Royalco Resources : September 18 Quarterly Report

Quarterly Activities Report

(Quarter ended 30 September 2018)

HIGHLIGHTS:

• • Royalty payment of $211,930 received in September for the June quarter for the Weeks Royalty;

• • Sale process continues for the Weeks Royalty after Fitzroy River Corporation withdraws offer (refer ASX announcement 6 September 2018);

• • Appointment of David Croll as a Non-Executive Director;

• • The Bowdens silver project, where Royalco retains a sliding scale royalty interest, continues to be advanced by Silver Mines Limited; and

• • MOD Resources (MOD: ASX) terminates agreement with Condamine

  Resources over the Sam's Creek gold assets.

CORPORATE DETAILS

Market Capitalisation:

Cash/Liquids:

$11.0 million $2.091 million

Directors:

Sue Thomas Non-Executive Chair

Malcolm McComas Non-Executive Director

David Croll Non-Executive Director

Company Secretary:

Justin Clyne

Substantial Shareholders:

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

ASX Code:	RCO
Issued Capital:	52,714,183 shares
Shareholders:	171
Share Price:	21.0 cents

Royalco Resources Limited (Royalco, RCO or Company) is pleased to report on its activities during the quarter ended 30 September 2018.

1. Corporate:

• 1.1 Summary of Announcements During and Post the Quarter:

  Date:	Announcement
  9 July	Update on Sales Process for Weeks Royalty - Proposal Received
  27 July	Quarterly Activities and Cashflow Reports
  4 September	Director Appointment (David Croll)
  6 September	Weeks Royalty Sales Process - FZR Withdraws Proposals
  24 September	Full Year Statutory Accounts
  1 October	Director Resignation (Geoff Barker)
  15 October	Appendix 4G
  15 October	Corporate Governance Statement
  15 October	Annual Report to Shareholders
  15 October	Notice of Annual general meeting and Proxy Form

  Table 1: Summary of ASX releases by Royalco during and post the September Quarter.

• 1.2 Appointment of David Croll:

On 4 September, the Company advised of the appointment of Mr David Croll as a non-executive director. David is a shareholder and the Managing Director of Noontide Investments Ltd, a substantial shareholder in the Company, having a relevant interest in approximately 19.9% of Royalco shares. He has worked for 25 years in Stockbroking and Funds Management.

1.3

Weeks Royalty Sale Process:

On 6 September, the Company announced that Fitzroy River Corporation had withdrawn its offer to acquire the Weeks Royalty which for the sum of $6.6m. The Company advised that the sales process is continuing and discussions with other potential buyers are ongoing. Fitzroy has also advised that it does not intend to make any further offer. Accordingly, the Chair, Sue Thomas is no longer conflicted, and the Board has appointed her to lead the sales process going forward.

At the time of this quarterly report there is no additional information to provide shareholders by way of an update. The Company continues to work with the various parties involved and will continue to keep its shareholders and the market fully informed in compliance with its obligations under the ASX Listing Rules.

1.4

Finance:

There was an increase in the Company's cash balance at the end of the September quarter which was $2.137m, compared to $2.06m at the end of June.

2. Royalty Interests:

2.1

Weeks Royalty:

Income received during the quarter (based on production for the 3-month period ended 30 June 2018) was $211,930 which was significantly higher than the $112,450 received for the 3 month period ended 31 March 2018).

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).

2.2

Sam's Creek:

Royalco notes the announcement to the ASX on 30 July 2018 by MOD Resources Limited (ASX: MOD) in its quarterly activities report as follows:

"On 3 July 2017, MOD Resources Ltd entered into a binding Share Sale Agreement (SSA) to divest its Sams Creek Gold Project to newly incorporated Condamine Resources Ltd (Condamine). The SSA signed with Condamine has now been mutually terminated recently and will no longer proceed. The SSA was subject to a number of conditions precedent, which were not fully achieved by Condamine within an acceptable time frame.

The SSA covered the Sams Creek Project, including EP 40338 (MOD 80%) and EP 54454 (MOD 100%). Following the termination of the SSA, OceanaGold Corporation (TSX/ASX: OGC) will continue to hold the remaining 20% in EP 40338 through a joint venture with MOD and the 100% interest in EP 54454 will remain with MOD.

Sams Creek is a substantial undeveloped gold project with >1M ounce porphyry hosted gold resource (see Appendix 1- Table 5) which remains open at depth and along strike, supporting significant additional exploration potential. MOD remains focused on advancing its copper projects in Botswana and is exploring other opportunities to monetise the Sams Creek Gold Project."

Royalco will continue to watch any developments on the Sam's Creek old assets over which it has a royalty.

2.3

Bowdens Project:

During the quarter, Silver Mines Limited (ASX: SVL) announced the following update regarding the Bowdens Project (refer SVL Quarterly Activities Report of 31 July 2018):

• • Feasibility Study and Maiden Ore Reserve Statement complete.

• • Environmental Impact Statement advanced.

• • Continued exploration at Bowdens NW and Bowdens SW.

In its update to the market post quarter's end (refer SVL ASX Announcement of 3 October 2018), Silver

Mines states that "…the Bowdens Silver is the largest undeveloped silver deposit in Australia with substantial resources and a considerable body of high quality technical work already completed. The projects boast outstanding logistics for future mine development…".

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

• 2.4 Schedule of Royalty Interests:

  PROJECT	OPERATOR	ROYALTY	COMMODITY
  Weeks Petroleum	ExxonMobil/Gippsland Basin JV	1% of 2.5%	Hydrocarbons
  Reefton-Blackwater	Oceana Gold Ltd (ASX: OGC)	1-3% ORR	Gold
  Sam's Creek	MOD Resources Ltd (ASX: MOD)	1% ORR	Gold
  Mt Garnet	Snow Peak/CSD JV (In voluntary administration)	3% NSR	Zinc, lead, silver
  Bowdens	Silver Mines Ltd (ASX: SVL)	1 - 2 % NSR	Silver
  LFB	Regis Resources Ltd (ASX: RRL)	3% NSR	Gold, copper

  Table 2: Schedule of royalty interests.

• 2.5 Information Pursuant to Listing Rule 5.4.3:

In accordance with ASX Listing Rule 5.4.3, but noting its several royalty interests as described above, Royalco advises that:

• 1) No petroleum tenements were held at the end of the Quarter;

• 2) No petroleum tenements were acquired or disposed of during the Quarter;

• 3) The beneficial percentage interests held in farm-in or farm-out agreements at the end of the Quarter was nil; and

4)The beneficial percentage interests in farm-in or farm-out agreements acquired or disposed of during the Quarter was nil.

3. Events Subsequent to the Quarter:

3.1

Resignation of Geoff Barker:

The only event subsequent to the quarter was the resignation of Mr Geoff Barker.

Susan Thomas

Non-Executive Chair Dated: 23 October 2018

About Royalco Resources Limited (ASX: RCO):

Royalco Resources Limited is an ASX listed resources company that owns a portfolio of royalty opportunities in hydrocarbons, gold, zinc, copper, silver and other minerals located primarily in Australia and New Zealand. Royalco's Tier 1 asset is a 1% interest in the Weeks Petroleum

Royalty that covers 20 producing fields with 19 platforms in the offshore Gippsland Basin owned by ExxonMobil (operator) and BHP Billiton.