Star Royalties Ltd (TSX-V:STRR) has highlighted the first ore shipment by Gold Mountain Mining Corp from its high margin Elk gold mine in British Columbia, on which the firm has a 2% net smelter royalty, and which represents cash flow for Star.
Under an ore purchase agreement (OPA), Gold Mountain delivers ore to New Gold Inc's New Afton processing plant, 133 kilometres from the mine.
The miner is set to deliver 70,000 tonnes of high-grade ore per year in the first three years and then up to 350,000 tonnes annually up to year 11.
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The metal payable is split 89% to Gold Mountain and 11% to New Gold and the deal allows Gold Mountain to be paid on a monthly basis for all ore delivered.
"We congratulate Gold Mountain on their well-deserved revenue generation," said Alex Pernin, CEO of Star Royalties in a statement.
"Our Elk Gold royalty represents cash flow in a tier-one jurisdiction from a high-margin gold mine operated by a driven and highly capable team. We believe Elk Gold’s exploration and production expansion upside provide excellent wealth creation potential for our investment portfolio, and we look forward to the results of Gold Mountain’s ongoing Phase 3 drill program," he added.
Gold Mountain’s deal with New Gold means it can operate and scale its operations without the need for an on-site mill, thus avoiding unnecessary annual carbon emissions of 11,500 tonnes, annual power consumption of 10.2 megawatt-hours, and annual water consumption of over 14 million litres, noted Star.
Star Royalties, a precious metals and green royalty and streaming investment company, has created the world’s first carbon-negative gold royalty platform and offers investors gold exposure with an increasingly negative carbon footprint.
Contact the author at giles@proactiveinvestors.com