Royal Gold boosts its royalty stable

Denver-based royalty company Royal Gold (RGL-T) has agreed to take a 93% interest in High Desert Mineral Resources (HDR-V) in return for 1.4 million of its own shares or US$24 million in cash, or a cash-share combo.

Royal gold also plans to offer High Desert’s minority shareholders equivalent consideration for their shares.

High Desert, a Nevada-based gold royalty and exploration company, owns a 2% net smelter return royalty in a large portion of Newmont Mining‘s (NEM-N) Leeville project.

Newmont recently gave the green light to the co-development of Leeville and the neighbouring Gold Quarry South Layback mine in Nevada.

The high-grade, underground Leeville mine will cost around US$180 million to build, with the first gold pour slated for 2006. At mining rate of about 3,500 tons per day, the mine should produce an average of 450,000-500,000 oz. per year, or 4 million oz. over a minimum 7-year mine life.

High Desert also holds a 1% net smelter returns royalty on the SJ claims, which cover a large part of Barrick Gold‘s (ABX-T) Screamer and West Betze deposits.

The company also has a portfolio of gold exploration properties and royalties on non-producing gold properties in Nevada.

The deal is subject to due diligence, final documentation and regulatory approval.

Royal finished the year ended June 30, with a record profit of US$10.7 million (or US59 per share) on revenue of US$12.3 million, including a US$6.8-million gain on deferred taxes. In the previous fiscal year, the company made US$1.1 million on revenue of US$6 million. Royal’s operating income was significantly higher, at US$5.1 million, compared with US$927,752 the year before.