UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2009

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Royal Gold, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware (State or Other Jurisdiction of Incorporation)		84-0835164 (I.R.S. Employer Identification No.)
1660 Wynkoop Street, Suite 1000
Denver, Colorado		80202
(Address of Principal Executive Office)		(Zip Code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ   No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date: 40,718,666 shares of the Company’s common stock, par value $0.01 per share, were outstanding as of April 30, 2009.

 

 

Introductory Note:

On November 6, 2008, the Company filed an amended Annual Report on Form 10-K/A with the Securities and Exchange Commission (“SEC”) restating the Company’s annual financial statements for fiscal year 2008, and for each of the quarters comprising fiscal year 2008, due to an error in the accounting for royalty revenues as discussed in Note 1 to the consolidated financial statements contained herein. The financial statements and related disclosures for the three and nine months ended March 31, 2008 have been restated in this document to reflect the error in the accounting for royalty revenue.

INDEX

		PAGE
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets			2
Consolidated Statements of Operations and Comprehensive Income			3
Consolidated Statements of Cash Flows			5
Notes to Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3. Quantitative and Qualitative Disclosures About Market Risk			41
Item 4. Controls and Procedures			41
PART II OTHER INFORMATION
Item 1. Legal Proceedings			42
Item 1A. Risk Factors			42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			44
Item 3. Defaults Upon Senior Securities			44
Item 4. Submission of Matters to a Vote of Security Holders			44
Item 5. Other Information			44
Item 6. Exhibits			45
SIGNATURES			46
EX-31.1
EX-31.2
EX-32.1
EX-32.2

ROYAL GOLD, INC.

Consolidated Balance Sheets

(Unaudited, in thousands except share data)

		March 31,				June 30,
		2009				2008
						(As Restated)
Current assets
Cash and equivalents		$	50,538			$	192,035
Royalty receivables			18,248				16,317
Income taxes receivable			2,038				2,186
Deferred tax assets			91				131
Prepaid expenses and other			1,429				308
Total current assets			72,344				210,977
Royalty interests in mineral properties, net (Note 3)			466,282				300,670
Restricted cash — compensating balance			19,250				15,750
Inventory — restricted			11,052				11,170
Other assets			5,786				7,283
Total assets		$	574,714			$	545,850
Current liabilities
Accounts payable		$	5,702			$	4,753
Dividends payable			2,738				2,384
Other			2,135				1,797
Total current liabilities			10,575				8,934
Net deferred tax liabilities			23,468				26,034
Term loan facility (Note 5)			19,250				15,750
Other long-term liabilities			688				504
Total liabilities			53,981				51,222
Commitments and contingencies (Note 11)
Minority interest in subsidiary			11,416				11,411
Stockholders’ equity
Common stock, $0.01 par value, authorized 100,000,000 shares; and issued 33,958,082 and 33,926,495 shares, respectively			340				339
Additional paid-in capital			466,100				463,335
Accumulated other comprehensive (loss) income			(32	)			65
Accumulated earnings			42,909				19,478
Total stockholders’ equity			509,317				483,217
Total liabilities and stockholders’ equity		$	574,714			$	545,850

The accompanying notes are an integral part of these consolidated financial statements.

ROYAL GOLD, INC.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited, in thousands except share data)

		For The Three Months Ended
		March 31,				March 31,
		2009				2008
						(As Restated)
Royalty revenues		$	20,797			$	18,731
Costs and expenses
Costs of operations (exclusive of depreciation, depletion and amortization shown separately below)			1,154				1,006
General and administrative			1,812				1,981
Exploration and business development			732				817
Depreciation, depletion and amortization			9,960				5,925
Total costs and expenses			13,658				9,729
Operating income			7,139				9,002
Interest and other income			1,075				1,715
Interest and other expense			(266	)			(330	)
Income before income taxes			7,948				10,387
Income tax expense			(2,534	)			(3,358	)
Minority interest in income of consolidated subsidiary			(1,272	)			(140	)
Net income		$	4,142			$	6,889
Adjustments to comprehensive income
Unrealized change in market value of available for sale securities, net of tax			(24	)			(109	)
Comprehensive income		$	4,118			$	6,780
Net income		$	4,142			$	6,889
Preferred dividends			—				(3,584	)
Net income available to common stockholders		$	4,142			$	3,305
Basic earnings per share		$	0.12			$	0.11
Basic weighted average shares outstanding			34,008,758				30,932,084
Diluted earnings per share		$	0.12			$	0.11
Diluted weighted average shares outstanding			34,447,169				31,213,663

The accompanying notes are an integral part of these consolidated financial statements.

ROYAL GOLD, INC.
Consolidated Statements of Operations and Comprehensive Income
(Unaudited, in thousands except share data)

		For The Nine Months Ended
		March 31,				March 31,
		2009				2008
						(As Restated)
Royalty revenues		$	51,499			$	45,944
Costs and expenses
Costs of operations (exclusive of depreciation, depletion and amortization shown separately below)			2,615				2,748
General and administrative			5,604				5,509
Exploration and business development			2,369				3,298
Depreciation, depletion, and amortization			22,921				11,933
Total costs and expenses			33,509				23,488
Operating income			17,990				22,456
Gain on royalty restructuring (Note 2)			31,500				—
Interest and other income			2,198				5,667
Interest and other expense			(929	)			(1,492	)
Income before income taxes			50,759				26,631
Income tax expense			(17,660	)			(8,362	)
Minority interest in income of consolidated subsidiary			(1,810	)			(682	)
Loss from equity investment			—				(550	)
Net income		$	31,289			$	17,037
Adjustments to comprehensive income
Unrealized loss in market value of available for sale securities, net of tax			(97	)			(282	)
Comprehensive income		$	31,192			$	16,755
Net income		$	31,289			$	17,037
Preferred dividends			—				(4,788	)
Net income available to common stockholders		$	31,289			$	12,249
Basic earnings per share		$	0.92			$	0.41
Basic weighted average shares outstanding			33,965,171				29,808,962
Diluted earnings per share		$	0.91			$	0.41
Diluted weighted average shares outstanding			34,402,551				30,134,888

The accompanying notes are an integral part of these consolidated financial statements.

ROYAL GOLD, INC.

		For The Nine Months Ended
		March 31,				March 31,
		2009				2008
						(As Restated)
Cash flows from operating activities
Net income		$	31,289			$	17,037
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization			22,921				11,933
Deferred tax benefit			(2,072	)			(1,154	)
Non-cash employee stock compensation expense			2,225				2,145
Gain on royalty restructuring (Note 2)			(31,500	)			—
Loss on available for sale securities			—				49
Note receivable — Battle Mountain Gold Exploration			—				(713	)
Tax benefit of stock-based compensation exercises			(289	)			(515	)
Changes in assets and liabilities:
Royalty receivables			(1,931	)			(695	)
Prepaid expenses and other assets			(857	)			(2,199	)
Accounts payable			1,457				2,921
Income taxes receivable			190				67
Other			(28	)			(171	)
Net cash provided by operating activities		$	21,405			$	28,705
Cash flows from investing activities
Acquisition of royalty interests in mineral properties			(186,110	)			(15,939	)
Proceeds from royalty restructuring (Note 2)			31,500				—
Restricted cash — compensating balance			(3,500	)			—
Proceeds on sale of Inventory — restricted			1,016				—
Deferred acquisition costs			(967	)			(63	)
Battle Mountain acquisition, net of cash acquired of $1,398,181			—				(2,933	)
Other			(97	)			(12	)
Net cash used in investing activities		$	(158,158	)		$	(18,947	)
Cash flows from financing activities:
Tax benefit of stock-based compensation exercises		$	289			$	515
Debt issuance costs			(785	)			(26	)
Term loan facility (Note 5)			3,500				—
Common dividends paid			(7,504	)			(5,869	)
Distribution to minority interest holder			(1,016	)			—
Preferred stock dividends paid			—				(2,802	)
Gold loan payoff — Battle Mountain			—				(6,852	)
Net proceeds from issuance of common stock			772				675
Net proceeds from issuance of preferred stock			—				111,098
Stock repurchase program			—				(5,516	)
Net cash (used in) provided by financing activities		$	(4,744	)		$	91,223
Net (decrease) increase in cash and equivalents			(141,497	)			100,981
Cash and equivalents at beginning of period			192,035				82,842
Cash and equivalents at end of period		$	50,538			$	183,823
Supplemental cash flow information:
Non-cash financing activities:
Conversion of preferred stock to common stock		$	—			$	116,946
Battle Mountain acquisition (with common stock)		$	—			$	35,832

The accompanying notes are an integral part of these consolidated financial statements.

Notes to Consolidated Financial Statements
(Unaudited)

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

Operations

Royal Gold, Inc. (“Royal Gold”, the “Company”, “we”, “us”, or “our”), together with its subsidiaries, is engaged in the business of acquiring and managing precious metals royalties. Royalties are passive (non-operating) interests in mining projects that provide the right to revenue or production from the project after deducting specified costs, if any.

We seek to acquire existing royalties and to create new royalties through the financing of mining, development or exploration projects in exchange for royalty interest. Substantially all of our revenues are and will be expected to be derived from royalty interests. We do not conduct mining operations.

