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, 1999
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.
CLASS OF OUTSTANDING AT
COMMON STOCK FEBRUARY 1, 2000
------------ ----------------
$.01 PAR VALUE 17,593,643 SHARES
ROYAL GOLD, INC.
INDEX
PART I: FINANCIAL INFORMATION PAGE
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 .................................. 15
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ............... 20
SIGNATURES ................................................. 21
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 future revenues from our principal royalties,
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, variations in
production results at the Pipeline Mining Complex, decisions and activities
of various mine operators, 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, delays 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.
ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
December 31, June 30,
1999 1999
---------- ----------
Current Assets
Cash and equivalents $ 3,157,908 $ 4,670,476
Marketable securities 2,005,256 4,014,418
Trade and other receivables 550,428 570,212
Royalties receivable in gold 2,418,019 64,218
Inventory 8,292 92,440
Prepaid expenses and other 34,310 34,946
---------- ----------
Total current assets 8,174,213 9,446,710
---------- ----------
Property and equipment, at cost
Mineral properties 11,149,605 3,044,135
Furniture, equipment and improvements 721,402 711,558
---------- ----------
11,871,007 3,755,693
---------- ----------
Less accumulated depreciation,
depletion and amortization (2,060,843) (1,445,358)
---------- ----------
Net property and equipment 9,810,164 2,310,335
---------- ----------
Other assets 35,767 57,767
---------- ----------
$18,020,144 $11,814,812
========== ==========
The accompanying notes are an integral part of
these consolidated financial statements.
3
ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, June 30,
1999 1999
---------- ----------
Current Liabilities
Accounts payable $ 584,722 $ 631,565
Taxes payable 37,820 0
Current note payable (Note 5) 2,000,000 0
Accrued compensation 556,315 190,000
Post retirement benefits 26,400 26,400
Other 74,292 16,496
---------- ----------
Total current liabilities 3,279,549 864,461
---------- ----------
Post retirement benefit liabilities 67,898 81,098
Commitments and contingencies (Note 8)
Stockholders' equity (Note 6)
Common stock, $.01 par value,
authorized 40,000,000 shares;
issued 17,803,822 and 17,321,322
shares, respectively 178,038 173,213
Additional paid-in capital 55,833,975 54,027,150
Accumulated deficit (40,295,686) (42,148,880)
---------- ----------
15,716,327 12,051,483
Less treasury stock, at cost (Note 6)
(210,726 and 238,726 shares,
respectively) (1,043,630) (1,182,230)
---------- ----------
Total stockholders' equity 14,672,697 10,869,253
---------- ----------
$18,020,144 $11,814,812
========== ==========
The accompanying notes are an integral part of
these consolidated financial statements.
4
ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the six months ended
December 31,
-----------------------------------
1999 1998
----------- -----------
Royalty revenues $ 4,845,367 $ 634,951
Gain (loss) on gold inventory 185,263 (580)
Consulting revenues 6,000 9,575
Costs and expenses
Costs of operations 372,882 141,235
Direct costs of consulting 347 1,625
General and administrative 1,029,600 816,621
Exploration 1,029,262 1,545,550
Lease maintenance and holding costs 187,186 327,333
Depreciation and depletion 615,486 298,054
----------- -----------
Total costs and expenses 3,234,763 3,130,418
----------- -----------
Operating earnings (loss) 1,801,867 (2,486,472)
Interest income 150,842 406,985
Interest expense 56,250 0
Loss on marketable securities (5,445) (17,411)
----------- -----------
Pretax earnings (loss) 1,891,014 (2,096,898)
Income tax expense 37,820 0
----------- -----------
Net earnings (loss) $ 1,853,194 $(2,096,898)
=========== ===========
Basic earnings (loss) $ 0.11 $ (0.12)
Basic weighted average
shares outstanding 17,400,857 16,946,341
Diluted earnings (loss) $ 0.10 $ (0.12)
Diluted weighted average
shares outstanding 17,688,402 16,946,341
The accompanying notes are an integral part of
these consolidated financial statements.
