DENVER, Jan. 5 /CNW/ -- Royal Gold, Inc.
(Nasdaq: RGLD; TSX: RGL) today announced that it has closed the agreement with
Kennecott Minerals Company to acquire two royalties for $25.0 million. The
royalties consist of a 3% net smelter return ("NSR") royalty on the Robinson
mine, which is located in eastern Nevada, and a sliding-scale NSR royalty on
the Mulatos mine in Sonora, Mexico.
The Robinson mine is an open pit copper mine with significant gold and
molybdenum credits. The mine has been owned and operated by Quadra Mining
Ltd. ("Quadra") since 2004. Quadra has reported that as of December 31, 2004,
proven and probable reserves include 142.6 million tons (129.4 million tonnes)
of ore, at an average grade of 0.0085 ounces of gold per ton (0.29 grams per
tonne) and 0.69% copper, containing approximately 1.2 million ounces of gold
and 2.0 billion pounds of copper. The operator estimates that calendar year
2006 production will be in the range of 55,000 to 65,000 ounces of gold and
145 to 150 million pounds of copper. Quadra also stated that its molybdenum
circuit is near completion, which is expected to produce in the range of 1.0
to 1.6 million pounds of molybdenum in calendar 2006.
The Company will begin receiving revenue from its 3.0% NSR royalty at the
Robinson mine when a $20.0 million reclamation trust account is fully funded
which, at the end of October 2005, totaled approximately $14.7 million. The
account is expected to be fully funded in calendar 2006.
The Mulatos project, owned and operated by Alamos Gold, Inc. ("Alamos"),
is an open pit, heap leach gold mine, which is nearing completion of
construction. According to Alamos, commercial production is expected in early
calendar 2006. Based on the operator's estimates, proven and probable
reserves, as of June 1, 2004, include 40.1 million tons (36.4 million tonnes)
of ore, at an average grade of 0.048 ounces per ton of gold (1.64 grams per
tonne), containing approximately 1.9 million ounces of gold. Alamos
anticipates that once full production is reached, yearly production is
expected to average 150,000 ounces of gold.
The Mulatos mine sliding-scale royalty, capped at two million ounces of
gold production, ranges from a 0.30% payout for gold prices below $300 up to a
maximum rate of 1.50% for gold prices above $400.
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 National Market System 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 proven and probable reserve estimates
made by the operators, production forecasts made by the operators,
construction completion, and funding of a reclamation trust account. Factors
that could cause actual results to differ materially from projections include,
among others, 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.
/Web site: http://www.royalgold.com/
