Royal Gold (RGLD) 8 Aug 242024 Q2 Earnings call transcript

Hello, everyone, and welcome to the Royal Gold 2024 Second Quarter Conference Call. My name is Seth, and I'll be the operator for your call today. [Operator Instructions] I will now hand the floor to Alistair Baker, to begin. Please go ahead.

Thank you, operator. to of welcome Quarter Gold's and Results. XXXX morning, our Royal discussion Second Good being and webcast this is event This live, be on call a available our website. will of replay

President for Vice call Development AG; are available Vice the is of and Raffield, and RG of Martin President Randy Counsel, Vice CFO; Paul also Vice Dan on Speaking Breeze, President Bill Heissenbuttel, Senior and Libner, and General today questions. Senior President Operations; Senior Senior Shefman, CEO; President, Corporate

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

We adjusted refer adjusted including non-GAAP net per financial net income, cash. will measures, share, to income EBITDA, net also certain adjusted

Paul provide measures After the website. provide Reconciliations in Q&A Bill of our our of to with an release, measures will on yesterday's the these acquisition. comparable start most will and an recent will are a can some lines overview found Dan session. press overview commentary we'll portfolio, the financial most give update. open remarks, the on a formal available Martin which be the quarter, of GAAP directly will for

I'll now turn the Bill. call over to

period adjustments, begin $XX cash $X.XX call. XX% million during Good a a revenue of share. Slide million morning, the $XXX $X.XX the record were per and Operating near flow record and I'll After We per over on with of had increase share. year. $XXX thank the joining minor or financial earnings same quarter earnings for X. of strong performance you last million,

and over revenue Canada the from U.S., gold was and Revenue our of generated XX% Australia. XX% was

flat, steady in strong of providing remained our cash margin EBITDA the business of was increase our XX% and G&A revenue, And the model. despite scalability at a for adjusted further XX% Our quarter. evidence

helped us portfolio long-held included allocated during was Solid of in credit facility. $XXX the regular outstanding quarter the on strategy, performance that of balance our with and flow repayment our of million, cash significant dividend strong quarterly payment generate price $XX million gold the we revolving which the line

We quarter position. ended cash After $XX debt with have returned of of made repayment and to we a the end, we net million. million further quarter $XX now a outstanding,

of our we exposure XXXX, we this of the to to Dan gold Back the in acquisition, of development you And on project brief to a asset. $XXX We'd in Goose to give turn have X more finally, increases the Canada. And which call the debt. in I'll so overview the Gold and the River over review Nunavut, like district, with far reinvested million royalties acquisition repaid business

Thanks, developed by Bill. cover cash Slide at being Most Goose the activity an River purchase. to the royalty spend In few that entirety late Back X royalties the I'll consideration River acquisition we district a $XX of turn X and Back the of minutes for June, of completed north, the Back George the is million. underway BXGold. deposits including at the are the Nunavut earlier gold and belt the XX-kilometer is stage. of an to in project, River development project on

in reserves, district. the The thereof royalties and extensions all we acquired cover potential resources

declines or The has royalty been X.XX% NSR of immediately first starts a X million X.X% NSR royalty royalty a return delivered. to after and that is paying revenue CAD net smelter

royalty return smelter an or paying The about ounces second gross approximate royalty GSR X.X% XXX,XXX after begins are delivered. that is

the The first royalty is a deduction second. against

asset. purchase us to between interaction account for acquired So as one have while the we X allows the the royalties, royalties

approximate royalties an royalty. GSR to the X.X% Together, are equivalent

in acquired through ownership had recall, you project already to the exposure If that other we Back River XXXX. we royalties of

So and position. to add existing these complement royalties that

resources of X.X XXX,XXX Turning XX-year Goose X,XXX includes project. production the between approximately feeding from be ounces River first estimating BX which of in construction BX X.X production over of million BXGold a to million over is conventional and process proven they gold day ounces of ounces a XXX,XXX currently probable to will I'll XXXX in brief tonne X. are forecasting per mine per reserves. increasing Total XXXX, measured expects leach advancing ounces Back total and operation and X.X give XXXX. XXXX and ounces year quarter a underground the contain project and plant. indicated gold the approximately XXX,XXX the million in of which life. gold combined currently overview Slide of is production open pit second

X.X additional BXGold, and inferred the Goose achieved. BX And exposure ounces Gold's as increases transaction. the as been various understand an rates an to rates resource to from conversion average significantly and to prospective indicated according you area change historical the contained summary royalty resources has exploration Project The Inferred levels Royal help million add measured this with to and the should is XX%. of to this campaign Slide production underway rate highly the royalty X on on River district base. Back how resource are extensive

reached be the X.X% BXGold's the production on in for royalty GSR will rate that and to royalty reached first expect the XXXX based XXXX increase threshold be We in the reach forecast. of rate threshold will

are it experienced stable attractive with developed a our an being to We by very project, pleased increases jurisdiction, as this operator. transaction a exposure

to Martin. I'll the over now call turn

Thanks, Dan.

