EDITOR: | May 3rd, 2018

Harte Gold Arranges Comprehensive US$70 Million Debt Financing Package

| May 03, 2018 | No Comments
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May 3, 2018 (Source) — Sugar Zone Project Is Fully Funded To Commercial Production

HARTE GOLD CORP. (“Harte Gold” or the “Company”) (TSX:HRT) (OTC:HRTFF) (Frankfurt:H4O) is pleased to announce it has entered into committed agreements with both Sprott Private Resource Lending (Collector), L.P. (“Sprott”) and Appian Natural Resources Fund (“Appian”) to fully fund the construction of the Sugar Zone Project.  All dollar amounts are quoted in U.S. dollars (“$”).

Highlights:

  • Sprott Facility“: $50 million senior secured debt facility available for drawdown after May 31, 2018, subject to final documentation including standard security arrangements.  Closing is expected on or about May 31, 2018 (“Closing Date”) with $20 million available at the Closing Date.
    • 20 month principal holiday and 13 month interest deferral (50%) provides the Company with substantial time to complete commissioning and ramp-up operations.
  • Appian Subordinated Loan“: $20 million subordinated loan to be drawn down beginning on or about May 11, 2018.
  • No additional equity placement required for drawdown of either facility.
  • No hedging, cash sweeps, debt service reserve account or offtake agreement necessary.

Stephen G. Roman, President and CEO of Harte Gold commented “Over the past six months, the Company has conducted an extensive review of its debt financing alternatives.  We are very pleased to have reached an agreement with both Sprott and Appian on a financing solution which provides immediate liquidity for continued development while maintaining maximum flexibility and a lower cost of capital, compared to most project debt transactions executed the past few years.”

Mr. Roman added “Most importantly, the financing announced today represents a fully funded solution with enough liquidity to support ramp-up of our operations and cover any unforeseen downturn in commodity prices, without having to approach the equity markets or any other financing dilutive to shareholders.  We appreciate Appian’s continued support and are pleased to welcome Sprott, a recognized global leader in precious metals financings, as a new investor in the project.”

Greg Caione, Partner of Sprott, commented “As one of the largest investors dedicated to the natural resource sector, Sprott is excited to partner with Harte Gold and Appian on the development of the Sugar Zone mine.  Our partnership with the Harte Gold team is consistent with our strategy of providing innovative and flexible capital to maximize the value of exceptional projects.”

Sprott Facility:

Sprott has received investment committee approval to provide Harte Gold with up to $50 million under a senior secured credit facility to be used for the construction of the Sugar Zone mine.

  • $50 million available from the Closing Date for 10 months, subject to final documentation and satisfaction of certain customary conditions precedent.
  • Structured in multiple tranches:
    • Tranche I: $20 million immediately drawn on the Closing Date.
    • Subsequent Tranches: available in $10 million monthly drawdowns, as required.
  • Term of 5 years.
  • Interest rate of 3-month LIBOR + 7.5%.
  • 50% of the interest will be capitalized and deferred, up to June 30, 2019.  Thereafter, 100% paid in cash.
  • Repayment in 42 equal monthly payments starting January 31, 2020, continuing to maturity.
  • 10 million common share purchase warrants with a term of five years at a 20% premium to market, subject to regulatory approvals.
  • Fixed production-linked payment of $14 per ounce of gold on the first 300,000 ounces produced, (no payment made on ounces produced thereafter), reducing to $11 per ounce if the loan remains below $35 million.  Payments are to be financially settled on a monthly basis and can be terminated at any time by payment of an early termination fee.

Appian Subordinated Loan:

Harte Gold has entered into a committed loan agreement with Appian for a $20 million debt facility.

  • $20 million subordinated loan facility to be drawn beginning on or about May 11, 2018.
  • Term of 6 months, with an option to extend facility to January 25, 2019.
  • Interest rate of 9.5%, increasing to 11.5% if the term is extended.
  • 100% of interest is capitalized.
  • Subordinated to the Sprott Facility.
  • 4 million common share purchase warrants with a term of five years at a 20% premium to market, subject to regulatory approvals.  Warrants are only exercisable if Appian’s share position remains less than 20%.
  • The loan agreement with Appian is a “related party transaction” as defined in Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Company is exempt from the requirements to obtain a formal valuation or minority shareholder approval in connection with the financing in reliance on sections 5.5(a) and 5.7(a), respectively, of MI 61-101, as the fair market value of the transaction will not exceed 25% of the Company’s market capitalization calculated in accordance with MI 61-101.

About Harte Gold Corp.
Harte Gold Corp. is focused on the exploration and development of its 100% owned Sugar Zone Property where it has recently completed a 70,000 tonne Advanced Exploration Bulk Sample at the Sugar Zone Deposit and mined 30,000 tonnes under its Phase I Commercial Production Permit. The Sugar Zone Property is located 80 kilometers east of the Hemlo Gold Camp. Using a 3 g/t Au cut-off, the Mineral Resource Estimate dated February 15, 2018 contains an Indicated Mineral Resource Estimate of 2,607,000 tonnes grading 8.52 g/t for 714,200 ounces of contained gold and an Inferred Mineral Resource Estimate of 3,590,000 tonnes, grading 6.59 g/t for 760,800 ounces of contained gold. Harte Gold also holds the Stoughton-Abitibi property located on the Destor-Porcupine Fault Zone, east of Timmins, Ontario, and adjacent to the Holloway Gold Mine.

 The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.


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