Pretium Resources closes sale of Snowfield to Seabridge, shares up
The 100%-owned Snowfield Project in northern British Columbia is located 65 km north of the town of Stewart and 21 km south-southeast of Barrick's Eskay Creek Mine.
Pretium Resources Inc. [PVG-TSX, NYSE] along with its wholly-owned subsidiary, Pretium Exploration Inc., has closed the previously announced sale of the Snowfield property to KSM Mining ULC, a wholly owned subsidiary of Seabridge Gold Inc. [SEA-TSX; SA-NYSE].
Under the terms, Pretivm received US$100-million in cash, and will receive further consideration comprising a 1.5% net-smelter royalty on all production from Snowfield and a US$20-million contingent cash payment payable within six months of the earlier of KSM Mining (or a parent company) completing a bankable feasibility study which includes production of reserves from Snowfield or the start of commercial production from Snowfield or any part of Snowfield. US$15-million of the deferred payment represents an advance NSR royalty payment and shall offset amounts payable under the NSR royalty.
“The divestment surfaces immediate value for a non-core asset and accelerates our plans to deleverage our balance sheet,” said Jacques Perron, President and CEO of Pretivm. “Combining Snowfield with Seabridge’s other assets creates synergies of scale that improves the likelihood it will reach production and the royalty ensures our participation in that long-term success.”
The cash proceeds of the transaction will be applied to the revolving portion of Pretivm’s credit facility, which as of September 30, 2020, had an outstanding principal balance of US$198-million.
The transaction will result in a non-cash impairment loss to be recorded in Q4 2020. Complete financial results, including the non-cash impairment loss will be disclosed in the company’s Q4 2020 operational and financial results. As of September 30, 2020, the book value of Snowfield was US$232.1-million.
Pretivm is an intermediate gold producer with the high-grade gold underground Brucejack mine in the Golden Triangle of northwest British Columbia.
In December 17 trading, Pretivm shares gained $0.48 to $15.00 on a volume of 307,700.