RE:RE:RE:Premier Gold Mines Announces Financing Arrangement with "After thinking about it, what would make sense is that that PG will pay 20% of the spot price as the ounces are produced. So instead of paying $40 milllion, 20% of that is $8 million. So the delivery of the silver is from the mine, not delivery of the silver to Orion."
I believe you have misunderstood. My reading of that is that in exchange for the up-front paynemt of $11.5 million, Premier has agreed to sell 12.5% of the silver produced from this mine (more in stages early in the agreement until 2 million ounces are delivered) for 20% of the prevailing silver price. That's how streaming agreements normally work.
So, for instance, if the price of silver is $20 an ounce, then Premier will deliver the first 2 million ounces for $4 per ounce and Orion will make $16 per ounce x 2 million ounces = $32 million, off that first 2 million ounces followed by 12.5 % of the life of mine silver production after that.
The gold stream is a little easier to parse. Premier has agreed to sell Orion 2450 ounces of gold for 15 quarters at a price that works out to $1150US per ounce, paid up front.
One interesting thing about the financing is that it envisions production from this mine for 15+ quarters. The mine has been producing 110k oz per year, and has reserves of 330k ounces, so on the surface it looks to have 12 quarters of production life left. Obviously Premier and Orion see significant value in the resources and perhaps prospects on the property.