Royalties help retain upside

NSR royalties can be secured at any stage in a project, from early exploration through to mine construction. In a challenging financial climate, a royalty sale allows a junior resource company to raise capital for acquisitions, exploration and development without incurring equity dilution.
Some companies find this funding strategy to be more attractive and flexible than a traditional joint venture partnership. For the property buyer, they are beneficial in that they allow project acquisitions at a reduced price and only require additional payments once production commences, reducing the inherent risks associated with structured loan payments.

“Typically, NSR agreements are used by resource companies to help finance either additional exploration or even development of a mine,” says Terry Lynch, chairman of Chilean Metals (TSXV:CMX,OTCQB:CMETF,SSE:CMX,MILA:CMX,FWB:IVV1,BER:IVV1). “They also represent a way for resource companies to sell an asset and maintain some of the upside of a project. This was the case with the sale of our Copaquirie asset to Teck Resources (TSX:TECK.B,NYSE:TECK).”
Chilean Metals owns a 3-percent NSR royalty interest on any future production from the Copaquire copper-moly deposit, recently sold to a subsidiary of Teck. Copaquire borders Teck’s producing Quebrada Blanca copper mine in Chile. “We didn’t really want to sell the asset given its huge potential, but in the economic conditions it was literally sell or die,” adds Lynch.

https://investingnews.com/innspired/investing-net-smelter-royalty-returns/

MoneyK