Restatement

As part of the Company’s royalty monitoring program during the first fiscal quarter of 2009, Royal Gold identified a $3.1 million overpayment with respect to the Company’s GSR1 and GSR2 royalties at the Cortez Pipeline Mining Complex (“Cortez”), which the Company received and recognized as royalty revenues. The overpayment of the royalty was the result of the operator incorrectly including non-Royal Gold royalty production in the Company’s quarterly GSR1 and GSR2 royalty payments commencing in January 2007 and continuing through fiscal year 2008.

The error that caused the overpayment of royalty payments was not timely identified by our controls and procedures in place and $3.1 million was incorrectly recognized as royalty revenue, resulting in a material overstatement of royalty revenue for fiscal year 2008. On November 3, 2008, the Company’s Audit Committee of the Board of Directors, in consultation with management, concluded that due to the error in accounting for royalty revenue, our previously issued consolidated financial statements as of and for the fiscal year ended June 30, 2008 and for each of the quarters comprising the fiscal year should no longer be relied upon and should be restated.

On November 6, 2008, the Company filed an amended Annual Report on Form 10-K/A (“Amended 10-K”) with the SEC restating the Company’s annual consolidated financial statements for fiscal year 2008 and for each of the quarters comprising fiscal year 2008. The consolidated financial statements and related disclosures for the quarter ended March 31, 2008 have been restated in this report to reflect the revenue accounting error discussed above. Refer to Note 20A of the Amended 10-K for the effects of the restatement on the Company’s consolidated financial statements as of and for the fiscal year ended June 30, 2008 and to Note 20B of the Amended 10-K for the effects of the restatement on the Company’s consolidated financial statements for each of the quarters comprising fiscal year 2008.

The effect of the restatement on the Company’s consolidated balance sheet for the fiscal year ended June 30, 2008 is illustrated in the following table:

ROYAL GOLD, INC.
Notes to Consolidated Financial Statements
(Unaudited)

Consolidated Balance Sheet Items

		As of June 30, 2008
		(in thousands)
		As Previously
		Reported				Adjustment								As Restated
Royalty receivables		$	17,627			$	(1,310	)						$	16,317
Income tax receivable			1,310				876								2,186
Total current assets			211,411				(434	)							210,977
Total assets			546,284				(434	)							545,850
Accounts payable			3,122				1,631								4,753
Total current liabilities			7,303				1,631								8,934
Total liabilities			49,591				1,631								51,222
Accumulated earnings			21,543				(2,065	)							19,478
Total stockholders’ equity			485,282				(2,065	)							483,217
Total liabilities and stockholders’ equity			546,284				(434	)							545,850

The effects of the restatement on the Company’s consolidated statement of operations and comprehensive income for the three and nine months ended March 31, 2008 are illustrated in the following tables:

Consolidated Statement of Operations and Comprehensive Income Items

		For the three months ended March 31, 2008
		(in thousands, except share data)
		As Previously
		Reported				Adjustment				As Restated
Royalty revenue		$	19,516			$	(785	)		$	18,731
Cost of operations			1,046				(40	)			1,006
Operating income			9,747				(745	)			9,002
Income before income taxes			11,132				(745	)			10,387
Income tax expense			3,572				(214	)			3,358
Net income			7,420				(531	)			6,889
Net income available to common shareholders			3,836				(531	)			3,305
Basic earnings per share		$	0.12			$	(0.01	)		$	0.11
Basic weighted average shares outstanding			30,932,084				—				30,932,084
Diluted earnings per share		$	0.12			$	(0.01	)		$	0.11
Diluted weighted average shares outstanding			31,213,663				—				31,213,663

		For the nine months ended March 31, 2008
		(in thousands, except share data)
		As Previously
		Reported				Adjustment				As Restated
Royalty revenue		$	47,729			$	(1,785	)		$	45,944
Cost of operations			2,838				(90	)			2,748
Operating income			24,151				(1,695	)			22,456
Income before income taxes			28,326				(1,695	)			26,631
Income tax expense			8,846				(484	)			8,362
Net income			18,248				(1,211	)			17,037
Net income available to common shareholders			13,460				(1,211	)			12,249
Basic earnings per share		$	0.45			$	(0.04	)		$	0.41
Basic weighted average shares outstanding			29,808,962				—				29,808,962
Diluted earnings per share		$	0.45			$	(0.04	)		$	0.41
Diluted weighted average shares outstanding			30,134,888				—				30,134,888

ROYAL GOLD, INC.
Notes to Consolidated Financial Statements
(Unaudited)

The effects of the restatement on the Company’s consolidated statement of cash flows for the nine months ended March 31, 2008 is illustrated in the following table:

Consolidated Statement of Cash Flows Items

		For the nine months ended March 31, 2008
		(in thousands)
		As Previously
		Reported								Adjustment								As Restated
Cash flows from operating activities:
Net income		$	18,248							$	(1,211	)						$	17,037
Deferred tax benefit			(1,143	)							(11	)							(1,154	)
Royalty receivables			2,479								1,784								(695	)
Income taxes payable			541								(474	)							67
Accounts payable			3,010								(89	)							2,921
Net cash provided by operating activities			28,714								(9	)							28,705

Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for annual financial statements. In the opinion of management, all adjustments which are of a normal recurring nature considered necessary for a fair statement have been included in this Form 10-Q. Operating results for the three and nine months ended March 31, 2009, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2009. These interim unaudited financial statements should be read in conjunction with the Company’s Amended 10-K.

Recently Adopted Accounting Pronouncements

Fair Value Measurements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of SFAS 157 were adopted by the Company on July 1, 2008. The adoption of SFAS 157 during our first fiscal quarter of 2009 did not have a significant impact on the Company’s consolidated financial statements. Refer to Note 10 for a discussion regarding the Company’s fair value measurements as of March 31, 2009.

In February 2008, the FASB staff issued Staff Position No. 157-2, Effective Date of FASB Statement No. 157 (“FSP 157-2”). FSP 157-2 delayed the effective date of SFAS 157 for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The provisions of FSP 157-2 are effective for the Company’s fiscal year beginning July 1, 2009; however, the Company does not expect the provisions to have a material impact, if any, on our consolidated financial statements.

ROYAL GOLD, INC.
Notes to Consolidated Financial Statements
(Unaudited)

Fair Value Option for Financial Assets and Liabilities

In February 2007, the FASB issued Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”), which allows entities to choose to measure many financial instruments and certain other items at fair value, with the objective of improving financial reporting by mitigating volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The provisions of SFAS 159 were adopted July 1, 2008. The Company did not elect the Fair Value Option for any of its financial assets or liabilities and, therefore, the adoption of SFAS 159 had no impact on the Company’s consolidated financial position, results of operations or cash flows.

Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards

In June 2007, the Emerging Issues Task Force (“EITF”) reached consensus on Issue No. 06-11 “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards.” EITF Issue No. 06-11 requires that the tax benefit related to dividend and dividend equivalents paid on equity-classified, non-vested shares and non-vested share units, which are expected to vest, be recorded as an increase to additional paid-in capital. EITF No. 06-11 was to be applied prospectively for tax benefits on dividends declared in our fiscal year beginning July 1, 2008. The adoption of EITF 06-11 had an insignificant impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

In May 2008, the FASB issued Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles,” (“SFAS 162”) which identifies the sources of accounting principles and the accounting framework for selecting the principles to be used in the preparation of financial statements of non-governmental entities that are presented in conformity with U.S. generally accepted accounting principles (“GAAP”). SFAS 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with GAAP.” The Company does not expect the adoption of SFAS 162 to have an impact on its consolidated financial statements.

In March 2008, the FASB issued Statement No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133” (“SFAS 161”). SFAS 161 intends to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance and cash flows. SFAS 161 also requires disclosure about an entity’s strategy and objectives for using derivatives, the fair values of derivative instruments and their related gains and losses. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008, and will be applicable to the Company’s fiscal year beginning July 1, 2009. The Company is evaluating the impact, if any, the adoption of SFAS 161 could have on its consolidated financial statements.

In December 2007, the FASB issued Statement No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”), which significantly changes the ways companies account for business combinations and will generally require more assets acquired and liabilities assumed to be measured at their acquisition date fair value. Under SFAS 141R, legal fees and other transaction-related costs are expensed as incurred and are no longer included in goodwill as a cost of acquiring the business. SFAS 141R also requires, among other things, acquirers to estimate the acquisition date fair value of any contingent consideration and to recognize any subsequent changes in the fair value of contingent consideration in earnings. In addition,

ROYAL GOLD, INC.
Notes to Consolidated Financial Statements
(Unaudited)

restructuring costs the acquirer expected, but was not obligated to incur, will be recognized separately from the business acquisition. SFAS 141R is effective for the Company’s fiscal year beginning July 1, 2009, and is to be applied prospectively. The Company is evaluating the impact, if any, the adoption of SFAS 141R could have on its consolidated financial statements.

Also in December 2007, the FASB issued Statement No. 160, “Non-controlling Interests in Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS 160”). SFAS 160 requires all entities to report non-controlling interests in subsidiaries as a separate component of equity in the consolidated financial statements. SFAS 160 establishes a single method of accounting for changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation. Companies will no longer recognize a gain or loss on partial disposals of a subsidiary where control is retained. In addition, in partial acquisitions, where control is obtained, the acquiring company will recognize and measure at fair value 100 percent of the assets and liabilities, including goodwill, as if the entire target company had been acquired. SFAS 160 is effective for the Company’s fiscal year beginning July 1, 2009, and is to be applied prospectively. The Company is evaluating the impact, if any, the adoption of SFAS 160 could have on its consolidated financial statements.

