SUCCESS THROUGH
SUSTAINABLE LEADERSHIP
DENVER, COLORADO2020 ANNUAL REPORT PORTFOLIO — DIVERSE, GOLD FOCUSED
PRINCIPAL
PROPERTIES
ANDACOLLO
1
Region IV, Chile
CORTEZ
Nevada, USA
MOUNT MILLIGAN
British Columbia, Canada
PEÑASQUITO
Zacatecas, Mexico
4
3
2
6
7
5
6
7
PUEBLO VIEJO
Sanchez Ramirez,
Dominican Republic
WASSA
Western Region, Ghana
KHOEMACAU
Botswana
3
2
4
5
1
187PROPERTIES1
41 PRODUCING
16 DEVELOPMENT
49 EVALUATION
81 EXPLORATION
1 As of June 30, 2020
REVENUE* BY COMMODITY
REVENUE* BY COUNTRY
CUMULATIVE FIVE YEAR RETURN GRAPH**
3%
Other
9%
Copper
9%
Silver
79%
Gold
3%
Australia
7%
Mexico
6%
Africa
10%
USA
15%
Chile
$250
$200
$150
$100
$50
2%
Other
38%
Canada
19%
Dom. Rep
$192
$185
$147
June '15
June '16
June '17
June '18
June '19
June '20
Royal Gold, Inc.
S&P500 Index
PHLX Gold/Silver Sector
* Total Revenue for FY 2020
** Returns have been indexed to June 30, 2015
FINANCIAL HIGHLIGHTS
REVENUE
For the Fiscal Years Ended June 30
($ Millions)
OPERATING CASH FLOWS
For the Fiscal Years Ended June 30
($ Millions)
CALENDAR YEAR DIVIDENDS1
($ per share)
440.8
459.0
423.1
498.8
359.8
328.8
340.8
266.9
253.2
1.06
1.00
1.12
0.92
0.96
169.3
'16
'17
'18
'19
'20
'16
'17
'18
'19
'20
'16
'17
'18
'19
'20
1 Dividends are paid on a calendar year basis. The dividend for calendar year 2020 is $1.12; dividends declared during fiscal year
2020 totaled $1.105.
MESSAGE FROM OUR PRESIDENT AND CHIEF
EXECUTIVE OFFICER
DEAR FELLOW SHAREHOLDERS,
I was appointed as President and
CEO on January 2, 2020, and while
2020 has been a challenging year
for many people around the world
in many respects, I am pleased to
report that Royal Gold’s business
continues to thrive.
As businesses have grappled
with the social and economic
challenges caused by a global
pandemic, Royal Gold stayed true
to long-held strategic objectives.
We have maintained our focus on
gold, remained disciplined with
our allocation of capital, managed
our balance sheet prudently, and
continued to return capital to
shareholders. Our commitment to
a long-term and proven strategy
allowed us to navigate an uncertain
operating environment and
produce record financial results for
fiscal 2020.
We benefited as precious metals
prices increased and our diversified
portfolio of precious metal assets
produced record operating
cash flow in 2020. While we are
pleased to see metal prices rise,
we are also careful to consider
long term returns and we will
remain disciplined with respect
to completing new acquisitions.
Our portfolio includes a pipeline
of earlier stage assets that are not
yet cash-flowing, and higher metal
prices may support production
and reserve increases that will
provide organic revenue growth in
the future without any significant
investment on our part.
True to our history, we remain
focused on measuring success on a
per share basis and limiting equity
dilution. While we have seen many
other companies in the precious
metals sector take advantage of
renewed capital inflows, we have
avoided dilutive equity issuances
to provide our shareholders with
as much exposure to our business
as possible.
COMPANY PERFORMANCE
Fiscal 2020 saw exceptional
financial performance, and we
recognized records for revenue of
$498.8 million, operating cash flow
of $340.8 million, and earnings
of $199.3 million. Our portfolio
performed well, with gold equivalent
volume1 of 320,000 ounces, and
benefited from significantly higher
gold and silver prices.
During the year we experienced
interruptions in the portfolio
including a two-month strike at
Andacollo, a one-month blockade
of Peñasquito, and production
curtailments and temporary
stoppages at several assets due to
actions taken by the operators to
combat the spread of COVID-19.
Despite these operational issues,
the strength and diversity of our
portfolio was evident as the overall
gold equivalent volume1 was less
than five percent lower than the
previous year.
1
See page A-2 at the end of this document for additional information about gold
equivalent ounces.
Our commitment to a long-term
and proven strategy allowed us to
navigate an uncertain operating
environment and produce record
financial results for fiscal 2020.
1
2020 ANNUAL REPORT IN 2020 WE ACHIEVED NEW RECORDS
FOR REVENUE OF
$498.8 million
OPERATING CASH FLOW OF
$340.8 million
AND EARNINGS OF
$199.3 million
Our new senior management team
has made a seamless transition
and we stand ready to build on the
company’s success.
CAPITAL ALLOCATION PRIORITIES
Disciplined capital allocation is a key
attribute of our approach to business,
and our significant free cash flow2
during the year allowed us to:
• reduce net debt2 by $115 million
and end the year with a net cash2
position of $14 million;
• fund approximately $136 million
in advance payments towards our
silver stream at the Khoemacau
project, which we expect will
provide a near-term contribution
to the portfolio when it begins
production in calendar 2021; and
• maintain our commitment to
paying a growing and sustainable
dividend, which we raised for the
19th consecutive year to $1.12 per
share per calendar year, with a
total of $71.5 million paid back to
shareholders during the year.
We funded all these activities without
issuing additional equity and ended
the year with a strong balance
sheet and access to liquidity that
positions us to act on new business
opportunities as they arise.
LEADERSHIP TRANSITION
A significant strategic achievement
during the year was our transition
to a new generation of leadership
within the company. In addition
to my appointment, Paul Libner,
Chief Financial Officer and
Treasurer, and Randy Shefman,
Vice President and General Counsel,
were promoted from within our
organization as we implemented
long standing succession
planning strategies. Additionally,
Mark Isto was promoted to Executive
Vice President and Chief Operating
Officer in recognition of his
contribution to our long standing
commitment to technical excellence
in our due diligence and asset
monitoring efforts. Our new senior
management team, which consists
of individuals with long careers with
Royal Gold, has made a seamless
transition and we stand ready to
build on the company’s success.
During the year, our previous
President and CEO, Tony Jensen, and
Vice President General Counsel and
Corporate Secretary, Bruce Kirchhoff,
decided to retire from Royal Gold.
These individuals were long standing
and respected leaders in our
organization and I believe I speak for
everyone at Royal Gold as I thank
them for their dedicated service over
the years.
In addition, I would like to thank the
employees of Royal Gold, who have
successfully navigated the personal
and corporate challenges of working
in a COVID 19 environment and have
ensured the smooth operation of our
business, even in these trying times.
We have built our business to appeal
to investors who want exposure
to precious metals through a
conservatively managed vehicle. Our
success this year demonstrates that
this approach continues to work.
I appreciate the opportunity to
lead Royal Gold in its next phase
of development and I value the
continued support of the Board and
management team. I look forward to
continuing to earn your support into
the future.
Sincerely,
William Heissenbuttel
Free cash flow and net debt (cash) are non-GAAP financial measures. See pages A-1
and A-2 at the end of this document for additional information.
2
2
ROYAL GOLD, INC.
ESG HIGHLIGHTS
Royal Gold’s business model is designed to provide shareholders with long-term exposure to resource upside and
metal price optionality for the life of a mining project. We understand that sustained economic performance cannot
be obtained without sound environmental, social and governance (ESG) practices. As such, the sustainability of our
investments is fundamental to our long-term success.
COMMUNITY SUPPORT
We believe that “good mines get better” through
expansion, resource conversion and technological
advancements. However, all operations will eventually
come to an end and the impacts of mine closure are felt
not only by the workforce and investors, but also by the
local community. We actively seek opportunities to work
with our operating partners to advance sustainability
initiatives with the goal of aiding communities to thrive
both during mining operations and beyond. We also
believe in supporting the education of the industry’s next
generation of leadership who will be at the forefront
of the continued evolution of responsible resource
development and sustainability standards.
We also believe in giving back at home, supporting
the communities where we live and work. Our annual
charitable giving is administered by a committee of
employees that selects donation targets and recipients
in our local communities. We are proud to partner
with leading charities in Denver, Luzern, Toronto and
Vancouver who are actively responding to community
needs with respect to medical supplies, homelessness,
food security, elder care, and education.
SUSTAINABILITY
Royal Gold endorses the International Council on
Mining and Metals’ (ICMM) 10 Principles of Sustainable
Development and participated in implementation of
the World Gold Council’s Responsible Gold Mining
Principles (RGMPs), each of which promote ethical and
sustainable resource development.
We integrate these principles into Royal Gold’s own
business planning and operations as appropriate and
encourage our operating partners, whom we consider
to be members of our supply chain, to adhere to
these or similar principles in their own management
and operations.
ENVIRONMENTAL IMPACT
With fewer than 30 employees across four professional
offices in United States, Switzerland, and Canada,
Royal Gold’s direct environmental footprint is modest,
although we strive to limit this impact to the extent
possible. We subsidize and encourage employees' use
of public transportation for their daily commute, and
in January 2020, we moved our Denver headquarters,
where two-thirds of our employees are based, into a
LEED Gold certified building. Also in 2020, we eliminated
single use plastic water bottles across all of our offices.
While we have limited influence over the mining
operations in which we hold stream and royalty
interests, we encourage our operators to implement
industry best practices for emissions reduction. In 2020,
we joined with leading mining companies to sponsor
the Colorado Cleantech Industry Association’s Mining
Cleantech Challenge, an industry judged competition to
promote new clean technologies for mining projects.
3
2020 ANNUAL REPORT
THE ROYAL GOLD BOARD OF DIRECTORS
William Hayes
INDEPENDENT DIRECTOR
Non-Executive Chair of Royal
Gold, Inc.; retired Executive
Vice President for Project
Development and Corporate
Affairs for Placer Dome Inc.
William Heissenbuttel
INSIDE DIRECTOR
President and Chief Executive
Officer of Royal Gold, Inc.
Kevin McArthur
INDEPENDENT DIRECTOR
Retired Executive Chairman
and Chief Executive Officer of
Tahoe Resources Inc.
Jamie Sokalsky
INDEPENDENT DIRECTOR
Retired Director and President
and Chief Executive Officer of
Barrick Gold Corporation
Christopher Thompson*
INDEPENDENT DIRECTOR
Retired Chairman and
Chief Executive Officer of Gold
Fields Limited
Ronald Vance
INDEPENDENT DIRECTOR
Retired Senior Vice President,
Corporate Development for
Teck Resources Limited
Sybil Veenman
INDEPENDENT DIRECTOR
Retired General Counsel for
Barrick Gold Corporation
* Christopher Thompson has informed the Board of Directors that he does not intend to stand for
reelection to the board at the November 2020 shareholders’ meeting.
THE ROYAL GOLD MANAGEMENT TEAM
William Heissenbuttel
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
Paul Libner
CHIEF FINANCIAL OFFICER
AND TREASURER
Mark Isto
EXECUTIVE VICE PRESIDENT
AND CHIEF OPERATING
OFFICER, ROYAL GOLD CORP.
Randy Shefman
VICE PRESIDENT AND
GENERAL COUNSEL
Daniel Breeze
VICE PRESIDENT,
CORPORATE
DEVELOPMENT,
RGLD GOLD AG
Jason Hynes
VICE PRESIDENT, BUSINESS
DEVELOPMENT AND
STRATEGY,
ROYAL GOLD CORP.
Alistair Baker
VICE PRESIDENT, INVESTOR
RELATIONS AND BUSINESS
DEVELOPMENT,
ROYAL GOLD CORP.
Margaret McCandless
ASSISTANT GENERAL COUNSEL,
CHIEF COMPLIANCE OFFICER,
AND CORPORATE SECRETARY
FORM 10-K 2020 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 2020
or
☐
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
(State or Other Jurisdiction of
Incorporation or Organization)
1144 15th Street, Suite 2500
Denver, Colorado
(Address of Principal Executive Offices)
84-0835164
(I.R.S. Employer
Identification No.)
80202
(Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
Registrant’s telephone number, including area code (303) 573-1660
Title of Each Class
Common Stock, $0.01 par value
Trading Symbol
RGLD
Name of the Exchange on which Registered
Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
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, 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 ☒
Non-accelerated filer ☐
Emerging growth company ☐
Accelerated filer ☐
Smaller reporting 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Aggregate market value of the voting common stock held by non-affiliates of the registrant, based upon the closing sale price of Royal Gold common stock on December 31,
2019, as reported on the Nasdaq Global Select Market was $8.0 billion. There were 65,591,043 shares of Royal Gold common stock, par value $0.01 per share, outstanding as
of July 30, 2020.
Portions of the Proxy Statement for the 2020 Annual Meeting of Stockholders scheduled to be held on November 18, 2020, and to be filed within 120 days after June 30, 2020,
are incorporated by reference into Part III, Items 10, 11, 12, 13 and 14 of this Annual Report on Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE
INDEX
PAGE
2
7
15
15
28
28
28
28
29
39
40
72
72
73
74
74
74
74
74
74
80
81
Business
PART I.
ITEM 1.
ITEM 1A. Risk Factors
ITEM 1B. Unresolved Staff Comments
ITEM 2.
ITEM 3.
ITEM 4.
PART II.
ITEM 5.
Properties
Legal Proceedings
Mine Safety Disclosure
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
ITEM 6.
ITEM 7.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
ITEM 8.
ITEM 9.
ITEM 9A. Controls and Procedures
ITEM 9B. Other Information
PART III.
ITEM 10. Directors, Executive Officers and Corporate Governance
ITEM 11. Executive Compensation
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
ITEM 13. Certain Relationships and Related Transactions, and Director Independence
ITEM 14. Principal Accountant Fees and Services
PART IV.
ITEM 15. Exhibits and Financial Statement Schedules
ITEM 16 Form 10-K Summary
SIGNATURES
1
This report contains and incorporates by reference “forward-looking statements” within the meaning of U.S. federal
securities laws. Forward-looking statements are made based on management’s current expectations and beliefs
concerning future developments. Actual results may differ, possibly materially, from forward-looking statements due to
various factors. For a discussion of some of these factors, see Item 1A, Risk Factors, and Item 7, Management’s Discussion
and Analysis of Financial Condition and Results of Operations (“MD&A”), of this report.
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”). Certain information provided in this Annual Report on
Form 10-K 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 Securities and Exchange Commission (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.
Unless the context otherwise requires, references to “Royal Gold,” the “Company,” “we,” “us,” and “our” refer to Royal
Gold, Inc. and its consolidated subsidiaries
PART I
ITEM 1. BUSINESS
Overview
We acquire and 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. Please refer to Item 2, Properties, for a discussion of the development at our principal properties.
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 June 30, 2020, we owned seven stream interests,
which are on six producing properties and two development stage properties. Our stream interests accounted for
approximately 72% of our total revenue for each of the fiscal years ended June 30, 2020 and 2019. 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 a percentage of revenue or metals produced from the project after deducting specified costs, if any. As of
June 30, 2020, we owned royalty interests on 35 producing properties, 14 development stage properties and 130
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. Royalties accounted for approximately 28% of our total revenue for each of the fiscal years ended June 30, 2020
and 2019.
We do not conduct mining operations on the properties in which we hold stream and royalty interests. Except for our
interest in the Peak Gold JV, we are not required to contribute to capital costs, exploration costs, environmental costs, or
other operating costs on those properties.
In the ordinary course of business, we engage in a continual review of opportunities to acquire existing stream and royalty
interests, to establish new streams 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. We currently, and
generally at any time, have acquisition opportunities in various stages of active review, including, for example, our
2
engagement of consultants and advisors to analyze particular opportunities, our analysis of technical, financial, legal and
other confidential information of particular opportunities, submission of indications of interest and term sheets,
participation in preliminary discussions and negotiations and involvement as a bidder in competitive processes.
As discussed in further detail throughout this report, some highlights of our business during fiscal year 2020 were as
follows:
Our revenue increased 18% to $498.8 million, compared to $423.1 million during fiscal 2019.
We made several key leadership changes due to retirements and used our management succession
planning to fill those roles.
We increased our calendar year dividend to $1.12 per basic share, which is paid in quarterly installments
throughout calendar year 2020. This represents a 6% increase compared with the dividend paid during
calendar year 2019.
Certain Definitions
Dollar or “$”: Refers to U.S. dollars. We refer to Canadian dollars as C$.
Gold equivalent ounces (GEOs): GEOs are calculated as Royal Gold’s revenue divided by the average gold price for the
period.
Gross smelter return (GSR) royalty: A defined percentage of the gross revenue from a resource extraction operation, less,
if applicable, certain contract-defined costs paid by or charged to the operator.
Metal stream: 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.
Mineralized material: That part of a mineral system that has potential economic significance, but is not included in the
proven and probable reserve estimates until further drilling and metallurgical work is completed, and until other economic
and technical feasibility factors based on such work have been resolved.
Net smelter return (NSR) royalty: A defined percentage of the gross revenue from a resource extraction operation less a
proportionate share of incidental transportation, insurance, refining and smelting costs.
Net value royalty (NVR): A defined percentage of the gross revenue from a resource extraction operation less certain
contract-defined costs.
Probable reserves: Reserves for which quantity and grade and/or quality are computed from information similar to that
used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less
adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume
continuity between points of observation.
Proven reserves: Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings
or drill holes, grade and/or quality are computed from the results of detailed sampling, and (b) the sites for inspection,
sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and
mineral content of reserves are well established.
Payable metal: Ounces or pounds of metal in concentrate after deduction of a percentage of metal in concentrate by a
third-party smelter pursuant to smelting contracts.
3
Reserve: That part of a mineral deposit that could be economically and legally extracted or produced at the time of the
reserve determination.
Royalty: The right to receive a percentage or other denomination of mineral production from a mining operation.
Ton: A unit of weight equal to 2,000 pounds or 907.2 kilograms.
Tonne: A unit of weight equal to 2,204.6 pounds or 1,000 kilograms.
Fiscal 2020 Business Developments
Please refer to Item 7, MD&A, for discussion on recent liquidity and capital resource developments.
Alturas royalty acquisition
On January 29, 2020, we entered into an agreement with various private individuals for the acquisition of an NSR royalty
of up to 1.06% (gold) and up to 1.59% (copper) on mining concessions included as part of the Alturas project, which is
located within the Coquimbo Region of Chile and held by Compañia Minera Salitrales Limitada, a subsidiary of Barrick
Gold Corporation (“Barrick”). Total consideration for the royalty is up to $41 million, of which $11 million was paid on
January 29, 2020. A future payment of up to $20 million is conditioned based on a project construction decision by Barrick
and the size of the minable mineralized material on the date of the construction decision. A further future payment of up
to $10 million will be made upon first production from the mining concessions.
Castelo de Sonhos royalty acquisition
In August 2019, we entered into an agreement with TriStar Gold Inc. and its subsidiaries (together “TriStar”) to acquire
(i) up to a 1.5% NSR royalty on the Castelo de Sonhos gold project (“CDS”), located in Brazil, and (ii) warrants to purchase
up to 19,640,000 common shares of TriStar. Total consideration was $7.5 million, of which $4.5 million was paid in
August 2019, $1.5 million was paid in November 2019, and $1.5 million was paid in March 2020.
Aggregate funds we invested with TriStar will be used 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 gold grade of approximately 1.0 gram
per tonne. Since August 2019, TriStar has completed reverse circulation drilling, which will support the preparation of a
preliminary feasibility study. Refer to Note 3 of our notes to consolidated financial statements for further discussion.
Covid-19 and current economic environment
Several of our operating counterparties previously announced temporary operational curtailments or the withdrawal or
review of previously disclosed guidance due to the ongoing COVID-19 pandemic. The economic and societal impacts
associated with COVID-19 are fluid and changing rapidly, and we are currently unable to predict the nature or extent of
any impacts on our results of operations and financial condition. We will continue to monitor any further developments
that the COVID-19 pandemic may have on stream or royalty interests as part of our regular asset impairment analysis.
Leadership changes
We made several key leadership changes as a result 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.
4
Our Operational Information
Reportable Segments and Financial Information
We manage our business under two reportable segments, consisting of the acquisition and management of stream interests
and the acquisition and management of royalty interests. Royal Gold’s long-lived assets (stream and royalty interests, net)
are geographically distributed as shown in the following table (amounts are in thousands):
As of June 30, 2020
As of June 30, 2019
Canada
Dominican Republic
Chile
Africa
Mexico
United States
Australia
Rest of world
Total
$
interests, net
Royalty
interest
Royalty
interest
Total stream
and royalty
Total stream
and royalty
Stream
interest
interests, net
767,749 $ 200,251 $ 968,000
451,585
451,585
—
515,733
301,507 214,226
89,877
89,556
321
83,748
—
83,748
163,398
— 163,398
31,944
31,944
—
35,031
22,993
12,038
$ 1,614,363 $ 704,550 $ 2,318,913 $ 1,622,435 $ 716,881 $ 2,339,316
Stream
interest
702,732 $ 189,855 $ 892,587 $
406,469
406,469
—
501,583
277,661 223,922
215,784
215,463
321
75,951
—
75,951
159,445
— 159,445
30,006
30,006
—
37,088
25,050
12,038
Our reportable segments for purposes of assessing performance for our fiscal years ended June 30, 2020, and 2019 are
shown below (amounts are in thousands):
Stream interests
Royalty interests
Total
Stream interests
Canada
Dominican Republic
Chile
Africa
Total stream interests
Royalty interests
Canada
United States
Mexico
Australia
Africa
Chile
Rest of world
Total royalty interests
Total
Year Ended June 30, 2020
Production
taxes
Cost of sales (1)
Revenue
$ 359,868 $
138,951
$ 498,819 $
83,890 $
—
83,890 $
Depletion (2)
Segment
gross profit(3)
— $ 144,678 $ 131,300
3,824
104,758
30,369
3,824 $ 175,047 $ 236,058
Year Ended June 30, 2019
Production
taxes
Cost of sales
Revenue
$ 305,824 $
81,021 $
$
37,717
35,378
17,611
171,727
$
117,232
17,717 $
14,340
15,833
6,217
1,024
$-
4,738
59,869
$ 423,056 $
77,535 $
23,393 $
17,675
7,684
5,012
53,764
—
— $
—
—
—
—
—
—
—
77,535 $
Depletion
Segment
gross profit
— $ 127,770 $ 100,519
57,628
— $
20,042
—
27,694
—
12,599
—
117,963
—
— $
—
—
—
-
4,112
35,086
78,034
17,717
14,340
15,833
6,217
1,024
-
4,738
59,869
4,112 $ 162,856 $ 178,553
— $
—
—
—
—
—
—
-
$- $
—
—
—
—
—
—
-
(1) Excludes depreciation, depletion and amortization.
5
(2) Depletion amounts are included within Depreciation, depletion and amortization on our consolidated statements of operations and
comprehensive income (loss).
(3) Refer to Note 14 to consolidated financial statements for a reconciliation of total segment gross profit to consolidated income (loss)
before income taxes.
Our financial results are primarily tied to the price of gold and, to a lesser extent, the prices of silver and copper, together
with the amounts of production from our producing-stage stream and royalty interests. During the fiscal year ended
June 30, 2020, we derived approximately 88% of our revenue from precious metals (including 79% from gold and 9%
from silver), 9% from copper, and 3% from other minerals. The prices of gold, silver, copper, and other metals have
fluctuated widely in recent years. The marketability and the price of metals are influenced by numerous factors beyond
our control. Significant declines in the prices of gold, silver, or copper could have a material adverse effect on our results
of operations and financial condition.
Competition
The mining industry in general, and streaming and royalty segments in particular, are very competitive. We compete with
other streaming and royalty companies, mine operators, and financial buyers in efforts to acquire existing streaming and
royalty interests. We also compete with the lenders, investors, and streaming and royalty companies providing financing
to operators of mineral properties in our efforts to create new streaming and royalty interests. Our competitors may be
larger than we are and may have greater resources and access to capital than we have. Key competitive factors in the stream
and royalty acquisition and financing business include the ability to identify and evaluate potential opportunities,
transaction structure and consideration, and access to capital.
Regulation
Operators of the mines that are subject to our stream and royalty interests must comply with numerous environmental,
mine safety, land use, waste disposal, remediation and public health laws and regulations promulgated by federal, state,
provincial and local governments in the United States, Canada, Chile, the Dominican Republic, Ghana, Mexico, Botswana,
Australia and other countries where we hold interests. Although we, as a stream or royalty interest owner, are not
responsible for ensuring compliance with these laws and regulations, failure by the operators to comply with applicable
laws, regulations and permits can result in injunctive action, orders to suspend or cease operations, damages, and civil and
criminal penalties on the operators, which could have a material adverse effect on our results of operations and financial
condition.
Corporate Information
We were incorporated under the laws of the State of Delaware on January 5, 1981. Our executive offices are located at
1144 15th Street, Suite 2500, Denver, Colorado 80202. Our telephone number is (303) 573-1660.
SEC Filings
We file periodic and current reports, proxy statements, and other information with the SEC. This includes our Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those
forms. These reports are available free of charge on our website at www.royalgold.com as soon as reasonably practicable
after they are electronically filed with or furnished to the SEC. These reports also can be obtained on the SEC’s website
at www.sec.gov. The information on our website is not part of this or any other report filed with or furnished to the SEC.
Employees
We currently have 27 employees, 18 of which work out of our office in Denver, Colorado. The remainder work out of our
offices in Lucerne, Switzerland, Vancouver, Canada, and Toronto, Canada. Our employees are not subject to a labor
contract or collective bargaining agreement. We consider our overall employee relations to be good.
6
Our global offices are adhering by the guidelines provided to the local health authorities during the COVID-19 pandemic.
The adoption of a remote work environment has not caused any material interruptions to the day-to-day activities of the
Company.
ITEM 1A. RISK FACTORS
You should carefully consider the risks described in this section. Our future performance is subject to risks and
uncertainties that could have a material adverse effect on our business, results of operations, and financial condition and
the trading price of our common stock. We may be subject to other risks and uncertainties not presently known to us. In
addition, please see our note about forward-looking statements included in Part II, Item 7, MD&A of this Annual Report
on Form 10-K.
Risks Relating to our Business
Our revenue is subject to volatility in metal prices, which could negatively affect our results of operations or cash flow.
Market prices for gold, silver, copper, nickel, and other metals may fluctuate widely over time and are affected by
numerous factors beyond our control. These factors include metal supply and demand, industrial and jewelry fabrication,
investment demand, central banking actions, inflation expectations, currency values, interest rates, forward sales by metal
producers, and political, trade, economic, or banking conditions.
