Royal Gold's Jensen says IRC acquisition, Andacollo royalty provide wonderful growth platform
Royal Gold's friendly merger with cross-town royalty rival International Resources Corp., combined with royalties from the Andacollo deposit, provides a wonderful base to grow the company.
Posted: Tuesday , 02 Mar 2010
RENO, NV -
The friendly takeover of International Royalty Corporation and the acquisition of Teck Resources' sulfide gold portion of the Andacollo copper and gold deposit in Chile means 2010 is a year of transformation and growth for Denver-based Royal Gold.
In a presentation to the BMO Capital Markets Global Metals & Mining Conference Monday in Hollywood, Florida, Royal CEO Tony Jensen said the recently completed acquisitions mean that half of Royal's revenue will by generated by four major assets in 2013.
Jensen called it "a wonderful base from which to grow our company from in the future."
For a $1.48 billion investment, Royal Gold is diversifying its revenue, and gaining royalties from new long life mines that are replacing maturing assets. In 2013 60% of Royal's revenues are expected from mines with lives greater than 15 years, Jensen noted.
The long-term growth profile of the company is precious-metals dominant with royalties coming from Andacollo and Pascua-Lama in Peru, the Peñasquito and Dolores mines in Mexico, the Canadian Malarctic, Wolverine and Holt projects in Canada, the Gwala Deeps and South Laverton in Australia, and Inata in Africa.
With the acquisitions, Jensen estimated that Royal's share of precious metals reserves subject to royalties increased 20% to 95 million ounces while precious metals equity reserves increased 129% to 3.7 million ounces.
Thanks to the acquisitions, Jensen projected that 95% of the company's revenue will come from the U.S., Mexico, Canada, Chile and Australia in 2013.
The company's key assets will evolve from its current portfolio of royalties in Taparko in Burkina Faso, the Cortez-Pipeline mining complex in Nevada, the Robinson project in Nevada, the Mulatos mine in Mexico, and Leeville and Goldstrike, both in Nevada.
In 2013, Jensen said the key assets will be royalties from Peñasquito, Andacollo, Pascua-Lama and Vosiey's Bay in Newfoundland and Labrador.
Jensen told the fund managers and analysts attending the conference that Peñasquito's 2% net smelter royalty has the potential of yielding $29 million in royalty revenues for Royal Gold. He called Voisey's Bay a "fantastic deposit" that could yield $23.2 million in royalty revenue for his company.
While Royal Gold reports $54 million in cash, Jensen noted that for the first time, the company has incurred debt totaling $254 million.