Ladies and gentlemen, welcome to the Royal Gold 2023 First Quarter Conference Call. My name is Felicia, and I'll be your operator today. Please note, there will be a Q&A session on this call. [Operator Instructions]. I will now hand you over to your host, Alistair Baker, Vice President, Investor Relations and Business Development. Alastair, please go ahead.

Thank you, operator. Good morning, and welcome to our discussion of Royal Gold's first quarter 2023 Results. This event is being webcast live, and you will be able to access a replay of this call on our website. Speaking on the call today are Bill Heissenbuttel, President and CEO; Mark Isto, Executive Vice President and COO of Royal Gold Corporation; and Paul Libner, CFO and Treasurer; Randy Shefman, General Counsel; Dan Breeze, Vice President, Corporate Development of RG AG; and Martin Raffield, Vice President of Operations, are also available for questions. During today's call, we will make forward-looking statements, including statements about our projections and expectations for the future. These statements are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These risks and uncertainties are discussed in yesterday's press release and our filings with the SEC. We will also refer to certain non-GAAP financial measures, including adjusted net income, adjusted net income per share, adjusted EBITDA margin and cash G&A expense. Reconciliations of adjusted net income, adjusted net income per share, adjusted EBITDA, adjusted EBITDA margin and cash G&A expense to the most directly comparable GAAP measures are available in yesterday's press release, which can be found on our website. Bill will start with a review of the quarter, Mark will provide some commentary on the portfolio, and Paul will wrap up with the financial summary. After the formal remarks, we'll open the lines for a Q&A session. I'll now turn the call over to Bill.

Good morning, and thank you for joining the call. I'll begin on Slide 4. Our first quarter of 2023 provided a strong start to the year. It was a fairly quiet quarter for us, and our portfolio performance was strong and steady. Revenue was $170 million for the quarter and operating cash flow was $109 million, which were both up nicely from the same period last year. Earnings were $64 million or $0.97 per share. After a minor adjustment, adjusted earnings were $0.96 per share. We paid $25 million in dividends at our increased rate for 2023 of $1.50 per share, which is a 7% increase over the 2022 level. We have an unmatched record in the precious metals sector for consistent dividend increases, and we have increased the dividend for 22 consecutive years. We made a payment on our revolver of $75 million, and we ended the quarter with liquidity of almost $650 million. Additionally, we completed an investor update two weeks ago and went into detail on some of our newer assets and where we have seen some interesting developments at those additions. We also discussed our 2023 guidance during that update and provided an overview of our 2022 ESG report, which is available on our website. We have advanced our report significantly in the ESG area, and the report contains some good detail on how we're tracking data like GHG emissions and water use in our portfolio. It also includes disclosure in alignment with TCFD guidelines as well as our first climate scenario analysis for the portfolio. ESG reporting is an evolving subject area, so I encourage you to review the report and provide us any feedback. I'll now turn the call over to Mark to provide some comments on the portfolio.

Thanks, Bill. Turning to Slide 5, I'll give some comments on first quarter revenue. Overall volume for the quarter was a very strong 90,000 GEOs, which is up over 4% from this time last year. Our royalty segment contributed $55 million in revenue, down slightly from the prior year quarter. Lower contributions from Penasquito and Voisey's Bay were partially offset by strong revenue at Cortez from the Legacy Zone and our new CC Zone. We also received our annual revenue payment from Red Chris in the quarter and new royalty revenue of about $850,000 from King of the Hills in Australia. Our Stream segment revenue was about $115 million, up about 9% compared to the prior year quarter. Higher contributions from Khoemacau, Mount Milligan, Xavantina and Rainy River more than offset lower revenue from Andacollo. Please note that we received on shipment each of gold and copper equating to about 6,000 GEOs from Mount Milligan in mid-February, earlier than our original end of March forecast. The early delivery allowed these shipments containing this 6,000 GEOs to be sold in the March quarter rather than our original expectation during the June quarter. These timing differences are not unusual for us. And while they don't impact results on a long-term basis, they can have a fairly significant impact on how one quarter compares to the next. I'd like to spend a moment on this point and turn to Slide 6 to review the sequence of mine production through the stream metal sales. We have three large stream interest in mines that produce metal concentrate: Mount Milligan, Andacollo and Khoemacau. As shown in schematic, the process of mining ore to delivering metal to Royal Gold can take up to five months due to the timing required to ship concentrates from the mine site…

