Royal Gold (RGLD) Updates on Penasquito Mine Operation Halt
Royal Gold, Inc. RGLD announced that the Penasquito mine’s operator, Newmont Corporation NEM, has signed a preliminary agreement with the National Union of Mine, Metal and Allied Workers of the Mexican Republic. This is likely to bring an end to the strike called by the Union.
On Oct 5, 2023, the Union's General Assembly approved the preliminary agreement. The deal is expected to be turned into a definitive agreement, wherein the parties must agree, approve, sign and file for final approval with the Federal Labor Tribunal for Collective Affairs in Mexico City. Its completion will allow Newmont to begin executing the return to work plan, permitting a safe restart of operations at the mine.
On Jun 7, 2023, NEM received a strike notice demanding the profit-sharing bonus granted in the Collective Bargaining Agreement to be increased from 10% to 20%. Newmont ceased operations at the Penasquito mine post the strike notice.
RGLD holds a production payment equivalent to a 2% net smelter return royalty on all metal production from the Penasquito mine.
Penasquito generated 7.2% of Royal Gold’s revenues in 2022. Approximately 77% of the company’s revenues come from six properties — Mount Milligan, Andacollo, Pueblo Viejo, Wassa, Cortezm and Penasquito.
Royal Gold reported adjusted earnings per share of 88 cents in second-quarter 2023, on par with the Zacks Consensus Estimate. The bottom line increased 9% year over year.
The company generated revenues of $144 million in the quarter, down 1.4% from the year-ago period’s level. The downside resulted primarily from a decline in gold sales at Andacollo, copper sales at Mount Milligan, and gold and silver production at Penasquito. RGLD’s sales in the ongoing quarter are expected to reflect the impact of this interruption of production at Penasquito.
Price Performance
Shares of Royal Gold rallied 13% in the past year compared with the industry’s growth of 16.2%.
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Zacks Rank & Other Stocks to Consider
Royal Gold currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the basic materials space are Yara International ASA YARIY, and L.B. Foster Company FSTR. While YARIY currently sports a Zacks Rank #1 (Strong Buy), FSTR carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Yara International has a trailing four-quarter average earnings surprise of 56%. The Zacks Consensus Estimate for YARIY’s fiscal 2023 earnings is pegged at $1.27 per share, which has moved north 9% in the past 60 days. The company’s shares rallied 5.2% in the past year.
L.B. Foster has a trailing four-quarter average earnings surprise of 134.5%. The Zacks Consensus Estimate for FSTR’s 2023 earnings is pegged at 53 cents per share, which has remained unchanged in the past 60 days. FSTR’s shares rose 98.4% in the past year.
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Newmont Corporation (NEM) : Free Stock Analysis Report
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Royal Gold, Inc. (RGLD) : Free Stock Analysis Report
