Abitibi Royalties Announces Proposed Change of Business

Val-d’Or, Québec, January 13th, 2016Abitibi Royalties Inc. (RZZ-TSX-V: “Abitibi Royalties” or the “Company”) announces that, at the request of the TSX Venture Exchange (“TSX-Venture”), it is submitting an application to the TSX-Venture to change its issuer status from a Mining Issuer to a Tier 2 Investment Issuer.  The Company’s business plan will remain unchanged as its looks to build a portfolio of gold mining royalties, with its main focus being the 3% net smelter royalty (“NSR”) on the Malartic CHL property, which includes the Odyssey North discovery, located at the Canadian Malartic mine in Québec.

Proposed Investment Policy
As required by the TSX-Venture’s listing requirements for an Investment Issuer, the Company will adopt an investment policy to govern its investment activities. The investment policy will set out, among other things, the investment objectives and strategy based on certain fundamental principles. Further details of the proposed change of business and the Company’s investment policy will be included in a Filing Statement prepared by the Company’s management, which will in due course be filed with the TSX-Venture and be available for viewing on SEDAR (www.sedar.com) under the Company’s issuer profile.

Sponsorship in connection with the proposed change of business is not required.

Completion of the proposed change of business is subject to a number of conditions, including the TSX-Venture acceptance and shareholder approval. The proposed change to an Investment Issuer cannot close until the required shareholder approval is obtained. There can be no assurance that the proposed change to an Investment Issuer will be completed as proposed or at all.  Golden Valley Mines Ltd., the Company’s largest shareholder, owning approximately 51.3% of the outstanding shares, has agreed to give its consent to the proposed change of business by way of written consent.

Investors are cautioned that, except as disclosed in the Filing Statement to be prepared in connection with the proposed change of business, any information released or received with respect to the change of business may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the proposed change of business and has neither approved nor disapproved the contents of this press release.

Composition of the Company’s Investment Portfolio

The nature and timing of the Company’s investments will depend, in part, on the investment opportunities identified and available to the Company.

The composition of its investment portfolio will vary over time depending on its assessment of a number of factors including the performance of financial markets and credit risk.

The Company’s current investments consist of:

  • 444,197 common shares of Agnico Eagle Mines Limited
  • 3,549,695 common shares of Yamana Gold Inc.
  • Approximately $1.7 million in cash (as of September 30, 2015).
  • A 2% net smelter royalty (“NSR”) on the Gouldie and Charlie zones at the Canadian Malartic mine.
  • A 3% NSR on the Malartic CHL property, which includes the eastern portion of the Barnat Extension, Jeffrey zone and the North Odyssey discovery at the Canadian Malartic mine.
  • Ten other NSRs, with varying interests, near existing mining operations have either been acquired or agreed to be acquired, which include royalties surrounding or near Agnico Eagle and Yamana’s Canadian Malartic mine in Québec, Agnico Eagle’s Lapa mine in Québec, Alamos Gold’s Young-Davidson mine in Ontario, Eldorado’s Efemcukuru mine in Turkey, Goldcorp’s Red Lake mine in Ontario, Hudbay’s 777 mine in Manitoba, Metanor Resources Bachelor mine in Québec and New Gold’s Rainy River mine in Ontario.

Future investments by the Company will not be subject to TSX-Venture approval unless required under TSX-Venture’s policies.

The Company has, effective today, adopted a policy to sell covered call options on up to 25% of its shares held in Agnico Eagle and Yamana each quarter. Based on current market prices, the Company estimates that quarterly cash proceeds could be up to approximately Cdn$625,000, should 25% of its shares be allocated in any given quarter. This amount does not include quarterly dividends currently being received by the Company in connection with its shareholdings in Agnico Eagle and Yamana, which totals approximately Cdn$125,000. There is no guarantee the Company will sell any covered calls or if it does, that it will realize the current market prices, as prices can vary considerably, both higher and lower.  Should covered calls be sold, the Company’s objective is to use strike prices that are anticipated to be well above current share prices for Agnico Eagle and Yamana, with contracts generally expiring between 1 month and 2 years. The Company owns 444,197 shares of Agnico Eagle and 3,549,695 shares of Yamana. 

About Abitibi Royalties

Abitibi Royalties holds a 3% NSR on the Odyssey North discovery, Jeffrey Zone and the eastern portion of the Barnat Extension and a 2% NSR on portions of the Gouldie and Charlie zones all at the Canadian Malartic mine near Val-d’Or, Québec. In addition, the Company is building a portfolio of royalties on early stage properties near producing mines and it holds 100% title to the Luc Bourdon and Bourdon West Prospects in the Ring of Fire, Ontario.  The Company owns 3,549,695 shares of Yamana Gold and 444,197 shares of Agnico Eagle Mines. 

Golden Valley Mines and Rob McEwen hold approximately 51.3% and 8.7% interest in Abitibi Royalties, respectively. 

For additional information, please contact:
Ian J. Ball – President and CEO
2864 chemin Sullivan
Val-d’Or, Québec J9P 0B9
Tel.: 416-346-4680
Email: ian.ball@abitibiroyalties.com

Forward Looking Statements:
This news release contains certain statements that may be deemed “forward-looking statements”.  Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur.  Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or realities may differ materially from those in forward looking statements. Forward looking statements are based on the beliefs, estimates and opinions of the Company’s management on the date the statements are made.  Except as required by law, the Company undertakes no obligation to update these forward-looking statements in the event that management’s beliefs, estimates or opinions, or other factors, should change.  

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.