Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2019 |
Jun. 30, 2019 |
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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 | 65,495,787 | 65,440,492 |
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS |
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OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS | |||||||||||||
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS | 1. OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 metal streams, royalties and similar interests. We seek to acquire existing stream and royalty interests or to finance mining 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. A royalty is a non-operating interest in a mining project that provides the right to revenue or metals produced from the project after deducting contractually 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, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2020. 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, 2019 filed with the Securities and Exchange Commission on August 8, 2019 (“Fiscal 2019 10-K”). Certain amounts in the prior period consolidated balance sheet have been reclassified for comparative purposes to conform with the presentation in the current period balance sheet. Reclassified amounts were not material. Recently Adopted Accounting Standards Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which requires recognition of right-of-use assets and lease payment liabilities on the balance sheet by lessees for all leases with terms greater than twelve months. Classification of leases as either a finance or operating lease will determine the recognition, measurement and presentation of expenses. ASU 2016-02 also requires certain quantitative and qualitative disclosures about material leasing arrangements. Subsequently, in July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”). ASU 2018-11 provides an additional modified retrospective transition method for adopting ASU 2016-02, which eliminates the need for adjusting prior period comparable financial statements prepared under legacy lease accounting guidance. ASU 2016-02, together with ASU 2018-11, is effective for the Company July 1, 2019. The Company adopted the new guidance using the modified retrospective approach set forth in ASU 2018-11, with the date of initial application on July 1, 2019. Comparative reporting periods were not adjusted upon adoption. As permitted under the transition guidance, the Company has elected to use the following practical expedients at transition:
In addition, the Company has elected to use the following practical expedients at and subsequent to adoption in accordance with ASU 2016-02:
The Company’s significant lease arrangements relate to its office spaces. These arrangements are for leases of assets such as corporate office space and office equipment. Through the implementation process, the Company evaluated its lease arrangements, which included an analysis of contracts, and updated its internal controls and processes that are necessary to track and calculate the additional accounting and disclosure requirements as required upon adoption of ASU 2016-02. Upon adoption, the new standard had an insignificant impact on the Company’s consolidated balance sheets as of September 30, 2019. Adoption of the new standard resulted in the recognition of $2.4 million of right-of-use assets on our consolidated balance sheets with an offsetting $2.4 million of lease liabilities for operating leases. The current portion of our right of use assets are included in Prepaid expenses and other, while the long-term portion is included in Other assets on our consolidated balance sheets. The current portion of the offsetting lease liabilities are included in Other current liabilities, while the long-term portion is included in Other long-term liabilities on our consolidated balance sheets. The Company did not have any finance leases as of September 30, 2019. The adoption of ASU 2016-02 did not impact accumulated losses, our consolidated statements of operations and comprehensive income, and our consolidated statements of cash flows.
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ACQUISITION |
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ACQUISITION | |
ACQUISITION | 2. ACQUISITION Castelo de Sonhos royalty acquisition In August 2019, a subsidiary of the Company entered into an agreement with TriStar Gold Inc. and its subsidiaries (together “TriStar”) to acquire (i) up to a 1.5% net smelter return (“NSR”) royalty on the Castelo de Sonhos gold project (“CDS”), located in Brazil, and (ii) warrants to purchase up to 19,640,000 common shares of TriStar. Total consideration is $7.5 million and is payable over three payments, of which $4.5 million was paid in August 2019. The second and third payments of $1.5 million each are subject to satisfaction of certain conditions and are payable by November 30, 2019 and March 31, 2020. The NSR royalty is incrementally earned pro-rata with the funding schedule while the warrants to purchase TriStar common shares will be issued pro-rata with the funding schedule. The CDS royalty acquisition has been accounted for as an asset acquisition. The $4.4 million paid as part of the aggregate funding schedule, plus direct acquisition costs, have been recorded as an exploration stage royalty interest within Stream and royalty interests, net on our consolidated balance sheets. Any future funding of the second and third payments, plus any direct acquisition costs, will also be recorded as an exploration stage royalty interest. The warrants have been recorded within Other assets on our consolidated balance sheets and have a carrying value of approximately $0.8 million as of September 30, 2019. The warrants have been classified as a financial asset instrument and are recorded at fair value at each reporting date using the Black-Scholes model. Any change in fair value of the warrants at subsequent reporting periods will be recorded within Interest and other income on our consolidated statements of operations and comprehensive income. As of September 30, 2019, the Company holds 11,784,000 warrants at an exercise price of C$0.25 per common share with a term of five years. |
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STREAM AND ROYALTY INTERESTS, NET | 3. STREAM AND ROYALTY INTERESTS, NET The following tables summarize the Company’s stream and royalty interests, net as of September 30, 2019 and June 30, 2019.
