International Royalty Corporation reports 2009 second quarter results



    
    NYSE-A: ROY
    TSX: IRC
    

    DENVER, CO, Aug. 14 /CNW Telbec/ - International Royalty Corporation
(NYSE-Amex:   ROY, TSX: IRC) (the "Company" or "IRC") today reported its 2009
second quarter financial results. All figures are in United States dollars
unless noted otherwise. Complete financial results are available on SEDAR,
EDGAR and on the Company's website at www.internationalroyalty.com.
    Highlights for the second quarter of 2009:

    
    - Royalty revenue was $6.1 million, compared to $8.6 million the quarter
      ended June 30, 2008.
    - Earnings from operations were $134,000, compared to $2.2 million the
      quarter ended June 30, 2008.
    - Cash flow from operations increased by $3.4 million to $2.9 million,
      compared to $(467,000) the quarter ended June 30, 2008.
    - As a result of the McWatters transaction, IRC was not required to pay
      taxes to Canada Revenue Agency in June 2009, compared to $7.5 million
      paid in June 2008. The Company also reduced its current taxes payable
      by approximately $4.6 million from its liability at March 31, 2009.
    - Production began at the Las Cruces and Johnson Camp copper projects on
      which the Company has royalties of 1.5% and 2.5% Net Smelter Return
      ("NSR"), respectively.
    - The Gwalia Deeps mine produced 31,000 ounces of gold in the second
      quarter, a 31% increase over the prior quarter.(3) IRC holds a
      1.5% NSR royalty on this project.
    - IRC successfully closed a CA$57.6 million common share financing in
      July 2009. This share issue provided IRC with $46.8 million in cash,
      which exceeds the Company's senior secured debentures as of June 30,
      2009 by approximately $23.1 million.
    

    Financial Highlights

    Royalty revenues for the three months ended June 30, 2009 were
$6,098,000, as compared to $8,610,000 for the three months ended June 30,
2008. The decrease is mainly due to a decline in revenue from the Voisey's Bay
mine of $3,340,000 offset by royalty revenue from the Skyline thermal coal
mine of $259,000, the newly acquired Johnson Camp copper mine of $106,000 and
the newly commissioned Gwalia Deeps gold mine of $424,000.
    Revenue recognized from the effective 2.7% NSR royalty on the Voisey's
Bay nickel, copper and cobalt mine was $4,646,000 for the quarter ended June
30, 2009 and $7,986,000 in 2008. The decrease in revenue from the Voisey's Bay
mine was due to an increase in production of contained nickel in concentrate
offset by significantly lower nickel prices in 2009 as compared to 2008. Total
contained nickel in concentrates paid on the Voisey's Bay mine during the
quarter ended June 30, 2009 was approximately 42.0 million pounds compared to
approximately 30.5 million pounds for the quarter ended June 30, 2008. The
increase in paid production was offset by a decrease in the average price of
nickel during the quarter from $12.93 per pound in 2008 to $4.99 per pound in
2009.
    Earnings from operations were $134,000 for the second quarter of 2009
compared to $2,198,000 for the second quarter of 2008. This was due to a
decrease in royalty revenues of $2,512,000 and an increase in amortization of
$738,000 offset by lower royalty taxes and other expenses. For the first six
months of 2009, earnings from operations were $54,000 compared to $4,998,000
in 2008. The decrease was primarily a result of a decrease of $5,696,000 in
royalty revenues.
    On April 9, 2009, the Company acquired all of the outstanding common
shares of McWatters Mining, Inc. ("McWatters") representing a 45% voting
interest. A class of voting preferred shares created under that Plan of
Arrangement and issued to all former common shareholders of McWatters is
entitled to 55% of the votes and an amount not exceeding CA$1.0 million of
cumulative dividends and redemption amounts. All income in excess of CA$1.0
million will accrue to the common shares, all of which are owned by IRC.
    McWatters was reorganized effective on June 2, 2008, and pursuant to a
proposal with its creditors, substantially all of its unsecured creditor
claims were acquired by CFT Capital, Inc. ("CFT"), and the balance of such
claims have been settled. At the date of transaction, McWatters had remaining
liabilities of CA$7.3 million which will be payable out of 6.0% of available
cash flow of McWatters. McWatters has approximately CA$140.0 million of
available resource deductions and tax-loss carryforwards. As of April 9, 2009,
IRC had advanced approximately $2.0 million to CFT to fund a portion of the
cost of the reorganization of McWatters. This amount is repayable by CFT to
IRC from cash flow over five years plus interest of 1.0% per annum.
    As a result of the McWatters transaction, the Company expensed
transaction costs of $6.7 million. As noted above, McWatters has estimated
accumulated non-capital losses carried forward, resource expenses and
partnership losses for federal purposes totaling approximately CA$140.0
million which are available to reduce future taxable income, the benefits of
which have not been recognized in the financial statements. Due to this
transaction, IRC was not required to pay taxes to Canada Revenue Agency in
June 2009. The Company paid $7.5 million in taxes in June 2008. The Company
also reduced its current taxes payable by approximately $4.6 million from its
liability as of March 31, 2009.
    Net loss for the second quarter of 2009 was $7.9 million compared to net
earnings of $927,000 for the second quarter of 2008. This loss was primarily
due to the expensing of $6.7 million of costs related to the McWatters
transaction on April 9, 2009. The Company also had a net foreign currency loss
of $1.4 million in the second quarter of 2009, compared to $117,000 in the
second quarter of 2008.
    Cash flow from operations for the quarter ended June 30, 2009 increased
by $3.4 million to $2.9 million compared to the quarter ended June 30, 2008.

