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Presented below is a discussion of the status of each of the Company’s currently significant mineral properties. 

## Pipeline Mining Complex: 

The Company holds two sliding-scale gross smelter returns royalties (GSR1 and GSR2) and a fixed gross royalty (GSR3) over the Pipeline Mining Complex that includes the Pipeline and South Pipeline gold deposits in Lander County, Nevada.The Company also owns a net value royalty (NVR1) on the South Pipeline gold deposit. 

The Pipeline Mining Complex is owned by The Cortez Joint Venture, a joint venture between Placer Cortez Inc. (60%), a subsidiary of Placer Dome Inc., and Kennecott Explorations (Australia) Ltd. (40%), a subsidiary of Rio Tinto. 

## Bald Mountain: 

Effective January 1, 1998, the Company purchased a 50% undivided interest in a sliding-scale net smelter returns royalty that burdens a portion of the Bald Mountain mine, in White Pine County, Nevada. Bald Mountain is an open pit, heap leach mine operated by Placer Dome U.S. Inc. During fiscal 2001, the Company recorded an impairment of $490,215.This resulted from the operator decreasing its long-term gold price estimate to $300 per ounce, which reduced its reserve estimate at the property. 

## Mule Canyon: 

In fiscal 1999, the Company purchased a 5% NSR royalty on a portion of the Mule Canyon mine, operated by Newmont Gold Company. 

## Yamana Resources: 

In fiscal 2000, the Company purchased a 2% NSR royalty on Yamana Resources’ properties in Argentina. 

## Inyo Gold Project (formerly Long Valley): 

Due to the decline in the gold price during the fourth quarter of fiscal 1999, the Company recorded a full impairment of its investment in the Inyo Gold project. The recoverability of the carrying value of the Inyo Gold project was evaluated based upon estimated future net cash flows from the property using estimates of proven and probable reserves, and resulted in an impairment of the property. 

## 3. RELATED PARTY TRANSACTION 

The Company acquired a portion of a 1.25% net value royalty (“NVR”) over production from the GAS Claims located on the Pipeline Mining Complex, in Lander County, Nevada, from a group of individuals.This royalty is know as NVR1. Royal Gold acquired NVR1 for approximately $2.1 million. Of this amount, approxi- mately 45% or $967,500 was distributed to those offi- cers and directors of the Company who participated. 

## 4. DERIVATIVES 

The Company has purchased gold put options to cover its production through calendar year 2003.These puts consist of 10,200 ounces of gold per year at $270 per ounce and 15,000 ounces of gold per year at $250 per ounce.The Company does not use hedge accounting under FAS 133 and therefore marks-to-market these puts each quarter and records the gain or loss in oper- ating costs. In fiscal year 2001, the Company expensed $90,472 related to these puts. 

## 5. AVAILABLE FOR SALE SECURITIES 

The Company holds equity positions in a number of mining and exploration companies.The Company had an unrealized loss of $553,472 in these securities at June 30, 2001. 

## 6. EARNINGS PER SHARE (“EPS”) COMPUTATION 

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Options to purchase 907,079 shares of common stock, at an average purchase price of $5.36 per share, were outstanding at June 30, 2001, but were not included in the computation of diluted EPS because the exercise price of these options was greater than the average market price of the common shares. 

For The Year Ended June 30, 2001 

