Table of Contents

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 SeptemberJune 30, 20222023

or

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.)

1144 15th Street, Suite 2500

Denver, Colorado

80202

(Address of Principal Executive Offices)

(Zip Code)

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

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

    

Trading Symbol

    

Name of the Exchange on which Registered

Common Stock, $0.01 par value

RGLD

Nasdaq Global Select Market

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 every Interactive Data File required to be submitted 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 such files). Yes     No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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  

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 65,643,71065,688,734 shares of Royal Gold common stock outstanding as of OctoberJuly 27, 2022.2023.

Table of Contents

In this Quarterly Report on Form 10-Q, Royal Gold, Inc., together with its subsidiaries, is collectively referred to as “Royal Gold,” “we,” “us,” or “our.”

INDEX

    

    

PAGE

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

Consolidated Balance Sheets

3

Consolidated Statements of Operations and Comprehensive Income

4

Consolidated Statements of Changes in Stockholders’ Equity

5

Consolidated Statements of Cash Flows

6

Notes to Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

1817

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

3229

Item 4.

Controls and Procedures

3229

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings

3229

Item 1A.

Risk Factors

3230

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

3330

Item 3.

Defaults Upon Senior Securities

3330

Item 4.

Mine Safety Disclosures

3330

Item 5.

Other Information

3330

Item 6.

Exhibits

3431

SIGNATURES

3532

2

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ITEM 1.     FINANCIAL STATEMENTS

ROYAL GOLD, INC.

Consolidated Balance Sheets

(Unaudited, amounts in thousands except share data)

    

September 30, 

    

December 31,

    

June 30, 

    

December 31,

    

2022

    

2021

    

2023

    

2022

ASSETS

Cash and equivalents

$

122,238

$

143,551

$

106,157

$

118,586

Royalty receivables

28,476

54,088

36,458

49,405

Income tax receivable

15,056

4,915

9,602

3,066

Stream inventory

13,691

11,607

10,657

12,656

Prepaid expenses and other

2,322

1,835

2,375

2,120

Total current assets

181,783

215,996

165,249

185,833

Stream and royalty interests, net (Note 3)

3,084,380

2,443,752

Stream and royalty interests, net (Note 2)

3,155,561

3,237,402

Other assets

110,630

97,284

118,899

111,287

Total assets

$

3,376,793

$

2,757,032

$

3,439,709

$

3,534,522

LIABILITIES

Accounts payable

$

7,332

$

6,475

$

8,552

$

6,686

Dividends payable

22,985

22,966

24,646

24,627

Income tax payable

21,716

19,070

15,603

16,065

Other current liabilities

12,443

12,917

14,267

16,209

Total current liabilities

64,476

61,428

63,068

63,587

Debt (Note 5)

446,327

Debt (Note 4)

395,529

571,572

Deferred tax liabilities

140,197

87,705

136,136

138,156

Other liabilities

5,854

6,688

9,083

7,738

Total liabilities

656,854

155,821

603,816

781,053

Commitments and contingencies (Note 12)

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 65,592,597 and 65,564,364 shares outstanding, respectively

656

656

Common stock, $.01 par value, 200,000,000 shares authorized; and 65,609,736 and 65,592,597 shares outstanding, respectively

656

656

Additional paid-in capital

2,211,353

2,206,159

2,217,559

2,213,123

Accumulated earnings

495,570

381,929

605,347

527,314

Total Royal Gold stockholders’ equity

2,707,579

2,588,744

2,823,562

2,741,093

Non-controlling interests

12,360

12,467

12,331

12,376

Total equity

2,719,939

2,601,211

2,835,893

2,753,469

Total liabilities and equity

$

3,376,793

$

2,757,032

$

3,439,709

$

3,534,522

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

3

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ROYAL GOLD, INC.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited, amounts in thousands except share data)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

September 30, 

September 30, 

    

2022

    

2021

    

2022

    

2021

Revenue (Note 6)

$

131,429

$

174,431

440,226

$

485,047

Costs and expenses

Cost of sales (excludes depreciation, depletion and amortization)

23,221

27,230

69,670

73,367

General and administrative

7,554

7,129

25,797

21,272

Production taxes

1,119

2,054

4,765

6,042

Depreciation, depletion and amortization

37,761

50,611

129,739

139,935

Total costs and expenses

69,655

87,024

229,971

240,616

Operating income

61,774

87,407

210,255

244,431

Fair value changes in equity securities

356

176

(1,221)

4,035

Interest and other income

3,571

819

5,665

2,227

Interest and other expense

(8,814)

(1,908)

(11,110)

(4,873)

Income before income taxes

56,887

86,494

203,589

245,820

Income tax expense

(10,954)

(16,028)

(20,347)

(39,242)

Net income and comprehensive income

45,933

70,466

183,242

206,578

Net income and comprehensive income attributable to non-controlling interests

(141)

(290)

(633)

(699)

Net income and comprehensive income attributable to Royal Gold common stockholders

$

45,792

$

70,176

$

182,609

$

205,879

Net income per share attributable to Royal Gold common stockholders:

Basic earnings per share

$

0.70

$

1.07

$

2.78

$

3.14

Basic weighted average shares outstanding

65,579,834

65,556,608

65,571,737

65,552,586

Diluted earnings per share

$

0.70

$

1.07

$

2.78

$

3.13

Diluted weighted average shares outstanding

65,660,152

65,627,845

65,661,197

65,628,827

Cash dividends declared per common share

$

0.35

$

0.30

$

1.05

$

0.90

Three Months Ended

Six Months Ended

June 30, 

June 30, 

June 30, 

June 30, 

    

2023

    

2022

    

2023

    

2022

Revenue (Note 5)

$

144,042

$

146,441

$

314,434

$

308,796

Costs and expenses

Cost of sales (excludes depreciation, depletion and amortization)

23,367

23,810

48,387

46,450

General and administrative

9,093

9,312

20,093

18,243

Production taxes

1,274

1,425

3,263

3,646

Depreciation, depletion and amortization

38,412

43,989

84,741

91,976

Total costs and expenses

72,146

78,536

156,484

160,315

Operating income

71,896

67,905

157,950

148,481

Fair value changes in equity securities

(509)

(2,191)

291

(1,577)

Interest and other income

2,650

1,118

4,912

2,093

Interest and other expense

(8,408)

(1,398)

(17,582)

(2,296)

Income before income taxes

65,629

65,434

145,571

146,701

Income tax (expense) benefit

(2,029)

5,911

(17,900)

(9,393)

Net income and comprehensive income

63,600

71,345

127,671

137,308

Net income and comprehensive income attributable to non-controlling interests

(151)

(205)

(347)

(492)

Net income and comprehensive income attributable to Royal Gold common stockholders

$

63,449

$

71,140

$

127,324

$

136,816

Net income per share attributable to Royal Gold common stockholders:

Basic earnings per share

$

0.97

$

1.08

$

1.94

$

2.08

Basic weighted average shares outstanding

65,605,391

65,569,190

65,600,213

65,567,621

Diluted earnings per share

$

0.97

$

1.08

$

1.93

$

2.08

Diluted weighted average shares outstanding

65,762,903

65,678,320

65,736,028

65,661,653

Cash dividends declared per common share

$

0.375

$

0.35

$

0.75

$

0.70

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

4

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ROYAL GOLD, INC.

Consolidated Statements of Changes in Stockholders’ Equity

Three months ended SeptemberJune 30, 2022,2023, and 20212022

(unaudited, amounts in thousands except share data)

Royal Gold Stockholders

Royal Gold Stockholders

Additional

Additional

Common Shares

Paid-In

Accumulated

Non-controlling

Total

Common Shares

Paid-In

Accumulated

Non-controlling

Total

Shares

Amount

Capital

Earnings

Interests

Equity

Shares

Amount

Capital

Earnings

Interests

Equity

Balance at June 30, 2022

 

65,569,687

$

656

 

$

2,210,809

$

472,764

$

12,429

$

2,696,658

Balance at March 31, 2023

 

65,599,348

$

656

 

$

2,215,362

$

566,545

$

12,369

$

2,794,932

Stock-based compensation and related share issuances

 

22,910

 

 

 

544

 

 

 

544

 

10,388

 

 

 

2,197

 

 

 

2,197

Distributions to non-controlling interests

 

 

 

 

 

(210)

 

(210)

 

 

 

 

 

(189)

 

(189)

Net income and comprehensive income

 

 

 

 

45,792

 

141

 

45,933

 

 

 

 

63,449

 

151

 

63,600

Dividends declared

 

 

 

 

 

(22,986)

 

 

(22,986)

 

 

 

 

 

(24,647)

 

 

(24,647)

Balance at September 30, 2022

 

65,592,597

$

656

 

$

2,211,353

$

495,570

$

12,360

$

2,719,939

Balance at June 30, 2023

 

65,609,736

$

656

 

$

2,217,559

$

605,347

$

12,331

$

2,835,893

Royal Gold Stockholders

Royal Gold Stockholders

Additional

Additional

Common Shares

Paid-In

Accumulated

Non-controlling

Total

Common Shares

Paid-In

Accumulated

Non-controlling

Total

Shares

Amount

Capital

Earnings

Interests

Equity

Shares

Amount

Capital

Earnings

Interests

Equity

Balance at June 30, 2021

 

65,551,061

$

656

 

$

2,203,863

$

286,249

$

12,647

$

2,503,415

Balance at March 31, 2022

 

65,568,799

$

656

 

$

2,208,425

$

424,608

$

12,425

$

2,646,114

Stock-based compensation and related share issuances

 

12,741

 

 

 

594

 

 

 

594

 

888

 

 

 

2,384

 

 

 

2,384

Distributions to non-controlling interests

 

 

 

 

 

(271)

 

(271)

 

 

 

 

 

(201)

 

(201)

Net income and comprehensive income

 

 

 

 

 

70,176

 

290

 

70,466

 

 

 

 

 

71,140

 

205

 

71,345

Dividends declared

 

 

 

 

 

(19,691)

 

 

(19,691)

 

 

 

 

 

(22,984)

 

 

(22,984)

Balance at September 30, 2021

 

65,563,802

$

656

 

$

2,204,457

$

336,734

$

12,666

$

2,554,513

Balance at June 30, 2022

 

65,569,687

$

656

 

$

2,210,809

$

472,764

$

12,429

$

2,696,658

ROYAL GOLD, INC.

Consolidated Statements of Changes in Stockholders’ Equity

Nine MonthsSix months ended SeptemberJune 30, 2022,2023, and 20212022

(unaudited, amounts in thousands except share data)

Royal Gold Stockholders

Additional

Common Shares

Paid-In

Accumulated

Non-controlling

Total

Shares

Amount

Capital

Earnings

Interests

Equity

Balance at December 31, 2022

 

65,592,597

$

656

 

$

2,213,123

$

527,314

$

12,376

$

2,753,469

Stock-based compensation and related share issuances

 

17,139

 

 

 

4,436

 

 

 

4,436

Distributions to non-controlling interests

 

 

 

 

 

(392)

 

(392)

Net income and comprehensive income

 

 

 

 

 

127,324

 

347

 

127,671

Dividends declared

 

 

 

 

 

(49,291)

 

 

(49,291)

Balance at June 30, 2023

 

65,609,736

$

656

 

$

2,217,559

$

605,347

$

12,331

$

2,835,893

Royal Gold Stockholders

Royal Gold Stockholders

Additional

Additional

Common Shares

Paid-In

Accumulated

Non-controlling

Total

Common Shares

Paid-In

Accumulated

Non-controlling

Total

Shares

Amount

Capital

Earnings

Interests

Equity

Shares

Amount

Capital

Earnings

Interests

Equity

Balance at December 31, 2021

 

65,564,364

$

656

 

$

2,206,159

$

381,929

$

12,467

$

2,601,211

 

65,564,364

$

656

 

$

2,206,159

$

381,929

$

12,467

$

2,601,211

Stock-based compensation and related share issuances

 

28,233

 

 

 

5,194

 

 

 

5,194

 

5,323

 

 

 

4,650

 

 

 

4,650

Distributions to non-controlling interests

 

 

 

 

 

(740)

 

(740)

 

 

 

 

 

(530)

 

(530)

Net income and comprehensive income

 

 

 

 

 

182,609

 

633

 

183,242

 

 

 

 

 

136,816

 

492

 

137,308

Dividends declared

 

 

 

 

 

(68,968)

 

 

(68,968)

 

 

 

 

 

(45,981)

 

 

(45,981)

Balance at September 30, 2022

 

65,592,597

$

656

 

$

2,211,353

$

495,570

$

12,360

$

2,719,939

Royal Gold Stockholders

Additional

Common Shares

Paid-In

Accumulated

Non-controlling

Total

Shares

Amount

Capital

Earnings

Interests

Equity

Balance at December 31, 2020

 

65,548,415

$

656

 

$

2,201,076

$

189,910

$

13,037

$

2,404,679

Stock-based compensation and related share issuances

 

15,387

 

 

 

3,381

 

 

 

3,381

Distributions to non-controlling interests

 

 

 

 

 

(1,070)

 

(1,070)

Net income and comprehensive income

 

 

 

 

 

205,879

 

699

 

206,578

Dividends declared

 

 

 

 

 

(59,055)

 

 

(59,055)

Balance at September 30, 2021

 

65,563,802

$

656

 

$

2,204,457

$

336,734

$

12,666

$

2,554,513

Balance at June 30, 2022

 

65,569,687

$

656

 

$

2,210,809

$

472,764

$

12,429

$

2,696,658

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

5

Table of Contents

ROYAL GOLD, INC.

Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

Nine Months Ended

Six Months Ended

September 30, 

September 30, 

June 30, 

June 30, 

    

2022

    

2021

2023

    

2022

Cash flows from operating activities:

Net income and comprehensive income

$

183,242

$

206,578

$

127,671

$

137,308

Adjustments to reconcile net income and comprehensive income to net cash provided by operating activities:

Depreciation, depletion and amortization

129,739

139,935

84,741

91,976

Non-cash employee stock compensation expense

6,632

4,340

4,579

4,542

Fair value changes in equity securities

1,221

(4,035)

(291)

1,577

Deferred tax (benefit) expense

(17,757)

8,465

Deferred tax benefit

(7,139)

(28,114)

Other

734

1,418

445

491

Changes in assets and liabilities:

Royalty receivables

25,612

(8,643)

12,948

17,220

Stream inventory

(2,083)

1,678

1,998

(1,564)

Income tax receivable

(10,141)

4,858

(6,536)

(2,797)

Prepaid expenses and other assets

(3,073)

(1,608)

(2,641)

(1,359)

Accounts payable

857

2,859

1,866

592

Income tax payable

2,646

615

(462)

4,976

Uncertain tax positions

(12,378)

Other liabilities

(1,310)

(1,111)

(597)

(3,519)

Net cash provided by operating activities

$

316,319

$

342,971

$

216,582

$

221,329

Cash flows from investing activities:

Acquisition of stream and royalty interests

(715,829)

(384,315)

(2,670)

(37,841)

Khoemacau subordinated debt facility

(25,000)

Proceeds from sale of equity securities

8,651

Sale of equity securities

107

Other

(676)

(910)

(258)

(36)

Net cash used in investing activities

$

(716,505)

$

(401,574)

$

(2,821)

$

(37,877)

Cash flows from financing activities:

Repayment of debt

(50,000)

(200,000)

(175,000)

Borrowings from revolving credit facility

500,000

100,000

Debt issuance costs

(1,533)

Net payments from issuance of common stock

(1,438)

(959)

253

108

Common stock dividends

(68,938)

(59,046)

(49,271)

(45,953)

Other

(751)

(3,043)

(639)

(541)

Net cash provided by (used in) financing activities

$

378,873

$

(163,048)

Net decrease in cash and equivalents

(21,313)

(221,651)

Net cash used in financing activities

$

(226,190)

$

(46,386)

Net (decrease) increase in cash and equivalents

(12,429)

137,066

Cash and equivalents at beginning of period

143,551

381,859

118,586

143,551

Cash and equivalents at end of period

$

122,238

$

160,208

$

106,157

$

280,617

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

6

Table of Contents

ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

1.    OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING STANDARDS

Royal Gold, Inc., together with its subsidiaries (“Royal Gold,” the “Company,” “we,” “us,” or “our”), is engaged in the business of acquiring and managing precious metals 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. 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 non-operating interests in a mining project that provide 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 ninesix months ended SeptemberJune 30, 20222023 are not necessarily indicative of the results that may be expected for the calendar year ending December 31, 2022.2023. These interim unaudited consolidated financial statements should be read in conjunction with our Transition Report on Form 10-K for the six monthsyear ended December 31, 2021,2022, filed with the Securities and Exchange Commission (“SEC”) on February 17, 16, 2023 (“2022 (“Transition Report”10-K”).

