The operational life of the Mount Milligan mine is due to be extended to 2035. Credit: Chris Wiedenhoff from Pixabay.

Royal Gold has signed an agreement with Centerra Gold to extend the life of the Mount Milligan Mine in central British Columbia, Canada, to 2035.

This arrangement, involving Royal Gold’s subsidiary RGLD Gold, includes a cost support agreement that provides immediate financial benefits and the potential for a longer mine lifespan.

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The near-term consideration includes $24.5m (C$33.17m) in cash and 50,000oz of gold.

Additionally, Royal Gold will gain a long-term free cash flow interest in the Mount Milligan open-pit copper and gold mine.

Under the existing stream agreement at Mount Milligan, Royal Gold receives 35% of the payable gold and 18.75% of the payable copper. This agreement remains unchanged, while the new deal brings an additional $125m in near-term consideration to Royal Gold.

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Beginning around 2030, Royal Gold will make cost support payments for metal deliveries. These payments will contribute to an immediate reserve increase, ensuring the mine’s operation until at least 2035.

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Centerra is planning a preliminary economic assessment for the project in the first half of 2025, which will explore the possibility of extending the mine’s life beyond 2035.

This assessment could potentially increase the value of Royal Gold’s investment in the mine.

Situated near Prince George in central British Columbia, Mount Milligan is an open-pit copper and gold mine. With a processing capacity of 60,000 tonnes per day, the mine produced 154,391oz of gold in 2023.

Royal Gold president and CEO Bill Heissenbuttel said: “This announcement demonstrates our willingness to work with our operating counterparties and be flexible and creative in order to find mutually beneficial opportunities to maximise value.

“Mount Milligan is a large and potentially long-life operation, and our support is designed to allow Centerra to extend the mine life and add long-term value for each company’s stakeholders.”