Our revenue is directly tied to metal prices. Under our stream agreements, we purchase metal at a fixed price or a stated
percentage of the market price and then sell the metal in the open market. If market prices decline, our revenue and cash
flow from metal sales decline. A price decline can also impact our revenue under certain sliding-scale royalty agreements
as we may receive a lower royalty rate when prices fall below specified thresholds. In addition, some of our royalty
agreements are based on the operator’s concentrate sales to smelters and allow for price adjustments between the operator
and the smelter based on metals prices on a future date, typically three to five months after shipment of concentrate. These
price adjustments can decrease our revenue in future periods if metal prices decline following shipment.
Price declines could cause an operator to reduce, suspend, or terminate production or development at a project, which
would impact our future revenue from the project. These production or development decisions could prevent us from
recovering our initial investment in the project or result in an impairment to the value of our initial investment.
We own passive interests in mining properties and cannot ensure properties are developed or operated in our best
interests.
Our revenue is derived entirely from stream and royalty interests in properties owned and operated by third parties. In
general, we have no decision-making authority regarding the development or operation of the mineral properties
underlying our stream and royalty interests. Operators make all development and operating decisions, including decisions
about permitting, feasibility analysis, mine design and operation, processing, plant and equipment matters, and temporary
or permanent suspension of operations. We generally are not entitled to compensation if operations are shut down. This
creates risk for us because operators may at times have business interests that are inconsistent with our interests or may act
contrary to our interests.
Our revenue is subject to operational and other risks faced by operators of the properties in which we hold stream or
royalty interests.
We generally are not required to pay capital or operating costs on projects in which we hold stream or royalty interests.
However, our revenue and the value of our investments are indirectly subject to hazards and risks normally associated
with developing and operating mining properties, including the following:
7
insufficient ore reserves
increased capital or operating costs
declines in the price of gold, silver, copper, nickel, or other metals
construction or development delays
operational disruptions, including those caused by pandemics or other global or local health crises
inability to obtain or maintain necessary permits
inability to replace or increase reserves as properties are mined
inability to maintain, or challenges to, exploration or mining rights
changes in mining taxes and royalties payable to governments
significant changes to environmental, permitting, or other regulatory requirements
challenges to operations, permits, or mining rights by local communities, indigenous populations,
non-government organizations, or others
litigation between operators and third parties relating to the properties
community or civil unrest, including protests and blockades
labor shortages, increased labor costs, labor disputes, strikes, or work stoppages
unavailability of mining, drilling, or other equipment
unanticipated geological conditions or metallurgical characteristics
unanticipated ground or water conditions, including lack of access to sufficient water
inadequate supplies of power or other raw materials
pit wall or tailings dam failures or underground stability issues
fires, explosions, or other industrial accidents
injuries to humans, property, or the environment
natural catastrophes and environmental hazards such as earthquakes, droughts, floods, forest fires,
hurricanes, weather, or climate events
physical effects of climate change and regulatory changes designed to reduce the effects of climate change;
uncertain political and economic environments
economic downturns
insufficient financing or inability to obtain financing
default by an operator on its obligations to us or its other creditors
insolvency, bankruptcy, or other financial difficulty of the operator
changes in laws or regulations or the enforcement of laws or regulations
The occurrence of any of these events could negatively impact operations at the properties in which we hold stream or
royalty interests, which in turn could have a material adverse effect on our revenue and cash flow.
The current COVID-19 pandemic has adversely affected, and may 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 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, including at our principal properties, have had temporary operational curtailments. There may
be additional curtailments. 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 unable to predict the nature or extent of any
impact the COVID-19 pandemic may have on our future results of operations and financial condition.
The current COVID-19 pandemic has significantly impacted the global economy and markets over the past several
months and may continue to do so, which could adversely affect our business or the trading price of our stock.
8
The global economy, metal prices, and financial markets have experienced 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 causes 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 review
opportunities to acquire new stream and royalty interests and currently 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.
A significant portion of our revenue comes from a small number of operating properties, which means that adverse
developments at these properties could have a more significant or lasting impact on our results of operations than if
our revenue was less concentrated.
Approximately 75% of our revenue for fiscal year 2020 came from six properties: Mount Milligan, Andacollo, Pueblo
Viejo, Wassa, Peñasquito, and Cortez. We expect these properties to continue to represent a significant portion of revenue
going forward. This concentration of revenue could mean that adverse developments, including any adverse decisions
made by the operators, at one or more of these properties could have a more significant or longer-term impact on our
results of operations than if our revenue was less concentrated.
Operators may fail to comply with their contractual arrangements with us or may interpret their obligations in a manner
adverse to us, which could decrease our revenue or increase our costs.
At times, operators may be unable or unwilling to fulfill their contractual obligations to us. In addition, we often rely on
the operators for the calculation of our stream deliveries or royalty payments. When we enter into new stream or royalty
interests, we attempt to secure contractual rights that allow us to monitor operators’ compliance with their obligations to
us, such as audit or access rights. However, these rights may not be sufficient to ensure compliance. In addition, our stream
and royalty agreements are often complex and may be subject to interpretation or uncertainties. Operators and other
counterparties may interpret our interests in a manner adverse to us. For these or other reasons, we could be forced to
expend resources or take legal action to enforce our contractual rights. We may not be successful in enforcing our
contractual rights. As a result, our revenue relating to the disputed interests could be adversely affected. We may also need
to expend significant monetary and human resources to defend our position, which could adversely affect our results of
operations. In addition, we may be required to make retroactive revenue adjustments in future periods relating to past
period revenue as a result of information that we learn through audit or access rights.
We often have limited access to data about operating properties, which may make it difficult for us to project or assess
the performance of our stream and royalty interests.
We often do not have the contractual right to receive production, operating, and other data from the operators of the
properties in which we hold stream and royalty interests. As a result, it may be difficult for us to project or assess the
performance of a stream or royalty interest. This could result in delays in, or reductions of, our cash flow from the amounts
that we anticipate based on the stage of development of or production from the properties, which could have an adverse
impact on our results of operations or financial condition.
Our stream and royalty interests may not result in the anticipated returns or may not otherwise ultimately benefit our
business.
We are continually reviewing opportunities to acquire new stream and royalty interests, and we have acquisition
opportunities at various stages of review. Any acquisition could be material to us. At times, we also consider opportunities
to restructure our existing stream or royalty interests where we believe the restructuring would provide a long-term benefit
to us, even though it could reduce near-term revenues or result in the incurrence of transaction-related costs. The success
9
of our stream and royalty interests is based in part on our ability to make accurate assumptions at the time of acquisition
about the amount and timing of revenue to be derived from those interests. These assumptions are based on a variety of
factors, including the geological, metallurgical, permitting, environmental, and other aspects of the project. For
development projects, we also make assumptions about the cost, timing, and conduct of development. If an operator fails
to bring a project into production as expected or if actual performance otherwise falls short of our assumptions, our revenue
derived from the project may not be sufficient to yield an adequate, or any, return on our investment. In addition, we could
be required to decrease the carrying value of our investment, which could have a material adverse effect on our results of
operations or financial condition. We cannot ensure that any acquisition or other transaction will ultimately benefit Royal
Gold.
We may not be able to acquire additional stream or royalty interests at appropriate valuations.
Our future success depends largely on our ability to acquire additional stream and royalty interests at appropriate
valuations. We may not be able to identify and complete acquisitions of additional interests at appropriate prices or terms.
We may not have sufficient liquidity or may not be able to obtain debt or equity financing to fund acquisitions due to
economic volatility, credit crises, declines in metal prices, or other reasons. Certain of our competitors are larger and have
greater financial resources than we do, and we may not be able to compete effectively against them. In addition, changes
to tax rules, accounting policies, or the treatment of stream interests by ratings agencies could make streams or royalties
less attractive to counterparties. Any of these factors could adversely affect our ability to acquire new stream or royalty
interests, which would adversely affect our future results of operations and financial condition.
Some of the agreements governing our stream and royalty interests contain terms that reduce or cap the revenue
generated from those interests.
Revenue from some of our stream and royalty interests decreases or stops after threshold production, delivery, or payment
milestones are achieved. For example, our stream interests at Pueblo Viejo, Andacollo, Wassa, and Khoemacau, and
certain of our royalty interests at other properties, contain these types of limitations. As a result, past production and
revenue relating to these interests may not be indicative of future results.
If the assumptions underlying operators’ production, reserve, or mineralized material estimates are inaccurate or if
future events cause operators to negatively adjust their previous estimates, our future revenue or the value of our
investments could be adversely affected.
The operators of the properties in which we hold stream and royalty interests generally prepare production and reserve
estimates for the properties. We do not independently prepare or verify this information. There are numerous uncertainties
inherent in these estimates, many of which are outside the operators’ control. As a result, production and reserve estimates
are subjective and necessarily depend upon a number of assumptions, including, among others, reliability of historical
data, geologic and mining conditions, metallurgical recovery, metal prices, operating costs, capital expenditures,
development and reclamation costs, mining technology improvements, and the effects of government regulation. If any
of the assumptions that operators make in connection with production or reserve estimates are incorrect, actual production
could be significantly lower than the production or reserve estimates, which could adversely affect our future revenue and
the value of our investments. In addition, if operators’ estimates with respect to the timing of production are incorrect, we
may experience variances in expected revenue from period to period.
Some operators also report publicly or to us estimates of mineralized material. The term “mineralized material” does not
indicate proven or probable reserves as defined by the SEC. Mineralized material is subject to future exploration and
development and associated risks and may never convert to future reserves. In addition, estimates of mineralized material
are subject to similar uncertainties and assumptions as discussed above with respect to mineral reserves.
Our disclosures relating to operating properties will change as a result of new SEC disclosure rules, and we continue
to face uncertainty around how some of these rules apply to a streaming and royalty company.
10
In 2018, the SEC adopted amendments to its disclosure requirements for mining companies, including streaming and
royalty companies. We are required to comply with the new rules for our fiscal year beginning on July 1, 2021. Our
disclosures about operating properties will change under the new rules, and, in some cases, we may be required to disclose
in our SEC filings more or less information than we currently disclose about these properties. There continues to be
uncertainty about how the rules will apply to a streaming and royalty company with significant investments in properties
run by international operators that are not required to report under SEC rules.
Most of our revenue is derived from properties outside the United States, and risks associated with conducting business
in foreign countries or other sovereign jurisdictions could adversely affect our results of operations or financial
condition.
Over 90% of our revenue comes from properties outside of the United States, and many of our operators are organized
outside of the United States. Within the United States and other countries, indigenous people may be recognized as
sovereign entities and may enforce their own laws and regulations. Our and operators’ activities are subject to the risks
associated with conducting business in foreign countries or other sovereign jurisdictions, including the following:
expropriation or nationalization of mining property or other government takings
seizure of mineral production
exchange and currency controls and fluctuations
limitations on foreign exchange or repatriation of earnings
restrictions on mineral production or price controls
import or export regulations, including trade wars and sanctions and restrictions on metal exports
changes in government taxation, royalties, tariffs, or duties
changes in economic, trade, diplomatic, or other relationships between countries or the effects on global and
economic conditions, the stability of global financial markets, or the ability of key market participants to
operate in certain financial markets
high rates of inflation
unfamiliar or uncertain foreign real estate, mineral tenure, safety, or environmental rules
war, crime, terrorism, sabotage, blockades, or other forms of civil unrest
uncertain political or economic environments
corruption
exposure to liabilities under anti-corruption or anti-money laundering laws
suspension of the enforcement of creditors’ or stockholders’ rights
loss of access to government-controlled infrastructure, such as roads, bridges, rails, ports, power sources, and
water supplies
These risks may limit or disrupt the development or operation of properties in which we hold stream and royalty interests
or impair our rights or interests in these properties, which could adversely affect our results of operations or financial
condition.
We and our operating properties may be subject to environmental risks, including risks associated with climate change,
which could have a material adverse effect on our financial condition or the value of our investments.
Mining operations are subject to extensive laws and regulations governing land use and the protection of the environment.
In addition, many countries have implemented laws and regulations designed to address the effects of climate change,
including rules to reduce industrial emissions and increase energy efficiency. These laws and regulations are constantly
evolving in a manner generally expected to result in stricter standards, more liability, and increased costs. Compliance
with these laws and regulations can impose substantial costs and burdens on operators of properties subject to our interests.
In addition, an operator’s failure to comply with these laws and regulations could result in injunctive action, orders to
11
suspend or cease operations, damages, or civil or criminal penalties on the operator. If any of these events were to occur,
our revenue or the value of our investment could be adversely affected.
Further, due to expansive environmental laws, it is possible that we could become subject to environmental liabilities for
historic periods during which we owned or operated properties or relative to our current ownership interests in lease and
underlying unpatented mining claims. These liabilities could have a material adverse effect on our results of operations or
financial condition.
Unknown defects in our stream or royalty interests or the bankruptcy or insolvency of an operator could have a material
adverse effect on the value of our investments.
Despite our due diligence practices, it is possible that unknown defects or problems will exist relating to the existence,
validity, enforceability, terms, or geographic extent of our stream and royalty interests. Similarly, stream interests and, in
many jurisdictions, royalty interests are contractual in nature, rather than interests in land. As a result, these interests may
not survive a bankruptcy or insolvency of an operator. We often do not have the protection of security interests that could
help us recover all or part of our investment in a stream or royalty interest in the event of an operator’s bankruptcy or
insolvency. If our stream or royalty interests were set aside through judicial or administrative proceedings, the value of
our investments could be adversely affected.
Anti-corruption laws and regulations could subject us to liability and require us to incur costs.
We are subject to the U.S. Foreign Corrupt Practices Act (the "FCPA") and other laws that prohibit improper payments or
offers of payments to third parties, including foreign governments and their officials, for the purpose of obtaining or
retaining business. In some cases, we invest in mining operations in jurisdictions that have experienced corruption in the
past. Our international investment activities create the risk of unauthorized payments or offers of payments in violation of
the FCPA or other anti-corruption laws by one of our employees or agents in violation of our policies. In addition, the
operators of the properties in which we own stream and royalty interests may fail to comply with anti-corruption laws and
regulations. Although we are passive investors in these properties, enforcement authorities could deem us to have some
culpability for the operators’ actions. Any violations of the FCPA or other anti-corruption laws could result in significant
civil or criminal penalties to us and could have an adverse effect on our reputation.
A significant disruption to our information technology systems could adversely affect our business and operating
results.
We rely on a variety of information technology and automated operating systems to manage and support our operations.
For example, we depend on our information technology systems for financial reporting, operational and investment
management, and email. These systems contain our proprietary business information and personally identifiable
information of our employees. The proper functioning of these systems and the security of this data is critical to the
efficient operation and management of our business. In addition, these systems could require modifications or upgrades as
a result of technological changes or growth in our business. These changes could be costly and disruptive to our operations
and could impose substantial demands on management time. Our systems, and those of third-party providers, could be
vulnerable to damage or disruption caused by catastrophic events, power outages, natural disasters, computer system or
network failures, viruses or malware, physical or electronic break-ins, unauthorized access, or cyber-attacks. Any security
breach could compromise our networks, and the information stored on them could be improperly accessed, disclosed, lost,
or stolen. The steps that we have taken to secure our systems and electronic information may not be adequate to prevent a
disruption. Any unauthorized activities could disrupt our operations, damage our reputation, or result in legal claims or
proceedings, any of which could adversely affect our business, reputation, or operating results.
We depend on the services of our executives and other key employees, and the loss of one or more members of our
management team could harm our business.
12
We believe that our success depends on retaining qualified executives and other key employees. Our management team
has significant industry and company-specific experience. If we are unsuccessful at retaining or attracting qualified
personnel, our business could be disrupted and our ability to achieve our business objectives and grow effectively could
be jeopardized. We do not currently maintain key person life insurance on any of our directors or employees.
Current and future indebtedness could adversely affect our financial condition and impair our ability to operate our
business.
As of June 30, 2020, we had $305 million outstanding and $695 million available under our revolving credit facility. We
may incur additional indebtedness in the future. Current and future indebtedness could have important consequences,
including the following:
require us to dedicate a substantial portion of our cash flow from operations to service indebtedness, thereby
reducing the availability of cash flow to fund acquisitions, working capital, or dividends
limit our flexibility in planning for, or reacting to, changes in our business
restrict us from exploiting business opportunities
make us more vulnerable to a downturn in our business or the economy
place us at a competitive disadvantage compared to our competitors with less indebtedness
require the consent of our existing lenders to incur additional indebtedness
limit our ability to borrow additional funds for acquisitions, working capital, or debt-service requirements
Our credit facility contains financial and other restrictive covenants. For example, the agreement includes financial
covenants that require us to maintain a maximum leverage ratio and a minimum interest coverage ratio (as these terms are
defined under the agreement). These covenants could limit our ability to engage in activities that are in our long-term best
interests. Our failure to comply with these covenants would result in an event of default that, if not waived, could result in
the acceleration of all outstanding indebtedness. Our credit facility expires in June 2024. In the future, we may be unable
to obtain new financing or refinancing on acceptable terms.
The proposed phase out of the London Interbank Offered Rate ("LIBOR") could adversely affect our results of
operations or financial condition.
In 2017, the United Kingdom's Financial Conduct Authority (the authority that regulates LIBOR) announced that it intends
to phase out LIBOR by the end of calendar 2021. The Federal Reserve Board has convened a group of private-market
participants to identify a proposed alternative rate and address the transition from LIBOR to an alternative rate. In 2019,
the FASB proposed guidance that would help facilitate the market transition from existing reference rates to alternative
rates. Borrowings under our revolving credit facility bear interest at LIBOR plus an applicable margin. Under the
agreement governing the facility, if LIBOR is phased out, we are required to negotiate in good faith to establish an
alternative rate under the facility. There is currently no definitive information regarding the future use of LIBOR or a
replacement rate. We are unable to predict whether and to what extent a LIBOR change would impact our future results
of operations and financial condition.
Risks Related to our Common Stock
Our stock price may continue to be volatile, and you could lose all or part of your investment.
The market price of our common stock has fluctuated in the past and may continue to do so in the future. For example,
during fiscal year 2020, the market price of our common stock ranged from a low of $59.78 to a high of $139.63. Many
13
factors unrelated to operating performance can contribute to volatility in the market price of our common stock, including
the following:
economic, market, or political conditions, including the effects of COVID-19
market prices of gold, silver, copper, nickel, and other metals
developments relating to operating properties
interest rates and expectations about inflation
currency values
credit market conditions
These market fluctuations, regardless of cause, may materially and adversely affect our stock price. As a result, you could
lose all or part of your investment.
We may issue additional equity securities, which would dilute our existing stockholders and reduce our per-share
financial measures and could reduce the market price of our common stock.
We may issue additional equity in the future in connection with acquisitions, strategic transactions, or for other purposes.
If we issue additional equity securities, our existing stockholders would be diluted and our per-share financial measures
would be reduced. In addition, shares of common stock that we issue in connection with an acquisition may not be subject
to resale restrictions. The market price of our common stock could decline if our stockholders sell substantial amounts of
our common stock or are perceived by the market as intending to sell these shares other than in an orderly manner.
We may change our practice of paying dividends, which could reduce the value of your investment.
We have paid a cash dividend on our common stock since calendar year 2000. Our board of directors has discretion in
determining whether to declare a dividend based on a number of factors, including metal prices, economic or market
conditions, earnings, cash flow, financial condition, and funding requirements for future opportunities or operations. In
addition, corporate law limitations or future contractual restrictions could limit our ability to pay dividends in the future.
If our board of directors reduces or eliminates future dividends, our stock price could fall, and the success of your
investment would depend largely on any future stock price appreciation. We have increased our dividend in prior years.
There can be no assurance, however, that we will continue to do so or that we will pay any dividends.
Provisions of Delaware law and our organizational documents could delay or prevent a third party from acquiring us.
The anti-takeover provisions of Delaware law impose barriers to the ability of a third party to acquire control of us, even
if a change of control would be beneficial to our existing stockholders. In addition, our certificate of incorporation and
bylaws contain provisions that may make it more difficult for a third party to acquire control of us without the approval of
our board of directors. These provisions may make it more difficult or expensive for a third party to acquire a majority of
our outstanding common stock. Among other things, these provisions provide for the following:
allow our board of directors to issue shares of common stock and preferred stock without stockholder approval,
except as may be required by Nasdaq rules
allow our board of directors to establish the rights and preferences of authorized and unissued preferred stock
provide for a classified board, whereby our board of directors is divided into three classes of directors serving
staggered three-year terms
prohibit stockholders from calling special meetings of stockholders
require advance notice of stockholder proposals and related information
require vacancies and newly created directorships on the board of directors to be filled only by affirmative vote
of a majority of the directors then serving on the board
These provisions could increase the cost of acquiring us or discourage a third party from acquiring us or removing
incumbent management, which could decrease the value of your investment.
14
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
We do not own or operate the properties on which we hold stream or royalty interests, except for our interest in the Peak
Gold JV, and therefore much of the information disclosed in this Form 10-K regarding these properties is provided to us
by the operators. For example, the operators of certain properties provide us information regarding metals production,
estimates of mineral reserves and additional mineralized material and production estimates. A list of our producing and
development stage streams and royalties, as well their respective reserves, are summarized in Table 1 “Operators’
Estimated Proven and Probable Gold Reserves” below within this Item 2. More information is available to the public
regarding certain properties in which we have stream or royalty interests, including reports filed with the SEC or with the
Canadian securities regulatory agencies available at www.sec.gov or www.sedar.com, respectively.
We manage our business under two reportable segments, consisting of the acquisition and management of stream interests
and the acquisition and management of royalty interests. The description of our principal streams and royalties set forth
below includes the location, operator, stream or royalty rate, access and any material current developments at the property.
For any reported production amounts discussed below, we consider reported production to relate to the amount of metal
sales subject to our stream and royalty interests. Please refer to Item 7, MD&A, for discussion on production estimates,
historical production and revenue for our principal properties. The map below illustrates the location of our principal
producing stage properties.
Principal Producing Properties
We consider both historical and future potential revenues to determine which stream and royalty interests in our portfolio
are principal to our business. Estimated future potential revenues from producing properties are based on a number of
factors, including reserves subject to our stream and royalty interests, production estimates, feasibility studies, technical
reports, metal price assumptions, mine life, legal status and other factors and assumptions, any of which could change and
could cause us to conclude that one or more of such stream and royalty interests are no longer principal to our business.
Currently, we consider the properties discussed below (listed alphabetically by stream and royalty interest) to be principal
to our business. Based on the factors discussed above, we no longer consider Rainy River to be a principal property.
15
Stream Interests
Andacollo (Region IV, Chile)
The Company’s wholly owned subsidiary, RGLD Gold AG (“RGLD Gold”) owns the right to purchase 100% of the gold
produced from the Andacollo copper-gold mine until 900,000 ounces of payable gold have been delivered, and 50%
thereafter. The cash purchase price equals 15% of the monthly average gold price for the month preceding the delivery
date for all gold purchased. As of June 30, 2020, approximately 237,100 ounces of payable gold have been delivered to
RGLD Gold.
Andacollo is an open-pit mine and milling operation located in central Chile, Region IV in the Coquimbo Province and is
operated by Compañía Minera Teck Carmen de Andacollo (“CMCA”), a 90% owned subsidiary of Teck Resources
Limited (“Teck”). The Andacollo mine is located in the foothills of the Andes Mountains approximately 1.5 miles
southwest of the town of Andacollo. The regional capital of La Serena and the coastal city of Coquimbo are approximately
34 miles northwest of the Andacollo mine by road, and Santiago is approximately 215 miles south by air. Access to the
mine is provided by Route 43 (R-43) south from La Serena to El Peñon. From El Peñon, D-51 is followed east and
eventually curves to the south to Andacollo. Both R-43 and D-51 are paved roads.
Stream deliveries from Andacollo were approximately 43,900 ounces of gold during the fiscal year ended June 30, 2020,
compared to approximately 51,900 ounces of gold during the fiscal year ended June 30, 2019. Stream deliveries
decreased as a result of the temporary suspension of operations during the quarter ended December 31, 2019, due to a
workers’ strike from October 14, 2019 through December 5, 2019, which was resolved with the ratification of a new 36-
month collective agreement.
16
Teck expects grades to continue to decline towards reserve grades in calendar year 2020 and future years. The current life
of mine for Andacollo is expected to continue until calendar year 2035. Additional permits or permit amendments will be
required to execute the life of mine plan.
Khoemacau Project (Botswana)
In February 2019, RGLD Gold entered into a silver stream with Khoemacau Copper Mining (Pty.) Limited (“KCM”) for
the purchase of silver produced from the Khoemacau Project (“Khoemacau”). Under the purchase and sale agreement,
subject to the satisfaction of certain conditions, RGLD Gold will make advance payments totaling $212 million toward
the purchase of 80% of the silver produced from Khoemacau until certain delivery thresholds are met (the “Base Silver
Stream”). At KCM’s option and subject to various conditions, RGLD Gold will make up to an additional $53 million in
advance payments for up to the remaining 20% of the silver produced from Khoemacau (the “Option Silver Stream”). The
stream rate will drop to 40% of silver produced from Khoemacau following delivery to RGLD Gold of 32 million silver
ounces under the Base Silver Stream, or to 50% of the silver produced from Khoemacau following delivery of 40 million
silver ounces to RGLD Gold should KCM exercise the entire Option Silver Stream. RGLD Gold will pay a cash price
equal to 20% of the spot silver price for each ounce delivered under the Base Silver Stream and Option Silver Stream;
however, if KCM achieves mill expansion throughput levels above 13,000 tonnes per day (30% above current mill design
capacity), RGLD Gold will pay a higher ongoing cash price under the Base Silver Stream and Option Silver Stream for
silver ounces delivered in excess of specific annual thresholds.
Khoemacau is a copper-silver development project located within the North West and Ghanzi Districts of Botswana owned
by KCM. The license area is generally southwest of the town of Maun and northeast of the town of Ghanzi. Khoemacau
is accessed from the city of Maun, approximately 40 miles southwest to the town of Toteng on a major travel route,
Botswana’s A3 highway, a paved road and then approximately 16 miles on gravel road to reach the Boseto plant site. The
Zone 5 mining area is connected to the Boseto plant by a 20-mile gravel road.
According to KCM, progress continued at Khoemacau during the June 2020 quarter and the project reached approximately
54% of construction completion as of June 30, 2020 with 81% of the capital committed. According to KCM, activities are
focused on refurbishment of the Boseto mill, underground development, completion of accommodation, power and water
infrastructure at Zone 5 and completing construction of the haul road between Zone 5 and the Boseto mill. Also, according
to KCM, underground development has cumulatively advanced 2,360 meters in the five declines, which is in line with
planned development rates.
