/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE
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MONTREAL, Feb. 23, 2020 /CNW Telbec/ - Guerrero
Ventures Inc. (TSXV: GV) ("Guerrero" or the "Company") is
pleased to announce that it has entered into definitive purchase
agreements with funds related to Orion Resource Partners
(USA) LP ("Orion") and
Yamana Gold Inc. and one of its affiliates ("Yamana")
dated February 23, 2020, to acquire two portfolios of royalty,
stream and gold loan assets for total consideration of
$268 million and $65 million, respectively
(the "Acquisitions"). Upon closing of the
Acquisitions and a concurrent private placement (together,
the "Transaction"), Guerrero intends to change its corporate name
to Nomad Royalty Company Ltd. ("Nomad"). All amounts
in this news release are expressed in United States dollars unless otherwise
indicated.
The Company intends to raise up to $10 million in a
concurrent marketed private placement of subscription receipts
(the "Private Placement") in order to fund a portion of
the Yamana Cash Consideration (as defined below) and capitalize the
Company. The Company has obtained a lead order of
$3 million in connection with the Private Placement.
Vincent Metcalfe, Chief Executive
Officer and Joseph de la Plante,
Chief Investment Officer of Guerrero, commented: "We are very proud to
announce today the launch of Nomad Royalty Company, a new global
acquisition-driven precious metals royalty company. Together
with our partners, Orion and Yamana, we are excited to combine our
significant transaction expertise to deliver a new generation
royalty company and execute an aggressive growth plan. Our ambition
is for Nomad to become a new leader in the mining industry through
transparent and collaborative leadership that takes to heart the
interests of all of its stakeholders."
Establishing a Global, Acquisition-Driven Precious Metals
Royalty Company
Key Highlights of the Transaction are as follows:
- Combined portfolio consisting of 10 royalty, stream and gold
loan assets, 7 of which are currently producing or expected to
begin producing in 2020 and are expected to generate more than
$30 million of operating cash
margin1 in 2021.
- Pure-play precious metals portfolio with no operator buy-back
rights on any of the contracts and significant upside through
resource expansions and mine life extensions.
- Creation of a new growth platform with a mandate to pursue
acquisitions with the support of Orion and Yamana.
- Highly experienced and high-performance management team led by
Vincent Metcalfe, Chief Executive
Officer, and Joseph de la Plante,
Chief Investment Officer, that have the expertise and relationships
to build a world-class royalty company.
- Strong focus on returning capital to shareholders through a
peer-leading dividend.
- Optimized corporate structure with a focus on minimizing
G&A expenses and executive compensation policies fully aligned
with shareholder interests.
Istvan Zollei, portfolio manager at Orion, commented: "We are
pleased to partner with the Nomad management team in the creation
of a new, uniquely positioned public royalty company. As a
leading metals and mining investor and the largest shareholder of
Nomad, Orion looks forward to supporting the Company's ambitious
growth plans and is confident Nomad will deliver superior returns
for all of its shareholders."
Gerardo Fernandez, Senior Vice
President, Corporate Development, at Yamana, commented: "This
transaction marks another step in Yamana's strategy to optimize its
portfolio while also providing us with a meaningful stake in a new
royalty company with an exceptional management team, asset base,
and growth prospects. We look forward to working with Nomad and are
confident the transaction will generate significant value for our
shareholders."
Orion and Yamana Portfolio Acquisitions
As part of the Transaction, Guerrero will acquire a portfolio of assets
from Orion (the "Orion Portfolio Acquisition") for
total consideration of $268 million. Guerrero will satisfy the purchase price by
issuing 396,455,965 common shares to Orion at a price of
CAD $0.90 per common share. Upon closing of the
Transaction, Orion is expected to hold approximately 77% of Nomad's
outstanding common shares.
Concurrent with the Orion Portfolio Acquisition, Guerrero will acquire a portfolio of assets
from Yamana (the "Yamana Portfolio Acquisition") for
total consideration of $65 million. Guerrero will satisfy the purchase price by
issuing 66,500,000 common shares to Yamana at a price of
CAD $0.90 per share and by paying $20 million in cash
(the "Yamana Cash Consideration"). Guerrero has the option to pay up to
$10 million of the Yamana Cash Consideration through a
deferred payment (the "Deferred Payment"), which, will have
a term of two years (subject to early redemption features), will
bear interest at an annual rate of 3% and will be convertible into
common shares of the Company at a price of CAD $0.90 per
share. Upon closing of the Transaction, Yamana is expected to
hold approximately 13% of Nomad's outstanding common shares, prior
to considering any shares underlying the Deferred Payment, if
issued.
