TORONTO (miningweekly.com) – Major miner Barrick Gold has struck a precious-metals streaming deal with Royal Gold, which has agreed to make an upfront cash payment of $610-million plus continuing cash payments for gold and silver delivered under Barrick's 60% interest in the Pueblo Viejo mine, in the Dominican Republic.

Barrick Gold had been selling various noncore assets to reduce its $12.9-billion in debt, having pledged to raise at least $3-billion for this purpose this year. The gold miner had earlier this year acknowledged that it had deviated from its roots by taking on too much debt in recent years.

Under the terms of the deal, Barrick would sell 7.5% of its attributable gold output at Pueblo Viejo, until 990 000 oz of gold had been delivered, and 3.75% thereafter.

Barrick would also sell Royal Gold 75% of its attributable silver output, until 50-million ounces had been delivered, and 37.5% thereafter. Silver would be delivered based on a fixed recovery rate of 70% a ton. Any grey metal produced above that rate was not subject to the stream.

Royal Gold would make ongoing cash payments to Barrick tied to prevailing spot prices, rather than being fixed in advance, maintaining material exposure to higher gold and silver prices in the future. Barrick would receive ongoing cash payments from Royal Gold equivalent to 30% of the prevailing spot prices for the first 550 000 oz of gold and 23.1-million ounces of silver delivered. Thereafter payments would double to 60% of prevailing spot prices for each subsequent ounce of gold and silver delivered.

"The innovative structure of this streaming agreement will allow us to crystalise significant value from Pueblo Viejo in a volatile metal price environment, strengthening our balance sheet in the short term while preserving material exposure to higher gold and silver prices in the future," Barrick copresident Jim Gowans said.

He noted that Barrick had raised 90%, or $2.7-billion, of its $3-billion debt-reduction target, with $250-million in debt retired so far this year, as well as $2.45-billion raised through asset sales, joint ventures and streaming.

Barrick would maintain its 60% equity ownership interest in Pueblo Viejo and its associated rights under its partnership with Goldcorp, including operatorship of the mine.

According to Barrick, Pueblo Viejo was the only mine in the world with yearly output topping one-million ounces of gold (100% basis), at all-in sustaining costs (AISC) below $700/oz. Barrick's share of gold output in 2014 was 665 000 oz at AISC of $588/oz.

Barrick’s share of full-year 2015 output was expected to range between 625 000 oz and 675 000 oz, at AISC of $540/oz to $590/oz.

As at December 31, Barrick’s portion of Pueblo Viejo’s compliant proven and probable gold reserves was 9.3-million ounces.

The streaming transaction was subject to customary closing conditions and was expected to close early in the fourth quarter. Rothschild was acting as financial adviser and Davies Ward Phillips & Vineberg was acting as legal counsel to Barrick.