Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Roebear who wrote (415)	8/23/2001 7:29:56 AM
From: Frank Pembleton	Read Replies (1) \| Respond to of 36161

FA read on RGLD Roebear, just got into it a little last night. The 10K isn't an easy read, but I do have an answer for the sudden rash of insider buying. Royal Gold is a royalty, this company comprises 11 employees and they derived $9.4 million of revenue in fiscal 2000 from GSR. The "gross smelter returns" works on a sliding scale, relative to the price of gold: $210 -- 0.04% $210-$229.99 -- 0.50% $230-$249.99 -- 0.75% $250-$269.99 -- 1.30% $270-$309.99 -- 2.25% $310-$329.99 -- 2.60% As you can see royalties this year will jump 57%, from $9.4 to $15 million, but as the scale progresses the % increase isn't as steep. At the moment, I'm thinking this is a whole new financial scheme for mining companies to "hedge" their production without using that dreaded word. Does hedge = royalty? I'd keep an eye out for that word when reading a 10K from a miner, JMHO! I'll keep working on it, but I need to make a comparison to another royalty (possibly F-N) to really get a grip on this business. I will keep the group posted. Regards Frank P.

To: Roebear who wrote (415)	8/23/2001 9:03:48 PM
From: Frank Pembleton	Read Replies (1) \| Respond to of 36161

Roebear, me again -- RGLD, my last thoughts, the biggest risk I see now after this big run-up is share dilution. In the 10K they intend on wrapping up exploration activities and concentrate purely on acquisitions. They're definitely competing with Franco-Nevada, it’s my concern they’ll need more cash. IMHO they could pull it off with investing in higher risk properties – probably collecting higher royalties. Let's keep in mind that Franco-Nevada as a billion dollar cash horde, they’ll be negotiating from a position of power. But then again if gold goes like we think it will, there might be room for two in this industry. Regards Frank P.