EXHIBIT 99.1

 

Picture 1

 

Royal Gold Reports Second Quarter 2019 Results

 

DENVER, COLORADO.  FEBRUARY 6, 2019: ROYAL GOLD, INC. (NASDAQ: RGLD) (together with its subsidiaries, “Royal Gold” or the “Company,” “we” or “our”) reports net income of $23.6 million, or $0.36 per share, on revenue of $97.6 million in its fiscal second quarter ended December 31, 2018 (“second quarter”).  Second quarter reported earnings included an income tax benefit resulting from the Company’s updated analysis of the tax impacts attributable to H.R. 1, originally known as the Tax Cuts and Jobs Act (the “Act”), which was partially offset by a decrease in the fair value of equity securities.

 

Second Quarter Key Metrics Compared to Prior Year Quarter:

 

·

Revenue of $97.6 million, a decrease of 14.6%

·

Operating cash flow of $58.8 million, a decrease of 22.2%

·

Volume of 79,600 GEOs,1 a decrease of 11.3%

·

Dividends paid of $16.4 million, an increase of 4.3%

·

Average price of $1,226 per gold ounce, a decrease of 3.8%

 

“Our second quarter consolidated operating performance was consistent with our guidance,” commented Tony Jensen, President and CEO.  “We were pleased to see several positive developments in our portfolio during the quarter, including good operating performance at Mount Milligan despite water supply challenges, continued improvement in production levels at Rainy River, and the start of commercial production at the Pyrite Leach Project at Peñasquito.  As we look forward in calendar 2019, we expect to see continued improvement at Rainy River and further positive news with respect to resolving water supply issues at Mount Milligan.”

 

“We also took our first step toward realizing value for our equity interest in the Peak Gold Project (“Peak Gold”) near Tok, Alaska,” Mr. Jensen continued.  “We believe that Peak Gold is a very attractive opportunity for an operating company that can bring additional talent to advance the project towards production.  Royal Gold will remain committed to the project over the long term through our existing royalty interests, and our considerations for any potential transfer of ownership will include a commitment to advance the project as a priority while respecting best practices for responsible development.” 

 

Recent Developments

 

Mount Milligan

 

At the Mount Milligan mine, Centerra Gold Inc. (“Centerra”) reported that there were sufficient water resources in the fourth calendar quarter of 2018 to enable the mill facility to run at a higher than anticipated throughput rate, allowing the operation to achieve the upper end of gold and copper production guidance for the 2018 calendar year.  Calendar year 2018 gold production was 194,993 ounces compared to the guidance range of 175,000 to 195,000 ounces, and copper production was 47.1 million pounds compared to the guidance range of 40 million to 47 million pounds.  During the fourth quarter of calendar 2018, production from Mount Milligan was 60,271 ounces of gold and 11.8 million pounds of copper.

 

 


1Gold Equivalent Ounces (“GEOs”) are calculated as revenue divided by the average gold price for the same period. GEOs net of stream payments were 64,800 in the second quarter, compared to 74,100 in the prior second quarter.

1


 

 

For calendar year 2019, Centerra expects mill throughput at Mount Milligan to be reduced during the remainder of the winter season to properly manage the water balance until the water flow increases in the spring.  Once the spring melt has commenced, typically in April, Centerra expects mill throughput levels to return to full capacity.  In the second half of calendar 2019, Centerra expects to achieve an average throughput of approximately 55,000 tonnes per calendar day. For the full calendar year, Centerra expects Mount Milligan’s payable gold production to be in the range of 155,000 to 175,000 ounces, and payable copper production to be in the range of 65 to 75 million pounds.

 

With respect to water sourcing and permitting activities at Mount Milligan, Centerra reports that permit applications are in process to allow the mine to draw additional flow during the spring melt period for the next three years from each of Philip Lake, Rainbow Creek and Meadows Creek.  This additional water would be stored in the tailings storage facility for use during the remainder of the year, which Centerra expects to be sufficient to allow operations to continue at a rate of 55,000 tonnes per calendar day.  Centerra also reports that it is completing an inventory of regional water sources to identify other potential long-term water sources that could provide additional water through to the end of the mine life.

