Royal Gold Inc: Form 10-Q for the period ended Jun 30, 2024

General Presentation

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide information to assist you in better understanding and evaluating the financial condition and results of operations of Royal Gold. You should read this MD&A in conjunction with our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements included in our Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”) on February 15, 2024 (“2023 10-K”).

This MD&A contains forward-looking information. You should review our important note about forward-looking statements following this MD&A.

We do not own, develop, or mine the properties on which we hold stream or royalty interests. Certain information provided in this Quarterly Report on Form 10-Q about operating properties in which we hold interests, including information about mineral resources and reserves, historical production, production estimates, property descriptions, and property developments, was provided to us by the operators of those properties or is publicly available information filed by these operators with applicable securities regulatory bodies, in certain cases including the SEC. We have not verified, and are not in a position to verify, and expressly disclaim any responsibility for the accuracy, completeness, or fairness of, this third-party information and refer the reader to the public reports filed by the operators for information regarding those properties.

Unless the context otherwise requires, references to “Royal Gold,” the “Company,” “we,” “us,” and “our” refer to Royal Gold, Inc. and its consolidated subsidiaries.

Overview of Our Business

We acquire and manage precious metal streams, royalties, and similar interests. We seek to acquire existing stream and royalty interests or finance projects that are in production or in the development stage in exchange for stream or royalty interests.

We manage our business under two segments:

• Acquisition and Management of Stream Interests — A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right and obligation to purchase all or a portion of one or more metals produced from a mine, at a price determined for the life of the transaction by the purchase agreement. As of June 30, 2024, we owned nine stream interests, which are on seven producing properties and two development stage properties. Stream interests accounted for approximately 71% and 70% of our total revenue for the three months and six months ended June 30, 2024, respectively, and 74% and 70% for the three and six months ended June 30, 2023, respectively. We expect stream interests to continue representing a significant portion of our total revenue.
• Acquisition and Management of Royalty Interests — Royalties are non-operating interests in mining projects that provide the right to revenue or metals produced from the project after deducting specified costs, if any. As of June 30, 2024, we owned royalty interests on 31 producing properties, 20 development stage properties and 117 exploration stage properties, of which we consider 49 to be evaluation stage projects. We use “evaluation stage” to describe exploration stage properties that contain mineral resources and on which operators are engaged in the search for mineral reserves. Royalty interests accounted for 29% and 30% of our total revenue for the three and six months ended June 30, 2024, respectively, and 26% and 30% for the three and six months ended June 30, 2023, respectively.

We do not conduct mining operations on the properties in which we hold stream and royalty interests, and we generally are not required to contribute to capital costs, exploration costs, environmental costs or other operating costs on those properties.

We are continually reviewing opportunities to grow our portfolio, whether through the creation or acquisition of new or existing stream or royalty interests or other acquisition activity. We generally have acquisition opportunities in various stages of review. Our review process may include, for example, engaging consultants and advisors to analyze an opportunity; analysis of technical, financial, legal, environmental, social, governance and other confidential information regarding an opportunity; submission of indications of interest and term sheets; participation in preliminary discussions and negotiations; and involvement as a bidder in competitive processes.

Business Trends and Uncertainties

Metal Prices

Our financial results are primarily tied to the price of gold, silver, copper, and other metals. Metal prices have fluctuated widely in recent years and we expect this volatility to continue. The marketability and price of metals are influenced by numerous factors beyond our control, and significant changes in metal prices can have a material effect on our revenue.

For the three and six months ended June 30, 2024 and 2023, average metal prices and percentages of revenue by metal were as follows:

(1) Based on the average U.S. dollars London Bullion Market Association PM fixing price for gold and daily fixing price for silver, as applicable.

(2) Based on the average U.S. dollars London Metals Exchange settlement price for copper.

