Metalla Royalty & Streaming Ltd (NYSEAMERICAN:MTA) (CVE:MTA) has got its hands on a 27.5% price participation royalty interest on production from Karora Resources Inc's (TSX:KRR) Higginsville gold asset in Australia, providing immediate cash flow.
"This transaction provides shareholders exposure to immediate cash flow from a highly regarded emerging gold district Higginsville, being advanced by Karora Resources," noted Brett Heath, the president and CEO of Metalla in a statement.
"Karora has gone through an impressive turnaround and is now one of the premier intermediate producers in Western Australia."
Heath added that Karora was also planning to deliver the "first meaningful exploration program at Higginsville in well over a decade" and he sees "strong potential for further high-grade discoveries".
The royalty is a 27.5% price participation royalty interest on the difference between the London pm fix gold price and A$1,340 per ounce gold price on the first 2,500 ounces per quarter for a cumulative total of 34,000 ounces of the yellow metal.
Metalla will issue shares representing up to US$6.5 million in value based on the 15 trading day volume-weighted average price on the NYSE American exchange prior to closing, less any royalty payments received by Morgan Stanley prior to closing.
Higginsville is a low-cost open pit gold mine and in the first half of 2020, generated 14,907 ounces at 1.87 grams per ton (g/t) for a cash cost of US$923 per ounce from its 1.4 million tonnes per annum (Mtpa) processing plant.
Production at Higginsville is currently sourced from the Baloo and Fairplay North open pits, with mining at Hidden Secret and Mousehollow open pits to start in the third quarter of 2020.
Karora is currently undergoing a A$10 million exploration and development drilling program, focusing on extending mining activities at Baloo and Fairplay North.
High-priority exploration targets in Higginsville include Aquarius, Hidden Secret, Mousehollow, Pioneer, Two Boys, Paleochannel extensions and Barcelona. Karora expects to release an updated reserve and resource estimate in the fourth quarter.
Metalla's new royalty covers the majority of the Higginsville tenements, including Aquarius, Hidden Secret, Mousehollow, Pioneer, Two Boys, Jupiter, Challenge, Mitchell, Aphrodite, Fairplay North, Poseidon South, Graveyard, Trident, the Paleochannel extensions, and a significant exploration package. It does not, however, cover the Baloo open pit.
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