Leadership Team Aligned with Shareholders
The Company will establish transparent and progressive
governance and compensation policies that will promote strong
alignment between management and shareholder interests. Upon
closing of the Transaction, the Chief Executive Officer and Chief
Investment Officer will each own 6.3 million common shares of the
Company and have agreed to renounce to the cash portion of their
compensation for the Company's initial 12 months of operations.
The leadership team strongly believes in minimizing annual
cash G&A expenses and expects annual expense levels to be well
below its royalty peers.
Assets Acquired from Orion
Blyvoor Gold Stream – Witwatersrand Gold Belt,
South Africa
Description
- Gold stream on the Blyvoor Gold Mine, operated by Blyvoor Gold
Pty;
- Status: Currently in final construction & re-start phase
with initial production expected mid-to-late 2020;
- The Blyvoor gold stream will be the material property of
Guerrero. Guerrero has commissioned a NI 43-101
compliant technical report which is expected to be completed and
filed in the coming weeks;
- One of the world's top ten most productive gold mines, having
produced over 45 million ounces of gold historically.
Stream Details
- 10% gold stream on the first 160 koz of gold produced within a
calendar year, then 5% stream on any additional gold produced
within the calendar year;
-
- Applicable to the first 300 koz of gold delivered under the
stream;
- Following delivery of 300 koz of gold, 0.5% stream on the first
100 koz of gold produced in a calendar year;
-
- Applicable to the first 10.32 Moz produced at the Blyvoor
Mine;
- Subject to a fixed ongoing payment of $572/oz.
Bonikro Gold Stream – Hiré,
Ivory Coast
Description
- Gold stream on the producing Bonikro Gold Mine operated by
Allied Gold Corp.;
- Status: Gold has been produced from the Bonikro open pit and
through the Bonikro plant since 2008.
Stream Details
- 6.0% gold stream until 650 koz gold produced, followed by 3.5%
gold stream until 1.3 Moz is produced; tail stream of 2.0%
thereafter;
- Subject to a fixed ongoing payment of $400/oz.
Woodlawn Silver Stream and Lead Marketing Fee –
New South Wales,
Australia
Description
- Silver stream on the Woodlawn Mine operated by Heron Resources
Limited;
- Status: Currently in the commissioning stage. The mine was
historically mined via open pit and underground between 1978 and
1998;
- The mine produces three primary concentrates (zinc, lead,
copper).
Stream Details
- Silver stream based on payable silver.
-
- 80% of payable silver until 2.15 Moz silver have been delivered
to the stream,
40% of payable silver until 3.4 Moz silver have been delivered to
the stream,
25% of payable silver for the remaining life of mine;
- Silver stream based on payable zinc
-
- Silver stream based on payable zinc multiplied by the zinc
stream rate multiplied by a zinc silver conversion rate of 170.2
ounces of silver per metric tonne of zinc;
- Zinc stream rate of 0.30% until 140 tonnes of payable zinc have
been delivered, 1.15% until 910 tonnes of payable zinc delivered,
2.25% until 4,200 tonnes of payable zinc have been delivered, and
0.75% of payable zinc for the remaining life of the mine;
- 0.2% Lead marketing fee;
- Subject to an ongoing payment of 20% of prevailing silver
price.
Mercedes and South Arturo Silver
Streams – Mexico &
Nevada
Description
- Silver stream on the Mercedes Mine operated by Premier Gold
Mines Limited;
- Silver stream on the South Arturo Mine, in which Premier Gold
Mines Limited has a JV interest and which is operated by Nevada
Gold Mines LLC, a joint venture between Barrick Gold Corporation
and Newmont Corporation;
- Status: In production (both mines).
Stream Details
- 100% of attributable silver production from the Mercedes (100%
ownership) and South Arturo (40% ownership) mines;
-
- Applicable to the first 3.75 Moz of payable silver delivered to
the stream, after which the stream is reduced to 30% over the life
of mine;
- Minimum delivery of 300 koz of silver annually until the
cumulative delivery of 2.1 Moz;
- Subject to ongoing payment of 20% of the prevailing silver
price.
