A graduated net smelter return (NSR) royalty on production at the Joe Mann mine of Campbell Resources (TSE) at Chibougamau, Que., has been sold to Repadre Capital (VSE), a subsidiary of Dundee Bancorp (TSE).
Last year, production at the mine totalled 70,222 oz. gold. Repadre will pay Campbell $3 million for the royalty which will be 1.8% at gold prices up to $500 per oz., increasing to 3.6% at $625 per oz. At present production rates and gold prices, the royalty will generate a cash flow of about $500,000 per year to Repadre.
Campbell will use its share of the sale to fund further development at the mine.
To help finance the royalty purchase, Repadre will issue a private placement of between 2.5 million and 4.5 million special warrants at $1 each to raise a minimum of $2.5 million and a maximum of $4.5 million.
Dundee will buy 1.5 million special warrants, and investment firm Canacord Capital has ensured the sale of an additional one million special warrants. Each special warrant will entitle the holder to one share of Repadre and a one-half Repadre share purchase warrant. One whole purchase warrant can be redeemed for a Repadre share at $1.50.
Repadre also holds a 1% NSR on several diamond properties, totaling more than one million acres, in the Lac de Gras area of the Northwest Territories.
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