DENVER, COLORADO. DECEMBER 5, 2005:
ROYAL GOLD, INC. (NASDAQ:RGLD; TSX:RGL) today announced that it has
finalized an agreement with Somita SA ("Somita"), a 90%-owned subsidiary
of High River Gold Mines, Ltd. ("High River") (TSX:HRG), to provide a
total of $35 million, over the next year, for the construction and
development of High River's Taparko open pit gold project, located in
Burkina Faso, West Africa. High River expects construction of the
Taparko-Bouroum Project to be completed in the fourth quarter of
calendar 2006. Today's announcement follows last month's announced
(October 18, 2005) signing of the term-sheet agreement and approval by
both the Board of Directors of Royal Gold and High River.
In
exchange for the $35 million in financing Royal Gold will receive two
concurrent production payments, a tail royalty and a milling royalty.
The first production payment is fixed at 15.0% of produced ounces
(equivalent to a 15.0% gross smelter return royalty). The second
production payment (also equivalent to a gross smelter return royalty)
is set at a 4.3% fixed percentage rate of the produced ounces when the
average monthly gold price falls between $385 and $430 per ounce, or a
sliding-scale at a calculated percentage rate, when the average monthly
gold price falls outside of this range.
The calculated rate,
expressed as a percentage, is determined by dividing the average monthly
gold price by 100 for gold prices above $430 per ounce, not to exceed
10.0%, or by dividing the average monthly gold price by 90 for gold
prices below $385 per ounce (i.e., a $450 per ounce gold price results
in a rate of 450/100 = 4.5%). Both production payments continue until
the earlier of the production of 804,420 ounces or payments totaling $35
million under the fixed 15.0% production payment.
The tail
royalty, which is a 2.0% gross smelter return ("GSR") royalty, is
applicable to gold production from defined portions of the
Taparko-Bouroum Project area. The milling royalty is a 0.75% GSR royalty
on ore that is mined outside of the defined area of the Taparko-Bouroum
Project and that is processed through the Tarparko processing
facilities to a maximum of 1.1 million tons (1.0 million tonnes) per
year. Both of these royalties commence once the two concurrent
production payments have ceased.
As part of the $35 million
funding, an initial payment of $6.4 million was made to Somita upon
closing. Subsequent funding of the Project is contingent upon Somita's
satisfaction of certain project requirements. If these are not met
within a specified time frame, Somita is obligated to repay this initial
payment with interest to Royal Gold.
High River, headquartered
in Toronto, Canada, is an emerging mid-tier gold producer with quality
exploration and development properties in Russia and West Africa.
Royal
Gold is a precious metals royalty company engaging in the acquisition
and management of precious metal royalty interests. Royal Gold is
publicly traded on the NASDAQ National Market System under the symbol
"RGLD," and on the Toronto Stock Exchange under the symbol "RGL." The
Company's web page is located at
www.royalgold.com .
______________
Cautionary
"Safe Harbor" Statement Under the Private Securities Litigation Reform
Act of 1995: With the exception of historical matters, the matters
discussed in this press release are forwardlooking statements that
involve risks and uncertainties that could cause actual results to
differ materially from projections or estimates contained herein. Such
forward-looking statements include statements regarding completion of
the Taparko Project in Burkina Faso, royalty and production payments and
funding of the project. Factors that could cause actual results to
differ materially from projections include, among others, satisfaction
of certain project requirements, precious metals prices, decisions and
activities of the operator of this property, unanticipated grade,
geological, metallurgical, processing or other problems the operator may
encounter, changes in project parameters as plans continue to be
refined, economic and market conditions, and changes in the political or
legal systems in Burkina Faso, as well as other factors described
elsewhere in this press release and in our Annual Report on Form 10-K,
and other filings with the Securities and Exchange Commission. Most of
these factors are beyond the Company's ability to predict or control.
The Company disclaims any obligation to update any forward-looking
statement made herein. Readers are cautioned not to put undue reliance
on forward-looking statements.
Dec 05, 2005