Sprott will pay $150m to KSMCo, in exchange for a 1.2% net smelter royalty (NSR) on the Kerr Sulphurets Mitchell (KSM) project in Canada, and KSMCo can buy back 0.2% of the 1.2% NSR, within the first 30 months of closing
Seabridge enters royalty agreement with Sprott Funds. (Credit: Albert Hyseni on Unsplash)
Seabridge Gold, through its wholly-owned subsidiary KSM Mining (KSMCo), has signed a royalty agreement with Sprott Resource Streaming and Royalty Corp. (Sprott).
Under the terms of the agreement, Sprott will pay $150m to KSMCo, in exchange for a 1.2% net smelter royalty (NSR) on the Kerr Sulphurets Mitchell (KSM) project in Canada.
KSMCo can buy back 0.2% of the 1.2% NSR, within the first 30 months of closing, by making a $21.5m payment in cash or by delivering Seabridge common shares.
The company intends to use the proceeds to complete the physical works at KSM, to achieve a ‘substantially started’ designation from the B.C. government.
The designation will protect the continuity of the approved environmental assessment certificate’s (EAC) throughout the life of the project, said the Canadian mining company.
Seabridge chairman and CEO Rudi Fronk said: “This fund-raising is intended to move KSM towards accomplishing three main objectives without the requirement for shareholder dilution.
“Achieve the ‘substantially started’ designation which ensures the continuity of the KSM project’s approved Environmental Assessment Certificate (“EAC”) for the life of the project.
“Complete key tasks which support construction readiness and shorten the construction period once a construction decision has been made; and enhance the KSM proposition in our ongoing joint venture discussions by securing the EAC.”
The new funding will help complete the work related to switching station that connects KSM with BC Hydro’s Northern Transmission Line, to power the construction and operation of the mine.
The green energy is expected to enhance KSM’s sustainability and carbon profile.
Seabridge said that the agreement will also help continue providing work for companies owned and managed by indigenous partners in the KSM project.
The completion of vis subject to customary conditions including settling final documentation and obtaining all necessary third-party consents and regulatory approvals.
RBC Capital Markets served as financial advisor and Blake, Cassels & Graydon as legal counsel to Seabridge on this transaction, while Fasken Martineau DuMoulin served as legal counsel to Sprott.
Sprott managing partner Michael Harrison said: “Since our original investment last year, we continue to be impressed by the significant progress the Seabridge team is making at KSM.
“The quality of the engineering and early works is excellent, and their strong relationships with the local indigenous peoples is truly best-in-class.
“We are very pleased to expand our partnership with Seabridge and further accelerate KSM’s development into a world-class mine.”