ROYAL GOLD INC, 10-Q filed on 11/7/2019
Quarterly Report
v3.19.3
Document and Entity Information - shares
3 Months Ended
Sep. 30, 2019
Oct. 31, 2019
Document and Entity Information    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2019  
Document Transition Report false  
Entity File Number 001-13357  
Entity Registrant Name Royal Gold, Inc  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 84-0835164  
Entity Address, Address Line One 1660 Wynkoop Street  
Entity Address, Address Line Two Suite 1000  
Entity Address, City or Town Denver  
Entity Address, State or Province CO  
Entity Address, Postal Zip Code 80202  
City Area Code 303  
Local Phone Number 573-1660  
Title of 12(b) Security Common Stock  
Trading Symbol RGLD  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Shares Outstanding   65,591,907
Entity Central Index Key 0000085535  
Current Fiscal Year End Date --06-30  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q1  
Amendment Flag false  
v3.19.3
Consolidated Balance Sheets - USD ($)
$ in Thousands
Sep. 30, 2019
Jun. 30, 2019
ASSETS    
Cash and equivalents $ 121,970 $ 119,475
Royalty receivables 26,635 20,733
Income tax receivable 3,698 2,702
Stream inventory 10,772 11,380
Prepaid expenses and other 1,135 389
Total current assets 164,210 154,679
Stream and royalty interests, net 2,305,018 2,339,316
Other assets 78,683 50,156
Total assets 2,547,911 2,544,151
LIABILITIES    
Accounts payable 3,496 2,890
Dividends payable 17,380 17,372
Income tax payable 5,548 6,974
Other current liabilities 5,949 6,374
Total current liabilities 32,373 33,610
Debt (Note 5) 164,595 214,554
Deferred tax liabilities 88,184 88,961
Uncertain tax positions 38,322 36,573
Other long-term liabilities 2,109  
Total liabilities 325,583 373,698
Commitments and contingencies
EQUITY    
Preferred stock, $.01 par value, 10,000,000 shares authorized; and 0 shares issued
Common stock, $.01 par value, 200,000,000 shares authorized; and 65,495,797 and 65,440,492 shares outstanding, respectively 655 655
Additional paid-in capital 2,202,350 2,201,773
Accumulated losses (12,676) (65,747)
Total Royal Gold stockholders' equity 2,190,329 2,136,681
Non-controlling interests 31,999 33,772
Total equity 2,222,328 2,170,453
Total liabilities and equity $ 2,547,911 $ 2,544,151
v3.19.3
Consolidated Balance Sheets (Parenthetical) - $ / shares
Sep. 30, 2019
Jun. 30, 2019
Consolidated Balance Sheets    
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued 0 0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized 200,000,000 200,000,000
Common stock, shares outstanding 65,495,787 65,440,492
v3.19.3
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Consolidated Statements of Operations and Comprehensive Income (Loss)    
Revenue $ 118,774 $ 99,992
Costs and expenses    
Cost of sales (excludes depreciation, depletion and amortization) 20,111 16,527
General and administrative 7,443 9,927
Production taxes 1,099 1,292
Exploration costs 2,626 4,362
Depreciation, depletion and amortization 38,714 42,551
Total costs and expenses 69,993 74,659
Operating income (loss) 48,781 25,333
Fair value changes in equity securities (1,375) (1,468)
Interest and other income 775 103
Interest and other expense (2,834) (7,877)
Income before income taxes 45,347 16,091
Income tax benefit (expense) 23,525 (4,115)
Net income 68,872 11,976
Net loss attributable to non-controlling interests 1,581 3,032
Net income attributable to Royal Gold common stockholders 70,453 15,008
Net income 68,872 11,976
Comprehensive income 68,872 11,976
Comprehensive loss attributable to non-controlling interests 1,581 3,032
Comprehensive income attributable to Royal Gold stockholders $ 70,453 $ 15,008
Net income per share available to Royal Gold common stockholders:    
Basic earnings per share (in dollars per share) $ 1.07 $ 0.23
Basic weighted average shares outstanding (in shares) 65,465,611 65,374,866
Diluted earnings per share (in dollars per share) $ 1.07 $ 0.23
Diluted weighted average shares outstanding (in shares) 65,615,926 65,497,159
Cash dividends declared per common share (in dollars per share) $ 0.265 $ 0.25
v3.19.3
Consolidated Statements of Changes in Stockholder's Equity - USD ($)
$ in Thousands
Common Shares
Additional Paid-In Capital
Accumulated Other Comprehensive Income (Loss)
Accumulated (Losses) Earnings
Noncontrolling Interests
Total
Balance at Jun. 30, 2018 $ 654 $ 2,192,612 $ (1,201) $ (89,898) $ 39,102 $ 2,141,269
Balance (in shares) at Jun. 30, 2018 65,360,041          
Increase (Decrease) in Stockholders' Equity            
Stock-based compensation and related share issuances   472       472
Stock-based compensation and related share issuances (in shares) 34,857          
Distributions from (to) non-controlling interests   1,950     (25) 1,925
Net income       15,008 (3,032) 11,976
Other comprehensive loss     $ 1,201 (1,201)    
Dividends declared       (16,376)   (16,376)
Balance at Sep. 30, 2018 $ 654 2,195,034   (92,467) 36,045 2,139,266
Balance (in shares) at Sep. 30, 2018 65,394,898          
Balance at Jun. 30, 2019 $ 655 2,201,773   (65,747) 33,772 2,170,453
Balance (in shares) at Jun. 30, 2019 65,440,492          
Increase (Decrease) in Stockholders' Equity            
Stock-based compensation and related share issuances   (323)       (323)
Stock-based compensation and related share issuances (in shares) 55,295          
Distributions from (to) non-controlling interests   900     (192) 708
Net income       70,453 (1,581) 68,872
Dividends declared       (17,382)   (17,382)
Balance at Sep. 30, 2019 $ 655 $ 2,202,350   $ (12,676) $ 31,999 $ 2,222,328
Balance (in shares) at Sep. 30, 2019 65,495,787          
v3.19.3
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Cash flows from operating activities:    
Net income $ 68,872 $ 11,976
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation, depletion and amortization 38,714 42,551
Amortization of debt discount and issuance costs 281 3,903
Non-cash employee stock compensation expense 2,101 2,444
Fair value changes in equity securities 1,375 1,468
Deferred tax benefit (33,139) (1,681)
Changes in assets and liabilities:    
Royalty receivables (5,902) 1,250
Stream inventory 608 (701)
Income tax receivable (995) (6,341)
Prepaid expenses and other assets (3,197) 1,061
Accounts payable 517 (4,060)
Income tax payable (1,426) (10,241)
Uncertain tax positions 1,748 3,266
Other liabilities 1,682 (258)
Net cash provided by operating activities 71,239 44,637
Cash flows from investing activities:    
Acquisition of royalty interests (4,362) (3)
Other 4,858 (121)
Net cash provided by (used in) investing activities 496 (124)
Cash flows from financing activities:    
Repayment of debt (50,000)  
Net payments from issuance of common stock (2,423) (1,972)
Common stock dividends (17,373) (16,376)
Other 556 2,163
Net cash used in financing activities (69,240) (16,185)
Net increase in cash and equivalents 2,495 28,328
Cash and equivalents at beginning of period 119,475 88,750
Cash and equivalents at end of period $ 121,970 $ 117,078
v3.19.3
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS
3 Months Ended
Sep. 30, 2019
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS  
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS

1.    OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS

Royal Gold, Inc. (“Royal Gold”, the “Company”, “we”, “us”, or “our”), together with its subsidiaries, is engaged in the business of acquiring and managing metal streams, royalties and similar interests.  We seek to acquire existing stream and royalty interests or to finance mining projects that are in production or in the development stage in exchange for stream or royalty interests.  A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or more metals produced from a mine at a price determined for the life of the transaction by the purchase agreement.  A royalty is a non-operating interest in a mining project that provides the right to revenue or metals produced from the project after deducting contractually specified costs, if any.  

Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements.  In the opinion of management, all adjustments which are of a normal recurring nature considered necessary for a fair presentation of our interim financial statements have been included in this Form 10-Q.  Operating results for the three months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2020.  These interim unaudited financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019 filed with the Securities and Exchange Commission on August 8, 2019 (“Fiscal 2019 10-K”).

Certain amounts in the prior period consolidated balance sheet have been reclassified for comparative purposes to conform with the presentation in the current period balance sheet.  Reclassified amounts were not material.  

