- Revenue and free cash flow* increased 43% and 47%, respectively,
year-over-year - Fiscal 2008 free cash flow* totaled 80% of revenue
- Significant portfolio expansion with planned acquisition of
Barrick Gold's royalty portfolio DENVER, Aug. 14
/PRNewswire-FirstCall/ -- Royal Gold, Inc. (Nasdaq: RGLD; TSX:
RGL), the leading precious metals royalty company, today announced
record revenues of $69.4 million for fiscal 2008 (ended June 30), a
43% increase over revenues of $48.4 million in fiscal 2007. The
Company also reported net income of $26.1 million for fiscal 2008,
up 32% compared to net income of $19.7 million for fiscal 2007. Net
income available to common stockholders for fiscal 2008 was reduced
by payment of preferred dividends and a non-cash preferred share
conversion adjustment totaling $4.8 million or $0.15 per basic
share. This resulted in net income available to common stockholders
for fiscal 2008 of $21.3 million, or $0.69 per basic share,
compared to $19.7 million, or $0.79 per basic share for fiscal
2007. For the fourth quarter ended June 30, 2008, royalty revenue
totaled $21.7 million, a 51% increase over royalty revenue of $14.4
million for the same period in fiscal 2007. The Company reported
fourth quarter 2008 net income of $7.9 million, or $0.24 per basic
share, as compared to net income of $5.7 million, or $0.20 per
basic share for the fourth quarter of fiscal 2007. Free cash flow
for fiscal 2008 was $55.8 million, or 80% of revenues, compared to
$37.9 million, or 78% of revenues for fiscal 2007. Free cash flow
for the fourth quarter was $18.3 million, or 84% of revenue
compared with free cash flow of $11.3 million, or 78% of revenues,
for the same period ended June 30, 2007. As of June 30, 2008, the
Company had a working capital surplus of $204.1 million. Current
assets were $211.4 million (including $192.0 million in
unrestricted cash), compared to current liabilities of $7.3
million, resulting in a current ratio of 29 to 1. Tony Jensen,
President and CEO, commented, "Our record results for fiscal 2008
reflect the continued execution of our long-term growth plan, as
well as strong performance from our producing properties and robust
commodity prices. Over 75% of our fiscal 2008 revenue was derived
from precious metals as both Leeville and Taparko, two of our key
gold development-stage royalties, began to make significant
contributions over the past year. Looking ahead to fiscal 2009, we
expect three additional development projects in our current
portfolio -- Penasquito, Dolores and Benso -- to come online and
provide additional sources of new revenue." Jensen continued, "We
are also pleased to have announced the expansion and
diversification of our portfolio with the planned acquisition of
Barrick Gold's royalty package. Beyond providing immediate royalty
revenue and cash flow, this transaction will add significant
strength to all phases of our portfolio -- producing royalties,
evaluation and development projects, and exploration properties. We
are pleased with our progress in 2008 and believe that we have
taken the steps necessary to position Royal Gold as the leading
precious metals royalty company for years to come." PROPERTY
HIGHLIGHTS Production declines for fiscal 2008 at the Cortez
Pipeline Mining Complex ("Cortez") and the Goldstrike SJ Claims
were more than offset by higher gold prices, which averaged $821 in
fiscal 2008 compared to $638 for fiscal 2007. Increased commodity
prices and greater production at Robinson and Leeville, new revenue
received from properties acquired during the year, and the start-
up of production at Taparko contributed to record financial
results. Robinson Quadra Mining recently announced updated
production guidance for calendar year 2008 at its Robinson mine.
The yearly production estimate for calendar 2008 at the Robinson
mine has increased from 100,000 ounces to 115,000 ounces of gold
and from 130 million pounds to 150 million pounds of copper. Martha
Coeur d'Alene ("Coeur") reported that the Martha mine produced 1.3
million ounces of silver during the first half of calendar 2008.
