A World Class Streaming and Royalty Company
RGLD Nasdaq 78.06 -0.38 -0.48% Volume: 713,023 December 10, 2018
Current Gold Price 1245.09 +0.02 +0% Volume: December 10, 2018

Royal Gold Reports Record Annual Revenue, Cash Flow and Volume

08/08/2018

DENVER--(BUSINESS WIRE)-- Royal Gold, Inc. (NASDAQ: RGLD) (together with its subsidiaries, “Royal Gold” or the “Company,” “we” or “our”) reports a fiscal year 2018 net loss of $113.1 million, or ($1.73) per basic share, on record revenue of $459.0 million and record operating cash flow of $328.8 million. Reported earnings included the negative impact of US tax reform legislation totaling $0.47 per share and several non-cash items (including a non-cash impairment of $239.1 million relating to the Pascua Lama project) totaling $3.03 per share. Absent these items, adjusted net income1 was $115.1 million, or $1.76 per share, up 14% from the prior year.

Fiscal 2018 Highlights Compared to Fiscal 2017:

  • Record revenue of $459.0 million, an increase of 4%
  • Record operating cash flow of $328.8 million, an increase of 23%
  • Record volume of 354,000 GEOs2, an increase of 1%
  • Final $250.0 million outstanding on revolving credit facility paid off
  • Dividends paid of $64.1 million, an increase of 4%
  • Average gold price of $1,297 per ounce, in line with the prior year

The Company reports net income of $26.7 million, or $0.41 per share, on revenue of $116.2 million in its fiscal fourth quarter ended June 30, 2018 (“fourth quarter”). Reported earnings included further impacts of US tax reform legislation totaling $0.01 per share and a non-cash functional currency election totaling $0.01 per share. Absent these items, adjusted net income1 was $27.6 million, or $0.43 per share, up 39% from the prior year quarter.

Fourth Quarter Highlights Compared to Prior Year Quarter:

  • Revenue of $116.2 million, an increase of 7%
  • Operating cash flow of $77.0 million, an increase of 17%
  • Volume of 89,000 GEOs2, an increase of 3%
  • Dividends paid of $16.4 million, an increase of 4%
  • Repaid remaining $75.0 million outstanding under revolving credit facility
  • Average gold price of $1,306 per ounce, up 4%

________________

1  

Adjusted Net Income is a non-GAAP measure. Please see Schedule A for reconciliation.

 
2

Gold Equivalent Ounces (“GEOs”) are calculated as revenue divided by the average gold price for the same period. GEOs net of stream payments were 289,300 in fiscal 2018 and 72,000 in the fourth quarter, compared to 280,800 in the prior fiscal year and 71,000 in the prior fourth quarter, respectively.

 
 

“Fiscal 2018 performance was solid, steady, and successful as evidenced by the second straight year of record revenue, cash flow and volume,” commented Tony Jensen, President and CEO. “Looking forward to fiscal 2019, we anticipate several positive catalysts, including the beginning of production at Cortez Crossroads, the early deployment of the Peñasquito Pyrite Leach Project, production improvements at Rainy River, and progress at the pilot pre-oxidation plant at Pueblo Viejo, as well as a preliminary economic assessment at the Peak Gold joint venture (“Peak Gold”).

Recent Developments

Mount Milligan

As previously reported, Centerra Gold Inc. (“Centerra”) temporarily suspended mill operations at Mount Milligan on December 27, 2017 due to insufficient fresh water. Mill operations restarted on February 5, 2018 with a single ball mill, and the second ball mill restarted on March 23, 2018. For the quarter ended June 30, 2018, mill throughput averaged 47,000 tonnes per calendar day (roughly 52,000 tonnes per operating day), and the process plant operated for 30 consecutive days averaging greater than 60,000 tonnes per day.

Our fourth quarter results were not impacted by the temporary shutdown of the mill processing facility. Due to the timing of shipments and deliveries of gold and copper, we expect the impact of the temporary shutdown to be reflected in Royal Gold’s first fiscal quarter 2019 results, as some of the deliveries of gold and copper that were expected in July and August 2018 have been deferred to a later date.

