ROYAL GOLD, INC. (Nasdaq: RGLD; TSX: RGL), the leading precious metals royalty company, today announced the closing of its acquisition of the royalty portfolio from Barrick Gold Corporation, effective October 1, 2008.
Consideration to Barrick for the transaction was approximately $150 million net cash and a restructuring of Royal Gold's royalty positions at Barrick's Cortez Pipeline Mining Complex in Nevada, valued at $31.5 million. The cash portion of the purchase price for the transaction was paid from Royal Gold's cash on hand. The Company initially announced the execution of a definitive agreement to acquire Barrick Gold's royalty portfolio on July 31, 2008.
The royalty portfolio consists of royalties on 72 properties, including 8 producing royalties, 2 development stage properties, 19 evaluation stage properties, and 43 exploration projects. Approximately 75% of the portfolio consists of precious metals royalties. See Tables 1 through 4 for a list of all the royalty properties acquired in the transaction along with calendar 2008 first half production and revenue figures for the majority of the producing properties.
Royalties on 77 properties were included in the Barrick royalty portfolio at the time Royal Gold entered into the definitive purchase agreement with Barrick. As previously announced, several royalties in the portfolio were subject to rights of first refusal or buy down rights. Of the 77 properties initially included in the royalty portfolio, three properties were transferred to third parties upon the exercise of ROFRs and two properties were removed from the transaction. The removal of these five royalties reduced the purchase price by $210,000. Osisko Mining did not exercise its ROFR on the Malartic property. In addition, one evaluation stage property, having an attributed value for purposes of the transaction of approximately $1.0 million, remains subject to a ROFR which is due to expire by the end of October 2008. This royalty will either be transferred to Royal Gold following expiration or waiver of the ROFR, or transferred by Barrick to the ROFR-holder if the ROFR is exercised in accordance with its terms.
Royal Gold holds four gold royalty interests at Cortez, consisting of two sliding-scale gross smelter return royalties, a fixed-rate GSR royalty and a net value return royalty ("NVR1"). The restructuring of Royal Gold's royalty positions at Cortez consisted of the following: (1) a reduction of Royal Gold's GSR2 sliding-scale royalty, from a range of 0.72% to 9.0%, to match the current GSR1 sliding-scale royalty rate ranging from 0.40% to 5.0%, and (2) the elimination of Royal Gold's interest in the 0.71% GSR3 royalty and the 0.39% NVR1 royalty on the mining claims that comprise the undeveloped Crossroads deposit.
The GSR3 and NVR1 royalties that cover areas outside of the Crossroads deposit at Cortez were not affected by this transaction. The Crossroads deposit continues to be subject to Royal Gold's GSR2 royalty at the reduced royalty rate.
As a result of the transaction, Royal Gold now holds a total of 22 producing royalties, 6 development stage properties, 27 evaluation stage properties and 64 exploration projects. -- www.cnxmarketlink.com
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