fund
United States
United States
Golden Queen/Gauss LLC
Newmont
Coeur
United States
United States
United States
1.95% NSR(16)
1.0 - 1.5% NSR(17)
0.00013 (cid:4) quarterly avg. gold price
2.0% NSR
52.25% of gold produced(18)
6.5% of gold produced(19)
7.5% NPI
3.5% NPI
0.97% NSR
3.25% NSR
1.0 - 5.0% NSR(20)
2.0% NSR (Oxide)
2.0% NSR (Sulfide)
100% of gold produced(22)
1.4% NSR(23)
0.0 - 3.0% NSR(24)
0.78 - 5.23% NSR(26)
3.0% NSR
2.0% NSR
7.5% of gold produced(27)
3.0% NSR
3.0% NSR
1.0% NSR
1.5% NSR
1.5% NSR
1.5% NSR
1.0 - 1.5% GSR(28)
Sabina Gold & Silver
Agnico Eagle/Yamana
Kirkland Lake
Capstone Mining
Thompson Creek
New Gold
Anaconda Mining
Copper Fox/Teck
Barrick
Pan American
Alamos
Goldcorp
Teck
Goldcorp
Nyrstar
Barrick
Orvana
Compa˜n´ıa Inversora en Minas
Barrick (60%)
B2Gold
Condor Gold
Amarillo Gold
Consolidated Tin
Bligh Resources
St . Barbara
ACH Minerals/Silver Lake
.
1.5% NSR
Metals X
32
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Mexico
Mexico
Mexico
Chile
Chile
Chile
Chile
Bolivia
Argentina
Dominican Republic
Nicaragua
Nicaragua
Brazil
Australia
Australia
Australia
Australia
Australia
Tons of
Ore
(M)
15.911
22.370
91.607
32.641
17.383
81.336
6.552
0.000
35.616
4.614
148.220
7.557
159.465
1.726
51.052
0.932
28.670
13.623
100.267
3.109
11.509
558.219
114.945
2.905
1037.054
8.847
57.541
49.287
24.008
646.704
459.664
198.103
4.145
320.645
0.638
1.327
103.481
1.378
7.606
18.868
0.762
1.507
8.666
3.097
0.027
0.026
0.034
0.023
0.026
0.036
0.019
0.000
0.017
0.218
0.013
0.064
0.005
0.014
0.019
0.080
0.027
0.184
0.030
0.141
0.011
0.010
0.033
0.060
0.006
0.055
0.027
0.031
0.013
0.015
0.004
0.013
0.047
0.046
0.029
0.148
0.087
0.126
0.089
0.050
0.002
0.064
0.219
0.099
0.000
0.000
0.423
0.591
3.116
0.744
0.457
2.963
0.124
0.000
0.588
1.005
1.867
0.483
0.827
0.024
0.984
0.075
0.763
2.503
3.035
0.439
0.124
5.689
3.772
0.175
5.775
0.483
1.570
1.543
0.310
9.870
1.609
2.674
0.194
14.680
0.018
0.196
8.960
0.173
0.675
0.946
0.001
0.097
1.900
0.307
0.000
PROPERTY
ROYALTY
OPERATOR
LOCATION
PROVEN +
PROBABLE
Tons of
Ore
(M)
Average
Gold
Grade
(opt)
RESERVES(3)(4)(5)
Gold
Contained
Ozs(6)
(M)
Gold(2)
Meekatharra (Paddy’s
.
Flat) (DEV)
.
.
Meekatharra (Reedys)
(DEV)
.
.
Meekatharra
.
.
.
.
.
(Yaloginda) .
.
.
.
.
Red Dam .
.
.
South Laverton .
.
Southern Cross .
.
.
Inata .
.
Taparko(31)
.
.
Wassa and Prestea .
.
Svetloye (DEV) .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
1.5% NSR
A$10 per gold ounce produced(29)
Metals X
Australia
3.858
0.125
0.483
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
1.5%, 1.5 - 2.5%, 1% NSR(30)
Metals X
Australia
0.992
0.092
0.45% NSR
2.5% NSR
1.5% NSR
1.5% NSR
2.5% GSR
2.0% GSR
10.5% of gold produced(32)
1.0% NSR
Metals X
Evolution Mining
Saracen
China Hanking Holding
Avocet
Nord Gold
Golden Star Resources
Polymetal
Australia
Australia
Australia
Australia
Burkina Faso
Burkina Faso
Ghana
Russia
3.858
1.764
7.961
3.286
5.820
5.978
26.044
8.069
0.007
0.063
0.065
0.070
0.056
0.084
0.082
0.082
0.092
0.028
0.111
0.516
0.229
0.326
0.502
2.143
0.664
Proven and Probable Silver Reserves
As of December 31, 2015(1)
Silver(33)
PROVEN +
PROBABLE
RESERVES(3)(4)(5)
Tons of
Ore
(M)
6.552
35.616
51.052
11.509
114.945
1037.054
57.541
24.008
646.704
7.606
0.638
1.327
103.481
7.606
0.762
8.069
Average
Silver
Grade
(opt)
Silver
Contained
Ozs(6)
(M)
0.278
0.297
0.324
1.009
0.082
0.050
0.923
0.642
0.876
0.156
0.740
0.302
0.523
0.156
0.498
0.095
1.823
10.569
16.516
11.618
9.410
51.895
53.100
15.410
566.550
1.185
0.472
0.401
54.145
1.185
0.380
0.765
PROPERTY
ROYALTY
OPERATOR
LOCATION
Gold Hill
.
.
.
.
.
.
.
.
.
.
.
.
Hasbrouck (DEV) .
.
Soledad Mountain (DEV) .
.
Kutcho Creek (DEV) .
.
.
Rainy River (DEV) .
.
.
Schaft Creek (DEV) .
.
.
.
Dolores
.
.
Pe˜nasquito(21)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
El Toqui
.
.
Don Mario
Don Nicolas (DEV) .
.
.
.
.
.
.
.
.
.
Pueblo Viejo .
.
La India (DEV) .
Balcooma (DEV)
Svetloye (DEV) .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
1.0 - 2.0% NSR(10)
0.6 - 0.9% NSR(11)
1.5% NSR
3.0% NSR(14)
2.0% NSR
60% Stream
3.5% NPI
2.0% NSR
2.0% NSR (Oxide)
2.0% NSR (Sulfide)
0.0 - 3.0% NSR(24)
3.0% NSR
2.0% NSR
75% of silver produced(27)
3.0% NSR
1.5% NSR
1.0% NSR
Kinross
West Kirkland/Clover Nevada
Golden Queen/Gauss LLC
Capstone Mining
New Gold
Copper Fox/Teck
Pan American
Goldcorp
Nyrstar
Orvana
Compa˜n´ıa Inversora en
Minas
Barrick (60%)
Condor Gold
Consolidated Tin
Polymetal
United States
United States
United States
Canada
Canada
Canada
Mexico
Mexico
Chile
Bolivia
Argentina
Dominican Republic
Nicaragua
Australia
Russia
33
Proven and Probable Base Metal Reserves
As of December 31, 2015(1)
Copper(34)
PROPERTY
ROYALTY
OPERATOR
LOCATION
.
Johnson Camp .
.
.
.
Robinson .
Caber (DEV) .
.
.
Kutcho Creek (DEV) .
.
.
.
.
.
.
.
.
.
.
.
.
.
Schaft Creek (DEV) .
.
.
Voisey’s Bay .
.
.
.
.
Don Mario .
El Morro (DEV) . .
.
.
Pascua-Lama (DEV)(35)
.
.
Balcooma (DEV) .
.
.
.
.
.
Las Cruces
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2.5% NSR
3.0% NSR
1.0% NSR
2.0% NSR
3.5% NPI
2.7% NSR
3.0% NSR
1.4% NSR
1.05% NSR
1.5% NSR
1.5% NSR
Excelsior Mining
KGHM
Nyrstar
Capstone
Mining
Copper Fox/Teck
Vale
Orvana
Goldcorp
Barrick
Consolidated
Tin
First Quantum
Lead(36)
United States
United States
Canada
Canada
Canada
Canada
Bolivia
Chile
Chile
Australia
Spain
PROPERTY
ROYALTY
OPERATOR
LOCATION
Pe˜nasquito(21)
.
El Toqui .
.
.
Balcooma (DEV)
.
.
.
.
.
. .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2.0% NSR (Sulfide)
0.0 - 3.0% NSR(24)
1.5% NSR
Goldcorp
Nyrstar
Consolidated Tin
Mexico
Chile
Australia
Zinc(37)
PROPERTY
ROYALTY
OPERATOR
LOCATION
.
.
. .
Caber (DEV) .
.
Kutcho Creek (DEV) .
Pe˜nasquito(21)
.
.
.
El Toqui .
.
.
.
Balcooma (DEV)
.
.
. .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
1.0% NSR
2.0% NSR
2.0% NSR (Sulfide)
0.0 - 3.0% NSR(24)
1.5% NSR
Nyrstar
Capstone Mining
Goldcorp
Nyrstar
Consolidated Tin
Canada
Canada
Mexico
Chile
Australia
NICKEL(38)
PROPERTY
ROYALTY
OPERATOR
LOCATION
PROVEN + PROBABLE
RESERVES(3)(4)(5)
Tons of Ore
(M)
Average
Base Metal
Grade
(%)
Base Metal
Contained Lbs(6)
(M)
111.200
159.465
0.676
11.509
1037.054
39.793
0.638
198.103
320.645
0.762
0.295%
0.431%
0.839%
2.010%
0.271%
1.048%
0.887%
0.494%
0.085%
2.130%
656.000
1375.670
11.355
462.678
5630.715
834.075
11.319
1959.099
548.177
32.466
8.047
4.996%
804.026
PROVEN + PROBABLE
RESERVES(3)(4)(5)
Tons of Ore
(M)
646.704
4.145
0.762
Average
Base Metal
Grade
(%)
0.261%
0.272%
0.517%
Base Metal
Contained Lbs(6)
(M)
3701.260
22.509
7.879
PROVEN + PROBABLE
RESERVES(3)(4)(5)
Tons of Ore
(M)
0.676
11.509
646.704
4.145
0.762
Average
Base Metal
Grade
(%)
8.577%
3.190%
0.626%
5.956%
1.921%
Base Metal
Contained Lbs(6)
(M)
116.036
734.300
8885.920
493.712
29.274
PROVEN + PROBABLE
RESERVES(3)(4)(5)
Tons of Ore
(M)
Average
Base Metal
Grade (%)
Base Metal
Contained Lbs(6)
(M)
Voisey’s Bay .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2.7% NSR
Vale
Canada
39.793
2.237%
1779.968
COBALT(39)
PROPERTY
ROYALTY
OPERATOR
LOCATION
PROVEN + PROBABLE
RESERVES(3)(4)(5)
Tons of Ore
(M)
Average
Base Metal
Grade
(%)
Base Metal
Contained Lbs(6)
(M)
Voisey’s Bay .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2.7% NSR
Vale
Canada
39.793
0.130%
103.331
34
MOLYBDENUM(40)
PROPERTY
ROYALTY
OPERATOR
LOCATION
PROVEN + PROBABLE
RESERVES(3)(4)(5)
Tons of Ore
(M)
Average
Base Metal
Grade
(%)
Base Metal
Contained Lbs(6)
(M)
Schaft Creek (DEV)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
3.5% NPI
Copper Fox/Teck
Canada
1037.054
0.018%
373.340
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
Reserves have been reported by the operators of record as of December 31, 2015, with the exception of the following properties: Don
Mario—September 30, 2015; Gwalia Deeps, South Laverton—June 30, 2015; Hasbrouck Mountain—June 3, 2015; Wharf—June 1, 2015;
Svetloye—January 1, 2015; Bald Mountain, El Morro, El Toqui, Gold Hill, Holt, Inata, La India, Meekatharra (Nannine, Paddy’s Flat,
Reedys and Yaloginda), Pinson, Rainy River, Ruby Hill and Soledad Mountain—December 31, 2014; Back River—October 21, 2014;
Kundip—June 30, 2014; Celtic/Wonder North—November 21, 2013; Schaft Creek—December 31, 2012; Don Nicolas, Johnson Camp and
Pascua-Lama—December 31, 2011; Mara Rosa—October 28, 2011; Balcooma—June 30, 2011; Kutcho Creek—February 15, 2011; Pine
Cove—June 30, 2010; and Caber—July 18, 2007.
Gold reserves were calculated by the operators at the following per ounce prices: A$1,500—South Laverton; A$1,474—Southern Cross
$1,450—Kundip; A$1,400—Celtic/Wonder North and Meekatharra (Nannine, Paddy’s Flat, Reedys and Yaloginda); $1,366—Schaft Creek;
$1,350—El Toqui; A$1,310—Red Dam; $1,300—El Morro, Pinson and Svetloye; $1,275—Wharf; $1,250—Back River, Holt, Inata, La India,
Mount Milligan, Mulatos and Soledad Mountain; A$1,250—Gwalia Deeps; $1,225—Hasbrouck Mountain; $1,200—Andacollo, El Limon,
Gold Hill, Leeville, Pascua-Lama, Robinson, Taparko and Twin Creeks; $1,180—Dolores; $1,150—Canadian Malartic; $1,100—Bald
Mountain, Don Mario, Don Nicolas, Mara Rosa, Marigold, Pe˜nasquito, Ruby Hill, Wassa, Bogoso and Prestea and Williams; $1,000—Cortez,
Goldstrike and Pueblo Viejo; and $983—Pine Cove. No gold price was reported for Balcooma, Caber or Kutcho Creek.
Set forth below are the definitions of proven and probable reserves used by the U.S. Securities and Exchange Commission. ‘‘Reserve’’ is that
part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. ‘‘Proven
(Measured) Reserves’’ are reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill
holes, and the grade is computed from the results of detailed sampling, and (b) the sites for inspection, sampling and measurement are
spaced so closely and the geologic character is so well defined that the size, shape, depth and mineral content of the reserves are well
established.
‘‘Probable (Indicated) Reserves’’ are reserves for which the quantity and grade are computed from information similar to that used for
proven (measured) reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately
spaced. The degree of assurance of probable (indicated) reserves, although lower than that for proven (measured) reserves, is high enough to
assume geological continuity between points of observation.
Royal Gold has disclosed a number of reserve estimates that are provided by operators that are foreign issuers and are not based on the U.S.
Securities and Exchange Commission’s definitions for proven and probable reserves. For Canadian issuers, definitions of ‘‘mineral reserve,’’
‘‘proven mineral reserve,’’ and ‘‘probable mineral reserve’’ conform to the Canadian Institute of Mining, Metallurgy and Petroleum
definitions of these terms as of the effective date of estimation as required by National Instrument 43-101 of the Canadian Securities
Administrators. For Australian issuers, definitions of ‘‘mineral reserve,’’ ‘‘proven mineral reserve,’’ and ‘‘probable mineral reserve’’ conform
with the Australasian Code for Reporting of Mineral Resources and Ore Reserves prepared by the Joint Ore Reserves Committee of the
Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia, as amended (‘‘JORC
Code’’). Royal Gold does not reconcile the reserve estimates provided by the operators with definitions of reserves used by the U.S.
Securities and Exchange Commission.
The reserves reported are either estimates received from the various operators or are based on documentation material provided to Royal
Gold or which is derived from recent publicly-available information from the operators of the various properties or various recent National
Instrument 43-101 or JORC Code reports filed by operators. Royal Gold did not prepare reserve or feasibility studies and does not have the
ability to independently confirm any reserve information presented. Accordingly, Royal Gold is not able to reconcile the reserve estimates
prepared in reliance on National Instrument 43-101 or JORC Code with definitions of the U.S. Securities and Exchange Commission.
‘‘Contained ounces’’ or ‘‘contained pounds’’ do not take into account recovery losses in mining and processing the ore.
NSR sliding-scale schedule (price of gold per ounce—royalty rate): Below $375 - 1.75%; >$375 to $400 - 2.0%; >$400 to $425 - 2.25%;
>$425 - 2.5%. All price points are stated in 1986 dollars and are subject to adjustment in accordance with a blended index comprised of
labor, diesel fuel, industrial commodities and mining machinery.
GSR sliding-scale schedule (price of gold per ounce—royalty rate): Below $210 - 0.40%; $210 to $229.99 - 0.50%; $230 to $249.99 - 0.75%;
$250 to $269.99 - 1.30%; $270 to $309.99 - 2.25%; $310 to $329.99 - 2.60%; $330 to $349.99 - 3.00%; $350 to $369.99 - 3.40%; $370 to
$389.99—$3.75%; $390 to $409.99 - 4.0%; $410 to $429.99 - 4.25%; $430 to $449.99 - 4.50%; $450 to $469.99 - 4.75%; $470 and higher—
5.00%.
The royalty is capped at $10 million. As of June 30, 2016, royalty payments of approximately $4.2 million have been received.
The 1.0% to 2.0% sliding-scale NSR royalty will pay 2.0% when the price of gold is above $350 per ounce and 1.0% when the price of gold
falls to $350 per ounce or below. The 0.6% to 0.9% NSR sliding-scale schedule (price of gold per ounce—royalty rate): Below $300 - 0.6%;
$300 to $350 - 0.7%; > $350 to $400 - 0.8%; > $400 - 0.9%. The silver royalty rate is based on the price of gold.
The 0.6% to 0.9% sliding-scale NSR applies to the M-ACE claims. The operator did not break out reserves or resources subject to the
M-ACE claims royalty.
Royalty only applies to Section 29 which currently holds about 95% of the reserves reported for the property. An additional Cordilleran
royalty applies to a portion of Section 28.
Additional Rayrock royalties apply to Sections 28, 32 and 33; these royalty rates vary depending on pre-existing royalties. The Rayrock
royalties take effect once 200,000 ounces of gold have been produced from open pit mines on the property. As of June 30, 2016,
approximately 103,000 ounces have been produced.
35
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
(23)
(24)
(25)
(26)
(27)
(28)
(29)
(30)
(31)
(32)
(33)
(34)
(35)
(36)
(37)
(38)
(39)
Royalty is capped at $300,000 plus simple interest.
NSR sliding-scale schedule (price of gold per ounce—royalty rate): $0.00 to under $350 - 0.0%; $350 to under $400 - 0.5%; $400 to under
$500 - 1.0%; $500 or higher—2.0%.
Goose Lake royalty applies to production above 400,000 ounces.
NSR sliding-scale schedule (price of gold per ounce—royalty rate): $0.00 to $350 - 1.0%; above $350 - 1.5%.
Thompson Creek will deliver 52.25% of gold produced, at a purchase price equal to the lesser of $435 per ounce delivered or the prevailing
spot price.
New Gold will deliver: (a) gold in amounts equal to 6.50% of gold produced until 230,000 ounces have been delivered, and 3.25% of gold
produced thereafter, and (b) silver in amounts equal to 60% of silver produced until 3.10 million ounces have been delivered, and 30% of
silver produced thereafter, in each case at a purchase price equal to 25% of the spot price per ounce delivered.
The Company’s royalty is subject to a 2.0 million ounce cap on gold production. There have been approximately 1.55 million ounces of
cumulative production as of June 30, 2016. NSR sliding-scale schedule (price of gold per ounce—royalty rate): $0.00 to $299.99 - 1.0%; $300
to $324.99 - 1.50%; $325 to $349.99 - 2.0%; $350 to $374.99 - 3.0%; $375 to $399.99 - 4.0%; $400 or higher—5.0%.
Operator reports reserves by material type. The sulfide material will be processed by milling. The oxide material will be processed by heap
leaching.
Teck will deliver gold in amounts equal to 100% of payable gold until 900,000 ounces have been delivered, and 50% of payable gold
thereafter, subject to a fixed payable percentage of 89%, at a purchase price equal to 15% of the monthly average gold price for the month
preceding the delivery date for each ounce delivered.
The royalty covers approximately 30% of the La Fortuna deposit. Reserves attributable to Royal Gold’s royalty represent 3/7 of Goldcorp’s
reporting of 70% of the total reserve.
All metals are paid based on zinc prices. NSR sliding-scale schedule (price of zinc per pound—royalty rate): Below $0.50 - 0.0%; $0.50 to
below $0.55 - 1.0%; $0.55 to below $0.60 - 2.0%; $0.60 or higher—3.0%.
Royalty applies to all gold production from an area of interest in Chile. Only that portion of the reserves pertaining to our royalty interest in
Chile is reflected here. Approximately 20% of the royalty is limited to the first 14.0 million ounces of gold produced from the project. Also,
24% of the royalty can be extended beyond 14.0 million ounces produced for $4.4 million. In addition, a one-time payment totaling
$8.4 million will be made if gold prices exceed $600 per ounce for any six-month period within the first 36 months of commercial production.
NSR sliding-scale schedule (price of gold per ounce—royalty rate): less than or equal to $325 - 0.78%; $400 - 1.57%; $500—$2.72%; $600 -
3.56%; $700 - 4.39%; greater than or equal to $800 - 5.23%. Royalty is interpolated between lower and upper endpoints.
Barrick will deliver: (a) gold in amounts equal to 7.50% of Barrick’s 60% interest in gold produced until 990,000 ounces have been delivered,
and 3.75% of Barrick’s 60% interest in gold produced thereafter, at a purchase price equal to 30% of the spot price per ounce delivered
until 550,000 ounces have been delivered, and 60% of the spot price per ounce delivered thereafter; and (b) silver in amounts equal to 75%
of Barrick’s 60% interest in silver produced, subject to a minimum silver recovery of 70%, until 50 million ounces have been delivered, and
37.50% of Barrick’s 60% interest in silver produced thereafter, at a purchase price equal to 30% of the spot price per ounce delivered until
23.10 million ounces of silver have been delivered, and 60% of the spot price per ounce delivered thereafter.
Royalty pays 1.0% for the first 250,000 ounces of production and then 1.5% for production above 250,000 ounces.
The A$10 per ounce royalty applies on production above 50,000 ounces.
The 1.5% to 2.5% NSR sliding-scale royalty pays at a rate of 1.5% for the first 75,000 ounces produced in any 12 month period and at a rate
of 2.5% on production above 75,000 ounces during that 12 month period. The 1.0% NSR royalty applies to the Rand area only.
There is a 0.75% GSR milling royalty that applies to ore that is mined outside of the defined area of the Taparko-Bouroum project that is
processed through the Taparko facilities up to a maximum of 1.1 million tons per year.
Golden Star will deliver 9.25% of gold produced, until the earlier of (a) December 31, 2017 or (b) the date at which the Wassa and Prestea
underground projects achieve commercial production, at which point Golden Star will deliver 10.5% (or 10.9% if Royal Gold’s total
investment increases from $145 million to $150 million) of gold produced until 240,000 ounces have been delivered (or 250,000 ounces if the
total investment increases from $145 million to $150 million), at a purchase price equal to 20% of the spot price per ounce delivered.
Thereafter Golden Star will deliver 5.5% of gold produced, at a purchase price equal to 30% of the spot price per ounce delivered.
Silver reserves were calculated by the operators at the following prices per ounce: $25.96—Schaft Creek; $25.00—Don Nicolas; $23.00—El
Toqui; $22.50—Svetloye; $20.00—Gold Hill; $17.50—Hasbrouck Mountain; $17.00—Dolores and Soledad; $16.50—Don Mario and
Pe˜nasquito; and $15.00—Pueblo Viejo. No silver price was reported for Balcooma or Kutcho Creek.
Copper reserves were calculated by the operators at the following prices per pound: $3.52—Schaft Creek; $3.21—Robinson $3.00—El Morro;
$2.98—Voisey’s Bay; $2.75—Don Mario; $2.70—Las Cruces; $2.50—Johnson Camp; and $2.00—Pascua-Lama. No copper reserve price was
reported for Balcooma, Caber or Kutcho Creek.
Royalty applies to all copper production from an area of interest in Chile. Only that portion of the reserves pertaining to our royalty interest
in Chile is reflected here. This royalty will take effect after January 1, 2017.
Lead reserve price was calculated by the operators at the following prices per pound: $1.04—El Toqui; and $0.90—Pe˜nasquito. No lead
reserve price was reported for Balcooma.
Zinc reserve price was calculated by the operators at the following prices per pound: $1.13—El Toqui; and $0.95—Pe˜nasquito. No zinc
reserve price was reported for Balcooma, Caber or Kutcho Creek.
Nickel reserve price was calculated by the operator at the following price per pound: $6.61—Voisey’s Bay.
Cobalt reserve price was calculated by the operator at the following price per pound: $12.81—Voisey’s Bay.
(40) Molybdenum reserve price was calculated by the operator at the following price per pound: $15.30—Schaft Creek.
36
ITEM 3. LEGAL PROCEEDINGS
Refer to Note 15 of the notes to consolidated financial statements for a discussion on litigation
associated with our Voisey’s Bay royalty.
ITEM 4. MINE SAFETY DISCLOSURE
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information and Current Stockholders
Our common stock is traded on the NASDAQ Global Select Market (‘‘NASDAQ’’) under the
symbol ‘‘RGLD’’ on the TSX under the symbol ‘‘RGL’’ until July 8, 2016, when we voluntarily delisted
from the TSX. The following table sets forth, for each of the quarterly periods indicated, the range of
high and low sales prices, in U.S. dollars, for our common stock on NASDAQ for each quarter since
July 1, 2014.
As of July 28, 2016, there were 884 stockholders of record of our common stock.
First Quarter (July, Aug., Sept.—2015) . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter (Oct., Nov., Dec.—2015) . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter (Jan., Feb., Mar.—2016) . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter (April, May, June—2016) . . . . . . . . . . . . . . . . . . . . . . . .
