Osisko Gold Royalties Ltd (TSX:OR) (NYSE:OR) today announced that it has entered into a binding bridge financing term sheet whereby it will provide a senior-secured bridge credit facility to Stornoway Diamond Corporation together with certain secured lenders and key stakeholders. The Bridge Facility is being provided to Stornoway by the Bridge Lenders in order to support Stornoway during its strategic review process.
Sean Roosen, Chair and CEO of Osisko stated: “We are working closely with Stornoway, its financial partners, and the Governement of Québec to ensure the long term viability of the Renard Mine for the benefit of all stakeholders during these challenging times in the diamond market.”
Osisko owns a senior-secured 9.6% diamond stream on Stornoway’s Renard diamond mine and will continue to receive deliveries under its stream agreement. Under the terms of the Bridge Facility, the buyers under the amended and restated purchase and sale agreement entered into on October 2, 2018 (the “Stream Agreement”), in proportion to their respective commitments, will advance an amount equivalent to the stream net proceeds payable under the Stream Agreement to Stornoway, up to an estimated amount of C$5.9 million (C$2.8 million attributable to Osisko). The Bridge Facility also provides that Diaquem, Inc. an affiliate of Investissement Québec, has agreed to advance to Stornoway an amount of up to C$11.7 million by way of access to the funds available in a senior loan reserve account maintained by Stornoway’s subsidiary, Stornoway Diamond (Canada) Inc. In addition, amounts equivalent to royalty payments to be made by SDCI to Diaquem under the existing royalty agreement, up to an estimated amount of C$1.9 million, and to interest payments accruing under the senior loan agreement between SDCI and Diaquem, up to an estimated amount of C$2.5 million, have agreed to be advanced by Diaquem.
The Bridge Facility will be secured by a first-ranking security interest over all present and after-acquired assets and property of the Stornoway and will accrue interest at a rate equal to 8.25% per annum.
Amounts owing under the Bridge Facility will become due and repayable in full upon the maturity date, being the earliest to occur of certain stated events, including (i) the completion of a restructuring or other material transaction pursuant to the Strategic Process or the sale of all or substantially all of the property, assets and undertakings of Stornoway, and (ii) September 16, 2019 (the maturity date being subject to 30-day extensions by unanimous consent of the Bridge Lenders).
Concurrently with the entering into of the Bridge Facility, Stornoway also entered into a binding term sheet with the holders of more than 75% of the outstanding principal amount of the convertible debentures, pursuant to which such holders have consented to postpone interest payments on the convertible debentures from June 30 to December 31, 2019. Stornoway also obtained a waiver from Fonds de Solidarité des Travailleurs du Québec, Fonds Régional de Solidarité F.T.Q. Nord-du-Québec, S.E.C. and Diaquem of the requirement to make interest payments under the Convention de prêt dated as of May 3, 2012 from May 1, 2019 until December 31, 2019, inclusively.
About Osisko Gold Royalties Ltd
Osisko Gold Royalties Ltd is an intermediate precious metal royalty company that holds a North American focused portfolio of over 135 royalties, streams and precious metal offtakes. Osisko’s portfolio is anchored by its 5% NSR royalty on the Canadian Malartic Mine, which is the largest gold mine in Canada. Osisko also owns a portfolio of publicly held resource companies, including a 32.7% interest in Barkerville Gold Mines Ltd., a 16.6% interest in Osisko Mining Inc., an 18.8% interest in Victoria Gold Corp. and a 19.9% interest in Falco Resources Ltd.
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