Metalla Royalty & Streaming (TSX-V: MTA)(OTCQX: MTAFF) has agreed to acquire Toronto-based royalty and mineral exploration and development company ValGold Resources (TSX-V: VAL) in an all-stock transaction, giving the Vancouver-based company exploration properties and a new royalty stream.
Per the agreement, shareholders of VAL will receive 0.1667 of a common share of MTA for each share held. Based upon the 40-day volume weighted average of Metalla stock on the TSX-Venture through Wednesday, the implied value of VAL shares is 13 cents, a more than six-year high for the stock. The buyout price represents a premium of 62.5% for shares of VAL after closing trading at 8 cents yesterday.
Based upon the undiluted number of shares of VAL, the transaction values the company at roughly $7.2 million.
Upon completion of the transaction, which has been approved by both boards, current ValGold shareholders will own about 11.2% of the issued and outstanding shares of Metalla. Metalla management expects the merger to be immediately accretive on a per share basis.
The prize for Metalla is the acquisition of a 2% net smelter royalty on Osisko’s (TSX: OSK) Garrison Project on the “Golden Highway” in the world-class mining camp east of Timmins, and north of Kirkland Lake, Ontario. The royalty covers three deposits that were the subject of a NI 43-101 resource estimate in March 2014 by ACA Howe International. According to the report, total Measured and Indicated resources were 30.07 million tonnes grading 1.24 grams per tonne (g/t) gold for $1.197 million ounces of gold. The Inferred category showed another 7.87 million tonnes grading 3.19 g/t gold, equating to 808,000 ounces.
Osisko, has conducted extensive drilling subsequent to the 2014 report and anticipates delivering an update resource estimate in July.
Metalla also brings other ValGold assets under its umbrella with the buyout, namely its 100% interest in the Tower Mountain Gold Project near Thunder Bay, Ontario, and exploration properties in Venezuela.
“The acquisition of ValGold is an exciting transaction that strengthens Metalla’s development pipeline of royalties and adds a top-tier operator in a world-class mining jurisdiction with significant potential upside,” said Metalla president and CEO Brett Heath in today’s statement.
Shares of VAL rose as high as 13.5 cents following the news and are holding at 12.5 cents as of noon in Toronto. Shares of MTA are flat at 82 cents.
