Royal Gold Announces Agreement to Acquire Gold and Silver Stream on Barrick’s Interest in the Pueblo Viejo Mine
August 05 2015 - 5:02PM
Business Wire
Royal Gold, Inc. (NASDAQ:RGLD; TSX:RGL) (“RGI”) announces
that its wholly owned subsidiary, RGLD Gold AG (“Royal Gold”),
entered into a $610 million Precious Metals Purchase and Sale
Agreement with a wholly owned subsidiary of Barrick Gold
Corporation, BGC Holdings Ltd. (“Barrick”), to purchase a
percentage of the gold and silver production attributable to
Barrick’s 60% interest in the Pueblo Viejo mine located in the
Dominican Republic (“Pueblo Viejo”).
Pueblo Viejo is an open-pit mining operation located 100
kilometers northwest of Santo Domingo. It is managed by a joint
venture between two of the world’s largest gold producers, with
Barrick owning 60% and responsible for operations and Goldcorp Inc.
(“Goldcorp”) owning the remaining 40%. The mine began production in
2013, and is the only primary gold mine in the world with annual
production of more than one million ounces of gold (100% basis), at
all-in sustaining costs below $700 per ounce. On a 100% basis, 2014
gold production was approximately 1.11 million ounces, silver
production was 3.85 million ounces, and all-in sustaining costs
were $588 per ounce. Total mine proven and probable reserves1 were
15.50 million ounces of gold and 97.20 million ounces of silver,
while measured and indicated resources2 were 10.50 million ounces
of gold and 61.20 million ounces of silver as of December 31,
2014.
Tony Jensen, President and Chief Executive Officer of Royal
Gold, Inc. commented, “This agreement adds revenue from yet another
high quality, long lived asset to Royal Gold’s portfolio and, when
coupled with three other transactions in recent months,
significantly diversifies our revenue sources. It provides our
shareholders with substantial resource conversion optionality and a
favorable entry point in the commodity cycle. Opportunities of this
caliber and magnitude are rare and we are pleased to partner with
Barrick on this world-class operation.”
Precious Metals Stream
- Royal Gold will make a single $610
million advance payment to Barrick at closing, subject to certain
conditions precedent
- Barrick will deliver gold and silver to
Royal Gold in an amount equal to:
- 7.5% of Barrick’s interest in the gold
produced at Pueblo Viejo until 990,000 ounces of gold have been
delivered, and 3.75% thereafter
- 75% of Barrick’s interest in the silver
produced at Pueblo Viejo (with silver deliveries based on a fixed
70% recovery rate) until 50.00 million ounces have been delivered,
and 37.5% thereafter
- Royal Gold will pay Barrick:
- 30% of the spot price per ounce of gold
until 550,000 ounces of gold have been delivered, and 60% of the
spot price per ounce thereafter
- 30% of the spot price per ounce of
silver until 23.10 million ounces of silver have been delivered,
and 60% of the spot price per ounce thereafter
- Closing of the transaction and funding
is expected within 90 days
Transaction Highlights for Royal Gold
- Transaction effective July 1, 2015 for
gold and January 1, 2016 for silver
- By design, deliveries of gold and
silver are accelerated in the early years of mine production:
- Estimated gross annual gold deliveries
of approximately 46,500 ounces during the first five full years of
production, or annual average life of mine gold deliveries of
nearly 34,000 ounces
- Estimated gross annual silver
deliveries of 1.9 million ounces of silver during the first five
full years of production, or annual average life of mine silver
deliveries of nearly 1.5 million ounces
- 18 years of mine life based on current
reserves to 2032
- Proven and probable gold reserves
attributable to Barrick of 9.3 million contained ounces at 3.3
grams per tonne (“g/t”) as of December 31, 2014
- Proven and probable silver reserves
attributable to Barrick of 58.3 million contained ounces grading
20.7 g/t as of December 31, 2014
- High quality resources (as of December
31, 2014):
- 6.3 million contained ounces of
measured and indicated gold resources attributable to Barrick
grading 2.6 g/t
- 36.7 million contained ounces of
measured and indicated silver resources attributable to Barrick
grading 15.2 g/t
Under the terms of the Purchase and Sale Agreement, Barrick will
deliver gold and silver to Royal Gold on a quarterly basis. Royal
Gold expects to sell the gold and silver shortly after receiving
each delivery, and will recognize revenue from the sale of the
delivered gold and silver 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 198 properties on six continents, including
interests on 38 producing mines and 25 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.
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
Precious Metals Purchase and Sale Agreement with Barrick, as well
as its expectations concerning reserves, measured and indicated
gold resources, production and mine life at the Pueblo Viejo mine.
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 Pueblo Viejo
mine subject to our stream interests; decisions and activities of
the operators of the mine; operators’ delays in securing or
inability to secure necessary governmental permits; political and
social risks inherent in investments in foreign jurisdictions;
changes in operators’ project parameters and timelines as
operations continue to be refined; economic and market conditions;
unanticipated grade, geological, metallurgical, processing,
regulatory and legal or other problems that the operators of the
mine may encounter; 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.
____________________________
i 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
Barrick 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 Barrick with definitions of reserves used by
the U.S. Securities and Exchange Commission.
ii 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 Barrick, 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/20150805006685/en/
Royal Gold, Inc.Karli Anderson, 303-575-6517Vice
President Investor Relations
Royal Gold (NASDAQ:RGLD)
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