Exhibit 99.1
ROYAL GOLD REPORTS HIGHER REVENUES AND EARNINGS IN SECOND QUARTER
. Revenues increased 18%, boosted by higher gold prices and GSR1
royalty rate step-up to 4.5%
. Earnings per share increased 18% from the prior year quarter to
$0.13
. Free cash flow (a non-GAAP financial measure) equaled 65% of
revenues
DENVER, Feb. 9 /PRNewswire-FirstCall/ -- ROYAL GOLD, INC. (Nasdaq: RGLD;
Toronto: RGL), the leading publicly traded precious metals royalty company,
today announced second quarter fiscal 2005 net income of approximately
$2.6 million or $0.13 per basic share, on royalty revenue of approximately
$6.0 million. This compares to net income for the second quarter of fiscal 2004
of $2.3 million, or $0.11 per basic share, on royalty revenue of approximately
$5.1 million.
Net income for the six-month period ended December 31, 2004, was
approximately $5.1 million, or $0.25 per basic share, on royalty revenue of
approximately $12.0 million. This compares to net income of approximately
$3.6 million, or $0.17 per basic share, for the six-month period ended
December 31, 2003, on royalty revenue of approximately $9.3 million.
"Royal Gold's royalty-based business model continues to perform
extremely well due to higher gold prices and our sliding-scale royalties," said
Stanley Dempsey, Chairman & CEO. "Our flagship royalties are generating
significant amounts of free cash flow, our balance sheet is solid and we are
focused on the pursuit of our growth strategy. We are working toward our goal of
increasing the size of the Company through new royalty generation and the
acquisition of existing royalties."
Free cash flow for the second quarter of fiscal 2005 was approximately
$3.9 million, or 65% of revenues. For the six-month period ended December 31,
2004, free cash flow was approximately $8.1 million, or 68% of revenues. The
Company defines free cash flow, a non-GAAP financial measure, as operating
income plus depreciation, depletion and amortization, non-cash charges and any
impairment of mining assets (see, Schedule A-Reconciliation).
At December 31, 2004, the Company had a working capital surplus of
approximately $46.4 million. Current assets were approximately $50.4 million,
compared to current liabilities of approximately $4.0 million translating into a
current ratio of nearly 13 to 1.
ROYALTY PORTFOLIO REVIEW
Pipeline Mining Complex (Lander County, Nevada)
The Company owns two sliding-scale gross smelter return ("GSR1" and
"GSR2") royalties, a fixed rate gross smelter return ("GSR3") royalty, and a net
value return ("NVR1") royalty on the Pipeline Mining Complex, in Lander County,
Nevada. The GSR1 royalty covers the current mine footprint, and the GSR2 royalty
covers any reserves that are developed on the claim block lying outside the
current mine footprint. The GSR2 royalty rate is 80% higher than the GSR1, at
all gold prices. The GSR3 royalty is a 0.71% fixed rate royalty for the life of
the mine. The 0.39% NVR1 royalty covers production from the
GAS Claims, an area of interest of approximately 4,000 acres including the South
Pipeline deposit and Crossroads area, but not including the Pipeline pit. The
NVR1 royalty is calculated by deducting processing-related costs, but is not
burdened by mining costs.
The Pipeline Mining Complex is owned by the Cortez Joint Venture, a
joint venture between Placer Cortez Inc. (60%), a subsidiary of Placer Dome
Inc., and Kennecott Exploration (Australia) Ltd. (40%), a subsidiary of Rio
Tinto.
During the second quarter of fiscal 2005, the Pipeline Mining Complex
produced 218,682 ounces of gold providing royalty revenue of $5.1 million,
compared to 217,866 ounces of gold produced, providing royalty revenue of
$4.3 million for the same quarter in fiscal 2004. This 19% increase in quarterly
royalty revenue was driven by a two-step increase in the GSR1 sliding-scale
rate.
During the quarter, the average gold price was $434 per ounce resulting
in a royalty rate of 4.5% under GSR1, compared to an average gold price of $391
per ounce and a royalty rate of 4.0% for the same period in fiscal 2004. Current
production from the Pipeline Mining Complex is subject to GSR1, GSR3 and NVR1
royalties.
