Royal Gold Inc. Reports Operating Results (10-Q)
Royal Gold Inc. has a market cap of $2.12 billion; its shares were traded at around $50.33 with a P/E ratio of 76.3 and P/S ratio of 28.7. The dividend yield of Royal Gold Inc. stocks is 0.7%. Royal Gold Inc. had an annual average earning growth of 25.6% over the past 10 years.RGLD is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, Jim Simons of Renaissance Technologies LLC, NWQ Managers of NWQ Investment Management Co, Paul Tudor Jones of The Tudor Group, Murray Stahl of Horizon Asset Management, Chuck Royce of Royce& Associates.
Highlight of Business Operations:Our financial results are primarily tied to the prices of gold, silver, copper and other metals, as well as production from our producing royalty interests. Royalty revenue for the quarter ended March 31, 2010 was $35.0 million (which includes $0.7 million of non-controlling interests), compared to $20.8 million (which includes $0.3 million of non-controlling interests) for the quarter ended March 31, 2009. For the quarters ended March 31, 2010 and 2009, the price of gold averaged $1,109 and $908 per ounce, respectively, the price of silver averaged $16.93 and $12.60 per ounce, respectively, and the price of copper averaged $3.30 and $1.56 per pound, respectively. For the three months ended March 31, 2010, Royal Gold derived 81% of its total royalty revenue from gold royalties, 3% of its total royalty revenue from silver royalties, 10% of its total royalty revenue from copper royalties and 6% of its total royalty revenue from other metal and energy royalties, compared to 89% of its total royalty revenue from gold royalties, 3% of its total royalty revenue from silver royalties, 7% of its total royalty revenue from copper
Due to the pro-rationing mechanism in the Plan of Arrangement, IRC shareholders who elected all cash consideration received C$4.20 of their consideration in cash (or the US$ equivalent thereof based on the Bank of Canada noon spot rate of $1.0420, as of February 19, 2010, if they elected to receive their cash consideration denominated in US$) and 0.0593 Royal Gold Shares or Exchangeable Shares for each IRC common share properly submitted. IRC shareholders who elected all share consideration received 0.1385 Royal Gold Shares or Exchangeable Shares per IRC common share. Holders who elected or were deemed to have elected a combination of cash and shares have received their proportionate cash and share consideration as pro-rated under the Plan of Arrangement.
Voiseys Bay A 3.0% NSR royalty on the Voiseys Bay nickel-copper-cobalt mine located in Newfoundland and Labrador, Canada and operated by Vale. The Company owns 90% of the 3.0% NSR (or 2.7%) while a non-controlling interest owns the remaining portion of the 3.0% NSR. The Voiseys Bay royalty is currently in production and is classified as a production stage royalty interest on the Companys consolidated balance sheets. The Company recognized approximately $0.6 (which includes $0.1 million of non-controlling interests) million in royalty revenue from the Voiseys Bay royalty since the acquisition of IRC through March 31, 2010;
Proven and probable reserves, as estimated by the operator as of December 31, 2009, for the sulfide portion are 396.6 million tonnes (437.2 million tons) with a grade of 0.42% copper and 0.13 g/t (0.004 ozs/ton) gold. This equates to 1.6 million contained ounces of gold. Reserves were estimated using a copper price of $1.60 per pound and a gold price of $500 per ounce. Gold will be produced as a by-product of copper production, with a gold recovery rate estimated by the operator to be approximately 61%.
The Taparko mine commenced gold production in August 2007 and has contributed approximately $40.8 million in royalty revenue (from TB-GSR1 and TB-GSR2) since production commenced. Gold sales at Taparko for the three months ended March 31, 2010, and March 31, 2009 were approximately 28,795 ounces and 22,963 ounces, respectively. The increase in gold sales during the period was attributable to improved mill throughput, mill availability, grade, and recoveries. Management estimates that, based on Taparkos last two quarters of production and its calendar 2010 production guidance, the $35 million cap associated with TB-GSR1 could be met by the fourth quarter of calendar 2010. Upon achieving the $35 million cap, the TB-GSR1 and TB-GSR2 royalties will terminate and the 2.0% GSR royalty (TB-GSR3) will become effective. The TB-GSR3 royalty covers all gold produced from the Taparko mine.
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, based on March 31, 2010 closing price, is approximately $61.2 million.. The Companys carrying value of its royalty interests at Taparko was approximately $11.2 million as of March 31, 2010. The pledge of High Rivers equity investments will remain in effect until the satisfaction of certain requirements as provided in the construction contract between Somita and its construction contractor, so long as there are no outstanding claims by the Company against the pledged securities.
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