Royal Gold, Inc. (NASDAQ: RGLD) (together with its
subsidiaries, “Royal Gold” or the “Company,” “we” or “our”) reports
net income attributable to stockholders (“net income”) of $23.7
million, or $0.36 per share, on revenue of $107.0 million in its
fiscal third quarter ended March 31, 2017 (“third quarter”).
Earnings increased significantly compared to the prior year quarter
net loss attributable to stockholders of $67.7 million, or ($1.04)
per share, on revenue of $93.5 million.
Third Quarter Highlights as Compared to the Prior Year
Quarter:
- Record operating cash flow of $76.1
million, an increase of 15%
- Revenue of $107.0 million, an increase
of 14%
- Volume of 87,700 Gold Equivalent Ounces
(“GEOs”1), an increase of 11%
- Dividends paid of $15.7 million, an
increase of 4%
- Average gold price of $1,219, an
increase of 3%
“We generated our second straight quarter of record operating
cash flow, and paid down $45 million of debt,” commented Tony
Jensen, President and CEO. “With no additional funding
requirements, cash flow from our diverse stream and royalty
portfolio on 38 operating properties will continue to strengthen
our balance sheet. At the same time, we look forward to three new
or expanding sources of revenue currently in development, including
New Gold’s Rainy River mine, Barrick’s Cortez Crossroads mine, and
Goldcorp’s Pyrite Leach Project at the Peñasquito mine. We expect
these new projects to be commissioned in calendar 2017, 2018 and
2019, respectively, providing further growth and revenue
diversification.”
___________
1 GEOs are calculated as revenue divided by the average gold
price for the same period. GEOs net of stream payments were 69,400
in the third quarter, compared to 63,900 a year ago.
Third Quarter Overview
Third quarter revenue of $107.0 million included stream revenue
of $76.6 million and royalty revenue of $30.4 million. Stream
segment gold purchases were approximately 50,000 ounces, while
sales totaled approximately 58,000 ounces. Stream segment silver
purchases were approximately 374,000 ounces and silver sales were
approximately 322,000 ounces. The Company had approximately 15,000
gold ounces and 375,000 silver ounces in inventory at March
31, 2017, as previously announced, compared to approximately 24,000
gold ounces and 323,000 silver ounces in inventory at December
31, 2016.
Total revenue increased 14% from the prior year quarter. Higher
sales from our Mount Milligan and Pueblo Viejo streams relative to
the prior year quarter more than offset lower sales from our
Andacollo stream, which was due to timing of concentrate
shipments.
Third quarter cost of sales was $22.4 million, compared to $17.9
million in the prior year quarter. The increase was primarily due
to higher gold sales from Mount Milligan and increased gold and
silver sales from Pueblo Viejo. Cost of sales is specific to our
stream agreements that call for Royal Gold’s purchase of gold and
silver for a cash payment per ounce.
General and administrative expenses decreased to $5.4 million in
the third quarter, compared to $7.7 million in the prior year
quarter. The decrease was primarily related to lower non-cash
stock-based compensation charges.
Exploration costs, which are related to our Peak Gold joint
venture (“Peak Gold”) in Alaska, totaled $2.6 million in the third
quarter, compared to $1.9 million in the prior year quarter. As of
March 31, 2017, Royal Gold had earned a 24.9% interest in the joint
venture. Peak Gold is currently preparing a resource estimate which
is expected to be complete by the end of the June 2017 quarter.
Interest and other income decreased during the third quarter to
$1.3 million from $3.1 million in the prior year quarter. The
decrease was primarily due to a realized gain on the sale of
marketable securities during the prior year quarter and a decrease
in the fair value of certain warrants we own.
We recognized a third quarter income tax expense of $6.5
million, compared with an income tax benefit of $8.3 million during
the prior year quarter. This resulted in an effective tax rate of
23.2% in the current period. The prior year effective tax rate of
10.6% reflected impairment charges recorded a year ago.
At March 31, 2017, we had current assets of $134.2 million
compared to current liabilities of $24.8 million, resulting in
working capital of $109.4 million. This compares to current assets
of $164.8 million and current liabilities of $22.7 million at
June 30, 2016, resulting in working capital of $142.1
million. As of March 31, 2017, the Company had $350 million
available and $300 million outstanding under its revolving credit
facility. In the third quarter, the Company repaid $45.0 million of
the outstanding borrowings under the revolving credit facility.
