Royal Gold has added the following press release to its web site.
Royal Gold Reports Net Income of $0.23 per Share for its First Quarter Fiscal 2014 and Concentrate Production Commences at Mt.
Milligan
DENVER--(BUSINESS WIRE)--
Royal Gold, Inc. (NASDAQ:RGLD) (TSX:RGL) (“Royal Gold” or the
“Company”) generated net income attributable to Royal Gold stockholders
of $15.2 million, or $0.23 per basic share, on revenue of $56.5
million for the first quarter of fiscal 2014.
This compares to net
income attributable to Royal Gold stockholders of $24.8 million, or
$0.42 per basic share, on revenue of $77.9 million for the first quarter
of fiscal 2013.
The average gold price was $1,326 per ounce in the first
quarter, down 20% from the prior year quarter.
Q1 Fiscal Year (“FY”) 2014 Highlights:
-
Adjusted EBITDA1 of $0.77 per basic share or 88% of revenue;
-
Cash dividends of $13.0 million, representing a payout ratio of 37% of
operating cash flow;
-
Completion of the previously announced acquisition of a royalty on the
El Morro copper-gold project in Chile for $35 million; and
-
Final payment of $12.9 million made to Thompson Creek Metals Company
(“Thompson Creek”) as part of the Mt.
Milligan gold stream
acquisition.
Copper and gold concentrate production commenced at Mt.
Milligan in September.
Tony Jensen, President and CEO, commented, “Our first quarter results
met production expectations on a portfolio basis, with Andacollo
reporting a particularly strong quarter.
We are pleased with the plant
commissioning process at Mt.
Milligan to date and look forward to that
contribution to our portfolio as concentrate sales commence in the near
future.
We expect Mt.
Milligan’s production to build more significantly
in the new calendar year.”
First quarter revenue was primarily impacted by lower average metal
prices.
First quarter production attributable to Royal Gold was higher
at Andacollo, Canadian Malartic, Holt, Dolores and Wolverine than the
prior year quarter, offset by lower production at Voisey’s Bay,
Peñasquito, Las Cruces, Robinson (copper), Leeville and Cortez.
First quarter income tax expense decreased to $4.8 million, primarily
due to expected contributions from Mt.
Milligan production to our fiscal
2014 earnings, and the reduction of the accrual for uncertain tax
positions during the first quarter.
This decrease resulted in an
effective tax rate of 24% for the quarter, compared with $16.5 million
or 39% in the prior year period.
The Company’s cash tax rate for the
quarter was 31%.
For the full fiscal year, based upon Royal Gold’s
current forecasts, we expect our effective tax rate to be between 30%
and 34%.
As of September 30, 2013, the Company had a working capital surplus of
$687.4 million.
Current assets were $715.4 million (including $637.9
million in cash and equivalents), compared to current liabilities of
$28.0 million, resulting in a current ratio of approximately 26 to 1.
In
addition to available working capital, the Company had $350 million
available under its revolving line of credit.
RECENT DEVELOPMENTS
Mt.
Milligan Stream
On August 7, 2013, Thompson Creek announced that commissioning had begun
at its new Mt.
Milligan mine.
They also reported that copper-gold
concentrate production began in September, followed by initial
concentrate movement on September 24 from the mine site to the Mackenzie
load out facility.
Thompson Creek expects to send the first ocean
shipment to market in the fourth quarter.
Royal Gold’s final commitment payment of $12.9 million to Thompson Creek
as part of the Mt.
Milligan gold stream acquisition was made in
September 2013.
El Morro Royalty Acquisition
In August 2013, Royal Gold, through its wholly owned Chilean subsidiary,
acquired a 70% interest in a 2.0% NSR royalty on certain portions of the
El Morro copper gold project in Chile (“El Morro”), from Xstrata Copper
Chile S.A., for $35 million.
Goldcorp Inc. (“Goldcorp”) holds 70%
ownership of the El Morro project and is the operator, with the
remaining 30% held by New Gold Inc. (“New Gold”).
Goldcorp and New Gold
reported that as of December 31, 2012, proven and probable reserves
totaled 9.5 million ounces of gold and 7 billion pounds of copper for
100% of the property.
