Royal Gold Reports Second Quarter 2019 Results

Royal Gold, Inc. (NASDAQ: RGLD) (together with its subsidiaries, Royal Gold or the Company, we or our) reports net income of $23.6 million, or $0.36 per share, on revenue of $97.6 million in its fiscal second quarter ended December 31, 2018 (second quarter). Second quarter reported earnings included an income tax benefit resulting from the Companys updated analysis of the tax impacts attributable to H.R. 1, originally known as the Tax Cuts and Jobs Act (the Act), which was partially offset by a decrease in the fair value of equity securities.

Second Quarter Key Metrics Compared to Prior Year Quarter:

  • Revenue of $97.6 million, a decrease of 14.6%
  • Operating cash flow of $58.8 million, a decrease of 22.2%
  • Volume of 79,600 GEOs,1 a decrease of 11.3%
  • Dividends paid of $16.4 million, an increase of 4.3%
  • Average price of $1,226 per gold ounce, a decrease of 3.8%

______________________

1   Gold Equivalent Ounces (GEOs) are calculated as revenue divided by the average gold price for the same period. GEOs net of stream payments were 64,800 in the second quarter, compared to 74,100 in the prior second quarter.
 

Our second quarter consolidated operating performance was consistent with our guidance, commented Tony Jensen, President and CEO. We were pleased to see several positive developments in our portfolio during the quarter, including good operating performance at Mount Milligan despite water supply challenges, continued improvement in production levels at Rainy River, and the start of commercial production at the Pyrite Leach Project at Pe±asquito. As we look forward in calendar 2019, we expect to see continued improvement at Rainy River and further positive news with respect to resolving water supply issues at Mount Milligan.

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We also took our first step toward realizing value for our equity interest in the Peak Gold Project (Peak Gold) near Tok, Alaska, Mr. Jensen continued. We believe that Peak Gold is a very attractive opportunity for an operating company that can bring additional talent to advance the project towards production. Royal Gold will remain committed to the project over the long term through our existing royalty interests, and our considerations for any potential transfer of ownership will include a commitment to advance the project as a priority while respecting best practices for responsible development.

Recent Developments

Mount Milligan

At the Mount Milligan mine, Centerra Gold Inc. (Centerra) reported that there were sufficient water resources in the fourth calendar quarter of 2018 to enable the mill facility to run at a higher than anticipated throughput rate, allowing the operation to achieve the upper end of gold and copper production guidance for the 2018 calendar year. Calendar year 2018 gold production was 194,993 ounces compared to the guidance range of 175,000 to 195,000 ounces, and copper production was 47.1 million pounds compared to the guidance range of 40 million to 47 million pounds. During the fourth quarter of calendar 2018, production from Mount Milligan was 60,271 ounces of gold and 11.8 million pounds of copper.

For calendar year 2019, Centerra expects mill throughput at Mount Milligan to be reduced during the remainder of the winter season to properly manage the water balance until the water flow increases in the spring. Once the spring melt has commenced, typically in April, Centerra expects mill throughput levels to return to full capacity. In the second half of calendar 2019, Centerra expects to achieve an average throughput of approximately 55,000 tonnes per calendar day. For the full calendar year, Centerra expects Mount Milligans payable gold production to be in the range of 155,000 to 175,000 ounces, and payable copper production to be in the range of 65 to 75 million pounds.

With respect to water sourcing and permitting activities at Mount Milligan, Centerra reports that permit applications are in process to allow the mine to draw additional flow during the spring melt period for the next three years from each of Philip Lake, Rainbow Creek and Meadows Creek. This additional water would be stored in the tailings storage facility for use during the remainder of the year, which Centerra expects to be sufficient to allow operations to continue at a rate of 55,000 tonnes per calendar day. Centerra also reports that it is completing an inventory of regional water sources to identify other potential long-term water sources that could provide additional water through to the end of the mine life.

