UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~March~~December 31, 2020


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-13357

Royal Gold, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		84-0835164
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation)		Identification No.)

1144 15^th Street, Suite 2500
Denver, Colorado		80202
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code (303) 573-1660

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of the Exchange on which Registered
Common Stock, $0.01 par value	RGLD	Nasdaq Global Select Market

~~Securities registered pursuant to Section 12(g) of the Act:~~ ~~None~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were ~~65,581,083~~65,606,496 shares of the Company’s common stock, par value $0.01 per share, outstanding as of ~~April 30, 2020~~. January 28, 2021.

Table of Contents

In this Quarterly Report on Form 10-Q, Royal Gold, Inc., together with its subsidiaries, is collectively referred to as “Royal Gold,” “we,” “us,” or “our.”

INDEX

		PAGE

PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Balance Sheets	3
	Consolidated Statements of Operations and Comprehensive Income	4
	Consolidated Statements of Changes in Stockholders’ Equity	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2119

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3431

Item 4.	Controls and Procedures	3531

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	3531

Item 1A.	Risk Factors	3532

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3632

Item 3.	Defaults Upon Senior Securities	3632

Item 4.	Mine Safety Disclosure	3632

Item 5.	Other Information	3632

Item 6.	Exhibits	3733

SIGNATURES		3934

Table of Contents

ITEM 1. FINANCIAL STATEMENTS

ROYAL GOLD, INC.

Consolidated Balance Sheets

(Unaudited, amounts in thousands except share data)

March 31,

June 30,


2020

2019
ASSETS

Cash and equivalents

$
93,715

$
119,475
Royalty receivables

32,322

20,733
Income tax receivable

11,361

2,702
Stream inventory

11,947

11,380
Prepaid expenses and other

1,232

389
Total current assets

150,577

154,679
Stream and royalty interests, net (Note 3)

2,317,413

2,339,316
Other assets

81,874

50,156
Total assets

$
2,549,864

$
2,544,151
LIABILITIES

Accounts payable

$
1,501

$
2,890
Dividends payable

18,359

17,372
Income tax payable

21,027

6,974
Other current liabilities

8,943

6,374
Total current liabilities

49,830

33,610
Debt (Note 5)

100,154

214,554
Deferred tax liabilities

86,776

88,961
Uncertain tax positions

36,441

36,573
Other long-term liabilities

6,128

-
Total liabilities

279,329

373,698
Commitments and contingencies (Note 12)

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 65,512,248 and 65,440,492 shares outstanding, respectively

655

655
Additional paid-in capital

2,209,098

2,201,773
Accumulated earnings (losses)

30,483

(65,747)
Total Royal Gold stockholders’ equity

2,240,236

2,136,681
Non-controlling interests

30,299

33,772
Total equity

2,270,535

2,170,453
Total liabilities and equity

$
2,549,864

$
2,544,151


	December 31,		June 30,
	2020		2020
ASSETS
Cash and equivalents	$	381,859	$	319,128
Royalty receivables		44,316		27,689
Income tax receivable		8,939		2,435
Stream inventory		13,900		11,671
Prepaid expenses and other		1,477		1,227
Total current assets		450,491		362,150
Stream and royalty interests, net (Note 3)		2,231,980		2,318,913
Other assets		81,263		85,224
Total assets	$	2,763,734	$	2,766,287
LIABILITIES
Accounts payable	$	2,587	$	2,484
Dividends payable		19,680		18,364
Income tax payable		23,318		13,323
Other current liabilities		11,569		9,384
Total current liabilities		57,154		43,555
Debt (Note 5)		195,983		300,439
Deferred tax liabilities		85,017		86,439
Uncertain tax positions		13,267		25,427
Other liabilities		7,634		8,308
Total liabilities		359,055		464,168
Commitments and contingencies (Note 13)
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 65,548,415 and 65,531,288 shares outstanding, respectively		656		655
Additional paid-in capital		2,201,076		2,210,429
Accumulated earnings		189,910		61,133
Total Royal Gold stockholders’ equity		2,391,642		2,272,217
Non-controlling interests		13,037		29,902
Total equity		2,404,679		2,302,119
Total liabilities and equity	$	2,763,734	$	2,766,287

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

Table of Contents

ROYAL GOLD, INC.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited, amounts in thousands except share data)

Three Months Ended

Nine Months Ended

March 31,

March 31,

March 31,

March 31,


2020

2019

2020

2019
Revenue (Note 6)

$
136,437

$
109,778

$
378,853

$
307,362

Costs and expenses

Cost of sales (excludes depreciation, depletion and amortization)

21,961

19,075

63,149

53,764
General and administrative

9,551

6,798

23,658

24,147
Production taxes

851

1,006

2,934

3,206
Exploration costs

565

330

4,705

5,534
Depreciation, depletion and amortization

51,228

39,368

130,038

120,726
Total costs and expenses

84,156

66,577

224,484

207,377

Operating income

52,281

43,201

154,369

99,985

Fair value changes in equity securities

(3,819)

1,781

(4,972)

(3,318)
Interest and other income

620

499

1,621

1,089
Interest and other expense

(2,088)

(7,499)

(7,139)

(22,786)
Income before income taxes

46,994

37,982

143,879

74,970

Income tax (expense) benefit

(8,702)

(9,388)

3,700

(11,355)
Net income and comprehensive income

38,292

28,594

147,579

63,615
Net loss and comprehensive loss attributable to non-controlling interests

262

178

2,750

3,753
Net income and comprehensive income attributable to Royal Gold common stockholders

$
38,554

$
28,772

$
150,329

$
67,368
Net income per share available to Royal Gold common stockholders:

Basic earnings per share

$
0.59

$
0.44

$
2.30

$
1.03
Basic weighted average shares outstanding

65,511,878

65,398,369

65,501,678

65,389,499
Diluted earnings per share

$
0.59

$
0.44

$
2.29

$
1.03
Diluted weighted average shares outstanding

65,600,770

65,515,234

65,626,400

65,494,902
Cash dividends declared per common share

$
0.28

$
0.265

$
0.825

$
0.78


	Three Months Ended				Six Months Ended
	December 31,		December 31,		December 31,		December 31,
	2020		2019		2020		2019
Revenue (Note 7)	$	158,360	$	123,643	$	305,240	$	242,417

Costs and expenses
Cost of sales (excludes depreciation, depletion and amortization)		24,859		21,077		46,760		41,188
General and administrative		6,789		6,665		14,244		14,108
Production taxes		1,401		984		2,756		2,083
Exploration costs		—		1,514		563		4,140
Depreciation, depletion and amortization		47,945		40,096		94,245		78,810
Total costs and expenses		80,994		70,336		158,568		140,329

Gain on sale of Peak Gold JV interest		—		—		33,906		—
Operating income		77,366		53,307		180,578		102,088

Fair value changes in equity securities		(382)		222		2,158		(1,153)
Interest and other income		613		226		1,034		1,001
Interest and other expense		(1,578)		(2,217)		(3,454)		(5,051)
Income before income taxes		76,019		51,538		180,316		96,885

Income tax (expense) benefit		(16,031)		(11,124)		(13,654)		12,401
Net income and comprehensive income		59,988		40,414		166,662		109,286
Net (income) loss and comprehensive (income) loss attributable to non-controlling interests		(99)		907		166		2,488
Net income and comprehensive income attributable to Royal Gold common stockholders	$	59,889	$	41,321	$	166,828	$	111,774
Net income per share attributable to Royal Gold common stockholders:
Basic earnings per share	$	0.91	$	0.63	$	2.55	$	1.70
Basic weighted average shares outstanding		65,546,938		65,495,907		65,542,326		65,480,759
Diluted earnings per share	$	0.91	$	0.63	$	2.54	$	1.70
Diluted weighted average shares outstanding		65,619,241		65,611,567		65,625,965		65,613,406
Cash dividends declared per common share	$	0.300	$	0.280	$	0.580	$	0.545

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

Table of Contents

ROYAL GOLD, INC.

Consolidated Statements of Changes in Stockholders’ Equity

Three months ended December 31, 2020 and 2019

(unaudited, amounts in thousands except share data)


	Royal Gold Stockholders

				Additional
	Common Shares			Paid-In		Accumulated		Non-controlling		Total
	Shares	Amount		Capital		(Losses) Earnings		Interests		Equity
Balance at September 30, 2020	65,545,606	$	656	$	2,199,705	$	149,702	$	13,158	$	2,363,221
Stock-based compensation and related share issuances	2,809		—		1,371		—		—		1,371
Distributions to non-controlling interests	—		—		—		—		(220)		(220)
Net income and comprehensive income	—		—		—		59,889		99		59,988
Dividends declared	—		—		—		(19,681)		—		(19,681)
Balance at December 31, 2020	65,548,415	$	656	$	2,201,076	$	189,910	$	13,037	$	2,404,679

	Royal Gold Stockholders

				Additional
	Common Shares			Paid-In		Accumulated		Non-controlling		Total
	Shares	Amount		Capital		(Losses) Earnings		Interests		Equity
Balance at September 30, 2019	65,495,787	$	655	$	2,202,350	$	(12,676)	$	31,999	$	2,222,328
Stock-based compensation and related share issuances	217		—		1,214		—		—		1,214
Distributions from (to) non-controlling interests	—		—		1,800		—		(187)		1,613
Net income (loss) and comprehensive income (loss)	—		—		—		41,321		(907)		40,414
Dividends declared	—		—		—		(18,355)		—		(18,355)
Balance at December 31, 2019	65,496,004	$	655	$	2,205,364	$	10,290	$	30,905	$	2,247,214

ROYAL GOLD, INC.

Consolidated Statements of Changes in Stockholders’ Equity

Six months ended December 31, 2020 and 2019

(unaudited, amounts in thousands except share data)


	Royal Gold Stockholders													Royal Gold Stockholders
						Accumulated
				Additional		Other											Additional
	Common Shares			Paid-In		Comprehensive		Accumulated		Non-controlling		Total		Common Shares			Paid-In		Accumulated		Non-controlling		Total
	Shares	Amount		Capital		Income (Loss)		(Losses) Earnings		Interests		Equity		Shares	Amount		Capital		(Losses) Earnings		Interests		Equity
Balance at December 31, 2019	65,496,004	$	655	$	2,205,364	$	—	$	10,290	$	30,905	$	2,247,214
Balance at June 30, 2020														65,531,288	$	655	$	2,210,429	$	61,133	$	29,902	$	2,302,119
Stock-based compensation and related share issuances	16,244		—		3,134		—		—		—		3,134	17,127		1		1,476		—		—		1,477
Distributions from (to) non-controlling interests	—		—		600		—		—		(344)		256
Net income and comprehensive income	—		—		—		—		38,554		(262)		38,292
Sale of Peak Gold JV interest														—		—		(10,829)		—		(16,218)		(27,047)
Distributions to non-controlling interests														—		—		—		—		(481)		(481)
Net income (loss) and comprehensive income (loss)														—		—		—		166,828		(166)		166,662
Dividends declared	—		—		—		—		(18,361)		—		(18,361)	—		—		—		(38,051)		—		(38,051)
Balance at March 31, 2020	65,512,248	$	655	$	2,209,098	$	—	$	30,483	$	30,299	$	2,270,535

	Royal Gold Stockholders
						Accumulated
				Additional		Other
	Common Shares			Paid-In		Comprehensive		Accumulated		Non-controlling		Total
	Shares	Amount		Capital		Income (Loss)		(Losses) Earnings		Interests		Equity
Balance at December 31, 2018	65,396,339	$	654	$	2,197,254	$	—	$	(86,238)	$	35,300	$	2,146,970
Stock-based compensation and related share issuances	3,965		—		1,675		—		—		—		1,675
Distributions from (to) non-controlling interests	—		—		420		—		—		(201)		219
Net income and comprehensive income	—		—		—		—		28,772		(178)		28,594
Other	—		—		—		—		266		—		266
Dividends declared	—		—		—		—		(17,363)		—		(17,363)
Balance at March 31, 2019	65,400,304	$	654	$	2,199,349	$	—	$	(74,563)	$	34,921	$	2,160,361
Balance at December 31, 2020														65,548,415	$	656	$	2,201,076	$	189,910	$	13,037	$	2,404,679

	Royal Gold Stockholders													Royal Gold Stockholders
						Accumulated
				Additional		Other											Additional
	Common Shares			Paid-In		Comprehensive		Accumulated		Non-controlling		Total		Common Shares			Paid-In		Accumulated		Non-controlling		Total
	Shares	Amount		Capital		Income (Loss)		(Losses) Earnings		Interests		Equity		Shares	Amount		Capital		(Losses) Earnings		Interests		Equity
Balance at June 30, 2019	65,440,492	$	655	$	2,201,773	$	—	$	(65,747)	$	33,772	$	2,170,453	65,440,492	$	655	$	2,201,773	$	(65,747)	$	33,772	$	2,170,453
Stock-based compensation and related share issuances	71,756		—		4,025		—		—		—		4,025	55,512		—		891		—		—		891
Distributions from (to) non-controlling interests	—		—		3,300		—		—		(723)		2,577	—		—		2,700		—		(379)		2,321
Net income and comprehensive income	—		—		—		—		150,329		(2,750)		147,579
Net income (loss) and comprehensive income (loss)														—		—		—		111,774		(2,488)		109,286
Dividends declared	—		—		—		—		(54,099)		—		(54,099)	—		—		—		(35,737)		—		(35,737)
Balance at March 31, 2020	65,512,248	$	655	$	2,209,098	$	—	$	30,483	$	30,299	$	2,270,535

	Royal Gold Stockholders
						Accumulated
				Additional		Other
	Common Shares			Paid-In		Comprehensive		Accumulated		Non-controlling		Total
	Shares	Amount		Capital		Income (Loss)		(Losses) Earnings		Interests		Equity
Balance at June 30, 2018	65,360,041	$	654	$	2,192,612	$	(1,201)	$	(89,898)	$	39,102	$	2,141,269
Stock-based compensation and related share issuances	40,263		—		3,527		—		—		—		3,527
Distributions from (to) non-controlling interests	—		—		3,210		—		—		(428)		2,782
Net income and comprehensive income	—		—		—		—		67,368		(3,753)		63,615
Other comprehensive income (loss)	—		—		—		1,201		(1,201)		—		—
Other	—		—		—		—		266		—		266
Dividends declared	—		—		—		—		(51,098)		—		(51,098)
Balance at March 31, 2019	65,400,304	$	654	$	2,199,349	$	—	$	(74,563)	$	34,921	$	2,160,361
Balance at December 31, 2019														65,496,004	$	655	$	2,205,364	$	10,290	$	30,905	$	2,247,214

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

Table of Contents

ROYAL GOLD, INC.

Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

Nine Months Ended

March 31,

March 31,

2020

2019
Cash flows from operating activities:

Net income and comprehensive income

$
147,579

$
63,615
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion and amortization

130,038

120,726
Amortization of debt discount and issuance costs

851

11,882
Non-cash employee stock compensation expense

8,283

5,510
Fair value changes in equity securities

4,972

3,318
Deferred tax benefit

(37,117)

(5,329)
Other

(148)

—
Changes in assets and liabilities:

Royalty receivables

(11,589)

(1,198)
Stream inventory

(567)

(3,102)
Income tax receivable

(8,658)

(8,750)
Prepaid expenses and other assets

(5,771)

2,474
Accounts payable

(1,295)

(4,326)
Income tax payable

14,054

(2,002)
Uncertain tax positions

(132)

3,130
Other liabilities

8,695

(5,039)
Net cash provided by operating activities

$
249,195

$
180,909

Cash flows from investing activities:

Acquisition of stream and royalty interests

(107,855)

(1,055)
Purchase of equity securities

(461)

(3,573)
Other

3,227

(157)
Net cash used in investing activities

$
(105,089)

$
(4,785)

Cash flows from financing activities:

Repayment of debt

(115,000)

—
Net payments from issuance of common stock

(4,257)

(1,982)
Common stock dividends

(53,111)

(50,114)
Contributions from non-controlling interest

3,300

3,210
Other

(798)

8
Net cash used in financing activities

$
(169,866)

$
(48,878)
Net (decrease) increase in cash and equivalents

(25,760)

127,246
Cash and equivalents at beginning of period

119,475

88,750
Cash and equivalents at end of period

$
93,715

$
215,996


	Six Months Ended
	December 31,		December 31,
	2020		2019
Cash flows from operating activities:
Net income and comprehensive income	$	166,662	$	109,286
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		94,245		78,810
Gain on sale of Peak Gold JV interest		(33,906)		—
Non-cash employee stock compensation expense		2,892		3,639
Fair value changes in equity securities		(2,158)		1,153
Deferred tax benefit		(8,405)		(36,126)
Other		398		566
Changes in assets and liabilities:
Royalty receivables		(16,627)		(7,714)
Stream inventory		(2,229)		(3,956)
Income tax receivable		(6,504)		(6,968)
Prepaid expenses and other assets		900		(7,020)
Accounts payable		(549)		(929)
Income tax payable		9,995		7,392
Uncertain tax positions		(12,160)		3,230
Other liabilities		1,510		8,133
Net cash provided by operating activities	$	194,064	$	149,496

Cash flows from investing activities:
Acquisition of stream and royalty interests		(48,832)		(72,417)
Proceeds from sale of Peak Gold JV interest		49,154		—
Proceeds from sale of Contango shares		12,146		—
Other		(364)		4,363
Net cash provided by (used in) investing activities	$	12,104	$	(68,054)

Cash flows from financing activities:
Repayment of debt		(105,000)		(85,000)
Net payments from issuance of common stock		(1,415)		(2,747)
Common stock dividends		(36,735)		(34,755)
Other		(287)		2,089
Net cash used in financing activities	$	(143,437)	$	(120,413)
Net increase (decrease) in cash and equivalents		62,731		(38,971)
Cash and equivalents at beginning of period		319,128		119,475
Cash and equivalents at end of period	$	381,859	$	80,504

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

Table of Contents

ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

1. OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ~~AND RECENTLY ISSUED~~ ACCOUNTING STANDARDS

Royal Gold ~~Inc. (“Royal Gold”, the “Company”, “we”, “us”, or “our”), together with its subsidiaries,~~ is engaged in the business of acquiring and managing ~~metal~~precious metals streams, royalties and similar interests. We seek to acquire existing stream and royalty interests or to finance ~~mining~~ 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 1one or more metals produced from a mine at a price determined for the life of the transaction by the purchase agreement. ~~A royalty is a~~Royalties are non-operating ~~interest~~interests in a mining project that ~~provides~~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 and ~~nine~~six months ended ~~March~~December 31, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, ~~2020.~~2021. These interim unaudited financial statements should be read in conjunction with ~~the Company’s~~our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2019~~2020 filed with the Securities and Exchange Commission on August ~~8, 2019~~6, 2020 (“Fiscal ~~2019~~2020 10-K”).