Recent Developments

Back River Royalties Acquisition

On June 26, 2024, International Royalty Corporation, a wholly-owned subsidiary of Royal Gold, acquired a 0.7% net smelter return royalty (the "Hill Royalty") that declines by 50% after $5 million Canadian dollars in royalty revenue is received, and a 26.25% interest in a 5% gross smelter return ("GSR") royalty (the "KM Royalty") that is payable after approximately 780,000 ounces have been produced on the Back River Gold Project ("Back River") for aggregate cash consideration of $51 million. Payments for the Hill Royalty are deductible from the KM Royalty. When considered together, the royalty interests are equivalent to an approximate effective 1.1% GSR royalty rate over the majority of the mine life. Back River is operated by B2Gold Corporation and is located in Western Nunavut, Canada. Refer to Note 2 to the notes to consolidated financial statements for more information on the Back River royalties acquisition.

Property Developments

This section provides recent updates for our principal properties as reported by the operators, either directly to us or in their publicly available documents.

Stream Interests

Andacollo

Gold stream deliveries from Andacollo were approximately 5,800 ounces for the three months ended June 30, 2024, compared to approximately 3,700 ounces for the three months ended June 30, 2023. The increase in deliveries in the current period resulted primarily from differences in the timing of shipments and settlements during the periods. Stream deliveries typically occur approximately 5 months after mine production. We receive stream deliveries based on a fixed payability factor of 89%.

On July 23, 2024, Teck Resources Limited (“Teck”) reported that production at Andacollo continued to be impacted by low water availability due to extreme drought conditions which limited ore processing rates. The water restrictions improved during the June 2024 quarter and Teck expects that improvement to continue in the second half of 2024.

Khoemacau

Silver stream deliveries from Khoemacau were approximately 281,600 ounces for the three months ended June 30, 2024, compared to approximately 398,700 ounces for the three months ended June 30, 2023. The decrease in deliveries in the current period resulted from lower tonnage milled due to equipment downtime and lower ore grade as a result of the mining schedule, and the timing of shipments and settlements during the periods. We receive stream deliveries based on a fixed payability factor of 90%.

On July 24, 2024, MMG Limited (“MMG”) reported that mining operations at Khoemacau during the June 2024 quarter were influenced by equipment availability and high turnover of skilled labor, a situation intensified by a competitive labor market in Botswana, due to an increase in underground mining operations in the country. To address this issue, Khoemacau has sourced a significant number of replacements who are being trained and inducted.

MMG reported that mining activities during the June 2024 quarter were concentrated in lower-grade sectors due to the mining sequence, which, coupled with dilution, adversely impacted ore grades. MMG is taking measures to reduce the dilution factor, with the expectation of achieving better ore grades in the forthcoming quarters.

Additionally, MMG reported it is committed to supporting the ramp-up of Khoemacau to achieve an annual production of 60,000 tonnes of copper by 2026, facilitated by ongoing mining development efforts to increase mining fronts, operational flexibility and mined grades. These efforts will be further enhanced by the completion of the primary vent fans as well as the paste fill project. In addition, MMG is dedicated to completing the construction of an expansion project by 2028, which aims to increase production capacity to 130,000 tonnes of copper, and is expected to reach full capacity by 2029. Any expanded production from the Zone 5 and Mango NE deposits falls within the area of interest covered by our silver stream interest.

Mount Milligan

Gold stream deliveries from Mount Milligan were approximately 9,800 ounces for the three months ended June 30, 2024, compared to approximately 17,300 ounces for the three months ended June 30, 2023. Deliveries at Mount Milligan lag mine production by approximately 5 months. Decreased gold deliveries primarily resulted from the timing of shipments and settlements during the periods, including the early settlement of a concentrate shipment that occurred in the prior quarter.

Copper stream deliveries from Mount Milligan were approximately 2.5 million pounds during the three months ended June 30, 2024, in line with the prior year quarter.

On August 1, 2024, Centerra Gold Inc. ("Centerra") reported that it continued to execute on its site-wide optimization program at Mount Milligan, initially launched in the fourth quarter of 2023. According to Centerra, the program is focused on a holistic assessment of occupational health and safety, as well as improvements in mine and plant operations, and covers all aspects of the operation to maximize the potential of the orebody. Centerra reported that milling costs in the six months ended June 30, 2024, were 12% lower than the prior year period. Due to the longer-term nature of the mining optimization initiatives, Centerra expects to see improvements in mining costs per tonne in 2025.

