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Northern Vertex outlines US$8.5M silver stream, US$5M placement, loan amendment

Northern Vertex Mining Corp. outlined plans to improve free cash flow, including an US$8.5 million silver stream agreement, a US$5 million private placement and an amended loan agreement.

The company said Oct. 15 that the nonbrokered placement will comprise 21,666,667 units at 30 U.S. cents apiece. Each unit will include one common share and half of a purchase warrant, with each whole warrant exercisable at 45 cents for a common share within 24 months of closing.

Northern Vertex will use the proceeds to fund ongoing operations at its Moss gold-silver mine in Arizona, which achieved commercial production in September, and for general working capital.

The company also entered into a preliminary agreement with Maverix Metals Inc., which will make an upfront US$8.5 million payment for the right to acquire 45% of the silver produced at Moss. Pricing will be based on applicable quarterly silver prices and spot prices upon delivery.

The silver stream is expected to be effective from Oct. 1 and is capped at 1.5 million ounces, after which the deal will cover 22.5% of silver production for the life of the mine.

Prior to closing, Northern Vertex will also have an option to increase the upfront payment by US$5 million, to US$13.5 million, which would entitle Maverix Metals to purchase 75% of the mine's silver production up to a maximum of 2.5 Moz, after which the deal would cover 37.5% of silver production.

The silver-stream deal is expected to close in the first half of November, subject to various factors including Maverix Metals entering into an intercreditor agreement with Sprott Private Resource Lending (Collector) LP.

In addition, Northern Vertex amended an agreement with Sprott Private Resource Lending to extend the maturity of its US$20 million facility by 13 months to Dec. 31, 2020, and reduce monthly principal repayments to US$500,000 from US$1.1 million.

In connection with the amendment, the company will issue 1.25 million common shares to Sprott and amend previously issued gold call options to a new strike price of US$1,200, down from US$1,275.