Earnings call transcript: Royal Gold beats Q1 2025 earnings expectations

Royal Gold Inc. (RGLD) reported robust financial results for the first quarter of 2025, significantly surpassing analyst expectations. The company announced earnings per share (EPS) of $1.72, exceeding the forecast of $1.38 by 24.6%. Revenue also outperformed projections, reaching $193.4 million against the anticipated $146.31 million, marking a 32.2% beat. According to InvestingPro data, the company maintains impressive gross profit margins of 86.3% and has achieved a strong financial health score. Despite these impressive figures, Royal Gold’s stock fell by 1.85% to close at $182.65, suggesting potential profit-taking or broader market influences.

Key Takeaways

• Royal Gold’s Q1 2025 EPS of $1.72 beat forecasts by 24.6%.
• Revenue reached $193.4 million, surpassing expectations by 32.2%.
• The stock price decreased by 1.85%, closing at $182.65.
• The company increased its dividend by 12.5% to $0.45 per share.
• Royal Gold maintained a debt-free status with $1.25 billion in liquidity.

Company Performance

Royal Gold demonstrated strong financial performance in the first quarter of 2025, with a 30% year-over-year increase in revenue to $193 million. The company achieved a record net income of $113.5 million, or $1.72 per share. Gold remains the dominant revenue driver, contributing 75% of total revenue. The company’s robust balance sheet and liquidity position it well within the royalty and streaming sector.

Financial Highlights

• Revenue: $193 million, up 30% year-over-year
• Earnings per share: $1.72, up from $1.38 forecast
• Operating cash flow: $136 million
• Dividend increased by 12.5% to $0.45 per share
• Gold equivalent ounces sold: 67,600

Earnings vs. Forecast

Royal Gold’s earnings per share of $1.72 exceeded the forecast of $1.38 by 24.6%, and revenue of $193.4 million surpassed expectations by 32.2%. This strong performance marks a significant positive surprise compared to previous quarters, highlighting the company’s operational efficiency and market position.

Market Reaction

Despite the earnings beat, Royal Gold’s stock fell by 1.85% to close at $182.65. The decline may reflect profit-taking or broader market conditions affecting investor sentiment. The stock remains near its 52-week high, indicating strong performance over the year.

Outlook & Guidance

Royal Gold maintained its 2025 guidance ranges for metal sales and expects stronger production in the second half of the year. The company continues to focus on portfolio optimization and potential M&A opportunities, with a tax rate guidance of 17% to 22%.

Executive Commentary

"Our portfolio performance was solid, and we are maintaining our 2025 guidance ranges," said Bill Heisenbuttel, CEO. He emphasized the company’s stable position and broad opportunity set for future growth. Dan Breese, SVP Corporate Development, highlighted the ongoing exploration of transaction opportunities in the base metal sector.

Risks and Challenges

• Potential market saturation in the royalty/streaming sector.
• Broader economic conditions impacting commodity prices.
• Challenges in recovering silver from the Pueblo Viejo circuit.
• Dependence on gold prices, which can be volatile.
• Execution risks associated with M&A activities.

Q&A

During the earnings call, analysts inquired about the company’s asset handbook and production outlooks. There was also discussion on the M&A landscape and challenges in the silver circuit recovery at Pueblo Viejo. Royal Gold confirmed its commitment to exploring opportunities in the base metal sector.

Full transcript - Royal Gold Inc (RGLD) Q1 2025:

Lauren, Conference Call Operator: Everyone to the Royal Gold twenty twenty five First Quarter Conference Call. My name is Lauren, and I’ll be moderating your call today. There will be an opportunity for questions at the end of the presentation. I would now like to pass the conference call over to Alastair Baker to begin. Please go ahead.

Alastair Baker, Unspecified, Royal Gold: Thank you, operator. Good morning, and welcome to our discussion of Royal Gold’s first quarter twenty twenty five 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 Heisenbuttel, President and CEO Paul Libner, Senior Vice President and CFO and Martin Raffield, Senior Vice President of Operations Dan Breese, Senior Vice President, Corporate Development of RGAG and Randy Schechman, Senior Vice President and General Counsel, are also available for questions. 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, adjusted EBITDA and cash G and A. 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. 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 and A session. I’ll now turn the call over to Bill.

