DENVER--(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
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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)
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New Gold will deliver to Royal Gold:
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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
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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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Source: Royal Gold, Inc.