5
ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended
December 31,
-----------------------------------
1999 1998
----------- -----------
Royalty revenues $ 3,052,805 $ 251,846
Loss on gold inventory (45,058) (580)
Consulting revenues 4,000 6,575
Costs and expenses
Costs of operations 219,430 80,494
Direct costs of consulting 347 1,625
General and administrative 650,624 444,624
Exploration 568,517 643,083
Lease maintenance and holding costs 166,774 15,358
Depreciation and depletion 403,251 132,414
----------- -----------
Total costs and expenses 2,008,943 1,317,598
----------- -----------
Operating earnings (loss) 1,002,804 (1,059,757)
Interest income 64,755 248,099
Interest expense 42,500 0
Loss on marketable securities (6,797) (17,411)
----------- -----------
Pretax earnings (loss) 1,018,262 (829,069)
Income tax expense 20,365 0
----------- -----------
Net earnings (loss) $ 997,897 $ (829,069)
=========== ===========
Basic earnings (loss) $ 0.06 $ (0.05)
Basic weighted average
shares outstanding 17,578,792 16,969,072
Diluted earnings (loss) $ 0.06 $ (0.05)
Diluted weighted average
shares outstanding 17,866,337 16,969,072
The accompanying notes are an integral part of
these consolidated financial statements.
6
ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the six months ended
December 31,
---------------------------------
1999 1998
----------- -----------
Cash flows from operating activities
Net earnings (loss) $ 1,853,194 $(2,096,898)
----------- -----------
Adjustments to reconcile net earnings
(loss) to net cash used in
operating activities:
Depreciation and depletion 615,486 298,054
Unrealized loss
on marketable securities 5,445 17,411
Unrealized gain on
gold inventory 0 580
Non-cash stock issuance 136,500 0
(Increase) decrease for compensation in:
Trade and other receivables 19,784 212,691
Marketable securities 3,717 0
Royalties receivable in gold (2,353,801) (14,263)
Inventory 84,148 7,432
Prepaid expenses and other 636 12,940
Increase (decrease) in:
Accounts payable and accrued liabilities 415,088 58,351
Post retirement liabilities (13,200) (13,200)
----------- -----------
Total Adjustments (1,086,197) 579,996
----------- -----------
Net cash provided by(used in)
operating activities 766,997 (1,516,902)
----------- -----------
Cash flows from investing activities
Purchase of marketable securities 0 (22,343)
Proceeds from marketable securities 2,000,000 0
Capital expenditures for
property and equipment (8,115,315) (230,281)
(Increase) decrease in other assets 22,000 (200)
----------- -----------
Net cash used in investing
activities (6,093,315) (252,824)
----------- -----------
The accompanying notes are an integral part of
these consolidated financial statements.
7
ROYAL GOLD, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
For the six months ended
December 31,
---------------------------------
1999 1998
----------- -----------
Cash flows from financing activities
Proceeds from issuance of common stock $ 1,813,750 $ 30,500
Proceeds from issuance of debt 2,000,000 0
Purchases of common stock 0 (273,587)
----------- -----------
Net cash provided by (used in) financing
activities 3,813,750 (243,087)
----------- -----------
Net decrease in cash and
equivalents (1,512,568) (2,012,813)
----------- -----------
Cash and equivalents at beginning
of period 4,670,476 8,462,083
----------- -----------
Cash and equivalents at end of period $ 3,157,908 $ 6,449,270
=========== ===========
The accompanying notes are an integral part of
these consolidated financial statements
8
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, 1999.
1. PROPERTY AND EQUIPMENT
The net carrying value of the Company's property and equipment consists of
the following components at December 31, 1999, and June 30, 1999:
December 31, June 30,
1999 1999
------------ ------------
Mineral Properties:
Pipeline GSR #1 $ - $ -
Pipeline GSR #2 - -
Pipeline GSR #3 7,672,858 -
Bald Mountain Royalty 1,787,701 1,956,825
Other 300,823 300,823
------------ ------------
9,761,382 2,257,648
Office furniture, equipment
and improvements 48,782 52,687
------------ ------------
Net property and equipment $ 9,810,164 $ 2,310,335
============ ============
As discussed in the following paragraphs, activity is being conducted on
substantially all of the Company's mineral properties. The recoverability
of the carrying value of capitalized projects is evaluated based upon
undiscounted estimated future net cash flows from each property's proven
and probable reserves. Reductions in the carrying value of each property
are recorded to the extent that the Company's carrying value in each
property exceeds its estimated future discounted cash flows.
Presented below is a discussion of the status of each of the Company's
significant mineral properties.
