Also this blurb from the "Royalty Agreements" section later in same BR WMT Annual Report. The Avanco deal was the smallest of three royalty agreements described. (Nothing new here but a succint summary for anyone interested in the structure of the BR deal).
I can't help but think that BR have negotiated a really good deal for their $12M outlay. Presumably this is the best offer on the table at a time of very tight finance for junior miner production start-ups. If I had a lazy $12M I'd happily cut AVB a better finance deal ...
"Avanco royalty contract – In October 2013, the Company entered into a royalty agreement with Avanco Resources over its exploration licenses within the world-class mineral district of Carajas in Brazil. The Company will provide US$12 million in return for Net Smelter Return (net revenue after deductions for freight, smelter and refining charges) royalty payments comprising 2% on copper, 25% on gold and 2% on all other metals that will be produced from their Antas North and Pedra Branca (Stage 1 and Stage 2) licenses. In addition, there will be a flat 2% royalty over all metals produced from any other discoveries within Avanco’s license area as at the time of the agreement. The purchase of the royalty is conditional on the publication of a JORC compliant reserve statement, the receipt of a mining license for Stage 1 and will only be drawn-down in parallel with debt draw-downs. It is expected that this will take place from the middle of 2014."
AVB Price at posting:
7.1¢ Sentiment: LT Buy Disclosure: Held
