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Metalla Royalty and Streaming adds high quality producing gold royalty to portfolio

The firm has struck a deal with Coeur Mining Inc and third-parties to jointly acquire a 1.3875% royalty interest on the operating Wharf mine in South Dakota

Metalla Royalty & Streaming Ltd -
Metalla said Wharf has been in production for more than three decades with an established track record of generating free cash flow

Metalla Royalty and Streaming Ltd (CVE:MTA) (NYSEAMERICAN:MTA) told investors that it had added a high quality producing gold royalty on a US open pit mine to its portfolio.

In a statement, the company said it had struck a deal with Coeur Mining Inc (NYSE: CDE) and third-parties to jointly acquire an existing 1.3875% royalty interest on the operating Wharf mine in South Dakota for a total of $8 million.

READ: Metalla Royalty and Streaming set to add two high quality gold royalties after striking US$4M Nevada acquisition

Metalla will retain 1%, while Coeur will have 0.3875% for a total cost of $5.77 million and $2.23 million, respectively, it said.

"We are pleased to add a high-quality producing gold royalty on one of the premier gold mines located in the United States with a proven operator such as Coeur," Metalla's CEO Brett Heath said in a statement.

"Wharf has been in production for more than three decades with an established track record of generating free cash flow. This transaction provides shareholders with immediate exposure to cash flow on a strong performing and well-run gold asset on an accretive basis."

Wharf, which has been producing since 1983, was acquired by Coeur in February 2015 from Goldcorp for around $99.5 million in cash.

It has been a consistent free cash flow generating asset for Coeur and consists of several areas of adjoining gold mineralization, which have been mined as a series of open pits. The mine produced 84,172 ounces of gold in 2019, highlighted Metalla.

Metalla will acquire the1.3875% royalty on the Wharf mine from third-parties for a total purchase price of $8 million, made up of shares and cash.

In conjunction, Metalla will sell the 0.3875% royalty part to Coeur, which will be satisfied through the transfer of 421,554 Metalla shares currently held by Coeur, representing $2.23 million in value based on a price of $5.30 per Metalla share, to the third-party sellers.

Heath also noted that the deal showcased how Metalla's third-party royalty model can generate a significant amount of value for partners and shareholders.

"In 2017 Metalla acquired a non-core royalty portfolio from Coeur in a share-based transaction at a price of C$2.16.  We now welcome the third-parties as new shareholders as we continue to build Metalla into a leading precious metals royalty company," he said.

Metalla is a royalty and streaming firm, which aims to increase share value by accumulating a diversified portfolio of royalties and streams with attractive returns.

Shares in Metalla slipped around 7% in Toronto on the day to C$7.52 each.

Contact the author at [email protected]

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Price: 12.6 CAD

TSX-V:MTA
Market: TSX-V
Market Cap: $467.55 m
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