Stock Quote

Royal Gold Reports Record Revenue in the Second Quarter of Fiscal 2021

ROYAL GOLD, INC. (NASDAQ: RGLD) (together with its subsidiaries, “Royal Gold” or the “Company,” “we,” “us,” or “our”) reports net income of $59.9 million, or $0.91 per share, on record revenue of $158.4 million in its second quarter of fiscal 2021 ended December 31, 2020 (“second quarter”). Adjusted net income 1 was $60.1 million, or $0.92 per share, after excluding a $0.01 loss on the change in fair value of equity securities.

Second Quarter 2021 Highlights:

  • Record revenue of $158.4 million, an increase of 28% over the prior year quarter
  • 76% of revenue from gold at an average price of $1,874 per ounce
  • Operating cash flow of $99.9 million, an increase of 28% over the prior year quarter
  • Volume of 84,500 GEOs1
  • $200 million of debt, net cash2 of $182 million, with $1.2 billion of liquidity available
  • Annual dividend increased to $1.20 per share, a 7% increase over the prior year, and the 20th consecutive annual increase
  • Khoemacau construction 85% complete, and 80% base silver stream fully funded
  • Continued Board renewal with election of Fabiana Chubbs

“Excellent performance from our operating portfolio combined with continued robust metal prices led to another quarter of record revenue and strong operating cash flow,” commented Bill Heissenbuttel, President and CEO of Royal Gold. “The positive price environment continues to support organic growth from within the portfolio including new revenue contributions from Relief Canyon and South Laverton. Solid operating cash flow of almost $100 million allowed us to further strengthen the balance sheet, increase our annual dividend for the 20th consecutive year, and complete our funding of the advance payment for the 80% base silver stream at Khoemacau. We are pleased to see progress at Khoemacau remain on track for first shipment of concentrate in the third calendar quarter of 2021.”

“Finally,” continued Mr. Heissenbuttel, “we continued our long-standing practice of maintaining an independent and highly qualified Board of Directors with the election of Fabiana Chubbs following the retirement of Chris Thompson in November. I would like to welcome Fabiana to the Board and thank Chris for his invaluable contribution to Royal Gold over the past several years.”

_________________________________________

[1] Adjusted net income is a non-GAAP financial measure. See Schedule A of this press release for additional information.

[2] See Schedule A of this press release for additional information about gold equivalent ounces, or GEOs.

[3] Net debt (and net cash) is a non-GAAP financial measure. See Schedule A of this press release for additional information.

Recent Developments

Khoemacau Project

According to Khoemacau Copper Mining (Pty.) Limited (“KCM”), progress continued at the Khoemacau Project (“Khoemacau”) during the quarter, and the project reached approximately 85% of construction completion as of December 31, 2020. According to KCM, activities are focused on refurbishment and upgrading of the Boseto mill, underground development, completion of accommodation, power and water infrastructure at Zone 5 and completion of haul road surfacing between Zone 5 and the Boseto mill. Also, according to KCM, underground development had cumulatively advanced 8,311 meters in the three mines and approximately 70,000 tonnes of ore were stockpiled on surface at the end of December 2020.

The six-month state of emergency declared by the Government of Botswana in March 2020 to help prevent the spread of COVID-19 was extended on September 28, 2020, for an additional six months through March 2021. Mining remains designated as an “essential service” and KCM reports that general development activity at Khoemacau is continuing without significant impact. In line with previous reporting, and barring any potential further impacts caused by COVID-19 considerations, KCM is targeting to begin commissioning activities late in the second calendar quarter of 2021 with first shipment of concentrate to occur late in the third calendar quarter of 2021.

On January 6, 2021, Royal Gold made the sixth advance payment of $32.6 million, which brings the total contribution to $212 million and completes the advance payment required to earn the full base silver stream. For any remaining funding required to complete construction, KCM may elect under the stream agreement to draw up to $53 million in additional stream financing, earning Royal Gold up to an additional 20% option silver stream, draw up to $25 million under a subordinated debt facility provided by Royal Gold, and/or seek at least $25 million in equity from project sponsors. The subordinated debt facility has a term of seven years, carries interest at a rate of LIBOR +11%, and requires mandatory repayment upon certain events.

KCM currently anticipates that up to $50 million of this additional funding is required to complete construction and ramp up of Khoemacau to commercial production, largely a result of previously reported schedule impacts caused by COVID-19 considerations. The added funding mechanisms built into the stream agreement allow KCM to seamlessly access the additional capital required. KCM is currently reviewing its funding options in advance of the next funding draw, which may occur as early as April 2021, and does not anticipate requiring any further funding after this draw to reach commercial production.

Continued Progress on Pueblo Viejo Expansion

Barrick Gold Corporation (“Barrick”) reported continued progress at Pueblo Viejo during the quarter to expand the process plant and tailings storage facilities. Barrick estimates that the expansion project could significantly increase throughput and allow the mine to maintain average annual gold production of approximately 800,000 ounces after calendar 2022 (on a 100% basis), and that the increase in tailings storage capacity has the potential to convert approximately 11 million ounces of mineralized material to reserves (on a 100% basis).