Certain amounts in the prior period consolidated balance sheet have been reclassified for comparative purposes to conform with the presentation in the current period balance sheet. Reclassified amounts were not material.

Recently Adopted ~~Accounting Standards~~

~~Leases~~

~~In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02,~~ ~~Leases (Topic 842~~), which requires recognition of right-of-use assets and lease payment liabilities on the balance sheet by lessees for all leases with terms greater than twelve months. Classification of leases as either a finance or operating lease will determine the recognition, measurement and presentation of expenses. ASU 2016-02 also requires certain quantitative and qualitative disclosures about material leasing arrangements.

~~Subsequently, in July 2018, the FASB issued ASU No. 2018-11,~~ ~~Leases (Topic 842): Targeted Improvements~~ (“ASU 2018-11”). ASU 2018-11 provides an additional modified retrospective transition method for adopting ASU 2016-02, which eliminates the need for adjusting prior period comparable financial statements prepared under legacy lease accounting guidance.

ASU 2016-02, together with ASU 2018-11, was effective for the Company July 1, 2019. The Company adopted the new guidance using the modified retrospective approach set forth in ASU 2018-11, with the date of initial application on July 1, 2019. Comparative reporting periods were not adjusted upon adoption.

~~As permitted under the transition guidance, the Company has elected to use the following practical expedients at transition:~~

●

~~To not reassess whether any expired or existing contracts were or contained leases; and~~

●

~~To not reassess the lease classification for any expired or existing leases.~~

~~ROYAL GOLD, INC.~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~In addition, the Company has elected to use the following practical expedients at and subsequent to adoption in accordance with ASU 2016-02:~~

●

~~Not to separate non-lease from lease components, and instead account for each lease component and any associated non-lease components as a single lease component; and~~

●

~~Not to recognize right-of-use assets and associated liabilities for short-term contracts with lease terms of 12 months or less.~~

The Company’s significant lease arrangements relate to its office spaces. These arrangements are for leases of assets such as corporate office space and office equipment. Through the implementation process, the Company evaluated its lease arrangements, which included an analysis of contracts, and updating the internal controls and processes that are necessary to track and calculate the additional accounting and disclosure requirements as required upon adoption of ASU 2016-02.

The Company leases office space and office equipment under operating leases expiring at various dates through the fiscal year ending June 30, 2030. The following amounts were recorded in the consolidated balance sheets at March 31, 2020 (amounts in thousands):

Classification

March 31, 2020
Operating Leases

Right-of-use assets - current

Prepaid expenses and other

$
608
Right-of-use assets - non-current

Other assets

5,065
Total right-of-use assets

$
5,673

Lease liabilities - current

Other current liabilities

$
549
Lease liabilities - non-current

Other long-term liabilities

6,128
Total operating lease liabilities

$
6,677

~~Maturities of operating lease liabilities at March 31, 2020 were as follows (amounts in thousands):~~

Fiscal Years:

Operating Leases
2020

$
93
2021

826
2022

823
2023

811
2024

822
Thereafter

4,149
Total lease payments

$
7,524
Less imputed interest

(847)
Total

$
6,677

~~Other information pertaining to leases consist of the following:~~


	~~March 31, 2020~~
~~Operating Lease Term and Discount Rate~~
~~Weighted average remaining lease term in years~~		9
~~Weighted average discount rate~~		~~2.5%~~

The Company did not have any finance leases as of March 31, 2020. The adoption of ASU 2016-02 did not impact accumulated earnings (losses), our consolidated statements of operations and comprehensive income, or our consolidated statements of cash flows.

~~ROYAL GOLD, INC.~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~Recently Issued~~ Accounting Standards

Current Expected Credit Loss

In June 2016, the ~~FASB~~Financial Accounting Standards Board issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments, which, together with subsequent amendments, changes how an entity ~~will record~~records credit losses from an “incurred loss” approach to an “expected loss” approach. This update iswas effective for annual periods beginning after December 15, 2019 ~~(i.e. July 1, 2020 for the Company)~~ and interim financial statement periods within those years, with early adoption permitted. ~~The Company is currently undergoing its~~On July 1, 2020, we adopted the new guidance and, based on our assessment, the adoption of the new guidance ~~and the~~did not have any impact ~~it will have~~ on our consolidated financial ~~statements and related disclosures. Based on procedures performed as of March 31, 2020, the Company does not expect the adoption to have a material impact on the Company’s consolidated financial~~ statements. ~~The Company will adopt the new guidance effective July 1, 2020.~~

2. ~~ACQUISITIONS~~SALE OF PEAK GOLD JV INTEREST

~~Alturas royalty acquisition~~

On ~~January 29,~~September 30, 2020, ~~a wholly-owned subsidiary of the Company~~we entered into an agreement with ~~various private individuals for the acquisition~~an affiliate of a net smelter return (“NSR”) royalty of up to 1.06% (gold) and up to 1.59% (copper) on mining concessions included as part of the Alturas project, which is located within the Coquimbo Region of Chile and held by a subsidiary of BarrickKinross Gold Corporation to sell our 40% membership interest in the Peak Gold Project for cash consideration of $49.2 million and to sell our 809,744 common shares in Contango Ore, Inc. (“~~Barrick”~~Contango”), ~~Compañia Minera Salitrales Limitada. Total~~our partner in Peak Gold, LLC, for cash consideration ~~for~~of $12.1 million.

In addition to the total cash consideration of $61.3 million, we received the following royalty ~~is up to $41 million, of which $11 million was paid on January 29, 2020.~~ interests:

●

An incremental 28% net smelter return royalty on silver produced from an area of interest which includes the current Peak Gold Project resource area. Peak Gold, LLC retains the right to acquire 50% of this royalty for consideration of $4.0 million; and

●

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

The ~~$11 million paid as part of the funding schedule, plus direct acquisition costs, have been~~royalties were recorded as an exploration stage royalty ~~interest within~~interests in Stream and royalty interests, net onin our consolidated balance ~~sheets. A future payment~~sheet as of ~~up to $20~~December 31, 2020 and were assigned a combined value of approximately $4.4 million ~~is conditional based on a project construction decision by Barrick and the size of the minable mineralized material~~ on the date of the ~~construction decision. A further future payment~~transaction.We recorded a gain of ~~up to $10~~$33.9 million ~~will be made to the private individuals upon first production from the mining concessions.~~

~~Castelo de Sonhos royalty acquisition~~

~~In August 2019, a subsidiary of the Company entered into an agreement with TriStar Gold Inc. and its subsidiaries (together “TriStar”) to acquire (i) up to a 1.5% NSR royalty~~ on the ~~Castelo de Sonhos gold project (“CDS”), located~~sale of our 40% membership interest in ~~Brazil, and (ii) warrants to purchase up to 19,640,000~~the Peak Gold Project during the three months ended September 30, 2020. The mark-to-market increase of $3.6 million on the sale of our 809,744 common shares ~~of TriStar. Total consideration~~in Contango is ~~$7.5 million and is payable over 3 payments, of which $4.5 million was paid~~included in ~~August 2019, $1.5 million was paid in November 2019, and the final payment of $1.5 million was paid on March 30, 2020.~~

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

~~The warrants have been recorded within~~ ~~Other assets~~ on our consolidated balance sheets and have a carrying value of approximately $0.3 million as of March 31, 2020. The warrants have been classified as a financial asset instrument and are recorded at fair value at each reporting date using the Black-Scholes model. Any change in fair value of the warrants at subsequent reporting periods will be recorded within Fair value changes in equity securitieson our consolidated statements of operations and comprehensive ~~income. As of March 31, 2020,~~income and was recognized during the ~~Company holds 19,640,000 warrants at an exercise price of C$0.25 per common share with a term of approximately five years.~~three months ended September 30, 2020.

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

3. STREAM AND ROYALTY INTERESTS, NET

The following tables summarize ~~the Company’s~~our stream and royalty interests, net as of ~~March~~December 31, 2020 and June 30, ~~2019.~~2020.


As of March 31, 2020 (Amounts in thousands):	Cost		Accumulated Depletion		Net
As of December 31, 2020 (Amounts in thousands):							Cost		Accumulated Depletion		Net
Production stage stream interests:
Mount Milligan	$	790,635	$	(218,378)	$	572,257	$	790,635	$	(270,370)	$	520,265
Pueblo Viejo		610,404		(193,109)		417,295		610,405		(226,083)		384,322
Andacollo		388,182		(107,501)		280,681		388,182		(120,847)		267,335
Rainy River		175,727		(23,176)		152,551		175,727		(34,820)		140,907
Wassa and Prestea		146,475		(65,746)		80,729
Wassa								146,475		(72,839)		73,636
Total production stage stream interests		2,111,423		(607,910)		1,503,513		2,111,424		(724,959)		1,386,465
Production stage royalty interests:
Voisey's Bay		205,724		(100,140)		105,584		205,724		(104,850)		100,874
Peñasquito		99,172		(43,744)		55,428		99,172		(47,263)		51,909
Holt		34,612		(23,796)		10,816
Cortez		80,681		(13,702)		66,979		80,681		(16,418)		64,263
Other		487,224		(399,127)		88,097		521,289		(433,800)		87,489
Total production stage royalty interests		907,413		(580,509)		326,904		906,866		(602,331)		304,535
Total production stage stream and royalty interests		3,018,836		(1,188,419)		1,830,417		3,018,290		(1,327,290)		1,691,000

Development stage stream interests:
Khoemacau		88,641		—		88,641		180,220		—		180,220
Other		12,037		—		12,037		12,037		—		12,037
Development stage royalty interests:
Other		70,952		—		70,952		69,780		—		69,780
Total development stage stream and royalty interests		171,630		—		171,630		262,037		—		262,037

Exploration stage royalty interests:
Pascua-Lama		177,690		—		177,690		177,690		—		177,690
Other		137,676		—		137,676		101,253		—		101,253
Total exploration stage royalty interests		315,366		—		315,366		278,943		—		278,943
Total stream and royalty interests, net	$	3,505,832	$	(1,188,419)	$	2,317,413	$	3,559,270	$	(1,327,290)	$	2,231,980

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

As of June 30, 2019 (Amounts in thousands):

Cost

Accumulated Depletion

Net
Production stage stream interests:

Mount Milligan

$
790,635

$
(184,091)

$
606,544
Pueblo Viejo

610,404

(158,819)

451,585
Andacollo

388,182

(86,675)

301,507
Rainy River

175,727

(14,522)

161,205
Wassa and Prestea

146,475

(56,919)

89,556
Total production stage stream interests

2,111,423

(501,026)

1,610,397
Total production stage stream and royalty interests

Production stage royalty interests:

Voisey's Bay

205,724

(95,564)

110,160
Peñasquito

99,172

(40,659)

58,513
Holt

34,612

(22,570)

12,042
Cortez

20,878

(12,362)

8,516
Other

487,224

(386,501)

100,723
Total production stage royalty interests

847,610

(557,656)

289,954
Total production stage stream and royalty interests

2,959,033

(1,058,682)

1,900,351
Development stage stream interests:

Other

12,038

—

12,038

Development stage royalty interests:

Cortez

59,803

—

59,803
Other

70,952

—

70,952
Total development stage royalty interests

130,755

—

130,755
Total development stage stream and royalty interests

142,793

—

142,793

Exploration stage royalty interests:

Pascua-Lama

177,690

—

177,690
Other

118,482

—

118,482
Total exploration stage royalty interests

296,172

—

296,172
Total stream and royalty interests, net

$
3,397,998

$
(1,058,682)

$
2,339,316


As of June 30, 2020 (Amounts in thousands):	Cost		Accumulated Depletion		Impairments		Net
Production stage stream interests:
Mount Milligan	$	790,635	$	(236,352)	$	—	$	554,283
Pueblo Viejo		610,404		(203,935)		—		406,469
Andacollo		388,182		(110,521)		—		277,661
Rainy River		175,727		(27,278)		—		148,449
Wassa		146,475		(67,619)		—		78,856
Total production stage stream interests		2,111,423		(645,705)		—		1,465,718

Production stage royalty interests:
Voisey's Bay		205,724		(101,381)		—		104,343
Peñasquito		99,172		(44,614)		—		54,558
Cortez		80,681		(15,065)		—		65,616
Other		521,837		(426,931)		(1,341)		93,565
Total production stage royalty interests		907,414		(587,991)		(1,341)		318,082
Total production stage stream and royalty interests		3,018,837		(1,233,696)		(1,341)		1,783,800

Development stage stream interests:
Khoemacau		136,608		—		—		136,608
Other		12,037		—		—		12,037

Development stage royalty interests:
Other		70,952		—		—		70,952
Total development stage royalty interests		70,952		—		—		70,952
Total development stage stream and royalty interests		219,597		—		—		219,597

Exploration stage royalty interests:
Pascua-Lama		177,690		—		—		177,690
Other		137,826		—		—		137,826
Total exploration stage royalty interests		315,516		—		—		315,516
Total stream and royalty interests, net	$	3,553,950	$	(1,233,696)	$	(1,341)	$	2,318,913

~~Mount Milligan~~

~~The Company’s wholly-owned subsidiary, RGLD Gold AG (“RGLD Gold”), owns the right to purchase 35%~~Separation of the ~~payable gold~~Wassa and 18.75% of the payable copper produced from the Mount Milligan copper-gold mine in British Columbia, Canada, which is operated by an indirect subsidiary of Centerra Gold Inc. (“Centerra”). The Company’s carrying value for its stream interest at Mount Milligan is $572.3 million as of March 31, 2020.Prestea/Bogoso Stream Agreement

On October 1, 2020, we announced the separation of the Wassa and Prestea/Bogoso gold stream agreement into separate stream agreements effective September 30, ~~2019, Centerra reported that issues identified~~2020. This separation was completed to facilitate the sale by Golden Star Resources Ltd. (“Golden Star”) of the Prestea/Bogoso mines to Future Global Resources (“FGR”).

The Wassa stream agreement, which remains with ~~decreasing long-term~~Golden Star, continues to provide us the right to purchase 10.5% of the gold ~~recoveries~~produced from the Wassa mine until the delivery of 240,000 ounces, after which the stream percentage will decrease to 5.5%. The cash purchase price for gold remains at 20% of the spot price per ounce delivered until the delivery of 240,000 ounces, and ~~increased costs~~30% of the spot price per ounce delivered thereafter. As of December 31, 2020, approximately 110,200 ounces remain to be delivered from the Wassa mine until the 240,000 ounce delivery threshold is reached.

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

The material terms of both the Wassa stream agreement and the Prestea/Bogoso stream agreement, including security and the rights and obligations of both Royal Gold and Golden Star, remain substantially consistent with those terms in the ~~short-to medium-term led them to record an impairment charge against their~~original agreement. The Wassa stream is recorded as a production stage stream interest within Stream and royalty interests, net on our consolidated balance sheets and has a carrying value of ~~the Mount Milligan mine under applicable accounting standards, and that it had begun a comprehensive technical review~~$73.6 million as of ~~the operation with the objective of publishing an updated National Instrument 43-101 (“NI 43-101”) technical report.~~December 31, 2020.

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

Significant reductions in proven and probable reserves or mineralized material are indicators of potential impairment for Royal Gold’s stream and royalty interests. As part of the Company’s regular asset impairment analysis, the Company determined that an impairment of our stream interest at Mount Milligan was not necessary as (i) the financial impairment taken by Centerra does not impact the mine operating performance, and (ii) the reduction in reserves and mineralized material at Mount Milligan resulted in gold and copper depletion rates that are well below current and long-term consensus gold and copper prices. As of March 31, 2020, the gold and copper depletion rates at our Mount Milligan stream interest are $764 per ounce of gold and $1.48 per pound of copper. Depletion rates well below current and long-term consensus metal prices are a strong indicator the carrying value of our stream or royalty interests are recoverable.

119

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

~~Rainy River~~

RGLD Gold owns the right to purchase 6.50% of the gold produced from the Rainy River mine, which is located in northwestern Ontario, Canada and is operated by New Gold, Inc. (“New Gold”), until 230,000 gold ounces have been delivered, and 3.25% thereafter; and 60% of the silver produced from the Rainy River mine until 3.1 million silver ounces have been delivered, and 30% thereafter. As of March 31, 2020, approximately 35,700 ounces of gold and approximately 373,100 ounces of silver have been delivered to RGLD Gold. The Company’s carrying value for its stream interest at Rainy River is $152.6 million as of March 31, 2020.

During the quarter ended December 31, 2019, New Gold reported that it continued to advance a comprehensive mine optimization study that would include a review of alternative open pit and underground mining scenarios at Rainy River On February 13, 2020, New Gold reported the results of the comprehensive optimization study that included an updated mine plan, which resulted in, among other things, a reduction in gold and silver reserves and the potential to extend the underground mine life beyond calendar 2028. New Gold published an updated NI 43-101 technical report for Rainy River on March 27, 2020, reflecting the updated mine plan and reserves.

Significant reductions in proven and probable reserves or mineralized material are indicators of potential impairment for the Company’s stream and royalty interests. As a result of the new information from New Gold, and as part of the Company’s regular asset impairment analysis, the Company determined that an impairment on its Rainy River stream interest was not necessary as of March 31, 2020 as the reduction in gold and silver reserves resulted in depletion rates that are well below current and long-term consensus gold and silver prices. As of March 31, 2020, the gold and silver depletion rates at our Rainy River stream interest are $848 per ounce of gold and $11.27 per ounce of silver. Depletion rates well below current and long-term metal prices are a strong indicator the carrying value of our stream or royalty interests are recoverable.

COVID-19 and current economic environment

~~Several~~Throughout 2020 and into 2021, several of our operating counterparties have ~~recently announced~~instituted temporary operational curtailments ~~or the withdrawal or review of previously disclosed guidance~~ due to the ongoing COVID-19 pandemic. ~~The~~In addition, the pandemic and resulting economic and societal impacts ~~associated with COVID-19~~have made it difficult for operators to forecast expected production amounts and, at times, operators have had to withdraw or revise previously disclosed guidance. For the most part, our results of operations and financial condition have not been materially impacted by these measures to date. However, the effects of the pandemic are fluid and changing rapidly, including with respect to vaccine and treatment developments and deployment and potential mutations of COVID-19. As a result, we are currently unable to predict the nature or extent of any future impact on our results of operations and financial condition. ~~The Company will~~We continue to monitor ~~any further~~the impact of developments ~~that~~associated with the ~~COVID-19~~ pandemic ~~may have~~ on stream orand royalty interests as part of our regular asset impairment analysis.

~~Other~~

During the quarter ended June 30, 2019, the Company was made aware of insolvency proceedings at one of our non-principal producing properties, El Toqui. The outcome of these insolvency proceedings may impact our royalty interests and the associated carrying value, which is approximately $1.3 million as of March 31, 2020. The Company continues to monitor these insolvency proceedings as part of our regular asset impairment analysis. Based on the results of these insolvency proceedings, the Company could determine that a future write-down of our interest to an amount less than the current carrying value or to zero is necessary.

