-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I+T7YR64o1zx/5Nrc3rvEWkJo/JzYstWeMZHPiaQ7QDOjcNaCDsAI5G3zZRGquhP eYWk/wCZdRLFlU2s5Lds6A== 0000085535-99-000002.txt : 19990414 0000085535-99-000002.hdr.sgml : 19990414 ACCESSION NUMBER: 0000085535-99-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990412 ITEM INFORMATION: FILED AS OF DATE: 19990413 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROYAL GOLD INC /DE/ CENTRAL INDEX KEY: 0000085535 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 840835164 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13357 FILM NUMBER: 99592229 BUSINESS ADDRESS: STREET 1: 1660 WYNKOOP ST STE 1000 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3035731660 MAIL ADDRESS: STREET 1: 1660 WYNKOOP ST STREET 2: SUITE 1000 CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: ROYAL RESOURCES CORP DATE OF NAME CHANGE: 19870517 FORMER COMPANY: FORMER CONFORMED NAME: ROYAL RESOURCES EXPLORATION INC DATE OF NAME CHANGE: 19810716 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) April 12, 1999 ROYAL GOLD, INC. (exact name of registrant as specified in its charter) Delaware 0-5664 84-0835164 (State of (Commission (IRS Employer incorporation) File Number) Identification No.) 1660 Wynkoop Street, Suite 1000, Denver, CO 80202-1132 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 303-573-1660 Item 5. OTHER EVENTS Royalty Conversion - ------------------ On April 1, 1999, Royal Gold, Inc. ("the Company")and Cortez Gold Mines ("Cortez") agreed to convert the Company's 20% net profits interest in the South Pipeline project into several gross smelter return royalties extending over a mining complex that includes the Pipeline and South Pipeline gold mines, in Lander County, Nevada. Each of the Pipeline and South Pipeline mines is owned by Cortez, which is a joint venture between Placer Dome U.S. Inc. (60%) and Kennecott Explorations (Australia) Ltd. (40%), a subsidiary of Rio Tinto. Cortez has advised Royal Gold that it expects Pipeline to produce 1.1 million ounces of gold in calendar 1999, and that the annual output from Pipeline in both 2000 and 2001 is expected to be approximately 850,000 ounces. The transaction will therefore bring significant cash flow to the Company commencing July 1, 1999, and is expected to provide the Company with net earnings in its fiscal year ending June 30, 2000. The transaction has no balance sheet effect on the Company, as the book value of the South Pipeline project has previously been written down completely. At present, Cortez anticipates that permits for the commencement of operations at South Pipeline will be received during the third quarter of 1999, and that pre-stripping of the South Pipeline deposit would commence in 2001, as personnel and equipment now employed in the Pipeline operation become available. Production from South Pipeline is not expected until 2002. The transaction was negotiated by the Company due to the lengthy period before South Pipeline would go into production under Cortez' business plan. The conversion was negotiated based on comparing the net present value of the expected cash flows that would come to Royal Gold under its 20% net profits interest, as and when South Pipeline was fully developed and all capital related to that project had been recouped by Cortez, to the net present value of the expected cash flows that Royal Gold would receive if it held gross royalty interests over both of Pipeline and South Pipeline, commencing July 1, 1999. These estimates were performed at various gold prices, and the parties' negotiations resulted in the sliding scale royalties that are detailed below. 1 Creating two separate gross royalty interests for the properties with reserves and for the properties not yet fully explored was intended to preserve an important aspect of the Company's original agreement, by providing for the Company's participation in any further exploration success on the 288 claims comprising the GAS Claims. The GAS Claims are on South Pipeline ground outside the planned operation of the South Pipeline deposit. See "New Royalties" below. As a result of the transaction, Royal Gold will have easier to calculate interests in a much bigger complex, and will not have to wait until 2002 for receipt of significant cash flows. By exchang ing the net profits royalty in the South Pipeline property, the Company avoids the risks of increased operating costs, increased capital requirements and any delays related to bringing South Pipeline into production. A "Gross Smelter Returns" royalty is measured by all of the revenues attributed to material that is mined and processed, with no deduction for any costs paid by or charged to Cortez. The only possible deduction is for any amounts that might be paid for any future royalty assessment that might be imposed by the United States government following any reform of the 1872 Mining Law. Reserves and Resources - ---------------------- Set forth below are the reserves reported by Placer Dome Inc. for the Pipeline and South Pipeline properties. Under the Cortez plan for development, South Pipeline is not expected to reach commercial production until 2002, and Pipeline has been in full production for several years. The Company previously held a 20% net profits interest in South Pipeline and now holds gross smelter return royalties on both properties. The new royalties provide revenue to Royal Gold based generally on revenue generated, rather than net profits after costs of development and production. 2 CORTEZ - PROVEN AND PROBABLE RESERVES (1) AS OF JUNE 30, 1999 (2) (SUBJECT TO ROYAL'S RESERVE CLAIMS GROSS SMELTER RETURNS ROYALTY) (3) --------------------------------------------------------------------- Average Contained Tons (mm) Grade (opt) Ounces Au ---------------------------------------- Pipeline 52.1 0.071 3.70 mm South Pipeline 122.3 0.037 4.59 mm - --------------- (1) "Reserve" is that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Reserves have been estimated by Cortez at a gold price of $300 per ounce "Proven (Measured) Reserves" are reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes and the grade is computed from the results of detailed sampling, and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that the size, shape, depth and mineral content of the reserves are well-established. "Probable (Indicated) Reserves" are reserves for which the quantity and grade are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance of probable (indicated) reserves, although lower than that for proven (measured) reserves, is high enough to assume geological continuity between points of observation. (2) As estimated by Cortez at March 24, 1999, to reflect antici pated production through June 30, 1999. Figures shown reflect no adjustments for recovery rates of contained ounces or for mining and processing losses. (3) Reserve Claims GSR applies to these properties. At gold prices from $270 to $310, the Company receives 2.25% of revenues from these properties. Also subject to Royal's Silver GSR and Other Products NSR royalties. See "New Royalties." 