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Torex Gold Resources Inc (2)
Symbol TXG
Shares Issued 85,672,972
Close 2021-03-30 C$ 15.75
Recent Sedar Documents

Torex Gold repays $40M (U.S.) in debt

2021-03-31 07:47 ET - News Release

Ms. Jody Kuzenko reports

TOREX GOLD FULLY REPAYS DEBT FACILITY

Torex Gold Resources Inc. has repaid early the remaining $40-million of debt in relation to the 2019 debt facility and is now debt free other than approximately $5-million of finance leases. All amounts expressed in U.S. dollars unless otherwise stated.

In addition, the company's wholly owned subsidiary, Minera Media Luna SA de CV (MML), has signed a third amended and restated credit agreement with the same syndicate of lenders comprising Bank of Montreal, BNP Paribas, ING Bank, Bank of Nova Scotia and Societe Generale in connection with a two-year senior secured $150-million revolving debt facility.

The company may use the 2021 revolving facility for general corporate and working capital purposes, including certain development expenditures and acquisitions, and can be used for letters of credit or funding of capital expenditures. The amended facility also allows Torex to make distributions to its shareholders in the aggregate amount of up to $100-million (Canadian), in all cases subject to the conditions of the 2021 revolving facility.

Jody Kuzenko, president and chief executive officer of Torex, stated: "With no remaining long-term debt, Torex has never been in a stronger financial position. The markedly enhanced terms our partner banks have granted through this latest refinancing agreement reflects the strength of our balance sheet and underlying cash flow potential of our El Limon Guajes complex (ELG). Importantly, the amended facility allows for greater financial flexibility as we lay the foundation for our future in Morelos and beyond."

Andrew Snowden, chief financial officer of Torex, stated: "The intent of the refinancing was to loosen the restrictions and covenants in place from our initial project financing when our operations were less mature and advanced to covenants more in line with a corporate-level facility. With the company's robust cash balance and the ongoing support of the banking syndicate the company now has significant financial flexibility to develop Media Luna and other future projects, a reduced cost of debt and can potentially return excess capital to shareholders."

The 2021 revolving facility continues to permit spending to facilitate the development of Media Luna, advance the Muckahi mining system, and other potential growth opportunities, with the spending limit under the previous agreement removed.

The development expenditures are subject to the conditions of the 2021 revolving facility, including compliance with (i) financial covenants related to maintaining a net leverage ratio of three times, an interest coverage ratio of three times and minimum liquidity of $50-million; and (ii) certain thresholds with respect to the quantum of development expenditures and the amount spent on the Muckahi mining system.

The 2021 revolving facility has an interest rate of LIBOR (London interbank offered rate) (subject to a zero floor) plus an applicable margin based on the net leverage ratio on any loan or letter of credit outstanding. It includes standard and customary finance terms and conditions with respect to fees, representations, warranties, covenants and conditions precedent to additional draws under the 2021 revolving facility. The amended debt facility continues to be secured by all of the assets of Minera Media Luna and secured guarantees of the company and each of its other subsidiaries with a direct or indirect interest ELG and/or the Media Luna project.

   LIBOR APPLICABLE MARGINS BASED ON NET LEVERAGE RATIO

Level        Net leverage ratio     LIBOR applicable margin

1                       = 1.00x                     275 bps
                   greater than
2             1.00x and = 2.00x                     300 bps
                   greater than
3             2.00x and = 2.50x                     325 bps
                   greater than
4                         2.50x                     375 bps

The 2021 revolving facility matures on March 30, 2023, with a step down in capacity by $25-million on Sept. 30, 2022, and again on Dec. 21, 2022.

The third amended and restated credit agreement will be posted today under the company's profile on SEDAR.

About Torex Gold Resources Inc.

Torex is an intermediate gold producer based in Canada, engaged in the exploration, development and operation of its 100-per-cent-owned Morelos gold property, an area of 29,000 hectares in the highly prospective Guerrero gold belt located 180 kilometres southwest of Mexico City. The company's principal assets are the El Limon Guajes mining complex comprising the El Limon, Guajes and El Limon Sur open pits, the El Limon Guajes underground mine including zones referred to as Subsill and El Limon Deep, and the processing plant and related infrastructure, which is in the commercial production stage as of April 1, 2016, and the Media Luna deposit, which is an early-stage development project, and for which the company issued an updated preliminary economic assessment in September, 2018. The property remains 75 per cent unexplored.

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