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8-K - ROYAL GOLD INC | v209914_8k.htm |
Exhibit
99.1
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
|
DENVER, COLORADO. FEBRUARY 3, 2011:
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.
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).
|
1
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 previously guided, 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.
2
Dolores - Minefinders
reported successful
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.
3
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.
For
further information, please contact:
Karen
Gross
Vice
President and Corporate Secretary
(303)
575-6504
Note: Management’s conference
call reviewing the second quarter results will be held today at 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.
4
*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.
5
TABLE
1
Quarter
Ended December 31, 2010
Royalty
Production and Revenue for Principal Royalty Interests
THREE MONTHS ENDED
DECEMBER 31, 2010
|
THREE MONTHS ENDED
DECEMBER 31, 2009
|
|||||||||||||
PROPERTY
|
ROYALTY
|
OPERATOR
|
METAL
|
Royalty
Revenue
($ Millions)
|
Reported
Production 1
|
Royalty
Revenue
($ Millions)
|
Reported
Production 1
|
|||||||
Andacollo
|
75%
NSR 2
|
Teck
|
Gold
|
11.3
|
11,087
oz.
|
- 2
|
- 2
|
|||||||
Voisey’s
Bay 3
|
2.7%
NSR
|
Vale
|
Nickel
Copper
|
8.1
|
22.5M
lbs. 39.6M lbs.
|
-
4
|
-
4
|
|||||||
Cortez
|
GSR1 and GSR2 5
GSR3 5
NVR1
5
|
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.
24.7M
lbs.
|
3.6
|
24,057
oz.
31.7M
lbs.
|
|||||||
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.
0.5M
oz.
|
0.4
|
19,305
oz.
349,248
oz.
|
|||||||
Gwalia
Deeps
|
1.5%
NSR
|
St Barbara
|
Gold
|
0.6
|
28,049
oz.
|
-
4
|
-
4
|
|||||||
Other
Royalty Properties 8
|
-
|
-
|
Various
|
10.9
|
-
|
6.4
|
-
|
|||||||
Total
Royalty Revenue
|
|
|
|
56.3
|
|
|
34.7
|
|
See footnotes on page
7.
6
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.
|
7
ROYAL
GOLD, INC.
Consolidated
Balance Sheets
(Unaudited,
in thousands except share data)
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 |
8
ROYAL
GOLD, INC.
Consolidated
Statements of Operations and Comprehensive Income
(Unaudited,
in thousands except share data)
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 |
9
ROYAL
GOLD, INC.
Consolidated
Statements of Operations and Comprehensive Income
(Unaudited,
in thousands except share data)
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 |
10
ROYAL
GOLD, INC.
Consolidated
Statements of Cash Flows
(Unaudited,
in thousands)
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 |
11
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 |
12