First Quarter (July, Aug., Sept.—2014) . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter (Oct., Nov., Dec.—2014) . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter (Jan., Feb., Mar.—2015) . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter (April, May, June—2015) . . . . . . . . . . . . . . . . . . . . . . . .
Sales Prices
High
Low
$63.99
$53.47
$53.32
$72.04
$82.84
$72.81
$77.20
$67.99
$42.21
$34.42
$24.68
$49.50
$63.86
$55.55
$57.55
$61.00
Fiscal Year:
2016
2015
Dividends
We have paid a cash dividend on our common stock for each year beginning in calendar year 2000.
Our board of directors has discretion in determining whether to declare a dividend based on a number
of factors including prevailing gold prices, economic market conditions and funding requirements for
future opportunities or operations.
For calendar year 2016, our annual dividend is $0.92 per share of common stock. We paid the first
payment of $0.23 per share on January 22, 2016, to common stockholders of record at the close of
business on January 8, 2016. We paid the second payment of $0.23 per share on April 15, 2016, to
common stockholders of record at the close of business on April 1, 2016. We paid the third payment of
$0.23 per share on July 15, 2016 to common stockholders of record at the close of business on July 1,
2016. Subject to board approval, we anticipate paying the fourth payment of $0.23 per share on
October 14, 2016, to common shareholders of record at the close of business on September 30, 2016.
For calendar year 2015, our annual dividend was $0.88 per share of common stock and
exchangeable shares (for April 2015 and July 2015 dividend payments only), paid on a quarterly basis
of $0.22 per share. For calendar year 2014, we paid an annual dividend of $0.84 per share of common
stock and exchangeable shares in four quarterly payments of $0.21 each.
37
ITEM 6. SELECTED FINANCIAL DATA
Revenue(1) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . .
Net (loss) income . . . . . . . . . . . . . . . . . . . . . .
Net (loss) income available to Royal Gold
common stockholders . . . . . . . . . . . . . . . . .
Net (loss) income per share available to Royal
Gold common stockholders:
Fiscal Years Ended June 30,
2016
2015
2014
2013
2012
$278,019
$359,790
$
$ 87,235
4,816
$ (82,438) $ 52,678
(Amounts in thousands, except per share data)
$237,162
$108,720
$ 63,472
$289,224
$171,167
$ 73,409
$263,054
$156,634
$ 98,309
$ (77,149) $ 51,965
$ 62,641
$ 69,153
$ 92,476
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends declared per common share(2)
. . . . .
$
$
$
(1.18) $
(1.18) $
$
0.91
0.80
0.80
0.87
$
$
$
0.96
0.96
0.83
$
$
$
1.09
1.09
0.75
$
$
$
1.61
1.61
0.56
2016
2015
2014
2013
2012
As of June 30,
Stream and royalty interests, net . . . . .
Total assets . . . . . . . . . . . . . . . . . . . .
Debt . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . .
Total Royal Gold stockholders’ equity .
$2,848,087
$3,066,552
$ 600,685
$ 780,667
$2,229,016
$2,083,608
$2,917,191
$ 313,869
$ 501,264
$2,353,122
(Amounts in thousands)
$2,109,067
$2,882,316
$ 302,632
$ 509,759
$2,354,725
$2,120,268
$2,895,747
$ 292,669
$ 525,111
$2,348,887
$1,890,988
$2,365,290
$ 282,172
$ 501,861
$1,838,459
(1) Please refer to Item 7, MD&A, of this report for a discussion of recent developments that
contributed to our 29% increase in revenue during fiscal year 2016 when compared to fiscal year
2015 and the 17% increase in revenue during fiscal year 2015 when compared to fiscal year 2014.
(2) The 2016, 2015, 2014, 2013 and 2012 calendar year dividends were $0.92, $0.88, $0.84, $0.80 and
$0.60, respectively, as approved by our board of directors. Please refer to Item 5 of this report for
further information on our dividends.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
Royal Gold, Inc. (‘‘Royal Gold’’, the ‘‘Company’’, ‘‘we’’, ‘‘us’’, or ‘‘our’’), together with its
subsidiaries, is engaged in the business of acquiring and managing precious metal streams, royalties,
and similar interests. We seek to acquire existing stream and royalty interests or to finance projects that
are in production or in the development stage in exchange for stream or royalty interests.
We manage our business under two segments:
Acquisition and Management of Stream Interests—A metal stream is a purchase agreement that
provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or
more metals produced from a mine, at a price determined for the term of the agreement. As of
June 30, 2016, we owned stream interests on four producing properties and three development stage
properties. As discussed further in Item 1, Business, Fiscal 2016 Business Developments, we invested
approximately $1.3 billion in stream interests in our fiscal year 2016, including stream interests relating
to Pueblo Viejo, Andacollo, Wassa and Prestea, and Rainy River. Stream interests accounted for
38
approximately 66% and 34% of our total revenue for the fiscal years ended June 30, 2016 and 2015,
respectively. We expect stream interests to continue growing as a proportion of our total revenue.
Acquisition and Management of Royalty Interests—Royalties are non-operating interests in mining
projects that provide the right to revenue or metals produced from the project after deducting specified
costs, if any. As of June 30, 2016, we owned royalty interests on 34 producing properties, 21
development stage properties and 131 exploration stage properties, of which we consider 50 to be
evaluation stage projects. We use ‘‘evaluation stage’’ to describe exploration stage properties that
contain mineralized material and on which operators are engaged in the search for reserves. Royalties
accounted for approximately 34% and 66% of our total revenue for the fiscal years ended June 30,
2016 and 2015, respectively.
We do not conduct mining operations on the properties in which we hold stream and royalty
interests, and except for our interest in the Peak Gold, LLC joint venture, we are not required to
contribute to capital costs, exploration costs, environmental costs or other operating costs on those
properties.
In the ordinary course of business, we engage in a continual review of opportunities to acquire
existing stream and royalty interests, to establish new streams on operating mines, to create new stream
and royalty interests through the financing of mine development or exploration, or to acquire
companies that hold stream and royalty interests. We currently, and generally at any time, have
acquisition opportunities in various stages of active review, including, for example, our engagement of
consultants and advisors to analyze particular opportunities, analysis of technical, financial and other
confidential information, submission of indications of interest and term sheets, participation in
preliminary discussions and negotiations and involvement as a bidder in competitive processes.
Our financial results are primarily tied to the price of gold and, to a lesser extent, the price of
silver and copper, together with the amounts of production from our producing stage stream and
royalty interests. For the fiscal years ended June 30, 2016, 2015 and 2014, gold, silver, and copper price
averages and percentage of revenue by metal were as follows:
Metal
Gold ($/ounce . . . . . . . . . . . . . . . . . . . . .
Silver ($/ounce) . . . . . . . . . . . . . . . . . . .
Copper ($/pound) . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . .
June 30, 2016
June 30, 2015
June 30, 2014
Fiscal Year Ended
Average
Price
$1,168
$15.32
$ 2.22
N/A
Percentage
of Revenue
Average
Price
Percentage
of Revenue
Average
Price
Percentage
of Revenue
88% $1,224
3% $17.36
4% $ 2.89
N/A
5%
81% $1,296
3% $20.57
7% $ 3.18
N/A
9%
72%
6%
8%
14%
Operators’ Production Estimates by Stream and Royalty Interest for Calendar 2016
We received annual production estimates from many of the operators of our producing mines
during the first calendar quarter of 2016. The following table shows such production estimates for our
principal producing properties for calendar 2016 as well as the actual production reported to us by the
various operators through June 30, 2016. The estimates and production reports are prepared by the
operators of the mining properties. We do not participate in the preparation or calculation of the
operators’ estimates or production reports and have not independently assessed or verified the accuracy
of such information. Please refer to Part I, Item 2, Properties, of this report for further discussion on
any updates at our principal producing and development properties.
39
Operators’ Estimated and Actual Production by Stream and Royalty Interest for Calendar 2016
Principal Producing Properties
Calendar 2016 Operator’s Production Estimate(1)
Silver
(oz.)
Base Metals
(lbs.)
Gold
(oz.)
Calendar 2016 Operator’s Production
Actual(2)(3)
Silver
(oz.)
Base Metals
(lbs.)
Gold
(oz.)
57,600
240,000 - 270,000
600,000 - 650,000
—
—
Not provided
—
—
25,300
99,700
—
—
321,900 Not provided
—
—
—
Stream/Royalty
Stream:
Andacollo(4)
. . . .
Mount Milligan(5) .
Pueblo Viejo(6)
. .
Wassa and
Prestea(7) . . . . .
180,000 - 205,000
Royalty:
Cortez GSR1 . . .
Cortez GSR2 . . .
Cortez GSR3 . . .
Cortez NVR1 . . .
Pe˜nasquito(8)(9) . . .
. . . . .
. . . . .
Lead(8)(9)
Zinc(8)(9)
119,200
1,300
120,500
68,900
520,000 - 580,000
—
—
—
—
22 - 24 million
95,700
31,800
2,700
34,400
23,700
161,000
—
—
—
—
—
145 - 155 million
375 - 400 million
—
—
—
—
7.8 million
—
—
—
—
—
46.1 million
109.4 million
(1)
Production estimates received from our operators are for calendar 2016. There can be no assurance that production
estimates received from our operators will be achieved. Please refer to our cautionary language regarding forward-
looking statements following this MD&A, as well as the Risk Factors identified in Part I, Item 1A, of this report for
information regarding factors that could affect actual results.
(2) Actual production figures shown are for the period January 1, 2016 through June 30, 2016, unless otherwise noted.
(3) Actual production figures for Cortez are based on information provided to us by the operators, and actual
production figures for Andacollo, Mount Milligan, Pe˜nasquito (gold) and Wassa and Prestea are the operators’
publicly reported figures.
(4)
(5)
(6)
(7)
(8)
(9)
The estimated and actual production figures shown for Andacollo are contained gold in concentrate.
The estimated and actual production figures shown for Mount Milligan are payable gold in concentrate.
The estimated and actual production figures shown are payable gold in dor´e and represent Barrick’s 60% interest in
Pueblo Viejo.
The estimated production figure shown is payable gold in dor´e.
The estimated gold and silver production figures reflect payable gold and silver in concentrate and dor´e, while the
estimated lead and zinc production figures reflect payable metal in concentrate.
The Company’s royalty interest at Pe˜nasquito includes gold, silver, lead and zinc. Actual production for the quarter
ended March 31, 2016, was not available from the operator as of the date of this report.
40
Historical Production
The following table discloses historical production for the past three fiscal years for the principal
producing properties that are subject to our stream and royalty interests, as reported to us by the
operators of the mines:
Historical Production(1) by Stream and Royalty Interest
Principal Producing Properties
For the Fiscal Years Ended June 30, 2016, 2015 and 2014
Metal
2016
2015
2014
Stream/Royalty
Stream:
Mount Milligan . . . . . . . . . . .
Andacollo . . . . . . . . . . . . . . .
Pueblo Viejo . . . . . . . . . . . . .
Wassa and Prestea . . . . . . . . .
Gold
Gold
Gold
Silver
Gold
108,800 oz.
41,600 oz.
31,200 oz.
208,900 oz.
20,100 oz.
76,900 oz.
N/A
N/A
N/A
N/A
21,100 oz.
N/A
N/A
N/A
N/A
Royalty:
Pe˜nasquito . . . . . . . . . . . . . . .
Gold
Silver
Lead
Zinc
Gold
Gold
Gold
Gold
Gold
. . . . . . . . . . . . Nickel
Copper
Gold
Cortez GSR1 . . . . . . . . . . . . .
Cortez GSR2 . . . . . . . . . . . . .
Cortez GSR3 . . . . . . . . . . . . .
Cortez NVR1 . . . . . . . . . . . .
Holt(2) . . . . . . . . . . . . . . . . . .
Voisey’s Bay(2)
Andacollo . . . . . . . . . . . . . . .
584,000 oz.
21.4M oz.
134.2 Mlbs.
333.0 Mlbs.
62,600 oz.
11,400 oz.
74,000 oz.
52,100 oz.
58,300 oz.
78.6 Mlbs.
56.2 Mlbs.
— oz.
742,100 oz.
24.6M oz.
158.4 Mlbs.
340.8 Mlbs.
153,000 oz.
76,000 oz.
229,000 oz.
167,000 oz.
61,500 oz.
62.8 Mlbs.
64.8 Mlbs.
41,500 oz.
534,200 oz.
27.7M oz.
175.5 Mlbs.
310.9 Mlbs.
7,600 oz.
87,800 oz.
95,400 oz.
84,400 oz.
63,100 oz.
123.7 Mlbs.
80.5 Mlbs.
50,400 oz.
(1) Historical production relates to the amount of metal sales, subject to our stream and
royalty interests for each fiscal year presented, as reported to us by the operators of the
mines, and may differ from stream deliveries discussed in Item 2, Properties, or from the
operators’ public reporting.
(2) Royalty no longer considered principal to our business as of June 30, 2016.
Critical Accounting Policies
Listed below are the accounting policies that the Company believes are critical to its financial
statements due to the degree of uncertainty regarding the estimates or assumptions involved and the
magnitude of the asset, liability, revenue or expense being reported. Please refer to Note 2 of the notes
to consolidated financial statements for a discussion on recently issued accounting pronouncements.
Use of Estimates
The preparation of our financial statements, in conformity with accounting principles generally
accepted in the United States of America, requires management to make estimates and assumptions.
These estimates and assumptions affect the reported amounts of assets and liabilities, at the date of the
financial statements, as well as the reported amounts of revenues and expenses during the reporting
period.
41
Our most critical accounting estimates relate to our assumptions regarding future gold, silver,
copper, nickel and other metal prices and the estimates of reserves, production and recoveries of third-
party mine operators. We rely on reserve estimates reported by the operators on the properties in
which we have stream and royalty interests. These estimates and the underlying assumptions affect the
potential impairments of long-lived assets and the ability to realize income tax benefits associated with
deferred tax assets. These estimates and assumptions also affect the rate at which we recognize revenue
or charge depreciation, depletion and amortization to earnings. On an ongoing basis, management
evaluates these estimates and assumptions; however, actual amounts could differ from these estimates
and assumptions. Differences between estimates and actual amounts are adjusted and recorded in the
period that the actual amounts are known.
Stream and Royalty Interests
Stream and royalty interests include acquired stream and royalty interests in production,
development and exploration stage properties. The costs of acquired stream and royalty interests are
capitalized as tangible assets as such interests do not meet the definition of a financial asset under the
Accounting Standards Codification (‘‘ASC’’) guidance.
Acquisition costs of production stage stream and royalty interests are depleted using the units of
production method over the life of the mineral property (as sales occur under stream interests or
royalty payments are recognized), which are estimated using proven and probable reserves as provided
by the operator. Acquisition costs of stream and royalty interests on development stage mineral
properties, which are not yet in production, are not amortized until the property begins production.
Acquisition costs of stream or royalty interests on exploration stage mineral properties, where there are
no proven and probable reserves, are not amortized. At such time as the associated exploration stage
mineral interests are converted to proven and probable reserves, the cost basis is amortized over the
remaining life of the mineral property, using proven and probable reserves. Exploration costs are
expensed when incurred.
Asset Impairment
We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate
that the related carrying amounts of an asset or group of assets may not be recoverable. The
recoverability of the carrying value of stream and royalty interests in production and development stage
mineral properties is evaluated based upon estimated future undiscounted net cash flows from each
stream and royalty interest using estimates of proven and probable reserves and other relevant
information received from the operators. We evaluate the recoverability of the carrying value of royalty
interests in exploration stage mineral properties in the event of significant decreases in the price of
gold, silver, copper and other metals, and whenever new information regarding the mineral properties
is obtained from the operator indicating that production will not likely occur or may be reduced in the
future, thus potentially affecting the future recoverability of our stream or royalty interests.
Impairments in the carrying value of each property are measured and recorded to the extent that the
carrying value in each property exceeds its estimated fair value, which is generally calculated using
estimated future discounted cash flows.
Estimates of gold, silver, copper, nickel and other metal prices, operators’ estimates of proven and
probable reserves or mineralized material related to our stream or royalty properties, and operators’
estimates of operating and capital costs are subject to certain risks and uncertainties which may affect
the recoverability of our investment in these stream and royalty interests in mineral properties. It is
possible that changes could occur to these estimates, which could adversely affect the net cash flows
expected to be generated from these stream and royalty interests. Refer to Note 4 of the notes to
consolidated financial statements for discussion and the results of our impairment assessments for the
fiscal years ended June 30, 2016 and 2015.
42
Revenue
Revenue is recognized pursuant to guidance in ASC 605 and based upon amounts contractually
due pursuant to the underlying streaming or royalty agreement. Specifically, revenue is recognized in
accordance with the terms of the underlying stream or royalty agreements subject to (i) the pervasive
evidence of the existence of the arrangements; (ii) the risks and rewards having been transferred;
(iii) the stream or royalty being fixed or determinable; and (iv) the collectability being reasonably
assured. For our streaming agreements, we recognize revenue when the metal is sold.
Metal Sales
Gold and silver received under our metal streaming agreements is taken into inventory and then is
sold primarily using average spot rate gold and silver forward contracts. The sales price for our gold
and silver sold in average spot rate forward contracts is determined by the average daily gold or silver
spot prices under the term of the contract, typically over a consecutive number of trading days between
10 days and three months (depending on the frequency of deliveries under the respective streaming
agreement and our sales policy in effect at the time) commencing shortly after receipt and purchase of
the metal. Revenue from gold and silver sales is recognized on the date of the settlement, which is also
the date that title to the gold or silver passes to the purchaser.
Cost of Sales
Cost of sales is specific to our stream agreements and is the result of our purchase of gold and
silver for a cash payment. The cash payment at Mount Milligan is the lesser of $435 per ounce or the
prevailing market price of gold when purchased, while the cash payment for our other streams is a set
contractual percentage of the gold or silver spot price near the date of metal delivery.
Exploration Costs
Exploration costs are specific to our Peak Gold joint venture for exploration and advancement of
the Tetlin gold project, as discussed further in Note 3 of our notes to consolidated financial statements.
Exploration costs associated with Peak Gold’s exploration and advancement of the Tetlin gold project
are expensed when incurred.
Income Taxes
The Company accounts for income taxes in accordance with the guidance of ASC 740. The
Company’s annual tax rate is based on income, statutory tax rates in effect and tax planning
opportunities available to us in the various jurisdictions in which the Company operates. Significant
judgment is required in determining the annual tax expense, current tax assets and liabilities, deferred
tax assets and liabilities, and our future taxable income, both as a whole and in various tax jurisdictions,
for purposes of assessing our ability to realize future benefit from our deferred tax assets. Actual
income taxes could vary from these estimates due to future changes in income tax law, significant
changes in the jurisdictions in which we operate or unpredicted results from the final determination of
each year’s liability by taxing authorities.
The Company’s deferred income taxes reflect the impact of temporary differences between the
reported amounts of assets and liabilities for financial reporting purposes and such amounts measured
by tax laws and regulations. In evaluating the realizability of the deferred tax assets, management
considers both positive and negative evidence that may exist, such as earnings history, reversal of
taxable temporary differences, forecasted operating earnings and available tax planning strategies in
each tax jurisdiction. A valuation allowance may be established to reduce our deferred tax assets to the
amount that is considered more likely than not to be realized through the generation of future taxable
income and other tax planning strategies.
43
The Company has asserted the indefinite reinvestment of certain foreign subsidiary earnings as
determined by management’s judgment about and intentions concerning the future operations of the
Company. As a result, the Company does not record a U.S. deferred tax liability for the excess of the
book basis over the tax basis of its investments in foreign corporations to the extent that the basis
difference results from earnings that meet the indefinite reversal criteria. Refer to Note 11 for further
discussion on our assertion.
The Company’s operations may involve dealing with uncertainties and judgments in the application
of complex tax regulations in multiple jurisdictions. The final taxes paid are dependent upon many
factors, including negotiations with taxing authorities in various jurisdictions and resolution of disputes
arising from federal, state, and international tax audits. The Company recognizes potential liabilities
and records tax liabilities for anticipated tax audit issues in the United States and other tax jurisdictions
based on its estimate of whether, and the extent to which, additional taxes will be due. The Company
adjusts these reserves in light of changing facts and circumstances, such as the progress of a tax audit;
however, due to the complexity of some of these uncertainties, the ultimate resolution could result in a
payment that is materially different from our current estimate of the tax liabilities. These differences
will be reflected as increases or decreases to income tax expense in the period which they are
determined. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits
in income tax expense.
Liquidity and Capital Resources
Overview
At June 30, 2016, we had current assets of $164.8 million compared to current liabilities of
$22.7 million resulting in a working capital surplus of $142.1 million and a current ratio of 7 to 1. This
compares to current assets of $797.0 million and current liabilities of $25.0 million at June 30, 2015,
resulting in a working capital surplus of $772.0 million and a current ratio of approximately 32 to 1.
The decrease in our working capital was primarily attributable to a decrease in our cash and
equivalents as a result of the recent stream acquisitions, as discussed earlier under Item 1, Business,
Fiscal 2016 Business Developments. Please refer to ‘‘Summary of Cash Flows’’ below for further
discussion on changes to our cash and equivalents during the period.
During the fiscal year ended June 30, 2016, liquidity needs were met from $288.8 million in net
revenue and our available cash resources. As of June 30, 2016, the Company had $375 million available
and $275 million outstanding under its revolving credit facility. Working capital, combined with the
Company’s undrawn revolving credit facility, resulted in $517.1 million of total liquidity at June 30,
2016. The Company was in compliance with each financial covenant under its revolving credit facility as
of June 30, 2016. Refer to Note 6 of our notes to consolidated financial statements and below (‘‘Recent
Liquidity and Capital Resource Developments’’) for further discussion on our debt.
We believe that our current financial resources and funds generated from operations will be
adequate to cover anticipated expenditures for debt service, general and administrative expense costs
and capital expenditures for the foreseeable future. Our current financial resources are also available to
fund dividends and for acquisitions of stream and royalty interests, including the remaining conditional
commitments incurred in connection with the Ilovica, Golden Star and Rainy River stream acquisitions
and the Peak Gold joint venture. Our long-term capital requirements are primarily affected by our
ongoing acquisition activities. The Company currently, and generally at any time, has acquisition
opportunities in various stages of active review. In the event of one or more substantial stream and
royalty interest or other acquisitions, we may seek additional debt or equity financing as necessary.
Please refer to our risk factors included in Part I, Item 1A of this report for a discussion of certain
risks that may impact the Company’s liquidity and capital resources.
44
Recent Liquidity and Capital Resource Developments
Amendment to Revolving Credit Facility
On March 16, 2016, the Company entered into Amendment No. 2 (the ‘‘Amendment’’) to the Sixth
Amended and Restated Revolving Credit Agreement, dated as of January 29, 2014 (as amended by
Amendment No. 1 thereto as of April 29, 2015, the ‘‘Revolving Credit Agreement’’), by and among the
Company, certain subsidiaries of the Company as guarantors, certain lenders from time to time party
thereto, and HSBC Bank USA, National Association, as administrative agent for the lenders. The
Amendment revises the Revolving Credit Agreement to extend the scheduled maturity date from
January 29, 2019 to March 16, 2021. As of June 30, 2016, the Company had $275.0 million outstanding
under the Revolving Credit Agreement.
Dividend Increase
On November 10, 2015, we announced an increase in our annual dividend for calendar 2016 from
$0.88 to $0.92, payable on a quarterly basis of $0.23 per share. The newly declared dividend is 5%
higher than the dividend paid during calendar 2015. Royal Gold has steadily increased its annual
dividend since calendar 2001.
Summary of Cash Flows
Operating Activities
Net cash provided by operating activities totaled $169.9 million for the fiscal year ended June 30,
2016, compared to $192.1 million for the fiscal year ended June 30, 2015. The decrease was primarily
due to an increase in income taxes paid of approximately $55.8 million primarily related to the sale of
the Andacollo royalty, an increase in exploration costs of approximately $6.4 million and an increase in
interest paid of approximately $7.3 million. These decreases in net cash provided by operating activities
were partially offset by an increase in proceeds received from our stream and royalty interest interests,
net of production taxes and cost of sales, of $47.5 million.
Net cash provided by operating activities totaled $192.1 million for the fiscal year ended June 30,
2015, compared to $147.2 million for the fiscal year ended June 30, 2014. The increase was primarily
due to an increase in proceeds received from our stream and royalty interests, net of production taxes
and cost of sales, of approximately $31.2 million. The increase was also due to a decrease in income tax
payments, net of refunds, of approximately $7.1 million.
Investing Activities
Net cash used in investing activities totaled $1.0 billion for the fiscal year ended June 30, 2016,
compared to $51.2 million for the fiscal year ended June 30, 2015. The increase in cash used in
investing activities is primarily due to an increase in acquisitions of stream and royalty interests in
mineral properties (primarily the Pueblo Viejo and Andacollo stream acquisitions) compared to the
prior year period. Please refer to Item 1, Business, Fiscal 2016 Business Developments, for further
discussion on our recently acquired streams.
Net cash used in investing activities totaled $51.2 million for the fiscal year ended June 30, 2015,
compared to $84.8 million for the fiscal year ended June 30, 2014. The decrease in cash used in
investing activities was primarily due to a decrease in funding for stream or royalty acquisitions and the
termination of the Tulsequah streaming agreement, resulting in the return of the original $10.0 million
advance payment. The Company made approximately $52.5 million in commitment payments during the
fiscal year ended June 30, 2015, as part of the Phoenix Gold and Ilovica stream acquisitions.
