Royal Gold Acquires 2.5% Royalty on Cactus Project, Strengthening Copper Mining Position

Royal Gold Strengthens Position in Copper Mining with Acquisition of Royalty on Cactus Project

Royal Gold Inc., through its subsidiary RG Royalties LLC, solidifies its foothold in the copper mining sector by acquiring a 2.5% net smelter royalty (NSR) on the Cactus Project from Tembo Capital for US$55 million. This strategic move underscores Royal Gold's commitment to diversifying its portfolio amid the growing demand for copper, a crucial metal in the transition to renewable energy and electric vehicle production. The Cactus Project, developed by Arizona Sonoran Copper Company Inc. (ASCU), is positioned for significant growth due to its substantial porphyry copper resource and supportive regional infrastructure. The acquisition not only enhances Royal Gold's revenue potential but also reflects investor confidence in the project’s long-term viability.

ASCU’s President and CEO, George Ogilvie, expresses enthusiasm over the acquisition, characterizing it as a robust endorsement of the Cactus Project and ASCU's strategic vision. The company remains focused on advancing the project through the necessary permitting processes, community engagement, and demonstrating capital efficiency, which is crucial for the project's success. ASCU's commitment is further highlighted by their 2024 Preliminary Economic Assessment (PEA), which outlines the potential for the Cactus Project to evolve into a mid-tier copper producer with sustainable and low-cost operations. With the evolving landscape of copper demand, ASCU's proactive steps in securing community support and necessary permits position the project favorably for future development.

Additionally, ASCU retains the option to buy back 0.5% of the NSR for US$7 million by July 10, 2025, as well as the option to buy back 0.14% of Elemental Altus’ NSR for US$1.9 million by the same date. These buyback opportunities allow ASCU to strategically manage its royalty obligations, potentially reducing the overall NSR to 2.54%. The company reports being well-funded and is currently evaluating its options regarding these opportunities, which could further enhance its financial flexibility and operational focus.

In the broader context of the copper market, Royal Gold's acquisition exemplifies the increasing interest in copper resources amid the global push for electrification and green technologies. The Cactus Project's location on privately held land, combined with a supportive permitting environment, equips ASCU to deliver not only robust economic returns but also long-term benefits to the surrounding community. As demand for copper continues to rise, the strategic decisions made by both Royal Gold and ASCU signal a promising trajectory for the industry.