    Bought Deal Financing

    On July 15, 2009, the Company closed an offering of 14,100,000 common
shares of IRC at a price of CA$3.55 per common share for total gross proceeds
of CA$50,055,000. The Company also granted to the underwriters an
over-allotment option of up to 2,115,000 common shares which were fully
exercised on July 24, 2009 at a price of CA$3.55 per share for gross proceeds
of CA$7,508,250. Closing of the over-allotment option brings total gross
proceeds from the offering to CA$57,563,250, and net proceeds to approximately
CA$54.1 million. IRC's has 94,695,356 common shares issued and outstanding
after the financing.

    Developments on Existing Royalties

    The Wolverine zinc project is scheduled for commissioning during 2010.
Excavation work has continued as concrete footings are being poured for the
mill building, concentrate load-out facility, power plant, maintenance shops
and administrative buildings.(1) IRC holds a sliding-scale royalty on all
precious metals production from this project.
    Saracen Mineral Holdings Limited's Carosue Dam gold project is slated for
commissioning during 2010. Initial gold production is expected to be 120,000
ounces per year from the South Laverton region.(2) IRC's holds a 1.5% NSR
royalty on this project.
    Production at Gwalia Deeps for the first six months of 2009 totalled
54,000 ounces of gold. Production is expected to ramp up to 200,000 ounces per
year within 18 months of its fourth quarter 2008 start-up.(3) IRC holds a 1.5%
NSR royalty on Gwalia Deeps.
    On August 1, 2009, employees at the Voisey's Bay nickel mine rejected a
contract offer and elected to go on strike.(4) Due to the payment timing and
price mechanisms in our royalty contract with Vale Inc. ("Vale"), the
operator, the strike should not impact payable metal in the third quarter of
2009. The impact of the strike, if any, would likely occur in the fourth
quarter of 2009 or the first quarter of 2010. Because the IRC royalty applies
to pounds of metal produced, any impact would be to defer revenue, not to
reduce it.
    The Johnson Camp copper mine produced 2.1 million pounds of copper during
the three months ended June 30, 2009. During the last week of July, copper
production averaged a monthly rate of approximately 1.3 million pounds. This
is nearly double the second quarter 2009 average of 0.7 million pounds per
month. By the end of 2009, the operator expects to ramp-up to an average
production rate of 25 million pounds of copper per year.(5) IRC acquired a
2.5% NSR royalty on the project on March 31, 2009.
    The Las Cruces copper project produced its first copper cathodes in June
2009 and shipped in July 2009. Annual production at Las Cruces is planned to
average 72,000 tonnes of cathode copper over the life of the mine.(6) IRC
holds a 1.5% NSR royalty on the Las Cruces project.
    In the fourth quarter of 2009, production is expected to begin at Avocet
Mining's Inata gold project (Belahouro) in Burkina Faso, West Africa. Avocet
recently took over Wega Mining and is expected to give the project access to
sufficient resources for timely completion and start up.(7) IRC holds a 2.5%
NSR royalty on this project.
    China Minmetals has announced that they are investigating the restart of
the Avebury nickel project in Tasmania, subject to the price of nickel being
sustained around recent levels of greater than $7.00 per pound.(8) IRC holds a
2.0% NSR royalty on the Avebury project.

