Karli Anderson - VP, IR Tony Jensen - President and CEO William Heissenbuttel - VP of Corporate Development and Operations Stefan Wenger - CFO and Treasurer.

Andrew Quail - Goldman Sachs John Tumazos - John Tumazos Very Independent Research, LLC Cosmos Chiu - CIBC.

Good afternoon and welcome to Royal Gold Fiscal 2015 Fourth 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 would now like to turn the conference over to Karli Anderson Vice President of Investor Relations. Please go ahead..

Thanks operator. Good morning and welcome to our discussion of Royal Gold’s fiscal fourth quarter 2015 results. This event is being webcast live and you’ll be able to access a replay of this call on our website.

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

Tony will open with an overview of the quarter, followed by Bill Heissenbuttel with the corporate development and an operational update and then Stefan Wenger will provide a financial update. After management completes their openings remarks, we’ll open the line for a 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. Now, I will turn the call over to Tony..

Good morning and thank you for taking the time to join us. We’re pleased to update you this morning our activities over the last few months which have been very busy at Royal Gold.

And just last night we issued three press releases associated with our financial and operations results, a significant new piece of business at the Pueblo Viejo mine and the addition of James Sikorsky [ph] as the new Director of Royal Gold. I will begin to discuss all of those issues on Slide 4.

We had another solid quarter and a record fiscal year of operational and financial results. Our record operating cash flow $192 million in fiscal 2015 cashed five years a strong performance.

As you can see this was accomplished during the deteriorating gold price due to the volume expansion we experienced on the back of strong performance from Mount Milligan and Peñasquito. On slide five, we’re showing you our growth and volume to-date.

Fiscal 2015 net gold equivalent ounces or GEOs were approximately 200,000 ounces is a new record for Royal Gold. It represents an 8% compounded annual growth rate since fiscal 2010. Bill Heissenbuttel will discuss operating performance in more detail in a moment.

Turning to new business on slide six, in the last few months we’ve added four new streams to our portfolio which were expected to have a meaningful impact on our future production profile. These include streams at the Pueblo Viejo, Rainy River and Andacollo as well as the stream over all the Golden Star Resources properties and Ashanti in Ghana.

You’ve likely heard me say on several occasions that we have never been busier and now we can see why. The strategy surrounding these acquisitions was put in place years ago. In 2012 we positioned the company financially to take advantage of opportunities.

When the downturn in the gold price occurred in late 2012 and early 2013 we entered into that new pricing environment with financial strength. Weaker opportunities came to us early in the lower gold price environment which required us to be patient.

At this price environment a persistent higher quality and cash flow in our newer cash flowing opportunities started to appear. This coupled with what we believe to be the right entry point in the commodity cycle as resulted in our decision to reinvest our business.

On slide seven, I’d like to highlight the strategic rationale for the new investments we’ve made over the last few weeks. The first is Pueblo Viejo.

With more than 1 million ounces of gold produced, production annually first quartile cost and 18 years of initial mine life Pueblo Viejo is truly a world class gold mine and a rare opportunity to Royal Gold.

I just mentioned initial mine life because the project has substantial and high quality resource and - 6.3 million ounces that we will likely find their way into production at some point in the future.

The Rainy River project fits well into our high quality portfolio and they follow our criteria for new investments with nearly 4 million announces of gold reserves, continued exploration upside and projected cash cost below $600 per ounce.

We are particularly pleased that another piece of business in Canada and to partner with New Gold, a company that is well known for its development track record and operational expertise. And at the Andacollo we are eager to expand our business in Chile and in the mine where Royal Gold enjoyed an excellent relationship for several years.

Our new stream gives us a larger interest in gold from Andacollo for a longer period of time and increases are optionality to new discoveries soon expanded area of interest.

Finally, we close our stream transaction with golden start in late July to fund development of the Wassa and Prestea underground projects which are expected to transform Golden Star and to lower cost producer. While development is underway, our screen cover has existing production from surface operations.

