Earnings call transcript: Royal Gold Q3 2025 sees record revenue but misses EPS

Royal Gold Inc. (RGLD) reported record revenue for the third quarter of 2025, yet missed earnings per share (EPS) expectations, leading to a slight decline in its stock price. The company posted an adjusted EPS of $2.06, falling short of the forecasted $2.19, with revenue reaching $252 million against a projected $262.05 million. The stock fell 0.87% following the announcement, trading at $172 in premarket activity.

Key Takeaways

• Record quarterly revenue of $252 million, marking a 30% increase year-over-year.
• EPS fell short of expectations by 5.94%, despite strong operational metrics.
• Stock declined by 0.87% post-earnings, reflecting investor concerns over the earnings miss.
• Gold remains the dominant revenue driver, contributing 78% of total revenue.
• Strategic acquisitions and project expansions bolster future growth prospects.

Company Performance

Royal Gold demonstrated robust performance in Q3 2025, achieving record revenue and operating cash flow. The company’s strategic acquisitions and project developments, such as the extension of the Mt. Milligan mine life and the integration of new assets, have positioned it well for future growth. However, the earnings miss has slightly overshadowed these achievements in the eyes of investors.

Financial Highlights

• Revenue: $252 million, up 30% year-over-year
• Adjusted net income: $136 million ($2.06 per share)
• Operating cash flow: $174 million, a record for the company
• Gold revenue contribution: 78% of total revenue

Earnings vs. Forecast

Royal Gold’s Q3 2025 results fell short of market expectations, with a 5.94% EPS miss and a 3.81% revenue shortfall. This deviation from forecasts has raised questions about the company’s ability to convert operational success into expected financial outcomes.

Market Reaction

Following the earnings announcement, Royal Gold’s stock experienced a modest decline, trading at $172, down 0.87% from the previous close. The stock’s movement suggests a cautious investor sentiment, tempered by the record revenue and operational achievements against the backdrop of missed earnings targets.

Outlook & Guidance

Royal Gold maintains its 2025 guidance ranges and plans to provide 2026 guidance at its upcoming investor day in March. The company is focused on integrating recent acquisitions and exploring further growth opportunities. Debt repayment is targeted for mid-2027, underscoring a commitment to financial discipline.

Executive Commentary

CEO Bill Heissenbuttel emphasized the company’s diversified portfolio and strategic acquisitions, stating, "We have one of, if not the most diversified portfolios by revenue and net asset value in our sector." He also highlighted the company’s conservative approach to valuing gold, underscoring a long-term strategic vision.

Risks and Challenges

• Potential volatility in gold prices, which significantly impact revenue.
• Integration risks associated with recent acquisitions.
• Pressure to meet future earnings expectations following the current miss.
• Macroeconomic factors affecting commodity prices and demand.
• Execution risks in expanding and operating new projects.

Q&A

During the Q&A session, analysts inquired about the timing of deliveries from the Constantian stream and potential dividend increases. Management clarified ongoing business development activities and provided insights into the accounting treatment for recent transactions.

Full transcript - Royal Gold Inc (RGLD) Q3 2025:

Operator: Hello all, and thank you for joining us on today’s Royal Gold 2025 third quarter conference call. My name is Drew, and I’ll be the operator on the call today. After the prepared remarks, we will have a Q&A session. If you would like to ask a question, please press Star followed by 1 on your telephone keypad, and to withdraw your question, it’s Star followed by 2. With that, it’s my pleasure to hand over to Alistair Baker to begin. Please go ahead when you’re ready.

Alistair Baker, Unknown Executive, Royal Gold: Thank you, Operator. Good morning and welcome to our discussion of Royal Gold’s third quarter 2025 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, Paul Libner, Senior Vice President and CFO, and Martin Raffield, Senior Vice President of Operations. Other members of the management team 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&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 and recent events. Martin will provide portfolio commentary, and Paul will give 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.

Bill Heissenbuttel, President and CEO, Royal Gold: Good morning, and thank you for joining the call. I’ll begin on slide four. We had another quarter of very strong results, and we set new records for revenue and cash flow. Our portfolio performed well and allowed us to benefit directly from materially stronger gold and silver prices. Earnings for the quarter were $127 million, or $1.92 per share, and after adjusting for non-recurring costs related to the Sandstorm and Horizon transactions, were a record $136 million, or $2.06 per share. Gold remained the largest contributor to revenue for the quarter at about 78% of the total, and the strong gold price, combined with our low and stable cash G&A, allowed us to maintain an adjusted EBITDA margin of over 80% for the quarter. We continued our focus on shareholder returns and paid our quarterly dividend of $0.45 per share.

We added a strong operator to our portfolio in First Quantum with the $1 billion Goldstream transaction on Constantian, and post-quarter end, we received our first gold delivery in early October. We are pleased to add yet another large, long-life, and cash-flowing asset to the portfolio. Also, post-quarter end, we completed the acquisition of Sandstorm Gold and Horizon Copper on October 20. The strategic rationale for the combination of these companies clearly resonated with our shareholders, and we were pleased with the overwhelming shareholder support for the transactions. Not only have we added a series of quality producing and development assets to the portfolio in recent months, but we also saw very positive news within the pre-existing portfolio with the Life of Mine Extension at Mt. Milligan and the Four Mile Exploration Update, both of which will be covered by Martin later in our presentation.

