Gatos Silver, Inc. Enters into A Revolving Credit Facility with Bank of Montreal to $50.0 Million
July 12, 2021 at 04:04 pm EDT
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Gatos Silver, Inc. entered into a Revolving Credit Facility with Bank of Montreal, Chicago Branch. The Credit Agreement provides for a revolving line of credit in a principal amount of $50.0 million. The Credit Agreement matures on July 31, 2024 and has an accordion feature which allows for an increase in the total line of credit up to $100.0 million, subject to certain conditions, including the availability of lender commitments. Advances under the line of credit bear interest at a variable index-based rate per year determined by the applicable index together with a pricing grid based on the Company’s total debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio, each as determined in accordance with the Credit Agreement (the “Leverage Ratio”). The Credit Agreement contains affirmative and negative covenants that are customary for credit agreements of this nature. The affirmative covenants require the Company to comply, at all times, with, among other things, a Leverage Ratio not greater than 3.00 to 1.00 with EBITDA calculated upon a trailing four fiscal quarter period, a liquidity covenant not less than $20.0 million and an interest coverage ratio not less than 4.00 to 1.00 calculated upon a trailing four fiscal quarter period. The negative covenants include, among other things, limitations on asset sales, mergers, acquisitions, indebtedness, liens, dividends and distributions, investments and transactions with affiliates. The Credit Agreement also includes customary events of default that include, among other things, defaults for non-payment, inaccuracy of representations and warranties, covenant breaches, defaults under other material indebtedness and material agreements, bankruptcy and insolvency, entry of material judgments, disruption in or abandonment of operations, loss of certain licenses and a change of control. Following the occurrence of an event of default, the lenders under the Credit Agreement can terminate the commitments under the Credit Agreement and demand the immediate repayment in full of all amounts due thereunder.
Gatos Silver, Inc. is a silver exploration, development, and production company, which is focused on high-grade, large silver deposits in geopolitically stable jurisdictions. The Companyâs flagship asset is the Los Gatos District, including the Cerro Los Gatos Mine in Chihuahua, Mexico. The Companyâs Cerro Los Gatos Mine is located approximately 120 kilometers south of Chihuahua City in the heart of Mexicoâs silver belt. The Companyâs Los Gatos District consists of approximately 14 mineralized zones, including three identified silver-lead-zinc deposits: the Cerro Los Gatos Mine, the Esther deposit, and the Amapola deposit. The other 11 mineralized zones, with over 150 kilometers of outcropping quartz and calcite veins, have at least one mineralization intercept. The Cerro Los Gatos Mine includes approximately 103,000 hectares of mineral rights.