Platinum Group Metals reports that Maseve Investments has completed the sale of the Maseve concentrator plant and certain surface rights to Royal Bafokeng Platinum.
Platinum Group Metals and Royal Bafokeng Platinum (RBPlat) executed definitive agreements for a two-step transaction valued at approximately US$74 million on 23 November 2017 (the Maseve Sale Transaction).
Conditions precedent to Step One were fulfilled on 14 February 2018.
A deposit amount in escrow of R41.37 million (approximately US$3.5 million) (the Deposit) was released to Platinum Group Metals on 14 March 2018.
The final Step One cash payment of R646.72 million (approximately US$54.5 million) was received by Platinum Group Metals in South Africa coincident with the registration of the applicable surface rights to a wholly owned subsidiary of RBPlat.
RBPlat is next (Step Two) to acquire 100% of the shares in Maseve, the holding company of the Maseve Mine, and all shareholder loans owed by Maseve, for an aggregate consideration valued at approximately US$16 million on 23 November 2017, of which approximately US$855,000 is payable to a minority shareholder of Maseve.
The parties continue to work together in fulfillment of the remaining conditions precedent to the completion of Step Two, which includes the Department of Mineral Resources approval to the transaction under section 11 of the Mineral and Petroleum Resources Development Act, which is expected in the weeks ahead.
An amount of R40.94 million (approximately US$3.47 million) from the release of the Deposit was used to settle outstanding contractor claims and pay an amount of US$107,755 to reduce outstanding indebtedness to the Sprott Resource Lending Partnership (Sprott) pursuant to their first secured loan facility.
Platinum Group Metals is to use approximately US$46.98 million from the Final Payment to repay all remaining indebtedness under the Sprott Facility, consisting of the outstanding principal amount of US$40.0 million, a bridge loan of US$5.0 million and all accrued and unpaid interest and fees due of approximately US$1.98 million.
Platinum Group Metals is also in the process of paying US$7.52 million from the Final Payment to reduce outstanding indebtedness and to pay fees due under a second secured loan facility (LMM Facility) with Liberty Metals & Mining Holdings, LLC (LMM).
Following this payment approximately US$44.45 million in principal, accrued interest and accrued production payments will remain due to LMM.
Platinum Group Metals is also required to pay LMM a production payment termination fee (PPTF) of US$15 million before 11 May 2018, or if later US$25 million.
The LMM Facility matures on 30 September 2018. All payments to LMM are first applied to the PPTF.
As previously reported, and as agreed with Sprott and LMM, Platinum Group Metals must raise US$20 million in subordinated debt and/or equity within 30 days of the Sprott Facility being repaid.
In addition, Platinum Group Metals must also complete a second required raise of US$20 million in subordinated debt and/or equity before 31 July 2018.
Proceeds from these required raises will first be applied to remaining amounts payable for the PPTF and then to repay remaining amounts due pursuant to the LMM Facility.
Voluntary repayments to LMM in excess of the first required US$20 million repayment will be applicable to reduce the second required US$20 million repayment (Second Required Repayment).
The company’s share of proceeds receivable for Step Two of the Maseve Sale Transaction are to be applied towards repayment of amounts owing to LMM.
In order to provide a financing alternative for a majority of the Second Required Payment to LMM, on 8 March 2018 the company entered into a non-binding Term Sheet with Sprott Private Resource Lending for a US$15.0 million term loan facility on industry standard costs, terms and conditions for a loan of this nature.
If the Sprott PRL Facility is completed, the Sprott PRL Facility may be drawn upon by Platinum Group Metals until 30 July 2018, or such other date as mutually agreed by the company and Sprott PRL and would have a maturity date of 12 months after the closing date.