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DENVER--(BUSINESS WIRE)--
Royal Gold, Inc. (NASDAQ:RGLD; TSX:RGL) (together with its
subsidiaries, “Royal Gold” or the “Company”) reports results for its
second quarter of fiscal 2015, ended December 31, 2014 (“second
quarter”), including revenue of $61.3 million, up 16% from the same
period a year ago, and Adjusted EBITDA1 of $48.0 million, up
5% from the prior year quarter. Streaming revenue was $17.3 million,
while royalty revenue was $44.0 million.
The Company reports a net loss attributable to Royal Gold stockholders
(“net loss”) of $6.5 million, or ($0.10) per basic share for the second
quarter, compared with net income attributable to Royal Gold
stockholders of $10.7 million, or $0.16 per share from the same period a
year ago. The decrease in our earnings per share was primarily
attributable to a non-cash impairment charge of approximately $26.0
million related to our Wolverine royalty interest and a non-cash $3.0
million write down of a royalty receivable at Wolverine. Absent the
($0.33) non-cash items related to Wolverine, net income would have been
approximately $0.23 per basic share, after taxes.
The average gold price was $1,201 per ounce for the second quarter, down
6% from $1,276 per ounce in the year ago quarter.
Tony Jensen, President and CEO, commented, “Mount Milligan and Cortez
posted significantly higher production than in the year ago period,
which more than offset lower metal prices. In calendar 2015, we look
forward to continued growth at Mount Milligan where Thompson Creek
expects gold production to increase by 25% to 35%, while 20% to 30%
higher gold production is expected at Peñasquito, according to Goldcorp.
In addition, we look forward to the startup of operations at the Phoenix
Gold Project, which is projected for mid-year. We are pleased to have
layered in two new pieces of business during the quarter and remain
active in evaluating additional business opportunities.”
Adjusted EBITDA for the second quarter was $48.0 million ($0.74 per
basic share), representing 78% of revenue, compared with Adjusted EBITDA
of $45.6 million ($0.70 per basic share), or 86% of revenue, for the
year ago quarter. Adjusted EBITDA, as a percentage of revenue, was lower
in the second quarter due to the inclusion of ongoing stream payments to
Mount Milligan of $435 per ounce of gold, which are recorded as a cost
of sales and totaled $6.2 million during the second quarter.
As of December 31, 2014, the Company had a working capital surplus of
$732.4 million. Current assets were $751.9 million compared to current
liabilities of $19.5 million, for a current ratio of 39 to 1.
During the second quarter, the Company had an effective tax rate of
22.4%, compared with 36.9% in the prior year quarter. The decrease in
the effective tax rate is primarily attributable to an increase in
revenue from lower tax jurisdictions and the impairment charge on the
Wolverine royalty interest. Absent the Wolverine impairment charge,
Royal Gold’s effective tax rate would have been approximately 26% for
the quarter.
The Company owns a 0.00% to 9.445% sliding-scale NSR royalty on all gold
and silver produced from the Wolverine underground mine and milling
operation located in Yukon Territory, Canada, and operated by the
privately held Yukon Zinc Corporation. Yukon Zinc recently announced a
decision to put the mine on care and maintenance, and the Company has
been notified of an updated mine plan at Wolverine that includes a
significant reduction in reserves and resources. For the twelve months
ended September 30, 2014, Wolverine contributed approximately 1.4% of
Royal Gold’s total revenues. Following the impairment charge, the
Wolverine royalty interest has a carrying value of $5.3 million.
RECENT DEVELOPMENTS
Mount Milligan Gold Stream
Thompson Creek reported that the ramp-up at Mount Milligan continues to
progress as expected, with production of approximately 41,000 ounces of
payable gold in the quarter ended December 31, 2014.
During the second quarter, Royal Gold, through a wholly owned
subsidiary, purchased approximately 13,000 ounces of physical gold,
which came from a combination of provisional and final settlements
associated with five shipments of concentrate from Mount Milligan. The
Company sold approximately 14,300 ounces of gold during the second
quarter at an average price of $1,208 per ounce, and had approximately
4,800 ounces of gold in inventory as of December 31, 2014.
For the month of December 2014, average daily mill throughput was 44,734
tonnes per day, which represents approximately 75% of design capacity.
Thompson Creek reports that it plans to utilize contractor services to
add secondary crushing capacity during 2015, with plans for a permanent
addition to crushing capacity when market conditions improve. For
calendar year 2015, Thompson Creek is forecasting annual payable gold
production of 220,000 to 240,000 ounces, an increase of approximately
25% to 35% over calendar year 2014 production of approximately 178,000
ounces.
Thompson Creek also filed an updated technical report for the Mount
Milligan mine that reflects 6.2 million ounces of estimated proven and
probable gold reserves at $1,250/ounce gold, up from 6.0 million ounces
in the previous technical report. The updated mineral reserve estimates
include forecasted average annual gold production of approximately
285,800 ounces in years 2015 through 2019, which is a 9% increase over
the previous technical report annual estimates for the first six years
of gold production. Life of mine average annual gold production is
estimated to be 186,700 ounces.
Peñasquito
The Company notes that Goldcorp reported approximately 567,800 ounces of
gold production at Peñasquito for the year ended December 31, 2014.
