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Royal Gold Inc
Royal Gold Reports Second Quarter 2020 Results (Businesswire)

2020-02-05 22:05
Royal Gold Reports Second Quarter 2020 Results

Royal Gold, Inc. (NASDAQ: RGLD) (together with its subsidiaries, “Royal Gold” or the “Company,” “we” or “our”) reports net income of $41.3 million, or $0.63 per share, on revenue of $123.6 million in its fiscal second quarter ended December 30, 2019 (“second quarter”).

Second Quarter Key Metrics Compared to Prior Year Quarter:

  • Revenue of $123.6 million, an increase of 26.7%
  • Operating cash flow of $78.3 million, an increase of 33.0%
  • Volume of 83,500 GEOs1, an increase of 4.9%
  • Dividends paid of $17.4 million, an increase of 6.1%
  • Repaid $35.0 million on revolving credit facility
  • Average price of $1,481 per gold ounce, an increase of 20.8%

“Royal Gold delivered another solid operating quarter. Continuing our disciplined approach to capital allocation, we strengthened the balance sheet further by paying down our credit facility, and we remain well positioned with approximately $1 billion of liquidity available for new business opportunities,” commented Bill Heissenbuttel, President and CEO. “Our strong operating cash flow allowed us to raise our calendar year dividend in November to $1.12 per share, which is the 19th consecutive annual increase since we started paying a dividend in calendar 2000. We are the only member of the VanEck Vectors Gold Miners ETF (the “GDX”) that has raised its dividend every year since the GDX was formed in 2006.”

“With respect to our portfolio,” Mr. Heissenbuttel continued, “we saw positive developments during the quarter with good progress at the Khoemacau project, and solid operating results at both Mount Milligan and Rainy River. We were also pleased to see long term resolutions to some recent issues, with the signing of a new 36-month collective agreement with the Workers’ Union at Andacollo, and a new 30-year agreement to secure sustainable water for the San Juan de Cedros community at Peñasquito. Both operations have returned to normal production levels after these agreements were reached.”

________________________

  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 69,300 in the second quarter, compared to 64,800 in the prior-year quarter.

Recent Developments

Khoemacau Project

According to Khoemacau Copper Mining (Pty.) Limited (“KCM”), progress continued at the Khoemacau Project (“Khoemacau”) in Botswana, and the project reached approximately 26% of construction completion at the end of the second quarter with 77% of the capital committed. Also, according to KCM, there are approximately 1,600 workers currently on site, with activities focused on completing excavation of the boxcuts, construction of accommodation, power and water infrastructure at Zone 5, completing construction of the access road between Zone 5 and the Boseto mill, and refurbishment of the Boseto mill. The mining contractor has been mobilized and much of the initial underground mining fleet has arrived on site and is being commissioned, with handover of the first boxcut from KCM to the contractor scheduled to begin in early February, which is slightly delayed from previous estimates due to slower than planned excavation advance.

On February 5, 2020, Royal Gold made the second advance payment of $22.0 million under the Khoemacau stream agreement. Royal Gold’s remaining commitment ranges from $124.2 million for the base stream of 80% of payable silver up to $177.2 million should KCM elect to increase the stream from 80% up to 100% of payable silver. Further payments are subject to certain conditions and are scheduled to be made on a quarterly basis using an agreed formula and certification process as project spending progresses.

KCM continues to expect the first shipment of concentrate by mid-2021.

Mount Milligan

On October 30, 2019, Centerra Gold Inc. (“Centerra”) reported that it is preparing an updated 43-101 technical report on the Mount Milligan mine that will incorporate changes to long-term gold recoveries, operating costs, optimization studies and exploration drilling. The publication of this report is expected within the coming months. Centerra expects a material reduction in the mineral reserves and mineralized material at Mount Milligan, although it has acknowledged that the extent of any changes in reserves and mineralized material cannot be precisely determined until all relevant studies and modeling have been completed. It is unclear at this point what impact, if any, the results of this work will have on the carrying value of Royal Gold’s stream interest at Mount Milligan. As of December 31, 2019, Royal Gold’s depletion rate of its interest at Mount Milligan was $402 per ounce of gold and $0.81 per pound of copper production.

Andacollo

On October 13, 2019, Teck Resources Limited (“Teck”) reported that the Carmen de Andacollo Workers Union gave notice that a strike would commence on October 14, 2019. Operations were suspended except for essential activities required to maintain safety and the environment. On December 5, 2019, Teck reported that the Workers Union ratified a new 36-month collective agreement and operations had resumed.

The impact of the strike on Royal Gold is expected to be reflected in the Company’s financial results beginning with the quarter ended June 30, 2020, as gold deliveries from Andacollo are generally received within six months of concentrate shipment.