3 CORTEZ - OTHER MINERALIZATION (1) AS OF JUNE 30, 1999 (2) (SUBJECT TO ROYAL'S GAS CLAIMS GSR ROYALTY) (3) --------------------------------------------------------- Average Contained Tons (mm) Grade (opt) Ounces Au --------------------------------------- Pipeline/South Pipeline 36.1 0.039 1.42 mm (1) "Other Mineralization" is in addition to "Proven and Probable Reserves." Other mineralization has not been included in the proven and probable ore reserve estimates because even though drilling, trenching and/or underground work indicate a sufficient quantity and grade to warrant further exploration or development expendi tures, these deposits cannot qualify as commercially mineable ore bodies without further drilling and metallurgical work are completed, and until other economic and technical feasibility factors based upon such work are resolved. (2) As estimated by Cortez at March 24, 1999, through June 30, 1999. Figures shown reflect no adjustments for recovery rates of contained ounces or for mining or processing losses. (3) These properties are not in production but are subject to the GAS Claims GSR, the Saddle Area GSR and the Other Products NSR royalties. See "New Royalties" below. Cortez Production Information - ----------------------------- As noted above, Cortez has advised the Company that it currently projects that production from the Pipeline mine, for each of calendar years 1999, 2000 and 2001, will be at the levels of 1.1 million ounces, 850,000 ounces and 850,000 ounces. These amounts for 2000 and 2001 are higher than production estimates previously announced by Placer Dome, but have been provided to Royal Gold by Placer Dome for purposes of this Form 8-K. As a result, Royal Gold is dependent on Cortez for information regarding Pipeline, including without limitation, estimates of future production at Pipeline. In addition, estimates of future production are subject to numerous risks and uncertainties, including mining and produc tion problems, environmental hazards, slope failures, accidents, 4 labor disputes, processing or mechanical problems and acts of God. Therefore, Royal Gold cannot provide any assurance that the estimates provided by Cortez will be realized. The Company's fiscal year ends June 30, and, assuming that production from Pipeline occurs evenly over each of the three stated calendar years, the Company's revenues from the Reserve Claims GSR attributable to Pipeline would be expected to be as follows over each of the next two fiscal years of the Company, at various assumed gold prices: Estimated Estimated Payments to Royal Under Pipeline Reserve Claims GSR Royalty Production $250/oz $300/oz $350/oz ------------------------------------------------- GSR% 1.3% 2.25% 3.4% - ---- FYE 6/30 - -------- 2000 975,000 oz. $3.2 mm $6.6 mm $11.6 mm 2001 850,000 oz. $2.8 mm $5.7 mm $10.1 mm The Company's GSR royalities have been structured to provide the Company with an increased return in the event gold prices improve from current levels, and a reduced return if gold prices decline. Royal cannot provide any assurance regarding future gold prices. New Royalties - ------------- Under the new agreement providing for the GSR royalties, Royal Gold will have access to all mining claim areas and processing facili ties at Pipeline and South Pipeline. The Company will also be entitled to receive all material information about exploration, mining, production, development, planning and budgeting for Pipeline and South Pipeline. Royal Gold has surrendered its 20% net profits interest and various contractual rights, including the contingent right to operate the South Pipeline property under defined circumstances. 5 The royalty interests Royal Gold now holds at the Pipeline and South Pipeline gold mines and on the GAS Claims (the 310 claims that are the subject of Cortez' mining lease with ECM, Inc., by which Cortez holds the South Pipeline property), include: (a) Reserve Claims GSR. A sliding scale gross smelter returns royalty ("GSR") for all gold produced from the "Reserve Claims," or some 52 claims that encompass all of the Pipeline and South Pipeline deposits. This royalty will cover, from July 1, 1999, proven and probable ore reserves containing approximately 8.3 million contained ounces of gold. The GSR on the Reserve Claims is tied to the gold price, without indexing for inflation or defla tion, as follows: Price of Gold Per Ounce ($U.S.) Gross Smelter Returns ---------------------------------------------------------- Below $210 0.40% $210-$229.99 0.50% $230-$249.99 0.75% $250-$269.99 1.30% $270-$309.99 2.25% $310-$329.99 2.60% $330-$349.99 3.00% $350-$369.99 3.40% $370-$389.99 3.75% $390-$409.99 4.00% $410-$429.99 4.25% $430-$449.99 4.50% $450-$469.99 4.75% $470 and above 5.00% (b) GAS Claims GSR. A sliding scale GSR for all gold produced from the remaining GAS Claims. The GAS Claims include some 310 lode mining claims, but production from 22 of the GAS Claims (those claims that encompass the South Pipeline reserve) will be subject to the Reserve Claims GSR. At present, apart from the Reserve Claims, there are no ore reserves on the GAS claims, but the GAS claims do host gold mineralization associated with the GAP and Windmill deposits. The GSR on the GAS Claims is tied to the gold price, without indexing for inflation or deflation, as follows: 6 Price of Gold Per Ounce ($U.S.) Gross Smelter Returns - ------------------------------------------------------------- Below $210 0.72% $210-$229.99 0.90% $230-$249.99 1.35% $250-$269.99 2.34% $270-$309.99 4.05% $310-$329.99 4.68% $330-$349.99 5.40% $350-$369.99 6.12% $370-$389.99 6.75% $390-$409.99 7.20% $410-$429.99 7.65% $430-$449.99 8.10% $450-$469.99 8.55% $470 and above 9.00% (c) The Saddle Area GSR. A 10% GSR on all gold and silver produced from any of the GAS Claims from January 1, 1999 until the commencement of commercial production from the South Pipeline deposit (this interest relates primarily to stockpiled material from the Crescent Pit and from the "saddle area," at South Pipeline). (d) The Silver GSR. A 7% GSR on all silver produced from any of the Reserve Claims or the GAS Claims commencing July 1, 1999. (e) The Other Products NSR. A 3% net smelter returns royalty on all products, other than gold or silver, produced from any of the Reserve Claims or GAS Claims, commencing July 1, 1999. A "Net Smelter Returns" royalty is measured by all of the revenues received by Cortez following the sale or final disposition of a given product, less the proportionate costs of refining such product for sale, transportation of the product to a market, and applicable insurance. The several GSR royalties (except for the Silver GSR)are payable in-kind and, under certain circumstances, the Company would be entitled to delayed production payments (i.e., non-recoupable payments) of $400,000 per year. 7 The Company's new arrangement with Cortez is governed by a new Royalty Agreement that will supersede the Agreement for Resolution of Disputes and Litigation and for the Formation of the South Pipeline Project, dated September 18, 1992, by which Royal Gold held its 20% net profits interest in South Pipeline. __________________ Cautionary "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995: With the exception of historical matters, the matters discussed in this Report on Form 8-K are forward-looking statements that involve risks and uncertainties that could cause actual events to differ materially from projec tions contained herein. Such forward-looking statements include statements regarding future cash flow and earnings, timing and amount of future production, and mineralization and reserves. Factors that could cause actual results to differ materially include, among others, various decisions and activities of Cortez, unanticipated grade, geological, metallurgical, processing or other problems at Cortez's Pipeline or South Pipeline properties, changes in project parameters as plans are refined by Cortez with respect to Pipeline and South Pipeline, the timing of the receipt of federal, state and local government permits for South Pipeline, results of current or planned exploration activities, environmental assessments, costs and risks, and changes in the gold price, as well as other factors described in the Report Form 8-K. Most of these factors are entirely beyond the Company's ability to predict, influence or control. These and other described risks are also discussed in greater detail in the Company's 10-K and 10-Q reports that have been filed with the SEC. The Company disclaims any obligation to update any forward-looking statement made herein. Readers are cautioned not to put undue reliance on forward-looking statements. