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Royal Gold Extends Revolving Credit Facility, Repays Debt

Zacks Equity Research

Royal Gold, Inc. RGLD declared that it has entered into new 5-year revolving credit facility worth $1 billion, with a final maturity due in Jun 2022.

The new facility replaces Royal Gold’s earlier $650 million credit facility whose maturity was due in Mar 2021. The company repaid its prior credit facility using a mix of borrowing under the new credit facility of $250 million and cash in hand of $50 million, which leaves about $750 million available under the new credit facility.

The new credit facility enables Royal Gold to increase the aggregate commitments under the arrangement to $1.25 billion and includes an accordion of up to $250 million. Per the terms of the facility, Royal Gold will incur commitment fees, annually on any undrawn credit capacity, ranging from 0.25–0.55%, when its leverage ratio is below specified levels. Interest rate range for drawn borrowings under the new credit facility is substantially similar to prior credit facility.

The company noted that it presently has no additional capital commitments and all cash will be available for debt reduction, dividends and acquisitions moving ahead. Royal Gold will also evaluate its capital structure at regular intervals and remain focused on credit facilities expansions.

Royal Gold’s shares have rallied around 25.8% in the last three months, outperforming the Zacks categorized Mining–Gold industry’s 4.6% gain.

Royal Gold reported net income attributable to stockholders of $23.7 million, or 36 cents per share in third-quarter fiscal 2017, as against a net loss of $67.7 million, or $1.04 in year-ago quarter.

Total revenues for the reported quarter were $107 million, up about 14% year-over-year. Revenues include stream revenues of $76.6 million and royalty of $30.4 million.

The increase in total revenues was mainly due to higher sales from Mount Milligan and Pueblo Viejo streams which more than offset reduced sales from Andacollo stream.

Royal Gold ended the quarter with cash and cash equivalents of $88.1 million compared with $122.9 million a year ago. Debt was roughly $635.9 million at the end of the quarter compared with $630.3 million at the end of the prior-year quarter.

Royal Gold, Inc. Price and Consensus


Royal Gold, Inc. Price and Consensus | Royal Gold, Inc. Quote

Royal Gold currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked companies in the basic materials space include Huntsman Corporation HUN, ArcelorMittal MT and The Chemours Company CC. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Huntsman has expected long-term earnings growth rate of 7%.

ArcelorMittal has expected long-term earnings growth rate of 11.6%.

Chemours has expected long-term earnings growth rate of 15.5%.

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