Rio Tinto PLC (LSE:RIO) has completed the sale of its Cortez gold royalty shortly before royalty payments are due to start.
The FTSE-100 miner said it sold the royalty, which covers an area that includes the Cortez mine and the Fourmile development project in Nevada, to a subsidiary of Royal Gold, Inc. (TSX:RGL) for US$525mln in cash.
The royalty is calculated as 1.2% at current gold prices.
Royalty payments start once the Cortez Complex has produced a total of 15mln ounces of gold since 2008 and this is expected to occur imminently, Rio Tinto said.
“This transaction unlocks hidden value from our portfolio and releases cash immediately," said Rio Tinto’s chief financial officer Peter Cunningham.
Rio Tinto obtained the royalty as partial consideration for the sale of its 40% interest in the Cortez complex to Barrick Gold Corp in 2008.
The Cortez gold mine is operated by Nevada Gold Mines LLC, a joint venture between Barrick and Newmont Corp, while Fourmile is wholly owned by Barrick.
In a separate statement, Royal Gold said it expects the royalty to begin paying in the third or fourth quarter of this year.
Barrick has disclosed that cumulative production from 2008 reached about 14.8mln ounces as of end-June 2022.