Royal Gold, Inc. (NASDAQ:RGLD; TSX:RGL) (together with
its subsidiaries, “Royal Gold” or the “Company”) reports results
for its second quarter of fiscal 2015, ended December 31, 2014
(“second quarter”), including revenue of $61.3 million, up 16% from
the same period a year ago, and Adjusted EBITDA1 of $48.0 million,
up 5% from the prior year quarter. Streaming revenue was $17.3
million, while royalty revenue was $44.0 million.
The Company reports a net loss attributable to Royal Gold
stockholders (“net loss”) of $6.5 million, or ($0.10) per basic
share for the second quarter, compared with net income attributable
to Royal Gold stockholders of $10.7 million, or $0.16 per share
from the same period a year ago. The decrease in our earnings per
share was primarily attributable to a non-cash impairment charge of
approximately $26.0 million related to our Wolverine royalty
interest and a non-cash $3.0 million write down of a royalty
receivable at Wolverine. Absent the ($0.33) non-cash items related
to Wolverine, net income would have been approximately $0.23 per
basic share, after taxes.
The average gold price was $1,201 per ounce for the second
quarter, down 6% from $1,276 per ounce in the year ago quarter.
Tony Jensen, President and CEO, commented, “Mount Milligan and
Cortez posted significantly higher production than in the year ago
period, which more than offset lower metal prices. In calendar
2015, we look forward to continued growth at Mount Milligan where
Thompson Creek expects gold production to increase by 25% to 35%,
while 20% to 30% higher gold production is expected at Peñasquito,
according to Goldcorp. In addition, we look forward to the startup
of operations at the Phoenix Gold Project, which is projected for
mid-year. We are pleased to have layered in two new pieces of
business during the quarter and remain active in evaluating
additional business opportunities.”
Adjusted EBITDA for the second quarter was $48.0 million ($0.74
per basic share), representing 78% of revenue, compared with
Adjusted EBITDA of $45.6 million ($0.70 per basic share), or 86% of
revenue, for the year ago quarter. Adjusted EBITDA, as a percentage
of revenue, was lower in the second quarter due to the inclusion of
ongoing stream payments to Mount Milligan of $435 per ounce of
gold, which are recorded as a cost of sales and totaled $6.2
million during the second quarter.
As of December 31, 2014, the Company had a working capital
surplus of $732.4 million. Current assets were $751.9 million
compared to current liabilities of $19.5 million, for a current
ratio of 39 to 1.
During the second quarter, the Company had an effective tax rate
of 22.4%, compared with 36.9% in the prior year quarter. The
decrease in the effective tax rate is primarily attributable to an
increase in revenue from lower tax jurisdictions and the impairment
charge on the Wolverine royalty interest. Absent the Wolverine
impairment charge, Royal Gold’s effective tax rate would have been
approximately 26% for the quarter.
The Company owns a 0.00% to 9.445% sliding-scale NSR royalty on
all gold and silver produced from the Wolverine underground mine
and milling operation located in Yukon Territory, Canada, and
operated by the privately held Yukon Zinc Corporation. Yukon Zinc
recently announced a decision to put the mine on care and
maintenance, and the Company has been notified of an updated mine
plan at Wolverine that includes a significant reduction in reserves
and resources. For the twelve months ended September 30, 2014,
Wolverine contributed approximately 1.4% of Royal Gold’s total
revenues. Following the impairment charge, the Wolverine royalty
interest has a carrying value of $5.3 million.
RECENT DEVELOPMENTS
Mount Milligan Gold Stream
Thompson Creek reported that the ramp-up at Mount Milligan
continues to progress as expected, with production of approximately
41,000 ounces of payable gold in the quarter ended December 31,
2014.
During the second quarter, Royal Gold, through a wholly owned
subsidiary, purchased approximately 13,000 ounces of physical gold,
which came from a combination of provisional and final settlements
associated with five shipments of concentrate from Mount Milligan.
The Company sold approximately 14,300 ounces of gold during the
second quarter at an average price of $1,208 per ounce, and had
approximately 4,800 ounces of gold in inventory as of December 31,
2014.