As reported by Barrick, the Environmental Impact Assessment for the process plant expansion has been approved and an amended environmental license has been issued, and progress continued with engineering, procurement of long lead equipment packages, earthworks and tendering of contracts for construction activities. Barrick also reported that studies and permitting discussions to support additional tailings capacity continued to progress.

Further Strengthening of Balance Sheet

The Company maintains a disciplined approach to capital allocation and repaid $75 million of the amount outstanding on its revolving credit facility during the second quarter, ending the quarter with an outstanding balance of $200 million and a net cash position of $182 million. The interest rate on borrowings under the revolving credit facility is LIBOR +1.10% for an all-in rate of 1.33% as of December 31, 2020.

On January 4, 2021, the Company repaid a further $50 million of the outstanding borrowings under the credit facility, reducing the amount outstanding to $150 million. After this repayment, the amount available under the revolving credit facility was $850 million.

Dividend Increase to $1.20 per Share

As previously announced on November 17, 2020, the Board of Directors increased the annual calendar year common stock dividend from $1.12 to $1.20 per share, a 7% increase over the prior calendar year, payable on a quarterly basis of $0.30 per share.

The return of capital to shareholders through payment of a growing and sustainable dividend is a core component of Royal Gold’s capital allocation strategy. Royal Gold has paid a dividend since 2000 and this increase represents the 20th consecutive annual increase to the dividend.

Board Renewal

The Royal Gold Board of Directors (“Board”) undertook a process to identify, assess and nominate a new Board member upon receiving notice from Christopher Thompson of his intention to retire from the Board effective November 18, 2020. Mr. Thompson was elected to the Board in 2014 and served as a member of the Audit and Finance Committee (“AFC”).

After a thorough search process, Fabiana Chubbs was nominated and elected as a Class III director at the Annual Meeting of Stockholders on November 18, 2020. Ms. Chubbs has extensive experience in the mining industry and currently serves as a director of Lithium Americas Corporation, and prior to retirement from executive management roles, held the position of Chief Financial Officer of Eldorado Gold Corporation from 2011 to 2018. Prior to 2011, Ms. Chubbs had responsibility for treasury and risk management functions at Eldorado Gold Corporation, and worked in auditing roles with PwC Canada, PwC Argentina and IBM. Ms. Chubbs’ experience with finance, financial reporting and internal controls provides her with excellent credentials to join the AFC and fill the vacancy resulting from the retirement of Mr. Thompson.

Royal Gold follows corporate practices designed to protect and promote long-term value, including robust processes for selection of new directors. The Royal Gold Board has nominated, and shareholders have elected, six new independent directors in the past eight years with wide and diverse backgrounds and experience, leading to meaningful Board renewal.

Second Quarter 2021 Overview

Second quarter revenue was $158.4 million, compared to revenue of $123.6 million for the prior year quarter, comprised of stream revenue of $107.7 million and royalty revenue of $50.7 million. The increase in total revenue for the second quarter compared to the prior year quarter was primarily due to increased gold, silver and copper prices and an increase in production within the royalty segment.

Cost of sales, which excludes depreciation, depletion and amortization, increased to $24.9 million for the second quarter from $21.1 million for the prior year quarter. The increase was primarily due to an increase in gold, silver and copper prices when compared to the prior period. Cost of sales is specific to stream agreements and is the result of the purchase of gold, silver and copper for a cash payment.

Exploration costs, which were specific only to the exploration and advancement of the Peak Gold Project, decreased to zero for the second quarter from $1.5 million for the prior year period. On September 30, 2020, the Company sold its interest in the Peak Gold Joint Venture and no further exploration costs are expected to be incurred.

Depreciation, depletion and amortization increased to $47.9 million for the second quarter from $40.1 million for the prior year quarter. The increase was primarily due to higher gold sales at Mount Milligan and an increase in depletion rates at Mount Milligan, as previously discussed in the Company’s fiscal year 2020 10-K. These increases were partially offset by a decrease in gold sales at Andacollo when compared to the prior period.

Interest and other expense decreased to $1.6 million for the second quarter, from $2.2 million for the prior year quarter. The decrease was primarily attributable to lower interest expense as a result of lower interest rates on outstanding debt when compared to the prior period.

During the second quarter, the Company recorded income tax expense totaling $16.0 million, compared with income tax expense of $11.1 million for the prior year quarter. The income tax expense resulted in an effective tax rate of 21.1% in the current period, compared with 21.6% in the quarter ended December 31, 2019.

As of December 31, 2020, the Company had current assets of $450.5 million compared to current liabilities of $57.2 million, which resulted in working capital of $393.3 million. This compares to current assets of $362.2 million and current liabilities of $43.6 million as of June 30, 2020, resulting in working capital of $318.6 million. The increase in working capital was primarily due to increased revenue and proceeds from the sale of the Peak Gold Joint Venture interest.

