UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
For the Quarterly Period Ended December 31, 2017June 30, 2023
or
For the transition period from to
Commission File Number: 001-13357
Royal Gold, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware | 84-0835164 | |
(State or Other Jurisdiction of | | (I.R.S. Employer |
Incorporation) | | Identification No.) |
| | |
| | |
Denver, Colorado | | 80202 |
(Address of Principal Executive Offices) | | (Zip Code) |
Registrant’s telephone number, including area code (303) (303) 573-1660
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol | Name of the Exchange on which Registered | ||
Common Stock, $0.01 par value | | RGLD | | Nasdaq Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ | Accelerated filer ☐ |
|
|
|
|
Emerging growth company ☐ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
There were 65,455,29365,688,734 shares of the Company’sRoyal Gold common stock par value $0.01 per share, outstanding as of February 1, 2018. July 27, 2023.
INDEX
| | PAGE | ||
| | | | |
PART I | | FINANCIAL INFORMATION | | |
| | | | |
| | | ||
| | | | |
| | 3 | ||
| ||||
| ||||
Consolidated Statements of Operations and Comprehensive | | 4 | ||
| | | 5 | |
| | | 6 | |
| | | 7 | |
| | | | |
| Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 17 | |
| | | | |
| | 29 | ||
| | | | |
| | 29 | ||
| | | | |
| | | ||
| | | | |
| | 29 | ||
| | | | |
| | 30 | ||
| | | | |
| | 30 | ||
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| | 30 | ||
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| | 30 | ||
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| | 30 | ||
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| | 31 | ||
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| 32 |
2
ROYAL GOLD, INC.
(Unaudited, amounts in thousands except share data)
|
|
|
|
|
|
|
|
| December 31, 2017 |
| June 30, 2017 | ||
ASSETS |
|
|
|
|
|
|
Cash and equivalents |
| $ | 98,132 |
| $ | 85,847 |
Royalty receivables |
|
| 29,285 |
|
| 26,886 |
Income tax receivable |
|
| 27,366 |
|
| 22,169 |
Stream inventory |
|
| 7,359 |
|
| 7,883 |
Prepaid expenses and other |
|
| 3,337 |
|
| 822 |
Total current assets |
|
| 165,479 |
|
| 143,607 |
Stream and royalty interests, net (Note 2) |
|
| 2,810,616 |
|
| 2,892,256 |
Other assets |
|
| 53,305 |
|
| 58,202 |
Total assets |
| $ | 3,029,400 |
| $ | 3,094,065 |
LIABILITIES |
|
|
|
|
|
|
Accounts payable |
| $ | 2,251 |
| $ | 3,908 |
Dividends payable |
|
| 16,363 |
|
| 15,682 |
Income tax payable |
|
| 15,097 |
|
| 5,651 |
Foreign withholding taxes payable |
|
| 3,451 |
|
| 3,425 |
Other current liabilities |
|
| 4,413 |
|
| 5,617 |
Total current liabilities |
|
| 41,575 |
|
| 34,283 |
Debt (Note 3) |
|
| 493,486 |
|
| 586,170 |
Deferred tax liabilities |
|
| 147,548 |
|
| 121,330 |
Uncertain tax positions |
|
| 30,187 |
|
| 25,627 |
Other long-term liabilities |
|
| 16,787 |
|
| 6,391 |
Total liabilities |
|
| 729,583 |
|
| 773,801 |
Commitments and contingencies (Note 10) |
|
|
|
|
|
|
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 65,307,285 and 65,179,527 shares outstanding, respectively |
|
| 653 |
|
| 652 |
Additional paid-in capital |
|
| 2,186,648 |
|
| 2,185,796 |
Accumulated other comprehensive income |
|
| 687 |
|
| 879 |
Accumulated earnings |
|
| 69,842 |
|
| 88,050 |
Total Royal Gold stockholders’ equity |
|
| 2,257,830 |
|
| 2,275,377 |
Non-controlling interests |
|
| 41,987 |
|
| 44,887 |
Total equity |
|
| 2,299,817 |
|
| 2,320,264 |
Total liabilities and equity |
| $ | 3,029,400 |
| $ | 3,094,065 |
| | | | | | |
|
| June 30, |
| December 31, | ||
|
| 2023 |
| 2022 | ||
ASSETS | | | | | | |
Cash and equivalents | | $ | 106,157 | | $ | 118,586 |
Royalty receivables | | | 36,458 | | | 49,405 |
Income tax receivable | | | 9,602 | | | 3,066 |
Stream inventory | | | 10,657 | | | 12,656 |
Prepaid expenses and other | | | 2,375 | | | 2,120 |
Total current assets | | | 165,249 | | | 185,833 |
Stream and royalty interests, net (Note 2) | | | 3,155,561 | | | 3,237,402 |
Other assets | | | 118,899 | | | 111,287 |
Total assets | | $ | 3,439,709 | | $ | 3,534,522 |
LIABILITIES | | | | | | |
Accounts payable | | $ | 8,552 | | $ | 6,686 |
Dividends payable | | | 24,646 | | | 24,627 |
Income tax payable | | | 15,603 | | | 16,065 |
Other current liabilities | | | 14,267 | | | 16,209 |
Total current liabilities | | | 63,068 | | | 63,587 |
Debt (Note 4) | | | 395,529 | | | 571,572 |
Deferred tax liabilities | | | 136,136 | | | 138,156 |
Other liabilities | | | 9,083 | | | 7,738 |
Total liabilities | | | 603,816 | | | 781,053 |
Commitments and contingencies (Note 11) | | | | | | |
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 65,609,736 and 65,592,597 shares outstanding, respectively | | | 656 | | | 656 |
Additional paid-in capital | | | 2,217,559 | | | 2,213,123 |
Accumulated earnings | | | 605,347 | | | 527,314 |
Total Royal Gold stockholders’ equity | | | 2,823,562 | | | 2,741,093 |
Non-controlling interests | | | 12,331 | | | 12,376 |
Total equity | | | 2,835,893 | | | 2,753,469 |
Total liabilities and equity | | $ | 3,439,709 | | $ | 3,534,522 |
The accompanying notes are an integral part of these consolidated financial statements.
3
ROYAL GOLD, INC.
Consolidated Statements of Operations and Comprehensive (Loss) Income
(Unaudited, amounts in thousands except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For The Three Months Ended |
| For The Six Months Ended | ||||||||
|
| December 31, |
| December 31, |
| December 31, |
| December 31, | ||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
Revenue |
| $ | 114,348 |
| $ | 106,961 |
| $ | 226,824 |
| $ | 224,909 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
| 19,863 |
|
| 22,502 |
|
| 40,282 |
|
| 45,163 |
General and administrative |
|
| 9,555 |
|
| 7,538 |
|
| 16,455 |
|
| 18,045 |
Production taxes |
|
| 602 |
|
| 445 |
|
| 1,145 |
|
| 942 |
Exploration costs |
|
| 1,358 |
|
| 2,476 |
|
| 4,561 |
|
| 5,764 |
Depreciation, depletion and amortization |
|
| 42,008 |
|
| 39,519 |
|
| 81,701 |
|
| 79,621 |
Total costs and expenses |
|
| 73,386 |
|
| 72,480 |
|
| 144,144 |
|
| 149,535 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
| 40,962 |
|
| 34,481 |
|
| 82,680 |
|
| 75,374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income |
|
| 645 |
|
| 7,488 |
|
| 1,634 |
|
| 9,045 |
Interest and other expense |
|
| (9,034) |
|
| (9,823) |
|
| (17,651) |
|
| (18,128) |
Income before income taxes |
|
| 32,573 |
|
| 32,146 |
|
| 66,663 |
|
| 66,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
| (48,360) |
|
| (5,044) |
|
| (55,904) |
|
| (12,232) |
Net (loss) income |
|
| (15,787) |
|
| 27,102 |
|
| 10,759 |
|
| 54,059 |
Net loss attributable to non-controlling interests |
|
| 1,022 |
|
| 960 |
|
| 3,105 |
|
| 3,791 |
Net (loss) income attributable to Royal Gold common stockholders |
| $ | (14,765) |
| $ | 28,062 |
| $ | 13,864 |
| $ | 57,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
| $ | (15,787) |
| $ | 27,102 |
| $ | 10,759 |
| $ | 54,059 |
Adjustments to comprehensive (loss) income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized change in market value of available-for-sale securities |
|
| (390) |
|
| 822 |
|
| (193) |
|
| 822 |
Comprehensive (loss) income |
|
| (16,177) |
|
| 27,924 |
|
| 10,566 |
|
| 54,881 |
Comprehensive loss attributable to non-controlling interests |
|
| 1,022 |
|
| 960 |
|
| 3,105 |
|
| 3,791 |
Comprehensive (loss) income attributable to Royal Gold stockholders |
| $ | (15,155) |
| $ | 28,884 |
| $ | 13,671 |
| $ | 58,672 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share available to Royal Gold common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per share |
| $ | (0.23) |
| $ | 0.43 |
| $ | 0.21 |
| $ | 0.89 |
Basic weighted average shares outstanding |
|
| 65,306,766 |
|
| 65,149,518 |
|
| 65,271,131 |
|
| 65,133,102 |
Diluted (loss) earnings per share |
| $ | (0.23) |
| $ | 0.43 |
| $ | 0.21 |
| $ | 0.88 |
Diluted weighted average shares outstanding |
|
| 65,306,766 |
|
| 65,253,209 |
|
| 65,460,430 |
|
| 65,264,137 |
Cash dividends declared per common share |
| $ | 0.25 |
| $ | 0.24 |
| $ | 0.49 |
| $ | 0.47 |
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | June 30, | | June 30, | | June 30, | | June 30, | ||||
|
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||
Revenue (Note 5) | | $ | 144,042 | | $ | 146,441 | | $ | 314,434 | | $ | 308,796 |
| | | | | | | | | | | | |
Costs and expenses | | | | | | | | | | | | |
Cost of sales (excludes depreciation, depletion and amortization) | | | 23,367 | | | 23,810 | | | 48,387 | | | 46,450 |
General and administrative | | | 9,093 | | | 9,312 | | | 20,093 | | | 18,243 |
Production taxes | | | 1,274 | | | 1,425 | | | 3,263 | | | 3,646 |
Depreciation, depletion and amortization | | | 38,412 | | | 43,989 | | | 84,741 | | | 91,976 |
Total costs and expenses | | | 72,146 | | | 78,536 | | | 156,484 | | | 160,315 |
| | | | | | | | | | | | |
Operating income | | | 71,896 | | | 67,905 | | | 157,950 | | | 148,481 |
| | | | | | | | | | | | |
Fair value changes in equity securities | | | (509) | | | (2,191) | | | 291 | | | (1,577) |
Interest and other income | | | 2,650 | | | 1,118 | | | 4,912 | | | 2,093 |
Interest and other expense | | | (8,408) | | | (1,398) | | | (17,582) | | | (2,296) |
Income before income taxes | | | 65,629 | | | 65,434 | | | 145,571 | | | 146,701 |
| | | | | | | | | | | | |
Income tax (expense) benefit | | | (2,029) | | | 5,911 | | | (17,900) | | | (9,393) |
Net income and comprehensive income | | | 63,600 | | | 71,345 | | | 127,671 | | | 137,308 |
Net income and comprehensive income attributable to non-controlling interests | | | (151) | | | (205) | | | (347) | | | (492) |
Net income and comprehensive income attributable to Royal Gold common stockholders | | $ | 63,449 | | $ | 71,140 | | $ | 127,324 | | $ | 136,816 |
Net income per share attributable to Royal Gold common stockholders: | | | | | | | | | | | | |
Basic earnings per share | | $ | 0.97 | | $ | 1.08 | | $ | 1.94 | | $ | 2.08 |
Basic weighted average shares outstanding | | | 65,605,391 | | | 65,569,190 | | | 65,600,213 | | | 65,567,621 |
Diluted earnings per share | | $ | 0.97 | | $ | 1.08 | | $ | 1.93 | | $ | 2.08 |
Diluted weighted average shares outstanding | | | 65,762,903 | | | 65,678,320 | | | 65,736,028 | | | 65,661,653 |
Cash dividends declared per common share | | $ | 0.375 | | $ | 0.35 | | $ | 0.75 | | $ | 0.70 |
The accompanying notes are an integral part of these consolidated financial statements.
4
ROYAL GOLD, INC.
Consolidated Statements of Cash FlowsChanges in Stockholders’ Equity
Three months ended June 30, 2023, and 2022
(Unaudited,unaudited, amounts in thousands)thousands except share data)
|
|
|
|
|
|
|
|
| For The Six Months Ended | ||||
|
| December 31, |
| December 31, | ||
|
| 2017 |
| 2016 | ||
Cash flows from operating activities: |
|
|
|
|
|
|
Net income |
| $ | 10,759 |
| $ | 54,059 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
| 81,701 |
|
| 79,621 |
Amortization of debt discount and issuance costs |
|
| 7,413 |
|
| 6,751 |
Non-cash employee stock compensation expense |
|
| 4,395 |
|
| 6,443 |
Deferred tax expense (benefit) |
|
| 28,958 |
|
| (3,211) |
Other |
|
| (158) |
|
| (4,638) |
Changes in assets and liabilities: |
|
|
|
|
|
|
Royalty receivables |
|
| (2,399) |
|
| (7,135) |
Stream inventory |
|
| 524 |
|
| (689) |
Income tax receivable |
|
| (5,197) |
|
| (52) |
Prepaid expenses and other assets |
|
| (328) |
|
| (835) |
Accounts payable |
|
| (1,658) |
|
| (1,832) |
Income tax payable |
|
| 9,445 |
|
| (12,120) |
Foreign withholding taxes payable |
|
| 26 |
|
| 1,636 |
Uncertain tax positions |
|
| 4,560 |
|
| 6,052 |
Other liabilities |
|
| 9,193 |
|
| 822 |
Net cash provided by operating activities |
| $ | 147,234 |
| $ | 124,872 |
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
Acquisition of stream and royalty interests |
|
| — |
|
| (192,818) |
Other |
|
| (94) |
|
| 1,774 |
Net cash used in investing activities |
| $ | (94) |
| $ | (191,044) |
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
Borrowings from revolving credit facility |
|
| — |
|
| 70,000 |
Repayment of revolving credit facility |
|
| (100,000) |
|
| — |
Net payments from issuance of common stock |
|
| (3,541) |
|
| (2,320) |
Common stock dividends |
|
| (31,391) |
|
| (30,035) |
Purchase of additional royalty interest from non-controlling interest |
|
| — |
|
| (1,438) |
Other |
|
| 77 |
|
| (2,680) |
Net cash (used in) provided by financing activities |
| $ | (134,855) |
| $ | 33,527 |
Net increase (decrease) in cash and equivalents |
|
| 12,285 |
|
| (32,645) |
Cash and equivalents at beginning of period |
|
| 85,847 |
|
| 116,633 |
Cash and equivalents at end of period |
| $ | 98,132 |
| $ | 83,988 |
| | | | | | | | | | | | | | | | | |
| | Royal Gold Stockholders | | | | | | | |||||||||
| | | | | | | | | | | | | | | | | |
| | | | | | | Additional | | | | | | | | | | |
| | Common Shares | | Paid-In | | Accumulated | | Non-controlling | | Total | |||||||
| | Shares | | Amount | | Capital | | Earnings | | Interests | | Equity | |||||
Balance at March 31, 2023 |
| 65,599,348 | | $ | 656 |
| $ | 2,215,362 | | $ | 566,545 | | $ | 12,369 | | $ | 2,794,932 |
Stock-based compensation and related share issuances |
| 10,388 | |
| — |
|
| 2,197 | |
| — | |
| — | |
| 2,197 |
Distributions to non-controlling interests | | — | |
| — |
|
| — | |
| — | |
| (189) | |
| (189) |
Net income and comprehensive income |
| — | |
| — |
|
| — | | | 63,449 | |
| 151 | |
| 63,600 |
Dividends declared |
| — | |
| — |
|
| — | |
| (24,647) | |
| — | |
| (24,647) |
Balance at June 30, 2023 |
| 65,609,736 | | $ | 656 |
| $ | 2,217,559 | | $ | 605,347 | | $ | 12,331 | | $ | 2,835,893 |
| | | | | | | | | | | | | | | | | |
| | Royal Gold Stockholders | | | | | | | |||||||||
| | | | | | | | | | | | | | | | | |
| | | | | | | Additional | | | | | | | | | | |
| | Common Shares | | Paid-In | | Accumulated | | Non-controlling | | Total | |||||||
| | Shares | | Amount | | Capital | | Earnings | | Interests | | Equity | |||||
Balance at March 31, 2022 |
| 65,568,799 | | $ | 656 |
| $ | 2,208,425 | | $ | 424,608 | | $ | 12,425 | | $ | 2,646,114 |
Stock-based compensation and related share issuances |
| 888 | |
| — |
|
| 2,384 | |
| — | |
| — | |
| 2,384 |
Distributions to non-controlling interests | | — | |
| — |
|
| — | |
| — | |
| (201) | |
| (201) |
Net income and comprehensive income |
| — | |
| — |
|
| — | |
| 71,140 | |
| 205 | |
| 71,345 |
Dividends declared |
| — | |
| — |
|
| — | |
| (22,984) | |
| — | |
| (22,984) |
Balance at June 30, 2022 |
| 65,569,687 | | $ | 656 |
| $ | 2,210,809 | | $ | 472,764 | | $ | 12,429 | | $ | 2,696,658 |
ROYAL GOLD, INC.
Consolidated Statements of Changes in Stockholders’ Equity
Six months ended June 30, 2023, and 2022
(unaudited, amounts in thousands except share data)
| | | | | | | | | | | | | | | | | |
| | Royal Gold Stockholders | | | | | | | |||||||||
| | | | | | | | | | | | | | | | | |
| | | | | | | Additional | | | | | | | | | | |
| | Common Shares | | Paid-In | | Accumulated | | Non-controlling | | Total | |||||||
| | Shares | | Amount | | Capital | | Earnings | | Interests | | Equity | |||||
Balance at December 31, 2022 |
| 65,592,597 | | $ | 656 |
| $ | 2,213,123 | | $ | 527,314 | | $ | 12,376 | | $ | 2,753,469 |
Stock-based compensation and related share issuances |
| 17,139 | |
| — |
|
| 4,436 | |
| — | |
| — | |
| 4,436 |
Distributions to non-controlling interests | | — | |
| — |
|
| — | |
| — | |
| (392) | |
| (392) |
Net income and comprehensive income |
| — | |
| — |
|
| — | |
| 127,324 | |
| 347 | |
| 127,671 |
Dividends declared |
| — | |
| — |
|
| — | |
| (49,291) | |
| — | |
| (49,291) |
Balance at June 30, 2023 |
| 65,609,736 | | $ | 656 |
| $ | 2,217,559 | | $ | 605,347 | | $ | 12,331 | | $ | 2,835,893 |
| | | | | | | | | | | | | | | | | |
| | Royal Gold Stockholders | | | | | | | |||||||||
| | | | | | | | | | | | | | | | | |
| | | | | | | Additional | | | | | | | | | | |
| | Common Shares | | Paid-In | | Accumulated | | Non-controlling | | Total | |||||||
| | Shares | | Amount | | Capital | | Earnings | | Interests | | Equity | |||||
Balance at December 31, 2021 |
| 65,564,364 | | $ | 656 |
| $ | 2,206,159 | | $ | 381,929 | | $ | 12,467 | | $ | 2,601,211 |
Stock-based compensation and related share issuances |
| 5,323 | |
| — |
|
| 4,650 | |
| — | |
| — | |
| 4,650 |
Distributions to non-controlling interests | | — | |
| — |
|
| — | |
| — | |
| (530) | |
| (530) |
Net income and comprehensive income |
| — | |
| — |
|
| — | |
| 136,816 | |
| 492 | |
| 137,308 |
Dividends declared |
| — | |
| — |
|
| — | |
| (45,981) | |
| — | |
| (45,981) |
Balance at June 30, 2022 |
| 65,569,687 | | $ | 656 |
| $ | 2,210,809 | | $ | 472,764 | | $ | 12,429 | | $ | 2,696,658 |
The accompanying notes are an integral part of these consolidated financial statements.
5
ROYAL GOLD, INC.