For the month of December 2014, average daily mill throughput
was 44,734 tonnes per day, which represents approximately 75% of
design capacity. Thompson Creek reports that it plans to utilize
contractor services to add secondary crushing capacity during 2015,
with plans for a permanent addition to crushing capacity when
market conditions improve. For calendar year 2015, Thompson
Creek is forecasting annual payable gold production of 220,000 to
240,000 ounces, an increase of approximately 25% to 35% over
calendar year 2014 production of approximately 178,000 ounces.
Thompson Creek also filed an updated technical report for the
Mount Milligan mine that reflects 6.2 million ounces of estimated
proven and probable gold reserves at $1,250/ounce gold, up from 6.0
million ounces in the previous technical report. The updated
mineral reserve estimates include forecasted average annual gold
production of approximately 285,800 ounces in years 2015 through
2019, which is a 9% increase over the previous technical report
annual estimates for the first six years of gold production. Life
of mine average annual gold production is estimated to be 186,700
ounces.
Peñasquito
The Company notes that Goldcorp reported approximately 567,800
ounces of gold production at Peñasquito for the year ended December
31, 2014. Goldcorp is forecasting gold production of 700,000 to
750,000 ounces at Peñasquito for the calendar year 2015, which is
an increase of approximately 20% to 30% over calendar 2014 gold
production. On a gold equivalent basis, Goldcorp forecasts
production to total 1.5 million to 1.6 million ounces. Royal Gold
has a 2% royalty on all metals at Peñasquito.
Goldcorp reports that Pre-Feasibility Studies for the
Concentrate Enrichment Process (CEP) and Pyrite Leach Process at
Peñasquito were essentially complete at the end of 2014 and are
undergoing internal review. Goldcorp highlighted that preliminary
economic results continue to demonstrate the robust economics of
these projects and their potential to significantly increase the
mine life at Peñasquito. The two projects are being integrated
as they enter the feasibility study phase, which Goldcorp expects
to commence by the end of the first calendar quarter 2015 and be
completed in early 2016.
Phoenix Gold Project Stream
On December 18, 2014, Rubicon Minerals reiterated that the
Phoenix Gold Project remains on track for production in mid-2015,
with mill construction on schedule and on budget. Lateral and
vertical development was 45% complete at the 685 meter level and
above. Results from its 38,000 meter infill drilling program were
released in early January, and confirmed Rubicon Minerals’
expectations of the upper portion of the F2 Deposit with respect to
continuity of mineralization and grade. As of December 31, 2014,
Royal Gold had a remaining funding commitment of $12.8 million as
part of its Phoenix Gold Project stream acquisition.
Peak Gold Joint Venture
On January 8, 2015, Royal Gold, through its wholly owned
subsidiary, Royal Alaska, LLC, formed the Peak Gold, LLC joint
venture (“JV”) with Contango ORE, Inc. (“CORE”) to advance
exploration and development of the Tetlin project. CORE contributed
its Tetlin lease and state mining claims, and Royal Gold Alaska,
LLC made its initial $5 million investment to fund exploration
activity, with the option to earn up to a 40% economic interest in
the JV by investing up to $30 million (including the initial $5
million investment) prior to October 2018, for further exploration
and development of the project.
Tulsequah Chief Gold Stream
On December 22, 2014, RGLD Gold AG (“RGLD Gold”) terminated the
Amended and Restated Gold and Silver Purchase and Sale Agreement
(the “Agreement”), between RGLD Gold, the Company, Chieftain Metals
Inc. and Chieftain Metals Corp. (together, “Chieftain”), relating
to Chieftain’s Tulsequah Chief polymetallic mining project located
in British Columbia, Canada. Pursuant to the terms of the
Agreement, Chieftain repaid RGLD Gold’s original $10.0 million
advance payment. The payment was received in January 2015.
RGLD Gold holds a right of first refusal over the creation by
Chieftain of any royalty, production payment, stream or similar
interest on gold or silver production from the project for a period
of two years from December 22, 2014.
