\nRoyal Gold has agreed to make an advance payment of $1.0 billion (\u201cAdvance\u201d) in return for a gold stream referenced to copper production, with deliveries of 75 ounces of gold per million pounds of recovered copper produced until the delivery of 425,000 ounces; 55 ounces of gold per million pounds of recovered copper produced between the delivery of 425,001 ounces and 650,000 ounces; and 45 ounces of gold per million pounds of recovered copper produced thereafter. Royal Gold will initially pay 20% of the spot gold price for each ounce delivered. Additionally, and depending on the achievement of certain objectives as described below, Royal Gold will increase the percentage of spot gold price paid for each ounce delivered to 35% and has also granted options to First Quantum to accelerate stream deliveries.<\/p>\n
\n\u201cI 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<\/i>,\u201d commented Bill Heissenbuttel, President and CEO of Royal Gold. \u201cThis 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.<\/i>\u201d<\/p>\n
Acquisition Highlights<\/b><\/p>\n 1<\/sup> Zambia 2024 Mining Report, Third Edition, PwC.<\/p>\n Overview of Transaction Terms<\/b><\/p>\n \nStream Agreement<\/p>\n \nDeliveries under the Stream Agreement will be indexed to the production of recovered copper to reduce exposure to metallurgy and processing variability, and the stream rate will vary based on gold delivery thresholds:<\/p>\n \nRecovered copper produced is in both concentrate and cathode form and the stream economics are not dependent on downstream smelter recoveries or gold production at the site.<\/p>\n \nFirst Quantum will have two options to accelerate stream deliveries and reduce the outstanding Advance:<\/p>\n \nRoyal Gold will pay 20% of the spot gold price for each ounce delivered. Should either one of the conditions in Acceleration Option 1 be met, Royal Gold will pay 35% of the spot gold price for each ounce delivered.<\/p>\n \nArea of Interest<\/p>\n \nThe Area of Interest covered by the Stream Agreement is defined as the existing mineral license for the mine, which covers an area of approximately 249 square kilometers.<\/p>\n \nGuarantees, Protections and Additional Rights<\/p>\n \nRG AG\u2019s counterparty is a Canadian-based special purpose vehicle and the interests under the Stream Agreement are guaranteed on an unsecured basis by all entities within the Kansanshi ownership chain, from the project company (Kansanshi Mining PLC) through to the parent, First Quantum Minerals Ltd. Royal Gold also has customary additional protections for a stream agreement including limitations on certain additional encumbrances, restrictions on transfer of mine ownership, sharing for insurance and expropriation proceeds, and typical remedies for events of default.<\/p>\n \nRG AG will also maintain certain rights to participate in any future stream, royalty or similar production-based financing on the Kansanshi land package.<\/p>\n \nFunding and Liquidity Update<\/p>\n \nRoyal Gold is funding the Advance using cash on hand and a draw of $825 million on its $1 billion revolving credit facility.<\/p>\n \nSeparately, Royal Gold has notified the members of the credit syndication group of its exercise of the $400 million accordion feature and has received commitments from them for the full $400 million of increased capacity. We anticipate closing on the accordion feature on August 5, 2025, following which $1.4 billion will be available under the revolving credit facility.<\/p>\n \nOur available cash, the $575 million undrawn capacity on the revolving credit facility, and anticipated cash flow from our portfolio are expected to be sufficient to fund all remaining outstanding financial commitments, which includes repayment of outstanding debt assumed with the acquisition of Sandstorm Gold Ltd. and the cash acquisition of Horizon Copper Corp., both of which are expected to close in the fourth quarter.<\/p>\n Background on the Kansanshi Mine<\/b><\/p>\n \nThe Kansanshi mine is owned and operated by Kansanshi Mining PLC, which is 80% owned indirectly by First Quantum and 20% by ZCCM Investments Holdings PLC, a listed company that is majority-owned by the Government of the Republic of Zambia. First Quantum acquired its interest in the project in 2001, began construction soon after, and achieved commercial production in 2005.<\/p>\n \nKansanshi is a sediment-hosted, stratabound deposit with subvertical veins. Economic copper and gold mineralization occurs in three ore-types: primary sulfide, mixed supergene and oxide.<\/p>\n \nMining is carried out in three open pits, Main, Northwest and Southeast Dome, using conventional open pit methods employing hydraulic and electric equipment and a fleet of haul trucks with electric trolley assist on the main ramps. Ore treatment is flexible to allow for variation in ore type either through an oxide leach circuit, a transitional ore \u201cmixed float\u201d circuit, or a sulfide flotation circuit. Sulfide ore is treated via crushing, milling and flotation to produce copper in concentrate. Flotation tails from the mixed and oxide circuits advance to a leaching and SX\/EW process to produce cathode copper. Gold is recovered from all ore types by gravity concentrators. Gemini tables treat the gold gravity concentrates and produce a high-grade concentrate for direct smelting to gold bullion.<\/p>\n \nThe construction of a new 25 million tonne per year sulfide processing plant (S3) and related upgrades (S3 Expansion) began in 2022 and are targeted for completion in the second half of 2025. Kansanshi is an integrated operation and an onsite smelter was commissioned in 2015 to treat copper concentrate from Kansanshi and Sentinel.<\/p>\n \nAs of December 31, 2024, Proven and Probable Reserves consisted of 1.070 billion tonnes grading 0.52% copper and 0.10 grams per tonne gold, calculated using a copper price of $3.50 per pound and a gold price of $1,805 per ounce. As of the same date, Measured and Indicated Resources (inclusive of Reserves) were 1.297 billion tonnes grading 0.57% copper and 0.07 grams per tonne gold, calculated at a 0.2% copper cut-off grade.<\/p>\n \nFirst Quantum expects a mine life of more than 20 years, and the All-In Sustaining Cost (\u201cAISC\u201d) is expected to be in the lower half of the global copper cost curve during the next 10 years of mine life.<\/p>\n\n
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