Royal Gold and Centerra Gold Announce Strategic Deal to Extend Life of Mount Milligan Mine
In a significant development for the mining industry, Royal Gold, through its subsidiary RGLD Gold AG, has finalized an agreement with Centerra Gold and its Thompson Creek Metals Company Inc. unit, aimed at extending the operational life of the Mount Milligan mine until 2035. This collaboration not only highlights the commitment of both companies to sustainable mining practices but also underscores their strategic foresight in ensuring the long-term viability of this critical asset.
Under the terms of the deal, Royal Gold is set to receive approximately $125 million in near-term consideration from Centerra Gold. This package includes $24.5 million in cash and an allocation of 50,000 ounces of gold. Additionally, Royal Gold will secure a long-term free cash flow interest in the Mount Milligan Mine, a key component of this partnership that promises mutual benefits for years to come.
A pivotal aspect of the agreement is Royal Gold's commitment to provide cost support payments for metal deliveries starting around 2030. This arrangement is not just a financial transaction; it's a strategic investment in the future of Mount Milligan, facilitating an immediate reserve increase and guaranteeing the extension of the mine's operational life to 2035. Bill Heissenbuttel, CEO of Royal Gold, emphasized the importance of this support, noting it as a means to unlock long-term value for stakeholders of both companies.
Centerra Gold, on its part, is planning a preliminary economic assessment in the first half of 2025. This assessment aims to explore the feasibility of further extending the mine's life beyond 2035, indicating a robust vision for Mount Milligan's future.
Located in central British Columbia, approximately 155 kilometres northwest of Prince George, Mount Milligan stands as a testament to modern mining operations. The site is a conventional truck-shovel open-pit mine with a significant copper and gold production capacity, evidenced by its 2023 gold output of 154,391 ounces.
Centerra's recent production update also reflects positively on the company's operational efficiency and market position. With a preliminary report of 129,259 ounces of gold produced in the last quarter of the previous year, the company achieved a total annual production of 350,317 ounces. Looking ahead, Centerra has set an ambitious gold production forecast for 2024, ranging between 370,000 and 410,000 troy ounces, alongside a copper output target of 55 to 65 million pounds.
The market has responded favorably to this strategic partnership, with shares of Royal Gold experiencing a modest uptick of 0.7%, and Centerra shares surging by 6%. These movements underscore investor confidence in the deal's potential to enhance shareholder value and contribute to the companies' growth trajectories.
