Royal Gold has announced it will acquire royalty interests in the Santa Rita and Serrote mines in Brazil.
The $250m investment will see the US precious metal trader receive precious metal royalties from the two Brazilian mines.
Both mines, currently owned by Appian Capital Advisory, are in the process of being purchased by ACG Acquisitions Company, after which Royal Gold will pay in cash for the royalty purchase to ACG.
Royal Gold will receive an average of 14,000 gold equivalent ounces (GEOs) per year over the five years from 2024 until the end of 2028. Prior to this, it will receive 8,000 GEOs from 1 May 2023 to the end of the year.
The Serrote project will provide Royal Gold with gold royalties while it will glean gold, platinum and palladium from the Santa Rita mine. Royal Gold will also take copper and nickel royalties from both locations.
The company estimates the metal mix to be around 60% gold, 25% platinum and palladium, 10% nickel and 5% copper.
“These assets, management team and jurisdiction will fit well within our existing portfolio,” stated Bill Heissenbuttel, CEO and president of Royal Gold. “This proposed acquisition meets our criteria for investment as the royalties will provide precious metals revenue on producing mines that we believe have excellent long-term potential,” he added.
Through the deal, Royal Gold will gain first refusal on not just future royalty agreements from the two mines but on any future projects purchased by ACG.
In May 2022, Appian filed a compensation claim against South African miner Sibanye after the latter dropped out of a deal to purchase the Serrote and Santa Rita projects. Appian alleged that Sibanye had agreed to purchase the two projects in a $1.2bn deal but broke the law by failing to complete the purchase.