Ilovitza Project Gold Stream
On October 20, 2014, RGLD Gold entered into a $175.0 million
gold stream transaction with Euromax Resources Ltd (“Euromax”) that
will finance a definitive feasibility study, permitting work, early
stage engineering and a significant portion of the construction at
Euromax’s Ilovitza gold-copper project. RGLD Gold will make two
advance deposit payments to Euromax totaling $15.0 million, which
will be used for completion of the definitive feasibility study and
permitting of the project, followed by payments aggregating $160
million towards project construction, in each case subject to
certain conditions. Payment of the first $7.5 million deposit is
conditioned upon Euromax raising an additional $5 million in
equity, which was completed in January, 2015, and the satisfaction
of certain other conditions. RGLD Gold’s decision to proceed with
the second $7.5 million deposit and the construction payments is
conditioned upon, among other things, progress of the definitive
feasibility study and environmental evaluations, demonstrated
project viability and, in the case of the construction payments,
sufficient project financing and permits to construct and operate
the mine. The construction payments would be paid pro-rata
with the balance of the project funding. In exchange, Euromax will
deliver physical gold equal to 25% of gold produced from the
Ilovitza project until 525,000 ounces have been delivered, and
12.5% thereafter (in each case subject to adjustment). RGLD Gold’s
purchase price per ounce will be 25% of the spot price at time of
delivery.
PROPERTY HIGHLIGHTS
Highlights at certain of the Company’s principal producing and
development properties during the second quarter, compared with the
prior fiscal quarter ended December 31, 2013, are listed below.
Production for our producing properties reflects the actual
production subject to our interests reported to us by the various
operators through December 31, 2014.
Principal Producing
Properties
Andacollo – Gold production decreased 16% over the prior
year quarter primarily due to lower grades mined, consistent with
the mine plan. Teck expects that Andacollo’s grades will return to
near-reserve levels over the next few quarters and that current
reserves will sustain operations until 2037; however, processing of
the reserves beyond 2033 will require permitting and construction
of an expansion to the existing tailings facility.
Cortez – Gold production at Cortez increased
significantly over the prior year quarter as surface mining
activity continued at the Pipeline and Gap pits, where our royalty
applies, while no significant mining activity occurred in these
areas during the prior year quarter.
Holt – Gold production at Holt increased 11% over the
prior year quarter. Mill throughput from the Holt ores increased
and grades processed decreased during the current quarter. St
Andrew Goldfields reported throughput increased 20% in calendar
2014 compared to calendar 2013 as the operation has now established
Zone 6 at the 77m Level.
Mount Milligan – Gold production was 41,000 ounces
compared to 20,400 ounces for the 2013 period. The increase
reflected the continuing ramp-up of the Mount Milligan mine, which
commenced production in late 2013. Average mill throughput during
the most recent quarter was 43,781 metric tonnes per day,
representing 73% of capacity, although the mill achieved 48,426
metric tonnes per day during the latter half of December.
Mulatos – Gold production at Mulatos decreased 14% over
the prior year quarter as the mine transitioned between ore bodies,
and a slower than anticipated commissioning of the upgraded mill
circuit impacted high grade gold production.
The upgrades to the mill circuit, completed in early October
2014, are designed to optimize recoveries from the various ore
types within San Carlos to ensure the budgeted recovery of 75% is
achievable. While the mill improvements were ongoing in the
September 2014 quarter, Alamos stockpiled high grade development
ore from the San Carlos deposit. At the end of the September 2014
quarter, the stockpile reached a total of 25,000 tonnes, with
average grades above the current mineral reserve grade. The
upgraded mill circuit began processing the high grade stockpile
during the first week of October 2014.
Peñasquito – Gold, silver and lead production decreased
14%, 18% and 37%, respectively, while reported zinc production
increased by 19% over the prior year quarter. Goldcorp expects
relatively low first quarter calendar 2015 production followed by
steady production growth over the course of calendar 2015 as mining
continues deeper into higher-grade portions of the Peñasco pit at
Peñasquito.
Robinson – Gold and copper production decreased 41% and
13%, respectively, over the prior year quarter. KGHM completed
mining in the Kimbley pit in October 2014, and ore is now being
delivered from the Ruth 2 East pit, which KGHM expects can be
blended or sent directly to the mill with improved processing
results. In calendar 2015, ore is anticipated to be mined from the
Ruth East, Ruth North and Ruth West pits.
