Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Royal Gold Inc (RGLD, Financial) reported near-record revenue of $174 million for the quarter, marking a 21% increase over the same period last year.
- The company achieved a strong adjusted EBITDA margin of 81%, demonstrating the scalability of its business model.
- Royal Gold Inc (RGLD) successfully reduced its debt, ending the quarter with $50 million outstanding and returning to a net cash position.
- The acquisition of additional royalties on the Back River Gold District enhances the company's exposure to the Goose Gold Development Project, a promising asset in a stable jurisdiction.
- The company maintained its strategy of capital allocation, including dividend payments and reinvestment in business growth, without diluting shareholder equity.
Negative Points
- Royal Gold Inc (RGLD) faced lower revenue contributions from the Cortez legacy zone, impacting overall revenue growth.
- Silver recovery at Pueblo Viejo remains below target, with deferred deliveries affecting revenue from this asset.
- The company experienced challenges at Khoemacau due to equipment availability and high turnover of skilled labor, impacting production.
- Interest expense, although decreased, was still significant at $2.5 million, reflecting the cost of previous borrowings.
- The effective tax rate increased to 18.9% from 3.1% in the prior year, due to the absence of a discrete tax benefit that was present in the previous period.
Q & A Highlights
Q: Can you provide details on the recent Back River royalty acquisition? Who were the sellers?
A: The Hill royalty was acquired from a private trust, and the KM royalty was from a subsidiary of a US company. It was a competitive process. (Daniel Breeze, Vice President - Corporate Development)
Q: Are there more royalties available on the Back River property?
A: The property has a few royalties, but this acquisition covers the bulk. There are a couple of smaller royalties, but they are not available for purchase. (Daniel Breeze, Vice President - Corporate Development)
Q: What is the typical timeline from identifying an opportunity to closing a deal?
A: Ideally, it takes six to eight weeks, but it often takes longer. Over the last 18 months, we were the preferred bidder on three transactions that did not close due to various reasons, including market conditions and capital market changes. (William Heissenbuttel, President and CEO)
Q: Can you clarify the royalty rates for the Back River project?
A: The chart simplifies the complex royalty structure. Initially, a 0.7% NSR applies, increasing to a 3.3% GSR as production thresholds are met. The 3.3% includes our existing 2.2% royalty. (Daniel Breeze, Vice President - Corporate Development)
Q: What is the expected rate of return for the Back River royalties?
A: The expected rate of return is in the mid to upper single digits based on current spot pricing. (Daniel Breeze, Vice President - Corporate Development)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
