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Item 8. Financial Statements and Supplementary Data

2023-02-16 compared with 2021-08-12 · 388 added, 300 removed, 544 unchanged (56% of the section changed)

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Index to Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB 00 42 )

CONSOLIDATED BALANCE SHEETS

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We have audited the accompanying consolidated balance sheets of Royal Gold, Inc.

(the Company) as of June 30, 2021 and 2020, the related consolidated statements of operations and comprehensive income, changes in equity and cash flows for each of the three years in the period ended June 30, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2021, in conformity with U.S.

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive income, changes in equity and cash flows for the year ended December 31, 2022, the six-month period ended December 31, 2021 and each of the two years in the period ended June 30, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for the year ended December 31, 2022, the six-month period ended December 31, 2021 and each of the two years in the period ended June 30, 2021, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 30, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated August 12, 2021 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 16, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

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Description of the Matter

At June 30, 2021, the Company’s stream and royalty interest balance totaled $2.3 billion.

At December 31, 2022, the Company’s stream and royalty interest balance totaled $3.2 billion.

As more fully described in Note 4 to the consolidated financial statements, the Company evaluates its stream and royalty interests for impairment whenever events or changes in circumstances indicate that the carrying amounts of the asset or group of assets may not be recoverable (“triggering events”).

Management evaluates various qualitative factors in determining whether or not events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be recoverable.

The factors considered include, among others, significant changes in estimates of forecasted gold, silver, copper and other metal prices, significant changes in operators’ estimates

of proven and probable reserves and other relevant information received from the operators, which may include operational or legal information that indicates production from mineral interests will not likely occur or may be significantly reduced in the future.

The factors considered include, among others, significant changes in estimates of forecasted gold, silver, copper and other metal prices, significant changes in operators’ estimates of proven and probable reserves and other relevant information received from the operators, which may include operational or legal information that indicates production from mineral interests may not occur or may be significantly reduced in the future or otherwise that the Company’s stream and royalty interest balance may not be recoverable.

Auditing the Company’s impairment assessment involved our subjective judgment because, in determining whether a triggering event occurred, management uses estimates that include, among others, assumptions about forecasted gold, silver, copper and other metal prices and total future production using reserve or other relevant information reported by the operators.

Significant uncertainty exists with these assumptions.

Further, management’s evaluation of any new information indicating that production will not likely occur or may be significantly reduced in the future requires significant judgment.

Further, management’s evaluation of any new information indicating that production will likely not occur or may be significantly reduced in the future, or otherwise that the Company’s stream and royalty interest balance may not be recoverable, requires significant judgment.

How We Addressed the Matter in Our Audit

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Denver, Colorado

August 12, 2021

February 16, 2023

ROYAL GOLD, INC.

Consolidated Balance Sheets

As of June 30,

(In thousands, except share data)

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Deferred tax liabilities

Uncertain tax positions

Other liabilities

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Common stock, $ .01 par value, 200,000,000 shares authorized;

and 65,551,061 and 65,531,288 shares outstanding, respectively

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

Additional paid-in capital

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Consolidated Statements of Operations and Comprehensive Income

For the Years Ended June 30,

(In thousands, except share data)

For The Year Ended

Six Months Ended

Fiscal Years Ended

Revenue (Note 8)

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Consolidated Statements of Changes in Equity

For the Years Ended June 30, 2021, 2020 and 2019

(In thousands, except share data)

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Common Shares

Comprehensive

Non-controlling

Income (Loss)

(Losses) Earnings

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Net income (loss)

Other comprehensive income (loss)

Dividends declared

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Stock-based compensation and related share issuances

Distributions from (to) non-controlling interests

Net income (loss)

Sale of Peak Gold JV interest

Distributions to non-controlling interests

Dividends declared

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Stock-based compensation and related share issuances

Sale of Peak Gold JV interest

Distributions to non-controlling interests

Dividends declared

Balance at June 30, 2021

Balance at December 31, 2021

Stock-based compensation and related share issuances

Distributions to non-controlling interests

Dividends declared

Balance at December 31, 2022

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

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Consolidated Statements of Cash Flows

For the Years Ended June 30,

(In thousands)

Six Months Ended

Fiscal Years Ended

Cash flows from operating activities:

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Depreciation, depletion and amortization

Amortization of debt issuance costs

Gain on sale of Peak Gold JV interest

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Fair value changes in equity securities

Deferred tax expense (benefit)

Deferred tax (benefit) expense

Impairment of royalty interests

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Common stock dividends

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

Net (decrease) increase in cash and equivalents

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(“Royal Gold”, the “Company”, “we”, “us”, or “our”), together with its subsidiaries, 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.

We seek to acquire existing stream and royalty interests or to finance projects that are in production or in the development (and exploration) stage in exchange for stream or royalty interests.

A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or more metals produced from a mine at a price determined for the life of the transaction by the purchase agreement.

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Actual results could differ significantly from those estimates.

We rely on reserve estimates reported by the operators of properties on which we hold stream and royalty interests.

We rely on mineral reserve and mineral resource estimates reported by the operators of properties on which we hold stream and royalty interests.

These estimates and the underlying assumptions affect the potential impairments of long-lived assets and the ability to realize income tax benefits associated with deferred tax assets.

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Basis of Consolidation

The consolidated financial statements include the accounts of Royal Gold, Inc., its wholly owned subsidiaries.

The consolidated financial statements include the accounts of Royal Gold, Inc., its majority owned or controlled subsidiaries.

All intercompany accounts, transactions, income and expenses, and profits or losses have been eliminated on consolidation.

Royal Gold, through its wholly owned subsidiary, Royal Alaska, LLC (“Royal Alaska”), and Contango ORE, Inc., through its wholly owned subsidiary CORE Alaska, LLC, entered into a limited liability company agreement for the Peak Gold JV, a joint venture for exploration and advancement of the Manh Choh Project (formerly known as the Peak Gold Project) located near Tok, Alaska.

We previously identified the Peak Gold JV as a Variable Interest Entity, with Royal Alaska as the primary beneficiary, due to the legal structure and certain related factors of the limited liability company agreement for the Peak Gold JV.

We determined that the Peak Gold JV should be fully consolidated at fair value initially.

As of June 30, 2020, Royal Alaska held a 40 % membership interest in the Peak Gold JV.

The fair value of our non-controlling interest was $ 45.7 million and was based on the underlying value of the mineral property assigned to the Peak Gold JV, which was recorded as an exploration stage property within Stream and royalty interests, net on our consolidated balance sheets as of June 30, 2020.

Royal Gold, through its wholly owned subsidiary, Royal Alaska, LLC (“Royal Alaska”), previously identified the Peak Gold JV as Variable Interest Entity, with Royal Alaska as the primary beneficiary, and we determined that the Peak Gold JV should be fully consolidated.

On September 30, 2020, we sold our Peak Gold JV interest, which is discussed in Note 3 of our notes to consolidated financial statements.

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cash and Equivalents

Cash and equivalents consist of all cash balances and highly liquid investments with an original maturity of three months or less.

Cash and equivalents were primarily held in cash deposit accounts as of June 30, 2021, and 2020.

Cash and equivalents were primarily held in cash deposit accounts as of December 31, 2022 and 2021.

Stream and Royalty Interests in Mineral Properties and Related Depletion

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The costs of acquired stream and royalty interests are capitalized as tangible assets as such interests do not meet the definition of a financial asset.

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Production stage stream and royalty interests are depleted using the units of production method over the life of the mineral property (as stream sales occur or royalty payments are recognized), which are estimated using proven and probable reserves as provided by the operator.

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Exploration stage mineral properties, where there are no proven and probable reserves, are not depleted.

At such time as the associated exploration stage mineral interests are converted to proven and probable reserves, the mineral property is depleted over its life, using proven and probable reserves.

At such time as the associated exploration stage mineral interests are converted to proven and probable reserves, and there is no production, the mineral property becomes a development stage mineral property.

Exploration costs are expensed when incurred.

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We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts of an asset or group of assets may not be recoverable.

When impairment indicators are identified, the recoverability of the carrying value of stream and royalty interests in production and development stage mineral properties is evaluated based upon estimated future undiscounted net cash flows from each stream and royalty interest using estimates of proven and probable reserves and other relevant information received from the operators.

When impairment indicators are identified, the recoverability of the carrying value of stream and royalty interests in production and development stage mineral properties is evaluated based upon estimated future undiscounted net cash flows from each stream and royalty interest using estimates of proven and probable mineral reserves, mineral resources and other relevant information received from the operators.

We evaluate the recoverability of the carrying value of royalty interests in exploration stage mineral properties in the event of significant decreases in the price of gold, silver, copper and other metals, and whenever new information regarding the mineral properties is obtained from the operator indicating that production will not likely occur or may be reduced in the future, thus potentially affecting the future recoverability of our stream or royalty interests.

Impairments in the carrying value of each property are measured and recorded to the extent that the carrying value in each property exceeds its estimated fair value, which is generally calculated using estimated future discounted cash flows.

Estimates of gold, silver, copper, and other metal prices, and operators’ estimates of proven and probable reserves or mineralized material related to our stream or royalty properties are subject to certain risks and uncertainties which may affect the recoverability of our investment in these stream and royalty interests in mineral properties.

