Seabridge raising US$225 million from Sprott, Teachers’
Seabridge Gold Inc. [SEA-TSX, SA-NYSE] is raising US$225 million by selling a secured note to Sprott Resource Streaming and Royalty Corp. and Ontario Teachers’ Pension Plan. The note is exchangeable at maturity for a silver royalty on Seabridge’s KSM project in northern British Columbia.
The proceeds of the sale will be used to continue ongoing physical works at KSM and advance the project towards a designation of ‘substantially started.’
Prior to its maturity, the note bears interest at 6.5% annually, payable quarterly in arrears. KSMCo, a unit of Seabridge, can elect to satisfy the interest payments in cash or by delivering Seabridge common shares.
When the note matures, the investors will use all of the principal amount repaid on maturity to purchase a 60% gross silver royalty upon the first to occur of:
- Commercial production being achieved at KSM.
- Either the 10-year anniversary, or, if the EAC expires and the investors do not exercise their right to put the note to KSMCo, the 13th anniversary of the issue date of the note.
KSMCo has the option to buyback 50% of the Silver Royalty, once exchanged on or before three years after commercial production has been achieved, for an amount that provides investors with a minimum guaranteed annualized return.
Seabridge’s 100% owed KSM gold project which is located in B.C.’s Golden Triangle region.
The KSM property ranks as one of the world’s largest undeveloped gold projects as measured by reserves. It is estimated to contain 38.8 million ounces of gold and 10.2 billion pounds of copper in proven and probable reserves.
“We re delighted to have Sprott and Ontario Teachers as partners at KSM,” said Seabridge Chairman and CEO Rudi Fronk. “Although KSM is best known for its mineral reserves and resources of gold and copper, the project also hosts a large inventory of silver.
“In KSM’s latest technical report, silver accounts for less than 3% of the projected KSM revenues, with the transaction representing a very small charge against the project’s future total revenues,” he said.
“Furthermore, the transaction does not require share dilution which furthers our long-standing strategy of providing the industry’s best leverage to gold as measured by ounces of gold per share.”
In determining whether a project has been ‘substantially started,’ the B.C. Environment Minister assesses each project separately on whether sufficient physical work has been completed prior to the Environmental Assessment Certificate (EAC) deadline.
KSM’s EAC deadline is July 29, 2026.
“We are planning on staying well ahead of the deadline by getting the work done as early as we can,” Fronk said “The financing provides most of the capital necessary to reach this objective as well as having the added advantage of cutting time from the construction schedule once a construction decision has been made.”
On February 25, 2022, Seabridge shares closed at $21.14 and currently trade in a 52-week range of $26.21 and $18.85.