STREAM AND ROYALTY INTERESTS, NET

6 Months Ended

Dec. 31, 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 December 31, 2019 and June 30, 2019.

As of December 31, 2019 (Amounts in thousands):	Cost		Accumulated Depletion		Net
Production stage stream interests:
Mount Milligan	$	790,636	$	(201,382)	$	589,254
Pueblo Viejo		610,404		(179,796)		430,608
Andacollo		388,182		(100,873)		287,309
Rainy River		175,727		(20,438)		155,289
Wassa and Prestea		146,475		(62,182)		84,293
Total production stage stream interests		2,111,424		(564,671)		1,546,753
Production stage royalty interests:
Voisey's Bay		205,724		(98,684)		107,040
Peñasquito		99,172		(42,451)		56,721
Holt		34,612		(23,273)		11,339
Cortez		80,681		(13,055)		67,626
Other		487,224		(395,171)		92,053
Total production stage royalty interests		907,413		(572,634)		334,779
Total production stage stream and royalty interests		3,018,837		(1,137,305)		1,881,532
Development stage stream interests:
Khoemacau		66,605		—		66,605
Other		12,038		—		12,038
Development stage royalty interests:
Other		70,952		—		70,952
Total development stage stream and royalty interests		149,595		—		149,595
Exploration stage royalty interests:
Pascua-Lama		177,690		—		177,690
Other		124,274		—		124,274
Total exploration stage royalty interests		301,964		—		301,964
Total stream and royalty interests, net	$	3,470,396	$	(1,137,305)	$	2,333,091

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 $589.3 million as of December 31, 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’s stream interest.  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 updated 43-101 technical report 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.

Rainy River

RGLD Gold owns the right to purchase 6.50% of the gold produced from the Rainy River project, which is located in northwestern Ontario, Canada and is operated by New Gold, Inc. (“New Gold”), until 230,000 gold ounces have been delivered, and 3.25% thereafter; and 60% of the silver produced from the Rainy River project until 3.1 million silver ounces have been delivered, and 30% thereafter. As of December 31, 2019, approximately 32,200 ounces of gold and approximately 332,300 ounces of silver have been delivered to RGLD Gold. The Company’s carrying value for its stream interest at Rainy River is $155.3 million as of December 31, 2019.

During the quarter ended December 31, 2019, New Gold reported that it continued to advance a comprehensive mine optimization study that includes a review of alternative open pit and underground mining scenarios, and it expects to release the results of this study on February 13, 2020.  It is unclear at this point what impact, if any, the results of New Gold’s optimization study and any updates to the reserves and mineralized material at Rainy River will have on the carrying value of our stream interest.  The Company will continue to monitor these developments 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.  The outcome of these insolvency proceedings may impact our royalty interests and the associated carrying value, which is approximately $1.3 million as of December 31, 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 our interest to an amount less than the current carrying value or to zero is necessary.