ROYAL GOLD INC 10-Q

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 the 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 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”). 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, in certain cases 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 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. As of September 30, 2024, we owned nine stream interests, which are on seven producing properties and two development stage properties. Stream interests accounted for approximately 69% of our total revenue for the three and nine months ended September 30, 2024 and 71% for the three and nine months ended September 30, 2023. 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 September 30, 2024, we owned royalty interests on 33 producing properties, 17 development stage properties and 116 exploration stage properties, of which we consider 50 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 31% of our total revenue for the three and nine months ended September 30, 2024 and 29% for the three and nine months ended September 30, 2023. 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. 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 of indications of interest and term sheets; participation in preliminary discussions and negotiations; and involvement as a bidder in competitive processes. 19 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 nine months ended September 30, 2024 and 2023, average metal prices and percentages of revenue by metal were as follows: Three Months Ended Nine Months Ended September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 Metal Average Price Percentage of Revenue Average Price Percentage of Revenue Average Price Percentage of Revenue Average Price Percentage of Revenue Gold ($/ounce) (1) $ 2,474 76% $ 1,928 78% $ 2,296 75% $ 1,931 75% Silver ($/ounce) (1) $ 29.43 12% $ 23.57 11% $ 27.22 13% $ 23.40 13% Copper ($/pound) (2) $ 4.18 9% $ 3.79 10% $ 4.14 9% $ 3.89 10% Other N/A 3% N/A 1% N/A 3% N/A 2% (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. Recent Developments Back River Royalties Acquisition On June 26, 2024, International Royalty Corporation, a wholly-owned subsidiary of Royal Gold, acquired a 0.7% net smelter return 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 ("GSR") 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. When considered together, the royalty interests are equivalent to an approximate effective 1.1% GSR royalty rate over the majority of the mine life. Back River is operated by B2Gold Corporation and is located in Western Nunavut, Canada. Refer to Note 2 to the notes to consolidated financial statements for more information on the Back River royalties acquisition. 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 5,200 ounces for the three months ended September 30, 2024, compared to approximately 9,300 ounces for the three months ended September 30, 2023. The decrease in deliveries was primarily due to lower tonnes milled as a result of water restrictions caused by extreme drought conditions earlier in the year. Stream deliveries typically occur approximately six months after mine production and are based on a fixed payability factor of 89%. On October 24, 2024, Teck Resources Limited reported improved mill throughput in the September 2024 quarter driven by increased water availability. Khoemac a u Silver stream deliveries from Khoemac a u were approximately 288,200 ounces for the three months ended September 30, 2024, compared to approximately 315,000 ounces for the three months ended September 30, 2023. The decrease in 20 deliveries in the current period primarily resulted from lower tonnage milled. Stream deliveries are based on a fixed payability factor of 90% and typically occur 1 to 2 months after mine production. On October 24, 2024, MMG Limited (“MMG”) reported improved mining and milling volumes and higher ore grades at Zone 5 during the September 2024 quarter compared to the previous quarter. According to MMG, operations were enhanced due to the gradual onboarding of skilled labor and increased availability of equipment, and the mining sequence allowed access to higher-grade areas. Improved controls on dilution also supported the increase in ore mined grades. MMG also reported that underground development advance increased by 25% during the quarter, which MMG expects will lead to greater mining volumes, access to higher-grade mining areas, and will increase mining flexibility in the near and medium term. MMG also reported that it expects production at Zone 5 to further ramp up over the next year, and that it is committed to accessing the higher-grade areas to achieve an annual production of 60,000 tonnes of copper in concentrate by 2026. This will be facilitated by ongoing mining development