Renaissance, Oz Minerals agree to production royalty
PERTH (miningweekly.com) – ASX-listed Renaissance Minerals has reached an agreement with fellow-listed Oz Minerals to cancel two outstanding milestone payments valued at A$22.5-million over the Cambodian gold project, in exchange for a production royalty.
Renaissance in 2012 acquired the Cambodian gold projects from Oz Minerals for A$17.8-million. Milestone payments of A$10-million had been payable upon either a 1.25-million-ounce gold resource being defined or the decision to mine, while a further A$12.5-million in cash was payable within six months after the first gold pour.
Renaissance said on Thursday that, given the difficult market conditions and depressed valuations, the two companies had now agreed to extinguish both outstanding payments. Instead, Oz Minerals would be granted a 1.5% gross smelter royalty over future production from the Okvau and O’Chhung project areas.
Total royalty payments would be capped at A$22.5-million.
“The results of a prefeasibility study (PFS) recently released demonstrated the Okvau gold project to be a robust, low operating cost project that will generate significant cash flow of around $45-million a year in the early years, with resilience to lower gold prices,” said Renaissance MD Justin Tremain.
“It is an uncomplicated project with excellent grade of 2.2 g/t gold, resulting in low all-in sustaining costs of $753/oz and, importantly, $630/oz in the initial five years.”
The July PFS estimated that the Okvau project would require capital investment of $120-million, lower than the $133-million estimated in the 2014 scoping study.
Renaissance was targeting production of some 91 500 oz/y over the mine life of eight years, with ore to be produced from a single openpit mine, mined in three stages.
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