Recently Adopted Accounting Standards

Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which requires recognition of right-of-use assets and lease payment liabilities on the balance sheet by lessees for all leases with terms greater than twelve months.  Classification of leases as either a finance or operating lease will determine the recognition, measurement and presentation of expenses. ASU 2016-02 also requires certain quantitative and qualitative disclosures about material leasing arrangements.

Subsequently, in July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”). ASU 2018-11 provides an additional modified retrospective transition method for adopting ASU 2016-02, which eliminates the need for adjusting prior period comparable financial statements prepared under legacy lease accounting guidance.

ASU 2016-02, together with ASU 2018-11, is effective for the Company July 1, 2019. The Company adopted the new guidance using the modified retrospective approach set forth in ASU 2018-11, with the date of initial application on July 1, 2019.  Comparative reporting periods were not adjusted upon adoption.

As permitted under the transition guidance, the Company has elected to use the following practical expedients at transition:

To not reassess whether any expired or existing contracts were or contained leases; and
To not reassess the lease classification for any expired or existing leases.

In addition, the Company has elected to use the following practical expedients at and subsequent to adoption in accordance with ASU 2016-02:

Not to separate non-lease from lease components, and instead account for each lease component and any associated non-lease components as a single lease component; and
Not to recognize right-of-use assets and associated liabilities for short-term contracts with lease terms of 12 months or less.

The Company’s significant lease arrangements relate to its office spaces. These arrangements are for leases of assets such as corporate office space and office equipment.  Through the implementation process, the Company evaluated its lease arrangements, which included an analysis of contracts, and updated its internal controls and processes that are necessary to track and calculate the additional accounting and disclosure requirements as required upon adoption of ASU 2016-02.

Upon adoption, the new standard had an insignificant impact on the Company’s consolidated balance sheets as of September 30, 2019.  Adoption of the new standard resulted in the recognition of $2.4 million of right-of-use assets on our consolidated balance sheets with an offsetting $2.4 million of lease liabilities for operating leases.  The current portion of our right of use assets are included in Prepaid expenses and other, while the long-term portion is included in Other assets on our consolidated balance sheets.  The current portion of the offsetting lease liabilities are included in Other current liabilities, while the long-term portion is included in Other long-term liabilities on our consolidated balance sheets.  The Company did not have any finance leases as of September 30, 2019.  The adoption of ASU 2016-02 did not impact accumulated losses, our consolidated statements of operations and comprehensive income, and our consolidated statements of cash flows.

v3.19.3
ACQUISITION
3 Months Ended
Sep. 30, 2019
ACQUISITION  
ACQUISITION

2.    ACQUISITION

Castelo de Sonhos royalty acquisition

In August 2019, a subsidiary of the Company entered into an agreement with TriStar Gold Inc. and its subsidiaries (together “TriStar”) to acquire (i) up to a 1.5% net smelter return (“NSR”) royalty on the Castelo de Sonhos gold project (“CDS”), located in Brazil, and (ii) warrants to purchase up to 19,640,000 common shares of TriStar.  Total consideration is $7.5 million and is payable over three payments, of which $4.5 million was paid in August 2019.  The second and third payments of $1.5 million each are subject to satisfaction of certain conditions and are payable by November 30, 2019 and March 31, 2020.  The NSR royalty is incrementally earned pro-rata with the funding schedule while the warrants to purchase TriStar common shares will be issued pro-rata with the funding schedule.  

The CDS royalty acquisition has been accounted for as an asset acquisition.  The $4.4 million paid as part of the aggregate funding schedule, plus direct acquisition costs, have been recorded as an exploration stage royalty interest within Stream and royalty interests, net on our consolidated balance sheets.  Any future funding of the second and third payments, plus any direct acquisition costs, will also be recorded as an exploration stage royalty interest.  

The warrants have been recorded within Other assets on our consolidated balance sheets and have a carrying value of approximately $0.8 million as of September 30, 2019.  The warrants have been classified as a financial asset instrument and are recorded at fair value at each reporting date using the Black-Scholes model.  Any change in fair value of the warrants at subsequent reporting periods will be recorded within Interest and other income on our consolidated statements of operations and comprehensive income.  As of September 30, 2019, the Company holds 11,784,000 warrants at an exercise price of C$0.25 per common share with a term of five years.

v3.19.3
STREAM AND ROYALTY INTERESTS, NET
3 Months Ended
Sep. 30, 2019
STREAM AND ROYALTY INTERESTS, NET  
STREAM AND ROYALTY INTERESTS, NET

3.    STREAM AND ROYALTY INTERESTS, NET

The following tables summarize the Company’s stream and royalty interests, net as of September 30, 2019 and June 30, 2019.

As of September 30, 2019 (Amounts in thousands):

    

Cost

    

Accumulated Depletion

    

Net

Production stage stream interests:

Mount Milligan

$

790,635

$

(192,726)

$

597,909

Pueblo Viejo

610,404

(168,961)

441,443

Andacollo

388,182

(93,774)

294,408

Rainy River

175,727

(17,462)

158,265

Wassa and Prestea

146,475

(59,565)

86,910

Total production stage stream interests

2,111,423

(532,488)

1,578,935

Production stage royalty interests:

Voisey's Bay

205,724

(97,136)

108,588

Peñasquito

99,172

(41,414)

57,758

Holt

34,612

(22,936)

11,676

Cortez

80,681

(12,777)

67,904

Other

487,224

(390,591)

96,633

Total production stage royalty interests

907,413

(564,854)

342,559

Total production stage stream and royalty interests

3,018,836

(1,097,342)

1,921,494

Development stage stream interests:

Other

12,038

12,038

Development stage royalty interests:

Other

70,952

70,952

Total development stage stream and royalty interests

82,990

82,990

Exploration stage royalty interests:

Pascua-Lama

177,690

177,690

Other

122,844

122,844

Total exploration stage royalty interests

300,534

300,534

Total stream and royalty interests, net

$

3,402,360

$

(1,097,342)

$

2,305,018

As of June 30, 2019 (Amounts in thousands):

    

Cost

    

Accumulated Depletion

    

Net

Production stage stream interests:

Mount Milligan

$

790,635

$

(184,091)

$

606,544

Pueblo Viejo

610,404

(158,819)

451,585

Andacollo

388,182

(86,675)

301,507

Rainy River

175,727

(14,522)

161,205

Wassa and Prestea

146,475

(56,919)

89,556

Total production stage stream interests

2,111,423

(501,026)

1,610,397

Total production stage stream and royalty interests

Production stage royalty interests:

Voisey's Bay

205,724

(95,564)

110,160

Peñasquito

99,172

(40,659)

58,513

Holt

34,612

(22,570)

12,042

Cortez

20,878

(12,362)

8,516

Other

487,224

(386,501)

100,723

Total production stage royalty interests

847,610

(557,656)

289,954

Total production stage stream and royalty interests

2,959,033

(1,058,682)

1,900,351

Development stage stream interests:

Other

12,038

12,038

Development stage royalty interests:

Cortez

59,803

59,803

Other

70,952

70,952

Total development stage royalty interests

130,755

130,755

Total development stage stream and royalty interests

142,793

142,793

Exploration stage royalty interests:

Pascua-Lama

177,690

177,690

Other

118,482

118,482

Total exploration stage royalty interests

296,172

296,172

Total stream and royalty interests, net

$

3,397,998

$

(1,058,682)

$

2,339,316

Mount Milligan

The Company’s wholly-owned subsidiary, RGLD Gold AG (“RGLD Gold”), owns the right to purchase 35% of the payable gold and 18.75% of the payable copper produced from the Mount Milligan copper-gold mine in British Columbia, Canada, which is operated by an indirect subsidiary of Centerra Gold Inc. (“Centerra”).  The Company’s carrying value for its stream interest at Mount Milligan is $597.9 million as of September 30, 2019.

On October 30, 2019, Centerra reported that issues identified with decreasing long-term gold recoveries and increased costs in the short-to medium-term led them to record an impairment charge against their carrying value of the Mount Milligan mine under applicable accounting standards, and that it has begun a comprehensive technical review of the operation with the objective of publishing an updated 43-101 technical report in the coming months.  According to Centerra, the updated 43-101 report will include studies to optimize the economics of the mine as well as incorporate results of exploration drilling through calendar 2019.  While Centerra acknowledged that the extent of any changes in reserves and mineralized material cannot be precisely determined until all relevant studies and modeling have been completed, it expects that the mineral reserves and mineralized material at Mount Milligan will be materially reduced.  

