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| First Quantum Minerals |
Strategic Streaming Agreement Enhances Liquidity for Zambia's Kansanshi Mine Expansion
Canadian miner First Quantum Minerals has finalized a $1 billion gold streaming agreement with Royal Gold, tying the funding directly to by-product gold output from the Kansanshi copper mine in Zambia. This major development underscores the rising prominence of streaming deals in the base metals sector, especially as mining companies seek non-dilutive financing for capital-intensive expansion projects.
Under the terms, First Quantum will receive the entire $1 billion upfront. In exchange, Royal Gold secures rights to gold deliveries pegged to copper output volumes: 75 ounces per million pounds of copper recovered until 425,000 ounces are delivered, 55 ounces per million for the next 225,000 ounces, and 45 ounces per million pounds thereafter. This structured stream ensures predictable, long-term gold inflows for Royal Gold while optimizing capital use for First Quantum.
Kansanshi S3 Expansion Gains Momentum
The deal significantly improves First Quantum’s financial flexibility as it pushes ahead with the $1.3 billion S3 expansion at Kansanshi. This expansion aims to boost throughput and extend the mine’s life, reinforcing Zambia’s critical role in global copper supply chains. Meanwhile, Royal Gold expects deliveries to begin in 2025, with an average annual stream of 35,000–40,000 ounces over the next decade, generating stable returns from a large-scale, long-life asset.
In addition to the upfront payment, First Quantum will receive 20% of the spot gold price per ounce delivered. That figure could rise to 35% should certain credit or leverage targets be achieved. Therefore, the transaction aligns both companies' long-term interests and incentivizes operational efficiency.
Streaming Deals Rise as Financing Tool in the Copper-Gold Sector
This deal reflects a growing trend in the mining sector, where companies leverage gold by-product streams to finance copper-focused assets. As a result, First Quantum preserves its copper exposure while monetizing gold output—a strategic move amid rising gold prices and persistent copper demand from energy transition sectors. In contrast, Royal Gold strengthens its portfolio with exposure to a Tier-1 African mining jurisdiction.
The transaction is expected to close Wednesday, pending final conditions. It positions both firms to capitalize on the copper-gold duality of Kansanshi, blending upstream funding innovation with long-term resource optimization.
ScrapInsight Commentary
This deal reflects the increasing use of precious metal streaming to finance copper projects without equity dilution. The structure signals confidence in long-term copper and gold fundamentals. Additionally, it highlights Zambia’s resurgence as a key mining jurisdiction in the global energy transition supply chain.
