nice to see green in a sea of red

It was nice to open the trading account this morning and see RCO was in the green on a mainly red day for gold stocks. I purchased a bundle a bit over a week ago, it's a really unique looking company.

Here are some notes I compiled before buying:

RCO - Royalco Resources

* Incorporated in 2001 to acquire royalties
* Listed on the ASX in 2006
* Royalty payments kicked in this year
* Main royalty payment coming from Oceana Gold - Reefton project (New Zealand)
* Royalty currently provides around 5000 ounces (of gold) per year after withholding tax (around $5-6m per year at current prices)
* Expected expenditure of $2-2.5m per year for exploration and admin costs
* Looking at potential dividend payment next year - Fully franked - up to 3cps p/a
* 5 players globally in the gold royalty market - unique/niche company
* Also have exploration potential from land owned in Philippines
* 53 million shares, $10m in cash/gold (Around 20c per share cash backing)
* Market cap around $20m
* 80% of company held by top 20 holders, leaving only 20% for day to day trading

More info on royalties:
http://www.royalco.com.au/royalties.html
The royalty situation is a little complicated, a read of the latest annual report gives a good overview of their current and future situation.

More info on exploration:
http://www.royalco.com.au/exploration.html

Quote from recent valuation announcement:
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ROYALTY INTERESTS- Valuation September 2009
Royalco Resources Limited recently commissioned DMR Corporate Pty Ltd to undertake a valuation of the company’s various royalty interests.
This report has now been received and provides a valuation of the key royalty interests in the range of $15.88 million to $16.96 million. The principle assumptions included appropriate commodity price assumptions and after tax discount rates.
Given the complexity of prevailing accounting standards the valuation provided will not be reflected in Royalco’s accounts for the period ending 30th June 2009. The current book value, which is based on historic cost rather than an estimate of current worth, will remain.
Utilising the above range for the royalty interests and Royalco’s prevailing cash as well as physical gold position suggests a net tangible asset backing per Royalco share of between 48 and 50 cents. This excludes any intangible value for Royalco’s advanced exploration activities.
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Concerns/Risks:
RCO currently has some opposition from the local Pilipino population. This could cause some disruptions to their Philippines project, but even without that project RCO is undervalued.
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With drilling to commence next month I would be ensuring you have your position in RCO ASAP.

Release to the ASX yesterday definitely worth a look also.
PAO Tenement grab samples up to -
49g/t Au
348g/t Ag

Considering this company is undervauled without the Philipines project...you are looking at a company which could rocket based on good results out of the drilling.