Kerr Mines and Star Royalties agree £13.6m streaming deal
Kerr Mines, the American gold producer, and Star Royalties, the Canadian metals-focused royalty and streaming company, have jointly announced the execution of a definitive £13.6 million gold purchase and sale agreement (streaming agreement) to finance the restart of underground operations and gold production at the Copperstone Gold Mine in Arizona.
The first instalment of £4.5 million will be advanced on the initial closing, which is expected to take place on or before November 20. The remaining two tranches will be advanced at the request of Kerr as it incurs expenditures for the restart of the Copperstone Gold Mine Project, with £4.5 million on or before February 28, 2021, and a further £4.5 million on or before April 30 next year.
“This Streaming Agreement provides the required project financing to restart gold production at our Copperstone Gold Mine, which is targeted for Q4-2021. We are extremely pleased to be undertaking this financing transaction with Star Royalties, which has a seasoned team of mining professionals that will prove to be a valued partner as we advance Copperstone to production," says Giulio T Bonifacio, chief executive officer of Kerr.
"With the extensive project evaluation undertaken by Star Royalties, we believe this streaming transaction further validates the value we have identified at Copperstone by way of our recent optimization efforts. We also note that we will be progressing the restart of operations under a whole ore leach processing scenario which will result in increased gold recoveries and production versus a floatation processing scenario.”
As part of the key transaction terms for the agreement, Star Royalties will purchase from Kerr an amount of refined gold equal to 9.9 percent of gold produced at Copperstone until a culminative 21,000 ounces of refined gold are delivered, then 3.3 percent of gold produced until a culminative 27,200 ounces are delivered, and 1.2 percent of gold produced thereafter for the remaining life of the mine, the statement says.
Furthermore, Star Royalties will provide a cash payment to Kerr for each ounce of gold delivered equal to 25 percent of the average London Bullion Market Association gold spot price for five consecutive trading days prior to delivery.
“We are proud to announce our partnership transaction with Kerr to advance the restart of Copperstone. We have structured a mutually beneficial streaming arrangement which should translate to a win-win outcome for both parties’ shareholders.
"This gold stream will provide for significant, near-term cash flow from a highly prospective deposit in a world-class jurisdiction. We look forward to the successful restart at Copperstone and to its exploration upside under Kerr’s experienced and knowledgeable management team,” says Alex Pernin, chief executive officer of Star Royalties.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.