Recent Accounting Standards

We have evaluated all the recently issued, but not yet effective, accounting standards that have been issued or proposed by the Financial Accounting Standards Board or other standards-setting bodies through the filing date of these unaudited consolidated financial statements and do not believe the future adoption of any such standards will have a material impact on our consolidated financial statements.

2.    ACQUISITIONS

Acquisition of Great Bear Royalties Corporation

On September 9, 2022, we completed the previously announced acquisition of all of the issued and outstanding shares of Great Bear Royalties Corporation (“GBR”) for cash consideration of approximately C$199.6 million (US$151.7 million) (“the Acquisition Price”).  GBR’s sole material asset is a 2.0% net smelter return royalty (“Great Bear Royalty”) that covers the entirety of the Great Bear Project in the Red Lake district of Ontario, Canada, owned and operated by a subsidiary of Kinross Gold Corporation (“Kinross”).  The Great Bear Royalty includes all metals produced from contiguous claims covering 9,140 hectares and will be registered on title to the relevant claims. Royalty payments will be made quarterly with applicable standard deductions. The purchase price was funded with available cash on hand.

As part of the acquisition and in exchange for information and access to the project provided by Kinross, we granted an option to Kinross to purchase a 25% interest in the Great Bear Royalty (0.5% of the 2.0% royalty rate) for an amount equal to 25% of the Acquisition Price, adjusted for inflation, at any time from the transaction closing date until the earlier of a construction decision for the Great Bear Project and 10 years after the transaction closing date.

The Great Bear Royalty is the sole material asset of GBR and represents substantially all the fair value of GBR’s gross assets. As a result, the GBR acquisition has been accounted for as an asset acquisition and the fair values of the GBR assets acquired are shown below:

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

(in thousands)

Purchase Price

$

151,679

Cash

315

Other assets

293

Royalty interests in mineral property (Great Bear royalty)

151,071

Total allocated purchase price

$

151,679

The $151.1 million allocated fair value of the Great Bear Royalty, plus $2.3 million of direct transaction costs and deferred tax of $53.6 million have been capitalized with the Great Bear Royalty interest and allocated to exploration stage royalty interests within Stream and royalty interests, net on our consolidated balance sheets. The deferred tax was recorded as a gross-up to the Great Bear Royalty mineral interest as prescribed by the applicable guidance.

Acquisition of Additional Royalty Interest on Cortez Complex

On August 2, 2022, we acquired a sliding scale gross royalty (“Cortez Complex Royalty”) on production from an area including the Cortez mine operational area and the Fourmile development project (the “Cortez Complex”) for cash consideration of $525 million. The area within the Cortez Complex is owned or controlled by Nevada Gold Mines LLC (“NGM”), a joint venture between Barrick Gold Corporation (“Barrick”) and Newmont Corporation, with the exception of the Fourmile development project which is 100% owned and operated by Barrick. The royalty is a life of mine sliding scale gross royalty payable at a rate of 0% at a gold price less than $400 per ounce, increasing to 3% at a gold price above $900 per ounce, and is payable on 40% of all production from the Cortez Complex. Based on information available, the royalty would not cover the existing deposits within the Robertson property.  At current gold prices the Cortez Complex Royalty is an effective 1.2% gross royalty on the Cortez Complex and is not subject to any stepdowns or caps.  Deductions from the Cortez Complex Royalty payments are limited to third-party royalties that existed prior to the creation of the royalty in 2008, which include the existing Crossroads and Pipeline royalties owned by Royal Gold. The purchase price was funded with debt and available cash on hand.

The acquisition has been accounted for as an asset acquisition and the $525 million cash consideration, plus direct acquisition costs, have been recorded and allocated between production and exploration stage royalty interests (Note 3) within Stream and royalty interests, net on our consolidated balance sheets. On the date of acquisition, approximately $199 million and $326 million was allocated to production stage and exploration stage royalty interests, respectively. The acquisition cost of the production stage Cortez Complex Royalty will be depleted using the units of production method, which is estimated using aggregate proven and probable reserves, as provided by NGM.

The royalty is payable after cumulative production from the Cortez Complex of 15 million gold equivalent ounces from January 1, 2008 onwards. During the quarter ended September 30, 2022, the production threshold was reached and approximately 3,300 ounces of gold production was attributable to the royalty. We expect all production from the Cortez Complex in the fourth quarter of 2022 to be subject to the royalty. The royalty is payable within forty-five days after the end of each calendar quarter.

Lawyers Royalty Acquisition

On March 24, 2022, we acquired a 0.5% net smelter returns royalty (“NSR”) on production from the Lawyers Project, currently operated by Benchmark Metals Inc., which is located in British Columbia, Canada. As part of this transaction, we also acquired a right of first offer (“ROFO”) for an existing 2.0% NSR royalty over the Ranch Project owned by Thesis Gold, Inc. that is located adjacent to the Lawyers Project.  We paid $8.0 million in cash consideration for the royalty and ROFO to Guardsmen Resources Inc. The Lawyers Project acquisition has been accounted for as an asset acquisition. The $8.0 million cash consideration, plus direct acquisition costs, have been recorded as an exploration stage royalty interest (Note 3) within Stream and royalty interests, net on our consolidated balance sheets.

Khoemacau Silver Stream

On February 23, 2022, we made an advance payment of $10.0 million toward the option stream which increased our right to receive payable silver produced from Khoemacau from 90% to 93%, and on March 14, 2022, we made our final advance payment of $16.5 million toward the option stream which increased our right to receive payable silver produced from 93%

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

to 100%. Cumulative advance payments of $265 million, plus direct acquisition costs, have been recorded as a production stage stream interest within Stream and royalty interests, net on our consolidated balance sheets.

As of September 30, 2022, $25.0 million of the subordinated debt facility, and $4.4 million of accrued interest remains outstanding on the Khoemacau subordinated debt facility, and these amounts are included in Other assets in our consolidated balance sheets. Refer to our Transition Report for further details on the Khoemacau silver stream acquisition and subordinated debt facility.

3.    STREAM AND ROYALTY INTERESTS, NET

The following tables summarize our stream and royalty interests, net as of September 30, 2022 and December 31, 2021.

As of September 30, 2022 (Amounts in thousands):

    

Cost

    

Accumulated Depletion

    

Net

Production stage stream interests:

Mount Milligan

$

790,635

$

(379,708)

$

410,927

Pueblo Viejo

610,404

(281,730)

328,674

Andacollo

388,182

(149,586)

238,596

Khoemacau

265,911

(11,621)

254,290

Rainy River

175,727

(58,328)

117,399

Wassa

146,475

(93,474)

53,001

Other

69,100

(11,200)

57,900

Total production stage stream interests

2,446,434

(985,647)

1,460,787

Production stage royalty interests:

Cortez

280,219

(28,352)

251,867

Voisey's Bay

205,724

(117,228)

88,496

Red Chris

116,187

(1,797)

114,390

Peñasquito

99,172

(56,529)

42,643

Other

447,246

(395,641)

51,605

Total production stage royalty interests

1,148,548

��

(599,547)

549,001

Total production stage stream and royalty interests

3,594,982

(1,585,194)

2,009,788

Development stage stream interests:

Other

12,038

12,038

Development stage royalty interests:

Côté

45,421

45,421

Other

73,233

73,233

Total development stage stream and royalty interests

130,692

130,692

Exploration stage stream interests:

NX Gold

34,253

34,253

Exploration stage royalty interests:

Cortez

325,654

325,654

Great Bear

206,965

206,965

Pascua-Lama

177,690

177,690

Red Chris

48,895

48,895

Côté

29,610

29,610

Other

120,833

120,833

Total exploration stage stream and royalty interests

943,900

943,900

Total stream and royalty interests, net

$

4,669,574

$

(1,585,194)

$

3,084,380

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

As of December 31, 2021 (Amounts in thousands):

    

Cost

    

Accumulated Depletion

Net

Production stage stream interests:

Mount Milligan

$

790,635

$

(336,921)

$

453,714

Pueblo Viejo

610,405

(260,321)

350,084

Andacollo

388,182

(139,035)

249,147

Khoemacau

239,411

(3,402)

236,009

Rainy River

175,727

(50,115)

125,612

Wassa

146,475

(84,915)

61,560

Other

69,101

(4,193)

64,908

Total production stage stream interests

2,419,936

(878,902)

1,541,034

Production stage royalty interests:

Voisey's Bay

205,724

(113,602)

92,122

Red Chris

116,187

116,187

Peñasquito

99,172

(53,022)

46,150

Cortez

80,681

(23,225)

57,456

Other

447,799

(387,364)

60,435

Total production stage royalty interests

949,563

(577,213)

372,350

Total production stage stream and royalty interests

3,369,499

(1,456,115)

1,913,384

Development stage stream interests:

Other

12,037

12,037

Development stage royalty interests:

Côté

45,421

45,421

Other

54,755

54,755

Total development stage stream and royalty interests

112,213

112,213

Exploration stage stream interests:

NX Gold

30,974

30,974

Exploration stage royalty interests:

Pascua-Lama

177,690

177,690

Red Chris

48,895

48,895

Côté

29,610

29,610

Other

130,986

130,986

Total exploration stage royalty interests

418,155

418,155

Total stream and royalty interests, net

$

3,899,867

$

(1,456,115)

$

2,443,752

2.    STREAM AND ROYALTY INTERESTS, NET

MountMilligan

On October 4, 2022, Centerra Gold, Inc. (“Centerra”) announced the highlights of an updated life of mine plan for Mount Milligan which provided, among other things, a four-year extension of the mine life to 2033The following tables summarize our stream and increases to the proven and probable reserves. As a result of the increase in proven and probable reserves, the gold and copper depletion rates on our Mount Milligan stream decreased to $416 per ounce of gold and $1.06 per pound of copperroyalty interests, net as of SeptemberJune 30, 2022 from $703 per ounce of gold2023 and $1.53 per pound of copper. Centerra reported that it expects to file a new technical report detailing the life of mine plan within 45 days of October 4,December 31, 2022.

4.  MARKETABLE EQUITY SECURITIES

As of September 30, 2022, our marketable equity securities include warrants to purchase up to 19,640,000 common shares of TriStar Gold Inc, 250,000 common shares of Goldon Resources Ltd. and 1,242,500 common shares of Mountain Boy Minerals Ltd. The common shares of Goldon Resources Ltd. and Mountain Boy Minerals Ltd. were acquired as part of the GBR acquisition. Our marketable equity securities are measured at fair value (Note 11) each reporting period with any changes in fair value recognized in net income.

As of June 30, 2023 (Amounts in thousands):

    

Cost

    

Accumulated Depletion

    

Net

Production stage stream interests:

Mount Milligan

$

790,635

$

(413,284)

$

377,351

Pueblo Viejo

610,404

(295,407)

314,997

Andacollo

388,182

(157,761)

230,421

Khoemacau

265,911

(29,275)

236,636

Rainy River

175,727

(68,476)

107,251

Other

232,703

(121,328)

111,375

Total production stage stream interests

2,463,562

(1,085,531)

1,378,031

Production stage royalty interests:

Cortez (Legacy Zone and CC Zone)

353,850

(47,402)

306,448

Voisey's Bay

205,724

(119,356)

86,368

Red Chris

116,187

(3,758)

112,429

Peñasquito

99,172

(59,407)

39,765

Other

447,687

(403,171)

44,516

Total production stage royalty interests

1,222,620

(633,094)

589,526

Total production stage stream and royalty interests

3,686,182

(1,718,625)

1,967,557

Development stage stream interests:

Other

12,038

12,038

Development stage royalty interests:

Côté

45,421

45,421

Other

81,510

81,510

Total development stage stream and royalty interests

138,969

138,969

Exploration stage stream interests:

Xavantina

19,565

19,565

Exploration stage royalty interests:

Cortez (Legacy Zone and CC Zone)

456,471

456,471

Great Bear

209,106

209,106

Pascua-Lama

177,690

177,690

Red Chris

48,895

48,895

Côté

29,610

29,610

Other

107,698

107,698

Total exploration stage stream and royalty interests

1,049,035

1,049,035

Total stream and royalty interests, net

$

4,874,186

$

(1,718,625)

$

3,155,561

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

The fair value of our marketable equity securities increased $0.4 million for the three months ended September 30, 2022, and decreased $1.2 million for nine months ended September 30, 2022, and increased $0.2 million and $4.0 million for the three and nine months ended September 30, 2021, respectively. These changes are included in Fair value changes in equity securities on our consolidated statements of operations and comprehensive income. The carrying value of our marketable equity securities as of September 30, 2022 and December 31, 2021, was $0.7 million and $1.7 million, respectively, and is included in Other assets on our consolidated balance sheets.

As of December 31, 2022 (Amounts in thousands):

    

Cost

    

Accumulated Depletion

    

Impairments

Net

Production stage stream interests:

Mount Milligan

$

790,635

$

(392,804)

$

$

397,831

Pueblo Viejo

610,404

(289,537)

320,867

Andacollo

388,182

(151,870)

236,312

Khoemacau

265,911

(15,905)

250,006

Rainy River

175,727

(61,601)

114,126

Other

215,576

(110,711)

104,865

Total production stage stream interests

2,446,435

(1,022,428)

1,424,007

Production stage royalty interests:

Cortez (Legacy Zone and CC Zone)

353,772

(35,276)

318,496

Voisey's Bay

205,724

(118,327)

87,397

Red Chris

116,187

(1,797)

114,390

Peñasquito

99,172

(57,772)

41,400

Other

447,535

(398,513)

49,022

Total production stage royalty interests

1,222,390

(611,685)

610,705

Total production stage stream and royalty interests

3,668,825

(1,634,113)

2,034,712

Development stage stream interests:

Other

12,038

12,038

Development stage royalty interests:

Côté

45,421

45,421

Other

74,225

74,225

Total development stage stream and royalty interests

131,684

131,684

Exploration stage stream interests:

Xavantina

34,253

34,253

Exploration stage royalty interests:

Cortez (Legacy Zone and CC Zone)

456,318

456,318

Great Bear

209,106

209,106

Pascua-Lama

177,690

177,690

Red Chris

48,895

48,895

Côté

29,610

29,610

Other

119,421

(4,287)

115,134

Total exploration stage royalty interests

1,075,293

(4,287)

1,071,006

Total stream and royalty interests, net

$

4,875,802

$

(1,634,113)

$

(4,287)

$

3,237,402

5.3.  MARKETABLE EQUITY SECURITIES

As of June 30, 2023, our marketable equity securities include warrants to purchase up to 19,640,000 common shares of TriStar Gold Inc and 250,000 common shares of Goldon Resources Ltd. Our marketable equity securities are measured at fair value (Note 10) each reporting period with any changes in fair value recognized in net income (amounts in thousands).

    

June 30, 

December 31,

    

2023

2022

Carrying value of marketable securities(1)

$

547

$

373

Change in fair value of marketable securities

$

(509)

$

(1,503)

(1)    Included in Other Assets on our consolidated balance sheets.

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

4.    DEBT

Our debt as of SeptemberJune 30, 20222023 and December 31, 20212022 consists of the following (amounts in thousands):

As of September 30, 2022

As of December 31, 2021

   

Principal

   

Debt Issuance Costs

   

Total

   

Principal

   

Debt Issuance Costs1

   

Total

(Amounts in thousands)

(Amounts in thousands)

Revolving credit facility

$

450,000

$

(3,673)

$

446,327

$

$

(4,408)

$

(4,408)

Total debt

$

450,000

$

(3,673)

$

446,327

$

$

(4,408)

$

(4,408)

(1)    Included in Other assets on our consolidated balance sheets.