 

Rainy River

 

Improved operating performance at the Rainy River mine, owned and operated by New Gold Inc. (“New Gold”), continued during the fourth calendar quarter of 2018.  Quarterly gold production was 77,202 ounces, a 39% increase over the prior quarter due mainly to higher grade, recovery and throughput rate.  Mill processing reached a run rate of 25,835 tonnes per operating day, the first full quarter in which the mill averaged a daily run rate above the target 24,000 tonnes per day, and the average throughput was 20,558 tonnes per calendar day at an 80% availability.  New Gold expects to replace the ball mill trunnion during the first calendar quarter of 2019 and that recoveries will continue to improve throughout the calendar year.

 

New Gold also announced that the underground development plan at Rainy River was deferred to 2020, and that it will review alternative underground mining scenarios during calendar 2019 with the overall objective of reducing capital requirements and improving the return on investment for the underground portion of the mine.

 

Adviser Retained to Assist with Peak Gold Project

 

Royal Gold retained Scotia Capital Inc. (“Scotia”) to assist in identifying parties interested in advancing Peak Gold.  We own a 40% indirect equity interest in Peak Gold, held through our wholly owned subsidiary Royal Alaska, LLC, and 809,744 common shares (or approximately 12.7%) of Contango ORE, Inc. (“CORE”), our joint venture partner.  In addition to the ownership interests in Peak Gold and CORE equity, the Company also has the right to sell up to 20% of CORE’s aggregate membership interest in the joint venture (for a total sale of up to 60% of the joint venture membership interest) and holds two net smelter return royalties on the Peak Gold land package.

 

Second Quarter 2019 Overview

 

Second quarter revenue was $97.6 million compared to $114.3 million in the prior year quarter, with stream revenue totaling $67.7 million and royalty revenue totaling $29.9 million.  The decrease in total revenue for the second quarter compared to the prior year quarter was due to lower average gold, silver and copper prices, as well as lower overall sales and production.  Lower gold stream sales from Andacollo and Pueblo Viejo were partially offset by higher gold and copper sales from Mount Milligan and initial contributions from Rainy River, while a decrease in royalty revenue was due to lower production at Peñasquito and Cortez.

 

Second quarter cost of sales was approximately $18.2 million, compared to $19.9 million in the prior year quarter.  The decrease was primarily due to lower gold sales from Andacollo.  Cost of sales is specific to the Company’s stream agreements and is the result of the purchase of gold, silver and copper for a cash payment.

 

General and administrative expenses decreased to $7.4 million in the second quarter from $9.6 million during the prior year quarter.  The decrease during the current period was primarily due to a decrease in legal costs related to the settlement of the Voisey’s Bay royalty calculation dispute during the first quarter of fiscal 2019. 

 

Depreciation, depletion and amortization expense decreased to $38.8 million in the second quarter from $42.0 million in the prior year quarter.  The decrease was primarily attributable to a decrease in gold sales at Andacollo and Pueblo Viejo, partially offset by an increase in metal sales at Mount Milligan and Rainy River. 

 

2


 

On July 1, 2018, the Company adopted new Accounting Standards Update guidance which impacts how changes in fair value of equity securities are recognized at each reporting period.  As a result, for the three months ended December 31, 2018, the Company recognized a loss of $3.6 million on changes in fair value of equity securities related to the holdings in CORE and Rubicon Minerals Corporation.  The new guidance could increase earnings volatility in the future.

 

The Company recognized a second quarter income tax benefit of $2.1 million, compared to an expense of $48.4 million during the prior year quarter.  The effective tax rate for the second quarter was (10.3)% compared to 148.5% for the prior year quarter.  The lower than expected effective tax rate is due to approximately $6.0 million of discrete tax items recorded in the quarter attributable to true-ups made after completing the Company’s analysis of the Act and consideration of recently-issued U.S. Treasury and IRS guidance.  The Company does not anticipate future material changes due to evolving guidance; however, many aspects of the law remain unclear and further regulatory guidance could impact the Company’s effective tax rate.

