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ACQUISITIONS | 12 Months Ended
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Jun. 30, 2019
ACQUISITIONS |
ACQUISITIONS | 3. ACQUISITIONS Acquisition of Silver Stream on Khoemac a u Copper Project On February 25, 2019, the Company announced that its wholly-owned subsidiary, RGLD Gold AG (“RGLD Gold”), entered into a life of mine purchase and sale agreement with Khoemac a u Copper Mining (Pty.) Limited (“KCM”), a majority-owned subsidiary of Cupric Canyon Capital LP (together with its subsidiaries including KCM, “Cupric”) for the purchase of silver produced from the Khoemac a u copper-silver project (“Khoemac a u” or the “Project”) located in Botswana and owned by KCM. Cupric Canyon Capital LP is a private company owned by management and funds advised by Global Natural Resource Investments. Under the purchase and sale agreement, subject to the satisfaction of certain conditions, RGLD Gold will make advance payments totaling $212 million toward the purchase of 80% of the silver produced from Khoemac a u until certain delivery thresholds are met (the “Base Silver Stream”). At Cupric’s option and subject to various conditions, RGLD Gold will make up to an additional $53 million in advance payments for up to the remaining 20% of the silver produced from Khoemac a u (the “Option Silver Stream”). The stream rate will drop to 40% of silver produced from Khoemac a u following delivery to RGLD Gold of 32 million silver ounces under the Base Silver Stream, or to 50% of the silver produced from Khoemac a u following delivery of 40 million silver ounces to RGLD Gold should Cupric exercise the entire Option Silver Stream. RGLD Gold will pay a cash price equal to 20% of the spot silver price for each ounce delivered under the Base Silver Stream and Option Silver Stream; however, if Cupric achieves mill expansion throughput levels above 13,000 tonnes per day (30% above current mill design capacity), RGLD Gold will pay a higher ongoing cash price under the Base Silver Stream and Option Silver Stream for silver ounces delivered in excess of specific annual thresholds. RGLD Gold’s first advance payment under the Base Silver Stream is expected to occur after $100 million of net new debt and equity funding is spent on Khoemac a u. The $212 million in advance payments to be made under the Base Silver Stream will be made in quarterly installments as project development advances according to the following approximate schedule: $60 million in the third and fourth quarters of calendar 2019, $125 million in calendar 2020, and the balance in calendar 2021. RGLD Gold will fund the advance payments through cash on hand or cash advances from Royal Gold. Royal Gold will fund any advances made to RGLD Gold out of cash flow from operations and amounts available under our revolving credit facility, as required. Separate from the Base Silver Stream and Option Silver Stream, and subject to various conditions, RGLD Gold will make up to $25 million available to Cupric toward the end of development of Khoemac a u under a subordinated debt facility. Any amounts drawn by Cupric under the debt facility will carry interest at LIBOR + 11% and have a term of seven years. RGLD Gold will have the right to force repayment of the debt facility upon certain events. The Company anticipates accounting for the Silver Stream and Option Stream (if exercised by Cupric) as an asset acquisition, consistent with the treatment of our other acquired streams. The $212 million in advance payments for the Base Silver Stream and $53 million in advance payments for the Option Silver Stream, plus direct transaction costs, will be recorded as a development stage stream interest within Stream and royalty interests, net on our consolidated balance sheets in the period advance payments occur. Acquisition of Additional Royalty Interest on Mara Rosa On June 29, 2018, Royal Gold, through its wholly-owned subsidiary RG Royalties, LLC, entered into an agreement to purchase a 1.75% Net Smelter Return (“NSR”) royalty on Amarillo Gold’s Mara Rosa gold project located in Goias State, Brazil for $10.8 million. The acquisition is in addition to the 1.00% NSR royalty on the Mara Rosa project previously acquired by International Royalty Corporation, another wholly-owned subsidiary of Royal Gold. The new Mara Rosa royalty agreement includes a right of first refusal on future financing opportunities based on production from the project. The acquisition of the additional royalty interest on Mara Rosa has been accounted for as an asset acquisition. The total purchase price of $10.8 million, plus direct transaction costs, has been recorded as an exploration stage royalty interest within Stream and royalty interests, net on our consolidated balance sheets. Acquisition of Contango ORE, Inc. Common Stock On June 28, 2018 and October 3, 2018, Royal Gold acquired 682,556 and 127,188 shares, respectively, of common stock of CORE for consideration of $26 per share pursuant to a Stock Purchase Agreement (“SPA”) entered into on April 5, 2018 between Royal Gold and certain individual stockholders of CORE.

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