FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996
COMMISSION FILE NUMBER 0-5664
ROYAL GOLD, INC.
----------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 84-0835164
------------------------------ ----------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
SUITE 1000
1660 WYNKOOP STREET
DENVER, COLORADO 80202-1132
-------------------------------------- --------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(303) 573-1660
--------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Not Applicable
--------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED
SINCE LAST REPORT)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months, and
(2) has been subject to such filing requirements for the past 90
days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
OUTSTANDING AT
CLASS OF COMMON STOCK FEBRUARY 1, 1997
--------------------- -----------------
$.01 PAR VALUE 15,666,626 SHARES
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ROYAL GOLD, INC.
INDEX
PAGE
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets ................... 3-4
Consolidated Statements of Operations ......... 5-6
Consolidated Statements of Cash Flows ......... 7-8
Notes to Consolidated Financial
Statements .................................. 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ................................... 14
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K .............. 21
SIGNATURES ................................................ 22
Cautionary "Safe Harbor" Statement Under the Private Securities
Litigation Reform Act of 1995. With the exception of historical
matters, the matters discussed in this report 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 regarding planned levels of exploration and other
expenditures, anticipated mine lives, timing of production and
schedules for development. Factors that could cause actual results
to differ materially include, among others, decisions and
activities of Cortez regarding the Crescent Pit, Pipeline and South
Pipeline, unanticipated grade, geological metallurgical, processing
or other problems, conclusions of feasibility studies, changes in
project parameters as plans continue to be refined, the timing of
receipt of governmental permits, the failure of plant, equipment or
processes to operate in accordance with specifications or
expectations, results of current exploration activities, accidents,
delayed in start-up dates, environmental costs and risks, changes
in gold prices, as well as other factors. 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.
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ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
December 31, June 30,
1996 1996
------------ -----------
Current Assets
Cash and equivalents $ 2,145,940 $ 3,308,292
Marketable securities 5,003,422 5,015,000
Receivables
Trade and other 91,448 336,162
Royalties receivable in gold 2,075,608 1,637,573
Gold inventory 3,713,131 1,205,406
Prepaid expenses and other 124,956 131,718
Deferred income tax benefit 25,000 25,000
------------ -----------
Total current assets 13,179,505 11,659,151
------------ -----------
Property and equipment, at cost
Mineral properties 3,457,455 1,832,091
Furniture, equipment and improvements 779,328 756,016
----------- ----------
4,236,783 2,588,107
----------- ----------
Less accumulated depreciation,
depletion and amortization (958,324) (931,997)
----------- ----------
Net property and equipment 3,278,459 1,656,110
----------- ----------
Other Assets
Restricted investments and other 22,767 22,767
Deferred income tax benefit 725,000 725,000
----------- ----------
Total other assets 747,767 747,767
----------- ----------
$ 17,205,731 $ 14,063,028
=========== ==========
The accompanying notes are an integral part of
these consolidated financial statements.
3
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ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, June 30,
1996 1996
----------- -----------
Current Liabilities
Accounts payable $ 624,466 $ 487,252
Accrued liabilities
Post retirement benefits 26,400 26,400
Other 254,359 15,877
----------- -----------
Total current liabilities 905,225 529,529
----------- -----------
Post retirement benefit liabilities 107,349 110,549
Commitments and contingencies
(Note 4)
Stockholders' equity
Common stock, $.01 par value,
authorized 40,000,000 shares;
issued 15,616,652 and 15,478,152
shares, respectively 156,167 154,782
Additional paid-in capital 47,284,028 47,200,643
Accumulated deficit (31,171,865) (33,852,502)
----------- -----------
16,268,330 13,502,923
----------- -----------
Less treasury stock, at cost
(15,026 and 15,986 shares,
respectively) (75,173) (79,973)
----------- -----------
Total stockholders' equity 16,193,157 13,422,950
----------- -----------
$ 17,205,731 $ 14,063,028
=========== ===========
The accompanying notes are an integral part of
these consolidated financial statements.
