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Royalco Resources Limited - December 2013 Quarterly Report

January 29, 2014

ENP Newswire - 29 January 2014 Release date- 28012014 - The interest in the Weeks Petroleum Royalty continues to underpin cash flow for Royalco Resources and should do so for many years to come. KEY POINTS 1. ROYALTIES: The payment from the interest in the Weeks Petroleum Royalty was $211,000 for the production quarter ending September 2013 . The outlook remains extremely positive for this interest with rising gas prices and the exceptionally long projected life of production. In precious metals, progress continues on the Blackwater and the Sam's Creek Projects in New Zealand , and Bowdens in New South Wales . 2. EXPLORATION: Renewal of Gambang (copper) Phase 3 tenement in the Philippines is still pending. Other opportunities are under consideration. 3. DIVIDEND: A 1 cent interim dividend has been declared by the Board. Payment details will be provided shortly. Royalty Interests Royalco owns a 1% interest in the Weeks Petroleum Royalty, (the equivalent of a 0.025% over-riding royalty from the entire hydrocarbon production of the main Bass Strait fields). Income received during the quarter was $211,675 , representing payment for the three- month period ending 30September 2013. An Investor Briefing that BHP Billiton, the holder of a 50 per cent interest in Bass Strait , released to the ASX on 11 December 2013 highlights the long life potential of this premium royalty interest. The operator at Reefton in New Zealand , OceanaGold , has provided an upgraded Inferred Resource estimate for the Blackwater Deposit of 600,000 high grade ounces of gold, with a prefeasibility study now due. Guidance from the scoping studies for Blackwater suggested an annual production rate of 50,000 to 60,000 ounces. If achieved, and using the current spot price for gold, this would result in the receipt of 1500-1800 ounces annually, or approximately $2.1-$2.5 million a year, payable to Royalco. At the Sam's Creek Project in New Zealand , where Royalco holds a 1% royalty interest, MOD Resources Limited reported on 9 October 2013 a resource of 1.01 million ounces of gold following recent drilling. MOD is earning up to an 80% interest in this project from OceanaGold . At the Bowdens Project in NSW, where Kingsgate Consolidated Limited is the operator, a definitive feasibility study is now due for completion this calendar year. The Royalco royalty interest in this project starts at a 2% net smelter return until $US5 million has been received, then reverts to a 1% net smelter return for the life of the mine. No activities of substance have been reported on the royalty interests held at LFB, Lyndhurst, Red Dam , Mt Garnet , Stanton or Uganda . The DGSM in Uganda is yet to process tenement transfers. Exploration The rationale for Royalco's exploration initiatives is to generate royalties and free-carried interests in a portfolio of projects. It is not necessarily the company's intention to be the operator of any mining project. Third parties would probably be introduced to develop any discovery made. Philippines Gambang (copper) 100% Phase 1 has recently been renewed; Phase 3 renewal is awaited. Exploration activities are effectively on hold pending Phase 3 renewal. As advised in the September 2013 Quarterly Report, a review of mineralization in the Tokla Diatreme area has now been completed. This review assessed all available exploration data dating back to the mid-1970s. It has been concluded that it is not possible to generate a resource estimate that would be compatible with contemporary standards of resource estimate practices as outlined in the updated JORC Code (2012). This review has shown there is unquantified copper mineralization hosted in both phreomagmatic breccias and mineralized intrusive rocks, with possible molybdenum and gold by-product contents, at the Innabba Prospect (formerly known as the Eastern Breccia Prospect). This mineralization is deemed non-commercial on a stand-alone basis at this point because the likely average copper grade will not exceed 0.4%. There may be an opportunity at some later date for this mineralization to provide additional material to any future mining operation established on the basis of new discoveries of copper mineralization elsewhere in the Gambang Project area, such as at Cableway. Pao (gold/copper) 100% This tenement is in the process of being relinquished following disappointing exploration results. Corporate Income from the Weeks Petroleum Royalty interest broadly matches anticipated head office and exploration costs. Royalco remains well placed to take advantage of opportunities that prevailing market conditions may present. The cash position as at 31 December 2013 was $5.56 million . As announced to the ASX on 9 December 2013 , David Ogg stepped down as an executive director with effect from 31 December 2013 to become a non-executive director. As also announced to the ASX on that date, executive chairman Peter Topham has agreed to a new employment contract at reduced remuneration and Nick Boicos has been appointed sole company secretary. Other reductions in head office and field exploration costs have been implemented. Contact: Royalco Resources Limited Level 1, 394-396 Little Bourke Street Melbourne VIC 3000 Tel: 03 9602 3626 Fax: 03 9670 4479


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Source: ENP Newswire


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