Arc Minerals agrees royalty deal with Golden Square

(Sharecast News) - Arc Minerals has entered into a binding royalty agreement with Golden Square Equity Partners, it announced on Thursday, following the sale of its entire 99.43% interest in Casa Mining to Golden Square for a consideration of up to $50m, as announced on 18 March.
The AIM-traded firm said that under the terms of the royalty agreement, Arc would be entitled to a royalty stream up to an aggregate value of $45m.

It said the royalty stream would be based on the gold production of the projects and interests held by Casa as at 19 March, and was 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.

The royalty agreement of up to $45m was based on potential gold production at the projects and interests held by Casa, Arc explained, adding that there could be "no guarantee" that any royalty payments would flow to Arc, or as to the timing of such payments.

Separately, the first payment by Golden Square to Casa in respect of operating expenses was made this week, the company confirmed.

"It is pleasing to have finalised the $45m royalty agreement with Golden Square, which in addition to the $5m loan note issued to Arc by Golden Square and repayable to Arc on 19 March 2021, should prove valuable going forward," said executive chairman Nick von Schirnding.

"Separately, we have completed a major cost reduction exercise across the board at Arc to ensure we are in the best possible financial shape going forward as we all adapt to the Covid-19 crisis.

"A separate update on this - as well as the work we are completing on the Kalaba Commercial Scale Demonstration plant and drilling programme - will be published shortly."

At 1455 BST, shares in Arc Minerals were down 1.02% at 1.46p.