Centerra also reported that work is progressing on a preliminary economic assessment to evaluate the substantial mineral resources at the Mount Milligan mine with a goal to unlock additional value beyond its current 2035 mine life. Centerra continues to expect that the Preliminary Economic Assessment will be completed in the first half of 2025.

Pueblo Viejo

Gold stream deliveries from Pueblo Viejo were approximately 7,000 ounces for the three months ended June 30, 2024, compared to approximately 6,800 ounces for the three months ended June 30, 2023.

Silver stream deliveries were approximately 332,700 ounces for the three months ended June 30, 2024, compared to approximately 150,700 ounces for the three months ended June 30, 2023.

On July 16, 2024, Barrick reported that Pueblo Viejo’s production during the June 2024 quarter was flat sequentially as throughput is ramped up with a shift to recovery rate optimization in the second half of 2024.

Royalty Interests

Cortez

Production attributable to our royalty interest at the Cortez Complex was approximately 162,400 ounces of gold for the three months ended June 30, 2024, of which 42,600 ounces were attributable to the Legacy Zone, and 119,800 ounces were attributable to the CC Zone, compared to approximately 179,600 ounces of gold for the three months ended June 30, 2023, of which 68,100 ounces were attributable to the Legacy Zone, and 111,500 ounces were attributable to the CC Zone.

The reduction compared to the prior period is a result of planned lower production at Cortez.

Peñasquito

Production attributable to our royalty interest at Peñasquito was approximately 64,200 ounces of gold, 7.95 million ounces of silver, 42.9 million pounds of lead and 113.3 million pounds of zinc for the three months ended June 30, 2024. This compares to approximately 48,100 ounces of gold, 5.95 million ounces of silver, 35.6 million pounds of lead and 89.7 million pounds of zinc for the three months ended June 30, 2023. Production was lower in the prior year quarter primarily due to a labor strike that was subsequently resolved.

On July 24, 2024, Newmont reported that full year 2024 production at Peñasquito is expected to be second half weighted driven primarily by improved grades. Newmont reported that Peñasquito delivered strong gold and zinc grades from the Chile Colorado pit during the June 2024 quarter, and stripping in the Peñasco pit is expected to allow access to ore with 50% higher gold grades in the December 2024 quarter.

Results of Operations

Quarter Ended June 30, 2024, Compared to Quarter Ended June 30, 2023

For the three months ended June 30, 2024, we recorded net income and comprehensive income attributable to Royal Gold stockholders (“net income”) of $81.2 million, or $1.23 per basic and diluted share, as compared to net income of $63.4 million, or $0.97 per basic and diluted share, for the three months ended June 30, 2023. The increase in net income was primarily attributable to higher revenue, as discussed below.

For the three months ended June 30, 2024, we recognized total revenue of $174.1 million, comprised of stream revenue of $123.0 million and royalty revenue of $51.1 million at an average gold price of $2,338 per ounce, an average silver price of $28.84 per ounce and an average copper price of $4.42 per pound. This is compared to total revenue of $144.0 million for the three months ended June 30, 2023, comprised of stream revenue of $106.0 million and royalty revenue of $38.0 million, at an average gold price of $1,976 per ounce, an average silver price of $24.13 per ounce and an average copper price of $3.84 per pound. Revenue and the corresponding production attributable to our stream and royalty interests for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, are as follows:

Revenue and Reported Production Subject to Our Stream and Royalty Interests

(Amounts in thousands, except reported production oz. and lbs.)

(1) Reported production relates to the amount of stream metal sales and the metal sales attributable to our royalty interests for the three months ended June 30, 2024, and 2023, and may differ from the operators’ public reporting due to a number of factors, including the timing of the operator’s concentrate shipments, the delivery of metal to us and our subsequent sale of the delivered metal. Refer to Note 6 to the notes to consolidated financial statements.

