Kin Mining NL (ASX:KIN) (FRA:8KM) has purchased a third-party 1.5% net smelter royalty (NSR) covering future production at its wholly-owned Cardinia Gold Project.
The explorer bought the royalty from prolific gold sector investor Sprott Private Resource Lending for $600,000, with the price tag representing just 22% of the royalty’s face value.
Ultimately, it applies to the first 100,000 ounces of gold produced at Cardinia, situated in WA’s north-eastern Goldfields.
Kin’s latest purchase was originally attached to a US$27 million financing package tied to Cardinia when it was known as the Lenora Gold Project.
“An important step”
Kin Mining managing director Andrew Munckton said negotiating the royalty purchase price was “a good result” in the wake of robust gold prices.
“This is an important step for us in advancing the Cardinia Gold Project to the next stage and ensuring we maximise the value of the project for our shareholders.”
“The purchase enhances the project economics by increasing the margin on the first 100,000 ounces of gold production.
“The royalty remains on foot and has been assigned to a Kin Mining owned entity, which means it can be utilised in the future should we need to do so as part of our potential financing arrangements.”
Gold boon
Today’s purchase comes just days after gold futures hit a four-month high, breaking past the US$1,900 benchmark.
The rise is widely seen as a reaction to rising inflation rates, with investors flocking to the precious metal as a “safe haven” investment.
Just last month, Kin upped the mineral resource estimate at the Cardinia asset to 1.23 million ounces of gold.
Specifically, the project’s combined measured and indicated resources jumped 15% to 762,000, representing nearly 62% of the total estimate.
Speaking to the upgrade in mid-May, Munckton said: “This is a very pleasing update to the CGP gold resource inventory, which reflects the success of our drilling programs in recent months.
“The addition of 102,000 higher-quality ounces, together with improvements in average grade for the recently discovered south-western lodes at Bruno Lewis, is a real positive for the project – particularly as we see great potential for further growth at this cornerstone deposit.
Moving forward, Kin wants to advance a number of deposits within the Cardinia project’s Eastern Corridor. It hopes to provide updates on these prospective gold zones over the September quarter.