DISCIPLINED
STRATEGY
SUCCESSFUL
RESULTS
A N N U A L R E P O R T 2 0 1 9
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1660 WYNKOOP STREET, SUITE 1000
DENVER, COLORADO 80202
WWW.ROYALGOLD.COM
TABLE OF CONTENTS
TABLE OF CONTENTS
1 Letter to Shareholders
24 Corporate Responsibility
4 Letter from the Chairman
26 Total Return to Shareholders
5 Key Elements of Our Business Strategy
27 Forward Looking Statements
6 Selected Financial Data
7 Financial Highlights
8 Portfolio Map
10 Principal Producing Properties
18 Property Tables
22 Property Table Footnotes
28 Glossary
29 Form 10-K
Last Page of 10-K
Corporate Information
Inside Back Cover
Board of Directors/Management
CORPORATE PROFILE
CORPORATE PROFILE
Royal Gold, Inc. acquires and manages precious metal
streams and royalty 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 incurring many of the costs and risks associated
with mine operations.
Precious metal streams are purchase agreements with
mine operators that provide, in exchange for a lump
sum 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. A royalty is the right to receive
a percentage of the metal produced from a mineral
property. Existing royalties can be acquired outright
from either a mineral resource company or a private
party; new royalties can be created by providing capital
to an operator or explorer in exchange for a royalty.
Except for one joint venture property where Royal Gold
conducts exploration, Royal Gold does not conduct work
on the properties in which Royal Gold holds stream and
royalty interests, and Royal Gold is 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
prolifi c gold regions. Approximately 91% of our reserves
and 87% of Royal Gold’s fiscal 2019 revenue was
derived from North America, the Dominican Republic
and Chile.
Gold attributed approximately 78% of Royal Gold’s total
revenue in fi scal 2019, while precious metals attributed
approximately 87% of Royal Gold’s total revenue in
fi scal 2019.
With this high-quality portfolio, Royal Gold maintains
upside potential through exploration successes by the
operators and generally benefi ts when new reserves
are discovered and produced. This successful business
model generates strong cash fl ow and high margins with
a lower cost structure, providing shareholders with a
premium precious metals investment.
Royal Gold, Inc. is based in Denver, Colorado, and is
publicly traded on the Nasdaq Global Select Market, under
the symbol “RGLD.”
BOARD OF DIRECTORS
Left to right: Christopher M.T. Thompson, William M. Hayes, Jamie C. Sokalsky, Tony A. Jensen,
Ronald J. Vance, Sybil E. Veenman, C. Kevin McArthur
MANAGEMENT
MANAGEMENT
Tony A. Jensen
President and
Chief Executive Offi cer
William H.
Heissenbuttel
Chief Financial Offi cer and
Vice President, Strategy
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Daniel K. Breeze
Vice President,
Corporate Development
Mark E. Isto
Vice President,
Operations
Bruce C. Kirchhoff
Vice President,
General Counsel
and Secretary
LETTER TO SHAREHOLDERS
DEAR FELLOW SHAREHOLDER,
Our focus has been to provide investors exposure
to gold through a lower risk investment compared to
other gold equities. We engineered Royal Gold to deliver
our stockholders upside to gold price appreciation,
organic reserve increases, and production expansion
while mitigating the risks of operating and capital costs,
asset concentration and business complexity.
We have underpinned this unique business model with
a basic and perhaps old-fashioned philosophy that:
• measures all our actions on a per share basis to make
sure we are adding value,
• limits shareholder dilution by growing out of cash fl ow
to the greatest extent possible, and
• judges success on total shareholder value returned to
our investors rather than enterprise value or market
capitalization.
This strategy requires preparation—being ready to
execute when opportunities surface; patience—waiting
for the right prospects and acquisition environment;
judgment—knowing how, when and where to deploy
resources; and tenacity—sticking to our focus and
philosophy.
We compete for investors who have many attractive
investment alternatives in the broader market. For that
reason, Royal Gold needs to be an attractive investment
for shareholders in all market conditions. We seek to
provide gold investors a portfolio of world-class, long-
lived, and diversifi ed assets with exploration upside,
while providing generalist investors stability in the event
of broader market declines, a positive carrying cost
supported by two decades of paying a growing dividend,
and substance as the second largest publicly traded
precious metal company in the United States.
COMPANY PERFORMANCE
Over the fiscal year ending June 30, 2019, our total
shareholder return was 11.7% compared to that of the
S&P 500 at 9.8%. We reached our then all-time high
share price of $102 at fiscal year-end in what was a
relatively inactive but improving gold market.
Our market performance was driven by solid operating
and fi nancial results. Our gold equivalent production
was 335,000 ounces, and we generated $253.2 million
in operating cash fl ow while aggressively rebuilding
the balance sheet. Our net debt at June 30, 2019 was
$95.1 million, representing only 0.3x of our 2019 EBITDA.
Earnings per share were $1.43. We obtained these results
in a relatively fl at gold market in which the gold price
averaged $1,263/ounce in fi scal 2019 compared to an
average of $1,297/ounce in fi scal 2018.
We stayed dedicated to growing our dividend, which
has increased in each of the last 19 years. In fiscal
year 2019, we paid our stockholders $67.5 million in
dividends, representing a cash flow payout ratio of
approximately 27%.
1
ROYAL GOLD, INC | 2019 ANNUAL REPORT
In the last fiscal year, our operating portfolio generally
performed well and several growth projects advanced.
facilities, which Vale expects to extend the Voisey’s Bay
mine life until 2034.
• Newmont Goldcorp announced that the $420 million
pyrite leach project designed to improve gold and
silver recovery over the life of the Peñasquito mine in
Zacatecas, Mexico, was commissioned at no cost to
Royal Gold.
• The Barrick-Newmont Goldcorp joint venture announced
that a potential mill expansion at the Pueblo Viejo mine
in the Dominican Republic moved to the feasibility
stage and is intended to sustain production levels at
800,000 ounces annually after 2023 and convert about
seven million ounces of mineralized material to reserves,
each on a 100% project basis.
• Newgold announced that mill throughput and recovery
at the Rainy River mine in Ontario, Canada, reached
original design capacity during the fiscal year.
• Nevada Gold Mines LLC announced that the Cortez
Crossroads mine in Nevada, United States, began
producing gold during the fiscal year, with production
expected to ramp up over the next few years.
Nonetheless, our financial results were hampered by
difficulties at two operations.
• Centerra’s Mount Milligan mine in British Columbia,
Canada, our largest revenue source, struggled to reach
targeted mill throughput over the last two winter seasons
due to limited water availability. With near-term permits
now in place, mine management is carrying out an action
plan to increase water supply to the mill and eliminate
similar processing reductions in the future.
• A road blockade at Peñasquito stopped production for
48 days in our fourth fiscal quarter. Newmont Goldcorp
resumed operations and entered into dialogue with
concerned stakeholders in June 2019, with the
assistance of government officials. While many issues
were addressed, the illegal blockade recommenced in
mid-September 2019. Newmont Goldcorp continues to
peruse open dialogue to address legitimate concerns.
PROJECT ADVANCEMENT
In September 2018, we resolved a long-standing dispute
regarding the calculation of the royalty on production from
Vale’s Voisey’s Bay mine in Newfoundland and Labrador,
Canada. Royalty payments resumed, and we received
$11.9 million in royalty revenue during the fiscal year. The
settlement also secures our interest in the future of this
world-class asset. In mid-2018, Vale approved $1.7 billion
for development of an underground mine and associated
In September 2018, the Peak Gold, LLC joint venture,
where we hold a 40% interest, completed a Preliminary
Economic Assessment (PEA) on the Peak Gold project
located in Alaska, United States. PEA highlights included
an eight-year mine life producing approximately 1.1 and
2.0 million ounces of gold and silver, respectively, from
two deposits grading nearly 4 grams of gold per tonne;
attractive economics represented by a 29% internal
after-tax rate of return; and $470 per gold ounce all-in
sustaining cost. The combination of robust grade, near-
surface open-pit mineralization, and a large, prospective
land package close to existing infrastructure, positions
the Peak Gold Project well for future development. Royal
Gold will continue to advance exploration and base line
environmental data collection in the coming year, but
always with an eye on converting our equity into an interest
more closely aligned with our business model.
In February 2019, we added our next growth vehicle
with the acquisition of a silver stream on Cupric Canyon
Capital’s Khoemacau project in Botswana. Royal Gold will
make an advance payment of $212 million in exchange for
80% of the silver produced from Khoemacau until certain
delivery thresholds are met, and at Cupric’s option, up
to an additional $53 million payable in exchange for up
to the remaining 20% of the silver produced. Royal Gold
will pay a cash price for each ounce of silver delivered
equal to 20% of the silver spot price, subject to increase
if Cupric achieves production above target throughput
levels. We also will extend a $25 million debt facility to
fund potential cost overruns. Khoemacau is a high-quality
and long-lived project with an expected initial mine life
of 21 years with annual average silver production of 1.9
million ounces and excellent exploration potential. The
Khoemacau stream complements our production profile
with construction already underway and first production
expected in calendar 2021.
In May 2019, we entered into the first of a series of
agreements allowing us to purchase up to a 2.5% net
smelter return royalty on TriStar Gold’s Castelo de Sonhos
(CDS) project in Brazil and up to 19.64 million warrants
for purchase of TriStar’s common stock. TriStar estimates
CDS mineralized material to be approximately 2.0 million
ounces grading slightly over one gram per tonne. Our
funding will be used primarily for feasibility study work and
continued drilling of TriStar’s prospective and substantial
land position.
2
Tony A. Jensen
President and CEO
OUR MARKET PERFORMANCE WAS DRIVEN BY
SOLID OPERATING AND FINANCIAL RESULTS.
TEAM TALENT
As I write, I am fi lled with refl ection since this will be my last
stockholder’s letter prior to my retirement by March 2020.
It has been a thrill to work with Royal Gold. In 2003, we were
a junior company with eight assets (three producing) and a
$400 million market capitalization. Today, Royal Gold owns
187 assets (41 producing) and has a market capitalization
of approximately $8.0 billion as of this writing, placing
Royal Gold among the world’s top 15 largest publicly traded
precious metal companies by market capitalization. While
it certainly hasn’t always been linear, our compounded
average shareholder return over that time has been 12.6%,
compared to the S&P 500 at 8.9% and gold appreciation
of 9.5%.
I have had the great opportunity to work with an incredible
group of people, both present and past, including our
directors on the board, our employees in the offi ce, and
throughout the industry. I will miss daily interactions with
those relationships but am extremely confi dent in the state
of the company and the ability of the Royal Gold team to
continue writing Royal Gold’s growth story.
It has been gratifying to see the growth of our team and
I expect several individuals will be leaders at the highest
level of our industry in the future.
They understand that our past doesn’t guarantee future
success and that we must work every day to add new value
or we will be left behind. Royal Gold has transformed itself
several times in the past and this team is ready to adapt as
necessary to ensure we stay relevant to the industry and
successful for our shareholders.
I am very proud of the company and culture we have created
together, grounded once again on old-fashioned principles
of respect, fair dealing, integrity, and responsibility. I am
confi dent that these values will be core to the company
throughout its’ future.
It has been an honor to serve Royal Gold. I sincerely thank
you for the opportunity and for your support over the last
sixteen years.
Respectfully,
There is no success without great support; in our case
24 extremely bright, creative and dedicated professionals.
Royal Gold is fi lled with talent throughout the company.
Tony A. Jensen
President and Chief Executive Offi cer
September 15, 2019
3
ROYAL GOLD, INC | 2019 ANNUAL REPORT
LETTER FROM THE CHAIRMAN
THE COMPANY DELIVERED
SOLID PERFORMANCE BASED ON
A SOUND STRATEGIC PLAN
ROOTED IN A CULTURE OF ACHIEVEMENT.
William M. Hayes
Chairman
DEAR FELLOW SHAREHOLDER,
Fiscal 2019 was another successful year for Royal Gold,
and consistent with past years, the Company delivered
solid performance based on a sound strategic plan rooted
in a culture of achievement. The stability that comes from
consistent performance is something that shareholders
expect of Royal Gold, and maintaining this stability is top
of mind for your Board of Directors as we work through
Tony’s transition to retirement.
Your Board has been preparing for this succession for the
past several years. We know the management team well,
and recognize that there is a very solid base of talent at all
levels within the Company. Your Board is confi dent that the
management team is prepared and committed to ensuring
both the success of the new leader, and the continued
success of the Company.
While this transition will change the face of the Company,
I can assure you that your Board will continue to off er
guidance to the Company the same way we have done
over the past several years, and we will strive to maintain
the culture that has fostered the Company’s success. I am
excited to think about how new leadership will push the
Company forward, and your Board remains committed to
ensuring the attributes that allowed Royal Gold to thrive will
remain intact through and after the leadership transition.
Sincerely,
William M. Hayes
Chairman
September 15, 2019
4
KEY ELEMENTS OF OUR
BUSINESS STRATEGY
BUSINESS MODEL
GOLD FOCUSED
GROWTH
Royal Gold’s stream and royalty
business model provides
investors with a diversifi ed
portfolio of 41 producing assets
without incurring many of the
costs and risks associated
with mine operations.
78% of Royal Gold’s revenue
in fi scal 2019 was
generated from gold.
Royal Gold emphasizes
investment in long lived assets
that we believe will provide our
shareholders resource to reserve
conversion upside.
CAPITAL DEPLOYMENT
FINANCIAL FLEXIBILITY
RETURN TO SHAREHOLDERS
Royal Gold maintains a strong
balance sheet that allows us
to opportunistically invest at
favorable times in the price cycle,
often when counterparties
most need fi nancing.
Royal Gold’s unique business
model allows us to source
our capital effi ciently, with a
preference to grow our business
from free cash fl ow.
Royal Gold concentrates on
margin expansion by maintaining
a lean cost structure, measures
success on per share metrics and
believes paying a sustainable and
growing dividend is important.
5
ROYAL GOLD, INC | 2019 ANNUAL REPORT
SELECTED FINANCIAL DATA
SELECTED STATEMENTS OF OPERATIONS DATA1
Fiscal Years Ended June 30,
(Amounts in thousands, except per share data)
2019
2018
2017
2016
2015
Revenue
$ 423,056
$ 459,042
$ 440,814
$ 359,790
$ 278,019
Net income (loss) attributable to
Royal Gold common stockholders
Net income (loss) per share available
to Royal Gold common stockholders:
Basic
Diluted
Dividends declared per common share 2
$ 93,825
$
(113,134 )
$
101,530
$
(77,149 )
$
51,965
$
$
$
1.43
1.43
1.05
$
$
$
(1.73 )
(1.73 )
0.99
$
$
$
1.55
1.55
0.95
$
$
$
(1.18 )
(1.18 )
0.91
$
$
$
0.80
0.80
0.87
SELECTED STATEMENTS OF CASH FLOWS DATA
Fiscal Years Ended June 30,
(Amounts in thousands)
2019
2018
2017
2016
2015
Net cash from operating activities
$ 253,166
$ 328,824
$ 266,853
$
169,311
$
192,099
SELECTED BALANCE SHEET DATA
As of June 30,
(Amounts in thousands)
2019
2018
2017
2016
2015
Stream and royalty interests, net
$ 2,339,316
$ 2,501,117
$ 2,892,256
$ 2,848,087
$ 2,083,608
Total assets
Debt
Total liabilities
$ 2,544,151
$ 2,682,016
$ 3,094,065
$ 3,069,729
$ 2,914,474
$ 214,554
$ 351,027
$ 586,170
$ 600,685
$ 313,869
$ 373,698
$ 540,747
$
773,801
$ 783,844
$ 503,981
Total Royal Gold stockholders’ equity
$ 2,136,681
$ 2,102,167
$ 2,275,377
$ 2,229,016
$ 2,353,122
1. Certain information, including the Company’s audited fi nancial statements, is contained in the Form 10-K.
2. Dividends are paid on a calendar year basis and do not correspond with the fi scal year dividend amounts shown in the Selected Financial Data.
The 2019, 2018, 2017, 2016 and 2015 calendar year dividends were $1.06, $1.00, $0.96, $0.92 and $0.88, respectively, as approved by our Board of Directors.
6
FINANCIAL HIGHLIGHTS
459.0
440.8
423.1
$500
$450
$400
$350
$300
278.0
359.8
$250
$200
$150
$100
$50
0
ʼ15
ʼ16
ʼ17
ʼ18
ʼ19
328.8
266.9
253.2
$350
$300
$250
$200
192.1
169.3
$150
$100
$50
0
ʼ15
ʼ16
ʼ17
ʼ18
ʼ19
$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$0.00
0.96
1.00
1.06
0.88
0.92
ʼ15
ʼ16
ʼ17
ʼ18
ʼ19
REVENUE
For the Fiscal Years Ended June 30 ($ Millions)
OPERATING CASH FLOWS
For the Fiscal Years Ended June 30 ($ Millions)
CALENDAR YEAR DIVIDENDS1
($ per share)
1. Dividends are paid on a calendar year basis. The dividend for calendar year 2019 was $1.06; the dividend paid during the fi scal year 2018 was $1.05.
7
ROYAL GOLD, INC | 2019 ANNUAL REPORT
PORTFOLIO MAP
3
2
5
4
6
1
PRINCIPAL
PROPERTIES
1
2
3
4
5
6
7
ANDACOLLO - REGION IV, CHILE
CORTEZ - NEVADA, USA
MOUNT MILLIGAN - BRITISH COLUMBIA, CANADA
PEÑASQUITO - ZACATECAS, MEXICO
RAINY RIVER - ONTARIO, CANADA
PUEBLO VIEJO - SANCHEZ RAMIREZ, DOMINICAN REPUBLIC
WASSA - WESTERN REGION, GHANA
8
7
3
2
5
4
6
1
7
187
PROPERTIES
41 PRODUCING
16 DEVELOPMENT
48 EVALUATION
82 EXPLORATION
9
ROYAL GOLD, INC | 2019 ANNUAL REPORT
PRINCIPAL
PRODUCING PROPERTIES
Approximately 76%
of Royal Gold’s fiscal 2019 revenue
was derived from our Principal Producing Properties,
was derived from our Principal Producing Properties,
was derived from our Principal Producing Properties,
which are comprised of Mount Milligan, Pueblo Viejo,
Andacollo, Rainy River, Wassa, Peñasquito and Cortez.
Our Principal Producing Properties are located in
some of the world’s most prolifi c gold regions and are
further distinguished by their long mine lives, signifi cant
production profi les, low operating costs and potential for
resource to reserve conversion. On average, our Principal
Producing Properties have over 15 years of remaining
reserve life.
We have optionality at our producing properties through
the operators’ innovation, capital and exploration,
including Newmont Goldcorp’s Peñasquito Pyrite Leach
Project which is expected to add between 100,000 and
140,000 ounces of gold and between 4 and 6 million
ounces of silver annually; the prefeasibility level studies
for a plant expansion at Pueblo Viejo that would increase
throughput by 50% to 12 million tonnes per year, allowing
the mine to maintain average annual gold production of
800,000 ounces after 2022 and has the potential to move
roughly 7 million ounces of gold to reserves; the start of
mining at the Cortez Crossroads deposit, which contains
3.2 million ounces of gold; and the 47% increase in gold
reserves at Golden Star’s Wassa underground mine,
which is contained within defi ned mineralized material of
97 million tonnes containing 9.8 million ounces of gold.
10
MOUNT MILLIGAN
BRITISH COLUMBIA, CANADA
Royal Gold’s wholly-owned subsidiary, RGLD Gold AG
(“RGLD Gold”), owns the right to purchase 35% of the
payable gold and 18.75% of the payable copper produced
from the Mount Milligan mine. The cash purchase price
for gold is equal to the lesser of $435 per ounce, with
no infl ation adjustment, or the prevailing market price
when purchased. The cash purchase price for copper
is 15% of the spot price. Payable gold is calculated as
97% of contained gold in concentrate. Payable copper
is calculated as 95% of contained copper in concentrate
or the actual payable copper percentage received by
Centerra Gold Inc. (“Centerra”), whichever is greater.
Mount Milligan is an open-pit copper-gold mine operated
by a subsidiary of Centerra, located in central British
Columbia, Canada.
Production Status: Gold stream deliveries from Mount
Milligan were approximately 68,500 ounces of gold
during the fiscal year ended June 30, 2019 (“fiscal
2019”), compared to approximately 78,000 ounces of
gold during the fi scal year ended June 30, 2018 (“fi scal
2018”). Copper stream deliveries from Mount Milligan
were approximately 9.1 million pounds of copper during
fiscal 2019, compared to approximately 10.4 million
pounds during fi scal 2018. The decrease in fi scal 2019
reflects the shutdown and lower mill production at
Mount Milligan in the March 2018 quarter, which was
the result of lower than expected water availability for
mill processing operations. Due to the timing of shipments
and deliveries of gold and copper, the impact of the
shutdown was refl ected in Royal Gold’s fi rst quarter of
fi scal 2019.
Centerra received near-term permits in early 2019
to capture additional surface waters and to access
groundwater within a six kilometer radius of the mine.
While these activities are aimed at eliminating future water
limitations, Centerra may need to manage production to
conserve water resources in the fi rst calendar quarter of
2020, if the water balance is restored.
Centerra reaffi rmed Mount Milligan’s production guidance
for the full 2019 calendar year, consisting of 155,000 to
175,000 ounces of payable gold production and 65 to
75 million pounds of payable copper production, and
reported Centerra is continuing to work on a long-term
plan to supply water to Mount Milligan for the remaining
mine life.
FY2019 REVENUE:
$101.010M
FY2019 SALES:
61,700 oz Gold
8.316M lbs Copper
RESERVES1:
4.736M oz Gold
1.836B lbs Copper
1. Reserves reported by Centerra as of December 31, 2018.
11
ROYAL GOLD, INC | 2019 ANNUAL REPORT
PUEBLO VIEJO
SANCHEZ RAMIREZ, DOMINICAN REPUBLIC
RGLD Gold owns the right to purchase 7.5% of Barrick
Gold Corporation’s (“Barrick”) 60% interest in payable gold
produced from the Pueblo Viejo mine until 990,000 ounces
have been delivered; 3.75% thereafter. The purchase price
for gold ounces delivered is 30% of the spot price until
550,000 ounces have been delivered; 60% thereafter.
Payable gold is calculated as 99.9% of contained gold
in doré. 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; 37.5% thereafter. The
purchase price for silver ounces delivered is 30% of the
spot price until 23.1 million ounces have been delivered;
60% thereafter. Silver deliveries are based on a fi xed
70% recovery rate. Payable silver is calculated as 99.0%
of the adjusted recovered silver amount. As of June 30,
2019, approximately 181,000 ounces of payable gold and
6.2 million ounces of payable silver have been delivered
to RGLD Gold.
Pueblo Viejo is an open-pit mine owned by a joint venture
in which Barrick holds 60% interest and is responsible for
operations. Newmont Goldcorp Corporation (“Newmont
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: Gold stream deliveries from Pueblo
Viejo were approximately 41,200 ounces of gold during
fi scal 2019, compared to approximately 45,400 ounces
of gold during fi scal 2018. Silver stream deliveries were
approximately 2.0 million ounces of silver during fi scal
2019, compared to approximately 1.9 million ounces of
silver during fi scal 2018. Barrick reported gold production
during the June 2019 quarter was impacted by delayed
access to higher grade phases of the Moore pit as a
result of a wall failure and lower grade reconciliation from
the Cumba pit. Production was also impacted by lower
throughput as a result of a scheduled total plant shutdown
and unplanned autoclave maintenance.
Barrick indicated that scoping studies and pilot project
work are supportive of a plant expansion at the Pueblo
Viejo mine that could allow the mine to maintain average
annual gold production of approximately 800,000 ounces
after calendar 2022. To achieve this, Barrick is evaluating
a fl otation concentrator followed by ultra-fi ne grinding
and tank oxidation of the concentrate. Barrick expects to
complete prefeasibility studies for the plant expansion and
additional tailings capacity by the end of calendar 2019.
According to Barrick, the project has potential to convert
roughly seven million ounces of mineralized material to
proven and probable reserves.
FY2019 REVENUE:
$82.844M
FY2019 SALES:
41,000 oz Gold
2.072M oz Silver
RESERVES1:
6.551M oz Gold
42.052M oz Silver
1. Reserves reported by Barrick as of December 31, 2018.
12
ANDACOLLOREGION IV, CHILE
RGLD Gold owns the right to purchase 100% of payable
gold until 900,000 ounces 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. Payable gold is
calculated as 89% of contained gold in concentrate. As of
June 30, 2019, approximately 193,000 ounces of payable
gold have been delivered to RGLD Gold.
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 central
Chile, Region IV in the Coquimbo Province, adjacent to
the town of Andacollo.
Production Status: Stream deliveries from Andacollo
were approximately 51,900 ounces of gold during fi scal
2019 compared to approximately 51,700 ounces of gold
during fi scal 2018. Teck expects grades to continue to
gradually decline towards reserve grades in calendar 2019
and future years. Teck continues to study and implement
projects that could increase production, including the
installation of a sizer to better manage harder ores at depth
and increase mill throughput.
FY2019 REVENUE:
$69.264M
FY2019 SALES:
55,000 oz Gold
RESERVES1:
1.049M oz Gold
1. Reserves reported by Teck as of December 31, 2018.
13
ROYAL GOLD, INC | 2019 ANNUAL REPORT
RAINY RIVER
ONTARIO, CANADA
RGLD Gold owns the right to purchase 6.5% of the gold
produced from the Rainy River project until 230,000
gold ounces have been delivered; 3.25% thereafter. The
purchase price for gold ounces delivered is 25% of the
spot price per ounce of gold at the time of delivery. Stream
gold deliveries are calculated as 6.5% of the contained
gold in doré. RGLD Gold also owns the right to purchase
60% of the silver produced from the Rainy River project until
3.1 million silver ounces have been delivered;
30% thereafter. The cash purchase price for the silver
ounces is 25% of the spot price per ounce of silver at
the time of delivery. Silver deliveries are calculated
as 60% of the contained silver in doré. As of June
30, 2019, approximately 24,000 ounces of gold and
approximately 235,000 ounces of silver have been
delivered to RGLD Gold.
Rainy River is an open-pit mine operated by New Gold, Inc.
(“New Gold”), located within the Richardson Township, in
northwestern Ontario, Canada.
of gold during fi scal 2018. Silver stream deliveries were
approximately 148,800 ounces of silver during fi scal 2019,
compared to approximately 85,900 ounces of silver during
fi scal 2018. The increase resulted from the continued
optimization of operations at Rainy River.
New Gold reported that ore mined during the June 2019
quarter included planned lower grades as operations
continued the transition from Phase 1 to Phase 2 of
the mine plan, and that New Gold expects milled grades
to be lower in the second half of the calendar year as
Phase 1 ore is depleted. Also during the June 2019 quarter,
New Gold advanced a comprehensive mine optimization
study that includes the review of alternative open pit and
underground mining scenarios with the overall objective
of improving the return on investment over the life of
mine by reducing open pit waste, overall underground
development, and sustaining capital. New Gold expects
to complete an updated life of mine plan in the December
2019 quarter.
Production Status: Gold stream deliveries from Rainy
River were approximately 16,800 ounces of gold during
fi scal 2019, compared to approximately 6,800 ounces
New Gold expects that full year calendar 2019 production
will meet annual guidance of between 250,000 and
275,000 gold equivalent ounces.
FY2019 REVENUE:
$22.142M
FY2019 SALES:
15,800 oz Gold
144,700M oz Silver
RESERVES1:
4.185M oz Gold
12.115M oz Silver
1. Reserves reported by New Gold as of December 31, 2018.
14
WASSA
WESTERN REGION, GHANA
day in calendar 2019 to approximately 4,000 tonnes per
day by mid-calendar 2020.
Golden Star reported that the mining rate at Wassa
during the fi rst half of calendar 2019 at 3,500 tonnes per
day was in line with expectations and indicated potential
to improve production further during the second half of
calendar 2019, but cautioned grades are likely to be lower
than planned and below the overall reserve grade. As
a result, Golden Star expects production in the second
half of calendar 2019 to be lower than the fi rst half of
calendar 2019 and accordingly, lowered production
guidance for calendar 2019 from between 170,000
and 180,000 ounces of gold to between 150,000 and
160,000 ounces of gold.
RGLD Gold owns the right to purchase 10.5% of payable
gold from the Wassa, Prestea and Bogoso mines until
240,000 ounces have been delivered; 5.5% thereafter.
The purchase price for gold ounces delivered is 20%
of the spot price until 240,000 ounces have been
delivered; 30% thereafter. Payable gold is calculated as
99.5% of contained gold in doré. As of June 30, 2019,
approximately 90,000 aggregate gold ounces have been
delivered to RGLD Gold.
The Wassa underground mine and mill are operated
by Golden Star Resources Ltd. (“Golden Star”), and
are located in the Wassa East District, in the Western
Region, Ghana.
Production Status: Stream deliveries from Wassa were
approximately 16,600 ounces of gold during fi scal 2019,
compared to approximately 14,500 ounces of gold during
fiscal 2018. The increase resulted from the ramp up
at Wassa underground as Golden Star transitioned
from the lower grade open pit to an underground-only
mining operation. Golden Star’s reported objective
at Wassa underground is to increase the average
production rate from approximately 3,500 tonnes per
FY2019 REVENUE:
$22.098M
FY2019 PRODUCTION2:
17,500 oz Gold
RESERVES1:
1.473M oz Gold
1. Reserves reported by Golden Star as of December 31, 2018.
15
ROYAL GOLD, INC | 2019 ANNUAL REPORT
PENASQUITO
ZACATECAS, MEXICO
Royal Gold owns a 2.0% NSR royalty on all metals at
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 Newmont 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 Royal Gold’s royalty interest at Peñasquito
decreased approximately 58%, 21%, 4% and 38%,
respectively, during fiscal 2019, when compared to
fi scal 2018.
Newmont Goldcorp reported a temporary suspension of
operations at Peñasquito due to a blockade by a trucking
contractor and certain community leaders began on March
27, 2019. On June 17, 2019, Newmont Goldcorp reported
that dialogue with the blockade leaders had started,
operations were beginning, and concentrate shipments
from the mine and deliveries to the mine resumed.
Newmont Goldcorp reported that operations ramped
back up in June 2019 and concentrate inventory levels
were back to normal. On September 15, 2019, Newmont
Goldcorp reported that the dialogue was suspended
and the illegal blockade has resumed.
t h a t g r a d e s
Prior to the September blockade, Newmont
G o l d c o r p e x p e c t e d
f o r g o l d ,
silver and lead would improve in the last half of
c a l e n d a r 20 1 9, zi n c g r a d e s w o u l d re m a i n
unchanged, and produc tion from Peñasquito
would be 165,000 ounces of gold, 25 million
ounces of silver, 180 million pounds of lead,
and 245 million pounds of zinc for the period
April 18 through December 31, 2019.
FY2019 REVENUE:
$13.865M
FY2019 PRODUCTION1:
158,800 oz Gold
16.421M oz Silver
117.396M lbs Lead
216.220M lbs Zinc
RESERVES2:
9.110M oz Gold
527.580M oz Silver
3.613B lbs Lead
7.995B lbs Zinc
1. Reported production for FY2019 relates to the amount of metal sales subject to Royal Gold’s royalty interests as reported to Royal Gold by the operator.
2. Reserves reported by Newmont Goldcorp as of June 30, 2018.
16
CORTEZ
NEVADA, UNITED STATES
Production Status: Production attributable to Royal
Gold’s royalty interest at Cortez increased approximately
24% during fi scal 2019, when compared to fi scal 2018.
The increase was a result of production ramping up
at the Crossroads deposit. Initial ore production at
Crossroads was realized during calendar 2018.
Royal Gold holds multiple royalties at Cortez owned and
operated by Nevada Gold Mines LLC (“NGM”), a joint
venture between Barrick and Newmont Goldcorp. Royal
Gold’s royalty interests include the following royalties:
• GSR1 – sliding-scale GSR royalty tied to the price of gold,
at a gold price of $470 per ounce and higher, the royalty
rate is 5%
• GSR2 – sliding-scale GSR royalty tied to the price of gold,
at a gold price of $470 per ounce and higher, the royalty
rate is 5%
• GSR3 – fi xed-rate GSR royalty of 0.7125%
• NVR1 – fi xed-rate NVR royalty of 4.91%
• NVR1C1 – fi xed-rate NVR royalty of 4.52%
Cortez is a large open-pit and underground mine,
utilizing mill and heap leach processing. High grade
refractory ores are trucked to NGM’s Goldstrike
operation for processing. Royal Gold’s royalty interest
at Cortez applies to the Pipeline, South Pipeline, Gap
and Crossroads deposits.