Thanks, Mark. I will now turn to Slide 8 and give an overview of the financial results for the quarter. For this discussion, I will be comparing the quarter ended March 31, 2023 to the prior year quarter. Revenue was $170 million for the quarter, an increase of 5%. The main driver of the higher revenue this quarter was stronger operating performance at many of our interests as well as new revenue of approximately $6 million from the addition of Cortez royalty interest we acquired during the second half of 2022. With respect to metal prices and compared to the prior year quarter, the price of gold was up slightly by 1%, silver was down 6% and copper was down 11%. Gold remains the dominant revenue source making up 71% of our total revenue followed by copper at 14% and silver at 12%. Turning to Slide 9. G&A expense increased to $11 million and $8.9 million in the prior quarter. The increase was primarily due to higher employee-related costs, which costs also include noncash employee stock compensation expense. Although inflationary pressures continue to have an impact on many within the metals and mining sector, our cash G&A costs have remained low or less than 5% of total revenue. Our DD&A expense decreased to $46 million from $48 million in the prior year quarter. On a unit basis, this expense was $514 per GEO for the quarter compared to $555 per GEO in the prior year period. The DD&A rate on a unit basis declined in the current quarter due to lower depletion rates at Mount Milligan and Pueblo Viejo, which were the result of reserve additions at the end of 2022. The decrease was partially offset by increased depletion expense at Khoemacau, which was the result of higher silver cells…

Thanks, Paul. This was a quiet and steady quarter for Royal Gold. Our portfolio performed well, and we saw continued progress at several assets in the portfolio that should provide interesting news flow in the near to medium term. I hope you found the discussion on timing helpful. Recent announcements regarding Centerra's 2023 production expectations at Mount Milligan and Pueblo Viejo expansion and the Goldrush Record of Decision are good examples of how timing issues can impact expectations for a particular time period in 2023 in particular. However, we take a longer-term view of events and are pleased with our portfolio performance. We remain focused on the balance sheet and rebuilding our liquidity in the quarter after a very active year in 2022, and I think we're very well positioned to remain active in 2023. Operator that concludes our prepared remarks. I'll now open the line for questions.

Thank you. [Operator Instructions] The first question comes from Josh Wolfson from RBC Capital Markets. Your line is now open. Josh, please go ahead.

Thanks very much. Two quick questions for me. First one is for the Cortez legacy royalty, which outperformed our expectations and I guess what the guidance implies for the year, Barrick had talked about a bit of a weaker result this quarter and then results improving through the rest of the year. But given the royalty payout was so high this quarter, I'm just wondering if expectations have changed at all based on the first quarter performance or if this was as expected.

Josh, thanks for the question. I might turn that one over to Mark for response.

Yeah, sure. I guess my view is that we would look at the full year guidance as the best view on the future for the year. I mean, they delivered about 37% on the midpoint of the guidance during the first quarter. So I would just take it as a strong first quarter but we wouldn't change our view for the rest of the year. We would be in the guidance that they pulled.

Okay. Got it. It sounds like it did perform a bit better, but maybe too soon to make any conclusions.

I would agree with that statement.

Okay. Got it. Mildly optimistic there. And the second question is, I may have missed this, but the company does typically provide some sort of stream production guidance for the upcoming quarter. Was there a number that the team felt comfortable with issuing? Or should we just look at the annual figures for production this year?

Yeah. Josh, we moved away from the quarterly stream segment sales forecast when we went to first the six-month guidance and then yearly guidance. The only time we do it is in February for the first quarter. But we don't -- we haven't continued that -- what we used to do a couple of years ago. So stick with the annual guidance as going to look to.