4. MARKETABLE EQUITY SECURITIES

As of ~~March~~December 31, 2020, ~~the Company’s~~our marketable equity securities include ~~809,744 common shares of Contango Ore, Inc.,~~ 3,949,575 common shares of ~~Rubicon Minerals~~Battle North Gold Corporation, and warrants to purchase up to 19,640,000 common shares of ~~TriStar.~~TriStar Gold Inc. Our marketable equity securities are measured at fair value (Note ~~11)~~12) each reporting period with any changes in fair value recognized in net income.

As discussed in Note 2, on September 30, 2020, we sold 809,744 common shares of Contango for total consideration of $12.1 million and recorded a mark-to-market increase of $3.6 million on the sale, which is included in Fair value changes in equity securities in our consolidated statement of operations and comprehensive income for the three months ended September 30, 2020.

The fair value of our marketable equity securities decreased ~~$3.8~~$0.4 million and ~~$5.0~~increased $2.2 million for the three and ~~nine~~six months ended ~~March~~December 31, 2020, respectively, and ~~increased $1.8 million and decreased $3.3 million for the three and nine months ended March 31, 2019, respectively, and is~~are included in Fair value changes in equity securities on our consolidated statements of operations and comprehensive income. The carrying value of ~~the Company’s~~our marketable equity securities as of ~~March~~December 31, 2020 and June 30, ~~2019~~2020 was ~~$11.5~~$7.9 million and ~~$16.0~~$17.9 million, respectively, and is included in Other assets on ~~the Company’s~~our consolidated balance sheets.

~~ROYAL GOLD, INC.~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

5. DEBT

~~The Company’s~~Our debt as of ~~March~~December 31, 2020 and June 30, ~~2019~~2020 consists of the following:


	As of March 31, 2020						As of June 30, 2019						As of December 31, 2020						As of June 30, 2020
	Principal		Debt Issuance Costs		Total		Principal		Debt Issuance Costs		Total		Principal		Debt Issuance Costs		Total		Principal		Debt Issuance Costs		Total

		(Amounts in thousands)						(Amounts in thousands)						(Amounts in thousands)						(Amounts in thousands)
Revolving credit facility	$	105,000	$	(4,846)	$	100,154	$	220,000	$	(5,446)	$	214,554	$	200,000	$	(4,017)	$	195,983	$	305,000	$	(4,561)	$	300,439
Total debt	$	105,000	$	(4,846)	$	100,154	$	220,000	$	(5,446)	$	214,554	$	200,000	$	(4,017)	$	195,983	$	305,000	$	(4,561)	$	300,439

Revolving credit facility

~~On September 20, 2019, the Company entered into a third amendment to~~As of December 31, 2020, we had $200 million outstanding and $800 million available under our revolving credit facility dated as of June 2, 2017. Under the amendment, the Company’s Swiss subsidiary RGLD Gold was added as a co-borrower and joint and several obligor, certain of the Company’s Canadian subsidiaries were added as guarantors, and certain equity pledges that previously had been granted in favor of the lenders to support the facility were released, with the result that the facility is now unsecured.

~~As of March 31, 2020, the Company had $105 million outstanding and $895 million available under the revolving credit~~ facility. ~~As of March 31, 2020, the~~The interest rate on borrowings under ~~the~~our revolving credit facility as of December 31, 2020 was LIBOR plus 1.10% for an all-in rate of ~~1.87%~~1.33%. Interest expense, which includes interest on ~~the~~ outstanding borrowings ~~under the revolving credit facility~~ and ~~the~~ amortization of ~~the~~ debt issuance costs, was ~~$1.2~~$1.0 million and ~~$5.0~~$2.2 million for the three and ~~nine~~six months ended ~~March~~December 31, 2020, respectively, and ~~$0.3~~$1.6 million and ~~$0.9~~$3.8 million for the three and ~~nine~~six months ended ~~March~~December 31, 2019, respectively. As discussed in Note 56 to the consolidated financial statements in ~~the Company’s~~our Fiscal ~~2019~~2020 10-K, ~~the Company has~~we have financial covenants associated with ~~its~~our revolving credit facility. As of ~~March~~December 31, 2020, ~~the Company was~~we were in compliance with each financial covenant.

On ~~April 3, 2020,~~January 4, 2021, we repaid $50 million of the ~~Company drew an additional $200 million on its~~outstanding borrowings under our revolving credit ~~facility at an interest rate of LIBOR plus 1.10% for an all-in rate of 2.54%, resulting in a total of $305 million outstanding and $695 million available. There is no immediate requirement for~~facility. This increased the additional funds. However, due to the uncertain environment caused by the COVID-19 pandemic and the impact on certain operations where we hold a stream or royalty interest, we believe the drawdown was a prudent precautionary measure to help ensure cash is readilyamount available ~~to support continued business activities. We occasionally borrow and repay amounts~~ under our revolving credit facility to $850 million and ~~may do so in~~decreased the ~~future.~~amount outstanding to $150 million.

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

Royal Gold may repay any borrowings under ~~the~~our revolving credit facility at any time without premium or penalty. Our revolving credit facility matures on June 3, 2024.

6. LEASES

Our significant lease arrangements relate to our office spaces. These arrangements are for leases of assets such as corporate office space and office equipment. We lease office space and office equipment under operating leases expiring at various dates through the fiscal year ending June 30, 2030. The following amounts were recorded in the consolidated balance sheets at December 31, 2020 (amounts in thousands):


	Classification	December 31, 2020
Operating Leases
Right-of-use assets - current	Prepaid expenses and other	$	806
Right-of-use assets - non-current	Other assets		6,404
Total right-of-use assets		$	7,210

Lease liabilities - current	Other current liabilities	$	951
Lease liabilities - non-current	Other long-term liabilities		7,634
Total operating lease liabilities		$	8,585

Maturities of operating lease liabilities at December 31, 2020 were as follows (amounts in thousands):


Fiscal Years:	Operating Leases
2021	$	574
2022		1,145
2023		1,121
2024		1,121
2025		1,082
Thereafter		4,524
Total lease payments	$	9,567
Less imputed interest		(982)
Total	$	8,585

Other information pertaining to leases consist of the following:


	December 31, 2020
Operating Lease Term and Discount Rate
Weighted average remaining lease term in years		9
Weighted average discount rate		2.5%

We did not have any finance leases as of December 31, 2020.

6.7. REVENUE

Revenue Recognition

Under ~~current ASC 606 –~~ ~~Revenue from Contracts with Customers~~ ~~(“ASC 606”)~~U.S. GAAP guidance, 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.

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

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

~~ROYAL GOLD, INC.~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

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 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 offsite treatment, refining, transportation and, if applicable, mining 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, ~~the Company~~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 Fiscal ~~2019~~2020 10-K. For the three and ~~nine~~six months ended ~~March~~December 31, 2020, royalty revenue that was estimated or was attributable to metal production for a period prior to ~~March~~December 31, 2020, was not material.

Disaggregation of Revenue

We have identified 2 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 ~~10.~~11.

1412

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

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


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	March 31,		March 31,		March 31,		March 31,		December 31,		December 31,		December 31,		December 31,
	2020		2019		2020		2019		2020		2019		2020		2019
Stream revenue:
Gold	$	78,503	$	62,856	$	219,838	$	175,149	$	83,685	$	69,111	$	167,282	$	141,335
Silver		8,284		7,908		25,648		24,512		11,128		8,929		22,026		17,365
Copper		10,673		7,001		28,579		15,819		12,906		11,585		24,914		17,906
Total stream revenue	$	97,460	$	77,765	$	274,065	$	215,480	$	107,719	$	89,625	$	214,222	$	176,606
Royalty revenue:
Gold	$	28,792	$	22,041	$	72,617	$	60,251	$	36,471	$	22,068	$	63,375	$	43,825
Silver		2,666		1,608		7,860		4,527		4,193		3,365		7,634		5,194
Copper		3,340		3,056		10,427		11,030		4,395		4,107		8,456		7,087
Other		4,179		5,308		13,884		16,074		5,582		4,478		11,553		9,705
Total royalty revenue	$	38,977	$	32,013	$	104,788	$	91,882	$	50,641	$	34,018	$	91,018	$	65,811
Total revenue	$	136,437	$	109,778	$	378,853	$	307,362	$	158,360	$	123,643	$	305,240	$	242,417

Revenue attributable to our principal stream and royalty interests is disaggregated as follows (amounts in thousands):


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		March 31,		March 31,		March 31,		March 31,			December 31,		December 31,		December 31,		December 31,
	Metal(s)	2020		2019		2020		2019		Metal(s)	2020		2019		2020		2019
Stream revenue:
Mount Milligan	Gold & Copper	$	32,298	$	26,938	$	93,423	$	63,954	Gold & Copper	$	44,713	$	30,629	$	79,332	$	61,126
Pueblo Viejo	Gold & Silver		28,302		20,787		73,534		58,504	Gold & Silver		27,554		23,614		58,824		45,232
Andacollo	Gold		22,055		15,638		63,324		51,016	Gold		17,766		20,665		41,275		41,269
Wassa	Gold		8,647		5,773		18,760		17,557	Gold		6,761		4,794		15,870		10,113
Rainy River	Gold & Silver		4,838		7,074		19,566		17,067
Other	Gold		1,320		1,555		5,458		7,382	Gold & Silver		10,925		9,923		18,921		18,866
Total stream revenue		$	97,460	$	77,765	$	274,065	$	215,480		$	107,719	$	89,625	$	214,222	$	176,606
Royalty revenue:
Peñasquito	Gold, Silver, Lead & Zinc	$	7,425	$	4,465	$	19,422	$	12,763	Gold, Silver, Lead & Zinc	$	12,952	$	7,577	$	23,161	$	11,997
Cortez	Gold		6,400		4,127		14,109		7,066	Gold		8,128		3,292		13,812		7,709
Other	Various		25,152		23,421		71,257		72,053	Various		29,561		23,149		54,045		46,105
Total royalty revenue		$	38,977	$	32,013	$	104,788	$	91,882		$	50,641	$	34,018	$	91,018	$	65,811
Total revenue		$	136,437	$	109,778	$	378,853	$	307,362		$	158,360	$	123,643	$	305,240	$	242,417

Please refer to Note 1011 for the geographical distribution of our revenue by reportable segment.

~~Contract Receivables~~8. STOCK-BASED COMPENSATION

Under our forward sales contracts related to our metal streaming arrangements, payment is due from the purchaser on the day of settlement. Accordingly, our metal stream sales contracts do not give rise to a receivable under ASC 606.We recognized stock-based compensation expense as follows:

~~Under our royalty arrangements, payment is typically due by the royalty payor either (i) monthly, typically thirty days after month-end or (ii) quarterly, typically~~ ~~thirty~~ to sixty days after the respective quarter-end. Revenue related to production that has occurred as of the reporting date but for which payment has not been received represents a receivable (rather than a contract asset) under ASC 606 as payment by the operator is unconditional upon the production of metal. As of March 31, 2020, and June 30, 2019, our royalty receivables were $32.3 million and $20.7 million, respectively.


	Three Months Ended				Six Months Ended
	December 31,		December 31,		December 31,		December 31,
	2020		2019		2020		2019

		(Amounts in thousands)				(Amounts in thousands)
Stock options	$	17	$	26	$	33	$	57
Stock appreciation rights		430		430		801		872
Restricted stock		588		697		1,585		1,940
Performance stock		363		385		473		770
Total stock-based compensation expense	$	1,398	$	1,538	$	2,892	$	3,639

~~Practical Expedients Utilized~~

~~Our forward sales contracts related to our metal streaming arrangements are short-term~~Stock-based compensation expense is included within General and administrative expense in ~~nature with a term~~the consolidated statements of one year or less. For these contracts, we have utilized the practical expedient allowed in ASC 606 that exempts us from presenting the transaction price allocated to remaining performance obligations (i.e. forecasts of unearned revenue) for contracts with an original expected term of one year or less.operations and comprehensive income.

1513

Table of Contents

ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

During the six months ended December 31, 2020 and 2019, we granted the following stock-based compensation awards (note that 0 awards were granted during the three months ended December 31, 2020 and 2019):


	Six Months Ended
	December 31,	December 31,
	2020	2019

	(Number of shares)
Stock options	2,860	1,604
Stock appreciation rights	64,100	46,726
Restricted stock	26,104	23,976
Performance stock (at maximum 200% attainment)	35,380	28,560
Total equity awards granted	128,444	100,866

As of December 31, 2020, 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)
Stock options	$	123		2.3
Stock appreciation rights		3,172		2.2
Restricted stock		4,993		3.5
Performance stock		2,367		1.9

9. EARNINGS PER SHARE (“EPS”)

Basic EPS were 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 ~~royalty arrangements generally cover metal production over~~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 ~~life~~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 tables summarize the effects of dilutive securities on diluted EPS for the period (amounts in thousands, except share data):


	Three Months Ended				Six Months Ended
	December 31,		December 31,		December 31,		December 31,
	2020		2019		2020		2019
Net income attributable to Royal Gold common stockholders	$	59,889	$	41,321	$	166,828	$	111,774
Weighted-average shares for basic EPS		65,546,938		65,495,907		65,542,326		65,480,759
Effect of other dilutive securities		72,303		115,660		83,639		132,647
Weighted-average shares for diluted EPS		65,619,241		65,611,567		65,625,965		65,613,406
Basic EPS	$	0.91	$	0.63	$	2.55	$	1.70
Diluted EPS	$	0.91	$	0.63	$	2.54	$	1.70

Table of Contents

ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

10. INCOME TAXES


	Three Months Ended				Six Months Ended
	December 31,		December 31,		December 31,		December 31,
	2020		2019		2020		2019

	(Amounts in thousands, except rate)				(Amounts in thousands, except rate)
Income tax expense (benefit)	$	16,031	$	11,124	$	13,654	$	(12,401)
Effective tax rate		21.1%		21.6%		7.6%		(12.8%)

The effective tax rate for the six months ended December 31, 2020, included discrete tax benefits ($24.5 million) attributable to the settlement of an uncertain tax position with a foreign jurisdiction and the release of a ~~mine and, thus, have a contract term that is greater than one year. Under these contracts, variability~~valuation allowance related to ~~future production volumes~~deferred tax assets, both of which were recorded during the three months ended September 30, 2020. The effective tax rate for the six months ended December 31, 2019, included discrete benefits ($32.3 million) attributable to the remeasurement of certain deferred tax assets and ~~market pricing is allocated entirely~~a net step-up in the basis of tax assets due to ~~those future production volumes from~~ the ~~mining operation. Consequently, we have utilized an alternative practical expedient allowed in ASC 606 that exempts us from presenting~~enactment of the transaction price allocated to remaining performance obligations (i.e. forecasts of unearned revenue) if the variable consideration in a contract is allocated entirely to a wholly unsatisfied performance obligation.

Federal Act on Tax Reform and AHV Financing (Swiss Tax Reform).

~~7. STOCK-BASED COMPENSATION~~11. SEGMENT INFORMATION

~~The Company recognized stock-based compensation expense~~We manage our business under 2 reportable segments, consisting of the acquisition and management of stream interests and the acquisition and management of royalty interests. Royal Gold’s long-lived assets (stream and royalty interests, net) are geographically distributed as ~~follows:~~shown in the following table (amounts in thousands):


	Three Months Ended				Nine Months Ended				As of December 31, 2020						As of June 30, 2020
	March 31,		March 31,		March 31,		March 31,						Total stream						Total stream
	2020		2019		2020		2019		Stream		Royalty		and royalty		Stream		Royalty		and royalty
		(Amounts in thousands)				(Amounts in thousands)			interest		interest		interests, net		interest		interest		interests, net
Stock options	$	94	$	33	$	151	$	187
Stock appreciation rights		1,365		417		2,237		1,592
Restricted stock		2,659		679		4,599		2,636
Performance stock		526		311		1,296		1,095
Total stock-based compensation expense	$	4,644	$	1,440	$	8,283	$	5,510
Canada									$	661,172	$	184,601	$	845,773	$	702,732	$	189,855	$	892,587
Dominican Republic										384,322		—		384,322		406,469		—		406,469
Chile										267,334		224,116		491,450		277,661		223,922		501,583
Africa										253,856		321		254,177		215,463		321		215,784
Mexico										—		71,843		71,843		—		75,951		75,951
United States										—		115,427		115,427		—		159,445		159,445
Australia										—		29,161		29,161		—		30,006		30,006
Rest of world										12,038		27,789		39,827		12,038		25,050		37,088
Total									$	1,578,722	$	653,258	$	2,231,980	$	1,614,363	$	704,550	$	2,318,913

~~Stock-based compensation expense is included within~~ ~~General and administrative~~ ~~expense in the consolidated statements of operations and comprehensive income.~~

~~During the three and nine months ended March 31, 2020, the Company granted the following stock-based compensation awards:~~

Three Months Ended

Nine Months Ended

March 31,

March 31,

March 31,

March 31,



2020


2019


2020


2019

(Number of shares)

(Number of shares)
Stock options

—

—

1,604

6,430
Stock appreciation rights

6,890

3,500

53,616

72,860
Restricted stock

2,050

1,200

26,026

43,460
Performance stock (at maximum 200% attainment)

4,280

2,400

32,840

59,820
Total equity awards granted

13,220

7,100

114,086

182,570

~~As of March 31, 2020, 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)
Stock options

$
55

1.6
Stock appreciation rights

1,790

2.0
Restricted stock

3,736

3.2
Performance stock

1,795

2.3

~~8. EARNINGS PER SHARE (“EPS”)~~

Basic earnings per common share were 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 earnings per share pursuant to the two-class method. The Company’s unvested restricted stock awards contain non-forfeitable dividend rights and participate equally with common stock with respect to dividends issued or declared. The Company’s unexercised stock option awards and unexercised SSARs and unvested performance stock do not contain rights to dividends. Under the two-class method, the earnings used to determine basic earnings per

1615

~~ROYAL GOLD, INC.~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~common share are reduced by an amount allocated to participating securities. Use~~Table of ~~the two-class method has an immaterial impact on the calculation of basic and diluted earnings per common share.~~Contents

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

Three Months Ended

Nine Months Ended

March 31,

March 31,

March 31,

March 31,


2020

2019

2020

2019

Net income and comprehensive income available to Royal Gold common stockholders

$
38,554

$
28,772

$
150,329

$
67,368

Weighted-average shares for basic EPS

65,511,878

65,398,369

65,501,678

65,389,499

Effect of other dilutive securities

88,892

116,865

124,722

105,403

Weighted-average shares for diluted EPS

65,600,770

65,515,234

65,626,400

65,494,902

Basic earnings per share

$
0.59

$
0.44

$
2.30

$
1.03

Diluted earnings per share

$
0.59

$
0.44

$
2.29

$
1.03

~~9. INCOME TAXES~~

Three Months Ended

Nine Months Ended

March 31,

March 31,

March 31,

March 31,


2020

2019

2020

2019

(Amounts in thousands, except rate)

(Amounts in thousands, except rate)
Income tax (expense) benefit

$
(8,702)

$
(9,388)

$
3,700

$
(11,355)
Effective tax rate

18.5%

24.7%

(2.6%)

15.1%

The effective tax rate for the nine months ended March 31, 2020, included discrete tax benefits attributable to the remeasurement of certain deferred tax assets and a net step-up in the basis of tax assets due to the enactment of the Federal Act on Tax Reform and AHV Financing (Swiss Tax Reform). The effective tax rate for the nine months ended March 31, 2019 included benefits related to the transition tax as part of H.R. 1, originally known as the Tax Cuts and Jobs Act, which was due to consideration of new U.S. Treasury regulations and IRS guidance released during the period.

