Royal Gold, Inc. (NASDAQ: RGLD; TSX: RGL), which owns interests in Ghana’s Wassa and Prestea mines, (together with its subsidiaries, Royal Gold) has reported results for its third-quarter of fiscal 2016, including total revenue of $93.5 million, up 26% from $74.1 million in the prior-year quarter.
The increase in revenue was driven by an increase in stream revenue from newly acquired streams at Pueblo Viejo, Wassa and Prestea, and Andacollo.
Third-Quarter Highlights Compared with the Year-ago Quarter:
• Revenue of $93.5 million, an increase of 26%
• Volume of 79,025 Gold Equivalent Ounces (“GEOs”1), an increase of 30%
• Record quarterly dividends paid of $15 million, or $0.23 per share
• After previously announced impairment charges, net loss was ($1.04) per share and adjusted net income2 was $0.29 per share, excluding the impairment
• Adjusted EBITDA3 of $69.3 million, an increase of 20%
“Our new streams at Andacollo, Pueblo Viejo, Wassa and Prestea are delivering significant growth and contributed to a 27% increase in operating cash flow over the December quarter,” commented Tony Jensen, President and CEO.
“As expected, we are now receiving deliveries of silver in addition to gold from Pueblo Viejo, further enhancing our returns from this quality property. Looking forward, we anticipate production from Rainy River and Cortez Crossroads will provide additional growth and portfolio diversification in the near future,” Mr Jensen said.
Third-quarter revenue included $63.4 million from the stream segment and $30.1 million from the royalty segment, at an average gold price of $1,183 per ounce. Stream segment gold purchases totaled approximately 40,800 ounces of gold and sales were approximately 54,300 ounces of gold. The Company had approximately 12,200 ounces of gold and 210,000 ounces of silver in inventory at March 31, 2016, as previously announced, compared to 25,700 ounces of gold at December 31, 2015.
Cost of sales was $17.9 million for the third-quarter, compared to $10.5 million a year ago. The increase is primarily attributable to stream production at Pueblo Viejo, Wassa and Prestea, and Andacollo. Cost of sales is specific to our stream agreements and is the result of the Company’s purchase of gold and silver for a cash payment.
General and administrative expenses increased to $7.7 million for the third quarter, up from $5.5 million a year ago. The increase was primarily due to an increase in non-cash stock based compensation of approximately $1.5 million.
Depreciation, depletion and amortization increased to $38.2 million for the third quarter, up from $24.8 million a year ago. The increase was primarily attributable to new production from the recently acquired streams at Pueblo Viejo, Andacollo, Wassa and Prestea.
Interest and other income increased to $3.1 million for the third quarter, up from $0.4 million a year ago, due to a change in fair value and gains on the sale of certain equity positions we held.
Interest and other expense increased to $8.8 million for the third-quarter, up from $6.4 million a year ago, primarily due to the outstanding balance on our revolving credit facility. The Company had $300 million outstanding under the revolving credit facility at the end of the third-quarter, and did not have any amounts outstanding under the revolving credit facility a year ago.
“We recognised an income tax benefit totaling $8.3 million compared with income tax expense of $1.0 million in the year ago quarter. This resulted in an effective tax rate of 10.6% in the current period, compared with 4.0% in the year ago quarter. The effective tax rate was impacted by the impairment charge in the quarter and appreciation of the Canadian dollar,” a statement said.
Royal Gold reported a net loss attributable to Royal Gold stockholders of ($67.7) million, or ($1.04) per share for the third quarter, as compared to net income attributable to Royal Gold stockholders of $25.0 million, or $0.38 per share, for the prior-year quarter.
The decrease in reported net income was primarily attributable to previously disclosed impairments of royalty and stream interests and royalty receivables collectively totaling $99.0 million, the effect of which was $1.33 per share, after taxes in the third quarter. Excluding the after-tax effect of the impairments of royalty and stream interests and royalty receivables, adjusted net income attributable to Royal Gold stockholders would have been $18.9 million, or $0.29 per share for the third-quarter.
Adjusted EBITDA for the third-quarter was $69.3 million ($1.06 per basic share), representing 74% of revenue, compared with Adjusted EBITDA of $57.7 million ($0.89 per basic share), or 78% of revenue, for the year-ago quarter.
On March 16, 2016, the Company entered into an amendment to revise its revolving credit agreement to extend the scheduled maturity date from January 29, 2019 to March 16, 2021. At March 31, 2016, working capital totaled $151.0 million. When combined with $350 million of available liquidity under our revolving credit facility, total liquidity at March 31, 2016 was approximately $500.0 million. Cash flow from operations was $66.1 million for the third-quarter.
Royal Gold is a precious metals royalty and stream company engaged in the acquisition and management of precious metal royalties, streams, and similar production-based interests. The Company owns interests on 193 properties on six continents, including interests on 38 producing mines and 24 development stage projects. Royal Gold is publicly traded on the NASDAQ Global Select Market under the symbol “RGLD,” and on the Toronto Stock Exchange under the symbol “RGL.”