- Free cash flow(1) of $11.5 million, representing 79% of revenues
DENVER, Feb. 5 /PRNewswire-FirstCall/ -- ROYAL GOLD, INC. (Nasdaq:
RGLD; TSX: RGL), a leading precious metals royalty company, today
announced second quarter fiscal 2009 net income of $21.4 million,
or $0.63 per basic share, on royalty revenue of $14.6 million. This
compares to net income for the second quarter of fiscal 2008 of
$4.6 million, or $0.11 per basic share, on royalty revenue of $14.7
million.(2) Net income for the six-month period ended December 31,
2008, was $27.1 million, or $0.80 per basic share, on royalty
revenue of $30.7 million. This compares to net income of $10.1
million, or $0.30 per basic share, for the six-month period ended
December 31, 2007, on royalty revenue of $27.2 million. Second
quarter and six-month net income for fiscal 2009 include the
effects of a one-time gain of $31.5 million, or $0.60 per basic
share after taxes, resulting from the Company's restructuring of
the royalties at the Cortez Pipeline Mining Complex ("Cortez") on
October 1, 2008, and a decrease in revenue of $3.3 million, or
$0.06 per basic share after taxes, due to provisional pricing
adjustments on the Robinson mine royalty resulting from the
significant decrease in copper prices during the quarter. Excluding
these items, the Company's net income was $3.0 million for the
second fiscal quarter, or $0.09 cents per basic share. For the
six-month period, excluding these items, net income was $8.8
million, or $0.26 per basic share. Royalty revenue for the second
fiscal quarter was largely driven by increased production at the
Leeville and Goldstrike mines, initial production at Benso, and
$4.0 million in revenue from the Barrick royalty portfolio which
was acquired in October 2008. This was offset by a significant
decline in royalty revenue at the Cortez and Robinson mines. Free
cash flow for the current quarter was $11.5 million, representing
79% of revenues. This compares to free cash flow for the second
quarter of fiscal 2008 of approximately $10.6 million, or 72% of
revenues. Free cash flow for the six-month period ended December
31, 2008, was $24.8 million, representing 81% of revenues. This
compares to free cash flow for the six-month period ended December
31, 2007, of $20.3 million or 75% of revenues. As of December 31,
2008, the Company had a working capital surplus of $51.1 million.
Current assets were $70.7 million (including $55.0 million in cash
and equivalents), compared to current liabilities of $19.6 million,
resulting in a current ratio of 4 to 1. Tony Jensen, President and
CEO, commented, "Royal Gold's second quarter earnings were
significantly impacted by the negative provisional price
adjustments at Robinson and the decreased production at Cortez.
Excluding these issues, the majority of our portfolio performed
well during the period. In particular, we were pleased with the
contribution from the producing properties acquired in the Barrick
transaction. Royal Gold continues to be in excellent financial
health with strong cash flow and a robust balance sheet. We believe
Royal Gold is well positioned for opportunities in the current
market environment and we will continue to demonstrate disciplined
capital investments." PROPERTY HIGHLIGHTS Cortez (Pipeline Mining
Complex) At the Cortez property, royalty production for the second
quarter was approximately 65,000 ounces of gold resulting in
revenue of $3.5 million compared with 146,000 ounces and $6.2
million in revenue for the comparable quarter. A portion of the
revenue reduction stems from the restructuring of the GSR2 royalty,
from a range of 0.72% to 9.0%, to match the current GSR1
sliding-scale royalty rate, which ranges from 0.40% to 5.0%,
resulting in a decrease of approximately $800,000 in royalty
revenue for the period. In addition, production from the Cortez
property decreased as a result of some mining being conducted in
the area known as GAP where a portion of the production is not
subject to the Company's royalty interests. Robinson As discussed
in the Company's November 4, 2008 earnings release, revenues at
Robinson for the current quarter were negatively impacted by
provisional pricing adjustments of approximately $3.3 million due
to the decrease in copper prices during the second fiscal quarter.
