ROYAL GOLD INC, 10-Q filed on 11/2/2017
Quarterly Report
Document and Entity Information
3 Months Ended
Sep. 30, 2017
Oct. 26, 2017
Document and Entity Information
 
 
Entity Registrant Name
ROYAL GOLD INC 
 
Entity Central Index Key
0000085535 
 
Document Type
10-Q 
 
Document Period End Date
Sep. 30, 2017 
 
Amendment Flag
false 
 
Current Fiscal Year End Date
--06-30 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Shares Outstanding
 
65,454,278 
Document Fiscal Year Focus
2018 
 
Document Fiscal Period Focus
Q1 
 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2017
Jun. 30, 2017
ASSETS
 
 
Cash and equivalents
$ 88,395 
$ 85,847 
Royalty receivables
29,079 
26,886 
Income tax receivable
26,023 
22,169 
Stream inventory
7,794 
7,883 
Prepaid expenses and other
4,488 
822 
Total current assets
155,779 
143,607 
Stream and royalty interests, net
2,852,598 
2,892,256 
Other assets
57,518 
58,202 
Total assets
3,065,895 
3,094,065 
LIABILITIES
 
 
Accounts payable
2,924 
3,908 
Dividends payable
15,708 
15,682 
Income tax payable
11,686 
5,651 
Foreign withholding taxes payable
3,462 
3,425 
Other current liabilities
5,915 
5,617 
Total current liabilities
39,695 
34,283 
Debt
539,772 
586,170 
Deferred tax liabilities
121,731 
121,330 
Uncertain tax positions
28,120 
25,627 
Other long-term liabilities
6,391 
6,391 
Total liabilities
735,709 
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 65,306,271 and 65,179,527 shares outstanding, respectively
653 
652 
Additional paid-in capital
2,184,639 
2,185,796 
Accumulated other comprehensive income
1,076 
879 
Accumulated earnings
100,972 
88,050 
Total Royal Gold stockholders' equity
2,287,340 
2,275,377 
Non-controlling interests
42,846 
44,887 
Total equity
2,330,186 
2,320,264 
Total liabilities and equity
$ 3,065,895 
$ 3,094,065 
Consolidated Balance Sheets (Parenthetical) (USD $)
Sep. 30, 2017
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
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
65,306,271 
65,179,527 
Consolidated Statements of Operations and Comprehensive Income (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Consolidated Statements of Operations and Comprehensive Income
 
 
Revenue
$ 112,476 
$ 117,947 
Costs and expenses
 
 
Cost of sales
20,419 
22,662 
General and administrative
6,899 
10,507 
Production taxes
543 
497 
Exploration costs
3,203 
3,288 
Depreciation, depletion and amortization
39,692 
40,102 
Total costs and expenses
70,756 
77,056 
Operating income
41,720 
40,891 
Interest and other income
989 
1,557 
Interest and other expense
(8,617)
(8,305)
Income before income taxes
34,092 
34,143 
Income tax expense
(7,544)
(7,188)
Net income
26,548 
26,955 
Net loss attributable to non-controlling interests
2,083 
2,832 
Net income attributable to Royal Gold common stockholders
28,631 
29,787 
Net income
26,548 
26,955 
Adjustments to comprehensive income, net of tax
 
 
Unrealized change in market value of available-for-sale securities
197 
 
Comprehensive income
26,745 
26,955 
Comprehensive loss (income) attributable to non-controlling interests
2,083 
2,832 
Comprehensive income attributable to Royal Gold stockholders
$ 28,828 
$ 29,787 
Net income per share available to Royal Gold common stockholders:
 
 
Basic earnings per share (in dollars per share)
$ 0.44 
$ 0.46 
Basic weighted average shares outstanding (in shares)
65,235,496 
65,116,686 
Diluted earnings per share (in dollars per share)
$ 0.44 
$ 0.46 
Diluted weighted average shares outstanding (in shares)
65,404,680 
65,280,904 
Cash dividends declared per common share (in dollars per share)
$ 0.24 
$ 0.23 
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Cash flows from operating activities:
 
 
Net income
$ 26,548 
$ 26,955 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation, depletion and amortization
39,692 
40,102 
Amortization of debt discount and issuance costs
3,679 
3,351 
Non-cash employee stock compensation expense
2,373 
4,144 
Deferred tax expense
(727)
(1,030)
Other
(223)
(153)
Changes in assets and liabilities:
 
 
Royalty receivables
(2,193)
(7,048)
Stream inventory
89 
(3,125)
Income tax receivable
(3,854)
(3,215)
Prepaid expenses and other assets
(1,654)
(1,724)
Accounts payable
(985)
1,777 
Income tax payable
6,035 
(13,264)
Foreign withholding taxes payable
37 
1,086 
Uncertain tax positions
2,493 
6,374 
Other liabilities
299 
878 
Net cash provided by operating activities
71,609 
55,108 
Cash flows from investing activities:
 
