Metalla Royalty & Streaming Ltd (TSX-V:MTA) said it had now completed its previously announced acquisition, from an arm's length seller, of an existing 5% net smelter return royalty on the South Domes portion of the Castle Mountain Gold mine in California - soon to be one of the USA's largest gold mines.
On closing, Metalla paid US$10 million in cash to the seller with the remaining US$5 million to be paid within 20 months from closing, bearing interest at 4% a year. As reported in September, 2021, the Castle Mountain mine is owned by Equinox Gold (TSX:EQX) Corp and the total consideration for the royalty was US$15 million in cash.
Metalla also reported that it had completed its previously announced drawdown of a further C$3 million under its existing amended and restated convertible loan with Beedie Capital, which was partly used to fund this acquisition.
READ: Metalla Royalty & Streaming to buy 5% net smelter return royalty on Castle Mountain gold mine in California
The C$3 million will accrue interest at 8% per annum with the remaining C$12 million available to the company under the loan facility subject to stand-by interest of 1.5% a year.
This drawdown amount is convertible by Beedie into common shares of Metalla for C$11.16 each, which is based on a 20% premium above the 30-day volume-weighted average price (VWAP) of Metalla shares on the TSX venture exchange calculated as of September 30, this year.
On September 13, Brett Heath, CEO of Metalla, told investors: "The Castle Mountain royalty provides Metalla shareholders with exceptional long-term exposure to a significant property operated by one of the industry's premier operators.
"The 5% NSR covers the South Domes portion of the producing Castle Mountain Gold Mine, soon to be one of the USA's largest gold mines when the phase 2 expansion is implemented. Metalla shareholders will gain a meaningful 5% NSR on reserves and resources of nearly 2 million ounces of gold on a mine expected to produce in excess of 200 Koz annually."
Phase 1 at Castle Mountain is currently operating at the JSLA, Jumbo and Oro Belle pits with expected output of between 30,000 and 40,000 ounces of gold annually. Phase 2, which is expected to begin in 2026 and includes South Domes, is projected to expand production to more than 200,000 ounces of gold annually.
Castle Mountain is poised to become one of the USA's largest gold mines with an expected annual output of 218,000 ounces and total all-in sustaining cost of US$858/oz over the 14-year Phase 2 mine plan.
The project currently boasts 4.2 million ounces (Moz) of gold reserves, of which South Domes covers 1.1Moz gold reserves. Equinox has outlined the potential to expand the 2021 feasibility mineral reserve pits to ultimately connect the JSLA and South Domes pits.
Contact the author at giles@proactiveinvestors.com