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STREAM AND ROYALTY INTERESTS, NET | 12 Months Ended
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Jun. 30, 2017
STREAM AND ROYALTY INTERESTS, NET |
STREAM AND ROYALTY INTERESTS, NET | 4. STREAM AND ROYALTY INTERESTS, NET The following summarizes the Company’s stream and royalty interests as of June 30, 2017 and 2016:
As of June 30, 2017 (Amounts in thousands): |  | Cost |  | Accumulated Depletion |  | Net
Production stage stream interests: |  |  |  |  |  |  |  |  |
Mount Milligan |  | $ | 790,635 |  | $ | (114,327) |  | $ | 676,308
Pueblo Viejo |  |  | 610,404 |  |  | (67,149) |  |  | 543,255
Andacollo |  |  | 388,182 |  |  | (39,404) |  |  | 348,778
Wassa and Prestea |  |  | 146,475 |  |  | (22,715) |  |  | 123,760
Total production stage stream interests |  |  | 1,935,696 |  |  | (243,595) |  |  | 1,692,101
Production stage royalty interests: |  |  |  |  |  |  |  |  |
Voisey's Bay |  |  | 205,724 |  |  | (85,671) |  |  | 120,053
Peñasquito |  |  | 99,172 |  |  | (34,713) |  |  | 64,459
Holt |  |  | 34,612 |  |  | (19,669) |  |  | 14,943
Cortez |  |  | 20,873 |  |  | (10,633) |  |  | 10,240
Other |  |  | 483,643 |  |  | (337,958) |  |  | 145,685
Total production stage royalty interests |  |  | 844,024 |  |  | (488,644) |  |  | 355,380
Total production stage stream and royalty interests |  |  | 2,779,720 |  |  | (732,239) |  |  | 2,047,481
Development stage stream interests: |  |  |  |  |  |  |  |  |
Rainy River |  |  | 175,727 |  |  | - |  |  | 175,727
Other |  |  | 12,031 |  |  | - |  |  | 12,031
Total development stage stream interests |  |  | 187,758 |  |  | - |  |  | 187,758
Development stage royalty interests: |  |  |  |  |  |  |  |  |
Pascua-Lama |  |  | 380,657 |  |  | — |  |  | 380,657
Cortez |  |  | 59,803 |  |  | — |  |  | 59,803
Other |  |  | 63,811 |  |  | — |  |  | 63,811
Total development stage royalty interests |  |  | 504,271 |  |  | — |  |  | 504,271
Total development stage stream and royalty interests |  |  | 692,029 |  |  | — |  |  | 692,029
Total exploration stage royalty interests |  |  | 152,746 |  |  | — |  |  | 152,746
Total stream and royalty interests |  | $ | 3,624,495 |  | $ | (732,239) |  | $ | 2,892,256
As of June 30, 2016 (Amounts in thousands): |  | Cost |  | Accumulated Depletion |  | Impairments |  | Net
Production stage stream interests: |  |  |  |  |  |  |  |  |  |  |  |
Mount Milligan |  | $ | 783,046 |  | $ | (74,060) |  | $ | — |  | $ | 708,986
Pueblo Viejo |  |  | 610,404 |  |  | (21,902) |  |  | — |  |  | 588,502
Andacollo |  |  | 388,182 |  |  | (18,286) |  |  | — |  |  | 369,896
Wassa and Prestea |  |  | 96,413 |  |  | (7,816) |  |  | — |  |  | 88,597
Total production stage stream interests |  |  | 1,878,045 |  |  | (122,064) |  |  | — |  |  | 1,755,981
Production stage royalty interests: |  |  |  |  |  |  |  |  |  |  |  |
Voisey's Bay |  |  | 205,724 |  |  | (85,671) |  |  | - |  |  | 120,053
Peñasquito |  |  | 99,172 |  |  | (29,898) |  |  | - |  |  | 69,274
Holt |  |  | 34,612 |  |  | (17,124) |  |  | - |  |  | 17,488
Cortez |  |  | 10,630 |  |  | (10,000) |  |  | - |  |  | 630
Other |  |  | 531,735 |  |  | (342,460) |  |  | (18,605) |  |  | 170,670
Total production stage royalty interests |  |  | 881,873 |  |  | (485,153) |  |  | (18,605) |  |  | 378,115
Total production stage stream and royalty interests |  |  | 2,759,918 |  |  | (607,217) |  |  | (18,605) |  |  | 2,134,096
Development stage stream interests: |  |  |  |  |  |  |  |  |  |  |  |
Rainy River |  |  | 100,706 |  |  | - |  |  | - |  |  | 100,706
Other |  |  | 87,883 |  |  | (153) |  |  | (75,702) |  |  | 12,028
Total development stage stream interests |  |  | 188,589 |  |  | (153) |  |  | (75,702) |  |  | 112,734
Development stage royalty interests: |  |  |  |  |  |  |  |  |  |  |  |
Pascua-Lama |  |  | 380,657 |  |  | — |  |  | — |  |  | 380,657
Other |  |  | 66,414 |  |  | — |  |  | — |  |  | 66,414
Total development stage royalty interests |  |  | 447,071 |  |  | — |  |  | — |  |  | 447,071
Total development stage stream and royalty interests |  |  | 635,660 |  |  | (153) |  |  | (75,702) |  |  | 559,805
Total exploration stage royalty interests |  |  | 155,997 |  |  | — |  |  | (1,811) |  |  | 154,186
Total stream and royalty interests |  | $ | 3,551,575 |  | $ | (607,370) |  | $ | (96,118) |  | $ | 2,848,087