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Not applicable (b) Not applicable (c) Exhibits (1)Royalty Agreement, dated April 1, 1999, between Royal Gold Inc. and the Cortez Joint Venture 8 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ROYAL GOLD, INC. (Registrant) Date: April 12, 1999 By: /s/ ------------------- Stanley Dempsey Chairman 9 ROYALTY AGREEMENT This Royalty Agreement (the "Agreement") is entered into as of April 1, 1999, by and among THE CORTEZ JOINT VENTURE,a joint venture formed under and governed by the laws of Nevada and comprised of Placer Cortez Inc., a Delaware corporation, and Kennecott Explorations (Australia) Ltd., a Delaware corporation (collectively, "Cortez"), PLACER DOME U.S. INC., a California corporation and the Manager of Cortez ("PDUS"), ROYAL GOLD, INC., a Delaware corporation ("Royal Gold") and ROYAL CRESCENT VALLEY INC.,a Nevada corporation ("Royal Crescent Valley"). RECITALS A. Cortez, PDUS, Royal Gold and Royal Crescent Valley are parties to that certain "Agreement for Resolution of Disputes and Litigation and for the Formation of the South Pipeline Project" dated as of September 18, 1992 (the "1992 Agreement"), pursuant to which, among other things, Royal Gold was granted a royalty on production from the GAS mining claims, as defined therein (the "1992 Royalty"). B. A dispute has arisen among the parties as to the interpretation of certain terms and conditions relating to the 1992 Royalty. C. The parties now wish to resolve all outstanding disputes concerning the 1992 Royalty by converting the 1992 Royalty into certain different royalties on production from the GAS mining claims and certain other properties owned and operated by Cortez in Crescent Valley, Nevada. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the receipt and sufficiency of which are hereby confirmed by all parties, the parties hereto agree as follows: 1. Definitions. The following terms shall have the meanings ascribed to them in this Section for all purposes of this Agreement: 1.1 "Annual Strategic Business Plan" means the annual strategic business plan prepared by Cortez along with any updates, as and when any of the same have been finalized and approved by the Cortez Management Committee. 1 1.2 "Commencement of Production" means the point in time when Cortez has completed all development activities for a particular mineral deposit including, without limitation, the construction of facilities, pre-stripping and the receipt of all permits required for operations, and Cortez has milled or otherwise processed ore mined and removed from such deposit for a start-up period of not less than sixty (60) consecutive days at a rate for that period of not less than seventy-five percent (75%) of the designed capacity of a particular mine. Where ore is mined from a particular mineral deposit and is processed in any Cortez facilities, Commencement of Production shall be the date when ore is first taken to that facility for processing on a commercial basis. Cortez shall notify Royal Gold of the date or dates of Commencement of Production for each particular deposit. 1.3 "Cortez Management Committee" means the Cortez Joint Venture Management Committee. 1.4 "Delayed Production Payments" means the payments, if any, to be paid by Cortez to Royal Gold as provided in Section 4 of this Agreement. 1.5 "ECM Lease" means that certain Mining Lease between Cortez and ECM, Inc. made effective April 15, 1991, as amended. 1.6 "GAS Claims" means all of those certain unpatented lode mining claims located in Lander County, Nevada and more specifically described in Exhibit A attached hereto and incorporated herein by reference, and all amendments and relocations thereof. 1.7 "Gross Smelter Returns" means the revenues attributed to Products mined and removed from the Reserve Claims or the GAS Claims, as the case may be, with no deduction for any costs paid by or charged to Cortez, except for deductions of Mining Law Reform Costs. The revenues attributed to Cortez shall be determined on a deemed market value basis, being the gross value of the Products determined as the total quantity of Products outturned to Cortez's account at the refiner and in the case of Products other than gold and silver not outturned to Cortez's account at the refiner, the total quantity of such products delivered to any customer, for any calendar quarter multiplied by (1) for gold, the average daily P.M. price fixing for gold by the London Bullion Association as reported in the Wall Street Journal or any other agreed upon successor publication for the applicable calendar 2 quarter, (2) for silver, the daily price fixing for silver by the London Bullion Association as reported in the Wall Street Journal, or any other agreed upon successor publication for the applicable calendar quarter, and (3) for all other Products, the deemed price shall be the Net Smelter Returns. 1.8 "Mining Law Reform Costs" means all amounts paid by or charged to Cortez for any royalty, assessment, production tax or other levy imposed on and measured by production, to the extent that any such levy is hereafter imposed by the United States on the production of Products from the public lands of the United States, in connection with reform of the Mining Law of 1872 or otherwise. 1.9 "Net Smelter Returns" means the actual price received by Cortez for the sale of Products other than gold and silver prior to delivery to any customer, refinery or upgrading facility and after deductions for any Mining Law Reform Costs, the costs of insuring, marketing, freight or transportation and, if applicable, refining and treatment costs, for such Products. 1.10 "New Deposit" shall have the meaning ascribed by Section 4.2 herein. 1.11 "Products" means all ores, minerals or materials of whatever kind and nature mined and removed from the Properties (excluding any commodities mined from the Properties and used by Cortez in the production of any Products), including any ores, minerals or materials which may be recovered as a result of reprocessing of tailings, dumps or other materials wherever located, if such materials were originally mined and removed from the Properties. If Cortez acquires any interest in oil, gas, geothermal resources or other minerals in the lands encompassed within the Properties, all oil, gas, geothermal resources and other minerals produced from such lands shall be Products. 1.12 "Properties" means the Reserve Claims and the GAS Claims. 1.13 "Reserve Claims" means those unpatented lode mining claims which encompass all of the known proven and probable reserves within the Pipeline and South Pipeline deposits as of the date of this Agreement, being those particular mining claims located in Lander County, Nevada and more specifically described in Exhibit B attached hereto and incorporated herein by reference, and all amendments and relocations thereof. 3 1.14 "Royalty" means the Gross Smelter Return royalties on gold and silver Products and Net Smelter Returns royalties on all other Products granted to Royal Gold on production from the Properties as provided in Section 3 of this Agreement. 1.15 "1998 Strategic Business Plan" means the 1998 strategic business plan prepared by Cortez, a copy of which was delivered to Royal Gold in July 1998, as amended by the parties' concurrence for the purpose of resolving the dispute referred to in Recital B above, to include year-end 1998 reserves and a new production plan incorporating such new reserves. 2. Termination of 1992 Royalty; Release of Claims. 2.1 Termination of 1992 Royalty. The parties hereby agree that the 1992 Royalty as created by the 1992 Agreement is hereby fully and finally terminated effective as of January 1, 1999, and except as specifically provided in this Agreement, Royal Gold shall have no further right, title or interest in and to the GAS mining claims as defined in the 1992 Agreement or the production of ores, minerals and materials therefrom. 2.2 Mutual Release of Claims. Each of Royal Gold and Royal Crescent Valley, on the one hand, and PDUS and Cortez, on the other hand, for themselves and for each of their affiliates, co-venturers and any of their respective successors, predecessors, and assigns, do hereby completely release and forever discharge each of the other parties, together with each of their affiliates, co-venturers and any of their respective successors, parents, subsidiaries, predecessors, assigns, officers, directors, agents and employees, from and against any and all rights, interests, claims, causes of action, damages, losses, liabilities, demands, costs and expenses of whatever kind or character, whether known or unknown, legal or equitable, which arise in any manner whatsoever from any actual or alleged acts, omissions, obligations, arrangements, relationships or circumstances occurring or existing in connection with the 1992 Royalty or those portions of the 1992 Agreement relating to the 1992 Royalty; provided, however, that nothing contained herein shall constitute any termination, release or waiver of rights with respect to those portions of the 1992 Agreement not relating to the 1992 Royalty. 