On July 5, 2020, RGLD Gold made its fourth advance payment of $11.1 million, which brings the total contribution to
$146.8 million. RGLD Gold expects to commit approximately $35 - $45 million during the remainder of calendar year
2020, and assuming the midpoint of this range, the total remaining commitment in calendar year 2021 is expected to range
from approximately $25 million for the Base Silver Stream up to approximately $78 million should KCM elect to fully
exercise the Option Silver Stream. Further payments are subject to certain conditions and are scheduled to be made on a
quarterly basis using an agreed formula and certification process as project spending progresses.
According to KCM, although a six-month state of emergency has been declared by the Government of Botswana to help
prevent the spread of COVID-19, mining has been designated an “essential service” and general development activity at
Khoemacau is continuing. However, due to the impacts experienced from travel restrictions, some activities have been
slowed or rescheduled. Barring any potential further impacts caused by COVID-19 considerations, we now expect the
first shipment of concentrate to occur late in the third calendar quarter of 2021.
Mount Milligan (British Columbia, Canada)
RGLD Gold owns the right to purchase 35% of the payable gold and 18.75% of the payable copper produced from the
Mount Milligan copper-gold mine in British Columbia, Canada, which is operated by an indirect subsidiary of Centerra
Gold Inc. (“Centerra”). The cash purchase price for gold is equal to the lesser of $435 per ounce, with no inflation
adjustment, or the prevailing market price when purchased. The cash purchase price for copper is 15% of the spot price.
As of June 30, 2020, approximately 516,500 ounces of payable gold and 34.71 million pounds of payable copper have
been delivered to RGLD Gold.
17
Mount Milligan is an open-pit mine and is located within the Omenica Mining Division in North Central British Columbia,
approximately 96 miles northwest of Prince George, 53 miles north of Fort St. James, and 59 miles west of Mackenzie.
The Mount Milligan project is accessible by commercial air carrier to Prince George, British Columbia, then by vehicle
from the east via Mackenzie on the Finlay Philip Forest Service Road and the North Philip Forest Service Road, and from
the west via Fort St. James on the North Road and Rainbow Forest Service Road. Road travel to the Mount Milligan
property site is 482 miles from Prince Rupert and 158 miles from Prince George.
Gold stream deliveries from Mount Milligan were approximately 59,900 ounces during the fiscal year ended June 30,
2020, compared to approximately 68,500 ounces during the fiscal year ended June 30, 2019. The decrease reflects
differences in the timing of shipments and settlements during the periods, in addition to lower gold grades processed and
lower gold recovery, slightly offset by increased tonnage processed.
Copper stream deliveries from Mount Milligan were approximately 12.7 million pounds during the fiscal year ended
June 30, 2020, compared to approximately 9.1 million pounds during the fiscal year ended June 30, 2019. Increased
deliveries resulted from differences in the timing of shipments and settlements during the periods, in addition to higher
tonnage and higher copper grades processed, slightly offset by lower copper recovery.
On March 26, 2020, Centerra published an updated National Instrument 43-101 (“NI 43-101”) technical report for the
Mount Milligan mine, which provided 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.
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 technical 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).
Significant reductions in proven and probable reserves or mineralized material are indicators of potential impairment for
our stream and royalty interests. As part of our regular asset impairment analysis during the quarter ended March 31, 2020,
we determined that an impairment of our stream interest at Mount Milligan was not necessary as (i) the 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 updated gold and copper depletion rates that remain well below current
and long-term consensus gold and copper prices. Due to the reduction in gold and copper reserves, as reported by Centerra,
the depletion rate of our investment at Mount Milligan increased from $402 to $764 per ounce of gold and from $0.81 to
$1.48 per pound of copper.
On April 1, 2020, Centerra announced that reductions of manpower and throughput at Mount Milligan would occur as a
result of actions implemented to combat the COVID-19 pandemic. Centerra has since reported that workforce numbers
returned to normal over the month of May resulting in mining and plant tonnages returning to planned levels. According
to Centerra, process plant throughput averaged approximately 60% of target levels and mining operations experienced a
four week partial shutdown during the reduction period, and during April, the process plant was shut down for eleven
days to perform routine maintenance and reline the SAG mill.
18
Centerra also reported that stored water inventory at Mount Milligan, which is critical to the ability to process ore through
the mill on a sustainable basis, was in excess of six million cubic meters as at June 30, 2020. Centerra reported that
spring water pumping started in April, and substantial snowpack and a wet spring led to volumes pumped as of the end
of June that exceeded those of the entire 2019 pumping season. In addition, Centerra reported that Mount Milligan
continued to access ground water from the Lower Rainbow Valley wellfield and other groundwater wells near the tailings
storage facility during the quarter ended June 30, 2020. Centerra also reported that it continued exploration activities
focused on extending the groundwater capacity in the vicinity of the existing infrastructure, and these activities will
continue for the remainder of 2020. Further, Centerra reported that it continues to pursue a longer-term solution to its
water requirements at Mount Milligan.
On July 31, 2020, Centerra confirmed that there is no change to the previously issued production guidance for Mount
Milligan for calendar year 2020 of 140,000 to 160,000 payable ounces of gold and 80 to 90 million pounds of copper.
Pueblo Viejo (Sanchez Ramirez, Dominican Republic)
RGLD Gold owns the right to purchase 7.5% of Barrick’s interest in the gold produced from the Pueblo Viejo mine until
990,000 ounces of gold have been delivered, and 3.75% thereafter. The cash purchase price for gold is 30% of the spot
price of gold per ounce delivered until 550,000 ounces of gold have been delivered, and 60% of the spot price of gold per
ounce delivered thereafter. RGLD Gold also owns the right to purchase 75% of Barrick’s interest in the silver produced
from the Pueblo Viejo mine, subject to a minimum silver recovery of 70%, until 50 million ounces of silver have been
delivered, and 37.5% thereafter. The cash purchase price for silver is 30% of the spot price of silver per ounce delivered
until 23.1 million ounces of silver have been delivered, and 60% of the spot price of silver per ounce delivered thereafter.
As of June 30, 2020, approximately 226,400 ounces of payable gold and 7.9 million ounces of payable silver have been
delivered to RGLD Gold.
The Pueblo Viejo mine is located in the province of Sanchez Ramirez, Dominican Republic, approximately 60 miles
northwest of Santo Domingo, and is owned by a joint venture in which Barrick holds a 60% interest and is responsible for
operations, and in which Newmont Corporation holds a 40% interest. Pueblo Viejo is accessed from Santo Domingo by
traveling northwest on Autopista Duarte, Highway #1, approximately 48 miles to Piedra Blanca and proceeding east for
approximately 14 miles on Highway #17 to the gatehouse for Pueblo Viejo. Both Highway #1 and Highway #17 are paved.
Gold stream deliveries from Pueblo Viejo were approximately 45,000 ounces of gold during the fiscal year ended June 30,
2020, compared to approximately 41,200 ounces of gold during the fiscal year ended June 30, 2019. Silver stream
deliveries were approximately 1.7 million ounces of silver during the fiscal year ended June 30, 2020, compared to
approximately 2.0 million ounces of silver during the fiscal year ended June 30, 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 at Pueblo Viejo to beyond calendar
year 2040. Barrick estimates that the process plant and tailings expansion project could significantly increase throughput
and allow the mine to maintain average annual gold production of approximately 800,000 ounces after calendar year 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).
Barrick expects the proportion of lower grade stockpile ore in the feed blend to steadily increase until the mine expansion
pits are fully developed as part of the decision on the proposed plant and tailings expansion project. Barrick also reported
lower gold production during the June 2020 quarter as a result of a planned maintenance shutdown. For calendar year
2020, Barrick indicated production attributable to their interest at Pueblo Viejo is expected to be between 530,000 and
580,000 ounces of gold.
Wassa (Western Region, Ghana)
RGLD Gold owns the right to purchase 10.5% of the gold produced from the Wassa, Prestea and Bogoso mines, operated
by Golden Star Resources Ltd. (“Golden Star”), until an aggregate 240,000 ounces have been delivered. Once the
applicable delivery threshold is met, the stream percentage will decrease to 5.5%. The cash purchase price for gold is 20%
19
of the spot price per ounce delivered until 240,000 ounces of gold have been delivered, and 30% of the spot price per
ounce delivered thereafter. As of June 30, 2020, approximately 110,500 ounces of payable gold have been delivered from
Wassa, Prestea and Bogoso mines, of that 69,700 ounces of payable gold have been delivered from Wassa to RGLD Gold.
The Wassa underground mine and oxide ore mill are located near the village of Akyempim in the Wassa East District, in
the Western Region of Ghana, approximately 50 miles north of Cape Coast and 93 miles west of the capital Accra. The
main access to the site is from the east, via the Cape Coast to Twifo-Praso road, then over the combined road-rail bridge
on the Pra River. There is also an access road from Takoradi in the south via Mpohor. An airport at Takoradi is capable
of handling jet aircraft and is serviced by several commercial flights each day.
Stream deliveries from Wassa were approximately 16,500 ounces of gold during the fiscal year ended June 30, 2020,
compared to approximately 16,600 ounces of gold during the fiscal year ended June 30, 2019.
On March 27, 2020, Golden Star reported that deep drilling in calendar year 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 year 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.
On July 27, 2020, Golden Star announced that it had signed a binding agreement with Future Global Resources Limited
(“FGR”) for the sale of the Prestea and Bogoso mines. This transaction will require the separation of the RGLD Gold
stream agreement into separate stream agreements for each of Wassa and Prestea/Bogoso, which is conditional on, among
other things, the approval of the board of directors of Royal Gold. Further, on July 28, 2020, Golden Star announced that,
if approved, the separated Wassa stream agreement would require Golden Star to deliver 10.5% of the gold produced from
Wassa in return for a cash purchase price for gold of 20% of the spot price per ounce delivered, until the delivery of
240,000 ounces, after which the obligation would decrease to 5.5% of the gold produced from Wassa in return for a cash
purchase price for gold of 30% of the spot price per ounce delivered.
On July 28, 2020, Golden Star reported calendar year 2020 gold production guidance for Wassa of between 165,000 to
170,000 ounces, up from the previous guidance range of 155,000 to 165,000 ounces.
Royalty Interests
Cortez (Nevada, USA)
Cortez is a series of large open-pit and underground mines, utilizing mill and heap leach processing, which are operated
by Nevada Gold Mines LLC (“NGM”), a joint venture between Barrick and Newmont Corporation (“Newmont”) with
respect to their Nevada operations. The operation is located approximately 60 air miles southwest of Elko, Nevada, in
Lander County. The site is reached by driving west from Elko on Interstate 80 approximately 46 miles and proceeding
south on State Highway 306 approximately 23 miles. Our royalty interest at Cortez applies to the Pipeline and South
Pipeline deposits, part of the Gap pit and the Crossroads deposit.
The royalty interests we hold at Cortez include:
(a)
(b)
Reserve Claims (“GSR1”). This is a sliding-scale GSR royalty for all products from an area originally
known as the “Reserve Claims,” which includes the majority of the Pipeline and South Pipeline deposits.
The GSR1 royalty rate is tied to the price of gold and does not include indexing for inflation or deflation.
The GSR1 royalty rate is 5.0% at a gold price of $470 per ounce and higher.
GAS Claims (“GSR2”). This is a sliding-scale GSR royalty for all products from an area outside of the
Reserve Claims, originally known as the “GAS Claims,” which encompasses approximately 50% of the
Gap deposit and all of the Crossroads deposit. The GSR2 royalty rate is tied to the gold price, without
20
indexing for inflation or deflation. The GSR2 royalty rate is 5.0% at a gold price of $470 per ounce
and higher.
(c)
(d)
Reserve and GAS Claims Fixed Royalty (“GSR3”). The GSR3 royalty is a fixed rate GSR royalty of
0.7125% and covers the same cumulative area as is covered by our two sliding-scale GSR royalties,
GSR1 and GSR2, except mining claims that comprise the undeveloped Crossroads deposit.
Net Value Royalty (“NVR1”) and Net Value Royalty (Crossroads) (“NVR1C”). The NVR1 royalty is a
fixed royalty of 4.91% NVR that covers the area of the GAS Claims, excluding the majority of the
Crossroads deposit. The NVR1C royalty, which covers the majority of the Crossroads deposit, is a fixed
royalty of 4.52% NVR.
On average, above a gold price of $470 per ounce after the relevant deductions, the combined royalty interests of GSR1,
GSR2, GSR3, NVR1 and NVR1C are equivalent to an approximate 8.2% gross smelter return royalty to Royal Gold.
We also own three other royalties in the Cortez area where there is currently no production and no reserves attributed to
these royalty interests.
Production attributable to our royalty interest at Cortez increased to 173,300 ounces of gold over the prior fiscal year of
96,700 ounces of gold, as a result of production ramping up at the Crossroads deposit, which is subject to our NVR1
(Crossroads) and GSR2 royalty interests and portions of the NVR1 and GSR3 royalty interests.
During the quarter ended March 31, 2020, Barrick provided us 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 our 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 our interests is expected to be
approximately 175,000 ounces in calendar year 2020, increasing to an approximate average of 425,000 ounces from
calendar 2021 through calendar 2026. The expected production increase from calendar year 2020 to calendar year 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.
Peñasquito (Zacatecas, Mexico)
We own a production payment equivalent to a 2.0% NSR royalty on all metal production from the Peñasquito open-pit
mine, located in the State of Zacatecas, Mexico, and operated by a subsidiary of Newmont. The Peñasquito mine is located
approximately 17 miles west of the town of Concepción del Oro, Zacatecas, Mexico. The mine, composed of two main
deposits called Peñasco and Chile Colorado, hosts large gold, silver, zinc and lead reserves. The deposits contain both
oxide and sulfide material, resulting in heap leach and mill processing. There are two access routes to the site. The first
is via a turnoff from Highway 54 onto the State La Pardita road, then onto the Mazapil to Cedros State road. The second
access is via the Salaverna by-pass road from Highway 54 approximately 16 miles south of Concepción del Oro. There is
a private airport on site and commercial airports in the cities of Saltillo, Zacatecas and Monterrey.
For fiscal 2020, gold production attributable to our royalty interest at Peñasquito increased to 312,200 ounces over the
prior fiscal year of 158,800 ounces; silver production increased to 27.8 million ounces over the prior fiscal year of 16.4
million ounces; lead increased to 182.3 million pounds over the prior fiscal year of 117.4 million pounds; and zinc
increased to 393.9 million pounds over the prior fiscal year of 216.2 million pounds.
The increase in production is attributable to higher grades and recoveries and tons processed compared to the prior fiscal
year, as well as the suspension of operations during the June 2019 quarter, resulting in significantly lower sales from
Peñasquito during the prior fiscal year.
21
On April 22, 2020, Newmont announced Peñasquito reached a definitive agreement with the San Juan de Cedros
community (one of 25 neighboring communities) in Zacatecas, Mexico on land use, water availability, infrastructure and
social investments, which includes access to 10,000 hectares for exploration and operational purposes, and resolves all
outstanding issues with the community.
On May 5, 2020, Newmont announced that operations at Peñasquito were placed on care and maintenance on April 12
due to a Mexican federal government decree to temporarily suspend all non-essential activities in Mexico as part of a
nationwide effort to help slow the spread of COVID-19. According to Newmont, a phased ramp-up began in mid-May
with milling and mining activities ramping up at the beginning of June, and production in the plant was back to pre-
COVID levels by mid-June.
On July 30, Newmont provided full year 2020 production guidance for Peñasquito of 510,000 ounces of gold, 28 million
ounces of silver, 360 million pounds of zinc, and 190 million pounds of lead.
Reserve Information
Table 1 below summarizes proven and probable reserves for gold, silver, copper, nickel, zinc, lead and cobalt that are
subject to our stream and royalty interests as of December 31, 2019, as reported to us by the operators of the mines.
Properties are currently in production unless noted as development (“DEV”) within the table. The exploration royalties we
own do not contain proven and probable reserves as of December 31, 2019. Please refer to pages 22-26 for the footnotes
to Table 1.
22
Operators’ Estimated Proven and Probable Gold Reserves
As of December 31, 2019(1)
Gold(2)
PROVEN +
PROBABLE
Average
PROPERTY
Bald Mountain
Cortez GSR1
Cortez GSR2
Cortez GSR3
Cortez NVR1
Cortez NVR1C
Gold Hill
Goldstrike (SJ Claims)
Hasbrouck Mountain (DEV)
Leeville
Marigold
Pinson (DEV)
Relief Canyon (DEV)
Robinson
Ruby Hill
Twin Creeks
Wharf
Back River - Goose Lake (DEV)
Canadian Malartic
Holt
Kutcho Creek (DEV)
LaRonde Zone 5
Mount Milligan
Pine Cove
Rainy River
Williams
Dolores
Peñasquito
Andacollo
La Fortuna (DEV)
Don Mario
Don Nicolas
Pueblo Viejo
El Limon
La India (DEV)
Mara Rosa (DEV)
Balcooma
Gwalia Deeps
Jaguar Nickel (DEV)
King of the Hills
Meekatharra
South Laverton
Southern Cross
Wembley Durack (DEV)
Inata
Taparko(26)
Prestea
Wassa
ROYALTY/METAL STREAM
OPERATOR
LOCATION
Nevada Gold Mines LLC
United States
West Vault Mining/Clover Nevada United States
United States
Nevada Gold Mines LLC
United States
SSR Mining
United States
Waterton Precious Metals Fund
Americas Silver
KGHM
Waterton Precious Metals Fund
Nevada Gold Mines LLC
Coeur Mining
Sabina Gold & Silver
Agnico Eagle/Yamana
Kinross
Nevada Gold Mines LLC
Nevada Gold Mines LLC
Nevada Gold Mines LLC
Nevada Gold Mines LLC
Nevada Gold Mines LLC
Kinross
1.75% - 2.5% NSR(7)
0.40 - 5.0% GSR(8)
0.40 - 5.0% GSR(8)
0.71% GSR
4.91% NVR
4.52% NVR (9)
1.0 - 2.0% NSR(10,11)
0.6 - 0.9% NSR(12)
0.9% NSR
1.5% NSR
1.8% NSR
2.0% NSR
3.0% NSR(13,14)
2.94% NSR(13,15)
3.0% NSR(16)
3.0% NSR
3.0% NSR
2.0% GPR
0.0 - 2.0% GSR(17)
1.95% GSR(18)
1.0 - 1.5% NSR(19)
0.00013 x quarterly avg. gold price Kirkland Lake
2.0% NSR
2.0% NSR
35% of payable gold(20)
7.5% NPI
6.5% of gold produced(21)
0.97% NSR
3.25% NSR
2.0% NSR
100% of payable gold(22)
1.4% NSR(23)
3.0% NSR
2.0% NSR
7.5% of payable gold(24)
3.0% NSR
3.0% NSR
2.75% NSR
1.5% NSR
1.5% NSR
1.5% NSR
1.5% NSR
1.5% NSR(25)
1.5% NSR
1.5% NSR
1.0% NSR
2.5% GSR
2.0% GSR
10.5% of payable gold (27)
10.5% of payable gold (27)
Capstone Mining
Agnico Eagle
Centerra Gold
Anaconda Mining
New Gold
Barrick
Pan American
Newmont
Teck
Newmont
Orvana
Cerrado Gold
Barrick/Newmont
Calibre
Condor Gold
Amarillo Gold
Consolidated Tin
St. Barbara
Washington H. Soul Pattinson
Red 5
Westgold Resources
Saracen
Shandong Tianye
Westgold Resources
Balaji Group
Nord Gold
Golden Star Resources
Golden Star Resources
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Mexico
Mexico
Chile
Chile
Bolivia
Argentina
Dominican Republic
Nicaragua
Nicaragua
Brazil
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Burkina Faso
Burkina Faso
Ghana
Ghana
Tons of
Ore
(M)
18.950
17.277
78.662
26.714
16.065
69.225
4.897
27.254
35.616
4.729
173.425
7.557
20.665
84.310
1.726
0.768
32.850
13.623
43.531
4.829
11.509
10.237
210.572
0.979
85.507
18.017
48.171
486.670
346.814
198.103
2.240
1.327
78.264
2.253
7.606
26.235
0.762
14.007
1.323
39.683
5.524
25.144
10.538
0.362
6.352
6.504
0.856
18.406
Gold
Grade
(opt)
0.023
0.020
0.040
0.017
0.016
0.044
0.016
0.081
0.017
0.288
0.014
0.064
0.022
0.005
0.014
0.060
0.026
0.184
0.028
0.116
0.009
0.067
0.011
0.037
0.031
0.059
0.024
0.017
0.003
0.013
0.054
0.148
0.072
0.127
0.089
0.034
0.002
0.170
0.008
0.036
0.082
0.071
0.096
0.055
0.054
0.074
0.353
0.077
RESERVES(3)(4)(5)
Gold
Contained
Ozs(6)
(M)
0.436
0.347
3.168
0.466
0.262
3.049
0.080
2.218
0.588
1.364
2.356
0.483
0.451
0.413
0.024
0.046
0.855
2.503
1.239
0.562
0.100
0.686
2.407
0.036
2.636
1.068
1.178
8.080
1.040
2.674
0.121
0.196
5.670
0.286
0.675
0.902
0.001
2.380
0.010
1.448
0.454
1.786
1.010
0.020
0.340
0.483
0.302
1.410
23
PROPERTY
Gold Hill
Hasbrouck Mountain
(DEV)
Relief Canyon (DEV)
Kutcho Creek (DEV)
Rainy River
Dolores
Peñasquito
Don Mario
Don Nicolas
Pueblo Viejo
La India (DEV)
Balcooma
Jaguar Nickel (DEV)
Khoemacau (DEV)
PROPERTY
Robinson
Kutcho Creek (DEV)
Mount Milligan
Voisey’s Bay
Don Mario
La Fortuna (DEV)
Balcooma
Jaguar Nickel (DEV)
Las Cruces
PROPERTY
Peñasquito
Balcooma
Operators’ Estimated Proven and Probable Silver Reserves
As of December 31, 2019(1)
Silver(28)
ROYALTY/METAL STREAM
1.0 - 2.0% NSR(10,11)
0.6 - 0.9% NSR(12)
Kinross
OPERATOR
LOCATION
United States
PROVEN +
PROBABLE
RESERVES
(3)(4)(5)
Silver
Average
Tons of Silver Contained
Grade Ozs(6)
Ore
(opt)
(M)
(M)
1.230
4.897 0.251
1.5% NSR
3.0% NSR(16)
2.0% NSR
60% of silver produced (21)
2.0% NSR
2.0% NSR
3.0% NSR
2.0% NSR
75% of payable silver(24)
3.0% NSR
1.5% NSR
1.5% NSR
80% of payable silver(29)
West Vault Mining/Clover Nevada United States
United States
Americas Silver
Canada
Kutcho Copper
Canada
New Gold
Mexico
Pan American
Mexico
Newmont
Bolivia
Orvana
Argentina
Cerrado Gold
Dominican Republic
Barrick/Newmont
Condor Gold
Nicaragua
Australia
Consolidated Tin
Australia
Washington H. Soul Pattinson
Botswana
Khoemacau Copper Mining
35.616 0.297
20.665 0.037
11.509 1.008
85.507 0.073
48.171 0.762
486.670 0.969
2.240 1.438
1.327 0.302
78.264 0.469
7.606 0.156
0.762 0.498
1.323 2.268
33.521 0.567
10.569
0.760
11.600
6.266
36.700
471.360
3.221
0.401
36.700
1.185
0.380
3.000
19.011
Operators’ Estimated Proven and Probable Base Metal Reserves
As of December 31, 2019(1)
Copper(30)
PROVEN +
PROBABLE
RESERVES(3)(4)(5)
Average
ROYALTY/METAL STREAM
3.0% NSR
2.0% NSR
18.75% of payable copper(20)
2.7% NVR
3.0% NSR
1.4% NSR(23)
1.5% NSR
1.5% NSR
1.5% NSR
OPERATOR
LOCATION
United States
KGHM
Canada
Kutcho Copper
Canada
Centerra Gold
Canada
Vale
Bolivia
Orvana
Chile
Newmont
Consolidated Tin
Australia
Washington H. Soul Pattinson Australia
First Quantum
Spain
Grade
Contained Lbs(6)
(M)
Tons of Base Metal Base Metal
Ore
(M)
84.310
11.509
210.572
31.857
2.240
198.103
0.762
1.323
1.874
(%)
0.41%
2.01%
0.23%
0.93%
1.89%
0.49%
2.13%
0.42%
4.82%
692.343
463.000
959.000
590.221
84.723
1,959.099
32.466
11.023
180.757
Lead(31)
PROVEN +
PROBABLE
RESERVES(3)(4)(5)
Average
Tons of Base Metal
Grade
Base Metal
Contained Lbs(6)
(M)
3,261.055
7.879
(%)
0.34%
0.52%
ROYALTY
OPERATOR
LOCATION
Ore
(M)
2.0% NSR
1.5% NSR
Newmont
Consolidated Tin
Mexico
Australia
483.474
0.762
24
Zinc(32)
PROVEN +
PROBABLE
RESERVES(3)(4)(5)
PROPERTY
Kutcho Creek (DEV)
Peñasquito
Balcooma
Jaguar Nickel (DEV)
ROYALTY
2.0% NSR
2.0% NSR
1.5% NSR
1.5% NSR
OPERATOR
LOCATION
Canada
Kutcho Copper
Mexico
Newmont
Consolidated Tin
Australia
Washington H. Soul Pattinson Australia
Nickel(33)
Average
Tons of Base Metal
Grade
Ore
(M)
11.509
483.474
0.762
1.323
(%)
3.19%
0.76%
1.92%
6.25%
Base Metal
Contained Lbs(6)
(M)
734.000
7,389.628
29.274
165.347
PROPERTY
Voisey’s Bay
ROYALTY
OPERATOR
LOCATION
2.7% NVR
Vale
Canada
PROVEN +
PROBABLE
Tons of
Ore
(M)
31.857
RESERVES(3)(4)(5)
Base Metal
Average
Base Metal Contained Lbs(6)
Grade (%)
2.11%
(M)
1,345.172
Cobalt(34)
PROVEN +
PROBABLE
RESERVES(3)(4)(5)
PROPERTY
Voisey’s Bay
ROYALTY
OPERATOR
LOCATION
2.7% NVR
Vale
Canada
Average
Tons of Base Metal
Ore
(M)
31.857
Grade
(%)
0.12%
Base Metal
Contained Lbs(6)
(M)
79.410
1. Reserves have been reported by the operators of record as of December 31, 2019, with the exception of the following properties
where reserves have been reported by the operators of record or their predecessors in interest and are unadjusted for production
since these dates: Mara Rosa - May 31, 2020; Don Mario - September 30, 2019; Dolores, Gwalia Deeps, King of the Hills,
Meekatharra, Relief Canyon and South Laverton - June 30, 2019; La India - January 25, 2019; Wharf - December 31, 2018;
Wembley Durack - June 30, 2018; Khoemacau - April 17, 2018; Pine Cove, Taparko and Williams - December 31, 2017;
Jaguar Nickel - June 30, 2017; Kutcho Creek - June 15, 2017; Bald Mountain, Gold Hill, Inata and Robinson - December 31,
2016; Southern Cross - July 24, 2016; Back River - August 15, 2015; Hasbrouck Mountain - June 3, 2015; La Fortuna, Pinson
and Ruby Hill - December 31, 2014; Don Nicolas - December 31, 2011; and Balcooma - June 30, 2011.