Mount Milligan The Company’s wholly-owned subsidiary, RGLD Gold AG (“RGLD Gold”), owns the right to purchase 35% of the payable gold and 18.75% of the payable copper produced from the Mount Milligan copper-gold mine in British Columbia, Canada, which is operated by an indirect subsidiary of Centerra Gold Inc. (“Centerra”). The Company’s carrying value for its stream interest at Mount Milligan is $597.9 million as of September 30, 2019. On October 30, 2019, Centerra reported that issues identified with decreasing long-term gold recoveries and increased costs in the short-to medium-term led them to record an impairment charge against their carrying value of the Mount Milligan mine under applicable accounting standards, and that it has begun a comprehensive technical review of the operation with the objective of publishing an updated 43-101 technical report in the coming months. According to Centerra, the updated 43-101 report will include studies to optimize the economics of the mine as well as incorporate results of exploration drilling through calendar 2019. While Centerra acknowledged that the extent of any changes in reserves and mineralized material cannot be precisely determined until all relevant studies and modeling have been completed, it expects that the mineral reserves and mineralized material at Mount Milligan will be materially reduced. A significant reduction in reserves and mineralized material could be an indicator of potential impairment for Royal Gold. The financial impairment taken by Centerra does not impact the mine operating performance, and, further, a significant reduction in reserves and mineralized material at Mount Milligan may not result in an impairment given current high gold prices and our low depletion rates for the Mount Milligan stream interest. It is unclear at this point what impact, if any, the results of Centerra’s technical report work will have on the carrying value of our stream interest at Mount Milligan. The Company will continue to monitor these developments at Mount Milligan in subsequent quarterly reporting periods. Other During the quarter ended June 30, 2019, the Company was made aware of insolvency proceedings at one of our non-principal producing properties (El Toqui), and during the quarter ended September 30, 2019, the Company was made aware of insolvency proceedings at one of our evaluation stage properties. The outcome of these insolvency proceedings may impact our royalty interests and the associated carrying values, which are approximately $1.4 million (El Toqui) and $2.7 million (evaluation stage interest) as of September 30, 2019. The Company continues to monitor these insolvency proceedings as part of our regular asset impairment analysis. Based on the results of these insolvency proceedings, the Company could determine that a future write-down of either interest to an amount less than the current carrying value or to zero is necessary. |
MARKETABLE EQUITY SECURITIES |
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MARKETABLE EQUITY SECURITIES | 4. MARKETABLE EQUITY SECURITIES As of September 30, 2019, the Company’s marketable equity securities include 809,744 common shares of Contango Ore, Inc. (“CORE”), 3,949,575 common shares of Rubicon Minerals Corporation, and warrants to purchase up to 11,784,000 common shares of TriStar. Our marketable equity securities are measured at fair value (Note 11) each reporting period with any changes in fair value recognized in net income. The decrease in fair value of our marketable equity securities was approximately $1.4 million and $1.5 million for the three months ended September 30, 2019 and 2018, respectively, and is included in Fair value changes in equity securities on our consolidated statements of operations and comprehensive income. The carrying value of the Company’s marketable equity securities as of September 30, 2019 and June 30, 2019 was $15.0 million and $16.0 million, respectively, and is included in Other assets on the Company’s consolidated balance sheets. |
DEBT |
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DEBT | 5. DEBT The Company’s debt as of September 30, 2019 and June 30, 2019 consists of the following:
Revolving credit facility On September 20, 2019, the Company entered into a third amendment to our revolving credit facility dated as of June 2, 2017. Under the amendment, the Company’s Swiss subsidiary, RGLD Gold AG, was added as a co-borrower and joint and several obligor, certain of the Company’s Canadian subsidiaries were added as guarantors, and certain equity pledges that previously had been granted in favor of the lenders to support the facility were released, with the result that the facility is now unsecured. As of September 30, 2019, the Company had $170 million outstanding and $830 million available under the revolving credit facility. Royal Gold may repay any borrowings under the revolving credit facility at any time without premium or penalty. As of September 30, 2019, the interest rate on borrowings under the revolving credit facility was LIBOR plus 1.10% for an all-in rate of 3.24%. For the three months ended September 30, 2019 and 2018, interest expense, which includes interest on the outstanding borrowings and the amortization of the debt issuance costs, was $2.2 million and $0.3 million respectively. As discussed in Note 5 to the consolidated financial statements in the Company’s Fiscal 2019 10-K, the Company has financial covenants associated with its revolving credit facility. As of September 30, 2019, the Company was in compliance with each financial covenant. |
