ROYAL GOLD INC, 10-K filed on 8/9/2018
Annual Report
v3.10.0.1
Document and Entity Information - USD ($)
12 Months Ended
Jun. 30, 2018
Aug. 01, 2018
Dec. 31, 2017
Document and Entity Information      
Entity Registrant Name ROYAL GOLD INC    
Entity Central Index Key 0000085535    
Document Type 10-K    
Document Period End Date Jun. 30, 2018    
Amendment Flag false    
Current Fiscal Year End Date --06-30    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Filer Category Large Accelerated Filer    
Entity Public Float     $ 5,335,748,560
Entity Shares Outstanding   65,505,110  
Document Fiscal Year Focus 2018    
Document Fiscal Period Focus FY    
v3.10.0.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2018
Jun. 30, 2017
ASSETS    
Cash and equivalents $ 88,750 $ 85,847
Royalty receivables 26,356 26,886
Income tax receivable 40 22,169
Stream inventory 9,311 7,883
Prepaid expenses and other 1,350 822
Total current assets 125,807 143,607
Stream and royalty interests, net (Note 4) 2,501,117 2,892,256
Other assets 55,092 58,202
Total assets 2,682,016 3,094,065
LIABILITIES    
Accounts payable 9,090 3,908
Dividends payable 16,375 15,682
Income tax payable 18,253 5,651
Withholding taxes payable 3,254 3,425
Other current liabilities 4,411 5,617
Total current liabilities 51,383 34,283
Debt (Note 5) 351,027 586,170
Deferred tax liabilities 91,147 121,330
Uncertain tax positions 33,394 25,627
Other long-term liabilities 13,796 6,391
Total liabilities 540,747 773,801
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 65,360,041 and 65,179,527 shares outstanding, respectively 654 652
Additional paid-in capital 2,192,612 2,185,796
Accumulated other comprehensive (loss) income (1,201) 879
Accumulated (losses) earnings (89,898) 88,050
Total Royal Gold stockholders’ equity 2,102,167 2,275,377
Non-controlling interests 39,102 44,887
Total equity 2,141,269 2,320,264
Total liabilities and equity $ 2,682,016 $ 3,094,065
v3.10.0.1
Consolidated Balance Sheets (Parenthetical) - $ / shares
Jun. 30, 2018
Jun. 30, 2017
Consolidated Balance Sheets    
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued 0 0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized 200,000,000 200,000,000
Common stock, shares outstanding 65,360,041 65,179,527
v3.10.0.1
Consolidated Statements of Operations and Comprehensive (Loss) Income - USD ($)
$ in Thousands
12 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2016
Consolidated Statements of Operations and Comprehensive (Loss) Income      
Revenue $ 459,042 $ 440,814 $ 359,790
Costs and expenses      
Cost of sales 83,839 87,265 70,979
General and administrative 35,464 33,350 31,720
Production taxes 2,268 1,760 3,978
Exploration costs 8,946 12,861 8,601
Depreciation, depletion and amortization 163,696 159,636 141,108
Impairment of stream and royalty interests and royalty receivables 239,364   98,588
Total costs and expenses 533,577 294,872 354,974
Operating (loss) income (74,535) 145,942 4,816
Gain on available-for-sale securities     2,340
Interest and other income 4,170 9,302 3,711
Interest and other expense (34,214) (36,378) (32,625)
(Loss) income before income taxes (104,579) 118,866 (21,758)
Income tax expense (14,772) (26,441) (60,680)
Net (loss) income (119,351) 92,425 (82,438)
Net loss attributable to non-controlling interests 6,217 9,105 5,289
Net (loss) income attributable to Royal Gold common stockholders (113,134) 101,530 (77,149)
Net (loss) income (119,351) 92,425 (82,438)
Adjustments to comprehensive (loss) income, net of tax      
Unrealized change in market value of available-for-sale securities (2,080) 879 5,632
Reclassification adjustment for gains included in net income     (2,340)
Comprehensive (loss) income (121,431) 93,304 (79,146)
Comprehensive loss attributable to non-controlling interests 6,217 9,105 5,289
Comprehensive (loss) income attributable to Royal Gold stockholders $ (115,214) $ 102,409 $ (73,857)
Net (loss) income per share available to Royal Gold common stockholders:      
Basic (loss) earnings per share (in dollars per share) $ (1.73) $ 1.55 $ (1.18)
Basic weighted average shares outstanding (in shares) 65,291,855 65,152,782 65,074,455
Diluted (loss) earnings per share (in dollars per share) $ (1.73) $ 1.55 $ (1.18)
Diluted weighted average shares outstanding (in shares) 65,291,855 65,277,953 65,074,455
Cash dividends declared per common share (in dollars per share) $ 0.99 $ 0.95 $ 0.91
v3.10.0.1
Consolidated Statements of Changes in Equity - USD ($)
$ in Thousands
Common Shares
Additional Paid-In Capital
Accumulated Other Comprehensive Income (Loss)
Accumulated (Losses) Earnings
Noncontrolling Interests
Total
Balance at Jun. 30, 2015 $ 650 $ 2,170,643 $ (3,292) $ 185,121 $ 62,805 $ 2,415,927
Balance (in shares) at Jun. 30, 2015 65,033,547          
Increase (Decrease) in Stockholders' Equity            
Stock-based compensation and related share issuances $ 1 9,138       9,139
Stock-based compensation and related share issuances (in shares) 60,403          
Net income (loss)       (77,149) (5,289) (82,438)
Other comprehensive income (loss)     3,292     3,292
Distributions to non-controlling interests         (647) (647)
Dividends declared       (59,388)   (59,388)
Balance at Jun. 30, 2016 $ 651 2,179,781   48,584 56,869 2,285,885
Balance (in shares) at Jun. 30, 2016 65,093,950          
Increase (Decrease) in Stockholders' Equity            
Stock-based compensation and related share issuances $ 1 8,533       8,534
Stock-based compensation and related share issuances (in shares) 85,577          
Non-controlling interest assignment   (2,518)       (2,518)
Net income (loss)       101,530 (9,105) 92,425
Other comprehensive income (loss)     879     879
Distributions to non-controlling interests         (2,877) (2,877)
Dividends declared       (62,064)   (62,064)
Balance at Jun. 30, 2017 $ 652 2,185,796 879 88,050 44,887 2,320,264
Balance (in shares) at Jun. 30, 2017 65,179,527          
Increase (Decrease) in Stockholders' Equity            
Stock-based compensation and related share issuances $ 2 4,236       4,238
Stock-based compensation and related share issuances (in shares) 180,514          
Contributions from non-controlling interests   2,580     432 3,012
Net income (loss)       (113,134) (6,217) (119,351)
Other comprehensive income (loss)     (2,080)     (2,080)
Dividends declared       (64,814)   (64,814)
Balance at Jun. 30, 2018 $ 654 $ 2,192,612 $ (1,201) $ (89,898) $ 39,102 $ 2,141,269
Balance (in shares) at Jun. 30, 2018 65,360,041          
v3.10.0.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
12 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2016
Cash flows from operating activities:      
Net (loss) income $ (119,351) $ 92,425 $ (82,438)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:      
Depreciation, depletion and amortization 163,696 159,636 141,108
Amortization of debt discount and issuance costs 15,046 13,825 12,985
Non-cash employee stock compensation expense 8,279 9,983 10,039
Impairment of stream and royalty interests 239,364   98,588
Gain on available-for-sale securities     (2,340)
Deferred tax benefit (32,843) 1,556 (4,983)
Other (197) (4,874) (390)
Changes in assets and liabilities:      
Royalty receivables 530 (6,883) 19,508
Stream inventory (1,428) 1,606 (7,203)
Income tax receivable 22,130 (13,056) (14,637)
Prepaid expenses and other assets 2,813 (1,691) (153)
Accounts payable 5,173 (206) (849)
Income tax payable 12,601 2,475 460
Withholding taxes payable (171) 1,411 (2,486)
Uncertain tax positions 7,767 8,631 1,867
Other liabilities 5,415 2,015 235
Net cash provided by operating activities 328,824 266,853 169,311
Cash flows from investing activities:      
Acquisition of stream and royalty interests (11,812) (203,721) (1,346,109)
Repayment of Golden Star term loan 20,000    
Purchase of available-for-sale securities (17,869)    
Andacollo royalty termination     345,000
Golden Star term loan     (20,000)
Sale of available-for-sale securities     11,905
Other (909) 3,605 (309)
Net cash used in investing activities (10,590) (200,116) (1,009,513)
Cash flows from financing activities:      
Repayment of revolving credit facility (250,000) (95,000) (75,000)
Net payments from issuance of common stock (4,042) (2,426) (353)
Common stock dividends (64,118) (61,396) (58,720)
Debt issuance costs (180) (3,340) (1,111)
Borrowings from revolving credit facility   70,000 350,000
Purchase of additional royalty interest from non-controlling interest   (2,518)  
Other 3,009 (2,843) (830)
Net cash (used in) provided by financing activities (315,331) (97,523) 213,986
Net increase (decrease) in cash and equivalents 2,903 (30,786) (626,216)
Cash and equivalents at beginning of period 85,847 116,633 742,849
Cash and equivalents at end of period $ 88,750 $ 85,847 $ 116,633
v3.10.0.1
THE COMPANY
12 Months Ended
Jun. 30, 2018
THE COMPANY  
THE COMPANY

