Royal Gold

Royal Gold is one of the world's leading precious metals stream and royalty companies engaged in the acquisition and management of precious metal streams, royalties and similar production-based interests.Royal Gold owns a large portfolio of producing, development, evaluation and exploration stage streams and royalties on properties located in some of the world’s most prolific gold regions and operated by some of the most well-known companies in the mining industry. Not all contracts are the same, some like the one it has with Thompson Creek Metals regarding a quarter of the gold produced at Mount Milligan lasts the length of the mine's life while others like Taparko in West Africa which ranges depending on the price of gold and the one in Pascua Lama (El Indio Gold Belt) where the 5.23% royalty is contingent on gold prices (must be higher than $800 an ounce) are structured differently; Most claims are between 1% and 5% but a few like Andacolo (75%) and Taparko (15%) are over 10%.[2] It also has an interest in Osisko Mining's Malartic gold project within the abitibi gold belt (1.0-1.5%, will be Canada's largest when production begins in 2012).

Royal Gold, Inc.

Type	Public
Traded as	NASDAQ: RGLD S&P 400 Component
Industry	Mining
Founded	1981
Founder	H. Stanley Dempsey
Headquarters	Denver, Colorado, USA
Key people	William Hayes, Chairman of the Board Bill Heissenbuttel, President and CEO Paul Libner, CFO and Treasurer
Products	Gold Silver Lead Copper Molybdenum Cobalt Zinc Potash
Revenue	$498.82 mil'20[1]17.9%
Operating income	$198.95 mil'20[1]41.4%
Net income	$196.3 mil'20[1]120.3%
Total assets	$2.766 bil[1]
Total equity	$2.302 bil[1]
Number of employees	27[1]
Website	Royal Gold, Inc.

The royalties are either bought (paid Thompson Creek Metals $311.5 million in October 2010 for a guaranteed, fixed share of gold production at Mount Milligan) or acquired through project financing arrangements.[3] Similar to silver streaming companies, royalty companies are not exposed to the operational risks associated with mining. Royal Gold's business has over a short period of time become more internationalized and diversified (in 2010 60% of revenue came from abroad compared to 44% the year before). In 2010 40% of revenue came from the USA compared to 79% in 2008; Canada down to 4% from 27% in 2008 however most assets in Canada are in the developmental phase while Africa nearly tripled to 29%.

In the 2009 edition of the Fortune Small Business Magazine (FSB) it ranked 10th among the fastest growing small businesses in the United States, 79 spots higher than in 2008.[4]

Royal Gold reported operating cash flow of $340.8 million during fiscal 2020 as well as $498.8 million in revenue and earnings per share of $3.04. [1]

History

In the 1980's, the company was named Royal Resources, Inc., and was an oil-exploration company.[5] In 1986, H. Stanley Dempsey, a board member of the public company, transformed the company into a gold mining company and renamed the company Royal Gold, Inc.[5] Dempsey served as Royal Gold's chief executive officer through 2006, as its executive chairman through 2008, and its non-executive chairman through 2014. Dempsey was inducted into the National Mining Hall of Fame in 2016.[6]

2010 was the year the company experienced the most growth with over a billion of the $1.86 billion in assets it has (September 2010) added during the year. In 2007 it purchased an interest in the Penasquito mine which did not begin producing until 2010. January 2010 acquired 75% of gold produced at Andacolo copper mine in Chile from Teck Resources. The royalty claim gets cut by 33.3% (down to 50% total) after it receives 910,000 ounces.

February 2010 completed the acquisition of another royalty company, IRC which has claims in Chile (Pascua Lama) and Canada (Voisey's Bay). International Royalty Company was quick to accept the $702 million deal from Royal Gold after Franco-Nevada attempted a hostile $640 million takeover.[7]

In the summer of 2011 Royal Gold paid Seabridge Gold C$160 million for a 2% net smelter return royalty claim on the KSM gold-copper-silver-molybdenum project in northern British Columbia.

By the end of the 2010 fiscal year the company was receiving royalty payments from 34 mines (July 2010).

Key assets

The developmental projects in which Royal Gold has the highest percentage claims are Wolverine, Yukon (9.445% of the gold and silver) and Pine Cove, Newfoundland (7.5% of the gold).[2] There are two molybdenum properties, one in Saskatchewan (Allan that has started producing) and another in British Columbia (Schaft Creek, not producing).

Andacollo, the property Royal has the highest stake in (75%) was estimated by Teck Resources to have 2P reserves (Proved + Probable) of 1.631 million ounces of gold. Voisey's Bay (3-4% royalty) has reserves of about 1.5 billion pounds of nickel, 873 million pounds of copper and 74 million pounds of cobalt.

Mines producing metals other than gold

In the first nine months of 2010 the largest producing mines that it has a royalty interest on were Leeville for gold (321,247 ounces), Robinson for copper (83.1 million pounds), Penasquito for lead (56 million pounds), zinc (86.3 million pounds), nickel (37.2 million pounds) and silver (8.5 million ounces).[8] In addition to the following properties there are another 19 in production that only produce gold.

In the last three months of the 2011 calendar year Royal Gold relied on Andacollo (23.5%), Voisey's Bay (17.5%), Penasquito (9.2%), Holt (6.1%) for more than half of its revenue. Those mines produced in total 92,358 ounces of gold during the quarter up from 65,862 ounces during the same period a year earlier, only two of them produced anything besides gold. Voisey's Bay and Las Cruces are the only major mining operations that don't produce gold.[9]

Allan Sask	British Columbia	Voisey's Bay Mine Labrador	El Toqui Chile	Robinson Nevada	Las Cruces Spain	Bolcooma, AUS	Mt.Goode, AUS	Dolorwes Mexico	Peñasquito Mexico	Martha Argentina	KSM BC,Canada
potash molybdenum	molybdenum	copper nickel cobalt	copper nickel cobalt	copper silver molybdenum	copper	copper silver lead zinc	cobalt	silver	lead zinc nickel silver	silver	copper silver molybdenum gold

References

1. "Royal Gold 2020 Annual Report page 44" (PDF). 2020-08-06.
2. "Royal Gold Properties, 2010 Annual Report". 2010. Archived from the original on 2011-03-03.
3. "Thompson Creek buys Terrane, done dea". 2010-10-21.
4. "2009 FSB 100:10. Royal Gold". CNN. 2009.
5. Whelan, David. "Virtual Gold". Forbes. Retrieved 2020-08-11.
6. "Inductee Stanley Dempsey | MiningHallOfFame.org". mininghalloffame.org. Retrieved 2020-08-11.
7. "Royal Gold rides to International Royalty's rescue in $749 million cash/share bid". 2009-12-21. Archived from the original on 2011-10-04.
8. "Royal Gold (RGLD)". wikinvest. Retrieved 2010-12-11.
9. "Royal Gold - Investor Relations". Archived from the original on February 14, 2012. Retrieved February 3, 2012.