 

At December 31, 2018, the Company had current assets of $203.7 million compared to current liabilities of $37.2 million, resulting in working capital of $166.5 million.  This compares to current assets of $125.8 million and current liabilities of $51.4 million at June 30, 2018, resulting in working capital of $74.4 million. 

 

During the second quarter, liquidity needs were met from $79.4 million in net revenue and available cash resources.  As of December 31, 2018, the Company had no amounts outstanding and the full $1 billion available under its revolving credit facility.  Working capital, combined with the Company’s undrawn revolving credit facility, resulted in approximately $1.2 billion of total liquidity at December 31, 2018. 

 

Property Highlights

 

A summary of second quarter and historical production reported by operators of the Company’s stream and royalty properties can be found on Tables 1 and 2.  Calendar year 2018 operator production estimates for certain properties in which the Company has interests compared to actual production at those properties through December 31, 2018 can be found on Table 3.  Results of the streaming business for the second quarter, compared to the prior year quarter, can be found on Table 4.  Highlights at certain of the Company’s principal producing and development properties during the second quarter, compared to the prior year quarter, are detailed in the Quarterly Report on Form 10-Q.

 

CORPORATE PROFILE

 

Royal Gold is a precious metals stream and royalty company engaged in the acquisition and management of precious metal streams, royalties and similar production-based interests.  As of December 31, 2018, the Company owns interests on 191 properties on five continents, including interests on 41 producing mines and 17 development stage projects.  Royal Gold is publicly traded on the Nasdaq Global Select Market under the symbol “RGLD.”  The Company’s website is located at www.royalgold.com.

 

For further information, please contact:

 

Alistair Baker

Director, Business Development

(720) 554-6995

 

Note:

   Management’s conference call reviewing the second quarter results will be held on Thursday, February 7, 2019, 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.

 

Second Quarter Earnings Call Information:

 

 

 

 

Dial-In Numbers:

 

855-209-8260 (U.S.); toll free

 

 

855-669-9657 (Canada); toll free

 

 

412-542-4106 (International)

Conference Title:

 

Royal Gold

Webcast URL:

 

www.royalgold.com under Investors, Events & Presentations

 

3


 

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 solid quarterly results; future production contributions from Peñasquito, Mount Milligan and Rainy River; expectations for continued improvement at Rainy River and positive water supply developments at Mount Milligan; the value to be realized from the Company’s interests in Peak Gold and CORE common shares following a strategic review process; the belief that Peak Gold is an attractive opportunity for an operating company; calendar year 2019 mill throughput, water availability and total payable gold and copper production from Mount Milligan; the impact, if any, on Mount Milligan of Centerra’s water permit applications, whether or not granted, and its regional water source inventory; New Gold’s expectations for improved mill recoveries and the impact of its review of underground mining scenarios; changes in taxes and tax rates resulting from future tax legislation and regulatory guidance; and operators’ estimated and actual production for calendar year 2018, 2019 and future years, and their estimates of reserves and mineralized material.  Net gold and metal reserves attributable to Royal Gold’s stream, royalty and other interests are subject to certain assumptions and, like reserves, do not reflect actual ounces that will be produced.  Like any stream, royalty or similar interest on a non-producing or not-yet-in-development project, our interests on development projects are subject to certain risks, such as the ability of the operators to bring the projects into production and operate in accordance with their feasibility studies and mine plans, and the ability of Royal Gold to make accurate assumptions regarding valuation and timing and amount of payments.  In addition, many of our interests are subject to risks associated with conducting business in a foreign country, including application of foreign laws to contract and other disputes, foreign environmental laws and enforcement and uncertain political and economic environments.  Factors that could cause actual results to differ materially from projections include, among others, precious metals, copper and nickel prices; performance of and production at the Company's stream and royalty properties; the ability of operators to finance project construction to completion and bring projects into production as expected, including development stage mining properties, mine and mill expansion projects and other development and construction projects; operators’ delays in securing or inability to secure or maintain necessary governmental permits; decisions and activities of the operators of the Company's stream and royalty properties; unanticipated grade, environmental, geological, seismic, metallurgical, processing, liquidity or other problems the operators of the Company’s stream and royalty properties may encounter; operators’ inability to access sufficient raw materials, water or power; 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 stream and royalty properties; contests to the Company’s stream and royalty interests and title and other defects in the properties where the Company holds stream and royalty interests; errors or disputes in calculating stream deliveries and royalty payments, or deliveries or payments not made in accordance with stream and royalty agreements; economic and market conditions; changes in laws governing the Company and its stream and royalty interests or the operators of the properties subject to such interests, 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.