 
Acquisition of stream and royalty interests
(5)
(90,083)
Other
100 
(226)
Net cash provided by (used in) investing activities
95 
(90,309)
Cash flows from financing activities:
 
 
Borrowings from revolving credit facility
 
70,000 
Repayment of revolving credit facility
(50,000)
 
Net payments from issuance of common stock
(3,529)
(2,038)
Common stock dividends
(15,682)
(15,012)
Purchase of additional royalty interest from non-controlling interest
 
(1,025)
Other
55 
(315)
Net cash (used in) provided by financing activities
(69,156)
51,610 
Net increase in cash and equivalents
2,548 
16,409 
Cash and equivalents at beginning of period
85,847 
116,633 
Cash and equivalents at end of period
$ 88,395 
$ 133,042 
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 months ended September 30, 2017, 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.

 

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, and 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 earnings at the date of initial application.  We are in the initial 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.

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 September 30, 2017 and June 30, 2017.

 

 

 

 

 

 

 

 

 

 

 

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

    

Cost

    

Accumulated Depletion

    

Net

Production stage stream interests:

 

 

 

 

 

 

 

 

 

Mount Milligan

 

$

790,635

 

$

(123,427)

 

$

667,208

Pueblo Viejo

 

 

610,404

 

 

(79,801)

 

 

530,603

Andacollo

 

 

388,182

 

 

(43,722)

 

 

344,460

Wassa and Prestea

 

 

146,475

 

 

(28,695)

 

 

117,780

Total production stage stream interests

 

 

1,935,696

 

 

(275,645)

 

 

1,660,051

Production stage royalty interests:

 

 

 

 

 

 

 

 

 

Voisey's Bay

 

 

205,724

 

 

(85,671)

 

 

120,053

Peñasquito

 

 

99,172

 

 

(35,882)

 

 

63,290

Holt

 

 

34,612

 

 

(20,103)

 

 

14,509

Cortez

 

 

20,878

 

 

(10,879)

 

 

9,999

Other

 

 

483,643

 

 

(343,722)

 

 

139,921

Total production stage royalty interests

 

 

844,029

 

 

(496,257)

 

 

347,772

Total production stage stream and royalty interests

 

 

2,779,725

 

 

(771,902)

 

 

2,007,823

 

 

 

 

 

 

 

 

 

 

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:

 

 

 

 

 

 

 

 

 

Pascua-Lama

 

 

380,657

 

 

 —

 

 

380,657

Cortez

 

 

59,803

 

 

 —

 

 

59,803

Other

 

 

63,811

 

 

 —

 

 

63,811

Total development stage royalty interests

 

 

504,271

 

 

 —

 

 

504,271

Total development stage stream and royalty interests

 

 

692,029

 

 

 —

 

 

692,029

Total exploration stage royalty interests

 

 

152,746

 

 

 —

 

 

152,746

Total stream and royalty interests

 

$

3,624,500

 

$

(771,902)

 

$

2,852,598

 

 

 

 

 

 

 

 

 

 

 

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

    

Cost

    

Accumulated Depletion

    

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:

 

 

 

 

 

 

 

 

 

Pascua-Lama

 

 

380,657

 

 

 —

 

 

380,657

Cortez

 

 

59,803

 

 

 —

 

 

59,803

Other

 

 

63,811

 

 

 —

 

 

63,811

Total development stage royalty interests

 

 

504,271

 

 

 —

 

 

504,271

Total development stage stream and royalty interests

 

 

692,029

 

 

 —

 

 

692,029

Total exploration stage royalty interests

 

 

152,746

 

 

 —

 

 

152,746

Total stream and royalty interests

 

$

3,624,495

 

$

(732,239)

 

$

2,892,256

 

DEBT
DEBT

3.    DEBT

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2017

 

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

 

$

(22,206)

 

$

(2,318)

 

$

345,476

 

$

370,000

 

$

(25,251)

 

$

(2,646)

 

$

342,103

Revolving credit facility

 

 

200,000

 

 

 —

 

 

(5,704)

 

 

194,296

 

 

250,000

 

 

 —

 

 

(5,933)

 

 

244,067

Total debt

 

$

570,000

 

$

(22,206)

 

$

(8,022)

 

$

539,772

 

$

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 months ended September 30, 2017, was $6.0 million compared to $5.8 million for the three months ended September 30, 2016, 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 September 30, 2017, the Company had $200 million outstanding and $800 million available under the revolving credit facility with an interest rate on borrowings of LIBOR plus 1.75% for an all-in rate of 3.07%.  During the three months ended September 30, 2017, the Company repaid $50.0 million 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 months ended September 30, 2017, was $1.8 million and $1.9 million for the three months ended September 30, 2016, 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 September 30, 2017, the Company was in compliance with each financial covenant.