3. Grant of Royalty. Cortez hereby grants to Royal Gold certain royalties on the production of Products from the Properties on the terms and conditions hereinafter contained. 4 3.1 Current GAS Claims Production. For all gold and silver Products produced from the GAS Claims from and after January 1, 1999 until the Commencement of Production from the South Pipeline deposit on the GAS Claims, Cortez shall pay to Royal Gold a royalty in the amount of ten percent (10%) of the Gross Smelter Returns. 3.2 Reserve Claims Gold Production. For all gold Products produced from the Reserve Claims from and after July 1, 1999, Cortez shall pay to Royal Gold a royalty equal to a percentage of Gross Smelter Returns determined in accordance with the following schedule: Price of Gold per Ounce ($U.S.) Gross Smelter Returns --------------------------------------------------------- Below $210 0.40% $210 - $229.99 0.50% $230 - $249.99 0.75% $250 - $269.99 1.30% $270 - $309.99 2.25% $310 - $329.99 2.60% $330 - $349.99 3.00% $350 - $369.99 3.40% $370 - $389.99 3.75% $390 - $409.99 4.00% $410 - $429.99 4.25% $430 - $449.99 4.50% $450 - $469.99 4.75% $470 and above 5.00% 3.3 Reserve Claims Silver Production. For all silver Products produced from the Reserve Claims from and after July 1, 1999, Cortez shall pay to Royal Gold a royalty in the amount of seven percent (7%) of the Gross Smelter Returns. 3.4 Reserve Claims Production (Excluding Gold and Silver). For all Products other than gold and silver produced from the Reserve Claims from and after July 1, 1999, Cortez shall pay to Royal Gold a royalty in the amount of three percent (3%) of the Net Smelter Returns. 3.5 GAS Claims Gold Production. For all gold Products produced from the GAS Claims (excluding any production subject to the royalty provided in Section 3.1 above), Cortez shall pay to Royal Gold a royalty equal to a percentage of Gross Smelter Returns determined in accordance with the following schedule: 5 Price of Gold per Ounce ($U.S.) Gross Smelter Returns --------------------------------------------------------- Below $210 0.72% $210 - $229.99 0.90% $230 - $249.99 1.35% $250 - $269.99 2.34% $270 - $309.99 4.05% $310 - $329.99 4.68% $330 - $349.99 5.40% $350 - $369.99 6.12% $370 - $389.99 6.75% $390 - $409.99 7.20% $410 - $429.99 7.65% $430 - $449.99 8.10% $450 - $469.99 8.55% $470 and above 9.00% 3.6 GAS Claims Silver Production. For all silver Products produced from the GAS Claims (excluding any production subject to the royalty provided in Section 3.1 above) Cortez shall pay to Royal Gold a royalty equal to seven percent (7%) of Gross Smelter Returns. 3.7 GAS Claims Production (Excluding Gold and Silver). For all Products other than gold and silver produced from the GAS Claims, Cortez shall pay to Royal Gold a royalty in the amount of three percent (3%) of the Net Smelter Returns. 3.8 Price of Gold. As used in the tables in Sections 3.2 and 3.5 above, the "Price of Gold" to be used to determine the applicable Gross Smelter Return for each quarterly Royalty payment shall be determined as set forth in Section 1.7. 4. Delayed Production Payments. Cortez shall be the sole judge of the rate, manner and timing of all operations on the Properties, exercisable in its sole discretion, and may reduce, modify, suspend or terminate any and all operations on the Properties at any time as Cortez, in its sole discretion, may eem appropriate. However, Cortez shall pay Delayed Production Payments to Royal Gold as follows: 4.1 Reserve Claims. In the event that the Royalty required to be paid to Royal Gold for production from the Reserve Claims during any calendar year is less than Four Hundred Thousand Dollars ($400,000), Cortez shall pay to Royal Gold a non-recoupable cash payment in an amount equal to the 6 difference between the Royalty owing to Royal Gold for production during such calendar year and Four Hundred Thousand Dollars ($400,000) (a "Delayed Production Payment"), such that Royal Gold shall receive no less than Four Hundred Thousand Dollars ($400,000) in total Royalty payments and Delayed Production Payments in respect of the Reserve Claims for each calendar year; provided, however, that (a) no Delayed Production Payment shall be due for any calendar year in which operations are suspended or terminated due to an event of force majeure as provided in Section 16, and (b) the operation of this Section 4.1 and Cortez's obligation to pay Delayed Production Payments hereunder shall fully and finally terminate at such time as Cortez has mined and processed at least seventy-five percent (75%) of the total reserves on the Reserve Claims as determined by Cortez as of January 1, 1999 (being total reserves of 8.90 million contained ounces). 4.2 GAS Claims. In the event that any deposit is discovered on the GAS Claims that contains more than five hundred thousand (500,000) contained ounces of gold in reserves (a "New Deposit" for purposes of this Section 4.2), Cortez shall, consistent with the orderly development of the Properties, commence and diligently pursue all requisite permits(s) including, without limitation, an approved plan of operations allowing it to mine and process such deposit. When Cortez has received all such requisite permit(s) and a sufficient period of time has passed, as determined by Cortez, to allow construction of all facilities and completion of pre-stripping necessary to allow production and processing of minerals to commence, Cortez shall pay to Royal Gold a Delayed Production Payment for any calendar year in which the Royalty required to be paid to Royal Gold for production from the New Deposit is less than Four Hundred Thousand Dollars ($400,000); provided, however, that (a) no Delayed Production Payment shall be due for any calendar year in which operations at a New Deposit are suspended or terminated due to an event of force majeure as provided in Section 16, and (b) the operation of this Section 4.2 and Cortez's obligation to pay Delayed Production Payments in respect of any New Deposit shall fully and finally terminate at such time as Cortez has mined and processed at least seventy-five percent (75%) of the reserves in the New Deposit as determined by Cortez as of the date of the Commencement of Production of the New Deposit. 5. Calculation and Delivery of Royalty Payments. Royalty payments shall be due and payable by the 27th day following the end of each calendar quarter during which Cortez mines and sells Products from the Reserve Claims or the GAS Claims, as the case may be. Royalty payments shall be accompanied by a 7 statement sufficient to allow Royal Gold to determine the method of computation of each Royalty payment and the accuracy thereof. Each statement furnished to Royal Gold shall be deemed to be correct and binding on Royal Gold unless, within eighteen (18) months of its receipt, Royal Gold notifies Cortez in writing that it disputes the correctness of such statement and specifies its objections in detail. Cortez shall maintain true and correct records of all Products mined, processed and sold from the Reserve Claims and the GAS Claims (or deemed to be sold) and Royal Gold shall have the right to audit such records at Cortez's offices during normal business hours upon reasonable prior notice, provided such audit is conducted by Royal Gold or by an accounting firm of recognized standing, at least one of whose members is a member of the American Institute of Certified Public Accountants. Cortez shall make available all books and records, refinery statements, and other invoices, receipts and records necessary for purposes of such audit, and shall make available work space and copying facilities, or permit Royal Gold and its representatives to install copying facilities for use in connection with its audit activities. 