Japan Gold unveils US$5.0 million royalty sale to Osisko
Japan Gold Corp. [JG-TSXV, JGLDF-OTCQB] has announced the sale of a 1.5% net smelter return royalty on certain of the company’s properties and assets in Japan to Osisko Gold Royalties Ltd. (OR-TSX, OR-NYSE) for US$5.0 million in cash.
Japan Gold is a Canadian mineral exploration company with a focus on Japan’s three largest islands: Hokkaido, Honshu, and Kyushu. The portfolio of 34 gold projects cover areas with known gold occurrences and a history of mining. These projects are prospective for high-grade epithermal gold mineralization.
On Wednesday, the shares eased 7.7% or $0.05 to $0.06, and trade in a 52-week range of 17.5 cents and $0.04.
The company said the royalty, which Osisko has agreed to purchase, is outside of a country-wide alliance between Japan Gold and Barrick Gold Corp. [ABX-TSX, GOLD-NYSE] which was previously established to jointly explore, develop and mine certain gold mineral properties and mining projects.
The Barrick Alliance previously completed a successful two-and-a-half-year country-wide screening program of 29 projects and has selected six with the potential to host Tier 1 and Tier 2 gold ore bodies for further advancement, and two more recently acquired projects and three project extensions for initial evaluation.
“We are pleased to work with Osisko as a strategic partner to advance our exploration of epithermal gold properties in Japan,’’ said Japan Gold Chairman and CEO John Proust. “The transaction allows us to accelerate our exploration activities across Japan to unlock the significant mineral potential of our projects through a non-dilutive financing,’’ he said. “As a first mover in Japan, the company has assembled a significant land position of 100%-owned permits in areas of past-producing gold mines and surrounding the Hishikari mine, a major gold deposit and one of the world’s highest grade gold producers. These districts have the geological potential to support significant discoveries.’’
On the first anniversary of the investment agreement or such other date mutually agreed to between the Japan Gold parties (including its Japan Gold KK subsidiary) and Osisko, Osisko will have the option to purchase an additional 0.5% net smelter return royalty form Japan Gold KK on the royalty properties for an additional US$3.0 million cash.
The royalty is a secured obligation of the Japan Gold parties evidenced by, among other things, a share pledge by the company of JGKK’s shares as well as a guarantee from Japan Gold, with a full security package to be put in place by the parties following further consultation with the applicable governmental authorities and to the extent permitted under applicable laws and the strategic alliance agreement dated February 23, 2020, among the Japan Gold parties and Barrick Gold.
Japan Gold has granted Osisko certain rights as part of the transaction, including the right of first refusal on future royalty and stream transactions on present and future Japan Gold properties that are not subject to the strategic alliance agreement.