Peñasquito

Royalty revenue for the quarter was impacted by a shutdown of mine operations resulting from a blockade of the mine by a trucking contractor and members of the San Juan de Cedros community (one of 25 neighboring communities) that started on September 14, 2019. Newmont, as operator, reported that the blockade of the Peñasquito mine was lifted on October 8, 2019, concentrate shipments resumed immediately thereafter, and that the site returned to full operation after a 10-day restart process which commenced on October 22, 2019. Despite the shutdown, gold, silver and lead production attributable to our royalty interest at Peñasquito increased approximately 79%, 85% and 71%, respectively, while zinc production decreased approximately 13% when compared to the prior year quarter.

On December 13, 2019, Newmont further reported that the Peñasquito mine and the San Juan de Cedros community had agreed to a 30-year infrastructure solution securing sustainable water availability for the community’s domestic and agricultural uses, which represents a significant milestone and an important step in the ongoing negotiations between the parties.

For calendar 2020, Newmont expects a full year of operations at Peñasquito with higher grades, leading to production of an estimated 575,000 ounces of gold, 30 million ounces of silver, 425 million pounds of zinc and 200 million pounds of lead.

Rainy River

New Gold Inc. (“New Gold”) reported total gold production from Rainy River for the December 2019 quarter of 51,100 ounces and 253,800 ounces for calendar 2019, achieving the lower end of annual gold production guidance of 245,000 to 270,000 ounces. New Gold reported average mill throughput for the December 2019 quarter of 22,521 tonnes per day, including average throughput of 24,858 tonnes per day for November and December, exceeding the target range of 24,000 tonnes per day and original design of 21,000 tonnes per day. New Gold also reported that mill availability averaged 89% for the quarter and gold recovery averaged 91%, in line with plan.

New Gold reported that it continued to advance a comprehensive mine optimization study at Rainy River that includes a review of alternative open pit and underground mining scenarios. New Gold expects the results of this study to be released on February 13, 2020. As of December 31, 2019, Royal Gold’s depletion rate of its interest at Rainy River was $591 per ounce of gold and $6.34 per ounce of silver production.

Wassa

Golden Star Resources Ltd. (“Golden Star”) reported total gold production from Wassa for the quarter of 41,000 ounces and 156,000 ounces for calendar 2019, achieving its revised annual gold production guidance of 150,000 to 160,000 ounces. During the quarter, Wassa delivered grades of 3.78 grams per tonne, 33% higher than the September 2019 quarter, as mining progressed in the 595 and 620 Levels. Wassa continued to deliver mining rates in excess of 4,000 tonnes per day during the quarter. For calendar 2020, Golden Star expects mining rates to average in excess of 4,000 tonnes per day, with resulting production between 155,000 and 165,000 ounces.

On November 13, 2019, Golden Star reported it continues to intersect significant higher-grade gold mineralization from infill and step out surface drilling on the southern extensions of the Wassa deposit. The drilling has been successful in converting portions of the Inferred Mineral Resource to Indicated as well as better defining the Inferred Mineral Resource at depth and along the hanging wall and footwall lodes peripheral to the main B-Shoot mineralization. According to Golden Star, a better understanding of the mineralization at depth resulting from this drilling will be incorporated into the ongoing geological interpretation update that will be the basis for Golden Star’s calendar 2019 year-end mineral resource estimation.

Alturas Royalty Acquisition

Subsequent to the end of the quarter, on January 29, 2020, a subsidiary of the Company entered into an agreement with various private individuals for the acquisition of a net smelter return royalty of up to 1.06% on gold and up to 1.59% on copper on mining concessions located in the Coquimbo Region of Chile held by Compañia Minera Salitrales Limitada (“CMSL”), a wholly owned subsidiary of Barrick Gold Corporation (“Barrick”), for total consideration of up to $41.0 million, including an upfront payment of $11.0 million and potential future payments of up to $20.0 million on a construction decision and up to $10.0 million on first production from the concessions. The potential future payment for a construction decision may be reduced depending on the mineable material in a mine plan at the date of a construction decision. As of December 31, 2018, Barrick disclosed mineralized material of 261 million tonnes at a gold grade of 1.06 grams per tonne at the Alturas Project, which is located on the CMSL concessions.

Second Quarter 2020 Overview

Second quarter revenue was $123.6 million compared to $97.6 million in the prior year quarter, with second quarter stream revenue totaling $89.6 million and royalty revenue totaling $34.0 million. The increase in total revenue for the second quarter compared to the prior year quarter resulted primarily from an increase in stream revenue and an increase in average gold and silver prices. The increase in stream revenue was primarily attributable to an increase in gold sales at Andacollo, Pueblo Viejo and Rainy River, and higher copper sales at Mount Milligan. This increase was partially offset by lower gold sales at Mount Milligan primarily due to timing of deliveries.

Second quarter cost of sales was approximately $21.1 million, compared to $18.2 million in the prior year quarter. The increase was primarily due to increased gold sales at Andacollo and increased gold and silver prices when compared to the prior year quarter. Cost of sales, which excludes depreciation, depletion and amortization, is specific to the Company’s stream agreements and is the result of the purchase of gold, silver and copper for a cash payment.

