VANCOUVER, BC--(Marketwired - April 05, 2017) - Maverix Metals Inc. (the "Company" or "Maverix") (TSX VENTURE: MMX) is pleased to announce that it has entered into a Royalty Purchase and Sale Agreement dated April 5, 2017 (the "Agreement") with 0875786 B.C. Ltd. (the "Seller"), a wholly owned subsidiary of Silvercorp Metals Inc. (TSX: SVM), pursuant to which Maverix agreed to acquire from the Seller (the "Transaction") a 2.5% net smelter return royalty on the Silvertip Mine (the "Royalty") for up to 6,600,000 Common shares in the capital of Maverix payable as follows:
- 3,800,000 Common shares of Maverix (the "Consideration Shares") on closing of the Transaction ("Closing"); and
- 2,800,000 Common shares of Maverix (the "Contingency Shares") when the Silvertip Mine achieves (i) commercial production, and (ii) a cumulative throughput of 400,000 tonnes of ore through the processing plant (together, as the "Milestone Events").
The Silvertip Mine is located in northern British Columbia, approximately 16 km south of the Yukon border and 90 km southwest of Watson Lake. The Silvertip Mine is owned and operated by JDS Silver Inc. ("JDS"). JDS acquired the project from Silvercorp in 2013 and continued previous permitting and development activities. In 2016, Denham Capital announced a partnership with JDS providing US$65 million to complete development and construction of the Silvertip Mine. JDS Silver began construction in December 2015 and initial production began in Q4 of 2016.
- Immediate Additional Leverage to Silver: The Royalty will provide immediate significant leverage to silver prices from a high-grade mine that has recently started producing and where quarterly royalty payments have already commenced;
- Significant and Growing Cash Flow: The expected ramp up to full production should provide growing cash flow over 2017 and 2018; and
- Further Diversification: The Royalty will provide additional exposure to an attractive mining interest in British Columbia, Canada.
Mr. Daniel O'Flaherty, Chief Executive Officer of Maverix commented, "Maverix is pleased to add another paying royalty on a high-grade mine. The Silvertip Royalty further strengthens and diversifies our royalty portfolio and provides Maverix shareholders with attractive leverage to silver in Canada."
A National Instrument 43-101 Technical Report, a Preliminary Economic Assessment ("PEA"), dated November 15, 2012, was prepared by Golder Associates Ltd. ("Golder") on the Silvertip Mine. The Golder PEA was based upon the following Indicated and Inferred Resources:
NI 43-101 Lower Zone Mineral Resources Estimate (325 g/t AgEq. Cut-Off Grade)
||Metal Contained in Resources
Notes to Resource Statement:
- The AgEq. ("silver-equivalent") formula is as follows: AgEq. (g/t) = (Ag g/t * Ag recovery) + ((Au g/t * Au price per g * Au recovery) / Ag price per g) + ((Pb% * Pb price * Pb recovery * 22.0462) / Ag price per g) + ((Zn% * Zn price * Zn recovery * 22.0462) / Ag price per g). Note that copper is not a contributor and gold only contributes when there is a gold recovery value.
- In calculating AgEq. grades, metal prices used are Au: US$1,250/troy ounce; Ag: US$19.00/troy ounce; Pb and Zn: US$1.00/pound.
- Metal recoveries are based on 2011 metallurgical testwork conducted by SGS Laboratories. Results chosen for the Silvertip process were recovery of 84.9% of silver, 92.4% of lead and 81.7% of zinc. Estimates include recovery of 50% for gold as a conservative estimate.
- Rounding may result in minor discrepancies in totals.
The project will be mined underground utilizing cut-and-fill methods and the Golder PEA contemplated various operating throughput scenarios, up to 1,000 tpd.
The Golder PEA -- titled "A Preliminary Economic Assessment of the Silvertip Project, Northern British Columbia" -- is filed on Silvercorp's SEDAR profile (report filed on November 19, 2012). JDS Silver has project information on their website (www.jdssilver.com), but are not required to file public documentation as JDS is a private entity.
