FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
COMMISSION FILE NUMBER 0-5664
ROYAL GOLD, INC.
----------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 84-0835164
------------------------------ ---------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
SUITE 1000
1660 WYNKOOP STREET
DENVER, COLORADO 80202-1132
-------------------------------------- --------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(303) 573-1660
--------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Not Applicable
--------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED
SINCE LAST REPORT)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months, and
(2) has been subject to such filing requirements for the past 90
days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
OUTSTANDING AT
CLASS OF COMMON STOCK MAY 1, 1997
--------------------- ---------------
$.01 PAR VALUE 15,779,276 SHARES
ROYAL GOLD, INC.
INDEX
PAGE
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets ................... 3-4
Consolidated Statements of Operations ......... 5-6
Consolidated Statements of Cash Flows ......... 7-8
Notes to Consolidated Financial
Statements .................................. 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ................................... 15
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K .............. 19
SIGNATURES ................................................ 20
Cautionary "Safe Harbor" Statement Under the Private Securities
Litigation Reform Act of 1995. With the exception of historical
matters, the matters discussed in this report 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 planned levels of exploration and other
expenditures, anticipated mine lives, timing of production and
schedules for development. Factors that could cause actual results
to differ materially include, among others, decisions and
activities of Cortez regarding the Crescent Pit, Pipeline and South
Pipeline, unanticipated grade, geological, metallurgical,
processing or other problems, conclusions of feasibility studies,
changes in project parameters as plans continue to be refined, the
timing of receipt of governmental permits, the failure of plant,
equipment or processes to operate in accordance with specifications
or expectations, results of current exploration activities,
accidents, delays in start-up dates, environmental costs and risks,
changes in gold prices, as well as other factors. 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.
ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
------------------------------
March 31, June 30,
1997 1996
------------------------------
Current Assets
Cash and equivalents $ 4,382,677 $ 3,308,292
Marketable securities 4,998,135 5,015,000
Receivables
Trade and other 371,890 336,162
Royalties receivable in gold 1,010,993 1,637,573
Gold inventory 1,997,651 1,205,406
Prepaid expenses and other 164,404 131,718
Deferred income tax benefit 25,000 25,000
---------- ----------
Total current assets 12,950,750 11,659,151
---------- ----------
Property and equipment, at cost
Mineral properties 3,609,454 1,832,091
Furniture, equipment and improvements 803,833 756,016
---------- ----------
4,413,287 2,588,107
---------- ----------
Less accumulated depreciation,
depletion and amortization (970,359) (931,997)
---------- ----------
Net property and equipment 3,442,928 1,656,110
---------- ----------
Other Assets
Restricted investments and other 22,767 22,767
Deferred income tax benefit 725,000 725,000
---------- ----------
Total other assets 747,767 747,767
---------- ----------
$ 17,141,445 $ 14,063,028
========== ==========
The accompanying notes are an integral part of
these consolidated financial statements.
3
ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------
March 31, June 30,
1997 1996
-------------------------------
Current Liabilities
Accounts payable $ 363,666 $ 487,252
Accrued liabilities
Post retirement benefits 26,400 26,400
Other 66,956 15,877
---------- ----------
Total current liabilities 457,022 529,529
---------- ----------
Post retirement benefit liabilities 105,749 110,549
Commitments and contingencies
(Note 5)
Stockholders' equity
Common stock, $.01 par value,
authorized 40,000,000 shares;
issued 15,779,302 and 15,478,152
shares, respectively 157,793 154,782
Additional paid-in capital 47,377,014 47,200,643
Accumulated deficit (30,880,960) (33,852,502)
---------- ----------
16,653,847 13,502,923
---------- ----------
Less treasury stock, at cost
(15,026 and 15,986 shares,
respectively) (75,173) (79,973)
---------- ----------
Total stockholders' equity 16,578,847 13,422,950
---------- ----------
$17,141,445 $ 14,063,028
========== ==========
The accompanying notes are an integral part of
these consolidated financial statements.
