Gold Royalty buys Côté Gold Project royalty in $15.8mn deal

Gold Royalty Corp. has entered into an agreement to acquire an existing 0.75% net smelter return royalty on a portion of the Côté Gold Project in Ontario - which is owned by IAMGOLD Corporation (operator) and Sumitomo Metal Mining Co. - in a deal worth US$15.875mn.

David Garofalo, Chairman and CEO of Gold Royalty, said together with its royalty on Canadian Malartic's Odyssey Project, Gold Royalty will own royalties on what is expected to be two of Canada's largest and longest-life gold mines.

"With first cash flow expected in 2023, the acquisition of the royalty on the Côté Gold Project will further enhance our sector-leading growth profile and expand our portfolio to include 28 producing and developing royalties anchored in Tier one jurisdictions," he said.

"This transaction represents the fifth major acquisition undertaken by Gold Royalty since our IPO last year, representing an unprecedented pace of growth and resulting in a diverse and well-balanced portfolio of 192 high-quality precious metal royalty assets. This enhanced scale drives increased trading liquidity, lower cost of capital and, ultimately, higher valuations."

The deal involves US$15mn in cash and the balance through issuance of common shares of Gold Royalty based on the 20-day volume weighted average price of such shares on the NYSE American as of the business day immediately preceding closing. The transaction is subject to customary conditions and is expected to complete in early March.

Côté Gold Project targets commercial production in second half of 2023

The Côté Gold Project is located in the Chester and Yeo Townships, District of Sudbury, in northeastern Ontario, Canada, approximately 125km southwest of Timmins and 175km northwest of Sudbury.

IAMGOLD completed an updated feasibility study on the project in 2021, and published a technical report which describes a 36,000 tpd open pit operation with estimated average annual production of 489,000 oz Au over the first 5 years of operation, and average annual production of 367,000 oz Au at an AISC of US$802/oz over the 18-year mine life.

In July 2020, IAMGOLD announced a construction decision at the Côté Gold Project. On January 12, it disclosed that construction is well underway (detailed engineering at 92.2%, overall project is 43.4% complete), with commercial production expected in the second half of 2023. The Côté Gold Project open pit is being mined in four phases.

The Royalty covers the southern portion of the proposed open pit identified as Zone 5 and Zone 7. Based on the geometry of the deposit, the Royalty coverage is coincident with the higher-grade mineralization and is expected to be scheduled during the initial phases of production.

Since a prior feasibility study completed by IAMGOLD in 2018, further optimisations of the mine plan now include the re-design of mine phases to target higher grade mineralised material in years 1 to 3, a reduction in stockpile re-handling by simplifying ore stockpile management, and usage of an autonomous haulage system to improve overall project economics while reducing capital expenditures over the life-of-mine.