Caldas Gold Corp (TSXV: CGC) this morning announced that it has managed to secure a non-binding term sheet for a US$110 million investment from that of Wheaton Precious Metals (TSX: WPM), which will be in the form of a precious metals purchase agreement. The arrangement proposes that Wheaton will purchase 6.5% of the gold produced at Caldas’ Marmato project in Colombia, along with 100% of the silver.
Specifically, the company will be able to purchase 100% of the silver and 6.5% of the gold produced at the mine site until 190,000 ounces of gold and 2.15 million ounces of silver have been pulled out of the ground and delivered to Wheaton. After this achievement, Wheaton will be able to purchase 3.25% of the gold produced and 50% of the silver.
Of the total cash figure of US$110 million, $38 million will be paid up front upon closing. Any additional funds will be paid during the construction at the firms operations in the “Deeps Zone” at the Marmato project.
Like any streaming arrangement, the funding comes at a cost. As a result of the financing, Wheaton will be entitled to purchase gold and silver from Caldas for 18% of the going price for spot gold and silver, until the uncredited portion of the upfront payment is paid off. After, the company will only be required to pay 22% of the spot price thereafter.
Furthermore, Caldas has offered a best effort private placement for the sale of 150,000 units of what it calls “senior secured gold-linked notes.” Each note has a principal value of US$1,000, with gross proceeds expected to be US$150 million. The company is also considering a C$50 million equity financing, the terms of which have not yet been provided.
Funds from all aforementioned offerings will be used to develop Caldas’ mining operations at its Marmato Project, which includes construction of a 4,000 tonnes per day processing plant and tailings storage facility, development of the Deeps Zone, and for escrow funds for interest payments on the first two years of the notes.
Closing dates were not provided.
Caldas Gold last traded at $2.00 on the TSX Venture.
Information for this briefing was found via Sedar and Caldas Gold. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
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