Barrick sells 22 royalties to Maverix Metals for up to US$60 million

Maverix Metals (TSX: MMX; NYSE-AM: MMX) is acquiring 22 royalties from Barrick Gold (TSX: ABX; NYSE: GOLD) including a 1% royalty on Skeena Resources’ (TSX: SKE; NYSE: SKE) Eskay Creek gold-silver project in British Columbia for US$50 million in cash and a contingent consideration of up to US$10 million.

The contingent payment will be broken down into three payments within six years of closing: US$6 million payable when Eskay Creek receives all the permits required to start construction; US$2 million when Maverix receives US$10 million in payments from the royalty portfolio (excluding Eskay Creek); and another US$2 million when Maverix receives US$20 million in royalty payments (excluding Eskay Creek).

The portfolio covers royalties on development, advanced exploration and exploration-stage projects in North and South America, Australia and Africa. In addition to a 1% net smelter return (NSR) royalty on Eskay Creek, the key royalties include a 2% NSR royalty on Augusta Corp.’s Bullfrog gold project in Nevada; a 2% NSR royalty on a refractory sulphide ore project at Boroo Pte. Ltd.’s Lagunas Norte mine in Peru; and a pair of 1%-2% NSR royalties on Sarama Resources’ (TSXV: SWA; ASX: SRR) Tankoro deposit at its Sanutura project in Burkina Faso.

A pre-feasibility study on Eskay Creek in July 2021 envisioned an open-pit mine producing an average of 249,000 oz. gold and 7.2 million oz. silver a year over an initial mine life of 10 years. At a gold price of US$1,550 per oz., the study forecast a post-tax net present value (5% discount rate) of $1.4 billion and an internal rate of return of 56%.

Eskay Creek, a past-producing mine in the Golden Triangle of northwest B.C., contains proven and probable reserves of 26.4 million tonnes grading 3.37 grams gold per tonne and 94 grams silver per tonne, for about 2.9 million oz. contained gold and 80.2 million oz. silver.

Under the Maverix-Barrick deal, Skeena Resources has the right to purchase 0.5% of the 1% royalty on Eskay Creek for $17.5 million in cash.

Augusta’s Bullfrog gold project is also a past-producing gold-silver mine. The project near Beatty, NV has measured and indicated resources of 71 million tonnes grading 0.53 gram gold per tonne and 1.26 grams silver per tonne for about 1.2 million oz. of contained gold and 2.9 million oz. silver. Inferred resources add 16.7 million tonnes grading 0.48 gram gold and 0.96 gram silver for about 0.3 million oz. gold and 0.5 million oz. silver.

According to Maverix, Augusta plans to complete a pre-feasibility study in the fourth quarter of this year and aims to start commercial production by 2024.

Boroo’s Lagunas Norte is an open-pit heap leach mine in northern Peru’s Alto Chicama district that has produced more than 10 million oz. gold since 2005. The mine, as of July 2021, contained proven and probable reserves of 49.4 million tonnes grading 2.49 grams gold and 6.24 grams silver for about 4 million oz. of contained gold and 9.9 million oz. silver.

The royalty on the refractory sulphide ore project will terminate after one million oz. of gold has been sold, and Boroo has the right to buy back the royalty for US$16 million in cash before July 1, 2023.

The royalties on Samara Resources’ Tankoro deposit terminate after one million oz. of gold have been sold from the covered areas. Tankoro contained indicated resources of 9.4 million tonnes grading 1.9 grams gold for about 0.6 million oz. gold and inferred resources of 43.6 million tonnes grading 1.4 grams gold for about 1.9 million ounces.

Tankoro is the primary deposit at Santuro, located in Burkina Faso’s Hounde Belt.

Of the remaining royalties under the deal, 12 are on assets in Australia, two are in the United States, and one is each in Argentina, Canada and Chile.

The transaction with Barrick brings Maverix’s total portfolio to 147 royalties and streams. Maverix will pay for the deal in cash and the transaction is expected to close in September 2022.

In a separate statement, Nevada Gold Mines, a joint venture between Barrick and Newmont announced that it has entered into an agreement to sell a portfolio of royalties to Gold Royalty Corp for US$27.5 million.

The Portfolio consists of three royalties on the production of minerals from the Granite Creek and Bald Mountain projects located in the State of Nevada. The total consideration of US$27.5 million will be met through the issuance by Gold Royalty of 9,393,681 common shares.

Upon closing, Nevada Gold Mines, the largest gold mining complex in the world, is expected to hold approximately 7% of the issued and outstanding shares of Gold Royalty on a pro forma basis. Nevada Gold Mines is operated by Barrick, and is a joint venture between Barrick (61.5%) and Newmont (38.5%).