11:32:52 EDT Mon 29 May 2023
Enter Symbol
or Name

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Nomad Royalty Company Ltd (2)
Symbol NSR
Shares Issued 62,220,100
Close 2022-05-02 C$ 10.25
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Nomad to be acquired by Sandstorm for $755M

2022-05-02 09:06 ET - News Release

Mr. Vincent Metcalfe reports


Nomad Royalty Company Ltd. has entered into a definitive arrangement agreement with Sandstorm Gold Ltd., pursuant to which Sandstorm will acquire all of the issued and outstanding shares of Nomad in an all-share transaction valued at approximately $755-million (Canadian). All dollar amounts are in U.S. dollars unless otherwise noted. The transaction will be effected by way of a court-approved plan of arrangement, is subject to certain regulatory and shareholder approvals, and is expected to close in the second half of 2022. Under the terms of the transaction, shareholders of Nomad will receive 1.21 common shares of Sandstorm for each Nomad share held.

The consideration implies a value of approximately $11.57 (Canadian) per Nomad share based on the closing price of the Sandstorm shares on the Toronto Stock Exchange on April 29, 2022, and represents a premium of 21 per cent to the closing price of the Nomad shares as at the same date, and a premium of 34 per cent on the 20-day volume-weighted average price of the Nomad shares and Sandstorm shares on the TSX for the period ending on April 29, 2022.

"Nomad has executed and delivered on its commitment to create value for our shareholders through our disciplined transaction-driven strategy. Today's transaction builds on our vision to create a pure-play, highly diversified, cash-flow-focused royalty and streaming company with peer-leading growth. Catalyzing the creation of the next large royalty company has always been our objective," commented Vincent Metcalfe, chief executive officer of Nomad.

"Today's announcement propels Sandstorm forward in both size and scale while solidifying Sandstorm's position amongst its peers as the highest-growth streaming and royalty company. We see tremendous value in Nomad's high-growth precious-metals-focused portfolio and in the combined portfolio," commented Nolan Watson, president and chief executive officer of Sandstorm.

BaseCore transaction

Concurrent with the transaction, Sandstorm has also agreed to acquire nine royalties and one stream from BaseCore Metals LP for total consideration of $525-million, consisting of $425-million cash and $100-million Sandstorm shares. The cash consideration for the acquisition of the BaseCore portfolio will be financed from Sandstorm's newly upsized $500-million revolving credit facility to be implemented before closing of BaseCore transaction.

BaseCore is an entity equally owned by affiliates of Glencore PLC and Ontario Teachers' Pension Plan that holds a high-quality, long-life portfolio that includes 10 royalty and stream assets, of which three are on currently producing assets, including a 1.66-per-cent net profit interest (NPI) royalty on the world-class Antamina copper mine located in Peru.

The BaseCore transaction is expected to close in four to six weeks and is subject to regulatory approvals, including the approval of the TSX for the listing of the Sandstorm shares, the Canadian Competition Bureau, waiver of rights of first offer or refusal on certain exploration-stage royalties, and other customary conditions for a transaction of this nature.

Antamina royalty spinout and silver stream with Horizon

Concurrent with the BaseCore transaction, Sandstorm has signed an amended and restated letter of intent with Royalty North Partners Ltd. (RNP), to become Horizon Copper, whereby Sandstorm will sell the acquired 1.66-per-cent Antamina NPI royalty to Horizon and Sandstorm will retain a long-life silver stream on the Antamina mine, along with a portion of the poststream NPI royalty.

The business intent of Horizon Copper is to actively grow its existing portfolio of assets, with a focus on copper projects. The subsequent spinout of the Antamina NPI will position Horizon Copper as a competitive copper company with a portfolio of high-quality cash-flowing and development-stage copper assets. This transformative transaction provides Horizon Copper with the size and scale required to further grow and diversify the company, further strengthening the strategic partnership opportunities with Sandstorm.

