Venus Metals Sells Youanmi Project Gold Smelter Royalty for $46m

Venus Metals (ASX: VMC) has sold its 1.0% net smelter return (NSR) royalty on all gold production from the Youanmi gold project mining leases to Franco-Nevada Australia for $46 million in cash.

Held through wholly owned subsidiary Redscope Enterprises, the royalty relates to mining leases owned by a subsidiary of Rox Resources (ASX: RXL).

Franco-Nevada Australia is a wholly owned subsidiary of Franco-Nevada Corporation, which is listed on the Toronto Stock Exchange and New York Stock Exchange and has a market capitalisation of approximately CAD$60 billion.

Venus said there were no conditions to the sale and completion was scheduled to occur later on the day of the announcement.

Special Dividends Planned

The Venus board currently intends to declare two special dividends to return value to shareholders following the royalty sale.

The first would be a cash special dividend returning approximately $35m in aggregate, which is expected to represent $0.17 per fully paid ordinary share held on the record date, with a franking level dependent upon the company’s available franking credits at the time of declaration but expected to exceed 75%.

The second would be a special dividend by way of an in-specie distribution of approximately 25 million Rox shares currently held by Venus, representing about 0.122 Rox shares per Venus share on issue on the record date.

The distribution dividend has a current value of about $10.625m, based on Rox’s closing share price of $0.425 on 29 May.

After the proposed Rox share distribution, Venus expects to retain 23 million Rox shares with a current value of approximately $9.775m.

Shareholder Value Return

Together, the proposed special dividends represent a current aggregate value of approximately $45.625m and about $0.221 per Venus share intended to be returned to eligible shareholders.

Venus may also receive a further $1 million in deferred cash consideration once documentation is signed for the royalty to be secured with a mining mortgage.

Venus expects to announce the distribution dividend in June or July, with the ex date, record date and transfer of Rox shares targeted for July.

The cash dividend declaration is targeted for the end of July, with the ex date and record date expected in late August and payment targeted for the end of August.

Venus intends to apply the balance of the royalty sale proceeds to tax liabilities, exploration, and working capital.

Strategic Review Conducted

Managing director Matthew Hogan said the transaction followed a strategic review announced in January.

“The Venus Board determined that the royalty sale and intended special dividends would represent the best outcome for returning value to all shareholders,” he said.

“We maintain our commitment to pursuing opportunities which recognise the underlying value of Venus’ unique portfolio of assets and their future potential.”

Those assets include the Sandstone (Bellchambers) gold project, as well as the Bridgetown-Greenbushes farm-in and joint venture with IGO subsidiary IGO Newsearch.

Sandstone has a global resource estimate of 766,000 tonnes at 1.27 grams per tonne gold for 31,400 ounces, while work continues on a mining development and closure proposal and pre-feasibility study activities.