UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 1, 2005
ROYAL GOLD, INC.
(Exact name of registrant as specified in its charter)
Delaware 001-13357 84-0835164
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1660 Wynkoop Street, Suite 1000, Denver, CO 80202-1132
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 303-573-1660
________________________________________________________________________
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On December 1, 2005, Royal Gold finalized a funding agreement with Somita
SA ("Somita"), a 90%-owned subsidiary of High River Gold Mines, Ltd. ("High
River") (TSX:HRG), to provide a total of $35 million, subject to certain
conditions, over the next year, for the construction and development of High
River's Taparko open pit gold project (the "Project"), located in Burkina Faso,
West Africa. This funding agreement follows the signing of a term-sheet
agreement dated October 18, 2005.
In exchange for the $35 million in funding, Royal Gold will receive two
concurrent production payments, a tail royalty and a milling royalty. The first
production payment is fixed at 15.0% of produced ounces (equivalent to a 15.0%
gross smelter return royalty). The second production payment (also equivalent to
a gross smelter return royalty) is set at a 4.3% fixed percentage rate of the
produced ounces when the average monthly gold price falls between $385 and $430
per ounce, or a sliding-scale at a calculated percentage rate, when the average
monthly gold price falls outside of this range. The calculated percentage rate
is determined by dividing the average monthly gold price by 100 for gold prices
above $430 per ounce, not to exceed 10.0% (e.g., a $450 per ounce gold price
results in a rate of 450/100 = 4.5%), or dividing the average monthly gold price
by 90 for gold prices below $385 per ounce (e.g., a $360 per ounce gold rate
results in a rate of 360/90 = 4.0%). Both production payments continue until the
earlier of the production of 804,420 ounces or payments totaling $35 million
under the fixed 15.0% production payment.
The tail royalty, which is a 2.0% gross smelter return royalty, is
applicable to gold production from defined portions of the Taparko-Bouroum
Project area. The milling royalty is a 0.75% gross smelter return royalty on ore
that is mined outside of the defined area of the Taparko-Bouroum Project and
that is processed through the Taparko processing facilities to a maximum of 1.1
million tons (1.0 million tonnes) per year. Both of these royalties commence
once the two concurrent production payments have ceased.
As part of the $35 million funding, an initial payment of $6.4 million was
made to Somita on December 1, 2005. Subsequent funding of the Project is
contingent upon Somita's satisfaction of certain requirements. If the
requirements for future funding are not met by February 28, 2006, (the subject
date can be extended under certain circumstances) then Somita will be obligated
to repay the initial payment to Royal Gold with interest.
High River, headquartered in Toronto, Canada, is an emerging mid-tier gold
producer with quality exploration and development properties in Russia and West
Africa.
ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
The disclosure provided in Item 1.01 of this Form 8-K is incorporated
herein by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
The material agreements relating to the High River transaction will be
filed with the Company's next report on Form 10-Q.
(d) Exhibits
Exhibit 99.1 Press Release dated December 5, 2005, titled Royal Gold Completes
Transaction with High River Gold for its Taparko Project.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Royal Gold, Inc.
(Registrant)
By: /s/ Karen Gross
------------------------------------
Name: Karen Gross
Title: Vice President & Corporate
Secretary
Dated: December 8, 2005
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
------------ -----------
Exhibit 99.1 Press Release dated December 5, 2005, titled Royal Gold Completes
Transaction with High River Gold for its Taparko Project.