FY2019 REVENUE:
$11.383M
FY2019 PRODUCTION2:
96,700 oz Gold
RESERVES3,4:
3.936M oz Gold
1. NVR1C is the designation utilized by Royal Gold to address the Crossroads portion of the NVR1 royalty.
2. Reported production relates to the amount of metal sales that are subject to Royal Gold’s royalty interests for the fi scal year ended June 30, 2019,
as reported to Royal Gold by the operator.
3. Reserves reported by Barrick as of December 31, 2018.
4. Cumulative reserves subject to Royal Gold’s royalties at Cortez.
17
ROYAL GOLD, INC | 2019 ANNUAL REPORT
PRODUCING PROPERTIES
LOCATION
OPERATOR
ROYALTY/METAL STREAM 1
(GOLD UNLESS
OTHERWISE STATED)
RESERVES
2,3,4,5,6
(CONTAINED
OZ OR LBS) M7 METAL
REVENUE
FY2019
($M)
PROPERTY
ARGENTINA
DON NICOLAS
MARTHA
AUSTRALIA
GWALIA DEEPS
KING OF THE HILLS
MEEKATHARRA
SOUTH LAVERTON
SOUTHERN CROSS
BOLIVIA
BURKINA FASO
TAPARKO
INATA
CANADA
MOUNT MILLIGAN
Santa Cruz
Compañía Inversora en Minas
2.0% NSR (gold, silver)
Santa Cruz
Patagonia Gold
2.0% NSR
W. Australia
W. Australia
W. Australia
W. Australia
W. Australia
St Barbara
Red 5 Limited
Westgold Resources
Saracen
Shandong Tianye
1.5% NSR
1.5% NSR
1.5% NSR 9
1.5% NSR; $6.00/oz 10
1.5% NSR
DON MARIO
Chiquitos
Orvana
3.0% NSR (gold, silver and copper)
Namantenga
Soum
Nord Gold
Balaji Group
2.0% GSR; 0.75% GSR (milling royalty) 11
2.5% NSR
0.483
0.340
British
Columbia
Centerra Gold
35% of payable gold 12
18.75% of payable copper 12
VOISEY’S BAY
Labrador
Vale
2.7% NVR (copper, nickel and cobalt)
PINE COVE
RAMBLER NORTH
HOLT
RAINY RIVER
WILLIAMS
CANADIAN MALARTIC
LARONDE ZONE 5
ALLAN
BORAX
CHILE
ANDACOLLO
GHANA
PRESTEA
WASSA
MEXICO
DOLORES
Newfoundland Anaconda Mining
Newfoundland Rambler Metals and Mining
Ontario
Kirkland Lake
Ontario
Ontario
Quebec
Quebec
Saskatchewan
Saskatchewan
New Gold
Barrick
Agnico Eagle/Yamana
Agnico Eagle
Potash Corporation
of Saskatchewan
Potash Corporation
of Saskatchewan
7.5% NPI
1.0% NSR (gold, silver, copper and zinc)
0.00013 x Au price (NSR)
6.5% of gold produced 14
60% of silver produced 14
0.72% NSR and 0.25% NSR
1.0% to 1.5% NSR 15
2.0% NSR
$0.36 to $1.44 per ton (potash) 16
$0.25 per ton (potash) 17
Region IV
Teck
100% of payable gold 18
Western Region Golden Star
Western Region Golden Star
10.5% of payable gold 19
10.5% of payable gold 19
Chihuahua
Pan American Silver
2.0% NSR and 1.25% NSR (gold)
2.0% NSR (silver)
PEÑASQUITO
Zacatecas
Newmont Goldcorp
2.0% NSR (gold, silver, lead and zinc)
NICARAGUA
EL LIMON
DOMINICAN REPUBLIC
PUEBLO VIEJO
SPAIN
LAS CRUCES
UNITED STATES
BALD MOUNTAIN
Leon
B2Gold
3.0% NSR
Sanchez
Ramirez
Barrick (60%)
7.5% of payable gold 20
75% of payable silver 20
Andalucia
First Quantum Minerals
1.5% NSR (copper) 21
Nevada
Kinross
CORTEZ
Nevada
Nevada Gold Mines LLC
GOLD HILL
GOLDSTRIKE (SJ CLAIMS)
LEEVILLE
MARIGOLD
ROBINSON
RUBY HILL
TWIN CREEKS
WHARF
SKYLINE
Kinross
Nevada
Nevada
Nevada
Nevada
Nevada
Nevada Gold Mines LLC
Nevada Gold Mines LLC
SSR Mining
0.9% NSR
1.8% NSR
2.0% NSR
KGHM
3.0% NSR (gold and copper)
Nevada
Nevada
South Dakota
Utah
Waterton Precious Metals
Nevada Gold Mines LLC
Coeur Mining
Bowie Resources
3.0% NSR
2.0% GPR
0.0% to 2.0% GSR 28
1.41% GV (coal)
1.75% to 2.5% NSR 22
GSR1: 0.40% to 5.0% GSR 23, 24
GSR2: 0.40% to 5.0% GSR 23, 24
GSR3: 0.71% GSR 24
NVR1: 4.91% NVR 24
NVR1C: 4.52% NVR 25
1.0% to 2.0% NSR (gold and silver) 26
0.6% to 0.95 NSR (M-ACE) 27
18
* One oil and gas royalty is not included
0.196
0.401
N.A.
2.205
0.089
0.460
1.232
0.959
0.160
3.320
87.277
4.736
1836.000
642.427
1448.878
85.429
0.036
N.A.
0.366
4.185
12.115
1.068
1.682
0.681
N.A.
N.A.
1.049
0.317
1.473
1.211
39.000
9.110
527.580
3613.200
7994.530
0.070
6.551
42.052
307.655
0.436
0.491
3.445
0.753
0.531
3.183
0.080
1.230
N.A.
2.525
0.985
1.863
0.413
692.343
0.024
0.057
0.855
N.A.
Au
Ag
Au
Au
Au
Au
Au
Au
Ag
Cu
Au
Au
Au
Cu
Cu
Ni
Co
Au
Au
Au
Ag
Au
Au
Au
Potash
– 8
0.029
4.023
0.861
2.611
4.060
1.251
1.532
1.416
– 8
101.010
11.930
– 13
0.075
9.460
22.142
1.679
6.886
1.047
1.281
Potash
0.166
Au
Au
Au
Au
Ag
Au
Ag
Pb
Zn
Au
Au
Ag
Cu
Au
Au
Au
Au
Au
Au
Au
Ag
Au
Au
Au
Au
Cu
Au
Au
Au
Coal
69.264
8.466
22.098
6.275
13.865
1.683
82.844
5.089
0.733
11.383
0.327
3.378
2.008
5.440
8.030
0.166
0.154
1.743
1.307
DEVELOPMENT PROPERTIES
PROPERTY
LOCATION
OPERATOR
AUSTRALIA
ROYALTY/METAL
STREAM 1
(GOLD UNLESS
OTHERWISE STATED)
RESERVES 2,3,4,5,6
(CONTAINED OZ
OR LBS) M7
METAL
BALCOOMA
Queensland
Consolidated Tin
1.5% NSR (gold, silver, copper,
lead and zinc)
JAGUAR NICKEL
W. Australia
Washington H. Soul
Pattinson and Company
1.5% NSR (gold, silver, copper
and zinc)
WEMBLEY DURACK
W. Australia
Westgold Resources
1.5% NSR
BOTSWANA
0.001
0.380
32.466
7.879
29.274
0.010
3.000
11.023
165.347
0.020
KHOEMACAU
Botswana
Cupric Canyon
80% of payable silver 8
19.011
BRAZIL
MARA ROSA
Goiás
Amarillo Gold
1.0% NSR and 1.75% NSR
1.087
CANADA
BELCOURT
British Columbia
Anglo American
0.103% GV (coal)
KUTCHO CREEK
British Columbia
Kutcho Copper Corp
2.0% NSR (gold, silver, copper
and zinc)
SCHAFT CREEK
British Columbia
Copper Fox/
Teck Resources
3.5% NPI (gold, silver, copper
and molybdenum)
BACK RIVER
Nunavut
Sabina Gold & Silver
George Lake: 2.35% GSR 9
Goose Lake: 1.95% GSR 10
CHILE
EL TOQUI
Region XI
Laguna Gold
0% to 3.0% NSR (zinc) 11
LA FORTUNA
Region III
Newmont Goldcorp
1.4% NSR (gold, copper) 12
N.A.
0.100
11.600
463.000
734.000
5.775
51.895
5630.715
373.340
0
2.503
131.704
2.674
1959.099
MACEDONIA
ILOVICA
Bosilovo
Euromax Resources
25% payable gold 13
2.010
NICARAGUA
LA INDIA
Leon
Condor Gold
3.0% NSR (gold, silver)
UNITED STATES
HASBROUCK MOUNTAIN
Nevada
PINSON
Nevada
West Kirkland Mining/
Clover Nevada
Waterton Precious
Metals Fund
1.5% NSR
3.0% NSR – Cordilleran 14, 15
2.94% NSR – Rayrock 14, 16
RELIEF CANYON
Nevada
Americas Gold and Silver
2.0% NSR (gold, silver) 17
0.675
1.185
0.588
10.569
0.483
0.436
1.597
Au
Ag
Cu
Pb
Zn
Au
Ag
Cu
Zn
Au
Ag
Au
Coal
Au
Ag
Cu
Zn
Au
Ag
Cu
Mo
Au
Au
Zn
Au
Cu
Au
Au
Ag
Au
Ag
Au
Au
Ag
19
ROYAL GOLD, INC | 2019 ANNUAL REPORT
EVALUATION PROPERTIES 1
PROPERTY
OWNERSHIP
ROYALTY
RATE
PROPERTY
OWNERSHIP
ROYALTY
RATE
Dundas Mining
2.0% NSR
ULU
Mandalay Resources
5.0% NSR 8
CANADA (CONTINUED)
AUSTRALIA
AVEBURY
BELL CREEK
BELLEVUE
Australian Mines
Golden Spur
BURNAKURA
Monument Mining
CELTIC/WONDER NORTH
Saracen
KUNDIP
ACH Minerals
A$1.00 to
A$2.00/tonne 2
2.0% NSR
1.5% to
2.5% NSR 3
1.5% NSR
1.0% to
1.5% GV 4
MEEKATHARRA - SABBATH
Westgold Resources
A$1.00/tonne 5
MT. FISHER
Rox Resources
A$5.00/oz 6
MT. GOODE (COSMOS)
Western Areas
1.5% NSR
(nickel)
PADDINGTON
PINNACLES
Zijin Mining Group
1.75% NSR
Nexus/Saracen
QUINNS AUSTIN
CNN Investments
RED DAM
Evolution Mining
1.5% NSR
1.5% NSR
2.5% GSR (Au);
2.5% NSR (Ag)
TEMORA
ULYSSES
VAN UDEN GOLD DEPOSIT
Sandfi re Resources
12.5% NPI
Genesis Minerals
1.5% NSR
Wesfarmers/
Shandong Tianye
1.5% NSR
WESTMORELAND
Laramide Resources
1.0% NSR
YUNDAMINDRA
Nex Metals
1.5% NSR
BRAZIL
CASTELO DE SONHOS
TriStar Gold
1.5% NSR
CANADA
BARRAUTE (SWANSON)
Monarques Gold
WOLVERINE
Yukon Zinc
CHILE
PASCUA-LAMA
Barrick
0.0% to
9.445% NSR 9
0.78-5.45% NSR
(Au) 10,11;
1.09% NSR (Cu) 12
GHANA
KUBI VILLAGE
GUATEMALA
TAMBOR
MEXICO
NIEVES
RUSSIA
Asante Gold
3.0% NPI
Kappes, Cassiday
& Associates
4.0% NSR
Blackberry Ventures
2.0% NSR
UNITED STATES
ALMADEN
GOLDRUSH
Sailfi sh Royalty Corp.
1.0% to
2.0% NSR 14
Nevada Gold Mines LLC
1.0% NVR
ISLAND MOUNTAIN
Tuvera Exploration
2.0% NSR
JOHNSON CAMP
Excelsior Mining
2.5% NSR
0.75% or
1.0% NSR
0.5% NSR
1.25% or
1.5% NSR 13
$0.25/lb
(uranium) 15
1.0% NSR
1.0% to
3.0% NSR 16
2.0% or
3.0% NSR 17
1.0% NSR
3.0% NSR 18
1.0% NSR 18
1.0% NSR 19
1.0% to
2.0% NSR 20
1.0% to
2.0% NSR 7
1.0% NSR
1.0% NSR
1.0% NSR
2.0% NSR
LA JARA MESA
Laramide Resources
LONG VALLEY
NIBLACK
Kore Mining
Heatherdale
Resources
PEAK GOLD PROJECT
Peak Gold
ROCK CREEK
SAN JUAN SILVER
(BULLDOG)
Hecla Mining
Hecla Mining
Centerra Gold
Seabridge Gold
Glencore
Newmont Goldcorp/
Premier Gold
Pan American Silver
1.5% NSR
MMG Limited
1.5% NSR
WILDCAT
Clover Nevada LLC
BERG
BRONSON SLOPE
CABER
FOLLANSBEE
GOLD RIVER
HIGH LAKE
RED OCTOBER
Matsa Resources
1.5% NSR
FEDOROVA
Barrick/Pana PGM
HORIZON COAL
Anglo American
0.50% GV (coal)
HUSHAMU
NorthIsle Copper
and Gold
10.0% NPI
PHOENIX GOLD
Rubicon Minerals
1.0% NSR
20
EXPLORATION PROPERTIES
PROPERTY
OWNERSHIP
ROYALTY
RATE
PROPERTY
OWNERSHIP
Yamana
2.5% NSR
MIKE LAKE
CANADA (CONTINUED)
MONUMENT
MOORE LAKE
NIGHTHAWK LAKE
NORTHGATE
PICKLE LAKE #2
Skyharbour Resources
2.5% NSR 11
Troilus Gold
Equity Metals/
Archon Minerals
Imperial Metals/
Rainy Mountain Royalty/
White Metal Resources
Argo Gold
PC Gold
CROESUS
Zijin Mining Group
Eastern Goldfi elds
0.6% NSR
RAMBLER SOUTH
MT. GOODE BELLEVUE
Golden Spur Resources
MT NEWMAN-VICTORY
St Barbara
NORTHWELL CHILKOOT
Saracen
PHILLIPS FIND
RED HILL WEST
Barra Resources
API Management
SOUTHERN CROSS NICKEL
Western Areas
WALLBROOK GOLD PROJECT
Nexus Minerals
WEST WYALONG
Argent Minerals/
HQ Mining
STAKEWELL
Diversifi ed Asset Holdings 1.5% NSR
China Minmetals
2.5% NSR
SAN JERONIMO
Newmont Goldcorp
2.0% NSR
ROYALTY
RATE
2.0% NSR
1.0% GV
2.5% NSR 12
1.0% NSR
1.0% NSR
1.0% to
3.0% NSR 13
2.0% NSR 13
1.0% GV 13
1.0% NSR
1.0% NSR
0.5% NSR
5.0% NSR 14
3.0% GV
5.0% NPI
2.0% NPI
ARGENTINA
MINA CANCHA
AUSTRALIA
ABBOTTS
BUTTERCUP BORE
CHERITONS FIND
CHESTERFIELD
CHUNDERLOO
EDNA MAY
FORRESTANIA
LAKE BALLARD
LOUNGE LIZARD
MELBA FLATS
MERLIN ORBIT
CANADA
AFRIDI LAKE
ASHMORE
AVIAT ONE
BARROW LAKE AND
NORTH KELLET RIVER
CARSWELL LAKE
CHURCHILL
CHURCHILL WEST
DUVERNY
FRANQUET
GAUTHIER
GODFREY II
GOLD DOME
GOLDEN BEAR
HICKEY’S POND
HOOD RIVER
JEWEL
JOE MANN
JUBILEE
KIZMET
Zeus Mining
Panoramic Gold
Hanking Gold
Tanzi Pty Ltd
Auris Minerals
Ramelius Resources
Western Areas
Western Areas
Dundas Mining
Merlin Diamonds
Shear Diamonds
Quaternary Mining
& Exploration
Stornoway Diamond
Hunter Exploration
Orano Canada/
Capstone Mining
Shear Diamonds/
Stornoway Diamond
Shear Diamonds/
Stornoway Diamond
Golden Predator
Newmont Goldcorp
Krinor Resources
Shear Diamonds
Stornoway Diamond
Jessie Resources
Stornoway Diamond
Centerra Gold
1.5% NSR
2.0% GV
1.5% NSR
1.5% NSR
0.45% NSR
A$1.25/
tonne 1
0.5% GSR
1.5% NSR 2
1.5% NSR 2
2.0% NSR
1.0% GV
2.0% NSR 3
1.5% NSR 3
1.5% NSR
2.5% to
4.0% GV
A$10.00/oz 4
2.5% NSR 5
1.5% NSR 6
1.5% NSR
2.5% NSR
1.5% GV
1.5% NSR
1.0% GV
1.0% GV
5.0% NSR
1.0% NSR
1.0% GV
2.0% NSR
2.0% NSR
1.0% NSR
1.0% GV
1.0% GV
0.0% to
2.0% NSR 9
1.0% GV
1.0% NSR 10
1.0% NSR
Threegold Resources
15.0% NPI 7
Nuinsco Resources/
Ocean Partner
Agnico Eagle
2.0% NSR 8
3.0% NSR 8
3.0% NSR
Moneta Porcupine Mines
2.0% NSR
MCKENZIE RED LAKE
Newmont Goldcorp
QIMMIQ
ValOre Metals
RED LAKE
SHASTA
TAK
Krinor Resources
Rubicon Minerals
Talisker Resources
Canterra Minerals
VOISEY'S BAY DIAMONDS
Vale
WILANOUR
Newmont Goldcorp
YELLOWKNIFE LITHIUM
Erex International
MEXICO
TUNISIA
TROZZA
UNITED STATES
AMBROSIA LAKE
APEX
BSC
Westwater Resources
Teck/Pennaroya Utah
McEwen Mining
BUCKHORN SOUTH
Nevada Gold Mines LLC
COOKS CREEK/FERRIS CREEK
Barrick
DOBY GEORGE
Western Exploration
HORSE MOUNTAIN
Barrick
HOT POT
ICBM
KEYSTONE
Nevada Exploration
Timberline Resources
Energy Fuels
MCDONALD-KEEP COOL
Newmont Goldcorp
MULE CANYON
Newmont Goldcorp
NEVADA PROPERTIES
Rubicon Minerals
ORO BLANCO
Pan American Silver
PINSON – OTHER
RYE
SAN RAFAEL
SIMON CREEK
Barrick
Barrick
Rio Grande Resources
Barrick
TRENTON CANYON
Newmont Goldcorp
TROY
UNCLE SAM
WINDFALL
WOOD GULCH
Hecla Mining
PolarX Limited
Timberline Resources
Western Exploration
WOODRUFF CREEK
McEwen Mining
2.0% NVR
3.0% NSR 15
2.5% NSR
15.0% NPI 16
14.0% NPI 16
1.5% NVR
2.0% NSR 17
0.25% NVR
1.25% NSR
0.75% NSR
2.0% NSR
3.0% NSR
5.0% NSR
2.5% NSR
3.0% NSR
0.489% to
5.979% NSR 18
0.5% NSR
2.0% NVR
1.0% NSR
2.4% GSR 19
8.0% NPI 19
3.0% GSR
2.0% NSR
3.2% NSR
5.0% NSR
1.0% NSR
21
ROYAL GOLD, INC | 2019 ANNUAL REPORT
FOOTNOTES
PRODUCING PROPERTIES
1. Metal Stream and Royalty defi nitions are included in the glossary on page 28 of this
7. “Contained ounces” or “contained pounds” do not take into account recovery losses in
annual report.
mining and processing the ore.
2. Reserves have been reported by the operators of record as of December 31, 2018,
with the exception of the following properties where reserves have been reported
by the operators of record or their predecessors in interest and are unadjusted for
production since these dates: La India - January 25, 2019; Don Mario - September
30, 2018; Gwalia Deeps, King of the Hills, Meekatharra, South Laverton and Wembley
Durack - June 30, 2018; Relief Canyon - May 24, 2018; Khoemacau - April 17, 2018;
El Toqui - February 28, 2018; Pine Cove, Taparko and Williams - December 31, 2017;
Jaguar Nickel - June 30, 2017; Bald Mountain, Gold Hill, Inata, Robinson and Southern
Cross - December 31, 2016; Back River - August 15, 2015; Hasbrouck Mountain -
June 3, 2015; La Fortuna, Pinson and Ruby Hill - December 31, 2014; Schaft Creek
- December 31, 2012; Don Nicolas - December 31, 2011; and Balcooma - June 30, 2011.
3. Gold reserves were calculated by the operators at the following per ounce prices:
A$1,650 - Meekatharra and King of the Hills; A$1,600 - Southern Cross and South
Laverton; $1,600 - Pine Cove; $1,366 - Schaft Creek; A$1,350 - Gwalia Deeps; $1,300 -
Dolores, La Fortuna, Mara Rosa and Pinson; $1,275 - Rainy River; $1,250 - Andacollo, Back
River, Don Mario, El Limon, Inata, La India, Marigold, Mount Milligan, Prestea, Robinson,
Taparko, Wassa and Wharf; $1,230 - Holt; $1,225 - Hasbrouck Mountain; $1,200 - Bald
Mountain, Canadian Malartic, Cortez, Gold Hill, Goldstrike, Leeville, Peñasquito, Pueblo
Viejo, Twin Creek and Williams; $1,150 - LaRonde Zone 5; and $1,100 - Don Nicolas and
Ruby Hill. No gold price was reported for Balcooma, Jaguar Nickel, Kutcho Creek or
Wembley Durack.
Silver reserves were calculated by the operators at the following prices per ounce:
$25.96 - Schaft Creek; $25.00 - Don Nicolas; $20.00 - Gold Hill; $18.50 - Dolores; $18.00
- Peñasquito; $17.50 - Hasbrouck Mountain; $17.00 - Rainy River; $16.50 - Pueblo Viejo;
and $15.00 - Don Mario and Khoemacau. No silver price was reported for Balcooma,
Jaguar Nickel or Kutcho Creek.
Copper reserves were calculated by the operators at the following prices per pound:
$3.52 -Schaft Creek; $3.00 - Andacollo, La Fortuna and Mount Milligan; $2.95 - Robinson;
$2.75 - Las Cruces; $2.76 - Voisey’s Bay; and $2.50 - Don Mario. No copper reserve price
was reported for Balcooma, Jaguar Nickel or Kutcho Creek.
Lead reserve price was calculated by the operators at the following prices per pound:
$0.95 - Peñasquito. No lead reserve price was reported for Balcooma.
Zinc reserve price was calculated by the operators at the following prices per pound:
$1.15 - Peñasquito; and $0.95 - El Toqui. No zinc reserve price was reported for Balcooma,
Jaguar Nickel or Kutcho Creek.
Nickel reserve price was calculated by the operator at the following price per pound:
$5.01 - Voisey’s Bay.
Cobalt reserve price was calculated by the operator at the following price per pound:
$24.69 - 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 defi nitions 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 defi ned
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 defi nitions for proven and probable reserves. For Canadian issuers,
defi nitions of “mineral reserve,” “proven mineral reserve,” and “probable mineral
reserve” conform to the Canadian Institute of Mining, Metallurgy and Petroleum
defi nitions of these terms as of the eff ective date of estimation as required by National
Instrument 43-101 of the Canadian Securities Administrators. For Australian issuers,
defi nitions 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 defi nitions of reserves used by the U.S.
Securities and Exchange Commission.
6. The reserves reported are either estimates received from the various operators or are
based on documentation provided to Royal Gold or are derived from publicly available
information from the operators of the various properties or various National Instrument
43-101 or JORC Code reports fi led by operators. Royal Gold is not able to reconcile the
reserve estimates prepared in reliance on National Instrument 43-101 or JORC Code with
defi nitions of the U.S. Securities and Exchange Commission.
8. No revenue received during the fi scal year ended June 30, 2019.
9. At Paddy’s Flat an additional royalty of A$10 per ounce applies on production above
50,000 ounces; At Reedy’s an additional 1.5% to 2.5% NSR sliding-scale royalty pays at
a rate of 1.5% for the fi rst 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 and a 1.0%
NSR royalty applies to the Rand area only. At Yaloginda the royalty is 0.45% NSR.
10. 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.
11. The 2.0% GSR applies to gold production from defi ned portions of the Taparko-Bouroum
project area. The 0.75% GSR milling royalty applies to ore that is mined outside of the
defi ned area of the Taparko-Bouroum project that is processed through the Taparko
facility up to a maximum of 1.1 million tons per year.
12. Centerra Gold will deliver 35% of payable gold produced, subject to a fi xed payable
percentage of 97%, and 18.75% of payable copper produced, subject to a minimum
payable percentage of 95%. The purchase price for gold is equal to the lesser of $435
per ounce delivered or the prevailing market price and the purchase price for copper is
15% of the spot price per metric tonne delivered.
13. Operation is currently in production; estimated pay-back of capital, a requisite for
commencing the NPI royalty payment, has not been achieved as of June 30, 2019.
14. 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. As of June 30, 2019, approximately 24,000 ounces
of payable gold and 235,000 ounces of payable silver have been delivered.
15. NSR sliding-scale schedule (price of gold per ounce - royalty rate): $0.00 to $350 - 1.0%;
above $350 - 1.5%.
16. The royalty applies to 40% of production. The royalty rate is $1.44 per ton for the fi rst
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.
17. Royalty applies to 40% of production. The royalty is capped at $150,000 per
calendar year.
18. 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 fi xed 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. As of June 30, 2019,
approximately 193,000 ounces of payable gold have been delivered.
19. Golden Star will deliver 10.5% of payable gold produced until 240,000 ounces have
been delivered from Wassa and Prestea, and 5.5% of payable gold produced thereafter.
The purchase price for gold ounces delivered is 20% of the spot gold price until the
threshold has been met, and 30% of the spot gold price thereafter. As of June 30, 2019,
approximately 90,000 ounces of payable gold have been delivered from Wassa and
Prestea.
20. Barrick will deliver: (a) gold in amounts equal to 7.50% of Barrick’s 60% interest in
payable gold until 990,000 ounces have been delivered, and 3.75% of Barrick’s 60%
interest in payable gold 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 payable silver, subject to a fi xed silver recovery of 70%, until 50 million ounces
have been delivered, and 37.50% of Barrick’s 60% interest in payable silver thereafter,
at a purchase price equal to 30% of the spot price per ounce delivered until 23.1 million
ounces of silver have been delivered, and 60% of the spot price per ounce delivered
thereafter. As of June 30, 2019, approximately 181,000 ounces of payable gold and 6.2
million ounces of payable silver have been delivered.
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. 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.
23. GSR1 and GSR2 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%.
24. The Cortez royalties are based on Regions within the Cortez land package. GSR1 covers
Regions 3 and 4; GSR2 covers Regions 2, 4 and 5; GSR3 covers Regions 2, 3 and 4; and
NVR1 covers Regions 2, 4 and 5.
25. NVR1C is the designation utilized by the Company to address the Crossroads portion
(i.e. Region 5) of the NVR1 royalty.
22
26. 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
silver royalty rate is based on the price of gold. The 1.0% to 2.0% sliding-scale NSR royalty
is capped at $10 million. As of June 30, 2019, royalty payments of approximately $6.88
million have been received.
27. The 0.6% to 0.9% sliding-scale NSR only applies to the M-ACE claims. 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.
28. 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 1-7, see corresponding footnotes under Producing Footnotes.
8. When production commences, Cupric will deliver 80% of payable silver produced,
subject to a fi xed payable percentage of 90%. At Cupric’s option and subject to various
conditions, Royal Gold will make an additional advance payment for the right to purchase
up to an additional 20% of the payable silver. The stream rate will drop by 50% upon the
delivery of 32 million ounces of silver at the 80% stream level, and 40 million ounces of
silver at the 100% stream level if the option is fully exercised. The purchase price is 20%
of the spot price of silver. Depending on the achievement by Cupric of mill expansion
throughput levels above 13,000 tonnes per day (30% above current mill design capacity),
Royal Gold will pay higher ongoing cash payments for ounces delivered in excess of
specifi c annual thresholds.
9. George Lake royalty applies to production above 800,000 ounces.
10. Goose Lake royalty applies to production above 400,000 ounces.
11. 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%.
12. The royalty covers approximately 30% of the La Fortuna deposit. Reserves attributable
to Royal Gold’s royalty represent 3/7 of Newmont Goldcorp’s reporting of 70% of the
total reserve.
13. This is a metal stream whereby Royal Gold is entitled to 25% of payable gold until 525,000
ounces of payable gold have been delivered; 12.5% thereafter, whereby the purchase
price for gold is 25% of the London PM gold fi xing price as quoted in United States dollars
per ounce by the LBMA on the Date of Delivery.
14. Royalty only applies to Section 29 which currently holds about 95% of the reserves
reported for the property.
15. A Cordilleran royalty of 5.0% NSR applies to a portion of Section 28.
16. Diff erent Rayrock royalty rates apply to Sections 28, 32 and 33; these rates vary
depending on pre-existing royalties. The Rayrock royalties take eff ect once 200,000
ounces of gold have been produced from open pit mines on the property. As of June 30,
2019, approximately 103,000 ounces have been produced.
17. Reserves represent Royal Gold’s interest based on our royalty ground covering
approximately 69% of the resource footprint by area.
EVALUATION PROPERTIES
1. Royal Gold considers and categorizes an exploration stage property to be an “evaluation
stage” property if mineralized material has been identifi ed on the property but reserves
have yet to be identifi ed. 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 identifi ed on these properties will ever be
converted into reserves.
2. The royalty is A$1.00 per tonne on the fi rst 5 million tonnes of production; A$2.00 per
tonne thereafter.
3. The 1.5% to 2.5% NSR sliding-scale royalty pays at a rate of 1.5% for the fi rst 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.
11. 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 or equal
to$800 - 5.23%. Royalty is interpolated between lower and upper production endpoints.
12. Royalty applies to all copper production from an area of interest in Chile.
13. The 0.75% NSR royalty applies to gold and silver and the 1.0% NSR royalty 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.
14. A $325,000 payment is due upon production of the fi rst 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%.
15. Royalty is payable on per pound of uranium produced above eight million pounds.
16. 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.
17. Royalty rate depends on the claim group.
18. Royalty rate is 3.0% on Homestake and Emerald unpatented claims; 1.0% on Emerald
patented claims.
19. The 1.0% royalty rate applies to the SS lode claims only.
20. 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.
3. Royalty rate is 2.0% for gold and 1.5% for all other metals.
4. Royalty is 2.5% at grades above 1.5 g/t or 4.0% for grades at 1.5 g/t or less.
5. Royalty applies to production above 40,000 ounces and is capped at $1 million.
6. Royalty payable on all minerals, except nickel or any by-products in whatever form or
state.
7. 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.
8. 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.”
9. 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
eff ect at a gold price of $350 per ounce or higher. The 2.0% NSR royalty applies to silver
and copper.
10. Operator has the option to purchase the entire 1.0% NSR for $1 million prior to the
development of a mine on the property.
11. 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.
12. Operator may purchase 1.5% of the 2.5% NSR at any time for CDN$1.5 million.
13. 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.
14. Operator has the right to purchase 2.5% of the 5.0% NSR at any time for $1 million.
4. The royalty rate is 1.0% until 250,000 ounces of gold has been produced; 1.5% thereafter.
15. Royalty is capped at $1 million.
5. Royalty applies on production above 10,000 ounces.
16. The 15.0% NPI and the 14.0% NPI apply to diff erent claims on the property.
6. Royalty is capped at 500,000 ounces.
17. The 2.0% NSR becomes payable once 400,000 ounces have been produced.
7. Royalty rate is 1.0% on Exploration claims and 2.0% on Gold claims. The 2.0% royalty on
18. Royalty rate varies depending on pre-existing royalties (max of 6.0%).
Gold claims has a 50% buy back for $1 million.
