Sanatana Resources Inc (CVE:STA) has inked a definitive deal to sell its 1% Watershed property royalty to Ely Gold Royalties Inc (CVE: ELY) (OTCQX: ELYGF), which, the firm says, will improve its liquidity and enable the group to accelerate exploration.
Sanatana got its hands on the royalty after an asset purchase agreement between it and Trelawney Augen Acquisition Corp, now known as IAMGOLD Corp NYSE:IAG), in 2016 whereby IAMGOLD acquired a 100% interest in 46 mining claims in Chester and Yeo Counties in the Canadian province.
The Watershed asset surrounds IAMGOLD Coté gold project in Ontario, which is a joint venture between IAMGOLD and Sumitomo Metal Mining Company.
Sanatana said it will sell the royalty to Ely Gold for C$2.5 million in cash and 1 million Ely Gold warrants, which will have a five-year term and an exercise price of C$1.31 a share. Ely has the right to accelerate the Ely warrants if the 10-day volume-weighted average price of Ely shares exceeds C$1.97 per share.
"We are pleased to advance monetization of our Watershed Royalty in a transaction that is non-dilutive to shareholders," said Peter Miles, the CEO of Sanatana in a statement.
"This transaction will significantly improve our liquidity and will allow us to accelerate exploration of our property portfolio and potentially acquire additional projects."
Completion of the royalty sale is subject to the receipt by Sanatana of a waiver from IAMGOLD of its right of first refusal (ROFR) relating to the royalty and conditional approval by the TSX Venture Exchange.
Closing is scheduled on the fifth business day after satisfaction or waiver of the conditions precedent. If IAMGOLD exercises the ROFR, Sanatana will pay a break fee of C$500,000 to Ely Gold.
Sanatana is a mineral explorer, which is focused on high-impact properties in Canada and the Western Pacific.
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