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
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.