Good afternoon and welcome to the Royal Gold, Inc. Fiscal 2020 First Quarter 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 Alistair Baker, Director of Business Development. Please, go ahead.

Thank you, Kate. Good morning and welcome to our discussion of Royal Gold’s first quarter 2020 results. This event is being webcast live and you will be able to access a replay of this call on our website. Participating on the call today are Tony Jensen, President and CEO, Bill Heissenbuttel, CFO and Vice President of Strategy; Mark Isto, Vice President of Operations; Dan Breeze, Vice President of Corporate Development of RG AG; and Bruce Kirchhoff, Vice President, General Counsel, and Secretary. This discussion falls under the Safe Harbor provision of the Private Securities Litigation Reform Act. The discussion of the company's current risks and uncertainties is included in the Safe Harbor and cautionary statement in today’s press release and slide presentation and is presented in greater detail in our filings with the SEC. Tony will give you an overview of the quarter, followed by Mark with an update on our operating results. Bill will then provide a financial update and Tony will wrap up the call with some closing comments. We'll then open the lines for a Q&A session. Now I will turn the call over to Tony.

Good morning and thank you for joining the call. I will begin in Slide 4. This was another solid quarter for Royal Gold. Our revenue for the quarter was approximately $119 million, a record for Royal Gold and up 3% from the previous June quarter, and 19%, year-on-year. Earnings for the quarter were $1.07 per share, which included $0.49 gain on tax and a $0.02 loss on mark-to-market of equity securities, both of which Bill would discuss in his remarks. Operating cash flow was a solid $71 million, which allowed us to pay $17 million in dividends and reduce our outstanding revolver balance by $50 million. Over the past year, we have reduced our principal over outstanding debt by $200 million and our only remaining debt outstanding is the $170 million grown on our revolver, which will continue to pay down as our cash position allows. With the undrawn revolver capacity and working capital, our liquidity was approximately $1 billion at quarter-end, which positions us well for the opportunities we see in the market today. In addition to providing these solid operating and financial results, we also concluded our CEO succession process, with the appointment of Bill Heissenbuttel as the new President and CEO upon my retirement on January 2, 2020. The board completed a thorough review of both internal and external candidates and it concluded that Bill’s background, experience, and vision, positions him best to lead the company in its next phase of growth. Bill has held roles within Royal Gold in Business Development, Operations, and Finance. So he knows the business well. He and I have worked closely together since he joined the company in 2006 and he has been involved in every major strategic decision that has led us to where we are today. And the board is confident that he has the skills to further build on the company's strengths. I’d like to turn the call over to Bill for a few comments.

Thanks, Tony. I'm looking forward to leading the company and working with the board and management team to continue to build our business. Our strategy is well established and under my leadership will continue our discipline focused on growth in our core business, and measuring our success on a per share basis. I've already made some organizational changes to make sure we're positioned to execute with success, most notably the promotion of Mark Isto to the role of Executive Vice President and Chief Operating Officer; Paul Libner to the role of Chief Financial Officer and Treasurer; and Randy Shefman to Vice President, General Counsel, all of which are effective January 2. Mark is a seasoned mining engineer and has been with the company since 2015. And his promotion reflects the importance we place on technical excellence. Paul is currently our Controller and Treasurer, and he's been with the company since 2004. He has a deep understanding of the Treasury functions he will oversee as our CFO. Randy brings a strong background in commercial transactional experience and has worked closely with Bruce Kirchhoff over his eight year career at Royal Gold. Randy’s promotion reflects the desire of Bruce to retire on January 2 of next year, after a 12-year career at Royal Gold. Bruce has helped navigate Royal Gold through the increasingly complex and demanding issues surrounding public company compliance and corporate governance and he will be missed by all in the company. It is a testament of the depth of talent in the organization that we have been able to make these appointments internally. And I'm confident that we have the right team in place. I look forward to introducing the new team to the market over the coming months. With that, I'd like to turn the call over to Mark to review our operating results.

