Royal Gold, Inc. (NASDAQ:RGLD; TSX:RGL) (together with
its subsidiaries, “Royal Gold” or the “Company”) reports net income
attributable to Royal Gold stockholders (“net income”) of $52.0
million, or $0.80 per basic and diluted share, on annual revenue of
$278.0 million in fiscal 2015 (ended June 30), compared with net
income of $62.6 million, or $0.96 per basic and diluted share, on
revenue of $237.2 million in fiscal 2014. The Company also reports
record operating cash flow of $192.1 million for fiscal 2015
compared with $147.2 million in fiscal 2014. The average gold price
in fiscal 2015 was $1,224 per ounce, down 6% from $1,296 per ounce
in fiscal 2014.
Fiscal 2015 Financial Highlights:
- Revenue of $278 million, an increase of
17% over fiscal 2014
- Record operating cash flow of $192.1
million, an increase of 31% over fiscal 2014
- Record volume of 227,100 Gold
Equivalent Ounces (“GEO’s”) 1
- Adjusted EBITDA2 of $3.33 per basic
share, or 78% of revenue
- Cash dividends of $56.1 million, 14
consecutive years of increasing dividends
Fourth Fiscal Quarter 2015 Highlights Compared with the Prior
Year Quarter:
- Revenue of $73.6 million, an increase
of 5%
- Operating cash flow of $43.9 million,
an increase of 37%
- Record volume of 61,700 GEO’s, an
increase of 13%
- Reported net income of $0.23 per share,
a decrease of 12% due to a non-cash $4.1 million ($0.06/share)
remeasurement of certain deferred tax liabilities
- Adjusted EBITDA of $55.2 million, a
decrease of 3%
Tony Jensen, President and CEO, commented, “It is gratifying to
report record operating cash flow and record volume today as our
portfolio continues to deliver growth, despite a contraction in the
gold price. We feel this is an excellent time in the commodities
cycle to be reinvesting in our business and we’ve been
opportunistic, adding several new pieces of business over the last
few months, including transactions with Barrick, Golden Star
Resources, Teck Resources, and New Gold, that will build on this
platform of growth.”
The increase in total fiscal 2015 revenue compared with fiscal
2014 resulted primarily from higher stream revenue at Mount
Milligan and higher royalty revenue from Cortez. Our royalty
revenue decreased during the same period due to lower average gold,
silver and copper prices and due to production decreases primarily
at Andacollo and estimated production decreases at Voisey’s
Bay.
The decrease in our fiscal 2015 earnings per share compared with
the prior fiscal year was primarily attributable to impairment
charges of approximately $31.3 million (including a royalty
receivable allowance of $3.0 million) on certain non-principal
royalty interests, mostly related to Wolverine, during our quarter
ended December 31, 2014. The effect of the impairment charges on
our fiscal year ended June 30, 2015 earnings was $0.37 per basic
share, after taxes.
Adjusted EBITDA for fiscal 2015 was $216.5 million ($3.33 per
basic share), representing 78% of revenue, compared with Adjusted
EBITDA of $202.1 million ($3.11 per basic share), or 85% of
revenue, for fiscal 2014. The lower percentage of revenue reporting
to EBITDA is a function of greater contributions from our streaming
business, where we record our ongoing metal purchases in cost of
sales.
As of June 30, 2015, the Company had a working capital surplus
of $765.8 million. Current assets were $790.8 million compared to
current liabilities of $25.0 million, for a current ratio of 32 to
1. Working capital, combined with the Company’s undrawn revolving
credit facility, totaled approximately $1.4 billion in liquidity at
June 30, 2015. The Company entered into several new significant
transactions that, when added to existing firm commitments, totaled
approximately $1.1 billion in anticipated capital expenditures thus
far in fiscal year 2016. The Company plans to fund these
commitments with its existing $1.4 billion in liquidity plus cash
flow from operations. Before considering our expected cash flow
from operations, at June 30, 2016, we would have approximately $350
million in available liquidity after all of these commitments are
funded. Cash flow from operations was $192.2 million in fiscal year
2015, and is expected to increase in fiscal year 2016 (assuming
similar gold prices) as three of the new transactions are expected
to deliver incremental operating cash flow in fiscal year 2016.
For the fourth fiscal quarter ended June 30, 2015, net income
was $14.8 million, or $0.23 per basic share, compared with net
income of $16.6 million, or $0.26 per basic share, for the prior
year quarter. Revenue was $73.6 million, compared with revenue of
$70.1 million for the same period in fiscal 2014. Adjusted EBITDA
was $55.2 million ($0.85 per basic share), or 75% of revenue,
compared with Adjusted EBITDA of $57.1 million ($0.88 per basic
share), or 81% of revenue, for the prior year quarter. The
reduction in the revenue to EBITDA margin was due to a higher cost
of sales from our streaming business.
Results for the fourth quarter fiscal 2015 were impacted by a
lower average gold price of $1,192 per ounce, representing a 7%
decrease from the prior year quarter of $1,288, and higher income
tax expense, partially offset by higher production at Mount
Milligan and Peñasquito. Absent the higher tax expense, net income
for the quarter would have been approximately $0.29 per share.
