Purpose Cash Management Fund Class A V.MNY

Stay tune for what's to come.

[AndyMan2]

MNY Updates,

I wanted to send out a brief note on one of our most recent features, Montan Mining (TSXV:MNY). As you know, the company signed a binding term sheet to acquire Kairos Capital Peru SAC and M&S Transportes y Servicios Generales SRL from Pacific Alliance who own a 125-tonne-per-day Mirador processing plant located in Chimbote, Peru, and six 100-per-cent-owned mineral concessions as well as options to buy three additional mineral concessions.

The Mirador plant is fully operational and currently has two months of material stockpiled and prepared for processing through its flotation circuit. The Mirador plant is fully permitted to 125 tpd and currently operating at 100 tpd through its 100 tpd flotation circuit. The plant also features a 25 tpd carbon in pulp (CIP) gold circuit which is on standby. The Mirador plant is strategically located 450 kilometres north of Lima whereas the majority of the toll milling industry is focused in the south of the country in the Chala and Nazca districts.

Here's a short interview with Montan’s Chairman, Luis Zapata, explaining the merits of their acquisition:



https://www.youtube.com/watch?v=WgGC_8WZ4Bk#action=share

As he stated in the video above, this is truly a transformational acquisition for the company as they add proven cash-flow to their bottom line among other very strong assets.
The acquisition terms are as follows:

Montan will purchase 100 per cent of Kairos and Mirador from Pacific Alliance in exchange for:

• The payment of $3-million (U.S.) in cash to Pacific Alliance, in compensation for $3.4-million (U.S.) in debt currently held by the parent company of Pacific Alliance;
• The issuance of $3-million (U.S.) in MNY shares at the next major MNY private placement issue price.

So how will they pay for it? MNY announced a binding term sheet with Cartesian Royalty Holdings Pte. Ltd. for a financing package of up to $10-million (U.S.) to finance the acquisition.

The term sheet provides that CRH will invest in three tranches, each with a specified use of proceeds, as well as additional tranches at the discretion of CRH. Each tranche will be structured in a 25-per-cent equity/75-per-cent stream ratio.

Streaming investment terms: For each $1-million (U.S.) in streaming investment, CRH is to receive 2,500 ounces of gold or gold equivalent from Montan, payable over a maximum of 50 months from closing. Repayment of each streaming investment is to commence six months after drawdown over a repayment period of 42 months, subject to two months of optional payment holidays whereby Montan can defer its monthly payment. Each exercised payment holiday must be separated by at least six months.

Equity investment terms: The Montan units are priced at a 20-per-cent discount to the volume-weighted average price (VWAP) of Montan common shares for the 30-calendar-day period immediately preceding the term sheet; each unit will consist of one common share and one common share warrant; the warrant will have an exercise price of a 25-per-cent premium to the VWAP with a term of five years, subject to TSX-V approval or other regulatory constraints.
To satisfy Montan’s initial working capital requirements, they’re currently raising $700,000 at $0.055/share which should close next week and they will conduct an additional ~$1.3MN raise shortly thereafter.

I invested in this current round (and the round before) and bought more stock in the market at $0.055/share because I think their current market cap presents tremendous value at these levels. I don’t think the streets giving them any value for their acquisition so obviously we’ll have to wait for the deal to close before we see any sort of major price appreciation in the short-term. We should, however, expect the definitive to close within the next couple weeks which should give the market a lot more confidence that the deal is going through. Once investors get comfort on that front, that’s when I think we’ll see their market cap get repositioned to reflect their true value. Their current financing is the biggest risk at the moment, but given the merits of their acquisition, Cartesian’s term sheet and the amount they need to raise, I definitely do believe they’ll get it done.

Investors can buy MNY.V at $0.055/share today based on their current assets excluding their Kairos acquisition. Once that deal’s done, things should change for the better…

The market obviously liked the deal as the stock hit a high of $0.08 when the deal was announced. It quickly retraced back to $0.055/share but could easily blast through its old highs once the deal’s done. With a 125 tonne-per-day processing plant, Montan is positioning itself for a major second half of the year and an even better 2018.

Make sure you keep MNY.V on your radar screens and stay tuned for what’s to come. I expect the definitive to be signed and more updates to follow over the next month.

As always, if you have any questions, please do not hesitate to get in touch with me anytime. I look forward to hearing from you.

Best,
Etienne