Royal Gold, Inc. (NASDAQ: RGLD) (together with its subsidiaries, “Royal Gold,” the “Company,” “we,” “us,” or “our”) reports net income of $239.4 million, or $3.63 per share, for the year ended December 31, 2023, on revenue of $605.7 million and operating cash flow of $415.8 million. Adjusted net income¹ was $232.9 million, or $3.53 per share.

For the quarter ended December 31, 2023 (“fourth quarter”), we reported net income of $62.8 million, or $0.95 per share, on revenue of $152.7 million and operating cash flow of $101.1 million.

Sales volume for 2023 at metal prices used to provide GEO² guidance was 315,600 GEOs³, slightly below the low end of the previously-issued guidance range of 320,000 to 345,000 GEOs, and in line with the range of expectations we provided with our third quarter 2023 results. At actual 2023 metal prices, sales volume was approximately 312,100 GEOs.

2023 Highlights:

• Solid financial results with revenue of $605.7 million, operating cash flow of $415.8 million and earnings of $239.4 million
• Revenue split: 76% gold, 12% silver, 9% copper
• Sales volume of 312,100 GEOs^2,3
• Sustained high adjusted EBITDA margin¹ of 79%
• Debt reduced by $325 million to $250 million
• Total available liquidity increased to $845 million
• Revolving credit facility maturity extended to June 28, 2028
• Paid $1.50 per share dividend

Fourth Quarter 2023 Highlights:

• Increased dividend for the 23^rd consecutive year to $1.60 per share for 2024, a 7% increase over 2023
• Repaid $75 million of balance outstanding on revolving credit facility

“We finished 2023 on a strong note with solid financial results in the fourth quarter,” commented Bill Heissenbuttel, President and CEO of Royal Gold. “We took advantage of our strong cash flow during the year to repay debt and build our liquidity to be well-positioned for new acquisition opportunities that meet our investment criteria. We also kept our focus on increasing our return of capital to shareholders and we raised our dividend for the 23^rd consecutive year, which remains an unparalleled record in the precious metals sector.”

“While we anticipate issuing 2024 guidance in April for our total portfolio, we are expecting to see continued revenue growth from our newest producers, Bellevue and King of the Hills, as those operations continue to ramp-up,” continued Mr. Heissenbuttel, “and we expect new revenue from several development projects as they transition to production, including Goldrush, Mara Rosa, Côté Gold and Manh Choh.”

Recent Portfolio Developments

Principal Property Updates

Notable recent updates as reported by the operators of our Principal Properties include:

Agreement with Centerra that Provides for Mine Life Extension at Mount Milligan

On February 14, 2024, we announced an additional agreement with Centerra Gold Inc. (“Centerra”) with respect to the Mount Milligan mine in British Columbia that will allow an extension of the mine life to 2035 and provide the potential for a future mine life increase. As part of the announcement of the agreement, Centerra described a three-part strategy to further increase the Mount Milligan mine life that includes the completion of a Preliminary Economic Assessment in the first half of 2025 to evaluate mine life extension opportunities, further exploration drilling, and a site optimization program that began in the fourth quarter. Please refer to the press release titled “Royal Gold Announces Additional Agreement with Centerra that Provides for Mine Life Extension at Mount Milligan” for more detail.

Additionally, on February 14, 2024, Centerra provided 2024 production guidance for Mount Milligan of 180,000 to 200,000 ounces of gold and 55 to 65 million pounds of copper.

Record of Decision Received at Goldrush and Cortez 2024 Production Forecast Provided by Barrick

On December 11, 2023, Barrick Gold Corporation (“Barrick”) reported that the Record of Decision (“ROD”) approving the plan of operations for the new Goldrush mine in Nevada (part of the Cortez Complex) was issued by the US Bureau of Land Management, approximately 6 months later than Barrick’s initial expectation. Barrick anticipates production to ramp up in 2024 after commissioning of the initial project infrastructure, and has forecasted expected gold production from Goldrush of 130,000 ounces in 2024, growing to approximately 400,000 ounces per year by 2028 (100% basis).