Not only this investment provide a media cash flow to Royal Gold, the Golden Star has one of the largest land packages in the perspective Ashanti belt often what we believe the significant exploration of...

Turning to slide eight, we thought it be interesting to consider the points of which Royal Gold has made investments over the last five years and any investments there is a time to be active and reinvesting and a time to be patience. As the chart shows, we have clearly considered these investment seasons for our major acquisitions.

Turning to slide nine, you last I’ve heard say that one of our top priority is to further diversify our revenue stream now that - is contributing meaningfully. Three of the four new pieces of business will result in immediate cash flow it will further diversify robust portfolio we’re recording in assets.

In chart, here illustrates how we expect these new investments will impact our production profile. Remembering from our few slides there, our total net GEO production in fiscal 2015 was above 200,000 ounces which is the bottom on the left.

The additions of these streams have the potential to deliver new volume of over 125,000 ounces where they have reached their full annual run rates.

I’d also like to point out, that within the existing portfolio, Mount Milligan still has 15% to 20% of additional capacity to add before reaching design throughput the group of Rubicon minerals has just begun production at Phoenix we’re just now starting to see some of those ounces.

And Peñasquito metallurgical enhancement project offers additional sources of growth as well. Now I’ll turn the call over to Bill..

Thank you Tony. On slide 10, I’d like to start with Pueblo Viejo. The Pueblo Viejo mine is expected to be another cornerstone asset for Royal Gold and represents the attractive combination of size and cost competitiveness.

On a 100% basis Pueblo Viejo's gold and silver reserves a 15.5 million ounces and 97.2 million ounces respectively place the mine amongst the largest operating gold assets in the industry and by the measurement of production and cost of production it is the only gold mine projected near-term production of over 1 million ounces as it all in sustaining cost of less than $700 per ounce.

The resources at the mine were very high quality and there conversion is limited more by infrastructure constraints in drill spacing.

Our due diligence team which consisted of experts in a variety of fields it’s been considerable time what the processing facilities and we’re impressed by the progress made by the side team in terms of optimizing a complex operation during the mines relatively short operating history.

Attributable production for 2015 is estimated to be between 625,000 to 675,000 ounces at now in sustaining cost to 540 to 590 hours per ounce and our stream will gold ounce production from July 1.

On slide 11, in terms of the stream the investment of $610 million which is still roughly by value two thirds one third between gold and silver when Royal Gold purchased 7.5% of attributable gold production and 75% of attributable silver production and then ongoing price for delivered ounce of 30% to 60% of the stock price at the time of delivery.

On delivery of just less than 1 million ounces of gold and 50 million ounces of silver the stream percentages will decrease by 50%. The transition from 30% to 60% and the cash price is intended to occur in time when the order rates at the mine are lower and cash flow might be less available for deliveries.

The structure also finance more of the return of our investment and Barrick noted this morning we're also paying a higher cash price at the time when the exploration upside becomes more important to the operator. So this structure has a mutually beneficial aspect to-.

Turning to Rainy River, this is a project we've followed closely for a number of years and we've consistently ranked it as one of the more attractive investment opportunities. Project meets our investment criteria for development projects in terms of the quality of the owner upside cross competitiveness and jurisdiction section.

With 3.8 million ounces of gold in reserves as 21 ton per day operation is expected to produce 325,000 ounces of gold per year for the first nine years with stock filed material providing a 14 year life in total based on current project parameters.

Cumulative capital expending on the project for the end of June was $119 million and new- has $760 million remaining to be spent to complete the project. In mid-2017 startup is anticipated. During additional 2.9 million ounces of gold in resources that we have not considered in our valuation approach.

The online sustaining costs for the project are currently estimated to be $658 announced. So while Rainy River might not have production scale it could be similarly fast competitive project. The stream applies to 6.5% of gold production and 60% of silver production although the silver is the relatively small value driver in the transaction.

