Q1 2024 Royal Gold Inc Earnings Call

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Chach: Hello and welcome to the Royal Gold 2024 First Quarter Conference. My name is Chach, and I'll be your moderator today. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. I'd now like to pass the conference over to your host, Alistair Baker, to begin. Alistair, please go ahead.

Hello, and welcome to the Royal Gold when she wants to go first quarter Conference. My name is Chad that'd be our moderator today, all lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end I'd now like to pass the conference. If it's your host Melissa pay cuts.

Alistair Baker: Begin Alistair please go ahead.

Alistair Baker: Thank you, operator. Good morning and welcome to our discussion of Royal Gold's first quarter 2024 results. This event is being webcast live, and a replay of this call will be available on our website. Speaking on the call today are Bill Heissenbuttel, President and CEO; Martin Raffield, Senior Vice President of Operations; and Paul Libner, Senior Vice President and CFO. Randy Shepman, Senior Vice President and General Counsel, and Dan Breeze, Senior Vice President of Corporate Development of RGAG, are also available for questions.

Alistair Baker: Thank you operator, good morning, and welcome to our discussion of Royal Gold's first quarter 2024 results. This event is being webcast live and a replay of this call will be available on our website.

Alistair Baker: Speaking on the call today are bill heightened buttle, President and CEO, Martin Raffield Senior Vice President of operations and all of those nurses senior Vice President and CFO.

Alistair Baker: Randy Schatzman, Senior Vice President and General Counsel, and Dan <unk> Senior Vice President corporate development of RG AG are also available for questions.

Alistair Baker: During today's call, we will make forward-looking statements, including statements about our projections and expectations for the future. These statements are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These risks and uncertainties are discussed in yesterday's press release and our filings with the SEC. We will also refer to certain non-GAAP financial measures, including adjusted net income, adjusted net income per share, and adjusted EBITDA. Reconciliations of these measures to the most directly comparable GAAP measures are available in yesterday's press release, which can be found on our website.

Alistair Baker: During today's call, we will make forward looking statements, including statements about our projections or expectations for the future.

Alistair Baker: <unk> are subject to risks and uncertainties that could cause actual results to differ materially from these statements.

Alistair Baker: Risks and uncertainties are discussed in yesterday's press release, and our filings with the.

Alistair Baker: SEC, we will also refer to certain non-GAAP financial measures, including adjusted net income adjusted net income per share and adjusted EBITDA Reconciliations of these measures to the most directly comparable GAAP measures are available in yesterday's press release, which can be found on our website.

Alistair Baker: Bill will start with an overview of the quarter, Martin will give some commentary on the portfolio, and Paul will provide a financial update. After the formal remarks, we'll open the lines for a Q&A session. I'll now turn the call over to Bill.

Alistair Baker: Joe will start with an overview of the quarter Martin will give some commentary on the portfolio and Paul will provide a financial update after the formal remarks, we'll open the lines for a Q&A session.

Alistair Baker: I'll now turn the call over to Bill.

William H. Heissenbuttel: Good morning, and thank you for joining the call. I'll begin on slide four.

Bill: Good morning, and thank you for joining the call I'll begin on slide four we had a good start to the year with revenue of $149 million operating cash flow of $138 million and earnings of $47 million or 72 per share.

William H. Heissenbuttel: We had a good start to the year with revenue of $149 million, operating cash flow of $138 million, and earnings of $47 million, or $0.72 per share. After adjustments, earnings were $0.91 per share. Revenue was 75% gold and 88% precious metals, as we continue to focus our business development efforts on these metals. And we generated 53% of our revenue from the US, Canada, and Australia. Our adjusted EBITDA margin remains strong and steady at 79% for the quarter.

Bill: After adjustments earnings were <unk> 91 per share.

William H. Heissenbuttel: Revenue was 75% gold and 88% precious metals as we continue to focus our business development efforts on these metals and we generated 53% of revenue from the U S, Canada and Australia.

William H. Heissenbuttel: Our adjusted EBITDA margin remained strong and steady at 79% for the quarter.

William H. Heissenbuttel: And with the record high gold price providing a strong tailwind, we were able to significantly reduce our debt and increase available liquidity. We repaid $100 million outstanding on a revolving credit facility and ended the quarter with almost a billion dollars of total liquidity. As previously disclosed, during the quarter, we entered into an additional agreement with Sinterra to provide long-term cost support to Mount Milligan in return for near-term cash and future gold consideration and future free cash flow loyalty.

William H. Heissenbuttel: With the record high gold price, providing a strong tailwind we were able to significantly reduce our debt and increase available liquidity.

William H. Heissenbuttel: We repaid $100 million outstanding on our revolving credit facility and ended the quarter with almost $1 billion of total liquidity.

William H. Heissenbuttel: As previously disclosed during the quarter, we entered into an additional agreement with Tara to provide long term cost support at Mount Milligan in return for near term cash and future gold consideration and our future free cash flow royalty.

William H. Heissenbuttel: This allowed an immediate two-year extension to the mine life to 2035 and provided the incentive for Sinterra to continue to invest in the long-term future and maximize the value of the large mineral endowment around the mine. Tara is working on a PEA to evaluate opportunities to extend the mine life beyond 2035, and we look forward to the results when it is completed in the first half of 2025.

William H. Heissenbuttel: This allowed an immediate two year extension to the mine life to 2035 and provides the incentive for some terra to continue to invest in the long term future and maximize the value of the large mineral endowment around the mine.

William H. Heissenbuttel: And Terry is working on a P. A to evaluate opportunities to extend the mine life beyond 2035, and we look forward to the results. When it is completed in the first half of 2025.

William H. Heissenbuttel: We also have a new operating partner at Comacal with the completion of the acquisition of Comacal by MMG and Mark. Recall that we provided a $25 million loan facility to the previous owner during the development of Comacao that accrued and capitalized interest at a rate of LIBOR plus 11%. This facility was repayable upon a change of control, and we received total proceeds of $37 million, including principal and capitalized interest. With these proceeds, the upfront cash payment from Sinterra on the Milligan transaction, and continued strong cash flow, we have made additional revolver repayments of $75 million since the end of the quarter, bringing our outstanding revolver balance down to $75 million.

William H. Heissenbuttel: We also have a new operating partner he called Macau with the completion of the acquisition of <unk> by Mg in March.

William H. Heissenbuttel: Recall that we provided of $25 million loan facility to the previous owner during the development of Macau that accrued in capitalized interest at a rate of LIBOR plus 11%.

William H. Heissenbuttel: This facility was repayable upon a change of control and we received total proceeds of $37 million, including principal and capitalized interest.

William H. Heissenbuttel: With these proceeds the upfront cash payment from some Tara on the Milligan transaction and continued strong cash flow. We have made additional revolver repayments of $75 million since the end of the quarter, bringing our outstanding revolver balance down to $75 million.

William H. Heissenbuttel: We are well positioned to repay the remainder of the balance during the third quarter, absent new investment opportunities. Maintaining a strong balance sheet is one of our core strategic objectives as it allows us to act quickly when attractive business development opportunities arise. We paid our quarterly dividend of 40 cents per share, a 7% increase over the previous quarter, marking the start of a 23rd straight year of paying an increased dividend.

William H. Heissenbuttel: We are well positioned to repay the remainder of the balanced during the third quarter absent new investment opportunities.

