ROYAL GOLD INC, 10-Q filed on 5/3/2018
Quarterly Report
v3.8.0.1
Document and Entity Information - shares
9 Months Ended
Mar. 31, 2018
Apr. 26, 2018
Document and Entity Information    
Entity Registrant Name ROYAL GOLD INC  
Entity Central Index Key 0000085535  
Document Type 10-Q  
Document Period End Date Mar. 31, 2018  
Amendment Flag false  
Current Fiscal Year End Date --06-30  
Entity Current Reporting Status Yes  
Entity Filer Category Large Accelerated Filer  
Entity Shares Outstanding   65,453,917
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q3  
v3.8.0.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Mar. 31, 2018
Jun. 30, 2017
ASSETS    
Cash and equivalents $ 109,376 $ 85,847
Royalty receivables 27,795 26,886
Income tax receivable 1,149 22,169
Stream inventory 12,699 7,883
Prepaid expenses and other 826 822
Total current assets 151,845 143,607
Value of interests 2,532,603 2,892,256
Other assets 68,999 58,202
Total assets 2,753,447 3,094,065
LIABILITIES    
Accounts payable 3,008 3,908
Dividends payable 16,361 15,682
Income tax payable 12,431 5,651
Withholding taxes payable 3,652 3,425
Other current liabilities 8,045 5,617
Total current liabilities 43,497 34,283
Debt (Note 3) 422,273 586,170
Deferred tax liabilities 103,221 121,330
Uncertain tax positions 36,616 25,627
Other long-term liabilities 17,435 6,391
Total liabilities 623,042 773,801
Commitments and contingencies (Note 10)
EQUITY    
Preferred stock, $.01 par value, 10,000,000 shares authorized; and 0 shares issued
Common stock, $.01 par value, 200,000,000 shares authorized; and 65,309,018 and 65,179,527 shares outstanding, respectively 653 652
Additional paid-in capital 2,188,251 2,185,796
Accumulated other comprehensive income 21 879
Accumulated (losses) earnings (100,173) 88,050
Total Royal Gold stockholders’ equity 2,088,752 2,275,377
Non-controlling interests 41,653 44,887
Total equity 2,130,405 2,320,264
Total liabilities and equity $ 2,753,447 $ 3,094,065
v3.8.0.1
Consolidated Balance Sheets (Parenthetical) - $ / shares
Mar. 31, 2018
Jun. 30, 2017
Consolidated Balance Sheets    
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued 0 0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized 200,000,000 200,000,000
Common stock, shares outstanding 65,309,018 65,179,527
v3.8.0.1
Consolidated Statements of Operations and Comprehensive (Loss) Income - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Mar. 31, 2018
Mar. 31, 2017
Consolidated Statements of Operations and Comprehensive (Loss) Income        
Revenue $ 115,983 $ 106,972 $ 342,807 $ 331,880
Costs and expenses        
Cost of sales 21,345 22,419 61,627 67,582
General and administrative 8,100 5,402 24,555 23,447
Production taxes 423 389 1,568 1,331
Exploration costs 536 2,647 5,098 8,411
Depreciation, depletion and amortization 39,679 40,164 121,380 119,785
Impairment of royalty interests 239,364   239,364  
Total costs and expenses 309,447 71,021 453,592 220,556
Operating (loss) income (193,464) 35,951 (110,785) 111,324
Interest and other income 1,781 1,326 3,416 10,056
Interest and other expense (8,294) (9,254) (25,946) (27,068)
(Loss) income before income taxes (199,977) 28,023 (133,315) 94,312
Income tax benefit (expense) 45,859 (6,492) (10,044) (18,724)
Net (loss) income (154,118) 21,531 (143,359) 75,588
Net loss attributable to non-controlling interests 468 2,130 3,573 5,921
Net (loss) income attributable to Royal Gold common stockholders (153,650) 23,661 (139,786) 81,509
Net (loss) income (154,118) 21,531 (143,359) 75,588
Adjustments to comprehensive (loss) income, net of tax        
Unrealized change in market value of available-for-sale securities (666) 360 (858) 1,182
Comprehensive (loss) income (154,784) 21,891 (144,217) 76,770
Comprehensive loss attributable to non-controlling interests 468 2,130 3,573 5,921
Comprehensive (loss) income attributable to Royal Gold stockholders $ (154,316) $ 24,021 $ (140,644) $ 82,691
Net (loss) income per share available to Royal Gold common stockholders:        
Basic (loss) earnings per share (in dollars per share) $ (2.35) $ 0.36 $ (2.14) $ 1.25
Basic weighted average shares outstanding (in shares) 65,307,324 65,169,883 65,283,019 65,145,183
Diluted (loss) earnings per share (in dollars per share) $ (2.35) $ 0.36 $ (2.14) $ 1.25
Diluted weighted average shares outstanding (in shares) 65,307,324 65,274,926 65,283,019 65,267,201
Cash dividends declared per common share (in dollars per share) $ 0.25 $ 0.24 $ 0.74 $ 0.71
v3.8.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
9 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Cash flows from operating activities:    
Net (loss) income $ (143,359) $ 75,588
Adjustments to reconcile net (loss) income to net cash provided by operating activities:    
Depreciation, depletion and amortization 121,380 119,785
Amortization of debt discount and issuance costs 11,200 10,202
Non-cash employee stock compensation expense 5,958 6,758
Impairment of royalty interests 239,364  
Deferred tax benefit (31,583) (6,266)
Other (199) (4,638)
Changes in assets and liabilities:    
Royalty receivables (909) (1,367)
Stream inventory (4,816) 2,865
Income tax receivable 21,020 (6,117)
Prepaid expenses and other assets 3,224 (743)
Accounts payable (939) (1,641)
Income tax payable 6,779 (422)
Withholding taxes payable 227 (5,449)
Uncertain tax positions 10,989 7,341
Other liabilities 13,473 5,036
Net cash provided by operating activities 251,809 200,932
Cash flows from investing activities:    
Acquisition of stream and royalty interests (1,012) (203,721)
Other (1,251) 1,503
Net cash used in investing activities (2,263) (202,218)
Cash flows from financing activities:    
Borrowings from revolving credit facility   70,000
Repayment of revolving credit facility (175,000) (45,000)
Net payments from issuance of common stock (3,502) (2,618)
Common stock dividends (47,755) (45,715)
Purchase of additional royalty interest from non-controlling interest   (1,462)
Other 240 (2,462)
Net cash used in financing activities (226,017) (27,257)
Net increase (decrease) in cash and equivalents 23,529 (28,543)
Cash and equivalents at beginning of period 85,847 116,633
Cash and equivalents at end of period $ 109,376 $ 88,090
v3.8.0.1
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ISSUED AND RECENTLY ADOPTED ACCOUNTING STANDARDS
9 Months Ended
Mar. 31, 2018
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ISSUED AND RECENTLY ADOPTED ACCOUNTING STANDARDS  
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ISSUED AND RECENTLY ADOPTED ACCOUNTING STANDARDS

1.    OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ISSUED AND RECENTLY ADOPTED ACCOUNTING STANDARDS

 

Royal Gold, Inc. (“Royal Gold”, the “Company”, “we”, “us”, or “our”), together with its subsidiaries, is engaged in the business of acquiring and managing precious metals streams, royalties and similar interests.  We seek to acquire existing stream and royalty interests or to finance projects that are in production or in the development stage in exchange for stream or royalty interests.  A metal stream is a purchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or more metals produced from a mine at a price determined for the life of the transaction by the purchase agreement.  Royalties are non-operating interests in mining projects that provide the right to revenue or metals produced from the project after deducting specified costs, if any. 

 

Summary of Significant Accounting Policies

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements.  In the opinion of management, all adjustments which are of a normal recurring nature considered necessary for a fair presentation of our interim financial statements have been included in this Form 10-Q.  Operating results for the three and nine months ended March 31, 2018, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2018.  These interim unaudited financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017 filed with the Securities and Exchange Commission on August 10, 2017 (“Fiscal 2017 10-K”).

 

Certain amounts in the prior period financial statements have been reclassified for comparative purposes to conform with the presentation in the current period financial statements.  Reclassified amounts were not material to the financial statements.

 

Asset Impairment

We evaluate long‑lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts of an asset or group of assets may not be recoverable.  The recoverability of the carrying value of stream and royalty interests in production and development stage mineral properties is evaluated based upon estimated future undiscounted net cash flows from each stream and royalty interest using estimates of proven and probable reserves and other relevant information received from the operators.  We evaluate the recoverability of the carrying value of royalty interests in exploration stage mineral properties in the event of significant decreases in the price of gold, silver, copper and other metals, and whenever new information regarding the mineral properties is obtained from the operator indicating that production will not likely occur or may be reduced in the future, thus potentially affecting the future recoverability of our stream or royalty interests.  Impairments in the carrying value of each property are measured and recorded to the extent that the carrying value in each property exceeds its estimated fair value, which is generally calculated using estimated future discounted cash flows.

Estimates of gold, silver, copper, and other metal prices, operators’ estimates of proven and probable reserves or mineralized material related to our stream or royalty properties, and operators’ estimates of operating and capital costs are subject to certain risks and uncertainties which may affect the recoverability of our investment in these stream and royalty interests in mineral properties.  It is possible that changes could occur to these estimates, which could adversely affect the net cash flows expected to be generated from these stream and royalty interests.  Refer to Note 2 for discussion and the results of our impairment assessments for the three and nine months ended March 31, 2018.

 

Recently Issued and Adopted Accounting Standards

 

Recently Issued

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) guidance for the recognition of revenue from contracts with customers.  This ASU superseded virtually all of the existing revenue recognition guidance under U.S. GAAP.  The core principle of the five step model is that an entity will recognize revenue when it transfers control of goods or services to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. Entities can choose to apply the standard using either the full retrospective approach or a modified retrospective approach.  The standard is effective for the Company’s fiscal year beginning July 1, 2018.  Early adoption is permitted.

 

We plan to implement the new ASU revenue recognition guidance as of July 1, 2018, using the modified retrospective method with the cumulative effect, if any, of initial adoption to be recognized in Accumulated (losses) earnings at the date of initial application.  We are in the final stages of our evaluation of the impact of the new standard on our accounting policies, processes, and financial reporting.  Based on the evaluation performed to-date, we expect to identify similar performance obligations as compared with deliverables and separate units of account previously identified.  We will continue to assess the impact of adopting this ASU throughout the remainder of fiscal year 2018.

