Royal Gold reaches agreement for acquisition of Great Bear Royalties

Precious metals streaming company Royal Gold has signed a definitive agreement to acquire all the issued and outstanding shares of Great Bear Royalties, in a significant piece of M&A in the gold royalties space.

Royal Gold’s US$5.10 per share offer values Great Bear at around $153 million – a 43% premium over its 20-day volume weighted average trading price on the TSXV up to and including July 8 – on a fully diluted basis.

Great Bear’s main asset is a 2% net smelter return royalty that covers the entirety of its namesake project in the Red Lake district of Ontario indirectly owned and operated by Kinross Gold. As part of the deal, Royal Gold has entered into a co-operation agreement with Kinross giving it access to key people and information relating to the project.

In exchange, Royal Gold will provide an option to Kinross to purchase a 25% interest in the royalty for an amount equal to 25% of the purchase price of Great Bear at any time from the transaction closing date, until either a construction decision for the project, or 10 years after the transaction closes.

“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,” Royal Gold CEO Bill Heissenbuttel said in a media release.

“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.”