RGLD's Royal Flush of Assets

IMARU CASANOVA, McNicoll, Lewis & Vlak, LLC The Gold Report Interview with Ima Casanova (04/06/2011)
"Royalty companies enjoy many significant benefits. One of the most important benefits is that by owning this stock, investors get exposure to a diversified portfolio of mining projects, including some of the highest-quality projects operated by many of the major producers. They also get reserve and resource growth at no cost to the company, which is a significant benefit.

Generally, the majority of these royalty deals don't have production caps. If Royal Gold acquires a 2% royalty on a project, it doesn't need to contribute any capital. So, basically, it's obtaining the growth without having to pay for that growth, which is a huge benefit. The royalty on Goldcorp's Peñasquito project is a great example of how Royal Gold benefited from a very significant reserve increase without having to spend a penny. Another key differentiation is protection against operating-cost increases, which all but guarantees expanded margins in a rising commodity price environment. This is not always true for the producers. So, the royalty structure is a great way to get the optionality that comes with owning a mining name versus physical gold or an ETF. I've always talked about it as being sort of a middle ground—a hybrid between an ETF and a producer—because investors get the lower risk profile from the cost-increase protection, as well as the organic growth potential they don't get if they own bullion or an ETF. . .Royal Gold has very good operational experience in the industry and a great track record of identifying and investing in very high-quality assets, and then benefiting from the remarkable organic growth of many of these assets. . .I think there's a lot of upside there that is not being priced in by the market yet." View Entire Article: Ima Casanova Uncovers the Under-Covereds

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