Working capital, combined with the Company’s undrawn revolving
credit facility, resulted in approximately $459.4 million of total
available liquidity at March 31, 2017.
Recent Developments
Mount Milligan Stream Amendment
We began receiving gold and copper deliveries reflecting the
amended Mount Milligan stream agreement in April 2017. Under the
terms of the amendment, our 52.25% gold stream has been amended to
a 35.0% gold stream and an 18.75% copper stream. We will continue
to pay $435 per ounce of gold delivered and will pay 15.0% of the
spot price per metric tonne of copper delivered. Under the terms of
both the original and amended agreements, there is a maximum of
five months between concentrate shipment and final settlement.
Royal Gold expects that, on the basis of its current stream
and royalty portfolio, approximately 85% of the next several fiscal
years’ revenue will come from precious metals.
Wassa and Prestea Gold Stream Acquisition
On January 3, 2017, the Company made the final scheduled payment
of $10.0 million under the Wassa and Prestea streaming agreement.
The Company has no further upfront payment obligations associated
with the Wassa and Prestea gold stream. Commercial production was
achieved at Wassa Underground on January 1, 2017. Commercial
production at Prestea Underground is currently expected to be
achieved in the third calendar quarter of 2017. Upon the earlier of
either commercial production from Prestea Underground or January 1,
2018, our streaming interest associated with Golden Star’s Ghanaian
assets will increase from 9.25% to 10.5%.
Attributable Reserves
Royal Gold announces updated estimates of ore reserves and
mineralized material1 attributable to the Company’s stream, royalty
and similar interests as of December 31, 2016. These figures are
provided by the operators of properties on which the Company holds
these interests, or are obtained by Royal Gold through publicly
available information.
On a gold equivalent basis2, using a silver to gold ratio of
approximately 70:1 and a copper to gold ratio of 450:1, metals
reserves attributable to Royal Gold were 6.7 million ounces, on a
net reserve basis, compared with 6.8 million ounces for the same
period ended 2015. The complete Royalty/Metal Stream Portfolio,
which includes the ore reserves and mineralized material1 subject
to the Company's interests on producing and development properties,
can be found on our website.
___________
1 The U.S. Securities and Exchange Commission does not
recognize this term. Mineralized material is that part of a mineral
system that has potential economic significance but cannot be
included in the proven and probable ore reserve estimates until
further drilling and metallurgical work is completed, and until
other economic and technical feasibility factors based upon such
work have been resolved. Investors are cautioned not to assume that
any part or all of the mineral deposits in this category will ever
be converted into reserves. 2 Gold equivalent basis is calculated
as total attributable gold ounces, plus silver ounces calculated as
70 silver ounces equivalent to one gold ounce, plus copper
calculated as 450 pounds of copper equivalent to one gold ounce.
PROPERTY HIGHLIGHTS
A summary of third quarter and historical production can be
found on Tables 1 and 2. Calendar year 2017 production estimates of
the operators of certain properties in which we have interests
versus actual production at those properties can be found on Table
3. Results of our streaming business for the third quarter,
compared to the prior year quarter, can be found on Table 4.
Highlights at certain of the Company’s principal producing and
development properties during the third quarter, compared to the
prior year quarter, are detailed in our 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. The
Company owns interests on 193 properties on six continents,
including interests on 38 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 third
quarter results will be held on Thursday, May 11, 2017, at noon
Eastern Time (10:00 a.m. Mountain Time). The call will be webcast
and archived on the Company’s website for a limited time.
