Royal Gold Reports Record Revenue and Free Cash Flow for Second Quarter Fiscal 2011
- Record royalty revenue of $56.3 million, a 62% increase
year-over-year - Record free cash flow1 of $48.9 million
represented 87% of total revenue, a 71% increase year-over-year - Net income rose 90% year-over-year to $18.3 million, or $0.33 per
basic share
Royal Gold, Inc. (NASDAQ:RGLD) (TSX:RGL) today announced net
income attributable to Royal Gold stockholders of $18.3 million, or
$0.33 per basic share, on record royalty revenue of $56.3 million for
the second quarter of fiscal 2011. This compares to net income
attributable to Royal Gold stockholders for the second quarter of fiscal
2010 of $9.6 million, or $0.24 per basic share, on royalty revenue of
$34.7 million.
For the six-month period ended December 31, 2010, royalty revenue was
$101.7 million and net income attributable to Royal Gold stockholders
was $30.1 million, or $0.55 per basic share. This compares to royalty
revenue of $60.9 million and net income attributable to Royal Gold
stockholders of $16.7 million, or $0.41 per basic share, for the
six-month period ended December 31, 2009.
Free cash flow1 for the quarter was a record $48.9 million,
representing 87% of revenues, which was an increase of 71% compared to
free cash flow of $28.6 million or 82% of revenues for the comparable
prior year quarter.
The 62% increase in quarterly revenue was largely driven by new
production from Andacollo and Voisey′s Bay, production increases at
Peñasquito, and higher average gold and other metal prices. The increase
in revenue was partially offset by lower production at Cortez and
Leeville, when compared to the second quarter of fiscal 2010, and a
reduced royalty rate at Taparko. The average price of gold for the
second fiscal quarter was $1,367 per ounce compared with $1,100 per
ounce for the comparable period, representing a 24% increase.
As of December 31, 2010, the Company had a working capital surplus of
$90.4 million. Current assets were $128.4 million (including $71.4
million in cash and equivalents), compared to current liabilities of
$38.0 million, resulting in a current ratio of 3 to 1. Total debt
outstanding under the Company′s credit facilities was $225.5 million, as
of December 31, 2010.
Tony Jensen, President and CEO, commented, 'Our record second quarter
results reflect the resiliency of our diversified portfolio in helping
us achieve another strong quarter of cumulative production gains. We
more than made up for the reduced royalty rate at Taparko with new
year-over-year revenue additions from Andacollo and the IRC portfolio,
and increased production at Peñasquito. We look forward to the
commencement of revenue at Wolverine and Holt during the fiscal third
quarter and the start of production at Canadian Malartic during the
fiscal fourth quarter of 2011.?
PROPERTY HIGHLIGHTS
Highlights at certain of the Company′s principal producing and
development properties during the quarter ended December 31, 2010 are
listed below:
Andacollo -Production ramp-up continued resulting in a
25% increase in quarter-over-quarter production. Andacollo is expected
to achieve its first full three-month period of near full production for
the quarter ending March 2011.
Voisey′s Bay - Vale recently announced the ratification of a new
five-year collective agreement with their employees, marking the end of
the worker strike which began on August 1, 2009. Royalty revenue
increased substantially from the prior quarter as production and
concentrate shipments increased with the help of replacement workers.
Peñasquito - Goldcorp announced a production forecast of 350,000
ounces of gold for calendar 2011 almost doubling prior year guidance,
and reiterated that Peñasquito will reach full processing capacity of
130,000 tonnes per day by March 31, 2011.
Siguiri -As previouslyguided,the Company
reached the $12.0 million cap and we recognized our final royalty
payment during the quarter.
Robinson - As planned, transition from the Veteran Pit to the
Ruth Pit was completed during the quarter. Production at Robinson was
lower during the period due to severe weather and grade variability.
Quadra reported that they expect calendar 2011 copper production to
range between 105 and 120 million pounds, and gold production to range
between 45,000 and 50,000 ounces.
Mulatos - Alamos reported strong fourth calendar quarter
production due to the stacking of ore directly on the liner.
Construction of a high grade mill is planned to begin in the second
quarter of calendar 2011 with expected completion in the fourth quarter.
Alamos announced estimated gold production between 160,000 to 175,000
ounces for calendar 2011.
Dolores -Minefinders reportedsuccessful
commissioning of the Phase 2 leach pad. Production volumes have steady
increased during the fourth quarter and Minefinders anticipates improved
gold and silver production in calendar 2011.
