Royal Gold, Rubicon Sign Gold Stream Deal


Royal Gold, Inc. (RGLD) announced that its fully-owned subsidiary, RGLD Gold AG, has entered into a gold stream agreement with Rubicon Minerals Corporation (RBY) 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.

Royal Gold currently carries a Zacks Rank #3 (Hold).

Other companies in the mining industry with favorable Zacks Rank include Franco-Nevada Corp. (FNV) and Lake Shore Gold Corp. (LSG) with both holding a Zacks Rank #2 (Buy).

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