|
ti
<br />(ROYAL/from page 1 14
<br />producer df gold- in the ' Vniled
<br />;hates," said Owen.
<br />"Gold has the attribute of being
<br />easy to sell;' Bald Stanley I?emp-
<br />sey, head of Royal Gold Inc., a
<br />Royal Resources subsidiary
<br />formed to look for gold, and [)en-
<br />ver Mining Finance Co., a recently
<br />acquired Royal rubsldiary tbatfin-
<br />ances mining ventures. .
<br />"NO MATTER what the state of
<br />the minerals industry, you can al-
<br />ways sell gold,.. said Dempsey.
<br />In the 1960s, Roya{ was the cor-
<br />porate umbrella over the limited
<br />partaershlps tDat formed the back-
<br />bone of oil baron John King'a fi•
<br />asocial empire. But fn the early
<br />1970s, King Resources toppled and
<br />its various branchp spent a de-
<br />codeln bankruptcy proceedtngs.In
<br />May 1981, more than 2,500 Royai
<br />limited partners got stock for their
<br />partnership interests and for the
<br />[iist time in 10 years possessed a
<br />liquid asset. Royal Is the only rec-
<br />og;nizable King entity that didn't
<br />disappear to bankruptcy court or
<br />w,asn't swallowed up by another
<br />company.
<br />Royal Resources soared through
<br />the early 1980s as one of the re-
<br />gion's more successful independent
<br />oil companies, and Its financial
<br />performantt was only slightly an-
<br />noyed by We slump that began in
<br />19•B2. Ia late 1982, its stock traded
<br />on the over-thacounter market !or
<br />;18.25 per share.
<br />But this year's oU price rnUapx
<br />hit the company hard.
<br />fast year, Royal reported net
<br />income of 51.8 million, or 80~ a
<br />shaire. But In fiscal 1986, the rnm-
<br />pany listed losses of ;15 milUon, or
<br />;2.44 a share. Meat of the 1986
<br />losses were paper declines caused
<br />by writedowns N the value of oil
<br />and gas holdings after oil prices of
<br />;30 a barrel last year tumbled Co
<br />one>third of that io 1986.
<br />Lately, the company's stock has
<br />been quoted at i3.
<br />While Royal has extensive oil
<br />holdings in the Rocky Mountains,
<br />Ter.as, Oklahoma, Louisiana, Kan-
<br />sas, California and other states, the
<br />company is doing little with them.
<br />IL has only two wells drilling, one
<br />each in Wyoming and California, a
<br />shadow of the 73 it participated in
<br />during the year which ended June
<br />30, 1985.
<br />"I've seen it Dad, but I've never
<br />seen it this bad before," Bald Nick-
<br />erson. "We're going more to gold."
<br />Last May, Royal signed a letter
<br />of Intent with Colosseum Calfornla
<br />Inc.for a Joint venture to acquire
<br />ici~ San Bernaidiiio CSuoty,- Cafif.
<br />Royal Gold will pay j1.2 million
<br />for 26% of the ~olnt venture, which
<br />plans to rnristrtict a mine and pro-
<br />cessing mill fn the nest year. The
<br />venture hopes to produce at least
<br />500,000 ounces of gold during the
<br />754-year Ufa of the mina
<br />Then, last summer Royal
<br />formed Royal Cald Inc. and spent
<br />;110,000 fora 19% faterest in the
<br />historic Camp Bird Mlne near the
<br />southwestern Colorado town o1
<br />Ouray. That mine, discovered in
<br />the late 1890s, Dos produced more
<br />than 1.1 mllllon ounces o[ gold
<br />from veins tDat Royal executives
<br />believe are oNy 40% explored.
<br />Nickerson, Owen and Dempsey,
<br />a former AMAX Ltc. vice presi-
<br />dent, hardly mentioned the oil side
<br />of their business during the wmpa-
<br />ny'a annual meeting last week.
<br />Sparsely attended becaase o[
<br />snowy weather and the general
<br />state of the natural resources in-
<br />dustry, the meeting featured mov-
<br />ies o[ gold mining operations, not
<br />oil drilling.
<br />"The all and gas industry is cur-
<br />rently suffering from oil and gas
<br />prices that make exploration In the
<br />United States uneconomical except
<br />in rare lastances;' said (been. "The
<br />prospects are very bleak"
<br />Some ezecutives and govern.
<br />meat ofOClals see gold mining as
<br />the only bright spot In an otDetwise
<br />dark natural resources Industry.
<br />"M long as you can flad a source
<br />to mine It cheaply, there U a tale
<br />amount of mosey to be made in
<br />gold;' said Rold. "I don't think we
<br />aze ever going to get to the point
<br />where we have as oversupply of
<br />gold; 909e of all the gold ever pro-
<br />duced is still N eztstence."
<br />5UT NANIFEN analyst Numph-
<br />rles warned that countries
<br />squeezed for cash because of the
<br />oil price collapse, including Middle
<br />Eastern oil producers and the Sovi•
<br />et Ualon, will be selUng gold to
<br />raise cash, pushing gold prices
<br />down.
<br />"A lot of oii companies have
<br />dabbled in gold, but I'm not aware
<br />of any that did it in a big way;'
<br />said Humphries. "I just don't (eel
<br />natural resources are an attractive
<br />investment area. My belie[ is that
<br />we are still In a long-term Dear
<br />market, and that includes gold."
<br />Nickerson, a veteran of more
<br />than three decades In the oil fields,
<br />says he hasn't written o[[ the oil
<br />business, however.
<br />"We could always get Dack iota
<br />
|