Gold Royalty Announces Agreement to Acquire Vares Copper Stream
Vancouver, British Columbia – May 28, 2024 – Gold Royalty Corp. (“Gold Royalty” or the “Company”) (NYSE American: GROY) – – is pleased to announce that it has entered into a binding purchase and sale agreement (the “PSA”) with OMF Fund III (Cr) Ltd., an entity managed by Orion Mine Finance Management LP (“Orion”) to acquire a copper stream (the “Stream”) on the Vares Silver Project (“Vares”), operated by a subsidiary of Adriatic Metals plc (“Adriatic“) located in Bosnia and Herzegovina (the “Transaction”).
Under the terms of the PSA, Gold Royalty will pay consideration to Orion of US$50 million to acquire the Stream at closing of the Transaction, consisting of US$45 million payable in cash and US$5 million to be satisfied by the issuance of 2,906,977 Gold Royalty shares.
Transaction Highlights
- Affirmative impact on Gold Royalty’s cash flow:
- The Vares Stream pertains to 100% of copper production from the mining area over the Rupice deposit, offering ongoing payments based on 30% of the LME spot copper price with a fixed payable copper rate of 24.5%.
- First concentrate production began at Vares in February 2024, with commercial production anticipated in the fourth quarter of 2024.
- Adriatic has projected ore production guidance and copper grades for 2024, 2025, and 2026, indicating potential benefits from the current high copper prices.
- High-quality asset with exploration and expansion opportunities:
- Adriatic’s plan involves a mine life of 18 years with promising operating costs, focusing on the high-grade Rupice deposit for polymetallic production.
- Efforts are ongoing to increase annual production rates up to 1 million tonnes of ore by 2026.
- The project remains open for further exploration within the existing Vares concessions.
- Aligning with a strong and proven operating team:
- Adriatic’s experienced operating team has made strides in productivity and development, paving the way for commercial production in late 2024.
David Garofalo, Chairman and CEO of Gold Royalty, expressed his optimism about the acquisition, emphasizing the potential revenue and cash flow enhancement from the addition of Vares to the company’s portfolio. Furthermore, he highlighted the strategic partnership with Orion and the anticipated benefits of additional copper exposure amid all-time high prices.
Overview of the Vares Silver Project
The Vares Silver Project encompasses a significant concession area in Bosnia and Herzegovina, focusing on the Rupice area. With silver and zinc as primary products, the project’s economic benefits extend to the region, spearheading economic growth and social progress.
The Vares Processing Plant utilizes advanced technology to handle ore processing and concentrate production, showcasing a commitment to safety and efficiency in operations.
Transaction Funding
Gold Royalty plans to finance the acquisition through an equity offering and an expanded credit facility. The agreement with the Bank of Montreal and the National Bank of Canada for an increased secured revolving credit facility reflects the company’s commitment to secure funding for strategic investments.
About Gold Royalty Corp.
As a gold-focused royalty company, Gold Royalty Corp. aims to build a diverse portfolio of precious metals royalty and streaming interests to drive long-term shareholder value through sustainable mining operations.
Gold Royalty Corp. Contact
Peter Behncke
Director, Corporate Development & Investor Relations
Telephone: (833) 396-3066
Email: [email protected]
Qualified Person
Alastair Still, P.Geo., Director of Technical Services of the Company, is a “qualified person” as defined under Canadian National Instrument 43-101 (“NI 43-101“) and has endorsed the technical content of this release.
Forward-Looking Statements
The forward-looking statements in this release encompass the company’s planned acquisition activities, expected outcomes, and financial arrangements. While grounded on certain assumptions, these statements involve risks and uncertainties, emphasizing the need for cautious interpretation.
