Scorpio Gold Announces Completion of Waterton Buyout to Eliminate Senior Secured Debt and Acquire a 100% Interest in the Mineral Ridge Property
TSX-V: SGN
#206 - 595 Howe Street
Vancouver, British Columbia
V6C 2T5
T: 604-678-9639
www.scorpiogold.com
News Release No. 269
Scorpio Gold Announces Completion of Waterton Buyout to Eliminate Senior
Secured Debt and Acquire a 100% Interest in the Mineral Ridge Property
Vancouver, March 6, 2019 - Scorpio Gold Corporation (“Scorpio Gold” or the “Company”) (TSX-V: SGN)
is pleased to announce that further to the Company’s press release dated January 28, 2019, the Company
has completed the Waterton Buyout (as defined below), as a result of whi ch, among other things, the
Company’s senior secured debt owing to an affiliate of Waterton Global Resources Management
(“Waterton”) in the amount of US$6,103,562 has been extinguished, and the Company now holds a 100%
interest in the Mineral Ridge project, located in Nevada.
Brian Lock, the interim CEO and a director of the Company, states “This is a great day for Scorpio Gold,
having eliminated its US$6-million senior secured debt with Waterton in exchange for an upfront payment
of US$3-million in cash, and increasing its ownership of the Mineral Ridge Gold Mine to 100%. Scorpio
Gold is finalizing the previously-announced US$6-million convertible debenture financing. We can now
focus our efforts on re -engaging with lenders who had previously expressed interest in funding our new
processing facility at the Mineral Ridge project. This will allow us to capture the value in the gold reserves
contained in the heap leach pad and unmined portions of the mine. We see potential to increase those
resources by further exploration within and outside our area of operations. Our operating team at Mineral
Ridge has proved its excellence over the past eight years and once financed, will build and operate the new
process facility with an expected mine life of at least seven years”.
Pursuant to the Waterton Buyout: (i) the loan advanced from Waterton Precious Metals Fund II Cayman,
LP (the “Lender”) to Scorpio Gold pursuant to the terms of a senior secured credit agreement (the “Credit
Agreement”) among the Company, its subsidiaries and the Lender, which was originally announced in the
Company’s press release dated August 17, 2015, has been fully extinguished and the Credit Agreement
has been terminated (ii) the gold and silver supply agreement dated May 18, 2011 among the Company,
Scorpio Gold (US) Corporation (“Scorpio Gold US”), Mineral Ridge Gold, LLC (“Mineral Ridge Gold”)
and an affiliate of the Lender has been terminated; and (iii) the Company has acquired the 30%
membership interest of Elevon LLC (“Elevon”) in Mineral Ridge Gold (which holds the Mineral Ridge
Project) and the related operating agreement dated March 10, 2010 between Scorpio Gold US and Elevon
has been terminated (collectively, the “Waterton Buyout”).
In consideration for the Waterton Buyout: (i) the Company paid the Lender US$3,000,000 (the “Upfront
Payment”), (ii) the Company assigned to the Lender the right to receive up to Cdn$1,000,000 of a
contingent payment the Company may receive from Gold Standard Ventures Corp. (“Gold Standard”) in
connection with the Company’s sale to Gold Standard of the Pinon property in 2014 (for further
information, see the Company’s news release dated March 5, 2014), and (iii) a contingent payment will
be payable by the Company to Waterton if the Company completes certain asset sale or change of control
transactions before 2022, which will be calculated based on a percentage of the value of such transactions.
The Company received funding to complete the Upfront Payment pursuant to a US$3,000,000 debt bridge
financing (the “Bridge Financing”) from arm’s length parties to the Company that intend to subscribe to
the Company’s non -brokered private placement of convertible debentures (the “Convertible Debenture
Financing”), previously announced in the Company’s press releas e on January 28, 2019. The Bridge
Financing accrues interest at a rate of 7% per annum, is unsecured, and is subject to industry-standard events
of default. The Company intends to repay the lenders of the Bridge Financing with funds obtained on the
closing of the Convertible Debenture Financing, which is expected to be later this month.
For further information, please visit the Company’s website at www.scorpiogold.com or contact the
Company at the address below:
Brian Lock, Director and Interim Chief Executive Officer
Tel: (604) 889-2543
Email: [email protected] or [email protected]
About Scorpio Gold Corporation
Scorpio Gold holds a 100% interest in the producing Mineral Ridge gold mining operation located in
Esmeralda County, Nevada. Mineral Ridge is a conventional open pit mining and heap leach operation.
Mining at Mineral Ridge was suspended in November 2017; however, the Company continues to generate
limited revenues from residual but diminishing recoveries from the leach pads. Scorpio Gold also holds a
100% interest in the advanced exploration-stage Goldwedge property in Manhattan, Nevada with a fully
permitted underground mine and 40 0 ton per day mill facility. The Goldwedge mill facility has been
placed on a care and maintenance basis and can be restarted immediately when needed.
ON BEHALF OF THE BOARD
SCORPIO GOLD CORPORATION
Brian Lock,
Interim CEO
Neither 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.
The Company relies on litigation protection for "forward -looking" statements. T his news release contains forward -looking
statements that are based on the Company’s current expectations and estimates. Forward -looking statements are frequently
characterized by words 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” occur, and include, without limitation, statements
regarding the Company repaying the lenders of the Bridge Financing, as well as th e completion of the Convertible Debenture
Financing and the allocation of the use of proceeds thereof. Such forward -looking statements involve known and unknown risks,
uncertainties and other factors 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, including risks relating to operation of a gold mine, including the
availability of cash flows or financing to meet the Company’s ongoing financ ial obligations; the inability of the Company to re -
finance its debt obligations; unanticipated changes in the mineral content of materials being mined; unanticipated changes in
recovery rates; changes in project parameters; failure of equipment or processes to operate as anticipated; the failure of contracted
parties to perform; availability of skilled labour and the impact of labour disputes; obtaining the required permits to expan d and
extend mining activities; delays in obtaining governmental approvals; changes in metals prices; unanticipated changes in key
management personnel; changes in general economic conditions; other risks of the mining industry and those risk factors outlined
in the Company’s Management Discussion and Analysis as filed on SEDAR. 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 Company disclaims any intent or
obligation to update any forward-looking statement, whether as a result of new in formation, future events or results or otherwise.
Forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such
statements due to the inherent uncertainty thereof.