Bill Heisenbuttel, President and CEO, Royal Gold: Good morning and thank you for joining the call. I’ll begin on Slide four. Our first quarter gave us a solid start to 2025. Our portfolio delivered steady performance and the strong and rising gold price was a significant tailwind. Earnings for the quarter were a record $113,000,000 or $1.72 per share.

We’ve recognized a couple of discrete tax items that Paul will describe in more detail. And after adjusting for these items, earnings were a strong $100,000,000 or $1.51 per share. Gold remained the largest contributor to revenue for the quarter at about 75% of total and our geographic weighting remained consistent with over 53% of our revenue generated from The U. S, Canada and Australia. Our low and stable G and A allowed us to maintain our high margins and we had an adjusted EBITDA margin of 82% for the quarter.

We paid our first dividend of 2025 at our new quarterly rate of $0.45 per share, which is a 12.5% increase over 2024. Our annual dividend has increased every year since 02/2001, and we’re the only precious metals company in the S and P high yield dividend aristocrats index. We also achieved the full repayment of the Rainy River advanced stream deposit during the quarter. We made our investment at Rainy River during the initial construction in 2015, and we are pleased to see New Gold’s plans for at least another nine years of operation as they continue to expand the pit and ramp up underground production. On the new business front, we entered into an additional agreement with Arrow Copper to acquire an incremental stream interest in Sabentina and increase the stream coverage in a very prospective area.

Since our initial investment in 2021, Arrow has successfully added high grade resources and increased production in Sabentina, and we are pleased to increase our exposure to this asset. We paid $50,000,000 for this additional interest from our cash balance, and we ended the quarter with $1,250,000,000 of total available liquidity. And finally, we published new additions of our investment stewardship report and asset handbook in mid April. These are comprehensive documents that should help the market understand our portfolio and the outlook for our business. The market’s focus is often only on the largest assets in our portfolio, but some of the smaller assets are important to our overall business and they have interesting growth potential.

The asset handbook provides the detail required to understand and value this potential. I’ll now turn the call over to Martin for an overview of Q1 revenue.

Martin Raffield, Senior Vice President of Operations, Royal Gold: Thanks, Bill. Turning to Slide five, I’ll give some comments on first quarter revenue. Overall revenue was $193,000,000 with volume of 67,600 GEOs. On our last quarterly call, we forecasted softer GEO sales from our Stream segment in the first quarter. Stream sales met our expectations, and any softness was more than offset by strong metal prices and a stronger contribution from our royalty segment.

Royalty revenue was up by about 53% from the prior year quarter to $71,000,000 We saw another strong quarter from Penasquito, Mancho and Robinson and lower revenue from the Cortez Legacy Zone. The contribution of our royalty segment has grown over the past few quarters with revenue from several new assets. This segment contributed about 37 of total revenue in the quarter. Revenue from our Stream segment was $122,000,000 up by about 19% from last year with increased gold sales from Pueblo Viejo and gold and copper sales from Mount Milligan, partially offset by lower sales from Zaventina. I’ll turn to Slide six and give some comments on notable developments within the portfolio.

At Mount Milligan, Centerra reported first quarter results on Tuesday and confirmed their gold and copper production guidance for 2025. Centerra is expecting gold production of 165,000 to 185,000 ounces and copper production of 50,000,000 to 60,000,000 pounds, with both weighted to the second half of the year. Remember that we experienced a normal course lag of about six months from production at the mine site to sales, so we will see the benefits of the higher production weighting in the first half of twenty twenty six. Centerra also provided an update on the mine life extension project. In addition to extending the mine life beyond 02/1936, they highlighted the potential for a 10% increase to mill capacity through ball mill motor upgrades and additional downstream flow sheet improvements, which may also improve overall metal recovery.

