Electric Royalties Ltd (CVE:ELEC) (OTCMKTS:ELECF) said it has restructured its previously-announced letter of intent (LOI) with Sprott Resource Streaming and Royalty Corp with regards to the acquisition of the Middle Tennessee Mine (MTM) Royalty from Globex Mining Enterprises Inc (TSE:GMX) (OTCMKTS:GLBXF) (FRA:G1MN), which Electric Royalties said will provide better value for its shareholders.
“We are excited to enter into these revised agreements with our partners at Globex and Sprott, as this reduces the cash component payable by the company to zero and reduces the overall dilution of the transaction to Electric Royalties,” Electric Royalties CEO Brendan Yurik said in a statement.
“Combined, these agreements provide a path forward to closing the acquisition without the need to raise additional capital,” Yurik added.
READ: Electric Royalties outlines highlights from "incredible quarter of growth" across its royalty asset portfolio
On April 15, Electric Royalties said Sprott Streaming would pay C$9.15 million in cash in return for 50% of the MTM royalty with Electric Royalties retaining 50% of the MTM royalty. Under the revised terms, Sprott Streaming would acquire 75% of the MTM Royalty by paying C$13.5 million in cash with Electric Royalties retaining 25% of the MTM Royalty.
As per the original agreement with Globex, Electric Royalties agreed to pay C$13.75 million in cash, having already made an initial C$250,000 down payment, plus issue nine million Electric Royalties common shares in return for the MTM Royalty on zinc production.
Thus as a result of its revised agreement with Sprott Streaming, Electric Royalties noted that it will no longer need to complete a C$10 million minimum equity financing in order to close its deal with Globex, in which Electric Royalties will also acquire a 1% Gross Revenue Royalty on the Glassville Manganese Project in New Brunswick.
In a separate statement, Globex Mining said it is pleased with Electric Royalties’ progress toward closing the purchase transaction. At closing, Globex expects to have over $27,500,000 in cash and shares of other listed companies as well as the 5,500,000 Electric Royalties warrants. In addition, Globex is working to complete several other transactions which, if finalized, will generate additional revenue for the company.
The MTM Royalty is a sliding scale gross metals royalty, with no royalty payable if the zinc price is below US$0.90 per pound, 1.0% between US$0.90 and US$1.10 and 1.4% at zinc prices above US$1.10 per pound. The Mid Tennessee Zinc Mines have been in intermittent operation for over 50 years and have produced over 2.7 billion pounds of zinc.
Contact Sean at sean@proactiveinvestors.com