4
ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended
March 31,
---------------------------
1997 1996
---------------------------
Royalty income $ 1,010,504 $ 807,300
Consulting revenues 3,000 3,000
Costs and expenses
Costs of operations 107,689 57,902
General and administrative 375,650 306,361
Direct costs of consulting revenues 1,065 0
Exploration 282,830 286,162
Lease maintenance and holding costs 58,668 114,548
Depreciation and depletion 12,035 53,107
---------- ----------
Total costs and expenses 837,937 818,080
---------- ----------
Operating income (loss) 175,567 (7,780)
---------- ----------
Interest and other income 118,955 136,999
Gain (loss) on marketable securities (3,615) 31
---------- ----------
Pre-tax income 290,907 129,250
---------- ----------
Income tax expense 0 0
---------- ----------
Net income $ 290,907 $ 129,250
========== ==========
Net income per share $ 0.02 $ 0.01
========== ==========
Weighted average shares outstanding 15,688,623 14,745,831
The accompanying notes are an integral part of
these consolidated financial statements.
5
ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the nine months ended
March 31,
----------------------------
1997 1996
----------------------------
Royalty income $ 5,620,773 $ 2,022,923
Consulting revenues 15,585 28,544
Costs and expenses
Costs of operations 447,696 172,452
General and administrative 1,167,336 913,432
Direct costs of consulting revenues 5,796 13,115
Exploration 1,041,625 1,185,412
Lease maintenance and holding costs 263,450 273,287
Depreciation and depletion 38,362 142,175
---------- ----------
Total costs and expenses 2,964,265 2,699,873
---------- ---------
Operating income (loss) 2,672,093 (648,406)
Interest and other income 295,232 352,682
Gain (loss) on marketable securities 4,197 (13,476)
---------- ----------
Pre-tax income (loss) 2,971,522 (309,200)
---------- ----------
Income tax expense 0 0
---------- ----------
Net income (loss) $ 2,971,522 $ (309,200)
========== ==========
Net income (loss) per share $ 0.19 $ (0.02)
Weighted average shares outstanding 15,557,314 14,671,572
The accompanying notes are an integral part of
these consolidated financial statements.
6
ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the nine months ended
March 31,
------------------------
1997 1996
-------------------------
Cash flows from operating activities
Net income (loss) $2,971,522 $ (309,200)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and depletion 38,362 142,175
(Gain) loss on marketable securities (4,197) 13,476
Noncash exploration expense 13,520 0
(Increase) decrease in:
Trade and other receivables 248,728 (3,290)
Marketable securities 21,062 (58,948)
Royalties receivable in gold 626,580 (285,437)
Inventory (792,245) (826,366)
Prepaid expenses and other (317,142) (44,646)
Increase (decrease) in:
Accounts payable and accrued liabilities (72,507) (26,875)
Post retirement liabilities (4,800) (4,800)
---------- ----------
Total Adjustments (242,639) (1,094,711)
Net cash provided by (used in) operating ---------- ----------
activities 2,728,883 (1,403,911)
---------- ----------
Cash flows from investing activities
Capital expenditures for
property and equipment (1,825,180) (1,112,359)
Net cash provided by (used in) investing ---------- ----------
activities (1,825,180) (1,112,359)
---------- ----------
(Continued)
The accompanying notes are an integral part of
these consolidated financial statements.
7
ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
For the nine months ended
March 31,
---------------------------
1997 1996
---------------------------
Cash flows from financing activities
Proceeds from issuance of common stock $ 170,682 $ 2,895,885
Net cash provided by (used in) financing ---------- ----------
activities 170,682 2,895,885
---------- ----------
Net increase (decrease) in cash and
equivalents 1,074,385 379,615
Cash and equivalents at beginning
of period 3,308,292 3,424,094
---------- ----------
Cash and equivalents at end of period $ 4,382,677 $ 3,803,709
========= ==========
The accompanying notes are an integral part of
these consolidated financial statements
8
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
For a more complete understanding of the business and operations of Royal
Gold, Inc., please refer to the Report on Form 10-K of Royal Gold, Inc.
for the annual period ended June 30, 1996.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. Therefore, it is
suggested that these financial statements be read in connection with
the financial statements and the notes included in the Company's
audited consolidated financial statements as of June 30, 1996.
The information in this report reflects all adjustments which, in the
opinion of management, are necessary to express a fair statement of
results for the periods presented. All such adjustments are of a
normal recurring nature. The results of operations for the period
ended March 31, 1997 are not necessarily indicative of the results to
be expected for the full fiscal year.
Certain accounts in the prior period financial statements have been
reclassified for comparative purposes to conform with the presentation
in the current period financial statements.
