ROYAL GOLD INC 10-Q

ITEM 1. FINANCIAL STATEMENTS ​ ROYAL GOLD, INC. Consolidated Balance Sheets (Unaudited, amounts in thousands except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, December 31, ​ 2023 2022 ASSETS ​ ​ ​ ​ ​ ​ Cash and equivalents ​ $ 126,816 ​ $ 118,586 Royalty receivables ​ ​ 46,934 ​ ​ 49,405 Income tax receivable ​ ​ 1,724 ​ ​ 3,066 Stream inventory ​ ​ 11,599 ​ ​ 12,656 Prepaid expenses and other ​ ​ 2,091 ​ ​ 2,120 Total current assets ​ ​ 189,164 ​ ​ 185,833 Stream and royalty interests, net (Note 2) ​ ​ 3,191,385 ​ ​ 3,237,402 Other assets ​ ​ 110,483 ​ ​ 111,287 Total assets ​ $ 3,491,032 ​ $ 3,534,522 LIABILITIES ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 7,852 ​ $ 6,686 Dividends payable ​ ​ 24,642 ​ ​ 24,627 Income tax payable ​ ​ 8,225 ​ ​ 16,065 Other current liabilities ​ ​ 14,279 ​ ​ 16,209 Total current liabilities ​ ​ 54,998 ​ ​ 63,587 Debt (Note 4) ​ ​ 496,817 ​ ​ 571,572 Deferred tax liabilities ​ ​ 136,784 ​ ​ 138,156 Other liabilities ​ ​ 7,501 ​ ​ 7,738 Total liabilities ​ ​ 696,100 ​ ​ 781,053 Commitments and contingencies (Note 11) ​ ​ ​ ​ ​ ​ EQUITY ​ ​ ​ ​ ​ ​ Preferred stock, $ .01 par value, 10,000,000 shares authorized; and 0 shares issued ​ ​ — ​ ​ — Common stock, $ .01 par value, 200,000,000 shares authorized; and 65,599,348 and 65,592,597 shares outstanding, respectively ​ ​ 656 ​ ​ 656 Additional paid-in capital ​ ​ 2,215,362 ​ ​ 2,213,123 Accumulated earnings ​ ​ 566,545 ​ ​ 527,314 Total Royal Gold stockholders’ equity ​ ​ 2,782,563 ​ ​ 2,741,093 Non-controlling interests ​ ​ 12,369 ​ ​ 12,376 Total equity ​ ​ 2,794,932 ​ ​ 2,753,469 Total liabilities and equity ​ $ 3,491,032 ​ $ 3,534,522 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 3 Table of Contents ROYAL GOLD, INC. Consolidated Statements of Operations and Comprehensive Income (Unaudited, amounts in thousands except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ March 31, ​ 2023 2022 Revenue (Note 5) ​ $ 170,392 ​ $ 162,355 ​ ​ ​ ​ ​ ​ ​ Costs and expenses ​ ​ ​ ​ ​ ​ Cost of sales (excludes depreciation, depletion and amortization) ​ ​ 25,020 ​ ​ 22,639 General and administrative ​ ​ 11,000 ​ ​ 8,931 Production taxes ​ ​ 1,989 ​ ​ 2,221 Depreciation, depletion and amortization ​ ​ 46,328 ​ ​ 47,988 Total costs and expenses ​ ​ 84,337 ​ ​ 81,779 ​ ​ ​ ​ ​ ​ ​ Operating income ​ ​ 86,055 ​ ​ 80,576 ​ ​ ​ ​ ​ ​ ​ Fair value changes in equity securities ​ ​ 799 ​ ​ 613 Interest and other income ​ ​ 2,263 ​ ​ 975 Interest and other expense ​ ​ ( 9,175 ) ​ ​ ( 898 ) Income before income taxes ​ ​ 79,942 ​ ​ 81,266 ​ ​ ​ ​ ​ ​ ​ Income tax expense ​ ​ ( 15,871 ) ​ ​ ( 15,304 ) Net income and comprehensive income ​ ​ 64,071 ​ ​ 65,962 Net income and comprehensive income attributable to non-controlling interests ​ ​ ( 196 ) ​ ​ ( 287 ) Net income and comprehensive income attributable to Royal Gold common stockholders ​ $ 63,875 ​ $ 65,675 Net income per share attributable to Royal Gold common stockholders: ​ ​ ​ ​ ​ ​ Basic earnings per share ​ $ 0.97 ​ $ 1.00 Basic weighted average shares outstanding ​ ​ 65,594,977 ​ ​ 65,565,735 Diluted earnings per share ​ $ 0.97 ​ $ 1.00 Diluted weighted average shares outstanding ​ ​ 65,709,095 ​ ​ 65,644,668 Cash dividends declared per common share ​ $ 0.375 ​ $ 0.35 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 4 Table of Contents ROYAL GOLD, INC. Consolidated Statements of Changes in Stockholders’ Equity Three months ended March 31, 2023, and 2022 (unaudited, amounts in thousands except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Royal Gold Stockholders ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Shares ​ Paid-In ​ Accumulated ​ Non-controlling ​ Total ​ ​ Shares ​ Amount ​ Capital ​ Earnings ​ Interests ​ Equity Balance at December 31, 2022 65,592,597 ​ $ 656 $ 2,213,123 ​ $ 527,314 ​ $ 12,376 ​ $ 2,753,469 Stock-based compensation and related share issuances 6,751 ​ — 2,239 ​ — ​ — ​ 2,239 Distributions to non-controlling interests ​ — ​ — — ​ — ​ ( 203 ) ​ ( 203 ) Net income and comprehensive income — ​ — — ​ ​ 63,875 ​ 196 ​ 64,071 Dividends declared — ​ — — ​ ( 24,644 ) ​ — ​ ( 24,644 ) Balance at March 31, 2023 65,599,348 ​ $ 656 $ 2,215,362 ​ $ 566,545 ​ $ 12,369 ​ $ 2,794,932 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Royal Gold Stockholders ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Shares ​ Paid-In ​ Accumulated ​ Non-controlling ​ Total ​ ​ Shares ​ Amount ​ Capital ​ Earnings ​ Interests ​ Equity Balance at December 31, 2021 65,564,364 ​ $ 656 $ 2,206,159 ​ $ 381,929 ​ $ 12,467 ​ $ 2,601,211 Stock-based compensation and related share issuances 4,435 ​ — 2,266 ​ — ​ — ​ 2,266 Distributions to non-controlling interests ​ — ​ — — ​ — ​ ( 329 ) ​ ( 329 ) Net income and comprehensive income — ​ — — ​ 65,675 ​ 287 ​ 65,962 Dividends declared — ​ — — ​ ( 22,996 ) ​ — ​ ( 22,996 ) Balance at March 31, 2022 65,568,799 ​ $ 656 $ 2,208,425 ​ $ 424,608 ​ $ 12,425 ​ $ 2,646,114 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 5 Table of Contents ROYAL GOLD, INC. Consolidated Statements of Cash Flows (Unaudited, amounts in thousands) ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ March 31, ​ March 31, ​ 2023 2022 Cash flows from operating activities: ​ ​ ​ ​ ​ Net income and comprehensive income $ 64,071 ​ $ 65,962 Adjustments to reconcile net income and comprehensive income to net cash provided by operating activities: ​ ​ ​ ​ ​ Depreciation, depletion and amortization ​ 46,328 ​ ​ 47,988 Non-cash employee stock compensation expense ​ 2,636 ​ ​ 2,124 Fair value changes in equity securities ​ ( 799 ) ​ ​ ( 613 ) Deferred tax expense ​ 1,092 ​ ​ 688 Other ​ 214 ​ ​ 245 Changes in assets and liabilities: ​ ​ ​ ​ ​ Royalty receivables ​ 2,471 ​ ​ 569 Stream inventory ​ 1,056 ​ ​ 3,118 Income tax receivable ​ 1,342 ​ ​ 518 Prepaid expenses and other assets ​ ( 914 ) ​ ​ ( 7,309 ) Accounts payable ​ 1,166 ​ ​ ( 208 ) Income tax payable ​ ( 7,840 ) ​ ​ ( 10,910 ) Other liabilities ​ ( 2,168 ) ​ ​ ( 1,039 ) Net cash provided by operating activities $ 108,655 ​ $ 101,133 ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ ​ ​ ​ Acquisition of stream and royalty interests ​ — ​ ​ ( 37,800 ) Other ​ ( 197 ) ​ ​ ( 11 ) Net cash used in investing activities $ ( 197 ) ​ $ ( 37,811 ) ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ ​ ​ ​ Repayment of debt ​ ( 75,000 ) ​ ​ — Net payments from issuance of common stock ​ ( 397 ) ​ ​ 141 Common stock dividends ​ ( 24,629 ) ​ ​ ( 22,978 ) Other ​ ( 202 ) ​ ​ ( 329 ) Net cash used in financing activities $ ( 100,228 ) ​ $ ( 23,166 ) Net increase in cash and equivalents ​ 8,230 ​ ​ 40,156 Cash and equivalents at beginning of period ​ 118,586 ​ ​ 143,551 Cash and equivalents at end of period $ 126,816 ​ $ 183,707 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 6 Table of Contents ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) 1. OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING STANDARDS ​ Royal Gold Inc., together with its subsidiaries (“Royal Gold,” the “Company,” “we,” “us,” or “our”), is engaged in the business of acquiring and managing precious metals streams, royalties and similar interests. We seek to acquire existing stream and royalty interests or to finance projects that are in production or in the development stage in exchange for stream or royalty interests. A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or more metals produced from a mine at a price determined for the life of the transaction by the purchase agreement. Royalties are non-operating interests in a mining project that provide the right to revenue or metals produced from the project after deducting contractually specified costs, if any. ​ Summary of Significant Accounting Policies ​ The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of management, all adjustments which are of a normal recurring nature considered necessary for a fair presentation of our interim financial statements have been included in this Form 10-Q. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the calendar year ending December 31, 2023. These interim unaudited consolidated financial statements should be read in conjunction with our Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on February 16, 2023 (“2022 10-K”). ​ Recent Accounting Standards ​ We have evaluated all the recently issued, but not yet effective, accounting standards that have been issued or proposed by the Financial Accounting Standards Board or other standards-setting bodies through the filing date of these unaudited consolidated financial statements and do not believe the future adoption of any such standards will have a material impact on our consolidated financial statements. ​ 7 Table of Contents ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) ​ 2. STREAM AND ROYALTY INTERESTS, NET The following tables summarize our stream and royalty interests, net as of March 31, 2023 and December 31, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of March 31, 2023 (Amounts in thousands): Cost Accumulated Depletion Net Production stage stream interests: ​ ​ ​ ​ ​ ​ ​ ​ ​ Mount Milligan ​ $ 790,635 ​ $ ( 404,090 ) ​ $ 386,545 Pueblo Viejo ​ ​ 610,404 ​ ​ ( 292,501 ) ​ ​ 317,903 Andacollo ​ ​ 388,182 ​ ​ ( 155,619 ) ​ ​ 232,563 Khoemac a u ​ ​ 265,911 ​ ​ ( 22,782 ) ​ ​ 243,129 Rainy River ​ ​ 175,727 ​ ​ ( 65,262 ) ​ ​ 110,465 Other ​ ​ 232,703 ​ ​ ( 115,926 ) ​ ​ 116,777 Total production stage stream interests ​ ​ 2,463,562 ​ ​ ( 1,056,180 ) ​ ​ 1,407,382 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Production stage royalty interests: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cortez (Legacy Zone and CC Zone) ​ ​ 353,844 ​ ​ ( 41,853 ) ​ ​ 311,991 Voisey's Bay ​ ​ 205,724 ​ ​ ( 118,985 ) ​ ​ 86,739 Red Chris ​ ​ 116,187 ​ ​ ( 3,758 ) ​ ​ 112,429 Peñasquito ​ ​ 99,172 ​ ​ ( 58,620 ) ​ ​ 40,552 Other ​ ​ 447,688 ​ ​ ( 400,934 ) ​ ​ 46,754 Total production stage royalty interests ​ ​ 1,222,615 ​ ​ ( 624,150 ) ​ ​ 598,465 Total production stage stream and royalty interests ​ ​ 3,686,177 ​ ​ ( 1,680,330 ) ​ ​ 2,005,847 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Development stage stream interests: ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ 12,038 ​ ​ — ​ ​ 12,038 Development stage royalty interests: ​ ​ ​ ​ ​ ​ ​ ​ ​ Côté ​ ​ 45,421 ​ ​ — ​ ​ 45,421 Other ​ ​ 81,510 ​ ​ ​ ​ ​ 81,510 Total development stage stream and royalty interests ​ ​ 138,969 ​ ​ — ​ ​ 138,969 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exploration stage stream interests: ​ ​ ​ ​ ​ ​ ​ ​ ​ Xavantina ​ ​ 17,126 ​ ​ — ​ ​ 17,126 Exploration stage royalty interests: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cortez (Legacy Zone and CC Zone) ​ ​ 456,444 ​ ​ — ​ ​ 456,444 Great Bear ​ ​ 209,106 ​ ​ — ​ ​ 209,106 Pascua-Lama ​ ​ 177,690 ​ ​ — ​ ​ 177,690 Red Chris ​ ​ 48,895 ​ ​ — ​ ​ 48,895 Côté ​ ​ 29,610 ​ ​ — ​ ​ 29,610 Other ​ ​ 107,698 ​ ​ — ​ ​ 107,698 Total exploration stage stream and royalty interests ​ ​ 1,046,569 ​ ​ — ​ ​ 1,046,569 Total stream and royalty interests, net ​ $ 4,871,715 ​ $ ( 1,680,330 ) ​ $ 3,191,385 ​ 8 Table of Contents ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2022 (Amounts in thousands): Cost Accumulated Depletion Impairments ​ Net Production stage stream interests: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mount Milligan ​ $ 790,635 ​ $ ( 392,804 ) ​ $ — ​ $ 397,831 Pueblo Viejo ​ ​ 610,404 ​ ​ ( 289,537 ) ​ ​ — ​ ​ 320,867 Andacollo ​ ​ 388,182 ​ ​ ( 151,870 ) ​ ​ — ​ ​ 236,312 Khoemac a u ​ ​ 265,911 ​ ​ ( 15,905 ) ​ ​ — ​ ​ 250,006 Rainy River ​ ​ 175,727 ​ ​ ( 61,601 ) ​ ​ — ​ ​ 114,126 Other ​ ​ 215,576 ​ ​ ( 110,711 ) ​ ​ — ​ ​ 104,865 Total production stage stream interests ​ ​ 2,446,435 ​ ​ ( 1,022,428 ) ​ ​ — ​ ​ 1,424,007 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Production stage royalty interests: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cortez (Legacy Zone and CC Zone) ​ ​ 353,772 ​ ​ ( 35,276 ) ​ ​ — ​ ​ 318,496 Voisey's Bay ​ ​ 205,724 ​ ​ ( 118,327 ) ​ ​ — ​ ​ 87,397 