Upon further consultation with Coeur, annual production is budgeted
at 3.2 million ounces for calendar 2008 instead of 5.0 million
ounces as previous reported to the Company. The new mill is now
operating efficiently and Coeur expects increased tons to be
processed during the third and fourth calendar quarters, resulting
in higher production levels. Penasquito Goldcorp recently reported
that construction is progressing well at Penasquito and that
several construction milestones were completed during the second
quarter. The oxide plant was commissioned and the first gold was
poured on May 10, 2008. Production of 1,600 ounces of gold and
91,600 ounces of silver was achieved in the quarter. Goldcorp is
estimating production of approximately 67,000 ounces of gold and
2.3 million ounces of silver in calendar 2008. Dolores Minefinders
Corporation recently reported that its initial gold and silver pour
at the Dolores mine has been delayed from mid-July until later in
the third calendar quarter due to a blockade that was established
in May by a group of protesters. Minefinders stated that they will
provide an updated 2008 production schedule in the near future.
Their original production estimate for calendar 2008 was 40,000
ounces of gold and 1.0 million ounces of silver. Taparko The
Taparko mine commenced gold production in July 2007 and contributed
$7.4 million in royalty revenue for the fiscal year. Reserve
characteristics, mining activity, and gold recovery performance
have been near feasibility study estimates. However, mill
performance has suffered throughout the year due to problems
associated with the grinding mill drive-train. This has resulted in
low mill availability and throughput. Several problems with the
original installation were identified and corrected but mechanical
problems have persisted. Production was ceased on June 11, 2008,
and the entire drive- train was re-evaluated and is now in the
process of re-assembly with the assistance of third party mill
equipment specialists. Continuous and sustained production is
dependent upon resolving the mill drive-train problems. Fiscal year
end and fourth quarter production and revenue for each of the
Company's active royalty interests are shown in Tables 1 and 2. For
more detailed information about each of our royalty properties,
please refer to the Company's most recent Annual Report on Form
10-K or our website, located at http://www.royalgold.com/. OTHER
DEVELOPMENTS Agreement to Acquire Barrick Gold Royalty Portfolio On
July 31, 2008, the Company entered into a definitive agreement to
acquire a portfolio of royalties from Barrick Gold ("Barrick") for
consideration of $150 million in net cash and a restructuring of
certain Company royalty positions at Cortez in Nevada. The
portfolio consists of royalties on 77 properties, including eight
producing properties. Over 75% of the portfolio consists of
precious metals royalties. The purchase price for the acquisition
will be paid from cash on hand and the transaction is expected to
close on October 1, 2008. Currently, Royal Gold holds four gold
royalty interests at Cortez, consisting of two sliding-scale gross
smelter return ("GSR") royalties ("GSR1 and GSR2"), a fixed rate
GSR royalty ("GSR3") and a net value return royalty ("NVR1"). As
consideration for the acquisition, Royal Gold will pay Barrick $150
million in net cash and reduce the GSR2 royalty, ranging from 0.72%
to 9.0%, to match the current GSR1 royalty rate ranging from 0.40%
to 5.0%. Royal Gold also will eliminate its interest in the 0.71%
GSR3 and the 0.39% NVR1 royalties on the mining claims that
comprise the undeveloped Crossroads deposit. The GSR3 and NVR1
royalties that cover areas outside of the Crossroads deposit at
Cortez will not be affected by this transaction. The Crossroads
deposit will continue to be subject to Royal Gold's GSR2 royalty at
the reduced royalty rate. Barrick has announced that it is
currently investing exploration and engineering resources to
advance the development of the Crossroads project and is targeting
over 1.0 million ounces of reserves by year end. The transaction is
expected to be immediately accretive on all key financial measures.
Royalty revenue generated from the Barrick portfolio in calendar
2007 was approximately $12.0 million. This royalty package
complements Royal Gold's existing geographical royalty positions
with significant growth into Canada and Australia. ROYALTY
DEFINITIONS The Company's royalty portfolio contains several
different types of royalties which are defined as follows: Royalty
- the right to receive a percentage or other denomination of
mineral production from a resource extraction operation. Gross
Smelter Return ("GSR") Royalty - a defined percentage of the gross
revenue from a resource extraction operation, less, if applicable,
certain contract-defined costs paid by or charged to the operator.