1.  THE COMPANY

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.

v3.10.0.1
ACQUISITIONS
12 Months Ended
Jun. 30, 2018
ACQUISITIONS  
ACQUISITIONS

3.  ACQUISITIONS

Acquisition of Additional Royalty Interest on Mara Rosa

 

On June 29, 2018, Royal Gold, through its wholly-owned subsidiary RG Royalties, LLC, entered into an agreement to purchase a 1.75% Net Smelter Return (“NSR”) royalty on Amarillo Gold’s Mara Rosa gold project in Goias State, Brazil for $10.8 million.   The acquisition is in addition to the 1.00% NRS royalty on the Mara Rosa project previously acquired by International Royalty Corporation, another wholly-owned subsidiary of Royal Gold.  The new Mara Rosa royalty agreement includes a right of first refusal on future financing opportunities based on production from the project.

 

The acquisition of the additional royalty interest on Mara Rosa has been accounted for as an asset acquisition.  The total purchase price of $10.8 million, plus direct transaction costs, has been recorded as an exploration stage royalty interest within Stream and royalty interests, net on our consolidated balance sheets.

 

Acquisition of Contango ORE, Inc. Common Stock

 

On June 28, 2018, Royal Gold acquired 682,556 shares of common stock of Contango ORE, Inc. (“CORE”) for consideration of $26 per share pursuant to a Stock Purchase Agreement (“SPA”) entered into on April 5, 2018 between Royal Gold and certain individual stockholders of CORE.  Royal Gold expects to acquire a second and final tranche of 127,188 shares of CORE common stock pursuant to the SPA during our first or second quarter of fiscal year 2019.

 

The Company has accounted for the CORE common stock as an investment in available-for-sale securities (Note 1), which are included in Other Assets on our consolidated balance sheets.  The Company recorded an unrealized loss on the CORE shares of approximately $1.5 million during fiscal year 2018. 

 

Acquisition of Additional Royalty Interests at Cortez

 

On September 19, 2016, Royal Gold, through its wholly-owned subsidiary, Denver Mining Finance Company, Inc., acquired a 3.75% Net Value Royalty (“NVR”) covering a significant area of Barrick Gold Corporation’s (“Barrick”) Cortez mine, including the Crossroads deposit, from a private party seller for total consideration of $70 million.  Giving effect to this acquisition, Royal Gold’s interests at Cortez Crossroads comprise a 4.52% NVR and a 5% sliding-scale Gross Smelter Return (“GSR”) royalty at current gold prices.  Royal Gold’s interests on production from the Pipeline and South Pipeline deposits as well as portions of the Gap deposit are comprised of a 4.91% NVR and a 5.71% GSR royalty at current gold prices.

