Goldgroup Mining signed an indicative term sheet in respect of a $3 million secured loan facility with Accendo Banco.
As set out in the term sheet, the facility will be available for drawing for 12 months following the date on which certain conditions precedent to the facility have been satisfied, with a minimum drawdown of $200,000. It will bear interest at the rate of 12% per annum, accruing on the outstanding amount drawn under the facility. Repayments will begin 12 months after the drawdown and be payable in equal installments, quarterly in arrears until the final repayment date of 36 months from the closing date. The company will have an option to prepay without penalty any portion of the facility, subject to 10 days’ notice, payment of additional fees or costs associated with prepayment, and minimum prepayment amounts of $200,000.
As consideration for the loan, Goldgroup Mining proposes:
- To pay the lender an arrangement fee in an amount equal to 0.925% of the facility amount and a commitment fee in an amount equal to 1% per annum on the available but undrawn balance of the facility amount
- To issue to the lender a total of 7,500,000 common share purchase warrants. Each lender warrant will be exercisable to purchase one common share in the capital of the company at a price of CAD$0.025 per lender warrant share for a period of 48 months from the closing date. The lender warrants may not be exercised prior to the closing date, and will be cancelled in the event that the closing date does not occur by Aug. 31, 2020. Any proceeds received by the company from the exercise of lender warrants will be immediately applied to prepay or repay the facility.
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In the event that an offer of finance from the lender in respect of the facility is accepted by the company, but no definitive agreement in respect of the facility is executed within 10 days of that acceptance, the company will pay to the lender a break fee of $100,000.
The facility will be secured by certain assets of the company, including the company’s Cerro Prieto project; guarantees by certain subsidiaries of the company; a pledge of the issued and outstanding shares of the company’s subsidiary, Minas de Oroco Resources; a subordination agreement with any existing lenders of the company in respect of the facility; and an assignment of collection rights to certain agreements of the company.
Proceeds of the facility will be used for general working capital purposes and to repay an existing secured loan from the lender that was previously announced by the company on Oct. 5, 2018. The facility, including the issuance of the lender warrants to the lender, is subject to TSX acceptance.
Goldgroup is a Canadian-based gold production, development and exploration company.