45
Financing Activities
Net cash provided by financing activities totaled $213.4 million for the fiscal year ended June 30,
2016, compared to cash used in financing activities of $57.6 million for the fiscal year ended June 30,
2015. The increase in cash provided by financing activities is primarily due to the Company’s
$275 million borrowing (net of repayment) under its revolving credit facility to fund stream acquisitions
during the current period. Refer to Item 1, Business, Fiscal 2016 Business Developments, for further
discussion on our recently acquired streams.
Net cash used in financing activities totaled $57.6 million for the fiscal year ended June 30, 2015,
compared to cash provided by financing activities of $66.9 million for the fiscal year ended June 30,
2014. The decrease was the result of a purchase of an additional royalty interest from a non-controlling
interest of approximately $11.5 million during fiscal year 2014. This decrease was partially offset by an
increase in the common stock dividend payment, which was the result of an increase in the dividend
rate when compared to fiscal year 2014.
Contractual Obligations
Our contractual obligations as of June 30, 2016, are as follows:
Contractual Obligations
Total
2019 Notes(1)
Revolving credit facility(2)
. . . . . . . . . . . .
. . .
$401,913
$320,458
Payments Due by Period (in thousands)
Less than
1 Year
$10,638
$ 7,960
1 - 3 Years
3 - 5 Years
$391,275
$ 15,919
$
—
$296,579
Total
. . . . . . . . . . . . . . . . . .
$722,371
$18,598
$407,194
$296,579
More than
5 Years
$—
$—
$—
(1) Amounts represent principal ($370 million) and estimated interest payments
($31.9 million) assuming no early extinguishment.
(2) Amounts represent principal ($275 million) and estimated interest payments
($45.5 million) assuming no early extinguishment.
For information on our contractual obligations, see Note 6 of the notes to consolidated financial
statements under Part II, Item 8, ‘‘Financial Statements and Supplementary Data’’ of this report. The
above table does not include stream or royalty commitments as discussed in Note 15 of the notes to
consolidated financial statements. The Company believes it will be able to fund all existing obligations
from net cash provided by operating activities.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on our financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Results of Operations
Fiscal Year Ended June 30, 2016, Compared with Fiscal Year Ended June 30, 2015
For the fiscal year ended June 30, 2016, we recorded a net loss available to Royal Gold common
stockholders of $77.1 million, or ($1.18) per basic share and diluted share, compared to net income
available to Royal Gold common stockholders of $52.0 million, or $0.80 per basic share and diluted
share, for the fiscal year ended June 30, 2015. The decrease in our earnings per share was primarily
attributable to impairment charges of approximately $98.6 million (including a royalty receivable write
46
down of approximately $2.9 million) on our stream interest at the Phoenix Gold Project and certain
other non-principal royalty interests during our quarter ended March 31, 2016, as discussed further
below. The decrease in our earnings per share was also attributable to an increase in tax expense of
approximately $56.0 million due to the Company’s termination of the Andacollo royalty interest, as
discussed below, and the planned liquidation of our Chilean subsidiary during the quarter ended
September 30, 2015. These decreases were partially offset by an increase in our revenue, which is also
discussed below. The effect of the impairment charges during our fiscal year ended June 30, 2016, was
$1.33 per basic share, after taxes, while the effect of the tax expense attributable to the termination of
the Andacollo royalty interest during the current period, was $0.86 per basic share. During the prior
year period, our earnings per share were negatively impacted by impairment charges of approximately
$31.3 million (including a royalty receivable write down of $3.0 million) on certain non-principal royalty
interests. The effect of the impairment charges during the fiscal year ended June 30, 2015, was $0.37
per basic share, after taxes.
For the fiscal year ended June 30, 2016, we recognized total revenue of $359.8 million, which is
comprised of stream revenue of $238.0 million and royalty revenue of $121.8 million, at an average
gold price of $1,168 per ounce, an average silver price of $15.32 per ounce and an average copper price
of $2.22 per pound, compared to total revenue of $278.0 million, which is comprised of stream revenue
of $94.1 million and royalty revenue of $183.9 million, at an average gold price of $1,224 per ounce, an
average silver price of $17.36 per ounce and an average copper price of $2.89 per pound, for the fiscal
year ended June 30, 2015. Revenue and the corresponding production, attributable to our stream and
47
royalty interests, for the fiscal year ended June 30, 2016 compared to the fiscal year ended June 30,
2015 is as follows:
Revenue and Reported Production Subject to our Stream and Royalty Interests
Fiscal Years Ended June 30, 2016 and 2015
(In thousands, except reported production in ozs. and lbs.)
Stream/Royalty
Stream(2):
Fiscal Year Ended
June 30, 2016
Fiscal Year Ended
June 30, 2015
Metal(s)
Revenue
Reported
Production(1)
Revenue
Reported
Production(1)
Mount Milligan . . . . . . . . . . . . . . . . . . Gold
Andacollo . . . . . . . . . . . . . . . . . . . . . . Gold
Pueblo Viejo . . . . . . . . . . . . . . . . . . . . Gold
Silver
Wassa and Prestea . . . . . . . . . . . . . . . . Gold
Other(5)
. . . . . . . . . . . . . . . . . . . . . . . . Gold
Total stream revenue . . . . . . . . . . . . . . . .
Royalty:
Pe˜nasquito . . . . . . . . . . . . . . . . . . . . . .
$125,438
$ 49,243
$ 39,683
$ 23,346
318
$
$238,028
$ 22,760
Gold
Silver
Lead
Zinc
$ 94,104
N/A
N/A
N/A
N/A
N/A
$ 94,104
$ 30,306
108,800 oz.
41,600 oz.
31,200 oz.
208,900 oz.
20,100 oz.
300 oz.
584,000 oz.
21.4 Moz.
134.2 Mlbs.
333.0 Mlbs.
Voisey’s Bay(3)
. . . . . . . . . . . . . . . . . . .
$ 11,044
$ 16,665
Nickel
Copper
Holt(3)
. . . . . . . . . . . . . . . . . . . . . . . . . Gold
Cortez . . . . . . . . . . . . . . . . . . . . . . . . . Gold
Andacollo(4)
. . . . . . . . . . . . . . . . . . . . . Gold
Other(5)
. . . . . . . . . . . . . . . . . . . . . . . . Various
Total royalty revenue . . . . . . . . . . . . . . . .
Total Revenue . . . . . . . . . . . . . . . . . . . . .
78.6 Mlbs.
56.2 Mlbs.
58,300 oz.
74,000 oz.
— oz.
$ 11,954
$ 18,044
$ 38,033
N/A $ 68,913
$183,915
$278,019
$ 10,295
6,107
$
$
—
$ 71,556
$121,762
$359,790
76,900 oz.
N/A
N/A
N/A
N/A
N/A
742,100 oz.
24.6 Moz.
158.4
Mlbs.
340.8
Mlbs.
62.8 Mlbs.
64.8 Mlbs.
61,500 oz.
229,000 oz.
41,500 oz.
N/A
(1) Reported production relates to the amount of metal sales, subject to our stream and royalty
interests, for the twelve months ended June 30, 2016 and 2015, and may differ from the operators’
public reporting.
(2) Refer to Item 2, Properties, for further discussion on our principal stream interests. Our streams at
Andacollo, Pueblo Viejo and Wassa and Prestea were acquired during the quarter ended
September 30, 2015. Refer to Item 1, Business, Fiscal 2016 Business Developments, for further
discussion on the recent stream acquisitions.
(3) Royalty no longer considered principal to our business as of June 30, 2016.
(4) Refer to Item 1, Business, Fiscal 2016 Business Developments, for further discussion on the recent
Andacollo royalty sale.
48
(5)
Individually, no stream or royalty included within the ‘‘Other’’ category contributed greater than
5% of our total revenue for either period.
The increase in our total revenue for the fiscal year ended June 30, 2016, compared with the fiscal
year ended June 30, 2015, resulted primarily from an increase in our stream revenue, which was a
result of increased production at Mount Milligan and new production from our recently acquired
streams, Wassa and Prestea, Pueblo Viejo, and Andacollo. Gold and silver ounces purchased and sold
during the fiscal year ended June 30, 2016 and 2015, and gold and silver ounces in inventory as of
June 30, 2016 and 2015, for our streaming interests were as follows:
Gold Stream
Purchases (oz.)
Sales (oz.)
Purchases (oz.)
Sales (oz.)
Fiscal Year Ended
June 30, 2016
Fiscal Year Ended
June 30, 2015
As of
June 30,
2016
As of
June 30,
2015
Ounces in Ounces in
inventory
inventory
Mount Milligan . . . . . . . . . .
Andacollo . . . . . . . . . . . . . .
Wassa and Prestea . . . . . . . .
Pueblo Viejo . . . . . . . . . . . .
Phoenix Gold . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . .
111,000
41,700
21,400
42,200
300
216,600
108,800
41,600
20,100
31,200
300
202,000
74,400
N/A
N/A
N/A
N/A
74,400
76,900
N/A
N/A
N/A
N/A
76,900
7,500
—
1,300
11,000
—
19,800
5,300
N/A
N/A
N/A
N/A
5,300
Silver Stream
Purchases (oz.)
Sales (oz.)
Purchases (oz.)
Sales (oz.)
Fiscal Year Ended
June 30, 2016
Fiscal Year Ended
June 30, 2015
As of
June 30,
2016
As of
June 30,
2015
Ounces in Ounces in
inventory
inventory
Pueblo Viejo . . . . . . . . . . . .
532,600
208,900
N/A
N/A
323,700
N/A
Our royalty revenue decreased during the fiscal year ended June 30, 2016, compared with the fiscal
year ended June 30, 2015, due to decreases in the average metal prices, the recent sale of the
Andacollo royalty, and production decreases at Pe˜nasquito and Cortez. Refer to Part I, Item 2,
Properties, for discussion and any updates on our principal producing properties.
Cost of sales were approximately $71.0 million for the fiscal year ended June 30, 2016, compared
to $33.5 million for the fiscal year ended June 30, 2015. The increase is primarily attributable to an
increase in production at Mount Milligan and new stream production at Andacollo, Pueblo Viejo, and
Wassa and Prestea. Cost of sales is specific to our stream agreements and is the result of RGLD Gold’s
purchase of gold and silver for a cash payment. The cash payment for Mount Milligan is the lesser of
$435 per ounce or the prevailing market price of gold when purchased, while the cash payment for our
other streams is a set contractual percentage of the gold or silver spot price near the date of metal
delivery.
General and administrative expenses increased to $31.7 million for the fiscal year ended June 30,
2016, from $24.9 million for the fiscal year ended June 30, 2015. The increase during the current period
was primarily due to an increase in non-cash stock based compensation of approximately $4.9 million as
a result of management’s change in estimate for the number of performance shares that are expected
to vest.
Depreciation, depletion and amortization expense increased to $141.1 million for the fiscal year
ended June 30, 2016, from $93.5 million for the fiscal year ended June 30, 2015. The increase was
primarily attributable to the ramp-up in production at Mount Milligan ($11.4 million) and new
production from the recently acquired streams at Pueblo Viejo ($21.9 million), Wassa and Prestea
($7.8 million) and Andacollo ($9.0 million).
49
Exploration costs increased to $8.6 million for the fiscal year ended June 30, 2016, from
$2.2 million for the fiscal year ended June 30, 2015. Exploration costs are specific to our Peak Gold
joint venture for exploration and advancement of the Tetlin gold project, as discussed further in Note 3
of the notes to consolidated financial statements.
Impairment of stream and royalty interests and royalty receivables was $98.6 million for the fiscal
year ended June 30, 2016 compared to $31.3 million for the fiscal year end June 30, 2015. The
impairment of stream and royalty interests ($96.1 million) was the result of our regular impairment
analysis conducted during the quarter ended March 31, 2016, and was primarily due to the presence of
impairment indicators on our stream interest at the Phoenix Gold Project and two non-principal
producing royalty interests, Inata and Wolverine. Also during the current fiscal year, the Company
recognized an allowance of approximately $2.9 million on the entire outstanding royalty receivable
associated with the Inata interest. The Company will continue to pursue collection efforts of all past
due payments. Refer to Note 4 of our notes to consolidated financial statements for further discussion
on the impairments recognized during fiscal year 2016.
During the fiscal year ended June 30, 2016, we recognized income tax expense totaling
$60.7 million compared with $9.6 million during the fiscal year ended June 30, 2015. This resulted in an
effective tax rate of (278.9%) during the current period, compared with 15.4% in the prior period. The
increase in the effective tax rate for the year ending June 30, 2016 is primarily related to the impacts
attributable to the Company’s Andacollo transactions, the liquidation of our Chilean subsidiary, and
impairment charges during the current fiscal year.
Fiscal Year Ended June 30, 2015, Compared with Fiscal Year Ended June 30, 2014
For the fiscal year ended June 30, 2015, we recorded net income available to Royal Gold common
stockholders of $52.0 million, or $0.80 per basic share and diluted share, compared to net income
available to Royal Gold common stockholders of $62.6 million, or $0.96 per basic share and diluted
share, for the fiscal year ended June 30, 2014. The decrease in our earnings per share was primarily
attributable to impairment charges of approximately $31.3 million (including a royalty receivable write
down of $3.0 million) on certain non-principal royalty interests during our quarter ended December 31,
2014, as discussed further below. This decrease was partially offset by an increase in our revenue and a
decrease in our income tax expense, which are also discussed below. The effect of the impairment
charges on our fiscal year ended June 30, 2015, earnings per share was $0.37 per basic share, after
taxes.
For the fiscal year ended June 30, 2015, we recognized total revenue of $278.0 million, at an
average gold price of $1,224 per ounce, an average silver price of $17.36 per ounce, an average copper
price of $2.89 per pound and an average nickel price of $7.02 per pound, compared to total revenue of
$237.2 million, at an average gold price of $1,296 per ounce, an average silver price of $20.57 per
ounce, an average nickel price of $6.89 per pound and an average copper price of $3.18 per pound, for
the fiscal year ended June 30, 2014. Revenue and the corresponding production, attributable to our
50
stream and royalty interests, for the fiscal year ended June 30, 2015 compared to the fiscal year ended
June 30, 2014 is as follows:
Revenue and Reported Production Subject to our Stream and Royalty Interests
Fiscal Years Ended June 30, 2015 and 2014
(In thousands, except reported production in ozs. and lbs.)
Stream/Royalty
Stream:
Fiscal Year Ended
June 30, 2015
Fiscal Year Ended
June 30, 2014
Metal(s)
Revenue
Reported
Production(1)
Revenue
Reported
Production(1)
Mount Milligan . . . . . . . . . . . . . . . . . . Gold
$ 94,104
76,900 oz.
$ 27,209
21,100 oz.
Total stream revenue . . . . . . . . . . . . . . .
Royalty:
Andacollo . . . . . . . . . . . . . . . . . . . . . . Gold
Pe˜nasquito . . . . . . . . . . . . . . . . . . . . .
$ 94,104
$ 38,033
$ 30,306
Gold
Silver
Lead
Zinc
Cortez . . . . . . . . . . . . . . . . . . . . . . . . Gold
Voisey’s Bay . . . . . . . . . . . . . . . . . . . .
$ 18,044
$ 16,665
41,500 oz.
742,100 oz.
24.6 Moz.
158.4 Mlbs.
340.8 Mlbs.
229,000 oz.
$ 27,209
$ 48,777
$ 29,281
$
8,138
$ 25,128
Nickel
Copper
Holt . . . . . . . . . . . . . . . . . . . . . . . . . . Gold
Other(2)
. . . . . . . . . . . . . . . . . . . . . . . Various
Total royalty revenue . . . . . . . . . . . . . . .
Total Revenue . . . . . . . . . . . . . . . . . . . .
62.8 Mlbs.
64.8 Mlbs.
61,500 oz.
$ 13,813
N/A $ 84,816
$209,953
$237,162
$ 11,954
$ 68,913
$183,915
$278,019
50,400 oz.
534,200 oz.
27.7 Moz.
175.5
Mlbs.
310.9
Mlbs.
95,400 oz.
123.7
Mlbs.
80.5 Mlbs.
63,100 oz.
N/A
(1) Reported production relates to the amount of metal sales, subject to our stream and royalty
interests, for the twelve months ended June 30, 2015 and 2014, as reported to us by the operators
of the mines, and may differ from the operators’ public reporting.
(2)
Individually, no royalty included within the ‘‘Other’’ category contributed greater than 5% of our
total revenue for either period.
The increase in our total revenue for the fiscal year ended June 30, 2015, compared with the fiscal
year ended June 30, 2014, resulted primarily from an increase in our stream revenue, which was a
result of increased production at Mount Milligan. Gold ounces purchased and sold during the fiscal
year ended June 30, 2015 and 2014, and gold ounces in inventory as of June 30, 2015 and 2014, for our
streaming interests were as follows:
Gold Stream
Purchases (oz.)
Sales (oz.)
Purchases (oz.)
Sales (oz.)
Fiscal Year Ended
June 30, 2015
Fiscal Year Ended
June 30, 2014
As of
June 30,
2015
As of
June 30,
2014
Ounces in Ounces in
inventory
inventory
Mount Milligan . . . . . . . . . .
74,400
76,900
28,900
21,100
5,300
N/A
51
Our royalty revenue decreased during the fiscal year ended June 30, 2015, compared with the fiscal
year ended June 30, 2014, due to decreases in the average gold, silver and copper prices and due to
production decreases primarily at Andacollo and Voisey’s Bay. These decreases were partially offset by
increased production at Cortez. Refer to Part I, Item 2, Properties, for discussion and any updates on
our principal producing properties.
Cost of sales were approximately $33.5 million for the fiscal year ended June 30, 2015, compared
to $9.2 million for the fiscal year ended June 30, 2014. The increase is attributable to an increase in
production at Mount Milligan. During fiscal 2015, cost of sales was specific to our stream agreement
for Mount Milligan and is the result of the Company’s purchases of gold for a cash payment of the
lesser of $435 per ounce, or the prevailing market price of gold when purchased.
General and administrative expenses increased to $24.9 million for the fiscal year ended June 30,
2015, from $21.2 million for the fiscal year ended June 30, 2014. The increase was primarily due an
increase in non-cash stock based compensation expense of approximately $2.6 million as a result of
management’s change in estimate for the number of performance shares that are expected to vest.
Depreciation, depletion and amortization expense increased to $93.5 million for the fiscal year
ended June 30, 2015, from $91.3 million for the fiscal year ended June 30, 2014. The increase was
primarily attributable to the ramp-up in production at Mount Milligan.
Impairment of stream and royalty interests was $31.3 million for the fiscal year ended June 30,
2015. The impairment charges were the result of our regular impairment analysis and were primarily
due to the presence of impairment indicators on a non-principal producing royalty interest, Wolverine,
during the three months ended December 31, 2014. The Company also determined during the three
months ended September 30, 2014, that a non-principal production stage royalty interest and one
exploration stage royalty interest should be written down to zero for an impairment charge of
$1.8 million. Refer to Note 4 of our notes to consolidated financial statements for further discussion on
the impairments recognized during fiscal year 2015.
During the fiscal year ended June 30, 2015, we recognized income tax expense totaling $9.6 million
compared with $19.5 million during the fiscal year ended June 30, 2014. This resulted in an effective
tax rate of 15.4% during fiscal year 2015, compared with 23.5% during fiscal year 2014. The decrease in
the effective tax rate for the fiscal year ended June 30, 2015, is primarily attributable to (i) a decrease
in tax expense relating to a decrease in unrealized taxable foreign currency exchange gains, (ii) a
favorable tax rate associated with certain operations in lower-tax jurisdictions, (iii) a valuation
allowance release as a result of the strengthening U.S. dollar, (iv) a decrease in tax expense due to the
Chilean tax legislation enacted in the quarter ended September 30, 2014, and the corresponding
re-measurement of the Chilean long term deferred tax asset to the higher corporate income tax rate,
and (v) the impairment charge on the Wolverine royalty interest and the corresponding tax benefit
recorded in the quarter ended December 31, 2014, and (vi) net of the effect of an increase in tax
expense due to Canadian tax legislation enacted in the quarter ended June 30, 2015, which resulted in
the re-measurement of Canadian deferred tax liabilities at the higher tax rate. Excluding the enactment
of the Chilean tax legislation during the quarter ended September 30, 2014, the impairment charge on
the Wolverine royalty interest during the quarter ended December 31, 2014, and the enactment of
Canadian tax legislation during the quarter ended June 30, 2015, the effective tax rate for the twelve
months ended June 30, 2015, would have been 19.6%.
Forward-Looking Statements
Cautionary ‘‘Safe Harbor’’ Statement under the Private Securities Litigation Reform Act of 1995:
With the exception of historical matters, the matters discussed in this Annual Report on Form 10-K are
forward-looking statements that involve risks and uncertainties that could cause actual results to differ
materially from projections or estimates contained herein. Such forward-looking statements include,
52
without limitation, statements regarding projected production estimates and estimates pertaining to
timing and commencement of production from the operators of properties where we hold stream and
royalty interests; effective tax rate estimates; the adequacy of financial resources and funds to cover
anticipated expenditures for general and administrative expenses as well as costs associated with
exploration and business development and capital expenditures, and our expectation that substantially
all our revenues will be derived from stream and royalty interests. Words such as ‘‘may,’’ ‘‘could,’’
‘‘should,’’ ‘‘would,’’ ‘‘believe,’’ ‘‘estimate,’’ ‘‘expect,’’ ‘‘anticipate,’’ ‘‘plan,’’ ‘‘forecast,’’ ‘‘potential,’’
‘‘intend,’’ ‘‘continue,’’ ‘‘project’’ and variations of these words, comparable words and similar
expressions generally indicate forward-looking statements, which speak only as of the date the
statement is made. Do not unduly rely on forward-looking statements. Actual results may differ
materially from those expressed or implied by these forward-looking statements. Factors that could
cause actual results to differ materially from these forward-looking statements include, among others:
• a low price environment for gold and other metal prices on which our stream and royalty
interests are paid or a low price environment for the primary metals mined at properties where
we hold stream and royalty interests;
• the production at or performance of properties where we hold stream and royalty interests, and
variation of actual performance from the production estimates and forecasts made by the
operators of these properties;
• the successful closing of Centerra’s acquisition of Thompson Creek and simultaneous
redemption and pay down of Thompson Creek’s 9.75% secured notes due in 2017, 7.375%
unsecured notes due in 2018, and 12.5% unsecured notes due in 2019;
• the ability of operators to bring projects, particularly development stage properties, into
production on schedule or operate in accordance with feasibility studies;
• acquisition and maintenance of permits and authorizations, completion of construction and
commencement and continuation of production at the properties where we hold stream and
royalty interests;
• challenges to mining, processing and related permits and licenses, or to applications for permits
and licenses, by or on behalf of indigenous populations, non-governmental organizations or other
third parties;
• liquidity or other problems our operators may encounter, including shortfalls in the financing
required to complete construction and a bring a mine into production;
• decisions and activities of the operators of properties where we hold stream and royalty
interests;
• hazards and risks at the properties where we hold stream and royalty interests that are normally
associated with developing and mining properties, including unanticipated grade, continuity and
geological, metallurgical, processing or other problems, mine operating and ore processing
facility problems, pit wall or tailings dam failures, industrial accidents, environmental hazards
and natural catastrophes such as floods or earthquakes and access to raw materials, water and
power;
• changes in operators’ mining, processing and treatment techniques, which may change the
production of minerals subject to our stream and royalty interests;
• changes in the methodology employed by our operators to calculate our stream and royalty
interests in accordance with the agreements that govern them;
• changes in project parameters as plans of the operators of properties where we hold stream and
royalty interests are refined;
53
• accuracy of and decreases in estimates of reserves and mineralization by the operators of
properties where we hold stream and royalty interests;
• contests to our stream and royalty interests and title and other defects to the properties where
we hold stream and royalty interests;
• adverse effects on market demand for commodities, the availability of financing, and other
effects from adverse economic and market conditions;
• future financial needs of the Company and the operators of properties where we hold stream or
royalty interests;
• federal, state and foreign legislation governing us or the operators of properties where we hold
stream and royalty interests;
• the availability of stream and royalty interests for acquisition or other acquisition opportunities
and the availability of debt or equity financing necessary to complete such acquisitions;
• our ability to make accurate assumptions regarding the valuation, timing and amount of revenue
to be derived from our stream and royalty interests when evaluating acquisitions;
• risks associated with conducting business in foreign countries, including application of foreign
laws to contract and other disputes, validity of security interests, environmental, governmental
consents for granting interests in exploration and exploration licenses, real estate, contract and
permitting laws, currency fluctuations, expropriation of property, repatriation of earnings,
taxation, price controls, inflation, import and export regulations, community unrest and labor
disputes, endemic health issues, corruption, enforcement and uncertain political and economic
environments;
• changes in laws governing us, the properties where we hold stream and royalty interests or the
operators of such properties;
• risks associated with issuances of additional common stock or incurrence of indebtedness in
connection with acquisitions or otherwise including risks associated with the issuance and
conversion of convertible notes;
• changes in management and key employees; and
• failure to complete future acquisitions or the failure of transactions involving the operators to
close;
as well as other factors described elsewhere in this report and our other reports filed with the SEC.
Most of these factors are beyond our ability to predict or control. Future events and actual results
could differ materially from those set forth in, contemplated by or underlying the forward-looking
statements. Forward-looking statements speak only as of the date on which they are made. We disclaim
any obligation to update any forward-looking statements made herein, except as required by law.
Readers are cautioned not to put undue reliance on forward-looking statements.
54
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Our earnings and cash flows are significantly impacted by changes in the market price of gold and
other metals. Gold, silver, copper, nickel and other metal prices can fluctuate significantly and are
affected by numerous factors, such as demand, production levels, economic policies of central banks,
producer hedging, world political and economic events and the strength of the U.S. dollar relative to
other currencies.