Rainy River

Improved operating performance at the Rainy River mine, owned and operated by New Gold Inc. (New Gold), continued during the fourth calendar quarter of 2018. Quarterly gold production was 77,202 ounces, a 39% increase over the prior quarter due mainly to higher grade, recovery and throughput rate. Mill processing reached a run rate of 25,835 tonnes per operating day, the first full quarter in which the mill averaged a daily run rate above the target 24,000 tonnes per day, and the average throughput was 20,558 tonnes per calendar day at an 80% availability. New Gold expects to replace the ball mill trunnion during the first calendar quarter of 2019 and that recoveries will continue to improve throughout the calendar year.

New Gold also announced that the underground development plan at Rainy River was deferred to 2020, and that it will review alternative underground mining scenarios during calendar 2019 with the overall objective of reducing capital requirements and improving the return on investment for the underground portion of the mine.

Adviser Retained to Assist with Peak Gold Project

Royal Gold retained Scotia Capital Inc. (Scotia) to assist in identifying parties interested in advancing Peak Gold. We own a 40% indirect equity interest in Peak Gold, held through our wholly owned subsidiary Royal Alaska, LLC, and 809,744 common shares (or approximately 12.7%) of Contango ORE, Inc. (CORE), our joint venture partner. In addition to the ownership interests in Peak Gold and CORE equity, the Company also has the right to sell up to 20% of COREs aggregate membership interest in the joint venture (for a total sale of up to 60% of the joint venture membership interest) and holds two net smelter return royalties on the Peak Gold land package.

Second Quarter 2019 Overview

Second quarter revenue was $97.6 million compared to $114.3 million in the prior year quarter, with stream revenue totaling $67.7 million and royalty revenue totaling $29.9 million. The decrease in total revenue for the second quarter compared to the prior year quarter was due to lower average gold, silver and copper prices, as well as lower overall sales and production. Lower gold stream sales from Andacollo and Pueblo Viejo were partially offset by higher gold and copper sales from Mount Milligan and initial contributions from Rainy River, while a decrease in royalty revenue was due to lower production at Pe±asquito and Cortez.

Second quarter cost of sales was approximately $18.2 million, compared to $19.9 million in the prior year quarter. The decrease was primarily due to lower gold sales from Andacollo. Cost of sales is specific to the Companys stream agreements and is the result of the purchase of gold, silver and copper for a cash payment.

General and administrative expenses decreased to $7.4 million in the second quarter from $9.6 million during the prior year quarter. The decrease during the current period was primarily due to a decrease in legal costs related to the settlement of the Voiseys Bay royalty calculation dispute during the first quarter of fiscal 2019.

Depreciation, depletion and amortization expense decreased to $38.8 million in the second quarter from $42.0 million in the prior year quarter. The decrease was primarily attributable to a decrease in gold sales at Andacollo and Pueblo Viejo, partially offset by an increase in metal sales at Mount Milligan and Rainy River.

On July 1, 2018, the Company adopted new Accounting Standards Update guidance which impacts how changes in fair value of equity securities are recognized at each reporting period. As a result, for the three months ended December 31, 2018, the Company recognized a loss of $3.6 million on changes in fair value of equity securities related to the holdings in CORE and Rubicon Minerals Corporation. The new guidance could increase earnings volatility in the future.

The Company recognized a second quarter income tax benefit of $2.1 million, compared to an expense of $48.4 million during the prior year quarter. The effective tax rate for the second quarter was (10.3)% compared to 148.5% for the prior year quarter. The lower than expected effective tax rate is due to approximately $6.0 million of discrete tax items recorded in the quarter attributable to true-ups made after completing the Companys analysis of the Act and consideration of recently-issued U.S. Treasury and IRS guidance. The Company does not anticipate future material changes due to evolving guidance; however, many aspects of the law remain unclear and further regulatory guidance could impact the Companys effective tax rate.

At December 31, 2018, the Company had current assets of $203.7 million compared to current liabilities of $37.2 million, resulting in working capital of $166.5 million. This compares to current assets of $125.8 million and current liabilities of $51.4 million at June 30, 2018, resulting in working capital of $74.4 million.