I'll $XXX volume for some the increased primary second on revenue. were GEOs. driver near XX,XXX Turning comments to Slide prices Higher revenue. the the with Overall for X, quarter of record revenue was give million quarter

lower about from for from by offset about approximately Bellevue revenue from contributed were segment with new revenue Royalty underground. XX% from Royalty of Cortez Mara million $XX higher Rosa, legacy Star's the total the quarter. Wonder and Our up was $X quarter increases XX% Penasquito revenue and prior Robinson the year million, and revenue Northern in partially These contributions zone.

from million, XX% increased from about $XXX revenue with Andacollo, Milligan, contributions segment Viejo. Pueblo partially stream lower last by by Wassa up Mount Xavantina, offset from our and year from Revenue was

Pueblo give at evaluate and Mount some the half on reported also week in will comments second milling the on quarter and to Milligan, recovery properties. mid-July prior our improvements reductions the X the Slide to as significant the turn opportunities year the the reported beyond reported to they're expected PEA quarter was mining of date to site-wide Centerra up. of next year in in of last completion extend to developments to in notable and with At is They that ramped for Barrick the XXXX. XXXX. that principal production on mine second half first shift in in compared costs At track on Viejo, I'll flat throughput the program occur rate life optimization optimization progress costs

XXX,XXX Silver continue deliveries conditions At in rates. of restrictions the second a second recovery remains while in further have water Teck we year. caused Andacollo, quarter. ounces we XXX,XXX the half lower in of deferral the the that reported ounces, drought expects improvement during to Teck the than saw throughput improvement receive of quarter target. second and And the an limited

in gold At second quarter and driven mill pit and and Turning the grades throughput good Penasquito, production from Chile high to higher X. zinc by Colorado strong, recoveries. production resulting Slide was

a to the first third an Newmont steady in higher At reported year. fourth expects Penasquito increase MMG turnover skilled full by production mining in returns gold quarter of number as levels workers. significant results gold of equipment the and Khoemacau, pit hired quarter the availability production the mine training the quarter the at Production labor. was since with high that to X in in has reported impacted Zone remain the later at it replacement ownership is of transition. and MMG

the of the to coming achieving better being reduce dilution measures also ore quarters. in expectation are with There taken grades

addition, tonnes the We're Recall initial expansion Stream commercial to and in portfolio our deposit. reported of and production mine Rosa. Manh the intention In Royal Zone with from see at progress Gold newer covers of pour note pleased year. Silver at Choh per of Northeast some and XXXX producing by to complete target production Mara Cote that Mango the achievement gold the Khoemacau MMG at copper XXX,XXX assets interest both expanded X the and the of their of an

to an worth fiscal ore and movement underground some XXX,XXX XXX,XXX Australian developments was royalty positive At a into capacity. plan to at by initial And and of in processing in the year. steadily referred to production a gold we production this Northern containing the to in expects to XXX,XXX royalty noting development XXXX. our Bellevue, couple approximately from has later ore And is are increasing X-year to Star with fiscal underground start grow and ounces levels Wonder ounces stoping Thunderbox properties. a our ramp-up being year-end from finally, high-grade announced quarter continue in XXX,XXX XX mill. at XXXX year the it's Western blended year expected revenue first Bellevue increase Australia, XXX,XXX received underground to ounces reserve fiscal significantly June production to

over the review to financial a for Paul call now our turn I'll of results.

