CIBC 2018 Whistler Institutional...
Transcript of CIBC 2018 Whistler Institutional...
NASDAQ: RGLD
CIBC 2018 Whistler Institutional ConferenceTony Jensen President and CEO
January 24, 2018
NASDAQ: RGLD
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Cautionary Statement
2
This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that could cause actualresults to differ materially from the projections and estimates contained herein and include, but are not limited to: statementsconcerning cash flow generation, and operating cash flow growth in Q1 FY18 building on record fiscal year 2017 performance; quicklydelevering; embedded growth and sequential growth catalysts and estimated production at Rainy River, Cortez Crossroads andPeñasquito Pyrite Leach in 2018; diverse portfolio; strong margins; lean structure; strategic capital allocation and strong net revenueon capital deployed, with significant mine life remaining; equity stewardship; dividend returns and historic and current compoundedannual growth rate in dividends per share, annual yield and operating cash flow yield; focus on total shareholder return; ability ofRainy River project to complete main tailings storage facility and ramp-up to capacity; expected start-up date for Cortez Crossroads;expected accelerated start-up date for and estimated production from the Pyrite Leach project; estimated production at each of RainyRiver, Cortez Crossroads and the Pyrite Leach project; mine life and reserves estimates and forecasts of throughput, recoveries andproduction from the operators of our stream and royalty interests; and lack of additional funding requirements. Factors that couldcause actual results to differ materially from these forward-looking statements include, among others: the risks inherent in theoperation of mining properties; a decreased price environment for gold and other metals on which our stream and royalty interestsare determined; performance of and production at properties, and variation of actual production from the production estimates andforecasts made by the operators of those stream and royalty properties; decisions and activities of the Company’s managementaffecting margins, use of capital and changes in strategy; unexpected operating costs, decisions and activities of the operators of theCompany’s stream and royalty properties; changes in operators’ mining and processing techniques or stream or royalty calculationmethodologies; resolution of regulatory and legal proceedings; unanticipated grade, geological, metallurgical, environmental,processing or other problems at the properties; revisions or inaccuracies in technical reports, reserve, resources and productionestimates; changes in project parameters as plans of the operators are refined; the results of current or planned exploration activities;errors or disputes in calculating stream deliveries and royalty payments, or deliveries or payments under stream or royaltyagreements; the liquidity and future financial needs of the Company; economic and market conditions; the impact of futureacquisitions and stream and royalty financing transactions; the impact of issuances of additional common stock; and risks associatedwith conducting business in foreign countries, including application of foreign laws to contract and other disputes, environmentallaws, enforcement and uncertain political and economic environments. These risks and other factors are discussed in more detail inthe Company’s public filings with the Securities and Exchange Commission. Statements made herein are as of the date hereof andshould not be relied upon as of any subsequent date. The Company’s past performance is not necessarily indicative of its futureperformance. The Company disclaims any obligation to update any forward-looking statements.Third-party information: Certain information provided in this presentation has been provided to the Company by the operators ofproperties subject to our stream and royalty interests, or is publicly available information filed by these operators with applicablesecurities regulatory bodies, including the Securities and Exchange Commission. The Company has not verified, and is not in a positionto verify, and expressly disclaims any responsibility for the accuracy, completeness or fairness of such third-party information andrefers readers to the public reports filed by the operators for information regarding those properties.
NASDAQ: RGLD
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Creating Long Term Value
Cash flow generationEmbedded growth
Strong marginsLean structure
Equity stewardshipDividend returns
3
DisciplineEfficiencyPerformance
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0x
5x
10x
15x
20x
25x
30x
35x
40x Historical OCF multiple1
OCF Multiple +1 Standard Deviation
Q1FY18 cash flow growth building on FY17 records…
Performance - Cash Flow Generation
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$173
$147
$192
$170
$266$282
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12 monthsJun-30-2013
12 monthsJun-30-2014
12 monthsJun-30-2015
12 monthsJun-30-2016
12 monthsJun-30-2017
LTM Sept-30-2017
Cash from Operations Gold Price
OCF average = $170m per year
Gold Price in US Dollars
Cash
from
Ope
ratio
ns in
USD
Mill
ions
Cash from operations vs gold price
...yet RGLD is trading at a discount to historical levels
RGLD at 19x vs historical of 23x and peers at 25x
OCF
Mul
tiple
1 Multiple calculated as reported cash from operations
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Sequential growth catalysts, bought and paid for
Rainy River - 2017
1 Information has been provided to the Company by the operators of those properties or is publicly available information filed bythese operators. Please see page 2.
