Nomad Royalty (TSX: NSR; US:OTC: NSRXF) has entered into a definitive arrangement agreement to acquire Coral Gold (TSXV: CLH; US-OTC: CLHRF) in a cash and share deal valued at US$45.8 million as the company looks to grow its royalty portfolio.
Through this transaction, Nomad is adding an uncapped, sliding scale (ranging from 1% to 2.25%) net smelter return royalty (NSR) on Nevada Gold Mines' Robertson development project. Robertson features historical oxide and sulphide inferred resources of 191.7 million tonnes grading 0.0143 oz. per tonne.
In exchange for the royalty, Coral shareholders will receive 5 ? in cash and 0.8 of a Nomad unit, made up of one share and half of a warrant. The resulting $1.21 per share consideration payable to Coral shareholders represents a 45% premium based on the most recent closing prices of both companies.
"When we created Nomad, we set the objective to become a catalyst for sector consolidation," Vincent Metcalfe, the company's CEO, said in a release. "Today's announcement marks the first step of our consolidation strategy, and follows our desire to become the best global acquisition-driven precious metals royalty company in the sector. This acquisition will further diversify our global portfolio as we keep executing on our aggressive growth plan."
The sliding scale royalty is set at 2% NSR at gold prices between US$1,800 and US$2,000 per oz., increasing to 2.25% NSR once gold prices exceed US$2,000.
The Robertson property is within the Cortez and Pipeline mining complex in Nevada and near the Cortez mill. The royalty also features downside protection, with minimum non-refundable advance payments of US$500,000 per year for 10 years starting in 2025. If Robertson is not in production by the end of 2024, these payments kick in and continue through to either the date of commercial production or 2034.
Coral Gold also holds a portfolio of exploration properties in the state's Battle Mountain-Cortez trend. The company has $11.5 million in cash and no debt.
"This acquisition is very strategic to Nomad as it allows us to access a royalty on a top-tier mining complex, operated by one of the largest gold operator(s) in the world and located in Nevada, a leading mining jurisdiction," Joseph de la Plante, Nomad's chief investment officer, said in the company's news release.
This transaction is subject to regulatory approval. Boards of both companies support the deal. Closing is expected around Nov. 6.
In addition, Nomad has also entered into a definitive agreement to acquire a 0.5% to 3% NSR on the Moss gold mine in Arizona, operated by Northern Vertex Mining (TSXV: NEE; US-OTC: NHVCF), for US$7.6 million in stock.
The Moss mine is targeting output of 55,000-65,000 oz. gold-equivalent per year, with an 18,300-metre drill program underway to increase mine life.
The royalty is a 0.5% to 3% NSR on metals and minerals produced from specific claims on the property. The open-pit operation has been in production since 2018 and, according to Nomad, has been consistently operating above its 5,000 tonne per day design throughput. Closing of the transaction is expected in September.
- This article first appeared in the Canadian Mining Journal.