Northern Vertex signs $20M (U.S.) Ag streaming deal
NORTHERN VERTEX Mining Corp. has signed a definitive $20-million (U.S.) silver streaming agreement with Maverix Metals Inc. and has arranged a concurrent fully financed private placement for gross proceeds to the company of $8-million (U.S.). Greenstone Resources II LP, one of the company’s shareholders, has agreed, subject to satisfaction of certain conditions, to subscribe for a majority of the private placement.
• Strengthens the balance sheet: The stream will be
used to fully repay the senior secured debt, eliminating principal and interest payments of about $22-million (U.S.) over the next 24 months. Furthermore, the equity private placement of $8-million (U.S.) will provide a working capital buffer during the continued ramp up of the Moss mine.
• Reduces financing costs: The stream is a long-term financing instrument which offers a lower cost of capital than the company’s other alternatives in the capital markets and significantly reduces the short-term financial burden on the Moss mine.
• Crystalizes significant value from silver byproduct: The stream ensures the realization of significant value for the shareholders, by crystalizing the value of b yprod uct silver production.
• Positioned for growth: The transaction supports the production outlook at the Moss mine, exploration upside of the Oatman district, and the financial and technical depth of the Northern Vertex team.
Ken Berry, president and chief executive officer of Northern Vertex, stated: “Given the opportunity to strengthen our balance sheet, we have significantly increased the size of the financing initially announced Oct. 15, 2018. Having the support of both Greenstone and Maverix, two very accomplished and well-financed mining groups, whom have undertaken extensive due diligence on the Moss mine, is a clear signal of the exciting potential at Moss and the strength of our operations team.”
Dan O’Flaherty, chief executive officer of Maverix Metals, stated: “We are pleased to play a significant role in helping Northern Vertex unlock the Moss mine’s full potential. This long-term partnership will promote management’s initiatives to expand Moss as well as pursue future accretive M&A transactions.”
Mike Haworth, senior partner of Greenstone, commented, “We are pleased to support the Northern Vertex financing and strengthen the company’s balance sheet during this critical commercial production ramp-up period.”
Terms of the silver streaming agreement
Under the terms of the streaming agreement, Maverix will make a $20-million (U.S.) upfront payment to the com pany’s wholl y owned subsidiary, Golden Vertex Mining Corp., which holds the Moss mine. In consideration for the upfront payment, Golden Vertex will agree to sell to Maverix 100 per cent (subject to a future step down as set out in this news release) of the payable silver production from the Moss mine on or after Oct. 1, 2018, at a continuing payment price per ounce equal to 20 per cent of the then-applicable silver spot price. Payable silver, in respect of each delivery of concentrate to an offtaker, will be a number of silver ounces equal to the greater of (1) the silver ounces in such delivery, multiplied by 98 per cent, and (2) the gold ounces in such delivery, multiplied by 98 per cent, multiplied by 8.5 for deliveries until Dec. 31, 2027, and multiplied by six for deliveries thereafter. After the purchase by Maverix of an aggregate of 3.5 million ounces of silver, the amount of payable silver purchasable by Maverix under the streaming agreement will be reduced to 50 per cent of production for the remaining life of mine. The company and Golden Vertex’s obligations under the streaming agreement will be secured against the outstanding securities of Golden Vertex and all of its assets. Maverix shall be granted the right to appoint one nominee to Northern Vertex’s board of directors until such time as 50 per cent of the upfront payment has been credited under the terms of the streaming agreement. The company and Golden Vertex will be subject to customary restrictive covenants for the duration of the streaming agreement, including with respect to the incurrence of certain indebtedness. The financial closing of the stream agreement, including the advancement of the upfront payment to the company, is subject to certain conditions, including the receipt of regulatory approvals. The company anticipates that the closing will occur on or about Dec. 12, 2018.
The company has also entered into binding subscription agreements for a $8.0-million (U.S.) private placement pursuant to which the company will issue units of the company at a price of 24 cents per unit. Each unit will consist of one common share of the company and one common share purchase warrant of the company. Each warrant will be exercisable for a period of two years from issuance to acquire an additional share at an exercise price of 40 cents per share. It is anticipated that the private placement will close concurrently with the closing under the streaming agreement. The company intends to leave the private placement open for a period of 30 days and will accept up to a further $2.0-million (U.S.) of additional subscriptions. Greenstone, a significant shareholder of the company (currently holding an aggregate of approximately 28 per cent of the issued and outstanding common shares on an undiluted basis) has agreed, subject to satisfaction of certain conditions included in its subscription agreement, to subscribe for units for gross proceeds of $4.5-million (U.S.).
Greenstone’s subscription pursuant to the private placement is a non-arm’slength transaction under the policies of the TSX Venture Exchange and is a related party transaction pursuant to Multilateral Instrument 61-101 — Protection of Minority Security Holders in Special Transactions, and therefore certain shareholder approval and valuation requirements would apply to such transaction pursuant to MI 61-101 unless an exemption is available therefrom under the terms of MI 61-101. The company intends to rely on the exemptions from the formal valuation and minority approval requirements in sections 5.5(b) and 5.7(1)(a) of MI 61-101.
All securities to be issued
pursuant to the private placement will be subject to a four-month hold period from the closing date under applicable securities laws in Canada. The private placement is subject to exchange acceptance.
Use of proceeds
The proceeds of the streaming agreement and the private placement will be used to fully repay the company’s senior secured credit facility with Sprott Private Resource Lending LP, to repay certain indebtedness owing to Greenstone and to finance the continued ramp-up of mining operations at the Moss mine.
About Northern Vertex Mining Corp.
Northern Vertex Mining, the newest gold producer in the United States, is focused on low-cost gold and silver production at its 100per-cent-owned Moss mine in northwest Arizona. Northern Vertex Mining has experience across all areas of operations, mine development, exploration, acquisitions and financing of mining projects. With operations at the flagship Moss mine achieving commercial production, Northern Vertex Mining intends to consolidate additional producing or near-term production gold assets within the Western United States. Through mergers and acquisitions, Northern Vertex Mining’s corporate goal is to become a mid-tier gold producer with over 200,000 ounces of gold production annually.
We seek Safe Harbor.
Lloyd Joseph Bardswich, Kenneth Edward Berry, David Paul Farrell, Michael John Haworth, James Murray McDonald, Gordon Donald Ulrich
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