UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~December~~March 31, ~~2017~~2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-13357

Royal Gold, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		84-0835164
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation)		Identification No.)

1660 Wynkoop Street, Suite 1000
Denver, Colorado		80202
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code (303) 573-1660

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were ~~65,455,293~~65,519,664 shares of the Company’s common stock, par value $0.01 per share, outstanding as of ~~February 1, 2018~~April 25, 2019.


Title of Each Class	Trading Symbol	Name of the Exchange on which Registered
Common Stock, $0.01 par value	RGLD	Nasdaq Global Select Market

Table of Contents

INDEX

		PAGE

PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Balance Sheets	3
	Consolidated Statements of Operations and Comprehensive Income (Loss) ~~Income~~	4
	Consolidated Statements of Changes in Stockholder’s Equity	5
	Consolidated Statements of Cash Flows	56
	Notes to Consolidated Financial Statements	67

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1619

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2934

Item 4.	Controls and Procedures	3034

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	3035

Item 1A.	Risk Factors	3135

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3135

Item 3.	Defaults Upon Senior Securities	3135

Item 4.	Mine Safety Disclosure	3135

Item 5.	Other Information	3135

Item 6.	Exhibits	3135

SIGNATURES		3237

Table of Contents

ITEM 1. FINANCIAL STATEMENTS

ROYAL GOLD, INC.

Consolidated Balance Sheets

(Unaudited, in thousands except share data)


	December 31, 2017		June 30, 2017		March 31, 2019		June 30, 2018
ASSETS
Cash and equivalents	$	98,132	$	85,847	$	215,996	$	88,750
Royalty receivables		29,285		26,886		27,554		26,356
Income tax receivable		27,366		22,169		8,790		40
Stream inventory		7,359		7,883		12,413		9,311
Prepaid expenses and other		3,337		822		602		1,350
Total current assets		165,479		143,607		265,355		125,807
Stream and royalty interests, net (Note 2)		2,810,616		2,892,256
Stream and royalty interests, net (Note 3)						2,381,592		2,501,117
Other assets		53,305		58,202		52,438		55,092
Total assets	$	3,029,400	$	3,094,065	$	2,699,385	$	2,682,016
LIABILITIES
Accounts payable	$	2,251	$	3,908	$	5,005	$	9,090
Dividends payable		16,363		15,682		17,361		16,375
Income tax payable		15,097		5,651		16,251		18,253
Foreign withholding taxes payable		3,451		3,425
Withholding taxes payable						2,861		3,254
Other current liabilities		4,413		5,617		7,786		4,411
Total current liabilities		41,575		34,283		49,264		51,383
Debt (Note 3)		493,486		586,170
Debt (Note 4)						362,915		351,027
Deferred tax liabilities		147,548		121,330		90,321		91,147
Uncertain tax positions		30,187		25,627		36,524		33,394
Other long-term liabilities		16,787		6,391		-		13,796
Total liabilities		729,583		773,801		539,024		540,747
Commitments and contingencies (Note 10)
Commitments and contingencies (Note 11)
EQUITY
Preferred stock, $.01 par value, 10,000,000 shares authorized; and 0 shares issued		—		—		—		—
Common stock, $.01 par value, 200,000,000 shares authorized; and 65,307,285 and 65,179,527 shares outstanding, respectively		653		652
Common stock, $.01 par value, 200,000,000 shares authorized; and 65,400,304 and 65,360,041 shares outstanding, respectively						654		654
Additional paid-in capital		2,186,648		2,185,796		2,199,349		2,192,612
Accumulated other comprehensive income		687		879
Accumulated earnings		69,842		88,050
Accumulated other comprehensive loss						-		(1,201)
Accumulated losses						(74,563)		(89,898)
Total Royal Gold stockholders’ equity		2,257,830		2,275,377		2,125,440		2,102,167
Non-controlling interests		41,987		44,887		34,921		39,102
Total equity		2,299,817		2,320,264		2,160,361		2,141,269
Total liabilities and equity	$	3,029,400	$	3,094,065	$	2,699,385	$	2,682,016

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

ROYAL GOLD, INC.

Consolidated Statements of Operations and Comprehensive Income (Loss) ~~Income~~

(Unaudited, in thousands except share data)


	For The Three Months Ended				For The Six Months Ended				For The Three Months Ended				For The Nine Months Ended
	December 31,		December 31,		December 31,		December 31,		March 31,		March 31,		March 31,		March 31,
	2017		2016		2017		2016		2019		2018		2019		2018
Revenue	$	114,348	$	106,961	$	226,824	$	224,909
Revenue (Note 5)									$	109,778	$	115,983	$	307,362	$	342,807

Costs and expenses
Cost of sales		19,863		22,502		40,282		45,163		19,075		21,345		53,764		61,627
General and administrative		9,555		7,538		16,455		18,045		6,798		8,100		24,147		24,555
Production taxes		602		445		1,145		942		1,006		423		3,206		1,568
Exploration costs		1,358		2,476		4,561		5,764		330		536		5,534		5,098
Depreciation, depletion and amortization		42,008		39,519		81,701		79,621		39,368		39,679		120,726		121,380
Impairment of royalty interests										—		239,364		—		239,364
Total costs and expenses		73,386		72,480		144,144		149,535		66,577		309,447		207,377		453,592

Operating income		40,962		34,481		82,680		75,374
Operating income (loss)										43,201		(193,464)		99,985		(110,785)

Fair value changes in equity securities										1,781		—		(3,318)		—
Interest and other income		645		7,488		1,634		9,045		499		1,781		1,089		3,416
Interest and other expense		(9,034)		(9,823)		(17,651)		(18,128)		(7,499)		(8,294)		(22,786)		(25,946)
Income before income taxes		32,573		32,146		66,663		66,291
Income (loss) before income taxes										37,982		(199,977)		74,970		(133,315)

Income tax expense		(48,360)		(5,044)		(55,904)		(12,232)
Net (loss) income		(15,787)		27,102		10,759		54,059
Income tax (expense) benefit										(9,388)		45,859		(11,355)		(10,044)
Net income (loss)										28,594		(154,118)		63,615		(143,359)
Net loss attributable to non-controlling interests		1,022		960		3,105		3,791		178		468		3,753		3,573
Net (loss) income attributable to Royal Gold common stockholders	$	(14,765)	$	28,062	$	13,864	$	57,850
Net income (loss) attributable to Royal Gold common stockholders									$	28,772	$	(153,650)	$	67,368	$	(139,786)

Net (loss) income	$	(15,787)	$	27,102	$	10,759	$	54,059
Adjustments to comprehensive (loss) income, net of tax
Net income (loss)									$	28,594	$	(154,118)	$	63,615	$	(143,359)
Adjustments to comprehensive income (loss), net of tax
Unrealized change in market value of available-for-sale securities		(390)		822		(193)		822		—		(666)		—		(858)
Comprehensive (loss) income		(16,177)		27,924		10,566		54,881
Comprehensive income (loss)										28,594		(154,784)		63,615		(144,217)
Comprehensive loss attributable to non-controlling interests		1,022		960		3,105		3,791		178		468		3,753		3,573
Comprehensive (loss) income attributable to Royal Gold stockholders	$	(15,155)	$	28,884	$	13,671	$	58,672
Comprehensive income (loss) attributable to Royal Gold stockholders									$	28,772	$	(154,316)	$	67,368	$	(140,644)

Net (loss) income per share available to Royal Gold common stockholders:
Basic (loss) earnings per share	$	(0.23)	$	0.43	$	0.21	$	0.89
Net income (loss) per share available to Royal Gold common stockholders:
Basic earnings (loss) per share									$	0.44	$	(2.35)	$	1.03	$	(2.14)
Basic weighted average shares outstanding		65,306,766		65,149,518		65,271,131		65,133,102		65,398,369		65,307,324		65,389,499		65,283,019
Diluted (loss) earnings per share	$	(0.23)	$	0.43	$	0.21	$	0.88
Diluted earnings (loss) per share									$	0.44	$	(2.35)	$	1.03	$	(2.14)
Diluted weighted average shares outstanding		65,306,766		65,253,209		65,460,430		65,264,137		65,515,234		65,307,324		65,494,902		65,283,019
Cash dividends declared per common share	$	0.25	$	0.24	$	0.49	$	0.47	$	0.265	$	0.25	$	0.78	$	0.74

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

ROYAL GOLD, INC.

Consolidated Statements of Changes in Stockholder’s Equity

(unaudited, in thousands except share data)


	Royal Gold Stockholders
						Accumulated
				Additional		Other
	Common Shares			Paid-In		Comprehensive		Accumulated		Non-controlling		Total
	Shares	Amount		Capital		Income (Loss)		(Losses) Earnings		Interests		Equity
Balance at December 31, 2018	65,396,339	$	654	$	2,197,254	$	—	$	(86,238)	$	35,300	$	2,146,970
Stock-based compensation and related share issuances	3,965		—		1,675		—		—		—		1,675
Other	—		—		—		—		266		—		266
Contributions from non-controlling interests	—		—		420		—		—		(201)		219
Net income	—		—		—		—		28,772		(178)		28,594
Other comprehensive loss	—		—		—		—		—		—		—
Dividends declared	—		—		—		—		(17,363)		—		(17,363)
Balance at March 31, 2019	65,400,304	$	654	$	2,199,349	$	—	$	(74,563)	$	34,921	$	2,160,361

	Royal Gold Stockholders
						Accumulated
				Additional		Other
	Common Shares			Paid-In		Comprehensive		Accumulated		Non-controlling		Total
	Shares	Amount		Capital		Income (Loss)		(Losses) Earnings		Interests		Equity
Balance at December 31, 2017	65,307,285	$	653	$	2,186,648	$	687	$	69,842	$	41,987	$	2,299,817
Stock-based compensation and related share issuances	1,733		—		1,603		—		—		—		1,603
Contributions from non-controlling interests	—		—		—		—		—		134		134
Net loss	—		—		—		—		(153,650)		(468)		(154,118)
Other comprehensive loss	—		—		—		(666)		—		—		(666)
Dividends declared	—		—		—		—		(16,365)		—		(16,365)
Balance at March 31, 2018	65,309,018	$	653	$	2,188,251	$	21	$	(100,173)	$	41,653	$	2,130,405

	Royal Gold Stockholders
						Accumulated
				Additional		Other
	Common Shares			Paid-In		Comprehensive		Accumulated		Non-controlling		Total
	Shares	Amount		Capital		Income (Loss)		(Losses) Earnings		Interests		Equity
Balance at June 30, 2018	65,360,041	$	654	$	2,192,612	$	(1,201)	$	(89,898)	$	39,102	$	2,141,269
Stock-based compensation and related share issuances	40,263		—		3,527		—		—		—		3,527
Other	—		—		—		—		266		—		266
Contributions from non-controlling interests	—		—		3,210		—		—		(428)		2,782
Net loss	—		—		—		—		67,368		(3,753)		63,615
Other comprehensive loss	—		—		—		1,201		(1,201)		—		—
Dividends declared	—		—		—		—		(51,098)		—		(51,098)
Balance at March 31, 2019	65,400,304	$	654	$	2,199,349	$	—	$	(74,563)	$	34,921	$	2,160,361

	Royal Gold Stockholders
						Accumulated
				Additional		Other
	Common Shares			Paid-In		Comprehensive		Accumulated		Non-controlling		Total
	Shares	Amount		Capital		Income (Loss)		(Losses) Earnings		Interests		Equity
Balance at June 30, 2017	65,179,527	$	652	$	2,185,796	$	879	$	88,050	$	44,887	$	2,320,264
Stock-based compensation and related share issuances	129,491		1		2,455		—		—		—		2,456
Contributions from non-controlling interests	—		—		—		—		—		339		339
Net loss	—		—		—		—		(139,786)		(3,573)		(143,359)
Other comprehensive loss	—		—		—		(858)		—		—		(858)
Dividends declared	—		—		—		—		(48,437)		—		(48,437)
Balance at March 31, 2018	65,309,018	$	653	$	2,188,251	$	21	$	(100,173)	$	41,653	$	2,130,405

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

ROYAL GOLD, INC.

Consolidated Statements of Cash Flows

(Unaudited, in thousands)


	For The Six Months Ended				For The Nine Months Ended
	December 31,		December 31,		March 31,		March 31,
	2017		2016		2019		2018
Cash flows from operating activities:
Net income	$	10,759	$	54,059
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)					$	63,615	$	(143,359)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, depletion and amortization		81,701		79,621		120,726		121,380
Amortization of debt discount and issuance costs		7,413		6,751		11,882		11,200
Non-cash employee stock compensation expense		4,395		6,443		5,510		5,958
Deferred tax expense (benefit)		28,958		(3,211)
Fair value changes in equity securities						3,318		—
Deferred tax benefit						(5,329)		(31,583)
Impairment of royalty interests						—		239,364
Other		(158)		(4,638)		—		(199)
Changes in assets and liabilities:
Royalty receivables		(2,399)		(7,135)		(1,198)		(909)
Stream inventory		524		(689)		(3,102)		(4,816)
Income tax receivable		(5,197)		(52)		(8,750)		21,020
Prepaid expenses and other assets		(328)		(835)		2,474		3,224
Accounts payable		(1,658)		(1,832)		(4,326)		(939)
Income tax payable		9,445		(12,120)		(2,002)		6,779
Foreign withholding taxes payable		26		1,636
Withholding taxes payable						(393)		227
Uncertain tax positions		4,560		6,052		3,130		10,989
Other liabilities		9,193		822		(4,646)		13,473
Net cash provided by operating activities	$	147,234	$	124,872	$	180,909	$	251,809

Cash flows from investing activities:
Acquisition of stream and royalty interests		—		(192,818)		(1,055)		(1,012)
Purchase of equity securities						(3,573)		—
Other		(94)		1,774		(157)		(1,251)
Net cash used in investing activities	$	(94)	$	(191,044)	$	(4,785)	$	(2,263)

Cash flows from financing activities:
Borrowings from revolving credit facility		—		70,000
Repayment of revolving credit facility		(100,000)		—		—		(175,000)
Net payments from issuance of common stock		(3,541)		(2,320)		(1,982)		(3,502)
Common stock dividends		(31,391)		(30,035)		(50,114)		(47,755)
Purchase of additional royalty interest from non-controlling interest		—		(1,438)
Contributions from non-controlling interest						3,210		—
Other		77		(2,680)		8		240
Net cash (used in) provided by financing activities	$	(134,855)	$	33,527
Net increase (decrease) in cash and equivalents		12,285		(32,645)
Net cash used in financing activities					$	(48,878)	$	(226,017)
Net increase in cash and equivalents						127,246		23,529
Cash and equivalents at beginning of period		85,847		116,633		88,750		85,847
Cash and equivalents at end of period	$	98,132	$	83,988	$	215,996	$	109,376

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

1. OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ~~ISSUED~~ADOPTED AND RECENTLY ~~ADOPTED~~ISSUED ACCOUNTING STANDARDS

Royal Gold, Inc. (“Royal Gold”, the “Company”, “we”, “us”, or “our”), together with its subsidiaries, is engaged in the business of acquiring and managing ~~precious metals~~metal streams, royalties and similar interests. We seek to acquire existing stream and royalty interests or to finance mining projects that are in production or in the development stage in exchange for stream or royalty interests. A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or more metals produced from a mine at a price determined for the life of the transaction by the purchase agreement. ~~Royalties are~~A royalty is a non-operating ~~interests~~interest in a mining ~~projects~~project that ~~provide~~provides the right to revenue or metals produced from the project after deducting contractually specified costs, if any.

Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of management, all adjustments which are of a normal recurring nature considered necessary for a fair presentation of our interim financial statements have been included in this Form 10-Q. Operating results for the three and ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2019 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, ~~2018.~~2019. These interim unaudited financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2017~~2018 filed with the Securities and Exchange Commission on August ~~10, 2017~~9, 2018 (“Fiscal ~~2017~~2018 10-K”).

Certain amounts in the prior period financial statements have been reclassified for comparative purposes to conform with the presentation in the current period financial statements. Reclassified amounts were not material to the financial statements.

Recently ~~Issued and~~ Adopted Accounting Standards

~~Recently Issued~~Revenue Recognition

~~In May 2014, the Financial~~On July 1, 2018, we adopted Accounting Standards ~~Board~~Codification 606 - Revenue from Contracts with Customers (“~~FASB”~~ASC 606”) ~~issued Accounting Standards Update (“ASU”)~~using the modified retrospective method of transition. Under this transition approach, we applied ASC 606 to all existing contracts for which all (or substantially all) of the revenue attributable to a contract had not been recognized under legacy revenue guidance. The guidance ~~for the recognition~~ of ~~revenue from~~ASC 606 will also be applied to any new contracts ~~with customers. This ASU superseded virtually~~entered into on or after July 1, 2018.

ASC 606 supersedes nearly all of the existing revenue recognition guidance under U.S. ~~GAAP. The core principle of the five step model is that an entity will~~GAAP and sets out a five-step revenue recognition framework to recognize revenue ~~when it transfers~~upon the transfer of control of goods or services to customers atin an amount that reflects the consideration to which itan entity expects to be entitled ~~in exchange~~ for those goods or services. ~~Entities can choose~~

For the three and nine months ended March 31, 2019, there was no impact to ~~apply the standard using either the full retrospective approach~~our reported revenue, operating costs and expenses or net income attributable to Royal Gold common stockholders as a ~~modified retrospective approach. The standard is effective for the Company’s fiscal year beginning~~result of adopting ASC 606, as compared to legacy revenue guidance under U.S. GAAP. In addition, no cumulative catch-up adjustment to accumulated losses was required on July 1, ~~2018. Early adoption is permitted.~~2018 as a result of adopting ASC 606. Please refer to Note 5 for additional discussion.

