Aim-listed Arc Minerals has entered into a binding royalty agreement with Golden Square Equity Partners, following the sale of Arc's entire 99.43% interest in Casa Mining to Golden Square for up to $50-million, as announced in March.
Under the terms of the royalty agreement, Arc will be entitled to a royalty stream up to an aggregate value of up to $45-million.
The royalty stream will be based on the gold production of the projects and interests held by Casa as at March 19, and is to be calculated as 3% of net smelter production at the prevailing gold price on the production date and paid by Casa to Arc quarterly in arrears based on the ounces of gold produced.
Meanwhile, the first payment by Golden Square to Casa in respect of operating expenses has been made this week.
“It is pleasing to have finalised the $45-million royalty agreement with Golden Square, which in addition to the $5-million loan note issued to Arc by Golden Square and repayable to Arc on March 19, 2021, should prove valuable going forward,” says Arc executive chairperson Nick von Schirnding.
He notes that Arc has also completed a major cost reduction exercise across the board to ensure it is financially well-positioned moving forward in the Covid-19 crisis.
A separate update on this – as well as the work the company is completing on the Kalaba Commercial Scale Demonstration plant and drilling programme – will be published shortly.