As of June 30, 2023

As of December 31, 2022

   

Principal

   

Debt Issuance Costs

   

Total

   

Principal

   

Debt Issuance Costs

   

Total

(Amounts in thousands)

(Amounts in thousands)

Revolving credit facility

$

400,000

$

(4,471)

$

395,529

$

575,000

$

(3,428)

$

571,572

Total debt

$

400,000

$

(4,471)

$

395,529

$

575,000

$

(3,428)

$

571,572

Revolving credit facility

On July 2, 2022,March 6, 2023, we borrowed $500repaid $75 million underand on June 6, 2023, we repaid $100 million of outstanding borrowings on our revolving credit facility.

On June 28, 2023, we entered into a fifth amendment to our revolving credit facility fordated as of June 2, 2017, as amended. The fifth amendment extended the acquisition ofscheduled maturity date from July 7, 2026 to June 28, 2028, replaced LIBOR with Secured Overnight Financing Rate (“Term SOFR”) as a benchmark interest rate and made certain other administrative changes to the Cortez Complex Royalty, and on September 6, 2022, we repaid $50 million of the outstanding borrowings. Refer to Note 2 of our notes to consolidated financial statements for further discussion on the Cortez Complex Royalty acquisition.existing revolving credit facility.

As of SeptemberJune 30, 2022,2023, we had $450$400 million outstanding and $550$600 million available under our revolving credit facility dated June 2, 2017, and as amended.facility. The interest rate on borrowings under our revolving credit facility as of SeptemberJune 30, 2022,2023, was LIBOR plus 1.10%1.20% for an all-in rate of 4.2%6.7%. Interest expense, which includes interest on outstanding borrowings and amortization of debt issuance costs, was $3.9$7.8 million and $4.4$16.3 million for the three and ninesix months ended SeptemberJune 30, 2022,2023, respectively, and $1.0$0.2 million and $2.1$0.5 million for the three and ninesix months ended SeptemberJune 30, 2021,2022, respectively. We were in compliance with each financial covenant (leverage ratio and interest coverage ratio) under theour revolving credit facility as of SeptemberJune 30, 2022.2023.

We may repay any borrowings under theour revolving credit facility at any time without premium or penalty.

6.5.    REVENUE

Revenue Recognition

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.

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 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 consecutive number of trading days between ten days and three months (depending on the frequency

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

of deliveries under the respective streaming agreement and our sales policy in effect at the time) commencing shortly after receipt and purchase of the metal. We settle our forward sales contracts via physical delivery of the metal to the 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 the point in time of physical delivery. Accordingly, revenue from our metal sales is recognized on the date of settlement, which is the date that control, custody and title to the metal transfer to the purchaser.

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

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 period in which metal production occurs. As a royalty holder, we act as a passive entity in the production and operations of the mining project, and the third-party operator of the 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 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 for that period. 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, we 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 Transition Report.2022 10-K. For the three months ended SeptemberJune 30, 2022,2023, royalty revenue that was estimated or was attributable to metal production for a period prior to SeptemberJune 30, 2022,2023, 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 10.9.

Revenue by metal type attributable to each of our revenue sources is disaggregated as follows (amounts in thousands):

Three Months Ended

Six Months Ended

June 30, 

    

June 30, 

    

June 30,

    

June 30,

2023

2022

2023

2022

Stream revenue:

    Gold

$

80,227

$

75,325

$

158,856

$

152,827

    Silver

19,230

12,892

37,539

24,331

    Copper

6,558

16,662

24,610

32,972

         Total stream revenue

$

106,015

$

104,879

$

221,005

$

210,130

Royalty revenue:

    Gold

$

30,169

$

28,974

$

73,037

$

66,890

    Silver

2,721

3,512

5,667

7,829

    Copper

1,572

3,281

6,630

9,986

    Other

3,565

5,795

8,095

13,961

         Total royalty revenue

$

38,027

$

41,562

$

93,429

$

98,666

Total revenue

$

144,042

$

146,441

$

314,434

$

308,796

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Notes to Consolidated Financial Statements

(Unaudited)

Revenue attributable to our principal stream and royalty interests is disaggregated as follows (amounts in thousands):

Three Months Ended

Six Months Ended

June 30, 

    

June 30, 

    

June 30,

    

June 30,

Metal(s)

2023

2022

2023

2022

Stream revenue:

    Mount Milligan

Gold & Copper

$

41,208

$

45,627

$

87,863

$

88,043

    Pueblo Viejo

Gold & Silver

23,540

19,812

45,898

43,076

    Khoemacau

Silver

8,881

5,202

18,035

7,591

    Andacollo

Gold

7,823

11,721

20,757

27,395

    Other

Gold & Silver

24,563

22,517

48,452

44,025

         Total stream revenue

$

106,015

$

104,879

$

221,005

$

210,130

Royalty revenue:

    Cortez Legacy Zone

Gold

$

14,305

$

8,138

$

37,393

$

24,852

    Cortez CC Zone

Gold

3,520

6,726

    Peñasquito

Gold, Silver, Lead & Zinc

6,105

9,664

13,538

22,758

    Other

Various

14,097

23,760

35,772

51,056

         Total royalty revenue

$

38,027

$

41,562

$

93,429

$

98,666

Total revenue

$

144,042

$

146,441

$

314,434

$

308,796

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

Revenue by metal type attributable to each of our revenue sources is disaggregated as follows (amounts in thousands):

Three Months Ended

Nine Months Ended

September 30, 

    

September 30, 

    

September 30, 

    

September 30, 

2022

2021

2022

2021

Stream revenue:

    Gold

$

76,833

$

83,318

$

229,661

$

240,016

    Silver

12,063

13,877

36,393

35,132

    Copper

9,836

18,726

42,809

50,540

         Total stream revenue

$

98,732

$

115,921

$

308,863

$

325,688

Royalty revenue:

    Gold

$

23,163

$

43,417

$

90,054

$

111,826

    Silver

2,648

3,952

10,477

12,517

    Copper

1,285

4,967

11,271

12,960

    Other

5,601

6,174

19,561

22,056

         Total royalty revenue

$

32,697

$

58,510

$

131,363

$

159,359

Total revenue

$

131,429

$

174,431

$

440,226

$

485,047

Revenue attributable to our principal stream and royalty interests is disaggregated as follows (amounts in thousands):

Three Months Ended

Nine Months Ended

September 30, 

    

September 30, 

    

September 30, 

    

September 30, 

Metal(s)

2022

2021

2022

2021

Stream revenue:

    Mount Milligan

Gold & Copper

$

41,553

$

53,455

$

129,596

$

131,061

    Pueblo Viejo

Gold & Silver

21,156

27,198

64,232

83,957

    Andacollo

Gold

12,170

11,601

39,565

52,491

    Wassa

Gold

7,390

8,033

22,840

23,935

    Khoemacau

Silver

5,050

107

12,641

107

    Other

Gold & Silver

11,413

15,527

39,989

34,137

         Total stream revenue

$

98,732

$

115,921

$

308,863

$

325,688

Royalty revenue:

    Peñasquito

Gold, Silver, Lead & Zinc

$

9,010

$

12,212

$

31,768

$

38,739

    Cortez

Gold

4,562

17,126

29,413

39,475

    Other

Various

19,125

29,172

70,182

81,145

         Total royalty revenue

$

32,697

$

58,510

$

131,363

$

159,359

Total revenue

$

131,429

$

174,431

$

440,226

$

485,047

Please refer to Note 10 for the geographical distribution of our revenue by reportable segment.

7.6.    STOCK-BASED COMPENSATION

We recognized stock-based compensation expense as follows (amounts in thousands):

Three Months Ended

Nine Months Ended

Three Months Ended

Six Months Ended

September 30, 

September 30, 

September 30, 

September 30, 

June 30, 

June 30, 

June 30, 

June 30, 

    

2022

    

2021

    

2022

    

2021

    

    

2023

    

2022

    

2023

    

2022

Restricted stock

$

1,140

$

1,116

$

3,496

$

2,198

$

1,540

$

1,201

$

3,154

$

2,356

Stock appreciation rights

212

360

417

692

Performance stock

658

(43)

2,136

801

183

847

993

1,478

Stock appreciation rights

283

414

975

1,290

Stock options

9

16

25

51

8

10

15

16

Total stock-based compensation expense

$

2,090

$

1,503

$

6,632

$

4,340

$

1,943

$

2,418

$

4,579

$

4,542

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

During the three and six months ended June 30, 2023 and 2022, we granted the following stock-based compensation awards:

Three Months Ended

Six Months Ended

June 30, 

June 30, 

June 30, 

June 30, 

    

2023

    

2022

    

2023

    

2022

(Number of shares)

(Number of shares)

Performance stock (at maximum 200% attainment)

82,360

39,380

Restricted Stock

56,530

28,220

Total equity awards granted

138,890

67,600

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

During the three and nine months ended September 30, 2022 and 2021, we granted the following stock-based compensation awards:

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

September 30, 

September 30, 

    

2022

    

2021

    

2022

    

2021

(Number of shares)

(Number of shares)

Performance stock (at maximum 200% attainment)

73,200

39,380

73,200

Restricted Stock

50,604

28,220

50,604

Total equity awards granted

123,804

67,600

123,804

As of SeptemberJune 30, 2022,2023, 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)

Restricted stock

$

7,361

2.2

$

9,880

2.1

Performance stock

5,265

2.0

7,666

2.2

Stock appreciation rights

701

0.9

111

0.1

Stock options

25

0.9

4

0.1

8.7.    EARNINGS PER SHARE (“EPS”)

Basic EPS was 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 EPS pursuant to the two-class method. Our unvested restricted stock awards contain non-forfeitable dividend rights and participate equally with common stock with respect to dividends issued or declared. Our unexercised stock option awards, unexercised stock-settled stock appreciation rights and unvested performance stock do not contain rights to dividends. Under the two-class method, the earnings used to determine basic EPS 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 EPS.

The following tables summarizetable summarizes the effects of dilutive securities on diluted EPS for the periods shown below (amounts in thousands, except share data):

Three Months Ended

Nine Months Ended

Three Months Ended

Six Months Ended

September 30, 

September 30, 

September 30, 

September 30, 

June 30, 

June 30, 

June 30, 

June 30, 

    

2022

    

2021

    

2022

    

2021

    

2023

    

2022

    

2023

    

2022

Net income attributable to Royal Gold common stockholders

$

45,792

$

70,176

$

182,609

$

205,879

$

63,449

$

71,140

$

127,324

$

136,816

Weighted-average shares for basic EPS

65,579,834

65,556,608

65,571,737

65,552,586

65,605,391

65,569,190

65,600,213

65,567,621

Effect of other dilutive securities

80,318

71,237

89,460

76,241

157,512

109,130

135,815

94,032

Weighted-average shares for diluted EPS

65,660,152

65,627,845

65,661,197

65,628,827

65,762,903

65,678,320

65,736,028

65,661,653

Basic EPS

$

0.70

$

1.07

$

2.78

$

3.14

$

0.97

$

1.08

$

1.94

$

2.08

Diluted EPS

$

0.70

$

1.07

$

2.78

$

3.13

$

0.97

$

1.08

$

1.93

$

2.08

9.8.    INCOME TAXES

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

September 30, 

September 30, 

    

2022

    

2021

    

2022

    

2021

Income tax expense

$

10,954

$

16,028

$

20,347

$

39,242

Effective tax rate

19.3%

18.5%

10.0%

16.0%

The following table provides the income tax expense (amounts in thousands) and effective tax rates for the periods indicated:

Three Months Ended

Six Months Ended

June 30, 

June 30, 

June 30, 

June 30, 

    

2023

    

2022

    

2023

    

2022

Income tax expense (benefit)

$

2,029

$

(5,911)

$

17,900

$

9,393

Effective tax rate

3.1%

(9.0%)

12.3%

6.4%

The effective tax rates for the three and six months ended June 30, 2023, and June 30, 2022, included discrete income tax benefits of $8.5 million and $18.8 million, respectively, attributable to the release of a valuation allowance on certain deferred tax assets, respectively.  

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

The effective tax rate for the nine months ended September 30, 2022, included a discrete income tax benefit of $18.8 million attributable to the release of a valuation allowance on certain deferred tax assets. The effective tax rate for the nine months ended September 30, 2021, included a discrete tax benefit of $12.0 million attributable to the settlement of an uncertain tax position with a foreign jurisdiction.

10.9.    SEGMENT INFORMATION

We manage our business under two reportable segments, consisting of the acquisition and management of stream interests and the acquisition and management of royalty interests. Our long-lived assets (stream and royalty interests, net) are geographically distributed as shown in the following table (amounts in thousands):

As of September 30, 2022

As of December 31, 2021

As of June 30, 2023

As of December 31, 2022

Total stream

Total stream

Total stream

Total stream

Stream

Royalty

and royalty

Stream

Royalty

and royalty

Stream

Royalty

and royalty

Stream

Royalty

and royalty

  

interest

  

interest

  

interests, net

  

interest

  

interest

  

interests, net

  

interest

  

interest

  

interests, net

  

interest

  

interest

  

interests, net

Canada

$

528,325

$

620,035

$

1,148,360

$

579,326

$

412,419

$

991,745

$

484,602

$

616,920

$

1,101,522

$

511,957

$

620,549

$

1,132,506

Dominican Republic

328,674

328,674

350,083

350,083

314,998

314,998

320,867

320,867

Africa

307,291

321

307,612

297,569

321

297,890

280,517

321

280,838

299,722

321

300,043

Chile

238,596

224,116

462,712

249,147

224,116

473,263

230,421

224,116

454,537

236,312

224,116

460,428

United States

626,525

626,525

107,761

107,761

810,487

810,487

823,203

823,203

Mexico

53,046

53,046

60,977

60,977

45,703

45,703

50,156

50,156

Australia

26,642

26,642

27,496

27,496

21,743

21,743

22,120

22,120

Rest of world

104,192

26,617

130,809

107,920

26,617

134,537

99,095

26,638

125,733

101,440

26,639

128,079

Total

$

1,507,078

$

1,577,302

$

3,084,380

$

1,584,045

$

859,707

$

2,443,752

$

1,409,633

$

1,745,928

$

3,155,561

$

1,470,298

$

1,767,104

$

3,237,402

Our reportable segments for purposes of assessing performance are shown below (amounts in thousands):

Three Months Ended September 30, 2022

Three Months Ended June 30, 2023

    

Revenue

    

Cost of sales (1)

    

Production taxes

    

Depletion (2)

    

Segment gross profit

    

Revenue

    

Cost of sales (1)

    

Production taxes

    

Depletion (2)

    

Segment gross profit

Stream interests

$

98,732

$

23,221

$

$

32,576

$

42,935

$

106,015

$

23,367

$

$

29,352

$

53,296

Royalty interests

32,697

1,119

5,063

26,515

38,027

1,274

8,945

27,808

Total

$

131,429

$

23,221

$

1,119

$

37,639

$

69,450

$

144,042

$

23,367

$

1,274

$

38,297

$

81,104

Three Months Ended September 30, 2021

Three Months Ended June 30, 2022

    

Revenue

    

Cost of sales (1)

    

Production taxes

    

Depletion (2)

    

Segment gross profit

    

Revenue

    

Cost of sales (1)

    

Production taxes

    

Depletion (2)

    

Segment gross profit

Stream interests

$

115,921

$

27,230

$

$

41,922

$

46,769

$

104,879

$

23,810

$

$

37,790

$

43,279

Royalty interests

58,510

2,054

8,596

47,860

41,562

1,425

6,075

34,062

Total

$

174,431

$

27,230

$

2,054

$

50,518

$

94,629

$

146,441

$

23,810

$

1,425

$

43,865

$

77,341

Nine Months Ended September 30, 2022

Six Months Ended June 30, 2023

    

Revenue

    

Cost of sales (1)

    

Production taxes

    

Depletion (2)

    

Segment gross profit

    

Revenue

    

Cost of sales (1)

    

Production taxes

    

Depletion (2)

    

Segment gross profit

Stream interests

$

308,863

$

69,670

$

$

106,745

$

132,448

$

221,005

$

48,387

$

$

63,104

$

109,514

Royalty interests

131,363

4,765

22,623

103,975

93,429

3,263

21,408

68,758

Total

$

440,226

$

69,670

$

4,765

$

129,368

$

236,423

$

314,434

$

48,387

$

3,263

$

84,512

$

178,272

Nine Months Ended September 30, 2021

Six Months Ended June 30, 2022

    

Revenue

    

Cost of sales (1)

    

Production taxes

    

Depletion (2)

    

Segment gross profit

    

Revenue

    

Cost of sales (1)

    

Production taxes

    

Depletion (2)

    

Segment gross profit

Stream interests

$

325,688

$

73,367

$

$

113,263

$

139,058

$

210,130

$

46,450

$

$

74,169

$

89,511

Royalty interests

159,359

6,042

26,394

126,923

98,666

3,646

17,561

77,459

Total

$

485,047

$

73,367

$

6,042

$

139,657

$

265,981

$

308,796

$

46,450

$

3,646

$

91,730

$

166,970

(1)Excludes depreciation, depletion and amortization.

