TriStar Gold Inc. entered into an agreement with Royal Gold Inc. for the latter to invest US$8 million in Tristar's Castelo de Sonhos gold project in Brazil.
This consists first of an option for Royal Gold to purchase a 1.0% net smelter returns royalty on Castelo de Sonhos for a cash payment of US$500,000.
TriStar said May 28 that it will use the proceeds Royal Gold pays to exercise the royalty option to repurchase 50% of the existing 2.0% royalty on the property so the total royalty following the transactions remains unchanged.
Additionally, the parties will enter into exclusive negotiations for two subsequent transactions valued at US$7.5 million. These include the sale of a newly created 1.5% net smelter royalty on the property and the grant of 19,640,000 share purchase warrants, each of which will entitle Royal Gold to purchase a share of TriStar at 25 Canadian cents for a period of five years.
Tristar will use the total proceeds to advance the project to a feasibility study, to pursue permitting activities and for general corporate purposes.
In November 2018, TriStar's preliminary economic assessment for Castelo de Sonhos outlined a posttax net present value of US$188 million, at a 10% discount rate, and an internal rate of return of 43%.