Good day and welcome to the Royal Gold Fiscal 2021 Second Quarter Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Alistair Baker. Please go ahead.

Thank you, operator. Good morning and welcome to our discussion of Royal Gold Second Quarter 2021 Results. This event is being webcast live and you will be able to access a replay of this call on our website. Participating on the call today are Bill Heissenbuttel, President and CEO; Paul Libner, CFO and Treasurer; and Mark Isto, Executive Vice President and COO of Royal Gold Corporation. Dan Breeze, Vice President, Corporate Development of RG AG; and Randy Shefman, 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, net debt and net cash. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are available in yesterday's press release, which can be found on our website. Bill will give you an overview of the quarter followed by Mark with an operating update. Paul will then provide a financial update and Bill will wrap up the call with some closing comments. We'll then open the lines for a Q&A session. Now, I will turn the call over to Bill.

Good morning and thank you for joining the call. Before beginning, I would like to remind you that Royal Gold continues to operate remotely, and we'll do our best to offer a coordinated response to any questions. Also, please bear in mind that this reporting period is quarterly for us, but annual for most of our operators. We may not be in a position to offer in-depth answers to questions on our operating assets to the extent the information for the December quarter has not yet been released. I'll begin on slide 4. We continued our strong start to fiscal 2021 with another quarter of record revenue. Total revenue of $158 million was driven by excellent operating results across the portfolio, particularly from our royalty segment. Relative to the prior year quarter, our Cortez revenue and our Australian royalty portfolio revenue were both up over 100%, while our Peñasquito and Marigold revenue increased over 50%. We had a couple of new contributions this quarter from royalties that, while small, demonstrate the optionality embedded in our portfolio. Commercial production was declared at Relief Canyon in January and we received our first revenue from the 2% NSR during the quarter. We also received the first payment from our 4% NPI royalty at Kurnalpi, which is part of Saracen South Laverton mine in Australia. We acquired both these royalties over a decade ago as part of multi-asset transactions. Earnings for the quarter were $60 million or $0.91 per share and operating cash flow came in slightly below $100 million. Adjusted earnings were $0.92 per share after adjusting for a minor mark-to-market change in the fair value of our equity securities. We raised our dividend in November for the 20th consecutive year to $1.20 per share per year, which represented a 7% increase over the prior year payout. This record of increasing annual dividends is unmatched in the precious metals space. We paid down a further $75 million on our revolving credit facility during the quarter, leaving us with a net cash position of $182 million and over $1.2 billion of liquidity at the end of the quarter. We made a further reduction in the balance outstanding on the revolving credit shortly after quarter-end, which Paul will touch on later. We continue to fund our investment in the Khoemacau project and we've now completed the funding of the 80% base silver stream. Mark will give you a further update on the project in his remarks. We also continued our practice of board renewal, adding Fabiana Chubbs to the Board following the retirement of Chris Thompson in November. Fabiana brings a wealth of experience to Royal Gold from her career in finance, auditing and internal controls, and I look forward to working with her. I would like to thank Chris for his many contributions to Royal Gold since 2014 and wish him well in his retirement. Maintaining a Board with relevant industry experience and diverse backgrounds is important to protect and promote long-term value for all stakeholders. And I believe that Royal Gold has one of the best Boards in the precious metals sector. With that, I'll turn the call over to Mark for an update on progress at Khoemacau.

