Key Development Properties
Note: Reserves, mine start-up and mine life information were provided by the operators and have not been verified by Royal Gold. Metal prices for the reserve figures can be found on page 23, footnote 2.
Wolverine underground operations
Royal Gold holds a 0.0% to 9.445% NSR royalty 1 on the Wolverine mine, operated by Yukon Zinc Corporation (“Yukon Zinc”). The Wolverine mine is an underground
zinc-silver-gold mine located in the Yukon Territory approximately 121 miles northwest of Watson Lake.
| Reserves (October 2007): | 0.205M oz. gold |
| 42.820M oz. silver |
Estimated Production Start-up: 2010
Estimated mine life: 9 years
Construction Status:
Yukon Zinc is completing the construction of its facilities at the Wolverine mine. In June, wet commissioning was completed and batches of low grade ore were put through the processing plant for testing of unit operations. The plant is scheduled to begin the ramp up process as ore is introduced into the mill on a continuous basis in the second half of calendar 2010.
Wolverine Royalty Schedule
| Price of Silver (per oz.) | Rate |
| Below $5.00 | 0.000% |
| $5.00 - $7.50 | 3.778% |
| Above $7.50 | 9.445% |
1 The royalty schedule, based on the price of silver, applies to both gold and silver.
Canadian Malartic mine operations
Royal Gold holds a 2.0% to 3.0% NSR sliding-scale royalty 1 on
the Canadian Malartic project owned by Osisko Mining Corporation (“Osisko”). Osisko is currently developing the
Canadian Malartic gold deposit as a large-scale surface mining
operation. The project is located in the southwestern portion of Quebec, Canada, immediately south of the town of Malartic
and approximately 12 miles west of the town of Val-d’Or.
Reserves (12/31/08): 4.727M oz. gold
Estimated Production Start-up: CY2011
Estimated mine life: 12 years
Construction Status:
Construction of the mine and mill facilities continues to advance. As of early June, the mining fleet was being deployed and the installation of the SAG and ball mills was scheduled to begin. Osisko estimates the project will be fully operational in the second quarter of calendar 2011 with average annual gold production of 630,000 ounces.
Canadian Malartic Royalty Schedule
| Price of Gold (per oz.) | Rate |
| $0.00 - $350 | 2.0% |
| Above $350 | 3.0% |
1 The NSR royalty is subject to a buy-down right for $1.0 to $1.5 million
depending upon the price of gold, and is exercisable at any time for one-half
of the royalty.
Aerial view of the Pascua-Lama deposit
Royal Gold holds a 0.78% - 5.23% NSR sliding-scale royalty 1, 2 on the Pascua-Lama project which is owned by a subsidiary of Barrick. This royalty is applicable to all gold production from an area of interest in Chile. Royal Gold also holds a 1.05% NSR copper royalty which applies to all of the copper reserves in Chile within the area of interest, but does not take effect until after January 1, 2017. The Pascua-Lama project is located on the border of Argentina and Chile, in the southeastern portion of the Atacama region of Chile, approximately 7 miles from Barrick’s Veladero mine.
Reserves (12/31/08): 3 14.615M oz. gold
Estimated Production Start-up: CY2013
Estimated mine life: 25 years
Construction Status:
Barrick has reported that detailed engineering and procurement
are nearing completion, major long-lead items have been ordered, and the Barriales Camp in Chile is essentially complete. Roadwork is progressing well and about three million tons of earth have been moved as part of initial earthworks. The project is on track to enter production in the first quarter of calendar 2013 with average annual gold production expected to be 750,000 to 800,000 ounces in the first full five years of operation.
Pascua-Lama Royalty Schedule
Royalty is interpolated between lower and upper endpoints
| Price of Silver (per oz.) | Rate |
| ≤$325 | 0.78% |
| $400 | 1.57% |
| $500 | 2.72% |
| $600 | 3.56% |
| $700 | 4.39% |
| ≥$800 | 5.23% |
1 The sliding-scale royalty rate reflects Royal Gold’s entire royalty interest upon the completion of the transaction announced on July 6, 2010. The remaining portion of the additional royalty interest will be acquired on or before October 29, 2010.
2 Upon completion of the transaction announced on July 6, 2010, approximately 20% of the royalty will terminate after production of 14.0M ounces. Upon payment(Pascua-Lama continued) of $4.4 million, Royal Gold can extend 16% of the royalty beyond 14.0M ounces of production. 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 first 36-months of commercial production.
3 Only that portion of the reserves pertaining to our royalty interest in Chile is reflected here.
Holt mine site
Royal Gold holds an NSR royalty 1 on the Holt mine, operated by St Andrew Goldfields Ltd. The royalty pays out at a rate calculated by multiplying the average monthly gold price by 0.00013. The Holt underground gold mine is a portion of the Holloway-Holt project. The Holloway-Holt property is located in the Timmins Mining Camp in northeastern Ontario, Canada, approximately 28 miles northeast of Kirkland Lake.
Reserves (12/31/08): 0.486M oz. gold
Estimated Production Start-up: post 2010
Estimated mine life: 7 years
1 In November 2008, the operator made application to a court in Ontario, Canada, for a declaration that it is not obligated to pay the entire royalty defined under the royalty agreement and to dispute the royalty rate. The operator claims that its predecessor in interest is responsible for payment of some or all of the royalty. On July 23, 2009, the Court held that Royal Gold is entitled to payment from the predecessor of the full amount of the NSR sliding-scale royalty and that the operator’s obligation is to reimburse the predecessor for payment of the royalty up to a flat rate of 0.013%. On August 21, 2009, the predecessor appealed the portion of the judgment holding them responsible for paying the royalty. On December 9, 2009, Royal Gold was made a party to the appeal.