VANCOUVER, BC--(Marketwired - February 01, 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 (the "Agreement") with Resource Income Fund, L.P. ("RIF"), a wholly owned subsidiary of Auramet Trading, LLC, pursuant to which Maverix agreed to:
- acquire two net smelter return ("NSR") royalty contracts on the Florida Canyon and Beta Hunt mining operations from RIF (the "Royalties");
- issue to RIF a total of 8,500,000 common shares from its treasury (the "Consideration Shares"); and
- pay to RIF US$5,000,000 in cash,
all in accordance with the terms and conditions of the Agreement (the "Transaction").
- Immediate Additional Leverage to Gold: The Royalties will provide immediate significant leverage to gold prices and, to a lesser extent, nickel prices from mines that are currently in production and have been making quarterly royalty payments;
- Significant and Growing Cash Flow: Operators of the underlying mines have been increasing resources and ramping up production which should provide growing cash flow over extended life of mines; and
- Further Asset Diversification: The Royalties will provide further exposure to attractive mining jurisdictions with interests in mining assets in Australia and United States.
Mr. Daniel O'Flaherty, Chief Executive Officer of Maverix commented, "This accretive transaction has a significant impact on our near-term cash flow. It adds further asset diversification into the mining friendly jurisdiction of Nevada, USA and is expected to provide increased exposure to growing gold production." Mr. O'Flaherty continued, "These NSR's are complementary to our expanding portfolio of streams and royalties and build on the momentum we have been able to generate since our launch in mid 2016. We will continue to focus on gold and on cash flowing assets, as we work to bolster our portfolio even further throughout 2017."
The Royalties are on the following mines, which are expected to generate immediate and significant cash payments to Maverix:
- Florida Canyon NSR Royalty (Nevada, USA) - a three and one quarter percent (3.25%) NSR royalty payable quarterly by Rye Patch Gold Corporation ("Rye Patch") on revenue from production of all metals and other materials, less allowable deductions, from the Florida Canyon open pit heap leach gold mine located in Pershing Co., Nevada, United States. Rye Patch recently acquired the past producing operation and is in the process of bringing the mine back into full scale production. On May 25, 2016, Rye Patch issued a press release (available on www.sedar.com under Rye Patch's profile) announcing the results of a Preliminary Economic Assessment with an effective date of March 16, 2016 on the Florida Canyon Mine (the "PEA"). The PEA contemplates average production from the Florida Canyon mine of approximately 75,000 ounces of gold per year for 8 years. The projected ramp-up to full production of 600,000 tons per month production (545,000 tonnes per month) is on track for April 2017, as indicated in Rye Patch's January 5, 2017 press release (available on www.sedar.com under Rye Patch's profile).
- Beta Hunt NSR Royalties (Western Australia, Australia) - a one and one-half percent (1.5%) NSR royalty payable quarterly on all gold production, and a one-half percent (0.5%) NSR royalty payable quarterly on all revenue from nickel production, less allowable deductions, from certain tenements at the underground Beta Hunt Mine located 600 km from Perth in Kambalda, Western Australia. The Beta Hunt royalties (gold and nickel) are payable by RNC Minerals Corporation ("RNC", formerly "Royal Nickel Corp."). RNC provided gold production guidance of 65,000 to 70,000 ounces from Beta Hunt for 2017 in their press release issued on January 18, 2017, a copy of which is available under their profile at www.sedar.com. Upon closing of the Transaction, and following the acquisition of the Beta Hunt royalties from Gold Fields Limited on December 23, 2016, Maverix will have aggregate royalty rights to seven and one-half percent (7.5%) of gold production, and one and one-half percent (1.5%) of nickel production from Beta Hunt.
Terms of the Transaction
Closing of the Transaction is expected to occur on February 9, 2017 or as soon as possible thereafter (the "Closing Date"). In addition to conditions customary for similar transactions, closing of the Transaction is conditional upon (i) Maverix receiving the necessary TSX Venture Exchange ("TSX-V") approval, and (ii) entry by Maverix, RIF and relevant royalty payors into assignment agreements pursuant to which the Royalties will be transferred from RIF to Maverix on or before the Closing Date.
The Consideration Shares issued to RIF will be subject to a statutory 4-month hold period, and thereafter will be subject to certain orderly disposition restrictions.
The Agreement was negotiated at arm's length between Maverix and RIF. No brokerage or finder's fees are payable in association with the Transaction.
Maverix Post Closing Capital Structure and Asset Portfolio
Following the completion of the Transaction, RIF will hold approximately 6% of the issued and outstanding common shares of Maverix and it is expected that Maverix will have a total of approximately 141.2 million shares issued and outstanding.
After completing this Transaction, Maverix will have a total of 27 streaming and royalty contracts, of which eight are at operating mines and currently generate cash flow, two are at mines that are operating or are in construction and are expected to begin paying in 2017 and the balance are at a diverse suite of assets covering early stage exploration projects to late stage pre-production projects.
Maverix intends to be in a position to formally release fiscal 2017 revenue and cash flow guidance in late February of this year.
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 Florida Canyon and Beta Hunt properties 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, the Company has limited, if any, access to the properties subject to the royalties. Although the Company 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 Company's royalty interest. The Company'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, 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.