Royal Gold at Renmark Roadshow: Strategic Growth Amid Gold Volatility

On Wednesday, 23 April 2025, Royal Gold (NASDAQ:RGLD) participated in the Renmark Financial Communications Virtual Non-Deal Roadshow Series. The company presented a robust strategic overview, highlighting its low-risk leverage to gold prices and consistent financial performance. Despite a recent share price increase, Royal Gold remains committed to shareholder returns and sustainable growth, while also addressing valuation concerns in the precious metals sector.

Key Takeaways

• Royal Gold reported record revenue, cash flow, and earnings for Q4 2024, with an 84% EBITDA margin.
• The company maintains a strong balance sheet with zero debt and $1.2 billion in liquidity.
• A 12.5% dividend increase for 2025 marks the 24th consecutive annual rise.
• Royal Gold emphasizes disciplined capital allocation and a focus on sustainable assets.
• The company aims to close the valuation gap with peers by highlighting portfolio quality.

Financial Results

• Record financial performance in Q4 2024 with significant revenue, cash flow, and earnings.
• 76% of Q4 revenue derived from gold; 60% from Canada, the US, and Australia.
• Ended 2024 with zero debt and approximately $1.2 billion in liquidity.
• Revenue growth outpaced increases in general and administrative expenses.

Operational Updates

• Portfolio of approximately 40 assets, with over 50% of revenue from Canada and the USA.
• 35 assets are in various development stages, not yet producing revenue.
• Notable projects include Back River, expected to commence revenue in Q3, and Mount Milligan, with a potential mine life extension.
• ESG performance improved, with top ratings from Sustainalytics and MSCI.

Future Outlook

• Growth expected from mining expansions and production from existing portfolio assets.
• Strategic focus on deploying capital from internal sources, avoiding shareholder dilution.
• Continued emphasis on sustainable, long-term assets and maintaining a strong balance sheet.

Q&A Highlights

• Development projects like Back River and Mount Milligan were discussed, highlighting potential growth.
• Valuation concerns addressed, noting the impact of recent gold price volatility.
• Cash flow multiples considered low compared to peers, attributed to misconceptions about portfolio quality.
• No major shifts in asset or jurisdiction preferences; focus remains on individual asset acquisitions.
• Efforts to attract generalist investors, with hopes of increased sector interest due to macroeconomic events.

For a detailed account, please refer to the full transcript below.

Full transcript - Renmark Financial Communications Virtual Non-Deal Roadshow Series:

Noella Alexander Young, Virtual Event Moderator, Renmark Financial Communications: Hello, and good afternoon, everyone. Welcome to today’s virtual non deal roadshow. My name is Noella Alexander Young, virtual event moderator here at Renmark Financial Communications. On behalf of our team, we’d like to thank everyone in New York and surrounding areas for joining us today for the presentation of Royal Gold Trading on the NASDAQ under the ticker symbol RGLD. Presenting today is Alistair Baker, senior vice president of investor relations and business development.

The presentation will last approximately twenty five minutes and will be followed by a q and a session for which you can participate using the chat box in the top right hand corner of your screen. With that being said, I will now hand the floor over to Alastair.

Alistair Baker, Senior Vice President of Investor Relations and Business Development, Royal Gold Trading: Thanks, Noella, and thanks everybody for attending today. Obviously, the gold price continues to grind higher, setting new records almost on a weekly basis, so it’s a great time to give you an update on Royal Gold. So firstly, just wanted to flag that I will be making forward looking statements during this presentation. There are risks and uncertainties that could cause actual results to differ materially from these statements. All of these risks and uncertainties are discussed in our most recent Form 10 k filing with the SEC.

So with that out of the way, I will today give you the investment thesis for Royal Gold and what we provide to our investors, which in a sentence would be precious metals exposure with consistent financial performance and a focus on per share metrics. And the presentation I’ll go through today is divided into sections. First, I’ll talk about our low risk leverage to the gold price. Secondly, our long history of executing a pretty simple, business strategy. Thirdly, our unique business model.

Fourth, our organic growth potential from a diversified portfolio. And fifth, I will end on valuation. And obviously, with the gold price being where it is, it’s very timely to talk about valuation of companies like ours. So to start with, I will give you an overview on this slide of Royal Gold. And, you know, we are a high margin business that generates consistent cash flows from precious metals.

We’ve been around since the mid nineteen eighties. We’ve been on the Nasdaq for that entire time. We have two segments to our business. We have streams at about two thirds of our revenue and royalties about one third of our revenue. But both are essentially the same things from a an investor or a shareholder perspective.

They both provide top line exposure to mining production or or production for mining assets. We will be releasing our q one results in a couple of weeks, but I can talk about our q four results, which were released in, mid February. And for that quarter, the fourth quarter of twenty twenty four, it was a a really fantastic way to end a very good year. We had record revenue, cash flow, and earnings both for the quarter as well as the year. Our EBITDA margin increased to 84% on an adjusted basis.

Our revenue, for the year or or for the quarter was 76%, gold, and, about 60% of revenue came from Canada, The US, and Australia. We ended the quarter and the year with zero debt and about $1,200,000,000 in liquidity. And, really, the results in the fourth quarter as well as the rest of 2024 demonstrate that we have high margins, and we are a business that benefits directly from a strong and rising gold price. So far in in, 2025, it’s been even stronger from a gold price perspective. Now I will talk on this slide a bit about how we’re positioned in our sector relative to peers.

