
Seabridge Gold (TSX: SEA) (NYSE: SA) announced that its wholly-owned subsidiary, KSM Mining ULC, has closed the sale of a US$150 million secured note to Sprott Resource Streaming and Royalty Corp. For commercial reasons beneficial to Seabridge, the transaction structure previously announced by Seabridge on May 11, 2023 has been restructured as a sale to Sprott Streaming of a secured note by KSMCo, and a contingent right by Seabridge. The Note is designed to be repaid at maturity by a net smelter royalty on Seabridge’s 100% owned KSM project located in northern British Columbia, Canada. The US$150 million in proceeds (approximately CAD$200 million at the current exchange rate) will be used to complete the physical works at KSM for which Seabridge expects to achieve a designation of ‘substantially started’ from the B.C. government. Essentially the same secured note/royalty structure was used last year to raise US$225 million from Sprott Streaming and the Ontario Teachers’ Pension Plan to kick start the ‘substantially started’ program.
Seabridge Chairman and CEO Rudi Fronk explained: “This funding is intended to move KSM towards accomplishing three main objectives without the requirement for shareholder dilution:
Mr. Fronk noted that the new funding “will enable us to complete the switching station and related work required for connecting KSM to BC Hydro’s Northern Transmission Line for construction and operation of the mine. Access to this green energy will substantially enhance KSM’s sustainability and carbon profile. Proceeds from the transaction will also enable us to continue providing significant work for companies owned and managed by our Indigenous partners in the KSM project, an important ESG objective.”
Key terms of the Note and NSR include:
Rudi Fronk, Seabridge’s Chairman and CEO stated: “This new US$150 million in financing, coupled with the US$225 million we raised from Sprott Streaming and Ontario Teachers’ Pension Plan last year, provide the capital we believe is needed to achieve substantially started status well before July 2026. It also has the added advantage of cutting time from the construction schedule once a construction decision has been made. KSM’s estimated low operating costs mean that the royalty is expected to have a minimal impact on the project’s projected financial returns. Furthermore, this funding does not require share dilution and therefore furthers our long-standing strategy of providing the industry’s best leverage to gold as measured by ounces of gold reserves and resources per share.”
Michael Harrison, Managing Partner at Sprott Streaming, commented: “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, a project without parallel in terms of reserves, production and mine life.”
Under the B.C. Environmental Assessment Act, a project’s EAC is subject to expiry if the project has not been ‘substantially started’ by the deadline specified in the EAC. However, if the B.C. Minister of Environment and Climate Change Strategy determines that a project has been ‘substantially started’ before the deadline, the EAC remains in effect for the life of the project. KSM’s current EAC deadline is July 29, 2026. In determining whether a project has been ‘substantially started’, the Minister assesses each project separately on whether sufficient on-site physical improvements have been completed prior to the EAC deadline.
Examples of B.C. mining projects that have been designated as ‘substantially started’ include Galore Creek and Kitsault.
RBC Capital Markets acted as financial advisor and Blake, Cassels & Graydon LLP acted as legal counsel to Seabridge in connection with this transaction. Fasken Martineau DuMoulin LLP acted as legal counsel to Sprott.
Seabridge holds a 100% interest in several North American gold projects. The Company’s principal asset, the KSM project, and its Iskut project are located in Northwest British Columbia, Canada’s “Golden Triangle”, the Courageous Lake project located in Canada’s Northwest Territories, the Snowstorm project in the Getchell Gold Belt of Northern Nevada and the 3 Aces project set in the Yukon Territory. For a full breakdown of Seabridge’s mineral reserves and mineral resources by category please visit the Company’s website at http://www.seabridgegold.com.
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