Maverix Metals Inc (TSX:MMX) said it has acquired a portfolio of 22 royalties from Barrick Gold Corp for an upfront cash consideration of $50 million and up to $10 million in contingent consideration depending on certain events occurring.
The portfolio includes royalties on development, advanced exploration and exploration stage projects located predominantly in Canada, the United States, and Australia, highlighted by a 1.0% royalty on Skeena Resources' Eskay Creek gold-silver project in the prolific Golden Triangle of British Columbia.
"This transaction marks another important milestone in our continued growth at Maverix. We are pleased to add Barrick alongside Newmont, Pan American Silver, Kinross and Gold Fields, to the list of reputable counterparties from which we have acquired royalty portfolios,” Dan O'Flaherty, CEO of Maverix said in a statement.
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"This portfolio boasts significant existing attributable mineral inventory with meaningful exploration potential in historic mining geographies. The acquisition increases our portfolio to a total of 147 royalties and streams and enhances our already robust exposure to the next generation of gold mines," he added.
Maverix said it has agreed to make up to $10 million in contingent payments if the following events occur within six years of the closing date of the transaction:
- $6 million payable upon Eskay Creek receiving all material permits required to commence construction;
- $2 million payable when Maverix has received $10 million in payments from the royalty portfolio (excluding any proceeds derived from Eskay Creek); and
- $2 million payable when Maverix has received $20 million in payments from the royalty portfolio (excluding any proceeds derived from Eskay Creek).
Maverix said it will use cash on hand and its revolving credit facility to fund the upfront purchase price. The transaction is expected to close by the end of September and is subject to customary closing conditions.
Key royalties acquired are:
- Eskay Creek Royalty - A 1.0% net smelter return royalty on the Eskay Creek project, located in British Columbia, operated by Skeena Resources Limited. Eskay Creek is a past-producing gold-silver mine located in the Golden Triangle of northwest British Columbia. Eskay Creek has proven and probable mineral reserves of 26.4 million tonnes at 3.37 grams per tonne gold and 94 g/t silver containing approximately 2.9 million ounces of gold and 80.2 million ounces of silver. In July 2021, Skeena completed a pre-feasibility study for the project which highlighted a high-grade open-pit operation producing an average of 249,000 ounces of gold and 7.2 million ounces of silver per year with an initial mine life of approximately 10 years generating an after-tax NPV5% of C$1.4 billion and a 56% IRR at a $1,550 per ounce gold price. Skeena is currently completing a feasibility study which is expected to be released in the third quarter of 2022. Skeena has the right to purchase 0.5% of the 1.0% royalty for a cash payment of C$17.5 million.
- Bullfrog Gold Royalty - A 2.0% NSR royalty on the Bullfrog Gold project operated by Augusta Gold Corp. Bullfrog Gold is a past-producing gold-silver mine located in the prolific Bullfrog mining district near Beatty, Nevada. Bullfrog Gold has measured and indicated resources of 71 million tonnes at 0.53 g/t gold and 1.26 g/t silver containing approximately 1.2 million ounces of gold and 2.9 million ounces of silver. Additionally, there are inferred resources of 16.7 million tonnes at 0.48 g/t gold and 0.96 g/t silver containing approximately 0.3 million ounces of gold and 0.5 million ounces of silver. Augusta expects to complete a pre-feasibility study in the fourth quarter of 2022 with a path to commercial production by 2024, subject to the preparation of up-to-date economic studies, an affirmative board production decision, and financing. The 2.0% royalty rate is subject to change such that the maximum aggregate royalty on any individual mining claim shall not exceed 5.5% but shall be a minimum 0.5% on any individual mining claim.
- Lagunas Norte Royalty -- A 2.0% NSR royalty on the refractory sulphide ore project of the Lagunas Norte mine operated by Boroo Pte Ltd. Lagunas Norte is an open-pit heap-leach mine located in the Alto Chicama mining district in northern Peru and has produced over 10 million ounces of gold since 2005. As of June 30, 2021, Lagunas Norte had proven and probable reserves of 49.4 million tonnes at 2.49 g/t gold and 6.24 g/t silver containing approximately 4.0 million ounces of gold and 9.9 million ounces of silver. In December 2021, Boroo announced a new technical report for Lagunas Norte, which included the PMR project and had a 22-year mine life producing an average of 147,000 ounces of gold per year. The royalty terminates after one million ounces of gold has been sold from the PMR and Boroo has the right to buy back the royalty for a cash payment of $16 million before July 1, 2023.
- Sanutura (South Hounde) Royalties --A pair of 1.0% - 2.0% NSR royalties on the Tankoro deposit of the Sanutura project operated by Sarama Resources Ltd. The Tankoro deposit is the primary deposit of Sanutura, Sarama's flagship project located in the prolific Hounde Belt in Burkina Faso. The Tankoro deposit hosts an indicated resource of 9.4 million tonnes at 1.9 g/t gold containing approximately 0.6 million ounces of gold and an inferred resource of 43.6 million tonnes at 1.4 g/t gold containing approximately 1.9 million ounces of gold. Sarama is currently completing a 50,000 metre drill program to update the mineral resource estimate which will lead to a preliminary economic assessment expected to be completed in the fourth quarter of 2023.
Maverix is a gold-focused royalty and streaming company with a globally diversified portfolio of over 140 assets. Maverix's mission is to increase per-share value by acquiring precious metals royalties and streams.
Contact the author at jon.hopkins@proactiveinvestors.com