Royal Gold Reports Record Third Quarter Revenue * Royalty Revenue
of $6.0 Million DENVER, May 6 /PRNewswire-FirstCall/ -- ROYAL GOLD,
INC. (Nasdaq: RGLD; TSX: RGL) today announced record revenues and
cash flow for the third quarter (January 1 -- March 31) of fiscal
year 2004. The Company's strong performance during the quarter
largely reflects the benefits of higher gold prices on its GSR1
sliding-scale royalty at the Pipeline Mining Complex in Nevada. The
Company reported net income of $2,950,814 or $0.14 per basic share,
on royalty revenue of $6,020,841 for the three months ended March
31, 2004. Net income for the quarter compares to net income of
$2,473,159, or $0.12 per basic share, on royalty revenue of
$5,587,567 for third quarter of fiscal 2003. Included in the third
quarter was a non-cash charge for a deferred tax expense of
$938,646 or $0.05 per basic share. Net income for the nine-month
period ended March 31, 2004 was $6,571,392 or $0.32 per basic
share, on royalty revenue of $15,285,788. This compares to net
income of $5,131,008, or $0.26 per share, on royalty revenue of
$12,083,123 for the nine-month period ended March 31, 2003. Free
cash flow for the third quarter was approximately $4.6 million, or
77% of revenues. For the nine-month period, free cash flow was
approximately $11.1 million, or 72% of revenues. Free cash flow, a
non-GAAP financial measure, is defined as operating income plus
depreciation, depletion and amortization, and any impairment of
mining assets (see Schedule A -- Reconciliation). At March 31,
2004, the Company had a working capital surplus of approximately
$46.2 million. Current assets were $49,004,777 compared to current
liabilities of $2,804,990 for a current ratio of 17 to 1.
Commenting on third quarter results, Stanley Dempsey, Chairman and
CEO, said, "We are extremely pleased with our strong revenues and
cash flow. These results demonstrate the effectiveness of our
royalty business model and the leverage it provides at higher gold
prices. We have the financial strength to fuel growth and believe
it is important to remain selective in our acquisitions in order to
achieve transactions that are high-quality and that will contribute
to our long-term success." ROYALTY PORTFOLIO REVIEW Pipeline Mining
Complex, Lander County, Nevada The Company owns two sliding-scale
gross smelter return royalties ("GSR1" and "GSR2"), a fixed gross
royalty ("GSR3"), and a net value royalty ("NVR1") on the Pipeline
Mining Complex. The GSR1 royalty covers the current mine footprint,
and the GSR2 ("Super") royalty covers any reserves that are
developed on the claim block lying outside the current mine
footprint. The GSR2 royalty pays out at a rate that is 80% higher
than that of GSR1, at all gold prices. The GSR3 royalty is a 0.71%
fixed rate for the life of the mine. The 0.39% NVR1 royalty covers
production from the GAS Claims, an area of interest of
approximately 4,000 acres including the South Pipeline deposit and
Crossroads area, but not including the Pipeline pit. The NVR1 is
calculated by deducting processing-related costs, but is not
burdened by mining costs. The Pipeline Mining Complex is owned by
the Cortez Joint Venture ("Cortez"), 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. For
the third quarter of fiscal 2004, the Pipeline Mining Complex
produced 259,821 ounces of gold, providing $5,459,516 of royalty
revenue to Royal Gold. This compares to 326,043 ounces of gold
produced, providing $4,933,825 of royalty revenue to Royal Gold,
for the same quarter in fiscal 2003. For the third quarter of
fiscal 2004, the average gold price was $408 per ounce and Royal
Gold's GSR1 royalty rate was 4.00%, compared to an average gold
price of $352 per ounce and a GSR1 royalty rate of 3.40% for the
same quarter of the previous year. Current production from the
Pipeline Mining Complex is subject to GSR1, GSR3, and NVR1.
