Africa-Press – Namibia. TRIGON Metals, the owners of Kombat Mine at Grootfontein, signed a US$37,5 million deal to sell copper and silver from the mine exclusively to Sprott Mining.
Sprott Mining Inc is a private company that acquires, builds and manages a diversified portfolio of producing mining assets in North America.
Trigon wants to expand the plant capacity at Kombat to 60 000 tonnes per month, complete ongoing works to dewater the mine, and develop the Asis West underground mine for general corporate and working capital purposes.
The deal, known as the stream agreement, signed on Monday, involves that Trigon will sell and deliver 100% of the silver and copper produced from Kombat Mine to Sprott Mining.
A stream agreement is when a financing company provides funding to a mining company and gets a percentage of the interest in the mine.
The streaming company will also decide how much they pay for the minerals produced by the mine.
As part of the stream agreement, Trigon has given Sprott Inc the right of first refusal concerning certain third-party offers of streaming, royalty or similar financing arrangements.
Sprott Mining will also have security over all Trigon assets.
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.
Trigon 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.
This buyback right expires after 30 June 2027.
Trigon will receive 10% of spot as payment for all silver and copper delivered into the stream as determined on the second day before the relevant delivery, with the balance applied as a credit to the advance amount.
Following the depletion of the advance amount, Trigon will receive 10% of spot as payment for all silver and copper delivered into the stream.
In return, Trigon receives advance cash payments aggregating US$37,5 million, with an initial tranche of US$15,8 million already paid on Monday.
The payment of the remaining US$21,6 million will be advanced upon establishing a deposit holding account subject to an agreement that satisfies the investors with the financial institution and other standard closing conditions.
Trigon will use US$2,6 million of the initial advance to repay Sprott Mining under the loan agreement of 24 May.
In connection with the transaction, Trigon used C$5,5 million to repay Lind Global Fund II as part of the company’s convertible security funding agreement reached in May this year.
Lind Global Fund II is a buyout fund managed by The Lind Partners. The fund is based in New York and invests globally.
Trigon Metals president Jed Richardson says the deal is expected to fund working capital needs beyond the planned restarting of the open pit in 2023.
Richardson also says with the deal, the company can accelerate the feasibility study and development works at 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 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.”
* Regina Murphy is a mining industry researcher. Reach her at [email protected]
Sprott Mining Inc is a private company that acquires, builds and manages a diversified portfolio of producing mining assets in North America.
Trigon wants to expand the plant capacity at Kombat to 60 000 tonnes per month, complete ongoing works to dewater the mine, and develop the Asis West underground mine for general corporate and working capital purposes.
The deal, known as the stream agreement, signed on Monday, involves that Trigon will sell and deliver 100% of the silver and copper produced from Kombat Mine to Sprott Mining.
A stream agreement is when a financing company provides funding to a mining company and gets a percentage of the interest in the mine.
The streaming company will also decide how much they pay for the minerals produced by the mine.
As part of the stream agreement, Trigon has given Sprott Inc the right of first refusal concerning certain third-party offers of streaming, royalty or similar financing arrangements.
Sprott Mining will also have security over all Trigon assets.
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.
Trigon 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.
This buyback right expires after 30 June 2027.
Trigon will receive 10% of spot as payment for all silver and copper delivered into the stream as determined on the second day before the relevant delivery, with the balance applied as a credit to the advance amount.
Following the depletion of the advance amount, Trigon will receive 10% of spot as payment for all silver and copper delivered into the stream.
In return, Trigon receives advance cash payments aggregating US$37,5 million, with an initial tranche of US$15,8 million already paid on Monday.
The payment of the remaining US$21,6 million will be advanced upon establishing a deposit holding account subject to an agreement that satisfies the investors with the financial institution and other standard closing conditions.
Trigon will use US$2,6 million of the initial advance to repay Sprott Mining under the loan agreement of 24 May.
In connection with the transaction, Trigon used C$5,5 million to repay Lind Global Fund II as part of the company’s convertible security funding agreement reached in May this year.
Lind Global Fund II is a buyout fund managed by The Lind Partners. The fund is based in New York and invests globally.
Trigon Metals president Jed Richardson says the deal is expected to fund working capital needs beyond the planned restarting of the open pit in 2023.
Richardson also says with the deal, the company can accelerate the feasibility study and development works at 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 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.”
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