I think this is important as you think about our opportunities for growth. We sit in a very interesting position. We are large enough to compete for the largest transactions in our sector. We have very good access to low cost capital. We have very strong cash flow coming in from our portfolio.

Yet we’re also small enough to be able to show growth in a sector that is generally, from an acquisition perspective, generally, smaller opportunities are the things that are most common. So a small transaction for Royal Gold, given our size, can actually mean that there’s a meaningful change to our business if we can do several of these small We’re not aiming to be the biggest in our sector. As I said, the sector’s most of the growth in the sector comes from relatively small transactions, so being large is not necessarily an advantage. However, we wanna be the best in our sector. We wanna be able to deploy our capital, the best projects.

We wanna be able to show the best returns to our shareholders. And we think this Goldilocks position that we’re in is really it’s a great platform for us to execute our strategy of growing in gold. Now I’ll get into the the presentation sections itself. Now I’ll talk about our low risk leverage to the gold price first. And this slide shows how we are positioned relative to other ways you can invest in gold.

And our model provides exposure to precious metals without many of the risks that come with investing in operating companies. We’re designed to provide exposure to gold, the price itself, but also the optionality in the projects and the assets where we invest. And we we reduce our downside risk by holding a diverse, portfolio that does not have direct exposure to operating and capital cost risks. And that’s all very important when you think about inflation. There are different ways you can invest in gold.

You can you can be conservative, and you can invest in physical gold, you can buy an ounce of gold. But that ounce will always be an ounce. There will never be additional upside to that ounce beyond price appreciation, and that ounce will also not pay you a dividend. In fact, it will cost you to hold that ounce. You could be more aggressive, and you can look at mining companies or exploration companies, and you can invest in those.

But when you do that, you’re also exposing yourself to operating and capital cost increases. There are some who would say, well, our business is conservative, and it doesn’t have the same leverage goal, but I think that is a fallacy. I think our financial results, as I talked about in the fourth quarter and last year, we did very, very well in an environment where the gold price has been rising and has been strong. And you can see that over the longer term on this slide. This shows why we do think we’re a very interesting alternative for those who are looking for exposure to gold.

On the left hand side, you can see our beta to the gold price of 1.8. That’s very strong. So we definitely have leverage to the gold price. On the right hand side, you can see our share price performance over the longer term. This goes back to the beating of the GDX index in 02/2005, ’2 thousand ’6.

And since that time, we have outperformed the gold price, the GDX index, and the general market as well. So very, very good share price performance over the longer term. Now I’ll get into the next section and talk about execution and execution of our business strategy. We we do have a very long record of consistent and disciplined performance, And this slide shows our 20 of capital allocation and growth, which is really driven by the idea that we wanna provide accretive growth to our shareholders. And since February, you can see our our revenue growth and our operating cash flow growth have been both very significant.

But there are three aspects of this this growth that I think are are well worth noting and calling out. The first is our business is high margin, and it’s very scalable. Our revenue growth has far exceeded any increase in G and A expense. We don’t need to add people. We don’t need to add anything to our business as we acquire more assets and grow our business.

The second is our revenue growth is not dependent solely on metal prices. Obviously, the the gold price over the past several years has been a great tailwind to us, but we’ve been able to add volume to our portfolio by adding assets and further, providing leverage to the gold price by adding new assets. And thirdly, we have financed our growth mostly internally without a significant rise in the share count over this this twenty plus year period. We are one of the original members of the GDX index, and we have the lowest share count by far in the GDX index. We have not issued equity since 02/2012.

We really do want to avoid shareholder dilution, and it’s a strategic imperative for us. If we can fund our business with internal resources, then what that means is that we’re able to pass per share growth on to our shareholders. Shareholders. Now on this next slide, I wanna talk a little bit about our our liquidity position, and liquidity is very important in our business. We have to be patient.

We have to maintain a strong balance sheet. We have to maintain liquidity because sometimes transactions come up very quickly, you need to be able to execute or act on those transactions and and be opportunistic. Making sure you have liquidity is always is a very key part of that. Our approach to funding our growth is really to use cash on hand, our operating cash flow, and our revolving credit facility to to fund growth and avoid issuing equity if we if we can do so. Equity is our least preferred method of financing growth.

And and certainly since, 02/2012, as I said, we haven’t done an equity offering. On the the left hand side of the slide, you can see the waterfall of how we used our cash flow and how we allocated that in 2024. We used our operating cash flow to repay debt, pay our dividend, and reinvest in the business. And our total liquidity at the end of the year, as you can see on the right hand side, was about $1,200,000,000 and that’s including the working capital that we had at the end of the fourth quarter. We don’t have any debt.

We have our full, revolving credit facility of $1,000,000,000 undrawn and available, which is lots of liquidity for the environment we find ourselves in today. And to further expand on the point about our credit facility, it’s a billion dollars, as I said, and it provides very cheap and flexible financing to us. We have eight top tier banks in the facility, so it’s a very, very well structured syndicate. What we do is we’ll draw on our our credit facility when we see a need for capital, and we’ll pay that back, that drawing back from cash flow. And if I was to to say a good example would be 2022.

We’re very active in 2022. We acquired a couple of large royalties, and ended the year with $575,000,000 of debt. And and the royalties we acquired were were multi decade. We had royalties at Cortez. We had royalties Great Bear.

