North­ern Ver­tex signs $20M (U.S.) Ag stream­ing deal

Stockwatch Daily - - MINES & METALS - Mr. Ken­neth Berry re­ports

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.

Trans­ac­tion ra­tio­nale:

• 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.

Pri­vate place­ment

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

(NEE) Shares: 180,808,552

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