Sep 16, 2020
Mining companies report Q2 results
20 Lecture minimum
ADELLA HARDING MINING QUARTERLY CORRESPONDENT Sep 4, 2020
Barrick Gold Corp.
Barrick Gold Corp. announced higher adjusted net earnings of $415 million, or 23 cents per share, for the second quarter amid increasing gold prices and the COVID-19 pandemic and reported that Nevada Gold Mines was a strong performer.
The adjusted net earnings compared with $154 million, or 9 cents per share, in the second quarter of last year, and Barrick announced net earnings of $357 million, or 20 cents per share, in the quarter ending June 30, compared with $194 million, or 11 cents per share, in the 2019 quarter.
Nevada Gold Mines produced 847,000 ounces of gold for both Barrick and Newmont Corp. in the second quarter, Barrick reported. Barrick is operator of Nevada Gold Mines and holds 61.5 percent. Newmont holds the remaining 38.5 percent of the joint venture that combined their properties in Nevada.
“Cortez Hills underground continued to outperform,” Barrick President and Chief Executive Officer Mark Bristow said in the earnings webinar as he talked about Nevada operations.
He said the Goldrush team at Cortez has now been integrated into the Cortez operation, and Goldrush development is ahead of schedule. Goldrush, a gold discovery that is in underground development, will move from a contractor to Cortez crews in the fourth quarter.
Bristow said Goldrush is ahead of schedule, and the first ore is expected in the first half of next year and permitting is expected later in 2021 for full-scale mining.
The Fourmile discovery that is still outside the NGM joint venture also continues to have “exciting potential,” Bristow said.
Exploration on the Carlin Trend continues to hold promise, he said, and the North Leeville results included an intercept of the highest grade ever at more than 1 ounce per ton of gold. There also have been thick intercepts at Deep Post, according to the earnings report.
NGM gold production at Carlin, however, was impacted in the quarter by roaster maintenance at Goldstrike, while an increase in higher grade Cortez ore processed at the Carlin roasters displaced lower grade Carlin ore in the feed mix. This roaster usage is an example of a synergy captured with the joint venture, Barrick reported.
Bristow said NGM is adjusting to routing ore through Carlin’s processing facilities.
At Turquoise Ridge in Humboldt County, construction of a third shaft is on schedule and within budget, said Bristow, adding that the focus is on continued boosting underground efficiencies.
He said the Turquoise Ridge complex that includes the Twin Creeks Mine has required extra effort to integrate Turquoise Ridge and the former Newmont Twin Creeks operation that toll-milled ore from Turquoise Ridge.
Still, Turquoise Ridge offers significant opportunities for NGM, said Bristow, who visited the operation a couple weeks ago.
“They’re still very exciting upside opportunities at Turquoise Ridge,” he said.
Bristow also explained that NGM put a hold on Long Canyon expansion because “we didn’t like what we saw,” and there was resistance to the proposal to “dewater the whole compartment” for expansion. He said NGM will look at a more manageable water balance.
NGM also will study whether to go underground or stay with open-pit mining, he said.
Still, Bristow said Long Canyon is “very profitable,” and the mine helps support the community.
NGM notified the U.S. Bureau of Land Management on July 27 that it wanted to pause the review process for the expansion, according to The Associated Press, which reported the BLM planned to issue a decision on the Long Canyon expansion in September 2021.
AP also reported five environmental groups a tribe and a local water-rights holder filed state administrative protests in April over water rights applications.
Bristow said NGM recognizes the impact the pandemic had on Nevada’s economy that is dependent on gaming and tourism, so the joint venture is prepaying net proceeds taxes to help the state.
NGM expects to pay $170 million to the state by March 2021, and the joint venture has chosen not to take up the option of deferring payroll tax payments of roughly $40 million, according to the Barrick earnings report.
In another note about Nevada, Bristow said NGM added $13 million more over 10 years to the Western Shoshone Scholarship Foundation, bringing the total to $26 million.
Barrick’s board of directors increased the company’s dividend to shareholders by 14 percent to 8 cents per share, and Bristow said the company will continue to look at potential dividend increases because of higher gold prices. He said, however, that the company will be conservative and careful how it spends money as gold prices climb.
Barrick continues to allocate capital using a figure of $1,200 per ounce, Bristow said.