Further, on February 14, 2024, Barrick reported that production at the Cortez Complex in 2024 is expected to be lower in 2024 relative to 2023 primarily due to changes in the Crossroads resource model that are expected to reduce oxide mill feed. Barrick expects this reduction to be partially offset by a higher contribution from Goldrush, although the delay in receiving the ROD during 2023 has pushed some production at Goldrush from 2024 into 2025. Barrick is expecting gold production at the Cortez Complex to be 620,000 to 680,000 ounces in 2024 (100% basis).

Update on Ramp-Up of Plant Expansion with Further Deferral of Silver Deliveries at Pueblo Viejo

On February 14, 2024, Barrick provided an update on the plant expansion and mine life extension project at Pueblo Viejo. According to Barrick, construction and commissioning activities for the plant expansion were substantially completed by the end of 2023. Reconstruction of the ore stockpile feed conveyor is underway after a failure reported in the fourth quarter, and Barrick now expects this reconstruction to be completed in the second quarter of 2024, which will allow the plant to reach full throughput. Barrick further reported that the focus during the first quarter of 2024 will be on the continued stability and optimization of the flotation circuit. With respect to the mine life extension project, Barrick reported that the technical and social studies for additional tailings storage capacity at the El Naranjo facility continued to advance as planned. Geotechnical drilling and site investigations are ongoing and continue to support the feasibility study, due for completion in the third quarter of 2024.

Silver stream deliveries were approximately 223,000 ounces for the fourth quarter compared to 337,900 ounces for the prior year quarter, and an additional 165,400 ounces of silver deliveries were deferred during the current period. As of December 31, 2023, approximately 854,000 ounces remain deferred, and the timing for the delivery of the entire deferred amount is uncertain. We expect that silver recoveries could remain highly variable and material deliveries of deferred silver ounces are not expected until the plant expansion is complete and is running at full production levels.

Barrick is expecting its share of gold production at Pueblo Viejo to be 420,000 to 490,000 ounces in 2024 (60% basis).

Production for 2024 Expected to Remain in Line with 2023 at Andacollo

On January 16, 2024, Teck Resources Limited (“Teck”) reported that the Andacollo mine in Chile continues to face extreme drought conditions, causing water restrictions which impact production, and Teck expects 2024 copper production to be similar to 2023. According to Teck, steps are being taken to mitigate these risks, with a solution likely to be in place in 2025. As a result, and with the benefit of higher grade ore, copper production is expected to increase between 2025 and 2027, compared to 2024. Gold and copper grades are relatively well correlated at Andacollo and gold production tends to track copper production.

Announcement of Change in Ownership of Khoemacau

On November 21, 2023, Khoemacau Copper Mining (“KCM”), the owner of the Khoemacau mine in Botswana, announced that the shareholders of its parent company, Cuprous Capital Ltd (“Cuprous”), had entered into a share purchase agreement with MMG Limited (“MMG”), whereby MMG will acquire all the issued share capital of Cuprous. MMG is a large and well-capitalized base metal mining company listed on the Stock Exchange of Hong Kong, with operations and projects in Australia, the Democratic Republic of the Congo, Peru and Canada. MMG has reported that the parties have agreed to work towards completion of the transaction in the first quarter of 2024.

During development of Khoemacau, Royal Gold made available a $25 million subordinated debt facility to KCM which is repayable at Royal Gold’s option upon the occurrence of certain events, including a change of control. Including capitalized interest, the amount owing under this facility was approximately $35.7 million as of December 31, 2023.

Other Property Updates

Notable recent updates as reported by the operators of other select portfolio assets include:

Producing Properties

Bellevue (2% NSR royalty): Bellevue Gold Limited (“Bellevue”) announced on January 29, 2024, that the processing plant achieved nameplate capacity of 1 million tonnes per year for December, and production ramp-up is progressing at the Bellevue Gold Project in Western Australia. With plant commissioning completed, Bellevue has provided gold production guidance of 75,000-85,000 ounces for the first six months of 2024.

King of the Hills (1.5% NSR royalty): On January 31, 2024, Red 5 Limited reported continued strong performance at the King of the Hills mine in Western Australia, with record crushing and milling performance in December resulting in annualized mill throughput exceeding the 5.5 million tonnes per year nameplate capacity.

