Pretium Resources Inc. (PVG:TSX; PVG:NYSE) announced in a news release that the sale of its Snowfield property in British Columbia to Seabridge Gold Inc. (SEA:TSX; SA:NYSE.MKT) closed.
For the asset, Pretium received $100 million in cash from Seabridge, was granted a 1.5% net smelter returns royalty on all future Snowfield production and is to receive a $20 million contingent cash payment in the future.
"The divestment surfaces immediate value for a non-core asset and accelerates our plans to deleverage our balance sheet," Pretium President and CEO Jacques Perron said in the release. "Combining Snowfield with Seabridge's other assets creates synergies of scale that improves the likelihood it will reach production, and the royalty ensures our participation in that long-term success."
In Seabridge Gold Inc.'s news release announcing the same closing, the company noted that Snowfield allows for variability in how it develops KSM, which could positively affect the project economics significantly.
"We expect a large portion of the Snowfield mineral resource could be exploited in a combined operation, which could potentially improve KSM's internal rate of return and net present value projections as well as shortening the payback period of initial capital," Seabridge Chairman and CEO Rudi Fronk explained in the release.
The next step for Seabridge and KSM is to complete a new preliminary feasibility study (PFS) that incorporates Snowfield data. The company expects that this PFS will boost project reserves and improve capital efficiency by extending the open-pit mine life.
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