As of December 31, 2020, the Company had $800 million available and $200 million outstanding under the revolving credit facility. Working capital, combined with available capacity under the revolving credit facility, resulted in approximately $1.2 billion of total liquidity as of December 31, 2020.

On January 4, 2021, the Company repaid $50 million of the outstanding borrowings under the revolving credit facility, which increased the amount available to $850 million and decreased the amount outstanding to $150 million.

Outlook

For the third quarter of fiscal 2021 Royal Gold expects stream segment sales to range between 48,000 and 53,000 GEOs with quarter-end inventory ranging between 26,000 and 31,000 GEOs.

For the full fiscal year 2021, depreciation, depletion and amortization expense is expected to range between $590 and $640 per GEO, and the effective tax rate is expected to range between 19% and 23%.

Other than potential remaining conditional funding at the Khoemacau Project as discussed above, Royal Gold has no other project capital commitments or financing obligations.

Property Highlights

A summary of second quarter and historical production reported by operators of the Company’s principal stream and royalty properties can be found on Tables 1 and 2. Calendar year 2020 operator production estimates for these properties compared to actual production at these properties through December 31, 2020 can be found on Table 3. Results of the streaming business for the second quarter, compared to the prior year quarter, can be found on Table 4. Highlights at certain of the Company’s principal producing and development properties during the second quarter, compared to the prior year quarter, 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, 2020, the Company owned interests on 189 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 Company’s website is located at www.royalgold.com.

Second Quarter Call Information:

Dial-In

855-209-8260 (U.S.); toll free

Numbers:

855-669-9657 (Canada); toll free

412-542-4106 (International)

Conference Title:

Royal Gold

Webcast URL:

www.royalgold.com under Investors, Events & Presentations

Note: Management’s conference call reviewing the second quarter results will be held on Thursday, February 4, 2021, 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.

Additional Investor Information: Royal Gold routinely posts important information, including information about upcoming investor presentations and press releases, on its website under the Investors tab. Investors and other interested parties are encouraged to enroll at www.royalgold.com to receive automatic email alerts for new postings.

Forward-Looking Statements: This press release includes “forward-looking statements” within the meaning of U.S. federal securities laws. Forward-looking statements are any statements other than statements of historical fact. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from these statements. Forward-looking statements are often identified by words like “will,” “may,” “could,” “should,” “would,” “believe,” “estimate,” “expect,” “anticipate,” “plan,” “forecast,” “potential,” “intend,” “continue,” “project,” or negatives of these words or similar expressions. Forward-looking statements include, among others, the following: statements about our expected financial performance, including revenue, expenses, earnings or cash flow; operators’ expected operating and financial performance, including production, deliveries, mine plans and reserves, development, cash flows and capital expenditures; planned and potential acquisitions or dispositions, including funding schedules and conditions; liquidity, financing and dividends; our overall investment portfolio; macroeconomic and market conditions including the impacts of COVID-19; prices for gold, silver, copper, nickel and other metals; potential impairments; or tax changes.

Factors that could cause actual results to differ materially from these forward-looking statements include, among others, the following: a low-price environment for gold, silver, copper, nickel or other metals; operating activities or financial performance of properties on which we hold stream or royalty interests, including variations between actual and forecasted performance, operators’ ability to complete projects on schedule and as planned, changes to mine plans and reserves, liquidity needs, mining and environmental hazards, labor disputes, distribution and supply chain disruptions, permitting and licensing issues, contractual issues involving our stream or royalty agreements, or operational disruptions due to COVID-19; risks associated with doing business in foreign countries; our ability to identify, finance, value and complete acquisitions; adverse economic and market conditions; changes in laws or regulations governing us, operators or operating properties; changes in management and key employees; and other factors described in our reports filed with the Securities and Exchange Commission, including our Form 10-K for the fiscal year ended June 30, 2020. Most of these factors are beyond our ability to predict or control.

Forward-looking statements speak only as of the date on which they are made. We disclaim any obligation to update any forward-looking statements, except as required by law. 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 2020, has been provided to us by the operators of the relevant properties or is publicly available information filed by these operators with applicable securities regulatory bodies, including the Securities and Exchange Commission. Royal Gold has not verified, and is not in a position to verify, and expressly disclaims any responsibility for the accuracy, completeness or fairness of any such third-party information and refers the reader to the public reports filed by the operators for information regarding those properties.

Information in this press release concerning the Khoemacau Copper Project was provided to the Company by Cupric Canyon Capital L.P., the privately-held owner and developer of Khoemacau. Such information may not have been prepared in accordance with applicable laws, stock exchange rules or international standards governing preparation and public disclosure of technical data and information relating to mineral properties. Royal Gold has not verified, and is not in a position to verify, and expressly disclaims any responsibility for the accuracy, completeness or fairness of this third-party information, and investors are cautioned not to rely upon this information.

