Electric Royalties Ltd (TSX-V:ELEC, OTC:ELECF) has signed a commitment letter to enhance its existing convertible credit facility from C$5 million to C$10 million.
The agreement with Gleason & Sons LLC, controlled by shareholder Stefan Gleason, a notable shareholder and Board Observer of Electric Royalties, is backed by a portion of Electric Royalties' existing royalty portfolio, which includes royalty assets in Canada, Spain, and the US.
Additionally, it encompasses a lien on the company's present and future rights in any additional royalties acquired using funds advanced under the credit facility, if any.
Simultaneously, Electric Royalties has taken a C$500,000 drawdown from the convertible credit facility for working capital.
Brendan Yurik, the company's CEO, thanked Stefan Gleason for his continued support of the company.
“The additional $5 million in credit that he is providing, with a favorable term and rate, speaks to his belief in the mandate of the company, which is to grow shareholder value by enabling the development of metal assets the world critically needs to achieve electrification and transition away from fossil fuels,” Yurik told investors.
“Access to this credit facility means that Electric Royalties is able to continue pursuing its near-term goal of becoming cashflow positive through the acquisition of additional producing royalties, without diluting shareholders at current share prices."
Stefan Gleason, who serves as managing director of Gleason & Sons, also shared his satisfaction in aiding Electric Royalties in capitalizing on the current environment for acquiring undervalued royalties.
“As a shareholder, I applaud Brendan and the Company's board for having kept overhead costs so low while continuing to execute on their business plan - and without dilutive equity financings whilst Electric Royalties' market valuation appears so far below fair value."
Electric Royalties owns a diverse range of royalty assets such as a gross revenue royalty (GRR) on the Penouta mine in Spain, a GRR on the Kenbridge nickel project in Canada, a sliding scale gross metals royalty (GMR) on the Middle Tennessee mine in the United States, a GMR on the Authier lithium project in Canada, and a GRR on the Bissett Creek graphite project in Canada.