In a significant move that underscores its commitment to growth and diversification, Versamet Royalties Corporation has announced the acquisition of a 90% silver stream from the Rosh Pinah Zinc mine and a 2.75% Net Smelter Return (NSR) royalty on the Santa Rita project. This strategic acquisition, valued at $125 million, is poised to enhance Versamet’s cash flow and solidify its position in the precious metals market.
Enhancing Cash Flow and Growth Trajectory
Dan O’Flaherty, CEO of Versamet, emphasized the importance of this acquisition, stating, “Securing uncapped, long-life and growing exposure to silver and nickel-copper production meaningfully enhances Versamet’s cash flow engine and growth trajectory while continuing our strategy of accretive acquisitions.” The company anticipates that its forecasted production will exceed 10,000 Gold Equivalent Ounces (GEOs) this year, with projections to grow to over 20,000 GEOs by 2026. This growth is expected to be organic, with an approximate 25% increase in the medium term, positioning Versamet for a robust future.
Transaction Details
The acquisition comprises two key components:
Rosh Pinah Zinc Silver Stream: Versamet will receive refined silver equal to 90% of payable silver from the Rosh Pinah Zinc mine. After the delivery of 3.1 million ounces of silver, the company will continue to receive 45% of payable silver for the mine’s remaining life. The payment structure is designed to be favorable, with Versamet paying only 10% of the spot silver price for each ounce delivered.
Santa Rita NSR Royalty: The 2.75% NSR royalty is an uncapped, life-of-mine royalty covering both open-pit and underground deposits, as well as Atlantic Nickel’s entire land holdings in the area, which spans over 40,000 hectares.
Rosh Pinah Zinc: A Legacy of Production
Located in southwestern Namibia, the Rosh Pinah Zinc mine has been operational for over 55 years. In 2024, it processed 0.65 million tonnes of ore, yielding 87 million pounds of zinc, 14 million pounds of lead, and 244,000 ounces of silver. The mine is currently undergoing an expansion known as RP2.0, which aims to nearly double its mill throughput to approximately 1.3 million tonnes per annum by 2026. This expansion is expected to significantly enhance the mine’s production capabilities and, consequently, Versamet’s revenue from the silver stream.
Santa Rita: A Promising Future
The Santa Rita operation, located in Bahia State, Brazil, is a large open-pit polymetallic mine owned by Atlantic Nickel. In 2024, it processed 6.6 million tonnes of ore, producing 31.8 million pounds of nickel, 10.1 million pounds of copper, and 0.6 million pounds of cobalt. The mine’s current operations are focused on open-pit mining, but there are plans to evaluate underground development, which could extend the mine’s life beyond its current operations.
Financing the Acquisition
Versamet has funded the acquisition through an amended and restated credit facility, which includes an increase in its revolving facility from $60 million to $100 million and a new term facility of $80 million. This financial strategy not only supports the acquisition but also positions Versamet for future growth and acquisitions.
Post-Acquisition Outlook
Following the completion of this transaction, Versamet will have a total of seven paying royalties and streams across six countries, with a forecast of more than 10,000 GEOs in 2025 and an increase to over 20,000 GEOs in 2026. Approximately 83% of this production will be derived from gold and silver, further solidifying the company’s focus on precious metals.
Versamet is also advancing its plans to list in the United States and graduate to the TSX mainboard, which is expected to enhance market awareness and broaden investor participation.
Conclusion
Versamet’s acquisition of the silver stream from Rosh Pinah Zinc and the NSR royalty on Santa Rita marks a pivotal moment in the company’s growth strategy. With a diversified portfolio and a clear path to increased production, Versamet is well-positioned to capitalize on the growing demand for precious metals. As the company continues to pursue accretive acquisitions, it is set to enhance shareholder value and solidify its standing in the competitive mining sector.
For more information about Versamet and its strategic initiatives, visit versamet.com.
English