William H. Heissenbuttel: Maintaining a strong balance sheet is one of our core strategic objectives as it allows us to act quickly when attractive business development opportunities arise.

William H. Heissenbuttel: We paid a quarterly dividend of <unk> 40 per share a 7% increase over the previous quarter, marking the start of a 20 <unk> straight year of paying an increased dividend.

William H. Heissenbuttel: And finally, we issued our first asset handbook shortly after quarter end. And by the end of the week, we expect to publish our investment stewardship report, which is our reimagined publication that covers ESG risks and a separate climate report. All of these documents are currently or will be available on our website. These publications take an enormous effort from a staff that is limited in size, and I want to thank them for their efforts in preparing these reports. I hope you find them helpful in your review of our company. I'll now turn the call over to Martin to provide some comments on the portfolio.

William H. Heissenbuttel: Finally, we issued our first asset handbook shortly after quarter end and by the end of the week, we expect to publish our investment stewardship report, which is a re imagined publication that covers ESG risks and a separate climate report.

Martin: All of these documents are currently or will be available on our website.

Martin: These publications taken enormous effort from our staff that is limited in size and I want to thank them for their efforts in preparing these reports I hope you find them helpful. In your review of our company.

William H. Heissenbuttel: Now I'll turn the call over to Martin to provide some comments on the portfolio.

Martin Raffield: Thanks Bill. Turning to slide 5, I'll give some comments on first quarter revenue. Overall revenue for the quarter was $149 million, with volume of 71,900 GEOs. Our royalty segment contributed $46 million, about 31% of the total revenue for the quarter. Royalty revenue was down about 16% from the prior year quarter, mostly due to a lower contribution from the Cortez Legacy Zone, as expected, partially offset by higher contributions from the Cortez CC Zone than Pen Esquito. Revenue from our stream segment was $103 million, down by about 11% from last year.

Martin: Thanks, Joe turning to slide five I'll give some comments on first quarter revenue.

Martin Raffield: Overall revenue for the quarter was $149 million with volume was 71900 G E OS.

Martin Raffield: Our royalty segment contributed $46 million about 31% of the total revenue for the quarter.

Martin Raffield: Royalty revenue was down about 16% from the prior year quarter, mostly due to a lower contribution from the Cortez legacy zone as expected, partially offset by higher contributions from the Cortez Ccs zone Scioto.

Martin Raffield: Revenue from our streaming segment was $103 million down by about 11% from last year.

Martin Raffield: Lower contributions from Mount Milligan and Pueblo Viejo were partially offset by higher revenue from Zaventina and Wassa. Now, I'll turn to slide 6 and give some comments on notable developments at our principal properties. At Mount Milligan, as Bill mentioned, the PEA is underway to evaluate opportunities to extend the mine life beyond 2035. This includes a review of tailings expansion options, exploration drilling on a number of targets near the existing pit, and a site optimization program that began late last year. Sinterra believes that the large mineral endowment at Mount Milligan has the potential to provide significant extensions to the mine life of the mine.

Martin Raffield: Contributions from Mount Milligan Pueblo Viejo were partially offset by higher revenue from 17 earn wassa.

Martin Raffield: At Pueblo Viejo, Barrett reported last week that the plant expansion construction is complete and that the all-stockpile feed conveyor reconstruction was completed in April. They are now working on increasing production from the crushing and milling circuits and improving operational stability and recovery in the flotation circuits. An additional 123,000 ounces of silver were deferred during the quarter due to low recovery. We expect the focus on the flotation circuit performance will improve silver recovery, but we also expect this work will take some time and that the delivery of our deferred silver ounces will depend on the outcome. At Cortez Barrack, the official opening of the new Gold Rush was announced.

Martin Raffield: I'll turn to slide six and give some comments on multiple developments that our principal properties.

Martin Raffield: At Mount Milligan as Bill mentioned, the Pea is underway to evaluate opportunities to extend the mine life beyond 2035.

Martin Raffield: This concludes the review of tailings expansion options exploration drilling on a number of targets near the existing pit and our site optimization program that began late last year.

Martin Raffield: <unk> believes that a large mineral endowment at Mount Milligan has the potential to provide significant extensions to the mine life.

Martin Raffield: Our Portland, Idaho Barrett reported last week that the plant's expansion construction is complete.

Martin Raffield: Stockpile feed conveyor construction was completed in April.

Martin Raffield: We're now working on increasing production from the crushing and milling circuits and improving operational stability and recovery in the flotation circuits.

Martin Raffield: An additional 123000 ounces of silver was deferred during the quarter due to lower recoveries, we expect to focus on the flotation circuit performance will improve silver recovery, but we also expect this work will take some time and the delivery of our deferred silver ounces will depend on the outcome.

Martin Raffield: At Cortez Barrick announced the official opening of the new Gold Rush mine.

Martin Raffield: Barrick expects to ramp up production from 130,000 ounces this year to reach commercial production in 2026. Barrick is targeting a 24 year mine life and average annual production of about 400,000 ounces by 2028. Barrick also reported last week that production at Cortez was on plan for the first quarter, and they maintain their total Cortez production guidance of 620 to 680,000 ounces for 2024. We expect about a third of this will come from the Crossroads area, where we have an effective gross royalty rate of approximately 9.4%, with a remainder coming from areas where our effective gross royalty rate is approximately 1.6%, including Gold Rush. Last year, those percentages were more heavily weighted towards our legacy zone and the higher royalty rate. Turning to slide 7, TEC has reported that drought conditions are continuing to cause water restrictions.

Martin Raffield: <unk> expects to ramp up production from 130000 ounces this year to reach commercial production in 2026.

Martin Raffield: Rick is targeting a 24 year mine life and the average annual production of about 400000 ounces by 2028.

Martin Raffield: Barrick also reported last week that production at Cortez was on plan for the first quarter and they maintain the total Cortez production guidance of 620 to 680000 ounces for 2024.

Martin Raffield: We expect about a third of this will come from the Crossroads area, where we have an effective gross royalty rights of approximately nine 4% with the remainder coming from areas, where our effective gross royalty rate is approximately one 6%, including gold rush.

Martin Raffield: Last year, those percentages were more heavily weighted towards our legacy zone and the higher royalty rate.

Martin Raffield: Turning to slide seven <unk> reported the drought conditions are continuing to call with water restrictions.

Martin Raffield: Tech is assessing steps to mitigate these water restriction risks and expects a solution to be in place in 2025. Gold production guidance for 2024 is between 18,000 and 24,000 recovered ounces. Apenasquito operations have returned to normal after last year's labor strike.

Martin Raffield: Teck is assessing steps to mitigate these water restriction risks and expects a solution to be in place in 2025.

Martin Raffield: Gold production guidance for 2020 fours between 18020 4000 recovered ounces.

Martin Raffield: I finished keto operations returned to normal after last year's labor strike.

Martin Raffield: Newmont reported that stripping of the Pinasco pit was delayed due to the strike, but it expects all production from Pinasco to increase later this year and into next year. As a result, gold production is expected to be weighted 60% for the second half of the year, with continued strong silver, lead, and zinc production from the Chile-Colorado period. At Comacao, the ownership transition to MMG is now complete. MMG is a publicly listed company, so we expect public disclosure of developments will be significantly improved.

Martin Raffield: <unk> reported the stripping of the pinata cockpit was delayed due to the strike, but it expects oil production from <unk> to increase later this year and into next year.

