Bear Creek Mining Enters Royalty Agreement, Convertible Debt Deal To Fund Mercedes Mine Purchase

It appears that Bear Creek Mining (TSXV: BCM) is nearly giving away the farm in an effort to acquire Equinox Gold’s Mercedes Gold Mine. The firm has entered into an arrangement with Sandstorm Gold (TSX: SSL) for both a royalty arrangement, as well as a convertible debenture financing.

In terms of the royalty, Bear Creek has agreed to a US$37.5 million royalty, which will see the company deliver a total of 25,200 ounces of gold over a period of three and a half years. In year one, a total of 5,400 ounces are to be delivered, with every year thereafter consisting of 7,200 ounces, or roughly 14.4% of the annual 50,000 ounces production of the mine.

Under the first three and a half years of the royalty arrangement, Bear Creek will receive just 7.5% of the spot price of gold for each ounce sold under the royalty arrangement. After the initial three year term, the company will see a 4.4% gold stream provided to Sandstorm under the current royalty arrangement, at a price of just 25% of the spot price of gold.

The company has also seen Sandstorm invest US$22.5 million in the company via a convertible debenture. The debt under the financing bears interest at a rate of 6% per annum, and has a maturity of three years. The debt can be converted to shares at a 35% premium to the price of the company at the time of the Mercedes Mine acquisition closing.

In all, the US$37.5 million received from the royalty arrangement and the US$22.5 million will be used to fund the majority of the initial US$75 million payment required to be paid to Equinox Gold upon closing of the transaction, with a further $25 million in cash due within six months of closing.

Bear Creek Mining last traded at $1.51 on the TSX Venture.


Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

Is Gold’s Bull Market About to Hit Junior Stocks? | Ken Armstrong – Westhaven Gold

Surge Battery Metals: The Nevada North Lithium PEA

Silver @ $36 & We’re Still 200M Oz Short | Paul Andre Huet – Americas Gold and Silver

Recommended

Goliath Resources Closes Out Funding Round With Total Gross Proceeds Of $27.1 Million

Silver47 Kickstarts 4,000 Metre Drill Campaign At Red Mountain Project

Related News

Bear Creek: Canaccord Raises Price Target To $6 From $3.75

Canaccord precious metals analyst Kevin MacKenzie upgraded their 12-month price target on Bear Creek Mining...

Tuesday, August 4, 2020, 05:48:30 PM

Equinox Gold Sells Pilar Property For $38.0 Million, 9.9% Equity Stake In Private Issuer

Equinox Gold Corp. (TSX: EQX) announced this morning that it has sold its Pilar Gold...

Monday, April 19, 2021, 08:00:48 AM

$3300 GOLD: Every $100 Rise in Gold Means Pure Profit |  Ross Beaty – Equinox Gold

In this interview, Ross Beaty, Chairman of Equinox Gold (TSX: EQX), examines the current gold...

Monday, June 2, 2025, 01:32:00 PM

Equinox: BMO Lowers Price Target After Second Blockade In Nine Months

On June 22nd, Equinox Gold Corp. (TSX: EQX) announced that there has been illegal blockades set...

Thursday, June 24, 2021, 04:14:00 PM

BMO Raises Equinox Gold Price Target To $22 Following Premier Gold Transaction

Last Week, Equinox Gold Corp (TSX: EQX) announced the acquisition of Premier Gold Mines (TSX:...

Monday, December 21, 2020, 11:52:00 AM