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Gowest Enters into Settlement Agreement with PGB Timmins Holdings

Aug 19, 2019
 
Gowest Gold Ltd. announced today that it has entered into a settlement agreent with with PGB Timmins Holdings LP (PGB)  with respect to alleged defaults by Gowest under a Pre-Paid Forward Gold Purchase Agreement signed on  December 16, 2016 by both parties. 
 
PGB delivered to Gowest a Notice of Events of Default and Termination and a Notice of Intention to Enforce Security pursuant to section 244 of the Bankruptcy and Insolvency Act (Canada) on August 9, 2019 based on the alleged defaults.
 
As a result of the settlement, PBG has withdrawn with prejudice both Notices on an irrevocable basis, with the right to re-issue the Notices if Gowest does not satisfy its obligation to pay the Cash Settlement Amount.
 
“The  achievement of a settlement with PGB provides the Company with the certainty necessary to move forward and to seek alternate financing solutions – in particular given that the Bradshaw project has been considerably de-risked  since the agreement with PGB was initially entered into, " said Greg Romain, President and Chief Executve Officer of Gowest. 
 
"We will ultimately come out of this process in a better position for shareholders and all other stakeholders as we continue to advance Bradshaw towards commercial production as quickly as possible, ” Romain added.
 
According to the terms of the agreement, Gowest is obligated to pay to PGB US $9 million in cash, plus in gold ounces. The payments are to be made in three  stages, with US$ 1,500,000 paid, as a non-refundable deposit by August 20, 2019 at 4:30 p.m. The second payment  of  US $7.5 million must be paid on or before October 16, 2019. 
 
On completing the payment, Gowest will also pay 3,500 ounces of gold to PGB  produced from the Bradshaw Deposit, at a rate of 15% of gold as produced. Once the gold payment is made, all claims against Gowest by PGB concerning the PPF Agreement will be paid in full. 
 
PGB has agreed that, if requested by Gowest, it will assign all of its right, title and interest in and under the PPF Agreement and all related security documents to a designee determined by Gowest in its sole discretion.
 
In connection with the entering into of the Settlement Agreement, Gowest has also entered into a Memorandum of Understanding with a third-party investor that has agreed, subject to certain conditions, to acquire all of PGB’s right, title and interest in and under the PPF Agreement and all related security documents for consideration sufficient for Gowest to satisfy its obligation to fund the full Cash Settlement Amount. 
 
 Under the Memorandum of Understanding, the parties have further agreed in principle to certain fundamental amendments to the PPF Agreement favourable to Gowest.  These amendments will be documented pursuant to an amended and restated PPF Agreement or a replacement agreement to be entered into immediately following the assignment of the PPF Agreement as contemplated under the Settlement Agreement.
 
Gowest is a Canadian gold exploration and development company focused developing its 100% owned Bradshaw Gold Deposit (Bradshaw), on the Frankfield Property, part of the Company’s North Timmins Gold Project (NTGP).  
 
Currently, Bradshaw contains a National Instrument 43‐101 Indicated Resource estimated at 2.1 million tonnes (“t”) grading 6.19 grams per tonne gold (g/t Au) containing 422 thousand ounces (oz) Au and an Inferred Resource of 3.6 million t grading 6.47 g/t Au containing 755 thousand oz Au. Further, based on the Pre‐Feasibility Study produced by Stantec Mining and announced on June 9, 2015, Bradshaw contains Mineral Reserves (Mineral Resources are inclusive of Mineral Reserves) in the probable category, using a 3 g/t Au cut‐off and utilizing a gold price of US$1,200 / oz, totaling 1.8 million t grading 4.82 g/t Au for 277 thousand oz Au.