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

year June this revenue to the which For the of is the million company. $XXX quarterly the was XX, up quarter be the XXXX, quarter. in ended for comparing to second prior XX% history highest I'll the discussion, quarter, Revenue

metal the year. up revenue the was in gold silver as was copper primary this prior over his XX% was XX%, and up near prices for was covered As Martin the remarks, quarter higher of one drivers record up XX%

revenue and mentioned, peers Royal when copper gold the making be source, streaming to of have Bill percentage highest our the total continues at revenue quarter, and the to at As silver royalty major sector. revenue dominant our compared to by up followed the XX%. XX% gold in Gold continues XX% for

Slide higher bit million the more $X.X detail G&A the from line Turning expense. due for quarter. prior increased provide to on increase was $XX.X noncash specific compensation to financial stock items year. XX, in The to million I'll expense a

G&A cash Excluding the noncash $X.X prior our unchanged expense, stock from quarter. which million, was year compensation was

of and costs impacted despite pressures G&A that quarters. Our inflationary have mining in sector metals cash percentage have total remained recent revenues low a as the

in depletion decreased factors: expense GEO overall million basis, $XXX per slightly from $XXX compared from $XX was to decrease The was for million expense in our this DD&A quarter and the ounce. to due a prior prior per $XX.XX depletion the Khoemacau $XX.XX year. on expense year. DD&A per this GEO per unit to Our primary On rate $XX a lower to GEO X first, quarter

contributions lower and Penasquito, Second, and Pueblo sold from a has Viejo; value and higher segment, specifically rates. carrying overall depletion to royalty lower our silver royalty finally, gold which

was due guided to $XXX to outstanding significantly decreased primarily prior The effective million credit June. interest the in X.X% to under $X.X We for at rate total million of of will was million for previously borrowings quarter revolving expense our range continue resulting $X.X million, to rate in compares be Interest credit rate an the facility lower the Tax to DD&A expense tax expense The when within to and from in the $X prior expense effective outstanding our million. an that This a XX.X%. million amounts the year. forecast of the $XX average year. compared decrease our tax all-in year. facility under $XXX of of was X.X% end tax prior

year. million, and line valuation or million tax The in to with XX% to primarily certain share. the quarter of tax for revenue for Net lower net the prior due of increase the The The deferred expense. effective foreign up full discrete was $X.X in per attributable a release higher prior income was was on our $X.XX period expense rate to $XX quarter was in year the attributable interest the expectations for tax lower over tax income to year assets. benefit a allowance the

or After item million discrete minor record quarter adjusting per other for for net a share. and income $X.XX was the a small tax adjustments, $XX.X

when cash Our quarter operating flow from million, due year increase segments up the X% was The to nearly prior this operating cash period. to compared stream cash receipts over in higher year. prior flow the $XXX primarily was

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

balance cash During a net sheet on a quarter, $XXX of the with our to outstanding repayment facility returned million credit balance. we the position

outstanding working and revolver debt that at I billion As our liquidity quarter of of approximately of our note working abnormally the up of low. $X total June million undrawn available end XX, we had will capital. was balance $XX also capital made and

next quarter resulted $XX this the reclassified a balance our and early $XX Back to we The repayment intend lower early million amount We the liability July capital royalties current reclassification working of final current a million this of a from the from a make also liability. cash acquisition as from to available the liability we from given the million River long-term $XX week. made remaining and payment revolver in

week, debt will we quarter, to turn for have for Bill the comments With performance early back repayment financial my X will our next expected closing now outstanding. That and on the the concludes I call comments.

Paul. Thanks,

Our were pleased to sheet debt long-standing to second progress we diligent our quarter with particularly and our the of strategy capital balance our I'm on business. dividend, new in was strong, sticking allocating reduction. and

With the to recent coming fund that have $XX borrowings the we repaid will repayment portfolio noted, we additions. Paul incurred our some million of all

offer River, shareholders X years, These I to Looking to upside over million future for Tier spent these a by jurisdictions, and have the X transactions we royalties are not coming high-quality equity and finance and available Cortez, Bear we replenished acquire them dilute $XXX gold issuing in to liquidity significant expect back fully Great on our Back over decades. acquisitions. royalties and did

mean financing that the benefit Our will upside. that shareholders choices full enjoy our of

the considers instability state one volatility, are we As positioned current for uncertainty. very this of and well market political

effective overall are year sales, DD&A and toward guidance tracking We tax our well rate. full for

themselves. we sheet advantage take liquidity present to have balance available solid, business opportunities that of is Our development and excellent may

that now Operator, concludes open prepared line the questions. our remarks. I'll for

you. Thank

question the from from Jakusconek Scotiabank. call Our on first Tanya comes

aware Maybe the I individuals just royalties I companies interested little Back from like royalty. deal. your River. they existing other purchased. on had Were on I'm like Congrats start you a Okay. on will just that wasn't

who of these seller or... is individuals with just the royalties, starting companies off maybe or So

one Dan, Thanks, to Tanya. on? do Yes. that you take want

was Bill. yes, competitive private a U.S. as of Tanya, a a Hill royalty, The Tanya, from for royalties, was a and the Sure, thanks it royalty subsidiary third-party process question. company, KM the came from well. trust ] [ and

these royalties Or more available Okay. Are this of that.... on are property? there than these

don't bulk in few terms to a Tanya. this available royalties, This is has of But that purchase. itself royalties, talking is think property couple here the smaller we're the There I our So a royalties. the about of now. of are bulk ownership the they're

and that and end yours pop how well on the sure always other there's know have this wasn't I'm know I just it. many of as I intrigued I up, exposure. whether companies is

