Royal Gold, Inc. (NASDAQ: RGLD) (together with its
subsidiaries, “Royal Gold” or the “Company,” “we” or “our”) reports
net income of $23.6 million, or $0.36 per share, on revenue of
$97.6 million in its fiscal second quarter ended December 31, 2018
(“second quarter”). Second quarter reported earnings included an
income tax benefit resulting from the Company’s updated analysis of
the tax impacts attributable to H.R. 1, originally known as the Tax
Cuts and Jobs Act (the “Act”), which was partially offset by a
decrease in the fair value of equity securities.
Second Quarter Key Metrics Compared to Prior Year
Quarter:
- Revenue of $97.6 million, a decrease of
14.6%
- Operating cash flow of $58.8 million, a
decrease of 22.2%
- Volume of 79,600 GEOs,1 a decrease of
11.3%
- Dividends paid of $16.4 million, an
increase of 4.3%
- Average price of $1,226 per gold ounce,
a decrease of 3.8%
______________________
1 Gold Equivalent Ounces (“GEOs”) are calculated as revenue
divided by the average gold price for the same period. GEOs net of
stream payments were 64,800 in the second quarter, compared to
74,100 in the prior second quarter.
“Our second quarter consolidated operating performance was
consistent with our guidance,” commented Tony Jensen, President and
CEO. “We were pleased to see several positive developments in our
portfolio during the quarter, including good operating performance
at Mount Milligan despite water supply challenges, continued
improvement in production levels at Rainy River, and the start of
commercial production at the Pyrite Leach Project at Peñasquito. As
we look forward in calendar 2019, we expect to see continued
improvement at Rainy River and further positive news with respect
to resolving water supply issues at Mount Milligan.”
“We also took our first step toward realizing value for our
equity interest in the Peak Gold Project (“Peak Gold”) near Tok,
Alaska,” Mr. Jensen continued. “We believe that Peak Gold is a very
attractive opportunity for an operating company that can bring
additional talent to advance the project towards production. Royal
Gold will remain committed to the project over the long term
through our existing royalty interests, and our considerations for
any potential transfer of ownership will include a commitment to
advance the project as a priority while respecting best practices
for responsible development.”
Recent Developments
Mount Milligan
At the Mount Milligan mine, Centerra Gold Inc. (“Centerra”)
reported that there were sufficient water resources in the fourth
calendar quarter of 2018 to enable the mill facility to run at a
higher than anticipated throughput rate, allowing the operation to
achieve the upper end of gold and copper production guidance for
the 2018 calendar year. Calendar year 2018 gold production was
194,993 ounces compared to the guidance range of 175,000 to 195,000
ounces, and copper production was 47.1 million pounds compared to
the guidance range of 40 million to 47 million pounds. During the
fourth quarter of calendar 2018, production from Mount Milligan was
60,271 ounces of gold and 11.8 million pounds of copper.
For calendar year 2019, Centerra expects mill throughput at
Mount Milligan to be reduced during the remainder of the winter
season to properly manage the water balance until the water flow
increases in the spring. Once the spring melt has commenced,
typically in April, Centerra expects mill throughput levels to
return to full capacity. In the second half of calendar 2019,
Centerra expects to achieve an average throughput of approximately
55,000 tonnes per calendar day. For the full calendar year,
Centerra expects Mount Milligan’s payable gold production to be in
the range of 155,000 to 175,000 ounces, and payable copper
production to be in the range of 65 to 75 million pounds.
With respect to water sourcing and permitting activities at
Mount Milligan, Centerra reports that permit applications are in
process to allow the mine to draw additional flow during the spring
melt period for the next three years from each of Philip Lake,
Rainbow Creek and Meadows Creek. This additional water would be
stored in the tailings storage facility for use during the
remainder of the year, which Centerra expects to be sufficient to
allow operations to continue at a rate of 55,000 tonnes per
calendar day. Centerra also reports that it is completing an
inventory of regional water sources to identify other potential
long-term water sources that could provide additional water through
to the end of the mine life.
