8-K: Perpetua Resources Sells Silver Royalty for $8.5 Million to Franco-Nevada

Perpetua Resources Corp. has sold a 100% royalty on future silver production from its Stibnite Gold Project to Franco-Nevada for $8.5 million in cash.

Summary

• Perpetua Resources Corp., along with its subsidiaries, has entered into a Silver Royalty Agreement with Franco-Nevada.
• Franco-Nevada will receive a 100% royalty on future payable silver production from the Stibnite Gold Project.
• Perpetua Resources received a cash payment of $8.5 million in exchange for the royalty.
• The company intends to use the proceeds for general corporate purposes.
• Silver is projected to represent less than 0.3% of the total life-of-mine revenue according to the 2020 Feasibility Study.
• Franco-Nevada will receive minimum payments equal to 100% of the payable silver from dore sales between the seventh and fifteenth years following commercial production.
• Franco-Nevada has an option to receive a royalty on silver from antimony concentrate production upon achieving commercial production and a contingent payment.
• Franco-Nevada also has a Right of First Refusal on any future royalties or stream interests at the Stibnite Gold Project, excluding gold-only royalties or streams.

Sentiment

Score: 7

Explanation: The document indicates a positive move for Perpetua Resources in securing funding, but it also involves giving up future revenue from silver production. The sentiment is moderately positive as it is a common financing method.

Positives

• Perpetua Resources received $8.5 million in cash, which will be used for general corporate purposes.
• The sale of the silver royalty allows Perpetua to monetize a non-core asset.
• The agreement provides a mechanism for Franco-Nevada to receive minimum payments on silver production.

Negatives

• Perpetua Resources has given up 100% of the future silver production from the Stibnite Gold Project.
• The company has granted Franco-Nevada a security interest and first priority lien on the Stibnite Gold Project to secure its obligations under the Royalty Agreement.

Risks

• The company's obligations under the Royalty Agreement are secured by a lien on the Stibnite Gold Project.
• The value of the royalty to Franco-Nevada is dependent on the future silver production at the Stibnite Gold Project.
• The company is relying on the 2020 Feasibility Study for its estimates of silver production and revenue.

Future Outlook

The company expects to use the proceeds from the royalty sale for general corporate purposes. The agreement includes a mechanism for Franco-Nevada to receive minimum payments on silver production between the seventh and fifteenth years after commercial production.

Industry Context

The sale of a silver royalty is a common financing method in the mining industry, allowing companies to raise capital without diluting equity. Franco-Nevada is a well-known royalty and streaming company, and this agreement is consistent with their business model.

Comparison to Industry Standards

• The sale of a silver royalty for a cash payment is a common practice in the mining industry, similar to other royalty and streaming deals.
• Franco-Nevada is a major player in the royalty and streaming space, with a portfolio of similar agreements with other mining companies.
• The 0.3% of life-of-mine revenue for silver is relatively low compared to other projects where silver is a primary focus.

Stakeholder Impact

• Shareholders may view the transaction positively as it provides additional funding for the company.
• Franco-Nevada benefits from the future potential silver production at the Stibnite Gold Project.
• The agreement does not appear to have a significant impact on employees, customers, or suppliers.

Next Steps

• Perpetua Resources will use the $8.5 million proceeds for general corporate purposes.
• Franco-Nevada will monitor the progress of the Stibnite Gold Project to determine when commercial production is achieved.

Key Dates

Keywords

Silver Royalty, Stibnite Gold Project, Franco-Nevada, Royalty Agreement, Mining, Perpetua Resources, Gold Project, Mineral Rights