What's Happening?
Spanish Mountain Gold has entered into a royalty agreement with Wheaton Precious Metals, selling a 1.5% net smelter returns royalty on its gold and silver production from the Spanish Mountain Gold project located in British Columbia, Canada. The transaction
is valued at $55 million and will be disbursed in three instalments. The initial payment of $22.5 million is expected soon, followed by a second instalment of $12.5 million after the completion of 60,000 meters of drilling at the project. The final payment of $20 million is contingent upon obtaining necessary approvals under British Columbia's Environmental Assessment Act for the mine's construction and operation. Spanish Mountain Gold retains the option to repurchase one-third of the royalty under certain conditions before December 31, 2030.
Why It's Important?
This agreement is significant as it provides Spanish Mountain Gold with the necessary financing to advance its feasibility study for the Spanish Mountain Gold project, which is crucial for making a build decision by 2028. The deal underscores the strategic importance of the Cariboo District in British Columbia as a Tier 1 mining region. By securing this financing, Spanish Mountain Gold positions itself as an emerging precious metals developer, potentially boosting its market presence and investor confidence. The transaction also highlights the role of royalty agreements in the mining industry as a means to secure funding while retaining operational control.
What's Next?
Spanish Mountain Gold plans to complete its feasibility study within 18 months, aiming for a build decision by 2028. The company will focus on meeting the conditions for the final payment, including obtaining environmental approvals. Additionally, Spanish Mountain Gold has the option to repurchase part of the royalty if a change of control occurs or upon completion of a specified throughput test at the mine. If the test is not completed by April 1, 2030, the royalty percentage could increase, unless the company opts to pay Wheaton $6 million to avoid this adjustment.