8. Royalty applies to production above 675,000 ounces.
9. Gold royalty rate is based on the price of silver per ounce. NSR sliding-scale schedule
(price of silver per ounce - royalty rate): Below $5.00 - 0.0%; $5.00 to $7.00 - 3.778%;
above $7.50 - 9.445%.
10. Royalty applies to all gold production from an area of interest in Chile. Approximately
20% of the royalty is limited to the fi rst 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 fi rst 36 months
of commercial production.
19. The 2.4% 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 8.0% NPI applies to
production from the properties from which less than 60% of the revenues are projected
to be derived from gold and silver.
23
ROYAL GOLD, INC | 2019 ANNUAL REPORT
CORPORATE RESPONSIBILITY
CORPORATE RESPONSIBILITY
Royal Gold acquires metals streams, royalties and similar
passive interests in mineral production, primarily by
providing fi nancing to third party developers and operators
of mining projects. Except for our activities at the Peak
Gold project in Alaska, we do not conduct exploration,
development or mining operations, and our stream and
royalty agreements do not allow us direct influence
over our operators’ decision-making and operations at
the properties in which we’re invested. Moreover, with
fewer than 25 professional and administrative employees
across four offi ces in three countries, Royal Gold’s direct
environmental and social footprint is modest.
Nonetheless, we acknowledge international concerns
related to climate change, sustainability and other
environmental, social and governance (ESG) issues,
particularly as those concerns may be infl uenced by the
mining industry.
We believe responsible mining and business practices
can create sustainable value for all stakeholders.
Guided by this core principle, we are committed to good
governance, environmental stewardship, promoting
human rights (including children’s rights) and fair labor
practices, safeguarding the wellbeing of our own
employees, and respecting the cultures and values
of the host countries and the indigenous and local
communities where we invest.
As a member of the World Gold Council, we fully endorse
the new Responsible Gold Mining Principles (RGMPs),
which promote sustainable gold mining. We also support
the ICMM 10 Principles for sustainable development
across the mining and metals industries generally, as
well as the London Bullion Market Association’s
“Responsible Sourcing” program designed to combat
money laundering, terrorist fi nancing and human rights
abuses in global metals markets.
These are not merely aspirational standards. Royal Gold
considers management of ESG risks and commitment
to sustainability as cornerstone responsibilities for well-
managed mining projects. We recognize that while our
infl uence over our operators’ mining projects is limited,
our stream and royalty portfolio is indirectly exposed to
the ESG risks associated with those operations. We
manage our exposure to these risks by:
•
•
•
•
seeking new stream and royalty investment
opportunities with responsible operators who maintain
appropriate focus on ESG risks at their operations;
conducting considerable due diligence, including
review of operators’ commitment to the above
principles, during our review of new investment
opportunities;
seeking, where possible, to mitigate ESG risk to our
investments through negotiation of appropriate
contractual safeguards; and
af ter making a new investment, monitoring
the operator’s management of ESG risks on an
ongoing basis and, where necessary, enforcing our
contractual rights.
Operators responsible for generating more than 95% of
our 2019 fi scal year revenue also endorse the RGMPs
and the ICMM 10 Principles and/or subscribe to one or
more other international charters respecting ESG issues,
24
including the United Nations Global Compact and GRI
Sustainability Standards, the IFC Performance Standards
on Environmental and Social Sustainability, the United
Nations Sustainable Development Goals and the Extractive
Industries Transparency Initiative (EITI) or host country
legislation implementing EITI.
Many of our operators also actively and positively
impact the communities where they mine. We
encourage their eff orts and often make our own fi nancial
contributions in support of their programs. In 2019, we
joined with Alamos Gold Inc. to fund a medical clinic
and a scholarship program that provide needed
healthcare and educational opportunities to the
communities in proximity to the Mulatos mine located in
Sonora, Mexico.
At our Peak Gold project, we continue working
with our joint venture partner to support the local
Tetlin native community by funding social, cultural
and other initiatives, administering secondary and
post-secondary educational programs, and providing other
development opportunities to Tetlin village residents.
Royal Gold’s success also depends heavily on the
quality, commitment and welfare of our own employees.
Our policies promote a safe and healthy workplace and
require strict adherence to legal and ethical standards in
our business practices. We also value the organizational
strength that comes from a talented and diverse workforce.
Royal Gold is committed to an inclusive work environment
where individuals are treated with fairness and respect
and are given equal opportunity to develop and advance
without regard to age, race, gender, color, religion, national
origin, disability, sexual orientation, marital status, military
status, and genetic characteristics.
Royal Gold’s commitment to community carries beyond
our offi ces. A number of our current and former directors,
offi cers and employees are active in or otherwise support
educational institutions and non-profi t organizations
furthering such causes as promotion of community health,
elimination of food insecurity and protection of at-risk
children. We support these eff orts by giving all employees
two full days of paid leave in order to serve non-profi t
organizations of their choosing.
25
ROYAL GOLD, INC | 2019 ANNUAL REPORT
TOTAL RETURN
TO SHAREHOLDERS
(Includes reinvestment of dividends)
ANNUAL RETURN PERCENTAGE
Company Name / Index
Royal Gold, Inc.
S&P 500 Index
PHLX Gold/Silver Sector Index
INDEXED RETURNS
Company Name / Index
Royal Gold, Inc.
S&P 500 Index
PHLX Gold/Silver Sector Index
2019
144.26
166.33
86.91
2019
11.72
10.42
4.01
2018
129.13
150.64
83.55
Years Ending June 30,
2018
20.17
14.37
1.69
2017
9.63
17.90
-16.72
2016
19.16
3.99
2015
-17.75
7.42
55.80
-36.67
Years Ending June 30,
2017
107.45
131.70
82.17
2016
98.01
111.71
98.66
2015
82.25
107.42
63.33
Base Period
2014
100
100
100
PHLX GOLD/SILVER SECTOR INDEX CONSTITUENTS
Agnico Eagle Mines Ltd.
Alamos Gold Inc.
Freeport-McMoRan Inc.
Gold Fields Limited
AngloGold Ashanti Limited
Gold Resource Corporation
Newmont Goldcorp Corporation
NovaGold Resources Inc.
Pan American Silver Corp.
Harmony Gold Mining Company Limited
Royal Gold, Inc.
B2Gold Corp.
Barrick Gold Corporation
Coeur Mining, Inc.
Hecla Mining Company
IAMGOLD Corporation
Compañía de Minas Buenaventura S.A.A.
Kinross Gold Corporation
Eldorado Gold Corporation
First Majestic Silver Corp.
MAG Silver Corp.
McEwen Mining Inc.
Sandstorm Gold Ltd.
Seabridge Gold Inc.
Sibanye Gold Limited
SSR Mining Inc.
Wheaton Precious Metals Corp.
Franco-Nevada Corporation
New Gold Inc.
Yamana Gold Inc.
COMPARISON OF CUMULATIVE FIVE-YEAR TOTAL RETURN
$200
$150
$100
$50
$0
Royal Gold, Inc.
S&P 500 Index
PHLX Gold/Silver Sector
June ’14
June ’15
June ’16
June ’17
June ’18
June ’19
26
Prepared by S&P Global Market Intelligence, a division of S&P Global Inc.
FORWARD LOOKING
STATEMENTS
other developments; variation of actual performance from the
production estimates and forecasts made by the operators of
those properties and projects; unexpected operating costs,
decisions and activities of the operators of the Company’s
stream and royalty properties; changes in operators’ mining
and processing techniques or stream delivery or royalty
payment calculation methodologies; resolution of regulatory
and legal proceedings; unanticipated grade, geological, seismic,
metallurgical, environmental, processing or other problems the
operators may encounter at the properties; operators’ inability to
access suffi cient raw materials, water, power or other resources
or infrastructure; revisions or inaccuracies in technical reports,
reserve, resources and production estimates; changes in
operators’ project parameters as plans of the operators are
refi ned; changes in estimates of reserves and mineralization by
the operators of the Company’s stream and royalty properties;
contests to the Company’s stream and royalty interests and title
and other defects in the properties where the Company holds
stream and royalty interests; the results of current or planned
exploration activities; errors or disputes in calculating stream
deliveries or royalty payments, or deliveries or payments not
made in accordance with stream or royalty agreements; decisions
and activities of the Company’s management aff ecting margins,
use of capital, and strategy; the liquidity and future fi nancial
needs of the Company; our inability to acquire additional stream
or royal interests at appropriate valuations; economic and
market conditions; the impact of future acquisitions and stream
and royalty fi nancing 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; inability to
transition to new leadership; insuffi cient cash fl ow to repay debt;
enforcement and uncertain political and economic environments.
These risks and other factors are discussed in more detail in
the Company’s public fi lings with the Securities and Exchange
Commission. Most of these risks are beyond the Company’s
ability to control. 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. Readers are cautioned
not to put undue reliance on forward-looking statements.
Third-party information: The Company does not own, develop or
mine the properties on which it holds stream or royalty interests,
except for our interest in the Peak Gold Joint Venture. Certain
information provided in this report has been provided to the
Company by the operators of those properties or is publicly
available information fi led by these operators with applicable
securities regulatory bodies, including the Securities and
Exchange Commission. The Company has not verifi ed, 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 fi led by the
operators for information regarding those properties.
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 and uncertainties that could cause actual results to diff er
materially from the projections and estimates contained herein
and include, but are not limited to: disciplined strategy and
successful results; benefi ts received or generated by discovery of
new reserves and production; strong cash-fl ow and high margins;
management team ensuring success of the new leader and the
Company; delivering upside to gold price appreciation while
mitigating risks; unique business model limiting shareholder
dilution by growing out of cash fl ow; attractive investment in
all market conditions; long-lived and diversifi ed assets with
exploration upside and stability during broader market declines;
paying a growing dividend; growth projects at Peñasquito, Pueblo
Viejo, Rainy River and Cortez; expected water supply increases
at Mount Milligan; dialogue with Peñasquito stakeholders;
expectations that Voisey’s Bay mine life will extend until 2034;
highlights of Preliminary Economic Assessment and positioning
of Peak Gold Project for future development; production and
mine life expectations at Khoemacau; mineralized material and
prospective land position at Castelo del Sonhos; and shareholder
returns; investment in long-lived assets providing resource to
reserve conversion upside; maintenance of a strong balance
sheet and the ability to opportunistically invest at favorable times
in the price cycle, often when counterparties most need fi nancing;
ability to source capital effi ciently and grow the business from
free cash fl ow; maintenance of a lean cost structure to expand
and maximize margins; payment of sustainable and growing
dividends; average remaining reserve life at Principal Producing
Properties; operators’ forecasts of increased or decreased grades
or production; optionality at our producing properties through the
operators’ innovation, capital, and exploration or the ability of
operators of our producing properties to successfully complete
expansions, process improvements, exploration programs or
other projects, including expectations regarding Peñasquito’s
Pyrite Leach Project, the possible plant expansion at Pueblo Viejo,
the start of mining at the Cortez Crossroads deposit, the 47%
increase in gold reserves at Golden Star’s Wassa underground
mine; expectations regarding water supply management at Mount
Milligan; studies and projects at Andacollo that may increase
mill throughput and production; mine optimization study with
objective to improve return on investment and new life of mine
plan at Rainy River; changes to 2019 production rates at Wassa;
grade and production expectations at Peñasquito; production
increases at Cortez; and management of ESG risks.
Factors that could cause actual results to diff er 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 the Company’s stream and royalty properties; the ability of
operators to fi nance project construction to completion and bring
projects into production as expected, including development
stage mining properties, mine and mill expansion projects and
27
ROYAL GOLD, INC | 2019 ANNUAL REPORT
GLOSSARY
CONCENTRATE: A mineral-rich, intermediate, product
obtained from processing ore, by gravity or flotation
operations. Concentrates typically require additional
processing to obtain refi ned metal.
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 defi ned
percentage of the gross revenue from a resource extraction
operation, less, if applicable, certain contract-defi ned costs
paid by or charged to the operator.
GROSS VALUE (GV) ROYALTY: A defi ned 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-defi ned 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, refi ning and smelting costs.
NET VALUE ROYALTY (NVR): A defi ned percentage of the
gross revenue from a resource extraction operation, less
certain contract-defi ned costs.
PROBABLE RESERVES: Reserves for which quantity and
grade and/or quality 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 continuity between points of observation.
PROVEN RESERVES: Reserves for which: (a) quantity is
computed from dimensions revealed in outcrops, trenches,
workings or drill holes; grade and/or quality are 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 defi ned
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 defi nitions).
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 fl uctuates
based on contract-specifi ed 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.
28
FORM 10-K
2 0 1 9
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 2019
or
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
Common Stock, $0.01 par value
Trading Symbol
RGLD
Name of the Exchange on which Registered
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 No
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 No
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
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and 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 such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange
Act.
Large accelerated filer
Non-accelerated filer (Do not check if a smaller reporting company)
Emerging growth company
Accelerated filer
Smaller reporting company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
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,
2018, as reported on the NASDAQ Global Select Market was $5,576,392,624. There were 65,559,787 shares of the Company’s common stock, par value $0.01 per share,
outstanding as of July 31, 2019.
Portions of the Proxy Statement for the 2019 Annual Meeting of Stockholders scheduled to be held on November 20, 2019, and to be filed within 120 days after June 30, 2019,
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
PAGE
1
7
20
20
31
31
31
32
32
48
49
80
80
82
82
82
82
82
82
83
83
84
90
Business
PART I.
ITEM 1.
ITEM 1A. Risk Factors
ITEM 1B. Unresolved Staff Comments
ITEM 2.
ITEM 3.
ITEM 4.
PART II.
ITEM 5.
Properties
Legal Proceedings
Mine Safety Disclosure
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Financial Statements and Supplementary Data
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
ITEM 6.
ITEM 7.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
ITEM 8.
ITEM 9.
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
ITEM 16 Form 10-K Summary
EXHIBIT INDEX
SIGNATURES
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, except for our
interest in the Peak Gold, LLC joint venture (“Peak Gold JV”) as described further in this report. 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 (the “SEC”). 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.
PART I
ITEM 1. BUSINESS
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 life of the transaction by the purchase agreement. As of June 30, 2019, we owned seven stream
interests, which are on six producing properties and two development stage properties. Our stream interests accounted
for approximately 72% and 71% of our total revenue for the fiscal years ended June 30, 2019 and 2018 respectively. We
expect stream interests to continue representing a significant proportion of our total revenue.
Acquisition and Management of Royalty Interests—Royalties are non-operating interests in mining projects that provide
the right to a percentage of revenue or metals produced from the project after deducting specified costs, if any. As of
June 30, 2019, we owned royalty interests on 35 producing properties, 14 development stage properties and 129
exploration stage properties, of which we consider 47 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 28% and 29% of our total revenue for the fiscal years ended
June 30, 2019 and 2018.
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 JV, 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, our analysis of technical, financial, legal and
1
other confidential information of particular opportunities, 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 2019
were as follows:
(1)
(2)
(3)
(4)
We settled the long-standing litigation related to the calculation of our royalty at the Voisey’s Bay mine;
We entered into a silver stream on the Khoemacau Copper Project, a development stage project, located
in Botswana;
We settled the $370 million aggregate principal amount of our 2.875% convertible senior notes due 2019
(“2019 Notes”) in cash; and
We increased our calendar year dividend to $1.06 per basic share, which is paid in quarterly installments
throughout calendar year 2019. This represents a 6.0% increase compared with the dividend paid
during calendar year 2018.
Certain Definitions
Dollar or “$”: Unless we have indicated otherwise, or the context otherwise requires, references in this Annual Report
on Form 10-K to “$” or “dollar” are to the currency of the United States. We refer to Canadian dollars as C$.
Gold equivalent ounces (GEOs): GEOs are calculated as Royal Gold’s revenue divided by the average gold price for the
period.
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 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.
Mineralized material: That part of a mineral system that has potential economic significance, but is not included in the
proven and probable 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.
Probable reserves: Reserves for which quantity and grade and/or quality 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
continuity between points of observation.
Proven reserves: Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings
or drill holes, grade and/or quality are 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.
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.
2
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.
Fiscal 2019 Business Developments
Please refer to Item 7, MD&A, for discussion on recent liquidity and capital resource developments.
Acquisition of Silver Stream on Khoemacau Copper Project
On February 25, 2019, the Company announced that its wholly-owned subsidiary, RGLD Gold AG (“RGLD Gold”),
entered into a life of mine purchase and sale agreement with Khoemacau Copper Mining (Pty.) Limited (“KCM”), a
majority-owned subsidiary of Cupric Canyon Capital LP (together with all its subsidiaries including KCM, “Cupric”) for
the purchase of silver produced from the Khoemacau copper-silver project (“Khoemacau” or the “Project”) located in
Botswana and owned by KCM. Cupric Canyon Capital LP is a private company owned by management and funds advised
by Global Natural Resource Investments (“GNRI”).
Under the purchase and sale agreement, subject to the satisfaction of certain conditions, RGLD Gold will make advance
payments totaling $212 million toward the purchase of 80% of the silver produced from Khoemacau until certain delivery
thresholds are met (the “Base Silver Stream”). At Cupric’s option and subject to various conditions, RGLD Gold will
make up to an additional $53 million in advance payments for up to the remaining 20% of the silver produced from
Khoemacau (the “Option Silver Stream”). The stream rate will drop to 40% of silver produced from Khoemacau
following delivery to RGLD Gold of 32 million silver ounces under the Base Silver Stream, or to 50% of the silver
produced from Khoemacau following delivery of 40 million silver ounces to RGLD Gold should Cupric exercise the entire
Option Silver Stream. RGLD Gold will pay a cash price equal to 20% of the spot silver price for each ounce delivered
under the Base Silver Stream and Option Silver Stream; however, if Cupric achieves mill expansion throughput levels
above 13,000 tonnes per day (30% above current mill design capacity), RGLD Gold will pay a higher ongoing cash price
under the Base Silver Stream and Option Silver Stream for silver ounces delivered in excess of specific annual thresholds.
RGLD Gold’s first advance payment under the Base Silver Stream is expected to occur after $100 million of net new debt
and equity funding is spent on Khoemacau. The $212 million in advance payments to be made under the Base Silver
Stream will be made in quarterly installments as project development advances according to the following approximate
schedule: Aggregate $60 million in the third and fourth quarters of calendar 2019, $125 million in calendar 2020, and
the balance in calendar 2021. RGLD Gold will fund advance payments through cash on hand or cash advances from
Royal Gold. Royal Gold will fund any advances made to RGLD Gold largely out of cash flow from operations and
amounts available under our revolving credit facility, as required.
Separate from the Base Silver Stream and Option Silver Stream, and subject to various conditions, RGLD Gold will make
up to $25 million available to Cupric toward the end of development of Khoemacau under a subordinated debt facility.
Any amounts drawn by Cupric under the debt facility will carry interest at LIBOR + 11% and have a term of seven years.
RGLD Gold will have the right to force repayment of the debt facility upon certain events.
Background on Khoemacau
Khoemacau is a copper-silver project located in the Kalahari copper belt, in a sparsely populated region of northwestern
Botswana in the Kalahari Desert. Khoemacau is made up of over 4,040 square kilometers of mineral concessions from
Cupric’s acquisition of Hana Mining Ltd. in 2013, as well as additional mineral concessions and a plant and associated
infrastructure (the “Boseto Mill”) acquired by Cupric out of the receivership of Discovery Metals Inc. in 2015. Cupric
3
consolidated the land position and infrastructure and has focused on exploration and development of the Zone 5 orebody
within the land package.
Cupric plans to develop Zone 5 as three separate underground mines, each planned to produce approximately 1.2 million
tonnes of ore per year over the first five years. Each of the mines is expected to have its own independent ramp access
and operate over a strike length of approximately 1,000 meters, extracting ore using conventional sub-level open stoping.
Cupric’s plan provides for the ore to be trucked approximately 35 kilometers to the Boseto Mill, which is to be refurbished
and enhanced to process approximately 10,000 tonnes of ore per day. Processing will be conventional sulfide flotation
via three stage crushing, ball milling and flotation, which Cupric expects will produce a high-quality copper concentrate
grading approximately 40% copper for shipment to international smelters. Cupric expects that power will be sourced
from an expansion to the existing power grid currently under construction by Botswana Power Corporation, and that
existing diesel generation capacity remaining from previous operations will be used as backup power. Water is expected
to be supplied from three borefields along with mine dewatering.
On July 18, 2019, Cupric announced financial closing for a total financing package of $650 million for Khoemacau,
including a further $15 million equity investment from funds advised by GNRI, a new $70 million equity investment from
Resource Capital Fund Investment VII LP, a new $275 million secured debt facility from Red Kite Mine Finance, and the
RGLD Gold purchase and sale agreement and debt facility.
Voisey’s Bay
The royalty on production of nickel, copper, cobalt and other minerals from the Voisey’s Bay mine in Newfoundland and
Labrador, Canada is directly owned by the Labrador Nickel Royalty Limited Partnership (“LNRLP”), in which the
Company’s wholly-owned indirect subsidiary is the general partner and 90% owner. The remaining 10% interest in
LNRLP is owned by a subsidiary of Altius Minerals Corporation.
On September 13, 2018, LNRLP entered into an agreement with Vale Canada Limited and certain of its subsidiaries
(collectively, the “Parties”) to comprehensively settle long-standing litigation related to calculation of the royalty on the
sale of all concentrates produced from the Voisey’s Bay mine.
The Parties agreed to a new method for calculating the royalty in respect of concentrates processed at Vale’s Long Harbour
Processing Plant (“LHPP”), which became effective for all Voisey’s Bay mine production after April 1, 2018. Under the
terms of the settlement, Royal Gold expects the 3% royalty rate will apply to approximately 50% of the gross metal value
in the concentrates at the nickel, copper and cobalt prices prevailing at the time of settlement. As those metal prices rise
or fall, the percentage of gross metal value in the concentrates applicable to the royalty would correspondingly increase or
decrease.
During the fiscal year ended June 30, 2019, the Company recognized approximately $11.9 million (which includes the
10% non-controlling interest) in royalty revenue attributable to the Voisey’s Bay royalty. Royalty payments for each
quarter are due 45 days after quarter-end. The Company anticipates recognizing revenue for the Voisey’s Bay royalty in
the period in which metal production occurs, based on information provided by the operator. If information is not received
timely from the operator, the Company may estimate Voisey’s Bay royalty revenue based on available or historical
information. Refer to Note 6 of our notes to consolidated financial statements for further discussion on our revenue
recognition.
Peak Gold JV
On September 24, 2018, the Company announced that the Peak Gold JV, of which our Royal Alaska, LLC subsidiary
owns a 40% interest, completed a Preliminary Economic Assessment (“PEA”) on the Peak Gold Project located near Tok,
Alaska. The PEA contemplates on a preliminary basis an open pit mining operation with positive economics at base case
gold and silver prices. While the Company remains committed to advancing the Peak Gold Project, it will continue to
review and evaluate strategic alternatives for its ownership in the project that more closely align with its core business.
Royal Gold also owns two net smelter return royalties on the Peak Gold Project.
4
Acquisition of Contango Ore, Inc. Common Stock
On October 3, 2018, the Company purchased the final tranche of Contango Ore, Inc. (“CORE”) common stock (127,188
shares) for $26 per share. As of June 30, 2019, the Company owns 809,744 shares of CORE common stock.
Our Operational Information
Reportable Segments 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 (amounts are in thousands):
As of June 30, 2019
As of June 30, 2018
Canada
Dominican Republic
Chile
Africa
Mexico
United States
Australia
Rest of world
Total
interests, net
Stream
interest
Royalty
interest
Total stream
and royalty
Royalty
interest
$ 767,749 $ 200,251 $ 968,000 $
451,585
515,733
89,877
83,748
163,398
31,944
35,031
Total stream
and royalty
interests, net
(284) $ 1,023,778
495,460
542,557
105,376
93,277
165,543
34,254
40,872
$ 1,622,435 $ 716,881 $ 2,339,316 $ 1,750,204 $ 990,277 $ (239,364) $ 2,501,117
Stream
interest
809,500 $ 214,562 $
495,460
—
328,331 453,306
502
104,874
—
93,277
— 165,543
34,254
—
28,833
12,039
451,585
—
301,507 214,226
321
89,556
—
83,748
— 163,398
31,944
—
22,993
12,038
—
(239,080)
—
—
—
—
—
Impairments
The Company’s reportable segments for purposes of assessing performance for our fiscal years ended June 30, 2019, 2018
and 2017 are shown below (amounts are in thousands):
Stream interests
Royalty interests
Total
Stream interests
Royalty interests
Total
Stream interests
Royalty interests
Total
Fiscal Year Ended June 30, 2019
Production
taxes
Cost of sales(1)
Revenue
$ 305,824 $
117,232
$ 423,056 $
77,535 $
—
77,535 $
Depletion(2)
Segment
gross profit(3)
— $ 127,770 $ 100,519
4,112
78,034
35,086
4,112 $ 162,856 $ 178,553
Fiscal Year Ended June 30, 2018
Production
taxes
Cost of sales(1)
Revenue
$ 324,516 $
134,526
$ 459,042 $
83,839 $
—
83,839 $
Depletion(2)
Segment
gross profit(3)
— $ 129,662 $ 111,015
2,268
98,334
33,924
2,268 $ 163,586 $ 209,349
Fiscal Year Ended June 30, 2017
Production
taxes
Cost of sales(1)
Revenue
$ 314,011 $
126,803
$ 440,814 $
87,265 $
—
87,265 $
Depletion(2)
Segment
gross profit(3)
— $ 121,530 $ 105,216
1,760
87,020
38,023
1,760 $ 159,553 $ 192,236
(1) Excludes depreciation, depletion and amortization.
(2) Depletion amounts are included within Depreciation, depletion and amortization on our consolidated statements of operations and
comprehensive income (loss).
(3) Refer to Note 13 of our notes to consolidated financial statements for a reconciliation of total segment gross profit to consolidated
income (loss) before income taxes.
5
Please see “Operations in foreign countries or other sovereign 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, 2019, Royal Gold derived approximately 87% of its revenue from precious metals (including 78% from gold and
9% from silver), 9% from copper and 4% from other minerals. The price of gold, silver, copper and other metals have
fluctuated widely in recent years. The marketability and the price of metals are influenced by numerous factors beyond
the control of the Company and significant declines in the price of gold, silver or copper could have a material and adverse
effect on the Company’s results of operations and financial condition.
Competition
The mining industry in general and streaming and royalty segments in particular are very competitive. We compete with
other streaming and royalty companies, mine operators, and financial buyers in efforts to acquire existing streaming and
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 streaming and royalty interests. Our competitors 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, the Dominican Republic, Ghana, Mexico, and other
countries where we hold interests. Although we are not responsible as a stream or 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, orders to suspend or cease
operations, damages and civil and criminal penalties on the operators.
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 a 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 SEC. Our SEC filings
are available from the SEC’s 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.
6
Company Personnel
We currently have 23 employees, 16 located in Denver, Colorado and the remainder located in our Zug, Switzerland,
Vancouver, Canada, and Toronto, Canada offices. Our employees are not subject to a labor contract or a collective
bargaining agreement. We consider our overall employee relations to be good.
We also retain independent contractors to provide consulting services, relating primarily to geology and mineralization
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, operations and stock
price.
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 stream and royalty interests have
features that may amplify the negative effects of a decrease 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 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, trade, 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 as reported by, in the case of gold and silver, the London Bullion Market Association, and in the case of
copper and nickel, the London Metal Exchange:
Gold
($/ounce)
Silver
($/ounce)
Copper
($/pound)
Nickel
($/pound)
Calendar Year
2010 - 2011
2012 - 2013
2014 - 2015
2016 - 2017
2018 - 2019
2019 to-date (July 31, 2019)
Low
Low
High
High Low High
High
Low
$ 1,895 $ 1,058 $ 48.70 $ 15.14 $ 4.60 $ 2.76 $ 13.17 $ 7.68
$ 1,792 $ 1,192 $ 37.23 $ 18.61 $ 3.93 $ 3.01 $ 9.90 $ 5.97
$ 1,385 $ 1,049 $ 22.05 $ 13.71 $ 3.37 $ 2.05 $ 9.62 $ 3.70
$ 1,366 $ 1,077 $ 20.71 $ 13.58 $ 3.27 $ 1.96 $ 5.82 $ 3.50
$ 1,355 $ 1,178 $ 17.52 $ 13.97 $ 3.29 $ 2.64 $ 7.14 $ 4.81
$ 1,440 $ 1,270 $ 16.54 $ 14.38 $ 2.98 $ 2.61 $ 6.66 $ 4.74
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, may prevent us from being able to recover the initial investment in our stream and royalty
interests, or may otherwise impact our stream and royalty revenue. Under our stream agreements, we purchase metals
either at a fixed price per ounce or 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. Further,
7
our sliding-scale royalties, such as Cortez, Holt, and other properties, amplify the effect of declines in market prices for
metals because when prices fall below price thresholds specified in a sliding-scale royalty, a lower royalty rate will apply.
A price decline may result in a material and adverse effect on our business, results of operations and financial condition.
Metal 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 mine operator’s ability to bring the mine into
production according to feasibility studies, technical or reserve reports or mine and other plans, or at all, and can have a
material adverse impact on the value of stream and royalty interests on the property.
Where gold and silver are produced as co-products or by-products at the properties where we hold stream and royalty
interests, 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
and Peñasquito 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 determined at a later date, typically three to five months after
shipment of concentrate 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 decline following shipment.
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 owned and operated by third parties.
Holders of stream or royalty interests typically have no authority regarding the development or operation of the mineral
properties to which their interests relate. 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 for the decisions of others regarding all development and 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 monitor operators’ compliance with their
obligations to us, there can be no assurance that such rights will always be sufficient to ensure such compliance or to affect
operations at our stream or royalty properties in ways that would be beneficial to our stockholders.
Our revenues are subject to operational and other risks faced by operators of the properties in which we hold stream
or royalty interests.
Although we generally are not required to pay capital costs on projects on which we hold stream or royalty interests
(except for transactions where we finance mine development or actively fund or participate in exploration), 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 capital or operating 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 suspend or close operations;
8
declines in the price of gold, silver, copper, nickel and other metals;
•
• mine operating and ore processing facility problems;
•
significant permitting, environmental and other regulatory requirements and restrictions and any changes in
those regulations or their enforcement;
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
challenges by non-mining interests, including by local communities, indigenous populations and
non-governmental organizations, to existing permits and mining rights, and to applications for permits and
mining rights;
community or civil unrest, including protests and blockades;
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, including lack of access to sufficient quantities of water for
operations;
pit wall or tailings dam failures or any underground stability issues;
fires, explosions and other industrial accidents;
environmental hazards and natural catastrophes such as earthquakes, droughts, floods, forest fires, hurricanes
or other weather- or climate-related events;
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 and
other costs in the United States and foreign jurisdictions;
uncertain domestic and foreign political and economic environments;
economic downturns and operators’ insufficient financing;
default by an operator on its obligations to us or its other creditors;
insolvency, bankruptcy or other financial difficulty of the operator; and
changes in laws or regulations, including changes implemented by new political administrations.
The occurrence of any of the above-mentioned risks or hazards, among others, could result in an interruption, suspension
or termination of 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, Rainy River, Peñasquito and Cortez properties
generated approximately $322.6 million in revenue in fiscal year 2019, or 76% of our revenue for the period. We expect
these properties and others to be important to us in fiscal year 2020 and beyond. Any adverse development affecting the
operation of or production from any of these properties could have a material adverse effect on our business, 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.
9
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 these 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 agreement reflecting the stream or royalty interest. Similarly,
stream interests and, in many jurisdictions, royalty interests are contractual in nature, rather than interests in land, and
therefore may be subject to risks resulting from 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 in the event of an operator’s bankruptcy or insolvency.
We have limited access to data and information 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 data and information, we do not have the contractual right to receive such data and
information for all of our interests. As a result, we may have limited access to data and information 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 business, results of
operations, cash flows and financial condition.