And we have now, two years later, we’ve repaid all the debt that we used to acquire those royalties, and that’s really from that cash flow that our portfolio generates. And while there is an interest cost in the short term to to using debt to fund our business, we think that short term interest expense is a worthy trade off when you’re thinking about adding multi decade assets to the portfolio without diluting shareholder interests in those assets. Now another key strategic objective for us is to return capital to shareholders, and it’s something that makes us unique when you think about precious metals opportunities and investments. We have paid a growing and sustainable dividend since February, and we’ve increased the dividend every year since 02/2001 despite volatility in the gold price. Last year at the end of last year, we announced an increase to our 2025 dividend of 12.5%, and that was the twenty fourth consecutive annual increase to our dividend.

We’ve now paid out over $1,000,000,000 of dividends to our shareholders since we started paying dividends, and we’re the only company in the GDX index that’s paid an increasing dividend every year since the index was formed. And we’re the only precious metals company in the S and P high yield dividend aristocrats index. So that is a huge differentiator for us, and it’s something we like to tell generalists all the time. Now something else that is very core to our business is is due diligence, and and we we view this as a a core competency of of ours. And and good due diligence is very important because we wanna make sure that we add the right assets to our portfolio, and we avoid adding the wrong assets.

And while we’re always busy looking at opportunities for different reasons, opportunities will come to us. Not all opportunities are are things that we wanna invest in. And so, sometimes we’ll we’ll just say no, and sometimes we’ll walk away from things if we see risks that we don’t like. And so our our due diligence process is very structured. It’s it’s a it’s a very exhaustive process, and and it’s really built around identifying upsides, but also identifying risks.

We don’t feel pressure to do transactions in our business. And if we can’t find the right opportunities, we’re happy to collect our revenue from the portfolio, build our balance sheet, and wait because we found that, history has shown us that opportunities often come up, with very little warning and and something very good maybe around the corner. So you don’t wanna you wanna make sure you’re ready to act on those opportunities when they become available. And, really, 2023 was a case in point when you think about that year. We were busy, as I said, in 2022.

In 2023, we just didn’t see the right opportunity. So what we did that year was we built debt. We we paid down our debt, built up our liquidity, and we were patient. And and now we’re in a very good position. Another attribute of our business is, ESG.

And we’ve always thought about ESG as being a very core part of our business even before ESG was called ESG, and it’s really because we do not operate. We don’t have direct operating control of the assets where we invest. And so when we make our investments, what we have to do is make a judgment on the sustainability of those assets. We want these assets to be in production for decades, and so we have to understand, what some of the sustainability risks are around the assets where we invest. And that’s a big part of our due diligence.

And we’ll also we’ll do things as well to work with operators to to ensure that they they operate to the highest standards, and we we look to to help fund initiatives around assets where we invest to to help with community programs and things like that. But it’s all around making sure that we are invested in sustainable assets because that’s what our shareholders want over the long term. And on this slide, you can see we’ve got two, influential ratings providers in our sector. We’ve got Sustainalytics and MSCI. Showing here over the the last several years, you can see our ratings have have improved, and and we we sit in a very good position.

We’re top right top rated by Sustainalytics, and we’re double A rated by MSCI. I’m gonna switch gears and talk about our business model in this next section. And, really, the the key to our model is optionality, and that’s optionality to resource and reserve growth assets where we invest without having to fund anything further to get exposure to that investment. I’ve got two assets or examples shown on this slide. We’ve got PV on the left.

We’ve got Wassa on the right. These are mines that we invested in in 02/2015. And in both cases today, total reserves and resources are higher than at the time that we made our original investments. And that’s in addition to the cash flow that we’ve managed to generate from these assets. It’s allowed us to recover almost 95% of our investment at PV and over a 70% of our investment at Wassa.

And the interesting thing here is that there are growth projects underway at both of these assets still today. At PV, there’s a mine life extension with a new tailings facility that that could see the mine life extended to the mid twenty forties. And at Wassa, there’s a large underground resource which is being scoped out, and the operator’s looking to to to get that into production and potentially add a couple of decades to existing reserve life of that asset. So the the thing that is common about both of these is that we do not need to fund anything further to get further exposure to this upside. It’s growth that we don’t have to pay for.

And so understanding exploration and production upside is is very important when we do our due diligence of new investment opportunities because that aspect of our business, that optionality, is the most important thing as a as a shareholder you wanna be able to to talk about and understand. Now our business model is unique as well in that it’s it’s very efficient. It’s it’s a highly efficient business. We have 30 employees in our company. Last year, we had revenue of over $700,000,000.

Today, our market cap is around $12,000,000,000. So on a per employee basis, we compare well against any company in any sector. So they’re very efficient business. And that low employee count means that we have a low fixed cash g and a, which clearly further contributes to our efficiency. In 2024 for the year, our adjusted EBITDA margin was 81%.

That grew to 84% in the fourth quarter. For the year, our cash G and A was about 4% of total revenue, but that grew or that declined actually to 3% of total revenue in the fourth quarter. And that was really as a result of the direct, impact of a of a very strongly rising gold price. Our G and A costs are low, they’re mostly fixed. So inflation is not really a risk to our margins.

And you can see that on this next slide, how we are relatively well insulated from, cost inflation compared to the average gold producer. On the left hand side, you can see cost structures for us and the average gold producer. And you can see that the producers are exposed to inflation and input costs. So these are the costs that they they require to run their operations. So labor, energy, consumables, things like that, they they often increase with commodity price increases.

