Karli Anderson - VP, IR Tony Jensen - President and CEO Stefan Wenger - CFO and Treasurer Bill Heissenbuttel - VP, Corporate Development Bill Zisch - VP, Operations Bruce Kirchhoff - VP, General Counsel and Secretary.

Andrew Quail - Goldman Sachs Cosmos Chiu - CIBC Tanya Jakusconek - Scotiabank.

Good afternoon, and welcome to the Royal Gold Fiscal 2015 First Quarter Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded.

I'd now like to turn the conference over to Karli Anderson, Vice President, Investor Relations. Please go ahead..

Thank you, operator. Good morning, and welcome to our discussion of Royal Gold's fiscal first quarter 2015 results. This event is being webcast live and you'll be able to access a replay of this call on our Web site.

Participating on the call today are Tony Jensen, President and CEO; Stefan Wenger, CFO and Treasurer; Bill Heissenbuttel, Vice President, Corporate Development; Bill Zisch, Vice President, Operations; and Bruce Kirchhoff, Vice President, General Counsel and Secretary.

Tony will open with an overview of the quarter, followed by Bill Zisch with an operational review, and then Bill Heissenbuttel will provide a corporate development update. After management completes their openings remarks, we'll open the line for Q&A session.

This discussion falls under the Safe Harbor provision of the Private Securities Litigation Reform Act. A discussion of the company's current risks and uncertainties is included in the Safe Harbor statement in today's press release and is presented in greater detail in our filings with the SEC.

Today's presentation refers to indicated and inferred resources at Contango Ore's Tetlin exploration project in Alaska. We caution investors that these terms do not represent results, and discussion of them is not permitted in SEC filings.

In addition, inferred resources have a great amount of uncertainty as to their existence and their ability to be mined economically and legally. Please review our cautionary language on Slide 2 and 11. Now, I'll turn the call over to Tony..

Good morning and thank you for joining us today. We're using some slides to guide our discussion, and I'll begin on Slide 4. We had another solid performance from our portfolio of assets that translate into strong financials. In the first quarter, net income was up 23% from a year ago, despite a 3% decline in gold price. This was largely driven by Mt.

Milligan production, as we recorded the fourth straight quarter of higher revenue from that project. Adjusted EBITDA was $0.86 per share or 81% of revenue, and we paid out 13.7 million in dividends to our shareholders. Our Q1 revenue was 69 million, an increase of 22% compared to the prior year quarter. Strong performance at Mt.

Milligan, Peñasquito and Cortez was partially offset by lower production at Andacollo, which was expected. And at Voisey's Bay, which was impacted by lower nickel grades and planned maintenance carried out in July. Bill Zisch will discuss our operating results momentarily.

On the business development front, we added the Tetlin exploration project in Tok, Alaska to our portfolio in the form of a unique structure, which included two royalties, an entry into our master agreement to advance exploration through a joint venture.

The royalty purchases were completed at the end of September, and we expect the joint venture to close after our counterparty's shareholder approval. In last week, we entered into a gold stream transaction with Euromax Resources for 25% of the gold at the Illovitza gold-copper project in Macedonia.

This is another unique structure when we're staging our investment with the risk of an early stage with very perspective project. These two transactions give us options on attractive assets at lower front cost, leaving our balance sheet robust to pursue additional opportunities for growth.

Bill Heissenbuttel will tell you more about these two deals towards the end of our call. Turning to Slide 5; you'll see that production from Mt. Milligan continues to increase steadily. Gold production to us are based on a combination of provisional and final payments for the first 12 concentrate shipments, and only on final settlements thereafter.

In the beginning of October, Mt. Milligan completed its 10th shipment, so we'll soon be transitioning entirely to final settlements.

As we make that transition, I thought it would be helpful to graph on Slide 5 the production reported by Thompson Creek, which is the blue line, versus our Royal Gold share of production, which is the red line, and the amount of that gold that we've actually received to-date, and that's the green line.

There are about 39,000 ounces of gold between the red and green lines at September 30, an increase of about 18,000 ounces from the prior quarter. The difference between those two lines represents work in progress inventory, gold in transit, and gold pending settlement.

As with any operation, gold in the system will continue to build as production increases, although we expect our sales to increase steadily as production increases and as we transition into deliveries based only on final settlements. We sold 15,300 ounces of gold from Mt.

Milligan in the first quarter, and retained 6,100 ounces of inventory on the balance sheet over quarter end. Operationally, we continue to see progress towards increased production. Calendar year to-date production has been 137,000 ounces of gold, 20 Mt. Milligan well on their way to achieving their annual guidance of 185,000 to 195,000 ounces.

