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Royal Gold (RGLD) Provides Updates on Operations for Q4

Zacks Equity Research

Royal Gold, Inc. RGLD has provided an update on fourth-quarter fiscal 2019 (ended Jun 30, 2019) operations. During the quarter, RGLD Gold AG — the fully-owned subsidiary of Royal Gold — sold nearly 70,000 gold equivalent ounces consisting of around 57,000 gold ounces, 589,000 silver ounces and 1,100 tons of copper related to its streaming agreements. The company ended the quarter with 25,000 ounces of gold, 512,000 ounces of silver and 400 tons of copper.

Average realized prices of gold and silver were $1,293 per ounce, and $14.88 per ounce sold compared with the prior-quarter figure of $1,303 per ounce and $15.51 per ounce, respectively. Average realized copper prices were $6,287 per ton compared with $6,051 per ton recorded in the previous quarter.

In the fiscal fourth quarter, cost of sales was around $342 per gold equivalent ounce compared to the prior-quarter figure of $319 per gold equivalent ounce. The cost of sales is based on the quarterly average silver-gold ratio of roughly 88 to 1 and copper-gold ratio of around 0.21 tons per ounce.

Royal Gold’s shares have gained around 15.9% over the past month outperforming the industry’s growth of 14.1%.

Royal Gold expects improved results backed by several positive catalysts, including the beginning of production at Cortez Crossroads, early deployment of the Peñasquito Pyrite Leach Project and production improvement at Rainy River. It will also be aided by Preliminary Economic Assessment (“PEA”) on the Peak Gold Project. Moreover, the company is focused on allocating its strong cash flow toward dividend payouts, debt reduction and new businesses.

Royal Gold's fiscal third-quarter 2019 sales performance was impacted by reduced gold and copper sales at Mount Milligan. The mill processing facility faced a temporary shutdown in early calendar-year 2018 due to lack of sufficient water sources. On Feb 27, 2018, Centerra — the operator of Mount Milligan mine — stated that it has received permit to access additional sources of groundwater and surface water until November 2021.  Mount Milligan commenced accessing water from the newly-permitted sources in the beginning of April this year. Further, Centerra projects mill throughput to be at full capacity of 55,000 tons per day, starting mid-May, and to remain at that level throughout the remainder of the current calendar year. Centerra expects these additional sources to supply enough water to relieve constraints on the mill operations, which have been affected since late 2017.

This February, Royal Gold entered into a silver mine life-purchase agreement with Khoemacau Copper Mining Limited (“KCM’’). The agreement highlights the purchase and sale of silver, produced from the Khoemacau Copper Project in Botswana. The deal is expected to act as a catalyst for the company.

Royal Gold, Inc. Price and Consensus

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

Royal Gold, Inc. price-consensus-chart | Royal Gold, Inc. Quote

Zacks Rank & Other Stocks to Consider

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

A few other top-ranked stocks in the Basic Materials space are Arconic Inc. ARNC, Flexible Solutions International Inc FSI and Fortescue Metals Group Ltd FSUGY. These stocks currently flaunt a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arconic has an estimated earnings growth rate of 36.76% for the current year. The stock has appreciated 45.7% in a year’s time.

Flexible Solutions has an outstanding projected earnings growth rate of 342.9% for the current year. The company’s shares have surged 177.4% in a year’s time.

Fortescue Metals has an impressive estimated earnings growth rate of 294.2% for the ongoing year. Its shares have rallied a whopping 122.2% over the past year.

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