Goldcorp is forecasting gold production of 700,000 to 750,000 ounces at
Peñasquito for the calendar year 2015, which is an increase of
approximately 20% to 30% over calendar 2014 gold production. On a gold
equivalent basis, Goldcorp forecasts production to total 1.5 million to
1.6 million ounces. Royal Gold has a 2% royalty on all metals at
Peñasquito.
Goldcorp reports that Pre-Feasibility Studies for the Concentrate
Enrichment Process (CEP) and Pyrite Leach Process at Peñasquito were
essentially complete at the end of 2014 and are undergoing internal
review. Goldcorp highlighted that preliminary economic results continue
to demonstrate the robust economics of these projects and their
potential to significantly increase the mine life at Peñasquito. The two
projects are being integrated as they enter the feasibility study phase,
which Goldcorp expects to commence by the end of the first calendar
quarter 2015 and be completed in early 2016.
Phoenix Gold Project Stream
On December 18, 2014, Rubicon Minerals reiterated that the Phoenix Gold
Project remains on track for production in mid-2015, with mill
construction on schedule and on budget. Lateral and vertical development
was 45% complete at the 685 meter level and above. Results from its
38,000 meter infill drilling program were released in early January, and
confirmed Rubicon Minerals’ expectations of the upper portion of the F2
Deposit with respect to continuity of mineralization and grade. As of
December 31, 2014, Royal Gold had a remaining funding commitment of
$12.8 million as part of its Phoenix Gold Project stream acquisition.
Peak Gold Joint Venture
On January 8, 2015, Royal Gold, through its wholly owned subsidiary,
Royal Alaska, LLC, formed the Peak Gold, LLC joint venture (“JV”) with
Contango ORE, Inc. (“CORE”) to advance exploration and development of
the Tetlin project. CORE contributed its Tetlin lease and state mining
claims, and Royal Gold Alaska, LLC made its initial $5 million
investment to fund exploration activity, with the option to earn up to a
40% economic interest in the JV by investing up to $30 million
(including the initial $5 million investment) prior to October 2018, for
further exploration and development of the project.
Tulsequah Chief Gold Stream
On December 22, 2014, RGLD Gold AG (“RGLD Gold”) terminated the Amended
and Restated Gold and Silver Purchase and Sale Agreement (the
“Agreement”), between RGLD Gold, the Company, Chieftain Metals Inc. and
Chieftain Metals Corp. (together, “Chieftain”), relating to Chieftain’s
Tulsequah Chief polymetallic mining project located in British Columbia,
Canada. Pursuant to the terms of the Agreement, Chieftain repaid RGLD
Gold’s original $10.0 million advance payment. The payment was received
in January 2015. RGLD Gold holds a right of first refusal over the
creation by Chieftain of any royalty, production payment, stream or
similar interest on gold or silver production from the project for a
period of two years from December 22, 2014.
Ilovitza Project Gold Stream
On October 20, 2014, RGLD Gold entered into a $175.0 million gold stream
transaction with Euromax Resources Ltd (“Euromax”) that will finance a
definitive feasibility study, permitting work, early stage engineering
and a significant portion of the construction at Euromax’s Ilovitza
gold-copper project. RGLD Gold will make two advance deposit payments to
Euromax totaling $15.0 million, which will be used for completion of the
definitive feasibility study and permitting of the project, followed by
payments aggregating $160 million towards project construction, in each
case subject to certain conditions. Payment of the first $7.5 million
deposit is conditioned upon Euromax raising an additional $5 million in
equity, which was completed in January, 2015, and the satisfaction of
certain other conditions. RGLD Gold’s decision to proceed with the
second $7.5 million deposit and the construction payments is conditioned
upon, among other things, progress of the definitive feasibility study
and environmental evaluations, demonstrated project viability and, in
the case of the construction payments, sufficient project financing and
permits to construct and operate the mine. The construction payments
would be paid pro-rata with the balance of the project funding. In
exchange, Euromax will deliver physical gold equal to 25% of gold
produced from the Ilovitza project until 525,000 ounces have been
delivered, and 12.5% thereafter (in each case subject to adjustment).
RGLD Gold’s purchase price per ounce will be 25% of the spot price at
time of delivery.
PROPERTY HIGHLIGHTS
Highlights at certain of the Company’s principal producing and
development properties during the second quarter, compared with the
prior fiscal quarter ended December 31, 2013, are listed below.
Production for our producing properties reflects the actual production
subject to our interests reported to us by the various operators through
December 31, 2014.
Principal Producing Properties
Andacollo – Gold production decreased 16% over the prior year
quarter primarily due to lower grades mined, consistent with the mine
plan. Teck expects that Andacollo’s grades will return to near-reserve
levels over the next few quarters and that current reserves will sustain
operations until 2037; however, processing of the reserves beyond 2033
will require permitting and construction of an expansion to the existing
tailings facility.
Cortez – Gold production at Cortez increased significantly over
the prior year quarter as surface mining activity continued at the
Pipeline and Gap pits, where our royalty applies, while no significant
mining activity occurred in these areas during the prior year quarter.