Estimates of gold, silver, copper, and other metal prices, and operators’ estimates of proven and probable mineral reserves or mineral resources related to our stream or royalty properties are subject to certain risks and uncertainties which may affect the recoverability of our investment in these stream and royalty interests in mineral properties.

It is possible that changes could occur to these estimates, which could adversely affect the net cash flows expected to be generated from these stream and royalty interests.

Refer to Note 4 for discussion and the results of our impairment assessments for the fiscal years ended June 30, 2021, 2020 and 2019.

Refer to Note 4 for discussion and the results of our impairment assessments for the year ended December 31, 2022, six months ended December 31, 2021, and fiscal years ended June 30, 2021, and 2020.

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.

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A more detailed summary of our revenue recognition policies for our stream and royalty interests is discussed in Note 8.

Gold, silver and copper received under our metal stream agreements are taken into inventory, and then sold primarily using average spot rate gold, silver and copper forward contracts.

The sales price for these average spot rate forward contracts is determined by the average daily gold, silver or copper spot prices during the term of the contract, typically a consecutive number of trading days between 10 days and three months (depending on the frequency of deliveries under the respective stream agreement and our sales activity in effect at the time) commencing shortly after receipt and purchase of the metal.

Revenue from gold, silver and copper sales is recognized on the date of the settlement, which is also the date that title to the metal passes to the purchaser.

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Gold, silver and copper received under our metal streaming agreements are taken into inventory, and then sold primarily using average spot rate gold, silver and copper forward contracts.

The sales price for these average spot rate forward contracts is determined by the average daily gold, silver or copper spot prices during the term of the contract, typically a consecutive number of trading days between 10 days and three months (depending on the frequency of deliveries under the respective streaming agreement and our sales activity in effect at the time) commencing shortly after receipt and purchase of the metal.

Revenue from gold, silver and copper sales is recognized on the date of the settlement, which is also the date that title to the metal passes to the purchaser.

Cost of Sales

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The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions and resolution of disputes arising from federal, state, and international tax audits.

We recognize potential liabilities and records tax liabilities for anticipated tax audit issues in the United States and other tax jurisdictions

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

based on our estimate of whether, and the extent to which, additional taxes will be due.

We recognize potential liabilities and record tax liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes will be due.

We adjust these reserves in light of changing facts and circumstances, such as the progress of a tax audit;

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Basic earnings per share is computed by dividing net income available to Royal Gold common stockholders by the weighted average number of outstanding common shares for the period, considering the effect of participating securities.

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts that may require issuance of common shares were converted.

Diluted earnings per share is computed by dividing net income available to common stockholders by the diluted weighted average number of common shares outstanding during each fiscal year.

Diluted earnings per share is computed by dividing net income available to common stockholders by the diluted weighted average number of common shares outstanding during each period.

Recently Adopted Accounting Standards

Recently Adopted

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses of Financial Instruments , which, together with subsequent amendments, changes how an entity will record credit losses from an “incurred loss” approach to an “expected loss” approach.

This update was effective for annual periods beginning after December 15, 2019 (i.e.

July 1, 2020 for Royal Gold) and interim financial statement periods within those years, with early adoption permitted.

On July 1, 2020, we adopted the new guidance and, based on our assessment, the adoption of the new guidance did not have any impact on our consolidated financial statements.

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 this Annual Report on Form 10-K and do not believe the future adoption of any such standards will have a material impact on our consolidated financial statements.

ACQUISITIONS AND DISPOSITIONS

Acquisition of Additional Royalty Interests on Cortez Complex

On December 29, 2022, we acquired two portions of a gross smelter return royalty (the “Idaho Royalty”) that together cover a large area including the Cortez mine operational area and the entirety of the Fourmile development project in Nevada (the “Cortez Complex”) from certain holders who are successors in interest to Idaho Mining Corporation for cash consideration of $ 204.1 million.

The area within the Cortez Complex is owned or controlled by Nevada Gold Mines LLC (“NGM”), a joint venture between Barrick Gold Corporation (“Barrick”) and Newmont Corporation, with the exception of the Fourmile development project which is 100 % owned and operated by Barrick.

The Idaho Royalty comprises a 0.24 % gross royalty that covers areas including the Pipeline and Crossroads deposits and a 0.45 % gross royalty that covers areas including the Cortez Hills, Goldrush, Fourmile and Robertson deposits.

The Idaho Royalty is life of mine, not subject to any stepdowns or caps, and has no applicable deductions.

The purchase price was funded with our available revolving credit facility (Note 6) and cash on hand.

The economic effective date for the transaction was December 1, 2022, and revenue of $ 0.7 million on production of approximately 116,000 ounces attributable to the royalty was recognized in the fourth quarter of 2022.

The acquisition has been accounted for as an asset acquisition and the $ 204.1 million cash consideration, plus direct acquisition costs, have been recorded and allocated between production and exploration stage royalty interests (Note 4) within Stream and royalty interests, net on our consolidated balance sheets.

On the date of acquisition, $ 73.4 million and $ 130.7 million was allocated to production stage and exploration stage royalty interests, respectively.

The acquisition cost of the production stage portion of the Idaho Royalty will be depleted using the units of production method, which is estimated using aggregate proven and probable reserves, as provided by NGM.

Acquisition of Great Bear Royalties Corp.

On September 9, 2022, we completed the acquisition of all of the issued and outstanding shares of Great Bear Royalties Corp.

(“GBR”) for cash consideration of approximately C$ 199.6 million (US$ 151.7 million) (“the Acquisition Price”).

GBR’s sole material asset is a 2.0 % net smelter return royalty (“Great Bear Royalty”) that covers the entirety of the Great Bear Project in the Red Lake district of Ontario, Canada, owned and operated by a subsidiary of Kinross Gold Corporation (“Kinross”).

The Great Bear Royalty includes all metals produced from contiguous claims covering 9,140 hectares.

Royalty payments will be made quarterly with applicable standard deductions.

The purchase price was funded with available cash on hand.

As part of the acquisition and in exchange for information and access to the project provided by Kinross, we granted an option (“Buyback Option”) to Kinross to purchase a 25 % interest in the Great Bear Royalty ( 0.5 % of the 2.0 % royalty rate) for an amount equal to 25 % of the Acquisition Price, adjusted for inflation, at any time from the transaction closing

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

date until the earlier of a construction decision for the Great Bear Project and 10 years after the transaction closing date.

The fair value of the Buyback Option on the transaction date using a Black-Scholes model was $ 2.1 million.

The Buyback Option has been capitalized as a direct transaction cost with the Great Bear Royalty mineral interest and will not be subsequently remeasured until the Buyback Option is either exercised or it expires.

The Great Bear Royalty is the sole material asset of GBR and represents substantially all the fair value of GBR’s gross assets.

As a result, the GBR acquisition has been accounted for as an asset acquisition and the fair values of the GBR assets acquired are shown below:

(in thousands)

Purchase Price

Royalty interests in mineral property (Great Bear royalty)

Total allocated purchase price

The $ 151.7 million allocated fair value of the Great Bear Royalty, plus $ 4.4 million of direct transaction costs and deferred tax of $ 53.6 million have been capitalized with the Great Bear Royalty mineral interest and allocated to exploration stage royalty interests within Stream and royalty interests, net on our consolidated balance sheets.

The deferred tax was recorded as a gross-up to the Great Bear Royalty mineral interest as prescribed by the applicable guidance.

Acquisition of Gross Royalty on Cortez Complex

On August 2, 2022, we acquired a sliding scale gross royalty (the “Rio Tinto Royalty”) on production from an area within the Cortez Complex for cash consideration of $ 525 million.

The area within the Cortez Complex is owned or controlled by NGM, with the exception of the Fourmile development project which is 100 % owned and operated by Barrick.

The royalty is a life of mine sliding scale gross royalty payable at a rate of 0 % at a gold price less than $ 400 per ounce, increasing to 3 % at a gold price above $ 900 per ounce, and is payable on 40 % of all production from the Cortez Complex.

Based on information available, the royalty would not cover the existing deposits within the Robertson property.

At current gold prices the Rio Tinto Royalty is an effective 1.2 % gross royalty on the Cortez Complex and is not subject to any stepdowns or caps.

Deductions from the Rio Tinto Royalty payments are limited to third-party royalties that existed prior to the creation of the royalty in 2008, which include the existing Crossroads and Pipeline royalties owned by Royal Gold.

The purchase price was funded with debt and available cash on hand.

The acquisition has been accounted for as an asset acquisition and the $ 525 million cash consideration, plus direct acquisition costs, have been recorded and allocated between production and exploration stage royalty interests (Note 4) within Stream and royalty interests, net on our consolidated balance sheets.

On the date of acquisition, $ 199 million and $ 326 million was allocated to production stage and exploration stage royalty interests, respectively.

The acquisition cost of the production stage Rio Tinto Royalty will be depleted using the units of production method, which is estimated using aggregate proven and probable reserves, as provided by NGM.

The royalty became payable during the quarter ended September 30, 2022, after cumulative production of 15 million gold equivalent ounces from the Cortez Complex from a starting date of January 1, 2008.