Barrick’s average realized gold price for the second quarter was $1,725 per ounce, up from $1,317 in the second quarter of 2019.
Total gold production for Toronto-based Barrick in the quarter was 1.15 million ounces, down from 1.35 million ounces in the 2019 quarter, but the company stated that at the six-month mark, production is at 2.4 million ounces and on its way to planned production for this year of between 4.6 million and 5 million ounces of gold.
Shutdowns and operation curtailment at the Veladero Mine in Argentina due to COVID-19 impacted production, according to Barrick.
The company also stated in the earnings report that higher gold prices resulted in higher royalty payments and costs. Total cash costs were $716 per ounce, compared with $651 in the 2019 quarter, and all-in sustaining costs were $1,031 per ounce, up from $869 per ounce in the second quarter of last year.
Copper production in the second quarter totaled 120 million pounds, up from 97 million pounds in the second quarter of last year, Barrick also reported. The realized copper price was $2.79 per pound, compared with $2.62 per pound in the 2019 quarter.
Bristow said Barrick handled the COVID-19 pandemic impacts well in the second quarter and is continuing precautions as the pandemic is ongoing, as well as helping the communities where it operates deal with the impact.
“Our flattened and decentralized management structure was a major factor in contending with COVID-19 while at the same time continuing to meet short-term targets and making significant progress towards our strategic objectives,” he stated in the earnings report.
“At all our sites, strict access, screening, sanitation and isolation measures were implemented and through our community engagement channels, we also took the lead in introducing these protocols, supported by education programs, to our neighbors,” Bristow said.
Newmont Corp.Newmont Corp. reported adjusted net income for the second quarter of $261 million, or 32 cents per share, up from the second quarter of last year, with higher gold prices helping offset the higher costs because of the COVID-19 pandemic.
Newmont’s average realized gold price was up $407 per ounce over the second quarter of 2019 at $1,724 per ounce, but since the quarter ended June 30, the price has surged, reaching new highs.
The 32 cents per share in earnings was two pennies less than Zacks Consensus Estimate for the quarter.
The company’s adjusted net income was $92 million, or 12 cents per share, in the 2019 quarter, while the company said its net income from continuing operations was $412 million, or 51 cents per share, in the 2020 quarter, $411 million more than the $1 million net income in the second quarter of last year.
Ongoing impacts from COVID-19 are costing Newmont roughly $4 million to $5 million per month, as the company continues pandemic protocols at all its operations, President and Chief Executive Officer Tom Palmer said in the July 30 earnings teleconference.
He said he is “incredibly proud of our employees” as they deal with the pandemic, and he said Newmont is continuing efforts to help the communities where Newmont operates deal with the impacts of COVID-19, including partnering with agencies that deal with domestic violence, as well as providing food and medical assistance and loans to small businesses.
The Greenwood Village, Colo.-based company also reported $33 million in incremental COVID-19 specific costs for the second quarter, such as for additional health and safety procedures, transportation expenses and community fund contributions.
The pandemic resulted in temporary shutdowns at five of Newmont’s operations in Mexico, Canada and South America that affected gold production, but they are all back in production and the company still expects to produce 6 million ounces of gold and another $1 million in co-products this year.
The outlook includes nearly 1.38 million ounces of gold for Newmont’s 38.5 percent share of Nevada Gold Mines for the year, and the company stated its share of production in the second quarter was 326,000 gold ounces at a cost applicable to sales of $797 per ounce and an all-in sustaining cost of $979 per ounce.
Nevada Gold Mines is a joint venture of Newmont and Barrick Gold Corp., with operator Barrick holding 61.5 percent of the JV.
The joint venture marked its first anniversary July 1, and Palmer said the joint venture “should have been done a long time ago.” He said some assets were in their twilight years before the joint venture, but they have new life with the combination that provides new access to orebodies.
“The sum of the whole is definitely better than the sum of its parts,” he said in the teleconference.
Overall, Newmont reported gold production of 1.3 million ounces in the second quarter at costs applicable to sales of $748 per ounce and an all-in sustaining cost of $1,097 per ounce, compared with 1.59 million ounces at costs applicable to sales of $759 per ounce and all-in sustaining costs of $1,016 per ounce in the second quarter of 2019.
Palmer said Newmont has top-tier operations in the best mining jurisdictions.