Holt – Gold production at Holt increased 11% over the prior year
quarter. Mill throughput from the Holt ores increased and grades
processed decreased during the current quarter. St Andrew Goldfields
reported throughput increased 20% in calendar 2014 compared to calendar
2013 as the operation has now established Zone 6 at the 77m Level.
Mount Milligan –Gold production was 41,000 ounces
compared to 20,400 ounces for the 2013 period. The increase reflected
the continuing ramp-up of the Mount Milligan mine, which commenced
production in late 2013. Average mill throughput during the most recent
quarter was 43,781 metric tonnes per day, representing 73% of capacity,
although the mill achieved 48,426 metric tonnes per day during the
latter half of December.
Mulatos – Gold production at Mulatos decreased 14% over the prior
year quarter as the mine transitioned between ore bodies, and a slower
than anticipated commissioning of the upgraded mill circuit impacted
high grade gold production.
The upgrades to the mill circuit, completed in early October 2014, are
designed to optimize recoveries from the various ore types within San
Carlos to ensure the budgeted recovery of 75% is achievable. While the
mill improvements were ongoing in the September 2014 quarter, Alamos
stockpiled high grade development ore from the San Carlos deposit. At
the end of the September 2014 quarter, the stockpile reached a total of
25,000 tonnes, with average grades above the current mineral reserve
grade. The upgraded mill circuit began processing the high grade
stockpile during the first week of October 2014.
Peñasquito – Gold, silver and lead production decreased 14%, 18%
and 37%, respectively, while reported zinc production increased by 19%
over the prior year quarter. Goldcorp expects relatively low first
quarter calendar 2015 production followed by steady production growth
over the course of calendar 2015 as mining continues deeper into
higher-grade portions of the Peñasco pit at Peñasquito.
Robinson – Gold and copper production decreased 41% and 13%,
respectively, over the prior year quarter. KGHM completed mining in the
Kimbley pit in October 2014, and ore is now being delivered from the
Ruth 2 East pit, which KGHM expects can be blended or sent directly to
the mill with improved processing results.In calendar 2015, ore
is anticipated to be mined from the Ruth East, Ruth North and Ruth West
pits.
Voisey’s Bay – Nickel production decreased 31%, while reported
copper production increased 14% over the prior year quarter. In July,
Long Harbour achieved a major milestone with the production of the first
finished nickel from the facility. Initially, Long Harbour will process
primarily nickel matte from PT Vale Indonesia, and transition to
processing solely concentrate from Voisey´s Bay at a later stage.
In anticipation of the transition from processing Voisey’s Bay nickel
concentrates at Vale’s Sudbury and Thompson smelters to processing at
the Long Harbour hydrometallurgical plant, the Company engaged in
discussions with Vale concerning calculation of the royalty once
Voisey’s Bay nickel concentrates are processed at Long Harbour. Vale
proposed a calculation of the royalty that the Company estimates could
result in the substantial reduction of royalty payable to the Company on
Voisey’s Bay nickel concentrates processed at Long Harbour. While the
Company may continue to engage in discussions concerning calculation of
the royalty on nickel concentrates processed at Long Harbour, there is
no guaranty that the Company and Vale will reach agreement on the proper
calculation under the terms of the royalty agreement. If no agreement is
reached, the Company intends to vigorously pursue all legal remedies to
ensure the appropriate calculation of the royalty and to enforce our
royalty interests at Voisey’s Bay.
Second quarter production and revenue for the Company’s principal
royalty and stream interests are shown in Table 1 and historical
production data is shown in Table 2. For more detailed information about
each of our principal royalty and stream properties, please refer to the
Company’s most recent Annual Report on Form 10-K, our Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K filed with the SEC and
available on the SEC’s website located at www.sec.gov,
or our website located at www.royalgold.com.
CORPORATE PROFILE
Royal Gold is a precious metals royalty and stream company engaged in
the acquisition and management of precious metal royalties, streams, and
similar production based interests. The Company owns interests on 198
properties on six continents, including interests on 37 producing mines
and 24 development stage projects. Royal Gold is publicly traded on the
NASDAQ Global Select Market under the symbol “RGLD,” and on the Toronto
Stock Exchange under the symbol “RGL.” The Company’s website is located
at www.royalgold.com.
QUALIFIED PERSON
The mineral reserve estimates reported by Thompson Creek were prepared
in accordance with CIM Definition Standards for Mineral Resources and
Mineral Reserves, as incorporated by reference in National Instrument
43-101, by Robert Clifford, Director, Mine Engineering of Thompson
Creek, a “qualified person” under National Instrument 43-101. Thompson
Creek reported that Mr. Clifford verified the data disclosed in their
news release dated January 19, 2015 that pertain to the mineral reserve
estimates.
Note: Management’s conference call reviewing the first quarter
results will be held Thursday, January 29, at 10:00 a.m. Mountain Time
(noon Eastern Time) and will be available by calling (866) 270-1533
(North America) or (412) 317-0797(international), conference
title “Royal Gold.” The call will be simultaneously broadcast on the
Company’s website at www.royalgold.com
under the “Presentations” section. A replay of this webcast will be
available on the Company’s website approximately two hours after the
call ends.