 

Recently Adopted

 

In March 2016, the FASB issued ASU guidance related to stock-based compensation.  The new guidance simplifies the accounting for stock-based compensation transactions, including income tax consequences, statement of cash flows presentation, estimating forfeitures when calculating compensation expense, and classification of awards as either equity or liabilities. 

 

The new standard requires all excess tax benefits and tax deficiencies to be recognized as income tax benefit (expense) in the income statement.  The new guidance also requires presentation of excess tax benefits as an operating activity on the statement of cash flows rather than a financing activity and requires presentation of cash paid to a tax authority when shares are withheld to satisfy the employer’s statutory income tax withholding obligation as a financing activity.  The new guidance also provides for an election to account for forfeitures of stock-based compensation. 

 

The Company adopted the ASU guidance effective July 1, 2017.  With respect to the forfeiture election, the Company will continue its current practice of estimating forfeitures when calculating compensation expense.  The adoption of this standard did not have a material impact on the Company’s consolidated financial statements or related disclosures. 

v3.8.0.1
STREAM AND ROYALTY INTERESTS, NET
9 Months Ended
Mar. 31, 2018
STREAM AND ROYALTY INTERESTS, NET  
STREAM AND ROYALTY INTERESTS, NET

2.    STREAM AND ROYALTY INTERESTS, NET

 

The following tables summarize the Company’s stream and royalty interests, net as of March 31, 2018 and June 30, 2017.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2018 (Amounts in thousands):

    

Cost

    

Accumulated Depletion

    

Impairments

 

Net

Production stage stream interests:

 

 

 

 

 

 

 

 

 

 

 

 

Mount Milligan

 

$

790,635

 

$

(143,370)

 

$

 —

 

$

647,265

Pueblo Viejo

 

 

610,404

 

 

(101,193)

 

 

 —

 

 

509,211

Andacollo

 

 

388,182

 

 

(53,916)

 

 

 —

 

 

334,266

Wassa and Prestea

 

 

146,475

 

 

(39,383)

 

 

 —

 

 

107,092

Rainy River

 

 

175,727

 

 

(2,354)

 

 

 —

 

 

173,373

Total production stage stream interests

 

 

2,111,423

 

 

(340,216)

 

 

 —

 

 

1,771,207

Production stage royalty interests:

 

 

 

 

 

 

 

 

 

 

 

 

Voisey's Bay

 

 

205,724

 

 

(85,671)

 

 

 —

 

 

120,053

Peñasquito

 

 

99,172

 

 

(37,636)

 

 

 —

 

 

61,536

Holt

 

 

34,612

 

 

(20,868)

 

 

 —

 

 

13,744

Cortez

 

 

20,878

 

 

(11,230)

 

 

 —

 

 

9,648

Other

 

 

483,795

 

 

(357,918)

 

 

 —

 

 

125,877

Total production stage royalty interests

 

 

844,181

 

 

(513,323)

 

 

 —

 

 

330,858

Total production stage stream and royalty interests

 

 

2,955,604

 

 

(853,539)

 

 

 —

 

 

2,102,065

 

 

 

 

 

 

 

 

 

 

 

 

 

Development stage stream interests:

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

12,038

 

 

 —

 

 

 —

 

 

12,038

 

 

 

 

 

 

 

 

 

 

 

 

 

Development stage royalty interests:

 

 

 

 

 

 

 

 

 

 

 

 

Cortez

 

 

59,803

 

 

 —

 

 

 —

 

 

59,803

Other

 

 

63,810

 

 

 —

 

 

(284)

 

 

63,526

Total development stage royalty interests

 

 

123,613

 

 

 —

 

 

(284)

 

 

123,329

Total development stage stream and royalty interests

 

 

135,651

 

 

 —

 

 

(284)

 

 

135,367

 

 

 

 

 

 

 

 

 

 

 

 

 

Exploration stage royalty interests:

 

 

 

 

 

 

 

 

 

 

 

 

Pascua-Lama

 

 

416,770

 

 

 —

 

 

(239,080)

 

 

177,690

Other

 

 

117,481

 

 

 —

 

 

 -

 

 

117,481

Total exploration stage royalty interests

 

 

534,251

 

 

 —

 

 

(239,080)

 

 

295,171

Total stream and royalty interests, net

 

$

3,625,506

 

$

(853,539)

 

$

(239,364)

 

$

2,532,603

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2017 (Amounts in thousands):

    

Cost

    

Accumulated Depletion

    

Impairments

 

Net

Production stage stream interests:

 

 

 

 

 

 

 

 

 

 

 

 

Mount Milligan

 

$

790,635

 

$

(114,327)

 

$

 —

 

$

676,308

Pueblo Viejo

 

 

610,404

 

 

(67,149)

 

 

 —

 

 

543,255

Andacollo

 

 

388,182

 

 

(39,404)

 

 

 —

 

 

348,778

Wassa and Prestea

 

 

146,475

 

 

(22,715)

 

 

 —

 

 

123,760

Total production stage stream interests

 

 

1,935,696

 

 

(243,595)

 

 

 —

 

 

1,692,101

Production stage royalty interests:

 

 

 

 

 

 

 

 

 

 

 

 

Voisey's Bay

 

 

205,724

 

 

(85,671)

 

 

 —

 

 

120,053

Peñasquito

 

 

99,172

 

 

(34,713)

 

 

 —

 

 

64,459

Holt

 

 

34,612

 

 

(19,669)

 

 

 —

 

 

14,943

Cortez

 

 

20,873

 

 

(10,633)

 

 

 —

 

 

10,240

Other

 

 

483,643

 

 

(337,958)

 

 

 —

 

 

145,685

Total production stage royalty interests

 

 

844,024

 

 

(488,644)

 

 

 —

 

 

355,380

Total production stage stream and royalty interests

 

 

2,779,720

 

 

(732,239)

 

 

 —

 

 

2,047,481

Development stage stream interests:

 

 

 

 

 

 

 

 

 

 

 

 

Rainy River

 

 

175,727

 

 

 —

 

 

 —

 

 

175,727

Other

 

 

12,031

 

 

 —

 

 

 —

 

 

12,031

Total development stage stream interests

 

 

187,758

 

 

 —

 

 

 —

 

 

187,758

Development stage royalty interests:

 

 

 

 

 

 

 

 

 

 

 

 

Cortez

 

 

59,803

 

 

 —

 

 

 —

 

 

59,803

Other

 

 

63,811

 

 

 —

 

 

 —

 

 

63,811

Total development stage royalty interests

 

 

123,614

 

 

 —

 

 

 —

 

 

123,614

Total development stage stream and royalty interests

 

 

311,372

 

 

 —

 

 

 —

 

 

311,372

 

 

 

 

 

 

 

 

 

 

 

 

 

Exploration stage royalty interests:

 

 

 

 

 

 

 

 

 

 

 

 

Pascua-Lama

 

 

416,770

 

 

 —

 

 

 —

 

 

416,770

Other

 

 

116,633

 

 

 

 

 

 

 

 

116,633

Total exploration stage royalty interests

 

 

533,403

 

 

 —

 

 

 —

 

 

533,403

Total stream and royalty interests, net

 

$

3,624,495

 

$

(732,239)

 

$

 —

 

$

2,892,256

 

 

Impairment of royalty interests

 

In accordance with our impairment accounting policy discussed in Note 1, impairments in the carrying value of each stream or royalty interest are measured and recorded to the extent that the carrying value in each stream or royalty interest exceeds its estimated fair value, which is generally calculated using estimated future discounted cash-flows.  As part of the Company’s regular asset impairment analysis, which included the presence of impairment indicators, the Company recorded impairment charges for the three and nine months ended March 31, 2018 and 2017, as summarized in the following table:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31, 

 

March 31, 

 

March 31, 

 

March 31, 

 

    

2018

    

2017

    

2018

    

2017

 

 

 

(Amounts in thousands)

 

 

(Amounts in thousands)

Pascua-Lama

 

$

239,080

 

$

 —

 

$

239,080

 

$

 —

Other

 

 

284

 

 

 —

 

 

284

 

 

 —

Total impairment of royalty interests

 

$

239,364

 

$

 —

 

$

239,364

 

$

 —

 

Pascua-Lama

 

We own a 0.78% to 5.45% sliding‑scale net smelter return (“NSR”) royalty on the Pascua‑Lama project, which straddles the border between Argentina and Chile, and is owned by Barrick Gold Corporation (“Barrick”).  The Company owns an additional royalty equivalent to 1.09% of proceeds from copper produced from the Chilean portion of the project, net of allowable deductions, sold on or after January 1, 2017.  Our royalty interests are applicable to all gold and copper production from the portion of the Pascua-Lama project lying on the Chilean side of the border. 

 

On January 18, 2018 Barrick reported that it is analyzing a revised sanction related to the Pascua-Lama project issued by Chile’s Superintendencia del Medio Ambiente (“SMA”) on January 17, 2018.  The sanction is part of a re-evaluation process ordered by Chile’s Environmental Court in 2014 and relates to historical compliance matters at the Pascua-Lama project.  According to Barrick, the SMA has not revoked Pascua-Lama’s environmental permit, but has ordered the closure of existing facilities on the Chilean side of the project, in addition to certain monitoring activities.

 

On February 6, 2018, in light of the SMA order to close surface facilities in Chile, and earlier plans to evaluate an underground mine, Barrick announced it reclassified Pascua-Lama’s proven and probable reserves, which are based on an open pit mine plan, as mineralized material.  Barrick reported further details in its year-end results on February 14, 2018 and an update on the Pascua-Lama project at its February 22, 2018 Investor Day.  A significant reduction in reserves or mineralized material are indicators of impairment. 

 

On April 23, 2018, Barrick announced that work performed to-date on the prefeasibility study for a potential underground project has been suspended, and they will focus on adjusting the project closure plan for surface infrastructure on the Chilean side of the project.  Barrick will continue to evaluate opportunities to de-risk the project while maintaining Pascua-Lama as an option for development in the future if economics improve and related risks can be mitigated. 