Consolidated Statements of Cash Flows
(Unaudited, amounts in thousands)
| | | | | |
| Six Months Ended | ||||
| June 30, | | June 30, | ||
| 2023 |
| 2022 | ||
Cash flows from operating activities: | | | | | |
Net income and comprehensive income | $ | 127,671 | | $ | 137,308 |
Adjustments to reconcile net income and comprehensive income to net cash provided by operating activities: | | | | | |
Depreciation, depletion and amortization | | 84,741 | | | 91,976 |
Non-cash employee stock compensation expense | | 4,579 | | | 4,542 |
Fair value changes in equity securities | | (291) | | | 1,577 |
Deferred tax benefit | | (7,139) | | | (28,114) |
Other | | 445 | | | 491 |
Changes in assets and liabilities: | | | | | |
Royalty receivables | | 12,948 | | | 17,220 |
Stream inventory | | 1,998 | | | (1,564) |
Income tax receivable | | (6,536) | | | (2,797) |
Prepaid expenses and other assets | | (2,641) | | | (1,359) |
Accounts payable | | 1,866 | | | 592 |
Income tax payable | | (462) | | | 4,976 |
Other liabilities | | (597) | | | (3,519) |
Net cash provided by operating activities | $ | 216,582 | | $ | 221,329 |
| | | | | |
Cash flows from investing activities: | | | | | |
Acquisition of stream and royalty interests | | (2,670) | | | (37,841) |
Sale of equity securities | | 107 | | | — |
Other | | (258) | | | (36) |
Net cash used in investing activities | $ | (2,821) | | $ | (37,877) |
| | | | | |
Cash flows from financing activities: | | | | | |
Repayment of debt | | (175,000) | | | — |
Debt issuance costs | | (1,533) | | | — |
Net payments from issuance of common stock | | 253 | | | 108 |
Common stock dividends | | (49,271) | | | (45,953) |
Other | | (639) | | | (541) |
Net cash used in financing activities | $ | (226,190) | | $ | (46,386) |
Net (decrease) increase in cash and equivalents | | (12,429) | | | 137,066 |
Cash and equivalents at beginning of period | | 118,586 | | | 143,551 |
Cash and equivalents at end of period | $ | 106,157 | | $ | 280,617 |
The accompanying notes are an integral part of these consolidated financial statements.
6
1. OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ISSUED AND RECENTLY ADOPTEDRECENT ACCOUNTING STANDARDS
Royal Gold, Inc. (“Royal Gold”, the “Company”, “we”, “us”, or “our”), together with its subsidiaries (“Royal Gold,” the “Company,” “we,” “us,” or “our”), is engaged in the business of acquiring and managing precious metals streams, royalties and similar interests. We seek to acquire existing stream and royalty interests or to finance projects that are in production or in the development stage in exchange for stream or royalty interests. A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or more metals produced from a mine at a price determined for the life of the transaction by the purchase agreement. Royalties are non-operating interests in a mining projectsproject that provide the right to revenue or metals produced from the project after deducting contractually specified costs, if any.
Summary of Significant Accounting Policies
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of management, all adjustments which are of a normal recurring nature considered necessary for a fair presentation of our interim financial statements have been included in this Form 10-Q. Operating results for the three and six months ended December 31, 2017,June 30, 2023 are not necessarily indicative of the results that may be expected for the fiscalcalendar year ending June 30, 2018.December 31, 2023. These interim unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report onour Form 10-K for the fiscal year ended June 30, 2017December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on August 10, 2017February 16, 2023 (“Fiscal 20172022 10-K”).
Certain amounts inRecent Accounting Standards
We have evaluated all the prior period financial statementsrecently issued, but not yet effective, accounting standards that have been reclassified for comparative purposes to conform with the presentation in the current period financial statements. Reclassified amounts were not material to the financial statements.
Recently Issued and Adopted Accounting Standards
Recently Issued
In May 2014,issued or proposed by the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) guidance foror other standards-setting bodies through the recognition of revenue from contracts with customers. This ASU superseded virtually all of the existing revenue recognition guidance under U.S. GAAP. The core principle of the five step model is that an entity will recognize revenue when it transfers control of goods or services to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. Entities can choose to apply the standard using either the full retrospective approach or a modified retrospective approach. The standard is effective for the Company’s fiscal year beginning July 1, 2018. Early adoption is permitted.
We plan to implement the new ASU revenue recognition guidance as of July 1, 2018, using the modified retrospective method with the cumulative effect, if any, of initial adoption to be recognized in Accumulated earnings at thefiling date of initial application. We are inthese unaudited consolidated financial statements and do not believe the initial stagesfuture adoption of our evaluation of theany such standards will have a material impact of the new standard on our accounting policies, processes, andconsolidated financial reporting. Based on the evaluation performed to-date, we expect to identify similar performance obligations as compared with deliverables and separate units of account previously identified. We will continue to assess the impact of adopting this ASU throughout the remainder of fiscal year 2018.statements.
Recently Adopted
In March 2016, the FASB issued ASU guidance related to stock-based compensation. The new guidance simplifies the accounting for stock-based compensation transactions, including income tax consequences, statement of cash flows presentation, estimating forfeitures when calculating compensation expense, and classification of awards as either equity or liabilities.
6
7
The new standard requires all excess tax benefits and tax deficiencies to be recognized as income tax benefit (expense) in the income statement. The new guidance also requires presentation of excess tax benefits as an operating activity on the statement of cash flows rather than a financing activity and requires presentation of cash paid to a tax authority when shares are withheld to satisfy the employer’s statutory income tax withholding obligation as a financing activity. The new guidance also provides for an election to account for forfeitures of stock-based compensation.
The Company adopted the ASU guidance effective July 1, 2017. With respect to the forfeiture election, the Company will continue its current practice of estimating forfeitures when calculating compensation expense. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements or related disclosures.
2. STREAM AND ROYALTY INTERESTS, NET
The following tables summarize the Company’sour stream and royalty interests, net as of June 30, 2023 and December 31, 2017 and June 30, 2017.2022.
|
|
|
|
|
|
|
|
|
| |||||||||
As of December 31, 2017 (Amounts in thousands): |
| Cost |
| Accumulated Depletion |
| Net | ||||||||||||
| | | | | | | | | | |||||||||
As of June 30, 2023 (Amounts in thousands): |
| Cost |
| Accumulated Depletion |
| Net | ||||||||||||
Production stage stream interests: |
|
|
|
|
|
|
|
|
| | | | | | | | | |
Mount Milligan |
| $ | 790,635 |
| $ | (129,652) |
| $ | 660,983 | | $ | 790,635 | | $ | (413,284) | | $ | 377,351 |
Pueblo Viejo |
|
| 610,404 |
|
| (93,202) |
|
| 517,202 | | | 610,404 | | | (295,407) | | | 314,997 |
Andacollo |
|
| 388,182 |
|
| (51,328) |
|
| 336,854 | | | 388,182 | | | (157,761) | | | 230,421 |
Wassa and Prestea |
|
| 146,475 |
|
| (34,446) |
|
| 112,029 | |||||||||
Khoemacau | | | 265,911 | | | (29,275) | | | 236,636 | |||||||||
Rainy River |
|
| 175,727 |
|
| (581) |
|
| 175,146 | | | 175,727 | | | (68,476) | | | 107,251 |
Other | | | 232,703 | | | (121,328) | | | 111,375 | |||||||||
Total production stage stream interests |
|
| 2,111,423 |
|
| (309,209) |
|
| 1,802,214 | | | 2,463,562 | | | (1,085,531) | | | 1,378,031 |
| | | | | | | | | | |||||||||
Production stage royalty interests: |
|
|
|
|
|
|
|
|
| | | | | | | | | |
Cortez (Legacy Zone and CC Zone) | | | 353,850 | | | (47,402) | | | 306,448 | |||||||||
Voisey's Bay |
|
| 205,724 |
|
| (85,671) |
|
| 120,053 | | | 205,724 | | | (119,356) | | | 86,368 |
Red Chris | | | 116,187 | | | (3,758) | | | 112,429 | |||||||||
Peñasquito |
|
| 99,172 |
|
| (36,730) |
|
| 62,442 | | | 99,172 | | | (59,407) | | | 39,765 |
Holt |
|
| 34,612 |
|
| (20,490) |
|
| 14,122 | |||||||||
Cortez |
|
| 20,878 |
|
| (11,094) |
|
| 9,784 | |||||||||
Other |
|
| 483,795 |
|
| (350,690) |
|
| 133,105 | | | 447,687 | | | (403,171) | | | 44,516 |
Total production stage royalty interests |
|
| 844,181 |
|
| (504,675) |
|
| 339,506 | | | 1,222,620 | | | (633,094) | | | 589,526 |
Total production stage stream and royalty interests |
|
| 2,955,604 |
|
| (813,884) |
|
| 2,141,720 | | | 3,686,182 | | | (1,718,625) | | | 1,967,557 |
|
|
|
|
|
|
|
|
|
| |||||||||
| | | | | | | | | | |||||||||
Development stage stream interests: |
|
|
|
|
|
|
|
|
| | | | | | | | | |
Other |
|
| 12,031 |
|
| — |
|
| 12,031 | | | 12,038 | | | — | | | 12,038 |
|
|
|
|
|
|
|
|
|
| |||||||||
Development stage royalty interests: |
|
|
|
|
|
|
|
|
| | | | | | | | | |
Côté | | | 45,421 | | | — | | | 45,421 | |||||||||
Other | | | 81,510 | | | — | | | 81,510 | |||||||||
Total development stage stream and royalty interests | | | 138,969 | | | — | | | 138,969 | |||||||||
| | | | | | | | | | |||||||||
Exploration stage stream interests: | | | | | | | | | | |||||||||
Xavantina | | | 19,565 | | | — | | | 19,565 | |||||||||
Exploration stage royalty interests: | | | | | | | | | | |||||||||
Cortez (Legacy Zone and CC Zone) | | | 456,471 | | | — | | | 456,471 | |||||||||
Great Bear | | | 209,106 | | | — | | | 209,106 | |||||||||
Pascua-Lama |
|
| 380,657 |
|
| — |
|
| 380,657 | | | 177,690 | | | — | | | 177,690 |
Cortez |
|
| 59,803 |
|
| — |
|
| 59,803 | |||||||||
Red Chris | | | 48,895 | | | — | | | 48,895 | |||||||||
Côté | | | 29,610 | | | — | | | 29,610 | |||||||||
Other |
|
| 63,811 |
|
| — |
|
| 63,811 | | | 107,698 | | | — | | | 107,698 |
Total development stage royalty interests |
|
| 504,271 |
|
| — |
|
| 504,271 | |||||||||
Total development stage stream and royalty interests |
|
| 516,302 |
|
| — |
|
| 516,302 | |||||||||
Total exploration stage royalty interests |
|
| 152,594 |
|
| — |
|
| 152,594 | |||||||||
Total stream and royalty interests |
| $ | 3,624,500 |
| $ | (813,884) |
| $ | 2,810,616 | |||||||||
Total exploration stage stream and royalty interests | | | 1,049,035 | | | — | | | 1,049,035 | |||||||||
Total stream and royalty interests, net | | $ | 4,874,186 | | $ | (1,718,625) | | $ | 3,155,561 |
7
8
| | | | | | | | | | | | |
As of December 31, 2022 (Amounts in thousands): |
| Cost |
| Accumulated Depletion |
| Impairments | | Net | ||||
Production stage stream interests: | | | | | | | | | | | | |
Mount Milligan | | $ | 790,635 | | $ | (392,804) | | $ | — | | $ | 397,831 |
Pueblo Viejo | | | 610,404 | | | (289,537) | | | — | | | 320,867 |
Andacollo | | | 388,182 | | | (151,870) | | | — | | | 236,312 |
Khoemacau | | | 265,911 | | | (15,905) | | | — | | | 250,006 |
Rainy River | | | 175,727 | | | (61,601) | | | — | | | 114,126 |
Other | | | 215,576 | | | (110,711) | | | — | | | 104,865 |
Total production stage stream interests | | | 2,446,435 | | | (1,022,428) | | | — | | | 1,424,007 |
| | | | | | | | | | | | |
Production stage royalty interests: | | | | | | | | | | | | |
Cortez (Legacy Zone and CC Zone) | | | 353,772 | | | (35,276) | | | — | | | 318,496 |
Voisey's Bay | | | 205,724 | | | (118,327) | | | — | | | 87,397 |
Red Chris | | | 116,187 | | | (1,797) | | | — | | | 114,390 |
Peñasquito | | | 99,172 | | | (57,772) | | | — | | | 41,400 |
Other | | | 447,535 | | | (398,513) | | | — | | | 49,022 |
Total production stage royalty interests | | | 1,222,390 | | | (611,685) | | | — | | | 610,705 |
Total production stage stream and royalty interests | | | 3,668,825 | | | (1,634,113) | | | — | | | 2,034,712 |
| | | | | | | | | | | | |
Development stage stream interests: | | | | | | | | | | | | |
Other | | | 12,038 | | | — | | | — | | | 12,038 |
Development stage royalty interests: | | | | | | | | | | | | |
Côté | | | 45,421 | | | — | | | — | | | 45,421 |
Other | | | 74,225 | | | — | | | — | | | 74,225 |
Total development stage stream and royalty interests | | | 131,684 | | | — | | | — | | | 131,684 |
| | | | | | | | | | | | |
Exploration stage stream interests: | | | | | | | | | | | | |
Xavantina | | | 34,253 | | | — | | | — | | | 34,253 |
Exploration stage royalty interests: | | | | | | | | | | | | |
Cortez (Legacy Zone and CC Zone) | | | 456,318 | | | — | | | — | | | 456,318 |
Great Bear | | | 209,106 | | | — | | | — | | | 209,106 |
Pascua-Lama | | | 177,690 | | | — | | | — | | | 177,690 |
Red Chris | | | 48,895 | | | — | | | — | | | 48,895 |
Côté | | | 29,610 | | | — | | | — | | | 29,610 |
Other | | | 119,421 | | | — | | | (4,287) | | | 115,134 |
Total exploration stage royalty interests | | | 1,075,293 | | | — | | | (4,287) | | | 1,071,006 |
Total stream and royalty interests, net | | $ | 4,875,802 | | $ | (1,634,113) | | $ | (4,287) | | $ | 3,237,402 |
3. MARKETABLE EQUITY SECURITIES
As of June 30, 2023, our marketable equity securities include warrants to purchase up to 19,640,000 common shares of TriStar Gold Inc and 250,000 common shares of Goldon Resources Ltd. Our marketable equity securities are measured at fair value (Note 10) each reporting period with any changes in fair value recognized in net income (amounts in thousands).
| | | | | | |
|
| June 30, | | December 31, | ||
|
| 2023 | | 2022 | ||
Carrying value of marketable securities(1) | | $ | 547 | | $ | 373 |
Change in fair value of marketable securities | | $ | (509) | | $ | (1,503) |
(1) Included in Other Assets on our consolidated balance sheets.
9
|
|
|
|
|
|
|
|
|
|
As of June 30, 2017 (Amounts in thousands): |
| Cost |
| Accumulated Depletion |
| Net | |||
Production stage stream interests: |
|
|
|
|
|
|
|
|
|
Mount Milligan |
| $ | 790,635 |
| $ | (114,327) |
| $ | 676,308 |
Pueblo Viejo |
|
| 610,404 |
|
| (67,149) |
|
| 543,255 |
Andacollo |
|
| 388,182 |
|
| (39,404) |
|
| 348,778 |
Wassa and Prestea |
|
| 146,475 |
|
| (22,715) |
|
| 123,760 |
Total production stage stream interests |
|
| 1,935,696 |
|
| (243,595) |
|
| 1,692,101 |
Production stage royalty interests: |
|
|
|
|
|
|
|
|
|
Voisey's Bay |
|
| 205,724 |
|
| (85,671) |
|
| 120,053 |
Peñasquito |
|
| 99,172 |
|
| (34,713) |
|
| 64,459 |
Holt |
|
| 34,612 |
|
| (19,669) |
|
| 14,943 |
Cortez |
|
| 20,873 |
|
| (10,633) |
|
| 10,240 |
Other |
|
| 483,643 |
|
| (337,958) |
|
| 145,685 |
Total production stage royalty interests |
|
| 844,024 |
|
| (488,644) |
|
| 355,380 |
Total production stage stream and royalty interests |
|
| 2,779,720 |
|
| (732,239) |
|
| 2,047,481 |
Development stage stream interests: |
|
|
|
|
|
|
|
|
|
Rainy River |
|
| 175,727 |
|
| — |
|
| 175,727 |
Other |
|
| 12,031 |
|
| — |
|
| 12,031 |
Total development stage stream interests |
|
| 187,758 |
|
| — |
|
| 187,758 |
Development stage royalty interests: |
|
|
|
|
|
|
|
|
|
Pascua-Lama |
|
| 380,657 |
|
| — |
|
| 380,657 |
Cortez |
|
| 59,803 |
|
| — |
|
| 59,803 |
Other |
|
| 63,811 |
|
| — |
|
| 63,811 |
Total development stage royalty interests |
|
| 504,271 |
|
| — |
|
| 504,271 |
Total development stage stream and royalty interests |
|
| 692,029 |
|
| — |
|
| 692,029 |
Total exploration stage royalty interests |
|
| 152,746 |
|
| — |
|
| 152,746 |
Total stream and royalty interests |
| $ | 3,624,495 |
| $ | (732,239) |
| $ | 2,892,256 |
4. DEBT
The Company’s non-currentOur debt as of June 30, 2023 and December 31, 2017 and June 30, 20172022 consists of the following:following (amounts in thousands):
| | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||
| | As of June 30, 2023 | | As of December 31, 2022 | ||||||||||||||||||||||||||||||||||||||
|
| Principal |
| Debt Issuance Costs |
| Total |
| Principal |
| Debt Issuance Costs |
| Total | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
|
| As of December 31, 2017 |
| As of June 30, 2017 | ||||||||||||||||||||||||||||||||||||||
|
| Principal |
| Unamortized Discount |
| Debt Issuance Costs |
| Total |
| Principal |
| Unamortized Discount |
| Debt Issuance Costs |
| Total | ||||||||||||||||||||||||||
|
|
| (Amounts in thousands) |
|
| (Amounts in thousands) | ||||||||||||||||||||||||||||||||||||
Convertible notes due 2019 |
| $ | 370,000 |
| $ | (19,110) |
| $ | (1,986) |
| $ | 348,904 |
| $ | 370,000 |
| $ | (25,251) |
| $ | (2,646) |
| $ | 342,103 | ||||||||||||||||||
| | | (Amounts in thousands) | | | (Amounts in thousands) | ||||||||||||||||||||||||||||||||||||
Revolving credit facility |
|
| 150,000 |
|
| — |
|
| (5,418) |
|
| 144,582 |
|
| 250,000 |
|
| — |
|
| (5,933) |
|
| 244,067 | | $ | 400,000 | | $ | (4,471) | | $ | 395,529 | | $ | 575,000 | | $ | (3,428) | | $ | 571,572 |
Total debt |
| $ | 520,000 |
| $ | (19,110) |
| $ | (7,404) |
| $ | 493,486 |
| $ | 620,000 |
| $ | (25,251) |
| $ | (8,579) |
| $ | 586,170 | | $ | 400,000 | | $ | (4,471) | | $ | 395,529 | | $ | 575,000 | | $ | (3,428) | | $ | 571,572 |
Convertible Senior Notes Due 2019Revolving credit facility
InOn March 6, 2023, we repaid $75 million and on June 2012,6, 2023, we repaid $100 million of outstanding borrowings on our revolving credit facility.
On June 28, 2023, we entered into a fifth amendment to our revolving credit facility dated as of June 2, 2017, as amended. The fifth amendment extended the Company completedscheduled maturity date from July 7, 2026 to June 28, 2028, replaced LIBOR with Secured Overnight Financing Rate (“Term SOFR”) as a benchmark interest rate and made certain other administrative changes to the existing revolving credit facility.
As of June 30, 2023, we had $400 million outstanding and $600 million available under our revolving credit facility. The interest rate on borrowings under our revolving credit facility as of June 30, 2023, was LIBOR plus 1.20% for an offering of $370 million aggregate principal amount of 2.875% convertible senior notes due 2019 (“2019 Notes”). The 2019 Notes bear interest at theall-in rate of 2.875% per annum, and the Company is required to make semi-annual interest payments on the outstanding principal balance of the 2019 Notes on June 15 and December 15 of each year, beginning December 15, 2012. The 2019 Notes mature on June 15, 2019.6.7%. Interest expense, recognizedwhich includes interest on the 2019 Notesoutstanding borrowings and amortization of debt issuance costs, was $7.8 million and $16.3 million for the three and six months ended December 31, 2017, was $6.1June 30, 2023, respectively, and $0.2 million and $12.1$0.5 million respectively, compared to $5.9 million and $11.7 million, respectively, for the three and six months ended December 31, 2016,June 30, 2022, respectively. We were in compliance with each financial covenant (leverage ratio and included the contractual coupon interest the accretion of the debt discount and amortization of the debt issuance costs.