(2) Refer to “Property Developments” above for a discussion of recent developments at principal properties.

(3) Individually, no stream or royalty included within the “Other” category contributed greater than 10% of our total revenue for either period.

The increase in our total revenue resulted primarily from higher average gold, silver and copper prices compared to the prior period. Higher copper sales at Mount Milligan, and higher gold and silver production at Peñasquito also contributed to the increase. These increases were partially offset by lower gold and silver sales at Pueblo Viejo compared to the prior year period.

Gold and silver ounces and copper pounds purchased and sold during the three months ended June 30, 2024 and 2023, and gold and silver ounces and copper pounds in inventory as of June 30, 2024, and December 31, 2023, for our streaming interests were as follows:

(1) Pueblo Viejo silver purchases do not include 142,800 ounces of silver permitted to be deferred based on the terms of the Pueblo Viejo silver stream agreement. Total deferred silver ounces were 1.12 million ounces at June 30, 2024, and the timing for the delivery of this deferred amount is uncertain.

Cost of sales, which excludes depreciation, depletion and amortization, increased to $24.2 million for the three months ended June 30, 2024, from $23.4 million for the three months ended June 30, 2023. The increase, when compared to the prior year quarter, was primarily due to higher copper sales at Mount Milligan. Cost of sales is specific to our stream agreements and, except for Mount Milligan, is the result of our purchase of metal for a cash payment that is a set contractual percentage of the spot price for that metal near the date of metal delivery. For Mount Milligan, the cash payments under the existing stream agreement are the lesser of $435 per ounce or the prevailing market price of gold when purchased and 15% of the spot price for copper near the date of metal delivery. Separately, and in addition to the cash payments under the existing stream agreement, the Mount Milligan Cost Support Agreement detailed in Note 5 of our notes to consolidated financial statements provides for cash payments on gold and copper deliveries that are expected to begin after certain thresholds are met or earlier, if metal prices are below certain thresholds but only as requested by Centerra.

General and administrative costs increased to $10.5 million for the three months ended June 30, 2024, from $9.1 million for the three months ended June 30, 2023. The increase was primarily due to higher non-cash stock compensation expense compared to the prior year period.

Depreciation, depletion and amortization decreased to $35.7 million for the three months ended June 30, 2024, from $38.4 million for the three months ended June 30, 2023. The decrease was primarily due to lower depletion rates at Khoemacau and lower gold and silver sales at Pueblo Viejo compared to the prior year period.

Interest and other expense decreased to $2.5 million for the three months ended June 30, 2024, from $8.4 million for the three months ended June 30, 2023. The decrease was primarily due to lower interest expense as a result of lower average amounts outstanding under our revolving credit facility compared to the prior year period. For the three months ended June 30, 2024, amounts outstanding under our revolving credit facility averaged $92 million at an average all-in borrowing rate of 6.5% compared to average amounts outstanding of $473 million at an average all-in borrowing rate of 6.3% for the prior year period.

For the three months ended June 30, 2024, we recorded income tax expense of $19.0 million, compared to $2.0 million for the three months ended June 30, 2023. The income tax expense resulted in an effective tax rate of 18.9% in the current period, compared with 3.1% for the three months ended June 30, 2023. The three months ended June 30, 2023 included a discrete tax benefit of $8.5 million attributable to the release of a valuation allowance on certain foreign deferred tax assets.

Six Months Ended June 30, 2024, Compared to Six Months Ended June 30, 2023

For the six months ended June 30, 2024, we recorded net income of $128.4 million, or $1.95 per basic and diluted share, as compared to net income of $127.3 million, or $1.94 per basic and $1.93 per diluted share, for the six months ended June 30, 2023. The increase in net income was primarily attributable to higher revenue, lower debt-related interest expense and lower depletion expense compared to the prior year period. This increase was partially offset by higher tax expense, as discussed below.