A significant reduction in reserves and mineralized material could be an indicator of potential impairment for Royal Gold.  The financial impairment taken by Centerra does not impact the mine operating performance, and, further, a significant reduction in reserves and mineralized material at Mount Milligan may not result in an impairment given current high gold prices and our low depletion rates for the Mount Milligan stream interest.  It is unclear at this point what impact, if any,

the results of Centerra’s technical report work will have on the carrying value of our stream interest at Mount Milligan.  The Company will continue to monitor these developments at Mount Milligan in subsequent quarterly reporting periods.  

Other

During the quarter ended June 30, 2019, the Company was made aware of insolvency proceedings at one of our non-principal producing properties (El Toqui), and during the quarter ended September 30, 2019, the Company was made aware of insolvency proceedings at one of our evaluation stage properties.  The outcome of these insolvency proceedings may impact our royalty interests and the associated carrying values, which are approximately $1.4 million (El Toqui) and $2.7 million (evaluation stage interest) as of September 30, 2019.  The Company continues to monitor these insolvency proceedings as part of our regular asset impairment analysis.  Based on the results of these insolvency proceedings, the Company could determine that a future write-down of either interest to an amount less than the current carrying value or to zero is necessary.

v3.19.3
MARKETABLE EQUITY SECURITIES
3 Months Ended
Sep. 30, 2019
MARKETABLE EQUITY SECURITIES  
MARKETABLE EQUITY SECURITIES

4.  MARKETABLE EQUITY SECURITIES

As of September 30, 2019, the Company’s marketable equity securities include 809,744 common shares of Contango Ore, Inc. (“CORE”), 3,949,575 common shares of Rubicon Minerals Corporation, and warrants to purchase up to 11,784,000 common shares of TriStar.  Our marketable equity securities are measured at fair value (Note 11) each reporting period with any changes in fair value recognized in net income.  

The decrease in fair value of our marketable equity securities was approximately $1.4 million and $1.5 million for the three months ended September 30, 2019 and 2018, respectively, and is included in Fair value changes in equity securities on our consolidated statements of operations and comprehensive income.  The carrying value of the Company’s marketable equity securities as of September 30, 2019 and June 30, 2019 was $15.0 million and $16.0 million, respectively, and is included in Other assets on the Company’s consolidated balance sheets.  

v3.19.3
DEBT
3 Months Ended
Sep. 30, 2019
DEBT  
DEBT

5.    DEBT

The Company’s debt as of September 30, 2019 and June 30, 2019 consists of the following:

As of September 30, 2019

As of June 30, 2019

   

Principal

   

Debt Issuance Costs

   

Total

   

Principal

   

Debt Issuance Costs

   

Total

(Amounts in thousands)

(Amounts in thousands)

Revolving credit facility

$

170,000

$

(5,405)

$

164,595

$

220,000

$

(5,446)

$

214,554

Total debt

$

170,000

$

(5,405)

$

164,595

$

220,000

$

(5,446)

$

214,554

Revolving credit facility

On September 20, 2019, the Company entered into a third amendment to our revolving credit facility dated as of June 2, 2017.  Under the amendment, the Company’s Swiss subsidiary, RGLD Gold AG, was added as a co-borrower and joint and several obligor, certain of the Company’s Canadian subsidiaries were added as guarantors, and certain equity pledges that previously had been granted in favor of the lenders to support the facility were released, with the result that the facility is now unsecured.

As of September 30, 2019, the Company had $170 million outstanding and $830 million available under the revolving credit facility.  Royal Gold may repay any borrowings under the revolving credit facility at any time without premium or penalty.

As of September 30, 2019, the interest rate on borrowings under the revolving credit facility was LIBOR plus 1.10% for an all-in rate of 3.24%.  For the three months ended September 30, 2019 and 2018, interest expense, which includes interest on the outstanding borrowings and the amortization of the debt issuance costs, was $2.2 million and $0.3 million

respectively. As discussed in Note 5 to the consolidated financial statements in the Company’s Fiscal 2019 10-K, the Company has financial covenants associated with its revolving credit facility.  As of September 30, 2019, the Company was in compliance with each financial covenant.

v3.19.3
REVENUE
3 Months Ended
Sep. 30, 2019
REVENUE  
REVENUE

6.    REVENUE

Revenue Recognition

Under current ASC 606 – Revenue from Contracts with Customers (“ASC 606”) guidance, a performance obligation is a promise in a contract to transfer control of a distinct good or service (or integrated package of goods and/or services) to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, a performance obligation is satisfied. In accordance with this guidance, revenue attributable to our stream interests and royalty interests is generally recognized at the point in time that control of the related metal production transfers to our customers.  The amount of revenue we recognize further reflects the consideration to which we are entitled under the respective stream or royalty agreement.  A more detailed summary of our revenue recognition policies for our stream and royalty interests is discussed below.

Stream Interests

A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or more of the metals produced from a mine, at a price determined for the life of the transaction by the purchase agreement. Gold, silver and copper received under our metal streaming agreements are taken into inventory, and then sold primarily using average spot rate gold, silver and copper forward contracts.  The sales price for these average spot rate forward contracts is determined by the average daily gold, silver or copper spot prices during the term of the contract, typically a consecutive number of trading days between ten days and three months (depending on the frequency of deliveries under the respective streaming agreement and our sales policy in effect at the time) commencing shortly after receipt and purchase of the metal. We settle our forward sales contracts via physical delivery of the metal to the purchaser (our customer) on the settlement date specified in the contract. Under our forward sales contracts, there is a single performance obligation to sell a contractually specified volume of metal to the purchaser, and we satisfy this obligation at the point in time of physical delivery. Accordingly, revenue from our metal sales is recognized on the date of settlement, which is the date that control, custody and title to the metal transfer to the purchaser.

Royalty Interests

Royalties are non-operating interests in mining projects that provide the right to a percentage of revenue or metals produced from the project after deducting specified costs, if any. We are entitled to payment for our royalty interest in a mining project based on a contractually specified commodity price (for example, a monthly or quarterly average spot price) for the period in which metal production occurs.  As a royalty holder, we act as a passive entity in the production and operations of the mining project, and the third-party operator of the mining project is responsible for all mining activities, including subsequent marketing and delivery of all metal production to their ultimate customer. In all of our material royalty interest arrangements, we have concluded that we transfer control of our interest in the metal production to the operator at the point at which production occurs, and thus, the operator is our customer.  We have further determined that the transfer of each unit of metal production comprising our royalty interest to the operator represents a separate performance obligation under the contract, and each performance obligation is satisfied at the point in time of metal production by the operator.  Accordingly, we recognize revenue attributable to our royalty interests in the period in which metal production occurs at the specified commodity price per the agreement, net of any contractually allowable offsite treatment, refining, transportation and, if applicable, mining costs.

Royalty Revenue Estimates

For a small number of our royalty interests, we may not receive, or be entitled to receive, payment information, including production information from the operator, for the period in which metal production occurred prior to issuance of our financial statements.  As a result, we may estimate revenue for these royalties based on available information, including

public information, from the operator.  If adequate information is not available from the operator or from other public sources before we issue our financial statements, the Company will recognize royalty revenue during the period in which the necessary payment information is received.  Differences between estimates and actual amounts could differ significantly and are recorded in the period that the actual amounts are known.  Please also refer to our “Use of Estimates” accounting policy discussed in our Fiscal 2019 10-K.  For the quarter ended September 30, 2019, royalty revenue that was estimated or was attributable to metal production for a period prior to September 30, 2019, was not material.  

Disaggregation of Revenue

We have identified two material revenue sources in our business: stream interests and royalty interests. These identified revenue sources are consistent with our reportable segments as discussed in Note 10.