On April 30, 2020, the Company entered into a settlement agreement with a foreign taxing authority related to an uncertain tax position recorded on our consolidated balance sheets as of March 31, 2020. We continue to analyze the impacts of the settlement on our consolidated financial statements, including the release of uncertain tax positions during our fourth quarter ending June 30, 2020.

ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

~~10. SEGMENT INFORMATION~~

The Company manages its business under 2 reportable segments, consisting of the acquisition and management of stream interests and the acquisition and management of royalty interests. Royal Gold’s long-lived assets (stream and royalty interests, net) are geographically distributed as shown in the following table (amounts in thousands):

As of March 31, 2020

As of June 30, 2019

Total stream

Total stream

Stream

Royalty

and royalty

Stream

Royalty

and royalty


interest

interest

interests, net

interest

interest

interests, net
Canada

$
724,808

$
191,809

$
916,617

$
767,749

$
200,251

$
968,000
Dominican Republic

417,295

—

417,295

451,585

—

451,585
Chile

280,681

225,100

505,781

301,507

214,226

515,733
Africa

169,370

321

169,691

89,555

321

89,876
Mexico

—

77,694

77,694

—

83,748

83,748
United States

—

161,223

161,223

—

163,398

163,398
Australia

—

30,376

30,376

—

31,944

31,944
Rest of world

12,038

26,698

38,736

12,039

22,993

35,032
Total

$
1,604,192

$
713,221

$
2,317,413

$
1,622,435

$
716,881

2,339,316

~~The Company’s~~Our reportable segments for purposes of assessing performance are shown below (amounts in thousands):


	Three Months Ended March 31, 2020										Three Months Ended December 31, 2020
	Revenue		Cost of sales⁽¹⁾		Production taxes		Depletion ⁽²⁾		Segment gross profit		Revenue		Cost of sales⁽¹⁾		Production taxes		Depletion ⁽²⁾		Segment gross profit
Stream interests	$	97,460	$	21,961	$	—	$	43,240	$	32,259	$	107,719	$	24,859	$	—	$	40,226	$	42,634
Royalty interests		38,977		—		851		7,875		30,251		50,641		—		1,401		7,635		41,605
Total	$	136,437	$	21,961	$	851	$	51,115	$	62,510	$	158,360	$	24,859	$	1,401	$	47,861	$	84,239

	Three Months Ended March 31, 2019										Three Months Ended December 31, 2019
	Revenue		Cost of sales⁽¹⁾		Production taxes		Depletion ⁽²⁾		Segment gross profit		Revenue		Cost of sales⁽¹⁾		Production taxes		Depletion ⁽²⁾		Segment gross profit
Stream interests	$	77,765	$	19,075	$	—	$	31,061	$	27,629	$	89,625	$	21,077	$	—	$	32,181	$	36,367
Royalty interests		32,013		—		1,006		8,255		22,752		34,018		—		984		7,801		25,233
Total	$	109,778	$	19,075	$	1,006	$	39,316	$	50,381	$	123,643	$	21,077	$	984	$	39,982	$	61,600


	Nine Months Ended March 31, 2020											Six Months Ended December 31, 2020
	Revenue		Cost of sales⁽¹⁾		Production taxes			Depletion ⁽²⁾		Segment gross profit		Revenue		Cost of sales⁽¹⁾		Production taxes		Depletion ⁽²⁾		Segment gross profit
Stream interests	$	274,065	$	63,149	$	—		$	106,883	$	104,033	$	214,222	$	46,760	$	—	$	79,253	$	88,209
Royalty interests		104,788		—		2,934			22,875		78,979		91,018		—		2,756		14,822		73,440
Total	$	378,853	$	63,149	$	2,934		$	129,758	$	183,012	$	305,240	$	46,760	$	2,756	$	94,075	$	161,649

	Nine Months Ended March 31, 2019											Six Months Ended December 31, 2019
	Revenue		Cost of sales		Production taxes		��	Depletion		Segment gross profit		Revenue		Cost of sales⁽¹⁾		Production taxes		Depletion ⁽²⁾		Segment gross profit
Stream interests	$	215,480	$	53,764	$	—		$	91,794	$	69,922	$	176,606	$	41,188	$	—	$	63,643	$	71,775
Royalty interests		91,882		—		3,206			28,786		59,890		65,811		—		2,083		15,000		48,728
Total	$	307,362	$	53,764	$	3,206		$	120,580	$	129,812	$	242,417	$	41,188	$	2,083	$	78,643	$	120,503

(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.

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


	Three Months Ended				Six Months Ended
	December 31,		December 31,		December 31,		December 31,
		2020		2019		2020		2019
Total segment gross profit	$	84,239	$	61,600	$	161,649	$	120,503

Costs and expenses
General and administrative expenses		6,789		6,665		14,244		14,108
Exploration costs		—		1,514		563		4,140
Depreciation and amortization		84		114		170		167
Gain on sale of Peak Gold JV interest		—		—		(33,906)		—
Operating income		77,366		53,307		180,578		102,088
Fair value changes in equity securities		(382)		222		2,158		(1,153)
Interest and other income		613		226		1,034		1,001
Interest and other expense		(1,578)		(2,217)		(3,454)		(5,051)
Income before income taxes	$	76,019	$	51,538	$	180,316	$	96,885

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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

Nine Months Ended

March 31,

March 31,

March 31,

March 31,

2020

2019

2020

2019
Total segment gross profit

$
62,510

$
50,381

$
183,012

$
129,812

Costs and expenses

General and administrative expenses

9,551

6,798

23,658

24,147
Exploration costs

565

330

4,705

5,534
Depreciation and amortization

113

52

280

146
Operating income

52,281

43,201

154,369

99,985
Fair value changes in equity securities

(3,819)

1,781

(4,972)

(3,318)
Interest and other income

620

499

1,621

1,089
Interest and other expense

(2,088)

(7,499)

(7,139)

(22,786)
Income before income taxes

$
46,994

$
37,982

$
143,879

$
74,970

~~The Company’s~~Our revenue by reportable segment for the three and ~~nine~~six months ended ~~March~~December 31, 2020 and 2019 is geographically distributed as shown in the following table (amounts in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	March 31,		March 31,		March 31,		March 31,		December 31,		December 31,		December 31,		December 31,
	2020		2019		2020		2019		2020		2019		2020		2019
Stream interests:
Canada	$	37,136	$	34,012	$	112,990	$	81,021	$	54,302	$	38,191	$	95,888	$	75,854
Dominican Republic		28,302		20,787		73,534		58,504		27,554		23,614		58,824		45,232
Chile		22,055		15,638		63,323		51,016		17,766		20,665		41,275		41,269
Africa		9,967		7,328		24,218		24,939		8,097		7,155		18,235		14,251
Total stream interests	$	97,460	$	77,765	$	274,065	$	215,480	$	107,719	$	89,625	$	214,222	$	176,606

Royalty interests:
United States	$	13,199	$	9,813	$	33,813	$	24,153	$	17,090	$	10,012	$	30,788	$	20,614
Canada		9,126		8,201		26,084		25,918
Mexico		9,160		8,719		24,923		24,551		15,174		9,376		26,751		15,763
Australia		3,714		3,234		11,062		9,451		8,314		3,546		12,856		7,348
Canada										6,047		8,037		13,458		16,958
Africa		925		161		2,531		1,185		744		911		1,494		1,606
Rest of world		2,853		1,885		6,375		6,624		3,272		2,136		5,671		3,522
Total royalty interests	$	38,977	$	32,013	$	104,788	$	91,882	$	50,641	$	34,018	$	91,018	$	65,811
Total revenue	$	136,437	$	109,778	$	378,853	$	307,362	$	158,360	$	123,643	$	305,240	$	242,417

~~11.~~12. FAIR VALUE MEASUREMENTS

~~ASC 820,~~ Fair ~~Value Measurements and Disclosures~~ ~~(“ASC 820”) establishes~~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, ~~that~~which prioritizes the inputs ~~to valuation techniques~~ used ~~to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices~~ in ~~active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the~~measuring fair value ~~hierarchy under ASC 820 are described below:~~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

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).

~~ROYAL GOLD, INC.~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

The following table sets forth ~~the Company’s~~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, 2020										As of December 31, 2020
			Fair Value										Fair Value
	Carrying Amount		Total		Level 1		Level 2		Level 3		Carrying Amount		Total		Level 1		Level 2		Level 3
Assets (amounts in thousands):
Marketable equity securities⁽¹⁾	$	11,472	$	11,472	$	8,345	$	3,127	$	—	$	7,874	$	7,874	$	6,447	$	1,427	$	—

(1) Included in Other assets on ~~the Company’s~~our consolidated balance sheets.

~~The Company’s~~Our marketable equity 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 by the Company.~~held. The carrying value of our revolving credit facility (Note 5) approximates fair value as of December 31, 2020. The TriStar Gold Inc. warrants classified within Level 2 of the fair value hierarchy are ~~valued each period using~~model-derived (Black-Scholes) valuations in which the ~~Black-Scholes model. The warrants~~significant inputs are part of the TriStar transaction (Note 2), and have been classified as a financial asset instrument. The carrying value of the Company’s revolving credit facility (Note 5) approximates fair value as of March 31, 2020.observable in active markets.

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ROYAL GOLD, INC.

Notes to Consolidated Financial Statements

(Unaudited)

As of ~~March~~December 31, 2020, ~~the Company also~~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.

~~12.~~13. COMMITMENTS AND CONTINGENCIES

Khoemacau Silver Stream Acquisition

Pursuant to ~~its~~our Khoemacau silver stream transaction closed in February 2019, ~~RGLD Gold~~we made ~~its first~~the following advance payments under our conditional funding schedule:

●

$65.8 million – November 5, 2019

●

$22.0 million – February 2, 2020

●

$47.9 million – April 3, 2020

●

$11.1 million – July 5, 2020

●

$32.5 million – October 5, 2020

●

$32.6 million – January 6, 2021

Including the sixth advance payment made on January 6, 2021, we have made total contributions of ~~$65.8~~$212 million ~~on November 5, 2019 and its second~~which completes the advance ~~payment of $22.0 million on February 2, 2020. As of March 31, 2020,~~payments for the ~~Company’s conditional funding schedule for $124.2 million~~Base Silver Stream. We are further committed to up to ~~$177.2~~$53.0 million ~~pursuant~~in additional contributions should Khoemacau Copper Mining (Pty.) Limited elect to ~~its Khoemac~~a~~u silver stream acquisition remains~~fully exercise the Option Silver Stream. Any further payments under the Option Silver Stream are subject to certain ~~conditions. On April 3, 2020, RGLD Gold~~conditions and are scheduled to be made ~~its third advance payment of $47.9 million.~~using an agreed formula and certification process as project spending progresses. Refer to our Fiscal ~~2019~~2020 10-K for further details on the Khoemacau silver stream acquisition.

Ilovica Gold Stream Acquisition

As of ~~March~~December 31, 2020, ~~the Company’s~~our conditional funding schedule ~~for~~of $163.75 million, ~~related to its~~as part of the Ilovica gold stream acquisition ~~made~~ in October 2014, remains subject to certain conditions.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 our financial condition and results of operations. ~~Royal Gold, Inc. (“Royal Gold”, the “Company”, “we”, “us”, or “our”) recommends that you~~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 our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2019~~2020, filed with the Securities and Exchange Commission (the “SEC”) on August ~~8, 2019~~6, 2020 (“Fiscal ~~2019~~2020 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 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, 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.

We refer to “GSR,” “NSR,” “NVR,” “metal stream (or “stream”)” and other types of royalty or similar interests throughout this MD&A. These terms are defined in our Fiscal ~~2019~~2020 10-K.

~~Statement Regarding Third Party Information~~Overview of Our Business

Royal Gold does not own, develop, or mine the properties on which it holds stream or royalty interests, except for our interest in the Peak Gold, LLC joint venture (“Peak Gold JV”) as described further in our Fiscal 2019 10-K. Certain information provided in this report, including the Operator’s Production Estimates by StreamWe acquire and Royalty Interest for Calendar 2020 and Property Developments, has been provided to us by the operators of properties where we own interests or is publicly available information filed by these operators with applicable securities regulatory bodies, including the SEC. Royal Gold has not verified, and is not in a position to verify, and expressly disclaims any responsibility for, the accuracy, completeness or fairness of such third-party information and refers the reader to the public reports filed by the operators for information regarding those properties.

~~Overview~~

~~Royal Gold, together with its subsidiaries, is engaged in the business of acquiring and managing~~manage precious metal streams, royalties, and similar interests. We seek to acquire existing stream and royalty interests or to finance projects that are in production 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 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 March 31, 2020, we owned seven stream interests, which are on six producing properties and two development stage properties. Stream interests accounted for 71% and 72% of our total revenue for the three and nine months ended March 31, 2020, compared to 71% and 70% for the three and nine months ended March 31, 2019. We expect stream interests to continue representing a significant proportion of our total revenue.

●

Acquisition and Management of Stream Interests — A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or more metals produced from a mine, at a price determined for the life of the transaction by the purchase agreement. As of December 31, 2020, we owned eight stream interests, which are on six producing properties and two development stage properties. Stream interests accounted for approximately 68% and 70% of our total revenue for the three and six months ended December 31, 2020, respectively, and 72% and 73% for the three and six months ended December 31, 2019, respectively. We expect stream interests to continue representing a significant portion of our total revenue.

●

Acquisition and Management of Royalty Interests — Royalties are non-operating interests in mining projects that provide the right to revenue or metals produced from the project after deducting specified costs, if any. As of December 31, 2020, we owned royalty interests on 35 producing properties, 15 development stage properties and 131 exploration stage properties, of which we consider 49 to be evaluation stage projects. We use “evaluation stage” to describe exploration stage properties that contain mineralized material and on which operators are engaged in the search for reserves. Royalty interests accounted for approximately 32% and 30% of our total revenue for the three and six months ended December 31, 2020, respectively, and 28% and 27% for the three and six months ended December 31, 2019, respectively.

~~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 March 31, 2020, we owned royalty interests on 36 producing properties, 14 development stage properties and 129 exploration stage properties, of which we consider 48 to be evaluation stage projects. We use “evaluation stage” to describe exploration stage properties that contain mineralized material and on which operators are engaged in the search for reserves. Royalties accounted for 29% and 28% of our total revenue for the three and nine months ended March 31, 2020, compared to 29% and 30% for the three and nine months ended March 31, 2019.

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

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Table of Contents

~~In the ordinary course of business, we engage in a continual review of~~We are continually reviewing opportunities to ~~acquire~~grow our portfolio, whether through the creation or acquisition of new or existing stream ~~and~~or royalty interests ~~to establish new streams and royalties on operating mines, to create new stream and royalty interests through the financing of mine development~~ or ~~exploration, or to acquire companies that hold stream and royalty interests.~~other acquisition activity. We ~~currently, and~~ generally ~~at any time,~~ have acquisition opportunities in various stages of ~~active~~review. Our review ~~including,~~process may include, for example, ~~our engagement of~~engaging consultants and advisors to analyze ~~particular opportunities, our~~an opportunity; analysis of technical, financial, legal, and other confidential information of ~~particular opportunities,~~an opportunity; submission of indications of interest and term ~~sheets,~~sheets; participation in preliminary discussions and ~~negotiations~~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, ~~and, to a lesser extent, the price of silver and copper, together with the amounts of production from our producing stage stream and royalty interests. The price of gold,~~ silver, copper, and other ~~metals has~~metals. Metal prices have fluctuated widely in recent ~~years.~~years and we expect this volatility to continue. The marketability and the price of metals are influenced by numerous factors beyond ~~the~~our control, ~~of the Company~~ and significant ~~declines~~changes in ~~the price of gold, silver or copper could~~metal prices can have a material ~~and adverse~~ effect on ~~the Company’s results of operations and financial condition.~~our revenue.

For the three and ~~nine~~six months ended ~~March~~December 31, 2020 and 2019, ~~gold, silver~~average metal prices and ~~copper price averages and percentage~~percentages of revenue by metal were as follows:

Three Months Ended

Nine Months Ended

March 31, 2020

March 31, 2019

March 31, 2020

March 31, 2019

Metal

Average
Price

Percentage
of Revenue

Average
Price

Percentage
of Revenue

Average
Price

Percentage
of Revenue

Average
Price

Percentage
of Revenue

Gold ($/ounce)

$
1,583

79%

$
1,304

77%

$
1,512

77%

$
1,248

77%

Silver ($/ounce)

$
16.90

8%

$
15.57

9%

$
17.07

9%

$
15.04

9%

Copper ($/pound)

$
2.56

10%

$
2.82

9%

$
2.62

10%

$
2.80

9%

Other

N/A

3%

N/A

5%

N/A

4%

N/A

5%

~~Recent Business Developments~~


	Three Months Ended						Six Months Ended
	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
Metal	Average Price		Percentage of Revenue	Average Price		Percentage of Revenue	Average Price		Percentage of Revenue	Average Price		Percentage of Revenue
Gold ($/ounce)	$	1,874	76%	$	1,481	74%	$	1,892	76%	$	1,477	76%
Silver ($/ounce)	$	24.39	10%	$	17.32	10%	$	24.32	10%	$	17.15	9%
Copper ($/pound)	$	3.25	11%	$	2.67	13%	$	3.10	11%	$	2.65	10%
Other		N/A	3%		N/A	3%		N/A	3%		N/A	5%

COVID-19 and ~~current economic environment~~the Current Economic Environment

~~Several~~Throughout 2020 and into 2021, several of our operating counterparties have ~~recently announced~~instituted temporary operational curtailments ~~or the withdrawal or review of previously disclosed guidance~~ due to the ongoing COVID-19 ~~pandemic, as discussed more fully in the individual property discussions throughout this MD&A.~~pandemic. In addition, ~~due to~~ the ~~uncertain environment, in April 2020 we drew an additional $200 million on our revolving credit facility, as discussed more fully in the liquidity section of this MD&A. The~~pandemic and resulting economic and societal impacts ~~associated with COVID-19~~have made it difficult for operators to forecast expected production amounts and, at times, operators have had to withdraw or revise previously disclosed guidance. For the most part, our results of operations and financial condition have not been materially impacted by these measures to date. However, the effects of the pandemic are fluid and changing rapidly, including with respect to vaccine and treatment developments and deployment and potential mutations of COVID-19. As a result, we are currently unable to predict the nature or extent of any future impact on our results of operations and financial condition. ~~Please refer~~We continue to ~~our risk factors included in Part II, Item 1A~~monitor the impact of ~~this Quarterly Report on Form 10-Q for more information about risks~~developments associated with ~~COVID-19.~~the pandemic on stream and royalty interests as part of our regular asset impairment analysis.

