Mining Company First Quantum Confirms Gold Investment of $1 Billion
First Quantum Minerals Ltd. (FQML) has announced a significant gold streaming agreement with Royal Gold, Inc., offering long-term financial benefits and strengthening the company's financial position.
The agreement, worth $1 billion, provides First Quantum with an immediate influx of non-debt capital, significantly boosting its liquidity and financial flexibility. This cash injection can be used to accelerate capital projects, repay high-cost debt, and fund working capital, thereby improving the company’s overall financial health and reducing leverage.
Under the terms of the agreement, First Quantum will deliver gold to Royal Gold as a by-product from its Kansanshi copper mine. The gold deliveries will be based on a step-down schedule, starting with 75 ounces per million pounds of copper until 425,000 ounces have been delivered, then 55 ounces until another 225,000 ounces, and finally 45 ounces thereafter. Annual gold deliveries are expected to be around 35,000 to 40,000 ounces over the next decade, monetizing gold production without affecting copper output focus.
The deal includes performance incentives where Royal Gold increases the streaming price from 20% to 35% of the spot gold price if First Quantum meets a BB unsecured debt rating or achieves a net debt to EBITDA ratio of ≤2.25x over three consecutive quarters. This arrangement aligns with First Quantum’s deleveraging strategy and supports balance sheet improvement. It also provides options to reduce the gold stream volume and delivery thresholds by up to 30%, contingent on achieving certain credit and operational milestones, which can further optimize cash flows and debt metrics.
Upon closing of the agreement, First Quantum's net debt to EBITDA ratio is expected to reduce markedly. The company will also maintain full exposure to the copper production at Kansanshi.
Fasken LLP and Caledonian Consultants are acting as legal counsel to First Quantum in connection with this agreement. RBC Capital Markets is acting as financial advisor to First Quantum.
Investor relations inquiries can be directed to Bonita To, Director, Investor Relations, at (416) 361-6400 or email: [email protected]. Media inquiries can be directed to James Devas, Manager, Corporate Affairs, at 44 207 291 6630 or email: [email protected].
[1] Financial Measures [2] Agreement Definition [3] Cautionary Statement [4] No Obligation to Update [5] Forward-Looking Statements Qualified [6] Legal Counsel [7] Financial Advisor [8] Media Relations Contact [9] Investor Relations Contact [10] Copper Production [11] The Transaction Provides the Company with the Ability to Increase Gold Exposure Over Time, Depending on Financial Performance [12] The Payment is in Exchange for Gold Deliveries Referenced to Copper Production from the Kansanshi Mine Located in Zambia [13] The Transaction Significantly Bolsters Liquidity for First Quantum [14] SEC Filings
This news release contains forward-looking statements and information, which are subject to various risks and uncertainties. The Company undertakes no obligation to reissue or update forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements and information contained herein are expressly qualified by this cautionary statement.
The agreement with Royal Gold, Inc. will allow First Quantum Minerals Ltd. to increase gold exposure over time, depending on financial performance, as part of their investing strategy in the finance industry. The payment for gold deliveries, based on copper production from the Kansanshi mine, will significantly bolster the company's liquidity, enhancing its ability to capitalize on opportunities in the industry.