During the fiscal year ended June 30, 2016, we reported revenue of $359.8 million, with an average
gold price for the period of $1,168 per ounce, an average silver price for the period of $15.32 per
ounce and an average copper price of $2.22 per pound. Approximately 88% of our total recognized
revenues for the fiscal year ended June 30, 2016 were attributable to gold sales from our gold
producing interests, as shown within the MD&A. For the fiscal year ended June 30, 2016, if the price
of gold had averaged 10% higher or lower per ounce, we would have recorded an increase or decrease
in revenue of approximately $33 million.
Approximately 3% of our total reported revenue for the fiscal year ended June 30, 2016 was
attributable to silver sales from our silver producing interests. For the fiscal year ended June 30, 2016,
if the price of silver had averaged 10% higher or lower per ounce, we would have recorded an increase
or decrease in revenues of approximately $1.1 million.
Approximately 4% of our total reported revenue for the fiscal year ended June 30, 2016 was
attributable to copper sales from our copper producing interests. For the fiscal year ended June 30,
2016, if the price of copper had averaged 10% higher or lower per pound, we would have recorded an
increase or decrease in revenues of approximately $1.9 million.
55
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM . . . . . . . . . . .
CONSOLIDATED BALANCE SHEETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)
INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY . . . . . . . . . . . . . . . . . . . . . . .
CONSOLIDATED STATEMENTS OF CASH FLOWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .
Page
57
58
59
60
61
62
56
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of Royal Gold, Inc.
We have audited the accompanying consolidated balance sheets of Royal Gold, Inc. as of June 30,
2016 and 2015, and the related consolidated statements of operations and comprehensive (loss) income,
changes in equity and cash flows for each of the three years in the period ended June 30, 2016. These
financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Royal Gold, Inc. at June 30, 2016 and 2015, and the consolidated
results of its operations and its cash flows for each of the three years in the period ended June 30,
2016, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), Royal Gold Inc.’s internal control over financial reporting as of
June 30, 2016, based on criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report
dated August 11, 2016 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Denver, Colorado
August 11, 2016
57
ROYAL GOLD, INC.
Consolidated Balance Sheets
As of June 30,
(In thousands except share data)
ASSETS
Cash and equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Royalty receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stream inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available-for-sale securities (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016
2015
$ 116,633
17,990
20,043
9,489
—
614
$ 742,849
37,681
6,422
2,287
6,273
1,511
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
164,769
797,023
Stream and royalty interests, net (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,848,087
53,696
2,083,608
36,560
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,066,552
$2,917,191
LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Uncertain tax positions (Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,114
15,012
3,554
22,680
600,685
133,867
16,996
6,439
780,667
$
4,911
14,341
5,721
24,973
313,869
146,603
15,130
689
501,264
Commitments and contingencies (Note 15)
EQUITY
Preferred stock, $.01 par value, authorized 10,000,000 shares authorized; and
0 shares issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock, $.01 par value, 100,000,000 shares authorized; and 65,093,950
and 65,033,547 shares outstanding, respectively . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Royal Gold stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
651
2,179,781
—
48,584
2,229,016
56,869
650
2,170,643
(3,292)
185,121
2,353,122
62,805
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,285,885
2,415,927
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$3,066,552
$2,917,191
The accompanying notes are an integral part of these consolidated financial statements.
58
Consolidated Statements of Operations and Comprehensive (Loss) Income
ROYAL GOLD, INC.
For the Years Ended June 30,
(In thousands except share data)
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
359,790
$
278,019
$
237,162
2016
2015
2014
Costs and expenses
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . .
Production taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exploration costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation, depletion and amortization . . . . . . . . . . . . .
Impairments of stream and royalty interests and royalty
receivables (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) on available-for-sale securities . . . . . . . . . . . . . .
Interest and other income . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and other expense . . . . . . . . . . . . . . . . . . . . . . . . .
(Loss) income before income taxes . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss (income) attributable to non-controlling interests . . .
Net (loss) income attributable to Royal Gold common
stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to comprehensive (loss) income, net of tax
Unrealized change in market value of available-for-sale
70,979
31,720
3,978
8,601
141,108
98,588
354,974
4,816
2,340
3,711
(32,625)
(21,758)
(60,680)
(82,438)
5,289
33,450
24,873
5,446
2,194
93,486
31,335
190,784
87,235
(183)
883
(25,691)
62,244
(9,566)
52,678
(713)
9,158
21,186
6,756
—
91,342
—
128,442
108,720
(4,499)
2,050
(23,344)
82,927
(19,455)
63,472
(831)
$
$
(77,149) $
51,965
(82,438) $
52,678
$
$
62,641
63,472
securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,632
(3,292)
(98)
Reclassification adjustment for (gains) losses included in
net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive (loss) income . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive loss (income) attributable to non-controlling
interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive (loss) income attributable to Royal Gold
(2,340)
(79,146)
160
49,546
4,510
67,884
5,289
(713)
(831)
stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(73,857) $
48,833
$
67,053
Net (loss) income per share available to Royal Gold common
stockholders:
Basic (loss) earnings per share . . . . . . . . . . . . . . . . . . . . . . .
Basic weighted average shares outstanding . . . . . . . . . . . . . .
Diluted (loss) earnings per share . . . . . . . . . . . . . . . . . . . . .
Diluted weighted average shares outstanding . . . . . . . . . . . .
Cash dividends declared per common share . . . . . . . . . . . . .
$
$
$
(1.18) $
0.80
65,074,455
65,007,861
(1.18) $
0.80
65,074,455
65,125,173
0.91
$
0.87
$
$
$
0.96
64,909,149
0.96
65,026,256
0.83
The accompanying notes are an integral part of these consolidated financial statements.
59
l
a
t
o
T
y
t
i
u
q
E
g
n
i
l
l
o
r
t
n
o
c
-
n
o
N
d
e
t
a
l
u
m
u
c
c
A
s
t
s
e
r
e
t
n
i
s
g
n
i
n
r
a
E
s
r
e
d
l
o
h
k
c
o
t
S
d
l
o
G
l
a
y
o
R
d
e
t
a
l
u
m
u
c
c
A
r
e
h
t
O
e
v
i
s
n
e
h
e
r
p
m
o
C
)
s
s
o
L
(
e
m
o
c
n
I
l
a
n
o
i
t
i
d
d
A
n
I
-
d
i
a
P
l
a
t
i
p
a
C
t
n
u
o
m
A
s
e
r
a
h
S
t
n
u
o
m
A
s
e
r
a
h
S
e
l
b
a
e
g
n
a
h
c
x
E
s
e
r
a
h
S
s
e
r
a
h
S
n
o
m
m
o
C
6
3
6
,
0
7
3
,
2
$
9
4
7
,
1
2
$
9
7
2
,
1
8
1
$
)
2
7
5
,
4
(
$
3
7
1
,
2
4
1
,
2
$
5
6
3
,
9
2
$
9
2
2
,
7
6
6
2
4
6
$
6
3
0
,
4
8
1
,
4
6
—
)
3
1
7
,
3
1
(
7
9
2
,
4
2
7
4
,
3
6
2
1
4
,
4
)
8
9
4
,
2
(
)
9
4
0
,
4
5
(
—
)
0
5
2
,
2
(
—
1
3
8
—
—
)
8
9
4
,
2
(
—
—
—
—
—
1
4
6
,
2
6
)
9
4
0
,
4
5
(
—
—
—
—
—
—
2
1
4
,
4
—
—
—
—
4
4
6
,
2
1
)
3
6
4
,
1
1
(
6
9
2
,
4
—
—
—
—
—
—
—
—
—
—
—
—
)
7
4
6
,
2
1
(
)
2
7
3
,
7
8
2
(
3
—
1
—
—
—
—
—
—
—
—
—
2
7
3
,
7
8
2
3
9
9
,
6
0
1
7
5
5
,
2
7
3
,
2
$
2
3
8
,
7
1
$
1
7
8
,
9
8
1
$
)
0
6
1
(
$
0
5
6
,
7
4
1
,
2
$
8
1
7
,
6
1
$
7
5
8
,
9
7
3
6
4
6
$
1
0
4
,
8
7
5
,
4
6
—
0
0
7
,
5
4
9
7
2
,
6
8
7
6
,
2
5
)
2
3
1
,
3
(
)
0
4
4
,
1
(
)
5
1
7
,
6
5
(
—
0
0
7
,
5
4
—
—
3
1
7
—
)
0
4
4
,
1
(
—
—
—
—
—
5
6
9
,
1
5
)
5
1
7
,
6
5
(
—
—
—
—
—
—
)
2
3
1
,
3
(
—
—
—
—
—
5
1
7
,
6
1
8
7
2
,
6
7
2
9
,
5
1
4
,
2
$
5
0
8
,
2
6
$
1
2
1
,
5
8
1
$
)
2
9
2
,
3
(
$
3
4
6
,
0
7
1
,
2
$
9
3
1
,
9
)
8
3
4
,
2
8
(
)
7
4
6
(
2
9
2
,
3
)
8
8
3
,
9
5
(
—
)
7
4
6
(
—
—
)
9
8
2
,
5
(
5
8
8
,
5
8
2
,
2
$
9
6
8
,
6
5
$
—
—
—
)
9
4
1
,
7
7
(
)
8
8
3
,
9
5
(
4
8
5
,
8
4
$
—
—
—
—
—
2
9
2
,
3
—
—
—
—
8
3
1
,
9
$
1
8
7
,
9
7
1
,
2
$
—
—
—
—
—
—
—
—
—
—
—
—
—
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
)
8
1
7
,
6
1
(
)
7
5
8
,
9
7
3
(
3
—
1
—
—
—
—
—
—
—
—
—
7
5
8
,
9
7
3
9
8
2
,
5
7
0
5
6
$
7
4
5
,
3
3
0
,
5
6
1
—
—
—
—
—
—
—
—
3
0
4
,
0
6
1
5
6
$
0
5
9
,
3
9
0
,
5
6
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
C
N
I
,
D
L
O
G
L
A
Y
O
R
y
t
i
u
q
E
n
i
s
e
g
n
a
h
C
f
o
s
t
n
e
m
e
t
a
t
S
d
e
t
a
d
i
l
o
s
n
o
C
4
1
0
2
d
n
a
5
1
0
2
,
6
1
0
2
,
0
3
e
n
u
J
d
e
d
n
E
s
r
a
e
Y
e
h
t
r
o
F
)
a
t
a
d
e
r
a
h
s
t
p
e
c
x
e
s
d
n
a
s
u
o
h
t
n
I
(
e
r
a
h
s
d
e
t
a
l
e
r
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
s
t
s
e
r
e
t
n
i
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
e
r
u
t
n
e
v
t
n
i
o
j
l
d
o
G
k
a
e
P
d
n
a
n
o
i
t
a
s
n
e
p
m
o
c
d
e
s
a
b
-
k
c
o
t
S
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
s
e
c
n
a
u
s
s
i
e
m
o
c
n
i
t
e
N
s
s
o
l
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
g
n
i
l
l
o
r
t
n
o
c
-
n
o
n
o
t
n
o
i
t
u
b
i
r
t
s
i
D
.
.
.
.
.
.
.
.
.
.
d
e
r
a
l
c
e
d
s
d
n
e
d
i
v
i
D
5
1
0
2
,
0
3
e
n
u
J
t
a
e
c
n
a
l
a
B
s
e
r
a
h
s
e
l
b
a
e
g
n
a
h
c
x
e
f
o
e
g
n
a
h
c
x
E
:
r
o
f
k
c
o
t
s
n
o
m
m
o
c
f
o
e
c
n
a
u
s
s
I
e
r
a
h
s
d
e
t
a
l
e
r
d
n
a
n
o
i
t
a
s
n
e
p
m
o
c
d
e
s
a
b
-
k
c
o
t
S
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
s
t
s
e
r
e
t
n
i
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
s
e
c
n
a
u
s
s
i
.
.
s
s
o
l
t
e
N
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
g
n
i
l
l
o
r
t
n
o
c
-
n
o
n
o
t
n
o
i
t
u
b
i
r
t
s
i
D
.
.
.
.
.
.
.
.
.
.
d
e
r
a
l
c
e
d
s
d
n
e
d
i
v
i
D
6
1
0
2
,
0
3
e
n
u
J
t
a
e
c
n
a
l
a
B
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
3
1
0
2
,
0
3
e
n
u
J
t
a
e
c
n
a
l
a
B
s
e
r
a
h
s
e
l
b
a
e
g
n
a
h
c
x
e
f
o
e
g
n
a
h
c
x
E
t
n
e
m
n
g
i
s
s
a
t
s
e
r
e
t
n
i
g
n
i
l
l
o
r
t
n
o
c
-
n
o
N
:
r
o
f
k
c
o
t
s
n
o
m
m
o
c
f
o
e
c
n
a
u
s
s
I
e
r
a
h
s
d
e
t
a
l
e
r
d
n
a
n
o
i
t
a
s
n
e
p
m
o
c
d
e
s
a
b
-
k
c
o
t
S
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
s
t
s
e
r
e
t
n
i
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
s
e
c
n
a
u
s
s
i
e
m
o
c
n
i
t
e
N
e
m
o
c
n
i
e
v
i
s
n
e
h
e
r
p
m
o
c
r
e
h
t
O
g
n
i
l
l
o
r
t
n
o
c
-
n
o
n
o
t
n
o
i
t
u
b
i
r
t
s
i
D
.
.
.
.
.
.
.
.
.
.
d
e
r
a
l
c
e
d
s
d
n
e
d
i
v
i
D
4
1
0
2
,
0
3
e
n
u
J
t
a
e
c
n
a
l
a
B
60
.
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
i
f
d
e
t
a
d
i
l
o
s
n
o
c
e
s
e
h
t
f
o
t
r
a
p
l
a
r
g
e
t
n
i
n
a
e
r
a
s
e
t
o
n
g
n
i
y
n
a
p
m
o
c
c
a
e
h
T
ROYAL GOLD, INC.
Consolidated Statements of Cash Flows
For the Years Ended June 30,
(In thousands)
Cash flows from operating activities:
Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net (loss) income to net cash provided by operating
activities:
Depreciation, depletion and amortization . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of stream and royalty interests . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt discount and issuance costs . . . . . . . . . . . . . . . . . .
Non-cash employee stock compensation expense . . . . . . . . . . . . . . . . . . .
Tax benefit of stock-based compensation exercises . . . . . . . . . . . . . . . . . .
(Gain) loss on available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in assets and liabilities:
Royalty receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stream inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign withholding taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Uncertain tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016
2015
2014
$
(82,438) $ 52,678
$ 63,472
141,108
98,588
12,985
10,039
548
(2,340)
(4,983)
(390)
17,221
(7,203)
(14,177)
(153)
(849)
(199)
1,867
235
93,486
31,335
12,100
5,141
(364)
183
(27,651)
(46)
5,977
1,110
15,525
2,527
150
(2,000)
1,405
543
91,342
—
11,332
2,580
(597)
4,499
(8,166)
(259)
3,731
(3,396)
(6,183)
11,417
1,105
(13,319)
(7,441)
(2,915)
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . .
$
169,859
$192,099
$147,202
Cash flows from investing activities:
Acquisition of stream and royalty interests . . . . . . . . . . . . . . . . . . . . . . .
Andacollo royalty termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Golden Star term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of available-for-sale securities . . . . . . . . . . . . . . . . . .
Tulsequah stream termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,346,109)
345,000
(20,000)
11,905
—
(309)
(60,429)
—
—
—
10,000
(773)
(80,019)
—
—
—
—
(4,782)
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(1,009,513) $ (51,202) $ (84,801)
Cash flows from financing activities:
Borrowings from revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (payments) proceeds from issuance of common stock . . . . . . . . . . . . .
Common stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of additional royalty interest from non-controlling interest . . . . . .
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution to non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . .
Tax (benefit) expense of stock-based compensation exercises . . . . . . . . . . .
350,000
(75,000)
(353)
(58,720)
—
(1,111)
(830)
(548)
—
—
775
(56,054)
—
—
1,120
(53,380)
— (11,522)
(1,284)
(2,431)
597
(864)
(1,805)
364
Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . .
$
213,438
$ (57,584) $ (66,900)
Net (decrease) increase in cash and equivalents . . . . . . . . . . . . . . . . . . . . .
Cash and equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . . .
(626,216)
742,849
83,313
659,536
(4,499)
664,035
Cash and equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
116,633
$742,849
$659,536
See Note 12 for supplemental cash flow information.
The accompanying notes are an integral part of these consolidated financial statements.
61
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY
Royal Gold, Inc. (‘‘Royal Gold’’, the ‘‘Company’’, ‘‘we’’, ‘‘us’’, or ‘‘our’’), together with its
subsidiaries, is engaged in the business of acquiring and managing precious metals royalties, metal
streams, and similar interests. Royalties are non-operating interests in mining projects that provide the
right to revenue or metals produced from the project after deducting specified costs, if any. A metal
stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to
purchase all or a portion of one or more metals produced from a mine, at a price determined for the
life of the transaction by the purchase agreement.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED AND
ISSUED ACCOUNTING PRONOUNCEMENTS
Summary of Significant Accounting Policies
Use of Estimates
The preparation of our financial statements in conformity with accounting principles generally
accepted in the United States of America requires the Company to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and
liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ significantly from those estimates.
Our most critical accounting estimates relate to our assumptions regarding future gold, silver,
copper, nickel and other metal prices and the estimates of reserves, production and recoveries of third-
party mine operators. We rely on reserve estimates reported by the operators on the properties in
which we have stream and royalty interests. These estimates and the underlying assumptions affect the
potential impairments of long-lived assets and the ability to realize income tax benefits associated with
deferred tax assets. These estimates and assumptions also affect the rate at which we recognize revenue
or charge depreciation, depletion and amortization to earnings. On an ongoing basis, management
evaluates these estimates and assumptions; however, actual amounts could differ from these estimates
and assumptions. Differences between estimates and actual amounts could differ significantly and are
recorded in the period that the actual amounts are known.
Basis of Consolidation
The consolidated financial statements include the accounts of Royal Gold, Inc., its wholly-owned
subsidiaries and an entity over which control is achieved through means other than voting right (see
Note 3). The Company follows the Accounting Standards Codification (‘‘ASC’’) guidance for
identification and reporting for entities over which control is achieved through means other than voting
rights. All intercompany accounts, transactions, income and expenses, and profits or losses have been
eliminated on consolidation.
Cash and Equivalents
Cash and equivalents consist of all cash balances and highly liquid investments with an original
maturity of three months or less. Cash and equivalents were primarily held in cash deposit accounts as
of June 30, 2016 and 2015.
62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED AND
ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)
Stream and Royalty Interests
Stream and royalty interests include acquired stream and royalty interests in production,
development and exploration stage properties. The costs of acquired stream and royalty interests are
capitalized as tangible assets as such interests do not meet the definition of a financial asset under the
Accounting Standards Codification (‘‘ASC’’) guidance.
Acquisition costs of production stage stream and royalty interests are depleted using the units of
production method over the life of the mineral property (as sales occur under stream interests or
royalty payments are recognized), which are estimated using proven and probable reserves as provided
by the operator. Acquisition costs of stream and royalty interests on development stage mineral
properties, which are not yet in production, are not amortized until the property begins production.
Acquisition costs of stream or royalty interests on exploration stage mineral properties, where there are
no proven and probable reserves, are not amortized. At such time as the associated exploration stage
mineral interests are converted to proven and probable reserves, the cost basis is amortized over the
remaining life of the mineral property, using proven and probable reserves. The carrying values of
exploration stage mineral interests are evaluated for impairment at such time as information becomes
available indicating that the production will not occur in the future. Exploration costs are expensed
when incurred.
Available-for-Sale Securities
Investments in securities that management does not have the intent to sell in the near term and
that have readily determinable fair values are classified as available-for-sale securities. Unrealized gains
and losses on these investments are recorded in accumulated other comprehensive (loss) income as a
separate component of stockholders’ equity, except that declines in market value judged to be other
than temporary are recognized in determining net income. When investments are sold, the realized
gains and losses on these investments, determined using the specific identification method, are included
in determining net income.
The Company’s policy for determining whether declines in fair value of available-for-sale securities
are other than temporary includes a quarterly analysis of the investments and a review by management
of all investments for which the cost exceeds the fair value. Any temporary declines in fair value are
recorded as a charge to other comprehensive (loss) income. This evaluation considers a number of
factors including, but not limited to, the length of time and extent to which the fair value has been less
than cost, the financial condition and near term prospects of the issuer, and management’s ability and
intent to hold the securities until fair value recovers. If such impairment is determined by the Company
to be other-than-temporary, the investment’s cost basis is written down to fair value and recorded in
net income during the period the Company determines such impairment to be other-than-temporary.
The new cost basis is not changed for subsequent recoveries in fair value. Refer to Note 5 for further
discussion on our available-for-sale securities.
Asset Impairment
We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate
that the related carrying amounts of an asset or group of assets may not be recoverable. The
recoverability of the carrying value of stream and royalty interests in production and development stage
63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED AND
ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)
mineral properties is evaluated based upon estimated future undiscounted net cash flows from each
stream and royalty interest using estimates of proven and probable reserves and other relevant
information received from the operators. We evaluate the recoverability of the carrying value of royalty
interests in exploration stage mineral properties in the event of significant decreases in the price of
gold, silver, copper, nickel and other metals, and whenever new information regarding the mineral
properties is obtained from the operator indicating that production will not likely occur or may be
reduced in the future, thus potentially affecting the future recoverability of our stream or royalty
interests. Impairments in the carrying value of each property are measured and recorded to the extent
that the carrying value in each property exceeds its estimated fair value, which is generally calculated
using estimated future discounted cash flows.
Estimates of gold, silver, copper, nickel and other metal prices, operators’ estimates of proven and
probable reserves or mineralized material related to our stream or royalty properties, and operators’
estimates of operating and capital costs are subject to certain risks and uncertainties which may affect
the recoverability of our investment in these stream and royalty interests in mineral properties. It is
possible that changes could occur to these estimates, which could adversely affect the net cash flows
expected to be generated from these stream and royalty interests. Refer to Note 4 for discussion and
the results of our impairment assessments for the fiscal years ended June 30, 2016 and 2015.
Revenue
Revenue is recognized pursuant to guidance in ASC 605 and based upon amounts contractually
due pursuant to the underlying streaming or royalty agreement. Specifically, revenue is recognized in
accordance with the terms of the underlying stream or royalty agreements subject to (i) the pervasive
evidence of the existence of the arrangements; (ii) the risks and rewards having been transferred;
(iii) the stream or royalty being fixed or determinable; and (iv) the collectability being reasonably
assured. For our streaming agreements, we recognize revenue when the metal is sold.
Metal Sales
Gold and silver received under our metal streaming agreements is taken into inventory, and this is
sold primarily using average spot rate gold and silver forward contracts. The sales price for our gold
and silver sold in average spot rate forward contracts is determined by the average daily gold or silver
spot prices under the term of the contract, typically over a consecutive number of trading days between
10 days and three months (depending on the frequency of deliveries under the respective streaming
agreement and our sales policy in effect at the time) commencing shortly after receipt and purchase of
the metal. Revenue from gold and silver sales is recognized on the date of the settlement, which is also
the date that title to the gold or silver passes to the purchaser.
Cost of Sales
Cost of sales is specific to our stream agreements and is the result of our purchase of gold and
silver for a cash payment. The cash payment at Mount Milligan is the lesser of $435 per ounce or the
prevailing market price of gold when purchased, while the cash payment for our other streams is a set
contractual percentage of the gold or silver spot price near the date of metal delivery.
64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED AND
ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)
Production taxes
Certain royalty payments are subject to production taxes (or mining proceeds taxes), which are
recognized at the time of revenue recognition. Production taxes are not income taxes and are included
within the costs and expenses section in the Company’s consolidated statements of operations and
comprehensive (loss) income.
Exploration Costs
Exploration costs are specific to the Peak Gold LLC (‘‘Peak Gold’’) joint venture for exploration
and advancement of the Tetlin gold project, as discussed further in Note 3. Exploration costs associated
with Peak Gold for the exploration and advancement of the Tetlin gold project are expensed when
incurred.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with the guidance of ASC 718.
The Company recognizes all share-based payments to employees, including grants of employee stock
options, stock-settled stock appreciation rights (‘‘SSARs’’), restricted stock and performance shares, in
its financial statements based upon their fair values.
Reportable Segments and Geographical Information
The Company manages its business under two reportable segments, consisting of the acquisition
and management of stream interests and the acquisition and management of royalty interests. Royal
Gold’s long-lived assets (stream and royalty interests, net) as of June 30, 2016 and 2015 are
geographically distributed as shown in the following table:
As of June 30, 2016
As of June 30, 2015
Canada . . . . . . . . . . . . . .
Chile . . . . . . . . . . . . . . . .
Dominican Republic . . . . .
Mexico . . . . . . . . . . . . . .
United States . . . . . . . . . .
Africa . . . . . . . . . . . . . . .
Australia . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . .
Stream
interest
Royalty
interest
$ 809,692
369,896
588,502
$228,566
453,629
—
— 118,899
— 102,385
697
42,547
32,649
88,596
—
12,029
Total stream
and royalty
interests, net
$1,038,258
823,525
588,502
118,899
102,385
89,293
42,547
44,678
Stream
interest
Royalty
interest
$823,091
—
—
—
—
—
—
8,183
$ 251,688
653,019
—
131,742
110,286
12,760
50,119
42,720
Total stream
and royalty
interests, net
$1,074,779
653,019
—
131,742
110,286
12,760
50,119
50,903
Total . . . . . . . . . . . . . . . . . .
