Trigon releases update on proposed sale of Kombat mine
Trigon Metals Inc. [TM-TSXV] has provided an update in its progress in relation to the proposed strategic sale of the company’s interest in the Kombat mine in Namibia.
Trigon said it has signed a binding loan agreement with Horizon Corp. Ltd. for a loan from Horizon of up to US$5.0 million. Under the loan agreement, Trigon has granted Horizon exclusivity rights to negotiate the purchase of Trigon’s interest in the Kombat mine.
The proposed transaction contemplates a valuation for the Kombat mine of US$30 million (97 cents per share) based on today’s fully diluted share count – although the final valuation may be significantly higher depending on operating milestones) which will be subject to definitive agreements, shareholder approval, regulatory consent and other closing conditions.
Trigon advanced on the news, rising 3.17% or $0.02 to 65 cents. The shares trade in a 52-week range of $1.28 and 46.5 cents.
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.
When Trigon reported its second quarter operating and financial results on December 2, 2024, the company said it had reached a key milestone at the Kombat mine having mined an average of 980 tonnes of ore per day from underground operations over 30 days.
Second quarter copper production was 2.13 million pounds at a cash cost of US$3.46 a pound of copper produced. Silver production during he quarter was 33,852 ounces.
The proposed sale of the Kombat mine reflects Trigon’s strategic focus on advancing its Addana, Silver Hill (Morocco) and Kalahari (Namibia) exploration projects, strengthening the company’s financial position while ensuring operational continuity and promoting expansion for the Kombat mine.
The US$5.0 million loan allows Horizon to begin investing in the Kombat mine and provide capital to the project in advance of the completion of the sale. Should Trigon and its shareholders elect to consummate the proposed transaction, the loan will become equity contributed to the Kombat mine, but if Trigon chooses not to complete the transaction, the funds will become payable as loans to the company plus associated break fees. The loan is separate from the sale price consideration of US$30 million and follow-up payments ranging from US$10 million to US$20 million.
The US$5.0 million will be issued in three tranches, to provide interim development capital for Kombat.
If the sale proceeds, Trigon will retain a 1.0% net revenue royalty on copper production when the Kombat mine achieves copper metal production of 1,000 tonnes for each of two calendar months. Thereafter, a royalty of 1.0% will be payable on net copper revenue, when invoiced copper price on final invoicing is greater than US$4.0 per pound, payable quarterly for 20 quarters. A follow-up payment ranging between US$10 million to US$20 million is due when underground production exceeds on average 2,250 tonnes per day over 90 days and also once the streaming copper royalty reduces as per the Sprott streaming agreement.