8
Revolving credit facility
The Company maintains a $1 billion revolving credit facility. As of December 31, 2017, the Company had $150 million outstanding and $850 million availablecoverage ratio) under theour revolving credit facility with an interest rate on borrowingsas of LIBOR plus 1.75% for an all-in rate of 3.24%. During the three and six months ended December 31, 2017, the Company repaid $50 million, respectively, of the outstandingJune 30, 2023.
We may repay any borrowings under the revolving credit facility. Royal Gold may repay borrowings under theour revolving credit facility at any time without premium or penalty. Interest expense
5. REVENUE
Revenue Recognition
A performance obligation is a promise in a contract to transfer control of a distinct good or service (or integrated package of goods and/or services) to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, a performance obligation is satisfied. In accordance with this guidance, revenue attributable to our stream interests and royalty interests is generally recognized at the point in time that control of the related metal production transfers to our customers. The amount of revenue we recognize further reflects the consideration to which we are entitled under the respective stream or royalty agreement. A more detailed summary of our revenue recognition policies for our stream and royalty interests is discussed below.
Stream Interests
A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or more of the metals produced from a mine, at a price determined for the life of the transaction by the purchase agreement. Gold, silver and copper received under our metal streaming agreements are taken into inventory, and then sold primarily using average spot rate gold, silver and copper forward contracts. The sales price for these average spot rate forward contracts is determined by the average daily gold, silver or copper spot prices during the term of the contract, typically a consecutive number of trading days between ten days and three months (depending on the frequency of deliveries under the respective streaming agreement and our sales policy in effect at the time) commencing shortly after receipt and purchase of the metal. We settle our forward sales contracts via physical delivery of the metal to the purchaser (our customer) on the settlement date specified in the contract. Under our forward sales contracts, there is a single performance obligation to sell a contractually specified volume of metal to the purchaser, and we satisfy this obligation at the point in time of physical delivery. Accordingly, revenue from our metal sales is recognized on the revolving credit facilitydate of settlement, which is the date that control, custody and title to the metal transfer to the purchaser.
10
Royalty Interests
Royalties are non-operating interests in mining projects that provide the right to a percentage of revenue or metals produced from the project after deducting specified costs, if any. We are entitled to payment for our royalty interest in a mining project based on a contractually specified commodity price (for example, a monthly or quarterly average spot price) for the threeperiod in which metal production occurs. As a royalty holder, we act as a passive entity in the production and sixoperations of the mining project, and the third-party operator of the mining project is responsible for all mining activities, including subsequent marketing and delivery of all metal production to their ultimate customer. In all of our material royalty interest arrangements, we have concluded that we transfer control of our interest in the metal production to the operator at the point at which production occurs, and thus, the operator is our customer. We have further determined that the transfer of each unit of metal production comprising our royalty interest to the operator represents a separate performance obligation under the contract, and each performance obligation is satisfied at the point in time of metal production by the operator. Accordingly, we recognize revenue attributable to our royalty interests in the period in which metal production occurs at the specified commodity price per the agreement, net of any contractually allowable costs.
Royalty Revenue Estimates
For a small number of our royalty interests, we may not receive, or be entitled to receive, payment information, including production information from the operator, for the period in which metal production occurred prior to issuance of our financial statements for that period. As a result, we may estimate revenue for these royalties based on available information, including public information, from the operator. If adequate information is not available from the operator or from other public sources before we issue our financial statements, we will recognize royalty revenue during the period in which the necessary payment information is received. Differences between estimates and actual amounts could differ significantly and are recorded in the period that the actual amounts are known. Please also refer to our “Use of Estimates” accounting policy discussed in our 2022 10-K. For the three months ended December 31, 2017June 30, 2023, royalty revenue that was $1.8 millionestimated or was attributable to metal production for a period prior to June 30, 2023, was not material.
Disaggregation of Revenue
We have identified two material revenue sources in our business: stream interests and $3.6 million, respectively, and $2.3 million and $4.3 million for the three and six months ended December 31, 2016, and included interest on the outstanding borrowings and the amortization of the debt issuance costs.
Asroyalty interests. These identified revenue sources are consistent with our reportable segments as discussed in Note 5 to the notes to consolidated financial statements in the Company’s Fiscal 2017 10-K, the Company has financial covenants associated with its revolving credit facility. As of December 31, 2017, the Company was in compliance with each financial covenant.9.
4. REVENUE
Revenue by metal type attributable to each of our revenue sources is compriseddisaggregated as follows (amounts in thousands):
| | | | | | | | | | | |
| Three Months Ended | | Six Months Ended | ||||||||
| June 30, |
| June 30, |
| June 30, |
| June 30, | ||||
| 2023 | | 2022 | | 2023 | | 2022 | ||||
Stream revenue: | | | | | | | | | | | |
Gold | $ | 80,227 | | $ | 75,325 | | $ | 158,856 | | $ | 152,827 |
Silver | | 19,230 | | | 12,892 | | | 37,539 | | | 24,331 |
Copper | | 6,558 | | | 16,662 | | | 24,610 | | | 32,972 |
Total stream revenue | $ | 106,015 | | $ | 104,879 | | $ | 221,005 | | $ | 210,130 |
Royalty revenue: | | | | | | | | | | | |
Gold | $ | 30,169 | | $ | 28,974 | | $ | 73,037 | | $ | 66,890 |
Silver | | 2,721 | | | 3,512 | | | 5,667 | | | 7,829 |
Copper | | 1,572 | | | 3,281 | | | 6,630 | | | 9,986 |
Other | | 3,565 | | | 5,795 | | | 8,095 | | | 13,961 |
Total royalty revenue | $ | 38,027 | | $ | 41,562 | | $ | 93,429 | | $ | 98,666 |
Total revenue | $ | 144,042 | | $ | 146,441 | | $ | 314,434 | | $ | 308,796 |
11
Revenue attributable to our principal stream and royalty interests is disaggregated as follows (amounts in thousands):
| | | | | | | | | | | | | | |
| | | | Three Months Ended | | Six Months Ended | ||||||||
| | | | June 30, |
| June 30, |
| June 30, |
| June 30, | ||||
| | Metal(s) | | 2023 | | 2022 | | 2023 | | 2022 | ||||
Stream revenue: | | | | | | | | | | | | | | |
Mount Milligan | | Gold & Copper | | $ | 41,208 | | $ | 45,627 | | $ | 87,863 | | $ | 88,043 |
Pueblo Viejo | | Gold & Silver | | | 23,540 | | | 19,812 | | | 45,898 | | | 43,076 |
Khoemacau | | Silver | | | 8,881 | | | 5,202 | | | 18,035 | | | 7,591 |
Andacollo | | Gold | | | 7,823 | | | 11,721 | | | 20,757 | | | 27,395 |
Other | | Gold & Silver | | | 24,563 | | | 22,517 | | | 48,452 | | | 44,025 |
Total stream revenue | | | | $ | 106,015 | | $ | 104,879 | | $ | 221,005 | | $ | 210,130 |
Royalty revenue: | | | | | | | | | | | | | | |
Cortez Legacy Zone | | Gold | | $ | 14,305 | | $ | 8,138 | | $ | 37,393 | | $ | 24,852 |
Cortez CC Zone | | Gold | | | 3,520 | | | — | | | 6,726 | | | — |
Peñasquito | | Gold, Silver, Lead & Zinc | | | 6,105 | | | 9,664 | | | 13,538 | | | 22,758 |
Other | | Various | | | 14,097 | | | 23,760 | | | 35,772 | | | 51,056 |
Total royalty revenue | | | | $ | 38,027 | | $ | 41,562 | | $ | 93,429 | | $ | 98,666 |
Total revenue | | | | $ | 144,042 | | $ | 146,441 | | $ | 314,434 | | $ | 308,796 |
Please refer to Note 9 for the following:geographical distribution of our revenue by reportable segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
| Six Months Ended | ||||||||
|
| December 31, |
| December 31, |
| December 31, |
| December 31, | ||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
|
|
| (Amounts in thousands) |
|
| (Amounts in thousands) | ||||||
Stream interests |
| $ | 79,287 |
| $ | 74,007 |
| $ | 158,049 |
| $ | 159,511 |
Royalty interests |
|
| 35,061 |
|
| 32,954 |
|
| 68,775 |
|
| 65,398 |
Total revenue |
| $ | 114,348 |
| $ | 106,961 |
| $ | 226,824 |
| $ | 224,909 |
5.6. STOCK-BASED COMPENSATION
The CompanyWe recognized stock-based compensation expense as follows:follows (amounts in thousands):
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|
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|
|
|
|
|
|
|
| ||||||||||||
|
| Three Months Ended |
| Six Months Ended | ||||||||||||||||||||
|
| December 31, |
| December 31, |
| December 31, |
| December 31, | ||||||||||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||||||||||||||
|
|
| (Amounts in thousands) |
|
| (Amounts in thousands) | ||||||||||||||||||
| | | | | | | | | | | | | ||||||||||||
| | Three Months Ended | | Six Months Ended | ||||||||||||||||||||
| | June 30, | | June 30, | | June 30, | | June 30, | ||||||||||||||||
|
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||||||||||||||
Restricted stock | | $ | 1,540 | | $ | 1,201 | | $ | 3,154 | | $ | 2,356 | ||||||||||||
Stock appreciation rights | | | 212 | | | 360 | | | 417 | | | 692 | ||||||||||||
Performance stock | | | 183 | | | 847 | | | 993 | | | 1,478 | ||||||||||||
Stock options |
| $ | 79 |
| $ | 95 |
| $ | 170 |
| $ | 203 | | | 8 | | | 10 | | | 15 | | | 16 |
Stock appreciation rights |
|
| 486 |
|
| 454 |
|
| 974 |
|
| 922 | ||||||||||||
Restricted stock |
|
| 888 |
|
| 829 |
|
| 2,314 |
|
| 2,203 | ||||||||||||
Performance stock |
|
| 568 |
|
| 921 |
|
| 937 |
|
| 3,115 | ||||||||||||
Total stock-based compensation expense |
| $ | 2,021 |
| $ | 2,299 |
| $ | 4,395 |
| $ | 6,443 | | $ | 1,943 | | $ | 2,418 | | $ | 4,579 | | $ | 4,542 |
Stock-based compensation expense is included within General and administrative expense in the consolidated statements of operations and comprehensive (loss) income.
9
During the three and six months ended December 31, 2017, the CompanyJune 30, 2023 and 2022, we granted the following stock-based compensation awards:
| | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | ||||||
| | | June 30, | | | June 30, | | | June 30, | | | June 30, |
|
| | 2023 |
| 2022 |
| | 2023 |
| 2022 | ||
| | | (Number of shares) | | | (Number of shares) | ||||||
Performance stock (at maximum 200% attainment) | | | — | | | — | | | 82,360 | | | 39,380 |
Restricted Stock | | | — | | | — | | | 56,530 | | | 28,220 |
Total equity awards granted | | | — | | | — | | | 138,890 | | | 67,600 |
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|
|
| Three Months Ended |
|
| Six Months Ended | ||||||
|
|
| December 31, |
|
| December 31, |
|
| December 31, |
|
| December 31, |
|
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
|
| (Number of shares) |
|
| (Number of shares) | ||||||
Stock options |
|
| - |
|
| - |
|
| 6,858 |
|
| 7,200 |
Stock appreciation rights |
|
| - |
|
| - |
|
| 71,262 |
|
| 63,340 |
Restricted stock |
|
| - |
|
| - |
|
| 50,380 |
|
| 44,890 |
Performance stock |
|
| - |
|
| - |
|
| 34,010 |
|
| 29,830 |
Total equity awards granted |
|
| - |
|
| - |
|
| 162,510 |
|
| 145,260 |
12
As of December 31, 2017,June 30, 2023, unrecognized compensation expense (expressed in thousands below) and weighted-average vesting period for each of our stock-based compensation awards were as follows:
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| Unrecognized |
| Weighted- | ||||||||||||||
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| compensation |
| average vesting | ||||||||||||||
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|
| expense |
| period (years) | ||||||||||||||
Stock options |
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|
|
|
| $ | 397 |
|
| 1.8 | ||||||||||||
Stock appreciation rights |
|
|
|
|
|
|
|
| 3,189 |
|
| 2.1 | ||||||||||||
| | | | | | | | | | | | | ||||||||||||
|
| | | | | | | Unrecognized |
| Weighted- | ||||||||||||||
| | | | | | | | compensation | | average vesting | ||||||||||||||
| | | | | | | | expense |
| period (years) | ||||||||||||||
Restricted stock |
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|
|
|
|
|
|
| 6,939 |
|
| 3.2 | | | | | | | | $ | 9,880 | | | 2.1 |
Performance stock |
|
|
|
|
|
|
|
| 2,424 |
|
| 2.0 | | | | | | | | | 7,666 | | | 2.2 |
Stock appreciation rights | | | | | | | | | 111 | | | 0.1 | ||||||||||||
Stock options | | | | | | | | | 4 | | | 0.1 |
6.7. EARNINGS PER SHARE (“EPS”)
Basic earnings per common share wereEPS was computed using the weighted average number of shares of common stock outstanding during the period, considering the effect of participating securities. Unvested stock-based compensation awards that contain non-forfeitable rights to dividends or dividend equivalents are considered participating securities and are included in the computation of earnings per shareEPS pursuant to the two-class method. The Company’sOur unvested restricted stock awards contain non-forfeitable dividend rights and participate equally with common stock with respect to dividends issued or declared. The Company’sOur unexercised stock options,option awards, unexercised SSARsstock-settled stock appreciation rights and unvested performance stock do not contain rights to dividends. Under the two-class method, the earnings used to determine basic (loss) earnings per common shareEPS are reduced by an amount allocated to participating securities. Use of the two-class method has an immaterial impact on the calculation of basic and diluted (loss) earnings per common share.EPS.
The following tables summarizetable summarizes the effects of dilutive securities on diluted EPS for the period:periods shown below (amounts in thousands, except share data):
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| ||||||||||||
|
| Three Months Ended |
| Six Months Ended | ||||||||||||||||||||
|
| December 31, |
| December 31, |
| December 31, |
| December 31, | ||||||||||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||||||||||||||
|
|
| (in thousands, except per share data) |
|
| (in thousands, except per share data) | ||||||||||||||||||
Net (loss) income available to Royal Gold common stockholders |
| $ | (14,765) |
| $ | 28,062 |
| $ | 13,864 |
| $ | 57,850 | ||||||||||||
| | | | | | | | | | | | | ||||||||||||
| | Three Months Ended | | Six Months Ended | ||||||||||||||||||||
| | June 30, | | June 30, | | June 30, | | June 30, | ||||||||||||||||
|
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||||||||||||||
Net income attributable to Royal Gold common stockholders | | $ | 63,449 | | $ | 71,140 | | $ | 127,324 | | $ | 136,816 | ||||||||||||
Weighted-average shares for basic EPS |
|
| 65,306,766 |
|
| 65,149,518 |
|
| 65,271,131 |
|
| 65,133,102 | | | 65,605,391 | | | 65,569,190 | | | 65,600,213 | | | 65,567,621 |
Effect of other dilutive securities |
|
| - |
|
| 103,691 |
|
| 189,299 |
|
| 131,035 | | | 157,512 | | | 109,130 | | | 135,815 | | | 94,032 |
Weighted-average shares for diluted EPS |
|
| 65,306,766 |
|
| 65,253,209 |
|
| 65,460,430 |
|
| 65,264,137 | | | 65,762,903 | | | 65,678,320 | | | 65,736,028 | | | 65,661,653 |
Basic (loss) earnings per share |
| $ | (0.23) |
| $ | 0.43 |
| $ | 0.21 |
| $ | 0.89 | ||||||||||||
Diluted (loss) earnings per share |
| $ | (0.23) |
| $ | 0.43 |
| $ | 0.21 |
| $ | 0.88 | ||||||||||||
Basic EPS | | $ | 0.97 | | $ | 1.08 | | $ | 1.94 | | $ | 2.08 | ||||||||||||
Diluted EPS | | $ | 0.97 | | $ | 1.08 | | $ | 1.93 | | $ | 2.08 |
Table of Contents8. INCOME TAXES
ROYAL GOLD, INC.
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
The calculation of weighted average shares includes all of our outstanding common stock. The Company intends to settlefollowing table provides the principal amount of the 2019 Notesincome tax expense (amounts in cash. As a result, there will be no impact to diluted earnings per share unless the share price of the Company’s common stock exceeds the conversion price of $102.79.
7. INCOME TAXES
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| Three Months Ended |
| Six Months Ended | ||||||||
|
| December 31, |
| December 31, |
| December 31, |
| December 31, | ||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 | ||||
|
| (Amounts in thousands, except rate) |
| (Amounts in thousands, except rate) | ||||||||
Income tax expense |
| $ | (48,360) |
| $ | (5,044) |
| $ | (55,904) |
| $ | (12,232) |
Effective tax rate |
|
| 148.5% |
|
| 15.7% |
|
| 83.9% |
|
| 18.5% |
The increase in thethousands) and effective tax raterates for the periods indicated:
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | June 30, | | June 30, | | June 30, | | June 30, | ||||
|
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||
Income tax expense (benefit) | | $ | 2,029 | | $ | (5,911) | | $ | 17,900 | | $ | 9,393 |
Effective tax rate | | | 3.1% | | | (9.0%) | | | 12.3% | | | 6.4% |
The effective tax rates for the three and six months ended December 31, 2017 is primarilyJune 30, 2023, and June 30, 2022, included discrete income tax benefits of $8.5 million and $18.8 million, respectively, attributable to the effects of recent U.S. tax legislation, as discussed below, and the effectsrelease of a non-cash functional currency election ($15.9 million expense) to file certain Canadian income tax returns in U.S. dollars. Prior to the functional currency election,valuation allowance on certain deferred tax liabilities were measured on the difference between adjusted Canadian dollar acquisition cost and Canadian dollar tax basis. These deferred tax liabilities were then marked-to market every quarter, for income tax expense (benefit) purposes, to account for changes in the Canadian dollar to U.S. dollar exchange rate. Post-election, the applicable deferred tax liabilities will be measured on the difference between U.S. GAAP value and U.S. dollar tax basis, and eliminating volatility in the effective tax rate caused by this mark-to-market adjustment.assets, respectively.
On December 22, 2017, H.R. 1, originally known as the Tax Cuts and Jobs Act (the “Act”), was enacted and is effective for tax years including January 1, 2018. Certain other aspects of the Act are not effective for fiscal June 30 companies until July 1, 2018.
The Act, among other things, reduced the U.S. corporate income tax rate to 21% starting January 1, 2018. As the Company is a fiscal year tax payer, we applied a blended U.S. federal income tax rate of approximately 28.1% for the fiscal year ending June 30, 2018. The blended percentage was calculated on a pro-rata percentage of the number of days before and after January 1, 2018. The Company’s U.S. federal corporate income tax rate will be 21% for the fiscal year commencing on July 1, 2018 and all future years.
ASC 740, Income Taxes, requires recognition of the effects of tax law changes in the period of enactment. As a result, the Company recorded a net charge (expense) of $26.4 million during the three months ended December 31, 2017. This amount, which is included in Income tax expense on our consolidated statements of operations and comprehensive (loss) income, consists of three components: (i) a $11.5 million charge relating to the one-time mandatory tax on the net accumulated post-1986 untaxed earnings and profits of the Company’s foreign subsidiaries, which we will elect to pay over an eight-year period, (ii) a $2.3 million benefit resulting from the re-measurement of the Company’s net deferred tax assets and liabilities, and (iii) a $17.2 million charge related to re-measurement of the U.S. income tax impacts resulting from foreign uncertain tax positions.
The net $26.4 million charge represents what the Company believes is a reasonable estimate of the impact of the Act. As the net charge is based on currently available information and interpretations, which are continuing to evolve, all amounts should be considered provisional. The Company will continue to analyze additional information and guidance related to the Act as supplemental legislation, regulatory guidance, or evolving technical interpretations become available. The final impacts may differ from the recorded amounts as of December 31, 2017 and the Company will continue to refine such amounts within the measurement period provided by Staff Accounting Bulletin No. 118. The Company expects to complete its analysis no later than the second quarter of fiscal year 2019.
