Royal sees revenues rise on Pipeline production

A 2.6% increase in the sliding-scale royalty on production from the Pipeline operation in Nevada resulted in higher third-quarter revenue for Denver-based Royal Gold (RGL-T).

The gold royalty company saw its revenue climb by 19% to $3.4 million during the three months ended Sept. 30. Earnings rose accordingly, to US$1.4 million (or US8 per basic share), compared with $372,299 (US2 a share) in the third quarter of 2001. (Earnings in the year-earlier period included a non-cash charge totalling just more than US$1 million.)

Pipeline supplies cash to Royal via four royalties: two sliding scale, one fixed gross smelter, and one net value return. The operation is owned 60-40 by Placer Dome (PDG-T) and Kennecott Exploration, a subsidiary of Rio Tinto (RTP-N).

Royal’s quarterly share of production from Pipeline slipped to 267,800 oz., from 295,518 oz. a year earlier. The lower production is attributed to the termination of carbonaceous ore sales to Barrick Gold (ABX-T) during the quarter and lower grades at South Pipeline. Royalty revenue was US$3.1 million, up from US$2.6 million.

Meanwhile, higher production was reported from Placer Dome’s Bald Mountain mine, also in Nevada. Royal Gold’s 1.75% royalty at the mine accounted for 53,000 oz., significantly higher than the 18,000 oz. accounted for in the third quarter of last year. The improvement reflects better recoveries resulting from changes in leaching techniques.

Royal also receives royalties from the Martha silver mine in Argentina’s Santa Cruz province, where Coeur d’Alene Mines (CDE-N) just boosted resources by 25%.

Reverse-circulation drilling along strike and down-dip from known mineralization has increased the Martha resource to 33,000 tonnes grading 3,800 grams silver per tonne.

Coeur d’Alene expects Martha to produce 1.6 million oz. silver in the second half of calendar 2002.

About 100 metres to the east, Coeur d’Alene has turned up another zone of high-grade silver mineralization, the R-4 prospect, along the same structure that hosts the main Martha orebody. Drilling continues.

Royal recently upped its annual dividend to US10 per share. This will be paid in two semi-annual payments of US5 apiece. The first is payable on Jan. 17 to shareholders of record on Jan. 3.

See ROYAL Page 19

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