HARTE GOLD ANNOUNCES SIGNING OF FINANCING AGREEMENT AND CLOSING OF US$9.5 MILLION PRIVATE PLACEMENT

9,500,000 Series B special shares (the “Special Shares”) of the Company were issued by way of a private placement to

ANR Investments B.V. (“ANR”) at a price of US$1.00 per Special Share for aggregate gross proceeds of US$9.5 million (the “Private Placement”). Proceeds will be used to fund working capital needs, the restart of the Sugar Zone Mine, and general corporate purposes.

 

Concurrent with the closing of the Private Placement, the Company issued to ANR (a) 6,970,844 common shares (each, a

“Common Share”), representing an upfront arrangement fee equal to US$600,000 (or 2.0% of US$30 million) based on a

price of Cdn$0.1173 per Common Share using a CAD-USD exchange rate of 0.7338; and (b) 7,500,000 purchase warrants to acquire Common Shares, exercisable at C$0.1349 (representing a 15% premium to the five-day VWAP of C$0.1173 as of July 1, 2020), which expire on July 14, 2025. The Company also entered into an offtake agreement with ANR, on the same terms and conditions as the original offtake agreement (as amended and except for the repurchase right), pursuant to which ANR was granted an 18.5% offtake of total Refined Gold (as defined in the original offtake agreement (as amended)) produced from the Sugar Zone properties until 500,000 ounces of Refined Gold are delivered.

The Company anticipates closing a US$18.5 million non-revolving credit facility (the “Credit Facility”) on or before August

29, 2020 (the “Final Closing Date”). At the closing of the Credit Facility, the Special Shares would convert into the principal

amount under the Credit Facility, bringing the aggregate principal amount of the Credit Facility to US$28 million. On the

Final Closing Date, an affiliate of Appian will have the right to acquire a 0.5% NSR on the entire Sugar Zone Property from

the Company, on similar terms as the Company’s existing 1.5% NSR, in exchange for payment to the Company of US$2.0

million.

 

ANR, which is the sole subscriber under the Private Placement, is an existing insider of the Company, beneficially owning,

directing or controlling 206,716,334 Common Shares or approximately 24.4% of the Company’s issued and outstanding

Common Shares prior to the Private Placement. ANR and Appian are owned by investment funds advised by Appian Capital Advisory LLP.

 

Pursuant to the terms of the Financing Agreement, Appian has been granted the right to appoint one additional nominee

to the Company’s Board of Directors (the “Board”). Appian exercised its right by having Mr. Igor Gonzales appointed to

the Board as its nominee , thereby increasing the number of Appian-related nominees from two to three directors on the

Board, which is comprised of seven directors in total. To facilitate the addition of Mr. Gonzales, Mr. Stephen Roman agreed to resign from the Board. Appian’s additional nomination right terminates on repayment of the Credit Facility.

 

A copy of the Financing Agreement will be filed and available under the Company’s profile on SEDAR at www.sedar.com.

 

FINANCIAL HARDSHIP EXEMPTIONS

 

The Toronto Stock Exchange (the “TSX”) has conditionally approved the listing of all of the Common Shares issuable in

connection with the transactions contemplated by the Financing Agreement (the “Transactions”). The TSX also granted

an exemption to the Company from the requirement to seek shareholder approval for the Transactions pursuant to the

financial hardship exemption available to companies listed on the TSX that are in serious financial difficulty, in each case

subject to customary conditions. As previously disclosed on July 1, 2020, as a result of the Company’s reliance on the

“financial hardship” exemption, the TSX has placed the Company under remedial delisting review, which is customary in

these circumstances. Although the Company believes that it will be in compliance with the TSX’s continued listing

requirements upon closing the Transactions, no assurance can be provided as to the outcome of such review or continued

qualification for listing on the TSX.

 

Each of the Transactions is a “related party transaction” as defined in Multilateral Instrument 61-101 – Protection of

Minority Security Holders in Special Transactions (“MI 61-101”). The Company is exempt from the requirements to obtain

a formal valuation or minority shareholder approval in connection with the Transactions in reliance on sections 5.5(g) and

5.7(1)(e), respectively, of MI 61-101, as the Company meets the requirements of the financial hardship exemption. A

material change report was not filed at least 21 days prior to the initial closing date of the Transactions as the terms and

conditions of the Transactions were not yet finalized at such time.

 

ABOUT HARTE GOLD CORP.

 

Harte Gold holds a 100% interest in the Sugar Zone Mine located in White River, Canada. The Sugar Zone Mine entered

commercial production in 2019. The Company has further potential through exploration at the Sugar Zone Property,

which encompasses 79,335 hectares covering a significant greenstone belt. Harte Gold trades on the TSX under the symbol “HRT”, on the OTC under the symbol “HRTFF” and on the Frankfurt Exchange under the symbol “H4O”.

 

For further information, please visit www.hartegold.com or contact:

 

Shawn Howarth

Vice President, Corporate Development and Investor Relations

Tel: 416-368-0999

E-mail: sh@hartegold.com