You individuals said of there's a those that well? royalties are not available. couple as smaller Are

is things some a top individual an me or least Again, interesting here, Tanya, without that of my believe having here. held held front all pop well. we one do by in and up, company the us But as I head the is of sometimes detail at by they that see agree off and sometimes It's these another I with you. surprise

we're of it's pretty third-party a now think transactions There's year. And market buyer prices then these and as think Tanya, right is I already market. seen that's commodity this announced a in pretty of number what royalties. the for seeing I you've a stronger sellers robust robust combination motivating been a market,

it's pretty capital sector of to deploy, the competitive. of have all us lots So in

sell So into. it's a good market to

general, be see surprised in wouldn't more. to I So

Okay.

this talked million $XXX And $XXX range. to we million so had historically, about

thing million. of I you something you're are -- seeing need that still of is, these in would saying that them. more you're you did obviously, range But So smaller that to obviously, say first royalties, is the $XX and ask the

you're the million trying stream? we range more this to be $XXX can million, maybe I'm $XX more. what go million $XXX which maybe seeing now see to to $XXX to versus differentiate So down just

mentioned range One of the a your upward higher competitors on much side.

you're larger but the a side. on if wondering, I'm So range downward seeing

I... then Dan, keep going why don't you

Sure, sure.

us sub-$XXX perhaps, see million mentioned River of and are we're think think that's is is, level size, I right busy we way And this, Those or in the general. market for I good pretty in good the royalties It's last category are Back the X an example opportunities. I the that to add has in the So think I that call been what the think, Tanya, I that looking of transactions. portfolio. things quality now

the talking when give think fair $XXX but say, range, answer, that's to I which same continue million think I we're still kind $XXX always the know to of what more million I see. you is we in we to

couple We think, I of the million are still in of some say of range mostly larger the streaming $XXX outside to range. it's but on the that very we range is see broad that fair aware opportunities a of general, $XXX million But in consistent sort across royalties, both to royalties, side.

all proactive walk from bit maybe, about how out of you about of these opportunity there. aware so Okay. are to Bill, has of And opportunities. to the through like we then the just you're us sort little we -- walk busy and us deals lot deals, completed tomorrow. a everyone takes all Can and what can you timeline maybe that like an start are these looking to or and the opportunities approached on hear has announced going hear talk they're of it and a you not you through at super be deal But us me of this get time that can but all

happy are We're signing tell up clear, transaction process, to just we're timing, that when be handicap looking trying a you something at many likelihood going of opportunities. I'm we're to ramps first a looking to about And exit we're from this looking weeks closing the at stage looking trying not talk not point be anybody of of earlier things. there a number just to the We're one. months. we're in could that busy, It to And in of our we coming business sort to X about to. anything signal activity, Yes, transaction. level X or of at

ideal this to information share Everything way. transactions that And that available, last X not In months, all close. X is be happens X different over lined will the of bidder us. is up, with you It that I best the did weeks that preferred we the never would takes were XX the for thing to on all close. worlds,

about, One are of market that ACG. not the that's X public. I'm into knows not other to which the go going

these can achieve failure But to just and But that Debt from our Metal to don't yet the it I CPs, what even give and change. peers, right? markets. derail something capital things, close, the $X,XXX, they competitor. price and still was changes, our X you a to gold ACG. price you us, flavor, and been could a when expectations amongst won You've the bigger looks say, at months, for on I $X,XXX issue are valuation company working for equity, the would that going biggest the contest think,

may as And open go seen debt markets that. down not just looking things Well, the do rather can all that. and even at down the where said, are rates And management things happen we've on these interest equity come open, be we'd same of side market our we the along, if product. is Board they the do to and the coming

would And have can it So lot I is that of even really, X longer, It Dan, good say, be it's you really probably a lot didn't about. a we take also think but estimate. hard. up I things know months where shorter can examples. couple come a a

is there? you I there know, don't want to So add Dan, anything

add, tend a community. own level, uncertain Tanya, BD I just bit to a transactions. to why we our It's try fluid back, Bill, of thinking very would our overpromise frustrating Yes, just that's can the I I of about very be part just environment what recent keep it a in our comments come at analyst our just high And transactions, appreciate for out business. And and little we that's pipeline. not may on think stepping

