Royal Gold to Acquire Barrick Gold's Royalty Portfolio



    DENVER, July 31 /CNW/ -- ROYAL GOLD, INC. (Nasdaq:   RGLD; TSX: RGL), the
leading precious metals royalty company, announced that it has entered into a
definitive agreement to acquire a portfolio of royalties from Barrick Gold
Corporation ("Barrick") for net cash consideration of $150 million and a
restructuring of certain Royal Gold royalty positions at Barrick's Cortez
Pipeline Mining Complex ("Cortez") in Nevada. The restructuring of these
royalty positions will reduce the royalty burden on the undeveloped Crossroads
deposit at Cortez while having only a minimal impact on Royal Gold's royalty
revenue from the current production.
    The Barrick portfolio consists of royalties on 77 properties, including
eight producing royalties, 20 development and evaluation stage properties, and
49 exploration projects.  Over 75% of the portfolio consists of precious
metals royalties.  The purchase price for the acquisition will be paid from
cash on hand.
    Royalty revenue generated from the Barrick portfolio in calendar 2007 was
approximately $12 million.  Revenues are expected to grow, assuming current
commodity prices, as development stage projects commence production.  The
transaction is expected to be immediately accretive on all key financial
measures.
    This royalty package complements Royal Gold's existing geographical
royalty positions with significant growth into Canada and Australia.
    
    Terms of the Transaction
    
    Currently, Royal Gold holds four gold royalty interests at Cortez,
consisting of two sliding-scale gross smelter return ("GSR") royalties ("GSR1
and GSR2"), a fixed rate GSR royalty ("GSR3") and a net value return royalty
("NVR1").  As consideration for the acquisition, Royal Gold will pay Barrick
$150 million in cash and reduce the GSR2 royalty, ranging from 0.72% to 9.0%,
to match the current GSR1 royalty rate ranging from 0.40% to 5.0%. Royal Gold
also will eliminate its interest in the 0.71% GSR3 and the 0.39% NVR1
royalties on the mining claims that comprise the undeveloped Crossroads
deposit.  The GSR3 and NVR1 royalties which cover areas outside of the
Crossroads deposit at Cortez will not be affected by this transaction.  The
Crossroads deposit will continue to be subject to Royal Gold's GSR2 royalty at
the reduced royalty rate. The transaction is expected to close on October 1,
2008.
    Commenting on the transaction, Tony Jensen, President and Chief Executive
Officer, stated, "This is a unique opportunity to significantly grow our asset
base through the acquisition of a large royalty package with a primary focus
on precious metals.  These new properties will not only provide immediate
royalty revenue and cash flow, but will also add significant strength to all
phases of our portfolio -- producing royalties, evaluation and development
properties, and exploration projects.  We believe the restructuring of our
various royalties at Cortez will provide the catalyst needed for Barrick to
develop the Crossroads deposit, thus providing our shareholders even greater
upside from this transaction over the long-term."
    Barrick is currently investing exploration and engineering resources to
advance the development of the Crossroads project.  In a press release today,
Barrick stated it "is targeting the conversion of all the existing 1.1 million
ounces of the measured and indicated resources held in the Crossroads deposit
to the proven and probable reserve category at year-end.  Upside potential
exists and is being tested through ongoing drilling with the expectation of
significant resource additions."
    
