Royal Gold (RGLD) 7 Nov 192020 Q1 Earnings call transcript

Good afternoon and welcome to the Royal Gold, Inc. Fiscal 2020 First Quarter Conference Call. All participants will be in listen-only mode. [Operator instructions]. After today's presentation there will be an opportunity to ask questions. instructions]. [Operator event this being is note recorded. Please

now Alistair Baker, would like Please, to to over conference the Director ahead. turn go I of Development. Business

discussion a quarter Kate. Royal and is website. you you, Good able and this live to Thank to call be access our morning being webcast Gold’s of results. XXXX our first will This replay event welcome of on

Vice today Bill of AG; the President, call Development are of Isto, Heissenbuttel, Strategy; Secretary. and on President Corporate CEO, Counsel, Tony General Breeze, Participating and and Dan President CFO Vice Mark of Vice Vice President Operations; Jensen, and Bruce President Kirchhoff, RG of

falls Harbor and slide Litigation detail with uncertainties in risks the discussion and in release This The and Harbor today’s included filings press company's the Private Reform the in in cautionary current provision is Securities presented greater our statement SEC. Safe of discussion under presentation Safe Act. of is and the the

overview session. followed you then will the our update for then a results. some open Bill comments. up call closing by update Q&A an the with and of on financial the Tony a Mark provide will will with We'll wrap operating give an Tony lines quarter,

Now Tony. turn call I will over to the

morning for Good and joining you thank the call.

in another I solid quarter Slide was begin X. This will for Royal Gold.

and for the Our quarter, $XXX and year-on-year. Gold Royal record X% was up revenue the a quarter June XX%, for million, from previous approximately

in on on of of both the his and for equity Earnings were loss discuss share, Bill $X.XX $X.XX quarter mark-to-market remarks. would which tax included per a $X.XX which gain securities,

dividends by reduce pay $XX million, $XX our $XX a outstanding was million allowed which flow balance solid us cash million. revolver to and in Operating

outstanding outstanding to cash the which have reduced continue past debt will revolver, debt and million pay million year, over the our our position down $XXX is allows. grown Over our only remaining by on principal our $XXX we as

billion $X was in well positions working at capacity we us capital, revolver today. approximately undrawn our for and the the market quarter-end, With see liquidity opportunities which the

of and we The with the upon review appointment XXXX. operating succession CEO solid President on these board providing a January financial to retirement Finance. and concluded our candidates that positions thorough CEO Bill completed growth. held my the X, also and the addition him and results, Heissenbuttel new of external within as Bill In process, both Business of internal background, phase company roles and experience, concluded to its Bill’s in it Operations, Royal best and next vision, Development, Gold in lead has

company's worked the together So on confident we the where he that to And every knows have closely the has led joined he been he build board the skills since today. are has company decision I in he XXXX major further business to and and the us in well. He strategic that has is involved strengths.

Bill over to like to turn I’d call comments. few for a the

Thanks, Tony.

I'm with our management board and team looking to the build leading forward to to the company business. and continue working

will our our Our well focused a my and strategy measuring under in discipline established growth on on share per leadership continue core success is our and business, basis.

to of Financial make of Vice Paul Officer; to Chief to success, to the execute to and X. effective notably most President, changes role Mark Libner sure are organizational some January we're all the and Operating promotion Shefman and of General made role already I've of President Vice the Chief Randy which Treasurer; positioned Executive Isto with Officer Counsel,

excellence. and company place been on And seasoned has with technical importance Mark since promotion is mining a XXXX. the reflects his engineer we the

our he Treasurer, been understanding will and our currently with XXXX. since the is oversee Treasury Paul and Controller CFO. as the of He deep has company functions he's a

XX-year to surrounding promotion and in Gold issues in by and Kirchhoff career over retire Royal company and through year, the of demanding corporate increasingly Royal compliance Bruce his at X eight Gold. Gold. on commercial background the after company. complex has navigate Randy’s Bruce missed January a a will next brings Royal at be worked year the all with Randy public helped transactional strong has governance experience Bruce closely career of desire and reflects he

is coming depth talent right have I we able It confident in that internally. the team the make over have the look the to in organization new a been introducing that testament of place. to months. we to I'm appointments market forward these the the of And team

to operating With Mark call over to review the results. turn like to that, our I'd