efforts to increase mining fronts, operational flexibility and access to higher-grade areas. These efforts will be further enhanced by constructing a paste fill plant to increase extraction rates and completion of the installation of primary vent fans. MMG plans to expand total production capacity at Khoemac a u to 130,000 tonnes of copper in concentrate per annum by building a new 4.5 million tonne per annum process plant, increasing Zone 5 output, and developing additional deposits. MMG expects to begin the expansion feasibility study by the end of 2024, with construction to begin in 2026, production of first concentrate in 2028, and full capacity reached by 2029. Any expanded production from the Zone 5 and Mango NE deposits falls within the area of interest covered by our silver stream. Mount Milligan Gold stream deliveries from Mount Milligan were approximately 22,100 ounces for the three months ended September 30, 2024, compared to approximately 13,000 ounces for the three months ended September 30, 2023. Copper stream deliveries from Mount Milligan were approximately 3.9 million pounds during the three months ended September 30, 2024, compared to approximately 2.4 million pounds during the three months ended September 30, 2023. The increase in deliveries was primarily due to increased mill throughput, as well as higher gold grade earlier in 2024. Stream metal deliveries typically occur approximately six months after mine production. Gold stream deliveries are based on a fixed payability factor of 97% and copper stream deliveries are based on a minimum payability factor of 95%. On October 31, 2024, Centerra Gold Inc. ("Centerra") reported that 2024 production guidance at the Mount Milligan mine in British Columbia remains unchanged at 180,000 to 200,000 ounces of gold and 55 to 65 million pounds of copper, with gold production trending towards the lower end of the range. Centerra also reported that work continued on the site-wide optimization program, and notable achievements during the first nine months of 2024 include an improved safety record, increased availability and utilization of the haul fleet, and consistent ore supply which has led to increased mill throughput per operating day. In addition, Centerra is progressing work on a preliminary economic assessment (“PEA”) to evaluate the substantial mineral resources at Mount Milligan with a goal to unlock additional value beyond its current 2035 mine life. Centerra expects the PEA to be completed towards the end of the first half of 2025. Pueblo Viejo Gold stream deliveries from Pueblo Viejo were approximately 6,000 ounces for the three months ended September 30, 2024, compared to approximately 5,000 ounces for the three months ended September 30, 2023. The increase in gold deliveries was primarily due to increased throughput in the current period. Gold stream deliveries are based on a fixed payability factor of 99.9%. Silver stream deliveries were approximately 89,600 ounces for the three months ended September 30, 2024, compared to approximately 171,100 ounces for the three months ended September 30, 2023. The decrease in silver deliveries was primarily due to lower silver recoveries, partially offset by higher throughput. Silver stream deliveries are based on a fixed payability factor of 99.0%. Deliveries are quarterly and typically occur 1 to 3 months after mine production. On October 16, 2024, Barrick Gold Corporation reported that Pueblo Viejo delivered a 23% improvement in gold production in the third quarter of 2024 compared to the second quarter of 2024 due to continued plant optimization. 21 Royalty Interests Cortez Production attributable to our royalty interest at the Cortez Complex was approximately 161,800 ounces of gold for the three months ended September 30, 2024, of which 45,300 ounces were attributable to the Legacy Zone, and 116,500 ounces were attributable to the CC Zone, compared to approximately 218,800 ounces of gold for the three months ended September 30, 2023, of which 98,800 ounces were attributable to the Legacy Zone, and 120,000 ounces were attributable to the CC Zone. Peñasquito Production attributable to our royalty interest at Peñasquito was approximately 55,700 ounces of gold, 5.7 million ounces of silver, 36.4 million pounds of lead and 133.6 million pounds of zinc for the three months ended September 30, 2024. During the three months ended September 30, 2023, no royalty production from Peñasquito was reported due to the suspension of operations resulting from a labor strike that was subsequently resolved in October 2023. October 18, 2024, Newmont Corporation ("Newmont") reported that it had agreed on a new Collective Bargain Agreement (“CBA”) for 2024-2026 with the National Union of Mining, Metallurgical, Steel, and Similar Workers of Mexico. According to Newmont, this