EDM Resources Inc (TSX-V:EDM, OTC:SWNLF) has entered into a royalty purchase agreement with Silver Crown Royalties under which Silver Crown will acquire a silver royalty on production from EDM’s Scotia Mine in Nova Scotia for C$500,000 in non-dilutive capital.
Under the terms of the agreement, EDM will receive C$250,000 at closing and a further C$250,000 within 30 days.
As part of the deal, EDM will also receive 60,000 units in Silver Crown at a deemed price of C$10 per unit. Each unit includes one common share and a warrant exercisable at C$13 per share for a period of 36 months.
“We are very pleased to secure a silver royalty with Silver Crown for our Scotia Mine which provides $500,000 of non-dilutive capital for EDM to continue its focus on advancing the Scotia Mine to production as soon as possible,” said EDM CEO Mark Haywood. “Silver Crown are a growing silver royalty company, and we are excited to also hold an equity position in them as they expand their silver royalty business."
The royalty is payable upon the commencement of commercial production at Scotia and will continue for 10 years. EDM has agreed to pay Silver Crown 90% of net proceeds from silver sales each quarter, subject to a minimum delivery obligation based on 7,000 ounces of silver per year.
The obligation ends once the equivalent of 50,000 ounces of silver or C$2.5 million in royalty payments has been delivered, although the royalty itself remains in effect throughout the term.
Closing of the transaction is expected in the second week of August.