Nomad Royalty (TSX:NSR) Company Ltd said it continues to grow its cash flow-focused portfolio, announcing it had struck a US$95 million gold stream deal with Orion Mine Finance over the latter's 40% interest in the Greenstone gold project, which is set to become one of Canada's largest gold mines.
Nomad will make up-front cash payments totaling US$95 million for 5.938% of the gold produce attributed to Orion's 40% interest in the Ontario mine until 120,333 ounces have been delivered and 3.958% thereafter.
As part of the deal, Nomad said it had also made a long-term commitment to funding mine-level environmental, social and governance (ESG) programs and will make payments to Greenstone Gold Mines LP (GGM), the owner of the project, equal to U$30 per ounce of gold it receives.
Affiliates of Orion beneficially own or control around 70% of Nomad Royalty (TSX:NSR) shares, while the Greenstone project is a 60:40 partnership between Equinox Gold (TSX:EQX) Corp and Orion Mine Finance.
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"The addition of the Greenstone Gold Stream strengthens our portfolio and adds near-term production from a fully permitted project located in Ontario, a premier mining jurisdiction," Vincent Metcalfe, Nomad's CEO told investors.
"This transaction is consistent with Nomad's strategy of building a cash flow focused precious metals royalty and stream portfolio."
Joseph de la Plante, Nomad's chief investment officer (CIO) added: "Through the Gold Stream, Nomad is excited and proud to make a life-of-mine financial commitment to support GGM's environment and community-based programs."
The Greenstone project hosts 5.54 million ounces in proven and probable reserves grading 1.27 grams per tonne (g/t) gold and GGM proposes to mine the Hardrock deposit as a 27,000 tonnes-per-day open-pit mine with an initial life of 14 years.
The stream on Orion's 40% interest applies to all mining claims, mining leases and other similar mining rights currently comprising the Greenstone project and also to potential future upside at the existing orebodies and prospective targets that may be acquired in the future, noted Nomad.
It does not encumber Equinox Gold (TSX:EQX) Corp's 60% interest in GGM or the Greenstone project, it added.
Under the terms of the deal, a first deposit of US$13.3 million is expected to be advanced by Nomad in the fourth quarter this year, while US$81.7 million is expected to be advanced no later than June 30, 2023 (second deposit).
Funding of the first deposit is conditional upon various elements, including that Orion enters into a senior credit facility on or before November 30, this year, and a formal construction decision is made on the project.
Nomad Royalty Company Ltd is a precious metals royalty company, which buys the rights to a percentage of gold or silver produced from a mine for its life. Nomad owns a portfolio of 15 assets, of which eight are on currently producing mines.
The company said it was "dedicated to promoting responsible mining practices and supporting the communities" where it operates.
Contact the author at giles@proactiveinvestors.com