Royal Gold (RGLD) 4 Nov 212022 Q1 Earnings call transcript

Good day, and welcome to the Royal Gold September Quarter 2021 Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Alistair Baker, Vice President of Investor Relations and Business Development. Please go ahead.

operator. you, Thank welcome Quarter and discussion Royal of Good Results. to September XXXX Gold's morning, our This webcast call is access event being a able will replay to be of this on website. live, our and you questions. Randy the also Breeze, Libner, and President Vice Development Paul and President, on and Executive Royal available of and Mark CFO call Heissenbuttel, Corporate Treasurer; Bill Participating President Shefman, are Gold are CEO; COO Isto, for and General Counsel, Vice today Corporation; RGAG, Dan

call, make for yesterday's about future. filings our to will today's differ our these These projections could SEC. These the subject materially with statements During statements, including to statements. that risks we forward-looking are actual release uncertainties and the risks in and press and results from discussed cause uncertainties expectations and statements are

to the income Mark net you non-GAAP We by the up release, update, our session. Bill found call on non-GAAP will and financial directly website. of available Bill can also be yesterday's most measures are comparable Reconciliations then net We'll wrap refer including financial an measures of in these closing measures, operating open then some adjusted an a comments. quarter, with overview a to and will Paul followed which lines the certain financial for cash. the give press provide update. will will with GAAP Q&A

I over Now Bill. call will turn the to

the for you call. Good joining thank morning, and

million of results, revolving quarter records per the are gold end for portfolio, once $XX ounce the the liquidity of quarter's our all million and silver on end have available down credit the $XXX this on again We outstanding $XX facility. X. details cash our will and for quarter recent to company. Khoemacau, million, And stream had excellent from quarter contributions revenue of or and $X.XX forward of continues share. deliveries his Royal $XXX to received we of million our to $XX paid XX,XXX equivalent Earnings which XX% of visit the for first net silver. more and subsequently share of increased after under quarter, to quarterly Turning facility. $XX as at were million was of percentage great begin the We debt of flow the Mark cash the million, recognized on we're operating volume and now of was payable Performance access credit million Khoemacau. to Slide We This I'll Gold. another across $XXX the ramp our we looking to increased up. mine

We have positive quarter. we from also last news seen announced acquisitions the recent

positive Chris. technical block our pre-feasibility I our team study like acquisition to on due published cave Newcrest diligence. for would complement at work its a Red

with the work Healthcare our At first in for production with entered and mine. for efforts progress initiatives. released mine the track with And cumulative estimate programs the optionality. and we further GEO Newcrest's surround at Rainy decades and X and team's which continues in exciting New XXXX. the half at good of for a exploration was potential mine confirms exploration regional long ESG contribution communities and medical partner, project study this into study. our Our supporting Ero the to line is production Mikinaak Wellness, life River, continue Gold, its equipment helping it new to for positive wellness bring next of and the Center and Copper second Gold, community outreach clearly future construction that on And Côté agreements NX near results we Riverside to progress the Foundation on demonstrates

recognition top of carbon in places rating companies We operations direct to during the upgrade the of XXXX ESG received fiscal which ESG with corporate corporate credits. purchase our emissions for us our with further practices AA, tier have MSCI net achieved our also in in And zero an carbon our we sector.

week Star Golden Chifeng. Finally, I'd announced and briefly to the like comment transaction earlier between on this

We we're communication occur has Star building with direct relationship to is to financial further transaction company to Closing time. our Mark on China operating have for and of this their the they won't for With in Chifeng at an the several and over transaction Golden have the several potential the year. $X I'll aware that, until operating months the been Chifeng. with that Laos, Chifeng and had our portfolio. assets Wassa. to apply with update during meantime, and of in a And billion looking resources new turn call identified plan forward

on start to the The perform I'll record in yield well continued again with X. Slide Bill. Thanks, quarter. portfolio deliveries

late mining issues Our stability total contributed of by XX% for increase and quarter. $XX.X revenue, an Royalty prior in year, curtailed while higher Mine leach revenue XX% large the which over has included Australia. in quarter. Robinson the pit since royalties contributed segment where improved Penasquito, during recovered the million Kurnalpi, and representing our drove Laverton about wall South The production increase is led production starting recoveries on increases of grades last that was year, Other Cortez the NPI

