Royal Gold has added the following press release to its web site.
Royal Gold Reports Second Fiscal Quarter 2014 Results: First Revenue from Mt.
Milligan and Two Portfolio Additions
DENVER--(BUSINESS WIRE)--
Royal Gold, Inc. (NASDAQ:RGLD)(TSX:RGL) (“Royal Gold” or the
“Company”) generated net income attributable to Royal Gold stockholders
of $10.7 million, or $0.16 per basic share, on revenue of $52.8 million
for the second quarter of fiscal 2014.
This compares to net income
attributable to Royal Gold stockholders of $27.2 million, or $0.42 per
basic share, on revenue of $79.9 million for the second quarter of
fiscal 2013.
The average gold price was $1,276 per ounce in the second
quarter, down 26% from the prior year quarter.
Q2 Fiscal Year (“FY”) 2014 Highlights
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Adjusted EBITDA1 of $0.70 per basic share or 86% of revenue
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First revenue of $2.6 million from Mt.
Milligan on sale of 2,149 ounces
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Gold Equivalent Ounces (“GEOs”)2 of 41,362
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Cash dividends of $13.0 million, representing a payout ratio of 38% of
operating cash flow
Recent Developments
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Acquisition of a 1.0% royalty on the southern end of Barrick Gold
Corporation’s (“Barrick”) Goldrush deposit in Nevada
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Increased ownership in the NVR1 royalty at Cortez from 0.39% to 1.01%
outside of the Crossroad Claims, and from 0.00% to 0.62% within the
Crossroad Claims
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Expansion of the Company’s credit facility to $450 million from $350
million
Tony Jensen, President and CEO, commented, “Our second quarter results
include new contributions from Mt.
Milligan and stronger production at
Peñasquito.
In early 2014 we expanded our business in Nevada and
enhanced our financial flexibility by increasing our credit facility.
This brings Royal Gold’s available liquidity to $1.1 billion and
provides a platform for future growth in our business.”
Second quarter revenue was impacted by 26% lower average metal prices
and 11% lower production volume subject to our interests than the prior
year quarter.
In particular, volume was affected by lower production at
Andacollo as Teck shifted into a lower grade phase of mining.
As a
result, production was 31% lower than the prior year quarter.
While
guidance is pending, mining of lower grades is likely to continue
throughout 2014.
This was partially offset by higher grades and thus
stronger production at Peñasquito.
As of December 31, 2013, the Company had a working capital surplus of
$704.8 million.
Current assets were $729.0 million (including $659.3
million in cash and equivalents), compared to current liabilities of
$24.2 million, resulting in a current ratio of approximately 30 to 1.
In
addition to available working capital, the Company had $350 million
available under its revolving line of credit at year-end, which has
since been increased to $450 million.
RECENT DEVELOPMENTS
52.25% Stream on Thompson Creek’s Mt.
Milligan Project
Thompson Creek reported that concentrate production at Mt.
Milligan from
start-up through December 31, 2013 contained 21.1 thousand ounces of
gold.
Royal Gold received 2,149 ounces of physical gold based on the
first shipment of 5,485 payable ounces during our second quarter.
Thompson Creek recently announced that a second shipment containing
10,475 payable ounces shipped on January 23, 2014.
Thompson Creek reported that they expect the mine will reach commercial
production within the first calendar quarter of 2014, defined as
operating the mill at 60% of design capacity for 30 days.
1.0% Royalty on Barrick’s Goldrush Deposit
In January 2014, Royal Gold acquired a 1.0% royalty on the southern end
of Barrick’s Goldrush deposit in Nevada from a private party.
Goldrush
is located approximately four miles from the Cortez mine and is
currently in the exploration stage.
Barrick reports 65.9 million tons of
mineralized material with an average grade of 0.127 ounces of gold per
ton at Goldrush as of December 31, 2012.
Barrick reports that the system
remains open in multiple directions, including Royal Gold’s new royalty
interest.
NVR1 Royalty at Cortez
In January 2014, Royal Gold, through a wholly-owned subsidiary,
purchased additional interests in the limited partnership that owns the
NVR1 royalty covering certain portions of the Pipeline Complex at
Barrick’s Cortez gold mine in Nevada.
The NVR1 royalty rate attributable
to our interest increased from 0.39% to 1.01% outside of the Crossroad
Claims and from zero to 0.62% within the Crossroad Claims.
Royal Gold
also owns three other royalties within the Pipeline Complex: namely
GSR1, GSR2 and GSR3.
Credit Facility
In January 2014, Royal Gold expanded and extended its revolving credit
facility from a $350 million facility maturing in May 2017 to a $450
million facility maturing in January 2019.
In addition, the facility
includes a $150 million accordion feature that allows the Company to
increase availability at its option, subject to satisfaction of certain
conditions, to a total of $600 million.
The commitment fee is reduced to
0.25% from 0.375% and the drawn interest rate is reduced to LIBOR+1.25%
from LIBOR +1.75%.
HSBC Securities (USA) Inc. was sole lead arranger and
joint book runner, and Scotiabank was syndication agent and joint book
runner.
PROPERTY HIGHLIGHTS
Highlights at certain of the Company’s principal producing and
development properties during the quarter ended December 31, 2013, as
compared to the prior year quarter, are listed below.
Production, as
used below, relates to the amount of metal sales subject to our royalty
and stream interests, as reported to us by the operators of the mines.