On August 1, 2018, Centerra reported that Mount Milligan continues to face potential limitations due to water supply, a situation exacerbated by minimal inflow from snow melt and less than expected precipitation experienced in 2018, and that it applied to British Columbia regulators to access additional water sources through July 2020. Centerra also reported that if regulatory approvals to access water sources are not received as expected, the Mount Milligan mill would need to reduce production to conserve water. In that case, Centerra reported that one ball mill would be operated at a throughput of approximately 30,000 tonnes per day for the fourth calendar quarter of 2018.

Repayment of Golden Star Loan Facility

On June 29, 2018, a subsidiary of Golden Star Resources, Ltd. repaid its $20 million term loan obligation to Royal Gold, including accrued interest, well in advance of its May 2019 maturity.

Separate from the term loan facility, Royal Gold’s wholly-owned subsidiary RGLD Gold AG has a streaming interest on 10.5% of the gold at Wassa and Prestea until 240,000 ounces are delivered and 5.5% thereafter. Through March 31, 2018, Wassa and Prestea have delivered approximately 61,500 ounces of gold to Royal Gold.

Purchase of 1.75% NSR on Mara Rosa

On June 29, 2018, Royal Gold’s wholly-owned subsidiary RG Royalties, LLC, acquired a 1.75% Net Smelter Return (“NSR”) royalty on Amarillo Gold’s Mara Rosa gold project in Goias State, Brazil for $10.8 million. This interest is in addition to the 1.00% NSR royalty previously acquired by another wholly-owned subsidiary of Royal Gold. The new Mara Rosa royalty agreement includes a right of first refusal on future financing opportunities based on production from the project.

Purchase of Shares of Contango Ore

On June 28, 2018, Royal Gold acquired 682,556 shares of common stock of Contango ORE, Inc. (“CORE”) for consideration of $26 per share, pursuant to a Stock Purchase Agreement entered into on April 5, 2018 between Royal Gold and certain individual stockholders of CORE. Royal Gold expects to acquire a second and final tranche of 127,188 shares of CORE common stock pursuant to the Stock Purchase Agreement at a subsequent closing.

Fiscal 2018 Overview

Fiscal 2018 record revenue of $459.0 million included stream revenue of $324.5 million and royalty revenue of $134.5 million. The Company had inventory of approximately 22,000 ounces of gold and 573,000 ounces of silver at June 30, 2018, as previously announced, compared to 14,000 ounces of gold and 537,000 ounces of silver at June 30, 2017.

Fiscal 2018 cost of sales was approximately $83.8 million, compared to $87.3 million in fiscal 2017. The decrease was primarily due to decreased gold sales from Mount Milligan and Andacollo. Cost of sales is specific to our stream agreements and is the result of the purchase of gold, silver and copper for a cash payment.

General and administrative expenses increased to $35.5 million in fiscal 2018 from $33.4 million during the prior year. The increase during the current period was primarily due to an increase in legal and litigation costs.

Exploration costs, which are specific to exploration and advancement of Peak Gold, decreased to $8.9 million in fiscal 2018, from $12.9 million in fiscal 2017. As of June 30, 2018, Royal Gold held a 40% membership interest in Peak Gold.

Depreciation, depletion and amortization expense increased to $163.7 million in fiscal 2018, from $159.6 million in fiscal 2017. The increase was primarily attributable to higher gold sales from Wassa and Prestea.

Interest and other income decreased to $4.2 million in fiscal 2018 from $9.3 million in fiscal 2017. The decrease was primarily due to a gain on a former interest, as well as consideration received as part of a legal settlement and termination of a non-principal royalty during fiscal 2017.

Interest and other expense decreased to $34.2 million in fiscal 2018 from $36.4 million in the prior year as the Company paid off the outstanding balance under our revolving credit facility.

We recognized income tax expense totaling $14.8 million in fiscal 2018, compared with $26.4 million during fiscal 2017. Given the fiscal 2018 accounting loss, this resulted in an effective tax rate of (14.1%) for the fiscal year, compared with 22.2% in the prior period.

At June 30, 2018, we had current assets of $125.8 million compared to current liabilities of $51.4 million resulting in working capital of $74.4 million. This compares to current assets of $143.6 million and current liabilities of $34.3 million at June 30, 2017, resulting in working capital of $109.3 million. The decrease in our current assets primarily resulted from a decrease in our income tax receivable due to a tax refund received from a foreign taxing authority of approximately $21 million during the fiscal year.

