Royal Gold Buys into Another Mine (RGLD, TCK)

By Douglas A. McIntyre Updated Mar 10, 5:53PM EDT · Published Apr 6, 9:05AM EDT

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Royal Gold, Inc. (NASDAQ:RGLD) has agreed to purchase an interest in a Chilean gold mine owned by Teck Cominco Ltd. (NYSE:TCK) for $100 million in cash and about 4.5 million shares of Royal Gold common stock. The company also announced that it would issue 6.5 million new shares of common stock on its existing shelf registration to pay for the acquisition.

In the deal with Teck, Royal Gold will receive 75% of the gold from a portion of the mine until 910,000 ounces have been sold. At that point, Royal Gold will get 50% of all future production from the property. Teck estimates that there are 1.6 million ounces of gold in the portion of the mine that Royal Gold has acquired an interest in.

The acquisition is subject to a marketing deal, government approvals, and completion of due diligence. The underwriters for the stock offering have a 30-day over-allotment option for 975,000 shares.

Teck expects to complete a currently under-construction project to begin production by the end of 2009. Commercial production is expected in the first half of 2010.

Royal Gold shares are down about 5% on the news, probably with gold itself, while Teck shares are up slightly.

Paul Ausick
April 6, 2009

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.