this is more good news, things coming together very nicely
Newcastle, Franco-Nevada to create new Castle royalty
2016-04-11 12:11 ET - News Release
Mr. David Adamson reports
NEWCASTLE GOLD CONSOLIDATES ROYALTIES WITH FRANCO-NEVADA FOR $3.4 MILLION
Newcastle Gold Ltd. has entered into an agreement with Franco-Nevada Corp., whereby Newcastle and Franco-Nevada have agreed to create, in return for a cash payment of approximately $2.2-million, a new 2.65-per-cent royalty covering all of Newcastle's Castle Mountain gold project claims, located in California, United States. The new royalty will override five separate pre-existing royalties held by Franco-Nevada that cover most of the Castle Mountain gold project. The new royalty does not require any advanced minimum royalty payments.
In addition to this royalty purchase, Franco-Nevada will subscribe for 3,636,364 subscription receipts of Newcastle at a price of 32 cents per subscription receipt for proceeds of approximately $1.2-million. Each subscription receipt will, immediately upon the completion of certain conditions, without payment of any additional consideration or taking of further action, entitle Franco-Nevada to receive one unit of Newcastle. Each unit will consist of one common share of Newcastle and one-half of one common share purchase warrant of Newcastle, where each whole common share purchase warrant is exercisable by Franco-Nevada to acquire one common share at a price of 64 cents for a period of five years from the closing of the placement.
The transaction provides the following benefits to Newcastle:
- The injection of working capital into the company, allowing the advancement of the Castle Mountain gold project;
- A streamlined royalty with Franco-Nevada which is easier and more cost-effective to manage for both parties than the existing patchwork of royalties on the Castle Mountain gold project.
Newcastle chief executive officer David Adamson commented: "We are pleased with this positive endorsement and streamlining of project royalties. We look forward to continuing our partnership with Franco-Nevada on our project. In conjunction with our recently announced transaction with Catalyst Copper which, on closing, brings both cash and high-calibre new board members to Newcastle, this new injection of working capital will allow the company to advance the project to the mutual benefit of Newcastle and Franco-Nevada."
The closing of the royalty purchase is subject to satisfaction of certain closing conditions, including: (i) regulatory approvals, (ii) the completion by Franco-Nevada of the placement, and (iii) the closing of the recently announced transaction with Catalyst Copper (see news release dated March 22, 2016) or an alternative financing in the event the merger does not close.
We seek Safe Harbor.