Revenue by metal type attributable to each of our revenue sources is disaggregated as follows:  

Three Months Ended

September 30, 

September 30, 

2019

2018

Stream revenue:

    Gold

$

72,224

$

59,114

    Silver

8,436

8,720

    Copper

6,321

2,203

         Total stream revenue

$

86,981

$

70,037

Royalty revenue:

    Gold

$

21,757

$

18,554

    Silver

1,829

1,352

    Copper

2,980

3,615

    Other

5,227

6,434

         Total royalty revenue

$

31,793

$

29,955

Total revenue

$

118,774

$

99,992

Revenue attributable to our principal stream and royalty interests is disaggregated as follows:

Three Months Ended

September 30, 

September 30, 

Metal(s)

2019

2018

Stream revenue:

    Mount Milligan

Gold & Copper

$

30,497

$

8,847

    Pueblo Viejo

Gold & Silver

21,618

19,486

    Andacollo

Gold

20,604

27,743

    Wassa

Gold

5,319

5,325

    Rainy River

Gold & Silver

7,166

5,900

    Other

Gold & Silver

1,777

2,736

         Total stream revenue

$

86,981

$

70,037

Royalty revenue:

    Peñasquito

Gold, Silver, Lead & Zinc

$

4,420

$

3,637

    Cortez

Gold

4,417

603

    Other

Various

22,956

25,715

         Total royalty revenue

$

31,793

$

29,955

Total revenue

$

118,774

$

99,992

Please refer to Note 10 for the geographical distribution of our revenue by reportable segment.

Contract Receivables

Under our forward sales contracts related to our metal streaming arrangements, payment is due from the purchaser on the day of settlement. Accordingly, our metal stream sales contracts do not give rise to a receivable under ASC 606.

Under our royalty arrangements, payment is typically due by the royalty payor either (i) monthly, typically thirty days after month-end or (ii) quarterly, typically thirty to sixty days after the respective quarter-end.  Revenue related to production that has occurred as of the reporting date but for which payment has not been received represents a receivable (rather than a contract asset) under ASC 606 as payment by the operator is unconditional upon the production of metal.  As of September 30, 2019, and June 30, 2019, our royalty receivables were $26.6 million and $20.7 million, respectively.

Practical Expedients Utilized

Our forward sales contracts related to our metal streaming arrangements are short-term in nature with a term of one year or less. For these contracts, we have utilized the practical expedient allowed in ASC 606 that exempts us from presenting the transaction price allocated to remaining performance obligations (i.e. forecasts of unearned revenue) for contracts with an original expected term of one year or less.

Our royalty arrangements generally cover metal production over the life of a mine and, thus, have a contract term that is greater than one year.  Under these contracts, variability related to future production volumes and market pricing is allocated entirely to those future production volumes from the mining operation. Consequently, we have utilized an alternative practical expedient allowed in ASC 606 that exempts us from presenting the transaction price allocated to remaining performance obligations (i.e. forecasts of unearned revenue) if the variable consideration in a contract is allocated entirely to a wholly unsatisfied performance obligation.

v3.19.3
STOCK-BASED COMPENSATION
3 Months Ended
Sep. 30, 2019
STOCK-BASED COMPENSATION  
STOCK-BASED COMPENSATION

7.    STOCK-BASED COMPENSATION

The Company recognized stock-based compensation expense as follows:

Three Months Ended

September 30, 

September 30, 

    

2019

    

2018

    

(Amounts in thousands)

Stock options

$

31

$

120

Stock appreciation rights

442

766

Restricted stock

1,243

1,280

Performance stock

385

278

Total stock-based compensation expense

$

2,101

$

2,444

Stock-based compensation expense is included within General and administrative expense in the consolidated statements of operations and comprehensive income.

During the three months ended September 30, 2019 and 2018, the Company granted the following stock-based compensation awards:

Three Months Ended

September 30, 

September 30, 

    

2019

    

2018

(Number of shares)

Stock options

1,604

6,430

Stock appreciation rights

46,726

69,360

Restricted stock

23,976

42,260

Performance stock (at maximum 200% attainment)

28,560

57,420

Total equity awards granted

100,866

175,470

As of September 30, 2019, unrecognized compensation expense (expressed in thousands below) and weighted-average vesting period for each of our stock-based compensation awards were as follows:

Unrecognized

    

Weighted-

compensation

average vesting

expense

    

period (years)

Stock options

$

160

1.9

Stock appreciation rights

3,012

2.2

Restricted stock

6,140

3.3

Performance stock

2,522

2.1

v3.19.3
EARNINGS PER SHARE ("EPS")
3 Months Ended
Sep. 30, 2019
EARNINGS PER SHARE ("EPS")  
EARNINGS PER SHARE ("EPS")

8.    EARNINGS PER SHARE (“EPS”)

Basic earnings per common share were computed using the weighted average number of shares of common stock outstanding during the period, considering the effect of participating securities.  Unvested stock-based compensation awards that contain non-forfeitable rights to dividends or dividend equivalents are considered participating securities and are included in the computation of earnings per share pursuant to the two-class method.  The Company’s unvested restricted stock awards contain non-forfeitable dividend rights and participate equally with common stock with respect to dividends issued or declared.  The Company’s unexercised stock options, unexercised SSARs and unvested performance stock do not contain rights to dividends.  Under the two-class method, the earnings used to determine basic earnings per common share are reduced by an amount allocated to participating securities. Use of the two-class method has an immaterial impact on the calculation of basic and diluted earnings per common share.

The following tables summarize the effects of dilutive securities on diluted EPS for the period:

Three Months Ended

September 30, 

September 30, 

    

2019

    

2018

    

(in thousands, except per share data)

Net income available to Royal Gold common stockholders

$

70,453

$

15,008

Weighted-average shares for basic EPS

65,465,611

65,374,866

Effect of other dilutive securities

150,315

122,293

Weighted-average shares for diluted EPS

65,615,926

65,497,159

Basic earnings per share

$

1.07

$

0.23

Diluted earnings per share

$

1.07

$

0.23

v3.19.3
INCOME TAXES
3 Months Ended
Sep. 30, 2019
INCOME TAXES  
INCOME TAXES

9.    INCOME TAXES

Three Months Ended

September 30, 

September 30, 

    

2019

    

2018

    

(Amounts in thousands, except rate)

Income tax (benefit) expense

$

(23,525)

$

4,115

Effective tax rate

(51.9%)

25.6%

The decrease in the effective tax rate for the three months ended September 30, 2019, as compared to the three months ended September 30, 2018, was attributable to discrete tax benefits ($32.3 million) primarily related to the remeasurement of certain deferred tax assets and a net step-up in the basis of tax assets due to the enactment of the Federal Act on Tax Reform and AHV Financing in Zug, Switzerland on September 3, 2019.

v3.19.3
SEGMENT INFORMATION
3 Months Ended
Sep. 30, 2019
SEGMENT INFORMATION  
SEGMENT INFORMATION

10.    SEGMENT INFORMATION

The Company manages its business under two reportable segments, consisting of the acquisition and management of stream interests and the acquisition and management of royalty interests.  Royal Gold’s long-lived assets (stream and royalty interests, net) are geographically distributed as shown in the following table:

As of September 30, 2019

As of June 30, 2019

Total stream

Total stream

Stream

Royalty

and royalty

Stream

Royalty

and royalty

  

interest

  

interest

  

interests, net

  

interest

  

interest

interests, net

Canada

$

756,174

$

197,409

$

953,583

$

767,749

$

200,251

$

968,000

Dominican Republic

441,443

441,443

451,585

451,585

Chile

294,408

214,225

508,633

301,507

214,226

515,733

Africa

86,910

321

87,231

89,555

321

89,876

Mexico

81,920

81,920

83,748

83,748

United States

162,412

162,412

163,398

163,398

Australia

31,187

31,187

31,944

31,944

Rest of world

12,039

26,570

38,609

12,039

22,993

35,032

Total

$

1,590,974

$

714,044

$

2,305,018

$

1,622,435

$

716,881

2,339,316

The Company’s reportable segments for purposes of assessing performance are shown below (amounts in thousands):

Three Months Ended September 30, 2019

    

Revenue

    

Cost of sales (1)

    

Production taxes

    

Depletion (2)

    

Segment gross profit

Stream interests

$

86,981

$

20,111

$

$

31,462

$

35,408

Royalty interests

31,793

1,099

7,199

23,495

Total

$

118,774

$

20,111

$

1,099

$

38,661

$

58,903

Three Months Ended September 30, 2018

    

Revenue

    

Cost of sales (1)

    

Production taxes

    

Depletion (2)

    

Segment gross profit

Stream interests

$

70,037

$

16,527

$

$

32,097

$

21,413

Royalty interests

29,955

1,292

10,408

18,255

Total

$

99,992

$

16,527

$

1,292

$

42,505

$

39,668

(1)Excludes depreciation, depletion and amortization
(2)Depletion amounts are included within Depreciation, depletion and amortization on our consolidated statements of operations and comprehensive income.

