Royal Gold Reports Strong Start to 2024 with Significant Liquidity Increase

DENVER–(BUSINESS WIRE)–Royal Gold, Inc. (NASDAQ: RGLD) (together with its subsidiaries, “Royal Gold,” the “Company,” “we,” “us,” or “our”) reports net income of $47.2 million, or $0.72 per share, for the quarter ended March 31, 2024, (“first quarter”) on revenue of $148.9 million and operating cash flow of $138.3 million. Adjusted net income¹ was $59.8 million, or $0.91 per share.

First Quarter 2024 Highlights:

• Solid financial results with revenue of $148.9 million, operating cash flow of $138.3 million and earnings of $47.2 million
• Revenue split: 75% gold, 13% silver, 9% copper
• Sales volume of 71,900 GEOs²
• Sustained high adjusted EBITDA margin¹ of 79%
• Repaid $100 million of debt, reducing total debt to $150 million
• Total available liquidity increased to $966 million
• Paid quarterly dividend of $0.40 per share, a 7% increase over the prior year period
• Additional Mount Milligan agreement provides near-term consideration in return for long-term support that allows for an extended mine life
• Received repayment of $37.0 million Khoemacau loan facility

Post Quarter Events:

• Repaid $75 million of debt, further reducing total debt to $75 million

“Our portfolio performed well during the first quarter and we started 2024 off on a positive note,” commented Bill Heissenbuttel, President and CEO of Royal Gold. “Our low and stable cost structure meant that we were able to benefit from the record gold price and our underlying cash flow from operations was solid for the quarter. In addition, we received payments from Centerra and MMG during the quarter, which combined with our cash flow, allowed us to repay $175 million of debt already in 2024. We have now rebuilt our available liquidity to approximately $1 billion.”

“During the quarter we also announced an additional agreement with Centerra that we expect will unlock significant long-term value from the large resource base around the Mount Milligan mine,” continued Mr. Heissenbuttel. “We were able to complete a mutually beneficial agreement, and we are looking forward to seeing how Centerra progresses its plans to surface the upside at Mount Milligan and add to the mine life beyond 2035.”

1		Adjusted net income, adjusted net income per share and adjusted EBITDA margin are non-GAAP financial measures. See Schedule A of this press release for additional information, including a detailed description of adjustments to net income.
2		See Schedule A of this press release for additional information about gold equivalent ounces, or GEOs.

Recent Portfolio Developments

Principal Property Updates

Notable recent updates as reported by the operators of our Principal Properties include:

Preliminary Economic Assessment Underway to Extend Mount Milligan Mine Life Beyond 2035

On February 13, 2024, we entered into a Processing Cost Support Agreement with Centerra Gold Inc. (“Centerra”) that provides near-term cash and gold consideration to Royal Gold in return for long-term cost support that allows an extension of the mine life of Mount Milligan to 2035 and the potential for future increases in mine life beyond 2035. With the announcement of the agreement, Centerra described a three-part strategy to further increase the Mount Milligan mine life that includes the completion of a Preliminary Economic Assessment (“PEA”) in the first half of 2025 to evaluate mine life extension opportunities, further exploration drilling, and a site optimization program that began in the fourth quarter of 2023.

On February 22, 2024, Centerra confirmed 2024 production guidance for Mount Milligan. Centerra expects gold production of between 180,000 and 200,000 ounces, which, at the midpoint, is 23% higher than last year’s production. This is mainly due to mine sequencing and higher gold grades. Copper production is expected to be between 55 million and 65 million pounds, which, at the midpoint, is 3% lower than last year’s production. Both gold and copper production are expected to be evenly weighted throughout the year. Royal Gold receives gold stream deliveries based on a 97% payability factor, and copper stream deliveries based on a payability factor of the greater of 95% or the actual payability rate received by Centerra. There is an approximate 5 month lag between mine site production and stream deliveries to Royal Gold due to the normal-course timing of shipments and deliveries.