Third Quarter Earnings Call Information:
Dial-In Numbers: 855-209-8260 (U.S.);
toll free 855-669-9657 (Canada); toll free 412-542-4106
(International) Conference Title: Royal Gold Webcast URL:
www.royalgold.com under Investors, Events
& Presentations
Cautionary “Safe Harbor” Statement Under the Private
Securities Litigation Reform Act of 1995: With the exception of
historical matters, the matters discussed in this press release are
forward-looking statements that involve risks and uncertainties
that could cause actual results to differ materially from
projections or estimates contained herein. Such forward-looking
statements include statements about cash flow from operating
properties strengthening our balance sheet; Rainy River, Cortez
Crossroads and the Peñasquito Pyrite Leach Project as new or
expanding sources of revenue providing further growth and revenue
diversification, and the expected timing of commissioning of these
projects; operators’ expectations regarding future production and
returns from our stream and royalty properties; timing for receipt
of gold and copper deliveries from Mount Milligan under the amended
Mount Milligan stream agreement; estimated percentages of future
net revenue from precious metals expected from the Company’s stream
and royalty portfolio in the aggregate; operators’ production
estimates for calendar year 2017; reserves and additional
mineralization estimates provided by the operators or obtained by
Royal Gold through publicly available information; the
sliding-scale features of our royalty structure at certain of our
properties; and estimates of commencement of production at projects
in development. Net gold and metal reserves attributable to Royal
Gold’s stream, royalty and other interests are subject to certain
assumptions and, like reserves, do not reflect actual ounces that
will be produced. Like any stream, royalty or similar interest on a
non-producing or not-yet-in-development project, our interests on
development projects are subject to certain risks, such as the
ability of the operators to bring the projects into production and
operate in accordance with their feasibility studies, and the
ability of Royal Gold to make accurate assumptions regarding
valuation and timing and amount of payments. In addition, many of
our interests are subject to risks associated with conducting
business in a foreign country, including application of foreign
laws to contract and other disputes, foreign environmental laws and
enforcement and uncertain political and economic environments.
Factors that could cause actual results to differ materially from
the projections include, among others, precious metals, copper and
nickel prices; performance of and production at the Company's
stream and royalty properties, including gold and copper production
at Mount Milligan and gold and silver production at Pueblo Viejo;
the ability of operators of development properties to finance
project construction to completion and bring projects into
production as expected; operators’ delays in securing or inability
to secure necessary governmental permits; decisions and activities
of the operators of the Company's stream and royalty properties;
unanticipated grade, environmental, geological, seismic,
metallurgical, processing, liquidity or other problems the
operators of the mining properties may encounter; changes in
operators’ project parameters as plans continue to be refined;
changes in estimates of reserves and mineralization by the
operators of the Company’s stream and royalty properties; contests
to the Company’s stream and royalty interests and title and other
defects to the Company’s stream and royalty properties; errors or
disputes in calculating stream deliveries and royalty payments, or
deliveries or payments not made in accordance with stream and
royalty agreements; economic and market conditions; risks
associated with conducting business in foreign countries; changes
in laws governing the Company and its stream and royalty properties
or the operators of such properties, and other subsequent events;
as well as other factors described in the Company's Annual Report
on Form 10-K, Quarterly Reports on Form 10-Q, and other filings
with the Securities and Exchange Commission. Most of these factors
are beyond the Company’s ability to predict or control. The Company
disclaims any obligation to update any forward-looking statement
made herein. 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 for calendar 2017, 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 such third-party information
and refers the reader to the public reports filed by the operators
for information regarding those properties.
TABLE 1 Third Quarter Fiscal 2017 Revenue
and Reported Production for Principal Stream and Royalty
Interests (In thousands, except reported production in oz.
and lbs.)
Three Months Ended Three Months Ended
March 31, 2017 March 31, 2016
Reported Reported
Stream/Royalty
Metal(s)
Revenue
Production1
Revenue Production1
Stream:
Mount Milligan Gold $ 35,112 28,900 oz.
$ 29,806 25,400 oz. Pueblo Viejo2 $ 24,524 $ 13,608 Gold
15,600 oz. 11,800 oz. Silver 322,000 oz. N/A Andacollo Gold $
10,398 8,500 oz. $ 15,730 13,500 oz. Wassa and Prestea Gold $ 6,563
5,400 oz. $ 4,155 3,500 oz. Other3 Gold $
-
N/A $ 140 100 oz.
Total stream revenue $
76,597 $ 63,439
Royalty:
Peñasquito $ 6,981 $ 5,210 Gold 137,500 oz. 120,300 oz.
Silver 4.8 Moz. 4.8 Moz. Lead 31.3 Mlbs. 30.2 Mlbs. Zinc 88.5 Mlbs.