$1,868,715
$979,372
$2,848,087
$831,274
$1,252,334
$2,083,608
65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED AND
ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)
The Company’s revenue, cost of sales and net revenue by reportable segment for our fiscal year’s
ended June 30, 2016, 2015 and 2014 is geographically distributed as show in the following table:
Fiscal Year Ended June 30, 2016
Fiscal Year Ended June 30, 2015
Revenue
Cost of
sales
Net
revenue
Revenue
Cost of
sales
Net
revenue
Streams:
Canada . . . . . . . . . . . . . . . . . . . . .
Chile . . . . . . . . . . . . . . . . . . . . . .
Dominican Republic . . . . . . . . . . .
Africa . . . . . . . . . . . . . . . . . . . . . .
$125,755
49,243
39,684
23,346
$47,417
7,280
11,625
4,657
$ 78,338
41,963
28,059
18,689
$ 94,104
—
—
—
$33,450
—
—
—
$ 60,654
—
—
—
Total streams . . . . . . . . . . . . . . . . . .
$238,028
$70,979
$167,049
$ 94,104
$33,450
$ 60,654
Royalties:
Mexico . . . . . . . . . . . . . . . . . . . . .
United States . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . .
Chile . . . . . . . . . . . . . . . . . . . . . .
Australia . . . . . . . . . . . . . . . . . . . .
Africa . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . .
$ 35,267
35,483
30,676
84
10,462
1,868
7,922
$ — $ 35,267
35,483
30,676
84
10,462
1,868
7,922
—
—
—
—
—
—
$ 43,008
42,675
37,496
39,508
8,494
3,075
9,659
$ — $ 43,008
42,675
37,496
39,508
8,494
3,075
9,659
—
—
—
—
—
—
Total royalties . . . . . . . . . . . . . . . . . .
$121,762
$ — $121,762
$183,915
$ — $183,915
Total royalties and streams . . . . . . . .
$359,790
$70,979
$288,811
$278,019
$33,450
$244,569
Fiscal Year Ended June 30, 2015
Fiscal Year Ended June 30, 2014
Revenue
Cost of
sales
Net
revenue
Revenue
Cost of
sales
Net
revenue
Streams:
Canada . . . . . . . . . . . . . . . . . . . . . .
$ 94,104
$33,450
$ 60,654
$ 27,209
$9,158
$ 18,051
Royalties:
Mexico . . . . . . . . . . . . . . . . . . . . . .
United States . . . . . . . . . . . . . . . . .
Chile . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . .
Australia . . . . . . . . . . . . . . . . . . . . .
Africa . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . .
$ 43,008
42,675
39,508
37,496
8,494
3,075
9,659
$ — $ 43,008
42,675
39,508
37,496
8,494
3,075
9,659
—
—
—
—
—
—
$ 43,093
34,671
50,733
54,277
8,353
7,943
10,883
$ — $ 43,093
34,671
50,733
54,277
8,353
7,943
10,883
—
—
—
—
—
—
Total royalties . . . . . . . . . . . . . . . . . . .
$183,915
$ — $183,915
$209,953
$ — $209,953
Total royalties and streams . . . . . . . . .
$278,019
$33,450
$244,569
$237,162
$9,158
$228,004
66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED AND
ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)
Income Taxes
The Company accounts for income taxes in accordance with the guidance of ASC 740. The
Company’s annual tax rate is based on income, statutory tax rates in effect and tax planning
opportunities available to us in the various jurisdictions in which the Company operates. Significant
judgment is required in determining the annual tax expense, current tax assets and liabilities, deferred
tax assets and liabilities, and our future taxable income, both as a whole and in various tax jurisdictions,
for purposes of assessing our ability to realize future benefit from our deferred tax assets. Actual
income taxes could vary from these estimates due to future changes in income tax law, significant
changes in the jurisdictions in which we operate or unpredicted results from the final determination of
each year’s liability by taxing authorities.
The Company’s deferred income taxes reflect the impact of temporary differences between the
reported amounts of assets and liabilities for financial reporting purposes and such amounts measured
by tax laws and regulations. In evaluating the realizability of the deferred tax assets, management
considers both positive and negative evidence that may exist, such as earnings history, reversal of
taxable temporary differences, forecasted operating earnings and available tax planning strategies in
each tax jurisdiction. A valuation allowance may be established to reduce our deferred tax assets to the
amount that is considered more likely than not to be realized through the generation of future taxable
income and other tax planning strategies.
The Company has asserted the indefinite reinvestment of certain foreign subsidiary earnings as
determined by management’s judgment about and intentions concerning the future operations of the
Company. As a result, the Company does not record a U.S. deferred tax liability for the excess of the
book basis over the tax basis of its investments in foreign corporations to the extent that the basis
difference results from earnings that meet the indefinite reversal criteria. Refer to Note 11 for further
discussion on our assertion.
The Company’s operations may involve dealing with uncertainties and judgments in the application
of complex tax regulations in multiple jurisdictions. The final taxes paid are dependent upon many
factors, including negotiations with taxing authorities in various jurisdictions and resolution of disputes
arising from federal, state, and international tax audits. The Company recognizes potential liabilities
and records tax liabilities for anticipated tax audit issues in the United States and other tax jurisdictions
based on its estimate of whether, and the extent to which, additional taxes will be due. The Company
adjusts these reserves in light of changing facts and circumstances, such as the progress of a tax audit;
however, due to the complexity of some of these uncertainties, the ultimate resolution could result in a
payment that is materially different from our current estimate of the tax liabilities. These differences
will be reflected as increases or decreases to income tax expense in the period which they are
determined. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits
in income tax expense.
Comprehensive (Loss) Income
In addition to net income, comprehensive (loss) income includes changes in equity during a period
associated with cumulative unrealized changes in the fair value of marketable securities held for sale,
net of tax effects.
67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED AND
ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)
Earnings per Share
Basic earnings per share is computed by dividing net income available to Royal Gold common
stockholders by the weighted average number of outstanding common shares for the period,
considering the effect of participating securities, and include the outstanding exchangeable shares.
Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts
that may require issuance of common shares were converted. Diluted earnings per share is computed
by dividing net income available to common stockholders by the diluted weighted average number of
common shares outstanding, including outstanding exchangeable shares, during each fiscal year.
Reclassification
Certain amounts in the prior period financial statements have been reclassified for comparative
purposes to conform with the presentation in the current period financial statements. Reclassified
amounts were not material to the financial statements.
Recently Adopted Accounting Standards
In April 2015, the Financial Accounting Standards Board (‘‘FASB’’) issued Accounting Standards
Update (‘‘ASU’’) guidance related to debt issuance costs. This update simplifies the presentation of
debt issuance costs by requiring debt issuance costs to be presented as a deduction from the
corresponding debt liability. The recognition and measurement guidance for debt issuance costs are not
affected by the updated guidance. Early adoption is permitted and the Company elected to early adopt
this guidance as of June 30, 2016, and the effects of the updated guidance were applied retrospectively
to our fiscal year ended June 30, 2015. The effect of the change in accounting principle as of June 30,
2016 and 2015, was that $7.4 million and $8.2 million, respectively, of our debt issuance costs have been
reclassified from Other assets to Debt on the Company’s consolidated financial statements.
In February 2015, ASU guidance was issued related to consolidations. This update affects reporting
entities that are required to evaluate whether they should consolidate certain legal entities. This update
makes some targeted changes to current consolidation guidance and impacts both the voting and the
variable interest consolidation models. In particular, the update will change how companies determine
whether limited partnerships or similar entities are variable interest entities (‘‘VIEs’’). The Company
adopted the updated guidance as of June 30, 2016. The effects of the adoption had no impact on the
Company’s consolidated financial statements.
In November 2015, the FASB issued guidance on the presentation of deferred income taxes that
requires deferred tax assets and liabilities, along with related valuation allowances, to be classified as
non-current on the balance sheet. As a result, each tax jurisdiction will now only have one net
non-current deferred tax asset or liability. The new guidance does not change the existing requirement
that prohibits offsetting deferred tax liabilities from one jurisdiction against deferred tax assets of
another jurisdiction. The Company adopted the updated guidance as of June 30, 2016, on a prospective
basis and it only resulted in a change of presentation of the deferred taxes on our consolidated
balances sheet. The change in accounting principle was not retrospectively applied to prior period
balances.
68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED AND
ISSUED ACCOUNTING PRONOUNCEMENTS (Continued)
Recently Issued Accounting Standards
In March 2016, the FASB issued ASU guidance to simplify several aspects of accounting for share-
based payment transactions, including income tax consequences, classification of awards as either equity
or liabilities, an option to recognize gross stock compensation with actual forfeitures as they occur, as
well as certain classifications on the statement of cash flows. The new guidance is effective for the
Company’s fiscal year beginning July 1, 2017. Early adoption is permitted, as long as all of the
amendments are adopted in the same period. We are currently evaluating the impact this guidance will
have on our consolidated financial statements and footnote disclosures.
In February 2016, the FASB issued ASU guidance which changes the accounting for leases. The
new guidance is effective for the Company’s fiscal year beginning July 1, 2019, and early adoption is
permitted. We are currently evaluating the impact, if any, this guidance will have on our consolidated
financial statements and footnote disclosures.
In January 2016, the FASB issued ASU guidance on the recognition and measurement of financial
instruments. The amended guidance requires, among other things that equity securities classified as
available-for-sale be measured at fair value with changes in fair value recognized in net income rather
than other comprehensive (loss) income as required under previous guidance. The new guidance is
effective for the Company’s fiscal year beginning July 1, 2018. We are currently evaluating the impact
this guidance will have on our consolidated financial statements.
In May 2014, the FASB issued ASU guidance for the recognition of revenue from contracts with
customers. Subsequent to the issuance of this ASU guidance, the FASB issued additional related ASU’s
on revenue recognition. The effective date and transition requirements for all of these ASU’s are the
same. Specifically, the guidance under these ASU’s is to be applied using a full retrospective method or
a modified retrospective method, as described in the guidance, and is effective for the Company’s fiscal
year beginning July 1, 2018. The Company is currently evaluating the level of effort needed to
implement the guidance, evaluating the provisions of each new guidance, and assessing their impact on
the Company’s consolidated financial statements and disclosures, as well as which transitions method
we intend to use.
3. ACQUISITIONS
Acquisition of Gold and Silver Stream at Pueblo Viejo
On September 29, 2015, RGLD Gold AG (‘‘RGLD Gold’’) closed its Precious Metals Purchase
and Sale Agreement with Barrick Gold Corporation (‘‘Barrick’’) and its wholly-owned subsidiary, BGC
Holdings Ltd. (‘‘BGC’’) for a percentage of the gold and silver production attributable to Barrick’s
60% interest in the Pueblo Viejo mine located in the Dominican Republic. Pursuant to the Precious
Metals Purchase and Sale Agreement, RGLD Gold made a single advance payment of $610 million to
BGC as part of the closing. The transaction is effective as of July 1, 2015 for the gold stream and
January 1, 2016 for the silver stream.
BGC will deliver gold to RGLD Gold in amounts equal to 7.50% of Barrick’s interest in the gold
produced at the Pueblo Viejo mine until 990,000 ounces of gold have been delivered, and 3.75% of
Barrick’s interest in gold produced thereafter. RGLD Gold will pay BGC 30% of the spot price per
ounce of gold delivered until 550,000 ounces of gold have been delivered, and 60% of the spot price
69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
3. ACQUISITIONS (Continued)
per ounce delivered thereafter. RGLD Gold began receiving gold deliveries during the quarter ended
December 31, 2015.
BGC will deliver silver to RGLD Gold in amounts equal to 75% of Barrick’s interest in the silver
produced at the Pueblo Viejo mine, subject to a minimum silver recovery of 70%, until 50 million
ounces of silver have been delivered, and 37.50% of Barrick’s interest in silver produced thereafter.
RGLD Gold will pay BGC 30% of the spot price per ounce of silver delivered until 23.10 million
ounces of silver have been delivered, and 60% of the spot price per ounce of silver delivered
thereafter. RGLD Gold began receiving silver deliveries during the quarter ended March 31, 2016.
The Pueblo Viejo gold and silver stream acquisition has been accounted for as an asset acquisition.
The advance payment of $610 million, plus direct transaction costs, have been recorded as a production
stage stream interest within Stream and royalty interests, net on our consolidated balance sheets. The
acquisition cost of the Pueblo Viejo gold and silver stream interest will be depleted using the units of
production method, which is estimated using aggregate proven and probable reserves, as provided by
Barrick.
Acquisition and Amendment of Gold Stream on Wassa and Prestea
On July 28, 2015, RGLD Gold, a wholly-owned subsidiary of the Company, closed a $130 million
gold stream transaction with a wholly-owned subsidiary of Golden Star Resources Ltd. (together
‘‘Golden Star’’). On December 30, 2015, the parties executed an amendment providing for an
additional $15 million investment (for a total investment of $145 million) by RGLD Gold.
Also on July 28, 2015 and separate from the stream transaction by RGLD Gold, the Company also
funded a $20 million, 4-year term loan to Golden Star and received warrants to purchase 5 million
shares of Golden Star common stock, with a grant date fair value of approximately $0.8 million.
Interest under the term loan is due quarterly at a rate equal to 62.5% of the average daily gold price
for the relevant quarter divided by 10,000, but not to exceed 11.5%. The warrants have a term of four
years and an exercise price of $0.27.
Funds will be used for ongoing development of Golden Star’s Wassa and Prestea mines in Ghana.
As of June 30, 2016, RGLD Gold has advanced $95 million. On July 1, 2016, RGLD Gold made an
advance payment of $20 million and expects to advance the balance in two quarterly payments as
follows: (i) $20 million on October 1, 2016, and (ii) $10 million on January 1, 2017; however this
schedule may be modified based on the actual spending on the Wassa and Prestea underground
projects and these funds are subject to satisfaction of certain conditions.
In return, Golden Star will deliver to RGLD Gold 9.25% of gold produced from the Wassa and
Prestea mines, until the earlier of (i) December 31, 2017 or (ii) the date at which the Wassa and
Prestea underground projects achieve commercial production. At that point, the stream percentage will
increase to 10.5% of gold produced from the Wassa and Prestea projects until an aggregate 240,000
ounces have been delivered. Once the applicable delivery threshold is met, the stream percentage will
decrease to 5.5% for the remaining life of the mines.
RGLD Gold will pay Golden Star a cash price equal to 20% of the spot price for each ounce of
gold delivered at the time of delivery until the applicable delivery threshold is met, and 30% of the
spot price for each ounce of gold delivered thereafter.
70
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
3. ACQUISITIONS (Continued)
The Wassa and Prestea gold stream acquisition has been accounted for as an asset acquisition. The
$95 million paid as part of the aggregate advance payments of $145 million, plus direct acquisition
costs, have been recorded as a production stage stream interest within Stream and royalty interests, net
on our consolidated balance sheets. Future advance payments, plus any direct acquisition costs
incurred, will be recorded as a production stage interest accordingly. The acquisition cost of the Wassa
and Prestea gold stream interest will be depleted using the units of production method, which is
estimated using aggregate proven and probable reserves, as provided by Golden Star.
The $20 million four-year term loan and the received warrants have been recorded within Other
assets on our consolidated balance sheets. The warrants have been classified as a financial asset
instrument and are recorded at fair value at each reporting period using the Black-Scholes model. Any
change in the fair value of the warrants at subsequent reporting periods will be recorded within Interest
and other income on our consolidated statements of operations and comprehensive (loss) income.
Acquisition of Gold and Silver Stream at Rainy River
On July 20, 2015, RGLD Gold entered into a $175 million Purchase and Sale Agreement with
New Gold, Inc. (‘‘New Gold’’), for a percentage of the gold and silver production from the Rainy River
Project located in Ontario, Canada (‘‘Rainy River’’). Pursuant to the Purchase and Sale Agreement,
RGLD Gold made an advance payment to New Gold, consisting of $100 million on July 20, 2015, and
will make an additional advance payment of $75 million once capital spending at Rainy River is 60%
complete (currently expected during the second half of calendar 2016). Under the Purchase and Sale
Agreement, New Gold will deliver to RGLD Gold 6.50% of the gold produced at Rainy River until
230,000 gold ounces have been delivered, and 3.25% thereafter. New Gold also will deliver to RGLD
Gold 60% of the silver produced at Rainy River until 3.10 million silver ounces have been delivered,
and 30% thereafter. RGLD Gold will pay New Gold 25% of the spot price per ounce of gold and
silver at the time of delivery.
The Rainy River gold and silver stream acquisition has been accounted for as an asset acquisition.
The $100 million paid as part of the aggregate advance payments of $175 million, plus direct
transaction costs, have been recorded as a development stage stream interest within Stream and royalty
interests, net on our consolidated balance sheets.
Acquisition of Gold Stream at Carmen de Andacollo
On July 9, 2015, RGLD Gold entered into a Long Term Offtake Agreement (the ‘‘Andacollo
Stream Agreement’’) with Compa˜n´ıa Minera Teck Carmen de Andacollo (‘‘CMCA’’), a 90% owned
subsidiary of Teck Resources Limited (‘‘Teck’’). Pursuant to the Andacollo Stream Agreement, CMCA
will sell and deliver to RGLD Gold 100% of payable gold from the Carmen de Andacollo
(‘‘Andacollo’’) copper-gold mine located in Chile until 900,000 ounces have been delivered, and 50%
thereafter, subject to a fixed payable percentage of 89%. RGLD Gold made a $525 million advance
payment in cash to CMCA upon entry into the Andacollo Stream Agreement, and RGLD Gold will
also pay CMCA 15% of the monthly average gold price for the month preceding the delivery date for
all gold purchased under the Andacollo Stream Agreement.
The transaction encompasses certain of CMCA’s presently owned mining concessions on the
Andacollo mine, as well as any other mining concessions presently owned or acquired by CMCA or any
of its affiliates within an approximate 1.5 kilometer area of interest, and certain other mining
71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
3. ACQUISITIONS (Continued)
concessions that CMCA or its affiliates may acquire. The Andacollo Stream Agreement was effective
July 1, 2015, and applies to all final settlements of gold received on or after that date. Deliveries to
RGLD Gold will be made monthly, and RGLD Gold began receiving gold deliveries during the quarter
ended September 30, 2015.
The Company accounted for the acquisition of the stream interest at Andacollo as an asset
acquisition. For US GAAP financial reporting purposes on the date of acquisition, the Company’s new
consolidated carrying value in its stream interest at Andacollo was approximately $388.2 million, which
included direct acquisition costs, and has been recorded as a production stage stream interest within
Stream and royalty interests, net on our consolidated balance sheets. The Andacollo gold stream interest
will be depleted using the units of production method, which is estimated using aggregate proven and
probable reserves, as provided by Teck.
Termination of Royalty Interest at Carmen de Andacollo
On July 9, 2015, Royal Gold Chile Limitada (‘‘RG Chile’’), a wholly owned subsidiary of the
Company, entered into a Royalty Termination Agreement with CMCA. The Royalty Termination
Agreement terminated an amended Royalty Agreement originally dated January 12, 2010, which
provided RG Chile with a royalty equivalent to 75% of the gold produced from the sulfide portion of
the Andacollo mine until 910,000 payable ounces have been produced, and 50% of the gold produced
thereafter. CMCA paid total consideration of $345 million to RG Chile in connection with the Royalty
Termination Agreement. The net carrying value of the Andacollo royalty on the date of termination
was approximately $207.5 million. The royalty termination transaction was taxable in Chile and the
United States.
Acquisition of Gold Stream on Euromax’s Ilovica Project
On October 20, 2014, RGLD Gold, a wholly owned subsidiary of the Company, entered into a
$175.0 million gold stream transaction with Euromax Resources Ltd (‘‘Euromax’’) that will finance a
definitive feasibility study, permitting work, early stage engineering and a significant portion of the
construction at Euromax’s Ilovica gold-copper project located in southeast Macedonia. RGLD Gold will
make two advance deposit payments to Euromax totaling $15.0 million, which are to be used for
completion of the definitive feasibility study and permitting of the project, followed by payments
aggregating $160 million towards project construction, in each case subject to certain conditions.
Payment of the first $7.5 million deposit was completed in March 2015. RGLD Gold advanced
$3.75 million of the second $7.5 million deposit in November 2015 and a decision to proceed with the
remaining portion of the second deposit ($3.75 million) and the construction payments is conditioned
upon, among other things, its satisfaction with the progress of definitive feasibility study and
environmental evaluations, demonstrated project viability, and, in the case of the construction
payments, sufficient project financing and permits to construct and operate the mine. The construction
payments would be paid pro-rata with the balance of the project funding. In exchange, Euromax will
deliver physical gold equal to 25% of gold produced from the Ilovica project until 525,000 ounces have
been delivered, and 12.5% thereafter (in each case subject to adjustment). RGLD Gold’s purchase
price per ounce will be 25% of the spot price at the time of delivery.
The Ilovica gold stream acquisition has been accounted for as an asset acquisition. The
$11.25 million paid as part of the aggregate pre-production commitment of $175 million, plus direct
72
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
3. ACQUISITIONS (Continued)
transaction costs, have been recorded as a development stage stream interest within Stream and royalty
interests, net on our consolidated balance sheets.
Tetlin Royalty Acquisitions and Peak Gold Joint Venture
On September 30, 2014, Royal Gold acquired a 2.0% net smelter return (‘‘NSR’’) royalty and a
3.0% NSR royalty held by private parties over areas comprising the Tetlin gold project located near
Tok, Alaska, for total consideration of $6.0 million. As discussed below, the Tetlin gold project is now
held by Peak Gold LLC (‘‘Peak Gold’’), a joint venture between subsidiaries of Royal Gold and
Contango ORE Inc.
The acquisition of the Tetlin royalties has been accounted for as an asset acquisition. The total
purchase price of $6.0 million, plus direct transaction costs, has been recorded as an exploration stage
royalty interest within Stream and royalty interests, net on our consolidated balance sheets.
On January 8, 2015, Royal Gold, through its wholly-owned subsidiary, Royal Alaska, LLC (‘‘Royal
Alaska’’), and Contango ORE, Inc., through its wholly-owned subsidiary CORE Alaska, LLC (together,
‘‘Contango’’), entered into a limited liability company agreement for Peak Gold, a joint venture for
exploration and advancement of the Tetlin gold project located near Tok, Alaska (the ‘‘Tetlin Project’’).
Contango contributed all of its assets relating to the Tetlin Project to Peak Gold, including a mining
lease and certain state of Alaska mining claims. Royal Alaska contributed $5.0 million in cash to Peak
Gold. Contango will initially hold a 100% membership interest in Peak Gold. Royal Alaska has the
right to obtain up to 40% of the membership interest in Peak Gold by making contributions of up to
$30.0 million (including Royal Alaska’s initial $5.0 million contribution) in cash to Peak Gold by
October 31, 2018. As of June 30, 2016, Royal Alaska has contributed $5.7 million and has obtained an
11% membership interest in Peak Gold.
Royal Alaska will act as the manager of Peak Gold. As manager of Peak Gold, Royal Alaska is
responsible for managing, directing and controlling the overall operations during the earn-in period,
and thereafter, provided Royal Alaska holds at least a 40% interest. Royal Alaska will act as manager
unless and until it is unanimously removed or resigns that position in the manner provided in Peak
Gold’s limited liability company agreement.
The Company follows the ASC guidance for identification and reporting of entities for which
control is achieved through means other than voting rights. The guidance defines such entities as VIEs.
The Company has identified Peak Gold as a VIE, with Royal Alaska as the primary beneficiary, due to
the legal structure and certain related factors of the limited liability company agreement for Peak Gold.
The Company determined that Peak Gold should be fully consolidated at fair value initially. The fair
value of the Company’s non-controlling interest is $45.7 million and is based on the underlying value of
the mineral property assigned to Peak Gold, which is recorded as an exploration stage property within
Stream and royalty interests, net on our consolidated balance sheets.
73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
4. STREAM AND ROYALTY INTERESTS, NET
The following summarizes the Company’s stream and royalty interests as of June 30, 2016 and
2015:
As of June 30, 2016 (Amounts in thousands):
Production stage stream interests:
Cost
Accumulated
Depletion
Impairments
Net
Mount Milligan . . . . . . . . . . . . . . . . . . . . . . . . .
Pueblo Viejo . . . . . . . . . . . . . . . . . . . . . . . . . . .
Andacollo . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wassa and Prestea . . . . . . . . . . . . . . . . . . . . . . .
$ 783,046
610,404
388,182
96,413
$ (74,060)
(21,902)
(18,286)
(7,816)
$
— $ 708,986
588,502
—
369,896
—
88,597
—
Total production stage stream interests . . . . . . . .
1,878,045
(122,064)
—
1,755,981
Production stage royalty interests:
Voisey’s Bay . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pe˜nasquito . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Holt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cortez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
205,724
99,172
34,612
10,630
531,735
(85,671)
(29,898)
(17,124)
(10,000)
(342,460)
—
—
—
—
(18,605)
Total production stage royalty interests . . . . . . . .
881,873
(485,153)
(18,605)
120,053
69,274
17,488
630
170,670
378,115
Production stage stream and royalty interests . . . . .
2,759,918
(607,217)
(18,605)
2,134,096
Development stage stream interests:
Rainy River . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total development stage stream interests . . . . . . .
Development stage royalty interests:
Pascua-Lama . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total development stage royalty interests . . . . . . .
Development stage stream and royalty interests . . .
Exploration stage royalty interests . . . . . . . . . . . . .
