Santacruz Announces Definitive Agreements Amending Terms of Sale of Glencore’S Bolivian Mining Assets
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News Release
October 4, 2024
SANTACRUZ ANNOUNCES DEFINITIVE AGREEMENTS AMENDING TERMS OF SALE OF
GLENCORE’S BOLIVIAN MINING ASSETS
Vancouver, B.C. – Santacruz Silver Mining Ltd. (TSX.V:SCZ) (“Santacruz” or the “Company”) is pleased to
announce that further to its news release dated April 4, 2024, it is has entered into a definitive omnibus agreement
(the “Omnibus Agreement”) and an amended and restated omnibus security agreement (the “Omnibus Security
Agreement” and together with the Omnibus Agreement, the “Definitive Agreements”), each with an effective
date of October 3, 2024, with certain Glencore entities (“Glencore”) to amend certain transaction documents in
connection with the prior sale by Glencore of its Bolivian mining assets to Santacruz (the “ Transaction”), as
previously announced by Santacruz on March 21, 2022 and October 13, 2021. The Definitive Agreements are the
result of arm’s length negotiations between Santacruz and Glencore and supersede the binding term sheet
entered into between the parties dated March 28, 2024.
Arturo Prestamo, Executive Chairman and CEO , commented; "This agreement marks a significant milestone for
Santacruz, providing us with enhanced financial flexibility as we move forward with our strategic plans. The revised
payment structure allows us to better manage our cash flow while maintaining the ability to accelerate payments
if it becomes beneficial to do so. We are also pleased to maintain our strong partnership with Glencore, whose
collaboration has been invaluable in reaching these mutually beneficial terms. We look forward to continuing this
productive relationship as we execute on our vision for the future."
Pursuant to the Definitive Agreements, Santacruz and Glencore have agreed to the following terms:
• The total consideration payable by Santacruz to Glencore under the Definitive Agreements will be in lieu
of all present and future amounts owing or payable by Santacruz under the transaction documents
entered into pursuant to the Transaction.
• Subject to the Acceleration Option (as defined below), Santacruz will pay up to US$80 million in cash to
Glencore in eight equal annual instalments of US$10 million each (the “ Base Purchase Price ”) with the
first payment being made on or before November 1, 2025.
• Santacruz can exercise an option to accelerate the payment of the outstanding balance of the Base
Purchase Price in full at any time, such prepayment amount will be US$40 million if exercised prior to
November 1, 2025 and shall decrease by US$2 million for each annual instalment of US$10 million that
has been paid by Santacruz (the “Acceleration Option”).
• Santacruz grants to Glencore a contingent value right (the “CVR”) whereby Santacruz will pay Glencore a
monthly payment of US$1,333,333.33 (the “CVR Payment”), subject to a total cap of US$77.7 million (the
“CVR Cap”), in the event that in any calendar month during the period commencing on March 28, 2024
and ending on December 31, 2032, the average LME spot price of zinc (or the highest open hedge price if
the Hedging Option (as defined below) has been exercised or the price at which a hedge would have been
entered into if Santacruz exercises the Santacruz Option (as defined below) ) in the calendar month is at
least US$3,850 pe r tonne (the “ Base Price”). The CVR Payment will increase by US$83,333.33 for each
increase of $100 per tonne above the Base Price and up to a price of $5 ,049.99 per tonne (the “ CVR
Escalator”).
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• In addition to the CVR Payment, in the event the average LME spot price of zinc (or the highest open hedge
price if the Hedging Option has been exercised or the price at which a hedge would have been entered
into if Santacruz exercises the Santacruz Option ) in a calendar month is at least US$5 ,050 per tonne (the
“Additional Payment Price”), Glencore will be entitled to an additional monthly payment of
US$166,666.66 for each increase of $100 per tonne above the Additional Payment Price, with 50% of such
payment being treated as a CVR Payment counting towards the CVR Cap and the remaining 50% of such
payment not being treated as a CVR Payment and therefore will not count towards the CVR Cap (such
amount not counting towards the CVR Cap being the “Additional Payments”).