Finally, in October, we received the first tranche of gold as partial consideration for the Mt. Milligan cost support agreement. This agreement from early 2024 was a key step for Centerra to begin work on the Mine Life Extension project, and we are pleased to see the initial results of that project study. This is a win-win for both Royal Gold and Centerra shareholders. I’ll now turn the call over to Martin to provide a portfolio update.

Martin Raffield, Senior Vice President of Operations, Royal Gold: Thanks, Bill. Turning to slide five, overall revenue for the third quarter was a record $252 million. With volume of 72,900 GEOs. Royalty revenue was up about 41% from the prior year quarter to $86 million. We saw very strong revenue from Peñasquito, the Cortez CC Zone, LaRonde Zone 5, and Voisey’s Bay, which was partially offset by weaker revenue from the Cortez Legacy Zone. Revenue from our stream segment was $166 million, up about 25% from last year, with increased sales from Andacollo, Rainy River, Mt. Milligan, Comacal, and Wasa, partially offset by lower sales from Xavantina. Turning to slide six, we saw some material news at Mt. Milligan and Cortez in the quarter. At Mt. Milligan, Centerra reported the results of the Mine Life Extension project.

They are expecting an increase in the mine life from 2036 to 2045, and there is potential to extend that further with expansion of the current mineral resource, future raises on the planned new tailings facility, and other mine life extension opportunities. Centerra has reported encouraging support from the government. Mt. Milligan was given fast-track status by the province of British Columbia in line with its commitments to streamlining permitting and regulatory processes for critical mineral projects. Mt. Milligan is Royal Gold’s largest contributor in terms of revenue, and the mine life extension adds significant value to our largest asset. At Cortez, Barrick provided an update on exploration and development plans for Four Mile, which is described as a multi-generational project. Barrick has completed a preliminary economic assessment that indicates the potential to produce 600,000-750,000 ounces annually over a 25-year mine life.

Barrick is undertaking a multi-year exploration program and they expect to set the mine up for initial test stoping shortly after underground development has been put in place by 2029. Barrick believes there is potential to increase the production rates further as confidence in the ore body and geotechnical modeling progresses. The royalties we acquired in 2022 at Cortez provide full coverage of Four Mile at a rate equivalent to an approximate 1.6% gross royalty. At Kansanshi, First Quantum announced last week that the S3 expansion is complete and is transitioning to operations. First Quantum reported that throughput and recoveries at the S3 expansion are ramping up faster than expected, and copper production in the fourth quarter of 2025 is expected to exceed third quarter levels. We received the first gold delivery under our new stream in early October.

We’ve now reached the regular cadence for monthly deliveries, and we’re expecting total deliveries and sales of approximately 7,500 ounces in 2025. This is about 5,000 ounces less in 2025 than our estimate when we announced the transaction, and this difference is related to timing of the initial delivery and is not related to production shortfalls. We also had some notable updates at a handful of our smaller assets. At Rainy River, New Gold reported strong production for the quarter due to processing with higher-grade ore in the open pit. Underground development is also advancing well, and they are expecting 2025 gold production to be above the midpoint at the 265,000-295,000 ounce guidance range. At Back River, B2Gold announced that commercial production was achieved on October 2 and reiterated near and long-term gold production estimates.

At Comacal, MMG confirmed the timing for the expansion project and they expect to complete the feasibility study by the end of 2025 and produce first concentrate in 2028. At Cactus, Arizona Sonoran reported PFS results, which indicate a 22-year mine life with average copper production of 198 million lbs per year and 226 million lbs per year in the first 10 years. Arizona Sonoran expects to complete a feasibility study in the second half of next year, leading to a final investment decision as early as the fourth quarter of 2026 and first production of copper cathodes in the second half of 2029. At Red Chris, Newmont reported that it aims to deliver a development proposal for the Block Cave expansion to its board towards the middle of 2026.

In September, the Government of Canada recognized the Red Chris expansion as a project of national importance, granting it priority status under the Major Projects Office Fast Track Initiative. At Xavantina, ERO reported an increase in reserves and resources driven by plans to market a high-grade gold concentrate over the next 12 to 18 months, as well as exploration efforts that continue to extend the known limits of mineralization. Finally, while Sandstorm assets were not part of our portfolio until quarter end, there were a couple of developments at the larger assets that are worth noting. At Mara, Glencore submitted the Righi application to the Government of Argentina in August, which Glencore describes as a significant step towards development. At Platreef, Ivanhoe announced the first feed of ore into the phase one concentrator last week, and the first concentrate is expected in mid to late November.

We visited the site in October and were impressed with how Ivanhoe has advanced the project and is preparing to transition to operations. I’ll now turn the call over to Paul.