Thompson Creek continues to target 80% of mill throughput design capacity by year end, and they're making good progress towards that goal averaging mill throughput of about 40,500 tons per day in the September quarter. On Slide 6, you'll see some new construction photos of Rubicon Minerals Phoenix project in Red Lake, Ontario.

In early September, Rubicon reported that project construction was over half complete, with approximately C$130 million required to complete the bill. Specifically, they noted that the mill construction was on schedule, and that 24% of the lateral and vertical development was complete, which was slightly below plan.

However, they continue to project an on-budget, an on-schedule start-up of production in mid 2015. We're encouraged by the results of the 38,000 meter infill drilling program, which is slightly over half complete.

Rubicon noted that the drilling has confirmed continuity and grade in the F2 Deposit, as you know that was critically important for us, and they also encountered potential economic intercepts outside the currently planned mine design.

Exploration outside of Phoenix was a big part of our investment thesis, and we're obviously pleased to see these initial results. Now, I'll turn the call over to Bill Zisch..

Thank you, Tony. On Slide 7, you'll see a waterfall chart that summarizes notable changes in production and revenues in the September quarter versus the June quarter. Today, we're reporting higher production in revenue from Mt. Milligan, Cortez, Andacollo, and Robinson, offset by lower production in revenue at Peñasquito, Holt, and Mulatos.

At Voisey's Bay, we saw lower nickel production as a result of lower grades during the quarter and no downtime in July. Currently, Vale is commissioning its new Long Harbour processing plant, and they intend to begin introducing nickel concentrates from Voisey's Bay in the coming quarters.

As they stated last quarter, Vale will transition the processing of Voisey's Bay nickel concentrates from Sudbury and Thompson smelters to Long Harbour. We've discussed with Vale of the royalty Ruby calculated going forward.

If we cannot reach agreement on the proper calculation, we'll pursue all legal revenues to enforce the terms of our royalty through this litigation. Turning to Slide 8; we provided a comparison of the operator's full year guidance versus actual production to-date. You'll see that based on production through September 30th, Andacollo, Mt.

Milligan, and Peñasquito appear well on their way to achieving their full year guidance. At Cortez, we understand that year-to-date reported production in the areas of our interest have been slower than expected due to a delay in permitting the Area 30 leach pad.

We've been told that Barrick received these permissions in September, and expects higher production in December. With that said, they'll still have a long way to go to meet their full year volume guidance on the areas of our interests, and we anticipate that some of that production maybe realized in the subsequent quarter.

And Mulatos almost reported sharply lower recoveries in the quarter as they experienced a severe rainy season, culminating with record rainfall in September. This resulted in dilution of the heat wave solutions and delayed the recovery of a significant portion of those ounces.

Alamos reported that they expect to achieve the lower end of their full year production guidance of a 150,000 ounces in calendar 2014, as they expect to realize the benefit of those stacked ounces and as they begin ramping up higher grade mill production from San Carlos.

At Holt, tonnage milled and the grade process were both slightly down during the current quarter. Moving on to Slide 9; we've updated a chart showing the cost, the cash operating cost of our properties for the first half of 2014. The width of each bench corresponds to the amount of volume from that operating property.

You'll see that our operators who put an average gross margins of 57%, meaning that the majority of our properties continue to reflect healthy unit economics. I'll now turn the call over to Bill Heissenbuttel to discuss corporate development..

Thanks, Bill. On to Slide 10; last week we announced a $175 million gold stream transaction with Euromax Resources, which will be used to finance completion of the definitive feasibility study for the Ilovitza project in Macedonia, and also provide a strong basis for the ultimate financing of project construction.

The transaction involves two separate $7.5 million investments to be made over the course of the next year and a $160 million option for Royal Gold to participate in the project development funding.

Both the second payment and the construction financing are subject to conditions precedent that include among other things, our satisfaction with the results of the feasibility study work and the timeliness and likelihood of a production decision. The project has a number of attributes to which we are attracted.

The lower grade ore body benefits from a low strip ratio, straightforward metallurgy, attractive cost inputs, European infrastructure and proximity to a potential smelter off taker.

We found Macedonia to be very supportive of foreign investment, and well aware of the legal and regulatory development necessary to attract that investment and support its candidacy for inclusion in the EU.

Finally, as is the case with all projects, we are pleased to support the management team, a group that achieved good success at European gold fields and comes with obvious experience in the Balkan region. Slide 11 shows an overview of the Tetlin exploration property in Alaska.