CBA provides a solid foundation for continuing operations at Peñasquito. On October 23, 2024, Newmont reported that it delivered steady gold, silver, lead and zinc production in the current quarter from the Chile Colorado pit and commenced mining ore in the higher gold grade Peñasco pit, ahead of plan due to efficient stripping. Newmont expects this will result in an increase in gold production in the fourth quarter of 2024 and into 2025. Results of Operations Quarter Ended September 30, 2024, Compared to Quarter Ended September 30, 2023 For the three months ended September 30, 2024, we recorded net income and comprehensive income attributable to Royal Gold stockholders (“net income”) of $96.2 million, or $1.46 per basic and diluted share, as compared to net income of $49.3 million, or $0.75 per basic and diluted share, for the three months ended September 30, 2023. The increase in net income was primarily attributable to higher revenue and lower interest expense, each discussed below. For the three months ended September 30, 2024, we recognized total revenue of $193.8 million, comprised of stream revenue of $133.1 million and royalty revenue of $60.8 million at an average gold price of $2,474 per ounce, an average silver price of $29.43 per ounce and an average copper price of $4.18 per pound. This is compared to total revenue of $138.6 million for the three months ended September 30, 2023, comprised of stream revenue of $99.0 million and royalty revenue of $39.6 million, at an average gold price of $1,928 per ounce, an average silver price of $23.57 per ounce and an average copper price of $3.79 per pound. Revenue and the corresponding production attributable to our stream and royalty interests for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, are as follows: 22 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 September 30, 2024 September 30, 2023 Reported Reported Stream/Royalty Metal(s) Revenue Production (1) Revenue Production (1) Stream (2) : Mount Milligan $ 56,570 $ 33,876 Gold 17,600 oz. 11,300 oz. Copper 3.1 Mlbs. 3.2 Mlbs. Pueblo Viejo $ 26,585 $ 16,688 Gold 7,000 oz. 6,800 oz. Silver 332,700 oz. 150,700 oz. Andacollo Gold $ 9,652 4,000 oz. $ 14,644 7,500 oz. Khoemac a u Silver $ 7,996 275,200 oz. $ 9,047 386,100 oz. Other (3) $ 32,249 $ 24,723 Gold 12,100 oz. 11,900 oz. Silver 80,300 oz. 76,900 oz. Total stream revenue $ 133,052 $ 98,978 . Royalty (2) : Cortez Legacy Zone Gold $ 13,047 45,300 oz. $ 19,668 98,800 oz. Cortez CC Zone Gold $ 2,739 116,500 oz. $ 2,948 120,000 oz. Peñasquito $ 9,356 $ — Gold 55,700 oz. — oz. Silver 5.7 Moz. — Moz. Lead 36.4 Mlbs. — Mlbs. Zinc 133.6 Mlbs. — Mlbs. Other (3) Various $ 35,643 N/A $ 17,023 N/A Total royalty revenue $ 60,785 $ 39,639 Total Revenue $ 193,837 $ 138,617 _______________________________________________ (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 September 30, 2024, and 2023, 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 6 to the notes to consolidated financial statements. (2) Refer to “Property Developments” above for a discussion of recent developments at principal properties. (3) Individually, no stream or royalty included within the “Other” category contributed greater than 10% of our total revenue for either period. The increase in our total revenue resulted primarily from higher average gold, silver and copper prices compared to the prior period. Higher gold sales from Mount Milligan, higher gold and silver sales from Pueblo Viejo, higher gold, silver, zinc and lead production from Peñasquito and new revenue of $12.6 million from non-principal royalties also contributed to the increase. These increases were partially offset by lower gold sales from Andacollo, lower production from the Cortez Legacy Zone and lower silver sales from Khoemac a u when compared to the prior year period. 23 Gold and silver ounces and copper pounds purchased and sold during the three months ended September 30, 2024 and 2023, and gold and silver ounces and copper pounds in inventory as of September 30, 2024, and December 31, 2023, for our streaming interests were as follows: Three Months Ended Three Months Ended As of As of September 30, 2024 September 30, 2023 September 30, 2024 December 31, 2023 Gold Stream Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.) Inventory (oz.) Inventory (oz.) Mount Milligan 22,100 17,600 13,000 11,300 5,000 4,000 Pueblo Viejo 6,000 7,000 5,000 6,800 6,000 6,200 Andacollo 5,200 4,000 9,300 7,500 2,500 800 Other 12,400 12,100 11,700 11,900 3,500 4,200 Total 45,700 40,700 39,000 37,500 17,000 15,200 Three Months Ended Three Months Ended As of As of September 30, 2024 September 30, 2023 September 30, 2024 December 31, 2023 Silver Stream Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.) Inventory (oz.) Inventory (oz.) Pueblo Viejo (1) 89,600 332,700 