11
13
8.9. SEGMENT INFORMATION
The Company manages itsWe manage our business under two reportable segments, consisting of the acquisition and management of stream interests and the acquisition and management of royalty interests. Royal Gold’sOur long-lived assets (stream and royalty interests, net) are geographically distributed as shown in the following table:table (amounts in thousands):
| | | | | | | | | | | | | | | | | | |
| | As of June 30, 2023 | | As of December 31, 2022 | ||||||||||||||
| | | | | | | | Total stream | | | | | | | | Total stream | ||
| | Stream | | Royalty | | and royalty | | Stream | | Royalty | | and royalty | ||||||
|
| interest |
| interest |
| interests, net |
| interest |
| interest |
| interests, net | ||||||
Canada | | $ | 484,602 | | $ | 616,920 | | $ | 1,101,522 | | $ | 511,957 | | $ | 620,549 | | $ | 1,132,506 |
Dominican Republic | | | 314,998 | | | — | | | 314,998 | | | 320,867 | | | — | | | 320,867 |
Africa | | | 280,517 | | | 321 | | | 280,838 | | | 299,722 | | | 321 | | | 300,043 |
Chile | | | 230,421 | | | 224,116 | | | 454,537 | | | 236,312 | | | 224,116 | | | 460,428 |
United States | | | — | | | 810,487 | | | 810,487 | | | — | | | 823,203 | | | 823,203 |
Mexico | | | — | | | 45,703 | | | 45,703 | | | — | | | 50,156 | | | 50,156 |
Australia | | | — | | | 21,743 | | | 21,743 | | | — | | | 22,120 | | | 22,120 |
Rest of world | | | 99,095 | | | 26,638 | | | 125,733 | | | 101,440 | | | 26,639 | | | 128,079 |
Total | | $ | 1,409,633 | | $ | 1,745,928 | | $ | 3,155,561 | | $ | 1,470,298 | | $ | 1,767,104 | | $ | 3,237,402 |
Our reportable segments for purposes of assessing performance are shown below (amounts in thousands):
| | | | | | | | | | | | | | | |
| | Three Months Ended June 30, 2023 | |||||||||||||
|
| Revenue |
| Cost of sales (1) |
| Production taxes |
| Depletion (2) |
| Segment gross profit | |||||
Stream interests | | $ | 106,015 | | $ | 23,367 | | $ | — | | $ | 29,352 | | $ | 53,296 |
Royalty interests | | | 38,027 | | | — | | | 1,274 | | | 8,945 | | | 27,808 |
Total | | $ | 144,042 | | $ | 23,367 | | $ | 1,274 | | $ | 38,297 | | $ | 81,104 |
| | | | | | | | | | | | | | | |
| | Three Months Ended June 30, 2022 | |||||||||||||
|
| Revenue |
| Cost of sales (1) |
| Production taxes |
| Depletion (2) |
| Segment gross profit | |||||
Stream interests | | $ | 104,879 | | $ | 23,810 | | $ | — | | $ | 37,790 | | $ | 43,279 |
Royalty interests | | | 41,562 | | | — | | | 1,425 | | | 6,075 | | | 34,062 |
Total | | $ | 146,441 | | $ | 23,810 | | $ | 1,425 | | $ | 43,865 | | $ | 77,341 |
| | | | | | | | | | | | | | | |
| | Six Months Ended June 30, 2023 | |||||||||||||
|
| Revenue |
| Cost of sales (1) |
| Production taxes |
| Depletion (2) |
| Segment gross profit | |||||
Stream interests | | $ | 221,005 | | $ | 48,387 | | $ | — | | $ | 63,104 | | $ | 109,514 |
Royalty interests | | | 93,429 | | | — | | | 3,263 | | | 21,408 | | | 68,758 |
Total | | $ | 314,434 | | $ | 48,387 | | $ | 3,263 | | $ | 84,512 | | $ | 178,272 |
| | | | | | | | | | | | | | | |
| | Six Months Ended June 30, 2022 | |||||||||||||
|
| Revenue |
| Cost of sales (1) |
| Production taxes |
| Depletion (2) |
| Segment gross profit | |||||
Stream interests | | $ | 210,130 | | $ | 46,450 | | $ | — | | $ | 74,169 | | $ | 89,511 |
Royalty interests | | | 98,666 | | | — | | | 3,646 | | | 17,561 | | | 77,459 |
Total | | $ | 308,796 | | $ | 46,450 | | $ | 3,646 | | $ | 91,730 | | $ | 166,970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2017 |
| As of June 30, 2017 | ||||||||||||||
|
| Stream interest |
| Royalty interest |
| Total stream |
| Stream interest |
| Royalty |
| Total stream | ||||||
Canada |
| $ | 836,129 |
| $ | 218,683 |
| $ | 1,054,812 |
| $ | 852,035 |
| $ | 221,618 |
| $ | 1,073,653 |
Dominican Republic |
|
| 517,203 |
|
| — |
|
| 517,203 |
|
| 543,256 |
|
| — |
|
| 543,256 |
Chile |
|
| 336,854 |
|
| 453,369 |
|
| 790,223 |
|
| 348,778 |
|
| 453,369 |
|
| 802,147 |
Africa |
|
| 112,029 |
|
| 525 |
|
| 112,554 |
|
| 123,760 |
|
| 572 |
|
| 124,332 |
Mexico |
|
| — |
|
| 99,769 |
|
| 99,769 |
|
| — |
|
| 105,889 |
|
| 105,889 |
United States |
|
| — |
|
| 166,115 |
|
| 166,115 |
|
| — |
|
| 168,378 |
|
| 168,378 |
Australia |
|
| — |
|
| 35,780 |
|
| 35,780 |
|
| — |
|
| 37,409 |
|
| 37,409 |
Other |
|
| 12,030 |
|
| 22,130 |
|
| 34,160 |
|
| 12,030 |
|
| 25,162 |
|
| 37,192 |
Total |
| $ | 1,814,245 |
| $ | 996,371 |
| $ | 2,810,616 |
| $ | 1,879,859 |
| $ | 1,012,397 |
| $ | 2,892,256 |
(1) | Excludes depreciation, depletion and amortization. |
(2) | Depletion amounts are included within Depreciation, depletion and amortization on our consolidated statements of operations and comprehensive income. |
14
The Company’s revenue, costROYAL GOLD, INC.
Notes to Consolidated Financial Statements
(Unaudited)
A reconciliation of sales and nettotal segment gross profit to the consolidated Income before income taxes is shown below (amounts in thousands):
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | June 30, | | June 30, | | June 30, | | June 30, | ||||
|
| | 2023 |
| | 2022 |
| | 2023 |
| | 2022 |
Total segment gross profit | | $ | 81,104 | | $ | 77,341 | | $ | 178,272 | | $ | 166,970 |
| | | | | | | | | | | | |
Costs and expenses | | | | | | | | | | | | |
General and administrative expenses | | | 9,093 | | | 9,312 | | | 20,093 | | | 18,243 |
Depreciation and amortization | | | 115 | | | 124 | | | 229 | | | 246 |
Operating income | | | 71,896 | | | 67,905 | | | 157,950 | | | 148,481 |
Fair value changes in equity securities | | | (509) | | | (2,191) | | | 291 | | | (1,577) |
Interest and other income | | | 2,650 | | | 1,118 | | | 4,912 | | | 2,093 |
Interest and other expense | | | (8,408) | | | (1,398) | | | (17,582) | | | (2,296) |
Income before income taxes | | $ | 65,629 | | $ | 65,434 | | $ | 145,571 | | $ | 146,701 |
Our revenue by reportable segment for the three and six months ended December 31, 2017June 30, 2023 and 2016,2022 is geographically distributed as shown in the following table:table (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
| Three Months Ended December 31, 2017 |
| Three Months Ended December 31, 2016 | ||||||||||||||||||||||||||
|
| Revenue |
| Cost of sales |
| Net revenue |
| Revenue |
| Cost of sales |
| Net revenue | ||||||||||||||||||
Streams: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
| | | | | | | | | | | | | ||||||||||||||||||
| | Three Months Ended | | Six Months Ended | ||||||||||||||||||||||||||
| | June 30, | | June 30, | | June 30, | | June 30, | ||||||||||||||||||||||
|
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||||||||||||||||||||
Stream interests: | | | | | | | | | | | | | ||||||||||||||||||
Canada |
| $ | 22,702 |
| $ | 6,624 |
| $ | 16,078 |
| $ | 31,664 |
| $ | 11,181 |
| $ | 20,483 | | $ | 50,848 | | $ | 54,591 | | $ | 107,829 | | $ | 106,077 |
Dominican Republic |
|
| 26,355 |
|
| 8,198 |
|
| 18,157 |
|
| 26,437 |
|
| 8,547 |
|
| 17,890 | | | 23,540 | | | 19,812 | | | 45,899 | | | 43,076 |
Africa | | | 18,763 | | | 14,540 | | | 36,301 | | | 25,375 | ||||||||||||||||||
Chile |
|
| 21,601 |
|
| 3,297 |
|
| 18,304 |
|
| 10,985 |
|
| 1,746 |
|
| 9,239 | | | 7,823 | | | 11,721 | | | 20,757 | | | 27,395 |
Rest of world | | | 5,041 | | | 4,215 | | | 10,219 | | | 8,207 | ||||||||||||||||||
Total stream interests | | $ | 106,015 | | $ | 104,879 | | $ | 221,005 | | $ | 210,130 | ||||||||||||||||||
| | | | | | | | | | | | | ||||||||||||||||||
Royalty interests: | | | | | | | | | | | | | ||||||||||||||||||
United States | | $ | 23,265 | | $ | 16,845 | | $ | 56,845 | | $ | 41,202 | ||||||||||||||||||
Mexico | | | 8,155 | | | 11,940 | | | 17,449 | | | 27,821 | ||||||||||||||||||
Australia | | | 5,081 | | | 4,040 | | | 9,180 | | | 8,086 | ||||||||||||||||||
Canada | | | (97) | | | 5,773 | | | 6,495 | | | 16,551 | ||||||||||||||||||
Africa |
|
| 8,629 |
|
| 1,744 |
|
| 6,885 |
|
| 4,921 |
|
| 1,028 |
|
| 3,893 | | | — | | | 114 | | | — | | | 430 |
Total streams |
| $ | 79,287 |
| $ | 19,863 |
| $ | 59,424 |
| $ | 74,007 |
| $ | 22,502 |
| $ | 51,505 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Royalties: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Mexico |
| $ | 10,854 |
| $ | — |
| $ | 10,854 |
| $ | 11,530 |
| $ | — |
| $ | 11,530 | ||||||||||||
United States |
|
| 12,298 |
|
| — |
|
| 12,298 |
|
| 9,407 |
|
| — |
|
| 9,407 | ||||||||||||
Canada |
|
| 5,396 |
|
| — |
|
| 5,396 |
|
| 5,682 |
|
| — |
|
| 5,682 | ||||||||||||
Australia |
|
| 3,227 |
|
| — |
|
| 3,227 |
|
| 3,230 |
|
| — |
|
| 3,230 | ||||||||||||
Africa |
|
| 585 |
|
| — |
|
| 585 |
|
| 764 |
|
| — |
|
| 764 | ||||||||||||
Other |
|
| 2,701 |
|
| — |
|
| 2,701 |
|
| 2,341 |
|
| — |
|
| 2,341 | ||||||||||||
Total royalties |
| $ | 35,061 |
| $ | — |
| $ | 35,061 |
| $ | 32,954 |
| $ | — |
| $ | 32,954 | ||||||||||||
Total streams and royalties |
| $ | 114,348 |
| $ | 19,863 |
| $ | 94,485 |
| $ | 106,961 |
| $ | 22,502 |
| $ | 84,459 | ||||||||||||
Rest of world | | | 1,623 | | | 2,850 | | | 3,460 | | | 4,576 | ||||||||||||||||||
Total royalty interests | | $ | 38,027 | | $ | 41,562 | | $ | 93,429 | | $ | 98,666 | ||||||||||||||||||
Total revenue | | $ | 144,042 | | $ | 146,441 | | $ | 314,434 | | $ | 308,796 |
12
ROYAL GOLD, INC.
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended December 31, 2017 |
| Six Months Ended December 31, 2016 | ||||||||||||||
|
| Revenue |
| Cost of sales |
| Net revenue |
| Revenue |
| Cost of sales |
| Net revenue | ||||||
Streams: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada |
| $ | 54,654 |
| $ | 15,847 |
| $ | 38,807 |
| $ | 70,050 |
| $ | 23,758 |
| $ | 46,292 |
Dominican Republic |
|
| 51,758 |
|
| 15,785 |
|
| 35,973 |
|
| 47,387 |
|
| 14,443 |
|
| 32,944 |
Chile |
|
| 33,938 |
|
| 5,109 |
|
| 28,829 |
|
| 31,154 |
|
| 4,744 |
|
| 26,410 |
Africa |
|
| 17,699 |
|
| 3,541 |
|
| 14,158 |
|
| 10,920 |
|
| 2,218 |
|
| 8,702 |
Total streams |
| $ | 158,049 |
| $ | 40,282 |
| $ | 117,767 |
| $ | 159,511 |
| $ | 45,163 |
| $ | 114,348 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalties: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mexico |
| $ | 21,751 |
| $ | — |
| $ | 21,751 |
| $ | 21,127 |
| $ | — |
| $ | 21,127 |
United States |
|
| 22,727 |
|
| — |
|
| 22,727 |
|
| 19,113 |
|
| — |
|
| 19,113 |
Canada |
|
| 11,488 |
|
| — |
|
| 11,488 |
|
| 11,870 |
|
| — |
|
| 11,870 |
Australia |
|
| 6,548 |
|
| — |
|
| 6,548 |
|
| 6,692 |
|
| — |
|
| 6,692 |
Africa |
|
| 1,047 |
|
| — |
|
| 1,047 |
|
| 1,588 |
|
| — |
|
| 1,588 |
Chile |
|
| — |
|
| — |
|
| — |
|
| 950 |
|
| — |
|
| 950 |
Other |
|
| 5,214 |
|
| — |
|
| 5,214 |
|
| 4,058 |
|
| — |
|
| 4,058 |
Total royalties |
| $ | 68,775 |
| $ | — |
| $ | 68,775 |
| $ | 65,398 |
| $ | — |
| $ | 65,398 |
Total streams and royalties |
| $ | 226,824 |
| $ | 40,282 |
| $ | 186,542 |
| $ | 224,909 |
| $ | 45,163 |
| $ | 179,746 |
9.10. FAIR VALUE MEASUREMENTS
FASB Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures (“ASC 820”) establishesvalue is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, we utilize a three-tier fair value hierarchy, thatwhich prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of themeasuring fair value hierarchy under ASC 820 are described below:as follows:
Level 1: Quoted prices for identical instruments in active markets;
Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and
15
Level 3: Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
The following table sets forth the Company’sour financial assets measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy.
| | | | | | | | | | | | | | | |
| | As of June 30, 2023 | |||||||||||||
| | | | Fair Value | |||||||||||
|
| Carrying Value |
| Total |
| Level 1 |
| Level 2 |
| Level 3 | |||||
Assets (amounts in thousands): | | | | | | | | | | | | | | | |
Marketable equity securities(1) | | $ | 547 | | $ | 547 | | $ | 11 | | $ | 536 | | $ | — |
| | | | | | | | | | | | | | | |
| | As of December 31, 2022 | |||||||||||||
| | | | Fair Value | |||||||||||
|
| Carrying Value |
| Total |
| Level 1 |
| Level 2 |
| Level 3 | |||||
Assets (amounts in thousands): | | | | | | | | | | | | | | | |
Marketable equity securities(1) | | $ | 373 | | $ | 373 | | $ | 121 | | $ | 252 | | $ | — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| As of December 31, 2017 | |||||||||||||
|
| Carrying |
| Fair Value | |||||||||||
|
| Amount |
| Total |
| Level 1 |
| Level 2 |
| Level 3 | |||||
Assets (In thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable equity securities(1) |
| $ | 3,450 |
| $ | 3,450 |
| $ | 3,450 |
| $ | — |
| $ | — |
Total assets |
|
|
|
| $ | 3,450 |
| $ | 3,450 |
| $ | — |
| $ | — |
Liabilities (In thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt(2) |
| $ | 427,890 |
| $ | 401,309 |
| $ | 401,309 |
| $ | — |
| $ | — |
Total liabilities |
|
|
|
| $ | 401,309 |
| $ | 401,309 |
| $ | — |
| $ | — |
|
|
|
|
13
The Company’sOur marketable equity securities classified within Level 1 of the fair value hierarchy are valued using quoted market prices in active markets. The fair value of the Level 1 marketable equity securities is calculated as the quoted market price of the marketable equity securitymarkets multiplied by the quantity of shares held by the Company.held. The TriStar Gold Inc. warrants that were part of the term loan funded to a subsidiary of Golden Star Resources Ltd. (“Golden Star”) in July 2015 were exercised during the quarter ended September 30, 2017. The warrants had been(Note 3) classified within Level 2 of the fair value hierarchy as of June 30, 2017. The fair value ofare model-derived (Black-Scholes) valuations in which the Golden Star common shares received by the Company upon exercise of the warrantssignificant inputs are classified within Level 1 of the fair value hierarchy as of September 30, 2017. The Company sold all of the common shares of Golden Star received upon exercise of the warrantsobservable in October 2017. The Company’s debt classified within Level 1 of the fair value hierarchy is valued using quoted prices in an active market.markets. The carrying value of the Company’sour revolving credit facility (Note 3)4) approximates fair value as of December 31, 2017.June 30, 2023.
As of December 31, 2017, the Company alsoJune 30, 2023, we had assets that, under certain conditions, are subject to measurement at fair value on a non-recurring basis like those associated with stream and royalty interests, intangible assets and other long-lived assets. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if any of these assets are determined to be impaired. If recognition of these assets at their fair value becomes necessary, such measurements will be determined utilizing Level 3 inputs.
10.
11. COMMITMENTS AND CONTINGENCIES
Xavantina Exploration Payment
On April 20, 2023, we made a $2.4 million advance payment to a subsidiary of Ero Copper Corp. (“Ero”) as part of our commitment to support the achievement of success-based targets related to regional exploration and mineral resource additions. This payment was recorded to exploration stage stream interests within Stream and royalty interests, net on our consolidated balance sheets as of June 30, 2023. Advance payments of $4.4 million remain if Ero meets certain success-based targets related to regional exploration and mineral resource additions through calendar 2024. Refer to Note 3 of our 2022 10-K for further information on the Xavantina (formerly referred to as NX Gold) Gold Stream Acquisition.
Ilovica Gold Stream Acquisition
As of December 31, 2017, the Company’sJune 30, 2023, our conditional funding schedule forof $163.75 million, related to itsas part of the Ilovica gold stream acquisition madeentered into in October 2014, remains subject to certain conditions.
Voisey’s Bay
The Company indirectly owns a royalty on the Voisey’s Bay mine in Newfoundland and Labrador owned by Vale Newfoundland & Labrador Limited (“VNL”). The royalty is directly owned by the Labrador Nickel Royalty Limited Partnership (“LNRLP”), in which the Company’s wholly-owned indirect subsidiary, Voisey’s Bay Holding Corporation, is the general partner and 90% owner. The remaining 10% interest in LNRLP is owned by Altius Royalty Corporation, a company unrelated to Royal Gold.
On October 6, 2017, LNRLP filed a Fresh as Amended Statement of Claim, amending the original October 16, 2009 Statement of Claim and amendments thereto made in December 2014, in the Supreme Court of Newfoundland and Labrador Trial Division against Vale Inco Limited, now known as Vale Canada Limited, and its wholly-owned subsidiaries, Vale Inco Atlantic Sales Limited and VNL, related to calculation of the NSR on the sale of concentrates, including nickel concentrates, from the Voisey’s Bay mine. LNRLP asserts that the defendants have incorrectly calculated the NSR since production at Voisey’s Bay began in late 2005, and since defendants began processing Voisey’s Bay concentrates at the new Long Harbour processing facility, and that the defendants have breached their contractual duties of good faith in several ways. LNRLP requests an order in respect of the correct calculation of future payments, and unspecified damages for non-payment and underpayment of past royalties to the date of the claim, together with additional damages until the date of trial, interest, costs and other damages. The litigation is in the discovery phase, and trial is expected to commence in the second half of calendar 2018.
11.SUBSEQUENT EVENT
On January 18, 2018 Barrick reported that it is analyzing a revised sanction related to the Pascua-Lama project issued by Chile’s Superintendencia del Medio Ambiente (“SMA”) on January 17, 2018. The sanction is part of a re-evaluation process ordered by Chile’s Environmental Court in 2014 and relates to historical compliance matters at the Pascua-Lama project. According to Barrick, the SMA has not revoked Pascua-Lama’s environmental permit, but has ordered the closure of existing facilities on the Chilean side of the project, in addition to certain monitoring activities.
14
16
Barrick also reported that closure of existing surface facilities in Chile is consistent with its plan to advance a prefeasibility study for underground mining operations at Pascua-Lama, which would address a number of community concerns by reducing the overall environmental impact of the project. Barrick reported that it is currently undertaking a number of optimization studies in order to complete the prefeasibility study.
