The Gold Report Interview with John Doody (06/23/10)

"A great example of royalty transaction was Kennecott (a subsidiary of Rio Tinto), the original owner of Peñasquito in Mexico. . .At current prices, the revenues from Peñasquito will be about $1.6 billion annually. . .The 2% NSR royalty that Kennecott initially kept was sold to Royal Gold for $100 million about three or four years ago, and will now generate $32 million a year in royalty income at current prices. Because Royal Gold has issued only 50 million shares, that's roughly $0.60 a share. That's going to continue as long as the site is producing, which is probably going to be another 30 years. Royal Gold has another royalty that comes online in August from Teck Resources' Andacollo copper/gold mine in Chile. . .Teck was in financial trouble in 2008, when the markets crashed, and had to sell a gold stream to Royal Gold for roughly $260 million in order to build a mill to keep getting the copper. They effectively sold Royal Gold 40,000 oz. gold a year out of Andacollo at no cost per ounce. So 40,000 oz. times $1,200 oz. is $48 million a year. That's almost $1 a share for Royal Gold starting in August. My target for Royal Gold is a double from here. . .They have a history of paying out 20% of their earnings in dividends. . .If we just take the average 1% yield with $1 per share dividend, that's a $100 stock." View Entire Article: John Doody's Doody-Free Picks

   The Gold Report Interview with Adrian Day (06/10/10)

"I just love the royalty model because it is a good way to get exposure to gold but at much lower risk. The business model itself is very low risk, very high margin. . .A lot of the royalties go up, as the price of gold goes up, and then a lot of these companies have an exploration upside because they own the royalty on a whole piece of ground. If the producing company at the mine starts exploring the ground around the mine and finds more metal, the royalty gets the benefit of that as well. There's very little downside, so I like the royalty companies a lot. [One of] my favorites [is] Royal Gold, which [is a] large one with strong balance sheets, strong management and excellent pipelines. To me, these are just a core low-risk gold exposure positions." View Entire Article: Adrian Day: Buy Gold Bullion, Royalties and Juniors

   Adrian Day, Adrian Day's Global Analyst (04/20/10)

"Royal Gold is another gold royalty company, though like Franco, it also has some non-gold assets, in this case, monthly base metals royalties following its acquisition of International Royalty. Royal will likely sell some of these, particularly the large royalty on Valey's Voisey's Bay nickel mine in order to maintain its gold profile and to shore up its balance sheet following the IRC acquisition. But gold royalties accounted for 84% of revenues in the latest period, pre-IRC, so there is a cushion. The company has two significant gold royalties that are coming onstream: Andacollo, which is due to start production by midyear; and Penasquito, where production is now ramping up to commercial production by the third quarter, with a 24-year mine life ahead of it. Beyond these, Royal Gold has a strong pipeline. Although the stock is up since we bought it, we would still look for opportunities to buy, perhaps waiting for further weakness (it's down from $52 earlier this month). Stocks are frequently weak after completing acquisitions, so we may have that opportunity."

   China Analyst (04/08/10)

"Royal Gold, Inc. is the 3rd most profitable stock in this segment of the market. Its net profit margin was 31.90% for the last 12 months. Its operating profit margin was 42.93% for the same period."

 PRINT THIS PAGE  EMAIL THIS PAGE