Earnings looked ok to me, any thoughts?
Royal Gold Announces Year End Results and Record Revenues for Fiscal 2003
/FROM PR NEWSWIRE LOS ANGELES 213-626-5500/
TO BUSINESS EDITOR:
Royal Gold Announces Year End Results and Record Revenues for Fiscal 2003
DENVER, Aug. 12 /PRNewswire-FirstCall/ -- ROYAL GOLD, INC.
(Nasdaq: RGLD; TSX: RGL) today announced that it had record revenues of
$15,788,212 million for fiscal 2003 (June 30), as compared to $12,323,071 in
fiscal 2002.
The Company reported net income of $6,752,346, or $0.34 per basic share
for fiscal 2003. For the 2003 fiscal year there were non-cash charges for
deferred tax expense of $1,708,053, or $0.09 per basic share. Net income for
fiscal 2003 compares to net income of $10,698,723, or $0.60 per diluted share
for fiscal 2002. Included in fiscal 2002 year-end earnings was the
recognition of a deferred tax asset of $6,849,687, which increased earnings by
$0.38 per share.
Free cash flow for fiscal 2003 was approximately $11.2 million, or 71% of
revenues, compared to $8.9 million or 72% of revenues in fiscal 2002. Free
cash flow is a non-GAAP financial measure which the Company defines as
operating income plus depreciation, depletion and amortization, non-cash
charges, and adding back any impairment of mining assets. For a
reconciliation of free cash flow to the most directly comparable GAAP
financial measure, see Schedule A-Reconciliation.
For the fourth quarter ended June 30, 2003, royalty revenue was
$3,717,089, compared to $3,461,299 for the same period in fiscal 2002. The
Company reported net income of $1,621,338, or $0.08 per basic share, as
compared to net income of $7,352,856, or $0.36 per basic share, for the fourth
quarter of fiscal 2002. The fiscal 2002 fourth quarter included the
recognition of the deferred tax asset noted above, or $0.38 per basic share.
At June 30, 2003, the Company had working capital of $34.3 million.
Current assets were $36,801,548, compared to current liabilities of
$2,505,981, for a current ratio of 15 to 1. General and administrative
expenses were $1,966,283 as compared to $1,874,952 in fiscal 2002.
Stanley Dempsey, Chairman and CEO stated, "We had another great year. We
had record revenues, and have grown the Company to hold royalty positions at
the three top mining complexes in the U.S. We increased our annual dividend
by one-third to $0.10 per share and our free cash flow remains strong, at
$11.2 million for the fiscal year."
REVIEW OF OPERATIONS
Pipeline Mining Complex, Lander County, Nevada
The Company owns two sliding-scale gross smelter return royalties ("GSR1"
and "GSR2"), a fixed gross royalty ("GSR3"), and a net value royalty ("NVR1")
on the Pipeline Mining Complex. The GSR1 royalty covers the current mine
footprint, and the GSR2 ("Super") royalty covers any reserves that are
developed on the claim block lying outside the current mine footprint. The
GSR2 royalty pays out at a rate that is 80% higher than that of GSR1, at all
gold prices. The GSR3 royalty is a 0.71% fixed rate for the life of the mine.
The 0.37% 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 is calculated
by deducting processing-related costs, but this royalty is not burdened by
mining costs.
The Pipeline Mining Complex is owned by the Cortez Joint Venture
("Cortez"), a joint venture between Placer Cortez Inc. (60%), a subsidiary of
Placer Dome Inc., and Kennecott Explorations (Australia) Ltd. (40%), a
subsidiary of Rio Tinto.
For the fourth quarter of fiscal 2003, the Pipeline Mining Complex
produced 226,505 ounces of gold, providing $3,164,209 of royalty revenue to
Royal Gold. This compares to 295,668 ounces of gold produced, providing
$3,221,654 of royalty revenue to Royal Gold, for the same quarter in fiscal
2002.
