Good day and welcome to the Royal Gold Fiscal 2020 Second Quarter Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Alistair Baker. Please go ahead.

Thanks, Lisa. Good morning and welcome to our discussion of Royal Gold's second quarter 2020 results. This event is being webcast live and you will be able to access a replay of the call on our website. Participating on the call today are Bill Heissenbuttel, President and CEO; Mark Isto, Executive Vice President and COO; Paul Libner, CFO and Treasurer; Dan Breeze, Vice President, Corporate Development of RGAG; and Randy Shefman, Vice President and General Counsel. 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 and cautionary statement in today's press release and slide presentation, and is presented in greater detail in our filings with the SEC. Bill will give you an overview of the quarter, followed by Mark with an update on our operating results. Paul will then provide a financial updates and Bill will wrap up the call with some closing comments. We'll then open the lines for a Q&A session. Now, I'll turn the call over to Bill.

Good morning and thank you for joining the call. I'll begin on Slide 4. This was another solid quarter for Royal Gold. We had a 27% increase in revenue to a record quarterly figure of $124 million, which was attributable to higher volume, up 5% from last year's quarter to 83,500 gold equivalent ounces, and much higher average realized precious metal prices. Earnings for the quarter were a healthy $41.3 million or $0.63 per share. We saw strong operating cash flow of $78 million, and we were able to make our initial $66 million advance at Khoemacau, pay our quarterly dividend and reduced our revolving credit balance without any significant change in our available liquidity. At the end of December, we had $865 million of capacity on the revolver available, and combined with working capital we had approximately $1 billion of liquidity for new business opportunities. We saw positive developments at Andacollo with the end of a workers' strike and the signing of a new labor contract and the end of the blockade at Penasquito. We also saw operational improvements at Mount Milligan, which were announced at the end of Centerra's third quarter, and Rainy River, which saw gains over the course of calendar 2019. Finally, construction continued to progress at Khoemacau, and we made a second payment of $22 million yesterday. Mark will bring you up to speed on that project and a few other notable properties. I would like to note that this is the one reporting period in which we are reporting a quarter-end, while our key operators are working on a full-year disclosure timetable. If our comments appear somewhat less detailed, it is due to the fact that our operators have yet to disclose their year-end operating results. I would like to welcome Paul to our quarterly call, his first as a participant in his 15 years with Royal Gold. But first, I'll hand the call over to Mark.

Thanks, Bill. On Slide 5, I'd like to start with an update on the Khoemacau project in Botswana, currently under development by Khoemacau Copper, or KCM, a subsidiary of Cupric Canyon Capital. Construction activity continued to advance nicely with more than 1,600 people working on site, up from the 800 reported at the end of September. And progress made over the past quarter is very evident with construction completion estimated at 26% and 77% of the capital committed. KCM is continuing to target first concentrate shipments in mid-2021. Our engineer visited the project site for the quarterly review prior to making our second payment. Construction is focused on four main areas, finalizing the boxcut excavations in preparation for underground development, construction of the 35-kilometer access road between the ore body at Zone 5 and the Boseto mill, advancing the Zone 5 infrastructure, and starting the Boseto mill refurbishment work. The initial underground mining fleet, some of which are shown in the photo, has arrived at site, and Barminco, the mining contractor, is actively commissioning the equipment and preparing to start mine development. Turning to Slide 6, the central boxcut, shown in the left photo, is scheduled for handover to Barminco in early February, followed by the south boxcut and then the north boxcut. The handover schedule has been slightly delayed since our last call due to slower-than-anticipated excavation advance. However, the project – overall project schedule remains unchanged. The access road between Boseto and Zone 5, shown in the right-hand photo, has reduced travel time across the project site from over 90 minutes to 35 minutes. The ore haul road will be adjacent to this access road, and construction is underway. Turning to Slide 7, you can see some of the progress on the infrastructure at Zone 5, which is…

Thanks Mark. I'll turn your attention to Slide 11 and provide an overview of the financial results for the quarter. For purposes of this discussion, I will be comparing the second quarter of fiscal 2020 to the prior-year quarter. As Bill mentioned at the beginning of the call, we had record revenue this quarter of $123.6 million on volume of 83,500 Gold Equivalent Ounces or GEOs. GEOs were approximately 5% higher year-on-year, and the most significant reason for the change was higher sales from Andacollo, primarily due to shipment timing. This increase was partially offset by lower royalty revenue, mainly from Cortez. As we announced at the beginning of January, stream segment volume for the quarter of 60,000 GEOs was in line with the expectations discussed during our last earnings call in November. Metal prices had a positive effect as gold and silver were up 21% and 19%, respectively, while copper was down 5% year-on-year. Gold accounted for 74% of our revenue for the current quarter, which was comparable to the prior year quarter. During the quarter, we did see a higher percentage of revenue attributable to copper, which was due to higher copper sales from Mount Milligan. G&A expense for the quarter was $6.7 million, down slightly from $7.4 million in the prior-year quarter. Our G&A expense each quarter includes non-cash compensation expense and generally averages $1.5 million to $2 million per quarter. As a result of recent retirements, we anticipate incurring additional non-cash compensation expense during our March quarter of approximately $3 million to $4 million. Our DD&A expense for the quarter was $40.1 million, or $480 per GEO. We still expect full fiscal year 2020 DD&A to range between $450 and $500 per GEO, although a change to the reserves at either Mount Milligan or Rainy River…

