Investment in Peak Gold, LLC

The Company recorded its investment at the historical book value of the assets contributed to the Joint Venture Company which was approximately $1.4 million. As of September 30, 2016, Royal Gold has contributed a total of $13.4 million to the Joint Venture Company, and earned a cumulative economic interest of approximately 15.1%. Of the $13.4 million, $2.7 million was contributed during the quarter ended September 30, 2016. Therefore, as of September 30, 2016, the Company holds a 84.9% economic interest in the Joint Venture Company. As of September 30, 2015, the Company held a 100% economic interest in the Joint Venture Company. The Royal Gold Initial Contribution did not entitle Royal Gold to a percentage interest in the Joint Venture Company.

The following table is a roll-forward of our investment in the Joint Venture Company from January 8, 2015 (inception) to September 30, 2016:



	Investment
	in Peak Gold, LLC
Investment balance at June 30, 2014	$	—
Investment in Peak Gold, LLC, at inception January 8, 2015	1,433,886
Loss from equity investment in Peak Gold, LLC	(1,433,886		)
Investment balance at June 30, 2015	$	—
Investment in Peak Gold, LLC	—
Loss from equity investment in Peak Gold, LLC	—
Investment balance at June 30, 2016	$	—
Investment in Peak Gold, LLC	—
Loss from equity investment in Peak Gold, LLC	—
Investment balance at September 30, 2016	$	—

The following table presents the condensed balance sheet for Peak Gold, LLC as of September 30, 2016 and June 30, 2016:



	September 30, 2016			June 30, 2016
ASSETS
Cash and cash equivalents	$	789,203		$	990,698
Mineral properties	1,433,886			1,433,886
TOTAL ASSETS	$	2,223,089		$	2,424,584

LIABILITIES AND MEMBERS' EQUITY
Accounts payable and other liabilities	$	2,226,154		$	1,674,956
TOTAL LIABILITIES	2,226,154			1,674,956
MEMBERS' EQUITY	(3,065		)	749,628
TOTAL LIABILITIES AND MEMBERS' EQUITY	$	2,223,089		$	2,424,584

The Company's share of the Joint Venture Company's results of operations for the three months ended September 30, 2016 and 2015 was a loss of $2.9 million and $3.3 million, respectively. The Peak Gold, LLC loss does not include any provisions related to income taxes as Peak Gold, LLC is treated as a partnership for income tax purposes. As of September 30, 2016 and 2015, the Company's share of the Joint Venture Company's inception-to-date cumulative loss of $13.8 million and $5.6 million, exceeded the historical book value of our investment in Peak Gold, LLC, of $1.4 million. Therefore the investment in Peak Gold, LLC had a balance of zero as of September 30, 2016 and 2015. The Company is not obligated to make additional capital contributions to the Joint Venture Company and therefore only records losses up to the point of the initial investment which was $1.4 million. The portion of the cumulative loss that exceeds the Company's investment will be suspended and recognized against earnings, if any, from the investment in the Joint Venture Company in future periods.

The suspended losses for the period from inception to September 30, 2016 are $12.4 million. The following table presents the condensed results of operations for Peak Gold, LLC for the three month periods ended September 30, 2016 and 2015:



	Three Months Ended		Three Months Ended		Inception to Date
	September 30, 2016		September 30, 2015		September 30, 2016
EXPENSES:
Exploration expense	$	3,012,330	$	2,960,055	$	12,544,189
General and administrative	440,363		354,254		2,242,762
Total expenses	3,452,693		3,314,309		14,786,951
NET LOSS	$	3,452,693	$	3,314,309	$	14,786,951