Gold mining properties developer Royal Gold, Inc. (RGLD, RGL.TO) reported Thursday a decline in second quarter profit, due to absence of gain on royalty restructuring, even though revenues surged 138% over last year. However, earnings for the quarter came in well above analysts' estimate, as did revenues.
The Denver, Colorado-based company reported net income attributable to Royal Gold stockholders for the second quarter of $9.62 million or $0.23 per share, compared to $21.40 million or $0.62 per share in the year-ago quarter.
On average, four analysts polled by Thomson Reuters expected the company to earn $0.19 per share for the quarter. Analysts estimates typically exclude special items.
Comprehensive income attributable to Royal Gold stockholders fell to $9.71 million from $21.64 million.
Net income for the year-ago second quarter included 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 pursuant to the company's acquisition of Barrick Gold's royalty portfolio.
Royalty revenues for the quarter surged 138% to $34.74 million from $14.62 million in the prior-year quarter, driven by higher production at Taparko, Cortez, Leeville, and Mulatos and improved year-over-year gold and copper prices. Two analysts had a revenue consensus of $26.81 billion for the second quarter.
In the immediately preceding quarter, Royal Gold reported an increase in first-quarter profit, helped by higher production and prices of gold. Net income attributable to Royal Gold stockholders advanced to $7.13 million or $0.17 per share, on revenues that surged 62% to $26.11 million over last year.
Gold prices averaged $1,100 per ounce during the quarter, compared to $795 per ounce in the prior year quarter.
The company noted that Gold accounted for 84% of the revenues in second quarter of fiscal 2010,
Total costs and expenses for the three month period rose to $19.54 million from $12.24 million in the comparable quarter of fiscal 2008.
Commenting on the results, Tony Jensen, president and chief executive officer of Royal Gold said, "Royal Gold had another great quarter due to strong production at our principal royalty properties and higher metal prices. These record financial results are prior to receiving any meaningful results from our Peñasquito and Andacollo royalties which are in the construction and commissioning stage."
Goldcorp, the operator of Royal Gold's Peñasquito property, revealed that both lead and zinc concentrates has ramped up consistent with expectations and that achievement of commercial production for the sulfide Line 1 and Line 2 remains on track for the third calendar quarter of 2010.
Goldcorp also reported that ore throughput rates for the first sulfide processing line have reached operational production levels and construction of the second sulfide processing line is on schedule for completion in the third calendar quarter of 2010.
On December 18, 2009, Royal Gold and International Royalty Corp. or IRC entered into an agreement whereby Royal Gold would acquire all of the issued and outstanding common shares of IRC.
Under the terms of the agreement, IRC shareholders may elect to receive either C$7.45 in cash or 0.1385 common shares of Royal Gold or a combination of both, subject to a maximum of US$350 million in cash and a maximum of 7.75 million common shares of Royal Gold. If IRC shareholders elect to receive more than about US$314 million in cash, the number of Royal Gold common shares issued will be reduced on a pro-rated basis until such cash election reaches a maximum of US$350 million.
Assuming the maximum cash election, the consideration under the agreement will consist, on average, of 0.0700 Royal Gold common shares and US$3.48 in cash for each IRC share, reflecting 51% share consideration.
For the six-month period, net income attributable to Royal Gold stockholders was $16.7 million, or $0.41 per share, compared to $27.1 million, or $0.79 per share last year.
Royalty revenue was for the first half of fiscal 2010 surged to $60.9 million from $30.7 million in the prior year.
RGLD is currently trading at $41.95, down $1.51 or 3.47%, while RGL.TO is currently trading at C$44.79, down C$1.09 or 2.38%.
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