TORONTO, Oct. 24,
2022 /CNW/ - Trigon Metals Inc. (TSXV: TM) ("Trigon"
or the "Company"), further to its previous announcement of
July 20, 2022, announced today that
it has signed a definitive agreement (the "Stream
Agreement") with Sprott Private Resource Streaming and Royalty
(B) Corp. ("Sprott Streaming") and Sprott Mining Inc. ("Sprott
Mining", collectively the "Investors") for a US$37.5 million silver and copper stream (the
"Transaction") for its Kombat Mine located in Grootfontein,
Otjozondjupa Region of Namibia.
The Streaming Transaction
Pursuant to the Transaction, Trigon shall sell and deliver to
the Investors 100% of silver produced from the Kombat Mine.
The expansion of the Kombat Mine is aimed at increasing annual
copper production and reducing forecasted operating costs. Proceeds
will primarily be used to expand the plant capacity to 60,000
tonnes per month and complete ongoing works to dewater the mine,
develop the Asis West underground mine, and for general corporate
and working capital purposes.
The advance amount under the Stream Agreement will be comprised
of cash payments aggregating US$37,500,000, with an initial tranche of
US$15,825,000 advanced today.
US$2,625,00 of the initial advance
was allocated to repayment of the amounts owing to Sprott Mining
under the loan agreement dated May 24,
2022 and C$5,500,000 was used
to repay the principal under the Company's Convertible Security
Funding Agreement (the "CSFA") with Lind Global Fund II, LP
("Lind"). The payment of the remaining US$21,675,000 will be advanced upon the
establishment of a deposit holding account subject to an agreement
in the form satisfactory to the Investors with financial
institution and other standard closing conditions. Trigon will
receive 10% of spot as payment for all silver and copper delivered
into the stream as determined on the second day prior to the
relevant delivery, with the balance applied as a credit to the
advance amount. Following depletion of the advance amount, Trigon
will receive 10% of spot as payment for all silver and copper
delivered into the stream. The Investors will have security over
all assets of the Company and Trigon Moroccan Holding Corp. as
security for the obligations under or in connection with the Stream
Agreement, including pledges of the shares of two subsidiaries, and
the obligations under or in connection with the Stream Agreement
will be guaranteed by such subsidiaries, specifically, Trigon
Moroccan Holding Corp. and PNT Financeco Corp., which are
wholly-owned by the Company.
Alongside the silver delivered into the stream, long-term Trigon
will deliver 1.625% of the copper production, in recognition
of the US$10,000,000 added to the
agreement since the July 20th
announcement of the term sheet. The copper stream will start at 0%
while mining from the open pit, increase to 6.5% during the in term
period of underground mining from Asis West until production from
Asis Far West commences when it falls to the long term rate of
1.625% if certain production targets are met.
As part of the Stream Agreement, Trigon has provided the
Investors with a right of first refusal with respect to certain
third party offers of streaming, royalty or similar financing
arrangements.
The silver stream is for the life of mine, restricted to the
Kombat Project and does not include the Silver Hill Project or any
new project Trigon may acquire. At its election, the Company may
buy back up to 50% of the Stream in a single payment by paying in
cash to Sprott Streaming 1.5 times the advance payment for the
portion of the Stream to be bought back by the Company. After
June 30, 2027, the buyback right
expires.
2,500,000 warrants (the "Stream Warrants") were issued to Sprott
Mining replacing the 2,500,000 warrants that were issued on
May 24, 2022 to Sprott Mining (Please
see the Company's press release dated May
24, 2022). Each Stream Warrant will have a strike price of
C$0.23, representing a 35% premium to
the 5-day VWAP share price for the 5 days prior to the execution of
the Stream Agreement and will be exercisable for one common share
of the Company for a term of three years and will otherwise have
customary adjustment provisions.
Jed Richardson, President and CEO
of Trigon, said, "We are very pleased to again partner with Sprott
Streaming and Sprott Mining. This deal not only is expected to fund
our working capital needs beyond our planned restart of the open
pit in 2023, through to early 2024 when cash flows are bolstered by
underground production, but it also enables us to accelerate the
feasibility study and development works at the Kombat Mine. We will
now be initiating expansion plans at Kombat that we believe will
result in a top quartile performing copper mine. We are bullish on
silver and on our exploration potential so the option to repurchase
50% of the silver stream was a major factor in working with Sprott
Streaming. After facing and solving many challenges during the past
few months, I believe Trigon is in an enviable position with an
improved and soon to be relaunched mine and abundant exploration
opportunities in Namibia and
Morocco."
Lind Repayment
In connection with the Transaction, the Company repaid Lind
C$5,500,000 of principal under the
CSFA and agreed to repay the remaining prepaid interest obligation
of C$530,000 ($830,000 total, less a C$300,000 reduction granted by Lind for early
repayment) by the issuance of 3,271,605 common shares of the
Company (the "Pre-Paid Interest Shares") at a deemed price of
C$0.162 per share. As per our press
release of October 14, 2022, Lind
exercised its right to convert C$270,000 of accrued interest into 2,000,000
common shares of Trigon at a conversion price of $0.135 per Trigon share which were issued to Lind
on October 17, 2022. Upon issuance of
the Pre-Paid Interest Shares all the obligations of the Company
under the CSFA shall be satisfied in full.