The full consideration that Horizon Copper will issue to Sandstorm under the spinout transaction includes:

  • 1.66-per-cent Antamina silver stream: Sandstorm will receive 1.66 per cent of silver based on production from the Antamina mine with continuing payments equal to 2.5 per cent of the silver spot price;
  • 0.55-per-cent Antamina royalty: Sandstorm will receive approximately one-third of the Antamina NPI, paid net of the Antamina silver stream servicing commitments;
  • $50-million cash payment: Horizon Copper will raise $50-million by way of equity financing, which will then be payable to Sandstorm on closing of the spinout transaction;
  • $105-million debenture: Sandstorm will be issued a $105-million debenture. The debenture is expected to bear an interest rate of 3 per cent over a 10-year term. Principal repayments are subject to a 100-per-cent cash sweep of the excess cash flow Horizon Copper receives from the 1.66-per-cent Antamina NPI after the Antamina silver stream and Antamina residual royalty obligations are paid. Prepayment of the debenture can occur at any time prior to maturity without penalty;
  • $26-million in Horizon Copper shares: Horizon Copper will issue Sandstorm approximately $26-million worth of Horizon Copper shares to maintain Sandstorm's 34-per-cent equity interest.

The Antamina silver stream and the debenture will be senior obligations of Horizon Copper, secured by the 1.66-per-cent Antamina NPI.

The spinout transaction is subject to several conditions, including, but not limited to, execution of definitive agreements, TSX Venture Exchange acceptance, disinterested RNP shareholder approval and Horizon Copper raising $50-million.

The transaction is not conditional on closing of the BaseCore transaction or the spinout transaction. The full particulars of the transaction, BaseCore transaction and spinout transaction will be described in detail in Nomad's management information circular to be prepared in accordance with applicable securities legislation.

Upon completion of the transaction and BaseCore transaction, existing shareholders of Nomad and Sandstorm will respectively own approximately 28 per cent and 67 per cent of the pro forma combined entity, and existing shareholders of BaseCore will own approximately 5 per cent, calculated on the date hereof.

Transaction overview

The transaction will be effected by way of a court-approved plan of arrangement under the Canadian Business Corporation Act, and will be subject to the approval of 66-2/3 per cent of the votes cast by shareholders of Nomad at a special meeting of the shareholders of Nomad and the approval of a simple majority of the vote cast by shareholders of Nomad at the Nomad meeting, excluding votes cast by the senior officers, as required under Multilateral Instrument 61-101.

Sandstorm will be required under the policies of the TSX to obtain the approval of a simple majority of the votes cast by shareholders of Sandstorm at a special meeting of the shareholders of Sandstorm. The dates of the Nomad meeting and the Sandstorm meeting will be announced by way of press release at a later date.

Nomad's principal shareholders, Orion Mine Finance Fund II LP and Orion Mine Finance Fund III LP, have entered into irrevocable voting support agreements with Sandstorm pursuant to which Orion has agreed to vote all of its Nomad shares, representing in total approximately 61 per cent of the Nomad shares on a fully diluted basis in favour of the transaction. Directors and officers of Nomad, holding a total of approximately 5 per cent of the Nomad shares on a fully diluted basis, have also entered into voting support agreements with Sandstorm, pursuant to which they have agreed to vote their Nomad shares in favour of the transaction.

In addition to the Nomad and Sandstorm shareholder approvals, the transaction is subject to approval by the Superior Court of Quebec, to regulatory approvals, including that of the Canadian Competition Bureau, the TSX and the New York Stock Exchange approvals for the listing of Sandstorm shares, as well as other customary closing conditions. The arrangement agreement contains customary reciprocal non-solicitation covenants, a right to match in favour of Sandstorm, and $20.6-million or $23.6-million in termination and reverse termination fees payable to Sandstorm or Nomad, respectively, in certain circumstances.

Closing of the transaction is currently expected to occur in the second half of 2022.

Recommendations of the board of directors

The board of directors of Nomad, having received a unanimous recommendation from a special committee solely comprising independent directors, has unanimously approved the transaction, and determined that the transaction is in the best interest of Nomad and fair to the shareholders of Nomad. Accordingly, the board of directors of Nomad unanimously recommends the shareholders of Nomad to vote in favour of the transaction.


National Bank Financial acted as financial adviser to the special committee, and has provided an opinion to the board of directors of Nomad and to the special committee. Cormark Securities has provided an independent opinion to the special committee. Each opinion to the effect that, subject to the assumptions, limitations and qualifications set out therein, the consideration to be received by the shareholders of Nomad in connection with the transaction is fair, from a financial point of view, to shareholders of Nomad.

Fasken Martineau DuMoulin acted as legal adviser to Nomad and the special committee in connection with the transaction.

About Nomad Royalty Company Ltd.

Nomad Royalty Company 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 22 royalty and stream assets, of which eight are on currently producing mines. Nomad plans to grow 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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