A. PIPELINE MINING COMPLEX ROYALTIES
The Company converted its 20% net profits interest at South
Pipeline into several gross smelter return royalties extending
over the mining complex that includes the Pipeline and South
Pipeline deposits. The Pipeline Mining Complex is owned by the
9
Cortez Joint Venture, a joint venture of Placer Cortez Inc. and
Kennecott Explorations (Australia) Ltd.
The royalty interests that Royal Gold holds include:
A) A sliding scale gross smelter returns ("GSR") royalty for all
gold produced from the "Reserve Claims" (52 claims that encompass
all of the presently known reserves (as of July 1, 1999) making
up the Pipeline and South Pipeline deposits). The GSR on the
Reserve Claims, known as GSR #1, is tied to the gold price, with
a floor of 0.40% GSR below $210 per ounce gold, and is capped at
a 5% GSR for a $470 per ounce or higher gold price. At a $300
gold price, the GSR on the Reserve Claims is 2.25%.
B) A sliding scale GSR for all gold produced from certain GAS
Claims (296 claims immediately south and east of the Reserve
Claims). This royalty, known as GSR #2, is tied to the gold
price, with a floor of 0.72% GSR below $210 per ounce gold, and
is capped at a 9% GSR for a $470 per ounce or higher gold price.
At a gold price of $300, the GSR on the GAS Claims is 4.05%.
C) A 10% GSR on all gold and silver produced from any of the GAS
Claims from January 1, 1999, until the commencement of commercial
production from the South Pipeline deposit.
D) A 7% GSR on all silver produced from any of the Reserve
Claims or GAS Claims, commencing July 1, 1999.
Effective September 1, 1999, the Company acquired, for
approximately $8 million, 47.5 percent of a group of overriding
royalty interests on mineral production from some 6,000 acres of
contiguous lands in Lander County, Nevada that, in the aggregate,
covers the Pipeline gold mine and the South Pipeline gold
deposit. The overriding royalty interests purchased by the
Company and identified as GSR #3 may be summarized as follows:
(i) 0.475% of the gross value of all mineral production from
lands encompassed by 50 designated and unpatented mining claims
situated in Lander County, until a total of 3.7 million troy
ounces of gold has been produced from such lands (2.6 million
ounces have been produced as of December 31, 1999), and,
thereafter, 0.7125% of the gross value of any subsequent mineral
production from such lands; and (ii) 0.7125% of the gross value
10
of all mineral production from any lands encompassed by the 348
claims identified in GSR #1 and GSR #2.
B. BALD MOUNTAIN
Effective January 1, 1998, Royal Gold acquired a 1.75% net
smelter return royalty that burdens approximately 81% of the
current reserves at the Bald Mountain Mine, White Pine County,
Nevada. Bald Mountain is owned and operated by Placer Dome U.S.
Inc.
2. INCOME TAXES
At June 30, 1999, the Company had an estimated net operating loss
carryforward for federal income tax purposes of approximately $24.7
million. If not used, the net operating loss carryforwards will expire
during the years 2001 through 2017. The Company's ability to generate
future taxable income to realize the benefit of its tax assets will depend
primarily on the spot price of gold. Due to net losses as a result of
depressed gold prices, a full valuation allowance of $11,528,157 was
established for the net deferred tax assets at June 30, 1999. The
continued volatility of the gold price makes it uncertain as to the
ultimate realization of these net deferred tax assets. However, the
benefits of prior losses, which are limited to fiscal year 2000 earnings,
are being recognized in fiscal year 2000 through an adjustment of the
valuation allowance.
3. ROYALTIES RECEIVABLE IN GOLD
At December 31, 1999, 8,331 ounces of gold, related to the December 31
quarterly production from GSR #1 at the Pipeline Mining Complex, were
recorded as a receivable. This gold was received on January 27, 2000.
4. INVENTORY
Gold inventory on the balance sheet consists of refined gold bullion held
in uninsured accounts. This gold is stored by the Company's refiner in
Utah. The inventory is carried at market value at the end of the period
with unrealized gains or losses included in the results of operations for
the period. During the quarter ended December 31, 1999, all gold
11
inventory was sold and at December 31, 1999, the Company held no gold
bullion in inventory. Inventory at December 31,1999, consisted of gold
coins held for sale.