For the six months ended June 30, 2024, we recognized total revenue of $323.0 million, comprised of stream revenue of $225.5 million and royalty revenue of $97.5 million at an average gold price of $2,203 per ounce, an average silver price of $26.07 per ounce and an average copper price of $4.12 per pound. This is compared to total revenue of $314.4 million for the six months ended June 30, 2023, comprised of stream revenue of $221.0 million and royalty revenue of $93.4 million, at an average gold price of $1,932 per ounce, an average silver price of $23.31 per ounce and an average copper price of $3.95 per pound. Revenue and the corresponding production attributable to our stream and royalty interests for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, are as follows:

Revenue and Reported Production Subject to Our Stream and Royalty Interests

(Amounts in thousands, except reported production oz. and lbs.)

(1) Reported production relates to the amount of stream metal sales and the metal sales attributable to our royalty interests for the six months ended June 30, 2024, and 2023, and may differ from the operators’ public reporting due to a number of factors, including the timing of the operator’s concentrate shipments, the delivery of metal to us and our subsequent sale of the delivered metal. Refer to Note 6 to the notes to consolidated financial statements.

(2) Refer to “Property Developments” above for a discussion of recent developments at principal properties.

(3) Individually, no stream or royalty included within the “Other” category contributed greater than 10% of our total revenue for either period.

The increase in our total revenue resulted primarily from higher average gold, silver and copper prices, higher production at Peñasquito, and higher gold sales at Xavantina which is included in other stream revenue in the table above. The increase was partially offset by lower gold and silver sales at Pueblo Viejo and lower production at the Cortez Legacy Zone when compared to the prior year period.

Gold and silver ounces and copper pounds purchased and sold during the six months ended June 30, 2024, and 2023, and gold and silver ounces and copper pounds in inventory as of June 30, 2024, and December 31, 2023, for our streaming interests were as follows:

(1) Pueblo Viejo silver purchases do not include 266,100 ounces of silver permitted to be deferred based on the terms of the Pueblo Viejo silver stream agreement. Total deferred silver ounces were 1.12 million ounces at June 30, 2024, and the timing for the delivery of this deferred amount is uncertain.

Cost of sales, which excludes depreciation, depletion and amortization, decreased to $45.9 million for the six months ended June 30, 2024, from $48.4 million for the six months ended June 30, 2023. The decrease was primarily due to lower gold and silver sales at Pueblo Viejo. Cost of sales is specific to our stream agreements and, except for Mount Milligan, is the result of our purchase of metal for a cash payment that is a set contractual percentage of the spot price for that metal near the date of metal delivery. For Mount Milligan, the cash payments under the existing stream agreement are the lesser of $435 per ounce or the prevailing market price of gold when purchased and 15% of the spot price for copper near the date of metal delivery. Separately, and in addition to the cash payments under the existing stream agreement, the Mount Milligan Cost Support Agreement detailed in Note 5 of our notes to consolidated financial statements provides for cash payments on gold and copper deliveries that are expected to begin after certain thresholds are met or earlier, if metal prices are below certain thresholds but only as requested by Centerra.

General and administrative costs increased to $21.9 million for the six months ended June 30, 2024, from $20.1 million for the six months ended June 30, 2023. The increase was primarily due to higher non-cash stock compensation expense compared to the prior year period.

Depreciation, depletion and amortization decreased to $74.5 million for the six months ended June 30, 2024, from $84.7 million for the six months ended June 30, 2023. The decrease was primarily due to lower depletion rates at Mount Milligan and Khoemacau as a result of proven and probable mineral reserve increases when compared to the prior year period.

Interest and other expense decreased to $7.1 million for the six months ended June 30, 2024, from $17.6 million for the six months ended June 30, 2023. The decrease was primarily due to lower interest expense as a result of lower average amounts outstanding under our revolving credit facility compared to the prior year period. For the six months ended June 30, 2024, amounts outstanding under our revolving credit facility averaged $156 million at an average all-in borrowing rate of 6.5%, compared to average amounts outstanding of $442 million at an average all-in borrowing rate of 6.2% for the prior year period.

