PERTH (miningweekly.com) – Diversified miner South32 has struck an agreement with TSX-V-listed royalty company Elemental Royalties to divest of a package of mineral royalties.
Under the terms of the agreement, Elemental will make a $40-million cash payment and would issue $15-million of its own shares to South32 for the royalty package, which consists of three gold royalties and one related non-gold royalty in Western Australia.
“The sale of these royalties is another step forward in unlocking value in our portfolio, at a time when there is strong appetite for exposure to standalone royalty investment,” South32 CEO Graham Kerr said on Tuesday.
“The proposed transaction will realise a cash payment, while retaining exposure to these royalties through a shareholding in Elemental. Separately, we continue to hold a portfolio of royalties weighted towards base metals.”
Completion of the transaction is subject to a number of conditions, including Australian Foreign Investment Review board approval and Elemental securing the required funding.
Following the completion of the transaction, South32 would hold a 19.7% stake in Elemental.
“We are delighted to announce this transformative acquisition from South32, which is our first as a public company and the second major gold royalty acquisition we have completed this year,” said Elemental CEO Frederick Bell.
“This continues the Elemental team’s excellent track record of sourcing high-quality, value-accretive royalty opportunities, whilst immediately adding scale, increasing diversification and exposure to tier 1 jurisdictions. We are grateful for the support of South32 and look forward to working together to continue creating value for shareholders."