Thanks, Bill. I'll start by making a brief comment on the excellent performance across the portfolio. Our royalty segment contributed 32% of revenue, while typical contribution has been in the range of 28%. We saw especially strong contributions from the Peñasquito royalty and many of the smaller royalties also performed well, which demonstrates the significant upside and optionality in the smaller and older portfolio assets. Moving on to slide 5, I'll give you an update on the Khoemacau project in Botswana currently under development by Khoemacau Copper KCM. Construction activity progressed well during the quarter, despite challenges caused by COVID-19 and the continued state of emergency in Botswana. Construction completion reached 85% at the end of the quarter, up from 70% at the end of the September quarter. Underground development in the three mines reached 8,300 meters and as of last week, there's a surface ore stockpile of over 100,000 tons, up from 70,000 tons at the end of December. Ore is being produced from development drives and overall ore grades and widths so far are consistent with expectations. Mapping and sampling the ore zones in these drives continues to provide high confidence in the quality and dimensions of the Zone five ore body and confirms results from previous surface-grade control drilling. Ground conditions are in line with the geotechnical model and no significant changes have been required to planned ground control measures. Confirmation of the resource and geotechnical models are both positive results at this stage of development. With respect to startup, KCM expects to begin plant commissioning activities late in the second quarter of calendar 2021, and they continue to target shipment of first concentrate late in the third quarter. Production is expected to ramp up capacity in the fourth quarter of 2021 and reach sustained production levels in the first quarter of calendar 2022. All of this assumes no escalation in COVID-19 challenges. We made our sixth advanced payment contribution of $32.6 million on January 6th, and have now advanced a total of $212 million towards the project, which completes our investment for the 80% base silver stream. Logistical and scheduling delays attributed to COVID-19 since last March have caused a modest increase to the project capital budget. KCM expects some further costs due to working capital and operating costs resulting from the extended construction schedule. If you recall, when we announced the transaction, we committed to providing additional funding of up to $78 million. We provided KCM with options to draw up to $53 million by increasing the silver stream to 100% of payable silver and/or draw up to $25 million from a subordinated debt facility. These options were intended to provide KCM with confidence that the project would be fully funded regardless of reasonable potential cost increases. KCM expects up to $50 million of further funding will be required to reach commercial production and we are currently in discussions with KCM to finalize sources of that additional funding. It's too early to say what Royal Gold's obligations may be, and we expect to have more clarity in early April as to KCM's funding plans. Regardless of the timing KCM anticipates, it will reach commercial production without requiring further funding beyond $50 million. Next, I'm going to show you a few slides regarding progress that have to do with the project site. Turning to slide 6, you can see a couple of photos from the boxcuts at Zone 5. The photo on the left shows substantial completion of the Geocell placement on boxcut slopes required for erosion control. The photo on the right shows concrete work underway at a boxcut sump as part of the mine's water management system, all of which was completed during the December quarter. Turning to slide 7. On the left, you can see a segment of the 35-kilometer haul road and access road looking from Zone 5 towards the Boseto mill site. Final surfacing is being applied and a 15-kilometer section of the haul road is complete and open to traffic. At the right, you can see construction progress on the new concentrate bagging facility. And finally, on slide 8, on the left you can see the permanent potable water treatment facility in the plant at Zone 5, which is currently being commissioned. And on the right side, you see the Boseto substation which is substantially complete with commissioning of electrical infrastructure and the connection to the national grid expected later this month. In summary, the Khoemacau team is doing an excellent job at advancing the project in spite of COVID-19 challenges. The ore body dimensions and grades are consistent with expectations and surface progress is at 85% completion. I'll now turn the call over to Paul to discuss our financial results.

