Triple Flag buys South Africa precious metals stream
Triple Flag Precious Metals Corp. [TFPM-TSX, TFPM-NYSE] said it has signed definitive agreements for the acquisition of a previously announced A$10 million gross revenue return and US$80 million gold and silver stream on the Prieska Copper-Zinc mine in South Africa with Orion Minerals Ltd.
Prieska is a brownfield restart in a historically prolific copper district in Northern Cape, South Africa. It was previously operated by Anglovaal Mining between 1971 and 1991, producing approximately 430,000 tonnes of copper and 1.0 million tonnes of zinc.
The project involves re-opening, dewatering and re-establishing mining operations in the existing underground mine.
Orion’s 2020 study anticipates an 11.5-year life of mine, producing 226,000 tonnes of copper and 680,000 tonnes of zinc in concentrate over the mine’s lifespan. At the fixed ratios of the stream agreement, this would entail life-of mine payable gold of 81,200 ounces and 4.9 million ounces of payable silver, of which 84% is payable under the stream.
Closing of the gross revenue return is subject to obtaining exchange control approvals from the South African Reserve Bank and drawdown of the Industrial Development Corp. of South Africa (IDC) convertible loan and well be drawn down pro rata with the IDC convertible loan.
Closing also conditional on obtaining exchange control approvals from the South African Reserve Bank, the mine development being fully funded and Orion finalizing an executable mine plan to Triple Flag’s satisfaction.
The stream provides for Orion to deliver Triple Flag 84% of payable gold and 84% of payable silver until 94,300 ounces of gold and 5.7 million ounces of silver respectively, are delivered. The stream rate for each of gold and silver is then reduced to 50% for the remaining mine life upon reaching the respective thresholds.
Payable gold and silver for the purposes of the stream are determined using a fixed ratio to copper in concentrate until the respective delivery thresholds noted above are met – 0.359 ounces of payable gold per tonne of copper contained in concentrate and 21,736 ounces of payable silver per tonne of copper contained in concentrate.
Triple Flag will make ongoing payments of 10% of the spot gold and silver price for each ounce delivered under the stream
A right of first refusal is granted to Triple Flag over future royalty-like or stream-like financing over the area of interest as well as over the OCP rights in the process of being acquired by New Okiep Mining (Pty.) Ltd. and New Okiep Exploration (Pty) Ltd. Okiep is the core project in a past-producing district that produced over 2.0 million tonnes of copper over 150 years up until 20023 and is located 450 kilometres west of Prieska.
Triple Flag is a pure play, gold-focused, emerging senior streaming and royalty company offering a window primarily to gold and silver in the Americas and Australia. Its portfolio includes 80 assets, including nine streams and 71 royalties.
Triple Flag shares were virtually unchanged on Wednesday, easing 1.4% or 24 cents to $17.39. The shares are currently trading in a 52-week range of $20.83 and $12.50.