Royal Gold : 2025 First Quarter Conference Call Transcript
RGLD
Published on 05/14/2025 at 11:29
Earnings Call
Thursday, May 8, 2025 5:00 PM GMT
CALL PARTICIPANTS 2
PRESENTATION 3
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QUESTION AND ANSWER 7
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EXECUTIVES
Senior Vice President of Investor Relations and Business Development
Senior Vice President of Corporate Development - RGLD Gold AG
Senior Vice President of Operations
Senior VP & CFO
President, CEO & Director
ANALYSTS
CIBC Capital Markets, Research Division
TD Cowen, Research Division
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Welcome, everyone, to the Royal Gold 2025 First Quarter Conference Call. My name is Lauren, and I'll be moderating your call today. [Operator Instructions]
I would now like to pass the conference call over to Alistair Baker to begin. Please go ahead.
Senior Vice President of Investor Relations and Business Development
Thank you, operator. Good morning, and welcome to our discussion of Royal Gold's first quarter 2025 results. This event is being webcast live and a replay of this call will be available on our website. Speaking on the call today are Bill Heissenbuttel, President and CEO; Paul Libner, Senior Vice President and CFO; and Martin Raffield, Senior Vice President of Operations. Dan Breeze, Senior Vice President, Corporate Development of RGAG; and Randy Shefman, Senior Vice President and General Counsel, are also available for questions.
During today's call, we will make forward-looking statements, including statements about our projections and expectations for the future. These statements are subject to risks and uncertainties that could cause actual results to differ materially from these statements. These risks and uncertainties are discussed in yesterday's press release and our filings with the SEC. We will also refer to certain non-GAAP financial measures, including adjusted net income, adjusted net income per share, adjusted EBITDA and cash G&A. Reconciliations of these measures to the most directly comparable GAAP measures are available in yesterday's press release, which can be found on our website.
Bill will start with an overview of the quarter, Martin will give some commentary on the portfolio, and Paul will provide a financial update. After the formal remarks, we'll open the lines for a Q&A session. I'll now turn the call over to Bill.
President, CEO & Director
Good morning, and thank you for joining the call. I'll begin on Slide 4.
Our first quarter gave us a solid start to 2025. Our portfolio delivered steady performance and the strong and rising gold price was a significant tailwind.
Earnings for the quarter were a record $113 million or $1.72 per share. We recognized a couple of discrete tax items that Paul will describe in more detail, and after adjusting for these items, earnings were a strong $100 million or $1.51 per share.
Gold remained the largest contributor to revenue for the quarter at about 75% of total, and our geographic weighting remained consistent with over 53% of our revenue generated from the U.S., Canada, and Australia.
Our low and stable G&A allowed us to maintain our high margins, and we had an adjusted EBITDA margin of 82% for the quarter.
We paid our first dividend of 2025 at our new quarterly rate of $0.45 per share, which is a 12.5% increase over 2024. Our annual dividend has increased every year since 2001, and we're the only precious metals company in the S&P High Yield Dividend Aristocrats Index.
We also achieved the full repayment of the Rainy River advanced stream deposit during the quarter. We made our investment at Rainy River during the initial construction in 2015, and we are pleased to see New Gold's plans for at least another nine years of operation as they continue to expand the pit and ramp up underground production.
On the new business front, we entered into an additional agreement with Ero Copper to acquire an incremental stream interest at Xavantina and increase the stream coverage in a very prospective area. Since our initial investment in 2021, Ero has successfully added high-grade resources and increased production in Xavantina, and we are pleased to increase our exposure to this asset. We paid $50 million for this additional interest from our cash balance, and we ended the quarter with $1.25 billion of total available liquidity.
And finally, we published new editions of our Investment Stewardship Report and Asset Handbook in mid-April. These are comprehensive documents that should help the market understand our portfolio and the outlook for our business. The market's focus is often only on the largest assets in our portfolio, but some of the smaller assets are important to our overall business and they have interesting growth potential. The asset handbook provides the detail required to understand and value this potential.
I'll now turn the call over to Martin for an overview of Q1 revenue.
Senior Vice President of Operations
Thanks, Bill. Turning to Slide 5, I'll give some comments on first quarter revenue.
Overall revenue was $193 million with volume of 67,600 GEOs. On our last quarterly call, we forecasted softer GEO sales from our stream segment in the first quarter. Stream sales met our expectations, and any softness was more than offset by strong metal prices and a stronger contribution from our royalty segment.
Royalty revenue was up by about 53% from the prior year quarter to $71 million. We saw another strong quarter from Peñasquito, Manh Choh, and Robinson and lower revenue from the Cortez Legacy Zone. The contribution of our royalty segment, which has grown over the past few quarters with revenue from several new assets - This segment contributed about 37% of total revenue in the quarter.
Revenue from our stream segment was $122 million, up by about 19% from last year with increased gold sales from Pueblo Viejo and gold and copper sales from Mount Milligan, partially offset by lower sales from Xavantina.
