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Mining company Spanish Mountain Gold has announced that it has sold a 1.5% royalty to Wheaton Precious Metals for $55 million. This means that, when Spanish Mountain Gold begins producing gold and silver at its mine, it will have to pay Wheaton 1.5% of the revenue it earns from selling that metal (without deducting expenses).
This financing will allow Spanish Mountain to:
- Pay for drilling and obtain environmental permits.
- Complete a feasibility study (within 18 months).
- Decide whether to build the mine in 2028.
Details of the financing agreement
It should be noted that Wheaton will not provide the $55 million all at once, but in three installments:
- $22.5 million in the coming weeks.
- $12.5 million once 60,000 meters have been drilled at the mine.
- $20 million once all environmental permits to build and operate the mine have been obtained.
On the other hand, Spanish Mountain may buy back one third of that royalty if there is a change of ownership in the company before 2030 or if the mine performs better than expected. If certain deadlines are not met—for example, if testing is not completed before April 1, 2030—the royalty could increase slightly (by up to an additional 0.15%), or the company could pay an additional $6 million to avoid it.
Source: Spanish Mountain Gold