 

The acquisition of the additional royalty interests at Cortez has been accounted for as an asset acquisition.  The portion of the acquisition, plus direct transaction costs, attributable to the Pipeline and South Pipeline deposits as well as portions of the Gap deposit ($10.2 million) has been recorded as a production stage royalty interest while the portion of the acquisition attributable to the Crossroads deposit ($59.8 million) has been recorded as a development stage royalty interest.  Both are included within Stream and royalty interests, net, on our consolidated balance sheets.

Acquisition of Gold and Silver Stream at Pueblo Viejo

On September 29, 2015, RGLD Gold AG (“RGLD Gold”), a wholly-owned subsidiary of the Company, closed its Precious Metals Purchase and Sale Agreement with Barrick and its wholly‑owned subsidiary, BGC Holdings Ltd. (“BGC”) for a percentage of the gold and silver production attributable to Barrick’s 60% interest in the Pueblo Viejo mine located in the Dominican Republic.  Pursuant to the Precious Metals Purchase and Sale Agreement, RGLD Gold made a single advance payment of $610 million to BGC as part of the closing.  The transaction was effective as of July 1, 2015 for the gold stream and January 1, 2016 for the silver stream.

BGC will deliver gold to RGLD Gold in amounts equal to 7.50% of Barrick’s interest in the gold produced at the Pueblo Viejo mine until 990,000 ounces of gold have been delivered, and 3.75% of Barrick’s interest in gold produced thereafter.  RGLD Gold will pay BGC 30% of the spot price per ounce of gold delivered until 550,000 ounces of gold have been delivered, and 60% of the spot price per ounce delivered thereafter.  RGLD Gold began receiving gold deliveries during the quarter ended December 31, 2015.

BGC will deliver silver to RGLD Gold in amounts equal to 75% of Barrick’s interest in the silver produced at the Pueblo Viejo mine, subject to a minimum silver recovery of 70%, until 50 million ounces of silver have been delivered, and 37.50% of Barrick’s interest in silver produced thereafter.  RGLD Gold will pay BGC 30% of the spot price per ounce of silver delivered until 23.10 million ounces of silver have been delivered, and 60% of the spot price per ounce of silver delivered thereafter.  RGLD Gold began receiving silver deliveries during the quarter ended March 31, 2016.

The Pueblo Viejo gold and silver stream acquisition has been accounted for as an asset acquisition.  The advance payment of $610 million, plus direct transaction costs, have been recorded as a production stage stream interest within Stream and royalty interests, net on our consolidated balance sheets.  The acquisition cost of the Pueblo Viejo gold and silver stream interest will be depleted using the units of production method, which is estimated using aggregate proven and probable reserves, as provided by Barrick.

Acquisition and Amendment of Gold Stream on Wassa and Prestea

On July 28, 2015, RGLD Gold closed a $130 million gold stream transaction with a wholly‑owned subsidiary of Golden Star Resources Ltd. (together “Golden Star”).  On December 30, 2015, the parties executed an amendment providing for an additional $15 million investment (for a total investment of $145 million) by RGLD Gold.  The Company has no remaining upfront deposit payments associated with the Wassa and Prestea gold stream.

Under the terms of the stream transaction, Golden Star will deliver to RGLD Gold 9.25% of gold produced from the Wassa and Prestea mines, until the earlier of (i) December 31, 2017 or (ii) the date at which the Wassa and Prestea underground projects achieve commercial production.  Effective January 1, 2018, the stream percentage increased to 10.5% of gold produced from the Wassa and Prestea projects until an aggregate 240,000 ounces have been delivered.  Once the applicable delivery threshold is met, the stream percentage will decrease to 5.5% for the remaining life of the mines.

RGLD Gold will pay Golden Star a cash price equal to 20% of the spot price for each ounce of gold delivered at the time of delivery until the applicable delivery threshold is met, and 30% of the spot price for each ounce of gold delivered thereafter.

Also on July 28, 2015 and separate from the stream transaction by RGLD Gold, the Company also funded a $20 million, 4 – year term loan to Golden Star and received warrants to purchase 5 million shares of Golden Star common stock, with a grant date fair value of approximately $0.8 million.  Interest under the term loan is due quarterly at a rate equal to 62.5% of the average daily gold price for the relevant quarter divided by 10,000, but not to exceed 11.5%.  The warrants have a term of four years and an exercise price of $0.27.

 

On June 29, 2018, a subsidiary of Golden Star repaid its $20 million term loan facility, plus accrued interest, to Royal Gold.  Prior to payoff, the term loan was recorded within Other assets on our consolidated balance sheets as of June 30, 2017.  The warrants that were part of the term loan were exercised during the quarter ended September 30, 2017.  The Company sold all of the common shares of Golden Star received upon exercise of the warrants in October 2017

 

The Wassa and Prestea gold stream acquisition has been accounted for as an asset acquisition. The aggregate advance payments of $145 million, plus direct acquisition costs, have been recorded as a production stage stream interest within Stream and royalty interests, net on our consolidated balance sheets.  The acquisition cost of the Wassa and Prestea gold stream interest will be depleted using the units of production method, which is estimated using aggregate proven and probable reserves, as provided by Golden Star.

Acquisition of Gold and Silver Stream at Rainy River

On July 20, 2015, RGLD Gold entered into a $175 million Purchase and Sale Agreement with New Gold, Inc. (“New Gold”), for a percentage of the gold and silver production from the Rainy River Project located in Ontario, Canada (“Rainy River”).  Pursuant to the Purchase and Sale Agreement, RGLD Gold made an advance payment to New Gold, consisting of $100 million on July 20, 2015, and made the final scheduled payment of $75 million in November 2016.  The Company has no further upfront deposit payments associated with the Rainy River gold and silver stream.

Under the Purchase and Sale Agreement, New Gold will deliver to RGLD Gold 6.50% of the gold produced at Rainy River until 230,000 gold ounces have been delivered, and 3.25% thereafter. New Gold also will deliver to RGLD Gold 60% of the silver produced at Rainy River until 3.10 million silver ounces have been delivered, and 30% thereafter. RGLD Gold will pay New Gold 25% of the spot price per ounce of gold and silver at the time of delivery.

