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8-K - ROYAL GOLD INC | v173146_8k.htm |
Exhibit 99.1
Royal
Gold Reports Record Revenue and Free Cash Flow
for
Fiscal Second Quarter 2010
|
·
|
Quarterly royalty revenue was
$34.7 million, up 138%
year-over-year
|
|
·
|
Free cash flow1 was $28.6 million, representing
82% of total revenue and a 149% increase
year-over-year
|
|
·
|
Gold royalties accounted for
84% of second quarter fiscal 2010
revenue
|
|
·
|
Andacollo transaction completed
and commercial production expected by mid-year
2010
|
|
·
|
Plan of Arrangement with
International Royalty Corporation proceeding as
expected
|
DENVER, COLORADO. FEBRUARY 4, 2010:
ROYAL GOLD, INC. (NASDAQ: RGLD; TSX:RGL) today announced net income
attributable to Royal Gold stockholders of $9.6 million, or $0.24 per basic
share, on record royalty revenue of $34.7 million for the second quarter of
fiscal 2010. This compares to net income attributable to Royal Gold
stockholders for the second quarter of fiscal 2009 of $21.4 million, or $0.63
per basic share, on royalty revenue of $14.6 million. For the six-month period
ended December 31, 2009, royalty revenue was $60.9 million and net income
attributable to Royal Gold stockholders was $16.7 million, or $0.41 per basic
share. This compares to royalty revenue of $30.7 million and net income,
attributable to Royal Gold stockholders, of $27.1 million, or $0.80 per basic
share, for the six-month period ended December 31, 2008.
Second quarter and six-month net income
attributable to Royal Gold stockholders for fiscal 2009 include the effects of a
one-time gain of $31.5 million, or $0.60 per basic share after taxes, resulting
from the Company's restructuring of the royalties at the Cortez Pipeline Mining
Complex on October 1, 2008, in connection with the Company’s acquisition of
Barrick Gold’s royalty portfolio.
Higher revenues for the second quarter
were largely driven by increased production at Taparko, Cortez, Leeville, and
Mulatos as well as higher year-over-year gold and copper prices.
1
|
The
Company defines free cash flow, a non-GAAP financial measure, as operating
income plus depreciation, depletion and amortization, non-cash charges and
impairment of mining assets, if any, less non-controlling
interests in operating income from consolidated subsidiary (see, Schedule
A).
|
Gold
prices averaged $1,100 per ounce during the quarter, compared with $795 per
ounce in the prior year quarter.
Free cash
flow for the current quarter was a record $28.6 million, representing 82% of
revenues. This was an increase of 149% compared to free cash flow of
$11.5 million or 79% of revenues for the prior year comparable
quarter.
As of
December 31, 2009, the Company had net working capital of $346.6
million. Current assets were $354.4 million (including $316.8 million
in cash and equivalents), compared to current liabilities of $7.8 million,
resulting in a current ratio of 45 to 1.
“Royal Gold had another great quarter
due to strong production at our principal royalty properties and higher metal
prices,” said Tony Jensen, President and CEO. “These record financial
results are prior to receiving any meaningful results from our Peñasquito and
Andacollo royalties which are in the construction and commissioning
stage. We look forward to the significant role these properties will
play in the future growth of the Company as they ramp up to full production in
calendar 2010.”
RECENT
DEVELOPMENTS
Peñasquito
Goldcorp
reported that ore throughput rates for the first sulfide processing line have
reached operational production levels and construction of the second sulfide
processing line is on schedule for completion in the third calendar quarter of
2010. Goldcorp also stated that production of both lead and zinc concentrates
has ramped up consistent with expectations and that achievement of commercial
production for the sulfide Line 1 and Line 2 remains on track for the third
calendar quarter of 2010.
Andacollo
In
January 2010, the Company announced the closing of the Andacollo transaction
with Teck Resources (“Teck”). Total consideration for the
transaction was approximately $218 million in cash and 1.2 million shares
of Royal Gold common stock. Royal Gold will receive 75% of the gold
produced from the sulfide portion of the Andacollo copper and gold deposit,
located in Chile, until 910,000 payable ounces of gold have been sold, after
which Royal Gold will receive 50% of all future payable gold production from the
property.
Teck
reported that ore has been introduced to the mill and shipment of copper
concentrate is expected to commence in April of this year. Full
commercial production is expected to be reached in the first half of calendar
2010.