REVENUE
REVENUE

4.    REVENUE

 

Revenue is comprised of the following:

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30, 

 

September 30, 

 

    

2017

    

2016

 

 

 

(Amounts in thousands)

Stream interests

 

$

78,762

 

$

85,504

Royalty interests

 

 

33,714

 

 

32,443

Total revenue

 

$

112,476

 

$

117,947

 

STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION

5.    STOCK-BASED COMPENSATION

 

The Company recognized stock-based compensation expense as follows:

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30, 

 

September 30, 

 

 

2017

    

2016

 

 

 

(Amounts in thousands)

Stock options

 

$

91

 

$

108

Stock appreciation rights

 

 

488

 

 

468

Restricted stock

 

 

1,426

 

 

1,374

Performance stock

 

 

368

 

 

2,194

Total stock-based compensation expense

 

$

2,373

 

$

4,144

 

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

 

During the three months ended September 30, 2017 and 2016, the Company granted the following stock-based compensation awards:

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

September 30, 

 

 

September 30, 

 

 

 

2017

    

 

2016

 

 

 

(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 September 30, 2017, 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

 

$

473

 

 

2.0

Stock appreciation rights

 

 

3,627

 

 

2.3

Restricted stock

 

 

7,684

 

 

3.4

Performance stock

 

 

2,790

 

 

2.1

 

EARNINGS PER SHARE ("EPS")
EARNINGS PER SHARE ("EPS")

6.    EARNINGS PER SHARE (“EPS”)

 

Basic 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 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 earnings per common share.

 

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

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30, 

 

September 30, 

 

    

2017

    

2016

 

 

 

(in thousands, except per share data)

Net income available to Royal Gold common stockholders

 

$

28,631

 

$

29,787

Weighted-average shares for basic EPS

 

 

65,235,496

 

 

65,116,686

Effect of other dilutive securities

 

 

169,184

 

 

164,218

Weighted-average shares for diluted EPS

 

 

65,404,680

 

 

65,280,904

Basic earnings per share

 

$

0.44

 

$

0.46

Diluted earnings per share

 

$

0.44

 

$

0.46

 

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 per share unless the share price of the Company’s common stock exceeds the conversion price of $102.91.

INCOME TAXES
INCOME TAXES

7.    INCOME TAXES

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30, 

 

September 30, 

 

    

2017

    

2016

 

 

(Amounts in thousands, except rate)

Income tax expense

 

$

7,544

 

$

7,188

Effective tax rate

 

 

22.1%

 

 

21.1%

 

The increase in the effective tax rate for the three months ended September 30, 2017 is primarily attributable to the re-measurement of Canadian dollar deferred tax liabilities to US dollars due to changes in the Canadian dollar to US dollar exchange rate.

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 September 30, 2017

 

As of June 30, 2017

 

    

Stream interest

    

Royalty interest

    

Total stream
and royalty
interests, net

    

Stream interest

    

Royalty
interest

    

Total stream
and royalty
interests, net

Canada

 

$

842,935

 

$

220,160

 

$

1,063,095

 

$

852,035

 

$

221,618

 

$

1,073,653

Dominican Republic

 

 

530,603

 

 

 —

 

 

530,603

 

 

543,256

 

 

 —

 

 

543,256

Chile

 

 

344,460

 

 

453,369

 

 

797,829

 

 

348,778

 

 

453,369

 

 

802,147

Africa

 

 

117,780

 

 

553

 

 

118,333

 

 

123,760

 

 

572

 

 

124,332

Mexico

 

 

 —

 

 

103,039

 

 

103,039

 

 

 —

 

 

105,889

 

 

105,889

United States

 

 

 —

 

 

167,430

 

 

167,430

 

 

 —

 

 

168,378

 

 

168,378

Australia

 

 

 —

 

 

36,563

 

 

36,563

 

 

 —

 

 

37,409

 

 

37,409

Other

 

 

12,031

 

 

23,675

 

 

35,706

 

 

12,030

 

 

25,162

 

 

37,192

Total

 

$

1,847,809

 

$

1,004,789

 

$

2,852,598

 

$

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 months ended September 30, 2017 and 2016, is geographically distributed as shown in the following table:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2017

 

Three Months Ended September 30, 2016

 

    

Revenue

    

Cost of sales

    

Net revenue

    

Revenue

    

Cost of sales

    

Net revenue

Streams:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

$

31,952

 

$

9,223

 

$

22,729

 

$

38,386

 

$

12,578

 

$

25,808

Dominican Republic

 

 

25,403

 

 

7,588

 

 

17,815

 

 

20,950

 

 

5,896

 

 

15,054

Chile

 

 

12,337

 

 

1,812

 

 

10,525

 

 

20,169

 

 

2,998

 

 

17,171

Africa

 

 

9,070

 

 

1,796

 

 

7,274

 

 

5,999

 

 

1,190

 

 

4,809

Total streams

 

$

78,762

 

$

20,419

 

$

58,343

 

$

85,504

 

$

22,662

 

