Altus Strategies PLC (AIM:ALS, TSX-V:ALTS, OTCQX:ALTUF) and Elemental Royalties Corp (TSX-V:ELE) are to merge.
Under the deal, each Altus shareholder will be entitled to receive 0.594 new Elemental shares for each Altus share in what’s being dubbed “a merger of equals.”
The exchange ratio has been agreed between the boards of Elemental and Altus taking into account the relative market capitalisations of both companies.
On completion, Elemental shareholders will own approximately 52.9% and Altus shareholders approximately 47.1% of the enlarged vehicle.
The Elemental directors and Altus directors believe the creation of the New Elemental Altus Group (TSX:AIF) will deliver substantial benefits for all stakeholders, including increased scale and diversification.
The enlarged group will account for a combined portfolio of 69 assets across 13 jurisdictions, concentrated in tier-1 mining jurisdictions, of which 11 are in production, and primarily focused on gold.
Combined adjusted 2022 revenue of the new Elemental Altus Group (TSX:AIF) is likely to amount to US$19.6mln.
In addition, there is significant near term growth potential from first expected revenue from Ming, Bonikro and Mercedes.
Investment group La Mancha has a large stake in both companies and is supporting the deal. Other major institutional investors are also in support.
Upon completion of the merger, it is intended an eight-member board will be constituted from a combination of existing directors from both Elemental and Altus.
Steven Poulton, current chief executive of Altus will be appointed as executive chair and Frederick Bell, current chief executive of Elemental will be appointed as chief executive of the enlarged group.
Elemental's name will be changed to Elemental Altus Royalties Corp shortly after completion, and the listing will be in Canada.
Elemental has received irrevocable undertakings in respect of just under 68mln Altus shares representing approximately 57.9%.
"Combining Altus and Elemental will create a new, strong and dynamic income-generating champion in the mining royalty sector,” said Steven Poulton, chief executive of Altus.
“The transaction will bring significant benefits to all current shareholders and establish a compelling investment proposition to potential new institutional and other investors.