Royal Gold Reports Steady Portfolio Performance with Solid Revenue, Cash Flow and Earnings for the Second Quarter of 2022

Royal Gold, Inc. (NASDAQ: RGLD) (together with its subsidiaries, “Royal Gold,” the “Company,” “we,” “us,” or “our”) reports net income of $71.1 million, or $1.08 per share, for the quarter ended June 30, 2022, (“second quarter”), on revenue of $146.4 million and operating cash flow of $120.2 million. Adjusted net income¹ was $54.0 million, or $0.81 per share.

Second Quarter 2022 Highlights:

• Solid financial performance with revenue of $146.4 million, operating cash flow of $120.2 million, and earnings of $71.1 million
• Revenue split: 71% gold, 11% silver, 14% copper
• Production volume of 78,300 GEOs²
• Strong balance sheet, ending the period debt free, with cash of $280.6 million and total liquidity of approximately $1.3 billion
• Adjusted EBITDA margin¹ of 78%
• Paid quarterly dividend of $0.35 per share, a 17% increase over the prior year

Post Quarter Events:

• Announced agreement to acquire Great Bear Royalties Corporation for royalty exposure to the emerging Great Bear Project in Ontario
• Acquired an effective 1.2% gross royalty on the world-class Cortez Complex in Nevada

“Royal Gold’s portfolio performed well in the second quarter,” commented Bill Heissenbuttel, President and CEO of Royal Gold. “While we saw lower volumes at some assets, these were not unexpected and our overall financial results were solid. Our typical high and consistent margins remained robust in the quarter, demonstrating again the resilience of our business model in a high inflation environment.”

“We have been very active on the business development front as we look to continue strengthening and diversifying our portfolio. Upon closing of the announced transaction, the Great Bear royalty is expected to layer in long term duration, scale and optionality to Royal Gold’s portfolio, and the recently-announced Cortez Complex royalty acquisition adds further exposure to a world-class producing gold complex with upside that we expect to realize over decades. Our goal is to enhance the scale and longevity of our portfolio, and together with the Red Chris royalty, NX Gold stream and Côté project royalty transactions last year, we are working diligently to provide our shareholders further exposure to assets with significant gold revenue and exploration optionality in low-risk jurisdictions.”

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¹ Adjusted net income, adjusted net income per share and adjusted EBITDA margin are non-GAAP financial measures. See Schedule A of this press release for additional information, including a detailed description of adjustments to net income.

² See Schedule A of this press release for additional information about gold equivalent ounces, or GEOs.

Recent Developments

Production Ramp-Up Continues to Progress at Khoemacau

According to Khoemacau Copper Mining (Pty.) Limited (“KCM”), the ramp-up of operations continued at the Khoemacau Project (“Khoemacau”) in Botswana, and average monthly underground production increased consistently during the second quarter, from approximately 5,700 tonnes per day in March to approximately 7,300 tonnes per day in June.

Tragically, KCM reported an accident in the underground mine that resulted in the death of two employees of the mining contractor on May 20, 2022. This resulted in short-term production disruptions immediately after the accident and into early June. Investigations into the cause of the accident remain ongoing.

KCM expects that the mining rate will continue to increase steadily from current levels and reach full sustained production by the fourth quarter of 2022, absent further COVID-19 impacts. With the results experienced so far during the ramp-up period, KCM continues to expect that at full production Khoemacau will produce 155,000 to 165,000 tonnes of high-grade copper and silver concentrate a year, containing approximately 60,000 to 65,000 tonnes of payable copper and 1.8 to 2.0 million ounces of payable silver, over an approximate 20-year mine life from Zone 5. In the second quarter, Royal Gold received silver stream deliveries of approximately 246,800 ounces.