Leeville Project (Eureka County, Nevada)
Royal Gold holds a 1.8% net smelter return ("NSR") royalty covering a
majority of the Leeville Project ("Leeville"). Leeville is an underground mine,
currently under development by Newmont Mining Corporation ("Newmont"). Newmont
has announced its intention to initiate production at Leeville in the fourth
quarter of calendar 2005. Current production on the Leeville royalty land is
derived from underground operations on a portion of the Carlin East deposit.
During the second quarter of fiscal 2005, the Carlin East deposit
produced 23,143 ounces of gold, providing royalty revenue of $169,095, compared
to 29,150 ounces of gold produced providing royalty revenue of $205,783 for the
same quarter in fiscal 2004.
SJ Claims (Goldstrike Mine, Eureka County, Nevada)
Royal Gold holds a 0.9% NSR royalty covering a portion of the Betze-Post
mine, known as the SJ Claims. The Betze-Post mine, which is a part of the larger
Goldstrike operation, is operated by Barrick Gold Corporation.
During the second quarter of fiscal 2005, the SJ Claims produced 158,741
ounces of gold, providing royalty revenue of $617,605, compared to 89,451 ounces
of gold produced providing royalty revenue of $313,553 for the same quarter in
fiscal 2004.
Troy Mine (Lincoln County, Montana)
In the second quarter of fiscal 2005, Royal Gold obtained the right to
receive payments equivalent to a 7.0% GSR royalty that covers the Troy
underground mine operated by Revett Silver Company ("Revett"). The GSR royalty
will extend until either cumulative production of 90% of the current reserves is
reached, or Royal Gold receives $10.5 million in cumulative payments, whichever
occurs first. Royal Gold also acquired a perpetual GSR royalty that begins at
6.1% on any production in excess of 100% of the currently identified reserves
which steps down to a perpetual 2% GSR royalty after cumulative production has
exceed 115% of the current reserves.
Revett has announced that production at the Troy mine commenced in late
calendar 2004, and that it anticipates production of approximately 3.0 million
ounces of silver and 25.0 million pounds of copper in calendar year 2005. Royal
Gold expects to receive royalty payments from the Troy Mine during the third
quarter of fiscal 2005.
Bald Mountain (White Pine County, Nevada)
Royal Gold holds a 1.75% to 3.5% NSR sliding-scale royalty that burdens
a portion of the Bald Mountain mine, operated by Placer Dome U.S. Inc. The 1.75%
NSR royalty rate does not increase until the gold price exceeds $500 per ounce.
During the second quarter of fiscal 2005, Bald Mountain produced about
4,592 ounces of gold, providing royalty revenue of $35,394, compared to 10,854
ounces of gold produced providing royalty revenue of $74,790 for the same
quarter in fiscal 2004.
South American Properties (Argentina)
The Company holds a 2% NSR royalty on the Martha silver mine operated by
Coeur d'Alene Mines Corporation. Royalty revenue for the second quarter of
fiscal 2005 was $62,849, compared to $161,337 for the same quarter in fiscal
2004.
Corporate Profile
Royal Gold, Inc. is a precious metals royalty company engaging in the
acquisition and management of precious metals royalty interests. Royal Gold is
publicly traded on the Nasdaq Market System, under the symbol "RGLD," and on the
Toronto Stock Exchange under the symbol "RGL." The Company's web page is located
at www.royalgold.com.
NOTE: Royal Gold will conduct its second quarter conference call today
at 12:00 noon Eastern (10:00 a.m. Mountain) time. The call will be
simultaneously carried on the Company's web site at www.royalgold.com within the
Investor Relations Section, under "Presentations." A replay on the web site will
be available approximately two hours after the call ends. The conference call is
also available by calling 800-603-2779 or 706-634-7230. Audio replays will be
available about two hours after the call and until February 18 by dialing
800-642-1687 or 706-645-9291, access number 3657821.
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 growth plans for the Company, royalty generation,
acquisition of existing royalties, production levels and timing at Revett,
revenue from Revett, commencement of royalty revenues at Revett, and the
sliding-scale features of our royalty structure at the Pipeline Mining Complex.
