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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Welcome to the International Royalty Corp special announcement conference call. (OPERATOR INSTRUCTIONS) I would like to remind everyone that this conference call is being recorded on Friday, September 5, 2008, at 11 a.m. eastern time.
I will now turn the conference over to Douglas Silver, Chairman and Chief Executive Officer. Go ahead, sir.
DOUGLAS SILVER, CHAIRMAN, CEO, INTERNATIONAL ROYALTY CORP: Thank you, Eric. Good morning, everybody, and thank you for joining us. We would like to discuss with you today about the acquisition of the Atna resource royalty portfolio. There is a copy of the presentation on the website, and I am going to basically walk you through it and talk about why we think this is a great transaction for IRC. We would then be happy to take any questions you might have and then we'll end the call with just a couple of comments about a couple of other royalties of ours that are doing a good things and you will be ready for a wonderful weekend.
As you know, as a public company, we always have forward-looking statements which, again, are the second page of our web cast. I won't read them right now, but we will be talking about some interpretations and forward-looking comments, and you should be aware that there's risks associated with them. The transaction involves four royalties, the Wolverine silver, gold royalty in Yukon, a royalty on the McDonald and keep cool project in Montana, a royalty on the Minera Hispaniola project in the Dominican Republic, and one on the Mina Chancha project in Argentina. For purposes of all of these discussions, the Wolverine royalty is the reason we purchased this portfolio and is the vast amount of the value. That's why you're going to find we're not really going to be talking about these early stage exploration royalties very much. They're at various stages of work right now, but they are not carrying the weight on this transaction.
For those of you familiar with McDonald, I'd just like to comment that the royalty does not apply to the McDonald deposit as defined. It's related to the exploration lands around the McDonald project, but it does cover some of the keep cool deposit, which has a resource, but unfortunately the resource numbers are not compliant to 43101 standards, so we can't really discuss them. Minera Hispaniola and Mina Chancha both early, early stage prospecting exploration royalties and just as a highlight in the case of Mina Chancha, [Yumonic] gold, who is the operator on it, has the first right of refusal, which the letter to them will be going out very shortly.
This is a very simple transaction. We are purchasing these royalty packages from Atna and, as you know, Atna and Canyon Resources were merged recently. These royalties, the three little royalties all come from the Canyon side and the Wolverine comes from the Atna side. We're closing the transaction immediately. We're paying them 20 million in cash and you should be aware that we do not require any financing. We have the cash available and so we can close very quickly. The -- we have closed. Okay. They closed this morning. Jurisdiction is in British Columbia, Canada, and the closing, as I said, it occurred today.
Let's talk about the Wolverine royalty because the reason we were attracted to this royalty is it's got to be one of the best silver royalties out there. We don't see silver royalties very often. We see even fewer that have sliding scale components to them and that's what really attracted us to this property. Unlike sliding scale royalties which are just done on a linear basis, this is actually designed as a step function. So, below $5 an ounce silver, we don't get anything. At $5 to $7.50 an ounce we get a rate of 3.778% NSR, and then if silver prices are greater than $7.50 an ounce, the royalty jumps up to 9.445% and you can see in the graph there that it shows the step function. Hopefully this will help the analysts in understanding how they should model this. The royalty rate is set by the silver prices and whatever that royalty rate is, it is then applied also to the gold production. In this case, this royalty probably 85% of the revenues are coming from silver with the balance coming from gold.
Finally, you should also be aware that the royalty can be taken in kind for both the silver and gold. People are often curious about a royalty like this, what kind of rights that we as a royalty holder have and I just wanted to touch on a couple of points. The royalty has an annual audit right that can be audited by chartered accountants in Canada. Atna has the right to...
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