Metalla snaps up royalty portfolio from Alamos Gold

Royalty & Streaming is acquiring a royalty on the San Luis property, above, of SSR Mining. Source: Metalla Royalty & Streaming Ltd.

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Royalty & Streaming is acquiring a royalty on the San Luis property, above, of SSR Mining. Source: Metalla Royalty & Streaming Ltd.

Metalla Royalty & Streaming Ltd. [MTA-CSE; MTAFF-OTCQB; X9CP-FSE] said Monday April 1 that it has struck a deal to acquire a portfolio of 18 royalties from Alamos Gold Inc. [AGI-TSX, NYSE] for $11.5 million, payable in common shares of Metalla.

The acquisition of 16 royalties and two options to acquire additional royalties expands Metalla’s portfolio to 43 royalties and streams.

Metalla also said Monday it has arranged a $12 million convertible loan facility with Beedie Capital to finance acquisitions of new royalties and streams.

The loan will be financed by way of an initial $7 million advance within 90 days of closing. The remaining $5 million will be available for subsequent advances in minimum tranches of $1.25 million.

“This transaction marks a major step in the growth of Metalla,” said the company’s President and CEO Brett Heath.

On Monday, Metalla shares eased 2.24% or $0.03 to $1.31. The 52-week range is 63 cents and $1.43.  Alamos Gold eased 4.13% or 28 cents to $6.50. The shares trade in a 52-week range of $3.88 and $7.97.

The assets being acquired include a 2% NSR royalty on the El Realto property, which is owned operated by Agnico-Eagle Mines Ltd. [AEM-TSX, NYSE]. El Realto is adjacent to Agnico’s operating La India Mine. The portfolio being acquired also includes:

  • A 1.5% NSR royalty on the Wasamac Mine, which is located west of Rouyn-Noranda, Que., and is being developed by Monarch Gold Corp. [MQR-TSXV; MRQRF-OTC; MR7-FSE].
  • An option to purchase a 1% NSR royalty on the La Fortuna Mine, which is located in Durango, Mexico, and is being developed by Minera Alamos Inc. [MAI-TSXV].
  • A 1% NSR royalty on the producing Beaufor Mine, which is operated by Monarch Gold and located 20 km northeast of Val d’Or, Que.
  • A 1% NSR royalty on the San Luis property in Ancash Department, central Peru. It is owned by SSR Mining Inc.[SSRM-TSX, NASDAQ]

Under the agreement with Beedie, the loan facility carries an interest rate of 8% on advanced funds and 2.5% on standby funds available with the principal payment due 48 months after the date that the financing is complete. The loan can be repaid with no penalty after 18 months and carries no warrant coverage.

The principal amount of the loan will be convertible into common shares of Metalla at a conversion price of $1.39, representing a 25% premium to the 30-day volume weighted average price as of March 15, 2019.

The loan facility will be convertible at any time, at the option of Beedie, and will be secured by certain assets of the company.

In November, 2018, Metalla completed the acquisition from Gogold Resources Inc. [GGD-TSX] of a 2% royalty on the Santa Gertrudis Mine in Sonora, Mexico for US$12 million.

In June 2018, Metalla was given the green light to acquire ValGold Resources Ltd. in a share exchange deal worth $7.2 million that left ValGold shareholders and option-holders with 11.2% of the issues and outstanding common shares of Metalla.

ValGold Resources was a long-established Canadian royalty and mineral exploration company. It held a net smelter royalty on the Garrison Gold Project in the Golden Highway Mining Camp near Timmins, Ontario. It also owned the prospective Tower Mountain Gold Project near Thunder Bay, Ontario. The company’s other assets included exploration properties in Venezuela near the Kilometre 88 District and Brisas Cristinas Project.

Osisko Mining Inc. [OSK-TSX] owns 100% and is the operator of the Garrison Gold Project, which consists of a portfolio of properties spanning a 50 km distance along the Destor-Porcupine Fault Zone, encompassing 16 non-contiguous properties, including the Garrcon and Jonpol properties, 903 Zone, and Buffonta and Golden Pike advanced exploration properties.

ValGold’s primary asset was a 2% net smelter royalty on a significant portion of the project, including all the claims which were the subject of a NI 43-101 compliant resource estimate in 2014.

According to the estimate by ACA Howe International Inc., the Garrcon and Jonpol properties contain a measured and indicated resource of 30.07 million tonnes, grading 1.24 g/t gold or 1.2 million ounces. On top of that is an inferred resource of 7.9 million tonnes, grading 3.19 g/t gold or 808,000 ounce.

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