During fiscal 2018, liquidity needs were met from $375.2 million in net revenue and our available cash resources. The Company repaid the remaining $250.0 million balance outstanding under the revolving credit facility, and as of June 30, 2018, the full $1.0 billion in borrowing capacity was available. Working capital, combined with the Company’s undrawn revolving credit facility, resulted in approximately $1.1 billion of total liquidity at June 30, 2018.

Fourth Quarter Overview

Fourth quarter revenue was $116.2 million compared to $108.9 million in the prior year quarter.Stream and royalty revenue totaled $83.5 million and $32.7 million, respectively, for the fourth quarter. Revenue increased due to higher gold and copper prices as well as increased stream sales from Mount Milligan and Pueblo Viejo, partially offset by lower metal sales from Wassa and Prestea, and Andacollo.

Fourth quarter ending inventory was comprised of 22,000 gold ounces and 573,000 silver ounces, reflecting a slight inventory drawdown from the prior quarter, offsetting the deferral of certain deliveries from Mount Milligan associated with the temporary shutdown which occurred in early calendar 2018.

Fourth quarter cost of sales of $22.2 million was above the $19.7 million recorded in the prior year quarter, driven by higher portfolio gold and silver sales.

General and administrative expenses increased to $10.9 million in the fourth quarter, compared to $9.9 million in the prior year quarter. The increase was primarily related to an increase in legal and litigation costs.

We recognized an income tax expense totaling $4.7 million in the fourth quarter, compared with an income tax expense of $7.7 million in the prior year quarter. This resulted in an effective tax rate of 16% in the current period, compared with 31% in the prior year quarter.

PROPERTY HIGHLIGHTS

A summary of fourth quarter, annual and historical production reported by operators of our stream and royalty properties can be found on Tables 1, 2 and 3. Calendar year 2018 operator production estimates for certain properties in which we have interests compared to actual production at those properties through June 30, 2018 can be found on Table 4. Results of our streaming business for the fourth quarter, compared to the prior year quarter, can be found on Table 5. Highlights at certain of the Company’s principal producing and development properties during the fourth quarter, compared to the prior year quarter, are detailed in our Annual Report on Form 10-K.

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 August 1, 2018, the Company owns interests on 191 properties on six continents, including interests on 40 producing mines and 18 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 fourth quarter and fiscal year results will be held on Thursday, August 9, 2018, 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.

Fourth 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, steady and successful performance evidenced by record revenue, cash flow and volume, positive catalysts including the beginning of production at Cortez Crossroads, the early deployment of the Peñasquito Pyrite Leach Project, progress at the pilot pre-oxidation plant at Pueblo Viejo, production improvements at Rainy River, a preliminary economic assessment by Peak Gold, the impact of the temporary shutdown and subsequent restart of mill processing operations at Mount Milligan, the impact of recent and future potential shutdowns and reduced production at Mount Milligan; operators’ production estimates for calendar year 2018 and their estimates of reserves and mineralized material, and the expectation to acquire additional shares of Contango ORE, Inc. common stock. Net gold and metal reserves attributable to Royal Gold’s stream, royalty and other interests are subject to certain assumptions and, like reserves, do not reflect actual ounces that will be produced. Like any stream, royalty or similar interest on a non-producing or not-yet-in-development project, our interests on development projects are subject to certain risks, such as the ability of the operators to bring the projects into production and operate in accordance with their feasibility studies and mine plans, and the ability of Royal Gold to make accurate assumptions regarding valuation and timing and amount of payments. In addition, many of our interests are subject to risks associated with conducting business in a foreign country, including application of foreign laws to contract and other disputes, foreign environmental laws and enforcement and uncertain political and economic environments. Factors that could cause actual results to differ materially from the projections include, among others, precious metals, copper and nickel prices; performance of and production at the Company's stream and royalty properties; the ability of operators to finance project construction to completion and bring projects into production as expected, including development stage mining properties, mine and mill expansion projects and other development and construction projects; operators’ delays in securing or inability to secure or maintain necessary governmental permits; decisions and activities of the operators of the Company's stream and royalty properties; unanticipated grade, environmental, geological, seismic, metallurgical, processing, liquidity or other problems the operators of the Company’s stream and royalty properties may encounter; operators’ inability to access sufficient raw materials, water or power; changes in operators’ project parameters as plans continue to be refined; changes in estimates of reserves and mineralization by the operators of the Company’s stream and royalty properties; contests to the Company’s stream and royalty interests and title and other defects in the properties where the Company holds stream and royalty interests; errors or disputes in calculating stream deliveries and royalty payments, or deliveries or payments not made in accordance with stream and royalty agreements; economic and market conditions; changes in laws governing the Company and its stream and royalty interests or the operators of the properties subject to such interests, and other subsequent events; as well as other factors described in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the Securities and Exchange Commission. Most of these factors are beyond the Company’s ability to predict or control. The Company disclaims any obligation to update any forward-looking statement made herein. Readers are cautioned not to put undue reliance on forward-looking statements.