Martin Raffield: As a result gold production is expected to be weighted 60% for the second half of the year with continued strong silver lead and zinc production from the Chile, Colorado pit.

Martin Raffield: That kind of Macau the ownership transition Raymond J is now complete and then she is a publicly listed company. So we expect public disclosure of development will be significantly improved.

Martin Raffield: Kamikawa is expecting payable silver production of 1.2 to 1.4 million ounces for 2024. This is lower than the life of mine average silver production of 1.8 to 2 million ounces per year, but it is in line with the mine plan, which has a top-down mining sequence with lower grades in the upper portion of the deposit. And finally, First Gold was poured in the first quarter at Mara Rosa in Brazil and Cote Gold in Ontario, which are our newest producing properties.

Martin Raffield: Macau is expecting payable silver production of one two to $1 4 million ounces for 2024.

Martin Raffield: This is lower than the life of mine average silver production of one eight to 2 million ounces per year, but it is in line with the mine plan, which has a top down mining sequence with lower grades in the a proportion of the deposit.

Martin Raffield: And finally first gold was poured in the first quarter Edmar Rocher in Brazil in Cotai, Golden, Ontario, which are our newest producing properties.

Martin Raffield: We also saw continued progress towards full production at King of the Hills and Bellevue Mines in Western Australia, and we expect to see first production from Manshaw in Alaska early in the third quarter of the year. I'll now turn the call over to Paul for a review of our financial results.

Martin Raffield: We also saw continued progress towards full production that king of the hills in Bellevue minds in Western Australia, and we expect to see first production from men's show in Alaska early in the third quarter of the year.

Martin Raffield: I'll now turn the call over to Paul for a review of our financial results.

Paul K. Libner: Thanks Martin. I'll now turn to slide 8 and get an overview of the financial results for the quarter. For this discussion, I'll be comparing the quarter ended March 31, 2024 to the prior year quarter. Revenue was down 13% to $149 million for the quarter. We had a strong first quarter of 2023.

Paul: Thanks, Martin I'll now turn to slide eight and give an overview of the financial results for the quarter.

Paul K. Libner: This discussion I'll be comparing the quarter ended March 31, 2024 to the prior year quarter.

Paul K. Libner: Revenue was down 13% to $149 million for the quarter.

Paul K. Libner: In fact, it was the second highest quarterly revenue in the history of the company. And, as Martin mentioned in his remarks, lower contributions from Mt. Milligan, Pueblo Vallejo, and the Cortez Legacy Zone were the main drivers for the lower revenue in the current quarter. However, the lower contributions from these properties were partially offset by higher contributions from Watsa and Zaventina, as well as higher average gold and silver prices. Gold and silver were up 10% and 4%, respectively, while copper was down 5% over the prior period.

Paul K. Libner: We had a strong first quarter of 2023 in fact, it was the second highest quarterly revenue in the history of the company.

Paul K. Libner: And as Martin mentioned in his remarks, lower contributions from Mount Milligan, probably a hole in the Cortez legacy zone were the main drivers for the lower revenue in the current quarter.

Paul K. Libner: The lower contribution from these properties were partially offset by higher contributions from Wassa and <unk> as well as higher average gold and silver prices.

Paul K. Libner: Gold and silver were up 10% and 4%, respectively, while copper was down 5% over the prior period.

Paul K. Libner: As Bill mentioned, gold continues to be the dominant revenue source, making up 75% of our total revenue for the quarter, followed by silver at 13% and copper at 9%. Royal Gold has the highest full revenue percentage compared to our major peers in the royalty and streaming sector.

Paul K. Libner: As Bill mentioned goal continues to be the dominant revenue source, making up 75% of our total revenue for the quarter.

Paul K. Libner: Followed by silver at 13% and copper at 9%.

Paul K. Libner: Well go to is the highest revenue percentage compared to our major peers in the royalty and streaming sector.

Paul K. Libner: Turn to slide nine, and I'll provide a bit more detail on the specific line items for the quarter. G&A expense increased slightly to $11.4 million from $11 million in the prior year quarter. The slide increase was due to higher corporate costs and non-cash stock compensation expense. Although we did see a small increase over the prior year, our cash G&A costs remain low as an overall percentage of total revenue. Our DDA expense decreased to $39 million from $46 million in the prior year.

Speaker Change: Turning to slide nine I'll provide a bit more detail on the specific line items for the quarter.

Paul K. Libner: G&A expense increased slightly to $11 $4 million from $11 million in the prior year quarter.

Paul K. Libner: Slight increase was due to higher corporate costs and noncash stock compensation expense.

Paul K. Libner: Although we did see a small increase over the prior year, our cash G&A costs remained low as an overall percentage of total revenue.

Paul K. Libner: Our <unk> expense decreased to $39 million from $46 million in the prior year on.

Paul K. Libner: On a unit basis, this expense was $539 per GEO for the quarter, compared to $514 per GEO in the prior year. The higher DNA per unit was mostly due to lower GEOs sold in the current period. The lower overall depletion expense, however, was due to a decrease in our Mt. Milligan gold depletion rate from $425 to $371 per ounce, as well as a decrease in copper and gold sales from Mt. Milligan and lower production from the Cortez Legacy Zone.

Paul K. Libner: On a unit basis. This expense was $539 per geo for the quarter compared to $514 per <unk> in the prior year.

Paul K. Libner: The higher DNA per unit was mostly due to lower Geo sold in the current period.

Paul K. Libner: The lower overall depletion expense, however was due to a decrease in our Mount Milligan gold depletion rate from $425 to $371 per ounce as well as the decrease in copper and gold sales from Mount Milligan and lower production from the Cortez legacy zone.

Paul K. Libner: Interest expense decreased nearly 50% to $4.6 million for the quarter. The decrease was primarily due to lower average amounts outstanding on the revolving credit facility. The all-in interest rate for outstanding borrowings on our credit facility was 6.5% at the end of March.

Paul K. Libner: Interest expense decreased nearly 50% to $4 $6 million for the quarter.

Paul K. Libner: The decrease was primarily due to lower average amounts outstanding on the revolving credit facility.

Paul K. Libner: The all in interest rate for outstanding borrowings under our credit facility was six 5% at the end of March.

Paul K. Libner: Tax expense for the quarter was $27 million, resulting in an effective tax rate of 36.4%. This compares to tax expense of $15.9 million and an effective tax rate of 19.9% in the prior year. The higher tax expense for the quarter was due to a one-time discrete tax expense of $13 million related to consideration received from the Mt. Milligan Cost Support Agreement. Excluding this discrete item, our effective tax rate for the quarter was approximately 19%, which is in line with the prior year period and our expectations for the full year. Net income for the quarter was down over the prior year to $47 million, or $0.72 per share. The decrease in net income was due to lower revenue and the discrete tax item I just mentioned.

Paul K. Libner: Tax expense for the quarter was $27 million, resulting in an effective tax rate of 36, 4%.

Paul K. Libner: This compares to tax expense of $15 $9 million and an effective tax rate of 19, 9% in the prior year.

Paul K. Libner: The higher tax expense this quarter was due to a one time discrete tax expense of $13 million related to consideration received from the Mount Milligan cost support agreement.

Paul K. Libner: Excluding this discrete item our effective tax rate for the quarter was approximately 19% which is in line with the prior year period, and our expectations for the full year.

