Wednesday, August 21, 2019

Sailfish Royalty Completes Acquisition of Terraco Gold, Creating a New Growth-Oriented Royalty Company

Terraco - Sailfish Merger.JPG

"Tortola, British Virgin Islands and Vancouver, British Columbia – August 19, 2019 – Sailfish Royalty Corp. (“Sailfish”) (TSX Venture: FISH) and Terraco Gold Corp. (“Terraco”) (TSX Venture: TEN) are pleased to announce the completion of the previously announced transaction between the two companies (the “Arrangement”). Sailfish has now acquired all of the issued and outstanding shares of Terraco (the “Terraco Shares”) in exchange for consideration of 0.12 of a common share of Sailfish (each full share, a “Sailfish Share”) for each Terraco Share, pursuant to a court approved plan of arrangement (the “Plan of Arrangement”). 

Sailfish is also pleased to report that it has repaid in full the US$12,031,055 outstanding senior unsecured convertible debenture held by Solidus Resources, LLC, a wholly-owned subsidiary of Waterton Precious Metals Fund II Cayman, LP (the “Debenture”). The extinguishment of the Debenture provides Sailfish shareholders with an unencumbered royalty ownership, with no future conversion or buy back rights, of up to a 3% NSR on the multi-million-ounce Spring Valley Gold Project (“Spring Valley”).  

Akiba Leisman, CEO of Sailfish, commented: “this exciting transaction brings together our combined royalty portfolios into a new, growth-oriented royalty vehicle.  Terraco’s royalty holdings will give our shareholders exposure to one of the best known undeveloped gold mining properties in Nevada. We believe that Spring Valley is a high priority development project for Waterton which is evidenced by a recent royalty purchase Solidus made (Pershing County June 26, 2019 filing) of up to a 1% NSR on Spring Valley from a third-party. As a significant royalty holder of Spring Valley, we look forward to continued advancement of the project.”

Todd Hilditch, former President & CEO of Terraco, further added: “As a founder of Terraco, I am excited to be representing shareholders as a director in the combination with Sailfish. This is a great opportunity to continue on for further exposure to a diverse portfolio of royalties, with exposure to a multi-million ounce gold project portfolio, and benefiting from a strong financial backing and an increased capital markets profile.”

Highlights of the New Combined Royalty Platform Company

The consolidated company will hold an array of precious metals royalties, ranging from the exploration stage through to production;

Geographic diversification of the combined royalty portfolio within the Americas, including Nevada, Mexico, Brazil and Nicaragua;

Royalties with well-established property owners, including Waterton Global Resource Management, Eldorado Gold Corporation and Endeavour Silver Corp.;

Platform for additional royalty consolidation in the precious metals space; and 

Near term shareholder friendly initiatives including a possible spinoff of the Gavilanes and Almaden-Nutmeg Mountain properties into a separate exploration company or a monetization of these assets.
Former Terraco shareholders will hold approximately 37.2% of the issued and outstanding common shares of Sailfish (60,215,705).  Former registered shareholders of Terraco will be required to submit their share certificates and letters of transmittal to Computershare Investor Services Inc. and follow the instructions in the Information Circular dated July 12, 2019 in order to obtain Sailfish share certificates pursuant to the Plan of Arrangement. In addition, the outstanding options of Terraco have been adjusted in accordance with their terms and the Exchange Ratio such that 1,626,120 outstanding options of Sailfish have been reserved for exercise. It is expected that shares of Terraco will be delisted from the TSX Venture Exchange at close of business on August 20, 2019. In connection with the closing of the Arrangement, Sailfish has appointed Todd Hilditch to its Board of Directors. 

Concurrently with the closing of the Arrangement, Wexford Spectrum Trading Limited and Wexford Catalyst Trading Limited (together, the “Wexford Funds”) loaned Sailfish US$12,031,055 (the “Loan”), the proceeds of which were used by Sailfish on behalf of TGC Holdings Ltd. , a wholly-owned subsidiary of Terraco (and, following completion of the Arrangement, Sailfish), to repay the Debenture.  The Loan is unsecured, has a three year term and bears interest at a rate of 8% per annum, accruing daily and payable on maturity or prepayment, and may be prepaid at any time by Sailfish. As consideration for the Loan, Sailfish paid the Wexford Funds a commitment fee equal to 1.5% of the Loan amount. The Loan from the Wexford Funds to Sailfish was a "related party transaction" as defined in Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Loan was considered and unanimously approved by Sailfish’s independent directors, with one director abstaining due to his affiliation with the Wexford Funds. The Loan is not subject to the formal valuation requirement of MI 61-101 and is exempt from the minority shareholder requirements of MI 61-101, pursuant to the exemption contained in s. 5.7(f) (Loan to Issuer, No Equity or Voting Component)."

Royalty Portfolio

Terraco holds 100% of the following core royalty assets (image is for illustrative purposes):

up to a 3% NSR on a majority of the current resources of Spring Valley (claims above in red);
a 1.5% NSR on a portion of Spring Valley on the north side of the resource (claims above in green);
a 0.5% NSR within a one-half mile of the red claims and outlined in blue (not including the area in green);
up to 2% NSR on the Moonlight Project (claims above in white)