/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE
SERVICES OR FOR RELEASE, PUBLICATION, DISTRIBUTION OR DISSEMINATION
DIRECTLY, OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO
THE UNITED STATES/
HALIFAX, Sept. 5, 2017 /CNW/ - GoGold Resources Inc.
("GoGold" or the "Company") (TSX:GGD) is pleased to announce that
it has entered into definitive agreements (the "Agreements") with
Agnico Eagle Mines Limited ("Agnico") to sell its interest in the
Santa Gertrudis gold project (the
"Project"), located in Sonora,
Mexico (the "Transaction").
Pursuant to the terms of the Agreements, GoGold will receive
total cash consideration of US$80
million (less a working capital adjustment estimated to be
approximately US$280,000 at closing
of the transaction) and will be granted a 2% NSR on the Project.
Agnico will retain the option to buy back 1% of the NSR for
US$7.5 million. Following
announcement of the Transaction and the satisfaction by GoGold of
certain conditions precedent, Agnico will advance to GoGold an
aggregate of US$7.5 million in cash
via a subordinated secured term loan bearing interest at 10% per
annum. The term loan, along with accrued and capitalized interest,
shall be repaid upon closing of the Transaction by way of a set off
against the total cash consideration. Agnico has entered into a
subordination and postponement agreement in respect of the
Company's existing senior revolving credit facility with the Bank
of Montreal. GoGold has received
the required consents for the Transaction from Bank of Montreal under the senior revolving credit
facility and received a waiver of compliance with its total debt
leverage and interest coverage ratio covenants for the fiscal
quarter ended September 30, 2017,
which may be extended to February 28,
2018 (the outside date for closing) in certain
circumstances.
Brad Langille, President and CEO
of GoGold stated, "We are very pleased to announce this Transaction
with Agnico Eagle. We believe it demonstrates the value generated
and progress made at Santa
Gertrudis by the GoGold team since acquiring the Project in
2014. Agnico Eagle has a strong track record of advancing and
developing projects and we believe GoGold shareholders are well
positioned to benefit from the future potential of the Project
through our retained royalty. The Transaction will enable GoGold to
significantly strengthen the Company's balance sheet through
repayment of our senior revolving credit facility, position the
Company well as the Parral Tailings project ramps up to its full
potential, while also allowing us to continue to pursue further
opportunities in Mexico and
beyond."
The net proceeds of the Transaction will be used to repay the
Company's senior revolving credit facility, reduce outstanding
trade and other payables and for working capital purposes.
Completion of the Transaction is subject to satisfactory completion
by Agnico of due diligence in respect of Santa Gertrudis and customary closing
conditions including the receipt of Mexican anti-trust approval.
The Transaction is not subject to a shareholder vote and is
expected to close in the fourth calendar quarter of 2017.
Advisors and Counsel
BMO Capital Markets acted as financial advisor to GoGold and
Fasken Martineau DuMoulin LLP acted as GoGold's legal advisor.
Davies Ward Phillips & Vineberg
LLP acted as Agnico's legal advisor.
About GoGold Resources
GoGold Resources (TSX: GGD) is a Canadian-based silver and gold
producer focused on operating, developing, exploring and acquiring
high quality projects in Mexico.
The Company's Parral Tailings project is one of the lowest cash
cost silver producers in the world. Headquartered in Halifax, NS, GoGold is building a portfolio of
low cost, high margin projects. For more information visit
gogoldresources.com.
CAUTIONARY STATEMENT:
The securities described herein have not been, and will not be,
registered under the United States Securities Act of 1933, as
amended (the "U.S. Securities Act"), or any state securities laws,
and may not be offered or sold within the
United States or to, or for the benefit of, U.S. persons (as
defined in Regulation S under the U.S. Securities Act) except in
compliance with the registration requirements of the U.S.
Securities Act and applicable state securities laws or pursuant to
exemptions therefrom. This release does not constitute an offer to
sell or a solicitation of an offer to buy of any of GoGold's
securities in the United
States.
This news release may contain "forward-looking information" as
defined in applicable Canadian securities legislation. All
statements other than statements of historical fact, included in
this release, including, without limitation, statements regarding
the completion of the transactions contemplated by the Agreements,
the use of proceeds from the amounts received by GoGold in
connection with the transactions contemplated by the Agreements and
the future plans and objectives of GoGold, constitute
forward-looking information that involve various risks and
uncertainties. Forward-looking information is based on a number of
factors and assumptions which have been used to develop such
information but which may prove to be incorrect, including, but not
limited to, assumptions in connection with the continuance of
GoGold and its subsidiaries as a going concern, general economic
and market conditions, mineral prices, the accuracy of mineral
resource estimates, and the ability to complete the transactions
contemplated by the Agreements. There can be no assurance that such
information will prove to be accurate and actual results and future
events could differ materially from those anticipated in such
forward-looking information.
Important factors that could cause actual results to differ
materially from GoGold's expectations include Agnico being
satisfied with the results of its due diligence, any deficiency in
working capital on the closing date of the transaction, exploration
and development risks associated with the GoGold's projects, the
failure to establish estimated mineral resources or mineral
reserves, volatility of commodity prices, variations of recovery
rates and global economic conditions. For additional information
with respect to risk factors applicable to GoGold, reference should
be made to GoGold's continuous disclosure materials filed from time
to time with securities regulators, including, but not limited to,
GoGold's Annual Information Form. The forward-looking information
contained in this release is made as of the date of this release.
GoGold assumes no obligation to update these forward-looking
statements, except as required by applicable securities
legislation.
SOURCE GoGold Resources Inc.