Kerr Mines and Star Royalties agree £13.6m streaming deal

Kerr Mines, the American gold producer, and Star Royalties, the Canadian metals-focused royalty and streaming company, have jointly announced the execution of a definitive £13.6 million gold purchase and sale agreement (streaming agreement) to finance the restart of underground operations and gold production at the Copperstone Gold Mine in Arizona.

The first instalment of £4.5 million will be advanced on the initial closing, which is expected to take place on or before November 20. The remaining two tranches will be advanced at the request of Kerr as it incurs expenditures for the restart of the Copperstone Gold Mine Project, with £4.5 million on or before February 28, 2021, and a further £4.5 million on or before April 30 next year.

“This Streaming Agreement provides the required project financing to restart gold production at our Copperstone Gold Mine, which is targeted for Q4-2021. We are extremely pleased to be undertaking this financing transaction with Star Royalties, which has a seasoned team of mining professionals that will prove to be a valued partner as we advance Copperstone to production," says Giulio T Bonifacio, chief executive officer of Kerr. 

"With the extensive project evaluation undertaken by Star Royalties, we believe this streaming transaction further validates the value we have identified at Copperstone by way of our recent optimization efforts. We also note that we will be progressing the restart of operations under a whole ore leach processing scenario which will result in increased gold recoveries and production versus a floatation processing scenario.”

As part of the key transaction terms for the agreement, Star Royalties will purchase from Kerr an amount of refined gold equal to 9.9 percent of gold produced at Copperstone until a culminative 21,000 ounces of refined gold are delivered, then 3.3 percent of gold produced until a culminative 27,200 ounces are delivered, and 1.2 percent of gold produced thereafter for the remaining life of the mine, the statement says.

Furthermore, Star Royalties will provide a cash payment to Kerr for each ounce of gold delivered equal to 25 percent of the average London Bullion Market Association gold spot price for five consecutive trading days prior to delivery.

“We are proud to announce our partnership transaction with Kerr to advance the restart of Copperstone. We have structured a mutually beneficial streaming arrangement which should translate to a win-win outcome for both parties’ shareholders. 

"This gold stream will provide for significant, near-term cash flow from a highly prospective deposit in a world-class jurisdiction. We look forward to the successful restart at Copperstone and to its exploration upside under Kerr’s experienced and knowledgeable management team,” says Alex Pernin, chief executive officer of Star Royalties.