In addition to the $175 million Royal Gold has agreed to invest of which $100 million has been paid and $75 million will be paid upon completion of 60% of the project spend. We will also pay 25% of the spot price for gold and silver the time of delivery in the refine metal.

And as it’s typical for our transactions the stream percentages will reduce by 50% after a current reserves have been processed. Turning to slide 13, at Andacollo this is an operation of we've known for over five years and then with operator with which we maintain an excellent relationship.

To 1.6 million ounce preferable support production for over 20 years, in the transaction we were able to extend the area to which the stream applies to 1.5 kilometer area around the pic area and the 900,000 ounce threshold the streams that down now covers all of the current reserve.

In annualizing the transaction we focused on the cost competitiveness of the operation. Gold represents the potential buy product credit for the copper mine at between 0.30% per pound and 0.35% per pound. But the new stream transaction only gets 00.3% to 00.4% per pound in incremental cash cost when compared to the mine burden by the previous royalty.

On slide 14, we're very pleased to be involved in the financing our golden starts asset to- our underground projects which are expected to facilitate the transformation of Golden Star from a larger mining company to a smaller producer of higher quality ounces.

Reserves of 1.9 million ounces have concurrently defined but that excludes the resource of 600,000 ounces of Prestea underground. Our project that is expected to see a completed feasibility study during this quarter. Total M&I resources at both projects were over 6 million ounces and we like the upside resource potential at both projects.

With the benefit of existing infrastructure the cost to complete these projects is relatively modest to returns of the company high and the initial production from these new underground sources is expected to occur at various points in 2016.

The first class for coloring affordable recently Wassa asset and permits for the Prestea --project we're also recently received. We have invested $40 million of the $130 million stream and funded the US the $20 million term loan as well. The remainder of this stream will be invested quarterly over a little more than a year.

Initial stream deliveries of 8.5% of gold are effective and in addition to the production from this quarter we expect some catch up deliveries of gold related to the second quarter based on our grid stream effective day. In addition to our advanced payment we will initially pay 20% of spot for each delivered ounce.

Turning to slide 15, with respect to the operations, we've provided a quarterly waterfall comparison of our key producing properties to the immediately prior quarter and the same quarterly period last year.

The key item to note on the prior quarter comparison is the slight reduction of Mount Milligan which is really do more to the record sales of prior quarter that resulted from settlement of higher gold grade concentrate shipment in that period. And also Cortez, where we expect to see quarter-over-quarter reductions on royalty ounces in calendar 2015.

On the same basis, we selling the Cortez ounces increased for the first time in the number of quarters and Peñasquito benefited from higher than expected ore grade which contributed too much higher production in the most recent quarter.

On a comparable quarterly period relative to fiscal 2014, the royalties Voge Bay reduction is attributable in part to adoption of our cash base to post revenue while the increase at Mount Milligan across that operations continue to ramp up.

On slide 16, in terms of comparing 6 months result for the current year forecast provided to us by certain operators. We point you the Cortez figure where we have already seen over the 80% of the royalty production forecast for this year as if the end of June and we should see lower production to our interest in the latter half of this year.

In addition although Peñasquito had a very strong performance in the last quarter and it now prompted the company to alter its 2015 guidance range. Turning to slide 17, with respect to a few key operating assets Mount Milligan made progress in its mill throughput and gold recoveries during the quarter.

After the slow April, the mine achieved May and June throughput of about 50,000 tons per day or 83% of capacity. In gold recoveries, we're almost 73% for the quarter. Peñasquito produced record gold production due to a 68% increase in ore grades compared to the same period last year.

And this included an 18.5% positive model reconciliation in one of the mining phases. Goldcorp's also announced the completed the pilot plant construction and commenced pilot plant testing for project. At Phoenix, Rubicon has made its first gold pore and its first delivery to Royal Gold.

Mill commissioning is continuing with the processing of low grade mineralized material and the company is focused on mining its first two trial stones. Now I'll turn the call over to Stefan..

