DENVER, Nov. 4 /PRNewswire-FirstCall/ -- ROYAL GOLD, INC. (Nasdaq: RGLD; TSX: RGL) today announced revenues of $5.9 million for the first quarter of fiscal year 2005 (ended September 30), an increase of 40%, compared to revenues of $4.2 million for the same period in fiscal 2004. Net income was $2.5 million or $0.12 per basic share for the quarter, compared to $1.3 million or $0.06 per basic share for the same period last fiscal year. Higher revenues were largely due to higher gold prices which resulted in a step-up of Royal Gold's sliding-scale royalty rate at the Pipeline Mining Complex.
"Our portfolio continues to perform at a high level," said Stanley Dempsey, Chairman and Chief Executive Officer. "The overall quality of our royalties and the mine operators, combined with our ability to derive significant leverage from the increasing gold price through our sliding-scale royalties, have been major drivers to success. Our unique business model and solid balance sheet allow us great flexibility and remains an asset. During the quarter, we took steps to advance our stated goal of doubling the size of the Company by expanding our royalty portfolio in a royalty financing transaction with Revett Silver Company. While we look forward to the additional revenue that will be generated from the Troy mine, we maintain our appetite for growth and will continue to seek opportunities."
During the quarter, free cash flow was approximately $4.2 million, or 71% of revenues compared to $2.7 million or 64% of revenues for the same period last fiscal year. Free cash flow, a non-GAAP financial measure, is defined as operating income plus depreciation, depletion and amortization, non-cash charges, and any impairment of mining assets. (See, Schedule A - Reconciliation.)
At September 30, 2004, the Company had a working capital surplus of approximately $51.8 million. Current assets were $55.3 million, compared to current liabilities of $3.5 million for a current ratio of nearly 16 to 1.
REVIEW OF OPERATIONS Pipeline Mining Complex, Lander County, Nevada
The Company owns two sliding-scale gross smelter return royalties ("GSR1 and GSR2"), a fixed rate gross smelter return royalty ("GSR3"), and a net value return royalty ("NVR1") on the Pipeline Mining Complex, in Lander County, Nevada. The GSR1 royalty covers the current mine footprint, and the GSR2 ("super") royalty covers any reserves that are developed on the claim block lying outside the current mine footprint. The GSR2 royalty pays out at a rate that is 80% higher than that of GSR1, at all gold prices. The GSR3 royalty is a 0.71% fixed rate for the life of the mine. The 0.39% NVR1 covers production from the GAS Claims, an area of interest of approximately 4,000 acres including the South Pipeline deposit and Crossroads area, but not including the Pipeline pit. The NVR1 royalty is calculated by deducting processing-related costs, but is not burdened by mining costs.
The Pipeline Mining Complex is owned by the Cortez Joint Venture ("Cortez"), a joint venture between Placer Cortez Inc. (60%), a subsidiary of Placer Dome Inc., and Kennecott Exploration (Australia) Ltd. (40%), a subsidiary of Rio Tinto.
During the first quarter of fiscal 2005, the Pipeline Mining Complex produced 249,469 ounces of gold providing royalty revenue of $5.0 million, compared to 219,901 ounces of gold produced providing royalty revenue of $3.5 million for the same quarter in fiscal 2004. The 43% increase in quarterly royalty revenue was driven by a step-up in our sliding-scale rate and increased production attributable to our royalty interests.
During the quarter, the average gold price was $401 per ounce resulting in a royalty rate of 4.0%, compared to an average gold price of $364 per ounce and a royalty rate of 3.4% for the same period in fiscal 2004. Current production from the Pipeline Mining Complex is subject to GSR1, GSR3, and NVR1.
Leeville Project, Eureka County, Nevada
Royal Gold holds a 1.8% net smelter return ("NSR") royalty covering a majority of the Leeville project ("Leeville"). Leeville is an underground mine, currently under development by Newmont Mining Corporation ("Newmont"). Newmont has announced its intention to initiate production at Leeville in the fourth quarter of calendar 2005. Current production on the Leeville royalty land is derived from underground operations on a portion of the Carlin East deposit.