Our royalty encompasses some legacy BHP
concessions that are currently estimated by Royal Gold to cover
approximately one-third of the total reserve.
On October 22, 2013, Goldcorp reported that the Environmental Assessment
Commission of Atacama analyzed a final report prepared by the Chilean
environmental permitting authority (“SEA”) and unanimously decided on
the reinstatement of the environmental permit for the El Morro project,
which had been suspended since April 27, 2012.
The permit was suspended
pending the definition and implementation by the SEA of a community
consultation process which corrects certain deficiencies in that process
as specifically identified by the Antofagasta Court of Appeals.
Goldcorp
states that it is optimizing project economics, evaluating alternatives
for long-term power supply, and continuing with community engagement to
advance the project.
Pascua-Lama Royalty
On October 31, 2013, Barrick Gold Corporation (“Barrick”) reported that
it has decided to temporarily suspend construction activities at
Pascua-Lama, except those required for environmental protection and
regulatory compliance.
Barrick said its decision to re-start will depend
on improved project economics such as go-forward costs, the outlook for
metal prices, and reduced uncertainty associated with legal and other
regulatory requirements.
Barrick also indicated that its decision will
maintain the option value of this major world class resource and its
potential to generate significant cash flows during its 25 year mine
life and beyond.
Royal Gold holds a 0.78% to 5.23% sliding scale net smelter royalty on
the Chilean side of the Pascua-Lama project and is not responsible for
capital costs or other costs of the project.
The Company does not expect
Barrick’s decision will have any impact on the carrying value of its
investment in the royalty at Pascua-Lama.
PROPERTY HIGHLIGHTS
Highlights at certain of the Company’s principal producing and
development properties during the quarter ended September 30, 2013, as
compared to the prior year quarter, are listed below:
Producing Properties
Andacollo – Gold production was 10% higher than the prior year
period based on increased mill throughput as a result of blasting and
process improvement initiatives.
The mine has produced about 91% of its
calendar year guidance to date.
However, Teck indicates that it expects
grade to decline over the coming quarters as the mine plan moves into
Phase 3 of the pit.
Cortez – Production decreased as Barrick continued to prioritize
open pit and underground production at Cortez Hills that is not subject
to our royalty interest.
Stockpiled roaster ore that is normally sent to
Goldstrike for processing was also displaced by Cortez Hill ore during
the quarter.
Holt – Production increased 32% over the prior year quarter, due
to higher grade ore sources and correspondingly, improved mill
recoveries.
Las Cruces – Production decreased 11% as First Quantum
experienced lower sales volumes.
First Quantum continues to test the
plant with higher ore throughput rates and lower grades as it prepares
to enter lower copper grade areas of the mine, which is expected in late
calendar 2014.
Mulatos – Production decreased 2% as increased crusher throughput
and a higher recovery ratio nearly offset a reduction in grade of ore
stacked on the heaps.
Alamos expects to have sufficient Escondida
high-grade zone reserves to continue processing until the first quarter
of calendar 2014, at which point the Escondida Deep zone is expected to
provide additional feed to continue mill production to the end of the
second quarter of calendar 2014.
The Mulatos royalty is capped at 2.0
million gold ounces of production.
As of September 30, 2013,
approximately 1.16 million cumulative ounces of gold have been produced.
Peñasquito – Gold and silver production was lower by 23% and 12%
respectively, over the prior year quarter, while production of lead and
zinc was also lower.
Goldcorp reported that the sulphide plant achieved
average throughput of approximately 110,000 tonnes per day during the
quarter with water availability as expected.
Goldcorp narrowed its full
year guidance to 370-390,000 ounces of gold as they expect higher grade
ore to be processed during the last quarter of the year.
They also
reported that progress on the Northern Well Field project continues on
schedule, and they expect construction activities to commence in the
fourth calendar quarter of 2013.
Robinson – Gold production was flat and copper production
decreased as the planned mine sequence moved to the Liberty pit which
has lower copper grades.
