Intention to Seek Written Shareholder Consent
for Certain Equity Issuances including to Orion and Equinox
All dollar figures are in US dollars unless
otherwise noted
RENO, Nev., Oct. 8, 2021 /PRNewswire/ - i-80 GOLD
CORP. (TSX: IAU) (OTCQX: IAUCF) ("i-80", or the
"Company") announces that in connection with the previously
announced acquisitions by the Company of the Lone Tree and Buffalo
Mountain gold deposits from Nevada Gold Mines LLC ("NGM")
and the Ruby Hill mine from affiliates of Waterton Global Resource
Management ("Waterton"), the Company will be seeking
shareholder approval pursuant to the requirements of the Toronto
Stock Exchange (the "TSX") of certain proposed issuances of
securities and common shares of the Company ("Common
Shares") to one or more investment funds managed by Orion
Resource Partners (collectively, together with their respective
affiliates, "Orion"), Equinox Gold Corp. ("Equinox")
and certain other potential convertible debt investors, as further
described in a news release dated September
7, 2021 and detailed below.
As previously announced, the Company has entered into a
non-binding term sheet with Orion for up to $140 million of acquisition financing, with an
additional $100 million potentially
available via an accordion feature. The Company and Orion are in
the process of finalizing definitive documentation in respect of
the foregoing.
The Orion Financing is expected to include a mix of equity and
convertible securities, warrants and secured instruments for up to
$140 million, with an additional
$100 million potentially available
via an accordion feature. The securities to be issued will be
priced based on the issue price of C$2.62 (the "Issue Price") in respect of
the previously-announced equity private placement the Company
expects to complete with NGM and others, including the issuance of:
(i) up to 19,195,419 Common Shares (the "Orion Conversion
Shares"), upon conversion of the principal of a $50 million unsecured convertible loan (the
"Orion Convertible Loan") that is intended to be provided by
Orion to the Company along with, if Orion elects to receive its
accrued interest in the form of Common Shares, such number of
Common Shares upon conversion of the interest on such loan as is
determined based on the market price of the Common Shares on the
TSX at time of the conversion (ii) 839,799 Common Shares (the
"Transfer Fee Shares") at the Issue Price in satisfaction of
the transfer fee of $1.75 million
that will be payable by the Company to Orion in connection with the
Asset Exchange (as defined below), and (iii) 5,500,000 Common Share
purchase warrants (the "Orion Warrants") to Orion, with each
Orion Warrant exercisable for one Common Share at price equal to
125% of the Issue Price for a period of three years from the date
of issue (subject to acceleration under certain circumstances).
Orion may also subscribe for Common Shares in the Additional
Private Placement (as defined below) at the Issue Price for up to
that number of Common Shares such that when added with its current
holdings of Common Shares and the Transfer Fee Shares it will own
9.9% of the issued and outstanding Common Shares following the
completion by the Company of the transactions with NGM, Waterton,
Orion and the private placement (the "Orion Private Placement
Shares", and together with the Orion Conversion Shares, the
Transfer Fee Shares and the Orion Warrants, the "Orion
Issuances"). Pursuant to the rules of the TSX, the Orion
Conversion Shares and the Common Shares issuable upon exercise by
Orion of the Orion Warrants will be deemed to have been issued at a
discount to market price and are regarded as being part of the
number of Common Shares being issued pursuant to the transactions
with NGM, Waterton and the private placement. The Corporation also
expects to accept additional unsecured convertible loans from one
or more additional potential convertible debt investors in a
principal amount of up to an additional $10
million (the "Additional Convertible Loans" and
together with the Orion Convertible Loans, the "Convertible
Loans") on the same terms as the Orion Convertible Loan.
As disclosed in its news release dated September 7, 2021, the Company has entered into a
definitive membership interest purchase agreement to acquire the
Ruby Hill mine from Waterton in consideration of (1) US$75 million in cash payable on closing, (2)
Common Shares (the "Ruby Hill Payment Shares") equal to
$8,000,000 divided by the US dollar
equivalent of the 10-day volume weighted average trading price as
of the date that is three business days immediately prior to the
closing date of the acquisition based on the USD/CAD exchange rate
on such date (the "Ruby Hill Issuance") and, (3) milestone
payment rights pursuant to which Waterton will be entitled to
receive up to an additional $67,000,000 upon the occurrence of certain
milestones in accordance with the milestone payment rights
agreement to be entered into on closing of the acquisition. The
Company may, prior to closing of the acquisition, elect to pay up
to $8,000,000 in cash in lieu of all
or any portion of the Ruby Hill Payment Shares, in which event the
number of Ruby Hill Payment Shares issuable would be reduced
accordingly. If the issuance of the Ruby Hill Payment Shares, after
giving effect to any election by the Company to pay any portion
thereof in cash, would result in Waterton holding more than 9.99%
of the then issued and outstanding Common Shares calculated on a
partially diluted basis, the number of the Ruby Hill Payment Shares
to be issued will be reduced and the Company will pay cash in lieu
of such portion of the Ruby Hill Payment Shares.
