Torex Gold Resources Inc. (TSX: TXG) is pleased to announce that the Company has repaid early the remaining $40 million of debt in relation to the 2019 Debt Facility and is now debt free other than approximately $5 million of finance leases.
In addition, the Company’s wholly-owned subsidiary Minera Media Luna, S.A. de C.V. has signed a Third Amended and Restated Credit Agreement with the same syndicate of lenders comprised of the Bank of Montreal, BNP Paribas, ING Bank, The Bank of Nova Scotia, and Societe Generale in connection with a two-year senior secured $150 million revolving debt facility.
The Company may use the 2021 Revolving Facility for general corporate and working capital purposes, including certain development expenditures and acquisitions, and can be used for letters of credit or funding of capital expenditures. The amended facility also allows Torex to make distributions to its shareholders in the aggregate amount of up to C$100 million, in all cases subject to the conditions of the 2021 Revolving Facility.
Jody Kuzenko, President & CEO of Torex, stated:
“With no remaining long-term debt, Torex has never been in a stronger financial position. The markedly enhanced terms our partner Banks have granted through this latest refinancing agreement reflects the strength of our balance sheet and underlying cash flow potential of our El Limón Guajes complex. Importantly, the amended facility allows for greater financial flexibility as we lay the foundation for our future in Morelos and beyond.”
Andrew Snowden, Chief Financial Officer of Torex, stated:
“The intent of the refinancing was to loosen the restrictions and covenants in place from our initial project financing when our operations were less mature and advanced to covenants more inline with a corporate level facility. With the Company’s robust cash balance and the ongoing support of the banking syndicate the Company now has significant financial flexibility to develop Media Luna and other future projects, a reduced cost of debt, and can potentially return excess capital to shareholders.”
The 2021 Revolving Facility continues to permit spending to facilitate the development of Media Luna, advance the Muckahi Mining System, and other potential growth opportunities, with the spending limit under the previous agreement removed.
The development expenditures are subject to the conditions of the 2021 Revolving Facility, including compliance with (i) financial covenants related to maintaining a net leverage ratio of 3x, an interest coverage ratio of 3x and minimum liquidity of $50 million; and (ii) certain thresholds with respect to the quantum of development expenditures and the amount spent on the Muckahi Mining System.
The 2021 Revolving Facility has an interest rate of LIBOR (subject to a zero floor) plus an applicable margin based on the net leverage ratio on any loan or letter of credit outstanding (Table 1). It includes standard and customary finance terms and conditions with respect to fees, representations, warranties, covenants and conditions precedent to additional draws under the 2021 Revolving Facility. The amended debt facility continues to be secured by all of the assets of Minera Media Luna and secured guarantees of the Company and each of its other subsidiaries with a direct or indirect interest ELG and/or the Media Luna Project.
Table 1: LIBOR Applicable Margins Based on Net Leverage Ratio
|Level||Net Leverage Ratio||LIBOR Applicable Margin|
|I||≤ 1.00x||275 bps|
|II||>1.00x and ≤ 2.00x||300 bps|
|III||>2.00x and ≤ 2.50x||325 bps|
The 2021 Revolving Facility matures on March 30, 2023 with a step down in capacity by $25 million on September 30, 2022 and again on December 21, 2022.
The Third Amended and Restated Credit Agreement will be posted today under the Company’s profile on SEDAR at www.sedar.com.
ABOUT TOREX GOLD RESOURCES INC.
Torex is an intermediate gold producer based in Canada, engaged in the exploration, development, and operation of its 100% owned Morelos Gold Property, an area of 29,000 hectares in the highly prospective Guerrero Gold Belt located 180 kilometers southwest of Mexico City. The Company’s principal assets are the El Limón Guajes mining complex (“ELG” or the “ELG Mine Complex”) comprising the El Limón, Guajes and El Limón Sur open pits, the El Limón Guajes underground mine including zones referred to as Sub-Sill and El Limón Deep (“ELD”), and the processing plant and related infrastructure, which commenced commercial production as of April 1, 2016, and the Media Luna deposit, which is an advanced stage development project, and for which the Company issued an updated preliminary economic assessment in September 2018. The property remains 75% unexplored.
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