Las Cruces - Ramp-up towards full production continued during the
quarter. Inmet plans to continue with plant modifications and announced
that it expects to increase copper production to 110 million pounds in
calendar 2011.
Wolverine - Major site construction, which included the
industrial complex and tailings facility, was completed. The mill
processing facility was commissioned and Yukon Zinc expects to increase
production to design capacity during calendar 2011.
Holt -St Andrew Goldfields continued development and
pre-production activities during the quarter, and expects full
production from Holt early in calendar 2011. Oral arguments related to
the dispute over the payor of the royalty are scheduled to be heard on
March 28, 2011.
Canadian Malartic - Osisko reports that production is scheduled
to begin in the second quarter of 2011.
RECENT DEVELOPMENTS
Mt. Milligan
During the quarter ended December 31, 2010, Royal Gold announced the
completion of the Mt. Milligan gold stream transaction in which Royal
Gold acquired the right to 25% of the payable gold produced from the Mt.
Milligan copper-gold project in British Columbia. Total consideration
for the transaction was $226.5 million paid in conjunction with the
closing of Thompson Creek Metal′s acquisition of Terrane Metals and an
additional $85.0 million to be paid during the construction period of
the Mt. Milligan project subject to certain conditions. In addition,
Royal Gold will pay Thompson Creek a cash payment equal to the lesser of
$400 or the prevailing market price for each payable ounce of gold until
550,000 ounces have been delivered to Royal Gold and the lesser of $450
or the prevailing market price for each additional ounce thereafter. A
winter work program has been implemented and project development is on
schedule.
Pascua-Lama
Also during the quarter, Royal Gold announced that it closed the
transactions for additional gold royalty interests on the Pascua-Lama
project, owned and operated by Barrick Gold. Royal Gold′s total interest
is now a 5.23% net smelter return sliding-scale royalty, at gold prices
at or above $800 per ounce. The transactions also included a 0.20%
fixed-rate copper royalty which takes effect after January 1, 2017,
increasing Royal Gold′s total copper royalty interest to 1.05%. Barrick
reports that development work is proceeding well, with detailed
engineering and procurement over 90% complete.
Second quarter fiscal 2011 production and revenue for the Company′s
principal royalty interests are shown in Table 1. For more detailed
information about each of our principal royalty properties, please refer
to the Company′s most recent Annual Report on Form 10-K, our Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC
and available on the SEC′s website located at www.sec.gov,
or our website located at www.royalgold.com.
CORPORATE PROFILE
Royal Gold is a precious metals royalty company engaged in the
acquisition and management of precious metal royalties and similar
interests. The Company′s current portfolio consists of 187 properties on
six continents, including interests on 33 producing mines and 24
development stage projects. Royal Gold is publicly traded on the NASDAQ
Global Select Market under the symbol 'RGLD,? and on the Toronto Stock
Exchange under the symbol 'RGL.? The Company′s website is located at www.royalgold.com.
Note: Management′s conference call reviewing the second quarter
results will be held todayat 10:00 a.m. Mountain Time (noon
Eastern Time) and will be available by calling (800) 603-2779 (North
America) or (973) 200-3960(international), access #36528572. The
call will be simultaneously broadcast on the Company′s website at www.royalgold.com
under the 'Presentations? section. A replay of this webcast will be
available on the Company′s website approximately two hours after the
call ends.
___________________________
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 about the
resiliency of our diversified portfolio, the commencement of revenue
from Wolverine and Holt, the start of production at Canadian Malartic,
design, production or processing capacity at Andacollo, Peñasquito,
Robinson, Mulatos, Dolores and Wolverine, production levels at Voisey′s
Bay, Robinson, Dolores and Las Cruces, and mine development at
Pascua-Lama. Factors that could cause actual results to differ
materially from the projections include, among others, precious metals
prices, performance of and production at the Company's royalty
properties, decisions and activities of the operators of the Company's
royalty properties, unanticipated grade, geological, metallurgical,
processing or other problems the operators of the mining properties may
encounter, delays in the operators securing or their inability to secure
necessary governmental permits, changes in operator′s project parameters
as plans continue to be refined, economic and market conditions,
possible liquidity and production problems at the Company′s royalty
properties, buy-down rights at Canadian Malartic, litigation, the
ability of the various operators to bring projects into production as
expected, and other subsequent events, as well as other factors
described in the Company's Annual Report on Form 10-K, Quarterly Report
on Form 10-Q, 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.
