In its most recent quarterly earnings announcement, Royal Gold reported record revenue of $98.1 million, up 60% from $61.3 million in the prior-year quarter.
“Increased production from Mount Milligan and contributions from our recently acquired streams at Pueblo Viejo, Andacollo, Wassa and Prestea drove our record performance in the second quarter as expected,” said Tony Jensen, president and CEO, Royal Gold. “Impressive volume growth at these properties and stability within the rest of the portfolio are yielding solid financial results and generating strong free cash flow.”
Second quarter revenue was comprised of stream revenue of $67.3 million and royalty revenue of $30.8 million, at an average gold price of $1,106/oz. Stream segment gold purchases totaled approximately 75,800 oz in the second quarter. The company sold approximately 61,600 oz of gold from its stream segment, and had approximately 25,700 oz in inventory at December 31, as previously guided, up from 11,500 oz at September 30.
During December, Royal Gold amended its $130 million gold stream transaction with Golden Star Resources, which provided for an additional $15 million investment by Royal Gold. If Golden Star procures a minimum of $5 million of third-party investment, Royal Gold will increase its investment by a further $5 million (for a total investment of $150 million) subject to satisfaction of certain conditions.
Golden Star reported that the Wassa Underground project made substantial progress during 2015, with stope development of the upper mineralization expected to commence in the June 2016 quarter and first ore production expected in mid-2016. Infill drilling early in 2015 was successful in expanding the F Shoot target and further drilling will be conducted to determine additional mineral potential in the area.
Golden Star also reported work on the Prestea Underground project is progressing as scheduled with first ore production expected in early 2017.
As of December 31, Royal Gold has advanced $75 million, and has received 12,700 oz of gold deliveries, resulting in $13.4 million in sales in just two quarters.
Thompson Creek continues to optimize the operation and expects to make a decision on construction of the permanent secondary crusher during the March 2016 quarter. Gold grades averaged 0.63 g/mt, an increase of 17% over the prior-year quarter and gold recoveries averaged 67.3% for the quarter, an increase of 11% over the prior-year quarter. For 2016, Thompson Creek forecasts annual gold payable production of 240,000 to 270,000 oz, an increase of approximately 10% to 24% over 2015 production of approximately 218,000 oz.
On January 11, Rubicon Minerals provided an updated geological model and mineralized material statement for the Phoenix gold project that included a significant reduction in mineralized material compared to previous statements provided by Rubicon. Rubicon suspended activities related to their previously announced Phoenix project.
In November, Barrick announced that two of three electric motors at the Pueblo Viejo oxygen plant experienced unexpected failures and were shipped to the United States for repair. A comprehensive plan to mitigate the impact of the motor failure was implemented by Barrick in December, which involved installing a number of portable compressors in December and early January. This restored mill production to near full capacity during the second week in January. One of the two repaired motors has arrived in the Dominican Republic and will be installed and tested by the end of January. The second motor is due to arrive on-site in mid-February.
Production attributable to royalty revenue recognized at Voisey’s Bay during the second quarter was 15.2 million lb of copper and 23.6 million lb of nickel. Vale reported that its new Long Harbour hydrometallurgical plant will begin processing only Voisey’s Bay concentrate by the first calendar quarter of 2016.