Prior to the price adjustments, the Company's revenue from the
Robinson royalty for the period ended December 31, 2008 was $2.0
million. After the price adjustments, the Company's revenue for the
second fiscal quarter was negative in the amount of $1.3 million.
Lower copper and gold sales for the second fiscal quarter, compared
with the previous two consecutive quarters, magnified the impact of
the provisional pricing adjustments. While the $1.3 million deficit
for the quarter does not require the Company to pay cash to the
operator, this amount will be deducted from future royalty
payments. The Company will be subject to additional positive and
negative price adjustments in future quarters depending on the
price of copper at the time of settlement. Dolores Production
commenced at the mine in November 2008 and shipments to the refiner
began in early December. Minefinders reported that crushing and
stacking rates averaged about 14,000 tonnes per day and expects
commercial production to be achieved in the second quarter of
calendar 2009. Once commercial production is reached, Royal Gold's
2.0% NSR royalty on gold and silver will take effect, which is in
addition to the 1.25% NSR royalty on gold which is currently
providing revenue to the Company. Malartic In November 2008, Osisko
announced the completion of a positive feasibility study resulting
in proven and probable reserves of 202 million tons of ore, at a
grade of 0.031 ounces per ton, containing 6.28 million ounces of
gold. The reserves were calculated using a $775 gold price. Osisko
estimates that during the first five years of operation, Malartic
would produce an average of 618,000 ounces of gold, at an average
operating cash cost of $313 per ounce after royalties and silver
credits. Royal Gold owns a 2.0% to 3.0% NSR sliding-scale royalty
interest on a portion of this deposit which is subject to a 50% buy
down right. Troy In mid-November 2008, Revett reported that the
drop in metal prices had resulted in a significant deterioration in
their cash position. They also stated that operations may be placed
on care and maintenance if metal prices remain at depressed levels,
or if alternative financing or deferral of some of its financial
obligations cannot be obtained. Revett plans to continue operations
until early February and thereafter as long as operations remain
profitable. Taparko High River reported that the Taparko mill was
restarted on November 4, 2008 after a new gear box was installed in
the mill drive train. The mill was shutdown for a period of time in
January for additional maintenance in order to improve mill
performance. Production for the months of November and December
totaled 10,200 ounces resulting in sales attributable to our
royalty of 7,505 ounces and royalty revenue of approximately $1.4
million for the quarter. Pursuant to the Amended and Restated
Funding Agreement dated February 22, 2006 (the "Funding Agreement")
between Royal Gold, Inc. and Somita SA ("Somita"), a 90% owned
subsidiary of High River and the operator of Taparko, Somita is in
breach of certain obligations under the Funding Agreement. As
security for the Company's investment in Somita, two of High
River's subsidiaries have pledged their equity interests in Somita
and High River (West Africa) Ltd., the corporate parent of Somita.
In addition, Royal Gold obtained as collateral a pledge of shares
of certain equity investments in public companies held by High
River. Royal Gold has not agreed to forbear pursuing any of its
remedies under the Funding Agreement or other agreements with High
River and its affiliates. Fiscal second quarter production and
revenue for each of the Company's active royalty interests are
shown in Table 1. For more detailed information about each of our
royalty properties, please refer to the Company's most recent
Amended Annual Report on Form 10-K/A, or our website located at
http://www.royalgold.com/. OTHER DEVELOPMENTS Royalty Interest at
Rock Creek In December 2008, Royal Gold converted holdings of 1.3
million shares of Revett Minerals into a 1.0% NSR royalty on the
Rock Creek deposit, located in Montana. Revett estimated, as of
December 31, 2007, that the additional mineralized material at Rock
Creek consisted of 137 million tons, grading 1.67 ounces per ton
silver and 0.74% copper, containing 229 million ounces of silver
and approximately 2.0 billion pounds of copper. About Royal Gold
Royal Gold is a leading publicly-traded precious metals royalty
company engaged in the acquisition and management of precious
metals royalty interests. Royal Gold is publicly-traded on the
NASDAQ Global Select Market under the symbol "RGLD," and on the
Toronto Stock Exchange under the symbol "RGL." The Company's web
page is located at http://www.royalgold.com/. ROYALTY DEFINITIONS
The Company's producing and development royalty portfolio contains
several different types of royalties which are defined as follows:
Royalty - the right to receive a percentage or other denomination
of mineral production from a resource extraction operation. Gross
Smelter Return ("GSR") Royalty - a defined percentage of the gross
revenue from a resource extraction operation, less, if applicable,
certain contract-defined costs paid by or charged to the operator.