100,706
87,883
188,589
380,657
66,414
447,071
635,660
155,997
—
(153)
(153)
—
(75,702)
(75,702)
—
—
—
—
—
—
(153)
—
(75,702)
(1,811)
100,706
12,028
112,734
380,657
66,414
447,071
559,805
154,186
Total stream and royalty interests . . . . . . . . . . . . . .
$3,551,575
$(607,370)
$(96,118)
$2,848,087
74
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
4. STREAM AND ROYALTY INTERESTS, NET (Continued)
As of June 30, 2015 (Amounts in thousands):
Production stage stream interests:
Cost
Accumulated
Depletion
Impairments
Net
Mount Milligan . . . . . . . . . . . . . . . . . . . . . . . . .
$ 783,046
$ (35,195)
$
— $ 747,851
Production stage royalty interests:
Andacollo . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Voisey’s Bay . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pe˜nasquito . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mulatos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Holt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Robinson . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cortez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
272,998
150,138
99,172
48,092
34,612
17,825
10,630
495,763
(65,467)
(76,141)
(24,555)
(32,313)
(13,950)
(12,748)
(9,933)
(265,727)
—
—
—
—
—
(27,586)
Total production stage royalty interests . . . . . . . .
1,129,230
(500,834)
(27,586)
207,531
73,997
74,617
15,779
20,662
5,077
697
202,450
600,810
Production stage stream and royalty interests . . . . .
1,912,276
(536,029)
(27,586)
1,348,661
Development stage stream interests:
Phoenix Gold . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total development stage stream interests . . . . . . .
Development stage royalty interests:
Pascua-Lama . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total development stage royalty interests . . . . . . .
Development stage stream and royalty interests . . .
75,843
8,183
84,026
372,105
67,017
439,122
523,148
Exploration stage royalty interests . . . . . . . . . . . . .
212,552
—
—
—
—
—
—
—
—
—
(603)
(603)
—
—
—
(603)
(150)
75,843
7,580
83,423
372,105
67,017
439,122
522,545
212,402
Total stream and royalty interests . . . . . . . . . . . . . .
$2,647,976
$(536,029)
$(28,339)
$2,083,608
Impairment of stream and royalty interests and royalty receivables
In accordance with our impairment accounting policy discussed in Note 1, impairments in the
carrying value of each stream or royalty interest are measured and recorded to the extent that the
carrying value in each stream or royalty interest exceeds its estimated fair value, which is generally
calculated using estimated future discounted cash-flows. As part of the Company’s regular asset
impairment analysis, which included the presence of impairment indicators, the Company recorded
75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
4. STREAM AND ROYALTY INTERESTS, NET (Continued)
impairment charges for the fiscal years ended June 30, 2016, 2015 and 2014, as summarized in the
following table:
Phoenix Gold(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inata(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wolverine(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Years Ended June 30,
2016
2015
2014
(Amounts in thousands)
$75,702
11,982
5,307
3,127
$ — $—
— —
25,967 —
2,372 —
Total impairment of stream and royalty interests . . . . . . . .
Inata royalty receivable . . . . . . . . . . . . . . . . . . . . . . . . . .
Wolverine royalty receivable . . . . . . . . . . . . . . . . . . . . . .
$96,118
2,855
(385)
$28,339
$—
— —
2,996 —
Total impairment of stream and royalty interests and
royalty receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$98,588
$31,335
$—
(1)
(2)
Included in Other development stage stream interests in the above stream and royalty
interests table.
Included in Other production stage royalty interests in the above stream and royalty
interests table.
Phoenix Gold
RGLD Gold owns the right to purchase 6.30% of any gold produced from the Phoenix Gold
Project until 135,000 ounces have been delivered, and 3.15% thereafter. The Phoenix Gold Project is
located in Red Lake, Ontario, Canada, and operated by Rubicon Minerals Corporation (‘‘Rubicon’’).
On January 11, 2016, Rubicon provided an updated geologic model and mineralized material statement
for the Phoenix Gold Project, which included a significant reduction in mineralized material compared
to previous statements provided by Rubicon. Rubicon also announced that they were evaluating
strategic alternatives, including merger and divestiture opportunities either at the corporate or asset
level, obtaining new financing or capital restructurings. A significant reduction in mineralized material,
along with recent decreases in the long-term metal price assumptions used by the industry, are
indicators of impairment.
During the quarter ended March 31, 2016, the Company independently evaluated the updated
geologic model and mineralized material statement in an effort to properly assess the recoverability of
our carrying value. The Company’s technical evaluation was completed by internal and external
personnel and included an econcomic analysis of the Phoenix Gold Project and a detailed review of the
geological model and mineralized material statement.
Based upon the results of the Company’s review of the updated geological model and mineralized
material statement, and other factors, it was determined that our stream interest at the Phoenix Gold
Project should be written down to zero as of March 31, 2016. The Company will continue to pursue
commercial alternatives for potential recovery of our investment.
76
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
4. STREAM AND ROYALTY INTERESTS, NET (Continued)
Inata
The Company owns a 2.5% gross smelter return royalty on all gold and silver produced from the
Inata mine, located in Burkina Faso, West Africa, and operated by a subsidiary of Avocet Mining PLC
(‘‘Avocet’’). The Company’s carrying value for its royalty interest at Inata was approximately
$12.0 million as of December 31, 2015. As part of the Company’s impairment assessment for the three
months ended March 31, 2016, the Company was notified of an updated mine plan at Inata, which
included a significant reduction in the life of the mine. Based upon our review of the updated mine
plan, our royalty interest was written down to zero as of March 31, 2016.
The Company also had a royalty receivable of approximately $2.8 million associated with past due
royalty payments on the Inata interest. As a result of Avocet’s financial and operational difficulties and
our review of the updated mine plan at Inata, the Company believes payment of the receivable is
uncertain and provided for an allowance against the entire royalty receivable as of March 31, 2016. The
Company will continue to pursue collection of all past due payments.
Wolverine
The Company owns a 0.00% to 9.445% sliding-scale NSR royalty on all gold and silver produced
from the Wolverine underground mine and milling operation located in Yukon Territory, Canada, and
operated by Yukon Zinc Corporation (‘‘Yukon Zinc’’). As part of the Company’s impairment
assessment for the three months ended December 31, 2014, the Company was notified of an updated
mine plan at Wolverine, which included a significant reduction in reserves and resources when
compared to the previous mine plan. A significant reduction in reserves and resources, along with
decreases in the long-term metal price assumptions used by the industry, are indicators of impairment.
As part of the impairment determination, the fair value for Wolverine was estimated by calculating
the net present value of the estimated future cash-flows expected to be generated by the mining of the
Wolverine deposits subject to our royalty interest. The estimates of future cash-flows were derived from
a life-of-mine model developed by the Company using Yukon Zinc’s updated mine plan information.
The metal price assumptions used in the Company’s model were supported by consensus price
estimates obtained from a number of industry analysts. The future cash-flows were discounted using a
discount rate which reflects specific market risk factors the Company associates with the Wolverine
royalty interest. Following the impairment charge during the three months ended December 31, 2014,
the Wolverine royalty interest has a carrying value of $5.3 million as of June 30, 2015.
The Company had a royalty receivable of approximately $3.0 million associated with past due
royalty payments on the Wolverine interest. As a result of recent financial and operational results
experienced by Yukon Zinc and their decision to put the mine on care and maintenance, the Company
believes payment of the receivable is uncertain and provided for an allowance against the entire
receivable as of June 30, 2015. The expense associated with the allowance is recorded within General
and administrative expense on the Company’s consolidated statements of operations and comprehensive
(loss) income.
During the second half of calendar 2015, Yukon Zinc completed bankruptcy proceedings in the
Supreme Court of British Columbia and during the quarter ended March 31, 2016, we were made
aware of no further intentions to recommission the mine. Based upon the updated developments and
77
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
4. STREAM AND ROYALTY INTERESTS, NET (Continued)
limited remaining mineralized material at Wolverine, the Company wrote down the remaining carrying
value at Wolverine to zero as of March 31, 2016.
Other
As part of the Company’s regular asset impairment analysis during the three months ended
March 31, 2016, including consideration of recent operator/property updates and developments, the
Company determined that one production stage royalty interest and three exploration stage royalty
interests should be written down to zero for a total impairment of approximately $3.1 million.
As part of the Company’s regular asset impairment analysis during the three months ended
September 30, 2014, the Company determined that one production stage royalty interest and one
exploration stage royalty interest should be written down to zero for a total impairment of $1.8 million.
As part of the termination of the Tulsequah Chief gold and silver stream, as discussed below, the
Company wrote-off approximately $0.6 million of direct acquisition costs during the three months
ended December 31, 2014.
Termination of the Tulsequah Chief Gold and Silver Stream
On December 22, 2014, RGLD Gold terminated the Amended and Restated Gold and Silver
Purchase and Sale Agreement (the ‘‘Tulsequah Agreement’’), between RGLD Gold, the Company,
Chieftain Metals Inc. and Chieftain Metals Corp. (together, ‘‘Chieftain’’), relating to Chieftain’s
Tulsequah Chief mining project located in British Columbia, Canada. Pursuant to the terms of the
Agreement, Chieftain repaid RGLD Gold’s original $10.0 million advance payment. As a result of the
termination of the Tulsequah Agreement and repayment of our investment, the carrying value of the
Tulsequah Chief gold and silver stream, which included our $10.0 million investment and approximately
$0.6 million of direct acquisition costs, was reduced to zero during the three months ended
December 31, 2014.
5. AVAILABLE-FOR-SALE SECURITIES
The Company’s available-for-sale securities as of June 30, 2016 and 2015 consist of the following:
Non-current:
Seabridge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of June 30, 2016
(Amounts in thousands)
Unrealized
Cost Basis Gain
Loss
Fair Value
$—
$—
— —
$— $—
$—
$—
78
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
5. AVAILABLE-FOR-SALE SECURITIES (Continued)
Non-current:
Seabridge . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of June 30, 2015
(Amounts in thousands)
Unrealized
Cost Basis Gain
Loss
Fair Value
$9,565
$9,565
— (3,292)
$6,273
$— $(3,292)
$6,273
Our only significant available-for-sale security was the investment in Seabridge Gold, Inc.
(‘‘Seabridge’’) common stock, acquired in June 2011. During the fiscal year ended June 30, 2016, the
Company sold all of its Seabridge common stock, resulting in a realized gain of approximately
$2.3 million.
6. DEBT
The Company’s debt as of June 30, 2016 and 2015 consists of the following:
As of June 30, 2016
Unmortized Issuance
Debt
As of June 30, 2015
Unmortized Issuance
Debt
Principal
Discount
Costs
Total
Principal
Discount
Costs
Total
(Amounts in thousands)
(Amounts in thousands)
Convertible notes due
2019 . . . . . . . . . . . . . . $370,000 $(36,943) $(3,934) $329,123 $370,000 $(47,890) $(5,180) $316,930
(3,061)
— (3,438) 271,562
Revolving credit facility . .
— (3,061)
275,000
—
Total debt
. . . . . . . . . . . $645,000 $(36,943) $(7,372) $600,685 $370,000 $(47,890) $(8,241) $313,869
Convertible Senior Notes Due 2019
In June 2012, the Company completed an offering of $370 million aggregate principal amount of
convertible senior notes due 2019 (‘‘2019 Notes’’). The 2019 Notes bear interest at the rate of 2.875%
per annum, and the Company is required to make semi-annual interest payments on the outstanding
principal balance of the 2019 Notes on June 15 and December 15 of each year, beginning
December 15, 2012. The 2019 Notes mature on June 15, 2019. Interest expense recognized on the 2019
Notes for the fiscal years ended June 30, 2016, 2015 and 2014 was approximately $22.8 million,
$22.1 million and $21.4 million, respectively. Interest expense recognized includes the contractual
coupon interest, the accretion of the debt discount and amortization of the debt issuance costs, and is
recorded in Interest and other expense consolidated statements of operations and comprehensive income.
During the fiscal years ended June 30, 2016 and 2015, the Company made $10.6 million in interest
payments on our 2019 Notes.
Revolving credit facility
The Company maintains a $650 million revolving credit facility. As of June 30, 2016, the Company
had $275.0 million outstanding and $375.0 million available under the revolving credit facility. The
Company had no amount outstanding under the revolving credit facility as of June 30, 2015.
79
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
6. DEBT (Continued)
Borrowings under the revolving credit facility bear interest at a floating rate of LIBOR plus a
margin of 1.25% to 3.0%, based on Royal Gold’s leverage ratio. As of June 30, 2016, the interest rate
on borrowings under the revolving credit facility was LIBOR plus 2.25% for an all-in rate of 2.89%.
Royal Gold may repay any borrowings under the revolving credit facility at any time without premium
or penalty.
On March 16, 2016, the Company entered into Amendment No. 2 (the ‘‘Amendment’’) to the Sixth
Amended and Restated Revolving Credit Agreement, dated as of January 29, 2014 (as amended by
Amendment No. 1 thereto as of April 29, 2015, the ‘‘Revolving Credit Agreement’’), by and among the
Company, certain subsidiaries of the Company as guarantors, certain lenders from time to time party
thereto, and HSBC Bank USA, National Association, as administrative agent for the lenders. The
Amendment revises the Revolving Credit Agreement to extend the scheduled maturity date from
January 29, 2019 to March 16, 2021.
At June 30, 2016, the Company was in compliance with each financial covenant (leverage ratio and
consolidated net worth, as defined therein).
7. REVENUE
Revenue is comprised of the following:
Fiscal Years Ended June 30,
2016
2015
2014
Stream interests . . . . . . . . . . . . . . . . . . . . . . . . . .
Royalty interests . . . . . . . . . . . . . . . . . . . . . . . . . .
(Amounts in thousands)
$ 94,104
183,915
$ 27,209
209,953
$238,028
121,762
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$359,790
$278,019
$237,162
8. STOCK-BASED COMPENSATION
In November 2015, shareholders of the Company approved the 2015 Omnibus Long-Term
Incentive Plan (‘‘2015 LTIP’’). Under the 2015 LTIP, 2,500,000 shares of common stock have been
authorized for future grants to officers, directors, key employees and other persons. The 2015 LTIP
provides for the grant of stock options, unrestricted stock, restricted stock, dividend equivalent rights,
SSARs and cash awards. Any of these awards may, but need not, be made as performance incentives.
Stock options granted under the 2015 LTIP may be non-qualified stock options or incentive stock
options.
80
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
8. STOCK-BASED COMPENSATION (Continued)
The Company recognized stock-based compensation expense as follows:
For the Fiscal Years Ended
June 30,
2016
2015
2014
Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock appreciation rights . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
(Amounts in thousands)
$ 417
454
1,422
1,687
2,511
3,686
791
4,212
468
1,305
3,110
(2,303)
Total stock-based compensation expense . . . . . . . . . . . .
$10,039
$5,141
$ 2,580
Stock-based compensation expense is included within General and administrative expense on the
consolidated statements of operations and comprehensive (loss) income.
Stock Options and Stock Appreciation Rights
Stock option and SSARs awards are granted with an exercise price equal to the closing market
price of the Company’s stock at the date of grant. Stock option and SSARs awards granted to officers,
key employees and other persons vest based on one to three years of continuous service. Stock option
and SSARs awards have 10 year contractual terms.
To determine stock-based compensation expense for stock options and SSARs, the fair value of
each stock option and SSAR is estimated on the date of grant using the Black-Scholes-Merton
(‘‘Black-Scholes’’) option pricing model for all periods presented. The Black-Scholes model requires key
assumptions in order to determine fair value. Those key assumptions during the fiscal year 2016, 2015
and 2014 grants are noted in the following table:
Stock Options
SSARs
2016
2015
2014
2016
2015
2014
Weighted-average expected volatility . . . . . . . . . . . . . . . .
Weighted-average expected life in years . . . . . . . . . . . . .
Weighted-average dividend yield . . . . . . . . . . . . . . . . . . .
Weighted-average risk free interest rate . . . . . . . . . . . . .
36.9% 37.3% 43.6% 36.9% 36.6% 41.3%
5.5
1.06% 1.00% 1.00% 1.00% 1.00% 1.00%
1.6% 1.7% 1.7% 1.6% 1.7% 1.5%
5.5
5.5
4.8
5.4
5.3
The Company’s expected volatility is based on the historical volatility of the Company’s stock over
the expected option term. The Company’s expected option term is determined by historical exercise
patterns along with other known employee or company information at the time of grant. The risk free
interest rate is based on the zero-coupon U.S. Treasury bond at the time of grant with a term
approximate to the expected option term.
81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
8. STOCK-BASED COMPENSATION (Continued)
Stock Options
A summary of stock option activity for the fiscal year ended June 30, 2016, is presented below.
Outstanding at July 1, 2015 . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . .
Number of
Shares
96,155
25,437
(2,500)
(1,269)
Outstanding at June 30, 2016 . . . . . .
117,823
Weighted-
Average
Exercise
Price
$59.28
$55.71
$28.78
$69.94
$59.04
Exercisable at June 30, 2016 . . . . . .
73,366
$57.46
Weighted-
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic Value
(in thousands)
6.4
5.1
$1,632
$1,129
The weighted-average grant date fair value of options granted during the fiscal years ended
June 30, 2016, 2015 and 2014, was $18.05, $24.86 and $22.78, respectively. The total intrinsic value of
options exercised during the fiscal years ended June 30, 2016, 2015 and 2014, were $0.1 million,
$0.7 million, and $1.1 million, respectively.
As of June 30, 2016, there was approximately $0.5 million of total unrecognized stock-based
compensation expense related to non-vested stock options, which is expected to be recognized over a
weighted-average period of 1.7 years.
SSARs
A summary of SSARs activity for the fiscal year ended June 30, 2016, is presented below.
Outstanding at July 1, 2015 . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . .
Number of
Shares
277,118
97,817
(7,000)
(130)
Outstanding at June 30, 2016 . . . . . .
367,805
Weighted-
Average
Exercise
Price
$63.91
$56.54
$30.96
$62.14
$62.58
Exercisable at June 30, 2016 . . . . . .
194,863
$62.24
Weighted-
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic Value
(in thousands)
7.1
5.7
$3,861
$2,106
The weighted-average grant date fair value of SSARs granted during the fiscal years ended
June 30, 2016, 2015 and 2014 was $18.35, $24.42 and $21.15, respectively. The total intrinsic value of
SSARs exercised during the fiscal years ended June 30, 2016, 2015 and 2014, were $0.3 million,
$0.2 million, and $0.1 million, respectively.
82
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
8. STOCK-BASED COMPENSATION (Continued)
As of June 30, 2016, there was approximately $1.9 million of total unrecognized stock-based
compensation expense related to non-vested SSARs, which is expected to be recognized over a
weighted-average period of 1.7 years.
Other Stock-based Compensation
Performance Shares
During fiscal 2016, officers and certain employees were granted 48,422 shares of restricted
common stock that can be earned only upon the Company’s achievement of certain pre-defined
performance measures. Specifically, for performance shares granted in fiscal 2016, one-half of the
shares awarded may vest upon the Company’s achievement of annual growth in Net Gold Equivalent
Ounces (‘‘Net GEOs’’) (‘‘GEO Shares’’). The second one-half of performance shares granted in fiscal
2016 may vest based on the Company’s total shareholder return (‘‘TSR’’) compared to the TSRs of
other members of the Market Vectors Gold Miners ETF (GDX) (‘‘TSR Shares’’). GEO Shares and
TSR Shares may vest by linear interpolation in a range between zero shares if neither threshold Net
GEO and TSR metric is met; to 100% of GEO Shares and TSR Shares awarded if both target Net
GEO and TSR metrics are met; to 200% of the Net GEO and TSR shares awarded if both the
maximum Net GEO and TSR metrics are met. The GEO Shares will expire in five years from the date
of grant if the performance measure is not met, while the TSR Shares will expire in three years from
the date of grant if the TSR market condition and three year service condition are not met.
Performance shares granted prior to fiscal 2016 can be earned only if a single pre-defined
performance goal (growth of adjusted free cash flow on a per share, trailing twelve month basis) is met
within five years of the date of grant. If the performance goal is not earned by the end of this five year
period, the fiscal 2015 Performance Shares will be forfeited. Vesting of the fiscal 2015 performance
shares is subject to certain performance measures being met and can be based on an interim earn out
of 25%, 50%, 75% or 100%.
The Company measures the fair value of the GEO Shares and performance shares granted prior to
fiscal 2016 based upon the market price of our common stock as of the date of grant. In accordance
with ASC 718, the measurement date for the GEO Shares and performance shares granted prior to
fiscal 2016 will be determined at such time that the performance goals are attained or that it is
probable they will be attained. At such time that it is probable that a performance condition will be
achieved, compensation expense will be measured by the number of shares that will ultimately be
earned based on the grant date market price of our common stock. For shares that were previously
estimated to be probable of vesting and are no longer deemed to be probable of vesting, compensation
expense is reversed during the period in which it is determined they are no longer probable of vesting.
Interim recognition of compensation expense will be made at such time as management can reasonably
estimate the number of shares that will be earned.
In accordance with ASC 718, provided the market condition within the TSR Shares, the Company
measured the grant date fair value using a Monte Carlo valuation model. The fair value of the TSR
Shares ($35.15 per share) is multiplied by the target number of TSR Shares granted to determine total
stock-based compensation expense. Total stock-based compensation expense of the TSR Shares is
amortized on a straight-line basis over the requisite service period, or three years. Stock-based
compensation expense for the TSR Shares is recognized provided the requisite service period is
rendered, regardless of when, if ever, the TSR market condition is satisfied. The Company will reverse
83
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
8. STOCK-BASED COMPENSATION (Continued)
previously recognized stock-based compensation expense attributable to the TSR Shares only if the
requisite service period is not rendered.
A summary of the status of the Company’s non-vested Performance Shares for the fiscal year
ended June 30, 2016, is presented below:
Weighted-
Average
Number of Grant Date
Fair Value
Shares
Non-vested at July 1, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
200,325
48,422
(10,781)
(23,750)
(4,038)
Non-vested at June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . .
210,178
$66.52
$45.63
$75.06
$49.66
$35.15
$63.78
As of June 30, 2016, total unrecognized stock-based compensation expense related to Performance
Shares was approximately $2.3 million, which is expected to be recognized over the average remaining
vesting period of 1.5 years.
Restricted Stock
Officers, non-executive directors and certain employees may be granted shares of restricted stock
that vest on continued service alone (‘‘Restricted Stock’’). During fiscal 2016, officers and certain
employees were granted 50,507 shares of Restricted Stock. Restricted Stock awards granted to officers
and certain employees vest over three years beginning after a two-year holding period from the date of
grant with one-third of the shares vesting in years three, four and five, respectively. Also during fiscal
year 2016, our non-executive directors were granted 22,680 shares of Restricted Stock. The
non-executive directors’ shares of Restricted Stock vest 50% immediately and 50% one year after the
date of grant.
Shares of Restricted Stock represent issued and outstanding shares of common stock, with dividend
and voting rights. The Company measures the fair value of the Restricted Stock based upon the market
price of our common stock as of the date of grant. Restricted Stock is amortized over the applicable
vesting period using the straight-line method. Unvested shares of Restricted Stock are subject to
forfeiture upon termination of employment or service with the Company.
84
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
8. STOCK-BASED COMPENSATION (Continued)
A summary of the status of the Company’s non-vested Restricted Stock for the fiscal year ended
June 30, 2016, is presented below:
Weighted-
Average
Number of Grant Date
Fair Value
Shares
Non-vested at July 1, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
154,807
73,187
(51,472)
—
Non-vested at June 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . .
176,522
$66.23
$56.25
$61.54
$ —
$63.46
As of June 30, 2016, total unrecognized stock-based compensation expense related to Restricted
Stock was approximately $5.5 million, which is expected to be recognized over the weighted-average
vesting period of 3.0 years.
9. STOCKHOLDERS’ EQUITY
Preferred Stock
The Company has 10,000,000 authorized and unissued shares of $.01 par value Preferred Stock as
of June 30, 2016 and 2015.
Common Stock Issuances
During the fiscal years ended June 30, 2016, 2015 and 2014, options to purchase 2,500, 20,488 and
34,495 shares, respectively, were exercised, resulting in proceeds of approximately $0.1 million,
$0.8 million and $1.1 million, respectively.
Stockholders’ Rights Plan
On September 10, 2007, the Company entered into the First Amended and Restated Rights
Agreement, dated September 10, 2007 (the ‘‘Rights Agreement’’). The Rights Agreement expires on
September 10, 2017. The Rights Agreement was approved by the Company’s board of directors (the
‘‘Board’’).
The Rights Agreement is intended to deter coercive or abusive tender offers and market
accumulations. The Rights Agreement is designed to encourage an acquirer to negotiate with the
Board and to enhance the Board’s ability to act in the best interests of all the Company’s stockholders.
Under the Rights Agreement, each stockholder of the Company holds one preferred stock
purchase right (a ‘‘Right’’) for each share of Company common stock held. The Rights generally
become exercisable only in the event that an acquiring party accumulates 15 percent or more of the
Company’s outstanding shares of common stock. If this were to occur, subject to certain exceptions,
each Right (except for the Rights held by the acquiring party) would allow its holders to purchase one
one-thousandth of a newly issued share of Series A junior participating preferred stock of Royal Gold
or the Company’s common stock with a value equal to twice the exercise price of the Right, initially set
at $175 under the terms and conditions set forth in the Rights Agreement.
85
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
10. EARNINGS PER SHARE (‘‘EPS’’)
Basic earnings (loss) per common share were computed using the weighted average number of
shares of common stock outstanding during the period, considering the effect of participating securities.