Bill. thanks, Yes,

of construction being in the is I'd a project September, on of making of Cupric I with XX% Construction On from like area. organization XX% contribution. on for safety. made, under by and decide focus Botswana, project at immediate in the with Capital. Slide the our X, first total the and in mid-October by full start Botswana than development to project XX% up was the Citizens workforce of making swing impressed local review and the in the met end of team region progress XXX people This a working the to Canyon is currently advance funding Khoemacau on were full with update site, an from more and

engineering is project and overall about one-third was progress the phase. At was XX%. XX-month the approximately into XX% The end execution construction September, about of complete,

project contributions and We and funded of in basis mid-XXXX. capital. budget, alongside from to first concentrate sources will of a first quarterly Tuesday funding the on future made remains the is be contribution $XX Project expected other on on our shipment million

Zone Each X meters on a material. million Slide the about cubic a to requires orebody. the boxcuts, of which removal progress of current and priority three shows excavation construction the access are provide X

the scheduled see the soils, and is rock the year. finish Central Barminco, excavations and of photos, mining look contractor can over boxcut well which the in calcrete, end through targeted have weathered turned and The calendar you to the first progressed completed As excellent. be walls the for to this is

the shot the erosion, corridor access of installation, boxcuts, of a X can Zone Boseto the a photo Turning between an and existing areas to Mill the close-up and Outside X access Mill X Boseto engineering and the the are from protect Mill. see services. to geocell water is to of between Slide the the the the Boseto and of solution X, slopes support to Most currently the accommodation, Zone three project X the on infrastructure, Zone of Zone consisting underway the infrastructure and refurbishment. power, the mill, corridor and infrastructure main work Barminco of you

first, is with followed corridor the construction transmission access the progressing of the whole of by road vehicle ore light Development road line. and the

the to existing One contract. of mechanical, aspects refurbishing upon and of the work the of Mill ownership domain structural, shortly piping unique Boseto of award the on project this and is scheduled start is plant

will Definition provide detailed step three the eliminate consuming stope basis first with this time drilling in early a for the levels of completed need to for production the the design was associated October, mines stopes. which in

the funding updates prior reviews provided contributions and completed, on calls. completed As the and and be project will will will be future progresses, further site be funding on earnings

the positive, Turning respectively. reduction discuss the to about average this stored tons at key the of were Milligan to our ounce pounds throughput Progress million with amount at also the remains Slide recent of XX,XXX all-in and quartile like twice of of second XX,XXX per gold operating of day. with with bottom Milligan solid now Mount $XXX mill starting some the and X, water I'd And Copper operating and properties several had Mount quarter in curve. operation XX developments on compared strong and a cost last has time cost water was ounces at per sourcing year. Andacollo.

Centerra water conserve bring water had to in continue and success with is in quarter news. that to expects be They've exploration operations from to applicable will expect calendar positive in which permits. able subject the December of first water, production they slowing also groundwater sources additional without to receipt

caused by when last expected technical to carrying Centerra the that higher well identified their the months. recent long-term reduction an impact publishing recoveries to lower also resources. reserves Mount be exploration plan. reports technical review work. optimization a them be and the costs recoveries, results as potential week Centerra’s are medium-term, highlight over costs that triggered remain announced original The XX was technical one-on-one of report other XXXX of the budgeting in process include gold will than will recent Milligan steady updated and the and This will they value coming operating Updating report as they in and of prompted financial updated and

all keeping of this worth in It's perspective.

increased likely and recoveries costs impact grade While material. will lower the of lower economics

receiving new impact at of when available. point mine plan mitigate Royal look metal it forward from on Assuming may the it becomes metal life. may to the Gold impact latter losing a this is grade mine production NPV it report unclear to years which ore, forward, what we'll be bring the At the focuses and may higher

their reaffirmed and Mount has Centerra In the meantime, guidance for production cost Milligan. XXXX

by currently receive due important revenue were October of we strike operations on suspended XX% contributed asset gross in of an Andacollo, the It's Workers XX At approximately a quarter. from and for the Union. gold our us to Andacollo payable which the XXX%

noting strike We before Tech we And and of Chile. strike to to and events the continue is some monitor ongoing understand these Union protests It's unrelated the situation. widespread are that are in that negotiations between the the that worth started that occurring. recent

to expect of suspension in deliveries quarter, concentrate impact the within receive we as shipment. typically XX-months We production be of the June