Plan
of Arrangement with International Royalty Corporation
On December 18, 2009, Royal Gold and
International Royalty Corporation (“IRC”) announced a Plan of Arrangement
(“Arrangement”) whereby Royal Gold would acquire all of the issued and
outstanding common shares of IRC. Under the Arrangement, IRC
shareholders may elect to receive either C$7.45 in cash or 0.1385 common shares
of Royal Gold or a combination of both, subject to a maximum of US$350 million
in cash and a maximum of 7.75 million common shares of Royal Gold. If
IRC shareholders elect to receive more than approximately US$314 million in
cash, the number of Royal Gold common shares issued will be reduced on a
pro-rated basis until such cash election reaches a maximum of US$350
million. Assuming the maximum share election, the consideration under
the Arrangement will consist, on average, of 0.0771 Royal Gold common shares
plus US$3.12 in cash for each fully diluted IRC common share, implying 56% share
consideration. Assuming the maximum cash election, the consideration
under the Arrangement will consist, on average, of 0.0700 Royal Gold common
shares plus US$3.48 in cash for each fully diluted IRC common share, implying
51% share consideration.
Royal
Gold has entered into voting agreements with all of IRC’s directors and senior
officers, and with several significant IRC shareholders under which they have
agreed to vote their shares in favor of Royal Gold’s acquisition of
IRC. Collectively, the shareholders subject to the voting agreements
represent approximately 34% of IRC’s common shares on a fully-diluted
basis.
An
Interim Order was obtained from the Ontario Superior Court of Justice to conduct
a special meeting of the IRC shareholders. The special meeting will
be held on February 16, 2010, at 9:00 a.m. MST, at the Inverness Hotel and
Conference Center, Evergreen Room, 200 Inverness Drive West, Englewood,
Colorado.
Term
Loan
On
January 21, 2010, Royal Gold announced that it had obtained a new $100 million
secured term loan from HSBC Bank USA, National Association, available in
connection with the closing of the Arrangement between Royal Gold and
IRC. HSBC Securities (USA) Inc. acted as sole lead arranger for the
loan.
The loan
will mature 18-months from the funding date with principal repayments equal to
10% of the funded amounts scheduled to occur every three months. The
interest rate on the loan is LIBOR plus 2.25%. Funding under the $100
million term loan is subject only to delivery of a borrowing notice and
certificates by Royal Gold and certain of its subsidiaries which will guarantee
the loan.
Taparko
Production
has improved at Taparko such that High River has notified the Company that
Somita is attempting to satisfy the Completion Test, as defined in the Funding
Agreement. The Completion Test commenced on December 1, 2009 and will
continue for 90 days.
Pursuant
to the Amended and Restated Funding Agreement dated February 22, 2006 (the
“Funding Agreement”), between Royal Gold, Inc. and Somita SA (“Somita”), a 90%
owned subsidiary of High River and the operator of Taparko, Somita is in breach
of certain obligations under the Funding Agreement. As security for
the Company’s investment in Somita, two of High River’s subsidiaries have
pledged their equity interests in Somita and High River (West Africa) Ltd., the
corporate parent of Somita. This pledge will remain in effect until
certain production and performance standards have been attained at the Taparko
mine, sufficient to satisfy the Completion Test. Thereafter, if
Somita satisfies the requirements of the Completion Test, the pledge of the
equity interests in Somita and its corporate parent (High River (West Africa)
Ltd.) will terminate and this security will be released.
In
addition, Royal Gold obtained as collateral a pledge of shares of certain equity
investments in public companies held by High River. The market value
of the pledged shares is approximately $59.5 million as of December
31, 2009. The Company’s carrying value of its royalty interests
at Taparko was approximately $15.3 million as of December
31, 2009. The pledge of High River’s equity investments will
remain in effect until the satisfaction of certain requirements as provided in
the construction contract between Somita and its construction
contractor.
SECOND
QUARTER PRODUCTION AND REVENUE
Second
quarter fiscal 2010 production and revenue for the Company’s principal royalty
interests are shown in Table 1. For more detailed information about
each of our royalty properties, please refer to the Company’s most recent Annual
Report on Form 10-K, our Quarterly Reports on Form 10-Q and and Current Reports
on Form 8-K filed with the SEC and available on the SEC’s website located at
www.sec.gov, or our website located at www.royalgold.com.
