Triple Flag buying royalty on Monarch gold project
Triple Flag Precious Metals Corp. [TFPM-TSX, TFPM.U] has struck a deal to acquire a 2.75% net smelter returns royalty on Monarch Mining Corp.’s [GBAR-TSX] Beaufor Mine gold project in Quebec and will pay $11.25 million cash for the asset.
Monarch shares advanced on the news, rising 3% or $0.02 to 68 cents. The shares trade in a 52-week range of $1.31 and 62 cents.
Based in Quebec City, Monarch is a fully integrated mining company that owns four projects, including the Beaufor Mine. Other assets include the Croinor Gold, McKenzie Break and Swanson properties, all of which are located near the company’s 750-tonne-per-day Beacon Mill.
Beufor is a past-producing underground mine located in the Abitibi region of Quebec, about 20 kilometres east of Val-d’Or, and is scheduled to resume production at its Beacon mill in June 2022. The mine was in production from 1933 to 1951 and again from 1933 to 2018, producing over one million ounces of gold. It has been on care and maintenance since June, 2019.
Monarch has already made shipments of ore to the mill and there are 15,000 tonnes of ore ready for processing when the mill restarts.
“We are pleased to partner with Monarch as it prepares to restart production at its past-producing Beaufor Mine later this year and continues to expand near-mine resources with ongoing exploration,” said Shaun Usmar, founder and CEO of Triple Flag.
Triple Flag will acquire the Beaufor royalty via two transactions. Firstly, it will acquire a 2% NSR royalty (which comes with a milestone-based stepdown to 1%) from a third party for $6.75 million. Secondly, Triple Flag has agreed to provide Monarch with additional funding of $4.5 million in consideration for increasing the royalty to 2.75% and eliminating the step down.
Usmar said the royalty will provide Triple Flag with near-term cash flows that will persist for years to come. Triple Flag is a gold-focused streaming and royalty company.
“This new non-dilutive investment will allow us to strengthen our financial position as we continue to prepare Beaufor Mine and Beacon mill for restart by June 2022,” said Monarch CEO Jean-Marc Lacoste.
The deal with Triple Flag has been announced after Monarch recently reported a significant increase in the mineral resource estimate for Beaufor. It said measured and indicated resources had jumped by 136% to 219,200 ounces of gold. The estimated inferred resources increased by 300% to 122,500 ounces of contained gold over an earlier estimate.
Monarch recently completed a 42,500-metre diamond drilling program to test areas around historical high-grade intersections near existing underground infrastructure and isolated mineral resource blocks. Due to the positive results, additional holes are being drilled to increase confidence levels in the resource estimates. Five drill rigs are currently being deployed underground.
Triple Flag was virtually unchanged, rising 0.73% or 11 cents to $15.20. The shares trade in a 52-week range of $16.90 and $10.50.