 

Statement Regarding Third-Party Information:  Certain information provided in this press release, including production estimates for calendar 2019, has been provided to us by the operators of the relevant properties or is publicly available information filed by these operators with applicable securities regulatory bodies, including the Securities and Exchange Commission.  Royal Gold has not verified, and is not in a position to verify, and expressly disclaims any responsibility for the accuracy, completeness or fairness of such third-party information and refers the reader to the public reports filed by the operators for information regarding those properties.

 

4


 

TABLE 1

Second Quarter Fiscal 2019

Revenue and Operators’ Reported Production for Principal Stream and Royalty Interests

(In thousands, except reported production in oz. and lbs.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

 

 

December 31, 2018

 

December 31, 2017

 

 

    

    

    

    

 

    

Reported

    

    

 

    

Reported

 

Stream/Royalty

 

Metal(s)

 

Revenue

 

Production1

 

Revenue

 

Production1

 

Stream:

 

  

 

 

  

 

  

 

 

  

 

  

 

Mount Milligan

 

 

 

$

28,169

 

 

 

$

21,632

 

 

 

 

 

Gold

 

 

 

 

17,700

oz.

 

 

 

12,600

oz.

 

 

Copper

 

 

 

 

2.4

Mlbs.

 

 

 

1.8

Mlbs.

Pueblo Viejo

 

 

 

$

18,230

 

 

 

$

26,355

 

 

 

 

 

Gold

 

 

 

 

8,900

oz.

 

 

 

14,500

oz.

 

 

Silver

 

 

  

 

509,500

oz.

 

  

 

469,600

oz.

Wassa and Prestea

 

Gold

 

$

9,550

 

7,800

oz.

$

8,629

 

6,800

oz.

Andacollo

 

Gold

 

$

7,635

 

6,200

oz.

$

21,601

 

17,000

oz.

Other

 

 

 

$

4,095

 

 

 

$

1,070

 

 

 

 

 

Gold

 

 

 

 

2,900

oz.

 

 

 

800.0

oz.

 

 

Silver

 

 

 

 

36,000

oz.

 

 

 

N/A

 

Total stream revenue

 

  

 

$

67,679

 

  

 

$

79,287

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalty:

 

  

 

 

  

 

  

 

 

  

 

  

 

Peñasquito

 

  

 

$

4,660

 

  

 

$

6,190

 

  

 

 

 

Gold

 

 

  

 

53,400

oz.

 

  

 

71,100

oz.

 

 

Silver

 

 

  

 

5.0

Moz.

 

  

 

5.1

Moz.

 

 

Lead

 

 

  

 

36.1

Mlbs.

 

  

 

33.4

Mlbs.

 

 

Zinc

 

 

  

 

83.1

Mlbs.

 

  

 

94.4

Mlbs.

Cortez

 

Gold

 

$

2,335

 

19,900

oz.

$

2,934

 

25,000

oz.

Other

 

Various

 

$

22,918

 

N/A

 

$

25,937

 

N/A

 

Total royalty revenue

 

  

 

$

29,913

 

  

 

$

35,061

 

  

 

Total Revenue

 

  

 

$

97,592

 

  

 

$

114,348

 

  

 

 

5


 

TABLE 1

Second Quarter Fiscal 2019

Revenue and Operators’ Reported Production for Principal Stream and Royalty Interests

(In thousands, except reported production in oz. and lbs.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

Six Months Ended

 

 

 

 

 

December 31, 2018

 

December 31, 2017

 

 

    

    

    

    

 

    

Reported

    

    

 

    

Reported

 

Stream/Royalty

 

Metal(s)

 

Revenue

 

Production1

 

Revenue

 

Production1

 

Stream:

 

  

 

 

  

 

  

 

 

  

 

  

 

Pueblo Viejo

 

 

 

$

37,717

 

 

 

$

51,758

 

 

 

 

 

Gold

 

 

  

 

18,100

oz.