171,100 150,700 89,600 223,000 Khoemac a u 288,200 275,200 315,000 386,100 101,000 135,300 Other 78,900 80,300 65,800 76,900 28,500 24,800 Total 456,700 688,200 551,900 613,700 219,100 383,100 Three Months Ended Three Months Ended As of As of September 30, 2024 September 30, 2023 September 30, 2024 December 31, 2023 Copper Stream Purchases (Mlbs.) Sales (Mlbs.) Purchases (Mlbs.) Sales (Mlbs.) Inventory (Mlbs.) Inventory (Mlbs.) Mount Milligan 3.9 3.1 2.4 3.2 0.8 — _______________________________________________ (1) Pueblo Viejo silver purchases for the three months ended September 30, 2024 do not include 115,600 ounces of silver permitted to be deferred based on the terms of the Pueblo Viejo silver stream agreement. Total deferred silver ounces were 1.2 million ounces at September 30, 2024, and the timing for the delivery of this deferred amount is uncertain. Cost of sales, which excludes depreciation, depletion and amortization, increased to $27.2 million for the three months ended September 30, 2024, from $21.4 million for the three months ended September 30, 2023. The increase, when compared to the prior year period, was primarily due to higher gold, silver and copper prices, higher gold sales from Mount Milligan and higher silver sales from Pueblo Viejo. The increase was partially offset by lower gold sales from Andacollo and lower silver sales from Khoemac a u compared to the prior year period. Cost of sales is specific to our stream agreements and, except for Mount Milligan, is the result of our purchase of metal for a cash payment that is a set contractual percentage of the spot price for that metal near the date of metal delivery. For Mount Milligan, the cash payments under the existing stream agreement are the lesser of $435 per ounce or the prevailing market price of gold when purchased and 15% of the spot price for copper near the date of metal delivery. Separately, and in addition to the cash payments under the existing stream agreement, the Mount Milligan Cost Support Agreement detailed in Note 5 of our notes to consolidated financial statements provides for cash payments on gold and copper deliveries that are expected to begin after certain thresholds are met or earlier, if metal prices are below certain thresholds and if requested by Centerra Gold Inc. ("Centerra"). General and administrative costs increased to $10.1 million for the three months ended September 30, 2024, from $9.9 million for the three months ended September 30, 2023. The increase was primarily due to higher non-cash stock compensation expense compared to the prior year period. Depreciation, depletion and amortization decreased to $36.2 million for the three months ended September 30, 2024, from $40.1 million for the three months ended September 30, 2023. The decrease was primarily due to lower stream depletion rates as a result of proven and probable mineral reserve increases by our operators when compared to the prior year period, lower silver sales from Khoemac a u, lower gold sales from Andacollo and lower gold production at Cortez compared to the prior year period. The decrease was partially offset by higher gold sales from Mount Milligan and higher gold and silver sales from Pueblo Viejo. 24 Interest and other expense decreased to $1.2 million for the three months ended September 30, 2024, from $7.3 million for the three months ended September 30, 2023. The decrease was primarily due to lower interest expense as a result of lower average amounts outstanding under our revolving credit facility compared to the prior year period. For the three months ended September 30, 2024, amounts outstanding under our revolving credit facility averaged $14 million at an average all-in borrowing rate of 6.5% compared to average amounts outstanding of $380 million at an average all-in borrowing rate of 6.7% for the prior year period. For the three months ended September 30, 2024, we recorded income tax expense of $21.5 million, compared to $10.8 million for the three months ended September 30, 2023. The income tax expense resulted in an effective tax rate of 18.3% in the current period, compared with 17.8% for the three months ended September 30, 2023. The higher income tax expense for the three months ended September 30, 2024 was primarily attributable to higher income before income taxes compared to the prior year period. Nine Months Ended September 30, 2024, Compared to Nine Months Ended September 30, 2023 For the nine months ended September 30, 2024, we recorded net income of $224.6 million, or $3.41 per basic and diluted share, as compared to net income of $176.7 million, or $2.69 per basic and $2.68 per diluted share, for the nine months ended September 30, 2023. The increase in net income was primarily attributable to higher revenue, lower debt-related interest expense and lower depletion