Mining Corporation First Quantum secures a US$1 billion financing deal in the form of gold stream with Royal Gold.
First Quantum Minerals (TSX: FM, OTC Pink: FQVLF) has secured a significant financial boost with a gold streaming agreement worth $1.0 billion, announced by CEO Tristan Pascall in a press release. The deal, with RGLD Gold AG, a wholly-owned subsidiary of Royal Gold (NASDAQ: RGLD), will provide First Quantum with immediate liquidity and strengthen its balance sheet.
The streaming agreement gives First Quantum an immediate $1.0 billion cash infusion, non-debt capital, in exchange for a portion of future gold by-product from its Kansanshi mine in Zambia. This cash inflow will help reduce leverage, cover capital and working-capital needs, and fund the S3 expansion and other requirements, without issuing debt or diluting shareholders.
The deal also includes a contractual mechanism whereby First Quantum can earn a higher receive-price if it achieves credit upgrades or reduces net leverage to specified levels. This could increase the gold payment from 20% to 35% of the spot price under certain conditions.
The agreement is tied to First Quantum's Zambian operations, covering future gold deliveries linked to copper output at its Kansanshi mine. Gold deliveries to Royal Gold are referenced to recovered copper, with the stream scaling with Kansanshi’s copper production rather than a fixed annual gold tonnage.
Royal Gold expects roughly 12,500 oz from the stream in 2025 and projects average annual deliveries of about 35,000–40,000 oz over the next decade. This implies a material but partial share of Kansanshi’s by-product gold output will be delivered under the stream each year.
It's important to note that the deal preserves First Quantum’s full exposure to Kansanshi copper production. The company retains incentives to maximize copper output while monetizing gold by-product. Approximately 84 percent of First Quantum's total gold output will still be exposed to spot market pricing.
The transaction is expected to materially lower First Quantum's net debt-to-EBITDA ratio. The long-term, unsecured capital provided does not increase First Quantum's debt load. Proceeds from the agreement will be used for capital expenditures and repayment of existing bank loans.
This move comes as Royal Gold recently announced a pair of major acquisitions: a US$3.5 billion all-share deal to acquire Sandstorm Gold and a separate US$196 million cash deal for Horizon Copper. The acquisitions would create a streaming and royalty giant with 393 assets across six continents, including 80 that are currently cash-flowing.
First Quantum's Preservation and Safe Management program, which enables the company to carry out environmental and safety measures funded through the export of 121,000 dry metric tons of copper concentrate currently stored on site, is not affected by this gold streaming agreement.
The CEO of First Quantum, Tristan Pascall, announced the transaction in a press release. Shares of First Quantum were up slightly in Tuesday trading following the announcement of the gold streaming deal.
The gold streaming agreement between First Quantum Minerals and RGLD Gold AG, a subsidiary of Royal Gold, will inject $1.0 billion into First Quantum's business, providing immediate liquidity and strengthening its financial position, while also allowing the company to invest in capital expenditures and repay existing loans. This move in gold investing is a strategic one for First Quantum, as it seeks to leverage its copper production to both monetize gold by-product and maintain full control over its copper operations.