$

62,842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalties:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mexico

 

$

10,897

 

$

 —

 

$

10,897

 

$

9,596

 

$

 —

 

$

9,596

United States

 

 

10,429

 

 

 —

 

 

10,429

 

 

9,706

 

 

 —

 

 

9,706

Canada

 

 

6,092

 

 

 —

 

 

6,092

 

 

6,188

 

 

 —

 

 

6,188

Australia

 

 

3,320

 

 

 —

 

 

3,320

 

 

3,462

 

 

 —

 

 

3,462

Africa

 

 

462

 

 

 —

 

 

462

 

 

824

 

 

 —

 

 

824

Chile

 

 

 —

 

 

 —

 

 

 —

 

 

489

 

 

 —

 

 

489

Other

 

 

2,514

 

 

 —

 

 

2,514

 

 

2,178

 

 

 —

 

 

2,178

Total royalties

 

$

33,714

 

$

 —

 

$

33,714

 

$

32,443

 

$

 —

 

$

32,443

Total streams and royalties

 

$

112,476

 

$

20,419

 

$

92,057

 

$

117,947

 

$

22,662

 

$

95,285

 

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 September 30, 2017

 

 

Carrying

 

Fair Value

 

    

Amount

    

Total

    

Level 1

    

Level 2

    

Level 3

Assets (In thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable equity securities(1)

 

$

4,998

 

$

4,998

 

$

4,998

 

$

 —

 

$

 —

Total assets

 

 

 

 

$

4,998

 

$

4,998

 

$

 —

 

$

 —

Liabilities (In thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt(2)

 

$

424,794

 

$

409,538

 

$

409,538

 

$

 —

 

$

 —

Total liabilities

 

 

 

 

$

409,538

 

$

409,538

 

$

 —

 

$

 —


(1)

Available-for-sale securities of $3.9 million included within Other assets and trading securities of $1.1 million included within Prepaid expenses and other 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 September 30, 2017.  

 

As of September 30, 2017, 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. 

COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES

10.COMMITMENTS AND CONTINGENCIES

 

Ilovica Gold Stream Acquisition

 

As of September 30, 2017, 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 the second half of calendar 2018.

 

OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ISSUED AND RECENTLY ADOPTED ACCOUNTING STANDARDS (Policies)
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, and 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 earnings at the date of initial application.  We are in the initial 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.

STREAM AND ROYALTY INTERESTS, NET (Tables)
Schedule of royalty and stream interests

 

 

 

 

 

 

 

 

 

 

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

    

Cost

    

Accumulated Depletion

    

Net

Production stage stream interests:

 

 

 

 

 

 

 

 

 

Mount Milligan

 

$

790,635

 

$

(123,427)

 

$

667,208

Pueblo Viejo

 

 

610,404

 

 

(79,801)

 

 

530,603

Andacollo

 

 

388,182

 

 

(43,722)

 

 

344,460

Wassa and Prestea

 

 

146,475

 

 

(28,695)

 

 

117,780

Total production stage stream interests

 

 

1,935,696

 

 

(275,645)

 

 

1,660,051

Production stage royalty interests:

 

 

 

 

 

 

 

 

 

Voisey's Bay

 

 

205,724

 

 

(85,671)

 

 

120,053

Peñasquito

 

 

99,172

 

 

(35,882)

 

 

63,290

Holt

 

 

34,612

 

 

(20,103)

 

 

14,509

Cortez

 

 

20,878

 

 

(10,879)

 

 

9,999

Other

 

 

483,643

 

 

(343,722)

 

 

139,921

Total production stage royalty interests

 

 

844,029

 

 

(496,257)

 

 

347,772

Total production stage stream and royalty interests

 

 

2,779,725

 

 

(771,902)

 

 

2,007,823

 

 

 

 

 

 

 

 

 

 

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:

 

 

 

 

 

 

 

 

 

Pascua-Lama

 

 

380,657

 

 

 —

 

 

380,657

Cortez

 

 

59,803

 

 

 —

 

 

59,803

Other

 

 

63,811

 

 

 —

 

 

63,811

Total development stage royalty interests

 

 

504,271

 

 

 —

 

 

504,271

Total development stage stream and royalty interests

 

 

692,029

 

 

 —

 

 

692,029

Total exploration stage royalty interests

 

 

152,746

 

 

 —

 

 

152,746

Total stream and royalty interests

 

$

3,624,500

 

$

(771,902)

 

$

2,852,598

 

 

 

 

 

 

 

 

 

 

 

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

    

Cost

    

Accumulated Depletion

    

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:

 

 

 

 

 

 

 

 

 

Pascua-Lama

 

 

380,657

 

 

 —

 

 

380,657

Cortez

 

 

59,803

 

 

 —

 

 

59,803

Other

 

 

63,811

 

 

 —

 

 

63,811

Total development stage royalty interests

 

 

504,271

 

 

 —

 

 

