Royal Gold, Inc.
RGLD
recently issued an update for second-quarter fiscal 2021 (ended Dec 31, 2020) operations. During the quarter, RGLD Gold AG — the fully-owned subsidiary of Royal Gold — sold 57,500 gold equivalent ounces (GEOs) comprising 44,500 gold ounces, 461,000 silver ounces and 1,800 tons of copper related to its streaming agreements. The figure was higher than the 56,000 gold equivalent ounces sold during first-quarter fiscal 2021.
Stream sales during the fiscal second quarter were also higher than the previously-guided range of 52,000 to 57,000 GEOs. The average realized price of gold was $1,880 per ounce in the quarter, down 0.9% sequentially. Average realized price of silver went up 5.2% sequentially to $24.16 per ounce. Average realized copper prices were $6,995 per ton, up from the previous quarter’s $6,494 per ton. The company ended second-quarter fiscal 2021 with 29,500 gold equivalent ounces in inventory, including 21,500 ounces of gold, 485,000 silver ounces and 400 tons of copper.
During the fiscal second quarter, cost of sales was around $432 per gold equivalent ounce compared with the fiscal first-quarter figure of $389 per gold equivalent ounce. The cost of sales is based on the quarterly average silver-gold ratio of roughly 77 to 1, and copper-gold ratio of 0.26 tons per ounce.
The Zacks Consensus Estimate for fiscal second-quarter earnings is pegged at 92 cents, suggesting an improvement of 46% from the prior-year reported figure. The estimate has remained unchanged for the past 30 days.
Royal Gold is focused on allocating its solid cash flow to dividends, debt reduction and investments in new businesses. As of Oct 2, 2020, the company had $800 million available and $200 million outstanding under the revolving credit facility aided by the diversification of the Peak Gold Project.
On Sep 30, 2020, Royal Gold entered into an agreement with
Kinross Gold Corporation
KGC
to sell its interest in the Peak Gold Project and its shareholding in Contango Ore, Inc. for cash proceeds of $61.3 million and increased royal interests. Additionally, Royal Gold will receive net smelter return (NSR) royalty on silver produced from the current resource area as well as on certain State of Alaska mining, owned by Contango. The deal will enable Royal Gold to focus on its core royalty and streaming business.
Royal Gold is a precious metals stream and royalty company engaged in the acquisition and management of precious metal streams, royalties and similar production-based interests. As of Dec 31, 2020, the company owned interests on 189 properties on five continents, including interests on 41 producing mines and 17 development stage projects. Gold continues to be the most significant revenue driver for Royal Gold and accounted for 75% of total revenues in the fiscal first quarter. Gold prices were up 24.6% in 2020 primarily owing to the coronavirus pandemic. Over the coming years, the combination of lower supply and higher demand are likely to support gold prices, which bodes well for Royal Gold.
Price Performance
Over the past year, Royal Gold’s shares have declined 4.2% against the
industry
’s growth of 25.5%.
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Zacks Rank & Stocks to Consider
Royal Gold currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the basic materials space are
Fortescue Metals Group Limited
FSUGY
and
BHP Group
BHP
, each currently flaunting a Zacks Rank #1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here.
Fortescue has a projected earnings growth rate of 53.6% for fiscal 2021. The company’s shares have surged 83.7% in six months’ time.
BHP has an expected earnings growth rate of 43.3% for fiscal 2021. The stock has gained 40.4% in the past six months.
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