2. Gold reserves were calculated by the operators at the following per ounce prices: A$1,800 - King of the Hills; A$1,725 -
Meekatharra; A$1,600 - Southern Cross and South Laverton; $1,600 - Pine Cove; $1,500 - Don Mario; A$1,350 - Gwalia
Deeps; $1,350 - El Limon; $1,300 - Andacollo, Dolores, La Fortuna, Mara Rosa, Pinson, Prestea, Relief Canyon and Wassa;
$1,275 - Rainy River; $1,250 - Back River, Holt, Inata, La India, Marigold, Mount Milligan, Robinson, Taparko and Wharf;
$1,225 - Hasbrouck Mountain; $1,200 - Bald Mountain, Canadian Malartic, Cortez, Gold Hill, Goldstrike, LaRonde Zone 5,
Leeville, Peñasquito, Pueblo Viejo, Twin Creeks and Williams; and $1,100 - Don Nicolas and Ruby Hill. No gold price was
reported for Balcooma, Jaguar Nickel, Kutcho Creek, or Wembley Durack.
3.
Set forth below are the definitions of proven and probable reserves used by the SEC. “Reserve” is that part of a mineral
deposit which could be economically and legally extracted or produced at the time of the reserve determination. “Proven
(Measured) Reserves” are reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches,
workings or drill holes; grade and/or quality are computed from the results of detailed sampling; and (b) the sites for
inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that the size, shape,
depth and mineral content of the reserves are well established. “Probable (Indicated) Reserves” are reserves for which the
quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the
sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of
assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of
observation.
4. Certain reserve estimates are provided by operators that are foreign issuers and are not based on the SEC's definitions for
proven and probable reserves. For Canadian issuers, definitions of "mineral reserve," "proven mineral reserve," and "probable
25
mineral reserve" conform to the Canadian Institute of Mining, Metallurgy and Petroleum definitions of these terms as of the
effective date of estimation as required by National Instrument 43-101 of the Canadian Securities Administrators. For
Australian issuers, definitions of "mineral reserve," "proven mineral reserve," and "probable mineral reserve" conform with
the Australasian Code for Reporting of Mineral Resources and Ore Reserves prepared by the Joint Ore Reserves Committee
of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia,
as amended ("JORC Code"). We do not reconcile the reserve estimates provided by the operators with definitions of reserves
used by the SEC.
The reserves reported are either estimates received from the various operators or are based on documentation provided to us
or are derived from publicly available information from the operators of the various properties or various National Instrument
43-101 or JORC Code reports filed by operators. We are not able to reconcile the reserve estimates prepared in reliance on
National Instrument 43-101 or JORC Code with definitions of the SEC.
“Contained ounces” or “contained pounds” do not take into account recovery losses in mining and processing the ore.
5.
6.
7. NSR sliding-scale schedule (price of gold per ounce - royalty rate): Below $375 - 1.75%; >$375 to $400 - 2.0%; >$400 to
$425 - 2.25%; >$425 - 2.5%. All price points are stated in 1986 dollars and are subject to adjustment in accordance with a
blended index comprised of labor, diesel fuel, industrial commodities and mining machinery.
8. GSR1 and GSR 2 sliding-scale schedule (price of gold per ounce - royalty rate): Below $210 - 0.40%; $210 to $229.99 -
0.50%; $230 to $249.99 - 0.75%; $250 to $269.99 - 1.30%; $270 to $309.99 - 2.25%; $310 to $329.99 - 2.60%; $330 to
$349.99 - 3.00%; $350 to $369.99 - 3.40%; $370 to $389.99 - $3.75%; $390 to $409.99 - 4.0%; $410 to $429.99 - 4.25%;
$430 to $449.99 - 4.50%; $450 to $469.99 - 4.75%; $470 and higher - 5.00%.
9. NVR1C is the Crossroads portion of NVR1.
10. The royalty is capped at $10 million. As of June 30, 2020, royalty payments of approximately $7.78 million have been
received.
11. The 1.0% to 2.0% sliding-scale NSR royalty will pay 2.0% when the price of gold is above $350 per ounce and 1.0% when
the price of gold falls to $350 per ounce or below. The 0.6% to 0.9% NSR sliding-scale schedule (price of gold per ounce -
royalty rate): Below $300 - 0.6%; $300 to $350 - 0.7%; > $350 to $400 - 0.8%; > $400 - 0.9%. The silver royalty rate is based
on the price of gold.
12. The 0.6% to 0.9% sliding-scale NSR applies to the M-ACE claims. The operator did not break out reserves or resources
subject to the M-ACE claims royalty.
13. Royalty only applies to Section 29 which currently holds about 95% of the reserves reported for the property.
14. A Cordilleran royalty of 5% NSR applies to a portion of Section 28.
15. Different Rayrock royalty rates apply to Sections 28, 32 and 33; these rates vary depending on pre-existing royalties. The
Rayrock royalties take effect once 200,000 ounces of gold have been produced from open pit mines on the property. As of
June 30, 2020, approximately 103,000 ounces have been produced.
16. Reserves represent our interest based on our royalty ground covering approximately 69% of the resource footprint by area.
17. NSR sliding-scale schedule (price of gold per ounce - royalty rate): $0.00 to under $350 - 0.0%; $350 to under $400 - 0.5%;
$400 to under $500 - 1.0%; $500 or higher - 2.0%.
18. Goose Lake royalty applies to production above 400,000 ounces.
19. NSR sliding-scale schedule (price of gold per ounce - royalty rate): $0.00 to $350 - 1.0%; above $350 - 1.5%.
20. Centerra Gold will deliver 35% of payable gold produced, subject to a fixed payable percentage of 97%, and 18.75% of
payable copper produced, subject to a minimum payable percentage of 95%. The purchase price for gold is equal to the lesser
of $435 per ounce delivered or the prevailing market price and the purchase price for copper is 15% of the spot price per
metric tonne delivered. As of June 30, 2020, approximately 516,500 ounces of payable gold and 34.7 million pounds of
payable copper have been delivered.
26
21. New Gold will deliver: (a) gold in amounts equal to 6.50% of gold produced until 230,000 ounces have been delivered, and
3.25% of gold produced thereafter, and (b) silver in amounts equal to 60% of silver produced until 3.10 million ounces have
been delivered, and 30% of silver produced thereafter, in each case at a purchase price equal to 25% of the spot price per
ounce delivered. As of June 30, 2020, approximately 38,700 ounces of payable gold and 410,500 ounces of payable silver
have been delivered.
22. Teck will deliver gold in amounts equal to 100% of payable gold until 900,000 ounces have been delivered, and 50% of
payable gold thereafter, subject to a fixed payable percentage of 89%, at a purchase price equal to 15% of the monthly average
gold price for the month preceding the delivery date for each ounce delivered. As of June 30, 2020, approximately 237,100
ounces of payable gold have been delivered.
23. The royalty covers approximately 30% of the La Fortuna deposit. Reserves attributable to our royalty represent 3/7 of
Newmont's reporting of 70% of the total reserve.
24. Barrick will deliver: (a) gold in amounts equal to 7.50% of Barrick’s 60% interest in gold produced until 990,000 ounces have
been delivered, and 3.75% of Barrick’s 60% interest in gold produced thereafter, at a purchase price equal to 30% of the spot
price per ounce delivered until 550,000 ounces have been delivered, and 60% of the spot price per ounce delivered thereafter;
and (b) silver in amounts equal to 75% of Barrick’s 60% interest in silver produced, subject to a fixed silver recovery of 70%,
until 50 million ounces have been delivered, and 37.50% of Barrick’s 60% interest in silver produced thereafter, at a purchase
price equal to 30% of the spot price per ounce delivered until 23.10 million ounces of silver have been delivered, and 60% of
the spot price per ounce delivered thereafter. As of June 30, 2020, approximately 226,400 ounces of payable gold and 7.93
million ounces of payable silver have been delivered.
25. At Paddy's Flat an additional royalty of A$10 per ounce applies on production above 50,000 ounces; At Reedy's an additional
1.5% to 2.5% NSR sliding-scale royalty pays at a rate of 1.5% for the first 75,000 ounces produced in any 12-month period
and at a rate of 2.5% on production above 75,000 ounces during that 12-month period and a 1.0% NSR royalty applies to the
Rand area only. At Yaloginda the royalty is 0.45% NSR.
26. There is a 0.75% GSR milling royalty that applies to ore that is mined outside of the defined area of the Taparko-Bouroum
project that is processed through the Taparko facilities up to a maximum of 1.1 million tons per year.
27. Golden Star will deliver 10.5% of payable gold produced until 240,000 ounces have been delivered from Wassa and Prestea,
and 5.5% of payable gold produced thereafter. The purchase price for gold ounces delivered is 20% of the spot gold price
until the threshold has been met, and 30% of the spot gold price thereafter. As of June 30, 2020, approximately 110,500 ounces
of payable gold have been delivered from Wassa and Prestea.
28. Silver reserves were calculated by the operators at the following prices per ounce: $25.00 - Don Nicolas; $20.00 - Gold Hill;
$17.50 - Hasbrouck Mountain; $17.00 - Don Mario, Dolores and Rainy River; $16.50 - Pueblo Viejo; $16.00 - Peñasquito;
and $15.00 - Khoemacau. No silver price was reported for Balcooma, Jaguar Nickel or Kutcho Creek.
29. When production commences, KCM will deliver 80% of payable silver produced, subject to a fixed payable percentage of
90%. At KCM’s option and subject to various conditions, Royal Gold will make an additional advance payment for the right
to purchase up to an additional 20% of the payable silver. The stream rate will drop by 50% upon the delivery of 32 million
ounces of silver at the 80% stream level, and 40 million ounces of silver at the 100% stream level if the option is fully
exercised. The purchase price is 20% of the spot price of silver. Depending on the achievement by Cupric of mill expansion
throughput levels above 13,000 tonnes per day (30% above current mill design capacity), we will pay higher ongoing cash
payments for ounces delivered in excess of specific annual thresholds.
30. Copper reserves were calculated by the operators at the following prices per pound: $3.00 - Andacollo, La Fortuna and Mount
Milligan; $2.95 - Robinson; $2.83 - Voisey's Bay; $2.75 - Las Cruces; and $2.50 - Don Mario and Khoemacau. No copper
reserve price was reported for Balcooma, Jaguar Nickel or Kutcho Creek.
31. Lead reserve price was calculated by the operators at the following prices per pound: $0.95 - Peñasquito. No lead reserve
price was reported for Balcooma.
32. Zinc reserve price was calculated by the operators at the following prices per pound: $1.15 - Peñasquito. No zinc reserve
price was reported for Balcooma, Jaguar Nickel or Kutcho Creek.
33. Nickel reserve price was calculated by the operator at the following price per pound: $5.66 - Voisey's Bay.
34. Cobalt reserve price was calculated by the operator at the following price per pound: $26.25 - Voisey's Bay.
27
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURE
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information and Holders
Our common stock is listed and traded on the Nasdaq Global Select Market under the symbol “RGLD.” As of July 30,
2020, we had 773 holders of record of our common stock. This figure does not reflect the beneficial ownership of shares
held in nominee name.
Sales of Unregistered Equity Securities
None.
Repurchases of Equity Securities
None.
ITEM 6. SELECTED FINANCIAL DATA
2020
Fiscal Year Ended June 30,
2018
(Amounts in thousands, except per share data)
2019
2017
2016
Revenue(1)
Operating income (loss)(2)
Net income (loss)
Net income (loss) attributable to Royal Gold
common stockholders
Net income (loss) per share attributable to Royal
Gold common stockholders:
Basic
Diluted
Dividends declared per common share(3)
$ 498,819 $ 423,056 $ 459,042 $ 440,814 $ 359,790
$ 198,945 $ 140,707 $ (74,535) $ 145,942 $
4,816
$ 196,250 $ 89,079 $ (119,351) $ 92,425 $ (82,438)
$ 199,343 $ 93,825 $ (113,134) $ 101,530 $ (77,149)
$
$
$
3.04 $
3.03 $
1.11 $
1.43 $
1.43 $
1.05 $
(1.73) $
(1.73) $
0.99 $
1.55 $
1.55 $
0.95 $
(1.18)
(1.18)
0.91
2020
2019
As of June 30,
2018
(Amounts in thousands)
2017
2016
Stream and royalty interests, net
Total assets
Debt
Total liabilities
Total Royal Gold stockholders’ equity
$ 2,318,913 $ 2,339,316 $ 2,501,117 $ 2,892,256 $ 2,848,087
$ 2,766,287 $ 2,544,151 $ 2,682,016 $ 3,094,065 $ 3,069,729
600,685
$
$
783,844
$ 2,272,217 $ 2,136,681 $ 2,102,167 $ 2,275,377 $ 2,229,016
586,170 $
773,801 $
351,027 $
540,747 $
214,554 $
373,698 $
300,439 $
464,168 $
(1) Please refer to Item 7, MD&A, of this report for a discussion of recent developments that contributed to our 18% increase in
revenue during fiscal year 2020 when compared to fiscal year 2019.
28
(2) Please refer to Note 4 of the notes to consolidated financial statements for discussion on the impairment recognized at Pascua-
Lama, which was attributable for the operating loss during our fiscal year 2018.
(3) The 2020, 2019, 2018, 2017 and 2016 calendar year dividends were $1.12, $1.06, $1.00, $0.96, and $0.92, respectively, as approved
by our board of directors.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
A discussion of the changes in our financial condition and results of operations for the fiscal years ended June 30, 2019,
and 2018, has been omitted from this Annual Report, but may be found in Item 7, MD&A, of our Annual Report on Form
10-K for the year ended June 30, 2019, filed with the SEC on August 8, 2019, which is available free of charge on the
SEC’s website at www.sec.gov and our website at www.royalgold.com.
Overview
We acquire and 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 June 30, 2020, we owned seven stream interests,
which are on six producing properties and two development stage properties. Our stream interests accounted for
approximately 72% of our total revenue for each of the fiscal years ended June 30, 2020, and 2019. 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 a percentage of revenue or metals produced from the project after deducting specified costs, if any. As of
June 30, 2020, we owned royalty interests on 35 producing properties, 15 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 approximately 28% of our total revenue for each of the fiscal years ended June 30, 2020,
and 2019.
We do not conduct mining operations on the properties in which we hold stream and royalty interests. Except for our
interest in the Peak Gold JV, we are not required to contribute to capital costs, exploration costs, environmental costs, or
other operating costs on those properties.
In the ordinary course of business, we engage in a continual review of opportunities to acquire existing stream and 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. We currently,
and generally at any time, have acquisition opportunities in various stages of active review, including, for example, our
engagement of consultants and advisors to analyze particular opportunities, our analysis of technical, financial, legal and
other confidential information of particular opportunities, submission of indications of interest and term sheets,
participation in preliminary discussions and negotiations and involvement as a bidder in competitive processes.
29
Our financial results are primarily tied to the price of gold and, to a lesser extent, the prices of silver and copper, together
with the amounts of production from our producing stage stream and royalty interests. For the fiscal years ended
June 30, 2020 and 2019, gold, silver, and copper price averages and percentage of revenue by metal were as follows:
Metal
Gold ($/ounce)
Silver ($/ounce)
Copper ($/pound)
Other
Fiscal Year ended
June 30, 2020
June 30, 2019
Average
Price
1,560
16.90
2.57
N/A
Percentage of
Revenue
79%
9%
9%
3%
$
$
$
Average
Price
1,263
15.00
2.79
N/A
Percentage
of Revenue
78%
9%
9%
4%
$
$
$
Operators’ Production Estimates by Stream and Royalty Interest for Calendar 2020
We received annual production estimates from many of the operators of our producing mines during the first calendar
quarter of 2020. In some instances, an operator may revise its original calendar year guidance throughout the year. The
following table shows such production estimates for our principal producing properties for calendar 2020 as well as the
actual production reported to us by the various operators through June 30, 2020. The estimates and production reports are
prepared by the operators. 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 Part I, Item 2, Properties, of this report for further discussion on any updates at our principal
producing properties.
Operators’ Estimated and Actual Production by Stream and Royalty Interest for Calendar 2020
Principal Producing Properties
Stream/Royalty
Stream:
Calendar 2020 Operator’s Production
Estimate(1)
Silver
(oz.)
Gold
(oz.)
Base Metals
(lbs.)
Calendar 2020 Operator’s Production
Actual(2)
Silver
(oz.)
Gold
(oz.)
Base Metals
(lbs.)
Andacollo(3)
Mount Milligan(4)
53,000
140,000 - 160,000
Copper
Pueblo Viejo(5)
Wassa(6)
Royalty:
Cortez GSR1
Cortez GSR2
Cortez GSR3
Cortez NVR1
Cortez NVR1C
Peñasquito(7)
Lead
Zinc
530,000 - 580,000
165,000 - 170,000
N/A
80 - 90 Million
66,500
109,000
145,700
113,200
29,900
510,000
28 million
190 million
360 million
27,500
69,300
254,000
85,100
61,800
48,300
52,400
88,700
400
185,000
39.1 Million
N/A
13.1 Million
84 Million
178 Million
(1) Production estimates received from our operators are for calendar 2020. There can be no assurance that production estimates
received from our 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 I, Item 1A, of this report for information regarding factors that
could affect actual results.
(2) Actual production figures shown are from our operators and cover the period January 1, 2020 through June 30, 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) The estimated and actual production figures shown for Mount Milligan are payable gold and copper in concentrate.
30
(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) The estimated and actual production figures shown for Wassa is payable gold in doré.
(7) 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.
COVID-19 and current economic environment
Several of our operating counterparties announced temporary operational curtailments or the withdrawal or review of
previously disclosed guidance due to the ongoing COVID-19 pandemic. The economic and societal impacts associated
with COVID-19 are fluid and changing rapidly, and we are currently unable to predict the nature or extent of any impact
on our results of operations and financial condition. We will continue to monitor any further developments that the
COVID-19 pandemic may have on stream or royalty interests as part of our regular asset impairment analysis.
Historical Production
The following table discloses historical production for the past two fiscal years for the principal producing properties that
are subject to our stream and royalty interests, as reported to us by the operators of the mines. We do not participate in the
preparation or calculation of the operators’ production reports and have not independently assessed or verified, and
disclaim all responsibility for, the accuracy of such information.
Historical Production(1) by Stream and Royalty Interest
Principal Producing Properties
For the Fiscal Years Ended June 30, 2020 and 2019
Stream/Royalty
Stream:
Mount Milligan
Andacollo
Pueblo Viejo
Wassa
Royalty:
Peñasquito
Cortez GSR1
Cortez GSR2
Cortez GSR3
Cortez NVR1
Metal
2020
2019
Gold
Copper
Gold
Gold
Silver
Gold
Gold
Silver
Lead
Zinc
Gold
Gold
Gold
Gold
63,700 oz.
12.7 Mlbs.
48,100 oz.
43,300 oz.
1.8 Moz.
15,000 oz.
312,200 oz.
27.8 Moz.
182.3 Mlbs.
393.9 Mlbs.
91,300 oz.
82,000 oz.
171,800 oz.
146,500 oz.
61,700 oz.
8.3 Mlbs.
55,000 oz.
41,000 oz.
2.1 Moz.
17,500 oz.
158,800 oz.
16.4 Moz.
117.4 Mlbs.
216.2 Mlbs.
84,600 oz.
12,100 oz.
96,700 oz.
77,400 oz.
(1) Historical production for our stream interests relates to the amount of stream metal sales for each fiscal year presented and may
differ from stream deliveries discussed in Item 2, Properties, or from the operators’ public reporting. For our royalty interests,
historical production relates to the payable metal amounts as reported to us by the operators of the mines subject to our royalty rate
for each fiscal year presented.
Critical Accounting Policies
Listed below are the accounting policies we believe are critical to our financial statements due to the degree of uncertainty
regarding the estimates or assumptions involved and the magnitude of the asset, liability, revenue or expense being
reported. Please also refer to Note 2 of the notes to consolidated financial statements for a discussion on recently adopted
and issued accounting pronouncements.
31
Use of Estimates
The preparation of our financial statements, in conformity with U.S. generally accepted accounting principles (“U.S.
GAAP”), requires management to make estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities, at the date of the financial statements, as well as the reported amounts of revenues and
expenses during the reporting period.
We rely on reserve estimates reported by the operators of the properties on which we hold stream and royalty interests.
These estimates and the underlying assumptions affect the potential impairments of long-lived assets and the ability to
realize income tax benefits associated with deferred tax assets. These estimates and assumptions also affect the rate at
which we recognize revenue or charge depreciation, depletion and amortization to earnings. On an ongoing basis,
management evaluates these estimates and assumptions; however, actual amounts could differ from these estimates and
assumptions. Differences between estimates and actual amounts are adjusted and recorded in the period that the actual
amounts are known.
Stream and Royalty Interests in Mineral Properties and Related Depletion
Stream and royalty interests include acquired stream and royalty interests in production, development and exploration
stage properties. The costs of acquired stream and royalty interests are capitalized as tangible assets as such interests do
not meet the definition of a financial asset under U.S. GAAP.
Production stage stream and royalty interests are depleted using the units of production method over the life of the mineral
property (as stream sales occur or royalty payments are recognized), which are estimated using proven and probable
reserves as provided by the operator. Development stage mineral properties, which are not yet in production, are not
depleted until the property begins production. Exploration stage mineral properties, where there are no proven and probable
reserves, are not depleted. At such time as the associated exploration stage mineral interests are converted to proven and
probable reserves, the mineral property is depleted over its life, using proven and probable reserves. Exploration costs are
expensed when incurred.
Asset Impairment
We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the related
carrying amounts of an asset or group of assets may not be recoverable. The recoverability of the carrying value of stream
and royalty interests in production and development stage mineral properties is evaluated based upon estimated future
undiscounted net cash flows from each stream and royalty interest using estimates of proven and probable reserves and
other relevant information received from the operators. We evaluate the recoverability of the carrying value of royalty
interests in exploration stage mineral properties in the event of significant decreases in the price of gold, silver, copper and
other metals, and whenever new information regarding the mineral properties is obtained from the operator indicating that
production will not likely occur or may be reduced in the future, thus potentially affecting the future recoverability of our
stream or royalty interests. Impairments in the carrying value of each property are measured and recorded to the extent
that the carrying value in each property exceeds its estimated fair value, which is generally calculated using estimated
future discounted cash flows.
Estimates of gold, silver, copper, and other metal prices, and operators’ estimates of proven and probable reserves or
mineralized material related to our stream or royalty properties are subject to certain risks and uncertainties which may
affect the recoverability of our investment in these stream and royalty interests in mineral properties. It is possible that
changes could occur to these estimates, which could adversely affect the net cash flows expected to be generated from
these stream and royalty interests. Refer to Note 4 to consolidated financial statements for a discussion of the impairment
assessment results for the fiscal year ended June 30, 2020.
Revenue
Under U.S. GAAP, 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
32
performance obligation and recognized as revenue when, or as, a performance obligation is satisfied. In accordance with
this guidance, revenue attributable to our stream interests and royalty interests is generally recognized at the point in time
that control of the related metal production transfers to our customers. The amount of revenue we recognize further reflects
the consideration to which we are entitled under the respective stream or royalty agreement. A more detailed summary of
our revenue recognition policies for our stream and royalty interests is discussed below.
Stream Interests
A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase
all or a portion of one or more of the metals produced from a mine, at a price determined for the life of the transaction by
the purchase agreement. Gold, silver and copper received under our metal streaming agreements are taken into inventory,
and then sold primarily using average spot rate gold, silver and copper forward contracts. The sales price for these average
spot rate forward contracts is determined by the average daily gold, silver or copper spot prices during the term of the
contract, typically a consecutive number of trading days between ten days and three months (depending on the frequency
of deliveries under the respective streaming agreement and our sales policy in effect at the time) commencing shortly after
receipt and purchase of the metal. We settle our forward sales contracts via physical delivery of the metal to the purchaser
(our customer) on the settlement date specified in the contract. Under our forward sales contracts, there is a single
performance obligation to sell a contractually specified volume of metal to the purchaser, and we satisfy this obligation at
the point in time of physical delivery. Accordingly, revenue from our metal sales is recognized on the date of settlement,
which is the date that control, custody and title to the metal transfer to the purchaser.
Royalty Interests
Royalties are non-operating interests in mining projects that provide the right to a percentage of revenue or metals produced
from the project after deducting specified costs, if any. We are entitled to payment for our royalty interest in a mining
project based on a contractually specified commodity price (for example, a monthly or quarterly average spot price) for
the period in which metal production occurred. 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.
Metal Sales
Gold, silver and copper received under our metal streaming agreements are taken into inventory, and then sold primarily
using average spot rate gold, silver and copper forward contracts. The sales price for these average spot rate forward
contracts is determined by the average daily gold, silver or copper spot prices during the term of the contract, typically a
consecutive number of trading days between 10 days and three months (depending on the frequency of deliveries under
the respective streaming agreement and our sales activity in effect at the time) commencing shortly after receipt and
purchase of the metal. Temporary modifications may be made to our metal sales guidelines from time to time as required
to meet our needs. Revenue from gold, silver and copper sales is recognized on the date of the settlement, which is also
the date that title to the metal passes to the purchaser.
Cost of Sales
Cost of sales, which excludes depreciation, depletion and amortization, is specific to our stream agreements and is the
result of 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 spot price near the date of metal delivery.
33
Exploration Costs
Exploration costs are specific to our Peak Gold JV for exploration and advancement of the Peak Gold project as discussed
further in Note 2 to consolidated financial statements. Exploration costs associated with the exploration and advancement
of Peak Gold are expensed when incurred.
Income Taxes
Our annual tax rate is based on income, statutory tax rates in effect and tax planning opportunities available to us in the
various jurisdictions in which the Company operates. Significant judgment is required in determining the annual tax
expense, current tax assets and liabilities, deferred tax assets and liabilities, and our future taxable income, both as a whole
and in various tax jurisdictions, for purposes of assessing our ability to realize future benefit from our deferred tax assets.
Actual income taxes could vary from these estimates due to future changes in income tax law, significant changes in the
jurisdictions in which we operate or unpredicted results from the final determination of each year’s liability by taxing
authorities.
Our deferred income taxes reflect the impact of temporary differences between the reported amounts of assets and
liabilities for financial reporting purposes and such amounts measured by tax laws and regulations. In evaluating the
realizability of the deferred tax assets, management considers both positive and negative evidence that may exist, such as
earnings history, reversal of taxable temporary differences, forecasted operating earnings and available tax planning
strategies in each tax jurisdiction. A valuation allowance may be established to reduce our deferred tax assets to the amount
that is considered more likely than not to be realized through the generation of future taxable income and other tax planning
strategies.
