First Quantum, copper producer, and Royal Gold, precious-metals streamer, have agreed a $1 billion upfront gold streaming deal tied to by-product output at Kansanshi in Zambia, handing the miner immediate liquidity as it completes the S3 expansion—described in recent materials as a $1.3 billion programme—while the buyer targets 35,000–40,000 oz a year of deliveries over the next decade. The transaction is scheduled to close on Wednesday, with First Quantum also receiving an ongoing 20% of spot per ounce delivered, rising to 35% if leverage or credit targets are met.
How the stream works
Deliveries are indexed to copper production: 75 oz of gold per million pounds of recovered copper until 425,000 oz have been delivered, then 55 oz per million pounds for the next 225,000 oz, and 45 oz thereafter. Royal Gold expects about 12,500 oz in 2025 and an average 35,000–40,000 oz annually over ten years, providing near-term cash flow from a large, long-life asset. First Quantum will receive 20% of spot for each ounce delivered, stepping to 35% if it meets predefined credit or leverage thresholds.
Balance sheet and project funding
The cash injection adds flexibility after the prolonged suspension of Cobre Panamá and as Kansanshi’s S3 expansion nears completion. First Quantum ended Q2 with $6.19 billion of total debt and said S3 remained on budget and in final commissioning, with first production in H2 2025. Royal Gold is funding the advance with cash and a draw on its revolving credit facility.
Market impact and pricing
Streaming shifts commodity-price risk while preserving First Quantum’s copper exposure. With spot gold around $3,360–$3,380/oz on Aug. 6 and LME 3-month copper orbiting $9,640–$9,680/t this week, the structure monetises gold by-product at elevated prices as Kansanshi scales up. Zambia’s Kansanshi—80% owned by First Quantum and 20% by ZCCM-IH—remains core to the group’s copper-gold mix, and the stream’s copper-indexed formula aligns deliveries with mine throughput.
Industry context and applications
The deal underscores miners’ increasing reliance on streams and prepayments to bridge capex cycles without equity dilution, particularly after market shocks. First Quantum flagged in late July that it was exploring gold prepayment options; the stream formalises that approach as S3 ramps. For Royal Gold, Kansanshi adds a producing interest with multi-decade reserves and near-term ounces, financed largely via its credit facility.
Company Background and Market Context
First Quantum operates large open-pit copper mines across Zambia (Kansanshi, Sentinel) and elsewhere, with Kansanshi its flagship since 2005. The S3 project adds a new 25 Mt/y sulphide plant and related upgrades; the company reported the expansion in final commissioning and on budget for first production in the second half of 2025. Royal Gold manages a portfolio of streams and royalties across precious-metal assets and said it expects immediate cash inflow from Kansanshi, funded by cash and its revolver. Ownership of Kansanshi is 80% First Quantum and 20% ZCCM-IH.
Gold’s role as a monetary hedge has supported prices above $3,300/oz, while fabrication demand spans jewellery and electronics. Elevated bullion prices improve the economics of by-product monetisation via streams, even as copper remains Kansanshi’s primary value driver. On Aug. 6, spot gold traded near $3,360–$3,380/oz.
