Interesting silver stream offer to Artemis (Blackwater) ARTEMIS GOLD RECEIVES SILVER STREAM OFFER FROM WHEATON PRECIOUS METALS FOR CAD ~$176 MILLION (US $141 MILLION) PROVIDING ADDITIONAL FUNDING FOR THE DEVELOPMENT OF BLACKWATER
Artemis Gold Inc. has received a silver stream offer to enter into a definitive precious metals purchase agreement with Wheaton Precious Metals Corp. in respect to the company's Blackwater gold project in British Columbia.
The letter of offer as well as a copy of the silver stream agreement (ROFR offer) has been submitted to New Gold Inc. as required under the terms of an agreement related to the purchase of Blackwater dated Aug. 21, 2020, which serves to formally trigger a right of first refusal mechanism under that agreement. Under this mechanism, New Gold has 30 days from the date of delivery of the ROFR offer to accept the ROFR offer and offer identical terms as the silver stream agreement from Wheaton. In the event the ROFR offer is not exercised by New Gold, Artemis and Wheaton will be free to execute the silver stream agreement within 120 days. The silver stream agreement will be a subordinated secured obligation of the company.
Under the terms of the silver stream agreement, Wheaton will purchase 50 per cent of the silver production from the mineral reserves of Blackwater until approximately 18 million ounces of silver have been delivered, after which the stream reduces to 33 per cent of the silver production for the life of mine. Wheaton will make an upfront deposit payment in cash of approximately $141-million (U.S.), payable in tranches during the major works construction of the project, subject to certain conditions. In addition, Wheaton will make continuing payments equal to 18 per cent of the spot silver prices until the upfront deposit payment is reduced to zero and 22 per cent of the spot silver prices thereafter.
The silver stream agreement also contains a partial buyback option such that, until the earlier of Jan. 1, 2025, or the achievement of commercial production at Blackwater, Artemis will have a one-time option to repurchase up to 33 per cent of the silver stream on a change of control for certain consideration.
The proceeds from the silver stream agreement will be used by the company to finance the advancement of the development and construction of the project.
Steven Dean, chairman and chief executive officer, commented: "This silver stream provides the capital, along with our cash position, to complement the project debt financing supporting the overall capital required for the development of our Blackwater project. The cost of capital underlying this stream is extremely competitive. Under the terms of this silver stream facility, Artemis retains full upside to initially 50 per cent, increasing to 67 per cent (after delivery of approximately 18 million ounces of silver) of the byproduct silver production from Blackwater.
"Wheaton is a first-tier streaming company with well-recognized in-house technical competencies. Their offer to provide this stream financing adds further credibility to the technical and economic strengths of Blackwater."