Completes C$60 million Transaction on the Malartic CHL Project
Quebec, Mar 20, 2015 AEST (ABN Newswire) - Abitibi Royalties Inc. (
CVE:RZZ) ("Abitibi Royalties" or the "Company") is pleased to announce that it has completed the transaction (the "Transaction") previously announced on February 23, 2015 worth approximately C$55 million to C$65 million or C$5.25 to C$6.20 per share of the Company with Canadian Malartic GP, Yamana Gold Inc. (TSE:YRI) (NYSE:AUY) ("Yamana") and Agnico Eagle Mines Limited (TSE:AEM) (NYSE:AEM) ("Agnico Eagle") (collectively, the "Purchasers") with regards to the sale of the Malartic CHL project (the "Project"), which is now part of the Canadian Malartic mine, currently the largest producing gold mine in Canada. The Project hosts the Odyssey North gold discovery and the Jeffrey and Barnat gold deposits.
"Abitibi Royalties now owns C$35 million in Agnico Eagle and Yamana shares, a new 3% NSR valued between C$20 million to C$30 million, C$1.2 million in cash and is debt free (as of February 23, 2015). Despite good appreciation in our shares during the past 12 months and cash flow starting in April, Abitibi Royalties' current market capitalization reflects only its working capital position. With the Transaction closed, Agnico Eagle and Yamana will continue permitting Jeffrey and Barnat for production and exploration will resume on the most meaningful discovery to date on the property, North Odyssey, where the partners are scheduled to spend approximately C$3.5 million, which includes 25,500 metres of drilling by year-end around that area of the property," stated Ian Ball, president.
Transaction Details:
- The Company has sold its interest in the Project to the Purchasers in exchange for shares in Yamana, Agnico Eagle and a new 3% NSR on the Malartic CHL project with a combined value of approximately C$55 million to C$65 million or C$5.25 to C$6.20 per share:
a. 3,549,695 Yamana and 459,197 Agnico Eagle shares for total consideration of C$35 million based on their respective closing prices on February 20, 2015 (the "Valuation Date"), the last trading day prior to the announcement of the binding letter of intent ("the LOI") with respect to the Transaction. Based on closing prices as at the Valuation Date, this consideration is equal to approximately C$3.35 per outstanding common share of Abitibi Royalties. Based on current payout ratios of Yamana and Agnico Eagle, these shares will generate approximately C$415,000 in dividends annually should they be retained by the Company and not sold.
b. A significant 3% royalty from net smelter returns on the Project. The 3% NSR is believed, based on the arms' length negotiations among the parties, to have a value of approximately C$20-C$30 million or C$1.90 - $2.85 per outstanding common share of Abitibi Royalties.
- The Company continues to own the 2% NSR royalty on a portion of the Gouldie deposit at the Canadian Malartic mine and its 100%-owned McFaulds Lake properties in the "Ring of Fire". The Company has approximately C$1.2 million in cash and no debt.
In accordance with the terms of a Release, Discharge and Transaction Agreement entered into concurrent with closing of the Transaction by Abitibi Royalties, Osisko Mining Corporation, Yamana and Agnico Eagle, each of them has released and discharged the others with respect to litigation commenced by Abitibi Royalties with respect to the Project. Abitibi Royalties previously announced details of the litigation by news releases dated May 30, June 6 and 16 and August 5, 19 and 22, 2014.
The Transaction was approved by the TSX Venture Exchange, by Golden Valley Mines Ltd., Abitibi Royalties' majority shareholder, and by Abitibi Royalties' Board of Directors.
Copies of the agreements pertaining to the Transaction will be filed with securities regulators and will be available on SEDAR at www.sedar.com.
Maxit Capital LP, engaged by Abitibi Royalties as its financial advisor in connection with the Transaction, will be paid by Abitibi Royalties $50,000 for preparation of a fairness opinion with respect to the Transaction, plus reimbursement of its reasonable out-of-pocket expenses. In addition, Maxit Capital LP is entitled to a $300,000 financial advisory services fee as a result of completion of the Transaction, to be paid in cash or by issuance of common shares of Abitibi Royalties, at the election of Abitibi Royalties. Issuance of shares by Abitibi Royalties in satisfaction of the financial advisory services fee will be subject to prior acceptance by the TSX Venture Exchange.
About Abitibi Royalties Inc.
Abitibi Royalties Inc. (CVE:RZZ) holds a 3% NSR on the Odyssey North discovery, Jeffrey Zone and the eastern portion of the Barnat Extension, located inside the Malartic CHL property and a 2% NSR on portions of the Gouldie and Charlie zones, all at the Canadian Malartic mine near Val-d’Or, Québec. In addition, the Company is building a portfolio of royalties on early stage properties near producing mines. The Company owns common shares in Yamana Gold and Agnico Eagle Mines (market value), plus cash (as of September 30, 2016) of Cdn$41.8 million. The Company is debt free.
| ||
|
