ROYAL GOLD INC 10-Q

ITEM 1. FINANCIAL STATEMENTS ROYAL GOLD, INC. Consolidated Balance Sheets (Unaudited, amounts in thousands except share data) September 30, 2024 December 31, 2023 ASSETS Cash and equivalents $ 127,882 $ 104,167 Royalty receivables 50,118 48,884 Income tax receivable 10,190 2,676 Stream inventory 11,620 9,788 Prepaid expenses and other 2,295 1,911 Total current assets 202,105 167,426 Stream and royalty interests, net (Note 3) 3,021,324 3,075,574 Other assets 78,196 118,057 Total assets $ 3,301,625 $ 3,361,057 LIABILITIES Accounts payable $ 13,245 $ 11,441 Dividends payable 26,320 26,292 Income tax payable 30,386 15,557 Other current liabilities 16,372 19,132 Total current liabilities 86,323 72,422 Debt (Note 4) — 245,967 Deferred tax liabilities 132,857 134,299 Mount Milligan deferred liability (Note 5) 25,000 — Other liabilities 6,517 7,728 Total liabilities 250,697 460,416 Commitments and contingencies (Note 12) 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 65,689,357 and 65,631,760 shares outstanding, respectively 657 656 Additional paid-in capital 2,225,788 2,221,039 Accumulated earnings 812,192 666,522 Total Royal Gold stockholders’ equity 3,038,637 2,888,217 Non-controlling interests 12,291 12,424 Total equity 3,050,928 2,900,641 Total liabilities and equity $ 3,301,625 $ 3,361,057 The accompanying notes are an integral part of these consolidated financial statements. 3 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, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Revenue (Note 6) $ 193,837 $ 138,617 $ 516,835 $ 453,051 Costs and expenses Cost of sales (excludes depreciation, depletion and amortization) 27,192 21,351 73,116 69,738 General and administrative 10,102 9,927 32,025 30,020 Production taxes 1,520 1,671 4,550 4,934 Depreciation, depletion and amortization 36,177 40,106 110,689 124,847 Total costs and expenses 74,991 73,055 220,380 229,539 Operating income 118,846 65,562 296,455 223,512 Fair value changes in equity securities ( 425 ) ( 462 ) ( 42 ) ( 171 ) Interest and other income 626 2,436 4,410 7,348 Interest and other expense ( 1,207 ) ( 7,285 ) ( 8,330 ) ( 24,867 ) Income before income taxes 117,840 60,251 292,493 205,822 Income tax expense (Note 9) ( 21,510 ) ( 10,752 ) ( 67,535 ) ( 28,652 ) Net income and comprehensive income 96,330 49,499 224,958 177,170 Net income and comprehensive income attributable to non-controlling interests ( 88 ) ( 162 ) ( 343 ) ( 509 ) Net income and comprehensive income attributable to Royal Gold common stockholders $ 96,242 $ 49,337 $ 224,615 $ 176,661 Net income per share attributable to Royal Gold common stockholders: Basic earnings per share $ 1.46 $ 0.75 $ 3.41 $ 2.69 Basic weighted average shares outstanding 65,670,381 65,619,406 65,652,934 65,606,681 Diluted earnings per share $ 1.46 $ 0.75 $ 3.41 $ 2.68 Diluted weighted average shares outstanding 65,795,014 65,757,076 65,767,668 65,743,114 Cash dividends declared per common share $ 0.40 $ 0.375 $ 1.20 $ 1.125 The accompanying notes are an integral part of these consolidated financial statements. 4 ROYAL GOLD, INC. Consolidated Statements of Changes in Stockholders’ Equity Three months ended September 30, 2024, and 2023 (unaudited, amounts in thousands except share data) Royal Gold Stockholders Common Shares Additional Paid-In Capital Accumulated Earnings Non-controlling Interests Total Equity Shares Amount Balance at June 30, 2024 65,656,625 $ 656 $ 2,225,942 $ 742,270 $ 12,325 $ 2,981,193 Stock-based compensation and related share issuances 32,732 1 ( 154 ) — — ( 153 ) Distributions to non-controlling interests — — — — ( 122 ) ( 122 ) Net income and comprehensive income — — — 96,242 88 96,330 Dividends declared — — — ( 26,320 ) — ( 26,320 ) Balance at September 30, 2024 65,689,357 $ 657 $ 2,225,788 $ 812,192 $ 12,291 $ 3,050,928 Royal Gold Stockholders Common Shares Additional Paid-In Capital Accumulated Earnings Non-controlling Interests Total Equity Shares Amount Balance at June 30, 2023 65,609,736 $ 656 $ 2,217,559 $ 605,347 $ 12,331 $ 2,835,893 Stock-based compensation and related share issuances 22,024 — 1,136 — — 1,136 Distributions to non-controlling interests — — — — ( 97 ) ( 97 ) Net income and comprehensive income — — — 49,337 162 49,499 