During the first quarter of fiscal 2005, the Carlin East deposit produced 33,406 ounces of gold. Royalty revenue for the quarter was $315,296, which included $78,000 for prior royalty payments. This compares to 27,275 ounces of gold produced, providing royalty revenue of $171,846 for the same quarter in fiscal 2004. The 38% net increase in royalty revenue related to the Carlin East deposit was due to higher gold prices as well as a 23% increase in production attributable to Royal Gold's royalty interest.
SJ Claims (Goldstrike Mine), Eureka County, Nevada
Royal Gold holds a 0.9% NSR royalty covering a portion of the Betze-Post mine, known as the SJ Claims. The Betze-Post mine, a part of the larger Goldstrike operation, is operated by Barrick Gold Corporation ("Barrick").
During the first quarter of fiscal 2005, the SJ Claims produced 131,357 ounces of gold, providing royalty revenue of $477,392, compared to 126,183 ounces of gold produced, providing royalty revenue of $414,839 for the same quarter in fiscal 2004. The 15% increase in royalty revenue was due to higher gold prices.
Bald Mountain, White Pine County, Nevada
Royal Gold holds a 1.75% to 3.5% NSR sliding-scale royalty that burdens a portion of the Bald Mountain mine, operated by Placer Dome U.S. Inc. The 1.75% NSR royalty rate does not increase until the gold price exceeds $500 per ounce.
During the first quarter of fiscal 2005, Bald Mountain produced about 7,300 ounces of gold, providing royalty revenue of $51,265, compared to 10,288 ounces of gold produced providing royalty revenue of $65,071 for the same quarter in fiscal 2004.
South American Properties (Argentina)
The Company holds a 2% NSR royalty on the Martha silver mine operated by Coeur d'Alene Mines Corporation. Royalty revenue for the first quarter of fiscal 2005 was $39,395, compared with $12,294 for the same quarter in fiscal 2004.
Troy Mine, Lincoln County, Montana
Royal Gold obtained payments equivalent to a 7.0% GSR royalty that covers the Troy mine operated by Revett Silver Company ("Revett"). The Troy mine is an underground mine which operated from 1981 through 1993, producing 44.4 million ounces of silver and 390.0 million pounds of copper. The GSR royalty will extend until either cumulative production of 90% of the current reserves is reached, or Royal Gold receives $10.5 million in cumulative payments, whichever occurs first. Revett has announced that production at the Troy mine should commence in late 2004, and anticipates production of approximately 3.0 million ounces of silver and 25.0 million ounces of copper in calendar year 2005.
Corporate Profile
Royal Gold is a precious metals royalty company engaging in the acquisition and management of precious metals royalty interests. Royal Gold is publicly traded on the Nasdaq Market System 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 its first quarter of fiscal 2005 will be held today at 12:00 noon Eastern, 10:00 a.m. Mountain. The call will be simultaneously carried on the Company's web site at http://www.royalgold.com/ under the "Presentations" section. A replay of the call will be available on our website approximately two hours after the call ends. The conference call is also available by calling 800-603-2779 or 706-634-7230. Replays are also available until November 12 by dialing 800-642-1687 or 706-645-9291, access number 1774816.
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 production levels and timing, reserves, increased revenue from Revett, and the sliding-scale features of our royalty structure at the Pipeline Mining Complex. Factors that could cause actual results to differ materially include, among others, precious metals prices, 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, 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.
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 by operating income plus depreciation, depletion and amortization, non-cash charges, and any impairment of mining assets. 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 - Reconciliation, attached to this press release.