Red Chris ​ ​ 116,187 ​ ​ ( 1,797 ) ​ ​ — ​ ​ 114,390 Peñasquito ​ ​ 99,172 ​ ​ ( 57,772 ) ​ ​ — ​ ​ 41,400 Other ​ ​ 447,535 ​ ​ ( 398,513 ) ​ ​ — ​ ​ 49,022 Total production stage royalty interests ​ ​ 1,222,390 ​ ​ ( 611,685 ) ​ ​ — ​ ​ 610,705 Total production stage stream and royalty interests ​ ​ 3,668,825 ​ ​ ( 1,634,113 ) ​ ​ — ​ ​ 2,034,712 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Development stage stream interests: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ 12,038 ​ ​ — ​ ​ — ​ ​ 12,038 Development stage royalty interests: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Côté ​ ​ 45,421 ​ ​ — ​ ​ — ​ ​ 45,421 Other ​ ​ 74,225 ​ ​ — ​ ​ — ​ ​ 74,225 Total development stage stream and royalty interests ​ ​ 131,684 ​ ​ — ​ ​ — ​ ​ 131,684 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exploration stage stream interests: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Xavantina ​ ​ 34,253 ​ ​ — ​ ​ — ​ ​ 34,253 Exploration stage royalty interests: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cortez (Legacy Zone and CC Zone) ​ ​ 456,318 ​ ​ — ​ ​ — ​ ​ 456,318 Great Bear ​ ​ 209,106 ​ ​ — ​ ​ — ​ ​ 209,106 Pascua-Lama ​ ​ 177,690 ​ ​ — ​ ​ — ​ ​ 177,690 Red Chris ​ ​ 48,895 ​ ​ — ​ ​ — ​ ​ 48,895 Côté ​ ​ 29,610 ​ ​ — ​ ​ — ​ ​ 29,610 Other ​ ​ 119,421 ​ ​ — ​ ​ ( 4,287 ) ​ ​ 115,134 Total exploration stage royalty interests ​ ​ 1,075,293 ​ ​ — ​ ​ ( 4,287 ) ​ ​ 1,071,006 Total stream and royalty interests, net ​ $ 4,875,802 ​ $ ( 1,634,113 ) ​ $ ( 4,287 ) ​ $ 3,237,402 ​ ​ ​ 3. MARKETABLE EQUITY SECURITIES ​ As of March 31, 2023, 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. Our marketable equity securities are measured at fair value (Note 10) each reporting period with any changes in fair value recognized in net income (amounts in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ 2023 ​ 2022 Carrying value of marketable securities (1) ​ $ 1,172 ​ $ 373 Change in fair value of marketable securities ​ $ 799 ​ $ ( 1,503 ) ​ (1) Included in Other Assets on our consolidated balance sheets. ​ 9 Table of Contents ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) ​ 4. DEBT ​ Our debt as of March 31, 2023 and December 31, 2022 consists of the following (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of March 31, 2023 ​ As of December 31, 2022 ​ Principal Debt Issuance Costs Total Principal Debt Issuance Costs Total ​ ​ ​ (Amounts in thousands) ​ ​ (Amounts in thousands) Revolving credit facility ​ $ 500,000 ​ $ ( 3,183 ) ​ $ 496,817 ​ $ 575,000 ​ $ ( 3,428 ) ​ $ 571,572 Total debt ​ $ 500,000 ​ $ ( 3,183 ) ​ $ 496,817 ​ $ 575,000 ​ $ ( 3,428 ) ​ $ 571,572 ​ Revolving credit facility ​ On March 6, 2023, we repaid $ 75 million of outstanding borrowings on our revolving credit facility. ​ As of March 31, 2023, we had $ 500 million outstanding and $ 500 million available under our revolving credit facility dated June 2, 2017, and as amended. The interest rate on borrowings under our revolving credit facility as of March 31, 2023, was LIBOR plus 1.20 % for an all-in rate of 6.2 %. Interest expense, which includes interest on outstanding borrowings and amortization of debt issuance costs, was $ 8.5 million and $ 0.2 million for the three months ended March 31, 2023 and 2022, respectively. We were in compliance with each financial covenant (leverage ratio and interest coverage ratio) under our revolving credit facility as of March 31, 2023. ​ We may repay any borrowings under our revolving credit facility at any time without premium or penalty. ​ 5. REVENUE ​ Revenue Recognition ​ A performance obligation is a promise in a contract to transfer control of a distinct good or service (or integrated package of goods and/or services) to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, a performance obligation is satisfied. In accordance with this guidance, revenue attributable to our stream interests and royalty interests is generally recognized at the point in time that control of the related metal production