Producing Properties
Andacollo – During the first three quarters of calendar 2013,
Andacollo completed the initial phase of its hypogene project and
realized record gold production for the full year.
However, the fourth
quarter of calendar 2013 marked a shift to a lower grade phase of
mining, which resulted in 31% lower gold production than the prior year
quarter.
2014 production guidance is forthcoming, but with the shift to
lower grade ore underway, it is expected that the average grade of ore
mined in calendar 2014 will be similar to the fourth calendar quarter of
2013.
Within that lower 2014 grade profile, gold production for the year
at Andacollo is expected to be weighted toward the second half of the
calendar year.
Cortez – A year ago, Pipeline heap leach material and stockpiled
roaster ore processed at Goldstrike provided for production to our
account at Cortez.
During this quarter, surface mining activity
continued to return from Cortez Hills to Pipeline and production to our
account was greater than in the September 2013 quarter.
Pipeline
production to our account is likely to continue to increase.
However,
during this quarter it remained below year ago levels by about 55%.
Holt – Production decreased 15% due to scheduled hoist motor and
hoist drive upgrades performed during the quarter.
The operator expects
this improvement to provide additional future hoisting capacity and
increased reliability.
Las Cruces – Production decreased 3% 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 34% due to lower than expected
grades from the Escondida deposit, somewhat offset by higher open pit
heap leach production.
Alamos expects to deplete the Escondida high
grade zone by the end of the first calendar quarter of 2014, at which
point the Escondida Deep zone is expected to provide additional feed to
continue mill production to the end of the second calendar quarter of
2014.
Alamos intends to transition to processing high grade ore from the
San Carlos zone once the Escondida Deep zone has been depleted.
The
Mulatos royalty is capped at 2.0 million gold ounces of production.
As
of December 31, 2013, approximately 1.2 million cumulative ounces of
gold have been produced.
Peñasquito – Gold and silver production increased 60% and 34%,
respectively, over the prior year quarter, while production of lead and
zinc was 99% higher and 4% lower, respectively.
Goldcorp reported that
mining in the higher grade portion of the pit will continue throughout
calendar 2014 and, combined with an assumed throughput of 110,000 tonnes
per day, production is expected to increase significantly to between
530,000 and 560,000 ounces of gold.
Including other metals on a gold
equivalent basis, production is expected to total approximately 1.2
million to 1.25 million ounces.
Production expectations over the balance
of the five year period assume throughput of 110,000 to 115,000 tonnes
per day.
Goldcorp has prepared a life-of-mine plan for Peñasquito that
reflects a positive effect on the 2014 and five year production profile.
The Company also reported that the plan includes a reduction to the
projected reserves and mine life from 19 years to 13 years because the
final two phases of the previous ultimate pit will not be mined or
processed under current economic assumptions.
Robinson – Gold production was down 25% and copper production
decreased 46% over the prior year quarter as the planned mine sequence
moved to the Liberty pit which has lower metal grades.
Voisey’s Bay – Nickel production was flat and copper production
decreased 15% over the prior year quarter.
Production and revenue for the three and six months ended December 31,
2013 for the Company’s principal royalty interests are shown in Tables 1
and 2, and historical production data is shown in Table 3.
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 38 producing mines
and 20 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 its second quarter
fiscal 2014 results will occur at noon Eastern Time (10:00 a.m.
Mountain
Time).
The call will be webcast and archived on the Company’s website
for a limited time.
Fiscal 2014 Second Quarter Earnings Call Information:
Dial-In Numbers:
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(866) 270-1533 (U.S.); toll free
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(855) 669-9657 (Canada); toll free
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(412) 317-0797 (International)
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Conference Title:
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Royal Gold
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Webcast URL:
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www.royalgold.com
under Investors, Events & Presentations
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__________________________
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; changes in grade and mill throughput at
Andacollo; anticipated production at Pipeline; life-of-mine plan at
Peñasquito; 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.
1 The Company defines Adjusted EBITDA, a non-GAAP financial
measure, as net income plus depreciation, depletion and amortization,
non-cash charges, income tax expense, interest and other expense, and
any impairment of mining assets, less non-controlling interests in
operating income of consolidated subsidiaries, interest and other
income, and any royalty portfolio restructuring gains or losses (see
Schedule A).
2 The Company defines Gold Equivalent Ounces as revenue
divided by the average gold price for the period.
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TABLE 1
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Royalty Production and Revenue for Principal Royalty Interests
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Three Months Ended December 31, 2013 and December 31, 2012
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Three Months Ended
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Three Months Ended
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December 31, 2013
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December 31, 2012
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Reported
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Reported
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Royalty/Stream
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Operator
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Metal(s)
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Revenue
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Production 1
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Revenue
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Production 1
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Royalty:
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Andacollo 2,3
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75%
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Teck
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Gold
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$ 11,736
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12,500
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oz.
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$ 23,128
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18,000
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oz.
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Voiseys Bay 3
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2.7% NSR
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Vale
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$ 5,900
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$ 7,413
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Nickel
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28.5
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Mlbs.
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28.8
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Mlbs.
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Copper
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26.4
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Mlbs.
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31.2
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Mlbs.
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Peñasquito
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2.0% NSR
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Goldcorp
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$ 7,003
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$ 6,612
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Gold
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145,800
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oz.
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91,000
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oz.
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Silver
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6.2
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Moz.
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4.6
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Moz.
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Lead
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47.1
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Mlbs.
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