Soma Gold eliminates El Limón royalty to boost operating margins

Soma Gold acquires El Limón gold mine royalty from Red Rock Resources for C$1.88M, boosting operating margins and funding mill expansion in Colombia.

Soma Gold (TSX-V:SOMA) has agreed to acquire the royalty on production revenue from its El Limón gold mine in Colombia from Red Rock Resources, in a transaction combining cash and purchase warrants.

The total consideration amounts to C$1.88 million ($2.04 million), alongside the issuance of 200,000 purchase warrants to Red Rock. These warrants grant the holder the option to purchase Soma Gold shares at C$2 each for three years from the issue date.

Originally, Red Rock retained a 3% royalty on net smelter returns (NSR) for up to C$2.77 million of product revenue from El Limón, which would reduce to a 1% royalty after completion, capped at C$1.38 million.

CEO Geoff Hampson highlights strategic benefits

According to Soma Gold CEO Geoff Hampson, removing the royalty is expected to improve operating margins as production at the El Limón plant resumes.

“The agreement not only streamlines the asset’s cost structure but also demonstrates the company’s commitment to unlocking the full value of its Colombian portfolio for the benefit of all stakeholders,” said Hampson.

Funding expansion and exploration in Colombia

Soma Gold recently raised C$17.25 million through a two-tranche placement to fund its Colombian projects. The funds will support:

• Ongoing mill expansion at El Limón
• Exploration at Nechi Mine
• Installation of ore sorting facilities

Soma Gold’s Colombian operations cover 43 km² of mineral concessions in Antioquia, including two fully permitted mills located within 25 km of each other, positioning the company as a growing gold producer in the region.