HIGHLIGHTS:
- US$825m financing package
secured from strategic partners Wheaton Precious Metals
and Zijin Mining to fund the build of the Koné project in Côte
d'Ivoire, increasing Montage's liquidity sources to US$968m inclusive of cash on hand
- Wheaton Precious Metals to provide a US$625m gold stream and a US$75m loan facility
- Montage retains significant exploration upside as the stream
is limited to the Koné and Gbongogo deposits plus a 500-meter
boundary and an expanded area of interest until certain dropdown
thresholds are met
- Montage can reduce the stream deliveries to nil by
supplementing scheduled deliveries with ounces produced from
outside of the Koné and Gbongogo deposits, following the
delivery of an agreed minimum number of ounces
- Montage can accelerate its deleveraging with
flexibility to deliver in excess of its minimum required
commitments
- Montage participates in the upside in the gold price as the
production payment is based on a gold price sliding scale for the
first 5 years, with a minimum transfer price of 20% at a gold price
above US$2,100/oz
- Strategic shareholder, Zijin Mining, demonstrates
further support for the advancement of the Koné project by
providing Montage with US$125m of
funding sources comprised of:
- US$50m loan facility with a
9-year tenure with an annual interest rate of SOFR + 4%, a
3-year drawdown availability period, and no upfront fees nor
commitment fees
- US$75m fully
redeemable subordinated gold stream, with
the first and second buyback option dates anticipated to occur at
the end of 2029 and 2030, respectively
VANCOUVER, BC, Oct. 23,
2024 /CNW/ - Montage Gold Corp. ("Montage" or the
"Company") (TSXV: MAU) (OTCQX: MAUTF) is pleased to announce
that it has entered into final documentation with both Wheaton
Precious Metals International Ltd. (a wholly owned subsidiary of
Wheaton Precious Metals Corp., together with its affiliates,
"Wheaton") and Zijin Mining Group Co. Ltd. (through its
subsidiary and non-operating division, together with its
affiliates, "Zijin") with respect to an aggregate US$825 million financing package to fund the
development of its flagship Koné project in Côte d'Ivoire, which is
set to become West-Africa's next
sizeable, long-life, low production-cost gold mine.
The financing package is well aligned with Montage's goal of
obtaining significant financial and strategic flexibility while
minimizing equity dilution. The financing package increases
Montage's liquidity sources to US$968
million, inclusive of its US$143
million cash position as at September
30, 2024, and is comprised of the following instruments:
- US$625 million gold stream
provided by Wheaton (the "Wheaton Stream")
- US$75 million senior secured
loan facility provided by Wheaton (the "Wheaton Loan
Facility")
- US$75 million fully redeemable
subordinated gold stream provided by Zijin (the "Zijin
Stream" and together with the Wheaton Stream, the "Streams")
- US$50 million senior secured
loan facility provided by Zijin (the "Zijin Loan
Facility", and together with the Wheaton Loan Facility, the "Loan
Facilities")
Martino De Ciccio, CEO of
Montage, commented: "Today's announced US$825 million funding package for the
construction of our flagship Koné project in Côte d'Ivoire provides
significant funding headroom, ahead of launching our construction,
as it increases our liquidity sources to approximately US$970 million. Moreover, it is the culmination
of an exhaustive financing process which generated strong interest
given the high-quality nature of our project coupled with
management's proven construction track record.
This funding package is well aligned with our goal of pursuing
the optimal financing solution which maximizes key valuation per
share metrics, by considering both the cost of capital and equity
dilution, alongside other important considerations such as
retaining exploration upside and maintaining significant strategic,
financial, and operating flexibility.
Furthermore, we are extremely pleased to have concluded our
financing through the formation of strategic partnerships with both
Wheaton and Zijin who share our vision of creating a premier
African gold producer. With the financing milestone now achieved,
we look forward to soon launching the construction of our Koné
project, which is set to become West-Africa's next sizable, long-life, low
production-cost gold mine, and poised to unlock value for all
stakeholders."
Randy Smallwood, President and
CEO of Wheaton Precious Metals Corp. commented: "With essential
permits in place coupled with its impressive scale, we believe the
Koné Project stands out as one of the premier gold assets in
Africa and we are very pleased to
partner with Montage to deliver a full financing package for its
development. Supported by strong shareholder backing from the
Lundin Group and Zijin Mining, the Koné Project is expected to
significantly boost Wheaton's near-term annual gold production and
further strengthen our peer-leading growth trajectory. We look
forward to collaborating with Montage's outstanding team, whose
extensive experience in West
Africa had driven remarkable progress in de-risking the
project and advancing it towards construction."
FINANCING PACKAGE DETAILS
$625m Gold Stream from Wheaton Precious
Metals
Upfront Consideration: Wheaton will
pay Montage a total upfront cash consideration of US$625 million in four equal installment payments
during construction, subject to certain customary conditions.
Streamed Metal Percentage: Under the agreement,
Wheaton will purchase 19.5% of the payable gold from the Core
Area of Interest until 400,000 ounces of gold (the "First Dropdown
Threshold") has been delivered, thereafter dropping to 10.8% of the
payable gold from the Core Area of Interest until an additional
130,000 ounces of gold (the "Second Dropdown Threshold") has been
delivered, at which point the Wheaton Stream will be reduced to
5.4% of the payable gold from the Core Area of Interest for the
life of the mine. Based on a stream crediting mechanism,
Montage can however reduce the Wheaton Stream deliveries to nil
following the Second Dropdown Threshold if payable gold reasonably
expected to be delivered from the Core Area of Interest has been
previously delivered under the stream from areas outside the Core
Area of Interest. Furthermore, Montage can accelerate its
deleveraging with flexibility to deliver in excess of its minimum
required commitments. Payable gold is calculated using a fixed
payable factor of 99.9%.
Core Area of Interest: The Koné and Gbongogo deposits,
based on a US$2,500/oz pit-shell,
plus a 500-meter boundary as shown in Figure 1 below, resulting in
Montage retaining significant exploration upside as more than 50
exploration targets have been identified on the property.
Ore from within a 100km expanded area of interest will be
subject to the stream if that ore is processed at the Koné mineral
processing facility, until such time following the Second Dropdown
Threshold that ounces received under the stream from the expanded
area of interest is equal to the remaining ounces from the Core
Area of Interest, at which point the stream percentage will be
reduced to nil. If at any point after that the remaining ounces
from the Core Area of Interest exceed the ounces received from the
Expanded Area of Interest, Wheaton will continue receiving 5.4% of
payable gold from the Core Area of Interest, for the remaining life
of mine.
Production Payments: In order for Montage to
participate in the gold price upside, there will be a price
adjustment mechanism in place, for the first five years after the
signing of the precious metals purchase agreement, as described
below, and afterwards Wheaton will make ongoing payments for the
gold ounces delivered equal to 20% of the spot price of gold.
- <$1,800: 20% of $2,100 less 25% of the difference between
$2,100 and $1,800, less 30% of the difference between
$1,800 and the spot price of
gold;
- $1,800-$2,100: 20% of $2,100, less 25% of the difference between
$2,100 and spot price of gold;
- $2,100-$2,700: 20% of the spot price of gold;
- $2,700-$3,000: 20% of $2,700, plus 25% of the difference between the
actual spot price of gold and $2,700;
or
- >$3,000: 20% of $2,700, plus 25% of the difference between
$3,000 and $2,700, plus 30% of the difference between the
actual spot price of gold and $3,000.
Other Considerations:
- Montage is expected to comply in all material respects with the
International Finance Corporation's Performance Standards on
Environmental and Social Sustainability, the Global Industry
Standard on Tailings Management, and WPMI's Partner/Supplier
Code of Conduct, which outlines Wheaton's expectations in regard to
environmental, social and governance ("ESG") matters.
- The Wheaton Stream will include a customary completion test
based on expected gold production and expected mining rates.
- In the event of a change of control prior to the earlier of
completion and December 31, 2026,
Montage will have an option to buyback one third of the Wheaton
Stream.
- Wheaton has also obtained a right of first refusal on any
future precious metals streams, royalty, prepay or similar
transactions on the Koné Project for a 5-year period, which
will be limited to the Area of Interest thereafter.
- No obligations for Montage to enter into a hedging
programme.
$75m Fully Redeemable
Subordinated Gold Stream from Zijin
Upfront
Consideration: Upfront cash consideration of US$75 million to be drawn by Montage during the
24-month availability period. The proceeds will be allocated to
cover project costs, working capital requirements, exploration and
financing fees for the development, construction and operation of
the Koné project.
Area of Interest: The Koné and Gbongogo deposits, based
on a US$2,500/oz pit-shell, plus a
500-meter boundary.
Streamed Metal Percentage: Zijin will receive 3.1% of the
payable gold from the Koné project until 54,000 ounces of gold has
been delivered (the "Drop Down Threshold"), after which Zijin will
receive 1.3% of gold production for the remaining life of the mine,
unless the Zijin Stream is redeemed according to the buy back terms
summarized below and as further specified in the Zijin Stream
agreement.
The Zijin Stream is fully redeemable under the following buy
back options:
First Buy Back
Option: at the later of (i) December 31, 2029, (ii) 30 months from steady
state production, and (iii) delivery of an aggregate amount of
31,750 ounces of gold, Montage may pay to Zijin a cash
consideration of a minimum of US$23
million plus an additional amount, if required, to provide
to Zijin a 10% IRR (based on a US$2,000/oz gold price) whereby:
- The stream percentage is reduced by 50% (from 3.1% to 1.55% and
from 1.3% to 0.65%, respectively); and
- The Drop Down Threshold is reduced to 42,750 ounces of
gold.
Second Buy Back Option: at the
later of (i) December 31, 2030, (ii)
42 months from steady state production, and (iii) delivery of an
aggregate amount of 36,500 ounces of gold (or an aggregate amount
of 40,700 ounces of gold if the first buy back is not exercised
prior to the second buy back), Montage may pay to Zijin a cash
consideration of a minimum of US$30
million plus an additional amount, if required, to provide
to Zijin a 10% IRR (based on a US$2,000/oz gold price), whereby the Zijin Stream
will be terminated.
Production Payments: Zijin will make ongoing
payments for the gold ounces delivered equal to 20% of the
applicable gold spot price.
The security granted to Zijin for the Zijin Stream shall be
second ranking and fully subordinated to any senior facilities and
certain security will terminate once the uncredited deposit
under the Zijin Stream has been reduced to nil.
$75m Loan
Facility from Wheaton
Wheaton will provide Montage
with a secured Wheaton Loan Facility on the following terms:
- Draw sequence: Expected to be drawn last and if
required
- Facility amount: US$75 million, available following
receipt of the 4th installment of the Wheaton Stream and for
3-years from closing
- Use of loan: Proceeds to be allocated to project
costs, including any costs overruns
- Commitment fees: 1.5% per annum standby fee
applicable from receipt of the 1st installment of the
Wheaton Stream
- Interest rate: 3-month CME Term Secured Overnight
Financing Rate ("CME Term SOFR") plus 7.75% per annum
- Maturity and repayment: Bullet repayment at
maturity falling 6 years from first drawdown. Montage may, without
penalty and at any time, prepay the Wheaton Loan Facility in whole
or in part
$50m Loan Facility from
Zijin
Zijin will provide Montage with a secured Zijin
Loan Facility on the following terms:
- Facility amount: US$50 million, available for
3-years from closing
- Use of loan: Proceeds to be allocated to project
costs, working capital requirements and financing fees for the
development, construction and operation of the Koné project, plus
general and administrative, exploration and corporate costs
- Upfront and commitment fees: none
- Interest rate: CME Term Secured Overnight Financing
Rate ("CME Term SOFR") floored at 2.50% plus 4.00% per annum
- Maturity and repayment: Repaid through (i) 70%
amortisation repayments across 24 equal quarterly instalments
commencing after expiry of the availability period and (ii) 30%
balloon repayment at maturity falling 9 years from closing. A cash
sweep of 10% of the excess cashflows shall be applied, following
the first repayment date, to repayment of the instalments. Montage
may, without penalty and at any time, prepay the Zijin Loan
Facility in whole or in part
Closing of the Loan Facilities and the Streams are subject to
closing conditions as set forth in the definitive agreements and
are expected to be satisfied in the coming weeks.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
ADVISORS
HCF International Advisors Ltd served as
financial advisors to Montage Gold Corp. Norton Rose Fulbright is acting as legal
advisor.
ABOUT MONTAGE GOLD CORP.
Montage Gold Corp.
(TSXV: MAU) is a Canadian-listed company focused on
becoming a premier multi-asset African gold producer, with its
flagship Koné project, located in Côte
d'Ivoire, at the forefront. Based on the Feasibility Study
published in 2024, the Koné project has an estimated
16-year mine life and sizeable annual production of +300koz of gold
over the first 8 years. Over the course of 2024, the Montage
management team will be leveraging their extensive track record in
developing projects in Africa to
progress the Koné project towards a construction
launch.
TECHNICAL DISCLOSURE
The Koné and Gbongogo Main
Mineral Resource Estimates were carried out by Mr. Jonathon Abbott of Matrix Resource Consultants
of Perth, Western Australia, who is considered to be
independent of Montage Gold. Mr. Abbott is a member in good
standing of the Australian Institute of Geoscientists and has
sufficient experience which is relevant to the commodity, style of
mineralization under consideration and activity which he is
undertaking to qualify as a Qualified Person under NI 43–101.
The Mineral Reserve Estimate was carried out by Ms. Joeline McGrath of Carci Mining Consultants
Ltd., who is considered to be independent of Montage Gold. Ms.
McGrath is a member in good standing of the Australian Institute of
Mining and Metallurgy and has sufficient experience which is
relevant to the work which she is undertaking to qualify as a
Qualified Person under NI 43–101.
For further details of the data verification undertaken,
exploration undertaken and associated QA/QC programs, and the
interpretation thereof, and the assumptions, parameters and methods
used to develop the Mineral Reserve Estimate for the Koné Gold
Project, please see the UFS, entitled "Koné Gold Project, Côte
d'Ivoire Updated Feasibility Study National Instrument 43-101
Technical Report" and filed on SEDAR+ at www.sedarplus.ca. Readers
are encouraged to read the UFS in its entirety, including all
qualifications, assumptions and exclusions that relate to the
details summarized in this news release. The UFS is intended to be
read as a whole, and sections should not be read or relied upon out
of context.
QUALIFIED PERSONS STATEMENT
The scientific and
technical contents of this press release have been verified and
approved by Silvia Bottero, BSc,
MSc, a Qualified Person pursuant to NI 43-101. Mrs. Bottero, EVP
Exploration of Montage, is a registered Professional Natural
Scientist with the South African Council for Natural Scientific
Professions (SACNASP), a member of the Geological Society of
South Africa and a Member of
AusIMM.
FORWARD LOOKING STATEMENTS
This press release contains
certain forward-looking information and forward-looking statements
within the meaning of Canadian securities legislation
(collectively, "Forward-looking Statements"). All statements, other
than statements of historical fact, constitute Forward-looking
Statements. Words such as "will", "intends", "proposed" and
"expects" or similar expressions are intended to identify
Forward-looking Statements. Forward-looking Statements in this
press release include statements related to closing of the Loan
Facilities and the Stream transactions; use of proceeds of the Loan
Facilities and the Streams; timing and order of draws on each of
the Loan Facilities and the Streams; redemption of the Zijin
Stream; the Company's compliance with certain ESG matters; the
Company's mineral reserve and resource estimates; the timing and
amount of future production and the anticipated production costs
from the Koné Gold Project; anticipated mining and processing
methods of the Koné Gold Project; anticipated mine life of the Koné
Gold Project; targeted improvements in the production profile;
expected timing of commencement and completion of our stated drill
programs in 2024; results of the drill programs including targeted
additions to the estimated mineral resources at the Koné Gold
Project, and the timing thereof; the establishment of satellite
deposits and the development of these deposits; expected recoveries
and grades of the Koné Gold Project; timing in respect of the
commencement of construction, and the length of construction, of
the mining operations at the Koné Gold Project; timing and amount
of necessary financing related to the mining operations at the Koné
Gold Project; and timing for permits and concessions, including
that the Company will receive all approvals necessary to build the
project and exploration plans for 2024.
Forward-looking Statements involve various risks and
uncertainties and are based on certain factors and assumptions.
There can be no assurance that such statements will prove to be
accurate, and actual results and future events could differ
materially from those anticipated in such statements. Important
factors that could cause actual results to differ materially from
the Company's expectations include uncertainties inherent in the
preparation of mineral reserve and resource estimates and
definitive feasibility studies such as the Mineral Reserve Estimate
and the UFS, and in delineating new mineral reserve and resource
estimates, including but not limited to, assumptions underlying the
production estimates not being realized, incorrect cost
assumptions, unexpected variations in quantity of mineralized
material, grade or recovery rates being lower than expected,
unexpected adverse changes to geotechnical or hydrogeological
considerations, or expectations in that regard not being met,
unexpected failures of plant, equipment or processes, unexpected
changes to availability of power or the power rates, failure to
maintain permits and licenses, higher than expected interest or tax
rates, adverse changes in project parameters, unanticipated delays
and costs of consulting and accommodating rights of local
communities, environmental risks inherent in the Côte d'Ivoire,
title risks, including failure to renew concessions, unanticipated
commodity price and exchange rate fluctuations, delays in or
failure to receive access agreements or amended permits, and other
risk factors set forth in the Company's 2023 Annual Information
Form available at www.sedarplus.ca, under the heading "Risk
Factors". The Company undertakes no obligation to update or revise
any Forward-looking Statements, whether as a result of new
information, future events or otherwise, except as may be required
by law. New factors emerge from time to time, and it is not
possible for Montage to predict all of them, or assess the impact
of each such factor or the extent to which any factor, or
combination of factors, may cause results to differ materially from
those contained in any Forward-looking Statement. Any
Forward-looking Statements contained in this press release are
expressly qualified in their entirety by this cautionary
statement.
NON-GAAP MEASURES
This press release includes certain terms or performance
measures commonly used in the mining industry that are not defined
under International Financial Reporting Standards ("IFRS"),
including AISC or "all-in sustaining costs" per payable ounce of
gold sold and per tonne processed and mining, processing and
operating costs reported on a unit basis. Non-GAAP measures do not
have any standardized meaning prescribed under IFRS and, therefore,
they may not be comparable to similar measures employed by other
companies. The Company discloses "all-in sustaining costs" and
other unit costs because it understands that certain investors use
this information to determine the Company's ability to generate
earnings and cash flows for use in investing and other activities.
The Company believes that conventional measures of performance
prepared in accordance with IFRS, do not fully illustrate the
ability of mines to generate cash flows. The measures, as
determined under IFRS, are not necessarily indicative of operating
profit or cash flows from operating activities. The measures cash
costs and all-in sustaining costs and unit costs are considered to
be key indicators of a project's ability to generate operating
earnings and cash flows. Non-GAAP financial measures should not be
considered in isolation as a substitute for measures of performance
prepared in accordance with IFRS and are not necessarily indicative
of operating costs, operating profit or cash flows presented under
IFRS. Readers should also refer to our management's discussion and
analysis, available under our corporate profile at www.sedarplus.ca
for a more detailed discussion of how we calculate such
measures.
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SOURCE Montage Gold Corp.