X as transition operating Gold mine full the X continued rate. remaining Rainy River optimizations, to the per Phase the XX% production throughput further plan mill was results, to first day as comments pit mill as with recoveries Phase planned and I'll New grade the for day, quarter to on XX,XXX ore on the XX,XXX achieved additional Slide of solid higher lower Rainy ore circuit. X, the grade in and turned target another line averaged Moving the of At provide Phase from included operations gravity tons quarter recovery from the of Mining well from X through in well is some as which and X. continue efforts a Phase Gold has quarter of circuit commissioning to tons improve Peñasquito. the River,

December to per ton now between X as one grades Phase is Gold ore the expects New and in out. an average quarter mined decline gram from X.X

We that study expects New advance a scenarios. to continue review release Gold XXXX. Gold includes New this to open underground study mining mine and The mid-February optimization comprehensive a in alternative pit and of

operations during by through caused to trucking lifted XX. caused was suspension XX. to which the October the that the April on The quarter the XX in concentrated And a as community. The blockade to was pleased Peñasquito suspended the dispute of to immediately, one full approximately be was operations some were equivalent members back XX,XXX illegal and from mine we Peñasquito, The blockade ounces. this contractor production started site the XX, on ramp-up of leading lower the September the At same blockade be October June on shipments suspended removal that gold now commenced of was see XX-day X, impact and last of Cedros operation. a of is an

Newmont negotiations and government community with seeking the week. sustainable is to the solution Goldcorp state started is ensure and law rule upheld earlier a working has of governments and federal been long-term this dispute to Cedros sponsored with

Newmont during are expected near also quarter stripping of Goldcorp Main XXXX. higher into pit completion, the is Piniasco ores and reported the and December the grade

I'll now financial over discuss results. to Bill call turn our the to

Thanks Mark.

to for will XX XXXX quarter Unless prior-year first the to I'll indicated, overview the results September an our Slide attention fiscal the and I comparing otherwise turn your give financial of quarter. of be quarter.

year’s our in opposed by to $XXX of revenue one call, offset the and Mount the change two litigation of million, of year-on-year As Royalty as fully settlement last the absence provided royalty quarter were Those be decreased from of and reasons for decreases on Tony royalty sales revenue could reached the of equivalent Cortez Mulatos mentioned GEOs. the from significant beginning last most in revenue a lower after Voisey's ounces year, GEOs was not which or quarterly quarters period. with shipment gold September only was in us, quarter Milligan Andacollo this one volume and record X% approximately us Bay increased at revenue. the receipt XX,XXX fiscal quarter Cap to reporting timing, due for revenue of sales the the

expectations last Stream segment we quarter the volume for line we and our as discussed in last earnings announced the call was during month. with August in

the gold was were our year-on-year. positive quarter. copper while a XX% effect up for and and had and XX% Gold XX% silver for respectively, down accounted of X% prices revenue Metal

quarter G&A $X.X G&A compensation non-cash for million. equity down on of expense period prior quarter year. million June to years spending awarded due as included was XXXX, with expense quarter fiscal ultimate settlement. Compared of The for compensation the primarily and fiscal in higher, year the consistent litigation typically million the quarter first is the expense, expense reporting and $X.X valid its preparation to a $X.X this approximately in was the previous higher relative from is

for Our quarter per million, or the DD&A GEO. $XX.X $XXX expense was

fiscal We the could XXXX available between impact expect in fiscal and this additional a year we $XXX information range reserves and range to the DD&A per change is although Mount once $XXX may rate, full Milligan from update our year to later depletion Centerra. GEO at