On February 6, 2018, in light of the SMA order to close surface facilities in Chile, and current plans to evaluate an underground mine, Barrick announced it is reclassifying Pascua-Lama’s proven and probable gold reserves of approximately 14 million ounces, which are based on an open pit mine plan, as mineralized material. Barrick reported that it will include further details in its year-end results release on February 14, 2018 and an update on the Pascua-Lama project at its February 22, 2018 Investor Day.
The Company owns a 0.78% to 5.45% sliding-scale net smelter return (“NSR”) gold royalty and a 1.09% NSR copper royalty on the Pascua-Lama project. Our royalty interests are applicable to all gold and copper production from the portion of the Pascua-Lama project lying on the Chilean side of the border. The Company’s carrying value for its royalty interests at Pascua-Lama is approximately $416.8 million as of December 31, 2017.
The Company routinely assesses whether impairment indicators are present for its long-lived assets. A significant reduction in reserves or mineralized material is an indicator of potential impairment. As part of our fiscal 2018 third quarter procedures, we will be evaluating Barrick’s reserves reclassification to assess the recoverability of our carrying value at Pascua-Lama. The Company will also consider further updates from Barrick, including those expected on February 14 and February 22, 2018, as part of our recoverability analysis. Upon completion of our process, the Company may determine an impairment is necessary.
15
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General Presentation
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide information to assist you in better understanding and evaluating ourthe financial condition and results of operations.operations of Royal Gold, Inc. (“Royal Gold”, the “Company”, “we”, “us”, or “our”), recommends that youGold. You should read this MD&A in conjunction with our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”(“SEC”) on August 10, 2017.February 16, 2023 (“2022 10-K”).
This MD&A contains forward-looking information. You should review our important note about forward-looking statements following this MD&A.
We refer to “GSR,” “NSR,” “NVR,” “metaldo not own, develop, or mine the properties on which we hold stream (or “stream”)” and other types ofor royalty or similar interests throughout this MD&A. These terms are defined in our Fiscal 2017 10-K.
Statement Regarding Third Party Information
interests. Certain information provided in this report,Quarterly Report on Form 10-Q about operating properties in which we hold interests, including the Operator’s Production Estimates by Streaminformation about mineral resources and Royalty Interest for Calendar 2017reserves, historical production, production estimates, property descriptions, and Property Developments, has beenproperty developments, was provided to us by the operators of those properties where we own interests or is publicly available information filed by these operators with applicable securities regulatory bodies, including the SEC. Royal Gold hasWe have not verified, and isare not in a position to verify, and expressly disclaimsdisclaim any responsibility for the accuracy, completeness, or fairness of, suchthis third-party information and refersrefer the reader to the public reports filed by the operators for information regarding those properties.
Overview
Unless the context otherwise requires, references to “Royal Gold,” the “Company,” “we,” “us,” and “our” refer to Royal Gold, together withInc. and its subsidiaries, is engaged in the businessconsolidated subsidiaries.
Overview of acquiringOur Business
We acquire and managingmanage precious metal streams, royalties, and similar interests. We seek to acquire existing stream and royalty interests or to finance projects that are in production or in the development stage in exchange for stream or royalty interests.
We manage our business under two segments:
● | Acquisition and Management of Stream Interests — A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or more metals produced from a mine, at a price determined for the life of the transaction by the purchase agreement. As of June 30, 2023, we owned nine stream interests, which are on eight producing properties and one development stage property. Stream interests accounted for approximately 74% and 70% of our total revenue for the three and six months ended June 30, 2023, respectively, and 72% and 68% for the three and six months ended June 30, 2022, respectively. We expect stream interests to continue representing a significant portion of our total revenue. |
Acquisition and Management of Stream Interests — A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or more metals produced from a mine, at a price determined for the life of the transaction by the purchase agreement. As of December 31, 2017, we owned stream interests on five producing properties and one development stage property. Stream interests accounted for approximately 69% and 70%, respectively, of our total revenue for the three and six months ended December 31, 2017 and 69% and 71%, respectively, of our total revenue for the three and six months ended December 31, 2016. We expect stream interests to continue representing a significant proportion of our total revenue.
● | Acquisition and Management of Royalty Interests — Royalties are non-operating interests in mining projects that provide the right to revenue or metals produced from the project after deducting specified costs, if any. As of June 30, 2023, we owned royalty interests on 32 producing properties, 19 development stage properties and 121 exploration stage properties, of which we consider 52 to be evaluation stage projects. We use “evaluation stage” to describe exploration stage properties that contain mineral resources and on which operators are engaged in the search for mineral reserves. Royalty interests accounted for 26% and 30% of our total revenue for the three and six months ended June 30, 2023, respectively, and 28% and 32% for the three and six months ended June 30, 2022, respectively. |
Acquisition and Management of Royalty Interests — Royalties are non-operating interests in mining projects that provide the right to revenue or metals produced from the project after deducting specified costs, if any. As of December 31, 2017, we owned royalty interests on 34 producing properties, 22 development stage properties and 133 exploration stage properties, of which we consider 51 to be evaluation stage projects. We use “evaluation stage” to describe exploration stage properties that contain mineralized material and on which operators are engaged in the search for reserves. Royalties accounted for approximately 31% and 30%, respectively, of our total revenue for the three and six months ended December 31, 2017 and 31% and 29%, respectively, of our total revenue for the three and six months ended December 31, 2016.
We do not conduct mining operations on the properties in which we hold stream and royalty interests, and except for our interest in the Peak Gold, LLC joint venture (“Peak Gold JV”), we generally are not required to contribute to capital costs, exploration costs, environmental costs or other operating costs on those properties.
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In the ordinary course of business, we engage in a continual review ofWe are continually reviewing opportunities to acquiregrow our portfolio, whether through the creation or acquisition of new or existing stream andor royalty interests to establish new streams on operating mines, to create new stream and royalty interests through the financing of mine development or exploration, or to acquire companies that hold stream and royalty interests.other acquisition activity. We currently, and generally at any time, have acquisition opportunities in various stages of activereview. Our review including,process may include, for example, our engagement ofengaging consultants and advisors to analyze particular opportunities,an opportunity; analysis of technical, financial, legal, environmental, social, governance and other confidential information regarding an opportunity; submission of indications of interest and term sheets,sheets; participation in preliminary discussions and negotiationsnegotiations; and involvement as a bidder in competitive processes.
Business Trends and Uncertainties
Metal Prices
Our financial results are primarily tied to the price of gold, and, to a lesser extent, the price of silver and copper, together with the amounts of production from our producing stage stream and royalty interests. The price of gold, silver, copper, and other metals hasmetals. Metal prices have fluctuated widely in recent years.years and we expect this volatility to continue. The marketability and the price of metals are influenced by numerous factors beyond theour control, of the Company and significant declineschanges in the price of gold, silver or copper couldmetal prices can have a material and adverse effect on the Company’s results of operations and financial condition.our revenue.
For the three and six months ended December 31, 2017June 30, 2023 and 2016, gold, silver2022, average metal prices and copper price averages and percentagepercentages of revenue by metal were as follows:
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Metal |
| Average |
| Percentage of Revenue |
| Average |
| Percentage |
| Average |
| Percentage of Revenue |
| Average |
| Percentage |
| Average | | Percentage | | Average | | Percentage | | Average | | Percentage | | Average | | Percentage | ||||||||
Gold ($/ounce) |
| $ | 1,275 |
| 79% |
| $ | 1,222 |
| 84% |
| $ | 1,277 |
| 78% |
| $ | 1,280 |
| 86% | | $ | 1,976 | | 77% | | $ | 1,871 | | 71% | | $ | 1,932 | | 74% | | $ | 1,874 | | 71% |
Silver ($/ounce) |
| $ | 16.73 |
| 9% |
| $ | 17.19 |
| 11% |
| $ | 16.78 |
| 9% |
| $ | 18.42 |
| 9% | | $ | 24.13 | | 15% | | $ | 22.60 | | 10% | | $ | 23.31 | | 14% | | $ | 23.32 | | 10% |
Copper ($/pound) |
| $ | 3.09 |
| 9% |
| $ | 2.39 |
| 3% |
| $ | 2.98 |
| 9% |
| $ | 2.28 |
| 3% | | $ | 3.84 | | 6% | | $ | 4.31 | | 14% | | $ | 3.95 | | 10% | | $ | 4.43 | | 14% |
Other |
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| 3% |
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| 2% |
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| 4% |
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| N/A |
| 2% | | | N/A | | 2% | | | N/A | | 5% | | | N/A | | 2% | | | N/A | | 5% |
Recent Business Developments(1) Based on the average U.S. dollars London Bullion Market Association PM fixing price for gold and daily fixing price for silver, as applicable.
(2) Based on the average U.S. dollars London Metals Exchange settlement price for copper.
U.S. Tax Legislation
Agreement to Acquire Royalty Interests on the Producing Santa Rita and Serrote Mines
On December 22, 2017, H.R.June 12, 2023, we announced that we entered into a binding commitment letter with ACG Acquisition Company to acquire new royalty interests on the producing Serrote and Santa Rita mines in Brazil for total cash consideration of $250 million, subject to satisfaction of certain conditions, including negotiation and execution of definitive documentation.
Based on current metal prices, we expect to fund the $250 million purchase price with approximately $50 million of available cash resources and approximately $200 million from a draw on our revolving credit facility.
Gold/Platinum/Palladium Royalties
At closing, we expect to pay cash consideration of $215 million in return for:
● | A gross smelter return royalty of 85% of the payable gold from the Serrote mine until the achievement of a royalty revenue threshold of $250 million from this royalty, and 45% thereafter; and, |
● | A gross smelter return royalty of 64 ounces of gold, 135 ounces of platinum and 100 ounces of palladium for each 1 million pounds of payable nickel produced from the Santa Rita mine until the achievement of a royalty revenue threshold of $100 million from this royalty, at which point the royalty on gold will continue and the royalty on platinum and palladium will terminate. |
Royalty revenue will be determined using fixed payabilities of 93% for gold at the Serrote mine and 86% for nickel at the Santa Rita mine. The royalties will have an economic effective date of May 1, originally known as2023, and there will be no deductions applicable to the Tax Cutsroyalty payments.
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Copper/Nickel Royalty
At closing, we expect to pay cash consideration of $35 million in return for a gross smelter return royalty on total payable copper and Jobs Act (the “Act”), was enactednickel production from the Serrote and isSanta Rita mines at a rate of 0.50% during 2023 and 2024, 0.75% during 2025 and 1.10% thereafter until the achievement of a royalty revenue threshold of $90 million from this royalty, and 0.55% thereafter.
Royalty revenue will be determined using fixed payabilities of 97% for copper at the Serrote mine, and 86% for nickel and 72% for copper at the Santa Rita mine. The royalty will have an economic effective for tax years including Januarydate of May 1, 2018. The effects2023, and there will be no deductions applicable to the royalty payments.
ESG Contribution
We will make a financial commitment of 0.25% of the Act are recognized inannual royalty payments received to support programs benefiting the periodcommunities within the area of enactment, or the period ending December 31, 2017. Certain other aspectsinfluence of each of the Act are not effective for fiscal June 30 companies until July 1, 2018.Serrote and Santa Rita mines.
The Act, among other things, reduced the U.S. corporate income tax rateConditions to 21% starting January 1, 2018. As a United States domiciled company, we expect that the Act will have a positive long-term impact on Royal Gold’s future financial results through the reduction in the U.S. corporate tax rate from 35% to 21% and by allowing us to efficiently repatriate future earnings from our foreign subsidiaries. As the Company is a fiscal year tax payer, we applied a blended U.S. federal income tax rate of approximately 28.1% for the fiscal year ending June 30, 2018. The blended percentage was calculated on a pro-rata percentageClosing
Closing of the numberproposed acquisition of days before and after January 1, 2018. The Company’s U.S. statutory federal corporate income tax ratethe royalties will be 21% forconditional on the fiscal year commencing on July 1, 2018 and all future years. We estimate that our effective tax rate in the second half of fiscal 2018 will be between 17% and 23%.
As a resultsuccessful completion of the Act,ACG transaction with Appian, a minimum working capital position for ACG at closing, and other closing conditions that are standard for transactions of this nature, including the Company recorded a net charge (expense)negotiation and execution of $26.4 million duringdefinitive royalty and security agreements with ACG and an intercreditor agreement with the three months ended December 31, 2017. This amount, which is included in Income tax expense on our consolidated statements of operations and comprehensive (loss) income, consists of three components: (i) a $11.5 million charge relating to the one-time mandatory tax on the net accumulated post-1986 untaxed earnings and profitssenior lenders.
Timing
Closing of the Company’s foreign subsidiaries, which we will elect to pay over an eight-year period, (ii) a $2.3 million benefit resulting from the re-measurementproposed acquisition of the Company’s net deferred tax assets and liabilities, and (iii)royalties could occur within the coming weeks after completion of all conditions to closing.
Xavantina Exploration Payment
On April 20, 2023, we made a $17.2$2.4 million chargeadvance payment to a subsidiary of Ero Gold Corporation (“Ero”) as part of our commitment to support the achievement of success-based targets related to re-measurementregional exploration and mineral resource additions. Advance payments of the U.S. income tax impacts resulting from foreign uncertain tax positions.$4.4 million remain if Ero meets certain success-based targets related to regional exploration and mineral resource additions through calendar 2024. Refer to Note 73 of our notes to consolidated financial statements2022 10-K for further discussioninformation on the income tax accounting considerations for the Act.Xavantina (formerly referred to as NX Gold) Gold Stream Acquisition.
PrincipalOperators’ Production Estimates by Stream and Royalty InterestsInterest for Calendar 2023
We generally receive annual production estimates from many of the operators of the producing mines in which we own a stream or royalty interest during the first quarter of each calendar year. In some instances, an operator may revise its original calendar year guidance throughout the year. The Company considers both historical and future potential revenues in determining which stream and royalty interests infollowing table shows current production estimates for calendar 2023, as well as actual production through June 30, 2023 (except as otherwise noted), for our portfolio are principal properties as reported to our business. Estimated future potential revenues from both producing and developmentus by the operators.
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properties are based on a number of factors, including reserves subject to our streamOperators’ Estimated and royalty interests, production estimates, feasibility studies, metal price assumptions, mine life, legal statusActual Production by Stream and other factors and assumptions, any of which could change and could cause the Company to conclude that one or more of such stream and royalty interests are no longer principal to our business. Currently, our principal producing and development stream and royalty interests are listed alphabetically in the following tables.
Please refer to our Fiscal 2017 10-KRoyalty Interest for further discussion of our principal producing and development stream and royalty interests.
Calendar 2023
Principal Producing Properties
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| | Calendar Year 2023 Operator’s Production | | Calendar Year 2023 Operator’s Production | ||||||||
| | Estimate(1) | | Actual(2) | ||||||||
| | Gold | | Silver | | Base Metals | | Gold | | Silver | | Base Metals |
Stream/Royalty | (oz.) | (oz.) | (lbs.) | (oz.) | | (oz.) | (lbs.) | |||||
Stream: | | | | | | | | | | | | |
Andacollo(3) |
| 22,000 - 27,000 | | | 12,100 | | | |||||
Mount Milligan(4) | 160,000 - 170,000 | | | 74,300 | | | ||||||
Copper | | | | 60 - 70 Million | | | 27.1 Million | |||||
Pueblo Viejo(5) | | 470,000 - 520,000 | | N/A | | | | 166,000 | | N/A | | |
Khoemacau(6) | | | | 1.5 - 1.7 Million | | | | | | 0.8 Million | | |
Royalty: | | | | | | | ||||||
Cortez(7) | | 940,000 - 1,060,000 | | | | | | 407,000 | | | | |
Peñasquito(8) | N/A | | N/A | | | 123,000 | | 13.8 Million | | |||
Lead |
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Operators’ Production Estimates by Stream and Royalty Interest for Calendar 2017
We received annual production estimates from many of the operators of our producing mines during the first calendar quarter of 2017. The following table shows such production estimates for our principal producing properties for calendar 2017 as well as the actual production reported to us by the various operators through December 31, 2017. The estimates and production reports are prepared by the operators of the mining properties. We do not participate in the preparation or
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calculation of the operators’ estimates or production reports and have not independently assessed or verified, and disclaim all responsibility for, the accuracy of such information. Please refer to “Property Developments” below within this MD&A for further discussion on our principal producing and development stage properties.
Operators’ Estimated and Actual Production by Stream and Royalty Interest for Calendar 2017
Principal Producing Properties
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| Calendar 2017 Operator’s Production Estimate |
| Calendar 2017 Operator’s Production | ||||||||
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| Estimate(1) |
| Actual(2) | ||||||||
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| Gold |
| Silver |
| Base Metals |
| Gold |
| Silver |
| Base Metals |
Stream/Royalty |
| (oz.) |
| (oz.) |
| (lbs.) |
| (oz.) |
| (oz.) |
| (lbs.) |
Stream: |
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Andacollo(3) |
| 61,600 |
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| 54,500 |
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Mount Milligan(4) |
| 235,000 - 255,000 |
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| 55 - 65 million |
| 164,000 |
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| 41.3 million |
Pueblo Viejo(5) |
| 635,000 - 650,000 |
| Not provided |
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| 468,000 |
| Not provided |
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Wassa and Prestea |
| 255,000 - 280,000 |
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| 267,600 |
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Cortez GSR1 |
| 102,200 |
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| 81,800 |
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Cortez GSR2 |
| 1,600 |
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| 1,000 |
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Cortez GSR3 |
| 103,800 |
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| 82,800 |
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Cortez NVR1 |
| 63,900 |
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| 43,800 |
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Peñasquito(6) |
| 410,000 |
| Not provided |
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| 393,000 |
| 16.0 million |
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Lead |
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| 125 million |
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| 96.8 million |
Zinc |
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| 325 million |
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| 263.2 million |
| Production estimates received from our operators are for calendar |
(2) |
| Actual production figures shown are from |
(3) |
| The estimated and actual production figures shown for Andacollo are contained gold in concentrate. Deliveries to us are determined using a fixed gold payability factor of 89%. |
(4) |
| The estimated and actual production figures shown for Mount Milligan are payable gold and copper in concentrate. |
(5) |
| The estimated and actual production figures shown for Pueblo Viejo are payable gold in doré and represent |
(6) | The estimated and actual production |
(7) | The estimated and actual production figures for Cortez include the entirety of the Cortez Complex. Barrick reports total production from the Cortez Complex and does not report production separately for the |
(8) |
| The estimated and actual gold and silver production figures shown for Peñasquito are payable gold and silver in concentrate and doré. The estimated and actual lead and zinc production figures shown are payable lead and zinc in concentrate. |
Property Developments
The following property development information is providedThis section provides recent updates for our principal properties as reported by the operators, of the property, either directly to Royal Goldus or in various documents madetheir publicly available.available documents.
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Stream Interests
Andacollo
Gold stream deliveries from Andacollo were approximately 13,5003,700 ounces of gold for the three months ended December 31, 2017,June 30, 2023, compared to approximately 9,2009,900 ounces of gold for the three months ended December 31, 2016.June 30, 2022. The production variability between quarters is typical fordecrease in deliveries resulted
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primarily from Andacollo resulting from concentrate shipment timing.
Teck indicated that they expectexperiencing lower gold grades to continue to gradually decline, which they expect to be offset largely by planned throughput improvementsand lower gold recoveries, in line with the expected downward trend of gold grades, as well as differences in the mill. Thetiming of shipments and settlements during the periods.
Gold production at Andacollo has trended lower since the beginning of 2021 due to lower ore grades, as anticipated in the mine plan. According to Teck Resources Limited (“Teck”), the period of lower grades is expected to last through 2023, and the mine plan then anticipates a transition to higher grade ore as the next phase of mining is developed over the following years. Teck has reported that the current life of mine for Carmen de Andacollo is expected to continue until 2034. Additional permitting2035 and that additional permits or permit amendments to existing permits will be required to execute the life of mine plan.
Khoemacau Project
Silver stream deliveries from Khoemacau were approximately 398,700 ounces for the three months ended June 30, 2023, compared to approximately 246,800 ounces for the three months ended June 30, 2022. Increased stream deliveries resulted from operations running at full capacity in the current period compared to the prior year period. Deliveries in the prior year period were lower due to the ramp-up of mining and processing operations throughout 2022 after completion of project construction in 2021.
According to Khoemacau Copper Mining (Pty.) Limited (“KCM”), operations at Khoemacau continued at nameplate capacity through the quarter ended June 30, 2023, after the target production rate of 3.7 million tonnes per year (10,000 tonnes per day) was achieved in December 2022. As projected in the mine plan, KCM expects payable silver production in 2023 to range between 1.5 to 1.7 million ounces, which is slightly below the life of mine average due to lower silver grades in the upper portion of the Zone 5 deposit and the top-down mining sequence.