So sometimes when you see gold prices or commodity prices increase, you see those costs increase as well, and margins don’t expand. And I think that’s an important point when you think about this tariff environment that we’re in today. Some of the costs for operators may actually increase fairly significantly. That will not help them ex increase their, their margins. Whereas us, we don’t have direct exposure to those costs, so our margins should actually, with the rising gold price, should expand.

Our g and a costs are are generally pretty steady. Things like salaries, services, office rents, these are things that don’t move in a short term manner. And so that means that our our margins are a lot less exposed to the inflation pressures that that operators will have, simply because we don’t have exposure to the same kinds of costs. Now I’m going to talk a little bit about the portfolio in this section. And we do have a broad portfolio with lots of good organic growth potential inside of it.

And this slide shows where we are in the world. It’s a global portfolio, but you can see that we’re weighted towards more lower risk and mining friendly jurisdictions. We do call out principal properties, in the portfolio on the right hand side of the slide. We have four of them, and they contributed just over 50% of our revenue last year. We have exposure to some of the more established mining camps in the world.

You see clustering of our our portfolio in certain areas. We have about 50% of our revenue last year came from Nevada, British Columbia, and Western Australia. These are all very well established mining camps. And we have significant exposure to these areas with other assets and royalties and and and so on that that may be on exploration or earlier stage assets in these regions. In a historical mining region, it is important to to have a presence because in these areas, that’s where you have the geological prospectivity.

You generally have pretty supportive regulatory environments. You have access to people and the skills that are required to run mining assets. There’s a saying in the mining business that the best place to find a mine is near a mine. So we think we’re very well situated with our portfolio to enjoy additional optionality from exploration success as it gets, surfaced. Our portfolio is is well diversified as well, and that’s a very important point, and that provides stability to our cash flows.

Our operators are best in class. We have some of the largest, most well capitalized and experienced companies in the world operating the assets where we have investments. 40% or sorry. 40 assets approximately are are that’s the number of of assets that contribute revenue to us today, so that portfolio and breadth is is is great. We have, our underlying assets are a mix of precious metals and then base precious metals, and over 50% of our our revenue comes from Canada and The USA.

So those are very mining, friendly, stable jurisdictions. This portfolio diversification is important when you think about risk. It really does reduce our exposure to single asset, operator, and jurisdictional risk. Our portfolio also spans the various stages of mining project development. We have a 35 assets that produce revenue or sorry, that do not produce revenue to us today, but are at different stages of development.

So they could be exploration assets, evaluation assets, or development assets. And there’s the expansion or the potential for organic growth to surface from within the portfolio as assets move through the development pipeline to production. And We’ve seen a couple of very good examples in the past, two or three years. We’ve got Bellevue Gold and King Of The Hills in Australia. Both of these assets are producing revenue today.

They both have, great futures ahead of themselves, but they’ve been in our portfolio for well over ten years. And and for many of those years, they were dormant. So that’s growth that we don’t have to pay for that that came up and bubbled up to the surface from within the portfolio, and that’s organic growth that we’re always looking to find and and we’re very happy to see. And to continue on the theme of organic growth, we have a number of catalysts ahead of ourselves. I’m not gonna go through this list, but, really, the the point here is to show that we have potential for mining expansions, extensions to reserve lives, and new production from within the portfolio.

And we don’t have to pay to get exposure to any of this. This is all free optionality to our shareholders. Now we don’t just rely on, organic growth to to, give us growth. We’re we’re always looking to add to the portfolio, and this slide summarizes some of what we’ve done over the past several years. Deployed about 1,200,000,000 on several transactions that all provide gold exposure to assets in safe jurisdictions.

And there’s one here that I’m missing. At the end of the last quarter, we announced the the acquisition of a a small copper royalty on an emerging copper project in Arizona. This isn’t something that we typically go out looking for, but it came across our desks. We like the returns. We like the project.

We like the people and certainly the jurisdiction, and we thought this is a very good thing to add to the portfolio. So relatively small transaction for us, not a strategic shift or anything like that, but it’s it’s another nice little thing to tuck into the portfolio. But the the point I’d make on this slide, here is is that we have funded all of these transactions using cash on hand and our revolving credit facility. We haven’t diluted our exposure or our shareholders’ exposure to any of these by issuing equity. And you can see that some of these are are fantastic assets to have in the portfolio.

And just to to give a bit more detail on some of these, I’ll go through this very quickly because there’s a lot happening in all of these. But Cortez in Nevada, great exploration potential there. New projects coming into production. We now have royalty coverage over the entire complex. Red Chris in in Northern British Columbia.

Newmont is the operator here. They’re moving this asset from a relatively small open pit operation to a large bulk tonnage underground with decades of mine life. Zaventina in Brazil, fantastic exploration success here, has has really proven out over the past couple of years since we’ve been invested. We actually increased our investments, just a a couple of weeks ago at this asset. We’re very pleased with the exploration potential here, and we think this this mine is gonna produce for for quite a long time.

Cote Gold in Ontario, this is in the final stages of of ramping up. It’s it’s an emerging world class operation. We’ve got a nice royalty position there. Great Bear in Ontario, it’s an earlier stage project, but Kinross is the moving this project forward. Kinross is a very well established, very experienced developer.