Statement Regarding Third-Party Information: Certain information provided in this press release, including production estimates for calendar 2018, 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
Fourth Quarter
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
June 30, 2018 June 30, 2017
    Reported     Reported
Stream/Royalty     Metal(s)     Revenue     Production 1     Revenue     Production 1
Stream:                                          
Mount Milligan $ 32,145   $ 31,575  
Gold 20,700 oz. 19,800 oz.
Copper 1.64 Mlbs. 2.57 Mlbs.
Pueblo Viejo $ 27,563 $ 19,678
Gold 13,200 oz. 10,500 oz.
Silver 616,300 oz. 374,500 oz.
Wassa and Prestea Gold $ 3,755 2,800 oz. $ 7,952 6,300 oz.
Andacollo Gold $ 16,289 12,400 oz. $ 18,699 14,900 oz.
Other(2) $ 3,737 $ N/A
Total stream revenue $ 83,489 $ 77,904
                                           
Royalty:                                          
Peñasquito $ 5,447 $ 6,752
Gold 79,600 oz. 133,300 oz.
Silver 4.96 Moz. 5.65 Moz.
Lead 26.61 Mlbs. 27.39 Mlbs.
Zinc 73.73 Mlbs. 85.72 Mlbs.
Cortez Gold $ 332 3,900 oz. $ 1,562 16,600 oz.
Other(2) Various $ 26,967 N/A $ 22,716 N/A
Total royalty revenue $ 32,746 $ 31,030
Total Revenue $ 116,235 $ 108,934
                                           
 
TABLE 2
Fiscal Year 2018
Revenue and Operators’ Reported Production for Principal Stream and Royalty Interests
(In thousands, except reported production in oz. and lbs.)
 
       

Fiscal Year Ended

   

Fiscal Year Ended

June 30, 2018 June 30, 2017
    Reported     Reported
Stream/Royalty     Metal(s)     Revenue     Production 1     Revenue     Production 1
Stream:                                          
Mount Milligan $ 133,534   $ 136,736  
Gold 77,700 oz. 103,400 oz.
Copper 10.35 Mlbs. 2.57 Mlbs.
Pueblo Viejo $ 95,055 $ 91,589
Gold 49,200 oz. 50,700 oz.
Silver 1.88 Moz. 1.56 Moz.
Andacollo Gold $ 57,413 44,400 oz. $ 60,251 47,800 oz.
Wassa and Prestea Gold $ 29,804 23,000 oz. $ 25,435 20,300 oz.
Other(2) $ 8,710 $ N/A
Total stream revenue $ 324,516 $ 314,011
                                           
Royalty:                                          
Peñasquito $ 25,886 $ 26,687
Gold 375,800 oz. 556,300 oz.
Silver 20.89 Moz. 20.71 Moz.
Lead 122.15 Mlbs. 125.21 Mlbs.
Zinc 348.48 Mlbs. 317.77 Mlbs.
Cortez Gold $ 8,155 77,700 oz. $ 6,504 64,200 oz.
Other(2) Various $ 100,485 N/A $ 93,612 N/A
Total royalty revenue $ 134,526 $ 126,803
Total revenue $ 459,042 $ 440,814
                                           
 
TABLE 3
Operators’ Historical Production
 

 

   

 

   

 

    Reported Production For The Quarter Ended 1

Property

   

Operator

   

Stream/Royalty

    Metal(s)    

Jun. 30,
2018

   

Mar. 31,
2018

   

Dec. 31,
2017

   

Sep. 30,
2017

   

Jun. 30,
2017

Stream:                                                                    
Mount Milligan(3) Centerra 35% of payable gold     Gold     20,700   oz.     25,800   oz.     12,600   oz.     18,600   oz.     19,800   oz.
            18.75% of payable copper     Copper     1.64   Mlbs.     4.33   Mlbs.     1.80   Mlbs.     2.58   Mlbs.     2.57   Mlbs.
Pueblo Viejo(4) Barrick (60%)

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

    Gold     13,200   oz.     8,500   oz.     14,500   oz.     12,900   oz.     10,500   oz.
           