Okay. Those are all my questions. Thank you very much.

The next question we have comes from Cosmos Chiu from CIBC. Please go ahead. Your line is now open.

Hi, thanks, Bill, Mark, Paul and Alistair. I guess you sort of answered this question, but I'll ask you anyway. You did over 90,000 GEOs in Q1. Your 2023 guidance, which is still pretty fresh, 320 to 345. And so I know there's timing differences and whatnot, but if I were to sort of multiply out Q1, you would exceed the top end. So again, how should we look at it? Like, again, I know the guidance is pretty fresh. I know the 6,000 ounces that contributed to Q1. But either way, how should we look at it?

Yeah. Cosmos, I guess what I would just caution you just don't annualize what we just did. As you say, the guidance we gave was two weeks ago. We remain comfortable with it. And you actually noted the 6,000 GEOs. We didn't expect them in the first quarter. We expected them in the second quarter and then they arrived early. So again, I'd keep an eye on the longer-term number.

Maybe ask a different way. When would you start to be viewing and potentially updating your guidance? Again, this is only two weeks old. But when does that process sort of start?

My view is we look at it every time we come to one of these meetings. It's part of the quarterly analysis. And if we felt the need to adjust the range, we don't say, okay, it's going to be the August meeting, or at some other point. So it's regularly reviewed on a quarterly basis, and we'd let you know if we needed to make an adjustment.

Of course. Maybe switching gears a little bit, a follow-up on my buddy, Josh's question. In terms of Cortez, thanks, Alistair, once again and team, for giving us guidance, 9.4% of Legacy and 1.6% of CC. Clearly, that's very simplistic and there's a lot more behind it in terms of different zones and whatever. Based on what you know, like how is that reconciling so far in terms of your expectations? And what's actually sort of coming through? Again, I understand that's early stage. I guess I'm just trying to get to -- from what -- your perspective, as you have more information, like how is it reconciling so far to what you had expected?

Yeah. Cosmos, looking at it, we only have had two quarters of the Rio Tinto royalty, and we only had one quarter of the Idaho royalty, really. I mean, it's got full quarters. So it might be a little early to reconcile. But Mark, is there anything you've seen in the numbers that would make us want to adjust the 9.4 and the 1.6 or how we describe these things?

I don't think so. I think the -- we've always tried to provide a guidance, gross royalty on the Legacy Zone, as we call it now. And historically, it's been a very accurate way to present it to the public. So that's why we continue to do it. So I'm very happy with how we approach it and how we try to convey that information.

Good to hear.

And maybe --

I don't -- sorry, I would just say, I don't think you really would want us to go through GSR1, GSR2, GSR3, NVR1 and NVR1C, NVR2 and NVR3. We're trying to make your life easier with it. But if we see some issue with where production is falling, we would certainly consider reclassifying how we describe it.

I agree. Don't give me any more details. Even better, if you can just give me a number, I think that's even better. But you should simplify as much as you can. And then one last question here. In terms of your balance sheet, again, great to see that you're repaying your debt, especially in today's higher interest rate environment. Is the plan to kind of pay it back as quick as possible and just continue with it? Or how do we look at it in terms of balancing out potential opportunities out there?

Well, we're not going to let repayments under the revolver trump a good investment opportunity. So you're correct in saying the goal is to pay it back as quickly as possible in the absence of a business development opportunity. But if we see a good opportunity, and we have to take the balance back up, we would certainly consider doing that. We don't -- the top of our strategic goals is not to reduce this to zero before we do anything else.

Great. Thank you, guys, Bill and team. And thanks for taking my questions.

Thanks, Cosmos.

No other questions on the phone line. I'll hand back to the management team. If they want any closing remarks.

Yeah. Great. Thank you to everyone for taking the time to join us today. We certainly appreciate your interest in Royal Gold, and we look forward to updating you on our progress during our next quarterly call. Have a good day.

Thank you, everyone. This does conclude today's call. You may now disconnect your lines.