This is an asset that we expect to be producing for a couple of decades once it starts production, towards the end of this decade. And then finally, Back River in, in Northern Canada. This is an asset that’s in the final stages of construction, and we should see some royalty revenue from this asset towards the middle of this year. So very good assets, lots of growth potential, and and they’re all very consistent with our strategy, which is really to to provide exposure to our shareholders to production and exploration upside in safe jurisdictions in metals that we understand. So I’m gonna end the slide just talking about valuation.

I I think it’s it’s worthy of note at this point, given where the gold price is. Our business is performing very well. I mean, clearly, gold price where it is today generates lots of cash flow for us. We’ve been very disciplined with our allocation of capital and that and how we what we do with that cash flow, and we’ve got good organic growth from within the portfolio. Our share price is is very close to all time highs, and that’s really been driven by this this very recent run up in the gold price.

But I think if you look at us on a valuation perspective, you still see that we’re trading towards the lower end of the peer group on a price to cash flow basis. And I think that’s simply because the the value of the long life life assets and the optionality within the portfolio has still not been recognized by the market. And and it feels like, the the gold price, even though it’s done very, very well, I I still think the the longer higher the higher longer term gold price has been factored by the market into our share price. So I think there is still a bit of a valuation disconnect there. So that’s basically everything that I wanted to cover on the formal part of the presentation.

I I I think, know, as I said, we we think we’re we’re positioned very, very well in this environment. We we have a very strong record. The business is performing well. We’ve got high quality assets in great jurisdictions. We’ve got lots of, organic growth potential from within the portfolio.

We traded an attractive valuation. We’ve got a strong balance sheet, lots of liquidity on hand to continue to grow in this environment. And we think, obviously, with the gold price where it is, we’re positioned extremely well. So, Noel, with that, I will, finish the formal part of the presentation and turn it back to you for q and a.

Noella Alexander Young, Virtual Event Moderator, Renmark Financial Communications: Thank you very much, Alastair, for the presentation. We’ll now begin the q and a. Your first question is, have you seen any recent shifts in the types of assets or jurisdictions where operators are actively seeking royalty or stream financing?

Alistair Baker, Senior Vice President of Investor Relations and Business Development, Royal Gold Trading: No. I think the generally speaking, things are consistent with what we’ve seen over the past several years. I think what what’s happened recently with the gold price doing what it’s done is it’s it’s it’s put a little bit of a more urgency into the operators. Some of the operators were developing assets to try to take advantage of the higher gold price, they’re trying to move things forward quickly or more quickly. So that’s been a very good thing for us.

We’ve seen more development projects come to us. We’ve seen, good opportunities for us to invest in this environment. I think, jurisdictionally, we’re seeing the same kinds of things that we’ve seen in, in the past several years. We’ve seen a little bit more activity in Africa. That’s for sure.

Our peers have been quite active there. We’re we’re a little less open to all of Africa. We’re we’re open to certain parts, and we’ll look at those very selectively. But I think generally speaking, we’re seeing the same kinds of opportunities that we have done. What we’re not seeing a lot of these days is balance sheet restructurings, and the simple reason is because most producing companies today have cash flow that’s pretty strong at these prices.

So most balance sheets are in pretty good shape, but what we are seeing more of is development opportunities.

Noella Alexander Young, Virtual Event Moderator, Renmark Financial Communications: Thank you for that response. Your next question is, do any of your partner development properties go into production this year or next year?

Alistair Baker, Senior Vice President of Investor Relations and Business Development, Royal Gold Trading: So the the nearest term is going to be, Back River, and that’s that’s in the final stages of construction. As I said, we expect to see some new revenue from that in the probably around the third quarter of this year. They’re they’re targeting midyear to start production. So that’s an exciting one for us. It’s been in our portfolio for a long time.

We’ve added to that over the past year. We’ve added to that royalty position. We’re very pleased. One of the other catalysts in the portfolio may not mean any increase in near term production, but one of the things that we’re looking very forward we’re looking forward to with with a great deal deal of interest is at Mount Milligan, Centerra is is going to be publishing a study on extending the mine life, and they’re looking to to publish that study in the third quarter this year. It’s a prefeasibility study that could see, as they’ve described it, a couple of decades added to the mine life at Mount Milligan.

So if that is something that happens, it could be a big catalyst for Royal Gold, and we’re very much looking forward to seeing the results of that study.

Noella Alexander Young, Virtual Event Moderator, Renmark Financial Communications: Thank you for that response, Alastair. The next question is, do you feel valuations may be too high in the precious metal space to initiate deals?

Alistair Baker, Senior Vice President of Investor Relations and Business Development, Royal Gold Trading: I think one of the one of the problems that we’ve had over the past several months is the the gold price has run fairly quickly, and it has increased significantly. So when when we’re looking to negotiate a transaction with a counterparty, I mean, obviously, the buyer and the seller, they may have different expectations as to what they’re looking for. The sellers are gonna look for something closer to spot pricing because it’s very high. We’ll be a little bit more conservative because we have been in this business for a long time, and we’re looking to to get longer term returns. So we may not be comfortable with using the spot price to value transactions.

That delta has widened as time has the last several months have gone on just because the gold price has done so well. But, you know, at the end of the day, most people are pretty rational, and I think most most of the sellers will realize this realizing the spot price today is probably unreasonable. There’s probably some some froth in the spot price. If things settle down on the trade war front or if geopolitical risks start to subside, you may see the gold price settle a little bit. So I I think most people are pretty rational, but it it does take a little bit more discussion because that gap is wide to begin with.

Noella Alexander Young, Virtual Event Moderator, Renmark Financial Communications: Thank you for the insight on that. The next question is, how have your cash flow multiples changed with the recent run up in the share price?

