Item 1. Business
ITEM 1. BUSINESS
Overview
We acquire and manage precious metal streams, royalties, and similar interests. We seek to acquire existing stream and royalty interests or to finance projects that are in production, development or in the exploration stage in exchange for stream or royalty interests. We do not conduct mining operations on the properties in which we hold stream and royalty interests and are generally not required to contribute to capital costs, environmental costs, or other operating costs on the properties. Please refer to Item 2, Properties, for a discussion of the developments at our principal 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 financial, legal (including corporate governance) and technical (including environmental issues concerning air, water and biodiversity and social impacts) 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.
As discussed in further detail throughout this report, some key business highlights and developments for the year ended December 31, 2024 were as follows:
• During calendar year 2024 we repaid the remaining $250 million outstanding under our $1 billion revolving credit facility, resulting in the revolving credit facility being fully undrawn and available as of December 31, 2024.
• We had record revenue of $719.4 million for the year ended December 31, 2024, compared to $605.7 million for the comparable prior year period, representing a 19% increase.
• We generated a record $529.5 million of net operating cash flow for the year ended December 31, 2024, compared to $415.8 million for the comparable prior year period, representing a 27% increase.
• We increased our calendar year dividend to $1.80 per basic share, which is paid in quarterly installments throughout calendar year 2025. This represents a 13% increase compared with the dividend paid during calendar year 2024.
• On February 13, 2024, we entered into a Cost Support Agreement with Centerra Gold Inc. ("Centerra") to incentivize Centerra to continue to invest and maximize the value of the large mineral endowment at Mount Milligan. The Cost Support Agreement provided a basis for a reserve increase and extension of the Mount Milligan mine life to 2035 and may provide a basis for further extension of the mine life beyond 2035.
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• We acquired royalty interests for total cash consideration of $106 million on the Back River Gold District in Nunavut, Canada, and the Cactus Project in Arizona, U.S.A.
Certain Definitions
Development stage property: A property that has mineral reserves disclosed but no material extraction.
Dollar or “$”: Refers to U.S. dollars. We refer to Canadian dollars as C$.
Exploration stage property: A property that has no mineral reserves disclosed.
Gold equivalent ounces (GEOs): GEOs are calculated as Royal Gold’s revenue divided by the average gold price for the period, with the gold price determined based on the LBMA Price.
Gross smelter return (GSR) royalty: A defined percentage of the gross revenue from a mineral resource extraction operation, less, if applicable, certain contract-defined costs paid by or charged to the operator.
Indicated mineral resource: That part of a mineral resource for which quantity and grade or quality are estimated on the basis of adequate geological evidence and sampling. The level of geological certainty associated with an indicated mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Because an indicated mineral resource has a lower level of confidence than the level of confidence of a measured mineral resource, an indicated mineral resource may only be converted to a probable mineral reserve.
Inferred mineral resource: That part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. The level of geological uncertainty associated with an inferred mineral resource is too high to apply relevant technical and economic factors likely to influence the prospects of economic extraction in a manner useful for evaluation of economic viability. Because an inferred mineral resource has the lowest level of geological confidence of all mineral resources, which prevents the application of the modifying factors in a manner useful for evaluation of economic viability, an inferred mineral resource may not be considered when assessing the economic viability of a mining project, and may not be converted to a mineral reserve.
LBMA Price: The London Bullion Market Association PM fixing prices in U.S. dollars for gold and daily fixing prices in U.S. dollars for silver.
LME Price : The London Metals Exchange settlement price for copper and other metals, as applicable.
Measured mineral resource: That part of a mineral resource for which quantity and grade or quality are estimated on the basis of conclusive geological evidence and sampling. The level of geological certainty associated with a measured mineral resource is sufficient to allow a qualified person to apply modifying factors, as defined in Subpart 1300 of Regulation S-K (“S-K 1300”), in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit. Because a measured mineral resource has a higher level of confidence than the level of confidence of either an indicated mineral resource or an inferred mineral resource, a measured mineral resource may be converted to a proven mineral reserve or to a probable mineral reserve.
Metal stream: 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.
Mineral reserve: An estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project. More specifically, it is the economically mineable part of a measured or indicated mineral resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted.
Mineral resource: A concentration or occurrence of material of economic interest in or on the Earth's crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions,
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location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled.
Net smelter return (NSR) royalty: A defined percentage of the gross revenue from a resource extraction operation less a proportionate share of incidental transportation, insurance, refining and smelting costs.
Net value royalty (NVR): A defined percentage of the gross revenue from a resource extraction operation less certain contract-defined costs.