The Robinson mine’s calendar year 2013 results
remain on course to meet or exceed levels from calendar year 2012 as
their year-to-date copper production is at 75% of calendar year 2012 and
year-to-date gold production has already exceeded calendar 2012 levels.
Voisey’s Bay – Nickel and copper production decreased over the
prior year quarter as the mine completed the planned extraction of
higher grade ore in calendar 2012 versus ore encountered in calendar
2013.
Additionally, copper shipments completed during the June quarter
were ahead of Voisey’s typical copper shipment schedule causing a
reduction in the September 2013 quarterly shipments.
Wolverine – Silver production increased 9%, driven primarily by
an increase in the mine’s targeted production.
Last month, Yukon Zinc
announced an increase in their production target, from 60% to 75% of
design output, effective October 10, 2013.
As a result, they planned to
commence a three-week operating period for the mill, followed by a one
week shut down for maintenance.
Yukon Zinc estimates they will average
1,200 tonnes per day over the four-week period.
First quarter 2014 production and revenue for the Company’s principal
royalty interests are shown in Table 1 and historical production data is
shown in Table 2.
For more detailed information about each of our
principal royalty 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 204
properties on six continents, including interests on 36 producing mines
and 21 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 first quarter
will be held today at 10:00 a.m.
Mountain Time (noon Eastern
Time) and will be available by calling (800) 603-2779 (North America) or
(973) 200-3960 (international), passcode: 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 effective tax rate estimates; the contribution of Mt.
Milligan
to the Company’s revenue; the operators’ expectations regarding
shipments from Mt.
Milligan; indefinite suspension of construction at
Pascua-Lama; completion of water management systems and the receipt of
regulatory and legal approvals at Pascua-Lama; changes in grade and mill
throughput at Andacollo; construction activities at Peñasquito; timing
of shipping schedules at Voisey’s Bay; as well as other anticipated
developments at various mines.
Factors that could cause actual results
to differ materially from the projections include, among others,
precious metals, copper and nickel prices; actual tax rates; performance
of and production at the Companys royalty properties; decisions and
activities of the operators of the Company’s royalty properties; delays
in the operators’ securing or their inability to secure necessary
governmental permits; changes in operators’ project parameters and
timelines as plans continue to be refined; economic and market
conditions; unanticipated grade, geological, metallurgical, processing,
regulatory and legal or other problems the operators of the mining
properties may encounter; completion of feasibility studies; the ability
of the various operators to bring projects into production as expected;
and other subsequent events, as well as other factors described in the
Companys 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.
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1
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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).
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TABLE 1
First Quarter Fiscal 2014
Royalty Production and Revenue for Principal Royalty Interests
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Three Months Ended
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Three Months Ended
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September 30, 2013
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September 30, 2012
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Property
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Royalty
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Operator
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Metal(s)
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Revenue
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Reported
Production1
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Revenue
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Reported
Production1
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Andacollo2,3
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75%
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Tech
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Gold
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$
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17,156
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17,500
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oz.
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$
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19,702
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15,900
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oz.
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Voiseys Bay3
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2.7% NSR
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Vale
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$
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7,034
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$
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9,195
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Nickel
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28.4
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Mlbs.
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33.9
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Mlbs.
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Copper
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34.7
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Mlbs.
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43.6
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Mlbs.
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Peñasquito3
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2.0% NSR
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Goldcorp
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$
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6,558
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$
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11,150
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Gold
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101,500
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oz.
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131,200
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oz.
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Silver
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6.5
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Moz.
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7.4
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Moz.
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Lead
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39.8
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Mlbs.
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41.7
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Mlbs.
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Zinc
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73.5
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Mlbs.
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96.6
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Mlbs.
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Holt
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0.00013 x quarterly
average gold price
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St Andrew Goldfields
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Gold
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$
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3,887
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17,000
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oz.
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$
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4,561
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12,900
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oz.
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Mulatos4
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1.0% - 5.0% NSR
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Alamos
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Gold
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$
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2,701
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41,600
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oz.
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$
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3,496
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42,300
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oz.
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Las Cruces
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1.5% NSR
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First Quantum
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Copper
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$
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2,015
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41.2
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Mlbs.
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$
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2,462
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46.2
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