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

    Silver     616,300   oz.     260,800   oz.     469,600   oz.     536,600   oz.     374,500   oz.
Andacollo     Teck     100% of gold produced     Gold     12,400   oz.     5,400   oz.     17,000   oz.     9,700   oz.     14,900   oz.
Wassa and Prestea(5)     Golden Star    

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

    Gold     2,800   oz.     6,300   oz.     6,800   oz.     7,100   oz.     6,300   oz.
Royalty:                                                                    
Peñasquito Goldcorp 2.0% NSR                                                        
Gold     79,600   oz.     91,200   oz.     71,100   oz.     134,000   oz.     133,300   oz.
Silver     4.96   Moz.     4.96   Moz.     5.06   Moz.     5.91   Moz.     5.65   Moz.
Lead     26.61   Mlbs.     25.98   Mlbs.     33.40   Mlbs.     36.16   Mlbs.     27.39   Mlbs.
                  Zinc     73.73   Mlbs.     87.95   Mlbs.     94.42   Mlbs.     92.38   Mlbs.     85.72   Mlbs.
Cortez     Barrick     GSR1 and GSR2, GSR3, NVR1     Gold     3,900   oz.     18,900   oz.     25,000   oz.     29,900   oz.     16,600   oz.
                         
 
FOOTNOTES
Tables 1, 2 and 3
 

1

  Reported production relates to the amount of metal sales that are subject to our stream and royalty interests for the stated period, as reported to us by operators of the mines.
 

2

Individually, no stream or royalty included within the “Other” category contributed greater than 5% of our total revenue for the entire period.
 

3

Reflects the October 20, 2016 amendment to our Mount Milligan streaming agreement. Prior to the amendment, Royal Gold held a 52.25% gold stream. Gold concentrate that was in transit at October 20, 2016 was delivered to us under the 52.25% gold stream. Royal Gold began receiving gold and copper deliveries reflecting the amended stream agreement in April 2017.
 

4

The first silver stream deliveries from Pueblo Viejo were in March 2016, with the first silver sales made during the June 2016 quarter.
 

5

The gold stream percentage at Wassa and Prestea increased to 10.5% from 9.25%, effective January 1, 2018.
 
TABLE 4
Calendar 2018 Operator’s Production Estimate vs Actual Production
 
    Calendar 2018 Operator's Production     Calendar 2018 Operator's Production
Estimate 1 Actual 2,3
Gold     Silver     Base Metals Gold     Silver     Base Metals
Stream/Royalty (oz.)     (oz.)     (lbs.) (oz.)     (oz.)     (lbs.)
Stream:                            
Andacollo(4) 66,700             27,100            
Mount Milligan(5) 175,000 - 195,000             75,900           22.6 million
Copper             40 - 47 million                  
Pueblo Viejo(6) 585,000 - 615,000     Not provided       264,000     Not provided      
Wassa and Prestea(7) 230,000 - 255,000             118,800            
Royalty:                            
Cortez GSR1 48,300             22,200            
Cortez GSR2 2,200             600            
Cortez GSR3 50,500             22,800            
Cortez NVR1 31,600             13,500            
Peñasquito(8) 310,000     Not provided       171,000     9.6 million      
Lead             160 million             53.8 million
Zinc                 300 million                 166.2 million
1   Production estimates received from our operators are for calendar 2018. There can be no assurance that production estimates received from our operators will be achieved. Please refer to our 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 our Fiscal 2017 Form 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, 2018 through June 30, 2018.
 
3 Actual production figures for Cortez are based on information provided to us by Barrick Gold Corporation, and actual production figures for Andacollo, Mount Milligan, Pueblo Viejo, Peñasquito (gold) and Wassa and Prestea are the publicly reported figures of the operators of those properties.
 