expense compared to the prior year period. This increase was partially offset by higher tax expense, as discussed below. For the nine months ended September 30, 2024, we recognized total revenue of $516.8 million, comprised of stream revenue of $358.5 million and royalty revenue of $158.3 million at an average gold price of $2,296 per ounce, an average silver price of $27.22 per ounce and an average copper price of $4.14 per pound. This is compared to total revenue of $453.1 million for the nine months ended September 30, 2023, comprised of stream revenue of $320.0 million and royalty revenue of $133.1 million, at an average gold price of $1,931 per ounce, an average silver price of $23.40 per ounce and an average copper price of $3.89 per pound. Revenue and the corresponding production attributable to our stream and royalty interests for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, are as follows: 25 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, 2024 September 30, 2023 Reported Reported Stream/Royalty Metal(s) Revenue Production (1) Revenue Production (1) Stream (2) : Mount Milligan $ 143,704 $ 121,739 Gold 46,200 oz. 44,000 oz. Copper 9.0 Mlbs. 9.4 Mlbs. Pueblo Viejo $ 64,147 $ 62,586 Gold 18,900 oz. 22,100 oz. Silver 773,900 oz. 850,800 oz. Andacollo Gold $ 31,949 14,100 oz. $ 35,401 18,500 oz. Khoemac a u Silver $ 24,148 902,700 oz. $ 27,082 1.2 Moz. Other (3) $ 94,583 $ 73,174 Gold 38,800 oz. 35,400 oz. Silver 239,800 oz. 208,800 oz. Total stream revenue $ 358,531 $ 319,982 Royalty (2) : Cortez Legacy Zone Gold $ 41,610 157,100 oz. $ 57,062 284,100 oz. Cortez CC Zone Gold $ 7,713 361,200 oz. $ 9,674 338,100 oz. Peñasquito $ 29,863 $ 13,538 Gold 163,800 oz. 103,700 oz. Silver 23.5 Moz. 12.0 Moz. Lead 144.2 Mlbs. 72.1 Mlbs. Zinc 381.7 Mlbs. 188.9 Mlbs. Other (3) Various $ 79,118 N/A $ 52,795 N/A Total royalty revenue $ 158,304 $ 133,069 Total Revenue $ 516,835 $ 453,051 _______________________________________________ (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, 2024, and 2023, 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 6 to the notes to consolidated financial statements. (2) Refer to “Property Developments” above for a discussion of recent developments at principal properties. (3) Individually, no stream or royalty included within the “Other” category contributed greater than 10% of our total revenue for either period. The increase in our total revenue resulted primarily from higher average gold, silver and copper prices, higher production from Peñasquito, and higher gold sales from Xavantina and Wassa which are included in other stream revenue in the table above. The increase was partially offset by lower silver sales from Khoemac a u, lower gold sales from Andacollo, and lower production from the Cortez Legacy Zone when compared to the prior year period. 26 Gold and silver ounces and copper pounds purchased and sold during the nine months ended September 30, 2024, and 2023, and gold and silver ounces and copper pounds in inventory as of September 30, 2024, and December 31, 2023, for our streaming interests were as follows: Nine Months Ended Nine Months Ended As of As of September 30, 2024 September 30, 2023 September 30, 2024 December 31, 2023 Gold Stream Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.) Inventory (oz.) Inventory (oz.) Mount Milligan 47,100 46,200 44,200 44,000 5,000 4,000 Pueblo Viejo 18,700 18,900 19,200 22,100 6,000 6,200 Andacollo 15,900 14,100 18,300 18,500 2,500 800 Other 38,100 38,800 35,900 35,400 3,500 4,200 Total 119,800 118,000 117,600 120,000 17,000 15,200 Nine Months Ended Nine Months Ended As of As of September 30, 2024 September 30, 2023 September 30, 2024 December 31, 2023 Silver Stream Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.) Inventory (oz.) Inventory (oz.) Khoemac a u 868,400 902,700 1,141,200 1,163,100 101,000 135,300 Pueblo Viejo (1) 640,500 773,900 684,100 850,800 89,600 223,000 Other 243,500 239,800 205,800 208,800 28,500 24,800 Total 1,752,400 1,916,400 2,031,100 2,222,700 219,100 383,100 Nine Months Ended Nine Months Ended As of As of September 30, 2024 September 30, 2023 September 30, 2024 December 31, 2023 Copper Stream Purchases (Mlbs.) Sales (Mlbs.) Purchases (Mlbs.) Sales (Mlbs.) Inventory (Mlbs.) Inventory (Mlbs.) Mount Milligan 9.8 9.0 8.4 9.4 0.8 — _______________________________________________ (1) Pueblo Viejo silver purchases for the nine months ended September 30, 2024 do not include 381,700 ounces of silver permitted to be deferred based on the terms of the Pueblo Viejo silver stream agreement. Total deferred silver ounces were 1.2 million ounces at September 30, 2024, and the timing for the delivery of this deferred amount is uncertain. Cost of sales, which excludes depreciation, depletion and amortization, increased to $73.1 million for the