As previously announced, the Company has entered into a
definitive exchange agreement to acquire the Lone Tree and Buffalo
Mountain gold deposits from NGM, including certain processing
infrastructure, via an asset exchange in consideration of (1) the
Company's 40% ownership in the South Arturo property; (2)
assignment of the Company's option to acquire the adjacent Rodeo
Creek exploration property; (3) contingent consideration of up to
$50 million based on production from
the Lone Tree property; and (4) arrangement of substitute bonding
(and release of NGM bonds) in respect of the Lone Tree and Buffalo
Mountain reclamation obligations at closing (collectively, the
"Asset Exchange").
Concurrent with or as soon as practicable following the closing
of the Asset Exchange, NGM has agreed to subscribe for Common
Shares at the Issue Price in an amount equal to the lesser of
$50 million and the amount that would
result in NGM holding 9.9% of the issued and outstanding Common
Shares on a non-diluted basis, after giving effect to the
Additional Private Placement Issuance (defined below) (including
any participation by other subscribers, including any potential
subscription by Equinox Gold Corp. ("Equinox") upon exercise
of its anti-dilution rights, and any shares issued to Waterton on
or prior to the private placement) (the "NGM Issuance").
The NGM Issuance is part of a larger non-brokered private
placement offering (the "Additional Private Placement
Issuance") by the Company of up to $90
million of Common Shares at the Issue Price, not including
any shares that may be issued to Equinox upon the exercise of its
anti-dilution right (the "Anti–Dilution Right") pursuant to
the support agreement between the Company and Equinox dated
April 7, 2021 (the "Support
Agreement"). Equinox currently holds 56,041,282 Common Shares
and 2,318,596 warrants to purchase Common Shares representing
29.03% of the issued and outstanding Common Shares on a
partially-diluted basis (calculated in accordance with the Support
Agreement).
The Ani-Dilution Right provides Equinox the right to maintain
its pro rata ownership of Common Shares in connection with the Ruby
Hill Issuance, the NGM Issuance, the Additional Private Placement
Issuance and the Orion Issuances. Equinox may elect to maintain its
pro-rata ownership of Common Shares by:
(i)
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subscribing for and
purchasing from treasury an agreed-upon number of Common Shares
(the "Anti–Dilution Shares") on a pro-rata basis at a price
per Anti-Dilution Share equal to the implied price per Common Share
issued in connection with the equity private placement transactions
giving rise to such Anti-Dilution Right (the "Equinox Share
Issuance");
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(ii)
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providing the
Corporation a convertible loan (the "Anti-Dilution Convertible
Loan") on the same terms as the Convertible Loans on a pro-rata
basis (the "Equinox Convertible Loan Issuance");
and/or
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(iii)
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to extent the
issuance of the Orion Warrants trigger the rights Anti-Dilution
Rights under the Support Agreement, subscribing for warrants (the
"Anti-Dilution Warrants" and together with the Anti–Dilution
Shares and Anti-Dilution Convertible Loan, the "Anti-Dilution
Securities") of the Corporation on a pro-rata basis (the
"Equinox Warrant Issuance" and together with the Equinox
Share Issuance and the Equinox Convertible Loan Issuance, the
"Equinox Issuance")
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in each case subject to the requirements of the TSX and the
provisions of the Support Agreement.
Equinox has advised the Company that it intends to exercise its
Anti-Dilution Right for up to $10
million, but has not determined the type or mix of the
Equinox Issuance. If Equinox were to exercise the Anti-Dilution
Right exclusively to provide an Anti-Dilution Convertible Loan,
Equinox would be entitled to maintain its pro-rata ownership of
Common Shares in respect of the Convertible Loans by providing an
Anti-Dilution Convertible Loan in a principal amount of up to
approximately $24.5 million alongside
the $60 million of Convertible Loans.