The royalty is payable within forty-five days after the end of each calendar quarter.

Lawyers Royalty Acquisition

On March 24, 2022, we acquired a 0.5 % net smelter returns royalty (“NSR”) on production from the Lawyers Project, currently operated by Benchmark Metals Inc., which is located in British Columbia, Canada.

As part of this transaction, we also acquired a right of first offer (“ROFO”) for an existing 2.0 % NSR royalty over the Ranch Project owned by Thesis Gold, Inc.

that is located adjacent to the Lawyers Project.

We paid $ 8.0 million in cash consideration for the royalty and

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

ROFO to Guardsmen Resources Inc.

The Lawyers Project acquisition has been accounted for as an asset acquisition.

The $ 8.0 million cash consideration, plus direct acquisition costs, have been recorded as an exploration stage royalty interest (Note 4) within Stream and royalty interests, net on our consolidated balance sheets.

Khoemac a u Silver Stream

On February 23, 2022, we made an advance payment of $ 10.0 million toward the option stream which increased our right to receive payable silver produced from Khoemac a u from 90 % to 93 %, and on March 14, 2022, we made our final advance payment of $ 16.5 million toward the option stream which increased our right to receive payable silver produced from 93 % to 100 %.

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

As of December 31, 2022, $ 25.0 million of the subordinated debt facility, and $ 5.5 million of accrued interest remains outstanding on the Khoemac a u subordinated debt facility, and these amounts are included in Other assets in our consolidated balance sheets.

Red Chris Royalty Acquisition

On August 11, 2021, we acquired a 1.0 % NSR royalty covering approximately 5,100 hectares, which includes the currently known mineralization and prospective exploration areas of the Red Chris Mine in British Columbia, Canada.

We paid $ 165 million in cash consideration for the royalty to Glencore Canada Corporation, a wholly owned subsidiary of Glencore International AG.

The Red Chris Mine is an operating open pit mine producing gold, copper and silver, and is located on the northern edge of the Skeena Mountains.

The mine is owned and operated by a joint venture, which is owned 70 % by Newcrest Mining Ltd.

(“Newcrest”) and 30 % by Imperial Metals Corporation, in which Newcrest is the operator.

The Red Chris royalty acquisition has been accounted for as an asset acquisition.

The $ 165 million cash consideration, plus direct acquisition costs, have been recorded and allocated between production and exploration stage royalty interests (Note 4) within Stream and royalty interests, net on our consolidated balance sheets.

On the date of acquisition, $ 116.2 million and $ 48.9 million was allocated to production stage and exploration stage royalty interests, respectively.

The acquisition cost of the production stage Red Chris royalty will be depleted using the units of production method, which is estimated using aggregate proven and probable reserves, as provided by Newcrest.

Xavantina (formerly “NX Gold Mine”) Gold Stream Acquisition

On June 30, 2021, we announced that we entered into a precious metals purchase agreement for gold produced from the operating underground Xavantina mine in Brazil (“Xavantina Stream”) with Ero Gold Corporation, a wholly owned subsidiary of Ero Copper Corporation, and certain of its affiliates (together, “Ero”).

On August 6, 2021, we made an advance payment of $ 100 million upon closing the transaction.

In exchange for the consideration provided, we will receive 25 % of the gold produced from the Xavantina mine until the delivery of 93,000 ounces, and 10 % thereafter.

We will pay 20 % of the spot gold price for each ounce delivered until the delivery of 49,000 ounces, and 40 % of the spot gold price thereafter.

Per the purchase agreement, we may make up to an additional $ 10 million of advance payments from the beginning of calendar 2022 through the end of calendar 2024 based on Ero meeting success-based targets related to regional exploration and mineral resource additions.

As of December 31, 2022, we have made $ 3.2 million of additional advance payments to Ero and $ 6.8 million of additional advance payments remain.

The Xavantina Stream has been accounted for as an asset acquisition.

The $ 100 million advance payment, plus direct acquisition costs, have been recorded and allocated between production and exploration stage stream interests (Note 4) within Stream and royalty interests, net on our consolidated balance sheets.

On the date of acquisition, $ 54.9 million and

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

$ 45.1 million was allocated to production stage and exploration stage royalty interests, respectively.

The acquisition cost of the production stage Xavantina Gold Stream will be depleted using the units of production method, which is estimated using aggregate proven and probable reserves, as provided by Ero.

Côté Royalty Acquisition

On June 7, 2021, we acquired a 1.0 % net smelter return royalty (“NSR”) on certain claims covering the Côté Gold Project in Northern Ontario, Canada.

On June 7, 2021, we acquired a 1.0 % NSR royalty on certain claims covering the Côté Gold Project in Northern Ontario, Canada.

The Côté Gold Project is owned 92.5 % by the Côté Gold Joint Venture (a joint venture owned 70 % by IAMGOLD Corporation and 30 % by Sumitomo Metal Mining Co., Ltd.), and 7.5 % by a third party.

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In addition to the total cash consideration of $ 61.3 million, we received the following royalty interests:

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

● An incremental 28 % NSR royalty on silver produced from an area of interest which includes the current Manh Choh Project resource area.

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● An incremental 1 % NSR royalty on certain State of Alaska mining claims acquired by a wholly owned subsidiary of Contango in the transaction, increasing our royalty on this area from 2 % to 3 %.

The royalties are recorded as exploration stage royalty interests in Stream and royalty interests, net in our consolidated balance sheet as of June 30, 2021 and were assigned a combined value of approximately $ 4.4 million on the date of the transaction.

The royalties are recorded as development and exploration stage royalty interests in Stream and royalty interests, net in our consolidated balance sheet as of December 31, 2022 and have a combined value of approximately $ 4.4 million.

We recorded a gain of $ 33.9 million on the sale of our 40 % membership interest in the Manh Choh Project during the three months ended September 30, 2020.

The mark-to-market increase of $ 3.6 million on the sale of our 809,744 common shares in Contango is included in Fair value changes in equity securities on our consolidated statements of operations and comprehensive income and was recognized during the three months ended September 30, 2020.

Alturas Royalty Acquisition

On January 29, 2020, we entered into an agreement with various private individuals for the acquisition of a NSR royalty of up to 1.06 % (gold) and up to 1.59 % (copper) on mining concessions included as part of the Alturas project, which is located within the Coquimbo Region of Chile and held by Compañia Minera Salitrales Limitada, a subsidiary of Barrick Gold Corporation (“Barrick”).

Total consideration for the royalty is up to $ 41 million, of which $ 11 million was paid on January 29, 2020.

The $ 11 million paid as part of the funding schedule, plus direct acquisition costs, have been recorded as an exploration stage royalty interest within Stream and royalty interests, net on our consolidated balance sheets.

A future payment of up to $ 20 million is conditioned based on a project construction decision by Barrick and the size of the minable mineralized material on the date of the construction decision.

A further future payment of up to $ 10 million will be made upon first production from the mining concessions.

Castelo de Sonhos Royalty Acquisition

In August 2019, we entered into an agreement with TriStar Gold Inc.

and its subsidiaries (together “TriStar”) to acquire (i) up to a 1.5 % NSR royalty on the Castelo de Sonhos gold project (“CDS”), located in Brazil, and (ii) warrants to purchase up to 19,640,000 common shares of TriStar.

Total consideration is $ 7.5 million and is payable over three payments, of which $ 4.5 million was paid in August 2019, $ 1.5 million was paid in November 2019, and the final payment of $ 1.5 million was paid on March 30, 2020.

The CDS royalty acquisition has been accounted for as an asset acquisition.

The $ 7.5 million paid as part of the aggregate funding schedule, plus direct acquisition costs, have been recorded as an exploration stage royalty interest within Stream and royalty interests, net on our consolidated balance sheets.

The warrants have been recorded within Other assets on our consolidated balance sheets and have a carrying value of approximately $ 3.1 million as of June 30, 2021.

The warrants have been classified as a financial asset instrument and are recorded at fair value at each reporting date using the Black-Scholes model (see Note 13).

As of June 30, 2021, we hold 19,640,000 warrants at an exercise price of C$ 0.25 per common share with a remaining term of approximately three years .

Acquisition of Silver Stream on Khoemac a u Copper Project

On February 25, 2019, we entered into a silver stream with Khoemac a u Copper Mining (Pty.) Limited (“KCM”) for the purchase of silver produced from the Khoemac a u Project (“Khoemac a u”).

Between November 2019 and January 2021, we completed a total of $ 212 million in advanced payments required to earn the base silver stream (“Silver Stream”) of 80 % of payable silver produced from Khoemac a u, until the delivery of 32.0 million ounces, and 40 % thereafter.

On April 7, 2021, we made a seventh advance payment of $ 10.6 million toward the option silver stream (“Option Stream”) which increased our right to receive payable silver produced from Khoemac a u from a rate of 80 % to 84 % until the delivery of

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

approximately 33.6 million silver ounces, and 42 % thereafter.

We will pay a cash price equal to 20 % of the spot silver price for each ounce delivered;

however, if KCM achieves mill expansion throughput levels above 13,000 tonnes per day ( 30 % above current mill design capacity), we will pay a higher ongoing cash price for silver ounces delivered in excess of specific annual thresholds.