Net Smelter Return ("NSR") Royalty - a defined percentage of the
gross revenue from a resource extraction operation, less a
proportionate share of incidental transportation, insurance,
refining and smelting costs. Net Value Royalty ("NVR") - a defined
percentage of the gross revenue from a resource extraction
operation, less certain contract-defined transportation costs,
milling costs and taxes. Net Profits Interest ("NPI") Royalty - a
defined percentage of the gross revenue from a resource extraction
operation, after recovery of certain contract-defined,
pre-production costs, and after deduction of certain
contract-defined mining, milling, processing, transportation,
administrative, marketing and other costs. Gross Proceeds Royalty
("GPR") - a royalty in which payments are made on contained ounces
rather than recovered ounces. Note: Management's conference call
reviewing the second quarter fiscal 2009 results will be held today
at 10:00 a.m. Mountain Time (noon Eastern Time) and will available
by calling (800) 603-2779 (North America) or (973) 200-3960
(international), access #82551240. The call will be simultaneously
broadcast on the Company's web site at http://www.royalgold.com/
under the "Presentations" section. A replay of this web cast will
be available on the Company's web site approximately two hours
after the call ends. Cautionary "Safe Harbor" Statement Under the
Private Securities Litigation Reform Act of 1995: With the
exception of historical matters, the matters discussed in this
press release are forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially
from projections or estimates contained herein. Such
forward-looking statements include statements regarding the
performance of Royal Gold's royalty portfolio, the Company's
excellent financial health, strong cash flow and robust balance
sheet, that the Company is well-positioned for opportunities in the
current market environment and will continue to make disciplined
capital investments, price and revenue adjustments attributable to
production at Robinson, operators' expectations on the
commencement, re-commencement or ramp up of production, and
operators' reserve or production estimates. Factors that could
cause actual results to differ materially from the projections
include, among others, precious metals prices, performance of and
production at the Company's royalty properties, decisions and
activities of the operators of the Company's royalty properties,
unanticipated grade, geological, metallurgical, processing or other
problems the operators of the mining properties may encounter,
changes in project parameters as plans continue to be refined,
economic and market conditions, liquidity and production problems
at Taparko, Troy and other royalty properties, the Company's
exercise of its rights under the Taparko Funding Agreement, buy
down rights at Malartic, litigation and governmental investigations
or proceedings arising out of or related to accounting and
financial reporting matters, other subsequent events, as well as
other factors described elsewhere in this press release and in the
Company's Annual Report on Form 10-K and other filings with the
Securities and Exchange Commission. Most of these factors are
beyond the Company's ability to predict or control. The Company
disclaims any obligation to update any forward-looking statement
made herein. Readers are cautioned not to put undue reliance on
forward-looking statements. *Free Cash Flow: The Company discloses
information on free cash flow and free cash flow as a percentage of
revenues in its reporting. Free cash flow is a non-GAAP financial
measure. The Company defines free cash flow as operating income
plus depreciation, depletion and amortization, non-cash charges,
and any impairment of mining assets less minority interest in
income of consolidated subsidiary. While we believe free cash flow
is a useful measure of the Company's performance, we also want to
advise that this is not a measure recognized by generally accepted
accounting principles. See Schedule A, attached to this press
release for a GAAP reconciliation. (1) The Company defines free
cash flow, a non-GAAP financial measure, as operating income plus
depreciation, depletion and amortization, non- cash charges and
impairment of mining assets, if any, less minority interest in
income from consolidated subsidiary (see Schedule A). (2) Certain
figures in this press release related to prior quarter information
have been restated. See our amended 10-K/A filed with the SEC on
November 6, 2008. TABLE 1 Royalty Production and Revenue - Second
Quarter Fiscal 2009 QUARTER ENDED DECEMBER 31, 2008 (Unaudited)
Royalty Reported Revenue Production(1) PROPERTY ROYALTY OPERATOR
METAL ($ Millions) Cortez GSR1 and Barrick Gold 3.5 65,425 oz.