REVENUE |
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REVENUE | 6. REVENUE Revenue Recognition Under current ASC 606 – Revenue from Contracts with Customers (“ASC 606”) guidance, a performance obligation is a promise in a contract to transfer control of a distinct good or service (or integrated package of goods and/or services) to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, a performance obligation is satisfied. In accordance with this guidance, revenue attributable to our stream interests and royalty interests is generally recognized at the point in time that control of the related metal production transfers to our customers. The amount of revenue we recognize further reflects the consideration to which we are entitled under the respective stream or royalty agreement. A more detailed summary of our revenue recognition policies for our stream and royalty interests is discussed below. Stream 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 of the metals produced from a mine, at a price determined for the life of the transaction by the purchase agreement. Gold, silver and copper received under our metal streaming agreements are taken into inventory, and then sold primarily using average spot rate gold, silver and copper forward contracts. The sales price for these average spot rate forward contracts is determined by the average daily gold, silver or copper spot prices during the term of the contract, typically a consecutive number of trading days between ten days and three months (depending on the frequency of deliveries under the respective streaming agreement and our sales policy in effect at the time) commencing shortly after receipt and purchase of the metal. We settle our forward sales contracts via physical delivery of the metal to the purchaser (our customer) on the settlement date specified in the contract. Under our forward sales contracts, there is a single performance obligation to sell a contractually specified volume of metal to the purchaser, and we satisfy this obligation at the point in time of physical delivery. Accordingly, revenue from our metal sales is recognized on the date of settlement, which is the date that control, custody and title to the metal transfer to the purchaser. Royalty Interests Royalties are non-operating interests in mining projects that provide the right to a percentage of revenue or metals produced from the project after deducting specified costs, if any. We are entitled to payment for our royalty interest in a mining project based on a contractually specified commodity price (for example, a monthly or quarterly average spot price) for the period in which metal production occurs. As a royalty holder, we act as a passive entity in the production and operations of the mining project, and the third-party operator of the mining project is responsible for all mining activities, including subsequent marketing and delivery of all metal production to their ultimate customer. In all of our material royalty interest arrangements, we have concluded that we transfer control of our interest in the metal production to the operator at the point at which production occurs, and thus, the operator is our customer. We have further determined that the transfer of each unit of metal production comprising our royalty interest to the operator represents a separate performance obligation under the contract, and each performance obligation is satisfied at the point in time of metal production by the operator. Accordingly, we recognize revenue attributable to our royalty interests in the period in which metal production occurs at the specified commodity price per the agreement, net of any contractually allowable offsite treatment, refining, transportation and, if applicable, mining costs. Royalty Revenue Estimates For a small number of our royalty interests, we may not receive, or be entitled to receive, payment information, including production information from the operator, for the period in which metal production occurred prior to issuance of our financial statements. As a result, we may estimate revenue for these royalties based on available information, including public information, from the operator. If adequate information is not available from the operator or from other public sources before we issue our financial statements, the Company will recognize royalty revenue during the period in which the necessary payment information is received. Differences between estimates and actual amounts could differ significantly and are recorded in the period that the actual amounts are known. Please also refer to our “Use of Estimates” accounting policy discussed in our Fiscal 2019 10-K. For the quarter ended September 30, 2019, royalty revenue that was estimated or was attributable to metal production for a period prior to September 30, 2019, was not material. Disaggregation of Revenue We have identified two material revenue sources in our business: stream interests and royalty interests. These identified revenue sources are consistent with our reportable segments as discussed in Note 10. Revenue by metal type attributable to each of our revenue sources is disaggregated as follows:
Revenue attributable to our principal stream and royalty interests is disaggregated as follows:
Please refer to Note 10 for the geographical distribution of our revenue by reportable segment. Contract Receivables Under our forward sales contracts related to our metal streaming arrangements, payment is due from the purchaser on the day of settlement. Accordingly, our metal stream sales contracts do not give rise to a receivable under ASC 606. Under our royalty arrangements, payment is typically due by the royalty payor either (i) monthly, typically thirty days after month-end or (ii) quarterly, typically thirty to sixty days after the respective quarter-end. Revenue related to production that has occurred as of the reporting date but for which payment has not been received represents a receivable (rather than a contract asset) under ASC 606 as payment by the operator is unconditional upon the production of metal. As of September 30, 2019, and June 30, 2019, our royalty receivables were $26.6 million and $20.7 million, respectively. Practical Expedients Utilized Our forward sales contracts related to our metal streaming arrangements are short-term in nature with a term of one year or less. For these contracts, we have utilized the practical expedient allowed in ASC 606 that exempts us from presenting the transaction price allocated to remaining performance obligations (i.e. forecasts of unearned revenue) for contracts with an original expected term of one year or less. Our royalty arrangements generally cover metal production over the life of a mine and, thus, have a contract term that is greater than one year. Under these contracts, variability related to future production volumes and market pricing is allocated entirely to those future production volumes from the mining operation. Consequently, we have utilized an alternative practical expedient allowed in ASC 606 that exempts us from presenting the transaction price allocated to remaining performance obligations (i.e. forecasts of unearned revenue) if the variable consideration in a contract is allocated entirely to a wholly unsatisfied performance obligation. |
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STOCK-BASED COMPENSATION | 7. STOCK-BASED COMPENSATION The Company recognized stock-based compensation expense as follows:
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, 2019 and 2018, the Company granted the following stock-based compensation awards:
As of September 30, 2019, unrecognized compensation expense (expressed in thousands below) and weighted-average vesting period for each of our stock-based compensation awards were as follows:
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EARNINGS PER SHARE ("EPS") |
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EARNINGS PER SHARE ("EPS") | 8. 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:
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INCOME TAXES |
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INCOME TAXES | 9. INCOME TAXES
The decrease in the effective tax rate for the three months ended September 30, 2019, as compared to the three months ended September 30, 2018, was attributable to discrete tax benefits ($32.3 million) primarily related to the remeasurement of certain deferred tax assets and a net step-up in the basis of tax assets due to the enactment of the Federal Act on Tax Reform and AHV Financing in Zug, Switzerland on September 3, 2019. |
SEGMENT INFORMATION |
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SEGMENT INFORMATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | 10. 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:
The Company’s reportable segments for purposes of assessing performance are shown below (amounts in thousands):
A reconciliation of total segment gross profit to the consolidated Income before income taxes is shown below (amounts in thousands):
The Company’s revenue by reportable segment for the three months ended September 30, 2019 and 2018 is geographically distributed as shown in the following table (amounts in thousands):
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FAIR VALUE MEASUREMENTS |
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FAIR VALUE MEASUREMENTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | 11. FAIR VALUE MEASUREMENTS 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.