Recognition and Measurement of Financial Instruments

~~We plan to implement the new ASU revenue recognition guidance as of~~On July 1, 2018, ~~using~~we adopted Accounting Standards Update (“ASU”) 2016-01 – Financial Instruments, which is guidance on the ~~modified retrospective method~~recognition and measurement of financial instruments. The amended guidance requires, among other things, that equity securities previously classified as available-for-sale be measured at fair value with changes in fair value recognized in net income rather than other comprehensive income (loss) as required under previous guidance. Upon adoption, the ~~cumulative effect, if any, of initial adoption to be recognized~~Company recorded a cumulative-effect adjustment in Accumulated ~~earnings~~losses ~~at the date~~ of ~~initial application. We are~~$1.2 million. The increase and decrease in ~~the initial stages~~fair value of our ~~evaluation~~equity securities was approximately $1.8 million and $3.3 million, respectively, for the three and nine months ended March 31, 2019 and is included in Fair value changes in equity securities on our consolidated statements of operations and comprehensive income (loss). The carrying value of the impact of the new standard on our accounting policies, processes, and financial reporting. Based on the evaluation performed to-date, we expect to identify similar performance obligations as compared with deliverables and separate units of account previously identified. We will continue to assess the impact of adopting this ASU throughout the remainder of fiscal year 2018.

~~Recently Adopted~~

In March 2016, the FASB issued ASU guidance related to stock-based compensation. The new guidance simplifies the accounting for stock-based compensation transactions, including income tax consequences, statement of cash flows presentation, estimating forfeitures when calculating compensation expense, and classification of awards as eitherCompany’s equity ~~or liabilities.~~

~~Table of Contents~~

~~ROYAL GOLD, INC.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

The new standard requires all excess tax benefits and tax deficiencies to be recognized as income tax benefit (expense) in the income statement. The new guidance also requires presentation of excess tax benefits as an operating activity on the statement of cash flows rather than a financing activity and requires presentation of cash paid to a tax authority when shares are withheld to satisfy the employer’s statutory income tax withholding obligation as a financing activity. The new guidance also provides for an election to account for forfeitures of stock-based compensation.

The Company adopted the ASU guidance effective July 1, 2017. With respect to the forfeiture election, the Company will continue its current practice of estimating forfeitures when calculating compensation expense. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements or related disclosures.

~~2. STREAM AND ROYALTY INTERESTS, NET~~

~~The following tables summarize the Company’s stream and royalty interests, net~~securities as of ~~December~~March 31, ~~2017 and June 30, 2017.~~

As of December 31, 2017 (Amounts in thousands):

Cost

Accumulated Depletion

Net
Production stage stream interests:

Mount Milligan

$
790,635

$
(129,652)

$
660,983
Pueblo Viejo

610,404

(93,202)

517,202
Andacollo

388,182

(51,328)

336,854
Wassa and Prestea

146,475

(34,446)

112,029
Rainy River

175,727

(581)

175,146
Total production stage stream interests

2,111,423

(309,209)

1,802,214
Production stage royalty interests:

Voisey's Bay

205,724

(85,671)

120,053
Peñasquito

99,172

(36,730)

62,442
Holt

34,612

(20,490)

14,122
Cortez

20,878

(11,094)

9,784
Other

483,795

(350,690)

133,105
Total production stage royalty interests

844,181

(504,675)

339,506
Total production stage stream and royalty interests

2,955,604

(813,884)

2,141,720

Development stage stream interests:

Other

12,031

—

12,031

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

516,302

—

516,302
Total exploration stage royalty interests

152,594

—

152,594
Total stream and royalty interests

$
3,624,500

$
(813,884)

$
2,810,616

Table of Contents

ROYAL GOLD, INC.

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

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

2019 and June 30, 2018 was $19.5 million and $19.2 million, respectively, and is included in Other assets on the Company’s consolidated balance sheets. As of March 31, 2019, the Company owns 809,744 common shares of Contango Ore, Inc. (“CORE”) and 3,597,823 common shares of Rubicon Minerals Corporation.

Recently Issued Accounting Standards

Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842) which requires recognition of right-of-use assets and lease payment liabilities on the balance sheet by lessees for virtually all leases currently classified as operating leases. Under ASU 2016-02, companies are permitted to make a policy election to not recognize lease assets or liabilities when the term of the lease is less than twelve months. The Company is evaluating the impacts of ASU 2016-02, which includes an analysis of non-cancelable leases, joint venture agreements and other existing arrangements that may contain a lease component. The Company has substantially completed the process of identifying contracts to which the new guidance applies and is evaluating those identified contracts to determine the impacts of ASC 2016-02 at adoption. Further, the Company is also evaluating policies, internal controls, and processes that will be necessary to support the additional accounting and disclosure requirements. The Company will adopt ASU 2016-02 on July 1, 2019, using the modified retrospective approach. Adoption of this guidance is anticipated to result in an insignificant increase in right-of-use assets and related liabilities on the Company’s consolidated balance sheets; however, the full impact to the Company’s financial statements and related footnote disclosures is still being evaluated.

In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”). ASU 2018-11 provides an additional transition method for adopting ASU 2016-02, as well as provides lessors with a practical expedient when applying ASU 2016-02 to certain leases. The Company anticipates making a policy election in connection with adopting ASU 2018-11, which will eliminate the need for adjusting prior period comparable financial statements prepared under current lease accounting guidance. The Company will adopt ASU 2018-11 at the same time it adopts ASU 2016-02.

2. ACQUISITION

Acquisition of Silver Stream on Khoemacau 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 for silver produced from the Khoemacau Copper Project (“Khoemacau” or the “Project”) in Botswana with Khoemacau Copper Mining (Pty.) Limited (“KCM”), a wholly-owned subsidiary of Cupric Canyon Capital LP (together with all its subsidiaries including KCM, “Cupric”), a private company owned by management and funds advised by Global Natural Resource Investments. Pursuant to the purchase and sale agreement, RGLD Gold will make advance payments to Cupric totaling $212 million for 80% of the silver produced from Khoemacau until certain delivery thresholds are met (the “Silver Stream”), and at Cupric’s option, up to an additional $53 million in advance payments for up to the remaining 20% of the silver produced (the “Option Stream”). The stream rate will drop by 50% (to 40% of the silver produced) upon the 32 million silver ounces under the Silver Stream, or to 50% of the silver produced upon delivery of 40 million silver ounces in the event Cupric exercises delivery of the entire Option Stream. RGLD Gold will pay 20% of the spot price of silver for each ounce delivered; however, depending on the achievement by Cupric of mill expansion throughput levels 30% above current mill design capacity, RGLD Gold will pay higher ongoing cash payments for silver ounces delivered in excess of specific annual thresholds.

RGLD Gold’s first advance payment under the Silver Stream is expected to occur after $100 million of net new debt and equity funding has been spent on the Project by Cupric. The $212 million in advance payments under the 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 transaction through cash on hand or cash advances from Royal Gold.

Table of Contents

ROYAL GOLD, INC.

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

amounts drawn under the facility would carry interest at LIBOR + 11% and have a term of seven years. RGLD Gold will have the right to force repayment of the 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 Silver Stream and $53 million in advance payments for the Option 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.

3. STREAM AND ROYALTY INTERESTS, NET

The following tables summarize the Company’s stream and royalty interests, net as of March 31, 2019 and June 30, 2018.


As of March 31, 2019 (Amounts in thousands):	Cost		Accumulated Depletion		Net
Production stage stream interests:
Mount Milligan	$	790,635	$	(172,737)	$	617,898
Pueblo Viejo		610,404		(145,955)		464,449
Andacollo		388,182		(79,513)		308,669
Rainy River		175,727		(12,218)		163,509
Wassa and Prestea		146,475		(54,628)		91,847
Total production stage stream interests		2,111,423		(465,051)		1,646,372
Production stage royalty interests:
Voisey's Bay		205,724		(94,055)		111,669
Peñasquito		99,172		(40,496)		58,676
Holt		34,612		(22,243)		12,369
Cortez		20,878		(11,859)		9,019
Other		487,224		(382,702)		104,522
Total production stage royalty interests		847,610		(551,355)		296,255
Total production stage stream and royalty interests		2,959,033		(1,016,406)		1,942,627

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	$	(1,016,406)	$	2,381,592

Table of Contents

ROYAL GOLD, INC.

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


As of June 30, 2018 (Amounts in thousands):	Cost		Accumulated Depletion		Impairments		Net
Production stage stream interests:
Mount Milligan	$	790,635	$	(152,833)	$	—	$	637,802
Pueblo Viejo		610,404		(114,944)		—		495,460
Andacollo		388,182		(59,851)		—		328,331
Wassa and Prestea		146,475		(41,601)		—		104,874
Rainy River		175,727		(4,028)		—		171,699
Total production stage stream interests		2,111,423		(373,257)		—		1,738,166
Total production stage stream and royalty interests
Production stage royalty interests:
Voisey's Bay		205,724		(86,933)		—		118,791
Peñasquito		99,172		(38,426)		—		60,746
Holt		34,612		(21,173)		—		13,439
Cortez		20,878		(11,241)		—		9,637
Other		483,795		(364,795)		—		119,000
Total production stage royalty interests		844,181		(522,568)		—		321,613
Total production stage stream and royalty interests		2,955,604		(895,825)		—		2,059,779
Development stage stream interests:
Other		12,038		—		—		12,038

Development stage royalty interests:
Cortez		59,803		—		—		59,803
Other		74,610		—		(284)		74,326
Total development stage royalty interests		134,413		—		(284)		134,129
Total development stage stream and royalty interests		146,451		—		(284)		146,167

Exploration stage royalty interests:
Pascua-Lama		416,770		—		(239,080)		177,690
Other		117,481		—		—		117,481
Total exploration stage royalty interests		534,251		—		(239,080)		295,171
Total stream and royalty interests, net	$	3,636,306	$	(895,825)	$	(239,364)	$	2,501,117

Voisey’s Bay

The royalty on production of nickel, copper, cobalt and other minerals from the Voisey’s Bay mine in Newfoundland and Labrador, Canada is directly owned by the Labrador Nickel Royalty Limited Partnership (“LNRLP”), in which the Company’s wholly-owned indirect subsidiary is the general partner and 90% owner. The remaining 10% interest in LNRLP is owned by a subsidiary of Altius Royalty Corporation, a non-controlling interest.

On September 13, 2018, LNRLP entered into an agreement with Vale Canada Limited and certain of its subsidiaries (collectively, the “Parties”) to comprehensively settle long-standing litigation related to calculation of the royalty on the sale of all concentrates produced from the Voisey’s Bay mine. Refer to Note 14 of our Fiscal 2018 10-K for further discussion on the claims previously asserted by LNRLP.

Table of Contents

ROYAL GOLD, INC.

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

4. DEBT

The Company’s non-current debt as of ~~December~~March 31, ~~2017~~2019 and June 30, ~~2017~~2018 consists of the following:


	As of December 31, 2017								As of June 30, 2017								As of March 31, 2019								As of June 30, 2018
	Principal		Unamortized Discount		Debt Issuance Costs		Total		Principal		Unamortized Discount		Debt Issuance Costs		Total		Principal		Unamortized Discount		Debt Issuance Costs		Total		Principal		Unamortized Discount		Debt Issuance Costs		Total
		(Amounts in thousands)								(Amounts in thousands)								(Amounts in thousands)								(Amounts in thousands)
Convertible notes due 2019	$	370,000	$	(19,110)	$	(1,986)	$	348,904	$	370,000	$	(25,251)	$	(2,646)	$	342,103	$	370,000	$	(2,844)	$	(290)	$	366,866	$	370,000	$	(12,764)	$	(1,316)	$	355,920
Revolving credit facility		150,000		—		(5,418)		144,582		250,000		—		(5,933)		244,067		—		—		(3,951)		(3,951)		—		—		(4,893)		(4,893)
Total debt	$	520,000	$	(19,110)	$	(7,404)	$	493,486	$	620,000	$	(25,251)	$	(8,579)	$	586,170	$	370,000	$	(2,844)	$	(4,241)	$	362,915	$	370,000	$	(12,764)	$	(6,209)	$	351,027

Convertible Senior Notes Due 2019

In June 2012, the Company completed an offering of $370 million aggregate principal amount of 2.875% convertible senior notes due 2019 (“2019 Notes”). The 2019 Notes bear interest at the rate of 2.875% per annum, and the Company is required to make semi-annual interest payments on the outstanding principal balance of the 2019 Notes on June 15 and December 15 of each year, beginning December 15, 2012. The 2019 Notes mature on June 15, ~~2019.~~ 2019, and the Company will settle the principal amounts of each 2019 Note in cash and settle any excess conversion value in shares of the Company, plus cash in lieu of fractional shares. Generally, we classify debt that is maturing within one year as a current liability. However, the Company has the intent and ability to settle the principal amount of the 2019 Notes in cash primarily from its available revolving credit facility, a non-current liability, as of March 31 2019 and June 30, 2018.

Interest expense recognized on the 2019 Notes for the three and ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2019 was ~~$6.1~~$6.3 million and ~~$12.1~~$18.9 million, respectively, compared to ~~$5.9~~$6.1 million and ~~$11.7~~$18.3 million, respectively, for the three and ~~six~~nine months ended ~~December~~March 31, ~~2016,~~2018, and included the contractual coupon interest, the accretion of the debt discount and amortization of the debt issuance costs.

Revolving credit facility

The Company maintains a $1 billion revolving credit facility. As of March 31, 2019, the Company had no amounts outstanding and $1 billion available under the revolving credit facility. Amortization of debt issuance costs, included within interest expense, recognized on the revolving credit facility for the three and nine months ended March 31, 2019 was $0.3 million and $0.9 million. For the three and nine months ended March 31, 2018, interest expense included interest on the outstanding borrowings and the amortization of the debt issuance costs and was $1.3 million and $4.9 million, respectively. Royal Gold may repay any borrowings under the revolving credit facility at any time without premium or penalty.

As discussed in Note 5 to the notes to consolidated financial statements in the Company’s Fiscal 2018 10-K, the Company has financial covenants associated with its revolving credit facility. As of March 31, 2019, the Company was in compliance with each financial covenant.

5. REVENUE

Revenue Recognition

Under current ASC 606 guidance, a performance obligation is a promise in a contract to transfer control of a distinct good or service (or integrated package of goods and/or services) to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, a performance obligation is satisfied. In accordance with this guidance, revenue attributable to our stream interests and royalty interests is generally recognized at the point in time that control of the related metal production transfers to our customers. The amount of revenue we recognize further reflects the consideration to which we are entitled under the respective stream or royalty agreement. A more detailed summary of our revenue recognition policies for our stream and royalty interests is discussed below.

811

Table of Contents

ROYAL GOLD, INC.

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

~~Revolving credit facility~~Stream Interests

A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or more of the metals produced from a mine, at a price determined for the life of the transaction by the purchase agreement. Gold, silver and copper received under our metal streaming agreements are taken into inventory, and then sold primarily using average spot rate gold, silver and copper forward contracts. The ~~Company maintains~~sales price for these average spot rate forward contracts is determined by the average daily gold, silver or copper spot prices during the term of the contract, typically a ~~$1 billion revolving credit facility. As~~consecutive number of ~~December 31, 2017,~~trading days between ten days and three months (depending on the ~~Company had $150 million outstanding and $850 million available~~frequency of deliveries under the ~~revolving credit facility with an interest rate on borrowings of LIBOR plus 1.75% for an all-in rate of 3.24%. During~~respective streaming agreement and our sales policy in effect at the ~~three~~time) commencing shortly after receipt and ~~six months ended December 31, 2017, the Company repaid $50 million, respectively,~~purchase of the ~~outstanding borrowings under~~metal. We settle our forward sales contracts via physical delivery of the ~~revolving credit facility. Royal Gold may repay borrowings under~~metal to the ~~revolving credit facility~~purchaser (our customer) on the settlement date specified in the contract. Under our forward sales contracts, there is a single performance obligation to sell a contractually specified volume of metal to the purchaser, and we satisfy this obligation at ~~any~~the point in time ~~without premium or penalty. Interest expense~~of physical delivery. Accordingly, revenue from our metal sales is recognized on the ~~revolving credit facility~~date of settlement, which is the date that control, custody and title to the metal transfer to the purchaser.

Royalty Interests

Royalties are non-operating interests in mining projects that provide the right to a percentage of revenue or metals produced from the project after deducting specified costs, if any. We are entitled to payment for our royalty interest in a mining project based on a contractually specified commodity price (for example, a monthly or quarterly average spot price) for the ~~three~~period in which metal production occurred. As a royalty holder, we act as a passive entity in the production and ~~six months ended December 31, 2017 was $1.8 million and $3.6 million, respectively, and $2.3 million and $4.3 million for~~operations of the ~~three and six months ended December 31, 2016, and included interest on the outstanding borrowings~~mining project, and the ~~amortization~~third-party operator of the ~~debt issuance~~mining project is responsible for all mining activities, including subsequent marketing and delivery of all metal production to their ultimate customer. In all of our material royalty interest arrangements, we have concluded that we transfer control of our interest in the metal production to the operator at the point at which production occurs, and thus, the operator is our customer. We have further determined that the transfer of each unit of metal production, comprising our royalty interest, to the operator represents a separate performance obligation under the contract, and each performance obligation is satisfied at the point in time of metal production by the operator. Accordingly, we recognize revenue attributable to our royalty interests in the period in which metal production occurs at the specified commodity price per the agreement, net of any contractually allowable offsite treatment, refining, transportation and, if applicable, mining costs.

Royalty Revenue Estimates

For a small number of our royalty interests, we may not receive, or be entitled to receive, payment information, including production information from the operator, for the period in which metal production occurred prior to issuance of our financial statements. As a result, we may estimate revenue for these royalties based on available information, including public information, from the operator. If adequate information is not available from the operator or from other public sources before we issue our financial statements, the Company will recognize royalty revenue during the period in which the necessary payment information is received. Differences between estimates and actual amounts could differ significantly and are recorded in the period that the actual amounts are known. Please also refer to our “Use of Estimates” accounting policy discussed in our Fiscal 2018 10-K. For the quarter ended March 31, 2019, royalty revenue that was estimated or was attributable to metal production for a period prior to March 31, 2019, was not material.

Disaggregation of Revenue

We have identified two material revenue sources in our business: stream interests and royalty interests. These identified revenue sources are consistent with our reportable segments as discussed in Note 5 to the notes to consolidated financial statements in the Company’s Fiscal 2017 10-K, the Company has financial covenants associated with its revolving credit facility. As of December 31, 2017, the Company was in compliance with each financial covenant.9.

~~4. REVENUE~~

Table of Contents

ROYAL GOLD, INC.

