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Troilus buys back royalty from First Quantum, raises C$20m

  • Tuesday, November 10, 2020
  • Source:ferro-alloys.com

  • Keywords:Troilus,First Quantum
[Fellow]Troilus buys back royalty from First Quantum, raises C$20m

[ferro-alloys.com]Troilus Gold (TSX: TLG; US-OTC: SKREF) has entered into a definitive agreement to buy back a sliding 2.5% net smelter royalty (NSR) on 81 mineral claims and one mining lease (the Troilus mine) from First Quantum Minerals (TSX: FM). As consideration for this repurchase, Troilus will pay First Quantum C$20 million in cash.

In conjunction with this repurchase, the developer is also raising approximately C$20.5 million. Troilus has entered into an agreement with Cormark Securities, on behalf of a syndicate of underwriters. The underwriters are purchasing, on a bought deal public offering basis, 5.47 million flow-through shares of the company, at C$1.92 each, for gross proceeds of C$10.5 million. In addition, the underwriters have also agreed to purchase, on a bought deal private placement basis, 9.1 million shares of the company, at C$1.1 per share, for additional proceeds of C$10 million. The offerings are expected to close around Dec. 1.

According to Justin Reid, Troilus’ CEO, the royalty buy back is “a highly accretive transaction to Troilus shareholders,” based on the modelling and economics outlined in the preliminary economic assessment (PEA) for the namesake asset, released in September.

The PEA outlined a 22-year, 35,000 tonnes per day open pit and underground mine, producing an average of 246,000 gold oz. in the first 14 years. With all-in sustaining costs estimated at $1,051 per gold oz. and an initial capital outlay of $333 million, the after-tax net present value estimate for the project came in at $576 million, at a 5% discount rate, with a 22.9% internal rate of return.

Midday Monday, Troilus’ stock was down nearly 11% on the TSE. The company has a C$126 million market capitalization.

(Mining.com)

  • [Editor:王可]

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