During the second quarter, liquidity needs were met from $79.4 million in net revenue and available cash resources. As of December 31, 2018, the Company had no amounts outstanding and the full $1 billion available under its revolving credit facility. Working capital, combined with the Companys undrawn revolving credit facility, resulted in approximately $1.2 billion of total liquidity at December 31, 2018.

Property Highlights

A summary of second quarter and historical production reported by operators of the Companys stream and royalty properties can be found on Tables 1 and 2. Calendar year 2018 operator production estimates for certain properties in which the Company has interests compared to actual production at those properties through December 31, 2018 can be found on Table 3. Results of the streaming business for the second quarter, compared to the prior year quarter, can be found on Table 4. Highlights at certain of the Companys principal producing and development properties during the second quarter, compared to the prior year quarter, are detailed in the Quarterly Report on Form 10-Q.

CORPORATE PROFILE

Royal Gold is a precious metals stream and royalty company engaged in the acquisition and management of precious metal streams, royalties and similar production-based interests. As of December 31, 2018, the Company owns interests on 191 properties on five continents, including interests on 41 producing mines and 17 development stage projects. Royal Gold is publicly traded on the Nasdaq Global Select Market under the symbol RGLD. The Companys website is located at www.royalgold.com.

Note: Managements conference call reviewing the second quarter results will be held on Thursday, February 7, 2019, at noon Eastern Time (10:00 a.m. Mountain Time). The call will be webcast and archived on the Companys website for a limited time.

Second Quarter Earnings Call Information:

 
Dial-In Numbers:     855-209-8260 (U.S.); toll free
855-669-9657 (Canada); toll free
412-542-4106 (International)
Conference Title: Royal Gold
Webcast URL:

www.royalgold.com under Investors, Events & Presentations

 

Cautionary Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: With the exception of historical matters, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projections or estimates contained herein. Such forward-looking statements include statements about solid quarterly results; future production contributions from Pe±asquito, Mount Milligan and Rainy River; expectations for continued improvement at Rainy River and positive water supply developments at Mount Milligan; the value to be realized from the Companys interests in Peak Gold and CORE common shares following a strategic review process; the belief that Peak Gold is an attractive opportunity for an operating company; calendar year 2019 mill throughput, water availability and total payable gold and copper production from Mount Milligan; the impact, if any, on Mount Milligan of Centerras water permit applications, whether or not granted, and its regional water source inventory; New Golds expectations for improved mill recoveries and the impact of its review of underground mining scenarios; changes in taxes and tax rates resulting from future tax legislation and regulatory guidance; and operators estimated and actual production for calendar year 2018, 2019 and future years, and their estimates of reserves and mineralized material. Net gold and metal reserves attributable to Royal Golds stream, royalty and other interests are subject to certain assumptions and, like reserves, do not reflect actual ounces that will be produced. Like any stream, royalty or similar interest on a non-producing or not-yet-in-development project, our interests on development projects are subject to certain risks, such as the ability of the operators to bring the projects into production and operate in accordance with their feasibility studies and mine plans, and the ability of Royal Gold to make accurate assumptions regarding valuation and timing and amount of payments. In addition, many of our interests are subject to risks associated with conducting business in a foreign country, including application of foreign laws to contract and other disputes, foreign environmental laws and enforcement and uncertain political and economic environments. Factors that could cause actual results to differ materially from projections include, among others, precious metals, copper and nickel prices; performance of and production at the Company’s stream and royalty properties; the ability of operators to finance project construction to completion and bring projects into production as expected, including development stage mining properties, mine and mill expansion projects and other development and construction projects; operators delays in securing or inability to secure or maintain necessary governmental permits; decisions and activities of the operators of the Company’s stream and royalty properties; unanticipated grade, environmental, geological, seismic, metallurgical, processing, liquidity or other problems the operators of the Companys stream and royalty properties may encounter; operators inability to access sufficient raw materials, water or power; changes in operators project parameters as plans continue to be refined; changes in estimates of reserves and mineralization by the operators of the Companys stream and royalty properties; contests to the Companys stream and royalty interests and title and other defects in the properties where the Company holds stream and royalty interests; errors or disputes in calculating stream deliveries and royalty payments, or deliveries or payments not made in accordance with stream and royalty agreements; economic and market conditions; changes in laws governing the Company and its stream and royalty interests or the operators of the properties subject to such interests, and other subsequent events; as well as other factors described in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the Securities and Exchange Commission. Most of these factors are beyond the Companys ability to predict or control. The Company disclaims any obligation to update any forward-looking statement made herein. Readers are cautioned not to put undue reliance on forward-looking statements.

