Elemental Board of Directors Unanimously Recommends Shareholders Reject Gold Royalty's Hostile Bid TO REJECT THE HOSTILE BID, SIMPLY TAKE NO ACTION INVESTOR CONFERENCE CALL AT 10 AM EST (7 AM PST) TOMORROW
Elemental Board of Directors Unanimously
Recommends Shareholders Reject Gold
Royalty's Hostile Bid
TO REJECT THE HOSTILE BID, SIMPLY TAKE NO ACTION
INVESTOR CONFERENCE CALL AT 10 AM EST (7 AM PST) TOMORROW
Vancouver, British Columbia--(Newsfile Corp. - January 26, 2022) - Elemental Royalties Corp. (TSXV:
ELE) (OTCQX: ELEMF) ("Elemental" or "the Company") today announced that the Board of Directors
(the "Board"), following the unanimous recommendation of a special committee of independent directors
(the "Special Committee"), has unanimously determined that the all-share hostile takeover bid (the
"Hostile Bid") from Gold Royalty Corp. is not in the best interests of the Company or its shareholders
("Shareholders").
The Board believes the Hostile Bid significantly undervalues Elemental's business and unanimously and
unequivocally recommends that Shareholders
REJECT
the Hostile Bid and
NOT TENDER
their shares.
The Board's determination followed careful consideration, including advice from its financial and legal
advisors, and the recommendation of the Special Committee. Furthermore, a majority of Elemental
shareholders communicated to the Company that they did not intend to accept the Hostile Bid.
To reject the Hostile Bid, simply take
NO ACTION
. If Shareholders have tendered their shares and wish
to withdraw them, simply ask your broker or contact Elemental's information agent, Morrow Sodali (see
contact information below), to assist you with this process.
"Gold Royalty's Hostile Bid is completely inadequate,"
confirmed Frederick Bell, CEO of Elemental
.
"The Board believes that Shareholders will be better off if Elemental continues to progress its
business plan, or if a more attractive alternative surfaces from our review of strategic options."
A Directors' Circular (the "Circular") providing the full details of the Board's recommendation, including
the reasons to
REJECT
the Hostile Bid, is available on the Company's website at
https://www.elementalroyalties.com
, and at
www.sedar.com
. The Circular is also being mailed to all
Shareholders and other persons required to receive a copy under applicable securities laws. We
encourage Shareholders to visit our website for up-to-date information as we move forward
.
The Circular includes a Letter to Shareholders on behalf of the Board and the Special Committee
summarizing the reasons why Shareholders should
REJECT
the Hostile Bid. The full text of the Letter to
Shareholders is provided here:
Dear Fellow Shareholder,
On January 11, 2022, Gold Royalty Corp. commenced a hostile take-over bid to acquire all the
common shares of Elemental Royalties Corp. that Gold Royalty does not already own (the "
Hostile
Bid
").
As shareholders, the question before us is simple: why own less of a good thing? The Hostile Bid by
Gold Royalty is an opportunistic attempt to acquire Elemental in a manner that grossly undervalues
Elemental's high-quality portfolio of revenue-generating royalties. More importantly, if successful, the
Hostile Bid would provide Gold Royalty shareholders with vastly disproportionate benefits at the
expense of shareholders of Elemental.
Upon the recommendation of the Special Committee of the Board of Directors, and with the benefit of
advice from our external financial and legal advisors, the Elemental Board unanimously and
unambiguously recommends that you
REJECT
the Hostile Bid and
DO NOT TENDER
your
Elemental shares to the Hostile Bid. It seems that a majority of you agree. Elemental shareholders
representing more than 50% of the outstanding common shares of Elemental have already
communicated to Elemental their intention to
REJECT
the Hostile Bid.
To join them in rejecting the Hostile Bid, simply
TAKE
NO ACTION
.
In this circular, we detail 13 reasons why you should
REJECT
this Hostile Bid. Here is a summary:
1
.
Elemental shareholders would only own approximately 12% of the combined company, despite
Elemental contributing 97% of the revenue on a trailing 12-month basis, and 62% of the
revenue based on Gold Royalty's calculation of the "pro forma" financial information of the
combined company. While Elemental's revenue is expected to grow materially in 2022, Gold
Royalty's revenue outlook is murky and impaired by a counterparty's royalty termination notice.
2
.
The Hostile Bid implies a woefully inadequate premium for control of Elemental. It values
Elemental significantly below equity analysts' target prices of Elemental's common shares and
fails to reflect compelling near-term revenue growth already embedded in our portfolio.
3
.
The combined portfolio of Gold Royalty and Elemental would be significantly less attractive than
Elemental's stand-alone portfolio of high-quality revenue-generating gold royalties. The majority
of Gold Royalty's assets have little or no likelihood of generating cashflow in the foreseeable
future, and 86% do not even have a current feasibility analysis.
4
.
While Elemental is generating record cash flow, Gold Royalty is burning through cash at an
unsustainable and alarming rate. Gold Royalty reported nearly $12 million in negative operating
cashflow in the fiscal year ended September 30, 2021.
5
.
Elemental's management and the Elemental Board are evaluating a range of strategic
alternatives, any of which might be more favorable to Elemental shareholders when compared
with the Hostile Bid by Gold Royalty.
Gold Royalty wants you to believe that it was forced to take its offer directly to Elemental shareholders
because Elemental failed to "constructively engage in meaningful negotiations" as stated in the Gold
Royalty take-over bid circular. That is simply not true. The issue, instead, has been Gold Royalty's
unwillingness to present a genuine offer that reflects the full value of Elemental's assets and pays a
compelling premium to
YOU
for control.
