Gold Royalty has agreed to acquire gold royalty interests on properties managed by Canada-based Monarch Mining for a total consideration of $12m (C$15m).
As per the definitive agreement, Gold Royalty will pay $8.95m (C$11.25m) to Monarch Mining on deal closing and a further $2.98m (C$3.75m) upon the six-month anniversary of closing.
The deal includes a $1.98m (C$2.50) per tonne royalty on material processed through Monarch’s Beacon mill originating from the Beaufor mine operations in Canada.
It also includes a net smelter return (NSR) royalty of 2.5% on each of Monarch’s Croinor Gold, McKenzie Break and Swanson properties in Quebec, Canada.
Moreover, Gold Royalty will get 1% NSR on Monarch’s Beaufor property that is held by Caisse de dépôt et placement du Québec.
Monarch Mining said in a statement that the transaction would strengthen its balance sheet with nearly $30m in cash and cash equivalents.
Monarch Mining president and CEO Jean-Marc Lacoste said “We are very pleased to have signed this non-dilutive financing agreement with Gold Royalty, which will be applied mainly to capital expenditures and equipment purchases for the Beaufor mine and Beacon mill reopening and to strengthening our balance sheet.”
The deal, planned for completion in August, is subject to customary closing conditions.
Gold Royalty CEO, president and chairman David Garofalo said: “These assets will not only add potential near term cash flow to our company but also a strong pipeline of development and exploration projects located in Quebec, a very favourable mining jurisdiction.
“The Monarch royalties nicely complement the pro-forma portfolio of over 100 royalties in the Americas resulting from our previously announced acquisition of Ely Gold Royalties.”
Monarch Mining plans to reopen the Beaufor mine and Beacon mill by June 2022.