Royal Gold, Inc.
) announced that its fully-owned subsidiary, RGLD Gold AG, has
entered into a gold stream agreement with
Rubicon Minerals Corporation
) which will fund a major part of the construction of the Phoenix
Gold mine in Ontario, Canada.
Per the agreement, Royal Gold will make an advance payment of
$75 million to Rubicon in five installments over the next 12
months for the construction of Phoenix Gold Project. In exchange,
Royal Gold will receive 6.3% of any gold produced from Phoenix
Gold mine until the delivery of 135,000 ounces and 3.15%
afterwards. The purchase price per ounce for Royal Gold will be
25% of the spot price at time of delivery.
The Phoenix Gold project is expected to start production in
13-14 months after the completion of the remaining financing. The
Phoenix Gold project is located in Red lake mining district in
Canada. The Red lake district is one of the most preeminent gold
producing districts and has twenty eight mines producing over 26
million ounces of gold since 1930's.
As per a preliminary economic assessment issued in 2013,
Rubicon forecasts a total mine production of 2.19 million ounces,
with average estimated annual production of 165,300 ounces based
on a 13 year mine life in the Phoenix Gold mine. Rubicon expects
about $100 million of additional financing to complete the
construction process, inclusive of corporate expenses, along with
Royal Gold's deposit.
Royal Gold, together with its subsidiaries, is engaged in
acquiring and managing precious metals, royalties and similar
interests. By partnering with capable operators, the company
focuses on building and managing a diversified, cash-flowing
portfolio of precious metal assets.
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Royal Gold currently carries a Zacks Rank #3 (Hold).
Other companies in the mining industry with favorable Zacks Rank
Lake Shore Gold Corp.
) with both holding a Zacks Rank #2 (Buy).