Royal Gold, Inc. has announced that its wholly owned subsidiary, International Royalty Corp. (IRC), has entered into a definitive agreement with Great Bear Royalties Corp. (GBR) to acquire all of the issued and outstanding common shares of GBR for a cash consideration of CAN$6.65 per common share.
The transaction is pursuant to a plan of arrangement under the provisions of the Business Corporations Act (British Columbia) and subject to the conditions set out in the arrangement agreement.
The acquisition price represents a 43% premium over GBR’s 20-day volume weighted average trading price on the TSXV up to and including 8 July, and values GBR at approximately CAN$199.5 million on a fully diluted basis.
The acquisition has been unanimously approved by the boards of directors of both Royal Gold, Inc. and GBR, and the Board of Directors of GBR has resolved to recommend that the shareholders of GBR approve the acquisition. All of the directors and officers of GBR have entered into support agreements to vote their shares in support of the acquisition representing, in aggregate, approximately 10.5% of GBR shareholders.
GBR’s sole material asset is a 2.0% net smelter return royalty that covers the entirety of the Great Bear Project in the Red Lake district of Ontario, Canada, indirectly owned and operated by Kinross Gold Corp. As part of IRC’s due diligence, IRC entered into a co-operation agreement with Kinross that provided IRC access to Kinross personnel and certain non-public information pertaining to the Great Bear Project. In exchange, IRC agreed to amend certain terms of the royalty agreement upon closing of the acquisition, including providing an option to Kinross to purchase a 25% interest in the Royalty for an amount equal to 25% of IRC’s purchase price of GBR, adjusted for inflation, at any time from the transaction closing date until the earlier of a construction decision for the Great Bear Project and 10 years after the transaction closing date.
Bill Heissenbuttel, President and CEO of Royal Gold, comments:
“I am pleased to announce this friendly transaction with Great Bear Royalties Corp., which provides Royal Gold exposure to Canada’s newest major gold discovery, the Great Bear Project.
“The Royalty represents one of the few royalty interests that meets all the characteristics we seek in our investments, namely the high quality of management, project and jurisdiction. Our unique approach to the transaction allowed us to work closely with Kinross to understand the technical aspects of the Great Bear Project and their vision for the development of what I believe will be a top tier asset in terms of production and mine life, and one that will provide significant value to Royal Gold shareholders over the long term.”
Calum Morrison, President and Chief Executive Officer of GBR, comments:
“Our Board is very pleased with this attractive premium and unanimously recommends that GBR shareholders approve the acquisition. We look forward to working with Royal Gold to complete the transaction.”