transfers to our customers. The amount of revenue we recognize further reflects the consideration to which we are entitled under the respective stream or royalty agreement. A more detailed summary of our revenue recognition policies for our stream and royalty interests is discussed below. ​ Stream Interests ​ A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or more of the metals produced from a mine, at a price determined for the life of the transaction by the purchase agreement. Gold, silver and copper received under our metal streaming agreements are taken into inventory, and then sold primarily using average spot rate gold, silver and copper forward contracts. The sales price for these average spot rate forward contracts is determined by the average daily gold, silver or copper spot prices during the term of the contract, typically a consecutive number of trading days between ten days and three months (depending on the frequency of deliveries under the respective streaming agreement and our sales policy in effect at the time) commencing shortly after receipt and purchase of the metal. We settle our forward sales contracts via physical delivery of the metal to the purchaser (our customer) on the settlement date specified in the contract. Under our forward sales contracts, there is a single performance obligation to sell a contractually specified volume of metal to the purchaser, and we satisfy this obligation at the point in time of physical delivery. Accordingly, revenue from our metal sales is recognized on the date of settlement, which is the date that control, custody and title to the metal transfer to the purchaser. ​ Royalty Interests ​ Royalties are non-operating interests in mining projects that provide the right to a percentage of revenue or metals produced from the project after deducting specified costs, if any. We are entitled to payment for our royalty interest in a mining project based on a contractually specified commodity price (for example, a monthly or quarterly average spot price) for 10 Table of Contents ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) ​ the period in which metal production occurs. As a royalty holder, we act as a passive entity in the production and operations of the mining project, and the third-party operator of the mining project is responsible for all mining activities, including subsequent marketing and delivery of all metal production to their ultimate customer. In all of our material royalty interest arrangements, we have concluded that we transfer control of our interest in the metal production to the operator at the point at which production occurs, and thus, the operator is our customer. We have further determined that the transfer of each unit of metal production comprising our royalty interest to the operator represents a separate performance obligation under the contract, and each performance obligation is satisfied at the point in time of metal production by the operator. Accordingly, we recognize revenue attributable to our royalty interests in the period in which metal production occurs at the specified commodity price per the agreement, net of any contractually allowable costs. ​ Royalty Revenue Estimates ​ For a small number of our royalty interests, we may not receive, or be entitled to receive, payment information, including production information from the operator, for the period in which metal production occurred prior to issuance of our financial statements for that period. As a result, we may estimate revenue for these royalties based on available information, including public information, from the operator. If adequate information is not available from the operator or from other public sources before we issue our financial statements, we will recognize royalty revenue during the period in which the necessary payment information is received. Differences between estimates and actual amounts could differ significantly and are recorded in the period that the actual amounts are known. Please also