Royal Gold(RGLD) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue increased by 27% to a record $124 million, driven by a 5% increase in volume to 83,500 gold equivalent ounces and higher average realized precious metal prices [8][33] - Earnings for the quarter were $41.3 million or $0.63 per share, representing a 75% increase compared to the prior-year quarter [38] - Operating cash flow was strong at $78 million, with approximately $1 billion in liquidity available for new business opportunities [9][40] Business Line Data and Key Metrics Changes - Stream segment volume for the quarter was 60,000 gold equivalent ounces, in line with previous expectations, with gold accounting for 74% of revenue [34][35] - Higher sales from Andacollo contributed to the increase in revenue, while lower royalty revenue was noted from Cortez [33] - At Mount Milligan, total stream sales were higher due to a significant increase in copper contribution, with strong deliveries of both gold and copper [21] Market Data and Key Metrics Changes - Gold and silver prices increased by 21% and 19% respectively, while copper prices decreased by 5% year-on-year [34] - At Rainy River, gold production for the calendar year was 253,800 ounces, within the annual guidance range [24] Company Strategy and Development Direction - The company aims to continue seeking disciplined growth opportunities in precious metals, focusing on gold and measuring success on a per-share basis [46][47] - The management team emphasizes a proven and well-established strategy, with no intention to change direction [46][47] Management's Comments on Operating Environment and Future Outlook - Management noted positive developments at key properties, including the end of strikes at Andacollo and Penasquito, and operational improvements at Mount Milligan and Rainy River [10][27] - The company anticipates stream segment sales for the upcoming quarter to be similar to previous guidance, with inventories expected to be in the range of 30,000 to 35,000 gold equivalent ounces [40] Other Important Information - The company made an initial contribution of $66 million toward the Khoemacau project development, with further contributions expected in 2020 [42] - The company reported a strong liquidity position with cash of almost $81 million and working capital of $92 million at the end of December [40][41] Q&A Session Summary Question: Is there a study ongoing on Rainy River similar to Mount Milligan? - Yes, New Gold is conducting a new technical report on Rainy River, with results expected on February 13 [51] Question: Will impairments by operators affect the carrying value of assets? - An impairment by an operator does not directly result in an impairment of the company's interest; analysis will be conducted once data is released [53] Question: What opportunities are seen in the market with higher gold prices? - Most transactions are expected to be between $200 million and $500 million, with a focus on project development and M&A opportunities [63]