Factors that could cause actual results to differ materially include, among
others, precious metals prices, decisions and activities of the
operators of our royalty properties, unanticipated grade, geological,
metallurgical, processing or other problems the operators of the mining
properties may encounter, changes in project parameters as plans continue to be
refined, results of current or planned exploration activities, economic and
market conditions, as well as other factors described elsewhere in this press
release and in our Annual Report on Form 10-K, 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.
The Company discloses information on free cash flow and free cash flow
as a percentage of revenues in its reporting. The Company defines free cash flow
by operating income plus depreciation, depletion and amortization, non-cash
charges, and any impairment of mining assets. 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 -- Reconciliation, attached to this press release.
ROYAL GOLD, INC.
Consolidated Balance Sheets
December 31, June 30,
2004 2004
-------------- --------------
(Unaudited)
Assets
Current assets
Cash and equivalents $ 43,366,461 $ 44,800,901
Royalty receivables 5,207,388 5,221,307
Current deferred tax asset 1,324,080 1,671,305
Prepaid expenses and other 532,454 207,662
Total current assets 50,430,383 51,901,175
Royalty interests in mineral
properties, net 46,158,521 40,325,611
Available for sale securities 396 420,231
Investment 1,000,000 --
Deferred tax asset 304,871 306,565
Other assets 622,631 568,228
Total assets $ 98,516,802 $ 93,521,810
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 1,967,632 $ 1,232,539
Dividend payable 1,042,661 779,377
Accrued compensation 557,000 200,000
Other 392,042 229,518
Total current liabilities 3,959,335 2,441,434
Deferred tax liability 7,766,463 8,078,975
Other long term liabilities 89,889 103,089
Total Liabilities 11,815,687 10,623,498
Commitments and contingencies
Stockholders' equity
Common stock, $.01 par value,
authorized 40,000,000 shares; 21,082,447
and 21,012,583 shares issued and
outstanding at December 31, 2004 and
June 30, 2004, respectively 210,824 210,125
Additional paid-in capital 102,946,283 102,019,891
Accumulated other comprehensive income 35 28,097
Deferred compensation (390,934) --
Accumulated deficit (14,968,221) (18,262,929)
Treasury stock, at cost (229,224 shares) (1,096,872) (1,096,872)
Total stockholders' equity 86,701,115 82,898,312
Total liabilities and stockholders'
equity $ 98,516,802 $ 93,521,810
ROYAL GOLD, INC.
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
For The Three Months Ended
-----------------------------
December 31, December 31,
2004 2003
-------------- --------------
Royalty revenues $ 6,031,833 $ 5,083,461
Costs and expenses
Costs of operations 519,404 347,183
General and administrative 986,613 779,009
Exploration and business development 587,528 250,635
Depreciation, depletion and amortization 867,121 786,039
Non-cash employee stock compensation
expense 119,125 --
Total costs and expenses 3,079,791 2,162,866
Operating income 2,952,042 2,920,595
Interest and other income 181,250 100,681
Gain on sale of available for
sale securities 163,526 --
Interest and other expense (29,018) (29,001)
Income before income taxes 3,267,800 2,992,275
Current tax expense (549,600) (16,385)
Deferred tax expense (99,882) (698,425)
Net income $ 2,618,318 $ 2,277,465
Adjustments to comprehensive income
Unrealized change in market value of
available for sale securities 25,452 212,324
Realization of the change in
market value on sale of available
for sale securities (104,657) --
Comprehensive income $ 2,539,113 $ 2,489,789
Basic earnings per share $ 0.13 $ 0.11
Basic weighted average shares
outstanding 20,814,226 20,778,772
Diluted earnings per share $ 0.12 $ 0.11
Diluted weighted average shares
outstanding 21,129,742 21,147,687
ROYAL GOLD, INC.