The Rainy River gold and silver stream acquisition has been accounted for as an asset acquisition. The aggregate advance payments of $175 million, plus direct transaction costs, have been recorded as a development stage stream interest within Stream and royalty interests, net on our consolidated balance sheets as of June 30, 2017.  New Gold announced commercial production at Rainy River in October 2017.  The Company reclassified the Rainy River stream interest to production stage from development stage during the three months ended December 31, 2017. 

Acquisition of Gold Stream and Termination of Royalty Interest at Carmen de Andacollo

On July 9, 2015, RGLD Gold entered into a Long Term Offtake Agreement (the “Andacollo Stream Agreement”) with Compañía Minera Teck Carmen de Andacollo (“CMCA”), a 90% owned subsidiary of Teck Resources Limited (“Teck”).  Pursuant to the Andacollo Stream Agreement, CMCA will sell and deliver to RGLD Gold 100% of payable gold from the Carmen de Andacollo (“Andacollo”) copper-gold mine located in Chile until 900,000 ounces have been delivered, and 50% thereafter, subject to a fixed payable percentage of 89%.  RGLD Gold made a $525 million advance payment in cash to CMCA upon entry into the Andacollo Stream Agreement, and RGLD Gold will also pay CMCA 15% of the monthly average gold price for the month preceding the delivery date for all gold purchased under the Andacollo Stream Agreement.

The transaction encompasses certain of CMCA’s presently owned mining concessions on the Andacollo mine, as well as any other mining concessions presently owned or acquired by CMCA or any of its affiliates within an approximate 1.5 kilometer area of interest, and certain other mining concessions that CMCA or its affiliates may acquire.  The Andacollo Stream Agreement was effective July 1, 2015, and applies to all final settlements of gold received on or after that date.  Deliveries to RGLD Gold are made monthly, and RGLD Gold began receiving gold deliveries during the quarter ended September 30, 2015.

Also on July 9, 2015, Royal Gold Chile Limitada (“RG Chile”), a wholly owned subsidiary of the Company, entered into a Royalty Termination Agreement with CMCA.  The Royalty Termination Agreement terminated an amended Royalty Agreement originally dated January 12, 2010, which provided RG Chile with a royalty equivalent to 75% of the gold produced from the sulfide portion of the Andacollo mine until 910,000 payable ounces have been produced, and 50% of the gold produced thereafter.  CMCA paid total consideration of $345 million to RG Chile in connection with the Royalty Termination Agreement.  The net carrying value of the Andacollo royalty on the date of termination was approximately $207.5 million.  The royalty termination transaction was taxable in Chile and the United States.

In accordance with relevant guidance from the ASC, the Company determined it should account for the Andacollo Stream Agreement and the Royalty Termination Agreement as a single transaction because both transactions closed on the same date, both transactions were with the same counterparty, and the same mineral interest (gold) was part of both transactions.  As the Company accounted for the Andacollo Stream Agreement and Royalty Termination Agreement as a single transaction, it was further determined, based on the relevant ASC guidance, that no gain will be recognized as part of the transactions. 

The Company accounted for the acquisition of the gold stream interest at Andacollo as an asset acquisition.  For US GAAP financial reporting purposes on the date of acquisition, the Company’s new consolidated carrying value in its stream interest at Andacollo was approximately $388.2 million, which included direct acquisition costs, and has been recorded as a production stage stream interest within Stream and royalty interests, net on our consolidated balance sheets.  The Andacollo gold stream interest will be depleted using the units of production method, which is estimated using aggregate proven and probable reserves, as provided by Teck.

 

v3.10.0.1
STREAM AND ROYALTY INTERESTS, NET
12 Months Ended
Jun. 30, 2018
STREAM AND ROYALTY INTERESTS, NET  
STREAM AND ROYALTY INTERESTS, NET

4. STREAM AND ROYALTY INTERESTS, NET

The following summarizes the Company’s stream and royalty interests as of June 30, 2018 and 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2018 (Amounts in thousands):

    

Cost

    

Accumulated Depletion

    

Impairments

 

Net

Production stage stream interests:

 

 

 

 

 

 

 

 

 

 

 

 

Mount Milligan

 

$

790,635

 

$

(152,833)

 

$

 —

 

$

637,802

Pueblo Viejo

 

 

610,404

 

 

(114,944)

 

 

 —

 

 

495,460

Andacollo

 

 

388,182

 

 

(59,851)

 

 

 —

 

 

328,331

Wassa and Prestea

 

 

146,475

 

 

(41,601)

 

 

 —

 

 

104,874

Rainy River

 

 

175,727

 

 

(4,028)

 

 

 —

 

 

171,699

Total production stage stream interests

 

 

2,111,423

 

 

(373,257)

 

 

 —

 

 

1,738,166

Production stage royalty interests:

 

 

 

 

 

 

 

 

 

 

 

 

Voisey's Bay

 

 

205,724

 

 

(86,933)

 

 

 —

 

 

118,791

Peñasquito

 

 

99,172

 

 

(38,426)

 

 

 —

 

 

60,746

Holt

 

 

34,612

 

 

(21,173)

 

 

 —

 

 

13,439

Cortez

 

 

20,878

 

 

(11,241)

 

 

 —

 

 

9,637

Other

 

 

483,795

 

 

(364,795)

 

 

 —

 

 

119,000

Total production stage royalty interests

 

 

844,181

 

 

(522,568)

 

 

 —

 

 

321,613

Total production stage stream and royalty interests

 

 

2,955,604

 

 

(895,825)

 

 

 —

 

 

2,059,779

 

 

 

 

 

 

 

 

 

 

 

 

 

Development stage stream interests:

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

12,038

 

 

 —

 

 

 —

 

 

12,038

 

 

 

 

 

 

 

 

 

 

 

 

 

Development stage royalty interests:

 

 

 

 

 

 

 

 

 

 

 

 

Cortez

 

 

59,803

 

 

 —

 

 

