Consolidation continues in the mining sector, with two royalty-focused companies this morning disclosing that they will be combining forces to create an intermediate royalty company.
Metalla Royalty & Streaming (TSXV: MTA) will be acquiring that of Nova Royalty Corp (TSXV: NOVR) in an all-stock transaction. The deal will see Nova shareholders receive 0.36 of a common share of Metalla for each share held, which represents a figure of $1.90 per Nova Share, a 25% premium. Nova shareholders will own roughly 40% of the resulting company.
The transaction overall is pegged at $190 million.
The resulting company will hold a portfolio of 105 royalties and streams, with most assets in tier one jurisdictions and Latin America. The top ten assets by net asset value will have an average mine life of 20 years, and an average operator market capitalization of $13 billion.
As part of the transaction, Beedle Capital will invest $15 million and expand Metalla’s current convertible loan facility to $50 million, resulting in available liquidity of $35 million.
The transaction is expected to enhance liquidity, while resulting in annual cost savings of $2.5 million after optimization, while cash flow will increase immediately as a result of Metalla acquiring the Aranzazu royalty, with three additional royalties now expected to begin cash flowing in 2024. The resulting issuer will also have exposure to gold, silver, and copper, which the company refers to as having “superior inflation protection.”
The combination is expected to be accretive to NAV on a per share basis as well, but further specifics were not provided.
“This merger represents a transformative moment for both companies and will lay a clear, low-risk path to becoming an intermediate royalty company. Together, we expect that our peer-leading, high-quality growth, underpinned by some of the best-in-class operators in the mining sector, will deliver superior long-term value for our shareholders,” commented Brett Heath, CEO of Metalla.
The transaction remains subject to Nova’s shareholders approving the transaction, as well as regulatory approval. The transaction is currently slated to close in late 2023, with the agreement containing a $7.5 million termination fee for Metalla should the transaction not proceed.
Metalla Royalty & Streaming last traded at $5.29 on the TSX Venture.
Information for this briefing was found via Sedar and Sailfish Royalty. 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.
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