Thanks Bill. I'll start on slide 18. Today's I'll briefly summarize the financial results we report this morning. And then I'll spend a bit of time discussing our financial liquidity. For the fourth quarter we reported earnings of $74 million an increase of 5% despite a 7% decline in gold price compared to the fourth quarter of 2014.

The revenue increase was driven by 13% increase in GEOs 61,700 and 54,500 in the prior year. Our operating cash flow increased 37% to $44 million and net income per share for the fourth quarter were $0.23 compared to the $0.26 in the fourth quarter of last year.

This quarter, we've recorded a $4.1 million or $0.06 per share in additional deferred income tax expense. Due to a tax rate change from 10% to 12% in Alberta Canada, we're certain of our Canadian subsidiaries or domicile this resulted in an effective tax rate of 30% for the quarter.

Without this change in Alberta, our effective tax rate for the fourth quarter would have been about 11% and our EPS would have been $0.29 per share. For the full fiscal year, we reported revenue of $278 million which was driven by an increase in GEOs to 227,000 compared with the 183,000 in fiscal 2014.

The resulting 17% increase in revenue was notable in an environment where the price of the gold decreased by 6% year-over-year. We reported strong operating cash flow of $192 million and increase of 31% over fiscal 2014. Our net income for the year was $52 million or $0.80 per share.

Net income for the year was impacted by a Walgreen impairment charges that we took in the second quarter which impacted our earnings by $31 million or about $0.37 per share. We paid out $56 million in dividends during the fiscal 2015, which represented a payout ratio of 29% of operating cash flow.

This dividend represents the 14th year of increasing dividends paid to our shareholders. You'll see on slide 19 that our liquidity position was nearly $1.4 billion on June 30. While we've been very active over the last several weeks. We are still favorably position.

Meeting out our commitments for the next 12 months leaves us with the about $350 million in remaining liquidity. That does not include the operating cash flow that we expect to generate over the next 12 months.

I'll point out that we generate just under $200 million in operating cash flow in fiscal 2015 and that is before the benefited any of the new streams we've added recently along with the continued ramp up of Mount Milligan that we expect during fiscal 2015. And with that I'll turn the call back over to Tony..

Than you Stefan. Now to wrap up on slide 20. Just as we positioned the company in 2012 with financial strength ahead of the decline in gold price. We are now position the company for more favorable times in the gold business with these recent transactions.

When considering new opportunities we will always preserve price and reserve optionality just as we have done in each of our recent transactions. Price optionality comes when making investments at the right entry point and we think that time is now. With regard to reserve optionality it has been our experience that good mines get better.

And having a foothold in the world-class asset like Pueblo Viejo early in its mine life as exactly where we want to be. There is certainly proud at the calling of our portfolio and on the personal note, I am equally pleased as we surrounded by high caliber and talented board and staff.

As you can imagine there haven't been any days off in the last several months. I would like to publicly thank them for their true dedication to the company. In closing and speaking of quality, I'm delighted to announce James Sikorsky [ph] who will be joining our board at our next scheduled meeting.

Jamie needs little introduction in the gold sector having served and as the prior CEO at Barrick. Topping off a very successful career in the business. We are looking forward to his contributions and as we continue to pursue growth, quality and opportunities With that operator we will be happy to take any questions..

We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Andrew Quail from Goldman Sachs. Please go ahead..

Yeah. Afternoon, Tony and team or morning wherever you just a high level question.

But has a few parts to it and I think it's Stefan you can jump in, as far as about cap reallocation you guys have done an excellent job I think from all perspective over the last few months in this quarter and this is Tom you want to be as far as the allocating capital, especially given some of the company’s financial positions.

You outlined I think slide 19 you've got 350 million or around that the total liquidity with that free cash flow. You actually go into net debt going forward.

What is your level that you guys are comfortable with net debt? If there was another nail at that time would that issue equity at this price and what is your cost to debt one and try to finish off but another questions.

But what was the minimum amount you want of cash you want to hold on your balance sheet?.