refer to our “Use of Estimates” accounting policy discussed in our 2022 10-K. For the three months ended March 31, 2023, royalty revenue that was estimated or was attributable to metal production for a period prior to March 31, 2023, was not material. ​ Disaggregation of Revenue ​ We have identified two material revenue sources in our business: stream interests and royalty interests. These identified revenue sources are consistent with our reportable segments as discussed in Note 9. ​ Revenue by metal type attributable to each of our revenue sources is disaggregated as follows (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ March 31, March 31, ​ 2023 ​ 2022 Stream revenue: ​ ​ ​ ​ ​ Gold $ 78,629 ​ $ 77,502 Silver ​ 18,308 ​ ​ 11,439 Copper ​ 18,053 ​ ​ 16,310 Total stream revenue $ 114,990 ​ $ 105,251 Royalty revenue: ​ ​ ​ ​ ​ Gold $ 42,868 ​ $ 37,917 Silver ​ 2,946 ​ ​ 4,317 Copper ​ 5,058 ​ ​ 6,705 Other ​ 4,530 ​ ​ 8,165 Total royalty revenue $ 55,402 ​ $ 57,104 Total revenue $ 170,392 ​ $ 162,355 ​ 11 Table of Contents ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) ​ Revenue attributable to our principal stream and royalty interests is disaggregated as follows (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ ​ March 31, March 31, ​ ​ Metal(s) ​ 2023 ​ 2022 Stream revenue: ​ ​ ​ ​ ​ ​ ​ ​ Mount Milligan ​ Gold & Copper ​ $ 46,656 ​ $ 42,416 Pueblo Viejo ​ Gold & Silver ​ ​ 22,358 ​ ​ 23,264 Andacollo ​ Gold ​ ​ 12,934 ​ ​ 15,674 Khoemac a u ​ Silver ​ ​ 9,153 ​ ​ 2,389 Other ​ Gold & Silver ​ ​ 23,889 ​ ​ 21,508 Total stream revenue ​ ​ ​ $ 114,990 ​ $ 105,251 Royalty revenue: ​ ​ ​ ​ ​ ​ ​ ​ Cortez Legacy Zone ​ Gold ​ $ 23,087 ​ $ 16,714 Cortez CC Zone ​ Gold ​ ​ 3,206 ​ ​ N/A Peñasquito ​ Gold, Silver, Lead & Zinc ​ ​ 7,433 ​ ​ 13,094 Other ​ Various ​ ​ 21,676 ​ ​ 27,296 Total royalty revenue ​ ​ ​ $ 55,402 ​ $ 57,104 Total revenue ​ ​ ​ $ 170,392 ​ $ 162,355 ​ Please refer to Note 9 for the geographical distribution of our revenue by reportable segment. ​ 6. STOCK-BASED COMPENSATION ​ We recognized stock-based compensation expense as follows (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ March 31, ​ 2023 2022 Restricted stock ​ $ 1,614 ​ $ 1,155 Performance stock ​ ​ 810 ​ ​ 631 Stock appreciation rights ​ ​ 205 ​ ​ 332 Stock options ​ ​ 7 ​ ​ 6 Total stock-based compensation expense ​ $ 2,636 ​ $ 2,124 ​ Stock-based compensation expense is included within General and administrative expense in the consolidated statements of operations and comprehensive income. ​ During the three months ended March 31, 2023 and 2022, we granted the following stock-based compensation awards: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ March 31, ​ ​ 2023 2022 ​ ​ ​ (Number of shares) Performance stock (at maximum 200 % attainment) ​ ​ 82,360 ​ ​ 39,380 Restricted stock ​ ​ 56,530 ​ ​ 28,220 Total equity awards granted ​ ​ 138,890 ​ ​ 67,600 ​ 12 Table of Contents ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) ​ As of March 31, 2023, unrecognized compensation expense (expressed in thousands below) and weighted-average vesting period for each of our stock-based compensation awards were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrecognized Weighted- ​ ​ compensation ​ average vesting ​ ​ expense period (years) Restricted stock ​ $ 11,230 ​ ​ 2.3 Performance stock ​ ​ 8,893 ​ ​ 2.3 Stock appreciation rights ​ ​ 312 ​ ​ 0.4 Stock options ​ ​ 11 ​ ​ 0.4 ​ ​ 7. EARNINGS PER SHARE (“EPS”) ​ Basic EPS was computed using the weighted average number of shares of common stock outstanding during the period, considering the effect of participating securities. Unvested stock-based compensation awards that contain non-forfeitable rights to dividends or dividend equivalents are considered participating securities and are included in the computation of EPS pursuant to the two-class method. Our unvested restricted stock awards contain non-forfeitable dividend rights and participate equally with common stock with respect to dividends issued