Bonterra arranges $5M credit facility with Wexford

Executive Summary

• Bonterra Resources Inc. has entered into a C$5 million non-revolving credit facility with Wexford Capital LP, an insider and largest shareholder, to provide financial flexibility amid an ongoing CRA audit and while evaluating strategic alternatives.
• The facility is structured as a single advance with a maturity date of September 23, 2026, bearing interest at 8.00% plus SOFR. Interest and commitment fees can be paid in cash or common shares, subject to TSX-V approval and ownership limits.
• Proceeds are designated for reimbursing shareholders for taxes related to prior flow-through share offerings and financing exploration/development expenditures on the Desmaraisville property to meet renunciation commitments.

Key Details

• Transaction Structure: Non-revolving credit facility with an aggregate amount of C$5 million.
• Lender: Wexford Capital LP (acting as agent) and certain funds managed by Wexford Capital (as lenders). Wexford is an insider and the company's largest shareholder.
• Interest Rate: 8.00% per annum plus the SOFR term rate applicable to the six-month period commencing on the closing date and ending on the maturity date.
• Maturity Date: September 23, 2026.
• Payment Terms:
  • Interest is payable in arrears six months from the closing date.
  • Commitment fee of $100,000 is earned and payable on the maturity date.
  • Both interest and the commitment fee may be paid in cash or common shares at the agent's option.
  • Share issuance calculation: Accrued amount divided by the VWAP of shares on the TSX Venture Exchange for the five trading days immediately preceding the payment/maturity date.
• Ownership Limit: No shares may be issued if the resulting ownership by lenders/parties acting in concert exceeds 19.9% of issued and outstanding shares.
• Regulatory Compliance: The transaction constitutes a related party transaction under Multilateral Instrument 61-101. The company relied on exemptions from valuation and minority shareholder approval requirements as the fair market value does not exceed 25% of the company's market capitalization.
• Use of Proceeds:
  1. Indemnifying or reimbursing shareholders who participated in flow-through private placements completed on December 13, 2019, and October 21, 2021, for taxes imposed prior to the closing date.
  2. Financing eligible exploration and development expenditures on the Desmaraisville property to satisfy renunciation commitments under applicable flow-through share subscription agreements.
• Strategic Context: The CEO cited the need for financial flexibility while navigating an ongoing CRA audit and evaluating strategic alternatives. The release also notes the JV agreement with Gold Fields Ltd. (successor to Osisko Mining) for the Urban-Barry properties, where Gold Fields can earn a 70% interest by incurring $30 million in work expenditures by November 2026.

Notable Quotes

• "We are grateful for the continued support of Wexford Capital, our largest shareholder, as we navigate the ongoing CRA audit and evaluate strategic alternatives to maximize value for all stakeholders. This credit facility provides important financial flexibility and underscores Wexford's confidence in Bonterra's underlying asset base and long-term potential." — Marc-Andre Pelletier, President and CEO