Statement Regarding Third-Party Information: Certain information provided in this press release, including production estimates for calendar 2019, has been provided to us by the operators of the relevant properties or is publicly available information filed by these operators with applicable securities regulatory bodies, including the Securities and Exchange Commission. Royal Gold has not verified, and is not in a position to verify, and expressly disclaims any responsibility for the accuracy, completeness or fairness of such third-party information and refers the reader to the public reports filed by the operators for information regarding those properties.

           

TABLE 1

Second Quarter Fiscal 2019

Revenue and Operators Reported Production for Principal Stream and Royalty Interests

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

 
Three Months Ended Three Months Ended
December 31, 2018     December 31, 2017
    Reported     Reported
Stream/Royalty     Metal(s)     Revenue     Production1     Revenue     Production1
Stream:                                          
Mount Milligan $ 28,169   $ 21,632  
Gold 17,700 oz. 12,600 oz.
Copper 2.4 Mlbs. 1.8 Mlbs.
Pueblo Viejo $ 18,230 $ 26,355
Gold 8,900 oz. 14,500 oz.
Silver 509,500 oz. 469,600 oz.
Wassa and Prestea Gold $ 9,550 7,800 oz. $ 8,629 6,800 oz.
Andacollo Gold $ 7,635 6,200 oz. $ 21,601 17,000 oz.
Other $ 4,095 $ 1,070
Gold 2,900 oz. 800 oz.
Silver     36,000 oz.     N/A
Total stream revenue $ 67,679 $ 79,287
                                           
Royalty:                                          
Pe±asquito $ 4,660 $ 6,190
Gold 53,400 oz. 71,100 oz.
Silver 5.0 Moz. 5.1 Moz.
Lead 36.1 Mlbs. 33.4 Mlbs.
Zinc 83.1 Mlbs. 94.4 Mlbs.
Cortez Gold $ 2,335 19,900 oz. $ 2,934 25,000 oz.
Other Various $ 22,918 N/A $ 25,937 N/A
Total royalty revenue $ 29,913 $ 35,061
Total Revenue $ 97,592 $ 114,348
                                           
 
                                           
Six Months Ended Six Months Ended
December 31, 2018     December 31, 2017
Reported Reported
Stream/Royalty     Metal(s)     Revenue     Production1     Revenue     Production1
Stream:                                          
Pueblo Viejo $ 37,717 $ 51,758
Gold 18,100 oz. 27,400 oz.
Silver 1.0 Moz. 1.0 Moz.
Mount Milligan $ 37,015 $ 53,584
Gold 23,300 oz. 31,300 oz.
Copper 3.2 Mlbs. 4.4 Mlbs.
Andacollo Gold $ 35,378 28,900 oz. $ 33,938 26,700 oz.
Wassa and Prestea Gold $ 17,611 14,400 oz. $ 17,699 13,900 oz.
Other $ 9,995 $ 1,070
Gold 7,400 oz. 800 oz.
Silver     67,500 oz.     N/A
Total stream revenue $ 137,716 $ 158,049
                                           