Interest and other expense decreased to $2.2 million in the second quarter from $7.4 million for the prior year quarter. The decrease was primarily attributable to lower interest expense as a result of a decrease in average debt amounts outstanding when compared to the prior period.

The Company recognized a second quarter income tax expense of $11.1 million, compared to an income tax benefit of $2.1 million during the prior year quarter, which resulted in an effective tax rate for the second quarter of 21.6% compared to (10.3)% for the prior year quarter. The lower effective tax rate for the prior year quarter was primarily attributable to the Company’s updated analysis of the tax impacts of H.R. 1, originally known as the Tax Cuts and Jobs Act.

As of December 31, 2019, the Company had current assets of $136.4 million compared to current liabilities of $44.1 million, resulting in working capital of $92.3 million. This compares to current assets of $154.7 million and current liabilities of $33.6 million at June 30, 2019, resulting in working capital of $121.1 million.

During the second quarter, liquidity needs were met from net cash provided by operating activities and available cash resources. During the three months ended December 31, 2019, the Company repaid $35 million of the outstanding borrowings under the revolving credit facility. As of December 31, 2019, the Company had $135 million outstanding and $865 million available under its revolving credit facility. Working capital, combined with the undrawn portion of the Company’s revolving credit facility, resulted in approximately $1.0 billion of total liquidity at December 31, 2019.

Property Highlights

A summary of second quarter and historical production reported by operators of the Company’s principal stream and royalty properties can be found on Tables 1 and 2. Calendar year 2019 operator production estimates for these properties compared to actual production at those properties through December 31, 2019 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, will be detailed in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2019.

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, 2019, the Company owned interests on 187 properties on five continents, including interests on 43 producing mines and 15 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 6, 2020, 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 in this release. These forward-looking statements include, among others, statements about portfolio developments, including progress at the Khoemacau Project and operators’ production estimates for Peñasquito and Wassa; the estimated timeframe for the first shipment of concentrate at Khoemacau; Centerra’s expectation of reduced reserves and the uncertain impact on the Company of the results of the anticipated updated 43-101 technical report at Mount Milligan; the timing of deliveries from Andacollo resulting from the previous suspension of operations; the anticipated release of the mine optimization study at Rainy River; and potential future payments in connection with the Alturas royalty acquisition. 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; 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 problems; changes in operators’ project parameters as plans continue to be refined, including reductions in estimates of reserves and mineralization by the operators of 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’ delay in securing or inability to secure or maintain necessary governmental permits; 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; the risks associated with conducting business in foreign countries, including application of foreign laws to contract and other disputes, foreign environmental laws and enforcement of those laws; economic and market conditions; changes in laws governing the Company and its stream and royalty interests or the operators of the properties subject to the interests, and other subsequent events; as well as other factors described in the Company's most recent Annual Report on Form 10-K, subsequent 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 in this press release. 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 without limitation production estimates, 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 any third-party information and refers the reader to the public reports filed by the operators for information regarding those properties.

Information in this press release concerning the Khoemacau Project mine life, average annual payable copper and silver production, silver contribution to mine revenue, cost information and initial deliveries of silver under the streaming agreement was provided to the Company by Cupric Canyon Capital L.P., the privately held owner and developer of Khoemacau. This information may not have been prepared in accordance with applicable laws, stock exchange rules or international standards governing preparation and public disclosure of technical data and information relating to mineral properties. 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 this third-party information, and investors are cautioned not to rely on this information.

TABLE 1

Second Quarter Fiscal 2020

Revenue and Operators’ Reported Production for Principal Stream and Royalty Interests

(Amounts in thousands, except reported production in oz. and lbs.)

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

 

December 31, 2019

 

December 31, 2018

 

 

 

 

 

 

Reported

 

 

 

Reported

Stream/Royalty

 

Metal(s)

 

Revenue

 

Production(1)

 

Revenue

 

Production(1)

Stream:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mount Milligan

 

 

 

$

30,629

 

 

 

 

$

28,169

 

 

 

 

 

Gold

 

 

 

 

12,900

oz.

 

 

 

 

17,700

oz.

 

 

Copper

 

 

 

 

4.3

Mlbs.

 

 

 

 

2.4

Mlbs.

Pueblo Viejo

 

 

 

$

23,614

 

 

 

 

$

18,230

 

 

 

 

 

Gold

 

 

 

 

10,500

oz.

 

 

 

 

8,900

oz.

 

 

Silver

 

 

 

 

462,400

oz.

 

 

 

 

509,500

oz.

Andacollo

 

Gold

 

$

20,665

 

13,900

oz.

 

$

7,635

 

6,200

oz.

Rainy River

 

 

 

$

7,562

 

 

 

 

$

4,095

 

 

 

 

 

Gold

 

 

 

 

4,500

oz.

 

 

 

 

2,900

oz.

