Amended Streaming Agreement Maintains Royal Gold’s Economic
Interest at Mount Milligan
DENVER--(BUSINESS WIRE)--
Royal Gold, Inc. (NASDAQ: RGLD) (together with its subsidiaries,
“Royal Gold” or the “Company,” “we” or “our”) 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.
CORPORATE PROFILE
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.
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
operators’ expectations about Centerra’s acquisition of Thompson Creek
Metals Company, the approvals required to conclude the transaction and
the timing thereof, Centerra’s financial strength and experience as a
gold miner as owner of Mount Milligan, Royal Gold’s amended stream
agreement, statements about the estimated economic value of the amended
stream agreement, estimated percentages of precious and base metals
expected from Mount Milligan and from the Company’s stream and royalty
portfolio in the aggregate after the amended Mount Milligan stream
agreement becomes effective, and Royal Gold’s security position related
to 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 stream
and royalty properties, including gold and copper production at Mount
Milligan; the failure of Centerra’s acquisition of Thompson Creek to
close as anticipated; Centerra’s operation of Mount Milligan as
anticipated; events that could cause our discounted cash flow analysis
of the amended stream to be inaccurate; 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 stream and
royalty properties; unanticipated grade, environmental, geological,
seismic, metallurgical, processing, liquidity or other problems the
operators of the mining properties may encounter; 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 stream
and royalty properties; contests to the Company’s stream and royalty
interests and title and other defects to the Company’s stream and
royalty properties; errors or disputes in calculating stream and royalty
payments, or payments not made in accordance with stream and royalty
agreements; economic and market conditions; risks associated with
conducting business in foreign countries; changes in laws governing the
Company and its stream and royalty 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.
Statement Regarding Third Party Information: Royal Gold does not
own, develop or mine the properties on which it holds stream or royalty
interests. Certain information has been provided to us by the operators
of those properties or is publicly available information filed by these
operators with applicable securities regulatory bodies, including the
Securities and Exchange Commission. Royal Gold has not verified, and is
not in a position to verify, and expressly disclaims any responsibility
for, the accuracy, completeness or fairness of such third-party
information and refers the reader to the public reports filed by the
operators for information regarding those properties.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161018006764/en/
Source: Royal Gold, Inc.