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Royal Gold (RGLD) Provides an Update on Operations for Q1

Zacks Equity Research

Royal Gold, Inc. RGLD has provided an update on first-quarter fiscal 2020 (ended Sep 30, 2019) operations. During the quarter, RGLD Gold AG — the fully-owned subsidiary of Royal Gold — sold nearly 60,000 gold equivalent ounces consisting of around 50,000 gold ounces, 510,000 silver ounces and 1,100 tons of copper related to its streaming agreements.

The company ended the quarter with 25,000 gold equivalent ounces in inventory including 18,000 ounces of gold, 514,000 ounces of silver and 400 tons of copper.

Average realized prices of gold and silver were $1,458 and $16.54 per ounce sold, respectively. Notably, the same for the prior quarter was at $1,293 and $14.88 per ounce, respectively. Average realized copper prices were $5,798 per ton, down from $6,287 per ton in the previous quarter.


In the fiscal first quarter, cost of sales was around $337 per gold equivalent ounce compared with the prior-quarter figure of $342 per gold equivalent ounce. The cost of sales is based on the quarterly average silver-gold ratio of roughly 87 to 1 and copper-gold ratio of around 0.25 tons per ounce.

The company witnessed lower stream sales than the prior quarter thanks to production restrictions experienced at Mount Milligan during the quarter ended March 31, 2019.

Exceptionally hot and dry weather around the Mount Milligan mine has affected precipitation levels and water flows, and water captured from the 2019 spring melt runoff was less than anticipated. Its operator, Centerra has cautioned that if additional groundwater sources are not available and the dry weather conditions persist, Mount Milligan production may need to be managed in the first calendar quarter of 2020 to conserve water resources until the 2020 spring melt.

Nevertheless, Centerra reaffirmed Mount Milligan’s production guidance for the full 2019 calendar year, consisting of 155,000 to 175,000 ounces of payable gold production and 65 to 75 million pounds of payable copper production.

The company will announce first-quarter 2020 results after the market close on Nov 6, 2019. The Zacks Consensus Estimate for the fiscal first quarter 2020’s revenues stands at $153.3 million, indication an improvement of 53.3% from the year-ago quarter. The same for earnings is pegged at 66 cents, suggesting growth of 186.96% prior-year reported figure.

Royal Gold’s shares have gained around 74.1% over the past year, outperforming the industry’s growth of 62.1%.

Royal Gold’s investments in the Mount Milligan, Andacollo, Pueblo Viejo, Wassa, Rainy River, Peñasquito and Cortez properties are expected to generate significant revenues in fiscal year 2020 and beyond. The company will also gain on acquisitions and investments courtesy of its strong balance sheet. Further, the recent rally in gold prices bodes well for the company.

Royal Gold added the high-quality long-life Khoemacau development project to its stream portfolio during fiscal 2019, which will act as a catalyst in the long run. The resolution of the Voisey’s Bay Royalty dispute provides the company an exposure to a world-class operating asset that ensures a steady stream of royalty revenues. It is anticipated to be among the company’s top 10 revenue generators.

Zacks Rank & Other Stocks to Consider

Royal Gold currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the Basic Materials space are Kirkland Lake Gold Ltd. KL, Kinross Gold Corporation KGC and Franco-Nevada Corporation FNV. These stocks currently flaunt a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kirkland Lake Gold has an estimated earnings growth rate of 73% for the current year. The stock has appreciated 151% in a year’s time.

Kinross Gold has a projected earnings growth rate of 165% for the current year. The company’s shares have surged 73% in a year’s time.

Franco-Nevada Corporation has an impressive estimated earnings growth rate of 35% for the ongoing year. Its shares have gained 55% over the past year.

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