STREAM AND ROYALTY INTERESTS, NET

3 Months Ended

Sep. 30, 2019

STREAM AND ROYALTY INTERESTS, NET

STREAM AND ROYALTY INTERESTS, NET

3.    STREAM AND ROYALTY INTERESTS, NET

The following tables summarize the Company’s stream and royalty interests, net as of September 30, 2019 and June 30, 2019.

As of September 30, 2019 (Amounts in thousands):	Cost		Accumulated Depletion		Net
Production stage stream interests:
Mount Milligan	$	790,635	$	(192,726)	$	597,909
Pueblo Viejo		610,404		(168,961)		441,443
Andacollo		388,182		(93,774)		294,408
Rainy River		175,727		(17,462)		158,265
Wassa and Prestea		146,475		(59,565)		86,910
Total production stage stream interests		2,111,423		(532,488)		1,578,935
Production stage royalty interests:
Voisey's Bay		205,724		(97,136)		108,588
Peñasquito		99,172		(41,414)		57,758
Holt		34,612		(22,936)		11,676
Cortez		80,681		(12,777)		67,904
Other		487,224		(390,591)		96,633
Total production stage royalty interests		907,413		(564,854)		342,559
Total production stage stream and royalty interests		3,018,836		(1,097,342)		1,921,494
Development stage stream interests:
Other		12,038		—		12,038
Development stage royalty interests:
Other		70,952		—		70,952
Total development stage stream and royalty interests		82,990		—		82,990
Exploration stage royalty interests:
Pascua-Lama		177,690		—		177,690
Other		122,844		—		122,844
Total exploration stage royalty interests		300,534		—		300,534
Total stream and royalty interests, net	$	3,402,360	$	(1,097,342)	$	2,305,018

As of June 30, 2019 (Amounts in thousands):	Cost		Accumulated Depletion		Net
Production stage stream interests:
Mount Milligan	$	790,635	$	(184,091)	$	606,544
Pueblo Viejo		610,404		(158,819)		451,585
Andacollo		388,182		(86,675)		301,507
Rainy River		175,727		(14,522)		161,205
Wassa and Prestea		146,475		(56,919)		89,556
Total production stage stream interests		2,111,423		(501,026)		1,610,397
Total production stage stream and royalty interests
Production stage royalty interests:
Voisey's Bay		205,724		(95,564)		110,160
Peñasquito		99,172		(40,659)		58,513
Holt		34,612		(22,570)		12,042
Cortez		20,878		(12,362)		8,516
Other		487,224		(386,501)		100,723
Total production stage royalty interests		847,610		(557,656)		289,954
Total production stage stream and royalty interests		2,959,033		(1,058,682)		1,900,351
Development stage stream interests:
Other		12,038		—		12,038
Development stage royalty interests:
Cortez		59,803		—		59,803
Other		70,952		—		70,952
Total development stage royalty interests		130,755		—		130,755
Total development stage stream and royalty interests		142,793		—		142,793
Exploration stage royalty interests:
Pascua-Lama		177,690		—		177,690
Other		118,482		—		118,482
Total exploration stage royalty interests		296,172		—		296,172
Total stream and royalty interests, net	$	3,397,998	$	(1,058,682)	$	2,339,316

Mount Milligan

The Company’s wholly-owned subsidiary, RGLD Gold AG (“RGLD Gold”), owns the right to purchase 35% of the payable gold and 18.75% of the payable copper produced from the Mount Milligan copper-gold mine in British Columbia, Canada, which is operated by an indirect subsidiary of Centerra Gold Inc. (“Centerra”).  The Company’s carrying value for its stream interest at Mount Milligan is $597.9 million as of September 30, 2019.

On October 30, 2019, Centerra reported that issues identified with decreasing long-term gold recoveries and increased costs in the short-to medium-term led them to record an impairment charge against their carrying value of the Mount Milligan mine under applicable accounting standards, and that it has begun a comprehensive technical review of the operation with the objective of publishing an updated 43-101 technical report in the coming months.  According to Centerra, the updated 43-101 report will include studies to optimize the economics of the mine as well as incorporate results of exploration drilling through calendar 2019.  While Centerra acknowledged that the extent of any changes in reserves and mineralized material cannot be precisely determined until all relevant studies and modeling have been completed, it expects that the mineral reserves and mineralized material at Mount Milligan will be materially reduced.  

A significant reduction in reserves and mineralized material could be an indicator of potential impairment for Royal Gold.  The financial impairment taken by Centerra does not impact the mine operating performance, and, further, a significant reduction in reserves and mineralized material at Mount Milligan may not result in an impairment given current high gold prices and our low depletion rates for the Mount Milligan stream interest.  It is unclear at this point what impact, if any,

the results of Centerra’s technical report work will have on the carrying value of our stream interest at Mount Milligan.  The Company will continue to monitor these developments at Mount Milligan in subsequent quarterly reporting periods.  

Other

During the quarter ended June 30, 2019, the Company was made aware of insolvency proceedings at one of our non-principal producing properties (El Toqui), and during the quarter ended September 30, 2019, the Company was made aware of insolvency proceedings at one of our evaluation stage properties.  The outcome of these insolvency proceedings may impact our royalty interests and the associated carrying values, which are approximately $1.4 million (El Toqui) and $2.7 million (evaluation stage interest) as of September 30, 2019.  The Company continues to monitor these insolvency proceedings as part of our regular asset impairment analysis.  Based on the results of these insolvency proceedings, the Company could determine that a future write-down of either interest to an amount less than the current carrying value or to zero is necessary.