BlackRock forms non-binding agreement on royalty investment

8th Oct 2013 09:16

BlackRock World Mining Trust announced that is has formed a non-binding agreement on the key commercial terms of a royalty investment. The deal, which has been formed with Avanco Resources, relates to a $12m net smelter return investment on Avanco's whole licensed area in Carajas, Brazil. It offers BlackRock a 25% royalty payment on gold production and 2% on production of other metals including copper produced from the whole licensed area of Stage 1 and Stage 2. A flat 2% royalty will be applied to all other projects from the rest of Avanco's licensed area. The group said the two companies are set to begin work on agreeing the heads of terms for the investment, after which they will sign the definitive legal documentation, which is expected to complete by the year-end. BlackRock said: "Whilst a relatively small investment for the company and early stage in terms of the profile of the Avanco mine development in Brazil, the board believes that this investment offers an attractive addition to the investment portfolio as it expands by size and diversifies by assets the company's existing royalty holdings. "This transaction would bring total unquoted investments within the company's portfolio to a pro forma aggregate percentage of 9.15% of gross assets (as at October 4th 2013)."The group added that it continues to view royalties as "an attractive method of accessing mining revenues and achieving direct long term commodity price exposure whilst stripping out cost inflation".NR