Official Opening of the Goldrush Mine and Overall Production On Track to Deliver on 2024 Guidance at the Cortez Complex

On April 25, 2024, Barrick Gold Corporation (“Barrick”) announced the official opening of the Goldrush underground mine in the Cortez Complex. Barrick reported that Goldrush is on track to produce 130,000 ounces of gold this year, with ramp-up to progressively increase each quarter over 2024, and is expected to reach commercial production in 2026. Barrick expects Goldrush to have a 24-year mine life, with production expected to grow to approximately 400,000 ounces per year by 2028 (100% basis).

On May 1, 2024, Barrick further reported that production from the Cortez Complex delivered on plan in the first quarter. Barrick continues to expect 2024 gold production of approximately 620,000 to 680,000 ounces (100% basis), with production affected by lower oxide grades and tonnes at Crossroads, over which Royal Gold has an approximate 9.4% GSR equivalent royalty rate, partially offset by a higher contribution from Goldrush, over which Royal Gold has an approximate 1.6% GSR royalty rate.

Plant Expansion Construction Complete with Ramp-Up to Commence at Pueblo Viejo

On May 1, 2024, Barrick provided an update on the plant expansion and mine life extension project at Pueblo Viejo. According to Barrick, process plant construction has been completed with the focus now on increasing production from the crushing and milling circuits and operational stability and recovery improvements in the flotation circuit. Reconstruction of the ore stockpile feed conveyor was completed in April, which will allow the plant to commence throughput ramp-up in the second quarter. With respect to the mine life extension project, Barrick reported that the technical and social studies for additional tailings storage capacity at the El Naranjo facility continued to advance and the feasibility study is due for completion in the third quarter of 2024.

Silver stream deliveries were approximately 218,200 ounces for the first quarter compared to 362,300 ounces for the prior year quarter, and an additional 123,300 ounces of silver deliveries were deferred during the current period. As of March 31, 2024, approximately 966,000 ounces remain deferred, and the timing for the delivery of the entire deferred amount is uncertain. We expect that silver recoveries could remain highly variable and material deliveries of deferred silver ounces are not expected until the expanded plant is running at full production levels. We do not expect material deliveries of the outstanding balance of deferred silver in 2024.

Barrick continues to expect its share of 2024 gold production to remain in the range of 420,000 to 490,000 ounces for 2024.

Continued Water Restrictions at Andacollo

On April 25, 2024, Teck reported that Andacollo continues to face extreme drought conditions, and continued water restrictions resulted in lower tonnes milled in the first quarter. According to Teck, it continues to assess steps that can be taken to mitigate these water restriction risks, with a solution expected to be in place in 2025. As a result, and with the benefit of higher-grade ore, production is expected to increase between 2025 and 2027, compared to 2024. Gold and copper grades are relatively well correlated at Andacollo and gold production tends to track copper production.

Teck expects that 2024 gold production from Andacollo will range between 18,000 and 24,000 ounces. Royal Gold receives stream deliveries based on a fixed payability factor of 89%, and there is an approximate 5 month lag between mine site production and stream deliveries to Royal Gold due to the normal-course timing of shipments and deliveries.

Peñasquito Gold Production Weighted to Second Half of 2024

On April 25, 2024, Newmont reported that it expects gold production at the Peñasquito mine in Mexico to be weighted approximately 60% toward the second half of 2024, with higher gold production from the Peñasco pit in the fourth quarter of 2024 and into 2025.

Newmont also reported that there is no change to the 2024 production guidance at Peñasquito of 250,000 ounces of gold, 34 million ounces of silver, 95,000 tonnes of lead and 245,000 tonnes of zinc.

Completion of Ownership Change of Khoemacau and Repayment of Debt Facility

On March 22, 2024, MMG Limited (“MMG”) completed its acquisition of Cuprous Capital, the parent company that owns the Khoemacau mine in Botswana. As part of the transaction, MMG repaid a subordinated debt facility that Royal Gold made available to the previous owner during construction. Including capitalized interest, the amount repaid was approximately $37.0 million.

MMG expects payable silver production in 2024 at Khoemacau to range between 1.2 to 1.4 million ounces, which is below the average life of mine production of 1.8 to 2.0 million ounces per year due to lower silver grades in the upper portion of the Zone 5 deposit and the top-down mining sequence. Royal Gold receives stream deliveries based on a fixed payability factor of 90%.