In a move that is reminiscent of the original focus of Royal Gold, we also announced an agreement with Contango Ore that provides us with an incremental investment option and an attractive exploration opportunity.

The Tetlin project has a number of unique attributes, including near surface mineralization at an attractive grade, numerous other untested targets on the property, good access to road and port infrastructure in Alaska and a supportive local community.

We'll make an initial $5 million investment and have the option to invest an additional $25 million, for which we can earn a progressively higher ownership interest in the project of up to 40%.

While we will direct the joint venture activities, we will use the current drilling contractor for much of this work, and this will allow us to remain focused on our core business. Our joint venture agreement is structured to facilitate and exit when it comes time for project development, construction, and operation to occur.

The transaction remains subject to Contango Ore shareholder approval, although we have the support of 39% of their shareholders at this time.

In addition to the joint venture and in keeping with our core focus, we purchased two royalties on the project for $6 million, and we'd obviously retain those interests even if our joint venture ownership changes.

Turning to slide 12, you will see that in light of the two recent deals we have completed, we still have approximately $900 million in uncommitted liquidity to invest. We had nearly $1.2 billion of liquidity as of September 30th, a figure which includes our working capital and undrawn credit line.

If we don't deduct approximately $64 million in post quarter end funding events and commitments at Phoenix Goldrush and the initial investment to Tetlin and Ilovitza, we have $1.1 billion in available liquidity.

Then deducting another $200 million in conditional commitments to Tulsequah Chief, Ilovitza and Tetlin, we end with a pro forma liquidity balance of about $900 million. However, this figure does not consider the fact that these investments will be made over time and might be financed by our ongoing cash flow from operations.

We believe we have one of the strongest uncommitted balance sheets in the royalty streaming business, and it positions us favorable to pursue new opportunities. With that, I'll turn the call back over to Tony..

Thank you, Bill. We have been very selective with regard to exploration properties. We're attracted to the Tetlin project due to its grade, location, and easy access. I don't know if you saw on that slide because it was a bit small, but the property really sits at the intersection of Highway 1 and Highway 2 in Alaska right next to the town of Tok.

It's very hard to find better infrastructure in that state or in any state. The other attributes that attracted us to the project include the rapid exploration success experienced to-date, the wealth of exploration target, and the exploration infrastructure that builds Tulsequah is already in place.

Our investment is properly staged, and it will be based on incremental success. We're honored in welcoming the opportunity to work with the Tetlin community and Contango Ore on this exciting project. Likewise, our investment in Illovitza is properly staged and will be based on success. In our estimate, I think this project is similar to Mt.

Milligan in some respect, like a very low strip ratio and the tenure of copper and gold. But the Illovitza reserve is about half the size at this point, just to put that into perspective. In the early stage of Ilovitza, the recoveries appear higher so the metal values per ton are expected to be a bit greater.

In year two, we're pleased to be a strategic partner with Euromax on this project. As you can see, we remain opportunistic and are continually looking for ways to increase margin in our business and find new and favorable entry points.

We will pursue several strategies that allow us to grow our business in an accretive and efficient manner, seeking to avoid undue risk for complication. We'll always make an investment that allows us to exit to, or promotes our core royalty and streaming business.

Let me just conclude on a personal note, with mixed emotions we'll soon see Bill Zisch pursue other opportunities. Well, his presence and contribution at Royal Gold will be missed. It is always great to see our people do well. And we are pleased to see him continue doing this his career. Bill will be taking on the reigns at Midway Gold as CEO.

And Bill, we wish you well. We also can be ensured that we'll be coming to talk to you about the merits of royalty financing very soon. Operator, with that, we'll conclude our prepared remarks, and we're happy to speak to any questions, if there are some..

(Operator Instructions) The first question comes from Andrew Quail of Goldman Sachs. Please go ahead..

Yes. Good morning, Tony and team, or it's afternoon on the East Coast. Just wanted to talk about Mt. Milligan, when we were there we talked about initiatives to try and get the throughput up to the nameplate capacity.

Can you guys just go through any sort of developments there?.

Bill, do you want to take that? Bill Zisch, that is..

Yes, Andrew, thanks for the question. They have continued to work on some of the items that were talked about back when we were on site which includes the -- they have run some tests on the pre-crusher. They're assessing those results to determine whether it does make sense, and if it make sense, how or what size perhaps.

And I know they're continuing to work on their blasting and fragmentation as well as de-bottlenecking, and optimizing their crushing circuits..

Just to add to that, Andrew, I think what Thompson Creek is advising to market is that they intend to know whether they desire to put in a secondary crusher by the end of this year..