Stream and royalty interests we acquire, 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 stream and royalty
interest acquisitions is based on our ability to make accurate assumptions regarding, among other things, the valuation,
timing and amount of revenues to be derived from our stream and royalty interests, the geological, metallurgical and other
technical aspects of the project, and, for development projects, 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
mine and other plans due to lack of capital, inexperience, unexpected problems, delays, or other factors, then our stream
or royalty interest may not yield sufficient revenues to be profitable for us. Furthermore, operators of properties at all
stages must obtain and maintain all necessary environmental permits and access to adequate supplies of water, power and
other raw materials, as well as financing, necessary to begin or sustain development or 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 or the other benefits we expect to realize from the acquisition of stream and
royalty interests, and potentially our business, results of operations, cash flows and financial condition.
For example, we experienced an impairment charge of $239.1 million for the Pascua-Lama mining project during our third
quarter of fiscal 2018 after Barrick Gold Corporation (“Barrick”), the owner of the project, reclassified the proven and
probable reserves for the Chilean portion of the project, to which our royalty interest relates, and, ultimately, suspended
further development of the project, in response to sanctions by the Chilean government. See Note 4 of the notes to
consolidated financial statements for more information.
10
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, 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 or royalty interest.
Potential litigation affecting the properties that we have stream and royalty interests in could have a material 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, suspension 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 and royalties 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, legal 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 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 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. All transactions include risks associated with our ability to negotiate
acceptable terms with counter-parties. 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 existing 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.
11
We may be unable to successfully acquire additional stream or royalty interests at appropriate valuations.
Our future success largely depends upon our ability to continue acquiring stream and royalty interests at appropriate
valuations, including through stream, royalty, and corporate acquisitions and other financing transactions. 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. Economic volatility, credit crises, or severe
declines in market prices for gold, silver, copper, nickel and 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 streams, royalties or other investments by the Company less attractive to
counterparties. Such changes could adversely affect our ability to acquire new stream or 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. 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 deliveries under our stream interests and payment of our royalty
interests. We may not be able to detect errors and later payment calculations may call for retroactive adjustments.
The deliveries and payments under 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 deliveries
and 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 such
calculations 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 stream deliveries and the calculation of royalty payments. Certain of our royalty interests,
however, do not provide us the contractual right to receive production or other information. 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 stream deliveries and royalty payments; however, such audits may occur many months following our
recognition of 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, they may curtail, delay or cease
development or operations at a mine site, or enter into bankruptcy proceedings. An operator’s 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 United States and global financial markets. If certain of the operators of
the properties on which we have stream and royalty interests suffer these material adverse effects, then our stream and
royalty 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.
12
Certain of the agreements governing our stream and royalty interests contain terms that reduce or cap the revenues
generated from those 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% to 3.75% of
Barrick’s interest in gold produced at Pueblo Viejo after 990,000 ounces of gold have been delivered. Similarly, our silver
stream at Pueblo Viejo decreases from 75% to 37.50% of Barrick’s interest in silver produced at Pueblo Viejo after
50,000,000 ounces of silver have been delivered. Our stream interests at Andacollo, Wassa, Rainy River and Khoemacau,
and certain of our royalty interests at other properties, are subject to similar limitations, and therefore current production
and revenue results from our interests may not be indicative of future results.
Estimates of mineral reserves and other mineralized material 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 mineral reserves and mineralized material,
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. 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 estimate
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
result in revisions to such estimates. The volume and grade of reserves actually recovered and rates of production actually
achieved may be less than anticipated. Assumptions about gold and other precious metal prices used to calculate reserve
estimates 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 make recovery of ores previously included in reserves containing
relatively lower grades uneconomic. 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 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
reserves as a result of continued exploration and study. It should not be assumed that any part or all of mineral resources
on properties where we hold stream and royalty interests will be converted into reserves.
The mineral reserves at producing properties subject to our stream and royalty interests may decline if the operators of
those properties are unable to replace the mineral reserves consumed through mining.
An operator’s current mineral reserves may decline as they are consumed in the ordinary course of mining. If current
mineral reserves are not replaced as they are mined by the operators of properties where we hold stream and royalty
interests, whether through expansion of known deposits, discovery of new mineralized material through exploration,
conversion of mineralized material to mineral reserves, or otherwise, the mineral reserves subject to our stream and royalty
interests on those properties may decline or be consumed altogether.
Expansion of known deposits of mineralized material and exploration for new mineralized material are highly speculative
activities typically requiring extensive programs of drilling and study, at substantial expense, over many years. There can
be no assurance that operators of the properties on which we hold stream and royalty interests will make such expenditures,
or that such expenditures will result in expansion of existing deposits or discovery of new mineralized material. Further,
where mineralized material is discovered, there can be no assurance that such mineralized material can be economically
and legally extracted, and, therefore, converted to mineral reserves in sufficient quantities to maintain or increase the
operators’ current mineral reserves.
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Failure of operators of properties on which we hold stream and royalty interests to maintain or increase mineral reserves
as their current reserves are mined may have a material adverse impact on our asset carrying values and potentially our
business, results of operations, cash flows and financial condition.
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 the mining properties to which our stream and royalty interests relate.
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. 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. Results of drilling, metallurgical testing and production, changes in
commodity prices, and the evaluation of mine plans subsequent to the date of any estimate may cause actual production to
vary materially from such estimates. Actual rates of production may be more or less than estimated by the operators, and
deliveries under stream agreements may be received earlier or later than expected, each of which may result in variances
from expected revenue from period to period. We do not participate in the preparation or verification of production
estimates by our operators and do not independently assess or verify the accuracy of such information.
If title to mining claims, concessions, licenses, leases or other forms of tenure is not properly maintained by the
operators, or is successfully challenged by third parties, our stream and royalty interests could be found to be invalid.
Our business is subject to the risk that operators of mining projects and holders of exploration or mining claims, tenements,
concessions, licenses or other interests in land and minerals may lose their exploration or mining rights or have their rights
to explore and mine properties contested by private parties or the government. Internationally, exploration and mining
tenures are subject to loss for many reasons, including expiration, failure of the holder to meet specific legal qualifications,
failure to establish a deposit capable of economic extraction, failure to pay maintenance fees or meet expenditure or work
requirements, reduction in geographic extent upon passage of time or upon conversion from an exploration tenure to a
mining tenure, failure of title, expropriation and similar risks. If title to exploration or mining tenures subject to our stream
and royalty interests has not been properly established or is not properly maintained, or is 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 92% of our revenues from non-United States sources during fiscal year 2019, compared to
approximately 91% in fiscal year 2018 and approximately 92% in fiscal year 2017. Our principal producing stream and
royalty interests on properties outside of the United States are located in Canada, Chile, the Dominican Republic, Ghana
and Mexico. We currently have stream and royalty interests in mines and projects in other countries, including Argentina,
Australia, Bolivia, Botswana, Brazil, Burkina Faso, Guatemala, Honduras, Macedonia, Nicaragua, Peru, Spain and
Tunisia. Various indigenous peoples may be recognized as sovereign entities 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 activities and those of the operators of properties on which we hold stream and royalty interests are
subject to the risks normally associated with conducting business in foreign countries or within the jurisdiction of
indigenous peoples that may be recognized as sovereign entities in the United States and elsewhere. These risks may
impact or our operators, depending on the jurisdiction, and include such things as:
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expropriation or nationalization of mining property;
seizure of mineral production;
exchange and currency controls and fluctuations;
limitations on foreign exchange and repatriation of earnings;
restrictions on mineral production and price controls;
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•
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•
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import and export regulations, including trade sanctions and restrictions on the export of gold, silver, copper,
nickel or other metals;
changes in legislation and government policies, including changes related to taxation, government royalties,
tariffs, imports, exports, duties, currency, foreign ownership, foreign trade, foreign investment and other
forms of government take, including any such changes as may be made in response to United States laws or
foreign policies;
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;
changes in economic, trade, diplomatic and other relationships between countries, and the effect on global
and economic conditions, the stability of global financial markets, and the ability of key market participants
to operate in certain financial markets;
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;
renegotiation, nullification or forced modification of existing contracts, licenses, permits, approvals,
concessions or the like;
• war, crime, terrorism, sabotage, blockades and other forms of civil unrest, and uncertain political and
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•
•
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economic environments;
corruption;
exposure to liabilities under anti-corruption and anti-money laundering laws, including the United States
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.
Our business and the mining projects in which we have stream and royalty interest are subject to extraterritorial and
domestic anti-bribery laws and labor laws, a breach or violation of which could lead to civil and criminal fines and
penalties and other collateral consequences such as reputational harm.
We invest in mining operations in certain jurisdictions that have experienced governmental and private sector corruption
and exploitation to some degree. In certain circumstances, compliance with labor and anti-bribery laws and heightened
expectations of enforcement authorities from within and outside of these jurisdictions may be in tension with certain local
customs and practices. For example, the United States Foreign Corrupt Practices Act and other laws with extraterritorial
reach, including the U.K. Bribery Act, generally prohibit companies and their agents and intermediaries from making
15
improper payments for the purpose of obtaining or retaining business or other commercial advantage. Because our assets
are made up of passive interests in mining operations owned and operated by third parties, we cannot ensure that these
operators’ internal control policies and procedures will prevent noncompliance with applicable laws and internal policies,
recklessness, exploitation, fraudulent behavior, dishonesty or other inappropriate acts for which they may be deemed
responsible. In addition, although we are passive investors in these third party operations, we cannot ensure that
enforcement authorities will not deem us to have some culpability as associates to these operations should these
circumstances arise.
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, rules, regulations and other practices 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 governments to respect the
rights of indigenous people. Some mandate that governments consult with indigenous people regarding government
actions which may affect them, 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 project has 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.
Subsequently, in the first calendar quarter of 2018, Barrick reclassified the proven and probable reserves for the Chilean
portion of the project, to which our royalty interest relates, and, ultimately, suspended further development of the project,
in response to sanctions by the Chilean government.
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, the Dominican Republic, Ghana, 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 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
United States 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. 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.
The mining industry is subject to environmental risks in the United States and in the foreign jurisdictions where mines
subject to our interests are located, including risk associated with climate change.
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. Concerns regarding climate change have resulted
in international, national and local treaties, legislation and initiatives that affect mineral exploration and production,
including those intended to reduce industrial emissions and increase energy efficiency. Compliance with all such laws and
16
regulations, treaties and initiatives (“Laws”) could increase permitting requirements, result in stricter standards and
enforcement, and require significant increases in capital expenditures and operating costs by operators of properties subject
to our interests. Further, breach of a Law may result in the imposition of fines and penalties or other adverse impacts on
operators and their properties, which may be material. If an operator is forced to incur significant costs to comply with
Laws or becomes subject to related restrictions that limit its ability to continue or expand operations, or if an operator were
to lose its right to use or access power, water or other raw materials necessary to operate a mine, or if the costs to comply
with Laws materially increased the capital or operating costs on the properties where we hold streams and royalties, our
revenues could be reduced, delayed or eliminated. These risks are also salient with regard to our development stage
properties where permitting may not be complete and/or where new legislation and regulation could lead to delays,
interruptions and significant unexpected cost burdens for mine developers and operators.
For example, Argentina passed a federal glacier protection law that could restrict mining activities in areas on or near the
country’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 could impact some aspects of the design, development and operation of the project.
Further, to the extent that we become subject to environmental liabilities for any historic period during which we owned
or operated properties, or relative to our current ownership interests in the lease and underlying unpatented mining claims
acquired at Cortez or the lease, unpatented mining claims and exploration activities associated with the Peak Gold JV, 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,
cyberattacks, ransomware, 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, affect our ability to maintain ongoing operations, and result in significant expenditures to repair or
replace the damaged property or information systems, reacquire access to networks and information systems, or to protect
them from similar events in the future. In addition, any security breaches, such as misappropriation, misuse, leakage,
falsification or accidental release or loss of information maintained in our information technology systems (or those of our
third party service providers), including information about our company or our employees, third party information in our
possession, and other data, could damage our reputation, expose us to legal liability and require us to expend significant
capital and other resources to remedy any such security breach. Despite security measures we have implemented and
other measures we may implement in the future, and despite the fact that, to date, we have not experienced any material
losses relating to cyber-attacks or other information security breaches, 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. Furthermore, new and
evolving requirements relating to cybersecurity are applicable or may in the future apply to our business, including
requirements relating to protection of personally identifiable information. Compliance with such requirements could
result in additional or increased compliance costs and exposure to legal liability.
We depend on the services of our President and Chief Executive Officer, management 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; however, in May 2019, the Company announced
that Mr. Jensen will retire by the end of the first calendar quarter of 2020. Mr. Jensen’s extensive commercial experience,
mine operations background and industry contacts have given us an important competitive advantage. The loss of Mr.
Jensen’s services, and the loss of services of other key members of management or other key employees could disrupt the
conduct of our business and 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 executive management
and other key employees is critical to our success and there can be no assurance of such success. If we are not successful
17
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.
Our disclosure controls and internal control over our financial reporting are subject to inherent limitations.
Management has concluded that as of June 30, 2019, 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 under
metal streams that translate to our revenues as discussed above in “We depend on our operators for the calculation of
deliveries under our stream interests and payment of our 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 our 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, 2019, there was $780 million available and $220 million outstanding under our revolving credit facility.
We are 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 in the future in connection with financing for acquisitions,
strategic transactions and for other purposes.
Indebtedness could have a material adverse effect on our business, results of operations, cash flows and financial condition.
For example, it could:
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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;
require the consent of our existing lenders to incur additional indebtedness; and
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 certain 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 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
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result in the acceleration of all of our debt. Any default under 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.
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 $87.74 and $60.21 for the fiscal year ended June 30, 2017, $94.39
and $76.15 for the fiscal year ended June 30, 2018 and $102.62 and $70.16 for the fiscal year ended June 30, 2019. 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;
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expectations regarding inflation;
ability of operators to service their financial obligations, advance development projects, produce precious
metals and develop new reserves;
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currency values;
credit market conditions;
general stock market conditions; and
global and regional political, trade 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 or are perceived by the market as intending to sell these shares
other than in an orderly manner.
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 and other metal 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.
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Certain provisions of Delaware law and, our organizational documents could impede, delay or prevent an otherwise
beneficial takeover or takeover attempt of us.
Certain provisions of Delaware law and our organizational documents 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. By default, Delaware law
prohibits, 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 our 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.
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 on which we hold stream or royalty interests, except for our interest in the Peak
Gold JV, 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 certain 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 in Table 1 “Operators’
Estimated Proven and Probable Gold Reserves” below within this Item 2. More information is available to the public
regarding certain properties in which we have stream or royalty interests, 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 stage properties.
Principal Producing Properties
The Company considers both historical and future potential revenues to determine which stream and royalty interests in
our portfolio are principal to our business. Estimated future potential revenues from producing properties are based on a
number of factors, including reserves subject to our stream and royalty interests, production estimates, feasibility studies,
technical reports, 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.
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Stream Interests
Andacollo (Region IV, Chile)
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, and 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. As of June 30, 2019, approximately
193,000 ounces of payable gold have been delivered to RGLD Gold.
Andacollo is an open-pit mine and milling operation located in central Chile, Region IV in the Coquimbo Province and is
operated by Compañía Minera Teck Carmen de Andacollo (“CMCA”), a 90% owned subsidiary of Teck Resources
Limited (“Teck”). 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 Peñon. From El Peñon, 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 approximately 51,900 ounces of gold during the fiscal year ended June 30, 2019,
compared to approximately 51,700 ounces of gold during the fiscal year ended June 30, 2018. Teck indicated that they
expect grades to continue to gradually decline towards reserve grades in calendar 2019 and future years. Teck continues
to study and implement projects that could increase production, including the installation of a sizer to better manage harder
ores at depth and increase mill throughput.
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Mount Milligan (British Columbia, Canada)
RGLD Gold owns the right to purchase 35% of the payable gold and 18.75% of the payable copper produced from the
Mount Milligan copper-gold mine in British Columbia, Canada, which is operated by an indirect subsidiary of Centerra
Gold Inc. (“Centerra”). The cash purchase price for gold is equal to the lesser of $435 per ounce, with no inflation
adjustment, or the prevailing market price when purchased. The cash purchase price for copper is 15% of the spot price.
Mount Milligan 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.
Gold stream deliveries from Mount Milligan were approximately 68,500 ounces of gold during the fiscal year ended
June 30, 2019, compared to approximately 78,000 ounces of gold during the fiscal year ended June 30, 2018. Copper
stream deliveries from Mount Milligan were approximately 9.1 million pounds of copper during the fiscal year ended
June 30, 2019, compared to approximately 10.4 million pounds during the fiscal year ended June 30, 2018. The decrease
during the current period reflects the shutdown and lower mill production at Mount Milligan in the March 2018 quarter,
which was the result of lower than expected fresh reclaim water volumes in the tailings storage facility that Mount Milligan
uses for mill processing operations. Due to the timing of shipments and deliveries of gold and copper, the impact of the
shutdown was reflected in our first quarter of fiscal year 2019.
Centerra reported that weather conditions around the Mount Milligan mine, and elsewhere in British Columbia, continue
to be exceptionally hot and dry, which has affected precipitation levels as well as water flows, and that water captured
from the calendar 2019 spring melt runoff was less than anticipated. Centerra reported that it continues to explore for
additional groundwater sources but estimates that if additional sources are not available, and/or dry weather conditions
persist in the second half of calendar 2019, it may need to take steps to manage production in the first calendar quarter of
2020 to conserve water resources until the calendar 2020 spring melt.
Despite the dry conditions, Centerra reaffirmed Mount Milligan’s production guidance for the full 2019 calendar year,
consisting of 155,000 to 175,000 ounces of payable gold production and 65 to 75 million pounds of payable copper
production, and reported that it is continuing to work on a long-term plan to supply water to Mount Milligan after
November 2021 and for the remaining mine life.
Pueblo Viejo (Sanchez Ramirez, Dominican Republic)
RGLD Gold owns 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 for gold is 30% of the spot
price of gold per ounce delivered until 550,000 ounces of gold have been delivered, and 60% 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 fixed
silver recovery of 70%, until 50 million ounces of silver have been delivered, and 37.5% thereafter. The cash purchase
price for silver is 30% of the spot price of silver per ounce delivered until 23.1 million ounces of silver have been delivered,
and 60% thereafter. As of June 30, 2019, approximately 181,000 gold ounces and 6.2 million silver ounces have been
delivered to RGLD Gold.
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 Newmont Goldcorp Corporation (“Newmont 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.
22
Gold stream deliveries from Pueblo Viejo were approximately 41,200 ounces of gold during the fiscal year ended June 30,
2019, compared to approximately 45,400 ounces of gold during the fiscal year ended June 30, 2018. Silver stream
deliveries were approximately 2.0 million ounces of silver during the fiscal year ended June 30, 2019, compared to
approximately 1.9 million ounces of silver during the fiscal year ended June 30, 2018. In calendar 2019, Barrick expects
production at Pueblo Viejo to be in line with calendar 2018 production levels, driven by increased throughput and
recoveries, offset by declining ore grades.
Barrick indicated that scoping studies and pilot project work are supportive of a plant expansion at the Pueblo Viejo mine
that could increase throughput by roughly 50% to 12 million tonnes per year, allowing the mine to maintain average annual
gold production of approximately 800,000 ounces after calendar 2022. To achieve this, Barrick is evaluating a flotation
concentrator followed by ultra-fine grinding and tank oxidation of the concentrate. Barrick reported that testing to-date
indicates that tank oxidation is preferable to the pad pre-oxidation process previously considered. Barrick expects to
complete prefeasibility studies for the plant expansion and additional tailings capacity by the end of calendar 2019.
According to Barrick, the project has potential to convert roughly seven million ounces of mineralized material to proven
and probable reserves.
On May 14, 2018, Barrick reported it signed a 10-year natural gas supply contract with AES Andres DR, S.A. in the
Dominican Republic that will enable the conversion of the Quisqueya I power generation facility from heavy fuel oil to
natural gas. Barrick anticipates converting the facility from heavy fuel oil to natural gas will reduce both greenhouse gas
emissions and power costs at Pueblo Viejo.
Rainy River (Ontario, Canada)
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. As of June 30, 2019, approximately 24,000
ounces of gold and approximately 235,000 ounces of silver have been delivered to RGLD Gold.
The Rainy River mine is centered within Richardson Township in northwestern Ontario, Canada, and is operated by New
Gold Inc. (“New Gold”). The mine is approximately 40 miles northwest of Fort Frances, approximately 100 miles south
of Kenora and approximately 260 miles west of Thunder Bay. The mine is easily accessible by a network of secondary
all-weather roads that branch off the well-maintained Trans-Canada Highways 11 and 71.
Gold stream deliveries from Rainy River were approximately 16,800 ounces of gold during the fiscal year ended June 30,
2019, compared to approximately 6,800 ounces of gold during the fiscal year ended June 30, 2018. Silver stream
deliveries were approximately 148,800 ounces of silver during the fiscal year ended June 30, 2019, compared to
approximately 85,900 ounces of silver during the fiscal year ended June 30, 2018. The increase resulted from the
continued optimization of operations at Rainy River.
On May 1, 2019, New Gold announced that a buildup of excess water in the Tailings Management Area (“TMA”) from
snowmelt caused a temporary suspension of milling operations at Rainy River on April 24, 2019. Mining and crushing
operations continued and ore was stockpiled during the suspension. On May 6, 2019, New Gold announced that milling
operations at Rainy River were restarted on May 3, 2019. New Gold reported the water level in the TMA was lowered
to a desirable operational level and pumping into the water management pond continued.
New Gold reported mill throughput for the June 2019 quarter averaged 21,117 tonnes per day and Rainy River averaged
a record 24,230 tonnes per day in June 2019, surpassing the target of 24,000 tonnes per day. New Gold expects milled
grades to be lower in the second half of calendar 2019 as mining operations shift from Phase 1 to Phase 2 due to the
depletion of Phase 1 ore. New Gold also reported a 93% average gold recovery for the June 2019 quarter, a significant
improvement over prior quarterly performance. Also during the June 2019 quarter, New Gold advanced a comprehensive
mine optimization study that includes the review of alternative open pit and underground mining scenarios with the overall
objective of improving the return on investment over the life of mine by reducing open pit waste, overall underground
23
development, and sustaining capital. New Gold expects to complete an updated life of mine plan in the December 2019
quarter.
New Gold expects that full year calendar 2019 production will meet annual guidance of between 250,000 and 275,000
gold equivalent ounces.
Wassa (Western Region, Ghana)
RGLD Gold owns the right to purchase 10.50% of the gold produced from the Wassa, Prestea and Bogoso mines, operated
by Golden Star, until an aggregate 240,000 ounces from Wassa, Prestea and Bogoso have been delivered. A significant
amount of the gold deliveries under the 10.50% gold stream are expected from the Wassa mine. Once the delivery
threshold is met, the stream percentage will decrease to 5.5% for the remaining term of the transaction. The cash purchase
price for gold is 20% of the spot price of gold per ounce delivered until the threshold is met, and 30% thereafter. As of
June 30, 2019, approximately 90,000 aggregate gold ounces have been delivered to RGLD Gold.
The Wassa 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.
Stream deliveries from Wassa were approximately 16,600 ounces of gold during the fiscal year ended June 30, 2019,
compared to approximately 14,500 ounces of gold during the fiscal year ended June 30, 2018. The increase resulted from
the ramp up at Wassa underground as Golden Star transitioned from the lower grade open pit to an underground-only
mining operation. Golden Star’s reported objective at Wassa underground is to increase the average production rate from
approximately 3,500 tonnes per day in calendar 2019 to approximately 4,000 tonnes per day by mid-calendar 2020.
On July 15, 2019, Golden Star announced that drilling at Wassa underground intersected significant gold mineralization
200 meters down plunge to the south of the previously-identified mineralized material and has extended the strike of this
underground ore body over 1.7 kilometers, which remains open to the south. Golden Star expects drilling to focus on
conversion of mineralized material to reserves at Wassa.
Golden Star reported that the mining rate at Wassa during the first half of calendar 2019 at 3,500 tonnes per day was in
line with their expectations and indicated potential to improve production further during the second half of calendar 2019,
but cautioned grades are likely to be lower than planned and below the overall reserve grade. As a result, Golden Star
expects production in the second half of calendar 2019 to be lower than the first half of calendar 2019 and therefore,
lowered their production guidance for calendar 2019 from between 170,000 and 180,000 ounces of gold to between
150,000 and 160,000 ounces of gold.
Royalty Interests
Cortez (Nevada, USA)
Cortez is a series of large open-pit and underground mines, utilizing mill, roast and heap leach processing, which are
operated by Nevada Gold Mines LLC (“NGM”), a joint venture between Barrick and Newmont Goldcorp with respect to
their Nevada operations. 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 royalty interest at Cortez applies to the Pipeline and South Pipeline
deposits, part of the Gap pit and the Crossroads deposit.
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.
24
The GSR1 royalty rate is tied to the price of gold and does not include indexing for inflation or deflation.
The GSR1 royalty rate is 5.0% at a gold price of $470 per ounce and higher.
(b)
(c)
(d)
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 GSR2 royalty rate is tied to the gold price, without
indexing for inflation or deflation. The GSR2 royalty rate is 5.0% at a gold price of $470 per ounce
and higher.
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 certain claims that comprise a portion of the Crossroads deposit.
Net Value Royalty (“NVR1”) and Net Value Royalty (Crossroads) (“NVR1C”). The NVR1 royalty is a
fixed royalty of 4.91% NVR that covers the area of the GAS Claims, excluding the majority of the
Crossroads deposit. The NVR1C royalty, which covers the majority of the Crossroads deposit, is a
fixed royalty of 4.52% NVR.
We also own three other royalties in the Cortez area where there is currently no production and no reserves attributed to
these royalty interests.
Production attributable to our royalty interest at Cortez increased approximately 24% during our fiscal year ended
June 30, 2019, when compared to the fiscal year ended June 30, 2018. The increase was a result of production ramping
up at the Crossroads deposit, which is subject to our NVR1C, GSR2 and portions of our NVR1 and GSR3 royalty interests.
Initial ore production at Crossroads was realized during calendar 2018. In calendar 2019, NGM expects Crossroads
expansion stripping to transition to production phase stripping.
Peñasquito (Zacatecas, Mexico)
We own a production payment equivalent to a 2.0% NSR royalty on all metal production from the Peñasquito open-pit
mine, located in the State of Zacatecas, Mexico, and operated by a subsidiary of Newmont Goldcorp. The Peñasquito mine
is located approximately 17 miles west of the town of Concepción del Oro, Zacatecas, Mexico. The mine, composed of
two main deposits called Peñasco 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 Concepción 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 Peñasquito decreased approximately 58%, 21%,
4% and 38%, respectively, during the fiscal year ended June 30, 2019, when compared to the fiscal year ended June 30,
2018.
On April 29, 2019, Newmont Goldcorp reported a temporary suspension of operations at Peñasquito due to a blockade by
a trucking contractor and certain community leaders. Newmont Goldcorp subsequently reported on June 17, 2019 that
dialogue with the blockade leaders had started, operations were beginning, and concentrate shipments from the mine and
deliveries to the mine resumed. Newmont Goldcorp reported that operations ramped back up in June 2019 and
concentrate inventory levels are now back to normal. This suspension resulted in significantly lower sales from
Peñasquito during the June quarter as we recognized $1.1 million in royalty revenue at Peñasquito compared to $5.4
million in the prior year June quarter.
Newmont Goldcorp expects that grades for gold, silver and lead will improve during the last half of calendar 2019, zinc
grades will remain unchanged, and production from Peñasquito will be 165,000 ounces of gold, 25 million ounces of
silver, 180 million pounds of lead, and 245 million pounds of zinc for the period April 18 through December 31, 2019.
25
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, 2018, 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, 2018. Please refer to
pages 28-30 for the footnotes to Table 1.