TABLE 1

Second Quarter Fiscal 2021

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

(In thousands, except reported production in oz and lb)

Three Months Ended

Three Months Ended

December 31, 2020

December 31, 2019

Stream/Royalty

Metal(s)

Revenue

Reported Production(1)

Revenue

Reported Production(1)

Stream:

Mount Milligan

$

44,713

$

30,629

Gold

16,900

oz

12,900

oz

Copper

4.1

Mlb

4.3

Mlb

Pueblo Viejo

$

27,554

$

23,614

Gold

9,400

oz

10,500

oz

Silver

408,600

oz

462,400

oz

Andacollo

Gold

$

17,766

9,500

oz

$

20,665

13,900

oz

Wassa

Gold

$

6,761

3,600

oz

$

4,794

3,300

oz

Other(2)

$

10,925

$

9,923

Gold

5,100

oz

6,100

oz

Silver

52,000

oz

20,500

oz

Total stream revenue

$

107,719

$

89,625

Royalty:

Peñasquito

$

12,952

$

7,577

Gold

210,600

oz

95,800

oz

Silver

8.7

Moz

9.3

Moz

Lead

52.1

Mlb

61.5

Mlb

Zinc

93.8

Mlb

72.1

Mlb

Cortez

Gold

$

8,128

57,600

oz

$

3,292

28,000

oz

Other(2)

Various

$

29,561

N/A

$

23,149

N/A

Total royalty revenue

$

50,641

$

34,018

Total revenue

$

158,360

$

123,643

Six Months Ended

Six Months Ended

December 31, 2020

December 31, 2019

Stream/Royalty

Metal(s)

Revenue

Reported Production(1)

Revenue

Reported Production(1)

Stream:

Mount Milligan

$

79,332

$

61,126

Gold

28,800

oz

29,500

oz

Copper

8.2

Mlb

6.7

Mlb

Pueblo Viejo

$

58,824

$

45,232

Gold

20,500

oz

20,000

oz

Silver

859,800

Moz

938,000

Moz

Andacollo

Gold

$

41,275

21,600

oz

$

41,269

27,900

oz

Wassa

Gold

$

15,870

8,500

oz

$

10,113

6,900

oz

Other(2)

$

18,921

$

18,866

Gold

9,200

oz

11,900

oz

Silver

75,100

oz

85,600

oz

Total stream revenue

$

214,222

$

176,606

Royalty:

Peñasquito

$

23,161

$

11,997

Gold

341,300

oz

131,300

oz

Silver

15.1

Moz

13.9

Moz

Lead

93.7

Mlb

91.2

Mlb

Zinc

191.8

Mlb

179.2

Mlb

Cortez

Gold

$

13,812

95,300

oz

$

7,709

63,100

oz

Other(2)

Various

$

54,045

N/A

$

46,105

N/A

Total royalty revenue

$

91,018

$

65,811

Total revenue

$

305,240

$

242,417

  1. Reported production relates to the amount of metal sales subject to our stream and royalty interests for the stated periods and may differ from the operators’ public reporting.
  2. Individually, except for Rainy River which contributed 6% of revenue for the three and six months ended December 31, 2020 and 2019, no stream or royalty included within the “Other” category contributed greater than 5% of the Company’s total revenue for either period.

TABLE 2

Operators’ Historical Production

Reported Production For The Quarter Ended1

Property

Operator

Stream/Royalty

Metal(s)

Dec. 31, 2020

Sep. 30, 2020

Jun. 30, 2020

Mar. 31, 2020

Dec. 31, 2019

Stream:

Mount Milligan

Centerra

35% of payable gold

Gold

16,900

oz

11,800

oz

20,200

oz

14,000

oz

12,900

oz

18.75% of payable copper

Copper

4.1

Mlb

4.1

Mlb

1.7

Mlb

4.3

Mlb

4.3

Mlb

Pueblo Viejo

Barrick (60%)

7.5% of Barrick's interest in gold produced up to 990,000 ounces; 3.75% thereafter

Gold

9,400

oz

11,100

oz

10,200

oz

13,200

oz

10,500

oz

75% of Barrick's interest in payable silver up to 50 million ounces; 37.5% thereafter(2)

Silver

408,600

oz

451,200

oz

394,700

oz

417,800

oz

462,400

oz

Andacollo

Teck

100% of gold produced up to 900,000 ounces; 50% thereafter

Gold

9,500

oz

12,200

oz

6,300

oz

13,900

oz

13,900

oz

Wassa

Golden Star

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

Gold

3,600

oz

4,900

oz

2,600

oz

5,600

oz

3,300

oz

Royalty:

Peñasquito

Newmont Corporation

2.0% NSR

Gold

210,600

oz

130,700

oz

83,700

oz

97,200

oz

95,800

oz

Silver

8.7

Moz

6.4

Moz

5.2

Moz

8.7

Moz

9.3

Moz

Lead

52.1

Mlb

41.7

Mlb

30.6

Mlb

60.5

Mlb

61.5

Mlb

Zinc

93.8

Mlb

98.0

Mlb

90.2

Mlb

124.5

Mlb

72.1

Mlb

Cortez

Nevada Gold Mines LLC

GSR1, GSR2, GSR3, NVR1, NVR1C(3)

Gold

57,600

oz

37,600

oz

52,500

oz

57,700

oz

28,000

oz

  1. Reported production relates to the amount of metal sales subject to our stream and royalty interests for the stated periods and may differ from the operators’ public reporting.
  2. The Pueblo Viejo silver stream is determined based on a fixed metallurgical recovery of 70% of silver in mill feed.
  3. Please refer to Part I, Item 2, of the Company’s Fiscal 2020 Form 10-K for a full description of the Company’s royalty interests at Cortez.