Voisey’s Bay – Nickel production decreased 31%, while
reported copper production increased 14% over the prior year
quarter. In July, Long Harbour achieved a major milestone with the
production of the first finished nickel from the facility.
Initially, Long Harbour will process primarily nickel matte from PT
Vale Indonesia, and transition to processing solely concentrate
from Voisey´s Bay at a later stage.
In anticipation of the transition from processing Voisey’s Bay
nickel concentrates at Vale’s Sudbury and Thompson smelters to
processing at the Long Harbour hydrometallurgical plant, the
Company engaged in discussions with Vale concerning calculation of
the royalty once Voisey’s Bay nickel concentrates are processed at
Long Harbour. Vale proposed a calculation of the royalty that the
Company estimates could result in the substantial reduction of
royalty payable to the Company on Voisey’s Bay nickel concentrates
processed at Long Harbour. While the Company may continue to engage
in discussions concerning calculation of the royalty on nickel
concentrates processed at Long Harbour, there is no guaranty that
the Company and Vale will reach agreement on the proper calculation
under the terms of the royalty agreement. If no agreement is
reached, the Company intends to vigorously pursue all legal
remedies to ensure the appropriate calculation of the royalty and
to enforce our royalty interests at Voisey’s Bay.
Second quarter production and revenue for the Company’s
principal royalty and stream interests are shown in Table 1 and
historical production data is shown in Table 2. For more detailed
information about each of our principal royalty and stream
properties, please refer to the Company’s most recent Annual Report
on Form 10-K, our Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K filed with the SEC and available on the SEC’s
website located at www.sec.gov, or our website located at
www.royalgold.com.
CORPORATE PROFILE
Royal Gold is a precious metals royalty and stream company
engaged in the acquisition and management of precious metal
royalties, streams, and similar production based interests. The
Company owns interests on 198 properties on six continents,
including interests on 37 producing mines and 24 development stage
projects. Royal Gold is publicly traded on the NASDAQ Global
Select Market under the symbol “RGLD,” and on the Toronto Stock
Exchange under the symbol “RGL.” The Company’s website is
located at www.royalgold.com.
QUALIFIED PERSON
The mineral reserve estimates reported by Thompson Creek were
prepared in accordance with CIM Definition Standards for Mineral
Resources and Mineral Reserves, as incorporated by reference in
National Instrument 43-101, by Robert Clifford, Director, Mine
Engineering of Thompson Creek, a “qualified person” under National
Instrument 43-101. Thompson Creek reported that Mr. Clifford
verified the data disclosed in their news release dated January 19,
2015 that pertain to the mineral reserve estimates.
Note: Management’s conference call reviewing the first
quarter results will be held Thursday, January 29, at 10:00 a.m.
Mountain Time (noon Eastern Time) and will be available by calling
(866) 270-1533 (North America) or (412) 317-0797 (international),
conference title “Royal Gold.” The call will be simultaneously
broadcast on the Company’s website at www.royalgold.com
under the “Presentations” section. A replay of this webcast will be
available on the Company’s website approximately two hours after
the call ends.
___________________________
1 The Company defines Adjusted EBITDA, a non-GAAP financial
measure, as net income plus depreciation, depletion and
amortization, non-cash charges, income tax expense, interest and
other expense, and any impairment of mining assets, less
non-controlling interests in operating income of consolidated
subsidiaries, interest and other income, and any royalty portfolio
restructuring gains or losses (see Schedule A).