With the rising gold prices providing more cash flow, Newmont declared a 25-cent dividend for the quarter, and Executive Vice President and Chief Financial Officer Nancy Buese said in the teleconference the dividend is one way Newmont is sharing the higher cash flow with shareholders.
This was the second quarter with a 25-cent dividend, up from 14 cents a share prior to the increase.
Palmer said in the teleconference that beyond the $1,200 gold price per ounce that provided the base for budgeting, every $100 increase in the gold price provides $400 million in free cash flow, and there are “potential tail winds” for additional cash flow from low oil and gas prices and declining value of the U.S. dollar.
In the earnings news release, he said that “the ongoing favorable gold price environment amplifies our free cash flow generation yet our discipline around capital allocation will not change as well continue to invest in profitable projects and provide shareholders industry-leading returns while maintaining a strong balance sheet.”
Newmont additionally reported that the average realized price for copper in the second quarter was $2.91 per pound, up 43 cents from the 2019 quarter, and the average realized price for silver was $14.70 per pound, up 50 cents.
The company said funding was in place for the Tanami Expansion 2 in Australia that will increase mine life to 2040 with a new hoisting shaft and support structure for the underground mine. The expansion also will increase gold production by roughly 150,000 ounces per year to 200,000 ounces per year.
Another project under way is an improvement to materials handling at the Musselwhite Mine in Canada. An underground shaft will hoist ore from the underground crushers, reducing haulage distances and ventilation costs. Commissioning was delayed by COVID-19 and will now commission it upon completion of the new conveyor system by the end of the year.
Kinross Gold Corp.Kinross Gold Corp. posted adjusted net earnings of $194 million, or 15 cents per share, for the second quarter, with President and Chief Executive Officer J. Paul Rollinson saying the strong quarter doubled earnings over last year.
The Toronto-based company reported net earnings of $195.7 million, or 16 cents per share, for the quarter, compared with $$71.5 million, or 6 cents per share, in the 2019 quarter. Adjusted net earnings in the second quarter of last year totaled $79.6 million, or 6 cents per share.
“Our margins increased 53 percent year-over-year, well above the 31 percent increase in the average realized gold price,” Rollinson said.
The average realized price was $1,712 per ounce in the second quarter, up from $1,307 per ounce in the 2019 quarter, and the price continued to rise into the $1,900s after the quarter ended.
“Our portfolio of mines performed well and continued production during the quarter, with our three largest producing mines – Paracatu, Kupol and Tasiast – delivering the lowest costs,” Rollinson also said.
Paracatu is in Brazil, Kupol in Russia and Tasiast is in the West African nation of Mauritania, where Kinross reached an agreement in principle in June to enhance the partnership to provide further stability for the long-term mine.
Rollinson also said in the earnings report that the company has “been able to effectively manage COVID-19 impacts on our portfolio of mines during the first half of the year as our comprehensive pandemic response plan continued to help protect the health of our employees and communities, while supporting the successful continuation of our business.”
He thanked “employees around the world for their dedication, hard work and commitment to safety during these challenging times.”
Kinross reported companywide production for the quarter of 571,978 attributable gold equivalent ounces, compared with 648,251 ounces in the 2019 quarter, and the company said the decrease was due to lower production at Paracatu, Round Mountain in Nevada and Chirano in Ghana, offset by higher production at Bald Mountain in Nevada and Kupol.
Cost of sales companywide was at $725 per ounce and all-in sustaining costs at $984 per ounce in the 2020 quarter, compared with cost of sales of $663 per ounce in the 2019 quarter and all-in sustaining costs of $925 per ounce last year.
The gold production included 74,351 ounces at the Round Mountain Mine in Nye County, down from 90,883 ounces in the 2019 quarter, and 48,368 ounces at Bald Mountain in White Pine County, up from 40,564 ounces in the same quarter last year.
Production at Round Mountain was lower mainly because of fewer ounces recovered from the heap leach pads and lower mill grades, according to the company. Costs of sales per ounce of $726 was higher than the $664 in the 2018 quarter largely due to lower production due to fewer ounces from the heap leach pads.
Kinross stated that higher maintenance and contractor costs in the second quarter also contributed to the higher per-ounce cost, compared with the prior year.
Kinross also reported that exploration drilling continued at Round Mountain at Phase X, which is the northwest continuation of Phase W mineralization and results to date have been encouraging.