504,271

Total development stage stream and royalty interests

 

 

692,029

 

 

 —

 

 

692,029

Total exploration stage royalty interests

 

 

152,746

 

 

 —

 

 

152,746

Total stream and royalty interests

 

$

3,624,495

 

$

(732,239)

 

$

2,892,256

 

DEBT (Tables)
Schedule of non-current debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2017

 

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

 

$

(22,206)

 

$

(2,318)

 

$

345,476

 

$

370,000

 

$

(25,251)

 

$

(2,646)

 

$

342,103

Revolving credit facility

 

 

200,000

 

 

 —

 

 

(5,704)

 

 

194,296

 

 

250,000

 

 

 —

 

 

(5,933)

 

 

244,067

Total debt

 

$

570,000

 

$

(22,206)

 

$

(8,022)

 

$

539,772

 

$

620,000

 

$

(25,251)

 

$

(8,579)

 

$

586,170

 

REVENUE (Tables)
Schedule of revenue

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30, 

 

September 30, 

 

    

2017

    

2016

 

 

 

(Amounts in thousands)

Stream interests

 

$

78,762

 

$

85,504

Royalty interests

 

 

33,714

 

 

32,443

Total revenue

 

$

112,476

 

$

117,947

 

STOCK-BASED COMPENSATION (Tables)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30, 

 

September 30, 

 

 

2017

    

2016

 

 

 

(Amounts in thousands)

Stock options

 

$

91

 

$

108

Stock appreciation rights

 

 

488

 

 

468

Restricted stock

 

 

1,426

 

 

1,374

Performance stock

 

 

368

 

 

2,194

Total stock-based compensation expense

 

$

2,373

 

$

4,144

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

September 30, 

 

 

September 30, 

 

 

 

2017

    

 

2016

 

 

 

(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 September 30, 2017, 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

 

$

473

 

 

2.0

Stock appreciation rights

 

 

3,627

 

 

2.3

Restricted stock

 

 

7,684

 

 

3.4

Performance stock

 

 

2,790

 

 

2.1

 

EARNINGS PER SHARE ("EPS") (Tables)
Summary of the effects of dilutive securities on diluted EPS

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30, 

 

September 30, 

 

    

2017

    

2016

 

 

 

(in thousands, except per share data)

Net income available to Royal Gold common stockholders

 

$

28,631

 

$

29,787

Weighted-average shares for basic EPS

 

 

65,235,496

 

 

65,116,686

Effect of other dilutive securities

 

 

169,184

 

 

164,218

Weighted-average shares for diluted EPS

 

 

65,404,680

 

 

65,280,904

Basic earnings per share

 

$

0.44

 

$

0.46

Diluted earnings per share

 

$

0.44

 

$

0.46

 

INCOME TAXES (Tables)
Schedule of income tax expense and effective tax rate

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30, 

 

September 30, 

 

    

2017

    

2016

 

 

(Amounts in thousands, except rate)

Income tax expense

 

$

7,544

 

$

7,188

Effective tax rate

 

 

22.1%

 

 

21.1%

 

SEGMENT INFORMATION (Tables)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2017

 

As of June 30, 2017

 

    

Stream interest

    

Royalty interest

    

Total stream
and royalty
interests, net

    

Stream interest

    

Royalty
interest

    

Total stream
and royalty
interests, net

Canada

 

$

842,935

 

$

220,160

 

$

1,063,095

 

$

852,035

 

$

221,618

 

$

1,073,653

Dominican Republic

 

 

530,603

 

 

 —

 

 

530,603

 

 

543,256

 

 

 —

 

 

543,256

Chile

 

 

344,460

 

 

453,369

 

 

797,829

 

 

348,778

 

 

453,369

 

 

802,147

Africa

 

 

117,780

 

 

553

 

 

118,333

 

 

123,760

 

 

572

 

 

124,332

Mexico

 

 

 —

 

 

103,039

 

 

103,039

 

 

 —

 

 

105,889

 

 

105,889

United States

 

 

 —

 

 

167,430

 

 

167,430

 

 

 —

 

 

168,378

 

 

168,378

Australia

 

 

 —

 

 

36,563

 

 

36,563

 

 

 —

 

 

37,409

 

 

37,409

Other

 

 

12,031

 

 

23,675

 

 

35,706

 

 

12,030

 

 

25,162

 

 

37,192

Total

 

$

1,847,809

 

$

1,004,789

 

$

2,852,598

 

$

1,879,859

 

$

1,012,397

 

$

2,892,256

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2017

 

Three Months Ended September 30, 2016

 

    

Revenue

    

Cost of sales

    

Net revenue

    

Revenue

    

Cost of sales

    

Net revenue

Streams:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

$

31,952

 

$

9,223

 

$

22,729

 

$

38,386

 

$

12,578

 

$

25,808

Dominican Republic

 

 

25,403

 

 

7,588

 

 

17,815

 

 

