Royal Gold, Inc. (NASDAQ: RGLD) has acquired a substantial share of a gross net smelter royalty on revenue generated at an expansive mining project in Nevada run by Barrick Gold Corporation (NYSE: GOLD) (TSX: ABX) and Newmont Corporation (NYSE: NEM) (TSX: NGT).
Royal Gold announced the news on Thursday and the company will be paying approximately US$204 million to select holders who are successors in interest to Idaho Mining Corporation for the Idaho Royalty on the Cortez Complex, which will be valid for the duration of the mine/operation’s life.
The company previously spent US$525 million in cash on another royalty at the Cortez Complex in August last year and has been involved with the site since 1986. Royal Gold has generated over US$400 million in royalty revenue there since it received its first royalty payment in 1995.
“With this transaction, we have further consolidated our royalty position at the world-class Cortez Complex,” said Bill Heissenbuttel, President and CEO of Royal Gold.
“Cortez is a cornerstone asset for Royal Gold and this acquisition increases and expands our interest at one of the world’s most prolific gold mines, which is operated by two of the leading companies in the gold business.”
Royal Gold says acquiring the Idaho Royalty (spanning 630 miles) will provide shareholders with improved dividend payments. The Cortez Complex has produced approximately 27 million ounces of gold since its inception.
Royal Gold is based in Denver, Colorado and also has offices in Toronto, Vancouver and Switzerland. The company says it owns interests in 186 properties throughout five continents. Royal Gold originally started as Royal Resources Corporation, an oil and gas company, and in the early 1980s switched its interest over to gold following a sharp drop in oil prices in 1986.
Royal Gold stock dropped by 1.91 per cent today to US$122.41 on the Nasdaq exchange.