Rainy River
Improved operating performance at the Rainy River mine, owned
and operated by New Gold Inc. (“New Gold”), continued during the
fourth calendar quarter of 2018. Quarterly gold production was
77,202 ounces, a 39% increase over the prior quarter due mainly to
higher grade, recovery and throughput rate. Mill processing reached
a run rate of 25,835 tonnes per operating day, the first full
quarter in which the mill averaged a daily run rate above the
target 24,000 tonnes per day, and the average throughput was 20,558
tonnes per calendar day at an 80% availability. New Gold expects to
replace the ball mill trunnion during the first calendar quarter of
2019 and that recoveries will continue to improve throughout the
calendar year.
New Gold also announced that the underground development plan at
Rainy River was deferred to 2020, and that it will review
alternative underground mining scenarios during calendar 2019 with
the overall objective of reducing capital requirements and
improving the return on investment for the underground portion of
the mine.
Adviser Retained to Assist with Peak Gold Project
Royal Gold retained Scotia Capital Inc. (“Scotia”) to assist in
identifying parties interested in advancing Peak Gold. We own a 40%
indirect equity interest in Peak Gold, held through our wholly
owned subsidiary Royal Alaska, LLC, and 809,744 common shares (or
approximately 12.7%) of Contango ORE, Inc. (“CORE”), our joint
venture partner. In addition to the ownership interests in Peak
Gold and CORE equity, the Company also has the right to sell up to
20% of CORE’s aggregate membership interest in the joint venture
(for a total sale of up to 60% of the joint venture membership
interest) and holds two net smelter return royalties on the Peak
Gold land package.
Second Quarter 2019 Overview
Second quarter revenue was $97.6 million compared to $114.3
million in the prior year quarter, with stream revenue totaling
$67.7 million and royalty revenue totaling $29.9 million. The
decrease in total revenue for the second quarter compared to the
prior year quarter was due to lower average gold, silver and copper
prices, as well as lower overall sales and production. Lower gold
stream sales from Andacollo and Pueblo Viejo were partially offset
by higher gold and copper sales from Mount Milligan and initial
contributions from Rainy River, while a decrease in royalty revenue
was due to lower production at Peñasquito and Cortez.
Second quarter cost of sales was approximately
$18.2 million, compared to $19.9 million in the prior
year quarter. The decrease was primarily due to lower gold sales
from Andacollo. 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.
General and administrative expenses decreased to
$7.4 million in the second quarter from $9.6 million
during the prior year quarter. The decrease during the current
period was primarily due to a decrease in legal costs related to
the settlement of the Voisey’s Bay royalty calculation dispute
during the first quarter of fiscal 2019.
Depreciation, depletion and amortization expense decreased
to $38.8 million in the second quarter from $42.0
million in the prior year quarter. The decrease was primarily
attributable to a decrease in gold sales at Andacollo and Pueblo
Viejo, partially offset by an increase in metal sales at Mount
Milligan and Rainy River.
On July 1, 2018, the Company adopted new Accounting Standards
Update guidance which impacts how changes in fair value of equity
securities are recognized at each reporting period. As a result,
for the three months ended December 31, 2018, the Company
recognized a loss of $3.6 million on changes in fair value of
equity securities related to the holdings in CORE and Rubicon
Minerals Corporation. The new guidance could increase earnings
volatility in the future.
The Company recognized a second quarter income tax benefit of
$2.1 million, compared to an expense of $48.4 million during
the prior year quarter. The effective tax rate for the second
quarter was (10.3)% compared to 148.5% for the prior year quarter.
The lower than expected effective tax rate is due to approximately
$6.0 million of discrete tax items recorded in the quarter
attributable to true-ups made after completing the Company’s
analysis of the Act and consideration of recently-issued U.S.
Treasury and IRS guidance. The Company does not anticipate future
material changes due to evolving guidance; however, many aspects of
the law remain unclear and further regulatory guidance could impact
the Company’s effective tax rate.