or declared. Our unexercised stock option awards, unexercised stock-settled stock appreciation rights and unvested performance stock do not contain rights to dividends. Under the two-class method, the earnings used to determine basic EPS are reduced by an amount allocated to participating securities. Use of the two-class method has an immaterial impact on the calculation of basic and diluted EPS. ​ The following table summarizes the effects of dilutive securities on diluted EPS for the periods shown below (amounts in thousands, except share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ March 31, ​ 2023 2022 Net income attributable to Royal Gold common stockholders ​ $ 63,875 ​ $ 65,675 Weighted-average shares for basic EPS ​ ​ 65,594,977 ​ ​ 65,565,735 Effect of other dilutive securities ​ ​ 114,118 ​ ​ 78,933 Weighted-average shares for diluted EPS ​ ​ 65,709,095 ​ ​ 65,644,668 Basic EPS ​ $ 0.97 ​ $ 1.00 Diluted EPS ​ $ 0.97 ​ $ 1.00 ​ ​ 8. INCOME TAXES ​ The following table provides the income tax expense (amounts in thousands) and effective tax rates for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ March 31, ​ March 31, ​ 2023 2022 Income tax expense $ 15,871 ​ $ 15,304 Effective tax rate ​ 19.9 % ​ ​ 18.8 % ​ ​ 13 Table of Contents ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) ​ 9. SEGMENT INFORMATION ​ We manage our business under two reportable segments, consisting of the acquisition and management of stream interests and the acquisition and management of royalty interests. Our long-lived assets (stream and royalty interests, net) are geographically distributed as shown in the following table (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of March 31, 2023 ​ As of December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ Total stream ​ ​ ​ ​ ​ ​ ​ Total stream ​ ​ Stream ​ Royalty ​ and royalty ​ Stream ​ Royalty ​ and royalty ​ interest interest interests, net interest interest interests, net Canada ​ $ 497,010 ​ $ 617,542 ​ $ 1,114,552 ​ $ 511,957 ​ $ 620,549 ​ $ 1,132,506 Dominican Republic ​ ​ 317,903 ​ ​ — ​ ​ 317,903 ​ ​ 320,867 ​ ​ — ​ ​ 320,867 Africa ​ ​ 290,125 ​ ​ 321 ​ ​ 290,446 ​ ​ 299,722 ​ ​ 321 ​ ​ 300,043 Chile ​ ​ 232,563 ​ ​ 224,116 ​ ​ 456,679 ​ ​ 236,312 ​ ​ 224,116 ​ ​ 460,428 United States ​ ​ — ​ ​ 816,336 ​ ​ 816,336 ​ ​ — ​ ​ 823,203 ​ ​ 823,203 Mexico ​ ​ — ​ ​ 47,936 ​ ​ 47,936 ​ ​ — ​ ​ 50,156 ​ ​ 50,156 Australia ​ ​ — ​ ​ 21,949 ​ ​ 21,949 ​ ​ — ​ ​ 22,120 ​ ​ 22,120 Rest of world ​ ​ 98,945 ​ ​ 26,639 ​ ​ 125,584 ​ ​ 101,440 ​ ​ 26,639 ​ ​ 128,079 Total ​ $ 1,436,546 ​ $ 1,754,839 ​ $ 3,191,385 ​ $ 1,470,298 ​ $ 1,767,104 ​ $ 3,237,402 ​ Our reportable segments for purposes of assessing performance are shown below (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2023 ​ Revenue Cost of sales (1) Production taxes Depletion (2) Segment gross profit Stream interests ​ $ 114,990 ​ $ 25,020 ​ $ — ​ $ 33,752 ​ $ 56,218 Royalty interests ​ ​ 55,402 ​ ​ — ​ ​ 1,989 ​ ​ 12,462 ​ ​ 40,951 Total ​ $ 170,392 ​ $ 25,020 ​ $ 1,989 ​ $ 46,214 ​ $ 97,169 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2022 ​ Revenue Cost of sales (1) Production taxes Depletion (2) Segment gross profit Stream interests ​ $ 105,251 ​ $ 22,639 ​ $ — ​ $ 36,378 ​ $ 46,234 Royalty interests ​ ​ 57,104 ​ ​ — ​ ​ 2,221 ​ ​ 11,485 ​ ​ 43,398 Total ​ $ 162,355 ​ $ 22,639 ​ $ 2,221 ​ $ 47,863 ​ $ 89,632 ​ (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. ​ 14 Table of Contents ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) ​ A reconciliation of total segment gross profit to the consolidated Income before income taxes is shown below (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ March 31, ​ ​ 2023 ​ 2022 Total segment gross profit ​ $ 97,169 ​ $ 89,632 ​ ​ ​ ​ ​ ​ ​ Costs and expenses ​ ​ ​ ​ ​ ​ General and administrative expenses ​ ​ 11,000 ​ ​ 8,931 Depreciation and amortization ​ ​ 114 ​ ​ 125 Operating income ​ ​ 86,055 ​ ​ 80,576 Fair value changes in equity securities ​ ​ 799 ​ ​ 613 Interest and