A reconciliation of total segment gross profit to the consolidated Income before income taxes is shown below (amounts in thousands):

Three Months Ended

September 30, 

September 30, 

2019

2018

Total segment gross profit

$

58,903

$

39,668

Costs and expenses

General and administrative expenses

7,443

9,927

Exploration costs

2,626

4,362

Depreciation

53

46

Operating income

48,781

25,333

Fair value changes in equity securities

(1,375)

(1,468)

Interest and other income

775

103

Interest and other expense

(2,834)

(7,877)

Income before income taxes

$

45,347

$

16,091

The Company’s revenue by reportable segment for the three months ended September 30, 2019 and 2018 is geographically distributed as shown in the following table (amounts in thousands):

Three Months Ended

September 30, 

September 30, 

    

2019

    

2018

Stream interests:

Canada

$

37,663

$

14,747

Dominican Republic

21,618

19,486

Chile

20,604

27,742

Africa

7,096

8,062

Total stream interests

$

86,981

$

70,037

Royalty interests:

United States

$

10,602

$

6,056

Canada

8,921

10,181

Mexico

6,387

7,996

Australia

3,802

3,060

Africa

470

492

Rest of world

1,611

2,170

Total royalty interests

$

31,793

$

29,955

Total revenue

$

118,774

$

99,992

v3.19.3
FAIR VALUE MEASUREMENTS
3 Months Ended
Sep. 30, 2019
FAIR VALUE MEASUREMENTS  
FAIR VALUE MEASUREMENTS

11.  FAIR VALUE MEASUREMENTS

ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  The three levels of the fair value hierarchy under ASC 820 are described below:

Level 1:   Quoted prices for identical instruments in active markets;

Level 2:   Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

Level 3:   Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The following table sets forth the Company’s financial assets measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy.

As of September 30, 2019

Carrying

Fair Value

    

Amount

    

Total

    

Level 1

    

Level 2

    

Level 3

Assets (In thousands):

Marketable equity securities(1)

$

14,970

$

14,970

$

14,200

$

770

$

(1) Included in Other assets on the Company’s consolidated balance sheets.

The Company’s marketable equity securities classified within Level 1 of the fair value hierarchy are valued using quoted market prices in active markets multiplied by the quantity of shares held by the Company.  The warrants classified within Level 2 of the fair value hierarchy are valued each period using the Black-Scholes model.  The warrants are part of the TriStar transaction discussed further in Note 2 and have been classified as a financial asset instrument.  The carrying value of the Company’s revolving credit facility (Note 5) approximates fair value as of September 30, 2019.

As of September 30, 2019, the Company also had assets that, under certain conditions, are subject to measurement at fair value on a non-recurring basis like those associated with stream and royalty interests, intangible assets and other long-lived assets.  For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if any of these assets are determined to be impaired.  If recognition of these assets at their fair value becomes necessary, such measurements will be determined utilizing Level 3 inputs.  

v3.19.3
COMMITMENTS AND CONTINGENCIES
3 Months Ended
Sep. 30, 2019
COMMITMENTS AND CONTINGENCIES  
COMMITMENTS AND CONTINGENCIES

12. COMMITMENTS AND CONTINGENCIES

Khoemacau Silver Stream Acquisition

As of September 30, 2019, the Company’s conditional funding schedule for $212 million pursuant to its Khoemacau silver stream acquisition made in February 2019 remains subject to certain conditions.  On November 5, 2019, the Company’s wholly-owned subsidiary, RGLD Gold AG, made its first advance payment ($65.8 million) pursuant to the Khoemacau silver stream.  Refer to our Fiscal 2019 10-K for further details on the Khoemacau silver stream acquisition.

Ilovica Gold Stream Acquisition

As of September 30, 2019, the Company’s conditional funding schedule for $163.75 million related to its Ilovica gold stream acquisition made in October 2014 remains subject to certain conditions.

v3.19.3
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS (Policies)
3 Months Ended
Sep. 30, 2019
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS  
Basis of Consolidation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements.  In the opinion of management, all adjustments which are of a normal recurring nature considered necessary for a fair presentation of our interim financial statements have been included in this Form 10-Q.  Operating results for the three months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2020.  These interim unaudited financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019 filed with the Securities and Exchange Commission on August 8, 2019 (“Fiscal 2019 10-K”).

Certain amounts in the prior period consolidated balance sheet have been reclassified for comparative purposes to conform with the presentation in the current period balance sheet.  Reclassified amounts were not material.  

Recently Adopted and Recently Issued Accounting Standards

Recently Adopted Accounting Standards

Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which requires recognition of right-of-use assets and lease payment liabilities on the balance sheet by lessees for all leases with terms greater than twelve months.  Classification of leases as either a finance or operating lease will determine the recognition, measurement and presentation of expenses. ASU 2016-02 also requires certain quantitative and qualitative disclosures about material leasing arrangements.

Subsequently, in July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”). ASU 2018-11 provides an additional modified retrospective transition method for adopting ASU 2016-02, which eliminates the need for adjusting prior period comparable financial statements prepared under legacy lease accounting guidance.

ASU 2016-02, together with ASU 2018-11, is effective for the Company July 1, 2019. The Company adopted the new guidance using the modified retrospective approach set forth in ASU 2018-11, with the date of initial application on July 1, 2019.  Comparative reporting periods were not adjusted upon adoption.

As permitted under the transition guidance, the Company has elected to use the following practical expedients at transition:

To not reassess whether any expired or existing contracts were or contained leases; and
To not reassess the lease classification for any expired or existing leases.

In addition, the Company has elected to use the following practical expedients at and subsequent to adoption in accordance with ASU 2016-02:

Not to separate non-lease from lease components, and instead account for each lease component and any associated non-lease components as a single lease component; and
Not to recognize right-of-use assets and associated liabilities for short-term contracts with lease terms of 12 months or less.

The Company’s significant lease arrangements relate to its office spaces. These arrangements are for leases of assets such as corporate office space and office equipment.  Through the implementation process, the Company evaluated its lease arrangements, which included an analysis of contracts, and updated its internal controls and processes that are necessary to track and calculate the additional accounting and disclosure requirements as required upon adoption of ASU 2016-02.

Upon adoption, the new standard had an insignificant impact on the Company’s consolidated balance sheets as of September 30, 2019.  Adoption of the new standard resulted in the recognition of $2.4 million of right-of-use assets on our consolidated balance sheets with an offsetting $2.4 million of lease liabilities for operating leases.  The current portion of our right of use assets are included in Prepaid expenses and other, while the long-term portion is included in Other assets on our consolidated balance sheets.  The current portion of the offsetting lease liabilities are included in Other current liabilities, while the long-term portion is included in Other long-term liabilities on our consolidated balance sheets.  The Company did not have any finance leases as of September 30, 2019.  The adoption of ASU 2016-02 did not impact accumulated losses, our consolidated statements of operations and comprehensive income, and our consolidated statements of cash flows.

v3.19.3
STREAM AND ROYALTY INTERESTS, NET (Tables)
3 Months Ended
Sep. 30, 2019
STREAM AND ROYALTY INTERESTS, NET  
Schedule of stream and royalty interests

As of September 30, 2019 (Amounts in thousands):

    

Cost

    

Accumulated Depletion

    

Net

Production stage stream interests:

Mount Milligan

$

790,635

$

(192,726)

$

597,909

Pueblo Viejo

610,404

(168,961)

441,443

Andacollo

388,182

(93,774)

294,408

Rainy River

175,727

(17,462)

158,265

Wassa and Prestea

146,475

(59,565)

86,910

Total production stage stream interests

2,111,423

(532,488)

1,578,935

Production stage royalty interests:

Voisey's Bay

205,724

(97,136)

108,588

Peñasquito

99,172

(41,414)

57,758

Holt

34,612

(22,936)

11,676

Cortez

80,681

(12,777)

67,904

Other

487,224

(390,591)

96,633

Total production stage royalty interests

907,413

(564,854)

342,559

Total production stage stream and royalty interests

3,018,836

(1,097,342)

1,921,494

Development stage stream interests:

Other

12,038

12,038

Development stage royalty interests:

Other

70,952

70,952

Total development stage stream and royalty interests

82,990

82,990

Exploration stage royalty interests:

Pascua-Lama

177,690

177,690

Other

122,844

122,844

Total exploration stage royalty interests

300,534

300,534

Total stream and royalty interests, net

$

3,402,360

$

(1,097,342)

