Nomad Royalty Company Ltd (TSE:NSR) (OTCQX:NSRXF) is to buy Coral Gold Resources Ltd (CVE: CLH), giving it a sliding scale net smelter return (NSR) royalty on a top tier mining complex in Nevada, USA.
The firm has struck a definitive deal to acquire all of the shares of Coral for a total of around US$45.8 million. The purchase gives Nomad a net smelter return (NSR) royalty on Nevada Gold Mines' Robertson property (Corals' main asset) - part of the greater Cortez & Pipeline mining complex - of between 1% to 2.25%. Based on the current gold spot price of over US$1,940 per ounce, the applicable NSR royalty rate currently would be 2%, the group said
The project boasts a historical inferred resource of over 2.7 million ounces of gold in total oxide and sulphide materials, based on a 2012 NI 43-101 preliminary economic assessment.
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"When we created Nomad, we set the objective to become a catalyst for sector consolidation," said Vincent Metcalfe, Nomad's CEO in a statement.
"Today's announcement marks the first step of our consolidation strategy and follows our desire to become the best global acquisition-driven precious metals royalty company in the sector. This acquisition will further diversify our global portfolio as we keep executing on our aggressive growth plan."
Under the terms of the deal, for each share held, Coral shareholders will receive C$0.05 in cash and 0.80 of a unit of Nomad, representing a total of C$1.21 per Coral share.
Each unit will comprise one Nomad share and one-half of a share purchase warrant. Each full warrant will entitle the holder thereof to purchase one additional Nomad share for C$1.71 for two years following the date of the transaction.
Based on Nomad's and Coral's August 21, 2020 closing share prices, the deal represents a premium of around 45% to Coral shareholders.
"This transaction offers numerous benefits to Coral shareholders immediately as well as over the medium to long-term," said Coral's CEO David Wolfin. "I look forward to becoming both a Nomad shareholder and warrant holder, and benefitting from the Nomad management team's expertise, key industry partnerships and growth strategy. I also look forward to seeing the Robertson NSR become an important asset within Nomad's growing portfolio."
Nomad owns 11 royalty, stream, and gold loan assets, of which five are on currently producing mines.
The firm plans to grow and diversify its low-cost production profile through the acquisition of additional producing and near-term producing gold and silver streams and royalties.
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