Estimates received from the mine operator indicate that production
from the Pipeline Mining Complex is expected to be about 892,000
ounces of gold for calendar year 2004. Leeville Project, Eureka
County, Nevada Royal Gold owns a 1.8% net smelter return royalty
("NSR") covering a portion of the Leeville project ("Leeville").
Leeville is an underground mine, currently under development by
Newmont Mining Corporation. Newmont has announced its intention to
initiate production at Leeville in the fourth quarter of 2005.
Current production on the Leeville royalty land is derived from
underground operations on a portion of the Carlin East deposit.
During the third quarter, the Carlin East deposit produced 25,785
ounces of gold attributable to Royal Gold's royalty interest,
providing $188,119 in royalty revenue. This compares to production
of 28,882 ounces of gold, providing $183,520 in royalty revenue, in
the same quarter of the previous year. Estimates received from the
mine operator indicate that production from the Carlin East deposit
is expected to be about 116,000 ounces of gold for calendar year
2004. SJ Claims (Betze-Post Mine), Eureka County, Nevada Royal Gold
owns a 0.9% NSR royalty covering a portion of the open pit at the
Betze-Post mine, known as the SJ Claims. The Betze-Post mine, a
part of the larger Goldstrike operation, is operated by Barrick
Gold Corporation ("Barrick"). During the third quarter, the SJ
Claims produced 79,505 ounces of gold attributable to Royal Gold's
royalty interest, providing $292,357 in royalty revenue. This
compares to production of 89,528 ounces of gold, providing $284,361
in royalty revenue, in the same quarter of the previous year.
Estimates received from the mine operator indicate that production
from the SJ Claims is expected to be about 515,000 ounces of gold
for calendar year 2004. Bald Mountain, White Pine County, Nevada
Royal Gold owns a 1.75% to 3.50% NRS sliding-scale royalty that
burdens a portion of the Bald Mountain Mine, operated by Placer
Dome U.S. Inc. The 1.75% NSR royalty rate does not increase until
the gold price exceeds $500 per ounce. During the third quarter,
the Bald Mountain mine produced 5,430 ounces of gold attributable
to Royal Gold's royalty interest, providing $39,296 of royalty
revenue. This compares to production of 24,289 ounces of gold,
providing $149,252 of royalty revenue for the same quarter of the
previous year. Estimates received from the mine operator indicate
that production from Bald Mountain is expected to be about 55,000
ounces of gold for calendar year 2004. Martha Mine, Santa Cruz
Province, Argentina The Company owns a 2% NSR on the Martha silver
mine operated by Coeur d'Alene Mines Corporation. The Company
received $41,553 in royalty revenue during the quarter. This
compares to $33,000 in royalty revenues for the same quarter of the
previous year. Estimates received from the mine operator indicate
that production from the Martha mine is expected to total about 1.3
million ounces of silver for calendar year 2004. Corporate Profile
Royal Gold is a dividend paying, precious metals royalty company
engaging in the acquisition and management of precious metals
royalty interests. Royal Gold is publicly traded on the Nasdaq
Market System, under the symbol "RGLD" and on the Toronto Stock
Exchange, under the symbol "RGL." The Company's web page is located
at http://www.royalgold.com/. NOTE: Management's conference call
reviewing its third quarter results for fiscal 2004 will be held
today, May 6, 2004, at noon Eastern (10:00 a.m. Mountain; 9:00 a.m.