$

2,305,018

As of June 30, 2019 (Amounts in thousands):

    

Cost

    

Accumulated Depletion

    

Net

Production stage stream interests:

Mount Milligan

$

790,635

$

(184,091)

$

606,544

Pueblo Viejo

610,404

(158,819)

451,585

Andacollo

388,182

(86,675)

301,507

Rainy River

175,727

(14,522)

161,205

Wassa and Prestea

146,475

(56,919)

89,556

Total production stage stream interests

2,111,423

(501,026)

1,610,397

Total production stage stream and royalty interests

Production stage royalty interests:

Voisey's Bay

205,724

(95,564)

110,160

Peñasquito

99,172

(40,659)

58,513

Holt

34,612

(22,570)

12,042

Cortez

20,878

(12,362)

8,516

Other

487,224

(386,501)

100,723

Total production stage royalty interests

847,610

(557,656)

289,954

Total production stage stream and royalty interests

2,959,033

(1,058,682)

1,900,351

Development stage stream interests:

Other

12,038

12,038

Development stage royalty interests:

Cortez

59,803

59,803

Other

70,952

70,952

Total development stage royalty interests

130,755

130,755

Total development stage stream and royalty interests

142,793

142,793

Exploration stage royalty interests:

Pascua-Lama

177,690

177,690

Other

118,482

118,482

Total exploration stage royalty interests

296,172

296,172

Total stream and royalty interests, net

$

3,397,998

$

(1,058,682)

$

2,339,316

v3.19.3
DEBT (Tables)
3 Months Ended
Sep. 30, 2019
DEBT  
Schedule of debt

As of September 30, 2019

As of June 30, 2019

   

Principal

   

Debt Issuance Costs

   

Total

   

Principal

   

Debt Issuance Costs

   

Total

(Amounts in thousands)

(Amounts in thousands)

Revolving credit facility

$

170,000

$

(5,405)

$

164,595

$

220,000

$

(5,446)

$

214,554

Total debt

$

170,000

$

(5,405)

$

164,595

$

220,000

$

(5,446)

$

214,554

v3.19.3
REVENUE (Tables)
3 Months Ended
Sep. 30, 2019
REVENUE  
Summary of disaggregated revenue

Revenue by metal type attributable to each of our revenue sources is disaggregated as follows:  

Three Months Ended

September 30, 

September 30, 

2019

2018

Stream revenue:

    Gold

$

72,224

$

59,114

    Silver

8,436

8,720

    Copper

6,321

2,203

         Total stream revenue

$

86,981

$

70,037

Royalty revenue:

    Gold

$

21,757

$

18,554

    Silver

1,829

1,352

    Copper

2,980

3,615

    Other

5,227

6,434

         Total royalty revenue

$

31,793

$

29,955

Total revenue

$

118,774

$

99,992

Revenue attributable to our principal stream and royalty interests is disaggregated as follows:

Three Months Ended

September 30, 

September 30, 

Metal(s)

2019

2018

Stream revenue:

    Mount Milligan

Gold & Copper

$

30,497

$

8,847

    Pueblo Viejo

Gold & Silver

21,618

19,486

    Andacollo

Gold

20,604

27,743

    Wassa

Gold

5,319

5,325

    Rainy River

Gold & Silver

7,166

5,900

    Other

Gold & Silver

1,777

2,736

         Total stream revenue

$

86,981

$

70,037

Royalty revenue:

    Peñasquito

Gold, Silver, Lead & Zinc

$

4,420

$

3,637

    Cortez

Gold

4,417

603

    Other

Various

22,956

25,715

         Total royalty revenue

$

31,793

$

29,955

Total revenue

$

118,774

$

99,992

v3.19.3
STOCK-BASED COMPENSATION (Tables)
3 Months Ended
Sep. 30, 2019
STOCK-BASED COMPENSATION  
Schedule of recognized stock-based compensation expense

Three Months Ended

September 30, 

September 30, 

    

2019

    

2018

    

(Amounts in thousands)

Stock options

$

31

$

120

Stock appreciation rights

442

766

Restricted stock

1,243

1,280

Performance stock

385

278

Total stock-based compensation expense

$

2,101

$

2,444

Schedule of stock-based compensation awards

Three Months Ended

September 30, 

September 30, 

    

2019

    

2018

(Number of shares)

Stock options

1,604

6,430

Stock appreciation rights

46,726

69,360

Restricted stock

23,976

42,260

Performance stock (at maximum 200% attainment)

28,560

57,420

Total equity awards granted

100,866

175,470

Schedule of unrecognized compensation expense

As of September 30, 2019, unrecognized compensation expense (expressed in thousands below) and weighted-average vesting period for each of our stock-based compensation awards were as follows:

Unrecognized

    

Weighted-

compensation

average vesting

expense

    

period (years)

Stock options

$

160

1.9

Stock appreciation rights

3,012

2.2

Restricted stock

6,140

3.3

Performance stock

2,522

2.1

v3.19.3
EARNINGS PER SHARE ("EPS") (Tables)
3 Months Ended
Sep. 30, 2019
EARNINGS PER SHARE ("EPS")  
Summary of the effects of dilutive securities on diluted EPS

Three Months Ended

September 30, 

September 30, 

    

2019

    

2018

    

(in thousands, except per share data)

Net income available to Royal Gold common stockholders

$

70,453

$

15,008

Weighted-average shares for basic EPS

65,465,611

65,374,866

Effect of other dilutive securities

150,315

122,293

Weighted-average shares for diluted EPS

65,615,926

65,497,159

Basic earnings per share

$

1.07

$

0.23

Diluted earnings per share

$

1.07

$

0.23

v3.19.3
INCOME TAXES (Tables)
3 Months Ended
Sep. 30, 2019
INCOME TAXES  
Schedule of income tax expense and effective tax rate

Three Months Ended

September 30, 

September 30, 

    

2019

    

2018

    

(Amounts in thousands, except rate)

Income tax (benefit) expense

$

(23,525)

$

4,115

Effective tax rate

(51.9%)

25.6%

v3.19.3
SEGMENT INFORMATION (Tables)
3 Months Ended
Sep. 30, 2019
SEGMENT INFORMATION  
Schedule of geographical distribution of long-lived assets

As of September 30, 2019

As of June 30, 2019

Total stream

Total stream

Stream

Royalty

and royalty

Stream

Royalty

and royalty

  

interest

  

interest

  

interests, net

  

interest

  

interest

interests, net

Canada

$

756,174

$

197,409

$

953,583

$

767,749

$

200,251

$

968,000

Dominican Republic

441,443

441,443

451,585

451,585

Chile

294,408

214,225

508,633

301,507

214,226

515,733

Africa

86,910

321

87,231

89,555

321

89,876

Mexico

81,920

81,920

83,748

83,748

United States

162,412

162,412

163,398

163,398

Australia

31,187

31,187

31,944

31,944

Rest of world

12,039

26,570

38,609

12,039

22,993

35,032

Total

$

1,590,974

$

714,044

$

2,305,018

$

1,622,435

$

716,881

2,339,316

Schedule of reportable segments for assessing performance

The Company’s reportable segments for purposes of assessing performance are shown below (amounts in thousands):

Three Months Ended September 30, 2019

    

Revenue

    

Cost of sales (1)

    

Production taxes

    

Depletion (2)

    

Segment gross profit

Stream interests

$

86,981

$

20,111

$

$

31,462

$

35,408

Royalty interests

31,793

1,099

7,199

23,495

Total

$

118,774

$

20,111

$

1,099

$

38,661

$

58,903

Three Months Ended September 30, 2018

    

Revenue

    

Cost of sales (1)

    

Production taxes

    

Depletion (2)

    

Segment gross profit

Stream interests

$

70,037

$

16,527

$

$

32,097

$

21,413

Royalty interests

29,955

1,292

10,408

18,255

Total

$

99,992

$

16,527

$

1,292

$

42,505

$

39,668

(1)Excludes depreciation, depletion and amortization
(2)Depletion amounts are included within Depreciation, depletion and amortization on our consolidated statements of operations and comprehensive income.
Schedule of reconciliation of segment gross profit to consolidated income (loss)

A reconciliation of total segment gross profit to the consolidated Income before income taxes is shown below (amounts in thousands):