6. Method of Making Payments. All payments of money required to be made by Cortez to Royal Gold hereunder shall be made by check to Royal Gold on or before the due date at the office of Royal Gold, Suite 1000, 1660 Wynkoop, Denver, Colorado 80202, or such other address as may be designated in writing from time to time by Royal Gold. Upon written request from Royal Gold to Cortez prior to the due date of any payment of money, Royal Gold may direct that the payment be made by way of wire transfer to an account designated by Royal Gold. Upon making payment as provided herein, Cortez shall be relieved of any responsibility for the distribution of such payment among Royal Gold and any of its successors or assigns. 7. In Kind Payment. Royal Gold shall have the right to elect annually to receive its Royalty payment on gold Products (but not any other Products) in kind at the refinery. If Royal Gold desires to receive its royalty in kind, it shall provide notice to Cortez within thirty (30) days following execution of this Agreement, with respect to the Reserve Claims, and within thirty (30) days following receipt of notice from Cortez of Commencement of Production, with respect to any deposit on the GAS Claims, and within thirty (30) days prior to the commencement of each calendar year thereafter. Once Royal Gold makes an election, the election shall remain in effect for the remainder of the relevant calendar year. In the event that Royal Gold fails to provide notice to Cortez of its election, it shall be deemed to have elected not to receive its royalty in kind. In all cases where Royal Gold properly elects 8 to receive its royalty in kind, the parties shall cooperate as necessary to establish a separate account for Royal Gold at the refinery for the delivery to Royal Gold of its proportionate share of refined metals, and Royal Gold shall be solely responsible for all handling, transportation, insurance, marketing and sales costs and expenses attributable to its share of Products following delivery to its account at the refinery. If Cortez utilizes a bullion refinery that it owns or controls, it shall provide Royal Gold with the same services it would receive at a commercial refinery, at costs no greater than would be charged by such refinery. Such services will include storage, security and transfer to buyers. For purposes of determining the gold equivalent of the royalty due Royal Gold, gold shall be priced at the average daily P.M. price fixing of the London Bullion Association, as reported in the Wall Street Journal or any agreed-upon successor publication, for the calendar quarter for which the production royalty is payable. 8. Commingling. Cortez shall have the right to commingle Products with ores, minerals or materials produced from lands other than the Reserve Claims and the GAS Claims after such Products have been weighed or measured, sampled and analyzed in accordance with sound mining and metallurgical practices such that Royal Gold's Royalty can be reasonably and accurately determined. Upon request to Cortez, and at Royal Gold's expense, Royal Gold shall have the right to have a representative present at the time all such samples and measurements are taken. Royal Gold's representative shall have the right to secure sample splits for the purpose of confirming the accuracy of all measure ments. If Royal Gold's assay results differ from Cortez's, Cortez shall perform a check assay. Any remaining disputes concerning assays, or other disputes concerning commingling procedures or results, shall be subject to arbitration as provided in Section 17 hereof . 9. Stockpiling. Cortez may stockpile any ores, minerals or materials, or other Products from the Reserve Claims and the GAS Claims at such place or places as Cortez may elect. If Cortez stockpiles or holds in inventory any dore or other Products that have been processed and are in a form that is saleable without sale for more than one hundred twenty (120) days, such dore and other Products shall be deemed to have been sold on the last day of the one hundred twenty (120) day period and Cortez shall pay to Royal Gold the Royalty due to Royal Gold on such deemed sale calculated as provided in Section 3 hereof. 9 10. Royal Gold Access and Information. Royal Gold shall have access to the Properties and the right to receive information concerning the Properties as provided in this section. 10.1 Access to Properties. Royal Gold, at its sole risk and expense, shall have access to the Properties and to Cortez's facilities being used in connection with mining and processing operations on the Properties to inspect the same upon three (3) days' prior notice to Cortez and in such a manner as shall not hinder or interrupt unreasonably the operations of Cortez, provided, that Cortez recognizes there may be occasions when it is convenient or necessary for Royal Gold representatives to schedule visits on less than three (3) days' notice and Cortez shall consider waiving the advance notice request if, in its sole discretion, it determines such waiver will not constitute an unreasonable burden. 10.2 Delivery of Information and Data. From the date of execution of this Agreement and for the duration of the term of this Agreement, as provided n Section 14, Cortez shall deliver to Royal Gold not less than quarterly or otherwise shall make available the following data and information relating to operations on the Properties. (a) All material data relating to exploration results on the Properties, including without limitation all drill logs, assay reports, drill hole location maps, drill hole surveys and all results of geochemical, geophysical and geological surveys. (b) The monthly operations report prepared by the Cortez Mine General Manager for the Cortez Management Committee. (c) The Annual Strategic Business Plan. (d) The annual reserve report prepared by Cortez, along with any updates, as and when any of the same have been finalized and approved by the Cortez Management Committee. (e) The annual Plan and Budget prepared by Cortez relating to the Properties and any amendments thereto, as and when any of the same have been finalized and approved by the Cortez Management Committee. 10 (f) Any additional material engineering or economic studies or analyses prepared by Cortez and relating to the Properties, as and when any of the same have been finalized, provided to and approved by the Cortez Management Committee. 10.3 Proprietary Information. Notwithstanding any of the foregoing to the contrary, Royal Gold acknowledges that Cortez will not provide specific information relating to or which might reveal the nature of certain proprietary methodologies or technologies developed by Cortez, although Cortez will disclose to Royal Gold the location of any exploration targets on the Properties generated by such proprietary methodologies or technologies. In addition, in the event that Cortez develops in the future any proprietary methodologies, technologies or processes which are maintained by Cortez as confidential and which Cortez reasonably believes does or may constitute a competitive business advantage, the methodologies, technologies and processes, but not the results generated thereby, shall be withheld from Royal Gold pursuant to this Agreement. 10.4 Confidentiality. Royal Gold shall not, without the prior written consent of Cortez, disclose to any third party (excluding, however, any representative, affiliate, agent, consultant or contractor of Royal Gold who has a bona fide need to be informed, subject to the execution by such third party of a confidentiality agreement in conformance with the provisions of this section) any information or data concerning operations, including exploration, on the Properties which is not generally available to the public; provided, however, that upon not less than five (5) days' prior written notice to Cortez setting forth the nature and content of a proposed disclosure, Royal Gold may disclose information or data pertaining to the Properties: (a) to any third party to whom Royal Gold in good faith anticipates selling or assigning all or a part of Royal Gold's interest hereunder or (b) to any lender from whom Royal Gold is borrowing funds based upon or secured by its interest in the Properties, provided that Royal Gold shall have been provided with a confidentiality agreement executed by such third party in conformance with the provisions of this section. If a disclosure is required for compliance with applicable laws, rules, regulations or orders of any governmental agency or stock exchange having jurisdiction, Royal Gold shall provide as much prior notice to Cortez of the nature and contents of the proposed disclosure, for the review and comment of Cortez, as is reasonably possible in the circumstances. 