Pretium Resources (TSX: PVG) (NYSE: PVG) this morning announced that it has agreed to sell its Snowfield property located in northwest BC to that of Seabridge Gold (TSX: SEA). The transaction will see the company obtain US$100 million in cash for the property, along with several earn-out arrangements.
In addition to the cash portion, the company will retain a 1.5% net smelter royalty on all future production from the property. A US$20 million contingency is also present, which is payable within six months of the earlier of a “bankable feasibility study which includes reserves” being completed on the property, or the commercial production of any part of the property. US$15 million of that contingency payment will be in the form of an “advanced net smelt royalty,” which will offset amounts that are to be paid under the NSR.
Proceeds from the sale of the property are to be used to pay off a portion of the company’s outstanding revolving credit facility, which currently has a principal balance of US$198 million.
The most significant item of the transaction however, is that the sale is going to result in a notable non-cash impairment. The Snowfield property currently has a book value of US$232.1 million for Pretium, resulting in a significant impairment of over US$100 million which will be recorded in the fourth quarter of 2020.
The transaction is expected to close in the fourth quarter, subject to the completion of a financing that was announced by Seabridge Gold this morning for US$105 million.
Pretium Resources last traded at $11.36 on the NYSE.
Information for this briefing was found via Sedar and Pretium Resources. 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.