Mount Milligan
Gold stream deliveries from Mount Milligan were approximately 17,60017,300 ounces of gold for the three months ended December 31, 2017,June 30, 2023, compared to approximately 23,50023,800 ounces of gold for the three months ended December 31, 2016. The decrease during the current quarter is primarily attributable to the reduced stream rate of 35% versus 52.5% in the prior year quarter.
June 30, 2022. Copper stream deliveries from Mount Milligan were approximately 1,245 tonnes2.5 million pounds during the three months ended December 31, 2017. CopperJune 30, 2023, compared to approximately 4.0 million pounds during the three months ended June 30, 2022. Gold and copper stream deliveries beganfor the three months ended June 30, 2023, relate to mine production during the June 2017 quarter.approximate period November 2022 to January 2023. During this period Centerra Gold Inc. (“Centerra”) reported negative variances to copper head grade, gold head grade and recovery, as compared to the previous year period.
On December 27, 2017,July 31, 2023, Centerra reported that mill processing operationsgold and copper production for the three months ended June 30, 2023, was impacted by lower grades and recoveries due to mine sequencing, although process plant throughput for the period averaged 61,482 tonnes per day and record tonnes were processed in the months of May and June. Centerra also reported that Mount Milligan remains on track to access higher-grade copper and gold ore from phase 7 and phase 9 in the second half of the year.
Centerra continues to expect that full year 2023 production at Mount Milligan were temporarily suspended duewill be back-end weighted, with gold production at the low end of the guidance range of 160,000 to lack170,000 ounces, and copper production tracking towards the mid-point of sufficient water resources, as a resultthe guidance range of Mount Milligan experiencing a drier than normal spring and summer in calendar 2017, with lower than average spring snow melt. On February 5, 2018,60 to 70 million pounds. Centerra reported that it recommenced mill processing operations at partial capacity. During the temporary shutdown, Centerra completed a number of steps to increase the flow of water into the tailings storage facility (“TSF”) from which the Mount Milligan mill draws all of its water requirements to supply milling operations. Such steps included adding pumps to existing water wells, increasing pump sizes to increase the flow rate, and drilling additional wells. Current make-up water sources for the TSF are from normal surface run-off, groundwater wells internal to the TSF, and from base underdrain towers that access process water underlying the TSF.
Centerraalso expects to resume milling operations at full capacitymake four concentrate shipments in April 2018, when additional fresh water becomes available from surface run-off after the spring melt. As a further, longer-term mitigation measure, Centerra received an amendment to Mount Milligan’s Environmental Assessment to allow pumping of water from a nearby lake (Phillip Lake)third quarter and has received additional related permits.
Due toanother four shipments in the fourth quarter, although the timing of shipments and deliveries of gold and copper, the impact of the temporary shutdown is likely tomay be reflected in Royal Gold’s mid-calendar 2018 results, as some of the deliveries of gold and copper that were expectedaffected by logistical delays resulting from labor disruptions in the June through August 2018 period will be deferred to a later date. Port of Vancouver.
Pueblo Viejo
Gold stream deliveries from Pueblo Viejo were approximately 12,6006,800 ounces for the three months ended June 30, 2023, compared to approximately 8,600 ounces for the three months ended June 30, 2022. Decreased deliveries resulted from processing lower grade gold stockpile material.
Silver stream deliveries were approximately 150,700 ounces for the three months ended June 30, 2023, compared to approximately 307,100 ounces for the three months ended June 30, 2022. Decreased silver deliveries resulted from lower silver recovery during the current period, and an additional 89,300 ounces of silver deliveries were deferred. The deferred ounces are the result of a mechanism in the stream agreement that allows for the deferral of deliveries in a period if Barrick’s share of silver production is insufficient to cover its stream delivery obligations. The stream agreement terms include a fixed 70% silver recovery rate. If actual recovery rates fall below the contractual 70% recovery rate, ounces may
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be deferred with deferred ounces to be delivered in future periods as silver recovery allows. As of June 30, 2023, approximately 607,700 ounces remain deferred. We expect that silver recoveries could remain highly variable until the plant expansion project is complete and is running at full production levels. We do not expect material deliveries of deferred silver ounces while the plant ramps up to full production levels during 2023, and timing for the delivery of the entire deferred amount is uncertain.
On May 3 and May 10, 2023, Barrick provided updates on the plant expansion and mine life extension project at Pueblo Viejo. With respect to the plant expansion, Barrick reported that construction was 93% complete as of March 31, 2023, and commissioning and operations handover of new equipment was underway. With respect to the mine life extension, Barrick further disclosed on July 27, 2023, that the engineering design for the El Naranjo tailings storage facility (“TSF”) project continues to advance and that the environmental license for the new TSF was recently received. Barrick has also reported that geotechnical drilling and site investigation are ongoing to support a feasibility study on the TSF, which is due for completion in the second quarter of 2024.
Royalty Interests
Cortez
Production attributable to our royalty interest at the Cortez Complex was approximately 179,900 ounces of gold for the three months ended December 31, 2017,June 30, 2023, compared to approximately 15,60052,000 ounces of gold for the three months ended December 31, 2016. Barrick reported Pueblo Viejo experienced lower ore grades processed during the 2017 calendar year, partially offset by higher recovery rates during the prior calendar year.
Silver stream deliveries were approximately 260,200 ounces of silver for the three months ended December 31, 2017, compared to approximately 322,500 ounces of silver for the three months ended December 31, 2016.June 30, 2022. The decrease in deliveries during the three months ended December 31, 2017increase was primarily due to the timingaddition of payments from Barrick’s third-party refiners. new royalties in 2022 that increased royalty coverage over producing areas within the Cortez Complex.
Rainy River
On October 19, 2017, New Gold announced that the Rainy River mine achieved commercial production, approximately two weeks ahead of schedule. Mining and milling activities at Rainy River continued to progress well during the December
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2017 quarter. The milling rate for the month of December averaged 21,000 tonnes per day, which is the nameplate capacity for the facility.
RGLD Gold AG (“RGLD Gold”) began receiving gold and silver deliveries during the quarter ended December 31, 2017. Stream deliveries from Rainy River were approximately 1,000 ounces of gold and approximately 11,900 ounces of silver for the three months ended December 31, 2017.
New Gold’s focus for calendar 2018 will be on optimizing throughput at the mill, as well as advancing initiatives to potentially increase production. In calendar 2018, New Gold expects to produce between 310,000 and 350,000 ounces of gold at Rainy River.New Gold estimates that approximately 21,500 ounces of gold and 185,000 ounces of silver will be delivered to RGLD Gold in calendar 2018.
Wassa and Prestea
Gold stream deliveries from Wassa and Prestea were approximately 6,000 ounces of gold for the three months ended December 31, 2017, compared to approximately 4,300 ounces of gold for the three months ended December 31, 2016.
Golden Star expects Wassa to become an underground-only operation by the end of January 2018, although 341,000 tonnes of lower grade, stockpiled ore will continue to be fed to the processing plant during the first nine months of calendar 2018.
Golden Star stated that mining rates at Wassa underground continued to be strong in the December 2017 quarter at approximately 1,900 tonnes per day, which represents a 36% outperformance compared to the planned mining rate for calendar 2017 of 1,400 tonnes per day and head grade delivered to the processing plant increased by 55% in the fourth quarter of calendar 2017 when compared to the third quarter of calendar 2017. The targeted mining rate for Wassa Underground in calendar 2018 is 2,700-3,000 tonnes per day.
The Prestea open pits were expected to complete gold production at the end of calendar 2017 but Golden Star now anticipates that mining will continue until late in the March 2018 quarter and stockpiled ore will continue to be processed until the end of the first half of calendar 2018.
Golden StarMay 3, 2023, Barrick reported that the Prestea undergroundRecord of Decision (“ROD”) on the Goldrush project, which is located within the CC Zone, is expected in the second half of 2023. Barrick also reported that mine development and test stoping in the Redhill zone is continuing and a minor permit modification has been delivering a consistent quantityapproved that will allow underground development to continue until the ROD on the Goldrush Plan of materialOperations is received. According to Barrick, the extension to the processing plant throughout December 2017 and early January 2018. From mid-January 2018, the gradepermitting timeline is not expected to increase significantly ashave a significant impact on the final draw down of2023 outlook and the first stope begins. Golden Star forecasts that ore production will continue to ramp-up. potential impact, if any, on the outlook from 2024 onwards is currently being reviewed.
Under our stream agreement, the gold stream percentage at Wassa and Prestea increased to 10.5%, from 9.25%, effective January 1, 2018. Golden Star expects consolidated calendar 2018 gold production to range between 230,000 and 255,000 ounces.
Peñasquito
Royalty Interests
Cortez
Production attributable to our royalty interest at Cortez increasedPeñasquito was approximately 72% over the prior year quarter. Waste stripping at Crossroads, which is subject to our NVR1 (Crossroads) and GSR2 royalty interests, restarted in October 2016 and is currently ongoing. Barrick expects production from Crossroads to begin in late calendar 2018.
Pascua-Lama
On January 18, 2018 Barrick reported that it is analyzing a revised sanction related to the Pascua-Lama project issued by Chile’s Superintendencia del Medio Ambiente (“SMA”) on January 17, 2018. The sanction is part of a re-evaluation process ordered by Chile’s Environmental Court in 2014 and relates to historical compliance matters at the Pascua-Lama project. According to Barrick, the SMA has not revoked Pascua-Lama’s environmental permit, but has ordered the closure of existing facilities on the Chilean side of the project, in addition to certain monitoring activities.
Barrick also reported that closure of existing surface facilities in Chile is consistent with its plan to advance a prefeasibility study for underground mining operations at Pascua-Lama, which would address a number of community concerns by
21
reducing the overall environmental impact of the project. Barrick reported that it is currently undertaking a number of optimization studies in order to complete the prefeasibility study.
On February 6, 2018, in light of the SMA order to close surface facilities in Chile, and current plans to evaluate an underground mine, Barrick announced it is reclassifying Pascua-Lama’s proven and probable gold reserves of approximately 14 million ounces, which are based on an open pit mine plan, as mineralized material.Barrick reported that it will include further details in its year-end results release on February 14, 2018 and an update on the Pascua-Lama project at its February 22, 2018 Investor Day.
The Company owns a 0.78% to 5.45% sliding-scale net smelter return (“NSR”) gold royalty and a 1.09% NSR copper royalty on the Pascua-Lama project. Our royalty interests are applicable to all gold and copper production from the portion of the Pascua-Lama project lying on the Chilean side of the border. The Company’s carrying value for its royalty interests at Pascua-Lama is approximately $416.8 million as of December 31, 2017.
The Company routinely assesses whether impairment indicators are present for its long-lived assets. A significant reduction in reserves or mineralized material is an indicator of potential impairment. As part of our fiscal 2018 third quarter procedures, we will be evaluating Barrick’s reserves reclassification to assess the recoverability of our carrying value at Pascua-Lama. The Company will also consider further updates from Barrick, including those expected on February 14 and February 22, 2018, as part of our recoverability analysis. Upon completion of our process, the Company may determine an impairment is necessary.
Peñasquito
Gold production attributable to our royalty interest at Peñasquito decreased approximately 62%, when compared to the prior year quarter, as a higher proportion of lower grade ore and stockpiled material fed the mill during the current quarter. Zinc production increased approximately 34% during the current quarter, while silver and lead production were in line with the prior year quarter.
Goldcorp expects calendar 2018 gold production at Peñasquito to be 310,000 ounces, which is lower compared to calendar 2017 (410,000 ounces), due to the continued processing of low-grade stockpiles. Goldcorp anticipates the feed will then revert to higher grade ore in calendar 2019 when the Phase 6D stripping program exposes higher-grade ore in the Peñasco pit.
On January 17, 2018, Goldcorp stated that the Pyrite Leach Project (“PLP”) was 62% complete and is expected to achieve commercial production in the December 2018 quarter, ahead of schedule. Goldcorp expects the PLP to add production of approximately one million48,100 ounces of gold, and 446.0 million ounces of silver, over35.6 million pounds of lead and 89.7 million pounds of zinc for the three months ended June 30, 2023. This compares to approximately 130,600 ounces of gold, 8.1 million ounces of silver, 35.0 million pounds of lead and 84.9 million pounds of zinc for the three months ended June 30, 2022. Newmont reported that production was lower in the current lifeperiod due to a labor strike, and gold production was further impacted by lower mill recovery and ore grade mined.
On June 8, 2023, Newmont reported that operations at Peñasquito were suspended on June 7, 2023, following a strike action by the National Union of Mine and Metal Workers of the mine.Mexican Republic. The suspension remains in effect as of the filing of this report and on July 20, 2023, Newmont announced the withdrawal of its full-year 2023 guidance for Peñasquito. Newmont further stated that it cannot estimate when the strike will be resolved, and it will reassess Peñasquito’s full year 2023 guidance once a resolution has been reached.
Results of Operations
Quarter Ended December 31, 2017,June 30, 2023, Compared to Quarter Ended December 31, 2016June 30, 2022
For the quarter ended December 31, 2017,June 30, 2023, we recorded net lossincome and comprehensive income attributable to Royal Gold stockholders (“net income”) of $14.8$63.4 million, or ($0.23)$0.97 per basic and diluted share, as compared to net income attributable to Royal Gold stockholders of $28.1$71.1 million, or $0.43$1.08 per basic and diluted share, for the quarter ended December 31, 2016.June 30, 2022. The decrease in our earnings per sharenet income was primarily attributable to an increase in ourhigher debt-related interest expense and income tax expense, due to the impacts of the Act and a non-cash functional currency election at certain of our Canadian subsidiaries. The decrease in our earnings per share for the quarter as result of the increased income tax expense was partially offset by an increase in our revenue, which is discussed below. The effects of the Act and the non-cash functional currency election for income tax purposes was additional income tax expense of approximately $26.4 million and $15.9 million, respectively, or $0.40 and $0.24 per basic share, respectively. Refer to “Recent Business Developments” above and Note 7 of our notes to consolidated financial statements for further discussion on the Act.
For the quarter ended December 31, 2017,June 30, 2023, we recognized total revenue of $114.4$144.0 million, which is comprised of stream revenue of $79.3$106.0 million and royalty revenue of $35.1$38.0 million at an average gold price of $1,275$1,976 per ounce, an average silver price of $16.73$24.13 per ounce and an average copper price of $3.09$3.84 per pound. This is compared to total revenue of $107.0$146.4 million for the three months ended December 31, 2016, which wasJune 30, 2022, comprised of stream revenue of $74.0$104.9 million and royalty revenue of $33.0$41.6 million,
22
at an average gold price of $1,222$1,871 per ounce, an average silver price of $17.19$22.60 per ounce and an average copper price of $2.39$4.31 per pound for the quarter ended December 31, 2016.pound. Revenue and the
22
corresponding production attributable to our stream and royalty interests for the quarter ended December 31, 2017June 30, 2023, compared to the quarter ended December 31, 2016June 30, 2022, are as follows:
Revenue and Reported Production Subject to Our Stream and Royalty Interests
Quarter Ended December 31, 2017 and 2016
(InAmounts in thousands, except reported production ozs.oz. and lbs.)
| | | | | | | | | | | | | | |
| | | | Three Months Ended | | Three Months Ended | ||||||||
| | | | June 30, 2023 | | June 30, 2022 | ||||||||
| | | | | | Reported | | | | Reported | ||||
Stream/Royalty |
| Metal(s) |
| Revenue | | Production(1) | | Revenue | | Production(1) | ||||
Stream(2): | | | | | | | | | | | | | | |
Mount Milligan | | | | $ | 41,208 | | | | | $ | 45,627 | | | |
| | Gold | | | | | 17,500 | oz. | | | | | 15,500 | oz. |
| | Copper | | | | | 1.7 | Mlbs. | | | | | 4.0 | Mlbs. |
Pueblo Viejo | | | | $ | 23,540 | | | | | $ | 19,812 | | | |
| | Gold | | | | | 7,400 | oz. | | | | | 7,100 | oz. |
| | Silver | | | | | 362,200 | oz. | | | | | 274,500 | oz. |
Khoemacau | | Silver | | $ | 8,881 | | 373,000 | oz. | | $ | 5,202 | | 221,800 | oz. |
Andacollo | | Gold | | $ | 7,823 | | 4,000 | oz. | | $ | 11,721 | | 6,300 | oz. |
Other(3) | | | | $ | 24,563 | | | | | $ | 22,517 | | | |
| | Gold | | | | | 11,600 | oz. | | | | | 11,300 | oz. |
| | Silver | | | | | 65,700 | oz. | | | | | 53,700 | oz. |
Total stream revenue | | | | $ | 106,015 | | | | | $ | 104,879 | | | |
| | | | | . | | | | | | | | | |
Royalty(2): | | | | | | | | | | | | | | |
Cortez Legacy Zone | | Gold | | $ | 14,305 | | 68,100 | oz. | | $ | 8,138 | | 52,000 | oz. |
Cortez CC Zone | | Gold | | $ | 3,520 | | 111,500 | oz. | | | N/A | | | |
Peñasquito | | | | $ | 6,105 | | | | | $ | 9,664 | | | |
| | Gold | | | | | 48,100 | oz. | | | | | 130,600 | oz. |
| | Silver | | | | | 6.0 | Moz. | | | | | 8.1 | Moz. |
| | Lead | | | | | 35.6 | Mlbs. | | | | | 35.0 | Mlbs. |
| | Zinc | | | | | 89.7 | Mlbs. | | | | | 84.9 | Mlbs. |
Other(3) | | Various | | $ | 14,097 | | N/A | | | $ | 23,760 | | N/A | |
Total royalty revenue | | | | $ | 38,027 | | | | | $ | 41,562 | | | |
Total Revenue | | | | $ | 144,042 | | | | | $ | 146,441 | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
| Three Months Ended | ||||||||
|
|
|
| December 31, 2017 |
| December 31, 2016 | ||||||||
|
|
|
|
|
| Reported |
|
|
| Reported | ||||
Stream/Royalty |
| Metal(s) |
| Revenue |
| Production(1) |
| Revenue |
| Production(1) | ||||
Stream(2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pueblo Viejo |
|
|
| $ | 26,355 |
|
|
|
| $ | 26,437 |
|
|
|
|
| Gold |
|
|
|
| 14,500 | oz. |
|
|
|
| 13,700 | oz. |
|
| Silver |
|
|
|
| 469,600 | oz. |
|
|
|
| 543,300 | oz. |
Mount Milligan |
| Gold |
| $ | 21,632 |
| 12,600 | oz. |
| $ | 31,664 |
| 25,700 | oz. |
|
| Copper |
|
|
|
| 1.8 | Mlbs. |
|
|
|
| N/A |
|
Andacollo |
| Gold |
| $ | 21,601 |
| 17,000 | oz. |
| $ | 10,985 |
| 9,200 | oz. |
Wassa and Prestea |
| Gold |
| $ | 8,629 |
| 6,800 | oz. |
| $ | 4,921 |
| 4,000 | oz. |
Rainy River |
| Gold |
| $ | 1,070 |
| 800 | oz. |
| $ | N/A |
| N/A |
|
Total stream revenue |
|
|
| $ | 79,287 |
|
|
|
| $ | 74,007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalty(2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peñasquito |
|
|
| $ | 6,190 |
|
|
|
| $ | 7,134 |
|
|
|
|
| Gold |
|
|
|
| 71,100 | oz. |
|
|
|
| 185,400 | oz. |
|
| Silver |
|
|
|
| 5.1 | Moz. |
|
|
|
| 5.0 | Moz. |
|
| Lead |
|
|
|
| 33.4 | Mlbs. |
|
|
|
| 33.6 | Mlbs. |
|
| Zinc |
|
|
|
| 94.4 | Mlbs. |
|
|
|
| 70.5 | Mlbs. |
Cortez |
| Gold |
| $ | 2,934 |
| 25,000 | oz. |
| $ | 1,834 |
| 14,500 | oz. |
Other(3) |
| Various |
| $ | 25,937 |
| N/A |
|
| $ | 23,986 |
| N/A |
|
Total royalty revenue |
|
|
| $ | 35,061 |
|
|
|
| $ | 32,954 |
|
|
|
Total Revenue |
|
|
| $ | 114,348 |
|
|
|
| $ | 106,961 |
|
|
|
(1) |
| Reported production relates to the amount of stream metal sales |
(2) |
| Refer to “Property Developments” above for |
(3) | Individually, except for our |
|
|
The increasedecrease in our total revenue for the three months ended December 31, 2017, compared with the three months ended December 31, 2016, resulted primarily from an increase in our stream revenuelower gold sales at Andacollo, lower copper sales at Mount Milligan and an increase in the averagelower gold and silver and copper prices. The increase in our stream revenue was primarilyproduction attributable to increasedour interest at Peñasquito. The decrease was offset by higher gold production attributable to our interest at AndacolloCortez as a result of the newly acquired royalties and Wassahigher gold and Prestea, and new gold production from our Rainy River stream, partially offset by a production (gold) decrease at Mount Milligan. Silver deliveries from Rainy River began during our December 2017 quarter with silver sales anticipatedprices when compared to begin in the March 2018 quarter. Copper deliveries from Mount Milligan began during our June 2017 quarter. prior year period.