4
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ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended
December 31,
-------------------------------
1996 1995
----------- -----------
Royalty income $ 2,101,584 $ 504,809
Consulting revenues 10,585 24,544
Costs and expenses
Costs of operations 173,040 65,966
General and administrative 391,424 327,747
Direct costs of consulting revenues 4,731 12,173
Exploration 478,147 434,710
Lease maintenance and holding costs 13,702 15,571
Depreciation and depletion 11,338 42,437
---------- ----------
Total costs and expenses 1,072,382 898,604
---------- ----------
Operating income (loss) 1,039,787 (369,251)
Interest and other income 75,876 111,810
Gain (loss) on marketable securities (719) (11,206)
---------- ----------
Net income (loss) $ 1,114,944 $ (268,647)
========== ==========
Net income (loss) per share $ 0.07 $ (0.02)
========== ==========
Weighted average shares outstanding 15,516,606 14,687,226
The accompanying notes are an integral part of
these consolidated financial statements.
5
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ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the six months ended
December 31,
-------------------------
1996 1995
---------- ----------
Royalty income $ 4,610,269 $ 1,215,623
Consulting revenues 12,585 25,544
Costs and expenses
Costs of operations 340,007 114,550
General and administrative 791,686 607,071
Direct costs of consulting revenues 4,731 13,115
Exploration 758,795 899,250
Lease maintenance and holding costs 204,782 158,739
Depreciation and depletion 26,327 89,068
---------- ----------
Total costs and expenses 2,126,328 1,881,793
---------- ----------
Operating income (loss) 2,496,526 (640,626)
---------- ----------
Interest and other income 176,277 215,683
Gain (loss) on marketable securities 7,812 (13,507)
Interest expense 0 (1,359)
---------- ---------
Net income (loss) $ 2,680,615 $ (439,809)
========== =========
Net income (loss) per share $ 0.17 $ (0.03)
========== =========
Weighted average shares outstanding 15,493,087 14,584,992
The accompanying notes are an integral part of
these consolidated financial statements.
6
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ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the six months ended
December 31,
---------------------------
1996 1995
---------- ----------
Cash flows from operating activities
Net income (loss) $ 2,680,615 $ (439,809)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and depletion 26,327 89,068
(Gain) loss on marketable securities (7,812) 13,507
Noncash exploration expense 13,520 0
(Increase) decrease in:
Trade and other receivables 244,714 37,313
Marketable securities 19,390 (58,948)
Royalties receivable in gold (438,035) (427,267)
Inventory (2,507,725) (149,585)
Prepaid expenses and other 6,762 7,324
Increase (decrease) in:
Accounts payable and accrued liabilities 375,696 183,875
Post retirement liabilities (3,200) (3,200)
---------- ----------
Total Adjustments (2,270,363) (307,913)
---------- ----------
Net cash provided by (used in) operating
activities 415,052 (747,722)
---------- ----------
Cash flows from investing activities
Capital expenditures for
property and equipment (1,648,676) (1,071,316)
---------- ----------
Net cash provided by (used in) investing
activities (1,648,676) (1,071,316)
---------- ----------
(Continued)
The accompanying notes are an integral part of these consolidated
financial statements.
7
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ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
For the six months ended
December 31,
---------------------------
1996 1995
---------- ----------
Cash flows from financing activities
Proceeds from issuance of common stock $ 76,072 $ 1,175,170
Net cash provided by (used in) financing ---------- ----------
activities 76,072 1,175,170
---------- ----------
Net increase (decrease) in cash and
equivalents (1,162,352) (643,868)
---------- ----------
Cash and equivalents at beginning
of period 3,308,292 3,424,094
---------- ----------
Cash and equivalents at end of period $ 2,145,940 $ 2,780,226
========== ==========
The accompanying notes are an integral part of
these consolidated financial statements
8
<PAGE>
ROYAL GOLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
For a more complete understanding of the business and operations of Royal
Gold, Inc., please refer to the Report on Form 10-K of Royal Gold, Inc.
for the annual period ended June 30, 1996.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. Therefore, it is
suggested that these financial statements be read in connection with
the financial statements and the notes included in the Company's
audited consolidated financial statements as of June 30, 1996.
