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.
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version on businesswire.com: https://www.businesswire.com/news/home/20180914005281/en/
Royal Gold, Inc.Alistair Baker, 647-749-8204Director,
Business Development
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