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Revenue by metal type attributable to each of our revenue sources is disaggregated as follows:


	Three Months Ended		Nine Months Ended
	March 31, 2019		March 31, 2019
Stream revenue:
Gold	$	62,856	$	175,149
Silver		7,908		24,512
Copper		7,001		15,819
Total stream revenue	$	77,765	$	215,480
Royalty revenue:
Gold	$	22,041	$	60,251
Silver		1,608		4,527
Copper		3,056		11,030
Other		5,308		16,074
Total royalty revenue	$	32,013	$	91,882
Total revenue	$	109,778	$	307,362

Revenue attributable to our principal stream and royalty interests is ~~comprised~~disaggregated as follows:


		Three Months Ended		Nine Months Ended
	Metal(s)	March 31, 2019		March 31, 2019
Stream revenue:
Mount Milligan	Gold & Copper	$	26,938	$	63,954
Pueblo Viejo	Gold & Silver		20,787		58,504
Andacollo	Gold		15,638		51,016
Wassa and Prestea	Gold		7,328		24,939
Other	Gold & Silver		7,074		17,067
Total stream revenue		$	77,765	$	215,480
Royalty revenue:
Peñasquito	Gold, Silver, Lead & Zinc	$	4,465	$	12,763
Cortez	Gold		4,127		7,066
Other	Various		23,421		72,053
Total royalty revenue		$	32,013	$	91,882
Total revenue		$	109,778	$	307,362

Please refer to Note 9 for the geographical distribution of our revenue by reportable segment.

Contract Receivables

Under our forward sales contracts related to our metal streaming arrangements, payment is due from the purchaser on the day of settlement. Accordingly, our metal stream sales contracts do not give rise to a receivable under ASC 606.

Under our royalty arrangements, payment is typically due by the royalty payor either (i) monthly, typically thirty days after month-end or (ii) quarterly, typically thirty to sixty days after the respective quarter-end. Revenue related to production that has occurred as of the ~~following:~~reporting date but for which payment has not been received represents a receivable (rather than a contract asset) under ASC 606 as payment by the operator is unconditional upon the production of metal. As of March 31, 2019, and June 30, 2018, our royalty receivables were $27.6 million and $26.4 million, respectively.

Three Months Ended

Six Months Ended

December 31,

December 31,

December 31,

December 31,


2017

2016

2017

2016

(Amounts in thousands)

(Amounts in thousands)
Stream interests

$
79,287

$
74,007

$
158,049

$
159,511
Royalty interests

35,061

32,954

68,775

65,398
Total revenue

$
114,348

$
106,961

$
226,824

$
224,909

Practical Expedients Utilized

Our forward sales contracts related to our metal streaming arrangements are short-term in nature with a term of one year or less. For these contracts, we have utilized the practical expedient allowed in ASC 606 that exempts us from presenting

Table of Contents

ROYAL GOLD, INC.

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

the transaction price allocated to remaining performance obligations (i.e. forecasts of unearned revenue) for contracts with an original expected term of one year or less.

Our royalty arrangements generally cover metal production over the life of a mine and, thus, have a contract term that is greater than one year. Under these contracts, variability related to future production volumes and market pricing is allocated entirely to those future production volumes from the mining operation. Consequently, we have utilized an alternative practical expedient allowed in ASC 606 that exempts us from presenting the transaction price allocated to remaining performance obligations (i.e. forecasts of unearned revenue) if the variable consideration in a contract is allocated entirely to a wholly unsatisfied performance obligation.

5.6. STOCK-BASED COMPENSATION

The Company recognized stock-based compensation expense as follows:


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	December 31,		December 31,		December 31,		December 31,		March 31,		March 31,		March 31,		March 31,
	2017		2016		2017		2016		2019		2018		2019		2018
		(Amounts in thousands)				(Amounts in thousands)				(Amounts in thousands)				(Amounts in thousands)
Stock options	$	79	$	95	$	170	$	203	$	33	$	70	$	187	$	241
Stock appreciation rights		486		454		974		922		417		482		1,592		1,456
Restricted stock		888		829		2,314		2,203		679		727		2,636		3,041
Performance stock		568		921		937		3,115		311		284		1,095		1,220
Total stock-based compensation expense	$	2,021	$	2,299	$	4,395	$	6,443	$	1,440	$	1,563	$	5,510	$	5,958

Stock-based compensation expense is included within General and administrative expense in the consolidated statements of operations and comprehensive ~~(loss)~~ income.

~~Table of Contents~~

~~ROYAL GOLD, INC.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

During the three and ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2019, the Company granted the following stock-based compensation awards:


	Three Months Ended		Six Months Ended		Three Months Ended		Nine Months Ended
	December 31,	December 31,	December 31,	December 31,	March 31,	March 31,	March 31,	March 31,
	2017	2016	2017	2016	2019	2018	2019	2018
	(Number of shares)		(Number of shares)		(Number of shares)		(Number of shares)
Stock options	-	-	6,858	7,200	—	—	6,430	6,858
Stock appreciation rights	-	-	71,262	63,340	3,500	—	72,860	71,262
Restricted stock	-	-	50,380	44,890	1,200	—	43,460	50,380
Performance stock	-	-	34,010	29,830
Performance stock (at maximum 200% attainment)					2,400	—	59,820	34,010
Total equity awards granted	-	-	162,510	145,260	7,100	—	182,570	162,510

As of ~~December~~March 31, ~~2017,~~2019, unrecognized compensation expense (expressed in thousands below) and weighted-average vesting period for each of our stock-based compensation awards were as follows:


	Unrecognized		Weighted-		Unrecognized		Weighted-
	compensation		average vesting		compensation		average vesting
	expense		period (years)		expense		period (years)
Stock options	$	397		1.8	$	168		1.8
Stock appreciation rights		3,189		2.1		2,296		1.9
Restricted stock		6,939		3.2		5,260		3.1
Performance stock		2,424		2.0		1,062		1.6

Table of Contents

ROYAL GOLD, INC.

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

7. EARNINGS PER SHARE (“EPS”)

Basic earnings (loss) per common share were computed using the weighted average number of shares of common stock outstanding during the period, considering the effect of participating securities. Unvested stock-based compensation awards that contain non-forfeitable rights to dividends or dividend equivalents are considered participating securities and are included in the computation of earnings per share pursuant to the two-class method. The Company’s unvested restricted stock awards contain non-forfeitable dividend rights and participate equally with common stock with respect to dividends issued or declared. The Company’s unexercised stock options, unexercised SSARs and unvested performance stock do not contain rights to dividends. Under the two-class method, the earnings used to determine basic earnings (loss) ~~earnings~~ per common share are reduced by an amount allocated to participating securities. Use of the two-class method has an immaterial impact on the calculation of basic and diluted earnings (loss) ~~earnings~~ per common share.

The following tables summarize the effects of dilutive securities on diluted EPS for the period:


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	December 31,		December 31,		December 31,		December 31,		March 31,		March 31,		March 31,		March 31,
	2017		2016		2017		2016		2019		2018		2019		2018
		(in thousands, except per share data)				(in thousands, except per share data)				(in thousands, except per share data)				(in thousands, except per share data)
Net (loss) income available to Royal Gold common stockholders	$	(14,765)	$	28,062	$	13,864	$	57,850
Net income (loss) available to Royal Gold common stockholders									$	28,772	$	(153,650)	$	67,368	$	(139,786)
Weighted-average shares for basic EPS		65,306,766		65,149,518		65,271,131		65,133,102		65,398,369		65,307,324		65,389,499		65,283,019
Effect of other dilutive securities		-		103,691		189,299		131,035		116,865		—		105,403		—
Weighted-average shares for diluted EPS		65,306,766		65,253,209		65,460,430		65,264,137		65,515,234		65,307,324		65,494,902		65,283,019
Basic (loss) earnings per share	$	(0.23)	$	0.43	$	0.21	$	0.89
Diluted (loss) earnings per share	$	(0.23)	$	0.43	$	0.21	$	0.88
Basic earnings (loss) per share									$	0.44	$	(2.35)	$	1.03	$	(2.14)
Diluted earnings (loss) per share									$	0.44	$	(2.35)	$	1.03	$	(2.14)

~~Table of Contents~~

~~ROYAL GOLD, INC.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

The calculation of weighted average shares includes all of our outstanding common stock. The Company intends to settle the principal amount of the 2019 Notes in ~~cash.~~cash from amounts available under our revolving credit facility, and we intend to settle any excess conversion value in shares in the Company, plus cash in lieu of fractional shares. As a result, there will be no impact to diluted earnings per share unless the share price of the Company’s common stock exceeds the conversion price of ~~$102.79.~~$102.16.

7.8. INCOME TAXES


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	December 31,		December 31,		December 31,		December 31,		March 31,		March 31,		March 31,		March 31,
	2017		2016		2017		2016		2019		2018		2019		2018
	(Amounts in thousands, except rate)				(Amounts in thousands, except rate)				(Amounts in thousands, except rate)				(Amounts in thousands, except rate)
Income tax expense	$	(48,360)	$	(5,044)	$	(55,904)	$	(12,232)
Income tax benefit (expense)									$	(9,388)	$	45,859	$	(11,355)	$	(10,044)
Effective tax rate		148.5%		15.7%		83.9%		18.5%		24.7%		22.9%		15.1%		(7.5%)

The increase in the effective tax rate for the three ~~and six~~ months ended ~~December~~March 31, ~~2017 is~~2019 was primarily attributable to ~~the effects of recent U.S. tax legislation,~~lower discrete period benefits as ~~discussed below, and the effects of a non-cash functional currency election ($15.9 million expense) to file certain Canadian income tax returns in U.S. dollars. Prior~~compared to the functional currency election, certain deferred tax liabilities were measured on the difference between adjusted Canadian dollar acquisition cost and Canadian dollar tax basis. These deferred tax liabilities were then marked-to market every quarter, for income tax expense (benefit) purposes, to account for changes in the Canadian dollar to U.S. dollar exchange rate. Post-election, the applicable deferred tax liabilities will be measured on the difference between U.S. GAAP value and U.S. dollar tax basis, and eliminating volatility in thethree months ended March 31, 2018. The prior year’s three months effective tax rate ~~caused~~included discrete benefits from an impairment partially offset by ~~this mark-to-market adjustment.~~

~~On December 22, 2017,~~true-ups to H.R. 1, originally known as the Tax Cuts and Jobs Act (the “Act”),. The effective tax rate for the nine months ended March 31, 2019 was ~~enacted and is~~primarily impacted by discrete true-ups recorded in the December 2018 quarter related to the Company’s completion of its analysis of the Act. The effective tax rate for ~~tax years including January 1, 2018. Certain other aspects~~the nine months ended March 31, 2018 was impacted by discrete period expense recorded during the December 2017 quarter related to the impacts of the Act, ~~are not effective for fiscal June 30 companies until July 1, 2018.~~

The Act, among other things, reduced the U.S. corporate income tax rate to 21% starting January 1, 2018. As the Company is a fiscal year tax payer, we applied a blended U.S. federal income tax rate of approximately 28.1% for the fiscal year ending June 30, 2018. The blended percentage was calculated on a pro-rata percentage of the number of days before and after January 1, 2018. The Company’s U.S. federal corporate income tax rate will be 21% for the fiscal year commencing on July 1, 2018 and all future years.

~~ASC 740,~~ ~~Income Taxes,~~ requires recognition of the effects of tax law changes in the period of enactment. As a result, the Company recorded a net charge (expense) of $26.4 million during the three months ended December 31, 2017. This amount, which is included in ~~Income tax expense~~ on our consolidated statements of operations and comprehensive (loss) income, consists of three components: (i) a $11.5 million charge relating to the one-time mandatory tax on the net accumulated post-1986 untaxed earnings and profits of the Company’s foreign subsidiaries, which we will elect to pay over an eight-year period, (ii) a $2.3 million benefit resulting from the re-measurement of the Company’s net deferred tax assets and liabilities, and (iii) a $17.2 million chargepartially offset by discrete benefits related to ~~re-measurement of the U.S. income tax impacts resulting from foreign uncertain tax positions.~~

~~The net $26.4 million charge represents what the Company believes is a reasonable estimate of the impact of the Act.~~impairment charges. As the net charge is based on currently available information and interpretations, which are continuing to evolve, all amounts should be considered provisional. The Company will continue to analyze additional information and guidance related to the Act as supplemental legislation, regulatory guidance, or evolving technical interpretations become available. The final impacts may differ from the recorded amounts as of December 31, ~~2017 and~~2018, the Company ~~will continue to refine such amounts~~completed its analysis of the Act within the measurement period provided by Staff Accounting Bulletin No. ~~118. The~~118 and the amounts are no longer considered provisional. Despite the completion of our analysis, many aspects of the law remain unclear and future guidance could impact the Company. A material impact due to evolving guidance is not anticipated; however, the Company ~~expects~~will continue to ~~complete its analysis no later than the second quarter of fiscal year 2019.~~

monitor any new developments.

1115

Table of Contents

ROYAL GOLD, INC.

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

8.9. SEGMENT INFORMATION

The Company manages its business under two reportable segments, consisting of the acquisition and management of stream interests and the acquisition and management of royalty interests. Royal Gold’s long-lived assets (stream and royalty interests, net) are geographically distributed as shown in the following table:


													As of March 31, 2019						As of June 30, 2018
																	Total stream								Total stream
	As of December 31, 2017						As of June 30, 2017						Stream		Royalty		and royalty		Stream		Royalty				and royalty
	Stream interest		Royalty interest		Total stream and royalty interests, net		Stream interest		Royalty interest		Total stream and royalty interests, net		interest		interest		interests, net		interest		interest		Impairments		interests, net
Canada	$	836,129	$	218,683	$	1,054,812	$	852,035	$	221,618	$	1,073,653	$	781,404	$	202,896	$	984,300	$	809,500	$	214,562	$	(284)	$	1,023,778
Dominican Republic		517,203		—		517,203		543,256		—		543,256		464,449		—		464,449		495,460		—		—		495,460
Chile		336,854		453,369		790,223		348,778		453,369		802,147		308,669		214,226		522,895		328,331		453,306		(239,080)		542,557
Africa		112,029		525		112,554		123,760		572		124,332		91,847		321		92,168		104,874		502		—		105,376
Mexico		—		99,769		99,769		—		105,889		105,889		—		84,915		84,915		—		93,277		—		93,277
United States		—		166,115		166,115		—		168,378		168,378		—		164,372		164,372		—		165,543		—		165,543
Australia		—		35,780		35,780		—		37,409		37,409		—		32,404		32,404		—		34,254		—		34,254
Other		12,030		22,130		34,160		12,030		25,162		37,192		12,041		24,048		36,089		12,039		28,833		—		40,872
Total	$	1,814,245	$	996,371	$	2,810,616	$	1,879,859	$	1,012,397	$	2,892,256	$	1,658,410	$	723,182	$	2,381,592	$	1,750,204	$	990,277	$	(239,364)	$	2,501,117

The Company’s revenue, cost of sales and net revenue by reportable segment for the three and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2019 and ~~2016,~~2018 is geographically distributed as shown in the following table:


	Three Months Ended December 31, 2017						Three Months Ended December 31, 2016						Three Months Ended March 31, 2019						Three Months Ended March 31, 2018
	Revenue		Cost of sales		Net revenue		Revenue		Cost of sales		Net revenue		Revenue		Cost of sales		Net revenue		Revenue		Cost of sales		Net revenue
Streams:
Canada	$	22,702	$	6,624	$	16,078	$	31,664	$	11,181	$	20,483	$	34,012	$	9,398	$	24,614	$	51,709	$	14,225	$	37,484
Dominican Republic		26,355		8,198		18,157		26,437		8,547		17,890		20,787		5,942		14,845		15,734		4,415		11,319
Chile		21,601		3,297		18,304		10,985		1,746		9,239		15,638		2,282		13,356		7,186		1,039		6,147
Africa		8,629		1,744		6,885		4,921		1,028		3,893		7,328		1,453		5,875		8,350		1,666		6,684
Total streams	$	79,287	$	19,863	$	59,424	$	74,007	$	22,502	$	51,505	$	77,765	$	19,075	$	58,690	$	82,979	$	21,345	$	61,634

Royalties:
Mexico	$	10,854	$	—	$	10,854	$	11,530	$	—	$	11,530	$	8,719	$	—	$	8,719	$	11,021	$	—	$	11,021
United States		12,298		—		12,298		9,407		—		9,407		9,813		—		9,813		8,459		—		8,459
Canada		5,396		—		5,396		5,682		—		5,682		8,201		—		8,201		6,089		—		6,089
Australia		3,227		—		3,227		3,230		—		3,230		3,234		—		3,234		3,343		—		3,343
Africa		585		—		585		764		—		764		161		—		161		543		—		543
Other		2,701		—		2,701		2,341		—		2,341		1,885		—		1,885		3,549		—		3,549
Total royalties	$	35,061	$	—	$	35,061	$	32,954	$	—	$	32,954	$	32,013	$	—	$	32,013	$	33,004	$	—	$	33,004
Total streams and royalties	$	114,348	$	19,863	$	94,485	$	106,961	$	22,502	$	84,459	$	109,778	$	19,075	$	90,703	$	115,983	$	21,345	$	94,638

1216

Table of Contents

ROYAL GOLD, INC.

