Thompson Creek Announces Royal Gold Increases Gold Stream Interest to Purchase Additional 15% of Future Gold Production from Mt. Milligan for $270 Million
NYSE: TC
TSX: TCM
TSX-V:TRX.WT
DENVER, Dec. 15, 2011 /PRNewswire/ - Thompson Creek Metals Company Inc. ("Company" or "Thompson Creek"), a growing, diversified, North American mining company, today announced that effective December 14, 2011, it has entered into an Amended and Restated Purchase and Sale Agreement with Royal Gold, Inc. ("Royal Gold") to sell an additional 15% of the payable gold from Thompson Creek's Mt. Milligan copper-gold project to Royal Gold in exchange for a total of $270 million, $112 million of which will be paid shortly after signing. Thompson Creek intends to use the proceeds from the Amended and Restated Agreement to finance a portion of the construction of the Mt. Milligan project and related costs.
"We are very pleased with Royal Gold's increased investment and continued support in the advancement of our Mt. Milligan project," said Kevin Loughrey, Chairman and Chief Executive Officer of Thompson Creek. "We believe that Royal Gold's participation in Mt. Milligan is an endorsement of the quality of the project that will transform our Company into a diversified, base metals producer beginning late 2013 and significantly strengthen our Company's financial performance," added Mr. Loughrey.
The Amended and Restated Agreement amended and restated the Purchase and Sale Agreement by and among the Company, Royal Gold, and their respective subsidiaries dated as of October 20, 2010 (the "Original Agreement"). Under the Original Agreement, Thompson Creek agreed to sell 25% of the payable ounces of gold produced from the Mt. Milligan project to Royal Gold in exchange for a total of $311.5 million, $226.5 million of which was paid at closing. The remaining $85 million was required to be paid over the construction period of the Mt. Milligan project. The cash purchase price for the payable gold under the Original Agreement was the lesser of $400 or the prevailing market price for each payable ounce of gold until 550,000 payable ounces have been delivered to Royal Gold and the lesser of $450 or the prevailing market price for each additional payable ounce thereafter.
Under the Amended and Restated Agreement, Royal Gold increased its aggregate investment (including amounts previously funded under the Original Agreement and commitments for future funding) from $311.5 million to $581.5 million, and agreed to purchase a total of 40% of the payable ounces of gold produced from the Mt. Milligan project at a cash purchase price equal to the lesser of $435, with no inflation adjustment, or the prevailing market price for each payable ounce of gold (regardless of the number of payable ounces delivered to Royal Gold).
Three business days following the execution of the Amended and Restated Agreement, Royal Gold will make a cash payment of $112 million to Thompson Creek. Following this payment, and taking into account payments totaling $252.6 million made by Royal Gold under the Original Agreement, Royal Gold will make future scheduled payments to Thompson Creek in the aggregate amount of $216.9 million, which will be paid on a quarterly basis commencing on March 1, 2012 at the rate of $45 million per quarter in calendar year 2012 (representing an aggregate of $180 million in calendar year 2012) and $12 million per quarter in the first two quarters of calendar year 2013, and $12.9 million in the third quarter of calendar year 2013 (representing an aggregate of $36.9 million in calendar year 2013).
Concurrently with the closing of the transaction with Royal Gold, the participating banks in the Company's revolving credit facility entered into a third amendment to the Company's revolving credit agreement whereby the banks consented to the Royal Gold transaction, and agreed to modify certain financial covenants and measurements included in the credit agreement.
About Mt. Milligan Copper-Gold Project
Mt. Milligan is a copper-gold project located approximately 90 miles northwest of Prince George in central British Columbia, Canada. Thompson Creek is in the process of constructing the mine, which is expected to be in production in the fourth quarter of 2013. The Mt. Milligan project is based on a conventional truck-shovel open pit mine and 60,000 tonnes per day copper flotation concentrator. Average annual production over the current 22-year mine life is expected to be approximately 81 million pounds of copper and 194,000 ounces of gold. Production in years one through six is expected to be higher with approximately 89 million pounds of copper and 262,000 ounces of gold. The current capital expenditure estimate to construct and develop the Mt. Milligan mine is C$1.265 billion. Since inception of the project through September 30, 2011, approximately C$383.1 million has been spent and an additional C$336.3 million has been committed as open purchase orders, contracts, and capital purchase commitments.
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