Dividends declared — — — ( 24,649 ) — ( 24,649 ) Balance at September 30, 2023 65,631,760 $ 656 $ 2,218,695 $ 630,035 $ 12,396 $ 2,861,782 ROYAL GOLD, INC. Consolidated Statements of Changes in Stockholders’ Equity Nine months ended September 30, 2024, and 2023 (unaudited, amounts in thousands except share data) Royal Gold Stockholders Common Shares Additional Paid-In Capital Accumulated Earnings Non-controlling Interests Total Equity Shares Amount Balance at December 31, 2023 65,631,760 $ 656 $ 2,221,039 $ 666,522 $ 12,424 $ 2,900,641 Stock-based compensation and related share issuances 57,597 1 4,749 — — 4,750 Distributions to non-controlling interests — — — — ( 476 ) ( 476 ) Net income and comprehensive income — — — 224,615 343 224,958 Dividends declared — — — ( 78,945 ) — ( 78,945 ) Balance at September 30, 2024 65,689,357 $ 657 $ 2,225,788 $ 812,192 $ 12,291 $ 3,050,928 Royal Gold Stockholders Common Shares Additional Paid-In Capital Accumulated Earnings Non-controlling Interests Total Equity Shares Amount 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 39,163 — 5,572 — — 5,572 Distributions to non-controlling interests — — — — ( 489 ) ( 489 ) Net income and comprehensive income — — — 176,661 509 177,170 Dividends declared — — — ( 73,940 ) — ( 73,940 ) Balance at September 30, 2023 65,631,760 $ 656 $ 2,218,695 $ 630,035 $ 12,396 $ 2,861,782 The accompanying notes are an integral part of these consolidated financial statements. 5 ROYAL GOLD, INC. Consolidated Statements of Cash Flows (Unaudited, amounts in thousands) Nine Months Ended September 30, 2024 September 30, 2023 Cash flows from operating activities: Net income and comprehensive income $ 224,958 $ 177,170 Adjustments to reconcile net income and comprehensive income to net cash provided by operating activities: Depreciation, depletion and amortization 110,689 124,847 Non-cash employee stock compensation expense 9,313 7,342 Fair value changes in equity securities 42 171 Deferred tax benefit 4,908 ( 6,011 ) Other 717 592 Changes in assets and liabilities: Royalty receivables ( 1,234 ) 14,678 Stream inventory ( 1,832 ) 2,805 Income tax receivable ( 7,513 ) ( 11,182 ) Prepaid expenses and other assets 11,240 ( 3,367 ) Accounts payable 1,804 1,940 Income tax payable 14,830 6,428 Mount Milligan deferred liability 25,000 — Other liabilities ( 4,472 ) ( 709 ) Net cash provided by operating activities $ 388,450 $ 314,704 Cash flows from investing activities: Acquisition of stream and royalty interests ( 55,683 ) ( 2,678 ) Proceeds from Khoemac a u debt facility 25,000 — Other ( 91 ) ( 149 ) Net cash used in investing activities $ ( 30,774 ) $ ( 2,827 ) Cash flows from financing activities: Repayment of debt ( 250,000 ) ( 250,000 ) Net payments from issuance of common stock ( 4,564 ) ( 1,373 ) Common stock dividends ( 78,917 ) ( 73,918 ) Other ( 480 ) ( 2,271 ) Net cash used in financing activities $ ( 333,961 ) $ ( 327,562 ) Net increase (decrease) in cash and equivalents 23,715 ( 15,685 ) Cash and equivalents at beginning of period 104,167 118,586 Cash and equivalents at end of period $ 127,882 $ 102,901 The accompanying notes are an integral part of these consolidated financial statements. 6 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 and obligation 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. 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 nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the calendar year ending December 31, 2024. These interim unaudited consolidated financial statements should be read in conjunction with our Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on February 15, 2024 (“2023 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 Back River Royalties On June 26, 2024, International Royalty Corporation, a wholly-owned subsidiary of Royal Gold, acquired a 0.7 % net smelter return ("NSR") royalty (the "Hill Royalty") that declines by 50 % after $ 5 million Canadian dollars in royalty revenue is received, and a 26.25 % interest in a 5 % gross smelter return royalty (the "KM Royalty") that is payable after approximately 780,000 ounces have been produced on the Back River Gold Project ("Back River") for aggregate cash consideration of $ 51 million. Payments for the Hill Royalty are