2. ROYALTY ACQUISITION

Effective October 1, 2008, the Company completed an acquisition of royalties from Barrick Gold Corporation (“Barrick”) for cash of approximately $181.3 million, including a restructuring of its GSR2, GSR3 and NVR1 royalties at Cortez, valued at $31.5 million, for net cash of approximately $150.0 million. The transactions were completed pursuant to the Royalty Purchase and Sale Agreement dated July 30, 2008. The cash portion of the purchase price was paid from the Company’s cash on hand.

We acquired royalties on 72 properties in various stages of production, development, evaluation and exploration. The Company uses “evaluation stage” to describe exploration stage properties that contain mineralized material and on which operators are engaged in the search for reserves. Please refer to Note 3 for a further discussion on the key royalty assets acquired from Barrick.

The restructuring of Royal Gold’s royalty positions at Cortez consisted of: (1) a reduction of the Company’s GSR2 sliding-scale royalty (ranging from 0.72% to 9.0%) to match the current GSR1 sliding-scale royalty rate (ranging from 0.40% to 5.0%) and (2) the elimination of Royal Gold’s interest in the 0.71% GSR3 royalty and the 0.39% NVR1 royalty on the mining claims that comprise the undeveloped Crossroads deposit. The GSR3 and NVR1 royalties that cover areas outside the Crossroads deposit at Cortez were not affected by this transaction. The Crossroads deposit continues to be subject to the Company’s GSR2 royalty at the rate of 0.4% to 5.0%.

The acquisition of Barrick’s royalty portfolio has been accounted for as an asset acquisition using the purchase method of accounting. The total purchase price of $181.3 million, plus direct transaction costs of approximately $3.2 million, has been allocated to the acquired royalty interests according to their relative fair values and is recorded as separate components of Royalty Interests in Mineral Properties on our consolidated balance sheets. The amounts allocated to the acquired royalty interests in mineral properties acquired from Barrick are preliminary and are subject to change upon completion of final valuations.

As part of the royalty restructuring, as discussed above, the Company recognized a gain of $31.5 million during the fiscal quarter ended December 31, 2008. The restructured royalties were a nonmonetary exchange and the fair value of the restructured royalties was determined based on expected future cash flows. The Company’s basis in the restructured royalties was zero thus giving rise to the $31.5 million

ROYAL GOLD, INC.
Notes to Consolidated Financial Statements
(Unaudited)

gain. The royalty restructuring gain has been recorded as Gain on royalty restructuring on the Company’s consolidated statements of operations and comprehensive income.

3. ROYALTY INTERESTS IN MINERAL PROPERTIES

The following summarizes the Company’s royalty interests in mineral properties as of March 31, 2009 and June 30, 2008.

						Accumulated
As of March 31, 2009 (Amounts in thousands):		Cost				Depletion				Net
Production stage royalty interests:
Cortez		$	10,630			$	(9,116	)		$	1,514
Robinson			17,825				(5,886	)			11,939
Taparko			33,570				(8,380	)			25,190
Leeville			18,322				(7,880	)			10,442
Goldstrike			20,788				(9,964	)			10,824
Mulatos			34,214				(4,175	)			30,039
Peñasquito (oxide circuit)			4,026				(373	)			3,653
Dolores			44,878				(128	)			44,750
Siguiri			10,946				(2,381	)			8,565
Allan			22,020				(93	)			21,927
Other			44,068				(16,762	)			27,306
			261,287				(65,138	)			196,149
Development stage royalty interests:
Peñasquito (sulfide circuit)			95,146				—				95,146
Malartic			34,031				—				34,031
Pascua-Lama			20,446				—				20,446
Other			30,243				—				30,243
			179,866				—				179,866
Exploration stage royalty interests			90,267				—				90,267
Total royalty interests in mineral properties		$	531,420			$	(65,138	)		$	466,282

ROYAL GOLD, INC.
Notes to Consolidated Financial Statements
(Unaudited)

						Accumulated
As of June 30, 2008 (Amounts in thousands):		Cost				Depletion				Net
Production stage royalty interests:
Cortez		$	10,630			$	(8,901	)		$	1,729
Robinson			17,825				(4,271	)			13,554
Taparko			33,570				(4,514	)			29,056
Leeville			17,495				(5,567	)			11,928
Goldstrike			20,788				(8,641	)			12,147
Mulatos			7,442				(1,439	)			6,003
Peñasquito (oxide circuit)			4,026				(22	)			4,004
Other			29,314				(10,137	)			19,177
			141,090				(43,492	)			97,598
Development stage royalty interests:
Peñasquito (sulfide circuit)			95,146				—				95,146
Dolores			40,989				—				40,989
Pascua-Lama			20,446				—				20,446
Other			18,110				—				18,110
			174,691				—				174,691
Exploration stage royalty interests			28,652				(271	)			28,381
Total royalty interests in mineral properties		$	344,433			$	(43,763	)		$	300,670

As discussed in Note 2, effective October 1, 2008, the Company acquired a royalty portfolio from Barrick which consisted of 72 properties in various stages of production, development, evaluation or exploration.

Key royalty assets acquired from Barrick:

Mulatos – A sliding-scale net smelter return (“NSR”) royalty on the Mulatos mine, located in Sonora, Mexico, and operated by a subsidiary of Alamos Gold, Inc. Prior to October 1, 2008, we owned a 0.30%-1.50% NSR sliding-scale royalty on the property. The acquisition of the Barrick royalty portfolio consolidated the Mulatos royalty and increased our royalty interest to a 1.0% to 5.0% sliding-scale NSR royalty. The royalty rate is 5.0% at a gold price of $400 per ounce or higher.

The Mulatos royalty is currently in production and is classified as a production stage royalty interest, which is depleted using the units of production method. A portion (non-reserve) of our investment in Mulatos is classified as an exploration stage royalty interest, which is not subject to amortization. In the event that future proven and probable reserves associated with the non-reserve portion of our royalty interest is developed at Mulatos, additional cost basis of our royalty interest will be reclassified to a development stage or a production stage royalty interest in future periods, as appropriate.

Malartic – A 2.0%-3.0% sliding-scale NSR royalty on the Canadian Malartic gold project, located in Quebec, Canada, and owned by Osisko Mining Corporation (“Osisko”). The royalty rate is 3.0% at a gold price of $350 per ounce or higher. The Malartic royalty is associated with proven and probable reserves but is not currently in production and is therefore classified as a development stage royalty interest, which is not subject to amortization. The royalty is subject to a buy down right, which if exercised by Osisko would lower the sliding-scale NSR royalty to 1.0%-1.5%.

ROYAL GOLD, INC.
Notes to Consolidated Financial Statements
(Unaudited)

Siguiri – A sliding-scale NSR royalty currently paying 1.875% on the Siguiri gold mine, located in Guinea, West Africa, and operated by AngloGold Ashanti. The Siguiri royalty is currently in production and is classified as a production stage royalty interest, which is depleted using a units of production method.

4. CREDIT FACILITY

On October 30, 2008, the Company and its wholly-owned subsidiaries, High Desert Mineral Resources, Inc. (“High Desert”) and RG Mexico, Inc. (“RG Mexico”), entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”) with HSBC Bank USA, National Association (“HSBC Bank”), as administrative agent and a lender, Scotiabanc Inc., as a lender, HSBC Securities (USA) Inc. (“HSBC Securities”), as sole lead arranger and Bank of Nova Scotia, as sole syndication agent. The Credit Agreement replaced the Company’s $80 million revolving credit facility with HSBC Bank.

The Credit Agreement provides the Company a $125 million revolving credit facility with a maturity date of October 30, 2013. Borrowings under the credit facility will bear interest at a floating rate of LIBOR plus a spread ranging from 1.75% to 2.25%, based on the Company’s leverage ratio (as defined). Unlike the prior credit facility, availability under the new credit facility is not limited by a borrowing base formula, therefore, the entire $125 million is available under the new credit facility.

The royalties securing the new credit facility consist of the GSR1, GSR2, GSR3, and NVR1 royalties at Cortez and the royalties at Goldstrike, Leeville, Robinson, Dolores, Peñasquito and Mulatos (the “Collateral Royalties”). In addition to the Collateral Royalties, the credit facility is secured by 100% of Royal Gold’s equity interests in High Desert and RG Mexico and substantially all of the present and future personal property and assets of the Company, High Desert and RG Mexico. The Credit Agreement contains financial covenants requiring the Company to maintain a leverage ratio (as defined) of 3.0 to 1.0 or less, a minimum consolidated net worth (as defined) of not less than a base amount that increases according to cumulative positive net income, an interest coverage ratio (as defined) of at least 3.0 to 1.0, a current ratio (as defined) of at least 1.5 to 1.0 and a facility coverage ratio (as defined) of at least 1.25 to 1.0.

As of March 31, 2009, the Company did not have any amounts outstanding under the credit facility.