 

As part of the impairment determination, the fair value for Pascua-Lama was estimated by calculating the net present value of the estimated future cash-flows, subject to our royalty interest, expected to be generated by the mining of the Pascua-Lama deposits.  The Company applied a probability factor to its fair value calculation that Barrick will either proceed with an open-pit mine or an underground mine at Pascua.  The estimates of future cash flows were derived from open-pit and underground mine models developed by the Company using various information reported by Barrick.  The metal price assumptions used in the Company’s model were supported by consensus price estimates obtained by a number of industry analysts.  The future cash flows were discounted using a discount rate which reflects specific market risk factors the Company associates with the Pascua-Lama royalty interest.  Following the impairment charge during the three months ended March 31, 2018, the Pascua-Lama royalty interest has a remaining carrying value of $177.7 million as of March 31, 2018.

v3.8.0.1
DEBT
9 Months Ended
Mar. 31, 2018
DEBT  
DEBT

3.    DEBT

 

The Company’s non-current debt as of March 31, 2018 and June 30, 2017 consists of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2018

 

As of June 30, 2017

 

   

Principal

   

Unamortized Discount

   

Debt Issuance Costs

   

Total

   

Principal

   

Unamortized Discount

   

Debt Issuance Costs

   

Total

 

 

 

(Amounts in thousands)

 

 

(Amounts in thousands)

Convertible notes due 2019

 

$

370,000

 

$

(15,963)

 

$

(1,653)

 

$

352,384

 

$

370,000

 

$

(25,251)

 

$

(2,646)

 

$

342,103

Revolving credit facility

 

 

75,000

 

 

 —

 

 

(5,111)

 

 

69,889

 

 

250,000

 

 

 —

 

 

(5,933)

 

 

244,067

Total debt

 

$

445,000

 

$

(15,963)

 

$

(6,764)

 

$

422,273

 

$

620,000

 

$

(25,251)

 

$

(8,579)

 

$

586,170

 

Convertible Senior Notes Due 2019

 

In June 2012, the Company completed an offering of $370 million aggregate principal amount of 2.875% convertible senior notes due 2019 (“2019 Notes”).  The 2019 Notes bear interest at the rate of 2.875% per annum, and the Company is required to make semi-annual interest payments on the outstanding principal balance of the 2019 Notes on June 15 and December 15 of each year, beginning December 15, 2012.  The 2019 Notes mature on June 15, 2019.  Interest expense recognized on the 2019 Notes for the three and nine months ended March 31, 2018, was $6.1 million and $18.3 million, respectively, compared to $5.9 million and $17.6 million, respectively, for the three and nine months ended March 31, 2017, and included the contractual coupon interest, the accretion of the debt discount and amortization of the debt issuance costs.

 

Revolving credit facility

 

The Company maintains a $1 billion revolving credit facility.  As of March 31, 2018, the Company had $75 million outstanding and $925 million available under the revolving credit facility with an interest rate on borrowings of LIBOR plus 1.50% for an all-in rate of 3.52%.  During the three and nine months ended March 31, 2018, the Company repaid $75 million and $175 million, respectively, of the outstanding borrowings under the revolving credit facility.  Royal Gold may repay borrowings under the revolving credit facility at any time without premium or penalty.  Interest expense recognized on the revolving credit facility for the three and nine months ended March 31, 2018 was $1.3 million and $4.9 million, respectively, and $2.9 million and $7.2 million for the three and nine months ended March 31, 2017, and included interest on the outstanding borrowings and the amortization of the debt issuance costs.

 

As discussed in Note 5 to the notes to consolidated financial statements in the Company’s Fiscal 2017 10-K, the Company has financial covenants associated with its revolving credit facility.  As of March 31, 2018, the Company was in compliance with each financial covenant.

v3.8.0.1
REVENUE
9 Months Ended
Mar. 31, 2018
REVENUE  
REVENUE

4.    REVENUE

 

Revenue is comprised of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31, 

 

March 31, 

 

March 31, 

 

March 31, 

 

    

2018

    

2017

    

2018

    

2017

 

 

 

(Amounts in thousands)

 

 

(Amounts in thousands)

Stream interests

 

$

82,979

 

$

76,597

 

$

241,028

 

$

236,108

Royalty interests

 

 

33,004

 

 

30,375

 

 

101,779

 

 

95,772

Total revenue

 

$

115,983

 

$

106,972

 

$

342,807

 

$

331,880

 

v3.8.0.1
STOCK-BASED COMPENSATION
9 Months Ended
Mar. 31, 2018
STOCK-BASED COMPENSATION  
STOCK-BASED COMPENSATION

5.    STOCK-BASED COMPENSATION

 

The Company recognized stock-based compensation expense as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31, 

 

March 31, 

 

March 31, 

 

March 31, 

 

    

2018

    

2017

    

2018

    

2017

 

 

 

(Amounts in thousands)

 

 

(Amounts in thousands)

Stock options

 

$

70

 

$

94

 

$

241

 

$

297

Stock appreciation rights

 

 

482

 

 

456

 

 

1,456

 

 

1,378

Restricted stock

 

 

727

 

 

800

 

 

3,041

 

 

3,004

Performance stock

 

 

284

 

 

(1,036)

 

 

1,220

 

 

2,079

Total stock-based compensation expense

 

$

1,563

 

$

314

 

$

5,958

 

$

6,758

 

Stock-based compensation expense is included within General and administrative expense in the consolidated statements of operations and comprehensive (loss) income.

 

During the three and nine months ended March 31, 2018, the Company granted the following stock-based compensation awards:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

March 31, 

 

 

March 31, 

 

 

March 31, 

 

 

March 31, 

 

    

 

2018

    

 

2017

    

 

2018

    

 

2017

 

 

 

(Number of shares)

 

 

(Number of shares)

Stock options

 

 

 —

 

 

 —

 

 

6,858

 

 

7,200

Stock appreciation rights

 

 

 —

 

 

 —

 

 

71,262

 

 

63,340

Restricted stock

 

 

 —

 

 

 —

 

 

50,380

 

 

44,890

Performance stock

 

 

 —

 

 

 —

 

 

34,010

 

 

29,830

Total equity awards granted

 

 

 —

 

 

 —

 

 

162,510

 

 

145,260

 

As of March 31, 2018, unrecognized compensation expense (expressed in thousands below) and weighted-average vesting period for each of our stock-based compensation awards were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

Unrecognized

    

Weighted-

 

 

 

 

 

 

 

 

compensation

 

average vesting

 

 

 

 

 

 

 

 

expense

    

period (years)

Stock options

 

 

 

 

 

 

 

$

307

 

 

1.7

Stock appreciation rights

 

 

 

 

 

 

 

 

2,703

 

 

1.9

Restricted stock

 

 

 

 

 

 

 

 

6,251

 

 

3.1

Performance stock

 

 

 

 

 

 

 

 

1,927

 

 

2.0

 

v3.8.0.1
EARNINGS PER SHARE ("EPS")
9 Months Ended
Mar. 31, 2018
EARNINGS PER SHARE ("EPS")  
EARNINGS PER SHARE ("EPS")

6.    EARNINGS PER SHARE (“EPS”)

 

Basic (loss) earnings per common share were computed using the weighted average number of shares of common stock outstanding during the period, considering the effect of participating securities.  Unvested stock-based compensation awards that contain non-forfeitable rights to dividends or dividend equivalents are considered participating securities and are included in the computation of earnings per share pursuant to the two-class method.  The Company’s unvested restricted stock awards contain non-forfeitable dividend rights and participate equally with common stock with respect to dividends issued or declared.  The Company’s unexercised stock options, unexercised SSARs and unvested performance stock do not contain rights to dividends.  Under the two-class method, the earnings used to determine basic (loss) earnings per common share are reduced by an amount allocated to participating securities. Use of the two-class method has an immaterial impact on the calculation of basic and diluted (loss) earnings per common share.

 

The following tables summarize the effects of dilutive securities on diluted EPS for the period:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31, 

 

March 31, 

 

March 31, 

 

March 31, 

 

    

2018

    

2017

    

2018

    

2017

 

 

 

(in thousands, except per share data)

 

 

(in thousands, except per share data)

Net (loss) income available to Royal Gold common stockholders

 

$

 (153,650)

 

$

23,661

 

$

 (139,786)

 

$

81,509

Weighted-average shares for basic EPS

 

 

65,307,324

 

 

65,169,883

 

 

65,283,019

 

 

65,145,183

Effect of other dilutive securities

 

 

 

 

105,043

 

 

 

 

122,018

Weighted-average shares for diluted EPS

 

 

65,307,324

 

 

65,274,926

 

 

65,283,019

 

 

65,267,201

Basic (loss) earnings per share

 

$

(2.35)

 

$

0.36

 

$

(2.14)

 

$

1.25

Diluted (loss) earnings per share

 

$

(2.35)

 

$

0.36

 

$

(2.14)

 

$

1.25

 

The calculation of weighted average shares includes all of our outstanding common stock.  The Company intends to settle the principal amount of the 2019 Notes in cash.  As a result, there will be no impact to diluted earnings (loss) per share unless the share price of the Company’s common stock exceeds the conversion price of $102.67.

v3.8.0.1
INCOME TAXES
9 Months Ended
Mar. 31, 2018
INCOME TAXES  
INCOME TAXES

7.    INCOME TAXES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31, 

 

March 31, 

 

March 31, 

 

March 31, 

 

    

2018

    

2017

    

2018

    

2017

 

 

(Amounts in thousands, except rate)

 

(Amounts in thousands, except rate)

Income tax benefit (expense)

 

$

45,859

 

$

(6,492)

 

$

(10,044)

 

$

(18,724)

Effective tax rate

 

 

22.9%

 

 

23.2%

 

 

(7.5%)

 

 

19.9%

 

The effective tax rate for the three months ended March 31, 2018 was primarily impacted by tax benefit related to the royalty impairments. The increase in the effective tax rate for the nine months ended March 31, 2018 is primarily attributable to the effects of recent U.S. tax legislation, as discussed below, and the effects of a non-cash functional currency election ($18 million expense) to file certain Canadian income tax returns in U.S. dollars, partially offset by the tax benefit related to the royalty impairments.  Prior to the functional currency election, certain deferred tax liabilities were measured on the difference between adjusted Canadian dollar acquisition cost and Canadian dollar tax basis.  These deferred tax liabilities were then marked-to market every quarter, for income tax expense (benefit) purposes, to account for changes in the Canadian dollar to U.S. dollar exchange rate.  Post-election, the applicable deferred tax liabilities will be measured on the difference between U.S. GAAP value and U.S. dollar tax basis, and eliminating volatility in the effective tax rate caused by this mark-to-market adjustment.