• Glencore can require Santacruz to hedge a limited amount of zinc produc tion from its Bolivian mining
operations (so long as the hedging price would exceed the Base Price) subject to certain conditions (the
“Hedging Option”). If Santacruz determines, acting reasonably and in good faith, that the cost of entering
into either a hedging arrangement is not commercially reasonable based on current market conditions,
Santacruz may, in lieu of entering into a hedging arrangement, pay the CVR Payments and, if applicable,
the Additional Payments to Glencore over the period which the hedge would have covered, based on the
price at which a hedging arrangement would have been entered into pursuant to the Glencore notice
exercising the Hedging Option (the “Santacruz Option”).
• The Additional Payments will terminate once Santacruz is no longer obligated to make CVR Payments.
• The payment obligations of Santacruz under the Omnibus Agreement are secured against the Bolivian
mining assets of Santacruz pursuant to the Omnibus Security Agreement.
The Definitive Agreements and the transactions contemplated thereby are subject to final acceptance of the TSX
Venture Exchange (the “Exchange”).
About Santacruz Silver Mining Ltd.
Santacruz is engaged in the operation, acquisition, exploration, and development of mineral properties in Latin
America. The Bolivian operations are comprised of the Bolivar, Porco and the Caballo Blanco Group, which consists
of the Tres Amigos, Reserva an d Colquechaquita mines. The Soracaya exploration project and San Lucas feed
sourcing business are also in Bolivia. The Zimapan mine is located in Mexico.
‘signed’
Arturo Préstamo Elizondo,
Executive Chairman and Interim CEO
For further information please contact:
Arturo Préstamo
Santacruz Silver Mining Ltd.
Email: [email protected]
Telephone: +52 81 83 785707
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of
the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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Forward looking information
This news release includes certain statements and information that may constitute forward -looking information
within the meaning of applicable Canadian securities laws. Forward-looking statements relate to future events or
future performance and reflect the expectations or beliefs of management of the Com pany regarding future
events. Generally, forward -looking statements and information can be identified by the use of forward -looking
terminology such as “intends”, “expects” or “anticipates”, or variations of such words and phrases or statements
that certain actions, events or results “may”, “could”, “should”, “would” or will “potentially” or “likely” occur. This
information and these statements, referred to herein as "forward‐looking statements", are not historical facts, are
made as of the date of this new s release and include without limitation, statements regarding the terms of the
Definitive Agreement s, the potential maximum consideration payable to Glencore pursuant to the Definitive
Agreements, the expected effects of the Definitive Agreements on Santacruz and Exchange acceptance of the
Definitive Agreements and the transactions contemplated thereby.
These forward‐looking statements involve numerous risks and uncertainties and actual results might differ
materially from results suggested in any forward-looking statements. These risks and uncertainties include, among
other things, risks that changes to the market price of zinc may affect the total consideration payable to Glencore
pursuant to the Definitive Agreement s, risks that the Company may not receive Exchange acceptance of the
Definitive Agreements and the transactions contemplated thereby, risks that the Definitive Agreements may not
impact cash flows of Santacruz as anticipated, or at all, risks related to changes in general economic, business and
political conditions, including changes in the financial markets, changes in applicable laws, and compliance with
extensive government regulation, as well as those risk factors discussed or referred to in the Company’s disclosure
documents filed with the securities regulatory authorities in certain provinces of Canada and available at
www.sedarplus.ca.
In making the forward -looking statements in this news release, the Company has applied several material
assumptions, including without limitation, the assumption that the market price of zinc may be above certain
minimum thresholds for the payment of the CVR Payments and Additional Payments, that the Definitive
Agreements will affect the cash flows of Santacruz as anticipated and that the Company will receive Exchange
acceptance of the Definitive Agreements and the transactions contemplated thereby.
There can be no assurance that any forward -looking information will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such statements. Accordingly, the reader should not
place any undue reliance on forward -looking information or statements. The Company undertakes no obligation
to update forward-looking information or statements, other than as required by applicable law.