Royal Gold, through its subsidiary RGLD Gold, has finalised a $1bn agreement to acquire a gold stream linked to copper production from the Kansanshi copper-gold mine in Zambia.
Operated primarily by First Quantum Minerals, Royal Gold is set to receive an initial 12,500 ounces of gold in 2025, with an annual average of 35,000-40,000 ounces expected over the subsequent decade.
The gold deliveries are indexed to the mine’s copper output, offering 75 ounces per million pounds of recovered copper until 425,000 ounces are delivered, decreasing thereafter.
Royal Gold will initially pay 20% of the spot gold price per ounce, potentially increasing to 35% under specific conditions.
The company intends to carry out the acquisition using cash reserves and a revolving credit facility, foregoing new share issuance.
Royal Gold president and CEO Bill Heissenbuttel said: “I am pleased to announce this transaction, which provides Royal Gold with exposure to a world-class mine located in a mining-friendly jurisdiction and operated by a first-tier counterparty.
“This large and long-life stream will add another significant gold interest to the enlarged portfolio we are creating with the recently announced transactions for Sandstorm Gold and Horizon Copper and enhance our position as a premier growth company in the streaming and royalty sector.
“The immediate cash flow from this acquisition paired with the cash flow of the combined Royal Gold, Sandstorm and Horizon portfolios will allow us to rapidly pay down the debt incurred to complete this acquisition.”
First Quantum Minerals, with extensive operations in Zambia, also oversees the Sentinel and Enterprise mines.
Kansanshi mine covers a licensed area of around 249km2, with significant reserves supporting a projected mine life exceeding 20 years.
Royal Gold’s agreement includes provisions for First Quantum to accelerate gold deliveries by meeting certain financial and operational benchmarks.
The agreement’s legal protections encompass guarantees within the Kansanshi ownership chain against additional encumbrances and default events.
The Kansanshi mine, operational since 2005, employs open-pit mining techniques and various ore processing circuits for efficient copper and gold recovery.
The mine’s proven reserves include over 1 billion tonnes, with copper and gold concentrations detailed in the technical reports, as of late 2024.