 

On December 22, 2017, H.R. 1, originally known as the Tax Cuts and Jobs Act (the “Act”), was enacted and is effective for tax years including January 1, 2018.  Certain other aspects of the Act are not effective for fiscal June 30 companies until July 1, 2018.

 

The Act, among other things, reduced the U.S. corporate income tax rate to 21% starting January 1, 2018.  As the Company is a fiscal year tax payer, we applied a blended U.S. federal income tax rate of approximately 28.1% for the fiscal year ending June 30, 2018.  The blended percentage was calculated on a pro-rata percentage of the number of days before and after January 1, 2018.  The Company’s U.S. federal corporate income tax rate will be 21% for the fiscal year commencing on July 1, 2018 and all future years.

 

ASC 740, Income Taxes, requires recognition of the effects of tax law changes in the period of enactment.  As a result, the Company recorded a net charge (expense) of $26.4 million during the three months ended December 31, 2017 and the nine months ended March 31, 2018.  This amount is included in Income tax benefit (expense) on our consolidated statements of operations and comprehensive (loss) income.  The tax expense consists of three components: (i) a $12.2 million charge relating to the one-time mandatory tax on the net accumulated post-1986 untaxed earnings and profits of the Company’s foreign subsidiaries, which we will elect to pay over an eight-year period, (ii) a $2.7 million benefit resulting from the re-measurement of the Company’s net deferred tax assets and liabilities, and (iii) a $16.9 million charge related to re-measurement of the U.S. income tax impacts resulting from foreign uncertain tax positions.

 

The net $26.4 million charge represents what the Company believes is a reasonable estimate of the impact of the Act.  As the net charge is based on currently available information and interpretations, which are continuing to evolve, all amounts should be considered provisional.  The Company will continue to analyze additional information and guidance related to the Act as supplemental legislation, regulatory guidance, or evolving technical interpretations become available.  The final impacts may differ from the recorded amounts as of March 31, 2018 and the Company will continue to refine such amounts within the measurement period provided by Staff Accounting Bulletin No. 118.  The Company expects to complete its analysis no later than the second quarter of fiscal year 2019.

v3.8.0.1
SEGMENT INFORMATION
9 Months Ended
Mar. 31, 2018
SEGMENT INFORMATION  
SEGMENT INFORMATION

8.    SEGMENT INFORMATION

 

The Company manages its business under two reportable segments, consisting of the acquisition and management of stream interests and the acquisition and management of royalty interests.  Royal Gold’s long-lived assets (stream and royalty interests, net) are geographically distributed as shown in the following table:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2018

 

As of June 30, 2017

 

 

 

 

 

 

 

 

 

 

 

Total stream

 

 

 

 

 

 

 

 

 

 

Total stream

 

 

Stream

 

Royalty

 

 

 

 

and royalty

 

Stream

 

Royalty

 

 

 

 

and royalty

 

  

interest

  

interest

  

Impairments

  

interests, net

  

interest

  

interest

  

Impairments

  

interests, net

Canada

 

$

820,639

 

$

217,236

 

$

(284)

 

$

1,037,591

 

$

852,035

 

$

221,618

 

$

 —

 

$

1,073,653

Dominican Republic

 

 

509,211

 

 

 —

 

 

 —

 

 

509,211

 

 

543,256

 

 

 —

 

 

 —

 

 

543,256

Chile

 

 

334,266

 

 

453,306

 

 

(239,080)

 

 

548,492

 

 

348,778

 

 

453,369

 

 

 —

 

 

802,147

Africa

 

 

107,092

 

 

515

 

 

 —

 

 

107,607

 

 

123,760

 

 

572

 

 

 —

 

 

124,332

Mexico

 

 

 —

 

 

95,234

 

 

 —

 

 

95,234

 

 

 —

 

 

105,889

 

 

 —

 

 

105,889

United States

 

 

 —

 

 

167,253

 

 

 —

 

 

167,253

 

 

 —

 

 

168,378

 

 

 —

 

 

168,378

Australia

 

 

 —

 

 

35,088

 

 

 —

 

 

35,088

 

 

 —

 

 

37,409

 

 

 —

 

 

37,409

Other

 

 

12,037

 

 

20,090

 

 

 —

 

 

32,127

 

 

12,030

 

 

25,162

 

 

 —

 

 

37,192

Total

 

$

1,783,245

 

$

988,722

 

$

 (239,364)

 

$

2,532,603

 

$

1,879,859

 

$

1,012,397

 

$

 —

 

$

2,892,256

 

The Company’s revenue, cost of sales and net revenue by reportable segment for the three and nine months ended March 31, 2018 and 2017, is geographically distributed as shown in the following table:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2018

 

Three Months Ended March 31, 2017

 

    

Revenue

    

Cost of sales

    

Net revenue

    

Revenue

    

Cost of sales

    

Net revenue

Streams:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

$

51,709

 

$

14,225

 

$

37,484

 

$

35,112

 

$

12,583

 

$

22,529

Dominican Republic

 

 

15,734

 

 

4,415

 

 

11,319

 

 

24,524

 

 

7,054

 

 

17,470

Chile

 

 

7,186

 

 

1,039

 

 

6,147

 

 

10,398

 

 

1,499

 

 

8,899

Africa

 

 

8,350

 

 

1,666

 

 

6,684

 

 

6,563

 

 

1,283

 

 

5,280

Total streams

 

$

82,979

 

$

21,345

 

$

61,634

 

$

76,597

 

$

22,419

 

$

54,178

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalties:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mexico

 

$

11,021

 

$

 —

 

$

11,021

 

$

10,446

 

$

 —

 

$

10,446

United States

 

 

8,459

 

 

 —

 

 

8,459

 

 

7,899

 

 

 —

 

 

7,899

Canada

 

 

6,089

 

 

 —

 

 

6,089

 

 

5,535

 

 

 —

 

 

5,535

Australia

 

 

3,343

 

 

 —

 

 

3,343

 

 

3,174

 

 

 —

 

 

3,174

Africa

 

 

543

 

 

 —

 

 

543

 

 

672

 

 

 —

 

 

672

Other

 

 

3,549

 

 

 —

 

 

3,549

 

 

2,649

 

 

 —

 

 

2,649

Total royalties

 

$

33,004

 

$

 —

 

$

33,004

 

$

30,375

 

$

 —

 

$

30,375

Total streams and royalties

 

$

115,983

 

$

21,345

 

$

94,638

 

$

106,972

 

$

22,419

 

$

84,553

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended March 31, 2018

 

Nine Months Ended March 31, 2017

 

    

Revenue

    

Cost of sales

    

Net revenue

    

Revenue

    

Cost of sales

    

Net revenue

Streams:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

$

106,363

 

$

30,072

 

$

76,291

 

$

105,161

 

$

36,341

 

$

68,820

Dominican Republic

 

 

67,492

 

 

20,200

 

 

47,292

 

 

71,911

 

 

21,497

 

 

50,414

Chile

 

 

41,124

 

 

6,148

 

 

34,976

 

 

41,552

 

 

6,243

 

 

35,309

Africa

 

 

26,049

 

 

5,207

 

 

20,842

 

 

17,484

 

 

3,501

 

 

13,983

Total streams

 

$

241,028

 

$

61,627

 

$

179,401

 

$

236,108

 

$

67,582

 

$

168,526

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalties:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mexico

 

$

32,772

 

$

 —

 

$

32,772

 

$

31,573

 

$

 —

 

$

31,573

United States

 

 

31,186

 

 

 —

 

 

31,186

 

 

27,012

 

 

 —

 

 

27,012

Canada

 

 

17,577

 

 

 —

 

 

17,577

 

 

17,405

 

 

 —

 

 

17,405

Australia

 

 

9,891

 

 

 —

 

 

9,891

 

 

9,867

 

 

 —

 

 

9,867

Africa

 

 

1,589

 

 

 —

 

 

1,589

 

 

2,260

 

 

 —

 

 

2,260

Chile

 

 

399

 

 

 —

 

 

399

 

 

1,333

 

 

 —

 

 

1,333

Other

 

 

8,365

 

 

 —

 

 

8,365

 

 

6,322

 

 

 —

 

 

6,322

Total royalties

 

$

101,779

 

$

 —

 

$

101,779

 

$

95,772

 

$

 —

 

$

95,772

Total streams and royalties

 

$

342,807

 

$

61,627

 

$

281,180

 

$

331,880

 

$

67,582

 

$

264,298

 

v3.8.0.1
FAIR VALUE MEASUREMENTS
9 Months Ended
Mar. 31, 2018
FAIR VALUE MEASUREMENTS  
FAIR VALUE MEASUREMENTS

9.    FAIR VALUE MEASUREMENTS

 

FASB Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures (“ASC 820”) establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  The three levels of the fair value hierarchy under ASC 820 are described below:

 

Level 1:   Quoted prices for identical instruments in active markets;

 

Level 2:   Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

 

Level 3:   Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

 

The following table sets forth the Company’s financial assets measured at fair value on a recurring basis (at least annually) by level within the fair value hierarchy.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2018

 

 

Carrying

 

Fair Value

 

    

Amount

    

Total

    

Level 1

    

Level 2

    

Level 3

Assets (In thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable equity securities(1)

 

$

3,274

 

$

3,274

 

$

3,274

 

$

 —

 

$

 —

Total assets

 

 

 

 

$

3,274

 

$

3,274

 

$

 —

 

$

 —

Liabilities (In thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt(2)

 

$

431,037

 

$

390,280

 

$

390,280

 

$

 —

 

$

 —

Total liabilities

 

 

 

 

$

390,280

 

$

390,280

 

$

 —

 

$

 —


(1)

Included in Other assets on the Company’s consolidated balance sheets.

(2)

Included in the carrying amount is the equity component of our 2019 Notes in the amount of $77 million, which is included within Additional paid-in capital on the Company’s consolidated balance sheets.

 

The Company’s marketable equity securities classified within Level 1 of the fair value hierarchy are valued using quoted market prices in active markets.  The fair value of the Level 1 marketable equity securities is calculated as the quoted market price of the marketable equity security multiplied by the quantity of shares held by the Company.  The warrants that were part of the term loan funded to a subsidiary of Golden Star Resources Ltd. (“Golden Star”) in July 2015 were exercised during the quarter ended September 30, 2017.  The warrants had been classified within Level 2 of the fair value hierarchy as of June 30, 2017.  The fair value of the Golden Star common shares received by the Company upon exercise of the warrants are classified within Level 1 of the fair value hierarchy as of September 30, 2017.  The Company sold all of the common shares of Golden Star received upon exercise of the warrants in October 2017.  The Company’s debt classified within Level 1 of the fair value hierarchy is valued using quoted prices in an active market.  The carrying value of the Company’s revolving credit facility (Note 3) approximates fair value as of March 31, 2018.  

