Metals Royalty Co. Raises $165M for Iron Ore Asset Acquisition

The Metals Royalty Company has successfully arranged a substantial $165 million financing package, signaling a significant move to bolster its stake in a key U.S. iron ore asset. This capital infusion is earmarked for acquiring an additional royalty interest in the Mesabi Metallics project located in Minnesota, a strategic move aligning with the company's focus on critical minerals and domestic industrial capacity.

The comprehensive financing comprises two tranches: a $140 million private placement of secured convertible notes and a $25 million senior secured term loan facility. These funds will primarily facilitate the acquisition of a 1.0% Index-Priced Gross Overriding Production Royalty from Ironclad Royalties, enhancing The Metals Royalty Company's exposure to the Mesabi project. Furthermore, the financing will be utilized to retire existing senior term loan obligations and provide working capital for general corporate initiatives.

The convertible notes, placed with a syndicate of institutional and accredited investors, carry a five-year maturity and an 8% annual coupon. The interest payment structure is designed with a phased approach, beginning with a 6% cash and 2% payment-in-kind (PIK) component in the first year, transitioning to 7% cash and 1% PIK in the second year, before shifting entirely to 8% cash interest for the remaining three years. The notes are convertible at an initial price of approximately $8.66 per share, a notable 37.5% premium over the $6.30 reference price set for the transaction, and will hold senior secured second-lien status.

Complementing the notes, the $25 million senior secured term loan will bear interest at Term SOFR plus 4% annually. This facility, with an initial 24-month term and a potential 12-month extension, will rank as a first-lien senior secured obligation. As part of this loan agreement, The Metals Royalty Company will issue warrants to the lender, granting the right to acquire 500,000 common shares at an exercise price also reflecting a 37.5% premium to the $6.30 reference price, exercisable over a five-year period.

This strategic financing and acquisition initiative occurs against a backdrop of increasing demand for domestic mineral resources, particularly those vital for defense, advanced technology infrastructure, and energy transition initiatives. The Mesabi Metallics project, a significant U.S. iron ore source, represents a valuable addition to The Metals Royalty Company's portfolio, which emphasizes acquiring royalty and stream interests to gain commodity exposure while mitigating direct operational risks inherent in mining.

The company's business model, focused on providing financing for critical mineral assets, aims to support U.S. re-industrialization efforts. By concentrating on royalties rather than direct mine ownership, The Metals Royalty Company positions itself to benefit from long-term production upside with reduced exposure to development and operational challenges. This latest capital raise significantly strengthens its financial position and expands its footprint in a sector critical to national economic and security objectives.