 

  

 

27,400

oz.

 

 

Silver

 

 

  

 

1.0

Moz.

 

  

 

1.0

Moz.

Mount Milligan

 

  

 

$

37,015

 

  

 

$

53,584

 

  

 

 

 

Gold

 

 

  

 

23,300

oz.

 

  

 

31,300

oz.

 

 

Copper

 

 

  

 

3.2

Mlbs.

 

  

 

4.4

Mlbs.

Andacollo

 

Gold

 

$

35,378

 

28,900

oz.

$

33,938

 

26,700

oz.

Wassa and Prestea

 

Gold

 

$

17,611

 

14,400

oz.

$

17,699

 

13,900

oz.

Other

 

 

 

$

9,995

 

 

 

$

1,070

 

 

 

 

 

Gold

 

 

 

 

7,400

oz.

 

 

 

800

oz.

 

 

Silver

 

 

 

 

67,500

oz.

 

 

 

N/A

 

Total stream revenue

 

 

 

$

137,716

 

  

 

$

158,049

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalty:

 

  

 

 

  

 

  

 

 

  

 

  

 

Peñasquito

 

  

 

$

8,297

 

  

 

$

13,986

 

  

 

 

 

Gold

 

 

  

 

103,700

oz.

 

  

 

205,100

oz.

 

 

Silver

 

 

  

 

9.2

Moz.

 

  

 

11.0

Moz.

 

 

Lead

 

 

  

 

65.9

Mlbs.

 

  

 

69.6

Mlbs.

 

 

Zinc

 

 

  

 

147.3

Mlbs.

 

  

 

186.8

Mlbs.

Cortez

 

Gold

 

$

2,939

 

26,900

oz.

$

5,922

 

54,900

oz.

Other

 

Various

 

$

48,633

 

N/A

 

$

48,867

 

N/A

 

Total royalty revenue

 

  

 

$

59,869

 

  

 

$

68,775

 

  

 

Total revenue

 

  

 

$

197,585

 

  

 

$

226,824

 

  

 

 

 

 

6


 

 

TABLE 2

Operators’ Historical Production

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported Production For The Quarter Ended1

 

Property

    

Operator

    

Stream/Royalty

    

Metal(s)

    

Dec. 31, 2018

 

    

Sep. 30, 2018

    

Jun. 30, 2018

    

Mar. 31, 2018

    

Dec. 31, 2017

    

Stream:

 

  

 

  

 

  

 

 

 

 

  

 

  

 

  

 

  

 

Mount Milligan

 

Centerra

 

35% of payable gold

 

Gold

 

17,700

oz.

 

5,500

oz.

20,700

oz.

25,800

oz.

12,600

oz.

 

 

  

 

18.75% of payable copper

 

Copper

 

2.4

Mlbs.

 

0.8

Mlbs.

1.6

Mlbs.

4.3

Mlbs.

1.8

Mlbs.

Pueblo Viejo

 

Barrick (60%)

 

7.5% of gold produced up to 990,000 ounces; 3.75% therafter

 

Gold

 

8,900

oz.

 

9,200

oz.

13,200

oz.

8,500

oz.

14,500

oz.

 

 

  

 

75% of payable silver up to 50 million ounces; 37.5% therafter

 

Silver

 

509,500

oz.

 

540,200

oz.

616,300

oz.

260,800

oz.

469,600

oz.

Andacollo

 

Teck

 

100% of gold produced

 

Gold

 

6,200

oz.

 

22,700

oz.

12,400

oz.

5,400

oz.

17,000

oz.

Wassa and Prestea

 

Golden Star

 

10.5% of gold produced up to 240,000 ounces; 5.5% therafter

 

Gold

 

7,800

oz.

 

6,500

oz.

2,800

oz.

6,300

oz.

6,800

oz.

Royalty:

 

  

 

  

 

  

 

 

 

 

  

 

  

 

  

 

  

 

Peñasquito

 

Goldcorp

 

2.0% NSR

 

  

 

 

 

 

  

 

  

 

  

 

  

 

 

 

  

 

  

 

Gold

 

53,400

oz.