10.5 Release of Forecasts. Royal Gold acknowledges that much of the information to be provided by Cortez pursuant to Section 10.2 constitute estimates and forecasts that are interpretive and/or speculative in nature. 11 Such information is in no manner warranted by Cortez. Royal Gold shall under no circumstance publicly release such information. Instead, Royal Gold agrees that it will rely only on its own forecasts and estimates for its business planning purposes and that it may release such forecasts and estimates so long as they are clearly identified as having been prepared by Royal Gold and not by Cortez. Royal Gold agrees to indemnify and hold Cortez harmless from any claim, demand, expense or liability associated with any use or reliance on any such information by Royal Gold or any third party. 11. Representations and Reliance. Cortez acknowledges that Royal Gold has relied in part on the accuracy of the 1998 Strategic Business Plan in deciding to enter into this Agreement. Royal Gold acknowledges that the 1998 Strategic Business Plan is merely Cortez's best estimate of future operations at Cortez, that, with the concurrence of Royal Gold, the 1998 year-end reserves were incorporated in the 1998 Strategic Business Plan in a summary fashion and without the degree of planning and scheduling that would normally occur in an Annual Strategic Business Plan, and that actual results of operations can differ materially from those anticipated in the 1998 Strategic Business Plan due to numerous factors both within and beyond the control of Cortez. Cortez represents and warrants to Royal Gold that as of the date of execution of this Agreement, (a) the 1998 Strategic Business Plan constitutes Cortez's most up to date and accurate estimate of future operations on the Properties, (b) Cortez is aware of no material errors or omissions in the 1998 Strategic Business Plan that have not been disclosed to Royal Gold and (c) there exist no additional or different estimate(s) of future operations on the Properties that have not been previously provided to Royal Gold. Royal Gold acknowledges that it has been provided or has been afforded the opportunity to review all data and information regarding the Properties and the operations thereon that it has deemed relevant in deciding to enter into this Agreement. Royal Gold acknowledges and agrees that it has relied entirely on its own estimates, assumptions, interpretations, calculations, conclusions and opinions of value of both the 1992 Royalty and the royalties granted hereunder and that, except with respect to the 1998 Strategic Business Plan as described above, it has not relied on any representations, warranties, statements, estimates, assumptions, interpretations, calculations, conclusions or opinions of Cortez or PDUS in deciding to enter this Agreement. 12 12. No Development Covenants. Cortez shall be the sole judge of the timing, rate, manner and method of production from the Properties and may delay, suspend, curtail, cease and modify any and all operations as it in its sole discretion may deem appropriate. Royal Gold's interest in the Properties shall be solely that of a non participating royalty holder and it shall have no rights to participate or influence management or decision-making regarding operations on the Properties. The parties hereto expressly disclaim any implied covenants of diligence with respect to operations on the Properties, including without limitation all exploration, development, mining and processing operations, and Royal Gold hereby acknowledges that it has received express consideration in this Agreement in lieu of any such implied covenants. 13. Nature of Relationship. Nothing in this Agreement shall be deemed to constitute either party the partner of the other, nor to constitute either party the agent or legal representative of the other, nor to create any fiduciary relationship between them. It is not the intention of the parties to create, nor shall this agreement be construed to create, any mining, commercial or other partnership. Neither party shall have any authority to act for or to assume any obligation or responsibility on behalf of the other party, except as otherwise expressly provided herein. The rights, duties, obligations and liabilities of the parties shall be several and not joint or collective. It is the express purpose and intention of the parties that Royal Gold shall receive only the production royalty interests in the Properties and the contractual rights provided in this Agreement and that Royal Gold shall have no other right, title or interest in and to the Properties. 14. Term of Agreement. The royalty interests in the Properties granted to Royal Gold by this Agreement shall be in the nature of interests in real property which are perpetual and run with the land. The term of the contractual provisions of this Agreement shall continue for so long as Cortez retains any interest in the Properties, and shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto. 15. Abandonment of Properties. 15.1 Prior Rights. The parties acknowledge and agree that Cortez has prior obligations to its co-venturers and other third parties to offer its properties upon a decision to abandon. Royal Gold agrees that its rights in this Section 15 shall be subject to the prior satisfaction by Cortez of all of its contractual obligations existing prior to the date of this Agreement. Subject to the satisfaction of such prior obligations, 13 Cortez shall take no action with respect to possible abandonment or disposition of the Properties that causes any prejudice to the rights of Royal Gold provided in this Section 15. 15.2 Mining Claims. Subject to section 15.1, Cortez may terminate or abandon its interest in any or all of the Properties at any time as it may in its sole discretion deem appropriate, subject only to the provisions of this section. In the event Cortez wishes to abandon any or all of the unpatented mining claims comprising a portion of the Properties which it owns, it shall provide Royal Gold with not less than thirty (30) days prior notice of its intention to do so and offer to transfer such mining claims to Royal Gold. At any time during the thirty (30) day period, Royal Gold may notify Cortez that it elects to accept transfer of such mining claims. In that event Cortez shall transfer the mining claims to Royal Gold (a) by quitclaim and without warranty whatsoever, (b) upon the express agreement of Royal Gold to accept any and all liabilities whatsoever associated with such mining claims, whether accrued or unaccrued, actual or contingent, past, present or future, and (c) upon the express agreement of Royal Gold to hold harmless and indemnify Cortez for any and all claims, damages, costs and expenses associated with any such liabilities. 15.3 Leased Properties. In the event that Cortez wishes to terminate any or all of its interest in that certain Mining Lease with ECM, Inc., or any successor lease or contractual arrangement between Cortez and ECM, Inc. by which Cortez controls a portion of the Properties (the "Lease"), it shall provide Royal Gold with not less than thirty (30) days prior notice of its intention to do so and offer to assign the Lease to Royal Gold. At any time during the thirty (30) day period, Royal Gold may notify Cortez that it elects to accept assignment of the Lease. In that event and assuming it has the contractual right to do so under the terms of the Lease, Cortez shall assign the Lease to Royal Gold (a) without warranty whatsoever, (b) upon the express agreement of Royal Gold to accept any and all liabilities whatsoever associated with the Lease and the properties subject thereto, whether accrued or unaccrued, actual or contingent, past, present or future, and (c) upon the express agreement of Royal Gold to hold harmless and indemnify Cortez for any and all claims, damages, costs and expenses associated with any such liabilities. 