Premier Gold Mines (PG.TSX) announced that it has entered into a share purchase agreement with Sandstorm Gold Ltd. whereby Sandstorm will acquire 33.66 million common shares and 6.97 million warrants of Premier Royalty Inc. – which represents Premier Gold Mines‘ entire position in Premier Royalty. The Warrants are exercisable to acquire one common share of Premier Royalty at a price of C$2.00. Approximately 5.51 million of the warrants expire on December 4, 2016 (subject to expiry acceleration provisions) and the remaining 1.46 million expire on October 7, 2014.
The Agreement contains a top up provision whereby if Sandstorm acquires 100% of the remaining issued and outstanding securities of Premier Royalty on or before the 18 month anniversary of the execution of the Agreement and the average price of the securities of Premier Royalty purchased through the subsequent acquisition is greater than the per unit price paid by Sandstorm under the Agreement, Sandstorm must pay Premier Gold an amount that is equal to the difference between the per unit price paid under the Agreement, and the average price of the voting securities of Premier Royalty that Premier Gold would have received if Premier Gold sold the common shares and warrants to Sandstorm pursuant to the subsequent acquisition.
* Under the terms of the agreement, each one Common Share and 0.207 of a Warrant (together, a Premier Royalty Unit) will be transferred to Sandstorm at a price of C$2.10 per Premier Royalty Unit, representing a total consideration of $70.68 million
* The total consideration for the Premier Royalty Units will be satisfied by the issuance of 5.60 million special warrants in the capital of Sandstorm (subject to the approval of the Toronto Stock Exchange), each being exercisable for no additional consideration into one common share of Sandstorm in accordance with the terms thereof
* In connection with the transaction, Sandstorm has also provided Premier Gold Mines with a temporary six month credit facility up to $70 million, which will bear interest at a 0.3% premium to the interest rate that Sandstorm would be charged by its lenders if funds were drawn from its revolving debt facility
* The transaction will result in a gain of more than C$35 million for Premier Gold Mines following the creation of Premier Royalty approximately 14 months ago
Ewan Downie, President and CEO of Premier Gold Mines:
“This sale will provide Premier Royalty access to greater opportunity and resources, while allowing Premier Gold Mines to crystalize a gain that started from a portfolio of royalties that was given little or no value. Premier Gold Mines now finds itself in the currently uncommon position in this market environment of having the resources to not only continue its aggressive development strategy but also the financial means to capitalize on the right opportunity should it present itself.”
“This deposition of a non-core asset further bolsters Premier Gold’s already strong treasury and will allow the Company to focus its efforts on advancing its high quality project portfolio.”
This article is contributed by Gold Alert and does not represent the views or opinions of International Business Times.