73.1 Mlbs. Cortez Gold $ 1,068 11,300 oz. $ 1,853 18,400 oz. Other3
Various $ 22,326 N/A $ 22,985 N/A
Total royalty revenue
$ 30,375 $ 30,048 Total revenue
$ 106,972 $ 93,487
Nine Months Ended Nine Months
Ended March 31, 2017 March 31, 2016
Reported Reported
Stream/Royalty
Metal(s)
Revenue
Production1
Revenue Production1
Stream:
Mount Milligan Gold $ 105,161 83,500
oz. $ 95,564 85,100 oz. Pueblo Viejo4 $ 71,911 $ 23,008 Gold
40,200 oz. 20,600 oz. Silver 1.2 Moz. N/A Andacollo Gold $ 41,552
32,900 oz. $ 32,163 28,200 oz. Wassa and Prestea Gold $ 17,484
14,000 oz. $ 17,555 15,500 oz. Other Gold
$
-
N/A $ 317 200 oz.
Total stream revenue $
236,108 $ 168,607
Royalty:
Peñasquito $ 19,935 $ 20,208 Gold 423,000 oz. 542,100 oz.
Silver 15.1 Moz. 18.8 Moz. Lead 97.8 Mlbs. 120.9 Mlbs. Zinc 232.1
Mlbs. 289.8 Mlbs. Cortez Gold $ 4,942 47,600 oz. $ 4,840 58,000 oz.
Other3 Various $ 70,895 N/A $ 72,005 N/A
Total royalty
revenue $ 95,772 $ 97,053 Total
revenue $ 331,880 $ 265,660
TABLE 2 Historical Production
Reported Production For The Quarter
Ended1
Property
Stream/Royalty
Operator
Metal(s)
Mar. 31,2017
Dec. 31,2016
Sep. 30,2016
Jun. 30,2016
Mar. 31,2016
Stream:
Mount Milligan5 35.00% of payable gold; 18.75% of
payable copper Centerra Gold 28,900 oz.
25,700 oz. 28,900 oz. 23,800
oz. 25,400 oz. Pueblo Viejo
7.5% of gold produced up to 990,000
ounces; 3.75% thereafter
Barrick (60%) Gold 15,600 oz. 13,700
oz. 11,000 oz. 10,600 oz. 11,800
oz.
75% of payable silver up to 50 million
ounces; 37.5% thereafter
Silver 322,000 oz.
543,300 oz. 323,300 oz. 208,900
oz. N/A Andacollo 100% of gold produced
Teck Gold 8,500 oz. 9,200
oz. 15,200 oz. 13,500 oz. 13,500
oz. Wassa and Prestea
9.25% of gold produced up to 240,000
ounces; 5.5% thereafter
Golden Star Gold 5,400 oz. 4,000
oz. 4,500 oz. 4,600 oz.
3,500 oz.
Royalty:
Peñasquito 2.0% NSR Goldcorp
Gold 137,500 oz. 185,400 oz.
100,100 oz. 41,900 oz. 120,300
oz. Silver 4.8 Moz. 5.0 Moz.
5.2 Moz. 2.6 Moz. 4.8
Moz. Lead 31.3 Mlbs. 33.6 Mlbs.
33.0 Mlbs. 13.3 Mlbs. 30.2 Mlbs.
Zinc 88.5
Mlbs. 70.5 Mlbs. 73.0 Mlbs. 43.2
Mlbs. 73.1 Mlbs. Cortez GSR1 and GSR2,
GSR3, NVR1 Barrick Gold 11,300 oz.
14,500 oz. 21,800 oz. 16,100
oz. 18,400 oz.
FOOTNOTESTables 1 and 2
1 Reported production relates to the amount of metal sales
that are subject to our stream and royalty interests for the stated
period, as reported to us by operators of the mines. 2 The first
silver stream deliveries were in March 2016, with the first silver
sales made during the June 2016 quarter. 3 Individually, no stream
or royalty included within the “Other” category contributed greater
than 5% of our total revenue for the entire period. 4 The gold and
silver streams at Pueblo Viejo were acquired during the three
months ended September 30, 2015. The first gold and silver stream
deliveries were in December 2015 and March 2016, respectively. 5
Reflects the October 20, 2016 amendment to our Mount Milligan
streaming agreement. Prior to the amendment, Royal Gold held a
52.25% gold stream. Gold concentrate that was in transit at October
20, 2016 was delivered to us under the 52.25% gold stream. Royal
Gold began receiving gold and copper deliveries reflecting the
amended stream agreement in April 2017.
TABLE 3
Calendar 2017 Operator’s Production Estimate vs Actual
Production Calendar 2017 Operator's
Production Calendar 2017 Operator's
Production Estimate1
Actual2,3 Gold Silver
Base Metals Gold
Silver Base Metals
Stream/Royalty (oz.)
