Shares Outstanding: 281,300,564
TORONTO, Nov. 9, 2017 /CNW/ - Aquila Resources
Inc. (TSX: AQA) ("Aquila" or the "Company") today
announced a financing transaction with Osisko Bermuda Limited
("OBL"), a wholly owned subsidiary of Osisko Gold Royalties Ltd
(TSX & NYSE: OR), pursuant to which OBL has agreed to commit
approximately US$65 million to Aquila
through a US$10 million private
placement and US$55 million gold
stream purchase agreement.
"We are very pleased to be able to conclude this transaction
with Osisko as we feel they are the right partner to assist us in
advancing Back Forty to commercial production," stated Barry Hildred, Aquila's Chief Executive Officer.
"Proceeds from these transactions will allow us to complete all
pre-construction activities at Back Forty and will provide a
significant portion of the upfront capital required to build the
Project. With Osisko as our strategic partner, we are
well-positioned to advance the project efficiently and realize
material value for our shareholders."
Private Placement
OBL has agreed to purchase 49,173,076 units of Aquila at a price
of C$0.26 per unit for aggregate
gross proceeds of US$10 million (the
"Strategic Investment"). Each unit shall consist of one
common share and one-quarter of one common share purchase warrant.
Each whole warrant shall entitle the holder to purchase one common
share of the Company for C$0.34 for a
period of 42 months from the Closing Date. The shares will be
issued by way of a private placement and therefore will be subject
to a customary four month hold period from the date of closing.
Proceeds from the financing will be used to complete the
feasibility study for the Back Forty project (the "Project"),
advance the Project to full permits for construction, complete
exploration programs, and for general corporate purposes.
On closing of the Strategic Investment, OBL will own
approximately 14.9% of Aquila's issued and outstanding common
shares. For such time as OBL and its affiliates own at least
10% of the issued and outstanding common shares of Aquila, it will
have the right to participate in future equity or equity-linked
placements to maintain its interest in Aquila and have the right to
nominate one individual for election or appointment to the Board of
Directors of the Company.
Gold Stream
Concurrent with the Strategic Investment, the parties have also
entered into a Gold Purchase Agreement (the "Stream Agreement"),
whereby OBL will provide the Company with staged payments totaling
US$55 million, payable as
follows:
- US$7.5 million on closing of the
gold stream transaction;
- US$7.5 million upon receipt by
Aquila of all material permits required for the development and
operation of the Project, and receipt of a positive feasibility
study;
- US$10 million following a
positive construction decision for the Project; and
- US$30 million upon the first
drawdown of an appropriate project debt finance facility, subject
to the COC Provision (as defined herein).
Under the terms of the Stream Agreement, OBL will purchase 18.5%
of the refined gold from the Project (the "Threshold Stream
Percentage") until the Company has delivered 105,000 ounces of gold
(the "Production Threshold"). Upon satisfaction of the
Production Threshold, the Threshold Stream Percentage will be
reduced to 9.25% of the refined gold (the "Tail Stream"). In
exchange for the refined gold delivered under the Stream Agreement,
OBL will pay the Company ongoing payments equal to 30% of the spot
price of gold on the day of delivery, subject to a maximum payment
of US$600 per ounce.
In the event of a change of control of the Company prior to the
advancement of the final US$30
million under the Stream Agreement, the person or entity
acquiring control over the Project may elect to forgo the final
payment, in which case the Threshold Stream Percentage and Tail
Stream will be reduced to 9.5% and 4.75%, respectively (the "COC
Provision"). All other terms and conditions of the Stream
Agreement will remain unchanged.
Pursuant to the Stream Agreement, the Company has agreed to pay
a US$200,000 capital commitment fee.
The fee is payable as to 50% upon closing of the Stream transaction
and 50% upon Osisko funding the second deposit under the Stream
Agreement. Aquila will satisfy the fee by way of the issuance of
common shares of the Company based upon the five-day volume
weighted average price of the common shares prior to the applicable
deposit funding date.
Closing of the gold stream transaction is anticipated to occur
on or about November 10, 2017 and is
subject to satisfaction of customary conditions.
Board Appointment
Effective immediately and pursuant to the Strategic Investment,
Joseph de la Plante, Vice President
Corporate Development for Osisko Gold Royalties has been appointed
to Aquila's Board of Directors. Mr. de la Plante has been
Vice President Corporate Development of Osisko Gold Royalties since
June 2014. Prior to this, Mr. de la
Plante held the position of Senior Advisor, Investment and
Corporate Development of Osisko Mining Corporation since
November 2010, where he played a key
role in the company's investor relations and corporate development
efforts prior to the sale of the company.
Advisors
GMP Securities L.P. and Medalist Capital Ltd. acted as financial
advisors to the Company and McCarthy Tétrault LLP acted as legal
counsel.
ABOUT AQUILA RESOURCES
Aquila Resources Inc. (TSX:
AQA) is a development-stage company with strategic assets in the
Great Lakes Region. The company is currently focused on advancing
permitting activities for its 100%-owned high grade polymetallic
Back Forty Project in Michigan.
Aquila's flagship Back Forty Project is an open pit volcanogenic
massive sulfide deposit with underground potential located along
the mineral-rich Penokean Volcanic Belt in Michigan's Upper Peninsula. The Project
contains approximately 1 billion pounds of zinc and 1 million
ounces of gold in the M&I categories, with additional upside
potential. Currently Aquila is trying to secure the final
State permit required to build and operate Back Forty while
completing a Feasibility Study.
This press release contains certain forward-looking
statements within the meaning of applicable Canadian securities
legislation. In certain cases, forward-looking statements can be
identified by the use of words such as "plans", "expects" or "does
not anticipate", or "believes", or variations of such words and
phrases or statements that certain actions, events or results
"may", "could", "would", "might" or "will be taken", "occur" or "be
achieved" and similar expressions suggesting future outcomes or
statements regarding an outlook.
Forward-looking statements relate to any matters that are not
historical facts and statements of our beliefs, intentions and
expectations about developments, results and events which will or
may occur in the future, without limitation, statement with respect
to: (i) the economic analysis contained in the PEA; (ii) the
development plan of the PEA and results thereof; (iii) capital
expenditure programs; (iv) the quality or quantity of the mineral
resources subject to estimates by Aquila; and (v) work plans to be
conducted by Aquila.
These and other forward-looking statements and information
are subject to various known and unknown risks and uncertainties,
many of which are beyond the ability of Aquila to control or
predict, that may cause their actual results, performance or
achievements to be materially different from those expressed or
implied thereby, and are developed based on assumptions about such
risks, uncertainties and other factors set out herein. Aquila
expressly disclaims any obligation to update forward-looking
information except as required by applicable law. Such
forward-looking information represents Aquila's best judgment based
on information currently available. No forward-looking statement
can be guaranteed and actual future results may vary materially.
Accordingly, readers are advised not to place undue reliance on
forward-looking statements or information. Furthermore, mineral
resources that are not mineral reserves do not have demonstrated
economic viability.
SOURCE Aquila Resources Inc.