Payable metal: Ounces or pounds of metal in concentrate after deduction of a percentage of metal in concentrate by a third-party smelter pursuant to smelting contracts.
Probable mineral reserve: The economically mineable part of an indicated and, in some cases, a measured mineral resource.
Production stage property: A property with material extraction of mineral reserves.
Proven mineral reserve: The economically mineable part of a measured mineral resource that can only result from conversion of a measured mineral resource.
Royalty: The right to receive a percentage or other denomination of mineral production from a mining operation.
Ton: A unit of weight equal to 2,000 pounds or 907.2 kilograms.
Tonne: A unit of weight equal to 2,204.6 pounds or 1,000 kilograms.
Our Operational Information
We manage our business under two reportable segments:
• Acquisition and Management of Stream Interests — A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or more metals produced from a mine, at a price determined for the life of the transaction by the purchase agreement. As of December 31, 2024 we owned nine stream interests, which are on seven production stage properties and two development stage properties. Stream interests accounted for 67% and 69% of our total revenue for the years ended December 31, 2024 and 2023, 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 December 31, 2024, we owned royalty interests on 35 production stage properties, 16 development stage properties and 115 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 reserves. Royalty interests accounted for 33% and 31% of our total revenue for the years ended December 31, 2024 and 2023, respectively.
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Our long-lived assets (stream and royalty interests, net) for the years ended December 31, 2024 and 2023 are geographically distributed as shown in the following table (amounts are in thousands):
As of December 31, 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 $ 417,643 $ 659,070 $ 1,076,713 $ 461,398 $ 614,900 $ 1,076,298
Dominican Republic 302,122 — 302,122 311,050 — 311,050
Africa 237,028 321 237,349 264,529 321 264,850
Chile 211,123 224,116 435,239 222,629 224,116 446,745
United States — 827,277 827,277 — 794,891 794,891
Mexico — 33,800 33,800 — 41,803 41,803
Australia — 19,265 19,265 — 21,288 21,288
Rest of world 85,254 25,785 111,039 92,010 26,639 118,649
Total $ 1,253,170 $ 1,789,634 $ 3,042,804 $ 1,351,616 $ 1,723,958 $ 3,075,574
Our reportable segments for purposes of assessing performance for the years ended December 31, 2024, 2023 and 2022, respectively, are shown below (amounts are in thousands):
Year Ended December 31, 2024
Revenue Cost of sales (1)
Production taxes Depletion (2)
Segment gross profit (3)
Stream interests
Canada $ 231,801 $ 43,262 $ — $ 43,755 $ 144,784
Dominican Republic 83,059 23,620 — 8,929 50,510
Africa 82,132 16,069 — 27,501 38,562
Chile 47,531 6,951 — 11,506 29,074
Rest of the world 38,771 7,612 — 11,109 20,050
Total stream interests 483,294 97,514 — 102,800 282,980
Royalty interests
United States $ 121,212 $ — $ 5,419 $ 22,902 $ 92,891
Mexico 52,842 — — 8,003 44,839
Australia 28,966 — — 2,023 26,943
Canada 18,945 — 1,203 7,502 10,240
Rest of the world 14,136 — — 855 13,281
Total royalty interests 236,101 — 6,622 41,285 188,194
Total $ 719,395 $ 97,514 $ 6,622 $ 144,085 $ 471,174
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Year Ended December 31, 2023
Revenue Cost of sales (1)
Production taxes Depletion (2)
Segment gross profit (3)
Stream interests
Canada $ 196,961 $ 41,624 $ — $ 50,559 $ 104,778
Dominican Republic 76,247 22,339 — 9,817 44,091
Africa 70,757 14,319 — 35,193 21,245
Chile 48,920 7,225 — 13,683 28,012
Rest of the world 25,395 5,016 — 11,869 8,510
Total stream interests 418,280 90,523 — 121,121 206,636
Royalty interests
United States $ 123,690 $ — $ 6,232 $ 28,551 $ 88,907
Mexico 25,754 — — 8,353 17,401
Australia 19,011 — — 831 18,180
Canada 12,712 — 1,062 5,650 6,000
Rest of the world 6,270 — — — 6,270
Total royalty interests 187,437 — 7,294 43,385 136,758
Total $ 605,717 $ 90,523 $ 7,294 $ 164,506 $ 343,394
Year Ended December 31, 2022
Revenue Cost of sales (1)
Production taxes Depletion (2)
Segment gross profit (3)
Stream interests
Canada $ 212,369 $ 46,438 $ — $ 67,368 $ 98,563
Dominican Republic 85,863 26,211 — 29,216 30,436
Africa 53,787 11,135 — 24,348 18,304
Chile 47,347 7,165 — 12,835 27,347
Rest of the world 18,427 3,693 — 9,759 4,975
Total stream interests 417,793 94,642 — 143,526 179,625
Royalty interests
United States $ 81,642 $ — $ 4,131 $ 13,966 $ 63,545
Mexico 52,388 — — 10,822 41,566
Canada 27,210 — 2,890 9,039 15,281
Australia 15,672 — — 1,089 14,583
Rest of the world 8,501 — — — 8,501
Total royalty interests 185,413 — 7,021 34,916 143,476
Total $ 603,206 $ 94,642 $ 7,021 $ 178,442 $ 323,101
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(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.
