IT HAS been an interesting time of late for Melbourne-based junior Royalco Resources, which has the twin pursuits of investing in mining royalties and Philippines exploration.
Thanks to the Opes Prime scandal, a 12.7% stake in Royalco held by Gasmere, of North Melbourne, was bounced across to ANZ.
While the likes of Oxiana and Rio Tinto have long sat on the Royalco share register with major positions, ANZ was not about to hang around as it scrambled to cover its Opes Prime exposure. Royalco shares tumbled as result. The same story has been played out in the dozens of other companies affected by ANZ's seizure of pledged Opes Prime portfolios.
But thanks to a healthy bank balance and a soon-to-start royalty income stream of more than $4 million a year, Royalco has been able to put some certainty into - and take advantage of - ANZ's exit from its share register by buying back a big chunk of the overhanging shares itself.
This is unheard of to Garimpeiro's tender ears as juniors such as Royalco usually only ever issue shares. Buying shares back is a novelty.
Royalco paid 26.5¢ each for 3.3 million shares in itself held by ANZ.
Some professional money has come in to complete ANZ's departure, with Anglo Pacific Group plc, a mining royalty investor itself, picking up
4.5 million shares (8%) at 26.6¢ each.
Since the Royalco buyback and the arrival of Anglo, Royalco's share price has recovered to the 34¢ a share level seen on Friday.
The $874,500 cash outlay by Royalco in its buyback reduced its cash balance to about $6.5 million. It also has
about $300,000 in listed investments.
Add the cash balance/investments to the looming $4 million-a-year royalty income stream, and the group's market capitalisation of
$19 million at Friday's
closing price does not look challenging.
That is particularly so because Royalco is an active explorer in the Philippines, where the hunt is on for the type of world-class deposit that recently made another Melbourne group, Indophil, a $426 million takeover target of ever-acquisitive Xstrata.
Now, the Philippines is no walk in the park for foreign explorers thanks to the efforts of non-government organisations - including the Catholic church - which have ensured the masses remain dirt poor.
Until last week, Royalco was trying to poke holes into prospective ground adjoining OceanaGold's Didipio copper/gold mine development. But the drilling rig has been pulled out for safety reasons after protests by anti-mining groups, supported by the local bishop, and the shooting of a village elder and former OceanaGold employee.
RCO Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