Paul Libner, Senior Vice President and CFO, Royal Gold: Thanks, Martin. I will turn to slide seven and give an overview of the financial results for the quarter. For the discussion of slides seven and eight, I’ll be comparing the quarter ended September 30, 2025, to the prior year quarter. Revenue for the quarter was up strongly by 30% to $252 million, which was another record for the company. Metal prices were a primary driver of the revenue increase, with gold up 40%, silver up 34%, and copper up 6% over the prior year. Gold remains our dominant revenue driver, making up 78% of our total revenue for the quarter, followed by silver at 12% and copper at 7%. Royal Gold has the highest gold revenue percentage when compared to our large-cap peers in the royalty and streaming sector. Turning to slide eight, I’ll provide more detail on certain financial items for the quarter.

G&A expense was $10.2 million and was relatively unchanged. Excluding non-cash stock compensation expense, our cash G&A has dropped to less than 3% of revenue for the quarter, which shows the efficiency of our business model. Our DD&A expense decreased to $33 million from $36 million. The lower overall depletion expense was primarily due to lower depletion rates in our stream segment as a result of reserve increases. The largest reserve increase was at Mt. Milligan following the Life of Mine Extension, which dropped the DD&A rate to $220 per ounce from $340 per ounce. The decreases in stream depletion rates were partially offset by higher production at Voisey’s Bay compared to the prior year. On a unit basis, this expense was $451 per GEO for the quarter compared to $462 per GEO. We incurred $13 million of acquisition-related costs this quarter related to the Sandstorm and Horizon acquisitions.

Acquisition-related costs are attributable to financial advisory, legal, accounting, tax, and consulting services. I’ll provide some additional accounting and financial commentary on the Sandstorm and Horizon acquisitions in a moment. Interest and other expenses increased during the quarter to $8.6 million, due primarily to higher average amounts outstanding under the revolving credit facility compared to the previous year. Tax expense for the quarter was $29 million compared to $22 million, and our effective tax rate for the quarter was 17.9%. Net income for the quarter increased significantly over the prior year to $127 million, or $1.92 per share. The increase in net income was primarily due to higher revenue offset by the Sandstorm, Horizon acquisition-related costs, and higher income tax and interest expense. After adjusting for the acquisition-related costs, adjusted net income was a record $136 million, or $2.06 per share.

Our operating cash flow this quarter was also a record at $174 million, up significantly from $137 million in the prior period. The increase in the current quarter was primarily due to higher net cash proceeds received from our stream and royalty interest. With respect to the outlook for the rest of the year, we are maintaining our 2025 guidance ranges for metal sales, DD&A, and the effective tax rate. Note that these guidance ranges were provided in March of 2025, and when we refer to our expectations for the remainder of the year, we are excluding any contributions or impacts from the Constantian stream acquisition, deferred gold consideration from the Mt. Milligan cost support agreement, and the Sandstorm and Horizon acquisitions. I’ll now provide a few additional comments on the Sandstorm and Horizon accounting treatment and financial results.

First, we currently are in the process of finalizing the accounting treatment for both transactions. However, we anticipate both transactions to qualify as business combinations under US GAAP. As a result, approximately $13 million in acquisition-related costs were expensed during the third quarter. We also expect additional deal-related closing costs to be expensed during the fourth quarter. Second, Sandstorm and Horizon will not be publishing third quarter results given the timing of the transaction closing. However, for the third quarter, Sandstorm recognized nearly $58 million of revenue and $37 million of operating cash flow, while Horizon recognized $6 million of revenue and $3 million of operating cash flow.

I will point out that these figures are unaudited and were prepared in accordance with IFRS accounting standards, so they are not directly comparable to Royal Gold’s financial information prepared in accordance with US GAAP, but they should help the market understand the relative contributions of each company in the quarter. We will provide consolidated results from the transaction closing date within our next quarterly release and audited financial results. I will end on slide nine and summarize our financial position. As disclosed in August, we drew $825 million on our $1.4 billion revolving credit facility to help fund the Constantian acquisition. We repaid $50 million of that borrowing in September and ended the quarter with $775 million drawn. That left us with approximately $813 million of liquidity between the undrawn and available amounts on the revolver and $188 million of working capital as of September 30th.

We drew an additional $450 million on the credit facility on October 10 for the closing of the Sandstorm and Horizon transactions, and we currently have $1.225 billion drawn, leaving $175 million undrawn and available. Further, we anticipate making a $75 million repayment towards the revolver balance on November 10. The current all-in borrowing rate on the credit facility is approximately 5.3%. In keeping with our longstanding practice, we intend to pay down our outstanding debt from future cash flow, and we expect to repay the outstanding balance around mid-2027 based on current metal prices and absent further acquisitions. In terms of additional liquidity, after the quarter end, we received the first tranche of gold as part of the deferred gold consideration for the Mt. Milligan cost support agreement. In keeping with our previous commentary, we sold those ounces shortly after receipt and realized proceeds of $44 million.

Recall that the delivery and sale of these ounces are not revenue and will not be reflected in our calculation of GEOs. The next two tranches of gold to be delivered by Centerra are also tied to production at the Greenstone Mine. They are payable upon production of 500,000 ounces and 700,000 ounces of gold, and based on projections by Equinox Gold, these hurdles are expected to be met in the second half of 2026 and the first half of 2027, respectively. With respect to further financial commitments, we have $100 million of funding outstanding for the warrant acquisition. We expect to fund the remaining commitment in two $50 million tranches, with the first tranche expected in the fourth quarter of 2025 and the second in May of 2026.