CORPORATE
PROFILE
Royal
Gold is a precious metals royalty company engaged in the acquisition and
management of precious metal royalty interests. The Company owns
royalties on 119 properties on six continents, including royalties on 21
producing mines and 13 development stage projects. Royal Gold is publicly traded
on the NASDAQ Global Select Market under the symbol “RGLD,” and on the Toronto
Stock Exchange under the symbol “RGL.” The Company’s website is
located at www.royalgold.com.
For
further information, please contact:
Karen
Gross
Vice
President and Corporate Secretary
(303)
575-6504
Note: Management’s conference
call reviewing the second quarter results will be held today at 10:00 a.m. Mountain
Time (noon Eastern Time) and will be available by calling
(800)
603-2779 (North America) or (973) 200-3960 (international), access
#50474540. The call will be simultaneously broadcast on the Company’s
website at www.royalgold.com
under the “Presentations” section. A replay of this webcast will be
available on the Company’s website approximately two hours after the call
ends.
Cautionary “Safe Harbor” Statement
Under the Private Securities Litigation Reform Act of 1995: With
the exception of historical matters, the matters discussed in this press release
are forward-looking statements that involve risks and uncertainties that could
cause actual results to differ materially from projections or estimates
contained herein. Such forward-looking statements include statements
regarding the ramp up at Peñasquito and Andacollo, the expectation that
Peñasquito and Andacollo will play a significant role in the future growth of
the Company, the operator’s estimate that construction completion and ramp up of
the second sulfide circuit at Peñasquito will be attained in the third calendar
quarter of 2010 and commercial production will be achieved during the third
calendar quarter of 2010, the operator’s estimate that commercial production at
Andacollo is expected to be reached in the first half of 2010, that the special
meeting of IRC’s shareholders will be held on February 16, 2010, and the
operators’ estimates regarding production at the Company’s other royalty
properties. Factors that could cause actual results to differ
materially from the projections include, among others, any delay in the closing
or termination of the transaction to acquire the outstanding shares of IRC,
precious metals prices, performance of and production at the Company's royalty
properties, decisions and activities of the operators of the Company's royalty
properties, unanticipated grade, geological, metallurgical, processing or other
problems the operators of the mining properties may encounter, delays in the
operators securing or their inability to secure necessary governmental permits,
changes in operator’s project parameters as plans continue to be refined,
economic and market conditions, possible liquidity and production problems at
Taparko and other royalty properties, the Company’s exercise of its rights under
the Taparko Funding Agreement, buy-down rights at Malartic, litigation, the
ability of the operator to bring the Andacollo project into production as
expected, and other subsequent events, as well as other factors described in the
Company's Annual Report on Form 10-K, Quarterly Report on Form 10-Q, and other
filings with the Securities and Exchange Commission. Most of these
factors are beyond the Company’s ability to predict or control. The
Company disclaims any obligation to update any forward-looking statement made
herein. Readers are cautioned not to put undue reliance on
forward-looking statements.
*Free Cash
Flow: The Company discloses information on free cash flow and
free cash flow as a percentage of revenues in its reporting. Free
cash flow is a non-GAAP financial measure. The Company defines free
cash flow as operating income plus depreciation, depletion and amortization,
non-cash charges, and any impairment of mining assets less non-controlling
interests in operating income of consolidated subsidiary. While we
believe free cash flow is a useful measure of the Company’s performance, we also
want to advise that this is not a measure recognized by generally accepted
accounting principles. See Schedule A, attached to this press release
for a GAAP reconciliation.
TABLE
1
Second
Quarter Fiscal 2010
Royalty Production and
Revenue for Principal Royalty Interests
QUARTER
ENDED
DECEMBER
31, 2009
|
QUARTER
ENDED
DECEMBER
31, 2008
|
||||||
PROPERTY
|
ROYALTY
|
OPERATOR
|
METAL
|
Royalty
Revenue
($
Millions)
|
Reported
Production 1
|
Royalty
Revenue
($
Millions)
|
Reported
Production 1
|
Cortez
|
GSR1 and GSR2 2
GSR3
2
NVR1
2
|
Barrick
|
Gold
|
8.9
|
124,973
oz.
|
3.5
|
65,425
oz.
|
Taparko
|
TB-GSR1
3
TB-GSR2
3
|
High
River
|
Gold
|
8.9
|
32,202
oz.
|
1.4
|
7,505
oz.
|
Robinson
4
|
3.0%
NSR
|
Quadra
|
Gold
Copper
|
3.6
|
24,057
oz.
