RNC Minerals (TSE:RNX) revealed it had restructured the current royalty on a number of tenements at its Higginsville gold operations (HGO) in Western Australia, which it says, will help it to develop the claims.
Morgan Stanley is the owner of the royalty, which previously consisted of a 1.75% NSR (net smelter royalty) plus a 50% participation payment on the difference between the realized gold price and A$1,340 per ounce (legacy rate).
The restructured royalty, to take effect at the beginning of next year, now is a flat 2% NSR after payment of an adjusted legacy rate on the first 10,000 gold ounces sold per year.
"We are pleased to have reached a mutually beneficial agreement with Morgan Stanley to restructure the terms of this royalty," said Paul Andre Huet, the chairman and chief executive of RNC.
"This revised structure addresses in a meaningful way RNC's strategic objective for additional economic incentive to mine the gold resources on these tenements.
"We are extremely pleased to have developed an arrangement that we expect will allow us to unlock significant value for both parties. The new royalty will allow us to develop these tenements, thereby providing us with additional flexibility to fill our Higginsville mill with material from our extensive pipeline of open pits already identified."
The flat 2% net smelter royalty on ounces sold in excess of 10,000 per annum will become payable after the first 37,500 ounces are sold from HGO production.
The new arrangement opens the door for RNC to access gold resources on tenements previously seen as uneconomic, the firm said.
"The benefits of the revised arrangements will begin to flow through over the coming quarters with drilling and mining activities to commence in specific areas immediately."
Shares advanced 11% in Toronto to C$0.50 each.
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