contributions and over both received and NX year, stream X% from revenue we On Gold. the side, the first the was past up Khoemacau

deferred of delivery Pueblo first silver from the Viejo. ounces received also We

the expect in now and a deferred The our deferred the and quarters levels. circuit quarters. approximately silver of issues prescribed that Barrick several any revenue. silver impact fall deferred ounces, ounces caused June silver to contractually next to addressed on in approximately If XXX,XXX to issues these recoveries were due recall, ounces cash to This it be Barrick has to lasting of we during issue timing expect remains ounces over we from delivered improved declined have and don't quarter. flow the balance ounces The the perspective, delivered below you silver XX,XXX and equipment circuit with delivery recovery, March

I to visit give operations. Slide on and like to the from X. Botswana. the mid-October transitioning opportunity in site excellent the with to was Turning impressed I'd construction Khoemacau and had an update into progress

progress conference mine XXXX. has development March since earlier in been of I've described quarter calls, on As the

So KCM XX% for XX% from September improve Recoveries In while stockpiled for and the in XX% COVID-XX-related and steadily the for been and to funding, March the visit. and expectations. and of has their and crews been to of been ramp-up plant, the working plans, XX,XXX operation Slide next from far XX% and XX,XXX per to drilling are the issues about to to recent on quarter. the with about The conditions, million Should approximately day. the drew ground be a absent slide by drill silver drilling would funding ore. a related the gold to a silver complete our COVID-XX within XX% copper drilling travel has plan of few Absent increase to the to Mine providing target in X end October target to With I October, addressed. systematically first and progress development remains to has ramp-up the payable ores million. of processing support quarters. from and an is in tonne photos changes to the funding silver. at mining. issues operational rate with of of last caused by improve stream the review mill Barminco -- to X, also Stope X issues, capital have this silver are shows we for option delivery full the Concentrate tonnes stream production October arrival end my blasting target general XX% respect expects factors, the available target stope stopes. is stream during slightly with ramp-up early in final key specifications. forecast, the successfully resolved, in were required and provide the of tonne per XX% considerations for respect from in rate. the blasting development offtake KCM the steadily silver. feed and being Australia, to recoveries of expects quality total rate any for production late The taking has about they lower XX% be visit. the any site KCM months $XX.X of With draw equipment the further XX,XXX further slot photo issues reach option targeted described. on oil expects On to which day currently additional and day operating few planned reached the pieces over per mining Equipment just required, orebody widths excellent to September copper slower including a tested XX% expected grades interest began KCM stope impacted KCM of processing consistent progressed any $XX.X to than of

considering the the top Zone concentrate left, of are to was and off-taker. box the a deliveries Starting left, quarters. construction be going flotation you XXXX, a at contributor forward next modern especially our the growing loaded into haul in bags Slide dumped newest plant, Red truck primary the show decades, X, development X recent the plant for a mining key on to These delivered the of now the mines mine, X coming of and of X. turn XX-kilometer settled expected onto the there can I'll developments portion progress to ore yard to or stream cells fleet completed that and being ramps Khoemacau and the haul the a equipment road truck the bin. with surface, On and crushed the I'm at is Royal finished from X the clockwise to acquisitions. production for plant, we arriving you in of some the well-built top transport look of couple midst sealed the maintenance pandemic. as most of the is the some the up clockwise can over Slide started Going cuts, Chris between see a workshop, of photos since the other where finally, see global with on Gold in recently the crusher from again, being the impressed

how Newcrest block pre-feasibility cave we mine's with in they study on October, as were profiles X. described broadly view We potential. the released Stage the see the which early a consistent pleased to production Newcrest

are several oblique in and the exploration. outlined also from the areas increase that section and potential reference optionality to to potential the slide. you In upside and the on production areas to throughput Newcrest I'll the included PFS, not including subject upgrade particular, still plant of

opportunities, Newcrest a is permitted target. Chris while Main higher-grade to revenue operating well the as world-class southwest operator. Red on for exploration a in a including near-mine discovered Tier advances Ridge Royalty entitles with identified as us zone continued several meaningful jurisdiction our a Royal mine be contributor of X should and Zone the new And Gold Newcrest studies a East to what decades.

