VANCOUVER, BC, Oct. 4, 2024
/CNW/ - Santacruz Silver Mining
Ltd. (TSX.V:SCZ) ("Santacruz" or the
"Company") is pleased to announce that further to its news
release dated April 4, 2024, it is
has entered into a definitive omnibus agreement (the "Omnibus
Agreement") and an amended and restated omnibus security
agreement (the "Omnibus Security Agreement" and together
with the Omnibus Agreement, the "Definitive Agreements"),
each with an effective date of October 3,
2024, with certain Glencore entities
("Glencore") to amend certain transaction documents in
connection with the prior sale by Glencore of its Bolivian mining
assets to Santacruz (the "Transaction"), as previously
announced by Santacruz on March 21,
2022 and October 13, 2021. The
Definitive Agreements are the result of arm's length negotiations
between Santacruz and Glencore and supersede the binding term sheet
entered into between the parties dated March
28, 2024.
Arturo Prestamo, Executive
Chairman and CEO, commented; "This agreement marks a significant
milestone for Santacruz, providing us with enhanced financial
flexibility as we move forward with our strategic plans. The
revised payment structure allows us to better manage our cash flow
while maintaining the ability to accelerate payments if it becomes
beneficial to do so. We are also pleased to maintain our strong
partnership with Glencore, whose collaboration has been invaluable
in reaching these mutually beneficial terms. We look forward to
continuing this productive relationship as we execute on our vision
for the future."
Pursuant to the Definitive Agreements, Santacruz and Glencore
have agreed to the following terms:
- The total consideration payable by Santacruz to Glencore under
the Definitive Agreements will be in lieu of all present and future
amounts owing or payable by Santacruz under the transaction
documents entered into pursuant to the Transaction.
- Subject to the Acceleration Option (as defined below),
Santacruz will pay up to US$80
million in cash to Glencore in eight equal annual
instalments of US$10 million each
(the "Base Purchase Price") with the first payment being
made on or before November 1,
2025.
- Santacruz can exercise an option to accelerate the payment of
the outstanding balance of the Base Purchase Price in full at any
time, such prepayment amount will be US$40
million if exercised prior to November 1, 2025 and shall decrease by
US$2 million for each annual
instalment of US$10 million that has
been paid by Santacruz (the "Acceleration Option").
- Santacruz grants to Glencore a contingent value right (the
"CVR") whereby Santacruz will pay Glencore a monthly payment
of US$1,333,333.33 (the "CVR
Payment"), subject to a total cap of US$77.7 million (the "CVR Cap"), in the
event that in any calendar month during the period commencing on
March 28, 2024 and ending on
December 31, 2032, the average LME
spot price of zinc (or the highest open hedge price if the Hedging
Option (as defined below) has been exercised or the price at which
a hedge would have been entered into if Santacruz exercises the
Santacruz Option (as defined below)) in the calendar month is at
least US$3,850 per tonne (the
"Base Price"). The CVR Payment will increase by US$83,333.33 for each increase of $100 per tonne above the Base Price and up to a
price of $5,049.99 per tonne (the
"CVR Escalator").
- In addition to the CVR Payment, in the event the average LME
spot price of zinc (or the highest open hedge price if the Hedging
Option has been exercised or the price at which a hedge would have
been entered into if Santacruz exercises the Santacruz Option) in a
calendar month is at least US$5,050
per tonne (the "Additional Payment Price"), Glencore will be
entitled to an additional monthly payment of US$166,666.66 for each increase of $100 per tonne above the Additional Payment
Price, with 50% of such payment being treated as a CVR Payment
counting towards the CVR Cap and the remaining 50% of such payment
not being treated as a CVR Payment and therefore will not count
towards the CVR Cap (such amount not counting towards the CVR Cap
being the "Additional Payments").
- Glencore can require Santacruz to hedge a limited amount of
zinc production from its Bolivian mining operations (so long as the
hedging price would exceed the Base Price) subject to certain
conditions (the "Hedging Option"). If Santacruz determines,
acting reasonably and in good faith, that the cost of entering into
either a hedging arrangement is not commercially reasonable based
on current market conditions, Santacruz may, in lieu of entering
into a hedging arrangement, pay the CVR Payments and, if
applicable, the Additional Payments to Glencore over the period
which the hedge would have covered, based on the price at which a
hedging arrangement would have been entered into pursuant to the
Glencore notice exercising the Hedging Option (the "Santacruz
Option").
- The Additional Payments will terminate once Santacruz is no
longer obligated to make CVR Payments.
- The payment obligations of Santacruz under the Omnibus
Agreement are secured against the Bolivian mining assets of
Santacruz pursuant to the Omnibus Security Agreement.
The Definitive Agreements and the transactions contemplated
thereby are subject to final acceptance of the TSX Venture Exchange
(the "Exchange").
About Santacruz Silver Mining Ltd.
Santacruz is engaged in the operation, acquisition, exploration,
and development of mineral properties in Latin America. The Bolivian operations are
comprised of the Bolivar, Porco and the Caballo Blanco Group, which
consists of the Tres Amigos, Reserva and Colquechaquita
mines. The Soracaya exploration project and San Lucas feed sourcing business are also in
Bolivia. The Zimapan mine is
located in Mexico.
'signed'
Arturo Préstamo Elizondo,
Executive Chairman and Interim CEO
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Forward looking information
This news release includes certain statements and information
that may constitute forward-looking information within the meaning
of applicable Canadian securities laws. Forward-looking statements
relate to future events or future performance and reflect the
expectations or beliefs of management of the Company regarding
future events. Generally, forward-looking statements and
information can be identified by the use of forward-looking
terminology such as "intends", "expects" or "anticipates", or
variations of such words and phrases or statements that certain
actions, events or results "may", "could", "should", "would" or
will "potentially" or "likely" occur. This information and these
statements, referred to herein as "forward‐looking statements", are
not historical facts, are made as of the date of this news release
and include without limitation, statements regarding the terms of
the Definitive Agreements, the potential maximum consideration
payable to Glencore pursuant to the Definitive Agreements, the
expected effects of the Definitive Agreements on Santacruz and
Exchange acceptance of the Definitive Agreements and the
transactions contemplated thereby.
These forward‐looking statements involve numerous risks and
uncertainties and actual results might differ materially from
results suggested in any forward-looking statements. These risks
and uncertainties include, among other things, risks that changes
to the market price of zinc may affect the total consideration
payable to Glencore pursuant to the Definitive
Agreements, risks that the Company may not receive Exchange
acceptance of the Definitive Agreements and the transactions
contemplated thereby, risks that the Definitive Agreements may not
impact cash flows of Santacruz as anticipated, or at all,
risks related to changes in general economic,
business and political conditions, including changes in the
financial markets, changes in applicable laws, and compliance with
extensive government regulation, as well as those risk
factors discussed or referred to in the Company's disclosure
documents filed with the securities regulatory authorities in
certain provinces of Canada and
available at www.sedarplus.ca.
In making the forward-looking statements in this news
release, the Company has applied several material assumptions,
including without limitation, the assumption that the market
price of zinc may be above certain minimum thresholds for the
payment of the CVR Payments and Additional Payments, that the
Definitive Agreements will affect the cash flows of Santacruz as
anticipated and that the Company will receive Exchange acceptance
of the Definitive Agreements and the transactions
contemplated thereby.
There can be no assurance that any forward-looking
information will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. Accordingly, the reader should not place any undue
reliance on forward-looking information or statements. The Company
undertakes no obligation to update forward-looking information or
statements, other than as required by applicable law.
SOURCE Santacruz Silver Mining Ltd.