(1) Included in Other assets 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 multiplied by the quantity of shares held by the Company. The warrants classified within Level 2 of the fair value hierarchy are valued each period using the Black-Scholes model. The warrants are part of the TriStar transaction discussed further in Note 2 and have been classified as a financial asset instrument. The carrying value of the Company’s revolving credit facility (Note 5) approximates fair value as of September 30, 2019. As of September 30, 2019, 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 |
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COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 12. COMMITMENTS AND CONTINGENCIES Khoemacau Silver Stream Acquisition As of September 30, 2019, the Company’s conditional funding schedule for $212 million pursuant to its Khoemacau silver stream acquisition made in February 2019 remains subject to certain conditions. On November 5, 2019, the Company’s wholly-owned subsidiary, RGLD Gold AG, made its first advance payment ($65.8 million) pursuant to the Khoemacau silver stream. Refer to our Fiscal 2019 10-K for further details on the Khoemacau silver stream acquisition. Ilovica Gold Stream Acquisition As of September 30, 2019, 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. |
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS (Policies) |
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OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2020. 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, 2019 filed with the Securities and Exchange Commission on August 8, 2019 (“Fiscal 2019 10-K”). Certain amounts in the prior period consolidated balance sheet have been reclassified for comparative purposes to conform with the presentation in the current period balance sheet. Reclassified amounts were not material. |
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Recently Adopted and Recently Issued Accounting Standards | Recently Adopted Accounting Standards Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), which requires recognition of right-of-use assets and lease payment liabilities on the balance sheet by lessees for all leases with terms greater than twelve months. Classification of leases as either a finance or operating lease will determine the recognition, measurement and presentation of expenses. ASU 2016-02 also requires certain quantitative and qualitative disclosures about material leasing arrangements. Subsequently, in July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”). ASU 2018-11 provides an additional modified retrospective transition method for adopting ASU 2016-02, which eliminates the need for adjusting prior period comparable financial statements prepared under legacy lease accounting guidance. ASU 2016-02, together with ASU 2018-11, is effective for the Company July 1, 2019. The Company adopted the new guidance using the modified retrospective approach set forth in ASU 2018-11, with the date of initial application on July 1, 2019. Comparative reporting periods were not adjusted upon adoption. As permitted under the transition guidance, the Company has elected to use the following practical expedients at transition:
In addition, the Company has elected to use the following practical expedients at and subsequent to adoption in accordance with ASU 2016-02:
The Company’s significant lease arrangements relate to its office spaces. These arrangements are for leases of assets such as corporate office space and office equipment. Through the implementation process, the Company evaluated its lease arrangements, which included an analysis of contracts, and updated its internal controls and processes that are necessary to track and calculate the additional accounting and disclosure requirements as required upon adoption of ASU 2016-02. Upon adoption, the new standard had an insignificant impact on the Company’s consolidated balance sheets as of September 30, 2019. Adoption of the new standard resulted in the recognition of $2.4 million of