Thanks, Mark. I will now turn your attention to slide 9 and give an overview of the financial results for the quarter. For this discussion, I'll be comparing the second quarter of fiscal 2021 to the prior year quarter. We experienced another consecutive quarter of record revenue, as we recognized a 28% increase in our revenue to $158 million on volume of 84,500 gold equivalent ounces or GEOs. The increase in our revenue when compared to the prior year quarter was due to higher average metal prices and a strong contribution from our royalty segment, including the two new royalty contributions that Bill mentioned earlier in his remarks. With respect to metal prices, the average price of gold, silver, and copper increased 27%, 41%, and 22%, respectively when compared to the prior year quarter. Contributions from gold continue to be dominant within our portfolio as the revenue mix for the quarter was 76% from gold, 11% from copper, and 10% from silver. G&A expense for the quarter was $6.8 million, which was stable and comparable to the $6.7 million we recognized during the prior year quarter. Our G&A expense, which also includes non-cash compensation expense, was again in line with the typical quarter for Royal Gold and is what we anticipate going forward absent any large or unusual items. Our DD&A expense for the quarter was $47.9 million or $567 per GEO, up from $480 per GEO in the prior year quarter. The increase in our total DD&A expense in the quarter was primarily due to higher gold sales and a higher depletion rate from Mount Milligan, partially offset by lower gold sales at Andacollo. However, we came in below the low end of our previously provided guidance range of between $590 and $640 per GEO, primarily due to the stronger performance in our royalty segment. Many of our royalties, including the two royalties that provided new contributions this quarter, have been in the portfolio for several years and have lower remaining carrying values. The result of strong production contributions and lower carrying values within the royalty segment contributed to the overall lower DD&A expense per GEO during the quarter. Looking forward, we are forecasting our DD&A for fiscal 2021 to remain within the previously provided guidance range of between $590 and $640 per GEO. Exploration costs which were specific to our Peak Gold joint venture were reduced to zero during the quarter due to the sale of the joint venture during the September 2020 quarter. We do not expect to incur additional exploration costs in the future. Earnings were $59.9 million or $0.91 per share, up 45% compared to the prior year quarter. We had limited adjustments to our earnings this quarter with only a $0.01 per share loss due to the fair value decrease in our equity holdings. Fair value increases or decreases in our equity holdings and the related adjustments to our earnings will continue as long as the company holds these securities. After moving this one item, our adjusted EPS was $0.92 per share for the quarter. We had another very strong quarter of operating cash flow as our cash from operations was up 28% to nearly $100 million. This increase was driven by our higher stream and royalty revenue less the cost of sales specific to our stream revenue. At the end of December, we held approximately 29,500 GEOs in inventory, which was slightly higher than the guidance range provided last quarter. The increase was primarily due to deliveries that were received earlier than forecasted. Looking forward to the March quarter, and absent any potential operational impacts due to COVID-19, we expect stream segment sales to be in the range of 48,000 to 53,000 GEOs. And inventories for the quarter end to be in the range of 26,000 to 31,000 GEOs. We also continue to expect our fiscal 2021 effective tax rate to range between 19% and 23% absent any unusual or discrete items. I will now turn to slide 10 and provide a summary of our financial position. Our liquidity position continues to strengthen as we ended the quarter with cash of $382 million, working capital of $393 million, and a net cash position of $182 million. During the quarter, we repaid $75 million on our revolving credit facility and in early January we repaid an additional $50 million. Upon the $50 million repayment in early January, we now have $150 million outstanding and $850 million available under our revolving credit facility. Combined with our available cash resources, this provides us with about $1.2 billion of total liquidity. We believe we have sufficient liquidity to cover G&A costs, any of the remaining commitments at Khoemacau, and our expected dividend payments for the foreseeable future. However, we also remain cautious with respect to the operating environment amid potential COVID-19 impacts. We remain committed to reducing our debt and absent the requirement to fund any new business opportunities; we expect to manage our debt levels accordingly once the operating environment returns to normal. With respect to Khoemacau, we made a $32.5 million advance payment in October and a $32.6 million advance payment in early January, completing our total contribution of $212 million for the 80% base silver stream. As Mark mentioned in his remarks, at KCM's election, we expect to provide further financing to the project in the form of additional silver stream and/or subordinated debt. The remaining amount form and timing of this funding will be decided in the next several weeks, and we expect that any final contribution will be made from our available cash resources. That concludes my comments on our financial performance for the quarter. I'll now turn the call back to Bill for closing comments.

