Gold Royalty will have the option to acquire additional royalties on five contiguous concessions to the south of the royalty for a consideration of up to $0.5m
Endeavour Silver to divest 1% NSR over Capstone's Cozamin mine in Mexico to Gold Royalty. (Credit: Herbert Aust from Pixabay)
Gold Royalty has signed an agreement to acquire an existing 1% net smelter return (NSR) over portions of Capstone Copper’s Cozamin copper-silver mine in Mexico from Endeavour Silver.
The precious metals-focused royalty and streaming company will pay a total consideration of $7.5m in cash for the royalty applied to two concessions, namely Calicanto and Vicochea on the copper-silver mine.
According to the terms of the agreement, Gold Royalty will have the option to acquire additional royalties on five contiguous concessions to the south of the royalty for a consideration of up to $0.5m.
The royalty has created a revenue of more than $1m over the last year and will add cash flow to the company, said Gold Royalty.
Gold Royalty chairman and CEO David Garofalo said: “The acquisition of the Cozamin royalty brings immediate cash flow, complementing our peer-leading revenue growth rate from our portfolio of high-quality, long-life North American assets.
”Capstone is an experienced and proven operator and we are excited to see them continue to deliver strong operating and exploration results at Cozamin for years to come.”
Located 3.6km north-northwest of Zacatecas City, the Cozamin mine is operated by Capstone Copper since late 2006. The underground mine started its commercial production at a rate of 1,000 tonnes per day (tpd).
Capstone Copper aims to have an average annual production of 20,000 tonnes of copper and 1.3 million ounces of silver at the Cozamin copper-silver mine from 2023 to 2030.
Endeavour Silver secured the royalty through a concession division agreement signed in 2017 on seven fully owned concessions.
Gold Royalty expects to fund the acquisition through its existing cash and cash equivalents.
Subject to customary conditions, the transaction is expected to be completed by 31 August 2023.