Maverix has agreed to reduce its royalty on gold production from the mine to 4.75% from 7.5% with effect from July 1, 2020, the miner said in a statement. Karora said both firms' shareholders would benefit on a renewed focus on exploration and development at the asset.
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"Since I accepted the role of Karora CEO, we have consistently stated that one of our goals is to reduce our overall AISC including a reduction in royalties. As such we are extremely pleased to have reached a mutually beneficial agreement with Maverix to reduce the royalty burden at Beta Hunt," said Paul Andre Huet, CEO at Karora.
"We see the reduction of the Beta Hunt royalty as the next transformative transaction following tremendous success with the former Morgan Stanley royalty at our Higginsville property. For the first time in over seven years, a significant portion of the royalty burden on exploration and production has been lifted at Beta Hunt."
Huet also noted that Beta Hunt was still at an early stage with vast additional exploration potential.
As consideration for the reduction, Karora will pay US$5 million in cash and issue 35.1 million shares at C$0.506 each to Maverix. The cash will be paid in two equal installments of US$2.5 million, with the first such payment to be made on closing and the second payment to be made in January 2021.
Closing of the deal is subject to various approvals, including from the Toronto stock exchange.
"We are happy to support Karora's long term vision of Beta Hunt and to participate in that future not only as a continuing royalty holder, but also as a strategic partner," said Daniel O'Flaherty, CEO and director at Maverix, who described it as a "win-win" transaction.
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