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Royal Gold (RGLD) Gives Update on Penasquito Operation Halt

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Royal Gold, Inc. (RGLD - Free Report) announced that the Penasquito mine’s operator, Newmont Corporation (NEM - Free Report) , ceased operations at the mine. The mine's operations were halted due to a strike called by the National Union of Mine and Metal Workers of the Mexican Republic.

On Jun 7, Newmont received a strike notice demanding that the profit-sharing bonus granted in the Collective Bargaining Agreement be increased from 10% to 20%.

Penasquito is undergoing continuous essential safety, security, and environmental monitoring and protection tasks. A timeline for restarting operations has not yet been provided.

On all metal production from the Penasquito mine, RGLD holds a production payment equivalent to a 2% net smelter return royalty.

Approximately 77% of Royal Gold’s revenues come from six properties — Mount Milligan, Andacollo, Pueblo Viejo, Wassa, Cortezm, and Penasquito. Penasquito generated 7.2% of Royal Gold’s revenues in 2022.

In the first quarter of 2023, Royal Gold’s sales were impacted by lower gold and silver production at Penasquito . However, the company generated revenues of $170 million, reflecting year-over-year growth of 4.9%. The upbeat performance can be attributed to higher gold and copper sales at Mount Milligan, a rise in silver sales at Khoemacau, increased gold production at Cortez, and contribution from the newly acquired royalties. The suspension of operations at Penasquito is likely to impact RGLD’s results till it resumes operations.

In the March-end quarter, RGLD reported adjusted earnings per share of 96 cents, beating the Zacks Consensus Estimate of 94 cents. The bottom line, however, declined 3% year over year.

The company projects stream segment sales of 320,000-345,000 GEOs for 2023.

Price Performance

In the past year, shares of Royal Gold have gained 8.8% compared with the industry’s growth of 6.8%.


Zacks Investment Research
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Zacks Rank & Stocks to Consider

Royal Gold currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Piedmont Lithium Inc. (PLL - Free Report) and Gold Fields Limited (GFI - Free Report) . PLL currently flaunts a Zacks Rank #1 (Strong Buy) and GFI carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Piedmont Lithium’s earnings per share is pegged at $6.29 for 2023. Earnings estimates have been revised 62.9% upward in the past 60 days. PLL has gained 4.1% in a year.

The Zacks Consensus Estimate for Gold Fields’ fiscal 2023 earnings per share is pegged at $1.01. Earnings estimates have moved 6.3% north in the past 60 days. GFI’s shares have gained 46.2% in the past year.

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