(2)Depletion amounts are included within Depreciation, depletion and amortization on our consolidated statements of operations and comprehensive income.

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

(2)Depletion amounts are included within Depreciation, depletion and amortization on our consolidated statements of operations and comprehensive income.

A reconciliation of total segment gross profit to the consolidated Income before income taxes is shown below (amounts in thousands):

Three Months Ended

Nine Months Ended

Three Months Ended

Six Months Ended

September 30, 

September 30, 

September 30, 

September 30, 

June 30, 

June 30, 

June 30, 

June 30, 

   

2022

   

2021

   

2022

   

2021

   

2023

   

2022

   

2023

   

2022

Total segment gross profit

$

69,450

$

94,629

$

236,423

$

265,981

$

81,104

$

77,341

$

178,272

$

166,970

Costs and expenses

General and administrative expenses

7,554

7,129

25,797

21,272

9,093

9,312

20,093

18,243

Depreciation and amortization

122

93

371

278

115

124

229

246

Operating income

61,774

87,407

210,255

244,431

71,896

67,905

157,950

148,481

Fair value changes in equity securities

356

176

(1,221)

4,035

(509)

(2,191)

291

(1,577)

Interest and other income

3,571

819

5,665

2,227

2,650

1,118

4,912

2,093

Interest and other expense

(8,814)

(1,908)

(11,110)

(4,873)

(8,408)

(1,398)

(17,582)

(2,296)

Income before income taxes

$

56,887

$

86,494

$

203,589

$

245,820

$

65,629

$

65,434

$

145,571

$

146,701

Our revenue by reportable segment for the three and ninesix months ended SeptemberJune 30, 20222023 and 20212022 is geographically distributed as shown in the following table (amounts in thousands):

Three Months Ended

Nine Months Ended

Three Months Ended

Six Months Ended

September 30, 

September 30, 

September 30, 

September 30, 

June 30, 

June 30, 

June 30, 

June 30, 

    

2022

    

2021

   

2022

   

2021

    

2023

    

2022

   

2023

   

2022

Stream interests:

Canada

$

46,861

$

64,031

$

152,938

$

158,679

$

50,848

$

54,591

$

107,829

$

106,077

Dominican Republic

21,156

27,198

64,232

83,957

23,540

19,812

45,899

43,076

Africa

18,763

14,540

36,301

25,375

Chile

12,170

11,601

39,566

52,491

7,823

11,721

20,757

27,395

Africa

13,257

8,679

38,633

26,149

Rest of world

5,288

4,412

13,494

4,412

5,041

4,215

10,219

8,207

Total stream interests

$

98,732

$

115,921

$

308,863

$

325,688

$

106,015

$

104,879

$

221,005

$

210,130

Royalty interests:

United States

$

11,413

$

27,080

$

52,616

$

64,903

$

23,265

$

16,845

$

56,845

$

41,202

Mexico

11,095

15,427

38,915

46,888

8,155

11,940

17,449

27,821

Australia

5,081

4,040

9,180

8,086

Canada

4,826

6,402

21,377

24,616

(97)

5,773

6,495

16,551

Australia

3,446

6,917

11,533

15,526

Africa

602

430

1,909

114

430

Rest of world

��

1,917

2,082

6,492

5,517

1,623

2,850

3,460

4,576

Total royalty interests

$

32,697

$

58,510

$

131,363

$

159,359

$

38,027

$

41,562

$

93,429

$

98,666

Total revenue

$

131,429

$

174,431

$

440,226

$

485,047

$

144,042

$

146,441

$

314,434

$

308,796

11.10.  FAIR VALUE MEASUREMENTS

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, we utilize a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

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

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

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 our financial assets measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy.

As of September 30, 2022

As of June 30, 2023

Fair Value

Fair Value

    

Carrying Value

    

Total

    

Level 1

    

Level 2

    

Level 3

    

Carrying Value

    

Total

    

Level 1

    

Level 2

    

Level 3

Assets (amounts in thousands):

Marketable equity securities(1)

$

655

$

655

$

117

$

538

$

$

547

$

547

$

11

$

536

$

As of December 31, 2021

As of December 31, 2022

Fair Value

Fair Value

    

Carrying Value

    

Total

    

Level 1

    

Level 2

    

Level 3

    

Carrying Value

    

Total

    

Level 1

    

Level 2

    

Level 3

Assets (amounts in thousands):

Marketable equity securities(1)

$

1,733

$

1,733

$

$

1,733

$

$

373

$

373

$

121

$

252

$

(1) Included in Other assets on our consolidated balance sheets.

Our marketable securities classified within Level 1 of the fair value hierarchy are valued using quoted market prices in active markets multiplied by the quantity of shares held.  The TriStar Gold Inc. warrants (Note 4)3) classified within Level 2 of the fair value hierarchy are model-derived (Black-Scholes) valuations in which the significant inputs are observable in active markets. The carrying value of our revolving credit facility (Note 5)4) approximates fair value as of SeptemberJune 30, 2022.2023.

As of SeptemberJune 30, 2022,2023, we 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.  

12.11.  COMMITMENTS AND CONTINGENCIES

NX GoldXavantina Exploration Payment

On March 22, 2022,April 20, 2023, we made a $2.4 million advance payment of $3.2 million to a subsidiary of Ero Copper CorporationCorp. (“Ero”) as part of our commitment to support the achievement of success-based targets related to regional exploration and mineral resource additions. This payment has beenwas recorded to exploration stage stream interests (Note 3) within Stream and royalty interests, net on our consolidated balance sheets. Assheets as of SeptemberJune 30, 2022, $6.82023. Advance payments of $4.4 million of advance payments remain if Ero meets certain success-based targets related to regional exploration and mineral resource additions through calendar 2024. Refer to Note 3 of our Transition Report2022 10-K for further information on the Xavantina (formerly referred to as NX Gold) Gold stream acquisition.Stream Acquisition.

Ilovica Gold Stream Acquisition

As of SeptemberJune 30, 2022,2023, our conditional funding schedule of $163.75 million, as part of the Ilovica gold stream acquisition entered into in October 2014, remains subject to certain conditions.

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

General Presentation

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 ourthe financial condition and results of operations of Royal Gold.  You should 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 the audited consolidated financial statements included in our Transition Report on Form 10-K for the six monthsyear ended December 31, 2021,2022, filed with the Securities and Exchange Commission (“SEC”) on February 17, 16, 2023 (“2022 (“Transition Report”10-K”).

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

We do not own, develop, or mine the properties on which we hold stream or royalty interests. Certain information provided in this Quarterly Report on Form 10-Q about operating properties in which we hold interests, including information about mineral resources and reserves, historical production, production estimates, property descriptions, and property developments, was provided to us by the operators of those properties or is publicly available information filed by these operators with applicable securities regulatory bodies, including the SEC. We have not verified, and are not in a position to verify, and expressly disclaim any responsibility for the accuracy, completeness, or fairness of, this third-party information and refer the reader to the public reports filed by the operators for information regarding those properties.

Unless the context otherwise requires, references to “Royal Gold,” the “Company,” “we,” “us,” and “our” refer to Royal Gold, Inc. and its consolidated subsidiaries.

Overview of Our Business

We acquire and manage precious metal streams, royalties, and similar interests. We seek to acquire existing stream and royalty interests or 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 SeptemberJune 30, 2022,2023, we owned nine stream interests, which are on eight producing properties and one development stage property. Stream interests accounted for approximately 75%74% and 70% of our total revenue for the three and ninesix months ended SeptemberJune 30, 2022,2023, respectively, and 66%72% and 68% for each of the three and ninesix months ended SeptemberJune 30, 2021,2022, respectively. We expect stream interests to continue representing a significant portion 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 SeptemberJune 30, 2022,2023, we owned royalty interests on 3332 producing properties, 19 development stage properties and 125121 exploration stage properties, of which we consider 5452 to be evaluation stage projects. We use “evaluation stage” to describe exploration stage properties that contain mineral resources and on which operators are engaged in the search for mineral reserves. Royalty interests accounted for 25%26% and 30% of our total revenue for the three and ninesix months ended SeptemberJune 30, 2022,2023, respectively, and 34%28% and 32% for each of the three and ninesix months ended SeptemberJune 30, 2021,2022, respectively.

 

We do not conduct mining operations on the properties in which we hold stream and royalty interests, and we generally are not required to contribute to capital costs, exploration costs, environmental costs or other operating costs on those properties.

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We are continually reviewing opportunities to grow our portfolio, whether through the creation or acquisition of new or existing stream or royalty interests or other acquisition activity. We generally have acquisition opportunities in various stages of review. Our review process may include, for example, engaging consultants and advisors to analyze an opportunity; analysis of technical, financial, legal, environmental, social, governance and other confidential information regarding an opportunity; submission

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of indications of interest and term sheets; participation in preliminary discussions and negotiations; and involvement as a bidder in competitive processes.

Business Trends and Uncertainties

Metal Prices

Our financial results are primarily tied to the price of gold, silver, copper, and other metals. Metal prices have fluctuated widely in recent years and we expect this volatility to continue. The marketability and price of metals are influenced by numerous factors beyond our control, and significant changes in metal prices can have a material effect on our revenue.

For the three and ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, average metal prices and percentages of revenue by metal were as follows:

Three Months Ended

Nine Months Ended

Three Months Ended

Six Months Ended

September 30, 2022

September 30, 2021

September 30, 2022

September 30, 2021

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

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)

$

1,729

76%

$

1,790

73%

$

1,824

73%

$

1,800

73%

$

1,976

77%

$

1,871

71%

$

1,932

74%

$

1,874

71%

Silver ($/ounce)(1)

$

19.23

11%

$

24.36

10%

$

21.92

11%

$

25.75

10%

$

24.13

15%

$

22.60

10%

$

23.31

14%

$

23.32

10%

Copper ($/pound)(2)

$

3.51

8%

$

4.25

14%

$

4.11

12%

$

4.17

13%

$

3.84

6%

$

4.31

14%

$

3.95

10%

$

4.43

14%

Other

N/A

5%

N/A

3%

N/A

4%

N/A

4%

N/A

2%

N/A

5%

N/A

2%

N/A

5%

(1)    Based on the average U.S. dollars London Bullion Market Association PM fixing price for gold and daily fixing price           for silver, as applicable.

(2)    Based on the average U.S. dollars London Metals Exchange settlement price for copper.

Acquisition of Great Bear Royalties CorporationAgreement to Acquire Royalty Interests on the Producing Santa Rita and Serrote Mines

On September 9, 2022June 12, 2023, we completedannounced that we entered into a binding commitment letter with ACG Acquisition Company to acquire new royalty interests on the previously announced acquisition of all of the issuedproducing Serrote and outstanding shares of Great Bear Royalties Corporation (“GBR”)Santa Rita mines in Brazil for total cash consideration of approximately C$199.6$250 million, (US$151.7 million) (the “Acquisition Price”).  GBR’s sole material asset is a 2.0% net smelter return royalty (“Great Bear Royalty”) that covers the entiretysubject to satisfaction of the Great Bear Project in the Red Lake districtcertain conditions, including negotiation and execution of Ontario, Canada, owned and operated by a subsidiary of Kinross Gold Corporation (“Kinross”).  The Great Bear Royalty includes all metals produced from contiguous claims covering 9,140 hectares and will be registered on title to the relevant claims. Royalty payments will be made quarterly with applicable standard deductions. Refer to Note 2 of our notes to consolidated financial statements for further discussion on the GBR acquisition. The purchase price was funded with available cash on hand.definitive documentation.

As partBased on current metal prices, we expect to fund the $250 million purchase price with approximately $50 million of the acquisitionavailable cash resources and in exchange for information and access to the project provided by Kinross, we granted an option to Kinross to purchaseapproximately $200 million from a 25% interest in the Great Bear Royalty (0.5% of the 2.0% royalty rate) for an amount equal to 25% of the Acquisition Price, adjusted for inflation, at any time from the transaction closing date until the earlier of a construction decision for the Great Bear Project and 10 years after the transaction closing date.  draw on our revolving credit facility.

Acquisition of Additional Royalty Interest on Cortez ComplexGold/Platinum/Palladium Royalties

On August 2, 2022,At closing, we acquired a sliding scale gross royalty (“Cortez Complex Royalty”) on production from an area within the Cortez Complex forexpect to pay cash consideration of $525 million.$215 million in return for:

A gross smelter return royalty of 85% of the payable gold from the Serrote mine until the achievement of a royalty revenue threshold of $250 million from this royalty, and 45% thereafter; and,
A gross smelter return royalty of 64 ounces of gold, 135 ounces of platinum and 100 ounces of palladium for each 1 million pounds of payable nickel produced from the Santa Rita mine until the achievement of a royalty revenue threshold of $100 million from this royalty, at which point the royalty on gold will continue and the royalty on platinum and palladium will terminate.

Royalty revenue will be determined using fixed payabilities of 93% for gold at the Serrote mine and 86% for nickel at the Santa Rita mine. The area withinroyalties will have an economic effective date of May 1, 2023, and there will be no deductions applicable to the Cortez Complex is owned or controlled by Nevada Gold Mines LLC a joint venture between Barrick Gold Corporation (“Barrick”) and Newmont Corporation (“Newmont”), with the exception of the Fourmile development project which is 100% owned and operated by Barrick. The royalty is a life of mine sliding scale gross royalty payable at a rate of 0% at a gold price less than $400 per ounce, increasing to 3% at a gold price above $900 per ounce, and is payable on 40% of all production from the Cortez Complex except for the existing deposits within the Robertson property. The purchase price was funded with debt and available cash on hand.  Refer to Note 2 and Note 5 of our notes to consolidated financial statements for further discussion on the Cortez complex royalty acquisition and funding.payments.

Lawyers Royalty Acquisition

On March 24, 2022, we acquired a 0.5% net smelter returns royalty (“NSR”) on production from the Lawyers Project, an exploration stage project currently operated by Benchmark Metals Inc., which is located in British Columbia, Canada. As part of this transaction, we also acquired a right of first offer (“ROFO”) for an existing 2.0% NSR royalty over the Ranch Project owned by Thesis Gold, Inc. that is located adjacent to the Lawyers Project.  We paid $8.0 million in cash consideration for the royalty and ROFO to Guardsmen Resources Inc.

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Copper/Nickel Royalty

At closing, we expect to pay cash consideration of $35 million in return for a gross smelter return royalty on total payable copper and nickel production from the Serrote and Santa Rita mines at a rate of 0.50% during 2023 and 2024, 0.75% during 2025 and 1.10% thereafter until the achievement of a royalty revenue threshold of $90 million from this royalty, and 0.55% thereafter.