Three Months Ended

September 30, 

September 30, 

2019

2018

Total segment gross profit

$

58,903

$

39,668

Costs and expenses

General and administrative expenses

7,443

9,927

Exploration costs

2,626

4,362

Depreciation

53

46

Operating income

48,781

25,333

Fair value changes in equity securities

(1,375)

(1,468)

Interest and other income

775

103

Interest and other expense

(2,834)

(7,877)

Income before income taxes

$

45,347

$

16,091

Schedule of revenue by reportable segment geographically distributed

The Company’s revenue by reportable segment for the three months ended September 30, 2019 and 2018 is geographically distributed as shown in the following table (amounts in thousands):

Three Months Ended

September 30, 

September 30, 

    

2019

    

2018

Stream interests:

Canada

$

37,663

$

14,747

Dominican Republic

21,618

19,486

Chile

20,604

27,742

Africa

7,096

8,062

Total stream interests

$

86,981

$

70,037

Royalty interests:

United States

$

10,602

$

6,056

Canada

8,921

10,181

Mexico

6,387

7,996

Australia

3,802

3,060

Africa

470

492

Rest of world

1,611

2,170

Total royalty interests

$

31,793

$

29,955

Total revenue

$

118,774

$

99,992

v3.19.3
FAIR VALUE MEASUREMENTS (Tables)
3 Months Ended
Sep. 30, 2019
FAIR VALUE MEASUREMENTS  
Schedule of financial assets and liabilities measured at fair value on recurring basis

As of September 30, 2019

Carrying

Fair Value

    

Amount

    

Total

    

Level 1

    

Level 2

    

Level 3

Assets (In thousands):

Marketable equity securities(1)

$

14,970

$

14,970

$

14,200

$

770

$

(1) Included in Other assets on the Company’s consolidated balance sheets.