5. TERM LOAN FACILITY

Royal Gold Chile Limitada (“RGCL”), a wholly-owned subsidiary of Royal Gold, had a $15.75 million term loan outstanding bearing interest at LIBOR plus 0.25% pursuant to a Term Loan Agreement between RGCL and HSBC Bank. On August 27, 2008, RGCL entered into an Amended and Restated Term Loan Agreement (“Amended and Restated Agreement”) with HSBC Bank to amend the existing term loan facility. The Amended and Restated Agreement increased the maximum term loan principal amount from $15.75 million to $21.75 million, with such additional amounts available to be drawn at any time prior to October 1, 2008. Pursuant to the terms of the Amended and Restated Agreement, Royal Gold must maintain a restricted interest-bearing securities account (the “Collateral Account”) on deposit at HSBC Securities with a balance equal to or in excess of the outstanding amounts on the term loan. Royal Gold entered into a Guarantee (the “Guarantee”) for the life of the term loan, for the benefit of HSBC Bank to guaranty RGCL’s obligations under the Amended and Restated Agreement and a security agreement granting HSBC Bank a security interest in the Collateral Account to secure RGCL’s obligations under the Term Loan Agreement and its obligations under the Guarantee. The term loan will mature on March 1, 2012.

ROYAL GOLD, INC.
Notes to Consolidated Financial Statements
(Unaudited)

On September 19, 2008, RGCL drew an additional $3.5 million under the Amended and Restated Agreement and Royal Gold securitized RGCL’s additional obligation under the Amended Agreement by depositing $3.5 million into the Collateral Account. As of March 31, 2009, $19.25 million was outstanding under the term loan facility. The $2.5 million additional amount available to be drawn under the Amended Agreement expired on October 1, 2008.

The $19.25 million balance in the Collateral Account as of March 31, 2009, is recorded as Restricted cash — compensating balance on the Company’s consolidated balance sheets. RGCL’s $19.25 million principal obligation under the Amended and Restated Agreement is recorded as Note payable on the Company’s consolidated balance sheets.

6. STOCK-BASED COMPENSATION

The Company recognized stock option and other stock-based compensation expense as follows:

		For The Three Months Ended								For The Nine Months Ended
		(In thousands)								(In thousands)
		March 31,				March 31,				March 31,				March 31,
		2009				2008				2009				2008
Stock options		$	134			$	312			$	648			$	942
Stock appreciation rights			76				—				124				—
Restricted stock			450				262				1,351				825
Performance stock			14				153				102				378
Total stock-based compensation expense		$	674			$	727			$	2,225			$	2,145

Stock-based compensation expense is allocated among cost of operations, general and administrative, and exploration and business development in our consolidated statements of operations and comprehensive income as summarized below:

		For The Three Months Ended								For The Nine Months Ended
		(In thousands)								(In thousands)
		March 31,				March 31,				March 31,				March 31,
		2009				2008				2009				2008
Stock-based compensation expense allocation:
Cost of operations		$	115			$	99			$	300			$	257
General and administrative			329				350				1,261				1,159
Exploration and business development			230				278				664				729
Total stock-based compensation expense		$	674			$	727			$	2,225			$	2,145

There were no stock options granted during the three months ended March 31, 2009 and 2008. For the nine months ended March 31, 2009 and 2008, 24,000 and 110,500 stock options, respectively, were granted at an exercise price of $30.96 and $29.75, respectively. As of March 31, 2009, there was $0.7 million of unrecognized compensation expense related to non-vested stock options, which is expected to be recognized over a weighted-average period of 1.6 years. The total intrinsic value of options exercised during the three months ended March 31, 2009 and 2008 was $0.03 million and $1.6 million, respectively. The total intrinsic value of options exercised during the nine months ended March 31, 2009

ROYAL GOLD, INC.
Notes to Consolidated Financial Statements
(Unaudited)

and 2008 was $1.2 million and $2.3 million, respectively. During the nine months ended March 31, 2009 and 2008, 96,500 and 99,517 stock options vested, respectively, at a weighted-average grant date fair value of $12.83 and $12.45, respectively.

There were no stock appreciation rights granted during the three months ended March 31, 2009. During the nine months ended March 31, 2009, 50,500 stock appreciation rights were granted at an exercise price of $30.96, which equals the closing market price of the Company’s common stock on the date of grant. No stock appreciation rights were granted during the three and nine months ended March 31, 2008. Stock appreciation rights granted vest based on one to three years of continuous service and have 10 year contractual terms and are settled in shares of Royal Gold common stock. As of March 31, 2009, there was $0.5 million of unrecognized compensation expense related to non-vested stock appreciation rights, which is expected to be recognized over a weighted-average period of 1.4 years.

There was no restricted stock granted during the three months ended March 31, 2009 and 2008. For the nine months ended March 31, 2009 and 2008, 96,500 and 87,500 shares of restricted stock, respectively, were granted at a grant date fair market value of $30.96 and $29.75, respectively. During the three and nine months ended March 31, 2009 and 2008, 23,166 and 10,625 shares of restricted stock, respectively, vested at a weighted-average grant date fair market value $26.51 and $29.59. As of March 31, 2009, there was $5.2 million of unrecognized compensation expense related to non-vested restricted stock, which is expected to be recognized over a remaining average vesting period of 3.5 years.

There was no performance stock granted during the three months ended March 31, 2009 and 2008. For the nine months ended March 31, 2009 and 2008, 46,500 and 48,000 shares of performance stock, respectively, were granted at a grant date fair market value of $30.96 and $29.75, respectively. No performance shares vested during the three months ended March 31, 2009 and 2008. During the nine months ended March 31, 2009 and 2008, 9,000 shares of performance stock vested at a grant date fair market value of $28.78. As of March 31, 2009, there was $0.1 million of unrecognized compensation expense related to non-vested performance stock, which is expected to be recognized over a remaining estimated vesting period of 0.75 years.

ROYAL GOLD, INC.
Notes to Consolidated Financial Statements
(Unaudited)

7. EARNINGS PER SHARE (“EPS”)

		For The Three Months Ended March 31, 2009
		(In thousands, except share data)
		Income				Shares				Per-Share
		(Numerator)				(Denominator)				Amount
Basic EPS
Income available to common stockholders		$	4,142				34,008,758			$	0.12
Effect of other dilutive securities			—				438,411
Diluted EPS		$	4,142				34,447,169			$	0.12
		For The Three Months Ended March 31, 2008
		(In thousands, except share data)
		Income								Per-Share
		(Numerator)				Shares				Amount
		(As Restated)				(Denominator)				(As Restated)
Basic EPS
Net income		$	6,889
Preferred dividends			(3,584	)
Income available to common stockholders		$	3,305				30,932,084			$	0.11
Effect of other dilutive securities			—				281,579
Diluted EPS		$	3,305				31,213,663			$	0.11
		For The Nine Months Ended March 31, 2009
		(In thousands, except share data)
		Income				Shares				Per-Share
		(Numerator)				(Denominator)				Amount
Basic EPS
Income available to common stockholders		$	31,289				33,965,171			$	0.92
Effect of other dilutive securities			—				437,380
Diluted EPS		$	31,289				34,402,551			$	0.91

ROYAL GOLD, INC.
Notes to Consolidated Financial Statements
(Unaudited)

		For The Nine Months Ended March 31, 2008
		(In thousands, except share data)
		Income								Per-Share
		(Numerator)				Shares				Amount
		(As Restated)				(Denominator)				(As Restated)
Basic EPS
Net income		$	17,037
Preferred dividends			(4,788	)
Income available to common stockholders		$	12,249				29,808,962			$	0.41
Effect of other dilutive securities			—				325,926
Diluted EPS		$	12,249				30,134,888			$	0.41

For the three and nine months ended March 31, 2009, all outstanding stock-based compensation awards were included in the computation of diluted EPS because the exercise price of the awards was less than the average market price of our common stock for the period.

For the three and nine months ended March 31, 2008, 1,600 stock-based compensation awards, at a weighted average purchase price of $32.40 per share, were outstanding, but were not included in the computation of diluted EPS because the exercise price of these awards was greater than the average market price of our common stock for the period.

8. INCOME TAXES

The following table summarizes the Company’s income tax expense and effective tax rate for the three and nine months ended March 31, 2009 and 2008:

		Three Months Ended March 31,								Nine Months Ended March 31,
		2009				2008				2009				2008
(In thousands)						(As Restated)								(As Restated)
Income tax expense		$	(2,534	)		$	(3,358	)		$	(17,660	)		$	(8,362	)
Effective tax rate			38.0	%			32.8	%			36.0	%			32.9	%

The material income tax returns the Company files are the U.S. federal income tax return, which has a three year statute of limitations, and the Colorado state income tax return, which has a four year statute of limitations. The U.S. federal return for tax years ended on or after June 30, 2006, and the Colorado state return for tax years ended on or after June 30, 2005, are subject to examination by the relevant taxing authority.

As of March 31, 2009, the Company’s total unrecognized tax benefits were $0.6 million for uncertain tax positions. The liability for unrecognized tax benefits is reflected within Other long-term liabilities on the Company’s consolidated balance sheets.

Interest and penalties associated with the liability for unrecognized tax benefits is approximately $0.1 million at March 31, 2009, and is included in Other long-term liabilities on the Company’s consolidated balance sheets.