___________________________
1 The Company defines Adjusted EBITDA, a non-GAAP financial
measure, as net income 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 income of consolidated subsidiaries, interest and other
income, and any royalty portfolio restructuring gains or losses (see
Schedule A).
___________________________
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 the
Company’s ability to invest in additional quality properties; and the
operators’ expectation of construction, ramp up, production, mine life,
resolution of regulatory and legal proceedings (including with Vale
regarding Voisey’s Bay) and other developments at various mines. 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 royalty
properties; the ability of the various operators to bring projects into
production as expected; delays in the operators securing or their
inability to secure necessary governmental permits; decisions and
activities of the operators of the Company's royalty properties;
unanticipated grade, geological, metallurgical, processing, liquidity or
other problems the operators of the mining properties may encounter;
completion of feasibility studies; 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 royalty
properties; contests to the Company’s royalty interests and title and
other defects to the Company’s royalty properties; errors or disputes in
calculating royalty payments, or payments not made in accordance with
royalty agreements; economic and market conditions; risks associated
with conducting business in foreign countries; changes in laws governing
the Company and its 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.
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TABLE 1
Second Quarter Fiscal 2015
Revenue and Reported Production for Principal Royalty and
Stream Interests
Three Months Ended December 31, 2014 and December 31, 2013
(In thousands, except reported production in oz. and lbs.)
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Three Months Ended
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Three Months Ended
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December 31, 2014
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December 31, 2013
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Reported
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Reported
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Royalty/Stream
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Metal(s)
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Revenue
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Production1 |
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Revenue
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Production1 |
Stream:
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Mount Milligan
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Gold
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$ 17,318
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14,300
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oz.
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$ 2,638
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2,100
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oz.
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Royalty:
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Andacollo
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Gold
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$ 9,594
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10,500
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oz.
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$ 11,736
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12,500
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oz.
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Peñasquito
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$ 5,573
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$ 7,003
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Gold
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125,000
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oz.
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145,800
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oz.
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Silver
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5.1
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Moz.
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6.2
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Moz.
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Lead
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29.5
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Mlbs.
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47.1
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Mlbs.
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Zinc
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84.0
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Mlbs.
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70.3
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Mlbs.
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Voisey's Bay
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$ 6,117
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$ 5,900
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Nickel
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19.6
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Mlbs.
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28.5
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Mlbs.
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Copper
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30.1
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Mlbs.
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26.4
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Mlbs.
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Cortez
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Gold
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$ 5,001
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60,400
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oz.
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$ 1,078
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8,300
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oz.
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Holt
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Gold
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$ 2,676
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14,300
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oz.
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$ 2,717
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12,900
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oz.
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Robinson
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$ 1,464
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$ 2,287
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Gold
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5,100
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oz.
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8,700
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oz.
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Copper
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19.3
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Mlbs.
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22.1
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Mlbs.
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Mulatos
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Gold
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$ 2,001
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34,500
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oz.
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$ 2,477
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40,200
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oz.
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Other
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Various
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$ 11,560
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N/A
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$ 16,949
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N/A
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Total Revenue
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$ 61,304
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|
|
|
|
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$ 52,785
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TABLE 2 Second Quarter Fiscal 2015 Revenue
and Reported Production for Principal Royalty and Stream Interests Six
Months Ended December 31, 2014 and December 31, 2013 (In
thousands, except reported production in oz. and lbs.)
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Six Months Ended
|
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Six Months Ended
|
|
|
|
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December 31, 2014
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December 31, 2013
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|
|
|
|
|
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Reported
|
|
|
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Reported
|
Royalty/Stream
|
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Metal(s)
|
|
Revenue
|
|
Production1 |
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Revenue
|
|
Production1 |
Stream:
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|
|
|
|
|
|
|
|
|
|
|
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Mount Milligan
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Gold
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$ 36,975
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29,700
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oz.
|
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$ 2,638
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2,100
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oz.
|
Royalty:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Andacollo
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Gold
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$ 20,093
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|
21,500
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oz.
|
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$ 28,892
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29,900
|
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oz.
|
Peñasquito
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|
|
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$ 12,684
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|
|
|
|
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$ 13,561
|
|
|
|
|
|
|
Gold
|
|
|
|
268,100
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|
oz.
|
|
|
|
247,300
|
|
oz.
|
|
|
Silver
|
|
|
|
11.6
|
|
Moz.
|
|
|
|
12.7
|
|
Moz.
|
|
|
Lead
|
|
|
|
70.8
|
|
Mlbs.
|
|
|
|
86.9
|
|
Mlbs.
|
|
|
Zinc
|
|
|
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169.4
|
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Mlbs.
|
|
|
|
143.8
|
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Mlbs.
|
Voisey's Bay
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|
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$ 11,726
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|
|
|
|
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$ 12,934
|
|
|
|
|
|
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Nickel
|
|
|
|
36.7
|
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Mlbs.
|
|
|
|
56.9
|
|
Mlbs.
|
|
|
Copper
|
|
|
|
52.1
|
|
Mlbs.
|
|
|
|
61.2
|
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Mlbs.
|
Cortez
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Gold
|
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$ 9,736
|
|
119,900
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oz.