The Company reported an effective tax rate of 30% for the fourth
quarter. In June 2015, the province of Alberta, Canada increased
its corporate tax rate from 10% to 12%, resulting in the
remeasurement of certain deferred tax liabilities to reflect the
higher rate. The remeasurement resulted in a $4.1 million ($0.06
per share) non-cash charge to the tax expense in the fourth
quarter. Absent this change in the tax law, our Q4 2015 effective
tax rate would have been 10.7%.
FISCAL 2015 AND RECENT DEVELOPMENTS
Acquisition of Gold and Silver Stream at Pueblo Viejo
On August 5, 2015, RGLD Gold AG (“RGLD Gold”), a wholly-owned
subsidiary of the Company, entered into a Precious Metals Purchase
and Sale Agreement with a wholly-owned subsidiary of Barrick Gold
Corporation, BGC Holdings Ltd., (“Barrick”), to purchase a
percentage of the gold and silver production attributable to
Barrick’s 60% interest in the Pueblo Viejo mine located in the
Dominican Republic. Pursuant to the Precious Metals Purchase and
Sale Agreement, RGLD Gold will make one advance payment of $610
million to Barrick at closing of the transaction, which remains
subject to satisfaction of certain conditions precedent. Closing
and funding of the transaction is anticipated within 90 days.
Barrick will deliver gold to RGLD Gold in amounts equal to 7.50%
of Barrick’s interest in the gold produced at the Pueblo Viejo mine
from July 1, 2015 until 990,000 ounces of gold have been delivered,
and 3.75% of Barrick’s interest in gold produced thereafter. RGLD
Gold will pay Barrick 30% of the spot price per ounce of gold
delivered until 550,000 ounces of gold have been delivered, and 60%
of the spot price per ounce delivered thereafter.
Barrick will deliver silver to RGLD Gold in amounts equal to 75%
of Barrick’s interest in the silver produced at the Pueblo Viejo
mine beginning on January 1, 2016 until 50.00 million ounces of
silver have been delivered, and 37.50% of Barrick’s interest in
silver produced thereafter. RGLD Gold will pay Barrick 30% of the
spot price per ounce of silver delivered until 23.10 million ounces
of silver have been delivered, and 60% of the spot price per ounce
of silver delivered thereafter.
Pueblo Viejo is an open-pit mining operation located 100
kilometers northwest of Santo Domingo. It is managed by a joint
venture between two of the world’s largest gold producers, with
Barrick owning 60% and responsible for operations and Goldcorp Inc.
(“Goldcorp”) owning the remaining 40%. The mine began production in
2013, and is the only primary gold mine in the world with annual
production of more than one million ounces of gold (100% basis), at
all-in sustaining costs below $700 per ounce. On a 100% basis, 2014
gold production was approximately 1.11 million ounces, silver
production was 3.85 million ounces, and all-in sustaining costs
were $588 per ounce. Total mine proven and probable reserves3 were
15.50 million ounces of gold and 97.20 million ounces of silver,
while measured and indicated resources4 were 10.50 million ounces
of gold and 61.20 million ounces of silver as of December 31,
2014.
Acquisition of Gold and Silver Stream at Rainy River
On July 20, 2015, RGLD Gold entered into a $175 million Purchase
and Sale Agreement with New Gold, Inc. (“New Gold”), for a
percentage of the gold and silver production from the Rainy River
Project located in Ontario, Canada (“Rainy River”). Pursuant to the
Purchase and Sale Agreement, RGLD Gold will make two advance
payments to New Gold, consisting of $100 million, which was paid at
closing on July 20, 2015, and $75 million once capital spending at
Rainy River is 60% complete (currently expected by mid-calendar
2016). Also under the Purchase and Sale Agreement, New Gold will
deliver to RGLD Gold 6.50% of the gold produced at Rainy River
until 230,000 gold ounces have been delivered, and 3.25%
thereafter. New Gold also will deliver 60% of the silver produced
at Rainy River until 3.10 million silver ounces have been
delivered, and 30% thereafter. RGLD Gold will pay New Gold 25% of
the spot price per ounce of gold and silver at the time of
delivery.
The Rainy River Project is located approximately 40 miles
northwest of Fort Frances in western Ontario, Canada. Over its
first nine years of full production, the 21,000 tonne per day,
combined open pit-underground operation is scheduled to produce an
average of 325,000 ounces of gold per year. Permits to begin major
earthworks construction are in place, and, as of mid-calendar 2015,
detailed engineering is 95% complete and 14% of the total
development capital estimate of $877 million has been spent. Rainy
River has an estimated fourteen year mine life based on current
reserves and is projected by New Gold to start-up in mid-calendar
2017.