The information in this report reflects all adjustments which, in the
opinion of management, are necessary to express a fair statement of
results for the periods presented. All such adjustments are of a
normal recurring nature. The results of operations for the period
ended December 31, 1996 are not necessarily indicative of the results
to be expected for the full fiscal year.
Certain accounts in the prior period financial statements have been
reclassified for comparative purposes to conform with the presentation
in the current period financial statements.
1. PROPERTY AND EQUIPMENT
Property and equipment consists of the following components at
December 31, 1996, and June 30, 1996:
December 31, June 30,
1996 1996
------------ ------------
Mineral Properties:
South Pipeline-
Net Profits Interest $ - $ -
South Pipeline-
Capped Royalty - 3,831
Long Valley 3,062,345 1,436,981
Camp Bird 120,110 120,110
---------- ----------
3,182,455 1,560,922
Office furniture, equipment
and improvements 96,004 95,188
---------- ----------
Net property and equipment $3,278,459 $1,656,110
========== ==========
As discussed in the following paragraphs, the Company is conducting
activity on substantially all of its mineral properties. The
results of these activities to date have not resulted in any
conclusions that the carrying value of these properties will or
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will not be recoverable by charges against income from future
mining operations or a subsequent sale of the properties.
Presented below is a discussion of the status of each of the
Company's significant mineral properties.
A. SOUTH PIPELINE (CRESCENT VALLEY)
The South Pipeline property is a claim block containing
sediment-hosted gold deposits located in Lander County,
Nevada. Pursuant to an agreement dated September 18, 1992,
the Company holds a 20% net profits interest in this project.
Production is continuing at the Crescent Pit portion of the
project, while the remainder of the project is in the
exploration and development stage. Cortez Gold Mines
("Cortez") is the project operator.
Cortez began mining at the Crescent Pit, which is located on
a small portion of the South Pipeline property, in June 1994.
In September 1994, sufficient quantities of mill-grade oxide
ore had been accumulated to start processing and Cortez
commenced production of gold. Mill-grade oxide ore from the
Crescent Pit is being processed at the Cortez Mill.
Production of heap leach material from the Crescent Pit began
in August 1995. This heap leach material consists of oxide ore
averaging 0.022 ounces per ton. Additionally, ore is being
stockpiled for future processing.
During the quarter ended December 31, 1996, Cortez milled
179,000 tons of oxide material from the Crescent Pit. This
material had an average grade of 0.222 ounces of gold per ton
and yielded 34,924 ounces of gold. In addition, Cortez
produced 6,212 ounces of gold from the Crescent Pit heap leach
operation.
B. SOUTH PIPELINE - CAPPED ROYALTY
In October 1994, the Company purchased an additional royalty
interest on the South Pipeline project from Western Mining
Corporation for $275,000. The royalty interest was equivalent
to a 0.75 percent net smelter return production royalty,
capped at $375,000. The Company has received all amounts
payable from this royalty.
10
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C. LONG VALLEY
The Long Valley Property, a development stage project in Mono
County, California, is subject to an agreement between the
Company and Standard Industrial Minerals, Inc. Pursuant to
the agreement, the Company is entitled, through December 31,
1997, to acquire Standard Industrial Minerals' interest in the
property, upon payment of $1,000,000. The Option Agreement,
which is terminable by the Company at any time, involves
annual option consideration payments which would total
$125,000, if all four such payments were made. Up to $100,000
of the payments (namely, the payments that were made in 1995
and 1996) may be credited against the option exercise amount.