Other Property Updates

Notable recent updates as reported by the operators of other select portfolio assets include:

Producing Properties

Bellevue (2% NSR royalty): Bellevue Gold Limited (“Bellevue”) announced on May 7, 2024, that commercial production has been declared at the Bellevue Gold mine in Western Australia. Bellevue reported that gold production of 37,338 ounces in the first quarter positions the company to achieve production guidance of 75,000-85,000 ounces for the six months ended June 30, 2024, and expects to publish fiscal year 2025 guidance as part of its multi-year outlook in July 2024. Bellevue also announced that a scoping study has commenced to review expanding the plant to 1.5 million tonnes per year, a 50% increase, with completion expected in the first half of calendar 2025.

Gwalia (1.5% NSR royalty) and Ulysses (0.9% NSR royalty): On April 18, 2024, Genesis Minerals Limited (“Genesis”), owner of the Gwalia mine and Ulysses development project in Western Australia, provided an update on the production growth strategy to fill the under-utilized Gwalia mill. At the Gwalia mine, Genesis reported that paste-filling of multiple large stopes in the “Heart of Gold” was completed during the first quarter, which should allow for production from adjacent high-grade stopes during the June 2024 quarter. At Ulysses, Genesis reported that the access portal was cut in the first quarter and the decline had advanced approximately 42 meters. Genesis is targeting production from Gwalia of approximately 120,000 to 140,000 ounces per year, and the ramp-up of the shallow Ulysses underground mine has the potential to increase production to approximately 195,000 ounces per year.

Wharf (2% GSR royalty): On February 21, 2024, Coeur Mining, Inc. (“Coeur”) provided 2024 gold production guidance for the Wharf mine in South Dakota of 86,000 to 96,000 ounces. Coeur also reported that exploration at Wharf in 2024 is focused on adding mineral reserves.

Xavantina (25% gold stream): On May 7, 2024, Ero Copper Corp. (“Ero”) announced that 2024 gold production guidance for the Xavantina mine in Brazil is increasing to 60,000 to 65,000 ounces from the previous range of 55,000 to 60,000 ounces. According to Ero, record first quarter gold production was driven by favorable grade reconciliations that have continued into the current quarter, and while this trend may continue, Ero is projecting a reversion to long-term block model grades for planned mining areas in the second half of 2024.

Development and Evaluation Properties

Côté Gold (1% NSR royalty): IAMGOLD Corporation (“IAMGOLD”) reported achievement of the first gold pour at the Côté Gold Project in Ontario on March 31, 2024, with the next step focused on the ramp up of the operation to commercial production in the third quarter of 2024. Royal Gold’s royalty covers approximately 70% of the resource area at the Côté Gold Project.

Fourmile (approximate 1.6% GSR royalty): Barrick provided an update of activity at the Fourmile Project in the Cortez Complex in Nevada on May 1, 2024. Barrick is targeting the extension of the existing mineral resources through the Sophia and Dorothy targets and assessing options for an independent exploration decline. Barrick is planning to spend approximately $40 million in 2024 on drilling, evaluation and modeling with the intention to commence a pre-feasibility study at the end of 2024.

Mara Rosa (1.0% NSR and 1.75% NSR royalties): On April 24, 2024, Hochschild Mining PLC (“Hochschild”) provided an update on the Mara Rosa Project in Brazil. According to Hochschild, Mara Rosa produced approximately 1,060 ounces of gold in the first quarter following the first gold pour on February 21, 2024, and commercial production is expected to be achieved in the next few weeks. Hochschild previously provided 2024 gold production guidance of 83,000 to 93,000, and is targeting production of approximately 100,000 ounces per year for the first four years of operations.

Great Bear (2% NSR royalty): Kinross Gold Corporation (“Kinross”) provided an update on activity at the Great Bear Project in Ontario on May 7, 2024. Kinross reported that recent exploration results show the extension of mineralization at depth across multiple zones. Kinross also reported that it continues to advance technical studies and is on track to release a PEA in the second half of 2024, and expects to file its Impact Statement with permitting authorities in the first half of 2025.