Phoenix Gold On December 20, 2016, the owner of the Phoenix Gold Project, Rubicon Minerals Corporation (“Rubicon”), announced a restructuring transaction under Canadian regulations. As part of the restructuring transaction, RGLD Gold’s gold stream interest was terminated. As discussed further below, the Company’s stream interest on the Phoenix Gold Project was written down to zero during the quarter ended March 31, 2016. In exchange for termination of the gold stream, RGLD Gold received approximately three million common shares of Rubicon and three Net Smelter Return (“NSR”) royalties on properties owned by Rubicon, including a 1.0% NSR on the Phoenix Gold Project. The fair value of the Rubicon common shares upon exchange was $3.4 million and is recorded within Other assets on our consolidated balance sheets and is accounted for under our available-for-sale accounting policy, which is also discussed in Note 2. The Company also recognized a corresponding gain on the fair value of the Rubicon common shares received upon exchange. The gain is recorded within Interest and other income on our consolidated statements of operations and comprehensive income (loss). The Company did not recognize any value for the 1.0% NSR on the Phoenix Gold Project received upon exchange as our interest on the Phoenix Gold Project was previously fully impaired. No value was assigned to the other royalties received upon exchange as no mineralization is attributable to the area subject to the royalty interests at the time of the exchange. Amendment to Mount Milligan On October 20, 2016, Centerra Gold Inc. (“Centerra”) and Thompson Creek Metals Company Inc. (“Thompson Creek”) completed the Plan of Arrangement (the “Arrangement”) previously announced on July 5, 2016, pursuant to which Centerra acquired all of the issued and outstanding common shares of Thompson Creek. RGLD Gold’s streaming interest at Mount Milligan was amended (the “amendment”) concurrently with the closing of the Arrangement. Under the terms of the amendment, RGLD Gold’s 52.25% gold stream at Mount Milligan was amended to a 35% gold stream and an 18.75% copper stream. RGLD Gold will continue to pay the lesser of $435 per ounce of gold delivered or the prevailing market price when purchased and will pay 15% of the spot price per metric tonne of copper delivered. Mount Milligan gold in concentrate in transit prior to October 20, 2016, was delivered to RGLD Gold under the previous 52.25% stream. Under the terms of both the original and amended agreements, there is a maximum of five months between concentrate shipment and final settlement. Accordingly, RGLD Gold began receiving gold and copper deliveries reflecting the amended stream agreement in April 2017. The Company incurred approximately $7.7 million in direct transaction costs associated with the amendment. These direct transaction costs have been capitalized as part of the Mount Milligan streaming interest within Stream and royalty interests, net on our consolidated balance sheets. Impairment of stream and royalty interests and royalty receivables In accordance with our impairment accounting policy discussed in Note 1, impairments in the carrying value of each stream or royalty interest are measured and recorded to the extent that the carrying value in each stream or royalty interest exceeds its estimated fair value, which is generally calculated using estimated future discounted cash‑flows. As part of the Company’s regular asset impairment analysis, the Company determined no impairment indicators were present as of June 30, 2017. The Company determined the presence of impairment indicators and recorded impairment charges for the fiscal years ended June 30, 2016 and 2015 as summarized in the following table and discussed in detail below:
|  | Fiscal Year Ended June 30,
|  | 2017 |  | 2016 |  | 2015
|  | (Amounts in thousands)
Phoenix Gold(1) |  | $ | — |  | $ | 75,702 |  | $ | —
Inata(2) |  |  | — |  |  | 11,982 |  |  | —
Wolverine(2) |  |  | — |  |  | 5,307 |  |  | 25,967
Other |  |  | — |  |  | 3,127 |  |  | 2,372
Total impairment of stream and royalty interests |  | $ | — |  | $ | 96,118 |  | $ | 28,339
Inata royalty receivable |  |  | — |  |  | 2,855 |  |  | —
Wolverine royalty receivable |  |  | — |  |  | (385) |  |  | 2,996
Total impairment of stream and royalty interests and royalty receivables |  | $ | — |  | $ | 98,588 |  | $ | 31,335
| (1) |  | Included in Other development stage stream interests in the above stream and royalty interests table.
| (2) |  | Included in Other production stage royalty interests in the above stream and royalty interests table.
