TSX- and Nasdaq-listed Uranium Royalty Corporation (URC) has filed a management information circular and related proxy materials ahead of a special meeting of shareholders to approve a proposed plan of arrangement between URC and certain affiliated entities of Orion Resources Partners and HRG Metals.

A subsidiary of Ontario Teachers, as part of HRG Metals, called the Sweetwater investors, agreed to contribute and sell their 92% interest in certain entities holding trona royalty assets and landholdings in Wyoming, Utah and Colorado to a newly formed company, if URC provides a $1.14-billion consideration through cash and shares.

The deal will be effected by way of a statutory plan of arrangement under the Canada Business Corporations Act and will result in the combination of URC and the Sweetwater investors' 92% interest in the Sweetwater entities under "New URC".

Upon completion of the arrangement, New URC is expected to be a publicly traded parent of the combined group listed on the Nasdaq.

Under the terms of the arrangement agreement, each shareholder will receive one common share of new URC share for each URC share held. The Sweetwater investors will receive about $330-million in cash from URC and 223-million New URC shares at a deemed value of $3.64 apiece.

A special committee of URC's board of directors comprised of independent directors have recommended that shareholders approve the merger since it is fair and favourable to shareholders of URC. URC's largest shareholder, Uranium Energy Corporation, which holds 14% of URC's issued and outstanding shares, has indicated it will vote in favour of the arrangement.

"The arrangement presents a unique opportunity for URC to create a larger, more diversified and cash-flowing royalty platform with significant long-term growth potential. The arrangement will add a well-established, unique royalty portfolio with relatively long mine lives. These interests will be underpinned by established and experienced operators that can generate meaningful cashflows," the URC board states.

The board adds that the additional future cashflows from the assets of the Sweetwater entities will uniquely position New URC with a strengthened balance sheet to carry out its business strategy of pursuing additional value-enhancing uranium royalty acquisitions.

"The transaction would also be accretive to net asset value, cash flow and earnings per share. Among other things, the arrangement is expected to position New URC more attractively to institutional investors and enhance its market visibility," URC says.

On closing of the arrangement, the Orion sellers and Ontario Teachers' are expected to hold about 43% and 16%, respectively, of the outstanding New URC shares.

Each of them has agreed to execute an investors' rights agreement at the closing of the arrangement, which includes agreements to vote in favour of management recommendations in respect of matters before shareholders of New URC for a period of two years after closing, subject to certain exceptions.

They also include provisions providing for notices of certain sales and certain restrictions on dispositions, designed to help preserve control premiums for New URC Shareholders.

Moreover, on closing of the arrangement, New URC is expected to be one of the largest public company landowners in the US (excluding real estate investment trusts) and one of the largest landowners in Wyoming (with about 850 000 acres of fee surface rights and about 4.5-million acres of mineral rights in fee).

The Sweetwater entities' extensive land package covers Wyoming's Green River Basin, the world's largest known trona deposit and would provide an element of control uncommon in the royalty space.

URC further explains that the Sweetwater entities' operations have or are undertaking production expansions and based on operator disclosures and information, are expected to increase attributable soda ash production capacity by more than 60% in the coming years, without requiring material additional capital investment from New URC.

"Greenfield projects have the potential to further increase total royalty attributable capacity over the longer term. Additionally, the Sweetwater entities' operations include renewable development opportunities, greenfield trona potential, and non-trona land with optionality and potential for future growth.

"The Sweetwater entities' land position would provide potential uranium exploration in Wyoming, the leading US State for uranium production and resources," URC concludes.