Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial and accounting officer), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of December 31, 2023. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2023, at the reasonable assurance level.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013 Framework). Based on management’s assessment and those criteria, management concluded that our internal control over financial reporting was effective as of December 31, 2023.
Our independent registered public accounting firm, Ernst & Young LLP , has issued an attestation report on our internal control over financial reporting as of December 31, 2023.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2023, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Royal Gold have been detected.
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Royal Gold, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Royal Gold, Inc.’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Royal Gold, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income, changes in equity and cash flows for the years ended December 31, 2023 and 2022, the six-month period ended December 31, 2021, and the year ended June 30, 2021, and the related notes, and our report dated February 15, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Denver, Colorado
February 15, 2024
ITEM 9B. OTHER INFORMATION
During the three months ended December 31, 2023, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information about our executive officers is reported under the caption “Information about our Executive Officers” in Part I of this report. The other information required by this item will be included in our proxy statement for our 2024 stockholders’ meeting to be filed with the SEC within 120 days after December 31, 2023, and is incorporated by reference into this report.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item will be included in our proxy statement for our 2024 stockholders’ meeting to be filed with the SEC within 120 days after December 31, 2023, and is incorporated by reference into this report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this item will be included in our proxy statement for our 2024 stockholders’ meeting to be filed with the SEC within 120 days after December 31, 2023, and is incorporated by reference into this report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
The information required by this item will be included in our proxy statement for our 2024 stockholders’ meeting to be filed with the SEC within 120 days after December 31, 2023, and is incorporated by reference into this report.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item will be included in our proxy statement for our 2024 stockholders’ meeting to be filed with the SEC within 120 days after December 31, 2023, and is incorporated by reference into this report.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements
Index to Financial Statements
Page
Report of Independent Registered Public Accounting Firm
Error! Bookmark not defined.
Consolidated Balance Sheets
83
Consolidated Statements of Operations and Comprehensive Income
84
Consolidated Statements of Changes in Equity
85
Consolidated Statements of Cash Flows
86
Notes to Consolidated Financial Statements
87
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(b) Exhibits
Exhibit
Number
Description
3.1
Restated Certificate of Incorporation, as amended through May 26, 2023 (filed as Exhibit 3.1 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 2, 2023, and incorporated herein by reference)
3.2
Amended and Restated Bylaws, as of March 2, 2023 (filed as Exhibit 3.1(a) to Royal Gold’s Current Report on Form 8-K f iled on March 8, 2023, and incorporated herein by reference)
4.1*
Description of capital stock
10.1
Revolving Facility Credit Agreement, dated June 2, 2017, among Royal Gold, Inc., RG Mexico, Inc., the lenders from time to time party thereto, and HSBC Bank USA, National Association, as administrative agent for the lenders (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K f iled on June 6, 2017, and incorporated herein by reference)
10.2
Amendment and Consent to Revolving Facility Credit Agreement, dated May 15, 2018, among Royal Gold, Inc., certain subsidiaries of Royal Gold, Inc., the lenders from time to time party thereto, and the Bank of Nova Scotia, as administrative agent for the lenders (filed as Exhibit 10.38 to Royal Gold’s Annual Report on Form 10-K filed on August 9, 2018, and incorporated herein by reference)
10.3
Second Amendment to Revolving Facility Credit Agreement, dated June 3, 2019, among Royal Gold, Inc., certain subsidiaries of Royal Gold, Inc., the lenders from time to time party thereto, and the Bank of Nova Scotia, as administrative agent for the lenders (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K f iled on June 6, 2019, and incorporated herein by reference)
10.4
