Royalty Overview

The Borborema royalty and convertible loan was acquired by Gold Royalty in December 2023 through a project financing transaction with Aura Minerals. The 2.0% NSR covers the entire project as well as the mineralization beneath the highway, providing significant upside potential. The royalty is structured as follow

2.0% NSR Royalty:

  • Upfront Payment: $21.0 million in cash upon closing of the transaction.
  • Royalty Terms: 2.0% NSR royalty over the Borborema Project.
  • Stepdown: The Royalty will decrease to a 0.5% NSR royalty after 725,000 ounces of payable gold are produced from the Borborema Project.
  • Buyback Option: The remaining 0.5% NSR will be subject to a $2.5 million buyback after the earlier of 2,250,000 ounces of payable gold being produced at the Borborema Project or 2050.
  • Pre-production Payments: Gold Royalty will receive quarterly payments of 250 ounces of gold (1,000 ounces per year). The pre-production payments will cease upon the earlier of:
    • Commencement of commercial production at the Borborema Project, being the mine achieving 75% of its planned mill throughput of 2,000,000 metric tonnes per year on average for 60 consecutive days; or 10 years from the closing of the transaction.

Royalty-Convertible Gold-Linked Loan:

  • Loan Principal: $10.0 million
  • Maturity: December 2029
  • Quarterly Interest Payments: Quarterly coupon payments of 110 ounces of gold (440 ounces per year).
  • Conversion: Upon maturity, Gold Royalty has the option to be:
    • repaid $10 million cash; or
    • repaid $5 million cash, plus a 0.5% NSR royalty over the Borborema Project.
  • Buyback Option upon Conversion: In the event that Gold Royalty elects to retain a 0.5% NSR upon Conversion, the resulting 0.5% NSR will be subject to a $2.5 million buyback after the earlier of 2,250,000 ounces of payable gold being produced at the Borborema Project or 2050.

ESG Co-Investment Contribution:

  • Upon commercial production at Borborema Project, Gold Royalty will provide a rebate to the operator of $30 per gold equivalent ounce payable from the Royalty. These funds are earmarked for ESG related investments up to a maximum of $300,000.
Project Overview

The Borborema Project is located in the southern part of Rio Grande do Norte in northeastern Brazil. It is situated 26 kilometers east of the town of Currais Novos and 35 kilometers west of Santa Cruz. It benefits from strategic access to the BR 226 federal highway, which connects it to the state capital of Natal, 172 kilometers to the east. The region counts with reliable infrastructure and a population of approximately 45,000 people in Currais Novos and nearly 880,000 in Natal.

Geologically, the Borborema Project is home to a classic mesothermal/orogenic gold deposit, nestled within a sheared and deformed Archaean to Proterozoic greenstone belt sequence. This sequence comprises metamorphosed volcanic and sedimentary rock units, intruded by slightly younger post-tectonic igneous bodies. The gold mineralization is linked to regional geological structures, with disseminated free gold and gold associated with sulphide mineralization being key features. The main ore body stretches an approximate 600 meters down-dip, 3,500 meters along the strike, with an average thickness of 50 meters in the central part, and 30 meters in the southern and northern regions.

A recent Feasibility Study published by Aura Minerals highlight the Borborema Project's robust economics. With a net present value of US$182 million, an after-tax internal rate of return of 21.9% at consensus gold prices, and an average 83,000 ounces of gold produced per year over the first 3 years, it looks to be a meaningful part of Aura’s operations and Gold Royalty’s near-term revenue. Additionally, a low all-in sustaining cost averaging $949 per ounce during the life of mine ($875 over the first three years), places it as a low-cost producer. Notably, the technical report shows the project will have a rapid payback period of 3.2 years, and a substantial mine life of 11.3 years based on the significant Reserves of 812,000 ounces of gold. With a substantial resource profile, exploration potential, and a strategic location, the Borborema Project is a key asset for Gold Royalty going forward.