$XX.X our Earnings non-cash loss or up to quarter this holdings. discrete of and million $XX.X of first net on were per year. period million benefit mark-to-market Earnings significantly tax the a $X.XX last million share compared $X.X included in equity a

been $X.XX If you $XX.X share. items earnings million have or a exclude these would

law enacted and quarter assets held X, subsidiary. new and be on the Swiss by tax a due our remeasurement tax tax The to was benefit January reform Swiss tax This law passive requires XXXX. this of new primarily to

benefit, and to fiscal this quarter items absent the was expect rate to XX%. range our tax we unusual tax the XXXX Excluding for rate our of be XX% XX.X% in full

also the office quarter. corporate which of Zug December in step-up the Swiss we from will of during will to basis the Canton further to note result relocate Lucerne anticipate that October a I tax we in our in decided Canton

associated time. are with any at effort in Lucerne and tax able quantify of valuation tax tax process not to are reform therefore all negotiating additional with updating We and work this the benefit a ruling the

mostly significantly due Cash from stream higher from quarter, prior-year $XX.X approximately million, and taxes up paid. to sales operations the income lower was

to segment the in GEOs XX,XXX end be of of approximately I XX,XXX line GEOs. is sales quarter, range we the quarter-end which GEOs, to held guidance December the range last At guidance the in inventory we the quarterly call. was XX,XXX stream XX,XXX be inventories in expect at and September, we in looking quarter, with within the provided And which last to to gave forward

to summary turn Slide will financial I our provide position. now of a XX and

million to Our of continued September and working liquidity with strengthen the ended $XXX of We quarter. over capital million. cash $XXX

During down of September. combined million million remaining and facility. the capital, million The we our the us end on is on with almost outstanding of working on our liquidity paid the this $X facility, drawn our provided quarter, debt only $XX $XXX with $XXX revolver of as billion undrawn total this

we prior and With above the liquidity the made outlined to week. total this cash figures calculated being Khoemacau investment

to in making to million calendar XXXX million the and adoption million. represents its increase $XXX Khoemacau $XXX initial will approximately to the million further the of project $XX payment advance million contributions development The of million we investment on in payment from in the XXXX, depending for advance $XX exercises make make and $XX size we $XXX of from expect Cupric to whether

capital will occur to as spend total proportion basis scheduled a forward be move are of payments project. to the Our on quarterly and we the in

achievements a consistency, message specific extend long us Well, believe at over number thanks at career. his career core Gold this for Tony this like to discipline his will values that opportunity well we to honesty; the Before and Tony, would all his Gold. I Royal take his represent tone successful to from Royal passing point I of there top remain and at to to of are back company the call to beyond tenure. of could

Back Tony. to you,

Bill. words, kind the for Thanks

and the the the team time been XX.X And both over that Gold created at my and to enjoyed the proud culture last board it's thoroughly I'm have an shareholders and we've the I Royal honor very Royal serve Gold. management years. these together. of

our judging the of I success, confidence. per from we a endowed flow that will Confidence on is principles the and possible maintained and out shares accretion, growing do assets, with extent company everything be protecting with greatest share pollution. company corporate our and leave talents basis, including This to cash valuable while

to the our is Striving the dealing, with in the metal our our to well shareholders, confidence and return conducting position. not valuable business and Also company fairly and the company providing responsibility. and for most respect to that be necessarily a what precious we growing business core largest, good sticking do others very integrity steady

Our is powerful cash growing. and flow

balance Our strong. is sheet

is robust grown opinion control. home continue and to and asset in growth team Our my our will take is excited base organic to yield

Crossroads and to to now Penasquito this extensive is activities, That see positive that is reduce and off to That winter. continue showing now River near-term over the Rainy significant progress are coming production quarter yield Coming not expansion made pleased studies construction start that results back sources a Mount the full results. after well. last to the several Milligan years. grade Pueblo is sustainable expected is stripping advancing the I'm production. developing in Mount attractive to Khoemacau into the Milligan now and in production water That Viejo campaign good and higher has an

see in XX It producers. to activity our is great this level of portfolio of

seen can but tell career, out time, get long sorted And that I our that on some Now over always they my to you management. that good time over tend assets at eyes in have point game. kept issues all I've with we've

that, our remarks line questions. prepared are concluded, open the with would happy for and Operator we to be

begin now will [Operator question-and-answer Instructions]. session. We the

Bank from Financial. The of first ahead. comes Please question go Nagle Shane National

for Yes, my question. thanks, guys taking

in Gold’s resource they're risk do that wondering own of positive internally. situation just the water opinion there they'd of that escalated improved, you in if potentially related curious and costs highlighted related see see kind Mount you've Royal to the terms impairment interest? I'm to obviously Centerra taking And be any with if just Just a seeing to Milligan, run your that’s write-down. your of

them the Centerra and peel apart, carrying Yes, very I'd other our in cost a specific costs Centerra’s write-down them to issues cost different and their that experiences It mine of is is impact carrying much structure Shane. cost. one the does not is the to specifically. carrying There couple the there like of

be costs us or revalue if that carrying the Our required only there re-estimate carrying reduction to would reserve a actually impacted was cost.

