By: Ecofin agency

First Quantum Minerals has entered into a $1 billion gold streaming agreement with a subsidiary of U.S.-based Royal Gold Inc., the Canadian miner announced on Tuesday, August 5. The deal covers part of the gold output from its Kansanshi copper and gold mine in Zambia and aims to support the company’s capital needs and reduce its debt.

Although Kansanshi is primarily a copper mine, it also produces gold as a by-product. First Quantum has chosen to monetize this secondary output through the streaming arrangement. Under such a deal, the buyer provides upfront financing in exchange for the right to purchase future production at favorable terms. In this case, deliveries will be tied to Kansanshi’s copper output.

Royal Gold will receive 75 ounces of gold for every one million pounds (about 453 tons) of copper produced until a total of 425,000 ounces is delivered. This will then fall to 55 ounces for the next 225,000 ounces, and finally to 45 ounces for the remainder of the agreement’s duration. Proceeds from the deliveries will be used to fund capital expenditures, working capital, and repay bank debt.

The company is making this move as gold prices continue to climb. Since January 2025, the price of gold has surged by around 30%, reaching a record high of about $3,500 per ounce. First Quantum is leveraging this favorable market to ease pressure from its $6.19 billion debt as of June 30. At the same time, the company is pressing ahead with a $1.25 billion expansion of Kansanshi’s copper operations, known as the S3 project, expected to be completed by year-end.

Despite the boost from gold monetization, First Quantum does not intend to rely solely on this funding route. It continues to monitor the debt capital markets for further financing opportunities. The company also operates the Sentinel copper mine in Zambia and has recently mentioned the potential sale of minority stakes in some of its assets.