Barrick Gold selling royalties to Maverix Metals
Barrick Gold Corp. [ABX-TSX, GOLD-NYSE] has struck a deal to sell a portfolio of royalties to Maverix Metals Inc. [MMX-TSX, NYSE American] for up to US$60 million.
The portfolio consists of 22 royalties on production of minerals from mines located in North America, South America and Africa. It includes multiple assets that contain multi-million gold equivalent ounces of reserves and resources, highlighted by a 1.0% royalty on Skeena Resources Ltd.’s [SKE-TSXV, SKE-NYSE, RXFB-FRA] Eskay Creek gold-silver project in the prolific Golden Triangle region of British Columbia.
The Eskay Creek project is currently undergoing a feasibility study that is expected to be completed in the third quarter of 2022. Skeena has the right to purchase 0.5% of the 1.0% royalty for $17.5 million in cash.
Under the agreement Maverix will pay US$50 million in cash on closing of the portfolio sale, subject to the exercise of any right of first refusal or buy-down right by the counterparties under certain royalties and three contingent payments, including:
- US$6 million if the operator Skeena Resources obtains all material permits needed to commence production of the Eskay Creek mine within six years of closing.
- US$2 million if Maverix receives cash payments from the portfolio, excluding the Eskay Creek royalty, equal to or greater than $10 million within six years of closing.
- A further US$2 million if Maverix receives cash payments from the portfolio, excluding the Eskay Creek royalty, equal to or greater than $20 million within six years of closing.
The transaction is expected to close at the end of the third quarter of 2022.
Maverix Metals shares advanced on the news, rising 2.6% or 11 cents to $4.35. The shares are trading in a 52-week range of $6.88 and $4.22.
Barrick Gold shares advanced, rising 1.25% or 24 cents to $19.39 on volume of 317,700, and trade in a 52-week range of $33.50 and $19.02.
Maverix is a gold-focused royalty and streaming company with a globally diversified portfolio of over 140 assets.
“This transaction marks another important milestone for our continued growth at Maverix,’’ said Maverix CEO Dan O’Flaherty. We are pleased to add Barrick alongside Newmont Corp., [NGT-TSX, NEM-NYSE], Pan American Silver Corp. [PAAS-TSX, NASDAQ], Kinross Gold Corp. (K-TSX, KGC-NYSE), Gold Fields, to the list of reputable counterparties from which we have acquired royalty portfolios,’’ he said.
“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.’’
Maverix said it will use cash on hand and its revolving credit facility to fund the upfront purchase price of the transaction.
Assets in the portfolio include a 2.0% royalty on the refractory sulphide ore project of the Lagunas Norte mine in northern Peru, and a pair of the 1.0%-2.0% NSR royalties on the Tankoro deposit of the Sanutura project in Burkina Faso.