Premier Gold Loan – Corporate – Gold
Deliveries
- Initial 4.9 koz gold payable in two equal installments:
March 31, 2020 and June 30, 2020;
- Starting September 30, 2020:
1,000 oz gold payable quarterly, until 12,000 oz gold have been
delivered.
Assets Acquired from Yamana
Riacho dos Machados ("RDM") Gold Royalty – Minas Gerais,
Brazil
Description
- The RDM Gold Mine is situated in the northern part of Minas
Gerais State, Brazil and is
currently operated by Equinox Gold Corp. (subject to closing
combination of Equinox Gold Corp. and Leagold Mining Corporation
announced on December 16, 2019);
- Status: In production.
Royalty Details
- 1% NSR royalty on gold and 2% NSR royalty on base metals.
Gualcamayo Gold Royalty and Deep Carbonates Project
("DCP") Commercial Production Payment – San Juan, Argentina
Description
- Royalty on the currently producing Gualcamayo Mine operated by
Mineros S.A.;
- Gualcamayo Oxides
-
- Status: In production. Since commencing commercial production
in 2009, Gualcamayo has produced 1.4 Moz gold from both open pit
and underground operations;
- Gualcamayo DCP
-
- DCP consists of a mineral resource located mainly to the west
and at depth of the current mining operations and remains open
along strike and at depth;
- Status: Pre-Feasibility Study
Royalty Details
- Oxides: 2% NSR royalty excluding first ⁓275 koz of gold
production from January 1, 2020,
onwards (first payment expected in 2023), capped at $50 million of total payments;
- DCP: 1.5% NSR royalty.
Commercial Production Payment Details
- $30 million cash payment due to
Nomad upon the commencement of commercial production from the
DCP.
Suruca Gold Royalty – Goias, Brazil
Description
- Royalty on the Suruca project operated by Lundin Mining
Corporation;
- The Suruca project is a gold bearing development project
located approximately 7 kilometres NE from the Chapada Mine;
- The oxide ores could be processed using conventional heap
leaching technology and the sulphide ores will be processed in the
existing Chapada plant subject to modifications or using a new CIL
plant;
- Status: Studies ongoing. Permitting is completed and basic
engineering has been advanced.
Royalty Details
Private Placement of Subscription Receipts
As part of
the Transaction, Guerrero has
entered into a letter of engagement with Scotia Capital Inc. and
BMO Capital Markets (the "Joint Bookrunners") under
which the Joint Bookrunners have agreed to offer for sale, on a
"best effort" private placement basis, subject to all required
regulatory approvals, up to $10 million in subscription
receipts (the "Subscription Receipts") of the Company
at a price of CAD $0.90 per Subscription Receipt
(the "Subscription Price") through a marketed private
placement financing in each of the provinces of Canada, the United
States (subject to applicable exemptions) and other
jurisdictions in Europe. The
private placement will not be subject to minimum proceeds.
The Company will use the net proceeds from the Private Placement
to fund the Yamana Cash Consideration and for general corporate
purposes. The Private Placement is expected to close before
the end of March, 2020, or such other date as agreed to by the
Joint Bookrunners and the Company.
Each Subscription Receipt will entitle the holder thereof to
receive, without payment of any additional consideration or further
action on the part of the holder, and subject to adjustment, one
common share of the Company upon the satisfaction or waiver as
applicable, of certain escrow release conditions, which include,
among other things, all conditions precedent to the completion of
the Acquisitions (the "Escrow Release Conditions")
having been satisfied on or before 4:00 p.m. (eastern time) on
June 30, 2020 (the "Escrow Release
Deadline").
The gross proceeds from the Private Placement will be delivered
to and held by a licensed Canadian trust company or other escrow
agent (the "Escrow Agent") mutually acceptable to the
Joint Bookrunners and the Company, in an interest-bearing account
(the "Escrowed Funds"). The net Escrowed Funds
will be released by the Escrow Agent to the Company upon
satisfaction, or waiver, if applicable, of the Escrow Release
Conditions prior to the Escrow Release Deadline.