ROYAL GOLD, INC. Consolidated Balance Sheets (Unaudited) September 30, June 30, 2004 2004 Current asset Cash and equivalents $48,666,658 $44,800,901 Royalty receivables 5,014,547 5,221,307 Current deferred tax asset 1,305,784 1,671,305 Prepaid expenses and other 277,308 207,662 Total current assets 55,264,297 51,901,175 Royalty interests in mineral properties, net 39,493,816 40,325,611 Available for sale securities 500,140 420,231 Deferred tax asset 219,554 306,565 Other assets 619,067 568,228 Total assets $96,096,874 $93,521,810 Current liabilities Accounts payable $1,429,845 $1,232,539 Federal income taxes payable 609,462 -- Dividend payable 779,377 779,377 Accrued compensation 300,000 200,000 Other 343,084 229,518 Total current liabilities 3,461,768 2,441,434 Deferred tax liability 7,870,113 8,078,975 Other long term liabilities 96,489 103,089 Total Liabilities 11,428,370 10,623,498 Commitments and contingencies Stockholders' equity Common stock, $.01 par value, authorized 40,000,000 shares; and issued 21,012,583 and 21,012,583 shares, respectively 210,125 210,125 Additional paid-in capital 102,019,891 102,019,891 Accumulated other comprehensive income 79,240 28,097 Accumulated deficit (16,543,880) (18,262,929) Less treasury stock, at cost (229,224 shares) (1,096,872) (1,096,872) Total stockholders' equity 84,668,504 82,898,312 Total liabilities and stockholders' equity $96,096,874 $93,521,810 ROYAL GOLD, INC. Consolidated Statements of Operations and Comprehensive Income (Unaudited) For The Three Months Ended September 30, September 30, 2004 2003 Royalty revenues $5,924,091 $4,181,485 Costs and expenses Costs of operations 459,281 335,148 General and administrative 815,863 585,687 Exploration and business development 455,616 522,439 Depreciation and depletion 860,188 914,891 Total costs and expenses 2,590,948 2,358,165 Operating income 3,333,143 1,823,320 Interest and other income 131,165 89,003 Interest and other expense (29,018) (29,277) Income before income taxes 3,435,290 1,883,046 Current tax expense (658,934) (73,705) Deferred tax expense (277,930) (466,228) Net income $2,498,426 $1,343,113 Adjustments to comprehensive income Unrealized change in market value of available for sale securities 51,143 (107,709) Comprehensive income $2,549,569 $1,235,404 Basic earnings per share $0.12 $0.06 Basic weighted average shares outstanding 20,783,359 20,696,816 Diluted earnings per share $0.12 $0.06 Diluted weighted average shares outstanding 21,090,329 21,099,580 ROYAL GOLD, INC. Consolidated Statements of Cash Flows (Unaudited) For The Three Months Ended September 30, September 30, 2004 2003 Cash flows from operating activities Net income $2,498,426 $1,343,113 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 860,188 914,891 Deferred tax expense 277,930 466,228 (Increase) decrease in: Royalty receivables 206,760 (276,274) Prepaid expenses and other assets (72,121) (70,299) Increase (decrease) in: Accounts payable 197,306 (11,765) Federal income taxes payable 609,462 (124,295) Accrued liabilities and other current liabilities 124,672 138,335 Other long term liabilities (6,600) (6,600) Net cash provided by operating activities 4,696,023 2,373,334 Cash flows from investing activities Capital expenditures for property and equipment (50,889) (42,275) Net cash used in investing activities (50,889) (42,275) Cash flows from financing activities: Dividends paid (779,377) (1,032,735) Proceeds from issuance of common stock -- 611,361 Net cash used in financing activities (779,377) (421,374) Net increase in cash and equivalents 3,865,757 1,909,685 Cash and equivalents at beginning of period 44,800,901 33,485,543 Cash and equivalents at end of period $48,666,658 $35,395,228 SCHEDULE A - RECONCILIATION Non-GAAP Financial Measures The Company computes and discloses free cash flow and free cash flow as a percentage of revenues as non-GAAP financial measures. Free cash flow is defined by the Company as operating income plus depreciation, depletion and amortization, non-cash charges, and adding back any impairment of mining assets. 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 reconciliation to operating income: For The Three Months Ended September 30, September 30, 2004 2003 Operating income $3,333,143 $1,823,320 Depreciation and depletion 860,188 914,891 Free cash flow $4,193,331 $2,738,211
Royal Gold, Inc.