 

As of March 31, 2018, the Company also had assets that, under certain conditions, are subject to measurement at fair value on a non-recurring basis like those associated with stream and royalty interests, intangible assets and other long-lived assets.  For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if any of these assets are determined to be impaired.  If recognition of these assets at their fair value becomes necessary, such measurements will be determined utilizing Level 3 inputs.  Refer to Note 2 for discussion of inputs used to develop fair value for those royalty interests that were determined to be impaired during the three months ended March 31, 2018.

v3.8.0.1
COMMITMENTS AND CONTINGENCIES
9 Months Ended
Mar. 31, 2018
COMMITMENTS AND CONTINGENCIES  
COMMITMENTS AND CONTINGENCIES

10.COMMITMENTS AND CONTINGENCIES

 

Ilovica Gold Stream Acquisition

 

As of March 31, 2018, the Company’s conditional funding schedule for $163.75 million related to its Ilovica gold stream acquisition made in October 2014 remains subject to certain conditions.

 

Voisey’s Bay

 

The Company indirectly owns a royalty on the Voisey’s Bay mine in Newfoundland and Labrador owned by Vale Newfoundland & Labrador Limited (“VNL”).  The royalty is directly owned by the Labrador Nickel Royalty Limited Partnership (“LNRLP”), in which the Company’s wholly-owned indirect subsidiary, Voisey’s Bay Holding Corporation, is the general partner and 90% owner.  The remaining 10% interest in LNRLP is owned by Altius Royalty Corporation, a company unrelated to Royal Gold.

 

On October 6, 2017, LNRLP filed a Fresh as Amended Statement of Claim, amending the original October 16, 2009 Statement of Claim and amendments thereto made in December 2014, in the Supreme Court of Newfoundland and Labrador Trial Division against Vale Inco Limited, now known as Vale Canada Limited, and its wholly-owned subsidiaries, Vale Inco Atlantic Sales Limited and VNL, related to calculation of the NSR on the sale of concentrates, including nickel concentrates, from the Voisey’s Bay mine.  LNRLP asserts that the defendants have incorrectly calculated the NSR since production at Voisey’s Bay began in late 2005, and since defendants began processing Voisey’s Bay concentrates at the new Long Harbour processing facility, and that the defendants have breached their contractual duties of good faith in several ways.  LNRLP requests an order in respect of the correct calculation of future payments, and unspecified damages for non-payment and underpayment of past royalties to the date of the claim, together with additional damages until the date of trial, interest, costs and other damages.  The litigation is in the discovery phase, and trial is expected to commence in September 2018.

 

v3.8.0.1
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ISSUED AND RECENTLY ADOPTED ACCOUNTING STANDARDS (Policies)
9 Months Ended
Mar. 31, 2018
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ISSUED AND RECENTLY ADOPTED ACCOUNTING STANDARDS  
Basis of Consolidation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements.  In the opinion of management, all adjustments which are of a normal recurring nature considered necessary for a fair presentation of our interim financial statements have been included in this Form 10-Q.  Operating results for the three and nine months ended March 31, 2018, are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2018.  These interim unaudited financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017 filed with the Securities and Exchange Commission on August 10, 2017 (“Fiscal 2017 10-K”).

Reclassification

Certain amounts in the prior period financial statements have been reclassified for comparative purposes to conform with the presentation in the current period financial statements.  Reclassified amounts were not material to the financial statements.

Asset Impairment

Asset Impairment

We evaluate long‑lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts of an asset or group of assets may not be recoverable.  The recoverability of the carrying value of stream and royalty interests in production and development stage mineral properties is evaluated based upon estimated future undiscounted net cash flows from each stream and royalty interest using estimates of proven and probable reserves and other relevant information received from the operators.  We evaluate the recoverability of the carrying value of royalty interests in exploration stage mineral properties in the event of significant decreases in the price of gold, silver, copper and other metals, and whenever new information regarding the mineral properties is obtained from the operator indicating that production will not likely occur or may be reduced in the future, thus potentially affecting the future recoverability of our stream or royalty interests.  Impairments in the carrying value of each property are measured and recorded to the extent that the carrying value in each property exceeds its estimated fair value, which is generally calculated using estimated future discounted cash flows.

Estimates of gold, silver, copper, and other metal prices, operators’ estimates of proven and probable reserves or mineralized material related to our stream or royalty properties, and operators’ estimates of operating and capital costs are subject to certain risks and uncertainties which may affect the recoverability of our investment in these stream and royalty interests in mineral properties.  It is possible that changes could occur to these estimates, which could adversely affect the net cash flows expected to be generated from these stream and royalty interests.  Refer to Note 2 for discussion and the results of our impairment assessments for the three and nine months ended March 31, 2018.

Recently Issued and Recently Adopted Accounting Standards

Recently Issued and Adopted Accounting Standards

 

Recently Issued

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) guidance for the recognition of revenue from contracts with customers.  This ASU superseded virtually all of the existing revenue recognition guidance under U.S. GAAP.  The core principle of the five step model is that an entity will recognize revenue when it transfers control of goods or services to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. Entities can choose to apply the standard using either the full retrospective approach or a modified retrospective approach.  The standard is effective for the Company’s fiscal year beginning July 1, 2018.  Early adoption is permitted.

 

We plan to implement the new ASU revenue recognition guidance as of July 1, 2018, using the modified retrospective method with the cumulative effect, if any, of initial adoption to be recognized in Accumulated (losses) earnings at the date of initial application.  We are in the final stages of our evaluation of the impact of the new standard on our accounting policies, processes, and financial reporting.  Based on the evaluation performed to-date, we expect to identify similar performance obligations as compared with deliverables and separate units of account previously identified.  We will continue to assess the impact of adopting this ASU throughout the remainder of fiscal year 2018.

 

Recently Adopted

 

In March 2016, the FASB issued ASU guidance related to stock-based compensation.  The new guidance simplifies the accounting for stock-based compensation transactions, including income tax consequences, statement of cash flows presentation, estimating forfeitures when calculating compensation expense, and classification of awards as either equity or liabilities. 

 

The new standard requires all excess tax benefits and tax deficiencies to be recognized as income tax benefit (expense) in the income statement.  The new guidance also requires presentation of excess tax benefits as an operating activity on the statement of cash flows rather than a financing activity and requires presentation of cash paid to a tax authority when shares are withheld to satisfy the employer’s statutory income tax withholding obligation as a financing activity.  The new guidance also provides for an election to account for forfeitures of stock-based compensation. 

 

The Company adopted the ASU guidance effective July 1, 2017.  With respect to the forfeiture election, the Company will continue its current practice of estimating forfeitures when calculating compensation expense.  The adoption of this standard did not have a material impact on the Company’s consolidated financial statements or related disclosures.

v3.8.0.1
STREAM AND ROYALTY INTERESTS, NET (Tables)
9 Months Ended
Mar. 31, 2018
STREAM AND ROYALTY INTERESTS, NET  
Schedule of royalty and stream interests

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2018 (Amounts in thousands):

    

Cost

    

Accumulated Depletion

    

Impairments

 

Net

Production stage stream interests:

 

 

 

 

 

 

 

 

 

 

 

 

Mount Milligan

 

$

790,635

 

$

(143,370)

 

$

 —

 

$

647,265

Pueblo Viejo

 

 

610,404

 

 

(101,193)

 

 

 —

 

 

509,211

Andacollo

 

 

388,182

 

 

(53,916)

 

 

 —

 

 

334,266

Wassa and Prestea

 

 

146,475

 

 

(39,383)

 

 

 —

 

 

107,092

Rainy River

 

 

175,727

 

 

(2,354)

 

 

 —

 

 

173,373

Total production stage stream interests

 

 

2,111,423

 

 

(340,216)

 

 

 —

 

 

1,771,207

Production stage royalty interests:

 

 

 

 

 

 

 

 

 

 

 

 

Voisey's Bay

 

 

205,724

 

 

(85,671)

 

 

 —

 

 

120,053

Peñasquito

 

 

99,172

 

 

(37,636)

 

 

 —

 

 

61,536

Holt

 

 

34,612

 

 

(20,868)

 

 

 —

 

 

13,744

Cortez

 

 

20,878

 

 

(11,230)

 

 

 —

 

 

9,648

Other

 

 

483,795

 

 

(357,918)

 

 

 —

 

 

125,877

Total production stage royalty interests

 

 

844,181

 

 

(513,323)

 

 

 —

 

 

330,858

Total production stage stream and royalty interests

 

 

2,955,604

 

 

(853,539)

 

 

 —

 

 

2,102,065

 

 

 

 

 

 

 

 

 

 

 

 

 

Development stage stream interests:

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

12,038

 

 

 —

 

 

 —

 

 

12,038

 

 

 

 

 

 

 

 

 

 

 

 

 

Development stage royalty interests:

 

 

 

 

 

 

 

 

 

 

 

 

Cortez

 

 

59,803

 

 

 —

 

 

 —

 

 

59,803

Other

 

 

63,810

 

 

 —

 

 

(284)

 

 

63,526

Total development stage royalty interests

 

 

123,613

 

 

 —

 

 

(284)

 

 

123,329

Total development stage stream and royalty interests

 

 

135,651

 

 

 —

 

 

(284)

 

 

135,367

 

 

 

 

 

 

 

 

 

 

 

 

 

Exploration stage royalty interests:

 

 

 

 

 

 

 

 

 

 

 

 

Pascua-Lama

 

 

416,770

 

 

 —

 

 

(239,080)

 

 

177,690

Other

 

 

117,481

 

 

 —

 

 

 -

 

 

117,481

Total exploration stage royalty interests

 

 

534,251

 

 

 —

 

 

(239,080)

 

 

295,171

Total stream and royalty interests, net

 

$

3,625,506

 

$

(853,539)

 

$

(239,364)

 

$

2,532,603

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2017 (Amounts in thousands):

    

Cost

    

Accumulated Depletion

    

Impairments

 

Net

Production stage stream interests:

 

 

 

 

 

 

 

 

 

 

 

 