include apparent known second which their mineral at confirm resource with to on At Ero Finally, the and land of Slide down promising depth. reserve for open thesis Santo has where underutilized. mineralization veins investment extended covered area which at beyond high-grade the Antonio rigs year-end In in and to depth. to that NX Matinha drilling the currently are XX. interest. Matinha all expects of pleased remains has continued Ero additional mineral The footprint limits is results see feed vein, updates. on of exploration extension limit mine's current high drilling underexplored the within that combined the and continues infill the the X by Vein while in the confirming current exploration the mid-October, extend continuity the the The area. XXX an resource Gold and of drill structure results shell of results turning indicated the Ero a meters prospectivity the mining mill mineralization, become mineralization Vein, potential this the to an announced exploration to of positive area, We're our our are Copper operating. regional of parallel thickening source, package, Mine, continues depth

of discuss an IAMGOLD at expects the mine The project for first production ounces turn mine second for Now report. the include report on continues Côté updated year, of to construction advance technical first will years results production technical of of which end Gold XX-year now XXXX end track the the progress the IAMGOLD Project, approximately per this the to and the issue since XX% stated X the IAMGOLD results. September. life. in half over overall at Paul XXX,XXX our will financial I'll plan remains optimization call before of of XXXX, that Côté, to the year at the with they

financial give overview now I'll the of Slide results Mark. turn Thanks, XX the for an quarter. to and

the For record Revenue the this million comparing a discussion, over ended prior XX, of prior quarter year quarter. the September for $XXX XX% to period. I'll the XXXX, be quarter, increase a reached year

of a was gold We XX,XXX ounces, XX% period. year the prior increase GEOs, equivalent over record volume had also which or

higher in period. was million about contributed from percentage our revenue down and excludes prices our increase $X.X gold as higher was XX% segment, in about the and respect newly mentioned As silver the at focus to Stream The remarks. to and million the The due prior and the also our metal prices our the gold is metal With total overall prices and XX% to in of to DD&A to NX the performances, price revenue and price copper up Mark to most of increased be acquired copper increased Mount during average the XX% our at of from driven from and dominant came specific the contributed are revenue Cost of sales operating million from strong Gold year quarter. of $XX.X portfolio was to in Stream copper also was copper $XX.X quarter. price higher Gold Gold sales during remains the to XX%. the the copper flat was prior revenue. sales, approximately compared quarter, contributed continue increase which NX Gold mixed, X%, Deliveries streaming silver overall prices. acquired of increase to revenue. Milligan the newly in by his record

Viejo from from increases newly was sales NX the Our production primarily up Stream. million prior sales gold $XX.X from $XX.X gold the Cortez higher silver due Andacollo. from Gold Mount and quarter. in copper gold from was at Milligan, and and DD&A partially and gold sales acquired higher by Pueblo gold expense sales to The year million, offset These were lower lower increase

GEO from our our guidance on $XXX the due $XXX GEO $XXX expense The per a GEO the quarterly the DD&A prior period was to per GEO, DD&A to call. and per better-than-expected earlier Our guidance $XXX range, when GEO dollars was lower compared in largely we portfolio. to below during basis last per provided to compared per our provided contributions royalty

million years, of rates. the most in Gold. of they was have year. attributable $XX period onetime of have decrease interest values portfolio As been XX% Manh The the Choh -- overall a royalties then the prior $X.XX formerly carrying for lower lower our many the sale as decrease a our and or share, depletion from Earnings in gain were $XX.X in to the period million project, prior earnings our known to in of Peak primarily per due

the our the year our which million operating of in Choh the increase. for reported record prior a tax Excluding earnings million gain in or discrete $XXX year, items earnings were of was Manh $XX.X this on the cash flow $XX other and We period Gold. prior compared sale project onetime interest in the quarter, XX% another to adjusted million current of Royal adjusted

our cash flow to nearly both the was which million the higher operating from $XX interest. received prior Our stream proceeds was and due primarily royalty from up period,

