HIGHLIGHTS:
Montage Gold Corp. (TSX-V: MAU) (OTCQX: MAUTF) is pleased to announce that it has entered into final documentation with both Wheaton Precious Metals International Ltd. and Zijin Mining Group Co. Ltd. (through its subsidiary and non-operating division, together with its affiliates, “Zijin”) with respect to an aggregate US$825 million financing package to fund the development of its flagship Koné project in Côte d’Ivoire, which is set to become West-Africa’s next sizeable, long-life, low production-cost gold mine.
The financing package is well aligned with Montage’s goal of obtaining significant financial and strategic flexibility while minimizing equity dilution. The financing package increases Montage’s liquidity sources to US$968 million, inclusive of its US$143 million cash position as at September 30, 2024, and is comprised of the following instruments:
Martino De Ciccio, CEO of Montage, commented: “Today’s announced US$825 million funding package for the construction of our flagship Koné project in Côte d’Ivoire provides significant funding headroom, ahead of launching our construction, as it increases our liquidity sources to approximately US$970 million. Moreover, it is the culmination of an exhaustive financing process which generated strong interest given the high-quality nature of our project coupled with management’s proven construction track record.
This funding package is well aligned with our goal of pursuing the optimal financing solution which maximizes key valuation per share metrics, by considering both the cost of capital and equity dilution, alongside other important considerations such as retaining exploration upside and maintaining significant strategic, financial, and operating flexibility.
Furthermore, we are extremely pleased to have concluded our financing through the formation of strategic partnerships with both Wheaton and Zijin who share our vision of creating a premier African gold producer. With the financing milestone now achieved, we look forward to soon launching the construction of our Koné project, which is set to become West-Africa’s next sizable, long-life, low production-cost gold mine, and poised to unlock value for all stakeholders.”
Randy Smallwood, President and CEO of Wheaton Precious Metals Corp. commented: “With essential permits in place coupled with its impressive scale, we believe the Koné Project stands out as one of the premier gold assets in Africa and we are very pleased to partner with Montage to deliver a full financing package for its development. Supported by strong shareholder backing from the Lundin Group and Zijin Mining, the Koné Project is expected to significantly boost Wheaton’s near-term annual gold production and further strengthen our peer-leading growth trajectory. We look forward to collaborating with Montage’s outstanding team, whose extensive experience in West Africa had driven remarkable progress in de-risking the project and advancing it towards construction.”
FINANCING PACKAGE DETAILS
$625m Gold Stream from Wheaton Precious Metals
Upfront Consideration: Wheaton will pay Montage a total upfront cash consideration of US$625 million in four equal installment payments during construction, subject to certain customary conditions.
Streamed Metal Percentage: Under the agreement, Wheaton will purchase 19.5% of the payable gold from the Core Area of Interest until 400,000 ounces of gold (the “First Dropdown Threshold”) has been delivered, thereafter dropping to 10.8% of the payable gold from the Core Area of Interest until an additional 130,000 ounces of gold (the “Second Dropdown Threshold”) has been delivered, at which point the Wheaton Stream will be reduced to 5.4% of the payable gold from the Core Area of Interest for the life of the mine. Based on a stream crediting mechanism, Montage can however reduce the Wheaton Stream deliveries to nil following the Second Dropdown Threshold if payable gold reasonably expected to be delivered from the Core Area of Interest has been previously delivered under the stream from areas outside the Core Area of Interest. Furthermore, Montage can accelerate its deleveraging with flexibility to deliver in excess of its minimum required commitments. Payable gold is calculated using a fixed payable factor of 99.9%.
Core Area of Interest: The Koné and Gbongogo deposits, based on a US$2,500/oz pit-shell, plus a 500-meter boundary as shown in Figure 1 below, resulting in Montage retaining significant exploration upside as more than 50 exploration targets have been identified on the property.
Ore from within a 100km expanded area of interest will be subject to the stream if that ore is processed at the Koné mineral processing facility, until such time following the Second Dropdown Threshold that ounces received under the stream from the expanded area of interest is equal to the remaining ounces from the Core Area of Interest, at which point the stream percentage will be reduced to nil. If at any point after that the remaining ounces from the Core Area of Interest exceed the ounces received from the Expanded Area of Interest, Wheaton will continue receiving 5.4% of payable gold from the Core Area of Interest, for the remaining life of mine.