20,950

 

 

5,896

 

 

15,054

Chile

 

 

12,337

 

 

1,812

 

 

10,525

 

 

20,169

 

 

2,998

 

 

17,171

Africa

 

 

9,070

 

 

1,796

 

 

7,274

 

 

5,999

 

 

1,190

 

 

4,809

Total streams

 

$

78,762

 

$

20,419

 

$

58,343

 

$

85,504

 

$

22,662

 

$

62,842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalties:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mexico

 

$

10,897

 

$

 —

 

$

10,897

 

$

9,596

 

$

 —

 

$

9,596

United States

 

 

10,429

 

 

 —

 

 

10,429

 

 

9,706

 

 

 —

 

 

9,706

Canada

 

 

6,092

 

 

 —

 

 

6,092

 

 

6,188

 

 

 —

 

 

6,188

Australia

 

 

3,320

 

 

 —

 

 

3,320

 

 

3,462

 

 

 —

 

 

3,462

Africa

 

 

462

 

 

 —

 

 

462

 

 

824

 

 

 —

 

 

824

Chile

 

 

 —

 

 

 —

 

 

 —

 

 

489

 

 

 —

 

 

489

Other

 

 

2,514

 

 

 —

 

 

2,514

 

 

2,178

 

 

 —

 

 

2,178

Total royalties

 

$

33,714

 

$

 —

 

$

33,714

 

$

32,443

 

$

 —

 

$

32,443

Total streams and royalties

 

$

112,476

 

$

20,419

 

$

92,057

 

$

117,947

 

$

22,662

 

$

95,285

 

FAIR VALUE MEASUREMENTS (Tables)
Schedule of financial assets measured at fair value on recurring basis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2017

 

 

Carrying

 

Fair Value

 

    

Amount

    

Total

    

Level 1

    

Level 2

    

Level 3

Assets (In thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable equity securities(1)

 

$

4,998

 

$

4,998

 

$

4,998

 

$

 —

 

$

 —

Total assets

 

 

 

 

$

4,998

 

$

4,998

 

$

 —

 

$

 —

Liabilities (In thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt(2)

 

$

424,794

 

$

409,538

 

$

409,538

 

$

 —

 

$

 —

Total liabilities

 

 

 

 

$

409,538

 

$

409,538

 

$

 —

 

$

 —


(1)

Available-for-sale securities of $3.9 million included within Other assets and trading securities of $1.1 million included within Prepaid expenses and other 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.

 

OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ISSUED AND RECENTLY ADOPTED ACCOUNTING STANDARDS (Details)
3 Months Ended
Sep. 30, 2017
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
STREAM AND ROYALTY INTERESTS, NET - Summary (Details) (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2017
Jun. 30, 2017
Cost
$ 3,624,500 
$ 3,624,495 
Accumulated Depletion
(771,902)
(732,239)
Net
2,852,598 
2,892,256 
Production stage stream interests
 
 
Cost
1,935,696 
1,935,696 
Accumulated Depletion
(275,645)
(243,595)
Net
1,660,051 
1,692,101 
Production stage stream interests |
Mount Milligan
 
 
Cost
790,635 
790,635 
Accumulated Depletion
(123,427)
(114,327)
Net
667,208 
676,308 
Production stage stream interests |
Pueblo Viejo
 
 
Cost
610,404 
610,404 
Accumulated Depletion
(79,801)
(67,149)
Net
530,603 
543,255 
Production stage stream interests |
Andacollo
 
 
Cost
388,182 
388,182 
Accumulated Depletion
(43,722)
(39,404)
Net
344,460 
348,778 
Production stage stream interests |
Wassa and Prestea
 
 
Cost
146,475 
146,475 
Accumulated Depletion
(28,695)
(22,715)
Net
117,780 
123,760 
Production stage royalty interests
 
 
Cost
844,029 
844,024 
Accumulated Depletion
(496,257)
(488,644)
Net
347,772 
355,380 
Production stage royalty interests |
Voisey's Bay
 
 
Cost
205,724 
205,724 
Accumulated Depletion
(85,671)
(85,671)
Net
120,053 
120,053 
Production stage royalty interests |
Penasquito
 
 
Cost
99,172 
99,172 
Accumulated Depletion
(35,882)
(34,713)
Net
63,290 
64,459 
Production stage royalty interests |
Holt
 
 
Cost
34,612 
34,612 
Accumulated Depletion
(20,103)
(19,669)
Net
14,509 
14,943 
Production stage royalty interests |
Cortez
 
 
Cost
20,878 
20,873 
Accumulated Depletion
(10,879)
(10,633)
Net
9,999 
10,240 
Production stage royalty interests |
Other
 
 
Cost
483,643 
483,643 
Accumulated Depletion
(343,722)
(337,958)
Net
139,921 
145,685 
Total production stage stream and royalty interests
 
