Horizon Corporation now has the exclusive rights to acquire Trigon Metals Inc. for US$30 million.
The proposed transaction will give Horizon Corporation access to Trigon Metals’ 80% interest in the Kombat Mine.
Trigon will retain a 1% net revenue royalty on copper production when the Kombat mine achieves copper metal production of 1,000 tons for each of two consecutive calendar months.
Thereafter, a royalty of 1% will be payable on net copper revenue when the invoiced copper price on final invoicing is more significant than US$4 per pound, payable quarterly for 20 quarters.
A US$5 million break fee applies if the proposed transaction is terminated due to non-approval or a superior bid.
Follow-up payment of between US$10 million and US$20 million when underground production exceeds an average of 2,250 tpd over 90 days and once the streaming copper royalty reduces as per the Sprott streaming agreement.
The companies have signed a binding agreement for a US$5 million loan separate from the sale to pave the way for the sale negotiations.
The loan allows Horizon Corporation to begin investing in the Kombat Mine and provide capital to the project in advance of the completion of the sale.
Should Trigon Metals elect to consummate the proposed transaction, the loan will become equity contributed to the Kombat Mine.
If Trigon chooses not to complete the transaction, the funds will become payable as loans to the company plus associated break fees.
The proposed transaction contemplates a valuation for the Kombat mine of US$30 million at C$0.97/share.
However, the final valuation may be significantly higher depending on operational milestones, subject to definitive agreements, shareholder approval, regulatory consent, and other closing conditions.
Trigon Metals wants to use the sale proceeds to advance its Addana, Silver Hill, and Kalahari exploration projects while ensuring operational continuity and promoting expansion for the Kombat Mine.
Trigon Metals CEO Jed Richardson said this deal is a decisive win for the company and shareholders.
“We have been committed to operating and growing the Kombat mine, but this deal offers the company and shareholders an opportunity to maximize growth for the company as a whole,” Richardson said.
He added that the agreement allows Trigon Metals to realize significant value from the Kombat Mine in an expensive and uncertain funding market while ensuring stability and continuity for the workforce at the site.
According to Richardson, since the company will be in a strong financial position with negligible debt, a meaningful portion of the proceeds will return to the market through share buybacks, dividends, or a combination of the two once the various agreement milestones are achieved.
The loan
Horizon Corporation will issue the US$5 million in three tranches to provide interim development capital for the Kombat Mine.
The first tranche of US$500,000 will be issued within seven working days of signing, the second of US$2 million within seven working days of completing the security agreements and approvals relating to the loan agreement, and the last one of US$2.5 million within 45 days of the tranche two.
The loan will have a grace period of six months from the date of tranche two drawdown and will be amortized over 18 equal payments from the end of the grace period to the end of the 2-year term bearing an annual interest rate of 15%.
Horizon Corporation will be entitled to appoint a board observer for the company before tranche two of the loan.
Horizon Corporation will be granted exclusivity to negotiate and finalise the proposed transaction before tranche one of the loan.
The completion of the proposed transaction is subject to the following milestones: definitive agreements, shareholder approval, regulatory approvals, and completion of due diligence.
Horizon Corporation is a UK-based investment-focused mining company with offices in Cape Town, South Africa.
The company operates the Manica Gold Mine in Mozambique, the Milford Project in Utah, USA, and the Copperbelt tailings projects in Zambia.