The pre feasibility study could provide a significant catalyst for Royal Gold, and we look forward to seeing the results when it’s published in the third quarter. At Andacollo, Teck provided gold production guidance of 35,000 to 39,000 ounces in 2025, which is significantly higher than the 2024 production of 20,800 ounces. The main driver of this increase is higher mill throughput due to increased water availability. As with Mount Milligan, we also experienced a normal course lag at Andacollo of about six months from production at the mine site to sales, so we expect to see the benefit of this increased production later in 2025. Turning to Slide seven, the quarter, as Barrick announced yesterday, we reached maintaining overall gold production guidance of between six and eighty thousand and seven hundred and sixty five thousand ounces for the year.

As we highlighted in our 2025 guidance press release, we estimate an overall average royalty rate of 3.1% on this production. Barrick also reported progress on installing ventilation infrastructure at Goldrush, which should support increased mining rates. At Fourmile, the exploration campaign to define the ore body and overall footprint started, which will support the pre feasibility study, and exploration continues at Hanston and Swift targets with encouraging results. At Pueblo Viejo, Barrick also reported yesterday that 2025 gold production guidance of 370,000 to 410,000 ounces for its 60% share is unchanged after completing a thirty five day shutdown for debottlenecking work on the expanded plant in the first quarter. Barrick also provided an update on the mine life extension project, which is focusing on housing resettlement and engineering work on the new tailings storage facility.

So far, two twenty homes have been constructed, 18 families have been resettled, and the tailings facility is on track for commissioning in late twenty twenty nine. I’ll wrap up with some comments on other portfolio assets. At Penasquito, Newmont reported that high grades in the Penasco Pit resulted in strong gold and steady coke production in the first quarter. Newmont expects coke production to remain relatively steady through the second quarter before beginning to shift to a higher proportion of silver, lead and zinc and lower gold through the third and fourth quarters. At Comacao, MMG provided twenty twenty five silver production guidance of 1,300,000 to 1,500,000 ounces.

MMG also reported that early works on camp and road construction as well as land acquisition and personnel recruitment have started on the expansion project. Construction is expected to begin in 2026 but remains subject to completion of a feasibility study. In Nevada, results of preliminary economic assessment studies were released for various assets operated by IAT, where we have royalty interests. At Granite Creek, underground production is ramping up to 60,000 ounces per year, over an eight year mine life. And a feasibility study is expected in the fourth quarter that includes an updated operational plan.

The open pit project to Granite Creek is targeted to produce 130,000 ounces per year over a ten year mine life, and an updated feasibility study is also expected in the fourth quarter. At Ruby Hill, the Archimedes project considers a high grade underground gold mine producing approximately a hundred thousand ounces per year over a ten year mine life. And the Mineral Point project envisions a large open pit heap leach gold mine producing approximately 280,000 ounces gold equivalent per year over a sixteen point five year mine life. We look forward to seeing progress at all of these projects. At Back River in Nunavut, B2Gold expects to pour first gold in the second quarter.

Any royalty revenue to us on production this year will be based on an initial royalty rate of 0.7%. B2 also announced the results of an updated NI forty three one zero one report, and they are targeting gold production of approximately 300,000 ounces per year for the first six years. B2 is also finalizing a study in late twenty twenty five or early twenty twenty six to evaluate an increase in mill throughput from 4,000 to potentially 6,000 tonnes per day. Finally, the cash price paid for each ounce of gold delivered at Zaventina will increase from 20% to 40% of stock when the 49,000 ounce delivery threshold is reached. We’ve received deliveries of 46,500 ounces at the March, and we expect this cash price increase will occur sometime in this current quarter.

Note also that the effect of the transaction that Bill mentioned will be to extend the threshold for deliveries of the current 25% stream rate from 93,000 to 160,000 ounces. I’ll now turn the call over to Paul for a review of our financial results.

Paul Libner, Senior Vice President and CFO, Royal Gold: Thanks, Martin. I’ll turn to Slide eight and give an overview of the financial results for the quarter. For this discussion, I’ll be comparing the quarter ended 03/31/2025 to the prior year quarter. Revenue for the quarter was up strongly by 30% to CAD 193,000,000. Metal prices were a primary driver of the revenue increase with gold up 38%, silver up 37% and copper up 11% over the prior year.