For the six months ended June 30, 2024, we recorded income tax expense of $46.0 million, compared with income tax expense of $17.9 million for the six months ended June 30, 2023. The income tax expense resulted in an effective tax rate of 26.4% in the current period, compared with 12.3% for the six months ended June 30, 2023. The six months ended June 30, 2024, included a $13.0 million discrete U.S. GILTI income tax expense related to consideration received from the Mount Milligan Cost Support Agreement. The six months ended June 30, 2023 included a discrete tax benefit of $8.5 million attributable to the release of a valuation allowance on certain foreign deferred tax assets.

Liquidity and Capital Resources

Overview

At June 30, 2024, we had current assets of $133.5 million compared to current liabilities of $122.4 million, which resulted in working capital of $11.1 million. This compares to current assets of $167.4 million and current liabilities of $72.4 million at December 31, 2023, resulting in working capital of $95 million. The decrease in working capital was primarily due to a decrease in our available cash, which primarily resulted from increased debt repayments and the $51 million Back River royalties acquisition during the current period and our expected repayment of the outstanding balance under our revolving credit facility which resulted in the classification of the liability as current.

During the six months ended June 30, 2024, liquidity needs were met from $251.8 million in net cash provided by operating activities and our available cash resources. Working capital, combined with available capacity under our revolving credit facility, resulted in approximately $961 million of total liquidity at June 30, 2024. As of June 30, 2024, we had $950 million available and $50 million outstanding under our revolving credit facility. We were in compliance with each financial covenant under the revolving credit facility as of June 30, 2024. Refer to Note 4 of our notes to consolidated financial statements and below under Recent Liquidity Developments for further discussion on our debt.

We believe that our current financial resources and funds generated from operations will be adequate to cover anticipated expenditures for debt service and general and administrative expense costs for the foreseeable future. Our current financial resources are also available to fund dividends and for acquisitions of stream and royalty interests, including any conditional funding schedules. Our long-term capital requirements are primarily affected by our ongoing acquisition activities. We currently, and generally at any time, have acquisition opportunities in various stages of active review. In the event of one or more substantial stream or royalty interest or other acquisitions, we may seek additional debt or equity financing as necessary. We occasionally borrow and repay amounts under our revolving credit facility and may do so in the future.

Please refer to our risk factors included in Part 1, Item 1A of our 2023 10-K for a discussion of certain risks that may impact our liquidity and capital resources.

Recent Liquidity Developments

Revolving Credit Facility Repayment

During the six months ended June 30, 2024, we made payments totaling $200 million towards the outstanding balance on the revolving credit facility leaving $950 million available as of June 30, 2024.

On July 10, 2024, we repaid $25 million of the outstanding balance of our revolving credit facility, leaving $975 million available as of the date of this report. On August 12, 2024, we plan to pay the remaining outstanding balance of our revolving credit facility.

Cash Flows

Operating Activities

Net cash provided by operating activities totaled $251.8 million for the six months ended June 30, 2024, compared to $216.6 million for the six months ended June 30, 2023. The increase, when compared to the prior year period, was primarily due to cash proceeds of $24.5 million received for the Mount Milligan Cost Support Agreement and $12.0 million of interest from the repayment of the Khoemacau debt facility. This increase was partially offset by lower cash receipts from the royalty segment when compared to the prior year period.

Investing Activities

Net cash used in investing activities totaled $27.3 million for the six months ended June 30, 2024, compared to net cash used in investing activities of $2.8 million for the six months ended June 30, 2023. The increase was primarily due to the $51 million in aggregate consideration paid for the acquisition of two royalties at Back River. The increase was partially offset by the $25 million principal repayment on the Khoemacau debt facility during the current period.

Financing Activities

Net cash used in financing activities totaled $254.4 million for the six months ended June 30, 2024, compared to $226.2 million for the six months ended June 30, 2023. The increase was primarily due to an increase in payments made on our revolving credit facility when compared to the prior year.