 

50,300

oz.

79,600

oz.

91,200

oz.

71,100

oz.

 

 

  

 

  

 

Silver

 

5.0

Moz.

 

4.2

Moz.

5.0

Moz.

5.0

Moz.

5.1

Moz.

 

 

  

 

  

 

Lead

 

36.1

Mlbs.

 

29.9

Mlbs.

26.6

Mlbs.

26.0

Mlbs.

33.4

Mlbs.

 

 

  

 

  

 

Zinc

 

83.1

Mlbs.

 

64.2

Mlbs.

73.7

Mlbs.

88.0

Mlbs.

94.4

Mlbs.

Cortez

 

Barrick

 

GSR1 and GSR2, GSR3, NVR1

 

Gold

 

19,900

oz.

 

7,000

oz.

3,900

oz.

18,900

oz.

25,000

oz.


FOOTNOTES

Tables 1 and 2

 

1     Reported production relates to the amount of metal sales that are subject to the Company’s stream and royalty interests for the stated period, as reported to the Company by operators of the mines.

2     Individually, no stream or royalty included within the “Other” category contributed greater than 5% of the Company’s total revenue for either period, except Rainy River for the six months ended December 31, 2018.  The “Other” category for streams is the Rainy River gold and silver stream. 

3     The gold stream percentage at Wassa and Prestea increased to 10.5% from 9.25%, effective January 1, 2018.

 

 

7


 

 

TABLE 3

Calendar 2018 Operator’s Production Estimate vs Actual Production

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calendar 2018 Operator’s Production

 

Calendar 2018 Operator’s Production

 

 

Estimate1

 

Actual2,3

 

    

Gold

    

Silver

    

Base Metals

    

Gold

    

Silver

    

Base Metals

Stream/Royalty

 

(oz.)

 

(oz.)

 

(lbs.)

 

(oz.)

 

(oz.)

 

(lbs.)

Stream:

 

  

 

  

 

  

 

  

 

  

 

  

Andacollo4

 

66,700

 

  

 

  

 

59,600

 

  

 

  

Mount Milligan5

 

175,000 - 195,000

 

  

 

  

 

195,000

 

  

 

  

Copper

 

  

 

  

 

40 – 47 million

 

  

 

  

 

47.1 million

Pueblo Viejo6

 

575,000 - 590,000

 

Not provided

 

  

 

581,000

 

Not provided

 

  

Wassa and Prestea7

 

225,000 - 235,000

 

  

 

  

 

224,900

 

  

 

  

Royalty:

 

  

 

  

 

  

 

  

 

  

 

  

Cortez GSR1

 

48,300

 

  

 

  

 

44,600

 

  

 

  

Cortez GSR2

 

2,200

 

  

 

  

 

5,200

 

  

 

  

Cortez GSR3

 

50,500

 

  

 

  

 

49,800

 

  

 

  

Cortez NVR1

 

31,600

 

  

 

  

 

36,600

 

  

 

  

Peñasquito8

 

310,000

 

Not provided

 

  

 

220,000

 

14.1 million

 

  

Lead

 

  

 

  

 

160 million

 

  

 

  

 

82.5 million

Zinc

 

  

 

  

 

300 million

 

  

 

  

 

225.9 million


1

Production estimates received from the operators are for calendar 2018.  There can be no assurance that production estimates received from the operators will be achieved.  Please refer to the cautionary language regarding forward-looking statements and the statement regarding third party information contained in this press release, as well as the Risk Factors identified in Part I, Item 1A, of the Company’s Fiscal 2018 Form 10-K for information regarding factors that could affect actual results.

2

Actual production figures shown are from the operators and cover the period January 1, 2018 through December 31, 2018, except for Peñasquito which covers the period from January 1, 2018 through September 30, 2018.

3

Actual production figures for Cortez are based on information provided to the Company by Barrick, and actual production figures for Andacollo, Mount Milligan, Pueblo Viejo, Peñasquito (gold) and Wassa and Prestea are the publicly reported figures of the operators of those properties.

4

The estimated and actual production figures shown for Andacollo are contained gold in concentrate.