1. PROPERTY AND EQUIPMENT
Property and equipment consists of the following components at
March 31, 1997, and June 30, 1996:
March 31, June 30,
1997 1996
---------- ----------
Mineral Properties:
South Pipeline-
Net Profits Interest $ - $ -
South Pipeline-
Capped Royalty - 3,831
Long Valley 3,214,344 1,436,981
Camp Bird 120,110 120,110
---------- ----------
3,334,454 1,560,922
========== ==========
Office furniture, equipment
and improvements 108,474 95,188
---------- ----------
Net property and equipment $3,442,928 $1,656,110
========== ==========
As discussed in the following paragraphs, the Company is conducting
activity on substantially all of its mineral properties. The
results of these activities to date have not resulted in any
conclusions that the carrying value of these properties will or
9
will not be recoverable by charges against income from future
mining operations or a subsequent sale of the properties.
Presented below is a discussion of the status of each of the
Company's significant mineral properties.
A. SOUTH PIPELINE (CRESCENT VALLEY)
The South Pipeline property is located on the GAS claim block
containing sediment-hosted gold deposits located in Lander County,
Nevada. Pursuant to an agreement dated September 18, 1992,
the Company holds a 20% net profits interest in this project.
Production is continuing at the Crescent Pit portion of the
project, while the remainder of the project is in the
exploration and development stage. Cortez Gold Mines
("Cortez") is a joint venture of Placer Cortez Inc. and
Kennecott Exploration (Australia) Ltd. Placer Domes U.S. Inc.
("PDUS") is the operator of the joint venture.
Cortez began mining at the Crescent Pit, which is located on
a small portion of the GAS claims, in June 1994. In September
1994, sufficient quantities of mill-grade oxide ore had been
accumulated to start processing and Cortez commenced
production of gold. Initially, mill-grade oxide ore from the
Crescent Pit was processed at the Cortez Mill. In March 1997,
the new Pipeline mill, was commissioned and began processing
mill-grade ore from the Crescent Pit.
Production of heap leach material from the Crescent Pit began
in August 1995. This heap leach material consists of oxide ore
averaging 0.022 ounces per ton.
At March 31, 1997, 376,000 tons of mill-grade material with an
average grade of 0.084 opt and 592,900 tons of heap leach
material with an average grade of 0.023 opt were stockpiled
for future processing.
During the quarter ended March 31, 1997, Cortez milled 335,000
tons of oxide material from the Crescent Pit. This material
had an average grade of 0.118 ounces of gold per ton and
yielded 34,656 ounces of gold. This material was processed at
both the Cortez mill and the new Pipeline Mill. The Pipeline
mill was commissioned in March and, during the month ended
March 31, 1997, that facility processed 168,000 tons of
Crescent Pit material with an average grade of 0.078 opt. In
addition, during the quarter ended March 31, 1997, Cortez
10
produced 3,748 ounces of gold from the Crescent Pit heap leach
operation. Processing of Crescent Pit mill-grade ore should
be completed by mid-June of this year.
In September 1996, Cortez filed its "1996 Amendment to the
Pipeline Plan of Operations for the South Pipeline Project"
with the Bureau of Land Management. (Pipeline is a property
that is operated by Cortez and that adjoins South Pipeline to
the north. Royal Gold has no interest in the Pipeline
deposit.) In this amendment, Cortez stated that the pre-
stripping of the open pit mine at South Pipeline is expected
to take about 18 months and will begin at the end of the third
year of mining activity at Pipeline. The mine life of
Pipeline is estimated to be five plus years after
commissioning of a mill with throughput of 10,000 tons per day
(the Pipeline mill). Cortez also stated that South Pipeline
ore will be processed after mining of the Pipeline deposit has
been completed. According to the amendment, the majority of
the South Pipeline Project ore will be processed in the
Pipeline processing facilities, extending the Pipeline / South
Pipeline Project life by an additional eight years. Timing of
production at the South Pipeline deposit remains subject to
permitting and development decisions of the operator.
Although Royal Gold holds a passive interest in the South
Pipeline Project, it has, under the September 18, 1992
agreement, certain rights with respect to the rate and manner
of production and processing of ore from the South Pipeline
Project. Royal Gold has taken appropriate steps to preserve
these rights, and, in view of Cortez' publicly-announced plans
for phased development of the South Pipeline Project, Royal
Gold has communicated its views with respect to the current
development schedule to Placer Dome U.S. Inc. Discussions
have been initiated and are ongoing between Placer Dome U.S.
and Royal Gold regarding various mechanisms that may
accommodate Royal Gold's rights, while preserving Cortez'
flexibility to establish an integrated mine development scheme
for Pipeline and South Pipeline.