Notes to Consolidated Financial Statements (Continued)

(Unaudited)


	Six Months Ended December 31, 2017						Six Months Ended December 31, 2016						Nine Months Ended March 31, 2019						Nine Months Ended March 31, 2018
	Revenue		Cost of sales		Net revenue		Revenue		Cost of sales		Net revenue		Revenue		Cost of sales		Net revenue		Revenue		Cost of sales		Net revenue
Streams:
Canada	$	54,654	$	15,847	$	38,807	$	70,050	$	23,758	$	46,292	$	81,021	$	23,393	$	57,628	$	106,363	$	30,072	$	76,291
Dominican Republic		51,758		15,785		35,973		47,387		14,443		32,944		58,504		17,675		40,829		67,492		20,200		47,292
Chile		33,938		5,109		28,829		31,154		4,744		26,410		51,016		7,684		43,332		41,124		6,148		34,976
Africa		17,699		3,541		14,158		10,920		2,218		8,702		24,939		5,012		19,927		26,049		5,207		20,842
Total streams	$	158,049	$	40,282	$	117,767	$	159,511	$	45,163	$	114,348	$	215,480	$	53,764	$	161,716	$	241,028	$	61,627	$	179,401

Royalties:
Mexico	$	21,751	$	—	$	21,751	$	21,127	$	—	$	21,127	$	24,551	$	—	$	24,551	$	32,772	$	—	$	32,772
United States		22,727		—		22,727		19,113		—		19,113		24,153		—		24,153		31,186		—		31,186
Canada		11,488		—		11,488		11,870		—		11,870		25,918		—		25,918		17,577		—		17,577
Australia		6,548		—		6,548		6,692		—		6,692		9,451		—		9,451		9,891		—		9,891
Africa		1,047		—		1,047		1,588		—		1,588		1,185		—		1,185		1,589		—		1,589
Chile		—		—		—		950		—		950
Other		5,214		—		5,214		4,058		—		4,058		6,624		—		6,624		8,764		—		8,764
Total royalties	$	68,775	$	—	$	68,775	$	65,398	$	—	$	65,398	$	91,882	$	—	$	91,882	$	101,779	$	—	$	101,779
Total streams and royalties	$	226,824	$	40,282	$	186,542	$	224,909	$	45,163	$	179,746	$	307,362	$	53,764	$	253,598	$	342,807	$	61,627	$	281,180

9.10. FAIR VALUE MEASUREMENTS

~~FASB Accounting Standards Codification (ASC)~~ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below:

Level 1: Quoted prices for identical instruments in active markets;

Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

Level 3: Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The following table sets forth the Company’s financial assets measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy.


	As of December 31, 2017										As of March 31, 2019
	Carrying		Fair Value								Carrying		Fair Value
	Amount		Total		Level 1		Level 2		Level 3		Amount		Total		Level 1		Level 2		Level 3
Assets (In thousands):
Marketable equity securities(1)	$	3,450	$	3,450	$	3,450	$	—	$	—	$	19,465	$	19,465	$	19,465	$	—	$	—
Total assets			$	3,450	$	3,450	$	—	$	—	$	19,465	$	19,465	$	19,465	$	—	$	—

Liabilities (In thousands):
Debt(2)	$	427,890	$	401,309	$	401,309	$	—	$	—	$	444,156	$	370,000	$	370,000	$	—	$	—
Total liabilities			$	401,309	$	401,309	$	—	$	—	$	444,156	$	370,000	$	370,000	$	—	$	—

⁽¹⁾

Included in Other assets on the Company’s consolidated balance sheets.

⁽²⁾

Included in the carrying amount is the equity component of our 2019 Notes in the amount of $77 million, which is included within Additional paid-in capital on the Company’s consolidated balance sheets.

1317

Table of Contents

ROYAL GOLD, INC.

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

The Company’s marketable equity securities classified within Level 1 of the fair value hierarchy are valued using quoted market prices in active markets. The fair value of the Level 1 marketable equity securities is calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company. The warrants that were part of the term loan funded to a subsidiary of Golden Star Resources Ltd. (“Golden Star”) in July 2015 were exercised during the quarter ended September 30, 2017. The warrants had been classified within Level 2 of the fair value hierarchy as of June 30, 2017. The fair value of the Golden Star common shares received by the Company upon exercise of the warrants are classified within Level 1 of the fair value hierarchy as of September 30, 2017. The Company sold all of the common shares of Golden Star received upon exercise of the warrants in October 2017. The Company’s debt classified within Level 1 of the fair value hierarchy is valued using quoted prices in an active market. ~~The carrying value of the Company’s revolving credit facility (Note 3) approximates fair value as of December 31, 2017.~~

As of ~~December~~March 31, ~~2017,~~2019, the Company also had assets that, under certain conditions, are subject to measurement at fair value on a non-recurring basis like those associated with stream and royalty interests, intangible assets and other long-lived assets. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if any of these assets are determined to be impaired. If recognition of these assets at their fair value becomes necessary, such measurements will be determined utilizing Level 3 inputs.

~~10.~~11. COMMITMENTS AND CONTINGENCIES

Khoemacau Silver Stream Acquisition

As of March 31, 2019, the Company’s conditional funding schedule for $212 million related to the Silver Stream pursuant to its Khoemacau silver stream acquisition made in February 2019 (Note 2) remains subject to certain conditions.

Ilovica Gold Stream Acquisition

As of ~~December~~March 31, ~~2017,~~2019, the Company’s conditional funding schedule for $163.75 million related to its Ilovica gold stream acquisition made in October 2014 remains subject to certain conditions.

~~Voisey’s Bay~~

The Company indirectly owns a royalty on the Voisey’s Bay mine in Newfoundland and Labrador owned by Vale Newfoundland & Labrador Limited (“VNL”). The royalty is directly owned by the Labrador Nickel Royalty Limited Partnership (“LNRLP”), in which the Company’s wholly-owned indirect subsidiary, Voisey’s Bay Holding Corporation, is the general partner and 90% owner. The remaining 10% interest in LNRLP is owned by Altius Royalty Corporation, a company unrelated to Royal Gold.

On October 6, 2017, LNRLP filed a Fresh as Amended Statement of Claim, amending the original October 16, 2009 Statement of Claim and amendments thereto made in December 2014, in the Supreme Court of Newfoundland and Labrador Trial Division against Vale Inco Limited, now known as Vale Canada Limited, and its wholly-owned subsidiaries, Vale Inco Atlantic Sales Limited and VNL, related to calculation of the NSR on the sale of concentrates, including nickel concentrates, from the Voisey’s Bay mine. LNRLP asserts that the defendants have incorrectly calculated the NSR since production at Voisey’s Bay began in late 2005, and since defendants began processing Voisey’s Bay concentrates at the new Long Harbour processing facility, and that the defendants have breached their contractual duties of good faith in several ways. LNRLP requests an order in respect of the correct calculation of future payments, and unspecified damages for non-payment and underpayment of past royalties to the date of the claim, together with additional damages until the date of trial, interest, costs and other damages. The litigation is in the discovery phase, and trial is expected to commence in the second half of calendar 2018.

~~11.SUBSEQUENT EVENT~~

On January 18, 2018 Barrick reported that it is analyzing a revised sanction related to the Pascua-Lama project issued by Chile’s Superintendencia del Medio Ambiente (“SMA”) on January 17, 2018. The sanction is part of a re-evaluation process ordered by Chile’s Environmental Court in 2014 and relates to historical compliance matters at the Pascua-Lama project. According to Barrick, the SMA has not revoked Pascua-Lama’s environmental permit, but has ordered the closure of existing facilities on the Chilean side of the project, in addition to certain monitoring activities.

~~Table of Contents~~

~~ROYAL GOLD, INC.~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~(Unaudited)~~

Barrick also reported that closure of existing surface facilities in Chile is consistent with its plan to advance a prefeasibility study for underground mining operations at Pascua-Lama, which would address a number of community concerns by reducing the overall environmental impact of the project. Barrick reported that it is currently undertaking a number of optimization studies in order to complete the prefeasibility study.

On February 6, 2018, in light of the SMA order to close surface facilities in Chile, and current plans to evaluate an underground mine, Barrick announced it is reclassifying Pascua-Lama’s proven and probable gold reserves of approximately 14 million ounces, which are based on an open pit mine plan, as mineralized material. Barrick reported that it will include further details in its year-end results release on February 14, 2018 and an update on the Pascua-Lama project at its February 22, 2018 Investor Day.

The Company owns a 0.78% to 5.45% sliding-scale net smelter return (“NSR”) gold royalty and a 1.09% NSR copper royalty on the Pascua-Lama project. Our royalty interests are applicable to all gold and copper production from the portion of the Pascua-Lama project lying on the Chilean side of the border. The Company’s carrying value for its royalty interests at Pascua-Lama is approximately $416.8 million as of December 31, 2017.

The Company routinely assesses whether impairment indicators are present for its long-lived assets. A significant reduction in reserves or mineralized material is an indicator of potential impairment. As part of our fiscal 2018 third quarter procedures, we will be evaluating Barrick’s reserves reclassification to assess the recoverability of our carrying value at Pascua-Lama. The Company will also consider further updates from Barrick, including those expected on February 14 and February 22, 2018, as part of our recoverability analysis. Upon completion of our process, the Company may determine an impairment is necessary.

1518

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide information to assist you in better understanding and evaluating our financial condition and results of operations. Royal Gold, Inc. (“Royal Gold”, the “Company”, “we”, “us”, or “our”), recommends that you read this MD&A in conjunction with our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2017~~2018 filed with the Securities and Exchange Commission (the “SEC”) on August ~~10, 2017.~~9, 2018 (Fiscal 2018 10-K).

This MD&A contains forward-looking information. You should review our important note about forward-looking statements following this MD&A.

We refer to “GSR,” “NSR,” “NVR,” “metal stream (or “stream”)” and other types of royalty or similar interests throughout this MD&A. These terms are defined in our Fiscal ~~2017~~2018 10-K.

Statement Regarding Third Party Information

Royal Gold does not own, develop, or mine the properties on which it holds stream or royalty interests, except for our interest in the Peak Gold, LLC joint venture (“Peak Gold JV”) as described further in this report. Certain information provided in this report, including the Operator’s Production Estimates by Stream and Royalty Interest for Calendar ~~2017~~2019 and Property Developments, has been provided to us by the operators of properties where we own interests or is publicly available information filed by these operators with applicable securities regulatory bodies, including the SEC. Royal Gold has not verified, and is not in a position to verify, and expressly disclaims any responsibility for, the accuracy, completeness or fairness of such third-party information and refers the reader to the public reports filed by the operators for information regarding those properties.

Overview

Royal Gold, together with its subsidiaries, is engaged in the business of acquiring and managing metal streams, royalties, and similar interests. We seek to acquire existing stream and royalty interests or to finance projects that are in production or in the development stage in exchange for stream or royalty interests.

We manage our business under two segments:

Acquisition and Management of Stream Interests — A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or more metals produced from a mine, at a price determined for the life of the transaction by the purchase agreement. As of ~~December~~March 31, ~~2017,~~2019, we owned seven stream interests, which are on ~~five~~six producing properties and ~~one~~two development stage ~~property.~~properties. Stream interests accounted for approximately ~~69%~~71% and 70%~~, respectively,~~ of our total revenue for the three and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2019, respectively, and ~~69%~~72% and ~~71%, respectively,~~70% of our total revenue for the three and ~~six~~nine months ended ~~December~~March 31, ~~2016.~~2018, respectively. We expect stream interests to continue representing a significant proportion of our total revenue.

Acquisition and Management of Royalty Interests — Royalties are non-operating interests in mining projects that provide the right to revenue or metals produced from the project after deducting specified costs, if any. As of ~~December~~March 31, ~~2017,~~2019, we owned royalty interests on 3437 producing properties, 2215 development stage properties and ~~133~~131 exploration stage properties, of which we consider 5153 to be evaluation stage projects. We use “evaluation stage” to describe exploration stage properties that contain mineralized material and on which operators are engaged in the search for reserves. Royalties accounted for approximately ~~31%~~29% and 30%, respectively, of our total revenue for the three and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2019 and ~~31%~~28% and ~~29%~~30%, respectively, ~~of our total revenue~~ for the three and ~~six~~nine months ended ~~December~~March 31, ~~2016.~~2018.

We do not conduct mining operations on the properties in which we hold stream and royalty interests, and except for our interest in the Peak Gold ~~LLC joint venture (“Peak Gold JV”),~~JV, we generally are not required to contribute to capital costs, exploration costs, environmental costs or other operating costs on those properties.

1619

Table of Contents

In the ordinary course of business, we engage in a continual review of opportunities to acquire existing stream and royalty interests, to establish new streams on operating mines, to create new stream and royalty interests through the financing of mine development or exploration, or to acquire companies that hold stream and royalty interests. We currently, and generally at any time, have acquisition opportunities in various stages of active review, including, for example, our engagement of consultants and advisors to analyze particular opportunities, our analysis of technical, financial and other confidential information of particular opportunities, submission of indications of interest and term sheets, participation in preliminary discussions and negotiations and involvement as a bidder in competitive processes.

Our financial results are primarily tied to the price of gold and, to a lesser extent, the price of silver and copper, together with the amounts of production from our producing stage stream and royalty interests. The price of gold, silver, copper and other metals has fluctuated widely in recent years. The marketability and the price of metals are influenced by numerous factors beyond the control of the Company and significant declines in the price of gold, silver or copper could have a material and adverse effect on the Company’s results of operations and financial condition.

For the three and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2019 and ~~2016,~~2018, gold, silver and copper price averages and percentage of revenue by metal were as follows:


	Three Months Ended						Six Months Ended						Three Months Ended						Nine Months Ended
	December 31, 2017			December 31, 2016			December 31, 2017			December 31, 2016			March 31, 2019			March 31, 2018			March 31, 2019			March 31, 2018
Metal	Average Price		Percentage of Revenue	Average Price		Percentage of Revenue	Average Price		Percentage of Revenue	Average Price		Percentage of Revenue	Average Price		Percentage of Revenue	Average Price		Percentage of Revenue	Average Price		Percentage of Revenue	Average Price		Percentage of Revenue
Gold ($/ounce)	$	1,275	79%	$	1,222	84%	$	1,277	78%	$	1,280	86%	$	1,304	77%	$	1,329	76%	$	1,248	77%	$	1,294	77%
Silver ($/ounce)	$	16.73	9%	$	17.19	11%	$	16.78	9%	$	18.42	9%	$	15.57	9%	$	16.77	6%	$	15.04	9%	$	16.78	8%
Copper ($/pound)	$	3.09	9%	$	2.39	3%	$	2.98	9%	$	2.28	3%	$	2.82	9%	$	3.16	15%	$	2.80	9%	$	3.04	11%
Other		N/A	3%		N/A	2%		N/A	4%		N/A	2%		N/A	5%		N/A	3%		N/A	5%		N/A	4%

Recent Business Developments

~~U.S. Tax Legislation~~Acquisition of Silver Stream on Khoemacau Copper Project

On ~~December 22, 2017, H.R. 1, originally known~~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 for silver produced from the Khoemacau Copper Project (“Khoemacau” or the “Project”) in Botswana with Khoemacau Copper Mining (Pty.) Limited (“KCM”), a wholly-owned subsidiary of Cupric Canyon Capital LP (together with all its subsidiaries including KCM, “Cupric”), a private company owned by management and funds advised by Global Natural Resource Investments. Pursuant to the purchase and sale agreement, RGLD Gold will make advance payments totaling $212 million for 80% of the silver produced from Khoemacau until certain delivery thresholds are met (the “Silver Stream”), and at Cupric’s option, up to an additional $53 million in advance payments for up to the remaining 20% of the silver produced (the “Option Stream”). The stream rate will drop by 50% (to 40% of silver produced) upon the delivery to RGLD Gold of 32 million silver ounces under the Silver Stream, or to 50% of the silver produced upon delivery of 40 million silver ounces in the event Cupric exercises the entire Option Stream. RGLD Gold will pay 20% of the spot price of silver for each ounce delivered; however, depending on the achievement by Cupric of mill expansion throughput levels above 13,000 tonnes per day (30% above current mill design capacity), RGLD Gold will pay higher ongoing cash payments for silver ounces delivered in excess of specific annual thresholds.

RGLD Gold’s first advance payment under the Silver Stream is expected to occur after $100 million of net new debt and equity funding has been spent on the Project by Cupric. The $212 million in advance payments under the Silver Stream will be made in quarterly installments as project development advances according to the ~~Tax Cuts~~following approximate schedule: $60 million in the third and ~~Jobs Act~~fourth quarters of calendar 2019, $125 million in calendar 2020 and the balance in calendar 2021. RGLD Gold will fund the transaction through cash on hand or cash advances from Royal Gold. Royal Gold will fund any advances made to RGLD Gold largely out of cash flow from operations and its current undrawn $1 billion revolving credit facility, as required.

Separate from the Silver Stream and Option Stream, and subject to various conditions, RGLD Gold will make available up to $25 million to Cupric toward the end of development of Khoemacau in the form of a subordinated debt facility. Any amounts drawn under the facility would carry interest at LIBOR + 11% and have a term of seven years. RGLD Gold will have the right to force repayment of the facility upon certain events.

Table of Contents

Background on Khoemacau

Khoemacau is a copper-silver project located in the Kalahari copper belt, in a sparsely populated region of northwestern Botswana in the Kalahari Desert. Khoemacau is made up of over 4,040 square kilometers of mineral concessions from Cupric’s acquisition of Hana Mining Ltd. in 2013, as well as additional mineral concessions and a plant and associated infrastructure (the ~~“Act”~~“Boseto Mill”) acquired by Cupric out of the receivership of Discovery Metals Inc. in 2015. Cupric consolidated the land position and infrastructure and has focused on exploration and development of the Zone 5 orebody.

Cupric plans to develop the Zone 5 orebody as three separate underground mines, each planned to produce 1.2 million tonnes of ore per year over the first five years. Each of the mines is expected to have its own independent ramp access and operate over a strike length of approximately 1,000 meters, extracting ore using conventional sub-level open stoping. Cupric’s plan provides for the ore to be trucked approximately 35 kilometers to the Boseto Mill, which is to be refurbished and enhanced to process approximately 10,000 tonnes of ore per day. Processing will be conventional sulfide flotation via three stage crushing, ball milling and flotation, which will produce a high-quality copper concentrate grading approximately 40% for shipment to international smelters. Cupric expects that power will be sourced from an expansion to the existing power grid currently under construction by Botswana Power Corporation, and that existing diesel generation capacity remaining from previous operations will be used as backup power. Water is expected to be supplied from three borefields along with mine dewatering.

Voisey’s Bay

The royalty on production of nickel, copper, cobalt and other minerals from the Voisey’s Bay mine in Newfoundland and Labrador, Canada is directly owned by the Labrador Nickel Royalty Limited Partnership (“LNRLP”), ~~was enacted~~in which the Company’s wholly-owned indirect subsidiary is the general partner and 90% owner. The remaining 10% interest in LNRLP is owned by a subsidiary of Altius Royalty Corporation.