|
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$ 1,519
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|
14,000
|
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oz.
|
Holt
|
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Gold
|
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$ 5,835
|
|
29,100
|
|
oz.
|
|
$ 6,604
|
|
29,900
|
|
oz.
|
Robinson
|
|
|
|
$ 3,734
|
|
|
|
|
|
$ 3,886
|
|
|
|
|
|
|
Gold
|
|
|
|
11,700
|
|
oz.
|
|
|
|
17,900
|
|
oz.
|
|
|
Copper
|
|
|
|
45.4
|
|
Mlbs.
|
|
|
|
39.8
|
|
Mlbs.
|
Mulatos
|
|
Gold
|
|
$ 3,763
|
|
62,800
|
|
oz.
|
|
$ 5,178
|
|
81,800
|
|
oz.
|
Other
|
|
Various
|
|
$ 25,784
|
|
N/A
|
|
$ 34,060
|
|
N/A
|
Total Revenue
|
|
|
|
$ 130,330
|
|
|
|
|
|
$ 109,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE 3 Historical Production
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Production For The Quarter Ended1 |
Property
|
|
Royalty/Stream
|
|
Operator
|
|
Metal(s)
|
|
Dec. 31, 2014
|
|
Sep. 30, 2014
|
|
Jun. 30, 2014
|
|
Mar. 31, 2014
|
|
Dec. 31, 2013
|
Andacollo2 |
|
75%
|
|
Teck
|
|
Gold
|
|
10,500
|
|
oz.
|
|
11,000
|
|
oz.
|
|
10,000
|
|
oz.
|
|
10,400
|
|
oz.
|
|
12,500
|
|
oz.
|
Cortez3 |
|
GSR1 and GSR2, GSR3, NVR1
|
|
Barrick
|
|
Gold
|
|
60,400
|
|
oz.
|
|
59,500
|
|
oz.
|
|
40,300
|
|
oz.
|
|
41,100
|
|
oz.
|
|
8,300
|
|
oz.
|
Holt
|
|
0.00013 x quarterly average gold price
|
|
St Andrew Goldfields
|
|
Gold
|
|
14,300
|
|
oz.
|
|
14,800
|
|
oz.
|
|
15,600
|
|
oz.
|
|
17,600
|
|
oz.
|
|
12,900
|
|
oz.
|
Mount Milligan4 |
|
Gold stream - 52.25% of payable gold
|
|
Thompson Creek
|
|
Gold
|
|
14,300
|
|
oz.
|
|
15,300
|
|
oz.
|
|
14,400
|
|
oz.
|
|
4,500
|
|
oz.
|
|
2,100
|
|
oz.
|
Mulatos5 |
|
1.0% - 5.0% NSR
|
|
Alamos
|
|
Gold
|
|
34,500
|
|
oz.
|
|
28,400
|
|
oz.
|
|
33,600
|
|
oz.
|
|
34,400
|
|
oz.
|
|
40,200
|
|
oz.
|
Peñasquito
|
|
2.0% NSR
|
|
Goldcorp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold
|
|
125,000
|
|
oz.
|
|
143,100
|
|
oz.
|
|
168,100
|
|
oz.
|
|
118,700
|
|
oz.
|
|
145,800
|
|
oz.
|
|
|
|
|
|
|
Silver
|
|
5.1
|
|
Moz.
|
|
6.5
|
|
Moz.
|
|
7.8
|
|
Moz.
|
|
7.1
|
|
Moz.
|
|
6.2
|
|
Moz.
|
|
|
|
|
|
|
Lead
|
|
29.5
|
|
Mlbs.
|
|
41.3
|
|
Mlbs.
|
|
43.2
|
|
Mlbs.
|
|
45.3
|
|
Mlbs.
|
|
47.1
|
|
Mlbs.
|
|
|
|
|
|
|
Zinc
|
|
84.0
|
|
Mlbs.
|
|
85.4
|
|
Mlbs.
|
|
77.0
|
|
Mlbs.
|
|
90.1
|
|
Mlbs.
|
|
70.3
|
|
Mlbs.
|
Robinson
|
|
3.0% NSR
|
|
KGHM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold
|
|
5,100
|
|
oz.
|
|
6,600
|
|
oz.
|
|
5,800
|
|
oz.
|
|
3,900
|
|
oz.
|
|
8,700
|
|
oz.
|
|
|
|
|
|
|
Copper
|
|
19.3
|
|
Mlbs.
|
|
26.1
|
|
Mlbs.
|
|
19.1
|
|
Mlbs.
|
|
10.7
|
|
Mlbs.
|
|
22.1
|
|
Mlbs.
|
Voisey's Bay
|
|
2.7% NSR
|
|
Vale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nickel
|
|
19.6
|
|
Mlbs.
|
|
17.1
|
|
Mlbs.
|
|
26.9
|
|
Mlbs.
|
|
39.9
|
|
Mlbs.
|
|
28.5
|
|
Mlbs.
|
|
|
|
|
|
|
Copper
|
|
30.1
|
|
Mlbs.
|
|
22.0
|
|
Mlbs.
|
|
9.7
|
|
Mlbs.
|
|
9.7
|
|
Mlbs.
|
|
26.4
|
|
Mlbs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
Reported production relates to the amount of metal sales that are
subject to our royalty and stream interests for the stated period,
as reported to us by operators of the mines.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2 |
|
|
|
The royalty rate is 75% until 910,000 payable ounces of gold have
been produced – 50% thereafter. There have been approximately
239,000 cumulative payable ounces produced as of December 31, 2014.