Acquisition of Gold Stream at Andacollo
On July 9, 2015, RGLD Gold entered into a Long Term Offtake
Agreement (the “Andacollo Agreement”) with Compañía Minera Teck
Carmen de Andacollo (“CMCA”), a 90% owned subsidiary of Teck
Resources Limited (“Teck”). Pursuant to the Andacollo Agreement,
CMCA will sell and deliver to RGLD Gold 100% of payable gold from
the Carmen de Andacollo copper-gold mine until 900,000 ounces have
been delivered, and 50% thereafter, subject to a fixed payable
percentage of 89%. RGLD Gold made a $525 million advance payment in
cash to CMCA upon entry into the Andacollo Agreement, and RGLD Gold
will also pay CMCA 15% of the monthly average gold price for the
month preceding the delivery date for all gold purchased under the
Andacollo Agreement.
The transaction will encompass CMCA’s presently owned mining
concessions on the Carmen de Andacollo mine, as well as any other
mining concessions presently owned or acquired by CMCA or any of
its affiliates within a 1.5 kilometer area of interest, and certain
other mining concessions that CMCA or its affiliates may acquire.
The Andacollo Agreement is effective July 1, 2015, and applies to
all final settlements of gold received on or after that date.
Deliveries to RGLD Gold will be made monthly, and RGLD Gold expects
to begin receiving gold deliveries in its first fiscal quarter of
2016, ending September 30, 2015.
Termination of Royalty Interest at Carmen de Andacollo
On July 9, 2015, Royal Gold Chile Limitada (“RG Chile”), a
wholly owned subsidiary of the Company, entered into an agreement
(the “Royalty Termination Agreement”) with CMCA. The Royalty
Termination Agreement terminated an agreement originally dated
January 12, 2010, which provided RG Chile with a royalty equivalent
to 75% of the gold produced from the sulfide portion of the Carmen
de Andacollo mine until 910,000 payable ounces have been produced,
and 50% of the gold produced thereafter (the “Royalty Agreement”).
Approximately 259,000 ounces of payable gold subject to the royalty
were produced through June 30, 2015, resulting in approximately
651,000 payable ounces remaining as of that date, before the step
down to the 50% royalty rate.
CMCA paid total consideration of $345 million to RG Chile in
connection with the Royalty Termination Agreement. The transaction
will be taxable in Chile and the United States, with net proceeds
estimated at approximately $300 million. In addition to the $345
million termination payment, a post-closing final royalty payment
of approximately $9.7 million was received in July 2015, which
finalized all outstanding shipments for which final settlements had
not been received as of July 1, 2015.
Acquisition of Gold Streams on Wassa, Bogoso and Prestea
On May 7, 2015, RGLD Gold announced signing a $130 million gold
stream transaction with a wholly owned subsidiary of Golden Star
Resources Ltd. (together “Golden Star”), pursuant to which RGLD
Gold will advance financing to Golden Star, subject to certain
conditions, for development projects at certain mines in Ghana, and
in return for which Golden Star will sell and deliver gold to RGLD
Gold. Separate from the stream transaction, the Company provided a
$20 million, four-year term loan to Golden Star and received
warrants to purchase 5 million shares of Golden Star Resources Ltd.
common stock. Closing of the gold stream and term loan transactions
occurred on July 28, 2015, when the conditions to closing were
satisfied. RGLD Gold expects to receive stream deliveries from
Golden Star in the current quarter related to production from and
after April 1, 2015.
Pursuant to the stream transaction and subject to certain
conditions, RGLD Gold will make $130 million in advance payments to
Golden Star in stages, including the $40 million upfront payment
made in connection with closing, and the balance on a pro rata
basis with spending on the Wassa and Prestea underground projects,
which RGLD Gold expects to make over the next five quarters. Golden
Star will deliver to RGLD Gold 8.5% of gold produced from the
Wassa, Bogoso and Prestea projects, until 185,000 ounces have been
delivered, 5.0% until an additional 22,500 have been delivered, and
3.0% thereafter. RGLD Gold will pay Golden Star a cash price equal
to 20% of the spot price for each ounce delivered at the time of
delivery until 207,500 ounces have been delivered, and 30% of the
spot price for each ounce delivered thereafter.
The Wassa mine is located approximately 90 miles west of Accra
and has operated continuously since 2005. Golden Star forecasts
calendar 2015 production of 110,000 to 115,000 ounces of gold from
the single Wassa open pit. Open pit proven and probable reserves
are 831,000 ounces at 1.39 grams per tonne. RGLD Gold’s investment
will fund development of the Wassa underground deposit, which has
746,000 ounces of proven and probable gold reserves at 4.27 grams
per tonne. Once the underground deposit is in production, Golden
Star expects average annual gold production of 150,000 ounces over
the life of mine from the combined open pit and underground at
Wassa.
Bogoso and Prestea are located approximately 125 miles west of
Accra and have produced over 9 million ounces from both open pit
and underground sources over the last 100 years. Development on the
Prestea underground is already well advanced, given the advantage
of existing infrastructure. Once in full production, Golden Star
expects annual production of approximately 75,000 ounces from
Prestea, with estimated life of mine production of 620,000
ounces.