We have accounted for the base Silver Stream and initial funding towards the Option Stream as an asset acquisition, consistent with the treatment of our other acquired streams.

The $ 212 million in advance payments for the base Silver Stream made during our fiscal year 2021 and 2020 and the $ 10.6 million toward the Option Stream, plus direct transaction costs, have been recorded as a development stage stream interest within Stream and royalty interests, net on our consolidated balance sheets as of June 30, 2021.

Any further advance payments made under the Option Stream (if exercised by KCM) will be recorded as a development stage interest within Stream and royalty interests, net on our consolidated balance sheets during the period the advance payment occurs.

Separate from the Silver Stream and Option Stream, and subject to various conditions, we will make up to $ 25 million available to KCM toward the end of development of Khoemac a u under a subordinated debt facility.

Any amounts drawn by KCM under the debt facility will carry interest at LIBOR + 11 % and have a term of seven years .

We will have the right to force repayment of the debt facility upon certain events.

On April 7, 2021, KCM drew $ 18.0 million on the $ 25.0 million subordinated debt facility which is recorded under Other Assets on our consolidated balance sheets.

As of June 30, 2021, we had remaining committed funding of $ 49.4 million to KCM in the form of $ 42.4 million of additional advance payments under the Option Stream and $ 7.0 million of debt, both of which may be drawn at the election of KCM prior to completion of construction.

On July 7, 2021, KCM drew the remaining $ 7.0 million amount on the subordinated debt facility, reducing our remaining committed funding to $ 42.4 million of additional advance payments under the Option Stream.

KCM has indicated that it does not expect to draw any material amounts from the remaining committed funding as part of the Option Stream.

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

STREAM AND ROYALTY INTERESTS, NET

The following summarizes our stream and royalty interests as of June 30, 2021 and 2020:

As of June 30, 2021 (Amounts in thousands):

The following summarizes our stream and royalty interests as of December 31, 2022 and 2021:

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

Accumulated Depletion

2 unchanged sentences

Total production stage stream interests

( 1,022,428 )

Production stage royalty interests:

Cortez (Legacy Zone and CC Zone)

Total production stage royalty interests

4 unchanged sentences

Total development stage stream and royalty interests

Exploration stage stream interests:

Exploration stage royalty interests:

Total exploration stage royalty interests

Cortez (Legacy Zone and CC Zone)

Total exploration stage stream and royalty interests

Total stream and royalty interests, net

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of June 30, 2020 (Amounts in thousands):

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

Accumulated Depletion

9 unchanged sentences

Total development stage stream and royalty interests

Exploration stage stream interests:

Exploration stage royalty interests:

2 unchanged sentences

( 1,456,115 )

Separation of the Wassa and Prestea and Bogoso Stream Agreement

On October 1, 2020, we announced the separation of the Wassa gold stream and the Prestea and Bogoso gold streams into two separate stream agreements effective September 30, 2020.

This separation was completed to facilitate the sale by Golden Star Resources Ltd.

(“Golden Star”) of the Prestea and Bogoso mines to Future Global Resources (“FGR”).

The Wassa stream agreement, which remains with Golden Star, continues to provide us the right to purchase 10.5 % of the gold payable from the Wassa mine until the delivery of 240,000 ounces, after which the stream percentage will decrease to 5.5 %.

The cash purchase price for gold remains at 20 % of the spot price per ounce delivered until the delivery of 240,000 ounces, and 30 % of the spot price per ounce delivered thereafter.

As of June 30, 2021, approximately 112,000 ounces remain to be delivered from the Wassa mine until the 240,000 ounce delivery threshold is reached.

The Prestea and Bogoso stream agreement with FGR provides us the right to purchase 5.5 % of the gold payable from the Prestea and Bogoso mines in return for a cash purchase price of 30 % of the spot price per ounce delivered.

The material terms of both the Wassa stream agreement and the Prestea and Bogoso stream agreement, including security and the rights and obligations of both Royal Gold and Golden Star, remain substantially consistent with those terms in the original agreement.

The Wassa stream is recorded as a production stage stream interest within Stream and royalty interests, net on our consolidated balance sheets and has a carrying value of $ 67.6 million as of June 30, 2021.

The Prestea and Bogoso stream has a carrying value of $ 0 as of June 30, 2021.

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Mount Milligan

We own the right to purchase 35 % of the payable gold and 18.75 % of the payable copper produced from the Mount Milligan copper-gold mine in British Columbia, Canada, which is operated by an indirect subsidiary of Centerra Gold Inc.

(“Centerra”).

Our carrying value for the stream interest at Mount Milligan is $ 490.3 million as of June 30, 2021.

On October 30, 2019, Centerra reported that issues identified with decreasing long-term gold recoveries and increased costs in the short-to medium-term led them to record an impairment charge against their carrying value of the Mount Milligan mine under applicable accounting standards, and that it had begun a comprehensive technical review of the operation with the objective of publishing an updated National Instrument 43-101 (“NI 43-101”) technical report.

On March 26, 2020, Centerra published an updated NI 43-101 technical report for Mount Milligan which provided, among other things, a detailed update to the life of mine plan and reductions to the proven and probable reserves due to increased costs, lower expected productivities and lower process plant throughput.

Significant reductions in proven and probable reserves or mineralized material are indicators of potential impairment for our stream and royalty interests.

As part of our regular asset impairment analysis during the quarter ended March 31, 2020, we determined that an impairment of our stream interest at Mount Milligan was not necessary as (i) the financial impairment taken by Centerra does not impact the mine operating performance, and (ii) the reduction in reserves and mineralized material at Mount Milligan resulted in updated gold and copper depletion rates that remain well below current and long-term consensus gold and copper prices.

As of June 30, 2021, the gold and copper depletion rates at our Mount Milligan stream interest are $ 712 per ounce of gold and $ 1.53 per pound of copper.

Depletion rates well below current and long-term consensus metal prices are a strong indicator the carrying value of our stream or royalty interests are recoverable and thus we concluded no impairment indicators were present as of June 30, 2021.

We own the right to purchase 6.50 % of the gold produced from the Rainy River mine, which is located in northwestern Ontario, Canada and is operated by New Gold, Inc.

(“New Gold”), until 230,000 gold ounces have been delivered, and 3.25 % thereafter;

and 60 % of the silver produced from the Rainy River mine until 3.1 million silver ounces have been delivered, and 30 % thereafter.

As of June 30, 2021, approximately 54,000 ounces of gold and approximately 699,400 ounces of silver have been delivered to us.

Our carrying value for the stream interest at Rainy River is $ 134.0 million as of June 30, 2021.

During the quarter ended December 31, 2019, New Gold reported that it continued to advance a comprehensive mine optimization study that would include a review of alternative open pit and underground mining scenarios at Rainy River On February 13, 2020, New Gold reported the results of the comprehensive optimization study that included an updated mine plan, which resulted in, among other things, a reduction in gold and silver reserves and the potential to extend the underground mine life beyond calendar year 2028.

New Gold published an updated NI 43-101 technical report for Rainy River on March 27, 2020, reflecting the updated mine plan and reserves.

Significant reductions in proven and probable reserves or mineralized material are indicators of potential impairment for our stream and royalty interests.

As a result of the new information from New Gold, and as part of our regular asset impairment analysis, we determined that an impairment on our Rainy River stream interest was not necessary as of March 31, 2020 as the reduction in gold and silver reserves resulted in updated depletion rates that remain well below current and long-term consensus gold and silver prices.

As of June 30, 2021, the gold and silver depletion rates at our Rainy River stream interest are $ 779 per ounce of gold and $ 9.07 per ounce of silver.

Depletion rates well below current and long-term metal prices are a strong indicator the carrying value of our stream or royalty interests are recoverable.

On October 4, 2022, Centerra Gold, Inc.

announced the highlights of an updated life of mine plan for Mount Milligan which provided, among other things, a four-year extension of the mine life to 2033 and increases to the proven and probable reserves.

As a result of the increase in proven and probable reserves, the gold and copper depletion rates on our Mount Milligan stream decreased to $ 416 per ounce of gold and $ 1.06 per pound of copper as of September 30, 2022 from $ 703 per ounce of gold and $ 1.53 per pound of copper.

In accordance with our impairment accounting policy discussed in Note 2, impairment in the carrying value of each stream and royalty interest is measured and recorded to the extent that the carrying value in each stream and royalty interest exceeds its estimated fair value, which is generally calculated using estimated future discounted cash-flows.

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

COVID-19 Pandemic

Throughout calendar year 2020 and into calendar year 2021, several of our operating counterparties have instituted temporary operational curtailments due to the ongoing COVID-19 pandemic.

In addition, the pandemic and resulting economic and societal impacts have made it difficult for operators to forecast expected production amounts and, at times, operators have had to withdraw or revise previously disclosed guidance.

For the most part, our results of operations and financial condition have not been materially impacted by these measures to date.

However, the effects of the pandemic will ultimately depend on many factors that are outside of our control, including the severity and duration of the pandemic, government and operator actions in response to the pandemic, and the development, availability, and public acceptance of effective treatments and vaccines.

As a result, we are currently unable to predict the nature or extent of any future impact on our results of operations and financial condition.

