Globex Reports a Flurry of Property Transactions and Builds its Royalty Portfolio
With a multifaceted approach to building shareholder value, Globex Mining Enterprises Inc. (CA: GMX – $0.76 & US: GLBXF – $0.60 & GER: G1MN – €0.52) has been very active during the early stages of this resource bull market. The Company controls a large portfolio of resource properties and most of these holdings were acquired by staking. This affords Globex the opportunity to engage in transactions with other players that work to advance exploration. Typically these deals include a cash payment that immediately generates a net gain to Globex, and a retained royalty that is held on the properties for later benefit.
Globex’s royalty portfolio has performed very well. Last month, for example, Globex reported an agreement with Electric Royalties Inc [ER] to vend two royalty holdings highlighted by the zinc royalty on the Middle Tennessee Mines property. The deal is valued above $18 million in cash and shares. This is in addition to the $4.7 million in royalty payments that Globex had received from the Middle Tennessee royalty prior to the agreement.
Under the terms reported for that transaction, ER has now issued a cash payment of $250,000 to Globex. This amount represents a down payment while ER completes due diligence on the project prior to closing the deal. With receipt of this initial payment ER now has been granted a 90 day period to complete its own research and secure any necessary financing to pay the agreed acquisition price.
Another previously announced deal with Starr Peak Exploration required payments to be issued at agreed intervals, following the transaction to vend the Normetmar/Normetal/Lac Turgeon/Rousseau properties. Starr Peak issued a payment of $50,000 to Globex in this installment. These properties were originally acquired through staking, at minimal cost. Globex continues to hold a 2.5% Gross Metals Royalty (GMR) on these properties.
Receipt of Cash Payments and Shares of Partner Corporations
Several other property transactions were reported this week by Globex. For example, it has optioned the Massif du Nord project to Canada Silver Cobalt Works Inc [CCW]. A cash payment of $25,000 plus $50,000 in CCW shares will be issued to Globex within 12 months. CCW has also committed to complete at least $100,000 in exploration activity at the project. In addition, the Lac Suzanne Nord nickel cobalt project, which had been originally optioned to Enertourbe Inc late last year, was transferred to CCW. Globex will receive a cash payment of $50,000 as part of the Lac Suzanne transaction. CCW has also committed to complete at least $200,000 in exploration work at that property. Globex retains a GMR of 2% on both properties.
A claim comprising the Orbit Alumina property has been sold to Alumina Quebec Mines Inc (AQM). Globex was issued share purchase warrants for 2 million shares of AQM that may be converted at no cost into common shares following the successful transaction to establish the company as a reporting issuer. Globex retains a 3% GMR on the property.
Another base metals prospect, the Pegma property has been sold to High Tide Corporation. High Tide, a subsidiary of Avidian Gold Corporation, has agreed to pay $10,000 in cash and 650,000 High Tide shares at the company’s initial public offering expected before September 30, 2021. This exploration property provides leverage to copper, nickel, cobalt and zinc. Globex retains a 2% GMR on the property. High Tide may opt to repurchase half of this royalty for a cash payment of $1.5 million.
Rounding out the busy update, a transaction to vend the Checkerboard Gold Property to Vior Inc was reported. Globex received a payment of Vior shares valued at $150,000 and retains a 2% GMR on this property. Vior has the option to repurchase half of this GMR for $1 million.
With this latest flurry of property transactions, Globex continues to demonstrate its prowess to arrange favorable deals. The agreements reported this week include an upfront payment of cash or shares that build the financial strength of the Company. If the Electric Royalties transaction is completed Globex will be positioned with the strongest balance sheet since its launch, with over $30 million in cash and shares and no debt obligations. This is more impressive considering that the market value for the entire Company is only slightly above $40 million. Suffice to state that the value proposition for shareholders remains extremely attractive despite the strong performance for the stock since the start of the year.
Although the cash value of the most recent transactions is relatively low compared to some other deals by Globex, the deal flow certainly indicates that Globex is gaining attention from other juniors that are intent on securing exploration properties. Meanwhile, the royalty portfolio has been strengthened by these deals. Each of the transactions arranged this week included a retained royalty that may become very profitable later in the cycle.
With the first quarter of 2021 just ended, Globex has achieved a remarkable number of transactions so far. Yet the company continues to hold a large inventory of exploration and royalty assets. Interest within the sector remains focused towards exploration projects with leverage to several metals in high demand. Therefore it is reasonable to assume that Globex may be working towards completing other transactions in the pipeline to build further shareholder value.
As one of the most successful project generators in Canada, the busy start to this year is certainly a positive indication for the months ahead. The resource bull market remains a powerful driving force that is likely to contribute towards additional deal flow. Smallcaps Recommendation: BUY.
|Smallcaps.us Advice: Buy||Price Target: $2.87||Latest Company Report (pdf)|
|For important disclosures, please read our disclaimer.|