Re: Presentation Cutting Edge series. Please find attached presentation to be made this evening to the Melbourne Mining Club Cutting Edge series.

Transcription

1 15 May 2012 The Manager ASX Announcements Platform Dear Sir, Re: Presentation Cutting Edge series Please find attached presentation to be made this evening to the Melbourne Mining Club Cutting Edge series. Yours faithfully David L Ogg Executive Director

2 A Very Different Type Of Company May

3 CAPITAL SUMMARY ASX code: RCO Listed on ASX 2006 Total shares on issue Current share price Market capitalisation 52.7 million 52 cents $27.4 million Shareholders 615 Substantial shareholders Directors 19.2% Anglo Pacific 33.0% Acorn Capital 14.9% 2

4 CORPORATE MODEL Modelled on Franco Nevada-style royalty businesses, combining cash flow and resource development Convert exploration success to equities/royalties or maintain direct exposure, particularly gold projects Acquire existing royalties Maintain strong balance sheet with a healthy cash position coupled with capital management discipline UNIQUE PRODUCT IN THE AUSTRALIAN MARKET 3

5 CAPITAL MANAGEMENT Since ASX listing, June 2006: Completed 2 buybacks, Survived hostile takeover, 2009 Capital return 10 cents per share, June 2010 Fully franked dividends begun bi-annually,

6 EXISTING ROYALTY INTERESTS Company Description Pre Resource Desk Studies Feas. Study In Production Oceana Gold Ltd Kagara Zinc Ltd CST Mining Group Ltd Reefton (NZ) 5000 ounces pa, 3% outside Globe Progress, gold Mt Garnet (Qld) 3% NSR**, zinc, lead, silver Mt Kelly (Qld) 1% NSR, copper, gold X? X Kingsgate Consolidated Ltd Bowdens (NSW) 1-2% NSR, silver, zinc, lead X Hydromet Corp Ltd Stanton (NT) 1% NSR, nickel, cobalt X Deutsche Rohstoff Red Dam (NT) $10/oz, gold? MOD Resources Sam s Creek (NZ) 1%, gold X Syrah Resources Ltd Mt Lyndhurst (SA) copper X Vale Gambang (Philippines) copper, gold? Alkane Exploration Ltd Molong (NSW) gold X 5

7 REEFTON SUBSTANTIAL POTENTIAL Drilling highly prospective near-mine targets. This includes Big River and Crushington and both are located in an additional royalty area. Feasibility work under way at the high grade Blackwater deposit which also lies in an additional royalty area. 6

8 BOWDENS ONE FOR THE LONG TERM Kingsgate purchased project 2012 for $75 million Feasibility studies being updated Project has 10 year-plus mine life, using existing studies as a guide Potential to generate revenues of $5 million at year one, then just over $2 million p.a. thereafter, based on current spot silver prices and historic guidance as to proposed production levels Target production start-up

9 ASSET BACKING Cash position Approx $16.5 million, as at 15 th May 2012= ~33 cents per share Debt NIL Shareprice 52 cents Enterprise value 19 cents or $10 million? 8

10 DIVIDEND POLICY Dividends paid since 2010: Guideline is 60 per cent after-tax profits to go in fully franked dividends Paid six-monthly RCO is one of only two ASX-listed hard rock mining/exploration companies of ~ $30M market cap to pay a fully franked dividend. Only 35 out of 1044 companies on ASX mining/oil list pay dividends and only 15 of them fully franked all except one much bigger than RCO. 9

11 FUTURE REVENUE SOURCES Reefton - Mt Kelly - Vale sale Reefton, new developments - Bowdens, start-up Reefton continues - Bowdens continues Exploration activities in the Philippines and East Africa offer significant prospectivity and satisfactory risk/reward scenarios versus sovereign risk assessments. 10

12 PHILIPPINES EXPLORATION Gambang sale/option agreement with Vale progressing $US6.03 million total value, with staged payments on option exercise, % production royalty Exploration in strategic corridor of Nueva Viscaya dominant position on major interpreted structures SE of Oceana Gold s Didipio Project 11

13 YABBE/PAO TENEMENTS Gold/copper prospects Yabbe: trenching, soil sampling, further exploration approvals Pao: tenement renewed, roads being upgraded Conwap: converting FTA Community relations Key to risk management 12

14 EAST AFRICA EXPLORATION Uganda prime geological target the greenstone belt extension of Lake Victoria goldfield in province world class gold deposits 2 tenements granted, more sought Ethiopia potential farm-ins Government has suspended new tenement applications 13

15 FUTURE ACTIVITIES EXPLORATION OBJECTIVES 2012 Philippines priority to progress drill targets in Yabbe/Pao East Africa opportunities with primarily gold and copper/gold targets ROYALTIES Ongoing broaden base with energy exposure CORPORATE TRANSACTIONS Ongoing opportunities in exploration and development 14

16 INVESTMENT APPEAL ATTRACTIVE COMMODITY EXPOSURE (gold, base metals) STRONG BALANCE SHEET AND CASHFLOWS (value) FOCUSED ON SHAREHOLDER RETURNS (management discipline) HIGH-LEVERAGE EXPLORATION INITIATIVES FROM A SOUND ASSET BASE 15