Electric Royalties Ltd (TSX-V:ELEC, OTC:ELECF) announced it has entered into an agreement with Minera Cobre Verde (MCV) to acquire a cash-flowing copper stream on the Minera Cobre Verde Mine in Chile for US$2.1 million.
The deal gives Electric Royalties the right to purchase 76,000 pounds of copper monthly at a fixed price of US$2.75 per pound for four years, with the potential to double the stream for an additional US$2.1 million.
"We are thrilled to be partnering with MCV on our first streaming acquisition - a transaction that's expected to significantly boost our revenue and cash flow on a per share basis, while also providing long-term potential to partner and help fund production expansion in the future,” Electric Royalties CEO Brendan Yurik said in a statement.
"MCV routinely lowers risk by buying production material from multiple local sources, an approach in which Franck Lançon and his management team have tremendous experience."
The stream will be cash-settled, offering immediate cash flow for Electric Royalties, and it is expected to boost revenues and provide leverage to rising copper prices.
"With this transaction, Electric Royalties is gaining direct exposure to copper prices over the next four years and is progressing towards becoming cash flow positive ahead of our numerous advanced royalties expected to enter or re-enter production over the next six to 48 months,” Yurik said.
The announcement was welcomed by investors, with shares of Electric Royalties up more than 8% at about US$0.15 late morning on Wednesday.