The Parties agreed to a new method for calculating the royalty in respect of concentrates processed at Vale’s Long Harbour Processing Plant (“LHPP”), which will be effective for ~~tax years including January~~all Voisey’s Bay mine production after April 1, 2018. ~~The effects~~Under the terms of the ~~Act~~settlement, Royal Gold expects the 3% royalty rate will apply to approximately 50% of the gross metal value in the concentrates at the nickel, copper and cobalt prices prevailing at the time of settlement. As those metal prices rise or fall, the percentage of gross metal value in the concentrates applicable to the royalty would correspondingly increase or decrease.

The LHPP is designed to produce 50,000 tonnes of finished nickel annually. In the next few years, Voisey’s Bay concentrate will provide 100% of the feed to LHPP but, over time, other sources of concentrate will be added to LHPP.

Vale announced it will recommence the $1.7 billion development of an underground mine and associated facilities, which is expected to extend the Voisey’s Bay mine life until 2034. Vale expects the underground mine to begin production in 2021 and to ramp up over four years, while the current open pit mining in the Ovoid deposit is expected to continue until 2022.

During the three and nine months ended March 31, 2019, the Company recognized approximately $2.5 million and $10.0 million (each period includes the 10% non-controlling interest), respectively, in royalty revenue attributable to the Voisey’s Bay royalty. Royalty payments for each quarter are ~~recognized~~due 45 days after quarter-end. The Company anticipates recognizing revenue for the Voisey’s Bay royalty in the period ~~of enactment, or~~in which metal production occurs, based on information provided by the ~~period ending December 31, 2017. Certain other aspects of~~operator. If information is not received timely from the ~~Act are not effective for fiscal June 30 companies until July 1, 2018.~~

The Act, among other things, reduced the U.S. corporate income tax rate to 21% starting January 1, 2018. As a United States domiciled company, we expect that the Act will have a positive long-term impact on Royal Gold’s future financial results through the reduction in the U.S. corporate tax rate from 35% to 21% and by allowing us to efficiently repatriate future earnings from our foreign subsidiaries. Asoperator, the Company ~~is a fiscal year tax payer, we applied a blended U.S. federal income tax rate of approximately 28.1% for the fiscal year ending June 30, 2018. The blended percentage was calculated~~may estimate Voisey’s Bay royalty revenue based on a pro-rata percentage of the number of days before and after January 1, 2018. The Company’s U.S. statutory federal corporate income tax rate will be 21% for the fiscal year commencing on July 1, 2018 and all future years. We estimate that our effective tax rate in the second half of fiscal 2018 will be between 17% and 23%.

~~As a result of the Act, the Company recorded a net charge (expense) of $26.4 million during the three months ended December 31, 2017. This amount, which is included in~~ ~~Income tax expense~~ on our consolidated statements of operations and comprehensive (loss) income, consists of three components: (i) a $11.5 million charge relating to the one-time mandatory tax on the net accumulated post-1986 untaxed earnings and profits of the Company’s foreign subsidiaries, which we will elect to pay over an eight-year period, (ii) a $2.3 million benefit resulting from the re-measurement of the Company’s net deferred tax assets and liabilities, and (iii) a $17.2 million charge related to re-measurement of the U.S. income tax impacts resulting from foreign uncertain tax positions.available or historical information. Refer to Note 75 of our notes to consolidated financial statements for further discussion on our revenue recognition.

Table of Contents

Peak Gold JV

On September 24, 2018, the ~~income tax accounting considerations~~Company announced that the Peak Gold JV, of which our Royal Alaska, LLC subsidiary owns a 40% interest, completed a Preliminary Economic Assessment (“PEA”) on the Peak Gold Project located near Tok, Alaska. The PEA contemplates on a preliminary basis an open pit mining operation with positive economics at base case gold and silver prices. The Company has engaged an external advisor to assist in identifying options with respect to our interests in the Peak Gold Project.

Royal Gold also owns two net smelter return royalties on the Peak Gold Project.

Acquisition of Contango Ore, Inc. Common Stock

On October 3, 2018, the Company purchased the second and final tranche of Contango Ore, Inc. (“CORE”) common stock (127,188 shares) for $26 per share. As previously reported in our Fiscal 2018 10-K, the ~~Act.~~Company purchased 682,556 shares of CORE common stock at $26 per share in June 2018. As of March 31, 2019, the Company owns 809,744 shares of CORE common stock.

Principal Stream and Royalty Interests

The Company considers both historical and future potential revenues in determining which stream and royalty interests in our portfolio are principal to our business. Estimated future potential revenues from both producing and development

~~Table of Contents~~

properties are based on a number of factors, including reserves subject to our stream and royalty interests, production estimates, feasibility studies, metal price assumptions, mine life, legal status and other factors and assumptions, any of which could change and could cause the Company to conclude that one or more of such stream and royalty interests are no longer principal to our business. Currently, our principal producing ~~and development~~ stream and royalty interests are listed alphabetically in the following ~~tables.~~table.

Please refer to our Fiscal ~~2017~~2018 10-K for further discussion of our principal producing ~~and development~~ stream and royalty interests.

Table of Contents

Principal Producing Properties


			Stream or royalty interests
Mine	Location	Operator	(Gold unless otherwise stated)
Andacollo	Region IV, Chile	Compañía Minera Teck Carmen de Andacollo (“Teck”)	Gold stream - 100% of gold produced (until 900,000 ounces delivered; 50% thereafter)
Cortez	Nevada, USA	Barrick Gold Corporation ("Barrick")	GSR1: 0.40% to 5.0% sliding-scale GSR
			GSR2: 0.40% to 5.0% sliding-scale GSR
			GSR3: 0.71% GSR
			NVR1: 4.91% NVR; 4.52% NVR (Crossroads)
Mount Milligan	British Columbia, Canada	Centerra Gold Inc. ("Centerra")	Gold stream - 35.00% of payable gold
			Copper stream - 18.75% of payable copper
Peñasquito	Zacatecas, Mexico	Newmont Goldcorp ~~Inc.~~Corporation (“Newmont Goldcorp”)	2.0% NSR (gold, silver, lead, zinc)
Pueblo Viejo	Sanchez Ramirez, Dominican Republic	Barrick (60%)	Gold stream - 7.5% of gold produced (until 990,000 ounces delivered; 3.75% thereafter)
			Silver stream - 75% of silver produced (until 50.0 million ounces delivered; 37.5% thereafter)
~~Rainy River(1)~~	~~Ontario, Canada~~	~~New Gold, Inc. (“New Gold”)~~	~~Gold stream - 6.5% of gold produced (until 230,000 ounces delivered; 3.25% thereafter)~~
			~~Silver stream - 60% of silver produced (until 3.1 million ounces delivered; 30% thereafter)~~
Wassa and Prestea~~(2)~~	Western Region of Ghana	Golden Star Resources Ltd. (“Golden Star”)	Gold stream - ~~9.25%~~10.5% of gold produced

⁽¹⁾

New Gold announced commercial production at Rainy River in October 2017. The Company reclassified the Rainy River stream interest to production stage from development stage during the three months ended December 31, 2017.

⁽²⁾

~~Gold stream percentage increased to 10.5% effective January 1, 2018.~~

~~Principal Development Stage Properties~~

Operators’ Production Estimates by Stream and Royalty Interest for Calendar ~~2017~~2019

We ~~received~~generally receive annual production estimates from many of the operators of our producing mines during the first ~~calendar~~ quarter of ~~2017.~~each calendar year. In some instances, an operator may revise their original calendar year guidance throughout the year. The following table shows ~~such~~current production estimates for our principal producing properties for calendar ~~2017~~2019 as well as the actual production reported to us by the various operators through ~~December~~March 31, ~~2017.~~2019. The estimates and production reports are prepared by the operators of the mining properties. We do not participate in the preparation or

~~Table of Contents~~

calculation of the operators’ estimates or production reports and have not independently assessed or verified, and disclaim all responsibility for, the accuracy of such information. Please refer to “Property Developments” below within this MD&A for further discussion on our principal producing and development stage properties.

Table of Contents

Operators’ Estimated and Actual Production by Stream and Royalty Interest for Calendar ~~2017~~2019

Principal Producing Properties

Calendar 2017 Operator’s Production Estimate

Calendar 2017 Operator’s Production

Calendar 2019 Operator’s Production

Estimate(1)

Actual(2)

Estimate(1)

Actual(2)

Gold

Silver

Base Metals

Gold

Silver

Base Metals

Gold

Silver

Base Metals

Gold

Silver

Base Metals

Stream/Royalty

(oz.)

(lbs.)

(oz.)

(lbs.)

(oz.)

(lbs.)

(oz.)

(lbs.)

Stream:

Andacollo(3)

61,600

54,500

62,000

13,200

Mount Milligan(4)

235,000 - 255,000

55 - 65 million

164,000

41.3 million

155,000 - 175,000

33,300

Copper

65 - 75 million

11.4 million

Pueblo Viejo(5)

635,000 - 650,000

Not provided

468,000

Not provided

550,000 - 600,000

N/A

148,000

N/A

Wassa and Prestea

255,000 - 280,000

267,600

Wassa and Prestea(6)

220,000 - 240,000

N/A

Royalty:

Cortez GSR1

102,200

81,800

102,000

28,500

Cortez GSR2

1,600

1,000

98,000

4,100

Cortez GSR3

103,800

82,800

199,000

32,600

Cortez NVR1

63,900

43,800

168,200

30,700

Peñasquito(6)

410,000

Not provided

393,000

16.0 million

Peñasquito(7)

370,000 - 400,000

N/A

Lead

125 million

96.8 million

240 - 290 million

N/A

Zinc

325 million

263.2 million

390 - 450 million

N/A

⁽¹⁾

Production estimates received from our operators are for calendar ~~2017.~~2019. Please refer to our cautionary statement regarding third party information at the beginning of this MD&A. There can be no assurance that production estimates received from our operators will be achieved. Please also refer to our cautionary language regarding forward-looking statements following this MD&A, as well as the Risk Factors identified in Part I, Item 1A, of our Fiscal ~~2017~~2018 10-K for information regarding factors that could affect actual results.

⁽²⁾

Actual production figures shown are from our operators and cover the period January 1, ~~2017~~2019 through ~~December~~March 31, ~~2017,~~2019, unless otherwise ~~noted.~~noted in footnotes to this table.

⁽³⁾

The estimated and actual production figures shown for Andacollo are contained gold in concentrate.

⁽⁴⁾

The estimated and actual production figures shown for Mount Milligan are payable gold and copper in concentrate. ~~Actual production shown is for the nine months ended September 30, 2017. Full calendar year 2017 information was not available from the operator as of the date of this report.~~

⁽⁵⁾

The estimated and actual production figures shown for Pueblo Viejo are payable gold in doré and represent Barrick’s 60% interest in Pueblo Viejo. The operator did not provide estimated or actual silver production. ~~Actual production shown is for the nine months ended September 30, 2017. Full calendar year 2017 information was not available from the operator as of the date of this report.~~

⁽⁶⁾

The estimated production figures shown for Wassa and Prestea are payable gold in doré. The operator did not provide actual production figures for the three months ended March 31, 2019 as of the date of this report.

⁽⁷⁾

The estimated ~~and actual~~ gold production figures shown for Peñasquito are payable gold in concentrate and doré. The estimated lead and zinc production figures shown are payable lead and zinc in concentrate. The operator did not provide estimated annual silver production. ~~Actual~~The operator did not provide actual gold, silver, lead and zinc production ~~shown is~~figures for the ~~nine~~three months ended ~~September 30, 2017. Full calendar year 2017 information was not available from the operator~~March 31, 2019 as of the date of this report.

Property Developments

The following property development information is provided by the operators of the property, either to Royal Gold or in various documents made publicly available.

~~Table of Contents~~

Stream Interests

Andacollo

Gold stream deliveries from Andacollo were approximately ~~13,500~~9,900 ounces of gold for the three months ended ~~December~~March 31, ~~2017,~~2019, compared to approximately ~~9,200~~10,000 ounces of gold for the three months ended ~~December~~March 31, ~~2016. The production variability between quarters is typical for Andacollo resulting from concentrate shipment timing.~~2018.

Consistent with the mine plan, Teck ~~indicated that they expect~~expects copper grades to ~~continue~~decline towards reserve grade in calendar 2019 and future years. Teck continues to ~~gradually decline, which they expect~~study and implement projects that would help increase production, including the installation of a sizer to manage harder ores at depth and increase mill throughput. Teck anticipated that the sizer project will be ~~offset largely by planned throughput improvements~~operational in the ~~mill. The~~first half of calendar 2019. Teck expects the current life of mine for Carmen de Andacollo ~~is expected~~ to continue until ~~2034.~~2035. Additional permitting or amendments to existing permits will be required to execute the life of mine plan.

Table of Contents

Mount Milligan

Gold stream deliveries from Mount Milligan were approximately ~~17,600~~23,100 ounces of gold for the three months ended ~~December~~March 31, ~~2017,~~2019, compared to approximately ~~23,500~~27,400 ounces of gold for the three months ended ~~December~~March 31, ~~2016. The decrease during the current quarter is primarily attributable to the reduced stream rate of 35% versus 52.5% in the prior year quarter.~~

2018. Copper stream deliveries from Mount Milligan were approximately ~~1,245 tonnes~~2.5 million pounds of copper during the three months ended ~~December~~March 31, ~~2017. Copper stream deliveries began~~2019, compared to approximately 3.4 million pounds of copper during the ~~June 2017 quarter.~~

On December 27, 2017, Centerra reported that mill processing operations at Mount Milligan were temporarily suspended due to lack of sufficient water resources, as a result of Mount Milligan experiencing a drier than normal spring and summerthree months ended March 31, 2018. Decreased deliveries resulted from differences in calendar 2017, with lower than average spring snow melt. On February 5, 2018, Centerra reported that it recommenced mill processing operations at partial capacity. During the temporary shutdown, Centerra completed a number of steps to increase the flow of water into the tailings storage facility (“TSF”) from which the Mount Milligan mill draws all of its water requirements to supply milling operations. Such steps included adding pumps to existing water wells, increasing pump sizes to increase the flow rate, and drilling additional wells. Current make-up water sources for the TSF are from normal surface run-off, groundwater wells internal to the TSF, and from base underdrain towers that access process water underlying the TSF.

Centerra expects to resume milling operations at full capacity in April 2018, when additional fresh water becomes available from surface run-off after the spring melt. As a further, longer-term mitigation measure, Centerra received an amendment to Mount Milligan’s Environmental Assessment to allow pumping of water from a nearby lake (Phillip Lake) and has received additional related permits.

~~Due to~~ the timing of shipments and ~~deliveries~~settlements during the periods.

On February 27, 2019, Centerra announced that it received an amendment to the Mount Milligan environmental assessment certificate that permits access to additional sources of surface water and groundwater. According to Centerra, Mount Milligan will be permitted to use water at set rates from Philip Lake 1, Rainbow Creek and Meadows Creek until November 30, 2021, as well as water from groundwater sources within a six-kilometer radius of the mine for the life of mine. Mount Milligan reported that it has upgraded its water pumping infrastructure and commenced accessing water from the newly permitted sources at the beginning of April 2019. Mill throughput was limited to 32,000 tonnes per operating day in the March 2019 quarter and has increased slowly as water levels increased in the tailing’s facility. Centerra expects mill throughput to be at full capacity of 55,000 tonnes per day starting mid-May 2019 as additional water is captured during the pending spring melt, and to remain at that level throughout the remainder of calendar 2019.

With respect to the long-term water supply plan, Centerra continues to work with relevant stakeholders to identify and evaluate water sources for the remainder of the mine life. Centerra expects formal applications and government review to commence later this calendar year. Centerra also expects that the long-term source, or sources, should be available after November 2021, for the entire mine life. Centerra continues to expect Mount Milligan gold and copper ~~the impact of the temporary shutdown is likely~~production to be ~~reflected in Royal Gold’s mid-calendar 2018 results, as some~~in-range of ~~the deliveries of gold and copper that were expected in the June through August 2018 period will be deferred to a later date.~~ their earlier reported guidance.

Pueblo Viejo

Gold stream deliveries from Pueblo Viejo were approximately ~~12,600~~12,400 ounces of gold for the three months ended ~~December~~March 31, ~~2017,~~2019, compared to approximately ~~15,600~~13,200 ounces of gold for the three months ended ~~December~~March 31, ~~2016. Barrick reported Pueblo Viejo experienced lower ore grades processed during the 2017 calendar year, partially offset by higher recovery rates during the prior calendar year.~~

2018. Silver stream deliveries were approximately ~~260,200~~553,000 ounces of silver for the three months ended ~~December~~March 31, ~~2017,~~2019, compared to approximately ~~322,500~~616,300 ounces of silver for the three months ended ~~December~~March 31, ~~2016. The decrease~~2018.

In calendar 2019, Barrick expects production at Pueblo Viejo to be in ~~deliveries during~~line with calendar 2018 production levels, driven by increased throughput and recoveries, offset by declining ore grades. Barrick indicated that scoping studies and pilot project work are supportive of a plant expansion at the ~~three months ended December 31, 2017 was due~~Pueblo Viejo mine that could increase throughput by roughly 50% to 12 million tonnes per year, allowing the mine to maintain average annual gold production of approximately 800,000 ounces after calendar 2022. To achieve this, Barrick is evaluating a flotation concentrator followed by ultra-fine grinding and tank oxidation of the concentrate. Barrick reported that testing to date indicates that tank oxidation is preferable to the ~~timing~~pad pre-oxidation process previously considered. Barrick expects to complete prefeasibility studies for the plant expansion and additional tailings capacity by the end of ~~payments~~calendar 2019. According to Barrick, the project has potential to convert roughly seven million ounces of mineralized material to proven and probable reserves.

Barrick and its power generation partner, AES Corporation, made significant progress in 2018 toward securing all necessary permits and commencing construction of a new 50-kilometer gas pipeline to the Quisqueya I power generation facility at Pueblo Viejo. Barrick reports that completion and first delivery of natural gas is expected to occur in the December 2019 quarter and that conversion of the power plant to natural gas from ~~Barrick’s third-party refiners.~~ heavy fuel oil is anticipated to reduce both greenhouse gas emissions and power costs at Pueblo Viejo.

Rainy River

~~On October 19, 2017,~~ Gold stream deliveries from Rainy River were approximately 4,400 ounces of gold for the three months ended March 31, 2019, compared to approximately 2,900 ounces of gold for the three months ended March 31, 2018. Silver stream deliveries were approximately 35,700 ounces of silver for the three months ended March 31, 2019, compared to approximately 41,800 ounces of silver for the three months ended March 31, 2018.

