Credit Facility and Debt Repayment
Royal Gold has made significant strides in debt management by repaying a total of $250 million of its revolving credit facility in 2023. Amendments to its credit terms were also instituted, extending the facility’s maturity to 2028 and adopting the Secured Overnight Financing Rate (SOFR) as the new interest benchmark, with a current rate of 6.7%. As of the end of the third quarter, the company reported $325 million in debt with an available credit of $675 million.
Revenue Recognition and Operations
The company’s revenue is derived mainly from metal streams and royalty interests. Stream revenues are recognized at the point of physical delivery based on spot rate forward contracts, while royalties are accounted for at the production stage, considering contractual pricing and allowable deductions. Despite lacking some operational details, the company’s reported revenue estimates are not significantly impacted by these delays.
The third quarter saw no revenue from the Peñasquito mine royalty due to operational disruptions from a strike. However, the situation is expected to stabilize, with a return to full capacity projected by the year’s end following the resolution between Newmont and the workers’ union.
Acquisitions and Exploration Updates
Royal Gold has decided not to proceed with the acquisition of royalties in the Serrote and Santa Rita mines in Brazil. Additionally, the company has made an advance payment of $2.4 million to Ero Copper for the Xavantina mine with an agreement for further payments upon reaching specific exploration targets.