Operators’ Estimated Proven and Probable Gold Reserves
As of December 31, 2018(1)
Gold(2)
PROVEN +
PROBABLE
Average
PROPERTY
Bald Mountain
Cortez GSR1
Cortez GSR2
Cortez GSR3
Cortez NVR1
Cortez NVR1C
Gold Hill
Goldstrike (SJ Claims)
Hasbrouck (DEV)
Leeville
Marigold
Pinson (DEV)
Relief Canyon (DEV)
Robinson
Ruby Hill
Twin Creeks
Wharf
Back River - Goose Lake (DEV)
Canadian Malartic
Holt
Kutcho Creek (DEV)
LaRonde Zone 5
Mount Milligan
Pine Cove
Rainy River
Schaft Creek (DEV)
Williams
Dolores
Peñasquito
Andacollo
La Fortuna (DEV)
Don Mario
Don Nicolas
Pueblo Viejo
El Limon
La India (DEV)
Mara Rosa (DEV)
Balcooma (DEV)
Gwalia Deeps
Jaguar Nickel (DEV)
King of the Hills
Meekatharra
South Laverton
Southern Cross
Wembley Durack (DEV)
Inata
Taparko(26)
Prestea
Wassa
ROYALTY/METAL STREAM
OPERATOR
LOCATION
Nevada Gold Mines LLC
West Kirkland/Clover Nevada
Nevada Gold Mines LLC
SSR Mining
Waterton Precious Metals Fund
Americas Silver
KGHM
Waterton Precious Metals Fund
Nevada Gold Mines LLC
Coeur Mining
Sabina Gold & Silver
Agnico Eagle/Yamana
Kinross
Nevada Gold Mines LLC
Nevada Gold Mines LLC
Nevada Gold Mines LLC
Nevada Gold Mines LLC
Nevada Gold Mines LLC
Kinross
1.75% - 2.5% NSR(7)
0.40 - 5.0% GSR(8)
0.40 - 5.0% GSR(8)
0.71% GSR
4.91% NVR
4.52% NVR (9)
1.0 - 2.0% NSR(10,11)
0.6 - 0.9% NSR(12)
0.9% NSR
1.5% NSR
1.8% NSR
2.0% NSR
3.0% NSR(13,14)
2.94% NSR(13,15)
3.0% NSR(16)
3.0% NSR
3.0% NSR
2.0% GPR
0.0 - 2.0% GSR(17)
1.95% GSR(18)
1.0 - 1.5% NSR(19)
0.00013 x quarterly avg. gold price Kirkland Lake
2.0% NSR
2.0% NSR
35% of payable gold(20)
7.5% NPI
6.5% of gold produced(21)
3.5% NPI
0.97% NSR
3.25% NSR
2.0% NSR
100% of payable gold(22)
1.4% NSR(23)
3.0% NSR
2.0% NSR
7.5% of payable gold(24)
3.0% NSR
3.0% NSR
2.75% NSR
1.5% NSR
1.5% NSR
1.5% NSR
1.5% NSR
1.5% NSR(25)
1.5% NSR
1.5% NSR
1.0% NSR
2.5% GSR
2.0% GSR
10.5% of payable gold (27)
10.5% of payable gold (27)
Capstone Mining
Agnico Eagle
Centerra Gold
Anaconda Mining
New Gold
Copper Fox/Teck
Barrick
Pan American
Newmont Goldcorp
Teck
Newmont Goldcorp
Orvana
Compañia Inversora en Minas
Barrick
B2Gold
Condor Gold
Amarillo Gold
Consolidated Tin
St . Barbara
Washington H. Soul Pattinson
Red 5
Westgold Resources
Saracen
Shandong Tianye
Westgold Resources
Balaji Group
Nord Gold
Golden Star Resources
Golden Star Resources
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Mexico
Mexico
Chile
Chile
Bolivia
Argentina
Dominican Republic
Nicaragua
Nicaragua
Brazil
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Burkina Faso
Burkina Faso
Ghana
Ghana
Tons of
Ore
(M)
18.950
28.337
108.831
46.697
34.701
90.471
4.897
29.729
35.616
3.417
146.720
7.557
26.204
84.310
1.726
0.876
32.850
13.623
57.843
2.953
11.509
10.395
493.353
0.979
136.398
1,037.054
18.017
49.053
573.654
348.771
198.103
2.867
1.327
84.593
0.661
7.606
26.235
0.762
11.550
1.323
0.794
6.246
17.207
9.639
0.362
6.352
6.504
0.853
18.606
Gold
Grade
(opt)
0.023
0.017
0.032
0.016
0.015
0.035
0.016
0.085
0.017
0.288
0.013
0.064
0.017
0.005
0.014
0.065
0.026
0.184
0.029
0.124
0.009
0.066
0.010
0.037
0.031
0.006
0.059
0.025
0.016
0.003
0.013
0.056
0.148
0.077
0.106
0.089
0.041
0.002
0.191
0.008
0.112
0.074
0.072
0.099
0.055
0.054
0.074
0.372
0.079
RESERVES(3)(4)(5)
Gold
Contained
Ozs(6)
(M)
0.436
0.491
3.445
0.753
0.531
3.183
0.080
2.525
0.588
0.985
1.863
0.483
0.436
0.413
0.024
0.057
0.855
2.503
1.682
0.366
0.100
0.681
4.736
0.036
4.185
5.775
1.068
1.211
9.110
1.049
2.674
0.160
0.196
6.551
0.070
0.675
1.087
0.001
2.205
0.010
0.089
0.460
1.232
0.959
0.020
0.340
0.483
0.317
1.473
26
Operators’ Estimated Proven and Probable Silver Reserves
As of December 31, 2018(1)
Silver(28)
PROVEN +
PROBABLE
RESERVES
(3)(4)(5)
ROYALTY/METAL STREAM
1.0 - 2.0% NSR(10,11)
0.6 - 0.9% NSR(12)
1.5% NSR
3.0% NSR(16)
2.0% NSR
60% of silver produced (21)
3.5% NPI
2.0% NSR
2.0% NSR
3.0% NSR
2.0% NSR
75% of payable silver(24)
3.0% NSR
1.5% NSR
1.5% NSR
80% of payable silver(29)
OPERATOR
LOCATION
Kinross
United States
Tons of
Silver
Average
Silver Contained
Grade Ozs(6)
Ore
(M)
(M)
(opt)
1.230
4.897 0.251
West Kirkland/Clover Nevada United States
United States
Americas Silver
Canada
Kutcho Copper
Canada
New Gold
Canada
Copper Fox/Teck
Mexico
Pan American
Mexico
Newmont Goldcorp
Orvana
Bolivia
Compañia Inversora en Minas Argentina
Dominican Republic
Barrick
Nicaragua
Condor Gold
Consolidated Tin
Australia
Washington H. Soul Pattinson Australia
Cupric Canyon
Botswana
35.616 0.297
26.204 0.042
11.509 1.008
136.398 0.089
1,037.054 0.050
49.053 0.795
573.654 0.920
2.867 1.158
1.327 0.302
84.593 0.497
7.606 0.156
0.762 0.498
1.323 2.268
10.569
1.102
11.600
12.115
51.895
39.000
527.580
3.320
0.401
42.052
1.185
0.380
3.000
33.521 0.567
19.011
Operators’ Estimated Proven and Probable Base Metal Reserves
As of December 31, 2018(1)
Copper(30)
PROVEN +
PROBABLE
RESERVES(3)(4)(5)
ROYALTY/METAL STREAM
3.0% NSR
2.0% NSR
18.75% of payable copper(20)
3.5% NPI
2.7% NVR
3.0% NSR
1.4% NSR(23)
1.5% NSR
1.5% NSR
1.5% NSR
OPERATOR
LOCATION
United States
KGHM
Canada
Kutcho Copper
Canada
Centerra Gold
Canada
Copper Fox/Teck
Canada
Vale
Bolivia
Orvana
Chile
Newmont Goldcorp
Consolidated Tin
Australia
Washington H. Soul Pattinson Australia
First Quantum
Spain
Average
Base Metal Base Metal
Grade
Contained Lbs(6)
(M)
Tons of
Ore
(M)
84.310
11.509
493.353
1,037.054
34.172
2.867
198.103
0.762
1.323
3.417
(%)
0.41%
2.01%
0.19%
0.27%
0.94%
1.52%
0.49%
2.13%
0.42%
4.50%
692.343
463.000
1,836.000
5,630.715
642.427
87.277
1,959.099
32.466
11.023
307.655
PROPERTY
Gold Hill
Hasbrouck (DEV)
Relief Canyon (DEV)
Kutcho Creek (DEV)
Rainy River
Schaft Creek (DEV)
Dolores
Peñasquito
Don Mario
Don Nicolas
Pueblo Viejo
La India (DEV)
Balcooma (DEV)
Jaguar Nickel (DEV)
Khoemacau (DEV)
PROPERTY
Robinson
Kutcho Creek (DEV)
Mount Milligan
Schaft Creek (DEV)
Voisey’s Bay
Don Mario
La Fortuna (DEV)
Balcooma (DEV)
Jaguar Nickel (DEV)
Las Cruces
Lead(31)
PROVEN +
PROBABLE
RESERVES(3)(4)(5)
LOCATION
Ore
(M)
Mexico
Australia
569.145
0.762
Average
Tons of Base Metal
Grade
Base Metal
Contained Lbs(6)
(M)
3,613.200
7.879
(%)
0.32%
0.52%
PROPERTY
Peñasquito
Balcooma (DEV)
ROYALTY
2.0% NSR
1.5% NSR
OPERATOR
Newmont Goldcorp
Consolidated Tin
27
Zinc(32)
PROVEN +
PROBABLE
RESERVES(3)(4)(5)
PROPERTY
Kutcho Creek (DEV)
Peñasquito
El Toqui (DEV)
Balcooma (DEV)
Jaguar Nickel (DEV)
ROYALTY
2.0% NSR
2.0% NSR - Sulfide
0.0 - 3.0% NSR(33)
1.5% NSR
1.5% NSR
OPERATOR
LOCATION
Canada
Kutcho Copper
Mexico
Newmont Goldcorp
Chile
Laguna Gold
Consolidated Tin
Australia
Washington H. Soul Pattinson Australia
Nickel(34)
Average
Tons of Base Metal
Grade
Ore
(M)
11.509
569.145
1.400
0.762
1.323
(%)
3.19%
0.70%
4.70%
1.92%
6.25%
Base Metal
Contained Lbs(6)
(M)
734.000
7,994.530
131.704
29.274
165.347
PROPERTY
Voisey’s Bay
ROYALTY
OPERATOR
LOCATION
2.7% NVR
Vale
Canada
PROVEN +
PROBABLE
Tons of
Ore
(M)
34.172
RESERVES(3)(4)(5)
Base Metal
Average
Base Metal Contained Lbs(6)
Grade (%)
2.12%
(M)
1,448.878
Cobalt(35)
PROVEN +
PROBABLE
RESERVES(3)(4)(5)
PROPERTY
Voisey’s Bay
ROYALTY
OPERATOR
LOCATION
2.7% NVR
Vale
Canada
Average
Tons of Base Metal
Ore
(M)
34.172
Grade
(%)
0.12%
Base Metal
Contained Lbs(6)
(M)
85.429
Molybdenum(36)
PROVEN +
PROBABLE
RESERVES(3)(4)(5)
PROPERTY
Schaft Creek (DEV)
ROYALTY
OPERATOR
LOCATION
3.5% NPI
Copper Fox/Teck
Canada
Average
Tons of Base Metal
Ore
(M)
1,037.054
Grade
(%)
0.02%
Base Metal
Contained Lbs(6)
(M)
373.340
1. Reserves have been reported by the operators of record as of December 31, 2018, with the exception of the following properties
where reserves have been reported by the operators of record or their predecessors in interest and are unadjusted for production
since these dates: La India - January 25, 2019; Don Mario - September 30, 2018; Gwalia Deeps, King of the Hills, Meekatharra,
South Laverton and Wembley Durack - June 30, 2018; Relief Canyon - May 24, 2018; Khoemacau - April 17, 2018; El Toqui -
February 28, 2018; Pine Cove, Taparko and Williams - December 31, 2017; Jaguar Nickel - June 30, 2017; Bald Mountain, Gold
Hill, Inata, Robinson and Southern Cross - December 31, 2016; Back River - August 15, 2015; Hasbrouck Mountain - June 3,
2015; La Fortuna, Pinson and Ruby Hill - December 31, 2014; Schaft Creek - December 31, 2012; Don Nicolas - December 31,
2011; and Balcooma - June 30, 2011.
2. Gold reserves were calculated by the operators at the following per ounce prices: A$1,650 - Meekatharra and King of the Hills;
A$1,600 - Southern Cross and South Laverton; $1,600 - Pine Cove; $1,366 - Schaft Creek; A$1,350 - Gwalia Deeps; $1,300 -
Dolores, La Fortuna, Mara Rosa and Pinson; $1,275 - Rainy River; $1,250 - Andacollo, Back River, Don Mario, El Limon, Inata,
La India, Marigold, Mount Milligan, Prestea, Robinson, Taparko, Wassa and Wharf; $1,230 - Holt; $1,225 - Hasbrouck Mountain;
$1,200 - Bald Mountain, Canadian Malartic, Cortez, Gold Hill, Goldstrike, Leeville, Peñasquito, Pueblo Viejo, Twin Creek and
Williams; $1,150 - LaRonde Zone 5; and $1,100 - Don Nicolas and Ruby Hill. No gold price was reported for Balcooma, Jaguar
Nickel, Kutcho Creek or Wembley Durack.
3.
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; grade and/or quality are 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,
28
shape, depth and mineral content of the reserves are well established. “Probable (Indicated) Reserves” are reserves for which the
quantity and grade and/or quality 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,
although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation.
4. 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.
5.
6.
The reserves reported are either estimates received from the various operators or are based on information provided to Royal Gold
or are derived from publicly available information from the operators of the various properties including National Instrument 43-
101 or JORC Code reports filed by operators. 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.
7. 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.
8. GSR1 and GSR2 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%.
9. NVR1C is the Crossroads portion of NVR1.
10. The royalty is capped at $10 million. As of June 30, 2019, royalty payments of approximately $6.88 million have been received.
11. 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.
12. 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.
13. Royalty only applies to Section 29 which currently holds about 95% of the reserves reported for the property.
14. A Cordilleran royalty of 5% NSR applies to a portion of Section 28.
15. Different Rayrock royalty rates apply to Sections 28, 32 and 33; these 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, 2019,
approximately 103,000 ounces have been produced.
16. Reserves represent Royal Gold's interest based on our royalty ground covering approximately 69% of the resource footprint by
area.
17. 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%.
18. Goose Lake royalty applies to production above 400,000 ounces.
19. NSR sliding-scale schedule (price of gold per ounce - royalty rate): $0.00 to $350 - 1.0%; above $350 - 1.5%.
20. Centerra Gold will deliver 35% of payable gold produced, subject to a fixed payable percentage of 97%, and 18.75% of payable
copper produced, subject to a minimum payable percentage of 95%. The purchase price for gold is equal to the lesser of $435 per
ounce delivered or the prevailing market price and the purchase price for copper is 15% of the spot price per metric tonne delivered.
As of June 30, 2019, approximately 456,700 ounces of payable gold and 22.1 million pounds of payable copper have been
delivered.
29
21. 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. As of
June 30, 2019, approximately 23,600 ounces of payable gold and 234,800 ounces of payable silver have been delivered.
22. 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. As of June 30, 2019, approximately 193,000 ounces of payable
gold have been delivered.
23. The royalty covers approximately 30% of the La Fortuna deposit. Reserves attributable to Royal Gold's royalty represent 3/7 of
Newmont Goldcorp's reporting of 70% of the total reserve.
24. 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. As of June 30, 2019, approximately 181,000 ounces of payable gold and 6.2 million ounces
of payable silver have been delivered.
25. At Paddy's Flat an additional royalty of A$10 per ounce applies on production above 50,000 ounces; At Reedy's an additional 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 and a 1.0% NSR royalty applies to the Rand area only.
At Yaloginda the royalty is 0.45% NSR.
26. 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.
27. Golden Star will deliver 10.5% of payable gold produced until 240,000 ounces have been delivered from Wassa and Prestea, and
5.5% of gold produced thereafter. The purchase price for gold ounces delivered is 20% of the spot gold price until the threshold
has been met, and 30% of the spot gold price thereafter. As of June 30, 2019, approximately 89,600 ounces have been delivered
from Wassa and Prestea.
28. Silver reserves were calculated by the operators at the following prices per ounce: $25.96 - Schaft Creek; $25.00 - Don Nicolas;
$20.00 - Gold Hill; $18.50 - Dolores; $18.00 - Peñasquito; $17.50 - Hasbrouck Mountain; $17.00 - Rainy River; $16.50 - Pueblo
Viejo; and $15.00 - Don Mario and Khoemacau. No silver price was reported for Balcooma, Jaguar Nickel or Kutcho Creek.
29. When production commences, Cupric will deliver 80% of payable silver produced, subject to a fixed payable percentage of 90%.
At Cupric’s option and subject to various conditions, Royal Gold will have the option to purchase up to an additional 20% of the
payable silver. The stream rate will drop by 50% upon the delivery of 32 million ounces of silver at the 80% stream level, and 40
million ounces of silver at the 100% stream level if the option is fully exercised. The purchase price is 20% of the spot price of
silver. Depending on the achievement by Cupric of mill expansion throughput levels above 13,000 tonnes per day (30% above
current mill design capacity), Royal Gold will pay higher ongoing cash payments for ounces delivered in excess of specific annual
thresholds.
30. Copper reserves were calculated by the operators at the following prices per pound: $3.52 -Schaft Creek; $3.00 - Andacollo, La
Fortuna and Mount Milligan; $2.95 - Robinson; $2.75 - Las Cruces; $2.76 - Voisey's Bay; and $2.50 - Don Mario. No copper
reserve price was reported for Balcooma, Jaguar Nickel or Kutcho Creek.
31. Lead reserve price was calculated by the operators at the following prices per pound: $0.95 - Peñasquito. No lead reserve price was
reported for Balcooma.
32. Zinc reserve price was calculated by the operators at the following prices per pound: 1.15 – Peñasquito; and $0.95 - El Toqui. No
zinc reserve price was reported for Balcooma, Jaguar Nickel or Kutcho Creek.
33. 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%
34. Nickel reserve price was calculated by the operator at the following price per pound: $5.01 - Voisey's Bay.
35. Cobalt reserve price was calculated by the operator at the following price per pound: $24.69 - Voisey's Bay.
36. Molybdenum reserve price was calculated by the operator at the following price per pound: $15.30 - Schaft Creek.
30
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
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”. 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, 2016.
As of July 31, 2019, there were 744 stockholders of record of our common stock.
Fiscal Year:
First Quarter (July, Aug., Sept.—2018)
Second Quarter (Oct., Nov., Dec.—2018)
Third Quarter (Jan., Feb., Mar.—2019)
Fourth Quarter (April, May, June—2019)
First Quarter (July, Aug., Sept.—2017)
Second Quarter (Oct., Nov., Dec.—2017)
Third Quarter (Jan., Feb., Mar.—2018)
Fourth Quarter (April, May, June—2018)
2019
2018
Dividends
Sales Prices
High
Low
$
$
$
$
98.53 $
85.67 $
94.49 $
102.62 $
71.91
70.16
80.72
80.65
$
$
$
$
94.39 $
90.13 $
90.51 $
93.50 $
76.15
78.25
78.78
85.15
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 and
other metal prices, economic market conditions and funding requirements for future opportunities or operations.
For calendar year 2019, our annual dividend is $1.06 per share of common stock. We paid the first payment of $0.265
per share on January 18, 2019, to common stockholders of record at the close of business on January 4, 2019. We paid
the second payment of $0.265 per share on April 19, 2019, to common stockholders of record at the close of business on
April 5, 2019. We paid the third payment of $0.265 per share on July 19, 2019, to common stockholders of record at the
close of business on July 5, 2019. Subject to board approval, we anticipate paying the fourth payment of $0.265 per share
on October 18, 2019, to common shareholders of record at the close of business on October 4, 2019.
For calendar year 2018, our annual dividend was $1.00 per share of common stock, paid on a quarterly basis of $0.25 per
share. For calendar year 2017, our annual dividend was $0.96 per share of common stock, paid on a quarterly basis of
$0.24 per share.
31
ITEM 6. SELECTED FINANCIAL DATA
2019
Fiscal Year Ended June 30,
2017
(Amounts in thousands, except per share data)
2016
2018
2015
Revenue(1)
Operating income (loss)(2)
Net income (loss)
Net income (loss) available to Royal Gold
common stockholders
Net income (loss) per share available to Royal
Gold common stockholders:
Basic
Diluted
Dividends declared per common share(3)
$ 423,056 $ 459,042 $ 440,814 $ 359,790 $ 278,019
4,816 $ 87,235
$ 140,707 $ (74,535) $ 145,942 $
$ 89,079 $ (119,351) $ 92,425 $ (82,438) $ 52,678
$ 93,825 $ (113,134) $ 101,530 $ (77,149) $ 51,965
$
$
$
1.43 $
1.43 $
1.05 $
(1.73) $
(1.73) $
0.99 $
1.55 $
1.55 $
0.95 $
(1.18) $
(1.18) $
0.91 $
0.80
0.80
0.87
2019
2018
As of June 30,
2017
(Amounts in thousands)
2016
2015
Stream and royalty interests, net
Total assets
Debt
Total liabilities
Total Royal Gold stockholders’ equity
$ 2,339,316 $ 2,501,117 $ 2,892,256 $ 2,848,087 $ 2,083,608
$ 2,544,151 $ 2,682,016 $ 3,094,065 $ 3,069,729 $ 2,914,474
214,554 $ 351,027 $ 586,170 $ 600,685 $ 313,869
$
$
373,698 $ 540,747 $ 773,801 $ 783,844 $ 503,981
$ 2,136,681 $ 2,102,167 $ 2,275,377 $ 2,229,016 $ 2,353,122
(1) Please refer to Item 7, MD&A, of this report for a discussion of recent developments that contributed to our 8% decrease in revenue
during fiscal year 2019 when compared to fiscal year 2018 and the 4% increase in revenue during fiscal year 2018 when compared
to fiscal year 2017.
(2) Please refer to Note 4 of the notes to consolidated financial statements for discussion on the impairment recognized at Pascua-
Lama, which was attributable for the operating loss during our fiscal year 2018.
(3) The 2019, 2018, 2017, 2016 and 2015 calendar year dividends were $1.06, $1.00, $0.96, $0.92 and $0.88, 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 life of the transaction by the purchase agreement. As of June 30, 2019, we owned seven stream
interests, which are on six producing properties and two development stage properties. Our stream interests accounted
for approximately 72% and 71% of our total revenue for the fiscal years ended June 30, 2019 and 2018, respectively. We
expect stream interests to continue representing a significant proportion of our total revenue.
Acquisition and Management of Royalty Interests—Royalties are non-operating interests in mining projects that provide
the right to a percentage of revenue or metals produced from the project after deducting specified costs, if any. As of
32
June 30, 2019, we owned royalty interests on 35 producing properties, 14 development stage properties and 129
exploration stage properties, of which we consider 47 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 28% and 29% of our total revenue for the fiscal years ended
June 30, 2019 and 2018, 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 JV, 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 and royalties 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, our analysis of technical,
financial, legal and other confidential information of particular opportunities, 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, 2019, 2018 and 2017, 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, 2019
Fiscal Year ended
June 30, 2018
June 30, 2017
Average
Price
1,263
15.00
2.79
N/A
Percentage
of Revenue
78%
9%
9%
4%
$
$
$
Average
Price
1,297
16.72
3.06
N/A
Percentage
of Revenue
77%
9%
11%
3%
$
$
$
Average
Price
1,259
17.88
2.44
N/A
Percentage
of Revenue
85%
8%
5%
2%
$
$
$
Operators’ Production Estimates by Stream and Royalty Interest for Calendar 2019
We received annual production estimates from many of the operators of our producing mines during the first calendar
quarter of 2019. In some instances, an operator may revise its original calendar year guidance throughout the year. The
following table shows such production estimates for our principal producing properties for calendar 2019 as well as the
actual production reported to us by the various operators through June 30, 2019. The estimates and production reports
are prepared by the operators. We do not participate in the preparation or calculation of the operators’ estimates or
production reports and have not independently assessed or verified, and disclaim all responsibility for, 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 properties.
33
Operators’ Estimated and Actual Production by Stream and Royalty Interest for Calendar 2019
Principal Producing Properties
Stream/Royalty
Stream:
Andacollo(3)
Mount Milligan(4)
Copper
Pueblo Viejo(5)
Rainy River(6)
Wassa(7)
Royalty:
Cortez GSR1
Cortez GSR2
Cortez GSR3
Cortez NVR1
Peñasquito(8)
Lead
Zinc
Calendar 2019 Operator’s Production
Estimate(1)
Silver
(oz.)
Gold
(oz.)
Base Metals
(lbs.)
Calendar 2019 Operator’s Production
Actual(2)
Silver
(oz.)
Gold
(oz.)
Base Metals
(lbs.)
62,000
155,000 - 175,000
26,300
81,800
65 - 75 million
31.8 million
550,000 - 600,000
245,000 - 270,000 245,000 - 270,000
150,000 - 160,000
N/A
102,000
98,000
199,000
168,200
165,000
25 million
272,000 N/A
127,600 126,500
80,300
62,000
7,600
69,600
58,800
12,000 1.7 million
180 million
245 million
12 million
25 million
(1) Production estimates received from our operators are for calendar 2019. There can be no assurance that production estimates
received from our operators will be achieved. Please also 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 from our operators and cover the period January 1, 2019 through June 30, 2019, unless
otherwise noted in footnotes to this table.
(3) The estimated and actual production figures shown for Andacollo are contained gold in concentrate.
(4) The estimated and actual production figures shown for Mount Milligan are payable gold and copper in concentrate.
(5) The estimated and actual production figures shown for Pueblo Viejo are payable gold in doré and represent Barrick’s 60% interest
in Pueblo Viejo. The operator did not provide estimated or actual silver production.
(6) The estimated and actual production figures shown for Rainy River are produced gold and silver in doré.
(7) The estimated and actual production figures shown for Wassa is payable gold in doré.
(8) The estimated and actual gold and silver production figures shown for Peñasquito are payable gold in concentrate and doré. The
estimated and actual lead and zinc production figures shown are payable lead and zinc in concentrate. The estimated production
figures shown are for the period April 18, 2019 through December 31, 2019, while actual production figures shown are for the
period April 18, 2019 through June 30, 2019, per the operator.
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. We do not participate in
34
the preparation or calculation of the operators’ production reports and have not independently assessed or verified, and
disclaim all responsibility for, the accuracy of such information.
Historical Production(1) by Stream and Royalty Interest
Principal Producing Properties
For the Fiscal Years Ended June 30, 2019, 2018 and 2017
Stream/Royalty
Stream:
Mount Milligan
Andacollo
Pueblo Viejo
Wassa
Rainy River
Royalty:
Peñasquito
Cortez GSR1
Cortez GSR2
Cortez GSR3
Cortez NVR1
Metal
2019
2018
2017
Gold
Copper
Gold
Gold
61,700 oz.
77,700 oz.
103,400 oz.
8.3 Mlbs.
10.4 Mlbs.
2.6 Mlbs.
55,000 oz.
41,000 oz.
44,400 oz.
49,200 oz.
47,800 oz.
50,700 oz.
Silver
2.1 Moz.
1.9 Moz.
1.6 Moz.
Gold
Gold
Silver
17,500 oz.
15,800 oz.
144,700 oz.
12,500 oz.
6,000 oz.
53,600 oz.
10,800 oz.
N/A
N/A
Gold
Silver
Lead
Zinc
Gold
Gold
Gold
Gold
158,800 oz.
375,800 oz.
556,300 oz.
16.4 Moz.
117.4 Mlbs.
216.2 Mlbs.
84,600 oz.
12,100 oz.
96,700 oz.
77,400 oz.
20.9 Moz.
122.2 Mlbs.
348.5 Mlbs.
76,300 oz.
1,400 oz.
77,700 oz.
42,100 oz.
20.7 Moz.
125.2 Mlbs.
317.8 Mlbs.
62,900 oz.
1,300 oz.
64,200 oz.
32,600 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 and royalty production discussed in Item 2,
Properties, or from the operators’ public reporting.
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 also refer to Note 2 of the notes to consolidated financial statements for a discussion on recently
adopted and 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.
We rely on reserve estimates reported by the operators of the properties on which we hold 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.
35
Stream and Royalty Interests in Mineral Properties and Related Depletion
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.
Production stage stream and royalty interests are depleted using the units of production method over the life of the mineral
property (as stream sales occur or royalty payments are recognized), which are estimated using proven and probable
reserves as provided by the operator. Development stage mineral properties, which are not yet in production, are not
depleted until the property begins production. Exploration stage mineral properties, where there are no proven and
probable reserves, are not depleted. At such time as the associated exploration stage mineral interests are converted to
proven and probable reserves, the mineral property is depleted over its life, 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, and other metal prices, and operators’ estimates of proven and probable reserves or
mineralized material related to our stream or royalty properties 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, 2019.
Revenue
Revenue is recognized pursuant to current guidance in ASC 606. Under current ASC 606 guidance, a performance
obligation is a promise in a contract to transfer control of a distinct good or service (or integrated package of goods and/or
services) to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized
as revenue when, or as, a performance obligation is satisfied. In accordance with this guidance, revenue attributable to our
stream interests and royalty interests is generally recognized at the point in time that control of the related metal production
transfers to our customers. The amount of revenue we recognize further reflects the consideration to which we are entitled
under the respective stream or royalty agreement. A more detailed summary of our revenue recognition policies for our
stream and royalty interests is discussed below.
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 of the metals produced from a mine, at a price determined for the life of the transaction by
the purchase agreement. Gold, silver and copper received under our metal streaming agreements are taken into inventory,
and then sold primarily using average spot rate gold, silver and copper forward contracts. The sales price for these average
spot rate forward contracts is determined by the average daily gold, silver or copper spot prices during the term of the
contract, typically a consecutive number of trading days between ten days and three months (depending on the frequency
36
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. We settle our forward sales contracts via physical delivery of the metal to the purchaser
(our customer) on the settlement date specified in the contract. Under our forward sales contracts, there is a single
performance obligation to sell a contractually specified volume of metal to the purchaser, and we satisfy this obligation at
the point in time of physical delivery. Accordingly, revenue from our metal sales is recognized on the date of settlement,
which is the date that control, custody and title to the metal transfer to the purchaser.
Royalty Interests
Royalties are non-operating interests in mining projects that provide the right to a percentage of revenue or metals produced
from the project after deducting specified costs, if any. We are entitled to payment for our royalty interest in a mining
project based on a contractually specified commodity price (for example, a monthly or quarterly average spot price) for
the period in which metal production occurred. As a royalty holder, we act as a passive entity in the production and
operations of the mining project, and the third-party operator of the mining project is responsible for all mining activities,
including subsequent marketing and delivery of all metal production to their ultimate customer. In all of our material
royalty interest arrangements, we have concluded that we transfer control of our interest in the metal production to the
operator at the point at which production occurs, and thus, the operator is our customer. We have further determined that
the transfer of each unit of metal production, comprising our royalty interest, to the operator represents a separate
performance obligation under the contract, and each performance obligation is satisfied at the point in time of metal
production by the operator. Accordingly, we recognize revenue attributable to our royalty interests in the period in which
metal production occurs at the specified commodity price per the agreement, net of any contractually allowable offsite
treatment, refining, transportation and, if applicable, mining costs.
Metal Sales
Gold, silver and copper received under our metal streaming agreements are taken into inventory, and then sold primarily
using average spot rate gold, silver and copper forward contracts. The sales price for these average spot rate forward
contracts is determined by the average daily gold, silver or copper spot prices during the term of the contract, typically 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 activity in effect at the time) commencing shortly after receipt and
purchase of the metal. Temporary modifications may be made to our metal sales guidelines from time to time as required
to meet the needs of the Company. Revenue from gold, silver and copper sales is recognized on the date of the settlement,
which is also the date that title to the metal passes to the purchaser.
Cost of Sales
Cost of sales, which excludes depreciation, depletion and amortization, is specific to our stream agreements and is the
result of our purchase of gold, silver and copper for a cash payment. The cash payment for gold from 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, silver or copper spot price near the date of metal delivery.
Exploration Costs
Exploration costs are specific to our Peak Gold JV for exploration and advancement of the Peak Gold project as discussed
further in Note 2 of our notes to consolidated financial statements. Exploration costs associated with the exploration and
advancement of Peak Gold 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
37
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’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, 2019, we had current assets of $154.7 million compared to current liabilities of $33.6 million resulting in
working capital of $121.1 million and a current ratio of 5 to 1. This compares to current assets of $125.8 million and
current liabilities of $51.4 million at June 30, 2018, resulting in working capital of $74.4 million and a current ratio of
approximately 2 to 1. The increase in our current ratio was primarily attributable to an increase in our cash and
equivalents, which is discussed further below under “Summary of Cash Flows.”
During the fiscal year ended June 30, 2019, liquidity needs were met from $253.2 million in net cash provided by operating
activities and our available cash resources. As of June 30, 2019, the Company had $780 million available and $220
million outstanding under its revolving credit facility. Working capital, combined with available capacity under the
Company’s revolving credit facility, resulted in approximately $900 million of total liquidity at June 30, 2019. Refer to
Note 5 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 conditional funding schedule in connection with the Khoemacau silver stream acquisition. 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
or 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.
38
Recent Liquidity and Capital Resource Developments
Convertible Senior Notes Due 2019
The 2019 Notes matured on June 15, 2019 and the Company settled the $370 million aggregate principal amount plus
accrued and unpaid interest with its available cash resources, primarily from our available revolving credit facility.
Revolving Credit Facility Amendment
On June 3, 2019, the Company entered into a second amendment to our revolving credit facility dated as of June 2, 2017.
The amendment extended the scheduled maturity date from June 2, 2022 to June 3, 2024 and reduced certain interest rates
and fees to be paid by the Company.
Dividend Increase
On November 13, 2018, we announced an increase in our annual dividend for calendar 2019 from $1.00 to $1.06, payable
on a quarterly basis of $0.265 per share. The newly declared dividend is 6.0% higher than the dividend paid during
calendar 2018. Royal Gold has steadily increased its annual dividend since calendar 2001.
Summary of Cash Flows
Operating Activities
Net cash provided by operating activities totaled $253.2 million for the fiscal year ended June 30, 2019, compared to
$328.8 million for the fiscal year ended June 30, 2018. The decrease is primarily due to higher income taxes paid of
$47.5 million over the prior period and a decrease in proceeds received from our stream and royalty interests, net of
production taxes and cost of sales, of approximately $26.6 million. The increase in cash taxes paid during the current
period is primarily attributable to an increase in required estimated tax payments made to various taxing authorities and
an increase in prior fiscal year earnings at certain foreign subsidiaries, which corresponding tax payments were made
within the current period.
Net cash provided by operating activities totaled $328.8 million for the fiscal year ended June 30, 2018, compared to
$266.9 million for the fiscal year ended June 30, 2017. 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 $23.0 million and a tax
refund received from a foreign taxing authority of approximately $21 million.
Investing Activities
Net cash used in investing activities totaled $5.6 million for the fiscal year ended June 30, 2019, compared to cash used in
investing activities of $10.6 million for the fiscal year ended June 30, 2018. The decrease in cash used in investing
activities is due to a decrease in acquisitions of stream and royalty interests in mineral properties and purchases of equity
securities when compared to the prior fiscal year.
Net cash used in investing activities totaled $10.6 million for the fiscal year ended June 30, 2018, compared to
$200.1 million for the fiscal year ended June 30, 2017. The decrease in cash used in investing activities is due to a decrease
in acquisitions of stream and royalty interests in mineral properties when compared to the fiscal year ended June 30, 2017.
Financing Activities
Net cash used in financing activities totaled $216.9 million for the fiscal year ended June 30, 2019, compared to cash used
in financing activities of $315.3 million for the fiscal year ended June 30, 2018. The decrease in cash used in financing
activities is primarily due to a decrease in debt repayments (net of borrowings) when compared to the prior fiscal year.
39
Net cash used in financing activities totaled $315.3 million for the fiscal year ended June 30, 2018, compared to cash used
in financing activities of $97.5 million for the fiscal year ended June 30, 2017. The increase in cash used in financing
activities is primarily due to increased repayment of amounts outstanding under our revolving credit facility when
compared to the fiscal year ended June 30, 2017.
