REG - Pembridge Resources - Minto Updates and New Terms Agreed with Pembridge

Pembridge ResourcesAnnouncement

02/05/2023 07:00

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RNS Number : 9848X  Pembridge Resources plc  02 May 2023

 

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO
CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER ARTICLE 7 OF THE MARKET
ABUSE REGULATION (EU) 596/2014 AS AMENDED BY REGULATION 11 OF THE MARKET ABUSE
(AMENDMENT) (EU EXIT) REGULATIONS 2019/310.

 

2 May 2023

 

Minto Metals Announces New Funding Facilities and Deferral of Consideration
Under the Share Purchase Agreement, and Pembridge Receives Indemnities and
Defers Minto Repayments

 

London, United Kingdom - Pembridge Resources plc (LSE: PERE) ("Pembridge" or
the "Company") is pleased to announce that Minto Metals Corp. ("Minto") has
received funding facilities and, together with Pembridge, has agreed to amend
the share purchase agreement dated 3 June 2019 for the purchase of Minto (the
"SPA").  Linked to this, Pembridge and Minto have signed an Indemnity
Agreement and a Postponement Agreement.

Highlights

·    Pembridge, Minto and Capstone Mining Corp. ("Capstone") have agreed
to amend the share purchase agreement dated 3 June 2019 for the purchase of
Minto (the "SPA") to defer payment of remaining $5 million purchase price and
to release and discharge Pembridge from the liabilities and obligations owing
to Capstone under the SPA.

·    Minto has received CAD 1 million advance from Lion Point Capital, LP
("Lion Point") pursuant to a loan agreement dated 14 April 2023 (the "Loan
Agreement") that may be increased to CAD 2 million subject to further
commitments to being obtained from the Lenders to fund any additional amount.

·    Minto has drawn down a further US$1.5 million under its existing
prepayment facility with Sumitomo Canada Limited ("Sumitomo"), bringing the
total amount of funds advanced by Sumitomo under the facility to US $12.5
million, and extend the term of the offtake agreement with Sumitomo by a
further 12 months or until an additional 40,000 dmt of copper concentrate are
produced.

·    Minto has agreed to indemnify and hold Pembridge harmless from and
against any claims, actions, causes of action, proceedings, judgements, debts,
damages, costs, obligations, liabilities and/or losses that it may incur
directly or indirectly as a result of or arising from any claim made:

(a) by the General Indemnitees or any of them against Pembridge in relation to
each and all of Pembridge's obligations pursuant to the General Indemnity
Agreement dated June 3, 2019 (the "General Indemnity Agreement") in favour of
Zurich American Insurance Company, Fidelity and Deposit Company of Maryland,
Zurich American Insurance Company, Colonial American Casualty and Surety
Company, American Guarantee and Liability Insurance Company and Zurich
Insurance Group Ltd.);

(b) by the Zurich Indemnitees or any of them against Pembridge in relation to
each and all of Pembridge's obligations pursuant to the Deed of Indemnity; and

(c) by Capstone against Pembridge in relation to each and all of Pembridge's
obligations pursuant to the Share Purchase Agreement.

·    Minto and Pembridge have signed a Postponement Agreement with respect
to its remaining receivable of CAD 1 million and accumulated interest, with
payment of CAD 250,000 by the end of Q3 2023 and the remaining amounts due
after the full settlement with Capstone of the remaining purchase price.

Amendment to Share Purchase Agreement

Pembridge, Minto and Capstone have agreed to amend the SPA, as previously
amended, to extend the due date for payment of the US$5 million deferred
balance of the purchase price owing to Capstone under the SPA to be payable as
follows: (a) $250,000 on each of September 1, 2023, December 1, 2023, March
1, 2024 and June 3, 2024 and (b) $1,000,000 on each of September 3, 2024,
December 3, 2024, March 3, 2025 and June 3, 2025. In addition, the terms of
the amendment provide that Pembridge has assigned to Minto all of its
obligations under the SPA and Capstone has released Pembridge from all such
obligations.

New Term Facility for Minto

Under the Loan Agreement, the Lion Point have agreed to provide a secured
non-revolving term facility (the "Facility") in a principal amount up of CAD 1
million, which may be increased to CAD 2 million subject to further
commitments being obtained from the Lenders to fund any additional amount. The
Facility bears interest at the rate of 10% per annuum, payable semi-annually.
Repayment of the Facility is due on the earlier of 14 April 2026 or the final
repayment date under secured notes previously issued by the Company on 3 June
2019.

