Newmont Mining Corp. agreed to sell its royalty portfolio to Maverix Metals Inc. in exchange for US$17 million in cash, 60 million common Maverix shares and 10 million warrants, the companies said May 29.
The portfolio comprises 54 precious metals and industrial minerals royalties, including royalties over TMAC Resources Inc.'s Hope Bay gold mine in Nunavut, Canada, and Barrick Gold Corp.'s Hemlo gold mine in Ontario. Maverix sees this royalty portfolio as an opportunity to increase cash flow, estimating the assets to yield C$6 million to C$8 million in cash flow in 2019 and up to C$20 million per year in the future.
Certain royalties are also subject to rights of first offer and first refusal, and any proceeds from an exercise of a right of first offer or first refusal will be paid to Maverix.
Upon completion of the transaction, Newmont will own about a 28% shareholding in Maverix on an undiluted basis. The warrants will allow Newmont to purchase Maverix shares at US$1.64 each for five years from the royalty deal's closing. The completion of the acquisition is expected in the second quarter, subject to certain conditions including approvals and certain agreements.
As a major Maverix shareholder, Newmont will be entitled to nominate one Maverix board member and to certain rights relating to equity financings as long as it holds at least a 10% stake in the company. Newmont, meanwhile, will grant Maverix the right to make an offer to acquire certain metal streams or metal royalties that Newmont contemplates selling in the future.