Thanks, Paul. Our financial and operating performance in the second fiscal quarter continued our strong start to fiscal 2021. Solid performance from our operating portfolio has allowed us to take full advantage of the robust metal price environment. And over the 12 months ended in December, we have invested $114 million at Khoemacau, moved from a net debt position of $54 million to a net cash position of $182 million, and paid dividends of $73.5 million. We see an active business development market today, but we remain mindful of long-term returns when we bid for opportunities. The financial performance of our portfolio allows us to be patient with new investment opportunities, and we will remain disciplined as we continue to evaluate our new business pipeline. Our strong balance sheet and access to liquidity positions us well to execute on new transactions in a timely manner. Operator, that concludes our prepared remarks. I'll now open the line for questions.

Thank you. We will now begin the question-and-answer session. Our first question comes from Cosmos Chiu with CIBC. Please go ahead.

Thank you, Bill, Mark, Paul, and Alistair. It's great to see the dividend increase once again. My first question is regarding Khoemacau. Can you confirm if the additional $50 million required to bring the mine to commercial production is essentially a cost increase due to COVID-19?

Yes. Cosmos, this is Bill. Can you hear me okay?

Hi, Bill. Yes.

Yes. Okay. Great. Yes. Essentially it is. I mean, the impact of COVID-19 and it's due to a number of things. I mean, you have quarantine costs, you have to have some extra staffing that's necessary just to sort of fill in when you have people in quarantine. So it is all related to the pandemic.

Bill, based on your understanding after the additional $50 million funding, how much cushion do they have? As Mark mentioned earlier, never say never; there might be more impacts from COVID-19. I'm trying to get a sense of how much cushion they have at the operator level.

Yes. And that number is probably not something we can disclose. I will say that what they've come forward with is that's the maximum they think they'll have to spend to get to commercial production. So Mark is there anything else any other color you might add to that? We just might be limited in what we can say.

Of course. I think the only thing I would add is that our funding is part of a larger funding arrangement. They began the year with significant funding available, which means they are well funded for the construction that remains, considering we are only a fraction of that total funding.

In terms of the actual construction, what are the critical path items they need to focus on to ramp up by the second quarter, achieve commissioning by the second quarter, and start concentrate shipments by the third quarter? Are there one or two specific critical path items they are concentrating on at this time?

Mark, I'll leave that to you, maybe you can.

Yes, the critical path for the last several quarters has focused on the mill refurbishment work. This area has faced some COVID-19 impacts affecting contractor productivity. The main task now is to complete the mechanical and electrical work, which is typical for a project at this stage. The mining and development is not on the critical path and is progressing well.

Okay, great. Now, shifting topics a bit. Bill, as you mentioned, this is your fiscal Q2, but many operators are focused on their full year 2020 results. Looking at your operator performances, I noticed that Cortez performed exceptionally well, exceeding their projections for 2020. For instance, their first revenue figures were 101 to 700 ounces compared to 67,000 ounces. So, regarding GSR1, could you recap what transpired in 2020? Also, to the extent that you can, what should we anticipate for 2021? Additionally, two quarters ago, you mentioned that Crossroads would positively impact 2021. I'm trying to determine if the outstanding performance in 2020 can be sustained moving forward.

Yes. Cosmos, I’ll start with the latter part of your question. Then I’ll ask Mark if he has anything to share about our performance in 2020. Typically, we receive a new forecast from Cortez in the first few months of the year. Therefore, by the next quarterly call, we believe we will be in a much better position to provide an outlook for this year. While we were able to provide projections for a couple of years last year, I can’t guarantee we’ll do the same this time; that will be determined through discussions with Barrick. We’ll need to postpone our outlook for 2021 until the next quarter. Mark, do you want to add anything about last year’s production?

Well, just you're right that calendar 2020 actually they did exceed their plan by a small margin. So we're very happy. It tended to be weighted more in calendar Q1 and Q2 than back-end weighted. But overall they did do a good job at providing an estimate.

And then maybe my last question, again, switching gears a little bit here. On taxes, with the new administration in the US Biden and Harris hearing some chatter about potential changes to corporate taxes, corporate tax rates and whatnot. Should we be aware of any potential impacts to Royal Gold in terms of when it might happen? Or if it happens is it going to impact Royal Gold at all? Could you give us a bit more color on that?

