UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
August 5, 2015
ROYAL GOLD, INC.
(Exact name of registrant as specified in
its charter)
| Delaware |
001-13357 |
84-0835164 |
| (State or other jurisdiction |
(Commission |
(IRS Employer |
| of incorporation) |
File Number) |
Identification No.) |
| 1660 Wynkoop Street, Suite 1000, Denver, CO |
80202-1132 |
| (Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including
area code: 303-573-1660
(Former name or former address, if changed
since last report.)
Check the appropriate box below if the Form 8-K filing
is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
| o | Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition. |
On August 5, 2015,
the Company reported its fiscal 2015 financial results. A copy of the press release is furnished as Exhibit 99.1 to this Current
Report on Form 8-K.
The information furnished
under this Item 2.02, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities
Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as
shall be expressly set forth by reference to such filing.
| Item 5.02 | Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Appointment of Jamie C. Sokalsky
On August 5, 2015,
the Board of Directors (the “Board”) of the Company elected Jamie C. Sokalsky (age 58) to serve as a Class I Director
of the Company, effective August 20, 2015, and pursuant to its authority under the Company’s bylaws, increased the size of
the Board from seven to eight directors. As a Class I Director, Mr. Sokalsky shall hold office for a term expiring at the Company’s
2015 annual meeting of stockholders.
Mr. Sokalsky
will be compensated for his service on the Board in accordance with the Company’s compensatory and other arrangements for
nonemployee directors, which are described under the heading “Director Compensation” in the Company’s definitive
proxy statement on Schedule 14A, filed with the Securities and Exchange Commission on October 1, 2014. Mr. Sokalsky has not been
appointed to serve on any committee of the Board.
The Board
has determined that Mr. Sokalsky is independent under the rules of The Nasdaq Stock Market as well as applicable rules and regulations
adopted by the Securities and Exchange Commission.
The Company issued
a press release announcing Mr. Sokalsky’s election to the Board on August 5, 2015, which is included as Exhibit 99.2
to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 7.01 | Regulation FD Disclosure. |
On August 5, 2015,
the Company announced that its wholly-owned subsidiary RGLD Gold AG (“RGLD Gold”) entered into a Precious Metals Purchase
and Sale Agreement with a wholly-owned subsidiary of Barrick Gold Corporation, BGC Holdings Ltd. (“Barrick”) for a
percentage of the gold and silver production attributable to Barrick’s 60% interest in the Pueblo Viejo mine located in the
Dominican Republic. A copy of the press release is furnished as Exhibit 99.3 hereto.
The information furnished
under this Item 7.01, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities
Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as
shall be expressly set forth by reference to such filing.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
Exhibit
No. |
|
Description |
| 99.1 |
|
Press Release dated August 5, 2015 regarding Fiscal 2015 Results. |
| 99.2 |
|
Press Release dated August 5, 2015 regarding Election of Jamie Sokalsky to the Royal Gold, Inc. Board of Directors. |
| 99.3 |
|
Press Release dated August 5, 2015 regarding Acquisition of Gold and Silver Stream on Barrick’s Interest in the Pueblo Viejo Mine. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| |
Royal Gold, Inc. |
| |
(Registrant) |
| |
|
|
| Dated: August 6, 2015 |
By: |
/s/ Bruce C. Kirchhoff |
| |
|
Name: |
Bruce C. Kirchhoff |
| |
|
Title: |
Vice President, General Counsel and Secretary |
EXHIBIT INDEX
Exhibit
No. |
|
Description |
| 99.1 |
|
Press Release dated August 5, 2015 regarding Fiscal 2015 Results. |
| 99.2 |
|
Press Release dated August 5, 2015 regarding Election of Jamie Sokalsky to the Royal Gold, Inc. Board of Directors. |
| 99.3 |
|
Press Release dated August 5, 2015 regarding Acquisition of Gold and Silver Stream on Barrick’s Interest in the Pueblo Viejo Mine. |
Exhibit 99.1
Royal Gold Reports Record Operating Cash
Flow
For Fiscal 2015
DENVER, COLORADO.
AUGUST 5, 2015: 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.”
_____________________________
| 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). |
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.
_______________________
| 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. |
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.
For further information, please contact:
Karli Anderson
Vice President Investor Relations
(303) 575-6517
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.
