Star Royalties Ltd (TSX-V:STRR) has announced the closing of the previously announced strategic non-brokered private placement of 15,384,620 common shares in its subsidiary, Green Star Royalties Ltd at a price of C$1.00 each.
The private placement is expected to accelerate the company's ability to pursue larger green opportunities and to establish a substantial pure-green royalty company that should attract capital from both generalist and ESG-focused investors.
Under the private placement, Agnico Eagle Mines Limited has purchased 14,134,620 Green Star shares for an aggregate purchase price of C$14.13 million. The company's management team and board of directors have purchased the remaining 1,250,000 Green Star shares in the private placement for an aggregate purchase price of C$1.25 million.
In a statement, Alex Pernin, chief executive officer of Star Royalties, commented: "We are delighted to finalize a strategic relationship with Agnico Eagle and we look forward to jointly maximizing the potential of Green Star. We recognize the alignment between our and Agnico Eagle's commitments to sustainability and we welcome their expertise as not only a highly reputable senior Canadian gold mining company but also a global ESG leader in their industry. We will now focus on scaling up our business, including with our partner Blue Source LLC, North America's leading carbon offset developer and marketer."
READ: Star Royalties subsidiary Green Star Royalties expands carbon credit partnership four-fold with Blue Source LLC
Following the closing of the private placement, Green Star is now owned 61.9% by Star Royalties, 35% by Agnico Eagle and 3.1% by management.
Management's direct or indirect holding of Green Star Shares are now: Kevin MacLean (0.84%), Anthony Lesiak (0.74%), Alexandre Pernin (0.52%), Dmitry Kushnir (0.25%), Jay Layman (0.25%), Kylie Dickson (0.25%), Jinhee Magie (0.12%), Kenneth Ngo (0.10%), and Belinda Labatte (0.03%).
In connection with the private placement, Star Royalties, Agnico Eagle and management entered into a unanimous shareholders' agreement under which each of Star Royalties and Agnico Eagle will have the right to appoint two individuals to the board of directors of Green Star for so long as each shareholder continues to exercise control or direction over at least 10% of the issued and outstanding Green Star shares.
Green Star will establish a Technical Committee that will review new investment opportunities and will have equal representation from Star Royalties and Agnico Eagle.
The agreement also provides that if Star Royalties holds less than 10% of the issued and outstanding shares of Green Star, Agnico Eagle may require Green Star to repurchase all securities of Green Star held by management for the fair market value of such securities. In addition, it contains restrictions on the transfer of Green Star Shares and a limitation on certain corporate actions of Green Star that do not have the consent of Agnico Eagle and Star Royalties and certain other customary provisions. The agreement will terminate on the date that one party owns all of the issued and outstanding Green Star Shares or on a "go-public" transaction.
In connection with the private placement, Agnico Eagle and Green Star also entered into a Co-Investment and Environmental Attribute Purchase (CIEAP) agreement under which Agnico Eagle was granted the right to co-invest with Green Star in up to 30% of certain future transactions. In addition, the CIEAP Agreement provides each of Agnico Eagle and Star Royalties the right to acquire 95% and 5%, respectively, of any environmental attributes (including carbon credits) that Green Star owns, or has the right to acquire, at fair market value.
In addition, Green Star has agreed to certain restrictions on its future capital commitments, including that it shall use commercially reasonable efforts to ensure that the Green Star's EA Deployed Capital, being the amount of deployed capital committed to projects or investments that generate a minimum number of environmental attributes, is greater than 75% of its aggregate deployed capital; and not make any investment, agree to any participation or increase the amount of deployed capital if it would result in Green Star's EA Deployed Capital being less than 50% of its aggregate deployed capital, without obtaining the prior consent of Agnico Eagle.
Star Royalties is a precious metals and carbon credit royalty and streaming company. The company created the world's first carbon-negative gold royalty platform through its pure-green subsidiary, Green Star Royalties, and offers investors exposure to precious metals and carbon credit prices with an increasingly negative carbon footprint.
The company's objective is to provide wealth creation by originating accretive transactions with superior alignment to both counterparties and shareholders.
Contact the author at jon.hopkins@proactiveinvestors.com