At December 31, 2018, the Company had current assets of
$203.7 million compared to current liabilities of
$37.2 million, resulting in working capital of
$166.5 million. This compares to current assets of
$125.8 million and current liabilities of $51.4 million
at June 30, 2018, resulting in working capital of $74.4
million.
During the second quarter, liquidity needs were met from
$79.4 million in net revenue and available cash resources. As
of December 31, 2018, the Company had no amounts
outstanding and the full $1 billion available under its revolving
credit facility. Working capital, combined with the Company’s
undrawn revolving credit facility, resulted in approximately $1.2
billion of total liquidity at December 31, 2018.
Property Highlights
A summary of second quarter and historical production reported
by operators of the Company’s stream and royalty properties can be
found on Tables 1 and 2. Calendar year 2018 operator production
estimates for certain properties in which the Company has interests
compared to actual production at those properties through December
31, 2018 can be found on Table 3. Results of the streaming business
for the second 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 second quarter,
compared to the prior year quarter, 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
December 31, 2018, the Company owns interests on 191 properties on
five continents, including interests on 41 producing mines and 17
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, February 7, 2019, 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.
Second 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 solid quarterly results; future
production contributions from Peñasquito, Mount Milligan and Rainy
River; expectations for continued improvement at Rainy River and
positive water supply developments at Mount Milligan; the value to
be realized from the Company’s interests in Peak Gold and CORE
common shares following a strategic review process; the belief that
Peak Gold is an attractive opportunity for an operating company;
calendar year 2019 mill throughput, water availability and total
payable gold and copper production from Mount Milligan; the impact,
if any, on Mount Milligan of Centerra’s water permit applications,
whether or not granted, and its regional water source inventory;
New Gold’s expectations for improved mill recoveries and the impact
of its review of underground mining scenarios; changes in taxes and
tax rates resulting from future tax legislation and regulatory
guidance; and operators’ estimated and actual production for
calendar year 2018, 2019 and future years, and their estimates of
reserves and mineralized material. 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 mine plans, 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
projections include, among others, precious metals, copper and
nickel prices; performance of and production at the Company's
stream and royalty properties; the ability of operators to finance
project construction to completion and bring projects into
production as expected, including development stage mining
properties, mine and mill expansion projects and other development
and construction projects; operators’ delays in securing or
inability to secure or maintain 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 Company’s stream and royalty
properties may encounter; operators’ inability to access sufficient
raw materials, water or power; 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 in the properties
where the Company holds stream and royalty interests; 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; changes in laws
governing the Company and its stream and royalty interests or the
operators of the properties subject to such interests, 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 2019, 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
Second Quarter Fiscal 2019
Revenue and Operators’ Reported
Production for Principal Stream and Royalty Interests
(In thousands, except reported
production in oz. and lbs.)
Three Months Ended Three Months Ended
December 31, 2018 December 31, 2017
Reported Reported
Stream/Royalty Metal(s)
Revenue Production1
Revenue Production1
Stream:
Mount Milligan $ 28,169 $
21,632 Gold 17,700 oz. 12,600 oz. Copper 2.4 Mlbs. 1.8 Mlbs.
Pueblo Viejo $ 18,230 $ 26,355 Gold 8,900 oz. 14,500 oz. Silver
509,500 oz. 469,600 oz. Wassa and Prestea Gold $ 9,550 7,800 oz. $
8,629 6,800 oz. Andacollo Gold $ 7,635 6,200 oz. $ 21,601 17,000
oz. Other $ 4,095 $ 1,070 Gold 2,900 oz. 800 oz. Silver
36,000 oz. N/A Total stream revenue $ 67,679 $
79,287
Royalty:
Peñasquito $ 4,660 $ 6,190 Gold 53,400 oz. 71,100 oz. Silver
5.0 Moz. 5.1 Moz. Lead 36.1 Mlbs. 33.4 Mlbs. Zinc 83.1 Mlbs. 94.4
Mlbs. Cortez Gold $ 2,335 19,900 oz. $ 2,934 25,000 oz. Other
Various $ 22,918 N/A $ 25,937 N/A Total royalty revenue $ 29,913 $
35,061
Total Revenue $ 97,592 $
114,348
Six Months Ended Six Months Ended
December 31, 2018 December 31, 2017
Reported Reported Stream/Royalty
Metal(s) Revenue
Production1 Revenue
Production1 Stream:
Pueblo Viejo $ 37,717 $ 51,758 Gold 18,100 oz. 27,400 oz.