Gold remains our dominant revenue driver making up 75% of our total revenue for the quarter followed by silver at 12% and copper at 9%. Royal Gold has the highest gold revenue percentage when compared to our major peers in the royalty and streaming sector. Turning to Slide nine, I’ll provide a bit more detail on certain financial line items for the quarter. G and A expense was $11,100,000 down slightly from the prior year and mostly due to lower corporate costs. We typically see higher G and A expense in the first quarter as this is the period when we grant employee equity awards and recognize higher non cash stock compensation expense when compared to other quarters throughout the year.

Excluding non cash stock compensation expense, our cash G and A remained low at approximately 4% of revenue for the quarter. Our DD and A expense decreased to $33,000,000 from $39,000,000 in the prior year. The lower overall depletion expense this quarter was due to lower depletion rates in our Stream segment as a result of reserve increases. Lower gold sales from Zaventina and lower gold production at Cortez also contributed to the decrease. On a unit basis, this expense was $488 per GEO for the quarter compared to $539 per GEO in the prior year.

Interest and other expense decreased significantly to 1,200,000 from $4,600,000 in the prior year. The decrease was primarily due to lower average amounts outstanding under the revolving credit facility. Tax expense for the quarter was $10,000,000 compared to $27,000,000 in the prior year. The lower income tax expense in the current period included two discrete tax benefits. First, a $12,000,000 benefit net of valuation allowance for additional recoverable basis in foreign jurisdictions.

And second, a $1,700,000 benefit related to a withholding tax refund on a foreign royalty. Excluding these discrete tax benefits, our effective tax rate for the quarter was 19.4%. Net income for the quarter increased significantly over the prior year to a record $113,500,000 or $1.72 per share. The increase in net income was primarily due to higher revenue, lower income tax expense and lower interest expense. After adjusting for the discrete tax benefits I just mentioned, adjusted net income was $99,800,000 or $1.51 per share.

This is the second highest in the company’s history after the record earnings we recognized in the fourth quarter of twenty twenty four. Our operating cash flow this quarter was $136,000,000 down slightly from $138,000,000 in the prior period. The slight decrease was primarily due to an increase in cash taxes paid, offset partially by higher net cash proceeds received from our stream and royalty interest. Finally, I will now turn to Slide 10 and provide a brief summary of our financial position as of 03/31/2025. We remain debt free at the end of the quarter and our total liquidity grew to approximately $1,250,000,000 which includes the fully undrawn and available $1,000,000,000 revolving credit facility and approximately $250,000,000 of working capital.

That concludes my comments on our financial performance for the quarter. And I’ll now turn the call back to Bill for closing comments.

Bill Heisenbuttel, President and CEO, Royal Gold: Thanks, Paul. The first quarter provided a good start to 2025. Our portfolio performance was solid, and we are maintaining our 2025 guidance ranges for metal sales, DD and A and tax rate. The outlook for economic conditions remains uncertain, and that is reflected with generally elevated volatility in the markets. However, I think we are well positioned to provide stability.

With our leverage to a strong gold price, our diversified portfolio, strong balance sheet, and commitment to paying a dividend, we are well placed to continue to deliver solid results. And on a final note, Kevin McArthur will retire from the board at our upcoming stockholder meeting. Kevin has served on the board since 2014, and he is leaving to focus on a new role that will require significant attention. Kevin’s strategic and operational insights will be missed, and I would like to thank him for his many contributions to Royal Gold. Operator, that concludes our prepared remarks.

I’ll now open the line for questions.

Lauren, Conference Call Operator: Thank you. We will now begin the Q and A session. Our first question today comes from Cosmos Chiui from CIBC. Cosmos, please go ahead.

Cosmos Chiui, Analyst, CIBC: Great. Thanks, Bill and team for the conference call. Maybe my first question is on your asset handbook. And thanks once again for publishing your asset handbook. I find it very helpful.

Especially this year, I see that you’ve included the your operators or the different operators’ multiyear production outlook for your assets. I guess one of the major requests from investors has always been for a long term guidance from Royal Gold. I know you won’t be giving one out. However, maybe, Bill, walk us through how we can use this new information in the 2024 asset handbook to help us build our own sort of near near term and long term kind of growth profile.

