Royalco Resources : June 17 Quarterly Report

June 2017 Quarterly Report‌

28th July 2017

KEY POINTS FOR THE QUARTER

CORPORATE DETAILS

ASX Code:

RCO

• Royalty payments of $160,041 were received in the June quarter from the Weeks Royalty.

  Issued Capital:

  52,714,183 shares

  Share Price:

  21.5 cents

• Historic payments due from the Mt Garnet royalty continue to be delayed.

  Market Capitalisation: $11.3 million

  Cash/Liquids:

  $2.635 million

  Directors:

  Peter Topham Executive Chairman

  & Managing Director Malcolm McComas Director

  Susan Thomas Director

• The Bowdens silver project, where Royalco retains a sliding scale royalty interest, is being advanced by Silver Mines Limited.

  Substantial Shareholders:

  Fitzroy River Corporation, Noontide Investments, Samuel Terry Asset Management and High Peak Royalties.

• The operator at the Sam's Creek gold project in New Zealand is in the process of assigning its position to a third party with the intention of advancing a fresh public listing.

The company's strategy is to expand a core royalty portfolio of income-producing base metals, precious metals and energy interests.

Royalty Interests

Royalco owns a 1.0% interest in the Weeks Petroleum Royalty (the equivalent of a 0.025% over-riding royalty from the entire hydrocarbon production of the main Bass Strait fields).

Income received during the quarter (based on production in the March 2017 quarter) was $160,041. This compares with $99,474 received in the prior quarter and $112,241 for the same period last year.

The outlook is for a continued improvement in returns as production increases and gas prices continue to rise. Gas production has commenced from the Kipper field as part of the Kipper/Tuna/Turrum multi-billion dollar development.

Infill and extension drilling on the Bowdens Project near Mudgee in New South Wales, continued through the quarter. The operator, Silver Mines Limited (ASX:SVL), in its release to the ASX dated 22nd June 2017 made comment that the Feasibility Study and EIS are due for completion by the end of this calendar year. An updated Resource Estimate is scheduled for release by the end of September.

Royalco's sliding scale royalty over the project starts at a 2.0% net smelter return until US$5 million has been received and then becomes a 1.0% net smelter return thereafter.

At Mt Garnet in far north Queensland, a Deed of Company Arrangement was executed by the operators on 8 December 2016. A formal shareholders meeting was meant to be held in May at which time the moneys due and payable to Royalco should have been clarified. This has not eventuated as a result of third party claims against the Trustees involved in the Administration process, the operators and other parties. The matter is due for review by the Supreme Court of Queensland on 11th August, 2017.

Of further note, production has been scheduled to recommence this current quarter from which additional royalties will be due from this 3% net smelter royalty interest.

The operator of the Sam's Creek Project in New Zealand, Mod Resources Limited (ASX:MOD) announced its intention to assign its interest (80%) in the project to a private group, Condamine Resources Limited, with the latter considering an ASX listing later 2017.

Royalco retains a 1% royalty on the main project area.

No activities of substance have been reported during the quarter on the other royalty interests.

Finance

The company's cash balance at the end of June was $2.635 million, compared to $2.639 million at the end of March.

Peter J Topham

Executive Chairman

& Managing Director

Appendix 5B

+Rule 5.5

Mining exploration entity and oil and gas exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16

Name of entity
Royalco Resources Limited
ABN	Quarter ended ("current quarter")
53 096 321 532	30 June 2017

Consolidated statement of cash flows		Current quarter $A'000	Year to date (12 months) $A'000
1.	Cash flows from operating activities	160	629
1.1	Receipts from customers
1.2	Payments for	-	(26)
(a) exploration & evaluation
(b) development		-	-
(c) production		-	-
(d) staff costs		(135)	(539)
(e) administration and corporate costs		(39)	(391)
1.3	Dividends received (see note 3)	-	72
1.4	Interest received	15
1.5	Interest and other costs of finance paid	-	-
1.6	Income taxes paid	-	-
1.7	Research and development refunds	-	-
1.8	Other (provide details if material)	(5)	(26)
1.9	Net cash from / (used in) operating activities	(4)	(281)

1. Cash flows from investing activities

2. Payments to acquire:

3. property, plant and equipment - -

4. tenements (see item 10) - -

5. investments - (18)

6. other non-current assets - -

7. Consolidated statement of cash flows		Current quarter $A'000	Year to date (12 months) $A'000
   2.2	Proceeds from the disposal of:	-	-
   (a) property, plant and equipment
   (b) tenements (see item 10)	-	-
   (c) investments	-	50
   (d) other non-current assets	-	-
   2.3	Cash flows from loans to other entities	-	-
   2.4	Dividends received (see note 3)	-	-
   2.5	Other (provide details if material)	-	-
   2.6	Net cash from / (used in) investing	-	32
   activities

8. Cash flows from financing activities

9. Proceeds from issues of shares

10. Proceeds from issue of convertible notes

11. Proceeds from exercise of share options

12. Transaction costs related to issues of shares, convertible notes or options

13. Proceeds from borrowings

14. Repayment of borrowings

15. Transaction costs related to loans and borrowings

16. Dividends paid*

17. Other (provide details if material)

18. 3.10 Net cash from / (used in) financing activities

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(264)

-

-

(264)

*Dividend 0.5 cent per share fully franked paid 27/9/16

Net increase / (decrease) in cash and cash equivalents for the period Cash and cash equivalents at beginning of period Net cash from / (used in) operating activities (item 1.9 above) Net cash from / (used in) investing activities (item 2.6 above) Net cash from / (used in) financing activities (item 3.10 above) Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of period	2,639 (4) - - -	3,148 (281) 32 (264) -
	2,635	2,635