~~Leadership changes~~

~~As previously announced, we recently made several key leadership changes as a result~~Sale of our ongoing management succession planning. After a thorough search process, our Board of Directors appointed William Heissenbuttel as our President and Chief Executive Officer and a member of the Board of Directors, effective January 2, 2020. Mr. Heissenbuttel most recently served as our Chief Financial Officer and Vice President Strategy. In addition, the Board of Directors promoted the following executives effective January 2, 2020: Mark Isto, Executive Vice President and Chief Operating Officer; Paul Libner, Chief Financial Officer and Treasurer; and Randy Shefman, Vice President and General Counsel.

~~Alturas royalty acquisition~~Peak Gold JV Interest

On ~~January 29,~~September 30, 2020, ~~a wholly-owned subsidiary of the Company entered into~~we announced an agreement with ~~various private individuals~~Kinross Gold Corporation to sell our interest in the Peak Gold Project and our common share position in Contango Ore, Inc. (“Contango”), our partner in Peak Gold, LLC, the owner of the Peak Gold Project. Consideration received for the ~~acquisition~~sale of athese interests included cash of $61.3 million, an incremental 28% net smelter return ~~(“NSR”)~~ royalty on silver produced from an area of upinterest which includes the current Peak Gold Project resource area, and an incremental 1% net smelter return royalty on certain State of Alaska mining claims acquired by a wholly owned subsidiary of Contango in the transaction. Peak Gold, LLC, retains the right to ~~1.06% (gold) and up to 1.59% (copper) on mining concessions included as part~~acquire 50% of the ~~Alturas project, which is located within the Coquimbo Region of Chile and held by a subsidiary of Barrick Gold Corporation (“Barrick”), Compañia Minera Salitrales Limitada. Total consideration~~incremental 28% net smelter return royalty on silver for the royalty is up to $41 million, of which $11 million was paid on January 29, 2020. A future payment of up to $20 million is conditional based on a project construction decision by Barrick and the size of the minable mineralized material

~~on the date of the construction decision. A further future payment of up to $10 million will be made to the private individuals upon first production from the mining concessions.~~ $4 million.

~~Castelo de Sonhos royalty acquisition~~

~~In August 2019, a subsidiary~~After this transaction, our interests in the Peak Gold Project and State of the Company entered into an agreement with TriStar Gold Inc. and its subsidiaries (together “TriStar”) to acquire (i) up to a 1.5% NSR royalty on the Castelo de Sonhos gold project (“CDS”), located in Brazil, and (ii) warrants to purchase up to 19,640,000 common sharesAlaska mining claim property owned by Contango consist solely of TriStar. Total consideration is $7.5 million and was payable over three payments, of which $4.5 million was paid in August 2019, $1.5 million was paid in November 2019, and the final payment of $1.5 million was paid in March 2020.

Aggregate funds invested by the Company will be used by TriStar primarily to advance CDS to the feasibility stage, including advancing permitting activities. A Preliminary Economic Assessment for CDS was prepared by TriStar in calendar 2018 and was based on a total of 2.0 million ounces of mineralized material at an average grade of approximately 1.0 gram per tonne. Since August 2019, TriStar has completed reverse circulation drilling, which is being completed to support the preparation of a preliminary feasibility study.net smelter return royalties. Refer to Note 2 of our notes to consolidated financial statements for further ~~discussion.~~discussion on the sale of the Peak Gold JV interest.

~~Principal~~Separation of the Wassa and Prestea/Bogoso Stream Agreement

On October 1, 2020, we announced the separation of the Wassa and ~~Royalty Interests~~Prestea/Bogoso gold stream agreement into separate stream agreements effective September 30, 2020. This separation was completed to facilitate the sale by Golden Star Resources Ltd. (“Golden Star”) of the Prestea/Bogoso mines to Future Global Resources (“FGR”).

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The Wassa stream agreement, which remains with Golden Star, continues to provide us the right to purchase 10.5% of the gold produced from the Wassa mine until the delivery of 240,000 ounces, after which the stream percentage will decrease to 5.5%. The cash purchase price for gold remains at 20% of the spot price per ounce delivered until the delivery of 240,000 ounces, and 30% of the spot price per ounce delivered thereafter. As of December 31, 2020, approximately 110,200 ounces remain to be delivered from the Wassa mine until the 240,000 ounce delivery threshold is reached.

The ~~Company considers both historical and future potential revenues~~Prestea/Bogoso stream agreement with FGR provides us the right to purchase 5.5% of the gold produced from the Prestea/Bogoso mines in ~~determining which stream and royalty interests in our portfolio are principal to our business. Estimated future potential revenues from both producing and development properties are based on~~return for a ~~number~~cash purchase price of ~~factors, including reserves subject to our stream and royalty interests, production estimates, feasibility studies, metal~~30% of the spot price assumptions, mine life, legal status and other factors and assumptions, any of which could change and could cause the Company to conclude that one or more of such stream and royalty interests are no longer principal to our business. Currently, our principal producing stream and royalty interests are listed alphabetically in the following table.per ounce delivered.

~~Please refer to our Fiscal 2019 10-K for further discussion of our principal producing stream and royalty interests.~~

~~Principal Producing Properties~~


			~~Stream or royalty interests~~
~~Mine~~	~~Location~~	~~Operator~~	~~(Gold unless otherwise stated)~~
~~Andacollo~~	~~Region IV, Chile~~	~~Compañía Minera Teck Carmen de Andacollo (“Teck”)~~	~~Gold stream - 100% of gold produced (until 900,000 ounces delivered; 50% thereafter)~~
~~Cortez~~	~~Nevada, USA~~	~~Nevada Gold Mines LLC ("NGM"), a joint venture between Barrick and Newmont Corporation ("Newmont")~~	~~GSR1: 0.40% to 5.0% sliding-scale GSR GSR2: 0.40% to 5.0% sliding-scale~~ ~~GSR GSR3: 0.71% GSR NVR1: 4.91% NVR; NVR1C 4.52% NVR~~
~~Mount Milligan~~	~~British Columbia, Canada~~	~~Centerra Gold Inc. ("Centerra")~~	~~Gold stream - 35.00% of payable gold~~
			~~Copper stream - 18.75% of payable copper~~
~~Peñasquito~~	~~Zacatecas, Mexico~~	~~Newmont~~	~~2.0% NSR (gold, silver, lead, zinc)~~
~~Pueblo Viejo~~	~~Sanchez Ramirez, Dominican Republic~~	~~Barrick (60%)~~	~~Gold stream - 7.5% of gold produced (until 990,000 ounces delivered; 3.75% thereafter)~~
			~~Silver stream - 75% of silver produced (until 50.0 million ounces delivered; 37.5% thereafter)~~
~~Rainy River~~	~~Ontario, Canada~~	~~New Gold, Inc. (“New Gold”)~~	~~Gold stream - 6.5% of gold produced (until 230,000 ounces delivered; 3.25% thereafter)~~
			~~Silver stream - 60% of silver produced (until 3.1 million ounces delivered; 30% thereafter)~~
~~Wassa~~	~~Western Region of Ghana~~	~~Golden Star Resources Ltd. (“Golden Star”)~~	~~Gold stream - 10.5% of gold produced (until 240,000 ounces delivered; 5.5% thereafter)~~⁽¹⁾

~~(1)~~

~~The 240,000 ounce threshold includes production from Golden Star’s Prestea mine.~~

Operators’ Production Estimates by Stream and Royalty Interest for Calendar 2020

We generally receive annual production estimates from many of the operators of our producing mines during the first quarter of each calendar year. In some instances, an operator may revise ~~their~~its original calendar year guidance throughout the year. The following table shows current production estimates for ~~our principal producing properties for~~ calendar 2020, as well as ~~the~~ actual production through December 31, 2020, for our principal properties as reported to us by the various operators through March 31, 2020. The estimates and production reports are prepared by the operators of the mining properties. We do not participate in the preparation or calculation of the operators’ estimates or production reports and have not independently assessed or verified, and disclaim all responsibility for, the accuracy of such information. Please refer to “Property Developments” below within this MD&A for further discussion on our principal producing and development stage properties.operators.

Operators’ Estimated and Actual Production by Stream and Royalty Interest for Calendar 2020

Principal Producing Properties

Calendar 2020 Operator’s Production

Estimate⁽¹⁾

Actual⁽²⁾

Estimate⁽¹⁾

Actual⁽²⁾

Gold

Silver

Base Metals

Gold

Silver

Base Metals

Gold

Silver

Base Metals

Gold

Silver

Base Metals

Stream/Royalty

(oz.)

(lbs.)

(oz.)

(lbs.)

(oz.)

(lbs.)

(oz.)

(lbs.)

Stream:

Andacollo⁽³⁾

53,000

14,800

53,000

49,200

Mount Milligan⁽⁴⁾

140,000 - 160,000

33,700

140,000 - 160,000

161,900

Copper

80 - 90 Million

20.1 Million

80 - 90 Million

82.8 Million

Pueblo Viejo⁽⁵⁾

530,000 - 580,000

N/A

143,000

N/A

530,000 - 580,000

N/A

542,000

N/A

Rainy River⁽⁶⁾

Withdrawn

50,400

61,300

Wassa⁽⁷⁾

155,000 - 165,000

Not released yet

Wassa⁽⁶⁾

165,000 - 170,000

168,000

Royalty:

Cortez GSR1

66,500

27,700

66,900

101,700

Cortez GSR2

109,000

30,000

109,600

103,900

Cortez GSR3

145,700

17,200

146,300

161,100

Cortez NVR1

113,200

45,800

113,500

121,600

Cortez NVR1C

29,900

200

30,100

44,500

Peñasquito⁽⁸⁾

Withdrawn

116,000

9.5 Million

Peñasquito⁽⁷⁾

510,000

28 million

343,000

20.4 Million

Lead

Withdrawn

62 Million

190 million

130 Million

Zinc

Withdrawn

135 Million

360 million

281 Million

(1)

Production estimates received from our operators are for calendar 2020, unless otherwise noted in footnotes to this table. ~~Please refer to our cautionary statement regarding third party information at the beginning of this MD&A.~~ There can be no assurance that production estimates received from ~~our~~the operators will be achieved. Please also refer to our cautionary language regarding forward-looking statements following this MD&A, as well as the Risk Factors identified in Part II, Item 1A of this report and our Fiscal 2019 10-K for information regarding factors that could affect actual results.

(2)	Actual production figures ~~shown~~ are ~~from~~provided by our operators and cover the period from January 1, 2020, through ~~March~~December 31, 2020, unless otherwise noted in footnotes to this table.

(3)	The estimated and actual production figures shown for Andacollo are contained gold in concentrate.

(4)	~~Centerra has reported that its previously reported calendar year 2020 production guidance is under review due to the ongoing COVID-19 pandemic~~The estimated and ~~related impacts to operations. The~~ actual production figures shown for Mount Milligan are payable gold and copper in concentrate.

(5)	The estimated and actual production figures shown for Pueblo Viejo are payable gold in doré and represent Barrick’s 60% interest in Pueblo Viejo. The operator did not provide estimated or actual silver production.

(6)	~~New Gold has withdrawn its previously reported calendar year 2020 production guidance due to the COVID-19 pandemic. The actual production figures shown are produced gold and silver in doré.~~

~~(7)~~

The estimated and actual production figures shown for Wassa are payable gold in doré.

~~(8)~~(7)

~~Newmont has withdrawn its previously reported calendar year 2020 production guidance due to the COVID-19 pandemic.~~ The estimated and actual gold and silver production figures shown for Peñasquito are payable gold and silver in concentrate and doré. The estimated and actual lead and zinc production figures shown are payable lead and zinc in concentrate. The estimated production figures shown are for the period January 1, 2020 through December 31, 2020, while actual production figures shown are for the period January1, 2020 through September 30, 2020, per the operator. Full calendar year 2020 information was not available from the operator as of the date of this report.

2421

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Property Developments

~~The following property development information is provided~~This section provides recent updates for our principal properties as reported by the operators, ~~of the properties,~~ either directly to ~~Royal Gold~~us or in ~~various documents made~~their publicly ~~available.~~available documents.

Stream Interests

~~Stream Interests~~Andacollo

~~Andacollo~~

Gold stream deliveries from Andacollo were approximately ~~9,500~~10,700 ounces ~~of gold~~ for the three months ended ~~March~~December 31, 2020, compared to approximately ~~9,900~~18,600 ounces ~~of gold~~ for the three months ended ~~March~~December 31, 2019. Decreased deliveries during the current period resulted from operational impacts due to COVID-19 in July 2020, in addition to differences in the timing of shipments and settlements during the periods.

~~As previously reported by~~ Teck expects grades to continue to decline towards reserve grades. The current life of mine for Andacollo ~~experienced a temporary suspension~~is expected to continue until calendar year 2035. According to Teck, additional permits or permit amendments will be required to execute the life of operations during the quarter ended December 31, 2019, due to a workers’ strike. We anticipate the impact of the strike to be reflected in our financial results beginning with the quarter ended June 30, 2020, as we generally receive gold deliveries from Andacollo within six months of concentrate shipment.mine plan.

With respect to COVID-19 pandemic impacts, Teck reported they maintained normal production levels while reducing the on-site workforce where possible and working with our contractors and the local communities to ensure adequate preventative measures are in place.Khoemacau

~~Khoemac~~a~~u Project~~

~~In February 2019, the Company’s wholly-owned subsidiary, RGLD Gold AG (“RGLD Gold”) entered into a silver stream with~~According to Khoemacau Copper Mining (Pty.) Limited (“KCM”) ~~for the purchase of silver produced from~~, progress continued at the Khoemacau ~~project~~Project (“Khoemacau” ~~or the “Project”~~) ~~located in Botswana. Please refer to our Fiscal 2019 10-K for further details on the Khoemac~~a~~u silver stream acquisition.~~

~~According to KCM, progress continued at Khoemac~~au during the ~~March~~three months ended December 31, 2020, ~~quarter~~ and the project reached approximately ~~43%~~85% of construction completion as of ~~March~~December 31, ~~2020 with 80% of the capital committed.~~2020. According to KCM, activities are focused on refurbishment and upgrading of the Boseto mill, underground development, ~~boxcut construction, construction~~completion of accommodation, power and water infrastructure at Zone 5 ~~completing construction~~and completion of ~~the~~ haul road surfacing between Zone 5 and the Boseto ~~mill, and refurbishment of the Boseto~~ mill. Also, according to KCM, ~~also reported that~~ underground development had cumulatively advanced 8,311 meters in the three mines and approximately 70,000 tonnes of ore were stockpiled on ~~two~~surface at the end of ~~the five planned declines started in early February 2020 and further two started in early March~~December 2020.

The six-month state of emergency declared by the Government of Botswana in March 2020 to help prevent the spread of COVID-19 was extended on September 28, 2020, for an additional six months through March 2021. Mining remains designated as an “essential service” and KCM reports that general development activity at Khoemacau is continuing without significant impact. In line with previous reporting, and barring any potential further impacts caused by COVID-19 considerations, KCM is targeting to begin commissioning activities late in the second calendar quarter of 2021 with first shipment of concentrate to occur late in the third calendar quarter of 2021.

On ~~April 3, 2020, RGLD~~January 6, 2021, Royal Gold made ~~its third~~the sixth advance payment of ~~$47.9~~$32.6 million, which brings the total contribution to ~~$135.7 million. RGLD Gold expects~~$212 million and completes the advance payment required to ~~commit approximately $65 million during~~earn the ~~remainder of calendar year 2020, and~~full base silver stream. For any remaining funding required to complete construction, KCM may elect under the ~~total remaining commitment in calendar year 2021 is expected~~stream agreement to ~~range from approximately $11 million for the base stream of 80% of payable silver~~draw up to ~~approximately $64~~$53 million ~~should KCM elect~~in additional stream financing, earning Royal Gold up to ~~increase the~~an additional 20% option silver stream, draw up to $25 million under a subordinated debt facility provided by Royal Gold, and/or seek at least $25 million in equity from ~~80% to 100%~~project sponsors. The subordinated debt facility has a term of ~~payable silver. Further payments are subject to~~seven years, carries interest at a rate of LIBOR +11%, and requires mandatory repayment upon certain ~~conditions and are scheduled to be made on a quarterly basis using an agreed formula and certification process as project spending progresses.~~events.

~~According~~KCM currently anticipates that up to ~~KCM, although a six-month state~~$50 million of ~~emergency has been declared by the Government~~this additional funding is required to complete construction and ramp up of ~~Botswana to help prevent the spread of COVID-19, mining has been designated an “essential service” and activity at~~ Khoemacau ~~is continuing. Barring any potential delays~~to commercial production, largely a result of previously reported schedule impacts caused by COVID-19 ~~considerations,~~considerations. The added funding mechanisms built into the stream agreement allow KCM ~~continues~~ to ~~expect~~seamlessly access the ~~first shipment~~additional capital required. KCM is currently reviewing its funding options in advance of ~~concentrate by mid-calendar 2021.~~the next funding draw, which may occur as early as April 2021, and does not anticipate requiring any further funding after this date to reach commercial production.

Mount Milligan

Gold stream deliveries from Mount Milligan were approximately ~~12,100~~9,700 ounces for the three months ended ~~March~~December 31, 2020, compared to approximately ~~23,100~~18,800 ounces for the three months ended ~~March~~December 31, 2019. Decreased deliveries were primarily a result of lower processed gold grades partially resulting from reduced open pit operations due to COVID-19 during the three months ended June 30, 2020, in addition to differences in the timing of shipments and settlements during the periods.

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Copper stream deliveries from Mount Milligan were approximately 2.5 million pounds during the three months ended December 31, 2020, compared to approximately 4.4 million pounds during the three months ended December 31, 2019. Decreased deliveries resulted from differences in the timing of shipments and settlements during the periods.

~~Copper stream deliveries from~~On January 14, 2021, Centerra reported that Mount Milligan ~~were~~produced approximately ~~3.40~~161,900 ounces of gold during calendar 2020, above previously issued gold production guidance of between 140,000 and 160,000 ounces. Centerra also reported that copper production for calendar year 2020 was 82.8 million pounds, ~~during the three months ended March 31, 2020, compared to approximately 2.46~~in line with previously issued copper production guidance of between 80 and 90 million ~~pounds during the three months ended March 31, 2019. Increased deliveries resulted from differences in the timing of shipments and settlements during the periods.~~

On March 26, 2020, Centerra published an updated National Instrument 43-101 (“NI 43-101”) technical report for the Mount Milligan mine, which provides a detailed update to the life of mine plan contained in the previous NI 43-101 report for Mount Milligan published by Centerra in calendar 2017. pounds.