As of May 2, 1997, Cortez has advised the Company that it is
revising its life-of-mine plan for the entire Cortez
development, and that it expects that such revision will
indicate improved economics for South Pipeline because of
anticipated a) reductions in mining cost parameters;
b) revisions in mill- grade and heap leach-grade cut-off; c)
increases in the heap leach recovery percentage resulting in
increased heap leach production; and d)increases in reserves
attributable additional drilling PDUS has indicated that
11
this life-of-mine plan should be completed by the end of June
1997.
B. SOUTH PIPELINE - CAPPED ROYALTY
In October 1994, the Company purchased an additional royalty
interest on the South Pipeline project from Western Mining
Corporation for $275,000. The royalty interest was equivalent
to a 0.75 percent net smelter return production royalty,
capped at $375,000. The Company has received all amounts
payable from this royalty.
C. LONG VALLEY
Long Valley is a development stage project in Mono County,
California. Pursuant to an agreement, between the Company and
Standard Industrial Minerals, Inc., Royal Gold is entitled,
through December 31, 1997, to acquire Standard Industrial
Minerals' interest in the property, upon payment of
$1,000,000. The Option Agreement, which is terminable by the
Company at any time, involved a total of $125,000 in annual
option consideration payments. Up to $100,000 of the payments
(namely, the payments that were made in 1995 and 1996) are
creditable against the option exercise amount.
Following the completion of its 1996 drilling season, the
Company reported that the project contains proven and probable
reserves (using a gold price of $350 per ounce) of
approximately 35.7 million tons, with average grade of 0.019
ounces of gold per ton ("opt") (at a cut-off grade of 0.01
opt), or approximately 680,000 contained ounces of gold. The
Company further estimated that the total quantity of
mineralized material in the deposit (including the quantity
declared to be proven and probable reserves) is approximately
51.1 million tons at an average grade of 0.019 opt (using a
cut-off grade of 0.01 opt), or approximately 970,000 contained
ounces of gold (contained ounces are calculated before
allowance for processing losses).
D. CAMP BIRD
At March 31, 1997, capitalized costs of $120,000 represent the
Company's ownership of patented mining claims. Management
believes that these claims have value for the mineral
potential as well as for the real estate value.
12
2. INCOME TAXES
At June 30, 1996, the Company had an estimated net operating
loss carryforward for federal income tax purposes of
approximately $25.1 million. If not used, the net operating
loss carryforwards will expire during the years 2001 through
2011.
Based upon the determination of proven gold reserves at the
Crescent Pit of the South Pipeline Project, management has
estimated that is more likely than not that the Company will
have some net future taxable income within the net operating
loss carryforward period and has established a $750,000
deferred tax asset at March 31, 1997.
3. ROYALTIES RECEIVABLE IN GOLD
At March 31, 1997, 2,878 ounces of gold related to the March
31 quarterly production is recorded as a receivable. This
gold was received on May 1, 1997. Royal Gold has exposure
with respect to this receivable to any change in the gold
price between the end of the quarter and the actual receipt of
gold.
4. INVENTORY
Gold inventory on the balance sheet consists of refined gold
bullion stored in safekeeping by the Company's refiner in
Utah. The inventory is carried at market value with
unrealized gains or losses included in the results of
operations for the period. For the March 31 quarter, the
Company recorded a loss of $285,000 related to its gold
inventory. At March 31, 1997, the Company held 5,631 ounces
of gold bullion in inventory.
5. CONTINGENCIES
The operations and activities conducted on the properties in
which the Company holds various interests are subject to
various federal, state, and local laws and regulations
governing protection of the environment. These laws are
continually changing, and are generally becoming more
restrictive. Management believes that the Company is in
material compliance with all applicable laws and regulations.
13
The U.S. Forest Service has advised the Company that all
outstanding reclamation at its Goldstripe project site, except
for post-reclamation groundwater monitoring, has been
satisfied.
6. ACCOUNTING FOR STOCK-BASED COMPENSATION (SFAS NO. 123)
The Company expects to elect the disclosure alternative
proscribed by SFAS No. 123, "Accounting for Stock-Based
Compensation," in accordance with Accounting Principles Board
Opinion ("APB") No. 25, "Accounting for Stock Issued to
Employees" and its various interpretations. Under APB No. 25,
no compensation cost is generally recognized for fixed stock
options for which the exercise price is not less than the
market price of the Company's Common Stock on the grant date.