Mount Milligan

 

$

790,635

 

$

(114,327)

 

$

 —

 

$

676,308

Pueblo Viejo

 

 

610,404

 

 

(67,149)

 

 

 —

 

 

543,255

Andacollo

 

 

388,182

 

 

(39,404)

 

 

 —

 

 

348,778

Wassa and Prestea

 

 

146,475

 

 

(22,715)

 

 

 —

 

 

123,760

Total production stage stream interests

 

 

1,935,696

 

 

(243,595)

 

 

 —

 

 

1,692,101

Production stage royalty interests:

 

 

 

 

 

 

 

 

 

 

 

 

Voisey's Bay

 

 

205,724

 

 

(85,671)

 

 

 —

 

 

120,053

Peñasquito

 

 

99,172

 

 

(34,713)

 

 

 —

 

 

64,459

Holt

 

 

34,612

 

 

(19,669)

 

 

 —

 

 

14,943

Cortez

 

 

20,873

 

 

(10,633)

 

 

 —

 

 

10,240

Other

 

 

483,643

 

 

(337,958)

 

 

 —

 

 

145,685

Total production stage royalty interests

 

 

844,024

 

 

(488,644)

 

 

 —

 

 

355,380

Total production stage stream and royalty interests

 

 

2,779,720

 

 

(732,239)

 

 

 —

 

 

2,047,481

Development stage stream interests:

 

 

 

 

 

 

 

 

 

 

 

 

Rainy River

 

 

175,727

 

 

 —

 

 

 —

 

 

175,727

Other

 

 

12,031

 

 

 —

 

 

 —

 

 

12,031

Total development stage stream interests

 

 

187,758

 

 

 —

 

 

 —

 

 

187,758

Development stage royalty interests:

 

 

 

 

 

 

 

 

 

 

 

 

Cortez

 

 

59,803

 

 

 —

 

 

 —

 

 

59,803

Other

 

 

63,811

 

 

 —

 

 

 —

 

 

63,811

Total development stage royalty interests

 

 

123,614

 

 

 —

 

 

 —

 

 

123,614

Total development stage stream and royalty interests

 

 

311,372

 

 

 —

 

 

 —

 

 

311,372

 

 

 

 

 

 

 

 

 

 

 

 

 

Exploration stage royalty interests:

 

 

 

 

 

 

 

 

 

 

 

 

Pascua-Lama

 

 

416,770

 

 

 —

 

 

 —

 

 

416,770

Other

 

 

116,633

 

 

 

 

 

 

 

 

116,633

Total exploration stage royalty interests

 

 

533,403

 

 

 —

 

 

 —

 

 

533,403

Total stream and royalty interests, net

 

$

3,624,495

 

$

(732,239)

 

$

 —

 

$

2,892,256

 

Schedule of impairment charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31, 

 

March 31, 

 

March 31, 

 

March 31, 

 

    

2018

    

2017

    

2018

    

2017

 

 

 

(Amounts in thousands)

 

 

(Amounts in thousands)

Pascua-Lama

 

$

239,080

 

$

 —

 

$

239,080

 

$

 —

Other

 

 

284

 

 

 —

 

 

284

 

 

 —

Total impairment of royalty interests

 

$

239,364

 

$

 —

 

$

239,364

 

$

 —

 

v3.8.0.1
DEBT (Tables)
9 Months Ended
Mar. 31, 2018
DEBT  
Schedule of non-current debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2018

 

As of June 30, 2017

 

   

Principal

   

Unamortized Discount

   

Debt Issuance Costs

   

Total

   

Principal

   

Unamortized Discount

   

Debt Issuance Costs

   

Total

 

 

 

(Amounts in thousands)

 

 

(Amounts in thousands)

Convertible notes due 2019

 

$

370,000

 

$

(15,963)

 

$

(1,653)

 

$

352,384

 

$

370,000

 

$

(25,251)

 

$

(2,646)

 

$

342,103

Revolving credit facility

 

 

75,000

 

 

 —

 

 

(5,111)

 

 

69,889

 

 

250,000

 

 

 —

 

 

(5,933)

 

 

244,067

Total debt

 

$

445,000

 

$

(15,963)

 

$

(6,764)

 

$

422,273

 

$

620,000

 

$

(25,251)

 

$

(8,579)

 

$

586,170

 

v3.8.0.1
REVENUE (Tables)
9 Months Ended
Mar. 31, 2018
REVENUE  
Schedule of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31, 

 

March 31, 

 

March 31, 

 

March 31, 

 

    

2018

    

2017

    

2018

    

2017

 

 

 

(Amounts in thousands)

 

 

(Amounts in thousands)

Stream interests

 

$

82,979

 

$

76,597

 

$

241,028

 

$

236,108

Royalty interests

 

 

33,004

 

 

30,375

 

 

101,779

 

 

95,772

Total revenue

 

$

115,983

 

$

106,972

 

$

342,807

 

$

331,880

 

v3.8.0.1
STOCK-BASED COMPENSATION (Tables)
9 Months Ended
Mar. 31, 2018
STOCK-BASED COMPENSATION  
Schedule of recognized stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31, 

 

March 31, 

 

March 31, 

 

March 31, 

 

    

2018

    

2017

    

2018

    

2017

 

 

 

(Amounts in thousands)

 

 

(Amounts in thousands)

Stock options

 

$

70

 

$

94

 

$

241

 

$

297

Stock appreciation rights

 

 

482

 

 

456

 

 

1,456

 

 

1,378

Restricted stock

 

 

727

 

 

800

 

 

3,041

 

 

3,004

Performance stock

 

 

284

 

 

(1,036)

 

 

1,220

 

 

2,079

Total stock-based compensation expense

 

$

1,563

 

$

314

 

$

5,958

 

$

6,758

 

Schedule of stock-based compensation awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

March 31, 

 

 

March 31, 

 

 

March 31, 

 

 

March 31, 

 

    

 

2018

    

 

2017

    

 

2018

    

 

2017

 

 

 

(Number of shares)

 

 

(Number of shares)

Stock options

 

 

 —

 

 

 —

 

 

6,858

 

 

7,200

Stock appreciation rights

 

 

 —

 

 

 —

 

 

71,262

 

 

63,340

Restricted stock

 

 

 —

 

 

 —

 

 

50,380

 

 

44,890

Performance stock

 

 

 —

 

 

 —

 

 

34,010

 

 

29,830

Total equity awards granted

 

 

 —

 

 

 —

 

 

162,510

 

 

145,260

 

Schedule of unrecognized compensation expense and weighted-average vesting period for each of the stock-based compensation awards

As of March 31, 2018, unrecognized compensation expense (expressed in thousands below) and weighted-average vesting period for each of our stock-based compensation awards were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

 

 

 

 

Unrecognized

    

Weighted-

 

 

 

 

 

 

 

 

compensation

 

average vesting

 

 

 

 

 

 

 

 

expense

    

period (years)

Stock options

 

 

 

 

 

 

 

$

307

 

 

1.7

Stock appreciation rights

 

 

 

 

 

 

 

 

2,703

 

 

1.9

Restricted stock

 

 

 

 

 

 

 

 

6,251

 

 

3.1

Performance stock

 

 

 

 

 

 

 

 

1,927

 

 

2.0

 

v3.8.0.1
EARNINGS PER SHARE ("EPS") (Tables)
9 Months Ended
Mar. 31, 2018
EARNINGS PER SHARE ("EPS")  
Summary of the effects of dilutive securities on diluted EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31, 

 

March 31, 

 

March 31, 

 

March 31, 

 

    

2018

    

2017

    

2018

    

2017

 

 

 

(in thousands, except per share data)

 

 

(in thousands, except per share data)

Net (loss) income available to Royal Gold common stockholders

 

$

 (153,650)

 

$

23,661

 

$

 (139,786)

 

$

81,509

Weighted-average shares for basic EPS

 

 

65,307,324

 

 

65,169,883

 

 

65,283,019

 

 

65,145,183

Effect of other dilutive securities

 

 

 

 

105,043

 

 

 

 

122,018

Weighted-average shares for diluted EPS

 

 

65,307,324

 

 

65,274,926

 

 

65,283,019

 

 

65,267,201

Basic (loss) earnings per share

 

$

(2.35)

 

$

0.36

 

$

(2.14)

 

$

1.25

Diluted (loss) earnings per share

 

$

(2.35)

 

$

0.36

 

$

(2.14)

 

$

1.25

 

v3.8.0.1
INCOME TAXES (Tables)
9 Months Ended
Mar. 31, 2018
INCOME TAXES  
Schedule of income tax expense and effective tax rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31, 

 

March 31, 

 

March 31, 

 

March 31, 

 

    

2018

    

2017

    

2018

    

2017

 

 

(Amounts in thousands, except rate)

 

(Amounts in thousands, except rate)

Income tax benefit (expense)

 

$

45,859

 

$

(6,492)

 

$

(10,044)

 

$

(18,724)

Effective tax rate

 

 

22.9%

 

 

23.2%

 

 

(7.5%)

 

 

19.9%

 

v3.8.0.1
SEGMENT INFORMATION (Tables)
9 Months Ended
Mar. 31, 2018
SEGMENT INFORMATION  
Schedule of geographical distribution of long-lived assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2018

 

As of June 30, 2017

 

 

 

 

 

 

 

 

 

 

 

Total stream

 

 

 

 

 

 

 

 

 

 

Total stream

 

 

Stream

 

Royalty

 

 

 

 

and royalty

 

Stream

 

Royalty

 

 

 

 

and royalty

 

  

interest

  

interest

  

Impairments

  

interests, net

  

interest

  

interest

  

Impairments

  

interests, net

Canada

 

$

820,639

 

$

217,236

 

$

(284)

 

$

1,037,591

 

$

852,035

 

$

221,618

 

$

 —

 

$

1,073,653

Dominican Republic

 

 

509,211

 

 

 —

 

 

 —

 

 

509,211

 

 

543,256

 

 

 —

 

 

 —

 

 

543,256

Chile

 

 

334,266

 

 

453,306

 

 

(239,080)

 

 

548,492

 

 

348,778

 

 

453,369

 

 

 —

 

 

802,147

Africa

 

 

107,092

 

 

515

 

 

 —

 

 

107,607

 

 

123,760

 

 

572

 

 

 —

 

 

124,332

Mexico

 

 

 —

 

 

95,234

 

 

 —

 

 

95,234

 

 