Our operations may involve dealing with uncertainties and judgments in the application of complex tax regulations in
multiple jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities
in various jurisdictions and resolution of disputes arising from federal, state, and international tax audits. We recognize
potential liabilities and record tax liabilities for anticipated tax audit issues in the United States and other tax jurisdictions
based on our estimate of whether, and the extent to which, additional taxes will be due. We adjust these reserves in light
of changing facts and circumstances, such as the progress of a tax audit; however, due to the complexity of some of these
uncertainties, the ultimate resolution could result in a payment that is materially different from our current estimate of the
tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period which they
are determined. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.
Liquidity and Capital Resources
Overview
At June 30, 2020, we had current assets of $362.2 million compared to current liabilities of $43.6 million resulting in
working capital of $318.6 million and a current ratio of 8 to 1. This compares to current assets of $154.7 million and
current liabilities of $33.6 million at June 30, 2019, resulting in working capital of $121.1 million and a current ratio of
approximately 5 to 1. The increase in our current ratio was primarily attributable to an increase in our cash and equivalents,
which is discussed further below under “Summary of Cash Flows.”
During the fiscal year ended June 30, 2020, liquidity needs were met from $340.8 million in net cash provided by operating
activities and our available cash resources. As of June 30, 2020, we had $695 million available and $305 million
outstanding under our revolving credit facility. Working capital, combined with available capacity under our revolving
credit facility, resulted in approximately $1 billion of total liquidity at June 30, 2020. Refer to Note 6 of our notes to
consolidated financial statements and below (“Recent Liquidity and Capital Resource Developments”) for further
discussion on our debt. On July 2, 2020, we repaid $30 million of the outstanding borrowings under the credit facility.
This payment increased the amount available under our revolving credit facility to $725 million and decreased the amount
outstanding to $275 million.
34
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 remaining conditional funding schedule in connection with the Khoemacau silver stream acquisition. Our
long-term capital requirements are primarily affected by our ongoing acquisition activities. We currently, and generally at
any time, have acquisition opportunities in various stages of active review. In the event of one or more substantial stream
or royalty interest or other acquisitions, we may seek additional debt or equity financing as necessary.
Please refer to our risk factors included in Part I, Item 1A of this report for a discussion of certain risks that may impact
our liquidity and capital resources.
Recent Liquidity and Capital Resource Developments
Revolving Credit Facility Drawdown
On April 3, 2020, we drew an additional $200 million on our revolving credit facility. 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. We remain committed to
reducing our debt, and absent the requirement to fund any new business opportunities, we expect to further manage our
debt levels once the operating environment returns to normal.
Dividend Increase
On November 19, 2019, we announced an increase in our annual dividend for calendar 2020 from $1.06 to $1.12, payable
on a quarterly basis of $0.28 per share. The newly declared dividend is 6% higher than the dividend paid during calendar
2019. We have steadily increased our annual dividend since calendar 2001.
Revolving Credit Facility Amendment
On September 20, 2019, we entered into a third amendment to our revolving credit facility dated as of June 2, 2017. Under
the amendment, our 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.
Summary of Cash Flows
Operating Activities
Net cash provided by operating activities totaled $340.8 million for the fiscal year ended June 30, 2020, compared to
$253.2 million for the fiscal year ended June 30, 2019. The increase was primarily due to an increase in proceeds received
from our stream interests, net of cost of sales, of approximately $49.5 million and lower income taxes paid of $12.9 million.
Investing Activities
Net cash used in investing activities totaled $152.9 million for the fiscal year ended June 30, 2020, compared to cash used
in investing activities of $5.6 million for the fiscal year ended June 30, 2019. The increase in cash used in investing
35
activities was due to an increase in acquisitions of stream and royalty interests. During the fiscal year ended June 30, 2020,
we made advance payments totaling $135.7 million for the Khoemacau silver stream acquisition.
Financing Activities
Net cash provided by financing activities totaled $11.8 million for the fiscal year ended June 30, 2020, compared to cash
used in financing activities of $216.9 million for the fiscal year ended June 30, 2019. The decrease in cash used in financing
activities is primarily due to a decrease in debt repayments (net of borrowings) when compared to the prior fiscal year.
Contractual Obligations
Our contractual obligations as of June 30, 2020, are as follows:
Contractual Obligations
Revolving credit facility(1)
Operating leases
Total
Payments Due by Period (in thousands)
Total
$ 325,972 $
$
9,210 $
$ 335,182 $
Less than
1 Year
1 - 3 Years
3 - 5 Years
More than
5 Years
4,258 $
901 $
5,159 $
12,775 $ 308,939 $
1,931 $
14,629 $ 310,870 $
1,854 $
—
4,524
4,524
(1) Amounts represent principal ($305 million) and estimated interest payments ($21.0 million) assuming no early extinguishment.
For information on our revolving credit facility, see Note 6 to consolidated financial statements. The above table does not
include stream commitments as discussed in Note 15 to consolidated financial statements. We believe we will be able to
fund all current obligations from net cash provided by operating activities.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Results of Operations
Fiscal Year Ended June 30, 2020, Compared with Fiscal Year Ended June 30, 2019
For the fiscal year ended June 30, 2020, we recorded net income attributable to Royal Gold stockholders of $199.3 million,
or $3.04 per basic share and $3.03 per diluted share, as compared to net income attributable to Royal Gold stockholders
of $93.8 million, or $1.43 per basic and diluted share, for the fiscal year ended June 30, 2019. The increase in our earnings
per share was primarily attributable to (i) an increase in revenue, (ii) a decrease in our interest expense and (iii) discrete
income tax benefits recognized, primarily attributable to recent Swiss tax reform during the quarter ended September 30,
2019 and the release of an uncertain tax liability resulting from a settlement agreement with a foreign tax authority. Each
are discussed further below.
For the fiscal year ended June 30, 2020, we recognized total revenue of $498.8 million, which is comprised of stream
revenue of $359.9 million and royalty revenue of $138.9 million, at an average gold price of $1,560 per ounce, an average
silver price of $16.90 per ounce and an average copper price of $2.57 per pound, compared to total revenue of
$423.1 million, which is comprised of stream revenue of $305.8 million and royalty revenue of $117.2 million, at an
average gold price of $1,263 per ounce, an average silver price of $15.00 per ounce and an average copper price of $2.79
per pound, for the fiscal year ended June 30, 2019.
36
Revenue and the corresponding production, attributable to our stream and royalty interests, for the fiscal year ended
June 30, 2020 compared to the fiscal year ended June 30, 2019 is as follows:
Revenue and Reported Production Subject to our Stream and Royalty Interests
Fiscal Years Ended June 30, 2020 and 2019
(In thousands, except reported production in ozs. and lbs.)
Stream/Royalty
Stream(2):
Mount Milligan
Pueblo Viejo
Andacollo
Wassa
Other(3)
Year Ended
June 30, 2020
Reported
Year Ended
June 30, 2019
Reported
Metal(s) Revenue
Production(1)
Revenue
Production(1)
Gold
Copper
Gold
Silver
Gold
Gold
Gold
Silver
$ 131,425
$
101,010
63,700 oz.
12.7 Mlbs.
$
96,978
$
82,844
$
$
$
74,219
23,203
34,043
43,300 oz.
1.8 Moz.
$
$
$
69,264
22,098
30,608
48,100 oz.
15,000 oz.
20,300 oz.
188,800 oz.
61,700 oz.
8.3 Mlbs.
41,000 oz.
2.1 Moz.
55,000 oz.
17,500 oz.
22,600 oz.
144,700 oz.
158,800 oz.
16.4 Moz.
117.4 Mlbs.
216.2 Mlbs.
96,700 oz.
N/A
Total stream revenue
$ 359,868
$
305,824
Royalty(2):
Peñasquito
Cortez
Other(3)
Total royalty revenue
Total revenue
Gold
Silver
Lead
Zinc
Gold
Various
$
25,498
$
13,865
312,200 oz.
27.8 Moz.
182.3 Mlbs.
393.9 Mlbs.
22,342
$
$
91,111
$ 138,951
$ 498,819
173,300 oz.
N/A
$
$
$
$
11,383
91,984
117,232
423,056
(1) Reported production relates to the amount of metal sales, subject to our stream and royalty interests, for the fiscal years ended
June 30, 2020 and 2019, and may differ from the operators’ public reporting.
(2) Refer to Item 2, Properties, for further discussion on our principal stream and royalty interests.
(3)
Individually, with the exception of the Rainy River stream (5.5% in fiscal year 2020 and 5.2% in fiscal year 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 fiscal year ended June 30, 2020, compared with the fiscal year ended June 30,
2019, resulted primarily from an increase in our stream revenue and an increase in 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 Andacollo which was due to a
decrease in deliveries resulting from a temporary suspension of operations during the December 2019 quarter due to a
worker’s strike.
37
Gold and silver ounces and copper pounds purchased and sold during the fiscal years ended June 30, 2020 and 2019, as
well as gold, silver and copper in inventory as of June 30, 2020 and 2019, for our stream interests were as follows:
Gold Stream
Mount Milligan
Andacollo
Pueblo Viejo
Wassa
Other
Total
Silver Stream
Pueblo Viejo
Other
Total
Year Ended
June 30, 2020
Year Ended
June 30, 2019
Purchases (oz.) Sales (oz.)
Purchases (oz.) Sales (oz.)
59,900
43,900
45,000
16,500
19,500
184,800
63,700
48,100
43,300
15,000
20,300
190,400
68,500
51,900
41,200
16,600
22,500
200,700
As of
June 30, 2020
As of
June 30, 2019
Inventory (oz.) Inventory (oz.)
7,100
4,300
9,500
1,500
2,200
24,600
3,300
100
11,100
2,900
1,500
18,900
61,700
55,000
41,000
17,500
22,600
197,800
Year Ended
June 30, 2020
Year Ended
June 30, 2019
Purchases (oz.)
1,726,100
175,700
1,901,800
Sales (oz.)
1,750,400
188,800
1,939,200
Purchases (oz.)
2,007,000
148,900
2,155,900
Sales (oz.)
2,071,700
144,700
2,216,400
As of
June 30, 2020
Inventory (oz.)
451,200
23,400
474,600
As of
June 30, 2019
Inventory (oz.)
475,600
36,500
512,100
Year Ended
June 30, 2020
Year Ended
June 30, 2019
As of
June 30, 2020
As of
June 30, 2019
Copper Stream
Mount Milligan
Purchases (Mlbs.)
12.6
Sales (Mlbs.) Purchases (Mlbs.)
9.1
12.7
Sales (Mlbs.) Inventory (Mlbs.) Inventory (Mlbs.)
0.8
0.8
8.3
Our royalty revenue increased during the fiscal year ended June 30, 2020, compared with the fiscal year ended
June 30, 2019, primarily due to an increase in production at Peñasquito and Cortez and an increase in the average gold and
silver prices. Refer to Part I, Item 2, Properties, for discussion and any updates on our principal producing properties.
Cost of sales increased to $83.9 million for the fiscal year ended June 30, 2020, from $77.5 million for the fiscal year
ended June 30, 2019. The increase was primarily due to increased gold and copper sales from Mount Milligan and an
increase in gold sales from Pueblo Viejo, partially offset by a decrease in silver sales from Pueblo Viejo. Cost of sales,
which excludes depreciation, depletion and amortization, is specific to our stream agreements and is the result of RGLD
Gold’s 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 spot price near the date of metal delivery.
Depreciation, depletion and amortization increased to $175.4 million for the fiscal year ended June 30, 2020, from $163.1
million for the fiscal year ended June 30, 2019. The increase was primarily attributable to higher gold and copper sales
at Mount Milligan and an increase in gold sales at Pueblo Viejo. An increase in depletion rates at Mount Milligan as a
result of updated reserves, as discussed in Part I, Item 2, Properties, also contributed to the increase in our depletion
expense during the current period.
We recognized a gain in fair value changes in equity securities of $1.4 million for the fiscal year ended June 30, 2020,
compared to a loss in fair value changes in equity securities of $6.8 million for the fiscal year ended June 30, 2019. The
change was primarily due to an increase in the fair value of marketable equity securities as discussed further in Note 5 to
the consolidated financial statements.
Interest and other expense decreased to $9.8 million for the fiscal year ended June 30, 2020, from $29.7 million for the
fiscal year ended June 30, 2019. The decrease was primarily attributable to lower interest expense as a result of a decrease
in average debt amounts outstanding during the current period when compared to the prior period. During the prior
period, we settled the $370 million aggregate principal amount due under our convertible senior notes that matured in June
2019. Refer to Note 6 of our notes to consolidated financial statements for further discussion on our outstanding debt.
During the fiscal year ended June 30, 2020, we recognized an income tax benefit totaling $3.7 million compared with an
expense of $17.5 million during the fiscal year ended June 30, 2019. This resulted in an effective tax rate of (1.9%) during
the current period, compared with 16.4% in the prior period. The effective tax rate for the fiscal year ended June 30, 2020
38
was primarily impacted by a net step-up of tax assets due to the enactment of the Federal Act on Tax Reform and AHV
Financing in Switzerland and the release of an uncertain tax liability resulting from a settlement agreement with a foreign
tax authority. The effective tax rate for the fiscal year ended June 30, 2019 was primarily impacted by true-ups related to
the Tax Cuts and Jobs Act partially offset by the implementation of the global intangible low-taxed income tax regime.
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 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, 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. 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE 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.
During the fiscal year ended June 30, 2020, we reported revenue of $498.8 million, with an average gold price for the
period of $1,560 per ounce, an average silver price for the period of $16.90 per ounce and an average copper price of $2.57
per pound. Approximately 79% of our total recognized revenues for the fiscal year ended June 30, 2020 were attributable
to gold sales from our gold producing interests, as shown within the MD&A. For the fiscal year ended June 30, 2020, if
the price of gold had averaged 10% higher or lower per ounce, we would have recorded an increase or decrease in revenue
of approximately $41.6 million.
Approximately 9% of our total reported revenue for the fiscal year ended June 30, 2020 was attributable to silver sales
from our silver producing interests. For the fiscal year ended June 30, 2020, if the price of silver had averaged 10% higher
or lower per ounce, we would have recorded an increase or decrease in revenues of approximately $4.4 million.
Approximately 9% of our total reported revenue for the fiscal year ended June 30, 2020 was attributable to copper sales
from our copper producing interests. For the fiscal year ended June 30, 2020, if the price of copper had averaged 10%
higher or lower per pound, we would have recorded an increase or decrease in revenues of approximately $5.0 million.
39
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page
41
43
44
45
46
47
40
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Royal Gold, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Royal Gold, Inc. (the Company) as of June 30, 2020
and 2019, the related consolidated statements of operations and comprehensive income (loss), changes in equity and cash
flows for each of the three years in the period ended June 30, 2020, and the related notes (collectively referred to as the
“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company at June 30, 2020 and 2019, and the results of its operations and its cash
flows for each of the three years in the period ended June 30, 2020, in conformity with U.S. generally accepted accounting
principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of June 30, 2020, based on criteria established
in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework), and our report dated August 6, 2020 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of
the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for
our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex
judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a
separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Description of
the Matter
Impairment Assessment of Stream and Royalty Interests in Mineral Properties
At June 30, 2020, the Company’s stream and royalty interest balance totaled $2.3 billion. As more
fully described in Note 2 to the consolidated financial statements, the Company evaluates its stream
and royalty interests for impairment whenever events or changes in circumstances indicate that the
carrying amounts of the asset or group of assets may not be recoverable (“triggering events”).
Management evaluates various qualitative factors in determining whether or not events or changes
in circumstances indicate that the carrying amount of an asset or group of assets may not be
recoverable. The factors considered include, among others, significant changes in estimates of
forecasted gold, silver, copper and other metal prices, significant changes in operators’ estimates
of proven and probable reserves and other relevant information received from the operators, which
41
How We
Addressed the
Matter in Our
Audit
may include operational or legal information that indicates production from mineral interests will
not likely occur or may be significantly reduced in the future.
Auditing the Company’s impairment assessment involved our subjective judgment because, in
determining whether a triggering event occurred, management uses estimates that include, among
others, assumptions about forecasted gold, silver, copper and other metal prices and total future
production using reserve or other relevant information reported by the operators. Significant
uncertainty exists with these assumptions. Further, management’s evaluation of any new
information indicating that production will not likely occur or may be significantly reduced in the
future requires significant judgment.
We obtained an understanding, evaluated the design and tested the operating effectiveness of
controls over the Company’s process over the impairment assessment. For example, we tested
controls over the Company’s process for identifying and evaluating potential impairment triggers
and related significant assumptions and judgments. To test the Company’s impairment assessment,
our audit procedures included, among others, evaluating the significant assumptions, judgments
and operating data used in the Company’s analysis. Specifically, we compared forecasted gold,
silver, copper and other metal prices to available market information, and we corroborated reserve
information to available operator or publicly available information. We involved our specialist and
searched for and evaluated other publicly available information that corroborates or contradicts the
reserve estimates or indicates that production from mineral interests will not likely occur or may
be significantly reduced in the future. We also considered the professional qualifications and
objectivity of management’s specialists and the reputation of the third-party operators. Further, we
evaluated the reasonableness of changes to estimated proven and probable reserves using our
experience with the Company’s stream and royalty interests and industry knowledge.
/s/ Ernst & Young LLP
We have served as the Company's auditor since 2010.
Denver, Colorado
August 6, 2020
42
ROYAL GOLD, INC.
Consolidated Balance Sheets
As of June 30,
(In thousands, except share data)
ASSETS
Cash and equivalents
Royalty receivables
Income tax receivable
Stream inventory
Prepaid expenses and other
Total current assets
Stream and royalty interests, net (Note 4)
Other assets
Total assets
LIABILITIES
Accounts payable
Dividends payable
Income tax payable
Other current liabilities
Total current liabilities
Debt (Note 6)
Deferred tax liabilities
Uncertain tax positions
Other long-term liabilities
Total liabilities
$
$
$
Commitments and contingencies (Note 15)
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 65,531,288
and 65,440,492 shares outstanding, respectively
Additional paid-in capital
Accumulated earnings (losses)
Total Royal Gold stockholders’ equity
Non-controlling interests
Total equity
Total liabilities and equity
$
June 30,
2020
June 30,
2019
319,128 $
27,689
2,435
11,671
1,227
362,150
2,318,913
85,224
119,475
20,733
2,702
11,380
389
154,679
2,339,316
50,156
2,766,287 $ 2,544,151
2,484 $
18,364
13,323
9,384
43,555
300,439
86,439
25,427
8,308
464,168
2,890
17,372
6,974
6,374
33,610
214,554
88,961
36,573
-
373,698
—
—
655
2,210,429
61,133
2,272,217
29,902
2,302,119
2,766,287 $
655
2,201,773
(65,747)
2,136,681
33,772
2,170,453
2,544,151
The accompanying notes are an integral part of these consolidated financial statements.
43
ROYAL GOLD, INC.
Consolidated Statements of Operations and Comprehensive Income (Loss)
For the Years Ended June 30,
(In thousands, except share data)
Revenue (Note 7)
Costs and expenses
Cost of sales (excludes depreciation, depletion and amortization)
General and administrative
Production taxes
Exploration costs
Depreciation, depletion and amortization
Impairment of royalty interests
Total costs and expenses
Operating income (loss)
Fair value changes in equity securities
Interest and other income
Interest and other expense
Income (loss) before income taxes
June 30,
2020
498,819 $
For The Year Ended
June 30,
2019
423,056 $
June 30,
2018
459,042
$
83,890
30,195
3,824
5,190
175,434
1,341
299,874
77,535
30,488
4,112
7,158
163,056
—
282,349
83,839
35,464
2,268
8,946
163,696
239,364
533,577
198,945
140,707
(74,535)
1,418
2,046
(9,813)
192,596
(6,800)
2,320
(29,650)
106,577
—
4,170
(34,214)
(104,579)
Income tax benefit (expense)
Net income (loss)
Net loss attributable to non-controlling interests
Net income (loss) attributable to Royal Gold common stockholders
3,654
196,250
3,093
199,343 $
(17,498)
89,079
4,746
93,825 $
(14,772)
(119,351)
6,217
(113,134)
$
Net income (loss)
Adjustments to comprehensive income (loss), net of tax
Unrealized change in market value of available-for-sale securities
$
196,250 $
89,079 $
(119,351)
—
—
(2,080)
Comprehensive income (loss)
Comprehensive loss attributable to non-controlling interests
Comprehensive income (loss) attributable to Royal Gold stockholders
$
196,250
3,093
199,343 $
89,079
4,746
93,825 $
(121,431)
6,217
(115,214)
Net income (loss) per share attributable to Royal Gold common
stockholders:
Basic earnings (loss) per share
Basic weighted average shares outstanding
Diluted earnings (loss) per share
Diluted weighted average shares outstanding
Cash dividends declared per common share
$
3.04 $
1.43 $
65,523,024
65,394,627
$
3.03 $
1.43 $
65,643,390
65,505,535
$
1.11 $
1.05 $
(1.73)
65,291,855
(1.73)
65,291,855
0.99
The accompanying notes are an integral part of these consolidated financial statements.
44
ROYAL GOLD, INC.
Consolidated Statements of Changes in Equity
For the Years Ended June 30, 2020, 2019 and 2018
(In thousands, except share data)
Royal Gold Stockholders
Common Shares
Shares
65,179,527 $
Amount
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Balance at June 30, 2017
Stock-based compensation and related share
issuances
Distributions from non-controlling interests
Net loss
Other comprehensive loss
Dividends declared
Balance at June 30, 2018
Stock-based compensation and related share
issuances
Distributions from (to) non-controlling interests
Net income (loss)
Other comprehensive income (loss)
Dividends declared
Balance at June 30, 2019
Stock-based compensation and related share
issuances
Distributions from (to) non-controlling interests
Net income (loss)
Dividends declared
Balance at June 30, 2020
652 $ 2,185,796 $
879 $
88,050 $
44,887 $ 2,320,264
Accumulated
(Losses) Earnings
Non-controlling
Interests
Total
Equity
180,514
—
—
—
—
2
—
—
—
—
4,236
2,580
—
—
—
65,360,041 $
654 $ 2,192,612 $
80,451
—
—
—
—
1
—
—
—
—
5,021
4,140
—
—
—
65,440,492 $
655 $ 2,201,773 $
90,796
—
—
—
—
—
—
—
4,936
3,720
—
—
65,531,288 $
655 $ 2,210,429 $
—
—
—
(2,080)
—
(1,201) $
—
—
—
1,201
—
— $
—
—
—
—
— $
—
—
(113,134)
—
(64,814)
(89,898) $
—
—
93,825
(1,201)
(68,473)
(65,747) $
—
—
199,343
(72,463)
61,133 $
—
432
(6,217)
—
—
4,238
3,012
(119,351)
(2,080)
(64,814)
39,102 $ 2,141,269
—
(584)
(4,746)
—
—
5,022
3,556
89,079
—
(68,473)
33,772 $ 2,170,453
—
(777)
(3,093)
—
4,936
2,943
196,250
(72,463)
29,902 $ 2,302,119
The accompanying notes are an integral part of these consolidated financial statements.
45
ROYAL GOLD, INC.
Consolidated Statements of Cash Flows
For the Years Ended June 30,
(In thousands)
June 30,
2020
Year Ended
June 30,
2019
June 30,
2018
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
$ 196,250 $
Depreciation, depletion and amortization
Amortization of debt discount and issuance costs
Non-cash employee stock compensation expense
Fair value changes in equity securities
Deferred tax benefit
Impairment of royalty interests
Other
Changes in assets and liabilities:
Royalty receivables
Stream inventory
Income tax receivable
Prepaid expenses and other assets
Accounts payable
Income tax payable
Uncertain tax positions
Other liabilities
175,434
1,136
9,116
(1,418)
(32,399)
1,341
(148)
(6,957)
(291)
268
(7,828)
(275)
6,349
(11,146)
11,320
Net cash provided by operating activities
$ 340,752 $
89,079 $ (119,351)
163,056
15,288
6,617
6,800
(1,745)
—
(2)
5,623
(2,069)
(2,663)
2,793
(6,426)
(11,281)
3,180
(15,084)
253,166 $
163,696
15,046
8,279
—
(32,843)
239,364
(197)
530
(1,428)
22,130
2,813
5,173
12,601
7,767
5,244
328,824
Cash flows from investing activities:
Acquisition of stream and royalty interests
Repayment of Golden Star term loan
Purchase of equity securities
Other
Net cash used in investing activities
Cash flows from financing activities:
Repayment of debt
Borrowings from revolving credit facility
Net payments from issuance of common stock
Common stock dividends
Contributions from non-controlling interest
Other
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and equivalents
Cash and equivalents at beginning of period
Cash and equivalents at end of period
(155,985)
—
(461)
3,587
$ (152,859) $
(1,055)
—
(3,573)
(967)
(5,595) $
(11,812)
20,000
(17,869)
(909)
(10,590)
(250,000)
(370,000)
(115,000)
—
220,000
200,000
(4,042)
(1,595)
(4,180)
(64,118)
(67,477)
(71,471)
—
4,140
3,720
(1,309)
2,829
(1,914)
11,760 $ (216,846) $ (315,331)
2,903
30,725
199,653
85,847
119,475
88,750
88,750
$ 319,128 $
119,475 $
$
See Note 11 for supplemental cash flow information.
The accompanying notes are an integral part of these consolidated financial statements.
46
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY
Royal Gold, Inc. (“Royal Gold”, the “Company”, “we”, “us”, or “our”), together with its subsidiaries, is engaged in the
business of acquiring and managing precious metals streams, royalties and similar interests. We seek to acquire existing
stream and royalty interests or to finance projects that are in production or in the development stage in exchange for stream
or royalty interests. A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment,
the right to purchase all or a portion of one or more metals produced from a mine at a price determined for the life of the
transaction by the purchase agreement. Royalties are non-operating interests in mining projects that provide the right to
revenue or metals produced from the project after deducting specified costs, if any.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED AND
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Summary of Significant Accounting Policies
Use of Estimates
The preparation of our financial statements in conformity with U.S. generally accepted accounting principles (“U.S.
GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues
and expenses during the reporting periods. Actual results could differ significantly from those estimates.
We rely on reserve estimates reported by the operators of properties on which we hold stream and royalty interests. These
estimates and the underlying assumptions affect the potential impairments of long-lived assets and the ability to realize
income tax benefits associated with deferred tax assets. These estimates and assumptions also affect the rate at which we
recognize revenue or charge depreciation, depletion and amortization to earnings. On an ongoing basis, management
evaluates these estimates and assumptions; however, actual amounts could differ from these estimates and assumptions.