Yes, exactly. Okay..

Be patient just a bit more, we'll get some more color on that shortly..

And obviously you guys are well-placed there, with not having to contribute any capital.

If there was a shortfall, if something needed to be done there and you guys could add some financing to that project if it was needed, would you be evaluating that to take some more ounces out of there?.

Well, Andrew a couple of things come to mind there. I appreciate the question. It gives me a chance to talk about the cash cost profile and the projects. It's coming in -- I think they're guiding somewhere between $1 and $1.50 per pound of copper for this year. Of course the project is not yet up to full production.

That includes after our take on the project. We're very, very pleased to see that it has a very robust cash cost profile. And that's part of the reason why I contrast it to Ilovitza. We're very familiar with that, and it gives some confidence in entering into a similar type deposit. With regard to Mt.

Milligan alone, I think the number that Thompson Creek ended at the June quarter was about $260 million on their balance sheet for cash. I think they're in a reasonably good position to do things themselves. And obviously, we want to continue to protect our key asset there. But I really don't anticipate the need to do something there.

And of course if that opportunity came up, we'd have to look and see if adding additional concentration was appropriate, but I'm not answering your question directly, but I'm hopefully giving you enough of a feel as to what our thinking process is..

No, that's fair, Tony. And my final question's more of a high level one for you, mate. I mean, look, obviously the sell-off and it's pretty brutal today, but what we've seen recently with the stronger US dollar, you guys always have some very large cap partners, so it doesn't -- it's not as relevant.

For other guys in the space, and these mines look low on the cost curve -- how much of your portfolio can you tell us you sort of would be at risk if we did see lower gold prices, under $1200? You know, that -- I suppose it would be of the other, it would be of the other segment?.

Yes, Andrew. Let me turn you back, I don't know who has control of the slides, but if you look back at Slide 9, you can get a really good feel that we've got a very high quality, high margin business. This is the -- as Bill explained, this is the margin, the cash cost margin for the individual operators.

So I really don't think we have a tremendous amount of properties that would be significantly in stress, but for those of you that do have access to looking at Slide 9, you can see that those properties, way out on the right hand side would be the ones that we'd be most concerned about and they just don't have a significant amount of volume contribution to us..

So, that reads at -- okay, so the average is 57, so say under 10%..

Yes. There is very few properties that are under a 40% margin on that slide..

Okay..

With me?.

Yes. No, I'm just looking at the slide now. Okay, that's all I had guys. Thanks very much..

Thank you..

The next question comes from the Cosmos Chiu of CIBC. Please go ahead..

Good morning, Cosmos..

Thanks. Hi, hi Tony and team. Thanks for taking the call, and congrats on a good quarter. I've got a few questions, here.

Maybe first off on Voisey's Bay, I'm not sure how much more you can tell us in terms of the negotiations that are currently going on, but if I remember correctly back in 2009, now this is before Royal Gold bought International Royalty Corp., there seemed to have been a situation back then as well.

Is the nature of what's happening today similar to what happened back then in 2009? I seem to recall that back in 2009 it was a matter of deduction of income taxes, and also transfer pricing.

How would you compare what's happening today to what happened back in 2009?.

Cosmos, you have a very good memory, and let me just be clear that there is ongoing litigation with Vale right now and we did, you're correct, we inherited that when we purchased international royalties. But we've looked at that and we felt that it had -- we continue to pursue that litigation. It has two claims on it today.

One is the transfer pricing issue and the other is deduction of taxes that we don't think is appropriate. So that's in front of the -- that's in the process right now. The item that we're talking about with regard to Long Harbour is something new.

It's something that we're concerned about because as you know, the concentrate heretofore has been processed over in Sudbury. And now they're going to be processing in province at Long Harbour. And there is always a conversation that needs to be had about what appropriate deductions are from a net smelter return royalty.

And so, that's the nature of what Bill Zisch was eluding to in his prepared remarks. We have been in conversation with Vale for some time on this subject, and we have not been able to come to agreement, and what we think is a fair treatment. And we'll continue to pursue that, but at the same time we're going to pursue our legal remedies as well.

And that's about all I can say at this point. That's the nature of what we're at..

Okay great, thanks. And then, maybe an easier question here -- in terms of taxes, maybe a question for Stefan. We saw that the taxes were 17.3%, and you mention in the MDNA that it was, resulted from a one-time Chilean tax benefit.

So, should we expect tax rates to increase next quarter, and on an ongoing basis as well, back to "a more normal level," Stefan?.