Alistair Baker, Senior Vice President of Investor Relations and Business Development, Royal Gold Trading: I don’t think they’ve changed a great deal. I mean, last time I would have spoken to you, they’re probably in the 15 to 16 times range, and now they’re in the 19. But I think the the important thing to note is that we’re at the relative low ends of our peers. So that’s something I I just don’t think makes sense. You know, I think there there may be a little bit of a misunderstanding of the quality of our portfolio in the marketplace.

We’re doing our best to make sure that the market understands the the the size of our portfolio, the breadth of it, and some of these smaller assets that actually do contribute pretty significantly to the portfolio. And to that point, we actually yesterday, we announced our or released our our 2024 asset handbook. There’s a lot of detail in there on some of the assets that we have in the portfolio, and and we’re trying to surface that that detail to to make sure that the market and sell side analysts specifically model those assets and and and give us full credit for what those assets are going to do. And, you know, we think that will help us bridge some of that valuation gap. It’ll take a little bit of time likely, but hopefully that valuation gap will close, and we’ll start to see ourselves trading at levels that are are more comparable to our large cap peers.

Noella Alexander Young, Virtual Event Moderator, Renmark Financial Communications: Thank you for clarifying that, Alastair. Your next question is, has competition in the gold and silver space reached an inflection point of moving to second tier locations or bidding on smaller companies instead of a single royalties?

Alistair Baker, Senior Vice President of Investor Relations and Business Development, Royal Gold Trading: No. I don’t think so. I mean, we we still see lots of single asset opportunities for us that that are quite interesting. Think, you know, we’re always looking at our peers and and, you know, is there an opportunity to consolidate the sector? That’s something we do look at.

We we find it’s easier, in in most cases to buy assets one by one. And so if we add to the portfolio, it’s, slower growth. It’s not that bolt on, that immediate, that change in company size. But we’re happy with that as well because we get to pick those assets very carefully, and and and we get to bid what we think those assets are worth. When you buy another company or a portfolio of assets, you’re often you gotta pay for everything, and sometimes there are things in those that we don’t like.

But it’s not to say that we’re we don’t look at consolidation opportunities. We do. And and so at the right value, if we see good good value in a portfolio, we’ll we’ll definitely consider it.

Noella Alexander Young, Virtual Event Moderator, Renmark Financial Communications: Thank you, Alastair. Next, how does the company weigh near term cash flow contribution versus long life optionality when evaluating new opportunities?

Alistair Baker, Senior Vice President of Investor Relations and Business Development, Royal Gold Trading: That’s a very good question. It’s subjective. It really does depend on the asset. I mean, we we wanna be when we make an investment, we wanted to to start returning cash to our shareholders as soon as possible. So we always like to be closer to cash flow, but we don’t wanna lose sight of the fact that long term optionality can generate a lot of value

So, we generally want assets that are close to production or in production, but also have that long life optionality and that ability to to extend. So it it it really is a judgment call, and and we will look at assets, from many different perspectives to try and make sure that we are getting what we what we hope, in terms of near term contribution, but also the long term potential for those assets to grow.

Noella Alexander Young, Virtual Event Moderator, Renmark Financial Communications: Thank you, Alastair. Next, a viewer asked, how do you structure inflation or commodity price protection into your agreements, if at all?

Alistair Baker, Senior Vice President of Investor Relations and Business Development, Royal Gold Trading: We don’t. We we don’t hedge. We don’t do anything like that on the top line. So it’s it’s that is not something we do. I think our shareholders want us for that leverage to metals prices, so they they they would push back if we started to hedge.

We don’t have capital needs. We it’s we’re not like a developer or or an operating company that may say that next year, I need $500,000,000 to to do an expansion. And and so I’ve gotta make sure that I’m I’m, I’m guarding that that that, that liquidity. We don’t need to do that because all of our our capital spending is discretionary. So, we we can choose to invest or we can choose not to.

We don’t have to. So so on the top line, we don’t do any hedging. On the bottom line or or our g and a and our expenses, as I said in the presentation, they’re really de minimis relative to the size of our company. Last year, $719,000,000 of revenue, and our our cash g and a was $30,000,000, give or take. So that’s we we protect ourselves on on the cost side by being very vigilant on costs, and we don’t like to see growth in our G and A expense.

So that’s how we protect on that side of things.

Noella Alexander Young, Virtual Event Moderator, Renmark Financial Communications: Thank you for that response. Next, the question is, any comments on central banks buying gold?

Alistair Baker, Senior Vice President of Investor Relations and Business Development, Royal Gold Trading: Well, it’s been a very good tailwind to the gold price over the past several quarters, and we expect it to continue. I think if you look at what’s happening in the the market more generally, central banks have been continuing to buy as the prices run up, so they don’t tend to be as price sensitive as perhaps other buyers. I think there’s a long term, shift in portfolios of central banks that’s moving away from US dollar assets. So US treasuries and things like that, I think you’re seeing more of a conversion into other assets, and gold is a beneficiary of that. I I think this is a probably a trend that we’re gonna see for for several years.

If you look at, Central Bank Holdings, you know, the the Chinese Central Bank has about five and a half percent of their reserves are in gold today. I think if if they were to to to increase to a 10% level, for example, it would take them quite a long time to get there. I don’t know what their targets are, but I think what you’ve seen from them over the past several quarters is fairly consistent buying, and we expect that to continue as, as time continues. So central bank buying, I think, caught a lot of people by surprise. They central banks, probably a couple of years ago, were generally not big buyers or consistent buyers, but they have come in over the past couple of years.

