Mako Mining announces proposed acquisition of Mt. Hamilton Gold-Silver Project

Mako Mining (MAKOF) Corp announced the entering into of a binding term sheet with Sailfish Royalty to acquire the Mt. Hamilton Gold-Silver Project located in White Pine County, Nevada, USA, through the acquisition of 100% of Mt. Hamilton, the direct owner of the Mt. Hamilton Project, through a series of transactions. Sailfish will acquire MH LLC on an arm’s length basis from Mt. Hamilton Holdings LLC, and subsequently transfer the interests to Mako in consideration for a corporate gold stream, to be secured and a 2% net smelter return royalty on the Mt. Hamilton Project from Mako. Neither Mako nor Sailfish will issue any equity to complete these transactions. Sailfish will acquire 100% of MH LLC from arm’s length party Mt. Hamilton Holdings LLC for a total purchase price of US$40.0 million in cash. Sailfish has received a commitment letter for a US$40 million non-revolving bridge finance facility from affiliates of Wexford Capital, the controlling shareholder of both Mako and Sailfish, to fund the cash component of the acquisition. Mako is not a party to the Wexford-Sailfish Loan and will not incur any direct payment obligations or liabilities in connection with such loan. Upon completion of this initial acquisition transaction, Mako has agreed to take over control of the Mt. Hamilton Project and all costs associated therewith, which costs are not anticipated to be material, and work expeditiously with Sailfish to complete the acquisition of MH LLC from Sailfish. The Term Sheet between Sailfish and Mako provides for the transfer of 100% of MH LLC to Mako in exchange for consideration consisting of the Stream and NSR royalty. Under the terms of the Stream, Sailfish will purchase from Mako approximately 341.7 troy ounces of gold per month at a price of 20% of the London Bullion Market Association PM Fix price for a period of 60 months commencing immediately following the closing of this second acquisition transaction. Although production supporting delivery of gold during the majority of the Stream Period is expected to be from the Mt. Hamilton Project, Mako will have the right to source monthly mineral deliveries from its other projects as well as by way of the purchase of silver and/or gold credits or the delivery of gold equivalent ounces. The number of troy ounces of gold to be purchased by Sailfish will be subject to adjustment pursuant to a put/call structure whereby the monthly stream amount will be adjusted, if necessary, to ensure that the stream amount consists of such number of troy ounces of gold of no less than the net equivalent margin of US$738,000.00, which is equivalent to US$2,700/oz Au and no more than the net equivalent margin of US$1,011,333.33, which is equivalent to US$3,700/oz Au. Upon completion of the Stream Period, Mako will grant Sailfish the NSR royalty on all mineral production with respect to the Mt. Hamilton Project. Mako and Sailfish will enter into a definitive purchase agreement in connection with completing the acquisition, which shall contain certain conditions precedent including, but not limited to, obtaining all required special committee and board approvals for the transaction, disinterested approval of the shareholders of each of Mako and Sailfish to be obtained at respective special meetings of shareholders, and all required approvals including the approval of the TSX Venture Exchange. In the event that the requisite shareholder and/or regulatory approvals for the transaction are not received and the definitive agreement is terminated, Wexford, or a nominee thereof, will purchase MH LLC and the Mt. Hamilton Project, including all rights, obligations and liabilities in connection therewith, with the exception of any costs or liabilities incurred by Mako from the date Mako took over control of the Mt. Hamilton Project to the completion of the sale to Wexford which are not anticipated to be material. The purchase price for the Fallback Sale shall be equal to the then outstanding principal and interest amount owing by Sailfish to Wexford under the Wexford-Sailfish Loan and is expected to be settled by a triparty offset arrangement amongst Mako, Sailfish and Wexford, following which Mako will have no outstanding payment obligations or liabilities to either Sailfish or Wexford in connection with the transaction. In the event of a Fallback Sale, the Stream and Royalty Agreement will be rescinded without the secured Stream or NSR royalty having come into force or effect, and there will be no ongoing obligations or liabilities of Mako to Sailfish thereunder.