"Our portfolio continues to perform at a high level," said Stanley Dempsey, Chairman and Chief Executive Officer. "The overall quality of our royalties and the mine operators, combined with our ability to derive significant leverage from the increasing gold price through our sliding-scale royalties, have been major drivers to success. Our unique business model and solid balance sheet allow us great flexibility and remains an asset. During the quarter, we took steps to advance our stated goal of doubling the size of the Company by expanding our royalty portfolio in a royalty financing transaction with Revett Silver Company. While we look forward to the additional revenue that will be generated from the Troy mine, we maintain our appetite for growth and will continue to seek opportunities."
During the quarter, free cash flow was approximately $4.2 million, or 71% of revenues compared to $2.7 million or 64% of revenues for the same period last fiscal year. Free cash flow, a non-GAAP financial measure, is defined as operating income plus depreciation, depletion and amortization, non-cash charges, and any impairment of mining assets. (See, Schedule A - Reconciliation.)
At September 30, 2004, the Company had a working capital surplus of approximately $51.8 million. Current assets were $55.3 million, compared to current liabilities of $3.5 million for a current ratio of nearly 16 to 1.
REVIEW OF OPERATIONS Pipeline Mining Complex, Lander County, Nevada
The Company owns two sliding-scale gross smelter return royalties ("GSR1 and GSR2"), a fixed rate gross smelter return royalty ("GSR3"), and a net value return royalty ("NVR1") on the Pipeline Mining Complex, in Lander County, Nevada. The GSR1 royalty covers the current mine footprint, and the GSR2 ("super") royalty covers any reserves that are developed on the claim block lying outside the current mine footprint. The GSR2 royalty pays out at a rate that is 80% higher than that of GSR1, at all gold prices. The GSR3 royalty is a 0.71% fixed rate for the life of the mine. The 0.39% NVR1 covers production from the GAS Claims, an area of interest of approximately 4,000 acres including the South Pipeline deposit and Crossroads area, but not including the Pipeline pit. The NVR1 royalty is calculated by deducting processing-related costs, but is not burdened by mining costs.
The Pipeline Mining Complex is owned by the Cortez Joint Venture ("Cortez"), a joint venture between Placer Cortez Inc. (60%), a subsidiary of Placer Dome Inc., and Kennecott Exploration (Australia) Ltd. (40%), a subsidiary of Rio Tinto.
During the first quarter of fiscal 2005, the Pipeline Mining Complex produced 249,469 ounces of gold providing royalty revenue of $5.0 million, compared to 219,901 ounces of gold produced providing royalty revenue of $3.5 million for the same quarter in fiscal 2004. The 43% increase in quarterly royalty revenue was driven by a step-up in our sliding-scale rate and increased production attributable to our royalty interests.
During the quarter, the average gold price was $401 per ounce resulting in a royalty rate of 4.0%, compared to an average gold price of $364 per ounce and a royalty rate of 3.4% for the same period in fiscal 2004. Current production from the Pipeline Mining Complex is subject to GSR1, GSR3, and NVR1.
Leeville Project, Eureka County, Nevada
Royal Gold holds a 1.8% net smelter return ("NSR") royalty covering a majority of the Leeville project ("Leeville"). Leeville is an underground mine, currently under development by Newmont Mining Corporation ("Newmont"). Newmont has announced its intention to initiate production at Leeville in the fourth quarter of calendar 2005. Current production on the Leeville royalty land is derived from underground operations on a portion of the Carlin East deposit.