Plant Expansion and Mine Life Extension Project Continues, with Further Deferral of Silver Ounces in the Second Quarter at Pueblo Viejo

During the second quarter, Barrick Gold Corporation (“Barrick”) reported continued progress on the plant expansion and mine life extension project at Pueblo Viejo in the Dominican Republic to increase throughput and allow the mine to maintain minimum average annual gold production of approximately 800,000 ounces after 2022 and beyond 2040 (100% basis).

With respect to the plant expansion, on May 4, 2022, Barrick reported that, as of March 31, 2022, construction was 39% complete, with completion expected by the end of calendar 2022. With respect to the mine life extension, Barrick also disclosed that social, environmental and technical studies for additional tailings capacity continued to advance, and that the final location and construction of the tailings storage facility would be subject to the completion of an Environmental and Social Impact Assessment (“ESIA”) in accordance with Dominican Republic legislation and international standards. Once completed, the ESIA would be submitted to the Government of the Dominican Republic for evaluation and final decision.

Silver stream deliveries were approximately 307,100 ounces for the second quarter, compared to approximately 386,500 ounces for the prior year quarter. During the second quarter an additional 45,000 ounces of silver deliveries were deferred. The deferred ounces are the result of a mechanism in the stream agreement that allows for the deferral of deliveries in a period if Barrick’s share of silver production is insufficient to cover its stream delivery obligations. The stream agreement terms include a fixed 70% silver recovery rate. If actual recovery rates fall below the contractual 70% recovery rate, ounces may be deferred with deferred ounces to be delivered in future periods as silver recovery allows. As of June 30, 2022, approximately 484,000 ounces have been deferred, and the timing for the delivery of the entire deferred amount is uncertain.

Increased Gold Production, Continued Progress with the Block Cave Feasibility Study, and Further East Ridge Exploration Success at Red Chris

On July 21, 2022, Newcrest Mining Limited (“Newcrest”) reported that gold production of 19,500 ounces (100% basis) at the Red Chris mine in British Columbia in the second quarter was 62% higher than the first quarter largely driven by higher mill throughput following improved weather conditions. Newcrest also reported that gold recovery increased in the quarter due to mill stabilization, improved water quality and implementation of a pre-crusher blending program.

According to Newcrest, development of the block cave during the second quarter continued with the exploration decline now progressed to 1,703 meters as July 13, 2022, and installation of the surface infrastructure relating to the exploration decline substantially complete. Newcrest also reported that the feasibility study is progressing as planned and remains on track for completion in the first half of calendar year 2023.

Further according to Newcrest, drilling activities at East Ridge continue to expand the footprint and confirm continuity and extensions of the higher grade mineralization. During the second quarter, Newcrest identified a conceptual exploration target for East Ridge that could contain from a lower case of 2.8 million ounces of gold and 0.9 million tonnes of copper (170 million tonnes at grades of 0.5 grams per tonne gold and 0.5% copper) to an upper case of 4.3 million ounces of gold and 1.3 million tonnes of copper (300 million tonnes at grades of 0.4 grams per tonne gold and 0.4% copper). According to Newcrest, East Ridge is outside of the initial mineral resource estimate for Red Chris and strike extents of this prospect remain open to the east.

Announcement of Agreement to Acquire Great Bear Royalties Corporation to Gain Royalty Exposure to the Emerging World-Class Great Bear Gold Project

On July 11, 2022, the Company announced that it had entered into a definitive agreement (the “Arrangement Agreement”) with Great Bear Royalties Corporation (“GBR”) to acquire all of the issued and outstanding common shares of GBR for cash consideration of C$6.65 per common share, which values GBR at approximately C$199.5 million (approximately $155 million) on a fully diluted basis. GBR’s sole material asset is a 2.0% net smelter return royalty (the “Royalty”) that covers the entire 9,140 hectare emerging world-class Great Bear Project in the Red Lake district of Ontario, Canada, indirectly owned and operated by Kinross Gold Corporation (“Kinross”).

