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Introduction & Market Context
Royal Gold, Inc. (NASDAQ:RGLD) presented its third quarter 2024 results on November 7, 2024, highlighting record financial performance amid favorable metal price environments. The precious metals streaming and royalty company benefited significantly from higher gold, silver, and copper prices, which increased 28%, 25%, and 10% year-over-year, respectively.
The company’s stock has performed well in 2024, with the share price currently trading near $157, up from its 52-week low of $127.31, though still below its 52-week high of $191.78. Recent premarket activity shows continued investor interest with the stock up 0.74%.
Quarterly Performance Highlights
Royal Gold achieved record revenue of $193.8 million in Q3 2024, representing a substantial 40% increase year-over-year. This performance was driven by both higher metal prices and increased production from key assets in the company’s portfolio.
Net income reached $96.2 million, or $1.46 per share, while adjusted net income was slightly higher at $96.6 million, or $1.47 per share. The company generated strong operating cash flow of $136.7 million, enabling dividend payments of $26.3 million and debt reduction.
As shown in the following breakdown of Q3 2024 revenue by segment:
The royalty segment contributed $60.8 million (31% of total revenue), showing impressive growth of 53% year-over-year. This increase was primarily driven by higher contributions from Peñasquito and Robinson mines, along with new revenue streams from Manh Choh and Côté Gold. Meanwhile, the stream segment accounted for $133.1 million (69% of total revenue), growing 34% year-over-year due to improved performance at Mount Milligan, Pueblo Viejo, Wassa, and Xavantina.
Gold remains the dominant revenue driver for Royal Gold, as illustrated in this revenue breakdown by metal:
Gold contributed 76% of total revenue, followed by silver at 12% and copper at 9%. The company sold a total of 78,400 Gold Equivalent Ounces (GEOs) during the quarter, benefiting from average metal prices of $2,474 per ounce for gold, $29.43 per ounce for silver, and $4.18 per pound for copper.
Detailed Financial Analysis
Royal Gold’s Q3 2024 financial results demonstrate the company’s operational efficiency and strong market position:
General and administrative expenses remained well-controlled at $10.1 million, while depreciation, depletion, and amortization (DD&A) totaled $36.2 million, or $462 per GEO. The company’s effective tax rate was 18.3%, falling within its guidance range of 17-22%.
A particularly notable achievement was the company’s debt reduction:
Royal Gold repaid $50 million on its revolving credit facility during Q3, resulting in zero debt outstanding as of September 30, 2024. This debt-free position, combined with working capital of $116 million and an undrawn revolving credit facility of $1 billion, provides the company with approximately $1.1 billion in available liquidity for potential growth opportunities.
Strategic Initiatives & Operational Updates
Royal Gold provided several important operational updates across its portfolio. At Mount Milligan, a site-wide optimization program is continuing, with a Preliminary Economic Assessment targeted for completion in late H1 2025. Production guidance remains unchanged at 180,000-200,000 ounces of gold and 55-65 million pounds of copper for 2024, though gold production is trending toward the lower end of the range.
Peñasquito, a significant contributor to the royalty segment’s growth, secured a new labor agreement for 2024-2026 and is transitioning to the Peñasco pit ahead of schedule. This transition is expected to increase gold production in Q4 and into 2025 due to higher gold grades.
The company also recognized first royalty revenue from two new mines:
1. Manh Choh - Contributing to the 53% year-over-year growth in the royalty segment
2. Côté Gold - Adding a new revenue stream to the portfolio
At Khoemacau, improved mining and milling volumes along with higher ore grades were reported in Q3. Development is ongoing to increase mining fronts, operational flexibility, and access to higher-grade areas. A feasibility study for expansion to 130,000 tonnes per year is expected to start by the end of 2024, with first concentrate from the expansion projected for 2028.
The Great Bear project continues to advance, with a Preliminary Economic Assessment outlining a 12-year initial mine life with gold production exceeding 500,000 ounces per year in the first eight years. First production is targeted for mid-2029.
Forward-Looking Statements
Royal Gold maintained its 2024 guidance across all metrics:
For the full year 2024, the company expects gold sales between 215,000-230,000 ounces, silver sales of 3.2-3.8 million ounces, and copper sales of 14.0-16.0 million pounds. Other metals are projected to contribute $17.0-20.0 million in revenue. DD&A is expected to range from $141-157 million, with an effective tax rate of 17-22%.
With its zero-debt position, substantial liquidity, and diversified portfolio of producing and development assets, Royal Gold appears well-positioned to pursue growth opportunities while maintaining its dividend program. The company paid $26.3 million in dividends during Q3 2024, continuing its commitment to shareholder returns.
As metal prices remain favorable and new assets come online, Royal Gold’s streaming and royalty business model continues to demonstrate resilience and growth potential in the precious metals sector.
Full presentation:
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