 —

 

 

105,889

 

 

 —

 

 

105,889

United States

 

 

 —

 

 

167,253

 

 

 —

 

 

167,253

 

 

 —

 

 

168,378

 

 

 —

 

 

168,378

Australia

 

 

 —

 

 

35,088

 

 

 —

 

 

35,088

 

 

 —

 

 

37,409

 

 

 —

 

 

37,409

Other

 

 

12,037

 

 

20,090

 

 

 —

 

 

32,127

 

 

12,030

 

 

25,162

 

 

 —

 

 

37,192

Total

 

$

1,783,245

 

$

988,722

 

$

 (239,364)

 

$

2,532,603

 

$

1,879,859

 

$

1,012,397

 

$

 —

 

$

2,892,256

 

Schedule of revenue, cost of sales and net revenue by reportable segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2018

 

Three Months Ended March 31, 2017

 

    

Revenue

    

Cost of sales

    

Net revenue

    

Revenue

    

Cost of sales

    

Net revenue

Streams:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

$

51,709

 

$

14,225

 

$

37,484

 

$

35,112

 

$

12,583

 

$

22,529

Dominican Republic

 

 

15,734

 

 

4,415

 

 

11,319

 

 

24,524

 

 

7,054

 

 

17,470

Chile

 

 

7,186

 

 

1,039

 

 

6,147

 

 

10,398

 

 

1,499

 

 

8,899

Africa

 

 

8,350

 

 

1,666

 

 

6,684

 

 

6,563

 

 

1,283

 

 

5,280

Total streams

 

$

82,979

 

$

21,345

 

$

61,634

 

$

76,597

 

$

22,419

 

$

54,178

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalties:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mexico

 

$

11,021

 

$

 —

 

$

11,021

 

$

10,446

 

$

 —

 

$

10,446

United States

 

 

8,459

 

 

 —

 

 

8,459

 

 

7,899

 

 

 —

 

 

7,899

Canada

 

 

6,089

 

 

 —

 

 

6,089

 

 

5,535

 

 

 —

 

 

5,535

Australia

 

 

3,343

 

 

 —

 

 

3,343

 

 

3,174

 

 

 —

 

 

3,174

Africa

 

 

543

 

 

 —

 

 

543

 

 

672

 

 

 —

 

 

672

Other

 

 

3,549

 

 

 —

 

 

3,549

 

 

2,649

 

 

 —

 

 

2,649

Total royalties

 

$

33,004

 

$

 —

 

$

33,004

 

$

30,375

 

$

 —

 

$

30,375

Total streams and royalties

 

$

115,983

 

$

21,345

 

$

94,638

 

$

106,972

 

$

22,419

 

$

84,553

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended March 31, 2018

 

Nine Months Ended March 31, 2017

 

    

Revenue

    

Cost of sales

    

Net revenue

    

Revenue

    

Cost of sales

    

Net revenue

Streams:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

$

106,363

 

$

30,072

 

$

76,291

 

$

105,161

 

$

36,341

 

$

68,820

Dominican Republic

 

 

67,492

 

 

20,200

 

 

47,292

 

 

71,911

 

 

21,497

 

 

50,414

Chile

 

 

41,124

 

 

6,148

 

 

34,976

 

 

41,552

 

 

6,243

 

 

35,309

Africa

 

 

26,049

 

 

5,207

 

 

20,842

 

 

17,484

 

 

3,501

 

 

13,983

Total streams

 

$

241,028

 

$

61,627

 

$

179,401

 

$

236,108

 

$

67,582

 

$

168,526

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalties:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mexico

 

$

32,772

 

$

 —

 

$

32,772

 

$

31,573

 

$

 —

 

$

31,573

United States

 

 

31,186

 

 

 —

 

 

31,186

 

 

27,012

 

 

 —

 

 

27,012

Canada

 

 

17,577

 

 

 —

 

 

17,577

 

 

17,405

 

 

 —

 

 

17,405

Australia

 

 

9,891

 

 

 —

 

 

9,891

 

 

9,867

 

 

 —

 

 

9,867

Africa

 

 

1,589

 

 

 —

 

 

1,589

 

 

2,260

 

 

 —

 

 

2,260

Chile

 

 

399

 

 

 —

 

 

399

 

 

1,333

 

 

 —

 

 

1,333

Other

 

 

8,365

 

 

 —

 

 

8,365

 

 

6,322

 

 

 —

 

 

6,322

Total royalties

 

$

101,779

 

$

 —

 

$

101,779

 

$

95,772

 

$

 —

 

$

95,772

Total streams and royalties

 

$

342,807

 

$

61,627

 

$

281,180

 

$

331,880

 

$

67,582

 

$

264,298

 

v3.8.0.1
FAIR VALUE MEASUREMENTS (Tables)
9 Months Ended
Mar. 31, 2018
FAIR VALUE MEASUREMENTS  
Schedule of financial assets and liabilities measured at fair value on recurring basis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2018

 

 

Carrying

 

Fair Value

 

    

Amount

    

Total

    

Level 1

    

Level 2

    

Level 3

Assets (In thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable equity securities(1)

 

$

3,274

 

$

3,274

 

$

3,274

 

$

 —

 

$

 —

Total assets

 

 

 

 

$

3,274

 

$

3,274

 

$

 —

 

$

 —

Liabilities (In thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt(2)

 

$

431,037

 

$

390,280

 

$

390,280

 

$

 —

 

$

 —

Total liabilities

 

 

 

 

$

390,280

 

$

390,280

 

$

 —

 

$

 —


(1)

Included in Other assets on the Company’s consolidated balance sheets.

(2)

Included in the carrying amount is the equity component of our 2019 Notes in the amount of $77 million, which is included within Additional paid-in capital on the Company’s consolidated balance sheets.

