Guerrero to buy two portfolios of royalty, stream and gold loan assets

Canadian minerals company Guerrero Ventures has agreed to acquire two portfolios of royalty, stream and gold loan assets from U.S. mining private equity firm Orion Resource Partners and Yamana Gold for C$268 million and C$65 milllion respectively.

Canadian minerals company Guerrero Ventures has agreed to acquire two portfolios of royalty, stream and gold loan assets from U.S. mining private equity firm Orion Resource Partners and Yamana Gold for C$268 million and C$65 milllion respectively. Guerrero will then change its name to Nomad Royalty Company.

PRESS RELEASE

MONTREAL, Feb. 23, 2020 /CNW Telbec/ – Guerrero Ventures Inc. (TSXV: GV) (“Guerrero” or the “Company”) is pleased to announce that it has entered into definitive purchase agreements with funds related to Orion Resource Partners (USA) LP (“Orion”) and Yamana Gold Inc. and one of its affiliates (“Yamana”) dated February 23, 2020, to acquire two portfolios of royalty, stream and gold loan assets for total consideration of $268 million and $65 million, respectively (the “Acquisitions”). Upon closing of the Acquisitions and a concurrent private placement (together, the “Transaction”), Guerrero intends to change its corporate name to Nomad Royalty Company Ltd. (“Nomad”). All amounts in this news release are expressed in United States dollars unless otherwise indicated.

The Company intends to raise up to $10 million in a concurrent marketed private placement of subscription receipts (the “Private Placement”) in order to fund a portion of the Yamana Cash Consideration (as defined below) and capitalize the Company. The Company has obtained a lead order of $3 million in connection with the Private Placement.

Vincent Metcalfe, Chief Executive Officer and Joseph de la Plante, Chief Investment Officer of Guerrero, commented: “We are very proud to announce today the launch of Nomad Royalty Company, a new global acquisition-driven precious metals royalty company. Together with our partners, Orion and Yamana, we are excited to combine our significant transaction expertise to deliver a new generation royalty company and execute an aggressive growth plan. Our ambition is for Nomad to become a new leader in the mining industry through transparent and collaborative leadership that takes to heart the interests of all of its stakeholders.”

Establishing a Global, Acquisition-Driven Precious Metals Royalty Company
Key Highlights of the Transaction are as follows:
Combined portfolio consisting of 10 royalty, stream and gold loan assets, 7 of which are currently producing or expected to begin producing in 2020 and are expected to generate more than $30 million of operating cash margin1 in 2021.
Pure-play precious metals portfolio with no operator buy-back rights on any of the contracts and significant upside through resource expansions and mine life extensions.
Creation of a new growth platform with a mandate to pursue acquisitions with the support of Orion and Yamana.
Highly experienced and high-performance management team led by Vincent Metcalfe, Chief Executive Officer, and Joseph de la Plante, Chief Investment Officer, that have the expertise and relationships to build a world-class royalty company.
Strong focus on returning capital to shareholders through a peer-leading dividend.
Optimized corporate structure with a focus on minimizing G&A expenses and executive compensation policies fully aligned with shareholder interests.

Istvan Zollei, portfolio manager at Orion, commented: “We are pleased to partner with the Nomad management team in the creation of a new, uniquely positioned public royalty company. As a leading metals and mining investor and the largest shareholder of Nomad, Orion looks forward to supporting the Company’s ambitious growth plans and is confident Nomad will deliver superior returns for all of its shareholders.”

Gerardo Fernandez, Senior Vice President, Corporate Development, at Yamana, commented: “This transaction marks another step in Yamana’s strategy to optimize its portfolio while also providing us with a meaningful stake in a new royalty company with an exceptional management team, asset base, and growth prospects. We look forward to working with Nomad and are confident the transaction will generate significant value for our shareholders.”

Orion and Yamana Portfolio Acquisitions
As part of the Transaction, Guerrero will acquire a portfolio of assets from Orion (the “Orion Portfolio Acquisition”) for total consideration of $268 million. Guerrero will satisfy the purchase price by issuing 396,455,965 common shares to Orion at a price of CAD $0.90 per common share. Upon closing of the Transaction, Orion is expected to hold approximately 77% of Nomad’s outstanding common shares.

Concurrent with the Orion Portfolio Acquisition, Guerrero will acquire a portfolio of assets from Yamana (the “Yamana Portfolio Acquisition”) for total consideration of $65 million. Guerrero will satisfy the purchase price by issuing 66,500,000 common shares to Yamana at a price of CAD $0.90 per share and by paying $20 million in cash (the “Yamana Cash Consideration”). Guerrero has the option to pay up to $10 million of the Yamana Cash Consideration through a deferred payment (the “Deferred Payment”), which, will have a term of two years (subject to early redemption features), will bear interest at an annual rate of 3% and will be convertible into common shares of the Company at a price of CAD $0.90 per share. Upon closing of the Transaction, Yamana is expected to hold approximately 13% of Nomad’s outstanding common shares, prior to considering any shares underlying the Deferred Payment, if issued.

Leadership Team Aligned with Shareholders
The Company will establish transparent and progressive governance and compensation policies that will promote strong alignment between management and shareholder interests. Upon closing of the Transaction, the Chief Executive Officer and Chief Investment Officer will each own 6.3 million common shares of the Company and have agreed to renounce to the cash portion of their compensation for the Company’s initial 12 months of operations. The leadership team strongly believes in minimizing annual cash G&A expenses and expects annual expense levels to be well below its royalty peers.