5

The estimated and actual production figures shown for Mount Milligan are payable gold and copper in concentrate.

6

The estimated and actual production figures shown for Pueblo Viejo are payable gold in doré and represent Barrick’s 60% interest gold produced from Pueblo Viejo.  The operator did not provide estimated silver production.

7

The estimated gold production figures shown for Wassa and Prestea are payable gold in concentrate and doré.  

8

The estimated and actual gold production figures shown for Peñasquito are payable gold in concentrate and doré.  The estimated and actual lead and zinc production figures shown are payable lead and zinc from concentrate.  The operator did not provide estimated silver production and the actual silver production figure shown is payable silver in concentrate and doré.

8


 

 

TABLE 4

Stream Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

As of

 

As of

 

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

June 30, 2018

Gold Stream

    

Purchases (oz.)

    

Sales (oz.)

    

Purchases (oz.)

    

Sales (oz.)

    

Inventory (oz.)

    

Inventory (oz.)

Andacollo

 

10,700

 

6,200

 

13,500

 

17,000

 

4,500

 

7,400

Pueblo Viejo

 

10,400

 

8,900

 

12,600

 

14,500

 

10,400

 

9,200

Mount Milligan

 

10,300

 

17,700

 

17,700

 

12,700

 

 

300

Wassa and Prestea

 

4,700

 

7,900

 

6,000

 

6,800

 

700

 

3,900

Rainy River

 

4,500

 

2,900

 

1,000

 

800

 

1,600

 

800

Total

 

40,600

 

43,600

 

50,800

 

51,800

 

17,200

 

21,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

As of

 

As of

 

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

June 30, 2018

Silver Stream

    

Purchases (oz.)

    

Sales (oz.)

    

Purchases (oz.)

    

Sales (oz.)

    

Inventory (oz.)

    

Inventory (oz.)

Pueblo Viejo

 

469,000

 

509,500

 

260,200

 

469,600

 

469,000

 

540,200

Rainy River

 

41,700

 

36,000

 

11,900

 

 —

 

41,700

 

32,300

Total

 

510,700

 

545,500

 

272,100

 

469,600

 

510,700

 

572,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Three Months Ended

 

As of

 

As of

 

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

June 30, 2018

Copper Stream

    

Purchases (Mlbs.)

    

Sales (Mlbs.)

    

Purchases (Mlbs.)

    

Sales (Mlbs.)

    

Inventory (Mlbs.)

    

Inventory (Mlbs.)

Mount Milligan

 

2.5

 

2.4

 

2.7

 

1.8

 

0.9

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

Six Months Ended

 

As of

 

As of

 

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

June 30, 2018

Gold Stream

    

Purchases (oz.)

    

Sales (oz.)

    

Purchases (oz.)

    

Sales (oz.)

    

Inventory (oz.)

    

Inventory (oz.)

Andacollo

 

26,000

 

28,900

 

26,500

 

26,700

 

4,500

 

7,400

Mount Milligan

 

23,000

 

23,300

 

36,400

 

31,300

 

 

300

Pueblo Viejo

 

19,300

 

18,100

 

23,100

 

27,400

 

10,400

 

9,200

Wassa and Prestea

 

11,200

 

14,300

 

13,400

 

13,900

 

700

 

3,900

Rainy River

 

8,100

 

7,400

 

1,000

 

800

 

1,600

 

800

Total

 

87,600

 

92,000

 

100,400

 

100,100

 

17,200

 

21,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

Six Months Ended

 

As of

 

As of

 

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

June 30, 2018

Silver Stream

    

Purchases (oz.)

    

Sales (oz.)

    

Purchases (oz.)

    

Sales (oz.)

    

Inventory (oz.)

    

Inventory (oz.)

Pueblo Viejo

 

978,400

 

1,049,700

 

730,200

 

1,006,200

 

469,000

 

540,200

Rainy River

 

76,900

 

67,400

 

11,900

 

 —

 

41,700

 

32,300

Total

 

1,055,300

 

1,117,100

 

742,100

 

1,006,200

 

510,700

 

572,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

Six Months Ended

 

As of

 

As of

 

 

December 31, 2018

 

December 31, 2017

 

December 31, 2018

 

June 30, 2018

Copper Stream

    

Purchases (Mlbs.)