 
Cost
2,779,725 
2,779,720 
Accumulated Depletion
(771,902)
(732,239)
Net
2,007,823 
2,047,481 
Development stage stream interests
 
 
Cost
187,758 
187,758 
Net
187,758 
187,758 
Development stage stream interests |
Rainy River
 
 
Cost
175,727 
175,727 
Net
175,727 
175,727 
Development stage stream interests |
Other
 
 
Cost
12,031 
12,031 
Net
12,031 
12,031 
Development stage royalty interests
 
 
Cost
504,271 
504,271 
Net
504,271 
504,271 
Development stage royalty interests |
Cortez
 
 
Cost
59,803 
59,803 
Net
59,803 
59,803 
Development stage royalty interests |
Pascua-Lama
 
 
Cost
380,657 
380,657 
Net
380,657 
380,657 
Development stage royalty interests |
Other
 
 
Cost
63,811 
63,811 
Net
63,811 
63,811 
Total development stage stream and royalty interests
 
 
Cost
692,029 
692,029 
Net
692,029 
692,029 
Exploration stage royalty interests
 
 
Cost
152,746 
152,746 
Net
$ 152,746 
$ 152,746 
DEBT (Details) (USD $)
3 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Jun. 30, 2017
Jun. 30, 2012
Long-term debt disclosure
 
 
 
 
Principal
$ 570,000,000 
 
$ 620,000,000 
 
Unamortized Discount
(22,206,000)
 
(25,251,000)
 
Debt Issuance Costs
(8,022,000)
 
(8,579,000)
 
Total debt
539,772,000 
 
586,170,000 
 
Repayment of revolving credit facility
50,000,000 
 
 
 
Borrowings from revolving credit facility
 
70,000,000 
 
 
2019 Notes
 
 
 
 
Long-term debt disclosure
 
 
 
 
Principal
370,000,000 
 
370,000,000 
 
Unamortized Discount
(22,206,000)
 
(25,251,000)
 
Debt Issuance Costs
(2,318,000)
 
(2,646,000)
 
Total debt
345,476,000 
 
342,103,000 
 
Principal amount of debt issued
 
 
 
370,000,000 
Interest rate on convertible senior notes (as a percent)
 
 
 
2.875% 
Interest expense recognized
6,000,000 
5,800,000 
 
 
Credit Facility
 
 
 
 
Long-term debt disclosure
 
 
 
 
Principal
200,000,000 
 
250,000,000 
 
Debt Issuance Costs
(5,704,000)
 
(5,933,000)
 
Total debt
194,296,000 
 
244,067,000 
 
Interest expense recognized
1,800,000 
1,900,000 
 
 
Maximum availability under the revolving credit facility
1,000,000,000 
 
 
 
Outstanding amount under credit facility
200,000,000 
 
 
 
Available under the revolving credit facility
800,000,000 
 
 
 
Effective interest rate (as percent)
3.07% 
 
 
 
Repayment of revolving credit facility
$ 50,000,000 
 
 
 
LIBOR |
Credit Facility
 
 
 
 
Long-term debt disclosure
 
 
 
 
Basis spread on interest rate (as a percent)
1.75% 
 
 
 
REVENUE (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Sep. 30, 2017
Sep. 30, 2016
REVENUE
 
 
Stream interests
$ 78,762 
$ 85,504 
Royalty interests
33,714 
32,443 
Total revenue
$ 112,476 
$ 117,947 
STOCK-BASED COMPENSATION (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Stock-based compensation
 
 
Stock-based compensation expense
$ 2,373 
$ 4,144 
Stock-based compensation awards granted (in shares)
162,510 
145,260 
Stock options
 
 
Stock-based compensation
 
 
Stock-based compensation expense
91 
108 
Stock options granted (in shares)
6,858 
7,200 
Unrecognized compensation expense
473 
 
Weighted-average vesting period (years)
2 years 
 
Stock appreciation rights
 
 
Stock-based compensation
 
 
Stock-based compensation expense
488 
468 
Other than options granted (in shares)
71,262 
63,340 
Unrecognized compensation expense
3,627 
 
Weighted-average vesting period (years)
2 years 3 months 18 days 
 
Restricted stock
 
 
Stock-based compensation
 
 
Stock-based compensation expense
1,426 
1,374 
Other than options granted (in shares)
50,380 
44,890 
Unrecognized compensation expense
7,684 
 
Weighted-average vesting period (years)
3 years 4 months 24 days 
 
Performance stock
 
 
Stock-based compensation
 
 
Stock-based compensation expense
368 
2,194 
Other than options granted (in shares)
34,010 
29,830 
Unrecognized compensation expense
$ 2,790 
 
Weighted-average vesting period (years)
2 years 1 month 6 days 
 
EARNINGS PER SHARE ("EPS") (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended
Sep. 30, 2017
Sep. 30, 2016
EARNINGS PER SHARE ("EPS")
 
