You are here: Agreements > Royalty Agreement > Royal Gold Enters into an Option Agreement to Acquire a Royalty on the Kerr-Sulphurets-Mitchell Project

SITE SEARCH
AGREEMENTS / CONTRACTS
(optional)
(optional)
Try our advanced search >>
CLAUSES Search Contract Clauses >>
Browse Contract Clause Library>>

Royal Gold Enters Into An Option Agreement To Acquire A Royalty On The Kerr-sulphurets-mitchell Project

Royalty Agreement

Legal Documents
You are currently viewing:

 This Royalty Agreement involves

ROYAL GOLD INC | ROYAL GOLD, INC | Seabridge Gold, Inc

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
 

Title: Royal Gold Enters into an Option Agreement to Acquire a Royalty on the Kerr-Sulphurets-Mitchell Project
Date: 6/22/2011
Industry: Gold and Silver     Sector: Basic Materials

join now
50 of the Top 250 law firms use our Products every day

 


 

 

Royal Gold Enters into an Option Agreement to Acquire a Royalty

on the Kerr-Sulphurets-Mitchell Project

 

DENVER, COLORADO .   JUNE 16, 2011:  ROYAL GOLD, INC. (NASDAQ:RGLD; TSX:RGL) , today announced that it has entered into agreements with Seabridge Gold, Inc. (“Seabridge”) to acquire an option to purchase a 1.25% net smelter return (“NSR”) royalty on all of the gold and silver production from the Kerr-Sulphurets-Mitchell (“KSM”) project in northwest British Columbia. Royal Gold has also agreed to purchase 1,019,000 shares of Seabridge common stock for C$30 million (US$30.6 million using a Canadian Dollar exchange rate of 0.9791 as of June 15, 2011).  The royalty option is contingent upon Royal Gold holding the shares for a minimum of nine months, and paying C$100 million if the option is exercised.

 

Pursuant to the agreements, Royal Gold may increase the royalty to a 2.0% NSR by purchasing, within 18 months of the first share purchase, an additional C$18.0 million in Seabridge common shares, at a 15% premium to the then market price, holding the additional Seabridge shares for a minimum of nine months, and paying an additional consideration of C$60 million if the option is exercised.

 

The C$30 million share purchase is priced at a 15.0% premium over the weighted average trading price of Seabridge common shares on the TSX for the five day trading period ending 2 days prior to today’s announcement.  The first share purchase is expected to occur following TSX approval.

 

Royal Gold does not expect to exercise the royalty option until the project achieves certain permitting and financing requirements and a decision to construct has occurred.   The royalty options will remain exercisable for 60 days following Royal Gold’s satisfaction that the project has received all material approvals and permits, has sufficient committed funding for construction, and certain other conditions have been met.  The exercise price for the royalty option is payable in three equal installments over an 18-month period from the date of exercise.  Proceeds of the option exercise will be dedicated to develop and construct the mining operations.

 

Tony Jensen, Royal Gold President and CEO, stated, “This transaction offers Royal Gold an excellent entry point into one of the largest undeveloped gold deposits in the world.  Once built, the economies of scale are expected to provide for low production costs and a robust production schedule, over a projected 50+ year mine life.  These features, and the advantages of being located in British Columbia, Canada, fit well into our development portfolio as we layer in our next generation of growth.”

 

 

 


 

 

 

The KSM deposit has proven and probable reserves of 2.2 billion tonnes at an average grade of 0.55 grams per tonne of gold (38.5 million ounces),


continue to document