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Royal Gold (RGLD) Provides Updates on Operations For Q4

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Royal Gold, Inc. (RGLD - Free Report) has provided an update on fourth-quarter fiscal 2018 (ended Jun 30, 2018) operations. During the quarter, RGLD Gold AG, the fully-owned subsidiary of Royal Gold, sold roughly 64,000 gold equivalent ounces consisting of roughly 51,000 gold ounces, 659,000 silver ounces and 700 tons of copper related to its streaming agreements. The company ended the quarter with 22,000 ounces of gold and 573,000 ounces of silver.
Average realized prices of gold, silver and copper were $1,314 per ounce, $16.55 per ounce sold compared with the prior-quarter figures of $1,328 and $16.77, respectively. Average realized copper prices were $6,847 per ton compared with $6,902 in the prior-year quarter.
In the fiscal fourth quarter, cost of sales was roughly $349 per gold equivalent ounce, up from prior-quarter figure of $342. The cost of sales is based on the quarterly average silver-gold ratio of roughly 79 to 1 and copper-gold ratio of around 0.19 ton per ounce.
First-Quarter 2019 to Bear Impact of Temporary Shutdown
During the quarter, lower deliveries primarily owing to the temporary shutdown of the mill processing facility at Mount Milligan that occurred earlier this year were mitigated by a slight inventory drawdown. Further, some of the deliveries of gold and copper that were slated for July and August 2018 will be deferred to a later date. The remaining impact of the shutdown and delayed deliveries are likely to be reflected in the first quarter fiscal 2019 results.
Repayment of Debt
During the fourth quarter Royal Gold repaid the remaining $75 million outstanding under its revolving credit facility. As of Jun 30, 2018, the company had $1 billion available and no amounts outstanding under its revolving credit facility.
Receipt of Repayment of Golden Star Loan Facility
On Jun 29, 2018, a subsidiary of Golden Star Resources Ltd. (GSS - Free Report) repaid its $20 million term loan facility, including accrued interest, to Royal Gold, well in advance of its May 2019 maturity.
Royal Gold has a streaming interest on 10.5% of the gold at Wassa and Prestea until 240,000 ounces are delivered and 5.5% thereafter. Through Mar 31, 2018, Wassa and Prestea have delivered approximately 61,500 ounces of gold to Royal Gold.
Other Updates
On Jun 29, 2018, Royal Gold agreed to purchase a 1.75% Net Smelter Return Royalty (“NSR”) on Amarillo Gold’s Mara Rosa gold project in Goias State, Brazil for $10.8 million. The acquisition adds to 1.00% Net Smelter Return Royalty previously acquired by Royal Gold, increasing its total royalty interest over the project area to a 2.75% Net Smelter Return. The Mara Rosa Royalty Agreement includes a right of first refusal on future financing opportunities for the project.
Further, on Jun 28, 2018, Royal Gold acquired 682,556 shares of common stock of Contango ORE, Inc. for $26 per share. The company expects to acquire a second and final tranche of 127,188 shares of CORE common stock pursuant to the Stock Purchase Agreement at subsequent closing.
Shares of Royal Gold have advanced 11.5% over the past year, against the industry’s 4.9% decline.
Zacks Rank & Stocks to Consider
Royal Gold currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the sector include KMG Chemicals, Inc. and Methanex Corporation (MEOH - Free Report) , both of which sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
KMG Chemicals has expected long-term growth rate of 29%. Its shares have appreciated 17% over the past year.
Methanex Corporation has a long-term earnings growth rate of 15%. Its shares have appreciated 20% over the past year.
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