Contractual Obligations
Our contractual obligations as of June 30, 2019, are as follows:
Payments Due by Period (in thousands)
Contractual Obligations
Revolving credit facility(1)
Total
Less than
1 Year
1 - 3 Years
3 - 5 Years
$ 260,023 $ 446 $ 22,086 $ 237,491 $
More than
5 Years
—
(1) Amounts represent principal ($220 million) and estimated interest payments ($40.0 million) assuming no early extinguishment.
For information on our contractual obligations, see Note 5 of the notes to consolidated financial statements. The above
table does not include stream commitments as discussed in Note 14 of the notes to consolidated financial statements. The
Company believes it will be able to fund all current obligations from net cash provided by operating activities.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Results of Operations
Fiscal Year Ended June 30, 2019, Compared with Fiscal Year Ended June 30, 2018
For the fiscal year ended June 30, 2019, we recorded net income attributable to Royal Gold stockholders of $93.8 million,
or $1.43 per basic share and $1.43 per diluted share, as compared to a net loss attributable to Royal Gold stockholders of
$113.1 million, or $1.73 per basic and diluted share, for the fiscal year ended June 30, 2018. The increase in our earnings
per share, when compared to the prior period, was attributable to prior period impairment charges of approximately $239.4
million, primarily on our royalty interest at Pascua-Lama, as discussed further in Note 4 of our notes to consolidated
financial statements. The effect of the impairment charges during the prior period was $2.68 per basic share, after taxes.
Our current period earnings per share were impacted by a decrease in our revenue and losses on changes in fair value on
our equity securities, both discussed further below.
For the fiscal year ended June 30, 2019, we recognized total revenue of $423.1 million, which is comprised of stream
revenue of $305.8 million and royalty revenue of $117.2 million, at an average gold price of $1,263 per ounce, an average
silver price of $15.00 per ounce and an average copper price of $2.79 per pound, compared to total revenue of
$459.0 million, which is comprised of stream revenue of $324.5 million and royalty revenue of $134.5 million, at an
average gold price of $1,297 per ounce, an average silver price of $16.72 per ounce and an average copper price of $3.06
per pound, for the fiscal year ended June 30, 2018.
40
Revenue and the corresponding production, attributable to our stream and royalty interests, for the fiscal year ended
June 30, 2019 compared to the fiscal year ended June 30, 2018 is as follows:
Revenue and Reported Production Subject to our Stream and Royalty Interests
Fiscal Years Ended June 30, 2019 and 2018
(In thousands, except reported production in ozs. and lbs.)
Stream/Royalty
Stream(2):
Mount Milligan
Pueblo Viejo
Andacollo
Rainy River
Wassa
Other(3)
Total stream revenue
Royalty(2):
Peñasquito
Cortez
Other(3)
Total royalty revenue
Total revenue
Fiscal Year Ended
June 30, 2019
Reported
Fiscal Year Ended
June 30, 2018
Reported
Metal(s) Revenue
Production(1)
Revenue
Production(1)
Gold
Copper
Gold
Silver
Gold
Gold
Silver
Gold
Gold
Gold
Silver
Lead
Zinc
Gold
Various
$ 101,010
$
133,534
61,700 oz.
8.3 Mlbs.
$
82,844
$
95,055
41,000 oz.
2.1 Moz.
$
$
69,264
22,142
55,000 oz.
$
$
57,413
8,710
15,800 oz.
144,700 oz.
17,500 oz.
6,800 oz.
22,098
$
$
8,466
$ 305,824
$
$
$
16,151
13,653
324,516
$
13,865
$
25,886
158,800 oz.
16.4 Moz.
117.4 Mlbs.
216.2 Mlbs.
11,383
$
$
91,984
$ 117,232
$ 423,056
96,700 oz.
N/A
$
$
$
$
8,155
100,485
134,526
459,042
77,700 oz.
10.4 Mlbs.
49,200 oz.
1.9 Moz.
44,400 oz.
6,000 oz.
53,600 oz.
12,500 oz.
10,500 oz.
375,800 oz.
20.9 Moz.
122.2 Mlbs.
348.5 Mlbs.
77,700 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, 2019 and 2018, and may differ from the operators’ public reporting.
(2) Refer to Item 2, Properties, for further discussion on our principal stream and royalty interests.
(3)
Individually, no stream or royalty included within the “Other” category contributed greater than 5% of our total revenue for either
period.
The decrease in our total revenue for the fiscal year ended June 30, 2019, compared with the fiscal year ended June 30,
2018, resulted primarily from a decrease in our stream revenue and a decrease in the average gold, silver and copper prices.
The decrease in our stream revenue was primarily attributable to a decrease in gold and copper sales at Mount Milligan
and a decrease in gold sales at Pueblo Viejo. These decreases were partially offset by higher metal sales at Andacollo
and Rainy River. The decrease in metal sales at Mount Milligan was anticipated based on previously announced news
from Centerra and as reported earlier by the Company.
41
Gold and silver ounces and copper pounds purchased and sold during the fiscal years ended June 30, 2019 and 2018, as
well as gold, silver and copper in inventory as of June 30, 2019 and 2018, for our stream interests were as follows:
Gold Stream
Mount Milligan
Andacollo
Pueblo Viejo
Wassa
Rainy River
Other
Total
Silver Stream
Pueblo Viejo
Rainy River
Total
Copper Stream
Mount Milligan
Fiscal Year Ended
June 30, 2019
As of
Fiscal Year Ended
June 30, 2018
June 30, 2018
Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.) Inventory (oz.) Inventory (oz.)
300
7,400
9,200
2,500
800
1,400
21,600
77,700
44,400
49,200
12,500
5,900
10,500
200,200
68,500
51,900
41,200
16,600
16,800
5,700
200,700
61,700
55,000
41,000
17,500
15,800
6,800
197,800
78,000
51,700
45,400
14,500
6,800
11,400
207,800
7,100
4,300
9,500
1,500
1,800
400
24,600
As of
June 30, 2019
Fiscal Year Ended
June 30, 2019
As of
Fiscal Year Ended
June 30, 2018
June 30, 2018
Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.) Inventory (oz.) Inventory (oz.)
540,200
32,300
572,500
1,883,300
53,600
1,936,900
2,071,700
144,700
2,216,400
2,007,000
148,900
2,155,900
1,886,737
85,900
1,972,637
475,600
36,500
512,100
As of
June 30, 2019
Fiscal Year Ended
June 30, 2019
Fiscal Year Ended
June 30, 2018
Purchases (Mlbs.) Sales (Mlbs.) Purchases (Mlbs.) Sales (Mlbs.) Inventory (Mlbs.) Inventory (Mlbs.)
—
As of
June 30, 2018
As of
June 30, 2019
10.4
10.4
0.8
8.3
9.1
Our royalty revenue decreased during the fiscal year ended June 30, 2019, compared with the fiscal year ended
June 30, 2018, primarily due to a decrease in production at Peñasquito and a decrease in the average gold, silver and copper
prices. Refer to Part I, Item 2, Properties, for discussion and any updates on our principal producing properties.
Cost of sales decreased to $77.5 million for the fiscal year ended June 30, 2019, from $83.8 million for the fiscal year
ended June 30, 2018. The decrease was primarily due to decreased gold and copper sales from Mount Milligan and a
decrease in gold sales from Pueblo Viejo, partially offset by an increase in gold sales from Rainy River and Andacollo.
Cost of sales, which excludes depreciation, depletion and amortization, is specific to our stream agreements and is the
result of RGLD Gold’s purchase of gold, silver and copper for a cash payment. The cash payment for gold from 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, silver or copper spot price near the date of metal delivery.
General and administrative expenses decreased to $30.5 million for the fiscal year ended June 30, 2019, from
$35.5 million for the fiscal year ended June 30, 2018. The decrease during the current period was primarily due to a
decrease in legal costs attributable to settlement of the Voisey’s Bay royalty calculation dispute as discussed further in
Part I, Item 1, Business.
Production taxes increased to $4.1 million for the fiscal year ended June 30, 2019, from $2.3 million for the fiscal year
ended June 30, 2018. The increase is primarily due to an increase in mining proceeds tax associated with our Voisey’s
Bay royalty, which resulted from increased revenue from the Voisey’s Bay royalty during the current period.
On July 1, 2018, the Company adopted new Accounting Standards Update (“ASU”) guidance which impacts how we
recognize changes in fair value on our equity securities at each reporting period. As a result of the new ASU guidance,
the Company recognized a loss on changes in fair value of equity securities of approximately $6.8 million for the fiscal
year ended June 30, 2019. Refer to Note 2 of our notes to consolidated financial statements for further detail. The new
guidance could increase our earnings volatility.
Interest and other income decreased to $2.3 million for the fiscal year ended June 30, 2019, from $4.2 million for the fiscal
year ended June 30, 2018. In June 2018, Golden Star repaid its $20 million term loan facility with Royal Gold, thus
reducing interest income during the current period.
42
Interest and other expense decreased to $29.7 million for the fiscal year ended June 30, 2019, from $34.2 million for the
fiscal year ended June 30, 2018. The decrease was primarily attributable to lower interest expense as a result of a decrease
in average amounts outstanding under our revolving credit facility during the current period when compared to the prior
period.
During the fiscal year ended June 30, 2019, we recognized income tax expense totaling $17.5 million compared with $14.8
million during the fiscal year ended June 30, 2018. This resulted in an effective tax rate of 16.4% during the current
period, compared with (14.1%) in the prior period. The effective tax rate for the fiscal year ended June 30, 2019 was
primarily impacted by discrete true-ups related to the Tax Cuts and Jobs Act (the “Act”) partially offset by the
implementation of the global intangible low-taxed income (“GILTI”) tax regime. The effective tax rate for the fiscal year
ended June 30, 2018 was impacted by discrete period expense recorded during the December 2017 quarter related to the
impacts of the Act, a one-time non-cash functional currency election, partially offset by discrete benefits related to
impairment charges.
Fiscal Year Ended June 30, 2018, Compared with Fiscal Year Ended June 30, 2017
For the fiscal year ended June 30, 2018, we recorded a net loss attributable to Royal Gold stockholders of $113.1 million,
or $1.73 per basic share and diluted share, as compared to net income attributable to Royal Gold stockholders of $101.5
million, or $1.55 per basic and diluted share, for the fiscal year ended June 30, 2017. The decrease in our earnings per
share was attributable to impairment charges of approximately $239.4 million primarily on our royalty interest at Pascua-
Lama, as discussed further in Note 4 of our notes to consolidated financial statements, during the three months ended
March 31, 2018. This decrease was partially offset by an increase in our revenue, which is discussed below. The effect
of the impairment charges during the current year, was $2.68 per basic share, after taxes. The decrease in our earnings
per share was also attributable to an increase in our income tax expense due to the impacts of the Act and a non-cash
functional currency election at certain of our Canadian subsidiaries. The combined effect of the Act and the non-cash
functional currency election for income tax purposes was additional income tax expense of approximately $30.7 million
and $18.3 million, respectively, or $0.47 and $0.25 per basic share, respectively, during the fiscal year ended June 30,
2018.
For the fiscal year ended June 30, 2018, we recognized total revenue of $459.0 million, which is comprised of stream
revenue of $324.5 million and royalty revenue of $134.5 million, at an average gold price of $1,297 per ounce, an average
silver price of $16.72 per ounce and an average copper price of $3.06 per pound, compared to total revenue of
$440.8 million, which is comprised of stream revenue of $314.0 million and royalty revenue of $126.8 million, at an
average gold price of $1,259 per ounce, an average silver price of $17.88 per ounce and an average copper price of $2.44
per pound, for the fiscal year ended June 30, 2017.
43
Revenue and the corresponding production, attributable to our stream and royalty interests, for the fiscal year ended
June 30, 2018 compared to the fiscal year ended June 30, 2017 is as follows:
Revenue and Reported Production Subject to our Stream and Royalty Interests
Fiscal Years Ended June 30, 2018 and 2017
(In thousands, except reported production in ozs. and lbs.)
Stream/Royalty
Stream (2):
Mount Milligan
Pueblo Viejo
Andacollo
Wassa
Rainy River
Other(3)
Fiscal Year ended
June 30, 2018
Reported
Fiscal Year ended
June 30, 2017
Reported
Metal(s) Revenue
Production(1)
Revenue
Production(1)
$
133,534
$
136,736
Gold
Copper
77,700 oz.
10.4 Mlbs.
$
95,055
$
91,589
Gold
Silver
Gold
Gold
Gold
Silver
Gold
$
$
$
57,413
16,151
8,710
$
13,653
49,200 oz.
1.9 Moz.
44,400 oz.
23,000 oz.
6,000 oz.
53,600 oz.
10,500 oz.
$
$
$
60,251
13,457
N/A
$
11,978
103,400 oz.
2.6 Mlbs.
50,700 oz.
1.6 Moz.
47,800 oz.
10,800 oz.
N/A
N/A
9,600 oz.
556,300 oz.
20.7 Moz.
125.2 Mlbs.
317.8 Mlbs.
64,200 oz.
N/A
Total stream revenue
$
324,516
$
314,011
Royalty:
Peñasquito
Cortez
Other(3)
Total royalty revenue
Total revenue
$
25,886
$
26,687
Gold
Silver
Lead
Zinc
Gold
$
Various $
$
$
375,800 oz.
20.9 Moz.
122.2 Mlbs.
348.5 Mlbs.
8,155
100,485
134,526
459,042
77,700 oz.
N/A
$
$
$
$
6,504
93,612
126,803
440,814
(1) Reported production relates to the amount of metal sales, subject to our stream and royalty interests, for the twelve months ended
June 30, 2018 and 2017, and may differ from the operators’ public reporting.
(2) Refer to Item 2, Properties, for further discussion on our principal stream and royalty interests.
(3)
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, 2018, compared with the fiscal year ended June 30,
2017, resulted primarily from an increase in our stream revenue and an increase in the average gold and copper prices.
The increase in our stream revenue was primarily attributable to new gold and silver production from our Rainy River
stream, an increase in gold sales at Wassa and increased copper sales at Mount Milligan, partially offset by lower gold
sales at Mount Milligan and Andacollo. Silver deliveries from Rainy River began during our December 2017 quarter
with silver sales beginning in the March 2018 quarter. Copper deliveries from Mount Milligan began during our June
2017 quarter.
44
Gold and silver ounces and copper pounds purchased and sold during the fiscal year ended June 30, 2018 and 2017, as
well as gold, silver and copper in inventory as of June 30, 2018 and 2017, for our stream interests were as follows:
Gold Stream
Mount Milligan
Andacollo
Pueblo Viejo
Wassa
Rainy River
Other
Total
Silver Stream
Pueblo Viejo
Rainy River
Total
Copper Stream
Mount Milligan
Fiscal Year Ended
June 30, 2018
As of
Fiscal Year Ended
June 30, 2017
June 30, 2017
Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.) Inventory (oz.) Inventory (oz.)
100
100
12,900
500
—
500
14,100
103,400
47,800
50,700
10,800
—
9,500
222,200
78,000
51,700
45,400
14,500
6,800
11,400
207,800
77,700
44,400
49,200
12,500
5,900
10,500
200,200
96,000
47,900
52,600
10,400
—
9,500
216,400
300
7,400
9,200
2,500
800
1,400
21,600
As of
June 30, 2018
Fiscal Year Ended
June 30, 2018
As of
Fiscal Year Ended
June 30, 2017
June 30, 2017
Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.) Inventory (oz.) Inventory (oz.)
536,800
—
536,800
1,563,100
—
1,563,100
1,886,737
85,900
1,972,637
1,883,300
53,600
1,936,900
1,776,200
—
1,776,200
540,200
32,300
572,500
As of
June 30, 2018
Fiscal Year Ended
June 30, 2018
Fiscal Year Ended
June 30, 2017
Purchases (Mlbs.) Sales (Mlbs.) Purchases (Mlbs.) Sales (Mlbs.) Inventory (Mlbs.) Inventory (Mlbs.)
—
As of
June 30, 2017
As of
June 30, 2018
10.4
10.4
2.6
2.6
—
Our royalty revenue increased during the fiscal year ended June 30, 2018, compared with the fiscal year ended
June 30, 2017, primarily due to an increase in the average gold and copper prices and increased gold 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 $83.8 million for the fiscal year ended June 30, 2018, compared to $87.3 million for the
fiscal year ended June 30, 2017. The decrease was primarily due to decreased gold sales from Mount Milligan and
Andacollo. Cost of sales, which excludes depreciation, depletion and amortization, is specific to our stream agreements
and is the result of RGLD Gold’s purchase of gold, silver and copper for a cash payment. The cash payment for gold
from 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, silver or copper spot price near the date of metal
delivery.
General and administrative expenses increased to $35.5 million for the fiscal year ended June 30, 2018, from $33.4 million
for the fiscal year ended June 30, 2017. The increase during the fiscal year ended June 30, 2018 was primarily due to an
increase in legal and litigation costs.
Exploration costs decreased to $8.9 million for the fiscal year ended June 30, 2018, from $12.9 million for the fiscal year
ended June 30, 2017. Exploration costs are specific to the exploration and advancement of the Peak Gold JV, as discussed
further in Note 2 of the notes to consolidated financial statements.
Depreciation, depletion and amortization expense increased to $163.7 million for the fiscal year ended June 30, 2018, from
$159.6 million for the fiscal year ended June 30, 2017. The increase was primarily attributable to increased gold sales
from our Wassa gold stream.
Impairment of royalty and stream interests was $239.4 million for the fiscal year ended June 30, 2018. The impairment
of royalty interests was the result of our regular impairment analysis conducted during the three months ended March 31,
2018, and was primarily due to the presence of impairment indicators on our royalty interest at Pascua-Lama. Refer to
Note 4 of our notes to consolidated financial statements for further discussion on our impairment analysis and results.
45
Interest and other income decreased to $4.2 million for the fiscal year ended June 30, 2018, from $9.3 million for the fiscal
year ended June 30, 2017. The decrease was primarily due to a gain recognized ($3.4 million) on consideration received
as part of the termination of our Phoenix Gold Project streaming interest during the fiscal year ended June 30, 2017. The
decrease in interest and other income was also due to consideration received as part of a legal settlement and termination
of a non-principal royalty of approximately $2.8 million during the fiscal year ended June 30, 2017.
Interest and other expense decreased to $34.2 million for the fiscal year ended June 30, 2018, from $36.4 million for the
fiscal year ended June 30, 2017. The decrease was primarily attributable to lower interest expense as a result of a decrease
in amounts outstanding under our revolving credit facility. The Company repaid the remaining $250 million outstanding
under the revolving credit facility during fiscal year 2018.
During the fiscal year ended June 30, 2018, we recognized income tax expense totaling $14.8 million compared with $26.4
million during the fiscal year ended June 30, 2017. This resulted in an effective tax rate of (14.1%) during the fiscal year
ended June 30, 2018, compared with 22.2% during the fiscal year ended June 30, 2017. The increase in the effective tax
rate for the fiscal year ended June 30, 2018 is primarily attributable to the effects of the Act and a non-cash functional
currency election at certain of our Canadian subsidiaries.
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 Quarterly Report on Form 10-Q 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, without limitation, statements regarding the impact of recently adopted or issued
accounting standards; the expected schedule for making advance payments pursuant to the Khoemacau Copper Project
stream agreement and the funding of such payments; application of the royalty on production from Voisey’s Bay to a
percentage of gross metal value in concentrates; the results of the PEA for the Peak Gold Project and the results of efforts
to identify options with respect to the Company’s interests in the Peak Gold Project; expectations concerning the proportion
of total revenue to come from stream and royalty interests; estimates pertaining to timing, commencement and volume of
production from the operators of properties where we hold stream and royalty interests and comparisons of estimates to
actual production; statements related to ongoing developments and expected developments at properties where we hold
stream and royalty interests, including declining grades and projects intended to increase production at Andacollo,
development of long-term water sources and supply plans at Mount Milligan and obtaining the permits therefor, plant and
tailings capacity expansions at Pueblo Viejo, studies to increase return on investment at Rainy River, increases in
production and conversion of mineralized material to resources at Wassa, and production ramp-up at Cortez Crossroads;
fluctuations in the prices for gold, silver, copper, nickel and other metals; stream and royalty revenue estimates and
comparisons of estimates to actual revenue; effective tax rate estimates, including the effect of recently enacted tax reform;
the adequacy of financial resources and funds to cover anticipated expenditures for debt service, general and administrative
expenses and dividends, as well as costs associated with exploration and business development and capital expenditures;
expected delivery dates of gold, silver, copper and other metals; 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 past results as well as 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;
46
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
the ability of operators to bring projects into production on schedule or operate in accordance with feasibility
studies, including development stage mining properties, mine and mill expansion projects and other
development and construction projects;
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, local communities, or other third
parties;
liquidity or other problems our operators may encounter, including shortfalls in the financing required to
complete construction and 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 drought,
floods, hurricanes or earthquakes and access to sufficient 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, or failure
to make such calculations 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;
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 in 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, governmental consents for granting interests in
exploration and exploitation licenses, application and enforcement of real estate, mineral tenure, contract,
safety, environmental 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;
47
•
•
•
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;
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.
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, 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, 2019, we reported revenue of $423.1 million, with an average gold price for the
period of $1,263 per ounce, an average silver price for the period of $15.00 per ounce and an average copper price of $2.79
per pound. Approximately 78% of our total recognized revenues for the fiscal year ended June 30, 2019 were attributable
to gold sales from our gold producing interests, as shown within the MD&A. For the fiscal year ended June 30, 2019, 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 $34.0 million.
Approximately 9% of our total reported revenue for the fiscal year ended June 30, 2019 was attributable to silver sales
from our silver producing interests. For the fiscal year ended June 30, 2019, 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 $4.0 million.
Approximately 9% of our total reported revenue for the fiscal year ended June 30, 2019 was attributable to copper sales
from our copper producing interests. For the fiscal year ended June 30, 2019, 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 $4.1 million.
48
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 INCOME (LOSS)
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page
50
52
53
54
55
56
49
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of Royal Gold, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Royal Gold, Inc. (the Company) as of June 30, 2019
and 2018, the related consolidated statements of operations and comprehensive income (loss), changes in equity and cash
flows for each of the three years in the period ended June 30, 2019, and the related notes (collectively referred to as the
“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company at June 30, 2019 and 2018, and the results of its operations and its cash
flows for each of the three years in the period ended June 30, 2019, 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) (PCAOB), the Company's internal control over financial reporting as of June 30, 2019, 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 8, 2019 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of
the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for
our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex
judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a
separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
50
Impairment Assessment of Stream and Royalty Interests in Mineral Properties
Description of
the Matter
How We
Addressed the
Matter in Our
Audit
At June 30, 2019, the Company’s stream and royalty interest balance totaled $2.3
billion. As more fully described in Note 2 to the consolidated financial statements, the
Company evaluates its stream and royalty interests for impairment whenever events or
changes in circumstances indicate that the carrying amounts of the asset or group of
assets may not be recoverable (“triggering events”). Management evaluates various
qualitative factors in determining whether or not events or changes in circumstances
indicate that the carrying amount of an asset or group of assets may not be recoverable.
The factors considered include, among others, significant changes in estimates of
forecasted gold, silver, copper and other metal prices, significant changes in operators’
estimates of proven and probable reserves and other relevant information received from
the operators, which may include operational or legal information that indicates
production from mineral interests will not likely occur or may be significantly reduced
in the future.
Auditing the Company’s impairment assessment involved our subjective judgment
because, in determining whether a triggering event occurred, management uses
estimates that include, among others, assumptions about forecasted gold, silver,
copper and other metal prices and total future production using reserve or other
relevant information reported by the operators. Significant uncertainty exists with
these assumptions. Further, management’s evaluation of any new information
indicating that production will not likely occur or may be significantly reduced in the
future requires significant judgment.
We obtained an understanding, evaluated the design and tested the operating
effectiveness of controls over the Company’s process over the impairment assessment.
For example, we tested controls over the Company’s process for identifying and
evaluating potential impairment triggers and related significant assumptions and
judgments. To test the Company’s impairment assessment, our audit procedures
included, among others, evaluating the significant assumptions, judgments and
operating data used in the Company’s analysis. Specifically, we compared forecasted
gold, silver, copper and other metal prices to available market information,
corroborated reserve information to available operator or publicly available
information. We involved our specialist and searched for and evaluated other
publicly available information that corroborates or contradicts the reserve estimates or
indicates that production from mineral interests will not likely occur or may be
significantly reduced in the future. We also considered the professional qualifications
and objectivity of management’s specialists and the reputation of the third-party
operators. Further, we evaluated the reasonableness of changes to estimated proven
and probable reserves using our experience with the Company’s stream and royalty
interests and industry knowledge.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2010.
Denver, Colorado
August 8, 2019
51
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
Prepaid expenses and other
Total current assets
Stream and royalty interests, net (Note 4)
Other assets
Total assets
LIABILITIES
Accounts payable
Dividends payable
Income tax payable
Withholding taxes payable
Other current liabilities
Total current liabilities
Debt (Note 5)
Deferred tax liabilities
Uncertain tax positions
Other long-term liabilities
Total liabilities
$
$
$
Commitments and contingencies (Note 14)
EQUITY
Preferred stock, $.01 par value, 10,000,000 shares authorized; and 0 shares issued
Common stock, $.01 par value, 200,000,000 shares authorized; and 65,440,492
and 65,360,041 shares outstanding, respectively
Additional paid-in capital
Accumulated other comprehensive loss
Accumulated losses
Total Royal Gold stockholders’ equity
Non-controlling interests
Total equity
Total liabilities and equity
$
2019
2018
119,475 $
20,733
2,702
11,380
389
154,679
2,339,316
50,156
2,544,151 $
88,750
26,356
40
9,311
1,350
125,807
2,501,117
55,092
2,682,016
2,890 $
17,372
6,974
1,094
5,280
33,610
214,554
88,961
36,573
—
373,698
9,090
16,375
18,253
3,254
4,411
51,383
351,027
91,147
33,394
13,796
540,747
—
—
655
2,201,773
—
(65,747)
2,136,681
33,772
2,170,453
2,544,151 $
654
2,192,612
(1,201)
(89,898)
2,102,167
39,102
2,141,269
2,682,016
The accompanying notes are an integral part of these consolidated financial statements.
52
ROYAL GOLD, INC.
Consolidated Statements of Operations and Comprehensive Income (Loss)
For the Years Ended June 30,
(In thousands except share data)
Revenue (Note 6)
Costs and expenses
Cost of sales (excludes depreciation, depletion and amortization)
General and administrative
Production taxes
Exploration costs
Depreciation, depletion and amortization
Impairment of royalty interests
Total costs and expenses
Operating income (loss)
Fair value changes in equity securities
Interest and other income
Interest and other expense
Income (loss) before income taxes
Income tax expense
Net income (loss)
Net loss attributable to non-controlling interests
Net income (loss) attributable to Royal Gold common stockholders
2019
423,056 $
2018
459,042 $
2017
440,814
$
77,535
30,488
4,112
7,158
163,056
—
282,349
83,839
35,464
2,268
8,946
163,696
239,364
533,577
87,265
33,350
1,760
12,861
159,636
—
294,872
140,707
(74,535)
145,942
(6,800)
2,320
(29,650)
106,577
(17,498)
89,079
4,746
—
4,170
(34,214)
(104,579)
(14,772)
(119,351)
6,217
$
93,825 $ (113,134) $
—
9,302
(36,378)
118,866
(26,441)
92,425
9,105
101,530
Net income (loss)
Adjustments to comprehensive income (loss), net of tax
Unrealized change in market value of available-for-sale securities
Comprehensive income (loss)
Comprehensive loss attributable to non-controlling interests
Comprehensive income (loss) attributable to Royal Gold stockholders
$
89,079 $ (119,351) $
92,425
—
89,079
4,746
(2,080)
(121,431)
6,217
$
93,825 $ (115,214) $
879
93,304
9,105
102,409
Net income (loss) per share available to Royal Gold common
stockholders:
Basic earnings (loss) per share
Basic weighted average shares outstanding
Diluted earnings (loss) per share
Diluted weighted average shares outstanding
Cash dividends declared per common share
$
1.43 $
(1.73) $
65,394,627
65,291,855
$
1.43 $
(1.73) $
65,505,535
65,291,855
$
1.05 $
0.99 $
1.55
65,152,782
1.55
65,277,953
0.95
The accompanying notes are an integral part of these consolidated financial statements.
53
ROYAL GOLD, INC.
Consolidated Statements of Changes in Equity
For the Years Ended June 30, 2019, 2018 and 2017
(In thousands except share data)
Royal Gold Stockholders
Common Shares
Shares
65,093,950 $
Amount
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Balance at June 30, 2016
Stock-based compensation and related share
issuances
Non-controlling interest assignment
Net income (loss)
Other comprehensive income
Distributions to non-controlling interests
Dividends declared
Balance at June 30, 2017
Stock-based compensation and related share
issuances
Distributions from non-controlling interests
Net loss
Other comprehensive loss
Dividends declared
Balance at June 30, 2018
Stock-based compensation and related share
issuances
Distributions from (to) non-controlling interests
Net income
Other comprehensive income (loss)
Dividends declared
Balance at June 30, 2019
651 $ 2,179,781 $
— $
48,584 $
56,869 $ 2,285,885
Accumulated
(Losses) Earnings
Non-controlling
Interests
Total
Equity
85,577
—
—
—
—
—
1
—
—
—
—
—
8,533
(2,518)
—
—
—
—
65,179,527 $
652 $ 2,185,796 $
180,514
—
—
—
—
2
—
—
—
—
4,236
2,580
—
—
—
65,360,041 $
654 $ 2,192,612 $
80,451
—
—
—
—
1
—
—
—
—
5,021
4,140
—
—
—
65,440,492 $
655 $ 2,201,773 $
—
—
—
879
—
—
879 $
—
—
—
(2,080)
—
(1,201) $
—
—
—
1,201
—
— $
—
—
101,530
—
—
(62,064)
88,050 $
—
—
(113,134)
—
(64,814)
(89,898) $
—
—
93,825
(1,201)
(68,473)
(65,747) $
—
—
(9,105)
—
(2,877)
—
8,534
(2,518)
92,425
879
(2,877)
(62,064)
44,887 $ 2,320,264
—
432
(6,217)
—
—
4,238
3,012
(119,351)
(2,080)
(64,814)
39,102 $ 2,141,269
—
(584)
(4,746)
—
—
5,022
3,556
89,079
—
(68,473)
33,772 $ 2,170,453
The accompanying notes are an integral part of these consolidated financial statements.
54
ROYAL GOLD, INC.
Consolidated Statements of Cash Flows
For the Years Ended June 30,
(In thousands)
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation, depletion and amortization
Amortization of debt discount and issuance costs
Non-cash employee stock compensation expense
Fair value changes in equity securities
Deferred tax benefit
Impairment of royalty interests
Other
Changes in assets and liabilities:
Royalty receivables
Stream inventory
Income tax receivable
Prepaid expenses and other assets
Accounts payable
Income tax payable
Withholding taxes payable
Uncertain tax positions
Other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Acquisition of stream and royalty interests
Repayment of Golden Star term loan
Purchase of equity securities
Other
Net cash used in investing activities
Cash flows from financing activities:
Repayment of debt
Borrowings from revolving credit facility
Net payments from issuance of common stock
Common stock dividends
Debt issuance costs
Contributions from non-controlling interest
Purchase of additional royalty interest from non-controlling interest
Other
Net cash used in financing activities
Net increase (decrease) in cash and equivalents
Cash and equivalents at beginning of period
Cash and equivalents at end of period
See Note 10 for supplemental cash flow information.
2019
2018
2017
$
89,079 $ (119,351) $
92,425
163,056
15,288
6,617
6,800
(1,745)
—
(2)
163,696
15,046
8,279
—
(32,843)
239,364
(197)
5,623
(2,069)
(2,663)
2,793
(6,426)
(11,281)
(2,160)
3,180
(12,924)
$ 253,166 $
530
(1,428)
22,130
2,813
5,173
12,601
(171)
7,767
5,415
328,824 $
159,636
13,825
9,983
—
1,556
—
(4,874)
(6,883)
1,606
(13,056)
(1,691)
(206)
2,475
1,411
8,631
2,015
266,853
(1,055)
—
(3,573)
(967)
(5,595) $
(11,812)
20,000
(17,869)
(909)
(203,721)
—
—
3,605
(10,590) $ (200,116)
$
(370,000)
220,000
(1,595)
(67,477)
(1,761)
4,140
—
(153)
(250,000)
—
(4,042)
(64,118)
(180)
—
—
3,009
$ (216,846) $ (315,331) $
30,725
88,750
$ 119,475 $
2,903
85,847
88,750 $
(95,000)
70,000
(2,426)
(61,396)
(3,340)
—
(2,518)
(2,843)
(97,523)
(30,786)
116,633
85,847
The accompanying notes are an integral part of these consolidated financial statements.