(Pipeline GSR2(2) Mining (sliding-scale) Complex) GSR3 NVR1
Robinson(3) 3.0% NSR Quadra Gold (1.3) 22,844 oz. Copper 29.2M lbs.
Leeville 1.8% NSR Newmont Gold 2.0 138,669 oz. Goldstrike 0.9% NSR
Barrick Gold 1.8 257,207 oz. (SJ Claims) Mulatos 1.0 - 5.0% Alamos
Gold 1.5 38,741 oz. NSR(4) (sliding-scale) Taparko TB-GSR1(5) High
River Gold 1.4 7,505 oz. TB-GSR2(5) Siguiri 0.00 - 1.875% AngloGold
Gold 1.2 81,431 oz. NSR(6) Ashanti (sliding-scale) Balcooma 1.5%
NSR Kagara Gold 0.6 -(8) Silver Copper Zinc Lead Troy 7.0% GSR(9)
Revett Silver 0.6 343,010 oz. Copper 2.7M lbs. Twin Creeks 2.0% GSR
Newmont Gold 0.5 31,536 oz. El Chanate 2.0 - 4.0% Capital Gold 0.5
9,376 oz. NSR(10) Gold (sliding-scale) 10% NPI Don Mario 3.0% NSR
Orvana Gold 0.4 17,653 oz. Benso 1.5% NSR Golden Gold 0.4 38,968
oz. Star Penasquito 2.0% NSR Goldcorp Gold 0.4 10,057 oz. Silver
0.9M oz. Wharf 0.30 - 1.5% Goldcorp Gold 0.3 17,903 oz. NSR(11)
(sliding-scale) El Limon 3.0% NSR Central Gold 0.2 9,321 oz. Sun
Mining Williams 0.72% NSR Barrick / Gold 0.2 37,792 oz. Teck
Cominco Mt. Goode 1.5% NRS Xstrata Nickel 0.2 2.4M lbs. (Cosmos)
Bald 1.75 - 3.5% NSR Barrick Gold 0.1 0 Mountain (sliding-scale)
Allan $0.36 - $1.44 Potash Potash 0.1 225,582 tons per ton (12)
Corp of (sliding-scale) Saskatchewan Martha 2.0% NSR Coeur Silver
0.1 415,645 oz. d'Alene Dolores 1.25% NSR(13) Minefinders Gold 0.02
2,440 oz. 2.0% NSR Silver - El Toqui 1.0 - 3.0% Breakwater Gold
0.02 -(8) NSR (14) Resources Zinc (sliding-scale) QUARTER ENDED
DECEMBER 31, 2007 (As Restated) Royalty Reported Revenue
Production(1) PROPERTY ROYALTY OPERATOR METAL ($ Millions) Cortez
GSR1 and Barrick Gold 6.2 146,066 oz. (Pipeline GSR2(2) (As Mining
(sliding-scale) restated) Complex) GSR3 NVR1 Robinson(3) 3.0% NSR
Quadra Gold 3.2 27,090 oz. Copper 28.9M lbs. Leeville 1.8% NSR
Newmont Gold 1.3 86,217 oz. Goldstrike 0.9% NSR Barrick Gold 1.3
183,211 oz. (SJ Claims) Mulatos 1.0 - 5.0% Alamos Gold 0.4 30,324
oz. NSR(4) (sliding-scale) Taparko TB-GSR1(5) High River Gold 1.1
5,932 oz. TB-GSR2(5) Siguiri 0.00 - 1.875% AngloGold Gold -(7) -(7)
NSR (6) Ashanti (sliding-scale) Balcooma 1.5% NSR Kagara Gold -(7)
-(7) Silver Copper Zinc Lead Troy 7.0% GSR(9) Revett Silver 0.3
113,714 oz. Copper 1.0M lbs. Twin Creeks 2.0% GSR Newmont Gold -(7)
-(7) El Chanate 2.0 - 4.0% Capital Gold -(7) -(7) NSR (10) Gold
(sliding-scale) 10% NPI Don Mario 3.0% NSR Orvana Gold 0.4 22,258
oz. Benso 1.5% NSR Golden Gold -(7) -(7) Star Penasquito 2.0% NSR
Goldcorp Gold -(7) -(7) Silver Wharf 0.30 - 1.5% Goldcorp Gold -(7)
-(7) NSR (11) (sliding-scale) El Limon 3.0% NSR Central Gold 0.1
7,175 oz. Sun Mining Williams 0.72% NSR Barrick / Gold 0.1 37,806
oz. Teck Cominco Mt. Goode 1.5% NRS Xstrata Nickel -(7) -(7)
(Cosmos) Bald 1.75 - 3.5% NSR Barrick Gold 0.1 16,069 oz. Mountain