Paul K. Libner: Net income for the quarter was down over the prior year to $47 million or <unk> 72 per share.

Paul K. Libner: The decrease in net income was due to lower revenue and the discrete tax item I just mentioned.

Paul K. Libner: After adjusting for the discrete tax item and a small change in the fair value of equity securities, net income for the quarter was $60 million, or $0.91 per share. Our operating cash flow was a record this quarter at $138 million, and up 27% over the prior year period. Operating cash flow for the current quarter included payments of $24.5 million as part of the Mt. Milligan Cost Support Agreement and $12 million in capitalized interest received as part of the Comacal Loan Facility repayment.

Paul K. Libner: After adjusting for the discrete tax item and a small change in the fair value of equity Securities net income for the quarter was $60 million or 91 per share.

Paul K. Libner: And the strong cash flow does not even include the $25 million we've received as repayment of principal on the ComaCal loan, which is recorded under cash from investing activity. I'd like to take a moment now to explain the accounting treatment of the Mt. Milligan Cost Support Agreement.

Paul K. Libner: Our operating cash flow was a record this quarter at $138 million and up 27% over the prior year period.

Paul K. Libner: Operating cash flow for the current quarter included payments of $24 $5 million as part of the Mount Milligan consequent agreement and $12 million in capitalized interest received as part of the <unk> loan facility repayment.

Paul K. Libner: And the strong cash flow does not even include the $25 million, we received as repayment of principal on the Kona count alone, which is recorded under cash from investing activities.

Paul K. Libner: I'd like to take a moment now to explain the accounting treatment of the Mount Milligan cost support agreement.

Paul K. Libner: When we entered into the agreement, we received a cash payment, the commitment by Sentara to deliver 50,000 ounces of gold in the future, and a free cash flow interest. With respect to the value of the cash consideration and the free cash flow interest, these have been recorded as a $25 million deferred support liability on the balance sheet. This amount will be amortized on units of production basis over the Mt. Milligan line life, beginning with the first cost support payment made, which we expect will be around 2030.

Paul K. Libner: When we entered into the agreement we received a cash payment.

Paul K. Libner: Mainland by center to deliver 50000 ounces of gold in the future and a free cash flow interest.

Paul K. Libner: With respect to the value of the cash consideration and the free cash flow interest. These had been recorded as a $25 million deferred support liability on the balance sheet.

Paul K. Libner: This amount will be amortized on a units of production basis over the Mount Milligan mine life, beginning with the first cost support payment made which we expect will be around 23.

Paul K. Libner: With respect to the deferred gold consideration, when the gold is received, we will bring these ounces onto our balance sheet at fair market value. When the ounces are subsequently sold, or upon receipt of the gold prior to any sale, we expect the value will also be recorded within the deferred support liability and amortized on a units of production basis as we provide future cost support over the mine life at Mount Milligan.

Paul K. Libner: With respect to the deferred golf consideration when the orders received we will bring these ounces onto our balance sheet at fair market value.

Paul K. Libner: When the ounces are subsequently sold where upon receipt of the gold prior to any cell. We expect the value will also be recorded within the deferred support liability and amortize on a units of production basis as we provide future cost support over the mine life at Mount Milligan.

Paul K. Libner: It is important to note that when we subsequently sell the deferred gold ounces, the proceeds will be recognized within other operating income and not recognized as royalty or stream revenue. Upon delivery of the deferred gold ounces, we anticipate selling the gold over a few days to a week following delivery. Finally, proceeds from the sale of the deferred gold ounces will be recognized as operating cash flow.

Paul K. Libner: It is important to note that subsequent to sell the deferred gold ounces. The proceeds will be recognized within other operating income and not recognized as royalty or stream revenue.

Paul K. Libner: Upon delivery of the deferred gold ounces, we anticipate selling gold over a few days to a week following delivery.

Paul K. Libner: Finally proceeds from the sale of the deferred gold ounces will be recognized as operating cash flow.

Paul K. Libner: I will now turn to slide 10 and provide a summary of our financial position as of March 31st. During the quarter, we repaid $100 million on our revolving credit facility and reduced the amount drawn to $150 million, bringing our total available liquidity to $966 million as of March 31st. Furthermore, using the cash received as part of the Coma Cow Bone repayment in late March, as well as our cash on hand, we made an additional revolver payment of $25 million on April 8th and another $50 million payment yesterday, leaving us with $75 million outstanding and $925 million undrawn and available.

Speaker Change: I will now turn to slide 10, and provide a summary of our financial position as of March 31.

Paul K. Libner: During the quarter, we repaid $100 million on our revolving credit facility and reduce the amount drawn to $150 million.

Paul K. Libner: Our total available liquidity to $966 million as of March 31.

Paul K. Libner: Further using the cash received as part of the coma Calgon repayment in late March as well as our cash on hand, we made an additional revolver payment of $25 million on April eight.

Paul K. Libner: And another $50 million payment yesterday, leaving us with $75 million outstanding and $925 million of Undrawn and available.

Paul K. Libner: Absent significant business development activity and as cash flow allows, we expect to fully repay our remaining revolver balance by sometime early in the third quarter. We have no material financial commitments outstanding. However, I will note that we made a small advance payment of $1.1 million to Arrow Copper as part of the success-based payment for resource additions at Zabentina. There are potentially up to $3.3 million of further success-based payments to AERO that remain through the end of 2024. That concludes my comments on our financial position for the quarter, and I will now turn the call back to Bill for closing comments.

Paul K. Libner: Absent significant business development activity and his cast rollout, we expect to fully repay our remaining revolver balance by sometime early in the third quarter.

Paul K. Libner: We have no material financial commitments outstanding. However, I will note that we made a small advance payment of $1 $1 million to arrow copper as part of that success based payment for resource additions at <unk>.

Paul K. Libner: There are potentially up to $3 3 million of further success based payments to era that remained through the end of 2024.

Paul K. Libner: That concludes my comments on our financial position for the quarter and I will now turn the call back to Bill for closing comments.

William H. Heissenbuttel: Thanks, Paul. Our first quarter was as expected, and I'm pleased to see our strong margins continue to produce solid cash flow so that we can reduce our outstanding revolver balance so quickly. Our balance sheet is in great shape, and we have excellent liquidity available to take advantage of business development opportunities that may present themselves. Before we wrap up, I want to highlight a change we made to our disclosure this quarter to improve transparency with respect to our performance compared to guidance.

Bill: Thanks, Paul first quarter was as expected and I'm pleased to see our strong margins continued to produce solid cash flow. So that we can reduce our outstanding revolver balance. So quickly our balance sheet is in great shape, and we have excellent liquidity available to take advantage of business development opportunities that may present themselves.

William H. Heissenbuttel: Before we wrap up I want to highlight a change we made in our disclosure this quarter to improve transparency.

William H. Heissenbuttel: With respect to our performance compared to guidance.

William H. Heissenbuttel: Included a new table table three in our press release that shows our 2024 sales guidance and actual sales through the end of the quarter.

William H. Heissenbuttel: This replaces a table that showed operator guidance and production for our principal properties, which is less helpful. For a leader who is trying to track Royal Gold's performance you.

William H. Heissenbuttel: You can see that we're tracking well so far with respect to sales guidance for the year and we will update this table every quarter. So as we move through the year.

