Royal Gold acquired a sliding-scale gross royalty on an area including the Cortez mine operational area and the Fourmile development project in Nevada (the Cortez Complex). Royal Gold paid $525 million in cash consideration for the royalty to Kennecott Royalty Co., a subsidiary of Rio Tinto. The area within the Cortez Complex is owned or controlled by Nevada Gold Mines (NGM), a joint venture between Barrick Gold and Newmont. The Fourmile development project is owned and operated by Barrick.
“The acquisition of this significant royalty increases our exposure to the world-class Cortez Complex,” said Bill Heissenbuttel, president and CEO of Royal Gold. “Royal Gold’s first royalty interest was created at Cortez, and it will always be considered as the cornerstone asset for the company we are today. Our long history at Cortez provides us insight into one of the world’s most prolific gold mines, and we fully expect the exploration prospectivity to continue to provide production growth for decades to come.”
The royalty is a life of mine sliding scale gross royalty payable at a rate of 0% at a gold price less than $400 per ounce, increasing to 3% at a gold price above $900 per ounce, and is payable on 40% of all production from the Cortez Complex. Based on the information available, the Royalty does not cover the existing deposits within the Robertson property. At current gold prices the Royalty is an effective 1.2% gross royalty on the Cortez Complex and is not subject to any step-downs or caps.
The royalty is payable after cumulative production from the Cortez Complex of 15 million gold equivalent ounces (oz) from January 1, 2008 onwards. According to Barrick public disclosure, cumulative production from January 1, 2008, was approximately 14.8 million oz as of June 30, 2022, and Royal Gold expects the royalty to begin paying in the third or fourth quarter of 2022 with the first revenue recognized during the fourth quarter of 2022 or first quarter of 2023. Royalty payments will be made quarterly within 45 days of the end of each calendar quarter.
In 1969, the original Cortez mine went into production and until 1997 gold ore was sourced from open pits at Cortez, Gold Acres, Horse Canyon and Crescent. In 1991, the Pipeline and South Pipeline deposits were discovered, with development approval received in 1996. In 1998, the Cortez Pediment deposit was discovered, with the Cortez Hills discovery announced in April 2003. The Cortez Hills development was approved by Placer Dome and Kennecott Explorations (Australia) Ltd. (a predecessor to Kennecott), then joint venturers, in September 2005 and confirmed by Barrick in 2006. Barrick obtained an interest in the Cortez property through its acquisition of Placer Dome in 2006. Barrick consolidated its 100% interest in the property following its purchase of the Kennecott interest in 2008. On July 1, 2019, Barrick’s interest in Cortez was contributed to NGM.