As part of Royal Gold’s due diligence for the acquisition, the Company entered into a co-operation agreement with Kinross to obtain access to Kinross personnel and certain information pertaining to the Great Bear Project. In exchange, Royal Gold agreed to amend certain terms of the royalty agreement upon closing of the acquisition, including providing an option to Kinross to purchase a 25% interest in the Royalty for an amount equal to 25% of Royal Gold’s purchase price of GBR, adjusted for inflation, at any time from the transaction closing date until the earlier of a construction decision for the Great Bear Project and 10 years after the transaction closing date.

The acquisition has been unanimously approved by the boards of directors of both Royal Gold and GBR, and the board of directors of GBR has resolved to recommend that the shareholders of GBR approve the acquisition. All of the directors and officers of GBR have entered into support agreements to vote their shares in support of the acquisition representing, in aggregate, approximately 10.5% of the outstanding shares of GBR. The arrangement agreement provides Royal Gold a customary right to match any superior proposal and includes customary non-solicitation covenants. In addition, the arrangement agreement requires GBR to pay a termination fee of C$7.0 million (approximately $6 million) to Royal Gold if GBR terminates the arrangement agreement in certain circumstances.

The transaction is subject to approval by the shareholders of GBR, and regulatory and court approvals. GBR expects to hold a special meeting of shareholders to approve the transaction on August 31, 2022, and subject to approval by shareholders, GBR will shortly thereafter seek approval by the Supreme Court of British Columbia of a plan of arrangement under the provisions of the Business Corporations Act (British Columbia). The transaction is expected to close during the quarter ending September 30, 2022.

Funding for the transaction is expected to come from available cash without the issue of equity.

Acquisition of Additional Royalty Interest on World-Class Producing Cortez Complex in Nevada

On August 2, 2022, the Company announced that it acquired a sliding-scale gross royalty (the “Cortez Royalty”) on an area including the Cortez mine operational area and the Fourmile development project in Nevada (the “Cortez Complex”). Royal Gold paid $525 million in cash consideration for the Cortez Royalty to Kennecott Royalty Company (“Kennecott”), a wholly owned subsidiary of Rio Tinto European Holdings Limited (“Rio Tinto”). The area within the Cortez Complex is owned or controlled by Nevada Gold Mines LLC (“NGM”), a joint venture between Barrick Gold Corporation (“Barrick”) (61.5% owner and operator) and Newmont Corporation (“Newmont”) (38.5% owner), with the exception of the Fourmile project which is 100% owned and operated by Barrick.

The Cortez Royalty is a life of mine sliding scale gross royalty payable at a rate of 0% at a gold price less than $400 per ounce, increasing to 3% at a gold price above $900 per ounce, and is payable on 40% of all production from the Cortez Complex. The Cortez Royalty does not cover the existing deposits within the Robertson property. At current gold prices the Cortez Royalty is an effective 1.2% gross royalty on the Cortez Complex and is not subject to any stepdowns or caps.

The Cortez Royalty is payable after cumulative production from the Cortez Complex of 15 million gold equivalent ounces from January 1, 2008 onwards. According to Barrick public disclosure, cumulative production from January 1, 2008, was approximately 14.8 million ounces as of June 30, 2022, and Royal Gold estimates that the Royalty is expected to begin paying in the third or fourth quarter of 2022 with the first revenue expected to be received in the fourth quarter of 2022 or first quarter of 2023. Royalty payments will be made quarterly within 45 days of the end of each calendar quarter.

Deductions from the Cortez Royalty payments are limited to third-party royalties that existed prior to 2008, which include the existing Crossroads and Pipeline royalties owned by Royal Gold.

The acquisition of the Cortez Royalty was funded from available cash and a draw on the Company’s credit facility as discussed below. No additional equity will be issued to fund this transaction.

Total Available Liquidity Increased to Approximately $1.3 Billion

At the end of the second quarter, Royal Gold was debt free with the full $1 billion credit facility undrawn and available. Combined with working capital of $276.3 million, Royal Gold had total available liquidity of approximately $1.3 billion as of June 30, 2022.