New Gold, ~~announced that the~~Inc. (“New Gold”) reported Rainy River ~~mine achieved commercial production, approximately two weeks ahead~~produced 61,557 ounces of ~~schedule. Mining~~gold and ~~milling activities~~60,383 ounces of silver during the March 2019 quarter. Production at Rainy River included planned lower grades as mining operations continued ~~to progress well during~~ the ~~December~~

2025

Table of Contents

~~2017 quarter. The milling rate~~transition to phase 2 of the mine plan. Mill throughput for the ~~month of December~~March 2019 quarter averaged ~~21,000~~19,725 tonnes per calendar day, ~~which is~~below the ~~nameplate capacity for~~annual target of 22,000-24,000 tonnes per day. The lower average mill throughput was negatively impacted by the ~~facility.~~

~~RGLD~~significant buildup of ice in the crushed ore stockpile above the apron feeders. New Gold ~~AG (“RGLD Gold”) began receiving gold and silver deliveries~~reported average mill throughput returned to target levels at the end of the March 2019 quarter. Also during the March 2019 quarter, ~~ended December 31, 2017. Stream deliveries from Rainy River were approximately 1,000 ounces~~New Gold reported that they launched a comprehensive optimization study that includes the review of ~~gold~~alternative open pit and ~~approximately 11,900 ounces~~underground mining scenarios with the overall objective of ~~silver for~~reducing capital and improving the ~~three months ended December 31, 2017.~~

~~New Gold’s focus for calendar 2018 will be~~return on ~~optimizing throughput at~~investment over the ~~mill, as well as advancing initiatives to potentially increase production. In calendar 2018,~~life of mine. New Gold expects to ~~produce between 310,000 and 350,000 ounces~~complete an updated life of ~~gold~~mine plan in the December 2019 quarter.

New Gold expects to begin a strategic exploration drilling program in the June 2019 quarter that will test near-mine targets in the Intrepid North area.

On May 1, 2019, New Gold announced that a buildup of excess water in the tailings facility from snowmelt caused a temporary suspension of milling operations at Rainy ~~River.~~River on April 24, 2019. Mining and crushing operations are continuing and ore is being stockpiled during the suspension. New Gold ~~estimates that approximately 21,500 ounces~~is managing the excess water and expects full mill operations to resume within five days of ~~gold and 185,000 ounces~~the announcement of ~~silver will be delivered to RGLD Gold in calendar 2018.~~the suspension depending on precipitation levels over the same period.

Wassa and Prestea

Gold stream deliveries from Wassa and Prestea were approximately ~~6,000~~5,800 ounces of gold for the three months ended ~~December~~March 31, ~~2017,~~2019, compared to approximately ~~4,300~~6,800 ounces of gold for the three months ended ~~December~~March 31, ~~2016.~~2018.

On March 28, 2019, Golden Star announced Wassa underground mineral reserves increased 47% to 949,000 ounces of gold, which was attributable to strong results from the calendar 2018 underground definition drilling program combined with a stope design optimization. Prestea mineral reserves decreased by 36% to 317,000 ounces of gold, resulting from calendar 2018 mining depletion and changes to the resource model following definition drilling and underground development.

In calendar 2019, Golden Star expects ~~Wassa to become an underground-only operation by~~ the ~~end of January 2018, although 341,000 tonnes of lower grade, stockpiled ore will continue to be fed to the processing plant during the first nine months of calendar 2018.~~

Golden Star stated that mining rates at Wassa underground continued to be strong in the December 2017 quarter at approximately 1,900 tonnes per day, which represents a 36% outperformance compared to the planned mining rate for calendar 2017 of 1,400 tonnes per day and head grade delivered to the processing plant increased by 55% in the fourth quarter of calendar 2017 when compared to the third quarter of calendar 2017. Theaverage targeted mining rate for Wassa ~~Underground~~underground to be 3,500 tonnes per day, moving towards a target of 4,000 tonnes per day in calendar ~~2018 is 2,700-3,000 tonnes per day.~~

~~The Prestea open pits were expected to complete gold production at~~2020. At the end of calendar ~~2017 but Golden Star now anticipates that mining will continue until late~~2018, improvements were being recorded in ~~the March 2018 quarter and stockpiled ore will continue to be processed until the end of the first half of calendar 2018.~~

~~Golden Star reported that the~~ Prestea underground has been delivering a consistent quantity of material to the processing plant throughout December 2017 and early January 2018. From mid-January 2018, the grade is expected to increase significantly as the final draw down of the first stope begins. Golden Star forecasts that oreunderground's lead production ~~will continue to ramp-up.~~

~~Under our stream agreement, the gold stream percentage at Wassa and Prestea increased to 10.5%, from 9.25%, effective January 1, 2018.~~indicators. Golden Star expects ~~consolidated~~improvements in raise development, long-hole drilling and blasting productivities to continue in calendar ~~2018 gold production to range between 230,000 and 255,000 ounces.~~2019.

Royalty Interests

Cortez

Production attributable to our royalty interest at Cortez during the quarter increased approximately ~~72%~~73% over the prior year ~~quarter. Waste stripping~~quarter, as a result of production ramping up at the Crossroads deposit, which is subject to our NVR1 (Crossroads) and GSR2 royalty ~~interests, restarted in October 2016 and is currently ongoing.~~interests. Initial ore production at Crossroads was realized during calendar 2018. In calendar 2019, Barrick expects Crossroads expansion stripping to transition to production ~~from Crossroads to begin in late calendar 2018.~~phase stripping.

~~Pascua-Lama~~Peñasquito

Gold and zinc production attributable to our royalty interest at Peñasquito decreased approximately 59% and 17%, respectively, and lead production attributable to our royalty interest increased approximately 33%, when compared to the prior year quarter, while silver production was in line with the prior year quarter.

On November 29, 2018, Newmont Goldcorp announced that the first gold from the Peñasquito Pyrite Leach Project (“PLP”) was achieved, and on January ~~18,~~14, 2019, announced that PLP achieved commercial production in December 2018, ~~Barrick~~both under budget and ahead of schedule. Newmont Goldcorp stated that during the March 2019 quarter the PLP is running well with overall higher recoveries.

On April 29, 2019, Newmont Goldcorp reported a temporary suspension of operations at Peñasquito due to a blockade by a trucking contractor and certain community leaders. Newmont Goldcorp reported that it is ~~analyzing a revised sanction related~~pursuing legal avenues and working with government authorities to resolve the ~~Pascua-Lama project issued by Chile’s Superintendencia del Medio Ambiente (“SMA”)~~situation but did not indicate what effect this suspension is expected to have on January 17, 2018. The sanction is part of a re-evaluation process ordered by Chile’s Environmental Court in 2014 and relates to historical compliance matters at the Pascua-Lama project. According to Barrick, the SMA has not revoked Pascua-Lama’s environmental permit, but has ordered the closure of existing facilities on the Chilean side of the project, in addition to certain monitoring activities.calendar 2019 production.

2126

Table of Contents

~~reducing~~

For calendar 2019, Newmont Goldcorp expects grades and recoveries to climb at Peñasquito as the ~~overall environmental impact~~mine benefits from completion of the ~~project. Barrick reported that it is currently undertaking~~multi-year waste stripping campaign in the main Peñasco pit and a ~~number~~full year of ~~optimization studies in order to complete~~operation at the ~~prefeasibility study.~~

~~On February 6, 2018, in light of the SMA order to close surface facilities in Chile, and current~~PLP. In June 2019, Newmont Goldcorp plans to evaluate an underground mine, Barrick announced it is reclassifying Pascua-Lama’s proven and probable gold reserves of approximately 14 million ounces, which are based on an open pit mine plan, as mineralized material.~~Barrick reported that it will include further details in its year-end results release on February 14, 2018 and an update on the Pascua-Lama project at its February 22, 2018 Investor Day.~~

~~The Company routinely assesses whether impairment indicators are present for its long-lived assets. A significant reduction in reserves or mineralized material is an indicator of~~launch their full potential impairment. As part of our fiscal 2018 third quarter procedures, we will be evaluating Barrick’s reserves reclassification to assess the recoverability of our carrying value at Pascua-Lama. The Company will also consider further updates from Barrick, including those expected on February 14 and February 22, 2018, as part of our recoverability analysis. Upon completion of our process, the Company may determine an impairment is necessary.

~~Peñasquito~~

~~Gold production attributable to our royalty interest~~continuous improvement program at Peñasquito, ~~decreased approximately 62%, when compared to~~where they expect the prior year quarter, as a higher proportion of lower grade ore and stockpiled material fed the mill during the current quarter. Zinc production increased approximately 34% during the current quarter, while silver and lead production were in line with the prior year quarter.

~~Goldcorp expects calendar 2018 gold production at Peñasquito~~greatest overall value to be ~~310,000 ounces,~~in processing improvements, which ~~is lower compared to calendar 2017 (410,000 ounces), due to the continued processing of low-grade stockpiles. Goldcorp anticipates the feed~~ will ~~then revert to higher grade ore in calendar 2019 when the Phase 6D stripping program exposes higher-grade ore in the Peñasco pit.~~

~~On January 17, 2018, Goldcorp stated that the Pyrite Leach Project (“PLP”) was 62% complete~~concentrate on productivity, reliability and is expected to achieve commercial production in the December 2018 quarter, ahead of schedule. Goldcorp expects the PLP to add production of approximately one million ounces of gold and 44 million ounces of silver over the current life of the mine.cost efficiency.

Results of Operations

Quarter Ended ~~December~~March 31, ~~2017,~~2019, Compared to Quarter Ended ~~December~~March 31, ~~2016~~2018

For the quarter ended ~~December~~March 31, ~~2017,~~2019, we recorded net ~~loss~~income attributable to Royal Gold stockholders of ~~$14.8~~$28.8 million, or ~~($0.23)~~$0.44 per basic and diluted share, as compared to net ~~income~~loss attributable to Royal Gold stockholders of ~~$28.1~~$153.7 million, or ~~$0.43~~($2.35) per basic and diluted share, for the quarter ended ~~December~~March 31, ~~2016.~~2018. The ~~decrease~~increase in our earnings per share, when compared to the prior year period, was ~~primarily~~ attributable to ~~an increase~~prior period impairment charges of approximately $239.4 million, primarily on our royalty interest at Pascua-Lama, as discussed further in our ~~income tax expense due to the impacts~~Fiscal 2018 10-K. The effect of the ~~Act and a non-cash functional currency election at certain of our Canadian subsidiaries. The decrease in our earnings per share for~~impairment charges during the quarter ~~as result of the increased income tax expense~~ended March 31, 2018 was partially offset by an increase in our revenue, which is discussed below. The effects of the Act and the non-cash functional currency election for income tax purposes was additional income tax expense of approximately $26.4 million and $15.9 million, respectively, or $0.40 and $0.24$2.74 per basic share, ~~respectively. Refer to “Recent Business Developments” above and Note 7 of our notes to consolidated financial statements for further discussion on the Act.~~after taxes.

For the quarter ended ~~December~~March 31, ~~2017,~~2019, we recognized total revenue of ~~$114.4~~$109.8 million, which is comprised of stream revenue of ~~$79.3~~$77.8 million and royalty revenue of ~~$35.1~~$32.0 million at an average gold price of ~~$1,275~~$1,304 per ounce, an average silver price of ~~$16.73~~$15.57 per ounce and an average copper price of ~~$3.09~~$2.82 per pound. This is compared to total revenue of ~~$107.0~~$116.0 million for the three months ended ~~December~~March 31, ~~2016,~~2018, which was comprised of stream revenue of ~~$74.0~~$83.0 million and royalty revenue of $33.0 million, at an average gold price of ~~$1,222~~$1,329 per ounce, an average silver price of ~~$17.19~~$16.77 per ounce and an average copper price of ~~$2.39~~$3.16 per pound for the quarter ended ~~December~~March 31, ~~2016.~~2018. Revenue and the

~~Table of Contents~~

corresponding production attributable to our stream and royalty interests for the quarter ended ~~December~~March 31, ~~2017~~2019 compared to the quarter ended ~~December~~March 31, ~~2016~~2018 are as follows:

Revenue and Reported Production Subject to Our Stream and Royalty Interests

Quarter Ended ~~December~~March 31, ~~2017~~2019 and ~~2016~~2018

(In thousands, except reported production ozs. and lbs.)


		Three Months Ended				Three Months Ended					Three Months Ended				Three Months Ended
		December 31, 2017				December 31, 2016					March 31, 2019				March 31, 2018
				Reported				Reported					Reported				Reported
Stream/Royalty	Metal(s)	Revenue		Production(1)		Revenue		Production(1)		Metal(s)	Revenue		Production(1)		Revenue		Production(1)
Stream(2):
Mount Milligan											$	26,938			$	47,807
										Gold			15,200	oz.			25,800	oz.
										Copper			2.6	Mlbs.			4.3	Mlbs.
Pueblo Viejo		$	26,355			$	26,437				$	20,787			$	15,734
	Gold			14,500	oz.			13,700	oz.	Gold			10,400	oz.			8,500	oz.
	Silver			469,600	oz.			543,300	oz.	Silver			469,000	oz.			260,800	oz.
Mount Milligan	Gold	$	21,632	12,600	oz.	$	31,664	25,700	oz.
	Copper			1.8	Mlbs.			N/A
Andacollo	Gold	$	21,601	17,000	oz.	$	10,985	9,200	oz.	Gold	$	15,638	12,000	oz.	$	7,186	5,400	oz.
Wassa and Prestea	Gold	$	8,629	6,800	oz.	$	4,921	4,000	oz.	Gold	$	7,328	5,600	oz.	$	8,350	6,300	oz.
Rainy River	Gold	$	1,070	800	oz.	$	N/A	N/A
Other(3)											$	7,074			$	3,902
										Gold			5,000	oz.			2,800	oz.
										Silver			40,800	oz.			11,100	oz.
Total stream revenue		$	79,287			$	74,007				$	77,765			$	82,979

Royalty(2):
Peñasquito		$	6,190			$	7,134				$	4,465			$	6,452
	Gold			71,100	oz.			185,400	oz.	Gold			37,300	oz.			91,200	oz.
	Silver			5.1	Moz.			5.0	Moz.	Silver			4.9	Moz.			5.0	Moz.
	Lead			33.4	Mlbs.			33.6	Mlbs.	Lead			34.5	Mlbs.			26.0	Mlbs.
	Zinc			94.4	Mlbs.			70.5	Mlbs.	Zinc			72.8	Mlbs.			88.0	Mlbs.
Cortez	Gold	$	2,934	25,000	oz.	$	1,834	14,500	oz.	Gold	$	4,127	32,700	oz.	$	1,901	18,900	oz.
Other(3)	Various	$	25,937	N/A		$	23,986	N/A		Various	$	23,421	N/A		$	24,651	N/A
Total royalty revenue		$	35,061			$	32,954				$	32,013			$	33,004
Total Revenue		$	114,348			$	106,961				$	109,778			$	115,983

Table of Contents

⁽¹⁾

Reported production relates to the amount of metal sales subject to our stream and royalty interests for the three months ended ~~December~~March 31, ~~2017~~2019 and ~~2016,~~2018, and may differ from the operators’ public reporting.

⁽²⁾

Refer to “Property Developments” above for further discussion on our principal stream and royalty interests.

⁽³⁾

The “Other” category for streams is only our Rainy River gold and silver stream. Individually, no ~~stream or~~ royalty included within the “Other” category for royalties contributed greater than 5% of our total revenue for either period.

The ~~increase~~decrease in our total revenue for the three months ended ~~December~~March 31, ~~2017,~~2019, compared with the three months ended ~~December~~March 31, ~~2016,~~2018, resulted primarily from ~~an increase~~a decrease in our stream revenue and ~~an increase~~a decrease in the average gold, silver and copper prices. The ~~increase~~decrease in our stream revenue was primarily attributable to ~~increased~~a decrease in gold ~~production~~and copper sales at ~~Andacollo and Wassa and Prestea, and new gold production from our Rainy River stream,~~Mount Milligan. This decrease was partially offset by a production (gold) decrease at Mount Milligan. Silver deliveries from Rainy River began during our December 2017 quarter with silver sales anticipated to begin in the March 2018 quarter. Copper deliveries from Mount Milligan began during our June 2017 quarter.

~~Table of Contents~~

~~Gold and silver ounces and tonnes of copper purchased and sold during the three months ended December 31, 2017 and 2016, and~~higher gold and silver ~~ounces~~sales at Pueblo Viejo and ~~tonnes of copper in inventory as of December 31, 2017, and June 30, 2017, for our streaming interests were as follows:~~

Three Months Ended

Three Months Ended

As of

As of

December 31, 2017

December 31, 2016

December 31, 2017

June 30, 2017
Gold Stream

Purchases (oz.)

Sales (oz.)

Purchases (oz.)

Sales (oz.)

Inventory (oz.)

Inventory (oz.)
Mount Milligan

17,700

12,700

23,500

25,700

5,200

100
Andacollo

13,500

17,000

9,200

9,200

—

100
Pueblo Viejo

12,600

14,500

15,600

13,700

8,500

12,900
Wassa and Prestea

6,000

6,800

4,300

4,000

500

1,000
Rainy River

1,000

800

—

—

200

—
Total

50,800

51,800

52,600

52,600

14,400

14,100

Three Months Ended

Three Months Ended

As of

As of

December 31, 2017

December 31, 2016

December 31, 2017

June 30, 2017
Silver Stream

Purchases (oz.)

Sales (oz.)

Purchases (oz.)

Sales (oz.)

Inventory (oz.)

Inventory (oz.)
Pueblo Viejo

260,200

469,600

322,500

543,300

260,800

536,800
Rainy River

11,900

—

—

—

11,900

—
Total

272,100

469,600

322,500

543,300

272,700

536,800

Three Months Ended

Three Months Ended

As of

As of

December 31, 2017

December 31, 2016

December 31, 2017

June 30, 2017
Copper Stream

Purchases (tonnes)

Sales (tonnes)

Purchases (tonnes)

Sales (tonnes)

Inventory (tonnes)

Inventory (tonnes)
Mount Milligan

1,245

819

N/A

N/A

426

—

~~Our royalty revenue increased during the quarter ended December 31, 2017, compared with the quarter ended December 31, 2016, primarily~~higher gold sales at Andacollo due to ~~an increase in the average gold, silver and copper prices.~~timing of deliveries. Please refer to “Property Developments” earlier within this MD&A for further discussion on recent developments regarding properties covered by certain of our stream and royalty interests.