PROPERTY HIGHLIGHTS
Highlights at certain of the Company’s principal producing and
development properties during fiscal 2015, compared with the prior
fiscal year ended June 30, 2014, are listed below. Production for
our producing properties reflects the actual production subject to
our interests reported to us by the various operators or from the
operator’s publicly available information.
Principal Producing
Properties
Andacollo – Production attributable to our royalty
interest at Andacollo decreased approximately 21%. The decrease in
production is primarily due to reduced mill throughput associated
with unplanned maintenance activities during the September 2015
quarter and planned maintenance activities during the March 2015
quarter. Teck expects higher mill throughput rates during the
remainder of calendar 2015.
Subsequent to quarter end, RG Chile received a post-closing
final payment of approximately $9.7 million, which finalized all
outstanding shipments associated with the terminated royalty
agreement.
Andacollo production resulting from RGLD Gold’s new streaming
interest will be calculated on metal sales completed in the quarter
(instead of provisional estimated ounces in concentrate and
true-ups based upon final smelter settlements). The eleven
concentrate shipments (approximately 22,900 ounces of contained
gold based on provisional weights and assays) that were not final
settled as of June 30, 2015 will be subject to the Andacollo
Agreement. Andacollo will deliver gold to RGLD Gold within five
business days following the end of the month in which final smelter
settlement occurs. RGLD Gold typically sells gold over a three week
period following physical receipt. Andacollo final settlements
generally take 5-6 months from the bill-of-lading date. The
difference in timing between Andacollo quarterly production and
final smelter settlements may result in divergences of ounces
between Teck’s figures and those reported by Royal Gold for future
quarters.
Cortez – Production increased 140% as surface mining
activity increased at the Pipeline and Gap pits, where our royalty
applies, while no significant activity occurred in these areas
during the prior fiscal year. Barrick has indicated that mining
during the remainder of calendar 2015 will include Cortez Hills
which is not subject to our interest, and Crossroads pre-stripping.
As a result, production subject to our interests is expected to be
lower during the remainder of calendar 2015.
Holt – Production decreased approximately 1% as St
Andrew’s reported higher tonnes milled was more than offset by
lower grades during the period.
Mount Milligan – During the fiscal year, RGLD Gold
purchased approximately 74,300 ounces of physical gold. RGLD Gold
sold approximately 76,900 ounces of gold during the period at an
average price of $1,223.77 per ounce, and had approximately 5,300
ounces of gold in inventory as of June 30, 2015. Mill performance
improved in June as Thompson Creek addressed operational challenges
at Mount Milligan and reported average daily mill throughput of
nearly 50,000 tonnes per day, or over 80% of design capacity, in
May and June.
Mulatos – Production attributable to our royalty interest
at Mulatos decreased approximately 6% during our fiscal year, when
compared to the prior period. Lower than plan throughput and
recovery associated with milling operations negatively impacted
production. Alamos expects that a new grinding circuit in the mill
will reduce grind size and improve gold recovery, allowing the mill
to ramp up to targeted recoveries in mid-calendar 2015.
Peñasquito – Production increased approximately 39% as
Goldcorp experienced higher sulfide ore gold grades but lower
recoveries. Reported production for silver and lead decreased
approximately 11% and 10%, respectively, while reported zinc
production increased approximately 10%.
In April 2015, Goldcorp reported that it integrated its
Concentrate Enrichment Process and Pyrite Leach Process into a
single Metallurgical Enhancement Project (“MEP”). The MEP entered
the feasibility study phase, which Goldcorp expects to complete in
early calendar 2016. Goldcorp anticipates the study will form the
basis of a new life-of-mine plan for Peñasquito, which could extend
mine life by more than five years through increased gold and silver
recoveries, result in production of higher quality concentrates,
and lower mining costs through minimization of re-handling and
simplified mining of complex ores.
Robinson – Copper and gold production increased
approximately 45% and 24%, respectively. The production increase
was due to higher copper grade and recovery as mining returned to
the Ruth pit during the second half of calendar 2014, whereas
mining primarily came from the lower grade Kimbley pit during the
prior fiscal year. KGHM stated that mining will continue in the
Ruth pit until the December 2015 quarter, when it is expected that
ore deliveries will primarily come from the lower grade stockpiled
ores.
Voisey’s Bay – Nickel and copper production decreased
approximately 49% and 16%, respectively. Historically, Vale
supplied us with Voisey’s Bay nickel concentrate shipment data on a
monthly basis, and copper concentrate shipment data on a quarterly
basis. This data allowed us to estimate our Voisey’s Bay quarterly
royalty revenue for financial reporting purposes. We did not
receive all of this data for the months relevant to the royalty
payments due for the December 2014 and March 2015 quarters, and in
April 2015 we announced our intention to recognize Voisey’s Bay
royalty revenue on a cash basis, or in the period in which actual
payment information is received from Vale, beginning with the June
2015 quarter. Accordingly, the revenue recognized for the Voisey’s
Bay royalty for the June 2015 quarter only included positive
adjustments from the estimated March 2015 quarterly revenue
(approximately $3.0 million).
