Added 73k ounces of gold and 900k ounces of silver per year, for $1 billion. This is a great deal. Assuming $1600 gold and $30 silver, they are netting ($1200*73,000) $87.6 million for gold and ($24*900,000) $21.6 million for silver, totaling about $110 million per year. These numbers are already great, but when gold and silver move higher, they become even better.
this is not as good a deal as they normally get.. its only like 10% per year. they got half of cde mexican gold production, or about 70k oz per year at 400 dollars per oz.. for 75 million, now they are paying a billion???? I guess if gold goes to 5000 or something they should be good.
First production exepcted in Q4 of 2015 and the ramp is 160k tonnes/day initially with a top out of 240ktonnes/day by year ten of operation (2025). So the royalty stream is backloaded by a lot. After initial amounts are realized, the stream reduces (from 120 oz of AU per mm# of CU to 81 oz of AU per mm# of CU). So the out years are lower than the primary period. The price is initally 400/oz for AU and 6/oz for AG but those are adjusted for inflation (I did not see details of what measure of inflation is used or what the base period is for the adjustment). The stream is secured only by the 20% interest that Inmet owns in the operator MPSA; I have no idea what kind of securioty that really amounts to. I assume management is awake and doing a good job (they have historically), but putting $1B at risk without some of these details being disclosed makes it hard to get a handle on the expected return on the investment (and I am not talking about the risks of the price of gold or possibility of mining disruptions, I am talking about determinign the value of the deal based on its financial terms). I can see why there is a sell-off and hope that when the dust clears the deal is a good one.