    References:

    
    1. Yukon Zinc Wolverine Report, July 21, 2009
    2. www.saracen.com.au
    3. St Barbara Ltd Financial Results for the Twelve Months Ended
       June 30, 2008.
    4. Canadian Press update, July 8, 2009
    5. Nord Resources Corporation News Release, August 6, 2009
    6. Inmet Mining Corporation Investor Presentation, BMO Capital Markets
       2009 Global Metals & Mining Conference, February 23, 2009
    7. Avocet Mining PLC, News Release, April 29, 2009
    8. OZ Minerals press release dated May 6, 2009


    Summary of Financial Information:
    ($ thousands, except per          Three Months Ended    Six Months Ended
     share data, unaudited)                 June 30,            June 30,
                                      ------------------- ------------------
                                          2009      2008      2009     2008
                                      --------- --------- --------- ---------
    Statement of Operations
    Royalty revenues                    $6,098    $8,610   $13,197   $18,893
    Earnings from operations               134     2,198        54     4,998
    Earnings (loss) before income
     taxes                              (8,798)    1,465    (7,879)    4,713
    Net earnings (loss)                 (7,908)      927    (4,603)    3,338
    Basic and diluted net earnings
     (loss) per share                   $(0.10)    $0.01    $(0.06)    $0.04

    Statement of Cash Flows
      Cash provided by (used in)
       operating activities             $2,921     $(467)   $7,601    $5,931

                                                           June 30, December
                                                              2009  31, 2008
    Balance Sheet                                         --------- ---------
      Total assets                                        $370,024  $376,570
      Shareholders' equity                                 291,507   297,280

    Payable production and revenues on the Company's royalties and average
metal prices received were as follows:

    Production and revenue (unaudited)
                                               Payable Metal Production(1)
                                             --------------------------------
                                                                    Six
                                               Quarter Ended    Months Ended
                                                   June 30,        June 30,
                                              -------------------------------
    Mine            Commodity      Royalty      2009    2008    2009    2008
    ---------------------------------------   --------------- ---------------
    Voisey's Bay
                    Nickel         2.7% NSR   42,047  30,504  95,314  68,460
                    Copper         2.7% NSR    9,063   8,629  25,292  42,486
                    Cobalt         2.7% NSR    1,732   1,551   4,267   3,121

    Southern Cross  Gold           1.5% NSR       39      37      76      73

    Skyline         Thermal Coal      1.413      574       -   1,331       -

    Gwalia Deeps    Gold           1.5% NSR       31       -      54       -

    Williams        Gold          0.25% NSR       37      31      91      69

    Meekatharra     Gold          0.45% NSR        -      13       -      24

    Johnson Camp    Copper         2.5% NSR    2,070       -   2,070       -


                                                   Revenue (thousands)
                                     ----------------------------------------
                                                                    Six
                                           Quarter Ended        Months Ended
                                              June 30,            June 30,
                                     -------------------- -------------------
    Mine                                  2009      2008      2009      2008
    --------------------             -------------------- -------------------
    Voisey's Bay                      $  4,646  $  7,986  $ 10,579  $ 17,584

    Southern Cross                         545       478     1,051     1,007

    Skyline                                259         -       584         -

    Gwalia Deeps                           424         -       738         -

    Williams                                85        69       206       156

    Meekatharra                              -        51         -        93

    Johnson Camp                           106         -       106         -

    Avebury(2)                               -         -      (104)        -

    (1) Gold is in thousands of ounces; thermal coal is in thousands of
        tonnes; nickel, copper and cobalt are in thousands of contained
        pounds in concentrate. Silver ounces are converted to gold ounce
        equivalents by dividing silver revenue by the average price of gold
        during the period. Production reports are received from the operators
        of the properties.
    (2) 2009 amount represents an adjustment upon settlement of revenue from
        the fourth quarter of 2008.


    Average metal prices realized (in US$) (unaudited)

                                                                    Six
                                           Quarter Ended        Months Ended
                                              June 30,            June 30,
                                     -------------------- -------------------
                                          2009      2008      2009      2008
                                     -------------------- -------------------
    Gold, per ounce                     $  926    $  851    $  919    $  912
    Thermal coal, per tonne              31.92         -     31.04         -
    Nickel, per pound(1)                  4.99     12.93      4.82     12.63
    Copper, per pound(1)                  1.80      5.00      1.66      3.09
    Cobalt, per pound(1)                 15.15     47.17     13.05     46.55

    (1) Before transportation, smelting and refining costs.
    