5. CURRENT NOTE PAYABLE
The Company has a $2,000,000 demand loan with HSBC (formerly Republic
National Bank). This loan is collateralized by $2,000,000 in
U.S. Treasury obligations that are held by HSBC and carries interest
calculated at the prime rate.
6. SHAREHOLDERS' EQUITY
The Company issued 452,500 shares of common stock under its shelf
registration statement which generated proceeds of $1,810,000 and received
$3,750 from the exercise of 30,000 stock options. The Company also
granted 28,000 shares of treasury stock to non-employee directors. This
issuance was recorded at a market price of $4.875, the stock price on the
date of the grant.
7. EARNINGS PER SHARE COMPUTATION
For the three months ended 12/31/99
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------ ---------
BASIC EPS
Earnings to
common stockholders $ 997,897 17,578,792 $ 0.06
Effect of
dilutive securities
Options - 287,545 -
----------- ------------ ---------
DILUTED EPS $ 997,897 17,866,337 $ 0.06
=========== ============ =========
12
For the six months ended 12/31/99
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------ ---------
BASIC EPS
Earnings to
common stockholders $ 1,853,194 17,400,857 $ 0.11
Effect of
dilutive securities
Options - 287,545 -
----------- ------------ ---------
DILUTED EPS $ 1,853,194 17,688,402 $ 0.10
=========== ============ =========
At December 31, 1999, options to purchase 1,005,532 shares of common
stock, at an average price of $5.66 per share, were not included in the
computation of diluted EPS because the exercise price of these options was
greater than the market price of the common shares at December 31, 1999.
At December 31, 1998, options to purchase 555,020 shares of common stock,
at an average price of $0.13 per share, were not included in the
computation of diluted EPS because the Company experienced a net loss in
the quarter and the six month period and these options are anti-dilutive.
Options to purchase 850,498 shares of common stock, at an average price of
$6.06 per share, were outstanding at December 31, 1998, but were not
included in the computation of diluted EPS for the quarter and six month
period because the exercise price of these options was greater than the
market price of the common shares at December 31, 1999.
8. CONTINGENCIES AND COMMITMENTS
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.
13
9. GENERAL
The unaudited financial statements as of December 31, 1999, and for the
three and six months ended December 31, 1999 and 1998 reflect all
adjustments, consisting solely of normal recurring items, which are
necessary for the fair presentation of financial position, results of
operations, and cash flows on a basis consistent with that of the prior
audited consolidated financial statements.
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
audited financial statements and the notes included in the Company's
Annual Report on Form 10-K as of June 30, 1999.
14
ROYAL GOLD, INC.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Royal Gold is engaged in the acquisition of gold and other precious metal
royalties and in the exploration and development of gold and other
precious metal properties.
The Company's primary business strategy is to acquire royalties and other
carried ownership interests in gold and other precious metal mining
properties through the direct acquisition of such interests, financing
properties in production or near production and through exploration and
development activity (and subsequent transfer of the operating interest in
the subject properties to other firms). 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.
The Company has continued to explore its properties and anticipates
continued exploration activities for the remainder of the fiscal year.
The Company's long-term viability is ultimately dependent upon the
acquisition of royalties and the successful exploration and subsequent
development and operation by others 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 property, the Company will
re-evaluate the property and may substantially increase or decrease the
level of expenditures on that particular property. The profitability and
reserves of the Company are affected by the prevailing gold price.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1999, the Company had a working capital surplus of
$4,894,664. Current assets were $8,174,213, compared to current
liabilities of $3,279,549, for a current ratio of 2.5 to 1. This compares
to current assets of $9,446,710, and current liabilities of $864,641, at
June 30, 1999, resulting in a current ratio of 11 to 1.
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 first six months of fiscal 2000, the Company
earned $4,610,000 from its royalty interest at the Pipeline Mining
Complex, and $235,000 from its royalty interest at Bald Mountain. The
Company also earned $150,842 in interest income on its cash and marketable
securities portfolio during the six month period. This marketable
securities portfolio is invested in U.S. treasury notes with maturities of
five months or less. These marketable securities have a market value of
$2,003,438 and an adjusted cost basis of $2,005,255.
15
During the six month period, the Company issued 452,500 shares of common
stock under its shelf registration statement which generated proceeds of
$1,810,000 and received $3,750 from the exercise of 30,000 stock options.
