and this by muffet jnr on another forum re today's...

and this by muffet jnr on another forum re today's quarterly:


Royalco (ASX.RCO) quarterly was released this afternoon...it makes for [b]very good [/b]reading. I have copied the most important points below (with my comments in []. It is worth keeping mind when viewing these that RCO's market cap is only around $55 million.



[b]- Announcements by Kagara Zinc Limted (Mt Garnet royalty interest) and Copperco Limited (Mt Kelly royalty interest) suggest income from these two royalties will commence in 2008.[/b]



[Mt Garnet was not scheduled to be returned to by Kagara until 2009. However if Kagara return to Mt Garnet in 2008, this would bring forward the royalty for royalco which is important for 2 reasons, being increased present value of the royalty, and also taking advantage of high zinc prices - which is important since the royalty is based on net smelter return.]



[b]- Royalco’s cash position remains strong ($9.0 million cash on deposit)[/b]



[Ex cash assets therefore RCO's market cap is around 45 million...cash assets are expected to grow giventhe royalty from Reefton gold project]



[b]- One of Royalco’s principal tenements, Pao, has now received National Commission on Indigenous Peoples, (“NCIP”), certification.[/b]



[This effectively means drilling can start immediately. Unfortunately its not possible to post the graphic from the report showing the vein sampling results, but it looks very exciting. Must be remembered that this is detailed trench sampling, not selectively chosen rock chip samples, therefore much more reliable. I would expect drill results would be available sometime in Sept/Oct. It is worth taking a look at the graphic in the quarterly report to see just how detailed the sampling has been and the fantastic results obtained over approx 2 kms---in other words, there is a very high probability they will get excellent high grade results. ]



[b]- A revised application has been lodged on the Gambang tenement to comply with recent amendments to NCIP guidelines.[/b]



[This effectively means that they cannot drill yet so gambang, which is the prospect from where i took my photos - refer earlier post. So approval still required. However they will have their hands fullw ith PAO over next couple months...you would expect approval for this project in next couple months though so drilling before XMAS perhaps.]



[b]- At Malangza, rock chip sampling has commenced and will shortly be followed by systematic soil sampling. Subject to rig availability, the initial drilling campaign will be undertaken towards the end of the year.[/b]



[If you remember my earlier post, this area was approved earlier this year so can be drilled. If they get a rig will be drilling by end of year as per comment. However this has been described as having the biggest potential of the projects though also most risky since fieldwork has been less than other projects. The potential size of any find (if there is any gold there) would dwarf other phillipine projects such as Indophil's]



[b]- Extensive geochemical sampling has been completed at Surigao ...an advanced porphyry copper target. ...recently identified gold anomalism on the southern side of this prospect. A review of data is proceeding with a view to selecting appropriate drill targets prior to the end of this calendar year.[/b]



[b]- Confidentiality arrangements concerning farm - in opportunities have been entered into on additional tenement packages. Due diligence is progressing in all instances.[/b]



[Many tenement packages in Phillipines are sourced from mines department...but to get access to these requires excellent relationships with the departmental personnel as well as the community. Royalco has cemented these relationships.]



[b]- On that basis the Reefton gold project royalty is expected to will commence from October 1, 2007, with payment due 14 days from the end of each quarter – i.e. January 14, 2008. Based on prevailing gold prices, the royalty will generate 4,000 to 5,000 ounces of gold per annum ($A3million to $A4 million) over a project mine life of approximately 7 years.[/b]



[Think about it...3-4 million pa over a 7 year period...on this royalty alone...and pretty much risk free because its gold price based not production based...if we add the Kagara and CopperCo royalty in 2008, they coud be receiving royalties of $6-7 million + per annum...I've assumed a Kagara royalty of around $2 mill though at current zinc/lead prices, it could be more than that...now not all that money can go into exploration...after all they already have 9 mill in the bank...so I'm thinking DIVIDENDS or more ROYALTY ACQUISITION bargaining power.]



Also worth noting that the number of royalties in their royalty bank increased to 15...though the above three are the only certain income providers, the others are also in various stages of development/exploration.



All in all a VERY positive progress report. The company based on the three royalties along should be well north of $1. Its the exploration project that provide the blue sky however. Of course they still need to find something, but with that kind of cashflow funding their exploration, in my a opinion its a matter of 'when they find something' , NOT 'if the find something'.



Cheers



BuffetJr