23:52:05 EDT Thu 24 Jun 2021
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Nomad Royalty Company Ltd
Symbol NSR
Shares Issued 566,364,957
Close 2021-05-13 C$ 1.02
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Nomad to acquire 0.28% NSR on Caserones for $23M (U.S.)

2021-05-13 17:40 ET - News Release

Mr. Vincent Metcalfe reports


Nomad Royalty Company Ltd. has entered into an agreement with Appian Capital Chile SpA, which is a subsidiary of the Appian Natural Resources Funds advised by Appian Capital Advisory LLP, to acquire an effective 0.28-per-cent net smelter return royalty on the producing Caserones mine located in the Atacama region of Chile for cash consideration of $23-million (U.S.), as well as the issuance of two million common share purchase warrants of the company.

Transaction highlights:

  • Acquisition of a royalty on a major mine operated by Minera Lumina Copper Chile, which is indirectly owned by JX Nippon Mining & Metals Corp.;
  • Addition of a new revenue stream from Chile, a Tier 1 mining jurisdiction, to Nomad's portfolio;
  • New mine with long reserve life and significant exploration potential, located on a large land package of approximately 17,000 hectares with potential for future expansions;
  • Provides Nomad with measured exposure to copper, a key metal in supporting the world's green transition away from fossil fuels and toward electrification.

Vincent Metcalfe, chief executive officer of Nomad, commented on the transaction: "The Caserones royalty provides Nomad with immediate cash flow over a very long mine life from Chile, a Tier 1 mining jurisdiction. This transaction highlights Nomad's unique positioning within the royalty space in terms of its financial capacity to acquire high-quality royalties and is consistent with Nomad's strategy of building a diversified portfolio of high-quality cash-flowing royalties and streams."

Joseph de la Plante, chief investment officer of Nomad, further commented: "We are very pleased to announce this transaction with Appian. The acquisition of the Caserones royalty provides Nomad with exposure to copper at a time when the demand for green and electrification-linked commodities, in particular copper, is set to surge to record highs as the global economy transitions to zero-emission technologies."

Caserones royalty

The royalty consists of an effective 0.28-per-cent net smelter return royalty on the tenements comprising the Caserones mine, located on a land package of approximately 17,000 hectares.

Caserones mine highlights

The Caserones mine is owned and operated by Minera Lumina Copper Chile, which is indirectly owned by JX Nippon Mining & Metals. The mine consists of an open-pit mining operation, with a plant to produce copper and molybdenum concentrates from primary sulphides, and a solvent extraction and electrowinning plant (SX-EW) to produce copper cathodes with oxide ore processing and mixed and secondary sulphides. The mine is located in the Atacama region of Chile and has over five years of operational history with a current estimated mine life of 19 years. The mine is located 15 kilometres west of the international border with Argentina and 162 km southeast of the city of Copiapo (the capital of the Atacama region) at an elevation of approximately 4,000 metres above sea level.

In 2019, the Caserones mine produced 146,000 tonnes copper and 2,778 tonnes of molybdenum with expected life-of-mine average annual payable production of approximately 148,000 tonnes copper equivalent. The mine benefits from a significant historical investment of $4.2-billion (U.S.) and well-established infrastructure, and is expected to produce significant volumes of copper and molybdenum over the long term.

Transaction details

As part of the transaction, Nomad will acquire shares representing a 30-per-cent ownership interest in Compania Minera Caserones (CMC), a private Chilean contractual mining company which holds the payment rights to 32.5 per cent of a 2.88-per-cent net smelter return royalty on the Caserones mine. Upon closing, Nomad will become a registered shareholder of CMC and will be party to a shareholder agreement which provides for, among other things, distribution of all royalty payments net of Chilean income taxes.

As consideration for the share acquisition, Nomad will pay a cash consideration of $23-million (U.S.) and deliver two million common share purchase warrants to the vendor. Each warrant will entitle the holder thereof to purchase one common share at a price equal to $1.085 (U.S.) per share for a period of 36 months following the date of the agreement. Nomad expects to finance the cash consideration through its revolving credit facility. The transaction will have an economic effective date of May 1, 2021, which shall provide Nomad with two-thirds of the second quarter dividend payment from CMC (expected during third quarter).

Subject to certain conditions, including the registration in Nomad's name of the shares of CMC being acquired by Nomad in the shareholder registry of the Custodian of Mines of Mines of Santiago, Chile, the closing of the share acquisition is expected in late May, 2021.

Qualified person

Vincent Cardin-Tremblay, PGeo, vice-president, geology, of Nomad Royalty, is the qualified person as defined by National Instrument 43-101, who has reviewed and approved the technical content of this news release.

About Nomad Royalty Company Ltd.

Nomad is a gold and silver royalty company that purchases rights to a percentage of the gold or silver produced from a mine for the life of the mine. Nomad owns a portfolio of 14 royalty, and stream, assets, of which seven are on currently producing mines. Nomad plans to expand and diversify its low-cost production profile through the acquisition of additional producing and near-term-producing gold and silver streams and royalties.

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