We received the first quarterly royalty payment relating to
processing Voisey’s Bay nickel concentrates at Vale’s new Long
Harbour hydrometallurgical plant. In response to questions
concerning Vale’s determination of the Long Harbour smelter and
refining charges deducted from actual proceeds to calculate the net
smelter return royalty payable, Vale recently stated that the
charges included “the cost of product sold, pre-operating costs,
depreciation, and cost of capital,” a calculation methodology that
the Company estimates could result in a substantial reduction or
elimination of royalty payable on Voisey’s Bay nickel concentrates
processed at Long Harbour. The Company strongly disagrees with
Vale’s determination that these changes are permissible deductions
pursuant to the royalty agreement and is requesting further
clarification of the basis for these charges while aggressively
pursuing its legal remedies.
Full year and fourth quarter fiscal 2015 production and revenue
for the Company’s principal royalty and stream interests are shown
in Tables 1 and 2, historical production data is shown in Table 3,
and a comparison of operators’ 2015 production estimates to actual
production is shown in Table 4. 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 38 producing mines and 25 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.
Note: Management’s conference call reviewing the fourth
quarter and year-end results will be held Thursday, August 6, at
10:00 a.m. Mountain Time (noon Eastern Time) and will be available
by calling (855) 209-8260 (North America) or (412) 542-4106
(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 Gold Equivalent Ounces as revenue
divided by the average gold price for the same period. Net of the
Company’s stream payments, GEO’s would have been 199,800 and 53,300
for FY2015 and the fourth fiscal quarter 2015, respectively. 2 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). 3 Cautionary Note to U.S. Investors Concerning
Estimates of Proven and Probable Mineral Reserves and Measured and
Indicated Mineral Resources: The mineral reserve estimates reported
by Barrick were prepared in accordance with Canadian Institute of
Mining, Metallurgy and Petroleum Definition Standards for Mineral
Resources and Mineral Reserves, as incorporated by reference in
National Instrument 43-101. RGI has not reconciled the reserve
estimates provided by Barrick with definitions of reserves used by
the U.S. Securities and Exchange Commission. 4 While the terms
“Mineral Resource,” “Measured Mineral Resource” and “Indicated
Mineral Resource” are recognized and required by Canadian
securities regulations, they are not defined terms under standards
of the United States Securities and Exchange Commission. Under
United States standards, mineralization may not be classified as a
“Reserve” unless the determination has been made that the
mineralization could be economically and legally produced or
extracted at the time the reserve estimation is made. The mineral
resources reported herein are estimates previously disclosed by
Barrick, without reference to the underlying data used to calculate
the estimates. Accordingly, RGI is not able to reconcile the
estimates prepared in reliance on Canadian National Instrument
43-101 with terms recognized by the United States Securities and
Exchange Commission. Readers are cautioned not to assume that all
or any part of the measured or indicated mineral resources will
ever be converted into mineral reserves.
___________________________
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, operators’ expectations of
construction, ramp up, production, and mine life, resolution of
regulatory and legal proceedings (including with Vale regarding
Voisey’s Bay), statements about the new streaming agreements with
Barrick, New Gold, Teck, and Golden Star, as well as expectations
concerning development, ramp-up, production and mine life at the
operations which are subject to these streaming agreements. 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 and stream 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 and stream 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 and stream
properties; contests to the Company’s royalty and stream interests
and title and other defects to the Company’s royalty and stream
properties; errors or disputes in calculating royalty and stream
payments, or payments not made in accordance with royalty and
stream agreements; economic and market conditions; risks associated
with conducting business in foreign countries; changes in laws
governing the Company and its royalty and stream 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 1Fiscal Year
2015Revenue and Reported Production for Principal Royalty
and Stream Interests(In thousands, except reported
production in oz. and lbs.)
Fiscal Year Ended Fiscal Year Ended June 30,
2015 June 30, 2014
Reported
Reported
Royalty/Stream
Metal(s)
Revenue
Production1
Revenue
Production1 Stream:
Mount Milligan Gold $ 94,104
76,900 oz. $ 27,209
21,100 oz.
Royalty:
Andacollo
Gold $ 38,033 41,500 oz.
$ 48,777 50,400 oz. Peñasquito
$ 30,306
$ 29,281 Gold
742,100 oz.
534,200 oz. Silver
24.6 Moz. 27.7
Moz. Lead 158.4
Mlbs. 175.5 Mlbs.
Zinc 340.8
Mlbs. 310.9 Mlbs. Cortez
Gold $ 18,044 229,000
oz. $ 8,138 95,400 oz.
Voisey's Bay $ 16,665
$ 25,128
Nickel 62.8 Mlbs.
123.7 Mlbs.
Copper 64.8 Mlbs.
80.5 Mlbs. Holt
Gold $ 11,954 61,500 oz.
$ 13,813 63,100 oz. Mulatos
Gold $ 8,339 140,900
oz. $ 9,443 149,800 oz.