 —

 

 

59,803

Other

 

 

74,610

 

 

 —

 

 

(284)

 

 

74,326

Total development stage royalty interests

 

 

134,413

 

 

 —

 

 

(284)

 

 

134,129

Total development stage stream and royalty interests

 

 

146,451

 

 

 —

 

 

(284)

 

 

146,167

 

 

 

 

 

 

 

 

 

 

 

 

 

Exploration stage royalty interests:

 

 

 

 

 

 

 

 

 

 

 

 

Pascua-Lama

 

 

416,770

 

 

 —

 

 

(239,080)

 

 

177,690

Other

 

 

117,481

 

 

 —

 

 

 -

 

 

117,481

Total exploration stage royalty interests

 

 

534,251

 

 

 —

 

 

(239,080)

 

 

295,171

Total stream and royalty interests, net

 

$

3,636,306

 

$

(895,825)

 

$

(239,364)

 

$

2,501,117

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

    

Cost

    

Accumulated Depletion

    

Impairments

 

Net

Production stage stream interests:

 

 

 

 

 

 

 

 

 

 

 

 

Mount Milligan

 

$

790,635

 

$

(114,327)

 

$

 —

 

$

676,308

Pueblo Viejo

 

 

610,404

 

 

(67,149)

 

 

 —

 

 

543,255

Andacollo

 

 

388,182

 

 

(39,404)

 

 

 —

 

 

348,778

Wassa and Prestea

 

 

146,475

 

 

(22,715)

 

 

 —

 

 

123,760

Total production stage stream interests

 

 

1,935,696

 

 

(243,595)

 

 

 —

 

 

1,692,101

Production stage royalty interests:

 

 

 

 

 

 

 

 

 

 

 

 

Voisey's Bay

 

 

205,724

 

 

(85,671)

 

 

 —

 

 

120,053

Peñasquito

 

 

99,172

 

 

(34,713)

 

 

 —

 

 

64,459

Holt

 

 

34,612

 

 

(19,669)

 

 

 —

 

 

14,943

Cortez

 

 

20,873

 

 

(10,633)

 

 

 —

 

 

10,240

Other

 

 

483,643

 

 

(337,958)

 

 

 —

 

 

145,685

Total production stage royalty interests

 

 

844,024

 

 

(488,644)

 

 

 —

 

 

355,380

Total production stage stream and royalty interests

 

 

2,779,720

 

 

(732,239)

 

 

 —

 

 

2,047,481

Development stage stream interests:

 

 

 

 

 

 

 

 

 

 

 

 

Rainy River

 

 

175,727

 

 

 —

 

 

 —

 

 

175,727

Other

 

 

12,031

 

 

 —

 

 

 —

 

 

12,031

Total development stage stream interests

 

 

187,758

 

 

 —

 

 

 —

 

 

187,758

Development stage royalty interests:

 

 

 

 

 

 

 

 

 

 

 

 

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, net

 

$

3,624,495

 

$

(732,239)

 

$

 —

 

$

2,892,256

 

Impairment of stream and royalty interests and royalty receivables

In accordance with our impairment accounting policy discussed in Note 1, impairments in the carrying value of each stream or royalty interest are measured and recorded to the extent that the carrying value in each stream or royalty interest exceeds its estimated fair value, which is generally calculated using estimated future discounted cash‑flows.  As part of the Company’s regular asset impairment analysis, the Company determined the presence of impairment indicators and recorded impairment charges for the fiscal years ended June 30, 2018 and 2016 as summarized in the following table and discussed in detail below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year Ended June 30, 

 

    

    

2018

    

2017

    

2016

 

 

 

 

(Amounts in thousands)

Stream:

 

 

 

 

 

 

 

 

 

 

Phoenix Gold

 

 

$

 —

 

$

 —

 

$

75,702

Royalty:

 

 

 

 

 

 

 

 

 

 

Pascua-Lama

 

 

 

239,080

 

 

 —

 

 

 —

Inata

 

 

 

 —

 

 

 —

 

 

11,982

Wolverine

 

 

 

 —

 

 

 —

 

 

5,307

Other

 

 

 

284

 

 

 —

 

 

3,127

Total impairment of stream and royalty interests

 

 

$

239,364

 

$

 —

 

$

96,118

Inata royalty receivable

 

 

 

 

 

 

 —

 

 

2,855

Wolverine royalty receivable

 

 

 

 

 

 

 —

 

 

(385)

Total impairment of stream and royalty interests and royalty receivables

 

 

$

239,364

 

$

 —

 

$

98,588

 

Pascua-Lama

 

We own a 0.78% to 5.45% sliding‑scale NSR royalty on gold and silver on the Chilean portion of the Pascua‑Lama project, which straddles the border between Argentina and Chile, and is owned by Barrick.  The Company owns an additional royalty equivalent to 1.09% of proceeds from copper produced from the Chilean portion of the project, net of allowable deductions, sold on or after January 1, 2017.   

 

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

 

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

 

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

 

As part of the impairment determination, the fair value for Pascua-Lama was estimated by calculating the net present value of the estimated future cash-flows, subject to our royalty interest, expected to be generated by the mining of the Pascua-Lama deposits.  The Company applied a probability factor to its fair value calculation that Barrick will either proceed with an open-pit mine or an underground mine at Pascua.  The estimates of future cash flows were derived from open-pit and underground mine models developed by the Company using various information reported by Barrick.  The metal price assumptions used in the Company’s model were supported by consensus price estimates obtained by a number of industry analysts.  The future cash flows were discounted using a discount rate which reflects specific market risk factors the Company associates with the Pascua-Lama royalty interest.  Following the impairment charge during the three months ended March 31, 2018, the Pascua-Lama royalty interest has a remaining carrying value of $177.7 million as of June 30, 2018.  As a result of Barrick’s reclassification of Pascua-Lama’s reserves to mineralized material, our Pascu-Lama royalty interest was reclassified to exploration stage from development stage during our fiscal year ended June 30, 2018. 