Manh Choh (3% NSR royalty and 28% NSR royalty on silver): According to an update on May 7, 2024, provided by Kinross, the operator and 70% owner of the Manh Choh Project in Alaska, ore and waste mining is ongoing and transportation of ore to the Fort Knox mine, where the ore will be processed, continues to ramp up. Kinross reported that it is on track for first production from Manh Choh early in the third quarter of 2024.

First Quarter 2024 Overview

In the first quarter, we recorded net income and comprehensive income of $47.2 million, or $0.72 per basic and diluted share, as compared to net income of $63.9 million, or $0.97 per basic and diluted share, for the three months ended March 31, 2023. The decrease in net income was primarily attributable to lower revenue and higher income tax expense, as discussed below.

For the first quarter, we recognized total revenue of $148.9 million, comprised of stream revenue of $102.5 million and royalty revenue of $46.4 million at an average gold price of $2,070 per ounce, an average silver price of $23.34 per ounce and an average copper price of $3.83 per pound. This is compared to total revenue of $170.4 million for the three months ended March 31, 2023, comprised of stream revenue of $115.0 million and royalty revenue of $55.4 million, at an average gold price of $1,890 per ounce, an average silver price of $22.55 per ounce and an average copper price of $4.05 per pound.

The decrease in our total revenue resulted primarily from lower gold production at the Cortez Legacy Zone, lower gold and copper sales at Mount Milligan and lower gold and silver sales at Pueblo Viejo. These decreases were partially offset by higher average gold and silver prices and higher gold sales from Wassa and Xavantina when compared to the prior year period.

Cost of sales, which excludes depreciation, depletion and amortization (“DD&A”), decreased to $21.8 million for the three months ended March 31, 2024, from $25.0 million for the three months ended March 31, 2023. The decrease, when compared to the prior year quarter, was primarily due to lower gold and copper sales at Mount Milligan. Cost of sales is specific to our stream agreements and is the result of our purchase of metal for a cash payment that, in most cases, is a set contractual percentage of the spot price.

DD&A decreased to $38.8 million for the first quarter, from $46.3 million for the three months ended March 31, 2023. The decrease was primarily due to lower depletion rates and lower gold and copper sales at Mount Milligan in the first quarter. The decrease was also due to lower gold production at the Cortez Legacy Zone compared to the prior year period.

Interest and other expense decreased to $4.6 million for the first quarter, from $9.2 million for the three months ended March 31, 2023. The decrease was primarily due to lower interest expense as a result of lower average amounts outstanding under our revolving credit facility compared to the prior year period. We had $150 million outstanding under our revolving credit facility as of March 31, 2024, compared to $500 million outstanding as of March 31, 2023. The all-in borrowing rate under our revolving credit facility was 6.5% as of March 31, 2024, compared to 6.2% for the comparable prior year period.

For the first quarter, we recorded income tax expense of $27.0 million, compared with income tax expense of $15.9 million for the three months ended March 31, 2023. The income tax expense resulted in an effective tax rate of 36.4% in the current period, compared with 19.9% for the three months ended March 31, 2023. The first quarter included a $13.0 million discrete U.S. GILTI income tax expense related to consideration received from the Mount Milligan Cost Support Agreement.

Net cash provided by operating activities totaled $138.3 million for the first quarter, compared to $108.7 million for the three months ended March 31, 2023. The increase, when compared to the prior year period, was primarily due to cash proceeds of $24.5 million received for the Mount Milligan Cost Support Agreement and $12.0 million of interest from the repayment of the Khoemacau debt facility. This increase was partially offset by lower cash receipts from the stream and royalty segments when compared to the prior year period.

Net cash provided by investing activities totaled $23.6 million for the first quarter, compared to net cash used in investing activities of $0.2 million for the three months ended March 31, 2023. The change from the comparable prior year period was primarily due to the Khoemacau debt facility principal repayment of $25 million.

Other Corporate Updates

Total Available Liquidity Increases to Approximately $966 Million at the end of the First Quarter

On March 6, 2024, we repaid $100 million of outstanding borrowings on the $1 billion revolving credit facility, resulting in $150 million outstanding and $850 million available as of March 31, 2024. Total liquidity at the end of the first quarter increased to approximately $966 million, which consisted of $116 million of working capital and the $850 million undrawn amount available under the revolving credit facility.