___________________________
Cautionary “Safe Harbor” Statement Under the Private
Securities Litigation Reform Act of 1995: With the exception of
historical matters, the matters discussed in this press release are
forward-looking statements that involve risks and uncertainties
that could cause actual results to differ materially from
projections or estimates contained herein. Such forward-looking
statements include statements about the Company’s ability to invest
in additional quality properties; and the operators’ expectation of
construction, ramp up, production, mine life, resolution of
regulatory and legal proceedings (including with Vale regarding
Voisey’s Bay) and other developments at various mines. Factors that
could cause actual results to differ materially from the
projections include, among others, precious metals, copper and
nickel prices; performance of and production at the Company's
royalty properties; the ability of the various operators to bring
projects into production as expected; delays in the operators
securing or their inability to secure necessary governmental
permits; decisions and activities of the operators of the Company's
royalty properties; unanticipated grade, geological, metallurgical,
processing, liquidity or other problems the operators of the mining
properties may encounter; completion of feasibility studies;
changes in operators’ project parameters as plans continue to be
refined; changes in estimates of reserves and mineralization by the
operators of the Company’s royalty properties; contests to the
Company’s royalty interests and title and other defects to the
Company’s royalty properties; errors or disputes in calculating
royalty payments, or payments not made in accordance with royalty
agreements; economic and market conditions; risks associated with
conducting business in foreign countries; changes in laws governing
the Company and its royalty properties or the operators of such
properties; and other subsequent events; as well as other factors
described in the Company's Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, and other filings with the Securities and
Exchange Commission. Most of these factors are beyond the Company’s
ability to predict or control. The Company disclaims any obligation
to update any forward-looking statement made herein. Readers are
cautioned not to put undue reliance on forward-looking
statements.
TABLE 1
Second Quarter Fiscal 2015
Revenue and Reported Production for
Principal Royalty and Stream Interests
Three Months Ended December 31, 2014
and December 31, 2013
(In thousands, except reported
production in oz. and lbs.)
Three Months Ended Three Months Ended December 31,
2014 December 31, 2013
Reported Reported
Royalty/Stream
Metal(s)
Revenue
Production1 Revenue
Production1 Stream:
Mount Milligan Gold $ 17,318
14,300 oz. $ 2,638 2,100 oz.
Royalty:
Andacollo
Gold $ 9,594 10,500 oz. $ 11,736
12,500 oz. Peñasquito $ 5,573
$ 7,003 Gold
125,000 oz.
145,800 oz. Silver 5.1 Moz.
6.2 Moz. Lead 29.5
Mlbs. 47.1 Mlbs.
Zinc 84.0 Mlbs.
70.3 Mlbs. Voisey's Bay $ 6,117
$ 5,900 Nickel
19.6 Mlbs. 28.5
Mlbs. Copper 30.1
Mlbs. 26.4 Mlbs. Cortez Gold
$ 5,001 60,400 oz. $ 1,078 8,300
oz. Holt Gold $ 2,676 14,300 oz.
$ 2,717 12,900 oz. Robinson $
1,464 $ 2,287
Gold 5,100 oz.
8,700 oz. Copper
19.3 Mlbs. 22.1 Mlbs.
Mulatos Gold $ 2,001 34,500 oz.
$ 2,477 40,200 oz. Other Various $
11,560 N/A $ 16,949 N/A
Total Revenue
$ 61,304
$ 52,785
TABLE 2Second Quarter Fiscal
2015Revenue and Reported Production for Principal Royalty
and Stream InterestsSix Months Ended December 31, 2014 and
December 31, 2013(In thousands, except reported production
in oz. and lbs.)
Six Months Ended Six Months Ended
December 31, 2014 December 31, 2013
Reported Reported
Royalty/Stream
Metal(s)
Revenue
Production1 Revenue
Production1 Stream:
Mount Milligan Gold $ 36,975
29,700 oz. $ 2,638 2,100 oz.
Royalty:
Andacollo
Gold $ 20,093 21,500 oz. $ 28,892
29,900 oz. Peñasquito $ 12,684
$ 13,561
Gold 268,100 oz.
247,300 oz. Silver 11.6 Moz.
12.7 Moz. Lead
70.8 Mlbs. 86.9 Mlbs.
Zinc 169.4 Mlbs.
143.8 Mlbs. Voisey's Bay $ 11,726
$ 12,934
Nickel 36.7 Mlbs.
56.9 Mlbs. Copper
52.1 Mlbs. 61.2 Mlbs. Cortez
Gold $ 9,736 119,900 oz. $ 1,519
14,000 oz. Holt Gold $ 5,835
29,100 oz. $ 6,604 29,900 oz. Robinson
$ 3,734 $ 3,886
Gold 11,700
oz. 17,900 oz. Copper
45.4 Mlbs. 39.8
Mlbs. Mulatos Gold $ 3,763 62,800
oz. $ 5,178 81,800 oz. Other
Various $ 25,784 N/A $ 34,060 N/A
Total Revenue $ 130,330
$ 109,272
TABLE 3Historical
Production
Reported Production For The Quarter
Ended1
Property
Royalty/Stream
Operator
Metal(s) Dec. 31, 2014 Sep.