Royalty revenue will be determined using fixed payabilities of 97% for copper at the Serrote mine, and 86% for nickel and 72% for copper at the Santa Rita mine. The royalty will have an economic effective date of May 1, 2023, and there will be no deductions applicable to the royalty payments.

ESG Contribution

We will make a financial commitment of 0.25% of the annual royalty payments received to support programs benefiting the communities within the area of influence of each of the Serrote and Santa Rita mines.

Conditions to Closing

Closing of the proposed acquisition of the royalties will be conditional on the successful completion of the ACG transaction with Appian, a minimum working capital position for ACG at closing, and other closing conditions that are standard for transactions of this nature, including the negotiation and execution of definitive royalty and security agreements with ACG and an intercreditor agreement with the senior lenders.

Timing

Closing of the proposed acquisition of the royalties could occur within the coming weeks after completion of all conditions to closing.  

NX GoldXavantina Exploration Payment

On March 22, 2022,April 20, 2023, we made a $2.4 million advance payment of $3.2 million to a subsidiary of Ero CopperGold Corporation (“Ero”) as part of our commitment to support the achievement of success-based targets related to regional exploration and mineral resource additions. AsAdvance payments of September 30, 2022, up to $6.8$4.4 million of additional exploration and mineral resource addition payments remain if Ero meets certain success-based targets related to regional exploration and mineral resource additions through calendar 2024. Refer to Note 3 of our Transition Report2022 10-K for further information on the Xavantina (formerly referred to as NX Gold) Gold stream acquisition.Stream Acquisition.

Operators’ Production Estimates by Stream and Royalty Interest for Calendar 20222023

We generally receive annual production estimates from many of the operators of the producing mines in which we own a stream or royalty interest during the first quarter of each calendar year. In some instances, an operator may revise its original calendar year guidance throughout the year. The following table shows current production estimates for calendar 2022,2023, as well as actual production through SeptemberJune 30, 20222023 (except as otherwise noted), for our principal properties as reported to us by the operators.

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Operators’ Estimated and Actual Production by Stream and Royalty Interest for Calendar 20222023

Principal Producing Properties

Calendar Year 2022 Operator’s Production

Calendar Year 2022 Operator’s Production

Estimate(1)

Actual(2)

Gold

Silver

Base Metals

Gold

Silver

Base Metals

Stream/Royalty

    

(oz.)

  

(oz.)

  

(lbs.)

  

(oz.)

  

(oz.)

  

(lbs.)

Stream:

Andacollo(3)

  

36,000

  

  

  

17,800

  

  

Mount Milligan(4)

 

190,000 - 210,000

 

 

 

81,800

 

 

Copper

 

 

70 - 80 Million

 

 

 

37.9 Million

Pueblo Viejo(5)

400,000 - 440,000

N/A

330,000

N/A

Wassa(6)

155,000 - 170,000

125,600

Khoemacau(7)

N/A

N/A

Royalty:

 

 

 

 

 

 

Cortez(8)

280,000

190,600

Peñasquito(9)

 

475,000

29 Million

 

440,000

23.3 Million

 

Lead

 

  

 

  

 

150 Million

 

112 Million

Zinc

 

  

 

  

 

350 Million

 

297 Million

Calendar Year 2023 Operator’s Production

Calendar Year 2023 Operator’s Production

Estimate(1)

Actual(2)

Gold

Silver

Base Metals

Gold

Silver

Base Metals

Stream/Royalty

(oz.)

(oz.)

(lbs.)

(oz.)

(oz.)

(lbs.)

Stream:

Andacollo(3)

22,000 - 27,000

12,100

Mount Milligan(4)

160,000 - 170,000

74,300

Copper

60 - 70 Million

27.1 Million

Pueblo Viejo(5)

470,000 - 520,000

N/A

166,000

N/A

Khoemacau(6)

1.5 - 1.7 Million

0.8 Million

Royalty:

Cortez(7)

940,000 - 1,060,000

407,000

Peñasquito(8)

N/A

N/A

123,000

13.8 Million

Lead

N/A

86 Million

Zinc

N/A

180 Million

(1)Production estimates received from our operators are for calendar 2022.2023. There can be no assurance that production estimates received from the operators will be achieved. Please also referOur stream interests can be affected by several factors that make it difficult to calculate our revenue for a period from the operator’s actual or estimated production for that same period. These factors include the timing of the operator’s concentrate shipments, the delivery of metal to us and the subsequent sale of the delivered metal. These factors do not typically affect our stream interests on operations that produce doré or our royalty interests. Refer to our cautionary language regarding forward-looking statements included herein, as well as the Risk Factors identified in Part I, Item 1A, of our Transition Report2022 10-K for information regarding factors that could affect actual results.

(2)Actual production figures shown are from the operators and cover the period from January 1, 2022,2023, through SeptemberJune 30, 2022,2023, unless otherwise noted in footnotes to this table. Such amounts may differ from our reported revenue and production and are not reduced to show the production attributable to our interests.

(3)The estimated and actual production figurefigures shown for Andacollo isare contained gold in concentrate. Deliveries to us are determined using a fixed gold payability factor of 89%.

(4)The estimated and actual production figures shown for Mount Milligan are payable gold and copper in concentrate. Actual figures reflect production through June 30, 2022.

(5)The estimated and actual production figures shown for Pueblo Viejo are payable gold in doré and represent the 60% interest in Pueblo Viejo held by Barrick Gold Corporation (“Barrick”). The operatorBarrick did not provide estimated or actual silver production.

(6)The estimated and actual production figure shownfigures for Wassa isKhoemacau are payable goldsilver in doré poured in the period.concentrate. Deliveries to us are determined using a fixed silver payability factor of 90%.

(7)The estimated and actual production figures for KhoemacauCortez include the entirety of the Cortez Complex. Barrick reports total production from the Cortez Complex and does not report production separately for the Legacy Zone and CC Zone. Production estimates for the Legacy Zone are not available throughprovided to us by Barrick and production estimates for 100% of the ramp-up period.Cortez Complex are publicly disclosed by Barrick.

(8)The estimated and actual production figures for Cortez represent the areas subject to our royalty interests excluding the production from the Cortez Complex Royalty.

(9)The estimated and actual gold and silver production figures shown for Peñasquito are payable gold and silver in concentrate and doré. The estimated and actual lead and zinc production figures shown are payable lead and zinc in concentrate. Actual figures are for the period January 1, 2023 through June 30, 2023. Estimated production figures are not available as 2023 production guidance was withdrawn by Newmont Corporation (“Newmont”) on July 20, 2023.

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Property Developments

This section provides recent updates for our principal properties as reported by the operators, either directly to us or in their publicly available documents.

Stream Interests

Andacollo

Gold stream deliveries from Andacollo were approximately 3,2003,700 ounces for the three months ended SeptemberJune 30, 2022,2023, compared to approximately 6,4009,900 ounces for the three months ended SeptemberJune 30, 2021.2022. The decrease in deliveries resulted

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primarily from Andacollo experiencing lower gold grades and lower gold recoveries, in line with the expected downward trend of gold grades, as well as differences in the timing of shipments and settlements during the periods.

As reported by Teck Resources Limited (“Teck”), a significant rainfall event in July caused operations to shut down for five days.  We expect the impact of this shutdown will affect stream deliveries in the first quarter of 2023.

Gold production at Andacollo has trended lower since the beginning of 2021 due to lower ore grades, as anticipated in the mine plan. According to Teck Resources Limited (“Teck”), the period of lower grades is expected to last through 2023, and the mine plan then anticipates a transition to higher grade ore as the next phase of mining is developed over the following years. Teck has reported that the current life of mine for Andacollo is expected to continue until 2035 and that additional permits or permit amendments will be required to execute the life of mine plan.

Khoemacau Project

Silver stream deliveries from Khoemacau were approximately 290,700398,700 ounces for the three months ended SeptemberJune 30, 2022. First concentrate was shipped from Khoemacau in mid-July 2021 and silver stream deliveries2023, compared to us were approximately 105,800246,800 ounces for the three months ended SeptemberJune 30, 2022. Increased stream deliveries resulted from operations running at full capacity in the current period compared to the prior year period.  Deliveries in the prior year period were lower due to the ramp-up of mining and processing operations throughout 2022 after completion of project construction in 2021.

According to Khoemacau Copper Mining (Pty.) Limited (“KCM”), the operator ofoperations at Khoemacau ramp-up of operations continued and average monthly underground production increased consistently duringat nameplate capacity through the quarter ended SeptemberJune 30, 2022, from approximately 7,3002023, after the target production rate of 3.7 million tonnes per day (8,000 tonsyear (10,000 tonnes per day) was achieved in June to approximately 8,000 tonnes per day (8,800 tons per day)December 2022. As projected in September 2022.  Production has reached the target mining rate of 10,000 tonnes per day (11,000 tons per day) for short periods during the ramp up period but has not yet been consistently sustained at this level.mine plan, KCM expects payable silver production in 2023 to reach the target mining rate on a sustained basis toward the end of December 2022 and into the first quarter of 2023.

KCM continuesrange between 1.5 to expect that at full production Khoemacau will produce 155,000 to 165,000 tonnes (171,000 to 182,000 tons) of high-grade copper and silver concentrate a year, containing approximately 60,000 to 65,000 tonnes (66,000 to 72,000 tons) of payable copper and 1.8 to 2.01.7 million ounces, which is slightly below the life of payablemine average due to lower silver per year, over an approximate 20-year mine life fromgrades in the upper portion of the Zone 5.5 deposit and the top-down mining sequence.

Mount Milligan

Gold stream deliveries from Mount Milligan were approximately 18,40017,300 ounces for the three months ended SeptemberJune 30, 2022,2023, compared to approximately 10,80023,800 ounces for the three months ended SeptemberJune 30, 2021. Increased gold deliveries resulted from differences in the timing of shipments and settlements during the periods and gold grade variability in the concentrate shipments.

2022. Copper stream deliveries from Mount Milligan were approximately 4.52.5 million pounds during the three months ended SeptemberJune 30, 2022,2023, compared to approximately 2.64.0 million pounds during the three months ended SeptemberJune 30, 2021. Increased2022. Gold and copper stream deliveries resultedfor the three months ended June 30, 2023, relate to mine production during the approximate period November 2022 to January 2023. During this period Centerra Gold Inc. (“Centerra”) reported negative variances to copper head grade, gold head grade and recovery, as compared to the previous year period.

On July 31, 2023, Centerra reported that gold and copper production for the three months ended June 30, 2023, was impacted by lower grades and recoveries due to mine sequencing, although process plant throughput for the period averaged 61,482 tonnes per day and record tonnes were processed in the months of May and June.  Centerra also reported that Mount Milligan remains on track to access higher-grade copper and gold ore from differencesphase 7 and phase 9 in the second half of the year.

Centerra continues to expect that full year 2023 production at Mount Milligan will be back-end weighted, with gold production at the low end of the guidance range of 160,000 to 170,000 ounces, and copper production tracking towards the mid-point of the guidance range of 60 to 70 million pounds.  Centerra also expects to make four concentrate shipments in the third quarter and another four shipments in the fourth quarter, although the timing of shipments and settlements duringmay be affected by logistical delays resulting from labor disruptions in the periods.

Stream deliveries during the quarter from Mount Milligan provided for complete repaymentPort of the $781.5 million advance deposit made by Royal Gold to Thompson Creek Metals Company, Inc. (“Thompson Creek”), a subsidiary of Centerra Gold Inc. (“Centerra”).  Royal Gold contributed three advance payments prior to and during the development of the mine in 2010 through 2012, in return for the right to acquire 52.25% of the payable gold produced from Mount Milligan.  Royal

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Gold and Centerra subsequently amended the stream interest in 2016 to a 35% gold stream and 18.75% copper stream.  Mount Milligan began commercial production in early 2014 and was Royal Gold’s first stream acquisition.

Subsequent to the end of the quarter on October 4, 2022, Centerra published the highlights of an updated life of mine plan for Mount Milligan.  According to Centerra, the mine life is expected to be extended by over four years to 2033.  Centerra expects total payable gold and copper to increase more than 800,000 ounces and 191 million pounds, respectively, from 2022 onwards when compared to the previous plan, with average annual production of 175,000 ounces of gold and 68 million pounds of copper.  

Centerra also indicated the potential for future resource growth due to exploration success in areas proximal to the open pit.  Centerra expects to file a new technical report detailing the life of mine plan and updated reserve and resource information within 45 days of October 4, 2022.  As a result of the increase in proven and probable reserves as announced by Centerra, the gold and copper depletion rates on our Mount Milligan stream decreased to $416 per ounce of gold and $1.06 per pound of copper as of September 30, 2022 from $703 per ounce of gold and $1.53 per pound of copper. Royal Gold will update its annual SK1300 disclosure for the Mount Milligan technical report update within its 2022 Annual Report on Form 10-K, which we expect to file in February 2023.  

Centerra remains on track to meet 2022 production guidance of between 190,000 to 210,000 ounces of payable gold and between 70 to 80 million pounds of payable copper.Vancouver.

Pueblo Viejo

Gold stream deliveries from Pueblo Viejo were approximately 8,9006,800 ounces for the three months ended SeptemberJune 30, 2022,2023, compared to approximately 9,2008,600 ounces for the three months ended SeptemberJune 30, 2021.2022. Decreased deliveries resulted from processing lower grade gold stockpile material.

During the current quarter, Barrick reported continued progress on the plant expansion and mine life extension project at Pueblo Viejo to increase throughput and allow the mine to maintain minimum average annual gold production of approximately 800,000 ounces after 2022 and beyond 2040 (100% basis).  

With respect to the plant expansion, on August 8, 2022, Barrick reported that as of June 30, 2022, overall construction was 56% complete and it expects the expansion to be substantially completed by the end of 2022 with commissioning in the first quarter of 2023.  With respect to the mine life extension, Barrick also disclosed that social, environmental and technical studies for additional tailings capacity continued to advance, and that a preferred site for a tailings storage facility (“TSF”) had been put forward for further evaluation.  Barrick reported that the final location and construction of the additional TSF would be subject to the completion of an Environmental and Social Impact Assessment (“ESIA”) in accordance with Dominican Republic legislation and international standards, which would then be submitted to the Government of the Dominican Republic for evaluation and final decision.  Further according to Barrick, basic engineering of the additional TSF is expected to be completed in the fourth quarter of 2022.

Silver stream deliveries were approximately 319,100150,700 ounces for the three months ended SeptemberJune 30, 2022,2023, compared to 396,500approximately 307,100 ounces for the three months ended SeptemberJune 30, 2021. During2022. Decreased silver deliveries resulted from lower silver recovery during the third quartercurrent period, and an additional 47,00089,300 ounces of silver deliveries were deferred. The deferred ounces are the result of a mechanism in the stream agreement that allows for the deferral of deliveries in a period if Barrick’s share of silver production is insufficient to cover its stream delivery obligations. The stream agreement terms include a fixed 70% silver recovery rate. If actual recovery rates fall below the contractual 70% recovery rate, ounces may

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be deferred with deferred ounces to be delivered in future periods as silver recovery allows. As of SeptemberJune 30, 2022,2023, approximately 530,000607,700 ounces remain deferred. We expect that silver recoveries could remain highly variable until the plant expansion project is complete and bottlenecks associated with the silver circuit and silver recovery can be fully addressed, and weis running at full production levels. We do not expect material deliveries of deferred silver this year.ounces while the plant ramps up to full production levels during 2023, and timing for the delivery of the entire deferred amount is uncertain.

WassaOn May 3 and May 10, 2023, Barrick provided updates on the plant expansion and mine life extension project at Pueblo Viejo.  With respect to the plant expansion, Barrick reported that construction was 93% complete as of March 31, 2023, and commissioning and operations handover of new equipment was underway. With respect to the mine life extension, Barrick further disclosed on July 27, 2023, that the engineering design for the El Naranjo tailings storage facility (“TSF”)  project continues to advance and that the environmental license for the new TSF was recently received. Barrick has also reported that geotechnical drilling and site investigation are ongoing to support a feasibility study on the TSF, which is due for completion in the second quarter of 2024.