And right per of gold ounce of a now $XXX have copper. and depletion $X.XX pound we per as rate

ultimately, numbers. come think team that Paul we his look bit resource So we're quite think details, headroom good our position. statements new and we've at -- very won't But we have a the a will we and reserve got but in financial final we those a out see once of know in won't

that take bit cost the what little a just all-in were want And of were production. very is a emphasize cost quartile basis, I opportunity to lower the was that that cash it sustaining the to Mark’s to then second comments and let just me cost And to. you speak a quartile, alluded producing his mine more comments think that I low type

So I the quality good a Centerra cash asset and the carry write-down actually over good want still into project. coming of the costs very because out the carrying the we're a don't costs had really very of seeing issue -- quarter, very that

of flows then again similarly have impairment that how Rainy mine we in short-term in the dug or And production mine in thinking interpretation and similar but business my going by life, maybe your forward? potentially Okay. River you cash it potentially may into impact increase reduction guys a with is see the sacrificed potential potential may a optimization around there

carrying sure see enough have the next have to and make I very to have now; there. cost sure We’d first exercise have cover about in there. XX,XXX Shane. River, then but that is a at of I'm and -- our take do we once what of have would Rainy results headroom correct, at similar have that year, they we details You’re quarter sitting put of rate depletion those make out, they're a here sufficient we right our the don't talking new look we'll think I to their we

headroom there Okay. There's Milligan, would just slightly probably less just myself. maybe be under guessing then

happy I the can't absolutely of answer of that rate question if specifically to there our details but we’re provide depletion interest.

you Thanks Maybe retirement, in the great. and be up with best me. that That's X. before all later. again Tony, with don't follow all if I'll That'd speak I January from

very support I Shane. appreciate the much your Thanks over years.

Instructions]. [Operator

Scotiabank. go of question comes Please Tanya Jakusconek ahead. from next The

the good morning, in new luck Bill, congrats everybody. your Tony, to and team And and to Yes, good endeavor. you

you. Thank

just just to the can us You’re movement Zug one questions, an welcome. to the right going offered the taxation And my from with you taxed be with give streams quick are Lucerne, what the a on at, idea Swiss of move? of

Yes.

to elements tax there So reform. the are really Swiss two

in rate they things is Zug, we X.X%. one to Lucerne may I'll higher If the those Switzerland we're would period by to value move. and excess in of going rate have basically is years, to But the I tax be, to what value said, be to to think a that of and XX.X%. depreciate have market effectively going rates, going do the you Swiss been the Zug, As that five tax the in had And would taxes. step-up period hence it time our to transition gone you current you value and recall, against to tax for reason And call is going we're to done a would the give for it stayed the allowing of in have be XX-year assets was Lucerne XX.X%.

the they years, a see a corporate for to don't are corporate our change have go that From will taxes relative this After paid. what transition they higher But not XX that up in to yes, tax of would period. cash movement much XX-year to rate. we taxes for period, been expected perspective,

look from up sort that next you XX%? of who have in are years, range? to X% person that we a So And XX doesn't years, the then the XX sort move background saying of after a financial

that Switzerland, is In correct.

restrictions through Switzerland? Were there any that go

tax what of is of at you're we're very have most result more going And Bill the there's trying what can the to and change issue have tax complex emphasizing, a we'll the to a the is -- but then as understand for make cash you global Swiss overall, imagine, Swiss area, I I tax reform this Tanya, as don't And well interplay our that we tax, very the sure we're that's over regard important two. to correct U.S. think absolutely the all amount. for obviously, Switzerland, we in reform But much important is reassess to the us with think tax between reform longer-term. years. and next XX think

for to it It's just Yes, head from were the the office? that. if XX separate at we at from just valuing at that what basis, valuing a look perspective, X%, way I XX%, our and after for fair alone a doing appreciate at you're stream next that on years in would be it of standalone then

Yes.