Under the disclosure alternative of SFAS No. 123, the Company
will disclose on an annual basis, starting with its 1997
fiscal year, its respective pro forma net income and earnings
per share as if the fair value based accounting method of SFAS
No. 123 had been used to account for stock-based compensation
cost for all awards granted by the Company after July 1, 1995.
14
ROYAL GOLD, INC.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Royal Gold is engaged in the acquisition, exploration, development,
and sale of gold properties and in the acquisition of gold royalty
interests.
The Company's primary business strategy is to create and acquire
royalty and other carried ownership interests in gold mining
properties through exploration and development activity (and
subsequent transfer of the operating interest in the subject
properties to other firms), and through the direct acquisition of
such interests. Substantially all of the Company's revenues are and
can be expected to be derived from royalty interests, rather than
from mining operations conducted by the Company.
At March 31, 1997, the Company had a working capital surplus of
$12,493,728. Current assets were $12,950,950, compared to current
liabilities of $457,022, for a current ratio of 28 to 1. This
compares to current assets of $11,659,151, and current liabilities
of $529,529, at June 30, 1996, resulting in a current ratio of 22
to 1. The Company is receiving its full 20% net profits royalty
interest from both mining units at the Crescent Pit.
The Company's liquidity needs are generally being met from its
available cash resources, royalty income, interest income, and the
issuance of common stock. During the third quarter of fiscal 1997,
the Company earned $1,295,449 in royalties from its net profits
interest at South Pipeline. The Company earned $118,955 in
interest income on its cash and marketable securities portfolio.
This marketable securities portfolio is invested in U.S. treasury
notes with maturities of up to fifteen months, has an adjusted cost
basis of $5,003,313, and had a market value, at March 31, 1997, of
$4,998,135.
Management believes its cash resources will be adequate to fund
planned operations for the foreseeable future. The Company has
continued to explore its properties and anticipates continued
exploration activities for the remainder of the year. The
Company's long-term viability is ultimately dependent upon the
successful development and operation of the Company's mineral
interests and the acquisition of additional gold royalties. It can
be anticipated, because of the nature of the business, that
exploration on many of the Company's properties will prove
unsuccessful and that the Company will terminate its interest in
such properties. As significant results are generated at any such
15
property, the Company will reevaluate the property and may
substantially increase or decrease the level of expenditures on
that particular property.
Placer Dome U.S. Inc., the operator of the Cortez Gold Mines joint
venture ("PDUS"), has informed the Company that it has made a
preliminary determination of the mine plan at Cortez, including the
Crescent Pit, for calendar year 1997. This plan indicates that, in
addition to processing Crescent Pit ore at the Cortez mill, PDUS
will process some of the stockpiled Crescent Pit ore at the new
Pipeline mill. In March 1997, Cortez commenced processing Crescent
Pit ore through the Pipeline Mill. With this increase in mill
availability, it is possible that mining and milling at the
Crescent Pit will be essentially completed by mid-year of calendar
year 1997, with some Crescent Pit heap leach production continuing
through the remainder of calendar year 1997. See also Note 1.A. to
the Consolidated Financial Statements.
The Company anticipates that total general and administrative
expenses for fiscal 1997 will be approximately $1,400,000 (revised
from $1,200,000, as disclosed in the 6/30/96 Form 10-K), of which
$1,167,000 has been spent to date. The Company also anticipates
expenditures for exploration and property holding costs to be
approximately $1,500,000 (revised from $1,225,000, as disclosed in
the 6/30/96 Form 10-K), of which $1,305,000 has been spent.
Development expenditures at Long Valley are estimated at $1,900,000
(revised from $1,000,000, as disclosed in the 6/30/96 Form 10-K),
of which $1,800,000 has been spent. This increase in expenditures
at Long Valley is due to encouraging results from drilling
activity. Because of the seasonal nature of the Company's
activities, development, exploration and holding costs are
disproportionately incurred during the nine months ended March 31.
On a prospective basis these amounts could increase or decrease
significantly, based on exploration results and decisions about
releasing or acquiring additional properties, among other factors.
RESULTS OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1997, COMPARED TO THE QUARTER ENDED
MARCH 31, 1996
For the quarter ended March 31, 1997, the Company reported net
income of $287,907, or $.02 per share, as compared to a net income
of $129,250, or $.01 per share, for the quarter ended March 31,
1996.