TABLE 3

Operator’s Estimated and Actual Production

Operator's Estimated Production for

Operator's Actual Calendar 2020

Full Year Calendar 2020(1)

Production(2)

Stream/Royalty

Gold (oz)

Silver (oz)

Base Metals (lb)

Gold (oz)

Silver (oz)

Base Metals (lb)

Stream:

Andacollo(3)

53,000

49,200

Mount Milligan(4)

140,000 - 160,000

161,900

Copper

80 - 90 M

82.8 M

Pueblo Viejo(5)

530,000 - 580,000

N/A

542,000

N/A

Wassa(6)

165,000 - 170,000

168,000

Royalty:

Cortez GSR1

66,900

101,700

Cortez GSR2

109,600

103,900

Cortez GSR3

146,300

161,100

Cortez NVR1

113,500

121,600

Cortez NVR1C

30,100

44,500

Peñasquito(7)

510,000

28 M

343,000

20.4 M

Lead

190 M

130 M

Zinc

360 M

281 M

  1. Production estimates received from the operators are for calendar 2020. There can be no assurance that production estimates received from the operators will be achieved. Please also refer to our cautionary language regarding forward-looking statements above, as well as the Risk Factors identified in Part I, Item 1A, of the Company’s Fiscal 2020 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, 2020 through December 31, 2020, unless otherwise noted in footnotes to this table.
  3. The estimated and actual production figures shown for Andacollo are contained gold in concentrate.
  4. The estimated and actual production figures shown for Mount Milligan are payable gold and copper in concentrate.
  5. The estimated and actual production figures shown for Pueblo Viejo are payable gold in doré and represent Barrick’s 60% interest in Pueblo Viejo. Barrick did not provide estimated or actual silver production.
  6. The estimated and actual production figures shown for Wassa are payable gold in doré.
  7. The estimated and actual gold production figures shown for Peñasquito are payable gold and silver in concentrate and doré. The estimated and actual lead and zinc production figures shown are payable lead and zinc in concentrate. The estimated production figures shown are for the period January 1, 2020, through December 31, 2020, while actual production figures shown are for the period January 1, 2020, through September 30, 2020, per the operator. Full calendar year 2020 information was not available from the operator as of the date of this release.

TABLE 4

Stream Summary

Three Months Ended

Three Months Ended

As of

As of

December 31, 2020

December 31, 2019

December 31, 2020

June 30, 2020

Gold Stream

Purchases (oz)

Sales (oz)

Purchases (oz)

Sales (oz)

Inventory (oz)

Inventory (oz)

Mount Milligan

9,700

16,900

18,800

12,900

3,800

3,300

Pueblo Viejo

10,500

9,400

13,200

10,500

10,500

100

Andacollo

10,700

9,500

18,600

13,900

2,900

11,100

Wassa

4,700

3,600

4,900

3,300

3,100

2,900

Other

4,500

5,100

5,600

6,100

1,200

1,500

Total

40,100

44,500

61,100

46,700

21,500

18,900

Three Months Ended

Three Months Ended

As of

As of

December 31, 2020

December 31, 2019

December 31, 2020

June 30, 2020

Silver Stream

Purchases (oz)

Sales (oz)

Purchases (oz)

Sales (oz)

Inventory (oz)

Inventory (oz)

Pueblo Viejo

418,200

408,600

417,700

462,400

418,200

451,200

Other

65,400

52,000

48,100

51,100

66,300

23,400

Total

483,600

460,600

465,800

513,500

484,500

474,600

Three Months Ended

Three Months Ended

As of

As of

December 31, 2020

December 31, 2019

December 31, 2020

June 30, 2020

Copper Stream

Purchases (Mlb)

Sales (Mlb)

Purchases (Mlb)

Sales (Mlb)

Inventory (Mlb)

Inventory (Mlb)

Mount Milligan

2.5

4.1

4.4

4.3

1.0

0.8

Six Months Ended

Six Months Ended

As of

As of

December 31, 2020

December 31, 2019

December 31, 2020

June 30, 2019

Gold Stream

Purchases (oz)

Sales (oz)

Purchases (oz)

Sales (oz)

Inventory (oz)

Inventory (oz)