Differences between estimates and actual amounts are adjusted and recorded in the period that the actual amounts are
known.
Basis of Consolidation
The consolidated financial statements include the accounts of Royal Gold, Inc., its wholly owned subsidiaries and an entity
over which control is achieved through means other than voting rights. All intercompany accounts, transactions, income
and expenses, and profits or losses have been eliminated on consolidation.
Peak Gold JV
Royal Gold, through its wholly owned subsidiary, Royal Alaska, LLC (“Royal Alaska”), and Contango ORE, Inc., through
its wholly owned subsidiary CORE Alaska, LLC, entered into a limited liability company agreement for the Peak Gold
JV, a joint venture for exploration and advancement of the Peak Gold Project located near Tok, Alaska. We have identified
the Peak Gold JV as a Variable Interest Entity, with Royal Alaska as the primary beneficiary, due to the legal structure
and certain related factors of the limited liability company agreement for the Peak Gold JV. We determined that the Peak
Gold JV should be fully consolidated at fair value initially. The fair value of our non-controlling interest is $45.7 million
and is based on the underlying value of the mineral property assigned to the Peak Gold JV, which is recorded as an
exploration stage property within Stream and royalty interests, net on our consolidated balance sheets.
As of June 30, 2020, and 2019, Royal Alaska held a 40% membership interest in the Peak Gold JV. Royal Alaska acts as
the manager of the Peak Gold JV and will be responsible for managing, directing and controlling the overall operations
47
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
unless Royal Alaska is unanimously removed or resigns that position in the manner provided in the Peak Gold JV limited
liability company agreement.
Cash and Equivalents
Cash and equivalents consist of all cash balances and highly liquid investments with an original maturity of three months
or less. Cash and equivalents were primarily held in cash deposit accounts as of June 30, 2020 and 2019.
Stream and Royalty Interests in Mineral Properties and Related Depletion
Stream and royalty interests include acquired stream and royalty interests in production, development and exploration
stage properties. The costs of acquired stream and royalty interests are capitalized as tangible assets as such interests do
not meet the definition of a financial asset under U.S. GAAP.
Production stage stream and royalty interests are depleted using the units of production method over the life of the mineral
property (as stream sales occur or royalty payments are recognized), which are estimated using proven and probable
reserves as provided by the operator. Development stage mineral properties, which are not yet in production, are not
depleted until the property begins production. Exploration stage mineral properties, where there are no proven and probable
reserves, are not depleted. At such time as the associated exploration stage mineral interests are converted to proven and
probable reserves, the mineral property is depleted over its life, using proven and probable reserves. Exploration costs are
expensed when incurred.
Asset Impairment
We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the related
carrying amounts of an asset or group of assets may not be recoverable. When impairment indicators are identified, the
recoverability of the carrying value of stream and royalty interests in production and development stage mineral properties
is evaluated based upon estimated future undiscounted net cash flows from each stream and royalty interest using estimates
of proven and probable reserves and other relevant information received from the operators. We evaluate the recoverability
of the carrying value of royalty interests in exploration stage mineral properties in the event of significant decreases in the
price of gold, silver, copper and other metals, and whenever new information regarding the mineral properties is obtained
from the operator indicating that production will not likely occur or may be reduced in the future, thus potentially affecting
the future recoverability of our stream or royalty interests. Impairments in the carrying value of each property are measured
and recorded to the extent that the carrying value in each property exceeds its estimated fair value, which is generally
calculated using estimated future discounted cash flows.
Estimates of gold, silver, copper, and other metal prices, and operators’ estimates of proven and probable reserves or
mineralized material related to our stream or royalty properties are subject to certain risks and uncertainties which may
affect the recoverability of our investment in these stream and royalty interests in mineral properties. It is possible that
changes could occur to these estimates, which could adversely affect the net cash flows expected to be generated from
these stream and royalty interests. Refer to Note 4 for discussion and the results of our impairment assessments for the
fiscal years ended June 30, 2020, 2019 and 2018.
Revenue
Under U.S. GAAP, 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
48
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 in Note 7.
Metal Sales
Gold, silver and copper received under our metal streaming agreements are taken into inventory, and then sold primarily
using average spot rate gold, silver and copper forward contracts. The sales price for these average spot rate forward
contracts is determined by the average daily gold, silver or copper spot prices during the term of the contract, typically a
consecutive number of trading days between 10 days and three months (depending on the frequency of deliveries under
the respective streaming agreement and our sales activity in effect at the time) commencing shortly after receipt and
purchase of the metal. Revenue from gold, silver and copper sales is recognized on the date of the settlement, which is
also the date that title to the metal passes to the purchaser.
Cost of Sales
Cost of sales, which excludes depreciation, depletion and amortization, is specific to our stream agreements and is the
result of 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 spot price near the date of metal delivery.
Production Taxes
Certain royalty payments are subject to production taxes (or mining proceeds taxes), which are recognized at the time of
revenue recognition. Production taxes are not income taxes and are included within the costs and expenses section in our
consolidated statements of operations and comprehensive income (loss).
Exploration Costs
Exploration costs are specific to the Peak Gold JV for the exploration and advancement of the Peak Gold Project, as
discussed further above under Basis of Consolidation. Costs associated with the Peak Gold JV for the exploration and
advancement of the Peak Gold Project are expensed when incurred.
Stock-Based Compensation
We recognize all share-based payments to employees, including grants of employee stock options, stock-settled stock
appreciation rights (“SSARs”), restricted stock and performance shares, in our financial statements based upon their fair
values.
Income Taxes
Our annual tax rate is based on income, statutory tax rates in effect, and tax planning opportunities available to us in the
various jurisdictions in which we operate. Significant judgment is required in determining the annual tax expense, current
tax assets and liabilities, deferred tax assets and liabilities, and our future taxable income, both as a whole and in various
tax jurisdictions, for purposes of assessing our ability to realize future benefit from our deferred tax assets. Actual income
taxes could vary from these estimates due to future changes in income tax law, significant changes in the jurisdictions in
which we operate or unpredicted results from the final determination of each year’s liability by taxing authorities.
Our deferred income taxes reflect the impact of temporary differences between the reported amounts of assets and
liabilities for financial reporting purposes and such amounts measured by tax laws and regulations. In evaluating the
realizability of the deferred tax assets, management considers both positive and negative evidence that may exist, such as
earnings history, reversal of taxable temporary differences, forecasted operating earnings and available tax planning
49
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
strategies in each tax jurisdiction. A valuation allowance may be established to reduce our deferred tax assets to the amount
that is considered more likely than not to be realized through the generation of future taxable income and other tax planning
strategies.
Our operations may involve dealing with uncertainties and judgments in the application of complex tax regulations in
multiple jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities
in various jurisdictions and resolution of disputes arising from federal, state, and international tax audits. We recognize
potential liabilities and records tax liabilities for anticipated tax audit issues in the United States and other tax jurisdictions
based on our estimate of whether, and the extent to which, additional taxes will be due. We adjust these reserves in light
of changing facts and circumstances, such as the progress of a tax audit; however, due to the complexity of some of these
uncertainties, the ultimate resolution could result in a payment that is materially different from our current estimate of the
tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period which they
are determined. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.
Earnings per Share
Basic earnings (loss) per share is computed by dividing net income (loss) available to Royal Gold common stockholders
by the weighted average number of outstanding common shares for the period, considering the effect of participating
securities. Diluted earnings (loss) per share reflect the potential dilution that could occur if securities or other contracts
that may require issuance of common shares were converted. Diluted earnings (loss) per share is computed by dividing
net income (loss) available to common stockholders by the diluted weighted average number of common shares
outstanding during each fiscal year.
Recently Adopted and Recently Issued Accounting Standards
Recently Adopted
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 July 1, 2019. We 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, we 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.
50
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In addition, we 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.
Our significant lease arrangements relate to our corporate office spaces and office equipment. Through the implementation
process, we evaluated our 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.
We lease office space and office equipment under operating leases expiring at various dates through the fiscal year ending
June 30, 2030. The following amounts were recorded in the consolidated balance sheets at June 30, 2020 (amounts in
thousands):
Operating Leases
Right-of-use assets - current
Right-of-use assets - non-current
Total right-of-use assets
Lease liabilities - current
Lease liabilities - non-current
Total operating lease liabilities
Classification
June 30, 2020
Prepaid expenses and other $
Other assets
Other current liabilities
Other long-term liabilities
$
$
$
823
7,087
7,910
901
8,309
9,210
Maturities of operating lease liabilities at June 30, 2020 are as follows (amounts in thousands):
Fiscal Years:
2021
2022
2023
2024
2025
Thereafter
Total lease payments
Less imputed interest
Total
$
Operating Leases
1,121
1,119
1,106
1,116
1,091
4,799
10,352
(1,142)
9,210
$
$
Other information pertaining to leases consist of the following:
Operating Lease Term and Discount Rate
Weighted average remaining lease term in years
Weighted average discount rate
June 30, 2020
9
2.5%
We did not have any finance leases as of June 30, 2020. The adoption of ASU 2016-02 did not impact accumulated
earnings (losses), our consolidated statements of operations and comprehensive income (loss), or our consolidated
statements of cash flows.
51
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Recently Issued
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of
Credit Losses of Financial Instruments, which, together with subsequent amendments, changes how an entity will record
credit losses from an “incurred loss” approach to an “expected loss” approach. This update is effective for annual periods
beginning after December 15, 2019 (i.e. July 1, 2020 for Royal Gold) and interim financial statement periods within those
years, with early adoption permitted. We are currently undergoing our assessment of the new guidance and the impact it
will have on our consolidated financial statements and related disclosures. Based on procedures performed as of June 30,
2020, the adoption of the new guidance effective July 1, 2020 is not expected to have a material impact on the Company’s
consolidated financial statements.
3. ACQUISITIONS
Alturas royalty acquisition
On January 29, 2020, we entered into an agreement with various private individuals for the acquisition 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 Compañia Minera Salitrales Limitada,
a subsidiary of Barrick Gold Corporation (“Barrick”). Total consideration for the royalty is up to $41 million, of which
$11 million was paid on January 29, 2020. The $11 million paid as part of the funding schedule, plus direct acquisition
costs, have been recorded as an exploration stage royalty interest within Stream and royalty interests, net on our
consolidated balance sheets. A future payment of up to $20 million is conditioned based on a project construction decision
by Barrick and the size of the minable mineralized material on the date of the construction decision. A further future
payment of up to $10 million will be made upon first production from the mining concessions.
Castelo de Sonhos royalty acquisition
In August 2019, we entered into an agreement with TriStar Gold Inc. and its subsidiaries (together “TriStar”) to acquire
(i) up to a 1.5% NSR royalty on the Castelo de Sonhos gold project (“CDS”), located in Brazil, and (ii) warrants to purchase
up to 19,640,000 common shares of TriStar. Total consideration is $7.5 million and is payable over three payments, of
which $4.5 million was paid in August 2019, $1.5 million was paid in November 2019, and the final payment of $1.5
million was paid on March 30, 2020.
The CDS royalty acquisition has been accounted for as an asset acquisition. The $7.5 million paid as part of the aggregate
funding schedule, plus direct acquisition costs, have been recorded as an exploration stage royalty interest within Stream
and royalty interests, net on our consolidated balance sheets.
The warrants have been recorded within Other assets on our consolidated balance sheets and have a carrying value of
approximately $4.0 million as of June 30, 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 securities on our consolidated statements
of operations and comprehensive income. As of June 30, 2020, 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.
Acquisition of Silver Stream on Khoemacau Copper Project
On February 25, 2019, our wholly owned subsidiary, RGLD Gold AG (“RGLD Gold”), entered into a life of mine purchase
and sale agreement with Khoemacau Copper Mining (Pty.) Limited (“KCM”) for the purchase of silver produced from the
Khoemacau Project (“Khoemacau” or the “Project”) located in Botswana and owned by KCM. Under the purchase and
sale agreement, subject to the satisfaction of certain conditions, RGLD Gold will make advance payments totaling $212
52
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
million toward the purchase of 80% of the silver produced from Khoemacau until certain delivery thresholds are met (the
“Base Silver Stream”). At KCM’s option and subject to various conditions, RGLD Gold will make up to an additional $53
million in advance payments for up to the remaining 20% of the silver produced from Khoemacau (the “Option Silver
Stream”). The stream rate will drop to 40% of silver produced from Khoemacau following delivery to RGLD Gold of 32
million silver ounces under the Base Silver Stream, or to 50% of the silver produced from Khoemacau following delivery
of 40 million silver ounces to RGLD Gold should KCM exercise the entire Option Silver Stream. RGLD Gold will pay a
cash price equal to 20% of the spot silver price for each ounce delivered under the Base Silver Stream and Option Silver
Stream; however, if KCM achieves mill expansion throughput levels above 13,000 tonnes per day (30% above current
mill design capacity), RGLD Gold will pay a higher ongoing cash price under the Base Silver Stream and Option Silver
Stream for silver ounces delivered in excess of specific annual thresholds.
RGLD Gold made its first advance payment of $65.8 million on November 5, 2019, its second advance payment of $22.0
million on February 2, 2020, and its third advance payment of $47.9 million on April 3, 2020. On July 5, 2020, RGLD
Gold made its fourth advance payment of $11.1 million, which brings the total contribution under the Base Silver Stream
to $146.8 million. Further payments are subject to certain conditions and are scheduled to be made on a quarterly basis
using an agreed formula and certification process as project spending progresses.
Separate from the Base Silver Stream and Option Silver Stream, and subject to various conditions, RGLD Gold will make
up to $25 million available to KCM toward the end of development of Khoemacau under a subordinated debt facility. Any
amounts drawn by KCM under the debt facility will carry interest at LIBOR + 11% and have a term of seven years. RGLD
Gold will have the right to force repayment of the debt facility upon certain events.
We have accounted for the Silver Stream and Option Stream (if exercised by KCM) as an asset acquisition, consistent with
the treatment of our other acquired streams. The $135.7 million in advance payments for the Base Silver Stream made
during our fiscal year 2020, plus direct transaction costs, have been recorded as a development stage stream interest within
Stream and royalty interests, net on our consolidated balance sheets as of June 30, 2020. Further advance payments made
under the Silver Stream or Option Stream (if exercised by KCM) will be recorded as a development stage interest within
Stream and royalty interests, net on our consolidated balance sheets during the period the advance payment occurs.
53
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. STREAM AND ROYALTY INTERESTS, NET
The following summarizes our stream and royalty interests as of June 30, 2020 and 2019:
As of June 30, 2020 (Amounts in thousands):
Production stage stream interests:
Mount Milligan
Pueblo Viejo
Andacollo
Rainy River
Wassa
Total production stage stream interests
Production stage royalty interests:
Voisey's Bay
Peñasquito
Holt
Cortez
Other
Total production stage royalty interests
Total production stage stream and royalty interests
Development stage stream interests:
Khoemacau
Other
Development stage royalty interests:
Other
Total development stage stream and royalty interests
Exploration stage royalty interests:
Pascua-Lama
Other
Total exploration stage royalty interests
Total stream and royalty interests, net
Cost
Accumulated
Depletion
Impairments
Net
$
790,635 $ (236,352) $
610,404
388,182
175,727
146,475
2,111,423
(203,935)
(110,521)
(27,278)
(67,619)
(645,705)
— $ 554,283
406,469
—
277,661
—
148,449
—
—
78,856
1,465,718
—
205,724
99,172
34,612
80,681
487,225
907,414
3,018,837
(101,381)
(44,614)
(23,851)
(15,065)
(403,080)
(587,991)
(1,233,696)
—
—
—
—
(1,341)
(1,341)
(1,341)
104,343
54,558
10,761
65,616
82,804
318,082
1,783,800
136,608
12,037
70,952
219,597
—
—
—
—
—
—
—
—
136,608
12,037
70,952
219,597
177,690
137,826
315,516
—
177,690
—
137,826
315,516
—
$ 3,553,950 $ (1,233,696) $ (1,341) $ 2,318,913
—
—
—
54
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
As of June 30, 2019 (Amounts in thousands):
Production stage stream interests:
Mount Milligan
Pueblo Viejo
Andacollo
Rainy River
Wassa
Total production stage stream interests
Total production stage stream and royalty interests
Production stage royalty interests:
Voisey's Bay
Peñasquito
Holt
Cortez
Other
Total production stage royalty interests
Total production stage stream and royalty interests
Development stage stream interests:
Other
Development stage royalty interests:
Cortez
Other
Total development stage royalty interests
Total development stage stream and royalty interests
Exploration stage royalty interests:
Pascua-Lama
Other
Total exploration stage royalty interests
Total stream and royalty interests, net
Mount Milligan
Cost
Accumulated
Depletion
Net
$ 790,635 $
610,404
388,182
175,727
146,475
2,111,423
(184,091) $
(158,819)
(86,675)
(14,522)
(56,919)
(501,026)
606,544
451,585
301,507
161,205
89,556
1,610,397
205,724
99,172
34,612
20,878
487,224
847,610
2,959,033
(95,564)
(40,659)
(22,570)
(12,362)
(386,501)
(557,656)
(1,058,682)
110,160
58,513
12,042
8,516
100,723
289,954
1,900,351
12,038
—
12,038
59,803
70,952
130,755
142,793
—
—
—
—
59,803
70,952
130,755
142,793
177,690
118,482
296,172
177,690
118,482
296,172
$ 3,397,998 $ (1,058,682) $ 2,339,316
—
—
—
RGLD Gold owns the right to purchase 35% of the payable gold and 18.75% of the payable copper produced from the
Mount Milligan copper-gold mine in British Columbia, Canada, which is operated by an indirect subsidiary of Centerra
Gold Inc. (“Centerra”). The Company’s carrying value for its stream interest at Mount Milligan is $554.3 million as of
June 30, 2020.
On October 30, 2019, Centerra reported that issues identified with decreasing long-term gold recoveries and increased
costs in the short-to medium-term led them to record an impairment charge against their carrying value of the Mount
Milligan mine under applicable accounting standards, and that it had begun a comprehensive technical review of the
operation with the objective of publishing an updated National Instrument 43-101 (“NI 43-101”) technical report.
On March 26, 2020, Centerra published an updated NI 43-101 technical report for Mount Milligan which provided, among
other things, a detailed update to the life of mine plan and reductions to the proven and probable reserves due to increased
costs, lower expected productivities and lower process plant throughput.
Significant reductions in proven and probable reserves or mineralized material are indicators of potential impairment for
Royal Gold’s stream and royalty interests. As part of our regular asset impairment analysis during the quarter ended March
55
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
31, 2020, we determined that an impairment of our stream interest at Mount Milligan was not necessary as (i) the financial
impairment taken by Centerra does not impact the mine operating performance, and (ii) the reduction in reserves and
mineralized material at Mount Milligan resulted in updated gold and copper depletion rates that remain well below current
and long-term consensus gold and copper prices. As of June 30, 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.
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 June 30, 2020, approximately 38,700 ounces of gold and approximately
410,500 ounces of silver have been delivered to RGLD Gold. The Company’s carrying value for its stream interest at
Rainy River is $148.5 million as of June 30, 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 updated depletion
rates that remain well below current and long-term consensus gold and silver prices. As of June 30, 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 of our operating counterparties announced temporary operational curtailments or the withdrawal or review of
previously disclosed guidance due to the ongoing COVID-19 pandemic. The economic and societal impacts associated
with COVID-19 are fluid and changing rapidly, and we are currently unable to predict the nature or extent of any impact
on our results of operations and financial condition. We will continue to monitor any further developments that the
COVID-19 pandemic may have on stream or royalty interests as part of our regular asset impairment analysis.
Impairment of royalty interests
In accordance with our impairment accounting policy discussed in Note 1, impairments in the carrying value of each
royalty interests are measured and recorded to the extent that the carrying value in each royalty interest exceeds its
estimated fair value, which is generally calculated using estimated future discounted cash-flows. For our regular asset
impairment analysis, we did not identify the presence of any impairment indicators and did not record any impairment
56
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
charges for the fiscal year ended of June 30, 2019. We identified impairment indicators and recorded impairment charges
for the fiscal year ended June 30, 2020, and 2018 as summarized in the following table and discussed in detail below:
Royalty:
Pascua-Lama
Other
Total impairment of royalty interests
Other
Fiscal Year Ended June 30,
2020
2019
2018
(Amounts in thousands)
—
1,341
1,341
$
$
—
—
—
$
239,080
284
239,364
During the quarter ended June 30, 2019, we were made aware of insolvency proceedings at one of our non-principal
producing properties (El Toqui). During the quarter ended June 30, 2020, we obtained new information regarding the
insolvency proceedings and determined our carrying value for El Toqui was not recoverable and an impairment of $1.3
million was necessary. Our carrying value for El Toqui is zero as of June 30, 2020.
Pascua-Lama
We own a 0.78% to 5.45% sliding-scale NSR royalty on gold and silver production from the Chilean portion of the Pascua-
Lama project, which straddles the border between Argentina and Chile, and is owned by Barrick. We own an additional
royalty equivalent to 1.09% of proceeds from copper produced from the Chilean portion of the project, net of allowable
deductions, sold on or after January 1, 2017.
On January 18, 2018, Barrick reported that it is analyzing a revised sanction related to the Pascua-Lama project issued by
Chile’s Superintendencia del Medio Ambiente (“SMA”) on January 17, 2018. The sanction is part of a re-evaluation
process ordered by Chile’s Environmental Court in 2014 and relates to historical compliance matters at the Pascua-Lama
project. According to Barrick, the SMA has not revoked Pascua-Lama’s environmental permit, but has ordered the closure
of existing facilities on the Chilean side of the project, in addition to certain monitoring activities.
On February 6, 2018, in light of the SMA order to close surface facilities in Chile, and earlier plans to evaluate an
underground mine, Barrick announced it reclassified Pascua-Lama’s proven and probable reserves, which are based on an
open pit mine plan, as mineralized material. Barrick reported further details in its year-end results on February 14, 2018
and an update on the Pascua-Lama project at its February 22, 2018 Investor Day. A significant reduction in reserves or
mineralized material are indicators of impairment.
On April 23, 2018, Barrick announced that work performed to-date on the prefeasibility study for a potential underground
project has been suspended, and they will focus on adjusting the project closure plan for surface infrastructure on the
Chilean side of the project. Barrick will continue to evaluate opportunities to de-risk the project while maintaining Pascua-
Lama as an option for development in the future if economics improve and related risks can be mitigated.
As part of the impairment determination, the fair value for Pascua-Lama was estimated by calculating the net present value
of the estimated future cash-flows, subject to our royalty interest, expected to be generated by the mining of the Pascua-
Lama deposits. We applied a probability factor to our fair value calculation that Barrick will either proceed with an open-
pit mine or an underground mine at Pascua. The estimates of future cash flows were derived from open-pit and underground
mine models we developed using various information reported by Barrick. The metal price assumptions we used in the
model were supported by consensus price estimates obtained by a number of industry analysts. The future cash flows were
discounted using a discount rate which reflects specific market risk factors we associate with the Pascua-Lama royalty
57
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
interest. Following the impairment charge ($239.1 million) during the three months ended March 31, 2018, the Pascua-
Lama royalty interest has a remaining carrying value of $177.7 million as of June 30, 2020. As a result of Barrick’s
reclassification of Pascua-Lama’s reserves to mineralized material, our Pascua-Lama royalty interest was reclassified to
exploration stage from development stage during our fiscal year ended June 30, 2018.
5. MARKETABLE EQUITY SECURITIES
As of June 30, 2020, our marketable equity securities include 809,744 common shares of Contango Ore, Inc., 3,949,575
common shares of Battle North Gold Corporation (formerly Rubicon Minerals Corporation), and warrants to purchase up
to 19,640,000 common shares of TriStar. Our marketable equity securities are measured at fair value (Note 12) each
reporting period with any changes in fair value recognized in net income.
The fair value of our marketable equity securities increased $1.4 million and decreased $6.8 million for the years ended
June 30, 2020 and 2019, respectively, and these changes are included in Fair value changes in equity securities on our
consolidated statements of operation and comprehensive income (loss). The carrying value of our marketable equity
securities as of June 30, 2020 and June 30, 2019 was $17.9 million and $16.0 million, respectively, and is included in
Other assets on our consolidated balance sheets.
6. DEBT
The Company’s debt as of June 30, 2020 and 2019 consists of the following:
As of June 30, 2020
Debt
Issuance
Costs
(Amounts in thousands)
As of June 30, 2019
Debt
Issuance
Costs
(Amounts in thousands)
Principal
Total
Principal
Total
Revolving credit facility
Total debt
Revolving Credit Facility
$ 305,000 $ (4,561) $ 300,439 $ 220,000 $ (5,446) $ 214,554
$ 305,000 $ (4,561) $ 300,439 $ 220,000 $ (5,446) $ 214,554
On September 20, 2019, we entered into a third amendment to our revolving credit facility dated as of June 2, 2017. Under
the amendment, our 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 being the facility is now unsecured.
As of June 30, 2020, we had $305 million outstanding and $695 million available under our revolving credit facility. As
of June 30, 2020, the interest rate on borrowings under the revolving credit facility was LIBOR plus 1.10% for an all-in
rate of 1.29%. Interest expense recognized on the revolving credit facility for the fiscal years ended June 30, 2020, 2019
and 2018 was approximately $7.0 million, $1.7 million and $5.7 million, respectively, and included interest on the
outstanding borrowings and the amortization of the debt issuance costs. We were in compliance with each financial
covenant (leverage ratio and interest coverage ratio) under the revolving credit facility as of June 30, 2020.
Royal Gold may repay any borrowings under the revolving credit facility at any time without premium or penalty. The
Company’s revolving credit facility matures on June 3, 2024.
58
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. REVENUE
Revenue Recognition
Under U.S. GAAP, a performance obligation is a promise in a contract to transfer control of a distinct good or service (or
integrated package of goods and/or services) to a customer. A contract’s transaction price is allocated to each distinct
performance obligation and recognized as revenue when, or as, a performance obligation is satisfied. In accordance with
this guidance, revenue attributable to our stream interests and royalty interests is generally recognized at the point in time
that control of the related metal production transfers to our customers. The amount of revenue we recognize further reflects
the consideration to which we are entitled under the respective stream or royalty agreement. A more detailed summary of
our revenue recognition policies for our stream and royalty interests is discussed below.
Stream Interests
A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase
all or a portion of one or more of the metals produced from a mine, at a price determined for the life of the transaction by
the purchase agreement. Gold, silver and copper received under our metal streaming agreements are taken into inventory,
and then sold primarily using average spot rate gold, silver and copper forward contracts. The sales price for these average
spot rate forward contracts is determined by the average daily gold, silver or copper spot prices during the term of the
contract, typically a consecutive number of trading days between ten days and three months (depending on the frequency
of deliveries under the respective streaming agreement and our sales policy in effect at the time) commencing shortly after
receipt and purchase of the metal. We settle our forward sales contracts via physical delivery of the metal to the purchaser
(our customer) on the settlement date specified in the contract. Under our forward sales contracts, there is a single
performance obligation to sell a contractually specified volume of metal to the purchaser, and we satisfy this obligation at
the point in time of physical delivery. Accordingly, revenue from our metal sales is recognized on the date of settlement,
which is the date that control, custody and title to the metal transfer to the purchaser.