 

 

Silver

 

 

 

 

51,100

oz.

 

 

 

 

36,000

oz.

Wassa

 

Gold

 

$

4,794

 

3,300

oz.

 

$

6,459

 

5,300

oz.

Other(2)

 

 

 

$

2,361

 

1,600

oz.

 

$

3,091

 

2,500

oz.

Total stream revenue

 

 

 

$

89,625

 

 

 

 

$

67,679

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalty:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Peñasquito

 

 

 

$

7,577

 

 

 

 

$

4,660

 

 

 

 

 

Gold

 

 

 

 

95,800

oz.

 

 

 

 

53,400

oz.

 

 

Silver

 

 

 

 

9.3

Moz.

 

 

 

 

5.0

Moz.

 

 

Lead

 

 

 

 

61.5

Mlbs.

 

 

 

 

36.1

Mlbs.

 

 

Zinc

 

 

 

 

72.1

Mlbs.

 

 

 

 

83.1

Mlbs.

Cortez

 

Gold

 

$

3,292

 

28,000

oz.

 

$

2,335

 

19,900

oz.

Other(2)

 

Various

 

$

23,149

 

N/A

 

 

$

22,918

 

N/A

 

Total royalty revenue

 

 

 

$

34,018

 

 

 

 

$

29,913

 

 

 

Total Revenue

 

 

 

$

123,643

 

 

 

 

$

97,592

 

 

 

TABLE 1

Second Quarter Fiscal 2020

Revenue and Operators’ Reported Production for Principal Stream and Royalty Interests

(Amounts in thousands, except reported production in oz. and lbs.)

 

 

 

 

 

Six Months Ended

 

Six Months Ended

 

 

 

 

December 31, 2019

 

December 31, 2018

 

 

 

 

 

 

 

Reported

 

 

 

 

Reported

Stream/Royalty

 

Metal(s)

 

Revenue

 

Production(1)

 

Revenue

 

Production(1)

Stream:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mount Milligan

 

 

 

$

61,126

 

 

 

 

$

37,015

 

 

 

 

 

Gold

 

 

 

 

29,500

oz.

 

 

 

 

23,300

oz.

 

 

Copper

 

 

 

 

6.7

Mlbs.

 

 

 

 

3.2

Mlbs.

Pueblo Viejo

 

 

 

$

45,232

 

 

 

 

$

37,717

 

 

 

 

 

Gold

 

 

 

 

20,000

oz.

 

 

 

 

18,100

oz.

 

 

Silver

 

 

 

 

938,000

oz.

 

 

 

 

1.0

Moz.

Andacollo

 

Gold

 

$

41,269

 

27,900

oz.

 

$

35,378

 

28,900

oz.

Rainy River

 

 

 

$

14,728

 

 

 

 

$

9,995

 

 

 

 

 

Gold

 

 

 

 

9,100

oz.

 

 

 

 

7,400

oz.

 

 

Silver

 

 

 

 

85,600

oz.

 

 

 

 

67,500

oz.

Wassa

 

Gold

 

$

10,113

 

6,900

oz.

 

$

11,784

 

9,600

oz.

Other(2)

 

Gold

 

$

4,138

 

2,800

oz.

 

$

5,827

 

4,800

oz.

Total stream revenue

 

 

 

$

176,606

 

 

 

 

$

137,716

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalty:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Peñasquito

 

 

 

$

11,997

 

 

 

 

$

8,297

 

 

 

 

 

Gold

 

 

 

 

131,300

oz.

 

 

 

 

103,700

oz.

 

 

Silver

 

 

 

 

13.9

Moz.

 

 

 

 

9.2

Moz.

 

 

Lead

 

 

 

 

91.2

Mlbs.

 

 

 

 

65.9

Mlbs.

 

 

Zinc

 

 

 

 

179.2

Mlbs.

 

 

 

 

147.3

Mlbs.

Cortez

 

Gold

 

$

7,709

 

63,100

oz.

 

$

2,939

 

26,900

oz.

Other(2)

 

Various

 

$

46,105

 

N/A

 

 

$

48,633

 

N/A

 

Total royalty revenue

 

 

 

$

65,811

 

 

 

 

$

59,869

 

 

 

Total revenue

 

$

242,417

 

 

 

 

$

197,585

 

 

 

TABLE 2

Operators’ Historical Production

 

 

 

 

 

Reported Production For The Quarter Ended1

Property

Operator

Stream/Royalty

Metal(s)

Dec. 31, 2019

Sep. 30, 2019

Jun. 30, 2019

Mar. 31, 2019

Dec. 31, 2018

Stream:

 

 

 

 

 

 

 

 

 

 

 

 

 

Mount Milligan

Centerra

35% of payable gold

Gold

12,900

oz.

16,600

oz.

23,100

oz.

15,200

oz.

17,700

oz.

 

 

18.75% of payable copper

Copper

4.3

Mlbs.

2.4

Mlbs.

2.5

Mlbs.

