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Maverix Metals Inc (2)
Symbol MMX
Shares Issued 107,948,342
Close 2019-08-13 C$ 6.37
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Maverix increases Hope Bay NSR to 2.5% for $40M (U.S.)

2019-08-14 10:17 ET - News Release

Mr. Dan O'Flaherty reports


Maverix Metals Inc. has agreed to acquire an additional net smelter return royalty (NSR) on the Hope Bay mine in Nunavut, Canada, owned and operated by TMAC Resources Inc. Maverix currently owns an existing 1-per-cent net smelter return royalty on Hope Bay.

Maverix and TMAC have agreed to amend the existing royalty agreement whereby Maverix will acquire an additional 1.5% NSR royalty (the "Additional Royalty") on Hope Bay in exchange for a cash payment of US$40 million. Upon closing of the transaction, Maverix will own a combined 2.5% NSR royalty on Hope Bay. Maverix will also be entitled to receive an additional 0.25% NSR royalty (the "Bonus Royalty") until certain conditions with respect to the Additional Royalty are satisfied.

Transaction Highlights:

  • Increased royalty interest in a world-class gold camp in Canada, hosting over 6 million ounces in global resources, with significant exploration potential1.
  • Immediately increases Maverix's attributable gold equivalent production per share.
  • Accretive to Maverix's net asset value and cash flow per share.

"Maverix is delighted to expand and support our existing relationship with TMAC through an increase to our interest at their Hope Bay mine," commented Dan O'Flaherty, CEO of Maverix. "Hope Bay is a multi-million ounce camp with tremendous exploration and expansion potential that we expect will operate for decades. This transaction provides both immediate and long-term growth and additional gold exposure for Maverix shareholders."

Hope Bay

Hope Bay began producing gold in early 2017, with an initial 20 year mine life2, and is expected to produce over 160,000 ounces of gold in 2019. TMAC continues to optimize the established operations at the Doris mine with ongoing productivity improvements, including the gravity project now completed and the second surge bin in full operation as of July 1, 2019.

Exploration drilling at Doris and Madrid continues to demonstrate the continuity of high-grade gold mineralization, including visible gold at Doris, increasing TMAC's confidence in the potential to grow these established deposits considerably at depth, and then grow resources further through the prioritized exploration of the more than 90 other identified regional targets.

Doug Ward, Vice President Technical Services of Maverix, commented, "TMAC has shown that through the combination of incremental improvements to operations, practical measures taken to address challenges as they arise, and a vision commensurate with the potential of the mine, the company is well positioned to realize a successful Hope Bay operation for many years to come."

Transaction Terms:

  • Maverix will acquire an Additional Royalty of 1.5% on Hope Bay, effective from August 1, 2019, bringing Maverix's total NSR royalty on Hope Bay to 2.5%.
  • Maverix will be entitled to a Bonus Royalty of 0.25% until the Additional Royalty is registered against the property, which is expected to occur once TMAC's debt facility with Sprott Private Resource Lending (Collector), LP is repaid in 2021.
  • Maverix will make a cash payment of US$40 million to TMAC upon closing of the transaction.
  • TMAC will have the right to buy back 0.5% of the Additional Royalty at any time after June 30, 2021 for a cash payment of US$15 million (the "Partial Buy Back").
  • After a total of three million ounces of payable gold has been produced at Hope Bay from the effective date of the Additional Royalty, the Additional Royalty will decrease to 0.75%, regardless of whether the Partial Buy Back is exercised, such that Maverix will retain a 1.75% NSR.
  • TMAC will have the right to buy back 100% of the Additional Royalty for a cash payment of US$50 million in the event of a change of control transaction of TMAC that is announced prior to June 30, 2021.
  • TMAC will have the option to pay the Additional and Bonus Royalty amounts in TMAC common shares, cash or a combination until June 30, 2021, after such date, the amounts will be paid in cash.
  • Concurrent with the closing of the purchase of the Additional Royalty, Maverix will subscribe for a private placement of TMAC common shares for proceeds of US$3 million.

Maverix will fund the transaction through a combination of cash on hand and drawing on its existing credit facility. Closing of the transaction is expected to occur on or around August 16, 2019.

Qualified Person

Doug Ward, B.Sc., Mining Engineering, MMSA, is Vice President Technical Services for Maverix, and a qualified person under National Instrument 43-101 -- Standards of Disclosure for Mineral Projects, has reviewed and approved the scientific and technical disclosure contained in this press release.

About Hope Bay

Hope Bay is an 80 km by 20 km Archean greenstone belt located in Nunavut, Canada. Hope Bay is a high-grade gold district with established Measured and Indicated Mineral Resources totaling approximately 4.81 million ounces of gold at an average grade of 8.3 g/t Au and Inferred Mineral Resources totaling approximately 1.62 million ounces of gold at an average grade of 6.9 g/t Au. Proven and Probable Mineral Reserves total approximately 3.59 million ounces of gold at an average grade of 6.8 g/t Au (estimates have an effective date of December 31, 2018. Mineral Resources are inclusive of those resources converted to Mineral Reserves)1.

About Maverix

Maverix is a gold royalty and streaming company. Maverix's mission is to provide its shareholders with significant low risk leverage to precious metal prices and to increase underlying per share value by continuing to grow its portfolio with acquisitions of high-quality royalties and streams that offer robust returns.

Technical and Third-party Information

Maverix has limited, if any, access to the properties on which Maverix holds a royalty, stream or other interest. Maverix is dependent on, (i) the operators of the mines or properties and their qualified persons to provide technical or other information to Maverix, or (ii) on publicly available information to prepare disclosure pertaining to properties and operations on the mines or properties on which Maverix holds a royalty, stream or other interest, and generally has limited or no ability to independently verify such information. Although Maverix does not have any knowledge that such information may not be accurate, there can be no assurance that such third-party information is complete or accurate. Some information publicly reported by operators may relate to a larger property than the area covered by Maverix's royalty, stream or other interest. Maverix's royalty, stream or other interests often cover less than 100% and sometimes only a portion of the publicly reported mineral reserves, resources and production of a property.

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