ROYAL GOLD, INC.
Notes to Consolidated Financial Statements
(Unaudited)

9. SEGMENT INFORMATION

We manage our business under one operating segment, consisting of royalty acquisition and management activities. All of our assets and revenues are attributable to the royalty operating segment.

Royal Gold’s royalty revenue and long-lived assets (royalty interests in mineral properties, net) are geographically distributed as shown in the following table.

		Royalty																Royalty Interests in
		Revenue																Mineral Properties, net
		Three months ended								Nine months ended
		March 31,								March 31,								As of				As of
		2009				2008				2009				2008				March 31,				June 30,
						(As Restated)								(As Restated)				2009				2008
USA			46	%			73	%			59	%			82	%			13	%			18	%
Mexico			14	%			3	%			13	%			3	%			45	%			55	%
Africa(1)			33	%			17	%			20	%			10	%			8	%			12	%
Canada			1	%			1	%			1	%			1	%			19	%			2	%
Other			6	%			6	%			7	%			4	%			15	%			13	%

10. FAIR VALUE MEASUREMENTS

The Company adopted the provision of SFAS 157 on July 1, 2007, with no significant impact on the Company’s consolidated financial statements. SFAS 157 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 SFAS 157 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).

ROYAL GOLD, INC.
Notes to Consolidated Financial Statements
(Unaudited)

The following table sets forth the Company’s financial assets measured at fair value by level within the fair value hierarchy. The Company’s financial liabilities are not within the scope of the provisions of SFAS 157.

		Fair Value at March 31, 2009
		(In thousands)
		Total				Level 1				Level 2				Level 3
Assets:
Money market investments(1)		$	44,738			$	44,738			$	—			$	—
Restricted cash			19,250				19,250				—				—
Marketable equity securities(2)			182				182				—				—
		$	64,170			$	64,170			$	—			$	—

The Company invests in money market funds, which are traded by dealers or brokers in active over-the-counter markets. The Company’s money market funds, which are invested in United States treasury bills or United States treasury backed securities, are classified within Level 1 of the fair value hierarchy.

The Company’s restricted cash, which is included in Restricted cash — compensating balance in the Company’s consolidated balance sheets, is invested in a money market fund which is traded by dealers or brokers in an active over-the-counter market. The Company’s restricted cash is classified within Level 1 of the fair value hierarchy.

The Company’s marketable equity securities classified within Level 1 of the fair value hierarchy are valued using quoted market prices in active markets. The fair value of the Level 1 marketable equity securities is calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company.

As of March 31, 2009, 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 royalty interests in mineral properties, intangible assets and other long-lived assets. For these assets, measurement at fair value in periods subsequent to their initial recognition are applicable if any of these assets are determined to be impaired; however, no impairment losses have occurred relative to any of these assets during the nine months ended March 31, 2009. If recognition of these assets at their fair value becomes necessary, such measurements will be determined utilizing Level 3 inputs.

11. COMMITMENTS AND CONTINGENCIES

Casmalia

On March 24, 2000, the United States Environmental Protection Agency (“EPA”) notified Royal Gold and 92 other entities that they were considered potentially responsible parties (“PRPs”) under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (“Superfund”), at the Casmalia Resources Hazardous Waste Disposal Site (the “Site”) in Santa Barbara County, California. EPA’s allegation that Royal Gold was a PRP was based on the disposal of allegedly hazardous petroleum exploration wastes at the Site by Royal Gold’s predecessor, Royal Resources, Inc., during 1983 and 1984.

ROYAL GOLD, INC.
Notes to Consolidated Financial Statements
(Unaudited)

After extensive negotiations, on September 23, 2002, Royal Gold, along with 35 members of the PRP group targeted by EPA, entered into a Partial Consent Decree with EPA and the United States Department of Justice intending to settle their liability for past and future clean-up costs incurred or expected to be incurred at the Site by the federal government. The United States District Court for the Central District of California entered the Partial Consent Decree on August 14, 2003. Based on the minimal volume of allegedly hazardous substances that Royal Resources, Inc. disposed of at the Site, which was characterized in volume as de minimis, our share of the $25.3 million settlement amount was approximately $0.1 million, which we deposited into the escrow account that the PRP group set up for that purpose in January 2002. The funds were paid to the United States Treasury on May 9, 2003 and the Partial Consent Decree was executed. As a result of the settlement, the United States of America may only pursue Royal Gold and the other PRPs for additional clean-up costs if the United States’ total clean-up costs at the Site significantly exceed the expected cost of approximately $272 million.

Royal Gold also executed a de minimis party Administrative Order on Consent (“AOC”) with the State of California on January 15, 2009. The AOC will become effective after notice from the California Attorney General that the required 30-day public comment period has closed and that comments received, if any, do not require modifications to or withdrawal of the AOC by the State of California. It is not anticipated at this date that any such modifications or withdrawals will occur.

Under the terms of the federal Partial Consent Decree and the state AOC, we believe our potential liability with the United States of America, the State of California, and third parties to be effectively settled and any further exposure related to the Casmalia site to be a remote possibility.

Holloway-Holt

On October 1, 2008, as part of the Company’s acquisition of a portfolio of royalties from Barrick , we acquired a royalty on a portion of the development stage Holloway-Holt mining project in Ontario, Canada, owned by St Andrew Goldfields Ltd. (“St Andrew”). St Andrew succeeded Newmont Canada Corporation (“Newmont Canada”) as owner of the Holloway-Holt mining project in November 2006. By virtue of the Company’s acquisition of Barrick’s royalty portfolio, RGLD Gold Canada, Inc. succeeded Barrick as the royalty payee under the royalty agreement.

On or about November 3, 2008, St Andrew filed an action in the Ontario Superior Court of Justice (the “Court”) seeking, among other things, declarations by the Court that St Andrew’s obligation in respect of the royalty is limited to only a portion of the total royalty payable, and that any additional royalty obligations under the royalty agreement remain the responsibility of Newmont Canada. Newmont Canada responded that St Andrew is responsible for all royalty obligations under the royalty agreement.

Barrick and we were joined as necessary parties to the litigation in January 2009. Trial concerning calculation of the royalty and the party or parties responsible for paying it was held from January 30, 2009 to February 12, 2009. The Court has not issued any findings, rulings, orders or opinions. The royalty is currently classified as a development stage royalty interest and the Company does not currently receive revenue from the royalty. At this time, the Company is unable to estimate the impact, if any, the litigation will have on the Company’s consolidated financial statements.

12. RELATED PARTY

Crescent Valley Partners, L.P. (“CVP”) was formed as a limited partnership in April 1992. It owns a 1.25% net value royalty (“NVR1”) on production of minerals from a portion of Cortez. Denver Mining Finance Company (“DMFC”), our wholly-owned subsidiary, is the general partner and holds a 2.0%

ROYAL GOLD, INC.
Notes to Consolidated Financial Statements
(Unaudited)

interest in CVP. In addition, Royal Gold holds a 29.6% limited partner interest in the partnership, while our Chairman of the Board of Directors, the Chairman of our Audit Committee and one other member of our board of directors hold an aggregate 35.56% limited partner interest. The general partner performs administrative services for CVP in receiving and processing the royalty payments received from the operator including the disbursement of royalty payments and record keeping for in-kind distributions to the limited partners, including our directors and Chairman.

Effective with the Barrick royalty portfolio acquisition (see Note 2), CVP assigned to Barrick the portion of CVP’s royalty interests in the undeveloped Crossroads deposit at Cortez attributable to Royal Gold through its limited partnership interest in CVP and general partnership interest through DMFC. The portion transferred equaled a 0.3954% royalty interest. CVP’s royalty interest outside the undeveloped Crossroads deposit was unaffected by the Barrick transaction.

CVP receives its royalty from the Cortez Joint Venture in-kind. The Company, as well as certain other limited partners, sell their pro-rata shares of such gold immediately and receive distributions in cash, while CVP holds gold for certain other limited partners. Such gold inventories, which totaled 26,377 ounces as of March 31, 2009, are held by a third party refinery in Utah for the account of the limited partners of CVP. The inventories are carried at historical cost and are classified as Inventory — restricted on the consolidated balance sheets. The carrying value of the gold in inventory was approximately $11.0 million and $11.2 million as of March 31, 2009 and June 30, 2008, respectively, while the fair value of such ounces was approximately $24.2 million and $25.6 million as of March 31, 2009 and June 30, 2008, respectively. None of the gold currently held in inventory as of March 31, 2009 and June 30, 2008, is attributed to Royal Gold’s CVP partnership interest, as the gold allocated to Royal Gold is typically sold within five days of receipt.

13. SUBSEQUENT EVENTS

Proposed Acquisition of Andacollo Production Interest

On April 3, 2009, the Company entered into a definitive agreement (“Master Agreement”) with a Chilean subsidiary of Teck Resources Limited (“Teck”), Compañía Minera Carmen de Andacollo (“CDA”), to acquire an interest in the gold produced from the sulfide portion of the Andacollo project in Chile (the “Andacollo Production Interest”). We refer to this as the “Teck Transaction.” The purchase price for the Andacollo Production Interest initially consisted of $100 million in cash and 4,454,136 shares of the Company’s common stock, $0.01 par value per share (“Common Stock”) but was adjusted to $217.9 million in cash and 1,204,136 shares based on the equity offering, as discussed below, completed by the Company. This adjustment is described further below. The initial number of shares to be issued was determined by dividing $200 million by the volume weighted average price of the Company’s Common Stock on the NASDAQ Global Select Market for the five day trading period that ended four trading days prior to the public announcement of the Teck Transaction.