(sliding-scale) Allan $0.36 - $1.44 Potash Potash -(7) -(7) per ton
(12) Corp of (sliding-scale) Saskatchewan Martha 2.0% NSR Coeur
Silver 0.2 773,741 oz. d'Alene Dolores 1.25% NSR(13) Minefinders
Gold -(7) -(7) 2.0% NSR Silver El Toqui 1.0 - 3.0% Breakwater Gold
-(7) -(7) NSR (14) Resources Zinc (sliding-scale) * Footnotes
follow on page 9. FOOTNOTES TABLE 1 (1) Reported production relates
to the amount of metal sales that are subject to our royalty
interests for the periods ended December 31, 2008 and December 31,
2007, as reported to us by the operators of the mines. (2) Royalty
percentages: GSR1 and GSR2 - 0.40-5.0% (sliding-scale); GSR3 -
0.71%; NVR1 - 0.39%. As of October 1, 2008, the GSR2 royalty
percentage was restructured to match the current GSR1 rate. (3)
Revenues consist of provisional payments for concentrates produced
during the current period and final settlements for prior
production periods. Figure reflected represents amount that will be
offset against future royalty payments. (4) The Company's royalty
is subject to a 2.0 million ounce cap on gold production. There
have been approximately 328,000 ounces of cumulative production, as
of December 31, 2008. (5) Royalty percentages: TB-GSR1 - 15.0%;
TB-GSR2 - 4.3% when the average monthly gold price ranges between
$385 and $430 per ounce. Outside of this range, the royalty rate is
calculated by dividing the average monthly gold price by 100 for
gold prices above $430 per ounce, or by dividing the average
monthly gold price by 90 for gold prices below $385 per ounce
(e.g., a $900 per ounce gold price results in a rate of 900/100 =
9.0%). Two subsequent royalties consist of a 2.0% GSR perpetual
royalty ("TB-GSR3"), applicable to gold production from defined
portions of the Taparko-Bouroum project area, and a 0.75% GSR
milling royalty ("TB-MR1"). The TB-MR1 royalty applies to ore that
is mined outside of the defined area of the Taparko-Bouroum project
that is processed through the Taparko facilities up to a maximum of
1.1 million tons per year. Both the TB-GSR3 and TB-MR1 royalties
commence once TB-GSR1 and TB- GSR2 have ceased. Both TB-GSR1 and
TB-GSR2 continue until either production reaches 804,420 ounces of
gold, or payments totaling $35 million under TB-GSR1 are received,
whichever comes first. As of December 31, 2008, Royal Gold has
recognized $5.6 million in cumulative royalty revenue under TB-GSR1
which is attributable to cumulative production of 43,700 ounces of
gold. (6) The royalty is capped on a dollar basis and approximately
$10.8 million remains to be paid as of December 31, 2008. NSR
sliding-scale schedule (price of gold per ounce - royalty rate as
of 9/30/08): $0 to $478.10 - 0.00%; $478.11 to $546.41 - 0.625%;
$546.42 to $580.57 - 0.875%; $580.58 to $614.72 - 1.125%; $614.73