right-of-use assets on our consolidated balance sheets with an offsetting $2.4 million of lease liabilities for operating leases. The current portion of our right of use assets are included in Prepaid expenses and other, while the long-term portion is included in Other assets on our consolidated balance sheets. The current portion of the offsetting lease liabilities are included in Other current liabilities, while the long-term portion is included in Other long-term liabilities on our consolidated balance sheets. The Company did not have any finance leases as of September 30, 2019. The adoption of ASU 2016-02 did not impact accumulated losses, our consolidated statements of operations and comprehensive income, and our consolidated statements of cash flows. |
STREAM AND ROYALTY INTERESTS, NET (Tables) |
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Schedule of stream and royalty interests |
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DEBT (Tables) |
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Schedule of debt |
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REVENUE (Tables) |
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Summary of disaggregated revenue | Revenue by metal type attributable to each of our revenue sources is disaggregated as follows:
Revenue attributable to our principal stream and royalty interests is disaggregated as follows:
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STOCK-BASED COMPENSATION (Tables) |
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Schedule of recognized stock-based compensation expense |
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Schedule of stock-based compensation awards |
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Schedule of unrecognized compensation expense | As of September 30, 2019, unrecognized compensation expense (expressed in thousands below) and weighted-average vesting period for each of our stock-based compensation awards were as follows:
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EARNINGS PER SHARE ("EPS") (Tables) |
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Summary of the effects of dilutive securities on diluted EPS |
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INCOME TAXES (Tables) |
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Schedule of income tax expense and effective tax rate |
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SEGMENT INFORMATION (Tables) |
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SEGMENT INFORMATION | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of geographical distribution of long-lived assets |
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Schedule of reportable segments for assessing performance | The Company’s reportable segments for purposes of assessing performance are shown below (amounts in thousands):
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Schedule of reconciliation of segment gross profit to consolidated income (loss) | A reconciliation of total segment gross profit to the consolidated Income before income taxes is shown below (amounts in thousands):
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Schedule of revenue by reportable segment geographically distributed | The Company’s revenue by reportable segment for the three months ended September 30, 2019 and 2018 is geographically distributed as shown in the following table (amounts in thousands):
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FAIR VALUE MEASUREMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial assets and liabilities measured at fair value on recurring basis |
(1) Included in Other assets on the Company’s consolidated balance sheets.
|
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS (Details) |
3 Months Ended |
---|---|
Sep. 30, 2019
item
| |
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS | |
Minimum number of metals produced from a mine | 1 |
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS - Recently Adopted Accounting Standards (Details) $ in Millions |
Sep. 30, 2019
USD ($)
|