Net Smelter Return ("NSR") Royalty - a defined percentage of the
gross revenue from a resource extraction operation, less a
proportionate share of incidental transportation, insurance,
refining and smelting costs. Net Value Royalty ("NVR") - a defined
percentage of the gross revenue from a resource extraction
operation, less certain contract-defined transportation costs,
milling costs and taxes. Net Profits Interest Royalty ("NPI") - a
defined percentage of the gross revenue from a resource extraction
operation, after recovery of certain contract-defined
pre-production costs, and after deduction of certain
contract-defined mining, milling, processing, transportation,
administrative, marketing and other costs. Royal Gold, the leading
precious metals royalty company, is engaged in the acquisition and
management of precious metals royalty interests. Royal Gold is
publicly traded on the NASDAQ Global Select Market under the symbol
"RGLD," and on the Toronto Stock Exchange under the symbol "RGL."
The Company's web page is located at http://www.royalgold.com/.
Note: Management's conference call reviewing the fourth quarter and
year end for fiscal 2008 will be held today at 10:00 a.m. Mountain
Time (noon Eastern Time) and will be available by calling (800)
603-2779 or (706) 634- 7230, access #43495505. The call will be
simultaneously broadcast on the Company's web site at
http://www.royalgold.com/ under the "Presentations" section. A
replay of this web cast will be available on the Company's web site
approximately two hours after the call ends. Cautionary "Safe
Harbor" Statement Under the Private Securities Litigation Reform
Act of 1995: With the exception of historical matters, the matters
discussed in this press release are forward-looking statements that
involve risks and uncertainties that could cause actual results to
differ materially from projections or estimates contained herein.
Such forward-looking statements include statements regarding strong
financial performance, continued execution of our long-term growth
plan, robust commodity prices, new revenue from three additional
development stage projects in fiscal 2009, receipt of immediate
royalty revenues and cash flow from the Barrick royalty package,
the Barrick transaction being immediately accretive on all key
financial measures, and the addition of significant strength to
Royal Gold's royalty portfolio upon the completion of the Barrick
transaction, estimated closing of the Barrick transaction,
operator's construction or development timeframes, and operator
reserve and production estimates. Factors that could cause actual
results to differ materially from projections include, among
others, precious metals prices, performance of and production at
our royalty properties, decisions and activities of the operators
of our royalty properties, unanticipated grade, geological,
metallurgical, processing or other problems the operators of the
mining properties may encounter, changes in project parameters as
plans continue to be refined, results of current or planned
exploration activities, management's ability to increase our cash
flow, revenues and margins, Royal Gold's and Barrick's ability to
consummate the Barrick transaction, and economic and market
conditions, as well as other factors described elsewhere in this
press release and in our Annual Report on Form 10-K, and other
filings with the Securities and Exchange Commission. Most of these
factors are beyond the Company's ability to predict or control. The
Company disclaims any obligation to update any forward-looking
statement made herein. Readers are cautioned not to put undue
reliance on forward- looking statements. *Free Cash Flow: The
Company discloses information on free cash flow and free cash flow
as a percentage of revenues in its reporting. The Company defines
free cash flow as operating income plus depreciation, depletion and
amortization, non-cash charges, and any impairment of mining assets
less minority interest in income of consolidated subsidiary. While
we believe free cash flow is a useful measure of the Company's
performance, we also want to advise that this is not a measure
recognized by generally accepted accounting principles. See
Schedule A, attached to this press release. * The Company defines
free cash flow, a non-GAAP financial measure, as operating income
plus depreciation, depletion and amortization, non-cash charges and
impairment of mining assets, if any, less minority interest in
income of consolidated subsidiary (see, Schedule A). TABLE 1
Royalty Production and Revenue - Fiscal 2008 PROPERTY ROYALTY
OPERATOR METAL YEAR ENDED JUNE 30, 2008 Royalty Revenue Reported ($
Millions) Production(1) Cortez GSR1(2) Barrick Gold 25.1 436,000
oz. (Pipeline GSR2 Mining GSR3 Complex) NVR1 Robinson(3) 3.0% NSR
Quadra Gold 16.6 121,000 oz. Copper 139.0M lbs. Goldstrike (SJ
Claims) 0.9% NSR Barrick Gold 5.1 698,000 oz. Leeville 1.8% NSR
Newmont Gold 5.6 361,000 oz. Taparko TB-GSR14 High River Gold 7.4
36,000 oz. TB-GSR2 (5,6) Don Mario 3.0% NSR Orvana Gold 1.4 63,000
oz.(6) Mulatos 0.30-1.5% NSR Alamos Gold 1.5 121,000 oz.(8)
(sliding-scale) Troy 7.0% GSR Revett Silver 2.5 744,000 oz.(9)
Copper 7.1M lbs. Martha 2.0% NSR Coeur Silver 0.983 3.2M oz.