Phoenix Gold RGLD Gold previously owned the right to purchase 6.30% of any gold produced from the Phoenix Gold Project until 135,000 ounces were delivered, and 3.15% thereafter. The Phoenix Gold Project is located in Red Lake, Ontario, Canada, and owned by Rubicon. On January 11, 2016, Rubicon provided an updated geologic model and mineralized material statement for the Phoenix Gold Project, which included a significant reduction in mineralized material compared to previous statements provided by Rubicon. Rubicon also announced that they were evaluating strategic alternatives, including merger and divestiture opportunities either at the corporate or asset level, obtaining new financing or capital restructurings. A significant reduction in mineralized material, along with recent decreases in the long‑term metal price assumptions used by the industry, are indicators of impairment. During the quarter ended March 31, 2016, the Company independently evaluated the updated geologic model and mineralized material statement in an effort to properly assess the recoverability of our carrying value. The Company’s technical evaluation was completed by internal and external personnel and included an economic analysis of the Phoenix Gold Project and a detailed review of the geological model and mineralized material statement. Based upon the results of the Company’s review of the updated geological model and mineralized material statement, and other factors, it was determined that our stream interest at the Phoenix Gold Project should be written down to zero as of March 31, 2016. Inata The Company owns a 2.5% gross smelter return royalty on all gold and silver produced from the Inata mine, located in Burkina Faso, West Africa, and operated by a subsidiary of Avocet Mining PLC (“Avocet”). The Company’s carrying value for its royalty interest at Inata was approximately $12.0 million as of December 31, 2015. As part of the Company’s impairment assessment for the three months ended March 31, 2016, the Company was notified of an updated mine plan at Inata, which included a significant reduction in the life of the mine. Based upon our review of the updated mine plan, our royalty interest was written down to zero as of March 31, 2016. The Company also had a royalty receivable of approximately $2.8 million associated with past due royalty payments on the Inata interest. As a result of Avocet’s financial and operational difficulties and our review of the updated mine plan at Inata, the Company believes payment of the receivable is uncertain and provided for an allowance against the entire royalty receivable as of March 31, 2016. The Company continues to pursue collection of all past due payments. Wolverine The Company owns a 0.00% to 9.445% sliding‑scale NSR royalty on all gold and silver produced from the Wolverine underground mine and milling operation located in Yukon Territory, Canada, and operated by Yukon Zinc Corporation (“Yukon Zinc”). As part of the Company’s impairment assessment for the three months ended December 31, 2014, the Company was notified of an updated mine plan at Wolverine, which included a significant reduction in reserves and resources when compared to the previous mine plan. A significant reduction in reserves and resources, along with decreases in the long‑term metal price assumptions used by the industry, are indicators of impairment. As part of the impairment determination, the fair value for Wolverine was estimated by calculating the net present value of the estimated future cash‑flows expected to be generated by the mining of the Wolverine deposits subject to our royalty interest. The estimates of future cash‑flows were derived from a life‑of‑mine model developed by the Company using Yukon Zinc’s updated mine plan information. The metal price assumptions used in the Company’s model were supported by consensus price estimates obtained from a number of industry analysts. The future cash‑flows were discounted using a discount rate which reflects specific market risk factors the Company associates with the Wolverine royalty interest. Following the impairment charge during the three months ended December 31, 2014, the Wolverine royalty interest has a carrying value of $5.3 million as of June 30, 2015. The Company had a royalty receivable of approximately $3.0 million associated with past due royalty payments on the Wolverine interest. As a result of financial and operational results experienced by Yukon Zinc and their decision to put the mine on care and maintenance, the Company determined that payment of the receivable is uncertain and provided for an allowance against the entire receivable as of June 30, 2015. The expense associated with the allowance is recorded within General and administrative expense on the Company’s consolidated statements of operations and comprehensive income (loss). During the second half of calendar 2015, Yukon Zinc completed bankruptcy proceedings in the Supreme Court of British Columbia and during the quarter ended March 31, 2016, we were made aware of no further intentions to recommission the mine. Based upon the updated developments and limited remaining mineralized material at Wolverine, the Company wrote down the remaining carrying value at Wolverine to zero as of March 31, 2016. Other As part of the Company’s regular asset impairment analysis during the three months ended March 31, 2016, including consideration of recent operator/property updates and developments, the Company determined that one production stage royalty interest and three exploration stage royalty interests should be written down to zero for a total impairment of approximately $3.1 million. As part of the Company’s regular asset impairment analysis during the three months ended September 30, 2014, the Company determined that one production stage royalty interest and one exploration stage royalty interest should be written down to zero for a total impairment of $1.8 million. As part of the termination of the Tulsequah Chief gold and silver stream, as discussed below, the Company wrote‑off approximately $0.6 million of direct acquisition costs during the three months ended December 31, 2014. Termination of the Tulsequah Chief Gold and Silver Stream On December 22, 2014, RGLD Gold terminated the Amended and Restated Gold and Silver Purchase and Sale Agreement (the “Tulsequah Agreement”), between RGLD Gold, the Company, Chieftain Metals Inc. and Chieftain Metals Corp. (together, “Chieftain”), relating to Chieftain’s Tulsequah Chief mining project located in British Columbia, Canada. Pursuant to the terms of the Agreement, Chieftain repaid RGLD Gold’s original $10.0 million advance payment. As a result of the termination of the Tulsequah Agreement and repayment of our investment, the carrying value of the Tulsequah Chief gold and silver stream, which included our $10.0 million investment and approximately $0.6 million of direct acquisition costs, was reduced to zero during the three months ended December 31, 2014.

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