4 The estimated and actual production figures shown for Andacollo are contained gold in concentrate.
 
5 The estimated and actual production figures shown for Mount Milligan are payable gold and copper in concentrate.
 
6 The estimated and actual production figures shown for Pueblo Viejo are payable gold in doré and represent Barrick’s 60% interest gold produced from Pueblo Viejo. The operator did not provide estimated silver production.
 
7 The estimated gold production figures shown for Wassa and Prestea are payable gold in concentrate and doré.
 
8 The estimated and actual gold production figures shown for Peñasquito are payable gold in concentrate. The operator did not provide estimated silver production.
 
 
TABLE 5
Stream Summary
 
    Three Months Ended     Three Months Ended     As of     As of
June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Gold Stream Purchases (oz.)     Sales (oz.) Purchases (oz.)     Sales (oz.) Inventory (oz.) Inventory (oz.)
Mount Milligan 14,200 20,700 19,900 19,800 300 100
Andacollo 15,200 12,400 12,600 14,900 7,400 100
Pueblo Viejo 9,200 13,200 12,900 10,500 9,200 12,900
Wassa and Prestea 5,700 2,800 5,300 6,300 3,900 1,000
Rainy River 2,800 2,300 800
Total 47,100 51,400 50,700 51,500 21,600 14,100
 
Three Months Ended Three Months Ended As of As of
June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Silver Stream Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.) Inventory (oz.) Inventory (oz.)
Pueblo Viejo 540,200 616,300 536,800.00 374,500.00 540,200 536,800
Rainy River 32,300 42,600 32,300
Total 572,500 658,900 536,800.00 374,500.00 572,500 536,800
 
Three Months Ended Three Months Ended As of As of
June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Copper Stream Purchases (Mlbs.) Sales (Mlbs.) Purchases (Mlbs.) Sales (Mlbs.) Inventory (Mlbs.) Inventory (Mlbs.)
Mount Milligan 1.64 1.64 2.57 2.57
                                     
 
Years Ended Years Ended As of As of
June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Gold Stream Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.) Inventory (oz.) Inventory (oz.)
Mount Milligan 78,000 77,700 96,000 103,400 300 100
Andacollo 51,700 44,400 47,900 47,800 7,400 100
Pueblo Viejo 45,400 49,200 52,600 50,700 9,200 12,900
Wassa and Prestea 25,900 23,000 19,900 20,300 3,900 1,000
Rainy River 6,800 5,900 800
Total 207,800 200,200 216,400 222,200 21,600 14,100
 
Years Ended Years Ended As of As of
June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Silver Stream Purchases (Moz.) Sales (Moz.) Purchases (Moz.) Sales (Moz.) Inventory (oz.) Inventory (oz.)
Pueblo Viejo 1.89 1.88 1.78 1.56 540,200 536,800
Rainy River 0.08 0.06 32,300
Total 1.97 1.94 1.78 1.56 572,500 536,800
 
Years Ended Years Ended As of As of
June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Copper Stream Purchases (Mlbs.) Sales (Mlbs.) Purchases (Mlbs.) Sales (Mlbs.) Inventory (Mlbs.) Inventory (Mlbs.)
Mount Milligan 10.35 10.35 2.57 2.57
 
 
ROYAL GOLD, INC.

Consolidated Balance Sheets

(In thousands except share data)

 
        June 30, 2018     June 30, 2017
ASSETS
Cash and equivalents $ 88,750 $ 85,847
Royalty receivables 26,356 26,886
Income tax receivable 40 22,169
Stream inventory 9,311 7,883
Prepaid expenses and other   1,350     822
Total current assets 125,807 143,607
Stream and royalty interests, net 2,501,117 2,892,256
Other assets   55,092     58,202
Total assets $ 2,682,016   $ 3,094,065
LIABILITIES
Accounts payable $ 9,090 $ 3,908
Dividends payable 16,375 15,682
Income tax payable 18,253 5,651
Withholding taxes payable 3,254 3,425
Other current liabilities   4,411     5,617
Total current liabilities 51,383 34,283
Debt 351,027 586,170
Deferred tax liabilities 91,147 121,330
Uncertain tax positions 33,394 25,627
Other long-term liabilities   13,796     6,391
Total liabilities   540,747     773,801
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 65,360,041 and 65,179,527 shares outstanding, respectively 654 652
Additional paid-in capital 2,192,612 2,185,796
Accumulated other comprehensive (losses) income (1,201 ) 879
Accumulated (losses) earnings   (89,898 )   88,050
Total Royal Gold stockholders’ equity 2,102,167 2,275,377
Non-controlling interests   39,102     44,887
Total equity   2,141,269     2,320,264
Total liabilities and equity $ 2,682,016   $ 3,094,065
 
 
ROYAL GOLD, INC.

