Orion and Blackstone have also secured the right to acquire 50% of Fruta del Norte`s gold production up to a maximum of 2.5 million ounces at a price determined based on monthly delivery dates and a defined offer period. Under the Gold Prepayment Agreement, i-80 will deliver 3,000 troy ounces of gold to Orion from March 31, 2022 for each of the quarters ending March 31, 2022 and June 30, 2022, and then 2,000 troy ounces of gold per calendar quarter until September 30, 2025 to meet the upfront payment of $45 million for total shipments of 32,000 troy ounces of gold. following a positive i-80 construction decision for (a) the Lone Tree Project processing facilities and (b) two of the following: the Ruby Hill underground development (including ruby deep and/or blackjack deposits), the Granite Creek open-pit development or the McCoy-Cove project, in all cases on the basis of a feasibility study, in a form and substance satisfactory to Orion, i-80 may request an increase in the initial payment of $45 million by an additional amount not exceeding a total of $50 million, in accordance with the terms of the gold prepayment agreement. In 2011, the Company received $50,000 under a Gold upfront payment agreement (« prepayment ») and at the same time entered into a collection agreement – the Gold Purchase Agreement (« Purchase Agreement »). Advance payment facilities allow producers to access financing directly related to production and supply. If the client is a business partner, they are generally more agile than banks in execution, and the underlying documentation becomes more streamlined than with traditional financing. In addition, under the prepayment agreement, the client may offer better financing terms compared to other types of financing due to the profitability on the commercial side. The defined gold deposit at McCoy-Cove represents one of the highest grade deposits with resources of more than 1 million ounces of gold in North America. McCoy-Cove is approved for underground development and i-80 will begin construction of a decline in early 2022 to advance a large underground drilling campaign, followed by the completion of a full feasibility study. VANCOUVER, BRITISH COLUMBIA–(Marketwired – May 30, 2017) – Lundin Gold Inc. (« Lundin Gold » or the « Company ») (TSX:LUG) (OMX:LUG) is pleased to announce a project financing package of $400 million to $450 million (the « Financing ») with Orion Mine Finance Group (« Orion ») and Blackstone Tactical Opportunities (« Blackstone »). The funding forms the basis for the development of the Company`s Fruta del Norte project and demonstrates the growing support for mining investments in Ecuador.
The financing consists of a $150 million gold prepayment credit facility, a $150 million flow credit facility, and $100 million to $150 million in committed interest in future equity financing required to finance the project. All dollar amounts are quoted in U.S. dollars (« $ »). The Convertible Loan was granted under other financing agreements (as well as the Convertible Loan, the « Financing Transactions ») between Orion and i-80 consisting of an initial agreement to buy and sell gold, including between OMF Fund III (Hg) Ltd. and i-80 (the « Gold Prepayment Agreement »), a purchase and sale agreement (Silver) between OMF Fund III (Hg) Ltd. and i-80 (the « Silver Stream Agreement »), among others, and an amended and amended removal agreement between, among others, OMF Fund II (O) Ltd. (« OMF O »), OMF Fund III (Cr) Ltd. and i-80, which amended and amended the Removal Agreement between, but not limited to, OMF O and i-80 dated April 7, 2021 (the « Original Removal Agreement »). Orion had previously entered into a share subscription agreement between Orion Mine Finance Fund III LP (« Fund III »), a limited partnership managed by Orion Mine Finance Management III LLC, and i-80 dated September 14. October 2021 (the « Subscription Agreement »). OMF O, OMF Fund III (Hg) Ltd.
and OMF Fund III (Cr) Ltd. and Orion Mine Finance Fund III LP are affiliates of Orion Mine Finance Management III LLC (collectively, the « Orion Group »). In connection with the closing of the initial payment agreement for gold, i-80 also issued warrants to Fund III for the purchase of 5,500,000 common shares (the « New Warrants ») at a purchase price per common share of C$3,275 exercisable until December 13, 2024. The conclusion of the Gold Advance Payment Agreement and the Silver Stream Agreement is subject to certain customary closing conditions. Further information on the financing transactions can be found in the i-80 press release dated December 14, 2021, a copy of which can be found under i-80`s SEDAR profile under www.sedar.com. Recent streaming transactions include the metal streaming facility that SilverStream provided to SEZC Minera Gold Ltd in 2014, under which SilverStream agreed to provide Minera with $5 million in four installments in exchange for Minera`s agreement to sell the largest quantity of 70 million ounces, or 10% of its monthly gold production, at SilverStream for the life of its mine. Earlier this year, KBL Mining Limited entered into a streaming agreement with Quintana Mineral Hill Streaming Co. LLC under which Quintana agreed to provide KBL with $23 million in installments in exchange for the right to acquire a percentage of KBL`s base metal, gold and silver production. While streaming gives the producer access to funds before the mine goes into production, there is a risk for the producer to enter into a streaming agreement that undervalues the streaming product, especially if the market for that product is volatile.
An insufficient floor price can reduce the overall value of the project, so producers should try to include an option to purchase all or part of the stream from the investor in the streaming agreement. .