Royal Gold(US:RGLD)2021-05-06 20:45Financial Data and Key Metrics Changes - Total revenue for Q3 2021 was $143 million, a 5% increase compared to the prior year quarter, driven by higher average metal prices and strong performance from the Peñasquito royalty [11][28] - Earnings for the quarter were $54 million or $0.82 per share, representing a 39% increase year-over-year [12][33] - Operating cash flow was strong at just over $92 million, although it was down $7 million primarily due to higher cash taxes paid [13][34] - The company ended the quarter with a net cash position of $220 million and over $1.2 billion of liquidity [13][36] Business Line Data and Key Metrics Changes - The royalty segment contributed approximately 33% of revenue, mainly due to strong performance from Peñasquito [17] - Revenue from gold accounted for 68% of total revenue, down from 79% in the prior period, due to significantly higher increases in average silver and copper prices [28] - The average prices of gold, silver, and copper increased by 13%, 55%, and 51% respectively over the prior quarter [28] Market Data and Key Metrics Changes - The company reported a deferral of approximately 362,000 ounces of silver from Pueblo Viejo, which is expected to be made up as plant performance improves [18] - Production guidance for Nevada Gold Mines is expected to be between 350,000 to 375,000 ounces for 2021, significantly higher than the previous year's 175,000 ounces [26][51] Company Strategy and Development Direction - The company is focused on organic growth opportunities within its portfolio and remains active in pursuing new business opportunities [41][42] - The company has access to a full $1 billion credit facility, which allows it to act quickly on investment opportunities that fit its criteria [42][43] - The company is committed to funding social initiatives with its operating counterparties, promoting sustainability and community benefits [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's diverse portfolio and its ability to generate cash returns to shareholders [41] - The company anticipates that the operational issues at Pueblo Viejo will be resolved in the current quarter, leading to improved silver recoveries [88][90] - Management is cautious about providing long-term guidance due to the variability in production and operational challenges [60] Other Important Information - The company repaid $50 million on its revolving credit facility during the quarter and is now debt-free [13][37] - The Khoemacau project is progressing well, with construction completion reaching about 92% [19] Q&A Session Summary Question: Can you discuss deal activity and what you're seeing in terms of asset types and locations? - Management noted a healthy market with opportunities in the $100 million to $500 million range, focusing on development assets, particularly primary gold assets [48] Question: Regarding Pueblo Viejo, when should we expect the 362,000 ounces of silver? - Management indicated that the timing depends on operational improvements, suggesting a quarter-to-quarter follow-up [49] Question: Can you confirm the production guidance for Cortez? - Management confirmed the guidance of 350,000 to 375,000 ounces for 2021, with variability expected in production timing [51][53] Question: What is the status of the silver circuit recovery issues at Pueblo Viejo? - Management explained that the recovery issues are related to preheaters, which are being rebuilt, and improvements are expected in the current quarter [82][84] Question: Are there still opportunities available in royalty portfolios? - Management indicated that while the market is active, finding cornerstone assets has become challenging, and many desirable portfolios have already been sold [92]