31.7M
lbs.
|
(1.3)
|
22,844
oz.
29.2M
lbs.
|
Leeville
|
1.8%
NSR
|
Newmont
|
Gold
|
3.0
|
150,328
oz.
|
2.0
|
138,669
oz.
|
Mulatos
|
1.0
- 5.0% NSR 5
|
Alamos
|
Gold
|
2.4
|
43,928
oz.
|
1.5
|
38,741
oz.
|
Siguiri
|
0.00 - 1.875% NSR 6
|
AngloGold
Ashanti
|
Gold
|
1.6
|
77,042
oz.
|
1.2
|
81,431
oz.
|
Peñasquito
|
2.0%
NSR
|
Goldcorp
|
Gold
Silver
|
1.1
|
28,120
oz.
1.2M
oz.
|
0.3
|
10,057
oz. 935,784 oz.
|
Goldstrike
|
0.9%
NSR
|
Barrick
|
Gold
|
0.6
|
64,420
oz.
|
1.8
|
257,207
oz.
|
Dolores
|
3.25%
NSR (Au)
2.0%
NSR (Ag)
|
Minefinders
|
Gold
Silver
|
0.4
|
19,305
oz.
349,248
oz.
|
0.02 7
-
|
2,440 7
-
|
Other
Royalty Properties 8
|
-
|
-
|
Various
|
4.2
|
N/A
|
4.2
|
N/A
|
Total
Royalty Revenue
|
34.7
|
14.6
|
Footnotes
follow on page 7.
FOOTNOTES
1
|
Reported
production relates to the amount of metal sales that are subject to our
royalty interests for the quarters ended December 31, 2009 and December
31, 2008, as reported to us by the operators of the
mines.
|
2
|
Royalty
percentages: GSR1 and GSR2 – 0.40 to 5.0% (sliding-scale); GSR3
– 0.71%; NVR1 – 0.39%. As of October 1, 2008, the GSR2 royalty
percentage was restructured to match the current GSR1
rate.
|
3
|
Royalty
percentages: TB-GSR1 – 15.0%; TB-GSR2 – 4.3% when the average
monthly gold price ranges between $385 and $430 per
ounce. Outside of this range, the royalty rate is calculated by
dividing the average monthly gold price by 100 for gold prices above $430
per ounce, or by dividing the average monthly gold price by 90 for gold
prices below $385 per ounce (e.g., a
$900 per ounce gold price results in a rate of 900/100 =
9.0%). Two subsequent royalties consist of a 2.0% GSR perpetual
royalty (“TB-GSR3”), applicable to gold production from defined portions
of the Taparko-Bouroum project area, and a 0.75% GSR milling royalty
(“TB-MR1”). The TB-MR1 royalty applies to ore that is mined
outside of the defined area of the Taparko-Bouroum project that is
processed through the Taparko facilities up to a maximum of 1.1 million
tons per year. Both the TB-GSR3 and TB-MR1 royalties
commence once TB-GSR1 and TB-GSR2 have ceased. Both TB-GSR1 and
TB-GSR2 continue until either production reaches 804,420 ounces of gold,
or payments totaling $35 million under TB-GSR1 are received, whichever
comes first. As of December 31, 2009, Royal Gold has recognized
approximately $20.1 million in royalty revenue under TB-GSR1 that is
attributable to cumulative production of approximately 142,000 ounces of
gold.
|
4
|
Revenues
consist of provisional payments for concentrates produced during the
current period and final settlements for prior production
periods. A negative figure reflects an amount that is offset
against future metal sales subject to our royalty.
|
5
|
The
Company’s sliding-scale royalty is subject to a 2.0 million ounce cap on
gold production. There has been approximately 506,000 ounces of
cumulative production as of December 31, 2009.
|
6
|
The
Company’s royalty is capped once payments of approximately $12.0 million
have been received. As of December 31, 2009, approximately $4.9
million remains unrecognized under the cap. NSR sliding-scale
schedule (price of gold per ounce - royalty rate as of 9/30/09): $0 to $495.71 –
0.00%; $495.72 to $566.54 – 0.625%; $566.55 to $601.94 – 0.875%; $601.95
to $637.35 – 1.125%; $637.36 to $672.76 – 1.50%; $672.77 and above –
1.875%. The sliding-scale schedule is adjusted based on the
average of the United States, Australian and Canadian Consumer Price
Indices on an annual basis. The most current rate available is
reflected herein.
