First Quantum in US$1.0 billion gold stream deal with Royal Gold
First Quantum Minerals Ltd. (FM-TSX) said Tuesday it has entered into a gold streaming agreement with a unit of Royal Gold Inc. [RGLD-NASDAQ]. Under the terms of the agreement, First Quantum will receive a US$1.0 billion upfront cash payment in exchange for gold deliveries referenced to copper production from the Kansanshi Mine in Zambia.
The deal allows First Quantum to exploit near-record gold prices after the company was forced to raise equity, refinance debt and pre-sell some copper production following the Panamanian government’s order to shut its biggest mine in late 2023.
First Quantum shares advanced on the news, rising 4.8% or $1.06 to $23.24. The shares trade in a 52-week range of $25.96 and $13.81.
“Following a thorough evaluation of several deleveraging options, I am pleased to announce this milestone transaction which preserves exposure to all of the copper production at Kansanshi, while still maintaining exposure to the majority of the company’s gold production,” said First Quantum CEO Tristan Pascall. “Today’s announcement further enhances the company’s financial resilience, while the ramp-up of the S3 Expansion at Kansanshi and a resolution in Panama will continue to strengthen our financial position,” Pascall said.
Under the agreement, First Quantum will receive an upfront cash payment of US$1.0 billion on August 6, 2025. First Quantum will deliver Royal Gold ounces of gold commensurate with copper production at Kansanshi on the following stepdown terms:
- 75,000 ounces of gold per million pounds of recovered copper produced until 425,000 ounces ounces of gold are delivered; and
- 55,000 ounces of gold per million pounds of recovered copper produced until an additional 225,000 ounces of gold are delivered; and
- 45,000 ounces of gold per million pounds of recovered copper produced thereafter.
First Quantum will received ongoing production payments from Royal Gold equivalent to 20% of the prevailing spot gold price for each ounce of gold delivered under the agreement, increasing to 35% of the spot gold price when First Quantum achieves the earlier of:
- BB senior unsecured debt rating from Fitch Ratings Inc. or S&P Global Ratings; or
- Net leverage ratio of less than or equal to 2.25 times over any three consecutive quarters starting with the quarter ended March 31, 2026.
First Quantum retains two options that will allow the company to accelerate deliveries and reduce ongoing gold delivered to Royal Gold by up to 30% (see press release for details).
The Kansanshi copper-gold mine is located in the North Western Province of Zambia. The site is owned and operated by Kansanshi Mining PLC, which is 80% owned by First Quantum.
The company has said production guidance for 2025 remains unchanged at 160,000 to 190,000 tonnes of copper and 100,000 to 110,000 ounces of gold.
Those targets include production associated with the Kansanshi S3 Expansion, with first production expected in the second half of 2025.