 

Phoenix Gold

RGLD Gold previously owned the right to purchase 6.30% of any gold produced from the Phoenix Gold Project until 135,000 ounces were delivered, and 3.15% thereafter.  The Phoenix Gold Project is located in Red Lake, Ontario, Canada, and owned by Rubicon Minerals Corporation (“Rubicon”).  On January 11, 2016, Rubicon provided an updated geologic model and mineralized material statement for the Phoenix Gold Project, which included a significant reduction in mineralized material compared to previous statements provided by Rubicon.  Rubicon also announced that they were evaluating strategic alternatives, including merger and divestiture opportunities either at the corporate or asset level, obtaining new financing or capital restructurings.  A significant reduction in mineralized material, along with recent decreases in the long‑term metal price assumptions used by the industry, are indicators of impairment.

During the quarter ended March 31, 2016, the Company independently evaluated the updated geologic model and mineralized material statement in an effort to properly assess the recoverability of our carrying value.  The Company’s technical evaluation was completed by internal and external personnel and included an economic analysis of the Phoenix Gold Project and a detailed review of the geological model and mineralized material statement.  Based upon the results of the Company’s review of the updated geological model and mineralized material statement, and other factors, it was determined that our stream interest at the Phoenix Gold Project should be written down to zero as of March 31, 2016, resulting in an impairment charge of $77.7 million. 

Inata

The Company owns a 2.5% gross smelter return royalty on all gold and silver produced from the Inata mine, located in Burkina Faso, West Africa.  The Company’s carrying value for its royalty interest at Inata was approximately $12.0 million as of December 31, 2015.  As part of the Company’s impairment assessment for the three months ended March 31, 2016, the Company was notified of an updated mine plan at Inata, which included a significant reduction in the life of the mine.  Based upon our review of the updated mine plan, our royalty interest was written down to zero as of March 31, 2016.

The Company also had a royalty receivable of approximately $2.8 million associated with past due royalty payments on the Inata interest.  As a result of the operator’s financial and operational difficulties and our review of the updated mine plan at Inata, the Company believes payment of the receivable is uncertain and provided for an allowance against the entire royalty receivable as of March 31, 2016. The Company continues to pursue collection of all past due payments.

Wolverine

The Company owns a 0.00% to 9.445% sliding‑scale NSR royalty on all gold and silver produced from the Wolverine underground mine and milling operation located in Yukon Territory, Canada, and operated by Yukon Zinc Corporation (“Yukon Zinc”).  Prior to our fiscal year ended June 30, 2016, the Company recognized an impairment at Wolverine.  During the quarter ended March 31, 2016, we were made aware of Yukon Zinc’s intentions to no longer recommission the mine.  Based upon the updated developments and limited remaining mineralized material at Wolverine, the Company wrote down the remaining carrying value at Wolverine to zero as of March 31, 2016.

Phoenix Gold Stream Termination

 

On December 20, 2016, the owner of the Phoenix Gold Project, Rubicon, announced a restructuring transaction under Canadian regulations.  As part of the restructuring transaction, RGLD Gold’s gold stream interest was terminated.  In exchange for termination of the gold stream, RGLD Gold received approximately three million common shares of Rubicon and three NSR royalties on properties owned by Rubicon, including a 1.0% NSR on the Phoenix Gold Project.  The fair value of the Rubicon common shares upon exchange was $3.4 million and is recorded within Other assets on our consolidated balance sheets and is accounted for under our available-for-sale accounting policy, which is also discussed in Note 2.  The Company also recognized a corresponding gain on the fair value of the Rubicon common shares received upon exchange.  The gain is recorded within Interest and other income on our consolidated statements of operations and comprehensive (loss) income. 

 

Amendment to Mount Milligan

 

On October 20, 2016, Centerra Gold Inc. (“Centerra”) and Thompson Creek Metals Company Inc. (“Thompson Creek”) completed the Plan of Arrangement (the “Arrangement”) previously announced on July 5, 2016, pursuant to which Centerra acquired all of the issued and outstanding common shares of Thompson Creek.  RGLD Gold’s streaming interest at Mount Milligan was amended (the “amendment”) concurrently with the closing of the Arrangement. 

 

Under the terms of the amendment, RGLD Gold’s 52.25% gold stream at Mount Milligan was amended to a 35% gold stream and an 18.75% copper stream.  RGLD Gold will continue to pay the lesser of $435 per ounce of gold delivered or the prevailing market price when purchased and will pay 15% of the spot price per metric tonne of copper delivered.  Mount Milligan gold in concentrate in transit prior to October 20, 2016, was delivered to RGLD Gold under the previous 52.25% stream.  Under the terms of both the original and amended agreements, there is a maximum of five months between concentrate shipment and final settlement.  Accordingly, RGLD Gold began receiving gold and copper deliveries reflecting the amended stream agreement in April 2017. The Company incurred approximately $7.7 million in direct transaction costs associated with the amendment.  These direct transaction costs have been capitalized as part of the Mount Milligan streaming interest within Stream and royalty interests, net on our consolidated balance sheets.

v3.10.0.1
DEBT
12 Months Ended
Jun. 30, 2018
DEBT  
DEBT

5. DEBT

The Company’s debt as of June 30, 2018 and 2017 consists of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2018

 

As of June 30, 2017

 

   

Principal

   

Unamortized Discount

   

Debt Issuance Costs

   

Total

   

Principal

   

Unamortized Discount

   

Debt Issuance Costs

   

Total

 

 

 

(Amounts in thousands)

 

 

(Amounts in thousands)

Convertible notes due 2019

 

$

370,000

 

$

(12,764)

 

$

(1,316)

 

$

355,920

 

$

370,000

 

$

(25,251)

 

$

(2,646)

 

$

342,103

Revolving credit facility

 

 

 —

 

 

 —

 

 

(4,893)

 

 

(4,893)

 

 

250,000

 

 

 —

 

 

(5,933)

 

 

244,067

Total debt

 

$

370,000

 

$

(12,764)

 

$

(6,209)

 

$

351,027

 

$

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 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.  Generally, we classify debt that is maturing within one year as a current liability.  However, the Company has the intent and ability to settle the principal amount of the 2019 Notes in cash primarily from its available revolving credit facility, a non-current liability, as of June 30, 2018.   

