Closes the Royalty Portfolio Acquisition from SSR Mining Vancouver, British Columbia--(Newsfile Corp. - October 21, 2021) - EMX Royalty Corporation (NYSE American: EMX) (TSXV: EMX) (FSE: 6E9) (the "Company", or "EMX") is pleased to announce that it has closed the acquisition of a portfolio of royalty interests and deferred payments (the "Royalty Portfolio") from SSR Mining Inc. and certain of its subsidiaries ("SSR Mining") (see EMX news release dated July 29, 2021). The Royalty Portfolio consists of 16 geographically diverse royalties, with four royalty assets at advanced stages of project development, and includes U.S. $18 million in future cash payments to be made to the owner of the Royalty Portfolio (see Figure 1 and Table 1). EMX has paid U.S. $33 million in cash and issued 12,323,048 million common shares of the Company valued at U.S. $32.5 million to SSR Mining. EMX will also make deferred and contingent payments to SSR Mining of up to U.S. $34 million if certain project advancement milestones are achieved.
Together with other recent advancements in EMX's global royalty portfolio and strengthening of cash flows across the Company's operations, the SSR transaction represents a key step in EMX's continued development as a leading royalty company.
The portfolio highlights include two royalties at Gediktepe in Turkey, which cover assets currently being developed by Lidya Madencilik Sanayi ve Ticaret A.. ("Lidya"), a private Turkish company. These include a 10% NSR royalty on production from an oxide gold-silver deposit and a 2% NSR royalty on the underlying polymetallic volcanogenic massive sulfide ("VMS") mineralization. Lidya expects that initial production from Gediktepe will commence in late 2021. The Royalty Portfolio also includes advanced stage project royalties at Yenipazar (Turkey) and Diablillos (Argentina) (see summaries below), with the remaining royalty interests covering both precious metal and base metal assets in South America, Mexico, the United States (Nevada), and Canada.
The number of royalties acquired by EMX was reduced from 18 (as originally contemplated) to 16, as the operator of two royalty properties in Mexico exercised rights of first refusal to acquire the royalties under the terms of their existing royalty agreements. The total consideration for those two properties was U.S. $530,000, which has been deducted as a purchase price adjustment from the share consideration that the Company has paid. The Company also entered into a Vendor-take-back note (VTB Note) with SSR Mining pursuant to which the Company has borrowed U.S. $7.8 million from SSR Mining. The proceeds of the VTB Note will be utilized to cover VAT liability which will arise upon completion of the acquisition of the Gediktepe royalties. The VAT will be recovered by the Company's Turkish subsidiary holding the Gediktepe royalties over the next two to three years.
With the closing of the Royalty Portfolio acquisition, EMX continues to significantly strengthen its global portfolio of royalties. Gediktepe is one of several EMX royalty properties that are expected to commence commercial production during Q4, 2021. The others include the Timok development project in Serbia, where the Cukaru Peki high grade copper-gold deposit is being put into production by Zijin Mining Group Co. Ltd., and Balya North, a polymetallic Carbonate Replacement Deposit ("CRD") in western Turkey being developed by Esan Eczacibai Endstriyel Hammaddeler San. ve Tic. A.., a private Turkish company. The Cukaru Peki royalty was acquired by EMX in 2013 shortly after discovery of the deposit, and Balya North is an organically generated EMX royalty.
EMX's Leeville royalty in Nevada has delivered increased cash flows in recent months, with royalty production proceeds now being received from the Four Corners and Carlin East mining areas in addition to other areas on the royalty property. Together with cash flow already being received from its recently purchased Caserones copper-molybdenum royalty in Chile, EMX anticipates a significant increase in royalty revenue in 2022 from multiple assets that span four continents. See the EMX website (www.EMXroyalty.com) for further project and portfolio details.
Commercial Terms Overview. EMX paid U.S. $33 million in cash and issued 12,323,048 million common shares to SSR Mining. The number of common shares issued by EMX to SSR Mining was based on the volume-weighted average price ("VWAP") of the shares on the NYSE American stock exchange for the 20 days prior to the date of completion of the transaction (the "Closing Date"). All such shares are subject to a hold period of four months and one day from the Closing Date. SSR Mining now owns an approximate 12% undiluted equity interest in EMX.
Additional deferred payments of up to U.S. $34 million may be made by EMX to SSR Mining in consideration for the Net Profits Interest ("NPI") royalty on the Yenipazar property. These will be payable as follows: (i) U.S. $2,000,000 in EMX common shares based on the 20-day VWAP prior to the date of commencement of construction of a mill or any other improvements to be used for the mining, handling, milling, beneficiation or other processing of certain mineral products on the Yenipazar property; (ii) U.S. $2,000,000 in EMX common shares based on the 20-day VWAP prior to the date of commencement of commercial production at the Yenipazar property; (iii) U.S. $15,000,000 in cash, payable when EMX has received U.S. $10,000,000 in net profits interest payments under the Yenipazar NPI royalty; and (iv) U.S. $15,000,000 in cash, payable when EMX has received a second U.S. $10,000,000 in net profits interest royalty payments under the Yenipazar NPI royalty. All shares issued as consideration for the Yenipazar NPI interest will be subject to a hold period of four months and one day from the date of issue, and the issuance of such shares is subject to TSX Venture Exchange approval.
The VTB Note totals U.S. $7.85 million, bears interest at 10% per annum for the first 180 days, and will increase to 13% per annum thereafter. The VTB Note has a maturity date of December 31, 2022. The proceeds of the VTB Note have been utilized for the payment of VAT associated with the sale of the Gediktepe royalty. The VTB Note is unsecured and subordinated to the Sprott Credit Facility which was drawn to help fund the Company's acquisition of the Caserones royalty. The Company will recover the VAT totaling U.S. $7.85 million over a two to three year period as royalty income is earned in Turkey.
https://www.newsfilecorp.com/release/100509
