i-80 Gold Corp. said it will ask shareholders to approve the issue of common shares and other securities as part of a financing package for its acquisition of the Lone Tree and Buffalo Mountain gold deposits from Nevada Gold Mines (NGM) and the Ruby Hill mine from affiliates of Waterton Global Resource Management.
The Nevada-focused mining company said the securities will be issued to one or more of the investment funds managed by Orion Resource Partners, Equinox Gold (TSX:EQX) Corp. and certain other potential convertible debt investors.
i-80 Gold said it has already entered into a non-binding term sheet with Orion for up to $140 million of acquisition financing, with an additional $100 million potentially available via an accordion feature.
READ: i-80 Gold to acquire Lone Tree, processing facilities, Buffalo Mountain and Ruby Hill to create Nevada mining complex
The company said the Orion financing is expected to include a mix of equity and convertible securities, warrants and secured instruments for up to $140 million. The securities to be issued will be priced based on the issue price of C$2.62 in respect of the previously-announced equity private placement it expects to complete with NGM and others.
The funding will also include the issuance of:
- Up to 19,195,419 common shares, upon conversion of the principal of a $50 million unsecured convertible loan that is intended to be provided by Orion to the company;
- 839,799 common shares at the issue price in satisfaction of the transfer fee of $1.75 million that will be payable to Orion in connection with the asset exchange;
- 5,500,000 common share purchase warrants to Orion, with each warrant exercisable for one common share at price equal to 125% of the issue price for a period of three years from the date of issue.
Concurrent with the closing of the asset exchange, which was announced in September, NGM has agreed to subscribe for common shares of i-80 Gold at the issue price in an amount equal to the lesser of $50 million and the amount that would result in NGM holding 9.9% of its issued and outstanding stock on a non-diluted basis.
The NGM Issuance is part of a larger non-brokered private placement offering of up to $90 million of common shares at the issue price. That excludes any shares that may be issued to Equinox upon the exercise of its anti-dilution right under an April 2021 support agreement. Equinox currently holds 56,041,282 shares and 2,318,596 warrants to purchase shares representing 29.03% of i-80 Gold’s outstanding shares on a partially diluted basis.
When it announced the transactions, i-80 Gold said the acquisitions are designed to position it as a prominent, stand-alone, gold producer in the state of Nevada. They result in a significant increase in the company's mineral resource base and position it to become one of the largest gold producers in Nevada with the capacity to process refractory and oxide mineralization.
Contact the author at stephen.gunnion@proactiveinvestors.com