Gold stream deliveries from Wassa were approximately 4,800 ounces for the three months ended September 30, 2022, compared to approximately 4,300 ounces for the three months ended September 30, 2021.

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Royalty Interests

Cortez

Production attributable to our royalty interest at the Cortez Complex was approximately 36,600179,900 ounces of gold for the three months ended SeptemberJune 30, 2022,2023, compared to approximately 98,30052,000 ounces of gold for the three months ended SeptemberJune 30, 2021.  This production is attributable2022. The increase was primarily due to the Company’s legacyaddition of new royalties in 2022 that increased royalty interests, including overlapping royalties atcoverage over producing areas within the Pipeline and Crossroads deposits (known as GSR1, GSR2, GSR 3, NVR1 and NVR1C). Refer to the Business Trends and Uncertainties section of this MD&A for information on the recent Cortez Complex Royalty acquisition.Complex.

On August 8, 2022,May 3, 2023, Barrick reported that miningthe Record of Phase 5 of CrossroadsDecision (“ROD”) on the Goldrush project, which is located within the CC Zone, is expected to deliver oxide ore and underpin stronger performance for Cortez in the December quartersecond half of 2022.

As2023. Barrick also reported that mine development and test stoping in the Redhill zone is continuing and a result of the acquisition of the Cortez Complex Royalty, thereminor permit modification has been an increaseapproved that will allow underground development to continue until the ROD on the Goldrush Plan of over 300% in gold mineral reserves and an increase of over 1200% in measured and indicated gold mineral resources attributableOperations is received. According to our royalty interests at Cortez beyondBarrick, the resources and reserves previously disclosed in detail in our Transition Report.  Referextension to the “Property Mineral Reservepermitting timeline is not expected to have a significant impact on the 2023 outlook and Mineral Resource Update for Cortez” section below.  the potential impact, if any, on the outlook from 2024 onwards is currently being reviewed.

Peñasquito

DuringProduction attributable to our royalty interest at Peñasquito was approximately 48,100 ounces of gold, 6.0 million ounces of silver, 35.6 million pounds of lead and 89.7 million pounds of zinc for the three months ended SeptemberJune 30, 2022,2023. This compares to approximately 130,600 ounces of gold, production at Peñasquito was approximately 144,300 ounces;8.1 million ounces of silver, production was approximately 6.80 million ounces; lead production was approximately 29.6 million pounds; and zinc production was approximately 84.6 million pounds. Gold production was approximately 170,400 ounces; silver production was approximately 7.79 million ounces; lead production was approximately 41.9 million pounds; and zinc production was approximately 98.335.0 million pounds duringof lead and 84.9 million pounds of zinc for the three months ended SeptemberJune 30, 2021.2022. Newmont reported that production was lower in the current period due to a labor strike, and gold production was further impacted by lower mill recovery and ore grade mined.

On June 8, 2023, Newmont reported that operations at Peñasquito were suspended on June 7, 2023, following a strike action by the National Union of Mine and Metal Workers of the Mexican Republic. The suspension remains in effect as of the filing of this report and on July 20, 2023, Newmont announced the withdrawal of its full-year 2023 guidance for Peñasquito. Newmont further stated that it cannot estimate when the strike will be resolved, and it will reassess Peñasquito’s full year 2023 guidance once a resolution has been reached.

Results of Operations

Quarter Ended SeptemberJune 30, 2022,2023, Compared to Quarter Ended SeptemberJune 30, 20212022

For the quarter ended SeptemberJune 30, 2022,2023, we recorded net income and comprehensive income attributable to Royal Gold stockholders (“net income”) of $45.8$63.4 million, or $0.70$0.97 per basic and diluted share, as compared to net income of $70.2$71.1 million, or $1.07$1.08 per basic and diluted share, for the quarter ended SeptemberJune 30, 2021.2022. The decrease in net income was primarily attributable to a decrease in revenue,higher debt-related interest expense and income tax expense, as discussed below.

For the quarter ended SeptemberJune 30, 2022,2023, we recognized total revenue of $131.4$144.0 million, comprised of stream revenue of $98.7$106.0 million and royalty revenue of $32.7$38.0 million at an average gold price of $1,729$1,976 per ounce, an average silver price of $19.23$24.13 per ounce and an average copper price of $3.51$3.84 per pound. This is compared to total revenue of $174.4$146.4 million for the three months ended SeptemberJune 30, 2021,2022, comprised of stream revenue of $115.9$104.9 million and royalty revenue of $58.5$41.6 million,

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at an average gold price of $1,790$1,871 per ounce, an average silver price of $24.36$22.60 per ounce and an average copper price of $4.25$4.31 per pound. Revenue and the corresponding production attributable to our stream and royalty interests for the quarter ended SeptemberJune 30, 2022,2023, compared to the quarter ended SeptemberJune 30, 2021,2022, are as follows:

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Revenue and Reported Production Subject to Our Stream and Royalty Interests

(Amounts in thousands, except reported production oz. and lbs.)

Three Months Ended

Three Months Ended

Three Months Ended

Three Months Ended

September 30, 2022

September 30, 2021

June 30, 2023

June 30, 2022

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

$

41,553

$

53,455

$

41,208

$

45,627

Gold

18,200

oz.

19,300

oz.

Gold

17,500

oz.

15,500

oz.

Copper

2.7

Mlbs.

4.4

Mlbs.

Copper

1.7

Mlbs.

4.0

Mlbs.

Pueblo Viejo

$

21,156

$

27,198

$

23,540

$

19,812

Gold

8,600

oz.

9,800

oz.

Gold

7,400

oz.

7,100

oz.

Silver

307,100

oz.

386,500

oz.

Silver

362,200

oz.

274,500

oz.

Khoemacau

Silver

$

8,881

373,000

oz.

$

5,202

221,800

oz.

Andacollo

Gold

$

12,170

6,800

oz.

$

11,601

6,500

oz.

Gold

$

7,823

4,000

oz.

$

11,721

6,300

oz.

Wassa

Gold

$

7,390

4,200

oz.

$

8,033

4,500

oz.

Khoemacau

Silver

$

5,050

255,900

oz.

$

107

4,500

oz.

Other(3)

$

11,413

$

15,527

$

24,563

$

22,517

Gold

5,900

oz.

6,300

oz.

Gold

11,600

oz.

11,300

oz.

Silver

51,100

oz.

165,400

oz.

Silver

65,700

oz.

53,700

oz.

Total stream revenue

$

98,732

$

115,921

$

106,015

$

104,879

.

.

Royalty(2):

Cortez Legacy Zone

Gold

$

14,305

68,100

oz.

$

8,138

52,000

oz.

Cortez CC Zone

Gold

$

3,520

111,500

oz.

N/A

Peñasquito

$

9,010

$

12,212

$

6,105

$

9,664

Gold

144,300

oz.

170,300

oz.

Gold

48,100

oz.

130,600

oz.

Silver

6.8

Moz.

7.8

Moz.

Silver

6.0

Moz.

8.1

Moz.

Lead

29.6

Mlbs.

42.0

Mlbs.

Lead

35.6

Mlbs.

35.0

Mlbs.

Zinc

84.6

Mlbs.

98.3

Mlbs.

Zinc

89.7

Mlbs.

84.9

Mlbs.

Cortez

Gold

$

4,562

36,600

oz.

$

17,126

106,300

oz.

Other(3)

Various

$

19,125

N/A

$

29,172

N/A

Various

$

14,097

N/A

$

23,760

N/A

Total royalty revenue

$

32,697

$

58,510

$

38,027

$

41,562

Total Revenue

$

131,429

$

174,431

$

144,042

$

146,441

(1)Reported production relates to the amount of stream metal sales and the metal sales attributable to our royalty interests for the three months ended SeptemberJune 30, 2022,2023, and 2021,2022, and may differ from the operators’ public reporting.reporting due to a number of factors, including the timing of the operator’s concentrate shipments, the delivery of metal to us and our subsequent sale of the delivered metal. Refer to Note 5 to the notes to consolidated financial statements.

(2)Refer to “Property Developments” above for a discussion of recent developments at principal properties.

(3)Individually, except for our stream interest at Rainy River, which contributed 6%7% of total revenue for the three months ended SeptemberJune 30, 2021,2023, and 6% for the three months ended June 30, 2022, no stream or royalty included within the “Other” category contributed greater than 5% of our total revenue for either period.

The decrease in our total revenue resulted primarily from lower gold sales at Andacollo, lower copper sales at Mount Milligan and Pueblo Viejo, lower gold and silver production attributable to our interest at Cortez and Peñasquito, and lower average gold, silver and copper prices.asquito. The decrease was offset by higher gold production attributable to our interest at Cortez as a result of the newly acquired royalties and higher gold and silver sales at Khoemacau, which shipped its first concentrate duringprices when compared to the prior year quarter.period.

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Gold and silver ounces and copper pounds purchased and sold during the three months ended SeptemberJune 30, 20222023 and 2021,2022, and gold and silver ounces and copper pounds in inventory as of SeptemberJune 30, 2022,2023, and December 31, 2021,2022, for our streaming interests were as follows:

Three Months Ended

Three Months Ended

As of

As of

Three Months Ended

Three Months Ended

As of

As of

September 30, 2022

September 30, 2021

September 30, 2022

December 31, 2021

June 30, 2023

June 30, 2022

June 30, 2023

December 31, 2022

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

18,400

18,200

10,800

19,300

8,700

4,100

17,300

17,500

23,800

15,500

3,800

5,200

Pueblo Viejo

8,900

8,600

9,200

9,800

8,900

8,600

6,800

7,400

8,600

7,100

6,800

7,900

Wassa

4,800

4,200

4,300

4,500

2,000

1,600

Andacollo

3,200

6,800

6,400

6,500

2,200

3,700

4,000

9,900

6,300

1,800

3,800

Other

7,100

5,900

7,500

6,300

3,100

2,200

11,200

11,600

10,400

11,300

4,700

4,100

Total

42,400

43,700

38,200

46,400

22,700

18,700

39,000

40,500

52,700

40,200

17,100

21,000

Three Months Ended

Three Months Ended

As of

As of

Three Months Ended

Three Months Ended

As of

As of

September 30, 2022

September 30, 2021

September 30, 2022

December 31, 2021

June 30, 2023

June 30, 2022

June 30, 2023

December 31, 2022

Silver 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.)

Khoemacau

398,700

373,000

247,000

221,800

155,100

105,900

Pueblo Viejo

319,100

307,100

396,500

386,500

319,100

316,000

150,700

362,200

307,000

274,500

150,700

337,800

Khoemacau

290,700

255,900

105,800

4,500

114,400

42,000

Other

64,300

51,100

109,700

165,400

29,600

34,300

70,600

65,700

55,200

53,700

25,500

17,500

Total

674,100

614,100

612,000

556,400

463,100

392,300

620,000

800,900

609,200

550,000

331,300

461,200

Three Months Ended

Three Months Ended

As of

As of

Three Months Ended

Three Months Ended

As of

As of

September 30, 2022

September 30, 2021

September 30, 2022

December 31, 2021

June 30, 2023

June 30, 2022

June 30, 2023

December 31, 2022

Copper Stream

    

Purchases (Mlbs.)

    

Sales (Mlbs.)

    

Purchases (Mlbs.)

    

Sales (Mlbs.)

    

Inventory (Mlbs.)

    

Inventory (Mlbs.)

    

Purchases (Mlbs.)

    

Sales (Mlbs.)

    

Purchases (Mlbs.)

    

Sales (Mlbs.)

    

Inventory (Mlbs.)

    

Inventory (Mlbs.)

Mount Milligan

4.5

2.7

2.6

4.4

1.8

0.9

2.5

1.7

4.0

4.0

0.8

0.9

Cost of sales, which excludes depreciation, depletion and amortization, decreased to $23.2$23.4 million for the three months ended SeptemberJune 30, 2022,2023, from $27.2$23.8 million for the three months ended SeptemberJune 30, 2021.2022. The decrease, when compared to the prior period,year quarter, was primarily due to a decrease in gold and silvercopper sales at Pueblo ViejoMount Milligan and lower gold sales at Mount Milligan,Andacollo, offset by higher silver sales at Khoemacau. Stream deliveriesCost of sales is specific to our stream agreements and is the result of our 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 costs decreased to $9.1 million for the three months ended June 30, 2023, from $9.3 million for the three months ended June 30, 2022. The decrease was primarily due to lower consulting costs and lower non-cash stock compensation expense during the current period.

Depreciation, depletion and amortization decreased to $38.4 million for the three months ended June 30, 2023, from $44.0 million for the three months ended June 30, 2022. The decrease was primarily due to lower depletion rates at Mount Milligan and Pueblo Viejo as a result of proven and probable mineral reserve increases when compared to the prior year quarter. The decrease was partially offset by higher depletion expense at Khoemacau began indue to the ramp-up of production and additional depletion expense from the newly acquired royalties at Cortez when compared to the prior year quarter.

Interest and other expense increased to $8.4 million for the three months ended June 30, 2023, from $1.4 million for the three months ended June 30, 2022. The increase was primarily due to higher interest expense as a result of higher average amounts outstanding under our revolving credit facility compared to the prior year quarter. We had $400 million outstanding under our revolving credit facility as of June 30, 2023, compared to zero outstanding as of June 30, 2022.  The current all-in borrowing rate under our revolving credit facility was 6.7% as of June 30, 2023.

For the three months ended June 30, 2023, we recorded income tax expense of $2.0 million, compared with income tax benefit of $5.9 million for the three months ended June 30, 2022. The income tax expense resulted in an effective tax rate of 3.1% in the current period, compared with (9.0%) for the three months ended June 30, 2022.  The three months ended June 30, 2023 and 2022, both included discrete tax benefits attributable to the release of a valuation allowance on certain deferred tax assets.

Six Months Ended June 30, 2023, Compared to Six Months Ended June 30, 2022

For the six months ended June 30, 2023, we recorded net income of $127.3 million, or $1.94 per basic and $1.93 per diluted share, as compared to net income of $136.8 million, or $2.08 per basic and diluted share, for the six months ended

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June 30, 2022. The decrease in net income was primarily attributable to higher debt-related interest expense and income tax expense, as discussed below.

For the six months ended June 30, 2023, we recognized total revenue of $314.4 million, comprised of stream revenue of $221.0 million and royalty revenue of $93.4 million at an average gold price of $1,932 per ounce, an average silver price of $23.31 per ounce and an average copper price of $3.95 per pound. This is compared to total revenue of $308.8 million for the six months ended June 30, 2022, comprised of stream revenue of $210.1 million and royalty revenue of $98.7 million, at an average gold price of $1,874 per ounce, an average silver price of $23.32 per ounce and an average copper price of $4.43 per pound. Revenue and the corresponding production attributable to our stream and royalty interests for the six months ended June 30, 2023, compared to the six months ended June 30, 2022, are as follows:

Revenue and Reported Production Subject to Our Stream and Royalty Interests

(Amounts in thousands, except reported production oz. and lbs.)

Six Months Ended

Six Months Ended

June 30, 2023

June 30, 2022

Reported

Reported

Stream/Royalty

    

Metal(s)

    

Revenue

Production(1)

Revenue

Production(1)

Stream(2):

Mount Milligan

$

87,863

$

88,043

Gold

32,700

oz.

29,400

oz.

Copper

6.2

Mlbs.

7.6

Mlbs.

Pueblo Viejo

$

45,898

$

43,076

Gold

15,300

oz.

15,600

oz.

Silver

700,100

oz.

590,500

oz.

Andacollo

Gold

$

20,757

11,000

oz.

$

27,395

14,700

oz.

Khoemacau

Silver

$

18,035

777,000

oz.

$

7,592

221,800

oz.

Other(3)

$

48,452

$

44,024

Gold

23,500

oz.

22,000

oz.

Silver

131,900

oz.

226,900

oz.

Total stream revenue

$

221,005

$

210,130

Royalty(2):

Cortez Legacy Zone

Gold

$

37,393

185,300

oz.

