Spanish Mountain signs $55M royalty deal with Wheaton

Spanish Mountain Gold (TSX-V: SPA) has inked a $55 million (C$75 million) royalty agreement with Wheaton Precious Metals (TSX: WPM) tied to its namesake project in British Columbia, Canada. The stock jumped.

Wheaton will acquire a 1.5% net smelter returns royalty on gold and silver production from the Spanish Mountain project, according to a statement Tuesday. Proceeds paid in three instalments: $22.5 million in the coming weeks, $12.5 million after 60,000 metres of drilling, and $20 million upon receiving key construction and operating approvals.

“Support from Wheaton is a significant vote of confidence in Spanish Mountain’s ability to reach production as the largest company in the royalty and streaming space, which would have completed extensive due diligence prior to signing this definitive deal,” Ben Pirie, a mining analyst at Atrium Research in Toronto, said in a note to clients.

The deal underscores continued investor appetite for large-scale Canadian gold projects and provides Spanish Mountain with staged funding tied to development milestones, as it advances one of British Columbia’s more prominent undeveloped deposits.

“This financing secures the company’s vision and strategy as an emerging precious metals developer in the Tier 1 Cariboo District,” CEO Peter Mah said. “It also propels the feasibility study forward,” which the company aims to complete within 18 months to support a construction decision in 2028.

Spanish Mountain shares surged 16% to 29¢ Tuesday morning in Toronto, boosting the company’s market value to about C$148 million ($75 million). The stock has traded between 12¢ and 32¢ in the past year. Wheaton dropped 3.3% to C$197 for a market capitalization of about C$89 billion.