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Treasury Metals Inc (2)
Symbol TML
Shares Issued 137,879,334
Close 2022-02-14 C$ 0.70
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Treasury arranges $20M (U.S.) financing with Sprott

2022-02-14 10:13 ET - News Release

Mr. Jeremy Wyeth reports

TREASURY METALS ANNOUNCES US$20 MILLION ROYALTY FINANCING TO FUND GOLIATH GOLD COMPLEX TO CONSTRUCTION DECISION

Treasury Metals Inc. has entered into a royalty agreement with an affiliate of Sprott Resource Streaming and Royalty Corp. (SRSR) in relation to the company's 100-per-cent-owned Goliath gold complex (GGC), which comprises the Goliath, Goldlund and Miller gold projects. Under the terms of the agreement, SRSR will pay Treasury consideration of $20-million (U.S.) for a 2.2-per-cent net smelter return royalty covering all minerals produced from the GGC for the life of the project. Further details are set out herein under "royalty transaction details." The financing is subject to customary closing conditions and is expected to close toward the end of March, 2022. The proceeds from the financing will be used to advance the project to a construction decision, including all economic studies, permitting, consultations, and corporate G&A (general and administrative) costs.

Highlights:

  • $20-million (U.S.) financing through the sale of a royalty to an affiliate of Sprott Resource Streaming and Royalty Corp. (SRSR) expected to finance the completion of economic studies, permitting and community engagement, including corporate G&A. Summary details of the royalty include:
    • A $20-million (U.S.) upfront payment;
    • 2.2 per cent of net smelter return revenue of all minerals produced on the properties comprising the Goliath gold complex;
    • Option, solely at the discretion of the company, to repurchase 50 per cent of the royalty until Dec. 31, 2028;
    • Automatic reduction of the royalty rate by 50 per cent upon the achievement of 1.5 million ounces of gold production;
    • The right for SRSR to participate for up to 40 per cent or $40-million (U.S.) in future metals streaming or royalty financing undertaken by the company;
  • The financing is subject to customary closing conditions and is expected to close toward the end of March, 2022.

Jeremy Wyeth, president and chief executive officer, commented: "We are extremely pleased to be announcing this transaction today and excited to bring on Sprott as a partner to help us move the Goliath gold complex forward toward construction and operation. With the desire to consider financing alternatives that are less dilutive to our shareholders, we undertook a process to explore the potential for the sale of a royalty that culminated in the agreement we announced today. Upon closing, the company is well funded with this $20-million (U.S.) ($25.5-million at current exchange rate) financing, in addition to the $6.5-million flow financing we completed in November, 2021, and the $9.9-million in cash we had at the end of Q3 2021, providing the necessary funding and financial flexibility to take Treasury through studies, permitting and community consultations to a construction decision."

Michael Harrison, managing partner, Sprott Resource Streaming and Royalty, commented: "We are pleased to be partnering with Treasury on the Goliath gold complex. We have been monitoring the progress of Goliath for many years and believe that the company has the team, the momentum and the funding to advance the GGC to a production decision. We view GGC as a project with long-term cash flow in a Tier 1 mining jurisdiction and an excellent addition to our growing portfolio of streams and royalties."

Royalty transaction details

The company has entered into a binding royalty agreement, subject to certain closing conditions, with SRSR for a $20-million (U.S.) financing. In exchange for the financing, Treasury will issue to SRSR a 2.2-per-cent royalty on all minerals produced from the GGC. This financing secures for the company a less dilutive source of financing, providing sufficient financing to advance the project through project development activities toward project financing and a construction decision while maintaining the robust economics of the project.

Buyback

The company will have a right, to be satisfied in cash or in shares, at the company's sole discretion, to repurchase a 50-per-cent interest of the royalty, which would include 50 per cent of any future minimum payments, on the following terms:

  • On or before Dec. 31, 2024 -- $14-million (U.S.);
  • From Jan. 1, 2025, until Dec. 31, 2025 -- $16-million (U.S.);
  • From Jan. 1, 2026, until Dec. 31, 2026 -- $17-million (U.S.);
  • From Jan. 1, 2027, until Dec. 31, 2027 -- $18.25-million (U.S.);
  • From Jan. 1, 2028, until Dec. 31, 2028 -- $19.5-million (U.S.).

Stepdown

Upon the achievement of 1.5 million ounces of gold production, the royalty will automatically reduce by 50 per cent for no additional consideration by the company. If commercial production is not achieved by Dec. 31, 2028, the royalty will increase by 25 per cent for no additional consideration by SRSR.

Minimum payments

Until the earlier of Dec. 31, 2027, and the date that commercial production is declared, the company will pay to SRSR, $500,000 (U.S.), on a quarterly basis, in cash or in common shares at the company's sole discretion. If the company elects to issue common shares as payment, the common shares would be issued at a 5-per-cent discount to the five-day VWAP (volume-weighted average price).

Participation right

If the company enters into a potential metal streaming or royalty contract as part of a larger project financing for the project, SRSR will have the right to participate to a maximum of 40 per cent or $40-million (U.S.) in the proposed transaction on the same terms and conditions of the proposed transaction.

Closing

The transaction is subject to certain customary closing conditions. Furthermore, any issuance of common shares of the company will require the prior approval of the Toronto Stock Exchange. The company expects the transaction to close toward the end of March, 2022.

Advisers and counsel

PI Financial Corp. is acting as the company's financial adviser and Cassels, Brock & Blackwell LLP is acting as the company's legal adviser.

About Treasury Metals Inc.

Treasury Metals is a gold-focused company with assets in Canada. Treasury's Goliath gold complex, which includes the Goliath, Goldlund and Miller deposits, is located in Northwestern Ontario. The deposits benefit substantially from excellent access to the Trans-Canada Highway, related power and rail infrastructure, and close proximity to several communities including Dryden, Ont. The company also owns several other projects throughout Canada, including the Weebigee/Sandy Lake gold project joint venture and the Gold Rock grassroots gold exploration property. Treasury Metals is committed to inclusive, informed and meaningful dialogue with regional communities and indigenous nations throughout the life of all its Projects and on all aspects, including creating sustainable economic opportunities, providing safe workplaces, enhancing of social value and promoting community well-being.

We seek Safe Harbor.

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