They’ve been a consistent source of demand for gold, and that they’ve been a very good, they’ve provided a lot of support to the gold price.

Noella Alexander Young, Virtual Event Moderator, Renmark Financial Communications: Thank you, Alastair, for that response. The next question is, what common misconceptions do you think the investment community has about Royal Gold or the royalty slash streaming business model?

Alistair Baker, Senior Vice President of Investor Relations and Business Development, Royal Gold Trading: I think the the one thing that I I find is still a misconception, and I’ve been doing this for a few years with Royal Gold, and it’s bit frustrating because we we do our best to to highlight it, but it’s the quality of the portfolio. I think compared to our largest peers, there’s a perception in the marketplace that our portfolio is not as good. I I think for the reasons that I explained in the presentation, we’re well diversified. We’re in good geopolitical, areas. We got, more gold exposure than than our large cap peers from our in our revenue.

Those are all things that I think the market is very slowly coming to appreciate. And and one of the things that has been a bit frustrating for me is that the market hasn’t looked at some of the smaller assets in our portfolio and and really modeled those out to try and understand what the con contributions are, to Rolling Gold from those assets. You know, we don’t we have 65,000,000 shares outstanding, so all you need is a few hundred thousand dollars in a quarter to make a penny difference on earnings. And if you look at the way that the Street has estimated, we have beaten earnings, over most of the last several quarters, and it’s because those small assets are not necessarily they’re they’re not very well modeled by a lot of the street. And and so I think that is something that people are getting they’re they’re they’re starting to do more, granular work on our portfolio because we’re putting more information into the marketplace about some of these smaller assets, and I hope that starts to to, correct that misperception about our portfolio.

We have a lot of assets in the portfolio that produce revenue. Some of them are smaller than others. That’s that’s fine. But those small ones, if you add those together, we have a couple of good quarters from a couple of the smaller assets. It’s a meaningful difference to Royal Gold.

So that that is that is the thing that I’m pushing the most, and I I think and I hope the street’s starting to recognize that.

Noella Alexander Young, Virtual Event Moderator, Renmark Financial Communications: Thank you for shedding some light on that. The next question is, how does your average mine life compare to peers?

Alistair Baker, Senior Vice President of Investor Relations and Business Development, Royal Gold Trading: So we don’t give the same kind of disclosure on on mine lives as our peers. In in the asset handbook that I mentioned yesterday, we we have a table that shows mine lives by asset, but it’s for reserves only. We we don’t make, assumptions about resource conversion and what resources could do to mine life. So our disclosure is different in that respect. Our peers will talk about reserve lives plus resource lives.

And, you know, our our view is that if if operators aren’t comfortable converting resources to reserves and adding those to mine lives that they’re disclosing, it is probably not appropriate for us to be putting resource the lies associated with resource conversion. As as in our business, we we don’t have access to the same information. The operators do. If the operators are not choosing to add, mine lives to resource conversion, then we probably shouldn’t because it’s we just don’t have the same access to information that they do. So that’s that’s a it’s a difference in in the approach in the way that we talk about our portfolio, but it doesn’t mean that we we believe that reserve lives are are are our asset lives are gonna end at the end of reserves.

It just means that today, as a snapshot, we we don’t want don’t feel comfortable putting, lives associated with those reserves or resource conversions. So so I think that’s that’s a big difference between us and our peers. And if you look at our our asset lives, we have multiple assets that have multi decade lives. We’re very comfortable with the duration of our portfolio, but we don’t give one number for the duration of the portfolio.

Noella Alexander Young, Virtual Event Moderator, Renmark Financial Communications: Thank you for clarifying that, Alastair. The next question is, will you utilize increased cash flow from the jump in precious metals prices to buy back shares or pay a special dividend?

Alistair Baker, Senior Vice President of Investor Relations and Business Development, Royal Gold Trading: So this is a a conversation that comes up, quite frequently at the board level is is what would happen if we can’t find new opportunities to reinvest. But what we’re finding is year on year, there are new things to look at, new opportunities to invest in, and and we find that the best way for us to grow value in the company is to reinvest cash flow in the business. If we’re able to take our cash flow, buy assets at one times NAV, have those rerate within the portfolio to a multiple of NAV, that’s the kind of thing that adds value to our shareholders over the longer term, and that’s where we prefer to to reinvest our capital. Now if if we ended up in a position where we thought, you know, there is no growth in the in the gold sector anymore, we we don’t wanna be, we just don’t see any opportunities, then obviously that that conversation changes. But that’s not where we are today.

We think that there’s lots of growth ahead of us to reinvest in the core business. And, clearly, we we we do pay an increasing dividend every year. That is something that’s core to us. We we don’t trade on yields. I don’t think people own us for dividend yield, but what people like to see is growth in dividends because it shows that you’re thinking about shareholders as as a a core constituent when you’re making investment decisions.

So growing our dividends is something we’re very committed to. Paying a special dividend, yeah, is something we would consider if we ended up with more cash on the balance sheet that we think we can deploy effectively. So never say never, but right now, the focus is to reinvest in the business, continue to pay our dividend as we have.

Noella Alexander Young, Virtual Event Moderator, Renmark Financial Communications: Thank you for that response. Next, a viewer asked, with gold briefly reaching 3,500, how many new options have come into the point of being accretive for royalty?