2.6

Mlbs.

2.4

Mlbs.

Pueblo Viejo

Barrick (60%)

7.5% of gold produced up to 990,000 ounces; 3.75% thereafter

Gold

10,500

oz.

9,500

oz.

12,400

oz.

10,400

oz.

8,900

oz.

 

 

75% of payable silver up to 50 million ounces; 37.5% thereafter(3)

Silver

462,400

oz.

475,600

oz.

553,000

oz.

469,000

oz.

509,500

oz.

Andacollo

Teck

100% of gold produced

Gold

13,900

oz.

14,000

oz.

14,100

oz.

12,000

oz.

6,200

oz.

Rainy River

New Gold

6.50% of gold produced up to 230,000 ounces; 3.25% thereafter

Gold

4,500

oz.

4,600

oz.

3,500

oz.

5,000

oz.

2,900

oz.

 

 

60% of payable silver up to 3.1 million ounces; 30% thereafter

Silver

51,100

oz.

34,500

oz.

36,400

oz.

40,900

oz.

36,000

oz.

Wassa

Golden Star

10.5% of gold produced up to 240,000 ounces; 5.5% thereafter(4)

Gold

3,300

oz.

3,600

oz.

3,500

oz.

4,400

oz.

5,300

oz.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalty:

 

 

 

 

 

 

 

 

 

 

 

 

 

Peñasquito

Newmont Corp.

2.0% NSR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gold

95,800

oz.

35,500

oz.

17,800

oz.

37,300

oz.

53,400

oz.

 

 

 

Silver

9.3

Moz.

4.6

Moz.

2.3

Moz.

4.9

Moz.

5.0

Moz.

 

 

 

Lead

61.5

Mlbs.

29.7

Mlbs.

17.0

Mlbs.

34.5

Mlbs.

36.1

Mlbs.

 

 

 

Zinc

72.1

Mlbs.

107.1

Mlbs.

(3.9)

Mlbs.

72.8

Mlbs.

83.1

Mlbs.

Cortez

Nevada Gold Mines
LLC

GSR1, GSR2, GSR3, NVR1, NVR1C

Gold

28,000

oz.

35,100

oz.

37,000

oz.

32,700

oz.

19,900

oz.

_____________________________________________

FOOTNOTES

Tables 1 and 2

1.

Reported production for stream interests relates to the Company’s actual metal sales, and for royalty interests relates to the amount of metal sales that are subject to the Company’s royalty interests for the stated period as reported to the Company by operators of the properties.

2.

Individually, no stream or royalty included within the “Other” category contributed greater than 5% of the Company’s total revenue for either period. The “Other” category for streams is the Prestea gold stream.

3.

The Pueblo Viejo silver stream is determined based on a fixed metallurgical recovery of 70% of silver in mill feed.

4.

The 240,000 ounce threshold includes production from Golden Star’s Prestea mine.

TABLE 3

Calendar 2019 Operator’s Production Estimate vs Actual Production

 

 

 

Calendar 2019 Operator’s Production

 

Calendar 2019 Operator’s Production

 

 

Estimate(1)

 

Actual(2)

 

 

Gold

 

Silver

 

Base Metals

 

Gold

 

Silver

 

Base Metals

Stream/Royalty

 

(oz.)

 

(oz.)

 

(lbs.)

 

(oz.)

 

(oz.)

 

(lbs.)

Stream:

 

 

 

 

 

 

 

 

 

 

 

 

Andacollo(3)

 

62,000

 

 

 

 

 

46,800

 

 

 

 

Mount Milligan(4)

 

155,000 - 175,000

 

 

 

 

 

137,100

 

 

 

 

Copper

 

 

 

 

 

65 - 75 million

 

 

 

 

 

53.1 million

Pueblo Viejo(5)

 

550,000 - 600,000

 

N/A

 

 

 

590,000

 

N/A

 

 

Rainy River(6)

 

245,000 - 270,000

 

245,000 - 270,000

 

 

 

253,800

 

282,100

 

 

Wassa(7)

 

150,000 - 160,000

 

 

 

 

 

156,000

 

 

 

 

Royalty:

 

 

 

 

 

 

 

 

 

 

 

 

Cortez GSR1

 

115,500

 

 

 

 

 

91,400

 

 

 

 

Cortez GSR2

 

70,200

 

 

 

 

 

41,200

 

 

 

 

Cortez GSR3

 

183,700

 

 

 

 

 

131,600

 

 

 

 

Cortez NVR1

 

156,900

 

 

 

 

 

116,200

 

 

 

 

Cortez NVR1C

 

2,000

 

 

 

 

 

1,100

 

 

 

 

Peñasquito(8)

 

165,000

 

25 million

 

 

 

71,000

 

9.2 million

 

 

Lead

 

 

 

 

 

180 million

 

 

 

 

 

63 million

Zinc

 

 

 

 

 

245 million

 

 

 

 

 

108 million

(1)

Production estimates received from our operators are for calendar 2019, unless otherwise noted in footnotes to this table. Please refer to our cautionary statement regarding third party information above. There can be no assurance that production estimates received from our operators will be achieved. Please also refer to our cautionary language regarding forward-looking statements above, as well as the Risk Factors identified in Part I, Item 1A, of our Fiscal 2019 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, 2019 through December 31, 2019, unless otherwise noted in footnotes to this table.

