Triple Flag to buy Maverix Metals creating fourth largest streaming and royalty firm

Canada's Triple Flag Precious Metals (TSX: TFPM) is buying smaller peer Maverix Metals (TSX: MMX) in a deal valued at $606 million, which would consolidate it as the world's fourth-largest senior streaming and royalty company.

The Toronto-based company said combining its predominantly gold and silver streams and royalties portfolio with Maverix's will allow it to increase scale and enhance diversification.

The new entity will have 29 paying assets and 228 assets overall, located in Australia, Latin America and North America.

Streaming and royalty firms provide upfront financing for exploration and development to precious metals producers in exchange for a percentage of production or revenues from any future output.

Triple Flag has royalties on properties located near Gold Fields Ltd.'s Salares Norte project in Chile. (Image courtesy of Gold Fields Chile.)

Maverix investors have the option of receiving either US$3.92 in cash or 0.36 of a Triple Flag share for each share held. This represents a 10% premium to Maverix shares closing price of $4.77.

The transaction is expected to be completed in January 2023, after which Triple Flag and Maverix shareholders would own about 77% and 23%, respectively, of the combined company.

The agreement allows Triple Flag to match superior proposals and a US$24 million termination fee.

"The merger of Maverix and Triple Flag represents that rare opportunity to combine the best with the best," Geoff Burns, founder and chair of Maverix, said in the statement.

"It represents a continuation of each company's focus on building a pure play portfolio of high-quality, precious metals streaming and royalty assets, located in good mining jurisdictions and in the hands of responsible operators," the companies added.

The merged entity will keep Triple Flag Precious Metals's name and headquarters, with Burns and another nominee of Maverix expected to join the Triple Flag board.

Elliott Investment Management LP, which owns 83% of Triple Flag, as well as key Maverix shareholders Newmont (NYSE: NEM), Pan American Silver (TSX: PAAS) and Kinross Gold (TSX: K) are all in favour of the deal.