Royal Gold Welcomes Thompson Creek Shareholders’ Approval of Centerra Acquisition
October 18 2016 - 5:16PM
Business Wire
Amended Streaming Agreement Maintains Royal
Gold’s Economic Interest at Mount Milligan
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.
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version on businesswire.com: http://www.businesswire.com/news/home/20161018006764/en/
Royal Gold, Inc. Karli Anderson, 303-575-6517Vice
President Investor Relations
Royal Gold (NASDAQ:RGLD)
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