TORONTO–(BUSINESS WIRE)–TMAC Resources Inc. (TSX: TMR) (“TMAC” or the “Company”)
has signed an amendment to its amended and restated credit agreement
entered into on July 26, 2017 (the “Credit Agreement”) with
Sprott Private Resource Lending (Collector), LP and associated lenders
(the “Sprott Lenders”). The outstanding principal is US$117
million after repaying an additional US$8.8 million during the first
quarter of 2019. The amendment eliminates all principal payments until
April 1, 2020, totalling US$26 million (approximately C$35 million).
Quarterly principal repayments of US$2.5 million are scheduled to
recommence on April 1, 2020. The remaining principal balance is due on
December 31, 2020, with TMAC having an option to extend the term by six
months to June 30, 2021.
Jason Neal, TMAC’s President and Chief Executive Officer, stated, “These
amendments to the Credit Agreement provide additional financial
flexibility for the next two years through both significantly reduced
principal amortization and easing of covenant restrictions. The cash
borrowing cost is slightly reduced, though Sprott achieves equity
exposure through repricing of its current warrants. Sprott has been an
excellent partner to TMAC through our extended ramp up, and as we
transition to optimization we appreciate the endorsement demonstrated
through these amendments.”
As consideration for the amendment, TMAC agreed to reprice up to
1,900,000 outstanding warrants currently held by the Sprott Lenders that
were issued with the signing of the Credit Agreement in 2017. The
warrants will be repriced at a 25% premium to the five-day volume
weighted share price of TMAC ending April 30, 2019. Subject to the
approval of the Toronto Stock Exchange, the repricing of the warrants
will become effective on May 14, 2019. An equivalent value in cash may
also be paid to one of the warrant holders in lieu of repricing the
warrants held by them.
AMENDMENTS TO THE CREDIT AGREEMENT
The amendments to the Credit Agreement include the following terms:
-
Eliminate a total of US$26 million in principal payments previously
due in 2019 and the first quarter of 2020. -
Quarterly principal payments for 2020 were reduced to US$2.5 million
per quarter and rescheduled to commence on April 1, 2020, from the
previously scheduled US$6.5 million for April 2020 and July 2020 and
US$5.5 million for October 2020. -
The initial maturity date is changed from July 31, 2020 to December
31, 2020. -
TMAC can prepay the facility in whole in or part on or after September
30, 2020. -
TMAC has the option to extend the term for six months to June 30, 2021
for a 1% extension fee payable on the then outstanding principal
balance. Quarterly principal payments of US$2.5 million would continue
during the extended term. - The coupon of 3-Month US LIBOR + 6.5% is unchanged
-
A 2% repayment fee is payable on the outstanding balance at either the
initial or extended maturity date, or on any prepayment, which
replaces the current 2% anniversary fee due on July 31, 2020 or 2%
repayment fee on any prepayments made in advance of July 31, 2020. -
In the event of a change of control transaction, each of TMAC and
Sprott have the option to accelerate maturity of the credit facility,
which would accelerate the 2% repayment fee. -
The covenant requiring TMAC to provide the Sprott Lenders with a
financial model that demonstrates TMAC’s ability to repay the full
loan from free cash flow and the Doris reserve tail test covenant have
been deleted. -
TMAC has reduced restrictions in executing gold and currency hedging
transactions up to 25% of forecast production.
The remaining terms of the Credit Agreement are unchanged.
ABOUT TMAC RESOURCES INC.
TMAC Resources operates Hope Bay located in Nunavut, Canada. The
property and operations are remote but not isolated, serviced by both a
port and airstrip. Hope Bay is an 80 km by 20 km Archean greenstone belt
that has been explored by BHP, Miramar, Newmont and TMAC over a period
spanning more than 30 years. In that time, more than $1.5 billion of
sunk expenditures have been spent in exploration and evaluation, surface
infrastructure, and mine and process plant development. TMAC began
producing gold in early 2017 from Doris, its first mine at Hope Bay, and
processed gold at the Doris Plant which originally had nameplate
capacity of 1,000 tonnes per day and expanded to 2,000 tonnes per day
midway through 2018. Hope Bay has 4.8 million ounces of measured and
indicated resources at Doris, Madrid and Boston deposits, largely within
350 metres of surface. There is potential to grow these established
deposits considerably at depth, and then grow resources further through
the prioritized exploration of the more than 90 other identified
regional targets. TMAC is now permitted to produce from both Madrid and
Boston.
FORWARD-LOOKING INFORMATION
This release contains “forward-looking information” within the meaning
of applicable securities laws that is intended to be covered by the safe
harbours created by those laws. “Forward-looking information” includes
statements that use forward-looking terminology such as “may”, “will”,
“expect”, “anticipate”, “believe”, “continue”, “potential” or the
negative thereof or other variations thereof or comparable terminology.
Such forward-looking information includes, without limitation, the
repricing of certain Warrants and payment of a cash fee in lieu of
repricing the remaining Warrants, the returns from the Hope Bay Project
being greater than the cost of capital under the Revised Credit
Agreement, the timing for bringing Madrid and Boston into production and
the ramp up at Doris and anticipated seasonal expenditure.
Forward-looking information is not a guarantee of future performance and
management bases forward-looking statements on a number of estimates and
assumptions at the date the statements are made. Furthermore, such
forward-looking information involves a variety of known and unknown
risks, uncertainties and other factors, which may cause the actual
plans, intentions, activities, results, performance or achievements of
the Company to be materially different from any plans, intentions,
activities, results, performance or achievements expressed or implied by
such forward-looking information. See “Risk Factors” in the Company’s
Annual Information Form dated March 11, 2019 filed on SEDAR at www.sedar.com
for a discussion of these risks.
Contacts
TMAC Resources Inc.
Jason Neal
President and Chief Executive Officer
416-628-0216
Maarten Theunissen
Chief Financial Officer
416-628-0216
Lisa Wilkinson
Director, Investor Relations and Strategic
Development
416-628-0216
[email protected]
www.tmacresources.com