$

24,852

154,000

oz.

Cortez CC Zone

Gold

$ 6,726

218,100

N/A

Peñasquito

$

13,538

$

22,758

Gold

103,700

oz.

264,100

oz.

Silver

12.0

Moz.

15.7

Moz.

Lead

72.1

Mlbs.

77.0

Mlbs.

Zinc

188.9

Mlbs.

205.0

Mlbs.

Other(3)

Various

$

35,772

N/A

$

51,056

N/A

Total royalty revenue

$

93,429

$

98,666

Total revenue

$

314,434

$

308,796

(1)Reported production relates to the amount of stream metal sales and the metal sales attributable to our royalty interests for the six

months ended June 30, 2023, and 2022, and may differ from the operators’ public reporting due to a number of factors, including the timing of the operator’s concentrate shipments, the delivery of metal to us and our subsequent sale of the delivered metal. Refer to Note 5 to the notes to consolidated financial statements.

(2) Refer to “Property Developments” above for a discussion of recent developments at principal properties.

(3) Individually, except for our stream interest at Rainy River, which contributed 6% of total revenue for the six months ended June 30, 2023 and June 30, 2022, respectively, no stream or royalty included within the “Other” category contributed greater than 5% of our total revenue for either period.

The increase in our total revenue resulted primarily from higher silver sales at Khoemacau due to the ramp-up and higher gold production attributable to our interests at Cortez as a result of the newly acquired royalties. The increase was partially offset by lower gold sales at Andacollo and lower gold and silver production at Peñasquito when compared to the prior year period.

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Gold and silver ounces and copper pounds purchased and sold during the six months ended June 30, 2023, and 2022, and gold and silver ounces and copper pounds in inventory as of June 30, 2023, and December 31, 2022, for our streaming interests were as follows:

Six Months Ended

Six Months Ended

As of

As of

June 30, 2023

June 30, 2022

June 30, 2023

December 31, 2022

Gold Stream

    

Purchases (oz.)

    

Sales (oz.)

    

Purchases (oz.)

    

Sales (oz.)

    

Inventory (oz.)

    

Inventory (oz.)

Mount Milligan

31,200

32,700

33,800

29,400

3,800

5,200

Pueblo Viejo

14,200

15,300

15,700

15,600

6,800

7,900

Andacollo

9,000

11,000

16,000

14,700

1,800

3,800

Other

24,200

23,500

21,500

22,000

4,700

4,100

Total

78,600

82,500

87,000

81,700

17,100

21,000

Six Months Ended

Six Months Ended

As of

As of

June 30, 2023

June 30, 2022

June 30, 2023

December 31, 2022

Silver Stream

    

Purchases (oz.)

    

Sales (oz.)

    

Purchases (oz.)

    

Sales (oz.)

    

Inventory (oz.)

    

Inventory (oz.)

Khoemacau

826,200

777,000

362,100

221,800

155,100

105,900

Pueblo Viejo

513,000

700,100

581,600

590,500

150,700

337,800

Other

140,000

131,900

106,300

226,900

25,500

17,500

Total

1,479,200

1,609,000

1,050,000

1,039,200

331,300

461,200

Six Months Ended

Six Months Ended

As of

As of

June 30, 2023

June 30, 2022

June 30, 2023

December 31, 2022

Copper Stream

    

Purchases (Mlbs.)

    

Sales (Mlbs.)

    

Purchases (Mlbs.)

    

Sales (Mlbs.)

    

Inventory (Mlbs.)

    

Inventory (Mlbs.)

Mount Milligan

6.0

6.2

6.7

7.6

0.8

0.9

Cost of sales, which excludes depreciation, depletion and amortization, increased to $48.4 million for the six months ended June 30, 2023, from $46.5 million for the six months ended June 30, 2022. The increase, when compared to the prior year was primarily due to higher silver sales at Khoemacau, offset by lower gold sales at Andacollo. Cost of sales is specific to our stream agreements and is the result of our 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 costs increased to $7.6$20.1 million for the threesix months ended SeptemberJune 30, 2022,2023, from $7.1$18.2 million for the threesix months ended SeptemberJune 30, 2021.2022. The increase was primarily due to an increase in employee-related costs including non-cash compensation expense.costs.

Depreciation, depletion and amortization decreased to $37.8$84.7 million for the threesix months ended SeptemberJune 30, 2022,2023, from $50.6$92.0 million for the threesix months ended SeptemberJune 30, 2021.2022. The decrease was primarily due to lower gold production at Cortez and lower gold sales and at Mount Milligan. Lower depletion rates at Mount Milligan and Pueblo Viejo as a result of proven and probable mineral reserve increases when compared to the prior quarter also contributed to the decrease. Refer to Note 3 of our notes to consolidated financial statements for further discussion on the decrease in depletion rates at Mount Milligan.year period. The decrease was partially offset by higher depletion expense at Khoemacau due to the ramp-up of production and additional depletion from Khoemacau which produced first deliveries inthe newly acquired royalties at Cortez when compared to the prior year comparable quarter.

Interest and other expense increased to $8.8$17.6 million for the threesix months ended SeptemberJune 30, 2022,2023, from $1.9$2.3 million for the threesix months ended SeptemberJune 30, 2021.2022. The increase was primarily due to higher interest expense as a result of the $500 million draw on thehigher average amounts outstanding under our revolving credit facility and foreign exchange losses related to the GBR acquisition.

For the three months ended September 30, 2022, we recorded an income tax expense of $11.0 million, compared with income tax expense of $16.0 million for the three months ended September 30, 2021. The income tax expense resulted in an effective tax rate of 19.3% in the current period, compared with 18.5% for the three months ended September 30, 2021.

Nine Months Ended September 30, 2022, Compared to Nine Months Ended September 30, 2021

For the nine months ended September 30, 2022, we recorded net income and comprehensive income attributable to Royal Gold stockholders (“net income”) of $182.6 million, or $2.78 per basic and diluted share, as compared to net income of $205.9 million, or $3.14 per basic and diluted share, for the nine months ended September 30, 2021.

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For the nine months ended September 30, 2022, we recognized total revenue of $440.2 million, comprised of stream revenue of $308.9 million and royalty revenue of $131.4 million at an average gold price of $1,824 per ounce, an average silver price of $21.92 per ounce and an average copper price of $4.11 per pound. This is compared to total revenue of $485.0 million for the nine months ended September 30, 2021, comprised of stream revenue of $325.7 million and royalty revenue of $159.4 million, at an average gold price of $1,800 per ounce, an average silver price of $25.75 per ounce and an average copper price of $4.17 per pound. Revenue and the corresponding production attributable to our stream and royalty interests for the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021, are as follows:

Revenue and Reported Production Subject to Our Stream and Royalty Interests

(Amounts in thousands, except reported production oz. and lbs.)

Nine Months Ended

Nine Months Ended

September 30, 2022

September 30, 2021

Reported

Reported

Stream/Royalty

    

Metal(s)

    

Revenue

    

Production(1)

    

Revenue

    

Production(1)

Stream(2):

Mount Milligan

$

129,596

$

131,061

Gold

47,600

oz.

44,700

oz.

Copper

10.3

Mlbs.

12.2

Mlbs.

Pueblo Viejo

$

64,232

$

83,957

Gold

24,300

oz.

31,400

oz.

Silver

.9

Moz.

1.1

Moz.

Andacollo

Gold

$

39,565

21,500

oz.

$

52,491

29,000

oz.

Khoemacau

Silver

12,641

580,400

oz.

$

107

4,500

oz.

Wassa

Gold

$

22,840

12,500

oz.

$

23,935

13,200

oz.

Other(3)

$

39,989

$

34,137

Gold

19,600

oz.

14,500

oz.

Silver

175,300

oz.

303,700

oz.

Total stream revenue

$

308,863

$

325,688

Royalty(2):

Peñasquito

$

31,768

$

38,739

Gold

408,300

oz.

530,500

oz.

Silver

22.6

Moz.

23.5

Moz.

Lead

106.6

Mlbs.

133.8

Mlbs.

Zinc

289.6

Mlbs.

319.3

Mlbs.

Cortez

Gold

$

29,413

190,600

oz.

$

39,475

241,300

oz.

Other(3)

Various

$

70,182

N/A

$

81,145

N/A

Total royalty revenue

$

131,363

$

159,359

Total revenue

$

440,226

$

485,047

(1)

Reported production relates to the amount of stream metal sales and the metal sales attributable to our royalty interests for the nine months ended September 30, 2022, and 2021, and may differ from the operators’ public reporting.

(2)

Refer to “Property Developments” above for a discussion of recent developments at principal properties.

(3)

Individually, except for our stream interest at Rainy River, which contributed 6% of total revenue for the nine months ended September 30, 2022 and 2021, no stream or royalty included within the “Other” category contributed greater than 5% of our total revenue for either period.

The decrease in our total revenue resulted primarily from lower gold sales at Andacollo and Pueblo Viejo and lower gold production at Cortez and Peñasquito. The decrease was offset by $26.1 million of new revenue from the NX Gold and Khoemacau streams which were not in full production during the prior year comparable period.

Cost of sales, which excludes depreciation, depletion and amortization, decreased to $69.7 million for the nine months ended September 30, 2022, from $73.4 million for the nine months ended September 30, 2021. The decrease, when compared to the prior period,year period. We had $400 million outstanding under our revolving credit facility as of June 30, 2023, compared to zero outstanding as of June 30, 2022.  The current all-in borrowing rate under our revolving credit facility was primarily due to a decrease in gold and silver sales at Pueblo Viejo and lower gold sales at Andacollo, offset by higher silver sales at Khoemacau. Stream deliveries from Khoemacau began in the prior year comparable period. Cost6.7% as of sales is specific to our stream agreements and is the result of our 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 prevailingJune 30, 2023.

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market price of gold when purchased, whileFor 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.

Gold and silver ounces and copper pounds purchased and sold during the ninesix months ended SeptemberJune 30, 2022 and 2021, and gold and silver ounces and copper pounds in inventory as of September 30, 2022, and December 31, 2021, for our streaming interests were as follows:

Revenue and Reported Production Subject to Our Stream and Royalty Interests

(Amounts in thousands, except reported production oz. and lbs.)

Nine Months Ended

Nine Months Ended

As of

As of

September 30, 2022

September 30, 2021

September 30, 2022

December 31, 2021

Gold Stream

    

Purchases (oz.)

    

Sales (oz.)

    

Purchases (oz.)

    

Sales (oz.)

    

Inventory (oz.)

    

Inventory (oz.)

Mount Milligan

52,200

47,600

43,800

44,700

8,700

4,100

Pueblo Viejo

24,600

24,300

30,100

31,400

8,900

8,600

Andacollo

19,300

21,500

28,400

29,000

2,200

Wassa

12,800

12,500

12,300

13,200

2,000

1,600

Other

20,500

19,600

15,800

14,500

3,100

2,200

Total

129,400

125,500

130,400

132,800

22,700

18,700

Nine Months Ended

Nine Months Ended

As of

As of

September 30, 2022

September 30, 2021

September 30, 2022

December 31, 2021

Silver Stream

    

Purchases (oz.)

    

Sales (oz.)

    

Purchases (oz.)

    

Sales (oz.)

    

Inventory (oz.)

    

Inventory (oz.)

Pueblo Viejo

900,700

897,600

1,030,500

1,052,100

319,100

316,000

Khoemacau

652,800

580,400

105,800

4,500

114,400

42,000

Other

170,600

175,300

280,500

303,700

29,600

34,300

Total

1,724,100

1,653,300

1,416,800

1,360,300

463,100

392,300

Nine Months Ended

Nine Months Ended

As of

As of

September 30, 2022

September 30, 2021

September 30, 2022

December 31, 2021

Copper Stream

    

Purchases (Mlbs.)

    

Sales (Mlbs.)

    

Purchases (Mlbs.)

    

Sales (Mlbs.)

    

Inventory (Mlbs.)

    

Inventory (Mlbs.)

Mount Milligan

11.2

10.3

11.2

12.2

1.8

0.9

General and administrative costs increased to $25.8 million for the nine months ended September 30, 2022, from $21.3 million for the nine months ended September 30, 2021. The increase was primarily due to an increase in employee-related costs including non-cash compensation expense, as well as higher costs associated with certain environmental, social and governance initiatives.

Depreciation, depletion and amortization decreased to $129.7 million for the nine months ended September 30, 2022, from $139.9 million for the nine months ended September 30, 2021. The decrease was primarily due to lower gold sales at Mount Milligan and Andacollo and lower gold and silver sales at Pueblo Viejo. Refer to Note 3 of our notes to consolidated financial statements for further discussion on the decrease in depletion rates at Mount Milligan. The decrease in depletion was partially offset by the additional depletion from the newly acquired Khoemacau and NX Gold streams when compared to the prior year period.

Interest and other expense increased to $11.1 million for the nine months ended September 30, 2022, from $4.9 million for the nine months ended September 30, 2021. The increase was primarily due to higher interest expense as a result of the $500 million draw on the revolving credit facility in July 2022 as part of the Cortez Complex Royalty acquisition discussed earlier in this MD&A and foreign exchange losses related to the GBR acquisition.

For the nine months ended September 30, 2022,2023, we recorded income tax expense totaling $20.3of $17.9 million, compared with income tax expense of $39.2$9.4 million for the ninesix months ended SeptemberJune 30, 2021.2022. The income tax expense resulted in an effective tax rate of 10.0%12.3% in the current period, compared with 16.0%6.4% for the ninesix months ended SeptemberJune 30, 2021.2022.  The ninesix months ended SeptemberJune 30, 2023 and June 30, 2022, included a discrete income tax benefitbenefits attributable to the release of a valuation allowance on certain deferred tax assets.  The nine months ended September 30, 2021, included a discrete tax benefit attributable to the settlement of an uncertain tax position with a foreign jurisdiction.

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Liquidity and Capital Resources

Overview

At SeptemberJune 30, 2022,2023, we had current assets of $181.8$165.3 million compared to current liabilities of $64.5$63.1 million, which resulted in working capital of $117.3$102.2 million and a current ratio of approximately 3 to 1. This compares to current assets of $216.0$185.8 million and current liabilities of $61.4$63.6 million at December 31, 2021,2022, resulting in working capital of $154.6$122.2 million and a current ratio of approximately 43 to 1. The decrease in working capital was primarily due to a decrease in our available cash, as a result ofwhich resulted from increased debt repayments during the Cortez Complex Royalty and GBR acquisitions.current period.

During the ninesix months ended SeptemberJune 30, 2022,2023, liquidity needs were met from $316.3$216.6 million in net cash provided by operating activities and our available cash resources. As of SeptemberJune 30, 2022,2023, we had $550$600 million available and $450$400 million outstanding under our revolving credit facility.

Working capital, combined with available capacity under our revolving credit facility, resulted in approximately $667$702 million of total liquidity at SeptemberJune 30, 2022. 2023. We were in compliance with each financial covenant under the revolving credit facility as of SeptemberJune 30, 2022.2023. Refer to Note 54 of our notes to consolidated financial statements and below under Recent Liquidity Developments 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, including any conditional funding schedules. Our long-term capital requirements are primarily affected by our ongoing acquisition activities. We currently, and generally at any time, have acquisition opportunities in various stages of active review. In the event of one or more substantial stream or royalty interest or other acquisitions, we may seek additional debt or equity financing as necessary. We occasionally borrow and repay amounts under our revolving credit facility and may do so in the future.

Please refer to our risk factors included in Part 1, Item 1A of our Transition Report2022 10-K for a discussion of certain risks that may impact our liquidity and capital resources.

Recent Liquidity Developments

Revolving Credit Facility DrawAmendment

In July 2022,On June 28, 2023, we borrowed $500 million underentered into a fifth amendment to our revolving credit facility dated as of June 2, 2017. The fifth amendment extended the scheduled maturity date from July 7, 2026 to fundJune 28, 2028, replaced LIBOR with Secured Overnight Financing Rate (“Term SOFR”) as a benchmark interest rate and made certain other administrative changes to the acquisition of the Cortez Complex Royalty, and on Septemberexisting revolving credit facility.