The Company entered into a $2,000,000 demand loan agreement with HSBC
(formerly Republic National Bank). This loan is collateralized by
$2,000,000 in U.S. Treasury obligations that are held by HSBC.
Management believes its cash resources will be adequate to fund planned
operations for the foreseeable future, based on production estimates from
Cortez. The Company's royalties are expected to yield approximately $8.5
million (revised from $7.1 million) to the Company in fiscal year 2000 at
a $300 gold price. The Company is unhedged. The Company anticipates
receiving $350,000 to $450,000 per year in revenues, based on production
estimates from the operator, from its interest at Bald Mountain, assuming
a constant gold price of $300 per ounce.
The Company anticipates total general and administrative expenses for
fiscal 2000 to be approximately $1,700,000, of which $1,030,000 has been
spent to date. The Company also anticipates expenditures for exploration
and property holding costs to be approximately $1,900,000, of which
$1,216,000 has been spent. 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.
SUBSEQUENT EVENT
On December 23, 1999, Royal Gold announced that it had agreed to acquire,
via a private placement, three million units of Yamana Resources Inc. for
Cdn $1.8 million or U.S. $1.3 million based on the exchange rates at
closing on February 1, 2000. Each Unit consists of one common share of
Yamana and one-half of a warrant, with each full warrant entitling Royal
Gold to purchase another common share of Yamana within a three-year period
at Cdn $0.50 per share. Yamana common stock is traded on Toronto Stock
Exchange and the securities purchased by the company will be restricted
from public sale for ninety days.
Royal Gold also purchased, for U.S. $150,000, a 2% net smelter returns
royalty on all mineral production from any of Yamana's properties,
including the high-grade silver property known as the Martha mine, at the
Bacon prospect, and the high-grade gold property known as Coyote, at the
Martinetas prospect. The private placement and royalty purchase
transaction was closed on February 1, 2000.
16
Yamana's mineral holdings in the Santa Cruz Province of Argentina
encompass about 365,000 acres (148,000 hectares). The most advanced of
these properties is the Martha mine, where permitting is now underway for
a direct shipping ore ("DSO") mining operation that is expected to be the
first phase of a four-phase mining program at Bacon. In a DSO project,
high-grade ore is shipped directly to a smelter, and no on-site processing
is required.
Yamana has advised Royal Gold that it expects the Martha mine to be in
production by the first quarter of 2001, and that the DSO ore shoots at
Bacon are expected to produce about four million ounces of silver
equivalent within the first year of operations.
Royal Gold now holds approximately 7% of the issued and outstanding shares
of Yamana. Royal Gold's exercise of the warrants would increase its stake
in Yamana. All of the Yamana shares, and any shares acquired upon the
exercise of the warrants, will be subject to certain restrictions upon any
proposed resale.
RESULTS OF OPERATIONS
FOR THE QUARTER ENDED DECEMBER 31, 1999, COMPARED TO THE QUARTER ENDED
DECEMBER 31, 1998
For the quarter ended December 31, 1999, the Company reported net earnings
of $997,897 or $0.06 per basic share, as compared to a net loss of
$829,069, or $0.05 per basic share, for the quarter ended December 31,
1998.
Royalty revenues for the current quarter increased to $3,052,805, compared
to $251,846 for the quarter ended December 31, 1998. The increase in
royalty income is primarily attributable to royalty revenues from the
company's interests in the Pipeline Mining Complex, that were not in
effect in the prior year period. In the prior year the Company's royalty
revenues derived from a 20% NPI interest at the Crescent Pit.
The loss of $45,058 on gold inventory in the current quarter relates to a
decrease in the gold price during the current quarter.
Costs of operations increased to $219,430 for the quarter ended December
31, 1999, compared to $80,494 for the quarter ended December 31, 1998,
primarily because of the increase in expenditures related to Nevada net
proceeds tax owing on the higher royalty revenues.
17
General and administrative costs of $650,624 for the current quarter
increased from $444,624 for the quarter ended December 31, 1998, primarily
because of non-recurring severance costs and a non-recurring stock grant
to non-employee directors.
Exploration expenditures of $568,517 for the quarter ended December 31,
1999, decreased from $643,083 for the quarter ended December 31, 1998,
primarily because the Company ceased activity at one project in Nevada
that was dropped, offset by increased activity at one other project in
Nevada.