*Free Cash Flow: The Company discloses information on free cash
flow and free cash flow as a percentage of revenues in its reporting.
Free cash flow is a non-GAAP financial measure. The Company defines free
cash flow as operating income plus depreciation, depletion and
amortization, non-cash charges, and any impairment of mining assets less
non-controlling interests in operating income of consolidated
subsidiaries. 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,
attached to this press release for a GAAP reconciliation.
1 | The Company defines free cash flow, a non-GAAP financial measure, as operating income plus depreciation depletion and amortization, non-cash charges and impairment of mining assets, if any, less non-controlling interests in operating income from consolidated subsidiary (see, Schedule A). |
TABLE 1 Quarter Ended December 31, 2010 Royalty Production and Revenue for Principal Royalty Interests | ||||||||||||||||||||||||||
THREE MONTHS ENDED | THREE MONTHS ENDED | |||||||||||||||||||||||||
PROPERTY | ROYALTY | OPERATOR | METAL | Royalty | Reported | Royalty | Reported | |||||||||||||||||||
Andacollo | 75% NSR 2 | Teck | Gold | 11.3 | 11,087 oz. | - 2 | - 2 | |||||||||||||||||||
Voisey′s Bay 3 | 2.7% NSR | Vale | Nickel
| 8.1 |
| - 4 | - 4 | |||||||||||||||||||
Cortez |
| Barrick | Gold | 7.6 | 89,445 oz. | 8.9 | 124,973 oz. | |||||||||||||||||||
Peñasquito 3 | 2.0% NSR | Goldcorp | Gold Silver Lead Zinc | 5.8 | 54,775 oz. 5.1M oz. 38.3M lbs. 58.1M lbs. | 1.1 | 28,120 oz. 1.2M oz. | |||||||||||||||||||
Robinson 3 | 3.0% NSR | Quadra | Gold Copper | 3.5 | 12,655 oz.
| 3.6 | 24,057 oz.
| |||||||||||||||||||
Mulatos | 1.0 - 5.0% NSR 6 | Alamos | Gold | 3.0 | 47,834 oz. | 2.4 | 43,928 oz. | |||||||||||||||||||
Leeville | 1.8% NSR | Newmont | Gold | 2.6 | 105,998 oz. | 3.0 | 150,328 oz. | |||||||||||||||||||
Taparko | TB-GSR3 | High River | Gold | 1.0 | 36,151 oz. | 8.9 7 | 32,202 oz. 7 | |||||||||||||||||||
Las Cruces 3 | 1.5% NSR | Inmet | Copper | 1.0 | 16.7M lbs. | - 4 | - 4 | |||||||||||||||||||
Dolores | 3.25% NSR 2.0% NSR | Minefinders | Gold Silver | 0.9 | 13,741 oz.
| 0.4 | 19,305 oz.
| |||||||||||||||||||
Gwalia Deeps | 1.5% NSR | St Barbara | Gold | 0.6 | 28,049 oz. | - 4 | - 4 | |||||||||||||||||||
| - | - | Various | 10.9 | - | 6.4 | - | |||||||||||||||||||
Total Royalty Revenue | 56.3 | 34.7 | ||||||||||||||||||||||||
See footnotes below.
FOOTNOTES | ||
1 | Reported production relates to the amount of metal sales that are subject to our royalty interests for the three months ended December 31, 2010 and December 31, 2009, as reported to us by the operators of the mines. | |
2 | The royalty rate is 75% of payable gold until 910,000 payable ounces of gold have been sold; 50% thereafter. Revenue commenced in May 2010. Gold is produced as a by-product of copper. | |
3 | Revenues consist of provisional payments for concentrates produced during the current period and final settlements for prior production periods. | |
4 | These royalty interests were acquired in February 2010 as part of the IRC transaction. | |
5 | Royalty percentages: GSR1 and GSR2 ? 0.40 to 5.0% (sliding-scale); GSR3 ? 0.71%; NVR1 ? 0.39%. | |
6 | The Company′s sliding-scale royalty is subject to a 2.0 million ounce cap on gold production. There have been approximately 658,000 ounces of cumulative production as of December 31, 2010. | |
7 | Taparko royalty paid at the TB-GSR1 royalty rate of 15% in addition to the TB-GSR2 royalty rate, calculated by dividing the average monthly gold price by 100 for gold prices above $430 per ounce (with a 10% cap). These two royalties ceased when payments totaling $35 million were received in October 2010 and the 2.0% TB-GSR3 royalty went into effect. | |
8 | 'Other? includes all of the Company′s non-principal producing royalties for the three months ended December 31, 2010 and 2009. Individually, no royalty included within 'Other? contributed greater than 5% of our total royalty revenue for any of the periods. | |
ROYAL GOLD, INC.