Thanks for the question, multiple questions there. Let me just start this is Tony. We are not underestimating equity of this at this kind of market environment so we’re quite pleased to have available reasonable lines of credit and I believe we’re just as shape below 2% on our credit facility so, we’re quite happy with that.

With regard to how much leverage we might on the balance sheet I think if we certainly want to stay below 3X as far as the coverage ratio I think this puts us Stefan where just about around little under two or right at too.

Yeah. On a pro forma basis will be about net two times leveled assuming we draw about $300 million on the credit facility to fund the Barrick acquisition..

Andrew there was another piece to your question that you have that I was reserving for Stef and I forgot in last bit of it..

How much cash do you have?.

We’ve typically said that we’d like to keep a minimum amount of cash in the company of about $100 million Andrew and that’s not a hard and fast number as you can imagine, we don’t have a lot of cost in this company, we have our staff and we have office here.

So, we were lot different than an operating company and that we can operate with the pretty lean cash balance. But we are still in the business of looking at new deals as well so we’d keep the reasonable amount of cash on the books..

Okay. I mean I think always do you guys have done to may will you quite even as far as the other one, the one last one I want to talk about is Mount Milligan and it looks like it’s going well not so much little bit if you guys this is why you’d not just the goal process or if it more of the commodity sell broadly - have did.

Can you just comment and you’ve been asked to put in more money there and also if not do you sort of are you comfortable that if there was sort of adverse as far as financial conditions put towards these cost legally that you guys would actually you strike right back in Milligan, is there precedent to it in streaming?.

Andrew again last question and then let me pull a part just a bit. First of all we are very pleased with our position in Mount Milligan and it is performing wonderfully and you give me the opportunity to say that we almost have $100 million back over $781 million investment and we’ve just been there a few years ago years.

So it’s providing us with a fantastic amount of return at the present time.

And that’s really indicative of the asset itself, we very much appreciate partnering with Thomson Creek been a fabulous partner of - we do recognize that they have issues of debt that they’re addressing and I think that’s probably if you talk to Thomson Creek they say it’s there top priority or one of them and you have to speak directly to them to understand exactly how they plan to meet their obligations there.

Like for us, we look to the asset and then when we look at the asset it’s very lower, certainly lower half of the worldwide production in copper and make it slow of buck of pound on equivalent basis and that’s after our gold is talking out of it so it’s a very, very strong producer and any kind of liquidation if anything like that, we’d expect the asset to continue to produce as only make sense because of just making money.

So, we feel quite good from that standpoint and finally, we do have different structures for different pieces of business and there we have a secured position should we need up. But really our interest is maintaining the stream through any kind of an issue and that’s what we would focus..

Would you put in more money - if they had to the second question--?.

I am happy to say we haven't announced and the project still has capacity, we like the project, you guys say it has capacity because it’s still a very low cash cost producer but as I’ve said many times with this very same question as we will be opportunistic and we can’t speculate on some kind of situation that might come up in the future but will be very much well into listen to any ideas that might come our way..

Okay. Thanks very much and congratulations on a good quarter..

Thank you Andrew..

[Operator Instructions] Our next question comes from John Tumazos of John Tumazos Very Independent Research..

I think Andrew asked most of them but I’ll try..

Morning John..

Congratulations on the new gold Barrick deals. If you have an opportunity that was a large size transaction looks like a 500 million or a billion that offers you a 15% or 20% return companies who are having hard time get mining together.

How would you do it in terms of that in equity or would you syndicate a little bit of it and just take a piece of it?.

So I think with the nature of question if we had something we promise we could not turn down what would we do is that the nature of the question?.

That’s impressive more articulate way thank you Tony you could be an analyst..

Yes John I think what we would do is first of all we would make sure that we were within our capacity, there’s definitely patience that Jeff and just spoke a moment ago.

We are not interested in putting our company into a position where some of the other folks with broader commodities cycle are experiencing right now so we want to protect ourselves in that fashion.