I'll turn to Slide 6 and give some comments on notable developments within the portfolio.
At Mount Milligan, Centerra reported first quarter results on Tuesday and confirmed their gold and copper production guidance for 2025. Centerra is expecting gold production of 165,000 to 185,000 ounces and copper production of 50 million to 60 million pounds, with both weighted to the second half of the year.
Remember that we experienced a normal course lag of about six months from production at the mine site to sales, so we will see the benefits of the higher production weighting in the first half of 2026.
Centerra also provided an update on the mine life extension project. In addition to extending the mine life beyond 2036, they highlighted the potential for a 10% increase to mill capacity through ball mill motor upgrades and additional downstream flow sheet improvements, which may also improve overall metal recovery. The prefeasibility study could provide a significant catalyst for Royal Gold, and we look forward to seeing the results when it's published in the third quarter.
At Andacollo, Teck provided gold production guidance of 35,000 to 39,000 ounces in 2025, which is significantly higher than the 2024 production of 20,800 ounces. The main driver of this increase is higher mill throughput due to increased water availability. As with Mount Milligan, we also experienced a normal course lag at Andacollo of about 6 months from production at the mine site to sales, so we expect to see the benefit of this increased production later in 2025.
Turning to Slide 7.
At Cortez, Barrick announced yesterday it is maintaining overall gold production guidance of between 680,000 and 765,000 ounces for the year. As we highlighted in our 2025 guidance press release, we estimate an overall average royalty rate of 3.1% on this production.
Barrick also reported progress on installing ventilation infrastructure at Goldrush, which should support increased mining rates. At Fourmile, the exploration campaign to define the ore body and overall footprint
started, which will support the prefeasibility study, and exploration continues at Hanson and Swift targets with encouraging results.
At Pueblo Viejo, Barrick also reported yesterday that 2025 gold production guidance of 370,000 to 410,000 ounces for its 60% share is unchanged after completing a 35-day shutdown for debottlenecking work on the expanded plant in the first quarter.
Barrick also provided an update on the mine life extension project, which is focusing on housing resettlement and engineering work on the new tailings storage facility. So far, 220 homes have been constructed, 18 families have been resettled, and the tailings facility is on track for commissioning in late 2029.
I'll wrap up with some comments on other portfolio assets.
At Peñasquito, Newmont reported that high grades in the Peñasco pit resulted in strong gold and steady co-product production in the first quarter. Newmont expects gold production to remain relatively steady through the second quarter before beginning to shift to a higher proportion of silver, lead and zinc and lower gold through the third and fourth quarters.
At Khoemacau, MMG provided 2025 silver production guidance of 1.3 million to 1.5 million ounces. MMG also reported the early works on camp and road construction as well as land acquisition and personnel recruitment have started on the expansion project. Construction is expected to begin in 2026 but remains subject to completion of a feasibility study.
In Nevada, results of Preliminary Economic Assessment studies were released for various assets operated by i-80, where we have royalty interests. At Granite Creek, underground production is ramping up to 60,000 ounces per year over an eight-year mine life, and the feasibility study is expected in the fourth quarter that includes an updated operational plan. The open pit project at Granite Creek is targeted to produce 130,000 ounces per year over a 10-year mine life, and an updated feasibility study is also expected in the fourth quarter. At Ruby Hill, the Archimedes project considers a high-grade underground gold mine producing approximately 100,000 ounces per year over a 10-year mine life. And the Mineral Point project envisions a large open pit heap leach gold mine, producing approximately 280,000 ounces gold equivalent per year over a 16.5-year mine life. We look forward to seeing progress at all of these projects.
At Back River and Nunavut, B2Gold (B2) expects to pour first gold in the second quarter. Any royalty revenue to us on production this year will be based on an initial royalty rate of 0.7%. B2 also announced the results of an updated NI 43-101 report, and they are targeting gold production of approximately 300,000 ounces per year for the first 6 years. B2 is also finalizing a study in late 2025 or early 2026 to evaluate an increase in mill throughput from 4,000 to potentially 6,000 tonnes per day.
Finally, the cash price paid for each ounce of gold delivered at Xavantina will increase from 20% to 40% of spot when the 49,000-ounce delivery threshold is reached. We received deliveries of 46,500 ounces at the end of March, and we expect this cash price increase will occur sometime in this current quarter. Note also that the effect of the transaction that Bill mentioned will be to extend the threshold for deliveries at the current 25% stream rate from 93,000 to 160,000 ounces.
I'll now turn the call over to Paul for a review of our financial results.
Senior VP & CFO
Thanks, Martin. I'll turn to Slide 8 and give an overview of the financial results for the quarter. For this discussion, I'll be comparing the quarter ended March 31, 2025 to the prior year quarter.
Revenue for the quarter was up strongly by 30% to $193 million.
Metal prices were a primary driver of the revenue increase, with gold up 38%, silver up 37% and copper up 11% over the prior year.
Disclaimer
Royal Gold Inc. published this content on May 14, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 14, 2025 at 15:28 UTC.