The Hostile Bid opportunistically attempts to transfer the substantial upside embedded in Elemental's
portfolio to Gold Royalty shareholders, at
YOUR
expense. Instead of 100% of Elemental and its high
quality, revenue generating portfolio of royalty assets, you would be left with just 12% equity ownership
in the combined company, without receiving an adequate premium for your Elemental shares.
We urge you to carefully read the attached Directors' Circular, which outlines the full list of compelling
reasons to
REJECT
the Hostile Bid.
On behalf of the Elemental Board and the Special Committee, we would like to thank you for your
consideration and your support.
Signed
Frederick Bell
CEO & Director
Martin Turenne
Chair of the Special Committee
Advisors
The Company has engaged Canaccord Genuity Corp. as its sole financial advisor and Fasken
Martineau DuMoulin LLP as legal advisor to the Special Committee and the Board. Longview
Communications and Public Affairs is engaged as communications advisor to the Company. Morrow
Sodali is acting as information agent and strategic advisor to Elemental.
Investor Conference Call
Elemental will hold an investor call and webcast on Thursday January 27, 2022 at 10:00 a.m. EST / 7:00
a.m. PST to discuss the rejection recommendation and respond to questions.
To watch the live video webcast and slide presentation, please log into:
https://services.choruscall.ca/links/elementalroyalties20220127.html
.
A replay of the webcast will be accessible using the same link provided above within two hours from the
end of the event through until end of day April 27, 2022.
You can also attend the live call by dialing:
Canada/USA Toll Free: 1-800-319-4610
UK Toll Free: 0808-101-2791
International or Vancouver Toll: +1-604-638-5340
Callers should dial in 5 - 10 min prior to the scheduled start time and simply ask to join the call.
Please submit your questions ahead of the investor call by
e-mailing
.
Elemental shareholders who have questions can contact Morrow Sodali, the information agent, at 1-
888-777-2158 or by e-mail at
On behalf of Elemental Royalties Corp.
Frederick Bell
CEO and Director
Investor Inquiries:
Frederick Bell, CEO and Director
Direct: +44 (0) 7554 872 794
Email:
John Robins, Director
Direct: +1 (604) 657 6226
Media Inquiries:
Longview Communications and Public Affairs
Alan Bayless, Vancouver: (604) 417-9645,
Andy Lloyd, Toronto: (416) 402-5029,
Elemental is a proud member of Discovery Group. For more information please visit:
www.discoverygroup.ca
or contact 604-653-9464.
(TSXV: ELE) | (OTCQX: ELEMF) | ISIN: CA28619L1076
Neither the TSX-V nor its Regulation Service Provider (as that term is defined in the policies of the TSX-
V) accepts responsibility for the adequacy or accuracy of this press release.
About Elemental Royalties
Elemental is a gold-focused royalty company listed on the TSX Venture Exchange (the "TSX-V") in
Canada and provides investors with lower risk precious metals exposure through a portfolio of nine high-
quality royalties. This enables investors to benefit from ongoing royalty revenue, future exploration upside
and low operating costs. Elemental's experienced team seeks to secure royalties in advanced precious
metals projects, run by established operators, from its pipeline of identified opportunities.
Cautionary note regarding forward-looking statements
This release contains certain "forward looking statements" and certain "forward-looking information" as
defined under applicable Canadian securities laws. Forward-looking statements and information can
generally be identified by the use of forward-looking terminology such as "may", "will", "should", "expect",
"intend", "estimate", "anticipate", "believe", "continue", "plans" or similar terminology (including negative
and grammatical variations).
Forward-looking statements and information include, but are not limited to, statements with respect to:
the availability of new royalty and other opportunities and the timing thereof; the availability of alternative
strategic alternatives for the Company or the Company continuing to progress its business plan, and
whether such options represent greater value to Elemental's shareholders; whether any takeover or
change of control transaction involving the Company will occur and/or be completed and as to the timing
thereof. Forward-looking statements and information are based on forecasts of future results, estimates
of amounts not yet determinable and assumptions that, while believed by management to be reasonable,
are inherently subject to significant business, economic and competitive uncertainties and
contingencies, including assumptions regarding the continuation of the Company's current business and
its review of strategic alternatives. Forward-looking statements and information are subject to various
known and unknown risks and uncertainties, many of which are beyond the ability of Elemental to control
or predict, that may cause Elemental's actual results, performance or achievements to be materially
different from those expressed or implied thereby, and are developed based on assumptions about such
risks, uncertainties and other factors set out herein, including but not limited to: the requirement for
regulatory approvals and third party consents; the impact of general business and economic conditions;
the absence of control over the mining operations from which Elemental will receive royalties, including
risks related to international operations, government relations and environmental regulation; the inherent
risks involved in the exploration and development of mineral properties; the uncertainties involved in
interpreting exploration data; the potential for delays in exploration or development activities; the
geology, grade and continuity of mineral deposits; the impact of the COVID-19 pandemic; the possibility
that future exploration, development or mining results will not be consistent with Elemental's
expectations; accidents, equipment breakdowns, title matters, labour disputes or other unanticipated
difficulties or interruptions in operations; fluctuating metal prices; unanticipated costs and expenses;
uncertainties relating to the availability and costs of financing needed in the future; the inherent
uncertainty of production and cost estimates and the potential for unexpected costs and expenses,
commodity price fluctuations; currency fluctuations; regulatory restrictions, including environmental
regulatory restrictions; potential liability; the impact of competition; the loss of key employees; and other
related risks and uncertainties. Elemental undertakes no obligation to update forward-looking
information except as required by applicable law. Such forward-looking information represents
management's best judgment based on information currently available. No forward-looking statement
can be guaranteed, and actual future results may vary materially. Accordingly, readers are advised not to
place undue reliance on forward-looking statements or information.
To view the source version of this press release, please visit
https://www.newsfilecorp.com/release/111693