Robinson $ 8,016
$ 6,354
Gold 34,300
oz. 27,600 oz.
Copper 101.1
Mlbs. 69.6 Mlbs.
Other Various $ 52,558
N/A $ 69,019 N/A
Total Revenue
$ 278,019
$ 237,162
TABLE 2Fourth Fiscal Quarter
2015Revenue and Reported Production for Principal Royalty
and Stream Interests(In thousands, except reported
production in oz. and lbs.)
Three Months Ended Three Months Ended June 30,
2015 June 30, 2014
Reported
Reported
Royalty/Stream
Metal(s)
Revenue
Production1
Revenue
Production1 Stream:
Mount Milligan Gold $ 27,411
23,000 oz. $ 18,619
14,400 oz.
Royalty:
Peñasquito
$ 10,369 $
8,458 Gold
296,900 oz.
168,100 oz. Silver 7.0
Moz. 7.8 Moz. Lead
48.2 Mlbs.
43.2 Mlbs. Zinc
88.9 Mlbs.
77.0 Mlbs. Andacollo Gold
$ 9,433 10,500 oz.
$ 9,688 10,000 oz. Cortez Gold
$ 3,283 43,900 oz.
$ 3,598 40,300 oz. Voisey's Bay
$ 3,021 $
5,884 Nickel
9.0 Mlbs.
26.9 Mlbs. Copper
20.8 Mlbs.
9.7 Mlbs. Holt Gold $
2,911 15,800 oz. $ 3,361
15,600 oz. Robinson $ 2,417
$ 1,459
Gold
11,800 oz. 5,800
oz. Copper
26.6 Mlbs. 19.1
Mlbs. Mulatos Gold $ 2,038
35,600 oz. $ 2,103 33,600
oz. Other Various $ 12,696
N/A $ 16,972
N/A
Total Revenue
$ 73,579
$ 70,142
TABLE 3Historical
Production
Reported Production For The Quarter Ended1
Property
Royalty/Stream
Operator
Metal(s) Jun. 30, 2015
Mar. 31, 2015 Dec. 31,
2014 Sep. 30, 2014 Jun.
30, 2014 Andacollo2 75% Teck
Gold 10,500 oz. 9,500
oz. 10,500 oz. 11,000
oz. 10,000 oz. Cortez3
GSR1 and GSR2, GSR3, NVR1 Barrick Gold
43,900 oz. 65,200 oz.
60,400 oz. 59,500 oz.
40,300 oz. Holt 0.00013 x
quarterly average gold price St Andrew Goldfields
Gold 15,800 oz.
16,700 oz. 14,300 oz.
14,800 oz. 15,600 oz. Mount Milligan4
Gold stream - 52.25% of payable gold
Thompson Creek Gold 23,000 oz.
24,200 oz. 14,300 oz.
15,300 oz. 14,400 oz.
Mulatos5 1.0% - 5.0% NSR Alamos
Gold 35,600 oz. 42,500
oz. 34,500 oz. 28,400
oz. 33,600 oz. Peñasquito 2.0% NSR
Goldcorp
Gold
296,900 oz. 177,200 oz.
125,000 oz. 143,100 oz.
168,100 oz. Silver 7.0
Moz. 6.0 Moz. 5.1 Moz.
6.5 Moz. 7.8 Moz. Lead
48.2 Mlbs. 39.5 Mlbs.
29.5 Mlbs. 41.3 Mlbs.
43.2 Mlbs.
Zinc 88.9 Mlbs.
82.6 Mlbs. 84.0 Mlbs.
85.4 Mlbs. 77.0 Mlbs.
Robinson 3.0% NSR KGHM
Gold 11,800 oz.
10,800 oz. 5,100 oz.
6,600 oz. 5,800 oz.
Copper
26.6 Mlbs. 29.1 Mlbs.
19.3 Mlbs. 26.1 Mlbs.
19.1 Mlbs. Voisey's Bay 2.7% NSR Vale
Nickel 9.0
Mlbs. 17.2 Mlbs. 19.6
Mlbs. 17.1 Mlbs. 26.9
Mlbs.
Copper 20.8 Mlbs.
NA Mlbs. 30.1 Mlbs. 22.0
Mlbs. 9.7 Mlbs.
FOOTNOTES
Tables 1, 2 and 3
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 were approximately 258,500
cumulative payable ounces produced as of June 30, 2015. Gold is
produced as a by-product of copper. This royalty was terminated
effective July 1, 2015. 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 1.4 million ounces of cumulative production as of
June 30, 2015. 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%.
TABLE 4Calendar 2015 Operators’
Production Estimate
Calendar 2015 Operator’s Production
Estimate1,2
First Six Months Calendar 2015
Operator's Actual3,4
Gold Silver Base
Metals Gold Silver
Base Metals Royalty/Stream (oz.)
(oz.) (lbs.)
(oz.) (oz.)
