Gold Royalty will acquire an NSR royalty of 2% on the Brazilian gold project from a subsidiary of Aura Minerals for cash consideration of $21m
Gold Royalty to offer a project funding of $31m to develop Aura Minerals' Borborema gold project. (Credit: Herbert Aust from Pixabay)
Gold-focused royalty company Gold Royalty has agreed to offer $31m in project funding to develop Aura Minerals’ Borborema gold project in Rio Grande do Norte State, northeast Brazil.
In this regard, Gold Royalty will acquire a net smelter return (NSR) royalty of 2% on the Brazilian gold project from a subsidiary of Aura Minerals for cash consideration of $21m.
The royalty company will also deliver further project financing to Aura Minerals’ subsidiary as lender under a royalty-convertible gold-linked loan amounting to $10m.
Besides, Gold Royalty has kept the option to convert the gold-linked loan into an additional 0.5% NSR upon maturity to benefit from potential exploration success and expansion at the Borborema gold project.
For the funding of the Brazilian project, Gold Royalty has received commitments from Queen’s Road Capital Investment and Taurus Mining Royalty Fund, a fund managed by Taurus Funds Management.
The commitment will help complete a private placement of $40m aggregate principal amount of unsecured convertible debentures.
Gold Royalty chairman and CEO David Garofalo said: “We are thrilled to secure a royalty over the Borborema gold project, and partner with Aura, a diversified mine operator in the Americas, in creating a mutually beneficial structure.
“The Aura team has a proven track-record of building mines in Brazil and we look forward to their team advancing the construction of the Borborema Project and bringing the asset into production. We are also pleased to have the support of QRC and Taurus as part of this transaction.
“Both of these institutional investors are leading financiers to the global resources sector, and their strategic investment further validates the value-accretive transactions we are executing at Gold Royalty as part of our long-stated growth strategy.”
Located in the Seridó region, the Borborema gold project consists of three mining concessions spread over a total area of 29km2.
Aura Minerals completed a feasibility study on the gold project in August this year.
According to the feasibility study, the Borborema open-pit gold mine will produce 748,000 ounces of gold over an initial 11.3-year mine life, with potential additional production upside.
Construction on the Borborema gold project is anticipated to be completed in early 2025, with commercial production scheduled to start in Q3 2025.