-- RBC Capital Markets on Monday reiterated its outperform, speculative risk, rating on the shares Seabridge Gold (SEA.TO, SA) and its US$71.00 price target ahead of its Valor Gold spin out.
Seabridge recently provided an update on the planned spin out of its Courageous Lake project in the Northwest Territories. A special shareholder vote is scheduled May 22 and closing is targeted in June.
Under the planned arrangement, Seabridge will subscribe to 700,000 shares of spinout company Valor Gold at C$7.29 per share for total consideration of C$5.1 million.
Seabridge will also receive a stream that allows the company the right to purchase 10% of future quarterly gold production at a fixed price of US$4,000 per ounce if the average price of gold over the quarter remains above US$4,000/oz, in exchange for 54.3 million Valor shares and an advance payment of C$4.9 million.
Following the spin-out, Valor is expected to maintain C$10 million in cash to support project development.
Upon approval, Seabridge will distribute 55-million shares in Valor gold to shareholders at a 1:1.953 ratio, implying a per-share valuation of C$21.10 per share.
Valor Gold has applied to be listed on the Toronto Stock Exchange and OTCQB in the U.S.
Price: $38.76, Change: $-2.45, Percent Change: -5.95%