TNC Secures A$42 Million of Funding with Nebari Natural Resources Fund

True North Copper Limited (ASX:TNC) (True North, TNC or the Company) is pleased to announce it has executed binding agreements and obtained Nebari Investment Committee clearance for a four year, USD28 million (A$42 million1 AUD equivalent) USD-denominated senior secured loan facility (Loan Facility) with Nebari Natural Resources Credit Fund II LP (Nebari).

TNC and Nebari have executed formal loan documentation for the Loan Facility to provide up to USD28 million in two tranches, with USD18 million to be drawn at closing (Tranche 1) and USD10 million available to be drawn (Tranche 2), subject to certain conditions precedent including (for Tranche 2) commencement of commercial production of sulphide ore at TNC’s Cloncurry Copper Project (CCP).

HIGHLIGHTS

The key terms of the Loan Facility are as follows:

• Funded amount: up to USD28 million (in two tranches), net of the original issue discount (OID).
• Nebari has completed its due diligence and notified True North that the transaction has been approved by its Investment Committee.
• Tranche 1 and Tranche 2 closing remain subject to conditions precedent referred to in Appendix 1.
• Facility term: Four years.
• Coupon: three-month term Secured Overnight Financing Rate (SOFR) (subject to a minimum of 4%) + a margin of 6.9% p.a payable quarterly (for Tranche 1) and 6.6% p.a. payable quarterly (for Tranche 2).
• OID: 7.0% on both Tranches.
• Amortisation: 8% commencing on the fourth quarterly interest payment date, bullet repayment of the outstanding principal amount on maturity.
• Warrants: the Company has agreed to issue Nebari (or its nominee/s) warrants convertible into TNC shares as outlined below.
• Security: over the assets of TNC and its projects.

COMMENT

True North Copper Managing Director, Marty Costello said:

We are very pleased to have secured the support of Nebari Natural Resources Fund following a rigorous due diligence and funding process. Nebari Natural Resources Fund are a highly respected and experienced financier of mining projects globally. We are thrilled to announce we have secured this financing with Nebari and its marks a significant milestone for our company. These funds will be used to refinance the environmental bond, as the key next step in our mining restart at the Cloncurry Copper Project, as well as provide working and restart capital. TNC will soon announce the approved Cloncurry Copper Project mine plan. We’re incredibly excited about restarting mining and bringing the Cloncurry Copper Project into production, at a time where the world’s copper supply is really tightening up and the metal price is rising.

Nebari Managing Director, Juan Alvarez said:

We are excited to partner with True North Copper as it develops its Cloncurry Copper Project and Mt Oxide Project and we look forward to being a long term partner and supporting True North Copper in their future growth strategy.

The Loan Facility will be used:

(a) to repay in full the short-term working capital loan advanced to the Company by Dyda Property Management Pty Ltd pursuant to a loan agreement dated 5 September 2023 (Existing DPM Loan) (A$5,314,529.23 of principal and interest outstanding as at the date of this announcement);

(b) to refinance the rehabilitation bond for the CCP, being A$13,468,875.40 (Cloncurry Rehabilitation Bond), in full by way of cash collateral lodged with the scheme fund maintained under the Mineral and Energy Resources (Financial Provisioning) Act 2018 (Qld); and

(c) for working capital purposes in relation to the CCP in accordance with a mine plan for the CCP to be approved by the Company and Nebari.

The Loan Facility contains other terms and conditions that are customary for an agreement of this nature. Refer to Appendix 1 for a full summary of the material terms of the Loan Facility.

In connection with the Loan Facility, the Company has agreed to issue to Nebari (or its nominee/s):

• 46,383,038 warrants exercisable at A$0.1177, to be issued on closing using TNC’s available placement capacity under ASX Listing Rule 7.1 (Tranche 1 Warrants); and
• subject to TNC shareholder approval under Listing Rule 7.1, additional warrants to be issued on first drawdown for the Tranche 2 loan amount (Tranche 2 Warrants) (refer to Appendix 1 for details of how the number and exercise price for the Tranche 2 Warrants will be determined).

The Warrants will have a 48-month exercise period and, on exercise, will convert into TNC shares on a 1 for 1 basis.

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