And yes there is more debt capacity that we could put in, put it again for equity - but we do have a number of different individuals entities I don’t know how to phrase that, have express interest in working with Royal Gold so indeed a kind of returns that you posed your question with there would be a number of companies or entities that would love to have a piece of that business so again can’t speculate but we are still interested and been active in the business so your question is a fair question..

Thank you a follow up in ancient times when I were under counting coverage - pretax income plus interest expense provided by interest expense is your coverage total debt-to-EBITDA that you’re referring to?.

Hey John this is Stefan we look at that on a net debt-to-EBITDA coverage ratio basis that ties into how our credit facility looks at it as well..

Okay..

The next question comes from Cosmos Chiu of CIBC..

Good afternoon Tony, Stefan, Bill, Bruce and Karli, thanks for hosting the call.

A few questions here, maybe first off I get on the balance sheet I think I can show the work to save myself I'm just trying to see if you can provide me with as of today how much cash and how much have you drawn on your line of credit? I believe based on my calculation you might have already needed to have drawn on your line of credit am I correct?.

Hey Cosmos this is Stefan I can walk through that, today we have about $400 million of cash on the balance sheet..

150 million okay..

400 million today..

Okay..

And that’s after the Andacollo stream acquisition after we received proceeds on the sale of our formal royalty at Andacollo and then also with after funding Golden Star and the first piece of Rainy River so today $400 million on the balance sheet so we have not drawn on our credit facility.

The Barrick yield on probably be able to expected to close in the next 90 days and depending on what our cash levels are at that time based on our continuing strong cash flow we would look to drawn our credit facility in amount around $300 million to complete that.

At the same time Cosmos as you know and I’ve told you a number of times we constantly evaluate our capital structure and - the needs of the business and I won’t stop that work as we go forward as well. But today we feel like we’re in a pretty good situation with respect to our funding needs..

Okay.

And as you mentioned the stuff in - funding for Golden Star can you remind me I think that’s $40 million for Golden Star right? And then for new gold what was the first one?.

Yeah let me just back up I’ll walk through each piece of it. We invested $525 million in the new Andacollo stream. And we received proceeds of 345 million or 300 million net of taxes on these sale of Andacollo royalty, our former royalty..

Okay..

We then invested $100 million in the Rainy River stream. And we invested a total of 60 million in the Golden Star structure, 20 million was the loan and 40 million went to the stream. So that’s what we funded today since June 30th..

Maybe switching gears a little bit on the Pueblo Viejo stream, congrats again giving that done. Looking at some of these trigger points here, I guess one trigger point 990,000 ounces that's when your percentage comes down in terms of contributions. Based on current reserves today, and are you work you through the calculation.

It doesn't seem like based on the current reserves, you can actually get to 990,000 ounces. So from based on that perspective, am I safe to assume that you've sort of factored in some upside to it in your calculations. And more specifically I know Barrick had talked about potential expansion at Pueblo Viejo.

Have you factored that in although I know that that's actually quite preliminary?.

Yeah and Cosmos Tony here. Actually we have we rarely do factoring the large component of the resources. In this case I just point to the fact that there are very high quality resources is both Bill and I said in our prepared remarks. And in fact the lot of those resources were on in the reserve book just a few years ago.

And Barrick had talked this morning in their press and in their conference call that they're looking to extent the mine life by expand and tailings facility and has a potential to convert a lot of those resources into reserves.

And we believe it's the same, so it's for us we look beyond just the reserves there to get our return because of the quality of the resource in this particular case..

Of course. And maybe I don't know how much you can comment on this Tony. But was there a competitive process whereby you acquired the stream. And maybe a follow up on that as well.

Was there an opportunity to go beyond the 7.5% that you ultimately negotiated on?.

Well, the former question first. In any kind of transaction like this I would only assume that it was competitive because these are rare unique and highly covered assets and I would think that anybody that's in this business would have wanted to take a look at that.

But I'm not in a position to be able to tell you exactly who is - like I said I don't know. So that's the nature of the competition. With regard to size this negotiation was very extensive. And all kinds of different things were embedded back in fourth but let me just say that where we ended up by we're ecstatic about.