d'Alene Williams 0.72% NSR Barrick/ Gold 0.613 106,000 oz.(6) Teck
Cominco El Limon 3.0% NSR Central Sun Gold 0.708 28,000 oz.(6)
Mining Bald 1.75-3.5% NSR Barrick Gold 0.607 50,000 oz. Mountain
(sliding-scale) El Chanate 2.0-4.0% NSR Capital Gold 1.1 21,000 oz.
(sliding-scale) Gold (6,10) 10% NPI Penasquito 2.0% NSR Goldcorp
Gold 0.059 1,600 oz.(6) Silver 92,000 oz. PROPERTY ROYALTY OPERATOR
METAL YEAR ENDED JUNE 30, 2007 Royalty Revenue Reported ($
Millions) Production(1) Cortez GSR1(2) Barrick Gold 21.5 510,000
oz. (Pipeline GSR2 Mining GSR3 Complex) NVR1 Robinson(3) 3.0% NSR
Quadra Gold 12.6 81,000 oz. Copper 116.9M lbs. Goldstrike (SJ
Claims) 0.9% NSR Barrick Gold 5.5 950,000 oz. Leeville 1.8% NSR
Newmont Gold 2.7 230,000 oz. Taparko TB-GSR14 High River Gold --(7)
--(7) TB-GSR2 Don Mario 3.0% NSR Orvana Gold --(7) --(7) Mulatos
0.30-1.5% NSR Alamos Gold 1.0 103,000 oz. (sliding-scale) Troy 7.0%
GSR Revett Silver 3.1 1.0M oz. Copper 9.6M lbs. Martha 2.0% NSR
Coeur Silver 0.714 2.9M oz. d'Alene Williams 0.72% NSR Barrick/
Gold --(7) --(7) Teck Cominco El Limon 3.0% NSR Central Sun Gold
--(7) --(7) Mining Bald 1.75-3.5% NSR Mountain (sliding-scale)
Barrick Gold 1.3 109,000 oz. El Chanate 2.0-4.0% NSR Capital Gold
--(7) --(7) (sliding-scale) Gold 10% NPI Penasquito 2.0% NSR
Goldcorp Gold --(7) --(7) Silver * Footnotes follow on page 9.
TABLE 2 Royalty Production and Revenue - Fourth Quarter 2008
PROPERTY ROYALTY OPERATOR METAL QUARTER ENDED JUNE 30, 2008 Royalty
Revenue Reported ($ Millions) Production(1) Cortez GSR1(2) Barrick
Gold 6.4 70,000 oz. (Pipeline GSR2 Mining GSR3 Complex) NVR1
Robinson(3) 3.0% NSR Quadra Gold 5.5 35,000 oz. Copper 38.7M lbs.
Goldstrike (SJ Claims) 0.9% NSR Barrick Gold 1.4 182,000 oz.
Leeville 1.8% NSR Newmont Gold 1.6 99,000 oz. Taparko TB-GSR1(4)
High River Gold 2.8 13,000 oz. TB-GSR2 (5,6) Don Mario 3.0% NSR
Orvana Gold 0.545 23,000 oz.(6) Mulatos 0.30-1.5% NSR
(sliding-scale) Alamos Gold 0.493 36,000 oz.(8) Troy 7.0% GSR
Revett Silver 0.882 244,000 oz.(9) Copper 2.4M lbs. Martha 2.0% NSR
Coeur Silver 0.331 964,000 oz. d'Alene Williams 0.72% NSR Barrick/
Gold 0.210 37,000 oz.(6) Teck Cominco El Limon 3.0% NSR Central Sun
Gold 0.224 9,000 oz.(6) Mining Bald 1.75-3.5% NSR Barrick Gold
0.156 10,000 oz. Mountain (sliding-scale) El Chanate 2.0-4.0% NSR
Capital Gold Gold 0.929 12,000 oz. (sliding-scale) (6,10) 10% NPI
Penasquito 2.0% NSR Goldcorp Gold 0.059 1,600 oz.(6) Silver 92,000
oz. PROPERTY ROYALTY OPERATOR METAL QUARTER ENDED JUNE 30, 2007
Royalty Revenue Reported ($ Millions) Production(1) Cortez GSR1(2)
Barrick Gold 6.4 140,000 oz. (Pipeline GSR2 Mining GSR3 Complex)
NVR1 Robinson(3) 3.0% NSR Quadra Gold 3.9 23,600 oz. Copper 32.3M
lbs. Goldstrike (SJ Claims) 0.9% NSR Barrick Gold 1.5 246,000 oz.