    

Sales (Mlbs.)

    

Purchases (Mlbs.)

    

Sales (Mlbs.)

    

Inventory (Mlbs.)

    

Inventory (Mlbs.)

Mount Milligan

 

4.2

 

3.2

 

5.3

 

4.4

 

0.9

 

 —

 

9


 

 

ROYAL GOLD, INC.

Consolidated Balance Sheets

(Unaudited, in thousands except share data)

 

 

 

 

 

 

 

 

 

    

December 31, 2018

    

June 30, 2018

 

 

 

 

 

 

 

ASSETS

 

 

  

 

 

  

Cash and equivalents

 

$

156,536

 

$

88,750

Royalty receivables

 

 

25,659

 

 

26,356

Income tax receivable

 

 

12,793

 

 

40

Stream inventory

 

 

7,954

 

 

9,311

Prepaid expenses and other

 

 

793

 

 

1,350

Total current assets

 

 

203,735

 

 

125,807

Stream and royalty interests, net

 

 

2,419,908

 

 

2,501,117

Other assets

 

 

51,463

 

 

55,092

Total assets

 

$

2,675,106

 

$

2,682,016

LIABILITIES

 

 

  

 

 

  

Accounts payable

 

$

2,291

 

$

9,090

Dividends payable

 

 

17,359

 

 

16,375

Income tax payable

 

 

10,739

 

 

18,253

Withholding taxes payable

 

 

2,348

 

 

3,254

Other current liabilities

 

 

4,439

 

 

4,411

Total current liabilities

 

 

37,176

 

 

51,383

Debt

 

 

358,897

 

 

351,027

Deferred tax liabilities

 

 

90,700

 

 

91,147

Uncertain tax positions

 

 

35,590

 

 

33,394

Other long-term liabilities

 

 

5,773

 

 

13,796

Total liabilities

 

 

528,136

 

 

540,747

Commitments and contingencies

 

 

  

 

 

  

EQUITY

 

 

  

 

 

  

Preferred stock, $.01 par value, 10,000,000 shares authorized; and 0 shares issued

 

 

 —

 

 

 —

Common stock, $.01 par value, 200,000,000 shares authorized; and 65,396,339 and 65,360,041 shares outstanding, respectively

 

 

654

 

 

654

Additional paid-in capital

 

 

2,197,254

 

 

2,192,612

Accumulated other comprehensive loss

 

 

 —

 

 

(1,201)

Accumulated losses

 

 

(86,238)

 

 

(89,898)

Total Royal Gold stockholders’ equity

 

 

2,111,670

 

 

2,102,167

Non-controlling interests

 

 

35,300

 

 

39,102

Total equity

 

 

2,146,970

 

 

2,141,269

Total liabilities and equity

 

$

2,675,106

 

$

2,682,016

 

10


 

 

ROYAL GOLD, INC.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited, in thousands except for per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

    

December 31, 

    

December 31, 

    

December 31, 

    

December 31, 

 

 

2018

 

2017

 

2018

 

2017

Revenue

 

$

97,592

 

$

114,348

 

$

197,585

 

$

226,824

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses

 

 

  

 

 

  

 

 

  

 

 

  

Cost of sales

 

 

18,162

 

 

19,863

 

 

34,689

 

 

40,282

General and administrative

 

 

7,423

 

 

9,555

 

 

17,349

 

 

16,455

Production taxes

 

 

909

 

 

602

 

 

2,201

 

 

1,145

Exploration costs

 

 

842

 

 

1,358

 

 

5,204

 

 

4,561

Depreciation, depletion and amortization

 

 

38,807

 

 

42,008

 

 

81,358

 

 

81,701

Total costs and expenses

 

 

66,143

 

 

73,386

 

 

140,801

 

 

144,144

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

31,449

 

 

40,962

 

 

56,784

 

 

82,680

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value changes in equity securities

 

 

(3,631)

 

 

 —

 

 

(5,099)

 

 

 —

Interest and other income

 

 

487

 

 

645