During the first quarter of fiscal 2005, the Carlin East deposit produced 33,406 ounces of gold. Royalty revenue for the quarter was $315,296, which included $78,000 for prior royalty payments. This compares to 27,275 ounces of gold produced, providing royalty revenue of $171,846 for the same quarter in fiscal 2004. The 38% net increase in royalty revenue related to the Carlin East deposit was due to higher gold prices as well as a 23% increase in production attributable to Royal Gold's royalty interest.
SJ Claims (Goldstrike Mine), Eureka County, Nevada
Royal Gold holds a 0.9% NSR royalty covering a portion of the Betze-Post mine, known as the SJ Claims. The Betze-Post mine, a part of the larger Goldstrike operation, is operated by Barrick Gold Corporation ("Barrick").
During the first quarter of fiscal 2005, the SJ Claims produced 131,357 ounces of gold, providing royalty revenue of $477,392, compared to 126,183 ounces of gold produced, providing royalty revenue of $414,839 for the same quarter in fiscal 2004. The 15% increase in royalty revenue was due to higher gold prices.
Bald Mountain, White Pine County, Nevada
Royal Gold holds a 1.75% to 3.5% NSR sliding-scale royalty that burdens a portion of the Bald Mountain mine, operated by Placer Dome U.S. Inc. The 1.75% NSR royalty rate does not increase until the gold price exceeds $500 per ounce.
During the first quarter of fiscal 2005, Bald Mountain produced about 7,300 ounces of gold, providing royalty revenue of $51,265, compared to 10,288 ounces of gold produced providing royalty revenue of $65,071 for the same quarter in fiscal 2004.
South American Properties (Argentina)
The Company holds a 2% NSR royalty on the Martha silver mine operated by Coeur d'Alene Mines Corporation. Royalty revenue for the first quarter of fiscal 2005 was $39,395, compared with $12,294 for the same quarter in fiscal 2004.
Troy Mine, Lincoln County, Montana
Royal Gold obtained payments equivalent to a 7.0% GSR royalty that covers the Troy mine operated by Revett Silver Company ("Revett"). The Troy mine is an underground mine which operated from 1981 through 1993, producing 44.4 million ounces of silver and 390.0 million pounds of copper. The GSR royalty will extend until either cumulative production of 90% of the current reserves is reached, or Royal Gold receives $10.5 million in cumulative payments, whichever occurs first. Revett has announced that production at the Troy mine should commence in late 2004, and anticipates production of approximately 3.0 million ounces of silver and 25.0 million ounces of copper in calendar year 2005.
Corporate Profile
Royal Gold is a precious metals royalty company engaging in the acquisition and management of precious metals royalty interests. Royal Gold is publicly traded on the Nasdaq Market System 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 its first quarter of fiscal 2005 will be held today at 12:00 noon Eastern, 10:00 a.m. Mountain. The call will be simultaneously carried on the Company's web site at http://www.royalgold.com/ under the "Presentations" section. A replay of the call will be available on our website approximately two hours after the call ends. The conference call is also available by calling 800-603-2779 or 706-634-7230. Replays are also available until November 12 by dialing 800-642-1687 or 706-645-9291, access number 1774816.
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 production levels and timing, reserves, increased revenue from Revett, and the sliding-scale features of our royalty structure at the Pipeline Mining Complex. Factors that could cause actual results to differ materially include, among others, precious metals prices, 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, 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.
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 by operating income plus depreciation, depletion and amortization, non-cash charges, and any impairment of mining assets. 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 - Reconciliation, attached to this press release.