Recently Adopted Accounting Standards and Critical Accounting Policies

Refer to Note 1 of our notes to consolidated financial statements for further discussion on any recently adopted accounting standards. Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 10-K for discussion on our critical accounting policies.

Forward-Looking Statements

This report and our other public communications include “forward-looking statements” within the meaning of U.S. federal securities laws. Forward-looking statements are any statements other than statements of historical fact. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from these statements.

Forward-looking statements are often identified by words like “will,” “may,” “could,” “should,” “would,” “believe,” “estimate,” “expect,” “anticipate,” “plan,” “forecast,” “potential,” “intend,” “continue,” “project,” or negatives of these words or similar expressions. Forward-looking statements include, among others, statements regarding the following: our expected financial performance and outlook, including sales volume, revenue, expenses, tax rates, earnings, and cash flows; operators’ expected operating and financial performance and other anticipated developments relating to their properties and operations, including production, deliveries, estimates of mineral resources and mineral reserves, environmental and feasibility studies, technical reports, mine plans, capital requirements, liquidity, and capital expenditures; benefits from acquisitions and asset assessments; receipt and timing of metal deliveries, including deferred amounts at Pueblo Viejo; the timing and amount of future benefits and obligations in connection with the Mount Milligan Cost Support Agreement; anticipated liquidity, capital resources, financing and stockholder returns; and prices for gold, silver, copper, and other metals.

Factors that could cause actual results to differ materially from these forward-looking statements include, among others, the following: a lower-price environment for gold, silver, copper, or other metals; operating activities or financial performance of properties on which we hold stream or royalty interests, including variations between actual and forecasted performance, operators’ ability to complete projects on schedule and as planned, operators’ changes to mine plans and mineral reserves and mineral resources (including updated mineral reserve and mineral resource information), liquidity needs, mining and environmental hazards, labor disputes, distribution and supply chain disruptions, permitting and licensing issues, other adverse government or court actions, or operational disruptions; contractual issues involving our stream or royalty agreements; the timing of deliveries of metals from operators and our subsequent sales of metal; risks associated with doing business in foreign countries; increased competition for stream and royalty interests; environmental risks, including those caused by climate change; potential cyber-attacks, including ransomware; our ability to identify, finance, value, and complete acquisitions; adverse economic and market conditions; impact of health epidemics and pandemics; changes in laws or regulations governing us, operators or operating properties; changes in management and key employees; and other risk factors described in this report and in our other reports filed with the Securities and Exchange Commission, including our 2023 10-K. Most of these factors are beyond our ability to predict or control. Other unpredictable or unknown factors not discussed in this report or our other reports could also have material adverse effects on forward-looking statements.

Forward-looking statements speak only as of the date on which they are made. We disclaim any obligation to update any forward-looking statements, except as required by law. Readers are cautioned not to put undue reliance on forward-looking statements.

Our earnings and cash flows are significantly impacted by changes in the market price of gold and other metals. Gold, silver, copper, and other metal prices can fluctuate significantly and are affected by numerous factors, such as demand, production levels, economic policies of central banks, producer hedging, world political and economic events, inflation and the strength of the U.S. dollar relative to other currencies. Please see the risk factor entitled “Our revenue is subject to volatility in metal prices, which could negatively affect our results of operations or cash flow,” under Part I, Item 1A of our 2023 10-K, for more information about risks associated with metal price volatility.

During the six months ended June 30, 2024, we reported revenue of $323 million, with an average gold price for the period of $2,203 per ounce, an average silver price of $26.07 per ounce, and an average copper price of $4.12 per pound. The table below shows the impact that a 10% increase or decrease in the average price of the specified metal would have had on our total reported revenue for the six months ended June 30, 2024:

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer (the principal executive officer) and Chief Financial Officer (the principal financial and accounting officer), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2024. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of June 30, 2024, at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended June 30, 2024, 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.

There have been no material changes to the risk factors included in Part I, Item 1A of our 2023 10-K, other than as supplemented by the risk factor included in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.