Gold is produced as a by-product of copper.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 |
|
|
|
Royalty percentages: GSR1 and GSR2 – 0.40 to 5.0% (sliding-scale):
GSR3 – 0.71%; NVR1 – 1.0140% excluding Crossroads and 0.6186% for
Crossroads.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
|
|
|
For our streaming interest at Mount Milligan, our revenue is a
product of the reported production, our 52.25% stream interest, an
applicable provisional percentage (for the first 12 shipments only)
and an average gold sale price for the period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5 |
|
|
|
The Company’s royalty is subject to a 2.0 million ounce cap on gold
production. There have been approximately 1.33 million ounces of
cumulative production as of December 31, 2014. NSR sliding-scale
schedule (price of gold per ounce – royalty rate): $0.00 to $299.99
– 1.0%; $300 to $324.99 – 1.50%; $325 to $349.99 – 2.0%; $350 to
$374.99 – 3.0%; $375 to $399.99 – 4.0%; $400 or higher – 5.0%.
|
|
|
|
|
|
|
|
|
|
|
ROYAL GOLD, INC. Consolidated Balance Sheets (Unaudited,
in thousands except share data)
|
|
|
|
|
|
|
|
December 31,
|
|
June 30,
|
|
|
2014
|
|
2014
|
ASSETS
|
|
|
|
|
Cash and equivalents
|
|
$
|
675,128
|
|
|
$
|
659,536
|
|
Royalty receivables
|
|
|
37,314
|
|
|
|
46,654
|
|
Income tax receivable
|
|
|
23,800
|
|
|
|
21,947
|
|
Prepaid expenses and other
|
|
|
15,626
|
|
|
|
7,840
|
|
Total current assets
|
|
|
751,868
|
|
|
|
735,977
|
|
|
|
|
|
|
Royalty and stream interests, net
|
|
|
2,067,152
|
|
|
|
2,109,067
|
|
Available-for-sale securities
|
|
|
7,788
|
|
|
|
9,608
|
|
Other assets
|
|
|
35,780
|
|
|
|
36,892
|
|
Total assets
|
|
$
|
2,862,588
|
|
|
$
|
2,891,544
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Accounts payable
|
|
|
2,742
|
|
|
|
3,897
|
|
Dividends payable
|
|
|
14,342
|
|
|
|
13,678
|
|
Foreign withholding taxes payable
|
|
|
200
|
|
|
|
2,199
|
|
Other current liabilities
|
|
|
2,182
|
|
|
|
2,730
|
|
Total current liabilities
|
|
|
19,466
|
|
|
|
22,504
|
|
|
|
|
|
|
Debt
|
|
|
316,874
|
|
|
|
311,860
|
|
Deferred tax liabilities
|
|
|
152,762
|
|
|
|
169,865
|
|
Uncertain tax positions
|
|
|
14,752
|
|
|
|
13,725
|
|
Other long-term liabilities
|
|
|
700
|
|
|
|
1,033
|
|
Total liabilities
|
|
|
504,554
|
|
|
|
518,987
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
Preferred stock, $.01 par value, authorized 10,000,000 shares authorized;
and 0 shares issued
|
|
|
-
|
|
|
|
-
|
|
Common stock, $.01 par value, 100,000,000 shares authorized; and 64,653,967
and 64,578,401 shares outstanding, respectively
|
|
|
647
|
|
|
|
646
|
|
Exchangeable shares, no par value, 1,806,649 shares issued, less
1,427,069 and 1,426,792 redeemed shares, respectively
|
|
|
16,705
|
|
|
|
16,718
|
|
Additional paid-in capital
|
|
|
2,151,335
|
|
|
|
2,147,650
|
|
Accumulated other comprehensive loss
|
|
|
(1,980
|
)
|
|
|
(160
|
)
|
Accumulated earnings
|
|
|
173,972
|
|
|
|
189,871
|
|
Total Royal Gold stockholders’ equity
|
|
|
2,340,679
|
|
|
|
2,354,725
|
|
Non-controlling interests
|
|
|
17,355
|
|
|
|
17,832
|
|
Total equity
|
|
|
2,358,034
|
|
|
|
2,372,557
|
|
Total liabilities and equity
|
|
$
|
2,862,588
|
|
|
$
|
2,891,544
|
|
|
|
|
|
|
|
|
|
|
ROYAL GOLD, INC. Consolidated Statements of Operations
and Comprehensive Income (Unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
For The Three Months Ended
|
|
For The Six Months Ended
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
Revenue
|
|
$
|
61,304
|
|
|
$
|
52,785
|
|
|
$
|
130,330
|
|
|
$
|
109,272
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
6,236
|
|
|
|
935
|
|
|
|
12,910
|
|
|
|
935
|
|
General and administrative
|
|
|
8,511
|
|
|
|
4,661