Terms of the Transaction
Closing is expected to occur on or before April 19, 2017 or such other time as agreed upon between the parties. Closing of the Transaction is conditional upon (i) Maverix receiving the necessary TSX Venture Exchange ("TSX-V") approval, and (ii) entry by Maverix, the Seller and JDS into an assignment agreement pursuant to which the Royalty will be transferred from the Seller to Maverix on or before Closing.
The Consideration Shares and, if the Milestone Events are achieved, the Contingency Shares, issued to the Seller will each be subject to a statutory four-month hold period from the date of their issuance.
All the parties to the agreement are residents of Canada.
The Agreement was negotiated at arm's length between Maverix and the Seller. No brokerage or finder's fees are payable in association with the Transaction.
Maverix's primary purpose is to acquire and hold predominantly precious metals streams and royalties, and in so doing provide significant leverage to gold and silver prices for its shareholders. Maverix's mission is to increase underlying per share value by adding high-quality streams and royalties that offer robust returns to Maverix's portfolio.
Technical and Third Party Information
Except where otherwise stated, the disclosure in this press release relating to the Silvertip Mine is based on information publicly disclosed by the owners or operators of these properties and information/data available in the public domain as at the date hereof and none of this information has been independently verified by Maverix. Specifically, as a royalty holder, Maverix has limited, if any, access to the properties subject to the royalties. Although Maverix does not have any knowledge that such information may not be accurate, there can be no assurance that such third party information is complete or accurate. Some information publicly reported by the operators may relate to a larger property than the area covered by the Maverix's royalty interest. Maverix's royalty interests often cover less than 100% and sometimes only a portion of the publicly reported mineral reserves, mineral resources and production of a property.
NEITHER THE TSX-V NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX-V) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
Cautionary note regarding forward-looking statements
This release contains certain "forward looking statements" and certain "forward-looking information" as defined under applicable Canadian and U.S. securities laws. Forward-looking statements and information can generally be identified by the use of forward-looking terminology such as "may", "will", "should", "expect", "intend", "estimate", "anticipate", "believe", "continue", "plans" or similar terminology.
Forward-looking statements and information include, but are not limited to, statements with respect to the transactions contemplated under the Transaction, receipt of TSXV approval for the issuance of the Consideration Shares and the Contingency Shares, any achievement of the Milestone Events, anticipated cash flows upon completion of the Transaction, future financial reporting by Maverix, the receipt of payments from Maverix's mining royalty and streaming portfolio and proposed future transactions Maverix may undertake and their expected timing. Forward-looking statements and information are based on forecasts of future results, estimates of amounts not yet determinable and assumptions that, while believed by management to be reasonable, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Forward-looking statements and information are subject to various known and unknown risks and uncertainties, many of which are beyond the ability of Maverix to control or predict, that may cause Maverix's actual results, performance or achievements to be materially different from those expressed or implied thereby, and are developed based on assumptions about such risks, uncertainties and other factors set out herein, including but not limited to: the requirement for regulatory approvals and third party consents, the impact of general business and economic conditions, the absence of control over the mining operations from which Maverix will purchase gold and receive royalties, including risks related to international operations, government relations and environmental regulation, the inherent risks involved in the exploration and development of mineral properties; the uncertainties involved in interpreting exploration data; the potential for delays in exploration or development activities; the geology, grade and continuity of mineral deposits; the possibility that future exploration, development or mining results will not be consistent with Maverix's expectations; accidents, equipment breakdowns, title matters, labor disputes or other unanticipated difficulties or interruptions in operations; fluctuating metal prices; unanticipated costs and expenses; uncertainties relating to the availability and costs of financing needed in the future; the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses, commodity price fluctuations; currency fluctuations; regulatory restrictions, including environmental regulatory restrictions; liability, competition, loss of key employees and other related risks and uncertainties. Maverix undertakes no obligation to update forward-looking information except as required by applicable law. Such forward-looking information represents management's best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information.