Mount Milligan

29,300

28,800

32,800

29,500

3,800

3,300

Andacollo

24,400

21,600

28,300

27,900

2,900

100

Pueblo Viejo

19,900

20,500

23,700

20,000

10,500

11,100

Wassa

8,700

8,500

7,800

6,900

3,100

2,900

Other

8,900

9,200

11,400

11,900

1,200

1,500

Total

91,200

88,600

104,000

96,200

21,500

18,900

Six Months Ended

Six Months Ended

As of

As of

December 31, 2020

December 31, 2019

December 31, 2020

June 30, 2019

Silver Stream

Purchases (oz)

Sales (oz)

Purchases (oz)

Sales (oz)

Inventory (oz)

Inventory (oz)

Pueblo Viejo

826,800

859,800

880,200

938,000

418,200

451,200

Other

118,000

75,100

97,500

85,600

66,300

23,400

Total

944,800

934,900

977,700

1,023,600

484,500

474,600

Six Months Ended

Six Months Ended

As of

As of

December 31, 2020

December 31, 2019

December 31, 2020

June 30, 2019

Copper Stream

Purchases (Mlb)

Sales (Mlb)

Purchases (Mlb)

Sales (Mlb)

Inventory (Mlb)

Inventory (Mlb)

Mount Milligan

8.3

8.2

6.8

6.7

1.0

0.8

ROYAL GOLD, INC.

Consolidated Balance Sheets

(Unaudited, in thousands except share data)

December 31, 2020

June 30, 2020

ASSETS

Cash and equivalents

$

381,859

$

319,128

Royalty receivables

44,316

27,689

Income tax receivable

8,939

2,435

Stream inventory

13,900

11,671

Prepaid expenses and other

1,477

1,227

Total current assets

450,491

362,150

Stream and royalty interests, net

2,231,980

2,318,913

Other assets

81,263

85,224

Total assets

$

2,763,734

$

2,766,287

LIABILITIES

Accounts payable

$

2,587

$

2,484

Dividends payable

19,680

18,364

Income tax payable

23,318

13,323

Other current liabilities

11,569

9,384

Total current liabilities

57,154

43,555

Debt

195,983

300,439

Deferred tax liabilities

85,017

86,439

Uncertain tax positions

13,267

25,427

Other liabilities

7,634

8,308

Total liabilities

359,055

464,168

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 65,548,415 and 65,531,288 shares outstanding, respectively

656

655

Additional paid-in capital

2,201,076

2,210,429

Accumulated earnings

189,910

61,133

Total Royal Gold stockholders’ equity

2,391,642

2,272,217

Non-controlling interests

13,037

29,902

Total equity

2,404,679

2,302,119

Total liabilities and equity

$

2,763,734

$

2,766,287

ROYAL GOLD, INC.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited, in thousands except for per share data)

For The Three Months Ended

For The Six Months Ended

December 31, 2020

December 31, 2019

December 31, 2020

December 31, 2019

Revenue

$

158,360

$

123,643

$

305,240

$

242,417

Costs and expenses

Cost of sales (excludes depletion, depreciation and amortization)

24,859

21,077

46,760

41,188

General and administrative

6,789

6,665

14,244

14,108

Production taxes

1,401

984

2,756

2,083

Exploration costs

1,514

563

4,140

Depreciation, depletion and amortization

47,945

40,096

94,245

78,810

Total costs and expenses

80,994

70,336

158,568

140,329

Gain on sale of Peak Gold JV interest

33,906

Operating income

77,366

53,307

180,578

102,088

Fair value changes in equity securities

(382)

222

2,158

(1,153)

Interest and other income

613

226

1,034

1,001

Interest and other expense

(1,578)

(2,217)

(3,454)

(5,051)

Income before income taxes

76,019

51,538

180,316

96,885

Income tax (expense) benefit

(16,031)

(11,124)

(13,654)

12,401

Net income and comprehensive income

59,988

40,414

166,662

109,286

Net (income) loss and comprehensive (income) loss attributable to non-controlling interests

(99)

907

166

2,488

Net income and comprehensive income attributable to Royal Gold common stockholders

$

59,889

$

41,321

$

166,828

$

111,774

Net income per share attributable to Royal Gold common stockholders:

Basic earnings per share

$

0.91

$

0.63

$

2.55

$

1.70

Basic weighted average shares outstanding

65,546,938

65,495,907

65,542,326

65,480,759

Diluted earnings per share

$

0.91

$

0.63

$

2.54

$

1.70

Diluted weighted average shares outstanding

65,619,241

65,611,567

65,625,965

65,613,406

Cash dividends declared per common share

$

0.300

$

0.280

$

0.580

$

0.545

ROYAL GOLD, INC.