deductible from the KM Royalty. Back River is operated by B2Gold Corporation and is located in Western Nunavut, Canada. The Back River royalties have been accounted for as an asset acquisition and the $ 51 million cash consideration, plus direct transaction costs, have been allocated to development ($ 42 million) and exploration ($ 9 million) stage royalty interests within Stream and royalty interests, net on our consolidated balance sheets. The purchase price was funded with available cash on hand. 7 ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) 3. STREAM AND ROYALTY INTERESTS, NET The following tables summarize our stream and royalty interests, net as of September 30, 2024 and December 31, 2023. As of September 30, 2024 (Amounts in thousands): Cost Accumulated Depletion Net Production stage stream interests: Mount Milligan $ 790,635 $ ( 455,549 ) $ 335,086 Pueblo Viejo 610,404 ( 306,451 ) 303,953 Andacollo 388,182 ( 173,673 ) 214,509 Khoemac a u 265,911 ( 55,365 ) 210,546 Rainy River 175,727 ( 82,771 ) 92,956 Other 237,059 ( 149,939 ) 87,120 Total production stage stream interests 2,467,918 ( 1,223,748 ) 1,244,170 Production stage royalty interests: Cortez (Legacy Zone and CC Zone) 353,850 ( 76,378 ) 277,472 Voisey's Bay 205,724 ( 123,350 ) 82,374 Red Chris 116,187 ( 5,966 ) 110,221 Peñasquito 99,172 ( 63,543 ) 35,629 Other 509,717 ( 416,069 ) 93,648 Total production stage royalty interests 1,284,650 ( 685,306 ) 599,344 Total production stage stream and royalty interests 3,752,568 ( 1,909,054 ) 1,843,514 Development stage stream interests: Other 12,038 — 12,038 Development stage royalty interests: Back River 42,948 — 42,948 La Fortuna 35,140 — 35,140 Other 30,844 — 30,844 Total development stage stream and royalty interests 120,970 — 120,970 Exploration stage stream interests: Xavantina 19,563 — 19,563 Exploration stage royalty interests: Cortez (Legacy Zone and CC Zone) 456,479 — 456,479 Great Bear 209,106 — 209,106 Pascua-Lama 177,690 — 177,690 Red Chris 48,895 — 48,895 Côté 29,610 — 29,610 Other 115,497 — 115,497 Total exploration stage stream and royalty interests 1,056,840 — 1,056,840 Total stream and royalty interests, net $ 4,930,378 $ ( 1,909,054 ) $ 3,021,324 8 ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) As of December 31, 2023 (Amounts in thousands): Cost Accumulated Depletion Net Production stage stream interests: Mount Milligan $ 790,635 $ ( 430,106 ) $ 360,529 Pueblo Viejo 610,404 ( 299,354 ) 311,050 Andacollo 388,182 ( 165,553 ) 222,629 Khoemac a u 265,911 ( 41,635 ) 224,276 Rainy River 175,727 ( 74,858 ) 100,869 Other 232,703 ( 132,043 ) 100,660 Total production stage stream interests 2,463,562 ( 1,143,549 ) 1,320,013 Production stage royalty interests: Cortez (Legacy Zone and CC Zone) 353,850 ( 61,891 ) 291,959 Voisey's Bay 205,724 ( 121,000 ) 84,724 Red Chris 116,187 ( 3,758 ) 112,429 Peñasquito 99,172 ( 59,900 ) 39,272 Other 448,899 ( 408,522 ) 40,377 Total production stage royalty interests 1,223,832 ( 655,071 ) 568,761 Total production stage stream and royalty interests 3,687,394 ( 1,798,620 ) 1,888,774 Development stage stream interests: Other 12,038 — 12,038 Development stage royalty interests: Côté 45,421 — 45,421 La Fortuna 35,140 — 35,140 Other 45,992 — 45,992 Total development stage stream and royalty interests 138,591 — 138,591 Exploration stage stream interests: Xavantina 19,565 — 19,565 Exploration stage royalty interests: Cortez (Legacy Zone and CC Zone) 456,479 — 456,479 Great Bear 209,106 — 209,106 Pascua-Lama 177,690 — 177,690 Red Chris 48,895 — 48,895 Côté 29,610 — 29,610 Other 106,864 — 106,864 Total exploration stage stream and royalty interests 1,048,209 — 1,048,209 Total stream and royalty interests, net $ 4,874,194 $ ( 1,798,620 ) $ 3,075,574 9 ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) 4. DEBT Our debt as of September 30, 2024 and December 31, 2023 consists of the following (amounts in thousands): As of September 30, 2024 As of December 31, 2023 Principal Debt Issuance Costs (1) Total Principal Debt Issuance Costs Total (Amounts in thousands) (Amounts in thousands) Revolving credit facility $ — $ — $ — $ 250,000 $ ( 4,033 ) $ 245,967 Total debt $ — $ — $ — $ 250,000 $ ( 4,033 ) $ 245,967 _______________________________________________ (1) Debt issuance costs of $ 3.4 million included within Other assets on our consolidated balance sheets. Revolving credit facility During the three months ended September 30, 2024, we repaid the remaining $ 50 million of outstanding borrowings on our revolving credit facility, making the entire $ 1 billion revolving credit facility available as of September 30, 2024. Interest expense, which includes interest on borrowings and amortization of debt issuance costs, was $ 0.5 million and $ 6.1 million for the three and nine months ended September 30, 2024, respectively, and $ 6.7 million and $ 23.0 million for the three and nine months ended September 30, 2023, respectively. We were in compliance with each financial covenant (leverage ratio and interest coverage ratio) under our revolving credit facility as of September 30, 2024. We may repay any borrowings under our revolving credit facility at any time without premium or penalty. 5. MOUNT MILLIGAN DEFERRED LIABILITY On February 13, 2024, RGLD Gold AG, a subsidiary of the Company, entered into a Processing Cost Support Agreement (the "Mount Milligan Cost Support Agreement") with Centerra Gold Inc. ("Centerra") with respect to the Mount Milligan Mine ("Mount Milligan") for cash consideration of $ 24.5 million, 50,000 ounces ("Deferred Gold Consideration") of gold to be delivered in the future and a free cash flow interest. The cost support allowed for the extension of the mine from 2032 to 2035 and the potential to extend the mine life beyond 2035. The value of the cash consideration and free cash flow interest received from Centerra is recorded as a deferred liability in our consolidated balance sheets as of September 30, 2024. This amount will be amortized as we provide future cost support to Centerra under the Mount Milligan Cost Support Agreement on a units of production basis over the Mount Milligan mine life beginning with the first cost support payment made after the First Threshold (defined below) is met. The key features of the Mount Milligan Cost Support Agreement are discussed below. Deferred Gold Consideration The Deferred Gold Consideration will be delivered in equal installments of 2,500 ounces for a period of 20 quarters commencing on the earlier of June 30, 2030, or the delivery of 375,000 ounces of gold or 30,000 tonnes of copper from metal deliveries referenced by the Mount Milligan Cost Support Agreement with a bill of lading date on or after January 1, 2024. As part of the Deferred Gold Consideration, we are entitled to receive three tranches of 11,111 ounces each (the "Greenstone Deliveries"), with the last delivery expected before year end 2027. Each of the Greenstone Deliveries received shall reduce the number of ounces in any remaining Deferred Gold Consideration delivery on a pro-rata basis. The Deferred Gold Consideration deliveries require no cash payment from the Company, and will be made irrespective of the operating status of Mount Milligan as long as we comply with the terms of the Mount Milligan Cost Support Agreement and existing stream agreement. Each of the Greenstone Deliveries will be delivered to Royal Gold within 30 days of such delivery to Centerra. When the Deferred Gold Consideration is received and subsequently sold, we anticipate the value of the gold ounces sold will be recorded as a deferred liability and amortized on a units of production basis over the mine life of Mount Milligan as we provide future cost support. 10 ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) Cost Support Metal deliveries referenced in the Mount Milligan Cost Support Agreement are those with a bill of lading date on or after January 1, 2024 (the "Reference Date"). Delivery thresholds used to define the periods of cost support are the earlier deliveries of: a. 375,000 ounces of gold or 30,000 tonnes of copper from the Reference Date (the “First Threshold”). b. 665,000 ounces of gold or 60,000 tonnes of copper from the Reference Date (the “Second Threshold”). Near-Term Cost Support Through Approximately 2029 At Centerra’s request, in the event that both the gold price is at or below $ 1,600 per ounce and the copper price is at or below $ 3.50 per pound, for each delivery under the existing Mount Milligan stream