|
|
|
|
15,652
|
|
|
|
11,227
|
|
Production taxes
|
|
|
1,731
|
|
|
|
1,603
|
|
|
|
3,421
|
|
|
|
3,386
|
|
Depreciation, depletion and amortization
|
|
|
20,278
|
|
|
|
22,670
|
|
|
|
42,490
|
|
|
|
45,071
|
|
Impairment of royalty and stream interests
|
|
|
26,570
|
|
|
|
-
|
|
|
|
28,339
|
|
|
|
-
|
|
Total costs and expenses
|
|
|
63,326
|
|
|
|
29,869
|
|
|
|
102,812
|
|
|
|
60,619
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
(2,022
|
)
|
|
|
22,916
|
|
|
|
27,518
|
|
|
|
48,653
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
|
228
|
|
|
|
168
|
|
|
|
279
|
|
|
|
216
|
|
Interest and other expense
|
|
|
(6,358
|
)
|
|
|
(5,995
|
)
|
|
|
(13,070
|
)
|
|
|
(11,658
|
)
|
(Loss) income before income taxes
|
|
|
(8,152
|
)
|
|
|
17,089
|
|
|
|
14,727
|
|
|
|
37,211
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit (expense)
|
|
|
1,827
|
|
|
|
(6,311
|
)
|
|
|
(2,131
|
)
|
|
|
(11,152
|
)
|
Net (loss) income
|
|
|
(6,325
|
)
|
|
|
10,778
|
|
|
|
12,596
|
|
|
|
26,059
|
|
Net income attributable to non-controlling interests
|
|
|
(223
|
)
|
|
|
(111
|
)
|
|
|
(462
|
)
|
|
|
(197
|
)
|
Net (loss) income attributable to Royal Gold common stockholders
|
|
$
|
(6,548
|
)
|
|
$
|
10,667
|
|
|
$
|
12,134
|
|
|
$
|
25,862
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(6,325
|
)
|
|
$
|
10,778
|
|
|
$
|
12,596
|
|
|
$
|
26,059
|
|
Adjustments to comprehensive (loss) income, net of tax
|
|
|
|
|
|
|
|
|
Unrealized change in market value of available-for-sale securities
|
|
|
(481
|
)
|
|
|
(3,419
|
)
|
|
|
(1,820
|
)
|
|
|
(2,288
|
)
|
Comprehensive (loss) income
|
|
|
(6,806
|
)
|
|
|
7,359
|
|
|
|
10,776
|
|
|
|
23,771
|
|
Comprehensive income attributable to non-controlling interests
|
|
|
(223
|
)
|
|
|
(111
|
)
|
|
|
(462
|
)
|
|
|
(197
|
)
|
Comprehensive (loss) income attributable to Royal Gold stockholders
|
|
$
|
(7,029
|
)
|
|
$
|
7,248
|
|
|
$
|
10,314
|
|
|
$
|
23,574
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share available to Royal Gold common
stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per share
|
|
$
|
(0.10
|
)
|
|
$
|
0.16
|
|
|
$
|
0.19
|
|
|
$
|
0.40
|
|
Basic weighted average shares outstanding
|
|
|
65,002,307
|
|
|
|
64,897,757
|
|
|
|
64,982,595
|
|
|
|
64,878,056
|
|
Diluted (loss) earnings per share
|
|
$
|
(0.10
|
)
|
|
$
|
0.16
|
|
|
$
|
0.19
|
|
|
$
|
0.40
|
|
Diluted weighted average shares outstanding
|
|
|
65,002,307
|
|
|
|
64,990,771
|
|
|
|
65,122,185
|
|
|
|
64,982,689
|
|
Cash dividends declared per common share
|
|
$
|
0.22
|
|
|
$
|
0.21
|
|
|
$
|
0.43
|
|
|
$
|
0.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROYAL GOLD, INC. Consolidated Statements of Cash Flows (Unaudited,
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three Months Ended
|
|
For The Six Months Ended
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(6,325
|
)
|
|
$
|
10,778
|
|
|
$
|
12,596
|
|
|
$
|
26,059
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
20,278
|
|
|
|
22,670
|
|
|
|
42,490
|
|
|
|
45,071
|
|
Non-cash employee stock compensation expense
|
|
|
375
|
|
|
|
147
|
|
|
|
2,824
|
|
|
|
1,759
|
|
Amortization of debt discount
|
|
|
2,540
|
|
|
|
2,380
|
|
|
|
5,013
|
|
|
|
4,720
|
|
Impairment of royalty and stream interests
|
|
|
26,570
|
|
|
|
-
|
|
|
|
28,339
|
|
|
|
-
|
|
Tax benefit of stock-based compensation exercises
|
|
|
(377
|
)
|
|
|
(236
|
)
|
|
|
(74
|
)
|
|
|
(208
|
)
|
Deferred tax benefit
|
|
|
(11,729
|
)
|
|
|
(5,181
|
)
|
|
|
(17,103
|
)
|
|
|
(8,038
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Royalty receivables
|
|
|
5,913
|
|
|
|
5,137
|
|
|
|
9,340
|
|
|
|
7,330
|
|
Prepaid expenses and other assets
|
|
|
1,197
|
|
|
|
2,704
|
|
|
|
3,344
|
|
|
