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Royal Gold (RGLD) - Largest public Gold royalty co.

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Royal Gold (RGLD) - Largest public Gold royalty co.

Rising Cash costs are not their problem

=============================

 

$34.45 x 30,069,673 shs = $ 1,035,900,235 MktCap (Jan.2008)

 

Charts ... Daily : Weekly : Monthly

aa0ah5.gif

 

(My largest holding - just took off my hedges, selling puts at a profit)

 

I like to look at RGLD's price as a ratio to Gold (GLD):

001rd0.png

 

RGLD SUMMARY

 

Year- ended June-- : - 2003- : -2004- : -2005- : -2006- : -2007-

 

Average Gold price. : $ 334. : $ 389. : $ 423. : $ 525. : $ 638.

Earnings per share.. : $ 0.34 : $ 0.43 : $ 0.55 : $ 0.50 : $ 0.79

Earns. fully dlluted.. : $ 0.33 : $ 0.42 : $ 0.54 : $ 0.49 : $ 0.79

Dividends per share : $ 0.10 : $ 0.15 : $ 0.20 : $ 0.22 : $ 0.26

Ratio: EPS.fd/ Gold.. : 1012.1 : 926.2 : 783.3 : 1071.4 : 807.6

 

Qtr.- ended -------- : 12/06- : 03/07- : 06/07- : 09/07- : 12/07- : 03/08-

 

Average Gold price : $ 613. : $ 650. : $ 668. : $ 782. : $ 787. : $ 906E

Earnings per share.. : $ 0.24 : $ 0.14 : $ 0.20 : $ 0.20 : $ 0.13 : $ 0.20E

Dividends per share : $ 0.06 : $ 0.07 : $ 0.07 : $ 0.07 : $ 0.07 : $0.07

Ratio: Gold/4xEPS.. : 638.5 : 1160.7 : 835.0 : 977.5 : 1513.5 : 1130E

 

The quarters ended: 3/07 and 12/07... were particularly disappointing

 

= = = = =

LINKS:

Company website... : http://www.royalgold.com/

Yahoo profile.......... : http://finance.yahoo.com/q?s=rgld

Stockhouse B'board : http://www.stockhouse.com/bullboards/forum...&table=LIST

StockRoar comment : http://www.stockroar.com/2007/10/28/update...-rgld-vsea-ice/

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Why invest in a Royalty Company? Here are some good reasons:

 

"Still looking for a good way to strike gold while investing in it? As gold moves solidly above $700 an ounce amid turbulence in the credit markets and on the back of a weak dollar, you don’t have to be a dyed-in-the-wool goldbug to see some merit in investing in the precious metal.

ADVERTISEMENT

 

 

An efficient way to do so would be with shares of Royal Gold Inc. (Nasdaq: RGLD), which bills itself as the world’s leading publicly traded precious metals royalty company. It’s an unusual company with an unusual business strategy. How many companies can you name that have a market cap of $875 million with only $48 million in annual revenue and 14 employees?

 

Royal Gold’s revenue consists of royalty payments based on its interests in mines operated by the world’s leading gold mining companies, making it a relatively pure play on gold. As the company puts it, its sliding-scale royalties provide investors with upside leverage when gold prices rise, as they are now, while providing a floor when gold prices fall.

 

Currently, the company—which traditionally has been based on a single mining complex in Nevada—faces the happy prospect of gold reaching a new 26-year high just as the company’s recent diversification in other mining projects is beginning to pay off with these mines coming on stream.

 

Denver-based Royal Gold more or less stumbled into the royalty business after the company, founded in 1981 as Royal Resources, abandoned oil and gas early on to become a gold mining company. The stock market crash of 1987, though, put a stop to that idea and the company realized it could invest in projects operated by others with much less risk. If a site doesn’t pan out, so to speak, Royal Gold still loses, but doesn’t have to worry about permit delays, rising operating costs or the myriad other factors that cut into an operating company’s margins when it does strike paydirt. Instead, it can sit back and wait until the mine starts pouring gold and then collect its royalty on the sale of it.

 

As a result, Royal Gold’s operating cash flow margin is 50%, compared with 19% for North American majors like Barrick Gold Corp. (NYSE: ABX), Newmont Mining Corp. (NYSE: NEM) and Goldcorp Inc. (NYSE: GG). Royal Gold’s net profit margin is 41%, compared with 11% for the majors.

 

Moreover, as the operating company seeks to maximize its return on a site, Royal Gold benefits from the additional reserves found through further exploration without having to contribute more capital. For instance, the Cortez mine in the Pipeline mining complex in Nevada began with reserves of 300,000 ounces in 1995, but had 2.3 million ounces of reserves at the end of 2006, even after production of 8.2 million ounces, because of new discoveries totaling 10.2 million ounces.

 

Royal Gold still derives 80% of its revenue from mines in Nevada, but that is due to change after its diversification into development sites in Mexico, Argentina, Chile and Burkina Faso in West Africa. The Taparko mine in Burkina Faso began pouring gold in July; Royal Gold hopes to begin seeing revenue from the project in the coming quarters. The Penasquito project in Mexico, which Royal Gold believes will be a major producer for two decades, is due to come on stream in the second half of calendar 2008.

