Premium Nickel gets C$34 million in financing via EdgePoint affiliate

By William Gullotti

Buffalo, N.Y., June 13 – Premium Nickel Resources Ltd. (PNRL) entered into a three-part financing agreement with Cymbria Corp., an affiliate of EdgePoint Investment Group Inc., for gross proceeds totaling C$33,999,200 on June 12, according to a 6-K filing with the Securities and Exchange Commission on Tuesday.

Term loan

Cymbria agreed to advance C$15 million to PNRL in the form of a three-year term loan.

The loan will be fully and unconditionally guaranteed by each of PNRL's existing and future subsidiaries.

Interest will be 10% per annum, payable quarterly in arrears. The principal will mature and be payable on the third anniversary of the issue date.

In connection with the loan, PNRL will issue 2 million non-transferable common share purchase warrants to Cymbria, which may be exercised to purchase common shares at C$1.4375 per share for three years.

Equity financing

Included in the agreement is the issue and sale of 14,772,000 units, comprised of one common share of PNRL and 22.5% of one whole common share purchase warrant, at a subscription price of C$1.10 per unit for gross proceeds of C$16,249,200.

The total whole number of the transferrable share purchase warrants is 3,324,000, which may be exercised to purchase common shares at C$1.4375 per share for three years.

The subscription price represents a premium of approximately 9.5% to the volume-weighted average trading price of the common shares on the TSX Venture Exchange over the previous 20 trading days.

The closing price of the common shares on Monday was C$1.15.

Option payment

Two of PNRL’s subsidiaries will receive an aggregate C$2.75 million from Cymbria to acquire a right to participate in the exercise of certain contractual rights, as and when the same may be exercised by such subsidiaries.

PNRL's indirect wholly-owned subsidiary Premium Nickel Resources Proprietary Ltd. (PNRP) acquired the Selebi mine in January 2022 out of liquidation. Pursuant to the acquisition agreement, the liquidator retained a 2% net smelter returns (NSR) royalty on the mine. PNRP has a contractual right to repurchase one-half of the Selebi NSR at a future time on payment by PNRP to the liquidator of $20 million.

Additionally, PNRL's indirect wholly-owned subsidiary Premium Nickel Group Proprietary Ltd. (PNGP) acquired the Selkirk mine in August 2022 out of liquidation. Likewise, the liquidator retained a 1% NSR royalty on the Selkirk mine. PNGP has a contractual right to repurchase the entirety of the Selkirk NSR at a future time on payment by PNGP to the liquidator of $2 million.

Each of PNRP and PNGP has agreed to grant to Cymbria, in exchange for the option payment, an option to participate in any such repurchase of the applicable portion of its NSR from the relevant liquidator. Cymbria will, following the exercise of its option to participate in any such repurchase, acquire a 0.5% net smelter returns royalty on the applicable property by paying an amount equal to (x) one half of the repurchase price payable by PNRP or PNGP pursuant to the applicable NSR, less (y) the option payment paid at closing pursuant to the relevant option agreement among Cymbria and PNRP or PNGP, as applicable.

Cymbria has the right to put its options back to PNRP and PNGP in certain circumstances in return for the reimbursement of the applicable portion of the option payment.

The concurrent financing transactions are expected to close on or before June 28.

If PNRL fails to satisfy the conditions precedent to closing of any one of the simultaneous financing transactions, it does not expect to complete any.

PNRL intends to use C$7.36 million of the net proceeds to repay all principal and interest under its currently outstanding promissory note with Pinnacle Island LP. The remaining balance of the net proceeds will be used to advance exploration and resource development at PNRL's Selebi and Selkirk nickel, copper, cobalt, platinum-group elements sulphide mines in Botswana, including the acquisition of adjacent mineral and property rights as appropriate, as well as for general corporate purposes.

Based in Toronto, Premium Nickel Resources is a mineral exploration and development company focused on discovering and advancing high-quality nickel, copper and cobalt resources.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.