Nordic Gold Corp. [NOR-TSXV; FIEIF-OTC; 2FN-FSE] has reached an agreement with PFL Raahe Holdings LP to provide US $7-million in additional financing to enable the company to reach production at the Laiva gold mine in Finland. PFL is an investment vehicle controlled by Pandion Mine Finance Fund LP.
The mine is a past producer, is fully built and fully permitted. On October 11, Laiva received written approval for start-up. Mining started on August 5. First gold pour is scheduled for November 27, 2018.
The terms of the supplemental tranches are as follows:
PFL will provide US $3-million immediately and another US $4-million in November 2018, subject to conditions precedent, as partial consideration for the purchase of gold under the prepaid forward gold purchase agreement dated November 10, 2017. The supplemental tranches will be in addition to the US $20.6-million provided in December, 2017.
Nordic will be obligated to deliver to Pandion an additional scheduled monthly quantity of gold at a price equal to the then-current spot price, less a specified discount.
Required gold deliveries related to the supplemental tranches may be reduced or cancelled entirely by Nordic prior to June 30, 2019, through the payment of the full amount of the supplemental tranches.
Nordic will use its best efforts to raise US $7-million in a private placement to reduce or cancel the gold deliveries related to the supplemental tranches. Executive chairman, Basil Botha, and CEO, Michael Hepworth, will invest an additional $200,000 through a participation in the private placement.
A cash sweep will be added to the PPF agreement, requiring any cash above a balance of US $2-million from the company’s operations be used, in part, to reduce the delivery obligations.
This will be cancelled upon payment by Nordic of the full amount of the supplemental tranches by June 30, 2019.
The start date of gold deliveries under the PPF agreement has been extended to January 2020, from May 2019.
Nordic announced on September 6, 2018, that it had reached an agreement with PFL to amend additional terms and provisions of the PPF agreement.
The parties have agreed to remove the entirety of Section 23 of the PPF agreement, which allowed PFL to elect, in lieu of delivery of 24,000 ounces of gold (from the restart of the Laiva gold mine), to exchange such gold delivery for up to 270 million common shares of Nordic in increments of 100 ounces of gold equal to 1,125,000 Nordic shares, subject to PFL restricting such exercise at any time such that it would not, following exercise, own more than 20 per cent of the Nordic shares.
In return for the removal of Section 23, the parties have agreed to the following:
PFL will be granted a 2.5% net smelter return (NSR) on gold production from the Laiva mine;
PFL will be issued 36.5 million Nordic shares — representing 19.99% of the outstanding Nordic shares following such issue.
Simultaneous with any subsequent equity raise by the company, until the company has raised CDN $10-million in equity, PFL will be issued sufficient common shares to maintain PFL’s ownership stake in the company at 19.99%.
Nordic will make a payment of US $1.5-million to PFL within six months of entering into the amendment to the PPF agreement.
The foregoing amendments have been given provisional approval of the TSX Venture Exchange.
The PPF agreement includes provisions for early buy back. Nordic has advised Pandion that it intends to exercise such provisions.
Hepworth said, “The gold forward sale initially enabled our small company with a market cap of around $3-million to acquire a high-value, fully built and permitted mine for around $25-million. The previous owners, Nordic Mines AB, invested 220,000,000 euros to build the Laiva gold mine. In addition, there is a US $155-million tax loss carryforward provision in place that the Finnish government has already approved for Nordic’s use should the company accrue taxable income.”
“Our financing options have significantly increased, now that the project is largely derisked and first gold is scheduled to be poured on November 27, 2018. The PEA gives us an after-tax NPV of US $69-million and a 1.7-year payback. As production is expected to be 67,000 ounces of gold in the first 12 months, this means that some debt is now an option and consequently we intend to refinance at more favourable terms.”
Nordic is already in discussion with several banks and several potential strategic investors, with regard to a refinancing. The goal is to have such financing in place by May 2019.
The company also amended the terms of its non-brokered private placement, announced on September 6, 2018. Specifically, Nordic announced that it intends to reprice the previously announced private placement to raise up to $10-million in gross proceeds. Nordic now plans to issue units consisting of one Nordic common share and a full warrant at 10 cents per unit. Each warrant forming part of the units will be exercisable for 24 months at 13 cents per share and will contain an early acceleration clause if the common shares trade above 25 cents for 30