Chesapeake Gold Passes Metates Royalty to Silver Wheaton Subsidiary

Chesapeake Gold Corp. (TSXV:CKG) announced that it has entered into an agreement under which it has assigned its interest in the 1.5-percent net smelter returns royalty on its Mexican Metates gold-silver property to a subsidiary of Silver Wheaton (TSX:SLW,NYSE:SLW).

The subsidiary will be acquiring the interest for US$9 million, the same amount Chesapeake originally paid for it.

As quoted in the press release:

As part of the Agreement, Chesapeake will have the right at any time for a period of five years to repurchase two-thirds of the Royalty (that being a 1% net smelter returns royalty) from Wheaton for US$9.0 million with Wheaton continuing to hold a 0.5% Royalty interest. Also as part of the transaction, Chesapeake through its wholly-owned Mexican subsidiary, American Gold Metates, S. de R.C. de C.V. (‘AGM’) will hold a right of first refusal to purchase the Royalty in the event Wheaton elects to sell the Royalty to a third party, on the same terms and conditions as the third party offer. The Agreement also contains customary terms and conditions for a royalty transaction.

Chesapeake and AGM have also entered into a right of first refusal agreement with Wheaton whereby Chesapeake and AGM have granted Wheaton a right of first refusal on any future silver stream or royalty for which Chesapeake or AGM receives and accepts an offer to purchase, on the same terms and conditions as the third party offer.

Click here to read the full Chesapeake Gold Corp. (TSXV:CKG) press release.