Royal Gold, Inc. (NASDAQ:RGLD) Q4 2019 Earnings Conference Call - Final Transcript

Aug 08, 2019 • 12:00 pm ET

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Royal Gold, Inc. (NASDAQ:RGLD) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Tony A. Jensen

operate for a 21-year mine life. We have a stream on 80% of the payable silver from this project which may be increased to 100% at Cupric's election. Cupric has completed project financing, and construction is well underway. Mark will provide a further update on the project progress in his remarks.

As you can see, this is was solid, steady and successful year. But we also faced some headwinds at a couple of our principal properties. Water restrictions during the winter caused throughput reductions at Mount Milligan in the third and fourth fiscal quarters. And a blockade at Penasquito caused a temporary operating shutdown during much of the fourth quarter. Metal prices also caused some negative pressure on revenues, with a 3% lower gold price and a 20% lower copper price compared to 2018, although the silver price was about 7% higher year-over-year.

I'm pleased that each of these issues improved by fiscal year-end. Mount Milligan is achieving throughput and recovery targets. Penasquito is back in full production and community dialogue is ongoing. And gold has begun to display its value as macroeconomic insurance.

I'll now turn the call over to Mark to discuss some of the activity at Khoemacau as well as development at some of our key producing properties.

Executive
Mark E. Isto

Thanks, Tony. Starting on Slide 5, I'd like to briefly mention some of the recent developments at Khoemacau. Cupric announced last month that they closed the project financing with the addition of the final $85 million of equity, $70 million of which came from resource capital and $15 million from GNRI, the project sponsor. In addition to our investment and other sources of financing available, Cupric now has a total of $650 million available for project development, debt repayment and working capital, all from experienced finance providers to the mining industry.

Cupric has been actively advancing the project, as you can see in the photos. The top photo shows the President of Botswana at the groundbreaking ceremony on June 28. The next photo shows one of the three boxcut excavations for the mine portals and the bottom photo shows progress on the pipeline to the Haka wellfield, one of the water sources for the project. Cupric has reported that there are almost 700 workers on-site and about 7.8% of the project capital has been spent since beginning of calendar 2019.

Although the project advance has been tempered by a slightly longer close for the project financing than anticipated, the five-year underground mining contract was awarded to Barminco who is currently mobilizing to start work in December. We just completed a site visit last month and are pleased with the quality of the project team, the support being provided by Fluor and Cupric's overall progress on the project.

Moving to Slide 6, I'd like to discuss some of the recent developments at several of our key operating properties. As Tony mentioned, at Mount Milligan, Centerra has started to access newly permitted water sources in April and spring melt water allowed