Third Amendment to Revolving Facility Credit Agreement, dated September 20, 2019, among Royal Gold, Inc., certain subsidiaries of Royal Gold, Inc., the lenders from time to time party thereto, and the Bank of Nova Scotia as administrative agent for the lenders (filed as Exhibit 10.1 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 7, 2019, and incorporated herein by reference)
10.5
Fourth Amendment to Revolving Facility Credit Agreement, dated July 7, 2021, among Royal Gold, Inc., certain subsidiaries of Royal Gold, Inc., the lenders from time to time party thereto, and the Bank of Nova Scotia as administrative agent for the lenders (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K filed on July 12, 2021, and incorporated herein by reference)
10.6
Fifth Amendment to Revolving Facility Credit Agreement, dated June 28, 2023, among Royal Gold, Inc., certain subsidiaries of Royal Gold, Inc., the lenders from time to time party thereto, and the Bank of Nova Scotia as administrative agent for the lenders (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K filed on June 30, 2023, and incorporated herein by reference)
10.7▲
Royal Gold Deferred Compensation Plan for Non-Employee Directors (filed as Exhibit 4.1 to Royal Gold’s Registration Statement on Form S-8 filed on July 20, 2017, and incorporated herein by reference)
10.8▲
Form of Employment Agreement by and between Royal Gold, Inc. and each of William Heissenbuttel, Paul Libner, Martin Raffield and Randy Shefman (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K/A filed on January 3, 2020, and incorporated herein by reference)
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Exhibit
Number
Description
10.9▲
Employment Agreement by and between Royal Gold Corporation and Mark Isto effective January 2, 2020 (filed as Exhibit 10.2 to Royal Gold’s Current Report on Form 8-K/A f iled on January 3, 2020, and incorporated herein by reference)
10.10▲
Retirement Letter Agreement, by and between Royal Gold Corporation and Mark Isto, effective as of September 14, 2023 (filed as Exhibit 10.1 Royal Gold’s Current Report on Form 8-K f iled on September 18, 2023, and incorporated herein by reference).
10.11▲
Consulting and Confidentiality Agreement, by and between Royal Gold Corporation and Mark Isto, effective as of September 14, 2023 (filed as Exhibit 10.2 to Royal Gold’s Current Report on Form 8-K f iled on September 18, 2023, and incorporated herein by reference).
10.12▲
Employment Contract effective January 1, 2019, by and between RGLD Gold AG and Daniel Breeze (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K filed on January 7, 2019, and incorporated herein by reference) .
10.13▲
Addendum to the Employment Contract, dated March 4, 2021, between RGLD Gold AG and Daniel Breeze (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K filed on March 8, 2021, and incorporated herein by reference)
10.14▲
Form of Amendment to Employment Agreement by and between Royal Gold, Inc. and each of William Heissenbuttel, Mark Isto, Dan Breeze, Paul Libner, Martin Raffield and Randy Shefman (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K f iled on April 11, 2022, and incorporated herein by reference)
10.15▲
Form of [First][Second] Amendment to Employment Agreement by and between Royal Gold, Inc. and each of William Heissenbuttel, Mark Isto, Dan Breeze, Paul Libner, Martin Raffield and Randy Shefman (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K f iled on May 25, 2022, and incorporated herein by reference)
10.16▲
Form of Amended and Restated Indemnification Agreement entered into between Royal Gold, Inc. or certain subsidiaries and the directors and executive officers of Royal Gold, Inc. or its wholly owned subsidiaries (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K f iled on February 16, 2023, and incorporated herein by reference)
10.17▲
2015 Omnibus Long-Term Incentive Plan, as amended (filed as Exhibit 4.2 to Royal Gold’s Registration Statement on Form S-8 filed on July 20, 2017, and incorporated herein by reference)
10.18▲
Form of Restricted Stock Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan (filed as Exhibit 10.3 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 1, 2018, and incorporated herein by reference)
10.19▲
Form of Restricted Stock Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan for grants after August 1, 2021 (filed as Exhibit 10.1 to Royal Gold’s Quarterly Report on Form 10-Q filed on May 5, 2022, and incorporated herein by reference)
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Exhibit
Number
Description
10.20▲
Form of Restricted Stock Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan for grants on or after March 2, 2023 (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K fi led on March 8, 2023, and incorporated herein by reference)
10.21▲
Form of Restricted Stock Unit Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan (filed as Exhibit 10.4 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 1, 2018, and incorporated herein by reference)