|
13,001
|
|
Accounts payable
|
|
|
388
|
|
|
|
(86
|
)
|
|
|
(1,182
|
)
|
|
|
(811
|
)
|
Foreign withholding taxes payable
|
|
|
(679
|
)
|
|
|
(1,852
|
)
|
|
|
(1,999
|
)
|
|
|
(10,108
|
)
|
Income taxes receivable
|
|
|
(7,151
|
)
|
|
|
1,384
|
|
|
|
(1,778
|
)
|
|
|
(7,626
|
)
|
Other liabilities
|
|
|
(1,184
|
)
|
|
|
(3,126
|
)
|
|
|
464
|
|
|
|
(943
|
)
|
Net cash provided by operating activities
|
|
$
|
29,816
|
|
|
$
|
34,719
|
|
|
$
|
82,274
|
|
|
$
|
70,206
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Acquisition of royalty and stream interests
|
|
|
(32,525
|
)
|
|
|
(61
|
)
|
|
|
(38,734
|
)
|
|
|
(48,089
|
)
|
Other
|
|
|
(390
|
)
|
|
|
(30
|
)
|
|
|
(517
|
)
|
|
|
(54
|
)
|
Net cash used in investing activities
|
|
$
|
(32,915
|
)
|
|
$
|
(91
|
)
|
|
$
|
(39,251
|
)
|
|
$
|
(48,143
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Net proceeds from issuance of common stock
|
|
|
576
|
|
|
|
94
|
|
|
|
775
|
|
|
|
94
|
|
Common stock dividends
|
|
|
(13,691
|
)
|
|
|
(13,022
|
)
|
|
|
(27,369
|
)
|
|
|
(26,032
|
)
|
Distribution to non-controlling interests
|
|
|
(446
|
)
|
|
|
(546
|
)
|
|
|
(911
|
)
|
|
|
(1,079
|
)
|
Tax expense of stock-based compensation exercises
|
|
|
377
|
|
|
|
236
|
|
|
|
74
|
|
|
|
208
|
|
Net cash used in financing activities
|
|
$
|
(13,184
|
)
|
|
$
|
(13,238
|
)
|
|
$
|
(27,431
|
)
|
|
$
|
(26,809
|
)
|
Net (decrease) increase in cash and equivalents
|
|
|
(16,283
|
)
|
|
|
21,390
|
|
|
|
15,592
|
|
|
|
(4,746
|
)
|
Cash and equivalents at beginning of period
|
|
|
691,411
|
|
|
|
637,899
|
|
|
|
659,536
|
|
|
|
664,035
|
|
Cash and equivalents at end of period
|
|
$
|
675,128
|
|
|
$
|
659,289
|
|
|
$
|
675,128
|
|
|
$
|
659,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHEDULE A
|
|
Non-GAAP Financial Measures
|
|
The Company computes and discloses Adjusted EBITDA. Adjusted
EBITDA is a non-GAAP financial measure. Adjusted EBITDA is defined
by the Company as net income 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 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. Management believes that
Adjusted EBITDA is a useful measure of the performance of our
royalty and stream portfolio. 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. generally accepted accounting principles
(“GAAP”) and should not be considered in isolation or as a
substitute for measures of performance determined in accordance
with U.S. GAAP. Below is a reconciliation of net income to
Adjusted EBITDA.
|
|
Royal Gold, Inc. Adjusted EBITDA Reconciliation
|
|
|
|
|
|
|
|
For The Three Months Ended
|
|
For The Six Months Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
(Unaudited, in thousands)
|
|
(Unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(6,325
|
)
|
|
$
|
10,778
|
|
|
$
|
12,596
|
|
|
$
|
26,059
|
|
Depreciation, depletion and amortization
|
|
|
20,278
|
|
|
|
22,670
|
|
|
|
42,490
|
|
|
|
45,071
|
|
Non-cash employee stock compensation
|
|
|
375
|
|
|
|
147
|
|
|
|
2,824
|
|
|
|
1,759
|
|
Allowance for uncollectible royalty receivables
|
|
|
2,997
|
|
|
|
-
|
|
|
|
2,997
|
|
|
|
Impairment of royalty and stream interests
|
|
|
26,570
|
|
|
|
-
|
|
|
|
28,339
|
|
|
|
-
|
|
Interest and other income
|
|
|
(228
|
)
|
|
|
(168
|
)
|
|
|
(279
|
)
|
|
|
(216
|
)
|
Interest and other expense
|
|
|
6,358
|
|
|
|
5,995
|
|
|
|
13,070
|
|
|
|
11,658
|
|
Income tax (benefit) expense
|
|
|
(1,827
|
)
|
|
|
6,311
|
|
|
|
2,131
|
|
|
|
11,152
|
|
Non-controlling interests in operating income of consolidated
subsidiaries
|
|
|
(223
|
)
|
|
|
(111
|
)
|
|
|
(462
|
)
|
|
|
(197
|
)
|
Adjusted EBITDA
|
|
$
|
47,975
|
|
|
$
|
45,622
|
|
|
$
|
103,706
|
|
|
$
|
95,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|