(oz.) (lbs.) (oz.)
(oz.) (lbs.)
Stream:
Andacollo4 61,600 -
- 14,600 -
- Mount Milligan5 260,000-290,000 -
- 45,200 -
- Copper 55
- 65 million
12.6 million Pueblo Viejo6 625,000-650,000
Not provided
143,000 Not provided - Wassa and
Prestea7 255,000-280,000
57,800
Royalty:
Cortez GSR1 102,200
- - 11,200
- - Cortez GSR2 1,600 -
- 100 - -
Cortez GSR3 103,800 - -
11,300 - - Cortez NVR1
63,900 - -
4,700 - - Peñasquito8
410,000 Not provided -
137,000 4.8 million - Lead
Not provided
32.4
million Zinc
Not provided
80.7 million 1 Production estimates received
from our operators are for calendar 2017. There can be no assurance
that production estimates received from our operators will be
achieved. Please refer to our cautionary language regarding
forward-looking statements and the statement regarding third party
information contained in this press release, as well as the Risk
Factors identified in Part I, Item 1A, of our Fiscal 2016 Form 10-K
for information regarding factors that could affect actual results.
2 Actual production figures shown are from our operators and cover
the period January 1, 2017 through March 31, 2017. 3 Actual
production figures for Cortez are based on information provided to
us by Barrick Gold Corporation, and actual production figures for
Andacollo, Mount Milligan, Pueblo Viejo, Peñasquito (gold) and
Wassa and Prestea are the publicly reported figures of the
operators of those properties. 4 The estimated and actual
production figures shown for Andacollo are contained gold in
concentrate. 5 The estimated and actual production figures shown
for Mount Milligan are payable gold and copper in concentrate. 6
The estimated and actual production figures shown for Pueblo Viejo
are payable gold in doré and represent Barrick’s 60% interest in
Pueblo Viejo. 7 The estimated gold production figures shown for
Wassa and Prestea are payable gold in concentrate and doré.
8
The estimated and actual gold production
figures shown for Peñasquito are payable gold in concentrate. The
operator did not provide estimated silver, lead and zinc
production.
TABLE 4 Stream Summary
Three Months Ended Three Months Ended
As of As of March 31,
2017 March 31, 2016 March 31, 2017 June 30,
2016 Gold Stream Purchases (oz.)
Sales (oz.) Purchases (oz.) Sales
(oz.) Inventory (oz.) Inventory (oz.) Mount
Milligan 22,700 28,900 17,400 25,400 - 7,500 Andacollo 10,900 8,500
8,300 13,500 2,500 - Pueblo Viejo 10,400 15,600 10,600 11,800
10,500 11,000 Wassa and Prestea 5,700 5,400 4,400 3,500 1,900 1,300
Phoenix Gold - - 100 100 - -
Total 49,700
58,400 40,800 54,300 14,900
19,800 Three Months Ended Three Months
Ended As of As of March 31, 2017 March
31, 2016 March 31, 2017 June 30, 2016 Silver
Stream Purchases (oz.) Sales (oz.) Purchases
(oz.) Sales (oz.) Inventory (oz.) Inventory
(oz.) Pueblo Viejo 373,600 322,000 209,800 - 375,000 323,700
Nine Months Ended Nine Months Ended
As of As of March 31, 2017 March 31,
2016 March 31, 2017 June 30, 2016 Gold
Stream Purchases (oz.) Sales (oz.) Purchases
(oz.) Sales (oz.) Inventory (oz.) Inventory
(oz.) Mount Milligan 76,100 83,500 79,800 85,100 - 7,500 Pueblo
Viejo 39,700 40,200 31,200 20,600 10,500 11,000 Andacollo 35,400
32,900 28,200 28,200 2,500 - Wassa and Prestea 14,500 14,000 17,100
15,500 1,900 1,300 Phoenix Gold - - 300 200 - -
Total
165,700 170,600 156,600 149,600
14,900 19,800 Nine Months Ended Nine
Months Ended As of As of March 31, 2017
March 31, 2016 March 31, 2017 June 30, 2016
Silver Stream
Purchases (Moz.) Sales (Moz.) Purchases (oz.)
Sales (oz.) Inventory (oz.) Inventory (oz.)
