Maverix Metals Inc (CVE:MMX) (OTCMKTS:MACIF) has increased its royalty interest in a world-class gold camp in Canada, namely the Hope Bay mine in Nunavut, owned and operated by TMAC Resources Inc (TSE:TMR).
Maverix currently owns an existing 1% net smelter royalty (NSR) on the Hope Bay gold mine but the firms' have now agreed that Maverix will acquire a further 1.5% NSR (additional royalty) with effect from August 1 this year for a cash payment of US$40 million, bringing it up to a combined 2.5% NSR.
Maverix will also be entitled to receive a further 0.25% NSR bonus royalty until certain conditions with respect to the additional royalty are satisfied
"Maverix is delighted to expand and support our existing relationship with TMAC through an increase to our interest at their Hope Bay mine," said Dan O'Flaherty, the chief executive at Maverix.
"Hope Bay is a multi-million ounce camp with tremendous exploration and expansion potential that we expect will operate for decades. This transaction provides both immediate and long-term growth and additional gold exposure for Maverix shareholders."
TMAC has the right to buy back 0.5% of the additional royalty at any time after June 30, 2021 for US$15 million in cash and can buy back 100% for US$50 million in cash in the event of a change of control transaction of TMAC that is announced before June 30, 2021.
After a total of 3 million ounces of payable gold has been produced at Hope Bay , the additional royalty will decrease to 0.75%, regardless of whether the partial buy-back is exercised, such that Maverix will retain a 1.75% NSR.
World class gold camp
Hope Bay is in a world-class gold camp in Canada, hosting over 6 million ounces of total resources, with significant exploration potential.
The deal immediately increases Maverix's attributable gold equivalent production per share and raises its net asset value and cash flow per share.
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