    Key Assets
    
    The royalty portfolio was assembled by Barrick and various predecessor
companies, including Placer Dome, Homestake, Lac Minerals, AurionGold, Delta
Gold and Plutonic.  The key assets in the royalty package include the
following properties:
    -- Mulatos -- a sliding-scale net smelter return ("NSR") royalty
currently paying 3.5% on Alamos Gold's Mulatos gold mine in Mexico. Royal Gold
currently owns an additional 0.30%-1.50% sliding-scale NSR royalty on the
property. This acquisition consolidates the Mulatos royalty and increases
Royal Gold's royalty interest from 1.5% to 5.0% at current commodity prices. 
The royalty is capped at 2.0 million ounces of production and 212,000 ounces
have been produced through March 31, 2008.
    Malartic -- a 2.0%-3.0% sliding-scale NSR royalty on the Canadian
Malartic gold project, owned by Osisko Mining Corporation ("Osisko").  Osisko
anticipates releasing measured and indicated additional mineralized material
estimates on Malartic in the third quarter of 2008 and expects to complete
feasibility work in the fourth quarter of 2008.  The royalty is subject to a
buy down right and a right of first refusal.
    Siguiri -- a sliding-scale NSR royalty currently paying 1.875% on the
Siguiri gold mine in Guinea, West Africa, operated by AngloGold Ashanti.  The
royalty is capped on a dollar basis and approximately $15 million remains to
be paid.
    Mt. Goode/Cosmos -- a 1.5% NSR royalty covering a portion of Xstrata's
Cosmos nickel mine in Australia.  A large portion of the royalty ground is
located to the south of the Cosmos and Cosmos Deeps ore bodies, and includes
potential future production from identified mineralization, including the
Tapinos, Prospero and AM2 deposits.
    Allan -- a 40% interest in a sliding-scale royalty on Potash Corporation
of Saskatchewan's potash mine located in Canada.  The royalty is currently
paying at a rate of $1.44 per ton relative to annual production.
    Other key precious metal royalty assets on evaluation and development
properties, or exploration projects include Mercator's Meekatharra project in
Western Australia, Dundee's Back River project in Canada, and the
Holt-McDermott claims on St. Andrew Goldfields' Holt-Holloway project in
Canada.
    See Tables 1 and 2 for a list of producing, and evaluation and
development properties to be acquired in the transaction that contain reserves
and additional mineralization.
    
    About Royal Gold
    
    Royal Gold is a precious metals royalty company engaged 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 http://www.royalgold.com.
    
    Conference Call and Webcast Information
    
    Management will host a conference call at 12:00 a.m. Mountain Time (2:00
p.m. Eastern time) on Thursday, July 31, 2008, to discuss the details of the
acquisition.  The call can be accessed by dialing (800) 603-2779 or (706)
634-7230, access code 57356752.
    The conference call will be simultaneously webcast on the Company's web
site at http://www.royalgold.com under the "Presentations" section.  The
webcast will include a slide show.  The replay of the webcast will be
available on the Company's web site approximately two hours after the call
ends.
    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 the forward-looking statements contained herein.  Such
forward-looking statements include statements regarding the transaction being
immediately accretive on all key financial measures, growth in royalty revenue
as development stage projects commence production, the scheduled closing of
the transaction, receipt of immediate royalty revenues and cash flow, addition
of significant strength to Royal Gold's royalty portfolio, the restructuring
of Royal Gold's royalties providing a catalyst to Barrick's development at the
Crossroads deposit and such development resulting in a greater upside to
shareholders, the operators' estimates of reserves and additional mineralized
material, and the price of potash per ton.  Like any royalty acquisition that
contains significant assets that are not producing or not yet in development,
the royalties in the royalty portfolio planned to be acquired that are in
evaluation and development or exploration stage are subject to certain risks,
such as the ability of the operator to bring the project into production and
operate in accordance with the feasibility study and the ability of Royal Gold
to make accurate assumptions regarding valuation, timing and amount of royalty
payments.  In addition, the royalties are subject to certain risks associated
with conducting business in foreign countries, including application of
foreign laws to contract and other disputes, foreign environmental laws and
enforcement and uncertain political and economic environments.  Factors that
could cause actual results to differ materially from projections include,
among others, the exercise of third party buy down rights, rights of first
offer and rights of first refusal on royalties planned to be acquired,
precious metals and other commodity prices, decisions and activities of the
operators of the various properties, unanticipated grade, geological,
metallurgical, processing or other problems the operators 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 the Company's 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.



    
                                   TABLE 1
                          BARRICK ROYALTY PORTFOLIO
    

    
                                RESERVES (1,2)
    

    
    GOLD/SILVER
    

    
    Property         Location      Ownership            NSR Rate %      Metal
    Mulatos (3)       Mexico      Alamos Gold          0.70 - 3.50       Gold
    Siguiri (4)       Guinea    AngloGold Ashanti      0.00 - 1.875      Gold
    Balcooma        Australia      Kagara Zinc            1.50           Gold
    Balcooma        Australia      Kagara Zinc            1.50          Silver
    El Toqui (5)     Chile     Breakwater Resources      1.0 - 3.0       Gold
    Meekathar (6)
     (Paddy's Flat) Australia    Mercator Gold       AUD$10 per ounce    Gold
    Wharf         United States     Goldcorp               2.0           Gold
    Holt/Holloway   Canada   St. Andrew Goldfields   0.00013 x Au price  Gold
    

