Thompson Creek (TC) Completes $200M Sale of Stake in Mt. Milligan Mine
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Thompson Creek Metals Company Inc. (NYSE: TC) announced that effective August 10, 2012, it has completed the previously announced transaction with Royal Gold to amend its gold stream agreement with Royal Gold, Inc. (Nasdaq: RGLD) to sell Royal Gold an additional 12.25% of the refined gold production from the Company's Mt. Milligan copper-gold mine for $200 million, plus $435 per ounce, or the prevailing market rate, if lower than $435 per ounce, when the gold is delivered. Thompson Creek intends to use the proceeds to finance the construction of the Mt. Milligan project and related costs.
Pursuant to this amendment, Thompson Creek has agreed to sell to Royal Gold a total of 52.25% of the refined gold production from its Mt. Milligan project, and Royal Gold's aggregate investment (including amounts previously funded and commitments for future funding) in the refined gold from Mt. Milligan has increased from $581.5 million to $781.5 million. Three business days following the consummation of the transactions contemplated by the amendment, Royal Gold will make a cash payment to Thompson Creek of $75 million. Following this payment, Royal Gold will make combined future scheduled payments to Thompson Creek in the aggregate amount of $251.9 million, which will be paid on a quarterly basis as follows: $45 million on September 1, 2012; $95 million on December 1, 2012; $62 million on March 1, 2012; $37 million on June 1, 2012; and $12.9 million on September 1, 2013.� Following the September 1, 2013, payment, Royal Gold will have satisfied its obligations to make quarterly payments to Thompson Creek.
Concurrently with the closing of the transaction with Royal Gold, the participating banks in the Company's revolving credit facility entered into a fifth amendment to the Company's revolving credit agreement whereby the banks consented to the Royal Gold transaction and revised and put in place new financial covenants and measurements. Specifically, under this amendment, the banks agreed to remove the senior secured leverage covenant, increase the liquidity covenant to $100 million from $75 million, add a new minimum quarterly EBITDA covenant commencing in the fourth quarter of 2012, add new liquidity thresholds for borrowings and prepayments, add a new condition precedent for borrowings, and add new reporting requirements. With these changes, the Company no longer anticipates that it will be in breach of its credit agreement as of September 30, 2012, and anticipates that it will be able to access revolving credit facility funds as needed to fund the construction of Mt. Milligan, assuming that the new covenants and conditions are met and satisfied.
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Pursuant to this amendment, Thompson Creek has agreed to sell to Royal Gold a total of 52.25% of the refined gold production from its Mt. Milligan project, and Royal Gold's aggregate investment (including amounts previously funded and commitments for future funding) in the refined gold from Mt. Milligan has increased from $581.5 million to $781.5 million. Three business days following the consummation of the transactions contemplated by the amendment, Royal Gold will make a cash payment to Thompson Creek of $75 million. Following this payment, Royal Gold will make combined future scheduled payments to Thompson Creek in the aggregate amount of $251.9 million, which will be paid on a quarterly basis as follows: $45 million on September 1, 2012; $95 million on December 1, 2012; $62 million on March 1, 2012; $37 million on June 1, 2012; and $12.9 million on September 1, 2013.� Following the September 1, 2013, payment, Royal Gold will have satisfied its obligations to make quarterly payments to Thompson Creek.
Concurrently with the closing of the transaction with Royal Gold, the participating banks in the Company's revolving credit facility entered into a fifth amendment to the Company's revolving credit agreement whereby the banks consented to the Royal Gold transaction and revised and put in place new financial covenants and measurements. Specifically, under this amendment, the banks agreed to remove the senior secured leverage covenant, increase the liquidity covenant to $100 million from $75 million, add a new minimum quarterly EBITDA covenant commencing in the fourth quarter of 2012, add new liquidity thresholds for borrowings and prepayments, add a new condition precedent for borrowings, and add new reporting requirements. With these changes, the Company no longer anticipates that it will be in breach of its credit agreement as of September 30, 2012, and anticipates that it will be able to access revolving credit facility funds as needed to fund the construction of Mt. Milligan, assuming that the new covenants and conditions are met and satisfied.
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