(lbs.) Andacollo5 52,200 -
- 22,200 -
- Cortez GSR1 104,100
- - 82,900
- - Cortez GSR2
27,900 - - 26,300
- - Cortez
GSR3 132,000 - -
109,200 - -
Cortez NVR1 97,200 -
- 81,600 -
- Holt 64,000 -
- 32,100 -
- Mount Milligan6
200,000-220,000 - -
106,000 - -
Mulatos7 150,000-170,000 -
- see footnote 7 -
- Peñasquito8,9
700,000-750,000 24-26 million -
453,600 12.0 million -
Lead
175-185 million
84.2 million Zinc
400-415 million
188.0 million 1 Production estimates
received from our operators are for calendar 2015. 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 preceding Table 1 above, as well as the
Risk Factors identified in Part I, Item 1A, of our Fiscal 2014 10-K
for information regarding factors that could affect actual results.
2 The operators of our Voisey’s Bay and Robinson royalty interests
did not release public production guidance for calendar 2015. 3
Actual production figures shown are for the period January 1, 2015
through June 30, 2015 unless otherwise noted. 4 Actual production
figures for Andacollo and Cortez are based on information provided
to us by the operators, and actual production figures for Holt,
Mount Milligan and Peñasquito (gold) are the operators’ publicly
reported figures. 5 The estimated and actual production figures
shown for Andacollo are payable gold in concentrate. 6 The
estimated and actual production figures shown for Mount Milligan
are payable gold in concentrate. 7 For the period ended March 31,
2015, Mulatos produced approximately 38,000 ounces of gold.
Production information for the quarter ended June 30, 2015, was not
available from the operator as of the date of this report. 8 The
estimated gold and silver production figures reflect payable gold
and silver in concentrate and doré, while the estimated lead and
zinc production figures reflect payable metal in concentrate. 9 The
actual gold production figure for gold reflects payable gold in
concentrate and doré as reported by the operator. The actual
production for silver, lead and zinc were not publicly available.
The Company’s royalty interest at Peñasquito includes gold, silver,
lead and zinc.
ROYAL GOLD, INC.Consolidated
Balance SheetsAs of June 30,(In thousands except share data)
2015 2014
ASSETS Cash and
equivalents $ 742,849 $ 659,536 Royalty receivables 37,681 46,654
Income tax receivable 6,422 21,947 Prepaid expenses and other
3,798 7,840 Total current assets
790,750 735,977 Royalty and stream interests, net 2,083,608
2,109,067 Available-for-sale securities 6,273 9,608 Other assets
44,801 36,892 Total assets $ 2,925,432
$ 2,891,544
LIABILITIES Accounts
payable 4,911 3,897 Dividends payable 14,341 13,678 Foreign
withholding taxes payable 199 2,199 Other current liabilities
5,522 2,730 Total current liabilities
24,973 22,504 Debt 322,110 311,860 Deferred tax liabilities
146,603 169,865 Uncertain tax positions 15,130 13,725 Other
long-term liabilities 689 1,033 Total
liabilities 509,505 518,987
Commitments and contingencies
EQUITY Preferred stock,
$.01 par value, authorized 10,000,000 shares authorized; and 0
shares issued - - Common stock, $.01 par value, 100,000,000 shares
authorized; and 65,033,547 and 64,578,401 shares outstanding,
respectively 650 646 Exchangeable shares, no par value, 1,806,649
shares issued, less 1,806,649 and 1,426,792 redeemed shares,
respectively - 16,718 Additional paid-in capital 2,170,643
2,147,650 Accumulated other comprehensive loss (3,292 ) (160 )
Accumulated earnings 185,121 189,871
Total Royal Gold stockholders’ equity 2,353,122 2,354,725
Non-controlling interests 62,805 17,832
Total equity 2,415,927 2,372,557 Total
liabilities and equity $ 2,925,432 $ 2,891,544
ROYAL GOLD, INC.Consolidated
Statements of Operations and Comprehensive Income(In thousands
except for per share data)
For The Three Months Ended For The Years Ended June 30,
June 30, June 30, June 30, 2015
2014 2015 2014 Revenue $ 73,579
$ 70,142 $ 278,019 $ 237,162 Costs and expenses Cost of
sales 9,998 6,283 33,450 9,158 General and administrative 6,671
6,094 27,869 21,186 Production taxes 1,091 1,647 5,446 6,756
Exploration Costs 2,038 - 2,194 - Depreciation, depletion and
amortization 26,213 24,666 93,486 91,342 Impairment of royalty and
stream interests - - 28,339
- Total costs and expenses 46,011
38,690 190,784 128,442
Operating income 27,568 31,452 87,235 108,720
Loss on available-for-sale securities (183 ) (4,499 ) (183 ) (4,499
) Interest and other income 178 157 883 2,050 Interest and other
expense (6,196 ) (5,857 ) (25,691 )
(23,344 ) Income before income taxes 21,367 21,253 62,244 82,927