 

In addition, Royal Gold is in the process of acquiring Battle Mountain, a smaller royalty company, which has four producing royalties and one development property, including the promising Dolores mine in Mexico, which is due to commence production early in calendar 2008."

 

/see: http://biz.yahoo.com/seekingalpha/070916/47192_id.html?.v=1

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Funny… I printed the same chart RGLD/GLD this morning further to our conversation of yesterday.

You have a strong case…. It sure looks like a buying opportunity.

 

Let see how it will open tomorrow. I'll probably follow !

 

Alex

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If gold slides from here, it could drag RGLD lower. But not necessarily.

 

I do think there were three temporary reasons for the recent selloff in RGLD:

 

+ Battle Mountain Gold Exploration (BMGX) shareholders, only received their RGLD shares in the past few days,

and some will have sold them immediately

 

+ Earnings of 20 cents were below expectations (22-23 cents)

 

+ RGLD announced a $100million + issue of convertibles, bringing some dillution

 

= =

 

For earnings, what is an important driver is the average gold price over each quarter.

For the quarter ended 30 Sept. 2007, the average gold price was about $675 - today it is $822.

Based on that rise, and would should (eventually!) be an anti-dillutive merger with BMGX,

I reckon the share price should be rising.

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announced a $100million + issue of convertibles, bringing some dillution

 

= =

 

For earnings, what is an important driver is the average gold price over each quarter.

For the quarter ended 30 Sept. 2007, the average gold price was about $675 - today it is $822.

Based on that rise, and would should (eventually!) be an anti-dillutive merger with BMGX,

I reckon the share price should be rising.

 

I have been trading in and out of RGLD since June 2007 and have done OK.

 

Agree with all the comments here - also check out the short position on RGLD - lots of potential for a short squeeze

on the next run up.

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I have been trading in and out of RGLD since June 2007 and have done OK.

 

Agree with all the comments here - also check out the short position on RGLD - lots of potential for a short squeeze

on the next run up.

 

 

I wonder if the short position will partly evaporate when all the RGLD shares are handed out.

A client and I are still awaiting 1.6 million of out BMGX shaes (acquired thru exercise of BMGX wts) to be converted

into free-trading RGLD. I wonder how many others are in the same boat now?

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I wonder if the short position will partly evaporate when all the RGLD shares are handed out.

A client and I are still awaiting 1.6 million of out BMGX shaes (acquired thru exercise of BMGX wts) to be converted

into free-trading RGLD. I wonder how many others are in the same boat now?

 

Very interesting point - I will find it quite instructive to see how this plays out - something else to add to the do

list :lol:

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John Doody talks (on Financial Sense) about how he has added RGLD to his BUY list

 

+ The share price fell by about 30% (in terms of MarketCap per ounce?)

+ The made a company-changing acquisition (BMGX)

 

Listen here: http://www.financialsense.com/Experts/roun.../2007/1123.html (about 45 minutes in)

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whats the total summary of Royal Gold`s Au reserves from all projects?

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Is the consensus for the investors (ie not traders) to buy under USD30 and hold?

 

Arn

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Under 30 now. Step in or will it go lower?

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SOME NEWS ....

 

1/

Royal Gold Announces Impact From Goldcorp's Expansion Plans at the Penasquito Project

 

December 05, 2007: 01:43 PM EST

 

DENVER, Dec. 5 /PRNewswire-FirstCall/ -- ROYAL GOLD, INC. , the leading precious metals royalty company, today announced that Goldcorp Inc. ("Goldcorp"), the operator of the Penasquito project located in Zacatecas, Mexico, has approved plans to expand mill throughput by 30% to 143,000 tons (130,000 tonnes) of ore and to accelerate the construction schedule at the project. According to Goldcorp, the expanded operation is now expected to produce an average of 1.7 million gold equivalent ounces per year, compared to a previous estimate of 1.3 million gold equivalent ounces per year.(1) Royal Gold holds a 2.0% net smelter return royalty on all metals at the Penasquito project.

 

Goldcorp estimates the average annual life-of-mine production to be 400,000 ounces of gold, 31 million ounces of silver, 417 million pounds of zinc and 214 million pounds of lead. Goldcorp's June 2006 feasibility study had previously estimated annual production levels of 388,000 ounces of gold, 23 million ounces of silver, 302 million pounds of zinc, and 157 million pounds of lead.

 

"Since the acquisition of our royalty interest at the Penasquito project one year ago, reserves have increased 48%(2), the planned annual production has increased 30%, and the mine life has been extended to 19 years," commented Tony Jensen, President and Chief Executive Officer. "This is exactly the type of project upside we target for acquisitions. These operational improvements will increase and accelerate our royalty revenues and significantly enhance our return on this investment."