Silver 1.0 Moz. 1.0 Moz. Mount Milligan $ 37,015 $ 53,584 Gold
23,300 oz. 31,300 oz. Copper 3.2 Mlbs. 4.4 Mlbs. Andacollo Gold $
35,378 28,900 oz. $ 33,938 26,700 oz. Wassa and Prestea Gold $
17,611 14,400 oz. $ 17,699 13,900 oz. Other $ 9,995 $ 1,070 Gold
7,400 oz. 800 oz. Silver 67,500 oz. N/A
Total stream revenue $ 137,716 $ 158,049
Royalty:
Peñasquito $ 8,297 $
13,986 Gold 103,700 oz. 205,100 oz. Silver 9.2 Moz. 11.0 Moz. Lead
65.9 Mlbs. 69.6 Mlbs. Zinc 147.3 Mlbs. 186.8 Mlbs. Cortez Gold $
2,939 26,900 oz. $ 5,922 54,900 oz. Other Various $ 48,633 N/A $
48,867 N/A Total royalty revenue $ 59,869 $ 68,775
Total
revenue $ 197,585 $ 226,824
TABLE 2
Operators’ Historical
Production
Property Operator
Stream/Royalty Reported Production For The
Quarter Ended1
Metal(s) Dec. 31,
2018 Sep. 30, 2018 Jun.
30, 2018 Mar. 31, 2018
Dec. 31, 2017 Stream:
Mount Milligan Centerra 35% of payable gold
Gold 17,700 oz.
5,500 oz. 20,700 oz.
25,800 oz. 12,600 oz.
18.75% of payable copper
Copper 2.4 Mlbs. 0.8
Mlbs. 1.6 Mlbs. 4.3 Mlbs.
1.8 Mlbs. Pueblo Viejo Barrick (60%) 7.5% of
gold produced up to 990,000 ounces; 3.75% therafter
Gold 8,900 oz. 9,200 oz.
13,200 oz. 8,500 oz.
14,500 oz.
75% of payable silver up to 50 million ounces; 37.5%
therafter Silver 509,500 oz.
540,200 oz. 616,300 oz.
260,800 oz. 469,600 oz.
Andacollo Teck 100% of gold produced
Gold 6,200 oz.
22,700 oz. 12,400 oz.
5,400 oz. 17,000 oz. Wassa and Prestea
Golden Star 10.5% of gold produced up
to 240,000 ounces; 5.5% therafter Gold
7,800 oz. 6,500 oz. 2,800
oz. 6,300 oz. 6,800
oz.
Royalty:
Peñasquito Goldcorp 2.0% NSR
Gold
53,400 oz. 50,300 oz.
79,600 oz. 91,200 oz.
71,100 oz. Silver 5.0 Moz.
4.2 Moz. 5.0 Moz.
5.0 Moz. 5.1 Moz. Lead
36.1 Mlbs. 29.9 Mlbs.
26.6 Mlbs. 26.0 Mlbs.
33.4 Mlbs.
Zinc 83.1 Mlbs.
64.2 Mlbs. 73.7 Mlbs.
88.0 Mlbs. 94.4 Mlbs. Cortez
Barrick GSR1 and GSR2, GSR3, NVR1
Gold 19,900 oz. 7,000
oz. 3,900 oz. 18,900
oz. 25,000 oz.
FOOTNOTES
Tables 1 and 2
1 Reported production relates to the amount of metal sales
that are subject to the Company’s stream and royalty interests for
the stated period, as reported to the Company by operators of the
mines. 2 Individually, no stream or royalty included within the
“Other” category contributed greater than 5% of the Company’s total
revenue for either period, except Rainy River for the six months
ended December 31, 2018. The “Other” category for streams is the
Rainy River gold and silver stream. 3 The gold stream percentage at
Wassa and Prestea increased to 10.5% from 9.25%, effective January
1, 2018.