That concludes my comments on our financial performance for the quarter, and I will now turn the call back to Bill for closing comments.

Bill Heissenbuttel, President and CEO, Royal Gold: Thanks, Paul. I’d like to welcome several new colleagues to Royal Gold, including those who have recently joined us from Sandstorm. These transactions significantly increased the size of our business, and we are pleased to add some very capable individuals to our team with institutional knowledge of the Sandstorm and Horizon assets, which will help us as we manage this much larger portfolio. Finally, I would like to address the transformative quarter we just completed at Royal Gold. Over the past few years, we have heard criticisms about our revenue and NAV concentration, our limited growth profile, and the shorter duration of our portfolio. I believe we have answered these questions with the transactions we have closed this year and the developments in the portfolio, and I would like to highlight these three areas.

We have one of, if not the most diversified portfolios by revenue and net asset value in our sector. We have added Mara, Odd Modern, Platreef, and Oyu Tolgoi as growth potential to our previous growth prospects at Great Bear, Red Chris, LaRonde, and Comacal, and we have increased the duration of our portfolio with the Mt. Milligan Mine Life Extension, the Four Mile upside potential, Constancia, and the longer-dated growth from Sandstorm and Horizon. These events combined to position Royal Gold as a premier company in our sector with a well-diversified, gold-focused portfolio with organic growth potential. We will be working over the next few months to make sure the market understands the potential value that exists in the expanded Royal Gold portfolio. Operator, that concludes our prepared remarks. I’ll now open the line for questions.

Operator: Thank you. With that, we’ll start today’s Q&A session. If you would like to register a question on the call today, please press Star, followed by 1 on your telephone keypad. Until we draw your question, it’s Star, followed by 2. Our first question comes from Cosmos Chu from CIBC. Your line is now open. Please go ahead.

Cosmos Chu, Analyst, CIBC: Thanks, Bill and team, for a very good presentation. Maybe my first question is on the Constantian stream, the new stream you have. As you mentioned, 5,000 ounces is deferred, I guess. If that’s a word for it, given the need to initiate delivery mechanisms for the new contract. I guess my question is two parts. Number one, could you maybe talk a little bit more about what that means in terms of setting up or initiating these delivery mechanisms? Is it computer systems? Is it the way you report, or is it actual delivery? Number two, in terms of the 5,000 ounces that you thought you might get in 2025, is that going to come in in 2026 then? Is that going to be sort of in addition to what you would expect in 2026 anyways?

Bill Heissenbuttel, President and CEO, Royal Gold: Yeah, Cosmos, it’s Bill. Thanks for the question. I may try to handle this one, and then the other guys can jump in. Really, there’s nothing real complicated about the system or setting it up. To be honest, I think we had just announced Constantian, and we had our earnings call within, I don’t know, a week or so of that. When you look at a model, you look at it and say, "Okay, that’s production. We’ll get so many ounces." What we didn’t do at the time was just overlay the delivery mechanism, which was you’re going to start getting them in October. It was just really a mistake on our part in terms of when do we expect the ounces to come. It is not a reflection of a production shortfall. There’s nothing wrong with the agreement as to the way it is structured.

We just pushed ounces that in just a basic model said, "You’re going to get so many ounces." Just some of those ounces are going to come in next year.

Cosmos Chu, Analyst, CIBC: I guess mathematically, if I were to take your 12,500 ounces that you had expected, that would have been from August to December in 2025. If I were to gross it up for a full year in 2026, that would be 30,000 ounces. If that’s the case, can I just add the additional 5,000 ounces to it in 2026? Is that the type of how I should think about it, or is that not the case?

Bill Heissenbuttel, President and CEO, Royal Gold: No. See, what would happen is when you get to the end of 2026. The ounces that are derived from production in December, for example, are going to be delivered in 2027. So it is not as though you take 30,000 ounces and add a bunch of some new ounces. There is just a delay like there is at our other concentrate operations like Andacollo and Milligan.

Cosmos Chu, Analyst, CIBC: Understood. Okay, great. Maybe switching gears a little bit, Bill, I see that you would now have $1.225 billion of debt on your balance sheet. I guess my question is, how comfortable are you with that level of debt? I know you do say that under current metal prices, you can actually repay everything by mid-2027. Absent any further acquisitions, but how realistic is it to assume there will not be any other acquisitions?

Bill Heissenbuttel, President and CEO, Royal Gold: I mean, you never know in this business, right? I mean, if you had told me on January 1 of this year that we were going to make about $5 billion of investments during 2025, I would not have believed you. Certainly, we have gone years where there have not been many investments, and I think 2024 is probably an example of it. It is possible that we do not find anything we like and we just continue to pay down the debt. As to the first part of your question, the debt level, I am very comfortable with. I think what we need to show as we move forward through 2026 is what is the running, trailing 12-month EBITDA of all these combined companies and with Constantian. Your pro forma leverage is going to be, I do not know, between 1 and 1.5 on a net debt to EBITDA basis.