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
For The Six Months Ended
------------------------------
December 31, December 31,
2004 2003
-------------- --------------
Royalty revenues $ 11,955,924 $ 9,264,946
Costs and expenses
Costs of operations 978,685 674,458
General and administrative 1,802,476 1,364,695
Exploration and business development 1,043,143 780,948
Depreciation, depletion, and amortization 1,727,309 1,700,931
Non-cash employee stock compensation
expense 119,125 --
Total costs and expenses 5,670,738 4,521,032
Operating income 6,285,186 4,743,914
Interest and other income 312,415 189,684
Gain on sale of available for sale securities 163,526 --
Interest and other expense (58,035) (58,278)
Income before income taxes 6,703,092 4,875,320
Current tax expense (1,208,534) (90,090)
Deferred tax expense (377,812) (1,164,653)
Net income $ 5,116,746 $ 3,620,577
Adjustments to comprehensive income
Unrealized change in market value of
available for sale securities 76,595 104,615
Realization of the change in market
value on sale of available for
sale securities (104,657) --
Comprehensive income $ 5,088,684 $ 3,725,192
Basic earnings per share $ 0.25 $ 0.17
Basic weighted average shares
outstanding 20,798,792 20,737,794
Diluted earnings per share $ 0.24 $ 0.17
Diluted weighted average shares
outstanding 21,101,455 21,122,464
ROYAL GOLD, INC.
Consolidated Statements of Cash Flows
(Unaudited)
For The Six Months Ended
------------------------------
December 31, December 31,
2004 2003
-------------- --------------
Cash flows from operating activities:
Net income $ 5,116,746 $ 3,620,577
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation, depletion and amortization 1,727,309 1,700,931
Gain on available for sale securities (163,526) --
Deferred tax expense 377,812 1,164,653
Non-cash employee stock option
compensation expense 119,125 --
Changes in assets and liabilities:
Royalty receivables 13,919 (1,186,687)
Prepaid expenses and other assets (330,876) (96,447)
Accounts payable 730,167 187,704
Accrued liabilities and other
current liabilities 481,208 248,258
Other long term liabilities (13,200) (13,200)
Net cash provided by operating activities 8,058,684 5,625,789
Cash flows from investing activities:
Capital expenditures for property
and equipment (104,437) (59,628)
Acquisition of royalty interests in
mineral properties (7,500,000) --
Purchase of investment (1,000,000) --
Proceeds from sale of available for
sale securities 539,513 --
Net cash used in investing activities (8,064,924) (59,628)
Cash flows from financing activities:
Dividends paid (1,558,754) (1,032,735)
Proceeds from issuance of common stock 130,554 738,177
Net cash used in financing activities (1,428,200) (294,558)
Net (decrease) increase in cash
and equivalents (1,434,440) 5,271,603
Cash and equivalents at beginning
of period 44,800,901 33,485,543
Cash and equivalents at end of period $ 43,366,461 $ 38,757,146
Supplemental cash flow information:
Cash paid during the period for:
Income taxes $ 1,325,000 $ 303,000
Non-cash financing activities:
Deferred compensation (equity offset) $ 729,960 $ --
SCHEDULE A - RECONCILIATION
Non-GAAP Financial Measures
The Company computes and discloses free cash flow and free cash flow as
a percentage of revenues as non-GAAP financial measures. Free cash flow is
defined by the Company as operating income plus depreciation, depletion and
amortization, non-cash charges, and adding back any impairment of mining assets.
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 reconciliation to operating
income:
For The For The
Three Months Ended Six Months Ended
--------------------------- ---------------------------
December 31, December 31, December 31, December 31,
2004 2003 2004 2003
------------ ------------ ------------ ------------
Operating income $ 2,952,042 $ 2,920,595 $ 6,285,186 $ 4,743,914
Depreciation,
depletion
and amortization 867,121 786,039 1,727,309 1,700,931
Non-cash employee
stock compensation
expense 119,125 -- 119,125 --
Free cash flow $ 3,938,288 $ 3,706,634 $ 8,131,620 $ 6,444,845
SOURCE Royal Gold, Inc.
-0- 02/09/2005
/CONTACT: Stanley Dempsey, Chairman & Chief Executive Officer, or Karen
Gross, Vice President & Corporate Secretary, both of Royal Gold, Inc.,
+1-303-573-1660/
/Web site: http://www.royalgold.com /