Gold Royalty Corp. (“Gold Royalty” or the “Company”) (NYSE American: GROY) is pleased to announce that it has entered into a binding purchase and sale agreement (the “PSA”) with OMF Fund III (Cr) Ltd., an entity managed by Orion Mine Finance Management LP (“Orion”) to acquire a copper stream (the “Stream”) on the Vares Silver Project (“Vares”), operated by a subsidiary of Adriatic Metals plc (“Adriatic”) located in Bosnia and Herzegovina (the “Transaction”).
Under the terms of the PSA, Gold Royalty will pay consideration to Orion of US$50 million to acquire the Stream at closing of the Transaction, consisting of US$45 million payable in cash and US$5 million to be satisfied by the issuance of 2,906,977 Gold Royalty shares.
David Garofalo, Chairman and CEO of Gold Royalty, commented: “With this acquisition we are adding another high-quality, long-life asset to our portfolio which we expect will meaningfully increase our revenue and cash flow on a per share basis. Vares not only provides significant near-term cash flow, but also provides potential upside through exploration and mine expansion. We welcome Orion as a strategic shareholder and look forward to further enhancing our relationship with a leading private equity firm with an exceptional track record in the global mining sector. Finally, while the Gold Royalty portfolio is still predominantly precious metals focussed, the Company expects to benefit from record copper prices through the additional copper exposure that comes with the Vares Stream.”
Overview of the Vares Silver Project
The Vares Silver Project consists of 41 km2 of concession area, which is centered around the town of Vares. The town is located in the Vares municipality in Bosnia and Herzegovina and is a 50-minute drive from Sarajevo, the capital of Bosnia and Herzegovina. The Vares Operation is one of the largest investments in Bosnia and Herzegovina, bringing significant economic and social benefits to the country. The Stream applies to certain areas of Vares, including the Rupice area of the project. All mineral reserves and resources within the current Vares mine plan are from the Rupice deposit and are subject to the Stream (refer to Table 2 and Table 3).
Vares is a polymetallic project with the majority of expected production to be silver and zinc, in addition to smaller components of lead, gold, copper, and antimony. Current development and near-term production are expected from the Rupice underground mine.
The Vares Processing Plant has a nominal capacity of 800,000 tonnes per annum, and applies three-stage crushing, grinding, flotation and filtration to produce two saleable concentrates: silver-lead and zinc concentrates are expected to be transported via rail to the Port of Ploče for shipment to smelters. The silver-lead concentrate contains payable silver, lead, zinc, copper and gold. The zinc concentrate contains payable zinc, silver, and gold. Both the Rupice Mine and Vares Processing Plant have been designed and constructed using the latest technology from the leading manufacturers in the industry, whilst adhering to the highest levels of health and safety.
On January 24, 2024, Adriatic announced its maiden production guidance for 2024, 2025 and 2026 following an updated reserve announcement in December 2023. The guidance is based on successful extension and exploration drilling, mine optimization work and advancing higher grade development at Rupice and Rupice Northwest.
Source: Company Press Release
