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Royal Gold reports higher quarterly profit

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(Kitco News) - Streaming and royalty company Royal Gold, Inc. (Nasdaq: RGLD) posted a larger than expected profit during its fiscal third quarter that ended in March, with revenue rising in part due to higher prices of precious metals, the company announced Wednesday.

Adjusted net income climbed to $44.3 million, or 68 cents per share, up from $27.5 million, or 42 cents, in the same quarter of 2019. Special items that were excluded include a loss on changes in the fair value of equity securities of 5 cents per share and a one-time non-cash employee stock-compensation expense of 4 cents per share.

The company reported net income of income of $38.6 million, or 59 cents per share, up from $28.8 million, or 44 cents, in the year-ago period.

Royal Gold reported gold-stream sales of 50,100 ounces during the quarter, up from 48,200 in the year-ago period. Silver sales dipped to 465,700 ounces from 509,800, while copper sales rose to 4.3 million pounds from 2.6 million. Quarter-end inventories included 22,300 gold ounces, 436,000 silver ounces and some 800,000 pounds of copper.

Third-quarter revenue rose to $136.4 million from $109.8 million in the prior-year quarter. The company attributed the increase to higher average gold and silver prices, as well as an increase in gold sales at Andacollo and Pueblo Viejo and higher copper sales at Mount Milligan. These increases were partially offset by lower gold sales at Rainy River and Mount Milligan.

“Our business model, underpinned by a large, diverse and gold-based operating portfolio, has performed well and allowed us to deliver another solid quarter of operating and financial results as unprecedented challenges caused by COVID-19 began to develop,” said Bill Heissenbuttel, president and chief executive officer.

Although the company had a positive cash flow of $99.7 million during the quarter, Royal Gold drew $200 million on its revolving credit facility as a “precautionary measure” amid the pandemic, in case production is suspended at some sites, the CEO said.

“The uncertain economic outlook facing the mining industry more generally may present new business-development opportunities, and our strong balance sheet and continued access to liquidity position us well to take advantage of new opportunities that may become available,” he added.

As of the end of the quarter, Royal Gold listed current assets of $150.6 million and liabilities of $49.8 million, resulting in working capital of $100.8 million.

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