Trigon unveils US$37.5 million streaming deal with Sprott
Trigon Metals Inc. [TM-TSXV] said it has signed a definitive agreement with Sprott Private Resource Streaming and Royalty Corp. and Sprott Mining Inc. for a US$37.5 million copper stream for its Kombat Mine in Namibia.
That’s up from the original amount of US$27.5 million when Trigon announced on July 20, 2022, that it had signed a non-binding term sheet with Sprott.
Trigon is a Canadian exploration and development company with a focus on copper and silver holdings in Africa. Currently the company has operations in Namibia and Morocco. Its portfolio includes an 80% interest in five mining licenses in the Otavi Mountainlands, an area of Namibia widely recognized for tis high-grade copper deposits. In that area, Trigon is focused on the Kombat Mine.
Under the streaming transaction, Trigon will deliver to the investors 100% of the silver produced at the Kombat Mine. Proceeds will primarily be used to expand the plant capacity to 60,000 tonnes per month and complete ongoing works to dewater the mine, develop the Asis West underground mine.
The advance amount under the stream agreement will be comprised of US$37.5 million in cash payments, with an initial tranche of US$15 million advanced on October 24, 2022. Kombat said US$2.6 million of the initial advance was allocated to repayment of amounts owned to Sprott Mining under a loan agreement dated May 24, 2022, and $5.5 million was used to repay the principal under a convertible security funding agreement with Lind Global Fund 11 LP
The payment of the remaining US$21.7 million will be advanced upon the establishment of a deposit holding account subject to an agreement in the form satisfactory to the investors with financial institution and other standard closing conditions.
Trigon will receive 10% of spot as payment for all silver and copper into the stream as determined on the second day prior to the relevant delivery, with the balance applied as a credit to the advance amount. Following depletion of the advance amount, Trigon will receive 10% of spot as payment for all silver and copper delivered into the stream.
Alongside the silver delivered into the stream, long-term Trigon will deliver 1.625% of the copper production, in recognition of the US$10 million added to the agreement since the July 20th announcement of the term sheet.
The copper stream will start at 0% while mining from the open pit, increase to 6.5% during the in term period of underground mining from Asis West until production from Asis Far West commences when it falls to the long term rate of 1.625% if certain production targets are met.
The announcement that a definitive deal has been signed comes after Trigon recently announced that it had revised the mine plan to optimize production based on new information from mining the Kavango Pit. In an August 2, 2022 press release the company said it had noted marked improvements on grade control and recoveries and was pausing operations to focus the mine plan on this type of mineralization to reduce mine wide operating costs at Kombat.
In a July 7, 2022 press release the company said the mine was advancing towards commercial production, up to that point, producing 861.4 tonnes of concentrate, grading 19.75% copper and 271.3 g/t silver. “To date, 548 tonnes of concentrate have been shipped and revenue received,’’ the company said.
On October 24, 2022, Trigon shares closed at 18.5 cents and currently trade in a 52-week range of 56 cents and 11 cents