23
Gold and silver ounces and tonnes of copper pounds purchased and sold during the three months ended December 31, 2017June 30, 2023 and 2016,2022, and gold and silver ounces and tonnes of copper pounds in inventory as of June 30, 2023, and December 31, 2017, and June 30, 2017,2022, for our streaming interests were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
| Three Months Ended |
| Three Months Ended |
| As of |
| As of | ||||||||||||||||
|
| December 31, 2017 |
| December 31, 2016 |
| December 31, 2017 |
| June 30, 2017 | ||||||||||||||||
| | | | | | | | | | | | | ||||||||||||
| | Three Months Ended | | Three Months Ended | | As of | | As of | ||||||||||||||||
| | June 30, 2023 | | June 30, 2022 | | June 30, 2023 | | December 31, 2022 | ||||||||||||||||
Gold Stream |
| Purchases (oz.) |
| Sales (oz.) |
| Purchases (oz.) |
| Sales (oz.) |
| Inventory (oz.) |
| Inventory (oz.) |
| Purchases (oz.) |
| Sales (oz.) |
| Purchases (oz.) |
| Sales (oz.) |
| Inventory (oz.) |
| Inventory (oz.) |
Mount Milligan |
| 17,700 |
| 12,700 |
| 23,500 |
| 25,700 |
| 5,200 |
| 100 | | 17,300 | | 17,500 | | 23,800 | | 15,500 | | 3,800 | | 5,200 |
Pueblo Viejo | | 6,800 | | 7,400 | | 8,600 | | 7,100 | | 6,800 | | 7,900 | ||||||||||||
Andacollo |
| 13,500 |
| 17,000 |
| 9,200 |
| 9,200 |
| — |
| 100 | | 3,700 | | 4,000 | | 9,900 | | 6,300 | | 1,800 | | 3,800 |
Other | | 11,200 | | 11,600 | | 10,400 | | 11,300 | | 4,700 | | 4,100 | ||||||||||||
Total | | 39,000 | | 40,500 | | 52,700 | | 40,200 | | 17,100 | | 21,000 | ||||||||||||
| | | | | | | | | | | | | ||||||||||||
| | Three Months Ended | | Three Months Ended | | As of | | As of | ||||||||||||||||
| | June 30, 2023 | | June 30, 2022 | | June 30, 2023 | | December 31, 2022 | ||||||||||||||||
Silver Stream |
| Purchases (oz.) |
| Sales (oz.) |
| Purchases (oz.) |
| Sales (oz.) |
| Inventory (oz.) |
| Inventory (oz.) | ||||||||||||
Khoemacau | | 398,700 | | 373,000 | | 247,000 | | 221,800 | | 155,100 | | 105,900 | ||||||||||||
Pueblo Viejo |
| 12,600 |
| 14,500 |
| 15,600 |
| 13,700 |
| 8,500 |
| 12,900 | | 150,700 | | 362,200 | | 307,000 | | 274,500 | | 150,700 | | 337,800 |
Wassa and Prestea |
| 6,000 |
| 6,800 |
| 4,300 |
| 4,000 |
| 500 |
| 1,000 | ||||||||||||
Rainy River |
| 1,000 |
| 800 |
| — |
| — |
| 200 |
| — | ||||||||||||
Other | | 70,600 | | 65,700 | | 55,200 | | 53,700 | | 25,500 | | 17,500 | ||||||||||||
Total |
| 50,800 |
| 51,800 |
| 52,600 |
| 52,600 |
| 14,400 |
| 14,100 | | 620,000 | | 800,900 | | 609,200 | | 550,000 | | 331,300 | | 461,200 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
| Three Months Ended |
| Three Months Ended |
| As of |
| As of | ||||||||||||||||
|
| December 31, 2017 |
| December 31, 2016 |
| December 31, 2017 |
| June 30, 2017 | ||||||||||||||||
Silver Stream |
| Purchases (oz.) |
| Sales (oz.) |
| Purchases (oz.) |
| Sales (oz.) |
| Inventory (oz.) |
| Inventory (oz.) | ||||||||||||
Pueblo Viejo |
| 260,200 |
| 469,600 |
| 322,500 |
| 543,300 |
| 260,800 |
| 536,800 | ||||||||||||
Rainy River |
| 11,900 |
| — |
| — |
| — |
| 11,900 |
| — | ||||||||||||
Total |
| 272,100 |
| 469,600 |
| 322,500 |
| 543,300 |
| 272,700 |
| 536,800 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
|
| Three Months Ended |
| Three Months Ended |
| As of |
| As of | ||||||||||||||||
|
| December 31, 2017 |
| December 31, 2016 |
| December 31, 2017 |
| June 30, 2017 | ||||||||||||||||
| | | | | | | | | | | | | ||||||||||||
| | Three Months Ended | | Three Months Ended | | As of | | As of | ||||||||||||||||
| | June 30, 2023 | | June 30, 2022 | | June 30, 2023 | | December 31, 2022 | ||||||||||||||||
Copper Stream |
| Purchases (tonnes) |
| Sales (tonnes) |
| Purchases (tonnes) |
| Sales (tonnes) |
| Inventory (tonnes) |
| Inventory (tonnes) |
| Purchases (Mlbs.) |
| Sales (Mlbs.) |
| Purchases (Mlbs.) |
| Sales (Mlbs.) |
| Inventory (Mlbs.) |
| Inventory (Mlbs.) |
Mount Milligan |
| 1,245 |
| 819 |
| N/A |
| N/A |
| 426 |
| — | | 2.5 | | 1.7 | | 4.0 | | 4.0 | | 0.8 | | 0.9 |
Our royalty revenue increased during the quarter ended December 31, 2017, compared with the quarter ended December 31, 2016, primarily due to an increase in the average gold, silver and copper prices. Please refer to “Property Developments” earlier within this MD&A for further discussion on recent developments regarding properties covered by certain of our stream and royalty interests.
Cost of sales, which excludes depreciation, depletion and amortization, decreased to $19.9$23.4 million for the three months ended December 31, 2017June 30, 2023, from $22.5$23.8 million for the three months ended December 31, 2016.June 30, 2022. The decrease, when compared to the prior year quarter, was primarily due to decreaseda decrease in copper sales at Mount Milligan and lower gold sales from Mount Milligan.at Andacollo, offset by higher silver sales at Khoemacau. Cost of sales is specific to our stream agreements and is the result of RGLD Gold’sour purchase of gold, silver and copper for a cash payment. The cash payment for gold from Mount Milligan is the lesser of $435 per ounce or the prevailing market price of gold when purchased, while the cash payment for our other streams is a set contractual percentage of the gold, silver or copper (Mount Milligan) spot price near the date of metal delivery.
General and administrative expenses increasedcosts decreased to $9.6$9.1 million for the three months ended December 31, 2017June 30, 2023, from $7.5$9.3 million for the three months ended December 31, 2016.June 30, 2022. The increase during the current quarterdecrease was primarily due to an increase in legallower consulting costs and litigation costs of approximately $1.7 million. lower non-cash stock compensation expense during the current period.
Depreciation, depletion and amortization increaseddecreased to $42.0$38.4 million for the three months ended December 31, 2017June 30, 2023, from $39.5$44.0 million for the three months ended December 31, 2016.June 30, 2022. The increasedecrease was primarily attributabledue to increased gold saleslower depletion rates at AndacolloMount Milligan and WassaPueblo Viejo as a result of proven and Prestea, which resulted in additional depletion of approximately $6.6 million. This increaseprobable mineral reserve increases when compared to the prior year quarter. The decrease was partially offset by a decrease in gold saleshigher depletion expense at Mount Milligan, which resulted in Khoemaca decrease inu due to the ramp-up of production and additional depletion of approximately $3.2 million.expense from the newly acquired royalties at Cortez when compared to the prior year quarter.
Interest and other income decreasedexpense increased to $0.6$8.4 million for the three months ended December 31, 2017,June 30, 2023, from $7.5$1.4 million for the three months ended December 31, 2016.June 30, 2022. The decreaseincrease was primarily due to higher interest expense as a gain recognized ($3.4 million) on consideration received as partresult of the termination ofhigher average amounts outstanding under our Phoenix Gold Project streaming interest duringrevolving credit facility compared to the prior period. Referyear quarter. We had $400 million outstanding under our revolving credit facility as of June 30, 2023, compared to zero outstanding as of June 30, 2022. The current all-in borrowing rate under our Fiscal 2017 10-K for discussion on the Phoenix Gold Project restructuring. The decrease in interest and other incomerevolving credit facility was also due to consideration received6.7% as part of a legal settlement and termination of a non-principal royalty of approximately $2.8 million during the prior period.June 30, 2023.
DuringFor the three months ended December 31, 2017,June 30, 2023, we recognized income tax expense totaling $48.4 million compared with anrecorded income tax expense of $5.0$2.0 million, duringcompared with income tax benefit of $5.9 million for the three months ended December 31, 2016. ThisJune 30, 2022. The income tax expense resulted in an effective tax rate of 148.5%3.1% in the current period, compared with 15.7% in the quarter ended December 31, 2016. The increase in the effective tax rate(9.0%) for the three months ended December 31, 2017 is primarilyJune 30, 2022. The three months ended June 30, 2023 and 2022, both included discrete tax benefits attributable to the effectsrelease of
24
the Act and a non-cash functional currency election atvaluation allowance on certain of our Canadian subsidiaries. Refer to “Recent Business Developments” above and Note 7 of our notes to consolidated financial statements for further discussion on the Act. deferred tax assets.
Six Months Ended December 31, 2017,June 30, 2023, Compared to Six Months Ended December 31, 2016June 30, 2022
For the six months ended December 31, 2017,June 30, 2023, we recorded net income attributable to Royal Gold stockholders of $13.9$127.3 million, or $0.21$1.94 per basic and $1.93 per diluted share, as compared to net income attributable to Royal Gold stockholders of $57.9$136.8 million, or $0.89$2.08 per basic share and $0.88 per diluted share, for the six months ended December 31, 2016.
24
June 30, 2022. The decrease in our earnings per sharenet income was primarily attributable to an increase in ourhigher debt-related interest expense and income tax expense, due to the impacts of the Act and a non-cash functional currency election at certain of our Canadian subsidiaries. The effects of the Act and the non-cash functional currency election for income tax purposes was additional income tax expense of approximately $26.4 million and $15.9 million, respectively, or $0.40 and $0.24 per basic share, respectively. Refer to “Recent Business Developments” above and Note 7 of our notes to consolidated financial statements for further discussion on the Act.as discussed below.
For the six months ended December 31, 2017,June 30, 2023, we recognized total revenue of $226.8$314.4 million, which is comprised of stream revenue of $158.0$221.0 million and royalty revenue of $68.8$93.4 million at an average gold price of $1,277$1,932 per ounce, an average silver price of $16.78$23.31 per ounce and an average copper price of $2.98$3.95 per pound. This is compared to total revenue of $224.9$308.8 million for the six months ended December 31, 2016, which isJune 30, 2022, comprised of stream revenue of $159.5$210.1 million and royalty revenue of $65.4$98.7 million, at an average gold price of $1,280$1,874 per ounce, an average silver price of $18.42$23.32 per ounce and an average copper price of $2.28$4.43 per pound. Revenue and the corresponding production attributable to our stream and royalty interests for the six months ended December 31, 2016June 30, 2023, compared to the six months ended December 31, 2016 isJune 30, 2022, are as follows:
Revenue and Reported Production Subject to Our RoyaltyStream and StreamRoyalty Interests
Six Months Ended December 31, 2017 and 2016
(InAmounts in thousands, except reported production ozs.oz. and lbs.)
| | | | | | | | | | | | | | |
| | | | Six Months Ended | | Six Months Ended | ||||||||
| | | | June 30, 2023 | | June 30, 2022 | ||||||||
| | | | | | | Reported | | | | | Reported | ||
Stream/Royalty |
| Metal(s) |
| Revenue | | Production(1) | | Revenue | | Production(1) | ||||
Stream(2): | | | | | | | | | | | | | | |
Mount Milligan | | | | $ | 87,863 | | | | | $ | 88,043 | | | |
| | Gold | | | | | 32,700 | oz. | | | | | 29,400 | oz. |
| | Copper | | | | | 6.2 | Mlbs. | | | | | 7.6 | Mlbs. |
Pueblo Viejo | | | | $ | 45,898 | | | | | $ | 43,076 | | | |
| | Gold | | | | | 15,300 | oz. | | | | | 15,600 | oz. |
| | Silver | | | | | 700,100 | oz. | | | | | 590,500 | oz. |
Andacollo | | Gold | | $ | 20,757 | | 11,000 | oz. | | $ | 27,395 | | 14,700 | oz. |
Khoemacau | | Silver | | $ | 18,035 | | 777,000 | oz. | | $ | 7,592 | | 221,800 | oz. |
Other(3) | | | | $ | 48,452 | | | | | $ | 44,024 | | | |
| | Gold | | | | | 23,500 | oz. | | | | | 22,000 | oz. |
| | Silver | | | | | 131,900 | oz. | | | | | 226,900 | oz. |
Total stream revenue | | | | $ | 221,005 | | | | | $ | 210,130 | | | |
| | | | | | | | | | | | | | |
Royalty(2): | | | | | | | | | | | | | | |
Cortez Legacy Zone | | Gold | | $ | 37,393 | | 185,300 | oz. | | $ | 24,852 | | 154,000 | oz. |
Cortez CC Zone | | Gold | | | $ 6,726 | | 218,100 | | | | N/A | | | |
Peñasquito | | | | $ | 13,538 | | | | | $ | 22,758 | | | |
| | Gold | | | | | 103,700 | oz. | | | | | 264,100 | oz. |
| | Silver | | | | | 12.0 | Moz. | | | | | 15.7 | Moz. |
| | Lead | | | | | 72.1 | Mlbs. | | | | | 77.0 | Mlbs. |
| | Zinc | | | | | 188.9 | Mlbs. | | | | | 205.0 | Mlbs. |
Other(3) | | Various | | $ | 35,772 | | N/A | | | $ | 51,056 | | N/A | |
Total royalty revenue | | | | $ | 93,429 | | | | | $ | 98,666 | | | |
Total revenue | | $ | 314,434 | | | | | $ | 308,796 | | | |
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| Six Months Ended |
| Six Months Ended | ||||||||
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| December 31, 2017 |
| December 31, 2016 | ||||||||
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| Reported |
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| Reported | ||
Stream/Royalty |
| Metal(s) |
| Revenue |
| Production(1) |
| Revenue |
| Production(1) | ||||
Stream(2): |
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Mount Milligan |
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| $ | 53,584 |
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| $ | 70,050 |
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| Gold |
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| 31,300 | oz. |
|
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| 54,600 | oz. |
|
| Copper |
|
|
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| 4.4 | Mlbs. |
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|
|
| N/A |
|
Pueblo Viejo |
|
|
| $ | 51,758 |
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|
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| $ | 47,387 |
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| Gold |
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| 27,400 | oz. |
|
|
|
| 24,600 | oz. |
| �� | Silver |
|
|
|
| 1.0 | Moz. |
|
|
|
| 866,600 | oz. |
Andacollo |
| Gold |
| $ | 33,938 |
| 26,700 | oz. |
| $ | 31,154 |
| 24,400 | oz. |
Wassa and Prestea |
| Gold |
| $ | 17,699 |
| 13,900 | oz. |
| $ | 10,920 |
| 8,600 | oz. |
Rainy River |
| Gold |
| $ | 1,070 |
| 800 | oz. |
|
| N/A |
| N/A |
|
Total stream revenue |
|
|
| $ | 158,049 |
|
|
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| $ | 159,511 |
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Royalty(2): |
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Peñasquito |
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| $ | 13,986 |
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| $ | 12,955 |
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| Gold |
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|
| 205,100 | oz. |
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| 285,500 | oz. |
|
| Silver |
|
|
|
| 11.0 | Moz. |
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|
|
| 10.3 | Moz. |
|
| Lead |
|
|
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| 69.6 | Mlbs. |
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|
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| 66.6 | Mlbs. |
|
| Zinc |
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|
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| 186.8 | Mlbs. |
|
|
|
| 143.5 | Mlbs. |
Cortez |
| Gold |
| $ | 5,922 |
| 54,900 | oz. |
| $ | 3,874 |
| 36,300 | oz. |
Other(3) |
| Various |
| $ | 48,867 |
| N/A |
|
| $ | 48,569 |
| N/A |
|
Total royalty revenue |
|
|
| $ | 68,775 |
|
|
|
| $ | 65,398 |
|
|
|
Total revenue |
| $ | 226,824 |
|
|
|
| $ | 224,909 |
|
|
|
(1)Reported production relates to the amount of stream metal sales subjectand the metal sales attributable to our royalty and stream interests for the six
months ended December 31, 2017June 30, 2023, and 2016,2022, and may differ from the operators’ public reporting.reporting due to a number of factors, including the timing of the operator’s concentrate shipments, the delivery of metal to us and our subsequent sale of the delivered metal. Refer to Note 5 to the notes to consolidated financial statements.
(3)Individually,interest at Rainy River, which contributed 6% of total revenue for the six months ended June 30, 2023 and June 30, 2022, respectively, no stream or royalty included within the “Other” category contributed greater than 5% of our total revenue for either period.
25
The increase in our total revenue for the six months ended December 31, 2017, compared with the six months ended December 31, 2016, resulted primarily from an increase inhigher silver sales at Khoemacau due to the ramp-up and higher gold production attributable to our royalty revenue.interests at Cortez as a result of the newly acquired royalties. The increase in our royalty revenue was primarily attributable to increased gold production from our Cortez royalty interests. The slight decrease in our stream revenue was primarily attributable to a decrease in production (gold) at Mount Milligan. This decrease waspartially offset by production increaseslower gold sales at Pueblo Viejo, Andacollo and Wassalower gold and Prestea and new goldsilver production from our Rainy River stream interest. Silver deliveries from our Rainy River interest began duringat Peñasquito when compared to the December 2017 quarter with silver sales anticipated to begin in the March 2018 quarter. Copper deliveries from Mount Milligan began during our June 2017 quarter. prior year period.