___________________________
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 1
Fiscal
Year 2015
Revenue and Reported Production for Principal Royalty and Stream Interests
(In thousands, except reported production in oz.
and lbs.)
|
|
|
|
Fiscal Year Ended June 30, 2015 |
|
Fiscal Year Ended June 30, 2014 |
| Royalty/Stream |
|
Metal(s) |
|
Revenue |
|
|
Reported Production1 |
|
Revenue |
|
|
Reported 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 2
Fourth Fiscal Quarter 2015
Revenue and Reported Production for Principal Royalty and Stream Interests
(In thousands,
except reported production in oz. and lbs.)
|
|
|
|
Fiscal Year Ended June 30, 2015 |
|
Fiscal Year Ended June 30, 2014 |
| Royalty/Stream |
|
Metal(s) |
|
Revenue |
|
|
Reported Production1 |
|
Revenue |
|
|
Reported 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
3
Historical 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 4
Calendar 2015 Operators’ Production
Estimate
| |
|
Calendar 2015 Operator’s Production Estimate1,2 |
|
First Six Months Calendar 2015 Operator's Production |
| |
|
|
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 Sheets
As 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 | |
EXHIBIT 99.2
Royal Gold Announces Appointment of Jamie
Sokalsky to Board of Directors
DENVER, COLORADO.
AUGUST 5, 2015: ROYAL GOLD, INC. (NASDAQ:RGLD; TSX: RGL) has appointed Jamie Sokalsky to the Company’s Board of Directors
effective August 20, 2015. Mr. Sokalsky will be a new addition to Royal Gold’s Board, now comprised of eight members, seven
of whom are independent.
Mr. Sokalsky brings more than 30 years
of senior management experience to Royal Gold’s Board, including finance, capital markets, corporate strategy and project
development. He is the former Chief Executive Officer and President of Barrick Gold Corporation (“Barrick”) and the
former Chairman of the Board of Probe Mines, Ltd. Prior to being appointed CEO at Barrick, Mr. Sokalsky served as its Chief Financial
Officer. He currently serves on the Board of Directors of Pengrowth Energy Corporation and Agnico-Eagle Mines Limited, and is Chairman
of the Board of Probe Metals, Inc. Mr. Sokalsky earned a Bachelor of Commerce degree (Honors) from Lakehead University and holds
a Chartered Professional Accountant designation.
William Hayes, Chairman of the Board, commented,
“Jamie’s finance, capital markets, and corporate strategy expertise make him an impressive addition to Royal Gold’s
Board of Directors. His extensive industry experience and strong network will complement our existing directors and enhance Royal
Gold’s Board through his unique perspective. We welcome him to our Board and look forward to his insights and leadership.”
CORPORATE PROFILE
Royal Gold, Inc. is
a precious metals royalty and stream company engaged in the acquisition and management of precious metal royalties, streams, and
similar production based interests. RGI owns interests on 198 properties on six continents, including interests on 38 producing
mines and 25 development stage projects. Royal Gold, Inc. is publicly traded on the NASDAQ Global Select Market under the
symbol “RGLD,” and on the Toronto Stock Exchange under the symbol “RGL.” RGI’s website is
located at www.royalgold.com.
For further information, please
contact:
Karli Anderson
Vice President Investor Relations
(303) 575-6517
EXHIBIT 99.3
Royal Gold Announces Agreement to Acquire
Gold and Silver Stream on
Barrick’s Interest in the Pueblo Viejo Mine
DENVER, COLORADO.
AUGUST 5, 2015: ROYAL GOLD, INC. (NASDAQ:RGLD; TSX: RGL) (“RGI”) announces that its wholly owned subsidiary,
RGLD Gold AG (“Royal Gold”), entered into a $610 million 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
(“Pueblo Viejo”).
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 reservesi
were 15.50 million ounces of gold and 97.20 million ounces of silver, while measured and indicated resourcesii
were 10.50 million ounces of gold and 61.20 million ounces of silver as of December 31, 2014.
Tony Jensen, President
and Chief Executive Officer of Royal Gold, Inc. commented, “This agreement adds revenue from yet another high quality, long
lived asset to Royal Gold’s portfolio and, when coupled with three other transactions in recent months, significantly diversifies
our revenue sources. It provides our shareholders with substantial resource conversion optionality and a favorable entry point
in the commodity cycle. Opportunities of this caliber and magnitude are rare and we are pleased to partner with Barrick on this
world-class operation.”
