ROY

[BigSully1]

I think maybe there were so many that big and fast profits  on Roy over last couple months, they couldn't resist taking them?

[soxguy]

Just got back home. Man,i hope that's the bottom. I hear that all the metals and mining stocks are weak today.

[BigSully1]

Just got back home. Man,i hope that's the bottom. I hear that all the metals and mining stocks are weak today.

Yes, they've been weak last few days. I need to keep reminding myself that ROY should be an exceptional LT hold, regardless what it does in the ST.  Many of the royalties they've been buying won't even begin paying for 2 or 3 years out. It just a little disheartening to see it go down so fast right after buying. I'm going to stop watching the ticker. Good luck all.

[yukiii]

Short term,

(Looking forward to the second quarter of 2007, the Company also expects less than an average quarter of payable production during this period, due to the seasonal nature of the shipments from the mine (there are no nickel concentrate shipments between December 7 and January 21 of each year and again between April 7 and May 21). During these winter months, a smaller number of nickel concentrate shipments are delivered than would be expected, and, as noted above, there are no copper concentrate shipments at all during the period between December 7 and May 21. The result, assuming constant metal prices, will be to reduce expected royalty revenues in the second quarter of each year. However, in 2007 the lower than average production expected to be payable in the second quarter should be more than offset by higher metal prices, as nickel prices continue at or near record highs.)

(Demand is also weakening because of a slowing U.S. economy and a consumer-driven pursuit of alternatives to historically expensive copper and nickel, according to Stephen Roach, chief economist at Morgan Stanley, the second-largest securities firm by market value.

Copper will decline 30 percent to an average of $5,650 a metric ton in the fourth quarter from more than $8,000 today, according to the median of 12 analysts' forecasts compiled by Bloomberg. Nickel and lead will drop about 50 percent from record prices reached on May 4 to $24,450 a ton for nickel and $1,000 for lead, the data show)

[BigSully1]

Short term,

(Looking forward to the second quarter of 2007, the Company also expects less than an average quarter of payable production during this period, due to the seasonal nature of the shipments from the mine (there are no nickel concentrate shipments between December 7 and January 21 of each year and again between April 7 and May 21). During these winter months, a smaller number of nickel concentrate shipments are delivered than would be expected, and, as noted above, there are no copper concentrate shipments at all during the period between December 7 and May 21. The result, assuming constant metal prices, will be to reduce expected royalty revenues in the second quarter of each year. However, in 2007 the lower than average production expected to be payable in the second quarter should be more than offset by higher metal prices, as nickel prices continue at or near record highs.)

(Demand is also weakening because of a slowing U.S. economy and a consumer-driven pursuit of alternatives to historically expensive copper and nickel, according to Stephen Roach, chief economist at Morgan Stanley, the second-largest securities firm by market value.

Copper will decline 30 percent to an average of $5,650 a metric ton in the fourth quarter from more than $8,000 today, according to the median of 12 analysts' forecasts compiled by Bloomberg. Nickel and lead will drop about 50 percent from record prices reached on May 4 to $24,450 a ton for nickel and $1,000 for lead, the data show)

Even IF copper and nickel prices do drop in the 4th Q this year, those lower prices shouldn't be reflected in ROY's revs until 1st or 2nd Q 2008 as most of ROY's agreements have like a 120 to 180 day lag in payments.

[yukiii]

David, How do you get .28 for 2007

If you take out future income tax recovery of $9,570,000 in 2006
there earnings were .08 for 2006
looking at 2007 next quarter should be .01.
with a rev of 50 million for 2007 that would put earnings at maybe .15 for the year if they are lucky.
That was why the runup from 4.5 to 8.
Long term looks good but 2007 ??

Right now last 4 quarter .20 eps after next quarter the last 4 quarters will be down to .12 eps.

[David Randolph]

If you take out future income tax recovery of $9,570,000 in 2006
there earnings were .08 for 2006

Very well seen yukiii, I didn't saw that income tax recovery in my initial analysis

I've been thinking about it for the last couple of hours and my take is 2006 isn't all that much important, if you look, in Q1 2007 the company paid $1.1 M in taxes and it still had $2.165 M in net income.

with a rev of 50 million for 2007 that would put earnings at maybe .15 for the year if they are lucky.

I think 2007 revenues will be much higher than $50 M, since nickel and copper prices are currently about 50% above what they're considering in their full year estimates. Unless you think nickel and copper will fall about 40% from current prices, you must expect more than $50 M revs.