Subsequent to the end of the quarter and in order to fund the acquisition of the Cortez Royalty as discussed above, on July 25, 2022, Royal Gold drew $500 million on the credit facility, leaving $500 million undrawn and available. In keeping with Royal Gold’s capital allocation strategy, the Company expects to repay this outstanding debt as cash flow allows.

Second Quarter 2022 Overview

In the second quarter, the Company recorded net income and comprehensive income attributable to Royal Gold stockholders (“net income”) of $71.1 million, or $1.08 per basic and diluted share, as compared to net income of $81.7 million, or $1.24 per basic and diluted share, for the quarter ended June 30, 2021. The decrease in net income was primarily attributable to a decrease in revenue.

During the second quarter the Company recognized total revenue of $146.4 million, comprised of stream revenue of $104.9 million and royalty revenue of $41.6 million at an average gold price of $1,871 per ounce, an average silver price of $22.60 per ounce and an average copper price of $4.31 per pound. This is compared to total revenue of $168.0 million for the prior year period, comprised of stream revenue of $114.4 million and royalty revenue of $53.6 million, at an average gold price of $1,816 per ounce, an average silver price of $26.69 per ounce and an average copper price of $4.40 per pound.

The decrease in total revenue resulted primarily from lower gold sales at Andacollo and Pueblo Viejo and lower gold production at Cortez and Peñasquito. The decrease was offset by $9.4 million of new revenue from the NX Gold and Khoemacau streams, which did not provide stream deliveries to Royal Gold during the prior year quarter.

Cost of sales, which excludes depreciation, depletion and amortization, decreased to $23.8 million in the second quarter, from $24.7 million for the prior year period. The decrease, when compared to the prior period, was primarily due to a decrease in gold sales at Andacollo and Pueblo Viejo, offset by gold sales at NX Gold and silver sales at Khoemacau. Stream deliveries from the NX Gold and Khoemacau streams were not due to Royal Gold during the prior year quarter. Cost of sales is specific to the Company’s stream agreements and is the result of the 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 the Company’s 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 $9.3 million for the second quarter, from $7.2 million for the prior year period. The increase was primarily due to an increase in employee-related costs including non-cash compensation expense, as well as higher costs associated with environmental, social and governance (“ESG”) initiatives.

Depreciation, depletion and amortization decreased to $44.0 million for the second quarter, from $48.0 million for the prior year period. The decrease was primarily due to lower gold sales at Andacollo and Pueblo Viejo compared to the prior period. The decrease was partially offset by additional depletion from the newly producing Khoemacau and newly acquired NX Gold streams.

For the second quarter, the Company recorded an income tax benefit of $5.9 million, compared with income tax expense of $5.5 million for the prior year period. The income tax benefit resulted in an effective tax rate of (9.0%) in the current period, compared with 6.3% for the prior year period. The second quarter included a discrete tax benefit attributable to a release of a valuation allowance while the three months ended June 30, 2021, included a discrete tax benefit attributable to the settlement of an uncertain tax position in a foreign jurisdiction.

Net cash provided by operating activities totaled $120.2 million for the second quarter, compared to $120.9 million for the prior year period.

Net cash used in investing activities totaled $0.1 million for the second quarter, compared to $95.1 million for the prior year period. The decrease was primarily due to lower acquisitions of stream and royalty interests compared to the prior year period.

Net cash used in financing activities totaled $23.2 million for the second quarter, compared to net cash used in financing activities of $170.1 million for the prior year period. The decrease was primarily due to a repayment of $150 million on the Company’s revolving credit facility during the prior year period.

At June 30, 2022, the Company had current assets of $340.3 million compared to current liabilities of $64.0 million, which resulted in working capital of $276.3 million and a current ratio of 5 to 1. This compares to current assets of $216.0 million and current liabilities of $61.4 million at December 31, 2021, resulting in working capital of $154.6 million and a current ratio of approximately 4 to 1. The increase in working capital was primarily due to an increase in available cash.