That’s extremely comfortable. I’m not concerned at all.

Cosmos Chu, Analyst, CIBC: Great. Maybe one last question. Congratulations on closing up the deal with Sandstorm Gold and Horizon Copper. Despite the simplification of the structure, you still will hold a 30% joint venture interest in Hamadan. Historically, Royal Gold was never in the business of really holding onto joint venture partnerships for the long term. I do not know if this is a question I should ask SSR Mining, but how do you look at that 30% joint venture interest? Again, kind of like potentially convert into more of a conventional royalty interest?

Bill Heissenbuttel, President and CEO, Royal Gold: Yeah, Cosmos, I think we’ve been pretty consistent saying that our goal is to not be a joint venture partner. It’s not what we do. It is probably very high on our priority list of trying to find a way to convert it into something that is more traditional for our business.

Cosmos Chu, Analyst, CIBC: What are some of the key sort of, not hurdles, but discussion points then? When could we expect that to, constantly?

Bill Heissenbuttel, President and CEO, Royal Gold: I wish I could give you a timeline. I certainly can’t. I can’t give you a timeline, but as you go through this, when you’re taking exposure to cost overruns and operating expenses and you want to convert it into something that doesn’t have that exposure, there’s a value discussion to have with whomever you sell it to. Then what gold price do you use? There’s a big difference between current gold prices and what you would call long-term consensus prices. Those are all the typical topics that will come up when it comes down to negotiating something.

Cosmos Chu, Analyst, CIBC: Of course. Thanks, Bill and team, for answering all my questions. That’s all I have. Thank you.

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

Operator: Our next question today comes from Josh Wilson from RBC. Your line is now open. Please go ahead.

Josh Wilson, Analyst, RBC: Thanks very much. I noticed in the text and also in some of Bill’s commentary, there was some disclosure about working over the next couple of months to ensure the market understands the business following the deals that were completed. I’m just wondering if you can provide some more insights on what this means. Given both of these transactions were press-released and the information is out there in terms of some of the details. Thanks.

Bill Heissenbuttel, President and CEO, Royal Gold: Yeah, I mean, when I talk about working hard to make sure people understand what all these companies together with Constantian mean, what I’m saying is spending as much time as I can in front of investors and analysts. There’s a lot that’s happened in our company in the last six months. I think we need to be able to focus people a little bit on saying, "Okay, this is what it looks like. These are the growth prospects." Just sending that message over and over again, because I truly believe there is a valuation gap. I want to be in front of people telling our story, telling people again why we think the Sandstorm Horizon deal made sense, why Constantian makes sense.

At the same time, being in front of them to listen to, "Are there any other concerns out there?" Because, as I said in my prepared remarks, I think we addressed the major ones we heard over and over again, but maybe there’s something out there. When I talk about working hard to make sure the market understands it, I’m just talking about physically being in front of people, telling the story, and listening.

Josh Wilson, Analyst, RBC: Got it. When it comes to disclosures, the company has historically issued, and thinking about guidance, both near-term and long-term, I understand the company’s historical views on this. I’m just wondering if there’s any refreshed perspectives. Also, when we think about 2026, when will the company look to provide that insight? Is it still going to be in April, or can we expect something more prompt earlier in the year? Thank you.

Bill Heissenbuttel, President and CEO, Royal Gold: Yeah, so I think I can say that we are planning an investor day. I think it’s in late March. I think at that point in time is when we expect to talk about 2026 guidance. As far as long-term guidance, three-year, five-year, the position is still what it’s been. Josh, you’ve heard me over and over again say we don’t own these properties. We’re not close enough to them to tell you what’s going to happen in three years. There is still that reluctance. What we have done in the past is go asset by asset to some extent and say, "This is what the operator thinks. Here’s our interest." Then help people from the operators forecast what it might look like on an asset-by-asset basis. I don’t think you’ll see us go to sort of a consolidated three or five-year.

Again, look out for that investor day early next year.

Josh Wilson, Analyst, RBC: Got it. Thank you. There was a couple of financial items that I just wanted to drill down on. Specifically, at least on the income statement for cost items, minority interest kind of jumped up this quarter. LZ5 on the asset list was quite high in terms of revenues. Is there any insight you can provide there as well as the fourth-quarter expenses for the Sandstorm deal? Thanks.

Bill Heissenbuttel, President and CEO, Royal Gold: Paul, can I turn the minority interest question to you?

Paul Libner, Senior Vice President and CFO, Royal Gold: Yeah, sure. Hey, Josh. Yeah, so the minority interest you saw was a little bit higher or unusual this quarter. To give you a little bit of background, and this isn’t really unique to us, we are a general partner of a partnership that holds a very small royalty interest on the Pipeline and Crossroads Deposit at Cortez. We actually administer some of the custodial functions on behalf of some of those partners. Some of those partners, as part of that royalty structure, receive some of their royalty proceeds actually in kind or in gold. During the quarter, we actually sold some of those ounces for one of those partners, and they actually had a pretty small book value, if you will, compared to spot when we sold those ounces. The sales proceeds that we recognized were actually included in interest and other income.