Bill Heisenbuttel, President and CEO, Royal Gold: Well, sure. Thanks thanks for the question. And and, obviously, the the information in the handbook, I think it only went out to 2028. So, you know, we we don’t give long term guidance. And and what we typically do is we’ll we’ll take an operator’s forecast, so we may adjust it.

We may adjust it up. We may adjust it down based on factors that that we see. But what we wanted the the the market to to try to understand is how do the operators see their own projects and try to put all that information into a couple of pages so that you can say, okay. You know, Xavantina expects 55,000 ounces of gold to be produced. This is the stream that that Royal Gold has.

Here’s the cash price. And and, you know, maybe that just helps you refine the short term to the medium term, look at it. So it was it was more about condensing information that’s already out there to try to make it easier for you for you to build it into a model and and do your calculations.

Cosmos Chiui, Analyst, CIBC: Yep. I I think it does help, Bill. So so thank you.

Bill Heisenbuttel, President and CEO, Royal Gold: Good. Good.

Cosmos Chiui, Analyst, CIBC: And then maybe my next question is on the corporate development end, and and you’ve been active. You know, you’ve made a a number of sort of changes or increases in existing assets within your portfolio. Seventina, we touched on it, Back River. So is that where you’re seeing some of the key opportunities? Or or, you know, you’ve done cactus as well, so that’s a completely new asset.

So could you maybe talk about the opportunity set? Is it mostly coming from current assets, or are there new opportunities coming from, new assets as well? Maybe talk about, that landscape.

Bill Heisenbuttel, President and CEO, Royal Gold: Yeah. Let me let me touch on, yeah, existing asset opportunities and then the general market. I’ll try to get Dan Breeze on here. But, look. The the assets in our portfolio, we know them better than anybody else.

We have a regular dialogue with with the companies, and we have existing agreements. They know how we work. And sometimes it’s just easier to build on a relationship that that, you know, we’ve built together than it is for a company to go out and look. Now I I would say, you know, the the in portfolio opportunities relative to new businesses, it that’s gonna be pretty small. It’s opportunistic.

And, it really comes down to the relationship and and the familiarity we have with with the project. As for new opportunities, I don’t know. Dan, can you can you jump in here?

Dan Breese, Senior Vice President, Corporate Development, Royal Gold: Sure, Bill. Hi. Hi, Cosmos, and, yeah, thanks thanks for the question. I I think I yeah. Hi there.

We we talked a little bit about this. I I think it was in the last call just in terms of the landscape, and we we made comments that things were very busy or getting very busy at the start of the the New Year. That that’s really continued, So I think it’s one of the busier times we’ve seen in recent memory. And it’s really hard to say where specifically where one set of opportunities is coming from. It’s really broad right now.

It’s I think if you look back in the in the landscape in terms of the announced transactions in our sector over the last, say, twelve to eighteen months, that’s the kinds of things that are are available right now to to look at. And to your comment on on the third party royalty market, I think that’s going to remain quite strong. You mentioned Cactus. We bought the B2Gold royalties as well last year, third party royalties. And I think just with these prices we’re seeing right now, it’s motivating sellers.

And so I think that that third party market continues to to roll forward. But there are other things or bigger things on the streaming side. We’re seeing some new royalty opportunities, I’d say, over earlier stage type projects as well. So we’re we’re quite busy, but it’s it’s very broad in terms of what we’re looking at.

Cosmos Chiui, Analyst, CIBC: Great. Maybe one last question then on taxes. You know, god, I love taxes. But on taxes, there was a discrete tax item in the quarter, 13,700,000. Just wanna confirm that’s a sort of onetime benefit or onetime item.

And then if you can remind us, you know, as you mentioned, if I were to exclude that benefit, it would be 19.4% effective tax rate. Could you remind us what we you know, what the guidance was for the percentage for the full year for tax expense? And for that, should we factor in the 19.4%, as part of that calculation for the full year, or should we use the other number that’s, without or with the discrete tax benefit?