Drilling intersected significant mineralization in the upper portions within the shallow part of Phase X to potentially optimize the pit shell design and confirmed mineralization extends from Phase W, the company stated.
Bald Mountain posted a good performance in the quarter, with production up due to more ounces of gold recovered from the Vantage Complex heap leach pad and higher grades, according to the earnings report.
Cost of sales of $861 per ounce was a little more than the $856 cost in the 2019 quarter.
The Fort Knox Mine near Fairbanks, Alaska, increased production to 56,031 ounces in the second quarter over 55,440 gold ounces in the 2019 quarter, according to the report.
Coeur MiningCoeur Mining Inc. reported an adjusted net income of $2.6 million, or 1 cent per share, for the second quarter that included operating costs related to COVID-19 of $6.1 million.
“Like most companies, our second-quarter results were negatively impacted by COVID-19,” said Mitchell Krebs, president and chief executive officer of the Chicago-based gold and silver producer, who reported the most notable impact was from the temporary 45-day suspension of Palmarejo in Mexico.
“I would like to thank everyone at Coeur for working tirelessly under challenging circumstances to safely and responsibly deliver critical minerals that are essential to nearly every aspect of modern life. Their ongoing efforts have allowed the company to be well positioned to benefit from higher gold and silver prices going forward,” he said in the earnings announcement.
Krebs said that now that Palmarejo is back in production, along with “our three U.S. operations hitting their strides and the tailwind of higher gold and silver prices, we are anticipating a strong second half of 2020 and expect to continue this momentum into 2021.”
The three U.S. operations are Rochester in Nevada, Kensington in Alaska, and Wharf in South Dakota.
The adjusted net income for the second quarter compared with an adjusted loss of $23 million, or a loss of 11 cents per share, in the second quarter of last year, according to the earnings report. Coeur posted an unadjusted loss of $1.2 million, or a 1-cent loss per share, in the quarter, compared with a loss of $36.8 million, or 18 cents per share, in the 2019 quarter.
Krebs said Coeur’s top strategic priority is the expansion project at the Rochester Mine, “which is expected to generate exponentially higher annual free cash flow and represents a fundamental inflection point for Coeur.”
The company approved construction of the project in the second quarter and has received its revised water pollution control permit for the work at Rochester, which is near Lovelock in Pershing County.
The expansion called POA 11, includes construction of a new leach pad, a crushing facility equipped with two high-pressure grinding roll units and a Merrill-Crowe process plant, along with related infrastructure to support the extension of Rochester’s mine life.
Plans called for construction, including earthwork, to begin in August, with the major work to start early next year and the project to be largely completed by late 2022.
Coeur reported that together with SNC-Lavalin, the engineering, procurement and project management contractor, Coeur has made significant progress on detailed design work, and planned to finalize a capital estimate by the end of this third quarter.
An updated technical report is expected to be filed late this year further outlining details of the expansion, including an updated mine plan and drilling results, along with additional financial details, according to the earnings report.
Coeur also said that in June the company calibrated a new recovery model for the Stage IV leach pad at Rochester and began executing a new stacking plan to maximize silver recoveries.
Coeur additionally reported that during the second quarter, the company entered into a first-of-its-kind agreement to protect critical sagebrush habitat in Nevada while ensuring continued environmental sensitive and sustainable mining practices. Coeur stated that funding will preserve and enhance more than 3,000 acres of greater-sage grouse habitat in Elko and Humboldt counties.
The deal was with Crawford Ranch for habitat credits, according to Agri-Pulse.
Rochester, which is Coeur’s only Nevada mining operation, produced 728,000 ounces of silver and 5,459 ounces of gold in the second quarter, compared with 971,000 ounces of silver and 8,609 gold ounces in the 2019 quarter.
Companywide, the company produced 78,229 ounces of gold and 1.6 million ounces of silver in the second quarter, down from 86,584 gold ounces and 3.1 million silver ounces in the second quarter of last year.
Kensington, an underground mine, produced 33,058 ounces of gold in the second quarter, down from 34,049 ounces in the 2019 quarter.
Coeur stated it is continuing the extension of rotational schedules at Kensington from 14 days to 28 days in response to the coronavirus, and all employees are required to quarantine for seven days and undergo COVID-19 testing before starting their 28-day rotation.
Wharf produced 24,789 gold ounces in the quarter, up from 15,680 ounces in the 2019 quarter and 25,000 ounces of silver, up from 12,000 ounces last year.
