ELYGF - Ely Gold Royalties (ELYGF)(ELY:CA) - A Winning Combination in the Precious Metals Royalty Space

Gold Royalty Corp. to acquire Ely Gold Royalties. Ely Gold Royalties announced a definitive agreement to be acquired by Gold Royalty Corp. (NYSE American, GROY) by way of a statutory plan of arrangement. The companies expect to close the transaction during the third quarter of 2021, subject to approval by Ely Gold Royalties shareholders. Mr. Trey Wasser, CEO of Ely Gold will join Gold Royalty's board of directors. Mr. Jerry Baughman, President of Ely Gold subsidiary Nevada Select Royalties, Inc. will also join the combined entity.Terms of the transaction. Ely shareholders will have the option to receive either: 1) C$1.46 in cash, or 2) 0.2450 Gold Royalty shares per Ely share, subject to pro-ration based on a maximum aggregate cash consideration of C$84 million and a maximum number of Gold Royalty Corp. shares issued of ~41.5 million. The exchange ratio implies a mix of C$0.42 in cash and 0.1742 of a Gold Royalty share per Ely share.Transaction benefits. The transaction creates a larger Americas-focused royalty company with an increased number of producing and near producing royalties and a significant development and exploration stage royalty portfolio to drive future growth. The combination supports enhanced scale, diversification, and growth potential.Rating is Outperform. On a per share basis, the transaction value represents a 1.2x multiple of our per share net asset value estimate of C$1.18 or US$0.95. While the per share transaction value is less than our price target which reflects a price-to-net asset value multiple of ~1.7x, we think the combined entity should be able to achieve a valuation closer to or at a premium to peer group averages based on its size, scale, and balance sheet advantages. Therefore, we believe ELY shareholders will continue to be rewarded through ownership of Gold Royalty Corp. shares. Read More >>