Canandian company Trigon Metals has signed a binding loan agreement with Horizon Corporation for a loan of up to US$5 million (N$100 million) as a step towards the sale of Kombat Mine in Namibia.
This was said in a statement issued by Trigon on Monday in which the company says it has granted Horizon exclusive rights to negotiate the purchase of Trigon’s interest in Kombat Mine near Otavi in the Otjozondjupa region.
The loan is separate from the sale price consideration of US$30 million (N$570 million), which may be significantly higher depending on operational milestones and follow-up payments ranging from US$10 million (N$190 million) to US$20 million (N$280 million), the statement says.
Commenting on the development, Trigon Metals chief executive and executive chairman Jed Richardson says: “This deal is a decisive win for the company and shareholders. We had been committed to operating and growing the Kombat Mine but this deal offers the company and shareholders an opportunity to maximise growth for the company as a whole.”
He says the agreement allows Trigon to realise significant value from Kombat Mine in an expensive and uncertain funding market while ensuring stability and continuity for the workforce on site.
“The influx of capital will position Trigon to advance exploration and development at our Addana and Kalahari projects, accelerating our next phase of growth as a company.
“Since the company will be in a strong financial position with negligible debt, we also propose to return a meaningful portion of the proceeds back to the market in the form of share buybacks, dividends or a combination of the two, once the various agreement milestones are achieved,” says Richardson.
The company, of which the local partner is Knowledge Katti, says it is focusing on strengthening its financial position while ensuring operational continuity and promoting expansion for Kombat Mine.
According to the statement, the loan allows Horizon to begin investing in Kombat Mine and provide capital to the project in advance of the completion of the sale.
Should Trigon and its shareholders elect to complete the proposed transaction, the loan will become equity contributed to Kombat Mine, but if Trigon chooses not to complete the transaction, the funds will become payable as loans to the company plus associated break fees.
According to the proposed deal, Horizon will acquire up to 100% of the Canadian domiciled holding company, which indirectly owns 80% of Kombat Mine for a price consideration of US$30 million (N$570 million) upon closing of all shareholder and regulatory approvals.
Trigon will retain a 1% net revenue royalty on copper production when Kombat Mine achieves copper metal production of 1 000 tonnes for each of two consecutive calendar months.
Thereafter, a royalty of 1% will be payable on net copper revenue when the invoiced copper price on final invoicing is greater than US$4 (N$72.54) per pound, payable quarterly for 20 quarters.
– email: matthew@namibian.com.na
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