Royal Gold Inc. announced net income of $38.6 million, or 59 cents per share, for the quarter ending March 31 and adjusted net income of $44.3 million, or 68 cents per share, during a time of coronavirus pandemic challenges.
“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 Heissenbuttal, president and chief executive officer of the Denver-based company.
He said in the earnings report that the “health and safety of our employees is top priority, and we are successfully managing our business remotely.” The company also has made $525,000 in donations to charities in Colorado, Toronto, Vancouver and Lucerene, Switzerland, where Royal Gold has offices.
Heissenbuttal said that although the company had operating cash flow of roughly $100 million in the quarter and limited impact to producing properties, the royalty company drew $200 million on its revolving credit facility after the quarter ended “as a precautionary liquidity measure in the event that production suspensions at assets within our portfolio arise, continue or are reinstated.”
The CEO also said that 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.”
One large streaming revenue source, Mt. Milligan Mine in Canada operated by Centerra Gold Inc., was impacted by the coronavirus. Centerra reduced manpower and mill throughput on April 1, and announced other processing cutbacks during the pandemic, but expected to ramp up in mid-May.
The company also reported Newmont Corp. placed the Peñasquito Mine in Mexico on care and maintenance on April 12 but was working on a restart plan. Royal Gold has an interest at the mine.
Royal Gold is a company that focuses on royalties or streaming revenue from mine production from properties where it holds an interest. The company has interests on 187 properties on five continents, including on 42 producing mines and 16 development stage projects.
Revenue for the quarter, which is the third for Royal Gold in its fiscal year, totaled $136.4 million, up from $109.8 million in the 2019 quarter. The total included stream revenue of $97.5 million and royalty revenue of $39 million, according to the report.
Royal Gold attributed the revenue increase to higher gold and silver prices, more gold sales at Andacollo in Chile and Pueblo Viejo in the Dominican Republic, and to higher copper sales at Mt. Milligan.
Looking at Nevada, Royal Gold reported the company received an update on reserves on portions of the Cortez Mine where Royal Gold holds an interest from Barrick Gold Corp., which operates the Nevada Gold Mines joint venture.
As of Dec. 31, 2019, total proven and probable reserves subject to a Royal Gold royalty contained 3.5 million ounces of gold, calculated at a $1,200-per-ounce gold price.
Barrick also states that total gold production for portions of Cortez where Royal Gold has an interest was expected to be roughly 175,000 ounces in the current calendar year but is anticipated to go up to roughly 425,000 ounces in the years 2021 through 2026.
Royal Gold has additional royalties on mining operations in Nevada, but Cortez is the largest royalty holding.
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