William H. Heissenbuttel: We've included a new table, Table 3, in our press release that shows our 2024 sales guidance and actual sales through the end of the quarter. This replaces a table that showed operator guidance and production for our principal properties, which is less helpful for a reader who is trying to track Royal Gold's performance. You can see that we're tracking well so far with respect to sales guidance for the year, and we'll update this table every quarter as we move through the year. Operator, that concludes our prepared remarks. I'll now open the line for questions.

Speaker Change: Operator that concludes our prepared remarks I'll now open the line for questions.

Operator: Thank you, Bill. If you'd like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask a question, please ensure your device is unmuted locally. That's star one to ask a question. Our first question today comes from Cosmos Chiu from CIBC. Please go ahead.

Speaker Change: Thank you Bill if you'd like to ask a question. Please press star followed by one on your total. Thank you Pat now if you change your mind. Please press star followed by team when preparing to ask a question. Please ensure your device is unmated lately.

Operator: Star one to ask a question.

Cosmos Chiu: Our first question today comes from Cosmos <unk> from CIBC. Please go ahead.

Cosmos Chiu: All right. Thanks, Bill.

Cosmos Chiu: Alright, Thanks Bill.

Cosmos Chiu: Um, maybe my first question is on, again, the discrete tax expense related to Matt Milligan's cost support agreement slash the guilty tax. Paul, I think you confirmed that this is a one-time item. So we're not going to see this recurring item again later on in future quarters. My other question is, is there an actual cash impact on this expense? Maybe not today, but over time, like, how should we look at this $12.98 million?

Cosmos Chiu: Maybe my first question is on again, the discrete tax expense.

Cosmos Chiu: Related to the Mount Milligan cost support agreement a flash to guilty tax.

Speaker Change: Uh huh.

Cosmos Chiu: Paul I think you confirmed that this is a one time item. So we're not going to see a recurring item again later on in future quarters. My other question is.

Cosmos Chiu: Is there a natural cash impact to this expense maybe not today, but over time like how should we look at this $12 $98 million.

Unknown Speaker: Hey, Cosmos. Yeah. Thanks for the question.

Paul: Hey, Cosmos, Yeah I think.

Cosmos Chiu: Thanks for the question and glad to hear that.

Unknown Speaker: Okay.

Unknown Speaker: Yeah, so Cosmos, this was a unique transaction where the book and the tax accounting differed. So under the US income inclusion rules for tax purposes, the value of that consideration that we received when we entered into the transaction was immediately taxable. And that's that $13 million that was taxed at the guilty rate, as you asked.

Cosmos Chiu: Yes, so positive that this was a unique transaction.

Unknown Speaker: Whereby the book.

Unknown Speaker: Tax accounting differed.

Unknown Speaker: So under the U S income inclusion rules for tax purposes.

Unknown Speaker: <unk> that consideration that we received when we entered into the transaction. It was immediately taxable and that's that $13 million.

Unknown Speaker: That was taxed the guilty right.

Unknown Speaker: So again, that value, that consideration that we received during the transaction, again, for tax purposes, was roughly $125 million. So going forward, if when we receive the value, or when we see the gold in the future, the deferred ounces, if the value of that gold, you know, should increase significantly, then we would have some additional, you know, cash taxes that we tax at that guilty rate in the future. But also, having said that, if the value of the gold should go down, then we would also have a potential tax benefit.

Unknown Speaker: That is a one time.

Unknown Speaker: You asked.

Unknown Speaker: <unk> again that value of that consideration that we received.

Unknown Speaker: During the transaction again for tax purposes was roughly $125 million, so going forward, if and when we receive the value when we see the gold in the future the deferred ounces.

Unknown Speaker: The value of that gold should increase significantly then we would have.

Unknown Speaker: Some additional.

Unknown Speaker: Cash taxes that we tax that guilty right.

Unknown Speaker: In the future, but also having said that if that value of that going to go down and we would also have a.

Unknown Speaker: Tax benefit potentially.

Unknown Speaker: Oh great.

William H. Heissenbuttel: And then maybe my other question is on Comacao. As you talked about, Bill, there's a new operator in town. Have you had a chance to meet the new operator, and what are your impressions so far?

Unknown Speaker: And then maybe my other question is on the Cold Macau.

William H. Heissenbuttel: As you talked about Bill you know Theres, a new operator in town.

William H. Heissenbuttel: Have you had a chance to meet the new operator, what are your impressions impressions so far.

William H. Heissenbuttel: Yeah, Cosmos, we've had a chance to meet him a couple of times, both over the phone and also in person. Yeah, you know, look, I'm, I'm impressed by the folks that we've met. But, you know, the relationship is sort of in the earlier stages, and what you're looking forward to further developing that relationship. So I don't have any concerns, if that's your question about MMG and their plans for the project and how they plan on treating us.

Speaker Change: Yes Cosmos.

Bill: We've had a chance to meet him a couple of times.

William H. Heissenbuttel: Both over the over the phone, but also also in person.

William H. Heissenbuttel: Yes look I'm unimpressed by the folks that we've met.

William H. Heissenbuttel: The relationship is sort of in the earlier stages.

William H. Heissenbuttel: Looking forward to further developing that relationship. So I don't have any concerns. If that's your question about about LNG and their plans for the project and how they plan on on treating us.

Speaker Change: Okay, great. Thanks, once again bill and team those are all the questions.

Cosmos Chiu: Great. Thanks once again, Bill and team. Those are the questions.

Speaker Change: Thanks Cosmos.

Operator: The next question is from Tanya Jakusconek from Scotia Bank. Please go ahead.

Speaker Change: The next question is from Tanya <unk> connect.

Tanya M. Jakusconek: <unk> Bank. Please go ahead.

Tanya M. Jakusconek: Good afternoon, everyone. Thank you so much for taking my questions. I, too, just wanted to start by saying a lot of your, you know, we had the Investor Day, so a lot of detail was provided at the Investor Day. But I thought maybe someone could walk us through the rest of the portfolio, your smaller royalties and streams and others and kind of give us a little bit of a look into how, you know, these could add in the next sort of, you know, five years or so we have the big So those ones we have a better idea, but there are a lot of smaller ones. And so it would be helpful to know what those could contribute.

Tanya M. Jakusconek: Good afternoon, everyone. Thank you so much for taking my questions.

Speaker Change: I had two I just wanted to.

Speaker Change: Alright bye thank you.

Tanya M. Jakusconek: A lot of your.

Tanya M. Jakusconek: Investor Day, so a lot of detail provided in the Investor day, but I thought maybe if someone could walk us through that.

Tanya M. Jakusconek: The rest of the portfolio, yes, Mano royalties and.

Speaker Change: And screams I know there has been kind of give us a little bit of that.

Tanya M. Jakusconek: I look out into how.

Tanya M. Jakusconek: These could add in the next sort of five years or so.

Tanya M. Jakusconek: We have the big mines, So we have a better idea, but there's a lot of smaller ones and so it would be helpful to know what that will contribute.

William H. Heissenbuttel: Thanks, Tanya. I might turn that over to Martin. I will say we don't spend a lot of time on some of the smaller ones. But, but Martin, I don't know if there are a few things you could share, particularly about maybe some of the newer ones, like, like Kote and Mara Rossi.

Speaker Change: Thanks Tanya.

