Barrick Gold Corporation recently announced that it has signed a gold and silver streaming agreement with RGLD Gold AG, a wholly owned subsidiary of Royal Gold, Inc.
The agreement obligates Royal Gold to pay $610 million in upfront cash as well as continuing cash payments for the gold and silver streaming. The ongoing cash payments will be tied to prevailing spot prices instead of fixed in advance. This will allow the companies to maintain material exposure to higher prices for gold and silver in the future.
According to the agreement, Barrick’s 60 percent equity ownership interest in the Dominican Republic’s Pueblo Viejo mine will be maintained. Barrick will also keep its associated rights with Goldcorp, Inc., and its joint venture agreement. This includes the Pueblo Viejo ownership.
“The innovative structure of this streaming agreement will allow us to crystalize significant value from Pueblo Viejo in a volatile metal price environment, strengthening our balance sheet in the short term while preserving material exposure to higher gold and silver prices in the future,” Jim Gowans, Barrick co-president, said. “We have made substantial progress on our $3 billion debt reduction target, with $250 million in debt retired so far this year, in addition to $2.45 billion raised through asset sales, joint ventures and streaming. Collectively, these actions represent $2.7 billion, or 90 percent of our target.”
