Sprott Resource Lending, the Toronto-headquartered specialist lender to companies in the natural resource development space, reported finalizing the sale of the company's 75% interest in Castle Mountain Venture (CMV) today via the sale of CMV's wholly-owned subsidiary, Viceroy Gold Corp. Castle Mountain Venture controls the formerly operating Castle Mountain gold mine in California.
Part of the purchase price was secured at closing of the deal as the private Canadian gold explorer, Telegraph Gold Inc., which has considerable mineral assets in CA, issued 4M shares of common stock (9.4% of current issued/outstanding). With the balance of the purchase price slated to be paid in two installments, one for $3.056M to be paid within three years of closing and the other for $5.094M to be paid within six years (pending milestone achievements), both of which may also be resolved through share issuance (provided they are listed on a recognized exchange at the time), SILU has turned up a good deal. Considering Telegraph's position and their separate purchase of the 25% remainder of Castle Mountain Venture, and in light of SILU's net investment position (as of June 30) of roughly $0.204M, the overall valuation for Sprott Resource Lending looks solid.
The acquisition agreement Telegraph has entered into with TSX Venture Exchange-listed capital pool firm, Foxpoint Capital Corp., will serve as the basis for a qualifying transaction, with Foxpoint aiming to acquire all issued and outstanding shares. Sprott Resource Lending should incur around 35% of net proceeds on the deal in U.S. taxation, but closing costs (including commissions) will be around 26% of the purchase price and SILU shareholders should be pleased as part of that comes in alongside the purchase price reception.
SILU, in accordance with a management services agreement and partnership agreement, receives various administrative management capabilities for the company's day to day operations via Sprott Asset Management LP, wholly-owned subsidiary of top Canadian independent money management firm, Sprott Inc., placing the company in a prime position to execute on key, lucrative deals in the thriving Canadian natural resource sector. Combined with the vast lending experience earned by the SILU leadership team during their many years in the sector, we have a powerful model for identifying and aggressing income generation opportunities that also allow (focus on mid cap and junior) oil, gas, and mineral resource developers the CAPEX leeway required to grow.
With a laser-focus on temporary, custom loans for specific purposes that bear all of the proper security, interest yield, and equity participation hallmarks, SILU has rapidly established a reputation for bringing world class underwriting/due diligence protocols to bear on the task of locating prime loan candidates. Emphasis on the burgeoning TSX and TSX-V has enabled SILU to ride the resource wave ably, with the company taking full advantage of their rigorous asset analysis process and conservative lending practices in order to drive shareholder returns. Yes, this is exactly the kind of financing SILU was organized to get involved in, helping resource developers boost enterprise value or restructure the capital base so they can drive strategic momentum forward, while locking down solid upside for investors.
More information is available on the Sprott Resource Lending Corp. website: SprottLending.com
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