Royal Gold, Inc. (NASDAQ:RGLD) (TSX:RGL)
today announced it has agreed to acquire, through its wholly-owned subsidiary RGLD Gold AG, an additional 12.25% of the payable gold produced from the Mt. Milligan copper-gold project, located in British Columbia, from a subsidiary of Thompson Creek Metals Company, Inc. (“Thompson Creek”) (NYSE:TC; TSX:TCM). Consideration for the new transaction is $200 million and cash payments equal to the lesser of $435 or the prevailing market price for each payable ounce of gold delivered to Royal Gold (the “Delivery Payments”). The structure of the Delivery Payments is unchanged from the Mt. Milligan transaction announced in December 2011. The new transaction is subject to the satisfaction of various conditions, including, among other things, Thompson Creek receiving final approval for an amendment to its senior secured revolving credit agreement satisfactory to Royal Gold and approval of the new transaction by the lenders thereunder within 30 days. Thompson Creek is currently in negotiations with its lenders to obtain these approvals.
Combined with the prior transactions completed in July 2010 and December 2011, Royal Gold will be entitled to 52.25% of the payable gold produced from Mt. Milligan for total consideration of $781.5 million and the Delivery Payments. To date, Royal Gold has paid approximately $454.6 million to Thompson Creek and will pay $75.0 million following closing of the new transaction and the remaining $251.9 million in five scheduled quarterly payments commencing on September 1, 2012 and ending on September 1, 2013.
Tony Jensen, President and Chief Executive Officer, commented, “We welcome the opportunity to further support Thompson Creek in the development of Mt. Milligan. Our view of the project has not changed and we continue to believe Mt. Milligan is an attractive investment for Royal Gold, with over two decades of mine life, located in the excellent host country of Canada.”