Key Takeaways:
The Metals Royalty Co. will acquire a key royalty on a Minnesota iron ore project for $132.5 million, a deal that positions the firm to capitalize on the shift toward lower-emission steel production in the United States.
"The acquisition of a royalty interest on the Mesabi Metallics project represents a defining milestone for TMCR and the direct expression of our mission to finance America's mineral security," Brian Paes-Braga, Chairman and CEO of The Metals Royalty Company Inc., said in a statement.
The agreement gives TMCR a 1.0% index-priced royalty on one of the country’s only large-scale projects for direct-reduction (DR) grade iron ore pellets, the critical feedstock for cleaner electric arc furnace steelmaking. The purchase is funded by a $75 million private placement of common shares priced at $13.00 each and a term sheet for a $50 million credit facility.
The deal secures a cash-flowing asset for TMCR with first production expected in the second half of 2026, tapping into rising demand for greener raw materials as the U.S. steel industry invests billions to decarbonize. The Mesabi project, backed by over $2 billion in equity from Essar Group, is poised to become a strategic domestic supplier, reducing reliance on imported materials.
The Metals Royalty Company (Nasdaq: TMCR) is acquiring a 25% interest in an existing 4.0% royalty on the Mesabi Metallics iron ore project, which is approximately 93% complete with a total planned investment of over $2.5 billion. The transaction, expected to close before May 31, 2026, involves a $125 million cash payment and $7.5 million in TMCR shares.
The royalty is indexed to the Platts Direct Reduction Pellet price, with a revenue floor of $150 per tonne that provides downside protection while retaining upside exposure to commodity prices. TMCR anticipates the royalty could generate over $13 million in annual cash flow once the project ramps up to its initial capacity of 8.5 million tonnes per annum in 2027.
To fund the acquisition, TMCR secured commitments for a $75 million private investment in public equity (PIPE), with $15 million coming from company founders and insiders. Stifel is acting as the lead placement agent for the financing.
In addition, the company has a term sheet for a senior secured credit facility of up to $50 million. This combined financing structure de-risks the acquisition and provides a clear path to closing the transaction. The Mesabi project itself is fully financed to first cash flow, supported by a $520 million senior secured facility from Breakwall Capital and a $150 million liquidity line from Macquarie Group.
The project's strategic importance is highlighted by the U.S. Export-Import Bank's announcement of support of up to $10 billion, validating its role in the national supply chain for green steel. This aligns with a broader industrial trend, as companies like U.S. Steel are also investing heavily in DR-grade iron capabilities to feed their own electric arc furnaces.
This article is for informational purposes only and does not constitute investment advice.