Palmarejo, produced 15,223 gold ounces and 867,000 silver ounces in the second quarter, down from 18,246 gold ounces and 1.735 silver ounces in the 2019 quarter, with the reduction due to the COVID-19 shutdown in the second quarter.
With the restart, workplace staffing is at 85 percent under government restrictions.
Coeur is also spending on exploration, including at the Sterling Gold project near Beatty.
The average realized price for gold was $1,641 per ounce in the second quarter, and the average realized silver price was $16.25 per ounce, up from $1,277 an ounce for gold in the 2019 quarter and $14.75 per ounce for silver.
Coeur has a hedging program on a portion of gold production that allows for downside protection should gold prices drop while enabling participation in the potential upside on a specified ceiling price, according to the company. The hedging program is to help finance Rochester expansion.
SSR MiningSSR Mining Inc., which expects its zero-premium merger with Alacer Gold to be completed in the third quarter, reported a net loss of $6.3 million, or 5 cents per share, in the second quarter with coronavirus impact affecting production.
The loss compared with earnings of $17.1 million, or 14 cents per share, in the 2019 quarter.
The Vancouver-based company that will soon have another office in Denver with the merger, also reported adjusted net loss of $2.1 million, or 2 cents per share, in the quarter, compared with net adjusted profit of $38.99 million in the 2019 quarter.
SSR Mining put the Seabee Gold Operation in Canada and the Puna Mine in Argentina were on temporary care and maintenance in the quarter due to COVID-19 restrictions.
“Obviously, the second quarter was an eventful one for SSR Mining, from navigating the impact of the COVID pandemic through to announcing our zero-premium merger with Alacer,” SSR President and Chief Executive Officer Paul Benson said in the earnings teleconference.
“With respect to COVID, it’s worth remembering each of our sites has its own unique characteristics, with consequences for both the risks to the operation and how we manage them,” he said, pointing out that the Marigold Mine in Nevada “is a highly mechanized operation with no camp or dining facilities,” and the mine was “relatively unaffected by the virus.”
Benson said, however, that the Seabee mine is a fly-in, fly-out operation and Puna is bus-in, bus-out, so both operations have camps and nearby indigenous communities, “so the risk was higher.”
He said in the earnings announcement that the company has been pleased with the ramp-ups to resumed production at Seabee and Puna.
Marigold, which is located near Valmy, produced 49,900 ounces of gold in the quarter, compared with 54,922 ounces in the 2019 quarter. Cash costs in the second quarter were $864 per ounce, up from $835 in the second quarter of last year.
Senior Vice President and Chief Operating Officer Kevin O’Kane said in the earnings teleconference that costs were going up because of higher royalty amounts the company has to pay with higher gold prices. The average realized gold price for Marigold was $1,722 per ounce in the second quarter, compared with $1,309 last year.
Even though Marigold has continued in production during the pandemic, he said there has been impact at the mine.
“Operating during the past three to four to months has been challenging for the Marigold team. There have been days when they did not have the full complement of operating staff, because of COVID-related issues. And I’d like to recognize the great job they’re doing. They have managed the operations with care and discipline,” O’Kane said.
SSR Mining also reported that exploration drilling at Trenton Canyon acquired from Newmont Corp. has yielded high-grade gold results from newly discovered sulfide mineralization in a geologic setting analogous to high-grade underground mines in Nevada. Trenton Canyon is adjacent to Marigold.
Drilling also showed positive results at the Valmy and Crossfire targets.
Seabee in Saskatchewan didn’t mill any ore or produce any gold in the second quarter, but the restart began in June, with the first phase focused on underground ventilation and capital development, according to SSR Mining.
At Puna, a phased restart began in the second quarter after the shutdown, and the mine produced 366,000 ounces of silver, compared with a little less than 1.49 million ounces in the 2019 quarter. The mine also produced lead and zinc in the quarter. However, SSR said COVID-19 travel protocols and restrictions caused sporadic impacts to operations in the quarter.
When the combination of SSR Mining and Alacer is final, the company will continue as SSR Mining Inc., and the president and chief executive officer will be Rod Antal, the current CEO of Alacer, which operates the Copler Mine in Turkey.
