Barron’s mugs Royal Gold

An exceedingly negative story about Royal Gold in the March 1 edition of Barron’s knocked a painful $6 off the gold royalty company’s shares, which dipped below US$14 before recovering to US$15.46 at presstime.

The Barron’s reporter, who admitted to using a short seller as a source, wrote that Royal shares were worth only US$4.59 each, assuming, among other factors, a US$350-per-oz. gold price and zero prospects for revenue growth.

The reporter’s biggest oversight was her failure to compare Royal Gold’s valuation to that of former gold royalty company Franco-Nevada Mining. Compared with Franco’s value on the day it merged with Newmont Mining, Royal is heavily under-valued.

Meanwhile Newmont Mining was up 17 to US$27.25 as the first cracks emerged in its merger last year with Franco and Australia’s Normandy Mining. Newmont revealed that Normandy’s 650,000-oz.-per-year Yandal mine in Australia might be unable to meet its settlement exposures in 2005. With 3.4 million oz. hedged and reserves of only 2.1 million oz. at Yandal, this means that Newmont might have to walk away from the mine, which is financially isolated from the rest of Newmont’s assets.

With gold hovering about the US$350-per-oz. mark, the rest of the U.S.-listed gold majors were mostly in the red: AngloGold dropped 25 to US$31.75; Gold Fields shed 16 to reach US$12.15; Durban Deep was unchanged at US$3.60; Harmony Gold declined 40 to close at US$13.78; and Ashanti Goldfields was down 12 to US$6.30.