ROYAL GOLD, INC. Consolidated Balance Sheets (Unaudited) September 30, June 30, 2004 2004 Current asset Cash and equivalents $48,666,658 $44,800,901 Royalty receivables 5,014,547 5,221,307 Current deferred tax asset 1,305,784 1,671,305 Prepaid expenses and other 277,308 207,662 Total current assets 55,264,297 51,901,175 Royalty interests in mineral properties, net 39,493,816 40,325,611 Available for sale securities 500,140 420,231 Deferred tax asset 219,554 306,565 Other assets 619,067 568,228 Total assets $96,096,874 $93,521,810 Current liabilities Accounts payable $1,429,845 $1,232,539 Federal income taxes payable 609,462 -- Dividend payable 779,377 779,377 Accrued compensation 300,000 200,000 Other 343,084 229,518 Total current liabilities 3,461,768 2,441,434 Deferred tax liability 7,870,113 8,078,975 Other long term liabilities 96,489 103,089 Total Liabilities 11,428,370 10,623,498 Commitments and contingencies Stockholders' equity Common stock, $.01 par value, authorized 40,000,000 shares; and issued 21,012,583 and 21,012,583 shares, respectively 210,125 210,125 Additional paid-in capital 102,019,891 102,019,891 Accumulated other comprehensive income 79,240 28,097 Accumulated deficit (16,543,880) (18,262,929) Less treasury stock, at cost (229,224 shares) (1,096,872) (1,096,872) Total stockholders' equity 84,668,504 82,898,312 Total liabilities and stockholders' equity $96,096,874 $93,521,810 ROYAL GOLD, INC. Consolidated Statements of Operations and Comprehensive Income (Unaudited) For The Three Months Ended September 30, September 30, 2004 2003 Royalty revenues $5,924,091 $4,181,485 Costs and expenses Costs of operations 459,281 335,148 General and administrative 815,863 585,687 Exploration and business development 455,616 522,439 Depreciation and depletion 860,188 914,891 Total costs and expenses 2,590,948 2,358,165 Operating income 3,333,143 1,823,320 Interest and other income 131,165 89,003 Interest and other expense (29,018) (29,277) Income before income taxes 3,435,290 1,883,046 Current tax expense (658,934) (73,705) Deferred tax expense (277,930) (466,228) Net income $2,498,426 $1,343,113 Adjustments to comprehensive income Unrealized change in market value of available for sale securities 51,143 (107,709) Comprehensive income $2,549,569 $1,235,404 Basic earnings per share $0.12 $0.06 Basic weighted average shares outstanding 20,783,359 20,696,816 Diluted earnings per share $0.12 $0.06 Diluted weighted average shares outstanding 21,090,329 21,099,580 ROYAL GOLD, INC. Consolidated Statements of Cash Flows (Unaudited) For The Three Months Ended September 30, September 30, 2004 2003 Cash flows from operating activities Net income $2,498,426 $1,343,113 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 860,188 914,891 Deferred tax expense 277,930 466,228 (Increase) decrease in: Royalty receivables 206,760 (276,274) Prepaid expenses and other assets (72,121) (70,299) Increase (decrease) in: Accounts payable 197,306 (11,765) Federal income taxes payable 609,462 (124,295) Accrued liabilities and other current liabilities 124,672 138,335 Other long term liabilities (6,600) (6,600) Net cash provided by operating activities 4,696,023 2,373,334 Cash flows from investing activities Capital expenditures for property and equipment (50,889) (42,275) Net cash used in investing activities (50,889) (42,275) Cash flows from financing activities: Dividends paid (779,377) (1,032,735) Proceeds from issuance of common stock -- 611,361 Net cash used in financing activities (779,377) (421,374) Net increase in cash and equivalents 3,865,757 1,909,685 Cash and equivalents at beginning of period 44,800,901 33,485,543 Cash and equivalents at end of period $48,666,658 $35,395,228 SCHEDULE A - RECONCILIATION Non-GAAP Financial Measures The Company computes and discloses free cash flow and free cash flow as a percentage of revenues as non-GAAP financial measures. Free cash flow is defined by the Company as operating income plus depreciation, depletion and amortization, non-cash charges, and adding back any impairment of mining assets. 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 reconciliation to operating income: For The Three Months Ended September 30, September 30, 2004 2003 Operating income $3,333,143 $1,823,320 Depreciation and depletion 860,188 914,891 Free cash flow $4,193,331 $2,738,211
Royal Gold, Inc.