30, 2014 Jun. 30, 2014 Mar. 31,
2014 Dec. 31, 2013 Andacollo2 75%
Teck Gold 10,500 oz. 11,000 oz.
10,000
oz.
10,400 oz. 12,500 oz. Cortez3
GSR1 and GSR2,GSR3, NVR1
Barrick Gold 60,400 oz. 59,500
oz. 40,300 oz. 41,100 oz.
8,300 oz. Holt
0.00013 x quarterlyaverage gold price
St AndrewGoldfields
Gold 14,300 oz. 14,800 oz.
15,600 oz. 17,600 oz. 12,900
oz. Mount Milligan4
Gold stream -52.25% of payablegold
ThompsonCreek
Gold 14,300 oz. 15,300 oz.
14,400 oz. 4,500 oz. 2,100
oz. Mulatos5 1.0% - 5.0% NSR Alamos
Gold 34,500 oz. 28,400 oz.
33,600 oz. 34,400 oz. 40,200 oz.
Peñasquito 2.0% NSR Goldcorp
Gold
125,000 oz. 143,100 oz. 168,100
oz. 118,700 oz. 145,800 oz. Silver
5.1 Moz. 6.5 Moz. 7.8
Moz. 7.1 Moz. 6.2 Moz. Lead 29.5
Mlbs. 41.3 Mlbs. 43.2 Mlbs.
45.3 Mlbs. 47.1 Mlbs.
Zinc 84.0 Mlbs.
85.4 Mlbs. 77.0 Mlbs. 90.1 Mlbs.
70.3 Mlbs. Robinson 3.0% NSR KGHM
Gold 5,100 oz. 6,600 oz.
5,800 oz. 3,900 oz. 8,700 oz.
Copper 19.3
Mlbs. 26.1 Mlbs. 19.1 Mlbs. 10.7
Mlbs. 22.1 Mlbs. Voisey's Bay 2.7% NSR Vale
Nickel 19.6 Mlbs. 17.1
Mlbs. 26.9 Mlbs. 39.9 Mlbs.
28.5 Mlbs.
Copper 30.1 Mlbs. 22.0 Mlbs. 9.7
Mlbs. 9.7 Mlbs. 26.4 Mlbs.
1 Reported production
relates to the amount of metal sales that are subject to our
royalty and stream interests for the stated period, as reported to
us by operators of the mines. 2 The royalty rate is 75%
until 910,000 payable ounces of gold have been produced – 50%
thereafter. There have been approximately 239,000 cumulative
payable ounces produced as of December 31, 2014. Gold is produced
as a by-product of copper. 3 Royalty percentages: GSR1 and
GSR2 – 0.40 to 5.0% (sliding-scale): GSR3 – 0.71%; NVR1 – 1.0140%
excluding Crossroads and 0.6186% for Crossroads. 4 For our
streaming interest at Mount Milligan, our revenue is a product of
the reported production, our 52.25% stream interest, an applicable
provisional percentage (for the first 12 shipments only) and an
average gold sale price for the period. 5 The Company’s
royalty is subject to a 2.0 million ounce cap on gold production.
There have been approximately 1.33 million ounces of cumulative
production as of December 31, 2014. NSR sliding-scale schedule
(price of gold per ounce – royalty rate): $0.00 to $299.99 – 1.0%;
$300 to $324.99 – 1.50%; $325 to $349.99 – 2.0%; $350 to $374.99 –
3.0%; $375 to $399.99 – 4.0%; $400 or higher – 5.0%.
