Maintains Economic Interest at Mount Milligan
Commitment Letter Signed with Centerra Gold
DENVER--(BUSINESS WIRE)--
Royal Gold, Inc. (NASDAQ:RGLD; TSX:RGL) (together with its
subsidiaries, “Royal Gold” or the “Company”) signed a commitment letter
and binding term sheet with Centerra Gold Inc. (“Centerra”) related to
the Company’s streaming interest at the Mount Milligan mine that is
owned by Thompson Creek Metals Company Inc. (“Thompson Creek”). Centerra
entered into a definitive arrangement agreement to acquire Thompson
Creek and pay its outstanding bonds.
“Royal Gold has actively engaged with companies regarding Mount Milligan
over the last ten months,” commented Tony Jensen, President and CEO of
Royal Gold. “To broaden interest and maximize value, we demonstrated
some flexibility in amending our gold stream to generate interest from
gold companies. We are extremely pleased to support Centerra’s
acquisition of Thompson Creek which delivers our two goals we have
discussed for some time; namely, the retention of our economic value at
Mount Milligan, without discount, and the introduction of a financially
strong operator.”
Under the terms of the commitment letter, Royal Gold’s 52.25% gold
streaming interest at Mount Milligan will be amended, conditional and
effective on closing of Centerra’s acquisition of Thompson Creek, 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. After transition to the amended stream, Royal Gold expects that
approximately 85% of its total net revenue will come from precious
metals and 15% from base metals.
Royal Gold’s security position related to Mount Milligan will remain
unchanged with respect to gold and will be amended to include copper.
“Thompson Creek developed Mount Milligan into a world class asset that
attracted interest from several quality operators,” Jensen stated. “We
are especially pleased to welcome Centerra as a new operator, as we
respect their operating and development skills. We view this overall
transaction as favorable for the continued successful operation of the
Mount Milligan mine and to all its stakeholders, including Royal Gold.”
Centerra’s proposed acquisition of Thompson Creek is subject to court
approval of the Plan of Arrangement as well as approval of Thompson
Creek shareholders and other customary conditions. Final closing is
expected in the fall of 2016.
Royal Gold was advised by Goldman, Sachs & Co. as well as law firms
Kirkland and Ellis, Hogan Lovells, and McCarthy Tétrault.
The Company will host a conference call to discuss these developments on
Tuesday, July 5, 2016 at 3:00pm Mountain Daylight Time (5:00pm Eastern
Daylight Time) and will be available by calling (855) 209-8260 (U.S.),
(855) 669-9657 (Canada) or (412) 542-4106 (international), conference
title “Royal Gold.” The call will be simultaneously broadcast on the
Company’s website at www.royalgold.com
under the “Presentations” section.
About Royal Gold
Royal Gold is a precious metals royalty and stream company engaged in
the acquisition and management of precious metal royalties, streams 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,” and until July 8,
2016, on the Toronto Stock Exchange under the symbol “RGL.” The
Company’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
proposed acquisition of Thompson Creek by Centerra, the approvals
required to conclude the transaction, and the timing thereof; Royal
Gold’s amended stream agreement; statements about the estimated economic
value of the amended stream agreement; the approximate mix of revenue
from precious metals and base metals; Royal Gold’s security position
related to Mount Milligan; operators’ expectations about development,
ramp-up, production and mine life; anticipated production and returns
from our stream and royalty properties, including without limitation
Mount Milligan. Factors that could cause actual results to differ
materially from the projections include, among others, precious metals
and copper prices; performance of and production at the Company's
royalty and stream properties; the ability of operators of development
properties to finance project construction to completion and bring
projects into production as expected; operators’ delays in securing or
inability to secure necessary governmental permits; decisions and
activities of the operators of the Company's royalty and stream
properties; unanticipated grade, environmental, geological, seismic,
metallurgical, processing, liquidity or other problems the operators of
the mining properties may encounter; completion of feasibility studies;
changes in operators’ project parameters as plans continue to be
refined; changes in estimates of reserves and mineralization by the
operators of the Company’s royalty and stream properties; contests to
the Company’s royalty and stream interests and title and other defects
to the Company’s royalty and stream properties; errors or disputes in
calculating royalty and stream payments, or payments not made in
accordance with royalty and stream agreements; economic and market
conditions; risks associated with conducting business in foreign
countries; changes in laws governing the Company and its royalty and
stream properties or the operators of such properties; and other
subsequent events; as well as other factors described in the Company'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 the Company’s ability to predict or control. The
Company disclaims any obligation to update any forward-looking statement
made herein. Readers are cautioned not to put undue reliance on
forward-looking statements.
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Source: Royal Gold, Inc.