16. Force Majeure. The obligations of Cortez hereunder shall be suspended to the extent and for the period that performance is prevented by any cause, whether foreseeable or unforeseeable, beyond its reasonable control, including, 14 without limitation, labor disputes (however arising and whether or not employee demands are reasonable or within the power of Cortez to grant); acts of God; laws, regulations, orders, instructions or requests of any government or governmental entity; judgments or orders of any court; inability to obtain on reasonably acceptable terms and within such periods of time as are customary or reasonable in the applicable jurisdictions any public or private license, permit or other authorization; curtailment or suspension of activities to remedy or avoid an actual or alleged, present or prospective violation of law including, without limitation, federal, state or local environmental or safety standards; acts of war, whether declared or undeclared; riot or civil strife; fire, explosion, earthquake, storm, flood or other adverse weather condition; inability to obtain labor, transportation, materials, machinery, equipment, supplies, utilities or services; accidents; breakdown of equipment, machinery or facilities; or any other cause whether similar or dissimilar to the foregoing. In addition to the foregoing, an event of force majeure shall exist if Cortez decides, acting in good faith, to suspend develop ment, mining or processing operations at the Properties due to safety concerns, or economic circumstances, including without limitation low prevailing prices for Products or materially increased costs of operation, which lead Cortez to conclude that continuing operations would be contrary to its financial best interests. Cortez shall promptly give notice to Royal Gold of the suspension of performance, stating the nature of the suspension, the reasons therefor, and the expected duration thereof. Cortez shall resume performance as soon as reasonably possible. 17. Technical Dispute Resolution. The parties hereto acknowledge that technical issues relating to accounting, commingling and stockpiling may arise in the future based upon changes of circumstances which the parties are not able to anticipate at the time of the execution of this Agreement. Cortez and Royal Gold each agree to negotiate in good faith to attempt to resolve any disputes which arise with respect to such technical issues. In the event that the parties are not able to resolve any dispute of a technical nature which involves a claim for payment or the assertion of a cost or liability by either party of an amount not more than Five Million Dollars ($5,000,000), the resolution of which will not otherwise result in this Agreement being declared void, rescinded or otherwise unenforce able by either party, such a dispute shall be resolved by binding arbitration. The arbitration shall be conducted in accordance with the rules of the American Arbitration Association, except (a) the parties agree that they shall each choose one arbitrator experienced in the technical area involved in the 15 dispute and that the two arbitrators so named shall choose a third arbitrator to complete the panel of three (3) arbitrators; (b) the parties shall be entitled to reasonable discovery prior to the arbitration hearing, as etermined by the arbitrators, (c) the arbitrators shall be entitled, in their reasonable discretion, to make equitable decisions to govern the parties' future conduct with respect to such technical matters, and (d) the arbitrators shall be entitled, in their reasonable discretion, to award costs of arbitration and attorneys' fees to the prevailing party. It is the intent of the parties hereto that such technical decisions be rendered in a manner which is economically neutral between the parties, but which recognize the relationship between the parties as one of operator and royalty holder with the operator being solely entitled to make operational decisions in its discretion as otherwise provided in this Agreement. 18. Instruments for Recording. The parties shall execute deed(s) in the form of Exhibit C attached hereto and by this reference made a part hereof. Cortez shall record the deed(s) in the office of the Lander County Recorder to provide public notice of the termination of the 1992 Royalty and of the royalties granted to Royal Gold hereunder. 19. Miscellaneous Provisions. 19.1 Notices. All notices given in connection herewith shall be in writing, and all such notices and deliveries to be made pursuant hereto shall be given or made in person, by certified or registered mail, by reputable overnight courier, or by facsimile acknowledged upon receipt. Such notices and deliveries shall be deemed to have been duly given and received when actually delivered in person or sent by facsimile (during normal business hours), on the next business day following the date they are sent by courier, or three business days after registered or certified mailing when deposited in a receptacle for United States or Canadian mail, postage prepaid, and addressed as follows: For PDUS and Cortez: Placer Dome U.S. Inc. Attention: Corporate Secretary Suite 600-1055 Dunsmuir Street Vancouver, B.C., Canada V7X 1L3 16 with a copy to: Cortez Joint Venture Attention: Mine General Manager Box HC66-50 Beowawe, Nevada 89821-9708 and a copy to: Kennecott Exploration (Australia), Ltd. Attention: President and Chief Executive Officer Kennecott Minerals Company 224 North 2200 West Salt Lake City, Utah 84116 For Royal Gold: Royal Gold, Inc. Attention: President 1660 Wynkoop Street, Suite 1000 Denver, Colorado 80202-1132 19.2 Assignments. No assignment of this Agreement or any interest created hereunder shall be effective until receipt by the non-assigning party of notice of the assignment and the written agreement of the assignee to assume and be bound by all of the obligations of the assigning party pursuant to this Agreement. No assignment by either party of its rights to receive payments hereunder shall require the non-assigning party to deliver payments to more than one (1) party or to more than one (1) address or account. In the event either party makes assignments such that more than one (1) party is otherwise entitled to payment hereunder, the assigning party shall designate a single party and place for receipt of payment. 19.3 Attorneys' Fees and Costs. In the event litigation is commenced by any party against any other party hereto in connection with the negotiation, execution, interpretation or enforcement of this Agreement or for the breach of any representation or warranty, expressed or implied, in this Agreement, then the Court shall award reasonable attorneys' fees and costs to the prevailing party(ies), including all such fees and costs associated with any appeal(s). 17 19.4 No Waiver. No waiver of any breach of any one or more of the conditions or covenants of this Agreement by any party shall be deemed to imply or constitute a waiver of a breach of any other condition or covenant in this Agreement or of a breach of the same condition or covenant in the future. 19.5 Entire Agreement. This Agreement is the complete expression of all agreements, contracts, covenants, and promises between the Parties, and all negotiations, understandings, and agreements between the Parties are set forth in this agreement, which solely and completely expresses their understanding, and shall be construed without reference to any such negotiations, understandings and agreements. 19.6 Amendments. This Agreement may not be amended, modified or changed, nor shall any waiver of any provision hereof be effective, except by an instrument in writing and signed by the party or parties to be bound thereby. 19.7 Governing Law. This Agreement is made under and shall be interpreted and enforced in accordance with the laws of the State of Nevada, without giving effect to those principles of conflicts of laws which might otherwise require the application of the laws of another jurisdiction. 