Gold and silver ounces and copper pounds purchased and sold during the three months ended March 31, 2019 and 2018, and gold and silver ounces and copper pounds in inventory as of March 31, 2019, and June 30, 2018, for our streaming interests were as follows:


	Three Months Ended		Three Months Ended		As of		As of
	March 31, 2019		March 31, 2018		March 31, 2019		June 30, 2018
Gold Stream	Purchases (oz.)	Sales (oz.)	Purchases (oz.)	Sales (oz.)	Inventory (oz.)		Inventory (oz.)
Mount Milligan	23,100	15,200	27,400	25,800	7,900		300
Pueblo Viejo	12,400	10,400	13,200	8,500	12,400		9,200
Andacollo	9,900	12,000	10,000	5,400	2,400		7,400
Wassa and Prestea	5,800	5,600	6,800	6,300	900		3,900
Rainy River	4,400	5,000	2,900	2,800	1,000	��	800
Total	55,600	48,200	60,300	48,800	24,600		21,600

	Three Months Ended		Three Months Ended		As of		As of
	March 31, 2019		March 31, 2018		March 31, 2019		June 30, 2018
Silver Stream	Purchases (oz.)	Sales (oz.)	Purchases (oz.)	Sales (oz.)	Inventory (oz.)		Inventory (oz.)
Pueblo Viejo	553,000	469,000	616,300	260,800	553,000		540,200
Rainy River	35,700	40,800	41,800	11,100	36,600		32,300
Total	588,700	509,800	658,100	271,900	589,600		572,500

	Three Months Ended		Three Months Ended		As of		As of
	March 31, 2019		March 31, 2018		March 31, 2019		June 30, 2018
Copper Stream	Purchases (Mlbs.)	Sales (Mlbs.)	Purchases (Mlbs.)	Sales (Mlbs.)	Inventory (Mlbs.)		Inventory (Mlbs.)
Mount Milligan	2.5	2.6	3.4	4.3	0.8		—

Cost of sales decreased to ~~$19.9~~$19.1 million for the three months ended ~~December~~March 31, ~~2017~~2019 from ~~$22.5~~$21.3 million for the three months ended ~~December~~March 31, ~~2016.~~2018. The decrease was primarily due to decreased gold and copper sales from Mount Milligan. Cost of sales is specific to our stream agreements and is the result of RGLD Gold’s purchase of gold, silver and copper for a cash payment. The cash payment for gold from Mount Milligan is the lesser of $435 per ounce or the prevailing market price of gold when purchased, while the cash payment for our other streams is a set contractual percentage of the gold, silver or copper ~~(Mount Milligan)~~ spot price near the date of metal delivery.

General and administrative expenses ~~increased~~decreased to ~~$9.6~~$6.8 million for the three months ended ~~December~~March 31, ~~2017~~2019 from ~~$7.5~~$8.1 million for the three months ended ~~December~~March 31, ~~2016.~~2018. The ~~increase~~decrease during the current quarter was primarily due to ~~an increase~~a decrease in legal costs attributable to the Voisey’s Bay royalty calculation dispute and ~~litigation costs~~settlement as discussed further above under “Recent Business Developments.”

On July 1, 2018, the Company adopted new Accounting Standards Update (“ASU”) guidance which impacts how we recognize changes in fair value on our equity securities at each reporting period. As a result of the new ASU guidance, the Company recognized a gain on changes in fair value of equity securities of approximately ~~$1.7 million.~~

~~Depreciation, depletion and amortization increased to $42.0~~$1.8 million for the three months ended ~~December~~March 31, ~~2017 from $39.5 million for the three months ended December 31, 2016. The increase was primarily attributable~~2019. Refer to increased gold sales at Andacollo and Wassa and Prestea, which resulted in additional depletion of approximately $6.6 million. This increase was partially offset by a decrease in gold sales at Mount Milligan, which resulted in a decrease in depletion of approximately $3.2 million.

Interest and other income decreased to $0.6 million for the three months ended December 31, 2017, from $7.5 million for the three months ended December 31, 2016. The decrease was primarily due to a gain recognized ($3.4 million) on consideration received as part of the terminationNote 1 of our ~~Phoenix Gold Project streaming interest during the prior period. Refer~~notes to consolidated financial statements for further detail. The new guidance could increase our Fiscal 2017 10-K for discussion on the Phoenix Gold Project restructuring. The decrease in interest and other income was also due to consideration received as part of a legal settlement and termination of a non-principal royalty of approximately $2.8 million during the prior period.earnings volatility.

During the three months ended ~~December~~March 31, ~~2017,~~2019, we recognized an income tax expense totaling ~~$48.4~~$9.4 million compared with an income tax ~~expense~~benefit of ~~$5.0~~$45.9 million during the three months ended ~~December~~March 31, ~~2016.~~2018. This resulted in an effective tax rate of ~~148.5%~~24.7% in the current period, compared with ~~15.7%~~22.9% in the quarter ended ~~December~~March 31, ~~2016.~~2018. The increase in the ~~effective tax rate for the three months ended December 31, 2017 is primarily attributable to the effects of~~

2428

Table of Contents

effective tax rate for the ~~Act and~~three months ended March 31, 2019 was primarily related to lower discrete benefits recorded in the current quarter as compared to the quarter ended March 31, 2018. The prior year’s quarter included a ~~non-cash functional currency election at certain of our Canadian subsidiaries. Refer~~discrete tax benefit related to ~~“Recent Business Developments” above and Note 7 of our notes to consolidated financial statements for further discussion on~~ the ~~Act.~~ impairment charges.

~~Six~~Nine Months Ended ~~December~~March 31, ~~2017,~~2019, Compared to ~~Six~~Nine Months Ended ~~December~~March 31, ~~2016~~2018

For the ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2019, we recorded net income attributable to Royal Gold stockholders of ~~$13.9~~$67.4 million, or ~~$0.21~~$1.03 per basic and diluted share, as compared to a net ~~income~~loss attributable to Royal Gold stockholders of ~~$57.9~~$139.8 million, or ~~$0.89~~($2.14) per basic ~~share~~ and ~~$0.88 per~~ diluted share, for the ~~six~~nine months ended ~~December~~March 31, ~~2016.~~2018. The ~~decrease~~increase in our earnings per share, when compared to the prior period, was ~~primarily~~ attributable to ~~an increase~~prior period impairment charges of approximately $239.4 million, primarily on our royalty interest at Pascua-Lama, as discussed further in our ~~income tax expense due to the impacts~~Fiscal 2018 10-K. The effect of the ~~Act and a non-cash functional currency election at certain of our Canadian subsidiaries. The effects of~~impairment charges during the ~~Act and the non-cash functional currency election for income tax purposes~~quarter ended March 31, 2018 was ~~additional income tax expense of approximately $26.4 million and $15.9 million, respectively, or $0.40 and $0.24~~$2.74 per basic share, ~~respectively. Refer to “Recent Business Developments” above and Note 7 of our notes to consolidated financial statements for further discussion on the Act.~~after taxes.

For the ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2019, we recognized total revenue of ~~$226.8~~$307.4 million, which is comprised of stream revenue of ~~$158.0~~$215.5 million and royalty revenue of ~~$68.8~~$91.9 million at an average gold price of ~~$1,277~~$1,248 per ounce, an average silver price of $15.04 per ounce and an average copper price of $2.80 per pound. This is compared to total revenue of $342.8 million for the nine months ended March 31, 2018, which was comprised of stream revenue of $241.0 million and royalty revenue of $101.8 million, at an average gold price of $1,294 per ounce, an average silver price of $16.78 per ounce and an average copper price of $2.98 per pound. This is compared to total revenue of $224.9 million for the six months ended December 31, 2016, which is comprised of stream revenue of $159.5 million and royalty revenue of $65.4 million, at an average gold price of $1,280 per ounce, an average silver price of $18.42 per ounce and an average copper price of $2.28$3.04 per pound. Revenue and the corresponding production attributable to our stream and royalty interests for the ~~six~~nine months ended ~~December~~March 31, ~~2016~~2019 compared to the ~~six~~nine months ended ~~December~~March 31, ~~2016 is~~2018 are as follows:

Revenue and Reported Production Subject to Our ~~Royalty~~Stream and ~~Stream~~Royalty Interests

~~Six~~Nine Months Ended ~~December~~March 31, ~~2017~~2019 and ~~2016~~2018

(In thousands, except reported production ozs. and lbs.)


			Six Months Ended				Six Months Ended						Nine Months Ended				Nine Months Ended
			December 31, 2017				December 31, 2016						March 31, 2019				March 31, 2018
					Reported				Reported						Reported				Reported
Stream/Royalty		Metal(s)	Revenue		Production(1)		Revenue		Production(1)			Metal(s)	Revenue		Production(1)		Revenue		Production(1)
Stream(2):
Mount Milligan			$	53,584			$	70,050					$	63,954			$	101,390
		Gold			31,300	oz.			54,600	oz.		Gold			38,500	oz.			57,100	oz.
		Copper			4.4	Mlbs.			N/A			Copper			5.8	Mlbs.			8.7	Mlbs.
Pueblo Viejo			$	51,758			$	47,387					$	58,504			$	67,492
		Gold			27,400	oz.			24,600	oz.		Gold			28,500	oz.			35,900	oz.
	��	Silver			1.0	Moz.			866,600	oz.		Silver			1.5	Moz.			1.3	Moz.
Andacollo		Gold	$	33,938	26,700	oz.	$	31,154	24,400	oz.		Gold	$	51,016	40,900	oz.	$	41,124	32,100	oz.
Wassa and Prestea		Gold	$	17,699	13,900	oz.	$	10,920	8,600	oz.		Gold	$	24,939	20,000	oz.	$	26,049	20,200	oz.
Rainy River		Gold	$	1,070	800	oz.		N/A	N/A
Other(3)													$	17,067			$	4,973
												Gold			12,300	oz.			3,600	oz.
												Silver			108,300	oz.			11,100	oz.
Total stream revenue			$	158,049			$	159,511					$	215,480			$	241,028

Royalty(2):
Peñasquito			$	13,986			$	12,955					$	12,763			$	20,439
		Gold			205,100	oz.			285,500	oz.		Gold			141,000	oz.			296,200	oz.
		Silver			11.0	Moz.			10.3	Moz.		Silver			14.1	Moz.			15.9	Moz.
		Lead			69.6	Mlbs.			66.6	Mlbs.		Lead			100.4	Mlbs.			95.5	Mlbs.
		Zinc			186.8	Mlbs.			143.5	Mlbs.		Zinc			220.1	Mlbs.			274.8	Mlbs.
Cortez		Gold	$	5,922	54,900	oz.	$	3,874	36,300	oz.		Gold	$	7,066	59,700	oz.	$	7,823	73,800	oz.
Other(3)		Various	$	48,867	N/A		$	48,569	N/A			Various	$	72,053	N/A		$	73,517	N/A
Total royalty revenue			$	68,775			$	65,398					$	91,882			$	101,779
Total revenue	Total revenue		$	226,824			$	224,909			Total revenue		$	307,362			$	342,807

⁽¹⁾

Reported production relates to the amount of metal sales subject to our stream and royalty interests for the nine months ended March 31, 2019 and 2018, and may differ from the operators’ public reporting.

~~(1)~~Reported production relates to the amount of metal sales, subject to our royalty and stream interests, for the six months ended December 31, 2017 and 2016, and may differ from the operators’ public reporting.

⁽²⁾

Refer to “Property Developments” above for further discussion on our principal stream and royalty interests.

~~(2)Refer to “Property Developments” above for further discussion on our principal stream interests.~~

~~(3)Individually, no stream or royalty included within the “Other” category contributed greater than 5% of our total revenue for either period.~~

⁽³⁾

The “Other” category for streams is only our Rainy River gold and silver stream. Individually, no royalty included within the “Other” category for royalties contributed greater than 5% of our total revenue for either period.

2529

Table of Contents

The ~~increase~~decrease in our total revenue for the ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2019 compared with the ~~six~~nine months ended ~~December~~March 31, ~~2016,~~2018, resulted primarily from ~~an increase~~a decrease in our ~~royalty revenue.~~stream revenue and a decrease in the average gold, silver and copper prices. The ~~increase in our royalty revenue was primarily attributable to increased gold production from our Cortez royalty interests. The slight~~ decrease in our stream revenue was primarily attributable to a decrease in ~~production (gold)~~gold and copper sales at Mount ~~Milligan. This~~Milligan and a decrease ~~was~~in gold sales at Pueblo Viejo. These decreases were partially offset by ~~production increases~~higher metal sales at ~~Pueblo Viejo,~~ Andacollo and ~~Wassa and Prestea and new gold production from our~~ Rainy ~~River stream interest. Silver deliveries from our Rainy River interest began during the December 2017 quarter with silver~~River. The decrease in metal sales ~~anticipated to begin in the March 2018 quarter. Copper deliveries from~~at Mount Milligan ~~began during our June 2017 quarter.~~was anticipated based on previously announced news from Centerra and as reported earlier by the Company.

Gold and silver ounces and ~~tonnes of~~ copper pounds purchased and sold during the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2019 and ~~2016,~~2018, and gold and silver ounces and ~~tonnes of~~ copper pounds in inventory as of ~~December~~March 31, ~~2017,~~2019, and June 30, ~~2017,~~2018, for our streaming interests were as follows:


	Six Months Ended		Six Months Ended		As of	As of	Nine Months Ended		Nine Months Ended		As of	As of
	December 31, 2017		December 31, 2016		December 31, 2017	June 30, 2017	March 31, 2019		March 31, 2018		March 31, 2019	June 30, 2018
Gold Stream	Purchases (oz.)	Sales (oz.)	Purchases (oz.)	Sales (oz.)	Inventory (oz.)	Inventory (oz.)	Purchases (oz.)	Sales (oz.)	Purchases (oz.)	Sales (oz.)	Inventory (oz.)	Inventory (oz.)
Mount Milligan	36,400	31,300	53,400	54,600	5,200	100	46,100	38,500	63,800	57,100	7,900	300
Andacollo	26,500	26,700	24,500	24,400	—	100	35,900	41,000	36,500	32,100	2,400	7,400
Pueblo Viejo	23,100	27,400	29,200	24,600	8,500	12,900	31,700	28,500	36,300	35,900	12,400	9,200
Wassa and Prestea	13,400	13,900	8,900	8,600	500	1,000	17,000	20,000	20,200	20,200	900	3,900
Rainy River	1,000	800	—	-	200	—	12,500	12,300	3,900	3,600	1,000	800
Total	100,400	100,100	116,000	112,200	14,400	14,100	143,200	140,300	160,700	148,900	24,600	21,600

	Six Months Ended		Six Months Ended		As of	As of	Nine Months Ended		Nine Months Ended		As of	As of
	December 31, 2017		December 31, 2016		December 31, 2017	June 30, 2017	March 31, 2019		March 31, 2018		March 31, 2019	June 30, 2018
Silver Stream	Purchases (Moz.)	Sales (Moz.)	Purchases (oz.)	Sales (oz.)	Inventory (oz.)	Inventory (oz.)	Purchases (oz.)	Sales (oz.)	Purchases (oz.)	Sales (oz.)	Inventory (oz.)	Inventory (oz.)
Pueblo Viejo	730,200	1,006,200	865,800	866,600	260,800	536,800	1,531,400	1,518,700	1,346,500	1,267,000	553,000	540,200
Rainy River	11,900	-	—	—	11,900	—	112,600	108,300	53,700	11,100	36,600	32,300
Total	742,100	1,006,200	865,800	866,600	272,700	536,800	1,644,000	1,627,000	1,400,200	1,278,100	589,600	572,500

	Six Months Ended		Six Months Ended		As of	As of	Nine Months Ended		Nine Months Ended		As of	As of
	December 31, 2017		December 31, 2016		December 31, 2017	June 30, 2017	March 31, 2019		March 31, 2018		March 31, 2019	June 30, 2018
Copper Stream	Purchases (tonnes)	Sales (tonnes)	Purchases (tonnes)	Sales (tonnes)	Inventory (tonnes)	Inventory (tonnes)	Purchases (Mlbs.)	Sales (Mlbs.)	Purchases (Mlbs.)	Sales (Mlbs.)	Inventory (Mlbs.)	Inventory (Mlbs.)
Mount Milligan	2,414	1,988	N/A	N/A	426	—	6.6	5.8	8.7	8.7	0.8	—

Cost of sales decreased to ~~$40.3~~$53.8 million for the ~~six~~nine months ended ~~December~~March 31, ~~2017, compared to $45.2~~2019 from $61.6 million for the ~~six~~nine months ended ~~December~~March 31, ~~2016.~~2018. The decrease was primarily due to decreased gold and copper sales from Mount ~~Milligan.~~Milligan and Pueblo Viejo, partially offset by an increase in gold sales at Rainy River and Andacollo. Cost of sales is specific to our stream agreements and is the result of RGLD Gold’s purchase of gold, silver and copper for a cash payment. The cash payment for gold from Mount Milligan is the lesser of $435 per ounce or the prevailing market price of gold when purchased, while the cash payment for our other streams is a set contractual percentage of the gold, silver or copper ~~(Mount Milligan)~~ spot price near the date of metal delivery.

~~General and administrative expenses decreased~~Production taxes increased to ~~$16.5~~$3.2 million for the ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2019, from ~~$18.0~~$1.6 million for the ~~six~~nine months ended ~~December~~March 31, ~~2016.~~2018. The ~~decrease~~increase is primarily due to an increase in mining proceeds tax associated with our Voisey’s Bay royalty, which resulted from increased revenue from the Voisey’s Bay royalty during the current ~~period was primarily due to a decrease in non-cash stock based compensation.~~period.