Pueblo Viejo 1.2 1.2 209,800 - 375,000 323,700
ROYAL GOLD, INC.
Consolidated Balance Sheets
As of March 31,
(Unaudited, in thousands except share
data)
March 31, 2017
June 30, 2016
ASSETS Cash and equivalents $ 88,090 $ 116,633
Royalty receivables 22,791 17,990 Income tax receivable 16,006
20,043 Stream inventory 6,624 9,489 Prepaid expenses and other
663 614 Total current assets 134,174 164,769 Stream
and royalty interests, net 2,932,087 2,848,087 Other assets
62,521 53,696 Total assets $ 3,128,782 $ 3,066,552
LIABILITIES Accounts payable $ 2,474 $ 4,114 Dividends
payable 15,681 15,012 Other current liabilities 6,622
3,554 Total current liabilities 24,777 22,680 Debt 635,881 600,685
Deferred tax liabilities 120,895 133,867 Uncertain tax positions
24,337 16,996 Other long-term liabilities 6,391 6,439
Total liabilities 812,281 780,667 Commitments and contingencies
EQUITY Preferred stock, $.01 par value, authorized
10,000,000 shares authorized; and 0 shares issued - - Common stock,
$.01 par value, 200,000,000 shares authorized; and 65,173,796 and
65,093,950 shares outstanding, respectively 652 651 Additional
paid-in capital 2,182,496 2,179,781 Accumulated other comprehensive
income 1,183 - Accumulated earnings 83,710 48,584
Total Royal Gold stockholders’ equity 2,268,041 2,229,016
Non-controlling interests 48,460 56,869 Total equity
2,316,501 2,285,885 Total liabilities and equity $
3,128,782 $ 3,066,552
ROYAL GOLD, INC.
Consolidated Statements of Operations and
Comprehensive Income (Loss)
(Unaudited, in thousands except for per
share data)
For The Three Months Ended For
The Nine Months Ended March 31, March 31, March 31,
March 31, 2017 2016 2017 2016 Revenue $ 106,972 $
93,487 $ 331,880 $ 265,660 Costs and expenses Cost of sales
22,419 17,921 67,582 51,960 General and administrative 5,402 7,679
23,447 23,416 Production taxes 389 958 1,331 3,546 Exploration
costs 2,647 1,851 8,411 6,135 Depreciation, depletion and
amortization 40,164 38,163 119,785 105,717 Impairments of stream
and royalty interests and royalty receivables -
98,973 - 98,588 Total
costs and expenses 71,021 165,545
220,556 289,362 Operating income
(loss) 35,951 (72,058 ) 111,324 (23,702 ) Interest and other
income 1,326 3,060 10,056 2,804 Interest and other expense
(9,254 ) (8,762 ) (27,068 ) (23,968 ) Income
(loss) before income taxes 28,023 (77,760 ) 94,312 (44,866 )
Income tax (expense) benefit (6,492 ) 8,262
(18,724 ) (55,655 ) Net income (loss) 21,531 (69,498
) 75,588 (100,521 ) Net loss attributable to non-controlling
interests 2,130 1,842 5,921
2,932 Net income (loss) attributable to Royal
Gold common stockholders $ 23,661 $ (67,656 ) $ 81,509
$ (97,589 ) Net income (loss) $ 21,531 $ (69,498 ) $
75,588 $ (100,521 ) Adjustments to comprehensive income (loss), net
of tax Unrealized change in market value of available-for-sale
securities 360 2,383 1,182 4,521 Reclassification adjustment for
gains included in net income - (675 ) -
(675 ) Comprehensive income (loss) 21,891 (67,790 )
76,770 (96,675 ) Comprehensive loss attributable to non-controlling
interests 2,130 1,842 5,921
2,932 Comprehensive income (loss) attributable
to Royal Gold stockholders $ 24,021 $ (65,948 ) $ 82,691
$ (93,743 ) Net income (loss) per share available to
Royal Gold common stockholders: Basic earnings (loss) per share $
0.36 $ (1.04 ) $ 1.25 $ (1.50 ) Basic weighted
average shares outstanding 65,169,883
65,085,225 65,145,183 65,069,056
Diluted earnings (loss) per share $ 0.36 $ (1.04 ) $ 1.25
$ (1.50 ) Diluted weighted average shares outstanding
65,274,926 65,085,225 65,267,201
65,069,056 Cash dividends declared per common share $
0.24 $ 0.23 $ 0.71 $ 0.68
ROYAL GOLD, INC.
