Maverix Metals (MMX.TO, MMX) continues to build its royalty portfolio and the company has now entered into an agreement with Newmont (NEM.TO, NEM) to purchase another royalty portfolio from the latter. The portfolio consists of 11 royalties on projects in different stages of the development curve with Orla Mining’s (OLA.TO) Camino Rojo project in Mexico in the construction stage. This project is anticipated to start producing in 2021 with an average output of 97,000 ounces of gold and 511,000 ounces of silver per year. At the current gold and silver price, this 2% NSR has the potential to generate almost US$4M per year in cash flow.
Interestingly, the royalty portfolio also contains the NSR on the Mother Lode project owned and operated by Corvus Gold (KOR.TO, KOR) and this 2% NSR could be very interesting given the recent exploration success enjoyed by Corvus on the land package. However, the NSR will only be applied to a portion of the total package, so it will be in Maverix’s best interest to see Corvus adding ounces on the land where the NSR does apply.
These are just two highlighted projects but we encourage you to read the entire Maverix press release (HERE) as the company described the key assets into more detail.
As consideration for the purchase of the portfolio with 11 royalties, Maverix will issue 12 million shares (at a deemed price of US$5/share) and US$15M in cash for an initial payment of US$75M. Maverix may have to pay an additional US$15M in milestone payments as US$5M will be due to Newmont if the Mother Lode, Imperial and Ana Paula projects reach the commercial production phase within five years of closing the transaction (which is expected to occur at the end of October).
Disclosure: The author has a long position in Maverix Metals. Maverix is a sponsor of the website.
