Royal Gold, Inc. (NASDAQ:RGLD) Q3 2018 Earnings Conference Call Transcript

May 03, 2018 • 12:00 pm ET


Royal Gold, Inc. (NASDAQ:RGLD) Q3 2018 Earnings Conference Call Transcript


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Good day and welcome to the Royal Gold Fiscal 2018 Third Quarter Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Karli Anderson, Vice President of Investor Relations. Please go ahead.

Karli Anderson

Thank you, Alison. Good morning and welcome to our discussion of Royal Gold third quarter fiscal year 2018 results. This event is being webcast live and you will be able to access a replay of this call on our website. Participating on the call today are Tony Jensen, President and CEO; Bill Heissenbuttel, Vice President - Corporate Development; Stefan Wenger, CFO and Treasurer; Mark Isto, Vice President - Operations; and Bruce Kirchhoff, Vice President - General Counsel and Secretary.

This discussion falls under the Safe Harbor provision of the Private Securities Litigation Reform Act. A discussion of the Company's current risks and uncertainties is included in the Safe Harbor and cautionary statement in today's press release and slide presentation, and is presented in greater detail in our filings with the SEC.

Tony will give you an overview of the quarter, followed by Stefan with a financial update and then we'll open the lines for a Q&A session.

I'll now turn the call over to Tony.

Tony A. Jensen

Thanks, Karli and good morning everybody. Thank you for joining the call. I'll begin on Slide 4. We've reported another solid quarter operationally. Higher revenue during the quarter included our full quarter of production from Rainy River, our newest royalty property. We also benefited from the gold price that was up 9% from year ago. Quarterly operating cash flow topped $100 million for the first time ever, reflecting continued strong performance from the portfolio and a $21 million tax refund collected from Chile. Even without the impact of the tax refund, Q3's cash flow from operations was a record for Royal Gold.

Our reported earnings were impacted by an impairment in Pascua-Lama where Royal Gold has 5.45% gold royalty and 1% copper royalty on the Chilean deposits. In coming to this decision, we balanced our view of the long-term potential of an asset with 16.5 million ounces of resource subject to our interest in one of the world's most prolific mining regions with the recent announcements by Barrick to re-categorize reserves to resources and to suspend work on the underground prefeasibility study. While the impairment is reflected with the project conditions today, we continue to believe that Pascua-Lama represents significant option value for our Royal Gold shareholders. Absent non-cash impacts, our adjusted earnings of $0.48 per share continued our trend of consistent and solid performance over the last several quarters.

We're allocating our strong cash flow to dividends, debt reduction and new business. We paid out $16 million in dividends during the quarter. We reduced our debt for the fifth straight quarter by paying down another $75 million. This leaves us the outstanding