Aura strikes US$31 million royalty deal with Gold Royalty
Aura Minerals Inc. [TSX-ORA] has announced an additional US$31 million in financing and said it is now fully funded for construction of the Borborema gold project in Rio Grande do Norte state, in northeastern Brazil.
Borborema is expected to produce 748,000 ounces of gold over an initial 11.3-year mine life from an open pit gold mine, according to a feasibility study, which sees the potential for additional production. With construction already under way, the company expects commercial production to start in the third quarter of 2025.
Aura shares were unchanged at $10.10 and trade in a 52-week range of $12.14 and $7.31.
Borborema Inc. a unit of Aura Minerals, and indirect owner of Aura’s Borborema project, has struck a deal with Gold Royalty Corp. [NYSE-GROY] to secure US$31 million in financing, composed of a US$21 million net smelter return royalty over the Borborema project, and a US$10 million gold-linked loan.
Together with the US$100 million term loan previously entered into with Banco Santander Brazil, and US$14 million raised through gold collars with several financial institutions, Aura, through its subsidiaries, has now secured over US$145 million to apply towards construction of the Borborema project, which has an estimated total construction capital expenditure of US$188 million.
Under the royalty agreement, Aura will receive US$21 million in cash. From Gold Royalty Corp., which is acquiring a 2.0% net smelter return royalty on the first 725,000 ounces produced from Borborema. The NSR will drop to 0.5% after 725,000 ounces of payable gold is produced. The remaining 0.5% of the NSR royalty will be subject to a US$2.5 million buyback at Borborema’s option that is exercisable after the earlier to occur of:
- 25 million ounces of gold being produced at the Borborma project.
- Jan 1, 2050.
Borborema will make quarterly preproduction payments to Gold Royalty of 250 ounces of gold (1,000 per year). The payments will cease either on the date of the commencement of commercial production, or the 10th anniversary of the closing of the transaction, whichever occurs first.
The agreement also contains a provision for ESG (environmental, social and governance) co-investment payments. They require Gold Royalty to make continuing payments to Borborema of US$30 per gold equivalent ounce delivered or paid to Gold Royalty. These payments are earmarked for ESG-related investments by Borborema, up to a maximum of US$300,000.
Aura is a mid-tier gold and copper production company with a focus on development and operation of gold and base metal projects in the Americas. Its producing assets include the San Andres gold mine in Honduras, the EPP gold mine complex in Brazil, the Aranzazu copper-gold-silver mine in Mexico, and the Gold Road (pre-operational) gold mine in Arizona.
The company has two additional gold projects in Brazil (Almas and Matupa) and one gold project in Colombia (Tolda Fria).