Consolidated Statements of Cash Flows

(Unaudited, in thousands)

Three Months Ended

Six Months Ended

December 31, 2020

December 31, 2019

December 31, 2020

December 31, 2019

Cash flows from operating activities:

Net income and comprehensive income

$

59,988

$

40,414

$

166,662

$

109,286

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

Depreciation, depletion and amortization

47,945

40,096

94,245

78,810

Gain on sale of Peak Gold JV interest

(33,906)

Non-cash employee stock compensation expense

1,398

1,538

2,892

3,639

Fair value changes in equity securities

381

(222)

(2,158)

1,153

Deferred tax (benefit) expense

2,140

(2,987)

(8,405)

(36,126)

Other

287

286

398

566

Changes in assets and liabilities:

Royalty receivables

(10,743)

(1,812)

(16,627)

(7,714)

Stream inventory

3,259

(4,564)

(2,229)

(3,956)

Income tax receivable

(4,640)

(5,973)

(6,504)

(6,968)

Prepaid expenses and other assets

640

(3,823)

900

(7,020)

Accounts payable

(314)

(1,446)

(549)

(929)

Income tax payable

(2,413)

8,818

9,995

7,392

Uncertain tax positions

36

1,482

(12,160)

3,230

Other liabilities

1,948

6,450

1,510

8,133

Net cash provided by operating activities

$

99,912

$

78,257

$

194,064

$

149,496

Cash flows from investing activities:

Acquisition of stream and royalty interests

(37,528)

(68,055)

(48,832)

(72,417)

Proceeds from sale of Peak Gold JV interest

(411)

49,154

Proceeds from sale of Contango shares

12,146

Other

(25)

(84)

(364)

4,363

Net cash (used in) provided by investing activities

$

(37,553)

$

(68,550)

$

12,104

$

(68,054)

Cash flows from financing activities:

Repayment of debt

(75,000)

(35,000)

(105,000)

(85,000)

Net payments from issuance of common stock

(26)

(324)

(1,415)

(2,747)

Common stock dividends

(18,370)

(17,382)

(36,735)

(34,755)

Other

(220)

1,533

(287)

2,089

Net cash used in financing activities

$

(93,616)

$

(51,173)

$

(143,437)

$

(120,413)

Net (decrease) increase in cash and equivalents

(31,257)

(41,466)

62,731

(38,971)

Cash and equivalents at beginning of period

413,116

121,970

319,128

119,475

Cash and equivalents at end of period

$

381,859

$

80,504

$

381,859

$

80,504

Schedule A – Non-GAAP Financial Measures and Certain Other Measures

Overview of non-GAAP financial measures:

Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by U.S. generally accepted accounting principles (“GAAP”). These measures should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP. In addition, because the presentation of these non-GAAP financial measures varies among companies, these non-GAAP financial measures may not be comparable to similarly titled measures used by other companies.

We have provided below reconciliations of our non-GAAP financial measures to the comparable GAAP measures. We believe these non-GAAP financial measures provide useful information to investors for analysis of our business. We use these non-GAAP financial measures to compare period-over-period performance on a consistent basis and when planning and forecasting for future periods. We believe these non-GAAP financial measures are used by professional research analysts and others in the valuation, comparison and investment recommendations of companies in our industry. Many investors use the published research reports of these professional research analysts and others in making investment decisions. The adjustments made to calculate our non-GAAP financial measures are subjective and involve significant management judgement. Non-GAAP financial measures used by management in this report or elsewhere include the following:

  1. Adjusted earnings before interest, taxes, depreciation, depletion and amortization, or adjusted EBITDA, is a non-GAAP financial measure that is calculated by the Company as net income adjusted for certain items that impact the comparability of results from period to period, as set forth in the reconciliation below. We consider adjusted EBITDA to be useful because the measure reflects our operating performance before the effects of certain non-cash items and other items that we believe are not indicative of our core operations.
  2. Net debt (or net cash) is a non-GAAP financial measure that is calculated by the Company as debt (excluding debt issuance costs) as of a date minus cash and equivalents for that same date. Net debt (or net cash) to trailing twelve months (TTM) adjusted EBITDA is a non-GAAP financial measure that is calculated by the Company as net debt (or net cash) as of a date divided by the TTM adjusted EBITDA (as defined above) ending on that date. We believe that these measures are important to monitor leverage and evaluate the balance sheet. Cash and equivalents are subtracted from the GAAP measure because they could be used to reduce our debt obligations. A limitation associated with using net debt (or net cash) is that it subtracts cash and equivalents and therefore may imply that there is less Company debt than the most comparable GAAP measure indicates. We believe that investors may find these measures useful to monitor leverage and evaluate the balance sheet.
  3. Adjusted net income and adjusted net income per share are non-GAAP financial measures that are calculated by the Company as net income and net income per share adjusted for certain items that impact the comparability of results from period to period, as set forth in the reconciliations below. We consider these non-GAAP financial measures to be useful because they allow for period-to-period comparisons of our operating results excluding items that we believe are not indicative of our fundamental ongoing operations. The tax effect of adjustments is computed by applying the statutory tax rate in the applicable jurisdictions to the income or expense items that are adjusted in the period presented. If a valuation allowance exists, the rate applied is zero.
  4. Free cash flow is a non-GAAP financial measure that is calculated by the Company as net cash provided by operating activities for a period minus acquisition of stream and royalty interests for that same period. We believe that free cash flow represents an additional way of viewing liquidity as it is adjusted for contractual investments made during such period. Free cash flow does not represent the residual cash flow available for discretionary expenditures. We believe it is important to view free cash flow as a complement to our consolidated statements of cash flows.
  5. Cash general and administrative expense, or cash G&A, is a non-GAAP financial measure that is calculated by the Company as general and administrative expenses for a period minus non-cash employee stock compensation expense for the same period. We believe that cash G&A is useful as an indicator of overhead efficiency without regard to non-cash expenses associated with employee stock compensation.

