Nov 12 2013
Sandspring Resources Ltd. ("Sandspring" or the "Company") is pleased to announce that it has entered into a precious metals purchase agreement with Silver Wheaton Corp. ("Silver Wheaton") under which Silver Wheaton, through its wholly owned subsidiary, Silver Wheaton (Caymans) Ltd., will pay Sandspring upfront cash payments totaling US$148.5 million for 10% of the payable gold production from the Company's Toroparu Mine in Guyana S.A. (the "Toroparu Project").
In addition, Silver Wheaton will make ongoing payments to Sandspring of the lesser of the market price and US$400 per payable ounce of gold delivered to Silver Wheaton over the life of the Toroparu Project, subject to a 1% annual increase starting after the third year of production.
Upon satisfaction of certain conditions, Sandspring is entitled to an initial draw down of US$13.5 Million of the cash payment to be used primarily for advancement of the final feasibility documentation for the Toroparu Project. The balance of the US$148.5 Million is subject to Silver Wheaton's election to proceed and is payable in installments during construction of the Toroparu Project once all necessary mining licenses have been obtained and conditions pertaining to final feasibility, the availability of project capital finance, the granting of security to Silver Wheaton and other customary conditions are satisfied. If following receipt of feasibility documentation Silver Wheaton elects not to proceed, Sandspring may elect to either return US$11.5 million to Silver Wheaton and terminate the agreement or reduce the stream percentage from 10% to 0.774%.
"This streaming transaction provides a non-dilutive capital commitment of approximately 30% of the $464 million project finance required for the Toroparu Project as determined in Sandspring's Pre-feasibility Study and marks a significant milestone for Sandspring. Furthermore, the addition of Silver Wheaton as a strategic partner brings significant experience and expertise to Sandspring as it continues to develop Toroparu," said Rich Munson, Sandspring's Chief Executive Officer.
Sandspring's financial advisor in the precious metals purchase agreement was Cutfield Freeman & Co and Davies Ward Phillips & Vineberg LLP was Sandspring's legal advisor.