Unvested stock-based compensation awards that contain non-forfeitable rights to dividends or dividend
equivalents are considered participating securities and are included in the computation of earnings per
share pursuant to the two-class method. The Company’s unvested restricted stock awards contain
non-forfeitable dividend rights and participate equally with common stock with respect to dividends
issued or declared. The Company’s unexercised stock options, unexercised SSARs and unvested
performance stock do not contain rights to dividends. Under the two-class method, the earnings (loss)
used to determine basic earnings (loss) per common share are reduced by an amount allocated to
participating securities. Use of the two-class method has an immaterial impact on the calculation of
basic and diluted earnings (loss) per common share.
The following table summarizes the effects of dilutive securities on diluted EPS for the period:
Fiscal Years Ended June 30,
2016
2015
2014
(in thousands, except share data)
Net (loss) income available to Royal Gold common
stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(77,149) $
51,965
$
62,641
Weighted-average shares for basic EPS . . . . . . . . . . . . . . . .
Effect of other dilutive securities . . . . . . . . . . . . . . . . . . . . .
65,074,455
—
65,007,861
117,312
64,909,149
117,107
Weighted-average shares for diluted EPS . . . . . . . . . . . . . . .
65,074,455
65,125,173
65,026,256
Basic (loss) earnings per share . . . . . . . . . . . . . . . . . . . . . . .
Diluted (loss) earnings per share . . . . . . . . . . . . . . . . . . . . .
$
$
(1.18) $
(1.18) $
0.80
0.80
$
$
0.96
0.96
The calculation of weighted average shares includes all of our outstanding common stock. The
Company intends to settle the principal amount of the 2019 Notes in cash. As a result, there will be no
impact to diluted earnings per share unless the share price of the Company’s common stock exceeds
the conversion price of $105.31.
11. INCOME TAXES
For financial reporting purposes, Income before income taxes includes the following components:
Fiscal Years Ended June 30,
2016
2015
2014
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(Amounts in thousands)
(230) $17,569
44,675
$17,033
65,894
(21,528)
$(21,758) $62,244
$82,927
86
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
11. INCOME TAXES (Continued)
The Company’s Income tax expense consisted of:
Current:
Federal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred and others:
Federal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Years Ended June 30,
2016
2015
2014
(Amounts in thousands)
$45,878
135
19,650
$ 22,418
(36)
14,835
$ (3,663)
334
30,950
$65,663
$ 37,217
$27,621
$ (6,986) $ (5,506) $ (4,122)
(26)
(4,018)
(49)
(22,096)
(78)
2,081
Total income tax expense . . . . . . . . . . . . . . . . . . . . .
$60,680
$ 9,566
$19,455
$ (4,983) $(27,651) $ (8,166)
The provision for income taxes for the fiscal years ended June 30, 2016, 2015 and 2014, differs
from the amount of income tax determined by applying the applicable United States statutory federal
income tax rate to pre-tax income (net of non-controlling interest in income of consolidated subsidiary
and loss from equity investment) from operations as a result of the following differences:
Total expense computed by applying federal rates . . . . . . . . . . . . . . . . .
State and provincial income taxes, net of federal benefit . . . . . . . . . . . .
Excess depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimates for uncertain tax positions . . . . . . . . . . . . . . . . . . . . . . . . . .
Statutory tax attributable to non-controlling interest . . . . . . . . . . . . . . .
Effect of foreign earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of foreign earnings indefinitely reinvested . . . . . . . . . . . . . . . . . .
Canadian rate adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chilean tax reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized foreign exchange gains . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Years Ended June 30,
2016
2015
2014
(Amounts in thousands)
$ (7,615) $ 21,786
25
(1,429)
1,404
(211)
6,536
(7,601)
4,070
(2,481)
(10,949)
(359)
(1,225)
(1)
(882)
1,866
1,838
61,576
3,406
—
—
(2,439)
1,641
1,290
$29,024
334
(1,114)
(7,386)
(293)
1,141
(1,700)
—
—
(367)
(594)
410
$60,680
$ 9,566
$19,455
The effective tax rate includes the impact of certain undistributed foreign subsidiary earnings for
which we have not provided U.S. taxes because we plan to reinvest such earnings indefinitely outside
the United States. The Company has the ability and intent to indefinitely reinvest these foreign
earnings based on revenue and cash projections of our other investments, current cash on hand, and
availability under our revolving credit facility. No deferred tax has been provided on the difference
87
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
11. INCOME TAXES (Continued)
between the tax basis in the stock of the consolidated subsidiary and the amount of the subsidiary’s net
equity determined for financial reporting purposes.
The tax effects of temporary differences and carryforwards, which give rise to our deferred tax
assets and liabilities at June 30, 2016 and 2015, are as follows:
2016
2015
(Amounts in thousands)
Deferred tax assets:
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
5,691
12,385
4,610
22,686
(2,100)
4,393
16,087
3,904
24,384
(4,262)
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 20,586
$ 20,122
Deferred tax liabilities:
Mineral property basis . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized foreign exchange gains . . . . . . . . . . . . . . . . . . . .
2019 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(127,337) $(133,646)
936
(16,384)
(1,658)
(1,273)
(12,639)
(124)
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
(141,373)
(150,752)
Total net deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(120,787) $(130,630)
The Company reviews the measurement of its deferred tax assets at each balance sheet date. All
available evidence, both positive and negative, is considered in determining whether, based upon the
weight of the evidence, it is more likely than not that some portion or all of the deferred tax asset will
not be realized. As of June 30, 2016 and 2015, the Company had $2.1 million and $4.3 million of
valuation allowances recorded, respectively. The valuation allowance remaining at June 30, 2016 is
attributable to capital loss carryforwards in non-US subsidiaries.
At June 30, 2016 and 2015, the Company had $59.5 million and $55 million of net operating loss
carry forwards, respectively. The increase in the net operating loss carry forwards is primarily
attributable to the impairment charges in non-U.S. subsidiaries. The majority of the tax loss carry
forwards are in jurisdictions that allow a twenty year carry forward period. As a result, these losses do
not begin to expire until the 2028 tax year, and the Company anticipates the losses will be fully utilized.
As of June 30, 2016 and 2015, the Company had $16.9 million and $15.1 million of unrecognized
tax benefits, respectively. If recognized, these unrecognized tax benefits would positively impact the
88
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
11. INCOME TAXES (Continued)
Company’s effective income tax rate. A reconciliation of the beginning and ending amount of gross
unrecognized tax benefits is as follows:
2016
2015
2014
Total gross unrecognized tax benefits at beginning of year . . . . . . . . . . . .
Additions / Reductions for tax positions of current year . . . . . . . . . . . . .
Reductions due to settlements with taxing authorities . . . . . . . . . . . . . . .
Reductions due to lapse of statute of limitations . . . . . . . . . . . . . . . . . .
(Amounts in thousands)
$13,725
1,662
(257)
$21,166
(1,052)
(296)
— (6,093)
$15,130
1,866
—
—
Total amount of gross unrecognized tax benefits at end of year . . . . . . . .
$16,996
$15,130
$13,725
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction,
and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to
U.S. Federal, state and local, and non-U.S. income tax examinations by tax authorities for fiscal years
before 2010. As a result of (i) statutes of limitation that will begin to expire within the next 12 months
in various jurisdictions, (ii) possible settlements of audit-related issues with taxing authorities in various
jurisdictions with respect to which none of the issues are individually significant, and (iii) additional
accrual of exposure and interest on existing items, the Company believes that it is reasonably possible
that the total amount of its net unrecognized income tax benefits will not decrease in the next
12 months.
The Company’s continuing practice is to recognize interest and/or penalties related to
unrecognized tax benefits as part of its income tax expense. At June 30, 2016 and 2015, the amount of
accrued income-tax-related interest and penalties was $5.7 million and $4.6 million, respectively.
12. SUPPLEMENTAL CASH FLOW INFORMATION
The Company’s supplemental cash flow information for the fiscal years ending June 30, 2016, 2015
and 2014 is as follows:
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes, net of refunds . . . . . . . . . . . . . . . . . .
$17,691
$76,072
$10,638
$20,272
$10,638
$27,322
Non-cash investing and financing activities:
Dividends declared . . . . . . . . . . . . . . . . . . . . . . . . .
$59,388
$56,715
$54,049
2016
2015
2014
(Amounts in thousands)
89
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
13. FAIR VALUE MEASUREMENTS
ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used
to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to
unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under
ASC 820 are described below:
Level 1: Quoted prices for identical instruments in active markets;
Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or
similar instruments in markets that are not active; and model-derived valuations in which all
significant inputs and significant value drivers are observable in active markets; and
Level 3: Prices or valuation techniques requiring inputs that are both significant to the fair value
measurement and unobservable (supported by little or no market activity).
The following table sets forth the Company’s financial assets measured at fair value on a recurring
basis (at least annually) by level within the fair value hierarchy.
Carrying
Amount
At June 30, 2016
Fair Value
Total
Level 1
Level 2
Level 3
Assets (In thousands):
Warrants(1)
. . . . . . . . . . . . . . .
$
2,438
Total assets . . . . . . . . . . . . . . . . .
Liabilities (In thousands):
$
$
2,438
2,438
$
$
— $2,438
— $2,438
$—
$—
Debt(2)
. . . . . . . . . . . . . . . . . .
$410,057
$390,813
$390,813
$ — $—
Total liabilities . . . . . . . . . . . . . .
$390,813
$390,813
$ — $—
(1)
(2)
Included in Other assets on the Company’s consolidated balance sheets.
Included in the carrying amount is the equity component of our 2019 Notes in the
amount of $77 million, which is included within Additional paid-in capital in the
Company’s consolidated balance sheets.
The Company’s debt classified within Level 1 of the fair value hierarchy is valued using quoted
prices in an active market. The carrying value of the Company’s revolving credit facility (Note 6)
approximates fair value as of June 30, 2016. During the fiscal year ended June 30, 2016, the warrants
issued by Golden Star (Note 3) were added to the Level 2 fair value hierarchy.
As of June 30, 2016, the Company also had assets that, under certain conditions, are subject to
measurement at fair value on a non-recurring basis like those associated with stream and royalty
interests, intangible assets and other long-lived assets. For these assets, measurement at fair value in
periods subsequent to their initial recognition is applicable if any of these assets are determined to be
impaired. If recognition of these assets at their fair value becomes necessary, such measurements will
be determined utilizing Level 3 inputs. Refer to Note 4 for discussion of inputs used to develop fair
value for those stream and royalty interests that were determined to be impaired during the twelve
months ended June 30, 2016 and 2015.
90
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
14. MAJOR SOURCES OF REVENUE
Operators that contributed greater than 10% of the Company’s total revenue for any of fiscal years
2016, 2015 or 2014 were as follows (revenue amounts in thousands):
Operator
Thompson Creek . . . . . . . . .
Barrick . . . . . . . . . . . . . . . . .
Teck . . . . . . . . . . . . . . . . . . .
Fiscal Year 2016
Fiscal Year 2015
Fiscal Year 2014
Revenue
$125,438
49,683
49,243
Percentage of
total
revenue
34.9%
13.8%
13.7%
Percentage of
total
revenue
33.8%
8.9%
13.7%
Percentage of
total
revenue
11.5%
8.2%
20.6%
Revenue
$27,209
19,456
48,777
Revenue
$94,104
24,849
38,033
15. COMMITMENTS AND CONTINGENCIES
Rainy River Gold and Silver Stream Acquisition
As of June 30, 2016, the Company has a remaining commitment, subject to certain conditions, of
$75.0 million as part of its Rainy River gold and silver stream acquisition in August 2015 (Note 3).
Wassa and Prestea Gold Stream Acquisition and Amendment
As of June 30, 2016, the Company has a remaining commitment, subject to certain conditions, of
$50.0 million as part of its Wassa and Prestea gold stream acquisition (July 2015) and amendment
(December 2015) as discussed further in Note 3.
Ilovica Gold Stream Acquisition
As of June 30, 2016, the Company has a remaining commitment, subject to certain conditions, of
$163.75 million as part of its Ilovica gold stream acquisition in October 2014.
Voisey’s Bay
The Company indirectly owns a royalty on the Voisey’s Bay mine in Newfoundland and Labrador
owned by Vale Newfoundland & Labrador Limited (‘‘VNL’’). The royalty is directly owned by the
Labrador Nickel Royalty Limited Partnership (‘‘LNRLP’’), in which the Company’s wholly-owned
indirect subsidiary, Voisey’s Bay Holding Corporation, is the general partner and 90% owner. The
remaining 10% interest in LNRLP is owned by Altius Investments Limited, a company unrelated to
Royal Gold.
On December 5, 2014, LNRLP filed amendments to its October 16, 2009 Statement of Claim in
the Supreme Court of Newfoundland and Labrador Trial Division against Vale Inco Limited, now
known as Vale Canada Limited (‘‘Vale Canada’’) and its wholly-owned subsidiaries, Vale Inco Atlantic
Sales Limited and VNL, related to calculation of the NSR on the sale of concentrates, including nickel
concentrates, from the Voisey’s Bay mine. LNRLP asserts that the defendants have incorrectly
calculated the NSR since production at Voisey’s Bay began in late 2005, have indicated an intention to
calculate the NSR in a manner LNRLP believes will violate the royalty agreement as Voisey’s Bay
concentrates are processed at Vale’s new Long Harbour processing facility, and have breached their
contractual duties of good faith and honest performance in several ways. LNRLP requests an order in
respect of the correct calculation of future payments, and unspecified damages for non-payment and
91
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ROYAL GOLD, INC.
15. COMMITMENTS AND CONTINGENCIES (Continued)
underpayment of past royalties to the date of the claim, together with additional damages until the date
of trial, interest, costs and other damages. The litigation is in the discovery phase.
16. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of selected quarterly financial information (unaudited). Some amounts
in the below table may not sum-up in total as a result of rounding.
Operating
income
(loss)
Net (loss) income
attributable to
Royal Gold
stockholders
Basic (loss)
earnings per
share
Diluted (loss)
earnings per
share
Revenue
(Amounts in thousands except per share data)
Fiscal year 2016 quarter-ended:
September 30 . . . . . . . . . . . . . . . .
December 31 . . . . . . . . . . . . . . . .
March 31 . . . . . . . . . . . . . . . . . . .
June 30 . . . . . . . . . . . . . . . . . . . . .
$ 74,056
98,118
93,487
94,129
$ 21,185
27,173
(72,058)
28,516
$359,790
$ 4,816
$(45,046)
15,114
(67,656)
20,439
$(77,149)
$(0.69)
0.23
(1.04)
0.32
$(1.18)
(Amounts in thousands except per share data)
Fiscal year 2015 quarter-ended:
September 30 . . . . . . . . . . . . . . . .
December 31 . . . . . . . . . . . . . . . .
March 31 . . . . . . . . . . . . . . . . . . .
June 30 . . . . . . . . . . . . . . . . . . . . .
$ 69,026
61,304
74,110
73,579
$ 29,539
(2,022)
32,150
27,568
$ 18,680
(6,548)
25,014
14,819
$278,019
$ 87,235
$ 51,965
$ 0.29
(0.10)
0.38
0.23
$ 0.80
$(0.69)
0.23
(1.04)
0.32
$(1.18)
$ 0.29
(0.10)
0.38
0.23
$ 0.80
17. SUBSEQUENT EVENTS
Mount Milligan Commitment Letter
On July 5, 2016, we entered into a binding commitment letter with Centerra Gold Inc.
(‘‘Centerra’’) setting forth the key terms and conditions of a future amendment to our Mount Milligan
streaming agreement in connection with the proposed acquisition by Centerra of Thompson Creek
Metals Company Inc. (‘‘Thompson Creek’’) by Plan of Arrangement under the Arrangement
Agreement executed between Centerra and Thompson Creek, as announced on July 5, 2016 (the
‘‘Centerra Acquisition’’). Thompson Creek is the parent company of Terrane Metals Corp. (‘‘Terrane’’),
which owns and operates the Mount Milligan copper-gold mine. Our obligation to amend the Mount
Milligan streaming agreement is subject to the consummation of the Centerra Acquisition and other
customary conditions set forth in the commitment letter.
Pursuant to the terms of the commitment letter, we and Centerra have agreed to amend the
existing streaming agreement, whereby, among other things, the existing 52.25% gold streaming interest
will be amended to 35.00% and we will obtain an 18.75% copper streaming interest at Mount Milligan
at a price equal to 15% of the spot price for each metric tonne of copper delivered. The Centerra
Acquisition is expected to close in our first or second quarter of fiscal 2017.
92
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
As of June 30, 2016, the Company’s management, with the participation of the President and Chief
Executive Officer (the principal executive officer) and Chief Financial Officer and Treasurer (the
principal financial and accounting officer) of the Company, carried out an evaluation of the
effectiveness of the design and operation of the Company’s disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the
‘‘Exchange Act’’)). Based on such evaluation, the Company’s President and Chief Executive Officer and
its Chief Financial Officer and Treasurer have concluded that, as of June 30, 2016, the Company’s
disclosure controls and procedures were effective to provide reasonable assurance that information
required to be disclosed by the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the required time periods and that such
information is accumulated and communicated to the Company’s management, including the President
and Chief Executive Officer and its Chief Financial Officer and Treasurer, as appropriate to allow
timely decisions regarding required disclosure.
Disclosure controls and procedures involve human diligence and compliance and are subject to
lapses in judgment and breakdowns resulting from human failures. As a result, a control system, no
matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control system must reflect the fact
that there are resource constraints and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, within the Company have been
detected.
(b) Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal
control over financial reporting is designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles.
Management assessed the effectiveness of our internal control over financial reporting as of
June 30, 2016. In making this assessment, management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated
Framework (2013 Framework). Based on management’s assessment and those criteria, management
concluded that, as of June 30, 2016, our internal control over financial reporting is effective.
Our management, including our President and Chief Executive Office (the principal executive
officer) and Chief Financial Officer and Treasurer (the principal financial and accounting officer), does
not expect that our disclosure controls and procedures or our internal controls will prevent all error
and all fraud. A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system are met. Further, the
design of a control system must reflect the fact that there are resource constraints and the benefits of
controls must be considered relative to their costs. Because of the inherent limitations in all control
93
systems, no evaluation of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within the Company have been detected.
Our independent registered public accounting firm, Ernst & Young LLP, has issued an attestation
report on our internal control over financial reporting as of June 30, 2016.
(c) Changes in Internal Control over Financial Reporting
There was no change in the Company’s internal control over financial reporting (as defined in
Rule 13a-15(f) under the Exchange Act during our fourth fiscal quarter ended June 30, 2016, that has
materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
(d) Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of Royal Gold, Inc.
We have audited Royal Gold Inc.’s internal control over financial reporting as of June 30, 2016,
based on criteria established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Royal
Gold, Inc.’s management is responsible for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal control over financial reporting
included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the company’s internal control over financial reporting based
on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained
in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion, Royal Gold, Inc. maintained, in all material respects, effective internal control over
financial reporting as of June 30, 2016, based on the COSO criteria.
94
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of Royal Gold, Inc. as of June 30,
2016 and 2015, and the related consolidated statements of operations and comprehensive (loss) income,
changes in equity and cash flows for each of the three years in the period ended June 30, 2016 of
Royal Gold, Inc. and our report dated August 11, 2016 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Denver, Colorado
August 11, 2016
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item is included in the Company’s Proxy Statement for its 2016
Annual Stockholders Meeting to be filed with the SEC within 120 days after June 30, 2016, and is
incorporated by reference in this Annual Report on Form 10-K.
The Company’s Code of Business Conduct and Ethics within the meaning of Item 406 of
Regulation S-K adopted by the SEC under the Exchange Act that applies to our principal executive
officer and principal financial and accounting officer is available on the Company’s website at
www.royalgold.com and in print without charge to any stockholder who requests a copy. Requests for
copies should be directed to Royal Gold, Inc., Attention: General Counsel and Secretary,
1660 Wynkoop Street, Suite 1000, Denver, Colorado, 80202. The Company intends to satisfy the
disclosure requirements of Item 5.05 of Form 8-K regarding any amendment to, or a waiver from, a
provision of the Company’s Code of Business Conduct and Ethics by posting such information on the
Company’s website.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is included in the Company’s Proxy Statement for its 2016
Annual Stockholders Meeting to be filed with the SEC within 120 days after June 30, 2016, and is
incorporated by reference in this Annual Report on Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The information required by this item is included in the Company’s Proxy Statement for its 2016
Annual Stockholders Meeting to be filed with the SEC within 120 days after June 30, 2016, and is
incorporated by reference in this Annual Report on Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
The information required by this item is included in the Company’s Proxy Statement for its 2016
Annual Stockholders Meeting to be filed with the SEC within 120 days after June 30, 2016, and is
incorporated by reference in this Annual Report on Form 10-K.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is included in the Company’s Proxy Statement for its 2016
Annual Stockholders Meeting to be filed with the SEC within 120 days after June 30, 2016, and is
incorporated by reference in this Annual Report on Form 10-K.
95
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements
Index to Financial Statements
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations and Comprehensive (Loss) Income . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page
57
58
59
60
61
62
(b) Exhibits
Reference is made to the Exhibit Index beginning on page 99 hereof.
96
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SIGNATURES
ROYAL GOLD, INC.
Date: August 11, 2016
By:
/s/ TONY JENSEN
Tony Jensen
President, Chief Executive Officer and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated.
