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j ~~ ROYAL RESOURCES CORPORATION <br />~~ ~ 1660 WYNKOOP STREET .SUITE 1000 TENTH FLOOR <br />DENVER, COLORAC~O 80202. (303) 573-1660 <br />W Dear Shareholders b Friends <br />The Board of Directors of Ro <br />/`/ J stockholders of Colosseum Ca <br />` Intent between Royal Resour <br />whereby Royaal would obtain <br />property known as the Colos <br />California for a consideration <br />W purchase is set for July 7, <br />the Letter of Intent are satis <br />The Letter of Intent also pro <br />W an additional 25 percent inte <br />November 15, 1986 at a purc <br />It is the assessment of manag <br />this is an excellent property <br />J~ ^ excellent economics and good <br />`J /J stress that Royal is not aban <br />gas business. We are, howe <br />consider to bey the most attra <br />Considerations in favor of su <br />L_L_J (a) demand far gold w <br />the present lack of in <br />(b) most of the capita <br />quality gold mining op <br />is available through b <br />rate of under four pe <br />CONTACTS <br />yal Resources Corporation and the <br />lifornia Inc. approved a Letter of <br />ces and Colosseum California Inc., <br />a 25 percent interest in a gold <br />seum Mine in San Bernadino County, <br />of $5.75 million. The closing for the <br />1986 provided certain contingencies in <br />fled. <br />vides Royal with the option to purchase <br />rest in the Colosseum Mine on or before <br />hase price of $6.5 million. <br />ement and the board of directors that <br />with well defined gold reserves, <br />upside potential. We would like to <br />Boning its commitment to the oil and <br />ver, diversifying into an area that we <br />ctive in the mineral business today. <br />ch diversification are: <br />orldwide remains strong in spite of <br />flationary trends, <br />I required for the development of a <br />eration such as the Colosseum Mine <br />ullion financing at an effective interest <br />rcent, <br />Company <br />Miduel Owen <br />Chd~rman <br />Rural Reaom,e• <br />1660 Wynkoop SUeet <br />suae moo reran floor <br />Denver C olo~ado 00103 <br />130]1 5)11660 <br />Pubbc 0.elalions: <br />Carl Ihnmpson <br />HiI JnJ M.iwln~n Ins <br />1050 V IM1 Sbeel Suile 3200 <br />Uenve~. Culoratfo 00265 <br />13031 63}n~3 <br />(c) hec1ging against declines in the price of gold is available <br />on most of a mine's production at relatively low cost, <br />(d) the market value of successful public gold companies <br />of size and substance currently sell at between $1500 and <br />$2200 per ounce of annual production per year. <br />