So what the one is thing applicable at to tax not, that’s that you’re XX.X%. missing there reform. And is it that applicable stands we another acronym There's the or Guilty us. have we're believe the U.S. it global tax Tax. or a And that

to we And have pay don't XX.X%. top-up that would Switzerland, so in to anything we

So to there's that that, and the surely accurate get more short-term extent us in can more the specific experts use to to that's our for on number to questions we phone. probably the the are tax

is go ahead. next Please of of Mike The Bank from America. Jalonen question

assumption? congratulations. did Mark the Mark, for how in do Bill Mount you effect NPV me early luck is And years? of production just the so own your guess I’m correct did say And be or I I in Mark, and by good Tony, that and you say but if And, question, wrong that, to you have a say future. actually. Milligan potentially you you. Thank shorter that Centerra did Centerra a could the if life more at higher offset cover

the of constant then some grades, about seeing and a review going being a mine earlier generic cut-off mill throughput, up. a assuming life thinking the higher your latter fashion. And in cut-off years Well years grade that’s of

would some with certainly impact generic to would schedule of I there's about. least the the -- give impact the impact a adjustments that the of have would So there's having possibility offsetting know it having earlier forward that talking NPV you some on that. certainly of on to and these -- impression I ounces basis, at an because it offset move earlier a the you're all basis in basis. pounds expect -- I production, no wouldn't the But

guess because I mine asked also grade question the I gold X.XX. grams, Okay. Milligan grade the Mount is X.XX average

myself, I'm So high kind they're to saying super to with. of begin grading already

grade, but take I much guess really it you view it kind some call make would for the situation my would, than of So shouldn't out low so? is difference I be

knew last bit was always this areas where in it copper more than in we production, we the to had are switched more we more versus grade actually saw years, production and early gold year little less that were gold what you mining Mike, year the production, a we the gold year have higher they prior. prior

So -- the grade rally not it's together. metals think those judge to that's gold both I it's probably on gold just appropriate of the not equivalent things those -- coming

XXX,XXX That's Tony? a like the production taking XXX,XXX was five good on study I'm first I'm or correct gold I point. the Milligan, ounces wrong, old years I Mount technical guess, think And in something if that. me

range. in I that Yes, think you’re

to that. think got And don’t close we I really

it's otherwise. So

will a you and luck. months. Okay, in few good says Centerra see what we Thank

for Thanks question, Mike. the

Instructions]. [Operator

Barnes from question The TD next go comes of ahead. Please Greg Securities.

going on will look of profile thank forward it do what the on will you. a Tony, we sense impact you? like the Cortez/Pipeline Yes, better have have in at terms

the we for at Cortez Mark first life have year. We with in the Mark the something kind the the end going have calendar March question. was first of think they of get And in our for talked from the last last the of of there, Yes, call, by looking conference I and on the that we guidance the to know, to or you get we contract just some thanks that they every also mine year. the we was in from property better -- back And call, quarter. of would the at advised venture come it by able conference close think Greg a end being about new also I plan Cortez had joint quarter I quarter -- and -- year just

couple prior So Cortez just Page can well if And think absent look from you press information at I I quarters, it’s that it's of grown quite you, chart quarters, that if any information, get -- us But history we out release the would that just last done quite referenced done you that, nice in on the guess of well. what done at I to that next another with I quarter, Greg. pretty for it's to. as XX have quarter. of get last significantly you will patient that a we the have seen has be and actually well I it’s, would think other you'll quarter-and-a-half, look quarters, three I indication our we And before

question-and-answer to to our like Tony the conference back Jensen I turn for session. closing would concludes remarks. This over

just Operator, the in hope there. and Shane, for line to that's everybody you’re still let Nagle me and go Shane back I

to and these fortunate ounce out. per River I Rainy is during The DD&A are at the read We our Rainy of ounce per just of River $XXX here $X want and gold to DD&A get at silver. call

So as we River have Rainy at well. quite a bit of headroom

during So I'm call. we're able out this that to get to glad market broadly the information

in call. management look Well, your conference forward saying, being asking call. years support chair you to forward call you conclude everybody, next in look by thank very updating I and team to much But the this your the the for next questions conference to over I usually and I the in

for say So you with for that, joining Bye thank us. now. let me

presentation. The now Thank today's attending conference concluded. for you has

now may You disconnect.