Centerra reported a reduction in proven and probable reserves due to increased costs, lower expected productivities, and lower process plant throughput compared to their calendar 2017 report, as well as an update to the resource model and re-estimation of metallurgical recoveries. Details for the reserves and updated mine plan, which does not contemplate any growth capital or inclusion of additional mineralized material, were reported by Centerra as follows:

●

Reserves as of December 31, 2019 containing 2.4 million ounces of gold and 959 million pounds of copper (comprised of 191.0 million tonnes grading 0.39 grams per tonne of gold and 0.23% of copper). Reserves were calculated using a gold price of $1,250 per ounce, a copper price of $3.00 per pound, and an exchange rate of US$ 1.00 to C$ 1.25;

●

~~Production based on a 9-year reserve life through calendar 2028;~~

●

~~Average life of mine recoveries of 61.8% for gold and 80.6% for copper;~~

●

~~Life of mine payable gold production of 1.45 million ounces, or an average of 161,000 ounces per year;~~

●

~~Life of mine payable copper production of 735.6 million pounds, or an average of 81.7 million pounds per year; and~~

●

Average life of mine all-in sustaining cost of $704 per ounce of gold sold on a by-product basis, which includes sustaining capital and copper revenue credits (assuming a copper price of $3.00 per pound and an exchange rate of US$ 1.00 to C$ 1.25).

~~As of March 31, 2020, approximately 62% of the total $781.5 million advance payment for our investment at Mount Milligan has been returned.~~

Significant reductions in proven and probable reserves or mineralized material are indicators of potential impairment for Royal Gold’s stream and royalty interests. As part of the Company’s regular asset impairment analysis, the Company determined that an impairment of our stream interest at Mount Milligan was not necessary as (i) the earlier financial impairment taken by Centerra does not impact the mine operating performance, and (ii) the reduction in reserves and mineralized material at Mount Milligan resulted in gold and copper depletion rates that are well below current and long-term consensus gold and copper prices. As of March 31, 2020, the gold and copper depletion rates at our Mount Milligan stream interest are $764 per ounce of gold and $1.48 per pound of copper. Depletion rates well below current and long-term metal prices are a strong indicator the carrying value of our stream or royalty interests are recoverable The Company will continue to monitor future developments at Mount Milligan as part of its regular asset impairment analysis.

On April 1, 2020, Centerra announced that reductions of manpower and throughput to 50,000 tonnes per day at Mount Milligan would occur as a result of actions implemented to combat the COVID-19 pandemic. On May 1, 2020, Centerra announced that processing of surface ore stockpiles using only the primary crusher continued during this period of reduced operations, and a planned two-week maintenance shut-down occurred during mid-April 2020. Centerra further reported that process plant operations restarted in late April and mine operations are expected to ramp up production in mid-May, and the short-term decrease in activity is not expected to have a material impact on calendar 2020 production, or cause changes to calendar 2020 guidance.

Pueblo Viejo

Gold stream deliveries from Pueblo Viejo were approximately ~~10,200~~10,500 ounces ~~of gold~~ for the three months ended ~~March~~December 31, 2020, compared to approximately ~~12,400~~13,200 ounces ~~of gold~~ for the three months ended ~~March~~December 31, 2019. The decrease in deliveries resulted from lower grade and recovery rates. On January 14, 2021, Barrick reported that its 60% share of Pueblo Viejo gold production during calendar year 2020 was 542,000 ounces, in line with previously issued guidance of between 530,000 and 580,000 ounces.

Silver stream deliveries were approximately ~~394,700~~418,200 ounces ~~of silver~~ for the three months ended ~~March~~December 31, 2020, compared to approximately ~~553,000~~417,800 ounces ~~of silver~~ for the three months ended ~~March~~December 31, 2019.

Barrick ~~reports that it continues to advance engineering and evaluation work towards a feasibility study for the process plant expansion and proposed tailings storage facility that could extend the mine life~~reported continued progress at Pueblo Viejo during the quarter to ~~beyond calendar~~

~~2040. Barrick estimates that~~expand the process plant and tailings storage facilities. Barrick estimates that the expansion project could significantly increase throughput and allow the mine to maintain average annual gold production of approximately 800,000 ounces after calendar 2022 (on a 100% basis), and that the increase in tailings storage capacity has the potential to convert approximately 11 million ounces of mineralized material to reserves (on a 100% basis).

~~Rainy River~~As reported by Barrick, the Environmental Impact Assessment for the process plant expansion has been approved and an amended environmental license has been issued, and progress continued with engineering, procurement of long lead equipment packages, earthworks and tendering of contracts for construction activities. Barrick also reported that studies and permitting discussions to support additional tailings capacity continued to progress.

~~Gold stream deliveries from Rainy River were approximately 3,600 ounces of gold for the three months ended March 31, 2020, compared to 4,400 ounces of gold for the three months ended March 31, 2019.~~

Wassa

Silver stream deliveries were approximately 40,800 ounces of silver for the three months ended March 31, 2020, compared to approximately 35,700 ounces of silver for the three months ended March 31, 2019.

On February 13, 2020, New Gold announced the results of an updated life of mine plan for the Rainy River mine. The corresponding NI 43-101 technical report was filed on March 27, 2020. New Gold reported that the mine plan was based on proven and probable reserves estimated at a gold price of $1,275 per ounce and a silver price of $17.00 per ounce, and it expects there may remain potential to extend the underground mine life beyond calendar 2028 should the prevailing gold price support the development of additional underground mining areas during that period and/or exploration efforts increase the resource inventory. Key highlights of the updated plan as reported by New Gold include:

●

A mine plan covering the calendar 2020 to 2028 period, which considers mining from a smaller and higher-grade open pit through to early 2025, with concurrent mining from a smaller and more selective underground operation from 2022 through 2027. Processing of stockpiled low-grade open pit material is expected to supplement underground mill feed during calendar 2026 to 2028;

●

~~Overall gold grade of 1.10 grams per tonne mined and 1.06 grams per tonne milled;~~

●

~~Average gold recovery of 89%;~~

●

Average gold equivalent production of 289,000 ounces per year (including 3.6 million ounces of silver converted to gold equivalent using a gold price of $1,300 per ounce and silver price of $16.00 per ounce); and

●

~~Proven and probable reserves of 2.636 million ounces of contained gold and 6.266 million ounces of contained silver as at December 31, 2019.~~

~~As of March 31, 2020, approximately 22% of the total $175 million advance payment for our investment at Rainy River has been returned.~~

Significant reductions in proven and probable reserves or mineralized material are indicators of potential impairment for the Company’s stream and royalty interests. As a result of the new information from New Gold and as part of the Company’s regular asset impairment analysis, the Company determined that an impairment on its Rainy River stream interest was not necessary as of March 31, 2020 as the reduction in gold and silver reserves resulted in depletion rates that are well below current and long-term consensus gold and silver prices. As of March 31, 2020, the gold and silver depletion rates at our Rainy River stream interest are $848 per ounce of gold and $11.27 per ounce of silver. Depletion rates well below current and long-term consensus metal prices are a strong indicator the carrying value of our stream or royalty interests are recoverable. The Company will continue to monitor future developments at Rainy River as part of its regular asset impairment analysis.

According to New Gold, as a result of measures to address the spread of COVID-19, Rainy River completed a voluntary two-week shutdown from March 20 to April 2, 2020. On April 29, 2020 New Gold reported that the mill facility is operating at full capacity with ore supplied from the open pit and medium-grade stockpile, and the mine is operating at approximately 70% of the productivity achieved before the shutdown. New Gold announced that it has withdrawn its calendar 2020 guidance until the impact of COVID-19 is better understood.

~~Wassa~~

Gold stream deliveries from Wassa were approximately ~~3,800~~4,700 ounces for the three months ended December 31, 2020, compared to approximately 4,900 ounces for the three months ended December 31, 2019.

On January 20, 2021, Golden Star reported full calendar year 2020 gold production from Wassa of 168,000 ounces, within the revised guidance range of 165,000 to 170,000 ounces, and a 7% increase over 2019 production. Golden Star also provided full calendar year 2021 gold production guidance of 165,000 to 175,000 ounces.

Also according to Golden Star, work on a preliminary economic assessment of the expansion of the Wassa mine into the southern extension of the Wassa ore body is nearing completion, with release of the study results in conjunction with an updated reserve and resource estimate expected from Golden Star in February 2021.

Royalty Interests

Cortez

Production attributable to our royalty interest at Cortez was approximately 57,600 ounces of gold for the three months ended ~~March~~December 31, 2020, compared to approximately ~~4,600~~28,000 ounces of gold for the three months ended ~~March~~December 31, 2019.

On March 27, 2020, Golden Star reported that deep drilling in calendar 2019 successfully extended the mineralization at Wassa by approximately 700 feet to the south where the deposit remains open to the south and down dip. Golden Star further reported that the exploration strategy during calendar 2020 would transition away from growth of the overall resource to infill drilling to help define the potential mine plans for the southern extension of the operation. According to Golden Star, as of December 31, 2019 the proven mineral reserve at Wassa increased 87% over the prior year period to 1.4 million ounces of gold, and total underground mineralized material at Wassa contained approximately 11.2 million ounces of gold.

Golden Star announced earlier it has taken a proactive response to the COVID-19 pandemic threat by implementing a range of procedures to protect and monitor the health and safety of their workforce and has not reported anyBarrick expects production ~~disruptions with respect to the pandemic.~~

~~Royalty Interests~~

~~Cortez~~

Production attributable to the Company’s royalty interest at Cortez increased to 57,700 ounces of gold over the prior year quarter of 32,700 ounces of gold, as a result of production ramping up at the Crossroads deposit, which is subject to the NVR1C, GSR2 and portions of the NVR1 and GSR3 royalty interests.

During the current quarter, Barrick provided the Company with an updated reserve statement and life of mine plan for Cortez. According to Barrick, as of December 31, 2019, total proven and probable reserves subject to the Company’s royalty interests contained 3.5 million ounces of gold (consisting of 87.0 million tonnes of ore at a grade of 1.26 grams per tonne). Reserves were calculated at a gold price of $1,200 per ounce.

~~Further according to Barrick, total gold production at Cortez from the regions subject to the Company’s interests is expected to be approximately 175,000 ounces~~ in calendar ~~2020, increasing~~year 2021 to ~~an approximate average of 425,000 ounces from calendar 2021 through calendar 2026. The expected production~~ increase from calendar year 2020 ~~to calendar 2021 is~~ primarily due to higher contribution from the Crossroads deposit, which is expected to ramp up through calendar year 2023 and offset declining production from the other royalty regions.

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Peñasquito

~~Gold, silver, lead and zinc production~~Production attributable to our royalty interest at Peñasquito for the three months ended December 31, 2020, increased by approximately ~~161%, 76%, 76%~~120% for gold and ~~71%, respectively, when~~30% for zinc, and decreased approximately 7% for silver and 15% for lead compared to the prior year quarter. ~~The increase in production resulted from improved operations and higher grades from the main Peñasco pit.~~

~~On May 5,~~In December 2020, Newmont ~~announced that operations at~~provided full year 2021 production guidance for Peñasquito ~~were placed on care~~of 660,000 ounces of gold, 30 million ounces of silver, 475 million pounds of zinc, and ~~maintenance on April 12,~~190 million pounds of lead, compared to calendar 2020 ~~due to a Mexican federal government decree to temporarily suspend all non-essential activities~~production guidance, as reported by Newmont in ~~Mexico as part~~July 2020, of ~~a nationwide effort to help slow the spread~~510,000 ounces of ~~COVID-19. Newmont further stated that it has continued to engage with government at all levels on a restart plan,~~gold, 28 million ounces of silver, 360 million pounds of zinc and ~~the site is well positioned to ramp back up quickly and efficiently over a two-week period once operations are allowed to restart.~~190 million pounds of lead.

Results of Operations

Quarter Ended ~~March~~December 31, 2020, Compared to Quarter Ended ~~March~~December 31, 2019

For the quarter ended ~~March~~December 31, 2020, we recorded net income and comprehensive income attributable to Royal Gold stockholders (“net income”) of ~~$38.6~~$59.9 million, or ~~$0.59~~$0.91 per basic and diluted share, as compared to net income ~~and comprehensive income attributable to Royal Gold stockholders~~ of ~~$28.8~~$41.3 million, or ~~$0.44~~$0.63 per basic and diluted share, for the quarter ended ~~March~~December 31, ~~2019.~~2019. The increase in ~~our earnings per share~~net income was primarily attributable to an increase in revenue, ~~and a decrease in our interest expense, each~~ discussed ~~further~~ below. These increases were partially offset by an increase in our ~~general~~cost of sales and ~~administrative expenses (discussed further below)~~an increase in depreciation, depletion and a decrease in the fair value of the marketable equity securities the Company holds. Refer to Note 4 of our notes to consolidated financial statements for further discussion on our marketable equity securities.amortization expense, each discussed below.

For the quarter ended ~~March~~December 31, 2020, we recognized total revenue of ~~$136.4~~$158.4 million, comprised of stream revenue of ~~$97.5~~$107.7 million and royalty revenue of ~~$39.0~~$50.7 million at an average gold price of ~~$1,583~~$1,874 per ounce, an average silver price of ~~$16.90~~$24.39 per ounce and an average copper price of ~~$2.56~~$3.25 per pound. This is compared to total revenue of ~~$109.8~~$123.6 million for the three months ended ~~March~~December 31, 2019, comprised of stream revenue of ~~$77.8~~$89.6 million and royalty revenue of ~~$32.0~~$34.0 million, at an average gold price of ~~$1,304~~$1,481 per ounce, an average silver price of ~~$15.57~~$17.32 per ounce and an average copper price of ~~$2.82~~$2.67 per pound. Revenue and the corresponding production attributable to our stream and royalty interests for the quarter ended ~~March~~December 31, 2020, compared to the quarter ended ~~March~~December 31, 2019, are as follows:

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Revenue and Reported Production Subject to Our Stream and Royalty Interests

Quarter Ended ~~March~~December 31, 2020 and 2019

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


		Three Months Ended				Three Months Ended					Three Months Ended				Three Months Ended
		March 31, 2020				March 31, 2019					December 31, 2020				December 31, 2019
				Reported				Reported					Reported				Reported
Stream/Royalty	Metal(s)	Revenue		Production⁽¹⁾		Revenue		Production⁽¹⁾		Metal(s)	Revenue		Production⁽¹⁾		Revenue		Production⁽¹⁾
Stream⁽²⁾:
Mount Milligan		$	32,298			$	26,938				$	44,713			$	30,629
	Gold			14,000	oz.			15,200	oz.	Gold			16,900	oz.			12,900	oz.
	Copper			4.3	Mlbs.			2.6	Mlbs.	Copper			4.1	Mlbs.			4.3	Mlbs.
Pueblo Viejo		$	28,302			$	20,787				$	27,554			$	23,614
	Gold			13,200	oz.			10,400	oz.	Gold			9,400	oz.			10,500	oz.
	Silver			417,800	oz.			469,000	oz.	Silver			408,600	oz.			462,400	oz.
Andacollo	Gold	$	22,055	13,900	oz.	$	15,638	12,000	oz.	Gold	$	17,766	9,500	oz.	$	20,665	13,900	oz.
Wassa	Gold	$	8,647	5,600	oz.	$	5,773	4,400	oz.	Gold	$	6,761	3,600	oz.	$	4,794	3,300	oz.
Rainy River		$	4,838			$	7,074
Other⁽³⁾											$	10,925			$	9,923
	Gold			2,600	oz.			5,000	oz.	Gold			5,100	oz.			6,100	oz.
	Silver			47,900	oz.			40,800	oz.	Silver			52,000	oz.			20,500	oz.
Other⁽³⁾	Gold	$	1,320	800	oz.	$	1,555	1,200	oz.
Total stream revenue		$	97,460			$	77,765				$	107,719			$	89,625

Royalty⁽²⁾:
Peñasquito		$	7,425			$	4,465				$	12,952			$	7,577
	Gold			97,200	oz.			37,300	oz.	Gold			210,600	oz.			95,800	oz.
	Silver			8.7	Moz.			4.9	Moz.	Silver			8.7	Moz.			9.3	Moz.
	Lead			60.5	Mlbs.			34.5	Mlbs.	Lead			52.1	Mlbs.			61.5	Mlbs.
	Zinc			124.5	Mlbs.			72.8	Mlbs.	Zinc			93.8	Mlbs.			72.1	Mlbs.
Cortez	Gold	$	6,400	57,700	oz.	$	4,127	32,700	oz.	Gold	$	8,128	57,600	oz.	$	3,292	28,000	oz.
Other⁽³⁾	Various	$	25,152	N/A		$	23,421	N/A		Various	$	29,561	N/A		$	23,149	N/A
Total royalty revenue		$	38,977			$	32,013				$	50,641			$	34,018
Total Revenue		$	136,437			$	109,778				$	158,360			$	123,643

(1)	Reported production relates to the amount of metal sales subject to our stream and royalty interests for the three months ended ~~March~~December 31, 2020, and 2019, and may differ from the operators’ public reporting.

(2)	Refer to “Property Developments” above for ~~further~~a discussion ~~on our~~of recent developments at principal ~~stream and royalty interests.~~properties.

(3)	Individually, except for Rainy River which contributed 6% of total revenue for the three months ended December 31, 2020 and 2019, no stream or royalty included within the “Other” category ~~for royalties~~ contributed greater than 5% of our total revenue for either period.

