Kirkland Lake Gold sells 2.5% net smelter royalty for $50m
TORONTO (miningweekly.com) – Dual-listed Kirkland Lake Gold on Tuesday announced that it had raised $50-million by selling a 2.5% net smelter return royalty (NSR) on its properties in Ontario’s Southern Abitibi gold belt, including its flagship Macassa gold mine, to US-based royalties and metals streaming firm Franco-Nevada.
Under the terms of the royalty agreement, Kirkland Lake has a three-year option to buy back 1% of the NSR, for $36-million, less the royalty proceeds attributable to the buy-back portion of the NSR that had been paid to Franco-Nevada before the buy-back date.
Franco-Nevada had also acquired a right of first refusal on any future royalty or stream interests from the company's properties, and the option to receive NSR payments in either gold bullion or cash.
"We look forward to having them as a long-term partner as we continue to develop Kirkland Lake into a significant intermediate gold producer with a targeted near-term production rate of 2 200 t/d," Kirkland Lake president and CEO Brian Hinchcliffe said.
"We regard Kirkland Lake as one of the premier gold camps in Ontario. Great camps tend to keep on giving. We believe Kirkland Lake will continue to produce gold for a very long time, making this a long-term asset for Franco-Nevada,” Franco-Nevada president and CEO David Harquail added.
National Bank Financial acted as financial adviser and Stikeman Elliott LLP acted as legal counsel to Kirkland Lake in respect of this transaction.
Kirkland Lake, which trades on the TSX and London's Aim, sold 30 253 oz of gold in the first quarter ended July 31.
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