D. CAMP BIRD
At December 31, 1996, capitalized costs of $120,000 represent
the Company's ownership of patented mining claims. Management
believes that these claims have value for their mineral
potential as well as for the real estate value.
2. INCOME TAXES
At June 30, 1996, the Company had an estimated net operating
loss carryforward for federal income tax purposes of
approximately $25.1 million. If not used, the net operating
loss carryforwards will expire during the years 2001 through
2011.
During the first six months of fiscal 1997, the Company
sustained a tax loss from operations which added to its net
operating loss carryforward position.
Based upon the determination of proven gold reserves at the
Crescent Pit of the South Pipeline Project, management has
estimated that is more likely than not that the Company will
have some net future taxable income within the net operating
loss carryforward period and has established a $750,000
deferred tax asset.
3. ROYALTIES RECEIVABLE IN GOLD
At December 31, 1996, 5,636 ounces of gold related to the
December 31 quarterly production is recorded as a receivable.
This gold was received on February 3, 1997. Royal Gold has
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exposure with respect to this receivable to any change in the
gold price between the end of the quarter and the actual
receipt of gold. For the December 31 quarter, the Company
recorded a loss of $46,000 related to this receivable, because
of a decrease in the gold price.
4. INVENTORY
Gold inventory on the balance sheet consists of refined gold
bullion stored in safekeeping by the Company's refiner in
Utah. The inventory is carried at market value with
unrealized gains or losses included in the results of
operations for the period. For the December 31 quarter, the
Company recorded a loss of $124,000 related to its gold
inventory. At December 31, 1996, the Company held 9,994
ounces of gold bullion in inventory.
5. CONTINGENCIES
The operations and activities conducted on the properties in
which the Company holds various interests are subject to
various federal, state, and local laws and regulations
governing protection of the environment. These laws are
continually changing, and are generally becoming more
restrictive. Management believes that the Company is in
material compliance with all applicable laws and regulations.
The U.S. Forest Service has advised the Company that all
outstanding reclamation at its Goldstripe project site, except
for post-reclamation groundwater monitoring, has been
satisfied.
6. Accounting for Stock-Based compensation (SFAS No. 123)
The Company expects to elect the disclosure alternative
proscribed by SFAS No. 123, "Accounting for Stock-Based
Compensation," in accordance with Accounting Principles Board
Opinion ("APB") No. 25, "Accounting for Stock Issued to
Employees" and its various interpretation. Under APB No. 25,
no compensation cost is generally recognized for fixed stock
options for which the exercise price is not less than the
market price of the Company's Common Stock on the grant date.
Under the disclosure alternative of SFAS No. 123, the Company
will disclose, starting with its 1997 fiscal year, its
respective pro forma net income and earnings per share as if
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the fair value based accounting method of SFAS No. 123 had
been used to account for stock-based compensation cost for all
awards granted by the Company after July 1, 1995.
13
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ROYAL GOLD, INC.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Royal Gold is engaged in the acquisition, exploration, development,
and sale of gold properties and in the acquisition of gold royalty
interests.
The Company's primary business strategy is to create and acquire
royalty and other carried ownership interests in gold mining
properties through exploration and development activity (and
subsequent transfer of the operating interest in the subject
properties to other firms), and through the direct acquisition of
such interests. Substantially all of the Company's revenues are and
can be expected to be derived from royalty interests, rather than
from mining operations conducted by the Company.
At December 31, 1996, the Company had a working capital surplus of
$12,274,280. Current assets were $13,179,505, compared to current
liabilities of $905,225, for a current ratio of 15 to 1. This
compares to current assets of $11,659,151, and current liabilities
of $529,529, at June 30, 1996, resulting in a current ratio of 22
to 1. The Company is now receiving its full 20% net profits
royalty interest from both mining units at the Crescent Pit.
