In an Oct. 9 research note, Andrew Kaip highlighted Royal Gold Inc.'s (RGLD:NASDAQ; RGL:TSX) reported sales from its streaming agreements. Gold sales and silver and copper deliveries during Q1 FY19 were "higher than estimated."
Gold stream deliveries were 46,000 ounces (46 Koz) versus BMO's estimated 43.5 Koz, and gold inventory dropped to 20 Koz from 22 Koz. Silver and copper stream deliveries were 544 Koz and 0.7 thousand tons (0.7 Kt), respectively, compared to BMO's expectations of about 456 Koz silver and 0.5 Kt copper.
During the quarter ended Sept. 30, 2018, the company's streaming revenue is estimated at $69.5 million, which would exceed BMO's $62.7 million forecast. At the same time, costs were down, coming in at an estimated $16.4 million versus BMO's anticipated $19.8 million. "We expect a positive revision to our estimates," Kaip indicated.
As for average metals prices, they were lower in Q1/19, quarter over quarter. Gold was $1,221 per ounce ($1,221/oz) versus $1,314/oz one quarter earlier. Silver was $15.25/oz compared to $16.55/oz. Copper was $5,800 per ton, down from $6,847 per ton.
Cost of sales during the quarter were $288/oz of gold equivalent, down from $349/oz in Q4/18.
Royal Gold is scheduled to release its Q1/19 results after the market close on Oct. 31, with a conference call to follow at noon Eastern Standard Time on Nov. 1.
BMO has an Outperform rating and a $98 per share target price on Royal Gold, whose stock is trading currently at ~$77.93 per share.
[NLINSERT]Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.
Disclosures from BMO Capital Markets, Royal Gold, Oct. 9, 2018
IMPORTANT DISCLOSURES
Analyst's Certification
I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosures
Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months from Royal Gold.
Disclosure 6C: Royal Gold is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: C) Non-Securities Related Services.
Disclosure 9B: BMO Capital Markets makes a market in Royal Gold in United States.
For Important Disclosures on the stocks discussed in this report, please click here.