TABLE 3
Calendar 2018 Operator’s Production
Estimate vs Actual Production
Calendar 2018 Operator's Production Calendar 2018
Operator's Production Estimate1
Actual2,3 Gold Silver
Base Metals Gold
Silver Base Metals
Stream/Royalty (oz.)
(oz.) (lbs.) (oz.)
(oz.) (lbs.)
Stream:
Andacollo4 66,700
59,600
Mount Milligan5 175,000 - 195,000
195,000
Copper
40 - 47 million
47.1 million Pueblo
Viejo6 575,000 - 590,000 Not provided
581,000 Not provided
Wassa and Prestea7 225,000 - 235,000
224,900
Royalty:
Cortez GSR1 48,300
44,600
Cortez GSR2
2,200
5,200
Cortez GSR3 50,500
49,800
Cortez NVR1
31,600
36,600
Peñasquito8 310,000 Not provided
220,000 14.1 million
Lead
160 million
82.5 million Zinc
300 million
225.9 million 1 Production estimates received from the
operators are for calendar 2018. There can be no assurance that
production estimates received from the operators will be achieved.
Please refer to the 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 the Company’s Fiscal 2018 Form
10-K for information regarding factors that could affect actual
results. 2 Actual production figures shown are from the operators
and cover the period January 1, 2018 through December 31, 2018,
except for Peñasquito which covers the period from January 1, 2018
through September 30, 2018. 3 Actual production figures for Cortez
are based on information provided to the Company by Barrick, 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 gold produced from Pueblo Viejo.
The operator did not provide estimated silver production. 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 and doré. The estimated and actual lead and zinc
production figures shown are payable lead and zinc from
concentrate. The operator did not provide estimated silver
production and the actual silver production figure shown is payable
silver in concentrate and doré.
TABLE 4
Stream Summary
Three Months Ended Three Months Ended As
of As of December 31, 2018 December 31,
2017 December 31, 2018 June 30, 2018 Gold
Stream Purchases (oz.) Sales (oz.)
Purchases (oz.) Sales (oz.)
Inventory (oz.) Inventory (oz.) Andacollo 10,700
6,200 13,500 17,000 4,500 7,400 Pueblo Viejo 10,400 8,900 12,600
14,500 10,400 9,200 Mount Milligan 10,300 17,700 17,700 12,700 —
300 Wassa and Prestea 4,700 7,900 6,000 6,800 700 3,900 Rainy River
4,500 2,900 1,000 800 1,600 800 Total 40,600 43,600 50,800 51,800
17,200 21,600
Three Months Ended Three Months
Ended As of As of December 31, 2018
December 31, 2017 December 31, 2018 June 30,
2018 Silver Stream Purchases (oz.) Sales
(oz.) Purchases (oz.) Sales (oz.) Inventory
(oz.) Inventory (oz.) Pueblo Viejo 469,000 509,500
260,200 469,600 469,000 540,200 Rainy River 41,700 36,000 11,900 —
41,700 32,300 Total 510,700 545,500 272,100 469,600 510,700 572,500
Three Months Ended Three Months Ended As
of As of December 31, 2018 December 31,
2017 December 31, 2018 June 30, 2018 Copper
Stream Purchases (Mlbs.) Sales (Mlbs.)