25
Gold and silver ounces and tonnes of copper pounds purchased and sold during the six months ended December 31, 2017June 30, 2023, and 2016,2022, and gold and silver ounces and tonnes of copper pounds in inventory as of June 30, 2023, and December 31, 2017, and June 30, 2017,2022, for our streaming interests were as follows:
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|
|
| Six Months Ended |
| Six Months Ended |
| As of |
| As of | ||||
|
| December 31, 2017 |
| December 31, 2016 |
| December 31, 2017 |
| June 30, 2017 | ||||
Gold Stream |
| Purchases (oz.) |
| Sales (oz.) |
| Purchases (oz.) |
| Sales (oz.) |
| Inventory (oz.) |
| Inventory (oz.) |
Mount Milligan |
| 36,400 |
| 31,300 |
| 53,400 |
| 54,600 |
| 5,200 |
| 100 |
Andacollo |
| 26,500 |
| 26,700 |
| 24,500 |
| 24,400 |
| — |
| 100 |
Pueblo Viejo |
| 23,100 |
| 27,400 |
| 29,200 |
| 24,600 |
| 8,500 |
| 12,900 |
Wassa and Prestea |
| 13,400 |
| 13,900 |
| 8,900 |
| 8,600 |
| 500 |
| 1,000 |
Rainy River |
| 1,000 |
| 800 |
| — |
| - |
| 200 |
| — |
Total |
| 100,400 |
| 100,100 |
| 116,000 |
| 112,200 |
| 14,400 |
| 14,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
| Six Months Ended |
| As of |
| As of | ||||
|
| December 31, 2017 |
| December 31, 2016 |
| December 31, 2017 |
| June 30, 2017 | ||||
Silver Stream |
| Purchases (Moz.) |
| Sales (Moz.) |
| Purchases (oz.) |
| Sales (oz.) |
| Inventory (oz.) |
| Inventory (oz.) |
Pueblo Viejo |
| 730,200 |
| 1,006,200 |
| 865,800 |
| 866,600 |
| 260,800 |
| 536,800 |
Rainy River |
| 11,900 |
| - |
| — |
| — |
| 11,900 |
| — |
Total |
| 742,100 |
| 1,006,200 |
| 865,800 |
| 866,600 |
| 272,700 |
| 536,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended |
| Six Months Ended |
| As of |
| As of | ||||
|
| December 31, 2017 |
| December 31, 2016 |
| December 31, 2017 |
| June 30, 2017 | ||||
Copper Stream |
| Purchases (tonnes) |
| Sales (tonnes) |
| Purchases (tonnes) |
| Sales (tonnes) |
| Inventory (tonnes) |
| Inventory (tonnes) |
Mount Milligan |
| 2,414 |
| 1,988 |
| N/A |
| N/A |
| 426 |
| — |
| | | | | | | | | | | | |
| | Six Months Ended | | Six Months Ended | | As of | | As of | ||||
| | June 30, 2023 | | June 30, 2022 | | June 30, 2023 | | December 31, 2022 | ||||
Gold Stream |
| Purchases (oz.) |
| Sales (oz.) |
| Purchases (oz.) |
| Sales (oz.) |
| Inventory (oz.) |
| Inventory (oz.) |
Mount Milligan | | 31,200 | | 32,700 | | 33,800 | | 29,400 | | 3,800 | | 5,200 |
Pueblo Viejo | | 14,200 | | 15,300 | | 15,700 | | 15,600 | | 6,800 | | 7,900 |
Andacollo | | 9,000 | | 11,000 | | 16,000 | | 14,700 | | 1,800 | | 3,800 |
Other | | 24,200 | | 23,500 | | 21,500 | | 22,000 | | 4,700 | | 4,100 |
Total | | 78,600 | | 82,500 | | 87,000 | | 81,700 | | 17,100 | | 21,000 |
| | | | | | | | | | | | |
| | Six Months Ended | | Six Months Ended | | As of | | As of | ||||
| | June 30, 2023 | | June 30, 2022 | | June 30, 2023 | | December 31, 2022 | ||||
Silver Stream |
| Purchases (oz.) |
| Sales (oz.) |
| Purchases (oz.) |
| Sales (oz.) |
| Inventory (oz.) |
| Inventory (oz.) |
Khoemacau | | 826,200 | | 777,000 | | 362,100 | | 221,800 | | 155,100 | | 105,900 |
Pueblo Viejo | | 513,000 | | 700,100 | | 581,600 | | 590,500 | | 150,700 | | 337,800 |
Other | | 140,000 | | 131,900 | | 106,300 | | 226,900 | | 25,500 | | 17,500 |
Total | | 1,479,200 | | 1,609,000 | | 1,050,000 | | 1,039,200 | | 331,300 | | 461,200 |
| | | | | | | | | | | | |
| | Six Months Ended | | Six Months Ended | | As of | | As of | ||||
| | June 30, 2023 | | June 30, 2022 | | June 30, 2023 | | December 31, 2022 | ||||
Copper Stream |
| Purchases (Mlbs.) |
| Sales (Mlbs.) |
| Purchases (Mlbs.) |
| Sales (Mlbs.) |
| Inventory (Mlbs.) |
| Inventory (Mlbs.) |
Mount Milligan | | 6.0 | | 6.2 | | 6.7 | | 7.6 | | 0.8 | | 0.9 |
Cost of sales, decreasedwhich excludes depreciation, depletion and amortization, increased to $40.3$48.4 million for the six months ended December 31, 2017, compared to $45.2June 30, 2023, from $46.5 million for the six months ended December 31, 2016.June 30, 2022. The decreaseincrease, when compared to the prior year was primarily due to decreasedhigher silver sales at Khoemacau, offset by lower gold sales from Mount Milligan.at Andacollo. Cost of sales is specific to our stream agreements and is the result of RGLD Gold’sour purchase of gold, silver and copper for a cash payment. The cash payment for gold from Mount Milligan is the lesser of $435 per ounce or the prevailing market price of gold when purchased, while the cash payment for our other streams is a set contractual percentage of the gold, silver or copper (Mount Milligan) spot price near the date of metal delivery.
General and administrative expenses decreasedcosts increased to $16.5$20.1 million for the six months ended December 31, 2017,June 30, 2023, from $18.0$18.2 million for the six months ended December 31, 2016.June 30, 2022. The decrease during the current periodincrease was primarily due to a decreasean increase in non-cash stock based compensation.employee-related costs.
Depreciation, depletion and amortization increaseddecreased to $81.7$84.7 million for the six months ended December 31, 2017,June 30, 2023, from $79.6$92.0 million for the six months ended December 31, 2016.June 30, 2022. The increasedecrease was primarily attributabledue to increased gold saleslower depletion rates at Andacollo,Mount Milligan and Pueblo Viejo as a result of proven and Wassa and Prestea, which resulted in additional depletion of approximately $11.4 million. This increaseprobable mineral reserve increases when compared to the prior year period. The decrease was partially offset by a decrease in gold saleshigher depletion expense at Mount Milligan, which resulted in Khoemaca decrease inu due to the ramp-up of production and additional depletion of approximately $4.8 million. from the newly acquired royalties at Cortez when compared to the prior year quarter.
Interest and other income decreasedexpense increased to $1.6$17.6 million for the six months ended December 31, 2017,June 30, 2023, from $9.0$2.3 million for the six months ended December 31, 2016.June 30, 2022. The decreaseincrease was primarily due to higher interest expense as a gain recognized ($3.4 million) on consideration received as partresult of the termination ofhigher average amounts outstanding under our Phoenix Gold Project streaming interest duringrevolving credit facility compared to the prior year period. ReferWe had $400 million outstanding under our revolving credit facility as of June 30, 2023, compared to zero outstanding as of June 30, 2022. The current all-in borrowing rate under our Fiscal 2017 10-K for discussion on the Phoenix Gold Project restructuring. The decrease in interest and other incomerevolving credit facility was also due to consideration received6.7% as part of a legal settlement and termination of a non-principal royalty of approximately $2.8 million during the prior period.June 30, 2023.
26
DuringFor the six months ended December 31, 2017,June 30, 2023, we recognizedrecorded income tax expense totaling $55.9of $17.9 million, compared with $12.2income tax expense of $9.4 million duringfor the six months ended December 31, 2016. ThisJune 30, 2022. The income tax expense resulted in an effective tax rate of 83.9%12.3% in the current period, compared with 18.5% during the six months ended December 31, 2016. The increase in the effective tax rate6.4% for the six months ended December 31, 2017 is primarilyJune 30, 2022. The six months ended June 30, 2023 and June 30, 2022, included discrete tax benefits attributable to the effectsrelease of the Act and a non-cash functional currency election atvaluation allowance on certain of our Canadian subsidiaries. Refer to “Recent Business Developments” above and Note 7 of our notes to consolidated financial statements for further discussion on the Act.deferred tax assets.
Liquidity and Capital Resources
Overview
At December 31, 2017,June 30, 2023, we had current assets of $165.5$165.3 million compared to current liabilities of $41.6$63.1 million, resultingwhich resulted in working capital of $123.9$102.2 million and a current ratio of 4approximately 3 to 1. This compares to current assets of $143.6$185.8 million and current liabilities of $34.3$63.6 million at June 30, 2017,December 31, 2022, resulting in working capital of $109.3$122.2 million and a current ratio of approximately 43 to 1. The decrease in working capital was primarily due to a decrease in our available cash, which resulted from increased debt repayments during the current period.
During the quartersix months ended December 31, 2017,June 30, 2023, liquidity needs were met from $94.5$216.6 million in net revenuecash provided by operating activities and our available cash resources. During the three months ended December 31, 2017, the Company repaid $50.0As of June 30, 2023, we had $600 million of theavailable and $400 million outstanding borrowings under theour revolving credit facility. As of December 31, 2017, the Company had $850 million available and $150 million outstanding under its revolving credit facility.
Working capital, combined with the Company’s undrawnavailable capacity under our revolving credit facility, resulted in approximately $970$702 million of total available liquidity as of December 31, 2017. The Company wasat June 30, 2023. We were in compliance with each financial covenant under the revolving credit facility as of December 31, 2017.June 30, 2023. Refer to Note 34 of our notes to consolidated financial statements and below under Recent Liquidity Developments for further discussion on our debt.
We believe that our current financial resources and funds generated from operations will be adequate to cover anticipated expenditures for debt service, general and administrative expense costs and capital expenditures for the foreseeable future. Our current financial resources are also available to fund dividends and for acquisitions of stream and royalty interests.interests, including any conditional funding schedules. Our long-term capital requirements are primarily affected by our ongoing acquisition activities. The CompanyWe currently, and generally at any time, hashave acquisition opportunities in various stages of active review. In the event of one or more substantial stream andor royalty interest or other acquisitions, we may seek additional debt or equity financing as necessary. We occasionally borrow and repay amounts under our revolving credit facility and may do so in the future.
Please refer to our risk factors included in Part 1, Item 1A of our Fiscal 20172022 10-K and in Part II, Item 1A of this Quarterly Report on Form 10-Q for a discussion of certain risks that may impact the Company’sour liquidity and capital resources.
SummaryRecent Liquidity Developments
Revolving Credit Facility Amendment
On June 28, 2023, we entered into a fifth amendment to our revolving credit facility dated as of June 2, 2017. The fifth amendment extended the scheduled maturity date from July 7, 2026 to June 28, 2028, replaced LIBOR with Secured Overnight Financing Rate (“Term SOFR”) as a benchmark interest rate and made certain other administrative changes to the existing revolving credit facility.
Revolving Credit Facility Repayment
On June 6, 2023, we made a $100 million principal payment towards the outstanding balance on the revolving credit facility leaving $600 million available as of June 30, 2023.
Cash Flows
Operating Activities
Net cash provided by operating activities totaled $147.2$216.6 million for the six months ended December 31, 2017,June 30, 2023, compared to $124.9$221.3 million for the six months ended December 31, 2016.June 30, 2022. The increasedecrease was primarily due to ahigher interest payments on
27
amounts outstanding under our revolving credit facility during the current period. The decrease in income taxes paid at certain foreign subsidiaries of approximately $14.0 million andwas partially offset by an increase in cash proceeds received from our stream and royalty interests, net of production taxes and cost of sales, of approximately $11.2 million. when compared to the prior year period.
Investing Activities
Net cash used in investing activities totaled $0.1$2.8 million for the six months ended December 31, 2017,June 30, 2023, compared to cash used in investing activities of $191.0$37.9 million for the six months ended December 31, 2016.June 30, 2022. The decrease in cash used in investing activities iswas primarily due to a decrease infewer acquisitions of royalty and stream and royalty interests in mineral properties compared to the prior year period.
Financing Activities
Net cash used in financing activities totaled $134.9$226.2 million for the six months ended December 31, 2017,June 30, 2023, compared to cash provided by financing activities of $33.5$46.4 million for the six months ended December 31, 2016.June 30, 2022. The decrease in cash provided by financing activities isincrease was primarily due to the Company’s $70repayments of $175 million borrowing under itson our revolving credit facility to fund a royalty acquisition during the priorcurrent year period. During the six months ended December 31, 2017, the Company repaid $100 million of the outstanding borrowings under the revolving credit facility.
27
Recently Issued or Adopted Accounting Standards and Critical Accounting Policies
Refer to Note 1 of our notes to consolidated financial statements for further discussion on any recently issued or adopted accounting standards. Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Fiscal 20172022 10-K for discussion on our critical accounting policies.
Forward-Looking Statements
Cautionary “Safe Harbor” Statement underThis report and our other public communications include “forward-looking statements” within the Private Securities Litigation Reform Actmeaning of 1995: With the exceptionU.S. federal securities laws. Forward-looking statements are any statements other than statements of historical matters, the matters discussed in this Quarterly Report on Form 10-Qfact. Forward-looking statements are forward-looking statements that involve risksnot guarantees of future performance, and uncertainties that could cause actual results tomay differ materially from projections or estimates contained herein. Such forward-lookingthese statements.
Forward-looking statements include, without limitation, statements regarding projected production estimates and estimates pertaining to timing and commencement of production from the operators of properties where we hold stream and royalty interests; statements related to ongoing developments and expected developments at properties where we hold stream and royalty interests; effective tax rate estimates, including the effect of recently enacted tax reform; the adequacy of financial resources and funds to cover anticipated expenditures for debt service and general and administrative expenses as well as costs associated with exploration and business development and capital expenditures, expected delivery dates of gold, silver, copper and other metals, and our expectation that substantially all our revenues will be derived from stream and royalty interests. Words such asare often identified by words like “will,” “may,” “could,” “should,” “would,” “believe,” “estimate,” “expect,” “anticipate,” “plan,” “forecast,” “potential,” “intend,” “continue,” “project,” and variationsor negatives of these words comparable wordsor similar expressions. Forward-looking statements include, among others, statements regarding the following: the proposed acquisition of new royalty interests on the producing Serrote and similar expressions generally indicate forward-looking statements, which speak only asSanta Rita mines in Brazil, including the details of the dateanticipated royalties thereon and funding of the statement is made. Do not unduly rely on forward-looking statements. Actual results may differ materiallypurchase price; our expected financial performance and outlook, including sales volume, revenue, expenses, and tax rates; operators’ expected operating and financial performance, including production, deliveries, mine plans, estimates of mineral resources and mineral reserves, development, cash flows and liquidity, capital requirements, capital expenditures and completion of feasibility studies, permitting activities and resolution of labor strikes; receipt of metal deliveries; anticipated liquidity, capital resources, financing and stockholder returns; deliveries of deferred silver ounces from those expressed or implied by these forward-looking statements. Pueblo Viejo; and prices for gold, silver, copper, nickel and other metals.
Factors that could cause actual results to differ materially from these forward-looking statements include, among others:
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as well asplanned, operators’ changes to mine plans and mineral reserves and mineral resources (including updated mineral reserve and mineral resource information), liquidity needs, mining and environmental hazards, labor disputes, distribution and supply chain disruptions, permitting and licensing issues, contractual issues involving our stream or royalty agreements, or operational disruptions; the timing of deliveries of metals from operators; risks associated with doing business in foreign countries; the impact of inadequately assessing new acquisitions; increased competition for stream and royalty interests; environmental risks, included those caused by climate change; the risk that the conditions to closing for the potential acquisition of royalties on the Serrote and Santa Rita mines may not be satisfied; delays in the completion of the plant expansion at Pueblo Viejo; potential cyber-attacks, including ransomware; our ability to identify, finance, value and complete acquisitions; adverse economic and market conditions; impact of health epidemics and pandemics; changes in laws or regulations governing us, operators or operating properties; changes in management and key employees; and other risk factors described elsewhere in this report and our other reports filed with the SEC,Securities and Exchange Commission, including our Fiscal 20172022 10-K. Most of these factors are beyond our ability to predict or control. Future events and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements.
28
Forward-looking statements speak only as of the date on which they are made. We disclaim any obligation to update any forward-looking statements, made herein, except as required by law. Readers are cautioned not to put undue reliance on forward-looking statements.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our earnings and cash flows are significantly impacted by changes in the market price of gold and other metals. Gold, silver, copper, nickel and other metal prices can fluctuate significantly and are affected by numerous factors, such as demand, production levels, economic policies of central banks, producer hedging, world political and economic events, inflation and the strength of the U.S. dollar relative to other currencies. Please see the risk factor entitled “VolatilityOur revenue is subject to volatility in gold, silver, copper, nickel and other metal prices, may have an adverse impact on the valuewhich could negatively affect our results of our stream and royalty interests and may reduce our revenues. Certain contracts governing our royalty stream interests have features that may amplify the negative effects of a drop in metals prices,operations or cash flow,” under Part I, Item 1A of our Fiscal 20172022 10-K, for more information that can affect gold, silver, copper, nickel and otherabout risks associated with metal prices as well as historical gold, silver, copper and nickel prices.price volatility.
29
During the six months ended December 31, 2017,June 30, 2023, we reported revenue of $226.8$314.4 million, with an average gold price for the period of $1,277$1,932 per ounce, an average silver price of $16.78$23.31 per ounce, and an average copper price of $2.98$3.95 per pound. Approximately 78%The table below shows the impact that a 10% increase or decrease in the average price of the specified metal would have had on our total reported revenuesrevenue for the six months ended December 31, 2017 were attributable to gold sales from our gold producing stream and royalty interests, as shown within the MD&A. For the six months ended December 31, 2017, if the price of gold had averaged 10% higher or lower per ounce, we would have recorded an increase or decrease in revenue of approximately $18.2 million.June 30, 2023:
| | |
Metal | Percentage of Total Reported Revenue Associated with Specified Metal | Amount by Which Total Reported Revenue Would Have Increased or Decreased If Price of Specified Metal Had Averaged 10% Higher or Lower in Period |
Gold | 74% | $23.7 million |
Silver | 14% | $2.4 million |
Copper | 10% | $5.7 million |
Approximately 9% of our total reported revenues for the six months ended December 31, 2017 were attributable to silver sales from our silver producing stream and royalty interests. For the six months ended December 31, 2017, if the price of silver had averaged 10% higher or lower per ounce, we would have recorded an increase or decrease in revenue of approximately $2.1 million.
Approximately 9% of our total reported revenues for the six months ended December 31, 2017 were attributable to copper sales from our copper producing stream and royalty interests. For the six months ended December 31, 2017, if the price of copper had averaged 10% higher or lower per pound, we would have recorded an increase or decrease in revenue of approximately $2.2 million.
ITEM 4.CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of December 31, 2017,Under the Company’s management,supervision and with the participation of the President andour management, including our Chief Executive Officer (the principal executive officer) and Chief Financial Officer and Treasurer (the principal financial and accounting officer) of the Company, carried out an evaluation of, we evaluated the effectiveness of the design and operation of the Company’sour disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)as of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).June 30, 2023. Based on suchthis evaluation, the Company’s President andour Chief Executive Officer and its Chief Financial Officer and Treasurer have concluded that as of December 31, 2017, the Company’sour disclosure controls and procedures were effective to provideas of June 30, 2023, at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the three months ended June 30, 2023, that information requiredmaterially affected, or are reasonably likely to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the required time periods and that such information is accumulated and communicated to the Company’smaterially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including the President andour Chief Executive Officer and the Chief Financial Officer, and Treasurer, as appropriate to allow timely decisions regarding required disclosure.
Disclosuredoes not expect that our disclosure controls and procedures involve human diligenceor our internal controls will prevent all error and compliance and are subject to lapses in judgment and breakdowns resulting from human failures. As a result, aall fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the CompanyRoyal Gold have been detected.
Changes in Internal Controls
There has been no change in the Company’s internal control over financial reporting during the three months ended December 31, 2017 that has materially affected, or that is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II.OTHER INFORMATION
Voisey’s BayNone.
Refer to Note 10 of our notes to consolidated financial statements for a discussion of the litigation associated with our Voisey’s Bay royalty.
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Information regardingThere have been no material changes to the risk factors appears in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Forward-Looking Statements,” and various risks faced by us are also discussed elsewhere in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q. In addition, risk factors are included in Part I, Item 1Athe section entitled “Risk Factors” of our Fiscal 20172022 10-K.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
| | | | |
Period | (a) Total Number of Shares Purchased | (b) Average Price Paid Per Share | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan or Programs |
April 2023 | — | — | N/A | N/A |
May 2023 | — | — | N/A | N/A |
June 2023 | — | — | N/A | N/A |
Total | — | — | N/A | N/A |
Not applicable.
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.
Not applicable.
Not applicable.
ITEM 5.OTHER INFORMATION
On June 14, 2023, Paul Libner, Chief Financial Officer and Treasurer of Royal Gold, adopted a trading plan that is intended to satisfy the affirmative defense of Rule 10b5-1(c) of the Securities Exchange Act of 1934, as amended, regarding the sale of up to 1,700 shares of common stock of Royal Gold. The plan provides that sales may begin on September 13, 2023, and will end on September 30, 2024, or such earlier date as all 1,700 shares are sold.
No non-Rule 10b5-1 trading arrangements (as defined by Item 408(a) of Regulation S-K) were entered into by a Section 16 director or officer of the Company during the quarter.
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Not applicable.
Exhibit |
| Description |
| | |
| | |
| | |
3.2 | | |
| | |
10.1 | | |
| | |
31.1* | | |
| | |
31.2* | | |
| | |
32.1‡ | | |
| | |
32.2‡ | | |
| | |
| |
|
| |
|
| | The cover page from Royal Gold, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in Inline XBRL |
|
| |
|
| |
|
|
* | Filed herewith. |
‡ | Furnished herewith. |
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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 thereunto duly authorized.
| ROYAL GOLD, INC. | |
| | |
Date: | | |
| By: | /s/ |
| |
|
| | President and Chief Executive Officer |
| | (Principal Executive Officer) |
| | |
Date: | By: | /s/ |
| |
|
| | Chief Financial Officer and Treasurer |
| | (Principal Financial and Accounting Officer) |
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