|
7
|
Royalty
was acquired in October 2007 and production from the 1.25% royalty on gold
commenced during the fourth quarter of calendar 2008. The
Company’s 2.0% NSR royalty on gold and silver became effective on May 1,
2009, once commercial production was achieved. Production
volumes for Dolores are based upon Royal Gold’s estimates as actual
production data was not available as of the time of this press
release.
|
8
|
“Other”
includes all of the Company’s non-principal producing royalties as of
December 31, 2009 and 2008. Individually, no royalty included within
“Other” contributed greater than 5% of our total royalty revenue for
either
period.
|
ROYAL
GOLD, INC.
Consolidated
Balance Sheets
(Unaudited,
in thousands except share data)
December
31,
|
June
30,
|
|||||||
2009
|
2009
|
|||||||
(Unaudited)
|
||||||||
Current
assets
|
||||||||
Cash
and equivalents
|
$ | 316,837 | $ | 294,566 | ||||
Royalty
receivables
|
32,440 | 20,597 | ||||||
Income
tax receivable
|
4,279 | 2,372 | ||||||
Deferred
tax assets
|
158 | 166 | ||||||
Prepaid
expenses and other
|
720 | 1,007 | ||||||
Total
current assets
|
354,434 | 318,708 | ||||||
Royalty
interests in mineral properties, net
|
435,311 | 455,966 | ||||||
Restricted
cash – compensating balance
|
- | 19,250 | ||||||
Inventory
– restricted
|
9,943 | 10,622 | ||||||
Other
assets
|
4,665 | 5,378 | ||||||
Total
assets
|
$ | 804,353 | $ | 809,924 | ||||
Current
liabilities
|
||||||||
Accounts
payable
|
$ | 3,575 | $ | 2,403 | ||||
Dividends
payable
|
3,684 | 3,259 | ||||||
Other
|
545 | 527 | ||||||
Total
current liabilities
|
7,804 | 6,189 | ||||||
Net
deferred tax liabilities
|
21,224 | 23,371 | ||||||
Chilean
loan facility
|
- | 19,250 | ||||||
Other
long-term liabilities
|
831 | 703 | ||||||
Total
liabilities
|
29,859 | 49,513 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders’
equity
|
||||||||
Common
stock, $.01 par value, authorized 100,000,000
shares;
and issued 40,741,654 and 40,480,311 shares,
respectively
|
407 | 405 | ||||||
Additional
paid-in capital
|
710,478 | 702,407 | ||||||
Accumulated
other comprehensive income (loss)
|
68 | (80 | ) | |||||
Accumulated
earnings
|
56,503 | 46,709 | ||||||
Treasury
stock, at cost (74,430 and 0 shares, respectively)
|
(3,557 | ) | - | |||||
Total
Royal Gold stockholders’ equity
|
763,899 | 749,441 | ||||||
Non-controlling
interests
|
10,595 | 10,970 | ||||||
Total
stockholders’ equity
|
774,494 | 760,411 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 804,353 | $ | 809,924 |
ROYAL
GOLD, INC.