Then, given that partnership is fully consolidated under US GAAP, that gain was actually backed out in other comprehensive income or that minority interest that you call. Before arriving at EPS. So really, at the end of the day, there was no effect on our results.

Josh Wilson, Analyst, RBC: Thank you. Sorry, just the deal expenses for the fourth quarter, if there’s any insight, and then also Lorenzo and Five.

Paul Libner, Senior Vice President and CFO, Royal Gold: Yeah, I’m happy to take the deal expenses. Obviously, yeah, we’re still going through the accounting of those expenses you can appreciate, but certainly from the period October 1 through closing. Additional, again, legal advisory service type fees. So accounting for all those, but we will have some of those charges come through in Q4 as well. Again, those will be non-recurring, kind of one-time in nature.

Operator: I can take the Zone 5 question if you like, Bill.

Cosmos Chu, Analyst, CIBC: Sure, Martin.

Operator: Josh, Agnico identified a mining area in Q3 that was mistakenly excluded from our partial royalty area. That exclusion goes back to November 2022. It is quite easy to see why it happened. The various zone blocks outside of zone that are plunging into the royalty area, and the area in question was actually accessed from one of the LaRonde mine shafts rather than the zone five decline line. They made that payment up in Q3 and completely covered the November 2022 through June 2025 shortfall.

Josh Wilson, Analyst, RBC: Got it. Okay. So sort of a true-up, I guess you could say, for historical production.

Cosmos Chu, Analyst, CIBC: Exactly right.

Josh Wilson, Analyst, RBC: Okay. Thank you very much.

Bill Heissenbuttel, President and CEO, Royal Gold: Thanks, Josh.

Operator: Our next question comes from Brian MacArthur from Raymond James. Your line is now open. Please proceed.

Josh Wilson, Analyst, RBC: Good morning, and thank you for taking my questions. A lot of them have been dealt with. Can I just ask on Four Mile? You’ve been very kind and given us the 1.6% equivalent. Is that a combination of GSR1, GSR2, GSR3, NVR1? Is this going to be variable? I just can’t remember where all the different pieces cover it, or is that 1.6% a pretty good thing to use on an annual basis, or are there going to be years it’s 1% and years it’s 3%?

Bill Heissenbuttel, President and CEO, Royal Gold: No, that’s a pretty good number to use. The 1.6 is the real royalty, and it’s the bit of the Idaho royalty that we bought those two towards the end of 2022. So it’s completely separate from all the legacy stuff that you’ve done for years.

Josh Wilson, Analyst, RBC: Perfect. So it’s that simple 1.6% royalty.

Bill Heissenbuttel, President and CEO, Royal Gold: Yep.

Josh Wilson, Analyst, RBC: Excellent. Just so I can clarify my own mind back to Cosmos’s question on Constantian. This 5,000 ounces, it’s just an MPV problem, if I want to put it that way, of being delayed a quarter. It’s not like those ounces are gone forever just because of the true-up date of the transaction or something. It’s just purely a concentrate delivery, and all the ounces are the same in the end. Is that right?

Bill Heissenbuttel, President and CEO, Royal Gold: All the ounces are the same. It’s just a timing issue.

Josh Wilson, Analyst, RBC: Great. Thank you very much.

Bill Heissenbuttel, President and CEO, Royal Gold: Thanks, Brian.

Operator: Our next question comes from Lawson Winder from Bank of America Securities. Your line’s now open. Please go ahead.

Paul Libner, Senior Vice President and CFO, Royal Gold: Thank you very much, Operator. Hello, Bill and team. Thank you for the update today. We’d like to ask just a couple of things. First of all, on capital returns, we’re approaching the time of year where Royal Gold typically considers the next dividend increase. When you think about everything that’s happened this year, do you think about there being an opportunity for a bigger-than-usual increase because of the larger portfolio, or could it just be a smaller increase given the heavy capital spending so far this year? Sort of related to that, what are your thoughts on share buybacks? It just kind of occurred to me when you were speaking, Bill, in response to one of the other questions about the valuation gap. I mean, do you see an opportunity to utilize a share buyback to help close that?

Bill Heissenbuttel, President and CEO, Royal Gold: Yeah, thanks, Lawson. Look, on the dividend, you’re absolutely right. Our board looks at it in November. I’m not going to lead high or low in terms of what we might do there. The thing we have been saying to folks is when we were going through Sandstorm and Horizon and Constantian, one of the things the board said to us was, "You’re going to be issuing 18-19 million shares. You’ll be taking on debt. We have an almost 25-year record of increasing dividends. We want to know what’s going to happen to that." That was part of their analysis. Increasing it every year is sort of near and dear to our heart. This is a board decision. I’m not going to say anything. We’ll be back to the market in a couple of weeks. It’s really important to us.