Yes, thanks, Bill. On Slide 5, I'd like to start with an update on the Khoemacau project in Botswana, currently under development by Cupric Canyon Capital. This is to decide in mid-October and met with the project team for a full review in advance of making our first funding contribution. I was impressed by the progress being made, the project organization and focus on safety. Construction is in full swing and at the end of September, a total of more than 800 people were working on site, Citizens of Botswana making up 95% of the construction workforce with 34% from the local region and 26% from the immediate area. The project is about one-third into the 30-month execution phase. At the end of September, engineering was approximately 85% complete, and overall construction progress was about 11%. Project remains on budget, and the first concentrate shipment is expected in mid-2021. We funded our first contribution to the project on Tuesday of $66 million and future funding will be made on a quarterly basis alongside contributions from other sources of capital. Slide 6 shows progress on the three boxcuts, which are the current construction priority and provide access to the Zone 5 orebody. Each excavation requires a removal of about a million cubic meters of material. As you can see in the photos, the excavations have progressed well through the soils, calcrete, and weathered rock and the finish walls look excellent. The Central boxcut is scheduled to be completed first and turned over to Barminco, the mining contractor which is targeted for the end of this calendar year. Turning to Slide 7, you can see a close-up of the geocell installation, an engineering solution to protect the slopes from erosion, the shot of the access corridor between Zone 5 and the Boseto…

Thanks Mark. I'll turn your attention to Slide 10 and give an overview of the financial results for the quarter. Unless otherwise indicated, I will be comparing our first quarter of fiscal 2020 to the prior-year September quarter. As Tony mentioned at the beginning of the call, revenue this quarter was $119 million, a quarterly record for us, on volume of 80,700 gold equivalent ounces or GEOs. GEOs decreased approximately 2% year-on-year and the most significant reasons for the change were lower Andacollo sales due to shipment timing, the absence of revenue from Mulatos after the Royalty Cap was reached in our last fiscal year, and the receipt of only one quarter of revenue from Voisey's Bay as opposed to last year’s September quarter in which the royalty litigation settlement provided us with two quarters of revenue in one reporting period. Those decreases could not be fully offset by increased Mount Milligan sales and Cortez royalty revenue. Stream segment volume for the quarter was in line with the expectations we discussed during our last earnings call in August and as we announced last month. Metal prices had a positive effect and gold and silver were up 21% and 13% respectively, while copper was down 5% year-on-year. Gold accounted for 79% of our revenue for the quarter. G&A expense for the quarter was $7.4 million down from $9.9 million. The prior year quarter included spending on the preparation for the valid litigation and its ultimate settlement. Compared to the June quarter of fiscal 2019, G&A expense was approximately $1.1 million higher, primarily due to non-cash compensation expense, and a higher relative expense in this reporting period is consistent with previous years as equity compensation is typically awarded in the first quarter of fiscal year. Our DD&A expense for the quarter was…

Thanks for the kind words, Bill. I have thoroughly enjoyed my time at Royal Gold. And it's been an honor to serve the shareholders over these last 16.5 years. I'm very proud of the Royal Gold team and both the management and the board and the culture that we've created together. This company is endowed with talents and assets, and I leave with confidence. Confidence that the corporate principles will be maintained including judging success, accretion, and everything we do on a per share basis, growing our company out of cash flow to the greatest extent possible while protecting our valuable shares from pollution. Striving to be the most valuable precious metal company not necessarily the largest, providing the steady and growing return to our shareholders, sticking to our core business and what we do well and conducting our business with respect for others fairly dealing, integrity and responsibility. Also confidence that the company is in a very good position. Our cash flow is powerful and growing. Our balance sheet is strong. Our asset base is robust and in my opinion will continue to yield organic growth and our home grown team is excited to take control. Coming back to the quarter and the near-term activities, I'm pleased to see that Mount Milligan and Rainy River are now showing attractive production results. Mount Milligan has made significant progress in developing sustainable water sources and is not expected to reduce production this winter. That Crossroads is now in full production. That Penasquito is now coming into higher grade after an extensive stripping campaign over the last several years. That the Pueblo Viejo expansion studies continue to yield positive results and that the Khoemacau construction is off to a good start advancing well. It is great to see this level of activity in our portfolio of 41 producers. Now I can tell you that over my career, I've seen that all assets have issues at some point in time, but they tend to get sorted out over time with good management. And we've always kept our eyes on that long game. Operator with that, our prepared remarks are concluded, and we would be happy to open the line for questions.

We will now begin the question-and-answer session. [Operator Instructions]. The first question comes from Shane Nagle of National Bank Financial. Please go ahead.