Long term looks good but 2007??

In this company's valuation we still need to factor in the 54 royalties they have that are still not producing revenues. They're not producing, but they certainly have value. How many mining companies do you have in the billions of dollars that are selling little to nothing?

As I see it, the trend in metal prices is bullish and the trend is your friend. I don't expect metal prices to decline, but to keep on rising over the long term, as the commodities bull market that started in 2002 may last for 15 to 20 years.

ROY is now a $483 M market cap company with interests in 60 mining properties and a diversified portfolio of metals, like platinum, palladium, uranium, gold, silver and many more.

Probably my research should have been more complete before buying ROY, but I feel that the more I'll know it, the more I'll like it. I'll keep holding ROY.

[soxguy]

I don't know if this is relevant, but I am thinking about BHP a few years ago when it was recommended to me at  $12. We all know where it's at today. I realize BHP is a big fish and I could be comparing apples to oranges, but i'm just throwing that out there.

[David Randolph]

Some news out that I like:

• International Royalty Increases credit facility to US$40 million
PR Newswire (Fri 8:29am)

Better to increase debt than to make a private placement. Expect more acquisitions in the horizon, we hope management values them right.

[soxguy]

ROY,oh boy!

[David Randolph]

I've read the latest form 40-F, which is the annual report for the fiscal year ended December 31, 2006 form the company needs to file with the SEC (because it is a Canadian company).

ROY is a somewhat complex company and we'll need several updates to fully understand it. One of the things that attracts me to it is the potentially very high net profit margin, since the company just holds royalties in other companies (mainly mining companies), so costs are slim:

«Costs and expenses

General and administrative expenses were $5,360,000 in 2006, compared to $7,272,000 in 2005 and $728,000 in 2004, which included stock-based compensation charges of $959,000 in 2006, $4,992,000 in 2005 and $92,000 in 2004.  After deducting these charges general and administrative costs were $4,401,000, $2,280,000 and $636,000 in 2006, 2005 and 2004 respectively.»

Technically the stock bounced from a double support area, also because there were good news out:

• International Royalty Increases credit facility to US$40 million
PR Newswire (Fri, May 18)

Since the share price rose, the debentures that served as collateral to this credit facility now allow for a $40 M revolving line of credit, instead of the previous $20 M. It's not really news.

The company's immediate future seems to be linked mainly to the price of Nickel. Nickel went down a bit on Friday:



But it is still way above the price used in the company's internal estimates:



Generally it seems to me this company made a lot of investments that still aren't producing any revenues or profits (the company owns more than 60 royalties, only 5 are in production stage now), but more of them will be production stage in the future. I still don't know what to expect from these investments, it will take time and work to find out about them, since one can never make an investment decision based on all available information at once. I have time. I like to work. I'll keep on holding ROY.

[Houlahan]

"The company's immediate future seems to be linked mainly to the price of Nickel."

I did a little research on nickel. It had a bull run in 2006.
It is in short supply and high demand.

I found the Nickel Outlook information at http://www.purchasing.com/article/CA6436666.htmlBank Boosts
Nickel Outlook
By Staff
Purchasing
May 3, 2007
Private banker cCalyon of London has made a sizeable 12.3% upgrade to its 2007 forecast price for world nickel to a new high estimate among analysts of $15.54/lb because of expected high demand and insufficient inventories. The investment bank says that continued increases in world stainless-steel production are expected to support demand for the alloying metal, keeping supplies tight all year. Prices for stainless have been high due to nickel's costs.

This was May 3rd and it has already surpassed this 15.54/lb price!

I Liked this website best http://www.estainlesssteel.com/stainless-steel-news.shtml
Stainless Steel News and Nickel Prices
I has a lot of current news.

[yukiii]

Copper will decline 30 percent to an average of $5,650 a metric ton in the fourth quarter from more than $8,000 today, according to the median of 12 analysts' forecasts compiled by Bloomberg. Nickel and lead will drop about 50 percent from record prices reached on May 4 to $24,450 a ton for nickel and $1,000 for lead, the data show.

Company said:
Looking forward to the second quarter of 2007, the Company also expects less than an average quarter of payable production during this period, due to the seasonal nature of the shipments from the mine (there are no nickel concentrate shipments between December 7 and January 21 of each year and again between April 7 and May 21). During these winter months, a smaller number of nickel concentrate shipments are delivered than would be expected, and, as noted above, there are no copper concentrate shipments at all during the period between December 7 and May 21. The result, assuming constant metal prices, will be to reduce expected royalty revenues in the second quarter of each year.