We think this is the perfect size piece of business for us on this kind of property. So it's exactly where we wanted it to be..

And maybe Tony taking a step back here, certainly you've been the company has been quite active not just used up but your whole team has been quite active and the past quarter we've seen streams where by much like the stream with the Golden Star higher return potentially based on that calculation almost 10% IRR.

But certainly higher risk in my opinion. On the other hand you have something like - where based on my calculation lower IRR low single-digits but the same at least based on reserves, but currently in production much less risk.

Is that the type of return that we should be expecting as this kind a like the double approach that we should also be expecting from Royal Gold as well in terms of how you look at future acquisitions..

I think that is there is a lot of truth in what you just show there and the fact that each investment that we consider is going to be unique. There aren't any two transactions that are the same.

And we have to look at the totality of the piece of the business they who the counterparty is where the assets located what the quality actually what the service ability of our particular revenue source that to be coming out of that. And in we'll be very creative and put something different from each operator.

And so I think it's suppress to say that there is time where we need certain builds and vessels in our stream that you see in the past. And we need higher rate of return because we think the demand because of the risk. And then there is other trend where we might to stay live as in Pueblo Viejo.

I think it’s a fantastic opportunity to be associated with for decades and decades..

Okay sure. And maybe some last housekeeping questions here. In terms of the structure of the stream at Pueblo Viejo. Is that go through your Zuke subsidiary and that cases it subject to same kind a tax rate and things like that when I goes through Zuke subsidiary..

Correct. We structurally at the same way we did Mount Milligan kind as most of the issue we very familiar with all of that structure..

Yeah. And then overall tax rate maybe for stuffing you talked about 11% for the quarter if you adjust for the tax adjustment - the Alberta tax adjustment. I feel like I ask you the very single time but what tax ratio you will be using at gold forward basis? Because I think in the past you've mentioned like maybe 25%, 26% we've seen, low 10, 11-.

I just want to ask that question so that question I am just going to put that into my model..

Cosmos it's an excellent question because - I'll go ahead as due to the tax areas one that's complex. Specifically for us because we do have a corporate structure that includes Canadian entities and our Swiss entity as well. And this year notably had a lot of moving parts.

We had good strong benefit this year from the strong US dollar that I talked about last quarter. We also had some tax reform in Canada and Chile that they gave some interesting component as well but if you skip through all of that and with the new streams in our business as you see our normal tax rate declined to somewhere in the low 20%.

And I'll give guidance or at least the directional indication of tax rate after our first quarter call as well but today I am not ready to give us the specific rate. But one thing you are seeing is that we are investing more and more in streaming side of our business. If you know that and as within more efficient tax rate for us.

If you're going to see our overall tax rate decline on a normal run rate..

Okay great. Congrats on the quarter and that's all I have. Thank you..

Thank you Cosmos..

Our next question comes from Tanya [ph] of Scotia Bank..

Yes good afternoon everybody. I have a technical question on Pueblo Viejo and then just some financial questions with Stefan. So may be if I just the Stefan first, Stefan just to make sure on your moving all of your streams to Zuke we won’t be dividending back that in Zuke to the US.

Is that correct? We're just going to be collecting in -?.

That's correct. Our business plan is to reinvest the revenues that we've received in our Swiss structure and new opportunities. We still have a good strong cash flow from our royalty portfolio it’s available to fund dividends and debts service here in the US..

Okay. So that will be capped over there.

And then just from an accounting perspective I mean we've got the tax now in the low 20s, but just for Pueblo Viejo will you be depreciating in 610 million over proven and probable reserves cost you report under US gap?.

That's correct. Our depreciation or depletion on that would be over proven and probable reserves. Just like we're doing for Mount Milligan and the others..

Even though you are looking at the conversion longer term in your overall valuation but your depreciation will have to be of proven and probable?.

Yeah. Tanya that's a great point we are required to depreciate proven and probable and not consider any future resource..