comments some on guidance. like Moving provide on to XX. Slide I'd to

to reporting for As January XXXX, we XX. quarterly provide start reporting XXXX this and the reporting, X-month we calendar calendar we between on period call, mentioned and move to our December The us XX, calendar during December July are X, new a XXXX. will effective to our will year-end moving last transition X period year coming

stub each year-end effective guidance early process to providing reporting, change in stub will effective today, total our guidance X-year the new This guidance and stream we for this and the sales period we XX, for our per GEO begin DD&A sales, portfolio that transition over sales of expect your guidance. rate total To will to and we quarterly of GEO tax previously part And the year. help guidance last second and in provide quarter, DD&A December ended As period annual reporting, tax with I GEO calendar rate replace XXXX. provided. inventory X-month provided quarter

between For slight discussed. and we and our sales GEO are metal With our COVID, our is GEO absent from our from previously shown to operational XX, XXX,XXX as assumes impacts stub the the is previous the to guidance, DD&A $XXX we unchanged increase XXX,XXX operational we which guidance. GEOs. increasing X-month potential provided guidance in per guidance period, $XXX already as expect range for total million between sales over any range prices driven a on stub by guidance. DD&A The the are Slide increase performances respect GEO our period, This which to strong

which rate to and any group could blueprint stub unusual XXXX. impact on agreed make global a like also tax, guidance, a a global XX% XXX our effective regarding period a implement to the Regarding news to we or streaming to In effective with of the some XX% minimum of I recent this expect tax few countries broader comments tax October, minimum a range between discrete sector. XX%, would date targeted OECD of items. absent

streaming the our revenue, Further, Gold everyone the GILTI, or implemented rate to rate. the was effective XX.XXX% minimum regime, which tax global to is being to XX% accounts again embodied intangible not the income, currently like is XX.XXX%. subject of added segment segment, proposed tax our suggested discussed the of stream on minimum tax Royal global total of nearly for as effective and remind top that XXXX. which U.S. be GILTI an GILTI would our on already I However, in in or has low our On tax

minimum Slide tax and global details plan November small we proposed if the that current We establish fiscal will fiscal a GILTI move year-end note now should adjusted position. the on key operating including XX to This difference global further calendar our do basis the revenue, new not release year financial for I to minimum and ultimately change, rate as on the such cash the One to provide historical comparisons new for as late U.S. we final calendar impact EBITDA such, help to and is in information As implemented flow. press include Royal results Gold over in the expect will metrics, significant issue tax, financial financial between a the reporting. of change. our year-end given summary turn year a

business position remained debt we very the working and help liquidity credit which balance million Our $XXX draw ended a quarter with with as ended capital to of $XX the of a million strong million, our $XXX net cash our recent position quarter resulted from on development August the We of successes. of million. fund facility cash, $XXX revolving

last on the mentioned available quarters I over As our repaid of during the October revolver X, balance balance quarterly repay And to to the our expectation increased we million. as next balance flow and this was on $XX cash allows. call, this of million couple $XXX

mentioned, currently after outstanding we of required, our to respect anticipate our production development shareholders. days during $XX.X Assuming objective With during under in continued it business paying December or the earlier as agreement, at flows, is completion new using of accretive on consistent have we commercial Mark operating down available XX help revolver successes business long-standing commitment our Drawing $XX the this to start period. to to KCM, development strong any absent million the until Khoemacau. growth remaining flow cash with the Khoemacau the cash million fund and of growth our our stream repaying quarter, providing if

$XX to resource XXXX our concludes we anticipate of making and potential If have also Ero performance our I'll stream, part certain comments available calendar back comments. quarter, further for to from up cash targets. required case, closing Bill the resources. either we financial Gold the the on for and payments these XXXX, contributions As my funding through now million call for of turn on Copper meeting depending That from NX exploration is

margins. costs well top low performance, exceptionally the revenue Thanks, Paul. portfolio XX cash our performance revenue, again The and for portfolio consistent discipline breadth quarter delivered With around provides and flow line and and maintaining GEO line record volumes. operating that allows to stable mines, G&A of this produce top from performed our high

and Our costs, direct designed inflationary to structure operating are margin subject caused not is pressure remove input by to exposure to cost prices. we

creeping into business offers inflation, of which the inherent be Our global economy. margins from protection seems to

in think to forward great Looking XXXX, shape. I we're

in production assets King looking at NX We at see and several Khoemacau, And the continued expect of first advancement Hills, Viejo exploration production to at continued levels in on at success Gold Pueblo to forward portfolio. we're particular, expansion. higher progress the the

