Business
Royal Gold Completes Transaction With High River Gold for Its Taparko Project
Royal Gold Completes Transaction With High River Gold for Its Taparko Project.
About this update from Red Lake Gold Inc
[{"type":"text","content":"\n\n\n\n\nDENVER, Dec. 5 /CNW/ -- ROYAL GOLD, INC.\n(Nasdaq: RGLD; Toronto: RGL) today announced that it has finalized an\nagreement with Somita SA (\"Somita\"), a 90%-owned subsidiary of High River Gold\nMines, Ltd. (\"High River\") (Toronto: HRG), to provide a total of $35 million,\nover the next year, for the construction and development of High River's\nTaparko open pit gold project, located in Burkina Faso, West Africa. High\nRiver expects construction of the Taparko-Bouroum Project to be completed in\nthe fourth quarter of calendar 2006. Today's announcement follows last\nmonth's announced (October 18, 2005) signing of the term-sheet agreement and\napproval by both the Board of Directors of Royal Gold and High River.\nIn exchange for the $35 million in financing Royal Gold will receive two\nconcurrent production payments, a tail royalty and a milling royalty. The\nfirst production payment is fixed at 15.0% of produced ounces (equivalent to a\n15.0% gross smelter return royalty). The second production payment (also\nequivalent to a gross smelter return royalty) is set at a 4.3% fixed\npercentage rate of the produced ounces when the average monthly gold price\nfalls between $385 and $430 per ounce, or a sliding-scale at a calculated\npercentage rate, when the average monthly gold price falls outside of this\nrange.\nThe calculated rate, expressed as a percentage, is determined by dividing\nthe average monthly gold price by 100 for gold prices above $430 per ounce,\nnot to exceed 10.0%, or by dividing the average monthly gold price by 90 for\ngold prices below $385 per ounce (i.e., a $450 per ounce gold price results in\na rate of 450/100 = 4.5%). Both production payments continue until the\nearlier of the production of 804,420 ounces or payments totaling $35 million\nunder the fixed 15.0% production payment.\nThe tail royalty, which is a 2.0% gross smelter return (\"GSR\") royalty, is\napplicable to gold production from defined portions of the Taparko-Bouroum\nProject area. The milling royalty is a 0.75% GSR royalty on ore that is mined\noutside of the defined area of the Taparko-Bouroum Project and that is\nprocessed through the Tarparko processing facilities to a maximum of\n1.1 million tons (1.0 million tonnes) per year. Both of these royalties\ncommence once the two concurrent production payments have ceased.\nAs part of...