How'd you come up with $1.10?Charge since Xmas in share price should continue until it reaches target of $1.10 hopefully sooner rather than later
Article LinkRoyalco Resources (ASX: RCO) has determined that a cash distribution of approximately $5.27 million should be made to Royalco shareholders in the form of a return of capital of 10 cents per share.
This distribution is to be made due to Royalco having surplus cash for its current operations. As previously announced to the market, as at 28 April 2010 Royalco had cash/liquid assets of approximately $14.2 million.
After a review of Royalco's financial position and its ongoing cash requirements, the company said it has concluded that its cash/liquid assets are more than adequate to continue its development and objectives.
The conclusion is on the basis that the company expects continued cash inflows from royalties, minimal expenditure commitments over the next 6 months and has no immediate other opportunities for acquisitions.
Accordingly, Royalco considers that it would be in shareholders' interests to return some of the surplus funds to shareholders at this time.
The proposed return of capital must be approved by Royalco's shareholders at a general meeting. Royalco also proposes a special resolution to amend its constitution to allow for certain alterations of capital, including reductions of capital.
The meeting is to be held at 10:00 am on Wednesday 16th June 2010 at the offices of Baker & McKenzie, Level 19, 181 William Street, Melbourne.
Royalco Resources shares rose 10% to 48 cents in trading this morning.
Link to AnnouncementDividend policy
Given the inherent and likely long-term profitability, of Royalcos business model the board of directors of Royalco has endorsed an indicative dividend policy:-
1. Dividends to commence once they can be classified as fully franked.
2. Biannual payments.
3. Up to 60% of after tax profits will be paid as dividends.
4. The board retains the right to alter the formula in the event of unforeseen circumstances.
Royalco executive chairman, Peter Topham, said, Royalco is in a strong financial position and the board is very pleased to be able to report its maiden profit result.
The board considers it likely that the company will generate a similar level of net revenue in the current financial year.
If that is the case it is possible the company may be in a position to implement its dividend policy in 2010.
March 2010 QuarterlyRoyalco currently holds a total of ten royalty interests of which three produced income during the quarter. Using prevailing spot prices for gold, income for the quarter from these interests was $1.8 million.
...
The delivery of physical gold into the Companys account at AGR Matthey continues under the Reefton royalty agreement with Oceana Gold Limited. The royalty payment for the December quarter was 1314 ounces pre New Zealand withholding tax. Subject to the spot price remaining above NZ$900 (currently NZ$1500+), royalty receipts should adjust back to the original rate of 1250 ounces per quarter pre withholding tax. At prevailing prices and exchange rates this equates to approximately $5 million per annum in net royalty income.
MELBOURNE-BASED royalty/exploration company Royalco Resources (ASX: RCO) is in the minority among the juniors on the cash holdings score - so much so that it is returning $5.27 million (10 ¢ a share) to shareholders.
Structured as a tax-effective capital return, the payment reflects Royalco's assessment that it is sitting on cash surplus to its needs. At last count, it was holding some $14.2 million in cash/liquids assets (27 ¢ a share).
Due mainly to its production royalty on a New Zealand goldmine, the expectation is that, while the cash position gets reduced by the capital return, it could be back to where it was by the end of the year anyway. Surging gold prices help.
The prospect of more capital returns to come was behind Royalco's share-price rise during the week to 50 ¢ a share at the close of trade on Friday, for a market cap of about $26 million.
Sorry, why is it very undervalued? How do you actually 'value' something like this? Interested to hear....Cheers, kennasRCO is very undervalued).
Seems this can't get any long term interest from even hard core intrinsic value investors. I did a blog post on this summarizing the value of RCO (hint, it's very short and finds RCO is very undervalued). Several nice tidbits from management in the quarterly, let's hope a few buyers start to line up, the disconnect between value and price doesn't last forever.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?