Rainy River (6.5% gold stream, 60% silver stream): On February 8, 2024, New Gold Inc. (“New Gold”) provided gold production guidance for the Rainy River mine in Ontario that indicates an increasing production profile over the next three years, with expected production of 250,000 to 280,000 ounces in 2024, 295,000 to 335,000 ounces in 2025 and 315,000 to 355,000 ounces in 2026. Additionally, New Gold expects exploration at Rainy River to prioritize near-surface opportunities for open pit extraction, underground targets downplunge of the current ore zones for potential resource and reserve growth, as well as potential new underground zones accessed from new underground infrastructure.

Development and Evaluation Properties

Back River (1.95% GSR royalty on the Goose Project): On January 23, 2024, B2Gold Corp. (“B2Gold”) reported that construction of the Goose Project in the Back River Gold District in Nunavut is progressing on track with the first gold pour on schedule for the first quarter of 2025. B2Gold expects gold production in 2025 of 220,000 to 260,000 ounces, and approximately 300,000 ounces per year over the first 5 years of operation. B2Gold also reported that $28 million is budgeted for exploration at the Back River Gold District in 2024, which includes 25,000 meters of drilling to target extensions of the Llama and Umwelt deposits, the largest and highest grade resources at the Goose Project. Further, B2Gold expects to finalize an updated life of mine plan for the Goose Project in the first quarter of 2024.

Côté Gold (1% NSR royalty): IAMGOLD Corporation reported on January 23, 2024, that commissioning activities at the Côté Gold Project are progressing and that initial production remains on track for March, 2024.

Great Bear (2% NSR royalty): Kinross Gold Corporation (“Kinross”) provided an update on activity at the Great Bear Project in Ontario on February 14, 2024. Kinross reported that the exploration program continues to make excellent progress, execution planning for the advanced exploration program is well underway, and permitting continues to advance on plan. Kinross expects to provide the results of a PEA in the second half of 2024.

Mara Rosa (1.0% NSR and 1.75% NSR royalties): On January 24, 2024, Hochschild Mining PLC (“Hochschild”) reported that construction and commissioning of the Mara Rosa Project in Brazil is in the final stages with the first gold pour expected in February, 2024. Hochschild expects gold production of 83,000 to 93,000 ounces in 2024.

Manh Choh (3% NSR royalty and 28% NSR royalty on silver): According to Kinross, the operator and 70% owner of the Manh Choh Project in Alaska, as of February 14, 2024, construction is essentially complete and first production is on schedule for the second half of 2024. Kinross expects total production at Manh Choh on a 100% basis to be approximately 900,000 gold equivalent ounces over a 4-5 year mine life.

2023 Overview

For the year ended December 31, 2023, we recorded net income and comprehensive income attributable to Royal Gold stockholders (“net income”) of $239.4 million, or $3.64 per basic share and $3.63 per diluted share, as compared to net income of $239.0 million, or $3.64 per basic share and $3.63 per diluted share, for the year ended December 31, 2022.

For the year ended December 31, 2023, we recognized total revenue of $605.7 million, which is comprised of stream revenue of $418.3 million and royalty revenue of $187.4 million, at an average gold price of $1,941 per ounce, an average silver price of $23.35 per ounce and an average copper price of $3.85 per pound, compared to total revenue of $603.2 million, which is comprised of stream revenue of $417.8 million and royalty revenue of $185.4 million, at an average gold price of $1,800 per ounce, an average silver price of $21.73 per ounce and an average copper price of $3.99 per pound, for the year ended December 31, 2022.

The increase in our total revenue for the year ended December 31, 2023, compared with the year ended December 31, 2022, resulted primarily from higher gold and silver prices when compared to the prior year. Lower sales compared to the prior year due to lower gold and copper sales at Mount Milligan, lower production from Pueblo Viejo and the impact of the approximate 4 month suspension of operations at Peñasquito commencing in June, 2023, due to a labor strike, were partially offset by higher gold production at the Cortez Legacy Zone and the new Cortez royalties acquired in 2022.