agreement, we will pay the lower of either $ 415 per ounce of gold, or 66 % of the spot gold price less $ 435 per ounce, and 35 % of the spot copper price for each pound of copper delivered (the “Pre-Threshold Support”). This near-term cost support will be made available from the Reference Date through to the First Threshold, which is expected to be through approximately 2029. Any Pre-Threshold Support we provide will be recoverable from any cost support calculated after the First Threshold at metal prices above $ 1,600 per ounce of gold and $ 3.50 per pound of copper. For gold, any cost support payment will be reduced by the difference between the gold price and $ 1,600 per ounce. For copper, any cost support payment will be reduced by the difference between the copper price and $ 3.50 per pound. Cost Support from Approximately 2030 Through Approximately 2035 We will provide Centerra cost support payments from the First Threshold until the Second Threshold as follows: a. With respect to gold, the lower of either $ 415 per ounce, or 50 % of the spot gold price less $ 435 per ounce, for each ounce of gold delivered under the existing Mount Milligan stream agreement. b. With respect to copper, 35 % of the spot copper price for each pound of copper delivered under the existing Mount Milligan stream agreement. Cost Support After Approximately 2036 We will provide Centerra cost support payments after the Second Threshold as follows: a. With respect to gold, the lower of either $ 615 per ounce, or 66 % of the spot gold price less $ 435 per ounce, for each ounce of gold delivered under the existing Mount Milligan stream agreement. b. With respect to copper, 51 % of the spot copper price, for each pound of copper delivered. Suspension of Cost Support Our obligation to make long-term cost support payments will be suspended if (and for so long as) Centerra discloses reserve tonnage which, when combined with mining depletion from the Reference Date to the date of such disclosure, is less than the current reserves expected to be processed through to 2035. Suspension of cost support payments will not impact the Deferred Gold Consideration and free cash flow interest, and the cash consideration is not refundable as long as we comply with the terms of the Mount Milligan Cost Support Agreement and the existing stream agreement. Nothing in the Mount Milligan Cost Support Agreement modifies the existing stream agreement, including the payment of $ 435 for each gold ounce delivered and 15 % of the spot price for each pound of copper delivered. 6. 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 11 ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) 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 and obligation 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 at cash average or spot market prices. The sales price for the averaging contracts is determined by the average daily gold, silver or copper spot prices during the term of the contract, typically a consecutive period between ten days and three months (depending on the frequency 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 both averaging and spot sales contracts via physical delivery of the metal to the purchaser (our customer) on the settlement date specified in the contract. Under our 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. 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 2023 10-K. For the three months ended September 30, 2024, royalty revenue that was estimated or was attributable to metal production for a period prior to September 30, 2024, 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. 