Ero Copper Corp. (TSX: ERO) announced today that it has entered into a metals purchase agreement with Royal Gold Inc.’s (NASDAQ: RGLD) subsidiary RGLD Gold AG. The streaming agreement concerns the NX Gold mine in Mato Grosso, Brazil.
Pursuant to the agreement, Royal Gold will pay US$100.0 million upfront cash for the purchase of 25% of the gold stream from the mine until 93,000 gold ounces. The company then gets 10% of gold produced beyond that mark for the remaining life of the mine.
In connection to this, Royal Gold will make payments equal to 20% of the prevailing market gold price for each gold ounce delivered up to 49,000 gold ounces. The percentage then increases to 40% for any gold ounces delivered afterwards.
The agreement also stipulates Royal Gold’s payables to Ero Copper subject to certain performance conditions. Upon completion of planned metres of drilling at NX Gold mine, Royal Gold will pay Ero Copper US$100 per metre drilled up to US$5.0 million from 2022 to 2024.
The gold producer will also pay Ero Copper US$20 per gold ounce of increase in the measured & indicated mineral resource from the estimate released on the effective date. This stipulation is also capped at US$5.0 million and is available through the end of 2024.
Ero Copper also relayed that the proceeds from the transaction, along with its US$84.0 million cash position, will be utilized to focus on increasing copper production at its MCSA mining complex, expanding NX Gold mine’s gold production and life of mine, and advancing the Boa Esperança project..
The cash consideration for the transaction is expected to be delivered in Q3 2021 while the effective economic date for the streaming agreement is set as May 1, 2021.
Ero Copper last traded at $25.45 on the TSX while Royal Gold last traded at US$114.02 on the Nasdaq.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
