Metalla Royalty agrees to acquire Nova Royalty

Metalla Royalty & Streaming Ltd. [MTA-TSXV; NYSE] said Friday it has struck a deal to acquire all the issued and outstanding shares of Nova Royalty Corp. [NOVR-TSXV, NOVRF-OTCQB], a move that will position the combined company as leading emerging intermediate royalty company.

Under the terms of the transaction Nova shareholders will receive 0.36 of a common share of Metalla for each share held, representing a consideration of $1.90 per Nova share, based on the closing price of Metalla shares on September 7, 2023 of $5.29.

The exchange ratio implies a premium of 25% base on the closing price of Nova shares on the same date, and a premium of 32% based on the closing price of Nova on May 16, 2023, the day before Nova announced that it had retained PI Financial to explore options to maximize shareholder value.

The purchase price implies a total equity value of $190 million.

Nova shares jumped 5.2% or $0.08 to $1.60 in early trading Friday on volume of 742,640. The shares are currently trading in a 52-week range of $1.91 and $1.37.

Metalla eased 11.1% or 59 cents to $4.70 on volume of 128,380.

The combined company is expected to have industry-leading growth through a combined portfolio of 105 high-quality royalties and streams with upwards of two decades of sustainable growth being advanced by top tier operators in the mining sector, including First Quantum Minerals Ltd. (FM-TSX), HudBay Minerals Inc. [HBM-TSX, NYSE], and Newmont Corp. [NGT-TSX, NEM-NYSE].

Nearly all of the assets are located in tier-one jurisdictions in Canada, the U.S., Australia and Latin America.

Strategic partner Beedie Capital has agreed to make an investment of $15 million equity investment in Metalla by subscribing for 2.8 million subscription receipts at $5.29 each. Following conversion of the subscription receipts into Metalla common shares, Beedie will hold 8.7 million shares of Metalla representing a 9.7% interest in the combined company on a non diluted basis.

Proceeds of the equity investment will be used for the acquisition of royalties and streams.

Beedie has also agreed to increase Metalla’s existing convertible loan facility to $50 million, resulting in approximately $35 million of available liquidity, better positioning the combined company to fund its growth.

Metalla was in the news recently when it agreed to acquire one silver stream and three royalties from Alamos Gold Inc. [AGI-TSX, NYSE]. In return for the assets, Metalla agreed to issue $5 million worth of common shares to Alamos.

The package includes a 20% silver stream on the Esperanza project, an advanced stage, low-capital intensity gold project in Morelos state, Mexico. It also included a 2.0% net smelter royalty (NSR) which covers the past-producing Ronda mine at Platinex Inc.’s [PTX-CSE] Shining Tree exploration property near Shining Tree, Ont. Ronda is along trend from Iamgold Corp’s [IMG-TSX, IAG-NYSE] Cote gold project.

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