Cost of sales, which excludes depreciation, depletion and amortization (“DD&A”), decreased to $90.5 million for the year ended December 31, 2023, from $94.6 million for the year ended December 31, 2022. The decrease was primarily due to lower gold and copper sales at Mount Milligan and lower gold and silver sales at Pueblo Viejo when compared to the prior year. This decrease was partially offset by higher silver sales at Khoemacau when compared to the prior year. Cost of sales, which excludes depreciation, depletion and amortization, is specific to our stream agreements and is the result of our purchase of gold, silver and copper for a cash payment. The cash payment for gold from Mount Milligan is the lesser of $435 per ounce or the prevailing market price of gold when purchased, while the cash payment for our other streams is a set contractual percentage of the gold, silver or copper (Mount Milligan) spot price near the date of metal delivery.

General and administrative costs increased to $39.8 million for the year ended December 31, 2023, from $34.6 million for the year ended December 31, 2022. The increase was primarily due to higher corporate costs and an increase in non-cash stock compensation expense.

DD&A decreased to $164.9 million for the year ended December 31, 2023, from $178.9 million for the year ended December 31, 2022. The decrease was primarily due to lower depletion rates at Pueblo Viejo as a result of proven and probable mineral reserve increases when compared to the prior year. The decrease was partially offset by higher depletion expense at Khoemacau due to the ramp-up of production in 2023 and additional depletion from the newly acquired royalties at Cortez in 2022.

There were no impairment charges on any of our stream or royalty interests for the year ended December 31, 2023. During the year ended December 31, 2022, we recognized an impairment loss of $4.3 million on the carrying value of a non-principal exploration stage royalty due to new legal information received.

Interest and other expense increased to $30.9 million for the year ended December 31, 2023, from $17.2 million for the year ended December 31, 2022. The increase in the current period was primarily attributable to higher interest expense as a result of higher interest rates when compared to the prior period.

Income tax expense was $42.0 million for the year ended December 31, 2023, as compared to $32.9 million for the year ended December 31, 2022, which resulted in an effective tax rate of 14.9% in the current period and 12.1% in the prior period. The effective tax rates for the years ended December 31, 2023 and 2022, were primarily impacted by the release of valuation allowances on certain foreign deferred tax assets.

Net cash provided by operating activities totaled $415.8 million for the year ended December 31, 2023, compared to $417.3 million for the year ended December 31, 2022. The decrease was primarily due to higher interest paid on the outstanding revolving credit facility compared to the prior period. This decrease was partially offset by higher proceeds received from our stream and royalty interests, net of cost of sales, compared to the prior period.

Net cash used in investing activities totaled $2.8 million for the year ended December 31, 2023, compared to net cash used in investing activities of $922.9 million for the year ended December 31, 2022. The decrease over the prior period was primarily due to the new royalty acquisitions during the year ended December 31, 2022.

Net cash used in financing activities totaled $427.4 million for the year ended December 31, 2023, compared to net cash provided by financing activities of $480.6 million for the year ended December 31, 2022. The change was primarily due to an increase in the debt outstanding for the year ended December 31, 2022 of $575 million that was used to fund acquisitions of our new royalty interests at Cortez and the Great Bear Project, and the repayment of $325 million of debt outstanding during the current period.

At December 31, 2023, we had working capital of $95.0 million, including $104.2 million of cash and equivalents. This compares to working capital of $122.2 million, including $118.6 million of cash and equivalents at December 31, 2022. The decrease in our working capital was primarily due to a decrease in our available cash, which resulted from increased debt repayments during the current period.

Fourth Quarter 2023 Overview

In the fourth quarter, we recorded net income of $62.8 million, or $0.95 per basic and diluted share, as compared to net income of $56.4 million, or $0.86 per basic and diluted share, for the quarter ended December 31, 2022. When compared to the prior year quarter, the increase in net income was primarily attributable to lower cost of sales and lower depreciation, depletion and amortization expense, both largely driven by lower metal sales during the current quarter, and the impairment of royalty interests in the prior year quarter. Each of these were partially offset by a decrease in our revenue, as discussed below.

