VANCOUVER, BC, May 26, 2021 /CNW/ - Electric Royalties
Ltd. (TSXV: ELEC) ("Electric Royalties" or the
"Company") is pleased to announce that it has restructured
the acquisition of the Globex portfolio of royalties ("Globex
Portfolio") (see Company news release dated March 10, 2021), and has revised the associated
non-binding letter of intent ("LOI") with Sprott Resource Streaming
and Royalty Corp. ("Sprott Streaming") (see Company news release
dated April 15, 2021), to provide
better value for shareholders.
Globex Portfolio
The Middle Tennessee Mine Royalty ("MTM Royalty") is a
sliding-scale, gross metal royalty (described below) on zinc
production at the operating Middle Tennessee Mine ("MTM"), located
in Smith County, Tennessee,
United States, and operated by a
subsidiary of Trafigura Group ("Trafigura"). As part of the
proposed transaction, the Company is also acquiring a 1% Gross
Revenue Royalty ("GRR") on the Glassville Manganese Project
("Glassville Royalty"), which is located in close proximity to the
Battery Hill project in New Brunswick,
Canada on which the Company holds an existing royalty.
Globex Portfolio Acquisition Revised Terms
- C$13.75 million cash, of which
the Company has already paid C$250,000 as an initial down payment.
- 9.0 million common shares of Electric Royalties.
- 5.5 million common share purchase warrants of Electric
Royalties with an exercise price of $0.60 per warrant exercisable to acquire one
common share for a period of 4 years;
-
- Acceleration of warrant exercise period:
-
- In the event the Company's share price is above $1.00 per share after year 2, 50% of the warrants
expire within 30 days of such date; and
- In the event the Company's share price is above $1.50 per share after year 3, all warrants expire
within 30 days of such date.
Sprott Streaming Revised LOI Terms
- Under the revised terms, Sprott Streaming would acquire 75% of
the MTM Royalty by paying C$13.5
million in cash with Electric Royalties retaining 25% of the
MTM Royalty.
- Electric Royalties will be granted an option to acquire an
additional 25% of the MTM Royalty from Sprott Streaming at the end
of year 1 by paying C$4.95 million,
minus the cash royalty payments received by a 25% royalty owner, up
to C$150,000, or at the end of year 2
for C$5.45 million, minus the cash
royalty payments received by a 25% royalty owner, up to
C$300,000.
- Revised co-investment structure represents 100% of the
remaining MTM Royalty acquisition cash consideration.
- Establishes a relationship with the Sprott Group of Companies,
a globally recognized financial partner in the resources
industry.
MTM Royalty
The MTM Royalty is a sliding scale gross metals royalty, with no
royalty payable if the zinc price is below US$0.90 per pound, 1.0% between US$0.90 and US$1.10
and 1.4% at zinc prices above US$1.10
per pound. The Mid Tennessee Zinc Mines have been in intermittent
operation for over 50 years and have produced over 2.7 billion
pounds of zinc
(https://www.northernminer.com/news/sra-revives-mid-tennessee-zinccomplex/1000220368/).
Three underground mines make up the complex including Gordonsville, Elmwood and Cumberland. The Mid Tennessee Zinc Mines is an
operation with significant resource potential. The mine complex is
owned by Trafigura and operated by Nyrstar, their integrated mining
business unit that includes the nearby Clarksville, Tennessee smelter complex.
Brendan Yurik, CEO of Electric
Royalties, stated "We are excited to enter into these revised
agreements with our partners at Globex and Sprott, as this reduces
the cash component payable by the Company to zero and reduces the
overall dilution of the transaction to Electric Royalties.
Combined, these agreements provide a path forward to closing the
acquisition without the need to raise additional capital."
The Globex Portfolio transaction remains subject to completion
of due diligence, financing and other customary closing
conditions.
Financing Update
Given the restructured agreements, the Company no longer needs
to complete a $10 million minimum
equity financing in order to complete the Globex Portfolio
acquisition (see Electric Royalties' news release dated
May 10, 2021). In that light, the
Company may complete a smaller equity financing than previously
planned while exploring other less dilutive financing options in
parallel to fund future acquisitions.
About Electric Royalties Ltd.
Electric Royalties is a royalty company established to take
advantage of the demand for a wide range of commodities (lithium,
vanadium, manganese, tin, graphite, cobalt, nickel, zinc &
copper) that will benefit from the drive toward electrification of
a variety of consumer products: cars, rechargeable batteries, large
scale energy storage, renewable energy generation and other
applications.
Electric vehicle sales, battery production capacity and
renewable energy generation are slated to increase significantly
over the next several years and with it, the demand for these
targeted commodities. This creates a unique opportunity to invest
in and acquire royalties over the mines and projects that will
supply the materials needed to feed the electric revolution.
Electric Royalties has a portfolio of 12 royalties with 4
additional royalties currently under contract, subject to
completion. Electric Royalties plans to focus predominantly on
acquiring royalties on advanced stage and operating projects to
build a diversified portfolio located in jurisdictions with low
geopolitical risk.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Cautionary Statements Regarding Forward-Looking
Information and Other Company Information
This news release includes forward-looking information
and forward-looking statements (collectively, "forward-looking
information") with respect to the Company and these other companies
and within the meaning of Canadian securities laws. Forward looking
information is typically identified by words such as: believe,
expect, anticipate, intend, estimate, postulate and similar
expressions, or are those, which, by their nature, refer to future
events. This information represents predictions and actual events
or results may differ materially. Forward-looking information may
relate to the Company's future outlook and anticipated events or
results or those of these other companies and may include
statements regarding the Company's financial results, future
financial position, expected growth of cash flows, business
strategy, budgets, projected costs, projected capital expenditures,
taxes, plans, objectives, industry trends and growth opportunities
or those of these other companies.
While management considers these assumptions to be
reasonable, based on information available, they may prove to be
incorrect. Forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company or these other
companies to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. These risks, uncertainties and other
factors include, but are not limited to risks associated with
general economic conditions; adverse industry events; marketing
costs; loss of markets; future legislative and regulatory
developments involving the renewable energy industry; inability to
access sufficient capital from internal and external sources,
and/or inability to access sufficient capital on favourable terms;
the mining industry generally, the Covid-19 pandemic, recent market
volatility, income tax and regulatory matters; the ability of the
Company or any of these other companies to implement its business
strategies including expansion plans; competition; currency and
interest rate fluctuations, and the other risks.
The reader is referred to the Company's most recent filings
on SEDAR and those of these other companies, or equivalent public
filings for a more complete discussion of all applicable risk
factors and their potential effects, copies of which may be
accessed through the Company's profile page at
www.sedar.com.
SOURCE Electric Royalties Ltd.