Key Producing Properties
Note: Reserves, production, estimated production and mine start-up 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. The information contained in this section relates to the Company’s royalty interests on these properties.
Taparko plant and administrative facilities
Royal Gold holds four royalties at Taparko, a surface gold mine operated by a subsidiary of High River Gold Mines Ltd. Royal Gold’s royalty interests, described below, include two initial gross smelter return (“GSR”) royalties (TB-GSR1 and TB-GSR2), and two subsequent GSR royalties (TB-GSR3 and TB-MR1). The mine is located in Burkina Faso, approximately 125 miles northeast of the capital city of Ouagadougou.
FY2010 Revenue: $32.2M
FY2010 Production: 117,505 oz. gold
| Reserves (12/31/09): | TB-GSR1 1 : | 0.132M oz. gold |
| TB-GSR2 1 : | 0.132M oz. gold | |
| TB-GSR3 : | 0.551M oz. gold |
Est. Royalty Production CY2010: 137,000 oz. gold
Description of Royalty Interests:
TB-GSR1 and TB-GSR2: The first GSR royalty is fixed at a rate of 15.0%. The second GSR royalty is a sliding-scale royalty that ranges from 0.0% to 10.0% depending upon the price of gold. TB-GSR2 pays out at a rate of 4.3% when the average monthly gold price ranges between $385 and $430 per ounce, and changes to a sliding-scale royalty when the average monthly gold price is outside of this range. The calculated rate, expressed as a percentage, is determined by dividing the average monthly gold price by 100 for gold prices above $430 per ounce, not to exceed 10.0%, or dividing the average monthly gold price by 90 for gold prices below $385 per ounce (i.e., a $1,000 per ounce gold price results in a rate of 1,000/100 = 10.0%). Both TB-GSR1 and TB-GSR2 royalties continue until either production reaches 804,420 ounces of
gold or payments totaling $35.0 million under the TB-GSR1 royalty are received by Royal Gold, whichever comes first.
TB-GSR3: A 2.0% GSR perpetual royalty which commences once the TB-GSR1 and TB-GSR2 royalties have ceased.
TB-MR1: A 0.75% GSR milling royalty which applies to ore that is mined outside of the defined area of the Taparko project that is processed through the Taparko facilities up to a maximum of 1.1 million tons per year. No ore has been processed under this royalty.
Royalty Status:
As of June 30, 2010, Royal Gold has recognized $30.6 million in royalty revenue under TB-GSR1 which is attributable to cumulative production of 202,000 ounces of gold. At current gold prices, the Company expects that the $35 million cap on TB-GSR1 could be met during the third quarter of calendar 2010. When the cap is reached, both the TB-GSR1 and TB-GSR2 royalties will cease and the TB-GSR3 royalty will take effect.
1 The TB-GSR1 and TB-GSR2 royalties are subject to the same reserve.
Pipeline Mining Complex
The Company holds four gold royalties on the Cortez Pipeline Mining Complex (“Cortez”) owned and operated by a subsidiary of Barrick Gold Corporation (“Barrick”). Royal Gold’s royalty interests, described below, include two sliding-scale gross smelter return royalties (GSR1 and GSR2), a fixed-rate GSR royalty (GSR3), and a net value royalty (NVR1). Cortez is a large surface gold mine located 60 miles southwest of Elko, Nevada.
FY2010 Revenue: $25.1M
FY2010 Production: 357,595 oz. gold
| Reserves (12/31/09): | GSR1 1 : | 1.527M oz. gold |
| GSR2 1 : | 3.717M oz. gold | |
| GSR3 1 : | 2.142M oz. gold | |
| NVR1 1 : | 1.872M oz. gold |
| Reserves (12/31/09): | TB-GSR1 1 : | 0.132M oz. gold |
| TB-GSR2 1 : | 0.132M oz. gold | |
| TB-GSR3 : | 0.551M oz. gold |
Est. Royalty Production CY2010: 241,000 oz. gold
Description of Royalty Interests:
GSR1 and GSR2: Gross smelter return sliding-scale royalties for all gold produced from the “Reserve Claims,” a block of 52 claims encompassing all of the proven and probable reserves in the Pipeline and South Pipeline deposits as of April 1, 1999, and for all gold produced from an area outside of the Reserve Claims, originally known as the “GAS Claims.” The GSR1 and GSR2 sliding-scale royalty rate is tied to the price of gold.
GSR3: A fixed-rate 0.71% GSR royalty for the life of the mine covering the same cumulative area as is covered by GSR1 and GSR2, with the exception of the mining claims that comprise the undeveloped Crossroads deposit.
NVR1: A fixed-rate 0.39% NVR royalty on production from the GAS Claims located on a portion of the Pipeline Mining Complex that excludes the Pipeline open pit and the mining claims that comprise the undeveloped Crossroads deposit.