Bill Heisenbuttel, President and CEO, Royal Gold: Cosmos, I’ll I’ll ask Paul to to hop in. You don’t wanna

Cosmos Chiui, Analyst, CIBC: answer that question? Cosmos.

Bill Heisenbuttel, President and CEO, Royal Gold: Well, I don’t like packages as much as

Cosmos Chiui, Analyst, CIBC: you do. So okay. Okay. Hi, Paul.

Paul Libner, Senior Vice President and CFO, Royal Gold: Hey, Cosmos. Thanks for the question. And, yeah, good good to hear from you. Yes. I I think to unwind your your your question there or to summarize it maybe into just a a short answer, we did have those two discrete items.

You have heard us say or me say in the past, these discrete items, I mean, are largely infrequent and they’re unusual. But so if we took out away those two discrete items for the quarter, yes, the effective tax rate was 19.4%. Our guidance for the year is 17% to 22%. So that number wedges right nicely in the mid part of that guidance range that we provided earlier. And again, no changes to that guidance.

Cosmos Chiui, Analyst, CIBC: Got you. Great. Thanks, Bill and team. Those are all the questions I have. Thank you.

Bill Heisenbuttel, President and CEO, Royal Gold: Thanks, Cosmos.

Lauren, Conference Call Operator: Thank you. Our next question comes from Tanya Jakusconek from Scotiabank. Tanya, please go ahead.

Tanya Jakusconek, Analyst, Scotiabank: Great. Good morning, everybody. Thank you so much for taking my questions. Got voted off an island on a previous call, so really appreciate it. I do have a few questions.

Can I just start on the quarterly basis? I know on the previous conference call, we talked about how the year shapes up with each a stronger second half versus first half. Is that still the case from a production or geo sales standpoint? I understand the, you know, pricing is is you know, it depends on pricing. But generally, on the asset basis, is that what we should expect?

Bill Heisenbuttel, President and CEO, Royal Gold: I I think that’s still our expectation, but but Martin can jump in here if I’ve I’ve gone astray there.

Martin, Senior Vice President of Operations, Royal Gold: No. That is still the expectation, Tanya. Stronger stronger second half. Yes.

Tanya Jakusconek, Analyst, Scotiabank: Okay. And and when I stronger second half, do we have a strong q four like everybody else does? I’m just trying to understand.

Bill Heisenbuttel, President and CEO, Royal Gold: It it’s it’s a hard first to break yeah. Go ahead, Martin. We we can we can expect a stronger fourth quarter. The problem that we sometimes run into is the street deliveries like a Milligan or an Andacollo can be really, really lumpy. And if we happen to get it in early or late, that can move it quarter to quarter, and that’s why I think we talk more halves than we do quarters because we we could we could end up with a with a Milligan shipment at some unexpected time, and then that particular quarter is not what we thought it would be.

Tanya Jakusconek, Analyst, Scotiabank: Okay. No. I appreciate that. But as you know it today, that’s sort of how you would see it pan out with a stronger q four, assuming the timing, is is delivered as you expect.

Cosmos Chiui, Analyst, CIBC: Yes.

Tanya Jakusconek, Analyst, Scotiabank: Okay. So that one thank you for that one. And then the other just one other on on, just on the modeling side. Just on the payments for 2025 that you have out there, can you just remind me, Paul, just sort of payments? I saw 58,000,000 was paid in q one.

Can you just remind me? I just wanna make sure I have all the payments that you have in the in the public domain right now that needs to go through your cash flow statement this year?

Paul Libner, Senior Vice President and CFO, Royal Gold: If I’m understanding your your question correctly, Tanya, so we we have no other commitments out there that that would go through that are are known. We did the the cat or I’m sorry, the, 17 of transaction, 50,000,000, but there are no other, like, commitments that we have that that you should be modeling for.

Tanya Jakusconek, Analyst, Scotiabank: Okay. So just the one that came through q one?

Paul Libner, Senior Vice President and CFO, Royal Gold: Correct.

Tanya Jakusconek, Analyst, Scotiabank: Okay. Perfect. Thank you for that. Just wanted to check. And then before getting to the transactions, and I’m getting that, Pueblo Viejo, just on Barret’s call yesterday, seems like, you know, they got the Pueblo Viejo back up again, and the throughput is moving higher.

