pending environmental clearances.We did some very basic exploration on licenses in Romania, and have devel- oped some good looking drill targets in Bulgaria. royalty, and it is our job to be sure we are exposed to upside.We have people on our staff who know how  to assess upside, and we use the best consultants in the business to help us make sure we properly assess a mine. Our plan for the year ahead is to continue in Greece and Bulgaria at minimum levels, and to hold back on domestic exploration unless we get an exciting opportunity.We believe exploration is a good way to develop value for shareholders, but under current market conditions we are reluctant to make a major commit- ment to exploration.We are putting more effort into the search for acquisitions of currently cash-flowing royalties. There are many opportunities for royalty financings. There are all manner of mine developers that are presently frustrated because they cannot get money to finish their projects.We could complete all sorts of deals now in the name of growth. But, we think it is smarter to stick with our investment criteria of quality assets and quality oper- ators.We would rather do one good deal a year than ten marginal transactions. So we ask you to be patient as we pursue a strategy of smart growth and we also ask that you judge our performance on the basis of the quality of our deals rather than the quantity. We were pleased to be able to pay our second annual dividend in July 2001.We believe that sharehold- ers should see a direct return on their investment, and  it is our hope that we can increase the dividend when revenues grow. We operate with a very small staff, and we work hard to keep general and administrative expenses in line. We are all stockholders, and we are anxious to see growth in the price of the stock.We have been very pleased with the performance of the share price since mid-year 2001.We continue to believe that gold is a core asset in every portfolio, and that Royal Gold’s shares provide a great way to have portfolio protection.We are very enthusiastic for our prospects in the year ahead, and look forward to your continued support. Royalty owners and mine developers know the value of their interests, and we do not expect to get a royalty on the cheap by out-trading someone.When we help finance a mine, we want our royalty to be tolerable for the operator. If the operator succeeds, we succeed with them.We are willing to pay full price for a good SMART GROWTH DIVIDEND Sincerely, Aal Stanley Dempsey, Chairman and CEO Peter Babin, President 3 We are anxious to grow the Company’s revenues, but only if we can do so on a profitable basis.We can do that by buying existing royalties or by creating royalties in mining finance transactions.We are looking for oppor- tunities in gold, silver, diamonds, and the platinum group metals.We want to end up with sizable royalties on major deposits, and prefer mines where there is a high quality operator.We see a lot of deals, but we are  reluctant to try to grow by doing many small, marginal transactions, or by over-paying for deals.We are pursuing “smart growth.” By smart growth, we mean that we will grow the Company by acquiring royalties on mines that have a good chance for growth in reserves.We also like leverage to precious metals price increases.