Royal Gold Inc. (RGLD), which gets its revenue from mining royalties, may sign more deals with companies seeking financing for project development as costs increase.
“This is a very good environment for us,” Chief Executive Officer Tony Jensen said in an interview today in Toronto. “It is a deal-rich and opportunity-rich environment,” he said.
Mining project costs have increased in the past five years, Jensen said. Companies are more likely to consider multiple sources of finance, including royalties, to fund mine development, he said. Volatility and weakness in equity markets may make royalty financings more attractive than share offerings, he said.
Royal Gold, which is based in Denver, wants an “absolute minumum” of 70 percent of revenue from precious metals royalties, Jensen said. The outlook for gold is “very favorable”, he said, without providing a price forecast.
Gold, which has risen for 10 consecutive years, reached a record $1,923.70 an ounce on Sept. 6 in New York. The metal has gained 21 percent this year, as investors seek a haven amid Europe’s debt crisis and plunging equity markets.
Royal Gold owns royalties on assets owned by companies including Barrick Gold Corp. (ABX), Teck Resources Ltd. and Goldcorp Inc.
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