For the fourth quarter, we recognized total revenue of $152.7 million, comprised of stream revenue of $98.3 million and royalty revenue of $54.4 million at an average gold price of $1,971 per ounce, an average silver price of $23.20 per ounce and an average copper price of $3.70 per pound. This is compared to total revenue of $163.0 million for the prior year period, comprised of stream revenue of $108.9 million and royalty revenue of $54.1 million, at an average gold price of $1,726 per ounce, an average silver price of $21.17 per ounce and an average copper price of $3.63 per pound.

The decrease in our total revenue resulted primarily from lower gold and copper sales at Mount Milligan, lower gold and silver sales at Pueblo Viejo and lower royalty revenue at Peñasquito. These decreases were partially offset by higher sales from Andacollo, higher revenue from Cortez, and higher gold and silver prices compared to the prior year quarter.

Cost of sales, which excludes DD&A, decreased to $20.8 million for the fourth quarter, from $25.0 million for the prior year period. The decrease, when compared to the prior year quarter, was primarily due to lower gold and copper sales at Mount Milligan and lower gold and silver sales at Pueblo Viejo. Cost of sales is specific to our stream agreements and is the result of our purchase of gold, silver and copper for a cash payment. The cash payment for gold from Mount Milligan is the lesser of $435 per ounce or the prevailing market price of gold when purchased, while the cash payment for our other streams is a set contractual percentage of the gold, silver or copper (Mount Milligan) spot price near the date of metal delivery.

General and administrative costs increased to $9.7 million for the fourth quarter, from $8.8 million for the prior year period. The increase was primarily due to higher corporate costs and higher non-cash stock compensation expense in the current period.

DD&A decreased to $40.0 million for the fourth quarter, from $49.2 million for the three months ended December 31, 2022. The decrease in the current quarter was primarily due to lower contributions from Mount Milligan and Pueblo Viejo, and lower DD&A rates for Pueblo Viejo in the current period compared to the prior year period.

Interest and other expense was $6.0 million for the fourth quarter, in line with $6.1 million for the prior year period. The current all-in borrowing rate under our revolving credit facility was 6.6% as of December 31, 2023, compared to 5.9% in the prior year period.

For the fourth quarter, we recorded income tax expense of $13.4 million, compared with income tax expense of $12.6 million for the three months ended December 31, 2022. The income tax expense resulted in an effective tax rate of 17.5% in the current period, compared with 18.2% for the three months ended December 31, 2022.

Net cash provided by operating activities totaled $101.1 million for the fourth quarter, compared to $101.0 million for the prior year period.

Net cash used in investing activities was nil for the fourth quarter, compared to $206.4 million for the prior year period. The change was primarily due to the acquisition of a new royalty interest at Cortez in the prior year period.

Net cash used in financing activities totaled $99.8 million for the fourth quarter, compared to net cash provided by financing activities of $101.7 million for the prior year period. The decrease was primarily due to reduced borrowings and repayment of $75 million on our revolving credit facility during the current year period.

Other Corporate Updates

Total Available Liquidity Increases to Approximately $845 Million

On December 6, 2023, Royal Gold repaid $75 million of outstanding borrowings on the $1 billion revolving credit facility, resulting in $250 million outstanding and $750 million available as of December 31, 2023. Total liquidity at the end of the fourth quarter increased to approximately $845 million, which consisted of $95.0 million of working capital and the $750 million undrawn amount available under the revolving credit facility.

Outlook for 2024

We expect stream segment sales of 47,000 to 52,000 GEOs for the quarter ended March 31, 2024, and we expect to issue guidance for 2024 sales, depreciation, depletion and amortization expense, and effective tax rate early in the second quarter of 2024.

Royal Gold has no material additional financing commitments.

Property Highlights

A breakdown of revenue for the Company’s stream and royalty portfolio can be found on Table 1 for the quarters and calendar years ended December 31, 2023 and December 31, 2022. Table 2 shows historical stream metal sales and metal sales attributable to the Company’s royalty interests for the Company’s principal stream and royalty properties. Calendar year 2023 operator production estimates for the Company’s principal stream and royalty properties compared to actual production reported by the operators at these properties can be found on Table 3. Stream segment purchases and sales for the quarters and calendar years ended December 31, 2023 and December 31, 2022 and inventories for December 31, 2023 and December 31, 2022 can be found on Table 4. Highlights at certain of the Company’s principal producing and development properties during 2023 compared to 2022 are detailed in the Company’s Annual Report on Form 10-K, for the year ended December 31, 2023, which is expected to be filed with the Securities and Exchange Commission on February 15, 2024.

CORPORATE PROFILE

Royal Gold is a precious metals stream and royalty company engaged in the acquisition and management of precious metal streams, royalties and similar production-based interests. As of December 31, 2023, the Company owned interests on 178 properties on five continents, including interests on 37 producing mines and 22 development stage projects. Royal Gold is publicly traded on the Nasdaq Global Select Market under the symbol “RGLD.” The Company’s website is located at www.royalgold.com.

Note: Management’s conference call reviewing the fourth quarter and full year 2023 results will be held on Thursday, February 15, 2024, at 12:00 pm Eastern Time (10:00 am Mountain Time). The call will be webcast and archived on the Company’s website for a limited time.

Additional Investor Information: Royal Gold routinely posts important information, including information about upcoming investor presentations and press releases, on its website under the Investors tab. Investors and other interested parties are encouraged to enroll at www.royalgold.com to receive automatic email alerts for new postings.

Forward-Looking Statements: This press release includes “forward-looking statements” within the meaning of U.S. federal securities laws. Forward-looking statements are any statements other than statements of historical fact. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from these statements. Forward-looking statements are often identified by words like “will,” “may,” “could,” “should,” “would,” “believe,” “estimate,” “expect,” “anticipate,” “plan,” “forecast,” “potential,” “intend,” “continue,” “project,” or negatives of these words or similar expressions. Forward-looking statements include, among others, statements about the following: our expected financial performance and outlook, including our first quarter 2024 guidance for stream segment sales of GEOs; operators’ expected operating and financial performance, including production, deliveries, mine plans, environmental and feasibility studies, technical reports, mine facilities, mineral resources and reserves, development, and asset assessments; other expected developments relating to operators, including the anticipated sale of KCM; and the timing of royalty payments and metal deliveries, including deferred amounts at Pueblo Viejo.

Factors that could cause actual results to differ materially from these forward-looking statements include, among others, the following: a lower-price environment for gold, silver, copper or other metals; operating activities or financial performance of properties on which we hold stream or royalty interests, including variations between actual and forecasted performance, operators’ ability to complete projects on schedule and as planned, operators’ changes to mine plans and mineral reserves and mineral resources (including updated mineral reserve and mineral resource information), liquidity needs, mining and environmental hazards, labor disputes, distribution and supply chain disruptions, permitting and licensing issues, or operational disruptions; contractual issues involving our stream or royalty agreements; the timing of deliveries of metals from operators and our subsequent sales of metal; risks associated with doing business in foreign countries; increased competition for stream and royalty interests; environmental risks, including those caused by climate change; potential cyber-attacks, including ransomware; our ability to identify, finance, value and complete acquisitions; adverse economic and market conditions; impact of health epidemics and pandemics; changes in laws or regulations governing us, operators or operating properties; changes in management and key employees; and other factors described in our reports filed with the Securities and Exchange Commission, including Item 1A. Risk Factors of our most recent Annual Report on Form 10-K. Most of these factors are beyond our ability to predict or control. Other unpredictable or unknown factors not discussed in this release could also have material adverse effects on forward-looking statements.

Forward-looking statements speak only as of the date on which they are made. We disclaim any obligation to update any forward-looking statements, except as required by law. Readers are cautioned not to put undue reliance on forward-looking statements.

Statement Regarding Third-Party Information: Certain information provided in this press release, including production estimates, has been provided to us by the operators of the relevant properties or is publicly available information filed by these operators with applicable securities regulatory bodies, including the Securities and Exchange Commission. Royal Gold has not verified, and is not in a position to verify, and expressly disclaims any responsibility for the accuracy, completeness or fairness of any such third-party information and refers the reader to the public reports filed by the operators for information regarding those properties.