v3.19.3
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS (Details)
3 Months Ended
Sep. 30, 2019
item
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS  
Minimum number of metals produced from a mine 1
v3.19.3
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS - Recently Adopted Accounting Standards (Details)
$ in Millions
Sep. 30, 2019
USD ($)
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS  
Right-of-use assets $ 2.4
Operating lease liabilities $ 2.4
v3.19.3
ACQUISITION (Details)
$ in Thousands
1 Months Ended 3 Months Ended
Aug. 31, 2019
USD ($)
payment
shares
Sep. 30, 2019
USD ($)
shares
Sep. 30, 2018
USD ($)
Aug. 31, 2019
$ / shares
Jun. 30, 2019
USD ($)
Acquisitions          
Acquisition consideration paid   $ 4,362 $ 3    
Investment value   $ 15,000     $ 16,000
TriStar          
Acquisitions          
Common stock that can be purchased by warrants (in shares) | shares   11,784,000      
CDS          
Acquisitions          
Net smelter return (NSR) (as a percent) 1.50%        
Acquisition consideration $ 7,500        
Number of installments | payment 3        
Acquisition consideration paid $ 4,500        
First installment 1,500        
Second installment 1,500        
Acquisition payment, excluding associated costs $ 4,400        
CDS | TriStar          
Acquisitions          
Common stock that can be purchased by warrants (in shares) | shares 19,640,000 11,784,000      
Investment value   $ 800      
Exercise price of warrants | $ / shares       $ 0.25  
Term of warrants 5 years        
v3.19.3
STREAM AND ROYALTY INTERESTS, NET - Summary (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Jun. 30, 2019
Cost $ 3,402,360 $ 3,397,998
Accumulated Depletion (1,097,342) (1,058,682)
Net 2,305,018 2,339,316
Mount Milligan    
Net 597,900  
Total production stage stream and royalty interests    
Cost 3,018,836 2,959,033
Accumulated Depletion (1,097,342) (1,058,682)
Net 1,921,494 1,900,351
Production stage stream interests    
Cost 2,111,423 2,111,423
Accumulated Depletion (532,488) (501,026)
Net 1,578,935 1,610,397
Production stage stream interests | Mount Milligan    
Cost 790,635 790,635
Accumulated Depletion (192,726) (184,091)
Net 597,909 606,544
Production stage stream interests | Pueblo Viejo    
Cost 610,404 610,404
Accumulated Depletion (168,961) (158,819)
Net 441,443 451,585
Production stage stream interests | Andacollo    
Cost 388,182 388,182
Accumulated Depletion (93,774) (86,675)
Net 294,408 301,507
Production stage stream interests | Rainy River    
Cost 175,727 175,727
Accumulated Depletion (17,462) (14,522)
Net 158,265 161,205
Production stage stream interests | Wassa and Prestea    
Cost 146,475 146,475
Accumulated Depletion (59,565) (56,919)
Net 86,910 89,556
Production stage royalty interests    
Cost 907,413 847,610
Accumulated Depletion (564,854) (557,656)
Net 342,559 289,954
Production stage royalty interests | Voisey's Bay    
Cost 205,724 205,724
Accumulated Depletion (97,136) (95,564)
Net 108,588 110,160
Production stage royalty interests | Penasquito    
Cost 99,172 99,172
Accumulated Depletion (41,414) (40,659)
Net 57,758 58,513
Production stage royalty interests | Holt    
Cost 34,612 34,612
Accumulated Depletion (22,936) (22,570)
Net 11,676 12,042
Production stage royalty interests | Cortez    
Cost 80,681 20,878
Accumulated Depletion (12,777) (12,362)
Net 67,904 8,516
Production stage royalty interests | Other    
Cost 487,224 487,224
Accumulated Depletion (390,591) (386,501)
Net 96,633 100,723
Total development stage stream and royalty interests    
Cost 82,990 142,793
Net 82,990 142,793
Development stage stream interests | Other    
Cost 12,038 12,038
Net 12,038 12,038
Development stage royalty interests    
Cost   130,755
Net   130,755
Development stage royalty interests | Cortez    
Cost   59,803
Net   59,803
Development stage royalty interests | Other    
Cost 70,952 70,952
Net 70,952 70,952
Exploration stage royalty interests    
Cost 300,534 296,172
Net 300,534 296,172
Exploration stage royalty interests | Pascua-Lama    
Cost 177,690 177,690
Net 177,690 177,690
Exploration stage royalty interests | Other    
Cost 122,844 118,482
Net $ 122,844 $ 118,482
v3.19.3
STREAM AND ROYALTY INTERESTS, NET (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Jun. 30, 2019
Stream and royalty interests, net $ 2,305,018 $ 2,339,316
Mount Milligan    
Gold streaming interest (as a percent) 35.00%  
Copper streaming interest (as a percent) 18.75%  
Stream and royalty interests, net $ 597,900  
El Toqui    
Stream and royalty interests, net 1,400  
Evaluation stage property    
Stream and royalty interests, net $ 2,700  
v3.19.3
MARKETABLE EQUITY SECURITIES (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Jun. 30, 2019
Marketable Securities      
Fair value changes in equity securities $ (1,375) $ (1,468)  
Investment value $ 15,000   $ 16,000
Contango      
Marketable Securities      
Investment shares owned (in shares) 809,744    
Rubicon      
Marketable Securities      
Investment shares owned (in shares) 3,949,575    
TriStar      
Marketable Securities      
Common stock that can be purchased by warrants (in shares) 11,784,000    
v3.19.3
DEBT (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Jun. 30, 2019
Long-term debt disclosure      
Principal $ 170,000   $ 220,000
Debt Issuance Costs (5,405)   (5,446)
Total debt 164,595   214,554
Repayment of debt 50,000    
Credit Facility      
Long-term debt disclosure      
Principal 170,000   220,000
Debt Issuance Costs (5,405)   (5,446)
Total debt 164,595   $ 214,554
Outstanding amount under credit facility 170,000    
Available under the revolving credit facility $ 830,000    
Effective interest rate (as percent) 3.24%    
Interest expense recognized $ 2,200 $ 300  
LIBOR | Credit Facility      
Long-term debt disclosure      
Basis spread on interest rate (as a percent) 1.10%    
v3.19.3
REVENUE (Details)
3 Months Ended
Sep. 30, 2019
item
Number of revenue sources 2
Minimum  
Average sale price determination period 10 days
Maximum  
Average sale price determination period 3 months
v3.19.3
REVENUE - Metal Disaggregation (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Disaggregation of Revenue    
Revenue $ 118,774 $ 99,992
Stream interests    
Disaggregation of Revenue    
Revenue 86,981 70,037
Stream interests | Gold    
Disaggregation of Revenue    
Revenue 72,224 59,114
Stream interests | Silver    
Disaggregation of Revenue    
Revenue 8,436 8,720
Stream interests | Copper    
Disaggregation of Revenue    
Revenue 6,321 2,203
Royalty interests    
Disaggregation of Revenue    
Revenue 31,793 29,955
Royalty interests | Gold    
Disaggregation of Revenue    
Revenue 21,757 18,554
Royalty interests | Silver    
Disaggregation of Revenue    
Revenue 1,829 1,352
Royalty interests | Copper    
Disaggregation of Revenue    
Revenue 2,980 3,615
Royalty interests | Other    
Disaggregation of Revenue    
Revenue $ 5,227 $ 6,434
v3.19.3
REVENUE - Property Disaggregation (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Disaggregation of Revenue    
Revenue $ 118,774 $ 99,992
Stream interests    
Disaggregation of Revenue    
Revenue 86,981 70,037
Stream interests | Mount Milligan    
Disaggregation of Revenue    
Revenue 30,497 8,847
Stream interests | Pueblo Viejo    
Disaggregation of Revenue    
Revenue 21,618 19,486
Stream interests | Andacollo    
Disaggregation of Revenue    
Revenue 20,604 27,743
Stream interests | Wassa and Prestea    
Disaggregation of Revenue    
Revenue 5,319 5,325
Stream interests | Rainy River    
Disaggregation of Revenue    
Revenue 7,166 5,900
Stream interests | Other    
Disaggregation of Revenue    
Revenue 1,777 2,736
Royalty interests    
Disaggregation of Revenue    
Revenue 31,793 29,955
Royalty interests | Other    
Disaggregation of Revenue    
Revenue 22,956 25,715
Royalty interests | Penasquito    
Disaggregation of Revenue    
Revenue 4,420 3,637
Royalty interests | Cortez    
Disaggregation of Revenue    
Revenue $ 4,417 $ 603
v3.19.3
REVENUE - Contract Receivables (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Jun. 30, 2019
Contract Receivables    
Royalty payments monthly due period 30 days  
Royalty receivables $ 26,635 $ 20,733
Minimum    
Contract Receivables    
Royalty payments quarterly due period 30 days  
Maximum    
Contract Receivables    
Royalty payments quarterly due period 60 days  
v3.19.3
REVENUE - Practical expedients (Details)
3 Months Ended
Sep. 30, 2019
Practical Expedients  
Obligation period practical expedient true
Transaction price allocated to remaining performance obligations true
v3.19.3
STOCK-BASED COMPENSATION (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Stock-based compensation    
Stock-based compensation expense $ 2,101 $ 2,444
Stock-based compensation awards granted (in shares) 100,866 175,470
Stock options    
Stock-based compensation    
Stock-based compensation expense $ 31 $ 120
Stock options granted (in shares) 1,604 6,430
Unrecognized compensation expense $ 160  
Weighted-average vesting period (years) 1 year 10 months 24 days  
Stock appreciation rights    
Stock-based compensation    
Stock-based compensation expense $ 442 $ 766
Other than options granted (in shares) 46,726 69,360
Unrecognized compensation expense $ 3,012  
Weighted-average vesting period (years) 2 years 2 months 12 days  
Restricted stock    
Stock-based compensation    
Stock-based compensation expense $ 1,243 $ 1,280
Other than options granted (in shares) 23,976 42,260
Unrecognized compensation expense $ 6,140  
Weighted-average vesting period (years) 3 years 3 months 18 days  
Performance stock    
Stock-based compensation    
Stock-based compensation expense $ 385 $ 278
Other than options granted (in shares) 28,560 57,420
Unrecognized compensation expense $ 2,522  
Weighted-average vesting period (years) 2 years 1 month 6 days  
Performance stock | Maximum    
Stock-based compensation    
Earn out basis if all goals are met (as a percent) 200.00%  
v3.19.3
EARNINGS PER SHARE ("EPS") (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
EARNINGS PER SHARE ("EPS")    
Net income (loss) available to Royal Gold common stockholders $ 70,453 $ 15,008
Weighted-average shares for basic EPS 65,465,611 65,374,866
Effect of other dilutive securities (in shares) 150,315 122,293
Weighted-average shares for diluted EPS 65,615,926 65,497,159
Basic earnings per share (in dollars per share) $ 1.07 $ 0.23
Diluted earnings per share (in dollars per share) $ 1.07 $ 0.23
v3.19.3
INCOME TAXES (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
INCOME TAXES    
Income tax benefit (expense) $ 23,525 $ (4,115)
Effective tax rate (as a percent) (51.90%) 25.60%
Re-measurement of net deferred tax assets and liabilities due to tax legislation $ (32,300)  
v3.19.3
SEGMENT INFORMATION (Details)
$ in Thousands
3 Months Ended
Sep. 30, 2019
USD ($)
segment
Sep. 30, 2018
USD ($)
Jun. 30, 2019
USD ($)
Long Lived Assets and Pre-Tax Income by Geographical Information      
Number of reportable segments | segment 2    
Stream and royalty interests, net $ 2,305,018   $ 2,339,316
Revenue 118,774 $ 99,992  
Cost of sales 20,111 16,527  
Production taxes 1,099 1,292  
Depletion 38,661 42,505  
Total segment gross profit 58,903 39,668  
Canada      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 953,583   968,000
Dominican Republic      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 441,443   451,585
Chile      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 508,633   515,733
Africa      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 87,231   89,876
Mexico      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 81,920   83,748
United States      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 162,412   163,398
Australia      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 31,187   31,944
Rest of world      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 38,609   35,032
Stream interests      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 1,590,974   1,622,435
Revenue 86,981 70,037  
Cost of sales 20,111 16,527  
Depletion 31,462 32,097  
Total segment gross profit 35,408 21,413  
Stream interests | Canada      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 756,174   767,749
Revenue 37,663 14,747  
Stream interests | Dominican Republic      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 441,443   451,585
Revenue 21,618 19,486  
Stream interests | Chile      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 294,408   301,507
Revenue 20,604 27,742  
Stream interests | Africa      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 86,910   89,555
Revenue 7,096 8,062  
Stream interests | Rest of world      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 12,039   12,039
Royalty interests      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 714,044   716,881
Revenue 31,793 29,955  
Production taxes 1,099 1,292  
Depletion 7,199 10,408  
Total segment gross profit 23,495 18,255  
Royalty interests | Canada      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 197,409   200,251
Revenue 8,921 10,181  
Royalty interests | Chile      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 214,225   214,226
Royalty interests | Africa      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 321   321
Revenue 470 492  
Royalty interests | Mexico      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 81,920   83,748
Revenue 6,387 7,996  
Royalty interests | United States      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 162,412   163,398
Revenue 10,602 6,056  
Royalty interests | Australia      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 31,187   31,944
Revenue 3,802 3,060  
Royalty interests | Rest of world      
Long Lived Assets and Pre-Tax Income by Geographical Information      
Stream and royalty interests, net 26,570   $ 22,993
Revenue $ 1,611 $ 2,170  
v3.19.3
SEGMENT INFORMATION - Reconciliation of total segment gross profit (Details) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2019
Sep. 30, 2018
SEGMENT INFORMATION    
Total segment gross profit $ 58,903 $ 39,668
Costs and expenses    
General and administrative expenses 7,443 9,927
Exploration costs 2,626 4,362
Depreciation 53 46
Operating income (loss) 48,781 25,333
Fair value changes in equity securities (1,375) (1,468)
Interest and other income 775 103
Interest and other expense (2,834) (7,877)
Income before income taxes $ 45,347 $ 16,091
v3.19.3
FAIR VALUE MEASUREMENTS (Details) - Recurring basis
$ in Thousands
Sep. 30, 2019
USD ($)
Carrying Amount  
Assets:  
Marketable equity securities $ 14,970
Fair Value  
Assets:  
Marketable equity securities 14,970
Level 1  
Assets:  
Marketable equity securities 14,200
Level 2  
Assets:  
Marketable equity securities $ 770
v3.19.3
COMMITMENTS AND CONTINGENCIES (Details) - USD ($)
$ in Thousands
3 Months Ended
Nov. 05, 2019
Sep. 30, 2019
Commitments and Contingencies    
Commitment payment made $ 65,800  
Khoemacau    
Commitments and Contingencies    
Maximum contribution amount   $ 212,000
Ilovica    
Commitments and Contingencies    
Maximum future additional payments upon satisfaction of certain conditions   $ 163,750