The owners of the Northparkes gold/copper mine, in New South Wales, have inked a $550-million streaming agreement with financier Triple Flag Mining Finance Bermuda, a subsidiary of Triple Flag Precious Metals Corp.
Under the terms of the agreement, Triple Flag Bermuda would make an upfront cash payment of $550-million and ongoing payments equalling 10% of the spot gold price and spot silver price at the time of delivery, for 54% of the gold produced at Northparkes until a cap of 630 000 oz is delivered, and 27% thereafter.
China Molybdenum Co (CMOC) will also deliver 80% of the silver production of Northparkes, until a cap of nine-million ounces is delivered, and 40% thereafter.
CMOC vice chairperson Li Chaochun on Monday said that the transaction provided the company with a long-term financing arrangement at a compelling cost of capital, and helped to diversify CMOC’s capital structure by providing long-term funding at a cost of capital which was competitive to current funding.
“It demonstrates significant value with reference to the gold and silver by-product from Northparkes, an operation that delivers consistent performance and presents outstanding resources potential.”
Triple Flag founder and CEO Shaun Usmar said that the project would be a new cornerstone asset, with robust cash flows over a very long mine life in a top-tier mining jurisdiction.
“This is a globally recognized mine with an excellent track record of safety, operations, reserve replacement and community involvement further bolstering and diversifying our portfolio,” said Usmar.
“Mining at Northparkes commenced in 1993 with a reserve of 68-million tonnes; 25 years later the mine has created significant value for its owners and their local stakeholders, and stands with a reserve of 133-million tonnes, a resource of 483-million tonnes and a long future ahead of it.
“Triple Flag is extremely pleased to be part of that future and will be joining Northparkes in their community investment programme by committing A$50 000 annually that will go towards scholarships and community initiatives,” Usmar added.
“We are extremely pleased to be embarking upon a long-term partnership with CMOC, who have had an impressive track record of rapid growth through world-class international merger and acquisition mining deals, offering the potential for further strategic financing opportunities together in the future.”
Northparkes was operated by major Rio Tinto from 2000 to 2013, with CMOC acquiring Rio’s 80% stake in the project in November 2013. The remaining 20% stake is held by Sumitomo through its subsidiaries SC Mineral Resources and Sumitomo Metal Mining Oceania.
By Esmarie Iannucci