Maverix Metals Inc. (TSX: MMX) announced on Monday that it has reached an agreement with Auramet Capital Partners to acquire a gold stream. The transaction is expected to see an “immediate increase to [Maverix’s] annual attributable gold equivalent ounces and cash flow”.
Pursuant to the agreement, the gold-focused streaming company will make a US$50 million cash payment to acquire a gold stream that will deliver 5,000 gold ounces annually. The stream will be delivered quarterly and the company will, in turn, make cash payments equal to 16% of the spot gold price for each ounce.
Beyond the gold stream arrangement, Maverix is also entitled to receive gold equal to all dividends distributed by Auramet on 2% of its outstanding shares. For context, Auramet paid a total of US$35 million in dividends for the fiscal year 2020.
“Maverix has a longstanding relationship with Auramet, including acquiring a portfolio of royalties from Auramet in 2017, which has already returned over 85% of our initial investment and continues to generate meaningful cash flow,” said Maverix CEO Dan O’Flaherty. “This transaction adds significant and immediate cash flow, as well as additional exposure to gold, while also forming a partnership that could allow Maverix to acquire future royalties sourced by Auramet, through its relationships with an extensive and growing list of precious metals companies.”
Auramet further relayed that it intends to use the proceeds from the transaction on further investments in the mining sector, including acquiring small royalties and streams, as well as for general corporate purposes.
Maverix Metals last traded at $5.67 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.