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Cortez

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Operator: Nevada Gold Mines LLC

Location: Nevada, United States

Royalty:

GSR1 and GSR2: 0.40% to 5.0% GSR sliding-scale
GSR3: 0.7125% GSR
NVR1: 4.91% NVR
NVR1C: 4.52% NVR

Term of Royalty: Life of Mine

Cortez

Cortez is a series of large open-pit and underground mines, utilizing mill, roast and heap leach processing. Cortez is operated by Nevada Gold Mines LLC (NGM), a joint venture between Barrick Gold Corporation (61.5%) and Newmont Corporation (38.5%). Royal Gold’s royalty interest at Cortez applies to the Pipeline and South Pipeline deposits, part of the Gap pit and the Crossroads deposit.

The Cortez deposits are Carlin-type sedimentary rock-hosted and porphyry/epithermal deposits. Carlin deposits form as structurally and/or stratigraphically controlled replacement bodies consisting of strata-bound, tabular, disseminated gold mineralization occurring in Silurian-Devonian carbonate rocks.

The open-pits use a conventional truck-and-shovel fleet, mining approximately 400,000 tons per day of ore and waste. Mining operations move between the various pits over the life of mine plan. Non-refractory ores from the mines are treated on site through the oxide mill or on heap leach pads, while refractory ore is shipped to other NGM operations (i.e. Gold Quarry and Goldstrike) for processing.

In 1987, Royal Gold was a party within a joint venture (Crescent Valley Joint Venture) that leased 200 claims from ECM, Inc. which covered an area within what would come to be known as the South Pipeline Project. In 1992, Placer Dome U.S. Inc. granted Royal Gold either a 20% net profits interest royalty or a sliding-scale net smelter return royalty according to a schedule tied to indexed gold prices which ranged from 2.5% at $350/oz up to 5.5% in excess of $500/oz (at Royal Gold’s selection) for the right to mine on the leased ground – in 1999 this option was converted into two gross smelter return royalties (GSR1 & GSR2). In 1993, Royal Gold purchased a fixed-rate GSR royalty (GSR3) from a joint venture partner and, in 2001, purchased an additional interest in the form of a net value royalty (NVR1).

On October 1, 2008, Royal Gold acquired a portfolio of royalties from Barrick Gold Corporation (Barrick). As consideration for the acquisition, Royal Gold paid Barrick $150 million in net cash and restructured its royalty positions to reduce the royalty burden on the undeveloped Crossroads deposit at Cortez while having a minimal impact on Royal Gold’s royalty revenue from current production at the time. Later, in September 2016, Royal Gold added to its suite of interests on the property through the acquisition of an incremental 3.75% net value royalty on a significant area of the Cortez property, including the Crossroads deposit, from a private party seller for total consideration of $70 million.

Today, Royal Gold’s royalty interest at Cortez comprises multiple royalties based on five Regions as described below (it should be noted that Regions at Cortez do not overlap, however our royalties do overlap Regions).

Cortez overhead view

Royalty Region   Royalty Applicable
  Royalty Name: GSR1 GSR2 GSR3 NVR1 NVR1C
  Royalty Type 1: GSR, sliding scale GSR, sliding scale GSR, fixed rate NVR, fixed rate NVR, fixed rate
  Current Royalty Rate: 5% GSR 2 5% GSR 2 0.7125% GSR 4.91% NVR 4.52% NVR
Royalty Region 2      
Royalty Region 3        
Royalty Region 4    
Royalty Region 5      

1 GSR refers to "gross smelter return"; NVR refers to "net value royalty"

2 Royalty is a sliding scale gross smelter return royalty that varies with the gold price according to the following schedule:

Royalty Rate Gold Price (US$/oz)
  Equal to and above Up to
0.40% $0 $209.99
0.50% $210 $229.99
0.75% $230 $249.99
1.30% $250 $269.99
2.25% $270 $309.99
2.60% $310 $329.99
3.00% $330 $349.99
3.40% $350 $369.99
3.75% $370 $389.99
4.00% $390 $409.99
4.25% $410 $429.99
4.50% $430 $449.99
4.75% $450 $469.99
5.00% $470 no limit

* Detailed information on our interest can be found on the Portfolio Asset Summary table