Hecla MiningHecla Mining Co. reported adjusted net income of $7.3 million, or 1 cent per share, in the second quarter, as the Coeur d’Alene, Idaho-based company’s silver production rose amid higher prices, even amid the COVID-19 pandemic.
“Despite the pandemic, Hecla had its second highest quarterly silver production since 2016 which, combined with higher prices, resulted in almost 25 percent more revenue than a year ago and generated about $27 million of free cash flow,” the company’s president and chief executive officer, Phillips S. Baker Jr., said in the earnings announcement.
Silver production totaled 3.4 million ounces in the quarter, and Hecla produced 59,982 ounces of gold, compared with 3.02 million ounces in the second quarter of last year and 60,768 gold ounces.
Baker said that Hecla currently produces “about a third of all the silver mined in the U.S., almost three times larger than the next primary producer. That number is expected to grow as Lucky Friday ramp.” Lucky Friday is an underground mine in Idaho that loss production during a strike.
In the earnings teleconference, Baker said gold and silver prices are higher, and “we think the higher prices are inevitable given the backdrop of the continued monetary stimulus from negative real rates, the trillions of dollars of physical stimulus, the weakness of the U.S. dollar and growing political uncertainty.”
Hecla’s averaged realized price for silver in the second quarter was $18.44 per ounce, 23 percent higher than the $15.01 price in the 2019 quarter. The average realized gold price was up 31 percent to $1,736 per ounce, and the gold price climbed to well over $2,000 an ounce after the quarter ended.
Also, Hecla reported a net loss applicable to common shareholders of $14.2 million, or 3 cents per share, in the second quarter, compared with a loss of $46.7 million, or 10 cents per share, in the 2019 quarter.
The company said improved numbers for the second quarter were due to improved gross profit at each operation due to higher production and prices. Combined, Greens Greek in Alaska, Casa Berardi in Quebec and Nevada operations generated $53.3 million more gross profit that the 2019 quarter.
Production from Nevada operations totaled 17,791 ounces of gold and 15,988 ounces of silver in the second quarter, compared with 49,449 silver ounces and 12,694 gold ounces in the 2019 quarter.
Hecla also listed investment gains, lower exploration costs and lower general and administrative expenses for the 2020 quarter as reasons for a better financial quarter, but stated they were partially offset by a loss on metals derivative contracts, higher ramp-up costs at Lucky Friday and $2 million in expense recognized for the value of Hecla shares contributed to the Hecla Charitable Foundation.
The company also reported that there were costs to placing the Midas and Hollister mines and the Aurora mill in Nevada on care and maintenance. The Midas mill also is on hold.
Hecla stated that “very high grades” of ore were experienced in the material being processed at the Midas mill in the second quarter, and the material not sold in the quarter will be sold in the third quarter. However, no further processing is currently anticipated at the Midas mill in northwestern Elko County, Hecla said.
Mining at Fire Creek near Crescent Valley is now focused primarily on material for a 30,000-ton bulk sample test to provide information on alternative mining techniques, water management and process recovery rates at a third-party facility.
Mining is expected to continue through this year, and the bulk sample is expected to be sent to a third-party for processing late in this third quarter, according to Hecla, which hopes to produce between 5,000 and 10,000 gold ounces from the test.
COVID-19 impacts were felt at the Greens Creek Mine, where the mine implemented a 14-day quarantine for employees before coming to Admiralty Island, where the mine is located, to prevent the spread of the virus. Hecla said that in addition to strict testing, the mine has since reduced the quarantine period to seven days for workers traveling to Juneau to work at Greens Creek.
Hecla also reported in its earnings slide presentation that the company leases a hotel in Juneau for quarantining.
Casa Berardi was shut down in March but was back in operation April 15, which impacted production, the company reported. The San Sebastian Mine in Mexico also was shut down. Hecla said the mill restarted on May 30.
Franco-NevadaFranco-Nevada, a gold royalty and streaming company with interests in Nevada, reported that during the second quarter ending June 30 the company performed well despite the impact of COVID-19, with adjusted net income of $91.8 million, or 48 cents per share.
The adjusted net income compares with $64 million, or 34 cents per share, in the second quarter of 2019, and the Toronto-based company stated that net income was $94.4 million, or 50 cents per share, compared with $64 million in the second quarter of last year.
“We recognize the efforts of our operators and their related communities during this difficult period, Paul Brink, Franco-Nevada’s chief executive officer, said in the earnings report. “Of our original 56 cash generating mining assets, 15 experienced some form of temporary curtailment in Q2.”