(3)

The estimated and actual production figures shown for Andacollo are contained gold in concentrate.

(4)

The estimated and actual production figures shown for Mount Milligan are payable gold and copper in concentrate. Actual production shown is for the nine months ended September 30, 2019. Full calendar year 2019 information was not available from the operator as of the date of this report.

(5)

The estimated and actual production figures shown for Pueblo Viejo are payable gold in doré and represent Barrick’s 60% interest in Pueblo Viejo. The operator did not provide estimated or actual silver production.

(6)

The estimated and actual production figures shown for Rainy River are produced gold and silver in doré.

(7)

The estimated and actual production figures shown for Wassa are payable gold in doré.

(8)

The estimated and actual gold and silver production figures shown for Peñasquito are payable gold and silver in concentrate and doré. The estimated lead and zinc production figures shown are payable lead and zinc in concentrate. The estimated production figures shown are for the period April 18, 2019 through December 31, 2019, while actual production figures shown are for the period April 18, 2019 through September 30, 2019, per the operator. Full calendar year 2019 information was not available from the operator as of the date of this report.

TABLE 4

Stream Summary

 

 

 

Three Months Ended

 

Three Months Ended

 

As of

 

As of

 

 

December 31, 2019

 

December 31, 2018

 

December 31, 2019

 

June 30, 2019

Gold Stream

 

Purchases (oz.)

 

Sales (oz.)

 

Purchases (oz.)

 

Sales (oz.)

 

Inventory (oz.)

 

Inventory (oz.)

Mount Milligan

 

18,800

 

12,900

 

10,300

 

17,700

 

10,300

 

7,100

Pueblo Viejo

 

13,200

 

10,500

 

10,400

 

8,900

 

13,200

 

9,500

Andacollo

 

18,600

 

13,900

 

10,700

 

6,200

 

4,700

 

4,300

Wassa

 

4,900

 

3,300

 

3,600

 

5,300

 

2,400

 

1,500

Rainy River

 

4,200

 

4,500

 

4,500

 

2,900

 

1,300

 

1,800

Other

 

1,400

 

1,600

 

1,100

 

2,600

 

400

 

400

Total

 

61,100

 

46,700

 

40,600

 

43,600

 

32,300

 

24,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

As of

 

As of

 

 

December 31, 2019

 

December 31, 2018

 

December 31, 2019

 

June 30, 2019

Silver Stream

 

Purchases (oz.)

 

Sales (oz.)

 

Purchases (oz.)

 

Sales (oz.)

 

Inventory (oz.)

 

Inventory (oz.)

Pueblo Viejo

 

417,700

 

462,400

 

469,000

 

509,500

 

417,800

 

475,600

Rainy River

 

48,100

 

51,100

 

41,700

 

36,000

 

48,400

 

36,500

Total

 

465,800

 

513,500

 

510,700

 

545,500

 

466,200

 

512,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

As of

 

As of

 

 

December 31, 2019

 

December 31, 2018

 

December 31, 2019

 

June 30, 2019

Copper Stream

 

Purchases (Mlbs.)

 

Sales (Mlbs.)

 

Purchases (Mlbs.)

 

Sales (Mlbs.)

 

Inventory (Mlbs.)

 

Inventory (Mlbs.)

Mount Milligan

 

4.4

 

4.3

 

2.5

 

2.4

 

0.9

 

0.8

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE 4

Stream Summary

 

 

 

Six Months Ended

 

Six Months Ended

 

As of

 

As of

 

 

December 31, 2019

 

December 31, 2018

 

December 31, 2019

 

June 30, 2019

Gold Stream

 

Purchases (oz.)

 

Sales (oz.)

 

Purchases (oz.)

 

Sales (oz.)

 

Inventory (oz.)

 

Inventory (oz.)

Mount Milligan

 

32,800

 

29,500

 

23,000

 

23,300

 

10,300

 

7,100

Andacollo

 

28,300

 

27,900

 

26,000

 

28,900

 

4,700

 

4,300

Pueblo Viejo

 

23,700

 

20,000

 

19,300

 

18,100

 

13,200

 

9,500

Wassa

 

7,800

 

6,900

 

7,700

 

9,600

 

2,400

 

1,500

Rainy River

 

8,600

 

9,100

 

8,100

 

7,400

 

1,300

 

1,800

Other

 

2,800

 

2,800

 

3,500

 

4,700

 

400

 

400

Total

 

104,000

 

96,200

 

87,600

 

92,000

 

32,300

 

24,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

Six Months Ended

 

As of

 

As of

 

 

December 31, 2019

 

December 31, 2018

 

December 31, 2019

 

June 30, 2019

Silver Stream

 

Purchases (oz.)