Royalty:                                          
Pe±asquito $ 8,297 $ 13,986
Gold 103,700 oz. 205,100 oz.
Silver 9.2 Moz. 11.0 Moz.
Lead 65.9 Mlbs. 69.6 Mlbs.
Zinc 147.3 Mlbs. 186.8 Mlbs.
Cortez Gold $ 2,939 26,900 oz. $ 5,922 54,900 oz.
Other Various $ 48,633 N/A $ 48,867 N/A
Total royalty revenue $ 59,869 $ 68,775
Total revenue $ 197,585 $ 226,824
 
           

TABLE 2

Operators Historical Production

 
Property     Operator     Stream/Royalty     Reported Production For The Quarter Ended1
                  Metal(s)     Dec. 31, 2018     Sep. 30, 2018     Jun. 30, 2018     Mar. 31, 2018     Dec. 31, 2017
Stream:                                                                    
Mount Milligan Centerra 35% of payable gold     Gold     17,700   oz.     5,500   oz.     20,700   oz.     25,800   oz.     12,600   oz.
            18.75% of payable copper     Copper     2.4   Mlbs.     0.8   Mlbs.     1.6   Mlbs.     4.3   Mlbs.     1.8   Mlbs.
Pueblo Viejo Barrick (60%) 7.5% of gold produced up to 990,000 ounces; 3.75% therafter     Gold     8,900   oz.     9,200   oz.     13,200   oz.     8,500   oz.     14,500   oz.
            75% of payable silver up to 50 million ounces; 37.5% therafter     Silver     509,500   oz.     540,200   oz.     616,300   oz.     260,800   oz.     469,600   oz.
Andacollo     Teck     100% of gold produced     Gold     6,200   oz.     22,700   oz.     12,400   oz.     5,400   oz.     17,000   oz.
Wassa and Prestea     Golden Star     10.5% of gold produced up to 240,000 ounces; 5.5% therafter     Gold     7,800   oz.     6,500   oz.     2,800   oz.     6,300   oz.     6,800   oz.
Royalty:                                                                    
Pe±asquito Goldcorp 2.0% NSR                                                        
Gold     53,400   oz.     50,300   oz.     79,600   oz.     91,200   oz.     71,100   oz.
Silver     5.0   Moz.     4.2   Moz.     5.0   Moz.     5.0   Moz.     5.1   Moz.
Lead     36.1   Mlbs.     29.9   Mlbs.     26.6   Mlbs.     26.0   Mlbs.     33.4   Mlbs.
                  Zinc     83.1   Mlbs.     64.2   Mlbs.     73.7   Mlbs.     88.0   Mlbs.     94.4   Mlbs.
Cortez     Barrick     GSR1 and GSR2, GSR3, NVR1     Gold     19,900   oz.     7,000   oz.     3,900   oz.     18,900   oz.     25,000   oz.
                         

FOOTNOTES

Tables 1 and 2

1   Reported production relates to the amount of metal sales that are subject to the Companys stream and royalty interests for the stated period, as reported to the Company by operators of the mines.
2 Individually, no stream or royalty included within the Other category contributed greater than 5% of the Companys total revenue for either period, except Rainy River for the six months ended December 31, 2018. The Other category for streams is the Rainy River gold and silver stream.
3 The gold stream percentage at Wassa and Prestea increased to 10.5% from 9.25%, effective January 1, 2018.
 
       