Consolidated
Statements of Operations and Comprehensive Income
(Unaudited,
in thousands except share data)
For
The Three Months Ended
|
||||||||
December
31,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Royalty
revenues
|
$ | 34,740 | $ | 14,622 | ||||
Costs
and expenses
|
||||||||
Costs
of operations (exclusive of depreciation, depletion and
amortization
shown separately below)
|
1,638 | 613 | ||||||
General
and administrative
|
2,972 | 2,122 | ||||||
Exploration
and business development
|
2,828 | 963 | ||||||
Depreciation,
depletion and amortization
|
12,101 | 8,537 | ||||||
Total
costs and expenses
|
19,539 | 12,235 | ||||||
Operating
income
|
15,201 | 2,387 | ||||||
Gain
on royalty restructuring
|
- | 31,500 | ||||||
Interest
and other income
|
150 | 166 | ||||||
Interest
and other expense
|
(166 | ) | (357 | ) | ||||
Income
before income taxes
|
15,185 | 33,696 | ||||||
Income
tax expense
|
(4,833 | ) | (11,998 | ) | ||||
Net
income
|
10,352 | 21,698 | ||||||
Less:
Net income attributable to non-controlling interests
|
(737 | ) | (301 | ) | ||||
Net
income attributable to Royal Gold stockholders
|
$ | 9,615 | $ | 21,397 | ||||
Net
income
|
$ | 10,352 | $ | 21,698 | ||||
Adjustments
to comprehensive income, net of tax
|
||||||||
Unrealized
change in market value of available for sale securities
|
94 | 240 | ||||||
Comprehensive
income
|
$ | 10,446 | $ | 21,938 | ||||
Comprehensive
income attributable to non-controlling interests
|
(737 | ) | (301 | ) | ||||
Comprehensive
income attributable to Royal Gold stockholders
|
$ | 9,709 | $ | 21,637 | ||||
Net
income per share attributable to Royal Gold stockholders:
|
||||||||
Basic
earnings per share
|
$ | 0.24 | $ | 0.63 | ||||
Basic
weighted average shares outstanding
|
40,578,426 | 33,961,206 | ||||||
Diluted
earnings per share
|
$ | 0.23 | $ | 0.62 | ||||
Diluted
weighted average shares outstanding
|
40,962,137 | 34,375,388 | ||||||
Cash
dividends declared per common share
|
$ | 0.09 | $ | 0.08 |
ROYAL
GOLD, INC.
Consolidated
Statements of Operations and Comprehensive Income
(Unaudited,
in thousands except share data)
For
The Six Months Ended
|
||||||||
December
31,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Royalty
revenues
|
$ | 60,853 | $ | 30,701 | ||||
Costs
and expenses
|
||||||||
Costs
of operations (exclusive of depreciation, depletion and
amortization
shown separately below)
|
2,839 | 1,460 | ||||||
General
and administrative
|
5,167 | 3,793 | ||||||
Exploration
and business development
|
3,713 | 1,637 | ||||||
Depreciation,
depletion and amortization
|
23,179 | 12,960 | ||||||
Total
costs and expenses
|
34,898 | 19,850 | ||||||
Operating
income
|
25,955 | 10,851 | ||||||
Gain
on royalty restructuring
|
- | 31,500 | ||||||
Interest
and other income
|
1,903 | 983 | ||||||
Interest
and other expense
|
(521 | ) | (523 | ) | ||||
Income
before income taxes
|
27,337 | 42,811 | ||||||
Income
tax expense
|
(7,864 | ) | (15,127 | ) | ||||
Net
income
|
19,473 | 27,684 | ||||||
Less:
Net income attributable to non-controlling interests
|
(2,733 | ) | (538 | ) | ||||
Net
income attributable to Royal Gold stockholders
|
$ | 16,740 | $ | 27,146 | ||||
Net
income
|
$ | 19,473 | $ | 27,684 | ||||
Adjustments
to comprehensive income, net of tax
|
||||||||
Unrealized
change in market value of available for sale securities
|
147 | (72 | ) | |||||
Comprehensive
income
|
$ | 19,620 | $ | 27,612 | ||||
Comprehensive
income attributable to non-controlling interests
|
(2,733 | ) | (538 | ) | ||||
Comprehensive
income attributable to Royal Gold stockholders
|
$ | 16,887 | $ | 27,074 | ||||
Net
income per share attributable to Royal Gold stockholders:
|
||||||||
Basic
earnings per share
|
$ | 0.41 | $ | 0.80 | ||||
Basic
weighted average shares outstanding
|
40,540,283 | 33,943,851 | ||||||
Diluted
earnings per share
|
$ | 0.41 | $ | 0.79 | ||||
Diluted
weighted average shares outstanding
|
40,942,564 | 34,343,827 | ||||||
Cash
dividends declared per common share
|
$ | 0.17 | $ | 0.15 |
ROYAL
GOLD, INC.