If the Escrow Release Conditions have not been satisfied on or
prior to the Escrow Release Deadline, the Escrow Agent will return
to the holders of Subscription Receipts an amount equal to the
aggregate Subscription Price for the Subscription Receipts held by
such holders and their pro rata portion of interest earned
on the Escrowed Funds (less applicable withholding tax, if any) and
the Subscription Receipts will be cancelled. The Company will
be responsible and liable to the holders of the Subscription
Receipts for any shortfall between the aggregate Subscription Price
paid by the original purchasers of Subscription Receipts and the
Escrowed Funds.
Completion of the Transaction
Completion of the
Transaction is expected to occur in the second quarter of 2020 and
is subject to a number of conditions including, but not limited to:
(i) closing conditions customary in transactions of this
nature; (ii) receipt of regulatory approvals, including
approval of the TSX Venture Exchange ("TSX-V") for the
Transaction and Toronto Stock Exchange ("TSX") listing
effective upon closing of the Transaction; (iii) completion of
the Acquisitions; (iv) completion of the Private Placement;
and (v) other actions necessary to complete the
Transaction. There can be no assurance that the Transaction
will be completed as proposed or at all. Given that
Guerrero has no active operations,
is not subject to a cease trade order, and that the Transaction
will be effected at arm's length and does not otherwise require
shareholder approval under the Canada Business Corporations
Act and applicable securities legislation, shareholder approval
will not be required under the applicable policies of the
TSX-V. Guerrero intends to
apply for a sponsorship waiver pursuant to TSX-V Policy 2.2.
In connection with the Transaction, the Company will seek
approval from the Toronto Stock Exchange to graduate from the TSX-V
and list its common shares on the TSX.
Board Approval
The Board of Directors of Guerrero has unanimously approved the
Transaction.
Guerrero Annual and Special Shareholders'
Meeting
Guerrero will call
an annual and special meeting of its shareholders (the
"Meeting") for the election of directors, the appointment of
the auditor, the change of the corporate name to Nomad Royalty
Company Ltd., amendments to Guerrero's articles to provide for the
appointment of additional directors between annual meetings of
shareholders, ratification of new general by-laws and approval of
incentive plans. Guerrero
will issue a press release at the time that it provides notice to
its shareholders of the Meeting and the dissemination of
Guerrero's management information
circular in respect of the Meeting.
Investor Rights Agreement
In connection with the
Acquisitions, Guerrero, Orion and Yamana will enter into an
investor rights agreement, pursuant to which Orion, Yamana and
Guerrero will agree, among other
things, that:
- In connection with the Acquisitions, Orion will be subject to a
12-month lockup period in respect of its shareholding in the
Company and Yamana will be subject to a similar 6-month lockup
period;
- For so long as Orion holds at least 50% of the issued and
outstanding common shares of the Company, it will have the right to
nominate for election 50% (rounded up to the nearest whole number)
of the directors of the Company;
- The foregoing right will be reduced proportionately in
increments of 10% commensurate with Orion's ownership, subject to
the condition that Orion must hold at least 10% of the Company's
outstanding common shares in order to have the right to propose
nominees for election as directors;
- For so long as Yamana holds at least 10% of the issued and
outstanding common shares of the Company, it will have the right to
propose one nominee for election as a director of the Company;
and
- Each of Yamana and Orion will have a participation right, for
so long as each holds at least 10% of the issued and outstanding
common shares of the Company, to maintain their respective
percentage shareholding interest in the Company at the time of any
financing by the Company, whether public or private. The foregoing
right will not apply in the event of an issuance of shares by the
Company upon the exercise of stock options or other incentive
securities, the conversion of outstanding convertible
securities.
Technical Due Diligence
Guerrero contracted G Mining Services Inc
("G Mining"), on behalf of Orion, Yamana and the
Company, to conduct an independent technical review of the assets
contained in the Orion and Yamana portfolios. G Mining
carried out and completed evaluations of each of the assets in the
two portfolios, subject to the assumptions, limitations and
qualifications set out in the final report provided to the
Company. G Mining and the Company also conducted site visits
to the Blyvoor and Bonikro gold mines.
Preliminary News Release
This is a preliminary news
release regarding the Transaction, additional press releases
containing additional information on the Transaction will follow in
accordance with the policies of the TSX‑V.
