Royal Gold Acquires Gold and Silver Stream on New Gold’s Rainy River Project
July 20 2015 - 8:00AM
Business Wire
Royal Gold, Inc. (NASDAQ: RGLD; TSX: RGL) (“RGI”)
announces that its wholly owned subsidiary RGLD Gold AG (“Royal
Gold” or the “Company”) entered into a $175 million Purchase
and Sale Agreement with New Gold, Inc. (“New Gold”), for a
percentage of the gold and silver production from the Rainy River
Project in Ontario, Canada (“Rainy River” or the “Project”).
The Rainy River Project is located 65 kilometers northwest of
Fort Frances in western Ontario, Canada, just north of the
Minnesota border. Over its first nine years of full production, the
21,000 tonne per day, combined open pit-underground operation is
scheduled to produce an average of 325,000 ounces of gold per year.
Permits to begin major earthworks construction are in place, and,
as of mid-2015, detailed engineering is 95% complete and 14% of the
total development capital estimate of $877 million has been spent.
Startup is projected for mid-2017.
Tony Jensen, President and Chief Executive Officer of Royal
Gold, Inc. commented, “The Rainy River Project fits well into our
high quality portfolio and met all our criteria for new investments
with nearly 4 million ounces of gold reserves, continued
exploration upside and projected cash costs below $600 per ounce.
We are particularly pleased to add another piece of business in
Canada and partner with New Gold—a company that is well-known for
its development track record and operational expertise.”
Stream Transaction Details
- Royal Gold will make 2 advance
payments to New Gold, consisting of $100 million at closing and $75
million once capital spending on the Project is sixty percent
complete (currently expected by mid-2016)
- New Gold will deliver to Royal Gold:
- 6.5% of the gold produced at Rainy
River until 230,000 ounces have been delivered, and 3.25%
thereafter
- 60% of the silver produced at Rainy
River until 3.1 million ounces have been delivered, and 30%
thereafter
- Royal Gold will pay New Gold 25% of the
spot price per ounce of gold or silver
Transaction Highlights for Royal Gold
- Estimated annual gross gold deliveries
of 20,000 ounces of gold during the first ten full years of
production, and approximately 17,000 gross ounces of gold during
the life of mine
- Estimated annual gross silver
deliveries of 250,000 ounces of silver during the first ten full
years of production, and approximately 230,000 gross ounces of
silver during the life of mine
- Fourteen years of mine life based on
current reserves, and an estimated startup of mid-2017
- Proven and probable gold reserves of
3.1 million contained ounces at 1.0 grams per tonne (“g/t”) in the
open pit, and 668,000 contained ounces grading 5.0 g/t in the
underground deposit
- Proven and probable silver reserves of
8.0 million contained ounces grading 2.5 g/t in the open pit, and
1.39 million contained ounces grading 10.3 g/t in the underground
deposit
- Excellent exploration potential with:
- 2.9 million contained ounces of
measured and indicated gold resources grading 1.11 g/t across both
the open pit and underground
- 10.0 million contained ounces of
measured and indicated silver resources grading 3.8 g/t across both
the open pit and underground
Under the terms of the Purchase and Sale Agreement, New Gold
will deliver gold and silver to Royal Gold on a monthly basis.
Royal Gold plans to sell the gold within a few weeks of receiving
each delivery, and will recognize revenue from the sale of the
delivered gold after the sale has occurred.
CORPORATE PROFILE
Royal Gold, Inc. is a precious metals royalty and stream company
engaged in the acquisition and management of precious metal
royalties, streams, and similar production based interests. RGI
owns interests on 196 properties on six continents, including
interests on 37 producing mines and 24 development stage projects.
Royal Gold, Inc. is publicly traded on the NASDAQ Global Select
Market under the symbol “RGLD,” and on the Toronto Stock Exchange
under the symbol “RGL.” RGI’s website is located at
www.royalgold.com.
About New Gold
New Gold is an intermediate gold mining company. The company has
a portfolio of four producing assets and three significant
development projects. The New Afton Mine in Canada, the Mesquite
Mine in the United States, the Peak Mines in Australia and the
Cerro San Pedro Mine in Mexico, provide the company with its
current production base. In addition, New Gold owns 100% of the
Rainy River and Blackwater projects, both in Canada, as well as an
interest in the El Morro project located in Chile. New Gold’s
objective is to be the leading intermediate gold producer, focused
on the environment and social responsibility. For further
information on the company, please visit www.newgold.com.
Cautionary “Safe Harbor” Statement Under the Private
Securities Litigation Reform Act of 1995: With the exception of
historical matters, the matters discussed in this press release are
forward-looking statements that involve risks and uncertainties
that could cause actual results to differ materially from
projections or estimates contained herein. Such forward-looking
statements include statements about the stream and Royal Gold’s
Purchase and Sale Agreement with New Gold, as well as expectations
concerning development, production and mine life at the Rainy River
Project. Factors that could cause actual results to differ
materially from the projections include, among others, precious
metals prices; actual tax rates; performance of and production at
the properties subject to our royalty and stream interests;
decisions and activities of the operators of these properties;
operators’ delays in securing or inability to secure necessary
governmental permits; changes in operators’ project parameters and
timelines as plans continue to be refined; economic and market
conditions; unanticipated grade, geological, metallurgical,
processing, regulatory and legal or other problems that the
operators of mining properties may encounter; completion of
feasibility studies; the ability of the various operators to bring
projects into production as expected; and other subsequent events,
as well as other factors described in RGI's Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, and other filings with
the Securities and Exchange Commission. Most of these factors
are beyond RGI’s ability to predict or control. RGI disclaims any
obligation to update any forward-looking statement made herein.
Readers are cautioned not to put undue reliance on forward-looking
statements.
Cautionary Note to U.S. Investors Concerning Estimates of
Proven and Probable Mineral Reserves and Measured and Indicated
Mineral Resources: The mineral reserve estimates reported by
New Gold were prepared in accordance with Canadian Institute of
Mining, Metallurgy and Petroleum Definition Standards for Mineral
Resources and Mineral Reserves, as incorporated by reference in
National Instrument 43-101. RGI has not reconciled the reserve
estimates provided by New Gold with definitions of reserves used by
the U.S. Securities and Exchange Commission.
While the terms “Mineral Resource,” “Measured Mineral Resource”
and “Indicated Mineral Resource” are recognized and required by
Canadian securities regulations, they are not defined terms under
standards of the United States Securities and Exchange Commission.
Under United States standards, mineralization may not be classified
as a “Reserve” unless the determination has been made that the
mineralization could be economically and legally produced or
extracted at the time the reserve estimation is made. The mineral
resources reported herein are estimates previously disclosed by New
Gold, without reference to the underlying data used to calculate
the estimates. Accordingly, RGI is not able to reconcile the
estimates prepared in reliance on Canadian National Instrument
43-101 with terms recognized by the United States Securities and
Exchange Commission. Readers are cautioned not to assume that all
or any part of the measured or indicated mineral resources will
ever be converted into mineral reserves.
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version on businesswire.com: http://www.businesswire.com/news/home/20150720005666/en/
Royal Gold, Inc.Karli Anderson, 303-575-6517Vice
President Investor Relations
Royal Gold (NASDAQ:RGLD)
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