| |||||||||||||||||||||
December 31, | June 30, | ||||||||||||||||||||
2010 | 2010 | ||||||||||||||||||||
ASSETS | |||||||||||||||||||||
Cash and equivalents | $ | 71,409 | $ | 324,846 | |||||||||||||||||
Royalty receivables | 52,869 | 40,363 | |||||||||||||||||||
Income tax receivable | 2,147 | 3,432 | |||||||||||||||||||
Prepaid expenses and other current assets | 1,962 | 2,627 | |||||||||||||||||||
Total current assets | 128,387 | 371,268 | |||||||||||||||||||
Royalty interests in mineral properties, net | 1,715,477 | 1,467,983 | |||||||||||||||||||
Other assets | 19,760 | 22,082 | |||||||||||||||||||
Total assets | $ | 1,863,624 | $ | 1,861,333 | |||||||||||||||||
LIABILITIES | |||||||||||||||||||||
Current portion of long-term debt | $ | 26,000 | $ | 26,000 | |||||||||||||||||
Accounts payable | 2,624 | 2,367 | |||||||||||||||||||
Dividends payable | 6,087 | 4,970 | |||||||||||||||||||
Other current liabilities | 3,243 | 2,437 | |||||||||||||||||||
Total current liabilities | 37,954 | 35,774 | |||||||||||||||||||
Long-term debt | 199,500 | 222,500 | |||||||||||||||||||
Net deferred tax liabilities | 151,375 | 152,583 | |||||||||||||||||||
Other long-term liabilities | 19,754 | 16,928 | |||||||||||||||||||
Total liabilities | 408,583 | 427,785 | |||||||||||||||||||
Commitments and contingencies | |||||||||||||||||||||
EQUITY | |||||||||||||||||||||
Preferred stock, $.01 par value, 10,000,000 shares authorized; and 0 shares issued | - | - | |||||||||||||||||||
Common stock, $.01 par value, 100,000,000 shares authorized; and 53,470,710 and 53,324,171 shares outstanding, respectively | 535 | 534 | |||||||||||||||||||
Exchangeable shares, no par value, 1,806,649 shares issued, less 206,425 and 176,540 redeemed shares, respectively | 70,426 | 71,741 | |||||||||||||||||||
Additional paid-in capital | 1,285,296 | 1,284,087 | |||||||||||||||||||
Accumulated other comprehensive income (loss) | 117 | (34 | ) | ||||||||||||||||||
Accumulated earnings | 70,935 | 51,862 | |||||||||||||||||||
Treasury stock, at cost (0 and 96,675 shares, respectively) | - | (4,474 | ) | ||||||||||||||||||
Total Royal Gold stockholders′ equity | 1,427,309 | 1,403,716 | |||||||||||||||||||
Non-controlling interests | 27,732 | 29,832 | |||||||||||||||||||
Total equity | 1,455,041 | 1,433,548 | |||||||||||||||||||
Total liabilities and equity | $ | 1,863,624 | $ | 1,861,333 | |||||||||||||||||
ROYAL GOLD, INC.
