What is a royalty?
A royalty is the right to receive a percentage or other denomination of mineral production from a mining operation.
Most of Royal Gold’s royalties are based on production generated from a mine. For example, a 2.0% gross value royalty on a mine that produces 100,000 ounces of gold annually, would generate payments having a value of nearly 2,000 ounces of gold per year. At a gold price of $1,600 per ounce, this would result in royalty revenue to us of nearly $3.2 million per year.
Types of royalties
The Company’s portfolio contains several different kinds of royalties or similar interests which are defined as follows:
Gross proceeds (GPR) royalty: A royalty in which payments are made on the contained ounces in a deposit rather than ounces recovered from metallurgical processing.
Gross smelter return (GSR) royalty: A defined percentage of the gross revenue from a resource extraction operation, less, if applicable, certain contract-defined costs paid by or charged to the operator.
Gross value (GV) royalty: A defined percentage of the gross value, revenue or proceeds from a resource extraction operation, without deductions of any kind.
Milling royalty (MR): A royalty on ore throughput at a mill.
Net profits interest (NPI) royalty: A defined percentage of the gross revenue from a resource extraction operation, after recovery of certain contract-defined pre-production costs, and after deduction of certain contract-defined mining, milling, processing, transportation, administrative, marketing and other costs.
Net smelter return (NSR) royalty: A defined percentage of the gross revenue from a resource extraction operation, less a proportionate share of incidental transportation, insurance, refining and smelting costs.
Net value royalty (NVR): A defined percentage of the gross revenue from a resource extraction operation, less certain contract-defined costs.