ELYGF - Ely Gold Royalties (ELYGF)(ELY:CA) - Proposed Business Combination Receives Favorable Market Reaction
Town Hall meetings. Gold Royalty Corp. (NYSE American, GROY) and Ely Gold Royalties will jointly host a town hall meeting on June 29 to discuss the companies' planned combination. Investors may register here. On June 21, Ely announced an agreement to be acquired by Gold Royalty Corp. Since the transaction was announced on June 21, Gold Royalty Corp. and Ely Gold Royalties (OTCQX, ELYGF) shares are up 21.9% and 40.0%, respectively, based on June 18 closing prices.Key shareholder votes and dates. Closing is contingent on approval by at least 66 2/3% of the votes cast by Ely shareholders, and approval by a simple majority excluding votes from certain management shareholders. Key dates include the: 1) record date for voting at a special Ely Gold shareholder meeting is July 14, 2) deadline to make an election to receive either Gold Royalty Corp. shares or cash is August 12, and 3) Ely Gold Royalties special meeting is scheduled for August 17.Terms of the transaction. Ely shareholders 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 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 shares per Ely share. The cash portion is fixed while the stock value floats and is pegged to the value of Gold Royalty Corp. shares. For example, as of the June 25 close, Gold Royalty Corp. shares closed at US$5.85 per share, implying a per share value of US$1.43 or C$1.76 (using an exchange rate of 1.23x) assuming an investor received all stock.Rating is Outperform. The combination supports enhanced scale, diversification, and growth potential. While the per share transaction value remains below our price target which reflects a price-to-net asset value multiple of ~1.7x based on our Ely per share net asset value estimate of C$1.18 or US$0.95, we think the combined entity should be able to achieve a valuation closer to or at a premium to intermediate royalty company peer group averages based on its size, scale, and balance sheet advantages. Read More >>