| ||||||||||||||||||||||
For The Three Months Ended | ||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||
Royalty revenues | $ | 56,316 | $ | 34,740 | ||||||||||||||||||
Costs and expenses | ||||||||||||||||||||||
Costs of operations (exclusive of depreciation, depletion and amortization shown separately below) | 3,949 | 1,638 | ||||||||||||||||||||
General and administrative | 3,930 | 2,972 | ||||||||||||||||||||
Exploration and business development | 827 | 2,828 | ||||||||||||||||||||
Depreciation, depletion and amortization | 16,006 | 12,101 | ||||||||||||||||||||
Total costs and expenses | 24,712 | 19,539 | ||||||||||||||||||||
Operating income | 31,604 | 15,201 | ||||||||||||||||||||
Interest and other income | 2,285 | 150 | ||||||||||||||||||||
Interest and other expense | (1,797 | ) | (166 | ) | ||||||||||||||||||
Income before income taxes | 32,092 | 15,185 | ||||||||||||||||||||
Income tax expense | (11,374 | ) | (4,833 | ) | ||||||||||||||||||
Net income | 20,718 | 10,352 | ||||||||||||||||||||
Net income attributable to non-controlling interests | (2,406 | ) | (737 | ) | ||||||||||||||||||
Net income attributable to Royal Gold stockholders | $ | 18,312 | $ | 9,615 | ||||||||||||||||||
Net income | $ | 20,718 | $ | 10,352 | ||||||||||||||||||
Adjustments to comprehensive income, net of tax | ||||||||||||||||||||||
Unrealized change in market value of available for sale securities | 145 | 94 | ||||||||||||||||||||
Comprehensive income | 20,863 | 10,446 | ||||||||||||||||||||
Comprehensive income attributable to non-controlling interests | (2,406 | ) | (737 | ) | ||||||||||||||||||
Comprehensive income attributable to Royal Gold stockholders | $ | 18,457 | $ | 9,709 | ||||||||||||||||||
Net income per share available to Royal Gold common stockholders: | ||||||||||||||||||||||
Basic earnings per share | $ | 0.33 | $ | 0.24 | ||||||||||||||||||
Basic weighted average shares outstanding | 55,043,160 | 40,578,426 | ||||||||||||||||||||
Diluted earnings per share | $ | 0.33 | $ | 0.23 | ||||||||||||||||||
Diluted weighted average shares outstanding | 55,308,709 | 40,962,137 | ||||||||||||||||||||
Cash dividends declared per common share | $ | 0.11 | $ | 0.09 | ||||||||||||||||||
ROYAL GOLD, INC.
| ||||||||||||||||||||||
For The Six Months Ended | ||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||
Royalty revenues | $ | 101,654 | $ | 60,853 | ||||||||||||||||||
Costs and expenses | ||||||||||||||||||||||
Costs of operations (exclusive of depreciation, depletion and amortization shown separately below) | 5,140 | 2,839 | ||||||||||||||||||||
General and administrative | 7,654 | 5,167 | ||||||||||||||||||||
Exploration and business development | 1,514 | 3,713 | ||||||||||||||||||||
Depreciation, depletion and amortization | 34,930 | 23,179 | ||||||||||||||||||||
Total costs and expenses | 49,238 | 34,898 | ||||||||||||||||||||
Operating income | 52,416 | 25,955 | ||||||||||||||||||||
Interest and other income | 3,708 | 1,903 | ||||||||||||||||||||
Interest and other expense | (4,102 | ) | (521 | ) | ||||||||||||||||||
Income before income taxes | 52,022 | 27,337 | ||||||||||||||||||||
Income tax expense | (18,301 | ) | (7,864 | ) | ||||||||||||||||||
Net income | 33,721 | 19,473 | ||||||||||||||||||||
Net income attributable to non-controlling interests | (3,577 | ) | (2,733 | ) | ||||||||||||||||||
Net income attributable to Royal Gold stockholders | $ | 30,144 | $ | 16,740 | ||||||||||||||||||
Net income | $ | 33,721 | $ | 19,473 | ||||||||||||||||||
Adjustments to comprehensive income, net of tax | ||||||||||||||||||||||
Unrealized change in market value of available for sale securities | 152 | 147 | ||||||||||||||||||||
Comprehensive income | 33,873 | 19,620 | ||||||||||||||||||||
Comprehensive income attributable to non-controlling interests | (3,577 | ) | (2,733 | ) | ||||||||||||||||||
Comprehensive income attributable to Royal Gold stockholders | $ | 30,296 | $ | 16,887 | ||||||||||||||||||
Net income per share available to Royal Gold common stockholders: | ||||||||||||||||||||||
Basic earnings per share | $ | 0.55 | $ | 0.41 | ||||||||||||||||||
Basic weighted average shares outstanding | 55,014,930 | 40,540,283 | ||||||||||||||||||||
Diluted earnings per share | $ | 0.55 | $ | 0.41 | ||||||||||||||||||
Diluted weighted average shares outstanding | 55,279,193 | 40,942,564 | ||||||||||||||||||||
Cash dividends declared per common share | $ | 0.20 | $ | 0.17 | ||||||||||||||||||
ROYAL GOLD, INC.