Precious Metals Stream
| · | Royal Gold will make a single $610 million advance payment to Barrick at closing, subject
to certain conditions precedent |
| · | Barrick will deliver gold and silver to Royal Gold in an amount equal to: |
| - | 7.5% of Barrick’s interest in the gold produced at Pueblo Viejo until 990,000 ounces of gold
have been delivered, and 3.75% thereafter |
| - | 75% of Barrick’s interest in the silver produced at Pueblo Viejo (with silver deliveries
based on a fixed 70% recovery rate) until 50.00 million ounces have been delivered, and 37.5% thereafter |
| · | Royal Gold will pay Barrick: |
| - | 30% of the spot price per ounce of gold until 550,000 ounces of gold have been delivered, and 60%
of the spot price per ounce thereafter |
| - | 30% of the spot price per ounce of silver until 23.10 million ounces of silver have been delivered,
and 60% of the spot price per ounce thereafter |
| · | Closing of the transaction and funding is expected within 90 days |
Transaction Highlights for Royal
Gold
| · | Transaction effective July 1, 2015 for gold and January 1, 2016 for silver |
| · | By design, deliveries of gold and silver are accelerated in the early years of mine production: |
| - | Estimated gross annual gold deliveries of approximately 46,500 ounces during the first five full
years of production, or annual average life of mine gold deliveries of nearly 34,000 ounces |
| - | Estimated gross annual silver deliveries of 1.9 million ounces of silver during the first five
full years of production, or annual average life of mine silver deliveries of nearly 1.5 million ounces |
| · | 18 years of mine life based on current reserves to 2032 |
| · | Proven and probable gold reserves attributable to Barrick of 9.3 million contained ounces at 3.3
grams per tonne (“g/t”) as of December 31, 2014 |
| · | Proven and probable silver reserves attributable to Barrick of 58.3 million contained ounces grading
20.7 g/t as of December 31, 2014 |
| · | High quality resources (as of December 31, 2014): |
| - | 6.3 million contained ounces of measured and indicated gold resources attributable to Barrick grading
2.6 g/t |
| - | 36.7 million contained ounces of measured and indicated silver resources attributable to Barrick
grading 15.2 g/t |
Under the terms
of the Purchase and Sale Agreement, Barrick will deliver gold and silver to Royal Gold on a quarterly basis. Royal Gold expects
to sell the gold and silver shortly after receiving each delivery, and will recognize revenue from the sale of the delivered gold
and silver after the sale has occurred.
CORPORATE PROFILE
Royal Gold, Inc. is
a precious metals royalty and stream company engaged in the acquisition and management of precious metal royalties, streams, and
similar production based interests. RGI owns interests on 198 properties on six continents, including interests on 38 producing
mines and 25 development stage projects. Royal Gold, Inc. is publicly traded on the NASDAQ Global Select Market under the
symbol “RGLD,” and on the Toronto Stock Exchange under the symbol “RGL.” RGI’s website is
located at www.royalgold.com.
For further information, please
contact:
Karli Anderson
Vice President Investor Relations
(303) 575-6517
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 stream and Royal Gold’s Precious Metals Purchase and Sale Agreement with Barrick, as well as its expectations
concerning reserves, measured and indicated gold resources, production and mine life at the Pueblo Viejo mine. Factors that could
cause actual results to differ materially from the projections include, among others, precious metals prices; actual tax rates;
performance of and production at the Pueblo Viejo mine subject to our stream interests; decisions and activities of the operators
of the mine; operators’ delays in securing or inability to secure necessary governmental permits; political and social risks
inherent in investments in foreign jurisdictions; changes in operators’ project parameters and timelines as operations continue
to be refined; economic and market conditions; unanticipated grade, geological, metallurgical, processing, regulatory and legal
or other problems that the operators of the mine may encounter; and other subsequent events, as well as other factors described
in RGI'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 RGI’s ability to predict or control. RGI disclaims any obligation to update any forward-looking
statement made herein. Readers are cautioned not to put undue reliance on forward-looking statements.
i
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.
ii
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.
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