Gowest Gold Ltd. entered a definitive prepaid forward gold purchase agreement with PGB Timmins Holdings LP, an investment vehicle controlled by Pandion Mine Finance LP.
Gowest and Pandion signed a nonbinding letter of intent in August for US$17.6 million in financing.
Under the agreement, PGB will advance up to US$17.6 million in four tranches to finance the development of the Bradshaw gold deposit in Ontario. In exchange, Gowest will deliver up to 65,805 ounces of gold to be produced from Bradshaw. PGB will pay an amount per ounce of gold equal to the market price at the time.
PGB can reduce the amount of gold deliverable by up to 10,000 ounces in exchange for up to 43,054,838 common Gowest shares, having an aggregate value of US$5 million. The conversion price is fixed at 15.5 Canadian cents.
PGB can exercise the conversion from gold to shares in increments of US$1 million and in exchange for 8,610,967 shares, which corresponds to a reduction in the total quantity of gold deliverable by 2,000 ounces.
Gowest can reduce the gold prepayment amount and the amount of gold deliverable to US$14.1 million and 53,187 ounces, respectively, subject to Gowest raising US$3.5 million through equity financing.