If the full principal amount of the Anti-Dilution Convertible Loan
is converted at the Conversion Price, the Anti-Dilution Convertible
Loan would result in the issuance of 9,420,547 Common Shares. If
Equinox were to exercise the Anti-Dilution Right exclusively to
acquire Anti-Dilution Shares, Equinox would be entitled to purchase
up to 12,506,375 Anti-Dilution Shares at the Issue Price for gross
proceeds to the Company of approximately US$26 million without the need for disinterested
shareholder approval in respect of insider participation under the
rules of the TSX. Assuming the issuance of the Orion Warrants
trigger the Anti-Dilution Right, if Equinox were to exercise the
Anti-Dilution Right to acquire Anti-Dilution Warrants, it would be
entitled to acquire up to 2,249,753 Anti-Dilution Warrants. The
Company does not expect the ultimate scope of Equinox's exercise of
its Anti-Dilution Rights to require disinterested shareholder
approval, however Equinox has not provided a binding commitment the
Company in respect thereof. Equinox is not under a binding
commitment to purchase any Anti-Dilution Securities, or provide an
Anti-Dilution Convertible Loan as at the date hereof.
The Equinox Issuance, together with the Ruby Hill Issuance, the
NGM Issuance, the Additional Private Placement Issuance, the Orion
Conversion Shares, the Transfer Fee Shares and the Orion Warrants,
are referred to as the "Other Issuances".
The Company confirms today that it will be seeking shareholder
approval of the Orion Issuances, Additional Convertible Loans and
the Equinox Issuance pursuant to the requirements of Section 607(g)
of the TSX Company Manual. Shareholder approval of the Orion
Issuances, Additional Convertible Loans and the Equinox Issuance is
required pursuant to the rules of the TSX because the Orion
Issuances, Additional Convertible Loans and the Equinox Issuance,
when combined with the other portion of the Other Issuances, will
result in the issuance of an aggregate number of listed securities
greater than 25% of the number of securities of the Company which
were outstanding, on a non-diluted basis, at the time the
transactions were agreed to. As noted above, rules of the TSX deem
these securities to have been issued at a discount to the
then-current market price. The Company is relying on an exemption
from the requirement to hold a shareholder meeting available under
Section 604(d) of the TSX Company Manual, and is seeking to obtain
the approval of the Orion Issuances and Equinox Issuances by
written consent by more than 50% of the shareholders of the
Company.
As previously announced, the closing of each of the transactions
with NGM, Waterton, Orion and the private placement are subject to
the satisfaction of a number of conditions precedent, including
regulatory approvals and, in the case of the Convertible Loans,
completion of due diligence and the negotiation and execution of
mutually satisfactory definitive documentation with Orion.
This news release does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities described
herein in the United States. The
securities have not been and will not be registered under the
United States Securities Act of 1933, as amended (the "U.S.
Securities Act") or any state securities laws and may not be
offered or sold within the United
States unless registered under the U.S. Securities Act and
applicable state securities laws, unless an exemption from such
registration is available.
About i-80 Gold Corp.
i-80 Gold Corp. is a Nevada-focused mining company with a goal of
achieving mid-tier gold producer status. i-80 is well financed with
more than $70.1 million (as at
June 30, 2021) in cash and has
recently signed financing agreements with NGM and non–binding term
sheet with Orion to provide access to as much as $240 million.
Cautionary Note Regarding Forward-Looking Information
Certain statements in this release constitute "forward-looking
statements" or "forward-looking information" within the meaning of
applicable securities laws, including but not limited to,
completion of the Asset Exchange, completion of the Ruby Hill
acquisition, completion of the equity private placement with NGM,
Orion, Equinox and/or other subscribers, and completion of the
convertible loan financing transaction with Orion and others and
the exercise of the Anti-Dilution Right by Equinox. Such statements
and information involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or
achievements of the company, its projects, or industry results, to
be materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements or information. Such statements can be identified by the
use of words such as "may", "would", "could", "will", "intend",
"expect", "believe", "plan", "anticipate", "estimate", "scheduled",
"forecast", "predict" and other similar terminology, or state that
certain actions, events or results "may", "could", "would", "might"
or "will" be taken, occur or be achieved. These statements reflect
the Company's current expectations regarding future events,
performance and results and speak only as of the date of this
release.
Forward-looking statements and information involve significant
risks and uncertainties, should not be read as guarantees of future
performance or results and will not necessarily be accurate
indicators of whether or not such results will be achieved. A
number of factors could cause actual results to differ materially
from the results discussed in the forward-looking statements or
information, including, but not limited to: failure to satisfy of
the relevant conditions to the completion of the transactions
described herein, failure to obtain the relevant regulatory
approvals, material adverse changes, exercise of termination rights
by any relevant party, unexpected changes in laws, failure to
complete the Orion financing transaction on satisfactory terms,
rules or regulations, or their enforcement by applicable
authorities; the failure of parties to contracts with the company
to perform as agreed; social or labour unrest; changes in commodity
prices; and the failure of exploration, refurbishment, development
or mining programs or studies to deliver anticipated results or
results that would justify and support continued exploration,
studies, development or operations.
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SOURCE i-80 Gold Corp