The increase in our total revenue ~~for the three months ended March 31, 2020, compared with the three months ended March 31, 2019,~~ resulted primarily from an increase in ~~our stream revenue~~the average gold, silver and copper prices compared to the prior period and an increase in ~~the average gold and silver prices. The increase in~~production within our stream revenue was primarily attributable to an increase in gold sales at Andacollo and Pueblo Viejo and higher copper sales at Mount Milligan. These increases were partially offset by lower gold sales at Rainy River and Mount Milligan due to a decrease in deliveries. Please refer to “Property Developments” earlier within this MD&A for further discussion on recent developments regarding properties covered by certain of our stream and royalty ~~interests.~~

segment. Gold and silver ounces and copper pounds

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purchased and sold during the three months ended ~~March~~December 31, 2020 and 2019, and gold and silver ounces and copper pounds in inventory as of ~~March~~December 31, 2020, and June 30, ~~2019,~~2020, for our streaming interests were as follows:


	Three Months Ended		Three Months Ended		As of	As of	Three Months Ended		Three Months Ended		As of	As of
	March 31, 2020		March 31, 2019		March 31, 2020	June 30, 2019	December 31, 2020		December 31, 2019		December 31, 2020	June 30, 2020
Gold Stream	Purchases (oz.)	Sales (oz.)	Purchases (oz.)	Sales (oz.)	Inventory (oz.)	Inventory (oz.)	Purchases (oz.)	Sales (oz.)	Purchases (oz.)	Sales (oz.)	Inventory (oz.)	Inventory (oz.)
Mount Milligan	12,100	14,000	23,100	15,200	8,500	7,100	9,700	16,900	18,800	12,900	3,800	3,300
Pueblo Viejo	10,200	13,200	12,400	10,400	10,200	9,500	10,500	9,400	13,200	10,500	10,500	100
Andacollo	9,400	13,900	9,900	12,000	300	4,300	10,700	9,500	18,600	13,900	2,900	11,100
Wassa	3,800	5,600	4,600	4,400	600	1,500	4,700	3,600	4,900	3,300	3,100	2,900
Rainy River	3,600	2,600	4,400	5,000	2,300	1,800
Other	900	800	1,200	1,200	400	400	4,500	5,100	5,600	6,100	1,200	1,500
Total	40,000	50,100	55,600	48,200	22,300	24,600	40,100	44,500	61,100	46,700	21,500	18,900

	Three Months Ended		Three Months Ended		As of	As of	Three Months Ended		Three Months Ended		As of	As of
	March 31, 2020		March 31, 2019		March 31, 2020	June 30, 2019	December 31, 2020		December 31, 2019		December 31, 2020	June 30, 2020
Silver Stream	Purchases (oz.)	Sales (oz.)	Purchases (oz.)	Sales (oz.)	Inventory (oz.)	Inventory (oz.)	Purchases (oz.)	Sales (oz.)	Purchases (oz.)	Sales (oz.)	Inventory (oz.)	Inventory (oz.)
Pueblo Viejo	394,700	417,800	553,000	469,000	394,700	475,600	418,200	408,600	417,700	462,400	418,200	451,200
Rainy River	40,800	47,900	35,700	40,800	41,300	36,500
Other							65,400	52,000	48,100	51,100	66,300	23,400
Total	435,500	465,700	588,700	509,800	436,000	512,100	483,600	460,600	465,800	513,500	484,500	474,600

	Three Months Ended		Three Months Ended		As of	As of	Three Months Ended		Three Months Ended		As of	As of
	March 31, 2020		March 31, 2019		March 31, 2020	June 30, 2019	December 31, 2020		December 31, 2019		December 31, 2020	June 30, 2020
Copper Stream	Purchases (Mlbs.)	Sales (Mlbs.)	Purchases (Mlbs.)	Sales (Mlbs.)	Inventory (Mlbs.)	Inventory (Mlbs.)	Purchases (Mlbs.)	Sales (Mlbs.)	Purchases (Mlbs.)	Sales (Mlbs.)	Inventory (Mlbs.)	Inventory (Mlbs.)
Mount Milligan	3.4	4.3	2.5	2.6	—	0.8	2.5	4.1	4.4	4.3	1.0	0.8

Cost of sales, which excludes depreciation, depletion and amortization, increased to ~~$22.0~~$24.9 million for the three months ended ~~March~~December 31, 2020, from ~~$19.1~~$21.1 million for the three months ended ~~March~~December 31, 2019. The increase was primarily due to ~~increased~~an increase in the gold, ~~sales from Pueblo Viejo~~silver and ~~Andacollo and increased gold and silver~~copper prices when compared to the prior ~~year quarter.~~period. Cost of sales is specific to our stream agreements and is the result of ~~RGLD Gold’s~~our purchase of gold, silver and copper for a cash payment. The cash payment for gold from Mount Milligan is the lesser of $435 per ounce or the prevailing market price of gold when purchased, while the cash payment for our other streams is a set contractual percentage of the gold, silver or copper (Mount Milligan) spot price near the date of metal delivery.

~~General and administrative~~Exploration costs ~~increased~~decreased to ~~$9.6~~zero for the three months ended December 31, 2020, from $1.5 million for the three months ended ~~March 31, 2020 from $6.8 million for the three months ended March~~December 31, 2019. ~~The increase was due~~Exploration costs were specific to ~~additional non-cash stock compensation expense of approximately $3.3 million primarily as a result~~the exploration and advancement of the ~~accelerated vesting of certain equity awards~~Peak Gold JV. On September 30, 2020, we sold our Peak Gold JV interest which is discussed earlier in ~~connection with the recent retirement~~this MD&A and Note 2 of our ~~former President and Chief Executive Officer and our former Vice President and General Counsel.~~notes to consolidated financial statements.

Depreciation, depletion and amortization increased to ~~$51.2~~$47.9 million for the three months ended ~~March~~December 31, 2020, from ~~$39.4~~$40.1 million for the three months ended ~~March~~December 31, 2019. The increase was primarily due to higher ~~copper~~gold sales at Mount Milligan and ~~higher gold sales at Pueblo Viejo. An~~an increase in ~~the~~ depletion rates at Mount Milligan, ~~and Rainy River~~ as previously discussed in our Fiscal 2020 10-K. These increases were partially offset by a ~~result of updated reserves, as discussed above also contributed~~decrease in gold sales at Andacollo when compared to the ~~increase in our depletion expense.~~prior period.

Interest and other expense decreased to ~~$2.1~~$1.6 million for the three months ended ~~March~~December 31, 2020, from ~~$7.5~~$2.2 million for the three months ended ~~March~~December 31, 2019. The decrease was primarily attributable to lower interest expense as a result of ~~a decrease in average~~lower interest rates on our outstanding debt ~~amounts outstanding~~ when compared to the prior period. ~~As discussed in our Fiscal 2019 10-K, the Company settled the $370 million aggregate principal amount due under its convertible senior notes that matured in June 2019.~~ Refer to Note 5 of our notes to consolidated financial statements for further discussion on our outstanding debt.

~~During~~For the three months ended ~~March~~December 31, 2020, we ~~recognized an~~recorded income tax expense totaling ~~$8.7~~$16.0 million, compared with an income tax expense of ~~$9.4~~$11.1 million ~~during~~for the three months ended ~~March~~December 31, 2019. The income tax expense resulted in an effective tax rate of ~~18.5%~~21.1% in the current period, compared with ~~24.7% in~~21.6% for the ~~quarter ended March 31, 2020. The~~ three months ended ~~March~~December 31, 2020 effective tax rate included income tax benefits resulting from foreign exchange rate movements compared to the U.S. dollar. On April 30, 2020, the Company entered into a settlement agreement with a foreign taxing authority related to an uncertain tax position recorded on our consolidated balance sheets as of March 31, 2020. We continue to analyze the impacts of the settlement on our consolidated financial statements, including the release of uncertain tax positions during our fourth quarter ending June 30, 2020.2019.

~~Nine~~Six Months ~~Ended March~~ended December 31, 2020, Compared to ~~Nine~~Six Months Ended ~~March~~December 31, 2019

For the ~~nine~~six months ended ~~March~~December 31, 2020, we recorded net income ~~and comprehensive income attributable to Royal Gold stockholders~~ of ~~$150.3~~$166.8 million, or ~~$2.30~~$2.55 per basic share and ~~$2.29~~$2.54 per diluted share, as compared to net income ~~and comprehensive income attributable to Royal Gold stockholders~~ of ~~$67.4~~$111.8 million, or ~~$1.03~~$1.70 per basic and diluted share, for the ~~nine~~six months ended ~~March~~December 31, 2019. The increase in our earnings per share was primarily attributable to ~~(i)~~ an increase in revenue, ~~(ii)~~ a ~~decrease in~~one-time gain attributable to the sale of our Peak Gold JV interest ~~expense~~during the September 2020 quarter and ~~(iii)~~various discrete income tax benefits recognized ~~primarily attributable to recent Swiss tax reform~~ during the ~~quarter ended~~ September ~~30, 2019.~~2020 quarter. Each ~~are~~item contributing to the increase

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in our earnings per share during the period is discussed ~~further~~below. These increases were partially offset by an increase in our cost of sales and an increase in depreciation, depletion and amortization expense, each discussed below.

For ~~the nine~~six months ended ~~March~~December 31, 2020, we recognized total revenue of ~~$378.9~~$305.2 million, ~~which is~~ comprised of stream revenue of ~~$274.1~~$214.2 million and royalty revenue of ~~$104.8~~$91.0 million at an average gold price of ~~$1,512~~$1,892 per ounce, an average silver price of ~~$17.07~~$24.32 per ounce and an average copper price of ~~$2.62~~$3.10 per pound. This is compared to total revenue of ~~$307.4~~$242.4 million for the ~~nine~~six months ended ~~March~~December 31, 2019, ~~which was~~ comprised of stream revenue of ~~$215.5~~$176.6 million and royalty revenue of ~~$91.9~~$65.8 million, at an average gold price of ~~$1,248~~$1,477 per ounce, an average silver price of ~~$15.04~~$17.15 per ounce and an average copper price of ~~$2.80~~$2.65 per pound. Revenue and the corresponding production attributable to our stream and royalty interests for the ~~nine~~six months ended ~~March~~December 31, 2020, compared to the ~~nine~~six months ended ~~March~~December 31, 2019, are as follows:

Revenue and Reported Production Subject to Our Stream and Royalty Interests

~~Nine~~Six Months Ended ~~March~~December 31, 2020 and 2019

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


			Nine Months Ended				Nine Months Ended						Six Months Ended				Six Months Ended
			March 31, 2020				March 31, 2019						December 31, 2020				December 31, 2019
					Reported				Reported						Reported				Reported
Stream/Royalty		Metal(s)	Revenue		Production⁽¹⁾		Revenue		Production⁽¹⁾			Metal(s)	Revenue		Production⁽¹⁾		Revenue		Production⁽¹⁾
Stream⁽²⁾:
Mount Milligan			$	93,423			$	63,954					$	79,332			$	61,126
		Gold			43,500	oz.			38,500	oz.		Gold			28,800	oz.			29,500	oz.
		Copper			10.9	Mlbs.			5.8	Mlbs.		Copper			8.2	Mlbs.			6.7	Mlbs.
Pueblo Viejo			$	73,534			$	58,504					$	58,824			$	45,232
		Gold			33,100	oz.			28,500	oz.		Gold			20,500	oz.			20,000	oz.
		Silver			1.4	Moz.			1.5	Moz.		Silver			859,800	Moz.			938,000	oz.
Andacollo		Gold	$	63,324	41,800	oz.	$	51,016	40,900	oz.		Gold	$	41,275	21,600	oz.	$	41,269	27,900	oz.
Rainy River			$	19,566			$	17,067
Wassa												Gold	$	15,870	8,500	oz.	$	10,113	6,900	oz.
Other⁽³⁾													$	18,921			$	18,866
		Gold			11,700	oz.			12,300	oz.		Gold			9,200	oz.			11,900	oz.
		Silver			133,500	oz.			108,300	oz.		Silver			75,100	oz.			85,600	oz.
Wassa		Gold	$	18,760	12,500	oz.	$	17,557	14,000	oz.
Other⁽³⁾		Gold	$	5,458	3,700	oz.	$	7,382	6,000	oz.
Total stream revenue			$	274,065			$	215,480					$	214,222			$	176,606

Royalty⁽²⁾:
Peñasquito			$	19,422			$	12,763					$	23,161			$	11,997
		Gold			228,500	oz.			141,000	oz.		Gold			341,300	oz.			131,300	oz.
		Silver			22.6	Moz.			14.1	Moz.		Silver			15.1	Moz.			13.9	Moz.
		Lead			151.7	Mlbs.			100.4	Mlbs.		Lead			93.7	Mlbs.			91.2	Mlbs.
		Zinc			303.6	Mlbs.			220.1	Mlbs.		Zinc			191.8	Mlbs.			179.2	Mlbs.
Cortez		Gold	$	14,109	120,800	oz.	$	7,066	59,700	oz.		Gold	$	13,812	95,300	oz.	$	7,709	63,100	oz.
Other⁽³⁾		Various	$	71,257	N/A		$	72,053	N/A			Various	$	54,045	N/A		$	46,105	N/A
Total royalty revenue			$	104,788			$	91,882					$	91,018			$	65,811
Total revenue	Total revenue		$	378,853			$	307,362			Total revenue		$	305,240			$	242,417

⁽¹⁾~~(1)~~Reported production relates to the amount of metal sales subject to our stream and royalty interests for the ~~nine~~six months ended ~~March~~December 31, 2020, and 2019, and may differ from the operators’ public reporting.

~~(2)Refer to “Property Developments” above for further discussion on our principal stream and royalty interests.~~

⁽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 5% of our total revenue for either period.~~

⁽³⁾	Individually, except for Rainy River which contributed 6% of total revenue for the six months ended December 31, 2020 and 2019, no stream or royalty included within the “Other” category contributed greater than 5% of our total revenue for either period.

The increase in our total revenue for the ~~nine~~six months ended ~~March~~December 31, 2020 ~~compared with the nine months ended March 31, 2019,~~ resulted primarily from an increase in ~~our stream revenue~~the average gold, silver and copper prices compared to the prior period and an increase in production within the average gold and silver prices. The increase in our stream revenue was primarily attributable to an increase in gold and copper sales at Mount Milligan and gold sales at Pueblo Viejo. These increases were partially offset by lower gold sales at Rainy River and Wassa. royalty segment.

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Gold and silver ounces and copper pounds purchased and sold during the ~~nine~~six months ended ~~March~~December 31, 2020 and 2019, and gold and silver ounces and copper pounds in inventory as of ~~March~~December 31, 2020 and June 30, 2020 for our streaming interests were as follows:


	Nine Months Ended		Nine Months Ended		As of	As of	Six Months Ended		Six Months Ended		As of	As of
	March 31, 2020		March 31, 2019		March 31, 2020	June 30, 2019	December 31, 2020		December 31, 2019		December 31, 2020	June 30, 2020
Gold Stream	Purchases (oz.)	Sales (oz.)	Purchases (oz.)	Sales (oz.)	Inventory (oz.)	Inventory (oz.)	Purchases (oz.)	Sales (oz.)	Purchases (oz.)	Sales (oz.)	Inventory (oz.)	Inventory (oz.)
Mount Milligan	44,900	43,500	46,100	38,500	8,500	7,100	29,300	28,800	32,800	29,500	3,800	3,300
Andacollo	37,700	41,800	35,900	41,000	300	4,300	24,400	21,600	28,300	27,900	2,900	100
Pueblo Viejo	33,900	33,100	31,700	28,500	10,200	9,500	19,900	20,500	23,700	20,000	10,500	11,100
Wassa	11,600	12,500	12,300	14,000	600	1,500	8,700	8,500	7,800	6,900	3,100	2,900
Rainy River	12,200	11,700	12,500	12,300	2,300	1,800
Other	3,700	3,700	4,700	6,000	400	400	8,900	9,200	11,400	11,900	1,200	1,500
Total	144,000	146,300	143,200	140,300	22,300	24,600	91,200	88,600	104,000	96,200	21,500	18,900

	Nine Months Ended		Nine Months Ended		As of	As of	Six Months Ended		Six Months Ended		As of	As of
	March 31, 2020		March 31, 2019		March 31, 2020	June 30, 2019	December 31, 2020		December 31, 2019		December 31, 2020	June 30, 2020
Silver Stream	Purchases (oz.)	Sales (oz.)	Purchases (oz.)	Sales (oz.)	Inventory (oz.)	Inventory (oz.)	Purchases (oz.)	Sales (oz.)	Purchases (oz.)	Sales (oz.)	Inventory (oz.)	Inventory (oz.)
Pueblo Viejo	1,274,900	1,355,800	1,531,400	1,518,700	394,700	475,600	826,800	859,800	880,200	938,000	418,200	451,200
Rainy River	138,300	133,500	112,600	108,300	41,300	36,500
Other							118,000	75,100	97,500	85,600	66,300	23,400
Total	1,413,200	1,489,300	1,644,000	1,627,000	436,000	512,100	944,800	934,900	977,700	1,023,600	484,500	474,600

	Nine Months Ended		Nine Months Ended		As of	As of	Six Months Ended		Six Months Ended		As of	As of
	March 31, 2020		March 31, 2019		March 31, 2020	June 30, 2019	December 31, 2020		December 31, 2019		December 31, 2020	June 30, 2020
Copper Stream	Purchases (Mlbs.)	Sales (Mlbs.)	Purchases (Mlbs.)	Sales (Mlbs.)	Inventory (Mlbs.)	Inventory (Mlbs.)	Purchases (Mlbs.)	Sales (Mlbs.)	Purchases (Mlbs.)	Sales (Mlbs.)	Inventory (Mlbs.)	Inventory (Mlbs.)
Mount Milligan	10.2	11.0	6.6	5.8	—	0.8	8.3	8.2	6.8	6.7	1.0	0.8

Cost of sales, which excludes depreciation, depletion and amortization, increased to ~~$63.2~~$46.8 million for the ~~nine~~six months ended ~~March~~December 31, 2020, from ~~$53.8~~$41.2 million for the ~~nine~~six months ended ~~March~~December 31, 2019. The increase was primarily due to ~~increased~~an increase in the gold, silver and copper ~~sales from Mount Milligan, higher gold sales from Pueblo Viejo,~~prices and an increase in ~~gold and silver prices over~~copper sales at Mount Milligan when compared to the prior ~~year quarter.~~period. Cost of sales is specific to our stream agreements and is the result of ~~RGLD Gold’s~~our purchase of gold, silver and copper for a cash payment. The cash payment for gold from Mount Milligan is the lesser of $435 per ounce or the prevailing market price of gold when purchased, while the cash payment for our other streams is a set contractual percentage of the gold, silver or copper (Mount Milligan) spot price near the date of metal delivery.

Exploration costs decreased to $0.6 million for the six months ended December 31, 2020, from $4.1 million for the six months ended December 31, 2019. Exploration costs were specific to the exploration and advancement of the Peak Gold JV. On September 30, 2020, we sold our Peak Gold JV interest which is discussed earlier in this MD&A and Note 2 of our notes to consolidated financial statements.

Depreciation, depletion and amortization increased to ~~$130.0~~$94.2 million for the ~~nine~~six months ended ~~March~~December 31, 2020, from ~~$120.7~~$78.8 million for the ~~nine~~six months ended ~~March~~December 31, 2019. The increase was primarily ~~attributable~~due to higher ~~gold and~~ copper sales ~~and depletion rates~~ at Mount Milligan and an increase in ~~gold sales and~~ depletion rates at ~~Pueblo Viejo. This~~Mount Milligan, as previously discussed in our Fiscal 2020 10-K. The increase was partially offset by ~~lower depletion at Wassa due to~~ a decrease in gold sales ~~over~~at Andacollo when compared to the prior period.

We recognized an increase in fair value changes in equity securities of $2.2 million for the six months ended December 31, 2020 compared to a decrease of $1.2 million for the six months ended December 31, 2019. The increase was primarily due to a $3.6 million mark-to-market increase on the sale of 809,744 Contango common shares as part of the sale of our interest in the Peak Gold JV during the September 2020 quarter. Refer to Note 4 of our notes to consolidated financial statements for further discussion on our marketable equity securities.