Sure. Like it's early days. And I think the soft answer if you will is it's too early to tell. Biden does have a tax plan that would show increased corporate tax rates. I am personally skeptical that he's ever going to get to it only because he's got a pandemic. He's got a vaccination program. He's got an economy that he's got to deal with first. And then he's also turning his attention to immigration and health care. And a 50-50 senate split does not give the democrats carte blanche to pass whatever they want, and there are some vulnerable senators that are going to be up for reelection in 2022. So if Biden's going to get anything done, it's going to be really in the next 12 months. I just – again this is my personal view I don't spend time awake at night worrying about the tax rates going up.

Thank you. Great. Those all the questions I have. Thanks a lot.

Thanks, Cosmos.

Our next question comes from Josh Wolfson with RBC Capital Markets. Please go ahead.

Thanks. I just had a quick question for the Khoemacau funding outlook. As it stands for that $50 million or up to $50 million number, are the three different financing options the team has outlined the only available options? Is there some sort of restriction in place that would require Cupric to utilize strictly those options? Or could they go elsewhere for capital?

There are other sources that would probably require our approval. So I wouldn't want to say just because something may not be permitted under the agreement, it doesn't mean they can't come to us with other options and we'll consider it. I think within the agreement they have – the options that we have laid out and relative to the size of the funding gap right now, those amounts would be sufficient. But look we're open to other sources. And I think it's a great project. So I'm not too worried about them finding sources of capital they need it.

Got it. Yes. I guess the question is more so, do you expect to contribute more towards the project which would – the two options at least that were available for Royal Gold would seem to be accretive options as opposed to just accumulating cash at the current time?

Yes. I mean, I guess, I look at it and say, if you've got a $50 million hole we've got $78 million committed to you and there's yet another basket again, it's more than sufficient. But if they were to come back to us and say notwithstanding, what's available we want to go in this direction, we would certainly look at it.

Great. That’s – those were all my questions. Thank you.

Thank you.

Our next question comes from Jackie Przybylowski with BMO Capital. Please go ahead.

Thanks very much. I think I just wanted to follow up on one of Cos' questions about the guidance for 2021 or I guess sorry for the next quarter Q3 2021. It looks like the guidance the 48,000 to 53,000 ounces is sort of below where you came at for the current quarter. And I was just wondering if you could give us a little more color on that. Or if you can give us some color as to how that gold equivalent ounces breaks down between gold, silver and copper if that's possible?

Yes. So what I'll say, the one thing that's important to recognize about our revenue is that two of the assets in Milligan and Andacollo can be really lumpy. And when we just sort of say timing of shipments, it's sort of a general comment. But we have heard this question and I wanted to turn this over to Mark to try to give you a little more flavor.

Thank you, Bill. The simplest way to understand this is that for every shipment of concentrate from Mount Milligan, we estimate it contains 4,000 to 5,000 Gold Equivalent Ounces. If a shipment arrives earlier or later than expected, that will adjust the 4,000 to 5,000 GEOs. The same applies to Andacollo, though concentrate shipments there typically range from 2,000 to 2,500 ounces in GEOs. The relationship between these two assets can lead to fluctuations based on how the concentrate is managed and stored before reaching the smelter. Essentially, you can expect a swing of 4,000 to 5,000 GEOs from Milligan and 2,000 to 2,500 GEOs from Andacollo. For further details on these variations, please refer to table two in our press release. I'm open to answering any other questions you might have.

Okay. That's helpful. Thanks, Mark. I guess, yes, that's a helpful answer. If I can just ask a second question. Your total available liquidity keeps going up it's at $1.2 billion at the moment. Can you give us a little bit of an update into your thoughts on opportunities? And that do you see growth investment opportunities on the horizon for yourselves? And if maybe you could talk about that $1.2 billion and how much would you be comfortable putting out in a single transaction sort of at the maximum level would be helpful color as well? Thanks.