The Company's liquidity needs are generally being met from its
available cash resources, royalty income, interest income, and the
issuance of common stock. During the second quarter of fiscal
1997, the Company earned $2,271,652 in royalties from its net
profits interest at South Pipeline. This $2,271,652 is comprised
of $1,921,509 related to mill-grade material and $350,143 from heap
leach ore from the Crescent Pit. The Company earned $75,876 in
interest income on its cash and marketable securities portfolio.
This marketable securities portfolio is invested in U.S. treasury
notes with maturities of up to fifteen months, has an adjusted cost
basis of $5,004,484, and had a market value, at December 31, 1996,
of $5,003,422.
Management believes its cash resources will be adequate to fund
planned operations for the foreseeable future. The Company has
continued to explore its properties and anticipates continued
exploration activities for the remainder of the year. The
Company's long-term viability is ultimately dependent upon the
successful development and operation of the Company's mineral
interests. It can be anticipated, because of the nature of the
business, that exploration on many of these properties will prove
unsuccessful and that the Company will terminate its interest in
such properties. As significant results are generated at any such
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property, the Company will reevaluate the property and may
substantially increase or decrease the level of expenditures on
that particular property.
On January 10, 1997, Placer Dome U.S. Inc. ("PDUS"), the 60% owner
and operator of Cortez Gold Mines, notified the Company that it has
updated the reserves and mineralization at South Pipeline. Set
forth below are charts showing the reserves and gold deposits that
have been defined at the South Pipeline property as of December 31,
1996:
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Proven and Probable Reserves (1)
December 31, 1996
Average
Tons Grade Contained
(millions) (oz Au/ton) Oz Au (2)
-------- --------- --------
South Pipeline Property
Crescent Pit:
Mill Grade Ore (3) 0.86 0.113 97,500
Heap Leach Ore (3) 0.77 0.026 19,800
South Pipeline Deposit:
Mill Grade Ore (3) 20.20 0.094 1,899,000
Heap Leach Ore (3) 26.91 0.022 592,000
- --------------------------------
(1) "Reserve" is that part of a mineral deposit which could be
economically and legally extracted or produced at the time of the
reserve determination.
"Proven (Measured) Reserves" are reserves for which (a)
quantity is computed from dimensions revealed in outcrops,
trenches, workings or drill holes and the grade is computed from
the results of detailed sampling, and (b) the sites for inspection,
sampling and measurement are spaced so closely and the geologic
character is so well defined that the size, shape, depth and
mineral content of the reserves are well-established.
"Probable (Indicated) Reserves" are reserves for which the
quantity and grade are computed from information similar to that
used for proven (measured) reserves, but the sites for inspection,
sampling, and measurement are farther apart or are otherwise less
adequately spaced. The degree of assurance of probable (indicated)
reserves, although lower than that for proven (measured) reserves,
is high enough to assume geological continuity between points of
observation.
(2) Contained ounces shown are before an allowance for dilution of
ore in the mining process. The assumed recovery rates are 84% for
Crescent Pit mill-grade ore, 86% for South Pipeline mill-grade ore,
and 50% for heap leach material. During fiscal 1996, Cortez
actually recovered 87.7% of the assayed head grade of the Crescent
Pit mill-grade ore, and 64% of the assayed head grade of the
Crescent Pit heap leach material.
(3) Amounts shown represent 100% of the reserves. The Company
holds a 20% net profits interest in this property.
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Gold Deposits/Mineralization (1)
December 31, 1996
Average
Tons Grade
(millions) (oz Au/ton)
-------- ---------
South Pipeline Project (2) 36.87 0.033
(excluding Deep Zone)
Deep Zone (2)(3) 2.16 0.177
The decrease in reserves at the Crescent Pit for the calendar year
1996 is primarily attributable to production during the calendar
year.
