Mount Milligan Operation Reports Positive Results

DENVER, CO - Royal Gold, Inc.  reported that Centerra Gold Inc. provided results on production, water availability, and the impact of increased costs and expected lower long-term recoveries on the Mount Milligan operation in British Columbia. Centerra reported positive operating results at Mount Milligan for the quarter ended September 30, 2019, with production of 55,355 ounces of gold and 21.2 million pounds of copper, 6% lower and 67% higher, respectively, than the prior year quarter. All-in sustaining costs on a by-product basis were $557 per ounce, which was 18% lower than the prior year quarter. Mill throughput averaged 55,727 tonnes per day over the quarter, which was 36.6% higher than the prior year quarter due to increased mill and water availability.

With respect to water, Centerra noted that favorable rainfall combined with access to surface water during the year from Philip Lake 1 and Rainbow Creek has resulted in more than twice the amount of stored water volume than last year at this time. In addition, the company reported success in its groundwater exploration program, and subject to the receipt of permits, expects to bring new groundwater sources on line in December. With these improvements and prudent water management, it is expected that Mount Milligan should not need to slow production in the first calendar quarter of 2020 to conserve water, as was required in the two prior years.

Issues identified with decreasing long-term recoveries and increased costs in the short to medium-term have led it to record an impairment charge against the carrying value of the Mount Milligan mine using a financial analysis under applicable accounting standards, and it has begun a comprehensive technical review of the operation with the objective of publishing an updated 43-101 technical report in the coming months. The updated 43-101 report will include studies to optimize the economics of the mine as well as incorporate results of exploration drilling through 2019.

Centerra has acknowledged that the extent of any changes in reserves and resources cannot be precisely determined until all the relevant studies and modeling have been completed, it expects that the mineral reserves and resources at Mount Milligan will be materially reduced. 

Royal Gold owns the right to purchase 35% of the payable gold and 18.75% of the payable copper produced from the Mount Milligan mine in return for a cash purchase price for gold equal to the lesser of $435 per ounce or the prevailing market price, and for a cash purchase price for copper equal to 15% of the spot price. Production from Mount Milligan contributed approximately 61,700 ounces of gold and approximately 8.3 million pounds of copper, which together contributed 23.9% of total revenue to Royal Gold in the fiscal year ended June 30, 2019.

The company’s address is 1660 Wynkoop, Suite 1000, Denver, CO 80202, (303) 573-1660, www.royalgold.com.