Consolidated Statements of Operations and Comprehensive (Loss) Income

(In thousands except for per share data)

 
    Three Months Ended     Years Ended
June 30,     June 30, June 30,     June 30,
2018 2017 2018 2017
Revenue $ 116,235 $ 108,934 $ 459,042 $ 440,814
 
Costs and expenses
Cost of sales 22,212 19,682 83,839 87,265
General and administrative 10,910 9,903 35,464 33,350
Production taxes 700 429 2,268 1,760
Exploration costs 3,849 4,450 8,946 12,861
Depreciation, depletion and amortization 42,317 39,851 163,696 159,636
Impairments of royalty interests           239,364      
Total costs and expenses   79,988     74,315     533,577     294,872  
 
Operating income (loss) 36,247 34,619 (74,535 ) 145,942
 
Interest and other income 756 753 4,170 9,302
Interest and other expense   (8,268 )   (10,819 )   (34,214 )   (36,378 )
Income (loss) before income taxes 28,735 24,553 (104,579 ) 118,866
 
Income tax expense   (4,728 )   (7,717 )   (14,772 )   (26,441 )
Net income (loss) 24,007 16,836 (119,351 ) 92,425
Net loss attributable to non-controlling interests   2,643     3,184     6,217     9,105  
Net income (loss) attributable to Royal Gold common stockholders $ 26,650   $ 20,020   $ (113,134 ) $ 101,530  
 
Net income (loss) $ 24,007 $ 16,836 $ (119,351 ) $ 92,425
Adjustments to comprehensive income (loss), net of tax
Unrealized change in market value of available-for-sale securities   (1,222 )   303     (2,080 )   879  
Comprehensive income (loss) 22,785 16,533 (121,431 ) 93,304
Comprehensive loss attributable to non-controlling interests   2,643     3,184     6,217     9,105  
Comprehensive income (loss) attributable to Royal Gold stockholders $ 25,428   $ 19,717   $ (115,214 ) $ 102,409  
 
Net income (loss) per share available to Royal Gold common stockholders:
Basic earnings (loss) per share $ 0.41   $ 0.31   $ (1.73 ) $ 1.55  
Basic weighted average shares outstanding   65,318,461     65,175,663     65,291,855     65,152,782  
Diluted earnings (loss) per share $ 0.41   $ 0.31   $ (1.73 ) $ 1.55  
Diluted weighted average shares outstanding   65,507,651     65,320,719     65,291,855     65,277,953  
Cash dividends declared per common share $ 0.25   $ 0.24   $ 0.99   $ 0.95  
 
 
ROYAL GOLD, INC.

Consolidated Statements of Cash Flows

(In thousands)

 
    Three Months Ended     Years Ended
June 30,     June 30, June 30,     June 30,
2018 2017 2018 2017
Cash flows from operating activities:
Net income (loss) $ 24,007 $ 16,836 $ (119,351 ) $ 92,425
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
Depreciation, depletion and amortization 42,317 39,851 163,696 159,636
Amortization of debt discount and issuance costs 3,845 3,623 15,046 13,825
Non-cash employee stock compensation expense 2,322 3,224 8,279 9,983
Impairments of royalty interests 239,364
Deferred tax benefit (1,260 ) 7,822 (32,843 ) 1,556
Other 3 (236 ) (197 ) (4,874 )
Changes in assets and liabilities:
Royalty receivables 1,439 (5,516 ) 530 (6,883 )
Stream inventory 3,388 (1,259 ) (1,428 ) 1,606
Income tax receivable 1,110 (6,939 ) 22,130 (13,056 )
Prepaid expenses and other assets (411 ) (948 ) 2,813 (1,691 )
Accounts payable 6,112 1,435 5,173 (206 )
Income tax payable 5,822 2,897 12,601 2,475
Withholding taxes payable (398 ) 6,860 (171 ) 1,411
Uncertain tax positions (3,222 ) 1,290 7,767 8,631
Other liabilities   (8,059 )   (3,019 )   5,415     2,015  
Net cash provided by operating activities $ 77,015   $ 65,921   $ 328,824   $ 266,853  
 