to $648.87 - 1.50%; $648.88 and above - 1.875%. The sliding-scale
schedule is adjusted based on the average of the United States,
Australian and Canadian Consumer Price Indices on a quarterly
basis. The most current rate available is reflected herein. (7)
Receipt of royalty revenue commenced in February 2008 for El
Chanate; June 2008 for Penasquito; and October 2008 for Siguiri,
Balcooma, Twin Creeks, Benso, Wharf, Mt. Goode, Allan, and El
Toqui; and December 2008 for Dolores. (8) Production information
was not available at the time of this press release. (9) The 7.0%
GSR royalty extends until either cumulative production reaches
approximately 9.9 million ounces of silver and 84.7 million pounds
of copper, or Royal Gold receives $10.5 million in cumulative
payments, whichever occurs first. As of December 31, 2008, the
Company has recognized approximately $9.5 million in cumulative
payments from the Troy mine attributable to cumulative production
of approximately 3.8 million ounces of silver and 33.5 million
pounds of copper. Royal Gold also holds a perpetual GSR royalty
that begins at 6.1% on any production in excess of 11.0 million
ounces of silver and 94.1 million pounds of copper. This 6.1% GSR
steps down to a perpetual 2.0% GSR royalty after cumulative
production exceeds 12.7 million ounces of silver and 108.2 million
pounds of copper. (10) The sliding-scale NSR royalty is capped once
payments of approximately $17 million have been received. The 10.0%
NPI royalty is capped at $1.0 million. As of December 31, 2008,
payments of $1.3 million for the sliding-scale NSR royalty and $1.0
million for the NPI royalty have been recognized under the cap. As
of January 1, 2009, Royal Gold will no longer receive revenue from
the 10.0% NPI royalty. (11) NSR sliding-scale schedule (price of
gold per ounce - royalty rate): $0.00 to under $350 - 0.0%; $350 to
under $400 - 0.5%; $400 to under $500 - 1.0%; $500 or higher -
2.0%. (12) The royalty applies to 40% of production. The royalty
rate is $1.44 per ton for the first 600,000 tons on which the
royalty is paid, reducing to $0.72 per ton on 600,000 to 800,000
tons and to $0.36 per ton above 800,000 tons, at a price above $23
per ton. A sliding- scale is applicable when the price of potash
drops below $23 per ton. Given the current North American market
price for potash, the complete sliding-scale schedule is not
presented here. In addition, there is a $0.25 per ton royalty
payable on certain production up to 600,000 tons. (13) Revenue only
pertains to the 1.25% NSR royalty. (14) NSR sliding-scale schedule
(price of zinc per pound - royalty rate): $0.50 to below $0.55 -
1.0%; $0.55 to below $0.60 - 2.0%; $0.60 or higher - 3.0%. Gold is
produced as a by-product of zinc. The royalty is currently held in