    
    BASE METALS
    

    
    Property         Location       Ownership           NSR Rate %      Metal
    Mt. Goode       Australia        Xstrata              1.50          Nickel
    Balcooma        Australia      Kagara Zinc            1.50          Copper
    Balcooma        Australia      Kagara Zinc            1.50           Zinc
    Balcooma        Australia      Kagara Zinc            1.50           Lead
    El Toqui          Chile    Breakwater Resources     1.0 - 3.0        Zinc
    


    
    POTASH
    

    
    Property         Location      Ownership            NSR Rate %      Metal
    Allan (7)       Canada     Potash Corporation      $0.36 - $1.44    Potash
                                of Saskatchewan          per ton
    

    GOLD/SILVER

    
    Property           Tons        Average Grade          Contained Ounces
                    (millions)        (opt)                 (millions)
    Mulatos (3)       35.42           0.048                    1.689
    Siguiri (4)       122.22          0.022                    2.629
    Balcooma           1.12           0.016                    0.018
    Balcooma           1.12            1.64                    1.842
    El Toqui (5)       5.20           0.032                    0.167
    Meekathar (6)
     (Paddy's Flat)    2.19           0.140                    0.308
    Wharf              8.95           0.025                    0.220
    Holt/Holloway      2.95           0.165                    0.486
    

    
    BASE METALS
    

    
    Property           Tons        Average Grade           Contained lbs
                    (millions)          (%)                  (millions)
    Mt. Goode          1.31            4.45                     116
    Balcooma           2.18             3.1                     135
    Balcooma           1.12             8.3                     185
    Balcooma           1.12             3.3                      73
    El Toqui           5.20             7.3                     759
    


    
    POTASH
    

    
    Property           Tons        Average Grade          Contained Ounces
                    (millions)        (opt)                 (millions)
    Allan (7)        348.33            25.9                      90
    


    
    (1) Set forth below are the definitions of proven and probable reserves
        used by the U.S. Securities and Exchange Commission.  Some of these
        royalty operators are Canadian issuers.  Their definitions of
        "mineral reserve," "proven mineral reserve" and "probable mineral
        reserve" conform to the Canadian Institute of Mining, Metallurgy and
        Petroleum definitions of these terms as of the effective date of
        estimation as required by National Instrument 43-101 of the Canadian
        Securities Administrators.
        "Reserve" is that part of a mineral deposit which could be
        economically and legally extracted or produced at the time of the
        reserve determination.
       "Proven (Measured) Reserves" are reserves for which (a) quantity is
        computed from dimensions revealed in outcrops, trenches, workings or
        drill holes, and the grade is computed from the results of detailed
        sampling, and  (b) the sites for inspection, sampling and measurement
        are spaced so closely and the geologic character is so well defined
        that the size, shape, depth and mineral content of the reserves are
        well established.
       "Probable (Indicated) Reserves" are reserves for which the quantity
        and grade are computed from information similar to that used for
        proven (measured) reserves, but the sites for inspection, sampling and
        measurement are farther apart or are otherwise less adequately spaced.
        The degree of assurance of probable (indicated) reserves, although
        lower than that for proven (measured) reserves, is high enough to
        assume geological continuity between points of observation.
    (2) Estimated reserves subject to the Barrick royalty portfolio interests.
        Royal Gold has not been supplied with reserve information directly
        from the operator.  This information is derived from recent publicly-
        available information from the operators of the various properties or
        from various recent National Instrument 43-101 reports.
    (3) The royalty is capped at 2.0 million ounces of production.  As of
        March 31, 2008, 212,000 ounces have been produced. NSR sliding-scale
        schedule (price of gold per ounce - royalty rate):  $0.00 to $299.99 -
        0.70%; $300 to $324.99 - 1.05%; $325 to $349.99 - 1.4%; $350 to
        $374.99 - 2.10%; $375 to $399.99 - 2.80%; $400 or higher - 3.5%.
    (4) The royalty is capped on a dollar basis and approximately $15 million
        remains to be paid.  NSR sliding-scale schedule (price of gold per
        ounce - royalty rate as of 3/31/08):  <478.10 - 0.00%; $478.10 to
        $546.41 - 0.625%; $546.42 to $580.57 - 0.875%; $580.58 to $614.72 -
        1.125%; $614.73 to $648.87 - 1.50%; above $648.87 - 1.875%.
    (5) NSR sliding-scale schedule (price of zinc per pound - royalty rate):
        > $0.50 but < $0.55 - 1.0%; > = $0.55 but < $0.60 - 2.0%; > = $0.60 -
        3.0%.
    (6) Royalty applies on production above 50,000 ounces.
    (7) The royalty applies to 40% of production.  The royalty rate is $1.44
        per ton for the first 600,000 tons on which the royalty is paid,
        reducing to $0.72 per ton on 600,000-800,000 tons and to $0.36 per ton
        above 800,000 tons.  The sliding-scale is applicable when the price of
        potash drops below $23 per ton.  However, given the fact that North
        American market prices for the remainder of 2008 are approximately
        $800 per ton, the complete sliding-scale schedule is not presented
        here.
    