16
Royalty income for the current quarter of $1,010,504, compared to
$807,300 for the quarter ended March 31, 1996, relates to Royal
Gold's interest in the South Pipeline property. The increase is
attributable to higher throughput at the mill and one month of
processing mill-grade ore at the new Pipeline mill. Included in
the current quarter is a $287,045 loss related to gold inventory.
Costs of Operations increased to $107,689 for the quarter ended
March 31, 1997, compared to $57,902 for the quarter ended March 31,
1996, primarily because of the levy of Nevada Net Proceeds Tax on
the higher revenues from the Crescent Pit.
General and administrative costs of $375,650 for the current
quarter have increased from $306,361 for the quarter ended March
31, 1996, primarily because of increased compensation related to
increased staff size.
Exploration expenditures of $282,830 for the quarter ended March
31, 1997, were level with expenditures of $286,162 for the quarter
ended March 31, 1996, reflecting comparable levels of activity with
the prior year.
Lease maintenance and holding costs decreased from $114,548 for the
quarter ended March 31, 1996, to $58,668 for the quarter ended
March 31, 1997, primarily due to the deferral of a portion of the
holding costs on the Buckhorn South property.
Depreciation, depletion and amortization decreased from $53,107 for
the quarter ended March 31, 1996, to $12,035 for the quarter ended
March 31, 1997, primarily due to depletion expense related to the
cessation of revenues from the South Pipeline Project capped
royalty.
Interest income decreased from $136,999 for the quarter ended March
31, 1996, to $118,955 for the quarter ended March 31, 1997, due to
decreased cash available for investing.
FOR THE NINE MONTHS ENDED MARCH 31, 1997, COMPARED TO THE NINE
MONTHS ENDED MARCH 31, 1996
For the nine months ended March 31, 1997, the Company reported net
income of $2,971,522, or $.19 per share, as compared to a net loss
of $309,200, or $.02 per share, for the nine months ended March 31,
1996.
17
Year to date royalty income of $5,620,773, compared to $2,022,923
for the prior year, relates to Royal Gold's interest in the South
Pipeline property, from which the Company was receiving its full
20% net profits interest for the nine months ended March 31, 1997.
The increase is attributable to higher throughput at the Cortez
mill, commencement of processing at the new Pipeline mill, and the
fact that Royal Gold received its full 20% net profits interest on
heap leach ore for the entirety of the current period. The heap
leach mining unit was in payback during the prior year period.
These increases in revenues were partly offset by a $497,886 loss
on gold inventory related to the decrease in gold price during the
fiscal year.
Costs of Operations increased to $447,696 for the nine months ended
March 31, 1997, compared to $172,452 for the nine months ended
March 31, 1996, primarily because of the levy of Nevada Net
Proceeds Tax on the higher revenues from the Crescent Pit.
General and administrative costs of $1,167,336 for the nine months
ended March 31, 1997 have increased from $913,432 for the nine
months ended March 31, 1996, primarily because of expenditures
incurred for relisting the Company's common stock on the Nasdaq
National Market System, professional fees, and increased
compensation and office expenses.
Exploration expenditures of $1,041,625 for the nine months ended
March 31, 1997, decreased from $1,185,412 for the nine months
ended March 31, 1996, primarily due to a higher level of
exploration activity at the Ferber and Buckhorn South properties in
the prior year period.
Lease maintenance and holding costs of $263,450 for the nine months
ended March 31, 1997, were at a comparable level compared to
$273,287 for the nine months ended March 31, 1996.
Depreciation, depletion and amortization decreased from $142,175
for the nine months ended March 31, 1996, to $38,362 for the nine
months ended March 31, 1997, primarily due to depletion expense
related to the decreased revenues from the South Pipeline Project
capped royalty.
Interest and other income decreased from $352,682 for the nine
months ended March 31, 1996, to $295,232 for the nine months ended
March 31, 1997, primarily due to the lower level of funds available
for investment.
18
PART II: OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ROYAL GOLD, INC.
(Registrant)
Date: May 9, 1997 By: /s/ Stanley Dempsey
Stanley Dempsey
Chairman of the Board and
Chief Executive Officer
Date: May 9, 1997 By: /s/ Thomas A. Loucks
Thomas A. Loucks
Treasurer
(chief financial officer)
20