Pipeline Mining Complex Royalty Schedule
| Price of Gold (per oz.) | GSR1 and GSR2 |
| Below $210 | 0.40% |
| $210 - $229.99 | 0.50% |
| $230 - $249.99 | 0.75% |
| $250 - $269.99 | 1.30% |
| $270 - $309.99 | 2.25% |
| $310 - $329.99 | 2.60% |
| $330 - $349.99 | 3.00% |
| $350 - $369.99 | 3.40% |
| $370 - $389.99 | 3.75% |
| $390 - $409.99 | 4.00% |
| $410 - $429.99 | 4.25% |
| $430 - $449.99 | 4.50% |
| $450 - $469.99 | 4.75% |
| $470 - and above | 5.00% |
1 NVR1 and GSR3 reserves are subsets of the reserves covered by GSR1 and GSR2.
Robinson mine operations
Royal Gold holds a 3.0% net smelter return (“NSR”) royalty on the Robinson mine operated by a subsidiary of QuadraFNX Mining Ltd. The Robinson mine is a surface copper mine with significant gold credits located in White Pine County, Nevada, approximately seven miles west of the town of Ely.
FY2010 Revenue: $12.1M
| FY2010 Production: 1 | 86,101 oz. gold |
| 107.4M lbs. copper |
| Reserves (12/31/09): | 0.704M oz. gold |
| 1,203M lbs. copper |
| Est. Royalty Production CY2010: 2 |
75,000 oz. gold |
| 115M-125M lbs. copper |
1 Recovered metal is contained in concentrate and is subject to third party treatment charges and recovery losses.
2 On August 12, 2010, QuadraFNX revised its production guidance from 80,000 ounces of gold to 75,000 ounces of gold and from 135 million pounds of copper to between 115 million and 125 million pounds of copper.
Leeville underground operations
Royal Gold holds a 1.8% carried working interest, which is equivalent to an NSR royalty, covering a majority of the Leeville property. Leeville is an underground gold mine owned and operated by a subsidiary of Newmont Mining Corporation. The operation, located in Eureka County, Nevada, is approximately 10 miles northwest of the town of Carlin.
FY2010 Revenue: $9.9M
FY2010 Production: 454,148 oz. gold
Reserves (12/31/09): 1.790M oz. gold
Est. Royalty Production CY2010: 429,000 oz. gold
Mulatos mine
Royal Gold holds a 1.0% to 5.0% NSR sliding-scale royalty on the Mulatos mine, operated by a subsidiary of Alamos Gold Inc. Mulatos is a surface gold mine located in Sonora, Mexico, approximately 140 miles east of the city of Hermosillo.
FY2010 Revenue: $9.0M
FY2010 Production: 164,954 oz. gold
Reserves (12/31/09): 2.387M oz. gold
Est. Royalty Production CY2010: 160,000-175,000 oz. gold
Description of Royalty Interests:
The royalty is capped at 2.0 million ounces of production. There have been approximately 581,000 ounces of cumulative production as of June 30, 2010.
Mulatos Royalty Schedule
| Price of Gold (per oz.) | Rate |
| Below $299.99 | 1.00% |
| $300 - $324.99 | 1.50% |
| $325 - $349.99 | 2.00% |
| $350 - $374.99 | 3.00% |
| $375 - 399.99 | 4.00% |
| $400 and above | 5.00% |
Siguiri mine operations
Royal Gold holds a 0.0% to 1.875% NSR sliding-scale royalty on the Siguiri mine, operated by a subsidiary of AngloGold Ashanti Limited. Siguiri is a surface gold operation located in the northeast portion of the Republic of Guinea, near the town of Siguiri, approximately 500 miles northeast of the capital city of Conakry.
FY2010 Revenue: $6.0M
FY2010 Production: 296,223 oz. gold
Reserves (12/31/09): 3.070M oz. gold
Est. Royalty Production CY2010: 301,500 oz. gold
Royalty Status:
The royalty is capped once payments of approximately $12.0 million have been received. As of June 30, 2010, approximately $1.8 million remains unrecognized under the cap. The Company expects that the $12 million cap could be reached in the second half of calendar 2010.
Peñasquito grinding circuit
Royal Gold holds a 2.0% NSR royalty on all metals at the Peñasquito mine. The mine, composed of two main deposits called Peñasco and Chile Colorado, hosts one of the world’s largest silver, gold and zinc reserves, while also containing large lead reserves. The project is operated by a subsidiary of Goldcorp Inc. (“Goldcorp”) and is located in Zacatecas, Mexico, approximately 17 miles west of the town of Concepcion del Oro.
FY2010 Revenue: $6.0M
| FY2010 Production: | 117,963 oz. gold |
| 7.2M oz. silver | |
| 36.7M lbs. lead | |
| 48.5M lbs. zinc |
| Reserves (12/31/09): 1 | 17.820M oz. gold |
| 1,070.100M oz. silver | |
| 15.930B lbs. zinc | |
| 7.211B lbs. lead |
Est. Royalty: 180,000 oz. gold
| Production CY2010: 2 | 13.4M oz. silver |
| 107M lbs. lead | |
| 135M lbs. zinc |
Production Status:
The ramp up of the first sulfide processing line continues to progress well. In June 2010, Goldcorp announced that the second sulfide processing line achieved mechanical completion ahead of schedule and is ramping up toward its 50,000 tonne-per-day design capacity. Commercial production was declared on September 12, 2010. Construction of the high pressure grinding roll circuit is expected to be completed in the fourth calendar quarter, and full production ramp up to the planned 130,000 tonne per day capacity to be reached in early calendar 2011.