    
                                   TABLE 2
                          BARRICK ROYALTY PORTFOLIO
    

    
                  ADDITIONAL MINERALIZED MATERIAL (1,2,3,4)
    

    
    GOLD/SILVER
    Property            Location          Ownership      NSR Rate %    Metal
    

    
    Mulatos (5)           Mexico     Alamos Gold         0.70 - 3.50   Gold
    Siguiri (6)           Guinea     AngloGold           0.00 - 3.75   Gold
                                     Ashanti
    Meekatharra
     (7,8)
    (Reedy)            Australia     Mercator Gold        1.0 - 2.5    Gold
    Meekatharra
     (8)
     (Paddy's
     Flat)             Australia     Mercator Gold         AUD$10      Gold
                                                          per ounce
    Wharf          United States     Goldcorp                2.0       Gold
    Malartic (7)          Canada     Osisko               2.0 - 3.0    Gold
                                     Exploration
    Holt/Holloway
     (9)                  Canada     St. Andrew            0.00013 x   Gold
                                     Goldfields            Au price
    Back River (10)
     (George Lake)        Canada     Dundee Precious         2.35      Gold
                                     Metals
    Back River (11)
     (Goose Lake)         Canada     Dundee Precious         1.95      Gold
                                     Metals
    

    
                         Measured           Indicated           Inferred
                              Average             Average          Average
                      Tons     Grade      Tons     Grade     Tons   Grade
    Property           (M)     (opt)      (M)      (opt)      (M)   (opt)
    

    
    Mulatos (5)       12.31    0.029     58.47     0.027     70.79   0.027
    Siguiri (6)        1.10    0.021     20.70     0.027     63.60   0.027
    Meekatharra
     (7,8)
     (Reedy)              -        -      2.25     0.071      2.65   0.069
    Meekatharra
     (8)
     (Paddy's
    Flat)                 -        -     17.51     0.039      8.74   0.040
    Wharf              3.42    0.020      5.26     0.021      4.42   0.025
    Malartic (7,9)        -        -         -         -    236.61   0.027
    Holt/Holloway
     (10)               1.46    0.194      2.11     0.200      1.18   0.226
    Back River (11)
     (George Lake)        -        -      2.03     0.291      2.82   0.307
    Back River (12)
     (Goose Lake)         -        -      1.74     0.346      1.09   0.270
    


    
                             TABLE 2 (continued)
                          BARRICK ROYALTY PORTFOLIO
    

    
                   ADDITIONAL MINERALIZED MATERIAL 1,2,3,4
    

    
    BASE METALS
                                                        Measured    Indicated
                                                           Average     Average
                                                      Tons  Grade  Tons  Grade
    Property  Location  Ownership NSR Rate %   Metal   (M)   (%)   (M)    (%)
    

    
    Mt. Goode Australia Xstrata     1.50       Nickel  0.46  6.39  0.56  6.98
    Balcooma  Australia Kagara Zinc 1.50       Copper    --    --  1.87   3.7
    Balcooma  Australia Kagara Zinc 1.50       Zinc      --    --  0.77   6.7
    Balcooma  Australia Kagara Zinc 1.50       Lead      --    --  0.77   2.8
    El Toqui  Chile     Breakwater                    Measured and Indicated
     (10,13)             Resources  1.0 - 3.0  Zinc     5.89 tons @ 8.1%
    Ming      Canada    Rambler     C$1.00 per
                         Metals     ton of ore Copper  0.53    -- 10.56    --
                                                              (14)        (14)
    Kutcho    Canada    Sherwood
     Creek               Copper     1.60       Copper    --    -- 19.05  1.56
    Kutcho    Canada    Sherwood
     Creek               Copper     1.60       Zinc      --    -- 19.05  2.12
    


    
                                                  Inferred
                                                       Average
                                                 Tons   Grade
    Property  Location  Ownership                (M)     (%)
    

