Royal Gold, through its wholly-owned subsidiary RGLD Gold AG, holds a life of mine purchase and sale agreement for 100% of the silver produced from Zone 5 at Khoemacau.
RGLD Gold AG provided stream financing to KCM, the original owner and project developer, during the construction of Khoemacau, and on January 6, 2021, RGLD Gold AG completed a total advance payment of $212 million in return for a base stream of 80% of payable silver. Subsequently, KCM elected to access an option for up to an additional $53 million in advance payments from RGLD Gold AG for up to the remaining 20% of the silver produced, and as of March 14, 2022, KCM had fully drawn this additional advance payment, increasing RGLD Gold AG’s interest to 100% of payable silver. The stream rate will drop by to 50% of the payable silver upon the delivery to RGLD Gold AG of 40 million ounces of payable silver.
RGLD Gold AG will pay 20% of the spot price of silver for each ounce delivered. Depending on the achievement of mill throughput levels above 13,000 tpd, which is 30% above the current mill design capacity, RGLD Gold AG will pay higher ongoing cash payments for ounces delivered in excess of specific annual thresholds.
Metal deliveries to RGLD Gold AG typically occur up to a month after production at Khoemacau due to the time required to ship concentrate from the mine site to the smelter and the payment provisions of the offtake contract.