Yes, thanks, guys for taking my question. Just with Mount Milligan, positive to see the water situation improved, obviously Centerra highlighted that they'd be potentially taking a write-down. I'm just curious if that’s related to in your opinion related to the escalated costs that they're seeing and just wondering if you've kind of run your own resource internally. And do you see any risk of impairment there in terms of Royal Gold’s interest?

Yes, Shane. There is a couple of different issues there I'd like to peel them apart, one is the cost structure of the mine and the other is Centerra’s carrying costs and the write-down that Centerra experiences very much specific to them in their carrying cost. It does not impact our carrying cost specifically. Our carrying costs would only be impacted if there was a reserve reduction that actually required us to revalue or re-estimate the carrying cost. And right now we have $402 per ounce of gold as a depletion rate and $0.81 per pound of copper. So we think we've got quite a bit of headroom in our numbers. But ultimately, we won't see -- we won't know those final details, Paul and his financial team will have a look at that once the new resource and reserve statements come out but we think we're in a very good position. And then let me just speak a little bit more to the cost that that you alluded to. And I just want to take the opportunity to emphasize what Mark’s comments were that the mine is producing a very low cash cost and all-in sustaining cost basis, I think his comments were that it was a lower quartile, second quartile type of production. So I really don't want the carrying costs and the write-down issue that Centerra had actually carry over into the quality of the asset because we're still seeing a very -- a very good quarter, very good cash costs coming out of the project.

Okay. And then maybe similarly my interpretation of the Rainy River mine optimization is that we may see potential increase in production in the short-term but potentially sacrificed by a reduction in mine life, have you guys again dug into there with a similar thinking around potential impairment or how it may potentially impact your business and cash flows going forward?

You’re correct, Shane. We’d have to -- once we see the results of their new 43,101 that they put out, I think they're talking about in the first quarter of next year, then we'll have to take a look at our carrying cost and make sure that we have sufficient cover there. I'm sitting here right now; I don't have those details of what our depletion rate is at Rainy River, but we would have to do a very similar exercise and make sure we have enough headroom there.

Okay. There's probably just maybe slightly less headroom then there would be under Milligan, just guessing myself.

I can't answer that question specifically but we’re absolutely happy to provide the details of our depletion rate there if of interest.

That'd be great. Maybe I'll follow up with that later. That's all from me. Thanks again and Tony, all the best in retirement, if I don't speak with you before January 2.

Thanks very much Shane. I appreciate your support over the years.

[Operator Instructions]. The next question comes from Tanya Jakusconek of Scotiabank. Please go ahead.

Yes, good morning, everybody. And Bill, congrats to you and the team and to Tony, good luck in your new endeavor.

Thank you.

You’re welcome. And my questions, just a quick one on taxation with the movement of the Swiss offered from Zug to Lucerne, can you just give us an idea of what the streams are going to be taxed at, right with the move?

Yes. So there are really two elements to the Swiss tax reform. As you may recall, our current tax rate in Switzerland is 8.7%. If we had stayed in Zug, I think the tax rate would have gone to 11.9%. And in Lucerne it is going to be, would be 12.0%. But one of the things the Swiss have done is they basically said, we're going to give you a period of time to transition to those higher tax rates, and we're going to do that by allowing you to step-up the value of the assets to what I'll call effectively market value and depreciate that excess value against taxes. And in Zug, it would have been for five years, Lucerne was going to be a 10-year period and hence the reason for the move. From a corporate perspective, our taxes are not expected to change relative to what they would have been for that 10-year period. After 10 years, yes, they will go up to the higher tax rate. But for this transition period, we don't see that much of a movement in corporate cash taxes paid.

So are you saying from a person who doesn't have a financial background that the next 10 years, sort of look in that sort of 9% range? And then after the 10 years, we move up to 12%?

In Switzerland, that is correct.

Were there any restrictions that go through Switzerland?

Tanya, I think the most important overall, I think you're absolutely correct in with regard to Switzerland, but the more important issue for us what is our global tax, cash tax amount. And that's what Bill is emphasizing, we don't think we're going to have very much of a change at all as result of the Swiss tax reform over the next 10 years. And then obviously, we'll have to reassess that for the longer-term. But there's -- this is a very complex area, as you can well imagine, and we're trying to make sure we understand Swiss tax reform and U.S. tax reform the interplay between the two.