~~Depreciation, depletion and amortization increased to $81.7~~On July 1, 2018, the Company adopted new ASU guidance which impacts how we recognize changes in fair value on our equity securities at each reporting period. As a result of the new ASU guidance, the Company recognized a loss on changes in fair value of equity securities of approximately $3.3 million for the ~~six~~nine months ended ~~December~~March 31, ~~2017, from $79.6 million~~2019. Refer to Note 1 of our notes to consolidated financial statements for ~~the six months ended December 31, 2016.~~further detail. The new guidance could increase was primarily attributable to increased gold sales at Andacollo, Pueblo Viejo and Wassa and Prestea, which resulted in additional depletion of approximately $11.4 million. This increase was partially offset by a decrease in gold sales at Mount Milligan, which resulted in a decrease in depletion of approximately $4.8 million. our earnings volatility.

Interest and other income decreased to ~~$1.6~~$1.1 million for the ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2019, from ~~$9.0~~$3.4 million for the ~~six~~nine months ended ~~December~~March 31, ~~2016.~~2018. As discussed further in our Fiscal 2018 10-K, in June 2018, Golden Star repaid its $20 million term loan facility with Royal Gold, thus reducing interest income during the current period.

Interest and other expense decreased to $22.3 million for the nine months ended March 31, 2019, from $25.9 million for the nine months ended March 31, 2018. The decrease was primarily ~~due~~attributable to lower interest expense as a ~~gain recognized ($3.4 million) on consideration received as part~~result of a decrease in amounts outstanding under our revolving credit facility. The Company repaid the ~~termination of our Phoenix Gold Project streaming interest during the prior period. Refer to our Fiscal 2017 10-K for discussion~~remaining amounts outstanding on the Phoenix Gold Project restructuring. The decrease in interest and other income was also due to consideration received as part of a legal settlement and termination of a non-principal royalty of approximately $2.8 millionrevolving credit facility during ~~the prior period.~~

fiscal year 2018.

2630

Table of Contents

During the ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2019, we recognized income tax expense ~~totaling $55.9~~$11.4 million compared with ~~$12.2~~income tax expense of $10.0 million during the ~~six~~nine months ended ~~December~~March 31, ~~2016.~~2018. This resulted in an effective tax rate of ~~83.9%~~15.1% in the current period, compared with ~~18.5%~~(7.5%) during the ~~six~~nine months ended ~~December~~March 31, ~~2016.~~2018. The ~~increase in the~~ effective tax rate for the ~~six~~nine months ended March 31, 2019 was primarily impacted by discrete true-ups recorded in the December ~~31, 2017 is primarily attributable~~2018 quarter related to the ~~effects~~Company’s completion of its analysis of the Tax Cuts and Jobs Act (the “Act”). The effective tax rate for the nine months ended March 31, 2018 was impacted by discrete period expense recorded during the December 2017 quarter related to the impacts of the Act, ~~and a non-cash functional currency election at certain of our Canadian subsidiaries.~~partially offset by discrete benefits related to impairment charges. Refer to ~~“Recent Business Developments” above and~~ Note 7 of our notes to consolidated financial statements for further discussion on the Act.

Liquidity and Capital Resources

Overview

At ~~December~~March 31, ~~2017,~~2019, we had current assets of ~~$165.5~~$265.4 million compared to current liabilities of ~~$41.6~~$49.3 million resulting in working capital of ~~$123.9~~$216.1 million and a current ratio of 45 to 1. This compares to current assets of ~~$143.6~~$125.8 million and current liabilities of ~~$34.3~~$51.4 million at June 30, ~~2017,~~2018, resulting in working capital of ~~$109.3~~$74.4 million and a current ratio of approximately 42 to 1. The increase in our current ratio was primarily attributable to an increase in our cash and equivalents, which is discussed further below under “Summary of Cash Flows.”

During the ~~quarter~~nine months ended ~~December~~March 31, ~~2017,~~2019, liquidity needs were met from ~~$94.5~~$180.9 million in ~~net revenue~~operating cash flows and our available cash resources. ~~During the three months ended December 31, 2017, the Company repaid $50.0 million of the outstanding borrowings under the revolving credit facility.~~ As of ~~December~~March 31, ~~2017,~~2019, the Company had ~~$850 million~~no amounts outstanding and $1 billion available ~~and $150 million outstanding~~ under its revolving credit facility. Working capital, combined with the Company’s undrawn revolving credit facility, resulted in approximately ~~$970 million~~$1.2 billion of total ~~available~~ liquidity ~~as of December~~at March 31, ~~2017.~~2019. The Company was in compliance with each financial covenant under the revolving credit facility as of ~~December~~March 31, ~~2017.~~2019. Refer to Note 34 of our notes to consolidated financial statements for further discussion on our debt.

We believe that our current financial resources and funds generated from operations will be adequate to cover anticipated expenditures for debt service, general and administrative expense costs and capital expenditures for the foreseeable future. Our current financial resources are also available to fund dividends and for acquisitions of stream and royalty interests. Our long-term capital requirements are primarily affected by our ongoing acquisition activities. The Company currently, and generally at any time, has acquisition opportunities in various stages of active review. In the event of one or more substantial stream and royalty interest or other acquisitions, we may seek additional debt or equity financing as necessary.

Please refer to our risk factors included in Part 1, Item 1A of our Fiscal ~~2017~~2018 10-K and in Part II, Item 1A of this Quarterly Report on Form 10-Q for a discussion of certain risks that may impact the Company’s liquidity and capital resources.

Summary of Cash Flows

Operating Activities

Net cash provided by operating activities totaled ~~$147.2~~$180.9 million for the ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2019, compared to ~~$124.9~~$251.8 million for the ~~six~~nine months ended ~~December~~March 31, ~~2016.~~2018. The ~~increase was~~decrease is primarily due to ~~a decrease in~~higher income taxes paid ~~at certain foreign subsidiaries~~ of ~~approximately $14.0~~$41.2 million over the prior period and ~~an increase~~a decrease in proceeds received from our stream and royalty interests, net of production taxes and cost of sales, of approximately ~~$11.2~~$27.5 million. The increase in cash taxes paid during the current period is primarily attributable to an increase in required estimated tax payments made to various taxing authorities and an increase in prior fiscal year earnings at certain foreign subsidiaries, which corresponding tax payments were made within the current period.

Investing Activities

Net cash used in investing activities totaled ~~$0.1~~$4.8 million for the ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2019, compared ~~to cash used in investing activities of $191.0~~$2.3 million for the ~~six~~nine months ended ~~December~~March 31, ~~2016.~~2018. The ~~decrease~~increase in cash used in investing activities is primarily due to ~~a decrease in acquisitions of stream and royalty interests in mineral properties compared to~~additional CORE common stock purchased during the ~~prior year~~current period.

Table of Contents

Financing Activities

Net cash used in financing activities totaled ~~$134.9~~$48.9 million for the ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2019, compared to ~~cash provided by financing activities of $33.5~~$226.0 million for the ~~six~~nine months ended ~~December~~March 31, ~~2016.~~2018. The decrease in cash ~~provided by~~used in financing activities is primarily due to a decrease in repayments on our revolving credit facility. The Company repaid the ~~Company’s $70 million borrowing under its~~remaining amounts outstanding on the revolving credit facility ~~to fund a royalty acquisition~~ during ~~the prior~~fiscal year ~~period. During the six months ended December 31, 2017, the Company repaid $100 million of the outstanding borrowings under the revolving credit facility.~~

~~Table of Contents~~

2018.

Recently Issued or Adopted Accounting Standards and Critical Accounting Policies

Refer to Note 1 of our notes to consolidated financial statements for further discussion on any recently issued or adopted accounting standards. Refer to our Fiscal ~~2017~~2018 10-K for discussion on our critical accounting policies.

Forward-Looking Statements

Cautionary “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: With the exception of historical matters, the matters discussed in this Quarterly Report on Form 10-Q are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projections or estimates contained herein. Such forward-looking statements include, without limitation, statements regarding the impact of recently adopted or issued accounting standards; the expected schedule for making advance payments pursuant to the Khoemacau Copper Project stream agreement and the funding of such payments; application of the royalty on production from Voisey’s Bay to a percentage of gross metal value in concentrates; expectations to settle the principal amount of 2019 Notes in cash (primarily from the available revolving credit facility) and any excess conversion value in shares plus cash in lieu of fractional shares; expectations concerning the proportion of total revenue to come from stream and royalty interests; the results of the PEA for the Peak Gold Project and the results of efforts to identify options with respect to the Company’s interests in the Peak Gold Project; the results of pre-feasibility study work for the Pueblo Viejo plant expansion; projected production estimates and estimates pertaining to timing, commencement and ~~commencement~~volume of production from the operators of properties where we hold stream and royalty interests; statements related to ongoing developments and expected developments at properties where we hold stream and royalty interests; fluctuations in the prices for gold, silver, copper, nickel and other metals; stream and royalty revenue estimates compared to actual revenue; effective tax rate estimates, including the effect of recently enacted tax reform; the adequacy of financial resources and funds to cover anticipated expenditures for debt service, ~~and~~ general and administrative expenses and dividends, as well as costs associated with exploration and business development and capital ~~expenditures,~~expenditures; expected delivery dates of gold, silver, copper and other ~~metals,~~metals; and our expectation that substantially all our revenues will be derived from stream and royalty interests. Words such as “may,” “could,” “should,” “would,” “believe,” “estimate,” “expect,” “anticipate,” “plan,” “forecast,” “potential,” “intend,” “continue,” “project,” and variations of these words, comparable words and similar expressions generally indicate forward-looking statements, which speak only as of the date the statement is made. Do not unduly rely on forward-looking statements. Actual results may differ materially from those expressed or implied by these forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, among others:

a low price environment for gold and other metal prices on which our stream and royalty interests are paid or a low price environment for the primary metals mined at properties where we hold stream and royalty interests;

the production at or performance of properties where we hold stream and royalty interests, and variation of actual performance from the production estimates and forecasts made by the operators of these properties;

the ability of operators to bring projects into production on schedule or operate in accordance with feasibility studies, including development stage mining properties, mine and mill expansion ~~project~~projects and other development and construction projects;

acquisition and maintenance of permits and authorizations, completion of construction and commencement and continuation of production at the properties where we hold stream and royalty interests;

challenges to mining, processing and related permits and licenses, or to applications for permits and licenses, by or on behalf of indigenous populations, non-governmental organizations or other third parties;

liquidity or other problems our operators may encounter, including shortfalls in the financing required to complete construction and bring a mine into production;

decisions and activities of the operators of properties where we hold stream and royalty interests;

Table of Contents

hazards and risks at the properties where we hold stream and royalty interests that are normally associated with developing and mining properties, including unanticipated grade, continuity and geological, metallurgical, processing or other problems, mine operating and ore processing facility problems, pit wall or tailings dam failures, industrial accidents, environmental hazards and natural catastrophes such as drought, floods, hurricanes or earthquakes and access to sufficient raw materials, water and power;

changes in operators’ mining, processing and treatment techniques, which may change the production of minerals subject to our stream and royalty interests;

changes in the methodology employed by our operators to calculate our stream and royalty interests, or failure to make such calculations in accordance with the agreements that govern them;

~~Table of Contents~~

changes in project parameters as plans of the operators of properties where we hold stream and royalty interests are refined;

accuracy of and decreases in estimates of reserves and mineralization by the operators of properties where we hold stream and royalty interests;

contests to our stream and royalty interests and title and other defects toin the properties where we hold stream and royalty interests;

adverse effects on market demand for commodities, the availability of financing, and other effects from adverse economic and market conditions;

future financial needs of the Company and the operators of properties where we hold stream or royalty interests;

federal, state and foreign legislation governing us or the operators of properties where we hold stream and royalty interests;

the availability of stream and royalty interests for acquisition or other acquisition opportunities and the availability of debt or equity financing necessary to complete such acquisitions;

our ability to make accurate assumptions regarding the valuation, timing and amount of revenue to be derived from our stream and royalty interests when evaluating acquisitions;

risks associated with conducting business in foreign countries, including application of foreign laws to contract and other disputes, validity of security interests, governmental consents for granting interests in exploration and exploitation licenses, application and enforcement of real estate, mineral tenure, contract, safety, environmental and permitting laws, currency fluctuations, expropriation of property, repatriation of earnings, taxation, price controls, inflation, import and export regulations, community unrest and labor disputes, endemic health issues, corruption, enforcement and uncertain political and economic environments;

changes in laws governing us, the properties where we hold stream and royalty interests or the operators of such properties;

risks associated with issuances of additional common stock or incurrence of indebtedness in connection with acquisitions or otherwise including risks associated with the issuance and conversion of convertible notes;

changes in management and key employees; and

failure to complete future acquisitions;

as well as other factors described elsewhere in this report and our other reports filed with the SEC, including our Fiscal ~~2017~~2018 10-K. Most of these factors are beyond our ability to predict or control. Future events and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements. Forward-looking statements speak only as of the date on which they are made. We disclaim any obligation to update any forward-looking statements made herein, except as required by law. Readers are cautioned not to put undue reliance on forward-looking statements.

Table of Contents

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our earnings and cash flows are significantly impacted by changes in the market price of gold and other metals. Gold, silver, copper ~~nickel~~ and other metal prices can fluctuate significantly and are affected by numerous factors, such as demand, production levels, economic policies of central banks, producer hedging, world political and economic events and the strength of the U.S. dollar relative to other currencies. Please see “Volatility in gold, silver, copper, nickel and other metal prices may have an adverse impact on the value of our stream and royalty interests and may reduce our revenues. Certain contracts governing our stream and royalty ~~stream~~ interests have features that may amplify the negative effects of a drop in metals prices,” under Part I, Item 1A of our Fiscal ~~2017~~2018 10-K, for more information that can affect gold, silver, copper ~~nickel~~ and other metal prices as well as historical gold, silver, copper and nickel prices.

~~Table of Contents~~

During the ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2019, we reported revenue of ~~$226.8~~$307.4 million, with an average gold price for the period of ~~$1,277~~$1,248 per ounce, an average silver price of ~~$16.78~~$15.04 per ounce and an average copper price of ~~$2.98~~$2.80 per pound. Approximately ~~78%~~77% of our total reported revenues for the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2019 were attributable to gold sales from our gold producing stream and royalty interests, as shown within the MD&A. For the ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2019, if the price of gold had averaged 10% higher or lower per ounce, we would have recorded an increase or decrease in revenue of approximately ~~$18.2~~$24.5 million.

Approximately 9% of our total reported revenues for the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2019 were attributable to silver sales from our silver producing stream and royalty interests. For the ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2019, if the price of silver had averaged 10% higher or lower per ounce, we would have recorded an increase or decrease in revenue of approximately ~~$2.1~~$3.0 million.

Approximately 9% of our total reported revenues for the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2019 were attributable to copper sales from our copper producing stream and royalty interests. For the ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2019, if the price of copper had averaged 10% higher or lower per pound, we would have recorded an increase or decrease in revenue of approximately ~~$2.2~~$3.1 million.

ITEM 4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of ~~December~~March 31, ~~2017,~~2019, the Company’s management, with the participation of the President and Chief Executive Officer (the principal executive officer) and Chief Financial Officer and ~~Treasurer~~Vice President Strategy (the principal financial and accounting officer) of the Company, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on such evaluation, the Company’s President and Chief Executive Officer and its Chief Financial Officer and ~~Treasurer~~Vice President Strategy have concluded that, as of ~~December~~March 31, ~~2017,~~2019, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the required time periods and that such information is accumulated and communicated to the Company’s management, including the President and Chief Executive Officer and the Chief Financial Officer and ~~Treasurer,~~Vice President Strategy, as appropriate to allow timely decisions regarding required disclosure.

Disclosure controls and procedures involve human diligence and compliance and are subject to lapses in judgment and breakdowns resulting from human failures. As a result, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Changes in Internal Controls

There has been no change in the Company’s internal control over financial reporting during the three months ended ~~December~~March 31, ~~2017~~2019 that has materially affected, or that is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Voisey’s Bay

Refer to Note 103 of our notes to consolidated financial statements for a discussion of the ~~litigation~~settlement associated with our Voisey’s Bay royalty.

~~Table of Contents~~

ITEM 1A. RISK FACTORS

Information regarding risk factors appears in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Forward-Looking Statements,” and various risks faced by us are also discussed elsewhere in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q. In addition, risk factors are included in Part I, Item 1A of our Fiscal ~~2017~~2018 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. ~~EXHIBITS~~EXHIBITS

Exhibit Number		Description
10.1*▲		Restricted Stock Unit Agreement in the form entered into between Royal Gold and Daniel Breeze, Vice President Corporate Development, RGLD Gold AG, under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan

10.110.2▲		~~Form of First Amendment to Employment~~Performance Share Agreement ~~made and~~in the form entered into ~~as of the 15th day of December, 2017, by and~~ between Royal Gold ~~Inc.~~ and ~~each of~~Daniel Breeze, Vice President Corporate Development, RGLD Gold AG, under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan

10.3*▲		Stock Appreciation Rights Agreement in the ~~following: Karli Anderson, William Heissenbuttel, Mark Isto, Tony Jensen, Bruce Kirchhoff~~form entered into between Royal Gold and ~~Stefan Wenger.~~Daniel Breeze, Vice President Corporate Development, RGLD Gold AG, under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan

31.1*		Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to ~~Section~~ Section��302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1‡		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Table of Contents

32.2‡		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		XBRL Instance Document.

101.SCH*		XBRL Taxonomy Extension Schema Document.

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document.

*Filed herewith.

*▲	~~Filed herewith.~~
‡	~~Furnished herewith.~~
	Identifies each management contract or compensation plan or arrangement

‡Furnished herewith.

3136

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ROYAL GOLD, INC.

Date: ~~February 8, 2018~~May 2, 2019
	By:	/s/ Tony Jensen
		Tony Jensen
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: ~~February 8, 2018~~May 2, 2019	By:	/s/ ~~Stefan Wenger~~William Heissenbuttel
		~~Stefan Wenger~~William Heissenbuttel
		Chief Financial Officer and ~~Treasurer~~Vice President Strategy
		(Principal Financial and Accounting Officer)

3237

~~Stream or royalty interests~~

~~Location~~

~~Operator~~

~~(Gold unless otherwise stated)~~

~~Pascua-Lama~~

~~Region III, Chile~~

~~Barrick~~

~~0.78% to 5.45% sliding-scale NSR~~

~~1.09% fixed rate royalty (copper)~~ (until 220,000 ounces delivered; 5.5% thereafter)