Rainy River - 2017
Performance - Embedded Growth
Rainy River - 2017
New Gold: Commercial production began October 20171
Stream on 6.5% of gold and 60% of silver1
3.9Moz gold in reserves; 10.0Moz silver in reserves1Rainy River – Ramp 2018
5
Cortez Crossroads - 2018
Barrick: CY18 startup expected1 and stripping underway 4.5% NVR & 5% GSR royalty3.2Moz gold in reserves1
Peñasquito Leach – CQ418
Goldcorp: Commissioning accelerated to CQ4181
Construction progress at 1/16/18: 62% complete1
Expected to add 1Moz gold, 44Moz silver to mine life1
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Our gross margin is within the top 6% of S&P 500 constituents
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Gross Margin, Last 12 Months
S&P 500 Constituent
RGLD, 80% margin
Gros
s Mar
gin
Source: S&P Capital iQ. Gross margin calculated as total revenue less cost of goods sold, divided by total revenue. A total of 456 of the S&P 500 constituents reported positive gross margin in the last 12 months.
Efficiency - Strong Margins
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$0 $10,000,000 $20,000,000NasdaqGS:MAR
NYSE:APHNYSE:UHS
NYSE:MNYSE:LEG
NYSE:OMCNasdaqGS:FAST
NYSE:KSSNYSE:AJG
NasdaqGS:FISVNasdaqGS:IDXXNasdaqGS:INFONasdaqGS:NAVI
NYSE:UTXNYSE:SEE
NYSE:ITNYSE:WFCNYSE:DPS
NYSE:KNYSE:TMO
NYSE:ALKNYSE:JPMNYSE:BACNYSE:CATNYSE:ADSNYSE:UAANYSE:GPNNYSE:TAP
NYSE:AMGNasdaqCM:AMD
NYSE:NINYSE:VNONYSE:BF.BNYSE:PEG
NasdaqGS:PDCONYSE:CHDNYSE:UNHNYSE:AIGNYSE:TRV
NasdaqGS:SNINYSE:HPQ
NasdaqGS:VRSNNYSE:CF
NYSE:PXDNYSE:NRGNYSE:NBLNYSE:DHI
NasdaqGS:CBOENasdaqGS:GILD
NYSE:VTR
$25M(REIT)
$1M
$1.3M
$3m
$2M
$19M$11M (REIT)
S&P
500
Cons
titue
nt
Revenue per employee
Source: S&P Capital iQ. Revenue per employee calculated as total reported revenue for the last 12 months, divided by total reported employees. 498 of the S&P 500 companies report total employees.
Efficiency - Lean Structure
Our revenue per employee is higher than 497 of the S&P 500
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RGLD has 14 million outstanding shares less than the next-highest GDX member
Discipline
* Company with an incorporation date that pre-dates Royal Gold, which was incorporated in 1981.
Discipline - Equity Stewardship
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NASDAQ: RGLD
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Rainy River
Cortez Crossroads
19% CAGR in dividends per share since 2001, and currently equates to $1.00 per share, a 1.2% annual yield, and an average 22% OCF yield1
Discipline - Dividend Returns
1 Calculated as reported cash from operations divided by common dividends paid during the same period. 9
27% 29%
12%
21%19%
25% 26%23%
34%30%
15%18%
25%
36%
29%35%
22%
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$1.00Dividend Per Share Operating Cash Flow Yield Average Gold Price (source: Kitco)
Annu
al D
ivid
ends
Per
Sha
re
Gold
Pric
e in
US
Dolla
rs
Latest increase
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Highly Skilled Board Leadership
Jamie SokalskyIndependent Director;
Former President and CEO, Barrick Gold Corporation
Kevin McArthur Independent Director; Executive Chair, Tahoe
Resources and Former CEO and Director, Goldcorp, Inc.
Tony JensenDirector; President and CEO,
Royal Gold, Inc.
William HayesIndependent Director and
Chairman of the Board; Former EVP, Placer Dome Inc.
Ronald J. Vance Independent Director; Former SVP Corporate Development,
Teck Resources
Christopher M.T. ThompsonIndependent Director; Former Chairman and CEO, Gold Fields
Limited
Sybil VeenmanIndependent Director; Former
Senior Vice President and General Counsel, Barrick Gold Corporation
10
1660 Wynkoop Street, #1000Denver, CO [email protected]
NASDAQ: RGLD