Electric Royalties Acquires its First Cash-Flowing Royalty
Electric Royalties Acquires its First Cash-Flowing
Royalty
VANCOUVER, BC
,
March 10, 2021
/CNW/ -
Electric Royalties Ltd.
(TSXV: ELEC)
("Electric Royalties" or the
"Company")
is pleased to announce that it has entered into an agreement with Globex Mining Enterprises Inc.
(GMX-TSX, GLBXF-OTCQX International, G1MN-
Frankfurt
) ("Globex") to acquire two royalties (the "Agreement").
The Middle Tennessee royalty ("MTM Royalty") is a sliding-scale, gross metal royalty on zinc production at the
operating Middle Tennessee Mine ("MTM"), located in
Smith County, Tennessee
,
United States
, and operated by a
subsidiary of Trafigura Group ("Trafigura"). The Company is also acquiring a new 1% Gross Revenue Royalty
("GRR") on the
Glassville
manganese project, which is located in close proximity to the Battery Hill project in
New
Brunswick, Canada
on which the Company holds an existing royalty. Total consideration for the acquisition is
C$13,000,000
in cash and the issuance of 14,500,000 common shares of the Company (the "Transaction"). In the
event the zinc price received by the operator of MTM averages above
US$2.00
per pound for 3 consecutive
months, the Company will make an additional
C$1,000,000
cash payment to Globex.
Transaction Highlights
The MTM royalty is the Company's first cash-flowing royalty, and results in Electric Royalties becoming the
only cash-flowing royalty company solely focused on the battery metals sector.
The MTM royalty has generated royalties of
~C$4,700,000
since production re-started in Q2 2017 (source:
https://globexmining.com/globex-zinc-royalty.htm
).
MTM has a first class owner and operator in Trafigura (
US$147 billion
revenue in 2020, source:
https://www.trafigura.com/trafigura-in-brief
/).
The
Glassville
royalty is strategically located near to the Company's existing Battery Hill manganese royalty in
New Brunswick, Canada
.
MTM Royalty
The MTM royalty is a sliding scale gross metals royalty, with no royalty payable if the zinc price is below
US$0.90
per pound, 1.0% between
US$0.90
and
US$1.10
and 1.4% at zinc prices above
US$1.10
per pound.
The Mid Tennessee Zinc Mines have been in intermittent operation for over 50 years and have produced over 2.7
billion pounds of zinc (
https://www.northernminer.com/news/sra-revives-mid-tennessee-zinc-complex/1000220368/
). Three underground mines make up the complex including
Gordonsville
,
Elmwood
and
Cumberland
. MTM is an
operation with significant resource potential. The mine complex is owned by Trafigura and operated by Nyrstar,
their integrated mining business unit that includes the nearby
Clarksville, Tennessee
smelter complex.
More information on MTM can be found at
https://www.nyrstar.com/cdn/88ae9585-d1d6-4df7-93b0-b0bb6aad9af9/2020-fact-sheet-middle-tennesee-30dec.pdf
Transaction Financing and Closing
Within 10 business days of signature of the Agreement, the Company will make a non-refundable down payment of
C$250,000
cash, offset against the total consideration payable on closing. Closing of the Transaction is expected
to occur before the end of
May 2021
and is subject to Electric Royalties completing a minimum funding of
C$10,000,000
. Electric Royalties is currently evaluating funding alternatives including a combination of equity
financing, debt financing or securing a strategic partner to assist with financing of the Transaction (which may result
in the strategic partner directly acquiring a portion of the royalty). Closing of the Transaction will occur following
satisfaction of raising the required financing, completion of due diligence and customary conditions including the
approval of the TSX Venture Exchange as well as the execution of definitive transaction documentation.
Brendan Yurik
, CEO of Electric Royalties
, stated: "This acquisition provides Electric Royalties with its first cash-
flowing royalty. The project is located in a good jurisdiction, with a top-tier owner and operator in Trafigura and a
long mine life. Zinc may not be well associated with the electric revolution, but has a key role to play in the
decarbonization of the global economy and there have been several promising recent breakthroughs in zinc battery
technologies and energy storage."
About Electric Royalties Ltd
.
Electric Royalties is a royalty company established to take advantage of the demand for a wide range of
commodities (lithium, vanadium, manganese, tin, graphite, cobalt, nickel & copper) that will benefit from the drive
toward electrification of a variety of consumer products: cars, rechargeable batteries, large scale energy storage,
renewable energy generation and other applications.
Electric vehicle sales, battery production capacity and renewable energy generation are slated to increase
significantly over the next several years and with it, the demand for these targeted commodities. This creates a
unique opportunity to invest in and acquire royalties over the mines and projects that will supply the materials
needed to feed the electric revolution.
Electric Royalties has a portfolio of 12 royalties and plans to focus predominantly on acquiring royalties on
advanced stage and operating projects to build a diversified portfolio located in jurisdictions with low geopolitical
risk.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statements Regarding Forward-Looking Information and Other Company Information
This news release includes
information regarding other companies based on previously disclosed pubic
information disclosed by those companies and the Company is not responsibility for the accuracy of that
information, and that all information provided herein is subject to this FLI cautionary. This news release also
includes
forward-looking information and forward-looking statements (collectively, "forward-looking information")
with respect to the Company and these other companies and within the meaning of Canadian securities laws.
Forward looking information is typically identified by words such as: believe, expect, anticipate, intend, estimate,
postulate and similar expressions, or are those, which, by their nature, refer to future events. This information
represents predictions and actual events or results may differ materially. Forward-looking information may relate
to the Company's future outlook and anticipated events or results or those of these other companies and may
include statements regarding the Company's financial results, future financial position, expected growth of cash
flows, business strategy, budgets, projected costs, projected capital expenditures, taxes, plans, objectives,
industry trends and growth opportunities or those of these other companies.
While management considers these assumptions to be reasonable, based on information available, they may
prove to be incorrect. Forward-looking statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of the Company or these other
companies to be materially different from any future results, performance or achievements expressed or implied
by the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to risks
associated with general economic conditions; adverse industry events; marketing costs; loss of markets; future
legislative and regulatory developments involving the renewable energy industry; inability to access sufficient
capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the
mining industry generally, the Covid-19 pandemic, recent market volatility, income tax and regulatory matters; the
ability of the Company or any of these other companies to implement its business strategies including expansion
plans; competition; currency and interest rate fluctuations, and the other risks.
The reader is referred to the Company's most recent filings on SEDAR and those of these other companies, or
equivalent public filings for a more complete discussion of all applicable risk factors and their potential effects,
copies of which may be accessed through the Company's profile page at
www.sedar.com
.
SOURCE
Electric Royalties Ltd.
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For further information:
Investor Contact: Mars Investor Relations, TF +1 (866) 697-0028,
[email protected], www.marsinvestorrelations.com; Electric Royalties: Electric Royalties Ltd.,
Brendan Yurik, Tel: (604) 364-3540, [email protected], www.electricroyalties.com
CO: Electric Royalties Ltd.
CNW 18:08e 10-MAR-21