Mr. Brett Heath reports
METALLA CLOSES SANTA GERTRUDIS ROYALTY ACQUISITION
Metalla Royalty and Streaming Ltd. has closed its previously announced acquisition of a 2-per-cent net smelter return (NSR) royalty on the Santa Gertrudis gold property located north of Hermosillo in Sonora, Mexico, from GoGold Resources Inc. (as disclosed in a news release dated Sept. 5, 2018) for $12-million (U.S.).
Brett Heath, president and chief executive officer of Metalla, commented: "We are pleased to have completed this transaction to give our shareholders exposure to world-class mining operator Agnico Eagle Mines Ltd. The royalty on Santa Gertrudis will represent a long-life and low-cost mine on an expansive land package that will translate into a future cornerstone asset in the Metalla royalty portfolio." Mr. Heath continued, "We also would like to welcome GoGold as a new shareholder. This transaction is a great example of our third party royalty model at work, allowing holders of pre-existing royalties to maximize the value and maintain the exposure of the royalty through our equity."
Share election
GoGold elected to accept $6-million (U.S.) of the purchase price by being issued common shares of Metalla at a deemed price of 78 cents per Metalla share. The share consideration represents a total of 10,123,077 Metalla shares with a pro forma interest of 9.9 per cent. The share consideration will be subject to a four-month hold period under applicable securities laws, rules of the TSX Venture Exchange and further trading restrictions governed by the definitive agreement.
Loan agreements
Metalla has also entered into loan agreements with a syndicate of arm's-length lenders for aggregate loan proceeds of $1.75-million (U.S.). The proceeds from the loan were used to pay, in part, the $6-million (U.S.) cash portion of the acquisition price for the royalty. The balance of the acquisition price for the royalty was paid from the company's cash reserves.
Terms of the loan include interest at a rate of 5.0 per cent per annum, calculated annually, and a term of 12 months, with early repayment provisions. As an inducement for providing the loan, Metalla has agreed to provide the lenders an origination discount of $52,500 (U.S.) in total and, subject to the approval of the exchange, to issue an aggregate of 525,000 non-transferable common share purchase warrants. Each Metalla warrant will entitle the holder to acquire one Metalla share at an exercise price of 85 cents for a period of two years. (The term of the warrants is subject to the approval of the exchange.) The Metalla warrants and the underlying Metalla shares to be issued upon exercise of the Metalla warrants will be subject to a four-month hold period under applicable securities laws.The company has also granted the lenders as collateral a corporate guarantee on the wholly owned subsidiary of Metalla that will hold the royalty on the closing of the transaction.
Capital structure
Following the completion of the transaction, Metalla's issued and outstanding common shares are expected to be approximately 102 million, including 2.8 million Metalla common shares priced at 78 cents to be issued pursuant to the automatic conversion of the convertible debenture held by Coeur Mining Inc. The convertible debenture automatically converts into Metalla shares at future financings (at the future financing price) or asset acquisitions (at the acquisition price) to maintain Coeur's 19.99-per-cent interest until the outstanding principal is either converted in full or otherwise repaid. The remaining balance on the convertible debenture is expected to be $3.2-million (U.S.) the automatic conversion.
About MetallaRoyalty and Streaming Ltd.
Metalla is a precious metals royalty and streaming company. Metalla provides shareholders with leveraged precious metal exposure through a diversified and growing portfolio of royalties and streams. Its strong foundation of current and future cash-generating asset base, combined with an experienced team, gives Metalla a path to become one of the leading gold and silver companies for the next commodities cycle.
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