DENVER--(BUSINESS WIRE)--
Royal Gold, Inc. (NASDAQ: RGLD) (“Royal Gold” or the “Company”)announces that wholly-owned subsidiaries of the Company and Altius
Minerals Corporation (“Altius”) entered into an agreement with Vale
Canada Limited and certain of its subsidiaries (collectively, the
“Parties”) to comprehensively settle their long-standing litigation
related to calculation of the royalty on the sale of all concentrates
produced from the Voisey’s Bay mine in Newfoundland and Labrador, Canada.
The Voisey’s Bay 3% net smelter return royalty is directly owned by the
Labrador Nickel Royalty Limited Partnership (“LNRLP”), in which the
Company’s wholly-owned indirect subsidiary is the general partner and
90% owner. The remaining 10% interest in LNRLP is owned by a subsidiary
of Altius.
The Parties agreed to a new method for calculating the royalty in
respect of concentrates processed at Vale’s Long Harbour Processing
Plant (LHPP), which will be effective for all Voisey’s Bay mine
production after April 1, 2018. The specific terms of the settlement are
confidential, but Royal Gold expects the 3% royalty rate will apply to
approximately 50% of the gross metal value in the concentrates at
existing nickel, copper and cobalt prices. As those metal prices rise or
fall, the percentage of gross metal value in the concentrates applicable
to the royalty would correspondingly increase or decrease.
“We are very pleased to have found common ground with Vale to resolve
our Voisey’s Bay royalty calculation concerns,” stated Tony Jensen,
President and Chief Executive Officer of Royal Gold. “This settlement
resolves all claims by agreeing on a prospective calculation and secures
our participation in the underground mine life extension. The Voisey’s
Bay royalty has only paid LNRLP approximately $1 million since the first
calendar quarter of 2016, but we now expect a steady quarterly flow of
revenue from this world class mine once again.”
The next LNRLP payment of approximately $2.2 million, relating to second
calendar quarter production, is expected to be received in October. The
third calendar quarter royalty payment, and the royalty payment for each
quarter thereafter, is due 45 days after quarter end.
LHPP is designed to produce 50,000 tonnes of finished nickel annually.
The plant is currently ramping up and is producing at an annualized rate
of approximately 35,600 tonnes based on actual production of 8,900
tonnes in the second calendar quarter of 2018. In the next few years,
Voisey’s Bay concentrate will provide 100% of the feed to LHPP but, over
time, other sources of concentrate will be added to LHPP.
On June 11, 2018, Vale announced it will recommence the $1.7 billion
development of an underground mine and associated facilities, which is
expected to extend the Voisey’s Bay mine life until 2034. Vale expects
the underground mine to begin production in 2021 and to ramp up over
four years, while the current open pit mining in the Ovoid deposit is
expected to continue until 2022. Vale estimates Voisey's Bay mineral
reserves at 32.4 million tonnes with a nickel grade of 2.13%, a copper
grade of 0.96%, and a cobalt grade of 0.13% as of December 31, 2017.
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. As of September 1, 2018, the Company
owns interests on 191 properties on six continents, including interests
on 40 producing mines and 18 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
expectations that the Company’s 3% royalty on production from Vale’s
Voisey’s Bay mine will apply to approximately 50% of the gross metal
value in the concentrates at existing nickel, copper and cobalt prices,
the increase or decrease in the percentage of gross metal value in the
concentrates applicable to the royalty as metal prices rise or fall, the
expectation that resolution of the dispute resolves all claims by
agreeing on a prospective calculation and secures the Company’s
participation in the underground mine life extension, the Company’s
expectation for a steady quarterly flow of revenue from the Voisey’s Bay
mine, the design capacity of, expected future production from, and feed
sources to Vale’s Long Harbour Processing Plant, the timing for
recommencement of development and commencement of production from an
underground mine and associated facilities at Voisey’s Bay, the
expectation that the underground mine will extend the Voisey’s Bay mine
life until 2034, production from the Ovoid deposit, and estimates of
Voisey’s Bay reserves.
Factors that could cause actual results to differ materially from these
forward-looking statements include, among others: the risks inherent in
the operation of mining properties; a decreased price environment for
gold and other metals on which our stream and royalty interests are
paid; performance of and production at the Company’s stream and royalty
properties; the ability of operators to finance project construction to
completion and bring projects into production as expected, including
development stage mining properties, mine and mill expansion projects
and other developments; variation of actual performance from the
production estimates and forecasts made by the operators of those
properties and projects; unexpected operating costs, decisions and
activities of the operators of the Company’s stream and royalty
properties; changes in operators’ mining and processing techniques or
stream delivery or royalty payment calculation methodologies; resolution
of regulatory and legal proceedings; unanticipated grade, geological,
seismic, metallurgical, environmental, processing or other problems the
operators may encounter at the properties; operators’ inability to
access sufficient raw materials, water, power or other resources or
infrastructure; revisions or inaccuracies in technical reports, reserve,
resources and production estimates; changes in operators’ project
parameters as plans of the operators are 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 in the properties where the
Company holds stream and royalty interests; the results of current or
planned exploration activities; errors or disputes in calculating stream
deliveries or royalty payments, or deliveries or payments not made in
accordance with stream or royalty agreements; decisions and activities
of the Company’s management affecting margins, use of capital and
strategy; the liquidity and future financial needs of the Company;
economic and market conditions; the impact of future acquisitions and
stream and royalty financing transactions; the impact of issuances of
additional common stock; and risks associated with conducting business
in foreign countries, including application of foreign laws to contract
and other disputes, environmental laws, enforcement and uncertain
political and economic environments. These risks and other factors are
discussed in more detail in the Company’s public filings with the
Securities and Exchange Commission. Most of these risks are beyond the
Company’s ability to control. Statements made herein are as of the date
hereof and should not be relied upon as of any subsequent date. The
Company’s past performance is not necessarily indicative of its future
performance. The Company disclaims any obligation to update any
forward-looking statements. Readers are cautioned not to put undue
reliance on forward-looking statements.
Statement about Mineral Reserves: This press release includes
information about reserve estimates provided by a Canadian issuer. These
estimates are not based on the U.S. Securities and Exchange Commission’s
definitions for proven and probable reserves. For Canadian issuers,
definitions of “mineral reserve,” “proven mineral reserve,” and
“probable mineral reserve” conform to the Canadian Institute of Mining,
Metallurgy and Petroleum definitions of these terms as of the effective
date of estimation as required by National Instrument 43-101 of the
Canadian Securities Administrators. Royal Gold does not reconcile the
reserve estimates provided by the operators with definitions of reserves
used by the U.S. Securities and Exchange Commission.
Statement Regarding Third-Party Information: Certain information
provided in this press release, including construction schedules,
production estimates and mineral reserves, has been provided to the
Company 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. The
Company 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 readers to the
public reports filed by the operators for information regarding those
properties.
View source version on businesswire.com:
https://www.businesswire.com/news/home/20180914005281/en/
Royal Gold, Inc.
Alistair Baker, 647-749-8204
Director,
Business Development
Source: Royal Gold, Inc.