Leeville 1.8% NSR Newmont Gold 0.576 48,000 oz. Taparko TB-GSR1(4)
High River Gold --(7) --(7) TB-GSR2 Don Mario 3.0% NSR Orvana Gold
--(7) --(7) Mulatos 0.30-1.5% NSR Alamos Gold 0.317 30,000 oz.
(sliding-scale) Troy 7.0% GSR Revett Silver 1.2 376,000 oz. Copper
3.6M lbs. Martha 2.0% NSR Coeur Silver 0.130 494,000 oz. d'Alene
Williams 0.72% NSR Barrick/ Gold --(7) --(7) Teck Cominco El Limon
3.0% NSR Central Sun Gold --(7) --(7) Mining Bald Mountain
1.75-3.5% NSR Barrick Gold 0.233 33,000 oz. (sliding-scale) El
Chanate 2.0-4.0% NSR Capital Gold --(7) --(7) (sliding-scale) Gold
10% NPI Penasquito 2.0% NSR Goldcorp Gold --(7) --(7) Silver *
Footnotes follow on page 9. FOOTNOTES TO TABLES 1 AND 2 (1)
Reported production relates to the amount of metal sales that are
subject to our royalty interests for the periods ended June 30,
2008 and June 30, 2007, as reported to us by the operators of the
mines. (2) Royalty percentages: GSR1 - 0.40-5.0% (sliding-scale);
GSR2 - 0.72-9.0% (sliding-scale); GSR3 - 0.71%; NVR1 - 0.39%. (3)
Revenues consist of provisional payments for concentrates produced
during the current period and final settlements for prior
production periods. (4) Royalty percentages: TB-GSR1 - 15.0%;
TB-GSR2 - 4.3% when the average monthly gold price ranges between
$385 and $430 per ounce. Outside of this range, the royalty rate is
calculated by dividing the average monthly gold price by 100 for
gold prices above $430 per ounce, or by dividing the average
monthly gold price by 90 for gold prices below $385 per ounce
(e.g., a $900 per ounce gold price results in a rate of 900/100 =
9.0%). Two subsequent royalties consist of a 2.0% GSR perpetual
royalty ("TB-GSR3"), applicable to gold production from defined
portions of the Taparko-Bouroum project area, and a 0.75% GSR
milling royalty ("TB-MR1"). The TB-MR1 royalty applies to ore that
is mined outside of the defined area of the Taparko-Bouroum project
that is processed through the Taparko facilities up to a maximum of
1.1 million tons per year. Both the TB-GSR3 and TB-MR1 royalties
commence once TB-GSR1 and TB-GSR2, described earlier, have ceased.
(5) Both TB-GSR1 and TB-GSR2 continue until either production
reaches 804,420 ounces of gold, or payments totaling $35 million
under TB-GSR1 are received, whichever comes first. As of June 30,
2008, Royal Gold has recognized $4.7 million in cumulative royalty
revenue under TB-GSR1. (6) Receipt of royalty revenue commenced in
July 2007 for Taparko; October 2007 for Don Mario, Williams and El
Limon; February 2008 for El Chanate; and June 2008 for Penasquito.