Revolving Credit Facility Repayment

On June 6, 2022,2023, we made a $50$100 million principal payment towards the outstanding balance on the revolving credit facility leaving $550$600 million available as of SeptemberJune 30, 2022.2023.

Cash Flows

Operating Activities

Net cash provided by operating activities totaled $316.3$216.6 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $343.0$221.3 million for the ninesix months ended SeptemberJune 30, 2021.2022. The decrease was primarily due to ahigher interest payments on

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amounts outstanding under our revolving credit facility during the current period. The decrease was partially offset by an increase in cash proceeds received from our stream interests, net of cost of sales, of approximately $16.9 millionwhen compared to the prior year period. Higher income taxes paid due to the change in year-end of $9.8 million compared to the prior year period also contributed to the decrease.

Investing Activities

Net cash used in investing activities totaled $716.5$2.8 million for the ninesix months ended SeptemberJune 30, 2022,2023, compared to $401.6$37.9 million for the ninesix months ended SeptemberJune 30, 2021.2022. The increase over the prior year perioddecrease was primarily due to higherfewer acquisitions of royalty and stream interests duecompared to the GBR and Cortez Complex Royalty acquisitions.prior year period.

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Financing Activities

Net cash provided by financing activities totaled $378.9 million for the nine months ended September 30, 2022, compared to net cash used in financing activities of $163.1totaled $226.2 million for the ninesix months ended SeptemberJune 30, 2021.2023, compared to $46.4 million for the six months ended June 30, 2022. The increase was primarily due to a $500repayments of $175 million draw on our revolving credit facility during the current year period.

Recently Adopted Accounting Standards and Critical Accounting Policies

Refer to Note 1 of our notes to consolidated financial statements for further discussion on any recently adopted accounting standards. Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Transition Report2022 10-K for discussion on our critical accounting policies.

Property Mineral Reserve and Mineral Resource Update for Cortez

Below is certain updated information regarding the estimates of mineral resources and mineral reserves (as such terms are defined in Subpart 1300 of Regulation S-K (“SK1300”)) previously reported by the operator of Cortez and included in our Transition Report on Form 10-KT (“Form 10-KT”) and our Current Report on Form 8-K dated April 12, 2022.

On August 1, 2022, we acquired an additional royalty at Cortez that we refer to as the Cortez Complex Royalty.  The updated disclosures herein reflect the change in Royal Gold’s royalty position on the Cortez property as a result of that acquisition.

We own various royalty positions at Cortez, including: (1) overlapping royalties covering the Pipeline and Crossroads deposits (known as GSR1, GSR2, GSR 3, NVR1 and NVR1C); (2) a 1% NVR on a portion of the Goldrush development property (NVR2); and (3) the Cortez Complex Royalty. The Cortez Complex Royalty covers an area including the Cortez mine operational area (including the Fourmile development project owned by Barrick). Refer to footnote 3 in each of the tables below for further detail regarding our royalties at Cortez.

Deductions under the Cortez Complex Royalty are limited to third-party royalties that existed prior to the creation of the royalty in 2008, which include the royalties listed under (1) and (2) above. The Cortez Complex Royalty is not subject to any stepdowns or caps.  Based on the information available to Royal Gold, the Cortez Complex Royalty does not cover the existing deposits in the Robertson property.  

As a result of the acquisition of the Cortez Complex Royalty, there has been an increase of 380% in gold mineral reserves and an increase of 1230% in measured and indicated gold mineral resources attributable to our royalty interests at Cortez beyond the resources and reserves previously disclosed in detail in our Transition Report.  

The disclosures below are derived from the Annual Information Form of Barrick, dated March 18, 2022, attached as Exhibit 99.1 to Barrick’s Annual Report on Form 40-F for the year ended December 31, 2021, which reports resources and reserves for Cortez pursuant to National Instrument 43-101 and CIM Standards, and nonpublic mineral resource and reserve updates provided by Barrick to us specific to the portions of the property to which our legacy royalty interests apply. Measurement units presented in this section are US standard units. There may be rounding differences due to unit conversions.

Table 1 Cortez – Summary of Gold Mineral Resources at December 31, 2021, Based on $1,500 Au (1)(2)(3)

Amount

Tons (M)

Au Grade

opt

Cut-Off Grade

Metallurgical Recovery

Measured Mineral Resources

0.8

0.203

(4)

(4)

Indicated Mineral Resources

28.1

0.099

(4)

(4)

Measured + Indicated Mineral Resources

28.9

0.102

(4)

(4)

Inferred Mineral Resources

47.5

0.159

(4)

(4)

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(1)

Mineral resources are estimated by Barrick as at December 31, 2021, and are shown exclusive of mineral reserves

(2)

Cortez mineral resources as reported by Barrick under its March 18, 2022, filing and separately to us are determined pursuant to CIM Standards.

(3)

We control various royalty positions at Cortez, including (i) the overlapping royalties covering the Pipeline and Crossroads deposits (known as GSR1, GSR2, GSR 3, NVR1 and NVR1C), which are equivalent to an approximate 8% gross smelter return royalty and cover 5.7 million tons of measured and indicated mineral resources at an average grade of 0.039 opt;  (ii) NVR2 over a portion of the Goldrush property, which is a 1% NVR covering 1 million tons of indicated resource averaging 0.129 opt and 2.3 million tons of inferred resources grading 0.136 opt. and (iii)  The Cortez Complex Royalty is an effective 1.2% gross royalty on the Cortez Complex at gold prices above $900 per ounce. Our resources for Cortez may vary from other information published by Barrick because we exclude any amounts for areas not covered by our royalties. Our royalties for Cortez cover all metals, but Barrick reports only gold resources for Cortez.

(4)

Specific cutoff grades and metallurgical recoveries used for resource estimates for Cortez have not been disclosed by Barrick.

Table 2 Cortez – Summary of Gold Mineral Reserves at December 31, 2021, Based on $1,200 Au and $16.50 Ag (1)(2)(3)

Amount

Tons (M)

Au Grade

opt

Cut-Off Grade

Metallurgical Recovery

Proven Mineral Reserves

4.0

0.126

(4)

(4)

Probable Mineral Reserves

113.8

0.122

(4)

(4)

Total Mineral Reserves

117.7

0.122

(4)

(4)

contr

(1)

Mineral reserves are estimated by Barrick as at December 31, 2021.

(2)

Cortez mineral reserves are reported by Barrick pursuant to CIM Standards.

(3)

We control various royalty positions at Cortez, including (i) the overlapping royalties covering the Pipeline and Crossroads deposits (known as GSR1, GSR2, GSR 3, NVR1 and NVR1C), which are equivalent to an approximate 8% gross smelter return royalty and cover 62.4 million tons of probable reserves at an average grade of 0.048 opt, (ii) (ii) NVR2 over a portion of the Goldrush property, which is a 1% NVR covering 5.4 million tons of probable reserves averaging 0.208 opt and (iii)   The Cortez Complex Royalty is an effective 1.2% gross royalty on the Cortez Complex at gold prices above $900 per ounce. Our reserves for Cortez may vary from other information published by Barrick because we exclude any amounts for areas not covered by our royalties. Our royalties for Cortez cover all metals, but Barrick reports only gold reserves for the property.

(4)

Reserves have been estimated based on an assumed gold price of $1,200 per ounce and an assumed silver price of $16.50 per ounce. Specific cutoff grades and metallurgical recoveries used for mineral reserve estimates for Cortez have not been disclosed by Barrick.

Forward-Looking Statements

This report and our other public communications include “forward-looking statements” within the meaning of U.S. federal securities laws. Forward-looking statements are any statements other than statements of historical fact. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from these statements.

Forward-looking statements are often identified by words like “will,” “may,” “could,” “should,” “would,” “believe,” “estimate,” “expect,” “anticipate,” “plan,” “forecast,” “potential,” “intend,” “continue,” “project,” or negatives of these words or similar expressions. Forward-looking statements include, among others, statementstatements regarding the following: volatilitythe proposed acquisition of metal pricesnew royalty interests on the producing Serrote and factors impacting same;Santa Rita mines in Brazil, including the details of the anticipated royalties thereon and funding of the purchase price; our expected financial performance and outlook, including sales volume, revenue, expenses, and tax rates, earnings or cash flow;rates; operators’ expected operating and financial performance, including production, deliveries, mine plans, mine lives, facilities,estimates of mineral resources and mineral reserves, access to and adequacy of water sources, development, cash flows and liquidity, capital requirements, capital expenditures and completion of feasibility studies, permitting activities and environmental impact studies; effectsresolution of the pandemic; estimateslabor strikes; receipt of fair valuemetal deliveries; anticipated liquidity, capital resources, financing and potential impairments; tax changes; deferralstockholder returns; deliveries of deferred silver ounces from Pueblo Viejo; impact on stream deliveries due to rainfall and the resulting temporary shutdown of operations at Andacollo; anticipated stronger performance at Cortezprices for the fourth quarter of 2022; adequacy of our current financial resourcesgold, silver, copper, nickel and funds from operations to cover anticipated expenditures for the foreseeable future; seeking additional debt or equity

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financing as necessary; borrowing and repaying amounts under our revolving credit facility; and disclosure controls and procedures and internal controls over financial reporting.other metals.

The risks and uncertaintiesFactors that could cause actual results to differ materially from those in forward lookingthese forward-looking statements include, without limitation,among others, the following: a lower-price environment for gold, silver, copper, nickel or other metals; operating activities or financial performance of operators,properties on which we hold stream or royalty interests, including inaccuracies in the operator’s disclosures, variations between actual and forecasted performance, the operator’soperators’ ability to complete projects on schedule and as planned, the operator’soperators’ changes to mine plans and mineral reserves and mineral resources the operator’s(including updated mineral reserve and mineral resource information), liquidity needs, mining and environmental hazards, labor disputes, distribution and supply chain disruptions, permitting and licensing issues, contractual issues involving our stream or royalty agreement,agreements, or operational disruptions due to public health crises; environmental risks, including those caused by climate change; potential cyber-attacks, including ransomware;disruptions; the timing of deliveries of metals from operators; risks associated with doing business in foreign countries; the impact of inadequately assessing new acquisitions; increased competition for stream and royalty interests; effectsenvironmental risks, included those caused by climate change; the risk that the conditions to closing for the potential acquisition of globalroyalties on the Serrote and regionalSanta Rita mines may not be satisfied; delays in the completion of the plant expansion at Pueblo Viejo; potential cyber-attacks, including ransomware; our ability to identify, finance, value and complete acquisitions; adverse economic and market conditions, including as a resultconditions; impact of government policies, war, natural disasters,health epidemics and public health issues;pandemics; changes in laws or regulations governing us, operators or operating properties; changes in management and key employees; the risk that any announcement relating to an acquisition could have adverse effects on the market price of Royal Gold’s common stock; the risk of litigation related to acquisitions; and the diversion of management time from ongoing business operations due to acquisition-related issues; and other risk factors described in our reports filed with the Securities and Exchange Commission, including our Transition Report.2022 10-K. Most of these factors are beyond our ability to predict or control.  Other unpredictable or unknown factors not discussed in this presentation could also have material adverse effects on forward looking statements.  

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Forward-looking statements speak only as of the date on which they are made. We disclaim any obligation to update any

forward-looking statements, except as required by law. Readers are cautioned not to put undue reliance on forward-looking statements.

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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, 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, inflation and the strength of the U.S. dollar relative to other currencies. Please see the risk factor entitled “Our revenue is subject to volatility in metal prices, which could negatively affect our results of operations or cash flow.,” under Part I, Item 1A of our Transition Report,2022 10-K, for more information about risks associated with metal price volatility.

During the ninesix months ended SeptemberJune 30, 2022,2023, we reported revenue of $440.2$314.4 million, with an average gold price for the period of $1,824$1,932 per ounce, an average silver price of $21.92$23.31 per ounce, and an average copper price of $4.11$3.95 per pound. The table below shows the impact that a 10% increase or decrease in the average price of the specified metal would have had on our total reported revenue for the ninesix months ended SeptemberJune 30, 2022:2023:

Metal

Percentage of Total Reported Revenue Associated with Specified Metal

Amount by Which Total Reported Revenue Would Have Increased or Decreased If Price of Specified Metal Had Averaged 10% Higher or Lower in Period

Gold

73%74%

$32.823.7 million

Silver

14%

$2.4 million

Copper

12%10%

$9.7 million

Silver

11%

$2.55.7 million

ITEM 4.     CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer (the principal executive officer) and Chief Financial Officer (the principal financial and accounting officer), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of SeptemberJune 30, 2022.2023. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of SeptemberJune 30, 2022,2023, at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended SeptemberJune 30, 2022,2023, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. 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 Royal Gold have been detected.

PART II.    OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS

None.

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ITEM 1A.    RISK FACTORS

There have been no material changes to the risk factors included in the section entitled “Risk Factors” of our Transition Report.2022 10-K.

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

Issuer Purchases of Equity Securities

Period

(a) Total Number of Shares Purchased(1)

(b) Average Price Paid Per Share

(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan or Programs

July 2022April 2023

N/A

N/A

August 2022May 2023

N/A

N/A

September 2022June 2023

N/A

N/A

Total

$0.00

N/A

N/A

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.     MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5.     OTHER INFORMATION

None.On June 14, 2023, Paul Libner, Chief Financial Officer and Treasurer of Royal Gold, adopted a trading plan that is intended to satisfy the affirmative defense of Rule 10b5-1(c) of the Securities Exchange Act of 1934, as amended, regarding the sale of up to 1,700 shares of common stock of Royal Gold. The plan provides that sales may begin on September 13, 2023, and will end on September 30, 2024, or such earlier date as all 1,700 shares are sold.

No non-Rule 10b5-1 trading arrangements (as defined by Item 408(a) of Regulation S-K) were entered into by a Section 16 director or officer of the Company during the quarter.

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ITEM 6.     EXHIBITS

Exhibit
Number

    

Description

3.1

AmendedCertificate of Restatement of Certificate of Incorporation (filed as Exhibit 3.2(d) of the Current Report on Form 8-K on March 8, 2023, and incorporated herein by reference)

3.2

Certificate of Amendment to the Restated BylawsCertificate of Royal Gold, Inc.Incorporation (filed as Exhibit 3.1 of the Current Report on Form 8-K on AugustMay 26, 2022,2023, and incorporated herein by reference)

10.1

Royalty Sale and PurchaseFifth Amendment to Revolving Credit Facility Credit Agreement, dated August 1, 2022, between Royal Gold, Inc. and its wholly owned subsidiary RG Royalties, LLC, as purchaser parties, and Kennecott Royalty Company, as sellerof June 28, 2023, together with Annex A (filed as Exhibit 10.1 of the Current Report on Form 8-K on August 2, 2022,February 16, 2023, and incorporated herein by reference).

Certain portions of this Exhibit were redacted pursuant to Item 601 (b)(10) of Regulations S-K. The Company agrees to furnish supplementally an unredacted copy of this Exhibit to the SEC upon request.

31.1*

Certification of Chief Executive 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.

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.

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*

The following financial statements from Royal Gold, Inc.’s Quarterly Report on Form 10-Q for the quarter ended SeptemberJune 30, 2022,2023, formatted in Inline XBRL: (a) Consolidated Statements of Cash Flows, (b) Consolidated Statements of Operations, (c) Consolidated Statements of Comprehensive Income, (d) Consolidated Balance Sheets, and (e) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

104*

The cover page from Royal Gold, Inc.’s Quarterly Report on Form 10-Q for the quarter ended SeptemberJune 30, 2022,2023, formatted in Inline XBRL (included as Exhibit 101).

*

Filed herewith.

Furnished herewith.

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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: NovemberAugust 3, 20222023

By:

/s/ William Heissenbuttel

William Heissenbuttel

President and Chief Executive Officer

(Principal Executive Officer)

Date:  NovemberAugust 3, 20222023

By:

/s/ Paul Libner

Paul Libner

Chief Financial Officer and Treasurer

(Principal Financial and Accounting Officer)

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