ROYAL GOLD, INC.Consolidated
Balance Sheets(Unaudited, in thousands except share data)
December 31, June 30, 2014 2014
ASSETS Cash
and equivalents $ 675,128 $ 659,536 Royalty receivables 37,314
46,654 Income tax receivable 23,800 21,947 Prepaid expenses and
other 15,626 7,840 Total current assets
751,868 735,977 Royalty and stream interests, net 2,067,152
2,109,067 Available-for-sale securities 7,788 9,608 Other assets
35,780 36,892 Total assets $ 2,862,588
$ 2,891,544
LIABILITIES Accounts
payable 2,742 3,897 Dividends payable 14,342 13,678 Foreign
withholding taxes payable 200 2,199 Other current liabilities
2,182 2,730 Total current liabilities
19,466 22,504 Debt 316,874 311,860 Deferred tax liabilities
152,762 169,865 Uncertain tax positions 14,752 13,725 Other
long-term liabilities 700 1,033 Total
liabilities 504,554 518,987
Commitments and contingencies
EQUITY
Preferred stock, $.01 par value,
authorized 10,000,000 sharesauthorized; and 0 shares issued
- -
Common stock, $.01 par value, 100,000,000
shares authorized; and64,653,967 and 64,578,401 shares outstanding,
respectively
647 646
Exchangeable shares, no par value,
1,806,649 shares issued, less 1,427,069 and1,426,792 redeemed
shares, respectively
16,705 16,718 Additional paid-in capital 2,151,335 2,147,650
Accumulated other comprehensive loss (1,980 ) (160 ) Accumulated
earnings 173,972 189,871 Total Royal
Gold stockholders’ equity 2,340,679 2,354,725 Non-controlling
interests 17,355 17,832 Total equity
2,358,034 2,372,557 Total liabilities
and equity $ 2,862,588 $ 2,891,544
ROYAL GOLD, INC.Consolidated
Statements of Operations and Comprehensive Income(Unaudited, in
thousands)
For The Three Months Ended For The Six
Months Ended December 31, December 31, December 31, December 31,
2014 2013 2014
2013 Revenue $ 61,304 $ 52,785 $ 130,330 $ 109,272
Costs and expenses Cost of sales 6,236 935 12,910 935 General and
administrative 8,511 4,661 15,652 11,227 Production taxes 1,731
1,603 3,421 3,386 Depreciation, depletion and amortization 20,278
22,670 42,490 45,071 Impairment of royalty and stream interests
26,570 - 28,339 -
Total costs and expenses 63,326 29,869
102,812 60,619 Operating
income (2,022 ) 22,916 27,518 48,653 Interest and other
income 228 168 279 216 Interest and other expense (6,358 )
(5,995 ) (13,070 ) (11,658 ) (Loss) income
before income taxes (8,152 ) 17,089 14,727 37,211 Income tax
benefit (expense) 1,827 (6,311 ) (2,131
) (11,152 ) Net (loss) income (6,325 ) 10,778 12,596 26,059
Net income attributable to non-controlling interests (223 )
(111 ) (462 ) (197 ) Net (loss) income
attributable to Royal Gold common stockholders $ (6,548 ) $ 10,667
$ 12,134 $ 25,862 Net (loss) income $
(6,325 ) $ 10,778 $ 12,596 $ 26,059 Adjustments to comprehensive
(loss) income, net of tax Unrealized change in market value of
available-for-sale securities (481 ) (3,419 )
(1,820 ) (2,288 ) Comprehensive (loss) income (6,806 ) 7,359
10,776 23,771 Comprehensive income attributable to non-controlling
interests (223 ) (111 ) (462 ) (197 )
Comprehensive (loss) income attributable to Royal Gold stockholders
$ (7,029 ) $ 7,248 $ 10,314 $ 23,574
Net (loss) income per share available to Royal Gold common
stockholders: Basic (loss) earnings per share $ (0.10 ) $
0.16 $ 0.19 $ 0.40 Basic weighted average
shares outstanding 65,002,307 64,897,757
64,982,595 64,878,056 Diluted
(loss) earnings per share $ (0.10 ) $ 0.16 $ 0.19 $
0.40 Diluted weighted average shares outstanding
65,002,307 64,990,771 65,122,185
64,982,689 Cash dividends declared per common share $
0.22 $ 0.21 $ 0.43 $ 0.41
ROYAL GOLD, INC.Consolidated
Statements of Cash Flows(Unaudited, in thousands)
For The Three Months Ended For
The Six Months Ended December 31, December 31, December 31,
December 31, 2014 2013 2014
2013 Cash flows from operating activities: Net