Income tax expense (6,394 ) (4,322 )
(9,566 ) (19,455 ) Net income 14,973 16,931 52,678 63,472
Net income attributable to non-controlling interests (154 )
(295 ) (713 ) (831 ) Net income attributable
to Royal Gold common stockholders $ 14,819 $ 16,636 $
51,965 $ 62,641 Net income $ 14,973 $ 16,931 $
52,678 $ 63,472 Adjustments to comprehensive income, net of tax
Unrealized change in market value of available-for-sale
securities 689 2 (3,292 ) (98 ) Recognized loss on available for
sale securities 167 6,825 160
4,510 Comprehensive income 15,829 23,758
49,546 67,884 Comprehensive income attributable to non-controlling
interests (154 ) (295 ) (713 ) (831 )
Comprehensive income attributable to Royal Gold stockholders $
15,675 $ 23,463 $ 48,833 $ 67,053
Net income per share available to Royal Gold common
stockholders: Basic earnings per share $ 0.23 $ 0.26
$ 0.80 $ 0.96 Basic weighted average shares
outstanding 65,033,547 64,950,353
65,007,861 64,909,149 Diluted earnings
per share $ 0.23 $ 0.26 $ 0.80 $ 0.96
Diluted weighted average shares outstanding 65,129,362
65,074,315 65,125,173
65,026,256 Cash dividends declared per common share $ 0.22
$ 0.21 $ 0.87 $ 0.83
ROYAL GOLD, INC.Consolidated
Statements of Cash Flows(In thousands)
For The Three Months Ended For The Years Ended June 30, June
30, June 30, June 30, 2015 2014
2015 2014 Cash flows from operating
activities: Net income $ 14,973 $ 16,931 $ 52,678 $ 63,472
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation, depletion and amortization
26,213 24,666 93,486 91,342 Recognized loss on available-for-sale
securities 183 4,499 183 4,499 Non-cash employee stock compensation
expense 1,481 1,291 5,141 2,580 Gain on distribution to
non-controlling interest (46 ) - (46 ) (259 ) Amortization of debt
discount 2,626 2,459 10,250 9,597 Impairment of royalty and stream
interests - - 28,339 - Tax benefit of stock-based compensation
exercises (290 ) (277 ) (364 ) (597 ) Deferred tax benefit 6,548
4,836 (27,651 ) (8,166 ) Changes in assets and liabilities: Royalty
receivables 1,805 (4,444 ) 8,973 3,731 Prepaid expenses and other
assets 1,016 (2,573 ) 5,487 9,756 Accounts payable 1,892 911 150
1,105 Foreign withholding taxes payable 1 (1,786 ) (2,000 ) (13,319
) Income taxes receivable (9,666 ) (1,632 ) 15,525 (6,183 )
Uncertain tax positions (331 ) (9,865 ) 1,405 (7,441 ) Other
liabilities (2,500 ) (2,900 ) 543
(2,915 ) Net cash provided by operating activities $ 43,905
$ 32,116 $ 192,099 $ 147,202
Cash flows from investing activities: Acquisition of royalty and
stream interests (88 ) (327 ) (60,429 ) (80,019 ) Tulsequah stream
termination - - 10,000 - Other (702 ) (5,009 )
(773 ) (4,782 ) Net cash used in investing activities $ (790
) $ (5,336 ) $ (51,202 ) $ (84,801 ) Cash flows from
financing activities: Net proceeds from issuance of common stock -
559 775 1,120 Common stock dividends (14,342 ) (13,674 ) (56,054 )
(53,380 ) Purchase of additional royalty interest from
non-controlling interest - - - (11,522 ) Debt issuance costs (864 )
- (864 ) (1,284 ) Distribution to non-controlling interests (578 )
(518 ) (1,805 ) (2,431 ) Tax expense of stock-based compensation
exercises 290 277 364
597 Net cash used in financing activities $ (15,494 )
$ (13,356 ) $ (57,584 ) $ (66,900 ) Net increase (decrease) in cash
and equivalents 27,621 13,424
83,313 (4,499 ) Cash and equivalents at beginning of
period 715,228 646,112 659,536
664,035 Cash and equivalents at end of period
$ 742,849 $ 659,536 $ 742,849 $ 659,536
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 Years Ended June 30, June
30, 2015 2014 2015
2014 Net income $ 14,973 $ 16,931 $
52,678 $ 63,472 Depreciation, depletion and amortization 26,213
24,666 93,486 91,342 Non-cash employee stock compensation 1,481
1,291 5,141 2,580 Allowance for uncollectible royalty receivables -
- 2,997 - Impairment of royalty and stream interests - - 28,339 -
Recognized loss on available-for-sale securities 183 4,499 183
4,499 Interest and other income (178 ) (157 ) (883 ) (2,050 )
Interest and other expense 6,196 5,857 25,691 23,344 Income tax
expense 6,394 4,322 9,566 19,455 Non-controlling interests in
operating income of consolidated subsidiaries (108 )
(295 ) (666 ) (572 ) Adjusted EBITDA $ 55,154
$ 57,114 $ 216,532 $ 202,070
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version on businesswire.com: http://www.businesswire.com/news/home/20150805006873/en/
Royal GoldKarli Anderson, 303-575-6517Vice President
Investor Relations
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