Sure. I will address the liquidity now. We have Dan Breeze here, and I will pass it to him for insights on business development. We have always stated that we would be willing to invest up to $1 billion in a transaction, and that position remains unchanged. However, this is not a preferred level as we want to avoid any concentration issues. Typically, any investment of that size would likely require us to be in production. Therefore, the $1 billion figure does not apply to every type of transaction we encounter. Dan, are you available? Would you like to discuss the current environment?

Yeah. Thanks. Hi, Jackie. Hope you're well. Can you hear me okay?

I can. Thanks. Hope you're well too.

Good. Yes. Thanks. The first thing to mention is that we’re not under pressure to finalize transactions. We have a strong portfolio, and Khoemacau is expected to come online in the next few quarters, which we’re excited about. This situation is similar to what we've discussed in previous calls. The market appears to be quite healthy, particularly in the $100 million to $500 million range. We’ve adjusted to the challenges of restricted travel and are effectively completing much of our work remotely, with operations continuing smoothly. We're observing some transactions occurring in the market, so we feel confident about deploying that capital eventually. Additionally, as Bill mentioned, we have ample liquidity to facilitate this.

That’s really helpful. Thanks, Dan. That’s it for me. Thanks.

Thanks, Jackie.

Thank you.

Our next question comes from Mike Jalonen with Bank of America. Please go ahead.

Hi, Bill. I hope you’re doing well. I’m calling you from my basement and I might be here for a while longer. I have a question regarding the strong performance on the royalty side and would like your thoughts. However, I assume the entire royalty wasn’t included since the market was shut down. I’m curious if there have been any discussions with Kirkland Lake about your royalty, possibly to reopen that mine? Is that something Kirkland Lake is considering? It’s a very valuable royalty at these prices, so I’m wondering about its current status.

Yes. I’m answering you from my basement. We spent months discussing with both Kirkland Lake and Newmont to address a concern that wasn’t our issue. As you know, our royalty does not impact the property and is paid by Newmont. We were surprised by the statement or the option agreement that was announced in August. All I can say is that we are in contact with our legal counsel and are reviewing our options regarding that agreement. That's all I can really offer you.

Okay. Thanks and good luck.

Thanks.

Our next question comes from Tanya Jakusconek with Scotiabank. Please go ahead.

Hi. Good morning, everyone. Can you hear me?

Yes. We can hear you, Tanya.

Okay. Great. Thank you. I have got three questions. I just wanted to circle back on your fiscal Q2. Other revenue, which we don't have the details on. We have Peñasquito and Cortez. But just on the other royalties, can you give us a breakdown of what are the bigger ones in there? Because that was a lot better than we were anticipating, and we'd just like to have a bit of clarity on the bigger items in that other revenue.

Paul, can I ask you to maybe give a few names there. I mean, I think we say in the quote that none of them represent 5% but maybe we could just take off some of the bigger ones.

Yeah. Hi, Tanya. How are you?

Good. Thank you.

I want to highlight a couple of items, particularly the 4% NPI from Kurnalpi, which pertains to certain tenements on the Saracen South Laverton property in Western Australia. This royalty brought in $3.7 million for us this quarter, equivalent to about 2000 GEOs. That's a significant highlight for the quarter. Additionally, we've seen a positive contribution from our overall Australian royalty portfolio. In total, including the Kurnalpi's $3.7 million, we had contributions from Australia amounting to $40 million this quarter, up from $34 million in Q1. These are the main points I wanted to emphasize.

Okay. Are you considering providing us with more information on that other category moving forward?

Yeah. I think, we've always tried to keep the disclosure to what we phrase as our principal properties, but I'm happy to take that request on and talk to the team about it and see if it makes sense to give you a bit more detail in the future.

That would be helpful, thank you. Moving on to the Q3 stream outlook, I know Jackie asked this and I'm trying to understand. The outlook indicates that the level of stream deliveries will be similar to Q2. However, given the improved production outlook for both Mount Milligan and Andacollo as we ramp up in the second half of the year, is it just the timing of these deliveries causing this variation? We would have anticipated a stronger second half.