The Andacollo Production Interest will equal 75% of the gold produced from the sulfide portion of the deposit at the Andacollo mine until 910,000 payable ounces of gold have been sold and 50% of the gold produced in excess of 910,000 payable ounces of gold. The mine, located about 34 miles southeast of the city of La Serena, Chile, produces copper from the oxide portion of the deposit and Teck is currently constructing facilities to produce both copper and gold from the sulfide portion of the deposit. The Andacollo Production Interest will not cover copper production.

Royal Gold’s obligation to close the Teck Transaction is subject to CDA’s completion of marketing for a specified percentage of its concentrate production from the Andacollo mine, the condition that CDA’s

ROYAL GOLD, INC.
Notes to Consolidated Financial Statements
(Unaudited)

material government approvals are not withdrawn or challenged and satisfactory completion of certain limited due diligence, as well as other customary closing conditions. Either party may terminate the definitive agreement if the closing conditions are not met by October 30, 2009.

The Company is currently evaluating the accounting for the Teck Transaction and will complete the initial purchase accounting during the period in which the transaction closes.

Equity Offering

On April 14, 2009, we sold 6,500,000 shares of our common stock, at a price of $38.00 per share, resulting in proceeds of approximately $235.3 million, which is net of the underwriter’s discount of approximately $11.1 million and estimated transaction costs of approximately $0.6 million. The net proceeds from the offering will be used primarily to pay the cash component of the Andacollo transaction, as discussed above. If the Andacollo transaction does not close, the net proceeds will be used for general corporate purposes and to fund acquisitions of additional royalty interests.

The underwriters of this equity offering were granted an option to purchase up to 975,000 additional shares of our common stock to cover any over-allotments. The over-allotment option period expired on May 7, 2009 and the over-allotment option was not exercised.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Restatement

As part of the Company’s royalty monitoring program during the first fiscal quarter of 2009, Royal Gold identified a $3.1 million overpayment with respect to the Company’s GSR1 and GSR2 royalties at the Cortez Pipeline Mining Complex (“Cortez”), which the Company received and recognized as royalty revenues. The overpayment of the royalty was the result of the operator incorrectly including non-Royal Gold royalty production in the Company’s quarterly GSR1 and GSR2 royalty payments commencing in January 2007 and continuing through fiscal year 2008.

The error that caused the overpayment of royalty payments was not timely identified by our controls and procedures in place and $3.1 million was incorrectly recognized as royalty revenue, resulting in a material overstatement of royalty revenue for fiscal year 2008. On November 3, 2008, the Company’s Audit Committee of the Board of Directors, in consultation with management, concluded that due to the error in accounting for royalty revenue, our previously issued consolidated financial statements as of and for the fiscal year ended June 30, 2008 and for each of the quarters comprising the fiscal year should no longer be relied upon and should be restated.

On November 6, 2008, the Company filed an amended Annual Report on Form 10-K/A (“Amended 10-K”) with the Securities and Exchange Commission restating the Company’s annual consolidated financial statements for fiscal year 2008 and for each of the quarters comprising fiscal year 2008. The consolidated financial statements and related disclosures for the quarter ended March 31, 2008 have been restated in this report to reflect the revenue accounting error discussed above and this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) gives effect to the restatement.

General

MD&A is intended to provide information to assist you in better understanding and evaluating our financial condition and results of operations. We recommend that you read this MD&A in conjunction with our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q, as well as the Amended 10-K.

This MD&A contains forward-looking information. You should review our important note about forward-looking statements following this MD&A.

We refer to “GSR,” “NSR,” and other types of royalty interests throughout this MD&A. These terms are defined in our Amended 10-K.

Overview

Royal Gold, together with its subsidiaries, is engaged in the business of acquiring and managing precious metals royalties. Royalties are passive (non-operating) interests in mining projects that provide the right to revenue or production from the project after deducting specified costs, if any. We seek to acquire existing royalties or to finance projects that are in production or in development stage in exchange for royalty interests. We are engaged in a continual review of opportunities to acquire existing royalties, to create new royalties through the financing of mine development or exploration, or to acquire companies that hold royalties. We currently, and generally at any time, have acquisition opportunities in various stages of active review, including, for example, our engagement of consultants and advisors to analyze particular opportunities, analysis of technical, financial and other confidential information, submission of

indications of interest, participation in preliminary discussions and involvement as a bidder in competitive auctions.

The Company owns royalties on 27 producing properties, 9 development stage properties and over 80 exploration stage properties, of which the Company considers 25 to be evaluation stage projects. The Company uses “evaluation stage” to describe exploration stage properties that contain mineralized material and on which operators are engaged in the search for reserves. We do not conduct mining operations nor are we required to contribute to capital costs, exploration costs, environment costs or other operating costs on the properties in which we hold royalty interests. During the quarter ended March 31, 2009, we focused on the management of our existing royalty interests, the acquisition of royalty interests, and the creation of royalty interests through financing and strategic exploration alliances.

Our financial results are primarily tied to the price of gold and other metals, as well as production from our producing stage royalty interests. Royalty revenue for the quarter ended March 31, 2009 was $20.8 million (which includes $0.3 million of minority interest), compared to $18.7 million (which includes $0.1 million of minority interest) for the quarter ended March 31, 2008. For the quarter ended March 31, 2009 and 2008, the price of gold averaged $908 per ounce and $925 per ounce, respectively, while the price of copper averaged $1.56 per pound and $3.52 per pound, respectively. For the three months ended March 31, 2009, Royal Gold derived 89% of its total royalty revenue from gold royalties, 3% of its total royalty revenue from silver royalties and 8% of its total revenue from other metal royalties.

The increase in royalty revenue for the quarter ended March 31, 2009, compared with the quarter ended March 31, 2008, resulted primarily from production from the recently acquired Barrick royalty portfolio, an increase in production at Taparko and commencement of production at Peñasquito and Dolores. These increases were partially offset by a decrease in gold and copper prices and a decrease in production and negative provisional pricing adjustments at Robinson. Please refer to “Recent Developments, Property Developments” below within this MD&A for further discussion on recent developments regarding properties covered by certain of our royalty interests.

Principal Royalty Properties

Our royalty portfolio includes gold royalties on properties owned by various operating companies across five continents. While the Company maintains a strong royalty presence in Nevada, a jurisdiction with a long history of successful gold mining, our principal producing and development royalty properties outside of the United States are primarily located in Canada (Malartic), Mexico (Peñasquito, Mulatos and Dolores), Chile (Pascua-Lama) and West Africa (Taparko and Siguiri). The Company also holds royalties on properties in Argentina, Australia, Bolivia, Colombia, Finland, Honduras, Nicaragua and Russia.

Our principal producing royalty interests are shown in the following table. Please refer to our Amended 10-K for further discussion on our principal producing royalty interests.

						Royalty
Mine		Location		Operator		(Gold unless otherwise stated)
Cortez		Nevada, USA		Barrick		GSR1:        0.40%-5.0% sliding-scale GSR
						GSR2(1):     0.40%-5.0% sliding-scale GSR
						GSR3(1):     0.71% GSR
						NVR1(1):     0.39% NVR
Robinson		Nevada, USA		Quadra Mining Ltd. (“Quadra”)		3.0% NSR (copper, gold, silver, molybdenum)
Leeville Mining Complex		Nevada, USA		Newmont Mining Corporation (“Newmont”)		1.8% NSR
Goldstrike		Nevada, USA		Barrick		0.9% NSR
Peñasquito(2)		Zacatecas, Mexico		Goldcorp		2.0% NSR (gold and silver)
Mulatos(3)		Sonora, Mexico		Alamos Gold, Inc. (“Alamos”)		1.0%-5.0% sliding-scale NSR
Taparko(4)		Burkina Faso, West Africa		High River Gold Mines Ltd. (“High River”)		15% GSR (TB-GSR1) and a 0%-10% sliding-scale GSR (TB-GSR2)
Siguiri(5)		Guinea, West Africa		AngloGold		0.0%-1.875% sliding-scale NSR
Dolores		Chihuahua, Mexico		Minefinders Corporation, Ltd. (“Minefinders”)		1.25% NSR

Our principal development royalties are shown in the following table and are not yet in production. Please refer to our Amended 10-K for further discussion on our principal development stage royalty interests.

						Royalty
Mine		Location		Operator		(Gold unless otherwise stated)
Peñasquito (sulfide circuit)		Zacatecas, Mexico		Goldcorp		2.0% NSR (gold, silver, lead and zinc)
Dolores(1)		Chihuahua, Mexico		Minefinders		2.0% NSR (gold and silver)
Pascua-Lama(2)		Region III, Chile		Barrick		0.16%-1.08% sliding-scale NSR 0.22% fixed rate royalty (copper)
Malartic(3)		Quebec, Canada		Osisko Mining Corporation (“Osisko”)		2.0%-3.0% sliding-scale NSR

The Company considers both historical and future expected revenues in determining which royalties in our portfolio are principal to our business. Estimated future expected royalty revenues from both producing and development properties are based on a number of factors, including reserves subject to our royalty interests, production estimates, feasibility studies, metal price assumptions, mine life and other factors and assumptions, any of which could change and could cause Royal Gold to conclude that such royalties are no longer principal to our business.