didn't until early about XXXX. do at that on it's example, you we an some technical in -- team studies after and I think If the look agree the transaction learned XXXX decided early guess, And further there Khoemacau whatnot. early I opportunity to we

say, something acquired that Chris, of there. looking come So we a the royalty Red number and about not thinking we see may years at, for through

to Sometimes chance we well came but knew that the advance, quickly. about royalty in very acquire

time in after royalty Cortez, And XXXX, And Tinto very we act acquired that a looking additional came private at the that to result idle as on the kind one. about we Cortez had we sellers Rio so that the of royalty quickly there to was The them to a sell. the just market opportunity. even I know for of surprised had that years relationship market that deciding some right the for with didn't degree. many

think And point, So predict. that's quarters hard to consider. think general about reasonable comment to of do Bill's Bill's sort very and we could X quicker, things to it's there I in timeline a I but

Okay.

X ourselves of X sits benchmarking average. months on So too to sort optimistic

ahead. go Yes,

No, about just benchmark things reasonable X hear just months these of when somewhere range. to a X between to ourselves of for you time sort

an probably is ideal months to closer X months reality. world. X Yes,

I could in okay. world. world. Maybe we an in live reality. ideal am an more lived Well, Reality, wish squeeze in living If one I I ideal in. I

of on were guidance the had just as Back a return again, haven't to River, it that. would I from the the to haven't But to But at myself. purchased. we use pricing rate were and just project, that done -- additional chance assuming assume? of to double look model Just sort digit. trying royalties I'm if be benchmark, safe your I would a benchmark that I'm this be

got Dan, think you've I Yes. number. that

a looked spot it we price think basis here. I at on

to single way think mid- about to reasonable upper think the moment. digits is a at I Yes, the it

digits single of that's and $X,XXX? on pricing upper Okay, spot

digits. single upper Yes,

Yes.

$X,XXX around somewhere Yes, spot $X,XXX, price. that

Instructions] question [Operator at Brian Raymond James. MacArthur today Next from comes

sort And on follows Tanya's last it of one.

slide, slide -- sorry, Back royalty. Slide But So your I is which guidance thought given worked the on X, I the out. this River

X.X% $X I'm the after to secondly, you Is do that get X guys if for ounces GSR true, you if trying I'm supposed XXX, it. about royalty it? this comment then to less from And to post on to X.X% down less thing. XXX XXX. million what that to XXX, you out just because you X.X% X.X% we the once NSR goes So that's which eventually the that KM X.X%, figure the think get from how And get on read and X.X% you then get X.X% the you get I deduct to XXX,XXX

time, but Because doing obviously, a it's this more easier maybe on get from over we're how guidance and IRRs, if that what Look, offline, here. you makes difference up ramps any these when big works? thing

Yes, want this to might Brian, at crack walk a it. offline to let me we it, just take take through but

think you it's chart, what the think, boil correct do do to say rate rate the the exactly, really what direction, you please of take and the with to stepped and for Cortez is -- this it should I where And I we to we me. got what to do apply deductions to you've I really, the trying for do down forecast. to tried royalty the to and with if your you a complicated is. trying you do situation tell deductions in effective wrong sort production are we're Dan, is

think Brian, And just on deductions that. their I right. question is and complicated, about Yes, that's property fairly royalties Tanya it like things their and

think as simple just what make getting it exactly to X very is to possible. try GSR the to ultimately it well. in as do X.X% And in early mine and that's just So as plan about buckets, that rate we those

asking, you to Okay. That's early say together, But a really I I'm say than that's X% don't equivalent on. need what details. I'm And trying or all early that's to the lot X% getting GSR on. at, a they're all up to you also get X% because different also

the in dropping off Tanya's go years too. to that's, think, I early through later should and X.X% be be should question it the thing? using So I higher because Or I whole

Sure.

KM the is X.X% Hill the Brian, and combined royalties. So

royalty that's is so you plus there, So the to get the that's existing X.X%, X.X% how X.X%. our which

rate. step back, this So is royalties into our just chart of to all X combined

whatever. got own basically note we -- that about of that your XX.XX% it or talked Right, which put is the

well do all you So as that. you're bringing that into when it

right. That's Yes. That's right.

[Operator Instructions]. right. All

We the have on call. further questions no

hand So I'll the conclude. to floor to Bill back

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

very conference. much This all concludes you Thank for joining. the