Alistair Baker, Senior Vice President of Investor Relations and Business Development, Royal Gold Trading: Overall, we’re seeing new projects come to us as the gold price rises. It’s amazing. You know, in this business, God isn’t creating more assets. Those assets were created a long time ago, and, you know, geologic formations are are are what they are. With the rise in the gold price, though, some of the deposits that have been around for a long time and have been known for a long time, those suddenly become economic.

So with the rise of the gold price, it actually it creates opportunities for us because more of those assets are coming to the market looking for financing. So the rising gold price is great for us. I mean, we’re we’re obviously seeing more revenue from our portfolio, our existing portfolio because gold price is higher. We’re also seeing resource conversion within the portfolio because those resources are are suddenly economic. We’re also seeing new opportunities coming to us because companies are looking to finance what may have been uneconomic at, $1,500 gold is suddenly very economic at these prices.

So it creates there’s a there’s a lot of benefit to us with a rising gold price.

Noella Alexander Young, Virtual Event Moderator, Renmark Financial Communications: Thank you, Alastair. We’re coming up to your last two questions. The first one is, how has your institutional ownership changed over the past two years?

Alistair Baker, Senior Vice President of Investor Relations and Business Development, Royal Gold Trading: So our institutional ownership, generally is pretty stable. If you look at our register, the top 20, shareholders would be 60% of our total register. They don’t change a lot. We’ve we’ve got a very a lot of very large, funds. We’ve got a lot of passive holdings, which by virtue of being on the Nasdaq, we’re a lot we’re we’re in about 200 different indices.

We are, we have a number of very large, active investors as well on the portfolio, and, generally, they’re pretty sticky. We find that there may be a little bit of rebalancing from one quarter to the next, but, generally, these are holders who have been with us for a long time, and they they tend not to to trade their positions. The average tenure of our of holdings, for our register as a whole is about sixteen years. So very long, sticky, supportive shareholder base, and we very much like to see that. Where we do see some change is is kind of at the smaller end of the portfolio.

We may see people come in and out. We may see hedge funds come in in a big way in a quarter depending on what’s happening, and they may exit the the following quarter. But that money tends to be to to come back to us if if it does leave. But, when we think about our our long term shareholders, institutionally, they haven’t changed for for quite a long time.

Noella Alexander Young, Virtual Event Moderator, Renmark Financial Communications: Thank you, Alastair, for that response. And the last question is, where are the generalists? Are they active or still tire kicking?

Alistair Baker, Senior Vice President of Investor Relations and Business Development, Royal Gold Trading: That is a great question, and it’s something we all ask ourselves every day, as we’re looking to to talk about and promote our company to to new potential investors. I think generalists we have spent a lot of time marketing to generalists, and and that’s who we think we appeal to the most. You’re a generalist and you don’t wanna take single asset exposure or you don’t wanna take management, team exposure risks, then the royalty model and and what we offer is is great. I mean, you you can buy us, and you you can sleep at night knowing that you’re gonna get exposure to the metal, and you’re you’re likely mitigating a lot of your risks just because our business model is what it is. So we’ve spent a lot of time over the past several years marketing to generalists.

We find that we get a lot of interest from generalists because our business model is very appealing. What we haven’t seen is a lot of new generalists coming into the sector. Now it does take some time, and I think what’s if I were to to read what’s happened over the past couple of years is we’ve been doing a lot of education calls with people who are, you know, large institutions that may be thinking about what to do if certain things occur. Now we’re seeing a lot of those certain things are occurring. So you’re seeing weakness in The US Dollar.

You’re seeing you know, a lot of macroeconomic things are happening today, which are, good reasons to be exposed to gold. So I’m looking forward to seeing over the next couple of quarters whether some of that generalist money has come into our sector, because we certainly spent a lot of time talking to them over the past several years. And I think the last several months may have been the catalyst that would see some of the generalists come in and deploy some of their capital in the precious metals sector. So it’s a very good question, and it’s something that I I ask, you know, banks, their trading desks, their analysts, and and so on. I I’m asking those people all the time, are you seeing generalist money coming into the sector yet?

And I think we’re seeing green shoots.

Noella Alexander Young, Virtual Event Moderator, Renmark Financial Communications: Excellent. Well, thank you very much, Alastair, for your responses today, and thank you to everyone who submitted questions. If you do not get a chance to submit your question, you can reach out to the appropriate account manager here at Renmark. That concludes our presentation for today. But before we go, I will turn back the floor to you, Alastair, for final remarks.

Alistair Baker, Senior Vice President of Investor Relations and Business Development, Royal Gold Trading: Well, thanks, Noelle, and thanks, everybody, for your attention. Certainly enjoyed the, Q and A session. Some good questions in there. If I didn’t answer anything, fully, then please get back to Renmark, and and I’d be happy to to touch base with you individually or or via Renmark as well. So thanks very much.

I look forward to talking to you again soon, and, enjoy the the high gold price.

Noella Alexander Young, Virtual Event Moderator, Renmark Financial Communications: Thank you, Alastair. And once again, this was Royal Gold trading on the Nasdaq under the ticker symbol RGLD. Thank you to everyone in New York and surrounding areas for joining us today. The playback for this virtual non deal roadshow will be available on our website twenty four to forty eight hours after this presentation under the VNDR library tab. Please stay tuned for other presentations in your area, and see you next time.

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