Operators’ Production Estimates by Royalty for Calendar 2009

We received production estimates from the operators of our producing mines during the first calendar quarter of 2009. The following table shows such production estimates for our principal producing properties for calendar 2009 as well as the actual production reported to us by the various operators for the quarter ended March 31, 2009. The estimates and production reports are prepared by the operators of the mining properties. We do not participate in the preparation or calculation of the operators’ estimates or production reports and have not independently assessed or verified the accuracy of such information.

Operators’ Production Estimate by Royalty for Calendar 2009 and Reported Production
Principal Producing Properties
For the period January 1, 2009 through March 31, 2009

		Calendar 2009 Operator's Production												Reported Production through
		Estimate(1)												March 31, 2009(2)
		Gold				Silver				Copper				Gold				Silver				Copper
Royalty		(oz.)				(oz.)				(lbs.)				(oz.)				(oz.)				(lbs.)
Cortez GSR1			345,296				—				—				58,273				—				—
Cortez GSR2(3)			614				—				—				5,683				—				—
Cortez GSR3(3)			345,910				—				—				63,956				—				—
Cortez NVR1(3)			72,863				—				—				34,239				—				—
Robinson			100,000				—			140		million			30,257				—			34.5		million
Leeville			426,212				—				—				106,767				—				—
Goldstrike			440,879				—				—				136,733				—				—
Peñasquito(4)			70,000			2.3		million			—				12,027			0.6		million			—
Mulatos			145,000				—				—				41,871				—				—
Dolores(5)			N/A			N/A					—				14,169				—				—
Taparko(5)			N/A				—				—				22,963				—				—
Siguiri			300,000				—				—				79,836				—				—

Recent Developments

Business Developments

Proposed Acquisition of Andacollo Production Interest

On April 3, 2009, the Company entered into a definitive agreement (“Master Agreement”) with a Chilean subsidiary of Teck Resources Limited (“Teck”), Compañía Minera Carmen de Andacollo (“CDA”), to acquire an interest in the gold produced from the sulfide portion of the Andacollo project in Chile (the “Andacollo Production Interest”). We refer to this transaction throughout this report as the “Teck Transaction.” The purchase price for the Andacollo Production Interest initially consisted of $100 million in cash and 4,454,136 shares of the Company’s common stock, $0.01 par value per share (“Common Stock”) but was adjusted to $217.9 million in cash and 1,204,136 shares based on the equity offering (as discussed further under “Liquidity and Capital Resources” within this MD&A) completed by the Company. The initial number of shares to be issued was determined by dividing $200 million by the volume weighted average price of the Common Stock on the NASDAQ Global Select Market for the five day trading period that ended four trading days prior to the public announcement of the purchase of the Teck Transaction.

The Andacollo Production Interest will equal 75% of the gold produced from the sulfide portion of the deposit at the Andacollo mine until 910,000 payable ounces of gold have been sold and 50% of the gold produced in excess of 910,000 payable ounces of gold. The mine, located about 34 miles southeast of the city of La Serena, Chile, produces copper from the oxide portion of the deposit and Teck is currently constructing facilities to produce both copper and gold from the sulfide portion of the deposit. The Andacollo Production Interest will not cover copper production.

Proven and probable reserves estimated by the operator for the sulfide portion are 393.5 million tonnes with a grade of 0.39% copper and 0.13 g/t gold. This equates to 1.6 million contained ounces of gold. Reserves were estimated by the operator using a copper price of $1.50 per pound and a gold price of $480 per ounce. Gold will be produced as a by-product of copper production, with a gold recovery rate estimated by the operator to be approximately 61%. Once the mine is in full production, the operator expects the mill to have a capacity of 55,000 tonnes per day. The operator estimates that the mine will produce on average approximately 53,000 ounces of gold and 76,000 tonnes of copper in concentrate annually for the first 10 years of commercial production, with an estimated mine life of 20 years. The mine is estimated by the operator to begin initial production of gold in the fourth quarter of calendar 2009, with ramp up continuing into 2010. The operator anticipates commercial production at the mine to be achieved in the first half of calendar 2010.

Royal Gold’s obligation to close the Teck Transaction is subject to CDA’s completion of concentrate marketing for a specified percentage of its concentrate production from the Andacollo mine, the condition that CDA’s material government approvals are not withdrawn or challenged and satisfactory completion of certain limited due diligence to Royal Gold, as well as other customary closing conditions. Either party may terminate the definitive agreement if the closing conditions are not met by October 30, 2009.

The Company is currently evaluating the accounting for the Teck Transaction and will complete the initial purchase accounting during the period in which the transaction closes.

Acquisition of Barrick Royalty Portfolio

Effective October 1, 2008, the Company completed its acquisition of royalties from Barrick for cash of approximately $181.3 million, including a restructuring of the Company’s GSR2, GSR3 and NVR1 royalties at Cortez, valued at $31.5 million, for net cash of approximately $150 million. The transactions were completed pursuant to the Royalty Purchase and Sale Agreement (“the Agreement”) dated

July 30, 2008. The cash portion of the purchase price for the transaction was paid from the Company’s cash on hand.

We acquired royalties on 72 properties in various stages of production, development, evaluation and exploration. The Company uses “evaluation stage” to describe exploration stage properties that contain mineralized material and on which operators are engaged in the search for reserves.

The restructuring of Royal Gold’s royalty positions at Cortez consisted of: (1) a reduction of the Company’s GSR2 sliding-scale royalty (ranging from 0.72% to 9.0%) to match the current GSR1 sliding-scale royalty rate (ranging from 0.40% to 5.0%) and (2) the elimination of Royal Gold’s interest in the 0.71% GSR3 royalty and the 0.39% NVR1 royalty on the mining claims that comprise the undeveloped Crossroads deposit. The GSR3 and NVR1 royalties that cover areas outside the Crossroads deposit at Cortez were not affected by this transaction. The Crossroads deposit continues to be subject to the Company’s GSR2 royalty at the rate of 0.4% to 5.0%.

The royalty portfolio acquired from Barrick has generated approximately $3.9 million in royalty revenue to the Company for the three months ended March 31, 2009 and approximately $7.9 million since the acquisition of the Barrick royalty portfolio on October 1, 2008. The key assets in the Barrick royalty portfolio include the following properties:

Mulatos — A sliding-scale NSR royalty currently paying 3.5% on Alamos’ Mulatos mine. Prior to October 1, 2008, we owned a 0.30%-1.50% sliding-scale NSR royalty on the property. This acquisition consolidated the Mulatos royalty and increased our royalty interest to a 1.0%-5.0% sliding-scale NSR royalty. At current commodity prices, the Mulatos royalty is 5.0%. As a result of the acquisition, the Company recognized approximately $1.3 million in additional royalty revenue from Mulatos during the three months ended March 31, 2009 and approximately $2.4 million since the acquisition of the Barrick royalty portfolio on October 1, 2008. The royalty is capped at 2.0 million gold ounces of production and approximately 370,000 cumulative gold ounces have been produced through March 31, 2009;

Malartic — A 2.0%-3.0% sliding-scale NSR royalty on the Canadian Malartic gold project, owned by Osisko. Osisko announced the completion of a positive feasibility study resulting in proven and probable reserves of 202 million tons of ore, at a grade of 0.031 ounces per ton, containing 6.28 million ounces of gold, of which 4.7 million is subject to our royalty interest. Osisko estimated that gold production over the life of the mine will be approximately 591,000 ounces annually. The royalty is subject to a buy down right and is classified as a development stage royalty interest on the Company’s consolidated balance sheets. If the buy down right is exercised by Osisko, the sliding-scale NSR royalty would be reduced to 1.0%-1.5%; and

Siguiri — A sliding-scale NSR royalty currently paying 1.875% on the Siguiri gold mine in Guinea, West Africa, operated by AngloGold Ashanti. The Company recognized approximately $1.3 million in royalty revenue from Siguiri during the three months ended March 31, 2009 and approximately $2.5 million since the acquisition of the Barrick royalty portfolio on October 1, 2008. The royalty is capped on a dollar basis and approximately $9.3 million remains under the cap as of March 31, 2009.

Please refer to Note 2 of the notes to consolidated financial statements for further discussion on the acquisition of the Barrick royalty portfolio.

Amended and Restated Credit Facility

On October 30, 2008, the Company entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”) with HSBC Bank USA National Association (“HSBC Bank”), Scotiabanc Inc.

(“Scotiabanc”), and The Bank of Nova Scotia (“Bank of Nova Scotia”) which, among other things, increased the Company’s existing credit facility from $80 million to $125 million and extended the maturity date to October 30, 2013. As of March 31, 2009, the Company did not have any amounts outstanding under the credit facility. Refer to “Liquidity and Capital Resources” below within this MD&A for further discussion on the Credit Agreement.