William H. Heissenbuttel: I might turn that over to Martin I will say, we don't spend a lot of time on some of the smaller ones, but but Martin I don't know if there are a few things you can share, particularly about maybe some of the newer ones like <unk> and <unk>.

Martin Raffield: Yeah, thanks. Thanks for the question, Tanya.

Martin Raffield: Yes. Thanks, Thanks for the question John.

Martin Raffield: Looking forward towards the end of this year I think we are expecting things to strengthen as we go towards the end of 'twenty four and 'twenty five.

Martin Raffield: So, you know, looking forward towards the end of this year, I think we are expecting things to strengthen as we go towards the end of 24 and 25. And, you know, we are expecting PV to ramp up, we're expecting Pennesquito to have improved gold production, and we're expecting Gold Rush to ramp up. So those are key on our forward-looking side.

Martin Raffield: We are expecting CV to ramp up we're expecting and mosquitoes have improved gold production, we're expecting gold rush to ramp up so those those are key.

Martin Raffield: The forward looking side.

Martin Raffield: But we do have some of our smaller operations that are also coming online, so Manchow, Ken Ross reported yesterday that that project is going well, they have started the ore haulage over to the Fort Knox site, so we're looking to that to start up early in Q3 and to start receiving revenue there over the next few years. The Cote ramp-up has started. They pulled their first gold on March 31st, so that is moving ahead.

Martin Raffield: But we do have some some of our smaller operations that are also coming online some non show.

Martin Raffield: <unk> reported yesterday that that project is going well.

Martin Raffield: <unk> fuel haulage over to the Fort Knox site.

Martin Raffield: So we're looking to that to start early in Q3 and to start receiving revenue there over the next few years.

Martin Raffield: The cotai ramp up those sources.

Martin Raffield: Poured first gold on March 31st So that is moving ahead. They are looking to get into the promotional production in Q3.

Martin Raffield: They're looking to get to commercial production in Q3. And Mara Rosa, they produced their first gold on February 21st, and they're looking to ramp up to commercial production over the next few weeks. So they're looking in the longer term or in the short term for 2024, 83,000 to 93,000 ounces and then ramping up to 100,000 ounces over the first four years of operation. So those are going well. The other ones that I would mention are probably Bellevue. Very good exploration results out of Bellevue and good definition drilling results over the past quarter. So we're expecting good things there over the next few years. So those are the ones that

Martin Raffield: And more rows.

Martin Raffield: They produce their first gold on February the 21st and they are looking to ramp up to commercial production.

Martin Raffield: Over the next few weeks.

Martin Raffield: Looking in the in the longer term or in the short term in 2024 83 to 93000 ounces and then ramping up to a 100000 ounces emphasis or usable operations. So those ones are going well the other ones that I would mention a protein belvieu.

Martin Raffield: Very good exploration results out of Bellevue and good distribution drilling results over the past quarter.

Martin Raffield: So we're expecting good things there over the next few years.

Martin Raffield: So that's those are the ones that jump to mind Tanya.

Martin Raffield: Yeah.

Tanya M. Jakusconek: Yeah, it's just, you know, the big ones are, you know, the operators are well covered. I was kind of thinking more of some of the smaller ones, but we could take it offline and see. I knew a couple of years ago, you had talked about some of these smaller ones contributing anywhere between 10 and 25,000 GEOs or thereabouts. Obviously, some of them are here.

Martin Raffield: Yes.

Martin Raffield: The.

Tanya M. Jakusconek: These are the operators are well covered and that was kind of thinking more on some of that smaller ones, but we can take it offline.

Tanya M. Jakusconek: And.

Tanya M. Jakusconek: I knew a couple of years ago, you had talked about some of the smaller ones contributing anywhere between 10, and 25000 geos or thereabout.

Tanya M. Jakusconek: Some of them are and yeah. It was just kind of wondering if that was you know.

Tanya M. Jakusconek: I was just kind of wondering if there were, you know, some smaller ones beyond the ones you just mentioned that we should be thinking about that would contribute above and beyond these ones. But we can take it offline, that's great. Yeah, we can take it offline, and if there are any specific assets you're looking at, we'd be happy to respond, just want to hit the ones you're interested in. Yeah, yeah, just because those ones we covered already from the operator. So we kind of well know those ones, and they are already in our models.

Tanya M. Jakusconek: Some smaller ones beyond the one that you just mentioned now that we should be thinking about that would contribute above and beyond these one.

Tanya M. Jakusconek: Yes.

Tanya M. Jakusconek: We have taken online.

Tanya M. Jakusconek: Yeah, we can take it offline and if there are any specific assets you are looking at we'd be happy to respond.

Tanya M. Jakusconek: Just want to hit the one here.

Tanya M. Jakusconek: Yes.

Tanya M. Jakusconek: Yeah.

Tanya M. Jakusconek: Yeah.

Tanya M. Jakusconek: Those won't recover already from the operator, so we kind of well no that was London Arthur with are already in our models I'm. Just wondering maybe there are some smaller ones that you know we can get that look we'll take it offline and my second question is yes.

Tanya M. Jakusconek: I'm just wondering, maybe there are some smaller ones that, you know, we can get to, but we'll take it offline. My second question is just on the transaction environment. If I could, every call, I ask every company, what they're seeing out there. I asked again at investor day, but wanted to circle back because it's very dynamic. So wanted to hear from you again today.

Tanya M. Jakusconek: On the transaction environment, if I could.

Tanya M. Jakusconek: Every call I ask every company.

Tanya M. Jakusconek: They're seeing out there I asked again I know in the Investor day, but wanted to circle back because it's very dynamic.

Tanya M. Jakusconek: I wanted to hear from you again today.

Tanya M. Jakusconek: You know, what are you seeing size wise for deals, hopefully, by now, new months have put an open the data room for these new crests and other assets for sale. So just wanted to see, you know, size wise, understand whether it's still, you know, mind build, you know, financing, balance sheet repairs. And then I want to understand the structure of the deals, whether you're focused mainly on, you know, just loyalty streams, or would you also look at equity and or debt components. So that would be helpful. Thank you.

Tanya M. Jakusconek: What are you seeing size wise for deals.

Tanya M. Jakusconek: Hopefully by now Newmont has tracked and opened the data room for these new kras than other asset sale. So just wanted to be size wise.

Tanya M. Jakusconek: Understand weather.

Tanya M. Jakusconek: Mind Bill.

Tanya M. Jakusconek: Financing.

Tanya M. Jakusconek: <unk> balance sheet repaired and then I want to understand the structure of the deals whether you focus mainly on.

Tanya M. Jakusconek: Lastly streams that would you also look at equity and or that component or that would be helpful. Thank you.

William H. Heissenbuttel: Sure, lots to unpack there. I'm going to turn this over to Dan. The one comment I would say is we're not going to comment on anything specific that we might be looking at, but Dan can certainly give you a feel for

Tanya M. Jakusconek: Sure.

Tanya M. Jakusconek: To unpack there the one time I'm going to turn this over to Dan. The one comment I would say is we're not going to comment on anything specific.

William H. Heissenbuttel: That we might be looking at but Dan can certainly give you a feel for what we're seeing.

William H. Heissenbuttel: Sure, Bill. Hi, good morning, Tanya.

Dan: Thanks, Bill Hi, good morning Tanya.