(7) Receipt of royalty revenue commenced in FY2008. (8) The
Company's royalty is subject to a 2.0 million ounce cap on gold
production. There have been approximately 248,000 ounces of
cumulative production, as of June 30, 2008. (9) The 7.0% GSR
royalty extends until either cumulative production reaches
approximately 9.9 million ounces of silver and 84.7 million pounds
of copper, or Royal Gold receives $10.5 million in cumulative
payments, whichever occurs first. As of June 30, 2008, the Company
has recognized approximately $8.0 million in cumulative payments
from the Troy mine attributable to cumulative production of
approximately 3.2 million ounces of silver and 33.0 million pounds
of copper. Royal Gold also holds a perpetual GSR royalty that
begins at 6.1% on any production in excess of 11.0 million ounces
of silver and 94.1 million pounds of copper. This 6.1% GSR steps
down to a perpetual 2.0% GSR royalty after cumulative production
exceeds 12.7 million ounces of silver and 108.2 million pounds of
copper. (10) The sliding-scale NSR royalty is capped once payments
of approximately $17 million have been received and the 10.0% net
profits interest royalty is capped at $1.0 million. As of June 30,
2008, payments of $600,000 for the sliding-scale NSR royalty and
$500,000 for the NPI royalty have been recognized. ROYAL GOLD, INC.
Consolidated Balance Sheets As of June 30, (In thousands except
share data) 2008 2007 Current assets Cash and equivalents $ 192,035
$ 82,842 Royalty receivables 17,627 12,470 Income tax receivable
1,310 - Deferred tax assets 131 154 Prepaid expenses and other 308
217 Total current assets 211,411 95,683 Royalty interests in
mineral properties, net 300,670 215,839 Restricted cash -
compensating balance 15,750 15,750 Inventory - restricted 11,170
10,612 Note receivable - Battle Mountain Gold Exploration - 14,494
Other assets 7,283 4,271 Total assets $ 546,284 $ 356,649 Current
liabilities Accounts payable $ 3,122 $ 2,342 Income taxes payable -
5 Dividends payable 2,384 1,869 Other 1,797 472 Total current
liabilities 7,303 4,688 Net deferred tax liabilities 26,034 5,911
Note payable 15,750 15,750 Other long-term liabilities 504 98 Total
liabilities 49,591 26,447 Commitments and contingencies Minority
interest in subsidiary 11,411 11,121 Stockholders' equity Preferred
stock, $0.01 par value, 10,000,000 shares authorized - - Common
stock, $0.01 par value, authorized 100,000,000 shares; and issued
33,926,495 and 28,892,980 shares, respectively 339 289 Additional
paid-in capital 463,335 310,439 Accumulated other comprehensive
income 65 458 Accumulated earnings 21,543 8,992 Less treasury
stock, at cost (0 and 229,224 shares, respectively) - (1,097) Total
stockholders' equity 485,282 319,081 Total liabilities and
stockholders' equity $ 546,284 $ 356,649 ROYAL GOLD, INC.
Consolidated Statements of Operations and Comprehensive Income For
the Years Ended June 30, (In thousands except share data) 2008 2007
2006 Royalty revenues $69,393 $48,357 $28,380 Costs and expenses
Costs of operations (exclusive of depreciation, depletion and
amortization shown separately below) 3,819 3,265 2,288 General and
administrative 7,208 5,824 5,022 Exploration and business
development 4,079 2,493 3,397 Depreciation, depletion and
amortization 18,364 8,269 4,261 Total costs and expenses 33,470
19,851 14,968 Operating income 35,923 28,506 13,412 Interest and
other income 6,742 4,258 3,204 Interest and other expense (1,729)
(1,973) (165) Income before income taxes 40,936 30,791 16,451
Current tax expense (12,811) (10,310) (5,974) Deferred tax
(expense) benefit (115) 761 873 Minority interest in income of
consolidated subsidiary (1,352) (1,522) - Loss from equity
investment (550) - - Net income $26,108 $19,720 $11,350 Adjustments
to other comprehensive income Unrealized change in market value of
available for sale securities, net of tax (393) (40) 783
Comprehensive income $25,715 $19,680 $12,133 Net income $26,108
$19,720 $11,350 Preferred stock dividends and deemed dividend
(4,788) - - Net income available to common stockholders $21,320
