Artemis Gold has received an offer worth around C$176m ($141m) from Wheaton Precious Metals for buying the silver stream of the former’s Blackwater gold project in British Columbia, Canada.
As per the terms of the proposed silver stream agreement, Wheaton Precious Metals will purchase half of the silver produced from the mineral reserves of the project.
It will be valid until nearly 18 million ounces of the commodity have been delivered, following which the stream comes down to 33% of the silver production for the life of mine.
The Blackwater gold project has 8.2 million ounces of gold in proven and probable mineral reserves plus 60.8 million ounces of silver.
Artemis Gold plans to use the proceeds from the silver stream transaction to fund the advancement of the project’s development and construction.
The company has projected an initial development capital of C$592m ($471.58m) for the Blackwater gold project for the first five years to achieve a throughput of 5.5 million tonnes per annum (tpa).
Artemis Gold chairman and CEO Steven Dean said: “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% increasing to 67% (after delivery of approximately 18 million ounces of Silver) of the by-product silver production from Blackwater.”
Artemis Gold had acquired the project from New Gold in 2020.
The gold development company said that the letter of offer and a copy of the silver streaming agreement have been provided to New Gold as per the terms of the Blackwater deal.
New Gold will have 30 days of time to accept the offer or come up with similar terms for the silver stream, said the company.
In the case of New Gold not exercising the offer, Artemis Gold will be free to execute the silver stream agreement with Wheaton Precious Metals within 120 days.
Wheaton Precious Metals’ payment will be made in tranches during the major construction works of the Blackwater gold project.
Apart from that, the company will make ongoing payments equivalent to 18% of the spot silver prices until the up-front deposit payment comes down to zero, and subsequently 22% of the spot silver prices.
A partial buy back option has also been included by the parties in the silver stream agreement. Under this, Artemis Gold will get a one-time option to repurchase up to 33% of the stream on a change of control for certain consideration.
The option will be valid until 1 January 2025 or the achievement of commercial production at the Blackwater gold project, depending on whichever comes earlier.