TABLE 3

Calendar 2018 Operators Production Estimate vs Actual Production

 
Calendar 2018 Operator’s Production Calendar 2018 Operator’s Production
Estimate1     Actual2,3
Gold     Silver     Base Metals Gold     Silver     Base Metals
Stream/Royalty     (oz.)     (oz.)     (lbs.)     (oz.)     (oz.)     (lbs.)
Stream:                                          
Andacollo4     66,700                 59,600                  
Mount Milligan5     175,000 – 195,000             195,000                  
Copper                 40 – 47 million               47.1   million
Pueblo Viejo6     575,000 – 590,000     Not provided       581,000     Not provided      
Wassa and Prestea7     225,000 – 235,000             224,900                  
Royalty:                                          
Cortez GSR1     48,300                 44,600                  
Cortez GSR2     2,200                 5,200                  
Cortez GSR3     50,500                 49,800                  
Cortez NVR1     31,600                 36,600                  
Pe±asquito8     310,000     Not provided       220,000     14.1 million      
Lead                 160 million               82.5 million
Zinc                 300 million               225.9 million
1   Production estimates received from the operators are for calendar 2018. There can be no assurance that production estimates received from the operators will be achieved. Please refer to the cautionary language regarding forward-looking statements and the statement regarding third party information contained in this press release, as well as the Risk Factors identified in Part I, Item 1A, of the Companys Fiscal 2018 Form 10-K for information regarding factors that could affect actual results.
2 Actual production figures shown are from the operators and cover the period January 1, 2018 through December 31, 2018, except for Pe±asquito which covers the period from January 1, 2018 through September 30, 2018.
3 Actual production figures for Cortez are based on information provided to the Company by Barrick, and actual production figures for Andacollo, Mount Milligan, Pueblo Viejo, Pe±asquito (gold) and Wassa and Prestea are the publicly reported figures of the operators of those properties.
4 The estimated and actual production figures shown for Andacollo are contained gold in concentrate.
5 The estimated and actual production figures shown for Mount Milligan are payable gold and copper in concentrate.
6 The estimated and actual production figures shown for Pueblo Viejo are payable gold in dor and represent Barricks 60% interest gold produced from Pueblo Viejo. The operator did not provide estimated silver production.
7 The estimated gold production figures shown for Wassa and Prestea are payable gold in concentrate and dor.
8 The estimated and actual gold production figures shown for Pe±asquito are payable gold in concentrate and dor. The estimated and actual lead and zinc production figures shown are payable lead and zinc from concentrate. The operator did not provide estimated silver production and the actual silver production figure shown is payable silver in concentrate and dor.
 
               

TABLE 4

Stream Summary

 
Three Months Ended Three Months Ended As of As of
December 31, 2018 December 31, 2017 December 31, 2018 June 30, 2018
Gold Stream Purchases (oz.)     Sales (oz.) Purchases (oz.)     Sales (oz.) Inventory (oz.) Inventory (oz.)
Andacollo 10,700 6,200 13,500 17,000 4,500 7,400
Pueblo Viejo 10,400 8,900 12,600 14,500 10,400 9,200
Mount Milligan 10,300 17,700 17,700 12,700 300
Wassa and Prestea 4,700 7,900 6,000 6,800 700 3,900
Rainy River 4,500 2,900 1,000 800 1,600 800
Total 40,600 43,600 50,800 51,800 17,200 21,600
 
Three Months Ended Three Months Ended As of As of
December 31, 2018 December 31, 2017 December 31, 2018 June 30, 2018
Silver Stream Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.) Inventory (oz.) Inventory (oz.)
Pueblo Viejo 469,000 509,500 260,200 469,600 469,000 540,200
Rainy River 41,700 36,000 11,900 41,700 32,300
Total 510,700 545,500 272,100 469,600 510,700 572,500
 
Three Months Ended Three Months Ended As of As of
December 31, 2018 December 31, 2017 December 31, 2018 June 30, 2018
Copper Stream Purchases (Mlbs.) Sales (Mlbs.) Purchases (Mlbs.) Sales (Mlbs.) Inventory (Mlbs.) Inventory (Mlbs.)
Mount Milligan 2.5 2.4 2.7 1.8 0.9
                                     
 
Six Months Ended Six Months Ended As of As of
December 31, 2018 December 31, 2017 December 31, 2018 June 30, 2018
Gold Stream Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.) Inventory (oz.) Inventory (oz.)
Andacollo 26,000 28,900 26,500 26,700 4,500 7,400
Mount Milligan 23,000 23,300 36,400 31,300 300
Pueblo Viejo 19,300 18,100 23,100 27,400 10,400 9,200
Wassa and Prestea 11,200 14,300 13,400 13,900 700 3,900
Rainy River 8,100 7,400 1,000 800 1,600 800
Total 87,600 92,000 100,400 100,100 17,200 21,600
 