12 ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) 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, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Stream revenue: Gold $ 100,126 $ 72,540 $ 270,000 $ 231,396 Silver 20,026 14,419 51,653 51,958 Copper 12,900 12,019 36,878 36,628 Total stream revenue $ 133,052 $ 98,978 $ 358,531 $ 319,982 Royalty revenue: Gold $ 46,837 $ 35,993 $ 117,504 $ 109,030 Silver 3,674 441 12,981 6,108 Copper 4,808 1,524 12,077 8,154 Other 5,466 1,681 15,742 9,777 Total royalty revenue $ 60,785 $ 39,639 $ 158,304 $ 133,069 Total revenue $ 193,837 $ 138,617 $ 516,835 $ 453,051 Revenue attributable to our principal stream and royalty interests is disaggregated as follows (amounts in thousands): Three Months Ended Nine Months Ended Metal(s) September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Stream revenue: Mount Milligan Gold & Copper $ 56,570 $ 33,876 $ 143,704 $ 121,739 Pueblo Viejo Gold & Silver 26,585 16,688 64,147 62,586 Andacollo Gold 9,652 14,644 31,949 35,401 Khoemac a u Silver 7,996 9,047 24,148 27,082 Other Gold & Silver 32,249 24,723 94,583 73,174 Total stream revenue $ 133,052 $ 98,978 $ 358,531 $ 319,982 Royalty revenue: Cortez Legacy Zone Gold $ 13,047 $ 19,668 $ 41,610 $ 57,062 Cortez CC Zone Gold 2,739 2,948 7,713 9,674 Peñasquito Gold, Silver, Lead & Zinc 9,356 — 29,863 13,538 Other Various 35,643 17,023 79,118 52,795 Total royalty revenue $ 60,785 $ 39,639 $ 158,304 $ 133,069 Total revenue $ 193,837 $ 138,617 $ 516,835 $ 453,051 Peñasquito Revenue During the three months ended September 30, 2023, no royalty revenue from Peñasquito was recognized due to the suspension of operations resulting from a strike action on June 7, 2023, by the National Union of Mine and Metal Workers of the Mexican Republic (the "Union"). Newmont Corporation and the Union reached a definitive agreement on October 13, 2023 and Peñasquito's operations reached full operating capacity by the end of the fourth quarter of 2023. Please refer to Note 10 for the geographical distribution of our revenue by reportable segment. 13 ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) 7. STOCK-BASED COMPENSATION We recognized stock-based compensation expense as follows (amounts in thousands): Three Months Ended Nine Months Ended September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Restricted stock $ 1,667 $ 1,538 $ 5,562 $ 4,692 Performance stock 1,310 1,105 3,751 2,098 Stock appreciation rights — 116 — 533 Stock options — 4 — 19 Total stock-based compensation expense $ 2,977 $ 2,763 $ 9,313 $ 7,342 Stock-based compensation expense is included within General and administrative expense in the consolidated statements of operations and comprehensive income. We granted the following stock-based compensation awards: Three Months Ended Nine Months Ended September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 (Number of shares) (Number of shares) Performance stock (at maximum 200 % attainment) — 380 93,840 82,740 Restricted Stock — 180 65,850 56,710 Total equity awards granted — 560 159,690 139,450 As of September 30, 2024, unrecognized compensation expense (expressed in thousands below) and weighted-average vesting period for each of our stock-based compensation awards were as follows: Unrecognized compensation expense Weighted- average vesting period (years) Restricted stock $ 7,930 1.9 Performance stock 6,125 1.9 8. 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. 14 ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) The following table 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 September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Net income attributable to Royal Gold common stockholders $ 96,242 $ 49,337 $ 224,615 $ 176,661 Weighted-average shares for basic EPS 65,670,381 65,619,406 65,652,934 65,606,681 Effect of other dilutive securities 124,633 137,670 114,734 136,433 Weighted-average shares for diluted EPS 65,795,014 65,757,076 65,767,668 65,743,114 Basic EPS $ 1.46 $ 0.75 $ 3.41 $ 2.69 Diluted EPS $ 1.46 $ 0.75 $ 3.41 $ 2.68 9. INCOME TAXES The following table provides the income tax expense (amounts in thousands) and effective tax rates for the periods indicated: Three Months Ended Nine Months Ended September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Income tax expense $ 21,510 $ 10,752 $ 67,535 $ 28,652 Effective tax rate 18.3 % 17.8 % 23.1 % 13.9 % The effective tax rate for the nine months ended September 30, 2024, included a $ 13.0 million discrete U.S. GILTI income tax expense related to the consideration from the Mount Milligan Cost Support Agreement. The effective tax rate for the nine months ended September 30, 2023 included a discrete income tax benefit of $ 8.5 million attributable to the release of a valuation allowance on certain foreign deferred tax assets. 10. 