Notwithstanding that we have $1.225 billion in debt, I can tell you when we went through 2015, we had the exact same thing. We spent over $1 billion in CapEx, continued to increase the dividend. That on the dividends. On the share buybacks, I want to give this some time. Again, talking about going to work in front of the market, telling the story, I want to see what happens to our valuation. I mean, we still trade at a premium, and it still might be hard to justify share buybacks. Right now, I want to see what the messaging can do. At the same time, we do want to repay that debt. There is a use for the capital, for the cash flow that is being generated over the course of the next year.

That’s a priority as well, is to pay that down.

Josh Wilson, Analyst, RBC: Great. Thank you for that. Thinking about 2026. Very helpful to have that investor day kind of in the back of my mind. Just thinking about the portfolio, so the Constantian stream and Sandstorm, it’s changed very substantially. As you look to 2026, conceptually, would you expect a material increase in GEOs next year versus 2025? Also, thinking about when we can get real numbers on those, would we expect the 2026 guidance to then come out with that investor day in March, or could we possibly get something a little earlier here, just given all the moving parts?

Bill Heissenbuttel, President and CEO, Royal Gold: No, I think the investor day is when you’re going to hear about what we expect for 2026. I mean, you have to understand that assets, the producing assets, have been in our portfolio for two and a half weeks. Even thinking about making an estimate for next year right now would not be the smartest thing in the world. Investor day, we’ll be talking about guidance and talking about all the, this new portfolio, as you say, and what it means for next year.

Josh Wilson, Analyst, RBC: Very helpful. And then just finally, there was an update from Arrow Copper yesterday on Xavantina, this concept of processing stockpiles. Would Royal Gold benefit from that in any way?

Bill Heissenbuttel, President and CEO, Royal Gold: Yes. I mean, it’s gold production. We expect it will flow through to our interest.

Josh Wilson, Analyst, RBC: Okay. Thank you very much, Bill. Appreciate it.

Bill Heissenbuttel, President and CEO, Royal Gold: Thanks, Lawson.

Operator: Our next question comes from Tania Jakosovic from Scotiabank. Your line is now open. Please go ahead.

Martin Raffield, Senior Vice President of Operations, Royal Gold: Oh, great, Brad. Good morning, everybody. Thank you so much for taking my questions. Just wanted to finish up on just on the Sandstorm transaction. Bill, you mentioned that we’ll take another charge in Q4. You’ve integrating assets, people at this point. Is it fair to assume that as we look at 2026, besides looking at obviously the depreciation and the guidance on that basis, all of the noise will be out of, so all of the unusual items are going to be closed in 2025, have the people and assets on and everything finalized. And so 2026 would be a clearer look at?

Bill Heissenbuttel, President and CEO, Royal Gold: Yeah, Tania, that’s the one thing I’ve sort of said to the team is I want everything done by the end of this year that is non-recurring with respect to this transaction because, as I said, we need to start building this record of quarter over quarter of sort of recurring business where we can show the revenue, we can show the cash flow that we’re generating. What I don’t want to have is a bunch of expenses leaking into the first quarter. Now, we may not, depending on the invoicing that we get, we may not be able to do that, but I’m highly confident that we’re going to be able to isolate the rest of the transaction expenses in the fourth quarter of this year.

Martin Raffield, Senior Vice President of Operations, Royal Gold: Okay. That’ll be good. Like 2026 will be what this would look like with all of these pieces in place.

Bill Heissenbuttel, President and CEO, Royal Gold: Yeah.

Martin Raffield, Senior Vice President of Operations, Royal Gold: Okay. That’s good. Maybe I could go on to Paul. This is an accounting question from a non-accountant. I just want to make sure that I count correctly. The amount million. One of that. Cost support agreement of that 11,000 ounces, that $44 million that came in on October 3rd. Nothing through the income statement. Where will it show up in the cash flow? Where is that going to be put exactly so I have it in the exact place?

Paul Libner, Senior Vice President and CFO, Royal Gold: Hey, Tania. Yeah, thanks for the question. Yeah. We’ve talked on a few calls and added some commentary even today just on that treatment. Yeah, the Milligan cost support agreement certainly was a unique transaction for us. As even Bill mentioned today, certainly it’s a win-win for both companies. You may recall that the consideration that we received for that additional support that we’re going to provide was in the form of cash and then that deferred gold and then the free cash flow interest at Milligan as well. I think the easiest way to think about this and on how it’ll impact the financials is all that consideration that we received as part of the agreement will eventually all be recognized as that deferred support liability that’s on the balance sheet currently at $25 million.

Because we have that obligation to provide additional cash payments under the agreement in exchange for that consideration that Mt. Milligan or Centerra provided. With the gold that we received in early October, that deferred support liability is going to increase by the fair value of those ounces that we received and sold. Again, we sell those ounces immediately or shortly after we receive them. You are not going to see much, if any, likely not much in the form of a P&L impact. Again, as a reminder, when we receive and sell those ounces, they are not part of our sales guidance here in 2025. Even, as I mentioned in the prepared remarks, we do anticipate receiving that next delivery in 2026. You will not see those ounces show up in some of that guidance that we provide in 2026 as well.

Martin Raffield, Senior Vice President of Operations, Royal Gold: I appreciate it. I know it’s not part of your revenue. I know it’s not part of your GEO ounces. Does it go anywhere through the cash flow statement? Yeah. Or just the balance sheet that I should think about?