$19,720 $11,350 Basic earnings per share $0.69 $0.79 $0.50 Basic
weighted average shares outstanding 31,054,725 24,827,319
22,863,784 Diluted earnings per share $0.68 $0.79 $0.49 Diluted
weighted average shares outstanding 31,390,293 25,075,086
23,134,034 ROYAL GOLD, INC. Consolidated Statements of Cash Flows
For the Years Ended June 30, (In thousands except share data) 2008
2007 2006 Cash flows from operating activities Net income $ 26,108
$ 19,720 $ 11,350 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation, depletion and
amortization 18,364 8,269 4,261 Loss on available for sale
securities 49 - - Deferred tax expense (benefit) 115 (761) (873)
Non-cash employee stock compensation expense 2,869 2,663 2,778
Interest income accrued for Battle Mountain note receivable (713) -
- Tax benefit of stock-based compensation exercises (722) (346)
(1,438) Changes in assets and liabilities: Royalty receivables
(4,430) (6,508) 639 Prepaid expenses and other assets (232) 414 266
Accounts payable 580 1,020 (65) Income taxes (receivable) payable
(970) 16 1,520 Other (1,891) (140) 167 Net cash provided by
operating activities $ 39,127 $ 24,347 $ 18,605 Cash flows from
investing activities Capital expenditures for property and
equipment $ (42) $ (285) $ (39) Acquisition of royalty interests in
mineral properties (16,246) (120,808) (43,931) Note receivable -
Battle Mountain Gold Exploration - (14,494) - Restricted cash -
compensating balance - (15,750) - Purchase of available for sale
securities - (81) (205) Deferred acquisition costs (157) (973) -
Battle Mountain acquisition, net of cash acquired of $1,398 (2,933)
- - Net cash used in investing activities $(19,378) $(152,391) $
(44,175) Cash flows from financing activities Common stock
dividends $ (8,253) $ (5,721) $ (4,807) Preferred stock dividends
(2,802) - - Debt issuance costs (27) (464) (82) Issuance of Note
payable - 15,750 - Tax benefit from stock-based compensation
exercises 722 346 1,438 Gold loan payoff - Battle Mountain (6,476)
- - Net proceeds from issuance of common stock 698 122,526 58,630
Net proceeds from issuance of preferred stock 111,098 - - Stock
repurchase program (5,516) - - Net cash provided by financing
activities $ 89,444 $ 132,437 $ 55,179 Net increase in cash and
equivalents 109,193 4,393 29,609 Cash and equivalents at beginning
of year 82,842 78,449 48,840 Cash and equivalents at end of year
$192,035 $ 82,842 $ 78,449 SCHEDULE A Non-GAAP Financial Measures
The Company computes and discloses free cash flow and free cash
flow as a percentage of revenues. Free cash flow is a non-GAAP
financial measure. Free cash flow is defined by the Company as
operating income plus depreciation, depletion and amortization,
non-cash charges, and any impairment of mining assets, less
minority interest in income of consolidated subsidiary. Management
believes that free cash flow and free cash flow as a percentage of
revenues are useful measures of performance of our royalty
portfolio. Free cash flow identifies the cash generated in a given
period that will be available to fund the Company's future
operations, growth opportunities, and shareholder dividends. Free
cash flow, as defined, is most directly comparable to operating
income in the Statements of Operations. Below is the reconciliation
to operating income: For the Fiscal Years Ended June 30, (in
thousands) 2008 2007 2006 Operating income $35,923 $28,506 $13,412
Depreciation, depletion and amortization 18,364 8,269 4,261
Non-Cash employee stock compensation 2,869 2,663 2,778 Minority
interest in income of consolidated subsidiary (1,352) (1,522) -
Free cash flow $55,804 $37,916 $20,451 For the Fiscal Quarters
Ended June 30, (in thousands) 2008 2007 Operating income $11,772
$8,346 Depreciation, depletion and amortization 6,431 2,518
Non-Cash employee stock compensation 724 938 Minority interest in
income of consolidated subsidiary (670) (458) Free cash flow
$18,257 $11,344 DATASOURCE: Royal Gold, Inc. CONTACT: Karen Gross,
Vice President and Corporate Secretary of Royal Gold, Inc.,
+1-303-573-1660 Web site: http://www.royalgold.com/
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