Information in this press release concerning the Khoemacau Copper Project was provided to the Company by Cupric Canyon Capital L.P., the privately held owner and developer of Khoemacau. Such information may not have been prepared in accordance with applicable laws, stock exchange rules or international standards governing preparation and public disclosure of technical data and information relating to mineral properties. Royal Gold has not verified, and is not in a position to verify, and expressly disclaims any responsibility for the accuracy, completeness or fairness of this third-party information, and investors are cautioned not to rely unduly upon this information.

Schedule A – Non-GAAP Financial Measures and Certain Other Measures

Overview of non-GAAP financial measures:

Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by U.S. generally accepted accounting principles (“GAAP”). These measures should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP. In addition, because the presentation of these non-GAAP financial measures varies among companies, these non-GAAP financial measures may not be comparable to similarly titled measures used by other companies.

We have provided below reconciliations of our non-GAAP financial measures to the comparable GAAP measures. We believe these non-GAAP financial measures provide useful information to investors for analysis of our business. We use these non-GAAP financial measures to compare period-over-period performance on a consistent basis and when planning and forecasting for future periods. We believe these non-GAAP financial measures are used by professional research analysts and others in the valuation, comparison and investment recommendations of companies in our industry. Many investors use the published research reports of these professional research analysts and others in making investment decisions. The adjustments made to calculate our non-GAAP financial measures are subjective and involve significant management judgement. Non-GAAP financial measures used by management in this release or elsewhere include the following:

1. Adjusted earnings before interest, taxes, depreciation, depletion and amortization, or adjusted EBITDA, is a non-GAAP financial measure that is calculated by the Company as net income adjusted for certain items that impact the comparability of results from period to period, as set forth in the reconciliation below. The net income and adjusted EBITDA margins represent net income or adjusted EBITDA divided by total revenue. We consider adjusted EBITDA to be useful because the measure reflects our operating performance before the effects of certain non-cash items and other items that we believe are not indicative of our core operations.
2. Net debt (or net cash) is a non-GAAP financial measure that is calculated by the Company as debt (excluding debt issuance costs) as of a date minus cash and equivalents for that same date. Net debt (or net cash) to trailing twelve months (TTM) adjusted EBITDA is a non-GAAP financial measure that is calculated by the Company as net debt (or net cash) as of a date divided by the TTM adjusted EBITDA (as defined above) ending on that date. We believe that these measures are important to monitor leverage and evaluate the balance sheet. Cash and equivalents are subtracted from the GAAP measure because they could be used to reduce our debt obligations. A limitation associated with using net debt (or net cash) is that it subtracts cash and equivalents and therefore may imply that there is less Company debt than the most comparable GAAP measure indicates. We believe that investors may find these measures useful to monitor leverage and evaluate the balance sheet.
3. Adjusted net income and adjusted net income per share are non-GAAP financial measures that are calculated by the Company as net income and net income per share adjusted for certain items that impact the comparability of results from period to period, as set forth in the reconciliations below. We consider these non-GAAP financial measures to be useful because they allow for period-to-period comparisons of our operating results excluding items that we believe are not indicative of our fundamental ongoing operations. The tax effect of adjustments is computed by applying the statutory tax rate in the applicable jurisdictions to the income or expense items that are adjusted in the period presented. If a valuation allowance exists, the rate applied is zero.
4. Free cash flow is a non-GAAP financial measure that is calculated by the Company as net cash provided by operating activities for a period minus acquisition of stream and royalty interests for that same period. We believe that free cash flow represents an additional way of viewing liquidity as it is adjusted for contractual investments made during such period. Free cash flow does not represent the residual cash flow available for discretionary expenditures. We believe it is important to view free cash flow as a complement to our consolidated statements of cash flows.
5. Cash general and administrative expense, or cash G&A, is a non-GAAP financial measure that is calculated by the Company as general and administrative expenses for a period minus non-cash employee stock compensation expense for the same period. We believe that cash G&A is useful as an indicator of overhead efficiency without regard to non-cash expenses associated with employee stock compensation.