For fiscal 2003, the Pipeline Mining Complex produced 1,061,071 ounces of
gold, providing $13,953,232 of royalty revenue, as compared to
1,174,276 ounces of gold produced, which provided royalty revenues of
$11,658,527 in fiscal 2002. The increase in revenue reflects higher gold
prices in the period.
For the fourth quarter of fiscal 2003, the average gold price was $347 per
ounce and Royal Gold's GSR1 royalty rate was 3.00% of production. Current
production from the Pipeline Mining Complex is subject to GSR1, GSR3, and
NVR1.
For calendar 2003, that operator has advised that the Pipeline Mining
Complex will produce about 1.0 million ounces of gold subject to the Company's
royalties.
Leeville Project, Eureka County, Nevada
Royal Gold acquired a 1.8% net smelter return ("NSR") royalty in
December 2002, covering a majority of the Leeville project ("Leeville").
Leeville is an underground mine, currently under development by Newmont Mining
Corporation. Newmont has announced its intention to initiate production at
Leeville in late 2005 or early 2006. Current production on the Leeville
royalty land is derived from underground operations on a portion of the Carlin
East deposit. During the fourth quarter, the Carlin East deposit produced
21,269 ounces of gold, which were subject to Royal Gold's royalty interest,
providing $134,643 in royalty revenue. For fiscal 2003, the Carlin East
deposit produced 64,265 ounces of gold subject to Royal Gold's royalty
interest, providing $409,729 of royalty revenue.
For calendar 2003, the operator has advised that the Carlin East deposit
will produce approximately 110,000 ounces of gold subject to the Company's
royalty.
SJ Claims (Goldstrike Mine), Eureka County, Nevada
Royal Gold acquired a 0.9% NSR royalty in December 2002, covering a
portion of the Betze-Post open pit at the Goldstrike mine known as the SJ
Claims. The Goldstrike mine is operated by Barrick Gold Corporation
("Barrick"). During the fourth quarter, the SJ Claims produced 105,872 ounces
of gold, which were subject to Royal Gold's interest, providing $291,345 in
royalty revenue. For fiscal year 2003, the SJ Claims produced 239,124 ounces
of gold subject to Royal Gold's interest, providing $720,724 of royalty
revenue.
For calendar 2003, the operator has advised that the SJ Claims will
produce 395,866 ounces of gold subject to the Company's royalty.
Bald Mountain, White Pine County, Nevada
Royal Gold owns a 1.75% net smelter returns royalty ("NSR") that burdens a
portion of the Bald Mountain mine, operated by Placer Dome U.S. Inc. During
the quarter, the Bald Mountain mine produced 18,331 ounces of gold, which were
subject to Royal Gold's interest, providing $112,588 in royalty revenue. For
fiscal 2003, the Bald Mountain mine produced 113,420 ounces of gold, which
were subject to Royal Gold's interest, providing $652,107 in royalty revenue.
For calendar 2003, the operator has advised that Bald Mountain has
exceeded its original production forecast, but has not yet prepared a new
production forecast for the year.
South American Properties (Argentina)
The Company holds a 2% NSR on the Martha silver mine operated by Coeur
d'Alene Mines Corporation. Royalty revenue for fiscal 2003 was $52,420.
Fiscal 2004 Outlook
"We expect our royalty portfolio to continue to generate good cash flow
and earnings in fiscal 2004, especially with the strength of the gold price.
The sliding-scale features of our royalty structure at the Pipeline Mining
Complex were designed to increase payouts to Royal Gold as the gold price
increases, and we have been rewarded in fiscal 2002 and 2003 for this stepped
price royalty structure. In addition, we protected our downside with step
decreases and floors on our sliding-scale royalties and our fixed price
royalties. With the current strong gold price environment, our royalty
structure continues to give us exposure to improved revenues. We also
continue to pursue acquisitions to expand our royalty portfolio," Dempsey
said.
Royal Gold is a precious metals royalty company engaging in the
acquisition and management of precious metal royalty interests. Royal Gold is
publicly traded on the NASDAQ National 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 .
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