55
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 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. 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. 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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED AND
RECENTLY 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.
We rely on reserve estimates reported by the operators of properties on which we hold 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.
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 rights. All intercompany accounts, transactions, income
and expenses, and profits or losses have been eliminated on consolidation. 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. The guidance defines such entities as Variable Interest Entities (“VIEs”).
Peak Gold JV
Royal Gold, through its wholly-owned subsidiary, Royal Alaska, LLC (“Royal Alaska”), and Contango ORE, Inc., through
its wholly-owned subsidiary CORE Alaska, LLC, entered into a limited liability company agreement for the Peak Gold
JV, a joint venture for exploration and advancement of the Peak Gold Project located near Tok, Alaska. The Company
has identified the Peak Gold JV 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 the Peak Gold JV. The Company determined that
the Peak Gold JV 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 the Peak Gold JV, which
is recorded as an exploration stage property within Stream and royalty interests, net on our consolidated balance sheets.
56
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of June 30, 2019, and 2018, Royal Alaska held a 40% membership interest in the Peak Gold JV. Royal Alaska acts
as the manager of the Peak Gold JV and will be responsible for managing, directing and controlling the overall operations
unless Royal Alaska is unanimously removed or resigns that position in the manner provided in the Peak Gold JV limited
liability company agreement.
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, 2019 and 2018.
Stream and Royalty Interests in Mineral Properties and Related Depletion
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 ASC guidance.
Production stage stream and royalty interests are depleted using the units of production method over the life of the mineral
property (as stream sales occur or royalty payments are recognized), which are estimated using proven and probable
reserves as provided by the operator. Development stage mineral properties, which are not yet in production, are not
depleted until the property begins production. Exploration stage mineral properties, where there are no proven and
probable reserves, are not depleted. At such time as the associated exploration stage mineral interests are converted to
proven and probable reserves, the mineral property is depleted over its life, 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, and other metal prices, and operators’ estimates of proven and probable reserves or
mineralized material related to our stream or royalty properties 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, 2019, 2018 and 2017.
Revenue
Revenue is recognized pursuant to current guidance in ASC 606 – Revenue from Contracts with Customers (“ASC 606”).
Under current ASC 606 guidance, a performance obligation is a promise in a contract to transfer control of a distinct good
or service (or integrated package of goods and/or services) to a customer. A contract’s transaction price is allocated to
each distinct performance obligation and recognized as revenue when, or as, a performance obligation is satisfied. In
57
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
accordance with this guidance, revenue attributable to our stream interests and royalty interests is generally recognized at
the point in time that control of the related metal production transfers to our customers. The amount of revenue we
recognize further reflects the consideration to which we are entitled under the respective stream or royalty agreement. A
more detailed summary of our revenue recognition policies for our stream and royalty interests is discussed in Note 6.
Metal Sales
Gold, silver and copper received under our metal streaming agreements are taken into inventory, and then sold primarily
using average spot rate gold, silver and copper forward contracts. The sales price for these average spot rate forward
contracts is determined by the average daily gold, silver or copper spot prices during the term of the contract, typically 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 activity in effect at the time) commencing shortly after receipt and
purchase of the metal. Revenue from gold, silver and copper sales is recognized on the date of the settlement, which is
also the date that title to the metal passes to the purchaser.
Cost of Sales
Cost of sales, which excludes depreciation, depletion and amortization, is specific to our stream agreements and is the
result of our purchase of gold, silver and copper for a cash payment. The cash payment for gold from 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, silver or copper spot price near the date of metal delivery.
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 income (loss).
Exploration Costs
Exploration costs are specific to the Peak Gold JV for the exploration and advancement of the Peak Gold Project, as
discussed further above under Basis of Consolidation. Costs associated with the Peak Gold JV for the exploration and
advancement of the Peak 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.
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.
58
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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’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.
Earnings per Share
Basic earnings (loss) per share is computed by dividing net income (loss) available to Royal Gold common stockholders
by the weighted average number of outstanding common shares for the period, considering the effect of participating
securities. Diluted earnings (loss) 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 (loss) per share is computed by dividing
net income (loss) available to common stockholders by the diluted weighted average number of common shares
outstanding during each fiscal year.
Recently Adopted and Recently Issued Accounting Standards
Recently Adopted
Revenue Recognition
On July 1, 2018, we adopted ASC 606 using the modified retrospective method of transition. Under this transition
approach, we applied ASC 606 to all existing contracts for which all (or substantially all) of the revenue attributable to a
contract had not been recognized under legacy revenue guidance. The guidance of ASC 606 was applied to any new
contracts entered into on or after July 1, 2018.
ASC 606 supersedes nearly all of the existing revenue recognition guidance under U.S. GAAP and sets out a five-step
revenue recognition framework to recognize revenue upon the transfer of control of goods or services to customers in an
amount that reflects the consideration to which an entity expects to be entitled for those goods or services.
For the fiscal year ended June 30, 2019, there was no impact to our reported revenue, operating costs and expenses or net
income attributable to Royal Gold common stockholders as a result of adopting ASC 606, as compared to legacy revenue
guidance under U.S. GAAP. In addition, no cumulative catch-up adjustment to accumulated losses was required on July
1, 2018 as a result of adopting ASC 606. Please refer to Note 6 for additional discussion.
59
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Recognition and Measurement of Financial Instruments
On July 1, 2018, we adopted Accounting Standards Update (“ASU”) 2016-01 – Financial Instruments, which is guidance
on the recognition and measurement of financial instruments. The amended guidance requires, among other things, that
equity securities previously classified as available-for-sale be measured at fair value with changes in fair value recognized
in net income rather than other comprehensive income (loss) as required under previous guidance. Upon adoption, the
Company recorded a cumulative-effect adjustment in Accumulated losses of $1.2 million. The decrease in fair value of
our equity securities was approximately $6.8 million for the fiscal year ended June 30, 2019 and is included in Fair value
changes in equity securities on our consolidated statements of operations and comprehensive income (loss). The carrying
value of the Company’s equity securities as of June 30, 2019 and June 30, 2018 was $16.0 million and $19.2 million,
respectively, and is included in Other assets on the Company’s consolidated balance sheets. As of June 30, 2019, the
Company owns 809,744 common shares of Contango Ore, Inc. (“CORE”) and 3,597,823 common shares of Rubicon
Minerals Corporation.
Definition of a Business
In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU guidance clarifying the definition of a
business and providing additional guidance for determining whether transactions should be accounted for as acquisitions
of assets or businesses. The Company adopted the new guidance on July 1, 2018 on a prospective basis. There was no
impact to the Company’s consolidated financial statements upon adoption.
Recently Issued
Leases
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires recognition of right-of-use assets
and lease payment liabilities on the balance sheet by lessees for all leases with terms greater than twelve
months. Classification of leases as either a finance or operating lease will determine the recognition, measurement and
presentation of expenses. ASU 2016-02 also requires certain quantitative and qualitative disclosures about leasing
arrangements. The Company is finalizing its evaluation of the impacts of ASU 2016-02, which includes an analysis of
non-cancelable leases, joint venture agreements and other existing arrangements that may contain a lease component. The
Company has completed the process of identifying contracts to which the new guidance applies and has substantially
completed its evaluation of those identified contracts to determine the impacts of ASC 2016-02 at adoption. The Company
has further enhanced its systems to track and calculate additional information required to comply with this standard on a
go-forward basis. In addition, the Company is finalizing its evaluation of policies, internal controls, and processes that
will be necessary to support the additional accounting and disclosure requirements.
The Company will adopt ASU 2016-02 in the first quarter of our fiscal year 2020 using the modified retrospective
approach. The Company expects to apply the following practical expedients:
•
•
an election to not apply the recognition requirements in the new standards update to short-term leases (a lease
that, at commencement date, has a lease term of 12 months or less and does not contain a purchase option);
and
a package of practical expedients to not reassess whether a contract contains a lease, lease classification and
initial direct costs.
Adoption of this guidance is anticipated to result in an insignificant increase in right-of-use assets and related liabilities on
the Company’s consolidated balance sheets; however, the full impact to the Company’s financial statements and related
footnote disclosures is still being finalized.
60
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”). ASU
2018-11 provides an additional transition method for adopting ASU 2016-02, as well as provides lessors with a practical
expedient when applying ASU 2016-02 to certain leases. The Company anticipates making a policy election in connection
with adopting ASU 2018-11, which will eliminate the need for adjusting prior period comparable financial statements
prepared under current lease accounting guidance. The Company will adopt ASU 2018-11 at the same time it adopts ASU
2016-02.
3. ACQUISITIONS
Acquisition of Silver Stream on Khoemacau Copper Project
On February 25, 2019, the Company announced that its wholly-owned subsidiary, RGLD Gold AG (“RGLD Gold”),
entered into a life of mine purchase and sale agreement with Khoemacau Copper Mining (Pty.) Limited (“KCM”), a
majority-owned subsidiary of Cupric Canyon Capital LP (together with its subsidiaries including KCM, “Cupric”) for the
purchase of silver produced from the Khoemacau copper-silver project (“Khoemacau” or the “Project”) located in
Botswana and owned by KCM. Cupric Canyon Capital LP is a private company owned by management and funds advised
by Global Natural Resource Investments. Under the purchase and sale agreement, subject to the satisfaction of certain
conditions, RGLD Gold will make advance payments totaling $212 million toward the purchase of 80% of the silver
produced from Khoemacau until certain delivery thresholds are met (the “Base Silver Stream”). At Cupric’s option and
subject to various conditions, RGLD Gold will make up to an additional $53 million in advance payments for up to the
remaining 20% of the silver produced from Khoemacau (the “Option Silver Stream”). The stream rate will drop to 40%
of silver produced from Khoemacau following delivery to RGLD Gold of 32 million silver ounces under the Base Silver
Stream, or to 50% of the silver produced from Khoemacau following delivery of 40 million silver ounces to RGLD Gold
should Cupric exercise the entire Option Silver Stream. RGLD Gold will pay a cash price equal to 20% of the spot silver
price for each ounce delivered under the Base Silver Stream and Option Silver Stream; however, if Cupric achieves mill
expansion throughput levels above 13,000 tonnes per day (30% above current mill design capacity), RGLD Gold will pay
a higher ongoing cash price under the Base Silver Stream and Option Silver Stream for silver ounces delivered in excess
of specific annual thresholds.
RGLD Gold’s first advance payment under the Base Silver Stream is expected to occur after $100 million of net new debt
and equity funding is spent on Khoemacau. The $212 million in advance payments to be made under the Base Silver
Stream will be made in quarterly installments as project development advances according to the following approximate
schedule: $60 million in the third and fourth quarters of calendar 2019, $125 million in calendar 2020, and the balance
in calendar 2021. RGLD Gold will fund the advance payments through cash on hand or cash advances from Royal Gold.
Royal Gold will fund any advances made to RGLD Gold out of cash flow from operations and amounts available under
our revolving credit facility, as required.
Separate from the Base Silver Stream and Option Silver Stream, and subject to various conditions, RGLD Gold will make
up to $25 million available to Cupric toward the end of development of Khoemacau under a subordinated debt facility.
Any amounts drawn by Cupric under the debt facility will carry interest at LIBOR + 11% and have a term of seven years.
RGLD Gold will have the right to force repayment of the debt facility upon certain events.
The Company anticipates accounting for the Silver Stream and Option Stream (if exercised by Cupric) as an asset
acquisition, consistent with the treatment of our other acquired streams. The $212 million in advance payments for the
Base Silver Stream and $53 million in advance payments for the Option Silver Stream, plus direct transaction costs, will
be recorded as a development stage stream interest within Stream and royalty interests, net on our consolidated balance
sheets in the period advance payments occur.
61
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Acquisition of Additional Royalty Interest on Mara Rosa
On June 29, 2018, Royal Gold, through its wholly-owned subsidiary RG Royalties, LLC, entered into an agreement to
purchase a 1.75% Net Smelter Return (“NSR”) royalty on Amarillo Gold’s Mara Rosa gold project located in Goias State,
Brazil for $10.8 million. The acquisition is in addition to the 1.00% NSR royalty on the Mara Rosa project previously
acquired by International Royalty Corporation, another wholly-owned subsidiary of Royal Gold. The new Mara Rosa
royalty agreement includes a right of first refusal on future financing opportunities based on production from the project.
The acquisition of the additional royalty interest on Mara Rosa has been accounted for as an asset acquisition. The total
purchase price of $10.8 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.
Acquisition of Contango ORE, Inc. Common Stock
On June 28, 2018 and October 3, 2018, Royal Gold acquired 682,556 and 127,188 shares, respectively, of common stock
of CORE for consideration of $26 per share pursuant to a Stock Purchase Agreement (“SPA”) entered into on April 5,
2018 between Royal Gold and certain individual stockholders of CORE.
62
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. STREAM AND ROYALTY INTERESTS, NET
The following summarizes the Company’s stream and royalty interests as of June 30, 2019 and 2018:
Cost
Accumulated
Depletion
Net
$ 790,635 $ (184,091) $
610,404
388,182
175,727
146,475
2,111,423
(158,819)
(86,675)
(14,522)
(56,919)
(501,026)
205,724
99,172
34,612
20,878
487,224
847,610
2,959,033
(95,564)
(40,659)
(22,570)
(12,362)
(386,501)
(557,656)
(1,058,682)
606,544
451,585
301,507
161,205
89,556
1,610,397
110,160
58,513
12,042
8,516
100,723
289,954
1,900,351
12,038
—
12,038
59,803
70,952
130,755
142,793
—
—
—
—
59,803
70,952
130,755
142,793
177,690
118,482
296,172
177,690
118,482
296,172
$ 3,397,998 $ (1,058,682) $ 2,339,316
—
—
—
As of June 30, 2019 (Amounts in thousands):
Production stage stream interests:
Mount Milligan
Pueblo Viejo
Andacollo
Rainy River
Wassa and Prestea
Total production stage stream interests
Production stage royalty interests:
Voisey's Bay
Peñasquito
Holt
Cortez
Other
Total production stage royalty interests
Total production stage stream and royalty interests
Development stage stream interests:
Other
Development stage royalty interests:
Cortez
Other
Total development stage royalty interests
Total development stage stream and royalty interests
Exploration stage royalty interests:
Pascua-Lama
Other
Total exploration stage royalty interests
Total stream and royalty interests, net
63
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of June 30, 2018 (Amounts in thousands):
Production stage stream interests:
Mount Milligan
Pueblo Viejo
Andacollo
Wassa and Prestea
Rainy River
Total production stage stream interests
Total production stage stream and royalty interests
Production stage royalty interests:
Voisey's Bay
Peñasquito
Holt
Cortez
Other
Total production stage royalty interests
Total production stage stream and royalty interests
Development stage stream interests:
Other
Development stage royalty interests:
Cortez
Other
Total development stage royalty interests
Total development stage stream and royalty interests
Exploration stage royalty interests:
Pascua-Lama
Other
Total exploration stage royalty interests
Total stream and royalty interests, net
Cost
Accumulated
Depletion
Impairments
Net
$
790,635 $ (152,833) $
610,404
388,182
146,475
175,727
2,111,423
(114,944)
(59,851)
(41,601)
(4,028)
(373,257)
205,724
99,172
34,612
20,878
483,795
844,181
2,955,604
(86,933)
(38,426)
(21,173)
(11,241)
(364,795)
(522,568)
(895,825)
— $ 637,802
495,460
—
328,331
—
104,874
—
171,699
—
1,738,166
—
—
—
—
—
—
—
—
118,791
60,746
13,439
9,637
119,000
321,613
2,059,779
12,038
—
—
12,038
59,803
74,610
134,413
146,451
—
—
—
—
—
(284)
(284)
(284)
59,803
74,326
134,129
146,167
416,770
117,481
534,251
177,690
117,481
295,171
$ 3,636,306 $ (895,825) $ (239,364) $ 2,501,117
(239,080)
—
(239,080)
—
—
—
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, the Company did not identify the presence of any impairment indicators
and did not record any impairment charges for the fiscal year ended of June 30, 2019. The Company identified
impairment indicators and recorded impairment charges for the fiscal year ended June 30, 2018 as summarized in the
following table and discussed in detail below:
Royalty:
Pascua-Lama
Other
Total impairment of royalty interests
$
Fiscal Year Ended June 30,
2019
2018
2017
(Amounts in thousands)
—
—
—
$
239,080
284
239,364
$
—
—
—
64
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Pascua-Lama
We own a 0.78% to 5.45% sliding-scale NSR royalty on gold and silver production from the Chilean portion of the
Pascua-Lama project, which straddles the border between Argentina and Chile, and is owned 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.
On January 18, 2018, Barrick reported that it is analyzing a revised sanction related to the Pascua-Lama project issued by
Chile’s Superintendencia del Medio Ambiente (“SMA”) on January 17, 2018. The sanction is part of a re-evaluation
process ordered by Chile’s Environmental Court in 2014 and relates to historical compliance matters at the Pascua-Lama
project. According to Barrick, the SMA has not revoked Pascua-Lama’s environmental permit, but has ordered the
closure of existing facilities on the Chilean side of the project, in addition to certain monitoring activities.
On February 6, 2018, in light of the SMA order to close surface facilities in Chile, and earlier plans to evaluate an
underground mine, Barrick announced it reclassified Pascua-Lama’s proven and probable reserves, which are based on an
open pit mine plan, as mineralized material. Barrick reported further details in its year-end results on February 14, 2018
and an update on the Pascua-Lama project at its February 22, 2018 Investor Day. A significant reduction in reserves or
mineralized material are indicators of impairment.
On April 23, 2018, Barrick announced that work performed to-date on the prefeasibility study for a potential underground
project has been suspended, and they will focus on adjusting the project closure plan for surface infrastructure on the
Chilean side of the project. Barrick will continue to evaluate opportunities to de-risk the project while maintaining
Pascua-Lama as an option for development in the future if economics improve and related risks can be mitigated.
As part of the impairment determination, the fair value for Pascua-Lama was estimated by calculating the net present value
of the estimated future cash-flows, subject to our royalty interest, expected to be generated by the mining of the Pascua-
Lama deposits. The Company applied a probability factor to its fair value calculation that Barrick will either proceed
with an open-pit mine or an underground mine at Pascua. The estimates of future cash flows were derived from open-pit
and underground mine models developed by the Company using various information reported by Barrick. The metal
price assumptions used in the Company’s model were supported by consensus price estimates obtained by 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 Pascua-Lama royalty interest. Following the impairment charge during the three months
ended March 31, 2018, the Pascua-Lama royalty interest has a remaining carrying value of $177.7 million as of June 30,
2019. As a result of Barrick’s reclassification of Pascua-Lama’s reserves to mineralized material, our Pascua-Lama
royalty interest was reclassified to exploration stage from development stage during our fiscal year ended June 30, 2018.
Other
During the fiscal year ended June 30, 2019, the Company was made aware of insolvency proceedings at one of our non-
principal producing properties (El Toqui). The outcome of the insolvency proceedings may impact our royalty interest
and the associated carrying value, which is approximately $1.4 million as of June 30, 2019. The Company continues to
monitor the insolvency proceedings; however, the Company could determine that a write-down to zero in the near future
is necessary.
65
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. DEBT
The Company’s debt as of June 30, 2019 and 2018 consists of the following:
As of June 30, 2019
Principal
Convertible notes due 2019 $
Revolving credit facility
Total debt
220,000
$ 220,000 $
— $
Debt
Unamortized
Issuance
Discount
Costs
(Amounts in thousands)
— $
—
— $ (5,446) $ 214,554 $ 370,000 $
— $ 370,000 $
Principal
Total
(5,446)
214,554
— $
—
As of June 30, 2018
Debt
Issuance
Costs
Unamortized
Discount
(Amounts in thousands)
Total
(12,764) $ (1,316) $ 355,920
(4,893)
(4,893)
(12,764) $ (6,209) $ 351,027
—
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 bearing interest at the rate of 2.875% per annum, matured on June 15, 2019.
The Company settled the $370 million aggregate principal amount plus accrued and unpaid interest on June 17, 2019 in
cash primarily from our available revolving credit facility.
Interest expense recognized on the 2019 Notes for the fiscal years ended June 30, 2019, 2018 and 2017 was approximately
$24.3 million, $24.5 million and $23.6 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 (loss).
Revolving Credit Facility
On June 3, 2019, the Company entered into a second amendment to our revolving credit facility dated as of June 2, 2017.
The amendment extended the scheduled maturity date from June 2, 2022 to June 3, 2024 and reduced certain interest rates
and fees to be paid by the Company.
As of June 30, 2019, the Company had $780 million available and $220 million outstanding under its revolving credit
facility. The Company had no amounts outstanding under the revolving credit facility as of June 30, 2018. Royal Gold
may repay borrowings under the revolving credit facility at any time without premium or penalty.
As of June 30, 2019, the interest rate on borrowings under the revolving credit facility was LIBOR plus 1.20% for all-in
rate of 3.65%. The Company was in compliance with each financial covenant (leverage ratio and interest coverage ratio)
under the revolving credit facility as of June 30, 2019. Interest expense recognized on the revolving credit facility for the
fiscal years ended June 30, 2019, 2018 and 2017 was approximately $1.7 million, $5.7 million and $9.9 million,
respectively, and included interest on the outstanding borrowings and the amortization of the debt issuance costs.
6. REVENUE
Revenue Recognition
Under current ASC 606 guidance, a performance obligation is a promise in a contract to transfer control of a distinct good
or service (or integrated package of goods and/or services) to a customer. A contract’s transaction price is allocated to
each distinct performance obligation and recognized as revenue when, or as, a performance obligation is satisfied. In
accordance with this guidance, revenue attributable to our stream interests and royalty interests is generally recognized at
the point in time that control of the related metal production transfers to our customers. The amount of revenue we
recognize further reflects the consideration to which we are entitled under the respective stream or royalty agreement. A
more detailed summary of our revenue recognition policies for our stream and royalty interests is discussed below.
66
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 of the metals produced from a mine, at a price determined for the life of the transaction by
the purchase agreement. Gold, silver and copper received under our metal streaming agreements are taken into inventory,
and then sold primarily using average spot rate gold, silver and copper forward contracts. The sales price for these average
spot rate forward contracts is determined by the average daily gold, silver or copper spot prices during the term of the
contract, typically a consecutive number of trading days between ten 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. We settle our forward sales contracts via physical delivery of the metal to the purchaser
(our customer) on the settlement date specified in the contract. Under our forward sales contracts, there is a single
performance obligation to sell a contractually specified volume of metal to the purchaser, and we satisfy this obligation at
the point in time of physical delivery. Accordingly, revenue from our metal sales is recognized on the date of settlement,
which is the date that control, custody and title to the metal transfer to the purchaser.
Royalty Interests
Royalties are non-operating interests in mining projects that provide the right to a percentage of revenue or metals produced
from the project after deducting specified costs, if any. We are entitled to payment for our royalty interest in a mining
project based on a contractually specified commodity price (for example, a monthly or quarterly average spot price) for
the period in which metal production occurred. As a royalty holder, we act as a passive entity in the production and
operations of the mining project, and the third-party operator of the mining project is responsible for all mining activities,
including subsequent marketing and delivery of all metal production to their ultimate customer. In all of our material
royalty interest arrangements, we have concluded that we transfer control of our interest in the metal production to the
operator at the point at which production occurs, and thus, the operator is our customer. We have further determined that
the transfer of each unit of metal production, comprising our royalty interest, to the operator represents a separate
performance obligation under the contract, and each performance obligation is satisfied at the point in time of metal
production by the operator. Accordingly, we recognize revenue attributable to our royalty interests in the period in which
metal production occurs at the specified commodity price per the agreement, net of any contractually allowable offsite
treatment, refining, transportation and, if applicable, mining costs.
Royalty Revenue Estimates
For a small number of our royalty interests, we may not receive, or be entitled to receive, payment information, including
production information from the operator, for the period in which metal production occurred prior to issuance of our
financial statements. As a result, we may estimate revenue for these royalties based on available information, including
public information, from the operator. If adequate information is not available from the operator or from other public
sources before we issue our financial statements, the Company will recognize royalty revenue during the period in which
the necessary payment information is received. Differences between estimates and actual amounts could differ
significantly and are recorded in the period that the actual amounts are known. Please also refer to our “Use of Estimates”
accounting policy discussed in Note 2. For the quarter ended June 30, 2019, royalty revenue that was estimated or was
attributable to metal production for a period prior to June 30, 2019, was not material.
Disaggregation of Revenue
We have identified two material revenue sources in our business: stream interests and royalty interests. These identified
revenue sources are consistent with our reportable segments as discussed in Note 13.
67
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Revenue by metal type attributable to each of our revenue sources is disaggregated as follows:
Stream revenue:
Gold
Silver
Copper
Total stream revenue
Royalty revenue:
Gold
Silver
Copper
Other
Total royalty revenue
Total revenue
Fiscal Year Ended
June 30, 2019
$
$
$
$
$
249,496
33,282
23,046
305,824
78,570
5,497
13,808
19,357
117,232
423,056
Revenue by metal type attributable to each of our revenue sources is disaggregated as follows:
Stream revenue:
Mount Milligan
Pueblo Viejo
Andacollo
Wassa
Rainy River
Other
Total stream revenue
Royalty revenue:
Peñasquito
Cortez
Other
Total royalty revenue
Total revenue
Metal(s)
Gold & Copper
Gold & Silver
Gold
Gold
Gold & Silver
Gold & Silver
Gold, Silver, Lead & Zinc
Gold
Various
$
$
$
$
$
Fiscal Year Ended
June 30, 2019
101,010
82,844
69,264
22,098
22,142
8,466
305,824
13,865
11,383
91,984
117,232
423,056
Refer to Note 13 for the geographical distribution of our revenue by reportable segment.
7. 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.
68
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company recognized stock-based compensation expense as follows:
2019
Fiscal Year Ended June 30,
2018
(Amounts in thousands)
2017
Stock options
Stock appreciation rights
Restricted stock
Performance stock
Total stock-based compensation expense
$
221
2,025
3,336
1,035
$ 6,617
$
318 $
393
1,851
3,840
3,899
$ 8,279 $ 9,983
1,988
4,487
1,486
Stock-based compensation expense is included within General and administrative expense on the consolidated statements
of operations and comprehensive income (loss).
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 2019, 2018 and 2017 grants are noted in the following table:
Weighted-average expected volatility
Weighted-average expected life in years
Weighted-average dividend yield
Weighted-average risk free interest rate
Stock Options
SSARs
2018
2019
2017
36.5 % 42.2 % 41.7 % 37.6 % 42.4 % 41.1 %
2018 2017 2019
4.5
5.5
5.5
5.2
5.4
5.8
1.13 % 1.10 % 1.11 % 1.13 % 1.10 % 1.11 %
2.7 % 1.8 % 1.2 % 2.7 % 1.8 % 1.3 %
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.
69
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Stock Options
A summary of stock option activity for the fiscal year ended June 30, 2019, is presented below.
Weighted-
Weighted-
Average
Outstanding at July 1, 2018
Granted
Exercised
Expired
Outstanding at June 30, 2019
Exercisable at June 30, 2019
Average Remaining
Exercise Contractual Intrinsic Value
(in thousands)
Life (Years)
Aggregate
Price
Number of
Shares
66,227 $ 69.35
6,430 $ 77.73
(27,930) $ 68.19
(2,429) $ 82.29
42,298 $ 70.65
32,125 $ 67.30
5.9 $
5.2 $
1,334
1,130
The weighted-average grant date fair value of options granted during the fiscal years ended June 30, 2019, 2018 and 2017,
was $24.12, $27.12 and $29.54, respectively. The total intrinsic value of options exercised during the fiscal years ended
June 30, 2019, 2018 and 2017, were $0.7 million, $1.4 million, and $0.5 million, respectively.
As of June 30, 2019, there was approximately $0.1 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, 2019, is presented below.
Weighted-
Average
Weighted-
Average Remaining
Aggregate
Number of
Shares
Exercise Contractual Intrinsic Value
(in thousands)
Life (Years)
Price
Outstanding at July 1, 2018
Granted
Exercised
Expired
Outstanding at June 30, 2019
Exercisable at June 30, 2019
252,886 $ 75.60
72,860 $ 78.06
(144,360) $ 71.99
(5,787) $ 87.42
175,599 $ 79.20
53,886 $ 73.46
8.0 $
6.8 $
4,090
1,565
The weighted-average grant date fair value of SSARs granted during the fiscal years ended June 30, 2019, 2018 and 2017
was $26.37, $29.17 and $29.76, respectively. The total intrinsic value of SSARs exercised during the fiscal years ended
June 30, 2019, 2018 and 2017, was $2.8 million, $6.4 million, and $0.2 million, respectively.
As of June 30, 2019, 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 2019, officers and certain employees were granted 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
70
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
granted in fiscal 2019, 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
2019 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.
The Company measures the fair value of the GEO Shares 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 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 ($47.37 per share) is multiplied by the
target number (100%) 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 previously
recognized stock-based compensation expense attributable to the TSR Shares only if the requisite service period is not
met.
A summary of the status of the Company’s non-vested Performance Shares at maximum (200%) attainment for the
fiscal year ended June 30, 2019, is presented below:
Outstanding at July 1, 2018
Granted
Vested
Forfeited
Non-attainment
Outstanding at June 30, 2019
Weighted-
Average
Shares
Number of Grant Date
Fair Value
184,664 $ 61.75
59,820 $ 62.77
(21,953) $ 38.12
(7,716) $ 76.01
(59,793) $ 52.48
155,022 $ 68.35
As of June 30, 2019, total unrecognized stock-based compensation expense related to Performance Shares was
approximately $1.6 million, which is expected to be recognized over the average remaining vesting period of 1.9 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 2019, officers and certain employees were granted 32,840 shares of
Restricted Stock. Restricted Stock 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,
71
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
respectively. Also, our non-executive directors were granted 10,620 shares of Restricted Stock during fiscal year 2019.
The non-executive directors’ shares of Restricted Stock vest 50% immediately and 50% one year after the date of grant.
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.
A summary of the status of the Company’s non-vested Restricted Stock for the fiscal year ended June 30, 2019, is
presented below:
Outstanding at July 1, 2018
Granted
Vested
Forfeited
Outstanding at June 30, 2019
Weighted-
Average
Shares
Number of Grant Date
Fair Value
144,783 $ 72.94
43,460 $ 77.96
(39,297) $ 62.32
(5,977) $ 78.95
142,969 $ 77.13
As of June 30, 2019, total unrecognized stock-based compensation expense related to Restricted Stock was approximately
$4.7 million, which is expected to be recognized over the weighted-average vesting period of 3.0 years.
8. 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:
2019
Fiscal Year Ended June 30,
2018
(in thousands, except per share data)
2017
$
93,825
65,394,627
110,908
65,505,535
1.43
1.43
$
$
$ (113,134) $
65,291,855
—
65,291,855
$
$
(1.73) $
(1.73) $
101,530
65,152,782
125,171
65,277,953
1.55
1.55
Net income (loss) available to Royal Gold common stockholders
Weighted-average shares for basic EPS
Effect of other dilutive securities
Weighted-average shares for diluted EPS
Basic earnings (loss) per share
Diluted earnings (loss) per share
72
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. INCOME TAXES
For financial reporting purposes, Income (loss) before income taxes includes the following components:
2019
Fiscal Year Ended June 30,
2018
(Amounts in thousands)
2017
United States
Foreign
The Company’s Income tax expense consisted of:
Current:
Federal
State
Foreign
Deferred and others:
Federal
State
Foreign
Total income tax expense
$ (3,776) $ (39,662) $ 15,253
103,613
$ 106,577 $ (104,579) $ 118,866
110,353
(64,917)
2019
Fiscal Year Ended June 30,
2018
(Amounts in thousands)
2017
$ (6,974) $ 24,621 $ 13,975
308
10,602
$ 19,243 $ 47,615 $ 24,885
(13)
26,230
253
22,741
$
17
(2,678)
916 $ (2,253) $ (1,443)
(18)
(223)
3,017
(30,367)
$ (1,745) $ (32,843) $
1,556
$ 17,498 $ 14,772 $ 26,441
The provision for income taxes for the fiscal years ended June 30, 2019, 2018 and 2017, 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:
2019
Fiscal Year Ended June 30,
2018
(Amounts in thousands)
2017
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
Realized foreign exchange gains
Unrealized foreign exchange gains
Effects of US income tax reform
Changes in estimates
Valuation allowance
Other
73
$ 22,381 $ (29,343) $ 41,603
78
(1,517)
2,870
3,162
3,046
(22,922)
—
(746)
—
(3,676)
4,374
169
$ 17,498 $ 14,772 $ 26,441
(104)
(1,440)
8,574
1,736
1,230
(19,004)
18,330
(1,610)
30,675
(70)
6,337
(539)
135
(867)
3,180
1,013
(6,921)
—
—
(38)
—
(1,538)
(47)
200
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The current year effective tax rate includes the impact of changes in estimates primarily due to the Company’s analysis of
the Tax Cuts and Jobs Act, partially offset by the effect of the newly enacted global intangible low-taxed income (“GILTI”)
tax regime.