v3.8.0.1
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ISSUED AND RECENTLY ADOPTED ACCOUNTING STANDARDS (Details)
9 Months Ended
Mar. 31, 2018
item
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ISSUED AND RECENTLY ADOPTED ACCOUNTING STANDARDS  
Minimum number of metals produced from a mine of which right to purchase all or a portion available in exchange for upfront deposit 1
v3.8.0.1
STREAM AND ROYALTY INTERESTS, NET - Summary (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2018
Mar. 31, 2018
Jun. 30, 2017
Cost $ 3,625,506 $ 3,625,506 $ 3,624,495
Accumulated Depletion (853,539) (853,539) (732,239)
Impairments (239,364) (239,364)  
Net 2,532,603 2,532,603 2,892,256
Impairment of royalty interests 239,364 239,364  
Production stage stream interests      
Cost 2,111,423 2,111,423 1,935,696
Accumulated Depletion (340,216) (340,216) (243,595)
Net 1,771,207 1,771,207 1,692,101
Production stage stream interests | Mount Milligan      
Cost 790,635 790,635 790,635
Accumulated Depletion (143,370) (143,370) (114,327)
Net 647,265 647,265 676,308
Production stage stream interests | Pueblo Viejo      
Cost 610,404 610,404 610,404
Accumulated Depletion (101,193) (101,193) (67,149)
Net 509,211 509,211 543,255
Production stage stream interests | Andacollo      
Cost 388,182 388,182 388,182
Accumulated Depletion (53,916) (53,916) (39,404)
Net 334,266 334,266 348,778
Production stage stream interests | Wassa and Prestea      
Cost 146,475 146,475 146,475
Accumulated Depletion (39,383) (39,383) (22,715)
Net 107,092 107,092 123,760
Production stage stream interests | Rainy River      
Cost 175,727 175,727  
Accumulated Depletion (2,354) (2,354)  
Net 173,373 173,373  
Production stage royalty interests      
Cost 844,181 844,181 844,024
Accumulated Depletion (513,323) (513,323) (488,644)
Net 330,858 330,858 355,380
Production stage royalty interests | Voisey's Bay      
Cost 205,724 205,724 205,724
Accumulated Depletion (85,671) (85,671) (85,671)
Net 120,053 120,053 120,053
Production stage royalty interests | Penasquito      
Cost 99,172 99,172 99,172
Accumulated Depletion (37,636) (37,636) (34,713)
Net 61,536 61,536 64,459
Production stage royalty interests | Holt      
Cost 34,612 34,612 34,612
Accumulated Depletion (20,868) (20,868) (19,669)
Net 13,744 13,744 14,943
Production stage royalty interests | Cortez      
Cost 20,878 20,878 20,873
Accumulated Depletion (11,230) (11,230) (10,633)
Net 9,648 9,648 10,240
Production stage royalty interests | Other      
Cost 483,795 483,795 483,643
Accumulated Depletion (357,918) (357,918) (337,958)
Net 125,877 125,877 145,685
Total production stage stream and royalty interests      
Cost 2,955,604 2,955,604 2,779,720
Accumulated Depletion (853,539) (853,539) (732,239)
Net 2,102,065 2,102,065 2,047,481
Development stage stream interests      
Cost     187,758
Net     187,758
Development stage stream interests | Rainy River      
Cost     175,727
Net     175,727
Development stage stream interests | Other      
Cost 12,038 12,038 12,031
Net 12,038 12,038 12,031
Development stage royalty interests      
Cost 123,613 123,613 123,614
Impairments (284) (284)  
Net 123,329 123,329 123,614
Development stage royalty interests | Cortez      
Cost 59,803 59,803 59,803
Net 59,803 59,803 59,803
Development stage royalty interests | Other      
Cost 63,810 63,810 63,811
Impairments (284) (284)  
Net 63,526 63,526 63,811
Total development stage stream and royalty interests      
Cost 135,651 135,651 311,372
Impairments (284) (284)  
Net 135,367 135,367 311,372
Exploration stage royalty interests      
Cost 534,251 534,251 533,403
Impairments (239,080) (239,080)  
Net 295,171 295,171 533,403
Exploration stage royalty interests | Pascua-Lama      
Cost 416,770 416,770 416,770
Impairments (239,080) (239,080)  
Net 177,690 177,690 416,770
Exploration stage royalty interests | Other      
Cost 117,481 117,481 116,633
Net $ 117,481 $ 117,481 $ 116,633
v3.8.0.1
STREAM AND ROYALTY INTERESTS, NET - Impairments (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2018
Mar. 31, 2018
Impairments of royalty interests $ 239,364 $ 239,364
Pascua-Lama    
Impairments of royalty interests 239,080 $ 239,080
Copper NSR (as a percent)   1.09%
Other    
Impairments of royalty interests $ 284 $ 284
Minimum | Pascua-Lama    
Net smelter return (NSR) (as a percent)   0.78%
Maximum | Pascua-Lama    
Net smelter return (NSR) (as a percent)   5.45%
v3.8.0.1
DEBT (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Mar. 31, 2018
Mar. 31, 2017
Jun. 30, 2017
Jun. 30, 2012
Long-term debt disclosure            
Principal $ 445,000   $ 445,000   $ 620,000  
Unamortized Discount (15,963)   (15,963)   (25,251)  
Debt Issuance Costs (6,764)   (6,764)   (8,579)  
Total debt 422,273   422,273   586,170  
Repayment of revolving credit facility     175,000 $ 45,000    
2019 Notes            
Long-term debt disclosure            
Principal 370,000   370,000   370,000  
Unamortized Discount (15,963)   (15,963)   (25,251)  
Debt Issuance Costs (1,653)   (1,653)   (2,646)  
Total debt 352,384   352,384   342,103  
Principal amount of debt issued           $ 370,000
Interest rate on convertible senior notes (as a percent)           2.875%
Interest expense recognized 6,100 $ 5,900 18,300 17,600    
Credit Facility            
Long-term debt disclosure            
Principal 75,000   75,000   250,000  
Debt Issuance Costs (5,111)   (5,111)   (5,933)  
Total debt 69,889   69,889   $ 244,067  
Interest expense recognized 1,300 $ 2,900 4,900 $ 7,200    
Maximum availability under the revolving credit facility 1,000,000   1,000,000      
Outstanding amount under credit facility 75,000   75,000      
Available under the revolving credit facility $ 925,000   $ 925,000      
Effective interest rate (as percent) 3.52%   3.52%      
Repayment of revolving credit facility $ 75,000   $ 175,000      
LIBOR | Credit Facility            
Long-term debt disclosure            
Basis spread on interest rate (as a percent)     1.50%      
v3.8.0.1
REVENUE (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Mar. 31, 2018
Mar. 31, 2017
REVENUE        
Stream interests $ 82,979 $ 76,597 $ 241,028 $ 236,108
Royalty interests 33,004 30,375 101,779 95,772
Total revenue $ 115,983 $ 106,972 $ 342,807 $ 331,880
v3.8.0.1
STOCK-BASED COMPENSATION (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Mar. 31, 2018
Mar. 31, 2017
Stock-based compensation        
Stock-based compensation expense $ 1,563 $ 314 $ 5,958 $ 6,758
Stock-based compensation awards granted (in shares)     162,510 145,260
Stock options        
Stock-based compensation        
Stock-based compensation expense 70 94 $ 241 $ 297
Stock options granted (in shares)     6,858 7,200
Unrecognized compensation expense 307   $ 307  
Weighted-average vesting period (years)     1 year 8 months 12 days  
Stock appreciation rights        
Stock-based compensation        
Stock-based compensation expense 482 456 $ 1,456 $ 1,378
Other than options granted (in shares)     71,262 63,340
Unrecognized compensation expense 2,703   $ 2,703  
Weighted-average vesting period (years)     1 year 10 months 24 days  
Restricted stock        
Stock-based compensation        
Stock-based compensation expense 727 800 $ 3,041 $ 3,004
Other than options granted (in shares)     50,380 44,890
Unrecognized compensation expense 6,251   $ 6,251  
Weighted-average vesting period (years)     3 years 1 month 6 days  
Performance stock        
Stock-based compensation        
Stock-based compensation expense 284 $ (1,036) $ 1,220 $ 2,079
Other than options granted (in shares)     34,010 29,830
Unrecognized compensation expense $ 1,927   $ 1,927  
Weighted-average vesting period (years)     2 years  
v3.8.0.1
EARNINGS PER SHARE ("EPS") (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Mar. 31, 2018
Mar. 31, 2017
EARNINGS PER SHARE ("EPS")        
Net (loss) income attributable to Royal Gold stockholders $ (153,650) $ 23,661 $ (139,786) $ 81,509
Weighted-average shares for basic EPS 65,307,324 65,169,883 65,283,019 65,145,183
Effect of other dilutive securities (in shares)   105,043   122,018
Weighted-average shares for diluted EPS 65,307,324 65,274,926 65,283,019 65,267,201
Basic (loss) earnings per share (in dollars per share) $ (2.35) $ 0.36 $ (2.14) $ 1.25
Diluted (loss) earnings per share (in dollars per share) (2.35) $ 0.36 (2.14) $ 1.25
Initial conversion price (in dollars per share) $ 102.67   $ 102.67  
v3.8.0.1
INCOME TAXES (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended 12 Months Ended
Mar. 31, 2018
Dec. 31, 2017
Mar. 31, 2017
Mar. 31, 2018
Mar. 31, 2017
Jun. 30, 2018
Income tax benefit (expense) $ 45,859   $ (6,492) $ (10,044) $ (18,724)  
Effective tax rate (as a percent) 22.90%   23.20% (7.50%) 19.90%  
Non-cash functional currency election $ 18,000     $ 18,000    
Net reduction in income tax expense due to Tax Cuts and Jobs Act   $ 26,400   26,400    
Mandatory transition tax due to tax legislation   $ 12,200   $ 12,200    
Mandatory transition tax payment period   8 years   8 years    
Re-measurement of net deferred tax assets and liabilities due to tax legislation   $ 2,700   $ 2,700    
Re-measurement of foreign uncertain tax positions due to tax legislation   $ 16,900   $ 16,900    
Forecast            
Effective tax rate (as a percent)           28.10%
v3.8.0.1
SEGMENT INFORMATION (Details)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2018
USD ($)
Mar. 31, 2017
USD ($)
Mar. 31, 2018
USD ($)
segment
Mar. 31, 2017
USD ($)
Jun. 30, 2017
USD ($)
Long Lived Assets and Pre-Tax Income by Geographical Information          
Number of reportable segments | segment     2    
Value of stream and royalty interests, net $ 2,532,603   $ 2,532,603   $ 2,892,256
Impairments (239,364)   (239,364)    
Revenue 115,983 $ 106,972 342,807 $ 331,880  
Cost of sales 21,345 22,419 61,627 67,582  
Net revenue 94,638 84,553 281,180 264,298  
Canada          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 1,037,591   1,037,591   1,073,653
Impairments (284)   (284)    
Dominican Republic          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 509,211   509,211   543,256
Chile          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 548,492   548,492   802,147
Impairments (239,080)   (239,080)    
Africa          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 107,607   107,607   124,332
Mexico          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 95,234   95,234   105,889
United States          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 167,253   167,253   168,378
Australia          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 35,088   35,088   37,409
Other          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 32,127   32,127   37,192
Stream interest          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 1,783,245   1,783,245   1,879,859
Revenue 82,979 76,597 241,028 236,108  
Cost of sales 21,345 22,419 61,627 67,582  
Net revenue 61,634 54,178 179,401 168,526  
Stream interest | Canada          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 820,639   820,639   852,035
Revenue 51,709 35,112 106,363 105,161  
Cost of sales 14,225 12,583 30,072 36,341  
Net revenue 37,484 22,529 76,291 68,820  
Stream interest | Dominican Republic          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 509,211   509,211   543,256
Revenue 15,734 24,524 67,492 71,911  
Cost of sales 4,415 7,054 20,200 21,497  
Net revenue 11,319 17,470 47,292 50,414  
Stream interest | Chile          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 334,266   334,266   348,778
Revenue 7,186 10,398 41,124 41,552  
Cost of sales 1,039 1,499 6,148 6,243  
Net revenue 6,147 8,899 34,976 35,309  
Stream interest | Africa          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 107,092   107,092   123,760
Revenue 8,350 6,563 26,049 17,484  
Cost of sales 1,666 1,283 5,207 3,501  
Net revenue 6,684 5,280 20,842 13,983  
Stream interest | Other          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 12,037   12,037   12,030
Royalty interest          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 988,722   988,722   1,012,397
Revenue 33,004 30,375 101,779 95,772  
Net revenue 33,004 30,375 101,779 95,772  
Royalty interest | Canada          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 217,236   217,236   221,618
Revenue 6,089 5,535 17,577 17,405  
Net revenue 6,089 5,535 17,577 17,405  
Royalty interest | Chile          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 453,306   453,306   453,369
Revenue     399 1,333  
Net revenue     399 1,333  
Royalty interest | Africa          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 515   515   572
Revenue 543 672 1,589 2,260  
Net revenue 543 672 1,589 2,260  
Royalty interest | Mexico          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 95,234   95,234   105,889
Revenue 11,021 10,446 32,772 31,573  
Net revenue 11,021 10,446 32,772 31,573  
Royalty interest | United States          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 167,253   167,253   168,378
Revenue 8,459 7,899 31,186 27,012  
Net revenue 8,459 7,899 31,186 27,012  
Royalty interest | Australia          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 35,088   35,088   37,409
Revenue 3,343 3,174 9,891 9,867  
Net revenue 3,343 3,174 9,891 9,867  
Royalty interest | Other          
Long Lived Assets and Pre-Tax Income by Geographical Information          
Value of stream and royalty interests, net 20,090   20,090   $ 25,162
Revenue 3,549 2,649 8,365 6,322  
Net revenue $ 3,549 $ 2,649 $ 8,365 $ 6,322  
v3.8.0.1
FAIR VALUE MEASUREMENTS (Details) - Recurring basis
$ in Thousands
Mar. 31, 2018
USD ($)
Carrying Amount  
Assets:  
Marketable equity securities $ 3,274
Liabilities:  
Debt 431,037
Amount of equity component of convertible notes 77,000
Fair Value  
Assets:  
Marketable equity securities 3,274
Total assets 3,274
Liabilities:  
Debt 390,280
Total liabilities 390,280
Level 1  
Assets:  
Marketable equity securities 3,274
Total assets 3,274
Liabilities:  
Debt 390,280
Total liabilities $ 390,280
v3.8.0.1
COMMITMENTS AND CONTINGENCIES (Details)
$ in Thousands
9 Months Ended
Mar. 31, 2018
USD ($)
Ilovica  
Commitments and Contingencies  
Scheduled payment amount $ 163,750
Voisey's Bay | LNRLP  
Commitments and Contingencies  
Ownership percentage held 90.00%
Voisey's Bay | Altius | LNRLP  
Commitments and Contingencies  
Ownership percentage held 10.00%