Royal Gold Announces Closing of Pueblo Viejo Stream Transaction and Provides Updates on Other Previously Announced Transactions
September 29 2015 - 5:00PM
Business Wire
Royal Gold, Inc. (NASDAQ:RGLD; TSX:RGL) (“RGI”) announces
that its wholly owned subsidiary, RGLD Gold AG (“Royal Gold,”
“Company”), closed its previously announced $610 million Precious
Metals Purchase and Sale Agreement with a wholly owned
subsidiary of Barrick Gold Corporation, BGC Holdings Ltd.
(“Barrick”), to purchase a quantity of gold and silver referenced
to production from Barrick’s 60% interest in the Pueblo Viejo mine
located in the Dominican Republic (“Pueblo Viejo”). In addition,
the Company also provides updates on its previously announced gold
offtake agreement with Compañía Minera Teck Carmen de
Andacollo (“CMCA”) and its gold stream transaction with a
wholly owned subsidiary of Golden Star Resources Ltd (“Golden
Star”).
Royal Gold made a single $610 million advance payment to
Barrick as part of the closing. The transaction is effective July
1, 2015 for the gold stream and January 1, 2016 for the silver
stream. Under the terms of the Purchase and Sale Agreement, Barrick
will deliver to Royal Gold, on a quarterly basis, an amount of gold
equal to 7.50% of Barrick’s interest in the gold produced at Pueblo
Viejo until 990,000 ounces of gold have been delivered, and 3.75%
thereafter; and an amount of silver equal to 75% of Barrick’s
interest in the silver produced at Pueblo Viejo (with silver
deliveries based on a fixed 70% recovery rate) until 50.00 million
ounces have been delivered, and 37.50% thereafter. Royal Gold will
pay Barrick 30% of the spot price per ounce of gold until 550,000
ounces of gold have been delivered, and 60% of the spot price per
ounce thereafter; and 30% of the spot price per ounce of silver
until 23.10 million ounces of silver have been delivered, and 60%
of the spot price per ounce thereafter.
Under the terms of the Purchase and Sale Agreement, Barrick will
maintain a segregated cash collection account for receipt of
dividends and other distributions paid to Barrick by the Pueblo
Viejo joint venture. Funds in the collection account will be used
first to fund deliveries of gold and silver to Royal Gold before
any distributions are made to Barrick Gold Corporation. If cash in
the collection account is not sufficient to fund Barrick’s delivery
obligations to Royal Gold, any unsatisfied delivery obligations
will accrue until sufficient cash is available. If actual silver
recoveries in any quarterly delivery period are below the 70% fixed
recovery rate, Barrick will make up any production shortfall.
Royal Gold will sell the gold and silver after receiving each
quarterly delivery, and will recognize revenue from the sale of
delivered gold and silver after the sale has occurred. Royal Gold
expects to receive its first delivery of gold in respect of Pueblo
Viejo on December 15 for the period July 1 to November 30, 2015.
Barrick informed the Company that the first delivery will include
approximately 8,600 ounces relating to July and August 2015
production, in addition to delivery of gold for the period
including September, October and November 2015.
About CMCA
Royal Gold made a single $525 million advance payment to
CMCA as part of the closing of the Long Term Offtake Agreement
dated July 9, 2015. The agreement is effective July 1, 2015, and
applies to all final settlements of gold received on or after that
date. CMCA will deliver to Royal Gold, on a monthly basis, 100% of
payable gold from the Carmen de Andacollo mine until 900,000 ounces
have been delivered, and 50% thereafter, subject to a fixed payable
percentage of 89%. Royal Gold will pay CMCA 15% of the monthly
average gold price for the month preceding the delivery date for
each delivered ounce.
Royal Gold sells the gold from CMCA within weeks after receiving
each monthly delivery, and will recognize revenue from the sale of
delivered gold after the sale has occurred. As of September 29,
2015, Royal Gold has sold approximately 9,500 ounces of gold
delivered by CMCA during the quarter, and has approximately 300
ounces of gold remaining in inventory from CMCA deliveries.
About Golden Star
Royal Gold made $55 million in advance payments to Golden Star
to date related to the Gold Purchase and Sale Agreement dated May
6, 2015. Royal Gold, Inc. also funded a previously announced $20
million term loan to Golden Star. Royal Gold expects to make
additional advance payments totaling $75 million over the next
several quarters. Golden Star will deliver to Royal Gold 8.50% of
the gold produced until 185,000 ounces have been delivered, 5.00%
until an additional 22,500 ounces have been delivered, and 3.00%
thereafter. Royal Gold will pay Golden Star 20% of the spot price
until 207,500 ounces of gold have been delivered, and 30% of the
spot price thereafter for each delivered ounce.
Golden Star delivers gold to us based on each shipment of doré.
Royal Gold sells the gold from Golden Star within weeks after
receiving each delivery, and will recognize revenue from the sale
of delivered gold after the sale has occurred. As of September 29,
2015, Royal Gold has sold approximately 3,200 ounces of gold
delivered by Golden Star during the quarter, and has approximately
1,100 ounces of gold remaining in inventory from Golden Star
deliveries. The Company also expects to receive make-whole
deliveries of approximately 4,000 ounces of gold prior to the end
of October related to the period from April 1, 2015 through August
14, 2015.
CORPORATE PROFILE
Royal Gold, Inc. is a precious metals royalty and stream company
engaged in the acquisition and management of precious metal
royalties, streams, and similar production based interests. RGI
owns interests on 198 properties on six continents, including
interests on 39 producing mines and 24 development stage projects.
Royal Gold, Inc. is publicly traded on the NASDAQ Global Select
Market under the symbol “RGLD,” and on the Toronto Stock Exchange
under the symbol “RGL.” RGI’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 our streaming and offtake
agreements with Barrick, CMCA, and Golden Star, as well as
expectations concerning development, ramp-up, production and mine
life at the operations which are subject to these agreements.
Factors that could cause actual results to differ materially from
the projections include, among others, precious metals prices;
actual tax rates; performance of and production at the Pueblo
Viejo, Andacollo, and Golden Star mines subject to our interests;
decisions and activities of the operators of the mine; operators’
delays in securing or inability to secure necessary governmental
permits; political and social risks inherent in investments in
foreign jurisdictions; changes in operators’ project parameters and
timelines as operations continue to be refined; economic and market
conditions; unanticipated grade, geological, metallurgical,
processing, regulatory and legal or other problems that the
operators of the mine may encounter; and other subsequent events,
as well as other factors described in RGI'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 RGI’s ability to predict or control. RGI disclaims any
obligation to update any forward-looking statement made herein.
Readers are cautioned not to put undue reliance on forward-looking
statements.
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version on businesswire.com: http://www.businesswire.com/news/home/20150929006881/en/
Royal Gold, Inc.Karli Anderson, 303-575-6517Vice
President Investor Relations
Royal Gold (NASDAQ:RGLD)
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