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Monarch Mining Corporation Announces a $11.25 Million Transaction With Gold Royalty Corp.

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Monarch Mining Corporation (TSX: GBAR) announced a transaction with Gold Royalty Corp. to strengthen its balance sheet prior to the reopening of the Beaufor mine and Beacon mill. This non-dilutive financing will generate approximately $11.25 million, increasing Monarch's cash reserves to about $30 million. The deal includes a $2.50 per tonne royalty on material processed at the Beacon mill and a 2.5% net smelter return on several properties. The transaction is expected to close in August 2021, contingent on customary conditions.

Positive
  • Transaction will increase cash reserves to approximately $30 million.
  • Non-dilutive financing avoids shareholder dilution.
  • Secures funds for capital expenditures for mine and mill reopening.
Negative
  • Monarch's existing buyback rights for NSR are canceled.
  • Transaction aimed at strengthening Monarch’s balance sheet in preparation for the Beaufor mine and Beacon mill reopening
  • Non-dilutive financing to increase Monarch’s cash and cash equivalent position to approximately $30 million

MONTREAL, July 23, 2021 (GLOBE NEWSWIRE) -- MONARCH MINING CORPORATION (“Monarch” or the “Corporation”) (TSX: GBAR) (OTCQX: GBARF) is pleased to announce that it has entered into a definitive agreement (the “Agreement”) with Gold Royalty Corp. (“Gold Royalty”) (NYSE: GROY) whereby Gold Royalty will acquire the following royalty interests from Monarch for cash proceeds of $11.25 million (the “Transaction”):

  • a $2.50 per tonne royalty on all material processed through the Beacon mill originating from the Beaufor mine operations; and
  • a 2.5% net smelter return (“NSR”) royalty on each of the Croinor Gold, McKenzie Break and Swanson properties, of which half (1.25%) can be bought back by Monarch for $2 million per property in the future, subject to certain conditions being met.

As a condition and as part of the Transaction, Gold Royalty will also acquire a 1% NSR on the Beaufor property from Caisse de dépôt et placement du Québec (“CDPQ”) and the Corporation’s existing buy back rights relating to a 1% NSR will be cancelled and extinguished, following which CDPQ will own a 2% NSR and Gold Royalty a 1% NSR on Beaufor. CDPQ’s royalty interest will be reduced to a 1% NSR once Monarch repays the $5 million capital invested by CDPQ (see Monarch press release dated May 7, 2020).

Following the closing of the Transaction, Monarch will have a strengthened balance sheet with approximately $30 million in cash and cash equivalents.

“We are very pleased to have signed this non-dilutive financing agreement with Gold Royalty, which will be applied mainly to capital expenditures and equipment purchases for the Beaufor mine and Beacon mill reopening and to strengthening our balance sheet,” said Jean-Marc Lacoste, President and Chief Executive Officer of Monarch. “With the current volatility in the gold market, it was important for us to find another way to secure the additional funds we needed to restart our operations, and we were satisfied with the valuation of our mining projects. It was also important for us to negotiate a partial buyback option for our longer-term Croinor Gold, McKenzie Break and Swanson properties for future plans that may result in those projects being put into production.”

Laurentian Bank Securities Inc. is acting as financial advisor to Monarch in connection with the Transaction.

The Transaction is expected to close in August 2021 and is subject to certain customary closing conditions for transactions of this nature.

About Gold Royalty
Gold Royalty Corp. is a gold-focused royalty company offering creative financing solutions to the metals and mining industry. Its mission is to acquire royalties, streams and similar interests at varying stages of the mine life cycle to build a balanced portfolio offering near, medium and longer-term attractive returns for its investors. Gold Royalty’s diversified portfolio currently consists of net smelter return royalties ranging from 0.5% to 2.0% on 18 gold properties covering 12 projects located in the Americas.

About Monarch
Monarch Mining Corporation (TSX: GBAR) is a fully integrated mining company that owns four advanced projects, including the fully permitted past-producing Beaufor Mine, which has produced more than 1 million ounces of gold over the last 30 years. Other advanced assets include the Croinor Gold, McKenzie Break and Swanson properties, all located near Monarch’s wholly owned and fully permitted Beacon 750 tpd mill. Monarch owns 28,702 hectares (287 km2) of mining assets in the prolific Abitibi mining camp.

Forward-Looking Statements
The forward-looking statements in this press release involve known and unknown risks, uncertainties and other factors that may cause Monarch’s actual results, performance and achievements to be materially different from the results, performance or achievements expressed or implied therein. Neither TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this press release.

FOR MORE INFORMATION:

Jean-Marc Lacoste 1-888-994-4465
President and Chief Executive Officer jm.lacoste@monarchmining.com 
   
Mathieu Séguin 1-888-994-4465
Vice President, Corporate Development m.seguin@monarchmining.com 
   
Elisabeth Tremblay 1-888-994-4465
Senior Geologist – Communications Specialist  e.tremblay@monarchmining.com 
   
www.monarchmining.com 


FAQ

What is the purpose of Monarch's transaction with Gold Royalty Corp. in July 2021?

The transaction aims to strengthen Monarch's balance sheet in preparation for the reopening of the Beaufor mine and Beacon mill.

How much cash will Monarch Mining Corporation receive from the transaction with Gold Royalty Corp.?

Monarch will receive approximately $11.25 million from the transaction.

What will be Monarch's cash position after the transaction with Gold Royalty?

After the transaction, Monarch's cash and cash equivalents will increase to about $30 million.

When is the expected closing date for Monarch's transaction with Gold Royalty Corp.?

The transaction is expected to close in August 2021, pending customary closing conditions.

What royalties are included in Monarch's agreement with Gold Royalty Corp.?

The agreement includes a $2.50 per tonne royalty on material processed at the Beacon mill and a 2.5% net smelter return royalty on selected properties.

MONARCH MINING CORP

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