Continental Gold Inc. (TSX: CNL; OTCQX: CGOOF) has announced that Newmont Mining Corporation has agreed to purchase 37.38 million common shares at CDN $4.00 per share for a total investment of US $109 million in a non-brokered private placement. Concurrently with Newmont’s investment, RK Mine Finance Master Fund I Limited has also agreed to purchase 8.59 million common shares on a private placement basis at CDN $4.00 per share for a total investment of US $25 million, as contemplated in Continental’s secured project credit facility with Red Kite.
After giving effect to the private equity placements, Newmont and Red Kite will own approximately 19.9% and 4.6%, respectively, of the issued and outstanding common shares of Continental on a non-diluted basis. The private placements will not close before May 18, 2017 post receipt of regulatory approvals, including by the Toronto Stock Exchange (TSX).
Newmont will become the largest shareholder. As at March 31, 2017, Van Eck Associates Corporation had control over 19,439,561 common shares, representing 13.7% of the current issued and outstanding common shares.
“After completing a formal process in which a number of alternatives (including multiple equity financing offers) were evaluated, we are pleased to be welcoming Newmont and Red Kite as investors in Continental. Newmont is our first choice for a cornerstone investor with its best-in-class balance sheet, excellent operating team and recent track record of delivering projects on schedule and under budget. We look forward to capitalizing on Newmont’s experience to successfully kick-off formal construction at the Buriticá project later this year. With Newmont as a partner and the completion of this financing, Continental will be well-positioned to build Buriticá and create significant value for our shareholders with first gold pour on track for early 2020,” commented Ari Sussman, CEO of Continental.
In connection with the Newmont investment, Newmont and Continental have entered into a binding Investment Agreement, the provisions of which include:
- a standstill until the Buriticá project goes into commercial production;
- a twelve-month lock-up on share dispositions;
- participation rights in any future equity financings to maintain pro rata ownership interest;
- ‘backstop rights’ to subscribe for any unsold portion of future equity financings;
- a right of first offer for any non-equity financing greater than US $30 million;
- the formation of joint management technical, exploration, and sustainability committees; and
- one seat for a Newmont nominee on the Continental Board of Directors.
Newmont and Continental will also form a strategic alliance to evaluate opportunities to partner on exploration of Continental’s other properties in Colombia.
RBC Capital Markets is acting as financial advisor to the Continental Board of Directors in connection with the Newmont investment.
photo credit: Continental Gold