Royal Gold, through its wholly-owned subsidiary RGLD Gold AG, holds a life
of mine purchase and sale agreement for silver produced from the
Khoemacau Copper Project in Botswana with Khoemacau Copper
Mining (Pty.) Limited (“KCM”), a wholly-owned subsidiary of Cupric Canyon
Capital LP (Cupric). Cupric is a private company owned by management and
funds advised by Global Natural Resource Investments.
On January 6, 2021, Royal Gold completed the total $212 million advance
payment to earn the base silver stream of 80% of payable silver. KCM has an
option to access up to an additional $53 million in advance payments from
Royal Gold for up to the remaining 20% of the silver produced. On April 7,
2021, KCM, at their option, drew a further $10.6 million advance payment,
increasing Royal Gold’s silver stream interest to 84% of payable silver and, on
October 8, 2021, KCM , at their option, drew a further $15.9 million advance payment,
increasing Royal Gold's silver stream interest to 90% of payable silver. On February 23, 2022, KCM, at their option, drew a further $10.0 million advance payment, increasing Royal Gold's silver stream interest to 93% of payable silver. On March 14, 2022, KCM, at their option, drew the remaining $26.5 million advance payment, increasing Royal Gold's silver stream interest to 100% of payable silver.
The stream rate will drop by 50% upon the delivery to Royal Gold of 40
million ounces for the 100% silver stream.
Royal Gold will pay 20% of the spot price of silver for each ounce
delivered. Depending on the achievement by KCM of mill expansion throughput
levels above 13,000 tonnes per day, which is 30% above the current mill
design capacity, Royal Gold will pay higher ongoing cash payments for ounces
delivered in excess of specific annual thresholds.
Royal Gold extended a $25 million subordinated debt facility to KCM to fund
potential cost overruns, subject to various conditions. On April 7, 2021,
KCM drew $18 million from the facility. On July 6, KCM drew the remaining $7
million.