Property Developments

Taparko

The Taparko mine commenced gold production in August 2007 and has contributed approximately $14.0 million in royalty revenue (from TB-GSR1 and TB-GSR2) since production commenced. Reserve characteristics, mining activity, and gold recovery performance has been near feasibility study estimates. However, mill performance has suffered since start-up due to problems associated with the grinding mill drive-train and production ceased on June 11, 2008. A new gear box to correct the mill problems was installed on October 29, 2008, and operations at Taparko re-commenced on November 4, 2008. In January 2009 and March 2009, High River completed further maintenance to improve mill performance. Despite the mill only achieving 68% availability, production for the quarter was higher than any prior comparable period, resulting in approximately 23,000 ounces in sales during the period.

Pursuant to the Amended and Restated Funding Agreement dated February 22, 2006 (the “Funding Agreement”) between Royal Gold, Inc. and Somita SA (“Somita”), a 90% owned subsidiary of High River and the operator of Taparko, Somita is in breach of certain obligations under the Funding Agreement. The Company has invested $35 million for the development of the Taparko mine under the Funding Agreement. As security for the Company’s investment in Somita, two of High River’s subsidiaries have pledged their equity interests in Somita and High River (West Africa) Ltd., the corporate parent of Somita. The pledge will remain in effect until certain production and performance standards have been attained at the Taparko mine. In addition, Royal Gold obtained as collateral a pledge of shares of certain equity investments in public companies held by High River. The collateral will remain in effect until project completion and attainment of certain production or performance standards at the Taparko mine. On November 21, 2008, High River announced the closing of an equity financing with Lybica Holding B.V., an affiliate of ZAO Severstal Resources, the mining division of OAO Severstal (“Severstal”). As a result of the equity financing, Severstal indirectly holds approximately 53% of High River common stock. Royal Gold has not agreed to forbear pursuing any of its remedies under the Funding Agreement or other agreements with High River and its affiliates. High River has recently announced that its ability to continue as a going concern depends on, among other things, its ongoing discussions with its lenders and obtaining additional financing.

Cortez

A portion of our revenue decrease at Cortez was attributable to the restructuring of the GSR2 royalty, from a range of 0.72% to 9.0%, to match the current GSR1 sliding-scale rate, which ranges from 0.40% to 5.0%, resulting in a decrease in royalty revenue of approximately $0.2 million and $1.0 million for the three and nine months ended March 31, 2009, respectively. The decrease in royalty revenue at Cortez was also due to a decrease in production. The production decrease was due primarily to lower grades being mined during the current period. Barrick has announced that they expect production to improve as higher grade material is mined.

Robinson

Royalty revenue from the 3.0% NSR royalty at Robinson, pursuant to the Robinson royalty agreement, is recognized based upon three percent of revenue received by the operator of the mine, Quadra, for the sale of minerals from the Robinson mine, reduced by certain costs incurred by Quadra. Quadra’s concentrate

sales contracts with third-party smelters, in general, provide for a provisional payment based upon assays and quoted metal prices at the date of shipment. Final true up payments are subsequently based upon final assays and market metal prices set on a specified future date. Under current sales contracts between Quadra and its third party smelters, final pricing for copper sales is generally set at least four months after the date of shipment.

Royal Gold recognizes royalty revenue under the Robinson royalty agreement based on amounts contractually due pursuant to the calculations above for the underlying sale. In the event there are significant pricing variations between the provisional and final settlement periods in copper, and to a lesser extent, gold and silver, royalty revenue recognized by the Company on the Robinson royalty will be positively or negatively impacted.

During the three months ended March 31, 2009, we recognized approximately $1.8 million in royalty revenue at Robinson compared to $4.4 million during the three months ended March 31, 2008. The decrease in royalty revenue at Robinson was attributable to a decrease in copper and gold prices, a decrease in copper sales and negative final pricing adjustments. During the three months ended March 31, 2009 and 2008, the average price of copper was $1.56 and $3.52 per pound, respectively, while the average price of copper during the three months ended December 31, 2008 and September 30, 2008, was $1.79 and $3.49, respectively. This significant decrease in the price of copper during our second and third fiscal quarters of 2009 resulted in Quadra having significant negative final pricing adjustments. Furthermore, during the three months ended March 31, 2009, copper sales at Robinson were approximately 34.5 million pounds compared to 38.9 million pounds during the three months ended March 31, 2008, which resulted in lower royalty revenue for the period.

The negative final pricing adjustments impacted our royalty revenue by approximately $0.2 million and $3.3 million during the three months ended March 31, 2009 and December 31, 2008, respectively. Royal Gold may be subject to negative (or positive) pricing adjustments in future periods depending on the price of copper at the time of settlement when compared to price of copper at the shipment date.

Pascua-Lama

Barrick announced on May 7, 2009, that Pascua-Lama will proceed to construction. Barrick has received key construction permits and environmental approvals and Chile and Argentina have reached a tax agreement on the mine. Barrick expects commissioning in late 2012 with production in early 2013. Barrick has announced forecasted average annual production of 750,000 — 800,000 ounces of gold in the first five years.

Holloway-Holt

On October 1, 2008, as part of the Company’s acquisition of a portfolio of royalties from Barrick , we acquired a royalty on a portion of the development stage Holloway-Holt mining project in Ontario, Canada, owned by St Andrew Goldfields Ltd. (“St Andrew”). St Andrew succeeded Newmont Canada Corporation (“Newmont Canada”) as owner of the Holloway-Holt mining project in November 2006. By virtue of the Company’s acquisition of Barrick’s royalty portfolio, RGLD Gold Canada, Inc. succeeded Barrick as the royalty payee under the royalty agreement.

On or about November 3, 2008, St Andrew filed an action in the Ontario Superior Court of Justice (the “Court”) seeking, among other things, declarations by the Court that St Andrew’s obligation in respect of the royalty is limited to only a portion of the total royalty payable, and that any additional royalty obligations under the royalty agreement remain the responsibility of Newmont Canada. Newmont Canada responded that St Andrew is responsible for all royalty obligations under the royalty agreement.

Barrick and we were joined as necessary parties to the litigation in January 2009. Trial concerning calculation of the royalty and the party or parties responsible for paying it was held from January 30, 2009 to February 12, 2009. The Court has not issued any findings, rulings, orders or opinions. The royalty is currently classified as a development stage royalty interest and the Company does not currently receive revenue from the royalty. At this time, the Company is unable to estimate the impact, if any, the litigation will have on the Company’s consolidated financial statements.

Results of Operations

Quarter Ended March 31, 2009, Compared to Quarter Ended March 31, 2008

For the quarter ended March 31, 2009, we recorded net earnings of $4.1 million, or $0.12 per basic and diluted share, as compared to net earnings of $6.9 million, or $0.11 per basic and diluted share (after adjustments for preferred stock dividends), for the quarter ended March 31, 2008. The decrease in our net earnings was primarily due to an increase in depreciation, depletion and amortization as further discussed below.

For the quarter ended March 31, 2009, we recognized total royalty revenue of $20.8 million (which includes $0.3 million of minority interest), at an average gold price of $908 per ounce and an average copper price of $1.56 per pound, compared to royalty revenue of $18.7 (which includes $0.1 million of minority interest) million, at an average gold price of $925 per ounce and an average copper price of $3.52 per pound for the quarter ended March 31, 2008. The increase in royalty revenue for the quarter ended March 31, 2009, compared with the quarter ended March 31, 2008, resulted primarily from production from the recently acquired Barrick royalty portfolio, an increase in production at Taparko and commencement of production at Benso, Peñasquito and Dolores. These increases were partially offset by a decrease in gold and copper prices, a decrease in production and a reduction in our GSR2 royalty rate at Cortez and a decrease in production and negative provisional pricing adjustments at Robinson. Royalty revenue and the corresponding production, attributable to our royalty interests, for the quarter ended March 31, 2009 compared to the quarter ended March 31, 2008 is as follows:

Royalty Revenue and Production Subject to Our Royalty Interests
Quarter Ended March 31, 2009 and 2008
(In thousands, except reported production ozs. and lbs.)

Three Months Ended

Three Months Ended

March 31, 2009

March 31, 2008

Metal(s)/

Royalty

Reported

Royalty

Reported

Royalty

Element

Revenue

Production(1)

Revenue

Production(1)

Taparko(2)

Gold

$

5,091

22,963 oz.

$

3,132

14,224 oz.

Cortez(3)

Gold

$

3,758

63,956 oz.

$

5,313

116,749 oz.

(As Restated)

Mulatos(4)

Gold

$

1,875

41,871 oz.

$

449

32,081 oz.

Robinson(5)

$

1,849

$

4,384

Gold

30,257 oz.

32,313 oz.

Copper

34.5 million lbs.

38.9 million lbs.

Leeville

Gold

$

1,731

106,767 oz.

$

1,865

113,685 oz.

Siguiri(6)

Gold

$

1,292

79,836 oz.

N/A

N/A

Goldstrike

Gold

$

1,114

136,733 oz.

$

1,195

145,369 oz.

Peñasquito (oxide)

$

361

N/A

N/A

Gold

12,027 oz.

N/A

N/A

Silver

0.6 million oz.

N/A

N/A

Dolores(7)

Gold

$

161

14,169 oz.

N/A

N/A

Other(8)

Various

$

3,565

N/A

$

2,393

N/A

Total Royalty Revenue

$

20,797

$

18,731

(As Restated)