(loss) income $ (6,325 ) $ 10,778 $ 12,596 $ 26,059 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization 20,278 22,670 42,490
45,071 Non-cash employee stock compensation expense 375 147 2,824
1,759 Amortization of debt discount 2,540 2,380 5,013 4,720
Impairment of royalty and stream interests 26,570 - 28,339 - Tax
benefit of stock-based compensation exercises (377 ) (236 ) (74 )
(208 ) Deferred tax benefit (11,729 ) (5,181 ) (17,103 ) (8,038 )
Changes in assets and liabilities: Royalty receivables 5,913 5,137
9,340 7,330 Prepaid expenses and other assets 1,197 2,704 3,344
13,001 Accounts payable 388 (86 ) (1,182 ) (811 ) Foreign
withholding taxes payable (679 ) (1,852 ) (1,999 ) (10,108 ) Income
taxes receivable (7,151 ) 1,384 (1,778 ) (7,626 ) Other liabilities
(1,184 ) (3,126 ) 464 (943 ) Net
cash provided by operating activities $ 29,816 $ 34,719
$ 82,274 $ 70,206 Cash flows from
investing activities: Acquisition of royalty and stream interests
(32,525 ) (61 ) (38,734 ) (48,089 ) Other (390 ) (30
) (517 ) (54 ) Net cash used in investing activities
$ (32,915 ) $ (91 ) $ (39,251 ) $ (48,143 ) Cash flows from
financing activities: Net proceeds from issuance of common stock
576 94 775 94 Common stock dividends (13,691 ) (13,022 ) (27,369 )
(26,032 ) Distribution to non-controlling interests (446 ) (546 )
(911 ) (1,079 ) Tax expense of stock-based compensation exercises
377 236 74 208
Net cash used in financing activities $ (13,184 ) $ (13,238
) $ (27,431 ) $ (26,809 ) Net (decrease) increase in cash and
equivalents (16,283 ) 21,390 15,592
(4,746 ) Cash and equivalents at beginning of period
691,411 637,899 659,536
664,035 Cash and equivalents at end of period $
675,128 $ 659,289 $ 675,128 $ 659,289
SCHEDULE A
Non-GAAP Financial
Measures
The Company computes and discloses
Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure.
Adjusted EBITDA is defined by the Company as net income plus
depreciation, depletion and amortization, non-cash charges, income
tax expense, interest and other expense, and any impairment of
mining assets, less non-controlling interests in operating income
of consolidated subsidiaries, interest and other income, and any
royalty portfolio restructuring gains or losses. Other companies
may define and calculate this measure differently. Management
believes that Adjusted EBITDA is a useful measure of the
performance of our royalty and stream portfolio. Adjusted EBITDA
identifies the cash generated in a given period that will be
available to fund the Company's future operations, growth
opportunities, shareholder dividends and to service the Company's
debt obligations. This information differs from measures of
performance determined in accordance with U.S. generally accepted
accounting principles (“GAAP”) and should not be considered in
isolation or as a substitute for measures of performance determined
in accordance with U.S. GAAP. Below is a reconciliation of net
income to Adjusted EBITDA.
Royal Gold, Inc.Adjusted EBITDA
Reconciliation
For The Three Months Ended For The Six Months Ended
December 31, December 31, (Unaudited, in thousands) (Unaudited, in
thousands) 2014 2013
2014 2013 Net (loss) income $
(6,325 ) $ 10,778 $ 12,596 $ 26,059 Depreciation, depletion and
amortization 20,278 22,670 42,490 45,071 Non-cash employee stock
compensation 375 147 2,824 1,759 Allowance for uncollectible
royalty receivables 2,997 - 2,997 Impairment of royalty and stream
interests 26,570 - 28,339 - Interest and other income (228 ) (168 )
(279 ) (216 ) Interest and other expense 6,358 5,995 13,070 11,658
Income tax (benefit) expense (1,827 ) 6,311 2,131 11,152
Non-controlling interests in operating income of consolidated
subsidiaries (223 ) (111 ) (462 ) (197
) Adjusted EBITDA $ 47,975 $ 45,622 $ 103,706
$ 95,286
Royal Gold, Inc.Karli Anderson, 303-575-6517Vice
President Investor Relations
Royal Gold (NASDAQ:RGLD)
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