1 The oxide and sulfide reserves have been combined.
2 The sulfide material will be processed by milling. The oxide material will be processed by heap leaching. Recovered base metals are contained in concentrate and subject to final settlements and third party recovery losses.
Goldstrike, Betze-Post mine
Royal Gold holds a 0.9% NSR royalty on a portion of the Betze-Post mine, known as the SJ Claims. Betze-Post, which is a part of the larger Goldstrike operation, is a surface gold mine operated by a subsidiary of Barrick. The SJ Claims and the Betze-Post mine are located approximately 24 miles northwest of Carlin, Nevada.
FY2010 Revenue: $3.9M
FY2010 Production: 348,802 oz. gold
Reserves (12/31/09): 5.354M oz. gold
Est. Royalty Production CY2010: 465,000 oz. gold
Voisey’s Bay concentrate load out facilities
Royal Gold holds a 2.7% NSR royalty on nickel, copper and cobalt from the Voisey’s Bay mine which is operated by Vale Inco. Voisey’s Bay is a surface nickel-copper-cobalt mine located in northern Labrador, 23 miles southwest of the town of Nain.
FY2010 Revenue: 1 $3.9M
| FY2010 Production: 1 | 19.0M lbs. nickel |
| 8.6M lbs. copper |
| Reserves (12/31/09): | 1.493B lbs nickel |
| 873M lbs. copper | |
| 74M lbs. cobalt |
Est. Royalty Production CY2010: The operator did not provide 2010 production guidance.
Production Status:
The operation continues to produce nickel and copper on a partial schedule due to an ongoing labor strike involving a portion of the workforce. The mine and mill are currently operating at about 40% of capacity with the operator reporting they are continuing to ramp up production.
1 The Voisey’s Bay royalty interest was acquired in February 2010. Revenue and production figures reflect partial operation of the mine and mill due to a labor strike that began on August 1, 2009.
Andacollo mine operations
Royal Gold owns an NSR royalty equal to 75% of all gold produced from the sulfide portion of the deposit until 910,000 payable ounces have been sold, and 50% of the future payable gold thereafter. The Andacollo operation is a large surface copper mine operated by a subsidiary of Teck Resources Limited (“Teck”). It is located in Chile’s Region IV, approximately 34 miles southeast of La Serena and 221 miles north of Santiago.
FY2010 Revenue: $3.8M
FY2010 Production: 1 4,145 oz. gold
Reserves (12/31/09): 1.631M oz. gold
Est. Royalty Production CY2010: 2 30,000 oz. gold
Production Status:
In July 2010, Teck reported that ramp up to full production continues with the expectation that design capacity will be reached in the fourth quarter of calendar 2010.
1 Royalty production commenced in the fourth quarter of calendar 2009.
2 The 2010 Teck mine production forecast has been adjusted to account for an estimated 61% concentrate recovery and a 90.6% smelter recovery.
Andacollo mine operations
Royal Gold holds a 3.25% NSR on gold and a 2.0% NSR on silver production from the Dolores mine which is operated by a subsidiary of Minefinders Corporation Ltd. (“Minefinders”). The surface gold and silver mine is located approximately 155 miles west of the city of Chihuahua.
FY2010 Revenue: $3.0M
| Reserves (12/31/09): | 73,463 oz. gold |
| 1.2M oz. silver |
| Reserves (12/31/08): | 2.444M oz. gold |
| 126.645M oz. silver |
| Est. Royalty Production CY2010: |
91,000-100,500 oz. gold |
| 2.3-2.6M oz. silver |
Production Status:
Minefinder’s calendar 2010 guidance reflects a step up in production from the first quarter to the third quarter, with steady state rates achieved by the end of the year.
Gwalia Deeps facilities
Royal Gold holds a 1.5% NSR royalty on the Gwalia Deeps mine which is operated by a subsidiary of St Barbara Limited. The Gwalia Deeps mine is an underground gold mining operation located 149 miles north of Kalgoorlie.
FY2010 Revenue: 1 $0.9M
FY2010 Production: 1 47,626 oz. gold
Reserves (June 2009): 1.980M oz. gold
Est. Royalty Production CY2010: 102,000 oz. gold
1 This royalty was acquired in February 2010.
Las Cruces facilities
Royal Gold holds a 1.5% NSR royalty on the Las Cruces mine which is operated by a subsidiary of Inmet Mining Corporation (“Inmet”). The mine is a surface copper operation located 12 miles northwest of Seville.
FY2010 Revenue: 1 $0.9M
FY2010 Production: 1 20.8M lbs. copper
Reserves (12/31/09): 2.304B lbs. copper
Est. Royalty Production CY2010: 161M lbs. copper
Production Status:
Having initiated operations in mid-2009, Inmet has reported that they expect to implement their ramp up plan to achieve full production by the end of 2010.
1 This royalty was acquired in February 2010.