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Highlights
• Royal Gold invests USD1.0 billion for gold deliveries linked to copper output.
• Agreement covers up to 650,000 ounces with tiered delivery thresholds.
• Expected gold deliveries of 35,000–40,000 ounces annually over the next decade.

Royal Gold, Inc. (NASDAQ: RGLD) announced that its wholly owned subsidiary, RGLD Gold AG, has entered into a USD1.0 billion precious metals purchase agreement for gold deliveries tied to copper production from the Kansanshi copper-gold mine in Zambia. Kansanshi, located in the country’s North Western Province, is operated and 80% owned by a subsidiary of First Quantum Minerals Ltd.

Under the agreement, Royal Gold will provide an advance payment of USD1.0 billion in exchange for a gold stream referenced to copper output from the mine. The stream agreement establishes three delivery tiers:

  • 75 ounces of gold per million pounds of recovered copper until 425,000 ounces are delivered.
  • 55 ounces per million pounds from 425,001 to 650,000 ounces.
  • 45 ounces per million pounds thereafter.

Royal Gold will initially pay 20% of the spot gold price for each ounce received. This percentage may increase to 35% based on the achievement of specific operational objectives. Additionally, First Quantum has the option to accelerate certain stream deliveries.

The company expects the transaction to generate immediate revenue and cash flow, with initial deliveries of approximately 12,500 ounces of gold expected in 2025. Over the following 10 years, gold deliveries are projected to average between 35,000 and 40,000 ounces per year. Funding for the USD1.0 billion advance was provided through a combination of existing cash and borrowings from the company’s revolving credit facility, with no new equity issued.

Kansanshi has been a key asset for First Quantum since 2005 and is considered a large-scale, long-life operation with more than 20 years of remaining mine life. Zambia, the 10th largest copper producer globally, has demonstrated government support for mining investment, including the 2024 launch of its “Three Million Tonnes Copper Production Strategy” to stimulate the sector.