Triple Flag buys gold stream on Ravenswood mine for $440M

Triple Flag Precious Metals (TSX, NYSE: TFPM) has acquired a stream on the Ravenswood gold mine in Queensland, Australia, a move that is expected to add 100,000 ounces to the company’s end-of-decade outlook.

For this acquisition, Triple Flag would make an upfront cash payment of $440 million, it said in a statement on Friday, citing its potential to generate immediate cashflow underpinned by two years of gold delivery.

CEO Sheldon Vanderkooy called the Ravenswood gold stream “a cornerstone addition” to the company’s substantial Australian presence, which already includes the Northparkes, Beta Hunt and Fosterville operations.

“The Ravenswood gold mine is one of the 10 largest gold mines in Australia by ore reserves, with a long history of continuous operation and historical production of more than 4 million ounces of gold,” Vanderkooy said in the press release.

Ravenswood is a large-scale open-pit gold operation with around 150 years of mining history. First discovery of gold dates back to the late 1860s, and about 120 years later, modern mining began. The site, with an 8.6-million-tonne-per-annum mill, is located 130 km south of Townsville by road.

The mine operation is currently jointly owned by EMR Capital and Golden Energy and Resources, which have invested over A$830 million since acquiring the asset from Resolute Mining in 2020.

Shares in Triple Flag Precious Metals rose 4.5% on the acquisition, despite gold prices trading flat on the day. The Toronto-based streaming and royalty company has a market capitalization of C$8.42 billion ($6 billion).

Improved outlook

Under the Ravenswood stream, Triple Flag has the right to purchase 5.5% of payable gold from the mine. The stream rate will drop to 3.75% after 194,200 oz. of gold has been delivered, and then to 2.5% after 253,000 oz. of delivery.

For the gold purchases, Triple Flag will pay 10% of the spot price for each ounce for the first 194,200 oz., and 20% of the spot price thereafter.

First delivery of gold is expected to begin in the third quarter of this year and end in the second quarter of 2028. Over this period, the company is targeting cumulative quarterly gold deliveries of 22,928 oz., or approximately 2,300-3,300 oz. per quarter, subject to a quarterly cap of 8% of actual production during each quarter.

Triple Flag estimates that the mine is expected to achieve over 200,000 oz. of production by 2028 after certain upgrades to the operation. Last year, it produced 134,000 oz. of gold.

The transaction would be funded from available capital, including cash on hand of $144 million, Triple Flag said. Closing is expected this month.

With the addition of Ravenswood, the company has now increased its 2030 outlook to 150,000-160,000 gold-equivalent ounces (GEOs), up from 140,000-150,000 GEOs.

Exploration potential

On top of the existing mine operation, the stream agreement also covers all exploration licenses of the Ravenswood project over a land package of more than 1,800 km².

In its press release, Triple Flag noted that the Buck Reef West and Sarsfield-Nolans deposits both have significant in-pit exploration potential, with targets including Nolans Fault, A4, Keel and Buck Reef Fault.

“In-pit and near-mine exploration upside also presents a significant opportunity to extend the mine life at Ravenswood Gold across a large and prospective land package,” Vanderkooy said.

The mine currently has 147 million tonnes of reserves grading 0.61 gram per tonne (g/t) gold, containing 2.8 million oz. of gold. This is included within a measured and indicated resource base of 205 million tonnes at 0.55 g/t, containing 3.6 million oz. of gold.