Royal Gold Inc Q2 2024 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Tanya Jakusconek - Scotiabank - Analyst : Maybe I will just start on Back River. I'm just interested on the royalties you purchased. Were they from existing individuals? I wasn't aware that other companies had a little royalty. So maybe just starting off with who is the seller of these royalties, individuals or companies or --

Question: Tanya Jakusconek - Scotiabank - Analyst : And are there more of these royalties then available on this property or are these -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 08, 2024 / 4:00PM, RGLD.OQ - Q2 2024 Royal Gold Inc Earnings Call

Question: Tanya Jakusconek - Scotiabank - Analyst : I know yours and I know there's other companies as well that have exposure. I'm just always intrigued on how many pop up, and I wasn't sure whether this is the end of it. You said there's a couple of smaller royalties that are not available. Are those individuals as well?

Question: Tanya Jakusconek - Scotiabank - Analyst : And so historically, we had talked about this $100 million to $300 million range. So the first thing I need to ask is, is that still the range of -- obviously, you did something in 50. But would you say that these royalties, obviously, are smaller and you're saying that you're seeing more of them. So maybe we can see this range go down to $50 million to $300 million versus $100 to $300 million, which maybe be more the stream? I'm just trying to differentiate now what you're seeing more. One of your competitors mentioned a much higher range on the upward side. So I'm wondering if you're seeing a larger range but on the downward side.

Question: Tanya Jakusconek - Scotiabank - Analyst : And then maybe, Bill, can you talk to me a little bit about how this -- we hear about all of these deals and everyone has super busy and has a lot of opportunities out there. But maybe you can walk us through from the time you are approached on an opportunity or you're proactive and start looking at opportunities. Can you just walk us through like what it takes to get the deal announced and sort of the time line so that all of us are aware that we hear all of these deals, but like they're not going to be completed tomorrow?

Question: Tanya Jakusconek - Scotiabank - Analyst : Okay. So two to six months sort of benchmarking, two optimistic, six on average. Just for ourselves to just benchmark when you hear about these things somewhere between two to six months of sort of a reasonable time range.

Question: Tanya Jakusconek - Scotiabank - Analyst : We live in reality. I wish I lived in an ideal world. Maybe I am living in an ideal world. If I could squeeze one more in. Just on the Back River, I haven't had a chance to model the additional royalties that were purchased. But just as a benchmark, if we were to use your guidance pricing and look at this project, would it be safe to assume -- I'm assuming that the rate of return would be sort of double digit. But again, I haven't done that, I'm just trying to benchmark myself.

Question: Tanya Jakusconek - Scotiabank - Analyst : Mid to upper single digit and that's on spot pricing --

Question: Brian MacArthur - Raymond James - Analyst : It sort of follows on Tanya's last one. So I thought I worked this out, but given your guidance on the slide, slide 6, which is the Back River royalty. So if I read this from zero to 400,000 ounces, do you just guys get the 0.7% NSR and then from 400 to 780, you get the REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 08, 2024 / 4:00PM, RGLD.OQ - Q2 2024 Royal Gold Inc Earnings Call 2.5 less the 0.7 because you deduct it. And then after 780, you get 3.3 less the 0.7, which eventually goes down to 0.3 once you get $5 million royalty on that thing? Is that the way I'm supposed to think about it? And secondly, if that's true, I'm trying to figure out how we get to the 1.3% GSR that you comment on for KM post 780. And maybe it's easier offline but any guidance on how that works? Because when we're doing these IRRs, obviously, if this thing ramps up more over time, makes a big difference from what you get here.

Question: Brian MacArthur - Raymond James - Analyst : But you also say -- that's what I'm trying to get at, because you all just say together, they're equivalent to 1% GSR early on and that's a lot different than getting up to 2% or 3% early on. That's all I'm really asking, I don't need all the details. So should I be using 1.1% through the whole thing or should I be higher in the early years and dropping it off later, because that's, I think, goes to Tanya's question too.

Question: Brian MacArthur - Raymond James - Analyst : Right, which is basically the -- we got that footnote that talked about you already own 51.25% of it or whatever, so you're bringing that into it as well when you do all that?