TSX-listed First Quantum Minerals has entered into a gold streaming agreement with RGLD Gold, with First Quantum to receive a $1-billion upfront cash payment in exchange for gold deliveries produced as a by-product at its Kansanshi copper mine, in Zambia.

RGLD is a subsidiary of Royal Gold, which has global precious metals streaming management offices.

First Quantum will deliver to Royal Gold 75 oz of gold per million pounds of recovered copper produced, until 425 000 oz are delivered; followed by 55 oz of gold per million pounds of recovered copper produced until 225 000 oz are delivered; and then 45 oz of gold per million pounds of recovered copper produced.

In addition to the upfront cash payment, First Quantum will receive ongoing production payments from Royal Gold equivalent to 20% of the prevailing spot gold price for each ounce of gold delivered under the agreement, increased to 35% of the spot price when First Quantum achieves either an unsecured debt rating of BB senior from a ratings agency or a net leverage ratio of less than or equal to 2.25 times over any three consecutive quarters, starting from the quarter ending March 31, 2026.

The agreement strengthens First Quantum’s financial resilience, alongside a planned ramp-up of the S3 expansion project at Kansanshi. The company is also working towards a resolution for the Cobre Panama mine, in Panama, which was forced to half operations in November 2023 owing to a ruling by a Supreme Court declaring the mining contract unconstitutional.

“The partnership with Royal Gold is a strong endorsement of the operations at Kansanshi and its multi-generational orebody, as well as Zambia as a leading mining jurisdiction,” says First Quantum CEO Tristan Pascall.

The streaming agreement provides long-term, non-debt capital to First Quantum, which bolsters its liquidity and ability to use funds for capital expenditure, general working capital requirements and bank loan repayments.

Pascall expects First Quantum’s net debt to earnings ratio to reduce markedly as a result of the transaction.

Moreover, the transaction allows First Quantum to maintain full exposure to the copper production at Kansanshi. Based on the company’s copper and gold production guidance for 2026 and 2027, an average of 84% of total gold production will continue to have exposure to spot gold prices.

The transaction with Royal Gold allows First Quantum to increase gold exposure over time, depending on financial performance, with provisions for higher ongoing production payments and acceleration options upon achieving certain leverage thresholds.