Daniel K. Breeze: Thanks for the question. And I think you've heard this from some of our peers in public already with their comments. The pipeline is pretty robust at the moment. I think that's the best way to describe it.

Dan: Thanks for the question.

Dan: And I think you've heard this from some.

Dan: Some of our peers, probably already with their comments.

Dan: Pipeline is pretty robust at the moment I think that's the best way to describe it we're quite busy right now.

Daniel K. Breeze: We're quite busy right now with reviews on a number of opportunities, and I think the higher commodity prices are really starting to settle in Tanya, and I think that's moving projects forward. I think we're seeing the equity markets really opening up, and that source of capital is coming into the sector, and that's helping projects move forward as well. And I think, as we look at the debt markets, and think about where interest rates are and where they I think that's also going to keep counterparties interested in looking at other sources of capital, like royalties and streams. So I always tell you that the size range, Tanya, is the $100 to $300 million level. I think that's broadly fair still here.

Dan: With reviews on a number of opportunities and I think.

Daniel K. Breeze: I think the higher commodity prices are really starting to settle in ammonia and I think that's moving projects forward and.

Daniel K. Breeze: I think we're seeing the equity markets really opening up and.

Daniel K. Breeze: And that source of capital is coming into the sector and that's helping projects going forward as well.

Daniel K. Breeze: And I think as we look at the debt markets and thinking out and looking at where interest rates are and where they might remain elevated for a while.

Daniel K. Breeze: That's also going to keep.

Daniel K. Breeze: Counterparties interested with looking at other sources of capital like like royalties and streams. So.

Daniel K. Breeze: Just tell you that the size range Tanya is the $100 million to $300 million level.

Daniel K. Breeze: That's broadly a fair still here, we are aware of few larger opportunities in the market.

Daniel K. Breeze: We are aware of a few larger opportunities in the markets. And I think it's fair to say that those opportunities are generally related to improving balance sheets and liquidity and so forth, mainly related to base metal assets. So we would be looking at byproduct precious metals in those cases.

Daniel K. Breeze: And I think it's fair to say that those opportunities are.

Daniel K. Breeze: Generally related to improving balance sheets, and liquidity and so forth mainly over.

Daniel K. Breeze: Base metal assets, so we'd be looking at byproduct precious.

Daniel K. Breeze: But I'd also just mention, you heard from Paul and his comments on our liquidity, and we have lots of internal liquidity with almost a billion dollars to look at those kinds of transactions as well. So we feel pretty good about the market on the smaller end. It's still very busy for us. I mentioned equity opening up a little bit. But there are some interesting sub $100 million type opportunities, earlier stage projects and whatnot that we're looking at. Hopefully, that gives you a little bit of flavor from our side with what we're doing. Yeah, thanks for that. Yeah, let me just say that

Daniel K. Breeze: Precious metals and in those cases, but.

Daniel K. Breeze: And also just mentioned you heard from Paul and his comments on our liquidity and we have lots of internal liquidity with almost $1 billion tend to look at those kinds of transactions as well. So we feel pretty good about the market on the smaller end.

Daniel K. Breeze: It's still very busy for us as I mentioned, the equity being up a little bit.

Daniel K. Breeze: But there are some interesting sub $100 million type opportunities earlier stage projects and whatnot that we're looking at as well.

Daniel K. Breeze: So hopefully that gives you a little bit of flavor from our side with what we're what we're seeing.

Daniel K. Breeze: Yes.

Speaker Change: Let me.

William H. Heissenbuttel: Yeah, let me just complete the last part of your question, which was, you know, doing equity in debt. And I think we've been pretty consistent. We're relatively open to it. It's not our core business. We wouldn't earn, you know, our valuation premium on a debt investment or an equity investment. At the same time, if the prize is a, the stream is a very large percentage of an overall financing package where we can provide all of those things.

Speaker Change: Yes, let me just let me just complete the last part of your question which was.

William H. Heissenbuttel: Doing equity and debt and I think we've been pretty consistent where we're relatively open to it it's not our core business.

William H. Heissenbuttel: Wouldn't earn.

William H. Heissenbuttel: <unk> premium on a debt investment or an equity investment at the same time. If if surprise is the stream is a very large percentage of and.

William H. Heissenbuttel: We're certainly, we're certainly open to it. You've seen us do debt at Comacao and WASA. So certainly wouldn't close the door on it and say we're not going to, we're not going to play in those markets, but the stream's got to be the prize.

William H. Heissenbuttel: And overall financing package, where we can provide all of those things.

William H. Heissenbuttel: Certainly, we're certainly open to what you've seen us do that at <unk> and Wassa.

William H. Heissenbuttel: Certainly wouldn't close the door on it and say, we're not going to we're not going to play in those markets, but the stream is got to be the prize.

William H. Heissenbuttel: Okay.

Tanya M. Jakusconek: Okay, thank you so much for taking my questions. I will let somebody else ask them. Thank you so much.

Speaker Change: Okay. Thank you so much for taking my questions and I will let somebody else ask thank you so much.

Speaker Change: Thanks, Tony.

Operator: Thank you. As a reminder, if you'd like to ask a question, please press start followed by one on your telephone keypad now. Our next question comes from Brian MacArthur from Raymond James. Please go ahead.

Speaker Change: Thank you as a reminder, if you'd like to ask a question. Please press star followed by one on your touch Thank you Pat now.

Brian MacArthur: Our next question comes from Brian Macarthur from Raymond James. Please go ahead.

Brian MacArthur: Good morning, and thank you for taking my questions. Just back to Cosmos's question about the tax. So, if I understand this right, you paid $13 million in tax on the $25 million cash payment from Sunterra. Is that all cash? And secondly, why is the tax rate so high?

Brian MacArthur: Good morning, and thank you for taking my questions.

Brian MacArthur: Just back to Cosmos. His question about the tax so if I understand this right you paid $13 million in tax on the 25 million cash payment from <unk> is that all cash and secondly, like why is the tax rate so high on that.

Unknown Speaker: All right, I'm going to hand that right back. Yeah, no, and it's a fair question.

Speaker Change: All right.

Speaker Change: I'll get back to you.

Speaker Change: Yeah, No. It's a fair question and again this really goes back to that.

Unknown Speaker: The accounting and the tax on this transaction was unique and it was unique in the sense that.

Unknown Speaker: And again, this really goes back to the accounting and the tax on this transaction. It was unique, and it was unique in the sense that the treatments differed. So, for U.S. income tax purposes, the U.S. income inclusion rules, the value of the consideration that we received when we entered into the transaction, that was immediately taxable. And again, the consideration that we received was $24.5 million, the value of the 50,000 deferred gold ounces, as well as the free cash flow interest.

Unknown Speaker: The treatments differed so.

Unknown Speaker: For U S income tax purposes, the U S, including income inclusion rules.

Unknown Speaker: The value of the consideration that we received when we entered into the transaction that was immediately taxable and again the the consideration that we received was the 24 and a half million dollars.

Unknown Speaker: The value of that 50000 deferred gold ounces as well as the free cash flow interest.

Unknown Speaker: So when we took that entire value, which the majority of that was the Value of the Deferred Gold, which I think was roughly $2,000 an ounce when we entered into the transaction, that's about $100 million. So that's $125 million. So then you apply the GILTI rate to that, which is that 13%. And that gets you roughly to that $13 million that we paid in taxes there in Q1.

