DENVER, Oct. 26 /CNW/ -- ROYAL GOLD, INC. (Nasdaq: RGLD; TSX: RGL) today
announced an agreement to purchase a sliding-scale net smelter return ("NSR")
royalty from Nevada Star Resource Corp. ("Nevada Star") on the Gold Hill
deposit for $3.3 million. The Gold Hill deposit, located just north of the
Round Mountain gold mine in Nye County, Nevada, is controlled by Round
Mountain Gold Corporation ("RMGC"), a joint venture between Kinross Gold, the
operator, and Barrick Gold Corporation ("Barrick"). The closing of the
acquisition is subject to customary conditions and is anticipated to occur in
November.
The sliding-scale NSR royalty on the Gold Hill deposit will pay 2.0% when
the price of gold is above $350 per ounce and 1.0% when the price of gold
falls to $350 per ounce or below. The royalty will be effectively capped at
$10.0 million as Round Mountain has the right, at any time, to purchase the
royalty interest on the Gold Hill deposit for $10.0 million, less any royalty
payments received by Nevada Star and Royal Gold prior to the purchase option
being exercised. The royalty is also subject to a minimum royalty payment of
$100,000 per year. To date, approximately $375,000 in advanced minimum
royalty payments has been made to Nevada Star by RMGC.
Tony Jensen, Royal Gold's President and Chief Executive Officer,
commented, "We are pleased to acquire this royalty position that is located
near the prolific Round Mountain mine, which is the fourth largest gold mine
in Nevada. This new acquisition will complement our existing portfolio and
brings us another royalty in Nevada. We already have established a working
relationship with Barrick, due to our other Nevada royalty positions, and are
now pleased to be associated with Kinross Gold, another highly-skilled
operator."
The RMGC is currently conducting an Environmental Impact Statement for
the expansion of the existing Round Mountain pit, which includes the Gold Hill
deposit. Once permitting is completed and equipment from the Round Mountain
pit expansion becomes available, production is expected to commence at Gold
Hill. Although RMGC's Gold Hill reserves are not separately detailed in their
publicly available financial reports, Barrick stated in its September 2006
Nevada Mine Tour presentation titled "Barrick in Nevada," posted on their web
site, that as of December 31, 2005, there were 375,000 contained ounces in
reserves that represent their 50% share of the project.
Nevada Star is a mineral exploration company based in Washington and
traded on the Toronto Venture Exchange and the Over-The-Counter Bulletin
Board.
Barrick is the world's leading gold mining company whose shares are
traded on the Toronto, New York, London and Swiss stock exchanges.
Kinross, a world-class gold company based in Canada, has become the
fourth largest primary gold producer in North America since 1993 and the
eighth largest in the world. Kinross' shares are traded on the Toronto and
New York stock exchanges.
Royal Gold is a precious metals royalty company engaging in the
acquisition and management of precious metal royalty interests. Royal Gold is
publicly traded on the NASDAQ Global Select Market under the symbol "RGLD,"
and on the Toronto Stock Exchange under the symbol "RGL." The Company's web
page is located at www.royalgold.com.
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 the timing of closing,
the completion of an Environmental Impact Statement, permitting, equipment
availability, and proven and probable reserves. Factors that could cause
actual results to differ materially from projections include, among others,
satisfaction of conditions to closing, regulatory review process, possible
appeals, and timing of final issuance of permits, precious metals prices,
decisions and activities of the operator of the various properties,
unanticipated grade, geological, metallurgical, processing or other problems
the operator may encounter, changes in project parameters as plans continue to
be refined, 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.
