Electric Royalties Ltd (TSX-V:ELEC, OTC:ELECF) has announced the signing of an agreement with Strategic Minerals Europe Corp to acquire a newly-granted 0.75% Gross Revenue Royalty (GRR) on the producing Penouta tin-tantalum mine in Spain, in exchange for a cash payment of C$1 million and 500,000 Electric Royalties common shares.
The royalty company also said it will have an option for a period of seven months from closing to acquire an additional 0.75% GRR on Penouta in exchange for an additional cash payment of C$1.25 million.
“Penouta has been steadily increasing production since the start of 2022,” Electric Royalties CEO Brendan Yurik said in a statement.
READ: Electric Royalties sees portfolio of 20 royalties advance toward lithium, manganese and iron production
“Our capital is expected to be well utilized for mine improvements, as well as allowing Strategic Minerals to potentially add additional revenue streams from Penouta,” Yurik added.
Electric Royalties noted the royalty rates will be reduced to 0.5% respectively once certain minimum royalty payments have been made.
The Penouta Mine is currently the largest tin and tantalum producer in all of Europe, having generated second-quarter 2022 revenues of US$4.7 million, according to the company.
As well, Electric Royalties reported that it has entered into a financing commitment, to be drawn at the election of the company, with a significant Electric Royalties shareholder.
The commitment is for a C$2 million convertible loan facility with a term of three years, bearing interest at 15%, with interest payments capitalized into the principal and due at the end of the loan term.
It added that at the discretion of the shareholder, the loan is convertible into common shares of Electric Royalties at C$0.50 per share if the company's shares trade over that price for a period of five consecutive trading days throughout the term.
Electric Royalties is a royalty company established to take advantage of the demand for lithium, vanadium, manganese, tin, graphite, cobalt, nickel, zinc and copper used in electrification of consumer products. It has 20 royalties in its portfolio, including one that is generating revenue.
Contact Sean at sean@proactiveinvestors.com