Minto Sumitomo Prepayment Facility and Offtake Agreement

Minto also announces that it has drawn down a further US $1.5 million under
its existing prepayment facility with Sumitomo, bringing the total amount of
funds advanced by Sumitomo under the facility to US $12.5 million. Pursuant to
an Amended and Restated Prepayment Facility Agreement dated May 16, 2022,
Sumitomo established a secured prepayment non-revolving credit facility in
favour of Minto in the amount of US $17.5 million, repayable over 48 months,
in connection with an offtake agreement between the parties. Under the offtake
agreement, Sumitomo agreed to purchase 100% of the copper concentrate produced
at the Minto Mine for a four-year term, based on 50,000 dmt/year of
concentrate production. In conjunction with this new drawdown, Sumitomo and
Minto will amend the offtake agreement to extend the term by a further 12
months or until an additional 40,000 dmt of copper concentrate are produced.
 Minto intends to use the proceeds of the drawdown for general corporate
purposes.

Minto Indemnity Agreement with Pembridge

As part of the acquisition of Minto in June 2019, Minto and Pembridge are
parties as indemnitors to a General Indemnity Agreement dated 3 June 2019 (the
"General Indemnity Agreement") in favour of Zurich American Insurance Company,
Fidelity and Deposit Company of Maryland, Zurich American Insurance Company,
Colonial American Casualty and Surety Company, American Guarantee and
Liability Insurance Company and Zurich Insurance Group Ltd.) (collectively,
the "General Indemnitees").  In addition, Pembridge is a party as indemnitor
to a Deed of Indemnity dated 24 May 2019 (the "Deed of Indemnity") in favour
of Zurich Insurance Public Limited Company (Zurich Insurance Public Limited
Company, together with each other party indemnified pursuant to the Deed of
Indemnity, collectively, the "Zurich Indemnitees") and Pembridge, Minto and
Capstone Mining Corp ("Capstone") are the parties to the SPA.

Minto has agreed to indemnify and hold Pembridge harmless from and against any
claims, actions, causes of action, proceedings, judgements, debts, damages,
costs, obligations, liabilities and/or losses (including costs and expenses
incurred in investigating or defending any claim or threatened claim, whether
or not any amounts are paid by Pembridge on such claim) (together, "Losses")
that it may incur directly or indirectly as a result of or arising from any
claim made:

(a) by the General Indemnitees or any of them against Pembridge in relation to
each and all of Pembridge's obligations pursuant to the General Indemnity
Agreement;

(b) by the Zurich Indemnitees or any of them against Pembridge in relation to
each and all of Pembridge's obligations pursuant to the Deed of Indemnity; and

(c) by Capstone against Pembridge in relation to each and all of Pembridge's
obligations pursuant to the Share Purchase Agreement.

Postponement Agreement

Pembridge lent a total of CAD 4 million to Minto, to fund Minto's surety
account, during 2019 and 2020.  The loan carries interest at 8% and was due
to be repaid in full via quarterly instalments each of CAD 1 million during
2022, with the final interest payment in early 2023.  The first two
instalments were repaid in March and June 2022 and the third instalment,
which was due originally at the end of September, has now been repaid fully
with the last CAD 250,000 received in December 2022.  The third instalment
was partly deferred under an agreement between Minto and Pembridge,
announced by Pembridge on 13 October 2022, to aid Minto in funding
increased reclamation security payments, and Minto has made its payments in
accordance with that agreement.  Minto and Pembridge had agreed to spread
the fourth instalment of CAD 1 million and accumulated interest due until
the end of September 2023.

To support Minto and ensure the deferral of the payment to Capstone of the
remaining purchase price, Pembridge and Minto have agreed to defer the
repayment of the amounts due from Minto to Pembridge and receive CAD $250,000
in approximately equal monthly payments ending in September 2023, the
remaining amounts becoming due after the full settlement with Capstone of the
remaining purchase price under the SPA.