(3) Refer to Note 15 of our notes to consolidated financial statements for a reconciliation of total segment gross profit to consolidated income before income taxes.
Our financial results are primarily tied to the price of gold and, to a lesser extent, the prices of silver and copper, together with the amounts of production from our production stage stream and royalty interests. During the year ended December 31, 2024, we derived approximately 88% of our revenue from precious metals (including 76% from gold and
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12% from silver), 9% from copper, and 3% from other minerals. The prices of gold, silver, copper, and other metals have fluctuated widely in recent years. The marketability and the price of metals are influenced by numerous factors beyond our control. Significant declines in the prices of gold, silver, or copper could have a material adverse effect on our results of operations and financial condition.
Competition
The mining industry in general, and stream and royalty segments in particular, are very competitive. We compete with other stream and royalty companies, mine operators, and financial buyers in efforts to acquire existing stream and royalty interests. We also compete with lenders, equity investors, and stream and royalty companies providing financing to operators of mineral properties in our efforts to create new stream and royalty interests. Our competitors may be larger than we are and may have greater resources and access to capital than we have. Key competitive factors in the stream and royalty acquisition and financing business include the ability to identify and evaluate potential opportunities, transaction structure and consideration, and access to capital.
Regulation
Operators of the mines that are subject to our stream and royalty interests must comply with numerous environmental, mine safety, land use, waste disposal, remediation and public health laws and regulations promulgated by federal, state, provincial and local governments in the United States, Canada, Chile, the Dominican Republic and other countries where we hold interests. Although we, as a stream or royalty interest owner, are not responsible for ensuring compliance with these laws and regulations, failure by the operators to comply with applicable laws, regulations and permits can result in injunctive action, orders to suspend or cease operations, damages, and civil and criminal penalties on the operators, which could have a material adverse effect on our results of operations and financial condition.
Human Capital Resources
Employees
We currently have 30 employees that work out of our offices in Denver, Colorado, Lucerne, Switzerland, Vancouver, Canada, and Toronto, Canada. Our employees are not subject to a labor contract or collective bargaining agreement.
Human Capital Management Strategy
The continued growth and success of our business depends on our people, and our people are our most important resource. Management is responsible for ensuring that our policies and practices support our desired corporate culture and employee development. Our human capital management strategy is built on attracting the best talent and developing and retaining talent. We have benefited from a very low voluntary turnover rate, with many of the current staff still with the Company after 10 years of employment.
Human Rights
We are committed to respecting human rights in the jurisdictions where we operate and affirm our commitment to comply with all applicable laws concerning human rights through our Human Rights Policy.
Compensation and Benefits
We offer competitive compensation and benefits to attract and retain top talent. We provide competitive medical and other insurance coverage for employees and eligible dependents and provide for sick leave in the case of illness or absence due to the sickness of the employee or an immediate family member.
Development
We support the continued professional development of our employees by underwriting or subsidizing education and professional development programs for our employees.
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Host Community Commitment
We actively seek opportunities to advance sustainability initiatives with the goal of supporting communities that host the operations in which we hold stream and royalty interests during our operators’ mining operations. Many of our operators also actively and positively impact the communities where they mine. We encourage their sustainability initiatives and other efforts and often make our own financial contributions in support of their programs.
Local Community Support
We also believe in supporting the communities where we live and work. Our annual charitable giving is administered by a committee of employees, including members of senior management, that selects donation targets and recipients in our local communities. We are proud to partner with leading charities in Denver, Lucerne, Toronto, and Vancouver that are actively responding to community needs with respect to medical supplies, food availability and security, elder care, and education.
SEC Filings
We file periodic and current reports, proxy statements, and other information with the SEC. This includes our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those forms. These reports are available free of charge on our website at www.royalgold.com as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. These reports also can be obtained on the SEC’s website at www.sec.gov. The information on our website is not part of this or any other report filed with or furnished to the SEC.