MI 61-101
The portion of the Transaction with Sprott Mining is considered
to be a non-arm's length transaction under the policies of the TSX
Venture Exchange and a related party transaction under
Multilateral Instrument 61- 101 Protection of Minority
Securityholders in Special Transactions ("MI 61-101") given
that Mr. Eric Sprott, a principal of
Sprott Mining, through 2176423 Ontario Ltd., beneficially owns
31,048,332 common shares of Trigon (or approximately 18.1% of the
outstanding Trigon common shares, and 17.7% upon issuance of the
Pre-Paid Interest Shares) and 7,524,166 warrants. Sprott Mining
also holds the 2,500,000 warrants as described above. The
transaction with Sprott Mining has been determined to be exempt
from the requirements to obtain a formal valuation or minority
shareholder approval pursuant to section 5.5(a) and 5.7(a) of MI
61-101.
The Transaction and the issuance of the Pre-Paid Interest Shares
remain subject to final acceptance of the TSX Venture Exchange.
Trigon Metals Inc.
Trigon is a publicly-traded Canadian exploration and development
company with its core business focused on copper and silver
holdings in mine-friendly African jurisdictions. Currently, the
company has operations in Namibia
and Morocco. In Namibia, the Company holds an 80% interest in
five mining licences in the Otavi Mountainlands, an area of
Namibia widely recognized for its
high-grade copper deposits, where the Company is focused on
exploration and re-development of the previously producing Kombat
mine. In Morocco, the Company is
the holder of the Silver Hill project, a highly prospective copper
and silver exploration project.
Cautionary Notes
Except for statements of historical fact, certain information
contained herein constitutes forward-looking statements under
Canadian securities legislation. Forward-looking statements are
often, but not always, identified by the use of words such as
"seek", "anticipate", "plan", "budget", "forecast", "schedule",
"continue", "estimate", "expect", "project", "predict",
"potential", "target", "intend", "believe" or variations of such
words and phrases or statements that certain actions, events or
results "may", "could", "would", "should", "might" or "will be
taken", "occur" or "be achieved". Such statements and assumptions
include those relating to expected benefits of the Transaction; use
of proceeds; timing of the issuance of the Pre-Paid Interest
Shares; expectations with respect to the second tranche of the
advance under the Strem Agreement; expected expansion of the Kombat
mine and the benefits thereof; expected plant capacity;
expectations with respect to funding the Company's capital needs;
expectations with respect to accelerating the feasibility study and
development work; expectations with respect to the performance of
our copper mine; silver prices expectations; exploration potential;
strategy; development potential and timetable for the Company's
properties; the timing, success and amount of future exploration
and development.
Forward-looking statements are based on the opinions and
estimates of management and certain qualified persons as of the
date such statements are made. Estimates regarding the anticipated
timing, amount and cost of future exploration at the Company's
projects are based on management expectations considering previous
industry experience, exploration done to date and recommended
programs, historic expenditures incurred and other factors that are
set out in the technical reports referred to. By their nature,
forward-looking statements are subject to numerous known and
unknown risks and uncertainties that could significantly affect
anticipated results or the level of activity, performance or
achievement in the future and, accordingly, actual results may
differ materially from those expressed or implied by such
forward-looking statements. The Company is exposed to numerous
operational, technical, financial and regulatory risks and
uncertainties, many of which are beyond its control, that may
significantly affect anticipated future results, including but not
limited to, risks related to: there being no certainty that the
Company will meet all conditions required for the receipt of the
second tranche of the advance under the Stream Agreement; risks of
recession; risks relating to COVID 19 and other potential
pandemics; general geopolitical uncertainties affecting the economy
and commodity prices; uncertainties inherent to economic studies,
which rely on various assumptions; unexpected events and delays
during construction and start-up; variations in mineral grade and
recovery rates; uncertainties inherent in estimating Mineral
Resources and Mineral Reserves; lack of revenues; revocation of
government approvals; corruption and uncertainty with court systems
and the rule of law and other foreign country risks inherent to the
jurisdictions where the Company operates; availability of external
financing on acceptable terms; exchange rates; ability to finalize
required agreements for operations; actual results of current
exploration activities; changes in project parameters as plans
continue to be refined; future mineral prices; failure of equipment
or processes to operate as anticipated; accidents, labour or
community disputes; other risk factors, including without
limitation the risk factors described in our other continuous
disclosure documents filed on SEDAR. Although management has
attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward-looking statements, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can
be no assurance that such statements will prove to be accurate, and
actual results and future events could differ materially from those
anticipated in such statements. Readers are cautioned that the
assumptions used in the preparation of such information, although
considered reasonable at the time of preparation, may prove to be
imprecise and, as such, undue reliance should not be placed on
forward-looking statements. The Company does not undertake any
obligation to update publicly or to revise any of the included
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required by applicable
securities laws.
Neither TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accept responsibility for the
adequacy or accuracy of this release.
SOURCE Trigon Metals Inc.