Date: August 11, 2016
By:
/s/ TONY JENSEN
Tony Jensen
President, Chief Executive Officer and Director
(Principal Executive Officer)
Date: August 11, 2016
By:
/s/ STEFAN L. WENGER
Stefan Wenger
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
Date: August 11, 2016
By:
/s/ WILLIAM M. HAYES
William M. Hayes
Chairman
Date: August 11, 2016
By:
/s/ GORDON J. BOGDEN
Gordon J. Bogden
Director
Date: August 11, 2016
By:
/s/ M. CRAIG HAASE
M. Craig Haase
Director
Date: August 11, 2016
By:
/s/ KEVIN MCARTHUR
Kevin McArthur
Director
97
Date: August 11, 2016
By:
/s/ JAMIE SOKALSKY
Jamie Sokalsky
Director
Date: August 11, 2016
By:
/s/ CHRIS M.T. THOMPSON
Chris M. T. Thompson
Director
Date: August 11, 2016
By:
/s/ RONALD J. VANCE
Ronald J. Vance
Director
98
Exhibit
Number
2.1
3.1
3.2
3.3
3.4
4.1
4.2
4.3
4.4
4.5
4.6
Exhibit Index
Description
Amended and Restated Arrangement Agreement, dated January 15, 2010, among Royal
Gold, Inc., RG Exchangeco Inc. (formerly, 7296355 Canada Ltd.) and International
Royalty Corporation (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K
on January 22, 2010 and incorporated herein by reference)
Restated Certificate of Incorporation, as amended (filed as Exhibit 3.1 to the Company’s
Quarterly Report on February 8, 2008 and incorporated herein by reference)
Amended and Restated Bylaws, as amended on August 28, 2014 (filed as Exhibit 3.1 to
the Company’s Current Report on Form 8-K on September 4, 2014 and incorporated
herein by reference)
Amended and Restated Certificate of Designations of Series A Junior Participating
Preferred Stock of Royal Gold, Inc. (filed as Exhibit 3.1 to the Company’s Current
Report on Form 8-K on September 10, 2007 and incorporated herein by reference)
Certificate of Designations, Preferences and Rights of the Special Voting Preferred Stock
of Royal Gold, Inc. (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K
on February 23, 2010 and incorporated herein by reference)
First Amended and Restated Rights Agreement dated September 10, 2007 between
Royal Gold, Inc. and Computershare Trust Company, N.A. (filed as Exhibit 4.1 to the
Company’s Registration Statement on Form 8-A on September 10, 2007 and incorporated
herein by reference)
Stockholder Agreement dated April 3, 2009 by and among Royal Gold, Inc., Compa˜n´ıa
Minera Carmen de Andacollo and Teck Cominco Limited (filed as Exhibit 4.1 to the
Company’s Current Report on Form 8-K filed on April 6, 2009 and incorporated herein
by reference)
Amendment No. 1 to the Stockholder Agreement, dated January 12, 2010 (filed as
Exhibit 4.1 to the Company’s Current Report on Form 8-K on January 15, 2010 and
incorporated herein by reference)
Appendix I to Schedule B of the Amended and Restated Arrangement Agreement, dated
January 15, 2010, among Royal Gold, Inc., RG Exchangeco Inc. (formerly, 7296355
Canada Ltd.) and International Royalty Corporation (filed as Exhibit 2.1 to the
Company’s Current Report on Form 8-K on January 22, 2010 and incorporated herein by
reference)
Indenture among Royal Gold, Inc., Wells Fargo Bank, National Association and
Computershare Trust Company of Canada, dated June 20, 2012 (filed as Exhibit 4.1 to
the Company’s Current Report on Form 8-K on June 20, 2012 and incorporated herein
by reference)
Supplemental Indenture among Royal Gold, Inc., Wells Fargo Bank, National Association
and Computershare Trust Company of Canada, dated June 20, 2012 (filed as Exhibit 4.2
to the Company’s Current Report on Form 8-K on June 20, 2012 and incorporated
herein by reference)
10.1(cid:2) 2004 Omnibus Long-Term Incentive Plan, as amended (filed as Exhibit 10.1 to Royal
Gold’s Current Report on Form 8-K filed on September 3, 2013 and incorporated herein
by reference)
99
Exhibit
Number
Description
10.2(cid:2) 2015 Omnibus Long-Term Incentive Plan (filed as Exhibit 10.1 to Royal Gold’s Current
Report on Form 8-K filed on November 16, 2015 and incorporated herein by reference)
10.3(cid:2) Form of Incentive Stock Option Agreement under Royal Gold’s 2004 Omnibus
Long-Term Incentive Plan (filed as Exhibit 10.2 to Royal Gold’s Current Report on
Form 8-K filed on November 7, 2008 and incorporated herein by reference)
10.4(cid:2) Form of Incentive Stock Option Agreement (Officer) under Royal Gold’s 2004 Omnibus
Long-Term Incentive Plan (filed as Exhibit 10.2 to Royal Gold’s Current Report on
Form 8-K filed on September 3, 2013 and incorporated herein by reference)
10.5(cid:2) Form of Non-qualified Stock Option Agreement under Royal Gold’s 2004 Omnibus
Long-Term Incentive Plan (filed as Exhibit 10.3 to Royal Gold’s Current Report on
Form 8-K filed on November 7, 2008 and incorporated herein by reference)
10.6(cid:2) Form of Restricted Stock Agreement under Royal Gold’s 2004 Omnibus Long-Term
Incentive Plan (filed as Exhibit 10.4 to Royal Gold’s Current Report on Form 8-K filed
on November 7, 2008 and incorporated herein by reference)
10.7(cid:2) Form of Restricted Stock Agreement under Royal Gold’s 2004 Omnibus Long-Term
Incentive Plan (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K filed
on August 17, 2012 and incorporated herein by reference)
10.8(cid:2) Form of Director Restricted Stock Agreement under Royal Gold’s 2004 Omnibus
Long-Term Incentive Plan (filed as Exhibit 10.3 to Royal Gold’s Current Report on
Form 8-K filed on September 3, 2013 and incorporated herein by reference)
10.9(cid:2) Form of Restricted Stock Agreement (Officer) under Royal Gold’s 2004 Omnibus
Long-Term Incentive Plan (filed as Exhibit 10.4 to Royal Gold’s Current Report on
Form 8-K filed on September 3, 2013 and incorporated herein by reference)
10.10(cid:2) Form of Performance Share Agreement under Royal Gold’s 2004 Omnibus Long-Term
Incentive Plan (filed as Exhibit 10.5 to Royal Gold’s Current Report on Form 8-K filed
on November 7, 2008 and incorporated herein by reference)
10.11(cid:2) Form of Performance Share Agreement under Royal Gold’s 2004 Omnibus Long-Term
Incentive Plan (1) (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K
filed on August 24, 2011 and incorporated herein by reference)
10.12(cid:2) Form of Performance Share Agreement under Royal Gold’s 2004 Omnibus Long-Term
Incentive Plan (2) (filed as Exhibit 10.2 to Royal Gold’s Current Report on Form 8-K
filed on August 24, 2011 and incorporated herein by reference)
10.13(cid:2) Form of Performance Share Agreement (Officer) under Royal Gold’s 2004 Omnibus
Long-Term Incentive Plan (filed as Exhibit 10.5 to Royal Gold’s Current Report on
Form 8-K filed on September 3, 2013 and incorporated herein by reference)
10.14(cid:2) Form of Stock Appreciation Rights Agreement under Royal Gold’s 2004 Omnibus
Long-Term Incentive Plan (filed as Exhibit 10.6 to Royal Gold’s Current Report on
Form 8-K filed on November 7, 2008 and incorporated herein by reference)
10.15(cid:2) Form of Stock Appreciation Rights Agreement—Stock Settled (Officer) under Royal
Gold’s 2004 Omnibus Long-Term Incentive Plan (filed as Exhibit 10.6 to Royal Gold’s
Current Report on Form 8-K filed on September 3, 2013 and incorporated herein by
reference)
100
Exhibit
Number
Description
10.16(cid:2) Form of Amended and Restated Indemnification Agreement (filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K on September 4, 2014 and incorporated herein
by reference)
10.17(cid:2) Form of Employment Agreement by and between Royal Gold, Inc. and Tony Jensen
(filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K filed on July 8, 2016
and incorporated herein by reference)
10.18(cid:2) Form of Employment Agreement by and between Royal Gold, Inc. and each of the
following: Karli Anderson, William Heissenbuttel, Mark Isto, Bruce Kirchhoff and Stefan
Wenger (filed as Exhibit 10.2 to Royal Gold’s Current Report on Form 8-K filed on
July 8, 2016 and incorporated herein by reference)
10.19(cid:2) Form of Award Modification Agreement by and between Royal Gold, Inc. and each of
the following: Stanley Dempsey, Tony Jensen, Karen Gross and Bruce Kirchhoff (filed as
Exhibit 10.3 to Royal Gold’s Current Report on Form 8-K filed on September 19, 2008
and incorporated herein by reference)
10.20
10.21
10.22
10.23
10.24
10.25
Sixth Amended and Restated Revolving Credit Agreement among Royal Gold, Inc., High
Desert Mineral Resources, Inc., RG Exchangeco Inc., RG Mexico, Inc., the additional
guarantors from time to time party thereto, the lenders from time to time party thereto,
and HSBC Bank USA, National Association, as administrative agent for the lenders,
dated January 29, 2014 (filed as Exhibit 10.1 to the Company’s Current Report on
Form 8-K on January 30, 2014 and incorporated herein by reference)
Amendment No. 1 to Sixth Amended and Restated Revolving Credit Agreement, among
Royal Gold, Inc., High Desert Mineral Resources, Inc., RG Exchangeco Inc.,
RG Mexico, Inc., the additional guarantors from time to time party thereto, the lenders
from time to time party thereto, and HSBC Bank USA, National Association, as
administrative agent for the lenders, dated April 29, 2015. (filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K on April 30, 2015 and incorporated herein by
reference)
Amendment No. 2 to Sixth Amended and Restated Revolving Credit Agreement, among
Royal Gold, Inc., High Desert Mineral Resources, Inc., RG Exchangeco Inc.,
RG Mexico, Inc., the additional guarantors from time to time party thereto, the lenders
from time to time party thereto, and HSBC Bank USA, National Association, as
administrative agent for the lenders, dated April 29, 2015. (filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K on March 21, 2016 and incorporated herein by
reference)
Amended and Restated Security Agreement by and among Royal Gold, Inc., High Desert
Mineral Resources, Inc., RG Mexico, Inc. and HSBC Bank USA, National Association
dated February 1, 2011 (filed as Exhibit 10.8 to the Company’s Quarterly Report on
Form 10-Q on February 4, 2011 and incorporated herein by reference)
Amended and Restated Pledge Agreement by Royal Gold, Inc. in favor of HSBC Bank
USA, National Association dated February 1, 2011 (filed as Exhibit 10.9 to the
Company’s Quarterly Report on Form 10-Q on February 4, 2011 and incorporated herein
by reference)
Royalty Agreement between Royal Gold, Inc. and the Cortez Joint Venture dated
April 1, 1999 (filed as part of Item 5 of the Company’s Current Report on Form 8-K on
April 12, 1999 and incorporated herein by reference)
101
Exhibit
Number
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
Description
Firm offer to purchase royalty interest of ‘‘Idaho Group’’ between Royal Gold, Inc. and
Idaho Group dated July 22, 1999 (filed as Attachment A to the Company’s Current
Report on Form 8-K on September 2, 1999 and incorporated herein by reference)
Royalty Deed and Agreement, dated effective as of April 15, 1991, between ECM, Inc.
and Royal Crescent Valley, Inc. (filed as Exhibit 10(1) to the Company’s Annual Report
on Form 10-K for the year ended June 30, 1991 and incorporated herein by reference)
Assignment and Assumption Agreement, dated December 6, 2002 (filed as Exhibit 10.2
to the Company’s Current Report on Form 8-K on December 23, 2002 and incorporated
herein by reference)
Royalty Assignment and Agreement, effective as of December 26, 2002, between High
Desert Mineral Resources, Inc. and High Desert Gold Corporation (filed as Exhibit 99.4
to the Company’s Current Report on Form 8-K on September 22, 2005 and incorporated
herein by reference)
Royalty Assignment, Confirmation, Amendment, and Restatement of Royalty, and
Agreement, dated as of November 30, 1995, among Barrick Bullfrog Inc.,
Barrick Goldstrike Mines Inc. and Royal Hal Co. (filed as Exhibit 99.5 to the Company’s
Current Report on Form 8-K on September 22, 2005 and incorporated herein by
reference)
Amendment to Royalty Assignment, Confirmation, Amendment, and Restatement of
Royalty, and Agreement, effective as of October 1, 2004, among Barrick Bullfrog Inc.,
Barrick Goldstrike Mines Inc. and Royal Hal Co. (filed as Exhibit 99.6 to the Company’s
Current Report on Form 8-K on September 22, 2005 and incorporated herein by
reference)
Purchase and Sale Agreement for Pe˜nasquito and Other Royalties among Minera
Kennecott S.A. DE C.V., Kennecott Exploration Company and Royal Gold, Inc., dated
December 28, 2006 (filed as Exhibit 10.2 to the Company’s Quarterly Report on
Form 10-Q on February 9, 2007 and incorporated herein by reference)
Contract for Assignment of Rights Granted, by Minera Kennecott, S.A. de C.V.
Represented in this Agreement by Mr. Dave F. Simpson, and Minera
Pe˜nasquito, S.A. de C.V., Represented in this Agreement by Attorney, Jose Maria
Gallardo Tamayo (filed as Exhibit 10.4 to the Company’s Quarterly Report on
Form 10-Q on February 9, 2007 and incorporated herein by reference)
Amended and Restated Master Agreement by and between Royal Gold, Inc. and
Compa˜n´ıa Minera Teck Carmen de Andacollo, dated as of January 12, 2010, along with
the related Form of Royalty Agreement attached thereto as Exhibit C (filed as
Exhibit 10.1 to the Company’s Current Report on Form 8-K on January 15, 2010 and
incorporated herein by reference)
Support Agreement, dated as of February 22, 2010, among Royal Gold, Inc.,
RG Callco Inc., and RG Exchangeco Inc. (filed as Exhibit 10.1 to the Company’s
Current Report on Form 8-K/A on February 23, 2010 and incorporated herein by
reference)
102
Exhibit
Number
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
10.44†
10.45†
Description
Voting and Exchange Trust Agreement, dated as of February 22, 2010, among Royal
Gold, Inc., RG Exchangeco Inc. and Computershare Trust Company of Canada (filed as
Exhibit 10.2 to the Company’s Current Report on Form 8-K/A on February 23, 2010 and
incorporated herein by reference)
Labrador Option Agreement, dated May 18, 1993, between Diamond Fields
Resources Inc. and Archean Resources Ltd., as amended (filed as Exhibit 10.13 to the
Company’s Quarterly Report on Form 10-Q on May 7, 2010 and incorporated herein by
reference)
Robinson Property Trust Ancillary Agreement by and between Kennecott Holdings
Corporation, Kennecott Rawhide Mining Company and Kennecott Nevada Copper
Company and BHP Nevada Mining Company, dated September 12, 2003 (filed as
Exhibit 10.60 to the Company’s Annual Report on Form 10-K on August 26, 2010 and
incorporated herein by reference)
Shares Purchase and Sale Agreement by Jaime Ugarte Lee and others to Compa˜nia
Minera Barrick Chile Limitada, dated as of March 23, 2001 (English Translation) (filed
as Exhibit 10.61 to the Company’s Annual Report on Form 10-K on August 26, 2010 and
incorporated herein by reference)
Royalty Deed between St Barbara Mines Limited and Resource Capital Funds III L.P.,
dated March 29, 2005, as supplemented and amended by the Supplemental Deed
between St Barbara Mines Limited and Resource Capital Funds III L.P., dated May 20,
2005 (filed as Exhibit 10.64 to the Company’s Annual Report on Form 10-K on
August 26, 2010 and incorporated herein by reference)
Net Smelter Return Royalty Agreement by and between Newmont Canada Limited and
Barrick Gold Corporation, dated October 8, 2004 (filed as Exhibit 10.65 to the
Company’s Annual Report on Form 10-K on August 26, 2010 and incorporated herein by
reference)
Royalty for Technical Expertise Agreement by and between Tenedoramex S. A. de C. V.
and Kennecott Minerals Company, dated as of March 23, 2001 (filed as Exhibit 10.2 to
the Company’s Current Report on Form 8-K on January 6, 2006 and incorporated herein
by reference)
Agreement for Amendment and Restatement of Royalty for Technical Expertise between
Minas de Oro Nacional S.A. de C.V. and RG Mexico, Inc. dated May 27, 2011 (filed as
Exhibit 10.51 to the Company’s Annual Report on Form 10-K on August 18, 2011 and
incorporated herein by reference)
Amended and Restated Purchase and Sale Agreement by and among Royal Gold, Inc.,
RGL Gold AG, Thompson Creek Metals Company Inc. and Terrane Metals Corp. dated
as of December 14, 2011 (filed as Exhibit 10.1 to the Company’s Current Report on
Form 8-K on December 15, 2011 and incorporated herein by reference)
First Amendment to Amended and Restated Purchase and Sale Agreement by and
among Royal Gold, Inc., RGLD Gold AG, Thompson Creek Metals Company Inc. and
Terrane Metals Corp. dated as of August 8, 2012 (filed as Exhibit 10.1 to the Company’s
Current Report on Form 8-K on August 9, 2012 and incorporated herein by reference)
103
Exhibit
Number
10.46
10.47
10.48
10.49
10.50
10.51
10.52
10.53
10.54
10.55†
10.56
Description
Second Amendment to Amended and Restated Purchase and Sale Agreement by and
among Royal Gold, Inc., RGLD Gold AG, Thompson Creek Metals Company Inc. and
Terrane Metals Corp. dated as of December 11, 2014 (filed as Exhibit 10.1 to the
Company’s Quarterly Report on Form 10-Q on January 29, 2015 and incorporated herein
by reference).
Intercreditor Agreement by and among RGLD Gold AG, Terrane Metals Corp. and
Valiant Trust Company dated November 27, 2012 (filed as Exhibit 10.1 to the Company’s
Quarterly Report on Form 10-Q on January 31, 2013 and incorporated herein by
reference)
Option Agreement between Seabridge Gold Inc. and RGLD Gold Canada, Inc. dated
June 16, 2011 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on
June 22, 2011 and incorporated herein by reference)
Subscription Agreement between Seabridge Gold Inc. and RGLD Gold Canada, Inc.
dated June 16, 2011 (filed as Exhibit 10.2 to the Company’s Current Report on
Form 8-K on June 22, 2011 and incorporated herein by reference)
Amending Agreement between Seabridge Gold Inc. and RG Exchangeco Inc., dated
October 28, 2011 (filed as Exhibit 10.3 to the Company’s Quarterly Report on
Form 10-Q on November 3, 2011 and incorporated herein by reference)
Second Amending Agreement by and between RG Exchangeco Inc. and Seabridge
Gold Inc. dated as of December 13, 2012 (filed as Exhibit 10.2 to the Company’s
Quarterly Report on Form 10-Q on January 31, 2013 and incorporated herein by
reference)
Net Smelter Royalty Agreement between Barrick Gold Corporation and McWatters
Mining Inc., dated April 3, 2003 (filed as Exhibit 10.50 to the Company’s Annual Report
on Form 10-K on August 18, 2011 and incorporated herein by reference)
Agreement between Rio Tinto Metals Limited and MK Gold Company, dated
September 1, 1999 (filed as Exhibit 10.52 to the Company’s Annual Report on
Form 10-K on August 18, 2011 and incorporated herein by reference)
Net Smelter Return Royalty Agreement between Expatriate Resources Ltd. and Atna
Resources Ltd., dated June 16, 2004, as modified by Partial Assignment of Royalty
between Atna Resources Ltd, Equity Engineering Ltd. and Yukon Zinc Corporation,
dated August 20, 2007 (filed as Exhibit 10.53 to the Company’s Annual Report on
Form 10-K on August 18, 2011 and incorporated herein by reference)
Purchase and Sale Agreement by and between RGLD Gold AG and Chieftain
Metals Inc., dated as of December 22, 2011 (filed as Exhibit 10.1 to the Company’s
Current Report on Form 8-K on December 28, 2011 and incorporated herein by
reference)
Form of Agreement for Assignment of Partnership Interest in Crescent Valley
Partners, L.P. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on
January 8, 2014 and incorporated herein by reference)
10.57*(cid:2) Form of Incentive Stock Option Agreement under Royal Gold’s 2015 Omnibus
Long-Term Incentive Plan
104
Exhibit
Number
Description
10.58*(cid:2) Form of Restricted Stock Agreement under Royal Gold 2015 Omnibus Long-Term
Incentive Plan
10.59*(cid:2) Form of Director Restricted Stock Agreement under Royal Gold’s 2015 Omnibus
Long-Term Incentive Plan
10.60*(cid:2) Form of Performance Share Agreement under Royal Gold’s 2015 Omnibus Long-Term
Incentive Plan
10.61*(cid:2) Form of Stock Appreciation Rights Agreement under Royal Gold’s 2015 Omnibus
21.1*
23.1*
31.1*
31.2*
Long-Term Incentive Plan
Royal Gold and Its Subsidiaries
Consent of Independent Registered Public Accounting Firm
Certification of President and Chief Executive Officer required by Section 302 of the
Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer required by Section 302 of the Sarbanes-Oxley
Act of 2002
32.1* Written Statement of the President and Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
32.2* Written Statement of the Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
101.INS*
XBRL Instance Document
101.SCH*
XBRL Taxonomy Extension Schema Document
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document
Filed or furnished herewith.
*
(cid:2) Identifies each management contract or compensation plan or arrangement.
†
Certain portions of this exhibit have been omitted by redacting a portion of the text (indicated by
asterisks in the text). This exhibit has been filed separately with the U.S. Securities and Exchange
Commission pursuant to a request for confidential treatment.
105
Royal Gold, Inc. and its Subsidiaries
As of June 30, 2016
Name
Royal Gold, Inc.
High Desert Mineral Resources, Inc.
Denver Mining Finance Company, Inc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Crescent Valley Partners LP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
DFH Co. of Nevada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gold Ventures, Inc.
RG Mexico, Inc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RGLD Gold AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RGLD Holdings, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RGLD Gold (Canada) ULC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International Royalty Corporation . . . . . . . . . . . . . . . . . . . . . . . . . .
4324421 Canada Inc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Voisey’s Bay Holding Corporation . . . . . . . . . . . . . . . . . . . . . . . .
Labrador Nickel Royalty Limited Partnership . . . . . . . . . . . . . .
RGLD Precious Metals GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Royal Crescent Valley, Inc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Royal Alaska, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Peak Gold, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXHIBIT 21.1
State / Province /
Country of
Incorporation
Ownership
Percentage
Delaware
Colorado
Colorado
Delaware
Nevada
Nevada
Delaware
Switzerland
Delaware
Alberta
Canada
Canada
Canada
Ontario
Switzerland
Nevada
Delaware
Delaware
100%
81%
100%
100%
100%
100%
100%
100%
*
100%
100%
100%
90%
100%
100%
11%
* Royal Gold, Inc. owns approximately 22% and RGLD Holdings, LLC owns approximately 78% of
RGLD Gold (Canada) ULC
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statements on Form S-3
(No. 333-203743), Form S-4 (No. 333-111590 and No. 333-145213) and Form S-8 (No. 333-122877,
No. 333-155384, No. 333-171364, and No. 333-209391) of our reports dated August 11, 2016, with
respect to the consolidated financial statements of Royal Gold, Inc., and the effectiveness of internal
control over financial reporting of Royal Gold, Inc., included in this Annual Report (Form 10-K) for
the year ended June 30, 2016.
EXHIBIT 23.1
/s/ Ernst & Young LLP
Denver, Colorado
August 11, 2016
EXHIBIT 31.1
I, Tony Jensen, certify that:
(1) I have reviewed this Annual Report on Form 10-K of Royal Gold, Inc.;
CERTIFICATION
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;
(3) Based on my knowledge, the financial statements, and other financial information included in this
report fairly present, in all material respects, the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)), for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure control and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal controls over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the registrant’s auditors and the audit committee of
the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
August 11, 2016
/s/ TONY JENSEN
Tony Jensen
President and Chief Executive Officer
(Principal Executive Officer)
EXHIBIT 31.2
I, Stefan Wenger, certify that:
(1) I have reviewed this Annual Report on Form 10-K of Royal Gold, Inc.;
CERTIFICATION
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;
(3) Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present, in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)), for the registrant and have:
(a) Designed such disclosure controls and procedures or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the registrant’s auditors and the audit committee of
the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
August 11, 2016
/s/ STEFAN WENGER
Stefan Wenger
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
In connection with the Annual Report on Form 10-K of Royal Gold, Inc. (the ‘‘Company’’), for
the year ending June 30, 2016, as filed with the Securities and Exchange Commission on the date
hereof (the ‘‘Report’’), I, Tony Jensen, President and Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 that, to my knowledge:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
August 11, 2016
/s/ TONY JENSEN
Tony Jensen
President and Chief Executive Officer
(Principal Executive Officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.2
In connection with the Annual Report on Form 10-K of Royal Gold, Inc. (the ‘‘Company’’), for
the year ending June 30, 2016, as filed with the Securities and Exchange Commission on the date
hereof (the ‘‘Report’’), I, Stefan Wenger, Chief Financial Officer of the Company, certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that, to
my knowledge:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
August 11, 2016
/s/ STEFAN WENGER
Stefan Wenger
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
Corporate Information
ANNUAL MEETING
CORPORATE HEADQUARTERS
STOCK EXCHANGE LISTING
Wednesday, November 16, 2016
Royal Gold, Inc.
NASDAQ Global Select Market
1660 Wynkoop Street, Suite 1000
(Symbol: RGLD)
9:00 a.m. MST
Ritz-Carlton Hotel
1881 Curtis Street
Denver, CO 80202
BOARD OF DIRECTORS
William M. Hayes
Chairman
Retired Mining Executive
Tony A. Jensen
Denver, Colorado 80202
(303) 573-1660 (phone)
(303) 595-9385 (fax)
E-mail: info@royalgold.com
WEBSITE
www.royalgold.com
LEGAL COUNSEL
President and Chief Executive Officer
Hogan Lovells US LLP
Royal Gold, Inc.
Denver, Colorado
Gordon J. Bogden
Retired Mining Executive
M. Craig Haase
Retired Mining Executive
Kevin C. McArthur
Executive Chair
Tahoe Resources Inc.
Jamie C. Sokalsky
Retired Mining Executive
Chris M.T. Thompson
Retired Mining Executive
Ronald J. Vance
Retired Mining Executive
OFFICERS
Tony Jensen
President and Chief Executive Officer
AUDITORS
Ernst & Young LLP
Denver, Colorado
TRANSFER AGENT/REGISTRAR
Computershare Investor Services
Mailing addresses:
For standard US postal mail:
Computershare Investor Services
PO Box 30170
College Station, TX 77842-3170
For overnight/express delivery:
Computershare Investor Services
211 Quality Circle Suite 210
College Station, TX 77845
Telephone and Fax:
(800) 962-4284 (toll free)
Stefan Wenger
(781) 575-3120 (International)
Chief Financial Officer and Treasurer
(303) 262-0700 (fax)
Karli Anderson
Website:
Vice President Investor Relations
www.computershare.com
William Heissenbuttel
Vice President Corporate Development
Bruce C. Kirchhoff
Vice President, General Counsel and
Secretary
Mark Isto
Vice President Operations
INVESTOR RELATIONS
Copies of Royal Gold’s Annual Report
on Form 10-K for the fiscal year ended
June 30, 2016 are available at no
charge. Please direct requests and
investor relations questions to:
Karli Anderson
Vice President Investor Relations
(303) 575-6517
E-mail: kanderson@royalgold.com
SHAREHOLDER COMMUNICATION
It is important for our shareholders to
receive timely information about Royal
Gold. All shareholders are encouraged
to visit the Company’s website at www.
royalgold.com for the latest news or to
sign up for our email list.
A1 | ROYAL GOLD, INC. | 2016 ANNUAL REPORT
From Left to right
From Left to right
JAMIE C. SOKALSKY
Retired Mining
Executive
KEVIN C. MCARTHUR
Executive Chair
Tahoe Resources Inc.
GORDON J. BOGDEN
Retired Mining
Executive
TONY A. JENSEN
President and
Chief Executive Officer
Royal Gold, Inc.
M. CRAIG HAASE
Retired Mining
Executive
WILLIAM M. HAYES
Chairman
Retired Mining
Executive
RONALD J. VANCE
Retired Mining
Executive
CHRIS M.T. THOMPSON
Retired Mining
Executive
KARLI ANDERSON
KARLI ANDERSON
Vice President
Vice President
Investor Relations
Investor Relations
BILL HEISSENBUTTEL
BILL HEISSENBUTTEL
Vice President
Vice President
Corporate Development
Corporate Development
TONY JENSEN
TONY JENSEN
President &
President &
Chief Executive Officer
Chief Executive Officer
MARK ISTO
MARK ISTO
Vice President
Vice President
Operations
Operations
BRUCE KIRCHHOFF
BRUCE KIRCHHOFF
Vice President,
Vice President,
General Counsel & Secretary
General Counsel & Secretary
STEFAN WENGER
STEFAN WENGER
Chief Financial Officer
Chief Financial Officer
& Treasurer
& Treasurer
9/23/16 8:00 PM
Board of DirectorsManagement R
o
y
a
l
G
o
l
d
,
I
n
c
.
1660 Wynkoop Street, Suite 1000
Denver, Colorado 80202
www.royalgold.com
46594cov.indd 1-2
2
0
1
6
A
n
n
u
A
l
R
e
p
o
R
t