Yes, I appreciate that. It's just from for our perspective, just in valuing the stream alone on a standalone basis, if we were to look at it for the next 10 years at 9%, and then after that at 12%, would that be a fair way of valuing it separate from what you're doing at head office?

Yes. So what the one thing that you’re missing there is that we have the U.S. tax reform. There's another global tax that we're applicable or that’s applicable to us. And believe it or not, the acronym is a Guilty Tax. And it stands at 13.1%. And so anything we don't pay in Switzerland, we would have to top-up to that 13.1%. So that's probably the more accurate number for us to use in the short-term and to the extent there's more questions that are specific to that, we can surely get to our tax experts on the phone.

The next question is from Mike Jalonen of Bank of America. Please go ahead.

Thank you. And, Tony, good luck in the future. And Bill and Mark, congratulations. I do have a question, more for Mark actually. Mark, how you cover Centerra so and correct me if I’m wrong but did you say the NPV effect of a potentially shorter life at Mount Milligan could be offset by higher production in the early years? And if you did say that, I guess just did Centerra say that to you or is that your own assumption?

Well that’s a generic review of thinking about a cut-off grade going up. And your earlier years seeing higher grades, assuming a constant mill throughput, and then the latter years of the mine life being cut-off in some fashion. So there's a -- there's the possibility of having these earlier -- having earlier production, offsetting at least some of the impact on an NPV basis. I certainly wouldn't give you the impression that it would impact -- that it would offset all of the impact because I have no basis to know that. But certainly on a generic basis, I would expect some ounces and pounds to move forward in the schedule with the adjustments you're talking about.

Okay. I guess I asked the question also because Mount Milligan mine gold grade 0.52 grams, the average grade is 0.33. So I'm kind of saying to myself, they're already super high grading to begin with. So you take out some low grade, it shouldn't really make much difference is kind of my view but it would be call for the situation than I would, I guess so?

Mike, what we always knew in the early years, it was more gold production, they are mining in areas that were higher grade gold and you actually saw this year versus last where we switched a little bit more to more copper production than we have the year prior less gold production, we had the year prior. So I think those things that's -- it's probably not -- it's not appropriate just to judge on the gold rally the gold equivalent grade of both those metals coming together.

That's a good point. I guess, I'm taking the old technical study on Mount Milligan, I think gold production in the first five years was 280,000 or 290,000 ounces something like that. And correct me if I'm wrong, Tony?

Yes, I think you’re in that range.

And I don’t think we really got close to that. So it's otherwise. Okay, we will see what Centerra says in a few months. Thank you and good luck.

Thanks for the question, Mike.

[Operator Instructions]. The next question comes from Greg Barnes of TD Securities. Please go ahead.

Yes, thank you. Tony, do we have a better sense on what the profile will look like at Cortez/Pipeline going forward in terms of the impact it will have on you?

Yes, Greg thanks for the question. We last I think it was the last conference call, we -- Mark and I had just come back from the property from Cortez and with the new joint venture that was going on there, they advised that they would have something by the end of the year or close to the end of the year. And I think in the conference call, we talked about being able to have some kind of better guidance for you at Cortez in the March quarter. And we also get a -- just looking at Mark know, we also get our life of mine plan by contract in the first quarter -- first calendar quarter of every year. So if you can just be patient with us for another quarter, well quarter-and-a-half, I guess before we get that, we will get that information out to you, Greg. But I think it’s, if you look at the last couple of quarters, you'll have seen that that Cortez has done quite well and it’s grown quite significantly from what it's done in the prior quarters, we have a nice chart on Page 10 of our press release that I just referenced you to. And actually last three quarters, it's done pretty well. And I think absent any other information, I would -- I would look at that history as indication of the next quarter.

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

Operator, let me just go back to Shane Nagle and Shane, I hope you’re still in the line and for everybody that's there. We are fortunate to get the DD&A at Rainy River during our call here and I just want to read these out. The DD&A at Rainy River is $591 per ounce of gold and $6 per ounce of silver. So we have quite a bit of headroom at Rainy River as well. So I'm glad we're able to get that information out broadly to the market during this call. Well, everybody, thank you very much for your support over the years and I usually conclude this call by saying, I look forward to updating you in the next conference call. But I look forward to being in your chair and asking questions to the management team in the next conference call. So with that, let me say thank you for joining us. Bye for now.

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