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Gold Royalty agrees acquisition of Abitibi Royalties, and Golden Valley

Published by , Editor
Global Mining Review,

Gold Royalty Corp., Abitibi Royalties Inc., and Golden Valley Mines and Royalties Ltd have entered into definitive agreements, dated 6 September 2021, pursuant to which Gold Royalty will acquire all of the issued and outstanding common shares of each of Abitibi Royalties and Golden Valley by way of statutory plans of arrangement.

Under the terms of the agreement with Abitibi Royalties, which was negotiated at arms-length, each holder of the common shares of Abitibi Royalties will receive 4.6119 Gold Royalty common shares for each Abitibi Royalties Share held. Such share exchange ratio implies consideration of CAN$25.33 per Abitibi Royalties Share and a premium of approximately 22% to Abitibi Royalties shareholders based on the 20-day volume weighted average price of the Gold Royalty Shares and Abitibi Royalties Shares ending on 3 September 2021.

Under the terms of the arrangement with Golden Valley, which was negotiated at arms-length, each holder of the common shares of Golden Valley will receive 2.1417 Gold Royalty Shares for each Golden Valley Share held. Such share exchange ratio implies consideration of CAN$11.76 per Golden Valley Share and a premium of approximately 86% to Golden Valley shareholders based on the 20-day volume weighted average price of the Gold Royalty Shares and Golden Valley Shares ending on 3 September 2021. The consideration for the Golden Valley Shares reflects Golden Valley’s ownership in Abitibi Royalties plus the additional value of its other assets.

At closing, existing Gold Royalty, Abitibi Royalties (excluding Golden Valley’s ownership in Abitibi Royalties) and Golden Valley shareholders will own approximately 54%, 23% and 23%, respectively, of Gold Royalty after giving effect to the arrangement (GRC) on a fully diluted and in-the-money basis.

David Garofalo, CEO, President, and Chairman of Gold Royalty, comments:

“We are pleased to present this consolidation opportunity to the shareholders of Golden Valley, Abitibi Royalties, and Gold Royalty that will firmly establish the combined company as the leading growth and Americas-focused precious metals royalty company. We will have a significant presence in Québec and Nevada, two of the most favoured mining regions worldwide. The acquisition of Golden Valley and Abitibi Royalties represents a very compelling extension of our strategy by adding royalties over the world class Canadian Malartic mine – a generational asset that will continue to deliver gold production for decades to come. This business combination also provides a strong balance of asset quality, scale, financial strength, and management to drive significant growth and to deliver further potential upside through a significant value re-rating to the benefit of all our stakeholders.”

Glenn Mullan, CEO, President and Chairman of Golden Valley, who will be joining GRC’s board of directors on completion of the transactions, comments:

“This is a great outcome for Golden Valley shareholders. The transaction provides an immediate and compelling premium for our shareholders and the opportunity to continue to participate in the continued growth of what is a world class asset portfolio. Having considered the landscape, we are convinced that Gold Royalty is the best fit among the peer group of royalty companies to take over stewardship of our assets and I am particularly excited to be joining the Gold Royalty board at closing and to work with the Gold Royalty management team to execute on the growth strategy”

Ian Ball, CEO and President of Abitibi Royalties, comments:

“Upon joining Abitibi Royalties in 2014, my goal was to build the ‘Best Gold Company’. I define this as the company that achieves the best share performance - period. In 2014, we started at CAN$0.35 per share and today we are announcing a combination with Gold Royalty at an implied value of CAN$25.33 per share. We have always tried to do it the right way, by walking in the same shoes as our shareholders. However, there is a point when someone with different skills is needed in order to continue the success of the company. I believe Abitibi Royalties has reached this stage. I look forward to seeing the Gold Royalty team build upon this exciting platform.”

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