Gold Royalty Corp. Acquires Copper Stream on Vares Silver Project

May 28, 2024

Gold Royalty has entered into a binding purchase and sale agreement with OMF Fund III (Cr), managed by Orion Mine Finance Management LP, to acquire a copper stream on the Vares Silver Project in Bosnia and Herzegovina. The project is operated by a subsidiary of Adriatic Metals. The transaction, valued at $50 million, includes $45 million payable in cash and $5 million in Gold Royalty shares.

Transaction Highlights:

Increased Cash Flow: The Vares Stream applies to 100% of copper production from the Rupice deposit area, with ongoing payments equal to 30% of the LME spot copper price. First concentrate production occurred in February 2024, with commercial production expected in the fourth quarter of 2024.
Production Guidance: Adriatic Metals forecasts 240-300 kt of ore mined in 2024 with copper grades of 0.5-0.6%, increasing to 750-850 kt in 2025 and 800-900 kt in 2026 at grades of 0.5-0.7% Cu.
Exploration and Expansion: Adriatic’s guidance indicates a mine life of 18 years, with ongoing studies to increase annual production rates to 1 million tonnes of ore by 2026. The project remains open for further exploration.
Experienced Team: Adriatic’s operating team has improved productivity and is on track to achieve commercial production in late 2024.

Overview of Vares Silver Project:

Location: The Vares Silver Project covers 41 km² around the town of Vares, approximately 50 minutes from Sarajevo.
Key Assets: The project includes the high-grade polymetallic Rupice deposit, with primary production of silver and zinc, alongside lead, gold, copper, and antimony.
Processing Plant: The Vares Processing Plant, with a nominal capacity of 800,000 tonnes per annum, utilizes three-stage crushing, grinding, flotation, and filtration to produce saleable silver-lead and zinc concentrates. These concentrates are transported to the Port of Ploče for shipment to smelters.

Production Guidance:

2024-2026: The guidance includes a ramp-up period in 2024 and life-of-mine averages from 2027-2040, with zinc grades ranging from 4.5-8.1%, silver from 160-348 g/t, lead from 2.9-4.9%, copper from 0.4-0.7%, and gold from 1.2-3.2 g/t.

Reserve and Resource Estimates:

Reserves: The Rupice deposit's probable reserves total 13.8 million tonnes with grades of 187 g/t Ag, 5.2% Zn, 3.3% Pb, 1.4 g/t Au, 0.5% Cu, and 0.2% Sb.
Resources: The indicated resources total 18.3 million tonnes, with inferred resources adding another 2.8 million tonnes.

David Garofalo, Chairman and CEO of Gold Royalty, highlighted the strategic benefits of the acquisition, which adds a high-quality, long-life asset to the company’s portfolio and enhances revenue and cash flow. The Vares Project offers significant exploration and expansion potential, aligning with Gold Royalty's focus on precious metals while benefiting from high copper prices.

This acquisition underscores Gold Royalty’s commitment to building a diversified and robust portfolio of revenue-generating assets in the global mining sector.