    Complete financial results are available on SEDAR, EDGAR and on the
Company's website at www.internationalroyalty.com.
    IRC invites you to participate in its Second Quarter 2009 Results
conference call.
    The Company will host this conference call Monday, August 17, 2009 at
11:00 AM EDT, 9:00 AM MDT.
    To participate in the conference call, please dial 416 644-3416 or toll
free 800 733-7571. To ensure your participation, please call approximately
five minutes prior to the scheduled start of the call.
    Replay archive: Please dial 877 289-8525, passcode 2131 1601 followed by
the pound # sign. The conference call will be archived from Monday, August 17,
2009 1:00 PM EDT to Monday, August 24, 2009 1:59 AM EDT.
    Peter Clarke of SRK Consulting, a qualified person for the purposes of
National Instrument 43-101, has reviewed this press release.

    International Royalty Corporation

    International Royalty Corporation (IRC) is a global mineral royalty
company. IRC holds more than 85 royalties including an effective 2.7% NSR on
the Voisey's Bay mine, a sliding-scale NSR on the Pascua gold project in
Chile, a 1.5% NSR on the Las Cruces copper project in Spain and a 1.5% NSR on
approximately 3.0 million acres of gold lands in Western Australia. IRC is
senior listed on the Toronto Stock Exchange (TSX: IRC) as well as the NYSE -
Amex (NYSE-A: ROY).

    On behalf of the Board of Directors,
    INTERNATIONAL ROYALTY CORPORATION


    Douglas B. Silver
    Chairman and CEO


    Cautionary Statement Regarding Forward-Looking Statements

    Some of the statements contained in this release are forward-looking
statements, such as statements that describe IRC's expectations in regards to
the production start dates for the projects on which IRC has royalties,
expected rates of production, lives of mine and expected cash costs. Financial
information contained in this press release is unaudited. In certain cases,
forward-looking statements can be identified by the use of words or phrases
such as "plans", "expects", "anticipates", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", or "does not anticipate", or
"believes" or variations of such words and phrases, or state that certain
actions, events or results "may", "could", "would", "might" or "will" be
taken, occur or be achieved. Since forward-looking statements are not
statements of historical fact and address future events, conditions and
expectations, forward-looking statements by their nature inherently involve
unknown risks, uncertainties, assumptions and other factors well beyond the
Company's ability to control or predict. Actual results and developments may
differ materially from those contemplated by such forward-looking statements
depending on, among others, such key factors as the ability of the mine
operators to finance, develop, reopen, restart or successfully place their
projects into production, including commodity prices, pending permits, and
access to financial resources; maintain ongoing production; resolve labor,
regulatory and operational issues and continue operations. IRC's
forward-looking statements in this release regarding the effect of new tax
legislation, benefits of tax legislation, projected royalty revenue, ongoing
production and royalties, projected amortization and royalty tax exposure,
anticipated governmental or regulatory impact on projects and the anticipated
timing of the start of production on several of the projects on which it has
royalties are based on certain assumptions. Such assumptions include, but are
not limited to, the validity of statements made by the project operators in
the public domain, commodity prices, accuracy of project operator projections,
governmental regulation, and project operators' ability to finance, construct
and successfully operate these properties. The forward-looking statements
included in this release represent IRC's views as of the date of this release.
While IRC anticipates that subsequent events and developments may cause IRC's
views to change, IRC specifically disclaims any obligation to update these
forward-looking statements. These forward-looking statements should not be
relied upon as representing IRC's views as of any date subsequent to the date
of this release. Although IRC has attempted to identify important factors that
could cause actual actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or intended.
Accordingly, readers should not place undue reliance on any forward-looking
statements.




For further information:

For further information: Jack Perkins, Director of Investor Relations,
(303) 991-9500; Douglas B. Silver, Chairman and CEO, (303) 799-9020,
info@internationalroyalty.com; www.internationalroyalty.com; Renmark Financial
Communications Inc.: Barbara Komorowski, bkomorowski@renmarkfinancial.com;
Christine Stewart, cstewart@renmarkfinancial.com; (514) 939-3989, (416)
644-2020; www.renmarkfinancial.com

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INTERNATIONAL ROYALTY CORPORATION

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