Eagle Royalties (ER.C) has announced it has closed an agreement with a private company (‘Royal Uranium’) to sell twelve uranium royalties to the PrivateCo for a total amount of C$3.75M. An initial payment of C$2.5M will be due immediately while the remaining C$1.25M will be covered by a promissory note issued by the buyer. That note will mature on December 14th 2025 the latest but could be accelerated upon a default of PrivateCo or PrivateCo obtaining a listing on an exchange.
Upon the maturity date, the final C$1.25M will have to be settled by C$0.5M in cash and C$0.75M in cash or shares, at the buyer’s discretion.
This appears to be an excellent deal for Eagle Royalties as the twelve royalties are non cash flowing (and likely won’t be generating any substantial cash flow within the next decade). The initial cash payment of C$2.5M represents approximately C$0.044 per share or 40% of the market cap of Eagle Royalties upon announcing the deal. The total deal value represents almost C$0.066 per share while Eagle Royalties could potentially retain exposure (and thus upside potential) to Royal Uranium if it receives the final payment in shares.
A good deal for what we essentially thought are ‘Tier 2’ royalties. The main reason to be interested in Eagle Royalties is the 0.5-2% NSR on portions of Banyan Gold’s (BYN.V) AurMac flagship project. We discussed that royalty and the specific land package it overlays in this report.
Disclosure: The author has a small long position in Eagle Royalties. Eagle Royalties is a sponsor of the website. Please read the disclaimer.
