AMN - BOTSWANA: Deal for silver from Khoemacau

US-based Royal Gold has entered into a life of mine purchase and sale agreement valued at up to US$265 million with the Botswana Khoemacau Copper Mining company, a fully-owned subsidiary of Cupric Canyon Capital LP. This involves the sale of silver produced from the Khoemacau Copper Project in Botswana.

The deal will see Royal Gold pay US$212 million in advance for 80% of the silver produced at the project with an option to pay $53 million for the remaining 20%.

The company expects average annual silver deliveries of 1.5 million ounces at a stream rate of 80%, or 1.9 million ounces based on a stream rate of 100%, with initial deliveries expected to start in the first half of 2021.

The deal is expected to last until certain delivery thresholds are met.

President and CEO Tony Jensen said: “We are pleased to announce the acquisition of this high-quality and long-lived silver stream on the Khoemacau Copper Project in Botswana, which has an expected initial mine life of 21 years and excellent exploration potential.

“The Khoemacau stream will fit nicely into our production profile and will add another component of growth.

"Coupling our stream with the Red Kite Mine Finance debt facility, Khoemacau is now fully funded and development activities can accelerate, with initial production and stream deliveries expected in the first half of 2021.

"We have been working closely with the Cupric team and GNRI on this opportunity for almost a year and are delighted to be developing those relationships into long-term partnerships.”

The stream rate will drop by 50% upon the delivery to Royal Gold of 32 million ounces for the Silver Stream, and 40 million ounces in the case that the option stream is fully exercised. Royal Gold will make ongoing cash payments per ounce of silver delivered equal to 20% of the spot silver price at the time of delivery.

Depending on the achievement by Cupric of mill expansion throughput levels above 13,000 tonnes per day, which is 30% above current mill design capacity, Royal Gold will pay higher ongoing cash payments for ounces delivered in excess of specific annual thresholds.

Khoemacau is a copper-silver project in a sparsely populated region of northwest Botswana in the Kalahari Desert. It is in the Kalahari copper belt, although the main mineralised zone demonstrates a high-grade copper tenor that is atypical of what has been discovered in the belt thus far.

www.royalgold.com