19.8 Authority. By their signatures below, each respective signatory represents that he or she has the express authority of the party for which he or she executes this Agreement and further has the express authority to bind his or her principal to the terms hereof. 19.9 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document only upon execution of this Agreement, in counterparts or otherwise, by all parties. 18 PLACER DOME U.S. INC., a California corporation By: /s/ ---------------------- Print Name: Jay K. Taylor Title: President and CEO Date: March 31, 1999 CORTEZ JOINT VENTURE, a Nevada joint venture By: /s/ ---------------------- Print Name: Jay K. Taylor Title: Chairman, Management Committee Date: March 31, 1999 ROYAL GOLD, INC., a Delaware corporation By: /s/ ----------------------- Print Name: Stanley Dempsey Title: Chairman and CEO Date: April 1, 1999 ROYAL CRESCENT VALLEY INC., a Nevada corporation By: /s/ --------------------- Print Name: Peter B.Babin Title: Vice President Date: April 1, 1999 19 EXHIBIT A Claim Name Recording Information BLM Serial No. Gas # 25A Book 390 Page 084 NMC 671367 Gas # 26 Book 287 Page 242 NMC 403033 Gas # 27 Book 287 Page 243 NMC 403034 Gas # 28 Book 287 Page 244 NMC 403035 Gas # 29 Book 287 Page 245 NMC 403036 Gas # 30 Book 287 Page 246 NMC 403037 Gas # 41A Book 390 Page 085 NMC 671368 Gas # 42 Book 287 Page 258 NMC 403049 Gas # 43 Book 287 Page 259 NMC 403050 Gas # 44 Book 287 Page 260 NMC 403051 Gas # 55A Book 390 Page 086 NMC 671369 Gas # 56 Book 287 Page 272 NMC 403063 Gas # 57 Book 287 Page 273 NMC 403064 Gas # 58 Book 287 Page 274 NMC 403065 Gas # 69A Book 390 Page 087 NMC 671370 Gas # 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NMC 471275 Gas #234 Book 309 Page 252 NMC 471276 Gas #235 Book 309 Page 253 NMC 471277 Gas #236 Book 309 Page 254 NMC 471278 Gas #237 Book 309 Page 255 NMC 471279 Gas #238 Book 309 Page 256 NMC 471280 Gas #239 Book 309 Page 257 NMC 471281 Gas #240 Book 309 Page 258 NMC 471282 Gas #241 Book 309 Page 259 NMC 471283 Gas #242 Book 309 Page 260 NMC 471284 Gas #243 Book 309 Page 261 NMC 471285 Gas #244 Book 309 Page 262 NMC 471286 Gas #245 Book 309 Page 263 NMC 471287 Gas #246 Book 309 Page 264 NMC 471288 Gas #247 Book 309 Page 265 NMC 471289 Gas #248 Book 309 Page 266 NMC 471290 Gas #249 Book 309 Page 267 NMC 471291 Gas #250 Book 309 Page 268 NMC 471292 Gas #251 Book 309 Page 269 NMC 471293 Gas #254 Book 309 Page 270 NMC 471294 Gas #255 Book 309 Page 271 NMC 471295 Gas #256 Book 309 Page 272 NMC 471296 Gas #257 Book 309 Page 273 NMC 471297 Gas #258 Book 309 Page 274 NMC 471298 Gas #259 Book 309 Page 275 NMC 471299 Gas #260 Book 309 Page 276 NMC 471300 Gas #261 Book 309 Page 277 NMC 471301 Gas #262 Book 309 Page 278 NMC 471302 Gas #263 Book 309 Page 279 NMC 471303 Gas #264 Book 309 Page 280 NMC 471304 Gas #265 Book 309 Page 281 NMC 471305 Gas #266 Book 309 Page 282 NMC 471306 Gas #267 Book 309 Page 283 NMC 471307 Gas #268 Book 309 Page 284 NMC 471308 Gas #269 Book 309 Page 285 NMC 471309 Gas #270 Book 309 Page 286 NMC 471310 Gas #271 Book 309 Page 287 NMC 471311 Gas #272 Book 309 Page 288 NMC 471312 Gas #273 Book 309 Page 289 NMC 471313 Gas #274 Book 309 Page 290 NMC 471314 Gas #275 Book 309 Page 291 NMC 471315 Gas #276 Book 309 Page 292 NMC 471316 Gas #277 Book 309 Page 293 NMC 471317 Gas #278 Book 309 Page 294 NMC 471318 Gas #279 Book 309 Page 295 NMC 471319 Gas #280 Book 309 Page 296 NMC 471320 Gas #281 Book 309 Page 297 NMC 471321 Gas #282 Book 309 Page 298 NMC 471322 Gas #283 Book 309 Page 299 NMC 471323 Gas #284 Book 309 Page 300 NMC 471324 Gas #285 Book 309 Page 301 NMC 471325 Gas #286 Book 309 Page 302 NMC 471326 Gas #287 Book 309 Page 303 NMC 471327 Gas #288 Book 309 Page 304 NMC 471328 Gas #289 Book 309 Page 305 NMC 471329 Gas #290 Book 309 Page 306 NMC 471330 Gas #291 Book 309 Page 307 NMC 471331 Gas #292 Book 309 Page 308 NMC 471332 Gas #293 Book 309 Page 309 NMC 471333 Gas #294 Book 309 Page 310 NMC 471334 Gas #295 Book 309 Page 311 NMC 471335 Gas #296 Book 309 Page 312 NMC 471336 Gas #297 Book 309 Page 313 NMC 471337 Gas #298 Book 309 Page 314 NMC 471338 Gas #299 Book 309 Page 315 NMC 471339 Gas #300 Book 309 Page 316 NMC 471340 Gas #301 Book 309 Page 317 NMC 471341 Gas #302 Book 309 Page 319 NMC 471342 Gas #303 Book 309 Page 320 NMC 471343 Gas #304 Book 309 Page 321 NMC 471344 Gas #305 Book 309 Page 322 NMC 471345 Gas #306 Book 309 Page 323 NMC 471346 Gas #307 Book 309 Page 324 NMC 471347 Gas #308 Book 309 Page 325 NMC 471348 Gas #309 Book 309 Page 326 NMC 471349 Gas #310 Book 309 Page 327 NMC 471350 Gas #311 Book 309 Page 328 NMC 471351 Gas #312 Book 309 Page 329 NMC 471352 Gas #313 Book 309 Page 330 NMC 471353 Gas #314 Book 309 Page 331 NMC 471354 Gas #315 Book 309 Page 332 NMC 471355 Gas #316 Book 309 Page 333 NMC 471356 Gas #317 Book 309 Page 334 NMC 471357 Gas #318 Book 309 Page 335 NMC 471358 Gas #319 Book 309 Page 336 NMC 471359 Gas #320 Book 309 Page 337 NMC 471360 Gas #321 Book 309 Page 338 NMC 471361 Gas R12 Book 390 Page 025 NMC 671308 Gas R13 Book 390 Page 026 NMC 671309 Gas R14 Book 390 Page 027 NMC 671310 Gas R15 Book 390 Page 028 NMC 671311 Gas R31 Book 390 Page 039 NMC 671322 Gas R32 Book 390 Page 40 NMC 671323 Gas R33 Book 390 Page 41 NMC 671324 Gas R41 Book 390 Page 49 NMC 671332 Gas R45 Book 390 Page 050 NMC 671333 Gas R46 Book 390 Page 051 NMC 671334 Gas R47 Book 390 Page 052 NMC 671335 Gas R48 Book 390 Page 53 NMC 671336 Gas R49 Book 390 Page 54 NMC 671337 Gas R53 Book 390 Page 58 NMC 671341 Gas R54 Book 390 Page 059 NMC 671342 Gas R55 Book 390 Page 060 NMC 671343 Gas R59 Book 390 Page 061 NMC 671344 Gas R60 Book 390 Page 062 NMC 671345 Gas R61 Book 390 Page 063 NMC 671346 Gas R62 Book 390 Page 064 NMC 671347 Gas R63 Book 390 Page 065 NMC 671348 Gas R64 Book 390 Page 66 NMC 671349 Gas R67 Book 390 Page 69 NMC 671352 Gas R68 Book 390 Page 070 NMC 671353 Gas R69 Book 390 Page 071 NMC 671354 Gas R71 Book 390 Page 072 NMC 671355 Gas R72 Book 390 Page 073 NMC 671356 Gas R73 Book 390 Page 074 NMC 671357 Gas R74 Book 390 Page 075 NMC 671358 Gas R75 Book 390 Page 076 NMC 671359 Gas R76 Book 390 Page 077 NMC 671360 Gas R77 Book 390 Page 078 NMC 671361 Gas R78 Book 390 Page 079 NMC 671362 Gas R79 Book 390 Page 080 NMC 671363 Gas R80 Book 390 Page 081 NMC 671364 Gas R81 Book 390 Page 082 NMC 671365 Gas R113 Book 390 Page 083 NMC 671366 EXHIBIT B Claim Name Recording Information BLM Serial Number GAC # 24 Book 390 Page 96 NMC 635005 GAC # 26 Book 387 Page 533 NMC 635006 GAC # 28 Book 387 Page 535 NMC 432087 GAC # 30 Book 387 Page 537 NMC 432089 GAC # 35 Book 390 Page 98 NMC 432094 GAC # 35A Book 387 Page 556 NMC 667092 GAC # 36 Book 387 Page 542 NMC 432095 GAC # 37 Book 387 Page 543 NMC 432096 GAC # 37A Book 387 Page 552 NMC 667093 GAC # 38 Book 387 Page 544 NMC 432097 GAC # 39 Book 387 Page 545 NMC 432098 GAC # 40 Book 387 Page 546 NMC 432099 GAC # 42 Book 387 Page 548 NMC 432101 GAC # 42A Book 387 Page 553 NMC 667094 GAC # 42B Book 387 Page 554 NMC 667095 GAC # 43 Book 387 Page 549 NMC 432102 GAC # 44 Book 387 Page 550 NMC 432103 Gas R16 Book 390 Page 29 NMC 671312 Gas R17 Book 390 Page 30 NMC 671313 Gas R18 Book 390 Page 31 NMC 671314 Gas R19 Book 390 Page 32 NMC 671315 Gas R20 Book 390 Page 33 NMC 671316 Gas R21 Book 390 Page 34 NMC 671317 Gas R22 Book 390 Page 35 NMC 671318 Gas R23 Book 390 Page 36 NMC 671319 Gas R24 Book 390 Page 37 NMC 671320 Gas R25 Book 390 Page 38 NMC 671321 Gas R34 Book 390 Page 42 NMC 671325 Gas R35 Book 390 Page 43 NMC 671326 Gas R36 Book 390 Page 44 NMC 671327 Gas R37 Book 390 Page 45 NMC 671328 Gas R38 Book 390 Page 46 NMC 671329 Gas R39 Book 390 Page 47 NMC 671330 Gas R40 Book 390 Page 48 NMC 671331 Gas R50 Book 390 Page 55 NMC 671338 Gas R51 Book 390 Page 56 NMC 671339 Gas R52 Book 390 Page 57 NMC 671340 Gas R65 Book 390 Page 67 NMC 671350 Gas R66 Book 390 Page 68 NMC 671351 GRM 755 Book 397 Page 465 NMC 398292 GRM 757 Book 397 Page 468 NMC 398294 GRM 759 Book 397 Page 471 NMC 398296 GRM 761 Book 397 Page 474 NMC 398298 GRM 763 Book 397 Page 477 NMC 398300 GRM 764 Book 284 Page 277 NMC 398301 GRM 776 Book 397 Page 480 NMC 398311 GRM 777 Book 397 Page 483 NMC 398312 GRM 778 Book 397 Page 486 NMC 398313 GRM 779 Book 397 Page 489 NMC 398314 GRM 780 Book 397 Page 492 NMC 398315 GRM 781 Book 397 Page 495 NMC 398316 GRM 850 Book 397 Page 498 NMC 398353 -----END PRIVACY-ENHANCED MESSAGE-----