Canadian miner First Quantum Minerals (TSX: FM) has secured a $1 billion gold streaming deal with a subsidiary of Royal Gold (NASDAQ: RGLD), the companies announced Tuesday.
The agreement provides First Quantum with the full sum upfront in exchange for future gold produced as a by-product at its Kansanshi copper mine in Zambia. In a gold streaming arrangement, the buyer pays upfront for the right to purchase a portion of future gold production, usually at a predetermined, discounted rate.
First Quantum will deliver gold to Royal Gold based on copper output: 75 ounces per million pounds of recovered copper until 425,000 ounces are reached, then 55 ounces per million until a further 225,000 ounces, and finally 45 ounces per million pounds thereafter.
In addition to the upfront payment, First Quantum will receive 20% of the spot gold price per ounce delivered, which may increase to 35% if specific credit…
