MINING FINANCE / INVESTMENT
Royal Gold's $60m deal important 1st step in Tulsequah Chief Project financing
Royal Gold has agreed to purchase payable gold and silver from the Tulsequah Chief Project in B.C. for a total consideration of US$60 million.
Posted: Friday , 23 Dec 2011
Royal Gold announced Thursday that it has agreed to acquire 12.5% of the payable gold and 22.5% of the payable silver on the Tulsequah Chief Polymetallic Project in British Columbia from Chieftain Metals (TSX: CFB) for a consideration of $60 million.
Chieftain will receive an initial advance payment of US$10 million from Royal Gold following the closing of the deal. Additional advance payments of up to $50 million will be pro-rated during development of the project.
The advance payments and future proceeds will allow Royal Gold to buy 12.5% of the first 48,000 gold ounces delivered at $450/oz, decreasing to 7.5% thereafter at $500/oz, and 22.5% of silver at $5/oz up to 2,775,000 ounces, decreasing to 9.75% thereafter at $7.50/oz.
A Preliminary Economic Assessment announced by Chieftain in June revealed the Tulsequah Project is believed to have total payable gold of 387,000 ounces, total payable silver of 12,546,000 ounces, total payable zinc of 275,900 tonnes, 68,700 tonnes of copper and 29,700 tonnes of lead over a mine life of nine years. Average annual payable production is estimated at 34,000 tonnes of zinc, 8,600 tonnes of copper, 3,600 tonnes of head, 45,000 ounces of gold and 1.5 million ounces of silver.
The 14,200 hectare property is located 100 kilometers south of Altin, B.C. and 65 kilometers northeast of Juneau, Alaska. Chieftain has received almost all major permits, licenses and authorizations for the underground mine. The initial capital requirement is estimated at C$310.1 million.
Victor Wyprysky, Chieftain Metals CEO, said, "This transaction is an important first component in the project financing for the Tulsequah Chief development as we plan for mine construction commencement in 2012."
Royal Gold CEO Tony Jensen said, "We are pleased to add the high grade Tulsequah Chief deposit to our portfolio which is another asset with gold exploration potential in an attractive geographic region. It will also fit well into our development pipeline with an estimated start-up in 2015, following Pascua Lama and Mt. Milligan in the second half of calendar 2013."
The Tulsequah Chief Project was operated by Cominco in the 1950s. The property covers two previously producing underground mines including the Tulsequah Chief and the Big Bull Deposits.