Empress Royalty buys US$5M Galaxy mine gold stream

Canada’s Empress Royalty (TSXV: EMPR) took a US$5 million gold stream on Golconda Gold’s (TSX: GG) Galaxy mine in South Africa on Friday as part of its expansion and revenue diversification strategy.

As per the agreement, Empress will receive 3.5% of payable gold production from Galaxy for the first 8,000 oz., reducing to 2% after that until 20,000 oz. — or 20 years —  is reached. The payable gold will be bought at 20% of its spot price.

The Galaxy and Princeton deposits underpin Golconda’s flagship project, presenting distinct mining prospects. Galaxy is a substantial pipe-shaped deposit with a 35-metre thickness and a 100-metre strike, suggesting deep, vertical potential for gold extraction.

In contrast, Princeton has a steep dip with a 5-metre thickness extending 300 metres in strike length, indicating a need for specialized underground mining techniques, according to the company.

Empress Royalty’s investment aims to boost the mechanized cut-and-fill mining operations, driving the mine’s expansion to increase production and enhance the long-term profitability for both Golconda and Empress.

David Talbot, a mining analyst at Red Cloud Securities, views the investment positively. He estimates a pre-tax net present value, at a 5% discount, of US$10.7 million for Empress over 20 years, foreseeing a potential yearly revenue increase of up to US$1.8 million.

This agreement aligns with Empress Royalty’s strategy of investing in producing precious metal mines to ensure substantial returns for its shareholders. The Galaxy mine’s expansion, facilitated by this investment, will contribute to Empress’ long-term revenue growth.

Empress and Golconda expect to complete due diligence and finalize the transaction in early 2024.

After trending down 35% over the past 12 months to a recent low at 25¢ per share, at 30¢ per share on Friday, it was up 3.5% for the day. It recently touched a high at 44¢ per share. Empress has a market capitalization of $35.5 million.