Gold Royalty in US$27 million Nevada Gold Mines deal

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Gold Royalty Corp. [GROY-NYSE American] has struck a deal with Nevada Gold Mines LLC (NGM), a joint venture between Barrick Gold Corp. [ABX-TSX, GOLD-NYSE] and Newmont Corp. [NGT-TSX, NEM-NYSE], to acquire a basket of royalties on properties located in Nevada for US$27 million.

Under the agreement Gold Royalty Corp will satisfy the amount by issuing 9.4 million common shares to Nevada Gold Mines on closing.

Currently ranked as the world’s single largest gold-producing complex, Nevada Gold Mines is operated by Barrick Gold. It is a joint venture held 61.5% by Barrick and 38.5% by Newmont.

Gold Royalty shares advanced on the news, rising 4.2% to US$2.70. The shares are currently trading in a 52-week range of $5.65 and $2.15.

The assets being sold include a 10% net profits interest royalty on the high-grade producing Granite Creek Mine, which is operated by i-80 Gold Corp. [IAU-TSXV] and payable after 120,000 ounces of gold, or equivalent is cumulatively produced from the project.

The sale also includes a 2.00% net smelter return royalty on the Bald Mountain Mine, which is operated by Kinross Gold Corp. (K-TSX, KGC-NYSE), and payable after 10 million ounces of gold has been produced from the properties.

Also, Gold Royalty is buying a 1.25% NSR on the Bald Mountain Joint Venture Zone, also operated by Kinross.

“We are excited to further expand our strong royalty position in Nevada, one of the best mining jurisdictions in the world, by acquiring a portfolio of high-quality royalties from NGM,’’ said Gold Royalty Chairman and CEO David Garofalo.

“Granite Creek commenced underground mining earlier this year and we are encouraged by the high-grade potential of the project to deliver significant returns in the future,’’ he said. “The Bald Mountain royalties provide Gold Royalty exposure to exploration upside on one of the largest private mining land packages in the U.S.”

Garfalo went on the say that the transaction further validates the company’s business model and growth strategy as it welcomes NGM as a significant Gold Royalty shareholder.

The transaction with Gold Royalty is expected to close at the end of the current quarter. It has been announced on the same day as Barrick Gold unveiled details of a deal to sell a portfolio of royalties to Maverix Metals Inc. [MMX-TSX, NYSE American] for up to US$60 million.

That deal 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.

Gold Royalty recently reported record revenue for the three months ($1.9 million) and nine months ($3.1 million) periods ended June 30, 2022. The company also reiterated that it expects to post revenue of $5 million for the full year, supported by the commencement of production of the Beaufor and Beacon mill in Quebec in July 2022.

As of June 30, 2022, the company had cash equivalents and marketable securities valued at $17.1 million, an amount that positions the company for future growth.

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