Consolidated Statements of Cash Flows
(Unaudited, in thousands)
For The Three Months Ended For
The Nine Months Ended March 31, March 31, March 31,
March 31, 2017 2016 2017 2016 Cash flows from
operating activities: Net income (loss) $ 21,531 $ (69,498 ) $
75,588 $ (100,521 ) Adjustments to reconcile net income (loss) to
net cash provided by operating activities: Depreciation, depletion
and amortization 40,164 38,163 119,785 105,717 Amortization of debt
discount and issuance costs 3,451 3,247 10,202 9,687 Non-cash
employee stock compensation expense 314 2,340 6,758 7,789
Impairments of stream and royalty interests and royalty receivables
- 98,973 - 98,588 Tax expense (benefit) of stock-based compensation
exercises 39 - (38 ) 247 Deferred tax (benefit) expense (3,055 )
(5,479 ) (6,266 ) (17,246 ) Other - (675 ) (4,638 ) (1,065 )
Changes in assets and liabilities: Royalty receivables 698 (176 )
(4,801 ) 14,976 Stream inventory 3,554 2,887 2,865 (3,115 ) Income
taxes receivable 5,633 (6,526 ) (6,539 ) (2,996 ) Prepaid expenses
and other assets 92 (1,958 ) (743 ) 85 Accounts payable 191 559
(1,641 ) (1,533 ) Uncertain tax positions 1,289 1,144 7,341 1,950
Other liabilities 2,198 3,050
3,021 8,084 Net cash provided by operating
activities $ 76,099 $ 66,051 $ 200,894 $
120,647 Cash flows from investing activities:
Acquisition of stream and royalty interests (10,903 ) (1,272 )
(203,721 ) (1,326,256 ) Andacollo royalty termination - - - 345,000
Golden Star term loan - - - (20,000 ) Proceeds from sale of
available-for-sale securities - 6,933 - 6,933 Other (271 )
(31 ) 1,503 (302 ) Net cash (used in)
provided by investing activities $ (11,174 ) $ 5,630 $
(202,218 ) $ (994,625 ) Cash flows from financing
activities: Borrowings from revolving credit facility - - 70,000
350,000 Repayment of revolving credit facility (45,000 ) (50,000 )
(45,000 ) (50,000 ) Net payments from issuance of common stock (298
) (174 ) (2,618 ) (174 ) Common stock dividends (15,680 ) (15,010 )
(45,715 ) (43,709 ) Purchase of additional royalty interest from
non-controlling interest (24 ) - (1,462 ) - Tax (benefit) expense
of stock-based compensation exercises (39 ) - 38 (247 ) Other
218 (1,234 ) (2,462 ) (1,878 )
Net cash (used in) provided by financing activities $ (60,823 ) $
(66,418 ) $ (27,219 ) $ 253,992 Net increase (decrease) in
cash and equivalents 4,102 5,263 (28,543 ) (619,986 ) Cash and
equivalents at beginning of period 83,988
117,600 116,633 742,849 Cash and
equivalents at end of period $ 88,090 $ 122,863 $
88,090 $ 122,863
SCHEDULE A
Non-GAAP Financial Measures
Non-GAAP financial measures are intended to provide additional
information only and do not have any standard meaning prescribed by
generally accepted accounting principles (“GAAP”). These measures
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP.
Our management uses Adjusted EBITDA and Adjusted Net Income as
measures of operating performance to assist in comparing
performance from period to period on a consistent basis; as a
measure for planning and forecasting overall expectations and for
evaluating actual results against such expectations; in
communications with the board of directors, stockholders, analysts
and investors concerning our financial performance; as useful
comparisons to the performance of our competitors; and as metrics
of certain management incentive compensation calculations. We
believe that these measures are used by and are useful to investors
and other users of our financial statements in evaluating our
operating performance because they provide an additional tool to
evaluate our performance without regard to special and non-core
items, which can vary substantially from company to company
depending upon accounting methods and book value of assets and
capital structure. We have provided reconciliations of all non-GAAP
measures to their nearest U.S. GAAP measures and have consistently
applied the adjustments within our reconciliations in arriving at
each non-GAAP measure. We consider these items to be necessary
adjustments for purposes of evaluating our ongoing business
performance and are often considered non-recurring. Such
adjustments are subjective and involve significant management
judgment.