Trading Halt
Trading in the Company's common shares on
the TSX-V will be halted before the opening of the market on Monday
February 24, 2020. The Company does not intend to apply
to the TSX-V for reinstatement of trading until closing of the
Transaction.
Advisors
Fasken Martineau DuMoulin LLP is acting
as legal counsel to the Company. CIBC Capital Markets is acting as
financial advisor and Torys LLP is acting as legal counsel to
Orion. RBC Capital Markets is acting as financial advisor and
Cassels Brock & Blackwell LLP is
acting as legal counsel to Yamana.
Qualified Persons
Louis-Pierre
Gignac, ing., M.Sc.A, CFA ,is a Qualified Person under NI
43-101, and has reviewed and approved the technical contents of
this news release on behalf of Guerrero.
Réjean Sirois, P. Eng, is a Qualified Person under NI 43-101,
and has reviewed and approved the technical contents of this news
release on behalf of Guerrero.
Investors are cautioned that, except as disclosed in the
Company's public filings, any information released or received with
respect to the Transaction may not be accurate or complete and
should not be relied upon.
This news release does not constitute an offer to sell or the
solicitation of an offer to buy any securities in any
jurisdiction.
Notice on Forward-looking Statements
This news release
contains statements that may constitute "forward-looking
information" within the meaning of applicable Canadian securities
legislation. Forward-looking information may include, among
others, statements regarding the future plans, costs, objectives or
performance of the Company and its business, or the assumptions
underlying any of the foregoing. In this news release, words
such as "may", "would", "could", "will", "likely", "believe",
"expect", "anticipate", "intend", "plan", "estimate" and similar
words and the negative form thereof are used to identify
forward-looking statements. Forward-looking statements should
not be read as guarantees of future performance or results, and
will not necessarily be accurate indications of whether, or the
times at or by which, such future performance will be
achieved. The forward-looking events and circumstances
discussed in this release, including completion of the Acquisitions
and Private Placement, and possible listing of the Company's common
shares on the Toronto Stock Exchange, may not occur and could
differ materially as a result of known and unknown risk factors and
uncertainties affecting the Company, including risks regarding
royalty, stream and gold loan assets, the ability of the Company's
management to manage and to operate the business of the Company,
and the equity markets generally. Forward-looking information
is based on information available at the time and/or management's
good-faith belief with respect to future events and are subject to
known or unknown risks, uncertainties, assumptions and other
unpredictable factors, many of which are beyond the control of the
Company. These risks, uncertainties and assumptions include,
but are not limited to, those that will be described in the
Company's continuous disclosure documents to be filed, and which
will be available, on SEDAR at www.sedar.com, and could cause
actual events or results to differ materially from those projected
in any forward-looking statements. The Company does not
intend, nor does it undertake any obligation, to update or revise
any forward-looking information contained in this news release to
reflect subsequent information, events or circumstances or
otherwise, except if required by applicable laws.
About Guerrero Ventures
Guerrero is a publicly listed company with a
focus on acquiring mineral assets that will provide the opportunity
to enhance shareholder value.
Completion of the Transaction is subject to a number of
conditions, including but not limited to, TSX Venture Exchange
acceptance and if applicable, disinterested shareholder approval.
Where applicable, the Transaction cannot close until the required
shareholder approval is obtained. There can be no assurance that
the Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the
management information circular or filing statement to be prepared
in connection with the Transaction, any information released or
received with respect to the Transaction, including the
Acquisitions and Private Placement, may not be accurate or complete
and should not be relied upon. Trading in the securities of
the Company should be considered highly speculative. This news
release does not constitute an offer to sell or the solicitation of
an offer to buy any securities in any jurisdiction.
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.
1 Cash margin is a non-IFRS financial
performance measure which has no standard definition under IFRS. It
is calculated by deducting the cost of sales from the revenues.
Guerrero Ventures Inc., 1275 Av. des
Canadiens-de-Montréal, Suite 500, Montreal, Québec, H3B 0G4;
For more information please contact:
Vincent Metcalfe, Chief
Executive
Officer
vmetcalfe@nomadroyalty.com
Joseph de la Plante, Chief
Investment
Officer
jdelaplante@nomadroyalty.com
SOURCE Guerrero Ventures Inc.