---|---|
OPERATIONS, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ADOPTED ACCOUNTING STANDARDS | |
Right-of-use assets | $ 2.4 |
Operating lease liabilities | $ 2.4 |
ACQUISITION (Details) $ in Thousands |
1 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
Aug. 31, 2019
USD ($)
payment
shares
|
Sep. 30, 2019
USD ($)
shares
|
Sep. 30, 2018
USD ($)
|
Aug. 31, 2019
$ / shares
|
Jun. 30, 2019
USD ($)
|
|
Acquisitions | |||||
Acquisition consideration paid | $ 4,362 | $ 3 | |||
Investment value | $ 15,000 | $ 16,000 | |||
TriStar | |||||
Acquisitions | |||||
Common stock that can be purchased by warrants (in shares) | shares | 11,784,000 | ||||
CDS | |||||
Acquisitions | |||||
Net smelter return (NSR) (as a percent) | 1.50% | ||||
Acquisition consideration | $ 7,500 | ||||
Number of installments | payment | 3 | ||||
Acquisition consideration paid | $ 4,500 | ||||
First installment | 1,500 | ||||
Second installment | 1,500 | ||||
Acquisition payment, excluding associated costs | $ 4,400 | ||||
CDS | TriStar | |||||
Acquisitions | |||||
Common stock that can be purchased by warrants (in shares) | shares | 19,640,000 | 11,784,000 | |||
Investment value | $ 800 | ||||
Exercise price of warrants | $ / shares | $ 0.25 | ||||
Term of warrants | 5 years |
STREAM AND ROYALTY INTERESTS, NET (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Jun. 30, 2019 |
|
Stream and royalty interests, net | $ 2,305,018 | $ 2,339,316 |
Mount Milligan | ||
Gold streaming interest (as a percent) | 35.00% | |
Copper streaming interest (as a percent) | 18.75% | |
Stream and royalty interests, net | $ 597,900 | |
El Toqui | ||
Stream and royalty interests, net | 1,400 | |
Evaluation stage property | ||
Stream and royalty interests, net | $ 2,700 |
MARKETABLE EQUITY SECURITIES (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Jun. 30, 2019 |
|
Marketable Securities | |||
Fair value changes in equity securities | $ (1,375) | $ (1,468) | |
Investment value | $ 15,000 | $ 16,000 | |
Contango | |||
Marketable Securities | |||
Investment shares owned (in shares) | 809,744 | ||
Rubicon | |||
Marketable Securities | |||
Investment shares owned (in shares) | 3,949,575 | ||
TriStar | |||
Marketable Securities | |||
Common stock that can be purchased by warrants (in shares) | 11,784,000 |
DEBT (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Jun. 30, 2019 |
|
Long-term debt disclosure | |||
Principal | $ 170,000 | $ 220,000 | |
Debt Issuance Costs | (5,405) | (5,446) | |
Total debt | 164,595 | 214,554 | |
Repayment of debt | 50,000 | ||
Credit Facility | |||
Long-term debt disclosure | |||
Principal | 170,000 | 220,000 | |
Debt Issuance Costs | (5,405) | (5,446) | |
Total debt | 164,595 | $ 214,554 | |
Outstanding amount under credit facility | 170,000 | ||
Available under the revolving credit facility | $ 830,000 | ||
Effective interest rate (as percent) | 3.24% | ||
Interest expense recognized | $ 2,200 | $ 300 | |
LIBOR | Credit Facility | |||
Long-term debt disclosure | |||
Basis spread on interest rate (as a percent) | 1.10% |
REVENUE (Details) |
3 Months Ended |
---|---|
Sep. 30, 2019
item
| |
Number of revenue sources | 2 |
Minimum | |
Average sale price determination period | 10 days |
Maximum | |
Average sale price determination period | 3 months |
REVENUE - Metal Disaggregation (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Disaggregation of Revenue | ||
Revenue | $ 118,774 | $ 99,992 |
Stream interests | ||
Disaggregation of Revenue | ||
Revenue | 86,981 | 70,037 |
Stream interests | Gold | ||
Disaggregation of Revenue | ||
Revenue | 72,224 | 59,114 |
Stream interests | Silver | ||
Disaggregation of Revenue | ||
Revenue | 8,436 | 8,720 |
Stream interests | Copper | ||
Disaggregation of Revenue | ||
Revenue | 6,321 | 2,203 |
Royalty interests | ||
Disaggregation of Revenue | ||
Revenue | 31,793 | 29,955 |
Royalty interests | Gold | ||
Disaggregation of Revenue | ||
Revenue | 21,757 | 18,554 |
Royalty interests | Silver | ||
Disaggregation of Revenue | ||
Revenue | 1,829 | 1,352 |
Royalty interests | Copper | ||
Disaggregation of Revenue | ||
