TSX-listed Breakwater Resources has sold basic royalties on a portion of the zinc produced over the life of its Myra Falls mine, in British Columbia, the company reported on Thursday.
Breakwater said it entered into royalty agreements with Red Mile Resources and Ronpam Resources, and received cash of C$69,4-million, including royalty income of C$62,6-million and fees and interest of C$6,8-million.
Under the terms of the agreement, the company will make basic royalty payments at fixed amounts per pound of payable zinc produced.
The amounts escalate from $0,022/lb to $0,193 per pound for the Red Mile royalty and from $0,015 per pound to $0,043 per pound for the Ronpam royalty over the first eleven years of the respective royalty agreements.
Also, the royalty firms can receive a varying net profit interest if the zinc price reaches certain levels in the years 2015 to 2019.
Of the cash received, C$62,6-million was placed with a financial institution in return for promissory notes.
Interest earned from the promissory notes will be used to fund the expected basic royalty payments during the initial years of the royalty agreements.
Over the remaining years, interest and principal from the promissory notes will be used to fund the basic royalty payments.
The balance of the funds, C$6,8-million, will be used for general corporate purposes, Breakwater said.
Source: Mining Weekly
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