Royal Gold, through its subsidiary International Royalty, has agreed to acquire 100% of Great Bear Royalties (GBR) in a transaction valued at around C$199.5m ($153m).
Under the terms of the transaction, GBR shareholders are eligible to receive C$6.65 in cash for each of the company’s common share held, on a fully diluted basis.
GBR’s main asset is a 2% net smelter return royalty (NSR) that covers the entire Great Bear project and is indirectly owned by Kinross Gold.
GBR was spun out from Great Bear Resources in 2020 and has been acquired by Canadian gold and silver miner Kinross Gold last year for C$1.8bn.
Kinross has provided its personnel and certain non-public information related to the Great Bear project to Royal Gold, as part of the due diligence process.
In exchange, Kinross is being offered an option to buy a 25% stake in Royal Gold for a sum equal to 25% of the acquisition price, adjusted for inflation.
The acquisition is subject to a plan of arrangement under the provisions of British Columbia’s Business Corporations Act.
It has been unanimously approved by the boards of directors of both Royal Gold and GBR.
Royal Gold president and CEO Bill Heissenbuttel said: “I am pleased to announce this friendly transaction with Great Bear Royalties Corp., which provides Royal Gold exposure to Canada’s newest major gold discovery, the Great Bear Project.
“The Royalty represents one of the few royalty interests that meets all the characteristics we seek in our investments, namely the high quality of management, project and jurisdiction.
“Our unique approach to the transaction allowed us to work closely with Kinross to understand the technical aspects of the Great Bear Project and their vision for the development of what I believe will be a top-tier asset in terms of production and mine life, and one that will provide significant value to Royal Gold shareholders over the long term.”
The Great Bear Project is located 25km southeast of Red Lake, Ontario, and hosts contiguous claims covering 9,140ha of area.
The project hosts a prolific gold system and has high-potential mineralised zones remaining open along strike and at depth, with multiple avenues to unlock potential.
It is equipped with a well-established mining camp, skilled labour and a paved highway and provincial power lines that run parallel to the property.
In addition, the property hosts a network of well-maintained logging roads which facilitate access to the site throughout the year.
Prior to the acquisition by Kinross, the Great Bear project has seen more than 340,000m of drilling in 794 drill holes, which identified five high-grade gold discoveries.
GBR president and chief executive officer Calum Morrison said: “Our Board is very pleased with this attractive premium and unanimously recommends that GBR shareholders approve the acquisition. We look forward to working with Royal Gold to complete the transaction.”
