Western Pacific Resources (WRP-V) was forced to extend its purchase agreement at the historic Deer Lake polymetallic mine, located 266 km southwest of Salt Lake City, Utah. But with a new strategic partner on board it looks like the company is about to hit the fast track. On Dec. 10 Western Pacific announced it had inked a convertible note financing with private equity outfit Quintana Minerals.
Quintana is the natural resource arm of Corbin J. Robertson Jr.'s holding company. Robertson is the grandson of Texas oil tycoon Hugh Roy Cullen, and sits as chairman and CEO of Natural Resource Partners (NRP-NY), which had a market capitalization of around $2.2 billion at the time of writing. Quintana will purchase secured convertible notes in Western Pacific in the principal amount of US$2.5 million when the deal closes, and could invest up to US$10 million in the company conditional on certain milestones.
Quintana’s secured notes will mature three years from closing and bear annual compounded interest at a rate of 8%. On closing Western Pacific will also be revamping its board of directors. Michael Williams and Ralph Rushton will be resigning, with Quintana managing director Oliver Rodz and mining analyst Lawrence Rolston sliding in as replacements.
The company may also opt to forward Western Pacific an additional US$5 million in unsecured notes within the next three years. All notes will be convertible at Quintana's discretion at 13.3 cents per share of Western Pacific, and also carry conditional rights of first refusal. As long as Quintana holds at least 20% of Western Pacific's outstanding shares it can opt to maintain that position during any public or private offering. Quintana also holds rights to three board positions at Western Pacific, as well as influence over any future acquisitions.
In addition to the equity investment, Western Pacific has also secured a base metal off-take agreement with Quintana's subsidiary worth roughly US$8.5 million. Under terms of the agreement Quintana will purchase 100% of the lead production at Deer Trail, 41 million lbs. of zinc and 60% of total production thereafter, as well as 20% of any other base metal output at the mine. |