Unknown Speaker: So when we took the entire value, which the majority of that was the the.

Unknown Speaker: The value of the deferred gold, which I think was roughly $2000 an ounce when we.

Unknown Speaker: The transaction is about $100 million, so thats a $125 million. So then you apply the guilty right to that which is that 13% and that gets you roughly to that $13 million that we paid in taxes there in Q1.

Unknown Speaker: And that was all cash. Correct. Unknown Speaker Not deferred or anything. So you don't. Okay.

Unknown Speaker: And that was all cash.

Unknown Speaker: Correct.

Unknown Speaker: Not deferred or anything if you don't okay, correct, Yeah, and then as I mentioned to Cosmos.

Unknown Speaker: Yeah. And then, as I mentioned to Cosmos, you know, going into the future, that value that deferred gold could go up. And if that happens, then at a future date, when we receive the delivery of those gold ounces, we could pay that same cash tax, you know, the guilty rate, 13% in the future. But on the flip side, again, too, if we, if that value should go down, then we could see a cash tax benefit come through. Okay, but we're talking all cash on this, not just book accounting. Correct. Okay.

Unknown Speaker: Into the future again that value of that deferred gold it could go up.

Unknown Speaker: If that happens then at a future date, when we received the delivery of those gold ounces.

Unknown Speaker: We could pay that same cash taxes, the guilty right, 13% in the future, but on the flip side again too if we if that value should go down.

Unknown Speaker: And we could see a cash tax benefit come through.

Unknown Speaker: Okay. So we're talking all cash to this not just book accounting.

Unknown Speaker: Correct.

Unknown Speaker: Okay.

Brian MacArthur: My second question, and maybe this is better offline. It talks about you got to, you know, the cash consideration of $25 million, and then the cash flow interest received of $25 million. Why is it $1.5 million for that free cash flow interest? I assume that it's calculated on an NPV basis post 2030 or something. But on the offset of that, you might have to make cost component support payments. So, like, if it's too complicated, we take it offline.

Speaker Change: My second question and maybe this is better offline.

Brian MacArthur: It talks about you got it.

Brian MacArthur: Cash consideration of and then cash flow interest received $25 million.

Brian MacArthur: Why is it <unk> 5 million for that free cash flow interest I assume that's calculated on an NPV basis post 2030 or something but on the offset of that you might have to make cost.

Brian MacArthur: Pulmonary support payment so like if it's too complicated we can take it offline, but I just not quite sure I understand where those values came from it and the reason I ask because I'm still trying to feel it figure out the value of the deal right because they are.

Brian MacArthur: But like, I'm not quite sure I understand where those values came from. And the reason I ask is I'm still trying to feel it out to figure out the value of the deal, right? Because there's, you know, if it's cash tax payments, it changes the value of the deal.

Brian MacArthur: Cash tax payments it changes the value of the deal is.

William H. Heissenbuttel: Yeah, Brian, let me just focus on the pre-cash flow royalty a little bit. Okay, that was, as I called it, what when I asked for it, it's idiot insurance, right?

Speaker Change: Yes, Brian let me just focus on the free cash flow royalty a little bit okay that that was as high as I called it when I ask for is idiot insurance right. The metal prices go up so high they didn't actually need our cost support the mine would have been fine and we didn't need to change anything and so on.

William H. Heissenbuttel: The metal prices went up so high, they didn't actually need our cost support, the mine would have been fine, and we didn't need to change anything. And so all we wanted was something that says if the metal prices go up really, really high, and this thing's making cash flow, there will be cash flowing. I want to share in it, even to a small amount, and it's carried so we don't have to contribute to the cost. It's not a joint venture, or anything like that.

William H. Heissenbuttel: All we wanted was something that says if the metal prices go up really really high and this things, making cash is cash flowing.

William H. Heissenbuttel: I want to share and even to a small about and it's carried we don't have to contribute to cost and signed a joint venture interest.

William H. Heissenbuttel: And I will say that, you know, when we were doing our calculation, at the time, and at the prices, the long-term prices we were using, there just wasn't a lot of free cash flow that we thought might be there. And so we really heavily discounted it, and we just came up with a value of $500,000. Now, at today's price, you know, it's probably worth more, but that's pretty far in the future.

William H. Heissenbuttel: Or anything like that and I will say that when we were doing our calculation.

William H. Heissenbuttel: At the time and at the prices of long term prices. We were using there just wasn't a lot of free cash flow that we thought might be there.

William H. Heissenbuttel: And so we've really heavily discounted it and we just came up with a value of $500000 now at today's pricing, it's probably worth more.

William H. Heissenbuttel: Because you get to 2030, they've got to be thinking about expanding the tailing storage facility, and there are going to be costs that will be incurred that would get deducted from any free cash flow interest. So, you know, it was just something I wanted just so we didn't look kind of dumb for giving up something today if we didn't need to in five or six years.

William H. Heissenbuttel: It's pretty far in the future.

William H. Heissenbuttel: You get to 2030, they've got to be thinking about expanding the tailing storage facility.

William H. Heissenbuttel: They're going to be costs that will be incurred that would get deducted from any free cash flow interest so.

William H. Heissenbuttel: It was just it was something I wanted to just look.

William H. Heissenbuttel: Kind of dumped forgiven up something today, if we didn't need to five or six years from now.

Brian MacArthur: No, it makes sense to me. In fact, I was trying to think about it the other way, because if you extend your mind through the 20, 40, or 50 or 60, then

Speaker Change: No. It makes sense to me in fact, I was trying to think about it the other way because if it is extending to mine through the 2040 or 50 or 60, then doesn't that thing become quite valuable.

William H. Heissenbuttel: It could be, but all we've got right now is a two-year extension of reserves, and they're working on a PAA. So that might be a conversation to have when the PAA comes in.

Brian MacArthur: It will it could be but always got right now is the two year extension of reserves and they're working on it.

William H. Heissenbuttel: That might be a conversation to happen to pega comes out.

Brian MacArthur: Right. Okay. So that was kind of calculated for 2035.

Speaker Change: Right. Okay. So that was kind of calculate 2035 I get that okay that helps a lot. Thanks very much bill that makes that clears it up thank you.

William H. Heissenbuttel: I understand that. Okay. That helps a lot. Thanks very much, Bill. That clears it up. Thank you.

Speaker Change: Thanks, Brian.

Brian MacArthur: Thank you. As a final reminder, if you'd like to ask any questions, please press star one on your telephone keypad now. We currently have no further questions, so I'd like to hand you over to Bill Heissenbuttel to conclude.

William H. Heissenbuttel: Thank you.

William H. Heissenbuttel: Final reminder, if you'd like to ask any questions. Please press star one on your telephone keypad now.

William H. Heissenbuttel: We currently have no further questions. So I'd like to hand back to bill highest bussell to conclude.

William H. Heissenbuttel: Well, thank you everyone for taking the time to join us today. We certainly appreciate your interest in Royal Gold, and we look forward to updating you on our progress during the next quarterly call. Take care.

William H. Heissenbuttel: Well, thanks, everyone for taking the time to join US today, we certainly appreciate your interest in Royal Gold and we look forward to updating you on our progress during our next quarterly call take care.

Operator: This concludes today's call. Thank you for joining us. You may now disconnect your lines.

Operator: This concludes today's call. Thank you for joining you may now disconnect your lines.

Operator: [music].