Royal Gold Builds Reserves

At the end of 2008, Royal Gold (RGL-T, RGLD-Q) had royalty interests on 30% more gold and 16% more silver than the year before.

In total, the company held royalties on 64.2 million oz. of gold and 1.2 billion oz. of silver.

Royal Gold attributes part of the gain to buying royalty interests in Barrick Gold’s (ABX-T, ABX-N) Cortez Pipeline mining complex in Nevada. The purchase added 72 properties, including eight producing mines, two development-stage properties, 19 evaluation-stage properties and 34 exploration projects.

In addition, Royal Gold said that significant reserve boosts at Goldcorp’s (G-T, GG-N) Penasquito project in Mexico, Osisko Mining’s (OSK-T, OSKFF-O) Canadian Malartic gold project in Quebec, Alamos Gold’s (AGI-T, AGIGF-O) Mulatos project in Mexico and at Cortez contributed to the increase.

On May 7, the company announced net income of US$4.1 million from record royalty revenue of US$20.8 million for the period ending March 31. A year earlier, Royal Gold reported revenue of US$18.7 million with a net income of US$6.9 million.

Increased royalty revenue was largely driven by stronger production from High River Gold Mines’ (HRG-T, HRIVF-O) Taparko project in Burkina Faso and from some of the properties acquired in the Barrick transaction.

The drop in profits was due to a US$4-million increase in depreciation, depletion and amortization charges, caused by increased production from Taparko and new production from other projects.