Nomad Royalty, Orion sign $95M (U.S.) gold stream deal
2021-10-29 07:15 ET – News Release
Mr. Vincent Metcalfe reports
NOMAD ROYALTY COMPANY ANNOUNCES $95 MILLION GOLD STREAM WITH ORION MINE FINANCE ON THE GREENSTONE GOLD PROJECT IN ONTARIO AND LIFE-OF-MINE ESG COMMITMENT
Nomad Royalty Company Ltd. has entered into a gold purchase agreement with a subsidiary of Orion Mine Finance with respect to its 40-per-cent interest in the Greenstone Gold Mines LP (GGM), which is the owner and operator of the Greenstone gold project located in Ontario, Canada. Nomad will make upfront cash payments totalling $95-million for 5.938 per cent of gold production attributed to Orion’s 40-per-cent interest in GGM until 120,333 ounces have been delivered, and 3.958 per cent thereafter. As part of the gold stream, Nomad has made a long-term commitment to financing mine-level environmental, social and governance (ESG) programs by agreeing to make payments to GGM equal to $30 per ounce of gold delivered to Nomad. For further clarity, the gold stream does not encumber Equinox Gold Corp.’s 60-per-cent interest in GGM or the Greenstone project. All figures quoted herein are in U.S. dollars unless otherwise indicated.
« The addition of the Greenstone gold stream strengthens our portfolio and adds near-term production from a fully permitted project located in Ontario, a premier mining jurisdiction, » commented Vincent Metcalfe, Nomad’s chief executive officer. « This transaction is consistent with Nomad’s strategy of building a cash-flow-focused precious metals royalty and stream portfolio. »
« We are very pleased to partner with Orion on its portion of the Greenstone project. Through the gold stream, Nomad is excited and proud to make a life-of-mine financial commitment to support GGM’s environment and community-based programs, » further commented Joseph de la Plante, Nomad’s chief investment officer.
Transaction highlights (shown on a 100-per-cent basis, of which Orion owns 40 per cent):
- Highlights Nomad’s expertise and ability to execute high-quality streaming transactions;
- Demonstrates Nomad’s commitment to supporting ESG initiatives through a life-of-mine financial commitment to GGM to support mine-level environment and community-based programs;
- Adds a Tier 1 gold stream on a top-tier mine to Nomad’s portfolio:
- One of Canada’s largest gold mines with 5.54 million ounces in proven and probable mineral reserves grading 1.27 grams per tonne gold;
- Conventional large-scale open-pit operation;
- Ontario, Canada, is one of the world’s best mining jurisdictions;
- 5.05 million ounces life-of-mine gold on at average all-in-sustaining costs of $618 per ounce:
- More than 400,000 ounces average annual gold production for the first five years;
- More than 360,000 ounces average annual gold production over the life of mine;
- Furthers Nomad’s strategy of investing in near-term production:
- Project is fully permitted and full-scale construction is under way;
- First gold pour targeted for the first half of 2024;
- Significant underground and near-mine exploration upside potential.
Terms of the agreement:
- Advance deposit: Nomad to finance an advance deposit of $95-million to Orion, of which $13.3-million is expected to be advanced in Q4 2021 and $81.7-million is expected to be advanced no later than June 30, 2023. Financing of the first deposit is conditional upon, among other things, (i) Orion and the other partners of GGM entering into a second amended and restated limited partnership agreement of GGM on or before Nov. 30, 2021; (ii) Orion entering into a senior credit facility on or before Nov. 30, 2021; (iii) a formal construction decision has been made with respect to the Greenstone project; and (iv) the first drawdown by Orion under its senior credit facility. Financing of the second deposit by Nomad shall be conditional upon, among other things, a second drawdown by Orion under its senior credit facility.
- Gold stream: Under the gold stream, Nomad will be entitled to delivery of 5.938 per cent of gold production attributed to Orion’s 40-per-cent interest until 120,333 ounces of gold have been delivered, and 3.958 per cent thereafter.
- Cash payment: Nomad will pay the seller a continuing payment, at the time of each delivery, equal to 20 per cent of the spot gold price for each ounce of refined gold delivered under the gold stream.
- ESG financial commitment: life-of-mine financial commitment to make continuing cash payments to GGM equal to $30 per ounce of gold delivered under the gold stream to support ESG programs implemented by GGM at the Greenstone projec.
- Exploration upside: The gold stream on Orion’s 40-per-cent interest applies to all mining claims, mining leases and other similar mining rights currently comprising the Greenstone project, including the Hardrock, Brookbank, Key Lake and Kailey deposits and will also apply to potential future upside at the existing orebodies and prospective targets that may be acquired in the future within the gold stream area of interest.
Nomad is dedicated to promoting responsible mining practices and supporting the communities where it lives and operates. By joining the United Nations Global Compact on Dec. 15, 2020, Nomad committed to voluntarily aligning its operations and strategy with the 10 universally accepted principles in the areas of human rights, labour, environment and anti-corruption. Nomad strives to be a leader in ESG by investing in both direct and indirect sustainable development initiatives, aligned with the sustainable development goals important to its business. As such Nomad plans to focus on quality education, gender equality, clean water and sanitation, and climate action.
The life-of-mine financial commitment by Nomad to make cash payments to GGM equal to $30 per ounce of gold delivered under the gold stream to support ESG programs implemented by GGM at the Greenstone project further demonstrates the company’s commitment to corporate sustainability. The future environment and community-based programs will directly benefit and impact all Greenstone project stakeholders.
The stream agreement may be terminated prior to the closing of the first deposit (i) by mutual consent of Nomad and Orion, (ii) by either Nomad or Orion if the first deposit does not close by Dec. 31, 2021, and (iii) by either Nomad or Orion if the amended and restated limited partnership agreement or the Orion senior credit facility is not entered into by Nov. 30, 2021.
A formal construction decision has not been made by the partners of GGM and is subject to receiving consent of Equinox Gold’s lenders and the closing of financing by Orion, both of which are expected within the next several weeks.
Affiliates of Orion beneficially own or control approximately 70 per cent of the outstanding common shares of Nomad and, as such, Orion is considered a related party and an insider of Nomad for the purposes of applicable securities laws and stock exchange rules. The gold stream transaction may be considered a related-party transaction between Nomad, Orion and their respective affiliates for the purposes of Multilateral Instrument 61-101 — Protection of Minority Security Holders in Special Transactions. Nomad is relying on exemptions from the formal valuation and minority approval requirements otherwise mandated by MI 61-101, since at the time the gold stream transaction was agreed to, neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the gold stream transaction, insofar as it involves interested parties, exceeded 25 per cent of Nomad’s market capitalization.
Vincent Cardin-Tremblay, PGeo, vice-president, geology, of Nomad is the qualified person as defined in National Instrument 43-101 who has reviewed and approved the technical content of this news release.
About Nomad Royalty Company Ltd.
Nomad Royalty 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 15 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.