RE:Time to Watch PLATINUM GROUP METALS LTD. (T.PTM) Wow, have we got a long way to go before profitability. My gosh I will wait for a wile before I consider buying back in.
Lender Approvals and Credit Update
The secured lenders to Platinum Group, Sprott Resource Lending Partnership, among other lenders (“Sprott”) and Liberty Metals & Mining Holdings, LLC (“LMM”), have provided their consent to the Implats Transaction, which consent is conditional on the satisfaction of certain conditions by the Company.
Sprott and LMM have also agreed to terms and conditions, upon completion of which, they will provide their consent to the sale of the Maseve Mine to Royal Bafokeng Platinum Limited (“RBPlat”) (see news release dated September 6, 2017). The Company and RBPlat are in process to complete required regulatory filings, legal agreements, procedures, etc. which are required for closing and which will also satisfy Sprott and LMM’s requirements. RBPlat paid a deposit of Rand 41.37 million (US $3.0 million) into escrow on October 9, 2017.
Sprott has also agreed to provide the Company up to a US $5.0 million bridge loan (the “Bridge Loan”) to provide working capital as may be required up until the closing of the Initial Purchase.
The Company has agreed with Sprott and LMM to a specific use of the Company’s US $17.2 million in proceeds from the Initial Purchase, including: (i) repayment of any principal or fees related to the Bridge Loan, (ii) payment of certain outstanding payables and general administrative expenses (including certain transaction fees related to the Implats Transaction), (iii) care and maintenance costs of the Maseve Mine during the sale closing period, and (iv) the Company’s US $5.0 million share of planned DFS costs. The Company is to place approximately US $7.0 million in a reserve account for dedication to the costs described at items (ii) and (iii) above. Proceeds from the Maseve Sale Transaction are to be used first to repay Sprott (US $40.0 million) and second to partially repay LMM (approximately US $33.0 million).
In consideration for LMM’s consent to the Implats Transaction, the Company has agreed to, among other things, do the following:
- Deliver an amendment to the second lien LMM facility agreement prior to the closing of the Implats Transaction which will, among other things,: (a) amend the term of the LMM Facility to mature the later of September 30, 2018 and four months after the closing of the first stage of the Maseve Sale Transaction (closing expected before December 31, 2017); (b) require that 60% of net proceeds raised by the Company in an equity financing of over US $500,000 be used for repayment of outstanding loan facilities; and (c) add additional events of default for failing to be listed on the TSX, material breaches under material agreements and a decrease in its equity ownership in Waterberg Resources beyond the decrease to occur as a result of the Implats Transaction.
- Raise US $20.0 million in debt and or equity within 30 days of the first lien facility due to Sprott being repaid (expected to be repaid before December 31, 2017) and raise a further US $10.0 million in debt and or equity by June 30, 2018. Proceeds in each instance are to repay and discharge amounts due firstly to Sprott and secondly to LMM.
- Deliver an amendment to the production payment agreement between LMM and the Company by October 17, 2017 pursuant to which a termination fee for the Maseve Mine production payment obligation due to LMM can be settled by payment of US $15.0 million by March 31, 2018 or US $25.0 million thereafter.
In consideration for Sprott providing the Bridge Loan and Sprott’s consent to the Implats Transaction and the Maseve Sale Transaction, the Company has delivered an amendment to the first lien Sprott facility agreement which: (a) amends the term of the loan to mature on earlier of (i) January 31, 2018 and (ii) ten days after the closing of the Maseve Sale Transaction; (b) requires that 60% of net proceeds raised by the Company in an equity financing of over US $500,000 be used for repayment of outstanding loan facilities; and (c) adds events of default for failing to be listed on the TSX, material breaches under material agreements and a decrease in equity ownership in Waterberg Resources beyond the decrease to occur as a result of the Implats Transaction.