Six Months Ended Six Months Ended As of As of
December 31, 2018 December 31, 2017 December 31, 2018 June 30, 2018
Silver Stream Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.) Inventory (oz.) Inventory (oz.)
Pueblo Viejo 978,400 1,049,700 730,200 1,006,200 469,000 540,200
Rainy River 76,900 67,400 11,900 41,700 32,300
Total 1,055,300 1,117,100 742,100 1,006,200 510,700 572,500
 
Six Months Ended Six Months Ended As of As of
December 31, 2018 December 31, 2017 December 31, 2018 June 30, 2018
Copper Stream Purchases (Mlbs.) Sales (Mlbs.) Purchases (Mlbs.) Sales (Mlbs.) Inventory (Mlbs.) Inventory (Mlbs.)
Mount Milligan 4.2 3.2 5.3 4.4 0.9
 
       

ROYAL GOLD, INC.

Consolidated Balance Sheets

(Unaudited, in thousands except share data)

 
December 31, 2018 June 30, 2018
ASSETS
Cash and equivalents $ 156,536 $ 88,750
Royalty receivables 25,659 26,356
Income tax receivable 12,793 40
Stream inventory 7,954 9,311
Prepaid expenses and other   793     1,350  
Total current assets 203,735 125,807
Stream and royalty interests, net 2,419,908 2,501,117
Other assets   51,463     55,092  
Total assets $ 2,675,106   $ 2,682,016  
LIABILITIES
Accounts payable $ 2,291 $ 9,090
Dividends payable 17,359 16,375
Income tax payable 10,739 18,253
Withholding taxes payable 2,348 3,254
Other current liabilities   4,439     4,411  
Total current liabilities 37,176 51,383
Debt 358,897 351,027
Deferred tax liabilities 90,700 91,147
Uncertain tax positions 35,590 33,394
Other long-term liabilities   5,773     13,796  
Total liabilities   528,136     540,747  
Commitments and contingencies
EQUITY
Preferred stock, $.01 par value, 10,000,000 shares authorized; and 0 shares issued
Common stock, $.01 par value, 200,000,000 shares authorized; and 65,396,339 and 65,360,041 shares outstanding, respectively 654 654
Additional paid-in capital 2,197,254 2,192,612
Accumulated other comprehensive loss (1,201 )
Accumulated losses   (86,238 )   (89,898 )
Total Royal Gold stockholders equity 2,111,670 2,102,167
Non-controlling interests   35,300     39,102  
Total equity   2,146,970     2,141,269  
Total liabilities and equity $ 2,675,106   $ 2,682,016  
 
   

ROYAL GOLD, INC.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited, in thousands except for per share data)

 
Three Months Ended Six Months Ended
December 31, December 31, December 31, December 31,
2018   2017   2018   2017
Revenue $ 97,592 $ 114,348 $ 197,585 $ 226,824
 
Costs and expenses
Cost of sales 18,162 19,863 34,689 40,282
General and administrative 7,423 9,555 17,349 16,455
Production taxes 909 602 2,201 1,145
Exploration costs 842 1,358 5,204 4,561
Depreciation, depletion and amortization   38,807     42,008     81,358     81,701  
Total costs and expenses   66,143     73,386     140,801     144,144  
 
Operating income 31,449 40,962 56,784 82,680
 
Fair value changes in equity securities (3,631 ) (5,099 )
Interest and other income 487 645 590 1,634
Interest and other expense   (7,410 )   (9,034 )   (15,287 )   (17,651 )
Income before income taxes 20,895 32,573 36,988 66,663
 