trust by Barrick for Royal Gold pending receipt of necessary
consents. ROYAL GOLD, INC. Consolidated Balance Sheets (In
thousands except share data) December 31, June 30, 2008 2008
(Unaudited) (As Restated) Current assets Cash and equivalents
$55,040 $192,035 Royalty receivables 14,833 16,317 Income taxes
receivable - 2,186 Deferred tax assets 140 131 Prepaid expenses and
other 709 308 Total current assets 70,722 210,977 Royalty interests
in mineral properties, net 475,724 300,670 Restricted cash -
compensating balance 19,250 15,750 Inventory - restricted 11,654
11,170 Other assets 5,277 7,283 Total assets $582,627 $545,850
Current liabilities Accounts payable $6,378 $4,753 Income taxes
payable 8,610 - Dividends payable 2,736 2,384 Other 1,827 1,797
Total current liabilities 19,551 8,934 Net deferred tax liabilities
23,631 26,034 Term loan facility 19,250 15,750 Other long-term
liabilities 490 504 Total liabilities 62,922 51,222 Commitments and
contingencies Minority interest in subsidiary 11,976 11,411
Stockholders' equity Common stock, $0.01 par value, authorized 340
339 100,000,000 shares; and issued 34,007,184 and 33,926,495
shares, respectively Additional paid-in capital 465,862 463,335
Accumulated other comprehensive (loss) income (7) 65 Accumulated
earnings 41,534 19,478 Total stockholders' equity 507,729 483,217
Total liabilities and stockholders' equity $582,627 $545,850 ROYAL
GOLD, INC. Consolidated Statements of Operations and Comprehensive
Income (Unaudited, in thousands except share data) For The Three
Months Ended December 31, December 31, 2008 2007 (As Restated)
Royalty revenues $14,622 $14,710 Costs and expenses Costs of
operations (exclusive of depreciation, depletion and amortization
shown separately below) 613 896 General and administrative 2,122
1,968 Exploration and business development 963 1,851 Depreciation,
depletion and amortization 8,537 3,606 Total costs and expenses
12,235 8,321 Operating income 2,387 6,389 Gain on royalty
restructuring 31,500 - Interest and other income 166 2,072 Interest
and other expense (357) (789) Income before income taxes 33,696
7,672 Current tax expense (14,116) (2,715) Deferred tax benefit
2,118 486 Minority interest in income of consolidated subsidiary
(301) (322) Loss from equity investment - (511) Net income $21,397
$4,610 Adjustments to comprehensive income Unrealized change in
market value of available for sale securities, net of tax 240 13
Comprehensive income $21,637 $4,623 Net income $21,397 $4,610
Preferred dividends - (1,204) Net income available to common
stockholders $21,397 $3,406 Basic earnings per share $0.63 $0.11
Basic weighted average shares outstanding 33,961,206 29,777,468
Diluted earnings per share $0.62 $0.11 Diluted weighted average
shares outstanding 34,375,388 30,124,299 ROYAL GOLD, INC.
