The 0.5% NSR buy back for $500,000 seems to have been a no brainer buy back decision……

  • At $1,667 POG on 60k ounces from June 2013, the annual royalty cost would have been $500,100 per annum.
  • The buy back facility is therefore very accretive to shareholders.
  • The sale of the bought back 0.5% NSR to Gold Royalties Corporation (GRC) was in 2011, at a price of $600,000 (50% of $1.2m for 1%).  This was soon after the pre feasibility, when the price of gold was circa $1200 per ounce.  The total payment for 0.5% was extended to $750,000 in 2012 in order to include over the 200,000 total ounces limit on the original agreement.
  • Therefore, in effect, Metanor obtained $500,000 funding since 2011 and was paid $250,000 fo rthe privilege of doing so.
  • The increase in the POG by circa $500 and the extended life of the mine made it a top priority for cash allocation.

 

Thanks to Margret for the initial GRC lead.

Source:- Gold Royalties Corporation MD&A 24 October 2012

Bachelor Lake

 On  March  31,  2011,  the  Company  entered  into  an  assumption  agreement  pursuant  to  which  the  Company  acquired  a royalty  interest  in  the  Bachelor  Lake  Property  located  in  Quebec  for  $1,200,000.    The  royalty  interest  acquired  is  a  1% net  smelter  royalty  on all  minerals  produced  from all  or  any  part  of  this  property  as  outlined  in  the  royalty agreement with the operating company.  Pursuant to the assumption agreement, the Company will be entitled to all royalties paid on the first 200,000 ounces of gold or gold equivalent ounces of other minerals and that royalty payments for minerals extracted in excess of 200,000 ounces will be split such that the Company will receive 60% of these royalty payments.  

On  March  22,  2012,  the  Company  entered  into  an  amendment  to  purchase  agreement  in  exchange  for  cash consideration  of  $300,000.  The  Amendment  to  Purchase  Agreement  changed  the  assumption  agreement  dated  March 31, 2011 and provided that the Company would receive 100% of royalty payments in excess of 200,000 ounces of gold or gold equivalent ounces of other minerals. 

As  part  of  the  royalty  agreement,  the  project  operator  has  an  option  to  re-purchase  the  royalty  for  an  amount  of $1,000,000,  subject  first  to  the  right  of  the  Company  to  limit  the  re-purchase  right  to only  half  of  the  royalty  (being  a 

0.5% repurchase of the 1% NSR for an amount of $500,000).  The project operator is entitled to exercise its re-purchase right at any time after the last day of the period of eighteen months after the date of the commencement of commercial production, as defined in the royalty agreement.