Electric Royalties Acquires Its First Cash-Flowing Royalty From Globex Mining

Electric Royalties Ltd (CVE:ELEC) (OTCMKTS:ELECF)  announced a deal with Globex Mining Enterprises Inc (TSE:GMX) (OTCMKTS:GLBXF) (FRA:G1MN) to acquire the cash-flowing Mid-Tennessee Zinc Mines (MTM) royalty, as well as a 1% Gross Revenue Royalty (GRR) on the Glassville manganese project in New Brunswick.
With these acquisitions, Electric Royalties will become the only cash-flowing royalty company solely focused on the battery metals sector.
“This acquisition provides Electric Royalties with its first cash-flowing royalty. The project is located in a good jurisdiction, with a top-tier owner and operator in Trafigura and a long mine life,” Electric Royalties CEO Brendan Yurik said in a statement.
Yurik added: “Zinc may not be well associated with the electric revolution, but has a key role to play in the decarbonization of the global economy and there have been several promising recent breakthroughs in zinc battery technologies and energy storage.”
In consideration for the two royalties, Electric Royalties will pay Globex C$13 million in cash plus 14.5 million Electric Royalties shares, with a current market value of C$5.22 million. Globex Mining will also receive a future cash payment of C$1 million if the price of zinc rises to, or above, US$2 per pound for at least 90 consecutive days.
The company noted that the MTM royalty has generated royalties of about C$4.7 million since production re-started in 2Q 2017. MTM is a sliding scale gross metals royalty, with no royalty payable if the zinc price is below US$0.90 per pound, 1.0% between US$0.90 and US$1.10 and 1.4% at zinc prices above US$1.10 per pound.
The Glassville royalty, meanwhile, is strategically located near Electric Royalties’ existing Battery Hill manganese royalty in New Brunswick.
The transaction is expected to close before the end of May 2021, and is subject to Electric Royalties completing a minimum funding of C$10 million.
Electric Royalties said it is currently evaluating funding alternatives, including a combination of equity financing, debt financing or securing a strategic partner to assist with financing of the transaction, which may result in the strategic partner directly acquiring a portion of the royalty.
Electric Royalties is a royalty company established so investors can participate in the demand for commodities, such as lithium, vanadium, manganese, tin, graphite, cobalt, nickel and copper, which will benefit from the global drive toward electrification of a variety of consumer products, including cars, rechargeable batteries, large scale energy storage, and renewable energy generation.