8 Nov 2019 13:58
THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE EU MARKET ABUSE REGULATION (596/2014). UPON PUBLICATION OF THE ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.
8 November 2019
Amendment to Precious Metals Streaming Agreement with Wheaton
London, United Kingdom - Pembridge Resources plc (LSE: PERE) ("Pembridge" or the "Company"), is pleased to announce that today it has entered into a Canadian law governed amendment agreement (the "Amendment Agreement") to the Precious Metals Streaming Agreement between, among others, Minto Explorations Ltd ("Minto") and Wheaton Precious Metals Corp. (previously Silverstone Resources Corp.) ("Wheaton"), dated 20 November 2008 (as previously amended by a letter agreement dated 11 March 2009 and an amendment agreement dated 13 October 2017) (the "Existing Agreement").
Highlights
- For the Modified Price Period, the price received by Minto from Wheaton for Payable Gold will increase to 75% of the Market Price
- The Modified Gold Price is effective immediately and shall end on the earlier of (i) 12 months, plus 60 days from First Delivery or (ii) the first 11,000 ounces of Payable Gold having been delivered to Wheaton
- Under the Offtake Agreement between Minto and Sumitomo, 90% of the Payable Gold contained within the copper concentrate produced at the Minto mine will continue to be paid in advance to Minto by Sumitomo on a monthly basis
- Assuming that the Market Price for gold remains on average US$1,500 per ounce and that Minto produces 11,000 ounces of Payable Gold, this deal could benefit Minto's revenue by up to approximately US$8.5m during the Modified Price Period
Existing Agreement
Under the terms of the Existing Agreement, in exchange for an up-front cash payment of US$37,500,000 from Wheaton to Minto, which was paid in 2008, Minto has been and remains entitled to the following sums from Wheaton in respect of Payable Gold and Payable Silver:
Payable Gold: Minto is entitled to the lesser of (i) US$300.00 per ounce of Payable Gold (subject to a 1% annual upwards inflationary adjustment after three years and yearly thereafter) and (ii) the prevailing price of gold quoted by the London Bullion Market Association ("Market Price") per ounce of Payable Gold (US$329 per ounce as at 28 October 2019), for 100% of Payable Gold under 30,000 ounces in any 12-month period and 50% of Payable Gold over 30,000 ounces from the Minto mine in any 12-month period.
Payable Silver: Minto is entitled to receive the lesser of (i) US$3.90 per ounce of Payable Silver (subject to a 1% annual upwards inflationary adjustment after three years and yearly thereafter) and the prevailing Market Price per ounce of Payable Silver, for 100% of the Payable Silver generated from Minto mine.
Amendment Agreement
Pursuant to the terms of the Amendment Agreement, for a limited period (the "Modified Price Period") the received price (the "Received Gold Price") for gold produced by Minto delivered under the Existing Agreement ("Payable Gold") will increase.
For the avoidance of doubt, during the Modified Price Period the received price for silver produced by Minto delivered under the Agreement ("Payable Silver") (the "Received Silver Price") will remain unaltered to that provided for in the Agreement.
Modified Gold Price
During the Modified Price Period, the Received Gold Price will increase to 75% of the Market Price (the "Modified Gold Price") on the day immediately prior to the time when title to the concentrate shipped passes from Minto to the buyer of concentrate (which shall be Sumitomo Corporation Canada ("Sumitomo"), as offtake partner, pursuant to and in accordance with the terms of the offtake agreement between Minto and Sumitomo, dated 22 July 2019 ("Offtake Agreement")).
Modified Price Period
The Modified Gold Price is effective from the date that Payable Gold or Payable Silver is first delivered (or required to be delivered) to Wheaton ("First Delivery") and shall end on the earlier of:
(i) 12 calendar months from First Delivery plus 60 days; and
(ii) any time at which 11,000 ounces of Payable Gold have been (or were required to be) delivered to Wheaton.
At the end of the Modified Price Period, Payable Gold will return to being priced as per the Existing Agreement.
Relationship with the Offtake Agreement
Under the terms of the Offtake Agreement, a provisional payment is made by Sumitomo to Minto on a monthly basis for 90% of the estimated value of concentrate produced at the Minto mine that month ("Advanced Payment"), with the final 10% payment due on delivery to Japan. The Advanced Payment calculation also includes precious metals credits and therefore Minto will receive 90% of the revenue from the Payable Gold and Payable Silver due under the terms of the Existing Agreement and, during the Modified Price Period, the Amendment Agreement.
Gati Al-Jebouri, Chief Executive Officer and Chairman of the Board of Pembridge stated:
"The support from Wheaton should significantly assist Minto's cash flow as the Minto mine ramps up production. Assuming that the Market Price for gold remains on average US$1,500/oz and that Minto produces 11,000 ounces of Payable Gold, this deal could benefit Minto's revenue by up to approximately US$8.5m during the Modified Price Period."
ENDS
The person who arranged for the release of this announcement on behalf of the Company was Gati Al-Jebouri, Chief Executive Officer and Chairman of the Board.
NOTES TO EDITORS
About Pembridge Resources plc
Pembridge is a mining company that is currently suspended from listing on the standard segment of the Official List of the FCA and trading on the main market for listed securities of London Stock Exchange plc. Minto, a subsidiary of Pembridge, is a British Columbia incorporated business operating the Minto mine in Yukon, Canada.About Minto Explorations Limited
Minto operates the underground copper-gold-silver mine located in central Yukon, approximately 240 kilometres north of the capital Whitehorse along the Klondike Highway. In excess of US$350 million of capital expenditure has been invested into Minto operations since site construction began in 2006. The Minto mine was in continuous production between 2007 and 2018, when the mine was placed onto temporary care and maintenance. Pembridge acquired Minto from Capstone Mining Corporation in June 2019 and restarted operations in October 2019.
Enquiries:
Pembridge Resources plc: +44 (0)20 7917 2968
Gati Al-Jebouri, Chief Executive Officer and Chairman of the Board
Paul Fenby, Chief Financial Officer
Thomas Horton, Vice President Corporate Development
Brandon Hill Capital - United Kingdom: +44 (0)20 3463 5016
Jonathan Evans
SI Capital - United Kingdom: +44 (0)14 8341 3500
Nick Emerson
Tavistock Communications - United Kingdom: +44 (0)20 7920 3150
Charles Vivian
Gareth Tredway