Maverix Metals Inc (TSX:MMX) is acquiring a new gold stream from long-term strategic partner Auramet Capital Partners LP.
The Vancouver-based royalty company announced it had reached an agreement with Auramet to acquire a gold stream that will deliver 5,000 ounces of gold to Maverix per year.
In consideration for the stream, Maverix will pay Auramet a cash payment of $50 million, according to a release from the company.
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The gold stream will be delivered quarterly, Maverix said, and the company will make ongoing cash payments equal to 16% of the spot gold price for each gold ounce delivered. Once a total of 50,000 ounces of gold are delivered to the stream, Auramet will have the option to terminate the stream for a cash payment of $5 million less certain cash flows related to the stream.
In addition, Maverix will be entitled to receive an amount in gold that is equivalent to all dividends distributed by Auramet on 2% of its shares outstanding, which is done semi-annually. In the fiscal year 2020, Auramet paid out $35 million in dividends to its shareholders, according to Maverix.
Auramet plans to use the proceeds of the transaction to make further investments in the mining sector, including acquiring small royalties and streams, as well as for general corporate purposes.
Maverix will have a right of first refusal to purchase any royalties or streams that Auramet decides to sell from their current portfolio or acquires in the future over the duration of the gold stream. It will have the right to participate in any royalty or stream that Auramet may acquire in the future where the transaction value is equal to or greater than $20 million.
Longstanding relationship
The deal strengthens Maverix’s existing relationship with Auramet, which is an affiliate of Auramet International LLC, CEO Dan Flaherty told investors.
"Maverix has a longstanding relationship with Auramet, including acquiring a portfolio of royalties from Auramet in 2017, which has already returned over 85% of our initial investment and continues to generate meaningful cash flow,” Flaherty said in a statement.
“This transaction adds significant and immediate cash flow, as well as additional exposure to gold, while also forming a partnership that could allow Maverix to acquire future royalties sourced by Auramet, through its relationships with an extensive and growing list of precious metals companies."
Maverix is a gold-focused royalty and streaming company with a globally diversified portfolio of over 100 assets.
Contact Angela at angela@proactiveinvestors.com
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