We continue to monitor the impact of developments associated with the pandemic on stream and royalty interests as part of our regular asset impairment analysis.

Impairment of Royalty Interests

In accordance with our impairment accounting policy discussed in Note 2, impairments in the carrying value of each royalty interests are measured and recorded to the extent that the carrying value in each royalty interest exceeds its estimated fair value, which is generally calculated using estimated future discounted cash-flows.

During the quarter ended June 30, 2019, we were made aware of insolvency proceedings at one of our non-principal producing properties (El Toqui).

During the quarter ended June 30, 2020, we obtained new information regarding the insolvency proceedings and determined our carrying value for El Toqui was not recoverable and an impairment of $ 1.3 million was necessary.

At June 30, 2020 and 2021, our carrying value for El Toqui was zero .

During the quarter ended December 31, 2022, an indicator of impairment was identified on one of our non-principal exploration stage royalty interests due to new legal information received.

Based on legal proceedings and subsequent legal analysis, we determined the carrying value of the non-principal exploration stage royalty interest was not recoverable and an impairment of $ 4.3 million was necessary.

At December 31, 2022, our carrying value for the non-principal exploration stage royalty interest was zero .

During the quarter ended June 30, 2020, we obtained new information regarding the insolvency proceedings and determined the carrying value for the non-principal production stage royalty interest was not recoverable and an impairment of $ 1.3 million was necessary.

There were no impairment charges on any of our stream and royalty interests for the transition period ended December 31, 2021 or for the fiscal year ended June 30, 2021.

MARKETABLE EQUITY SECURITIES

As of June 30, 2021, our marketable equity securities include warrants to purchase up to 19,640,000 common shares of TriStar Gold Inc.

Our marketable equity securities are measured at fair value (Note 13) each reporting period with any changes in fair value recognized in net income.

As a result of the announcement on March 15, 2021, by Evolution Mining Limited to acquire all of the issued and outstanding shares of Battle North Gold Corporation (“Battle North Gold”) at a price of $ 2.65 Canadian dollars per share, we voted all 3,949,575 of our Battle North Gold common shares in favor of the transaction that completed on May 20, 2021, and received cash consideration of $ 8.6 million.

As discussed in Note 3, on September 30, 2020, we sold 809,744 common shares of Contango for total consideration of $ 12.1 million and recorded a mark-to-market increase of $ 3.6 million on the sale, which is included in Fair value changes in equity securities in our consolidated statement of operations and comprehensive income for the fiscal year ended June 30, 2021.

The fair value of our marketable equity securities increased $ 6.0 million and $ 1.4 million for the years ended June 30, 2021, and 2020, respectively, and these changes are included in Fair value changes in equity securities on our consolidated statements of operation and comprehensive income.

The carrying value of our marketable equity securities as of June 30, 2021 and 2020 was $ 3.1 million and $ 17.9 million, respectively, and is included in Other assets on our consolidated balance sheets.

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s debt as of June 30, 2021 and 2020 consists of the following:

As of June 30, 2021

As of June 30, 2020

As of December 31, 2022, our marketable equity securities include warrants to purchase up to 19,640,000 common shares of TriStar Gold Inc.

250,000 common shares of Goldon Resources Ltd.

and 1,242,500 common shares of Mountain Boy Minerals Ltd.

The common shares of Goldon Resources Ltd.

and Mountain Boy Minerals Ltd.

were acquired as part of the GBR acquisition.

Our marketable equity securities are measured at fair value (Note 13) each reporting period with any changes in fair value recognized in net income (amounts in thousands).

Carrying value of marketable securities

Change in fair value of marketable securities (1)

(1) Period ended December 31, 2021 is for six months ended.

The Company’s debt as of December 31, 2022 and 2021 consists of the following:

As of December 31, 2022

As of December 31, 2021

Debt Issuance Costs

4 unchanged sentences

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

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revolving Credit Facility

As of June 30, 2021, we had no amounts outstanding under our revolving credit facility and $ 1 billion available.

Interest expense recognized on the revolving credit facility for the fiscal years ended June 30, 2021, 2020 and 2019 was approximately $ 3.3 million, $ 7.0 million and $ 1.7 million, respectively, and included interest on the outstanding borrowings and the amortization of the debt issuance costs.

We were in compliance with each financial covenant (leverage ratio and interest coverage ratio) under the revolving credit facility as of June 30, 2021.

On July 2, 2022, we borrowed $ 500 million under our revolving credit facility for the acquisition of the Cortez Complex Royalty, and on September 6, 2022, we repaid $ 50 million of the outstanding borrowings.

Refer to Note 3 of our notes to consolidated financial statements for further discussion on the Rio Tinto Royalty acquisition.

On December 6, 2022, we repaid $ 75 million of outstanding borrowings on our revolving credit facility, and on December 28, 2022 we borrowed $ 200 million for the acquisition of additional royalty interests on the Cortez Complex.

Refer to Note 3 of our notes to consolidated financial statements for further discussion on the acquisition of the Idaho Royalty.

As of December 31, 2022, we had $ 575 million of debt outstanding with an all-in rate interest rate on borrowings of 5.93 % and $ 425 million available under our revolving credit facility.

Interest expense recognized on the revolving credit facility for the year ended December 31, 2022, six months ended December 31, 2021 and fiscal years ended June 30, 2021 and 2020 was approximately $ 10.0 million, $ 1.4 million, $ 3.3 million and $ 7.0 million, respectively, and included interest on the outstanding borrowings and the amortization of the debt issuance costs.

We were in compliance with each financial covenant (leverage ratio and interest coverage ratio) under the revolving credit facility as of December 31, 2022.

On July 7, 2021, we entered into a fourth amendment to our revolving credit facility dated as of June 2, 2017.

The amendment extends the maturity date from June 3, 2024, to July 7, 2026, adds provisions to provide for the eventual replacement of LIBOR and makes certain changes to the lenders under the agreement.

In August 2021, we borrowed $ 100 million under our revolving credit facility for business development activities and have $ 900 million available.

Royal Gold may repay any borrowings under the revolving credit facility at any time without premium or penalty.

1 unchanged sentence

These arrangements are for leases of assets such as corporate office space and office equipment.

We lease office space and office equipment under operating leases expiring at various dates through the fiscal year ending June 30, 2030.

The following amounts were recorded in the consolidated balance sheets at June 30, 2021 (amounts in thousands):

We lease office space and office equipment under operating leases expiring at various dates through the year ending December 31, 2030.

The following amounts were recorded in the consolidated balance sheets at December 31, 2022 (amounts in thousands):

Classification

June 30, 2021

December 31, 2022

Operating Leases

10 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Maturities of operating lease liabilities at June 30, 2021 were as follows (amounts in thousands):

Maturities of operating lease liabilities at December 31, 2022 were as follows (amounts in thousands):

Fiscal Years:

3 unchanged sentences

Other information pertaining to leases consists of the following:

June 30, 2021

December 31, 2022

Operating Lease Term and Discount Rate

1 unchanged sentence

Weighted average discount rate

We did not have any finance leases as of June 30, 2021.

We did not have any finance leases as of December 31, 2022.

Revenue Recognition

6 unchanged sentences

A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or more of the metals produced from a mine, at a price determined for the life of the transaction by the purchase agreement.

Gold, silver and copper received under our metal streaming agreements are taken into inventory, and then sold primarily using average spot rate gold, silver and copper forward contracts.

The sales price for these average spot rate forward contracts is determined by the average daily gold, silver or copper spot prices during the term of the contract, typically a consecutive number of trading days between ten days and three months (depending on the frequency 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.

Gold, silver and copper received under our metal stream agreements are taken into inventory, and then sold primarily using average spot rate gold, silver and copper forward contracts.

The sales price for these average spot rate forward contracts is determined by the average daily gold, silver or copper spot prices during the term of the contract, typically a consecutive number of trading days between ten days and three months (depending on the frequency of deliveries under the respective stream agreement and our sales policy in effect at the time) commencing shortly after receipt and purchase of the metal.

We settle our forward sales contracts via physical delivery of the metal to the purchaser (our customer) on the settlement date specified in the contract.

9 unchanged sentences

We have further determined that the transfer of each unit of metal production, comprising our royalty interest, to the operator represents a separate performance obligation under the contract, and each performance obligation is satisfied at the point in time of metal production by the operator.

Accordingly, we recognize revenue attributable to our royalty interests in the period in which metal production occurs at the specified commodity price per the agreement, net of any contractually allowable offsite treatment, refining, transportation and, if applicable, mining costs.

Royalty Revenue Estimates

4 unchanged sentences

Please also refer to our “Use of Estimates” accounting policy discussed in Note 2.

For the quarter ended June 30, 2021, royalty revenue that was estimated or was attributable to metal production for a period prior to June 30, 2021, was not material.

For the quarter ended December 31, 2022, royalty revenue that was estimated or was attributable to metal production for a period prior to December 31, 2022, was not material.

Disaggregation of Revenue

3 unchanged sentences

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

Fiscal Year Ended

Six Months Ended

Fiscal Years Ended

Stream revenue:

6 unchanged sentences

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

Fiscal Year Ended

Six Months Ended

Fiscal Years Ended

Stream revenue:

5 unchanged sentences

Royalty revenue:

Cortez Legacy Zone

Cortez CC Zone

Gold, Silver, Lead & Zinc

8 unchanged sentences

Stock options granted under the 2015 LTIP may be non-qualified stock options or incentive stock options.

