ROYAL GOLD, INC. (NASDAQ:RGLD) welcomes today’s approval by the shareholders of Thompson Creek Metals Company Inc. (“Thompson Creek”) of a special resolution authorizing the acquisition of all outstanding Thompson Creek common shares by Centerra Gold Inc. (“Centerra”) by plan of arrangement under the Business Corporations Act (British Columbia). The acquisition is expected to close on or about October 20 following court approval of the plan of arrangement.
As previously announced, Royal Gold’s streaming interest at Mount Milligan will be amended upon closing of the acquisition.
Amended Mount Milligan Streaming Agreement Highlights:
- Stream will transition from 52.25% of gold produced to 35% of gold produced and 18.75% of copper produced.
- Royal Gold will continue to pay $435 per ounce of gold delivered.
- Royal Gold will pay 15% of the spot price per metric tonne of copper delivered.
- Amendment is effective for all concentrate shipped after the closing date.
- Concentrate shipped before the closing date but not settled as of the closing date will still be subject to the original 52.25% gold stream.
- Amendment is estimated to be value-neutral on a discounted cash flow basis.
“We believe the acquisition and amended stream represent an excellent outcome for Royal Gold,” commented Tony Jensen, President and CEO. “Centerra’s stronger balance sheet and gold-focused skill set will further benefit our investment at Mount Milligan and we welcome them as our partner in this high quality project.”
Under the terms of the amendment, Royal Gold’s 52.25% gold stream at Mount Milligan will be converted to a 35% gold stream and 18.75% copper stream. Royal Gold will continue to pay $435 per ounce of gold delivered and will pay 15% of the spot price per metric tonne of copper delivered. Royal Gold estimates this amendment to be value-neutral on a discounted cash flow basis, and expects about two-thirds of its future net revenue from Mount Milligan will be gold related and one-third copper related over the next ten years. Royal Gold’s existing first ranking security over 52.25% of gold produced from Mount Milligan will be amended to provide for first ranking security over 35% of produced gold and 18.75% of produced copper. Royal Gold’s other existing security over the Mount Milligan assets will remain unaffected.
After transition to the amended stream, Royal Gold expects that, on the basis of its current stream and royalty portfolio, approximately 85% of total future net revenue will come from precious metals and 15% from base metals.
Mount Milligan gold in concentrate that is currently in transit will be delivered to Royal Gold under the current 52.25% stream. Under the terms of both the original and amended agreements, there is a maximum of five months between concentrate shipment and final settlement, and Royal Gold expects to begin receiving gold and copper deliveries reflecting the amended stream agreement in approximately March 2017.
On October 18, Thompson Creek announced that commissioning of major equipment and components of the Mount Milligan permanent secondary crushing circuit had begun. Routine testing and commissioning of all equipment and process circuits will continue over the next several weeks, with first feed through the secondary crusher expected by the end of October. Thompson Creek noted that capital expenditures for the project are expected to be $50 – $55 million, approximately $10 million below their prior guidance.
Royal Gold is a precious metals stream and royalty company engaged in the acquisition and management of precious metal streams, royalties and similar production based interests. The Company owns interests on 193 properties on six continents, including interests on 38 producing mines and 24 development stage projects. Royal Gold is publicly traded on the NASDAQ Global Select Market under the symbol “RGLD.” The Company’s website is located at www.royalgold.com.
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