Royalty Interests
Royalties are non-operating interests in mining projects that provide the right to a percentage of revenue or metals produced
from the project after deducting specified costs, if any. We are entitled to payment for our royalty interest in a mining
project based on a contractually specified commodity price (for example, a monthly or quarterly average spot price) for
the period in which metal production occurred. 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. As a result, we may estimate revenue for these royalties based on available information, including
public information, from the operator. If adequate information is not available from the operator or from other public
sources before we issue our financial statements, we will recognize royalty revenue during the period in which the
necessary payment information is received. Differences between estimates and actual amounts could differ significantly
59
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
and are recorded in the period that the actual amounts are known. Please also refer to our “Use of Estimates” accounting
policy discussed in Note 2. For the quarter ended June 30, 2020, royalty revenue that was estimated or was attributable to
metal production for a period prior to June 30, 2020, was not material.
Disaggregation of Revenue
We have identified two material revenue sources in our business: stream interests and royalty interests. These identified
revenue sources are consistent with our reportable segments as discussed in Note 14.
Revenue by metal type attributable to each of our revenue sources is disaggregated as follows (amounts in thousands):
Stream revenue:
Gold
Silver
Copper
Total stream revenue
Royalty revenue:
Gold
Silver
Copper
Other
Total royalty revenue
Total revenue
Year Ended
June 30,
2020
June 30,
2019
$
$
$
$
$
294,490
32,744
32,634
359,868
98,153
9,996
13,528
17,274
138,951
498,819
$
$
$
$
$
249,496
33,282
23,046
305,824
78,570
5,497
13,808
19,357
117,232
423,056
Revenue by metal type attributable to each of our revenue sources is disaggregated as follows (amounts in thousands):
Stream revenue:
Mount Milligan
Pueblo Viejo
Andacollo
Wassa
Other
Total stream revenue
Royalty revenue:
Peñasquito
Cortez
Other
Total royalty revenue
Total revenue
Metal(s)
Gold & Copper
Gold & Silver
Gold
Gold
Gold & Silver
Gold, Silver, Lead & Zinc
Gold
Various
Year Ended
June 30,
2020
June 30,
2019
$
131,425 $
96,978
74,219
23,203
34,043
359,868 $
25,498 $
22,342
91,111
138,951 $
498,819 $
$
$
$
$
101,010
82,844
69,264
22,098
30,608
305,824
13,865
11,383
91,984
117,232
423,056
Refer to Note 14 for the geographical distribution of our revenue by reportable segment.
8. STOCK-BASED COMPENSATION
In November 2015, our shareholders approved the 2015 Omnibus Long-Term Incentive Plan (“2015 LTIP”). Under the
2015 LTIP, 2,500,000 shares of common stock have been authorized for future grants to officers, directors, key employees
and other persons. The 2015 LTIP provides for the grant of stock options, unrestricted stock, restricted stock, dividend
60
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
equivalent rights, SSARs and cash awards. Any of these awards may, but need not, be made as performance incentives.
Stock options granted under the 2015 LTIP may be non-qualified stock options or incentive stock options.
We recognized stock-based compensation expense as follows:
Fiscal Year Ended June 30,
2020
2019
(Amounts in thousands)
2018
Stock options
Stock appreciation rights
Restricted stock
Performance stock
Total stock-based compensation expense
$
221 $
163 $
318
1,988
4,487
1,486
$ 9,116 $ 6,617 $ 8,279
2,025
3,336
1,035
2,545
5,117
1,291
Stock-based compensation expense is included within General and administrative expense on the consolidated statements
of operations and comprehensive income (loss).
Stock Options and Stock Appreciation Rights
Stock option and SSARs awards are granted with an exercise price equal to the closing market price of our stock at the
date of grant. Stock option and SSARs awards granted to officers, key employees and other persons vest based on one to
three years of continuous service. Stock option and SSARs awards have 10 year contractual terms.
To determine stock-based compensation expense for stock options and SSARs, the fair value of each stock option and
SSAR is estimated on the date of grant using the Black-Scholes-Merton (“Black-Scholes”) option pricing model for all
periods presented. The Black-Scholes model requires key assumptions in order to determine fair value. Those key
assumptions during the fiscal year 2020, 2019 and 2018 grants are noted in the following table:
Weighted-average expected volatility
Weighted-average expected life in years
Weighted-average dividend yield
Weighted-average risk free interest rate
Stock Options
SSARs
2019
2020
2018
34.4 % 36.5 % 42.2 % 34.6 % 37.6 % 42.4 %
2019 2018 2020
4.5
4.5
1.0 % 1.1 % 1.1 % 1.0 % 1.1 % 1.1 %
1.6 % 2.7 % 1.8 % 1.6 % 2.7 % 1.8 %
5.5
5.2
4.7
5.4
Our expected volatility is based on the historical volatility of our stock over the expected option term. Our expected option
term is determined by historical exercise patterns along with other known employee or company information at the time
of grant. The risk-free interest rate is based on the zero-coupon U.S. Treasury bond at the time of grant with a term
approximate to the expected option term.
61
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Stock Options
A summary of stock option activity for the fiscal year ended June 30, 2020, is presented below.
Weighted-
Weighted-
Average
Outstanding at July 1, 2019
Granted
Exercised
Forfeited
Outstanding at June 30, 2020
Exercisable at June 30, 2020
Average Remaining
Exercise Contractual Intrinsic Value
(in thousands)
Life (Years)
Aggregate
Price
Number of
Shares
42,298 $ 70.65
1,604 $ 124.60
(24,199) $ 72.92
(802) $ 124.60
18,901 $ 70.38
15,623 $ 65.96
6.0 $
5.5 $
1,020
912
The weighted-average grant date fair value of options granted during the fiscal years ended June 30, 2020, 2019 and 2018,
was $17.42, $24.12 and $27.12, respectively. The total intrinsic value of options exercised during the fiscal years ended
June 30, 2020, 2019 and 2018, were $1.3 million, $0.7 million, and $1.4 million, respectively.
As of June 30, 2020, there was approximately $0.1 million of total unrecognized stock-based compensation expense
related to unvested stock options, which is expected to be recognized over a weighted-average period of 1.5 years.
SSARs
A summary of SSARs activity for the fiscal year ended June 30, 2020, is presented below.
Weighted-
Weighted-
Average
Number of
Shares
Average Remaining
Exercise Contractual Intrinsic Value
(in thousands)
Life (Years)
Aggregate
Price
Outstanding at July 1, 2019
Granted
Exercised
Forfeited
Outstanding at June 30, 2020
Exercisable at June 30, 2020
175,599 $ 79.20
53,616 $ 124.15
(101,823) $ 81.02
(4,788) $ 124.60
122,604 $ 95.57
42,386 $ 73.48
7.8 $
6.3 $
3,536
2,155
The weighted-average grant date fair value of SSARs granted during the fiscal years ended June 30, 2020, 2019 and 2018
was $32.33, $26.37 and $29.17, respectively. The total intrinsic value of SSARs exercised during the fiscal years ended
June 30, 2020, 2019 and 2018, was $4.6 million, $2.8 million, and $6.4 million, respectively.
As of June 30, 2020, there was approximately $1.5 million of total unrecognized stock-based compensation expense
related to unvested SSARs, which is expected to be recognized over a weighted-average period of 1.9 years.
Other Stock-based Compensation
Performance Shares
During fiscal 2020, officers and certain employees were granted shares of restricted common stock that can only be earned
upon the achievement of certain pre-defined performance measures. Specifically, for performance shares granted in fiscal
62
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2020, one-half of the shares awarded may vest upon our achievement of annual growth in Net Gold Equivalent Ounces
(“Net GEOs”) (“GEO Shares”). The second one-half of performance shares granted in fiscal 2020 may vest based on our
total shareholder return (“TSR”) compared to the TSRs of other members of the Market Vectors Gold Miners ETF (GDX)
(“TSR Shares”). GEO Shares and TSR Shares may vest by linear interpolation in a range between zero shares if neither
threshold Net GEO and TSR metric is met; to 100% of GEO Shares and TSR Shares awarded if both target Net GEO and
TSR metrics are met; to 200% of the Net GEO and TSR shares awarded if both the maximum Net GEO and TSR metrics
are met. The GEO Shares will expire in five years from the date of grant if the performance measure is not met, while the
TSR Shares will expire in three years from the date of grant if the TSR market condition and three year service condition
are not met.
We measure the fair value of the GEO Shares based upon the market price of our common stock as of the date of grant.
The measurement date for the GEO Shares will be determined at such time that the performance goals are attained or that
it is probable they will be attained. At such time that it is probable that a performance condition will be achieved,
compensation expense will be measured by the number of shares that will ultimately be earned based on the grant date
market price of our common stock. For shares that were previously estimated to be probable of vesting and are no longer
deemed to be probable of vesting, compensation expense is reversed during the period in which it is determined they are
no longer probable of vesting. Interim recognition of compensation expense will be made at such time as management can
reasonably estimate the number of shares that will be earned.
We measured the grant date fair value using a Monte Carlo valuation model. The fair value of the TSR Shares ($77.50 per
share) is multiplied by the target number (100%) of TSR Shares granted to determine total stock-based compensation
expense. Total stock-based compensation expense of the TSR Shares is amortized on a straight-line basis over the requisite
service period, or three years. Stock-based compensation expense for the TSR Shares is recognized provided the requisite
service period is rendered, regardless of when, if ever, the TSR market condition is satisfied. We will reverse previously
recognized stock-based compensation expense attributable to the TSR Shares only if the requisite service period is not
met.
A summary of the status of our unvested Performance Shares at maximum (200%) attainment for the fiscal year ended
June 30, 2020, is presented below:
Outstanding at July 1, 2019
Granted
Vested
Forfeited
Non-attainment
Outstanding at June 30, 2020
Weighted-
Average
Shares
Number of Grant Date
Fair Value
155,022 $ 68.35
32,840 $ 100.48
(15,753) $ 53.65
(15,525) $ 98.15
(11,672) $ 52.79
144,912 $ 80.59
As of June 30, 2020, total unrecognized stock-based compensation expense related to Performance Shares was
approximately $1.5 million, which is expected to be recognized over the average remaining vesting period of 2.2 years.
Restricted Stock
Officers, non-executive directors and certain employees may be granted shares of restricted stock that vest on continued
service alone (“Restricted Stock”). During fiscal 2020, officers and certain employees were granted 17,710 shares of
Restricted Stock. Restricted Stock granted to officers and certain employees vest over three years beginning after a two-
year holding period from the date of grant with one-third of the shares vesting in years three, four and five, respectively.
63
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Also, our non-executive directors were granted 8,316 shares of Restricted Stock during fiscal year 2020. The non-executive
directors’ shares of Restricted Stock vest 50% immediately and 50% one year after the date of grant.
We measure the fair value of the Restricted Stock based upon the market price of our common stock as of the date of grant.
Restricted Stock is amortized over the applicable vesting period using the straight-line method. Unvested shares of
Restricted Stock are subject to forfeiture upon termination of employment or service.
A summary of the status of our unvested Restricted Stock for the fiscal year ended June 30, 2020, is presented below:
Outstanding at July 1, 2019
Granted
Vested
Forfeited
Outstanding at June 30, 2020
Weighted-
Average
Shares
Number of Grant Date
Fair Value
142,969 $ 77.13
26,026 $ 123.72
(63,054) $ 92.90
(9,894) $ 121.12
96,047 $ 90.40
As of June 30, 2020, total unrecognized stock-based compensation expense related to Restricted Stock was approximately
$3.3 million, which is expected to be recognized over the weighted-average vesting period of 3.1 years.
9. EARNINGS PER SHARE (“EPS”)
Basic earnings (loss) 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. Our unvested restricted stock
awards contain non-forfeitable dividend rights and participate equally with common stock with respect to dividends issued
or declared. Our unexercised stock options, unexercised SSARs and unvested performance stock do not contain rights to
dividends. Under the two-class method, the earnings (loss) used to determine basic earnings (loss) per common share 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 earnings (loss) per common share.
The following table summarizes the effects of dilutive securities on diluted EPS for the period (amounts in thousands,
except share data):
Net income (loss) attributable to Royal Gold common
stockholders
Weighted-average shares for basic EPS
Effect of other dilutive securities
Weighted-average shares for diluted EPS
Basic earnings (loss) per share
Diluted earnings (loss) per share
June 30,
2020
Fiscal Year Ended June 30,
June 30,
2019
June 30,
2018
$
$
$
199,343
65,523,024
120,366
65,643,390
3.04
3.03
$
$
$
93,825
65,394,627
110,908
65,505,535
1.43
1.43
$
$
$
(113,134)
65,291,855
—
65,291,855
(1.73)
(1.73)
64
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. INCOME TAXES
For financial reporting purposes, Income (loss) before income taxes includes the following components:
2020
Fiscal Year Ended June 30,
2019
(Amounts in thousands)
2018
United States
Foreign
Our Income tax (benefit) expense consisted of:
$ 35,446 $ (3,776) $ (39,662)
(64,917)
110,353
$ 192,596 $ 106,577 $ (104,579)
157,150
2020
Fiscal Year Ended June 30,
2019
(Amounts in thousands)
2018
Current:
Federal
State
Foreign
Deferred and others:
Federal
State
Foreign
Total income tax (benefit) expense
$ 18,320 $ (6,974) $ 24,621
253
22,741
$ 28,745 $ 19,243 $ 47,615
347
10,078
(13)
26,230
$ (1,047) $
(19)
(31,333)
916 $ (2,253)
(223)
(30,367)
$ (32,399) $ (1,745) $ (32,843)
$ (3,654) $ 17,498 $ 14,772
17
(2,678)
The provision for income taxes for the fiscal years ended June 30, 2020, 2019 and 2018, differs from the amount of income
tax determined by applying the applicable United States statutory federal income tax rate to pre-tax income (net of
non-controlling interest in income of consolidated subsidiary and loss from equity investment) from operations as a result
of the following differences:
2020
Fiscal Year Ended June 30,
2019
(Amounts in thousands)
2018
Total expense (benefit) computed by applying federal rates
State and provincial income taxes, net of federal benefit
Excess depletion
Estimates for uncertain tax positions
Statutory tax attributable to non-controlling interest
Effect of foreign earnings
Effect of foreign earnings indefinitely reinvested
Realized foreign exchange gains
Unrealized foreign exchange gains
Effects of US income tax reform
Effects of Swiss income tax reform
Changes in estimates
Valuation allowance
Other
Total income tax (benefit) expense
65
$ 40,445 $ 22,381 $ (29,343)
(104)
(1,440)
8,574
1,736
1,230
(19,004)
18,330
(1,610)
30,675
—
(70)
6,337
(539)
$ (3,654) $ 17,498 $ 14,772
304
(1,291)
(11,146)
654
(8,249)
—
—
(286)
—
(72,669)
24
47,840
720
135
(867)
3,180
1,013
(6,921)
—
—
(38)
—
—
(1,538)
(47)
200
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The current year effective tax rate includes the impact of the Federal Act on Tax Reform and AHV Financing in
Switzerland and the release of an uncertain tax position resulting from a settlement agreement with a foreign tax authority.
The tax effects of temporary differences and carryforwards, which give rise to our deferred tax assets and liabilities at
June 30, 2020 and 2019, are as follows:
Deferred tax assets:
Stock-based compensation
Net operating losses
Foreign tax credits
Amortizable tax goodwill
Other
Total deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Mineral property basis
Unrealized foreign exchange gains
Investment in Peak Gold joint venture
Other
Total deferred tax liabilities
Total net deferred taxes
2019
2020
(Amounts in thousands)
$
1,313 $
104
17,159
67,287
7,713
93,576
(60,604)
$
32,972 $
1,118
56
11,125
—
7,960
20,259
(12,764)
7,495
$ (67,639) $ (74,360)
(582)
(4,353)
(150)
(79,445)
$ (39,550) $ (71,950)
(582)
(3,955)
(346)
(72,522)
We review the measurement of our deferred tax assets at each balance sheet date. Considering all available positive and
negative evidence, including but not limited to recent earnings history and forecasted future results, the Company believes
it is more likely-than-not that all net deferred tax assets not currently burdened with a valuation allowance will be fully
realized. As of June 30, 2020, and 2019, we recorded a valuation allowance of $60.6 million and $12.8 million,
respectively. The valuation allowance remaining at June 30, 2020 is attributable to US foreign tax credits, Swiss
amortizable tax goodwill, capital loss and other tax attribute carryforwards in non-US subsidiaries.
At June 30, 2020 and 2019, we had $0.4 million and $0.2 million of net operating loss carry forwards, respectively. The
majority of the tax loss carry forwards are in jurisdictions that allow a twenty-year carry forward period. As a result, these
losses do not begin to expire until the 2038 tax year, and the Company anticipates the losses will be fully utilized.
As of June 30, 2020, and 2019, we had $25.4 million and $36.5 million of unrecognized tax benefits, respectively. If
recognized, these unrecognized tax benefits would positively impact our effective income tax rate. A reconciliation of the
beginning and ending amount of gross unrecognized tax benefits is as follows:
2020
2019
(Amounts in thousands)
2018
Total gross unrecognized tax benefits at beginning of year
Additions / Reductions for tax positions of current year
Additions / Reductions for tax positions of prior years
Reductions due to settlements with taxing authorities
Total amount of gross unrecognized tax benefits at end of year
$ 36,547 $ 36,346 $ 28,542
1,624
6,180
—
$ 25,389 $ 36,547 $ 36,346
537
(694)
(11,001)
1,709
(912)
(596)
We file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. With few exceptions,
the Company is no longer subject to U.S. Federal, state and local, and non-U.S. income tax examinations by tax authorities
for fiscal years before 2014. As a result of possible settlements with taxing authorities in various jurisdictions, the
66
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Company believes that it is reasonably possible that the total amount of its net unrecognized income tax benefits may
decrease by $24 million in the next 12 months.
Our continuing practice is to recognize interest and/or penalties related to unrecognized tax benefits as part of our income
tax expense. At June 30, 2020 and 2019, the amount of accrued income-tax-related interest and penalties was
$12.6 million. The gross unrecognized tax benefits reflected in the tabular reconciliation do not include interest and
penalties and are not reduced by advanced deposits of $12.6 million made to taxing authorities.
11. SUPPLEMENTAL CASH FLOW INFORMATION
Our supplemental cash flow information for the fiscal years ended June 30, 2020, 2019 and 2018 is as follows:
Cash paid (received) during the period for:
Interest
Income taxes, net of refunds
Non-cash investing and financing activities:
Dividends declared
12. FAIR VALUE MEASUREMENTS
2020
2019
(Amounts in thousands)
2018
4,900 $ 10,638 $ 16,049
$
$ 31,555 $ 44,435 $ (3,058)
$ 72,463 $ 68,473 $ 64,814
Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants. As such, fair value is a market-based measurement that should be
determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for
considering such assumptions, we utilize a three-tier fair value hierarchy, which prioritizes the inputs used in measuring
fair value as follows:
Level 1: Quoted prices for identical instruments in active markets;
Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments
in markets that are not active; and model-derived valuations in which all significant inputs and significant value
drivers are observable in active markets; and
Level 3: Prices or valuation techniques requiring inputs that are both significant to the fair value measurement
and unobservable (supported by little or no market activity).
The following table sets forth our financial assets measured at fair value on a recurring basis (at least annually) by level
within the fair value hierarchy.
Assets (amounts in thousands):
Marketable equity securities(1)
$
17,863
$ 17,863 $ 13,858 $ 4,005 $ —
Carrying Amount
Total
Level 1
Level 2 Level 3
As of June 30, 2020
Fair Value
(1)
Included in Other assets on our consolidated balance sheets.
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. The carrying value of our revolving credit facility (Note 6)
approximates fair value as of June 30, 2020. The warrants issued by TriStar (Note 5) classified within Level 2 of the fair
67
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
value hierarchy are model-derived (Black-Scholes) valuations in which the significant inputs are observable in active
markets.
As of June 30, 2020, 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. Refer to Note 4 for discussion of inputs used to develop fair
value for those stream and royalty interests that were determined to be impaired during the fiscal years ended
June 30, 2020.
13. MAJOR SOURCES OF REVENUE
Operators that contributed greater than 10% of our total revenue for any of fiscal years 2020, 2019 or 2018 were as follows
(revenue amounts in thousands):
Fiscal Year Ended June 30, 2020
Percentage of
total
revenue
Fiscal Year Ended June 30, 2019
Percentage of
total
revenue
Revenue
Fiscal Year Ended June 30, 2018
Percentage of
total
revenue
Revenue
Operator
Centerra
Barrick
Teck
Revenue
$ 131,425
125,458
74,219
26.3 % $ 101,011
25.2 %
14.9 %
99,283
69,264
23.9 % $ 133,534
23.5 % 108,285
57,413
16.4 %
29.1 %
23.6 %
12.5 %
14. SEGMENT INFORMATION
We manage our business under two reportable segments, consisting of the acquisition and management of stream interests
and the acquisition and management of royalty interests. Royal Gold’s long-lived assets (stream and royalty interests, net)
as of June 30, 2020 and 2019 are geographically distributed as shown in the following table (amounts in thousands):
As of June 30, 2020
As of June 30, 2019
Canada
Dominican Republic
Chile
Africa
Mexico
United States
Australia
Rest of world
Total
$
interests, net
Stream
interest
Royalty
interest
Royalty
interest
Total stream
and royalty
Total stream
and royalty
Stream
interests, net
interest
702,732 $ 189,855 $ 892,587 $ 767,749 $ 200,251 $ 968,000
451,585
406,469
—
515,733
277,661 223,922
89,877
321
215,463
83,748
—
75,951
163,398
— 159,445
31,944
30,006
—
35,031
25,050
12,038
$ 1,614,363 $ 704,550 $ 2,318,913 $ 1,622,435 $ 716,881 $ 2,339,316
451,585
—
301,507 214,226
321
89,556
—
83,748
— 163,398
31,944
—
22,993
12,038
406,469
501,583
215,784
75,951
159,445
30,006
37,088
Our reportable segments for purposes of assessing performance are shown below (amounts in thousands):
Stream interests
Royalty interests
Total
Year Ended June 30, 2020
Production
taxes
Cost of sales
Revenue
$ 359,868 $
138,951
$ 498,819 $
83,890 $
—
83,890 $
Depletion
Segment
gross profit
— $ 144,678 $ 131,300
104,758
30,369
3,824
3,824 $ 175,047 $ 236,058
68
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Stream interests
Royalty interests
Total
Stream interests
Royalty interests
Total
Year Ended June 30, 2019
Production
taxes
Cost of sales
Revenue
$ 305,824 $
117,232
$ 423,056 $
77,535 $
—
77,535 $
Depletion
Segment
gross profit
— $ 127,770 $ 100,519
4,112
78,034
35,086
4,112 $ 162,856 $ 178,553
Year Ended June 30, 2018
Production
taxes
Cost of sales
Revenue
$ 324,516 $
134,526
$ 459,042 $
83,839 $
—
83,839 $
Depletion
Segment
gross profit
— $ 129,662 $ 111,015
2,268
98,334
33,924
2,268 $ 163,586 $ 209,349
A reconciliation of total segment gross profit to the consolidated Income (loss) before income taxes is shown below
(amounts in thousands):
Total segment gross profit
Costs and expenses
General and administrative expenses
Exploration costs
Depreciation
Impairment of royalty interests
Operating income (loss)
Fair value changes in equity securities
Interest and other income
Interest and other expense
Income (loss) before income taxes
Year Ended June 30,
2020
236,058
$
2019
178,553
$
2018
209,349
$
30,195
5,190
387
1,341
198,945
1,418
2,046
(9,813)
192,596
$
30,488
7,158
200
—
140,707
(6,800)
2,320
(29,650)
106,577
35,464
8,946
110
239,364
(74,535)
—
4,170
(34,214)
(104,579)
$
$
69
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Our revenue by reportable segment for the fiscal year’s ended June 30, 2020, 2019, and 2018 is geographically distributed
as shown in the following table (amounts in thousands):
Stream interests:
Canada
Dominican Republic
Chile
Africa
Total stream interests
Royalty interests:
United States
Canada
Mexico
Australia
Africa
Chile
Rest of world
Total royalty interests
Total revenue
2020
2019
2018
Fiscal Year Ended June 30,
$
$
$
$
$
158,736
96,978
74,219
29,935
359,868
48,692
30,524
32,731
15,252
2,575
—
9,177
138,951
498,819
$
$
$
$
$
123,152
82,844
69,264
30,564
305,824
34,845
32,602
27,224
12,806
1,416
—
8,339
117,232
423,056
$
$
$
$
$
142,244
95,055
57,413
29,804
324,516
39,496
24,254
42,959
13,710
2,098
473
11,536
134,526
459,042
15. COMMITMENTS AND CONTINGENCIES
Khoemacau Silver Stream Acquisition
Pursuant to its Khoemacau silver stream transaction in February 2019, RGLD Gold made its first advance payment of
$65.8 million on November 5, 2019, its second advance payment of $22.0 million on February 2, 2020, and its third
advance payment of $47.9 million on April 3, 2020. As of June 30, 2020, our conditional funding schedule for $76.3
million up to $129.3 million pursuant to our Khoemacau silver stream acquisition remains subject to certain conditions.
On July 5, 2020, RGLD Gold made its fourth advance payment of $11.1 million.
Ilovica Gold Stream Acquisition
As of June 30, 2020, our conditional funding schedule of $163.75 million, as part of the Ilovica gold stream acquisition in
October 2014, remains subject to certain conditions.
70
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of selected quarterly financial information (unaudited). Some amounts in the below table may
not sum-up in total as a result of rounding.
Net income
attributable to
Revenue
Operating
income
(Amounts in thousands except per share data)
Royal Gold Basic earnings Diluted earnings
stockholders
per share
per share
Fiscal year 2020 quarter-ended:
September 30,
December 31,
March 31,
June 30,
Fiscal year 2019 quarter-ended:
September 30,
December 31,
March 31,
June 30,
1.07
0.63
0.59
0.75
3.03
0.23
0.36
0.44
0.40
1.43
$ 118,774 $ 48,781 $
123,643
136,437
119,965
53,307
52,281
44,576
$ 498,819 $ 198,945 $ 199,343 $
70,453 $
41,321
38,554
49,015
1.07 $
0.63
0.59
0.75
3.04 $
(Amounts in thousands except per share data)
$ 99,992 $ 25,333 $
97,592
109,778
115,694
31,449
43,201
40,724
$ 423,056 $ 140,707 $
15,008 $
23,586
28,772
26,459
93,825 $
0.23 $
0.36
0.44
0.40
1.43 $
71
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief
Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as
of June 30, 2020. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that
our disclosure controls and procedures were effective as of June 30, 2020, at the reasonable assurance level.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our
internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles.