Gold recovery is supposed to, you know, be picking up not so much q three q two, q ’3, but into q four. They don’t talk about the silver circuit. So can someone just bring me up to speed on the silver circuit? What are you expecting there? And then just remind me on the silver deferrals of what’s outstanding and should this circuit be operational, let’s say, q one of next year, how do we see that silver deferral come through for you?

Thank you.

Bill Heisenbuttel, President and CEO, Royal Gold: Martin, do you wanna do a high level on the silver circuit and what what they’re what they’re up to?

Martin, Senior Vice President of Operations, Royal Gold: Yeah. So so to answer the last question first, Tanya, the current deferral is 1,970,000 ounces at the end of the first quarter. And really, the the discussion that they gave during their conference call was was very similar to the to the discussion previously. It appears, you know, when they talked in q four, q ’1 was gonna be thickener optimization, type work to get that thickener working properly. That has now been confirmed to have been completed.

So that was a big job off the list of things that is required to improve recovery and overall throughput. There are there are several other other things happening over the year, the, gland service water type work, the cooling towers in q three, and that’s that’s one of the things that we really expect to have a significant improvement on the silver recovery going into q four and into 2026. And then there’s carbon generation, carbon regeneration kiln work happening in q four that, again, is going to help to improve recovery. So no no real change in the messaging there. I think going forward over the over the year, we are gonna see that, recovery improving on the gold side.

And towards the end of the year, we’re gonna see the silver starting to come up probably in q four. And we are we’re actually going on-site on Monday, so we’re gonna get a well, in Tuesday next week, so we’re gonna start to get a clearer view of how that work is taking place.

Tanya Jakusconek, Analyst, Scotiabank: And and how should I be thinking about all the accumulation of this deferred silver and how it starts coming through on the, on your revenue side, should I be thinking all of this deferral to be, you know, sort of taking two years to to to sort of get through your the system? How should I be thinking about it?

Bill Heisenbuttel, President and CEO, Royal Gold: Yeah. I I mean, my two sides

Cosmos Chiui, Analyst, CIBC: Go ahead, Martin. Go ahead.

Martin, Senior Vice President of Operations, Royal Gold: No. You you go ahead, Bill. I was I was gonna say we’ve given we have made I don’t wanna get that answer wrong. So I think

Bill Heisenbuttel, President and CEO, Royal Gold: I’ll I’ll I’ll try not to get it wrong. I I I would just say temper expectations when it comes to the timing of the of the deferred silver. If you look at and we talked about this before. The the silver recovery has to get above 52 and a half percent, and then we start getting the silver. If you look at the technical report that’s out there that shows silver production and you say, okay.

That’s a %. Barack share is 60%. Our current deliveries are 75%. So when you look at the difference, that 25% that’s sort of available based on their forecast production, I I think you’ll get a sense that I I don’t think it’s gonna come in very quickly. I I think it’s gonna it may come in over a few years.

Tanya Jakusconek, Analyst, Scotiabank: Okay. Alright. Thank you so much for that. Just every day, keep thinking about the silver circuit. Maybe moving on to the m and a side.

I’m just you know, I I’ve kind of seen a bit of a shift in what’s available out there in the transaction market just from some of your peers. And I just wanted to understand whether you’re seeing a similar thing in in terms of opportunities for yourself. One of the opportunities have brought to my attention has been that these base metal companies are, you know, coming forward where they haven’t previously with maybe some balance sheet repair, given the weaker commodity prices there and some larger stream. Are you seeing that as well,

Bill Heisenbuttel, President and CEO, Royal Gold: number one? Dan, do want to go first?

Dan Breese, Senior Vice President, Corporate Development, Royal Gold: Sure. Hi, Yeah. Thanks for the thanks for the question. I think, in general, as I was saying to Cosmos earlier, that this opportunity set is pretty broad. But in that opportunity set, we are seeing those kinds of opportunities.

And obviously, the gold price, I think it’s attracting the interest of the base metal operators and looking for ways to potentially monetize in this environment. So we’re seeing some of those pop up as well, Tanya. That’s a fair comment.