nine months ended September 30, 2024, from $69.7 million for the nine months ended September 30, 2023. The increase was primarily due to higher gold sales from Xavantina and Wassa, partially offset by lower silver sales from Khoemac a u and lower gold sales from Andacollo compared to the prior year period. Cost of sales is specific to our stream agreements and, except for Mount Milligan, is the result of our purchase of metal for a cash payment that is a set contractual percentage of the spot price for that metal near the date of metal delivery. For Mount Milligan, the cash payments under the existing stream agreement are the lesser of $435 per ounce or the prevailing market price of gold when purchased and 15% of the spot price for copper near the date of metal delivery. Separately, and in addition to the cash payments under the existing stream agreement, the Mount Milligan Cost Support Agreement detailed in Note 5 of our notes to consolidated financial statements provides for cash payments on gold and copper deliveries that are expected to begin after certain thresholds are met or earlier, if metal prices are below certain thresholds but only as requested by Centerra. General and administrative costs increased to $32.0 million for the nine months ended September 30, 2024, from $30.0 million for the nine months ended September 30, 2023. The increase was primarily due to higher non-cash stock compensation expense compared to the prior year period. Depreciation, depletion and amortization decreased to $110.7 million for the nine months ended September 30, 2024, from $124.8 million for the nine months ended September 30, 2023. The decrease was primarily due to lower stream depletion rates, as a result of proven and probable mineral reserve increases by our operators when compared to the prior year period, lower gold sales from Andacollo, lower silver sales from Khoemac a u and lower gold production from the Cortez Legacy Zone. Interest and other expense decreased to $8.3 million for the nine months ended September 30, 2024, from $24.9 million for the nine months ended September 30, 2023. The decrease was primarily due to lower interest expense as a result of lower 27 average amounts outstanding under our revolving credit facility compared to the prior year period. For the nine months ended September 30, 2024, amounts outstanding under our revolving credit facility averaged $109 million at an average all-in borrowing rate of 6.5%, compared to average amounts outstanding of $421 million at an average all-in borrowing rate of 6.4% for the prior year period. For the nine months ended September 30, 2024, we recorded income tax expense of $67.5 million, compared with income tax expense of $28.7 million for the nine months ended September 30, 2023. The income tax expense resulted in an effective tax rate of 23.1% in the current period, compared with 13.9% for the nine months ended September 30, 2023. The nine months ended September 30, 2024, included a $13.0 million discrete U.S. GILTI income tax expense related to consideration received from the Mount Milligan Cost Support Agreement. The nine months ended September 30, 2023 included a discrete tax benefit of $8.5 million attributable to the release of a valuation allowance on certain foreign deferred tax assets. Liquidity and Capital Resources Overview At September 30, 2024, we had current assets of $202.1 million compared to current liabilities of $86.3 million, which resulted in working capital of $115.8 million. This compares to current assets of $167.4 million and current liabilities of $72.4 million at December 31, 2023, resulting in working capital of $95 million. The increase in working capital was primarily due to an increase in our available cash, which primarily resulted from higher net cash proceeds from our stream and royalty interests and cash proceeds received for the Mount Milligan Cost Support Agreement, partially offset by the $51 million Back River royalties acquisition during the current year. During the nine months ended September 30, 2024, liquidity needs were met from $388.5 million in net cash provided by operating activities and our available cash resources. Working capital, combined with available capacity under our revolving credit facility, resulted in approximately $1.1 billion of total liquidity at September 30, 2024. As of September 30, 2024, we had $1.0 billion available under our revolving credit facility. We were in compliance with each financial covenant under the revolving credit facility as of September 30, 2024. Refer to Note 4 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 and general and administrative expense costs 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 2023 10-K for a discussion of certain risks that may impact our liquidity and capital resources. Recent