 

Sales (oz.)

 

Purchases (oz.)

 

Sales (oz.)

 

Inventory (oz.)

 

Inventory (oz.)

Pueblo Viejo

 

880,200

 

938,000

 

978,400

 

1,049,700

 

417,800

 

475,600

Rainy River

 

97,500

 

85,600

 

76,900

 

67,400

 

48,400

 

36,500

Total

 

977,700

 

1,023,600

 

1,055,300

 

1,117,100

 

466,200

 

512,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

Six Months Ended

 

As of

 

As of

 

 

December 31, 2019

 

December 31, 2018

 

December 31, 2019

 

June 30, 2019

Copper Stream

 

Purchases (Mlbs.)

 

Sales (Mlbs.)

 

Purchases (Mlbs.)

 

Sales (Mlbs.)

 

Inventory (Mlbs.)

 

Inventory (Mlbs.)

Mount Milligan

 

6.8

 

6.7

 

4.2

 

3.2

 

0.9

 

0.8

ROYAL GOLD, INC.

Consolidated Balance Sheets

(Unaudited, amounts in thousands except share data)

 

 

 

December 31, 2019

 

June 30, 2019

ASSETS

 

 

 

 

 

 

 

Cash and equivalents

 

$

80,504

 

$

119,475

 

Royalty receivables

 

 

28,446

 

 

20,733

 

Income tax receivable

 

 

9,671

 

 

2,702

 

Stream inventory

 

 

15,336

 

 

11,380

 

Prepaid expenses and other

 

 

2,485

 

 

389

 

Total current assets

 

 

136,442

 

 

154,679

 

Stream and royalty interests, net

 

 

2,333,091

 

 

2,339,316

 

Other assets

 

 

85,103

 

 

50,156

 

Total assets

 

$

2,554,636

 

$

2,544,151

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

Accounts payable

 

$

3,170

 

$

2,890

 

Dividends payable

 

 

18,354

 

 

17,372

 

Income tax payable

 

 

14,366

 

 

6,974

 

Other current liabilities

 

 

8,240

 

 

6,374

 

Total current liabilities

 

 

44,130

 

 

33,610

 

Debt

 

 

129,869

 

 

214,554

 

Deferred tax liabilities

 

 

87,352

 

 

88,961

 

Uncertain tax positions

 

 

39,804

 

 

36,573

 

Other long-term liabilities

 

 

6,267

 

 

 

Total liabilities

 

 

307,422

 

 

373,698

 

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 65,496,004 and 65,440,492 shares outstanding, respectively

 

 

655

 

 

655

 

Additional paid-in capital

 

 

2,205,364

 

 

2,201,773

 

Accumulated earnings (losses)

 

 

10,290

 

 

(65,747

)

Total Royal Gold stockholders’ equity

 

 

2,216,309

 

 

2,136,681

 

Non-controlling interests

 

 

30,905

 

 

33,772

 

Total equity

 

 

2,247,214

 

 

2,170,453

 

Total liabilities and equity

 

$

2,554,636

 

$

2,544,151

 

ROYAL GOLD, INC.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited, amounts in thousands except for per share data)

 

 

Three Months Ended

 

Six Months Ended

 

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

 

2019

 

2018

 

2019

 

2018

Revenue

 

$

123,643

 

 

$

97,592

 

 

$

242,417

 

 

$

197,585

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales (excludes depletion, depreciation and amortization)

 

 

21,077

 

 

 

18,162

 

 

 

41,188

 

 

 

34,689

 

General and administrative

 

 

6,665

 

 

 

7,423

 

 

 

14,108

 

 

 

17,349

 

Production taxes

 

 

984

 

 

 

909

 

 

 

2,083

 

 

 

2,201

 

Exploration costs

 

 

1,514

 

 

 

842

 

 

 

4,140

 

 

 

5,204

 

Depreciation, depletion and amortization

 

 

40,096

 

 

 

38,807

 

 

 

78,810

 

 

 

81,358

 

Total costs and expenses

 

 

70,336

 

 

 

66,143

 

 

 

140,329

 

 

 

140,801

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

53,307

 

 

 

31,449

 

 

 

102,088

 

 

 

56,784

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value changes in equity securities

 

 

222

 

 

 

(3,631

)

 

 

(1,153

)

 

 

(5,099

)

Interest and other income

 

 

226

 

 

 

487

 

 

 

1,001

 

 

 

590

 

Interest and other expense

 

 

(2,217

)

 

 

(7,410

)

 

 

(5,051

)

 

 

(15,287

)

Income before income taxes

 

 

51,538

 

 

 

20,895

 

 

 

96,885

 

 

 

36,988

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax (expense) benefit

 

 

(11,124

)

 

 

2,148

 

