Centerra deal with Royal Gold adds two years to Mount Milligan mine life

Mount Milligan mine. Credit: Centerra Gold

Centerra Gold (TSX: CG; NYSE: CGAU) will pay Royal Gold (NASDAQ: RGLD) US$125 million in cash and gold in return for long-term cost support that will allow it to extend the life of its Mount Milligan mine in British Columbia to 2035.

Royal Gold will receive around US$125 million in near-term consideration, comprising US$24.5 million in cash and 50,000 oz. of gold, along with a long-term free cash flow interest in Mount Milligan.

Starting in approximately 2030, Royal Gold will make cost-support payments for metal deliveries that are independent of an existing streaming deal that sees Centerra receive US$435 per oz. of gold and 15% of the spot price of copper.

The payments will kick in if gold prices fall below US$1,600 per oz. and copper below US$3.50 per lb. and are intended to be used for continued exploration drilling and work to upgrade resources to reserves. They also serve as the basis for an immediate reserve increase and extension of the Mount Milligan mine life by two years.

“Mount Milligan is a large and potentially long-life operation, and our support is designed to allow Centerra to extend the mine life and add long-term value for each company’s stakeholders,” said Bill Heissenbuttel, CEO of Royal Gold.

Centerra expects to complete a preliminary economic assessment in the first half of 2025 to evaluate a mine life extension beyond 2035.

Mount Milligan is located 155 km northwest of Prince George in central B.C. It is a conventional truck-shovel open-pit copper and gold mine and concentrator with a 60,000 tonne-per-day capacity copper flotation processing plant. The mine produced 154,391 oz. of gold in 2023.

On Wednesday, Centerra announced preliminary production of gold in the final three months of last year was 129,259 oz., up from 126,221 the quarter before. That took output for last year to 350,317 oz., toward the midpoint of Centerra’s guidance range of 340,000 to 360,000 ounces.

The Canadian gold producer, which also operates the Oksut mine in Turkey, forecast gold production of between 370,000 and 410,000 oz. in 2024, marking an increase of 11% at the midpoint of its guidance.

Copper output is set to come in at between 55 million and 65 million lb., it said.

Shares of Royal Gold rose 0.7% in late morning trading in Toronto, giving it a market capitalization of $7 billion. Centerra shares were up 6%. The company has a market cap of $770 million.


Be the first to comment on "Centerra deal with Royal Gold adds two years to Mount Milligan mine life"

Leave a comment

Your email address will not be published.


By continuing to browse you agree to our use of cookies. To learn more, click more information

Dear user, please be aware that we use cookies to help users navigate our website content and to help us understand how we can improve the user experience. If you have ideas for how we can improve our services, we’d love to hear from you. Click here to email us. By continuing to browse you agree to our use of cookies. Please see our Privacy & Cookie Usage Policy to learn more.