Liquidity Developments Revolving Credit Facility Repayment 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 $1.0 billion revolving credit facility available as of September 30, 2024. Operating Activities Net cash provided by operating activities totaled $388.5 million for the nine months ended September 30, 2024, compared to $314.7 million for the nine months ended September 30, 2023. The increase, when compared to the prior year period, was primarily due to net cash proceeds received from our stream and royalty interests of $34.6 million, cash proceeds of $24.5 million received for the Mount Milligan Cost Support Agreement, lower debt cash interest payments of $16.0 million, and $12.0 million of interest from the repayment of the Khoemac a u debt facility. This increase was partially offset by higher cash taxes of $11.4 million when compared to the prior year period. 28 Investing Activities Net cash used in investing activities totaled $30.8 million for the nine months ended September 30, 2024, compared to net cash used in investing activities of $2.8 million for the nine months ended September 30, 2023. The increase was primarily due to the $51.2 million in aggregate consideration paid for the acquisition of two royalties at Back River. The increase was partially offset by the $25 million principal repayment on the Khoemac a u subordinated debt facility during the current period. Financing Activities Net cash used in financing activities totaled $334.0 million for the nine months ended September 30, 2024, compared to $327.6 million for the nine months ended September 30, 2023. The increase was primarily due to an increase in dividend payments made when compared to the prior year. 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 2023 10-K for discussion on our critical accounting policies. 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, statements regarding the following: our expected financial performance and outlook, including sales volume, revenue, expenses, tax rates, earnings, and cash flows; operators’ expected operating and financial performance and other anticipated developments relating to their properties and operations, including production, deliveries, estimates of mineral resources and mineral reserves, environmental and feasibility studies, technical reports, mine plans, capital requirements, liquidity, and capital expenditures; opportunities for acquisitions and other transactions; anticipated benefits from acquisitions and other transactions; receipt and timing of future metal deliveries, including deferred amounts at Pueblo Viejo; the timing and amount of future benefits and obligations in connection with the Mount Milligan Cost Support Agreement; anticipated liquidity, capital resources, financing, and stockholder returns; and prices for gold, silver, copper, and other metals. Factors that could cause actual results to differ materially from these forward-looking statements include, among others, the following: changes in the price of gold, silver, copper, or other metals; operating activities or financial performance of properties on which we hold stream or royalty interests, including variations between actual and forecasted performance, operators’ ability to complete projects on schedule and as planned, operators’ changes to mine plans and mineral reserves and mineral resources (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, other adverse government or court actions, or operational disruptions; changes of control of properties or operators; contractual issues involving our stream or royalty agreements; the timing of deliveries of metals from operators and our subsequent sales of metal; risks associated with doing business in foreign countries; increased competition for stream and royalty interests; environmental risks, including those caused by climate change; potential cyber-attacks, including ransomware; our ability to identify, finance, value, and complete acquisitions or other transactions; adverse economic and market conditions; impact of health epidemics and pandemics; changes in laws or regulations governing us, operators, or operating properties; changes in management and key employees; and other risk factors described in this report and in our other reports filed with the Securities and Exchange Commission, including our 2023 10-K. Most of these factors are beyond our ability to predict or control. Other unpredictable or unknown factors not discussed in this report or our other reports could also have material adverse effects on forward-looking statements. Forward-looking statements speak only as of the date on which they are made. We disclaim any obligation to update any forward-looking statements, except as required by law. Readers are cautioned not to put undue reliance on forward-looking statements. 29