Merger of Two Royalty Companies Provides Growth Platform to Become a Mid-Tier Force

Au Report

Source: Streetwise Reports 07/11/2019

The combined company will provide exposure to both near- and longer-term projects.

Terraco Gold Corp. (TEN:TSX.V; TCEGF:OTCPK), which holds a royalty on the Spring Valley gold project in Nevada, is being acquired by Sailfish Royalty. The combined company will hold a geographically diverse set of royalties, including projects in Nevada, Mexico, Brazil and Nicaragua.

According to the terms of the deal, Terraco shareholders will receive 0.12 of a common share of Sailfish for each Terraco share. The arrangement represents a premium of approximately 53% over the trailing 20-day volume weighted average price of the Terraco shares as at June 19, the day before the announcement. The deal, which has the unanimous recommendation of the boards of both companies, is expected to close in mid-August.

“To join together with Sailfish is a great opportunity for us,” Terraco CEO Todd Hilditch told Streetwise Reports. “We have a royalty portfolio on the Spring Valley gold project, that has size, scale and will be long-life depending on the production profile and the operator. Having a near-term production story made sense to us. With a combined Sailfish and Terraco we see….one plus one equaling three with a current cash flowing royalty, a stream/royalty in the shorter term (within 12 months), and then longer-term growth with our royalties as well as acquisition opportunities.”

In addition, funds managed by Wexford Capital LP, collectively the largest shareholder of Sailfish with a 76% ownership stake, have completed a private placement into Terraco at C$0.13 per share, for gross proceeds of C$4.7 million. The placement gives Wexford a 19.9% ownership of Terraco on a non-diluted basis, the company reported. This arrangement is not contingent upon the closing of the Sailfish acquisition.

The Spring Valley property is controlled by the private equity group Waterton Global Resource Management, which acquired it from the Barrick Gold-Midway Gold joint venture at the end of 2015 after Midway declared bankruptcy (due to a different production project). Last fall, Waterton was seen drilling as many as 30 holes at Spring Valley, where Terraco holds up to a 3% net smelter return (NSR) royalty. As a private entity, Waterton has no obligation to make public its plans or drill results.

The Spring Valley project is highly regarded. James Kwantes wrote in Resource Opportunities on June 23, “Spring Valley is one of the—if not THE—largest undeveloped gold deposit in Nevada, making it an attractive prize for any major. It’s also outside the Barrick-Newmont Nevada JV boundary.”

Akiba Leisman, CEO of Sailfish, told Streetwise Reports, “The consummation of the Barrick-Newmont joint venture staked most of the prospective part of the state of Nevada. This makes projects outside of the joint venture boundaries more valuable. The Spring Valley royalty was always on our radar, and it has been since Terraco acquired the royalty, which increased our eagerness to get involved in this jurisdiction.”

“Multimillion ounce deposits in Nevada are …read more

Source:: The Gold Report