Sentinel Metals Locks in Right to Buy Out 36-Year Royalty at Columbia Gold Project
Key Takeaways
- Sentinel Metals has secured an exclusive, irrevocable option to acquire Amazon Mining Company's 1% production royalty over 13 patented claims at Columbia for a fixed price of 500oz of gold (approximately A$3.1 million at spot), regardless of how large the resource grows.
- Exercising the option would reduce Columbia's aggregate royalty burden from approximately 3.8% to approximately 3.2% — a 16% reduction on a resource-weighted basis — directly improving project economics per ounce produced.
- The near-term cash cost is minimal: just 5oz of gold per year (approximately A$30,000) to keep the option alive, with the 465oz balance only payable if and when Sentinel elects to exercise at or around a Final Investment Decision.
- The 13 patented claims covered by the Amazon Royalty host approximately 500,000oz of Columbia's current 920,000oz Mineral Resource, making this royalty reduction material to more than half the existing resource base.
- The fixed 500oz purchase price is locked in ahead of an updated Columbia Mineral Resource Estimate targeted for November 2026, meaning Sentinel has capped its cost before any potential resource expansion increases the value of the patented claims.
Sentinel locks in right to retire legacy royalty at Columbia Gold-Silver Project
Sentinel Metals (ASX: SNM) has secured an exclusive and irrevocable option to acquire the 1% production royalty held by Amazon Mining Company over 13 patented claims at its 100%-owned Columbia Gold-Silver Project in Montana. The move is designed to reduce Columbia’s effective aggregate royalty burden from approximately 3.8% to approximately 3.2%, a reduction of around 16% on a current resource-weighted basis. The fixed purchase price is 500oz of gold (currently equivalent to approximately A$3.1 million at spot), and that price is locked in regardless of how large the Columbia Resource ultimately grows.
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Key terms of the Amazon Royalty option
The 13 patented claims covered by the Amazon Royalty host approximately 500,000oz of Columbia’s current 920,000oz Mineral Resource. The claims are privately owned blocks sitting within a broader project area of unpatented federal claims, and the royalty applies only to the patented block.
The option structure is deliberately low-cost in the near term. Sentinel pays 5oz of gold per year (approximately A$30,000) to keep the option alive, with every annual payment credited against the 500oz total purchase price. After seven annual payments of 5oz each (35oz in total), the remaining balance of 465oz (approximately A$2.9 million) becomes due only if and when Sentinel elects to exercise. That exercise decision is expected at or around a Final Investment Decision on mine development.
Critically, Sentinel can terminate the agreement at any time without penalty and with nothing further to pay. The term can also be extended by up to three one-year periods (at 25oz per extension) if permitting delays arise, for a maximum term of 10 years.
The payment schedule, sourced directly from the announcement, is set out below:
| Payment Event | Gold (oz) | Approx. A$ Value |
|---|---|---|
| Signing | 5oz | ~A$30k |
| Year 1 | 5oz | ~A$30k |
| Year 2 | 5oz | ~A$30k |
| Year 3 | 5oz | ~A$30k |
| Year 4 | 5oz | ~A$30k |
| Year 5 | 5oz | ~A$30k |
| Year 6 | 5oz | ~A$30k |
| On Exercise | Balance: 465oz | ~A$2.9M |
Balance assumes all seven option payments made before exercise. Based on US$4,480/oz gold and AUD/USD 0.72 as at 7 September 2026.
Why royalties matter for gold project economics
A production royalty is a percentage of revenue paid to a third party from every ounce produced, regardless of what it costs to mine that ounce. Whether the gold price is high or margins are tight, the royalty payment comes off the top.
That distinction matters when assessing project economics. Lower royalties mean the project retains more revenue per ounce produced, which flows directly into cash flow, payback periods, and ultimately the internal rate of return investors use to assess viability.
It also helps to understand the difference between the two types of mining claims at Columbia. Patented claims are privately owned parcels of land where the claim holder owns the surface and mineral rights outright. Unpatented claims are grants of mineral rights on federal land, where the US government retains ownership of the surface. The Amazon Royalty applies only to the patented block, which is why reducing it doesn’t affect the entire project uniformly but does materially affect the portion of the resource it covers.
The royalty itself is 36 years old, having been reserved when Amazon Mining Company sold the patented claims in 1990. It pre-dates the current Columbia Mineral Resource Estimate by decades and was never structured around the project’s current scale.
De-risking Columbia ahead of a major resource update
This transaction is one step in what Sentinel has described as a systematic strategy to de-risk Columbia’s future development. The timing is deliberate: an updated Columbia Mineral Resource Estimate is targeted for November 2026, and the fixed 500oz purchase price is locked in now, before that update potentially increases the resource footprint covered by the patented claims.
Sentinel’s portfolio now includes a second 100%-owned North American asset: the Big Springs Gold Project on Nevada’s Independence Trend, which hosts a Mineral Resource of more than 1 million oz and has existing mining approvals in place.
Managing Director Matt Herbert framed the option’s strategic logic directly:
Matt Herbert, Managing Director & CEO
“This is a 36-year-old royalty that pre-dates the current Columbia Mineral Resource Estimate, and we have now locked in the right to remove it for 500 ounces of gold, irrespective of how large the Columbia Resource ultimately becomes. Importantly, it costs us just 5 ounces a year to preserve that right, with the balance only payable if and when we choose to exercise the option…”
“…by the time we reach FID the remaining balance should be relatively modest in the context of the overall project development.”
Key upcoming milestones for the Columbia project include:
- Updated Columbia Mineral Resource Estimate: targeted November 2026
- Option term: up to 7 years (extendable to 10 years if permitting delays arise)
- Exercise decision expected: at or around Final Investment Decision
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About Sentinel Metals
Sentinel Metals (ASX: SNM) is a North American gold company with two 100%-owned projects. The Columbia Gold-Silver Project in Montana hosts an Inferred Mineral Resource of 21.4Mt at 1.3g/t Au for 920,000oz of gold. The Big Springs Gold Project on Nevada’s Independence Trend hosts a Mineral Resource of more than 1 million oz and has existing mining approvals in place.
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