Interest expense recognized on the 2019 Notes for the fiscal years ended June 30, 2018,  2017 and 2016 was approximately $24.5 million, $23.6 million and $22.8 million, respectively. Interest expense recognized includes the contractual coupon interest, the accretion of the debt discount and amortization of the debt issuance costs, and is recorded in Interest and other expense consolidated statements of operations and comprehensive (loss) income.

Revolving credit facility

The Company maintains a $1.0 billion revolving credit facility.  As of June 30, 2018, the Company had no amounts outstanding and $1.0 billion available under the revolving credit facility.  The Company had $250 million outstanding under the revolving credit facility as of June 30, 2017.  Royal Gold may repay borrowings under the revolving credit facility at any time without premium or penalty. 

 

The Company was in compliance with each financial covenant (leverage ratio and interest coverage ratio) under the revolving credit facility as of June 30, 2018.  Interest expense recognized on the revolving credit facility for the fiscal years ended June 30, 2018, 2017 and 2016 was approximately $5.7 million, $9.9 million and $8.1 million, respectively, and included interest on the outstanding borrowings and the amortization of the debt issuance costs.

v3.10.0.1
REVENUE
12 Months Ended
Jun. 30, 2018
REVENUE  
REVENUE

6. REVENUE

Revenue is comprised of the following:

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Year Ended June 30, 

 

    

2018

    

2017

    

2016

 

 

 

(Amounts in thousands)

Stream interests

 

$

324,516

 

$

314,011

 

$

238,028

Royalty interests

 

 

134,526

 

 

126,803

 

 

121,762

Total revenue

 

$

459,042

 

$

440,814

 

$

359,790

 

v3.10.0.1
STOCK-BASED COMPENSATION
12 Months Ended
Jun. 30, 2018
STOCK-BASED COMPENSATION  
STOCK-BASED COMPENSATION

 

 

7. STOCK‑BASED COMPENSATION

In November 2015, shareholders of the Company approved the 2015 Omnibus Long‑Term Incentive Plan (“2015 LTIP”). Under the 2015 LTIP, 2,500,000 shares of common stock have been authorized for future grants to officers, directors, key employees and other persons.  The 2015 LTIP provides for the grant of stock options, unrestricted stock, restricted stock, dividend equivalent rights, SSARs and cash awards. Any of these awards may, but need not, be made as performance incentives.  Stock options granted under the 2015 LTIP may be non‑qualified stock options or incentive stock options.

The Company recognized stock‑based compensation expense as follows:

 

 

 

 

 

 

 

 

 

 

 

 

For the Fiscal Year Ended

 

 

June 30, 

 

    

2018

 

2017

    

2016

 

 

 

(Amounts in thousands)

Stock options

 

$

318

 

$

393

 

$

454

Stock appreciation rights

 

 

1,988

 

 

1,851

 

 

1,687

Restricted stock

 

 

4,487

 

 

3,840

 

 

3,686

Performance stock

 

 

1,486

 

 

3,899

 

 

4,212

Total stock-based compensation expense

 

$

8,279

 

$

9,983

 

$

10,039

 

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

Stock Options and Stock Appreciation Rights

Stock option and SSARs awards are granted with an exercise price equal to the closing market price of the Company’s stock at the date of grant.  Stock option and SSARs awards granted to officers, key employees and other persons vest based on one to three years of continuous service.  Stock option and SSARs awards have 10 year contractual terms.

To determine stock‑based compensation expense for stock options and SSARs, the fair value of each stock option and SSAR is estimated on the date of grant using the Black‑Scholes‑Merton (“Black‑Scholes”) option pricing model for all periods presented.  The Black‑Scholes model requires key assumptions in order to determine fair value.  Those key assumptions during the fiscal year 2018,  2017 and 2016 grants are noted in the following table:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Options

 

SSARs

 

 

 

2018

 

2017

    

2016

    

2018

 

2017

 

2016

 

Weighted-average expected volatility

    

42.2

%  

41.7

%  

36.9

%  

42.4

%  

41.1

%  

36.9

%

Weighted-average expected life in years

 

5.5

 

5.5

 

5.5

 

5.4

 

5.8

 

5.4

 

Weighted-average dividend yield

 

1.10

%  

1.11

%  

1.06

%  

1.10

%  

1.11

%  

1.00

%

Weighted-average risk free interest rate

 

1.8

%  

1.2

%  

1.6

%  

1.8

%  

1.3

%  

1.6

%

 

The Company’s expected volatility is based on the historical volatility of the Company’s stock over the expected option term.  The Company’s expected option term is determined by historical exercise patterns along with other known employee or company information at the time of grant.  The risk free interest rate is based on the zero‑coupon U.S. Treasury bond at the time of grant with a term approximate to the expected option term.

Stock Options

A summary of stock option activity for the fiscal year ended June 30, 2018, is presented below.

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

 

 

    

Weighted-

    

 

 

 

 

 

 

Weighted-

 

Average

 

 

 

 

 

 

 

Average

 

Remaining

 

Aggregate

 

 

Number of

 

Exercise

 

Contractual

 

Intrinsic Value

 

 

Shares

 

Price

 

Life (Years)

 

(in thousands)

Outstanding at July 1, 2017

 

107,825

 

$

64.13

 

  

 

 

  

Granted

 

6,858

 

$

87.42

 

  

 

 

  

Exercised

 

(48,123)

 

$

60.18

 

  

 

 

  

Forfeited

 

(333)

 

$

56.54

 

  

 

 

  

Outstanding at June 30, 2018

 

66,227

 

$

69.35

 

6.2

 

$

1,549

Exercisable at  June 30, 2018

 

48,957

 

$

68.36

 

5.6

 

$

1,199

 

The weighted‑average grant date fair value of options granted during the fiscal years ended June 30, 2018,  2017 and 2016, was $27.12,  $29.54 and $18.05, respectively.  The total intrinsic value of options exercised during the fiscal years ended June 30, 2018,  2017 and 2016, were $1.4 million, $0.5 million, and $0.1 million, respectively.