I want to highlight that there is a six-month delay with Milligan and Andacollo. When we consider our December quarter and focus a bit on Milligan, it's important to remember that production was reduced in the second calendar quarter due to COVID-19. The impact of that reduction often becomes apparent later, and people tend to overlook it. When Mark referenced table two in the press release, it shows the variability among our individual assets. If either of the larger assets experiences a dip in performance, it can lead to significant fluctuations. However, I don’t believe the range we've projected is far from what we've seen in the past. The timing of production is crucial here. If we see production increases from the mine, that should eventually reflect in our results, but there will be a six-month lag before we see that impact.

Okay. So it's the timing of it. And then maybe my last question, just on the M&A and you mentioned your $1 billion transaction. Those would be something that you would do, obviously, asset being in production and a $100 million to $500 million range that you're seeing now. Are those more in the development stage type of acquisitions, or are they producing? And are you still focused on gold? Or have you shifted to silver? Maybe just a bit more on that. Thank you.

Yeah. And Dan I may turn this back over to you. The one thing I will say is that we're always going to be gold-focused. And you've probably heard me say it before. If you give me five transactions to look at and three of them are gold and two of them are silver, I'm going to look at the gold ones first. So silver is in the box, but we're very much focused on gold. We don't take strategic shifts and say, okay, now we're going to do some silver. We tend not to be able to pick the market that way. You take the deals as they come in. Dan is there anything you want to add?

Sure. Yeah, hi, Tanya. Hope you're well. Thanks for the question. I would just add that when you think about the buckets of where the use of proceeds are generally directed towards, project development, M&A and strengthening the balance sheets. And I think right now what we're seeing mostly is on the project development side and some of the equity raises that are happening in the market they're small and they're moving forward the projects, which is good for us as well. We're seeing more of those kinds of projects move forward where we can be part of the capital structure on the development side. So it's probably skewed more towards project developments, I would say.

Okay. That makes sense. Okay. Thank you so much for that.

Thank you.

You're welcome.

Our next question comes from Greg Barnes with TD Securities. Please go ahead.

Yes. Thank you. Bill, I just want to confirm if the $50 million funding gap at KCM is the full extent of the funding gap. Is it just what your funding options could cover?

That is the funding gap.

Okay. And secondarily, your comments at the end of your prepared statements about being disciplined and focusing on returns and being patient. If I'm reading between the lines, obviously the royalty space has got a lot more competitive. Are you not seeing the returns on the latest deals that have been done, particularly attractive for you?

I think the industry overall has experienced a decrease in returns. However, looking at it more closely, there’s an initial return based on a reserve that is apparent at the outset, but that’s not the return we ultimately aim for. We’re interested in assets with potential for growth, where, a few years down the line, we can demonstrate that even if the initial return seems low, significant future returns are possible. The competition is increasing, not just because more players have entered the market, but also because the equity markets are more accessible and interest rates are low, making debt markets more favorable. We haven’t seen this combination in a while. The key takeaway is that we can afford to be patient. We will not pursue deals just to fill a future pipeline; instead, we will focus on the transactions that align with our goals. However, it’s true that there is greater competition in the sector now that these alternative sources of capital have become more available.

When you look at some recent deals, do you believe the other participants are overestimating the potential gains beyond the basic reserve? Or is that not true yet?

I'll be honest with you, when one of our competitors announces a transaction, we analyze it. However, each company has its own technical team and perspective on potential gains. They might have some knowledge about the asset. So, it would be quite difficult for me to say that Company X believes this mine will have a lifespan of 20 years instead of the expected 5 years. I can't really make that assertion.

Okay. Fair enough. Thank you.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Bill Heissenbuttel for any closing remarks.

Well thank you very much for taking the time to join us today. I very much enjoyed the questions. We appreciate your interest in Royal Gold and we look forward to updating you on our progress during our next quarterly call. Take care.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.