CANADIAN mining company First Quantum Minerals has struck a $1bn gold streaming arrangement with Royal Gold’s subsidiary, providing immediate capital in exchange for future precious metal deliveries, said Reuters on Tuesday.
The financing structure sees Royal Gold AG advance the full sum upfront to First Quantum, securing rights to gold production linked to copper operations at the Kansanshi facility in Zambia. Completion is scheduled for Wednesday.
Gold streaming represents a popular funding method where investors provide miners with immediate cash flow whilst securing future metal purchases, typically at fixed rates below market prices, said Reuters. This approach allows mining companies to access capital without traditional debt financing whilst giving streaming firms exposure to production from established operations, the newswire added.
Under the arrangement’s terms, First Quantum will initially retain 20% of prevailing gold prices for each ounce delivered, with potential increases to 35% should the company achieve specific financial metrics related to credit standing or debt ratios.
Royal Gold highlighted the transaction’s appeal, noting it provides instant revenue from a substantial, long-term asset. The streaming company anticipates receiving approximately 12,500 ounces during the current year, followed by annual deliveries averaging between 35,000 and 40,000 oz over the subsequent decade.
The Kansanshi mine’s dual production of copper and gold makes it particularly attractive for streaming arrangements, as precious metal output provides additional revenue streams beyond the primary base metal operations. Such deals have become increasingly common as mining companies seek alternative financing whilst commodity investors pursue exposure to production without operational risks.
The transaction reflects broader industry trends towards innovative financing structures as miners balance growth capital requirements with debt management objectives, said Reuters.