Revenue | 2,980 | 3,615 |
Royalty interests | Other | ||
Disaggregation of Revenue | ||
Revenue | $ 5,227 | $ 6,434 |
REVENUE - Property Disaggregation (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Disaggregation of Revenue | ||
Revenue | $ 118,774 | $ 99,992 |
Stream interests | ||
Disaggregation of Revenue | ||
Revenue | 86,981 | 70,037 |
Stream interests | Mount Milligan | ||
Disaggregation of Revenue | ||
Revenue | 30,497 | 8,847 |
Stream interests | Pueblo Viejo | ||
Disaggregation of Revenue | ||
Revenue | 21,618 | 19,486 |
Stream interests | Andacollo | ||
Disaggregation of Revenue | ||
Revenue | 20,604 | 27,743 |
Stream interests | Wassa and Prestea | ||
Disaggregation of Revenue | ||
Revenue | 5,319 | 5,325 |
Stream interests | Rainy River | ||
Disaggregation of Revenue | ||
Revenue | 7,166 | 5,900 |
Stream interests | Other | ||
Disaggregation of Revenue | ||
Revenue | 1,777 | 2,736 |
Royalty interests | ||
Disaggregation of Revenue | ||
Revenue | 31,793 | 29,955 |
Royalty interests | Other | ||
Disaggregation of Revenue | ||
Revenue | 22,956 | 25,715 |
Royalty interests | Penasquito | ||
Disaggregation of Revenue | ||
Revenue | 4,420 | 3,637 |
Royalty interests | Cortez | ||
Disaggregation of Revenue | ||
Revenue | $ 4,417 | $ 603 |
REVENUE - Contract Receivables (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Jun. 30, 2019 |
|
Contract Receivables | ||
Royalty payments monthly due period | 30 days | |
Royalty receivables | $ 26,635 | $ 20,733 |
Minimum | ||
Contract Receivables | ||
Royalty payments quarterly due period | 30 days | |
Maximum | ||
Contract Receivables | ||
Royalty payments quarterly due period | 60 days |
REVENUE - Practical expedients (Details) |
3 Months Ended |
---|---|
Sep. 30, 2019 | |
Practical Expedients | |
Obligation period practical expedient | true |
Transaction price allocated to remaining performance obligations | true |
EARNINGS PER SHARE ("EPS") (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
|
EARNINGS PER SHARE ("EPS") | ||
Net income (loss) available to Royal Gold common stockholders | $ 70,453 | $ 15,008 |
Weighted-average shares for basic EPS | 65,465,611 | 65,374,866 |
Effect of other dilutive securities (in shares) | 150,315 | 122,293 |
Weighted-average shares for diluted EPS | 65,615,926 | 65,497,159 |
Basic earnings per share (in dollars per share) | $ 1.07 | $ 0.23 |
Diluted earnings per share (in dollars per share) | $ 1.07 | $ 0.23 |
INCOME TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
|
INCOME TAXES | ||
Income tax benefit (expense) | $ 23,525 | $ (4,115) |
Effective tax rate (as a percent) | (51.90%) | 25.60% |
Re-measurement of net deferred tax assets and liabilities due to tax legislation | $ (32,300) |
SEGMENT INFORMATION - Reconciliation of total segment gross profit (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
|
SEGMENT INFORMATION | ||
Total segment gross profit | $ 58,903 | $ 39,668 |
Costs and expenses | ||
General and administrative expenses | 7,443 | 9,927 |
Exploration costs | 2,626 | 4,362 |
Depreciation | 53 | 46 |
Operating income (loss) | 48,781 | 25,333 |
Fair value changes in equity securities | (1,375) | (1,468) |
Interest and other income | 775 | 103 |
Interest and other expense | (2,834) | (7,877) |
Income before income taxes | $ 45,347 | $ 16,091 |
FAIR VALUE MEASUREMENTS (Details) - Recurring basis $ in Thousands |
Sep. 30, 2019
USD ($)
|
---|---|
Carrying Amount | |
Assets: | |
Marketable equity securities | $ 14,970 |
Fair Value | |
Assets: | |
Marketable equity securities | 14,970 |
Level 1 | |
Assets: | |
Marketable equity securities | 14,200 |
Level 2 | |
Assets: | |
Marketable equity securities | $ 770 |
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Nov. 05, 2019 |
Sep. 30, 2019 |
|
Commitments and Contingencies | ||
Commitment payment made | $ 65,800 | |
Khoemacau | ||
Commitments and Contingencies | ||
Maximum contribution amount | $ 212,000 | |
Ilovica | ||
Commitments and Contingencies | ||
Maximum future additional payments upon satisfaction of certain conditions | $ 163,750 |