10.22▲
Form of Restricted Stock Unit Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan for grants after August 1, 2021 (filed as Exhibit 10.2 to Royal Gold’s Quarterly Report on Form 10-Q filed on May 5, 2022, and incorporated herein by reference)
10.23▲
Form of Restricted Stock Unit Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan for grants on or after March 2, 2023 (filed as Exhibit 10.3 to Royal Gold’s Current Report on Form 8-K f iled on March 8, 2023, and incorporated herein by reference)
10.24▲
Form of Director Restricted Stock Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan (filed as Exhibit 10.2 to Royal Gold’s Current Report on Form 8-K f iled on March 8, 2023, and incorporated herein by reference)
10.25▲
Form of Director Restricted Stock Unit Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan (filed as Exhibit 10.4 to Royal Gold’s Current Report on Form 8-K f iled on March 8, 2023, and incorporated herein by reference)
10.26▲
Form of Performance Share Award Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan (filed as Exhibit 10.7 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 1, 2018, and incorporated herein by reference)
10.27▲
Form of Performance Share Award Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan for grants after August 1, 2021 (filed as Exhibit 10.3 to Royal Gold’s Quarterly Report on Form 10-Q filed on May 5, 2022, and incorporated herein by reference)
10.28▲
Form of Performance Share Award Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan for grants on or after March 2, 2023 (filed as Exhibit 10.5 to Royal Gold’s Current Report on Form 8-K f iled on March 8, 2023, and incorporated herein by reference)
10.29▲
Form of Incentive Stock Option Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan (filed as Exhibit 10.1 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 1, 2018, and incorporated herein by reference)
10.30▲
Form of Stock Appreciation Rights Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan (filed as Exhibit 10.2 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 1, 2018, and incorporated herein by reference)
21.1 *
Royal Gold and Its Subsidiaries
23.1*
Consent of Independent Registered Public Accounting Firm
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Exhibit
Number
Description
10.20▲
Form of Restricted Stock Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan for grants on or after March 2, 2023 (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K fi led on March 8, 2023, and incorporated herein by reference)
10.23▲
Form of Restricted Stock Unit Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan for grants on or after March 2, 2023 (filed as Exhibit 10.3 to Royal Gold’s Current Report on Form 8-K f iled on March 8, 2023, and incorporated herein by reference)
10.28▲
Form of Performance Share Award Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan for grants on or after March 2, 2023 (filed as Exhibit 10.5 to Royal Gold’s Current Report on Form 8-K f iled on March 8, 2023, and incorporated herein by reference)
31.1*
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97.1*
Incentive Compensation Recoupment Policy
101*
The following financial statements from Royal Gold, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2023, formatted in Inline XBRL: (a) Consolidated Statements of Cash Flows, (b) Consolidated Statements of Operations, (c) Consolidated Statements of Comprehensive Income, (d) Consolidated Balance Sheets, and (e) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags
104*
The cover page from Royal Gold, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2023, formatted in Inline XBRL (included as Exhibit 101)
*
Filed or furnished herewith.
▲
Identifies a management contract or compensation plan or arrangement.
ITEM 16. FORM 10-K SUMMARY
Registrants may voluntarily include a summary of information required by Form 10-K under this Item 16. We have elected not to include this summary information.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ROYAL GOLD, INC.
Date: February 15, 2024
By:
/s/ William Heissenbuttel
William Heissenbuttel
President, Chief Executive Officer and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
(Principal Executive Officer)
Date: February 15, 2024
By:
/s/ William Heissenbuttel
William Heissenbuttel
President, Chief Executive Officer and Director
(Principal Executive Officer)
Date: February 15, 2024
By:
/s/ Paul Libner
Paul Libner
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
Date: February 15, 2024
By:
/s/ William Hayes
William Hayes
Chairman
Date: February 15, 2024
By:
/s/ Fabiana Chubbs
Fabiana Chubbs
Director
Date: February 15, 2024
By:
/s/ Kevin McArthur
Kevin McArthur
Director
Date: February 15, 2024
By:
/s/ Jamie Sokalsky
Jamie Sokalsky
Director
Date: February 15, 2024
By:
/s/ Ronald Vance
Ronald Vance
Director
Date: February 15, 2024
By:
/s/ Sybil Veenman
Sybil Veenman
Director
118