Business
Royal Gold Acquires Penasquito Royalty and Rights to Additional Royalties From Minera Kennecott
Royal Gold Acquires Penasquito Royalty and Rights to Additional Royalties From Minera Kennecott.
About this update from Red Lake Gold Inc
[{"type":"text","content":"\n\n\n\nDENVER, Dec. 29 /CNW/ -- ROYAL GOLD, INC. (Nasdaq: RGLD; Toronto: RGL)\ntoday announced an agreement with Minera Kennecott S.A. De C.V. to acquire its\n2.0% net smelter return (\"NSR\") royalty on the Penasquito project in\nZacatecas, Mexico, for $100 million, consisting of $80 million in cash and\n577,434 shares of Royal Gold common stock. The Penasquito project, composed\nof two main deposits called Penasco and Chile Colorado, is under development\nby Goldcorp Inc. (\"Goldcorp\"). The Penasquito project hosts one of the\nworld's largest silver, gold and zinc reserves, while also containing large\nlead reserves. The transaction is subject to customary due diligence and is\nexpected to close in early 2007. Royal Gold also obtained the right to\nacquire additional NSR royalties ranging from 1.0% to 2.0% on a number of\nproperties in the region. The right to these additional royalties expires on\nMay 1, 2007. Royal Gold is being advised by HSBC Securities (USA) Inc.\n\n\n\"We are very pleased to obtain this substantial royalty on a world class,\nlong-life project and become associated with yet another senior mining\ncompany. This acquisition further diversifies our royalty portfolio, augments\nour future revenue stream, and positions the Company to sustain high quality\nroyalty revenue for many years into the future,\" commented Tony Jensen, Royal\nGold's President and Chief Executive Officer.\n\n\nAccording to the feasibility study dated July 31, 2006 (filed with the\nCanadian Securities Administrators by Glamis Gold and available at\nwww.sedar.com), Penasquito proven and probable reserves contain about 10.0\nmillion ounces of gold, 575 million ounces of silver, 8.0 billion pounds of\nzinc and 3.7 billion pounds of lead. The project also contains significant\nadditional mineralization and the operator is currently conducting extensive\nexploration on the property.\n\n\nThe Penasquito feasibility study estimates a mine life of approximately\n17 years. Average annual metal production from this open pit mine is forecast\nto be about 388,000 ounces of gold, 23 million ounces of silver, 303 million\npounds of zinc and 156 million pounds of lead. The Penasquito feasibility\nstudy estimates co-product cash costs to average $125 per ounce of gold, $4.91\nper ounce of silver and $0.44 per pound of zinc, with lead revenue taken as ...