Lease maintenance and holding costs increased from $15,538 for the quarter
ended December 31, 1998, to $166,744 for the quarter ended December 31,
1999, primarily due to the holding costs on one property in Nevada.
Depreciation, depletion, and amortization costs increased from $132,414 to
$403,251 for the quarter ended December 31, 1999, primarily due to three
months of depletion relating to the Company's newly acquired royalty
interest at the Pipeline Mining Complex.
Interest income decreased from $248,099 for the quarter ended December 31,
1998, to $64,755 for the quarter December 31, 1999, primarily due to
decreased funds available for investing.
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999, COMPARED TO SIX MONTHS ENDED
DECEMBER 31, 1998
For the six months ended December 31, 1999, the Company reported net
earnings of $1,853,194, or $0.11 per basis share, as compared to a net
loss of $2,096,898, or $0.12 per basic share, for the six months ended
December 31, 1998.
Royalty revenues for the six month period increased to $4,845,367,
compared to $634,951 for the six months ended December 31, 1998. The
increase in royalty income is primarily attributable to royalty revenues
from its interests in the Pipeline Mining Complex, that were not in effect
in the prior period. In the prior year the Company's royalty revenues
were derived from a 20% NPI interest at the Crescent Pit.
The gain of $185,263 on gold inventory in the current six month period
relates to a substantial increase in the gold price during the first
quarter of the fiscal year.
18
Costs of operations increased to $372,882 for the six months ended
December 31, 1999, compared to $141,235 for the six months ended December
31, 1998, primarily because of the increase in expenditures related to the
Nevada net proceeds tax owing on the higher royalty revenues.
General and administrative costs of $1,029,600 for the six months ended
December 31, 1999 increased from $816,621 for the six months ended
December 31, 1998, primarily because of non-recurring severance costs and
a non-recurring stock grant to non-employee directors.
Exploration expenditures of $1,029,262 for the six months ended December
31, 1999, decreased from $1,545,550 for the six months ended December 31,
1998, primarily because the Company ceased activity at one project in
Nevada that was dropped, a slight decrease in activity at the Milos Gold
property, offset by increased expenditures at one property in Nevada.
Lease maintenance and holding costs decreased from $327,323 for the six
months ended December 31, 1998, to $187,186 for the six months ended
December 31, 1999, primarily due to the cessation of claims fees on one
property in Nevada.
Depreciation, depletion, and amortization costs increased from $298,054 to
$615,486 for the six months ended December 31, 1999, primarily due to four
months of depletion relating to the Company's newly acquired royalty
interest at the Pipeline Mining Complex.
Interest income decreased from $406,985 for the six months ended December
31, 1998, to $150,842 for the six months December 31, 1999, primarily due
to decreased funds available for investing.
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, 1999.
19
PART II: OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
20
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, 2000 By: /s/ Stanley Dempsey
--------------------
Stanley Dempsey
Chairman of the Board and
Chief Executive Officer
Date: February 14, 2000 By: /s/ John Skadow
----------------
John Skadow
Controller and Treasurer
21
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<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-2000 JUN-30-2000
<PERIOD-END> DEC-31-1999 DEC-31-1999
<CASH> 3,157,908 3,157,908
<SECURITIES> 2,005,256 2,005,256
<RECEIVABLES> 2,968,447 2,968,447
<ALLOWANCES> 0 0
<INVENTORY> 8,292 8,292
<CURRENT-ASSETS> 8,174,213 8,174,213
<PP&E> 11,871,007 11,871,007
<DEPRECIATION> 2,060,843 2,060,843
<TOTAL-ASSETS> 18,020,144 18,020,144
<CURRENT-LIABILITIES> 3,279,549 3,279,549
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0 0
0 0
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<TOTAL-LIABILITY-AND-EQUITY> 18,020,144 18,020,144
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<TOTAL-REVENUES> 4,851,367 3,056,805
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<TOTAL-COSTS> 3,234,763 2,008,943
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<INTEREST-EXPENSE> 56,250 56,250
<INCOME-PRETAX> 1,891,014 1,018,262
<INCOME-TAX> 37,821 20,365
<INCOME-CONTINUING> 1,853,194 997,897
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
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<NET-INCOME> 1,853,194 1,018,262
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