Production Payments: In order for Montage to participate in the gold price upside, there will be a price adjustment mechanism in place, for the first five years after the signing of the precious metals purchase agreement, as described below, and afterwards Wheaton will make ongoing payments for the gold ounces delivered equal to 20% of the spot price of gold.
Other Considerations:
$75m Fully Redeemable Subordinated Gold Stream from Zijin
Upfront Consideration: Upfront cash consideration of US$75 million to be drawn by Montage during the 24-month availability period. The proceeds will be allocated to cover project costs, working capital requirements, exploration and financing fees for the development, construction and operation of the Koné project.
Area of Interest: The Koné and Gbongogo deposits, based on a US$2,500/oz pit-shell, plus a 500-meter boundary.
Streamed Metal Percentage: Zijin will receive 3.1% of the payable gold from the Koné project until 54,000 ounces of gold has been delivered (the “Drop Down Threshold”), after which Zijin will receive 1.3% of gold production for the remaining life of the mine, unless the Zijin Stream is redeemed according to the buy back terms summarized below and as further specified in the Zijin Stream agreement.
The Zijin Stream is fully redeemable under the following buy back options:
First Buy Back Option: at the later of (i) December 31, 2029, (ii) 30 months from steady state production, and (iii) delivery of an aggregate amount of 31,750 ounces of gold, Montage may pay to Zijin a cash consideration of a minimum of US$23 million plus an additional amount, if required, to provide to Zijin a 10% IRR (based on a US$2,000/oz gold price) whereby:
Second Buy Back Option: at the later of (i) December 31, 2030, (ii) 42 months from steady state production, and (iii) delivery of an aggregate amount of 36,500 ounces of gold (or an aggregate amount of 40,700 ounces of gold if the first buy back is not exercised prior to the second buy back), Montage may pay to Zijin a cash consideration of a minimum of US$30 million plus an additional amount, if required, to provide to Zijin a 10% IRR (based on a US$2,000/oz gold price), whereby the Zijin Stream will be terminated.
Production Payments: Zijin will make ongoing payments for the gold ounces delivered equal to 20% of the applicable gold spot price.
The security granted to Zijin for the Zijin Stream shall be second ranking and fully subordinated to any senior facilities and certain security will terminate once the uncredited deposit under the Zijin Stream has been reduced to nil.
$75m Loan Facility from Wheaton
Wheaton will provide Montage with a secured Wheaton Loan Facility on the following terms:
$50m Loan Facility from Zijin
Zijin will provide Montage with a secured Zijin Loan Facility on the following terms:
Closing of the Loan Facilities and the Streams are subject to closing conditions as set forth in the definitive agreements and are expected to be satisfied in the coming weeks.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
ADVISORS
HCF International Advisors Ltd served as financial advisors to Montage Gold Corp. Norton Rose Fulbright is acting as legal advisor.
ABOUT MONTAGE GOLD CORP.
Montage Gold Corp. is a Canadian-listed company focused on becoming a premier multi-asset African gold producer, with its flagship Koné project, located in Côte d’Ivoire, at the forefront. Based on the Feasibility Study published in 2024, the Koné project has an estimated 16-year mine life and sizeable annual production of +300koz of gold over the first 8 years. Over the course of 2024, the Montage management team will be leveraging their extensive track record in developing projects in Africa to progress the Koné project towards a construction launch.
TECHNICAL DISCLOSURE
The Koné and Gbongogo Main Mineral Resource Estimates were carried out by Mr. Jonathon Abbott of Matrix Resource Consultants of Perth, Western Australia, who is considered to be independent of Montage Gold. Mr. Abbott is a member in good standing of the Australian Institute of Geoscientists and has sufficient experience which is relevant to the commodity, style of mineralization under consideration and activity which he is undertaking to qualify as a Qualified Person under NI 43–101.
The Mineral Reserve Estimate was carried out by Ms. Joeline McGrath of Carci Mining Consultants Ltd., who is considered to be independent of Montage Gold. Ms. McGrath is a member in good standing of the Australian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the work which she is undertaking to qualify as a Qualified Person under NI 43–101.
Figure 1: Wheaton Stream Core Area of Interest (CNW Group/Montage Gold Corp.)
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