Royal Gold Inc.’s (RGLD) fully-owned subsidiary – Royal Alaska, LLC – has completed the formation of a joint venture with Contango ORE, Inc. (“CORE”) to advance exploration and development of CORE’s Tetlin properties.
CORE had earlier entered into a Master Agreement with Royal Gold, which provided for the contribution by the former to the joint venture of its Tetlin lease and State of Alaska mining claims near Tok, Alaska prospective for gold and related minerals, coupled with other personal property, which the joint venture collectively values at $45.7 million.
Pursuant to this agreement and the receipt of approval from shareholders of the transaction, CORE and Royal Gold formed a limited liability company named Peak Gold, LLC to hold the joint venture assets. The venture will be managed by representative of both the companies and Royal Gold’s initial investment of $5 million will fund exploration activity. Royal Gold will also have the choice to earn up to 40% economic interest in the venture by investing $30 million, which includes the initial $5 million investment, before Oct 2018.
Royal Gold’s experience and expertise will facilitate CORE in expanding its Chief Danny Prospect, including its earlier announced Peak Zone discovery. The proceeds of Royal Gold’s investment will be utilized by the joint venture for further exploration and development of the Tetlin properties.
Royal Gold released its first-quarter fiscal 2015 (ended Sep 30, 2014) results on Oct 29, 2014. The company posted earnings of 29 cents per share in the reported quarter compared with 23 cents per share in the year-ago quarter. Excluding asset impairment costs, earnings were 31 cents per share in the quarter. The increase in earnings was primarily attributed to a rise in revenue.
The company’s royalty revenues were $69 million in the first quarter compared with $56.5 million in the prior-year quarter. Revenues in the quarter were higher than the year-ago quarter, mainly due to new production at Mt. Milligan and increase in production at Cortez and Penasquito.
Royal Gold currently carries a Zacks Rank #3 (Hold).
Other companies in the gold mining industry worth a look include Banro Corp. (BAA), Pretium Resources Inc. (PVG) and Golden Star Resources, Ltd. (GSS). All of these carry a Zacks Rank #2 (Buy).
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