LONDON (Alliance News) - BlackRock World Mining Trust PLC Monday said that it has now signed an agreement over a USD12.0 million net smelter return royalty investment with Avanco Resources Ltd in respect of its whole licensed area in Carajas, Brazil.
The news comes after the trust in October said that it had reached a non-binding agreement on key commercial terms with regard to a USD12.0 million net smelter return royalty investment with Avanco Resources.
The trust said that the royalty offers it a 25% royalty payment on gold production and 2% on production of other metals including copper produced from the whole licensed area of Stage 1 and Stage 2. A flat 2% royalty will be applied to all other projects from the rest of Avanco's licensed area, said the company.
The purchase is conditional on the publication of a JORC compliant reserve and resource statement, the receipt of a mining license for Stage 1 and will only be drawn-down in parallel with debt draw-downs.
"Whilst a relatively small investment for the company and early stage in terms of the profile of the Avanco mine development in Brazil, the board believes that this investment offers an attractive addition to the investment portfolio as it expands by size and diversifies by assets the Company's existing royalty holdings," the trust said in a statement.
"The board and manager continue to view royalties as an attractive method of accessing mining revenues and achieving direct long term commodity price exposure whilst stripping out cost inflation," the trust added.
The trust said that it expects that the company will continue to deploy capital, up to the unquoted holding limit of 20% of gross assets, in royalty related investments as appropriate assets become available at the right price.
BlackRock World Mining Trust shares were Monday quoted down 0.7% at 498.51 pence.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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BlackRock World Mining Trust plc (BRWM)