The Ontario Teachers’ Pension Plan appears to be somewhat bullish on the price of silver. The group this morning indicated that it, together with Sprott Resource Streaming and Royalty Corp, has acquired a silver royalty on the KSM project in BC, operated by Seabridge Gold (TSX: SEA).
The arrangement will see Seabridge’s subsidiary, KSM, sell a secured note to both the Ontario Teachers and Sprott, valued at US$225 million. Once the secured note matures, it will then transition to a silver royalty on the property. Upon maturity, the principal repaid will be utilized to purchase a 60% royalty on silver produced.
The note itself bears interest at a rate of 6.5% per annum, with interest payable in cash or shares of Seabridge. The note is to mature at the earlier of commercial production, or the 10-year anniversary of the issuance of the note. Once converted to a royalty, Seabridge can repurchase up to 50% of the silver royalty at an undisclosed price that provides a minimum return to the investors.
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“This investment highlights Ontario Teachers’ growing commitment to invest in the global metals industry, where we can achieve inflation protection, real returns and cash flow diversification. This is an innovative structure that provides excellent exposure to a combination of fixed returns and long-term silver prices,” commented Christopher Metrakos, Managing Director of Natural Resources for the Ontario Teachers.
Proceeds from the sale of the secured note are to be used to further development at KSM, and push the project towards being “substantially started.” The transaction is currently slated to close on March 15.
Seabridge Gold last traded at $21.14 on the TSX.
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.
