Royal Gold, Inc. RGLD has issued an update for the December-end quarter. During the quarter, RGLD Gold AG — the fully-owned subsidiary of Royal Gold — sold 61,700 gold equivalent ounces (GEOs), comprising 45,600 gold ounces, 715,100 silver ounces and 1,300 tons of copper related to its streaming agreements.
The average realized price of gold was $1,792 per ounce in the quarter, down 0.2% sequentially. The average realized price of silver stood at $23.35 per ounce, down 6.3% quarter over quarter. Average realized copper prices were $9,703 per ton, up from the previous quarter’s $9,451 per ton. The company ended the quarter with 26,000 gold-equivalent ounces in inventory, including 18,700 ounces of gold, 392,300 silver ounces and 400 tons of copper.
During the three-month period ended Dec 31, 2021, the cost of sales came in at around $407 per gold equivalent ounce compared with the prior quarter’s tally of $423 per gold equivalent ounce. The cost of sales is based on the quarterly average silver-gold ratio of roughly 77 to 1, and copper-gold ratio of around 0.19 tons per ounce.
The Zacks Consensus Estimate for the December-end quarter’s earnings is pegged at 98 cents, suggesting an increase of 6.5% from the prior-year reported figure. The Zacks Consensus Estimate for quarterly revenues is pinned at $160.8 million, indicating year-over-year growth of 1.6%.
Royal Gold is focused on allocating its solid cash flow to dividends, debt reduction and investments in new businesses. As of Sep 30, 2021, the company had total liquidity of approximately $1.1 billion. The company extended its revolving credit to July 2026, securing a key source of liquidity to finance growth for another five years. On Oct 8, Royal Gold repaid $50 million out of the revolving credit facility of $100 million. It now has an outstanding balance of $50 million and $950 million available under the credit facility.
Royal Gold is a precious metals stream and royalty company engaged in the acquisition and management of precious metal streams, royalties and similar production-based interests. As of Dec 31, 2021, the company owned interests on 190 properties on five continents, including interests on 44 producing mines and 17 development-stage projects.
The company will benefit from higher metal prices this year. Silver and copper are gaining on a pick-up in industrial activity. Copper prices look strong on robust demand in China. Gold continues to be the most significant revenue driver for Royal Gold and accounted for 73% of total revenues in the September-end quarter. After declining below $1,700 an ounce earlier in 2021, gold prices have picked up and are currently trading above $1,800 per ounce on concerns over the Delta & Omicron COVID-19 variants. However, this volatility in gold prices is a concern.
Royal Gold’s shares have lost 2.4% in the past year compared with the industry’s decline of 15.3%.
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Zacks Rank & Stocks to Consider
Royal Gold currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space include The Chemours Company CC, Haynes International, Inc. HAYN and AdvanSix Inc. ASIX. While Chemours and Haynes sport a Zacks Rank #1 (Strong Buy), AdvanSix carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chemours has an expected earnings growth rate of 104% for the current year. The Zacks Consensus Estimate for CC’s earnings for the current year has been revised upward by 10% in the past 60 days.
Chemours beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 34.2%. CC has gained 22.8% over a year.
Haynes has an expected earnings growth rate of 298.6% for fiscal 2022. The Zacks Consensus Estimate for its fiscal 2022 earnings has been revised upward by 53.2% in the past 60 days.
Haynes beat the Zacks Consensus Estimate for earnings in three of the four trailing quarters, the average surprise being 83.1%. HAYN has rallied 76.7% over a year.
AdvanSix has an expected earnings growth rate of 194.5% for the current year. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 14.1% in the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 47%. ASIX has soared 127.6% over a year.
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