Harte Gold Gets financing to Restart Mine – Needs TSE Approval

Harte Gold had suspended operations in an abundance of caution to protect its workers on March 30, 2020. This move had a severe negative impact on Harte Gold’s financial position and as a result it does not have sufficient financial resources to re-start the mining operations at the Sugar Zone Mine. That position led to looking for financing outside of the company.

On July 1st, Harte Gold announced that they had secured financing with Appian Capital Advisory LLP for up to $30 million (USD), pending approval from the TSE.

The Proposed Transaction is comprised of:

1. a private placement of 9,500,000 Series B special shares (the “Special Shares”) of the Company at a price of US$1.00 per Special Share (the “Offering Price”) for aggregate gross proceeds of US$9,500,000 (the “Private Placement”);
2. a US$18.5 million non-revolving credit facility (the “Credit Facility”); and
3. a grant of a 0.5% net smelter return royalty in consideration of US$2 million (the “0.5% NSR”).

“This Proposed Transaction represents the completion of our review process. Given the Company’s current financial condition, the Proposed Transaction provides the best financing alternative available to the Company, limiting up-front dilution, providing sufficient funding to cover cash flow and capital requirements on start-up and allowing for immediate capital to accelerate the restart of operations,” said Joseph Conway, Chair of the Board of Harte Gold and Chair of the Special Committee.

This funding will allow the restart of mining in a phased process. Backfill and select mining will develop a stockpile for the mill to restart in late July.

Harte Gold will also begin the transition from contractor mining to in-house mining. This is anticipated to give a lower mining cost per tonne, flexibility in scheduling, workforce development and long-term sustainability of mine operations. This transition is expected to take three months.

Summer prospecting at TT8 Zone would commence on restart of operations. Based on drilling and geophysics work completed to-date, the Company has identified target areas for prospecting which depend upon the Proposed Transaction proceeding. The drilling of near-mine exploration targets would commence in Q4.

The Company has applied to the TSE for an exemption from the requirement to seek security holder approval for this proposed transaction on the basis that the Company finds itself in a state of serious financial difficulty. Harte Gold believes it does not have adequate time available to seek security holder approval. The media release states, “The Company is facing a limited opportunity to complete the Proposed Transaction, with no credit facilities or banking facilities available to it to enable it to bridge a period of time between announcement of the Proposed Transaction and a meeting of security holders of the Company, and with a reasonable expectation that the Company’s current cash reserves would be depleted before security holder approval can be obtained, which would leave it unable to service its obligations as they become due. Management of the Company, the Special Committee and the Board each also believe that it is in the Company’s best interest to restart the Sugar Zone Mine as soon as possible in order to maintain its previous workforce, contractors and suppliers at the Sugar Zone Mine. The loss of trained employees familiar with the Company’s operations and experienced contractors and suppliers could have a material adverse impact on the Company’s ability to resume operations at the Sugar Zone Mine and return to profitability.”