- Harte Gold (TSX:HRT) has entered into a term sheet agreement with financing firm Appian Capital Advisory worth up to C$40 million
- The deal will allow Harte Gold to restart work at its Sugar Zone mining operation
- The private firm Appian Capital will loan the company approximately $25.17 million and purchase 9.5 million special shares in Harte Gold for $12.98 million
- Harte Gold is moving from a lease arrangement at Sugar Zone to an owner-operator model, where it will assume operational control of the mine
- Harte Gold (HRT) is up 12.5 per cent and is trading at 14 cents per share
Harte Gold (TSX:HRT) has entered into a term sheet agreement with financing firm Appian Capital Advisory worth up to C$40 million.
The deal will see Appian acquire 9.5 million special series B shares for an approximate price of $12.98 million.
Appian will then loan Harte Gold approximately $25.17 million in a non-revolving credit facility.
The final piece of the agreement will see Appian pick up a 0.5 per cent net smelter royalty from Harte, for the Sugar Zone mining operation. Harte Gold has stated it will use the funds to restart operations at Sugar Zone in July.
The company will also transition to an owner-operator model at Sugar Zone, whereas previously the company had been farming the work out to contractors.
The company has stated this is the culmination of an independent review of its financial structure by independent members of its Board.
The company believes this deal gives it the best possible pathway to return to 800 tonnes per day in production, alongside a pathway towards 1200 tonnes per day and funding for further drilling work.
Harte has stated it believes it will need approximately $35 million to return Sugar Zone to an 800 tonne-a-day operation.
This involves $18 million to reduce accounts payable and providing enough liquidity to restart operations. $10 million for mine development, $5 million for surface infrastructure and capital projects and $2 million for exploration.
The restart plan will begin with select mining operations, before mill operations resume in late July.
The company’s Chairman Joseph Conway said given the company’s current financial state, the proposed transaction was the best solution available.
He went on to say that the deal limits up-front dilution, provides sufficient funding to cover cash flow and capital requirements and allows for immediate capital to accelerate the restart of operations.
Harte Gold (HRT) is up 12.5 per cent and is trading at 14 cents per share at 11:15 pm EDT.