Purchases (Mlbs.) Sales (Mlbs.) Inventory
(Mlbs.) Inventory (Mlbs.) Mount Milligan 2.5 2.4 2.7 1.8
0.9 —
Six Months Ended Six Months
Ended As of As of December 31, 2018
December 31, 2017 December 31, 2018 June 30,
2018 Gold Stream Purchases (oz.) Sales
(oz.) Purchases (oz.) Sales (oz.) Inventory
(oz.) Inventory (oz.) Andacollo 26,000 28,900 26,500
26,700 4,500 7,400 Mount Milligan 23,000 23,300 36,400 31,300 — 300
Pueblo Viejo 19,300 18,100 23,100 27,400 10,400 9,200 Wassa and
Prestea 11,200 14,300 13,400 13,900 700 3,900 Rainy River 8,100
7,400 1,000 800 1,600 800 Total 87,600 92,000 100,400 100,100
17,200 21,600
Six Months Ended Six Months
Ended As of As of December 31, 2018
December 31, 2017 December 31, 2018 June 30,
2018 Silver Stream Purchases (oz.) Sales
(oz.) Purchases (oz.) Sales (oz.) Inventory
(oz.) Inventory (oz.) Pueblo Viejo 978,400 1,049,700
730,200 1,006,200 469,000 540,200 Rainy River 76,900 67,400 11,900
— 41,700 32,300 Total 1,055,300 1,117,100 742,100 1,006,200 510,700
572,500
Six Months Ended Six Months Ended
As of As of December 31, 2018 December 31,
2017 December 31, 2018 June 30, 2018 Copper
Stream Purchases (Mlbs.) Sales (Mlbs.)
Purchases (Mlbs.) Sales (Mlbs.) Inventory
(Mlbs.) Inventory (Mlbs.) Mount Milligan 4.2 3.2 5.3 4.4
0.9 —
ROYAL GOLD, INC.
Consolidated Balance Sheets
(Unaudited, in thousands except share
data)
December 31, 2018 June 30, 2018
ASSETS Cash and
equivalents $ 156,536 $ 88,750 Royalty receivables 25,659 26,356
Income tax receivable 12,793 40 Stream inventory 7,954 9,311
Prepaid expenses and other 793 1,350
Total current assets 203,735 125,807 Stream and royalty interests,
net 2,419,908 2,501,117 Other assets 51,463
55,092 Total assets $ 2,675,106 $ 2,682,016
LIABILITIES Accounts payable $ 2,291 $ 9,090 Dividends
payable 17,359 16,375 Income tax payable 10,739 18,253 Withholding
taxes payable 2,348 3,254 Other current liabilities 4,439
4,411 Total current liabilities 37,176 51,383
Debt 358,897 351,027 Deferred tax liabilities 90,700 91,147
Uncertain tax positions 35,590 33,394 Other long-term liabilities
5,773 13,796 Total liabilities
528,136 540,747 Commitments and contingencies
EQUITY Preferred stock, $.01 par value, 10,000,000 shares
authorized; and 0 shares issued — — Common stock, $.01 par value,
200,000,000 shares authorized; and 65,396,339 and 65,360,041 shares
outstanding, respectively 654 654 Additional paid-in capital
2,197,254 2,192,612 Accumulated other comprehensive loss - (1,201 )
Accumulated losses (86,238 ) (89,898 ) Total Royal
Gold stockholders’ equity 2,111,670 2,102,167 Non-controlling
interests 35,300 39,102 Total equity
2,146,970 2,141,269 Total liabilities
and equity $ 2,675,106 $ 2,682,016
ROYAL GOLD, INC.
