Baker Steel Transaction Update
AZARGA METALS CORP.
UNIT 1 – 15782 MARINE DRIVE, WHITE ROCK, B.C. V4B 1E6, CANADA
www.azargametals.com
FOR IMMEDIATE RELEASE
10 April 2019 TSX-V: AZR
BAKER STEEL TRANSACTION UPDATE
AZARGA METALS CORP. ("Azarga Metals" or the “ Company”) (TSX-V:AZR) is pleased to
announce that Baker Steel Resources Trust Ltd. (“ BSRT”) and the Co mpany have executed a
Secured Convertible Loan Facility Agreement (“ Investment Transaction”), to consummate the
terms of the binding terms sheet announced on 14 February 2019 and 29 March 2019. The final
investment size was agreed as US$3 million (“Loan”), with the first US$1 million expected to be
drawn down within the next few days and the second advance of US$2 million drawable in four
to six months time, provided however that the second advance is subject to earlier drawdown in
certain circumstances set out in the definitive documentation.
Chairman, Alex Molyneux commented, “I’m very pleased to welcome Baker Steel as our
partner for continued development of the Unkur Copper -Silver Project. We were very
successful with our first round of exploration lea ding to a sizable maiden resource and
we firmly believe we can transformationally grow the mineralized envelope from here in
the now fully funded next phase.”
Mr Trevor Steel, Managing Partner and Chief Investment Officer of
Baker Steel Capital Managers L LP ("BSCM") will, in connection with closing, be appointed to
the Company’s Board of Directors, subject to approval by the TSX Venture Exchange . Mr Steel
co-founded BSCM in 2001 and prior to that he was a senior portfolio manager at Merrill Lynch
Investment Managers where he specialised in the natural resources sector.
Following the funding made available from the Investment Transaction, Azarga Metals has
commenced plans to start the second major physical exploration phase at Unkur which w ill
commence during the 2019 field season and will include a diam ond drilling program which will
have the potential of discovering additional copper and silver mineralization from at least three
target concepts: (i) along strike or down dip from currently defined minerali zation; (ii) confirming
the presence of at least one additional mineralized zone postulated to occur stratigraphically
below the currently defined Zone 1 and Zone 2; and (iii) drilling new targets expected to be
generated by planned geophysical surveys.
A more detai led announcement regarding the second phase of explo ration at Unkur will be
made in the near future.
As previously announced, the Loan will bear interest at an annual rate of 8%, payable semi -
annually, and will mature on December 31, 2022. BSRT will be permitted to convert some or all
of the principal amo unt of the Loan at any time, at a conversion price of C$0.14 per common
share, into common shares of the Company. Azarga Metals will be permitted at any time to
convert the interest owing under the Loan into common shares of the Company at a conversion
Page 2
price equal to the Market Price (as defined in the Corporate Finance Manual of the TSX Venture
Exchange) on the day of the interest election notice.
On completion of the Investment Transaction, the Company has agreed to issue such number
of warrants (the “W arrants”) to BSRT as is equivalent to to US$1,714,285 converted into
Canadian dollars using the Bank of Canada closing rate on the date prior to the issuance. Each
Warrant will exercisable for a period of two years for one common share of the Company at a
price per common share of C$0.17.
Provided that the Investment Transaction completes, the full amount is drawn (i.e., both
tranches) and the Warrants are issued, assuming conversion of the ful l Loan and all interest at
maturity, as well as exercise of the Warrants, an exchange rate of US$1 = C$ 1.3316 and using
a conversion price for the interest of C$ 0.12, which was the last closing price of the common
shares of the Company on April 9, 2019, BSRT would beneficially own and control an aggregate
of 51,878,038 common shares of the Company, representing a beneficial ownership interest of
approximately 36.46% of the issued and outstanding shares of the Company (post -issuance of
the shares). On April 2, 2019, the majority of the disinterested shareholders of Azarga Metals
approved, by way of a consent resolution, BSRT becoming a control person of the Company.
Prior to completion of the Inv estment Transaction, BSRT currently owns no common shares of
the Company.
In connection with the Investment Transaction, the Company will grant BSRT the right to be
nominate one director to the board of the Company, for so long as any principal amount of the
Loan is outstanding. In addition, if at any ti me, BSRT directly or indirectly owns 20% or more of
the common shares of the Company, it will be entitled to nominate two persons to the board of
the Company.
Also in connection with the Investment Trans action, the Company agreed to grant BSRT an
option to acquire a portion of the Unkur net smelter royalty for US$5.0 million.
BSRT, Arnold House, St Julians Aven ue, Guernsey, GY1 1WA, entered into the Investment
Transaction for investment purposes. Depending on market conditions and other factors, BSRT
may from time to time acquire and/or dispose of securities of the Company or continue to hold
its current position. A copy of the early warning report required to be filed with the applicable
securities commissions in connection with the execution of the In vestment Transaction will be
available on SEDAR at www.se dar.com and can by obtained by contacting Tino Isnardi at +44
(0) 20 7389 0009.
*****
Qualified Person
Azarga Metals’ Director, Michael Hopley, a Qualified Person as defined by NI 43 -101, has
reviewed and approved the exploration information disclosure contained in this Press Release.
About Azarga Metals Corp.
Azarga Metals is a mineral exploration and development company that owns 100% of the Unkur
Copper-Silver Project in the Zabaikalsky administrative region in eastern Russia.
Page 3
AZARGA METALS CORP.
"Alex Molyneux"
Alexander Molyneux, Chairman
For further information please contact: Doris Meyer, at +1 604 536-2711 ext 6, visit
www.azargametals.com, or follow us on Twitter @AzargaMetals. The address of the head
office of Azarga Metals is Unit 1 - 15782 Marine Drive, White Rock, BC V4B 1E6, British
Columbia, Canada.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined
in the polic ies of the TSX V enture Exchange) accepts respon sibility fo r the adequacy or
accuracy of this release.
Cautionary Statement:
This news release contains forward -looking statements that are based on the Corporation's current
expectations and estimates. Forw ard-looking statements are frequently character ized by wor ds such as
"plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "suggest", "indicate" and other
similar words or statements that certain events or conditions "may" or "will" o ccur. Such forwa rd-looking
statements involve k nown and un known risks, uncertainties and other fac tors that could cause actual
events or results to differ materially from estimated or anticipated events or results implied or expressed
in such forward -looking statements. S uch factors include, among othe rs: the act ual results of current
planned explorati on activities; conclusions of economic evaluations; changes in project parameters as
plans to continue to be refined; possible variations in ore grade or reco very rates; acci dents, labor
disputes and other risks of t he mining industry; delays in obtaining governmental approvals or financing;
and fluctuations in metal prices. There may be other factors that cause actions, events or results not to be
as anticipated, estimated or intended. Any forward-looking statement speaks only as of the date on which
it is made and, except as may be required by applicable securities laws, the Corporation disclaims any
intent or obligation to update any forward -looking statement , whether as a r esult of new information,
future events or results or otherwise. Forward -looking s tatements are not guarantees of future
performance and accordingly undue reliance should not be put on such statements due to the inherent
uncertainty therein.