(all amounts are expressed in US dollars)
TORONTO, November 20, 2020 (GLOBE NEWSWIRE) – (TSX: SRHI, SRHI.WT) – SRHI Inc. (the “Business” or “SRHI“) Is pleased to announce that the Company and Minera Tres Valles SpA (“MTV”) Completed the usual documentation and formalization of conditions under the judicial reorganization agreement (“JRA“) Between MTV, MTV’s senior lenders (“Lenders”) And the company.
MTV is the company’s 70% -owned copper mine in Salamanca, Chile.
A summary of the financial commitments arising from the JRA (and as published in previous press releases) is as follows:
SRHI to provide $ 10 million to MTV by June 2021
- Up to $ 10 million has secured second-tier debt to be financed from the company’s cash resources (the “New SRHI loan”)
- To be drawn by MTV by June 2021
- Principal and interest subordinated to the Senior Secured Prepayment Facility (the “Establishment”) And new senior debt (defined below)
- Repayment expected from 2025
- Completes (and will prorate) the Company’s $ 10 million corporate guarantee provided under the agreement governing the facility (the “Installation agreement”) Concluded between the lenders, MTV and the company in December 2019
- No dilution of the company’s 70% stake in MTV
Lenders change terms of facility agreement and commit to additional $ 6 million
- Immediate release of $ 7 million in cash, previously restricted by lenders under the facility agreement, to support MTV operations
- 12-month extension of the term of the facility agreement until December 2024
- 12-month extension of the start of the facility agreement for principal repayments until March 31, 2022
- 18-month extension of the obligation to pay 50% interest under the facility agreement. Full interest payments begin March 31, 2022
- Up to $ 6 million in new senior debt (“New senior debt”) To have substantially the same guarantees and conditions as those currently envisaged in the facility agreement (with some modifications)
- New senior debt should be made available to MTV, if necessary, after SRHI has fully advanced the new SRHI loan.
Unsecured creditors convert money owed to unsecured debt
- On August 24, 2020, approximately $ 22 million of MTV’s accounts payable and accrued liabilities were converted to long-term debt (the “Unsecured debt“)
- As of August 24, 2020, unsecured debt of approximately $ 17 million has been converted from MTV’s accounts payable to long-term debt (“Unsecured term debt”)
- Effective August 24, 2020, unsecured debt of approximately $ 5 million was converted from MTV’s accounts payable into subordinated long-term debt (“Subordinated debt“) to be repaid only after all amounts due to lenders and unsecured creditors have been repaid in full
- Grace period for repayment of principal and interest on unsecured term debt – first payment starting March 31, 2022
- 50% of unsecured term debt to be repaid in 13 quarterly payments from March 31, 2022
- 50% remaining unsecured term debt to be repaid on June 30, 2025
- The annual interest rate on new unsecured debt is 5%
- Possibility of accelerated prepayments
- Subordinated debt and unsecured term debt totaling approximately $ 7 million is owed to Vecchiola SA, a related party to the minority shareholder of MTV.
About SRHI Inc.
SRHI is a Toronto-based publicly traded company and its primary operating activity is its 70% interest in the producing Minera Tres Valles copper mine in Salamanca, Chile. For more information on the SSRI, please visit www.srhi.ca.
Caution regarding forward-looking information
Certain statements contained in this press release contain forward-looking information (collectively referred to herein as “forward-looking statements”) within the meaning of applicable Canadian securities laws. The use of any of the words “expect”, “plan”, “continue”, “estimate”, “may”, “want”, “plan”, “should”, “believe”, “plan” “,” intend “and similar expressions are intended to identify forward-looking statements. In particular, but without limiting the foregoing, this press release contains forward-looking statements regarding: the terms of the JRA; and the expected time frames for the provision, withdrawal and repayment of MTV’s debt.
Although SRHI believes that forward-looking statements are reasonable, they are not guarantees of future results, performance or achievement. A number of factors or assumptions were used in making forward-looking statements, including: the terms of the JRA; that the assumptions regarding future production of mined ore and copper cathode as well as future cash flows, including future copper prices, operating costs and capital expenditures remain substantially correct; there have been no other material disruptions affecting the development and operation of MTV; the timing of the planned reopening of the Don Gabriel mine; the timing and success of the construction and development of the Papomono Masivo underground mine and the assumptions regarding general marketing, political, commercial and economic conditions.
Actual results, performance or achievements could differ materially from those expressed or implied by the forward-looking statements if the assumptions underlying the forward-looking statements prove to be incorrect or if one or more risks or other factors materialize, including: (i ) risks associated with the mining industry in general (e.g. operational risks in development, exploration and production; delays or changes in plans with respect to exploration or mining projects development or capital expenditures; the uncertainty of estimates and projections relating to mineral reserves, production, costs and expenditures; and occupational, health, safety and environmental risks) and the risks associated with the industries of other portfolio companies; (ii) the risks associated with investing in emerging markets; (iii) general economic, market and business conditions; (iv) the JRA is not respected; (v) fluctuations and uncertainties in the prices of raw materials; (vi) risks associated with catastrophic events, man-made disasters, terrorist attacks, wars and other conflicts, or an outbreak of a public health pandemic or other public health crises, including COVID-19; (vii) the risk that MTV and / or the Company will cease to be in operation and that the Company’s guarantee of MTV’s debt will be called and the related pledge will be realized (viii) the risks described under the heading “Management risks ”in SRHI’s MD&A and Analysis for the year ended December 31, 2019 and its most recent 2020 interim report; and (ix) the risks described under “Risk Factors” or incorporated by reference in SRHI’s Annual Information Form dated March 24, 2020.
Forward-looking statements speak only as of the date hereof, unless otherwise stated, and SRHI assumes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. except to the extent expressly required by applicable Canadian securities laws.
Cautionary Note to U.S. Investors Regarding Estimates of Measured, Indicated and Inferred Mineral Resources
This press release may use the terms “measured”, “indicated” and “inferred” mineral resources. US investors are advised that although these conditions are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. “Inferred mineral resources” involve great uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that all or part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of a feasibility study or other economic studies. US investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. US investors are also cautioned not to assume that all or part of an inferred mineral resource exists or is economically or legally exploitable.
Investor contact details:
President and Chief Financial Officer
Source: SRHI Inc.