During the second quarter, liquidity needs were met from $120.2 million in net cash provided by operating activities and available cash resources.

Outlook

There is no change to previously issued guidance for sales of 315,000 to 340,000 GEOs, depreciation, depletion and amortization expense of $535 to $585 per GEO, and an effective tax rate of 17% to 22% for 2022. Due to uncertainty with respect to the timing and amount of the first payment from the Cortez Royalty described above, 2022 guidance ranges were not adjusted to include any contribution from this royalty at this time.

Royal Gold has two near term financing commitments which the Company expects to pay using available cash. The first is the potential payment of C$199.5 million (approximately $155 million) for the acquisition of GBR upon closing of that transaction, which is expected in the third quarter subject to receipt of all necessary approvals. The second is the potential payment of up to $6.8 million to a subsidiary of Ero Copper Corporation for the achievement of success-based targets related to regional exploration and mineral resource targets under the NX Gold stream, which may occur at any time prior to the end of 2024.

Property Highlights

A breakdown of revenue for the Company’s stream and royalty portfolio can be found on Table 1 for the three and six month periods ended June 30, 2021 and 2022. Historical production reported by operators of the Company’s principal stream and royalty properties can be found on Table 2. Calendar year 2022 operator production estimates for the Company’s principal stream and royalty properties compared to actual production reported by the operators at these properties through June 30, 2022 can be found on Table 3. Results of the stream segment purchases and sales for the three and six month periods ended June 30, 2021 and 2022 and inventories for the quarters ended June 30, 2022 and December 31, 2021 can be found on Table 4. Highlights at certain of the Company’s principal producing and development properties during the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, are detailed in the Quarterly Report on Form 10-Q.

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 June 30, 2022, the Company owned interests on 185 properties on five continents, including interests on 41 producing mines and 19 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 second quarter results will be held on Thursday, August 4, 2022, 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: the resiliency of our business model; our expected financial performance and outlook, including sales volume, revenue, expenses or tax rates; operators’ expected operating and financial performance, including production, deliveries, mine plans, environmental and feasibility studies, mine facilities, mineral resources and reserves, and development; liquidity; our overall investment portfolio; the benefits of acquisitions, including, among others the realization of potential upside, exploration optionality, and anticipated future gold production; the financing, approval and closing of acquisitions; the timing of royalty payments; the funding of acquisitions; financing commitments; the repayment of amounts borrowed under our revolving credit facility; the usefulness and importance of non-GAAP financial measures.

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, nickel or other metals; operating activities or financial performance of properties on which we hold stream or royalty interests, including inaccuracies in operators’ disclosures, variations between actual and forecasted performance, operators’ ability to complete projects on schedule and as planned, operators’ changes to mine plans and reserves and resources (including updated mineral reserve and resource information as of December 31, 2021), liquidity needs, mining and environmental hazards, labor disputes, distribution and supply chain disruptions, permitting and licensing issues, contractual issues involving our stream or royalty agreements, or operational disruptions due to public health crises; 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; changes in laws or regulations governing us, operators or operating properties; changes in management and key employees; the ability to obtain, or delays in obtaining, stockholder and court approval of acquisitions; the risk that an event, change or other circumstance could give rise to the termination of the arrangement agreement with GBR; the risk that a condition to closing of the acquisition of GBR may not be satisfied; the risk that any announcement relating to the acquisitions of GBR or the Cortez Royalty could have adverse effects on the market price of Royal Gold’s common stock; the risk of litigation related to acquisitions; the diversion of management time from ongoing business operations due to acquisition-related issues; the volatility in commodity price for gold; public health crises, such as pandemics (including COVID-19) and epidemics, and any related government policies and actions; scrutiny and increased regulation of non-GAAP financial measures; and other factors described in our reports filed with the Securities and Exchange Commission, including Item 1A. Risk Factors of our Form 10-K for the Transition Period ended December 31, 2021. 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 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 report 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. 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.