Maverix Metals Inc. [MMX-TSX, NYSE American] said Monday September 21 that it has struck a deal to acquire a portfolio of 11 royalties for US$90 million from Newmont Goldcorp Corp. [NGT-TSX; NEM-NYSE].
Under the transaction, Maverix will issue 12 million common shares at $5 each to Newmont and pay $15 million in cash on closing. Maverix also agreed to make US$15 million in contingent cash payments due once certain production milestones are reached within five years of the closing date.
The royalty portfolio consists of gold assets located in Mexico, U.S.A, Canada and Guatemala, ranging from exploration to construction. The flagship royalty in the portfolio is a 2.0% NSR on Orla Mining Ltd.’s [OLA-TSX] Camino Rojo Oxide gold project in Zacatecas, Mexico.
Orla recently said it has obtained two key permits required to commence development of the project and remains on track to produce first gold in 2021.
The 100%-owned Camino Rojo Oxide Gold Project is an advanced gold and silver open-pit heap leach project. Hosting 1.03 million ounces of gold and 20.1 million ounces of silver reserves Camino Rojo will be Orla’s first mine. It is expected to produce 97,000 ounces of gold annually.
Another key royalty is a 1.0% NSR royalty on Bluestone Resources Corp.’s [BSR-TSXV; BBSRF-OTCQB] Cerro Blanco Project in Jutiapa, Guatemala. Early activities are expected to start at Cerro Blanco by Q1 2021. Cerro Blanco is a high-grade gold and silver project with proven and probable reserves of 3.4 million tonnes at 8.5 g/t gold and 32.2 g/t silver, containing 940,000 oz gold and 3.6 million oz silver.
Recent step-out and infill drilling demonstrated potential for additional reserves and resource growth. Bluestone expects to update its reserves and resources in Q1 2021.
A feasibility study outlined a high-grade and underground operation with annual production of 113,000 ounces of gold over an initial eight-year mine life.
Under Maverix’s deal with Newmont Goldcorp, certain royalties in the portfolio are subject to rights of first refusal as well as the requirement for various transfer consents, including Orla Mining’s Camino Rojo. Orla has the right of first refusal. Any proceeds from the exercise of a right of first refusal, will be paid to Maverix.
Upon completion of the transaction, it is anticipated that Newmont will own 42 million shares or approximately 30% of the issued and outstanding common shares of Maverix. Closing of the deal is expected to occur before October 30, 2020, subject to certain conditions, including the approval of the Toronto Stock Exchange.
On Monday, Maverix shares eased 4.2% or 31 cents to $7.04 in light trading volume. The shares are currently trading in a 52-week range of $7.55 and $3.10.