Cosmos, thanks for the question. Without that one-time Chilean item, our tax rate would have been 28% for the quarter. I think we had initially got it for the year somewhere between 28% and 32%. So we are coming in at the lower end of our guidance if we normalize that.

So as I look at the rest of the year, we go at higher tax rates and I would expect our full year now to come in somewhere between 26% and 30%..

Okay great, and then maybe one more question, here. In terms of Canadian Malartic, I saw that you know, not a huge decrease but it came down a bit quarter-over-quarter in terms of revenue.

Is that just a function of lower production at Canadian Malartic, or is that production moving away from your royalty grounds?.

Cosmos, Bill Zisch here; thanks for the question. With regard to Malartic, actually that decrease is somewhat what they had anticipated in their plan. So, versus the preceding quarter were down kind of as expected as planned as they move in some lower grade material.

They also did have an outage during the quarter, for about five-day maintenance outage again, I believe that was planned. Their throughput was up, their fragmentation was up, but it's lower grade basically that impacted the quarter..

Okay, because I seem to recall that Royal Gold doesn't -- Royal Gold's royalty doesn't encompass the entire property, am I correct?.

Correct..

Yes, but that's not the impact, that wasn't the reason why it decreased..

Right..

Great, that's all I have. And, congrats Bill, and I'm sure we'll talk in the future as well..

Thanks, Cosmos..

Thanks, Cosmos..

(Operator Instructions) The next question is from Tanya Jakusconek of Scotiabank. Please go ahead..

Great. Good morning, everybody..

Good morning, Tanya..

Just again, congratulations Bill on your new role..

Thanks..

You're welcome. I have a couple of questions. The first one has got to do with Andacollo, and we're just trying to get a better handle on what the gold production's going to look like from Anacollo over the next few years. And we understand that Teck's increased the throughput.

We're just wondering, next year, I think production is supposed to be higher. And then how long do we stay at this higher level before grades start to come off? And I know when you first acquired it, I think in 2009 we had talked about this 50,000 ounce level, and then it sort of falling off in the next few years. So, that's my first question..

Yes. Tanya, you got a very good memory. Andacollo was front-end loaded with regard to grade on gold. And we're really through that higher grade material. We had last year significantly higher production as you all know than we did this year. And we expect this to be a little bit lower as planned, as they mine through their current stage.

We're now very close and maybe a little bit below the average reserve grade for the project. Next year we'd expect that to increase slightly, but not significantly. I think the best guidance that we could give you is that reserve grade maybe a little bit higher than reserve grade what normal miners would try to do.

But I think that's more applicable going forward rather than any large return back to where it were a year ago..

Okay, all right. And then -- thank you for that -- just on Macedonia.

Sorry, I'm not really up to speed with the mining laws there, and the code and the permitting, so maybe someone can just review that with us? What other gold operations are there; and just some of the processes that we should look forward to?.

Yes. This is Bill, I'll handle that one. There are a couple of existing operations there. They're a bit older in the country. You certainly would not classify the country as having a long mining culture.

They do fully understand, they actually have a very easy permitting process, and in fact Euromax currently has a permit that would allow them to proceed. But Euromax wants to take a step back and do work in accordance with all international standard. It's a country that is very, very welcoming, a foreign investment very supportive of this project.

So we're very pleased with what we've got..

So, is there a mining law in the country, like are there royalties? Just to understand what, exactly?.

Yes. There is a permitting process. There is a law with regard to the ownership of concessions. So it's -- at this point it's well developed to allow the project to proceed..

All right, okay. Thank you..

Tanya, to the extent if you have more detailed questions, Karli would be happy, Karli Anderson would be happy to entertain those, so make sure we answer your questions appropriately..

Yes, I just have never had a project permitted there before, and so I'm just trying to see and understand some of the challenges that -- and some of the hurdles that we'd have to go through on permitting. You know, each country has its own issues..

They do. Here we were very, very impressed with the –- as Bill said, the willingness for the government to attract foreign investment, and I think the permitting issues here are very much manageable.

And I just want to make a point and emphasize that we'd stress that all of this development will be done to international standards and so we'll continue to make that point with Euromax, and I know that they're thinking the same way..

Okay, thank you..

Thanks, Tanya..

That is all the time we have. This concludes our question-and-answer session. I'd like to turn the conference back over to Tony Jensen for any closing remarks..

Thank you, operator, and thank you all for joining us today. We appreciate the opportunity to update you and your interest and continued support of Royal Gold. And we look forward to talking with you again on the next quarterly call. Bye for now..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..