The Cortez mine and Fourmile development project in Nevada are included in the sliding-scale gross royalty that Royal Gold (NASDAQ:RGLD) purchased from Rio Tinto’s (NYSE:RIO) Kennecott Royalty subsidiary for $525 million on Tuesday.
Except for the Fourmile development, which is entirely owned by Barrick, all of the land in the Cortez complex is owned or under the control of Nevada Gold Mines, a joint venture between Barrick Gold (NYSE:GOLD) and Newmont (NYSE:NEM).
Once the Cortez complex has produced 15 million ounces of gold, which is anticipated to happen by the third or fourth quarter of this year, royalty payments will begin.
According to Royal Gold (NASDAQ:GLD) President and CEO Bill Heissenbuttel, this is the biggest of several recent transactions that significantly increase the scale, length, and optionality of the Royal Gold portfolio.
According to market analysts, Royal Gold’s (NASDAQ:RGLD) valuation is extremely favorable right now and they see the stock outperforming returns from both regular gold miners and the price of gold.
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