Consolidated Statements of Operations and
Comprehensive Income
(Unaudited, in thousands except for per
share data)
Three Months Ended Six Months Ended December 31, December
31, December 31, December 31, 2018 2017 2018
2017 Revenue $ 97,592 $ 114,348 $ 197,585 $ 226,824 Costs
and expenses Cost of sales 18,162 19,863 34,689 40,282 General and
administrative 7,423 9,555 17,349 16,455 Production taxes 909 602
2,201 1,145 Exploration costs 842 1,358 5,204 4,561 Depreciation,
depletion and amortization 38,807 42,008
81,358 81,701 Total costs and
expenses 66,143 73,386 140,801
144,144 Operating income 31,449 40,962
56,784 82,680 Fair value changes in equity securities (3,631
) — (5,099 ) — Interest and other income 487 645 590 1,634 Interest
and other expense (7,410 ) (9,034 ) (15,287 )
(17,651 ) Income before income taxes 20,895 32,573 36,988
66,663 Income tax expense 2,148 (48,360
) (1,967 ) (55,904 ) Net income (loss) 23,043 (15,787
) 35,021 10,759 Net loss attributable to non-controlling interests
543 1,022 3,575
3,105 Net income (loss) attributable to Royal Gold common
stockholders $ 23,586 $ (14,765 ) $ 38,596 $ 13,864
Net income (loss) $ 23,043 $ (15,787 ) $ 35,021 $
10,759 Adjustments to comprehensive income (loss), net of tax
Unrealized change in market value of available-for-sale securities
— (390 ) — (193 )
Comprehensive income (loss) 23,043 (16,177 ) 35,021 10,566
Comprehensive loss attributable to non-controlling interests
543 1,022 3,575 3,105
Comprehensive income (loss) attributable to Royal Gold
stockholders $ 23,586 $ (15,155 ) $ 38,596 $ 13,671
Net income (loss) per share available to Royal Gold
common stockholders: Basic earnings (loss) per share $ 0.36
$ (0.23 ) $ 0.59 $ 0.21 Basic weighted average shares
outstanding 65,395,457 65,306,766
65,385,161 65,271,131 Diluted earnings
(loss) per share $ 0.36 $ (0.23 ) $ 0.59 $ 0.21
Diluted weighted average shares outstanding
65,473,400 65,306,766 65,485,423
65,460,430 Cash dividends declared per common share $
0.265 $ 0.25 $ 0.515 $ 0.49
ROYAL GOLD, INC.
Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Three Months Ended Six Months Ended December 31,
December 31, December 31, December 31, 2018 2017 2018
2017 Cash flows from operating activities: Net income (loss)
$ 23,043 $ (15,787 ) $ 35,021 $ 10,759 Adjustments to reconcile net
income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization 38,807 42,008 81,358
81,701 Amortization of debt discount and issuance costs 3,961 3,734
7,864 7,413 Non-cash employee stock compensation expense 1,625
2,021 4,070 4,395 Fair value changes in equity securities 3,631 —
5,099 — Deferred tax expense (benefit) 1,374 29,685 (307 ) 28,958
Other — 65 — (158 ) Changes in assets and liabilities: Royalty
receivables (553 ) (206 ) 697 (2,399 ) Stream inventory 2,057 435
1,356 524 Income tax receivable (6,412 ) (1,343 ) (12,753 ) (5,197
) Prepaid expenses and other assets 1,244 1,326 2,305 (328 )
Accounts payable (2,966 ) (673 ) (7,026 ) (1,658 ) Income tax
payable 2,727 3,410 (7,514 ) 9,445 Withholding taxes payable (203 )
(11 ) (906 ) 26 Uncertain tax positions (1,069 ) 2,067 2,197 4,560
Other liabilities (8,435 ) 8,894 (7,993
) 9,193 Net cash provided by operating activities $
58,831 $ 75,625 $ 103,468 $ 147,234
Cash flows from investing activities: Acquisition of stream
and royalty interests (52 ) 5 (55 ) — Purchase of equity securities
(3,569 ) — (3,569 ) — Other 34 (194 )
(87 ) (94 ) Net cash used in investing activities $ (3,587 )
$ (189 ) $ (3,711 ) $ (94 ) Cash flows from financing
activities: Repayment of revolving credit facility — (50,000 ) —
(100,000 ) Net payments from issuance of common stock (245 ) (12 )
(2,217 ) (3,541 ) Common stock dividends (16,378 ) (15,709 )
(32,754 ) (31,391 ) Contributions from non-controlling interest
2,790 — 2,790 — Other (1,953 ) 22 210
77 Net cash used in financing activities $
(15,786 ) $ (65,699 ) $ (31,971 ) $ (134,855 ) Net increase in cash
and equivalents 39,458 9,737 67,786 12,285 Cash and equivalents at
beginning of period 117,078 88,395
88,750 85,847 Cash and equivalents at
end of period $ 156,536 $ 98,132 $ 156,536 $
98,132
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version on businesswire.com: https://www.businesswire.com/news/home/20190206005630/en/
Royal GoldAlistair BakerDirector, Business
Development(720) 554-6995
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