PDUS has informed the Company that it has made a preliminary
determination of the mine plan at Cortez, including the Crescent
Pit, for calendar year 1997. This plan indicates that, in addition
to processing Crescent Pit ore at the Cortez mill, PDUS will
process some of the stockpiled Crescent Pit ore at the new Pipeline
mill. With this increase in mill availability, it is possible that
mining and milling at the Crescent Pit will be essentially
completed by mid-year of calendar year 1997, with some Crescent Pit
heap leach production continuing through the remainder of calendar
year 1997. If the mining and milling of Crescent Pit material is
advanced as indicated by Cortez' initial 1997 mine plan, the
Company may receive larger-than-expected royalty payments during
the second half of fiscal 1997.
- ---------------------------------
(1) Gold mineralization has not been included in the proven and
probable ore reserve estimates because even though drilling,
trenching and/or underground work indicate a sufficient quantity
and grade to warrant further exploration or development
expenditures, these deposits do not qualify as commercially
mineable ore bodies until further drilling and metallurgical work
are completed, and until other economic and technical feasibility
factors based upon such work are resolved.
(2) Amounts shown represent 100% of the deposits. The Company
holds a 20% net profits interest in this property.
(3) The Deep Zone is that portion of the South Pipeline deposit,
located below the bottom of the currently "optimized" South
Pipeline Pit, which is potentially mineable by underground mining
methods. Cortez is currently evaluating the Deep Zone.
PDUS will be revising its reserve and mineralization estimates for
South Pipeline by mid-year to reflect the results of drilling
completed in calendar year 1996, and will revise its mine plan
accordingly.
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The Company anticipates that total general and administrative
expenses for fiscal 1997 will be approximately $1,400,000 (revised
from $1,200,000, as disclosed in the 6/30/96 Form 10-K), of which
$792,000 has been spent to date. The Company also anticipates
expenditures for exploration and property holding costs to be
approximately $1,225,000, of which $964,000 has been spent.
Development expenditures at Long Valley are estimated at $1,800,000
(revised from $1,000,000, as disclosed in the 6/30/96 Form 10-K),
of which $1,625,000 has been spent. This increase in expenditures
at Long Valley is due to encouraging results from drilling
activity. Because of the seasonal nature of the Company's
activities, development, exploration and holding costs are
disproportionately incurred during the six months ended December
31. On a prospective basis these amounts could increase or
decrease significantly, based on exploration results and decisions
about releasing or acquiring additional properties, among other
factors.
RESULTS OF OPERATIONS
- ---------------------
FOR THE QUARTER ENDED DECEMBER 31, 1996, COMPARED TO THE QUARTER
ENDED DECEMBER 31, 1995
For the quarter ended December 31, 1996, the Company reported net
income of $1,114,944, or $.07 per share, as compared to a net loss
of $268,647, or $.02 per share, for the quarter ended December 31,
1995.
Royalty income for the current quarter of $2,101,584, compared to
$504,809 for the quarter ended December 31, 1995, relates to Royal
Gold's interest in the South Pipeline property. The increase is
attributable to higher throughput at the mill and to the fact that
Royal Gold received its full 20% net profits interest on heap leach
ore for the entirety of the current quarter. The heap leach mining
unit was in payback during the prior year quarter.
Costs of Operations increased to $173,040 for the quarter ended
December 31, 1996, compared to $65,966 for the quarter ended
December 31, 1995 primarily because of the levy of Nevada Net
Proceeds Tax on the higher revenues from the Crescent Pit.
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General and administrative costs of $391,424 for the current
quarter have increased from $327,747 for the quarter ended December
31, 1995, primarily because of expenditures incurred for the
pending application to relist the Company's common stock on the
Nasdaq National Market System, professional fees, and increased
compensation and office expenses.
Exploration expenditures of $478,147 for the quarter ended December
31, 1996, increased from $434,710 for the quarter ended December
31, 1995, primarily because of increased activity on Union Pacific
Resources ground in the State Line Diamond District of
Colorado/Wyoming.
Depreciation, depletion and amortization decreased from $42,437 for
the quarter ended December 31, 1995, to $11,388 for the quarter
ended December 31, 1996, primarily due to depletion expense related
to the cessation of revenues from the South Pipeline Project capped
royalty.
