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Trigon Metals completes credit agreement with Sprott Mining

Trigon Metals Inc. has entered into a credit agreement with Sprott Mining Inc. and the Company’s wholly owned subsidiary, Trigon (Morocco) Holding Corp. (Trigon Morocco), pursuant to which Sprott has lent to the Company US$2.5 million (the “Sprott Loan”).

The Sprott Loan has a term of 180 days and will accrue interest at the rate of 12.0% per annum, payable in arrears. The Sprott Loan is secured by security interest over all present and after acquired property of Trigon and Trigon Morocco, with a first ranking charge against Trigon’s Moroccan assets including a guarantee from Trigon Morocco and a share pledge of its Trigon Morocco shares.

Pursuant to the Sprott Loan, upon closing of the Sprott Loan Trigon has issued 2,500,000 common share purchase warrants (the “Initial Warrants”) each exercisable for one common share of Trigon at a price of C$0.47 per common share for a period of one year from the date of their issuance, subject to customary adjustment provisions.

Warrants

In the event that Trigon and Sprott enter into an agreement for stream of silver deliveries equal to 8.25% of the silver produce from the Kombat Mine as contemplated in the credit agreement, the Initial Warrants will be cancelled and, subject to the approval of the TSX Venture Exchange, 2,500,000 warrants will be issued.

It is contemplated that each Stream Warrant will, if issued, have a strike price at a 35% premium to the 5-day VWAP share price for the 5 days prior to the execution of a stream agreement (or such other exercise price as agreed to by the parties and as may be required by the TSXV) and will be exercisable for one common share of the Company for a term of three years (or such other term as required by the TSXV) and will otherwise have customary adjustment provisions. The Warrants shall be subject to a four month statutory hold period.

The proceeds of the Sprott Loan are to be used to fund the Company’s operations in Namibia and for working capital purposes. The Sprott Loan is considered to be a non-arm’s length transaction under the policies of the TSXV and a related party transaction under Multilateral Instrument 61-101 Protection of Minority Securityholders in Special Transactions given that Mr. Eric Sprott, a principal of Sprott, through 2176423 Ontario Ltd., beneficially owns 31,048,332 common shares of Trigon (or approximately 18.3% of the outstanding Trigon common shares) and 7,524,166 warrants. The Loan has been determined to be exempt from the requirements to obtain a formal valuation or minority shareholder approval pursuant to section 5.5(a) and 5.7(a) of MI 61-101.

 

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