Global investment firm Orion Resource Partners has agreed to a merger between its private portfolio company Sweetwater Royalties and Uranium Royalty Corporation (URC) to bring together two royalty companies for a stronger growth and expansion platform that will be valued at about $2.4-billion.
The transaction values Sweetwater Royalties, a land and minerals royalty company based in the US, at $1.9-billion and a 100% enterprise value basis, with an equity value of $1.1-billion for the attributable 92% of the business transferring to URC as part of the transaction.
This reflects an uplift in value since Orion established the business in 2020.
In turn, Canada-headquartered URC is the world’s only pure-play uranium royalty company. It is listed on TSX as well as Nasdaq.
Under the terms of the transaction, Orion will receive about $832-million of which $240-million will comprise of cash and the balance will comprise retained shares in the combined business. The transaction will result in Orion owning 43% of the new entity, which will be formed under a US-domiciled parent company to be listed on Nasdaq.
Sweetwater owns more than 4.5-million mineral acres and about 850 000 surface acres in Wyoming, Utah and Colorado, as well as 450 000 mineral acres in the Upper Michigan area. Sweetwater owns about 50% of the world’s largest known trona deposit, which alone accounts for about 90% of the world’s known trona resources. Trona is used to produce soda ash, which is a vital material in glassmaking and the production of chemicals, paper, and detergents.
URC is invested in almost 30 uranium operations spanning the US, Canada, Spain and Namibia.
Sweetwater generates royalty income by leasing its surface and mineral estates for development.
This transaction represents the third sale for Orion, which currently holds a 67% interest in Sweetwater, following the sale of a 25% stake in March 2023 and an 8% interest in April 2024 with each transaction having valued Sweetwater at increasingly higher amounts.
Following completion, Orion will become the largest shareholder in the post-closing entity, which is well positioned for potential growth, pairing Sweetwater’s royalty income with URC’s established position in the uranium royalty sector.
Additionally, the business can benefit from the optionality of Sweetwater’s sizable acreage position, which could unlock additional revenue streams for the business from planned soda ash capacity expansions, renewable-energy leases, and potential uranium discoveries, among other opportunities.
Commenting on the transaction, Orion partner and Sweetwater chairperson Jon Lamb said when the business was created in 2020, Orion recognized the opportunity to combine the strength of assets in the soda ash sector with mineral rights and land ownership to build a differentiated mining royalties platform.
“We are excited to partner with URC to build on that foundation and create a leading, diversified royalty business with strong positions in both soda ash and uranium.”
URC president and director Scott Melbye also welcomes this transformational combination that will accelerate near-term cash flows from competitive and reliable, long-life assets located in a top-tier jurisdiction.
“The global uranium market is experiencing a meaningful primary supply deficit, expected to drive significant capital investment in the years ahead. This enhanced, newly formed royalty leader will be uniquely positioned to capitalise on favourable market dynamics,” he says.
Sweetwater CEO Damon Barber lauds Orion for having been an “exceptional partner and a truly visionary sponsor since the creation of Sweetwater in 2020”.
He says Orion’s conviction in the land and royalty model, long-term perspective and unwavering support has enabled Sweetwater to build a differentiated platform from the ground up.
“We are proud of what the Sweetwater team has accomplished alongside Orion, and we are excited to begin the next chapter of growth with URC, where we see strong strategic alignment and a shared commitment to value creation.”
The transaction is still subject to majority approval by URC shareholders, requisite court approval, applicable stock exchange and regulatory approvals, and other customary closing conditions.
The companies expects the transaction to close early in the third quarter.