 

 

12,401

 

 

 

(1,967

)

Net income and comprehensive income

 

 

40,414

 

 

 

23,043

 

 

 

109,286

 

 

 

35,021

 

Net loss and comprehensive loss attributable to non-controlling interests

 

 

907

 

 

 

543

 

 

 

2,488

 

 

 

3,575

 

Net income and comprehensive income attributable to Royal Gold common stockholders

 

$

41,321

 

 

$

23,586

 

 

$

111,774

 

 

$

38,596

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share available to Royal Gold common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.63

 

 

$

0.36

 

 

$

1.70

 

 

$

0.59

 

Basic weighted average shares outstanding

 

 

65,495,907

 

 

 

65,395,457

 

 

 

65,480,759

 

 

 

65,385,161

 

Diluted earnings per share

 

$

0.63

 

 

$

0.36

 

 

$

1.70

 

 

$

0.59

 

Diluted weighted average shares outstanding

 

 

65,611,567

 

 

 

65,473,400

 

 

 

65,613,406

 

 

 

65,485,423

 

Cash dividends declared per common share

 

$

0.28

 

 

$

0.265

 

 

$

0.545

 

 

$

0.515

 

ROYAL GOLD, INC.

Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

   

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

 

2019

 

2018

 

2019

 

2018

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income and comprehensive income

 

$

40,414

 

 

$

23,043

 

 

$

109,286

 

 

$

35,021

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

40,097

 

 

 

38,807

 

 

 

78,810

 

 

 

81,358

 

Amortization of debt discount and issuance costs

 

 

285

 

 

 

3,961

 

 

 

566

 

 

 

7,864

 

Non-cash employee stock compensation expense

 

 

1,538

 

 

 

1,625

 

 

 

3,639

 

 

 

4,070

 

Fair value changes in equity securities

 

 

(222

)

 

 

3,631

 

 

 

1,153

 

 

 

5,099

 

Deferred tax (benefit) expense

 

 

(2,987

)

 

 

1,374

 

 

 

(36,126

)

 

 

(307

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalty receivables

 

 

(1,812

)

 

 

(553

)

 

 

(7,714

)

 

 

697

 

Stream inventory

 

 

(4,564

)

 

 

2,057

 

 

 

(3,956

)

 

 

1,356

 

Income tax receivable

 

 

(5,973

)

 

 

(6,412

)

 

 

(6,968

)

 

 

(12,753

)

Prepaid expenses and other assets

 

 

(3,823

)

 

 

1,244

 

 

 

(7,020

)

 

 

2,305

 

Accounts payable

 

 

(1,446

)

 

 

(2,966

)

 

 

(929

)

 

 

(7,026

)

Income tax payable

 

 

8,818

 

 

 

2,727

 

 

 

7,392

 

 

 

(7,514

)

Uncertain tax positions

 

 

1,482

 

 

 

(1,069

)

 

 

3,230

 

 

 

2,197

 

Other liabilities

 

 

6,450

 

 

 

(8,638

)

 

 

8,133

 

 

 

(8,899

)

Net cash provided by operating activities

 

$

78,257

 

 

$

58,831

 

 

$

149,496

 

 

$

103,468

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of stream and royalty interests

 

 

(68,055

)

 

 

(52

)

 

 

(72,417

)

 

 

(55

)

Purchase of equity securities

 

 

(411

)

 

 

(3,569

)

 

 

(411

)

 

 

(3,569

)

Other

 

 

(84

)

 

 

34

 

 

 

4,774

 

 

 

(87

)

Net cash used in investing activities

 

$

(68,550

)

 

$

(3,587

)

 

$

(68,054

)

 

$

(3,711

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repayment of debt

 

 

(35,000

)

 

 

 

 

 

(85,000

)

 

 

 

Net payments from issuance of common stock

 

 

(324

)

 

 

(245

)

 

 

(2,747

)

 

 

(2,217

)

Common stock dividends

 

 

(17,382

)

 

 

(16,378

)

 

 

(34,755

)

 

 

(32,754

)

Contributions from non-controlling interest

 

 

2,700

 

 

 

2,790

 

 

 

2,700

 

 

 

2,790

 

Other

 

 

(1,167

)

 

 

(1,953

)

 

 

(611

)

 

 

210

 

Net cash used in financing activities

 

$

(51,173

)

 

$

(15,786

)

 

$

(120,413

)

 

$

(31,971

)

Net (decrease) increase in cash and equivalents

 

 

(41,466

)

 

 

39,458

 

 

 

(38,971

)

 

 

67,786

 

Cash and equivalents at beginning of period

 

 

121,970

 

 

 

117,078

 

 

 

119,475

 

 

 

88,750

 

Cash and equivalents at end of period

 

$

80,504

 

 

$

156,536

 

 

$

80,504

 

 

$

156,536

 

 


Alistair Baker
Director, Business Development
(720) 554-6995

Copyright Business Wire 2020

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