We recognized stock-based compensation expense as follows:

Fiscal Year Ended June 30,

(Amounts in thousands)

Stock options

Stock appreciation rights

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

Six Months Ended

Fiscal Years Ended

Restricted stock

Performance stock

Stock appreciation rights

Stock options

Total stock-based compensation expense

4 unchanged sentences

Stock option and SSARs awards have 10-year contractual terms.

There were no stock options or SSARs awards granted during the year ended December 31, 2022 or the six months ended December 31, 2021.

ROYAL GOLD, INC.

2 unchanged sentences

The Black-Scholes model requires key assumptions to determine fair value.

Those key assumptions during the fiscal year 2021, 2020 and 2019 grants are noted in the following table:

Those key assumptions for the fiscal years June 30, 2021, and 2020 grants are noted in the following table:

Stock Options

Six Months Ended

Fiscal Years Ended

Weighted-average expected volatility

2 unchanged sentences

Weighted-average risk free interest rate

Six Months Ended

Fiscal Years Ended

Weighted-average expected volatility

Weighted-average expected life in years

Weighted-average dividend yield

Weighted-average risk free interest rate

Our expected volatility is based on the historical volatility of our stock over the expected option term.

3 unchanged sentences

Stock Options

A summary of stock option activity for the fiscal year ended June 30, 2021, is presented below.

A summary of stock option activity for the year ended December 31, 2022, is presented below.

Intrinsic Value

(in thousands)

Outstanding at July 1, 2020

Outstanding at June 30, 2021

Exercisable at June 30, 2021

Outstanding at January 1, 2022

Outstanding at December 31, 2022

Exercisable at December 31, 2022

There were no stock options granted during the year ended December 31, 2022 or the six months ended December 31, 2021.

The weighted-average grant date fair value of options granted during the fiscal years ended June 30, 2021 and 2020, was $ 41.92 and $ 17.42 , respectively.

The total intrinsic value of options exercised during the fiscal years ended June 30, 2021, 2020 and 2019, was $ 0 , $ 1.3 million, and $ 0.7 million, respectively.

As of June 30, 2021, there was approximately $ 0.1 million of total unrecognized stock-based compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.0 years.

The total intrinsic value of options exercised during the years ended December 31, 2022 and June 30, 2020 was $ 0.2 million and $ 1.3 million, respectively.

There were no options exercised during the six months ended December 31, 2021 or fiscal year ended June 30, 2021.

As of December 31, 2022, there was no unrecognized stock-based compensation expense related to unvested stock options.

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of SSARs activity for the fiscal year ended June 30, 2021, is presented below:

A summary of SSARs activity for the year ended December 31, 2022, is presented below:

Intrinsic Value

(in thousands)

Outstanding at July 1, 2020

Outstanding at June 30, 2021

Exercisable at June 30, 2021

The weighted-average grant date fair value of SSARs granted during the fiscal years ended June 30, 2021, 2020 and 2019 was $ 40.92 , $ 32.33 and $ 26.37 , respectively.

The total intrinsic value of SSARs exercised during the fiscal years ended June 30, 2021, 2020 and 2019, was $ 0.1 million, $ 4.6 million, and $ 2.8 million, respectively.

As of June 30, 2021, there was approximately $ 2.4 million of total unrecognized stock-based compensation expense related to unvested SSARs, which is expected to be recognized over a weighted-average period of 1.8 years.

Outstanding at January 1, 2022

Outstanding at December 31, 2022

Exercisable at December 31, 2022

There were no SSARs granted during the year ended December 31, 2022 and six months ended December 31, 2021.

The weighted-average grant date fair value of SSARs granted during the fiscal years ended June 30, 2021 and 2020 was $ 40.92 and $ 32.33 .

The total intrinsic value of SSARs exercised during the years ended December 31, 2022, June 30, 2021 and 2020 was $ 0.2 million, $ 0.1 million and $ 4.6 million, respectively.

There were no SSARs exercised during the six months ended December 31, 2021.

As of December 31, 2022, there was approximately $ 0.5 million of total unrecognized stock-based compensation expense related to unvested SSARs, which is expected to be recognized over a weighted-average period of 0.6 years.

Other Stock-based Compensation

Performance Shares

During fiscal year 2021, officers and certain employees were granted shares of restricted common stock that can only be earned upon the achievement of certain pre-defined performance measures.

Specifically, for performance shares granted in fiscal year 2021, one-half of the shares awarded may vest upon our achievement of annual growth in Net Gold Equivalent Ounces (“Net GEOs”) (“GEO Shares”).

The second one-half of performance shares granted in fiscal year 2021 may vest based on our total shareholder return (“TSR”) compared to the TSRs of other members of the VanEck Vectors Gold Miners ETF (GDX) (“TSR Shares”).

GEO Shares and TSR Shares may vest by linear interpolation in a range between zero shares if neither threshold Net GEO and TSR metric is met;

to 100 % of GEO Shares and TSR Shares awarded if both target Net GEO and TSR metrics are met;

to 200 % of the Net GEO and TSR Shares awarded if both the maximum Net GEO and TSR metrics are met.

The GEO Shares will expire in five years from the date of grant if the performance measure is not met, while the TSR Shares will expire in three years from the date of grant if the TSR market condition and three year service condition are not met.

We measure the fair value of the GEO Shares based upon the market price of our common stock as of the date of grant.

During the year ended December 31, 2022 and six months ended December 31, 2021, officers and certain employees were granted shares of restricted common stock that may vest based on our total shareholder return (“TSR”) compared to the TSRs of certain defined members of the Van Eck Vectors Gold Miners ETF (“GDX”) (“Granted TSRs”).

The Granted TSRs may vest by linear interpolation in a range between zero shares if neither threshold TSR metric is met;

to 100 % of the Granted TSRs awarded if the target TSR metric is met;

to 200 % of Granted TSRs awarded if the maximum TSR metric is met.

The Granted TSRs will expire in three years from the date of grant if the TSR market condition is met and a three year service condition is met.

During the fiscal years ended June 30, 2021 and 2020, officers and certain employees were granted shares of restricted common stock that can only be earned upon the achievement of certain pre-defined performance measures.

Specifically, for performance shares granted during the fiscal years ended June 30, 2021 and 2020, one-half of the shares awarded may vest upon our achievement of annual growth in Net Gold Equivalent Ounces (“Net GEOs”) (“GEO Shares”).

The second one-half of performance shares granted during the fiscal years ended June 30, 2021 and 2020 may vest based on our TSR compared to the TSRs of all members of the GDX (“Prior TSR Shares”).

GEO Shares and Prior TSR Shares may vest by linear interpolation in a range between zero shares if neither threshold Net GEO and TSR metric is met;

to 100 % of GEO Shares and Prior TSR Shares awarded if both target Net GEO and TSR metrics are met;

to 200 % of the Net GEO and Prior TSR Shares awarded if both the maximum Net GEO and TSR metrics are met.

The GEO Shares will expire in five years from the date of grant if the performance measure is not met, while the Prior TSR Shares will expire in three years from the date of grant if the TSR market condition and three year service condition are not met.

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We measured the fair value of the GEO Shares based upon the market price of our common stock as of the date of grant.

The measurement date for the GEO Shares will be determined at such time that the performance goals are attained or that it is probable they will be attained.

2 unchanged sentences

Interim recognition of compensation expense will be made at such time as management can reasonably estimate the number of shares that will be earned.

We measured the grant date fair value of the TSR Shares using a Monte Carlo valuation model.

The fair value of the TSR Shares ($ 82.30 per share) is multiplied by the target number ( 100 %) of TSR Shares granted to determine total stock-based compensation expense.

Total stock-based compensation expense of the TSR Shares is amortized on a straight-line basis

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

over the requisite service period, or three years .

Stock-based compensation expense for the TSR Shares is recognized provided the requisite service period is rendered, regardless of when, if ever, the TSR market condition is satisfied.

We will reverse previously recognized stock-based compensation expense attributable to the TSR Shares only if the requisite service period is not met.

A summary of the status of our unvested Performance Shares at maximum ( 200 %) attainment for the fiscal year ended June 30, 2021, is presented below:

Outstanding at July 1, 2020

GEO Shares granted in August 2020, 2019 and 2018 remain outstanding as of December 31, 2022 and the Company will continue to measure these awards for vesting until each awards expiration or performance attainment, whichever date is first.

We measured the grant date fair value of the Granted TSRs and Prior TSR Shares using a Monte Carlo valuation model.

The fair value of our TSR awards is multiplied by the target number ( 100 %) of TSR awards granted to determine total stock-based compensation expense.

Total stock-based compensation expense of the TSR awards is amortized on a straight-line basis over the requisite service period, or three years .

Stock-based compensation expense for the TSR awards is recognized provided the requisite service period is rendered, regardless of when, if ever, the TSR market condition is satisfied.

We will reverse previously recognized stock-based compensation expense attributable to the TSR awards only if the requisite service period is not met.