Tanya Jakusconek, Analyst, Scotiabank: Okay. And I was also told that there are some other opportunities as well in the gold space above and beyond just the normal mine build in in the primary metal that there’s obviously some more asset sales beyond the Newmont stuff and maybe, you know, more m and a opportunities as well. And and also what I found is that the size has moved up significantly up to the billion dollar range. I know last quarter, we talked about the 100 to 300,000,000 range for you. Are has your range of what opportunities you’re seeing changed from that 100 to 300,000,000?

Dan Breese, Senior Vice President, Corporate Development, Royal Gold: I I think the 100

Bill Heisenbuttel, President and CEO, Royal Gold: to 300,000,000. Yeah. Sorry, Dan. We we are seeing some larger ones. But, again, that’s when we talk a hundred to 300, we’re talk we’re trying to to talk about, what I would consider normal.

And we still see some of those opportunities, but we do, from time to time, get, larger opportunities like when when we bought the Cortez royalty a couple years ago.

Tanya Jakusconek, Analyst, Scotiabank: Okay. It just seems that there’s been a shift that it’s moved up into a larger range, and I just didn’t understand whether you’re seeing those ones as well. Majority of yours are in the 100 to 300,000,000 range. Is that how I should be thinking about it?

Bill Heisenbuttel, President and CEO, Royal Gold: I I again, on a normal course basis, yes. But we are seeing larger opportunities right now.

Tanya Jakusconek, Analyst, Scotiabank: Okay.

Bill Heisenbuttel, President and CEO, Royal Gold: I just wouldn’t shift your expectations on a go forward basis to a much larger dollar amount.

Tanya Jakusconek, Analyst, Scotiabank: Okay. And then lastly, with, you know, everything shifting around and valuation shifting around, how does corporate transaction fit in, for you versus just normal asset transaction?

Bill Heisenbuttel, President and CEO, Royal Gold: Yeah. I I think we’ve been pretty consistent that, we we we have models on all of our competitors. We’re always open to a dialogue. It’s just it it’s always hard to find that right time, right, where the the valuations are right, the kind of work, the the the social issues work. And so, you know, we we find ourselves focused on the asset deals just because it’s it’s just a little harder to to to have a meeting of the minds, when it comes to the corporate deals, but we’re obviously open to it.

Tanya Jakusconek, Analyst, Scotiabank: Okay. No. Thank you. It just seems that the overall market has had a shift in the quarter to to different type of opportunity. So look forward to seeing that.

I think it’ll be quite active. And thank you also for the asset handbook. We do find it very useful.

Bill Heisenbuttel, President and CEO, Royal Gold: Good. Thanks for the questions.

Lauren, Conference Call Operator: Thank you. Our next question comes from Derek Martin, TD Cowen. Derek, please go ahead.

Alastair Baker, Unspecified, Royal Gold: Thank you. If MMG moves forward with a full construction decision at Comacao, the expansion, could you give us a sense of what the correlation between the copper and silver grades are at the two deposits that fall within the area of interest and how that might impact the stream?

Bill Heisenbuttel, President and CEO, Royal Gold: Martin, do you wanna take that?

Martin, Senior Vice President of Operations, Royal Gold: Yes, Derek. Thanks. I so I I don’t have the numbers right at my fingertips, but, I think it’s safe to to say that the correlation is similar to the correlation on the in the Zone 5 mine. So yeah, that I think that’s that’s all I would say at the moment. Correlated similar to Zone 5.

Alastair Baker, Unspecified, Royal Gold: No. That’s fine. Thank you. I appreciate that. That’s all for me.

Lauren, Conference Call Operator: Thank you. We have no more questions registered. So I will now hand back over to Bill for final remarks.

Bill Heisenbuttel, President and CEO, Royal Gold: Thank you for taking the time to join us today. We certainly appreciate your interest, and we look forward to updating you on our progress during our next quarterly call. Thank you.

Lauren, Conference Call Operator: This concludes today’s conference call. Thank you for joining, everyone. You may now disconnect your lines.

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