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, 2024 As of December 31, 2023 Stream interest Royalty interest Total stream and royalty interests, net Stream interest Royalty interest Total stream and royalty interests, net Canada $ 428,042 $ 660,950 $ 1,088,992 $ 461,398 $ 614,900 $ 1,076,298 Dominican Republic 303,954 — 303,954 311,050 — 311,050 Africa 242,378 321 242,699 264,529 321 264,850 Chile 214,509 224,116 438,625 222,629 224,116 446,745 United States — 778,496 778,496 — 794,891 794,891 Mexico — 35,629 35,629 — 41,803 41,803 Australia — 19,908 19,908 — 21,288 21,288 Rest of world 86,888 26,133 113,021 92,010 26,639 118,649 Total $ 1,275,771 $ 1,745,553 $ 3,021,324 $ 1,351,616 $ 1,723,958 $ 3,075,574 15 ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) Our reportable segments for purposes of assessing performance are shown below (amounts in thousands): Three Months Ended September 30, 2024 Revenue Cost of sales (1) Production taxes Depletion (2) Segment gross profit Stream interests $ 133,052 $ 27,192 $ — $ 26,674 $ 79,186 Royalty interests 60,785 — 1,520 9,417 49,848 Total $ 193,837 $ 27,192 $ 1,520 $ 36,091 $ 129,034 Three Months Ended September 30, 2023 Revenue Cost of sales (1) Production taxes Depletion (2) Segment gross profit Stream interests $ 98,978 $ 21,351 $ — $ 30,433 $ 47,194 Royalty interests 39,639 — 1,671 9,556 28,412 Total $ 138,617 $ 21,351 $ 1,671 $ 39,989 $ 75,606 Nine Months Ended September 30, 2024 Revenue Cost of sales (1) Production taxes Depletion (2) Segment gross profit Stream interests $ 358,531 $ 73,116 $ — $ 80,199 $ 205,216 Royalty interests 158,304 — 4,550 30,234 123,520 Total $ 516,835 $ 73,116 $ 4,550 $ 110,433 $ 328,736 Nine Months Ended September 30, 2023 Revenue Cost of sales (1) Production taxes Depletion (2) Segment gross profit Stream interests $ 319,982 $ 69,738 $ — $ 93,537 $ 156,707 Royalty interests 133,069 — 4,934 30,964 97,171 Total $ 453,051 $ 69,738 $ 4,934 $ 124,501 $ 253,878 _______________________________________________ (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. 16 ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) 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 September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Total segment gross profit $ 129,034 $ 75,606 $ 328,736 $ 253,878 Costs and expenses General and administrative expenses 10,102 9,927 32,025 30,020 Depreciation and amortization 86 117 256 346 Operating income 118,846 65,562 296,455 223,512 Fair value changes in equity securities ( 425 ) ( 462 ) ( 42 ) ( 171 ) Interest and other income 626 2,436 4,410 7,348 Interest and other expense ( 1,207 ) ( 7,285 ) ( 8,330 ) ( 24,867 ) Income before income taxes $ 117,840 $ 60,251 $ 292,493 $ 205,822 Our revenue by reportable segment for the three and nine months ended September 30, 2024 and 2023, is geographically distributed as shown in the following table (amounts in thousands): Three Months Ended Nine Months Ended September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Stream interests: Canada $ 66,372 $ 42,577 $ 173,737 $ 150,405 Dominican Republic 26,585 16,688 64,147 62,586 Africa 19,973 18,092 59,470 54,394 Chile 9,652 14,644 31,949 35,401 Rest of world 10,470 6,977 29,228 17,196 Total stream interests $ 133,052 $ 98,978 $ 358,531 $ 319,982 Royalty interests: United States $ 34,131 $ 28,237 $ 83,484 $ 85,082 Mexico 10,853 1,964 34,509 19,413 Australia 7,476 4,696 19,498 13,874 Canada 5,269 3,090 13,435 9,585 Rest of world 3,056 1,652 7,378 5,115 Total royalty interests $ 60,785 $ 39,639 $ 158,304 $ 133,069 Total revenue $ 193,837 $ 138,617 $ 516,835 $ 453,051 11. 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; 17 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). As of September 30, 2024 and December 31, 2023, we had financial assets in the form of marketable securities which are measured at fair value on a recurring basis; however, the carrying value of such financial assets is not material. The carrying value of our revolving credit facility (Note 4) approximates fair value as of September 30, 2024. As of September 30, 2024, 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. COMMITMENTS AND CONTINGENCIES Ilovica Gold Stream Acquisition As of September 30, 2024, 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. 18