Interest and other expense decreased to ~~$7.1~~$3.5 million for the ~~nine~~six months ended ~~March~~December 31, 2020, from ~~$22.8~~$5.1 million for the ~~nine~~six months ended ~~March~~December 31, 2019. The decrease was primarily attributable to lower interest expense as a result of ~~a decrease in average~~lower interest rates on our outstanding debt ~~amounts outstanding~~ when compared to the prior period. ~~As discussed in our Fiscal 2019 10-K, the Company settled the $370 million aggregate principal amount due under its convertible senior notes that matured in June 2019.~~ Refer to Note 5 of our notes to consolidated financial statements for further discussion on our outstanding debt.

~~During~~28

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For the ~~nine~~six months ended ~~March~~December 31, 2020, we ~~recognized an~~recorded income tax ~~benefit~~expense totaling ~~$3.7~~$13.7 million, compared with an income tax ~~expense~~benefit of ~~$11.4~~$12.4 million ~~during~~for the ~~nine~~six months ended ~~March~~December 31, 2019. ~~This~~The income tax expense resulted in an effective tax rate of ~~(2.6%)~~7.6% in the current period, compared with ~~15.1% during~~(12.8%) for the ~~nine~~six months ended ~~March~~December 31, 2019. The ~~decrease in the~~six months ended December 31, 2020 effective tax rate ~~for~~included income tax benefits of $24.5 million resulting primarily from the ~~nine months ended March 31, 2020 was primarily related~~release of an uncertain tax position due to a settlement agreement with a foreign tax authority and a change to the ~~remeasurement~~realizability of certain deferred tax assets, ~~and a net step-up in~~both of which were recorded during the ~~basis~~three months ended September 30, 2020. For the six months ended December 31, 2019, the effective tax rate included an income tax benefit of ~~tax assets due~~$32.3 million primarily related to the enactment of the Federal Act on Tax Reform and AHV Financing in Switzerland (Swiss Tax Reform) during the September 2019 quarter. The effective tax rate for the nine months ended March 31, 2019 included an income tax benefit related to the transition tax as part of the Act, which was due to consideration of new U.S. Treasury regulations and IRS guidance released during the period..

Liquidity and Capital Resources

Overview

At ~~March~~December 31, 2020, we had current assets of ~~$150.6~~$450.5 million compared to current liabilities of ~~$49.8~~$57.2 million, ~~resulting~~which resulted in working capital of ~~$100.8~~$393.3 million and a current ratio of ~~approximately 3~~8 to 1. This compares to current assets of ~~$154.7~~$362.2 million and current liabilities of ~~$33.6~~$43.6 million at June 30, ~~2019,~~2020, resulting in working capital of ~~$121.1~~$318.6 million and a current ratio of approximately 58 to 1. The increase in working capital was primarily due to proceeds from the sale of our Peak Gold JV interest and increased revenue.

During the ~~nine~~six months ended ~~March~~December 31, 2020, liquidity needs were met from ~~$249.2~~$194.1 million in net cash provided by operating activities and our available cash resources. ~~During the nine months ended March~~As of December 31, 2020, ~~the Company repaid $115~~we had $800 million ~~of the outstanding borrowings under the revolving credit facility. As of March 31, 2020, the Company had $105~~available and $200 million outstanding ~~and $895 million available~~ under ~~its~~our revolving credit facility. Working capital, combined with ~~the Company’s undrawn~~available capacity under our revolving credit facility, resulted in approximately $1$1.2 billion of total liquidity at ~~March~~December 31, 2020. ~~The Company was~~We were in compliance with each financial covenant under the revolving credit facility as of ~~March~~December 31, 2020. Refer to Note 5 of our notes to consolidated financial statements for further discussion on our outstanding debt. On January 4, 2021, we repaid $50 million of the outstanding borrowings under the credit facility. This increased the amount available under our revolving credit facility to $850 million and decreased the amount outstanding to $150 million.

We believe that our current financial resources and funds generated from operations will be adequate to cover anticipated expenditures for debt service, general and administrative expense costs and capital expenditures for the foreseeable future. Our current financial resources are also available to fund dividends and for acquisitions of stream and royalty interests, including the conditional funding schedule in connection with the Khoemacau silver ~~stream acquisition.~~stream. Our long-term capital requirements are primarily affected by our ongoing acquisition activities. ~~The Company~~We currently, and generally at any time, ~~has~~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 Fiscal ~~2019~~2020 10-K ~~and in Part II, Item 1A of this Quarterly Report on Form 10-Q~~ for a discussion of certain risks that may impact ~~the Company’s~~our liquidity and capital resources.

~~Recent Liquidity and Capital Resource Developments~~

~~Revolving Credit Facility Drawdown~~

On April 3, 2020, the Company drew an additional $200 million on its revolving credit facility at an interest rate of LIBOR plus 1.10% for an all-in rate of 2.54%, resulting in a total of $305 million outstanding and $695 million available. There is no immediate requirement for the additional funds. However, due to the uncertain environment caused by the COVID-19 pandemic and the impact on certain operations where we hold a stream or royalty interest, we believe the drawdown was a prudent precautionary measure to help ensure cash is readily available to support continued business activities.

~~Summary of~~ Cash Flows

Operating Activities

Net cash provided by operating activities totaled ~~$249.2~~$194.1 million for the ~~nine~~six months ended ~~March~~December 31, 2020, compared to ~~$180.9~~$149.5 million for the ~~nine~~six months ended ~~March~~December 31, 2019. The increase iswas primarily due to an increase in proceeds received from our stream and royalty interests, net of cost of sales and production taxes, of approximately ~~$51.7 million and lower~~$49.9 million. The increase was partially offset by an increase in income taxes paid of ~~$6.0 million over the prior period.~~$10.3 million.

Investing Activities

Net cash ~~used in~~provided by investing activities totaled ~~$105.1~~$12.1 million for the ~~nine~~six months ended ~~March~~December 31, 2020, compared to net cash used in investing activities of ~~$4.8~~$68.1 million for the ~~nine~~six months ended ~~March~~December 31, 2019. The increase ~~in cash used in investing activities is~~was primarily due to an$49.2 million received for the sale of our Peak Gold JV investment and $12.1 million for the sale of our Contango shares. This increase ~~in the acquisition of stream and royalty interests. The Company has made~~was partially offset by advance payments totaling ~~$87.8~~$43.6 million for the Khoemacau silver stream acquisition during the ~~nine months ended March 31, 2020.~~

current period.

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Financing Activities

Net cash used in financing activities totaled ~~$169.9~~$143.4 million for the ~~nine~~six months ended ~~March~~December 31, 2020, compared to ~~$48.9~~$120.4 million for the ~~nine~~six months ended ~~March~~ December��31, 2019. The increase ~~in cash used in financing activities is~~was primarily due to an increase in repayments on our revolving credit facility. ~~The Company~~We repaid ~~$115.0~~$105.0 million on our revolving credit facility during the ~~nine~~six months ended ~~March~~December 31, 2020, compared to $85.0 million during the six months ended December 31, 2019.

Recent Liquidity and Capital Resource Development

Dividend Increase

On November 17, 2020, we announced an increase in our annual dividend for calendar 2021 from $1.12 to $1.20, payable on a quarterly basis of $0.30 per share. The newly declared dividend is 7% higher than the dividend paid during calendar 2020. We have steadily increased our annual dividend for 20 years, or since calendar 2001.

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 our Fiscal ~~2019~~2020 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, the following: statements about our expected financial performance, including revenue, expenses, earnings or cash flow; operators’ expected operating and financial performance, including production, deliveries, mine plans and reserves, development, cash flows and capital expenditures; planned and potential acquisitions or dispositions, including funding schedules and conditions; liquidity, financing and dividends; our overall investment portfolio; macroeconomic and market conditions including the impacts of COVID-19; prices for gold, silver, copper, nickel and other metals; potential impairments; or tax changes.

Factors that could cause actual results to differ materially from these forward-looking statements include, among others, the following: a ~~low-price~~lower-price environment for gold, silver, copper, nickel 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, changes to mine plans and reserves, liquidity needs, mining and environmental hazards, labor disputes, distribution and supply chain disruptions, permitting and licensing issues, contractual issues involving our stream or royalty ~~agreements;~~agreements, or operational disruptions due to COVID-19; risks associated with doing business in foreign countries; our ability to identify, finance, value and complete acquisitions; adverse economic and market conditions; changes in laws or regulations governing us, operators or operating properties; changes in management and key employees; and other factors described ~~elsewhere~~ in ~~this report and our other SEC reports, including~~Item 1A. Risk Factors of our Fiscal ~~2019 10-K and subsequent Quarterly Reports on Form 10-Q.~~2020 10-K. Most of these factors are beyond our ability to predict or control.

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.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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, and the strength of the U.S. dollar relative to other currencies. Please see the risk factor entitled “~~Volatility~~Our revenue is subject to volatility in ~~gold, silver, copper, nickel and other~~ metal prices, ~~may have an adverse impact on the value~~which could negatively affect our results of our stream and royalty interests and may reduce our revenues. Certain contracts governing our stream and royalty interests have features that may amplify the negative effects of a decrease in metals prices,operations or cash flow.” under Part I, Item 1A of our Fiscal ~~2019~~2020 10-K, for more information ~~that can affect gold, silver, copper and other~~about risks associated with metal ~~prices as well as historical gold, silver, copper and nickel prices.~~price volatility.

During the ~~nine~~six months ended ~~March~~December 31, 2020, we reported revenue of ~~$378.9~~$305.2 million, with an average gold price for the period of ~~$1,512~~$1,892 per ounce, an average silver price of ~~$17.07~~$24.32 per ounce, and an average copper price of ~~$2.62~~$3.10 per pound. ~~Approximately 77% of our total reported revenues for~~The table below shows the nine months ended March 31, 2020 were attributable to gold sales from our gold producing stream and royalty interests, as shown within the MD&A. For the nine months ended March 31, 2020, if the price of gold had averagedimpact that a 10% ~~higher or lower per ounce, we would have recorded an~~ increase or decrease in ~~revenue~~the average price of ~~approximately $31.2 million.~~

~~Approximately 10% of~~the specified metal would have had on our total reported ~~revenues~~revenue for the ~~nine~~six months ended ~~March~~December 31, 2020 were attributable to copper sales from our copper producing stream and royalty interests. For the nine months ended March 31, 2020, if the price of copper had averaged 10% higher or lower per pound, we would have recorded an increase or decrease in revenue of approximately $4.2 million.2020:


Metal	Percentage of Total Reported Revenue Associated with Specified Metal	Amount by Which Total Reported Revenue Would Have Increased or Decreased If Price of Specified Metal Had Averaged 10% Higher or Lower in Period
Gold	76%	$23.8 million
Copper	11%	$3.6 million
Silver	10%	$3.1 million

Approximately 9% of our total reported revenues for the nine months ended March 31, 2020 were attributable to silver sales from our silver producing stream and royalty interests. For the nine months ended March 31, 2020, if the price of silver had averaged 10% higher or lower per ounce, we would have recorded an increase or decrease in revenue of approximately $3.5 million.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

~~As of March 31, 2020,~~Under the ~~Company’s management,~~supervision and with the participation of ~~the~~our management, including our President and Chief Executive Officer (the principal executive officer) and Chief Financial Officer and Treasurer (the principal financial and accounting officer) ~~of the Company, carried out an evaluation of~~, we evaluated the effectiveness of the design and operation of ~~the Company’s~~our disclosure controls and procedures ~~(as defined in Rules 13a-15(e) and 15d-15(e)~~as of ~~the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).~~December 31, 2020. Based on ~~such~~this evaluation, ~~the Company’s~~our President and Chief Executive Officer and ~~its~~ Chief Financial Officer and Treasurer have concluded that ~~as of March 31, 2020, the Company’s~~our disclosure controls and procedures were effective ~~to provide~~as of December 31, 2020, 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 December 31, 2020, that ~~information required~~materially affected, or are reasonably likely to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the required time periods and that such information is accumulated and communicated to the Company’smaterially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including ~~the~~our President and Chief Executive Officer and ~~the~~ Chief Financial Officer and Treasurer, ~~as appropriate to allow timely decisions regarding required disclosure.~~

~~Disclosure~~does not expect that our disclosure controls and procedures ~~involve human diligence~~or our internal controls will prevent all error and ~~compliance and are subject to lapses in judgment and breakdowns resulting from human failures. As a result, a~~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 ~~the Company~~Royal Gold have been detected.

~~Changes in Internal Controls~~

There has been no change in the Company’s internal control over financial reporting during the three months ended March 31, 2020 that has materially affected, or that is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~Not applicable.~~None.

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ITEM 1A. RISK FACTORS

Information regarding risk factors appears in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Forward-Looking Statements,” and various risks faced by us are also discussed elsewhere in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.

~~The following risk factors supplement, and should be read in conjunction with,~~There have been no material changes to the risk factors ~~described~~included in ~~Part I, Item 1A~~the section entitled “Risk Factors” of our Fiscal ~~2019~~2020 10-K.

The current COVID-19 pandemic is adversely affecting, and is expected to continue to adversely affect, operations at some properties in which we have stream or royalty interests, which could have a material adverse effect on our results of operations and financial condition.

The world is currently experiencing a deadly outbreak of the coronavirus disease 2019, or COVID-19. Public health and government authorities have recommended and mandated precautions to mitigate the spread of the COVID-19, including in some cases quarantines, shelter-in-place orders, and restrictions on mining-related activities. As a result, several of our operating counterparties have announced temporary operational curtailments. There may be additional curtailments, and any curtailment could be extended. The COVID-19 pandemic could also disrupt operators’ supply or distribution chains or access to workers, which in turn could adversely impact their production or sales. In addition, development and exploration activities at some properties may be delayed or suspended. Any of these events could have a material adverse impact on our results of operations and financial condition in future periods. We are currently unable to predict the nature or extent of any impact the COVID-19 pandemic may have on our results of operations and financial condition.

~~The current COVID-19 pandemic is significantly impacting the global economy and markets, which may adversely affect our business or the trading price of our stock.~~

The global economy, metal prices, and financial markets are experiencing significant volatility and uncertainty due to COVID-19. Our revenue is directly related to the market price of gold and other metals. Metal price volatility could cause our revenue to fluctuate from period to period. This price volatility could also cause operators or developers to defer or forgo projects, which could adversely impact our future revenue. Moreover, in the ordinary course of business, we are reviewing opportunities to acquire new stream and royalty interests and we have acquisition opportunities at various stages of review. Reduced economic and travel activities or illness among our management team as a result of COVID-19 could limit or delay acquisition opportunities or other business activities. In addition, economic volatility, disruptions in the financial markets, or severe price declines for gold or other metals could adversely affect our ability to obtain future debt or equity financing for acquisitions on acceptable terms. Government efforts to counter the economic effects of COVID-19 through liquidity and stimulus programs may be insufficient or ineffective in preventing or reducing the effects of a recession. It is difficult to determine the extent of the economic and market impacts from COVID-19 and the many ways in which they may negatively affect our business and the trading price of our stock.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~Not applicable.~~Issuer Purchases of Equity Securities


Period	(a) Total Number of Shares Purchased⁽¹⁾	(b) Average Price Paid Per Share	(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan or Programs
October 2020	—	—	N/A	N/A
November 2020	158	$117.36	N/A	N/A
December 2020	—	—	N/A	N/A
Total	158	$117.36	N/A	N/A

(1)	Represents shares of common stock withheld by us as payment of withholding taxes due upon the vesting of restricted stock held by our employees.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

~~Not applicable.~~None.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

~~Not applicable.~~None.

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ITEM 6. EXHIBITS


Exhibit Number		Description
~~10.1▲~~		CEO Employment Agreement entered into by and between Royal Gold, Inc. and William Heissenbuttel, dated January 1, 2020 (filed as Exhibit 10.1 to the Company’s Amendment No. 1 to Current Report on Form 8-K/A on January 3, 2020, which amended the Company’s Current Report on Form 8-K originally filed on September 26, 2019, and incorporated herein by reference).

~~10.2▲~~		Retirement Agreement between Royal Gold, Inc. and Tony Jensen, dated January 1, 2020 (filed as Exhibit 10.2 to the Company’s Amendment No. 1 to Current Report on Form 8-K/A on January 3, 2020, which amended the Company’s Current Report on Form 8-K originally filed on September 26, 2019, and incorporated herein by reference).

~~10.3▲~~		Form of Executive Employment Agreement entered into by and between Royal Gold, Inc. and Paul Libner and Randy Shefman (filed as Exhibit 10.1 to the Company’s Amendment No. 1 to Current Report on Form 8-K/A on January 3, 2020, which amended the Company’s Current Report on Form 8-K originally filed on October 11, 2019, and incorporated herein by reference).

~~10.4▲~~		Employment Agreement by and between Royal Gold Corporation and Mark Isto effective January 2, 2020 (filed as Exhibit 10.2 to the Company’s Amendment No. 1 to Current Report on Form 8-K/A on January 3, 2020, which amended the Company’s Current Report on Form 8-K originally filed on October 11, 2019, and incorporated herein by reference).

~~10.5▲~~		Retirement Agreement between Royal Gold, Inc. and Bruce Kirchhoff, dated January 1, 2020 (filed as Exhibit 10.3 to the Company’s Amendment No. 1 to Current Report on Form 8-K/A on January 3, 2020, which amended the Company’s Current Report on Form 8-K originally filed on October 11, 2019, 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.

101.INS101		The following financial statements from Royal Gold, Inc.’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2020, formatted in Inline ~~XBRL Instance Document.~~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.

101.SCH104		The cover page from Royal Gold, Inc.’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2020, formatted in Inline XBRL ~~Taxonomy Extension Schema Document.~~

101.CAL*		~~Inline XBRL Taxonomy Extension Calculation Linkbase Document.~~

101.DEF*		~~Inline XBRL Taxonomy Extension Definition Linkbase Document.~~

101.LAB*		~~Inline XBRL Taxonomy Extension Label Linkbase Document.~~

101.PRE*		~~Inline XBRL Taxonomy Extension Presentation Linkbase Document.~~

~~104~~		~~Cover Page Interactive Data File (formatted~~(included as ~~Inline XBRL and contained in~~ Exhibit 101).

*	Filed herewith.

‡	Furnished herewith.

▲~~Identifies each management contract or compensation plan or arrangement.~~

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SIGNATURES

Pursuant to the requirements 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: ~~May 7, 2020~~February 4, 2021
	By:	/s/ William Heissenbuttel
		William Heissenbuttel
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: ~~May 7, 2020~~February 4, 2021	By:	/s/ Paul Libner
		Paul Libner
		Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)

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Fiscal Years:	Operating Leases
2020	$	93
2021		826
2022		823
2023		811
2024		822
Thereafter		4,149
Total lease payments	$	7,524
Less imputed interest		(847)
Total	$	6,677