Abitibi Royalties inks three deals in 30 days

Within a month of launching an online platform that junior mining companies and prospectors can use to pitch their properties to Abitibi Royalties (TSXV: RZZ; US-OTC: ATBYF), CEO Ian Ball says the company has received 41 submissions and signed three deals.

Under the scheme unveiled on June 9, Abitibi pays a company or prospector’s claim fees on their existing mineral properties, or provides money upfront that allows them to stake new ground, in exchange for a net smelter return royalty (NSR).

“Each of the three deals we’ve signed so far have the ingredients we’re looking for,” Ball says in an interview. “They’re near existing mine sites, have good geology and signs of mineralization.”

On July 8, Abitibi Royalties announced its third deal: a 2% NSR on Nordic Minerals’ 3.3 sq. km property, which sits 5 km southwest of Hudbay Minerals’ (TSX: HBM; NYSE: HBM) flagship 777 mine in the Flin Flon greenstone belt in Manitoba. (The 777 mine produces zinc, copper, gold and silver, and production is expected to continue until 2020.)

In exchange for the NSR, Abitibi Royalties will pay Nordic’s annual [$5,000] claim fee on the property, due in 2016. There is also a three-year option for Abitibi Royalties to pay an amount equal to the annual maintenance fees to keep the property in good standing, in consideration for which the NSR will increase by 1% for each annual payment made on behalf of Nordic.

In addition, Abitibi Royalties has agreed to pay Nordic $5,000 in exchange for the right to receive 15% of the total proceeds should the property be sold. The cash will be paid from Abitibi Royalties’ working capital.

The agreement with Nordic follows a deal Abitibi Royalties struck on July 6 with Ivars Azis, a businessman with a background in geotechnical engineering, to acquire a 2% NSR on 2.8 sq. km of mineral claims, 3.5 km east of Metanor Resources’ (TSXV: MTO; US-OTC: MEAOF) Bachelor mine in Quebec, and 225 km northeast of Val-d’Or. The deal is similar to Abitibi Royalties’ arrangement with Nordic.

In June, Abitibi Royalties acquired a 2% NSR on Golden Valley Mines’ Smokehead prospect, 1 km southeast of the Canadian Malartic gold mine in Quebec.

Ball, who was promoted from company president to CEO on June 26, notes all three deals “are interesting in their own respects.”

On the property east of the Bachelor mine, for example, “there was various information in the technical reports about Metanor’s Bachelor mine stating that there were good targets to the east, so it looked to me like it was an interesting concept,” he says.

“We’re still reviewing a number of the 41 submissions we’ve had that look similar to these three,” Ball says, adding that the company is especially interested in Nevada, and Abitibi Royalties is speaking with a number of companies that either have claims in the state or hope to stake them. Ball also notes that claim fees are due in Nevada at the end of July — a deadline that is fast approaching.

So far, Ball considers the company’s new “royalty search” website a success. “It certainly has put us in contact with people we would never have spoken to before,” he says, “and it has raised the profile of the company in the royalty space. Our objective was to see if we could acquire 20 to 30 of these in the next year, and so far we’ve moved toward that, so we’re pretty happy.

“As commodity prices continue their downturn, more and more claims will become available.”