In well available our on to the those of cash addition opportunities business that in new preference I'll this that to and which for the criteria facility and act generation, Between now Operator, fit sheet, and our remain include we gold opportunities. pursuit placed for potential, million for credit line we metals $XXX questions. balance organic on concludes the production growth precious active are ongoing remarks. investment, the with the open for our upside. exploration prepared potential quickly

[Operator Instructions].

Tyler comes first Our from with JPMorgan. Langton question

of it should out this little of sort with or than Maybe ramp -- of? with is be a modeled deliveries your I any deliveries Should -- I will higher the of are I any just Khoemacau? had just are line fair to quarter. guess start assume at the that aware anything guess, production bit kind Khoemacau. else were sort Or ramp in we of lags there sort there to

the question. for Thanks

after final to -- contractually, a any similar This number is very is of after final or Andacollo paid settlement We contract's the the think, settlement. deliveries get shortly not occur I Milligan, or Mount provisional I expect wouldn't a where months actually lags. reached.

of XXX% anything that? Mark, assuming say wants third capacity. would just that, you between anything, add but the to the at I my end that getting now else if is the Mark and he ask look I'll So to -- it and ramping up, date to quarter ramp-up just

no. No,

a it's I good think, here, description.

over million fair then I a little ounces. sort the million -- lower kind sort of bit be think was years, the mine of average? production know is I X to average, first I that assume, several the X.X supposed And than in close to to life, think, of Okay. Is production to it

Actually, but go to -- estimated XXXX project, profile. the I both There silver on is, don't things of you it again, very aware -- me, I'll And Mark. I if interesting it don't XX isn't change? back and have we turn the we sort the right front an relatively one presentation that through of Are of is believe constant. production gave in did And years copper the the actually there's mine any life. about variability major the you of of any

you're right, very There's Bill. Yes, little change. absolutely

I way a is to a perspective, accurate the numbers very it. think modeling using average do from

to is but final helpful. still one just precious of the question. commented that and were bulks. on interested sort that in also still base focus metals? I deals seeing And most sort of side? of, precious this of are on sort sort -- metal the precious seeing battery they guess, focused -- are I meals, looking That's Okay. Or And I of precious are morning in of you're a guess, on then open they're outside are Or deals, you metals? sort guess, sort you the of you your, peers of

going precious stay We're to focused metals. on

market. very precious some of We thing is metals understand find most think a we percentage now, only The we I opportunity, Right our base I I precious metals. consider other metal revenue base metal strategically, that we As the if caution understand something before, certainly could will it. attractive accommodate is, said would think markets. the metals I've

dealing we certainly If whether want outside not have understand of into much, you it's fully might not but it's that we're we'd things, we're we may I impediment, or getting don't don't consider say get something understand. -- that something would as to industries and those with to an

next with from CIBC. Our Chiu comes question Cosmos

is And global GILTI not on Maybe was I to be the the could you're to you Paul, seem well. my you anyways. that go going tax it. about as tax you minimum to think subject I GILTI as additional thought the first -- as is to question mentioned, -- to is I confirm? tax something believe read mentioned, But right going I now, that taxes. XX.X%. up

the does that back or into how the my then taxes? in other part taxes with global terms in, that potential fit repatriate piece of does terms So minimum help in question global of -- how of of is the from Switzerland? funds puzzle does your change of minimum And coming the ability the that you

turn I you? can that over Paul, to

Back Better it. XX% Build Better, in our U.S. yes. for being as implement the moved the current -- question. U.S., if -- under here Yes, under under GILTI legislation there in to Yes, that GMT, Cosmos, it's U.S. the Appreciate that the Build which is the legislation, would move think the regime, you could here thanks Back around the said, under I XX.XXX%. it's could that's That of thrown talks the

