The net smelter returns (NSR) financing would see Franco-Nevada
receive a perpetual 1 per cent NSR interest from SolGold from the first
$US100 million deal.
The BHP and Newcrest-backed SolGold will also have the option to upsize the financing to $US150 million.
Concurrently,
SolGold and Franco-Nevada formed a $US15 million bridge loan agreement
for immediately available funds as an initial advance prior to closing
the NSR financing agreement.
Franco-Nevada, which has indicated
its interest in financing SolGold’s share of mine development at Alpala
via a gold stream, will be entitled to receive certain minimum royalty
payments of $US10 million from 2028.
SolGold expects Alpala’s gold-rich porphyry prospects to support up to $US1 billion of precious metal stream financing.
Franco-Nevada
will have the right to appoint an observer to the Alpala project
advisory committee, being in a position to advise the SolGold board on
strategic, financial and technical project matters.
SolGold’s current largest shareholder BHP last year increased its hold in the company to 14.7 per cent last year.
BHP
received over 19.25 million SolGold shares, which were exercisable
until November 2024 at a price of 37 pence (70 cents) per share.
The
mining giant also agreed not to discuss or collude with other
shareholders about a change of control or acquisition of additional
shares in SolGold without consent.
SolGold general manager,
project and corporate finance Ingo Hofmaier said SolGold received a
“broad range” of funding options before deciding to proceed with
Franco-Nevada.
“The decision to proceed with Franco-Nevada is
based on various factors, including the size of the investment, the
permanent nature of its financing, Franco-Nevada’s understanding of
Latin America and the competitive cost of capital,” Hofmaier said.
“With
BHP, Newcrest and now Franco-Nevada having exposure to the project,
there should be no doubt as to the quality of Alpala or Ecuador as a
sovereign mining destination.”
http://www.miningnewspro.com/en/News/529059/BHP-backed SolGold accepts $155m funding from Franco-Nevada