After the end of the first quarter, we repaid a further $75 million of outstanding borrowings on the credit facility from cash flow and the proceeds of the repayment of the Khoemacau debt facility as described above. These payments were $25 million on April 8, 2024, and $50 million on May 8, 2024, reducing the outstanding revolver balance to $75 million.

Property Highlights

A breakdown of revenue for the Company’s stream and royalty portfolio can be found on Table 1 for the quarters ended March 31, 2024 and March 31, 2023. Table 2 shows stream metal sales and metal sales attributable to the Company’s royalty interests for the Company’s principal stream and royalty properties. Table 3 shows Royal Gold’s 2024 sales volume guidance and year to date sales volume achieved. Stream segment purchases and sales for the quarters ended March 31, 2024 and March 31, 2023 and inventories for March 31, 2024 and December 31, 2023 can be found on Table 4. Highlights at certain of the Company’s principal producing and development properties during the quarter ended March 31, 2024, compared to the quarter ended March 31, 2023, are detailed in the Quarterly Report on Form 10-Q.

CORPORATE PROFILE

Royal Gold is a precious metals stream and royalty company engaged in the acquisition and management of precious metal streams, royalties and similar production-based interests. As of March 31, 2024, the Company owned interests on 177 properties on five continents, including interests on 37 producing mines and 24 development stage projects. Royal Gold is publicly traded on the Nasdaq Global Select Market under the symbol “RGLD.” The Company’s website is located at www.royalgold.com.

For further information, please contact:		First Quarter 2024 Call Information:
Alistair Baker		Dial-In Numbers:	844-200-6205 (U.S.); toll free
Senior Vice President, Investor Relations and Business Development			833-950-0062 (Canada); toll free 646-904-5544 (International)
(303) 573-1660		Access Code:	251350
Note: Management’s conference call reviewing the first quarter 2024 results will be held on Thursday, May 9, 2024, at 12:00 pm Eastern Time (10:00 am Mountain Time). The call will be webcast and archived on the Company’s website for a limited time.		Webcast URL:	www.royalgold.com under Investors, Events & Presentations

Additional Investor Information: Royal Gold routinely posts important information, including information about upcoming investor presentations and press releases, on its website under the Investors tab. Investors and other interested parties are encouraged to enroll at www.royalgold.com to receive automatic email alerts for new postings.

Forward-Looking Statements: This press release includes “forward-looking statements” within the meaning of U.S. federal securities laws. Forward-looking statements are any statements other than statements of historical fact. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from these statements. Forward-looking statements are often identified by words like “will,” “may,” “could,” “should,” “would,” “believe,” “estimate,” “expect,” “anticipate,” “plan,” “forecast,” “potential,” “intend,” “continue,” “project,” or negatives of these words or similar expressions. Forward-looking statements include, among others, statements about the following: our expected financial performance and outlook, including our 2024 guidance; operators’ expected operating and financial performance, including production, deliveries, mine plans, environmental and feasibility studies, technical reports, mine facilities, estimates of mineral resources and mineral reserves, developments relating to their properties and operations, and asset assessments; and the timing of royalty payments and metal deliveries, including deferred amounts at Pueblo Viejo.

Factors that could cause actual results to differ materially from these forward-looking statements include, among others, the following: a lower-price environment for gold, silver, copper or other metals; operating activities or financial performance of properties on which we hold stream or royalty interests, including variations between actual and forecasted performance, operators’ ability to complete projects on schedule and as planned, 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, other adverse government or court actions, or operational disruptions; contractual issues involving our stream or royalty agreements; the timing of deliveries of metals from operators and our subsequent sales of metal; risks associated with doing business in foreign countries; increased competition for stream and royalty interests; environmental risks, including those caused by climate change; 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 factors described in our reports filed with the Securities and Exchange Commission, including Item 1A.

Contacts

Alistair Baker

Senior Vice President, Investor Relations and Business Development

(303) 573-1660

Read full story here