As of June 30, 2018, there was approximately $0.2 million of total unrecognized stock‑based compensation expense related to non‑vested stock options, which is expected to be recognized over a weighted‑average period of 1.6 years.

SSARs

A summary of SSARs activity for the fiscal year ended June 30, 2018, is presented below.

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

 

 

    

Weighted-

    

 

 

 

 

 

 

Weighted-

 

Average

 

 

 

 

 

 

 

Average

 

Remaining

 

Aggregate

 

 

Number of

 

Exercise

 

Contractual

 

Intrinsic Value

 

 

Shares

 

Price

 

Life (Years)

 

(in thousands)

Outstanding at July 1, 2017

 

424,145

 

$

66.19

 

  

 

 

  

Granted

 

71,262

 

$

87.42

 

  

 

 

  

Exercised

 

(241,421)

 

$

62.52

 

  

 

 

  

Forfeited

 

(1,100)

 

$

85.92

 

  

 

 

  

Outstanding at June 30, 2018

 

252,886

 

$

75.60

 

7.3

 

$

4,360

Exercisable at June 30, 2018

 

125,152

 

$

71.59

 

6.2

 

$

2,659

 

The weighted‑average grant date fair value of SSARs granted during the fiscal years ended June 30, 2018,  2017 and 2016 was $29.17,  $29.76 and $18.35, respectively.  The total intrinsic value of SSARs exercised during the fiscal years ended June 30, 2018,  2017 and 2016, were $6.4 million, $0.2 million, and $0.3 million, respectively.

As of June 30, 2018, there was approximately $2.0 million of total unrecognized stock‑based compensation expense related to non‑vested SSARs, which is expected to be recognized over a weighted‑average period of 1.8 years.

Other Stock‑based Compensation

Performance Shares

During fiscal 2018, officers and certain employees were granted shares of restricted common stock that can be earned only upon the Company’s achievement of certain pre‑defined performance measures.  Specifically, for performance shares granted in fiscal 2018, one‑half of the shares awarded may vest upon the Company’s achievement of annual growth in Net Gold Equivalent Ounces (“Net GEOs”) (“GEO Shares”).  The second one‑half of performance shares granted in fiscal 2018 may vest based on the Company’s total shareholder return (“TSR”) compared to the TSRs of other members of the Market Vectors Gold Miners ETF (GDX) (“TSR Shares”).  GEO Shares and TSR Shares may vest by linear interpolation in a range between zero shares if neither threshold Net GEO and TSR metric is met; to 100% of GEO Shares and TSR Shares awarded if both target Net GEO and TSR metrics are met; to 200% of the Net GEO and TSR shares awarded if both the maximum Net GEO and TSR metrics are met.  The GEO Shares will expire in five years from the date of grant if the performance measure is not met, while the TSR Shares will expire in three years from the date of grant if the TSR market condition and three year service condition are not met.

The Company measures the fair value of the GEO Shares based upon the market price of our common stock as of the date of grant.  In accordance with ASC 718, the measurement date for the GEO Shares will be determined at such time that the performance goals are attained or that it is probable they will be attained.  At such time that it is probable that a performance condition will be achieved, compensation expense will be measured by the number of shares that will ultimately be earned based on the grant date market price of our common stock.  For shares that were previously estimated to be probable of vesting and are no longer deemed to be probable of vesting, compensation expense is reversed during the period in which it is determined they are no longer probable of vesting.  Interim recognition of compensation expense will be made at such time as management can reasonably estimate the number of shares that will be earned.

In accordance with ASC 718, provided the market condition within the TSR Shares, the Company measured the grant date fair value using a Monte Carlo valuation model.  The fair value of the TSR Shares ($64.67 per share) is multiplied by the target number (100%) of TSR Shares granted to determine total stock‑based compensation expense.  Total stock‑based compensation expense of the TSR Shares is amortized on a straight‑line basis over the requisite service period, or three years.  Stock‑based compensation expense for the TSR Shares is recognized provided the requisite service period is rendered, regardless of when, if ever, the TSR market condition is satisfied.  The Company will reverse previously recognized stock‑based compensation expense attributable to the TSR Shares only if the requisite service period is not rendered.

A summary of the status of the Company’s non‑vested Performance Shares at maximum (200%) attainment for the fiscal year ended June 30, 2018, is presented below:

 

 

 

 

 

 

 

    

 

    

Weighted-

 

 

 

 

Average

 

 

Number of

 

Grant Date

 

 

Shares

 

Fair Value

Non-vested at July 1, 2017

 

233,845

 

$

61.07

Granted

 

68,020

 

$

76.20

Vested

 

(70,046)

 

$

68.83

Forfeited

 

(13,030)

 

$

60.76

Non-attainment

 

(34,125)

 

$

71.77

Non-vested at June 30, 2018

 

184,664

 

$

61.75

 

As of June 30, 2018, total unrecognized stock‑based compensation expense related to Performance Shares was approximately $1.5 million, which is expected to be recognized over the average remaining vesting period of 1.8 years.

Restricted Stock

Officers, non‑executive directors and certain employees may be granted shares of restricted stock that vest on continued service alone (“Restricted Stock”).  During fiscal 2018, officers and certain employees were granted 36,170 shares of Restricted Stock.  Restricted Stock granted to officers and certain employees vest over three years beginning after a two‑year holding period from the date of grant with one‑third of the shares vesting in years three, four and five, respectively.  Also during fiscal year 2018, our non‑executive directors were granted 14,210 shares of Restricted Stock.  The non‑executive directors’ shares of Restricted Stock vest 50% immediately and 50% one year after the date of grant.

The Company measures the fair value of the Restricted Stock based upon the market price of our common stock as of the date of grant.  Restricted Stock is amortized over the applicable vesting period using the straight‑line method.  Unvested shares of Restricted Stock are subject to forfeiture upon termination of employment or service with the Company.

A summary of the status of the Company’s non‑vested Restricted Stock for the fiscal year ended June 30, 2018, is presented below: