Globex Mining Enterprises Inc (TSE:GMX) (OCTMKTS:GLBXF) (FRA:G1MN), the exploration, royalty, and property bank, is to sell its Francoeur/Arntfield/Lac Fortune gold property in Québec to mining major Yamana Gold Inc (TSE:YRI) (NYSE:AUY) (LON:AUY) (FRA:RNY) in a cash and share deal worth over C$15 million.
Globex has struck a definitive purchase agreement on the asset, which lies in the prolific Abitibi region, and adjoins Yamana’s Wasamac gold mine project, which is being advanced towards production.
As part of the deal, Yamana will also acquire 30 claims in Beauchastel township to the east of the Wasamac gold property and three claims in the Malartic township from Globex.
READ: Globex Mining receives cash payments as part of its recent resource royalty transactions
The agreement will provide Globex with "revenue for the next four years as well as a significant royalty stream should a mineral deposit on the property package enter into production", it said.
At closing, which is expected to take place on June 21 this year, C$4 million will be paid to Globex to be satisfied by Yamana issuing 706,714 of its shares at a deemed price of C$5.66 each. Based on Yamana's closing share price in Toronto on Friday, June 11 (of C$6.22) those shares would be worth C$4,395,761.08.
Then, Yamana will pay on each annual anniversary cash sums over the next four years amounting to C$11 million in total, starting with C$3 million in cash on the first anniversary after closing.
Based on Yamana’s current trading price, the total cash and share consideration of the deal is C$15,395,761.08, of which Globex will receive $7,395,761.08 in cash and shares within the first year.
Globex said it will also retain a 2% gross metal royalty (GMR) on all production from the Francoeur/Arntfield/Lac Fortune property and the 30 Beauchastel and three Malartic township claims, of which 0.5% may be purchased by Yamana for C$1.5 million.
Yamana will assume payment of the three underlying royalties on the properties and will make a final environmental bond payment of $223,633.50 currently due by Globex on the Francoeur Mine in July, 2021, after which Globex will transfer the bond to Yamana.
Contact the author at giles@proactiveinvestors.com