Interest income decreased from $111,810 for the quarter ended
December 31, 1995, to $75,876 for the quarter ended December 31,
1996, due to decreased cash available for investing.
FOR THE SIX MONTHS DECEMBER 31, 1996, COMPARED TO THE SIX MONTHS
ENDED DECEMBER 31, 1995
For the six months ended December 31, 1996, the Company reported
net income of $2,680,615, or $.17 per share, as compared to a net
loss of $439,809, or $.03 per share, for the six months ended
December 31, 1995.
Year to date royalty income of $4,610,269, compared to $1,215,623
for the prior year, relates to Royal Gold's interest in the South
Pipeline property, from which the Company was receiving its full
20% net profits interest for the six months ended December 31,
1996. The increase is attributable to higher throughput at the
Cortez mill and the fact that Royal Gold received its full 20% net
profits interest on heap leach ore for the entirety of the current
period. The heap leach mining unit was in payback during the prior
year period.
Costs of Operations increased to $340,007 for the six months ended
December 31, 1996, compared to $114,550 for the six months ended
December 31, 1995, primarily because of the levy of Nevada Net
Proceeds Tax on the higher revenues from the Crescent Pit.
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<PAGE>
General and administrative costs of $791,686 for the six months
ended December 31, 1996 have increased from $607,071 for the six
months ended December 31, 1995, primarily because of expenditures
incurred for the pending application to relist the Company's common
stock on the Nasdaq National Market System, professional fees, and
increased compensation and office expenses.
Exploration expenditures of $758,795 for the six months ended
December 31, 1996, decreased from $899,250 for the six months
ended December 31, 1995, primarily due to a higher level of
exploration activity at the Ferber and Buckhorn South properties in
the prior year period.
Lease maintenance and holding costs increased from $158,739 for the
six months ended December 31, 1995, to $204,782 for the six months
ended December 31, 1996, due to the escalating holding costs at the
Company's exploration properties.
Depreciation, depletion and amortization decreased from $89,068 for
the six months ended December 31, 1995, to $26,327 for the six
months ended December 31, 1996, primarily due to depletion expense
related to the decreased revenues from the South Pipeline Project
capped royalty.
Interest and other income decreased from $215,683 for the six
months ended December 31, 1995, to $176,277 for the six months
ended December 31, 1996, primarily due to the lower level of funds
available for investment.
20
<PAGE>
PART II: OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
--------
None.
(b) Reports on Form 8-K
-------------------
None.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ROYAL GOLD, INC.
(Registrant)
Date: February 14, 1997 By: /s/ Stanley Dempsey
-------------------
Stanley Dempsey
Chairman of the Board and
Chief Executive Officer
Date: February 14, 1997 By: /s/ Thomas A. Loucks
--------------------
Thomas A. Loucks
Treasurer
(chief financial officer)
22
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<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1997 JUN-30-1997
<PERIOD-END> DEC-31-1996 DEC-31-1996
<CASH> 2,145,940 2,145,940
<SECURITIES> 5,003,422 5,003,422
<RECEIVABLES> 2,167,056 2,167,056
<ALLOWANCES> 0 0
<INVENTORY> 3,713,131 3,713,131
<CURRENT-ASSETS> 13,179,505 13,179,505
<PP&E> 4,236,783 4,236,783
<DEPRECIATION> (958,324) (958,324)
<TOTAL-ASSETS> 17,205,731 17,205,731
<CURRENT-LIABILITIES> 905,225 905,225
<BONDS> 0 0
0 0
0 0
<COMMON> 47,440,195 47,440,195
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<TOTAL-LIABILITY-AND-EQUITY> 17,205,731 17,205,731
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<TOTAL-REVENUES> 2,112,169 4,622,854
<CGS> 0 0
<TOTAL-COSTS> 1,072,382 2,126,328
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 1,114,944 2,680,615
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 1,114,944 2,680,615
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,114,944 2,680,615
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