Management assessed the effectiveness of our internal control over financial reporting as of June 30, 2020. In making this
assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control—Integrated Framework (2013 Framework). Based on management’s assessment
and those criteria, management concluded that our internal control over financial reporting was effective as of June 30,
2020.
Our independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on our internal
control over financial reporting as of June 30, 2020.
Changes in Internal Control over Financial Reporting
There were no changes in our internal controls over financial reporting during our fourth fiscal quarter ended
June 30, 2020, that materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure
controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are
met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of
controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Royal Gold have
been detected.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Royal Gold, Inc.
Opinion on Internal Control over Financial Reporting
We have audited Royal Gold, Inc.’s internal control over financial reporting as of June 30, 2020, based on criteria
established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
72
Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Royal Gold, Inc. (the Company)
maintained, in all material respects, effective internal control over financial reporting as of June 30, 2020, based on the
COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of June 30, 2020 and 2019, the related consolidated
statements of operations and comprehensive income (loss), changes in equity and cash flows for each of the three years in
the period ended June 30, 2020, and the related notes and our report dated August 6, 2020 expressed an unqualified opinion
thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained
in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed
risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Denver, Colorado
August 6, 2020
ITEM 9B. OTHER INFORMATION
None.
73
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item will be included in our Proxy Statement for our 2020 Annual Stockholders Meeting
to be filed with the SEC within 120 days after June 30, 2020, and is incorporated by reference in this Annual Report on
Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item will be included in our Proxy Statement for our 2020 Annual Stockholders Meeting
to be filed with the SEC within 120 days after June 30, 2020, and is incorporated by reference in this Annual Report on
Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this item will be included in our Proxy Statement for our 2020 Annual Stockholders Meeting
to be filed with the SEC within 120 days after June 30, 2020, and is incorporated by reference in this Annual Report on
Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
The information required by this item will be included in our Proxy Statement for our 2020 Annual Stockholders Meeting
to be filed with the SEC within 120 days after June 30, 2020, and is incorporated by reference in this Annual Report on
Form 10-K.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item will be included in our Proxy Statement for our 2020 Annual Stockholders Meeting
to be filed with the SEC within 120 days after June 30, 2020, and is incorporated by reference in this Annual Report on
Form 10-K.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements
Index to Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Income (Loss)
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
74
Page
41
43
44
45
46
47
(b) Exhibits
Exhibit
Number
Description
3.1
3.2
3.3
3.4
4.1
10.1▲
10.2▲
Restated Certificate of Incorporation, as amended (filed as Exhibit 3.1 to Royal Gold’s Quarterly Report
on Form 10-Q filed on May 3, 2018, and incorporated herein by reference)
Amended and Restated Bylaws, as amended on August 28, 2014 (filed as Exhibit 3.1 to Royal Gold’s
Current Report on Form 8-K on September 4, 2014, and incorporated herein by reference)
Amended and Restated Certificate of Designations of Series A Junior Participating Preferred Stock of
Royal Gold, Inc. (filed as Exhibit 3.1 to Royal Gold’s Current Report on Form 8-K on September 10,
2007, and incorporated herein by reference)
Certificate of Designations, Preferences and Rights of the Special Voting Preferred Stock of Royal
Gold, Inc. (filed as Exhibit 4.1 to Royal Gold’s Current Report on Form 8-K on February 23, 2010, and
incorporated herein by reference)
Description of capital stock (filed as Exhibit 4.2 to Royal Gold’s Quarterly Report on Form 10-Q on
November 7, 2019, and incorporated herein by reference)
2004 Omnibus Long-Term Incentive Plan, as amended (filed as Exhibit 10.1 to Royal Gold’s Current
Report on Form 8-K filed on September 3, 2013, and incorporated herein by reference)
2015 Omnibus Long-Term Incentive Plan, as amended (filed as Exhibit 4.2 to Royal Gold’s Registration
Statement on Form S-8 filed on July 20, 2017, and incorporated herein by reference)
10.3▲
Royal Gold Deferred Compensation Plan for Non-Employee Directors (filed as Exhibit 4.1 to Royal
Gold’s Registration Statement on Form S-8 filed on July 20, 2017, and incorporated herein by reference)
10.4▲
Form of Employment Agreement by and between Royal Gold, Inc. and William Heissenbuttel, dated
January 2, 2020 (filed as Exhibit 10.1 to Royal Gold’s Amendment No. 1 to Current Report on Form 8-
K/A filed on January 3, 2020, and incorporated herein by reference).
10.5▲
Employment Agreement by and between Royal Gold Corporation and Mark Isto effective January 2,
2020 (filed as Exhibit 10.2 to Royal Gold’s Amendment No. 1 to Current Report on Form 8-K/A on
January 3, 2020, and incorporated herein by reference).
10.6▲
Employment Contract effective January 1, 2019, by and between RGLD Gold AG and Daniel Breeze
(filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K filed on January 7, 2019, and
incorporated herein by reference)
10.7▲
Form of Employment Agreement by and between Royal Gold, Inc. and each of Paul Libner and Randy
Shefman (filed as Exhibit 10.1 to Royal Gold’s Amendment No. 1 to Current Report on Form 8-K/A on
January 3, 2020, and incorporated herein by reference).
75
Exhibit
Number
10.8▲
Form of Amended and Restated Indemnification Agreement entered into between Royal Gold, Inc. or
certain subsidiaries and the directors and executive officers thereof (filed as Exhibit 10.1 to Royal Gold’s
Current Report on Form 8-K on September 4, 2014, and incorporated herein by reference)
Description
10.9▲
Retirement Agreement by and between Royal Gold, Inc. and Tony Jensen, dated January 1, 2020 (filed
as Exhibit 10.2 to Royal Gold’s Amendment No. 1 to Current Report on Form 8-K/A filed on January
3, 2020, and incorporated herein by reference)
10.10▲
Retirement Agreement by and between Royal Gold, Inc. and Bruce Kirchhoff, dated January 1, 2020
(filed as Exhibit 10.3 to Royal Gold’s Amendment No. 1 to Current Report on Form 8-K/A on January
3, 2020, and incorporated herein by reference)
10.11▲
Form of Employment Agreement by and between Royal Gold, Inc. and Tony Jensen (filed as
Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K filed on July 8, 2016, and incorporated herein
by reference)
10.12▲
Form of Employment Agreement by and between Royal Gold, Inc. and Bruce Kirchhoff (filed as
Exhibit 10.2 to Royal Gold’s Current Report on Form 8-K filed on July 8, 2016, and incorporated herein
by reference)
10.13▲
Form of First Amendment to Employment Agreement by and between Royal Gold, Inc. and each of
Tony Jensen and Bruce Kirchhoff (filed as Exhibit 10.1 to Royal Gold’s Quarterly Report on Form 10-Q
filed on February 8, 2018, and incorporated herein by reference)
10.14▲
Restricted Stock Unit Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan in the
form entered into by and between Royal Gold, Inc. and Daniel Breeze (filed as Exhibit 10.1 to Royal
Gold’s Quarterly Report on Form 10-Q filed on May 2, 2019, and incorporated herein by reference)
10.15▲
Performance Share Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan in the
form entered into by and between Royal Gold, Inc. and Daniel Breeze (filed as Exhibit 10.2 to Royal
Gold’s Quarterly Report on Form 10-Q filed on May 2, 2019, and incorporated herein by reference)
10.16▲
Stock Appreciation Rights Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan in
the form entered into by and between Royal Gold, Inc. and Daniel Breeze (filed as Exhibit 10.3 to Royal
Gold’s Quarterly Report on Form 10-Q filed on May 2, 2019, and incorporated herein by reference)
10.17▲
Form of Incentive Stock Option Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive
Plan (filed as Exhibit 10.1 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 1, 2018,
and incorporated herein by reference)
10.18▲
Form of Restricted Stock Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan
(filed as Exhibit 10.3 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 1, 2018, and
incorporated herein by reference)
10.19▲
Form of Restricted Stock Unit Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan
(filed as Exhibit 10.4 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 1, 2018, and
incorporated herein by reference)
76
Exhibit
Number
10.20▲
Description
Form of Director Restricted Stock Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive
Plan (filed as Exhibit 10.5 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 1, 2018,
and incorporated herein by reference)
10.21▲
Form of Director Restricted Stock Unit Agreement under Royal Gold’s 2015 Omnibus Long-Term
Incentive Plan (filed as Exhibit 10.6 to Royal Gold’s Quarterly Report on Form 10-Q filed on November
1, 2018, and incorporated herein by reference)
10.22▲
Form of Performance Share Award Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive
Plan (filed as Exhibit 10.7 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 1, 2018,
and incorporated herein by reference)
10.23▲
Form of Stock Appreciation Rights Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive
Plan (filed as Exhibit 10.2 to Royal Gold’s Quarterly Report on Form 10-Q filed on November 1, 2018,
and incorporated herein by reference)
10.24▲
Form of Restricted Stock Unit Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan
(filed as Exhibit 10.58 to Royal Gold’s Annual Report on Form 10-K on August 10, 2017, and
incorporated herein by reference)
10.25▲
Form of Director Restricted Stock Unit Agreement under Royal Gold’s 2015 Omnibus Long-Term
Incentive Plan (filed as Exhibit 10.59 to Royal Gold’s Annual Report on Form 10-K on August 10, 2017,
and incorporated herein by reference)
10.26▲
Form of Amendment to Equity Award Agreements under Royal Gold's 2004 Omnibus Long-Term
Incentive Plan (filed as Exhibit 10.2 to Royal Gold’s Quarterly Report on Form 10-Q filed on April 27,
2016, and incorporated herein by reference)
10.27▲
Form of Incentive Stock Option Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive
Plan (filed as Exhibit 10.57 to Royal Gold’s Annual Report on Form 10-K on August 10, 2016, and
incorporated herein by reference)
10.28▲
Form of Restricted Stock Agreement under Royal Gold 2015 Omnibus Long-Term Incentive Plan (filed
as Exhibit 10.58 to Royal Gold’s Annual Report on Form 10-K on August 10, 2016, and incorporated
herein by reference)
10.29▲
Form of Director Restricted Stock Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive
Plan (filed as Exhibit 10.59 to Royal Gold’s Annual Report on Form 10-K on August 10, 2016, and
incorporated herein by reference)
10.30▲
Form of Performance Share Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive Plan
(filed as Exhibit 10.60 to Royal Gold’s Annual Report on Form 10-K on August 10, 2016, and
incorporated herein by reference)
10.31▲
Form of Stock Appreciation Rights Agreement under Royal Gold’s 2015 Omnibus Long-Term Incentive
Plan (filed as Exhibit 10.61 to Royal Gold’s Annual Report on Form 10-K on August 10, 2016, and
incorporated herein by reference)
77
Exhibit
Number
10.32▲
Description
Form of Incentive Stock Option Agreement (Officer) under Royal Gold’s 2004 Omnibus Long-Term
Incentive Plan (filed as Exhibit 10.2 to Royal Gold’s Current Report on Form 8-K filed on September 3,
2013, and incorporated herein by reference)
10.33▲
Form of Restricted Stock Agreement (Officer) under Royal Gold’s 2004 Omnibus Long-Term Incentive
Plan (filed as Exhibit 10.4 to Royal Gold’s Current Report on Form 8-K filed on September 3, 2013,
and incorporated herein by reference)
10.34▲
Form of Performance Share Agreement (Officer) under Royal Gold’s 2004 Omnibus Long-Term
Incentive Plan (filed as Exhibit 10.5 to Royal Gold’s Current Report on Form 8-K filed on September 3,
2013, and incorporated herein by reference)
10.35▲
Form of Stock Appreciation Rights Agreement—Stock Settled (Officer) under Royal Gold’s 2004
Omnibus Long-Term Incentive Plan (filed as Exhibit 10.6 to Royal Gold’s Current Report on Form 8-K
filed on September 3, 2013, and incorporated herein by reference)
10.36
Royalty Agreement between Royal Gold, Inc. and the Cortez Joint Venture dated April 1, 1999 (filed as
part of Item 5 of Royal Gold’s Current Report on Form 8-K on April 12, 1999, and incorporated herein
by reference)
10.37
Firm offer to purchase royalty interest of “Idaho Group” between Royal Gold, Inc. and Idaho Group
dated July 22, 1999 (filed as Attachment A to Royal Gold’s Current Report on Form 8-K on
September 2, 1999, and incorporated herein by reference)
10.38
Royalty Deed and Agreement, dated effective as of April 15, 1991, between ECM, Inc. and Royal
Crescent Valley, Inc. (filed as Exhibit 10(1) to Royal Gold’s Annual Report on Form 10-K for the year
ended June 30, 1991, and incorporated herein by reference)
10.39
Form of Agreement for Assignment of Partnership Interest in Crescent Valley Partners, L.P. (filed as
Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K on January 8, 2014, and incorporated herein
by reference)
10.40
10.41
Purchase and Sale Agreement for Peñasquito and Other Royalties among Minera Kennecott S.A. DE
C.V., Kennecott Exploration Company and Royal Gold, Inc., dated December 28, 2006 (filed as
Exhibit 10.2 to Royal Gold’s Quarterly Report on Form 10-Q on February 9, 2007, and incorporated
herein by reference)
Contract for Assignment of Rights Granted, by Minera Kennecott, S.A. de C.V. Represented in this
Agreement by Mr. Dave F. Simpson, and Minera Peñasquito, S.A. de C.V., Represented in this
Agreement by Attorney, Jose Maria Gallardo Tamayo (filed as Exhibit 10.4 to Royal Gold’s Quarterly
Report on Form 10-Q on February 9, 2007, and incorporated herein by reference)
10.42†
Amended and Restated Purchase and Sale Agreement by and among Royal Gold, Inc., RGLD Gold AG,
Thompson Creek Metals Company Inc., and Terrane Metals Corp. dated as of December 14, 2011 (filed
as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K on December 15, 2011, and incorporated
herein by reference)
78
Exhibit
Number
10.43†
10.44
10.45
First Amendment to Amended and Restated Purchase and Sale Agreement by and among Royal
Gold, Inc., RGLD Gold AG, Thompson Creek Metals Company Inc., and Terrane Metals Corp. dated
as of August 8, 2012 (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K on August 9,
2012, and incorporated herein by reference)
Description
Second Amendment to Amended and Restated Purchase and Sale Agreement by and among Royal
Gold, Inc., RGLD Gold AG, Thompson Creek Metals Company Inc., and Terrane Metals Corp. dated
as of December 11, 2014 (filed as Exhibit 10.1 to Royal Gold’s Quarterly Report on Form 10-Q on
January 29, 2015, and incorporated herein by reference).
Third Amendment to Amended and Restated Purchase and Sale Agreement, dated October 20, 2016,
among RGLD Gold AG, Thompson Creek Metals Company Inc., and Royal Gold, Inc. (filed as Exhibit
10.1 to Royal Gold’s Quarterly Report on Form 10-Q on November 3, 2016, and incorporated herein by
reference)
Long Term Offtake Agreement, dated July 9, 2015, between Compania Minera Teck Carmen de
10.46
Andacollo and RGLD Gold AG (filed as Exhibit 10.1 to Royal Gold’s Quarterly Report on Form 10-Q
filed on November 5, 2015, and incorporated herein by reference)
10.47
Precious Metals Purchase and Sale Agreement, dated August 5, 2015, among RGLD Gold AG, BGC
Holdings Ltd., and Barrick Gold Corporation (filed as Exhibit 10.3 to Royal Gold’s Quarterly Report
on Form 10-Q filed on November 5, 2015, and incorporated herein by reference)
10.48
10.49
10.50
10.51
Intercreditor Agreement, dated October 20, 2016, among The Bank of Nova Scotia for the Senior Debt
Secured Parties identified therein, RGLD Gold AG and Thompson Creek Metals Company Inc. (filed
as Exhibit 10.2 to Royal Gold’s Quarterly Report on Form 10-Q on November 3, 2016, and incorporated
herein by reference)
Revolving Facility Credit Agreement, dated June 2, 2017, among Royal Gold, Inc., RG Mexico, Inc.,
the lenders from time to time party thereto, and HSBC Bank USA, National Association, as
administrative agent for the lenders (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K
on June 6, 2017, and incorporated herein by reference)
Revolving Facility Credit Agreement Amendment, dated May 15, 2018, among Royal Gold, Inc., RG
Royalties, LLC (f/k/a RG Mexico, Inc.), Royal Gold International Holdings, Inc., the lenders from time
to time party thereto, and the Bank of Nova Scotia, as administrative agent for the lenders (filed as
Exhibit 10.38 to Royal Gold’s Annual Report on Form 10-K filed on August 9, 2018, and incorporated
herein by reference)
Second Amendment to Revolving Facility Credit Agreement dated June 3, 2019, among Royal Gold,
Inc., RG Royalties, LLC (f/k/a RG Mexico, Inc.), Royal Gold International Holdings, Inc. RGLD UK
Holdings Limited, the lenders from time to time party thereto, and the Bank of Nova Scotia, as
administrative agent for the lenders (filed as Exhibit 10.1 to Royal Gold’s Current Report on Form 8-K
on June 6, 2019, and incorporated herein by reference)
79
Exhibit
Number
10.52
Description
Amendment No. 3 to Revolving Facility Credit Agreement dated as of September 20, 2019, and entered
into by and among Royal Gold, Inc., RGLD Gold AG, RG Royalties, LLC, Royal Gold International
Holdings, Inc., the banks and financial institutions identified therein as a “Lender,” and The Bank of
Nova Scotia as Administrative Agent for the Lenders (filed as Exhibit 10.1 to Royal Gold’s Quarterly
Report on Form 10-Q filed on November 7, 2019, and incorporated herein by reference)
21.1*
Royal Gold and Its Subsidiaries
23.1*
Consent of Independent Registered Public Accounting Firm
31.1*
Certification of President and Chief Executive Officer required by Section 302 of the Sarbanes-Oxley
Act of 2002
31.2*
Certification of Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002
32.1*
32.2*
Written Statement of the President and Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Written Statement of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
101.INS* Inline XBRL Instance Document
101.SCH* 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 as Inline XBRL and contained in Exhibit 101)
*
Filed or furnished herewith.
▲
Identifies a management contract or compensation plan or arrangement.
† Certain portions of this exhibit have been omitted by redacting a portion of the text (indicated by asterisks in the text). This exhibit
has been filed separately with the U.S. Securities and Exchange Commission pursuant to a request for confidential treatment.
ITEM 16. FORM 10-K SUMMARY
The optional summary in Item 16 has not been included in this Form 10-K.
80
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: August 6, 2020
ROYAL GOLD, INC.
By: /s/ WILLIAM H. HEISSENBUTTEL
William H. Heissenbuttel
President, Chief Executive Officer and Director
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: August 6, 2020
By: /s/ WILLIAM H. HEISSENBUTTEL
William H. Heissenbuttel
President, Chief Executive Officer and Director
(Principal Executive Officer)
Date: August 6, 2020
By: /s/ PAUL K. LIBNER
Paul K. Libner
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
Date: August 6, 2020
Date: August 6, 2020
Date: August 6, 2020
By: /s/ WILLIAM M. HAYES
William M. Hayes
Chairman
By: /s/ C. KEVIN MCARTHUR
C. Kevin McArthur
Director
By: /s/ JAMIE C. SOKALSKY
Jamie C. Sokalsky
Director
Date: August 6, 2020
By: /s/ CHRISTOPHER M.T. THOMPSON
Date: August 6, 2020
Date: August 6, 2020
Chris M.T. Thompson
Director
By: /s/ RONALD J. VANCE
Ronald J. Vance
Director
By: /s/ SYBIL E. VEENMAN
Sybil E. Veenman
Director
81
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Royal Gold, Inc. and its Subsidiaries
As of June 30, 2020
Name
Royal Gold, Inc.
Denver Mining Finance Company, Inc.
Crescent Valley Partners, L.P.
Royal Crescent Valley, LLC
RG Royalties, LLC
RGLD Holdings, LLC
RGLD Gold (Canada) ULC
International Royalty Corporation
4324421 Canada Inc.
Labrador Nickel Royalty Limited Partnership
Royal Alaska, LLC
Peak Gold, LLC
Royal Gold International Holdings, Inc.
RGLD UK Holdings Limited
RGLD Gold AG
Royal Gold Corporation
EXHIBIT 21.1
State / Province /
Country of
Incorporation
Delaware
Colorado
Colorado
Delaware
Delaware
Delaware
Alberta
Canada
Canada
Ontario
Delaware
Delaware
Delaware
United
Kingdom
Switzerland
Canada
Ownership
Percentage
100 %
93.077 %
100 %
100 %
100 %
*
100 %
100 %
90 %
100 %
40 %
100 %
100 %
100 %
100 %
*
Royal Gold, Inc. owns approximately 22% and RGLD Holdings, LLC owns approximately 77% of RGLD Gold
(Canada) ULC
EXHIBIT 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
1) Registration Statement (Form S-3 No. 333-224626) of Royal Gold, Inc.,
2) Registration Statement (Form S-4 No. 333-111590) of Royal Gold, Inc.,
3) Registration Statement (Form S-4 No. 333-145213) of Royal Gold, Inc.,
4) Registration Statement (Form S-8 No. 333-219378) of Royal Gold, Inc., and
5) Registration Statement (Form S-8 No. 333-209391) of Royal Gold, Inc.
of our reports dated August 6, 2020, with respect to the consolidated financial statements of Royal Gold, Inc., and the
effectiveness of internal control over financial reporting of Royal Gold, Inc., included in this Annual Report (Form 10-
K) for the year ended June 30, 2020.
/s/ Ernst & Young LLP
Denver, Colorado
August 6, 2020
EXHIBIT 31.1
I, William H. Heissenbuttel, certify that:
CERTIFICATION
(1)
(2)
(3)
(4)
I have reviewed this Annual Report on Form 10-K of Royal Gold, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report fairly
present in all material respects, the financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
(5)
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
August 6, 2020
/s/ WILLIAM H. HEISSENBUTTEL
William H. Heissenbuttel
President and Chief Executive Officer
(Principal Executive Officer)
EXHIBIT 31.2
I, Paul K. Libner, certify that:
CERTIFICATION
(1)
(2)
(3)
(4)
I have reviewed this Annual Report on Form 10-K of Royal Gold, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
(5)
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
August 6, 2020
/s/ PAUL K. LIBNER
Paul K. Libner
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
In connection with the Annual Report on Form 10-K of Royal Gold, Inc. (the “Company”), for the year ended
June 30, 2020, as filed with the Securities and Exchange Commission (the “Report”), I, William H. Heissenbuttel,
President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 that, to my knowledge:
(1)
(2)
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
the information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company.
August 6, 2020
/s/ WILLIAM H. HEISSENBUTTEL
William H. Heissenbuttel
President and Chief Executive Officer
(Principal Executive Officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.2
In connection with the Annual Report on Form 10-K of Royal Gold, Inc. (the “Company”), for the year ended
June 30, 2020, as filed with the Securities and Exchange Commission (the “Report”), I, Paul K. Libner, Chief Financial
Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 that, to my knowledge:
(1)
(2)
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
the information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company.
August 6, 2020
/s/ PAUL K. LIBNER
Paul K. Libner
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
APPENDIX A
OVERVIEW OF NON-GAAP
FINANCIAL MEASURES
Non-GAAP financial measures are intended to provide additional information only and do not have any standard
meaning prescribed by U.S. generally accepted accounting principles (“GAAP”). These measures should not be
considered in isolation or as a substitute for measures prepared in accordance with GAAP. In addition, because the
presentation of these non-GAAP financial measures varies among companies, these non-GAAP financial measures
may not be comparable to similarly titled measures used by other companies.
We have provided below reconciliations of our non-GAAP financial measures to the comparable GAAP measures.
We believe these non-GAAP financial measures provide useful information to investors for analysis of our business.
We use these non-GAAP financial measures to compare period-over-period performance on a consistent basis
and when planning and forecasting for future periods. We believe these non-GAAP financial measures are used
by professional research analysts and others in the valuation, comparison and investment recommendations of
companies in our industry. Many investors use the published research reports of these professional research
analysts and others in making investment decisions. The adjustments made to calculate our non-GAAP financial
measures are subjective and involve significant management judgement. Non-GAAP financial measures used by
management in this report or elsewhere include the following:
1. Net debt (cash) is a non-GAAP financial measure that is calculated by the Company as debt (excluding debt
issuance costs) at the end of a period minus cash and equivalents for that same date. Cash and equivalents
are subtracted from the GAAP measure because it could be used to reduce our debt obligations. A limitation
associated with using net debt is that it subtracts cash and equivalents and therefore may imply that there is less
Company debt than the most comparable GAAP measure indicates. We believe that investors may find these
measures useful to monitor leverage and evaluate the balance sheet.
2. Free cash flow is a non-GAAP financial measure that is calculated by the Company as net cash provided by operating
activities for a period minus acquisition of stream and royalty interests for that same period. We believe that free
cash flow represents an additional way of viewing liquidity as it is adjusted for contractual investments made during
such period. Free cash flow does not represent the residual cash flow available for discretionary expenditures. We
believe it is important to view free cash flow as a complement to our consolidated statements of cash flows.
A-1
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES TO U.S. GAAP MEASURES
NET DEBT (CASH):
(amounts in thousands)
Debt
Debt issuance costs
Cash and equivalents
Net debt (cash)
FREE CASH FLOW:
June 30, 2020
June 30, 2019
$ 300,439
$ 214,554
4,561
5,446
(319,128)
(119,475)
$ (14,128)
$ 100,526
(amounts in thousands)
Net cash provided by operating activities
Acquisition of stream and royalty interests
Free cash flow
Three Months Ended
June 30,
Years Ended
June 30,
2020
2019
2020
2019
$ 91,557
$72,257
$ 340,752
$ 253,166
(48,130)
—
(155,985)
(1,055)
$ 43,427
$72,257
$ 184,767
$ 252,111
OTHER MEASURES
We use certain other measures in managing and evaluating our business. We believe these measures may provide
useful information to investors for analysis of our business. We use these measures to compare period-over-
period performance and liquidity on a consistent basis and when planning and forecasting for future periods. We
believe these measures are used by professional research analysts and others in the valuation, comparison, and
investment recommendations of companies in our industry. Many investors use the published research reports
of these professional research analysts and others in making investment decisions. Other measures used by
management in this report and elsewhere include the following:
1. Gold equivalent ounces, or GEOs, is calculated by the Company as revenue (in total or by reportable segment)
for a period divided by the average gold price for that same period.
A-2
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