 
Net income (loss) available to Royal Gold common stockholders
$ 28,631 
$ 29,787 
Weighted-average shares for basic EPS
65,235,496 
65,116,686 
Effect of other dilutive securities (in shares)
169,184 
164,218 
Weighted-average shares for diluted EPS
65,404,680 
65,280,904 
Basic earnings per share (in dollars per share)
$ 0.44 
$ 0.46 
Diluted earnings per share (in dollars per share)
$ 0.44 
$ 0.46 
Initial conversion price (in dollars per share)
$ 102.91 
 
INCOME TAXES (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Sep. 30, 2017
Sep. 30, 2016
INCOME TAXES
 
 
Income tax expense
$ 7,544 
$ 7,188 
Effective tax rate (as a percent)
22.10% 
21.10% 
SEGMENT INFORMATION (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Sep. 30, 2017
segment
Sep. 30, 2016
Jun. 30, 2017
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Number of reportable segments
 
 
Value of stream and royalty interests, net
$ 2,852,598 
 
$ 2,892,256 
Revenue
112,476 
117,947 
 
Cost of sales
20,419 
22,662 
 
Net revenue
92,057 
95,285 
 
Canada
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
1,063,095 
 
1,073,653 
Dominican Republic
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
530,603 
 
543,256 
Chile
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
797,829 
 
802,147 
Africa
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
118,333 
 
124,332 
Mexico
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
103,039 
 
105,889 
United States
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
167,430 
 
168,378 
Australia
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
36,563 
 
37,409 
Other
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
35,706 
 
37,192 
Stream interest
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
1,847,809 
 
1,879,859 
Revenue
78,762 
85,504 
 
Cost of sales
20,419 
22,662 
 
Net revenue
58,343 
62,842 
 
Stream interest |
Canada
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
842,935 
 
852,035 
Revenue
31,952 
38,386 
 
Cost of sales
9,223 
12,578 
 
Net revenue
22,729 
25,808 
 
Stream interest |
Dominican Republic
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
530,603 
 
543,256 
Revenue
25,403 
20,950 
 
Cost of sales
7,588 
5,896 
 
Net revenue
17,815 
15,054 
 
Stream interest |
Chile
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
344,460 
 
348,778 
Revenue
12,337 
20,169 
 
Cost of sales
1,812 
2,998 
 
Net revenue
10,525 
17,171 
 
Stream interest |
Africa
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
117,780 
 
123,760 
Revenue
9,070 
5,999 
 
Cost of sales
1,796 
1,190 
 
Net revenue
7,274 
4,809 
 
Stream interest |
Other
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
12,031 
 
12,030 
Royalty interest
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
1,004,789 
 
1,012,397 
Revenue
33,714 
32,443 
 
Net revenue
33,714 
32,443 
 
Royalty interest |
Canada
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
220,160 
 
221,618 
Revenue
6,092 
6,188 
 
Net revenue
6,092 
6,188 
 
Royalty interest |
Chile
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
453,369 
 
453,369 
Revenue
 
489 
 
Net revenue
 
489 
 
Royalty interest |
Africa
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
553 
 
572 
Revenue
462 
824 
 
Net revenue
462 
824 
 
Royalty interest |
Mexico
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
103,039 
 
105,889 
Revenue
10,897 
9,596 
 
Net revenue
10,897 
9,596 
 
Royalty interest |
United States
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
167,430 
 
168,378 
Revenue
10,429 
9,706 
 
Net revenue
10,429 
9,706 
 
Royalty interest |
Australia
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
36,563 
 
37,409 
Revenue
3,320 
3,462 
 
Net revenue
3,320 
3,462 
 
Royalty interest |
Other
 
 
 
Long Lived Assets and Pre-Tax Income by Geographical Information
 
 
 
Value of stream and royalty interests, net
23,675 
 
25,162 
Revenue
2,514 
2,178 
 
Net revenue
$ 2,514 
$ 2,178 
 
FAIR VALUE MEASUREMENTS (Details) (Recurring basis, USD $)
Sep. 30, 2017
Other assets
 
Assets:
 
Marketable equity securities
$ 3,900,000 
Prepaid expenses and other
 
Assets:
 
Marketable equity securities
1,100,000 
Carrying Amount
 
Assets:
 
Marketable equity securities
4,998,000 
Liabilities:
 
Debt
424,794,000 
Amount of equity component of convertible notes
77,000,000 
Fair Value
 
Assets:
 
Marketable equity securities
4,998,000 
Total assets
4,998,000 
Liabilities:
 
Debt
409,538,000 
Total liabilities
409,538,000 
Level 1
 
Assets:
 
Marketable equity securities
4,998,000 
Total assets
4,998,000 
Liabilities:
 
Debt
409,538,000 
Total liabilities
$ 409,538,000 
COMMITMENTS AND CONTINGENCIES (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Sep. 30, 2017
Ilovica
 
Commitments and Contingencies
 
Scheduled payment amount
$ 163.75 
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%