DENVER--(BUSINESS WIRE)--
Royal Gold, Inc. (RGLD) (RGL.TO) announces that its
wholly owned subsidiary, RGLD Gold AG (“Royal Gold” or the “Company”)
has entered into a $175 million gold stream transaction with Euromax
Resources Ltd (EOX.V) (“Euromax”) that will finance a significant
portion of the construction of the Ilovitza gold-copper project in
Macedonia.
Stream Transaction Details
-
Royal Gold will make two advance deposit payments totaling $15 million
towards completion of the definitive feasibility study on the Ilovitza
project, followed by a third payment of $160 million towards project
construction, subject to certain conditions;
-
Euromax will deliver 25% of any gold produced from the Ilovitza
project until 525,000 ounces have been delivered, and 12.5%
thereafter; and
-
Royal Gold’s purchase price per ounce will be 25% of the spot price at
time of delivery.
Transaction Highlights for Royal Gold
-
Conventional open pit operation;
-
Attractive cost and production profile anticipated with a low strip
ratio and 23 year mine life;
-
Current reserve of 2.45 million ounces of gold and 905 million pounds
of copper;
-
Advanced project with permitting significantly progressed;
-
Planned production start in 2018;
-
Good infrastructure with access to smelter via direct rail; and
-
Proven leadership team consisting of members of the former European
Goldfields management team.
“The Ilovitza gold stream represents a well-structured, low-cost option
on a long-life asset,” commented Tony Jensen, Royal Gold President and
CEO. “Similar to many of Royal Gold’s principal properties, Ilovitza is
a polymetallic deposit with attractive economics, a proven management
team and strong local support. Royal Gold is proud to assist in securing
the financing necessary to significantly advance development and
construction of this project.”
About the Ilovitza Project
The Ilovitza project (“project”) is located in south east Macedonia,
approximately 15 kilometers west of the Bulgarian border. The deposit is
a copper-gold porphyry situated in the northwest-southeast striking
Tertiary magmatic arc that covers large areas of Central Romania,
Serbia, Macedonia, Southern Bulgaria, Northern Greece and Eastern
Turkey. The project is located three kilometers from a two-lane paved
road, which connects to a major highway through the village of Ilovitza.
Based on a pre-feasibility study (“PFS”) published in July 2014, Euromax
plans to develop a low-strip (0.7:1 waste:ore) open pit operation
feeding a 10 million tonne/year sulfide process plant that produces i) a
saleable copper concentrate with a gold credit, and ii) a precious metal
doré product from leaching the flotation tails in a CIL circuit. Overall
process recoveries are estimated at 84% copper and 86.5% gold. Average
annual production is estimated to be 35 million pounds copper and 95,000
ounces gold over a 23 year mine life. The PFS estimates average life of
mine operating costs of $10.60/tonne of ore and startup capital costs of
approximately $500 million. A definitive feasibility study is currently
being initiated. Euromax expects to be in production by 2018.
Reserve and resource from the PFS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Tonnes (mt)
|
|
Cu Grade (%)
|
|
Au Grade (g/t)
|
|
Cont. Cu (m lbs)
|
|
Cont. Au (koz)
|
Probable Reserve
|
Sulfide
|
|
209
|
|
0.20%
|
|
0.34
|
|
905
|
|
2,276
|
Oxide
|
|
16
|
|
-
|
|
0.33
|
|
-
|
|
172
|
Total
|
|
|
|
|
|
|
|
905
|
|
2,448
|
M&I Resource (Incl. Reserves)
|
Sulfide
|
|
237
|
|
0.22%
|
|
0.33
|
|
1,125
|
|
2,541
|
Oxide
|
|
36
|
|
-
|
|
0.33
|
|
-
|
|
381
|
Total
|
|
|
|
|
|
|
|
1,125
|
|
2,922
|
Inferred Resource
|
Sulfide
|
|
20
|
|
0.22%
|
|
0.36
|
|
97
|
|
226
|
Oxide
|
|
7
|
|
-
|
|
0.25
|
|
-
|
|
55
|
Total
|
|
|
|
|
|
|
|
97
|
|
281
|
|
|
|
|
|
|
|
|
|
|
|
About the Purchase and Sale Agreement
Royal Gold entered into a purchase and sale agreement with Euromax which
includes:
-
A first installment of $7.5 million upon closing;
-
A second installment of $7.5 million on the first anniversary of
closing; and
-
A construction payment of $160 million, subject to certain conditions.
The closing and first anniversary payments are to be used solely for the
feasibility study and permitting of the project. The closing payment is
conditional on, among other things, an additional C$5.0 million in
funding being raised by Euromax. The first anniversary payment has
several conditions, including satisfactory progress on the definitive
feasibility study and permitting efforts. Royal Gold’s decision to
proceed with the construction payments is conditional on, among other
things, its satisfaction with the definitive feasibility study and
environmental evaluations, demonstrated project viability, and
sufficient project financing and permits to construct and operate the
mine. The construction payments would be paid pro-rata with the balance
of the project funding. Early termination provisions allow the return of
Royal Gold’s $7.5 or $15.0 million investments under certain
circumstances or, alternatively, allow Royal Gold to retain a gold
stream calculated as 2.0% of Ilovitza’s gold production for the life of
the project with no further investment beyond the first $15.0 million.
The initial 25.0% gold stream rate is subject to adjustment upon
delivery of the definitive feasibility study if there is an increase or
decrease in gold reserves or gold recoveries, to ensure that Royal Gold
receives 525,000 ounces of gold from the 43-101 reserves (adjustment is
subject to a minimum initial stream rate of 24.0%). The price paid for
each delivered ounce will be 25% of the spot price.
Royal Gold’s investment will be secured by pledges of Euromax’s equity
interests in the Macedonian ownership structure, intercompany agreements
in the Macedonian ownership structure, and the assets of the project,
some of which will require government approval. Royal Gold has agreed to
subordinate these security interests up to $215 million in senior
project debt, plus any customary mining equipment capital leases for the
project.
CORPORATE PROFILE
Royal Gold is a precious metals royalty and stream company engaged in
the acquisition and management of precious metal royalties, streams, and
similar production based interests. The Company owns interests on 198
properties on six continents, including interests on 37 producing mines
and 23 development stage projects. Royal Gold is publicly traded on the
NASDAQ Global Select Market under the symbol “RGLD,” and on the Toronto
Stock Exchange under the symbol “RGL.” The Company’s website is located
at www.royalgold.com.
For further information, please contact:
Karli Anderson
Vice President Investor Relations
(303) 575-6517
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 the
Company’s stream transaction with Euromax Resources Ltd. Factors that
could cause actual results to differ materially from the projections
include, among others, precious metals and copper prices; actual tax
rates; performance of and production at the property; decisions and
activities of the operators of the property; delays in the operators’
securing or their inability to secure necessary governmental permits;
changes in operators’ project parameters and timelines as plans continue
to be refined; economic and market conditions; unanticipated grade,
geological, metallurgical, processing, regulatory and legal or other
problems the operators of the mining properties may encounter;
completion of feasibility studies; the ability of the various operators
to bring projects into production as expected; 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.