Cash flows from investing activities:
Acquisition of stream and royalty interests (10,800 ) (11,812 ) (203,721 )
Repayment of Golden Star term loan 20,000 20,000
Purchase of available-for-sale securities (17,869 ) (17,869 )
Other   342     2,102     (909 )   3,605  
Net cash (used in) provided by investing activities $ (8,327 ) $ 2,102   $ (10,590 ) $ (200,116 )
 
Cash flows from financing activities:
Repayment of revolving credit facility (75,000 ) (50,000 ) (250,000 ) (95,000 )
Net payments from issuance of common stock (540 ) 192 (4,042 ) (2,426 )
Common stock dividends (16,363 ) (15,681 ) (64,118 ) (61,396 )
Debt issuance costs (83 ) (3,340 ) (180 ) (3,340 )
Borrowings from revolving credit facility 70,000
Purchase of additional royalty interest from non-controlling interest (1,056 ) (2,518 )
Other   2,672     (381 )   3,009     (2,843 )
Net cash used in financing activities $ (89,314 ) $ (70,266 ) $ (315,331 ) $ (97,523 )
Net (decrease) increase in cash and equivalents (20,626 ) (2,243 ) 2,903 (30,786 )
Cash and equivalents at beginning of period   109,376     88,090     85,847     116,633  
Cash and equivalents at end of period $ 88,750   $ 85,847   $ 88,750   $ 85,847  
 
 

SCHEDULE A

Non-GAAP Financial Measures

Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles (“GAAP”). These measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

Adjusted Net (Loss) Income Reconciliation

Management of the Company uses adjusted net income (loss) to evaluate the Company’s operating performance, and for planning and forecasting future business operations. The Company believes the use of adjusted net income (loss) allows investors and analysts to understand the results relating to receipt of revenue from its royalty interests and purchase and sale of gold from its streaming interests by excluding certain items that have a disproportionate impact on our results for a particular period. The net income (loss) adjustments are presented net of tax generally at the Company’s statutory effective tax rate. Management’s determination of the components of adjusted net income (loss) are evaluated periodically and based, in part, on a review of non-GAAP financial measures used by mining industry analysts. Net income (loss) attributable to Royal Gold stockholders is reconciled to adjusted net income (loss) as follows:

Adjusted Net Income (Loss) Reconciliation:

           
Three Months Ended

Year Ended

June 30, June 30,
(Unaudited, in thousands) (Unaudited, in thousands)
2018 2018
 
Net income (loss) attributable to Royal Gold common stockholders $ 26,650 $ (113,134 )
 
Preliminary impacts of U.S. tax legislation 475 30,675
Income tax foreign currency election 375 16,407
Increase in uncertain tax positions 125 6,050
Impairments royalty interests, net of tax 175,056
   
Adjusted net income attributable to Royal Gold common stockholders $ 27,625 $ 115,054
 
                 
 
Net income (loss) attributable to Royal Gold common stockholders per basic share $ 0.41 $ (1.73 )
 
Preliminary impacts of U.S. tax legislation 0.01 0.47
Income tax foreign currency election 0.01 0.25
Increase in uncertain tax positions 0.09
Impairments royalty interests, net of tax 2.68
   
Adjusted net income attributable to Royal Gold common stockholders per basic share $ 0.43 $ 1.76  
 
Net income (loss) attributable to Royal Gold common stockholders per diluted share $ 0.41 $ (1.73 )
 
Preliminary impacts of U.S. tax legislation 0.01 0.47
Income tax foreign currency election 0.01 0.25
Increase in uncertain tax positions 0.09
Impairments royalty interests, net of tax 2.68
   
Adjusted net income attributable to Royal Gold common stockholders per diluted share $ 0.43 $ 1.76  

Royal Gold, Inc.
Karli Anderson, 303-575-6517
Vice President Investor Relations

Source: Royal Gold, Inc.

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