But the extent that these resources get converted then we redo it..

You redo it.

I know absolutely which then comes to Stefan how about a guidance for depreciation and depletion for the company going forward?.

Tanya, this year our DD&A rate per ounce was $412 an ounce and that was right of the middle guidance that I gave last year.

More prepared for the - arrange out yet for next year I would guide though that we'll see our DD&A rate go up a bit because of the new streams that are going to production or slightly I think have slightly higher DD&A rates than that $412 an ounce average.

But I'll firm that up in our first quarter guidance as well but you should expect a slight increase there..

Okay. And that's what we see.

And then Tony just for your thoughts coming back to the technical question on Pueblo Viejo just wanted to talk to you about the silver circuit silver recoveries I mean we've struggled with Pueblo Viejo on that front and I don’t know how many times we've been down back up down, Barrick did mention on their call that they are getting recoveries in excess of 80% they had it for over a month.

One sort of due diligent that you do on that circuit and what did you see?.

Extensive due diligence and first of all let me say that we feel the chemistry works fine and it's not an issue of getting the chemistry to the get the recoveries it’s a matter just getting sustainability in the circuit..

Absolutely yes..

Getting those new tanks and place that I think Barrick is hoping to about this morning. And so it’s a matter of getting steady state production from the circuit. Having said all of that we recognized that as a risk from a standpoint. It's not proven itself yet.

We don't want to necessarily take that risk and so and Barrick is quite confident and in its ability.

And so we said well let's just agree that we'll fix that at 70% recovery and to the extent that you do better than that, that's the year account and to the extent you do that less than that we can reach into some of the better accounts and be made whole for our transaction.

So I think we structured something that is indicative of that particular risk element that you identify..

And is that why that one starting as of January 1, 2016 or why did that one start later?.

Yeah, I think that's largely the reason that Barrick had some items that they wanted to get into the - implementing the circuit and that gives them some time to do that and get a little more steady state before our stream is impacting that silver..

Okay, that's what I wanted to check. Okay, thank you..

Thank you for the questions..

The next question comes from John Dodi [ph] of Gold Stock Analyst..

Good afternoon John..

Hello guys and gals congratulations on the three recent deals. You really been active and I hope you get at least a weekend off coming..

Yeah, that we hope so too..

Okay. Cosmo kind of swept the field - my question is about the competitive climate now. But I thought it was unique in that your close friends might have thought they have a more of an entry into the new gold and the Pueblo Viejo transaction. But I guess that didn't prevail..

I can't comment anything specific John. I can just tell you that we run as higher as we can from our standpoint and we let the cards fall where they may. So I don't know any details..

Yeah, that's fine. Refresh my memory on the secured position that the company has at Mount Milligan..

Bill do you want to take that?.

Sure. There are some existing bonds that are in the amount of $350 million I think that's the right number. They have a first secured position with respect to the asset.

We have a second position with respect to the asset but the first position when it comes to Alcoa Gold that's been shift or severed from the ground which at any point in time would be relatively small value. So we sit behind those particular bonds. We would come next.

There are some unsecured guarantees for the corporate debt that reached out into the company that holds the Mount Milligan operations that they are that they would subordinated to us. So we are just worried about that one bond being in front of us..

Okay. So the worst case is and I certainly hope this wouldn't happen, but worst case is you would end up holding the mine subject to $350 million in bonds ahead of you..

Technically that's true. I think if we ever got to that position, I think ultimately what you would see is some transfer of ownership that the mines before we ever really got to that period of time or got to that situations and I would think that be the first protocol..

Alright, great. Thanks and congratulations on the deals in the great quarter. Looking forward tomorrow..

Thanks for the support John..

This concludes our question-and-answer session. I would like to turn the call back over to Tony Jensen for any closing remarks..

Well, thank you again for taking time to join us today. We certainly appreciate your questions, your interest and your continued support of Royal Gold and we look forward to update you in the next conference call. Thanks very much..

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect..