Caldas Gold Corp. [CGC-TSXV; ALLXF-OTCQX] has signed a non-binding term sheet to receive total cash consideration of US$110-million for a precious metals purchase agreement to be entered into with Wheaton Precious Metals International Ltd. (WPMI), a wholly-owned subsidiary of Wheaton Precious Metals Corp. [WPM-TSX, NYSE].
Proceeds from the stream will solely be used to finance the expansion of the company’s mining operations in the Deeps Zone (the MDZ) at its Marmato Project located in the department of Caldas, Colombia.
Serafino Iacono, Chairman and CEO of Caldas Gold, said: “The streaming transaction is the first step in securing the project financing required to build Colombia’s next major gold mine. Given the due diligence undertaken by Wheaton, we believe the proposed streaming transaction validates the value we have identified in our Marmato Project. The streaming transaction will help us to manage the overall leverage in our capital structure while improving flexibility and reducing financing costs and risks. In light of our shared values around ESG, we are very pleased to have secured this competitively priced financing arrangement with a company the quality of Wheaton.”
“Wheaton is excited to partner with Caldas Gold in developing the Marmato Project. The strength and potential upside of this project was especially apparent during our on-site due diligence trip prior to travel restrictions being put into place,” said Randy Smallwood, President and CEO of Wheaton. “We remain unwavering in our focus on delivering the highest quality portfolio of precious metals production to our shareholders through our top-tier asset base, strong organic growth profile and acquisition of accretive growth opportunities such as Marmato.”
Upon entering into the precious metals stream, WPMI will purchase 6.5% of the gold production and 100% of the silver production until 190,000 ounces of gold and 2.15 million ounces silver have been delivered, after which the stream drops to 3.25% of the gold production and 50% of the silver production for the life of mine. Under the proposed precious metals stream, WPMI will pay total cash consideration of US$110-million, US$38-million of which is payable upon closing and the remaining portion of which is payable during the construction of the MDZ Project at Marmato, subject to receipt of required permits and licences, sufficient financing having been obtained to cover total expected capital expenditures, and other customary conditions. In addition, WPMI will make continuing payments equal to 18% of the spot gold and silver price until the uncredited portion of the upfront payment is reduced to nil, and 22% of the spot gold and silver price thereafter.
Entering into the precious metals stream remains subject to completion of definitive documentation, including the precious metals purchase agreement.
Caldas Gold is committed to supporting the communities in which it operates. As part of the precious metals stream, Caldas Gold has undertaken to Wheaton that it will provide financing through its ESG initiatives to support the local communities around its Marmato Project.
Caldas Gold also determined to offer for sale up to 150,000 units for anticipated aggregate gross proceeds of up to US$150-million. Each unit is expected to consist of US$1,000 principal amount of senior secured gold-linked notes and a number of warrants to be determined based on market conditions. Concurrently, based on market conditions, Caldas Gold is considering an equity financing on a best efforts private placement basis of up to CDN$50-million consisting of shares and warrants. The net proceeds of the offering and any equity financing are expected to be used (1) for the expansion of the underground mining operations at its Marmato project, including development of the MDZ, construction of an additional 4,000-tonne-per-day processing plant and additional tailings storage facilities, and (2) to escrow funds for the payment of interest during the first two years on the notes.
Caldas Gold is advancing a prefeasibility study for a major expansion and modernization of its underground mining operations at its Marmato Project which hosts mineral resources of 2.0 million ounces of gold in the measured and indicated categories and 3.3 million ounces in the inferred category.