other income ​ ​ 2,263 ​ ​ 975 Interest and other expense ​ ​ ( 9,175 ) ​ ​ ( 898 ) Income before income taxes ​ $ 79,942 ​ $ 81,266 ​ Our revenue by reportable segment for the three months ended March 31, 2023 and 2022 is geographically distributed as shown in the following table (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ March 31, ​ March 31, ​ 2023 2022 Stream interests: ​ ​ ​ ​ ​ ​ Canada ​ $ 56,981 ​ $ 51,485 Dominican Republic ​ ​ 22,358 ​ ​ 23,264 Chile ​ ​ 12,934 ​ ​ 15,674 Africa ​ ​ 17,539 ​ ​ 8,446 Rest of world ​ ​ 5,178 ​ ​ 6,382 Total stream interests ​ $ 114,990 ​ $ 105,251 ​ ​ ​ ​ ​ ​ ​ Royalty interests: ​ ​ ​ ​ ​ ​ United States ​ $ 33,581 ​ $ 24,358 Mexico ​ ​ 9,295 ​ ​ 15,881 Canada ​ ​ 6,591 ​ ​ 10,778 Australia ​ ​ 4,099 ​ ​ 4,046 Africa ​ ​ — ​ ​ 316 Rest of world ​ ​ 1,836 ​ ​ 1,725 Total royalty interests ​ $ 55,402 ​ $ 57,104 Total revenue ​ $ 170,392 ​ $ 162,355 ​ ​ 10. FAIR VALUE MEASUREMENTS ​ Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, we utilize a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: ​ Level 1: Quoted prices for identical instruments in active markets; ​ Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and ​ 15 Table of Contents ROYAL GOLD, INC. Notes to Consolidated Financial Statements (Unaudited) ​ Level 3: Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). ​ The following table sets forth our financial assets measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of March 31, 2023 ​ ​ ​ ​ Fair Value ​ Carrying Value Total Level 1 Level 2 Level 3 Assets (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Marketable equity securities (1) ​ $ 1,172 ​ $ 1,172 ​ $ 149 ​ $ 1,023 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2022 ​ ​ ​ ​ Fair Value ​ Carrying Value Total Level 1 Level 2 Level 3 Assets (amounts in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Marketable equity securities (1) ​ $ 373 ​ $ 373 ​ $ 121 ​ $ 252 ​ $ — ​ (1) Included in Other assets on our consolidated balance sheets. ​ Our marketable securities classified within Level 1 of the fair value hierarchy are valued using quoted market prices in active markets multiplied by the quantity of shares held. The TriStar Gold Inc. warrants (Note 3) classified within Level 2 of the fair value hierarchy are model-derived (Black-Scholes) valuations in which the significant inputs are observable in active markets. The carrying value of our revolving credit facility (Note 4) approximates fair value as of March 31, 2023. ​ As of March 31, 2023, we had assets that, under certain conditions, are subject to measurement at fair value on a non-recurring basis like those associated with stream and royalty interests, intangible assets and other long-lived assets. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if any of these assets are determined to be impaired. If recognition of these assets at their fair value becomes necessary, such measurements will be determined utilizing Level 3 inputs. ​ ​ 11. COMMITMENTS AND CONTINGENCIES ​ Xavantina Exploration Payment ​ On April 20, 2023, we made a $ 2.4 million advance payment to a subsidiary of Ero Gold Corporation as part of our commitment to support the achievement of success-based targets related to regional exploration and mineral resource additions. This payment will be recorded to exploration stage stream interests within Stream and royalty interests, net on our consolidated balance sheets during the second quarter of 2023. Advance payments of $ 4.4 million remain if Ero meets certain success-based targets related to regional exploration and mineral resource additions through calendar 2024. Refer to Note 3 of our 2022 10-K for further information on the Xavantina (formerly referred to as NX Gold) Gold Stream Acquisition. ​ Ilovica Gold Stream Acquisition ​ As of March 31, 2023, our conditional funding schedule of $ 163.75 million, as part of the Ilovica gold stream acquisition entered into in October 2014, remains subject to certain conditions. ​ ​ ​ ​ 16 Table of Contents ​