 

Goldcorp also reported that the project remains on schedule and is expected to produce gold from heap leaching of oxides in 2008 with mill start-up in 2009. In addition, Goldcorp reports exploration drilling, metallurgical evaluations and optimization efforts are continuing to provide further project enhancements. As a royalty owner, Royal Gold is not required to contribute to any capital, development, exploration or mine operation costs for the project.

/see: http://money.cnn.com/news/newsfeeds/articl...005122007-1.htm

 

2/

Out of the Gate: Royal Gold Moves Up

By Associated Press December 18, 2007

 

Recommendations

Shares of Royal Gold Inc. rose Tuesday after an HSBC analyst upgraded the stock because of greater production from a metals project in which Royal Gold holds an interest. (Minefinders' Dolores mine?)

 

Victor Flores raised his rating on the company, which buys the rights to collect royalties from mine operators, to "Overweight" from "Neutral." He retained a price target of $34 per share and said the stock price has been weak recently.

 

Shares rose $1.56, or 5.8 percent, to $28.25 in morning trading.

 

Royal Gold receives royalties on Goldcorp Inc.'s Penasquito project in Zacatecas, Mexico. Earlier this month, Goldcorp said it will increase mill production to 1.7 million gold equivalent ounces per year, from 1.3 million.

 

Goldcorp also said annual gold production from the Penasquito mine is higher than it previously estimated.

 

Analyst Michael Jalonen of Merrill Lynch rates Royal Gold shares at "Buy," while Brian Christie of National Bank Financial gives a rating of "Sector Perform," or "Neutral."

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Another interesting Royalty co (very small cap), that you may already be familiar with is Intl Royalty Corp (AMEX:ROY) It's a fairly new listing, but was at a GIP recently (mid dec) and the trend looks to be continuing. It is half a point above strong support, and well under any resistance levels. Increasing volume on a stock with what seems to me to be good financials... Could this be a buy?

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....Intl Royalty Corp (AMEX:ROY) It's a fairly new listing,

but was at a GIP recently (mid dec) and the trend looks to be continuing.

 

Also trades as: IRC.t in Canada

 

I know it. I own it, bought back in very recently.

 

Has major investments in the Voiseys Bay royalty,

which is tied to Nickel prices (see chart) and so IRC.t ... update

aa1qi5.gif

 

...is less gold-oriented than RGLD. I want the Gold exposure.

 

Updated monthly chart for RGLD:

aa0vq5.gif

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WHEN IT BREAKS above $35 (next week, maybe?)

 

then RGLD will really fly.

No overhead reisistance to slow it down

 

= =

 

Later: Friday was a great day for RGLD !

 

RGLD $ 34.45 +$1.38 / + 4.17% !!

 

I mentioned this many times as my largest position.

I hope some of you bought some.

The real fun will start if/when it breaks out over $35. coming soon, I think

 

$34.45 x 30,069,673 shs = $ 1,035,900,235 MktCap

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...but Monday -1.07 (3.11%).......with $900 gold.

 

maybe best to wait for the pull back in gold now.

 

Nothing goes straight up.

I lightened a tad (<10%) near $35, but I want to stick with RGLD for the longer haul.

 

IRC.t (see above) has been a nice winner - hope you got some near the low we identified

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IRC.t (see above) has been a nice winner - hope you got some near the low we identified

 

No, I lost all my money following your other tips.

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Royal Gold (RGLD) looks way too cheap relative to the price of Gold

 

003ad8.png

 

Some in-the-money calls for March 2008 or later may reward nicely

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No, I lost all my money following your other tips.

 

??

So many of the ideas here have made big money, and my own portfolio has done well.

Praytell, what have you bought, and over what timeframe that has done badly??

 

No everything has made money, nor can you expect it too, but handling trades and timeframes

is key, so maybe that is what you need to learn. BTW, taking some profits - when they are on offer-

is part of the exercise.

 

So I am very curious what has not worked out for you. Maybe we can all learn soemthing from that.

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??

So many of the ideas here have made big money, and my own portfolio has done well.

Praytell, what have you bought, and over what timeframe that has done badly??

 

No everything has made money, nor can you expect it too, but handling trades and timeframes

is key, so maybe that is what you need to learn. BTW, taking some profits - when they are on offer-

is part of the exercise.

 

So I am very curious what has not worked out for you. Maybe we can all learn soemthing from that.

 

 

Hey, chill out Bubbs, it was a flippant line.

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The recent selloff in Gold stocks has sent the RGLD price back down ... update : 5 yrs : Daily

aa2ye7.gif

5 years

aa1ct6.gif

Daily- 1year

aa0kx7.gif

 

Another buying opportunity here, near $28?

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Another buying opportunity here, near $28?

Well one of the directors flogging 102,000 shares isn't exactly going to help support the price.

 

I have been nibbling though. I noticed that there are Jan 2009 and Jan 2010 LEAPs quoted for RGLD and although the spreads aren't good and the volume almost non-existent, the premiums (premia?) aren't too bad. With a sensible in-the-money strike price, owning the 2010 calls feels to me like owning the shares but with roughly 2 x leverage. Don't get the dividend yield though.

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