Thanks Paul. In addition to the solid financial and operating performance for the quarter, we also experienced a seamless transition to a new generation of leadership with the appointment of some new members of the management team. Although some may still be new names to you, they have all been with the Company for many years and have been integral in the development and execution of our strategy. As a team, we work well together, and our day-to-day approach has been the same these past few weeks as it was for the past several years. I've also spent some time traveling and meeting with shareholders, analysts and other stakeholders recently, and my key message in all those discussions is that our strategy is proven and well established, and I don't intend to change direction. My priority is to continue to build on our success, which means seeking out disciplined growth opportunities in precious metals with a focus on gold and measuring that success on a per share basis. I am confident we have the right team in place to continue executing our strategy. And for any of those of you on the line who aren't familiar with the team, we look forward to meeting with you over the coming months. Operator, that concludes our prepared remarks. I'll now open the line for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Adam Graf of B. Riley FBR. Please go ahead.

Thank you. Just a quick question regarding Mount Milligan and Rainy River, so I understand that there is a study ongoing by Centerra at Mount Milligan. Is there a similar study ongoing on Rainy River? And if the underlying operators take reserve numbers down significantly, I presume that that will also be a significant impairment to them. And would that also correspond to similar proportional impairment on those assets to – on the carrying value of those assets to you guys?

Yes. So Adam, the first part of your question, yes, Rainy River – New Gold is conducting a new technical report on Rainy River and they have announced that they are going to release the results of that study on February 13. So we look – that's the one date that we do know. I think when Mount Milligan – Centerra has already taken an impairment at Mount Milligan. They did that at the end of October. And at that point, I think they said their technical report will be done in the coming months. So we don't – we have less certainty in terms of the timetable. With respect to the second part of your question, in terms of impairments, an impairment by an operator does not directly result in an impairment with respect to our interest. We're going to wait for the data to be released. We will analyze that data. Our impairment analysis starts with an undiscounted valuation of our position, using the new mine plan. But beyond that, at this point, we really can't – we can't comment on whether or not there will be impairment. We need the information to be released and we need some time to analyze it.

So a follow-up question to that. So you're going to follow the reserve – the new reserves and new mine plan outlined by both Mount Milligan – at both Mount Milligan and Rainy River. Are you required to also use the same metal price assumptions that the underlying operators are assuming?

Paul, do you want to answer that?

Yes. No. So the Company's policy is generally to use consensus prices. So the operator may use a different methodology, but as part of our analysis, we will look to consensus prices.

So just in regard to that, if you're using a different price deck, effectively, it could be – the underlying operator, if they were using that same price deck, would have a different mine plan. I'm trying to understand how you would reconcile using potentially a different price deck versus the underlying operator that generated the mine plan that you're going to be using.

Yes. And I don't think consensus pricing and what operators are currently using in the market are all that different. I think what Paul saying is that our policy is to use consensus pricing and the operator's forecast. I can't imagine a situation where the prices are so different that the mine plans end up being so different that we come up with a wrong analysis.

Thank you.

Thank you.

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

Yes, good morning, everybody. Good morning, Bill.

Hey, Tanya.

I wanted to ask you, Bill, just on – and thank you for your comments on the strategy portion. I definitely wanted to discuss the gold focus. With this higher gold price scenario, again, what sort of opportunities are we seeing in the market, maybe sort of size, deal type? That would be great.

Sure. Size and deal type really hasn't changed much in the last quarter. I still think you're going to see most of the transactions somewhere between $200 million and $500 million. I think the – in terms of the use of proceeds that you're going to see, you probably will see a bit more project development and perhaps a bit more M&A. Obviously, I don't think you're going to get a lot of balance sheet restructurings at these prices. And one of the things that I'm pleased with is that when we were doing a number of transactions a few years ago, we actually did a number of gold streams on gold properties. So we've proven that you can use this product, even though you may be streaming the primary metal. So I think the gold price going up will be beneficial to the number of opportunities we see.

Okay. And then another question just on Crossroads and we appreciate that Barrick has yet to report. We just noticed that Crossroads was a small contributor to your production profile in calendar 2019. Do you expect significant production uptick from Crossroads for the remainder of fiscal 2020?

Well, we should see a new life-of-mine plan at the end of this quarter. We usually get it at late March, early April, which would be our next information point. We would anticipate and we have anticipated that production would continue to increase, although it may be quite lumpy in its profile. So seeing up and down between quarters at this point, I think would be what we would expect. But we can't really provide any more information until we get the new life-of-mine plan for next quarter.

Tanya, I know we frustrated you a little bit with that request. But I think, hopefully by the next quarterly call, we may have something to talk about.

Okay. I appreciate that. Great, thank you.

Thank you.

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

Thanks operator and thanks everyone for taking the time to join us today. We appreciate your interest, your continued support of Royal Gold. And we look forward to updating you on our progress during our next quarterly call. Thank you.

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