Reconciliation of non-GAAP financial measures to U.S. GAAP measures

Adjusted EBITDA, net cash, and net cash to TTM adjusted EBITDA:

Three Months Ended

December 31,

September 30,

June 30,

March 31,

(amounts in thousands)

2020

2020

2020

2020

Net income and comprehensive income

$

59,988

$

106,674

$

48,672

$

38,292

Depreciation, depletion and amortization

47,945

46,300

45,396

51,228

Non-cash employee stock compensation

1,398

1,493

833

4,644

Impairment of royalty interests

1,341

Gain on sale of Peak Gold JV interest

(33,906)

Fair value changes in equity securities

382

(2,539)

(6,390)

3,819

Interest and other, net

965

1,454

2,249

1,468

Income tax expense (benefit)

16,031

(2,377)

45

8,702

Non-controlling interests in operating (income) loss of consolidated subsidiaries

(99)

265

343

410

Adjusted EBITDA

$

126,610

$

117,364

$

92,489

$

108,563

TTM adjusted EBITDA

$

445,026

Debt

$

195,983

Debt issuance costs

4,017

Cash and equivalents

(381,859)

Net cash

$

(181,859)

Net cash to TTM adjusted EBITDA

(0.41)x

Cash G&A:

Three Months Ended

December 31,

September 30,

June 30,

March 31,

(amounts in thousands)

2020

2020

2020

2020

General and administrative expense

$

6,789

$

7,454

$

6,537

$

9,551

Non-cash employee stock compensation

(1,398)

(1,493)

(833)

(4,644)

Cash G&A

$

5,391

$

5,961

$

5,704

$

4,907

TTM cash G&A

$

21,963

Adjusted net income and adjusted net income per share:

Three Months Ended

Six Months Ended

December 31,

December 31,

(amounts in thousands, except per share data)

2020

2019

2020

2019

Net income and comprehensive income attributable to Royal Gold common stockholders

$

59,889

$

41,321

$

166,828

$

111,774

Fair value changes in equity securities

382

(222)

(2,158)

1,153

Gain on sale of Peak Gold JV interest

(33,906)

Discrete tax benefits

(25,799)

(29,407)

Tax effect of adjustments

(147)

23

7,595

(231)

Adjusted net income attributable to Royal Gold common stockholders

60,124

41,122

$

112,560

$

83,289

Net income attributable to Royal Gold common stockholders per diluted share

$

0.91

$

0.63

2.54

1.70

Fair value changes in equity securities

0.01

(0.03)

0.02

Gain on sale of Peak Gold JV interest

(0.52)

Discrete tax benefits

(0.39)

(0.45)

Tax effect of adjustments

0.12

Adjusted net income attributable to Royal Gold common stockholders per diluted share

$

0.92

$

0.63

$

1.72

$

1.27

Free cash flow:

Three Months Ended

Six Months Ended

December 31,

December 31,

(amounts in thousands)

2020

2019

2020

2019

Net cash provided by operating activities

$

99,912

$

78,257

$

194,064

$

149,496

Acquisition of stream and royalty interests

(37,528)

(68,055)

(48,832)

(72,417)

Free cash flow

$

62,384

$

10,202

$

145,232

$

77,079

Net cash (used in) provided by investing activities

$

(37,553)

$

(68,550)

$

12,104

$

(68,054)

Net cash used in financing activities

$

(93,616)

$

(51,173)

$

(143,437)

$

(120,413)

Other measures

We use certain other measures in managing and evaluating our business. We believe these measures may provide useful information to investors for analysis of our business. We use these measures to compare period-over-period performance and liquidity on a consistent basis and when planning and forecasting for future periods. We believe these measures are used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in our industry. Many investors use the published research reports of these professional research analysts and others in making investment decisions. Other measures used by management in this report and elsewhere include the following:

  1. Gold equivalent ounces, or GEOs, is calculated by the Company as revenue (in total or by reportable segment) for a period divided by the average gold price for that same period.
  2. Depreciation, depletion, and amortization, or DD&A, per GEO is calculated by the Company as depreciation, depletion, and amortization for a period divided by GEOs (as defined above) for that same period.
  3. Working capital is calculated by the Company as current assets as of a date minus current liabilities as of that same date. Liquidity is calculated by the Company as working capital plus available capacity under the Company’s revolving credit facility.
  4. Dividend payout ratio is calculated by the Company as dividends paid during a period divided by net cash provided by operating activities for that same period.
  5. Operating margin is calculated by the Company as operating income for a period divided by revenue for that same period.

Contacts:

For further information, please contact:
Alistair Baker
Vice President Investor Relations and Business Development
(720) 554-6995

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