Royal Gold acquires gold stream on Kansanshi copper-gold mine

Royal Gold (RGLD) announced that its wholly-owned subsidiary RGLD Gold, has entered into a precious metals purchase agreement for gold deliveries referenced to copper production from the Kansanshi copper-gold mine in the North Western Province of Zambia, operated and 80% owned by a subsidiary of First Quantum Minerals (FQVLF) (FGVLF). Royal Gold has agreed to make an advance payment of $1B in return for a gold stream referenced to copper production, with deliveries of 75 ounces of gold per million pounds of recovered copper produced until the delivery of 425,000 ounces; 55 ounces of gold per million pounds of recovered copper produced between the delivery of 425,001 ounces and 650,000 ounces; and 45 ounces of gold per million pounds of recovered copper produced thereafter. Royal Gold will initially pay 20% of the spot gold price for each ounce delivered. Additionally, and depending on the achievement of certain objectives as described below, Royal Gold will increase the percentage of spot gold price paid for each ounce delivered to 35% and has also granted options to First Quantum to accelerate stream deliveries. The effective date of the transaction is August 5 and Royal Gold expects to receive approximately 12,500 ounces of gold in 2025. Gold deliveries are expected to average approximately 35,000-40,000 ounces per year over the next 10 years. Deliveries under the stream agreement will be indexed to the production of recovered copper to reduce exposure to metallurgy and processing variability, and the stream rate will vary based on gold delivery thresholds: 75 ounces of gold per million pounds of recovered copper produced until the delivery of 425,000 ounces; 55 ounces of gold per million pounds of recovered copper produced between the delivery of 425,001 ounces and 650,000 ounces; and 45 ounces of gold per million pounds of recovered copper produced thereafter. Recovered copper produced is in both concentrate and cathode form and the stream economics are not dependent on downstream smelter recoveries or gold production at the site. Royal Gold will pay 20% of the spot gold price for each ounce delivered. Should either one of the conditions in Acceleration Option 1 be met, Royal Gold will pay 35% of the spot gold price for each ounce delivered.