VANCOUVER – Trigon Metals Inc. [TM-TSXV; PNTZF-OTC] The TSX Venture Exchange has accepted for filing a metal purchase and sale agreement (streaming agreement) between Sprott Resource Streaming and Royalty (B) Corp. (Sprott SR) and Sprott Mining Inc. (Sprott Mining) (with Sprott SR, the purchasers), and the company and the company’s subsidiaries.
The term of the streaming agreement is 40 years and thereafter will automatically be extended for successive 10-year terms unless there has been no material mining activity or operations of any kind in respect of the stream area. The purchasers 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 streaming agreement.
Under the streaming agreement, the purchasers agreed to advance cash payments aggregating US$37.5-million, with an initial tranche of US$15,825,000 advanced upfront (the initial instalment) at the time of closing and the remaining US$21,675,000 (the second instalment) (together with the initial instalment, the deposit).
The purchasers will pay 10% of the spot price per silver ounce delivered and 10% of the spot price per copper pound delivered.
In return, the company will deliver to the purchasers 100% of the silver produced with a minimum 90% payability commitment (the silver stream percentage) and 6.5% of the copper produced (the copper stream percentage) from the Kombat mine, located in Namibia.
The copper stream percentage will be reduced by 75% to 1.625% upon the event of underground operations achieving ore production and processing of 2,250 tonnes per day for a 90-consecutive-day period.
If the production does not meet certain conditions, the company will return a certain amount of the deposit (whether or not advanced) to the purchasers by way of promissory note.
The company has a one-time option (the buyback option) by June 30, 2027, to buy back up to 50% of the steaming agreement by making a single cash payment. The company provided in favour of the purchasers a right of first refusal with respect to any proposed grant, sale or issuance to any third party of a stream, royalty or similar financing transaction based on, or with reference to, future metals production from the Kombat mine.
Of the initial instalment, CDN$5.5-million was used to repay the principal amount under the convertible security financing agreement with Lind Global Fund II LP (the CSFA).
Further to the TSX Venture Exchange bulletin dated May 25, 2022, the principal amount of the US$2.5-million bridge loan was repaid to Sprott Mining from the proceeds of the initial instalment and the 2.5 million bonus warrants previously issued in connection to the bridge loan were cancelled.
Concurrently, the company issued 2.5 million replacement warrants (the stream warrants) to Sprott Mining in accordance with the terms of the bonus warrants. Each stream warrant will be exercisable for one common share of the company at an exercise price of 23 cents for three years.