The release from Minto can be found at the following link.

http://www.rns-pdf.londonstockexchange.com/rns/9848X_1-2023-5-1.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/9848X_1-2023-5-1.pdf)

 

Gati Al-Jebouri, Chief Executive Officer and Chairman of the Board of
Pembridge said:

"The ability to support Minto's financial position is of high importance to
the success of our investment in Minto.  The acquisition of Minto in June
2019 came with liabilities and obligations by Pembridge to Capstone and Zurich
Insurance.  I am pleased that we have reached agreement with Minto to receive
full indemnity by Minto to Pembridge for all those obligations and liabilities
and for Capstone's agreement to release and discharge of Pembridge of the
obligations and liabilities of Pembridge towards Capstone arising from the
SPA.  To achieve this significant step in simplifying the potential
liabilities of Pembridge has come at the cost of deferring a large part of our
receivable from Minto.  However, this enables us to continue more effectively
seeking partnerships to grow our business and provides the fullest support to
Minto that Pembridge is in a position to undertake.  I trust that, with the
additional financing that Minto has received and the support from Capstone
with the deferral of the payment of the remaining purchase price, Minto will
continue developing the mine and seek to generate the maximum value of the
investment."

Cautionary Statement

This News Release includes certain "forward-looking statements" which are not
comprised of historical facts. Forward-looking statements include estimates
and statements that describe the Company's future plans, objectives or goals,
including words to the effect that the Company, or management, expects a
stated condition or result to occur. Forward-looking statements may be
identified by such terms as "believes", "anticipates", "expects", "estimates",
"may", "could", "would", "will", or "plan". Since forward-looking statements
are based on assumptions and address future events and conditions, by their
very nature they involve inherent risks and uncertainties. Although these
statements are based on information currently available to the Company, the
Company provides no assurance that actual results will meet management's
expectations. Risks, uncertainties and other factors involved with
forward-looking information could cause actual events, results, performance,
prospects and opportunities to differ materially from those expressed or
implied by such forward-looking information. Forward-looking information in
this news release includes, but is not limited to, the Company's intentions
regarding its objectives, goals or future plans and statements. Factors that
could cause actual results to differ materially from such forward-looking
information include, but are not limited to, the Company's ability to predict
or counteract the potential impact of COVID-19 coronavirus on factors relevant
to the Company's business, failure to identify additional mineral resources,
failure to convert estimated mineral resources to reserves with more advanced
studies, the inability to eventually complete a feasibility study which could
support a production decision, the preliminary nature of metallurgical test
results may not be representative of the deposit as a whole, delays in
obtaining or failures to obtain required governmental, environmental or other
project approvals, political risks, uncertainties relating to the availability
and costs of financing needed in the future, changes in equity markets,
inflation, changes in exchange rates, fluctuations in commodity prices, delays
in the development of projects, capital, operating and reclamation costs
varying significantly from estimates and the other risks involved in the
mineral exploration and development industry, and those risks set out in the
Company's public documents. Although the Company believes that the assumptions
and factors used in preparing the forward-looking information in this news
release are reasonable, undue reliance should not be placed on such
information, which only applies as of the date of this news release, and no
assurance can be given that such events will occur in the disclosed time
frames or at all. The Company disclaims any intention or obligation to update
or revise any forward-looking information, whether as a result of new
information, future events or otherwise, other than as required by law.

 

ENDS

 

NOTES TO EDITORS

About Pembridge Resources plc

Pembridge is a mining company that is listed on the standard segment of the
Official List of the FCA and trading on the main market for listed securities
of London Stock Exchange plc. Pembridge has an investment in Minto Metals
Corp, a British Columbia incorporated business listed on the TSX Venture
Exchange under the symbol "MNTO" that operates the Minto mine in Yukon,
Canada.

About Minto Metals Corp

Minto Metals Corp operates the underground copper-gold-silver mine located in
central Yukon, approximately 240 kilometres north of the capital Whitehorse
along the Klondike Highway. In excess of US$350 million of capital expenditure
has been invested into Minto operations since site construction began in 2006.
The Minto mine was in continuous production between 2007 and 2018, when the
mine was placed onto temporary care and maintenance. Pembridge acquired the
Minto mine from Capstone Mining Corporation in June 2019 and restarted
operations in October 2019.

Enquiries:

 

Pembridge Resources plc:
 
+44 (0)7905 125740

Gati Al-Jebouri, Chief Executive Officer and Chairman of the Board

David James, Chief Financial Officer

 

Tavira Financial Ltd:
 
                        +44 (0)20 7100 5100

Jonathan Evans

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