Was reading the Federation Mining June Update this morning (attached below). In this they reveal the present PFS reserve which is around 128,000 oz. Pretty light on when you consider they are looking to build a mine plan around 70 koz a year. Having said this it is not unusual for mines like this to have just 1-2 years of reserves mapped out at any one time. As I understand it the royalty is for 3% up to 1 Moz recovered which then reverts back to 1.5% fixed once 1 Moz have been mined. If anyone else can shed further light on the specifics of this royalty agreement it would be great to get your insight.
So even with the reserve of 128,000 oz assuming the recovery rate is high, the royalty is still worth Federation buying it out. In fact they would be sending a very negative message to the market in terms of their confidence levels in this project if they didn't exercise the option. It's a no brainer really
"provided" the project is as promising as they say it is.
It will be interesting to see what happens from here.
Community-Meeting-June-2024.pdf