| ||||||||||||||||||||||
For The Six Months Ended | ||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||
Net income | $ | 33,721 | $ | 19,473 | ||||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||||
Depreciation, depletion and amortization | 34,930 | 23,179 | ||||||||||||||||||||
Gain on distribution to non-controlling interest | (2,709 | ) | (1,742 | ) | ||||||||||||||||||
Deferred tax benefit | (1,208 | ) | (1,446 | ) | ||||||||||||||||||
Non-cash stock-based compensation expense | 3,207 | 3,087 | ||||||||||||||||||||
Tax benefit of stock-based compensation exercises | (952 | ) | (739 | ) | ||||||||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||||||
Royalty receivables | (12,505 | ) | (13,416 | ) | ||||||||||||||||||
Prepaid expenses and other assets | 1,631 | 634 | ||||||||||||||||||||
Accounts payable | (301 | ) | 1,417 | |||||||||||||||||||
Income taxes payable (receivable) | 2,237 | (2,007 | ) | |||||||||||||||||||
Other liabilities | 3,303 | (557 | ) | |||||||||||||||||||
Net cash provided by operating activities | $ | 61,354 | $ | 27,883 | ||||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||
Acquisition of royalty interests in mineral properties | (279,500 | ) | - | |||||||||||||||||||
Change in restricted cash - compensating balance | - | 19,250 | ||||||||||||||||||||
Proceeds on sale of Inventory - restricted | 4,260 | 3,108 | ||||||||||||||||||||
Deferred acquisition costs | (2,057 | ) | (343 | ) | ||||||||||||||||||
Other | (96 | ) | (81 | ) | ||||||||||||||||||
Net cash (used in) provided by investing activities | $ | (277,393 | ) | $ | 21,934 | |||||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||
Tax benefit of stock-based compensation exercises | 952 | 739 | ||||||||||||||||||||
(Prepayment of) borrowings under Chilean loan facility | - | (19,250 | ) | |||||||||||||||||||
Repayment of debt | (23,000 | ) | - | |||||||||||||||||||
Common stock dividends | (9,953 | ) | (6,522 | ) | ||||||||||||||||||
Proceeds from issuance of common stock | - | 594 | ||||||||||||||||||||
Distribution to non-controlling interests | (5,123 | ) | (3,108 | ) | ||||||||||||||||||
Other | (274 | ) | 1 | |||||||||||||||||||
Net cash (used in) financing activities | $ | (37,398 | ) | $ | (27,546 | ) | ||||||||||||||||
Net increase (decrease) in cash and equivalents | (253,437 | ) | 22,271 | |||||||||||||||||||
Cash and equivalents at beginning of period | 324,846 | 294,566 | ||||||||||||||||||||
Cash and equivalents at end of period | $ | 71,409 | $ | 316,837 | ||||||||||||||||||
SCHEDULE A
Non-GAAP Financial Measures
The Company computes and discloses free cash flow and free cash flow as
a percentage of revenues. Free cash flow is a non-GAAP financial
measure. Free cash flow is defined by the Company as operating income
plus depreciation, depletion and amortization, non-cash charges, and any
impairment of mining assets, less non-controlling interests in operating
income of consolidated subsidiaries. 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, shareholder
dividends, and to service the Company′s debt obligations. Free cash
flow, as defined, is most directly comparable to operating income in the
Statements of Operations. Below is the reconciliation to operating
income:
Royal Gold, Inc. | |||||||||||||||||||||
Free Cash Flow Reconciliation | |||||||||||||||||||||
For The Three Months Ended | |||||||||||||||||||||
December 31, | |||||||||||||||||||||
(Unaudited, in thousands) | |||||||||||||||||||||
2010 | 2009 | ||||||||||||||||||||
Operating income | $ | 31,604 | $ | 15,201 | |||||||||||||||||
Depreciation, depletion and amortization | 16,006 | 12,101 | |||||||||||||||||||
Non-cash employee stock compensation | 1,923 | 1,937 | |||||||||||||||||||
Non-controlling interests in operating income of consolidated subsidiaries | (609 | ) | (611 | ) | |||||||||||||||||
Free cash flow | $ | 48,924 | $ | 28,628 | |||||||||||||||||
For The Six Months Ended | |||||||||||||||||||||
December 31, | |||||||||||||||||||||
(Unaudited, in thousands) | |||||||||||||||||||||
2010 | 2009 | ||||||||||||||||||||
Operating income | $ | 52,416 | $ | 25,955 | |||||||||||||||||
Depreciation, depletion and amortization | 34,930 | 23,179 | |||||||||||||||||||
Non-cash employee stock compensation | 3,207 | 3,087 | |||||||||||||||||||
Non-controlling interests in operating income of consolidated subsidiaries | (868 | ) | (991 | ) | |||||||||||||||||
Free cash flow | $ | 89,685 | $ | 51,230 |
Royal Gold, Inc.
Karen Gross
Vice President and Corporate
Secretary
(303) 575-6504