Paul Libner, Senior Vice President and CFO, Royal Gold: Just balance sheet.

Martin Raffield, Senior Vice President of Operations, Royal Gold: Just balance sheet. Okay. That’s all I just wanted to clarify. Maybe I can have maybe Bill or someone in the team just talk to us about, you’ve done two big deals. I just quickly looked at your available liquidity after you adjust for the Sandstorm deal and your $100 million payment that needs to go out. Plus, just, you have maybe $300-$400 million of available liquidity. Are you still looking at transactions in this market, opportunities, or have we put a pause on that?

Bill Heissenbuttel, President and CEO, Royal Gold: No, we’re still looking. I don’t think we’ll ever stop looking. There are still opportunities in the market. I think the ones we’re seeing are not of the scale of the ones we just did, like Constantian. I think one of the interesting dynamics on the BD side is with where the gold price has gone. I’ve always said that BD is harder to do when the gold price is volatile because it’s hard to land on a gold price that both the seller and the purchaser can agree on. If no one, I don’t think anybody in our sector is using $4,000 an ounce to value things. At the same time, I’m not sure the seller is going to be accepting of a long-term consensus price of $3,000. That may slow the processes down a little bit. We’re not closed.

We’re not going to sit on our hands until we repay that debt. We’re still active.

Martin Raffield, Senior Vice President of Operations, Royal Gold: Would you be comfortable size-wise? Would it be that $100 million-$300 million range?

Bill Heissenbuttel, President and CEO, Royal Gold: Yeah. I mean, that’s what we normally see in the market. I think at this point, I would say if we did do something, it would have to be something we really loved. Because you have a choice here. We can continue to pay down the debt or we can make new investments. I’m happy doing both. The investment that we might make, I think, would have to be something we found so attractive we just could not pass it up.

Martin Raffield, Senior Vice President of Operations, Royal Gold: Would it be fair to assume, Bill, then it would be like if anything in your existing portfolio came available. Let’s say in parts of projects that you already have an interest and something comes available, that would be kind of viewed as a bolt-on. Would that be what you’re saying versus going into new jurisdictions?

Bill Heissenbuttel, President and CEO, Royal Gold: No, I mean, not just bolt-on acquisitions. If it comes within the portfolio, great, we’ll look at it. If it’s a completely new company, new project, we’ll look at that as well. If it’s attractive, we may decide that we do want to make that investment. We just have to manage. I think people want to see the debt come down, even though I’m comfortable with it. We just have to balance it.

Martin Raffield, Senior Vice President of Operations, Royal Gold: Yeah. Fair enough. It’s nice to see the $4,000 gold price. We just don’t know how long it stays, right? Thank you.

Bill Heissenbuttel, President and CEO, Royal Gold: Exactly. Thanks, Tania.

Operator: Our next question comes from Derek Marr from TD Cowen. Your line is now open. Please proceed.

Bill Heissenbuttel, President and CEO, Royal Gold: Thank you. I just had a quick accounting question. Is there going to be a bump in the cost base of some of these former Sandstorm assets, i.e., will depreciation for these assets be higher than they were when they were in standalone Sandstorm?

Paul, over to you, Derek.

Paul Libner, Senior Vice President and CFO, Royal Gold: Yeah, sure. Hey, Derek. Yeah, as I mentioned in our prepared remarks, I mean, we’re still going through that accounting at the moment. As far as the allocation of the purchase price there, which obviously will include the allocation among the different interests at Sandstorm and impacting the depreciation. We’re still going through all that at the moment. I do think that we’ll be able to provide a bit more information on that within our next update call.

Bill Heissenbuttel, President and CEO, Royal Gold: Okay. Great. Thanks. That’s it for me.

Operator: Our final question comes from Kerry McBrewery from Canaccord. Your line’s now open. Please go ahead.

Bill Heissenbuttel, President and CEO, Royal Gold: Hi, good morning, guys. Based on Derek’s Four Mile update, it looks like demineralization is potentially trending maybe off your royalty ground. Is that the case, or do you see it as all being on your royalty ground?

Pardon, can I push that one to you?

Alistair Baker, Unknown Executive, Royal Gold: Yeah. On our royalty ground, Kerry. We do not see any of the material that they are identifying at the moment as being off our ground.

Bill Heissenbuttel, President and CEO, Royal Gold: Okay, great. I know inclusion on the S&P 500 has always been an elusive target. Do you see with these transactions that that’s more likely now, or have the goalposts moved on that?

I think we’re still a bit a ways. Last time we checked, I think the minimum was like $20.5 billion, and we would still have a ways to go to achieve that one.

Okay, great. Thanks, guys.

Thank you.

Operator: That concludes the Q&A portion of today’s call. I’ll now hand back over to Bill for some closing comments.

Bill Heissenbuttel, President and CEO, Royal Gold: Thanks, everyone, for taking the time to join us today and for all the good questions. We appreciate your interest in Royal Gold. We look forward to updating you on our progress in the new year. Take care.

Operator: Thank you all for joining. That concludes today’s call. You may now disconnect your line.

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