Maverix Metals Inc. is pleased to announce it has reached an agreement with Auramet Capital Partners, L.P., an affiliate of Auramet International LLC (“Auramet”), to acquire a gold stream and enter a long-term strategic partnership.
Dan O’Flaherty, CEO of Maverix, commented, “Maverix has a longstanding relationship with Auramet, including acquiring a portfolio of royalties from Auramet in 2017, which has already returned over 85% of our initial investment and continues to generate meaningful cash flow. This transaction adds significant and immediate cash flow, as well as additional exposure to gold, while also forming a partnership that could allow Maverix to acquire future royalties sourced by Auramet, through its relationships with an extensive and growing list of precious metals companies.”
Maverix will make a cash payment equal to $50 million to acquire a gold stream that will deliver 5,000 ounces of gold to Maverix per year. The gold stream shall be delivered quarterly and Maverix will make ongoing cash payments equal to 16% of the spot gold price for each gold ounce delivered. After a total of 50,000 ounces of gold have been delivered to the stream, Auramet shall have the option to terminate the stream for a cash payment of $5 million less certain cash flows related to the stream.
The stream is structured in Canada and has certain security provisions.
In addition to the gold stream, Maverix will be entitled to receive an amount in gold that is equivalent to all dividends distributed by Auramet on 2% of its shares outstanding, which is done semi-annually. In fiscal year 2020, Auramet paid out $35 million in dividends to its shareholders.
Auramet expects to use the proceeds of the transaction to make further investments in the mining sector, including acquiring small royalties and streams, as well as for general corporate purposes.
For the duration of the gold stream, Maverix will have a right of first refusal to purchase any royalties or streams that Auramet decides to sell from their current portfolio or acquires in the future. Furthermore, Maverix will have the right to participate in any royalty or stream that Auramet may acquire in the future where the transaction value is equal to or greater than $20 million.
Auramet is one of the largest physical precious metals merchants in the world with over $20 billion in annual revenues and provides a full range of services to all participants in the precious metals chain, from extraction and production to manufacturing and consumption. Auramet is a private company established in 2004 by a team who had worked previously together since 1989. Their business is comprised of three main activities: physical metals trading, metals merchant banking and advisory. Auramet has built a consistently successful and prominent franchise in the metals space on the back of an experienced management team that has proven to be innovative and capable of delivering the highest quality service to participants in the sector. In fiscal year 2020, it purchased over 6 million ounces of gold, 70 million ounces of silver and 3.2 million ounces of PGMs sourced from a diversified base of over 75 mining companies, 15 recycling companies and 20 refineries/smelters (with none comprising more than 5%). Auramet has also provided term financing facilities in excess of $850 million to date in the mining sector and is looking to grow its capital investment business in the precious metals and battery-related metals mining space.
For more information on Auramet please visit auramet.com.