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UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): December 20, 2022

 

GATOS SILVER, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

(State or other jurisdiction of incorporation)

001-39649

(Commission File Number)

27-2654848

(I.R.S. Employer

Identification No.)

 

925 W Georgia Street, Suite 910

Vancouver, British Columbia, Canada

(Address of principal executive offices)

V6C 2G3

(Zip Code)

 

 

Registrant’s telephone number, including area code: (720) 726-9662

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, par value $0.001 per share GATO

New York Stock Exchange

Toronto Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 

Item 1.01. Entry into a Material Definitive Agreement.

 

On December 20, 2022, the Company entered into an amended and restated revolving credit facility (the “Revolver”) with Bank of Montreal (“BMO”) pursuant to which the maturity date of the Revolver was extended from July 31, 2024 to December 31, 2025 and a credit limit of US$50 million was re-established, consistent with the original Revolver entered into on July 12, 2021. The Revolver includes an accordion feature providing up to an additional US$25 million of credit (the “Accordion”), subject to certain conditions. After the Company made a US$4 million repayment prior to closing, the balance outstanding on the Revolver is US$9 million with US$41 million available for advance.

 

Advances under the Revolver bear interest at a variable index-based rate per year together with a margin based on the Company’s total debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio (the “Leverage Ratio”). The margin ranges from 3.00% to 4.00% or 2.00% to 3.00% depending on the Leverage Ratio and the index selected by the Company.

 

The Revolver contains affirmative and negative covenants that are customary for agreements of this nature. The affirmative covenants require the Company to comply, at all times, with, among other things, a Leverage Ratio not greater than 3.00 to 1.00, with EBITDA calculated upon a trailing four fiscal quarter period, a liquidity covenant not less than $20.0 million and an interest coverage ratio not less than 4.00 to 1.00 calculated based on a trailing four fiscal quarter period. The negative covenants include, among other things, limitations on certain specified asset sales, mergers, acquisitions, indebtedness, liens, dividends and distributions, investments and transactions with affiliates. The Revolver also contains covenants requiring to the Company to provide the lenders with audited annual, and certain unaudited quarterly, financial statements for the Los Gatos Joint Venture and the Company in respect of the years ended December 31, 2021 and December 31, 2022 by April 15, 2022 and April 30, 2022 respectively.

 

The Revolver also includes customary events of default that are subject to customary curing provisions and include, among other things, defaults for non-payment, inaccuracy of representations and warranties, covenant breaches, defaults under other material indebtedness and material agreements, bankruptcy and insolvency, entry of material judgments, disruption in or abandonment of operations, loss of certain licenses and a change of control. Following the occurrence of an event of default, the lenders under the Revolver can terminate the commitments and demand the immediate repayment in full of all amounts due thereunder.

 

The foregoing description of the Revolver is not complete and is qualified in its entirety by reference to the full text of the agreement, which is filed herewith as Exhibit 10.1 and incorporated herein by reference in its entirety.

 

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information set forth under Item 1.01 of this Current Report on Form 8-K with respect to the Revolver is hereby incorporated by reference into this Item 2.03.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No. 

  

Description 

10.1    Amended and Restated Revolving Credit Agreement, dated December 20, 2022, among Gatos Silver, Inc., certain subsidiaries of Gatos Silver, Inc. from time to time, Bank of Montreal, Chicago Branch, as administrative agent, BMO Capital Markets, as bookrunner and mandated lead arranger, and Bank of Montreal, Chicago Branch and certain financial institutions from time to time, as lenders
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    GATOS SILVER, INC.
     
Date: December 21, 2022   By:  

/s/ Dale Andres 

        Dale Andres
        Chief Executive Officer

 

 

 

 

 

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