So to anticipate slight being again, that we don't But Royal see we a increase, as said. Gold. impact could I significant a

be subject to question. those that to that's So which rate, GILTI with same of earnings, back or cash can the a are Swiss earnings brought tax-free. U.S. repatriation respect great our earnings, to

call GILTI I eliminated XXXX, tax it in GILTI was believe of introduction effectively was -- 'XX So the the would that of prior regime the taxation. and repatriation as of double repatriated taxation, and taxation funds

when the in, repatriation again, So taxation. came no GILTI was there regime

the of presentation, on at Mark, MD&A reading correctly, the like ahead mill it Maybe at gears or slightly compared little the the also to I Great. switching the not? seems Am ramp-up ramp-up a the and it underground. the is looking Reading here. Khoemacau operation, bit mining

ore stockpile tested day expected well where up well stoping I they bounds successfully. the on are up Yes. -- to there. we very stated, be. expected. The the slower Exactly. recoveries has as the rate The a ramped The XX,XXX of within they mill They has ramped tonne as that them was than

So the constraint and to it be be will the be in the ramping mine will not will up mill, stoping. the it operation

and as so, go the development about about next think which rest month year. from ore, can ramp-up really be generating or the piece is XX,XXX coming will into or You we a of stoping it tonnes

said, I of tonne around as the XX% a So day the and you of really March, end it's rate by can XX,XXX expect stoping.

gold, to you Great. question would question, from that to was quarter happy that that Or And ideal the world, Bill, that's mentioned the have maybe be you, from XX% of continues in are silver, you In focus copper. from on a in wanted one here earlier, answering with XX% Paul purchase be your revenue last appreciate Bill. an Bill, last different? metals. your And I as for XX% bit mix?

I've of much but X probably them. was copper to down and X I'm Well, the me since we're gold, look ideal particular, people -- look figure when I But always precious at we'll revenue our because where I gold prices gold about say, the to minimums, I ones I copper, look with ask gold higher going think is in gold give said projects, in again, at first, I at if be I'd X copper is higher. mean always gold it, us like always X -- in they an the strategically, silver, the higher. so are. you I X mean world, is and metal-focused all

[Operator Instructions].

Our MacDonald with comes from question next Scotiabank. Scott

to you at? wanted use of deals the looking of sizes deal of on types What just predominantly of you're good the kind range are at the business your comments are in Congrats looking quarter. And seeing. you're proceeds? Bill, on types counterparties what of a up follow terms of opportunities on the

Development, give a here, from and Yes. we're you thought our of answered the Actually, have can, -- I as what I first if Head Business Breeze ask perspective, bring in the for seeing. Dan might a but sense to I him strategic question I

Côté environment so It's of if Look, look the to solid transactions are through years good the year, Obviously, were Royalties, volumes know the and volumes. the highlighted terms at part we Thanks, the that's XXXX. Red lots in in going last of it that X has particular, your Dan pretty as firm this royalty the Bill. transactions. in reports, the been has and best really the when half or year, dollar In quarterly I with of year, year-to-date, years of that one like third-party And Chris. here. Gold you with of it's be we transacted looks first and industry this well. NX your also

we're slow, looks are finish good sell year. the going operators bit I'd to you off. good a a packages processes to kick a look now. now actually been say And a seeing I bit say, it's the slower, good those to The still quite market packages But trading are Some into. with through it's start finding but think Scott, be if September, pipeline more right to July at,

our I'd say sheets at Copper, weighted In use by looking of still probably it's development of terms NX of strengthening type and that transaction. again, proceeds, example an by Ero of balance of towards financing. project followed That's -- Gold

So it's good.

what seeing deals, It's a to that's right is size as the our again, very It's silver year, that's our what on actually to said, the pipeline. range, we And opportunities, streaming think of seeing. I well million company. we're in mostly million size portfolio. transacted side. in gold, Bill similar we're as And those we've on and gold consistent been $XXX what this that's of a now of what saying terms focused types good bit and for the with to meaningful $XXX

you. helps that hopefully, So

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

on during for next you Well, our in Gold, Thank progress thank Take we look time to you, taking your Royal our appreciate We join care, us today. you. quarterly forward updating interest everyone. everyone, call. the and certainly to

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

disconnect. You now may