Impact: Mildly Positive
Silver X announced a US$2.42M deal to sell an expanded royalty covering the entire 12,840 ha Tangana Mining Unit in its Nueva Recuperada Ag polymetallic project in central Peru. Maverix Metals Inc., a subsidiary of Triple Flag Precious Metals Corp. (TSX:TFPM, Not Rated), currently holds a 3% NSR on a ~5,000 ha portion of the Mining Unit which was acquired from Pan American Silver (TSX:PAS, Not Rated) in 2018. This will be expanded to cover the entire mining unit. In consideration, Triple Flag will pay a total of US$2.42M, consisting of US$1.67M of cash and the remainder an offset of amounts to be paid under the royalty agreement through the end of 2023. Triple Flag has also been granted both a Right of First Refusal and a Right of First Offer over future royalty or stream-like financings on the mine. In our opinion, this is agreement is a net positive for Silver X. While it does mean an increase in future royalty payments, this agreement provides Silver X with needed up-front capital at a time when it is ramping up production at the mine following an operational reset (read notable).