A summary of the status of our unvested Performance Shares at maximum ( 200 %) attainment for the year ended December 31, 2022, is presented below:

Outstanding at January 1, 2022

Non-attainment

Outstanding at June 30, 2021

As of June 30, 2021, total unrecognized stock-based compensation expense related to Performance Shares was approximately $ 2.1 million, which is expected to be recognized over the average remaining vesting period of 2.1 years.

Outstanding at December 31, 2022

As of December 31, 2022, total unrecognized stock-based compensation expense related to Performance Shares was approximately $ 4.7 million, which is expected to be recognized over the average remaining vesting period of 1.8 years.

Restricted Stock

Officers, non-executive directors and certain employees may be granted shares of restricted stock that vest on continued service alone (“Restricted Stock”).

During fiscal year 2021, officers and certain employees were granted 19,630 shares of Restricted Stock.

Restricted Stock granted to officers and certain employees vest over three years beginning after a two-year holding period from the date of grant with one -third of the shares vesting in years three, four and five, respectively.

Also, our non-executive directors were granted 6,744 shares of Restricted Stock during fiscal year 2021.

During the year ended December 31, 2022, officers and certain employees were granted 24,090 shares of Restricted Stock.

Restricted Stock granted to officers and certain employees during the year ended December 31, 2022, and six months ended December 31, 2021, vest ratably over three years from the date of grant, while Restricted Stock granted to officers and certain employees during the fiscal years ended June 30, 2021 and 2020 vest over three years beginning after a two-year holding period from the date of grant with one-third of the shares vesting in years three, four and five, respectively.

Also, our non-executive directors were granted 4,128 shares of Restricted Stock during the year ended December 31, 2022.

The non-executive directors’ shares of Restricted Stock vest 50 % immediately and 50 % one year after the date of grant.

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Unvested shares of Restricted Stock are subject to forfeiture upon termination of employment or service.

A summary of the status of our unvested Restricted Stock for the fiscal year ended June 30, 2021, is presented below:

Outstanding at July 1, 2020

Outstanding at June 30, 2021

As of June 30, 2021, total unrecognized stock-based compensation expense related to Restricted Stock was approximately $ 4.1 million, which is expected to be recognized over the weighted-average vesting period of 3.2 years.

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of the status of our unvested Restricted Stock for the year ended December 31, 2022, is presented below:

Outstanding at January 1, 2022

Outstanding at December 31, 2022

As of December 31, 2022, total unrecognized stock-based compensation expense related to Restricted Stock was approximately $ 6.5 million, which is expected to be recognized over the weighted-average vesting period of 2.0 years.

EARNINGS PER SHARE (“EPS”)

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The following table summarizes the effects of dilutive securities on diluted EPS for the period (amounts in thousands, except share data):

Fiscal Year Ended

Six Months Ended

Fiscal Years Ended

Net income attributable to Royal Gold common stockholders

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Weighted-average shares for diluted EPS

For financial reporting purposes, Income before income taxes includes the following components:

Fiscal Year Ended June 30,

(Amounts in thousands)

For financial reporting purposes, Income before income taxes includes the following components (amounts in thousands):

Six Months Ended

Fiscal Years Ended

United States

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our Income tax expense (benefit) consisted of:

Fiscal Year Ended June 30,

(Amounts in thousands)

Our Income tax expense (benefit) consisted of (amounts in thousands):

Six Months Ended

Fiscal Years Ended

Deferred and others:

Total income tax expense (benefit)

The provision for income taxes for the fiscal years ended June 30, 2021, 2020 and 2019, differs from the amount of income tax determined by applying the applicable United States statutory federal income tax rate to pre-tax income (net of non-controlling interest in income of consolidated subsidiary and loss from equity investment) from operations as a result of the following differences:

Fiscal Year Ended June 30,

(Amounts in thousands)

The provision for income taxes for the year ended December 31, 2022, six months ended December 31, 2021, and fiscal years ended June 30, 2021, and 2020 differs from the amount of income tax determined by applying the applicable United States statutory federal income tax rate to pre-tax income (net of non-controlling interest in income of consolidated subsidiary and loss from equity investment) from operations as a result of the following differences (amounts in thousands):

Six Months Ended

Fiscal Years Ended

Total expense (benefit) computed by applying federal rates

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Effects of Swiss income tax reform

Rate adjustment

Changes in estimates

1 unchanged sentence

Total income tax expense (benefit)

The effective tax rate for the fiscal year ended June 30, 2021, includes the release of uncertain tax positions resulting from settlement agreements with foreign tax authorities.

The effective tax rate for the year ended December 31, 2022, was 12.1 % which includes the release of a valuation allowance on certain foreign deferred tax assets.

The effective tax rate for six months ended December 31, 2021, was 17.8 % which includes the release of an uncertain tax position resulting from settlement agreements with foreign tax authorities and a change in estimates, partially offset by a foreign tax rate adjustment resulting in the revaluation of certain deferred tax assets.

The effective tax rate for the fiscal year ended June 30, 2021, was 10.9 %, primarily impacted by the release of uncertain tax positions resulting from settlement agreements with foreign tax authorities.

The effective tax rate for the fiscal year ended June 30, 2020, was primarily impacted by the Federal Act on Tax Reform and AHV Financing in Switzerland and the release of an uncertain tax position resulting from a settlement agreement with a foreign tax authority.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The tax effects of temporary differences and carryforwards, which give rise to our deferred tax assets and liabilities at June 30, 2021 and 2020, are as follows:

(Amounts in thousands)

The tax effects of temporary differences and carryforwards, which give rise to our deferred tax assets and liabilities on December 31, 2022 and 2021 are as follows (amounts in thousands):

Deferred tax assets:

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Unrealized foreign exchange gains

Investment in Peak Gold joint venture

Total deferred tax liabilities

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Considering all available positive and negative evidence, including but not limited to recent earnings history and forecasted future results, the Company believes it is more likely-than-not that all net deferred tax assets not currently burdened with a valuation allowance will be fully realized.

As of June 30, 2021, and 2020, we recorded a valuation allowance of $ 61.9 million and $ 60.6 million, respectively.

The valuation allowance remaining at June 30, 2021 is attributable to US foreign tax credits, Swiss amortizable tax goodwill, and capital loss and other tax attribute carryforwards in non-US subsidiaries.

At June 30, 2021 and 2020, we had $ 0.1 million of net operating loss carry forwards.

The majority of the tax loss carry forwards are in jurisdictions that allow a twenty-year carry forward period.

As of December 31, 2022 and 2021, we recorded a valuation allowance of $ 46.8 million and $ 62.7 million, respectively.

The valuation allowance remaining at December 31, 2022 is attributable to US foreign tax credits, Swiss amortizable tax goodwill, and capital loss and other tax attribute carryforwards in non-US subsidiaries.

As of December 31, 2022 and 2021, we had a deferred tax liability for mineral property basis of $ 124.4 million and $ 70.9 million, respectively.

The increase in the deferred tax liability for mineral property was primarily attributable to book over-tax basis differences related to the acquisition of GBR (Note 3).

As of December 31, 2022 and 2021, we had $ 3.2 million and $ 0.2 million of net operating loss carryforwards.

The majority of the tax loss carryforwards are in jurisdictions that allow a twenty-year carry-forward period.

As a result, these losses do not begin to expire until the 2038 tax year, and the Company anticipates the losses will be fully utilized.

As of June 30, 2021, and 2020, we had $ 0.7 million and $ 25.4 million of unrecognized tax benefits, respectively.

If recognized, these unrecognized tax benefits would positively impact our effective income tax rate.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for the fiscal years ended June 30, 2021, 2020 and 2019 is as follows:

(Amounts in thousands)

As of December 31, 2022 and 2021, we had zero unrecognized tax benefits.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for the year ended December 31, 2022, six months ended December 31, 2021, and fiscal years ended June 30, 2021 and 2020 is as follows (amounts in thousands):

Six Months Ended

Fiscal Years Ended

Total gross unrecognized tax benefits at beginning of year

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Total amount of gross unrecognized tax benefits at end of year

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We file income tax returns in the U.S.

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income tax examinations by tax authorities for fiscal years before 2019.

As a result of possible settlements with taxing authorities in various jurisdictions, the Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits may decrease to $ 0 in the next 12 months.

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our continuing practice is to recognize interest and/or penalties related to unrecognized tax benefits as part of our income tax expense.

At June 30, 2021 and 2020, the amount of accrued income-tax-related interest and penalties was $ 0.3 million and $ 12.6 million, respectively.

As of December 31, 2022 and 2021, the amount of accrued income-tax-related interest and penalties was zero .

The gross unrecognized tax benefits reflected in the tabular reconciliation do not include interest and penalties.

SUPPLEMENTAL CASH FLOW INFORMATION

Our supplemental cash flow information for the fiscal years ended June 30, 2021, 2020 and 2019 is as follows:

(Amounts in thousands)

Our supplemental cash flow information for the year ended December 31, 2022, six months ended December 31, 2021, and fiscal years ended June 30, 2021, and 2020 is as follows (amounts in thousands):

Six Months Ended

Fiscal Years Ended

Cash paid during the period for:

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

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

As of June 30, 2021

Carrying Amount

As of December 31, 2022

Carrying Value

Assets (amounts in thousands):

Marketable equity securities (1)

As of December 31, 2021

Carrying Value

Assets (amounts in thousands):

Marketable equity securities (1)

Included in Other assets on our consolidated balance sheets.