Consolidated
Statements of Cash Flows
(Unaudited,
in thousands)
For
The Six Months Ended
|
||||||||
December
31,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 19,473 | $ | 27,684 | ||||
Adjustments
to reconcile net income to net cash provided by
operating
activities:
|
||||||||
Depreciation,
depletion and amortization
|
23,179 | 12,960 | ||||||
Gain
on distribution to non-controlling interest
|
(1,742 | ) | - | |||||
Deferred
tax benefit
|
(1,446 | ) | (2,541 | ) | ||||
Non-cash
employee stock compensation expense
|
3,087 | 1,551 | ||||||
Gain
on royalty restructuring
|
- | (31,500 | ) | |||||
Tax
benefit of stock-based compensation exercises
|
(739 | ) | (253 | ) | ||||
Changes
in assets and liabilities:
|
||||||||
Royalty
receivables
|
(13,416 | ) | 1,484 | |||||
Prepaid
expenses and other assets
|
634 | (289 | ) | |||||
Accounts
payable
|
1,417 | 2,236 | ||||||
Income
taxes (receivable) payable
|
(2,007 | ) | 11,372 | |||||
Other
|
(557 | ) | (499 | ) | ||||
Net
cash provided by operating activities
|
$ | 27,883 | $ | 22,205 | ||||
Cash
flows from investing activities:
|
||||||||
Acquisition
of royalty interests in mineral properties
|
- | (186,110 | ) | |||||
Proceeds
from royalty restructuring
|
- | 31,500 | ||||||
Change
in restricted cash – compensating balance
|
19,250 | (3,500 | ) | |||||
Proceeds
on sale of Inventory - restricted
|
3,108 | - | ||||||
Deferred
acquisition costs
|
(343 | ) | (62 | ) | ||||
Other
|
(81 | ) | (15 | ) | ||||
Net
cash provided by (used in) investing activities
|
$ | 21,934 | $ | (158,187 | ) | |||
Cash
flows from financing activities:
|
||||||||
Tax
benefit of stock-based compensation exercises
|
739 | 253 | ||||||
(Prepayment
of) borrowings under Chilean loan facility
|
(19,250 | ) | 3,500 | |||||
Common
stock dividends
|
(6,522 | ) | (4,768 | ) | ||||
Distribution
to non-controlling interests
|
(3,108 | ) | - | |||||
Proceeds
from issuance of common stock
|
594 | 723 | ||||||
Debt
issuance costs
|
(2 | ) | (721 | ) | ||||
Other
|
3 | - | ||||||
Net
cash used in financing activities
|
$ | (27,546 | ) | $ | (1,013 | ) | ||
Net
increase (decrease) in cash and equivalents
|
22,271 | (136,995 | ) | |||||
Cash
and equivalents at beginning of period
|
294,566 | 192,035 | ||||||
Cash
and equivalents at end of period
|
$ | 316,837 | $ | 55,040 | ||||
Non-cash
investing and financing activities:
|
||||||||
Royalty
restructuring
|
$ | (1,572 | ) | $ | - | |||
Treasury
stock
|
$ | (3,557 | ) | $ | - |
SCHEDULE
A
Non-GAAP Financial
Measures
The
Company computes and discloses free cash flow and free cash flow as a percentage
of revenues. Free cash flow is a non-GAAP financial measure. Free
cash flow is definedby the Company as operating income plus depreciation,
depletion and amortization, non-cash charges, and any impairment of mining
assets, less non-controlling interests in operating income of consolidated
subsidiary. Management believes that free cash flow and free cash
flow as a percentage of revenues are useful measures of performance of our
royalty portfolio. Free cash flow identifies the cash generated in a
given period that will be available to fund the Company’s future operations,
growth opportunities, and shareholder dividends. Free cash flow, as
defined, is most directly comparable to operating income in the Statements of
Operations. Below is the reconciliation to operating
income:
ROYAL
GOLD, INC.
|
Free
Cash Flow Reconciliation
|
For
the Three Months Ended
December
31,
(Unaudited, iin
thousands)
|
||||||||
2009
|
2008
|
|||||||
Operating
income
|
$ | 15,201 | $ | 2,387 | ||||
Depreciation,
depletion and amortization
|
12,101 | 8,537 | ||||||
Non-Cash
employee stock compensation
|
1,937 | 915 | ||||||
Non-controlling
interest in operating income of consolidated subsidiary
|
(611 | ) | (301 | ) | ||||
Free
cash flow
|
$ | 28,628 | $ | 11,538 |
For
the Six Months Ended
December
31,
(Unaudited, iin
thousands)
|
||||||||
2009
|
2008
|
|||||||
Operating
income
|
$ | 25,955 | $ | 10,851 | ||||
Depreciation,
depletion and amortization
|
23,179 | 12,960 | ||||||
Non-cash
employee stock compensation
|
3,087 | 1,551 | ||||||
Non-controlling
interest in operating income of consolidated subsidiary
|
(991 | ) | (538 | ) | ||||
Free
cash flow
|
$ | 51,230 | $ | 24,824 |