Pacific) time and is available by calling 800-603-2779 or
706-634-7230. The call will be simultaneously carried on the
Company's web site at http://www.royalgold.com/ under the
"Presentations" section. A replay of the conference call will be
available on the web site approximately two hours after the call
ends. Audio replays will be available about two hours after the
call and until May 14, 2004, by dialing 800-642-1687 or
706-645-9291, access number 7141299. 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 regarding
estimated production levels for calendar year 2004 at each of our
producing royalty properties and estimated commencement of
production at the Leeville mine. All of this forward-looking
information was provided to us by the operators of the mines. Other
forward looking statements include the prospects for future
acquisitions of royalty properties. Factors that could cause actual
results to differ materially from projections include, among
others, precious metals prices, decisions and activities of the
operators of our royalty properties, unanticipated permitting or
other delays in connection with commencement of production on the
Leeville mine, unanticipated grade, geological, metallurgical,
processing or other problems the operators of the mining properties
may encounter, economic and market conditions, and our future
financial needs or opportunities, as well as other factors
described elsewhere in this press release and in our Annual Report
on Form 10-K, 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 here. Readers are
cautioned not to put undue reliance on forward-looking statements.
Consolidated Balance Sheets (Unaudited) ASSETS March 31, June 30,
2004 2003 Current assets Cash and equivalents $41,667,029 $
33,485,543 Royalty receivables 5,120,922 3,125,437 Current deferred
tax asset 1,726,122 -- Prepaid expenses and other 490,704 190,568
Total current assets 49,004,777 36,801,548 Royalty interests in
mineral properties, net 41,156,015 43,559,743 Available for sale
securities 742,672 457,584 Deferred tax asset 356,211 5,454,500
Other assets 161,533 85,297 Total assets $91,421,208 $86,358,672
Consolidated Balance Sheets Continued (Unaudited) LIABILITIES AND
STOCKHOLDERS' EQUITY March 31, June 30, 2004 2003 Current
liabilities Accounts payable $1,611,272 $1,126,591 Dividend payable
779,377 1,032,735 Accrued compensation 100,000 200,000 Other
314,341 146,655 Total current liabilities 2,804,990 2,505,981
Deferred tax liability 7,583,317 8,746,702 Other liabilities 93,689
113,489 Commitments and contingencies Stockholders' equity Common
stock, $.01 par value, authorized 40,000,000 shares; and issued
21,012,583 and 20,883,914 shares, respectively 210,125 208,838
Additional paid-in capital 101,348,938 100,612,048 Accumulated
other comprehensive income 260,860 64,963 Accumulated deficit
(19,783,839) (24,796,477) 82,036,084 76,089,372 Less treasury
stock, at cost (229,224 shares) (1,096,872) (1,096,872) Total
stockholders' equity 80,939,212 74,992,500 Total liabilities and
stockholders' equity $91,421,208 $86,358,672 Consolidated
Statements of Operations and Comprehensive Income (Unaudited) For
The Three Months Ended March 31, March 31, 2004 2003 Royalty
revenues $6,020,841 $5,587,567 Costs and expenses Costs of
operations 418,900 481,983 General and administrative 834,031
476,404 Exploration and business development 150,705 326,373
Depreciation and depletion 762,288 776,036 Total costs and expenses
2,165,924 2,060,796 Operating income 3,854,917 3,526,771 Interest
and other income 142,018 98,750 Interest and other expense (5,512)
(28,601) Income before income taxes 3,991,423 3,596,920 Current tax
expense (101,963) (71,939) Deferred tax expense (938,646)
(1,051,822) Net income $2,950,814 $2,473,159 Adjustments to
comprehensive income Unrealized change in market value of available
for sale securities 91,282 (117,307) Comprehensive income
$3,042,096 $2,355,852 Basic earnings per share $0.14 $0.12 Basic
weighted average shares outstanding 20,783,359 20,537,681 Diluted
earnings per share $0.14 $0.12 Diluted weighted average shares