The tax effects of temporary differences and carryforwards, which give rise to our deferred tax assets and liabilities at
June 30, 2019 and 2018, are as follows:
Deferred tax assets:
Stock-based compensation
Net operating losses
Foreign tax credits
Other
Total deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Mineral property basis
Unrealized foreign exchange gains
2019 Notes
Investment in Peak Gold joint venture
Other
Total deferred tax liabilities
Total net deferred taxes
2018
2019
(Amounts in thousands)
$
1,118 $
56
11,125
7,960
20,259
(12,764)
$
7,495 $
805
1,933
11,172
7,346
21,256
(12,811)
8,445
$ (74,360) $ (74,274)
(664)
(2,631)
(4,359)
(213)
(82,141)
$ (71,950) $ (73,696)
(582)
—
(4,353)
(150)
(79,445)
The Company reviews the measurement of its deferred tax assets at each balance sheet date. The Company’s analysis
indicates a cumulative three-years of historical losses in the U.S., primarily as the result of fiscal year 2018 impairments
of certain non-producing assets. Considering all available positive and negative evidence, including but not limited to
recent earnings history and forecasted future results, the Company believes it is more likely-than-not that all net deferred
tax assets not currently burdened with a valuation allowance will be fully realized. As of June 30, 2019, and 2018, the
Company recorded a valuation allowance of $12.8 million. The valuation allowance remaining at June 30, 2019 is
attributable to US foreign tax credits and capital loss carryforwards in non-US subsidiaries.
At June 30, 2019 and 2018, the Company had $0.2 million and $7.1 million of net operating loss carry forwards,
respectively. The decrease in the net operating loss carry forwards is primarily attributable to the utilization of net operating
losses by 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 2038 tax year, and the Company anticipates
the losses will be fully utilized.
74
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of June 30, 2019, and 2018, the Company had $36.5 million and $36.3 million of unrecognized tax benefits,
respectively. If recognized, these unrecognized tax benefits would positively impact the Company’s effective income tax
rate. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
2019
2018
(Amounts in thousands)
2017
Total gross unrecognized tax benefits at beginning of year
Additions / Reductions for tax positions of current year
Additions / Reductions for tax positions of prior years
Reductions due to settlements with taxing authorities
Reductions due to lapse of statute of limitations
Total amount of gross unrecognized tax benefits at end of year
$ 36,346 $ 28,542 $ 26,960
1,394
188
—
—
$ 36,547 $ 36,346 $ 28,542
1,709
(912)
(596)
—
1,624
6,180
—
—
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 2014. 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, 2019 and 2018, the amount of accrued income-tax-related interest and penalties was
$12.6 million and $9.8 million, respectively. The gross unrecognized tax benefits reflected in the tabular reconciliation
do not include interest and penalties and are not reduced by advanced deposits of $12.6 million made to taxing authorities.
10. SUPPLEMENTAL CASH FLOW INFORMATION
The Company’s supplemental cash flow information for the fiscal years ending June 30, 2019, 2018 and 2017 is as follows:
Cash paid (received) during the period for:
Interest
Income taxes, net of refunds
Non-cash investing and financing activities:
Dividends declared
11. FAIR VALUE MEASUREMENTS
2019
2018
(Amounts in thousands)
2017
$ 10,638 $ 16,049 $ 18,999
$ 44,435 $ (3,058) $ 26,835
$ 68,473 $ 64,814 $ 62,064
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
75
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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.
Assets (In thousands):
Marketable equity securities(1)
Total assets
Carrying
Amount
As of June 30, 2019
Fair Value
Total
Level 1
Level 2 Level 3
$ 15,984
$ 15,984 $ 15,984 $ — $ —
$ 15,984 $ 15,984 $ 15,984 $ — $ —
(1)
Included in Other assets on the Company’s consolidated balance sheets.
The Company’s marketable equity securities classified within Level 1 of the fair value hierarchy are valued using quoted
market prices in active markets. The fair value of the Level 1 marketable equity securities is calculated as the quoted
market price of the marketable equity security multiplied by the quantity of shares held by the Company. The carrying
value of the Company’s revolving credit facility (Note 5) approximates fair value as of June 30, 2019.
As of June 30, 2019, 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 fiscal years ended
June 30, 2019.
12. MAJOR SOURCES OF REVENUE
Operators that contributed greater than 10% of the Company’s total revenue for any of fiscal years 2019, 2018 or 2017
were as follows (revenue amounts in thousands):
Operator
Centerra
Barrick
Teck
Fiscal Year Ended June 30, 2019
Percentage of
total
revenue
Revenue
$ 101,011
Fiscal Year Ended June 30, 2018
Percentage of
total
revenue
Revenue
Fiscal Year Ended June 30, 2017
Percentage of
total
revenue
Revenue
99,283
69,264
23.9 % $ 133,534
23.5 % 108,285
57,413
16.4 %
29.1 % $ 136,737
23.6 % 104,009
60,251
12.5 %
31.0 %
23.6 %
13.7 %
13. SEGMENT 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
76
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
royalty interests, net) as of June 30, 2019 and 2018 are geographically distributed as shown in the following table (amounts
in thousands):
As of June 30, 2019
As of June 30, 2018
Canada
Dominican Republic
Chile
Africa
Mexico
United States
Australia
Rest of world
Total
interests, net
Stream
interest
Royalty
interest
Total stream
and royalty
Royalty
interest
$ 767,749 $ 200,251 $ 968,000 $
451,585
515,733
89,876
83,748
163,398
31,944
35,032
Total stream
and royalty
interests, net
(284) $ 1,023,778
495,460
542,557
105,376
93,277
165,543
34,254
40,872
$ 1,622,435 $ 716,881 $ 2,339,316 $ 1,750,204 $ 990,277 $ (239,364) $ 2,501,117
Stream
interest
809,500 $ 214,562 $
495,460
—
328,331 453,306
104,874
502
—
93,277
— 165,543
34,254
—
28,833
12,039
451,585
—
301,507 214,226
321
89,555
—
83,748
— 163,398
31,944
—
22,993
12,039
—
(239,080)
—
—
—
—
—
Impairments
The Company’s reportable segments for purposes of assessing performance are shown below (amounts in thousands):
Stream interests
Royalty interests
Total
Stream interests
Royalty interests
Total
Stream interests
Royalty interests
Total
Fiscal Year Ended June 30, 2019
Production
taxes
Cost of sales
Revenue
$ 305,824 $
117,232
$ 423,056 $
77,535 $
—
77,535 $
Depletion
Segment
gross profit
— $ 127,770 $ 100,519
4,112
78,034
35,086
4,112 $ 162,856 $ 178,553
Fiscal Year Ended June 30, 2018
Production
taxes
Cost of sales
Revenue
$ 324,516 $
134,526
$ 459,042 $
83,839 $
—
83,839 $
Depletion
Segment
gross profit
— $ 129,662 $ 111,015
2,268
98,334
33,924
2,268 $ 163,586 $ 209,349
Fiscal Year Ended June 30, 2017
Production
taxes
Cost of sales
Revenue
$ 314,011 $
126,803
$ 440,814 $
87,265 $
—
87,265 $
Depletion
Segment
gross profit
— $ 121,530 $ 105,216
1,760
87,020
38,023
1,760 $ 159,553 $ 192,236
77
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A reconciliation of total segment gross profit to the consolidated Income (loss) before income taxes is shown below
(amounts in thousands):
Total segment gross profit
Costs and expenses
General and administrative expenses
Exploration costs
Depreciation
Impairment of royalty interests
Operating income (loss)
Fair value changes in equity securities
Interest and other income
Interest and other expense
Income (loss) before income taxes
$
$
Fiscal Year Ended June 30,
2018
209,349
2019
178,553
$
$
30,488
7,158
200
—
140,707
(6,800)
2,320
(29,650)
106,577
$
35,464
8,946
110
239,364
(74,535)
—
4,170
(34,214)
(104,579)
$
2017
192,236
33,350
12,861
83
—
145,942
—
9,302
(36,378)
118,866
The Company’s revenue by reportable segment for the fiscal year’s ended June 30, 2019, 2018 and 2017 is geographically
distributed as shown in the following table (amounts in thousands):
Stream interests:
Canada
Dominican Republic
Chile
Africa
Total stream interests
Royalty interests:
United States
Canada
Mexico
Australia
Africa
Chile
Rest of world
Total royalty interests
Total revenue
2019
Fiscal Year Ended June 30,
2018
2017
$
$
$
$
$
123,152 $
82,844
69,264
30,564
305,824 $
142,244 $
95,055
57,413
29,804
324,516 $
34,845 $
32,602
27,224
12,806
1,416
—
8,339
117,232 $
423,056 $
39,496 $
24,254
42,959
13,710
2,098
473
11,536
134,526 $
459,042 $
136,736
91,589
60,251
25,435
314,011
35,282
23,208
41,945
12,943
3,131
1,648
8,646
126,803
440,814
78
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. COMMITMENTS AND CONTINGENCIES
Khoemacau Silver Stream Acquisition
As of June 30, 2019, the Company’s conditional funding schedule for $212 million related to the Base Silver Stream
pursuant to its Khoemacau silver stream acquisition made in February 2019 (Note 3) remains subject to certain
conditions.
Ilovica Gold Stream Acquisition
As of June 30, 2019, the Company’s conditional funding schedule, of $163.75 million as part of its Ilovica gold stream
acquisition in October 2014 remains subject to certain conditions.
15. 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.
Net income (loss)
Revenue
Operating
income
(loss)
(Amounts in thousands except per share data)
attributable to Basic earnings Diluted earnings
(loss) per
share
Royal Gold
stockholders
(loss) per
share
Fiscal year 2019 quarter-ended:
September 30,
December 31,
March 31,
June 30,
Fiscal year 2018 quarter-ended:
September 30,
December 31,
March 31,
June 30,
$ 99,992 $ 25,333 $
97,592
109,778
115,694
31,449
43,201
40,724
$ 423,056 $ 140,707 $
15,008 $
23,586
28,772
26,459
93,825 $
0.23 $
0.36
0.44
0.40
1.43 $
(Amounts in thousands except per share data)
$ 112,476 $ 41,720 $
114,348
115,983
116,235
40,962
(193,464)
36,247
$ 459,042 $ (74,535) $
28,631 $
(14,765)
(153,650)
26,650
(113,134) $
0.44 $
(0.23)
(2.35)
0.41
(1.73) $
0.23
0.36
0.44
0.40
1.43
0.44
(0.23)
(2.35)
0.41
(1.73)
79
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, 2019, the Company’s management, with the participation of the President and Chief Executive Officer (the
principal executive officer) and Chief Financial Officer and Vice President Strategy (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 Vice President Strategy have concluded that, as of June 30, 2019, 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 Vice President Strategy, 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, 2019. 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, 2019, 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 Vice President Strategy (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 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, 2019.
80
(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, 2019, 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.
Opinion on Internal Control over Financial Reporting
We have audited Royal Gold, Inc.’s internal control over financial reporting as of June 30, 2019, 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). In our opinion, Royal Gold, Inc. (the Company)
maintained, in all material respects, effective internal control over financial reporting as of June 30, 2019, based on the
COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of June 30, 2019 and 2018, the related consolidated
statements of operations and comprehensive income (loss), changes in equity and cash flows for each of the three years in
the period ended June 30, 2019, and the related notes and our report dated August 8, 2019 expressed an unqualified opinion
thereon.
Basis for Opinion
The Company’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 are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. 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.
Definition and Limitations of Internal Control Over Financial Reporting
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.
81
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.
/s/ Ernst & Young LLP
Denver, Colorado
August 8, 2019
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 2019 Annual Stockholders
Meeting to be filed with the SEC within 120 days after June 30, 2019, 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: Vice President, 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 2019 Annual Stockholders
Meeting to be filed with the SEC within 120 days after June 30, 2019, 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 2019 Annual Stockholders
Meeting to be filed with the SEC within 120 days after June 30, 2019, 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 2019 Annual Stockholders
Meeting to be filed with the SEC within 120 days after June 30, 2019, 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 2019 Annual Stockholders
Meeting to be filed with the SEC within 120 days after June 30, 2019, and is incorporated by reference in this Annual
Report on Form 10-K.
82
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 Income (Loss)
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(b) Exhibits
Reference is made to the Exhibit Index beginning on page 84 hereof.
ITEM 16. FORM 10-K SUMMARY
The optional summary in Item 16 has not been included in this Form 10-K.
Page
50
52
53
54
55
56
83
Exhibit Index
Description
Restated Certificate of Incorporation, as amended (filed as Exhibit 3.1 to the Company’s Quarterly
Report on Form 10-Q filed on May 3, 2018 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)
Form of common stock certificate (filed as Exhibit 4.1 to the Company’s Quarterly Report on Form 10-
Q on May 3, 2018 and incorporated herein by reference)
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)
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)
2015 Omnibus Long-Term Incentive Plan, as amended (filed as Exhibit 4.2 to Royal Gold’s Registration
Statement on Form S-8 filed on July 20, 2017 and incorporated herein by reference)
Exhibit
Number
3.1
3.2
3.3
3.4
4.1
10.1▲
10.2▲
10.3▲
10.4▲
Royal Gold Deferred Compensation Plan for Non-Employee Directors (filed as Exhibit 4.1 to Royal
Gold’s Registration Statement on Form S-8 filed on July 20, 2017 and incorporated herein by reference)
10.5▲
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)
10.6▲
Form of Employment Agreement by and between Royal Gold, Inc. and each of the following: William
Heissenbuttel and Bruce Kirchhoff (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)
10.7▲
Form of First Amendment to Employment Agreement by and between Royal Gold, Inc. and each of the
following: William Heissenbuttel, Tony Jensen and Bruce Kirchhoff (filed as Exhibit 10.1 to Royal
Gold’s Quarterly Report on Form 10-Q filed on February 8, 2018 and incorporated herein by reference)
10.8▲
Employment Contract effective January 1, 2019, by and between RGLD Gold AG and Daniel Breeze
(filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K filed on January 7, 2019 and
incorporated herein by reference)
84
Exhibit
Number
10.9▲
Employment Agreement effective January 1, 2019, by and between Royal Gold Corporation and Mark
Isto (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K filed on February 20, 2019 and
incorporated herein by reference)
Description
10.10▲
Form of Amended and Restated Indemnification Agreement entered into between Royal Gold, Inc. or
certain subsidiaries and the directors and executive officers thereof (filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K on September 4, 2014 and incorporated herein by reference)
10.11▲
Restricted Stock Unit Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan in the
form entered into by and between Royal Gold, Inc. and Daniel Breeze (filed as Exhibit 10.1 to Royal
Gold’s Quarterly Report on Form 10-Q filed on May 2, 2019 and incorporated herein by reference)
10.12▲
Performance Share Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan in the form
entered into by and between Royal Gold, Inc. and Daniel Breeze (filed as Exhibit 10.2 to Royal Gold’s
Quarterly Report on Form 10-Q filed on May 2, 2019 and incorporated herein by reference)
10.13▲
Stock Appreciation Rights Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan in
the form entered into by and between Royal Gold, Inc. and Daniel Breeze (filed as Exhibit 10.3 to Royal
Gold’s Quarterly Report on Form 10-Q filed on May 2, 2019 and incorporated herein by reference)
10.14▲
Form of Incentive Stock Option Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive
Plan (filed as Exhibit 10.1 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 1, 2018
and incorporated herein by reference)
10.15▲
Form of Restricted Stock Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan
(filed as Exhibit 10.3 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 1, 2018 and
incorporated herein by reference)
10.16▲
Form of Restricted Stock Unit Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan
(filed as Exhibit 10.4 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 1, 2018 and
incorporated herein by reference)
10.17▲
Form of Director Restricted Stock Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive
Plan (filed as Exhibit 10.5 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 1, 2018
and incorporated herein by reference)
10.18▲
Form of Director Restricted Stock Unit Agreement under Royal Gold’s 2015 Omnibus Long-Term
Incentive Plan (filed as Exhibit 10.6 to Royal Gold’s Quarterly Report on Form 10-Q filed on November
1, 2018 and incorporated herein by reference)
10.19▲
Form of Performance Share Award Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive
Plan (filed as Exhibit 10.7 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 1, 2018
and incorporated herein by reference)
10.20▲
Form of Stock Appreciation Rights Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive
Plan (filed as Exhibit 10.2 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 1, 2018
and incorporated herein by reference)
85
Exhibit
Number
10.21▲
Description
Form of Restricted Stock Unit Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan
(filed as Exhibit 10.58 to the Company’s Annual Report on Form 10-K on August 10, 2017 and
incorporated herein by reference)
10.22▲
Form of Director Restricted Stock Unit Agreement under Royal Gold’s 2015 Omnibus Long-Term
Incentive Plan (filed as Exhibit 10.59 to the Company’s Annual Report on Form 10-K on August 10,
2017 and incorporated herein by reference)
10.23▲
Form of Amendment to Equity Award Agreements under Royal Gold's 2004 Omnibus Long-Term
Incentive Plan (filed as Exhibit 10.2 to Royal Gold’s Quarterly Report on Form 10-Q filed on April 27,
2016 and incorporated herein by reference)
10.24▲
Form of Incentive Stock Option Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive
Plan (filed as Exhibit 10.57 to the Company’s Annual Report on Form 10-K on August 10, 2016 and
incorporated herein by reference)
10.25▲
Form of Restricted Stock Agreement under Royal Gold 2015 Omnibus Long-Term Incentive Plan (filed
as Exhibit 10.58 to the Company’s Annual Report on Form 10-K on August 10, 2016 and incorporated
herein by reference)
10.26▲
Form of Director Restricted Stock Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive
Plan (filed as Exhibit 10.59 to the Company’s Annual Report on Form 10-K on August 10, 2016 and
incorporated herein by reference)
10.27▲
Form of Performance Share Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan
(filed as Exhibit 10.60 to the Company’s Annual Report on Form 10-K on August 10, 2016 and
incorporated herein by reference)
10.28▲
Form of Stock Appreciation Rights Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive
Plan (filed as Exhibit 10.61 to the Company’s Annual Report on Form 10-K on August 10, 2016 and
incorporated herein by reference)
10.29▲
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)
10.30▲
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)
10.31▲
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)
10.32▲
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)
86
Exhibit
Number
10.33▲
Description
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)
10.34▲
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)
10.35▲
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)
10.36
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)
10.37
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)
10.38
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)
10.39
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)
10.40
Purchase and Sale Agreement for Peñasquito 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)
10.41
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 Peñasquito, 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)
10.42†
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)
10.43†
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)
87
Exhibit
Number
10.44
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).
Description
10.45
Third Amendment to Amended and Restated Purchase and Sale Agreement, dated October 20, 2016,
among RGLD Gold AG, Thompson Creek Metals Company Inc. and Royal Gold, Inc. (filed as Exhibit
10.1 to the Company’s Quarterly Report on Form 10-Q on November 3, 2016 and incorporated herein
by reference)
Long Term Offtake Agreement, dated July 9 2015, between Compania Minera Teck Carmen de
10.46
Andacollo and RGLD Gold AG (filed as Exhibit 10.1 to Royal Gold’s Quarterly Report on Form 10-Q
filed on November 5, 2015)
Precious Metals Purchase and Sale Agreement, dated August 5, 2015, among RGLD Gold AG, BGC
10.47
Holdings Ltd. and Barrick Gold Corporation (filed as Exhibit 10.3 to Royal Gold’s Quarterly Report on
Form 10-Q filed on November 5, 2015)
10.48
Intercreditor Agreement, dated October 20, 2016, among The Bank of Nova Scotia for the Senior Debt
Secured Parties identified therein, RGLD Gold AG and Thompson Creek Metals Company Inc. (filed as
Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q on November 3, 2016 and incorporated
herein by reference)
10.49
Revolving Facility Credit Agreement, dated June 2, 2017, among Royal Gold, Inc., RG Mexico, Inc.,
the lenders from time to time party thereto, and HSBC Bank USA, National Association, as
administrative agent for the lenders (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-
K on June 6, 2017 and incorporated herein by reference)
10.50
Revolving Facility Credit Agreement Amendment dated May 15, 2018, among Royal Gold, Inc., RG
Royalties, LLC (f/k/a RG Mexico, Inc.), Royal Gold International Holdings, Inc., the lenders from time
to time party thereto, and the Bank of Nova Scotia, as administrative agent for the lenders
10.51
Second Amendment to Revolving Facility Credit Agreement dated June 3, 2019, among Royal Gold,
Inc., RG Royalties, LLC (f/k/a RG Mexico, Inc.), Royal Gold International Holdings, Inc. RGLD UK
Holdings Limited, the lenders from time to time party thereto, and the Bank of Nova Scotia, as
administrative agent for the lenders (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-
K on June 6, 2019 and incorporated herein by reference)
10.52
Pledge Agreement by Royal Gold, Inc. in favor of The Bank of Nova Scotia, dated June 2, 2017 (filed
as Exhibit 10.2 to the Company’s Current Report on Form 8-K on June 6, 2017 and incorporated herein
by reference)
10.53
Pledge Agreement by Royal Gold, Inc. in favor of The Bank of Nova Scotia, dated June 2, 2017 (filed
as Exhibit 10.3 to the Company’s Current Report on Form 8-K on June 6, 2017 and incorporated herein
by reference)
10.54
Share Pledge Agreement by Royal Gold, Inc. in favor of The Bank of Nova Scotia, dated June 2, 2017
(filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K on June 6, 2017 and incorporated
herein by reference)
88
Exhibit
Number
Description
21.1*
Royal Gold and Its Subsidiaries
23.1*
Consent of Independent Registered Public Accounting Firm
31.1*
Certification of President and Chief Executive Officer required by Section 302 of the Sarbanes-Oxley
Act of 2002
31.2*
Certification of Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002
32.1*
32.2*
Written Statement of the President and Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
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.
▲
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.
89
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
Date: August 8, 2019
ROYAL GOLD, INC.
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 8, 2019
By: /s/ TONY JENSEN
Date: August 8, 2019
Date: August 8, 2019
Date: August 8, 2019
Date: August 8, 2019
Date: August 8, 2019
Date: August 8, 2019
Date: August 8, 2019
Tony Jensen
President, Chief Executive Officer and Director
(Principal Executive Officer)
By: /s/ WILLIAM HEISSENBUTTEL
William H. Heissenbuttel
Chief Financial Officer and Vice President Strategy
(Principal Financial and Accounting Officer)
By: /s/ WILLIAM M. HAYES
William M. Hayes
Chairman
By: /s/ KEVIN MCARTHUR
Kevin McArthur
Director
By: /s/ JAMIE SOKALSKY
Jamie Sokalsky
Director
By: /s/ CHRIS M.T. THOMPSON
Chris M. T. Thompson
Director
By: /s/ RONALD J. VANCE
Ronald J. Vance
Director
By: /s/ SYBIL VEENMAN
Sybil Veenman
Director
90
Royal Gold, Inc. and its Subsidiaries
As of June 30, 2019
Name
Royal Gold, Inc.
Denver Mining Finance Company, Inc.
Crescent Valley Partners LP
Royal Crescent Valley, LLC
RG Royalties, LLC
RGLD Holdings, LLC
RGLD Gold (Canada) ULC
International Royalty Corporation
4324421 Canada Inc.
Labrador Nickel Royalty Limited Partnership
Royal Alaska, LLC
Peak Gold, LLC
Royal Gold International Holdings
RGLD UK Holdings Limited
RGLD Gold AG
Royal Gold Corporation
EXHIBIT 21.1
State / Province /
Country of
Incorporation
Delaware
Colorado
Colorado
Delaware
Delaware
Delaware
Alberta
Canada
Canada
Ontario
Delaware
Delaware
Delaware
United
Kingdom
Switzerland
Canada
Ownership
Percentage
100 %
93.077 %
100 %
100 %
100 %
*
100 %
100 %
90 %
100 %
40 %
100 %
100 %
100 %
100 %
*
Royal Gold, Inc. owns approximately 22.3% and RGLD Holdings, LLC owns approximately 77.7% 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. 333-224626),
Form S-4 (No. 333-111590 and No. 333-145213) and Form S-8 (No. 333-219378, No. 333-122877, No. 333-155384,
No. 333-171364, and No. 333-209391) of our reports dated August 8, 2019, 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, 2019.
EXHIBIT 23.1
/s/ Ernst & Young LLP
Denver, Colorado
August 8, 2019
EXHIBIT 31.1
I, Tony Jensen, certify that:
CERTIFICATION
(1)
(2)
(3)
(4)
I have reviewed this Annual Report on Form 10-K of Royal Gold, Inc.;
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;
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;
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)
(b)
(c)
(d)
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;
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;
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
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)
(b)
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
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 8, 2019
/s/ TONY JENSEN
Tony Jensen
President and Chief Executive Officer
(Principal Executive Officer)
EXHIBIT 31.2
I, William Heissenbuttel, certify that:
CERTIFICATION
(1)
(2)
(3)
(4)
I have reviewed this Annual Report on Form 10-K of Royal Gold, Inc.;
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;
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;
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)
(b)
(c)
(d)
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;
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;
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
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)
(b)
August 8, 2019
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
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.
/s/ WILLIAM HEISSENBUTTEL
William Heissenbuttel
Chief Financial Officer and Vice President Strategy
(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, 2019, 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)
(2)
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
the information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company.
August 8, 2019
/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, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William
Heissenbuttel, Chief Financial Officer and Vice President Strategy 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)
(2)
August 8, 2019
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
the information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company.
/s/ WILLIAM HEISSENBUTTEL
William Heissenbuttel
Chief Financial Officer and Vice President Strategy
(Principal Financial and Accounting Officer)
CORPORATE INFORMATION
BOARD OF
DIRECTORS
WILLIAM M. HAYES
Chairman
Retired Mining Executive
TONY A. JENSEN
President and Chief Executive Offi cer
of Royal Gold, Inc.
C. KEVIN McARTHUR
Retired Mining Executive
JAMIE C. SOKALSKY
Retired Mining Executive
CHRISTOPHER M.T. THOMPSON
Retired Mining Executive
RONALD J. VANCE
Retired Mining Executive
SYBIL E. VEENMAN
Retired Mining Executive
OFFICERS
TONY A. JENSEN
President and Chief Executive Offi cer
DANIEL K. BREEZE
Vice President,
Corporate Development
WILLIAM H. HEISSENBUTTEL
Chief Financial Offi cer
and Vice President, Strategy
MARK E. ISTO
Vice President, Operations
BRUCE C. KIRCHHOFF
Vice President,
General Counsel and Secretary
HEAD OFFICE
Royal Gold, Inc.
1660 Wynkoop Street, Suite 1000
Denver, Colorado 80202 USA
Tel: 303.573.1660
TORONTO OFFICE
Royal Gold Corporation
220 Bay Street, Suite 500
Toronto, Ontario M5J 2W4
Canada
VANCOUVER
OFFICE
Royal Gold Corporation
Suite 1900
1055 West Hastings Street
Vancouver, British Columbia
V6E 2E9
Tel: 778.382.7479
ZUG OFFICE
RGLD Gold AG
Baarerstrasse 71
6300 Zug
Switzerland
INVESTOR
INFORMATION
Alistair Baker
Director, Corporate Development
info@royalgold.com
www.royalgold.com
Tel: 303.573.1660
LEGAL COUNSEL
Hogan Lovells US LLP
Denver, Colorado
ANNUAL MEETING
Royal Gold, Inc. will hold its Annual
Meeting of Stockholders at Hotel Born,
1600 Wewatta Street, Denver, Colorado
on Wednesday, November 20, 2019 at
9:00 a.m. MT.
TRANSFER AGENT
Questions about shareholder
accounts, dividend payments, change
of addresses, lost certifi cates, direct
registration system (DRS), stock transfers
and related matters should be directed
to the transfer agent, registrar and
dividend disbursement agent listed
below:
For holders of Royal Gold
Common Stock (NYSE: RGLD)
Shareholder correspondence
should be mailed to:
Computershare
P.O. Box 505000
Louisville, Kentucky
40233-5000 USA
Overnight correspondence
should be mailed to:
Computershare
462 South 4th Street, Suite 1600
Louisville, Kentucky
40202 USA
Toll Free: 800.962.4284
Tel: 781.575.3120
8:00 a.m. – 8:00 p.m. ET
Shareholder website
www.computershare.com/investor
Shareholder online inquiries
https://www-us.computershare.com/
investor/Contact
AUDITORS
Ernst & Young LLP
Denver, Colorado
TABLE OF CONTENTS
TABLE OF CONTENTS
1 Letter to Shareholders
24 Corporate Responsibility
4 Letter from the Chairman
26 Total Return to Shareholders
5 Key Elements of Our Business Strategy
27 Forward Looking Statements
6 Selected Financial Data
7 Financial Highlights
8 Portfolio Map
10 Principal Producing Properties
18 Property Tables
22 Property Table Footnotes
28 Glossary
29 Form 10-K
Last Page of 10-K
Corporate Information
Inside Back Cover
Board of Directors/Management
CORPORATE PROFILE
CORPORATE PROFILE
Royal Gold, Inc. acquires and manages precious metal
streams and royalty 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 incurring many of the costs and risks associated
with mine operations.
Precious metal streams are purchase agreements with
mine operators that provide, in exchange for a lump
sum 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. A royalty is the right to receive
a percentage of the metal produced from a mineral
property. Existing royalties can be acquired outright
from either a mineral resource company or a private
party; new royalties can be created by providing capital
to an operator or explorer in exchange for a royalty.
Except for one joint venture property where Royal Gold
conducts exploration, Royal Gold does not conduct work
on the properties in which Royal Gold holds stream and
royalty interests, and Royal Gold is 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
prolifi c gold regions. Approximately 91% of our reserves
and 87% of Royal Gold’s fiscal 2019 revenue was
derived from North America, the Dominican Republic
and Chile.
Gold attributed approximately 78% of Royal Gold’s total
revenue in fi scal 2019, while precious metals attributed
approximately 87% of Royal Gold’s total revenue in
fi scal 2019.
With this high-quality portfolio, Royal Gold maintains
upside potential through exploration successes by the
operators and generally benefi ts when new reserves
are discovered and produced. This successful business
model generates strong cash fl ow and high margins with
a lower cost structure, providing shareholders with a
premium precious metals investment.
Royal Gold, Inc. is based in Denver, Colorado, and is
publicly traded on the Nasdaq Global Select Market, under
the symbol “RGLD.”
BOARD OF DIRECTORS
Left to right: Christopher M.T. Thompson, William M. Hayes, Jamie C. Sokalsky, Tony A. Jensen,
Ronald J. Vance, Sybil E. Veenman, C. Kevin McArthur
MANAGEMENT
MANAGEMENT
Tony A. Jensen
President and
Chief Executive Offi cer
William H.
Heissenbuttel
Chief Financial Offi cer and
Vice President, Strategy
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Vice President,
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Mark E. Isto
Vice President,
Operations
Bruce C. Kirchhoff
Vice President,
General Counsel
and Secretary
DISCIPLINED
STRATEGY
SUCCESSFUL
RESULTS
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1660 WYNKOOP STREET, SUITE 1000
DENVER, COLORADO 80202
WWW.ROYALGOLD.COM