The company stated that all its employees work remotely, and there are no known cases of the coronavirus in the company, which continues to closely monitor the pandemic’s impact on its portfolio of assets.
All but one of the mines, Golden Highway in Canada, are back in operation. Owner Kirkland Lake Gold placed the mine on temporary suspension while assessing future options, and Franco-Nevada reported Kirkland’s guidance does not show any gold production in the second half of this year.
“The return to normal operations and higher gold prices makes us optimistic about the second half (of the year),” Brink said. “In addition, we see the potential for longer-term organic growth from our over 240 exploration and development royalties due to increased capital available to the gold sector.”
He also said the company’s energy assets should benefit from stabilized oil and gas prices after lows in the second quarter.
Franco-Nevada reported 92.5 percent of its revenue in the second quarter came from gold and gold equivalents, and gold equivalent ounces sold in the second quarter totaled 104,330, down 3.2 percent from the 107,774 ounces sold in the 2019 quarter.
Lower contributions from the Goldstrike complex on the Carlin Trend in Nevada, Antapaccay in Peru and Sabodala in Senegal were partly offset by higher contributions from Cobre Panama in Panama and Hemlo in Canada.
South Arturo’s El Nino underground mine exceeded the operator’s expectations during the second quarter despite a planned shutdown of the Goldstrike roaster, which resulted in minimal ore processing during the month of June, according to the earnings report.
South Arturo is considered part of Goldstrike but is 40 percent owned by Premiere Gold, 60 percent by Nevada Gold Mines, which is the operator. Franco-Nevada said 4,764 ounces of gold were produced for its royalty portion in the second quarter.
Franco-Nevada also has active royalties in Nevada on the Gold Quarry, Marigold, Fire Creek, Bald Mountain and Robinson mines.
Franco-Nevada also announced that the board of directors declared in dividend of 26 cents per share for the quarter.
Royal GoldRoyal Gold Inc. announced that net income for the company’s fourth quarter ending June 30 was $49 million, or 75 cents per share, on revenue of $120 million, and the net income for the fiscal year was $199.3 million, or $3.03 per share.
“Fiscal 2020 was a standout year for Royal Gold, and our portfolio delivered record revenue of approximately $500 million, 79 percent of which came from gold,” President and Chief Executive Officer Bill Heissenbuttel said of the Denver-based royalty and streaming company.
He also said that “despite unprecedented challenges caused by an uncertain external environment, I am pleased with how we maintained our strategic focus on strengthening the balance sheet, growing our dividend and funding future growth through cash flow.
“Royal Gold has developed a reputation for operational and financial discipline, and I look forward to further building on this reputation as we review new business opportunities in a positive gold price environment, all with the ultimate goal of growing per share metrics,” Heissenuttel said in the earnings report.
The average gold price in the quarter ending June 30 was $1,711 per ounce, up 30.7 percent, and the price was above $2,000 per ounce by early August.
For the fourth quarter, Royal Gold posted adjusted net income of $34.2 million, or 53 cents per share, compared with $29.2 million last year, and for the fiscal year, the adjusted net income was $162.4 million, or $2.47 per share. The net income for the year of $199.3 million compared with $93.8 million, or $1.43 per share, in the prior fiscal year.
Royalty revenue increased in the 2020 fiscal year and the fourth quarter primarily due to an increase in production for its royalty-coverage at the Cortez Mine in Nevada and the Penasquito Mine in Mexico, despite a 35-day COVID-19 shutdown, as well as higher gold and silver prices.
For the fourth quarter, stream revenue totaled $85.5 million and royalty revenue, $34.2 million, the company reported.
Production for Royal Gold interests at Cortez totaled 52,500 ounces, compared with 37,000 ounces in the 2019 quarter, according to the earnings report, which lists the Nevada mine operated by Nevada Gold Mines as one of its major royalty properties.
Royal Gold’s Nevada interests also include the Goldstrike, Bald Mountain, Gold Hill, Leeville, Marigold, Robinson and Twin Creeks mines.
Royal Gold as of June 30 owned interests on 187 properties on five continents, including interests on 41 producing mines and 16 development-stage projects. One of its newest interests is in the Khoemacau Copper Mining Ltd.’s project in Botswana now under construction and expected to begin production next year.