Consolidated Statements of Operations and Comprehensive Income
(Unaudited, in thousands except share data) For The Six Months
Ended December 31, December 31, 2008 2007 (As Restated) Royalty
revenues $30,701 $27,213 Costs and expenses Costs of operations
1,460 1,742 General and administrative 3,793 3,527 Exploration and
business development 1,637 2,481 Depreciation, depletion, and
amortization 12,960 6,008 Total costs and expenses 19,850 13,758
Operating income 10,851 13,455 Gain on royalty restructuring 31,500
- Interest and other income 1,123 3,952 Interest and other expense
(664) (1,163) Income before income taxes 42,810 16,244 Current tax
expense (17,668) (5,927) Deferred tax benefit 2,541 923 Minority
interest in income of consolidated subsidiary (537) (542) Loss from
equity investment - (550) Net income $27,146 $10,148 Adjustments to
comprehensive income Unrealized loss in market value of available
for sale securities, net of tax (72) (173) Comprehensive income
$27,074 $9,975 Net income $27,146 $10,148 Preferred dividends -
(1,204) Net income available to common stockholders $27,146 $8,944
Basic earnings per share $0.80 $0.30 Basic weighted average shares
outstanding 33,943,851 29,253,504 Diluted earnings per share $0.79
$0.30 Diluted weighted average shares outstanding 34,343,827
29,455,599 ROYAL GOLD, INC. Consolidated Statements of Cash Flows
(Unaudited, in thousands) For The Six Months Ended December 31,
December 31, 2008 2007 (As Restated) Cash flows from operating
activities Net income $27,146 $10,148 Adjustments to reconcile net
income to net cash provided by operating activities: Depreciation,
depletion and amortization 12,960 6,008 Deferred tax benefit
(2,541) (923) Non-cash employee stock compensation expense 1,551
1,418 Gain on royalty restructuring (31,500) - Loss on available
for sale securities - 48 Note receivable - Battle Mountain Gold
Exploration - (714) Tax benefit of stock-based compensation
exercises (253) (114) Changes in assets and liabilities: Royalty
receivables 1,485 1,437 Prepaid expenses and other assets (208)
(2,318) Accounts payable 2,207 2,367 Income taxes payable
(receivable) 11,372 (621) Other (14) 371 Net cash provided by
operating activities $22,205 $17,107 Cash flows from investing
activities Capital expenditures for property and equipment $(15)
$(11) Acquisition of royalty interests in mineral properties
(186,110) (2,300) Proceeds from royalty restructuring 31,500 -
Restricted cash - compensating balance (3,500) - Deferred
acquisition costs (62) (56) Battle Mountain acquisition, net of
cash acquired of $1,398,181 - (2,933) Net cash used in investing
activities $(158,187) $(5,300) Cash flows from financing
activities: Tax benefit of stock-based compensation exercises $253
$114 Debt issuance costs (721) - Term loan facility 3,500 - Common
dividends paid (4,768) (3,755) Gold loan payoff - Battle Mountain -
(6,852) Net proceeds from issuance of common stock 723 398 Net
proceeds from issuance of preferred stock - 111,098 Net cash (used
in) provided by financing activities $(1,013) $101,003 Net
(decrease) increase in cash and equivalents (136,995) 112,810 Cash
and equivalents at beginning of period 192,035 82,842 Cash and
equivalents at end of period $55,040 $195,652 Supplemental cash
flow information: Non-cash financing activities: Battle Mountain
acquisition (with common stock) $- $35,832 SCHEDULE A Non-GAAP
Financial Measures The Company computes and discloses free cash
flow and free cash flow as a percentage of revenues. Free cash flow
is a non-GAAP financial measure. Free cash flow is defined by the
Company as operating income plus depreciation, depletion and
amortization, non-cash charges, and any impairment of mining
assets, less minority interest in income of consolidated
subsidiary. Management believes that free cash flow and free cash
flow as a percentage of revenues are useful measures of performance
of our royalty portfolio. Free cash flow identifies the cash
generated in a given period that will be available to fund the
Company's future operations, growth opportunities, and shareholder
dividends. Free cash flow, as defined, is most directly comparable
to operating income in the Statements of Operations. Below is the
reconciliation to operating income: For the Three Months Ended
December 31, 2008 2007 (As restated) Operating income $2,387 $6,389
Depreciation, depletion and amortization 8,537 3,606 Non-Cash
employee stock compensation 915 880 Minority interest in income of
consolidated subsidiary (301) (322) Free cash flow $11,538 $10,553
For the Six Months Ended December 31, 2008 2007 (As restated)
Operating income $10,851 $13,455 Depreciation, depletion and
amortization 12,960 6,008 Non-Cash employee stock compensation
1,551 1,418 Minority interest in income of consolidated subsidiary
(537) (542) Free cash flow $24,825 $20,339 DATASOURCE: Royal Gold,
Inc. CONTACT: Karen Gross, Vice President and Corporate Secretary,
+1-303-573-1660, for Royal Gold, Inc. Web Site:
http://www.royalgold.com/
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