outstanding 21,125,284 21,091,023 Consolidated Statements of
Operations and Comprehensive Income (Unaudited) For The Nine Months
Ended March 31, March 31, 2004 2003 Royalty revenues $15,285,788
$12,083,123 Costs and expenses Costs of operations 1,093,357
1,064,096 General and administrative 2,198,726 1,470,231
Exploration and business development 931,653 570,140 Depreciation
and depletion 2,463,219 1,924,983 Total costs and expenses
6,686,955 5,029,450 Operating income 8,598,833 7,053,673 Interest
and other income 331,702 290,426 Interest and other expense
(63,791) (98,418) Income before income taxes 8,866,744 7,245,681
Current tax expense (192,053) (144,914) Deferred tax expense
(2,103,299) (1,969,759) Net income $6,571,392 $5,131,008
Adjustments to comprehensive income Unrealized change in market
value of available for sale securities 195,897 (140,127)
Comprehensive income $6,767,289 $4,990,881 Basic earnings per share
$0.32 $0.26 Basic weighted average shares outstanding 20,752,872
19,532,262 Diluted earnings per share $0.31 $0.26 Diluted weighted
average shares outstanding 21,118,405 20,048,206 Consolidated
Statements of Cash Flows (Unaudited) For The Nine Months Ended
March 31, March 31, 2004 2003 Cash flows from operating activities
Net income $6,571,392 $5,131,008 Adjustments to reconcile net
income to net cash provided by operating activities: Depreciation
and depletion 2,463,219 1,924,983 Deferred tax expense 2,103,299
1,969,759 Realized gain on sale of available for sale securities
(22,778) -- Put option mark to market -- 208,791 Other 5,642 6,356
(Increase) decrease in: Royalty receivables (1,995,485) (1,748,897)
Prepaid expenses and other assets (299,730) 7,643 Increase
(decrease) in: Accounts payable and accrued liabilities 504,720
611,525 Other liabilities (19,800) (5,879) Total adjustments
2,739,087 2,974,281 Net cash provided by operating activities
$9,310,479 $8,105,289 Consolidated Statements of Cash Flows
Continued (Unaudited) For The Nine Months Ended March 31, March 31,
2004 2003 Cash flows from investing activities Proceeds from sale
of available for sale securities $38,642 $-- Acquisition, net of
cash acquired of $853,480 -- (1,597,159) Capital expenditures for
property and equipment (93,700) (7,004) Net cash used in investing
activities (55,058) (1,604,163) Cash flows from financing
activities: Dividends (1,812,112) (2,377,714) Payments of notes
payable -- (647,649) Proceeds from issuance of common stock 738,177
14,524,776 Net cash provided by (used in) financing activities
(1,073,935) 11,499,413 Net increase in cash and equivalents
8,181,486 18,000,539 Cash and equivalents at beginning of period
33,485,543 11,104,140 Cash and equivalents at end of period
$41,667,029 $29,104,679 SCHEDULE A - RECONCILIATION Non-GAAP
Financial Measures The Company computes and discloses free cash
flow and free cash flow as a percentage of revenues. Free cash flow
is a non-GAAP financial measure. Free cash flow is defined by the
Company as operating income plus depreciation, depletion and
amortization, non-cash charges, and adding back any impairment of
mining assets. Management believes that free cash flow and free
cash flow as a percentage of revenues are useful measures of
performance of our royalty portfolio. Free cash flow identifies the
cash generated in a given period that will be available to fund the
Company's future operations, growth opportunities, and shareholder
dividends. Free cash flow, as defined, is most directly comparable
to operating income in the Statements of Operations. Below is
reconciliation to operating income: For The Three Months Ended For
The Nine Months Ended March 31, March 31, March 31, March 31, 2003
2002 2003 2002 Operating income $3,854,917 $3,526,771 $8,598,833
$7,053,673 Depreciation and depletion 762,288 776,036 2,463,219
1,924,983 Free cash flow $4,617,205 $4,302,807 $11,062,052
$8,978,656 DATASOURCE: Royal Gold, Inc. CONTACT: Stanley Dempsey,
Chairman & Chief Executive Officer, or Karen Gross, Vice
President & Corporate Secretary, both of Royal Gold, Inc.,
+1-303-573-1660 Web site: http://www.royalgold.com/
Copyright