How will this affect next quarter earnings??? Why would the stock go up from here? I would not want to hold this going into next earnings report, but maybe buy after the drop................

[Houlahan]

Hi Yukiii,

Just so you know, I really respect your opinion. 

Anyway, I simply thought, as demand increases for nickel, so would the price.

Kawasaki Industries will soon mass-produce a prototype nickel-hydrogen storage battery that can be used as a power source for rail transit. And it can be used to help maintain stable output from wind-power and solar-power generators. And alternative engery source during our high engery needs. As you know, TSL and other solar stocks did well recently. I see more needs in the coming future for nickel.

There are a lot of uses for nickel. I believe the demand will push prices higher but I not sure how much higher. I do not see another bull run like last year, because the higher prices are just getting too high and they are looking for alternatives. Like cutting the amount of nickel in stainless steel, in other words, lowering the grade. I think there is a growing use of low grade nickel ore, which could bring some relief.

I feel nickel is like the stock market. It will go higher. How much higher??? Will the stock market/nickel give a "mini-burps" before reaching new highers.

So, production is starting again May 21? And demand has not gone away. In fact, it is increasing. Finding alternatives will take time. Time needed for nickel to rise. 

[BigSully1]

Copper will decline 30 percent to an average of $5,650 a metric ton in the fourth quarter from more than $8,000 today, according to the median of 12 analysts' forecasts compiled by Bloomberg. Nickel and lead will drop about 50 percent from record prices reached on May 4 to $24,450 a ton for nickel and $1,000 for lead, the data show.

Company said:
Looking forward to the second quarter of 2007, the Company also expects less than an average quarter of payable production during this period, due to the seasonal nature of the shipments from the mine (there are no nickel concentrate shipments between December 7 and January 21 of each year and again between April 7 and May 21). During these winter months, a smaller number of nickel concentrate shipments are delivered than would be expected, and, as noted above, there are no copper concentrate shipments at all during the period between December 7 and May 21. The result, assuming constant metal prices, will be to reduce expected royalty revenues in the second quarter of each year.

How will this affect next quarter earnings??? Why would the stock go up from here? I would not want to hold this going into next earnings report, but maybe buy after the drop................

OK. I can see you are definitely negatively biased by the way you just happened to leave the last 2 sentences off the quoted paragraph. I'll add them back for you.

"Looking forward to the second quarter of 2007, the Company also expects less than an average quarter of payable production during this period, due to the seasonal nature of the shipments from the mine (there are no nickel concentrate shipments between December 7 and January 21 of each year and again between April 7 and May 21). During these winter months, a smaller number of nickel concentrate shipments are delivered than would be expected, and, as noted above, there are no copper concentrate shipments at all during the period between December 7 and May 21. The result, assuming constant metal prices, will be to reduce expected royalty revenues in the second quarter of each year. However, in 2007 the lower than average production expected to be payable in the second quarter should be more than offset by higher metal prices, as nickel prices continue at or near record highs."

You do understand that don't you? I think you really do. More than offset by higher metal prices. We already know second Q will will result in lower average production (but not necessarily lower than Q1), but at  higher prices. Higher prices is already a fact. Suggest you also read the following paragraph again and you will find the just reported Q was also lower than a normal expected or average Q of production due to the strike at Voisey between late July and early Oct last year. Settlement from the mines does not occur until 90 to 180 days after shipment from the mines. Royalties for Q2 will likely be much higher than Q1 due to higher nickel prices and quite possibly even higher production than what was reflected in Q1.

"While concentrate sold during 2007 was up significantly at Voisey's Bay from the same period in 2006, it was less than a normal quarter of expected production from the mine. Production payable was negatively impacted by the strike at the Voisey's Bay operation from late July 2006 to early October 2006. Due to the nature of the sales agreements on the Voisey's Bay concentrates, in which settlement does not occur until 90 to 180 days subsequent to shipment from the mine, the impact from the strike was not reflected in the royalty payments until the first quarter of 2007. In addition, the first quarter payment reflected only limited revenue from the sale of copper concentrates because copper concentrate shipments are limited by CVRD Inco's agreements with the aboriginal people in Labrador. Under these agreements, copper concentrates can only be shipped between May 21 and December 7 of each year. Under normal conditions, the company believes that first quarter production payable from Voisey's Bay will be at or above the average for the year.