Gold Royalty Corp. [GROY-NYSE American] and Ely Gold Royalties Inc. [ELY-TSXV; ELYGF-OTCQX] have entered into a definitive agreement, dated June 21, 2021, under which Gold Royalty will acquire all of the issued and outstanding common shares of Ely Gold.
Under the terms of the agreement, each holder of Ely shares will have the option to receive consideration per Ely share of either C$1.46 in cash, or 0.2450 of a Gold Royalty common share, subject to pro-ration based on a maximum aggregate cash consideration of C$84 million and a maximum aggregate number of Gold Royalty shares issued of approximately 41.5 million.
The share exchange ratio implies a mix of C$0.42 in cash plus 0.1742 of a Gold Royalty share per Ely share on a fully diluted, in-the-money, and fully pro-rated basis (assuming the maximum aggregate cash consideration of C$84 million).
The consideration represents a premium of approximately 42% to Ely Gold shareholders based on the 30-day volume weighted average price of the Gold Royalty shares and Ely shares ending on June 18, 2021.
At closing, assuming maximum aggregate cash consideration of C$84 million, existing Gold Royalty and Ely Gold shareholders will own approximately 55% and 45%, respectively, of Gold Royalty after giving effect to the arrangement on a fully diluted, in-the-money, and fully-prorated basis.
The transaction creates a new, sizable Americas-focused royalty company with a peer-leading resource endowment and a robust development pipeline, including nearly 100 royalties on various production, near-production, development and exploration assets.
David Garofalo, CEO, President and Chairman of Gold Royalty, stated: “We are pleased to present this arrangement to the shareholders of Ely Gold and Gold Royalty. The acquisition of Ely Gold is consistent with our strategy of identifying opportunities to create shareholder value. Shareholders of ‘New Gold Royalty’ will benefit through their participation in a larger, well-funded, and more diverse company that has the ability to acquire royalties in a variety of high-return projects globally.”
Trey Wasser, CEO, President and Director of Ely Gold, who will be joining New Gold Royalty’s board of directors, commented: “This is a great outcome for Ely Gold shareholders. The transaction provides an immediate, compelling premium, a significant cash component and the opportunity to continue to participate in the growth of an outstanding combined asset portfolio.”