The carrying value of our revolving credit facility (Note 6) approximates fair value as of June 30, 2021.

Our marketable securities classified within Level 1 of the fair value hierarchy are valued using quoted market prices in active markets multiplied by the quantity of shares held.

The warrants issued by TriStar (Note 5) classified within Level 2 of the fair value hierarchy are model-derived (Black-Scholes) valuations in which the significant inputs are observable in active markets.

As of June 30, 2021, 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

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

assets are determined to be impaired.

The carrying value of our revolving credit facility (Note 6) approximates fair value as of December 31, 2022.

As of December 31, 2022, 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.

MAJOR SOURCES OF REVENUE

Operators that contributed greater than 10% of our total revenue for any of fiscal years ended June 30 2021, 2020 or 2019 were as follows (revenue amounts in thousands):

Percentage of

Operators that contributed greater than 10% of our total revenue for the year ended December 31, 2022, six months ended December 31, 2021, and the fiscal years ended June 30, 2022 and 2021 were as follows (revenue amounts in thousands):

Six Months Ended

Fiscal Years Ended

Percentage of total revenue

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

Royal Gold’s long-lived assets (stream and royalty interests, net) as of June 30, 2021 and 2020 are geographically distributed as shown in the following table (amounts in thousands):

As of June 30, 2021

As of June 30, 2020

Royal Gold’s long-lived assets (stream and royalty interests, net) as of December 31, 2022 and 2021 are geographically distributed as shown in the following table (amounts in thousands):

As of December 31, 2022

As of December 31, 2021

interests, net

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Rest of world

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Fiscal Year Ended June 30, 2021

Year Ended December 31, 2022

Cost of sales (1)

Production taxes

Depletion (2)

Segment gross profit

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Royalty interests

Six Months Ended December 31, 2021

Cost of sales (1)

Production taxes

Depletion (2)

Segment gross profit

Stream interests

Royalty interests

Fiscal Year Ended June 30, 2021

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Production taxes

Depletion (2)

Segment gross profit

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Production taxes

Depletion (2)

Segment gross profit

1 unchanged sentence

Royalty interests

(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

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Fiscal Year Ended June 30

Six Months Ended

Fiscal Years Ended

Total segment gross profit

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Income before income taxes

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Our revenue by reportable segment for the fiscal year’s ended June 30, 2021, 2020, and 2019 is geographically distributed as shown in the following table (amounts in thousands):

Fiscal Year Ended June 30,

Our revenue by reportable segment for the year ended December 31, 2022, six months ended December 31, 2021 and fiscal years ended June 30, 2021 and 2020 is geographically distributed as shown in the following table (amounts in thousands):

Six Months Ended

Fiscal Years Ended

Stream interests:

Dominican Republic

Rest of world

Total stream interests

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Total revenue

COMMITMENTS AND CONTINGENCIES

Khoemac a u Silver Stream Acquisition

Our Khoemac a u silver stream transaction closed in February 2019.

Between November 2019 and January 2021, we completed a total of $ 212 million in advanced payments required to earn the base silver stream of 80 % of payable silver under our conditional funding schedule:

● $ 65.8 million – November 5, 2019

● $ 22.0 million – February 2, 2020

● $ 47.9 million – April 3, 2020

● $ 11.1 million – July 5, 2020

● $ 32.5 million – October 5, 2020

● $ 32.6 million – January 6, 2021

On April 7, 2021, we made a seventh advance payment of $ 10.6 million toward the option silver stream which increased our right to receive payable silver produced from Khoemac a u from a rate of 80 % to 84 % until the delivery of approximately 33.6 million silver ounces, and 42 % (from 40 % ) thereafter.

Additionally, on April 7, 2021, KCM drew $ 18.0 million on a $ 25.0 million subordinated debt facility we provided.

The subordinated debt facility has a term of seven years , carries interest at a rate of LIBOR + 11 % and requires mandatory repayment upon certain events.

As of June 30, 2021, we have remaining committed funding of $ 49.4 million to KCM in the form of $ 42.4 million of additional stream financing and $ 7.0 million of debt, both of which may be drawn at the election of KCM prior to the completion of construction.

On July 7, 2021, KCM drew the remaining $ 7.0 million amount on the subordinated debt facility, reducing our remaining committed funding to $ 42.4 million of additional advance payments.

KCM has indicated that it does not expect to draw any material amounts from this remaining committed funding.

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

COMMITMENTS AND CONTINGENCIES

Xavantina Exploration Payment

On March 22, 2022, we made a payment of $ 3.2 million of additional advance payments to a subsidiary of Ero as part of our commitment to support the achievement of success-based targets related to regional exploration and mineral resource additions.

This payment has been recorded to exploration stage stream interests (Note 4) within Stream and royalty interests, net on our consolidated balance sheets.

As of December 31, 2022, $ 6.8 million of additional advance payments remain if Ero meets certain success-based targets related to regional exploration and mineral resource additions through calendar 2024.

Refer to Note 3 for further information on the Xavantina Gold Stream acquisition.

Ilovica Gold Stream Acquisition

As of June 30, 2021, our conditional funding schedule of $ 163.75 million, as part of the Ilovica gold stream acquisition in October 2014, remains subject to certain conditions.

SUBSEQUENT EVENTS

NX Gold Mine Gold Stream Acquisition

On June 30, 2021, we announced that we entered into a precious metals purchase agreement for gold produced from the NX Gold Mine in Brazil (“NX Gold Stream”) with Ero Gold Corporation, a wholly-owned subsidiary of Ero Copper Corporation, and certain of its affiliates (together, “Ero”).

On August 6, 2021, we made an advance payment of $ 100 million upon closing of the transaction.

We will make up to an additional $ 10 million of further payments from the beginning of calendar year 2022 through the end of calendar year 2024 depending on meeting success-based targets related to regional exploration and resource additions.

In return, we will receive 25 % of the gold produced from the NX Gold Mine until the delivery of 93,000 ounces, and 10 % thereafter.

We will pay 20 % of the spot gold price for each ounce delivered until the delivery of 49,000 ounces, and 40 % of the spot gold price thereafter.

A delivery of approximately 2,500 ounces of gold based on mine production through to closing is expected to be received from Ero within five business days of closing the transaction.

Red Chris Royalty Acquisition

On August 11, 2021, we acquired a 1.0 % net smelter return royalty covering approximately 5,100 hectares which include the currently known mineralization and prospective exploration areas of the Red Chris Mine in British Columbia, Canada.

We paid $ 165 million in cash consideration for the royalty to Glencore Canada Corporation, a wholly owned subsidiary of Glencore International AG.

The Red Chris Mine is an operating open pit mine producing gold, copper and silver, and is located on the northern edge of the Skeena Mountains.

The mine is owned and operated by the Red Chris JV, which is owned 70 % by Newcrest Mining Ltd.

( “ Newcrest ” ) and 30 % by Imperial Metals Corporation, in which Newcrest is the operator.

Fiscal year end change

On August 9, 2021, our board of directors approved a change in our fiscal year end from June 30 to December 31 effective as of December 31, 2021.

As a result, we expect to file a Transitional Report on Form 10-KT in early 2022 for the six-month stub period from July 1, 2021, to December 31, 2021.

As of December 31, 2022, 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.

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

TRANSITION PERIOD COMPARATIVE DATA

The following table presents certain comparative financial information for the year ended December 31, 2022 and 2021, respectfully (amounts in thousands, except share data).

Costs and expenses

Cost of sales (excludes depreciation, depletion and amortization)

General and administrative

Production taxes

Depreciation, depletion and amortization

Impairment of royalty interests

Total costs and expenses

Operating income

Fair value changes in equity securities

Interest and other income

Interest and other expense

Income before income taxes

Income tax expense

Net income and comprehensive income

Net (income) loss and comprehensive (income) loss attributable to non-controlling interests

Net income and comprehensive income attributable to Royal Gold common stockholders

Basic earnings per share

Basic weighted average shares outstanding

Diluted earnings per share

Diluted weighted average shares outstanding

Cash dividends declared per common share

ROYAL GOLD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cash flows from operating activities:

Net income and comprehensive income

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

Depreciation, depletion and amortization

Non-cash employee stock compensation expense

Fair value changes in equity securities

Deferred tax (benefit) expense

Impairment of royalty interests

Changes in assets and liabilities:

Royalty receivables

Stream inventory

Income tax receivable

Prepaid expenses and other assets

Accounts payable

Income tax payable

Uncertain tax positions

Other liabilities

Net cash provided by operating activities

Cash flows from investing activities:

Acquisition of stream and royalty interests

Khoemac a u subordinated debt facility

Proceeds from sale of equity securities

Net cash used in by investing activities

Cash flows from financing activities:

Repayment of debt

Borrowings from revolving credit facility

Net payments from issuance of common stock

Common stock dividends

Net cash provided by (used in) financing activities

Net decrease in cash and equivalents

Cash and equivalents at beginning of period

Cash and equivalents at end of period

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data