Soma Gold (TSXV: SOMA) has agreed to sell a silver royalty on its Cordero mine in Colombia to Silver Crown Royalties (CBOE: SCRI) for US$10 million in cash. The gold producer says the deal funds growth without issuing new shares.
The royalty covers payable silver from Cordero and from the past-producing La Ye and Los Mangos mines, which sit on two concessions in Antioquia. It does not cover Soma’s other properties, its processing facilities or any third-party ore run through those facilities.
Silver Crown will pay in two tranches. The first US$3 million is due at closing, expected on or about November 30. The remaining US$7 million is due within 10 business days after Soma discharges the existing financing security over the project and Silver Crown registers its own first-ranking security.
Sponsored · Cambria Gold Mines
Both parties are aiming to complete that step by December 31. If the security isn’t discharged by then, Silver Crown can force Soma to buy the royalty back.
Most of the payments come early in the deal. Until Silver Crown has received the cash equivalent of 305,500 ounces of payable silver, Soma will pay each quarter the greater of 90% of its payable silver production or a set minimum. The minimum starts at 5,500 ounces in the fourth quarter of 2026.
That minimum rises to 30,000 ounces in 2027 and to 60,000 ounces a year from 2028 through 2031, with a final 30,000 ounces due over the first half of 2032. Soma owes those minimums despite whatever it actually produces. Ounces delivered above the floor count toward the threshold, so Soma can reach it sooner.
Once the threshold is met, the royalty drops to a 7.5% net smelter return on all payable silver for the life of the project. Until the second tranche is paid, Silver Crown receives only 30% of the royalty it would otherwise be owed.
Silver is a by-product at Soma and makes up roughly 1% of its ongoing revenue.
“This Transaction reflects Soma’s strategy of unlocking value from its existing asset base to fund the development of new mines and other sources of mill feed, without issuing dilutive equity,” said CEO Geoff Hampson.
The proceeds will go toward operational priorities, building out the company’s Colombian production platform and other growth opportunities. Soma will also pay Silver Crown a US$75,000 work fee at closing.
Soma Gold last traded at $0.50 on the TSX Venture.