Income tax expense   2,148     (48,360 )   (1,967 )   (55,904 )
Net income (loss) 23,043 (15,787 ) 35,021 10,759
Net loss attributable to non-controlling interests   543     1,022     3,575     3,105  
Net income (loss) attributable to Royal Gold common stockholders $ 23,586   $ (14,765 ) $ 38,596   $ 13,864  
 
Net income (loss) $ 23,043 $ (15,787 ) $ 35,021 $ 10,759
Adjustments to comprehensive income (loss), net of tax
Unrealized change in market value of available-for-sale securities       (390 )       (193 )
Comprehensive income (loss) 23,043 (16,177 ) 35,021 10,566
Comprehensive loss attributable to non-controlling interests   543     1,022     3,575     3,105  
Comprehensive income (loss) attributable to Royal Gold stockholders $ 23,586   $ (15,155 ) $ 38,596   $ 13,671  
 
Net income (loss) per share available to Royal Gold common stockholders:
Basic earnings (loss) per share $ 0.36   $ (0.23 ) $ 0.59   $ 0.21  
Basic weighted average shares outstanding   65,395,457     65,306,766     65,385,161     65,271,131  
Diluted earnings (loss) per share $ 0.36   $ (0.23 ) $ 0.59   $ 0.21  
Diluted weighted average shares outstanding   65,473,400     65,306,766     65,485,423     65,460,430  
Cash dividends declared per common share $ 0.265   $ 0.25   $ 0.515   $ 0.49  
 
     

ROYAL GOLD, INC.

Consolidated Statements of Cash Flows

(Unaudited, in thousands)

 
Three Months Ended Six Months Ended
December 31,   December 31, December 31,   December 31,
2018   2017 2018   2017
Cash flows from operating activities:
Net income (loss) $ 23,043 $ (15,787 ) $ 35,021 $ 10,759
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
Depreciation, depletion and amortization 38,807 42,008 81,358 81,701
Amortization of debt discount and issuance costs 3,961 3,734 7,864 7,413
Non-cash employee stock compensation expense 1,625 2,021 4,070 4,395
Fair value changes in equity securities 3,631 5,099
Deferred tax expense (benefit) 1,374 29,685 (307 ) 28,958
Other 65 (158 )
Changes in assets and liabilities:
Royalty receivables (553 ) (206 ) 697 (2,399 )
Stream inventory 2,057 435 1,356 524
Income tax receivable (6,412 ) (1,343 ) (12,753 ) (5,197 )
Prepaid expenses and other assets 1,244 1,326 2,305 (328 )
Accounts payable (2,966 ) (673 ) (7,026 ) (1,658 )
Income tax payable 2,727 3,410 (7,514 ) 9,445
Withholding taxes payable (203 ) (11 ) (906 ) 26
Uncertain tax positions (1,069 ) 2,067 2,197 4,560
Other liabilities   (8,435 )   8,894     (7,993 )   9,193  
Net cash provided by operating activities $ 58,831   $ 75,625   $ 103,468   $ 147,234  
 
Cash flows from investing activities:
Acquisition of stream and royalty interests (52 ) 5 (55 )
Purchase of equity securities (3,569 ) (3,569 )
Other   34     (194 )   (87 )   (94 )
Net cash used in investing activities $ (3,587 ) $ (189 ) $ (3,711 ) $ (94 )
 
Cash flows from financing activities:
Repayment of revolving credit facility (50,000 ) (100,000 )
Net payments from issuance of common stock (245 ) (12 ) (2,217 ) (3,541 )
Common stock dividends (16,378 ) (15,709 ) (32,754 ) (31,391 )
Contributions from non-controlling interest 2,790 2,790
Other   (1,953 )   22     210     77  
Net cash used in financing activities $ (15,786 ) $ (65,699 ) $ (31,971 ) $ (134,855 )
Net increase in cash and equivalents 39,458 9,737 67,786 12,285
Cash and equivalents at beginning of period   117,078     88,395     88,750     85,847  
Cash and equivalents at end of period $ 156,536   $ 98,132   $ 156,536   $ 98,132  
 

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