Royalco royalties to fund exploration
June 29, 2006
New explorer Royalco Resources is using the unusual method of royalties to
fund its exploration campaigns, after staging a positive debut on the
Australian Stock Exchange.
Royalco plans to fund exploration of its mineral projects using income
from royalty interests in advanced development projects.
The company raised over $12 million to kick-start its exploration
plans, issuing shares at 50 cents in the initial public offering.
Shares opened at 59.5 cents and closed at 56 cents after more than 2.2
million shares were traded.
Royalco already has 10 royalty interests on its books in gold, copper,
zinc and silver operations across Australia and New Zealand.
It expects to start receiving royalty incomes in the first half of
2007.
Executive chairman Peter Topham said the company was focused on a niche
category in the mining sector.
“Royalty revenues are generally exposed to fewer risk factors than
investment in pure exploration activities,” he said in the company
prospectus.
“This results in a more reliable income stream as royalty interest are
maintained without the need for increased expenditures on exploration
and drilling, nor are they subject to third party financing interests or
charges.”
More recently the company, which was established in 2001, moved into
the exploration side of mining, buying the Philippines interests of Oxiana
Ltd.
“These arrangements have provided Royalco with a strong base in the
Philippines from which to advance exploration with a number of drill
ready targets already identified,” Mr Topham said.
“The board sees the company’s future growth being driven by both the
acquisition and creation of royalties as well as participation in
projects with strong potential for discovery.”