    
    Mt. Goode Australia Xstrata                  0.65    5.65
    Balcooma  Australia Kagara Zinc                --      --
    Balcooma  Australia Kagara Zinc              0.01     7.8
    Balcooma  Australia Kagara Zinc              0.01     3.6
    El Toqui  Chile     Breakwater
     (10,13)             Resources               5.25     7.1
    Ming      Canada    Rambler
                         Metals                  3.39      -- (14)
    Kutcho    Canada    Sherwood
     Creek               Copper                  0.40   1.620
    Kutcho    Canada    Sherwood
     Creek               Copper                  0.40   1.770
    


    
    (1) Mineralized material is that part of a mineral system that has
        potential economic significance but cannot be included in the proven
        and probable ore reserve estimates until further drilling and
        metallurgical work is completed, and until other economic and
        technical feasibility factors based upon such work have been resolved.
        The U.S. Securities and Exchange Commission does not recognize this
        term.  Investors are cautioned not to assume that any part or all of
        the mineral deposits in these categories will ever be converted into
        reserves.
    (2) Some of the royalty operators are Canadian issuers.  Their definitions
        of "mineral resource," "measured mineral resource," "indicated mineral
        resource" and "inferred mineral resource" conforms to the Canadian
        Institute of Mining, Metallurgy and Petroleum definitions of those
        terms as of the effective date of estimation, as required by National
        Instrument 43-101 of the Canadian Securities Administrators.  Mineral
        resources which are not mineral reserves do not have economic
        viability.  Canadian issuers use the terms "mineral resources" and its
        subcategories "measured," "indicated" and "inferred" mineral
        resources.  While such terms are recognized and required by Canadian
        regulations, the U.S. Securities and Exchange Commission does not
        recognize them.  Investors are cautioned not to assume that any part
        or all of the mineral deposits in these categories will ever be
        converted into reserves.
    (3) Royal Gold has not been supplied with additional mineralized material
        information directly from the operator.  This information is derived
        from recent publicly-available information from the operators of the
        various properties or from various recent National Instrument 43-101
        reports.  Additional mineralized material shown in the table may
        include additional mineralized material that is not subject to the
        royalty interests, and/or may be subject to contractual limitations
        such as production caps, monetary caps, and the extent of claim,
        concession or tenement boundaries.
    (4) Only additional mineralized material relating to producing,
        development and evaluation stage projects are presented in this table.
        No additional mineralized material for exploration stage projects
        within the Barrick royalty portfolio are presented herein.
    (5) NSR sliding-scale schedule (price of gold per ounce - royalty rate):
        $0.00 to $299.99 - 0.70%; $300 to $324.99 - 1.05%; $325 to $439.99 -
        1.40%; $350 to $374.99 - 2.10%; $375 to $399.99 - 2.80%; $400 or
        higher - 3.5%.
    (6) The royalty is capped on a dollar basis and approximately $15 million
        remains to be paid.  NSR sliding-scale schedule (price of gold per
        ounce - royalty rate as of 3/31/08):  <$478.10 - 0.00%; $478.10 to
        $546.41 - 0.625%; $546.42 to $580.57 - 0.875%; $580.58 to $614.72 -
        1.125%; $614.73 to $648.87 - 1.50%; above $648.87 - 1.875%.
    (7) Subject to third party rights, such as first right of refusal and/or
        buy down right.
    (8) Royalty applies on production above 50,000 ounces at Paddy's Flat and
        above 300,000 ounces at Reedy.
    (9) NSR sliding-scale schedule (price of gold per ounce - royalty rate):
        below $350 - 2.0%; $350 and above - 3.0%.
    (10) Additional mineralized material does not include reserves, except at
         Holt/Holloway and El Toqui where the operator includes reserves in
         the Measured and Indicated category.
    (11) Royalty applies on production above 800,000 ounces.
    (12) Royalty applies on production above 400,000 ounces.
    (13) NSR sliding-scale schedule (price of zinc per pound - royalty rate):
         > $0.50 but < $0.55 - 1.0%; > = $0.55 but < $0.60 - 2.0%; > = $0.60 -
         3.0%.
    (14) Royalty is paid on tons processed through the mill rather than on
         metal content.
    Royal Gold, Inc.
    




For further information:

For further information: Karen Gross, Vice President and Corporate
Secretary of Royal Gold, Inc., +1-303-573-1660 Web Site:
http://www.royalgold.com

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