Adjusted EBITDA Reconciliation
Adjusted EBITDA is defined by the Company as net income (loss)
plus depreciation, depletion and amortization, non-cash charges,
income tax expense, interest and other expense, and any impairment
of mining assets, less non-controlling interests in operating loss
(income) of consolidated subsidiaries, interest and other income,
and any royalty portfolio restructuring gains or losses. Other
companies may define and calculate this measure differently.
Adjusted EBITDA identifies the cash generated in a given period
that will be available to fund the Company's future operations,
growth opportunities, shareholder dividends and to service the
Company's debt obligations. This information differs from measures
of performance determined in accordance with U.S. GAAP and should
not be considered in isolation or as a substitute for measures of
performance determined in accordance with U.S. GAAP. See the table
below for a reconciliation of net income to Adjusted EBITDA.
For The Three Months Ended
For The Nine Months Ended March 31, March 31,
(Unaudited, in thousands) (Unaudited, in thousands)
2017 2016 2017
2016 Net income (loss) $ 21,531 $ (69,498 ) $
75,588 $ (100,521 ) Depreciation, depletion and amortization 40,164
38,163 119,785 105,717 Non-cash employee stock compensation 314
2,340 6,758 7,789 Impairment of stream and royalty interests and
royalty receivables - 98,973 - 98,588 Interest and other, net 7,928
5,702 17,012 21,164 Income tax expense (benefit) 6,492 (8,262 )
18,724 55,655 Non-controlling interests in operating loss of
consolidated subsidiaries 2,130 1,842
7,205 2,932
Adjusted EBITDA $ 78,559 $ 69,260
$ 245,072 $ 191,324
Adjusted Net Income (Loss) Reconciliation
Management of the Company uses adjusted net income (loss) to
evaluate the Company’s operating performance, and for planning and
forecasting future business operations. The Company believes the
use of adjusted net income (loss) allows investors and analysts to
understand the results relating to receipt of revenue from its
royalty interests and purchase and sale of gold from its streaming
interests by excluding certain items that have a disproportionate
impact on our results for a particular period. The net income
(loss) adjustments are presented net of tax generally at the
Company’s statutory effective tax rate. Management’s determination
of the components of adjusted net income (loss) are evaluated
periodically and based, in part, on a review of non-GAAP financial
measures used by mining industry analysts. Net income (loss)
attributable to Royal Gold stockholders is reconciled to adjusted
net income (loss) as follows:
For The Three Months Ended
For The Nine Months Ended March 31, March 31,
(Unaudited, in thousands) (Unaudited, in thousands)
2017 2016 2017
2016 Net income (loss) attributable to Royal Gold
common stockholders $ 23,661 $ (67,656 ) $ 81,509 $ (97,589 )
Impairments of stream and royalty interests and royalty
receivables, net of tax - 86,514 - 86,130 Tax expense on Andacollo
royalty sale and Chilean subsidiary liquidation - -
- 56,000
Adjusted net income
attributable to Royal Gold common stockholders $ 23,661 $
18,858 $ 81,509 $ 44,541
Net
income (loss) attributable to Royal Gold common stockholders per
basic share $ 0.36 $ (1.04 ) $ 1.25 $ (1.50 ) Impairment
of stream and royalty interests and royalty receivables, net of tax
- 1.33 - 1.32 Tax expense on Andacollo royalty sale and Chilean
subsidiary liquidation - - -
0.86
Adjusted net income attributable to Royal
Gold common stockholders per basic share $ 0.36 $ 0.29 $
1.25 $ 0.68
Net income (loss) attributable to
Royal Gold common stockholders per diluted share $ 0.36 $ (1.04
) $ 1.25 $ (1.50 ) Impairment of stream and royalty
interests and royalty receivables, net of tax - 1.33 - 1.32 Tax
expense on Andacollo royalty sale and Chilean subsidiary
liquidation - - - 0.86
Adjusted net income attributable to Royal Gold common
stockholders per diluted share $ 0.36 $ 0.29 $ 1.25 $
0.68
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170510006715/en/
Royal Gold, Inc.Karli Anderson, 303-575-6517Vice
President Investor Relations
Royal Gold (NASDAQ:RGLD)
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